BRM – June 2023 monthly update

1
A WORD FROM THE MANAGER
In May, Barramundi’s gross performance return was down 0.5% and
the adjusted NAV return was also down 0.5%. This compares to the
S&P/ASX200 Index (70% hedged into NZ$) which fell 2.2%.
The Australian share market was dragged down in the month by a
mixture of negative economic data. This included a stronger than
expected annual inflation increase of 6.8% for April, released late in
the month. This increased the odds of a further interest rate hike by
the RBA. The Consumer Discretionary sector (-6.2%) was the worst
performing sector in the month. Soft interest margin data within
banks results (see below) resulted in Financials (-4.8%) also weighing
on index returns. Chinese economic data also disappointed which
helped drag Materials (-4.5%) lower. Boosted by strong earnings
results from technology companies in both Australia and the US, the
Information Technology sector (+11.6%) was the best performing
sector in May.
Portfolio News
Xero’s (+17.8% in A$) share price rose strongly after releasing
a pleasing 2023 financial year-end result. Revenue growth of
+28% was in line with market expectations. However underlying
profitability was better than expected. Total subscriber growth of
14% also allayed some concerns about Xero’s growth trajectory. The
core markets of Australia and NZ continue to perform well, and Xero
subscriber numbers rebounded in the UK. However, North America
remains a struggle for the company.
Xero’s new CEO seems to be settling in well. She has emphasised
that the company will be more disciplined and focused in the way
it manages its resources. Xero will have better balance between
focussing on profitability and cash generation and investing
aggressively in growth initiatives. The CEO and her team are
reviewing Xero’s approach to the North American market and will
provide an update later on in the year on how they intend to tackle
that opportunity.
The share price of fibre cement siding manufacturer, James Hardie
(+13.1%), also rose strongly after the release of its 2023 financial
year end results. James Hardie’s results were in line with recent
guidance given to the market. However, the company’s outlook
for the June ’23 quarter was ahead of market expectations.
Management expects sales volumes for the rest of the year to be
substantially lower than last year. Offsetting this, the company
expects profitability to be buffered by increased pricing of its
products and disciplined cost management.
NEXTDC (+11.7%) raised A$618m of new equity in May to fund
future growth projects. We participated in the equity raising. Of
this, A$390m has been earmarked to fund expansion into two
new regions, Kuala Lumpur and Auckland. A$150m will be used to
accelerate the build at its Sydney (S3) data centre. This comes after
NEXTDC had only last month announced the largest customer win in
Australian history. This customer will be hosted at S3. The balance of
the funds would be used to fund future growth projects. The share
price also possibly benefitted from the improving sentiment towards
companies benefitting from the growth in Artificial Intelligence
(“AI”). NEXTDC is seen as a beneficiary of the generative AI trend.
Generative AI will likely require vastly increased data storage and
computing power from data centres like those built by NEXTDC.
Macquarie (-4.1%) delivered FY23 after tax profit of over A$5.1bn
at its results release in May, +10% higher than the prior year, and
ahead of market expectations. The reason for the muted share
price reaction we suspect is because the earnings ‘beat’ came from
Macquarie’s commodities and global markets (CGM) division. CGM
derives a lot of its earnings through commodity and energy related
(e.g., gas, electricity) trading activities. Trading income is volatile, so
investors (and Macquarie management) are reticent to extrapolate
CGM’s FY23 profitability into the future. That said, Macquarie
delivered credible results across its other divisions in what has been a
trying year for financial market participants. The business is well run,
well capitalised, and well positioned for the future.
Our bank shareholdings weighed on portfolio performance. NAB
(-7.1%), ANZ (-2.6%) and Westpac’s (-4.9%) results followed in
CBA’s (-2.6%) footsteps from earlier in the year, in that, while the
results were good, net interest margins generally disappointed. With
the economic environment getting tougher, profit growth will likely
be harder to come by in the coming year.
As part of a A$165m equity raising, AUB Group (-8.0%) lifted after
tax profit guidance for its FY23 year by a further 4%, to A$120-
124m. This represents growth of 65% on 2022 reflecting both solid
organic growth and the inclusion of nine months of earnings from a
major UK acquisition, Tysers. Organic growth is being underpinned
by the continuing rise in insurance premium rates. This is also
benefitting Tysers, which is performing ahead of AUB’s expectations.
Tysers was mainly purchased for its wholesale broking business, but it
also includes a retail broking operation. Originally the retail business
was to be sold into a 50/50 joint venture (JV) with PSC Insurance
Group, another ASX-listed insurance broker with pre-existing UK
operations. The JV is no longer proceeding as PSC wanted a pathway
to full ownership of the retail business and AUB wished to maintain
an on-going shareholding. In lieu of the $100m that the formation of
the JV would have released to AUB, it has now raised new equity. We
participated in the equity raising.
oOh!media’s share price fell 25.8% over May in what we view as
an overreaction to a trading update early in the month. This update
indicated March quarter revenue was up by 3% on the prior year
1
Share Price Premium to NAV (using the net asset value per share, after expenses, fees and tax, to four decimal places).
MONTHLY UPDATE
June 2023
$
0.72
Share Price
PREMIUM
1
0.3
%

as at 31 May 2023
BRM NAV
$
0.72

SECTOR SPLIT
as at 31 May 2023
KEY DETAILS
as at 31 May 2023
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
$0.71
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
274m
MARKET CAPITALISATION
$197m
GEARING
None (maximum permitted 20%
of gross asset value)
3
%
18
%
21
%

INDUSTRIALS
17
%
COMMUNICATION
SERVICES

HEALTH CARE
24
%
4
%
3
%

FINANCIALS
CASH &
DERIVATIVES
CONSUMER
STAPLES
4
%
and that the June quarter to that date was slightly ahead of 2022. At
the company’s AGM a week later, the June quarter was reported as
running 3% ahead of last year, with May and June pacing at double
digit growth to offset April’s 10% decline. Softer Government-related
spend versus last year’s COVID & Federal election advertising are
obvious current headwinds, as is the loss of some market share to
competitor QMS’ new City of Sydney Street furniture assets. We
expect the out-of-home advertising sector, including oOh!media,
to outperform softening overall ad spend this year. Some out-of-
home formats are still recovering post COVID, and these will garner
additional spend as audiences return.
Over the longer term, out-of-home should continue to take share
from other media formats. This will be driven by ongoing digitisation
of its asset base, increasingly sophisticated audience measurement
giving advertisers confidence of the return on their spend, and
greater programmatic trading of out-of-home inventory giving
advertisers more flexibility.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We participated in both the AUB and NEXTDC equity raisings and
topped up our oOh!media shareholding after it fell following its
trading update.
2
6
%
CONSUMER
DISCRETIONARY
MATERIALS
INFORMATION
TECHNOLOGY

MAY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
XERO
+18
%
JAMES HARDIE
+13
%
PWR HOLDINGS
-12
%
oOH!MEDIA
-26
%
NANASONICS
-12
%
5 LARGEST PORTFOLIO POSITIONS as at 31 May 2023
WISETECH
7
%
CSL LIMITED
10
%
CARSALES.COM
6
%
AUB GROUP
6
%
XERO
5
%
The remaining portfolio is made up of another 20 stocks and cash.
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return(0.0%)(3.5%)(14.4%)+12.6%+14.3%
Adjusted NAV Return(0.5%)+3.5%+10.8%+12.8%+11.0%
Portfolio Performance
Gross Performance Return(0.5%)+4.4%+13.5%+15.3%+13.9%
Benchmark Index^(2.2%)(0.9%)+2.7%+11.9%+7.8%
PERFORMANCE to 31 May 2023
3
TOTAL SHAREHOLDER RETURN to 31 May 2023
^Benchmark Index: 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 dividends (and other capital management initiatives) and after expenses, fees and tax,
»adjusted NAV return – the percentage change in the adjusted NAV,
»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 https://barramundi.co.nz/about-barramundi/barramundi-policies
Share Price/Total Shareholder Return
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Oct
2006
Oct
2007
Oct
2011
Oct
2013
Oct
2014
Oct
2015
Oct
2008
Oct
2009
Oct
2010
Oct
2016
Oct
2020
Oct
2012
Oct
2022
Share Price Total Shareholder Return
Oct
2017
Oct
2018
Oct
2019

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
Email: enquire@barramundi.co.nz | www.barramundi.co.nz
4
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142
Phone: +64 9 488 8777
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
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
and Delano Gallagher (Senior Investment
Analysts) 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 Andy Coupe (Chair),
Carol Campbell, David
McClatchy and Fiona Oliver.
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 utilised
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 Barramundi warrants on issue