BRM – September 2018 monthly update

1
Monthly Update
September 2018
BRM NAV
$
0.74
SHARE PRICE
$
0.64
DISCOUNT
14.0
%
as at 31 August 2018
A word from the Manager
Market Overview
With reporting season hitting top gear in August, company
results were the key driver of the market’s performance
with the ASX 200 index (70% hedged in NZ$) tracking
+1.4% higher across the month. The market took domestic
political upheaval in its stride with Australia switching its
Prime Minister during the month for the 5th time in the
past eight years. Financials seemed to wear the political
risk most visibly with the sector performing poorly in the
days around the Prime Ministerial change.
On the whole, results across the market were well received
and outlook commentary seemed positive.
The Telecommunication services sector returned +13.1% in
A$ terms for the month as the sector began consolidating
with Vodafone and TPG Telecom announcing a merger.
Information Technology, which rose +12.9% was one of the
standout sectors in the market this reporting season. Tech
businesses continue to benefit from the structural tailwind of
rising demand across the economy for software and cloud
based applications, and growth continues to surprise on the
upside within this sector.
The Healthcare sector was another high achiever, with the
likes of CSL (+15.6%) and Resmed (+10.2%) continuing to
cement and enhance their global leadership positions in each
of their niches.
Companies within the consumer discretionary sector, (+3.5%
for the month) typically delivered better than expected results
as consumer spending seems to be holding up better than
feared, given the backdrop of tightening lending standards
and a softening housing market.
Financials underperformed the index in the month, in part
due to political sentiment. Insurance companies results and
outlook statements were positive and their results were
bolstered by a hardening premium rate environment. The
major banks quarterly updates (and full year results in the
case of CBA) proved to be favourable, with modest credit
growth, and relatively stable net interest margins and loan
impairments the order of the day.
Companies in the materials, energy and industrials sectors
delivered a mixed bag of results, with strong cash flow
generation and some positive capital management surprises
offset by rising cost pressures across raw materials, labour
and consumables.
Results Season
In August Barramundi’s gross performance return was +5.8%.
This was a pleasing result compared to the ASX 200 Index
(70% hedged into NZ$) which returned +1.4%. The majority
of our portfolio companies reported strong earning results for
the month.
Wisetech Global’s (up +40% in the month in A$) results
were marginally ahead of guidance with strong organic and
acquisition related growth. The company provided positive
commentary for FY2019 with an outlook of strong growth.
Our team attended a breakfast meeting with Richard White
(CEO) and some of his management team the day after the
result. We remain impressed with their focussed approach as
they continue taking steps to establish the CargoWise One
platform as the global operating standard in cloud based
software solutions for the freight forwarding and logistics
industries. We expect that the business will grow reasonably
fast through organic growth, abetted by strategically
important acquisitions for years to come.
XERO (+19.3%) did not report in August, but had a positive
AGM and benefitted from positive market sentiment to the
tech sector which generally had a good reporting season as
mentioned above. This also played into Technology One’s
return for the month (+11.9%) as it continued to rise following
its market update in July (which we wrote about in last
month’s update).
CSL (+15.6%) continues to benefit from its decision to
invest heavily over a number of years in opening new
plasma collection centres. This investment has made CSL
the key beneficiary of a tight market in plasma derived
products as global demand for plasma products continues
to grow strongly relative to supply. Pleasingly, CSL’s
burgeoning influenza business also posted a maiden profit
ahead of schedule.

Sector Split
as at 31 August 2018
Key Details
as at 31 August 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
$107m
GEARING
None (maximum permitted 20%
of gross asset value)
11
%

HEALTH CARE
19
%
12
%

CASH
19
%

INDUSTRIALS

FINANCIALS
23
%
INFORMATION
TECHNOLOGY
1
%

REAL EASTATE
10
%
CONSUMER
DISCRETIONARY
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Credit Corp (+12.2%) reported results in late July. CCP’s
share price rose across the month on the back of a favourable
operating environment as they benefit from tightening lending
restrictions by the major banks and a favourable backdrop for
their expansion into the US.
Nanosonics (+11.4%) is accelerating the roll out of its next
generation Trophon 2 product, underpinning its growth
trajectory into 2019.
Brambles (+11%) rounded out our top performers for the
month, posting a solid result in a tough operating environment
which was enough to spark a relief rally for the share price.
Brambles also announced it was exploring the demerger of
IFCO, its reusable plastic containers business, which was taken
well by the market.
Ansell (-11.7%) suffered from market concerns regarding the
cost of raw materials. We remain comfortable with the overall
direction that Ansell is being taken in by management. They
are streamlining operations around Ansell’s Industrial and
Healthcare business units and focussing their product portfolios
within these divisions on higher growth and higher returning
categories. Management has also been disciplined in the
pursuit of acquisitions. In time we think this will pay dividends
for shareholders.
Rio Tinto (-8.4%) and to a lesser degree BHP (-4.7%) were
also impacted by rising cost pressures in spite of each of them
delivering a solid set of financial results. Both companies have
been anticipating a sustained increase in cost inflation for a
while. We’re comfortable that their management teams remain
ahead of the curve in the productivity initiatives that they
currently have underway to help mitigate this cost inflation.
Portfolio Changes
In a key portfolio change during the month we sold our
Ramsay Healthcare position.
We have long admired the quality of the business. Ramsay
has by all accounts some of the best private hospitals in
Australia (and good operations offshore) and is well managed.
It also stands to benefit longer term from the structural trends
of ageing demographics and (unfortunately) rising obesity.
However, our work in the past few months has raised our
concerns related to a number of headwinds facing the
company that appear somewhat structural in nature. These
headwinds include private health insurance pricing pressure,
a trend of patients spending less time in hospitals for
operations, as treatment methods continue to improve as
well as rising cost pressures (primarily labour cost pressures).
Hence our outlook for Ramsay’s earnings growth over the next
few years has deteriorated and given its valuation relative to
this deterioration in earnings outlook, we have consequently
exited the position. We expect the resulting cash balance to
come down over the next couple of months as we continue to
review and re-assess positioning across the portfolio.
5
%

MATERIALS
2

3
August’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
WISETECH GLOBAL
+40
%
XERO
+19
%
CSL
+16
%
ANSELL
-12
%
RIO TINTO
-8
%
5 Largest Portfolio Positions as at 31 August 2018
CSL
7
%
SEEK
7
%
CARSALES.COM
6
%
BRAMBLES
5
%
COMMONWEALTH
BANK OF AUSTRALIA
5
%
The remaining portfolio is made up of another 21 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 August 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return+4.9%+7.3%+19.7%+9.1%+3.8%
Adjusted NAV Return+5.5%+9.5%+24.6%+12.9%+4.8%
Portfolio Performance
Gross Performance Return+5.8%+11.1%+28.5%+16.6%+8.2%
Benchmark Index^+1.4%+6.6%+15.3%+12.7%+3.4%
Performance to 31 August 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 currency hedging before fees and tax, 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.