BRM – July 2018 monthly update

1
Monthly Update
July 2018
BRM NAV
$
0.71
SHARE PRICE
$
0.60
DISCOUNT
15.2
%
as at 30 June 2018
A word from the Manager
I am excited to write my first Barramundi monthly update. I
joined Fisher Funds at the start of June as the Senior Portfolio
Manager responsible for Australian equities and I look
forward to meeting a number of you over the coming years.
Market overview
Overall June was a sound month for Australian equities with
the S&P/ASX200 (70% hedged to NZD) closing up 3.7%,
with the energy minerals, retail and technology services
sectors performing particularly well.
While the headline figure was solid, it did hide a softness
that crept into the market in the last week of the month on
news of escalating tariffs between the US and China and the
potential for a trade war. This was coupled with a softness
in Chinese data and equity markets. Australia’s economic
fortunes are intrinsically linked to China as its largest trading
partner, and we are watching the tariff developments closely.
For June, the Barramundi portfolio lifted 4.2% on a gross
performance basis.
Wearing out the shoe leather
The Fisher Funds investment team office has a number of
pieces of art on its walls, which mainly consist of quotes by
renowned investors. Next to my new desk are two pieces with
quotes by Peter Lynch, the former manager of the rockstar
Magellan Fund. The first is “There is absolutely no better
investment technique than wearing out shoe leather and
visiting companies.” The second is “Know what you own and
know why you own it.”
There are two potential reactions to those pieces of art –
either we need to inject some flair into our taste or, given
that as the manager of the Magellan Fund between 1977
and 1990, Lynch averaged a 29.2% annual return (consistently
more than doubling the S&P500 and making it the best
performing mutual fund in the world), it’s a great reminder to
keep heeding his advice.
There is no substitute to looking in the eye of business
heads – it accelerates the knowledge process and gives
us confidence that there are layers of quality management
below the “C” suite.
During June, the Fisher Funds investment team took some
time to wear out the shoe leather and visit a number of
portfolio companies and a few that are interesting potential
investments.
One of the highlights was the opportunity to spend some
time with the head of Xero’s UK operation, Gary Turner.
A recent addition to the Barramundi portfolio, Xero is
the market leading provider of cloud based accounting
software for small-to medium businesses and their
accountants in New Zealand, Australia and the UK, with
growing presences in the US and other markets such as
South East Asia and EMEA.
At the core of our investment thesis is a belief that Xero
will continue to be the innovators of the industry, allowing
it to retain its market leading positioning in Australia/New
Zealand and the UK, grow its foothold in the US market,
as well as, over time, grow its rest-of-world business.
Combined with the huge market opportunity (global
penetration less than 3%) and the wide moat Xero is
building around its small business customers, we think the
company has material future earnings growth potential.
The UK: a lucrative opportunity
Gary Turner is one of the longest standing executives
at Xero and has presided over the UK operations since
inception almost 10 years ago.
During this time, Xero UK has increased its subscribers
dramatically, from less than 25,000 subscribers and less
than 15% of group revenue five years ago, to more than
325,000 subscribers and more than 20% of group revenue
today. Importantly, we see the UK as the strongest revenue
growth driver for the company over the next five years.

Sector Split
as at 30 June 2018
Key Details
as at 30 June 2018
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
FINANCIAL YEAR END
30 June
TYPICAL PORTFOLIO SIZE
25-35 stocks
INVESTMENT CRITERIA
Long-term growth
PERFORMANCE
OBJECTIVE
Long-term growth of capital and
dividends
TAX STATUS
Portfolio Investment Entity (PIE)
MANAGER
Fisher Funds Management
Limited
MANAGEMENT
FEE RATE
1.25% of gross asset value
(reduced by 0.10% for every 1% of
underperformance relative to the
change in the NZ 90 Day Bank Bill
Index with a floor of 0.75%)
PERFORMANCE
BENCHMARK
Changes in the NZ 90 Day Bank
Bill Index + 7%
PERFORMANCE
FEE HURDLE
15% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.52
SHARES ON ISSUE
166m
MARKET CAPITALISATION
$99m
GEARING
None (maximum permitted 20%
of gross asset value)
11
%

FINANCIALS
22
%
12
%

INDUSTRIALS
19
%
CONSUMER
DISCRETIONARY
INFORMATION
TECHNOLOGY
24
%
HEALTHCARE
5
%
CASH
5
%

MATERIALS
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Currently, Xero has around 1.4m customers globally. Xero
forecasts that it will reach 1m customers in the UK alone,
and we believe that this milestone will be reached within
the next five years. A powerful tailwind for the UK’s business
growth is the UK government’s mandate requiring firms to
lodge consumption tax (VAT) returns digitally from April
next year. Given approximately only one in seven of the
1.4m VAT registered companies in the UK currently use
accounting or tax software, we believe that this regulatory
catalyst will help ensure the impressive growth rates we
have been witnessing continue.
We believe that the secret to Xero’s success in the UK’s
still relatively nascent cloud accounting software market
will continue to be great product, great people, strong
relationships with the accountant channel as a key route to
market and the courage to continue to be the innovator
of the industry. It is face to face meetings like this that are
invaluable in building our further understanding of portfolio
companies like Xero.
2
%

REAL ESTATE
2

3
June’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
GATEWAY LIFESTYLE
GROUP
+19
%
NANOSONICS
+19
%
INGENIA
COMMUNITIES
+15
%
APN OUTDOOR
+10
%
RAMSAY HEALTHCARE
-11
%
5 Largest Portfolio Positions as at 30 June 2018
CSL
7
%
SEEK
7
%
CARSALES.COM
6
%
COMMONWEALTH
BANK OF AUSTRALIA
5
%
NATIONAL
AUSTRALIA BANK
4
%
The remaining portfolio is made up of another 22 stocks and cash.
Oct
2006
Oct
2007
Oct
2008
Oct
2009
Oct
2010
Oct
2011
Oct
2012
Oct
2013
Oct
2015
Oct
2016
Oct
2014
Share Price/Total Shareholder Return
$
1.00
$
1.20
$
0.8 0
$
0.60
$
0.40
Share PriceTotal Shareholder Return
$
1.60
$
0.20
$
0.00
$
1.40
Oct
2017
Total Shareholder Return to 30 June 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+0.6%+5.8%+10.1%+5.5%+3.3%
Adjusted NAV Return+4.0%+10.9%+22.6%+10.2%+4.4%
Manager Performance
Gross Performance Return+4.2%+11.5%+24.3%+13.5%+7.7%
Benchmark Index^+3.7%+9.4%+14.9%+10.8%+3.2%
Performance to 30 June 2018
^Benchmark Index: S&P/ASX Small Ords Industrial Gross Index until 30 September 2015 & S&P/ASX 200 Index (hedged 70% to NZD) from 1 October 2015
Non-GAAP Financial Information
Barramundi uses non-GAAP measures, including adjusted net asset value, adjusted NAV return, gross performance return and total shareholder return. The rationale for using such non-GAAP measures is as follows:
»adjusted net asset value – the underlying value of the investment portfolio adjusted for capital allocation decisions,
»adjusted NAV return – the return to an investor after fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection and hedging of currency movements, and
»total shareholder return – the return to an investor who reinvests their dividends, and if in the money, exercises their warrants at warrant maturity date for additional shares.
All references to adjusted net asset value, adjusted NAV return, gross performance return and total shareholder return in this monthly update are to such non-GAAP measures. The calculations applied to non-GAAP
measures are described in the Barramundi Non-GAAP Financial Information Policy. A copy of the policy is available at http://barramundi.co.nz/about-barramundi/barramundi-policies/

Disclaimer: The information in this update has been prepared as at the date noted on the front page. The information has been prepared as a general summary of the matters covered only, and it is by
necessity brief. The information and opinions are based upon sources which are believed to be reliable, but Barramundi Limited and its officers and directors make no representation as to its accuracy
or completeness. The update is not intended to constitute professional or investment advice and should not be relied upon in making any investment decisions. Professional financial advice from
an authorised financial adviser should be taken before making an investment. To the extent that the update contains data relating to the historical performance of Barramundi Limited or its portfolio
companies, please note that fund performance can and will vary and that future results may have no correlation with results historically achieved.
Barramundi Limited
Private Bag 93502, Takapuna, Auckland 0740
Phone: +64 9 489 7074 | Fax: +64 9 489 7139
Email: enquire@barramundi.co.nz | www.barramundi.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777 | Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz | www.computershare.com/nz
About Barramundi
Barramundi is an investment
company listed on the New
Zealand Stock Exchange. The
company gives shareholders
an opportunity to invest
in a diversified portfolio of
between 25 and 35 quality
growing Australian companies
through a single, professionally
managed investment. The aim of
Barramundi is to offer investors
competitive returns through
capital growth and dividends.
Capital Management Strategies
Regular Dividends
»Quarterly distribution policy introduced in
August 2009
»Under this policy, 2% of average NAV is targeted
to be paid to shareholders quarterly
»Dividends paid by Barramundi may include
dividends received, interest income, investment
gains and/or return of capital
»Shareholders who prefer to have increased
capital rather than a regular income stream have
the opportunity to participate in the company’s
dividend reinvestment plan (DRP)
»Shares issued to DRP participants are at a 3%
discount to market price
»Barramundi became a portfolio investment entity
on 1 October 2007. As a result, dividends paid to
New Zealand tax resident shareholders have not
been subject to further tax
Share Buyback Programme
»Barramundi has a buyback programme in place
allowing it (if it elects to do so) to acquire up to 7.4m of
its shares on market in the year to 31 October 2018
»Shares bought back by the company are held as
treasury stock
» Shares held as treasury stock are available to be
re-issued for the dividend reinvestment plan and to pay
performance fees
Warrants
»Warrants put Barramundi in a better position to grow
further, operate efficiently and pursue other capital
structure initiatives as appropriate
»A warrant is the right, not the obligation, to purchase
an ordinary share in Barramundi at a fixed price on a
fixed date
»There are currently no warrants on issue
Management
Barramundi’s portfolio is managed
by Fisher Funds Management
Limited. Robbie Urquhart
(Senior Portfolio Manager),
Terry Tolich (Senior Investment
Analyst) and Delano Gallagher
(Investment Analyst) have prime
responsibility for managing the
Barramundi portfolio. Together
they have significant combined
experience and are very capable
of researching and investing in the
quality Australian companies that
Barramundi targets. Fisher Funds
is based in Takapuna, Auckland.
Board
The Manager has authority
delegated to it from the
Board to invest according to
the Management Agreement
and other written policies.
The Board of Barramundi
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell and Andy
Coupe; and non-independent
director Carmel Fisher.