BRM – May 2021 monthly update

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A WORD FROM THE MANAGER
In April Barramundi returned gross performance of +4.5% and an
adjusted NAV return of +4.1%. This compares to the ASX200 Index
which returned +3.2% (70% hedged into NZ$).
Having risen strongly in the previous few months, long-term
interest rates in Australia stabilised in April. The Australian
Government 10yr yield finished the month at 1.75%, down slightly
from 1.79% at the end of March.
This supported a broad strengthening in Australian share prices
across most sectors in the month. The Information Technology
(+9.7%), Materials (+6.8%) and Industrials (+4.3%) sectors led
the market higher. Energy (-4.9%), Consumer Staples (-2.6%) and
Utilities (-1.2%) lagged.
Portfolio News
Trading updates from a number of our portfolio companies
generally pointed to an improving economic backdrop.
Audinate (+15.1% in A$) announced that it had achieved
record revenues in the March quarter. This has been driven by
new product launches, as well as a rebound in demand from its
customers whose own businesses are recovering from the COVID
induced slowdown. Customers, concerned about the continued
disruption in supply chains, have also increased their orders as a
precautionary measure. As supply chain disruption subsides, this
source of demand is likely to subside.
Share prices of our online classified advertising businesses REA
Group (+11.7%), Carsales (+11.7%) and SEEK (+8.6%) all
rose strongly, as did the share price of software companies, Xero
(+11.9%) and Wisetech (+8.2%). Although we had no company
specific news related to them, the underlying operating economic
conditions for each of these businesses remains robust.
Glove and protective equipment (“PPE”) manufacturer Ansell’s
share price (+7.7%) responded positively to another upgrade to
fiscal 2021 earnings guidance. The latest expectations are 19%
higher than those provided barely three months ago and they infer
earnings will be nearly 60% above 2020. This reflects elevated
demand for PPE as COVID infections continue. We believe it will be
difficult for Ansell to match 2021 earnings for the next one to two
years. However, relative to pre-COVID times, it is likely that overall
levels of demand for Ansell’s products has been raised by the
increased focus on health and safety practices that the pandemic
has prompted.
Resmed (+3.6%) reported a third quarter 2021 earnings result
that broadly met expectations for normalised earnings. Resmed’s
underlying revenue growth rate is below historical levels. This
is because COVID has resulted in fewer people venturing out
to sleep labs to be diagnosed with sleep-disordered breathing.
As vaccination programmes ramp-up, we expect the number
of patients being diagnosed to rise. Resmed has suggested its
revenue growth rate will be back above 10% per year by the end
of Fiscal 2022. Resmed also announced a US$255m provision to
settle a long running dispute with the Australian Tax Office.
Similar to Resmed, CSL’s (+2.5%) plasma collections have
also been impacted by COVID-19 related social distancing
considerations. The path to a recovery in plasma collections
was delayed by the resurgence in COVID infections in late 2020.
Encouragingly, the US vaccine rollout and falling COVID-19
case numbers in the US in 2021 has recently resulted in plasma
collections beginning to recover. We expect this recovery to
continue throughout 2021.
Brambles (-1.7%) delivered its third quarter 2021 trading update
during April. For the nine months to the end of March the
company has achieved constant currency revenue growth of 6%.
Full year guidance for revenue growth of 4-6% and underlying
profit growth of 5-7% (both constant currency) was reconfirmed.
The company again noted that its costs were rising (labour,
transport, lumber). That said, most of the company’s customer
contracts now contain cost indexation and surcharge clauses.
These, combined with its US automation programme and supply
chain efficiency and procurement initiatives suggest to us that
Brambles is well placed to manage any cost headwinds over the
medium term.
Woolworths (-3.8%) reported its third quarter 2021 results
in April. Comparing this result to the same quarter in 2020 is
obscured by the fact that a year ago, supermarket sales were
elevated as they benefitted from panic buying in Australia and NZ
as we entered our respective lockdowns. However, adjusting for
this and comparing this result to a more ‘normal’ March quarter
of 2019, we note that Woolworths’ Australian food sales grew
+4.1% pa on a like for like basis. This is in line with the typical
growth rate delivered by the company pre-COVID. Woolworths
continues to perform well. In particular, its online sales are
growing strongly and it is outperforming the competition.
1
Share Price Premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
MONTHLY UPDATE
May 2021
BRM NAV
$
0.84
$
1.08
Share Price
Warrant PricePREMIUM
1
$
0.30 37.8
%

as at 30 April 2021

SECTOR SPLIT
as at 30 April 2021
KEY DETAILS
as at 30 April 2021
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
$0.64
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
213m
MARKET CAPITALISATION
$230m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
20
%
21
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTHCARE
27
%
3
%

FINANCIALS
CONSUMER
STAPLES
5
%
CONSUMER
DISCRETIONARY
Credit Corp’s share price sank by -11.2% over April. A market
update towards the end of April reconfirmed guidance for
underlying earnings growth of 7-13% for the 2021 fiscal year.
We suspect the market has been progressively coming to the
view that lower debt sale volumes by Australasian and US lenders
may be a headwind to earnings in fiscal 2022. Credit Corp has
indicated that sales volumes are around 50% below pre-COVID
levels as stimulus and constrained spending options, along with
bank forbearance, are temporarily lowering charge-off rates.
However, it also suggests there are early signs of a recovery in debt
sales volumes. Over the next couple of years we expect a return
to normal sales volumes by lenders. We expect Credit Corp’s US
debt buying operation to increase its share of that market. And
we expect the company’s Australian consumer lending book to be
rebuilt to pre-COVID levels.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We had no significant portfolio changes in the month.
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The Barramundi portfolio also holds cash.

APRIL’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.
AUDINATE
+15
%
XERO
+12
%
REA GROUP
+12
%
NEXTDC
+11%
CARSALES.COM
+12
%
5 LARGEST PORTFOLIO POSITIONS as at 30 April 2021
CARSALES.COM
6
%
CSL LIMITED
8
%
WISETECH
6
%
SEEK
6
%
CBA
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
Share PriceTotal Shareholder Return
$
0.00
$
0.50
$
1.00
$
1.50
$
2.00
$
2.50
$
3.00
$
3.50
Oct
2017
Oct
2018
Oct
2019
Oct
2020
TOTAL SHAREHOLDER RETURN to 30 April 2021
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+12.0%+15.7%+102.4%+36.9%+23.5%
Adjusted NAV Return+4.1%+7.7%+45.2%+17.8%+13.5%
Portfolio Performance
Gross Performance Return+4.5%+8.2%+49.6%+21.6%+17.0%
Benchmark Index^+3.2%+8.0%+31.5%+9.8%+10.5%
PERFORMANCE to 30 April 2021
^Benchmark index: S&P/ASX Small Ords Industrial Gross Index until 30 September 2015 & S&P/ASX200 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 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 a 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
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
MANAGEMENT
The Manager has authority delegated
to it from the Board to invest according
to the Management Agreement and
other written policies. 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 Board of Barramundi
comprises independent
directors Alistair Ryan (Chair),
Carol Campbell, Andy Coupe
and Carmel Fisher.
Warrants
»On 26 August 2020 a new issue of warrants (BRMWF)
was announced
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every four
Barramundi shares held
»The warrants were allotted to shareholders in October
2020 and the warrants listed on the NZX Main Board
from early October 2020. (Information pertaining to
the warrants was mailed/emailed to shareholders in
September 2020)
»The Exercise Price of each warrant is $0.70, adjusted
down for the aggregate amount per Share of any cash
dividends declared on the Shares with a record date
during the period commencing on the date of allotment
of the Warrants and ending on the last Business
Day before the final Exercise Price is announced by
Barramundi. Dividends totalling 3.03 cents per share have
been declared to date and there are two more dividends
expected to be declared in the remaining period up to the
announcement of the 29 October 2021 exercise price
»The Exercise Date for the new warrants (BRMWF) is
29 October 2021
»The final Exercise Price will be announced and an Exercise
Form sent to warrant holders in September 2021