Ann: Half Yearly Report and Accounts, page-2

This half year result continues ARB's long term track record of producing consistent growth in both revenue and profit.

Australia has been in a mining downturn for approximately 3 years now. A lot of people assume that this downturn will surely halt ARB's progress. The reality is completely different. ARB produced more profit in this Half Year 2016 than the whole Full Year 2009 (only 7 years ago).

With its legion of loyal followers (ARB has more than 500,000 followers in Facebook), the company is somehow able to convince its customers to keep purchasing its ARB branded goods at prices that are relatively more expensive than the alternatives offered by ARB's competitors.

Over the years, through a combination of in-house research and takeover of other businesses, ARB has been able to continuously expand its ARB branded product offering.

In this Half Year Report, in Note 6, we find out that during the half year, ARB spent $2 million to purchase a retail store in Dandenong, VIC and a manufacturing business, AutoXtras.

After checking out the website of AutoXtras, I have just learned that this company manufactures long range fuel tanks. If I were to guess, I would guess that these tanks will be branded as ARB and sold at premium prices.

The retail store and the AutoXtras business, contributed revenue of $2,699,000 and a profit after tax of $437,000. The net margin is a very attractive 16.2%.

Over the medium term, as independent ARB store owners retire and want to cash out, ARB is the natural buyer of these small retail shops. If ARB can continue to purchase 1 or 2 stores every year, the extra profit from these transactions is a nice addition to its overall profit growth.

With the new warehouses in Czech Republic & USA now fully online, I expect export growth to be the dominant driver of ARB's growth.

Based on its recent history, ARB usually pays a special dividend every 5 years. It's been one year since the last special dividend, that means I have to wait for another 4 years before I might be lucky and get another special dividend.

In the mean time, it's time to close the file on ARB for another 6 months!