KFL – November 2017 monthly update

Sam Dickie
Senior Portfolio Manager,
Kingfish
The company expects to double its constant currency
revenue every 5-6 years and will continue to improve
margins. That is a great combination for building long
term shareholder wealth and an obvious company for us
to own in Kingfish.
We highlighted last month that Xero has been added
to the Kingfish portfolio. The company held its London
“XeroCon” user’s conference in October. Xerocon
was attended by more than 2,000 accountants and
bookkeepers, a huge increase on last year’s event. At the
same time the company updated the market on its UK
customer numbers. With over a quarter of a million active
customers Xero has established a clear leadership position
in the UK SaaS accounting market.
The New Zealand share market’s performance over the
past few years has been spectacular but we are conscious
that the golden weather won’t necessarily last forever. By
continuing to focus on owning the highest quality, globally
competitive, companies in the share market we believe we
are well positioned even if growth at home slows from its
recent strong clip.
1
Monthly Update
November 2017
KFL NAV
$
1.41
SHARE PRICE
$
1.30
DISCOUNT
8.0
%
as at 31 October 2017
A word from the Manager — No Black October
The S&P/NZX50 has continued its strong ascent so far
this year. The 30th anniversary of the October 1987 crash
was anything but a crash with the market recorded its
highest monthly return to date this year rising 2.7%.
Despite the stellar return New Zealand was only the
middle of the pack compared to other share markets
around the World with Japan, Australia, broader Asia
and Emerging Markets all outperforming.
Our view, even before the change in government, was
that the strong relative growth rate of the New Zealand
economy versus the rest of world would slow. This
view has been exacerbated by the appointment of the
new government. In particular we believe that slowing
migration will have a negative impact on growth and
make it more difficult for businesses to find labour.
The change in the relative growth rate of New Zealand’s
economy compared to the rest of the world has been
reflected in our portfolio with almost half of the revenues
from companies owned by Kingfish coming from outside
of New Zealand.
The potential impact of lower migration and slower
growth in house prices was felt via weaker performance
from the retirement living sector. Ryman Healthcare
and Summerset, which are at least in part impacted by
house prices, were flat and down 5% respectively in a
strong market.
Fisher & Paykel Healthcare held an investor day during
the month. This was a great reminder that this is one
of New Zealand’s highest quality companies with an
attractive and very long growth runway ahead of it.

Sector Split
as at 31 October 2017
Key Details
as at 31 October 2017
FUND TYPE
Listed Investment Company
INVESTS IN
Growing New Zealand companies
LISTING DATE
31 March 2004
FINANCIAL YEAR END
31 March
TYPICAL PORTFOLIO SIZE
15-25 stocks
INVESTMENT CRITERIA
Long-term growth
PERFORMANCE
OBJECTIVE
Long-term growth of capital and
dividends
TAX STATUS
Portfolio Investment Entity (PIE)
MANAGER
Fisher Funds Management
Limited
MANAGEMENT
FEE RATE
1.25% of gross asset value
(reduced by 0.10% for every 1% of
underperformance relative to the
change in the NZ 90 Day Bank Bill
Index with a floor of 0.75%)
PERFORMANCE
FEE HURDLE
Changes in the NZ 90 Day Bank
Bill Index + 7%
PERFORMANCE FEE
15% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$1.30
SHARES ON ISSUE
189m
MARKET CAPITALISATION
$245m
GEARING
None (maximum permitted 20%
of gross asset value)
Performance
to 31 October 2017
2
3
%
ENERGY
29
%
HEALTHCARE
14
%

UTILITIES
2
%
CONSUMER
STAPLES
30
%
INDUSTRIALS
7
%
INFORMATION
TECHNOLOGY
12
%
CONSUMER
DISCRETIONARY
The Kingfish portfolio also holds cash.
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Corporate Performance
Total Shareholder Return+1.6%+3.0%+6.2%+9.3%+14.0%
Adjusted NAV Return+0.3%+1.8%+12.5%+11.1%+13.3%
Manager Performance
Gross Performance+0.5%+2.4%+15.5%+13.8%+16.6%
S&P/NZX50G Index+2.7%+5.9%+17.0%+14.8%+15.5%
Non-GAAP Financial Information
Kingfish uses non-GAAP measures, including adjusted net asset value, gross performance return and total shareholder return. The rationale for using such non-GAAP measures is as follows:
»adjusted net asset value – the underlying value of the investment portfolio adjusted for capital allocation decisions,
»gross performance return – the Manager’s portfolio performance in terms of stock selection and hedging of currency movements, and
»total shareholder return – the return to an investor who reinvests their dividends, and if in the money, exercises their warrants at warrant maturity date for additional shares.
All references to adjusted net asset value, gross performance return and total shareholder return in this monthly update are to such non-GAAP measures. The calculations applied to non-GAAP measures are
described in the Kingfish Global Non-GAAP Financial Information Policy. A copy of the policy is available at http://kingfish.co.nz/about-kingfish/kingfish-policies/

October’s Biggest Movers
Typically the Kingfish portfolio will be invested 90% or more in equities.
The remaining portfolio is made up of another 13 stocks and cash.
XERO
+11
%
PORT OF TAURANGA
+7
%
ABANO HEALTHCARE
+5
%
DELEGAT GROUP
+4
%
VISTA GROUP
-9
%
5 Largest Portfolio Positions
as at 31 October 2017
MAINFREIGHT
12
%
FISHER & PAYKEL
HEALTHCARE
11
%
INFRATIL
9
%
FREIGHTWAYS
8
%
RYMAN
HEALTHCARE
7
%
Total Shareholder Return
to 31 October 2017
3
Mar
2004
Mar
2005
Mar
2006
Mar
2007
Mar
2008
Mar
2009
Mar
2010
Mar
2011
Mar
2012
Mar
2014
Mar
2015
Mar
2013
Mar
2016
Share Price/Total Shareholder Return
$
2.50
$
3.00
$
2.0 0
$
1.50
$
1.00
Share PriceTotal Shareholder Return
$
4.00
$
0.50
$
0.00
Mar
2017
$
3.50

Disclaimer: The information in this update has been prepared as at the date noted on the front page. The information has been prepared as a general summary of the matters covered only, and it is
by necessity brief. The information and opinions are based upon sources which are believed to be reliable, but Kingfish Limited and its officers and directors make no representation as to its accuracy
or completeness. The update is not intended to constitute professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from an
authorised financial adviser should be taken before making an investment. To the extent that the update contains data relating to the historical performance of Kingfish Limited or its portfolio companies,
please note that fund performance can and will vary and that future results may have no correlation with results historically achieved.
Kingfish Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7094 | Fax: +64 9 489 7139
Email: enquire@kingfish.co.nz | www.kingfish.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777 | Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz | www.computershare.com/nz
About Kingfish
Kingfish is an investment company
listed on the New Zealand Stock
Exchange. The company gives
shareholders an opportunity to
invest in a diversified portfolio
of between 15 and 25 quality
growing New Zealand companies
through a single, professionally
managed investment. The aim
of Kingfish is to offer investors
competitive returns through
capital growth and dividends.
Capital Management Strategies
Regular Dividends
»Quarterly distribution policy introduced in
June 2009
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Kingfish may include dividends
received, interest income, investment gains
and/or return of capital
»Shareholders who prefer to have increased
capital rather than a regular income stream have
the opportunity to participate in the company’s
dividend reinvestment plan (DRP)
»Shares issued to DRP participants are at a 3%
discount to market price
»Kingfish became a portfolio investment entity on
1 October 2007. As a result, dividends paid to
New Zealand tax resident shareholders have not
been subject to further tax
Share Buyback Programme
»Kingfish has a buyback programme in place allowing
it (if it elects to do so) to acquire up to 9.4m of its
shares on market in the year to 31 October 2018
»Shares bought back by the company are held as
treasury stock
» Shares held as treasury stock are available to be
re-issued for the dividend reinvestment plan and to
pay performance fees
Warrants
»Warrants put Kingfish in a better position to
grow further, improve liquidity, operate efficiently
and pursue other capital structure initiatives as
appropriate
»A warrant is the right, not the obligation, to purchase
an ordinary share in Kingfish at a fixed price on a
fixed date
»There are currently no warrants on issue
Management
Kingfish’s portfolio is managed
by Fisher Funds Management
Limited. Sam Dickie (Senior
Portfolio Manager), Zoie Regan
(Senior Investment Analyst) and
Matt Peek (Investment Analyst)
have prime responsibility for
managing the Kingfish portfolio.
Together they have over 40 years
combined experience and are
very capable of researching and
investing in the quality New
Zealand companies that Kingfish
targets. Fisher Funds is based in
Takapuna, Auckland.
Board
The Manager has authority
delegated to it from the
Board to invest according to
the Management Agreement
and other written policies.
The Board of Kingfish
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell and Andy
Coupe; and non-independent
director Carmel Fisher.