KFL – March 2018 monthly update

Sam Dickie
Senior Portfolio Manager,
Kingfish
1
Monthly Update
March 2018
KFL NAV
$
1.46
SHARE PRICE
$
1.34
DISCOUNT
8.0
%
as at 28 February 2018
A word from the Manager
Recently, I’ve been writing about the 1963 dream - where
the market recorded 16 positive return months in a row
before finally peaking in 1965. The more modern version of
this dream died in February. After 13 positive return months,
the S&P NZX 50 gross index closed down 0.8% ending what
has been a phenomenal run for the New Zealand market.
In addition to being the first down month we have seen
for some time, there was also a spike in volatility in equity
markets around the world in early February. A good
example of this was in the United States where the S&P 500
share market index shed 4.1% in a single day – while we
expect volatility in markets, this is the first serious bout we
have seen for some time.
Inevitably, the New Zealand market got caught up in the
global equity sell-off. While we think that the sell-off was
most likely kick-started by fears about inflation and interest
rates rising too fast, we believe it was exacerbated by the
collapse in the ‘short volatility’ trade and the ensuing spike
in volatility as investors closed positions.
Put simply, technical factors caused forced selling which
turned into a global panic and drove the New Zealand
market down 5% intramonth. Such volatility, particularly
when driven by technical reasons, often throws up good
buying opportunities and we used this market correction
to add to high quality positions in the Kingfish portfolio at
discounted prices. By the end of the month, most of the
dust settled, global markets largely rebounded and the S&P
NZX 50 regained most of its lost ground.
There was plenty of positive news for the Kingfish portfolio
during the month, with a number of portfolio companies
reporting their results. Of the eleven portfolio companies
that reported results during the month, five were largely
in line with expectations, while five (a2 Milk, Auckland
Airport, Delegat, Port of Tauranga and Summerset)
reported results that were ahead of expectations – always
a positive outcome. As flagged ahead of its result, Michael
Hill’s performance was below expectations, primarily as a
result of its underperforming US and Emma & Roe divisions,
which are being addressed.
We added The a2 Milk Company to the portfolio ahead
of its interim 2018 result. The company reported an
outstanding result, comfortably beating already high
expectations with revenue +70% and EBITDA +123%
versus last year. The company’s strong result was driven
primarily through growth in its China infant formula
business where it has rapidly increased market share.
a2 Milk also unexpectedly announced an agreement
with Fonterra to accelerate growth into new markets and
products, such as nutritionals, butter, and cheese. We
increased the size of the position in a2 Milk on the back
of the result and announcement.
a2 Milk’s agreement with Fonterra should leverage
Fonterra’s logistics and distribution network to help the
company access markets in South East Asia and the
Middle East, as well as provide fresh a2 milk in New
Zealand. The agreement also creates new milk pools
and diversifies a2 Milk’s manufacturing base. Fonterra
has historically opposed a2’s progress so the validation
of its product proposition is also a strong endorsement
of the a2 milk category and it’s global growth potential.
During February, we exited our position in Z Energy.
The original thesis for the investment was predicated on
a strengthening of the business’s market position and
material synergies following its Caltex acquisition. These
investment storylines and catalysts have now largely
played out and we believe there are now better uses of
your capital elsewhere.

2
Sector Split
as at 28 February 2018
Key Details
as at 28 February 2018
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
$1.27
SHARES ON ISSUE
189m
MARKET CAPITALISATION
254m
GEARING
None (maximum permitted 20%
of gross asset value)
Performance
to 28 February 2018
The Kingfish portfolio also holds cash.
7
%
29
%
INDUSTRIALS
12
%
CONSUMER
STAPLES
INFORMATION
TECHNOLOGY
31
%
HEALTHCARE
10
%

UTILITIES
11
%
CONSUMER
DISCRETIONARY
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Corporate Performance
Total Shareholder Return+0.0%+3.0%+10.9%+8.7%+12.4%
Adjusted NAV Return(1.2%)+1.8%+14.7%+11.6%+12.9%
Manager Performance
Gross Performance Return(1.2%)+2.5%+17.9%+14.5%+15.9%
S&P/NZX50G Index(0.8%)+2.3%+16.8%+12.5%+14.2%
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
»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/

3
February’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.
5 Largest Portfolio Positions
as at 28 February 2018
Total Shareholder Return
to 28 February 2018
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
THE A2 MILK COMPANY
+44
%
SUMMERSET GROUP
+11
%
Z ENERGY
-9
%
XERO
-9
%
MICHAEL HILL
-13
%
FISHER & PAYKEL
HEALTHCARE
12
%
MAINFREIGHT
12
%
THE A2 MILK COMPANY
9
%
FREIGHTWAYS
8
%
INFRATIL
7
%

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.