KEY POINTS:
The increasing value of its portfolio boosted investment company Kingfish's annual net surplus by 95 per cent to a record $36.8 million.
Profit for the 12 months ended March 31 included $33.8m in unrealised gains on investments, and $6.3m of realised gains, largely the amalgamation of Waste Management
and Transpacific Industries in 2006.
Managed by Fisher Funds, Kingfish focused on small to medium local growth-oriented companies, whose growth was generally not dependent on the New Zealand economy.
"The source and magnitude of our investment performance over the years has often been surprising, making us reluctant to predict future returns," Fisher Funds managing director Carmel Fisher said.
"What we do know is that the performance of Kingfish over time will directly reflect the performance of our underlying company investments, which in our view are the cream of the New Zealand share market."
Net asset value per share rose 35 per cent over the year to $2.1520, well above the current share price.
"We are pleased to have achieved the very thing that we expect of our portfolio companies -- a more than doubling of asset value in a three year period," Ms Fisher said.
Positions in Delegats, and Rakon, which it considered best in the world in its field, contributed significantly in the first six months of ownership.
The other three major contributors were three longer held stocks -- Ryman Healthcare, Mainfreight and Metlifecare -- which had also been strong contributors in 2006.
The managers also added an "exploratory" holding in Sealegs International to its Nursery portfolio after two years' monitoring of its performance.
Fisher Funds received a $4.5m performance fee, half of it in Kingfish shares, as it achieved returns above the benchmark rate of 14.7 per cent.
Excluding the manager's performance fee, annual operating expenses of $2.3m represented 1.7 per cent of total assets. Revenue rose 91 per cent to $44.6m.
A number of the portfolio companies had achieved average annual earnings growth of around 20 per cent, resulting in strong share price growth.
In addition, the managers had seen their buy and hold approach to investing rewarded.
"That is, we have not needed to frantically buy and sell, or time our entry into and exit from portfolio positions, or seek undervalued stocks which could then be sold for higher prices in the future," she said.
"Rather, our strategy of finding businesses with a proven record of growing profits, and holding them for as long as the investment case remained true, has resulted in market-leading investment performance."
Shares in Kingfish, which will pay a final dividend of 3.5 cents per shares on June 15, were up a cent at $1.53.
- NZPA