Barramundi Annual Report - 30 June 2019
ANNUAL REPORT30 JUNE 2019
2Barramundi Limited Annual Report 2019CONTENTS03About Barramundi06Directors’ Overview10The STEEPP Process12Manager’s Report18Barramundi Portfolio Stocks26Board of Directors27Corporate GovernanceStatement33Directors’ Statement ofResponsibility34Financial Statements Contents53Independent Auditor’s Report57Shareholder Information59Statutory Information62DirectoryCALEND ARNext Dividend Payable26 SEPTEMBER 2019Annual Shareholders’ MeetingEllerslie Event Centre, Auckland10:30am11 OCTOB ER 2019
3Barramundi Limited (“Barramundi” or the “Company”) is a listed investmentcompany that invests in growing Australian companies. The Barramundi portfoliois managed by Fisher Funds Management Limited (“Fisher Funds” or “theManager”), a specialist investment manager with a track record of successfullyinvesting in quality, growth companies. Barramundi listed on NZX Main Board on26 October 2006 and may invest in companies that are listed on an Australian stockexchange (with a primary focus on those outside the top 20 at the time of investment)or unlisted companies.IN V ESTMENT OB JECTI V ESThe key investment objectives of Barramundi are to: achieve a high real rate of return, comprising both income and capital growth,within risk parameters acceptable to the directors; and provide access to a diversified portfolio of Australian quality, growth stocks througha single tax efficient investment vehicle.IN V ESTMENT A PPRO A CHThe investment philosophy of Barramundi is summarised by the following broadprinciples: invest as a medium to long-term investor exiting only on the basis of a fundamentalchange in the original investment case; invest in companies that have a proven track record of growing profitability; and construct a diversified portfolio of investments, based on the ‘STEEPP’ investmentcriteria (see pages 10 and 11).This report is dated 3 September 2019 and is signed on behalf of the Board ofBarramundi Limited by Alistair Ryan, Chair, and Carmel Fisher, Director.Alistair Ryan, ChairCarmel Fisher, DirectorBarramundi Limited Annual Report 2019A BO U T BA R R A MUNDI
4Barramundi Limited Annual Report 2019AT A GL ANCEFor the 12 months ended 30 June 2019Net profitGross performance returnTotal shareholder returnAdjusted NAV return 7.4M 10 .0 % 15 . 5 % 5.6%As at 30 June 2019Share priceNAV per share 0.63 0 .69DI V IDENDS PA IDDividends paid during the year ended 30 June 2019 (cents per share)Total for the year ended 30 June 2019 5.38 cents per share (2018: 5.32 cps)1.401.4228 September201821 December20181.251.3128 March201927 June2019
5As at 30 June 2019SEEKCSL hese are the largest five percentage holdings in the Barramundi portfolio. The full Barramundi portfolio and percentage holdingdata as at 30 June 2019 can be found on page 17.SECTOR SPLITAs at 30 June 2019Financials21%Healthcare20%Information Technology19%Communication Services12%Industrials11%Consumer Discretionary10%Materials2%Real Estate2%The Barramundi portfolio also holds some cashBarramundi Limited Annual Report 2019L AR GEST INVESTMENTS
DIRECTOR S ’ OVER VIEW6Barramundi Limited Annual Report 2019Alistair RyanChair“The Board is pleasedat the Manager’scontinued focus oninvesting in qualitycompanies which havecontinued to grow andyield satisfying returnsfor shareholders.”
7For the 2019 financial year, Barramundi recordeda net profit after expenses, fees and tax of 7.4m,which equated to an adjusted NAV return2 of 5.6%.Barramundi’s gross performance return3 was 10.0%which was comparable to the company’s benchmark4which lifted 10.2% for the twelve month period to30 June 2019.The Australian share market, along with all global sharemarkets, suffered a sharp correction in the last quarter ofthe 2018 calendar year.The market rallied in the second half of the Barramundifinancial year by circa 20%4 as investors reactedpositively to news of progress in US-China tradenegotiations, lower interest rates and renewed confidencepost the Australian Federal election in May, which sawthe return of the Coalition government. While the level ofvolatility has now reduced we note that the backdrop ofslowing global economies, coupled with ongoing globaltrade tensions, and the risk of interest rate rises remain.The Barramundi portfolio was well positioned going intothe challenging third quarter, and fully participated in thesubsequent market rebound in the six months to June2019. The Manager’s investment approach during theperiod again demonstrated that profitable investmentopportunities are always available, irrespective of thedirection of the overall market.The share price strengthened over the 2019 financial yearrising three cents (5%) which combined with dividendspaid per share and the impact of warrants resulted in TSR1of 15.5% for the 2019 financial year (2018: 10.1%).R EV ENUES AND EXPENSESThe 2019 net profit result comprised gains on investmentsof 7.6m, dividend and interest income of 3.4m, lessoperating expenses of 2.3m, and less tax of 1.2m.Operating expenses were 1.9m lower than thecorresponding period due to there being no performancefee payable to the Manager in the 2019 year.DI V IDENDSBarramundi continues to distribute 2.0% of average netasset value per quarter. Over the 12 month period to30 June 2019, Barramundi paid 5.38 cents per share in12345dividends. The next dividend will be 1.39 cents pershare, payable on 26 September 2019 with a recorddate of 12 September 2019.Barramundi has a dividend reinvestment plan whichprovides ordinary shareholders with the option toreinvest all or part of any cash dividends in fully paidordinary shares. Currently, shares issued under thereinvestment plan will be issued at a 3% discount.To participate in the dividend reinvestment plan, acompleted participation notice must be received byBarramundi before the next record date. Full detailsof the dividend reinvestment plan can be found inthe Barramundi Dividend Reinvestment Plan OfferDocument, a copy of which is available at ementstrategies/.5WARR ANTSBarramundi has a regular warrant programme. On1 November 2018, 42,153,796 new Barramundiwarrants were allotted. One new warrant was issuedto all eligible shareholders for every four shares heldon record date (31 October 2018). The warrants willbe exercisable in late October at 0.59 per warrant.Warrants continue to be a part of the overall capitalmanagement programme.SHARE BUY BACKSThe Share Buyback programme is another part ofBarramundi’s capital management programme. Sharebuybacks are utilised when the share price to NAVdiscount is greater than 8%. During the 12 monthsto 30 June 2019, the share price to NAV discountfluctuated between 0% and 17%. Over the period,Barramundi took advantage of the deeper share priceto NAV discounts and purchased 671,901 shares.Shares purchased under the buyback programme areheld as treasury stock and subsequently reissued toshareholders under the dividend reinvestment plan.ANNUAL SHAREHOLDERS’ MEETINGThe 2019 Annual Shareholders’ Meeting will be heldon Friday 11 October at 10:30am at the Ellerslie EventCentre in Auckland. All shareholders are encouragedto attend, with those who are unable to attend invitedto cast their vote on company resolutions prior tothe meeting. All information presented at the annualmeeting will be available on Barramundi’s website atthe conclusion of the meeting.Total Shareholder Return - the return to an investor who reinvests their dividends, and if in the money, exercises their warrants atwarrant maturity date for additional shares.Adjusted NAV return - the net return to an investor after expenses, fees & tax.Gross Return - the Manager’s portfolio performance in terms of stock selection & currency hedging before expenses, fees and tax.S&P / ASX 200 index (hedged 70% to NZ).Participation forms for the Dividend Reinvestment Plan (DRP) can be obtained by contacting either Barramundi or ComputershareInvestor Services Limited.Barramundi Limited Annual Report 2019The Directors are pleased to report a positiveBarramundi result with a total shareholderreturn1 (TSR) of 15.5% for the 2019 financialyear (2018: 10.1%), achieved against achallenging market backdrop.
DIR ECTORS ’ OVERVIEW CONTINUED8Barramundi Limited Annual Report 2019CONCLUSIONThe 2019 year was certainly a challenging period forthe Australian share market which has been stronglyinfluenced by global trade tensions, interest ratemovements and global economic developments. It wasencouraging that Barramundi was able to generate apositive return against such a backdrop. The Board ispleased with the Manager’s continued focus on investingin quality companies which have continued to grow andyield satisfying returns for shareholders.We would like to thank you for your continued supportand welcome each of the new shareholders whohave joined us during the year, and we look forwardto seeing many of you at our Annual Shareholders’Meeting in October.On behalf of the Board,Alistair Ryan, ChairBarramundi Limited3 September 2019COMPANY PER FOR MANCEFOR THE YEAR ENDED 30 %Adjusted NAV Return5.6%22.6%2.7%6.2%10.1%9.2%Dividend Return9.0%8.9%8.7%8.2%8.7%- 7.4m 20.5m 2.7m 5.4m 8.3m-4.40cps12.99cps1.82cps4.17cps6.68cps-OPEX ratio2.0%3.7%2.1%2.1%2.4%-OPEX ratio (before performance fee)2.0%1.8%2.1%2.1%2.2%-20192018201720162015NAV (as per financial statements) 0.69 0.71 0.64 0.67 0.70Adjusted NAV 1.70 1.61 1.32 1.28 1.21Share Price 0.63 0.60 0.60 0.62 0.67Warrant Price 0.02- 0.01- 0.04Share Price Discount/(Premium) to s Performance Return10.0%24.3%6.0%11.0%13.0%12.7%Blended 9%10.7%Total Shareholder ReturnNet ProfitBasic Earnings per ShareAS AT 30 JUNE5 YEARS(ANNUALISED)P ORTFOLIO PER FOR MANCEFOR THE YEAR ENDED 30 JUNEPerformance fee hurdle³5 YEARS(ANNUALISED)NB: All returns have been reviewed by an independent actuary.¹ Share price discount/(premium) to NAV (including warrant price on a pro-rated basis).² Blended index: S&P/ASX Small Ords Industrial Gross Index until 30 September 2015 & S&P/ASX 200 index (hedged 70% toNZD) from 1 October 2015. Returns shown gross in NZ dollar terms.³ The performance fee hurdle is the Benchmark Rate (NZ 90 Day Bank Bill Index 7%).
9Share PriceTotal Shareholder Return1.80Share Price/Total Shareholder Return 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2019NON- G AAP FIN ANCI AL INFOR MATIONBarramundi uses the following non-GAAP measures: adjusted net asset value – the underlying value of the investment portfolio adjusted for capital allocationdecisions after expenses, fees and tax, adjusted NAV return – the net return to an investor after expenses, fees and tax, gross performance return – the Manager’s portfolio performance in terms of stock selection and currencyhedging before expenses, fees and tax, total shareholder return – the return to an investor who reinvests their dividends, and if in the money, exercisestheir warrants at warrant maturity date for additional shares, OPEX ratio – the percentage of Barramundi’s assets used to cover operating expenses, excluding tax andbrokerage, and dividend return – how much Barramundi pays out in dividends each year relative to its share price.All references to the above measures in this Annual Report are to such non-GAAP measures. The calculations appliedto non-GAAP measures are described in the Barramundi Non-GAAP Financial Information Policy. A copy of the policyis available at i-policies/.Barramundi Limited Annual Report 2019TOTA L SH AR EHOLDER R ET URN
10THE STEEPP PROCESSBarramundi Limited Annual Report 2019Fisher Funds employs a process that it calls STEEPP to analyse existing and potential portfoliocompanies. This analysis gives each company a score against a number of criteria that Fisher Fundsbelieves need to be present in a successful portfolio company. All companies are then rankedaccording to their STEEPP score to broadly determine their portfolio weighting (or indeed whetherthey make the grade to be a portfolio company in the first place).The STEEPP criteria are as follows:SSTRENGTH OFTHE B USINESSWhat is the company’scompetitive advantage? Is itsustainable? Is the company amarket leader? Does it have adominant position? A strongbusiness is one that can maintainits profit margins by employing aunique strategy.TETR ACKR ECOR DE ARNINGSHISTORYHow has the company performedin the past? Has the companyperformed under the samemanagement team? Has it grownorganically or by acquisition? Howdid the company react during adownturn? Fisher Funds prefers tobuy established companies thathave executed well in the past.How fast has the companybeen able to grow its earningsin the past? How consistenthas earnings growth been?Fisher Funds prefers to buycompanies that exhibit seculargrowth characteristics where thecompany has proven its abilityto provide a high or improvingreturn on invested capital.Applying this STEEPP analysis, Fisher Funds constructed a portfoliofor Barramundi which comprised 25 securities as at 30 June 2019.
11PPE A RNINGS GROWTHFOR ECASTPEOPLE/MANAGEMENTPRICE /VALUATIONWhat is the company’s earningsgrowth forecast over the nextthree to five years? What is theprobability of achieving theforecast? What does Fisher Fundsexpect the company’s earningspotential to be? Fisher Fundsnotices that too many analystsfocus on short-term earnings. Aslong-term growth investors, FisherFunds thinks about where thecompany’s earnings could be inthree to five years.Who are the management teamand how long have they been intheir roles? Who are the directors,what is their history with thecompany, and what do they bringto the Board? What is the depth ofmanagement in the organisationand is there a succession plan forthe key executive roles? Do themanagement team own sharesin the business and how arethey rewarded? Has the Boardand management exhibitedgood corporate behaviour in theareas of environmental, socialand governance considerations?For Fisher Funds, the quality ofthe company management andits corporate governance is ofparamount importance.How much of the future earningsgrowth is already reflected inthe share price? Where does thecurrent share price sit in relationto Fisher Funds’ worst to best casevaluation range? A company willgenerate a higher score where themarket price currently reflects littleof that company’s upside potential.Barramundi Limited Annual Report 2019E
MAN A GER ’S REPORT12Barramundi Limited Annual Report 2019Robbie UrquhartSenior Portfolio Manager“We remain optimisticabout the longerterm earnings growthand returns that canbe generated by ourportfolio companiesfor Barramundiinvestors.”
13For the year ended 30 June 2019 the Barramundishare portfolio kept pace with the broadermarket, with a gross performance return, (thereturn before expenses, fees and tax) of 10.0%,compared with the S&P/ASX 200 Index (70%hedged to NZ ) return of 10.2% for the year.It was certainly a ‘year of two halves’ for theAustralian equity market (and equity marketsglobally). The first six months to 31 December2018 saw the ASX200 Index fall 6.9% (in A ),with losses broad based across most sectors inthe market.Global growth concerns, trade war worries,hawkish central bank rhetoric, rising interest rates(up to October) and concerns over elevated shareprices all contributed to the sell-off.The second six months saw a sharp reversal ofthis pessimism. Central bank rhetoric turneddovish. Interest rates fell. (The Australiangovernment 10yr interest rate fell to all-timelows and ended June at 1.3%.) Equities rose. TheASX200 returned 19.7% (in A ) in the secondhalf of the year, with all sectors posting strongdouble digit returns in the half.Australian economic growth slowed duringthe year. At the time of writing, annual GDPgrowth was tracking at around 1.8%, whichis well below the 3.1% run rate seen at theend of June 2018. Australian consumers faceda number of headwinds during the year. Theseincluded softening housing markets acrossmajor metropolitan cities, tightening lendingrestrictions by banks and a weaker job market.In addition, political policy uncertainty ahead ofthe Federal election in May 2019 weighed onsentiment and economic activity.While the 2019 financial year was challenging forall Australian share market investors, we werepleased with the positioning of the Barramundiportfolio throughout the year, and remainconfident in our ability to exploit opportunities involatile markets.THE BARR AMUNDI PORTFOLIOY E AR IN REVIEWBarramundi was invested in approximately 25companies throughout the year. One new companywas added to the portfolio, and we exited twoothers during the year. At a sector level the majorityof our portfolio companies fall into the Healthcare,Information Technology and Financials sectors. Wealso have holdings in the Communication Services(online and outdoor advertising), Industrials andConsumer Discretionary sectors. Rounding out theportfolio, we have a position in a diversified miningcompany (Rio Tinto) and a retirement communityliving business.This diverse sector exposure is typical of ourpositioning and is reflective of our investment focuson quality and growth as encapsulated by theSTEEPP acronym.The majority of our companies delivered positivereturns for the yearWe were especially pleased with the performance ofTechnology One ( 89% in A ), Nanosonics ( 78%),Wisetech ( 77%), and Credit Corp ( 52%).As a generalisation, companies with defensiveearnings characteristics and offshore revenueexposure did well during the year. The low growth,low interest rate environment also increased thepremium the market was prepared to pay forcompanies with structural growth prospects.This market backdrop, as well as good execution bymanagement, lay behind the strong returns of ourtech companies including Wisetech, Xero ( 33%) andTechnology One. This also assisted our Healthcarecompanies including Resmed ( 23%), Sonic Healthcare( 14%) and CSL ( 13%).Nanosonics in particular was rewarded by themarket in the last six months for establishing itstrophon product as the globally leading disinfectionsolution for ultrasound probes. As shareholders inthe company since 2009, it’s been great to see thisovernight success story that has been a decade inthe making.Rio Tinto ( 35%) and BHP ( 33%) were indirectbeneficiaries of the tragic collapse of a tailings damwall at one of Vale’s mining sites in Brazil. This eventhas come with a high human and environmental cost,and significantly disrupted the global iron ore market.Barramundi Limited Annual Report 2019SUMM A R Y AND MAR KET R EVIEW
MAN A GER’ S R EPORT CONTINUED14Barramundi Limited Annual Report 2019A handful of companies weighed on portfolioperformanceCompanies detracting from our returns in the yearincluded Link Administration (-30%), Domino’sPizza (-26%) and ARB Corporation (-19%). Seek(-0.7%) and Carsales (-7.6%) also underperformedthe market.We review Link Administration in more depth below.In terms of the other underperforming portfoliocompanies, headwinds related to the broadereconomic environment contributed materially to theirunderperformance.The softening economic and consumer environmentdiscussed earlier, impacted a number of companiesexposed to domestic Australian conditions. Theseincluded our advertising holdings such as Carsales,Seek and oOH! Media. ARB Corporation, which sellsaccessories to the 4x4 vehicle market, was similarlyimpacted by the softness in new vehicle sales asconsumers tightened their purse strings.While these cyclical headwinds are unhelpful tocompany earnings in the short term, they do not
This report is dated 3 September 2019 and is signed on behalf of the Board of Barramundi Limited by Alistair Ryan, Chair, and Carmel Fisher, Director. Alistair Ryan, Chair Carmel Fisher, Director ABOUT BARRAMUNDI Barramundi Limited (“Barramundi” or the “Company”) is a listed investm
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Conc Diagram- All Failures Cispa Data Avalon Date PCB Lot Number Igarashi TPS date codes. MB Panel Number VIAS Hole Location Failure 9-June'09 11-June'09 923 162 12-June'09 923 163,164 TBD TBD 1 13-June'09 923 164 15-June'09 923 166 16-June'09 923 167 17-June'09 923 168,171 18-June'09 923 171 19-June'09 923 171 20-June'09 923 171 22-June'09 923 173 23-June '09 923 179 24-June '09 923 .
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Winter Carnival 14 June P&C Disco 8 17 June Board Meeting 18 June 19 June 20 June 21 June Bletchley Vale Cup 9 24 June Swimming Lessons Yr 3 – 6 P&C Meeting 25 June Swimming Lessons Yr 3 – 6 26 June Swimming Lessons Yr 3 – 6 Pre Primary Junior Olympics 27 June Swimming Lessons Yr 3 – 6 Yr2 Start Smart 28 June Swimming Lessons Yr 3 – 6 10
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Annual Report 2020 compared to our 2019 Annual Report. The total carbon footprint for printing CIMB Annual Report 2020 was 11,588kgCO2e, compared to 14,987kgCO2e for our 2019 annual report. The carbon footprint for the 3 books of CIMB Annual Report 2020 is 14.485kgCO2e. We are committed to reducing the environmental impact of our annual report .
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