KFL – March 2020 monthly update

1
Monthly Update
March 2020
A word from the Manager
The Kingfish adjusted NAV declined -3.5% in February,
compared to the local share market which returned
-3.9% (S&P/NZX50G). New Zealand outperformed global
markets which were down around twice this amount as the
Coronavirus outbreak in China began to spread more widely
internationally.
Portfolio Company Developments
a2 Milk delivered a first half fiscal 2020 result stronger
than expected including revenue of $807 million, ahead
of the top end of its revenue guidance range ($780-800
million) provided only in mid-November. It also flagged
stronger than expected sales in China during January and
February, probably due to heightened demand following the
Coronavirus outbreak. We continue to back management,
who are executing strongly against the strategy to grow
market share in China and are continuing to build a
meaningful US business.
Auckland Airport delivered its first half fiscal 2020 result and
provided updated guidance for the full year, a reduction of
$5 million on previously expected net profit. The guidance
incorporates a negative impact of Coronavirus in the second
half. The company indicated that the northern runway is
likely to be commissioned in the early 2030s rather than 2028,
which will likely delay its landing charge beyond 1 July 2020.
Delegat delivered a strong first half fiscal 2020 result off the
back of +10% growth in case sales. Disciplined cost control
meant the company grew profits at a similar rate despite the
headwind of a weaker 2019 harvest (where volumes were
down -11% and below long-term averages which elevated
the cost base on a per bottle basis). The company continues
to execute consistently against its long-term plan to grow
case sales at +6.7% annually out to fiscal 2022 and profits
commensurately based on continuing to develop its position
as a premium wine brand.
Fisher & Paykel Healthcare upgraded earnings expectations
again for fiscal 2020, following a number of profit upgrades in
2019 as the company outperforms its conservative guidance.
The higher sales have been in both Homecare and Hospital
divisions and includes better performance from both legacy
mask sales slowing less rapidly but also sales of its new
Vitera mask. However, most of the increase in demand has
been from hardware sales to China in its attempt to control
the Coronavirus outbreak. It is heartening that a company
we are invested in can directly assist some of those suffering
from the virus.
Freightways delivered a disappointing first half fiscal 2020
result. The express courier business met expectations but
the information management division missed expectations,
including the delayed start of its large digitisation project for
the Royal Commission which is now underway. The courier
business is performing broadly in line with expectations
but has suffered a market-based modest decline in same
customer volumes that has slowed earnings growth
(although healthy industry rate increases and Pricing For
Effort have lifted profitability). Management are evaluating
opportunities to refine the information management
division to the more attractive components. We had recently
reduced the size of the position and allocated this capital
elsewhere.
Meridian announced its first half fiscal 2020 result, strong
on favourable hydro conditions. The far greater focus has
been the possible outcome of Rio Tinto’s review into the
future of the Tiwai Point aluminium smelter. This is expected
to conclude in March and is currently creating significant
uncertainty around the future of the New Zealand electricity
sector. Aside from this, Meridian is operating well including
growing its retail, commercial and industrial, and Australian
renewable energy businesses. We had earlier reduced our
position at a time when little probability of a Rio Tinto exit
was being reflected in the share price.
Port of Tauranga announced its first half fiscal 2020 result
but also reduced its full year 2020 NPAT guidance by $2
million. This reflects the extended shutdown of China’s
ports due to Coronavirus which has meant shipping service
disruptions. Log inventories at China ports are at elevated
levels and there is some uncertainty around how long it
will take for a more normal log export environment to
resume from New Zealand. Despite the disruption, the
port continued to grow container volumes and extend its
position as New Zealand’s leading container port.
1
Share Price (Premium) / Discount to NAV (using NAV to four decimal places)
2
SaaS – Software as a service is a method of software delivery that allows access to data from any device with an internet
connection.
KFL NAV
$
1.61
SHARE PRICE
$
1.61
DISCOUNT
1
0.1
%

as at 29 February 2020

2
Key Details
as at 29 February 2020
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
10% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$1.40
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
246m
MARKET
CAPITALISATION
$397m
GEARING
None (maximum permitted 20%
of gross asset value)
Sector Split
as at 29 February 2020
7
%
26
%
INDUSTRIALS
19
%

UTILITIES
INFORMATION
TECHNOLOGY
29
%
HEALTH
CARE
13
%
CONSUMER
STAPLES
The Kingfish portfolio also holds cash
Summerset confirmed its strong fiscal 2019 result which was
widely anticipated given its strong quarterly sales release.
It also announced the acquisition of a second development
site in Victoria in Torquay. Guidance for underlying net profit
for fiscal 2020 was flat as a result of higher care wages,
expectations to deliver around 400 units and development
margin to ease back to a more typical 20-25% (due to a
greater apartment mix and higher land acquisition costs
flowing through). We had anticipated these headwinds and
trimmed the position following the strong share price run
ahead of the result.
Vista delivered its fiscal 2019 result in line with revised
expectations. The core business continues to grow solidly,
and this was the first step in the journey to rebuild some
credibility lost after it missed its original guidance for circa
20% revenue growth by a wide margin. The SaaS
2
transition
project remains in its early days but on schedule. Sentiment
has been very negative as Vista China has been losing
around 80% of its revenue stream while cinemas in China
have closed as a precaution to contain Coronavirus, although
costs are highly variable and losses will be limited now that
cinemas are reopening.
Portfolio Changes
We have begun to add to several positions which have
reacted disproportionately in the broad market selloff.
However, we are conscious this is a dynamic environment and
so are taking a measured approach.
Sam Dickie
Senior Portfolio Manager
Fisher Funds Management Limited

33
Total Shareholder Return to 29 February 2020
Mar
2004
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
$
3.00
$
4.00
$
5.00
$
6.00
Share PriceTotal Shareholder Return
$
1.00
$
2.00
$
0.00
Mar
2017
Mar
2018
Mar
2019
Mar
2005
February’s Biggest Movers
Typically the Kingfish portfolio will be invested 90% or more in equities.
The remaining portfolio is made up of another 8 stocks and cash.
5 Largest Portfolio Positions as at 29 February 2020
FREIGHTWAYS
-16
%
PORT OF TAURANGA
-14
%
MERIDIAN ENERGY
-14
%
SUMMERSET
-12
%
DELEGAT GROUP
-12
%
THE A2 MILK
COMPANY
16
%
FISHER & PAYKEL
HEALTHCARE
16
%
INFRATIL
14
%
MAINFREIGHT
10
%
RYMAN HEALTHCARE
7
%
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(5.3%)+4.0%+29.9%+17.8%+13.7%
Adjusted NAV Return(3.5%)(0.1%)+19.3%+15.9%+13.5%
Portfolio Performance
Gross Performance Return(3.8%)+0.3%+23.7%+19.0%+16.4%
S&P/NZX50G Index(3.9%)(0.5%)+20.8%+16.2%+13.9%
Non-GAAP Financial Information
Kingfish uses non-GAAP measures, including adjusted net asset value, adjusted NAV return, 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 after expenses, fees and tax,
»adjusted NAV return – the net return to an investor after expenses, fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection, before expenses, fees and tax, and
»total shareholder return – the return combines the share price performance, the warrant price performance, the net value of converting any warrants into shares, and the dividends paid to shareholders. It
assumes all dividends are reinvested in the company’s dividend reinvestment plan, and that shareholders exercise their warrants, (if they were in the money), at warrant expiry date.
All references to adjusted net asset value, adjusted NAV return, 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 Non-GAAP Financial Information Policy. A copy of the policy is available at http://kingfish.co.nz/about-kingfish/kingfish-policies/
Performance to 29 February 2020

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
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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 its
shares on market
»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
Management
Kingfish’s portfolio is managed
by Fisher Funds Management
Limited. Sam Dickie (Senior
Portfolio Manager) and Matt Peek
(Investment Analyst) have prime
responsibility for managing the
Kingfish portfolio. Together they
have over 30 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.
Warrants
»On 5 February 2020 a new issue of warrants (KFLWF)
was announced.
»The warrants were issued at no cost to eligible
shareholders and in the ratio of one warrant for
every four Kingfish shares held.
»The warrants were allotted to shareholders on 9
March 2020 and the warrants were listed on the
NZX Main Board from 10 March 2020. (Information
pertaining to the warrants was mailed/emailed to
shareholders in February 2020).
»The Exercise Price of each warrant is $1.64, to be
adjusted down for dividends declared during the
period up to the Exercise Date.
»The Exercise Date for the new warrants (KFLWF) is
12 March 2021.
»The final Exercise Price will be announced and an
Exercise Form will be sent to warrant holders in late
January 2021.