BRM – November 2018 monthly update

1
Monthly Update
November 2018
BRM NAV
$
0.65
SHARE PRICE
$
0.63
DISCOUNT
3.1
%
as at 31 October 2018
A word from the Manager
Market Overview
‘October, and the trees are stripped bare, of all they wear.’
– Lyrics by U2
U2’s meditative lyrics seem like an apt description of the past
month for equity markets. Similar to the major global equity
markets, the ASX 200 index had a tough month, falling 6.1%
(in A$) in the worst monthly return since August 2015.
Concerns around higher interest rates, slowing global growth,
the spectre of rising cost pressures and inflation, trade war
rhetoric and a sell–off in global technology companies seemed
to weigh as much on Australian as they did on international
equities.
All sectors of the ASX 200 finished the month in the red, with
the Information Technology (IT) sector including a number
of high P/E or ‘growth’ constituents affected the most,
falling –11.2% (in A$ terms) for the month. That said, the
negative performance was broad based, with other sectors
including Energy (–10.5%), Consumer Discretionary (–8%),
Communication Services (–7.3%), Healthcare (–7%) and
Financials (–5.9%) all feeling the October chill.
Portfolio News
Given this backdrop and with Barramundi including a number
of IT, Healthcare and higher P/E ‘growth’ companies, the
portfolio was negatively affected. The news flow from a
number of our portfolio companies was somewhat positive,
or at least not as commensurately negative as the share price
performances would suggest.
Wisetech –27.3% (in A$ for the month), was the portfolio’s
worst performer for October and was caught up in the IT
and high P/E sell–off. The company presented at a broker’s
conference during the month and effectively re–affirmed
earnings guidance and noted continuing strength in the
business’s organic revenue growth as customer demand for its
software continues to increase.
Carsales –15.6%, also one of the portfolio’s worst performers
noted at its AGM that the company has had a solid start to the
financial year in its core business with the exception of display
advertising (a small component of overall earnings) which had
been soft.
Three of our industrial businesses Ansell (–8.2%), ARB (–8.7%)
and Brambles (–2.6%) also held their AGMs in October. All
three noted rising cost pressures (typically raw materials inputs,
and energy), and where feasible each of them are mitigating
this through lifting their own prices. While there was a note of
caution in their commentary, demand for their products does
not seem to be falling.
BHP (–7%) and RIO (–3%), both released their September
quarter production reports during the month. Aggregating the
‘overs and unders’ across their different divisions (the benefit
of being a diversified miner), both companies’ reports were
broadly in line with expectations. BHP completed the sale of
its US onshore gas assets to BP on the last day of the month
and will be returning the US$10.4bn in sales proceeds to
shareholders.
Resmed (–6.7%), delivered a strong first quarter 2019 result
with good revenue momentum evident. Pleasingly, with
management’s disciplined focus on cost control, underlying
profits rose more than the increase in revenue for the quarter.
Dominos +1.5%, hosted an investor day in Brisbane during the
month which we attended. No large ground breaking initiative
was announced. However, the company did shine further
light on a range of store productivity and customer focussed
technology initiatives and shared more of their thinking around
the economics and logic behind store–splits which are central
to their store roll–out strategy in Australia. It’s pleasing to see
that management continues exploring ways in which they can
improve their customer proposition and put more distance
between them and their competitors.
Portfolio Changes
We selectively topped up some of our positions during the
month and used the price weakness in Xero (–18.8% in A$) to
increase its weighting in the portfolio.
We also initiated a new position in Aristocrat Leisure, a good
quality business, with a track record of delivery and strong
growth prospects on the horizon.
Aristocrat is the leading global provider of gaming machines
and software to casinos as well as pubs & clubs, with a
particularly strong presence in the US and Australia.

Sector Split
as at 31 October 2018
Key Details
as at 31 October 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
$0.69
SHARES ON ISSUE
168m
MARKET CAPITALISATION
$106m
GEARING
None (maximum permitted 20%
of gross asset value)
11
%

HEALTH CARE
20
%
11
%

INDUSTRIALS
19
%
COMMUNICATION
SERVICES
INFORMATION
TECHNOLOGY
20
%
FINANCIALS
3
%

CASH
9
%
CONSUMER
DISCRETIONARY
Well run, and with a demonstrated track record of
earnings growth over a number of years, management
have inculcated a deep cultural focus on innovation and
design and development within the company. This has
been commercialised through the launch of a range of
games over the past decade that have developed a strong
brand cache amongst consumers and gaming venues
alike. Aristocrat has shared some of the financial benefits
that stem from the popularity of their games with the
venue providers in the form of lower pricing, which has
improved customer stickiness as well as their customer
proposition vs the competition. Speaking of which, the
competitive environment has improved in the last decade
as the industry has consolidated, leaving Aristocrat’s
key competitors with stretched balance sheets and less
flexibility to invest in innovation and improving the odds of
Aristocrat staying ahead of the pack.
Aristocrat has diverted a portion of the strong cash flow
generated from this core but relatively mature division
into a higher growth arena of digital and mobile games.
Aristocrat first entered the digital gaming market through
acquisition in 2012, and successfully grew the earnings
strongly from this division over the ensuing years including
2
%

REAL ESTATE
2
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
5
%

MATERIALS
through using their design and marketing talent to
successfully re-skin some of their high profile branded land
based games for the digital market.
This was followed up with two further acquisitions in 2017,
expanding its reach in social casino (it is now the #2 player
globally) as well as into the casual games market. This
provides it with critical mass in a sector in which marketing
capability and brand presence is increasingly important to
acquire and retain customers in a profitable fashion.
Digital games now comprise over 30% of Aristocrat’s
operating earnings and this is likely to be a key source of
the company’s future earnings growth.
The chilly October market conditions gave us an
attractive entry point to add a position in Aristocrat to the
Barramundi portfolio.

3
October’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
WISETECH GLOBAL
-27
%
XERO
-19
%
NANOSONICS
-16
%
SEEK
-14
%
CARSALES.COM
-16
%
5 Largest Portfolio Positions as at 31 October 2018
SEEK
7
%
CSL LIMITED
7
%
CARSALES.COM
7
%
COMMONWEALTH
BANK OF AUSTRALIA
6
%
LINK GROUP
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
Oct
2018
Total Shareholder Return to 31 October 2018
1 Month3 Months1 Year3 Years
(annualised)
Since Inception
(annualised)
Company Performance
Total Shareholder Return(1.6%)+5.6%+17.9%+9.7%+3.8%
Adjusted NAV Return(8.9%)(6.0%)+3.5%+8.6%+3.7%
Portfolio Performance
Gross Performance Return(8.8%)(5.4%)+6.6%+11.8%+7.0%
Benchmark Index^(6.2%)(6.1%)+2.3%+9.1%+2.7%
Performance to 31 October 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 8.4m of
its shares on market in the year to 31 October 2019
»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
»On 16 October 2018, a new issue of warrants (BRMWE)
was announced
»The warrants were issued at no cost to eligible
shareholders and in the ratio of one warrant for every
four Barramundi shares held
»Exercise Price = $0.64 per warrant, to be adjusted down
for dividends declared during the period up to the
Exercise Date.
»Exercise Date = 25 October 2019
» The final Exercise Price will be announced and an
Exercise Form will be posted to warrant holders in
September 2019
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.