BRM – August 2023 monthly update

1
A WORD FROM THE MANAGER
In July, Barramundi’s gross performance return was up 4.0% and
the adjusted NAV return was up 3.8%. This compares to the S&P/
ASX200 Index (70% hedged into NZ$) which was up 2.8%.
The Australian market experienced a broad-based rally in July,
led by the Energy (+8.8%), Financials (+4.9%) and Information
Technology (+4.5%) sectors. The energy market was boosted
by commentary from the Chinese government that it is seeking
a wide range of ways to stimulate the economy from boosting
consumer industries to accelerating growth in light industry.
Financials were supported by a better mix of domestic economic
data (see below), while technology companies benefitted from
robust earnings results from listed tech peers in the US.
Weighed down by another soft month for bellwether CSL’s share
price, which fell -3.2% (in A$), the Healthcare index was the
worst performing sector in the month, falling -1.5%.
Portfolio News
Credit Corp’s (+19.2%) share price increase in July was mostly
given back when the result was delivered on the 1st of August.
After tax profit was towards the bottom end of its guidance
range and 5% below 2022. A very strong result from the
Australian and New Zealand (ANZ) Lending operation was
offset by reduced earnings from the ANZ and US Debt Buying
businesses. All these trends had been signalled in advance. For
2024 both the ANZ Lending and US Debt Buying businesses
are expected to increase earnings but a further fall in ANZ Debt
Buying’s contribution is forecast, as fewer debt ledgers are
expected to be bought.
oOh!Media’s share price rebounded +18.2% in July, following
the announcement of new contract wins. In late June, the
company won the inaugural contract for outdoor advertising on
the new Sydney Metro & Southwest rail line. It followed this up
by winning the Woollahra Council Street Furniture contract and
the contract for the Martin Place Station precinct. No financial
details have been disclosed on these contracts but they all bolster
oOh!Media’s ability to provide advertisers with exposure to CBD
and affluent suburban audiences.
Our online classified advertising holdings, SEEK (+14.6%) and
REA (+10.1%) both performed strongly in July. Both businesses
increased the price of their ads during the month. REA raised
prices between 12% and 18% depending on the advertising tier.
SEEK’s price rises were more varied across its tiers. Advertising
volumes for the two businesses moved in opposite directions.
REA’s Sydney property listing volumes (a big market for it) rose
again. In contrast, SEEK’s job ad volumes continue to fall from
the 2022 peak from a combination of a softer economic outlook
and improving labour supply.
Improving domestic inflation data, a decision by the Reserve Bank
of Australia not to lift interest rates and better than expected
unemployment data ameliorated the market’s expectations
of how negative the bad debt cycle might prove to be for the
Australian banks. This supported the share prices of our bank
shareholdings, including ANZ (+8.6%), NAB (+7.8%), CBA
(+5.4%), and Westpac (+4.7%), all of which rose in the month.
Fibre cement producer, James Hardie (+9.4%) benefitted
from improving data related to a recovery in the US housing
market, where new housing construction has surpassed market
expectations. Housing renovation (also a key driver of demand
for fibre cement) has similarly not fallen as much as expected.
In addition to this, input costs for James Hardie such as lumber
have also been subsiding. This has boosted expectations that the
company’s revenue growth and profit margins in FY24 will be
better than was expected a few months ago.
Macquarie (-1.5%) fell after a tepid Q1 FY24 trading update at
its AGM in the month. The prior financial year was a stellar year
of profit growth for Macquarie led by its commodities and global
markets division. This division’s earnings tend to be volatile from
one year to the next. So, it was always going to be tough for the
company to surpass that level of profitability in FY24. In addition
to this, capital markets activity (M&A, equity and debt raisings)
has until recently been relatively subdued which has also led to
a slower start to the new financial year for the capital markets
division. Macquarie remains well placed to grow its earnings over
the longer term.
During the month, a competitor of CSL (-3.2%) announced
positive trial results for the treatment of the acquired
autoimmune disease, chronic inflammatory demyelinating
polyneuropathy (CIDP). Headline results from the trial were in-line
with similar trials done by CSL for the treatment of CIDP using
immunoglobulin therapies. Therefore, even if the new therapy
gets FDA approval, we think it will likely be seen as another
option for doctors to use in order to treat CIDP. This will limit the
extent to which this new therapy cannibalises CSL’s market share
for CIDP treatment.
1
Share Price Discount to NAV (using the net asset value per share, after expenses, fees and tax, to four decimal places).
MONTHLY UPDATE
August 2023
$
0.73
Share Price
DISCOUNT
1
2.5
%

as at 31 July 2023
BRM NAV
$
0.75

SECTOR SPLIT
as at 31 July 2023
KEY DETAILS
as at 31 July 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
$0.72
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
276m
MARKET CAPITALISATION
$201m
GEARING
None (maximum permitted 20%
of gross asset value)
3
%
18
%
18
%

INDUSTRIALS
18
%
INFORMATION
TECHNOLOGY

HEALTH CARE
26
%
5
%
2
%

FINANCIALS
CASH &
DERIVATIVES
CONSUMER
STAPLES
4
%
Ansell’s (-9.7%) trading update in the month noted that it had
achieved 2023 underlying after tax profit in the middle of its
guidance range, albeit aided by the writeback of some incentive
accruals relating to previous years. Underlying earnings will
be around 18% below 2022. Revenue from Ansell’s Industrial
business held up well and is expected to continue to grow for the
2024 financial year. The Healthcare business has suffered from
post pandemic distributor destocking and price declines, so its
2023 revenue is down about 24%. Destocking is now expected
to extend into the FY24 year so Ansell will slow production to
reduce its own inventory level. This, along with a myriad of other
negative factors (FX, higher interest & tax rates, no incentive
writeback), will be a drag on FY24 earnings. Initial guidance is
for underlying FY24 earnings to drop a further 3-20%. Alongside
this, Ansell has announced a range of productivity and IT
initiatives in an effort to improve the company’s efficiency
.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
We reduced our Wisetech (+7.5%) position late in the month.
Wisetech has had a stellar year with the share price rising circa 70%
calendar year to date. The company has been performing well and
has a great long term outlook. However, given the magnitude of
the share price move, we think the valuation outlook is more evenly
balanced and consequently have reduced our weighting.
We also reduced our target weight in Ansell in the month, noting
the operational challenges facing the company which detract from its
earnings growth over the next few years (see above).
2
6
%
CONSUMER
DISCRETIONARY
MATERIALS
COMMUNICATION
SERVICES

JULY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
CREDIT CORP
GROUP
+19
%
oOH!MEDIA
+18
%
SEEK
+15
%
ANSELL
-10
%
REA GROUP
+10
%
5 LARGEST PORTFOLIO POSITIONS as at 31 July 2023
AUB GROUP
6
%
CSL LIMITED
10
%
CARSALES.COM
6
%
WISETECH
5
%
RESMED
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+2.8%+3.5%(5.7%)+11.5%+14.6%
Adjusted NAV Return+3.8%+5.9%+12.4%+13.4%+11.5%
Portfolio Performance
Gross Performance Return+4.0%+6.4%+15.7%+16.0%+14.3%
Benchmark Index^+2.8%+2.6%+11.3%+12.5%+7.8%
PERFORMANCE to 31 July 2023
3
TOTAL SHAREHOLDER RETURN to 31 July 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