BRM – February 2024 monthly update

1
A WORD FROM THE MANAGER
Barramundi’s gross performance return for January was 1.6% and
the adjusted NAV return was up 1.4%. This compares to the S&P/
ASX200 Index (70% hedged into NZ$) which rose 1.2% over the
month.
During the month the market reacted particularly sharply to weak
trading updates from Domino’s and Nanosonics (see below).
Despite this, the portfolio delivered a respectable return overall. This
highlights the benefits of the diversification we have in the portfolio
both by company and across sectors.
Portfolio News
Resmed’s share price rose 15% (in A$) in January from the
combination of a healthy Q2 FY24 earnings result and further
positive news associated with the travails of Philips, its major
competitor in the sleep and respiratory market. On the earnings
front, Q2 FY24 underlying after tax profit was up 13% on the
comparable period. This was driven by a 12% lift in revenue and
a solid expansion of the profit margin. The margin benefitted
from both a higher gross margin (aided by a price rise) and lower
operating costs relative to revenue (operating leverage & recent cost
saving initiatives). With respect to Philips, it announced cessation
of sales in the US of a range of sleep and respiratory products. It
subsequently announced finalisation of a consent decree with the
Food and Drug Administration in response to its various major
product recalls over the last two and a half years. The terms of
the consent decree are yet to be disclosed but until they are met
Philips will remain out of the US market for sleep therapy and
other respiratory devices. It will continue to sell masks and other
consumables. In our view, Philips is unlikely to compete with Resmed
in the US devices market before 2025 at the earliest.
While there was no company specific update from Johns Lyng
Group, its share price rose +11% on the news of the higher-than-
expected summer storms experienced on the east coast of Australia.
Johns Lyng Group performs cleanup and repair and restoration work
for catastrophe events. As the largest national provider of repair and
restoration work in Australia Johns Lyng Group will likely play a key
role in the repair and restoration work on the east coast of Australia
caused by any summer storms.
As signalled last October, Credit Corp (+6%) reported a loss for H1
FY24 due to a material (14%) impairment of its US Purchased Debt
Ledger (“PDL”) book reflecting a rise in payment delinquency. On
an underlying basis H1 earnings were up by 5%. This was driven
by a three-fold increase in Consumer Lending earnings from strong
credit demand, which is expected to continue over H2 FY24. On
an underlying basis (ex-impairment), US PDL earnings were flat.
However, the opportunity for Credit Corp to deploy further capital in
this business is currently attractive with the supply of PDLs increasing
and their prices (30% lower) now reflecting current collection
conditions. Australia and New Zealand (ANZ) PDL earnings were
down 37% due to further run-off in this book as PDL supply remains
well below historical norms (reflecting bank forbearance over COVID
& generally more responsible lending). Current ANZ PDL purchases
approximately match amortisation of the book, so FY24 should be
the earnings trough for this business. We expect to see good growth
in FY25 from the capital currently being deployed in Lending and US
PDLs, and no further run-off in ANZ PDL earnings.
Woolworths (-3%) provided a mixed 1H24 trading update, with
a strong result from its Australian Food business more than offset
by weak results from its New Zealand Food and Big W businesses.
The New Zealand Food business continued to struggle, with 1H24
operating profit (excluding costs of its transformation program)
falling -31% on the prior corresponding period. The weak
performance was likely a result of a tough economic environment,
but also good execution from its competitors. Encouragingly
Woolworths made positive early progress in its multi-year
transformation program to turn around its New Zealand business.
Highlights of the transformation program are the refresh of its oldest
80 stores, opening a fresh distribution centre in Christchurch, and
the launch of its Everyday Rewards program. Despite this, based on
Woolworths’ expectations over the next few years, it wrote down its
New Zealand business by NZ$1.6bn.
Nanosonics (-32%) provided the market with a weak first half
update. This included also retracting its full year guidance (revenue
growth of +15-20%). First half revenues fell -4.3% in constant
currency compared to the prior corresponding period primarily
related to lower-than-expected Trophon unit replacements in its
North American markets. Management attributed the slowdown to
ongoing capital budgetary pressures in the North American hospital
system. This meant several hospital customers delayed replacing their
existing Trophon 1 units despite the age of the units and benefits
of upgrading to the new Trophon 2. Encouragingly, Nanosonics
has seen some of those customers replace their units in January.
Management nevertheless remains cautious on seeing a full recovery
in the run rate of Trophon replacements in the near term.
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
February 2024
$
0.72
Share Price
as at 31 January 2024
DISCOUNT
1
3.2
%

BRM NAV
$
0.76
$
0.08
Warrant Price

SECTOR SPLIT
as at 31 January 2024
KEY DETAILS
as at 31 January 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
$0.69
PERFORMANCE FEE CAP
1.25%
SHARES ON ISSUE
280m
MARKET CAPITALISATION
$202m
GEARING
None (maximum permitted 20%
of gross asset value)
4
%
19
%
19
%

CONSUMER
DISCRETIONARY
17
%
COMMUNICATION
SERVICES

HEALTH CARE
24
%
2
%
3
%

FINANCIALS
CONSUMER
STAPLES
MATERIALS
5
%
Domino’s (-33%) delivered a disappointing trading update in
advance of reporting H1 earnings in February. The market took
umbrage at disappointing same store sales (“SSS”) outturns from
Europe (+0.6%) and Asia (-8.9%), both of which represented a
marked slip from the preceding update delivered in late 2023. In
Europe, perennial problem child France remains the issue. In Asia,
the peak Christmas/New Year trading period for Japan did not
go as well as hoped and sales in Malaysia are being impacted by
negative sentiment towards brands associated with the US (due to
the Gaza conflict). The ANZ division was a standout, with SSS growth
strengthening to 8.2%. As the ANZ playbook is being followed in
Europe and Asia, its performance is tentative evidence that improved
traction can eventually be delivered in these other markets as well.
Domino’s is now guiding to underlying H1 EBIT 14-17% lower than
a year ago versus previous inferences of a flat result. It has also
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
retracted its implicit full year earnings guidance as well. Although
frustrated, we consider its long-term growth prospects as attractive,
particularly relative to the current lower share price.
Portfolio Changes
We reduced our position in Audinate (+2%) in the month (on
valuation grounds).
2
7
%
INDUSTRIALS
CASH &
DERIVATIVES
INFORMATION
TECHNOLOGY

JANUARY’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
RESMED
+15
%
JOHNS LYNG GROUP
+11
%
AUB GROUP
+11
%
DOMINO’S PIZZA
-33
%
NANOSONICS
-32
%
5 LARGEST PORTFOLIO POSITIONS as at 31 January 2024
WISETECH
7
%
CSL LIMITED
10
%
RESMED
5
%
SEEK
5
%
CARSALES.COM
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+0.5%+8.6%+14.7%(0.2%)+15.4%
Adjusted NAV Return+1.4%+18.7%+15.0%+9.0%+14.5%
Portfolio Performance
Gross Performance Return+1.6%+19.5%+18.4%+11.1%+17.3%
Benchmark Index^+1.2%+13.7%+7.5%+10.2%+10.3%
PERFORMANCE to 31 January 2024
3
TOTAL SHAREHOLDER RETURN to 31 January 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