KFL – September 2023 monthly update

1
A WORD FROM THE MANAGER
In August, Kingfish’s gross performance return was down 3.6% and
the adjusted NAV return was also down 3.6%. This compares to the
benchmark S&P/NZX50G, which was down 4.2%.
New Zealand shares were down during August with only eight
companies in the benchmark index in positive territory. Four of those
are Kingfish holdings.
In line with usual practice, in the second half of the month of August
many New Zealand companies reported their financial results for the
period to the end of June, while some others provided updates at their
annual meetings. Although expectations heading into this ‘reporting
season’ were relatively subdued, on balance the outlook for most
companies is proving more challenging than anticipated in the near-
term.
a2 Milk (-9%) delivered its full year result in line with expectations. The
company has continued to be a clear leader in the China infant formula
category, taking market share in its key sales channels and improving
brand awareness to new highs. For instance, it's "top of mind" brand
awareness is now 9% (from 7% one year ago and 4% two years
ago) versus its market share of around 5% and increasing. However,
the market it operates will again contract in the year ahead, with 9.6
million births in 2022 versus 14.6 million in 2019 and even fewer
likely in 2023. This is a greater decline than expected. While we knew
the population of women at childbearing age is reducing, they are
now also having notably fewer children than historically (for example,
if the fertility rate was the same as in 2019, the 9.6 million births in
2022 would be more like 13 million). In part this is a result of China's
COVID-19 policies, which dissuaded women from becoming pregnant
during the pandemic. But younger people also appear not to be having
babies for several other reasons as well. So, despite strong execution,
the company's prospects are being blunted, with babies typically
consumers of formula for multiple years, which means the weaker
market landscape is likely to persist for some time. Notwithstanding this,
the company still expects modest growth in the coming year as a result
of ongoing market share gains. We have reduced Kingfish’s position in
a2 Milk.
Auckland Airport (-7%) reported its full year result, which was
modestly ahead of expectations. The forward guidance provided
was below expectations due to higher costs (operations, interest, and
depreciation). Auckland Council sold part of its stake in Auckland
Airport after the share market closed on 31 August through an offer
targeted at institutional investors. The widely anticipated sale was
priced at a premium to the prevailing share price and Kingfish elected
not to participate at that level.
Contact Energy (+0.7%) delivered a solid full year result and provided
guidance for the new year ahead of expectations. Part of the uplift is
coming from retail and commercial customer pricing, where Contact
Energy has been repricing customers towards higher competitor levels.
The company will see its newly built Tauhara geothermal plant begin
to contribute to earnings from around December, replacing more
expensive gas generation. The company expects a new long term
supply agreement may be reached with the Tiwai Point aluminium
smelter in coming months. This would likely further increase earnings
given the low prevailing contracted price agreed in early 2021. A
satisfactory outcome could result in an increase to its dividend from the
current level. Kingfish had increased its position ahead of the result.
Wine maker Delegat (-10%) delivered its annual result of $59.3 million
underlying net profit, with 2% growth on the prior year less than
initially expected. Guidance for the new year is $62-67 million, which
was broadly in line with our expectation and represents a healthier
5-13% growth rate. The company will continue to target selective price
increases (3% on average during the year) to bolster operating profit
margins which have contracted in recent years due to cost pressures.
Its key Oyster Bay brand remains healthy, with volumes growing
meaningfully ahead of the US premium wine segment, and not just
in Sauvignon Blanc but other varietals too (including Pinot Grigio,
Chardonnay, and Pinot Noir).
EBOS (-2%) delivered a result broadly in line with expectations and
expects another year of profitable growth. Management is confident
that through a combination of ongoing market share gains, cost out
initiatives across the group, and selective acquisition opportunities
it can limit the earnings impact from losing the contract to distribute
medicines for Chemist Warehouse in Australia from mid-2024. It
continues to deliver consistent performance across its other business
units. The Animal Care business is benefitting from its inhouse
manufacturing facility, which drove increased margin over the year
and is expected to facilitate increasing new product development over
coming years, supporting ongoing revenue growth.
Fisher & Paykel Healthcare (-8%) held its annual meeting and reiterated
full year revenue guidance. Its sleep apnoea mask business is tracking
slightly stronger than expectations, while hospital respiratory support
is slightly weaker (primarily in the sales of new hardware rather than
recurring consumables sales).
Freightways (+2%) delivered its full year result. Trading conditions
in its core New Zealand courier business remained challenging on
account of reduced economic activity. Volumes in the six months to June
averaged around 2% lower than the corresponding period in 2022.
However, underlying volumes in the economy have been weaker,
more like 5-6% down, particularly for customers it considers are in the
1
Share Price Discount to NAV (including warrant price on a pro-rated basis and using the net asset value per share, after expenses, fees and tax, to four decimal places).
MONTHLY UPDATE
September 2023
KFL NAV
$
1.35
$
1.31
Share Price
DISCOUNT
1
2.0
%
as at 31 August 2023
Warrant Price
$
0.0 5

2
KEY DETAILS
as at 31 August 2023
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
$1.45
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
332m
MARKET CAPITALISATION
$435m
GEARING
None (maximum permitted 20%
of gross asset value)
SECTOR SPLIT
as at 31 August 2023
4
%
31
%
8
%
MATERIALS
HEALTH CARE
6
%
CONSUMER
STAPLES

UTILITIES
CASH
1
%
INFORMATION
TECHNOLOGY
3
%
retail sector. The company has been taking market share as a result
of its superior service levels versus competitors, which has insulated
the volume decline. Performance in Australia has been more robust,
with its Allied Express large item delivery acquisition outperforming
expectations. The company is continuing to increase prices to offset cost
pressures, particularly in areas where pricing has been low in relation
to the effort required (such as cross-Auckland deliveries and for bulky
items, having already lifted pricing for residential deliveries).
Infratil (+1%) provided a brief but positive update at its annual
meeting indicating trading conditions are generally solid for portfolio
companies, running at the top end of guidance issued in May.
Summerset (-0.5%) delivered a better-than-expected first half result.
This included all time high development margins of 34%, comfortably
above management targets of 20-25%. Despite the pressure on NZ
house prices since late 2021, Summerset has been able to maintain
or increase pricing. This reflects the company’s pricing lagging the
rapid run up in house prices in 2020 and 2021, plus the company’s
increased effort to optimise pricing per unit.
Cinema software provider Vista (-16%) delivered a result that was
slightly below expectations, as revenue growth was softer than
anticipated. In part this was because a meaningful contract for Vista's
studio insights product Movio Research was not renewed during the
period (due to customer merger and acquisition activity which resulted
in a duplication of subscriptions). Meanwhile revenues from its new
digital and cloud products are only gradually building as the first
customers will not contribute meaningfully until 2024. The company
maintained its full year revenue guidance.
Vulcan Steel (+2%) delivered its full year result towards the top end of
its revised guidance range but having reduced the range in July due
to slower market conditions in New Zealand steel distribution. The
company is still seeing those conditions persist, which it is attributing
to the combination of higher interest rates and uncertainty ahead of
the general election in October. It is not seeing the same softness in
Australia and the picture is more balanced in its other divisions in New
Zealand. Vulcan has made substantial progress on integrating the
Ullrich Aluminium acquisition, transferring it onto its ‘Anvil’ IT system
which will enable it to progressively uplift service and introduce a shift
towards its ‘Value in Use’ pricing methodology which will improve
profitability. The company continues to see a significant opportunity
to leverage a dual aluminium and steel product offering from the
combined branch footprint. It expects to roll out 9-10 of these ‘hybrid’
sites in the current financial year.
Matt Peek
Portfolio Manager
Fisher Funds Management Limited
47
%
INDUSTRIALS

33
TOTAL SHAREHOLDER RETURN to 31 August 2023
AUGUST'S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month
The remaining portfolio is made up of another 10 stocks and cash.
5 LARGEST PORTFOLIO POSITIONS as at 31 August 2023
VISTA GROUP
- 16
%
DELEGAT GROUP
- 10
%
A2 MILK CO
-9
%
FISHER & PAYKEL
HEALTHCARE
-8
%
AUCKLAND
INTERNATIONAL
AIRPORT
-7
%
INFRATIL
18
%
FISHER & PAYKEL
HEALTHCARE
15
%
SUMMERSET
14
%
MAINFREIGHT
8
%
AUCKLAND
INTERNATIONAL
AIRPORT
8
%
Share Price/Total Shareholder Return
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
Mar
2004
Share Price Total Shareholder Return
Mar
2005
Mar
2006
Mar
2007
Mar
2008
Mar
2009
Mar
2010
Mar
2011
Mar
2012
Mar
2013
Mar
2014
Mar
2015
Mar
2016
Mar
2017
Mar
2018
Mar
2020
Mar
2019
Mar
2021
Mar
2023
Mar
2022
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(1.8%)+0.2%(10.8%)(0.6%)+7.9%
Adjusted NAV Return(3.6%)(1.5%)(0.7%)(0.2%)+6.4%
Portfolio Performance
Gross Performance Return(3.6%)(1.2%)+0.3%+1.1%+8.6%
S&P/NZX50G Index(4.2%)(2.2%)(0.4%)(1.1%)+4.4%
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 dividends (and other capital management initiatives) and after expenses, fees and tax,
»adjusted NAV return – the percentage change in the adjusted NAV,
»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 kingfish.co.nz/about-kingfish/kingfish-policies.
PERFORMANCE to 31 August 2023

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 a 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 June have no correlation with results historically achieved.
Kingfish Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7094
Email: enquire@kingfish.co.nz | www.kingfish.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777
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 utilised
for the dividend reinvestment plan
MANAGEMENT
The Manager has authority
delegated to it from the Board
to invest according to the
Management Agreement and
other written policies. Kingfish’s
portfolio is managed by Fisher
Funds Management Limited. Matt
Peek (Portfolio Manager) and
Michael Bacon and Zoie Regan
(Senior Investment Analysts) have
prime responsibility for managing
the Kingfish portfolio. Together
they have significant 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 Board of Kingfish
comprises independent
directors Andy Coupe
(Chair), Carol Campbell,
David McClatchy and Fiona
Oliver.
Warrants
»Kingfish announced an issue of warrants (KFLWH) on
20 June 2023
»Information pertaining to the warrants was mailed/
emailed to all shareholders on Tuesday 27 June 2023
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every four
Kingfish shares held, based on the record date of
5 July 2023
»The warrants were allotted to shareholders on 6 July 2023
and listed on the NZX Main Board from 7 July 2023
»The Exercise Price of each warrant is $1.37, adjusted
down for the aggregate amount per Share of any cash
dividends declared on the shares with a record date
during the period commencing on the date of allotment of
the warrants and ending on the last Business Day before
the final Exercise Price is announced by Kingfish
»The Exercise Date for the warrants is 26 July 2024