BRM – February 2020 monthly update

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A word from the Manager
Market Overview
The ASX200 Index started 2020 in a buoyant mode,
outperforming major global equity indices and returned +5%
for the month. The index had risen further than this before
concerns surrounding coronavirus started weighing on global
financial markets in the last week of January.
As concerns over the economic impact of coronavirus increased,
bond yields were driven lower. The Australian 10yr government
bond yield fell to 0.95% by month end. Against this backdrop,
defensive sectors such as Healthcare (+12% in A$ in the month),
Communication Services / Telecommunications (+8.1%),
Consumer Staples (+8.2%) and Real Estate (+6%) outperformed.
The Information Technology sector (+11%) also performed
strongly.
In contrast, global growth concerns weighed on the Energy
(+0.7%), Materials (+1.8%) and Industrials (+2%) sectors which
underperformed the market during the month.
Portfolio News
Link Group’s (+16.2% in A$) share price rose strongly in the
month after announcing it would acquire Pepper European
Servicing (PES) for an up front payment of A$266m. PES
primarily provides loan servicing services in Ireland & the UK and
has a small but growing presence in Spain, Greece and Cyprus.
Loan servicing is the process by which PES collects interest and
principal payments from borrowers and manages the day to
day tasks related to loans (such as communications with the
borrower) on behalf of the lenders.
The acquisition was well received by the market. PES is seen
as complementary to Link’s existing loan servicing operation in
its Banking & Credit Management business which is focussed
on the Irish market but lacks a presence in Spain, Greece
and Cyprus. PES is seen to broaden the European growth
opportunity for Link in loan servicing. Link also pointed out that
there are meaningful efficiency benefits and cost savings that
can be realised across these two businesses and if realised this
will add to Link’s profits in the future.
Credit Corp (+14.9%) announced a strong financial result
for the December six month period. After tax profit for
the company grew by +15% in the period. Credit Corp’s
burgeoning purchased debt ledger business in the US continues
to grow strongly, with profitability up +20% in this division. Its
first location in Salt Lake City is now fully utilised. Credit Corp
is ramping up its presence in its second site in Washington
State, laying the groundwork for future growth in the US. The
Australian consumer lending division continues to show good
momentum. Although the underlying performance of the
Australian purchased debt ledger division was tepid due to
market dynamics, the competitive environment seems to have
improved in the last six months.
Resmed (+14.4%) continued its run of strong results when
it released its latest quarterly numbers during the month.
Mask sales were up +16% (constant currency)², the seventh
consecutive quarter of double digit increases! This has been
driven by medical equipment distributors (aided by ResMed’s
Brightree software) becoming increasingly effective in regularly
replacing patients’ old masks. The icing on the cake has been
a series of well received new mask launches over the last 15
months. Device sales growth of +8% (constant currency)²
remained solid. The net result was a 13% increase in revenue
and a 22% jump in underlying profit after tax. Needless to say
this was well received by the market.
CSL (+13.2%) has a number of tailwinds supporting its strong
share price performance. It is one of three global companies
supplying flu vaccines to the northern hemisphere. The largest
of these manufacturers missed production deadlines to meet
the start of the 2019/2020 US flu season. CSL’s flu division (called
Seqirus) has benefitted from this as it stepped in to fill the
void in supply. In conjunction with the 2019/2020 US flu season
shaping up to be one of the worst in recent history this has
meant Seqirus has ‘sold out’ of vaccines in the US.
CSL has also benefitted from competitor supply issues in their
immunoglobulin (IG) business where feedback suggests CSL
continues to take market share and grow IG sales ahead of the
market growth. The tightness in IG supply has seen a number of
countries outside the US increase pricing in excess of 20%.
After a strong performance in 2019, Ingenia Communities
(-3.6%) shares fell in January. Ingenia is the Barramundi
holding most directly affected by the Australian bushfires,
which have ravaged the country over the summer. In January,
Ingenia announced that none of its tourism parks had suffered
1
Share Price Discount to NAV (using NAV to four decimal places).
2
Constant currency is when exchange rates are used to eliminate the effect of currency fluctuations when calculating financial performance.
I.e. it shows how the company performed independent of foreign currency movements.
Monthly Update
February 2020
BRM NAV
$
0.75
SHARE PRICE
$
0.74
as at 31 January 2020
DISCOUNT
1
0.8
%

Sector Split
as at 31 January 2020
Key Details
as at 31 January 2020
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
$0.59
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
205m
MARKET
CAPITALISATION
$152m
GEARING
None (maximum permitted 20%
of gross asset value)
10
%

HEALTHCARE
21
%
11
%

INDUSTRIALS
21
%
COMMUNICATION
SERVICES

INFORMATION
TECHNOLOGY
21
%

FINANCIALS
9
%
CONSUMER
DISCRETIONARY
substantial fire damage. However it did note two resident
owned homes were lost at one of their sites. No health issues
were reported and property losses were mitigated. Ingenia
expects tourism revenue related to three of its assets to be
negatively impacted by a total of $2m, for which it has insurance
in place to help mitigate these losses.
Ingenia expects home sales at one of its sites to be negatively
impacted by the bush fires and consequently has guided to the
lower end of its earnings guidance range.
After rising strongly in December on the back of an earnings
upgrade, oOH!Media’s share price fell -6.6% in January after the
company announced that longtime CEO and founder Brendon
Cook will retire from his role during 2020. The company
reiterated earnings guidance provided in December.
A CEO transition adds some uncertainty to oOH!Media’s
management team. However, we think this announcement is
part of what seems to be a well orchestrated succession plan by
the company. It does not look like a rushed transition that has
been foisted on the company. Brendon Cook strikes us as being
2
%

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

MATERIALS
as galvanised as ever in running the company. He has given
the Board ample time to undertake a thorough search process
for his replacement. He is in no hurry to leave during this time
and will stay on as long as it takes to find a replacement. And
oOH!Media will retain access to Brendon’s expertise after he has
left as he will step into a non-executive consulting role once a
replacement has been found.
We think the longer-term outlook for oOH!Media’s prospects
remains sound.
Portfolio Changes
There were no major portfolio changes during the month.
2
The Barramundi portfolio also holds cash.

January’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
LINK
ADMINISTRATION
+16
%
NEXT DC
+15
%
CREDIT CORP GROUP
+15
%
CSL LIMITED
+13%
RESMED
+14
%
5 Largest Portfolio Positions as at 31 January 2020
SEEK
7
%
CSL LIMITED
8
%
CARSALES.COM
7
%
XERO LIMITED
5
%
LINK ADMINISTRATION
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
Share PriceTotal Shareholder Return
$
0.00
$
0.50
$
1.00
$
1.50
$
2.00
$
2.50
Oct
2017
Oct
2018
Oct
2019
Total Shareholder Return to 31 January 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+2.8%+15.5%+39.1%+15.6%+13.0%
Adjusted NAV Return+5.4%+6.6%+32.1%+16.4%+11.3%
Portfolio Performance
Gross Performance Return+6.1%+8.6%+37.2%+20.1%+14.9%
Benchmark Index^+4.8%+4.9%+24.2%+12.7%+11.9%
Performance to 31 January 2020
^Benchmark Index: S&P/ASX Small Ords Industrial Gross Index until 31 January 2015 & S&P/ASX 200 Index (hedged 70% to NZD)
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/
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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
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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 its shares on
market
»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
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.