BRM – December 2021 monthly update

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A WORD FROM THE MANAGER
In November, Barramundi’s gross performance return was
down (0.7%) and the adjusted NAV was down (0.9%). This
compares to the ASX200 Index (70% hedged into NZ$) which
was down (0.7%).
It was a volatile month for the Australian market, with the
emergence of the Omicron COVID-19 variant late in the
month impacting market returns. The materials (+6.2%) sector
led the market higher helped by a strong rebound in junior
explorers as well as Iron Ore major, Fortescue which rose 22%.
Communication Services (+5.2%) and the defensive Consumer
Staples (+4.4%) sectors also led the market higher. The Energy
(-8.4%) and Financials (-8.0%) sectors lagged. Financials were
impacted by some poor financial results from Westpac and
CBA (see below).
Portfolio News
Fineos (+10.0% in A$) reiterated its FY22 earnings guidance
at its AGM during the month. Fineos expects revenue to grow
around 18% in the year and importantly expects the recurring
subscription revenue to rise 30%. Fineos has also secured
a new subscription client with a five year term. It has also
bolstered its sales team in the key North American market.
We met with Audinate’s (+7.7%) management team during
the month. Audinate is working hard to manage the supply
chain bottlenecks it faces due to chip shortages. While
these challenges do not seem to be getting worse (touch
wood), bottlenecks are likely to persist for a while. Pleasingly,
Audinate’s order book remains strong with customers placing
orders well in advance of their requirements. Audinate is
seeing inflationary cost pressures (particularly in chips), but it is
managing to pass these on to its customers.
The emergence of the Omicron COVID-19 strain is positive for
Sonic Healthcare (+6.7%) given it prolongs the elevated level
of COVID-19 PCR tests which are processed in Sonic’s labs.
The market also reacted favourably to speculation that Sonic
was exploring an acquisition of a European diagnostics firm.
Subsequent to month end, this firm was ultimately sold to a
private purchaser (not Sonic).
On the last day of the month Credit Corp (+4.6%)
announced the acquisition of the assets of the Radio Rentals
consumer leasing business from Thorn Group which was
well received. Radio Rentals leases household products
(whitegoods, brown goods, tech products) to sub-prime
consumers. Thorn Group has successfully transitioned Radio
Rentals from bricks & mortar outlets to a fully online offer.
The purchase price is $60m but this is covered by the value
of the existing lease book from which Credit Corp will derive
rentals over the remaining life of the contracts that will meet
its targeted investment return. In addition, Credit Corp has
obtained the intellectual property, systems and supply chain
arrangements of the business. This will accelerate Credit
Corp’s already planned development of an online “retail by
instalment” product as part of its Consumer Lending business.
In essence, Credit Corp has paid nothing for the on-going
earnings stream that can be developed from the Radio Rentals
platform. Reflecting both the acquisition and refinement of
its original guidance range, Credit Corp now expects NPAT
growth of +4 to +10% (was -4% to +8%) for the year.
Internationally, a couple of listed data centres were acquired
during the month demonstrating the attractiveness of these
assets. This news buoyed Next DC’s share price which rose
3.3% in November.
AUB Group produced a +5.4% return for November. At its
AGM during the month it reaffirmed guidance for underlying
NPAT growth of +7 to +12%, (representing growth in
continuing operations of +16 to +21%), for the June 2022
year. Although guidance was not upgraded, the tenor of
commentary at the meeting was positive. Progress was noted
on a number of its growth and profit-enhancing strategic
priorities for the year. In particular, the company stated that its
business model is well suited to multiple countries worldwide
and that considered expansion to territories outside Australia
and New Zealand is anticipated in future.
Westpac (-17.9%) and CBA (-11.0%) both fell sharply
after delivering poor financial results in the month. Westpac
has been attempting to address historic underinvestment
in its core business, simplify and control its cost base and
simultaneously grow its revenue at the same time. In its
half year results delivered during the month, the market
was disappointed to see Westpac’s revenue growth miss
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Share Price Premium to NAV (using NAV to four decimal places).
MONTHLY UPDATE
December 2021
BRM NAV
$
0.84
$
0.98
Share Price
PREMIUM
1
16.2
%

as at 30 November 2021

SECTOR SPLIT
as at 30 November 2021
KEY DETAILS
as at 30 November 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
$0.81
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
263m
MARKET CAPITALISATION
$258m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
INFORMATION
TECHNOLOGY
21
%
22
%

INDUSTRIALS
18
%
COMMUNICATION
SERVICES

HEALTH CARE
26
%
3
%

FINANCIALS
CONSUMER
STAPLES
5
%
CONSUMER
DISCRETIONARY
expectations because of intense pricing competition in
the mortgage market. Its costs also exceeded expectation,
which left the market sceptical on its ability to achieve its
longer-term cost-out targets. Westpac pointed out that an
acceleration of business projects had the effect of bringing
forward expenditure which will now also subside earlier than
originally anticipated once the projects roll off. Westpac
consequently remains committed to its A$8bn total cost
target which it hopes to achieve by 2024. The market will
remain very focussed on Westpac’s progression towards this
target over the coming few years.
CBA has done a great job capturing an increase in household
demand for mortgages and credit as the Australian economy
(especially housing) has begun recovering from the depths
of the pandemic. This has seen CBA’s share price perform
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
strongly relative to peers. However, in its trading update in the
month, CBA signalled that it too is being impacted by pricing
competition which has detracted from its net interest margin.
This led to its share price falling during the month.
Portfolio Changes
There were no material portfolio changes during the month.
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The Barramundi portfolio also holds cash.

NOVEMBER’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
FINEOS
+10
%
NANASONICS
-8
%
OOH!MEDIA
-11
%
WESTPAC
-18%
CBA
- 11
%
5 LARGEST PORTFOLIO POSITIONS as at 30 November 2021
CARSALES.COM
7
%
CSL LIMITED
9
%
WISETECH
6
%
CBA
5
%
SEEK
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
Oct
2021
TOTAL SHAREHOLDER RETURN to 30 November 2021
1 Month3 Months1 Year3 Years
(annualised)
5 Years
(annualised)
Company Performance
Total Shareholder Return+4.0%(7.0%)+9.8%+31.0%+21.3%
Adjusted NAV Return(0.9%)(3.3%)+21.9%+22.2%+16.3%
Portfolio Performance
Gross Performance Return(0.7%)(3.1%)+24.5%+25.7%+19.7%
Benchmark Index^(0.7%)(2.3%)+15.5%+12.6%+10.4%
PERFORMANCE to 30 November 2021
^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 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
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 Alistair Ryan (Chair),
Carol Campbell, Andy Coupe
and David McClatchy.
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.