BKI Investment : Net Tangible Asset Backing

NTA AND MONTHLY REPORT

January 2019

"Our aim is to create wealth for BKI shareholders, through an increasing fully franked dividend and capital growth"

Business Overview

BKI is a research driven, Listed Investment Company, investing for the long term in profitable, high yielding, well managed companies. Listed on the Australian Stock Exchange (BKI.ASX) with the equity portfolio managed by Contact Asset Management, an investment in BKI gives shareholders access to a diversified Australian equity portfolio.

Growing Fully Franked Dividends

BKI's Board & Portfolio Managers are shareholders in BKI. We invest for the long term and focus on creating wealth for all shareholders by keeping costs low and increasing fully franked dividends and capital growth.

As at 31 January 2019, BKI's fully franked dividend yield was 5.5% (based on the immediate past 12 month rolling dividend** and share price of $1.60), while the grossed-up yield was 7.9%# (tax rate of 30%).

6.00

5.00

4.00

3.00

2.00

1.00

0.00

Special Dividend per share

Ordinary Dividends per Share

We focus on dividend payments and not generating excessive management fees or performance fees.

Pre-Tax Net Tangible Assets: $1.55

Post-Tax Net Tangible Assets: $1.49

All calculations are before providing for the FY2019 Interim Dividend of 3.625cps and Special Dividend of 1.5cps.

Board of Directors

Robert Millner (Chairman), Alex Payne, David Hall, Ian Huntley, Jaime Pinto (Company Secretary)

Investment Management

Contact Asset Management Pty Ltd provides investment management services in accordance with the directions of the BKI Board and BKI Investment Committee.

Tom Millner (Director - Portfolio Manager) Will Culbert (Director - Portfolio Manager)

Company Overview
ASX Code	BKI.ASX
Mandate	Australian Listed Equities
Market Capitalisation	$1,164m
Investment Portfolio	$1,039m
Cash & Cash Equivalents	$93m

$1,132m

Total Portfolio Including Cash Debt

$0

MER* Performance Fee

0.18%

N/A

Rolling 12 Month Dividend** Historical Dividend Yield Percentage Franked Grossed Up Yield# DRP

8.825cps

5.5%

100%

7.9% Active

Share Price

$1.60

Net Tangible Assets (NTA)

$1.55 $1.49

Pre Tax NTA Post Tax NTA

*MER as at 31 December 2018 **Includes FY2018 Final Dividend of 3.70cps and FY2019 Interim Dividend of 3.625cps and Special Dividend of 1.5cps, #Based on share price as at 31 January 2019. Grossed up yield includes franking credits and is based on a tax rate of 30%.

Focused on Capital Management

The chart below shows the dividends and franking credits received from a $10,000 investment in BKI at inception versus bank quarterly interest. An investor who spent the equivalent of $10,000 to purchase BKI shares upon listing in December 2003 would now be receiving fully franked dividends of $1,707pa. The franking credits enhance the income by a further $731, assuming a tax rate of 30%. The same investment in a term deposit (based on the cash rate + 0.50%) would be earning $369pa with no franking credits.

This chart highlights the benefit of receiving a fully franked dividend in a falling interest rate environment.

Contact Us

Web	www.bkilimited.com.au
E-Mail	[e-mail]
Tom Millner	0408 754 180
Will Culbert	0410 627 378
Jaime Pinto	02 9210 7000
BKI Performance
31 January 2019

Company		% of Total Portfolio
1	Commonwealth Bank	6.1%
2	National Australia Bank	5.8%
3	New Hope Corporation	5.2%
4	Westpac Banking Corporation	5.0%
5	BHP Billiton	4.1%
6	Transurban Group	4.0%
7	APA Group	4.0%
8	Woolworths Group	3.5%
9	ANZ Banking Group	3.5%
10	Macquarie Group	3.4%
11	Wesfarmers Limited	3.2%
12	TPG Telecom	3.0%
13	AGL Energy Limited	2.8%
14	Woodside Petroleum	2.8%
15	Sydney Airport	2.6%
16	Telstra Corporation	2.5%
17	Ramsay Healthcare	2.3%
18	ASX Limited	2.2%
19	IAG Limited	2.2%
20	Sonic Healthcare	2.0%
21	Invocare Limited	1.8%
22	Suncorp Group	1.4%
23	ARB Corporation	1.3%
24	Coles Group	1.2%
25	QUBE Holdings	1.2%
Cash and cash equivalents		8.2%
Total of top 25 plus Cash and cash equivalents		85.3%

1 Year	3 Years	5 Years	10 Years	15 Years
(pa)	(pa)	(pa)	(pa)
S&P/ASX 300 Accumulation Index	1.1%	10.0%	7.1%	9.9%	8.5%
BKI Total Shareholder Returns (TSR)	-4.6%	2.9%	4.7%	10.7%	8.1%
BKI TSR Outperformance vs Index	-5.7%	-7.1%	-2.4%	0.8%	-0.4%
BKI Portfolio Performance	-1.7%	5.1%	4.0%	8.5%	7.4%
BKI Portfolio Outperformance vs Index	-2.8%	-4.9%	-3.1%	-1.4%	-1.1%
S&P/ASX 300 Accumulation Index - 80% franked	2.5%	11.6%	8.6%	11.7%	10.2%
BKI Total Shareholder Returns - 100% Franked	-2.8%	4.9%	6.6%	13.0%	10.2%

Source: Contact Asset Management, Bloomberg. Portfolio Performance is measured by change in pre-tax NTA and is after all operating expenses, provision and payment of both income and capital gains tax and the reinvestment of dividends. TSR include reinvestment of dividends. TSR including franking credits are based on BKI's dividends being fully franked and the S&P/ASX300 Accumulation Index franked at 80%. Past performance is generally not indicative of future performance.

The material contained within the BKI Investment Company Limited Monthly Report (The Report) has been prepared by Contact Asset Management (AFSL 494045). Figures referred to in The Report are unaudited. The Report is not intended to provide advice to investors or take into account an individual's financial circumstances or investment objectives. This is general investment advice only and does not constitute advice to any person. The opinions within The Report are not intended to represent recommendations to investors, they are the view of Contact Asset Management as of this date and are accordingly subject to change. Information related to any company or security is for information purposes only and should not be interpreted as a solicitation of offer to buy or sell any security. The information on which The Report is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. Investors should consult their financial adviser in relation to any material within this document.