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Kingfish increases Net Asset Value

14 October 2004

Kingfish increases Net Asset Value of Portfolio by 15.2%
in first six months

The Directors of investment company Kingfish Limited are pleased to announce the results of its first six months of trading to 30 September 2004. The company achieved a $6.7 million surplus after taxation and grew the Net Asset Value of its investment portfolio by 15.2%.

The surplus after taxation includes $ 8.7 million of unrealized gains on investments and is after incurring $ 1.9 million of issue expenses relating to the Initial Public Offering and NZSX listing on 31 March 2004.

“The result was particularly pleasing considering that within six months our manager, Fisher Funds, had not only invested over 80% of the $58.5 million IPO proceeds in a portfolio of quality New Zealand companies but also managed to attain a significant increase in the Net Asset Value” said Kingfish Chairman, Rob Challinor. Mr. Challinor further noted that “the result is all the more impressive given the higher-than-average cash balance held during the period while the portfolio was established.”

The core Kingfish holdings include Waste Management, Metlifecare, Freightways, and Turners Auctions – companies selected because of their track record of growing earnings and sustainable competitive advantage. Fisher Funds Managing Director, Carmel Fisher, said “we expect these companies will be part of the Kingfish portfolio for many years to come”. The Kingfish portfolio currently contains 16 stocks and Fisher Funds expects that by the end of the financial year, a further two or three might be introduced to the portfolio.

At the end of September 2004, approximately 16% of the portfolio was held in cash as Fisher Funds continued to investigate investment opportunities and gradually build exposure in several smaller holdings.

The most significant contributor to the performance of the Kingfish portfolio in the six months to September 2004 was Pumpkin Patch whose shares lifted 65% following its June listing. Strong performances also came from Ryman Healthcare, Metlifecare, Freightways, Waste Management, Mainfreight and Just Water International.

OUTLOOK In spite of commentators calling for a correction in the New Zealand share market, Fisher Funds remains comfortable to be fully invested and is continuing to search for great, small businesses to add to the portfolio. Managing Director, Carmel Fisher, says “as long-term investors, we are focused on buying businesses that will be worth significantly more, and provide a growing income over a three to five year timeframe, so a flat or negative short term outlook is of relatively little concern to us. We have been delighted with the number of investment opportunities that have presented themselves in the past six months, and expect that there will be sufficient new opportunities in the next six months to enable up to 95 % of the portfolio to be invested by the end of the financial year.”

Kingfish will not pay a dividend for the first half year but maintains its dividend policy which is to distribute net income, excluding unrealized investment gains. The Directors intend that imputation credits will be attached to the fullest extent possible.

Mr. Challinor said “Kingfish shares are currently trading at $0.99 which is a discount to Net Asset Value per share. The Board will from time to time consider buying shares or warrants in Kingfish if in its opinion the value of the shares or options do not appropriately reflect the underlying asset value and will shortly announce a policy in this regard. ”

KEY STATISTICS AT A GLANCE As at 30 September 2004
Net Asset Value per share $1.1151
Diluted Net Asset Value per share $1.0575
Shares on issue 58,500,000
Warrants on issue 58,500,000
Warrants are exercisable on any of 31 March 2006, 31 March 2007 or 31 March 2008
As at 13 October 2004
Net Asset Value per share $ 1.1262
Diluted Net Asset Value per share $ 1.0631


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