2013 Annual General Meeting

2013 Annual General Meeting2013 Annual General Meeting2013 Annual General MeetingChairman's Address2013 Annual General MeetingChairman's Address

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DisclaimerDisclaimer

This material has been prepared by BKI Investment Company Limited.

The information within this document is not intended to provide advice to investors or take into account an individual’s financialcircumstances or investment objectives. This is general investment advice only and does not constitute advice to any person. Theopinions within this document are not intended to represent recommendations to investors, they are the view of BKI InvestmentCompany Limited 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 ofoffer to buy or sell any security. The information on which this presentation is based has been obtained from sources we believeto 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.

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Non Executive DirectorsNon Executive DirectorsRobert Millner Chairman of the Board

Chairman of the Investment CommitteeCh i f th N i ti C ittChairman of the Nomination Committee

David Hall Independent Non-Executive DirectorDavid Hall Independent Non-Executive DirectorChairman of the Audit Committee

Alex Payne Non-Executive DirectorChairman of the Remuneration CommitteeInvestment Committee

Ian Huntley Independent Non Executive DirectorIan Huntley Independent Non-Executive DirectorInvestment Committee

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ManagementManagementThomas Millner Chief Executive Officer

Investment Committee

Jaime Pinto Company SecretaryC t Ad i i t ti S i Corporate Administration Services

Martin Bocxe Ruwald & EvansAuditorsAuditors

Martin Bocxe Ruwald & Evans

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BKI’s 10th Annual General MeetingBKI’s 10th Annual General MeetingBKI Shareholders have grown from 7,832 in FY2004 to 12,350*. Portfolio Valuation has increased by 358%, from $171m to $784m*. Organic growth as well as:

Acquisitions of PSI Limited and Huntley Investment Company.Acquisitions of PSI Limited and Huntley Investment Company.SPPs, Rights Issues, Placements and DRPs.

In 8 years Ordinary Dividends paid to shareholders have increased by 55%In 8 years Ordinary Dividends paid to shareholders have increased by 55%.BKI has paid 5 Special Dividends since listing.Internalised management; Since FY2004, BKI’s MER has been reduced by 72%Won 2011 Listed Investment Company of the Year Award. Reduced share price discount to NTA.

*As at 30 September 2013 6

FY2013 HighlightsFY2013 Highlights

Net Operating Result increased by 8.0%.

Earnings Per Share (EPS) before special dividends increased by 4.7%.

Total Full Year Dividends paid increased by 11 7%Total Full Year Dividends paid increased by 11.7%.

Management Expense Ratio (MER) of 0.19%.

12 month Total Shareholder Return outperformance of 7.5%*.

S f l SPP i O t b 2012 i d $19 1Successful SPP in October 2012 raised $19.1m.

*BKI’s Total Shareholder Returns (including the reinvestment of dividends) for the year to 30 June 2013 was positive 29.4% compared to the S&P/ASX 300 Accumulation Index which increased by 21.9% over the same period. Past performance is not indicative of future performance. 7

2013 Annual General Meeting2013 Annual General Meeting2013 Annual General MeetingCEO’s Address2013 Annual General MeetingCEO’s Address

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N t O ti R ltN t O ti R ltNet Operating ResultFY2004 – FY2013Net Operating ResultFY2004 – FY2013

30

35

25

30

Mill

ions

15

20

$

10

15

0

5

9Net Operating Result

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Dividends PaidDividends PaidDividends Paid2nd Half 2004 – 2nd Half 2013Dividends Paid2nd Half 2004 – 2nd Half 2013

1 0.53.5

4.0

are

10.5

0.5

2.5

3.0

s pe

r Sha

2 5 2 5 2 6 2.73 3 3 3

2.5 2.75 3 3 3.2 3.2 3.25 3.41.5

2.0

Cen

ts

2 2.1 2.22.5 2.5 2.6

0.5

1.0

0.0

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Ordinary Dividends Special Dividends

Yield for all SeasonsYield for all SeasonsDividends + Franking Credits received from a $10,000 investment in BKI at inception V’s Bank Quarterly Interest.Dividends + Franking Credits received from a $10,000 investment in BKI at inception V’s Bank Quarterly Interest.Highlights the opportunity of receiving a fully franked dividend in a falling interest rate environment.

1,400

Dol

lars

1,000

1,200

ustr

alia

n D

600

800

$ A

u

200

400

0FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

BKI Di idend BKI Franking Interest

Source: BKI; IRESS. 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 $1,019pa. The franking creditsenhance the income by a further $437 (total income of $1,456). The same investment in a term deposit (based on the cash rate) would be earning $494pa with no franking credits. Figures includereinvestment of dividends and cash, Ignores capital appreciation of BKI shares. Assumes tax rate of 30%.

BKI Dividend BKI Franking Interest

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Management Expense RatioManagement Expense Ratio

0.69% 0.71%0.70%

0.80%

0.56%0.60%

BKI Internally Managed

0.46% 0.46%

0.40%

0.50%

0.31%0.30%

0.40%

0.19% 0.18% 0.18% 0.19%

0 10%

0.20%

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0.10%FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

P tf li V l tiP tf li V l tiPortfolio ValuationAs at 30 June 2013Portfolio ValuationAs at 30 June 2013

600

700

s

500

600

$ M

illio

ns

300

400

$

200

0

100

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Investment Portfolio Cash

BKI P fBKI P fBKI PerformanceAs at 30 June 2013BKI PerformanceAs at 30 June 2013

BKI Performance 1 Year 3 Yrs 5 Yrs 7 Yrs 9 Yrsas at 30 June 2013

BKI Portfolio

as at 30 June 2013 (pa) (pa) (pa) (pa)

S&P/ASX 300 ACC INDEX (XKOAI) 21.9% 8.2% 2.7% 3.5% 8.0%Returns are measured

after BKI Total Shareholder Returns 29.4% 13.5% 8.8% 6.1% 9.4%

BKI Share Price Outperformance V's XKOAI 7 5% 5 3% 6 1% 2 6% 1 4%a teall operating

expenses, provision and

BKI Share Price Outperformance V s XKOAI 7.5% 5.3% 6.1% 2.6% 1.4%

BKI Portfolio Performance 22.2% 9.9% 4.8% 5.6% 8.5%

Source: BKI Investment Company Limited, IRESS. Portfolio Returns are measured by change in pre tax NTA and are after

provision and payment of income and capital gains

BKI Portfolio Outperformance V's XKOAI 0.3% 1.7% 2.1% 2.1% 0.5%

Sou ce est e t Co pa y ted, SS o t o o etu s a e easu ed by c a ge p e ta a d a e a teall operating expenses, provision and payment of both income and capital gains tax and the reinvestment of dividends. Total Shareholder Returns include reinvestment of dividends. Past performance is generally not indicative of future performance.

capital gains tax.

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T t l Sh h ld R tT t l Sh h ld R tTotal Shareholder ReturnsAs at 30 June 2013Total Shareholder ReturnsAs at 30 June 2013

Total Shareholder Returns exclude the benefit of franking credits being passed on

29.4%30.0%

from BKI to Shareholders. 21.9%

20.0%

25.0%

13.5%

8.8% 9.4%8 2% 8 0%10 0%

15.0%

6.1%8.2%

2.7% 3.5%

8.0%

5.0%

10.0%

0.0%1 Year 3 Years (pa) 5 Years (pa) 7 Years (pa) 9 Years (pa)

BKI Total Shareholder Returns S&P/ASX 300 ACC INDEX (XKOAI)

Source: BKI Investment Company Limited, IRESS. Total Shareholder Returns include reinvestment of dividends. Past performance is generally notindicative of future performance. 15

Sh P h PlSh P h PlShare Purchase PlanOctober 2012Share Purchase PlanOctober 2012

SPP offered to all existing shareholders

O t it t f th i t i BKI t $1 29 hOpportunity to further invest in BKI at $1.29 per share

New shares ranked equally with existing sharesq y g

$19.1m raised through the SPPSince the offer:

BKI has declared 7.15cps in fully franked dividendsShares now valued at $1.53*

Total Shareholder Return on new shares of 24.1%.*

16

%

* As at 30 September 2013.

ffFY2013 – First HalfFY2013 – First Half

Overall a positive reporting season

Si ifi t t i f A t li C iSignificant cost savings from Australian Companies

Further focus on Balance Sheets, lower gearing levels, g g

Signs of earnings growth

Strong dividend yields

Good investment opportunity $20m invested including all SPP fundsGood investment opportunity - $20m invested including all SPP funds

S&P/ASX300 Index gained 10% from July 2012 to December 2012.

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Portfolio MovementsPortfolio MovementsPortfolio Movements$20m Invested

Portfolio Movements$20m Invested

Major Investments FY14 Forecast Dividend Yield

FY14 Forecast EPS Growth

FY14 ForecastPE Multiplep

ANZ Banking Corporation 5.5% 7.0% 11.7 X

Westpac Banking Corp 6.5% 3.0% 12.5 X

National Australia Bank 6.7% 6.2% 11.1 X

APA Group 6.0% 0.5% 27.4 X

Transurban Group 4.9% 15.4% 40.0 X

Metcash Limited 7.5% 7.5% 11.1 X

S&P/ASX 300 Index 4 2% 9 0% 15 6 XS&P/ASX 300 Index 4.2% 9.0% 15.6 X

Source: BKI Investment Company, Bloomberg; as at 30 June 2013. 18

Portfolio MovementsPortfolio MovementsPortfolio MovementsDivestments

Portfolio MovementsDivestments

Divestments FY14 Forecast Dividend Yield

FY14 Forecast EPS Growth

FY14 ForecastPE Multiple p

Westpac Pref Shares(WBCPB) 5.2% 0.0% n/a

Cl C ti 4 5% 20 6% 17 6 XClover Corporation 4.5% 20.6% 17.6 X

Ten Network + (Entitlements) 0.0% -117.0% -205 X

S W t M di (E titl t ) 5 5% 33 7% 8 5 XSeven West Media (Entitlements) 5.5% -33.7% 8.5 X

SCA Property Group 6.0% 15.7% 14.2 X

ASX Li it d ( ) 5 1% 3 5% 16 2 XASX Limited (Rights) 5.1% 3.5% 16.2 X

S&P/ASX 300 Index 4.2% 9.0% 15.6XS&P/ASX 300 Index 4.2% 9.0% 15.6X

19Source: BKI Investment Company, Bloomberg; as at 30 June 2013.

S fS fFY2013 – Second HalfFY2013 – Second Half

Equity markets continued to be strong; January 2013 – April 2013 S&P/ASX300 Index gained a further 11%.

However the Australian economy showed signs of stalling:Higher full time unemployment and job security concernsHigher full time unemployment and job security concernsLower business confidenceW k t il di Weaker retail spending Robust Australian DollarU t bl F d l G tUnstable Federal Government

Equity market looked to be trading at fair valueEquity market looked to be trading at fair value.

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S fS fS&P/ASX300 Index lost 7% over the months of May 2013 and June

FY2013 – Second HalfFY2013 – Second HalfS&P/ASX300 Index lost 7% over the months of May 2013 and June 2013.

ASX down 11% SUN down 7%WOW down 9% WPL down 6%WES down 8% CBA down 5% IAG down 8% TLS down 5%

Australian Dollar fell from US$1 03 to US0 91cAustralian Dollar fell from US$1.03 to US0.91c

Further cut in interest rates in May to 2.75%

Higher business confidence building in the lead up to the election

B h d f FY2013 k i ff i d l By the end of FY2013 stocks were again offering good value. 21

2013 Annual General Meeting2013 Annual General Meeting2013 Annual General Meeting1st Quarter FY2014 Update2013 Annual General Meeting1st Quarter FY2014 Update

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t Qt QFurther cut in interest rates in August to 2 50%

1st Quarter FY2014 Update1st Quarter FY2014 UpdateFurther cut in interest rates in August to 2.50%

Higher business confidence in the lead up to the election

Change of Government

Re-rating of stocks into the July - September reporting season

Better quality companies delivering on continual cost savings balance Better quality companies delivering on continual cost savings, balance

sheet strength and earnings certainty

Attractive dividend outlook.

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V lV lValuePE Ratio (X)ValuePE Ratio (X) 25

On a Historical PE valuation, Australian equity markets look

15

20

Australian equity markets look to be offering reasonable value against the US, UK and 5

10

2004 2006 2008 2010 2012 2014European markets.

The Australian equity market is

2004 2006 2008 2010 2012 2014

Australia US Euro UK

18The Australian equity market is now trading above the 10 year average. 12

15

Many companies within our market justifying current 6

9

24

j y gvaluations.

Source: Credit Suisse

62004 2006 2008 2010 2012 2014

Australia Average +/- 1 S.D.

IIIncomeDividend Yield (%)IncomeDividend Yield (%) 7%

The Australian equity market is offering an attractive dividend 4%

5%

6%

offering an attractive dividend yield above global peers.

1%

2%

3%

2004 2006 2008 2010 2012 2014Franking credits passed on to shareholders by many A t li C i

2004 2006 2008 2010 2012 2014

Australia US Euro UK

7%Australian Companies.

Australian equity market offering 4%

5%

6%

Australian equity market offering Dividend Yields at the 10 Year Historical average. 1%

2%

3%

2004 2006 2008 2010 2012 2014

25Source: Credit Suisse

2004 2006 2008 2010 2012 2014

Australia Average +/- 1 S.D.

P tf li M tP tf li M tPortfolio Movements$45m Invested

Portfolio Movements$45m Invested

Major Investments FY14 Forecast Dividend Yield

FY14 Forecast EPS Growth

FY14 ForecastPE Multiple

$$

Dividend Yield EPS Growth PE Multiple

Primary Healthcare 4.0% 13.0% 15.0 X

Woolworths Limited 4.1% 6.0% 17.4 X

Insurance Australia 6.1% 5.0% 13.0 X

TOLL Holdings 5.0% 3.0% 13.7 X

Telstra Corporation 5.9% 3.0% 15.0 X

Commonwealth Bank 5.2% 2.0% 11.8 X

S&P/ASX 300 Index 4 2% 9 0% 15 6 XS&P/ASX 300 Index 4.2% 9.0% 15.6 X

Source: BKI Investment Company, Bloomberg 26

ffPortfolio MovementsPortfolio Movements

Major Investments FY14 Forecast Dividend Yield

FY14 Forecast EPS Growth

FY14 ForecastPE MultipleDividend Yield EPS Growth PE Multiple

IOOF Holdings 5.3% 11.0% 16.7 X

MaxiTrans Industries 6.1% 6.0% 11.0 X

Wesfarmers Limited 5.1% 10.0% 19.1 X

Bendigo & Adelaide Bank 6.2% 5.0% 12.8 X

Suncorp Limited 5.8% 115.0% 13.0 X

Woodside Petroleum 6.5% 7.0% 14.4 X

S&P/ASX 300 Index 4 2% 9 0% 15 6 XS&P/ASX 300 Index 4.2% 9.0% 15.6 X

Source: BKI Investment Company, Bloomberg 27

P tf li M tP tf li M tPortfolio MovementsDivestments

Portfolio MovementsDivestments

Divestments FY14 Forecast Dividend Yield

FY14 Forecast EPS Growth

FY14 ForecastPE Multiplep

Tabcorp Holdings 5.5% 3.1% 17.0 X

QBE I G 2 0% 10 0% 14 5 XQBE Insurance Group 2.0% 10.0% 14.5 X

S&P/ASX 300 Index 4.2% 9.0% 15.6 X% %

28Source: BKI Investment Company, Bloomberg

BKI - Top 25 Investments % of Total Portfolio Index Weight1 NAB National Australia Bank 9.5 % 5.7 %2 CBA C lth B k 9 1 % 8 1 %2 CBA Commonwealth Bank 9.1 % 8.1 %3 NHC New Hope Corporation 7.3 % 0.0 %4 WBC Westpac Banking Corp 7.3 % 7.1 %5 BHP BHP Billiton Limited 6.2 % 8.0 %6 TLS Telstra Corporation 5.2 % 4.2 %7 WES Wesfarmers Limited 4.4 % 2.9 %8 WOW Woolworths Limited 3.9 % 3.0 %9 ANZ ANZ Bank 3.6 % 5.9 %10 ALQ ALS Limited 2.6 % 0.3 %11 TPM TPG Telecom Limited 2.4 % 0.6 %12 AGK AGL Energy Limited 2.4 % 0.2 %13 WPL Woodside Limited 2 1 % 2 2 %13 WPL Woodside Limited 2.1 % 2.2 %14 IAG Insurance Australia Group 1.5 % 0.8 %15 IVC InvoCare Limited 1.5 % 0.1 %16 ARP ARB Corporation Limited 1.4 % 0.1 %17 CCL Coca Cola Amatil Limited 1 3 % 0 7 %17 CCL Coca Cola Amatil Limited 1.3 % 0.7 %18 MTS Metcash Limited 1.2 % 0.2 %19 APA APA Group 1.2 % 0.3 %20 BEN Bendigo Bank Limited 1.1 % 0.3 %21 MLT Milton Corporation Limited 1.0 % 0.0 %22 ASX ASX Limited 0.9 % 0.5 %23 SUN Suncorp-Metway Limited 0.9 % 1.2 %24 BXB Brambles Limited 0.9 % 1.0 %25 PPT Perpetual Limited 0.9 % 0.1 %

Cash & Cash Equivalents 7.6% 0.0%Total 87.4% 53.4%

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t Q *t Q *1st Quarter FY2014 Update*1st Quarter FY2014 Update*

Revenue – Revenue from the Investment Portfolio (excluding Special Dividend Income) is up approx 9% on the previous corresponding period.*

Net Operating Result – Net Operating Result (excluding Special Dividend Income) is up approx 10% on the same time last year *Income) is up approx 10% on the same time last year.

Special Dividend Income - BKI is expected to receive $920k in Special Dividend Income in the first half of FY2014 from New Hope Corporation, Suncorp Group, Coca Cola Amatil and Milton Corporation

Portfolio Valuation - The BKI Portfolio Valuation including cash and receivables is $784m, up from $677m at 30 June 2013.

30* Figures referred to in the “1st Quarter FY2014 Update” are unaudited. Revenue, Net Operating Income and Portfolio Valuation are partly driven by the $59m Placement completed on 5 September 2013.

t Q *t Q *1st Quarter FY2014 Update*1st Quarter FY2014 Update*

Net Tangible Asset Backing (NTA) - The consolidated unaudited pre taxNTA at 30 September 2013 was $1.61 per share, up 8.3% on 30 June 2013after adjusting for the $0.034 dividend paid in August 2013.

Performance BKI’s Share Price Performance (including the reinvestmentPerformance - BKI’s Share Price Performance (including the reinvestmentof dividends) for the 12 months to 30 September 2013 was 28.3%,outperforming the S&P/ASX 300 Accumulation Index over the same periodoutperforming the S&P/ASX 300 Accumulation Index over the same periodby 4.7%.

Dividends – Barring any unforeseen circumstances, BKI is confident of atleast maintaining the Interim and Final Ordinary Dividends during FY2014.

31* Figures referred to in the “1st Quarter FY2014 Update” are unaudited.

Pl t d E titl t OffPl t d E titl t OffPlacement and Entitlement OfferPlacement and Entitlement Offer

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PlacementPlacement

Placement to sophisticated investors

Issue Price of $1.48 per New Share

Represented a Represented a 6.9% discount to 31 August 2013 pre-tax NTA of $1.59

3.9% discount to closing share price on 2 September 20131

Placement raised $59mPlacement raised $59m

Added approx 600 new shareholders to the BKI register.

331. Date prior to the announcement of the Capital Raise

1:15 Entitlement Offer1:15 Entitlement OfferOffered to all BKI shareholdersIssue Price of $1.48 per New Share to raise up to $48 million (before costs).$ p p $ ( )

$1.48 Represents:a 6 9% discount to 31 August 2013 pre tax NTAa 6.9% discount to 31 August 2013 pre-tax NTA

an 8.8% discount to 30 September 2013 pre-tax NTA

Top Up facility availableNew BKI Shares to rank equally with existing BKI shares at the time of q y gissue and be entitled to all dividends and franking credits declared by the BKI Board going forward

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Washington H. Soul Pattinson committed to taking up their full entitlement

Offer existing shareholders the chance to increase their investment in

Objectives of Capital Raising Objectives of Capital Raising Offer existing shareholders the chance to increase their investment in BKI without paying brokerage and other charges.Introduce new shareholders to the BKI shareholder registerIntroduce new shareholders to the BKI shareholder register.Increase liquidity in BKI shares.Reduce BKI’s Management Expense Ratio.The net proceeds from the Capital Raising will be used by BKI to p p g yexpand its investment portfolio in accordance with its investment policy.

Entitlement Offer closing date is 16 October 2013Entitlement Offer closing date is 16 October 2013

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