BRM – September 2020 monthly update

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A WORD FROM THE MANAGER
In August Barramundi returned gross performance of +7.7%
and an Adjusted NAV return of +7.6%. This compares to our
benchmark, the ASX200 Index (70% hedged into NZ$), which
returned +3.4%.
Across the market, share price moves were heavily influenced
by the August reporting season. While ‘messy’, on the whole,
reporting companies’ results across different industry sectors
were better than feared and were well received by the market.
At a sector level, the Information Technology (+15.3% in A$),
Consumer Discretionary (+7.8%) and Real Estate (+7.3%)
sectors led the market higher. Utilities (-5.9%), Communication
Services (-5.2%) and Consumer Staples (-0.8%) lagged.
Portfolio News
The majority of our portfolio companies reported robust
financial results in August despite the trying conditions of the
last six months. We highlight a select few of these below.
oOH!Media (+37.3%) had a difficult first half to its December
2020 financial year. Market concerns over its debt level and the
prospect of its advertising revenue dropping substantially due
to COVID-19 lockdowns resulted in it raising new equity several
months ago. This, along with various successful remedial actions
by management, enabled the company to halve its debt levels
over the six months to June. The market responded positively
to this and was happy to look through a 33% fall in revenue
for the half and an underlying bottom line loss of -$17m. As
COVID-19 restrictions ease, audiences for oOH!Media’s out of
home advertising media (billboards, etc.) are returning. With this,
its future earnings prospects are recovering.
ARB Corp (+37.1%) delivered a strong set of results despite
a soft macro environment. Sales fell 50% between the middle
of March and the end of April as customers stopped ordering
due to the escalating uncertainty and impact of COVID-19. But
government stimulus and associated economic initiatives proved
to be the catalyst for a rebound in customer orders in May. This
continued into June and July which were consecutive record
sales months for the company. ARB Corp is also benefitting
from international border closures. This has increased domestic
travel and with it, the demand for 4x4 accessories.
Having lagged the share price performance of its technology
peers in the past few months, Wisetech’s (+36.5%) share
price played catch up post its results in August. Global rollouts
have been secured for four of its core customers in the last six
months, pointing to accelerating demand for its product suite.
Management confirmed that with a broad foundation to the
company now well established, the era of land-grab acquisitions
is largely complete. The pace of acquisitions had been a point of
contention for investors so this was well received by the market.
Wisetech’s guidance for FY2021 included reasonable revenue
growth in what is an uncertain environment. The company is
also focussing on improving the efficiency of its cost base and
hence guided to profit growth in excess of its revenue growth
guidance. This too was well received by the market.
New addition to the portfolio Fineos (+19.3%) got off to a good
start following robust financial results and the announcement of a
complementary acquisition in the month (see below).
AUB Group (+21.2%) rose strongly as its fiscal 2020 earnings
(+15%) clearly showed the resilience of its insurance broking
operations to slower economic activity over much of the
second half of the year due to COVID-19. There are clear signs
that AUB’s new CEO’s plans to reinvigorate the business are
bearing fruit. Moreover, despite current economic uncertainties,
the company was confident enough to provide guidance for
earnings growth of 10-14% for the coming year.
Resmed (-13.7%) fell during August despite reporting a very
strong result (profit +40%) for the last quarter of its fiscal 2020
year. COVID-19 related sales of ventilators outstripped the
adverse impact of lower new patient set-ups on its CPAP devices
due to the restricted operation of doctors’ practices and sleep
labs under lockdown conditions. However, the market reacted
adversely to the prospect of slower revenue growth over coming
quarters as ventilator sales fall from elevated levels quite quickly
while new CPAP set-ups recover only gradually.
SEEK’s (-4.6%) financial result was credible given that it has been
negatively impacted by COVID-19 related job cuts and hiring
freezes. Recruiters and corporates have both reduced the number
of job adverts they pay for on SEEK’s employment marketplace.
Advertising volumes across the key ANZ and Asian markets had
fallen by 65% at its worst during April. Volumes have recovered
since then and were down 17% for the year as a whole. While this
recovery has continued after year end, it is still below pre-COVID
levels in 2019. Offsetting the weakness in ANZ and Asia, revenues
increased in Zhaopin (SEEK’s Chinese subsidiary) where the business
continues to benefit from the structural shift to advertising for jobs
online. Revenues also increased in SEEK’s Online Learning division
which has been a beneficiary of COVID-19 enforced lockdowns.
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Share Price Premium to NAV (using NAV to four decimal places).
MONTHLY UPDATE
September 2020
BRM NAV
$
0.74
$
0.76
Share Price
PREMIUM
1
3.0
%

as at 31 August 2020

SECTOR SPLIT
as at 31 August 2020
KEY DETAILS
as at 31 August 2020
FUND TYPE
Listed Investment Company
INVESTS IN
Growing Australian companies
LISTING DATE
26 October 2006
FINANCIAL YEAR END
30 June
TYPICAL PORTFOLIO SIZE
20-35 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
$0.68
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
209m
MARKET CAPITALISATION
$159m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
21
%
20
%

INDUSTRIALS
19
%
COMMUNICATION
SERVICES

HEALTHCARE
25
%
3
%

FINANCIALS
CONSUMER
STAPLES
7
%
CONSUMER
DISCRETIONARY
Management used the result to reinforce the company’s long-
term focus. SEEK kept its entire permanent staff base on 100%
of their wages during the year and continued to invest in
research and development with a view to be well positioned for
stronger growth in 2022/23.
Portfolio Changes
We added software provider Fineos to the portfolio in early
August. Led by founder (and majority shareholder) Michael
Kelly, Fineos is a leading provider of policy administration
systems software to insurance companies operating in the Life,
Accident & Health (LA&H) insurance industry. Its key Claims
product helps insurance companies efficiently process associated
health insurance related claims.
Fineos counts some of the leading insurers in the USA, Australia
and ACC in NZ amongst its client base. The LA&H industry is in the
early stages of switching from legacy mainframe-centric systems
to digital products like those offered by Fineos. Fineos’ software
is mission critical and best in class. It is well positioned to grow its
client base and has a substantial runway of growth in front of it.
We have followed Fineos closely since it listed on the stock
market in 2019. We have been impressed by management’s
execution since then. They have successfully won new customer
contracts, broadened the company’s reach within existing
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
customers and have successfully converted customers from
using the on-premise version of Fineos’ software to the cloud-
based version.
Fineos acquired a small Silicon valley based company with
complementary software in August, broadening the appeal of
its product offering to its customers. Through this acquisition,
Fineos has also bolstered its developer and sales and marketing
talent pool which will further expedite its growth potential. We
participated in the affiliated equity raising which was used to
fund the acquisition.
During the month we increased our weighting in Wisetech and
CSL following further corroboration of our investment theses
through their financial results.
We reduced our weighting in CBA, Sonic Healthcare and ARB
Corp following the re-rating in their respective share prices over
the past few months
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The Barramundi portfolio also holds cash.

AUGUST’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
Typically the Barramundi portfolio will be invested 90% or more in equities.
OOH!MEDIA
+37
%
ARB CORP
+37
%
WISETECH
+36
%
FINEOS CORP
+19%
AUB GROUP
+21
%
5 LARGEST PORTFOLIO POSITIONS as at 31 August 2020
CARSALES.COM
7
%
CSL LIMITED
8
%
SEEK
6
%
XERO LIMITED
6
%
WISETECH
6
%
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
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 August 2020
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+7.0%+13.9%+31.5%+20.2%+13.5%
Adjusted NAV Return+7.6%+12.8%+13.4%+14.6%+11.7%
Portfolio Performance
Gross Performance Return+7.7%+13.3%+16.4%+17.9%+15.1%
Benchmark Index^+3.4%+6.8%(3.9%)+6.3%+8.3%
PERFORMANCE to 31 August 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 20 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,
Andy Coupe and 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
»On 26 August 2020 a new issue of warrants (BRMWF)
was announced
»The warrants will be issued at no cost to eligible
shareholders and in the ratio of one warrant for every
four Barramundi shares held
»The warrants will be allotted to shareholders in October
2020 and the warrants will be listed on the NZX Main
Board from October 2020. (Information pertaining to
the warrants will be mailed/emailed to shareholders in
September 2020)
»The Exercise Price of each warrant will be $0.70, to be
adjusted down for dividends declared during the period
up to the announcement of the Exercise Price
»The Exercise Date for the new warrants (BRMWF) will be
in October 2021
»The final Exercise Price will be announced and an Exercise
Form will be sent to warrant holders in September 2021