BRM – March 2020 monthly update

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A word from the Manager
Barramundi’s gross performance for the month was down - 7.1%,
while the adjusted NAV was down - 6.7%. This compares with
our benchmark, S&P/ASX200 Index (70% hedged into NZ$),
which was down -7.6%.
Market Overview
Coronavirus related concerns escalated significantly in February
as the virus spread into a broad number of countries outside of
China. This resulted in sharp falls across share markets globally.
The economic cost of the virus has continued to rise as global
containment efforts have resulted in significant disruption to
manufacturing, supply chains, travel, tourism and trade. The
extent and duration of this disruption to economic activity
remains uncertain.
In concert with the falls in major global equity indicies, the
ASX200 index was down -7.7% (in A$) in February. All sectors
finished the month in the red, with the Energy (-18%) and
the Information Technology sectors (-17.6%) falling the most.
Defensive, ‘safe haven’ sectors including Healthcare (-3.8%),
Utilities (-4.5%) and Real Estate (-5.1%) were the best performing
sectors in the month.
Portfolio News
As a generalisation, Barramundi’s portfolio companies are more
exposed to the second order effects of Coronavirus to trade
and supply chain disruption and slowing economic growth
rather than the direct, first order effects, such as the reduction in
tourism.
Nevertheless, the second (and first) order effects of the virus on
economic activity is rising. This was a theme that came through
in company guidance and management discussion during
reporting season in February. The pathway forward for the virus
and the global economy remains uncertain. Not surprisingly,
management teams erred on the side of caution in their
earnings outlook comments.
Equity markets will experience bouts of volatility like we saw in
February. This may persist for some time. However, we remain
optimistic about our portfolio companies’ longer-term earnings
growth and the returns that can be generated for Barramundi
shareholders.
AUB Group’s (+7.2% in A$) strong February performance was
driven initially by the announcement that it was increasing
its ownership of MGA Whittles from 50% to 100% for $140m
and acquiring a 40% shareholding in BizCover for $132m.
MGA Whittles is AUB Group’s largest brokerage and among
its best performing. BizCover is Australia’s leading online
insurance distribution platform. The company rounded out
the month reporting a 25% increase in underlying earnings
for its December half year. This healthy performance, and the
contribution from the recent acquisitions for the full year (FY),
saw FY earnings guidance lifted from an 8-10% increase to a 16-
18% increase on the prior year.
Next DC (+3.9%) reported a solid first half result and reaffirmed
it is on course to meet its full year guidance. There was
incrementally positive news on a number of data centre builds.
The second data centre site in Sydney is nearing completion
after setbacks in 2019 and development of the second site
in Perth is tracking ahead of schedule. Management remain
confident that the demand for its data centres remains strong in
its core Sydney and Melbourne markets.
Dominos (+2.4%) reported a +6% increase in underlying
earnings that was well received. There are signs that its
European operation is starting to get back into its stride. In
particular, France is performing better after remedial actions
taken last year by the new country CEO. Germany is also
poised for organic growth after completing the integration of
the Hallo Pizza acquisition. Europe is Domino’s largest growth
opportunity for the next few years.
CSL (-0.8%) reported a strong set of results. Its core
immunoglobulin business (40% of group revenues) continued
to take share from peers in a growing market that is short of
supply. Of all its global peers, CSL has been best placed to
address the supply shortage. It is now reaping the benefits from
its investment into increased plasma collection capacity over the
previous six years. Elsewhere, CSL’s influenza business benefitted
from a strong Northern Hemisphere influenza season and a key
competitor missing its delivery deadline.
Wisetech (-39.7%), which provides software to logistics
companies globally, delivered a soft financial result. It also
(sensibly) downgraded its earnings guidance for the full year
given the impact of the Coronavirus-related disruption to
global trade. Wisetech’s valuation has been predicated on high
revenue growth rates both from its own core business as well
as from the acquisitions it has made in the past few years. The
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Share Price Discount to NAV (using NAV to four decimal places).
Monthly Update
March 2020
BRM NAV
$
0.70
SHARE PRICE
$
0.66
as at 29 February 2020
DISCOUNT
1
5.2
%

Sector Split
as at 29 February 2020
Key Details
as at 29 February 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
$135m
GEARING
None (maximum permitted 20%
of gross asset value)
10
%
INFORMATION
TECHNOLOGY
21
%
11
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTHCARE
22
%

FINANCIALS
9
%
CONSUMER
DISCRETIONARY
market was disappointed by the revenue growth rate of the core
business. It was also seeking a stronger contribution from the
acquisitions than was evident in the six months to December
2019.
After rising strongly in January following the announcement of
an acquisition, Link Administration (-31%) fell sharply following
its earnings release in February. This was always going to be a
difficult period for the company, as it grappled with the impacts
of the Australian Government’s “Protecting Your Super” reforms
on its core Retirement & Superannuation Solutions operation
in Australia, and the effect of Brexit on its UK and European
businesses. In addition to reporting a financial result in which
earnings fell 11% in the half year, management reduced Link’s
full year earnings guidance as well. Following a number of
disappointing earnings updates, this was not well received by
the market.
In fairness, the company’s management seems to be executing
acceptably on what it can control. We are looking for a better
earnings performance in 2021 as cost-out initiatives bear fruit
and near-term headwinds abate.
2
%

MATERIALS
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
2
%

REAL ESTATE
oOH!Media (-15.4%) delivered a solid financial result in a difficult
domestic advertising environment. However, market concerns
over the cyclical softness in the advertising industry continues to
weigh on its share price. We remain positive on oOh!media’s
long-term growth prospects as we expect the out of home
advertising sector to continue taking advertising market share
from traditional media.
Portfolio Changes
SEEK’s earnings are partially dependent on the cyclicality of the
employment market. It has a large exposure to Asian markets
and China. With its earnings outlook looking more challenging
in this environment we reduced our position modestly during
the month.
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The Barramundi portfolio also holds cash.

February’s Biggest Movers in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
WISETECH
-40
%
LINK
ADMINISTRATION
-31
%
OOH!MEDIA
-15
%
RIO TINTO
-12%
XERO LIMITED
-14
%
5 Largest Portfolio Positions as at 29 February 2020
CARSALES.COM
7
%
CSL LIMITED
8
%
SEEK
6
%
AUB GROUP
5
%
XERO LIMITED
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 29 February 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(10.8%)(5.0%)+24.2%+11.9%+9.4%
Adjusted NAV Return(6.7%)(3.5%)+18.8%+12.9%+9.0%
Portfolio Performance
Gross Performance Return(7.1%)(3.1%)+22.3%+16.3%+12.3%
Benchmark Index^(7.6%)(5.5%)+8.6%+8.6%+9.3%
Performance to 29 February 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 combines the share price performance, the warrant price performance, the net value of converting any warrants into shares, and the dividends paid to shareholders. It
assumes all dividends are reinvested in the company’s dividend reinvestment plan, and that shareholders exercise their warrants, (if they were in the money), at warrant expiry date
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.