BRM – August 2018 monthly update

1
Monthly Update
August 2018
BRM NAV
$
0.71
SHARE PRICE
$
0.61
DISCOUNT
13.6
%
as at 31 July 2018
A word from the Manager
Market Overview
July was a solid month for the market overall with the S&P/
ASX 200 Index (70% hedged into NZD) rising +1.4%. While
the market rose overall, sector performance was variable.
The telecommunications, industrials and healthcare sectors
performed well. So too did the financial sector which ticked
higher with strong performances from a number of non-bank
financials and the regional banks. Utilities, retail and some
elements of the consumer staples sectors were the laggards
for the month.
Towards the end of July, the Australian market saw an injection
of political risk premium after a strong showing by the Labour
Party in a number of key by-elections which put elements
of the Coalition’s recently announced tax reform package
into doubt. Also, late in the month companies within the
technology and online space came under pressure taking their
cue from the US technology sector’s late month jitters.
Emerging from the penalty box
Technology One was one of the best performers for the
Barramundi portfolio in July, rising +16% across the month.
This rebound came after a torrid previous 12 months during
which time it was down over 20% (including dividends). Given
the company posted a 9% rise it its net profit for its most
recent financial year and earnings growth has continued into
2018, why has Technology One experienced such share price
volatility?
To set the scene, Technology One was founded in Queensland
by Adrian Di Marco in 1987. Since then it has grown to
become one of Australia’s largest enterprise software
companies. Technology One provides enterprise software
(akin to the ‘plumbing’ for the general running of operations)
to clients across a range of sectors including universities,
healthcare companies (including hospitals) and government
agencies. Its software helps clients to manage their business
operations including customer records management, invoicing
and HR & payroll.
Technology One has a long history of growing earnings in
a profitable manner in Australia and New Zealand. In fact,
recently the company announced contracts to provide
software to NZ Treasury and the Department of the Prime
Minister and Cabinet. Technology One also has a small
foothold in the UK market.
While the company has had a successful track record over
the long term, the past year or so has proved to be one
of transition. In May 2017, Adrian Di Marco stepped aside
as CEO, passing the reins to Edward Chung (the previous
COO). Around this time, Technology One also had a public
spat with one of its clients and in September 2017, the
company slightly missed its financial year end guidance.
Since then the company signalled that new accounting
standards which come into force in 2019 will impact how
it would report its earnings, but initially did not provide
clarity on exactly how the new standard would affect
its accounts. The combination of these key factors put
Technology One in the penalty box from the stock market’s
perspective.
However, Technology One started to emerge from the
penalty box this July. Pleasingly, the company provided
clarity on how the new accounting standards would
impact its reporting during the month. At the same time,
Technology One reiterated its guidance and provided
some commentary on the long term growth strategy
(which remains intact) and the ‘relief rally’ in the share
price ensued.
While the recent market concerns are legitimate, in our
view the company’s recent hiccups did not fundamentally
derail the earnings power of the business and the trends
and tailwinds driving growth. Technology One was first
added to the Barramundi portfolio in December 2012
and we remain comfortable that the investment thesis
and longer term growth opportunity remains intact for
Technology One.

Sector Split
as at 31 July 2018
Key Details
as at 31 July 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
$0.70
SHARES ON ISSUE
167m
MARKET CAPITALISATION
$102m
GEARING
None (maximum permitted 20%
of gross asset value)
12
%

FINANCIALS
21
%
12
%

INDUSTRIALS
20
%
CONSUMER
DISCRETIONARY
INFORMATION
TECHNOLOGY
24
%
HEALTHCARE
4
%
CASH
5
%

MATERIALS
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Looking forward, we expect growth to come from three
main sources:
1. Growing customer base: Technology One has a
reasonable runway of untapped customers within Australia
(& New Zealand) that it can target.
2. Upselling to existing clients: Technology One invests
consistently in R&D, adding new functionality & modules
to its existing product offering which it upsells to existing
clients. Over the last decade it has increased the number
of products used per customer from approximately three
to five, and is aiming to lift this by another three over the
next decade.
3. Increased cloud computing: Technology One is currently
experiencing a tailwind of growth from moving its existing
customers into the cloud. We expect this process to
continue (and add to revenue) for a number of years yet.
Additionally, Technology One has spent a number of years
establishing a foothold in the UK market. While the UK
presence has not borne fruit for them yet, it remains a
watching brief and may in the future be a growth lever for
the company. Watch this space.
2
%

REAL ESTATE
2

3
July’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
TECHNOLOGY ONE
+16
%
CREDIT CORP GROUP
+14
%
BRAMBLES
+11
%
CARSALES.COM
-8
%
ARB CORPORATION
-8
%
5 Largest Portfolio Positions as at 31 July 2018
CSL
7
%
SEEK
7
%
CARSALES.COM
6
%
NATIONAL
AUSTRALIA BANK
5
%
COMMONWEALTH
BANK OF AUSTRALIA
5
%
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 31 July 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Corporate Performance
Total Shareholder Return+1.7%+5.8%+12.0%+6.0%+3.4%
Adjusted NAV Return(0.2%)+6.9%+22.8%+9.0%+4.3%
Manager Performance
Gross Performance Return+0.8%+8.5%+26.1%+12.4%+7.7%
Benchmark Index^+1.4%+6.5%+15.9%+11.1%+3.3%
Performance to 31 July 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.