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The good news continues.


HOMEX - Melbourne


+++++++++++++++++++++++++
The Directors of ARB Corporation Limited are pleased to report that
the company had another successful year to the end of June 2002.


Net profit after tax was up 27.2% to $8.3 million for the year,
derived from revenues of $79.9 million (up 15.7% on the prior year)
and an operating profit of $11.7 million (up 19.8% on the prior
year). The average year to year net profit growth over the last five
years has been 27%.


The 2001/2002 results are summarised as follows:


YEAR TO JUNE 2002 JUNE 2001 CHANGE
$'000 $'000


Total Revenues 79,876 69,032 +15.7%
EBIT 12,022 10,184
Gross Interest 337 433
Pre-tax Op Profit 11,685 9,751 +19.8%
less Tax 3406 3,244
Net Profit 8,279 6,507 +27.2%


EPS - cents 65.6 57.2
DPS - cents 32.5 25 + 100
Franking 100% 100%


A final fully franked dividend of 20 cents per share has been
recommended and will be paid on 25 th October 2002 on registerable
transfers received by the company by close of business on the 11 th
October 2002. This brings the total dividend for the year to 32.5
cents fully franked.


The yearhas been a challenging one for ARB. The results are
especially pleasing in that they demonstrate a sound performance
despite adverse impacts. Business in the USA during the year was
clearly affected by the terrorist acts last September and their
consequences. Despite this, sales in the USA continued to grow for
the year although at a lesser rate than we would have otherwise
expected. Elsewhere sales grew well in both the Australian
aftermarket and to export customers.


This year was the first year for some time which did not include any
benefits from the Export Facilitation Scheme, an industry support
scheme. Despite the efforts of your directors, the company still has
not been accepted into ACIS, the new industry support scheme.


On the other hand, after tax profit benefited from the second step in
the reduction of corporate tax rates from 34% to 30%.


A new purpose built South Australian sales and distribution centre
was opened in Adelaide in October 2001 and this has provided the
basis for significant sales increases in South Australia. A property
was purchased in Canberra in December 2001 and after refurbishment
our ACT sales office moved into the new premises in May 2002. The new
facility provides much better operational conditions for staff and
customers. An agreement has been signed to develop a new Queensland
sales and distribution centre for $2.4 million. Preliminary approval
work is progressing and the building is expected to be completed
within this financial year.


Although production output has been at it highest in the last few
months, capacity has been strained and has been a limitation on
growth. Development of increased production capacity is ongoing but
abnormal fluctuations in demand have to be managed on a short-term
basis.


Liquidity in the shares of ARB has improved over the past year but
remains less than ideal. The directors have been advised that, based
on experience with other companies, a share split is likely to assist
liquidity in share trading. The directors are therefore proposing a 5
for 1 share split and a resolution to that effect with explanatory
information will be presented with the notice of meeting for the
Annual General Meeting this year.


THE YEAR AHEAD


Sales for the 2002/03 year have started well and we will again be
budgeting for solid sales and profit growth over the coming year. The
main factor likely to affect the company's performance this year will
be any change in general economic conditions, particularly in the
USA.


Over the next year the company will continue to develop new products
for our customers worldwide. We will also continue to develop our
established distribution system particularly in the major
metropolitan areas.


R Brown
CHAIRMAN OF DIRECTORS


regards
Barcoo
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Barcoo
The energy sector, with gas/lpg in particular, seems to be the one to watch. Long term I think it is going to grow exponentially. Too busy right now to do some deep digging but I will be on the lookout for long term buys.
Regards
Harmy
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Liquidity in the shares of ARB has improved over the past year but
remains less than ideal. The directors have been advised that, based
on experience with other companies, a share split is likely to assist
liquidity in share trading. The directors are therefore proposing a 5
for 1 share split and a resolution to that effect with explanatory
information will be presented with the notice of meeting for the
Annual General Meeting this year.


Interesting that they desire to increase liquidity with an aim to assist share trading.

Is higher liquidity better?

I suppose time will tell.

JR


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Interesting that they desire to increase liquidity with an aim to assist share trading.

Is higher liquidity better?

I suppose time will tell.


In my view this is totally unnecessary and a waste of shareholders money. Long term it just doesn't matter. A pizza is the same size whether cut into 6 pieces or 8.
My only thought is that it doesn't seem to take much to move the price a fairly long way. Ten percent moves are reasonably common. Maybe they want to reduce the volatility so that the stock shows up differently (less "apparent" risk) on the institutional screens?
I will be voting against it but I expect to be on the losing side of the vote.

regards
Barcoo
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Is higher liquidity better?

JR
I've also thought about this from time to time !! There is no doubt that a share split does increase liquidity but you have to ask what benefit this has for the company. After all when the equity is first issued and the company collects the capital to set up or enhance business it is then immaterial what happens to the share price after that point (apart from keeping the investors happy). Any increase in liquidity doesn't enhance the company's performance one iota.
Also for knowledgeable investors it is also immaterial how much a share is actually valued - look at BRK for example.
Regards
Harmy
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Any increase in liquidity doesn't enhance the company's performance one iota.
Also for knowledgeable investors it is also immaterial how much a share is actually valued


Those dam super managers I suppose are behind the push in ARP's case maybe it's justified when you look at the liquidity on a daily basis , but ARP's share price has in general performed very well so why rock the boat.

Maybe you gotta suspect some other motive, easier to float some shares at a price under $2.00 in OZ market , could have more expanstion in mind & that may again not be a bad thing, dunno but interesting motive given IMO.

Shares outstanding have increased a bit over last couple years but nothin massive , some funds have been selling down but again not to drasticly.

JR
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In my view this is totally unnecessary and a waste of shareholders money. Long term it just doesn't matter. A pizza is the same size whether cut into 6 pieces or 8

Yep or least IMO you'd expect a better reason than just to increase share trading that you'd think should not be a concern to management when the stock price has performed so well.

but I expect to be on the losing side of the vote.

What ever Roger Brown wants.

JR



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Those dam super managers I suppose are behind the push in ARP's case maybe it's justified when you look at the liquidity on a daily basis , but ARP's share price has in general performed very well so why rock the boat.

Maybe the institutions don't like the buy/sell spread sometimes. Personally I think that if this is the reason then management should tell them to go **** themselves. It is irresponsible of management to spend money on such a frivolous shallow exercise.

Maybe you gotta suspect some other motive, easier to float some shares at a price under $2.00 in OZ market , could have more expanstion in mind & that may again not be a bad thing, dunno but interesting motive given IMO.

Er, $2.83 actually at current prices. I agree about the interesting motive given. If it's to raise money then I still can't see the logic.
Gets back to the pizza cut into 6 or 8 pieces, doesn't it.

......some funds have been selling down but again not to drasticly.

Well, more fool them then. They dance to the beat of a different drum than I do.

Realistically though if the only thing I have cause to grumble about with a company is stock splits then I'll be pretty happy. I won't mind if in 10 years time I own 25 times as many shares with a stock price of $3.20.
After all, it's the earnings that really count.

regards
Barcoo

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After all, it's the earnings that really count.

Barcoo
AS Chris and I have been discussing - it is the EPS which drives a share price up (or down) - all other indicators are important to a greater or lesser extent but the EPS is the most important driver.
Regards
Harmy

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.........it is the EPS which drives a share price up (or down) - all other indicators are important to a greater or lesser extent but the EPS is the most important driver.

I have been saying things along similar lines for quite a while now, in a few different ways. ie Earnings.
I don't know if I would pinpoint it to EPS. There are a few different ways to measure basically the same thing.
ROA
ROE
EPS
Owner earnings.
Cashflow.
Call it what you will. Its all basically measuring the same thing.
Why wouldn't I pinpoint it to EPS? Purely because Buffett says you can't.
I can also think of an example where earnings are not the most important consideration.
eg Company ABC has 10 million shares and 30 million options outstanding. What is more important EPS or options?
Personally I DO use EPS but am attempting to educate myself to where I understand fully Buffetts' point of view.

I agree that earnings are the most important driver - long term.
The most important driver - short term - is public perception, psychology, etc. This is where the long term investor gets his advantage. Make use of short term mispricings to buy long term value.
As Ben Graham said, "In the short term the market is a voting machine, in the long term it is a weighing machine."

regards
Barcoo
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Barcoo
Absolutely agree with you in everything you say. Short term investor sentiment can be frustrating but you can learn to use it.
It's a mystery to me why good Oz companies should rise and fall according what the US market does. I guess you've just got to live with it and use it to your advantage.
Regards
Harmy

PS I don't always buy winners !! Bought Healthscope one day before they announced a 15% new equity issue - price promptly tanked 10% and still dropping - I'm out of pocket by $1K !! Bugger !!
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Barcoo,

Yor comment:
I don't know if I would pinpoint it to EPS. There are a few different ways to measure basically the same thing.
ROA
ROE
EPS
Owner earnings.
Cashflow.
Call it what you will. Its all basically measuring the same thing.


Well, hopefully, they should. You could also add increases in book value. They should all be equivalent to increased shareholder (make that owner) value. After all, if you were putting money into a small business partnership, you'd expect that. Should also apply to a large business partnership, too, shouldn't it?

Unfortunately, due to accounting shenanigans, and one-offs, it isn't always the case. Fortunately, in general, it is the case.


Chris
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