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.