BRM – May 2020 monthly update

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A WORD FROM THE MANAGER
In April Barramundi returned gross performance of +12.3%
and an Adjusted NAV return of +12.4%. This compares to our
benchmark, the ASX200 Index (70% hedged into NZ$), which
returned +9.9%.
Buoyed by significant fiscal and monetary policy stimulus
measures, along with improving COVID-19 data, global equity
markets rebounded strongly in April. All sectors in the ASX200
index finished the month in positive territory. The Energy
(+24.8% in A$), Information Technology (+22.5%), Consumer
Discretionary (+16%) and Materials (+14.2%) sectors led the
market. Consumer Staples (+2.4%), Utilities (+2.7%) and
Financials (+2.8%) lagged the overall market.
Portfolio News
Barramundi’s positive return in the month was broad based.
The majority of our companies contributed strongly to the result
with a good number rising well over 10% each in the month.
Some of the worst performers in March such as oOH!Media
and Credit Corp rebounded the most in April as the market
responded positively to both companies’ capital raisings.
oOH!Media (+61.7% in A$) strengthened its balance sheet in
March through an equity raising, the proceeds of which were
used to repay debt. This was well received by the market and
underpinned its rebound in April. Advertising conditions are
likely to remain poor in the near-term. However, with less debt,
oOH!Media is better positioned to manage this downturn.
Credit Corp (+21%) undertook a $150m equity raising in
late April. We participated in this equity raising. The business
was tracking well through to March. In April, the economic
impact of Australia’s COVID-19 lockdown began to be felt.
Management noted that April collections on purchased debt
ledgers had slipped, consumer lending enquiries had fallen, and
repayment arrears had risen but remained within expectations.
None of this is a great surprise to us given the nature of Credit
Corp’s customer base. Its services are priced to reflect this risk.
By participating in the equity raising we are backing what we
regard as a terrific management team. The additional funding
will primarily give Credit Corp the capacity to take advantage
of the defaulted consumer debt buying opportunities that must
inevitably arise from an economic downturn. It will also provide
extra resilience for an already sound balance sheet in the event
of a deep, protracted slowdown.
Nanosonics (+23.4%) had a business update in early April.
Sales for the first three months of 2020 were significantly up on
the same period in 2019. However, Nanosonics highlighted that
as hospitals work to control COVID-19, direct access to hospitals
is becoming more limited. This may impact sales of its Trophon
device in the short-term. Trophon units already in hospitals have
been redeployed to ICU and emergency departments to help
deal with the increased volume of COVID-19 driven procedures.
Nanosonics has also placed additional Trophons free of charge
in some Spanish ICU departments to help cope with the
increased volume of procedures during COVID-19.
None of this detracts from Nanosonics’ long-term growth
opportunity. It is also pleasing to see Nanosonics take steps in
the near-term to help hospitals where they can. It reflects well
on the calibre of the management team.
Some of the fund’s strongest performers in March gave back
some of the returns in April. This included the likes of Resmed
(-5.2%) and Next DC (-0.6%). There was no negative material
news on either company in the month. Both companies
continue to benefit from the COVID-19 crisis. Next DC because
of an accelerating demand for more cloud-based data storage.
And in Resmed’s case, they’re benefitting from increased
demand for their ventilators because of COVID-19.
The share price performance of our bank shareholdings was
weighed down by the prospect of rising impairments and
dividend deferrals. This was a focus for both NAB (+1.7%) and
ANZ (-0.4%) when they announced results late in the month.
The financial performance for the six months ending March
was solid for both banks. However, the market was rightfully
focussed on the future and how the banks will be impacted by
the ensuing economic downturn.
The financial results gave the first insight into the economic
turndown as both banks applied a significant COVID-19 related
overlay to their debt provisioning. This overlay is forward
looking and captures their best estimate of how the economic
downturn will collectively impact their bad debts in the future.
NAB’s bad debt provisioning was more than double the
provisioning for the previous six months. ANZ’s provisioning and
Westpac’s (-1.3%) pre-announced provisioning were both a bit
higher in percentage terms than NAB’s. In all cases provisioning
was roughly in line with market expectations, and can be
readily absorbed and managed by the banks. If anything, NAB’s
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Share Price Discount to NAV (using NAV to four decimal places).
MONTHLY UPDATE
May 2020
BRM NAV
$
0.62
$
0.61
Share Price
DISCOUNT
1
1.7
%

as at 30 April 2020

SECTOR SPLIT
as at 30 April 2020
KEY DETAILS
as at 30 April 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
$0.58
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
207m
MARKET CAPITALISATION
$126m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
22
%
20
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTHCARE
26
%

FINANCIALS
8
%
CONSUMER
DISCRETIONARY
provisioning was seen as being on the optimistic side. NAB
sensibly undertook a $3.5bn equity raising to bolster its capital
position which was well received by the market. We participated
in this equity raising.
Although ANZ did not raise equity, it did defer the payment
of its interim dividend until there is more visibility on how the
economy performs as Australia and NZ come out of lockdown.
The range of economic outcomes over the next year in Australia
remains broad. The banks’ management teams are being
prudent in strengthening their capital positions further through
taking steps such as raising equity in NAB’s case or deferring the
payment of dividends in ANZ’s case. This positions them well to
weather this downturn and to benefit when the economy does
eventually begin recovering.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We participated in the NAB and Credit Corp equity raisings
in the month and re-balanced some positions. However there
were no other material portfolio changes in the month.
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The Barramundi portfolio also holds cash.

APRIL’S BIGGEST MOVERS in Australian Dollar Terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
OOH!MEDIA
+62
%
NANOSONICS
+23
%
CREDIT CORP GROUP
+21
%
AUB GROUP
+20%
CARSALES.COM
+21
%
5 LARGEST PORTFOLIO POSITIONS as at 30 April 2020
CARSALES.COM
7
%
CSL LIMITED
8
%
COMMONWEALTH
BANK
7
%
SEEK
7
%
XERO LIMITED
6
%
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 30 April 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+17.3%(15.3%)+11.6%+10.5%+7.9%
Adjusted NAV Return+12.4%(14.6%)+2.8%+7.5%+7.3%
Portfolio Performance
Gross Performance Return+12.3%(14.9%)+5.6%+10.7%+10.5%
Benchmark Index^+9.9%(19.4%)(8.5%)+2.0%+6.4%
PERFORMANCE TO 30 APRIL 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
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.
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