Kingfish Limited — AGM Information 2019

Jul 31, 2019

KINGFISH LIMITED ANNUAL MEETING OF SHAREHOLDERS 31 July 2019

Agenda

• Preliminary matters

• Chair’s Overview

• Manager’s Review

• Q&A

• Annual Meeting Resolutions

Board of Directors

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Alistair Ryan

Carmel Fisher

Andy Coupe Carol Campbell

Kin fish Team g

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Sam Dickie Snr Portfolio Manager

Zoie Regan Snr Investment Analyst

Matt Peek Investment Analyst

Wayne Burns Corporate Manager

Chair’s Overview

Kin fish’s Investment Ob ectives g j

Absolute Returns

Achieve a high real rate of return, comprising both income and capital growth within acceptable risk parameters

Diversified Portfolio

Access to a diversified portfolio of New Zealand quality, growth stocks through a single tax-efficient vehicle

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Corporate Governance

• Investment Committee

• Management Agreement Renewal

• Performance Fee Reduction

2019 Overview

Net profit	Dividend	NAV per share	Share price
$47.1m (2018: $36.3m)	11.76cps (2018: 11.28cps)	$1.57 (2018: $1.45)	$1.35 (2018: $1.31)
Total shareholder return*	Dividend return	Adjusted NAV return*	Share price discount to NAV^
+13.5% (2018: 12.0%)	+9.0% (2018: +8.7%)	+17.6% (2018: 14.7%)	13.1% (2018: 9.7%)

*These metrics are Non-GAAP measures calculated in accordance with the methodology described in the Kingfish Non-GAAP Financial Information Policy which is available on the Kingfish website.

^Share price discount/(premium) to NAV (including warrant price on a pro-rated basis).

Basic and Diluted Earnings per share

Earnings per Share	2019	2018	2017	2016	2015
Basic Earnings per Share (cents)	24.24	19.62	14.50	16.71	9.85
Diluted Earnings per Share (cents)	23.81	19.51	14.13	16.43	8.99

Use of Shareholder Funds

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Quarter 1, FY 2020

1 A ril – 30 June 2019 p

Total shareholder return Adjusted NAV return +10.1% +5.3% NAV per share Share price $1.62 $1.44 Net profit $18.8m

*These metrics are Non-GAAP measures calculated in accordance with the methodology described in the Kingfish Non-GAAP Financial Information Policy which is available on the Kingfish website.

Warrants

• Warrant holders had the option to convert all or some of their warrants into Kingfish shares in July 2019

• 41.9m warrants were exercised, providing an additional $52.4m to invest in the Kingfish portfolio

Manager’s Review Sam Dickie Senior Portfolio Manager

Let’s start with a quiz…

Which investment has performed the best over the last 15 years (since Kingfish’s inception)?

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Agenda

1. Review of FY2019 2. Portfolio insights 3. How we think 4. Outlook

1. Review of FY2019

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How did the NZ market fare in FY2019?

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‘The Goldilocks economy’ Global growth scare ‘Dovish’ central banks
1
2
3
FY2019 financial year
31 Mar 18 30 Jun 18 30 Sep 18 31 Dec 18 31 Mar 19 30 Jun 19
Note: S&P/NZX50G index; Source: Bloomberg
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The impact of lower interest rates

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Total return for first half calendar 2019 (6 months)

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+19.2% +22.8%
S&P/NZX50G Kingfish
+35.3% +21.6%
Utilities Property
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Notes: Utilities = S&P / NZX All Utilities Sector Index, Property = S&P / NZX All Real Estate Index, * Gross performance return Source: Bloomberg

Strong Manager performance FY2019

Fiscal year to 31 March 2019

+21.2%

+22% +21.2% +20% +18.3% +18% +16% +14% +12% +10% Kingfish gross performance S&P/NZX50G index return

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This has continued FY2020 year to date

Fiscal year FY2020 to date as at 26 July 2019

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+12%
+11.1%
+10.0%
+10%
+8%
+6%
Kingfish gross performance S&P/NZX50G index
return
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Portfolio company performance

-20% 0% 20% 40% 60% 80%	12 / 15 positive Portfolio company return (year to 31 March 2019*)
	Fletcher Buiding Pushpay Holdings Summerset Freightways a2 Milk Delegat Port Of Tauranga Ryman Healthcare F&P Healthcare Restaurant Brands Auckland Airport Infratil Mainfreight Meridian Energy Vista

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Note: * Pushpay and Fletcher Building from date of first investment, only shows positions held at 31 March 2019 Source: Bloomberg

2. Portfolio insights

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What key changes have we made?

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Increases (+14.5%)

Decreases (-8.5%)

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Smaller Larger
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Exits

Entries (+3.5%)

(-9.0%) Note: 31 March 2018 until present, logos show target weight changes of 1.5% or larger only

What went especially well

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FY2019 external sales

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+8%
+13%
NZ$2.95b
(+13%)
+12% +14%
New Zealand Australia
Europe The Americas
Asia
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Movio sales revenue

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$80m
$70m
$60m
$50m
$40m
$30m
$20m
$10m
-
FY16 FY17 FY18 FY19 FY20 FY21 FY22
Note: FY19-FY22 illustrative based on $70m revenue in FY22
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What went especially well

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Investment Portfolio (by value)

“China's birth rate falls despite repeal of one-child policy”

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FY2018 Current
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• Renewable Energy  Data/connectivity

• Airports  Retirement and other

“A2 shifts from a brand to a category, with Nestle and Mengniu now on board”

“China is about to make a second attempt to control the daigou trade with new rules”

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What went against us?

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Australian dwelling commencements

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250,000
200,000
150,000
100,000
50,000
-
FY15 FY16 FY17 FY18 FY19 FY20
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• Best in class, large growth runway, and highly scalable business with operating leverage surprising to the upside

• Company remains relatively young and is transitioning to its next phase of growth

• Maintain small, nursery-sized position

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Note: FY20 from company release (midpoint)

3. How we think

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Key Theme 1: Our culture is critical

• The most successful companies have strong, positive cultures

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• Core values in our culture:

• Totally honest with one another

• Learn from our mistakes

• Create repeatable processes

• Continuous improvement,

  • “build a learning machine”

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• Focus on what is most important

• Delivering performance for Kingfish investors

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Key Theme 2: Genuine long-term thinking is critical, yet rare

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Bill Gates

Steve Jobs

Jeff Bezos

Don Braid

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Key Theme 3: Deep, differentiated proprietary research

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What we
strive for
Examples
•
Subject matter experts
•
Long term focus
Proprietary research + (cumulative, enduring)
•
Deep domain expertise Differentiated insights
(e.g. competitors, customers)
•
Unique analysis
Strong understanding
Fundamental understanding
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What everyone does
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Key Theme 4: When the story changes, change your mind

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• Key performance metrics not improving

• • Rolling-up dentists problematic

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• Growth strategy diminished

• Increasing long term challenges for core

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• Reduced confidence in management

• Poor execution in core business

• Evidence moat is less strong than we thought

• Original investment thesis plays out

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4. Outlook

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Outlook

• New Zealand economy is in a late cycle slowdown, but still growing

• Laser-like focus on honing our culture and process

• Think long term – and mean it!

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• Deep, differentiated proprietary research = Active portfolio management

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Quiz results

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$25,000 invested in 2004 would be worth this much today...
$110,000
$86,000
$81,000
$70,000
$61,000
$55,000
$39,000
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KFL NZ Equity
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BRK/A US Equity
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Source: Bloomberg (in NZD), total shareholder returns with net dividends reinvested from 31 March 2004 to 19 July 2019, amounts have been rounded to the nearest $1,000, Kingfish excludes warrants.

General Questions from Shareholders (not relating to resolutions)

Annual Meeting 2019 resolutions

2019 Annual Meeting Resolutions

• Introduce and propose

• Discussion, questions

• Enter your vote on voting paper and lodge your voting paper at end of resolutions

Matters of Business

• Annual Report

• Resolutions:

– Re-elect Alistair Ryan

– Re-elect Carmel Fisher

– Auditor remuneration

• Constitution changes

Proxy Count

Resolution	For	Against	Discretionary	Total	Abstain
Re-elect Alistair Ryan	14,768,712	114,121	732,599	15,615,432	3,000
Re-elect Carmel Fisher	14,840,980	72,305	703,272	15,616,557	1,875
Auditor remuneration	13,753,095	201,656	1,593,073	15,547,824	70,608
Constitution amendments	13,685,203	135,639	1,521,260	15,342,102	276,330

Proxy votes to date: 15.6 million

Resolution 1 Re-election of Alistair Ryan

To re-elect Alistair Ryan as a Director of Kingfish Limited

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Resolution 2 Re-election of Carmel Fisher

To re-elect Carmel Fisher as a Director of Kingfish Limited

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Resolution 3 Auditor Remuneration

That the Board of Directors be authorised to fix the remuneration of the auditor for the ensuing year

Resolution 4 Constitution changes

To amend the existing Constitution of the company as marked up in the Constitution described in the Explanatory Notes to the Notice of Meeting, and tabled at the Annual Meeting of Shareholders on 31 July 2019.

Conclusion

• Complete and sign voting paper

• Voting papers in the voting boxes

• If you need a voting paper please see Computershare

• Results to NZX

Thank you