BRM – December 2019 monthly update

1
A word from the Manager
Market Overview
The S&P/ASX 200 Index returned +3.3% (in A$), broadly
in line with major global indices. All sectors apart from
Financials and Utilities (-0.6%) finished in positive territory
for the month. The Information Technology (+11%),
Healthcare (+8.9%) and Consumer Staples (+8.3%) sectors
performed particularly well during the month.
Portfolio News
Technology One (+25.9% in A$) reported full year financial
results that were broadly in line with market expectations
during the month. The result was Technology One’s first
under the new AASB
2
15 accounting standard and although
messy the market reacted well to the result coming in at the
top end of guidance. The process of converting on premise
customers to its cloud based offering continued through
the period. Cloud based customers now constitute over
a third of the total customer base (and software revenues).
During the period Technology One won a contract with the
Australian Department of Defence. The contract win was
unique in that it was on premise but should be converted to a
cloud based offering once Technology One get the necessary
security clearances in the coming year. Encouragingly,
progress is being made in the UK division where losses
continue to abate and the division is nearing break even.
The company signed six new UK customers and expects this
market to be a source of future growth.
Xero (+17.8%) announced its interim financial result, which
saw subscribers exceed two million for the first time and
drove a +33% increase in revenue growth. Other milestones
included doubling operating profit (EBITDA) and an increase
in its gross profit margin. Subscriber growth was strong
courtesy of Australia (+114,000) and the UK (+73,000). These
subscriber additions were helped by supportive regulatory
change as Australia introduced ‘Single Touch Payroll’ and the
UK introduced its first phase of ‘Making Tax Digital’ for small
businesses.
CSL (+10.7%) continued its strong share price performance
of recent months. Results from its competitors, corroborated
by industry data pointed to continued tightness in the supply
/ demand balance in key plasma therapy markets, which
resulted in a number of brokers upgrading their earnings
forecasts and valuations in the month.
Aristocrat (+8.2%) rose strongly on the back of its financial
results which largely met market expectations. Aristocrat’s
key North American land-based electronic gaming machine
division delivered a strong set of results as the company
showed evidence of successfully expanding into adjacent
gaming markets. Pleasingly, its digital gaming division also met
market expectations. The social casino division delivered tepid
results as expected, while the casual gaming digital division’s
strong result was underpinned by the success of popular
game ‘Raid’. This lays a strong foundation for the results of
this division in the next year. We exited our Aristocrat position
after the result. Over the course of the last few financial results
our conviction in some aspect of the business has reduced.
Regarding the longer term earnings outlook there are some
early signs that key competitors in land-based gaming are
starting to improve their performance which is not helpful in
a mature industry. Although the digital gaming division has
performed adequately, overall it has missed our expectations
since we initially invested in Aristocrat. Mostly however, we
have come to increasingly question the long-term sustainability
of Aristocrat’s business model from an Environmental, Social
and Governance perspective and hence decided to sell
our shares.
Westpac (-10.5%) led the underperformance of the large
banks in Australia during the month. At Westpac’s annual
result it cut its dividend and raised equity to bolster its
capital position. Shortly after this, AUSTRAC (the anti-
money laundering and counter-terrorism financing regulator)
began civil proceedings in relation to alleged contraventions
of Westpac’s obligations under the requisite regulations.
The details of this civil proceeding took the market by
surprise. Westpac had previously disclosed that as part of its
programme to improve its management of financial crime risks
it had discovered that a large number of international funds
transfer instructions had not been reported to AUSTRAC as
required. Westpac self-reported these breaches to AUSTRAC.
This had sparked an investigation by AUSTRAC into Westpac’s
processes and banking activities. However, the statement
of claim filed in court by AUSTRAC in November was more
extensive than expected by the market. This claim extended
1
Share Price Discount to NAV (using NAV to four decimal places).
2
Australian Accounting Standards Board.
Monthly Update
December 2019
BRM NAV
2
$
0.74
SHARE PRICE
$
0.71
as at 30 November 2019
DISCOUNT
1
3.6
%

Sector Split
as at 30 November 2019
Key Details
as at 30 November 2019
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
FEE HURDLE
Changes in the NZ 90 Day Bank
Bill Index + 7%
PERFORMANCE FEE
10% of returns in excess of
benchmark and high water mark
HIGH WATER MARK
$0.61
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
204m
MARKET
CAPITALISATION
$145m
GEARING
None (maximum permitted 20%
of gross asset value)
11
%

FINANCIALS
20
%
12
%

INDUSTRIALS
19
%
COMMUNICATION
SERVICES

HEALTHCARE
20
%

INFORMATION
TECHNOLOGY
9
%
CONSUMER
DISCRETIONARY
beyond the issues self-reported by Westpac and included
funds transfers that are characteristic of the type linked to
child exploitation activities.
In the wake of AUSTRAC’s filing, the Westpac CEO has
resigned and been replaced by an interim CEO. Westpac’s
chairman has brought forward his resignation into the
first half of 2020 and the Director chairing the Board’s
Risk & Compliance committee will not seek re-election at
December’s AGM. A number of work streams have been
initiated to address the company’s failings.
National Australia Bank’s (-6.8%) share price also fell during
the month following a tepid earnings result, and it was also
impacted by AUSTRAC’s statement of claim filing against
Westpac. Similar to Westpac, NAB has previously disclosed
that it too has self-reported a number of compliance
breaches to AUSTRAC. NAB is working with AUSTRAC
to address and resolve these breaches. The uncertainty
2
%

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

MATERIALS
affiliated with this investigation weighed on NAB’s share price.
The NAB chairman (and interim CEO) has spoken about how
the bank has begun overhauling processes and practices to
address the bank’s failings although acknowledged that “it is
still early days and there is more work to be done to achieve
sustainable change.” This process no doubt will be picked
up and continued by the incoming new CEO at NAB (Ross
McEwan) who started in his role on 2nd December
Portfolio Changes
During the month we exited Aristocrat, (as discussed above).
2
The Barramundi portfolio also holds cash.

November’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
TECHNOLOGY ONE
+26
%
XERO LIMITED
+18
%
OOH MEDIA LIMITED
+13
%
WESTPAC BANKING
CORPORATION
-10
%
CSL LIMITED
+11
%
5 Largest Portfolio Positions as at 30 November 2019
SEEK
7
%
CSL LIMITED
7
%
CARSALES.COM
7
%
XERO LIMITED
5
%
COMMONWEALTH
BANK
5
%
The remaining portfolio is made up of another 20 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
$
2.00
$
0.20
$
0.00
$
1.40
Oct
2017
Oct
2018
$
1.60
Oct
2019
$
1.80
Total Shareholder Return to 30 November 2019
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+8.5%+14.8%+29.5%+14.8%+12.1%
Adjusted NAV Return+3.0%+6.0%+29.3%+14.7%+11.5%
Portfolio Performance
Gross Performance Return+4.2%+7.7%+33.8%+18.2%+15.2%
Benchmark Index^+2.7%+4.4%+25.7%+13.1%+11.4%
Performance to 30 November 2019
^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, after expenses, fees and tax,
»adjusted NAV return – the return to an investor after expenses, fees and tax,
»gross performance return – the Manager’s portfolio performance in terms of stock selection and currency hedging before expenses, 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/
3

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 8.6m of
its shares on market in the year to 31 October 2020
»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.