BRM – May 2024 monthly update

1
A WORD FROM THE MANAGER
Barramundi’s gross performance return for April was down -3.9% and
the adjusted NAV return was down -3.7%. This compares to the S&P/
ASX200 Index (70% hedged into NZ$) which fell -2.7% over the month.
Stickier than expected inflation data internationally was replicated in
Australia. The Australian Q1 inflation print of +3.6% released in April,
was higher than expected and resulted in the market pushing out its
expectation of when the Reserve Bank of Australia (“RBA”) will first cut
interest rates. This underpinned a sharp increase in the Australian Govt
10yr bond yield which rose from 4.0% to 4.4% over the month.
This in turn contributed to equity market softness, with the interest rate
sensitive Real Estate (-7.8%) and Consumer Discretionary (-5.1%) sectors
dragging the ASX200 index lower. After a strong run-in recent months,
the Information Technology (-3.9%) sector (including a number of our
portfolio companies) also gave back some of their gains. There was no
substantively negative news in the month across our technology holdings.
Utilities (+4.8%) and Materials (+0.6%) were the best performing sectors.
Materials benefitted from a seasonal pick-up in demand for iron ore in
China, supporting returns for miners and in particular, Rio Tinto (+7.2%).
Portfolio News
Resmed (+9.0% in A$) reported a strong March quarter result. Revenue
for the quarter was up by 7%. Even more encouraging was a significant
jump in gross margin for the quarter (up from 56.1% a year ago to
58.5%). When combined with tight cost control, this produced a 27%
increase in earnings for Q3. Resmed has signalled the prospect of further
gross margin expansion over its 2025 year.
Fineos (+6.5%) provided two points of incrementally positive
commentary in its April update. The first was that it was on track
to ensure its newest customer, Guardian would go live with Fineos’
AdminSuite later this year. Given the size of Guardian in the US
insurance market, we believe that once live on Fineos, Guardian will
become a reference customer for the reliability and functionality of
Fineos’ AdminSuite. Fineos also commented that insurance carriers were
increasingly appreciating the importance of core systems built specifically
for their industry, with Fineos a leading system provider. Together these
bode well for Fineos to win more contracts in the future.
Ansell (+4.1%) announced a binding agreement to acquire Kimberly-
Clark’s Personal Protective Equipment business (“KCPPE”) for US$640m.
Funding for the purchase includes A$465m (US$305m) of new equity.
We participated in the equity raising. KCPPE designs and markets
differentiated safety products that include gloves, protective apparel,
and safety eyewear. All its production is outsourced. The acquisition will
bolster Ansell’s presence in the Life Sciences and Chemical Protective
Clothing verticals and was well received by the market.
Johns Lyng’s share price fell 12.3% although there was no company
specific news in the month. This was likely a result of lower catastrophe
events in Australia year to date, and a realisation by the market that
aggressive revenue growth in the US may be a couple years out.
Offsetting the first point, Johns Lyng have a long pipeline of catastrophe
repair work from the events that happened in 2021/22 that will support
catastrophe revenues for at least the next 12-18 months. And to the
second point, Johns Lyng management have been explicit on their US
strategy. They are building the foundations for a successful long-term
business by investing ahead of the earnings growth expected to be
generated in the US.
Brambles’ (-9.5%) Q3 FY24 trading update included group revenue
growth that inferred Q3 growth of +1%. This marked a slowdown
in revenue compared to prior periods and is largely due to a lower
contribution from pricing as Brambles cycles the large increases pushed
through over recent years. This moderation in price rises had been well
signalled by the company. Volume growth for the YTD remains slightly
negative, reflecting lacklustre macro conditions and pallet returns by
manufacturers and retailers as they optimise inventories as supply
chains normalise post COVID. Brambles has reiterated its FY24 guidance
for revenue +6-8% CC
2
and EBIT
3
+13-15% CC, which we think is
achievable.
Domino’s (-9.1%) held a strategy day in April. This did not give an
update on current trading. However, it did provide a lot of colour on
what the company is doing with respect to product development,
marketing and technology to redress the adverse impact on sales
volumes of its pricing missteps in 2022 and early 2023. There is a
clear focus on rebuilding sales through new products that refresh the
core menu and provide access to new segments, and through more
effective marketing via Domino’s own customer platforms and those of
aggregators. Improved sales volumes will restore franchisee profitability,
which in turn will give them the confidence to open new stores. These
things obviously take time, but we have already seen encouraging signs
in the half year sales results for ANZ
4
and Germany. The strategy day
presentation noted that “the timeline of turnaround in France, Japan and
Taiwan is currently uncertain”. France and Japan are two key markets in
Domino’s unchanged target of nearly doubling its store count by 2033.
The market’s perception that there is now more uncertainty about the
deliverability of this target explains the decline in Domino’s share price
over April. At this stage we are prepared to back management’s ability to
deliver improved performance in these markets, but patience is required.
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).
2
Constant Currency.
3
Earnings Before Interest and Tax.
4
Australia and New Zealand.
MONTHLY UPDATE
May 2024
$
0.71
Share Price
as at 30 April 2024
DISCOUNT
1
5.8
%

BRM NAV
$
0.77
$
0.05
Warrant Price

SECTOR SPLIT
as at 30 April 2024
KEY DETAILS
as at 30 April 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
282m
MARKET CAPITALISATION
$200m
GEARING
None (maximum permitted 20%
of gross asset value)
3
%
20
%
20
%

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

FINANCIALS
CONSUMER
STAPLES
MATERIALS
6
%
NextDC (-5.1%) raised $1.3b through an equity issue in April. We took
up our full entitlement. NextDC will use the funds to accelerate the
development and fitout of existing and new data centres across Australia.
The Australian data centre market is currently seeing exponential
growth in demand from the migration of data to the cloud, and more
recently through the adoption of Artificial Intelligence (AI). As a leading
provider of data centres in Australia, NextDC is benefitting from this.
In FY23 it grew its contracted capacity by circa 50% and it is currently
in negotiations with several parties, two of which alone could match
everything won in FY23.
Robbie Urquhart
Senior Portfolio Manager
Fisher Funds Management Limited
Portfolio Changes
During the month we increased our weighting in Johns Lyng Group which
we thought was attractively priced.
2
7
%
INDUSTRIALS
CASH &
DERIVATIVES
INFORMATION
TECHNOLOGY

HEALTH CARE

APRIL’S SIGNIFICANT RETURNS IMPACTING
THE PORTFOLIO
during the month in Australian dollar terms
JOHNS LYNG GROUP
-12
%
JAMES HARDIE
-12
%
CREDIT CORP GROUP
-11
%
BRAMBLES
-9
%
AUDINATE GROUP
-11
%
5 LARGEST PORTFOLIO POSITIONS as at 30 April 2024
WISETECH
8
%
CSL LIMITED
10
%
RESMED
5
%
CAR GROUP
5
%
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(3.4%)(0.3%)+9.0%(5.1%)+14.1%
Adjusted NAV Return(3.7%)+2.2%+15.1%+7.1%+12.9%
Portfolio Performance
Gross Performance Return(3.9%)+2.8%+17.9%+9.3%+15.6%
Benchmark Index^(2.7%)+2.0%+10.9%+8.1%+8.7%
PERFORMANCE to 30 April 2024
3
TOTAL SHAREHOLDER RETURN to 30 April 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