Kingfish well placed to benefit from NZ economic recovery

May 20, 2011

Adjusted Net Asset Value (NAV) per share* increases by 9.8% in the year to March 31, 2011
Total shareholder return* of 16.3% beats major indices
Dividends paid in 2011 total 8.69 cents per share, delivering an exceptional gross yield
First quarter 2012 dividend of 2.26 cents per share to be paid in June
Portfolio well-placed to benefit from a broad New Zealand economic recovery

Specialist New Zealand companies investor Kingfish Limited (NZX: KFL) today announced a profit after tax for the 12 months to March 31, 2011 of $9.74 million. The result – which includes gains in the value of the Kingfish investment portfolio as well as interest and dividend income – builds on the prior year’s $24.45 million gain.

Total shareholder return (TSR), which reflects gains in the Kingfish share price and dividends*, amounted to 16.3% for the 12 months. The return compares with a 5.3% return on the NZX50 index, the basket of shares representing New Zealand’s top 50 listed companies.

NAV per share, adjusted to include dividends, rose 9.8%* over the year. Kingfish chairman James Miller said: “Kingfish has delivered a strong result in 2011. In spite of the very tough market, it has met its objectives to provide investors with a diversified portfolio of well-researched New Zealand companies and deliver a competitive rate of return.”

In accordance with Kingfish’s policy to pay out 2 per cent of its NAV per quarter, the company paid four tax-paid dividends during the year amounting to a total of 8.69 cents per share. On May 20 the Kingfish Board also declared a 2012 first quarter dividend of 2.26 cents per share to be paid to shareholders on June 24, 2011.

Mr Miller said he was pleased the discount between the Kingfish share price and NAV (adjusted for outstanding Kingfish warrants) had narrowed from 18.5% at the start of the year to 10.5% at year end.

“The Board is fully committed to continually looking at innovative ways to narrow this discount. Over the last year initiatives such as the renewal of the share buy-back programme, the continuation of a quarterly dividend plan and our engagement of an investor relations manager have helped the value of the investment portfolio to be reflected in the Kingfish share price,” Mr Miller said. Kingfish manager Fisher Funds Management said the portfolio had faced very difficult economic conditions over the year, but had nevertheless performed well.

Fisher Funds managing director Carmel Fisher said: “After a tough first quarter when Kingfish’s adjusted NAV declined by 7.2% the adjusted NAV rose in each of the subsequent three quarters to finish up a creditable 9.8% for the year.” During the year Kingfish added three new companies to the portfolio – Kathmandu, Fisher & Paykel Healthcare and Infratil. These were funded by trimming the portfolio’s investment in several existing holdings, notably Pumpkin Patch and Delegats’ as they face headwinds in their respective businesses. No holding has suffered a deterioration in prospects sufficient for it to be sold out completely.

The fundamentals of the Kingfish portfolio are sound relative to the broader market. According to the consensus of analysts’ forecasts, the earnings of Kingfish’s investments are expected to grow by 24% in the coming year and their shares trade at a price of around 13.4 times those earnings. This compares to the broader market which trades at 15.1 times earnings.

Ms Fisher said: “The missing ingredient for some time now has been economic growth. Shareholders should be pleased with Kingfish’s returns and its outperformance of the broader market. If we can maintain this outperformance when the economic recovery finally emerges shareholders will have something to be very pleased about.”

ENDS

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