Kingfish Limited Listed Investment Company New Zealand

How is the Net Asset Value worked out?
The net asset value represents the total assets of a fund or company (securities, cash and accrued earnings) minus any liabilities, divided by the number of shares on issue. The Kingfish Net Asset Value is calculated at the close of business each Wednesday and at month end and is announced to the stock exchange the following day. We update the website with the new NAV after it is announced.

How is the Diluted Net Asset Value worked out?

The warrants (or options as they are also called) provide warrant holders with an opportunity to buy shares at a price of $0.95 on any of the exercise dates. Warrant holders will probably only exercise their right to buy shares at $0.95 if the share price is at or above $0.95. As a result the warrants will have a dilutionary effect on the share price. As an example, if on 3 September 2012 the share price was $1 and everyone exercised their warrants (paying $0.95), the average share price will come down (be diluted). Immediately prior to the exercise of the warrants there will be 100 million shares on issue and the market capitalisation (worth) of the company will be $100m (100m * $1). Once the warrants are exercised, the market cap will be $147.5m ($100m + $47.5m new money from the exercise of 50m warrants) and there will be 150 million shares on issue. That would imply the share price should be $0.98 ($147.5m/150m shares). Market sentiment might mean it's different to that in reality. To make this clear to shareholders we publish a weekly net asset value and a diluted net asset value to show the impact.

What does “Trading at a Discount” mean?
It is common for listed investment companies such as Kingfish to have a share price that is different to the Net Asset Value (NAV) per share. Where the share price is lower than the NAV per share, the shares are said to be trading at a discount. Where the share price is higher than the NAV per share, the shares are trading at a premium. There can be many reasons for the shares trading at a value different to the underlying NAV including expectations of future earnings and market sentiment from time to time. See the Buyback tab for further information.

What is the level and criteria for the Manager’s eligibility for the Management Fee and the Performance fee?
In return for the performance of its duties as Manager of the Company's Portfolio, Fisher Funds is entitled to be paid:

(a)	A Management Fee of 1.25% per annum of the Gross Asset Value. The Management Fee is reduced by 0.10% for each 1.0% per annum by which the Gross Return is below the change in the NZX 90 Day Bank Bill Index over the same period. However, a minimum Management Fee of 0.75% per annum applies.
(b)	A Performance Fee of 15% of excess returns over and above a Benchmark Rate being the change in the NZX 90 Day Bank Bill Index + 7% per annum.

A High-water Mark applies to the Net Asset Value level at which the Manager last received a performance fee. Any future performance fee is payable only for excess returns above this mark.

The above is an abbreviation of the relevant Management Agreement Clauses.

The general terms of the Management Agreement extracted from the Prospectus can be viewed here. For a full copy of the agreement please contact us.

At what level of NAV discount to share price would Kingfish consider a share buyback?
The shares of a Listed Investment Company (LIC) such as Kingfish may alternate trading between a premium or discount to NAV. The Kingfish capital management policy as disclosed in the prospectus states that if in the opinion of the Board the price of the shares does not appropriately reflect the underlying asset value the board will from time to time consider buying shares in Kingfish. Any decision by the Board to acquire shares will consider other investment alternatives and whether the acquisition is in the best interest of the shareholders. The Kingfish Board will most likely consider a buyback programme when it believes the discount to be extreme, or greater than the discount ranges prevalent in similar investment vehicles. Where there is a significant discount, buying back shares can benefit shareholders. This is because using funds to buyback Kingfish shares is like buying the portfolio of shares held by Kingfish at a discount (lower) price than those shares could be purchased on the market. Buybacks will only be used where the Board believes this will enhance shareholder value. If a decision is made in relation to a buy back then Kingfish is required to advise the market in advance. We currently have a share buyback policy in place until 31 October 2012.

Click here to read our Share Buyback Policy.

Kingfish is a registered Portfolio Investment Entity (PIE) for tax purposes. The PIE regime has significant advantages for shareholders:

Natural person Shareholders or Trustees do not have to include dividend income from Kingfish in their tax return (although if you are on marginal tax rate lower than 28%, you can elect to include dividends to take advantage of any imputation credits attached at the higher rate of 28%). Other shareholders only have to include fully imputed dividends in their income, in which case the imputation credits will usually fully offset any tax liability. Imputation credits will be attached to dividends to the fullest extent possible. To the extent that the dividend is not imputed, the dividend should be treated as excluded income for New Zealand resident investors.
There is no longer a tax on the distribution of capital gains to shareholders.
The Manager, Fisher Funds, will have more flexibility to undertake one-off 'short-term' transactions (however, overall they will maintain their long term buy and hold strategy).

The stockmarket can be a complex place. However most of the key terms that describe market processes are relatively easy to understand.

This section gives a guide to some of these key terms – including terms that are found in the sharemarket tables in the newspaper. New terms are added to this list often, to ensure investors have an easy reference place for key phrases and terminology.

Click on the link below to view:

Glossary of Terms

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Kind regards

Kingfish Limited

When can my warrants be converted to shares?
The remaining warrant exercise dates for the Kingfish ‘B’ warrants are:

Tuesday 24 April 2012, Tuesday 24 July 2012 and Monday 3 September 2012 (final exercise date).

You may exercise all or some of your warrants (subject to a 500 minimum) at any time during this period upon completion of an Exercise form and payment of $0.95 per warrant. You will receive one share for every warrant that you exercise.

Options or Warrants?
You may have heard Kingfish warrants (KFLWB) also being referred to as Kingfish options. These are the same thing and can be called either “warrants” or “options”. Whatever term is used they entitle the holder of the warrant (option) to subscribe for a share at an exercise price of $0.95, exercisable on any of the above dates. Computershare Registry records these as options on your Statement of Holdings. These are listed on the NZX under the code of KFLWB and are categorised under the warrants section in the newspaper.

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