December 2008 Quarter

Dear Shareholders Kingfish was established in 2004 The last quarter of 2008 ended, for to invest, through its manager, in a most, with a big sigh of relief. portfolio of well researched small cap at a glance New Zealand companies. It provides The Kingfish portfolio suffered some of its Performance for period 31/03/04 a single vehicle through which to heaviest falls in its history. The Net Asset to 31/12/2008 (since listing) invest in these stocks, primarily on Value dropped 18% from $1.19 to $0.98, Net Asset Value $0.98 1.3%* a long term buy and hold basis. The while the share price declined from $0.96 Dividends Paid $0.15 15.0% tax structure is efficient, especially to $0.84 – a period end discount of 14% Share Price $0.84 -16.0% now that Kingfish has “PIE” status. to the underlying NAV. Share volumes *Based on adjusted Net Asset Value Despite the difficult current market per Share at listing of $0.9684, traded during the quarter were relatively representing the issue price of $1.00 conditions, directors consider that light – 2.3% of the total shares outstanding. less issue costs of $0.0316 per share. the company’s investment rationale This perhaps reflects that shareholders and focus remain as relevant today as continue to recognise the underlying Performance for the three months when the company was established. 30/9/2008 to 31/12/2008 value of the portfolio companies and are “holding on” during the rough patch. The company’s bias is towards Net Asset Value -17.7% capital growth but during the past Share Price -12.5% This newsletter contains, among other five years a total of 15 cents per matters: share has been paid in dividends. Notable December quarter share » Fisher Funds’ comments on portfolio price falls, including dividends Our next report to you will be companies for the quarter (local currency terms) in May when we release our full Comvita -24.3% » A formal report on share buybacks for year results to 31 March 2009. Opus Intl -27.5% the last buyback period - in November, With best wishes on behalf of the company’s share buyback Metlifecare -40.5% the Board, programme was renewed and your Rakon Limited -42.3% Board and Manager continually Sealegs -64.3% monitor its implementation Portfolio Holdings Summary, as at » Confirmation of the renewal of 31/12/2008 the Management Agreement Listed Companies % Holding between Kingfish Limited and Fisher Rob Challinor, Chairman Funds Management Limited. Kingfish Limited - 3 February 2009 Abano Healthcare 1.29% Comvita 1.46% Delegats 7.08% Freightways 10.08% renewal of management agreement Mainfreight 16.24% Metlifecare 8.46% In March 2004 Kingfish Limited signed a Management Agreement (the Michael Hill 5.99% "Agreement") with Fisher Funds Management Limited to manage our NZ Exchange 5.17% investment portfolio. The Agreement was for an initial five year term from Opus International 2.89% 31 March 2004, following Kingfish raising funds and listing on the NZX. The Pumpkin Patch 3.86% Agreement provides for continuation for a further five year term. The company Rakon 1.95% is entitled to decline to renew if the Board is dissatisfied with the Manager’s Ryman Healthcare 18.71% performance of “Management Services” as defined in the Agreement. Sealegs 0.17% Your independent directors have considered the comprehensive obligations Wakefield Hospital 4.65% of the Management Services clauses. Short term investment performance has Non-listed Companies been disappointing, as it has been for other NZ equity funds reviewed, reflecting Waterman Holdings 2.72% Equity Total 90.72% the global credit crisis. Notwithstanding this, independent directors consider New Zealand dollar Cash 9.28% that Fisher Funds has met all its Agreement obligations and the Agreement will Cash Total 9.28% therefore continue for a further five years under existing terms and conditions. Kingfish Limited PO Box 33549, Takapuna, Auckland, New Zealand. TOTAL 100.00% Phone +64 9 489 7094 Fax +64 9 489 7139 email: [email protected] www.kingfishlimited.co.nz

1986B kingfish newsletter dec 08.indd 4 4/02/2009 2:21:17 p.m. 1986B kingfish newsletter dec 08.indd 1 4/02/2009 2:21:15 p.m. Mar 05 Jun 05 Sep 05 Dec 05 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 rightsrights issue issue to to operate operate a a more more prudent prudent PortfolioPortfolio ChangesChanges kingfishkingfish netnet assetasset valuevalue andand shareshare priceprice performanceperformance balancebalance sheet sheet whilst whilst at at the the same same time time DuringDuring the the December December quarter quarter we we reduced reduced suspendingsuspending dividend dividend payments. payments. The The ourour weighting weighting in in RakonRakon andand increased increased 33 February February 2009 2009 $2.45$$2.452$.24.545 companycompany confirmed confirmed that that cashcash flowflow in in ourour cash cash weighting weighting slightly.slightly. WeWe diddid notnot $2.20$$2.202$.2.020 NANVAV thethe business business remains remains very very strong strong and and it it makemake significant significant portfolioportfolio changeschanges inin thethe ShSahraer eP rPicreice SSHAREHARE Buy BuyBACKBACK – – NOTICE NOTICE TO TO SHAREHOLDERS SHAREHOLDERS FOR FOR $1.95$$1.951$.19.595 remainsremains “well “well positioned positioned to to rideride outout the the DecemberDecember quarter quarter as as we we are are pleased pleased PERIODPERIOD 1 1 S SEPTEMBEREPTEMBER 2008 2008 TO TO 3 3 FEBR FEBRuuARARyy 2009 2009 $1.70$$1.701$.17.070 toughtough operating operating conditionsconditions inin thethe domesticdomestic withwith both both the the quality quality of of the the businesses businesses $1.45$$1.451$.14.545 economyeconomy and and then then take take full full advantage advantage of of andand the the composition composition ofof the the portfolio.portfolio. $1.20$$1.201$.12.020 thethe inevitable inevitable upturn upturn in in the the residential residential ThisThis notice notice to to shareholdersshareholders is is issued issued in in accordanceaccordance withwith the the $0.95$0.95 housinghousing market.” market.” The The fall fall in in the the Metlifecare Metlifecare $0$.09.595 OutlookOutlook / / Strategy Strategy requirementsrequirements of of section section 65(2A)65(2A) ofof the the CompaniesCompanies ActAct 1993.1993. $0.70$$0.700$.07.070 shareshare price price has has had had a a significant significant negativenegative TheThe fundamentals fundamentals of of the the Kingfish Kingfish portfolioportfolio

5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 r r n n c c r r c c r r n n p p c c r r c c impactimpact on on Kingfishs’ Kingfishs’ NAV,NAV, andand wewe believebelieve areare compelling, compelling, despite despite continued continued a a u u epep e e a a unun epep e e a a u u e e e e a a unun epep e e TheThe Kingfish Kingfish BoardBoard announcedannounced onon 3131 OctoberOctober 20082008 its its intention intention to to M M J J S S D D M M J J S S D D M M J J S S D D M M J J S S D D thatthat the the shares shares are are now now oversold oversold with with earningsearnings downgrades. downgrades. The The portfolio portfolio is is continuecontinue its its shareshare buybackbuyback programmeprogramme ofof KingfishKingfish ordinary ordinary shares.shares. thethe Metlifecare Metlifecare share share price price now now trading trading wellwell placed placed to to weather weather the the storm storm and and is is TheThe buyback buyback period period is is from from 6 6 November November 2008 2008 to to 31 31 October October 2009 2009 atat less less than than half half its its net net asset asset backing. backing. consistentconsistent with with our our time-tested time-tested approachapproach ofof investing investing in in qualityquality growthgrowth companiescompanies andand is is for for up up to to a a maximum maximum of of 4,238,000 4,238,000 shares. shares. RelativeRelative PerformancePerformance 31/12/200831/12/2008 11 Month Month 33 Month Month SinceSince Inception Inception TheThe Mainfreight Mainfreight interim interim net net profit profit result result withwith a a long long term term investment investment horizon. horizon. While While waswas up up 9%, 9%, although although it it fell fell slightly slightly in in the the InIn accordance accordance with with the the requirements requirements of of section section 65(2A)65(2A) ofof the the CompaniesCompanies KingfishKingfish NAVNAV -1.8%-1.8% -17.7%-17.7% 1.3%1.3% thethe current current environment environment is is challenging challenging secondsecond quarter. quarter. Trading Trading in in the the third third quarter quarter forfor all all investors, investors, we we know know that that when when ActAct 1993, 1993, Kingfish Kingfish LimitedLimited advisesadvises that that betweenbetween 1 1 SeptemberSeptember 20082008 andand 9090 Day Day Bank Bank Bill Bill Index Index 1.1%1.1% 3.7%3.7% 98.4%98.4% hashas been been encouraging, encouraging, and and although although the the investorsinvestors again again focus focus on on rational rational valuationvaluation 33 February February 2009, 2009, it it purchased purchased a a total total of of 62,617 62,617 ordinary ordinary shares shares at at a a (NZD)(NZD) + + 7% 7% p.a. p.a. companycompany admits admits to to low low visibility visibility of of its its benchmarksbenchmarks and and quality quality measures, measures, totaltotal cost cost of of $50,248.83 $50,248.83 at at an an average average price price of of $0.8025. $0.8025. All All these these shares shares NZSXNZSX Small Small Cap Cap Index Index (NZSCI) (NZSCI) -6.2%-6.2% -21.3%-21.3% -7.1%-7.1% forwardforward workload, workload, its its domestic domestic businessbusiness thethe Kingfish Kingfish portfolioportfolio will will stand stand out.out. acquiredacquired under under the the buyback buyback programme programme are are included included in in treasury treasury stock. stock. NZSXNZSX Mid Mid Cap Cap Index Index (NZSEMC) (NZSEMC) -2.6%-2.6% -14.3%-14.3% 0.8%0.8% hashas grown grown market market share share as as competitors competitors havehave struggled. struggled. Freightways Freightways announced announced NZSXNZSX 50 50 Gross Gross Index Index (NZ50G) (NZ50G) -0.2%-0.2% -12.1%-12.1% 4.7%4.7% AsAs the the shares shares acquired acquired under under the the buyback buyback programme programme were were thatthat its its Q1 Q1 2009 2009 trading trading performance performance was was solid,solid, with with net net profit profit upup 3%.3%. Its Its Information Information purchasedpurchased on-market on-market via via an an appointed appointed independent independent broker, broker, ManagementManagement division division continues continues to to performperform thethe sellers sellers of of these these shares shares are are not not known known to to the the company. company. strongly,strongly, albeit albeit that that it it currently currently only only CarmelCarmel Fisher, Fisher, Managing Managing Director Director representsrepresents around around 15% 15% of of group group profits. profits. FisherFisher Funds Funds Quarterly Quarterly review review sellingselling pressure pressure in in a a very very illiquid illiquid stock. stock. FisherFisher Funds Funds Management Management Limited Limited TheThe December December quarter quarter was was another another dismal dismal PumpkinPumpkin Patch Patch unwound unwound its its currency currency LikeLike most most share share portfolios, portfolios, the the significantsignificant 33 February February 2009 2009 oneone for for world world equity equity markets, markets, although although hedges,hedges, releasing releasing $30m $30m for for debt debt reduction. reduction. marketmarket decline decline has has left left the the KingfishKingfish thethe New New Zealand Zealand sharemarket sharemarket was was an an ItIt has has also also had had some some success success in in reducing reducing portfolioportfolio looking looking veryvery attractiveattractive in in outperformeroutperformer with with the the NZ50 NZ50 Gross Gross Index Index stockstock levels, levels, although although as as with with most most valuationvaluation terms. terms. BasedBased onon currentcurrent decliningdeclining 12.1% 12.1% for for the the December December quarter quarter retailers,retailers, short short term term profitability profitability is is underunder analysts’analysts’ consensus consensus earnings earnings forecasts, forecasts, comparedcompared with with a a 22% 22% decline decline posted posted by by the the pressure.pressure. Michael Michael Hill Hill International International is is whatswhats comingcoming upup thethe Kingfish Kingfish portfolioportfolio hashas a a 1212 monthmonth MSCIMSCI World World Index Index in in local local currency currency terms. terms. nono exception, exception, withwith its its firstfirst halfhalf trading trading forwardforward weighted weighted average average P/E P/E of of 9.5x 9.5x resultresult likely likely to to be be ‘materially ‘materially below below PublicationPublication ofof AnnualAnnual Report:Report: May May 2009 2009 BankingBanking failures, failures, plunging plunging commodity commodity andand weighted weighted average average earnings earnings per per share share lastlast year’s year’s record record interim interim result’. result’. The The prices,prices, declining declining house house prices, prices, falling falling growthgrowth of of 17%. 17%. Gearing Gearing remains remains low low with with AnnualAnnual Shareholders Shareholders Meeting: Meeting: July July 2009 2009 companycompany has has announced announced an an innovative innovative consumerconsumer and and business business confidence confidence allall hadhad weightedweighted average average interest interest cover cover of of the the internalinternal restructuring restructuring which which we we believe believe KingfishKingfish UpdateUpdate ReportsReports willwill bebe producedproduced for for the the DecemberDecember andand June June quarters.quarters. TheThe AnnualAnnual andand Interim Interim ReportsReports willwill bebe producedproduced for for the the MarchMarch anan impact, impact, despite despite concerted concerted efforts efforts byby KingfishKingfish portfolioportfolio companiescompanies beingbeing overover addsadds long long term term value value that that the the market market andand September September quarters. quarters. Should Should you you prefer prefer to to receive receive future future Update Update newsletters newsletters electronicallyelectronically pleaseplease emailemail usus atat [email protected]@kingfishlimited.co.nz. GovernmentsGovernments and and monetary monetary authorities authorities 9.0x.9.0x. It It is is comforting comforting to to knowknow that that the the isis currently currently giving giving no no credit credit for. for. worldwide.worldwide. With With this this backdrop, backdrop, it it is is easy easy KingfishKingfish companiescompanies areare notnot significantlysignificantly toto see see why why equity equity markets markets have have struggled. struggled. impactedimpacted by by the the credit credit crisis crisis that that is is at at RakonRakon announced announced a a very very disappointing disappointing TheThe quarter quarter was was all all about about investor investor thethe heart heart of of the the global global markets’ markets’ woes. woes. interiminterim result, result, with with a a weak weak second second half half uncertaintyuncertainty and and selling selling was was indiscriminate, indiscriminate, expected.expected. It It is is a a beneficiary beneficiary ofof a alower lower withwith the the shares shares of of well-performing, well-performing, NoneNone of of the the news news from from the the Kingfish Kingfish NZ$/US$NZ$/US$ cross, cross, although although the the impact impact is is defensivedefensive businesses businesses being being sold sold alongside alongside portfolioportfolio companiescompanies duringduring the the quarterquarter notnot expected expected until until 2010F2010F duedue to to existingexisting thosethose of of poor poor quality quality businesses. businesses. gavegave us us cause cause for for concern, concern, though though it it is is clear clear currencycurrency hedging. hedging. We We had had anticipated anticipated that that thatthat businesses businesses in in all all sectors sectors are are feeling feeling RakonRakon would would find find the the currentcurrent environmentenvironment PortfolioPortfolio ReviewReview thethe impact impact of of a a slowing slowing global global economy. economy. difficultdifficult andand havehave activelyactively reducedreduced our our DuringDuring the the quarter, quarter, the the Kingfish Kingfish portfolioportfolio RymanRyman Healthcare Healthcare posted posted a a solid solid result result holdingholding over over the the past past six six months. months. We We have have declineddeclined 17.7%, 17.7%, underperforming underperforming forfor the the half half year year ended ended 30 30 September September beenbeen very very pleased pleased to to see see both both Wakefield Wakefield thethe NZ50G NZ50G (-12.1%). (-12.1%). Most Most of of this this withwith underlying underlying earnings earnings up up 10% 10% and and cash cash HealthHealth and and Abano Abano continue continue to to performperform underperformanceunderperformance can can be be attributed attributed flowflow remaining remaining strong.strong. DemandDemand for for its its strongly,strongly, with with the the healthcare healthcare industry industry toto our our holding holding in in Metlifecare, Metlifecare, which which retirementretirement villagevillage unitsunits remains remains strongstrong beingbeing less less impacted impacted by by the the domestic domestic declineddeclined by by 40% 40% as as small small parcels parcels of of shares shares withwith sales sales of of occupation occupation rightsrights upup 11%11% recession.recession. Similarly, Similarly, Delegat’s Delegat’s continues continues werewere traded traded throughout throughout the the period. period. The The andand occupancy occupancy at at record record highs. highs. Realised Realised toto go go from from strength strength to to strength strength with with declinedecline in in the the Metlifecare Metlifecare share share price price profitsprofits in in the the secondsecond halfhalf areare expectedexpected strongstrong case case sales sales at at favourable favourable export export waswas at at odds odds with with the the performance performance of of toto be be as as good, good, if if not not better better than than the the firstfirst pricesprices for for its its premium premium New New Zealand Zealand thethe underlying underlying business business and and reflects reflects half.half. Metlifecare Metlifecare has has indicated indicated that that it it wines.wines. It It is is a a major major beneficiary beneficiary ofof a a intendsintends to to raise raise $30m-$40m $30m-$40m through through a a decliningdeclining NZ$ NZ$ in in the the medium medium term. term.

TheThe information information andand anyany opinionsopinions hereinherein areare basedbased onon sources sources believedbelieved reliable, reliable, butbut the the writerwriter makesmakes nono representations representations as as toto its its accuracyaccuracy or or completeness.completeness. All All opinions opinions reflect reflect the the writer’swriter’s judgement judgement onon the the datedate ofof this this report report andand areare subject subject to to changechange withoutwithout notice.notice.

1986B1986B kingfish kingfish newsletter newsletter dec dec 08.indd 08.indd 2-3 2-3 4/02/20094/02/2009 2:21:17 2:21:17 p.m. p.m. rightsrights issue issue to to operate operate a a more more prudent prudent PortfolioPortfolio ChangesChanges kingfishkingfish netnet assetasset valuevalue andand shareshare priceprice performanceperformance balancebalance sheet sheet whilst whilst at at the the same same time time DuringDuring the the December December quarter quarter we we reduced reduced suspendingsuspending dividend dividend payments. payments. The The ourour weighting weighting in in RakonRakon andand increased increased 33 February February 2009 2009 $2.45$$2.452$.24.545 companycompany confirmed confirmed that that cashcash flowflow in in ourour cash cash weighting weighting slightly.slightly. WeWe diddid notnot $2.20$$2.202$.2.020 NANVAV thethe business business remains remains very very strong strong and and it it makemake significant significant portfolioportfolio changeschanges inin thethe ShSahraer eP rPicreice SSHAREHARE Buy BuyBACKBACK – – NOTICE NOTICE TO TO SHAREHOLDERS SHAREHOLDERS FOR FOR $1.95$$1.951$.19.595 remainsremains “well “well positioned positioned to to rideride outout the the DecemberDecember quarter quarter as as we we are are pleased pleased PERIODPERIOD 1 1 S SEPTEMBEREPTEMBER 2008 2008 TO TO 3 3 FEBR FEBRuuARARyy 2009 2009 $1.70$$1.701$.17.070 toughtough operating operating conditionsconditions inin thethe domesticdomestic withwith both both the the quality quality of of the the businesses businesses $1.45$$1.451$.14.545 economyeconomy and and then then take take full full advantage advantage of of andand the the composition composition ofof the the portfolio.portfolio. $1.20$$1.201$.12.020 thethe inevitable inevitable upturn upturn in in the the residential residential ThisThis notice notice to to shareholdersshareholders is is issued issued in in accordanceaccordance withwith the the $0.95$0.95 housinghousing market.” market.” The The fall fall in in the the Metlifecare Metlifecare $0$.09.595 OutlookOutlook / / Strategy Strategy requirementsrequirements of of section section 65(2A)65(2A) ofof the the CompaniesCompanies ActAct 1993.1993. $0.70$$0.700$.07.070 shareshare price price has has had had a a significant significant negativenegative TheThe fundamentals fundamentals of of the the Kingfish Kingfish portfolioportfolio

5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 r r n n c c r r c c r r n n p p c c r r c c impactimpact on on Kingfishs’ Kingfishs’ NAV,NAV, andand wewe believebelieve areare compelling, compelling, despite despite continued continued a a u u epep e e a a unun epep e e a a u u e e e e a a unun epep e e TheThe Kingfish Kingfish BoardBoard announcedannounced onon 3131 OctoberOctober 20082008 its its intention intention to to M M J J S S D D M M J J S S D D M M J J S S D D M M J J S S D D thatthat the the shares shares are are now now oversold oversold with with earningsearnings downgrades. downgrades. The The portfolio portfolio is is continuecontinue its its shareshare buybackbuyback programmeprogramme ofof KingfishKingfish ordinary ordinary shares.shares. thethe Metlifecare Metlifecare share share price price now now trading trading wellwell placed placed to to weather weather the the storm storm and and is is TheThe buyback buyback period period is is from from 6 6 November November 2008 2008 to to 31 31 October October 2009 2009 atat less less than than half half its its net net asset asset backing. backing. consistentconsistent with with our our time-tested time-tested approachapproach ofof investing investing in in qualityquality growthgrowth companiescompanies andand is is for for up up to to a a maximum maximum of of 4,238,000 4,238,000 shares. shares. RelativeRelative PerformancePerformance 31/12/200831/12/2008 11 Month Month 33 Month Month SinceSince Inception Inception TheThe Mainfreight Mainfreight interim interim net net profit profit result result withwith a a long long term term investment investment horizon. horizon. While While waswas up up 9%, 9%, although although it it fell fell slightly slightly in in the the InIn accordance accordance with with the the requirements requirements of of section section 65(2A)65(2A) ofof the the CompaniesCompanies KingfishKingfish NAVNAV -1.8%-1.8% -17.7%-17.7% 1.3%1.3% thethe current current environment environment is is challenging challenging secondsecond quarter. quarter. Trading Trading in in the the third third quarter quarter forfor all all investors, investors, we we know know that that when when ActAct 1993, 1993, Kingfish Kingfish LimitedLimited advisesadvises that that betweenbetween 1 1 SeptemberSeptember 20082008 andand 9090 Day Day Bank Bank Bill Bill Index Index 1.1%1.1% 3.7%3.7% 98.4%98.4% hashas been been encouraging, encouraging, and and although although the the investorsinvestors again again focus focus on on rational rational valuationvaluation 33 February February 2009, 2009, it it purchased purchased a a total total of of 62,617 62,617 ordinary ordinary shares shares at at a a (NZD)(NZD) + + 7% 7% p.a. p.a. companycompany admits admits to to low low visibility visibility of of its its benchmarksbenchmarks and and quality quality measures, measures, totaltotal cost cost of of $50,248.83 $50,248.83 at at an an average average price price of of $0.8025. $0.8025. All All these these shares shares NZSXNZSX Small Small Cap Cap Index Index (NZSCI) (NZSCI) -6.2%-6.2% -21.3%-21.3% -7.1%-7.1% forwardforward workload, workload, its its domestic domestic businessbusiness thethe Kingfish Kingfish portfolioportfolio will will stand stand out.out. acquiredacquired under under the the buyback buyback programme programme are are included included in in treasury treasury stock. stock. NZSXNZSX Mid Mid Cap Cap Index Index (NZSEMC) (NZSEMC) -2.6%-2.6% -14.3%-14.3% 0.8%0.8% hashas grown grown market market share share as as competitors competitors havehave struggled. struggled. Freightways Freightways announced announced NZSXNZSX 50 50 Gross Gross Index Index (NZ50G) (NZ50G) -0.2%-0.2% -12.1%-12.1% 4.7%4.7% AsAs the the shares shares acquired acquired under under the the buyback buyback programme programme were were thatthat its its Q1 Q1 2009 2009 trading trading performance performance was was solid,solid, with with net net profit profit upup 3%.3%. Its Its Information Information purchasedpurchased on-market on-market via via an an appointed appointed independent independent broker, broker, ManagementManagement division division continues continues to to performperform thethe sellers sellers of of these these shares shares are are not not known known to to the the company. company. strongly,strongly, albeit albeit that that it it currently currently only only CarmelCarmel Fisher, Fisher, Managing Managing Director Director representsrepresents around around 15% 15% of of group group profits. profits. FisherFisher Funds Funds Quarterly Quarterly review review sellingselling pressure pressure in in a a very very illiquid illiquid stock. stock. FisherFisher Funds Funds Management Management Limited Limited TheThe December December quarter quarter was was another another dismal dismal PumpkinPumpkin Patch Patch unwound unwound its its currency currency LikeLike most most share share portfolios, portfolios, the the significantsignificant 33 February February 2009 2009 oneone for for world world equity equity markets, markets, although although hedges,hedges, releasing releasing $30m $30m for for debt debt reduction. reduction. marketmarket decline decline has has left left the the KingfishKingfish thethe New New Zealand Zealand sharemarket sharemarket was was an an ItIt has has also also had had some some success success in in reducing reducing portfolioportfolio looking looking veryvery attractiveattractive in in outperformeroutperformer with with the the NZ50 NZ50 Gross Gross Index Index stockstock levels, levels, although although as as with with most most valuationvaluation terms. terms. BasedBased onon currentcurrent decliningdeclining 12.1% 12.1% for for the the December December quarter quarter retailers,retailers, short short term term profitability profitability is is underunder analysts’analysts’ consensus consensus earnings earnings forecasts, forecasts, comparedcompared with with a a 22% 22% decline decline posted posted by by the the pressure.pressure. Michael Michael Hill Hill International International is is whatswhats comingcoming upup thethe Kingfish Kingfish portfolioportfolio hashas a a 1212 monthmonth MSCIMSCI World World Index Index in in local local currency currency terms. terms. nono exception, exception, withwith its its firstfirst halfhalf trading trading forwardforward weighted weighted average average P/E P/E of of 9.5x 9.5x resultresult likely likely to to be be ‘materially ‘materially below below PublicationPublication ofof AnnualAnnual Report:Report: May May 2009 2009 BankingBanking failures, failures, plunging plunging commodity commodity andand weighted weighted average average earnings earnings per per share share lastlast year’s year’s record record interim interim result’. result’. The The prices,prices, declining declining house house prices, prices, falling falling growthgrowth of of 17%. 17%. Gearing Gearing remains remains low low with with AnnualAnnual Shareholders Shareholders Meeting: Meeting: July July 2009 2009 companycompany has has announced announced an an innovative innovative consumerconsumer and and business business confidence confidence allall hadhad weightedweighted average average interest interest cover cover of of the the internalinternal restructuring restructuring which which we we believe believe KingfishKingfish UpdateUpdate ReportsReports willwill bebe producedproduced for for the the DecemberDecember andand June June quarters.quarters. TheThe AnnualAnnual andand Interim Interim ReportsReports willwill bebe producedproduced for for the the MarchMarch anan impact, impact, despite despite concerted concerted efforts efforts byby KingfishKingfish portfolioportfolio companiescompanies beingbeing overover addsadds long long term term value value that that the the market market andand September September quarters. quarters. Should Should you you prefer prefer to to receive receive future future Update Update newsletters newsletters electronicallyelectronically pleaseplease emailemail usus atat [email protected]@kingfishlimited.co.nz. GovernmentsGovernments and and monetary monetary authorities authorities 9.0x.9.0x. It It is is comforting comforting to to knowknow that that the the isis currently currently giving giving no no credit credit for. for. worldwide.worldwide. With With this this backdrop, backdrop, it it is is easy easy KingfishKingfish companiescompanies areare notnot significantlysignificantly toto see see why why equity equity markets markets have have struggled. struggled. impactedimpacted by by the the credit credit crisis crisis that that is is at at RakonRakon announced announced a a very very disappointing disappointing TheThe quarter quarter was was all all about about investor investor thethe heart heart of of the the global global markets’ markets’ woes. woes. interiminterim result, result, with with a a weak weak second second half half uncertaintyuncertainty and and selling selling was was indiscriminate, indiscriminate, expected.expected. It It is is a a beneficiary beneficiary ofof a alower lower withwith the the shares shares of of well-performing, well-performing, NoneNone of of the the news news from from the the Kingfish Kingfish NZ$/US$NZ$/US$ cross, cross, although although the the impact impact is is defensivedefensive businesses businesses being being sold sold alongside alongside portfolioportfolio companiescompanies duringduring the the quarterquarter notnot expected expected until until 2010F2010F duedue to to existingexisting thosethose of of poor poor quality quality businesses. businesses. gavegave us us cause cause for for concern, concern, though though it it is is clear clear currencycurrency hedging. hedging. We We had had anticipated anticipated that that thatthat businesses businesses in in all all sectors sectors are are feeling feeling RakonRakon would would find find the the currentcurrent environmentenvironment PortfolioPortfolio ReviewReview thethe impact impact of of a a slowing slowing global global economy. economy. difficultdifficult andand havehave activelyactively reducedreduced our our DuringDuring the the quarter, quarter, the the Kingfish Kingfish portfolioportfolio RymanRyman Healthcare Healthcare posted posted a a solid solid result result holdingholding over over the the past past six six months. months. We We have have declineddeclined 17.7%, 17.7%, underperforming underperforming forfor the the half half year year ended ended 30 30 September September beenbeen very very pleased pleased to to see see both both Wakefield Wakefield thethe NZ50G NZ50G (-12.1%). (-12.1%). Most Most of of this this withwith underlying underlying earnings earnings up up 10% 10% and and cash cash HealthHealth and and Abano Abano continue continue to to performperform underperformanceunderperformance can can be be attributed attributed flowflow remaining remaining strong.strong. DemandDemand for for its its strongly,strongly, with with the the healthcare healthcare industry industry toto our our holding holding in in Metlifecare, Metlifecare, which which retirementretirement villagevillage unitsunits remains remains strongstrong beingbeing less less impacted impacted by by the the domestic domestic declineddeclined by by 40% 40% as as small small parcels parcels of of shares shares withwith sales sales of of occupation occupation rightsrights upup 11%11% recession.recession. Similarly, Similarly, Delegat’s Delegat’s continues continues werewere traded traded throughout throughout the the period. period. The The andand occupancy occupancy at at record record highs. highs. Realised Realised toto go go from from strength strength to to strength strength with with declinedecline in in the the Metlifecare Metlifecare share share price price profitsprofits in in the the secondsecond halfhalf areare expectedexpected strongstrong case case sales sales at at favourable favourable export export waswas at at odds odds with with the the performance performance of of toto be be as as good, good, if if not not better better than than the the firstfirst pricesprices for for its its premium premium New New Zealand Zealand thethe underlying underlying business business and and reflects reflects half.half. Metlifecare Metlifecare has has indicated indicated that that it it wines.wines. It It is is a a major major beneficiary beneficiary ofof a a intendsintends to to raise raise $30m-$40m $30m-$40m through through a a decliningdeclining NZ$ NZ$ in in the the medium medium term. term.

TheThe information information andand anyany opinionsopinions hereinherein areare basedbased onon sources sources believedbelieved reliable, reliable, butbut the the writerwriter makesmakes nono representations representations as as toto its its accuracyaccuracy or or completeness.completeness. All All opinions opinions reflect reflect the the writer’swriter’s judgement judgement onon the the datedate ofof this this report report andand areare subject subject to to changechange withoutwithout notice.notice.

1986B1986B kingfish kingfish newsletter newsletter dec dec 08.indd 08.indd 2-3 2-3 4/02/20094/02/2009 2:21:17 2:21:17 p.m. p.m. December 2008 Quarter

Dear Shareholders Kingfish was established in 2004 The last quarter of 2008 ended, for to invest, through its manager, in a most, with a big sigh of relief. portfolio of well researched small cap at a glance New Zealand companies. It provides The Kingfish portfolio suffered some of its Performance for period 31/03/04 a single vehicle through which to heaviest falls in its history. The Net Asset to 31/12/2008 (since listing) invest in these stocks, primarily on Value dropped 18% from $1.19 to $0.98, Net Asset Value $0.98 1.3%* a long term buy and hold basis. The while the share price declined from $0.96 Dividends Paid $0.15 15.0% tax structure is efficient, especially to $0.84 – a period end discount of 14% Share Price $0.84 -16.0% now that Kingfish has “PIE” status. to the underlying NAV. Share volumes *Based on adjusted Net Asset Value Despite the difficult current market per Share at listing of $0.9684, traded during the quarter were relatively representing the issue price of $1.00 conditions, directors consider that light – 2.3% of the total shares outstanding. less issue costs of $0.0316 per share. the company’s investment rationale This perhaps reflects that shareholders and focus remain as relevant today as continue to recognise the underlying Performance for the three months when the company was established. 30/9/2008 to 31/12/2008 value of the portfolio companies and are “holding on” during the rough patch. The company’s bias is towards Net Asset Value -17.7% capital growth but during the past Share Price -12.5% This newsletter contains, among other five years a total of 15 cents per matters: share has been paid in dividends. Notable December quarter share » Fisher Funds’ comments on portfolio price falls, including dividends Our next report to you will be companies for the quarter (local currency terms) in May when we release our full Comvita -24.3% » A formal report on share buybacks for year results to 31 March 2009. Opus Intl -27.5% the last buyback period - in November, With best wishes on behalf of the company’s share buyback Metlifecare -40.5% the Board, programme was renewed and your Rakon Limited -42.3% Board and Manager continually Sealegs -64.3% monitor its implementation Portfolio Holdings Summary, as at » Confirmation of the renewal of 31/12/2008 the Management Agreement Listed Companies % Holding between Kingfish Limited and Fisher Rob Challinor, Chairman Funds Management Limited. Kingfish Limited - 3 February 2009 Abano Healthcare 1.29% Comvita 1.46% Delegats 7.08% Freightways 10.08% renewal of management agreement Mainfreight 16.24% Metlifecare 8.46% In March 2004 Kingfish Limited signed a Management Agreement (the Michael Hill 5.99% "Agreement") with Fisher Funds Management Limited to manage our NZ Exchange 5.17% investment portfolio. The Agreement was for an initial five year term from Opus International 2.89% 31 March 2004, following Kingfish raising funds and listing on the NZX. The Pumpkin Patch 3.86% Agreement provides for continuation for a further five year term. The company Rakon 1.95% is entitled to decline to renew if the Board is dissatisfied with the Manager’s Ryman Healthcare 18.71% performance of “Management Services” as defined in the Agreement. Sealegs 0.17% Your independent directors have considered the comprehensive obligations Wakefield Hospital 4.65% of the Management Services clauses. Short term investment performance has Non-listed Companies been disappointing, as it has been for other NZ equity funds reviewed, reflecting Waterman Holdings 2.72% Equity Total 90.72% the global credit crisis. Notwithstanding this, independent directors consider New Zealand dollar Cash 9.28% that Fisher Funds has met all its Agreement obligations and the Agreement will Cash Total 9.28% therefore continue for a further five years under existing terms and conditions. Kingfish Limited PO Box 33549, Takapuna, Auckland, New Zealand. TOTAL 100.00% Phone +64 9 489 7094 Fax +64 9 489 7139 email: [email protected] www.kingfishlimited.co.nz

1986B kingfish newsletter dec 08.indd 4 4/02/2009 2:21:17 p.m. 1986B kingfish newsletter dec 08.indd 1 4/02/2009 2:21:15 p.m. Mar 05 Jun 05 Sep 05 Dec 05 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08