KFL – April 2018 monthly update

1
Monthly Update
April 2018
KFL NAV
$
1.45
SHARE PRICE
$
1.31
DISCOUNT
9.5
%
as at 31 March 2018
A word from the Manager
March cemented the end of the recent golden run with the S&P/NZX50 posting its second consecutive down month of the year.
Volatility continued throughout the period with the S&P/NZX50 making fresh all-time highs during the month, but finishing on
its lows to be down 0.7% for the month ending 31 March 2018.
Interestingly, the New Zealand market’s performance in the face of a global correction was again ahead of the majority of global
equity markets for the month, exhibiting our market’s actual/perceived defensive qualities – the NZ equity market (S&P/NZX50)
has twice the dividend yield of the US equity market (S&P500).
For example, the US S&P500 finished down 2.7% for March. During the month, President Trump focused his attention on China
with a number of proposed tariffs on steel, aluminium and a $50billion list of Chinese imports. He also accused Amazon of not
paying its share of taxes and hurting small businesses. The combination of Trump’s tweets targeting Amazon and the threat of
regulation over the technology sector on the back of news stories regarding Facebook’s data breach saw the US technology
sector underperform the broader index for the month.
Meanwhile, back in the land of the long white cloud, our technology sector
outperformed the global trend, largely buoyed by Vista bouncing from
an oversold level. Telcos and utilities also outperformed helping to drive
the New Zealand market performance. The Kingfish portfolio was 1.2%
ahead of the S&P/NZX50 for the month largely driven by the ongoing
stellar performance of Summerset. Portfolio companies Freightways
and Mainfreight also contributed positively to the result. After a busy
reporting season in February, it was a quieter month with limited news
announcements from some Kingfish portfolio companies.
Auckland Airport benefited when Air New Zealand announced a new
Auckland-Chicago flight, which coupled together with capacity from joint
venture partner, United Airlines, on an Auckland-San Francisco flight, will
add approximately 135,000 international seats into Auckland Airport. Such
an increase in seats represents an increase of approximately +1% on current
airline seat capacity.
Infratil’s major holding, Trustpower, benefits from one of its shareholders
(the Tauranga Energy Consumer Trust, “TECT”) arrangements to distribute
dividends for the benefit of consumers. In January, TECT announced
a proposal to remove its annual cheques to Trustpower’s consumers
from 2023 onwards with payments instead going solely towards local
charities. This proposal was withdrawn during the month. While Infratil’s
and Trustpower’s share prices have recovered since the proposal was first
announced in January, they remain below their previous highs as there is still
the possibility that TECT may revisit the terms of its proposal at some point
in the future.
Fisher Funds has historically charged
Kingfish GST at the standard GST rate
on the provision of investment services.
Last year the IRD confirmed that the
lower GST fund manager rate could be
charged to Kingfish (and this rate has
been applied since 1 August 2017). On
28 March 2018, Fisher Funds received
confirmation from the IRD that they
would receive a refund for overcharged
GST of $2.9m plus use of money
interest of $0.2m on the provision of
investment services to Kingfish for the
eight year period from 1 August 2009
to 31 July 2017. On receipt in early
April, Fisher Funds passed the refund
and use of money interest to Kingfish.
The refund and use of money interest
receivable from Fisher Funds has been
recognised in the Kingfish NAV from
28 March 2018 onwards.
GST Update

2
Sector Split
as at 31 March 2018
Key Details
as at 31 March 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
$1.24
SHARES ON ISSUE
191m
MARKET CAPITALISATION
250m
GEARING
None (maximum permitted 20%
of gross asset value)
The Kingfish portfolio also holds cash.
4
%
30
%
INDUSTRIALS
11
%
CONSUMER
DISCRETIONARY
INFORMATION
TECHNOLOGY
30
%
HEALTHCARE
10
%

UTILITIES
11
%
CONSUMER
STAPLES
In January, Michael Hill indicated a strategic repositioning
of its Emma & Roe brand in Australia. On 6 March, Michael
Hill released the outcome of its review, announcing that it
will close all but six of the current footprint of 30 stores at a
cash cost of A$5.8 - $7.9m. The focused group of six stores
is at the lower end of expectations and should meaningfully
reduce trading losses during the trial phase through to
the end of FY19. We think this positively demonstrates the
willingness of management and the board to better control
losses and manage risk during the trial period.
During the month, Restaurant Brands announced its sales
results through to the end of February (fourth quarter
2018 sales). Overall sales came in marginally ahead of our
expectations, driven by solid +6.2% same store sales growth
in the core New Zealand KFC business, with the other New
Zealand operations also ahead of expectations. Australian
KFC same store sales growth softened slightly to +2.4% (in
Australian dollars) from higher levels in previous quarters, but
this was more than offset by a robust result from the Pacific
Islands operations, with solid performance from Taco Bell
and an encouraging pick-up in weekly sales from Pizza Hut.
Sam Dickie
Senior Portfolio Manager,
Kingfish

1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Corporate Performance
Total Shareholder Return(0.0%)(0.0%)+12.0%+7.7%+11.9%
Adjusted NAV Return+1.4%+0.8%+14.7%+12.7%+12.6%
Manager Performance
Gross Performance Return+0.5%+0.1%+16.5%+15.2%+15.6%
S&P/NZX50G Index(0.7%)(0.9%)+15.6%+12.6%+13.5%
3
March’s Biggest Movers
Typically the Kingfish portfolio will be invested 90% or more in equities.
SUMMERSET GROUP
+10
%
XERO*
+9
%
MERIDIAN ENERGY
+5
%
DELEGAT GROUP
+5
%
THE A2 MILK COMPANY
-6
%
5 Largest Portfolio Positions as at 31 March 2018
MAINFREIGHT
12
%
FISHER & PAYKEL
HEALTHCARE
12
%
FREIGHTWAYS
9
%
THE A2 MILK COMPANY
8
%
RYMAN HEALTHCARE
7
%
The remaining portfolio is made up of another 11 stocks and cash.
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
Mar
2018
Total Shareholder Return to 31 March 2018
Performance to 31 March 2018
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/
*Xero was exited during March

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.