BRM - June 2024 Monthly Update

1
A WORD FROM THE MANAGER
Barramundi’s gross performance return for May was down -0.7% and the
adjusted NAV return was down -0.9%. This compares to the S&P/ASX200
Index (70% hedged into NZ$) which was up +0.5% over the month.
May registered a mixed month of performance across and within sectors.
Earnings results from a range of companies strongly influenced sector
returns. Information Technology (+5.4%) was the best performing
sector. With interest rates stable, Utilities (+3.4%) and Real Estate
(+1.8%) similarly supported the ASX200 Index’s return. Communication
Services (-2.6%) was the worst performing sector, weighed down by a
disappointing result from Spark (-12.2%). The Consumer Staples (-1%)
and Consumer Discretionary (-0.7%) sectors also lagged following signs
of softening consumer expenditure.
Portfolio News
Xero (+10.6% in A$) delivered a strong financial result in May with the
first signs that the strategic focus of the company highlighted at the
recent investor day is bearing fruit. Revenue increased 22% helped by
higher prices and an 11% increase in total subscriber growth. Pleasingly,
strong subscriber growth was registered in important large markets for
Xero including Australia (+13%) and the UK (11%). Disciplined cost
control resulted in operating expenses as a percent of revenue falling
sharply from 81% in FY23 to 73% in FY24. This contributed to free
cash flow more than tripling to over $340m in FY24. Xero was at pains
to point out that the company continues to invest in talent (people) and
in product development meaning costs likely increase as a proportion of
revenue in FY25. On the evidence of the significant progress achieved in
FY24, this cost guidance was taken in the market’s stride.
AUB (+4.5%) acquired 70% of Pacific Indemnity, an underwriting
agency in Australia focussed on specialty financial lines underwriting
capability and adding to AUB’s scale in ‘specialty agencies’. AUB paid
A$105m for the shareholding with a deferred payment due in 18 months
post settlement based on a sliding scale, contingent on performance.
Although the price looked relatively full, this acquisition aligns with
AUB’s stated intention to add scale in speciality agencies, adding to the
strength of the overall business. To fund this acquisition and provide
AUB with capacity to undertake further acquisitions, the company raised
A$200m of equity in the month. This was well received by the market.
We participated in and supported the equity raising.
Macquarie’s (MQG) (+3.9%) financial results delivered in May were
below the record earnings of the prior year which had been bolstered
by significant volatility in energy and commodity markets. However,
MQG’s divisions delivered a credible result in what has been a difficult
environment for capital markets activity. The market became more
comfortable that its earnings will grow once again in FY25, as capital
markets activity improves.
In early May REA (+3.9%) announced its March quarter result. Revenues
in its core Australian Residential business grew +27%, led by price
increases of +13%, further upsell of customers to its Premier+ product,
positive mix benefits as Sydney and Melbourne volumes remained ahead
of the rest of the market, and +6% growth in national listings. It also
announced that the average price increase for the year beginning 1 July
would be +10%. This price increase will provide the base for double-digit
revenue growth (excluding the impact of listing volumes) in FY25.
SEEK fell -7.5% during May as job ads continued to fall from the highs
experienced in 2023. April job ad volumes fell -18.6% year-on-year
as the labour market continues to ease, with the seasonally adjusted
unemployment rate rising to 4.1% from 3.9% in March. Despite this,
SEEK are doing a good job in controlling the controllables and surveys
suggest it has been able to increase the average price it charges for a job
listing. In May it also started trialling two new product tiers in Australia.
These products sit in between its current standout and premium products
in terms of function and price. They are examples of SEEK looking at ways
to increase the monetisation of its platform.
James Hardies (JHX) (-13.7%) delivered a respectable FY24 earnings
result in May. In its important US market, JHX delivered revenue growth
of 13%, helped by both volume (+9%) and price (+4%) increases. Cost
and working capital discipline led to operating cash flow which was 50%
higher than in FY23. JHX continues to take market share in key markets,
which we like.
The poor share price performance was a consequence of the company
delivering maiden earnings guidance for FY25 which underwhelmed
market expectations. The majority of JHX’s revenue in the US stems from
repair and remodelling (“R&R”) building work rather than new build
construction. Given interest rates don’t look as if they’ll be cut as fast as
the market thought a few months ago, expectations around R&R activity
over FY25 in the US have fallen. JHX has also been investing strongly in
sales and marketing expenditure and in addition management noted that
input costs also seem to be rising – both facets tempering their view for
FY25 earnings guidance. It’s never easy to pick when the ‘cycle’ will turn
in one’s favour. However, given JHX is taking market share in its category
and is investing for the future, we think it remains in a strong position to
do well when the R&R cycle does pick up.
Audinate (-16.6%) held an investor day in Sydney which we attended.
The company did a great job illustrating its expansion into networked
audio products through showcasing its ‘Dante Connect’ and ‘Dante
Director’ software products. As the pro-AV industry moves to the cloud,
more AV devices will connect on networks. This increases the importance
of controlling and securing the AV endpoints through the platforms
Audinate is developing. In a networked office environment for example,
it’s important that when Boards of directors or others meet in confidential
settings that the audio signals and speakers in the room are secure and
1
Share Price Discount to NAV (including warrant price on a pro-rated basis and using the net asset value per share, after expenses, fees and tax, to four decimal places).
MONTHLY UPDATE
June 2024
$
0.73
Share Price
as at 31 May 2024
DISCOUNT
1
2.4
%

BRM NAV
$
0.76
$
0.05
Warrant Price

SECTOR SPLIT
as at 31 May 2024
KEY DETAILS
as at 31 May 2024
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
281m
MARKET CAPITALISATION
$205m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
18
%
22
%

CONSUMER
DISCRETIONARY
15
%
COMMUNICATION
SERVICES
24
%
2
%
3
%

FINANCIALS
CONSUMER
STAPLES
MATERIALS
5
%
locked down. Dante’s product suite provides this capability. The company
continues to invest strongly in research and development and is pleasingly
broadening its reach into the networked AV industry.
Unrelated to the investor day, the share price fell sharply following
the resignation of longstanding CFO, Rob Goss, later in the month for
personal reasons. Rob is staying on for a few months (and preparing the
year end accounts) while Audinate look for a replacement. We wish Rob
well for the future.
Portfolio Changes
During the month we increased our target weighting in SEEK as it
is looking attractively valued. We also lifted our target weighting in
Audinate. This was partially based on valuation grounds and also because
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
of the progress it has made in developing its networked software
products which management highlighted at its investor day.
We reduced our target weight in Woolworths given an underwhelming
performance from management, and noting that they are transitioning to
a new CEO during 2024.
2
7
%
INDUSTRIALS
CASH &
DERIVATIVES
INFORMATION
TECHNOLOGY

HEALTH CARE

MAY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
XERO
+11
%
FINEOS CORP
-11
%
JAMES HARDIE
-14
%
AUDINATE GROUP
-17
%
oOH!MEDIA
-15
%
5 LARGEST PORTFOLIO POSITIONS as at 31 May 2024
WISETECH
8
%
CSL LIMITED
10
%
XERO
5
%
AUB GROUP
5
%
SEEK
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+2.6%(0.6%)+11.9%(3.9%)+13.9%
Adjusted NAV Return(0.9%)(3.2%)+14.6%+6.7%+12.0%
Portfolio Performance
Gross Performance Return(0.7%)(3.0%)+17.6%+8.9%+14.7%
Benchmark Index^+0.5%+1.8%+14.0%+7.6%+8.4%
PERFORMANCE to 31 May 2024
3
TOTAL SHAREHOLDER RETURN to 31 May 2024
^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 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
Oct
2021
Oct
2023

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
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
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.
Warrants
»Barramundi announced an issue of warrants (BRMWH)
on 9 October 2023
»Information pertaining to the warrants was mailed/
emailed to all shareholders on Tuesday 17 October 2023
»The warrants were issued at no cost to eligible
shareholders in the ratio of one warrant for every four
Barramundi shares held, based on the record date of
25 October 2023
»The warrants were allotted to shareholders on 26
October 2023 and listed on the NZX Main Board from
27 October 2023
»The Exercise Price of each warrant is $0.69, 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
»The Exercise Date for the warrants is 25 October 2024