BRM – September 2021 monthly update

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A WORD FROM THE MANAGER
In August Barramundi returned gross performance of +9.7% and
an adjusted NAV return of +9.2%. This compares to the ASX200
Index which returned +2.1% (70% hedged into NZ$).
Returns across the market were strongly influenced by individual
company financial results released during the reporting season. Led
by Wisetech (see below), and the acquisition of Afterpay (which we
wrote about last month) the Information Technology (+16.8% in
A$) sector led the market higher in the month. Healthcare (+6.8%)
and Consumer Staples (+6.5%) companies also delivered strong
returns. The falling iron ore price helped drag Materials (-7.9%)
lower. The Energy sector (-5.1%) also lagged.
Portfolio News
August was a great month for Barramundi. The majority of our
companies that reported are navigating this complex business
environment very well and delivered strong financial results.
Wisetech (+57% in A$), which provides critical software to the
logistics industry, delivered an outstanding FY21 financial result.
Wisetech’s core revenue grew around 25% in the last year. The
largest freight and logistics companies globally (its key customers)
such as DHL and DSV continue to grow strongly and have also
benefitted from the rebound in global trade.
The positive surprise was the +63% increase in Wisetech’s
EBITDA (a key measure of pre-tax profits). EBITDA grew faster
than revenue for three key reasons. First: product development
costs are increasing at a slower rate than revenue growth. This
is a function of Wisetech’s scale. Wisetech is also automating
and reducing the amount of development expenditure allocated
to old legacy products of companies it has acquired in the past.
Second: sales and marketing costs fell over the year. This is partly
because there was less marketing related travel, and fewer trade
shows due to COVID-19. Some of this expenditure is expected
to return in the future. Wisetech has also been disciplined in
focussing its marketing efforts on large logistics companies and
reducing its focus on the smaller customers which have absorbed
a disproportionate amount of marketing spend historically. Third:
general expenses are rising more slowly than revenue which is also
a function of Wisetech’s increased scale.
Investors responded positively to the result given this increased
profit margin is seen as an inflection point in Wisetech’s
profitability. The company expects its profit margin to increase
further through FY22.
Reflecting fewer COVID-related trading restrictions, Domino’s
(+35.2%) reported a +29% increase in underlying earnings for its
June 2021 year, helped by strong growth in new stores as well as
an increase in sales growth across its existing store network. The
company has increased its long-term store target across its various
regions to 6,650 stores – over twice its current number of stores. It
is also accelerating the speed with which it is rolling out these new
stores, adding to its overall growth rate.
Nanosonics (+24.7%) results showed that in its core US market,
increased access to hospitals and a recovery in ultrasound
appointments saw revenues increase +54% on the previous
six months. It saw a similar recovery in its other geographies.
Management also gave further detail on its long-awaited new
product. Coris is a decontamination device for use on reusable
endoscopes. More healthcare-associated outbreaks have been
linked to contaminated endoscopes than many other medical
devices. As such, if Nanosonics can successfully establish Coris as
the standard of care for endoscope decontamination, the revenue
opportunity will be significant.
The market reacted positively to Fineos’ (+18.1%) strong financial
results and to management’s expectation that revenue growth will
continue to be supported by demand from new clients. Many of
Fineos’ insurance provider customers had frozen their budgets at
the start of the pandemic. As global economies have reopened,
investment spending has recommenced which is encouraging.
PWR Holdings (+16.0%) released another set of excellent results
in August. Its key divisions grew revenues despite disruptions
caused by lockdowns and supply constraints. Its Emerging Tech
and Automotive Aftermarket divisions did particularly well.
Demand for PWR’s innovative emerging tech products in non-auto
and auto-markets continues to strengthen. PWR has also invested
strongly in its aftermarket division, adding extra colleagues and it
recently released an online store for aftermarket sales. Aftermarket
sales grew +29% in FY21.
There were no major surprises in Carsales (+14.7%) financial
result. Carsales generated respectable earnings growth in its key
divisions. The company announced a few growth initiatives which
the market liked. In particular, Carsales has launched an online car
selling service called Carsales Select. Through this platform, car
dealers can sell their vehicles online via the Carsales website. This
opens up a significant new revenue opportunity for Carsales longer
term. Car dealers are no longer limited to selling vehicles at their
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Share Price Premium to NAV (including warrant price on a pro-rated basis and using NAV to four decimal places).
MONTHLY UPDATE
September 2021
BRM NAV
$
0.94
$
1.08
Share Price
Warrant PricePREMIUM
1
$
0.33 24.0
%

as at 31 August 2021

SECTOR SPLIT
as at 31 August 2021
KEY DETAILS
as at 31 August 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
$0.87
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
214m
MARKET CAPITALISATION
$231m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
20
%
21
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTH CARE
25
%
3
%

FINANCIALS
CONSUMER
STAPLES
5
%
CONSUMER
DISCRETIONARY
physical dealerships. Carsales is also countering the potential threat
to traditional dealers posed by large international online-only car
dealers that have sprung up in recent years such as Cazoo and
Carvana. Investors will no doubt watch the development of this
initiative closely.
Credit Corp’s (+11.5%) underlying earnings were up +11% for
the June 2021 year, meeting its earnings guidance. US Debt Buying
was a standout, doubling its contribution. Credit Corp has guided
to FY22 earnings being in a range of -4% to +8% relative to FY21.
This is driven by further expected growth in the US Debt Buying
market and recovery in its lending book. The AU/NZ Debt Buying is
expected to be subdued.
Ansell (-6.8%) has been a clear COVID-19 beneficiary. For its
June 2021 year it reported +23% and +49% growth respectively
in underlying sales and earnings. Unsurprisingly, its Healthcare
business was particularly strong. Although it had slower growth,
the Industrial business benefitted from improving economic
conditions in the second half as COVID restrictions eased. For the
2022 year it is likely that there will be lower demand and price
increases for products that have benefitted the most from COVID-
related demand. This resulted in relatively tepid earnings growth
guidance being given for 2022 and resulted in the share price
falling. For us, the more important observation is that Ansell’s
sustainable earnings now sit well above their pre-COVID level.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We increased our positions in three of our Australian bank
shareholdings (ANZ (+0.5%), NAB (+6.9%) and Westpac
(+5.3%) during the month. The bad debt experience at the banks
has been significantly better than expected a year ago. Coupled
with their strong capital positions, three of the four major banks
have announced share buybacks and are increasing dividends,
both of which are supportive for bank share prices. To help fund
these increased weightings, we reduced our weighting in Sonic
Healthcare (+8.5%).
We also increased our weighting in data centre operator, Next
DC (+3.8%). It continues to benefit from the structural growth
in demand for data centre capacity as computer services are
increasingly shifted to the cloud.
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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.
WISETECH
+57
%
DOMINO’S PIZZA
+35
%
NANOSONICS
+25
%
PWR HOLDINGS
+16%
FINEOS
+18
%
5 LARGEST PORTFOLIO POSITIONS as at 31 August 2021
CARSALES.COM
7
%
CSL LIMITED
8
%
WISETECH
7
%
SEEK
5
%
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 31 August 2021
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+4.6%+3.2%+63.0%+33.2%+23.0%
Adjusted NAV Return+9.2%+14.0%+36.6%+18.2%+16.0%
Portfolio Performance
Gross Performance Return+9.7%+15.1%+41.9%+21.8%+19.4%
Benchmark Index^+2.1%+5.3%+26.3%+9.6%+11.3%
PERFORMANCE to 31 August 2021
^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 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 David McClatchy.
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 6.35 cents per share have
been declared to date and there are no more dividend
expected to be declared in the remaining period, before
the final Exercise Price is announced by Barramundi.
»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