factory approved accessories

Annual
Report
2021
ARB Corporation Limited
ABN: 31 006 708 756

ARB drives excellence with passion
The year in review
1 4 7
2 5 8
3 6 9
1. ARB developed a range of factoryapproved accessories for the new Ford
Bronco 4WD. ARB’s airbag-compliant bull bar
and rear bar were developed in conjunction
with Ford and incorporate recovery points
and a light bar, with a design to improve off
road clearance and protection.
2. ARB released a new integrated slideout camp kitchen option for outdoor
enthusiasts. The ARB Slide Kitchen fts
into ARB’s standard dual-cab drawer set-up
and includes an extendable benchtop, gas
stove, utensils drawer and kitchen sink.
3. ARB announced its acquisition of the
leading manufacturer and distributor of utility
accessories in the United Kingdom, Auto
Styling Truckman Group. The “Truckman”
brand is principally focused on rear of
vehicle products such as canopies, bed
liners and general utility vehicle products.
The acquisition expands ARB’s international
distribution and aligns with the company’s
evolving product strategy.
4. ARB’s very frst product was a roof rack
and is once again setting the industry
benchmark with the release of the BASE
Rack. Its ultra sleek and super low mounting
profle and lightweight design mean the
BASE Rack provides unmatched simplicity,
flexibility and personalisation. The design
has set the new benchmark in strength and
integration.
5. In a year of 495 entries in 35 categories,
ARB is proud to have been selected as
“Catalogue of the Year” in the Recreation
and Leisure – Camping, Outdoor Goods and
Miscellaneous category of the 2020 Real
Media Awards.
6. ARB celebrated the grand opening of
ARB Highbrook in Auckland, New Zealand
to enhance supply to the region and
strengthen our growing distribution network.
New Zealand has become a growing market
for ARB.
7. ARB also launched its 100% Australianmade Fire Pit. The Fire Pit is made
exclusively in ARB’s Melbourne factory from
three-millimetre REDCOR® sheet steel,
which is supplied by BlueScope Australia.
8. ARB’s website has experienced all-time
high interaction rates. In the past year, the
website experienced over 5.5 million user
sessions, which is an increase of 30% on
the previous year.
9. ARB has continued its expansion of
Flagship stores. Over the past year, four
new Flagship stores – ARB Cockburn,
Edwardstown, Seven Hills and Gosford –
have opened their doors. The new Flagship
style offers an improved retail design,
educational displays and state-of-the-art
ftting bays. The fresh new look brings with
it expert advice and specialised service,
making it the perfect place for customers to
personalise their 4WDs.

ARB CORPORATION LIMITED

 

TABLE OF CONTENTS

 

CONTENTS

 

PAGE

 

Corporate Information

 

2

 

Chairman’s Statement

 

3

 

Directors’ Report

 

8

 

Financial Report for the year ended 30 June 2021

 

Consolidated Income Statement

 

13

 

Consolidated Statement of Comprehensive Income

 

14

 

Consolidated Statement of Financial Position

 

15

 

Consolidated Statement of Changes in Equity

 

16

 

Consolidated Statement of Cash Flows

 

17

 

Notes to the Financial Statements

 

18

 

Directors’ Declaration

 

41

 

Independent Auditor’s Report

 

42

 

Auditor’s Independence Declaration

 

48

 

ASX Additional Information

 

49

 

Corporate Governance Statement

 

50

1

ARB CORPORATION LIMITED

 

CORPORATE INFORMATION

 

COMPANY ABN
31 006 708 756

 

DIRECTORS
Roger G Brown B.E., M.B.A.
Andrew H Brown
Adrian R Fitzpatrick B.Com., FCA
John R Forsyth B.E., M.B.A.
Robert D Fraser B.Ec., LLB (Hons)
Karen L Phin BA., LLB (Hons), GAICD
Andrew P Stott

 

COMPANY SECRETARY
Damon Page B.Bus., CA

 

PRINCIPAL REGISTERED OFFICE
42-44 Garden Street
Kilsyth Victoria 3137 Australia
Tel: +61 3 9761 6622
Fax: +61 3 9761 6807

 

AUDITORS
Pitcher Partners
Level 13
664 Collins Street
Docklands Victoria 3008

 

LOCATION OF REGISTER OF SECURITIES
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford Victoria 3067
Tel: 1300 850 505 (within Australia)
Tel: +61 3 9415 4000 (from overseas)
Fax: +61 3 9473 2500

 

STOCK EXCHANGE
Australian Securities Exchange
Level 4, North Tower
Rialto, 525 Collins Street
Melbourne Victoria 3000

2
ARB CORPORATION LIMITED
CHAIRMAN’S STATEMENT
3
RESULTS
The Directors of ARB Corporation Limited (“ARB” or the “Company”) are pleased to report that the Company achieved
a net profit after tax of $112.9 million for the year ended 30 June 2021, up 97.0% on the reported net profit after tax of
$57.3 million in the previous year.
Sales for the year were $623.1 million, an increase of 33.9% over the previous year.
Profit before tax of $150.0 million for the year ended 30 June 2021 represents an increase of 92.1% compared with the
year to 30 June 2020.
The full year results are summarised below:
The Company intends to pay a final fully franked dividend of 39.0 cents per share. This brings total dividends for the
year to 68.0 cents per share fully franked, an increase of 72.2% compared with last year.
Information about the ARB Dividend Reinvestment Plan and Bonus Share Plan, which will apply to the final dividend,
can be found on the Company’s website at https://www.arb.com.au/about/investor-relations/. Investors wishing to
make or change an election to participate in either of the plans can do so online via the Computershare Investor Centre
website at www.computershare.com.au/easyupdate/arb or by phoning Computershare on 1300 850 505.
COVID-19
Unfortunately, COVID-19 continues to significantly impact lives, livelihoods, economies and businesses around the
world. ARB has adapted its work practices to focus on the health, safety and hygiene of its employees, customers and
other stakeholders.
The Company rebounded strongly in the current financial year from the worst of the COVID-19 impacts experienced at
the onset of the pandemic. The ongoing disruption caused by COVID-19 across all of ARB’s markets has presented
both opportunities and operational challenges. The trend towards local travel has increased worldwide demand for the
Company’s products, however logistical and supply chain constraints coupled with labour shortages have increased
operational costs and disrupted timely fulfilment of sales. It is not feasible to quantify the impact of these and other
COVID-19 related factors.
CORPORATE GOVERNANCE STATEMENT AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTS
The Company’s Corporate Governance Statement and Environmental, Social and Governance report can be accessed
online at https://www.arb.com.au/about/investor-relations/.
Year ended 30 Jun 21 30 Jun 20 Change
$’000 $’000
Sales 623,072 465,379 33.9%
Other Revenue 2,785 1,609
Total Revenue 625,857 466,988 34.0%
Profit before Tax 150,023 78,092 92.1%
Tax (37,128) (20,797)
Profit after Tax 112,895 57,295 97.0%
EPS – cents 140.0 71.8
DPS – cents
Interim 29.0 18.5
Final 39.0 21.0
Total 68.0 39.5 72.2%
Franking (at 30% tax rate) 100% 100%
ARB CORPORATION LIMITED
CHAIRMAN’S STATEMENT (continued)
4
ARB DRIVES EXCELLENCE WITH PASSION
ARB’s core values of DRIVE, EXCELLENCE and PASSION have steered the Company’s success in Australia and
across the world for close on half a century since ARB was founded in 1975.
A committee comprising past and present employees was charged to define and articulate the values and guiding
principles that drive the Company’s culture and shape the way ARB does business. Over 50 employees from the shop
floor to the Board, across all international locations, were invited to participate in interviews and workshops to
collaborate, share experiences and contribute to the formation of ARB’s Values Statement.

“It’s easy to be passionate
about your job when it so
obviously values quality
and takes pride in its
products. We don’t call it
work when we love our job
and the culture at ARB
feels like family.”
Emma Richards,
Sales
“People aspire to have
ARB products and be
involved with ARB as a
company. We are a quality
focused industry leader
and we do what we do well,
no compromises.”
Lachlan Strauss,
VIC/TAS State Manager
“Passion for our products
is what brings us together.
We all believe in our
product range and love the
lifestyle it is designed for.”
James Chapman,
Stockist Sales Representative
“ARB stands for something
to be proud of and that is
passion, quality and well
designed products.
Attention to detail is what
makes us stand out in the
industry as well as solid
engineering and design.
The founders were a group
of family and friends and
the entire business still
feels like that today.”
Trever Roper,
Thailand

“ARB represents trust, team work and continually moving forward. Innovation is at the forefront of what we do
and ARB offers great opportunities by empowering its people to achieve.”
Stuart Fooks,
Engineer

ARB CORPORATION LIMITED
CHAIRMAN’S STATEMENT (continued)
5
10 YEAR HISTORICAL PERFORMANCE
The sales, profits and dividends per share performance of the Company over the past 10 years are illustrated in the
graphs below:

SALES REVENUE
Annual sales revenue has grown at an
average compound rate of 9.4% over the
past 10 years.

 

NET PROFIT AFTER TAX
Net profit after tax has grown at an
average compound rate of 11.5% over the
past 10 years.

 

DIVIDENDS PER SHARE
Dividends per share have grown steadily
over the past 10 years with a special
dividend paid in 2014/15.
All dividends have been fully franked.


100
200
300
400
500
600
700
$ million
Aust Aftermarket OEM Export

20
40
60
80
100
120
$ million

20
40
60
80
100
120
140
Cents
Interim Final Special
ARB CORPORATION LIMITED
CHAIRMAN’S STATEMENT (continued)
6
HIGHLIGHTS OF THE 2020/21 YEAR
Sales and Distribution
Sales revenue increased by 33.9% in 2020/21 over the previous year. Strong sales growth was achieved across all
customer categories with particularly pleasing growth achieved in the export and original equipment categories:

Customer Category Percentage of Sales Sales Growth
12 months to Jun 2021 12 months to Jun 2020
Australian Aftermarket 54.9% 60.9% 20.9%
Exports 36.7% 32.7% 50.2%
Original Equipment 8.3% 6.4% 73.9%
100.0% 100.0% 33.9%

ARB’s sales to the Australian aftermarket grew by 20.9% with consistently strong demand throughout the year,
challenged by fitment capacity and supply chain constraints. Sales growth was above average in New South Wales,
Queensland, Western Australia and Tasmania and below average, albeit still double-digit percentage growth, in Victoria
and South Australia.
ARB has continued to diversify sales to overseas and original equipment channels. Despite sales growth of 20.9% to
the Australian aftermarket, the percentage of total group sales to export and original equipment manufacturers has
increased from 39.1% to 45%, and in turn the Australian aftermarket has dropped from 60.9% to 54.9%.
New vehicle sales in Australia grew by 9.6% during the financial year while new vehicle sales of ARB’s target vehicles,
four-wheel drive utilities and SUVs, grew by 11.3%, with all of the growth occurring during the final four months of the
financial year. Demand for second hand 4WD vehicles globally has also spiked. Product sales for used 4WD vehicles
remains an important part of ARB’s business.
ARB’s distribution network to the Australian aftermarket is a key strength incorporating sales through the ARB store
network, to ARB stockists, to new vehicle dealers and to various fleet operators. ARB also distributes to the Australian
aftermarket segment through its GoActive Outdoors, Kingsley Enterprises and SmartBar divisions.
Branded ARB stores are an integral part of the Company’s distribution network throughout Australia. Three new stores
were established since this time last year in Gosford, New South Wales, Edwardstown, South Australia, and Cockburn,
Western Australia. This brings the total number of ARB stores to 70, of which 29 are Company owned. The rollout of
ARB’s flagship store format continued with an additional three Company owned stores updated to the new format.
Export sales grew by 50.2% and now represent 36.7% of ARB’s sales, up from 32.7% of sales last year. Growth in
overseas markets is a key focus for ARB which has been bolstered by recent business acquisitions in the United
Kingdom and New Zealand. Demand for ARB products was strong across all export markets and sales growth was
achieved by all overseas subsidiaries, in the USA, New Zealand, the UAE, the Czech Republic, Thailand and now in
the UK.
Accessory sales to original equipment manufacturers increased by 73.9%, after declining 12.9% in the prior year,
supported by several new contracts commencing with original equipment customers.
Sales growth in all customer categories was impacted by global supply chain issues, labour shortages, fitment
constraints and new vehicle availability resulting in longer lead times and larger than normal customer backorders.
“Truckman” Acquisition in the United Kingdom
ARB strategically acquired Auto Styling Truckman Group Limited, trading as Truckman, in the United Kingdom in March
2021. Truckman is the industry recognised brand leader in the UK, principally focused on rear of vehicle products such
as hard top canopies, bed liners and general utility vehicle products.
The acquisition of Truckman expands the Company’s international footprint and establishes a strong presence in
Europe’s largest utility vehicle market. Truckman’s business, under the leadership of continuing local management, is
integrating well despite the challenges imposed by COVID-19 and restrictions on international travel. The Board is
pleased with Truckman’s contribution and is excited by the opportunities to grow and expand in the UK market and
throughout Europe.

ARB CORPORATION LIMITED
CHAIRMAN’S STATEMENT (continued)
7
Products and Production
Product development is a key element in maintaining ARB’s long-term competitive advantage. The Company will
further expand its research and development programme in 2021/22 and work is continuing on a number of exciting
long-term development projects that will provide future growth opportunities for the Company. Significant engineering
resources were used in developing comprehensive ranges of ARB and Old Man Emu accessories for the updated
Toyota Hilux, the new Izuzu D-Max, the new Mazda BT-50 and the new Nissan Navara.
Engineering and development are underway on a full suite of premium, aftermarket products for the new Ford Bronco
in the USA, announced to the market on 31 March 2021.
A number of new products were released during the financial year, consolidating ARB as a market leader and
contributing to ARB’s sales and profit growth. Examples include the low-profile, aluminium Base Roof Rack with clever
accessories to secure a wide range of cargo and the integrated ARB Slide Kitchen that neatly tucks away into standard
dual cab drawers. Further innovative all-new products will come to market this financial year.
Upcoming new vehicle releases, including the Toyota Land Cruiser 300 Series and Ford Ranger, present exciting
opportunities and require collaboration across the engineering, manufacturing, marketing and sales teams at ARB.
The Company’s website at www.arb.com.au provides further information on ARB’s new product releases.
Construction has started on a new 30,000 square metre factory in very close proximity to the existing Thai operations
on a site acquired during the financial year. The new factory will increase capacity and facilitate more efficient and
streamlined operations in Thailand.
Financial
Growth in profit after tax of 97.0% exceeded sales revenue growth of 33.9% primarily due to higher gross profits,
increased volume-driven factory overhead recoveries and strengthening of the Australian dollar against the Thai baht.
The Company’s cash balance grew by $43 million to $85 million as at 30 June 2021, supported by cash flows generated
from operations of $103 million and the reinvestment and underwriting of $54 million in dividends paid during the year.
Throughout the year the Company continued to invest significantly in its future growth with an increase in net working
capital of $36 million, investments in property, plant and equipment of $33 million and a net $15 million payment for the
initial instalment of the Truckman acquisition.
With its cash reserves and no debt, the Company is well placed to continue its investment in people, property,
distribution networks, machinery and businesses to facilitate ongoing growth.
THE FUTURE
The Company maintains a positive short-term outlook based on strong global sales since the end of the financial year,
a strong customer order book, increasing new car sales in Australia and customer opportunities already announced to
the market.
The current economic conditions remain very uncertain. While demand is strong and global economies have performed
better than expected, ongoing and unpredictable restrictions designed to curb the spread of COVID-19 continue to
disrupt supply chains, shipping networks, retail operations and customer fulfilment. It is not possible to provide financial
or operational guidance in the short term with any level of confidence.
The Board remains focussed on the long-term growth of the Company as it develops and pursues a number of exciting
opportunities, including further growth in export markets, new products, improved distribution and increased
manufacturing capacity.
The Board believes ARB is well positioned to achieve long-term success with strong brands around the world, loyal
customers, capable senior management and staff, a strong balance sheet and growth strategies in place.
The Board expresses its appreciation to ARB’s staff worldwide for their commitment and efforts in challenging
circumstances during the last financial year and thanks the Company’s customers and suppliers for their continued
support.
A first quarter trading update will be provided to shareholders at the AGM on 14 October 2021.
Roger Brown
Chairman, 17 August 2021

ARB CORPORATION LIMITED

 

DIRECTORS’ REPORT

 

The Company achieved growth in sales and profit after tax of 33.9% and 97.0% respectively.

 

The Company acquired 100% of the shares of Auto Styling Truckman Group Limited (trading as Truckman) during the year.

 

There have been no other significant changes in the Group’s state of affairs during the financial year.

 

Dividends paid or proposed by the Company since the end of the previous financial year were:

 

In respect of the financial year:

 

2021 2020
$’000 $’000

 

An interim fully franked ordinary dividend of 29.0 cents per share was paid on 23 April 2021
(2020: 18.5 cents per share fully franked paid on 23 October 2020) (i)

 

23,193 14,769

 

The final dividend proposed by the Directors of the Company to be paid on 22 October 2021 is
a fully franked dividend of 39.0 cents per share (ii)
(2020: 21.0 cents per share paid on 23 October 2020) (ii) 31,798 16,317

 

Total dividends in respect of the financial year

 

54,991 31,086

 

All dividends were fully franked at the coporate tax rate of 30%.

 

Dividends Paid, Recommended and Declared

 

Review of Operations

 

A review of the Group’s operations is included in the Chairman’s Statement on pages 3 to 7.

 

Significant Changes in the State of Affairs

 

Subsequent Events

 

With the exception of the declaration of a final dividend detailed in Note 6, no other matters or circumstances have arisen since the
end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years. Government imposed lockdowns in response to COVID-19
continue to create uncertainty in various states around Australia. Lockdowns since the end of the financial year have not had a
material impact on the business as at the date of this report.

 

The Directors present their report together with the financial report of the consolidated entity of ARB Corporation Limited, being the
Company and its controlled entities (“the Group”), for the financial year ended 30 June 2021 and the auditor’s report thereon. This
financial report has been prepared in accordance with Australian Accounting Standards.

 

Principal Activities

 

The principal activities of the Group during the course of the financial year remained unchanged and were the design,
manufacture, distribution and sale of motor vehicle accessories and light metal engineering works.

 

Results

 

Likely Developments

 

The Group will continue to pursue its operating and financial strategies to create shareholder value. Further information is included
in the Chairman’s Statement.

 

Environmental Regulation

 

The Group’s operations are not significantly impacted by any environmental regulations or laws.

 

The consolidated profit attributable to members of the parent entity after income tax expense for the year was $112,895,000
(2020: $57,295,000).

 

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the
Directors’ Report and in the financial statements have been rounded to the nearest $1,000, or in certain cases, to the nearest $1
(where indicated).

 

(ii) The final dividends were declared subsequent to the financial year end and are not recognised as liabilities at 30 June.
(i) The interim dividend was declared prior to 30 June 2020 and was recognised as a liability at 30 June 2020.

 

Rounding of Amounts

8

ARB CORPORATION LIMITED

 

DIRECTORS’ REPORT (continued)

 

NAME & QUALIFICATIONS

 

EXPERIENCE AND SPECIAL RESPONSIBILITIES

 

Mr. Roger G Brown
B.E., M.B.A.
Chairman
Non-executive Director

 

Non-executive Chairman of ARB Corporation Limited since 2016.
Executive Chairman of ARB Corporation Limited from 1987 to 2016.
Managing Director of ARB Corporation Limited from 1987 to 2012.
Member of the Risk Management Committee.
Wide range of experience within the automotive industry in Australia and overseas.
Non-executive Director of AMCIL Limited.

 

Mr. Andrew H Brown
Managing Director

 

Wide range of experience in automotive engineering and marketing.
Managing Director of ARB Corporation Limited since 2012.
Executive Director of ARB Corporation Limited from 1987 to 2012.
Member of the Risk Management Committee.

 

Mr. Adrian R Fitzpatrick
B.Com., FCA
Independent Non-executive Director

 

Former partner of Pitcher Partners (retired 30 June 2016).
Non-executive Chairman of AussieBroadband Limited since 2020.
Non-executive Director of ARB Corporation Limited since 2016.
Previously a Non-executive Director of RXP Services Ltd from 2019 to 2021.
Member of the Audit Committee and the Remuneration and Nomination Committee.

 

Mr. John R Forsyth
B.E., M.B.A.
Non-executive Director

 

Director of ARB Corporation Limited since 1987.
Non-executive Director of ARB Corporation Limited since 2016.
Executive Director of ARB Corporation Limited from 1989 to 2016.
Chairman of the Risk Management Committee.
Company Secretary of ARB Corporation Limited from 2004 to 2019.

 

Mr. Robert D Fraser
B.Ec., LLB (Hons)
Independent Non-executive Director

 

Non-executive Director of ARB Corporation Limited since 2004.
Chairman of the Audit Committee and the Remuneration and Nomination Committee.
Company Director and corporate adviser. Director of Taylor Collison Limited and Non
executive Director of F.F.I. Holdings Limited, Magellan Financial Group Limited and
MFF Capital Investments Limited.

 

Ms. Karen L Phin
BA., LLB (Hons), GAICD
Independent Non-executive Director

 

Non-executive Director of ARB Corporation Limited since 2019.
Corporate advisor on capital markets, capital management and funding strategies. Non
executive Director of Omni Bridgeway Ltd (formerly IMF Bentham Ltd) and Magellan
Financial Group Limited. Member of the Takeovers Panel.
Member of the Audit Committee and the Remuneration and Nomination Committee.

 

Mr. Andrew P Stott
Independent Non-executive Director

 

Wide 4WD industry experience.
Non-executive Director of ARB Corporation Limited since 2006.
Member of the Audit Committee and the Remuneration and Nomination Committee.

 

Mr. Damon Page
B.Bus., CA
Company Secretary

 

Company Secretary of ARB Corporation Limited since 2019.
Chief Financial Officer of ARB Corporation Limited since 2014.

 

Comparatives

 

Where necessary, comparative information has been reclassified for consistency with current year disclosures.

 

No options over unissued shares or interests in the Group were granted during or since the end of the financial year and there
were no options outstanding at the end of the financial year.

 

Information on Directors and Company Secretary

 

The qualifications, experience and special responsibilities of each person who has been a Director of ARB Corporation Limited at
any time during or since the end of the financial year are provided below, together with details of the Company Secretary.

 

Share Options

9

ARB CORPORATION LIMITED

 

DIRECTORS’ REPORT (continued)

 

Remuneration Risk
& Nomination Management
Committee Committee

 

Audit
Committee

 

Board

 

Meetings attended / Meetings held whilst a member

 

Mr. Roger G Brown
Mr. Andrew H Brown
Mr. Adrian R Fitzpatrick
Mr. John R Forsyth
Mr. Robert D Fraser
Ms. Karen L Phin
Mr. Andrew P Stott

 

16 / 16 * * 23 / 23
16 / 16 * * 23 / 23
16 / 16 4 / 4 2 / 2 *
16 / 16 * * 22 / 23
16 / 16 4 / 4 2 / 2 *
16 / 16 4 / 4 2 / 2 *
16 / 16 4 / 4 2 / 2 *

 

* Not a member of the Committee

 

The Risk Management Committee meetings occur in conjunction with management meetings.

 

2021 2020
$ $

 

Amounts paid or payable to auditors for non-audit services provided during the year by
the auditors to any entity that is part of the Group for:

 

Taxation services

 

124,500 42,932

 

Indemnification and Insurance of Directors, Officers and Auditors

 

The Company has, during the financial year, in respect of any person who is or has been an officer of the Company or a related
body corporate, paid a premium in respect of Directors’ and Officers’ Liability insurance which indemnifies the Directors and
Officers of the Company for any claims made against the Directors and Officers of the Company, subject to conditions contained
in the insurance policy. Further disclosures required under Section 300(1)(g) of the Corporations Act 2001 are prohibited under the
terms of the contract.

 

Non-audit services are approved by resolution of the Audit Committee. Non-audit services provided during the year by the auditors
of the Group, Pitcher Partners, are detailed below. The Directors are satisfied that the provision of the non-audit services during
the year by the auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.

 

Proceedings on Behalf of the Group

 

In addition to scheduled meetings, the Board has informal discussions on a regular basis to consider relevant issues arising. It also
has informal meetings, discusses strategic, operational and risk matters with senior management and undertakes site visits.

 

Auditor’s Independence Declaration

 

No person has applied for leave of court to bring proceedings on behalf of the Group.

 

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in relation to the
audit for the financial year is included at page 50 of this report.

 

Non-Audit Services

 

Directors’ Meetings

 

The number of Board of Directors and Board Committee meetings held during the financial year, and each director’s attendance at
these meetings were:

 

No indemnities have been given or insurance premiums paid during or since the end of the financial year, for the auditors of the
Group.

10

ARB CORPORATION LIMITED

 

DIRECTORS’ REPORT (continued)

 

Key Management Personnel

 

Remuneration Policies

 

The Group has reimbursed expenses incurred by the Non-executive Directors in the discharge of their duties of $nil (2020: $nil).

 

Post
Short Term Long Term Employment
Salary Non-cash Annual Long Service Super- Total
& Fees Benefits Leave Leave annuation
$ $ $ $ $ $
Details of the nature and amount of each major element of the remuneration of each Director of the Company and each KMP of
the Company and the Group for the financial year are:

 

Roger G Brown (Chairman)
Andrew H Brown (Managing Director)
Adrian R Fitzpatrick
John R Forsyth
Robert D Fraser
Karen L Phin
Andrew P Stott
2021

 

153,750 14,606 168,356
368,347 28,701 32,319 5,960 25,000 460,327
62,337 5,922 68,259
153,750 14,606 168,356
100,316 100,316
62,337 5,922 68,259
62,337 5,922 68,259

 

Total

 

963,174 28,701 32,319 5,960 71,978 1,102,132

 

Roger G Brown (Chairman)
Andrew H Brown (Managing Director)
Adrian R Fitzpatrick
John R Forsyth
Robert D Fraser
Karen L Phin (appointed 26 June 2019)
Andrew P Stott
2020

 

145,044 13,779 158,823
310,870 28,701 18,243 11,769 25,000 394,583
55,885 5,309 61,194
145,044 13,779 158,823
85,739 4,194 89,933
55,885 5,309 61,194
55,885 5,309 61,194

 

Total

 

854,352 28,701 18,243 11,769 72,679 985,744

 

The Company determines the total amount of remuneration for Directors by resolution.

 

Remuneration Report – Audited

 

The Company provides a remuneration package to all KMP which may incorporate both cash-based and non cash-based
remuneration. The contracts for service between the Company and specified KMP are on a continuing basis, the terms of which
are not expected to change in the immediate future. The remuneration policy is based on providing a fair and competitive annual
remuneration package to KMP based on market related data. KMP do not participate in any short-term or long-term incentive
arrangements. The Board does not believe that incentives based on the Company’s short term returns are appropriate to long
term wealth creation for shareholders. The Board believes that the Managing Director and the Board as a whole are appropriately
incentivised in the long term by their shareholdings in the Company.

 

During the prior financial year, effective from 1 April 2020, Roger Brown, Andrew Brown and John Forsyth chose to take a 50%
reduction to their total remuneration, excluding Andrew Brown’s motor vehicle benefit. Each of the other directors took a 30%
reduction to their total remuneration. This cost reduction measure, in response to COVID-19, was in place from 1 April 2020
through to 30 June 2020.

 

‘Key Management Personnel’ (“KMP”) are those persons having authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of that entity. Being a
working Board, strategic direction and decision-making is exercised by the Directors. Accordingly, the Managing Director and the
other Directors are considered to be the Group’s KMP.

 

The Directors present the Group’s 2021 remuneration report which details the remuneration information for ARB Corporation
Limited’s key management personnel including executive directors and non-executive directors.

 

The Board’s policy for determining the nature and amount of remuneration of KMP is agreed by the Board of Directors as a whole
based on the recommendations of the Remuneration and Nomination Committee. The Board obtains professional advice where
necessary to ensure that the Group attracts and retains talented and motivated KMP who can enhance the Group’s performance
through their contributions and leadership.

11

ARB CORPORATION LIMITED

 

DIRECTORS’ REPORT (continued)

 

The following table summarises the Group’s performance and key performance indicators:

 

2021 2020 2019 2018 2017

 

Revenue ($’000)

 

625,857 466,988 446,572 425,144 381,206

 

Increase in revenue (%)

 

34.0% 4.6% 5.0% 11.5% 5.5%

 

Profit before tax ($’000)

 

150,023 78,092 77,692 74,372 67,501

 

Increase/(decrease) in profit before tax (%)

 

92.1% 0.5% 4.5% 10.2% 4.8%

 

Profit after tax ($’000)

 

112,895 57,295 57,137 50,969 49,152

 

Increase/(decrease) in profit after tax (%)

 

97.0% 0.3% 12.1% 3.7% 3.6%

 

Basic earnings per share (cents)

 

140.0 71.8 71.9 64.3 62.1

 

Dividends per share fully franked (cents)

 

68.0 39.5 39.5 37.0 34.0

 

Earnings before interest and tax ($’000)

 

151,874 79,766 77,908 74,641 67,458

 

Gearing ratio (%)

 

n/a n/a n/a 1.3% n/a

 

End of year share price ($)

 

43.19 17.95 18.20 22.83 15.71

 

Total remuneration of KMP ($)

 

1,102,132 985,744 1,114,027 1,055,250 1,047,167

 

Key Management Personnel Shareholdings

 

The ordinary shares of ARB Corporation Limited held by each Director, either directly or indirectly, were:

 

Beginning
of Year
Acquired Sold End
of Year

 

Roger G Brown (Chairman)
Andrew H Brown (Managing Director)
Adrian R Fitzpatrick
John R Forsyth
Robert D Fraser
Karen L Phin
Andrew P Stott

 

(a) 5,920,830 5,920,830
(a) 5,933,563 5,933,563
2,500 2,500 (2,500) 2,500
1,622,293 456 1,622,749
28,556 607 29,163
4,700 4,700
3,000 3,000

 

(a) Common to each of R.G. Brown and A.H. Brown are 5,879,272 (2020: 5,879,272) shares held indirectly.

 

Signed in accordance with a resolution of the Directors.

 

Roger G Brown
Director

 

John R Forsyth
Director

 

Melbourne, 17 August, 2021

 

*** End of the Remuneration Report ***

 

Corporate Governance Statement

 

The Company’s Corporate Governance Statement is included at page 50 of this report and is also available on the Company
website at http://www.arb.com.au/about/investor-relations/.

 

2021

 

Since the end of the previous financial year no Director of the Company has received or become entitled to receive any benefit
(other than a benefit included in the aggregate amount of remuneration received or due and receivable by Directors shown in the
consolidated financial report) because of a contract made by the Company, its controlled entities or a related body corporate with a
Director or with a firm of which a Director is a member, or with an entity in which the Director has a substantial interest.

12

ARB CORPORATION LIMITED

 

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021

 

2021 2020
$’000 $’000

 

Note

 

Sales revenue
Other income

 

623,072 465,379
2,785 1,609

 

Total revenue and other income

 

3 625,857 466,988

 

Materials and consumables used
Employee expenses
Government wage subsidies
Depreciation and amortisation expense
Advertising expense
Distribution expense
Finance expense
Occupancy expense
Maintenance expense
Other expenses

 

(278,878) (216,127)
(129,093) (115,210)
9,819 9,478
(23,513) (21,733)
(5,975) (6,950)
(14,467) (10,554)
(2,002) (1,723)
(13,820) (11,679)
(5,065) (4,034)
(12,840) (10,364)

 

4

 

Profit before income tax expense
Income tax expense

 

150,023 78,092
(37,128) (20,797)

 

5

 

112,895 57,295

 

25 140.0 71.8

 

The accompanying notes form part of these financial statements.

 

Profit attributable to members of the parent entity

 

Basic and Diluted earnings per share (cents)

13

ARB CORPORATION LIMITED

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021

 

2021 2020
$’000 $’000

 

Note

 

Profit attributable to members of the parent entity

 

112,895 57,295

 

Other comprehensive income

 

Items that may be reclassified subsequently to Profit/(Loss)
Movement in fair value of cash flow hedges
Exchange differences on translation of foreign operations

 

19 82 9
19 (13,824) 448

 

Other comprehensive income for the year
Total comprehensive income for the year attributable to members of the parent
entity

 

(13,742) 457

 

99,153 57,752

 

The accompanying notes form part of these financial statements.

14

ARB CORPORATION LIMITED

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021

 

2021 2020
$’000 $’000

 

Note

 

Current assets
Cash and cash equivalents
Receivables
Derivative financial instruments
Inventories
Other assets
Total current assets

 

23 84,771 41,569
7 79,890 60,102
14 151
8 172,958 119,170
9 6,292 3,683
344,062 224,524

 

Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Right-of-use assets
Total non-current assets

 

10 201,434 180,399
5 9,977 5,897
11 63,110 35,524
12 39,679 40,175
314,200 261,995

 

Total assets

 

658,262 486,519

 

Current liabilities
Payables
Derivative financial instruments
Current tax liabilities
Lease liabilities
Provisions
Total current liabilities

 

13 73,234 35,709
14 74 5
5 14,168 2,948
16 5,927 4,716
17 19,414 29,904
112,817 73,282

 

Non-current liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities

 

16 39,200 39,814
5 933
17 19,535 1,162
59,668 40,976

 

Total liabilities

 

172,485 114,258

 

NET ASSETS

 

485,777 372,261

 

EQUITY
Contributed equity
Reserves
Retained earnings

 

18 170,789 116,916
19 9,522 23,264
20 305,466 232,081

 

TOTAL EQUITY

 

485,777 372,261

 

The accompanying notes form part of these financial statements.

15

ARB CORPORATION LIMITED

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021

 

Contributed Reserves Retained Total
equity earnings equity
$’000 $’000 $’000 $’000

 

Balance as at 1 July 2019

 

115,181 22,807 208,606 346,594

 

Adjustment on change of accounting policy, net of tax (note 1 (h))
Restated opening balance

 

(2,482) (2,482)
115,181 22,807 206,124 344,112

 

Profit for the year
Movement in fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operations, net of tax
Total comprehensive income for the year

 

57,295 57,295
9 9
448 448
457 57,295 57,752

 

Transactions with owners in their capacity as owners:
Contributions
Share issue
Dividends paid
Total transactions with owners in their capacity as owners

 

1,534 1,534
201 201
(31,338) (31,338)
1,735 (31,338) (29,603)

 

Balance as at 30 June 2020

 

116,916 23,264 232,081 372,261

 

Balance as at 1 July 2020

 

116,916 23,264 232,081 372,261

 

Profit for the year
Movement in fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operations, net of tax
Total comprehensive income for the year

 

112,895 112,895
82 82
(13,824) (13,824)
(13,742) 112,895 99,153

 

Transactions with owners in their capacity as owners:
Dividend reinvestment and bonus share plans (net of underwriter’s fee)
Share issue
Dividends paid
Total transactions with owners in their capacity as owners

 

53,728 53,728
145 145
(39,510) (39,510)
53,873 (39,510) 14,363

 

Balance as at 30 June 2021

 

170,789 9,522 305,466 485,777

 

The accompanying notes form part of these financial statements.

16

ARB CORPORATION LIMITED

 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021

 

2021 2020
$’000 $’000

 

Note

 

Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income tax paid
Net cash provided by Operating activities

 

651,141 497,648
(516,480) (384,555)
151 49
(1,864) (1,723)
(29,777) (20,182)
103,171 91,237

 

23

 

Cash Flows From Investing Activities
Payments for property, plant and equipment
Payments for development costs
Payments for intangible software assets
Proceeds from sales of property, plant & equipment
Payments for business acquisition (net of cash acquired)
Net cash used in Investing activities

 

10 (33,138) (17,757)
11 (2,754) (3,299)
11 (711) (734)
783 642
22 (15,188) (17,478)
(51,008) (38,626)

 

Cash Flows From Financing Activities
Dividends paid
DRP underwriting fee
Payments for lease liabilities
Repayment of borrowings
Net cash used in Financing activities

 

(15,035)
(551)
(5,399) (4,572)
(3,391)
(9,341) (19,607)

 

Foreign exchange differences
Net increase/(decrease) in cash held

 

380 101
43,202 33,105

 

Cash at the beginning of the financial year

 

41,569 8,464

 

Cash at the end of the financial year

 

23 84,771 41,569

 

The accompanying notes form part of these financial statements.

17

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021

 

NOTES TO THE FINANCIAL STATEMENTS

 

1 Statement of significant accounting policies

 

2 Financial risk management

 

3 Revenues from continuing operations

 

4 Profit from continuing operations

 

5 Income tax

 

6 Dividends

 

7 Receivables

 

8 Inventories

 

9 Other assets

 

10 Property, plant and equipment

 

11 Intangible assets

 

12 Right-of-use assets

 

13 Payables

 

14 Derivative financial instruments

 

15 Financing arrangements

 

16 Lease liabilities

 

17 Provisions

 

18 Contributed equity

 

19 Reserves

 

20 Retained earnings

 

21 Parent entity information

 

22 Business combinations

 

23 Cash flow information

 

24 Commitments and contingencies

 

25 Earnings per share

 

26 Auditors’ remuneration

 

27 Subsequent events

 

28 Controlled entities

 

29 Directors and executives

 

30 Related party transactions

 

31 Segment information

18

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

 

(a) Basis of preparation of the financial report

 

Compliance with IFRS
The consolidated financial statements of ARB Corporation Limited also comply with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 

Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain
classes of assets as described in the accounting policies.

 

(b) Going concern

 

(c) Principles of consolidation

 

(d) Revenue recognition

 

(e) Cash and cash equivalents

 

(f) Inventories

 

Raw materials and consumables: purchase cost on a first-in-first-out basis;
Finished goods and work in progress: cost of direct material and labour and a proportion of manufacturing overheads based
on normal operating capacity.

 

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent
accounting policies. Adjustments are made to bring into line any dissimilar accounting policies.

 

Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of six months or less
held at call with financial institutions, and bank overdrafts.

 

Revenue is recognised as, or when, goods or services are transferred to the customer, and is measured at an amount that reflects
the consideration to which the Group expects to be entitled in exchange for the goods or services. The Group provides a general
warranty for all goods sold. The Group does not provide customers with the option to purchase an additional or extended warranty.
Warranty obligations are recognised as a provision, and are measured at the Group’s estimate of the expenditure required to fulfil
its warranty obligations at the reporting date.

 

The financial report was authorised for issue by the Directors as at the date of the Directors’ report.

 

All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation.
Subsidiaries are fully consolidated from the date on which control is established.

 

The financial report has been prepared on a going concern basis.

 

The consolidated financial statements are those of the Group, comprising the financial statements of the parent entity and of all
entities which the parent entity controls. The Group controls an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.

 

Interest revenue is recognised when it becomes receivable on a proportional basis taking into account the interest rates applicable
to the financial assets.

 

Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each product to its present
location and condition are accounted for as follows:

 

The following is a summary of significant accounting policies adopted by the consolidated entity (“the Group”) in the preparation
and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

 

This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board and
the Corporations Act 2001. The Group is a for-profit entity for the purpose of preparing the financial statements.

 

The financial report covers ARB Corporation Limited and its controlled entities as a consolidated entity. ARB Corporation Limited
is a company limited by shares, incorporated and domiciled in Australia.

19

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

(g) Property, plant and equipment

 

Depreciation
Land is not depreciated. The depreciable amounts of all other plant and equipment are depreciated over their estimated useful
lives commencing from the time the asset is held ready for use.

 

The useful lives for each class of assets are:
Buildings:
Plant and equipment:

 

2021
40 years
3 to 10 years

 

2020
40 years
3 to 10 years

 

(h) Leases

 

(i) Intangibles
Goodwill
Goodwill is initially measured as described in Note 1 (r). Goodwill is not amortised but is tested annually for impairment, or more
frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less accumulated
impairment losses.

 

Research and development
Expenditure on research activities is recognised as an expense when incurred.

 

IT software development costs
Costs incurred in developing IT software are initially recognised as an asset, and are subsequently amortised over their estimated
useful lives commencing from the time the asset is available for use. The amortisation method applied to an intangible asset is
consistent with the estimated consumption of economic benefits of the asset.

 

Distribution rights
Distribution rights are recorded at cost.

 

Amortisation is calculated using a straight-line method to allocate the cost over the period of the distribution rights.

 

Cost and valuation
Freehold land and buildings are shown at cost less accumulated depreciation for buildings and accumulated impairment losses.

 

The Group has also elected (i) to not recognise right-of-use assets and lease liabilities for low value assets, rather, lease
payments associated with these assets are recognised as an expense on a straight-line basis over the lease term, (ii) to apply a
single discount rate to a portfolio of leases with reasonably similar characteristics, and (iii) to use hindsight to determine the lease
term for contracts that include options to renew, extend or terminate the lease.

 

In accordance with the transition requirements of AASB 16, the Group elected to use the modified retrospective approach, under
which the cumulative effect of initial application was recognised in retained earnings at 1 July 2019.

 

The Group accounts for leases on balance sheet and, as a lessee, recognises right-of-use assets representing its rights to use the
underlying assets and lease liabilities representing its obligation to make lease payments for all leases with a term greater than 12
months.

 

Right-of-use assets are initially measured at their cost comprising the amount of the initial measurement of the lease liability, lease
payments made prior to commencing the lease and other direct costs incurred including an estimate of required make good costs
at the end of the lease term less any lease incentives received. Right-of-use assets are subsequently measured at cost less any
accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liability. Lease costs are
depreciated over the shorter of the lease term or the estimated useful life of the asset.

 

Expenditure on motor vehicle accessories design and development activities is capitalised only when technical feasibility studies
identify that the project will deliver future economic benefits and these benefits can be measured reliably. Capitalised development
expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using a straight-line method to allocate the
cost of the intangible assets over their estimated useful lives, which range from 3 to 5 years. Amortisation commences when the
intangible asset is available for use. Other development expenditure is expensed when incurred.

 

All other classes of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

 

Lease liabilities are initially measured at the present value of the lease payments over the lease term using the Group’s
incremental borrowing rate. Lease liabilities are subsequently measured at the present value of the remaining lease payments
adjusted to reflect changes to lease terms or payments. Variable lease payments not included in the measurement of lease
liabilities are recognised as an expense when incurred.

20

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

(j) Taxes

 

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

 

Tax consolidation
The parent entity and its controlled Australian entities have formed an income tax consolidated group under the tax consolidation
legislation. The parent entity is responsible for recognising the current tax liabilities and deferred tax assets arising in respect of tax
losses, for the tax consolidated group. The tax consolidated group has also entered into a tax funding agreement whereby each
company in the Group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax
consolidated group.

 

(k) Impairment of non-financial assets

 

(l) Employee benefits

 

(m) Financial instruments

 

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only when it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.

 

Hedge accounting: certain derivatives are designated as hedging instruments and are classified as cash flow hedges. At the
inception of each hedging transaction the Group documents the relationship between the hedging instruments and hedged items,
its risk management objective and its strategy for undertaking the hedge transaction. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and
will continue to be highly effective in offsetting changes in cash flows of hedged items.

 

Assets with an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB 136
Impairment of Assets. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or
circumstances arise that indicate that the carrying amount of the asset may be impaired.

 

An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable
amount of an asset is defined as the higher of its fair value less costs to sell and value in use.

 

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within 12
months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid
when the liability is settled. All other employee benefit liabilities which are not expected to be settled wholly before 12 months after
the end of the reporting period are measured at the present value of the estimated future cash outflow to be made in respect of
services provided by employees up to the reporting date.

 

Cash flow hedge: to qualify as a cash flow hedge the underlying transactions generating the cash flows must be highly probable.
Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity in the cash
flow hedging reserve. The gain or loss is released to profit or loss in the same period when the forecast transactions occur, thereby
mitigating any exchange fluctuations that would have transpired in the absence of the hedge.

 

Receivables: measured at fair value at inception and subsequently at amortised cost using the effective interest rate method.
Receivables are tested for impairment. Any impairment loss is recognised in the profit and loss. The Group applies the simplified
approach under AASB 9 Financial Instruments to measuring the allowance for credit losses for receivables from contracts with
customers on the basis of the lifetime expected credit losses of the financial asset that are expected to result from default events.
Expected credit losses are based on a review of debtor balances and identification of specific debtors, based on historical credit
loss experience, and adjusted for factors that are specific to the financial asset, as well as current and future expected economic
conditions relevant to the financial asset.

 

Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income
tax rate adjusted by changes in deferred tax assets and liabilities.

 

Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are
expected to be recovered or liabilities are settled. No deferred tax asset or liability is recognised in relation to temporary
differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.

 

Financial liabilities: include trade payables, other creditors, provision for deferred consideration and loans from third parties
measured at amortised cost.

21

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

(n) Foreign currency

 

Functional and presentation currency
The financial statements of each Group entity are measured using its functional currency, which is the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars
which is the parent entity’s functional and presentation currency.

 

Transactions and balances
Transactions in foreign currencies of entities within the Group are translated into their functional currency at the rate of exchange
ruling at the date of the transaction.

 

Assets and liabilities are translated at the closing rate prevailing on reporting date;
Income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate;
All resulting exchange differences are recognised as Other Comprehensive Income.
Entities that have a functional currency different to the presentation currency are translated as follows:

 

(o) Goods and services tax (GST)

 

(p) Comparatives

 

(q) Significant accounting estimates and judgements

 

Inventories
Management has assessed the value of inventory that is likely to be sold below cost using past experience and judgement on the
likely sell through rates of various items of inventory, and booked a provision for this amount.

 

Impairment of goodwill
Goodwill is allocated to cash generating units (CGU) according to management’s expectations regarding which assets will be
expected to benefit from the synergies arising from the business combination that gave rise to the goodwill. The recoverable
amount of a CGU is based on value in use calculations. These calculations are based on projected cash flows approved by
management. Management’s determination of cash flow projections and gross margins are based on past performance and its
expectation for the future. The present value of future cash flows has been calculated as disclosed in Note 11 of the financial
statements.

 

Impairment of non-financial assets other than goodwill
All assets are assessed for impairment at each reporting date by evaluating whether indicators of impairment exist in relation to the
continued use of the asset by the Group. Impairment triggers include declining product or manufacturing performance, technology
changes, adverse changes in the economic or political environment or future product expectations. If an indicator of impairment
exists the recoverable amount of the asset is determined. The recoverable amount of a CGU is based on value in use
calculations.

 

Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.

 

Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.

 

Certain accounting estimates include assumptions concerning the future, which, by definition, will seldom represent actual results.
Estimates and assumptions based on future events have a significant inherent risk, and where future events are not as anticipated
there could be a material impact on the carrying amounts of the assets and liabilities discussed below:

 

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the
asset or as part of an item of the expense. Receivables and payables in the Consolidated Statement of Financial Position are
shown inclusive of GST.

 

Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign
currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the
end of the financial year.

 

Except for certain foreign currency hedges, all resulting exchange differences arising on settlement or re-statement are recognised
as revenues and expenses for the financial year.

22

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

(r) Business combinations

 

Acquisition related costs are expensed as incurred.

 

(s) New and revised accounting standards effective at 30 June 2021

 

(t) New accounting standards and interpretations issued but not operative at 30 June 2021

 

(u) Rounding amounts

 

(v) Government wage subsidies

 

(w) COVID-19

 

A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results
in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition
method.

 

The consideration transferred is the sum of the acquisition date fair values of the assets transferred, equity instruments issued or
liabilities incurred by the acquirer to former owners of the acquiree. Deferred consideration payable is measured at its acquisition
date fair value. Contingent consideration to be transferred by the acquirer is recognised at the acquisition date fair value. At each
reporting date subsequent to the acquisition, contingent consideration payable is measured at its fair value with any changes in the
fair value recognised in profit or loss.

 

Goodwill is recognised initially at the excess over the aggregate of the consideration transferred, the fair value of the non
controlling interest, and the acquisition date fair value of the acquirer’s previously held equity interest (in case of step acquisition),
less the fair value of the identifiable assets acquired and liabilities assumed.

 

A number of new accounting standards and interpretations have been issued at the reporting date but are not yet effective. The
Directors have not yet assessed the impact of these standards or interpretations.

 

Since the declaration by the World Health Organisation on 11 March 2020, of COVID-19 as a pandemic, there has been a
significant impact on local and world economies. This pandemic may have an impact on the financial position, and may affect the
financial performance of the Group in the future.

 

The Group has applied all new and revised Australian Accounting Standards that apply to annual reporting periods beginning on or
after 1 July 2020.

 

In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the
Directors’ Report and in the financial statements have been rounded to the nearest $1,000, or in certain cases, to the nearest $1
(where indicated).

 

Government wage subsidies are recognised when there is reasonable certainty that the subsidy will be received and all subsidy
conditions are met. Subsidies relating to expense items are recognised as a negative expense over the periods necessary to
match the subsidy to the costs for which they are compensating.

23

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

2. FINANCIAL RISK MANAGEMENT

 

The Group is exposed to a variety of financial risks comprising:
(a) Currency risk
(c) Interest rate risk
(e) Fair values

 

(b) Liquidity risk
(d) Credit risk

 

(a) Currency risk

 

2021 2020
A$’000 A$’000

 

2021 2020
Forward Rate Forward Rate

 

Settlement – less than 6 months

 

Sell AUD / Buy THB

 

41,411 1,408

 

24.1482 21.3000

 

Sell GBP / Buy THB

 

7,058

 

40.7459

 

Sell GBP / Buy USD

 

1,608

 

1.3315

 

Sell GBP / Buy Euro

 

1,022

 

1.1366

 

Sensitivity

 

(b) Liquidity risk

 

Maturity analysis
As at 30 June 2020, property lease payments due within 1 year: $6.4m; within 1-5 years: $29.8m; and more than 5 years: $18.1m.
Financial liabilities, excluding lease liabilities and deferred consideration, are contractually due to be settled within six months.
As at 30 June 2021, property lease payments due within 1 year: $8.2m; within 1-5 years: $27.0m; and more than 5 years: $19.9m.
As at 30 June 2021, deferred consideration is due within 1 year: $2.4m (2020: $nil); and within 1-5 years: $18.3m (2020: $nil).

 

There is a net surplus of Euro received over the Group’s Euro payments. Accordingly, the Group monitors the foreign currency
exchange rates and may take out hedge contracts to stabilise the Group’s sale of Euro.

 

If the Group considers its exposure in a foreign currency to be significant it will consider the use of hedging contracts.

 

No reasonable movement in the Australian dollar (AUD) rates (for example 10% up or down) used to determine the fair value of
the Group’s financial instruments would result in a significant impact on profit or equity.

 

The Group trades in various foreign currencies for both sales and purchases.

 

The Group purchases some equipment and products in Thai Baht (THB), United States Dollars (USD), New Zealand Dollars
(NZD), Euro (EUR), Japanese Yen (JPY), Swedish Krona (SEK) and Great British Pounds (GBP). To minimise the risk on the
exposure to these currencies, the Group may take out hedge contracts.

 

The Group monitors its cash flow on a daily basis to ensure it can meet its obligations associated with financial liabilities.

 

Derivative financial instruments are used by the Group to hedge exposure to exchange rate risk associated with foreign currency
transactions. Transactions for hedging purposes are undertaken without the use of collateral as the Group only deals with
reputable institutions with sound financial positions.

 

The Group enters into forward exchange contracts to buy and sell specified amounts of foreign currencies in the future at
stipulated exchange rates. The objective in entering the forward exchange contracts is to protect the Group against unfavourable
exchange rate movements for both the contracted and anticipated future sales and purchases undertaken in foreign currencies.

 

Forward exchange contracts as at 30 June were:

 

There is a net deficit of Thai Baht (THB) received over the Group’s THB payments. Accordingly, the Group monitors the foreign
currency exchange rates and may take out hedge contracts to stabilise the Group’s purchase of THB.

 

There is a net deficit of United States Dollars (USD) received over the Group’s USD payments. Accordingly, the Group monitors
the foreign currency exchange rates and may take out hedge contracts to stabilise the Group’s purchase of USD.

 

The Board of Directors has overall responsibility for ensuring that the risk mitigation actions recommended by the Risk
Management Committee are implemented. The Board’s policy with respect to the Group’s exposure to financial risks is to seek to
minimise potential adverse effects on the financial performance as a result of risks arising from financial instruments.

24

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

2. FINANCIAL RISK MANAGEMENT (continued)

 

(c) Interest rate risk

 

Note Weighted Floating Non Fixed interest maturing in :
Average Interest 1 year More than Interest
Interest rate rate or less 1 year Bearing Total
% $’000 $’000 $’000 $’000 $’000

 

Financial assets
Cash
Receivables
Derivative financial instruments
2021

 

23 0.12% 84,771 84,771
7 79,890 79,890
14 151 151

 

Financial liabilities
Payables
Derivative financial instruments
Lease liabilities
Provision for deferred consideration 17

 

13 73,234 73,234
14 74 74
16 4.03% 5,927 39,200 45,127
2.31% 18,307 2,425 20,732

 

Financial assets
Cash
Receivables
2020

 

23 0.25% 41,569 41,569
7 60,102 60,102

 

Financial liabilities
Payables
Derivative financial instruments
Lease liabilities

 

13 35,709 35,709
14 5 5
16 4.20% 4,716 39,814 44,530

 

(d) Credit risk

 

Concentrations of credit risk
The Group minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number
of customers. The majority of cash holdings are held on deposit with Australian banks.

 

(e) Fair values

 

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation.

 

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date of recognised
financial assets is the carrying amount of those assets, net of any allowance for credit losses, as disclosed in the Consolidated
Statement of Financial Position and Notes to the Financial Statements.

 

Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their
obligations. The credit risk exposure to forward exchange contracts is the net fair value of these contracts.

 

The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments
entered into by members of the Group.

 

The net fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the Consolidated
Statement of Financial Position and Notes to the Financial Statements.

 

The fair values of derivative hedging instruments have been determined based on observable inputs including foreign currency
forward exchange rates. Derivative hedging instruments are classified as Level 2 in the fair value measurement hierarchy. These
foreign currency forward contracts are valued on a discounted cash flow basis using forward exchange rates. All other financial
assets and liabilities carrying amounts are a reasonable approximation of fair values as they are short term trade receivables and
payables.

 

The Group monitors its cash flow on a daily basis. Borrowings as at 30 June 2021 were $nil (2020: $nil). Finance facilities
available and used as at the reporting date are disclosed in Note 15.

 

The Group’s exposure to interest rate risks and the effective interest rates of financial assets and liabilities, both recognised and
unrecognised at the balance date, are as follows:

25

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

3. REVENUES FROM CONTINUING OPERATIONS

 

2021 2020
$’000 $’000

 

Revenue from sale of goods

 

623,072 465,379

 

Other income:
Interest
Net gain on disposal of property, plant and equipment
Other
Total other income

 

151 49
181 12
2,453 1,548
2,785 1,609

 

Total income from continuing operations

 

625,857 466,988

 

4. PROFIT FROM CONTINUING OPERATIONS

 

2021 2020
$’000 $’000

 

Note

 

Cost of goods sold

 

350,187 272,903

 

Depreciation of non-current assets:
Buildings
Plant and equipment

 

10 (a) 3,189 2,831
10 (a) 10,471 9,741
13,660 12,572

 

Amortisation of non-current assets:
Development costs capitalised
Intangible software assets
Right-of-use assets

 

11 2,509 2,641
11 1,035 1,184
12 6,309 5,336
9,853 9,161

 

Total depreciation and amortisation

 

23,513 21,733

 

Other expense items:
Trade receivables (recovered) / written off
Provision for inventory obsolescence
Research and development expenditure
Bonus accrued for employees in response to COVID-19

 

(81) 706
3,627 1,453
12,001 12,043
1,497

 

COVID-19
The Company’s financial results rebounded strongly in the current financial year from the worst of the COVID-19 impacts
experienced at the onset of the pandemic. The ongoing disruption caused by COVID-19 across all of ARB’s markets has
presented both opportunities and operational challenges. Whilst demand for the Company’s products has increased
worldwide with a trend towards local touring, logistical and supply chain constraints have increased operational costs and
disrupted fulfilment of sales demand. It is not feasible to quantify the impact of these and other COVID-19 related factors.

26

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

5. INCOME TAX

 

2021 2020
$’000 $’000

 

Note

 

(a) The components of tax expense:

 

Current tax
Deferred tax
Deferred tax recognised through retained earnings
(Over) / Underprovision prior year

 

41,325 22,062
(4,133) (2,175)
1 (h) 1,061
(64) (151)

 

Total income tax expense

 

37,128 20,797

 

(b) Income tax expense

 

Prima facie income tax expense at 30% (2020: 30%) on the operating profit
Increase/(decrease) in income tax expense due to:
Differences in overseas tax rates
Research & development
Intercompany dividend
Other
Income tax expense on operating profit
(Over) / Underprovision prior year

 

45,007 23,427

 

(9,453) (2,629)
(117) (140)
1,135
620 290
37,192 20,948
(64) (151)

 

Total income tax expense

 

37,128 20,797

 

(c) Deferred tax

 

Deferred tax assets
Deferred tax asset comprises the estimated future benefits at applicable income tax rates of the
following items:
Provisions, accruals and accrued employee benefits
Doubtful debt impairment
Inventory write-down
Income tax expense on group unrealised profit
Leases
Other

 

6,745 5,055
221 242
2,334 1,334
3,663 2,426
1,640 1,290
178 (42)

 

14,781 10,305

 

Deferred tax liabilities
Deferred tax liability comprises the estimated future expenses at applicable income tax
rates for the following items:
Difference in depreciation and amortisation of property, plant and equipment
for accounting and income tax purposes
Development costs capitalised
Acquired
Other income not yet assessable

 

528 306
3,872 3,804
989
348 298

 

5,737 4,408

 

Net deferred tax assets

 

9,044 5,897

 

Disclosed on Balance Sheet:
Deferred tax assets
Deferred tax liabilities

 

9,977 5,897
(933)

 

Net deferred tax assets

 

9,044 5,897

 

(d) Current tax liabilities

 

Balance at the beginning of the financial year
Income tax
Tax payments
Acquired
Under / (over) provisions
Other

 

2,948 1,239
41,325 22,062
(29,777) (20,182)
(205)
(64) (151)
(59) (20)

 

Current tax liabilities

 

14,168 2,948

27

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

6. DIVIDENDS

 

2021 2020
$’000 $’000

 

Note

 

Dividends recommended or paid by the Company are:
Recognised amounts
A final fully franked ordinary dividend of 21.0 cents per share was paid
on 23 October 2020 (2020: 21 cents fully franked)

 

16,317 16,569

 

An interim fully franked ordinary dividend of 29.0 cents per share was paid
on 23 April 2021 (2020: 18.5 cents fully franked)

 

23,193 14,769

 

20 39,510 31,338

 

Unrecognised amounts
A final fully franked ordinary dividend is proposed of 39.0 cents per share
to be paid on 22 October 2021 (2020: 21.0 cents fully franked)

 

31,798 16,764

 

Dividend franking account

 

Franking credits (measured on a tax paid basis under Australian Legislation)

 

62,340 61,193

 

7. RECEIVABLES

 

2021 2020
$’000 $’000

 

Current
Trade receivables
Other receivables

 

75,015 57,204
5,642 3,746
80,657 60,950
(767) (848)

 

Less: allowance for credit losses

 

79,890 60,102

 

Allowance for credit losses
Receivables ageing analysis at 30 June is:

 

Not past due
Past due 0 – 30 days
Past due 31 – 90 days
Past due more than 91 days

 

72,558 51,134
6,157 4,845
994 3,479
948 1,492

 

80,657 60,950

 

Movements in the allowance for credit losses were:
Opening balance at 1 July
Writeback / (charge) for the year
Amounts written off
Foreign exchange translation

 

(848) (142)
9 (716)
64 18
8 (8)

 

Closing balance at 30 June

 

(767) (848)

 

The balance of the franking account at year end that could be distributed as franked dividends using franking credits already in
existence or which will arise from the payment of income tax provided for in the financial statements and after deducting franking
credits to be used in payment of the above dividends:

 

Trade receivables are non interest bearing with 30 day terms. A credit loss is recognised when there is an expectation of
impairment of trade receivables. The credit losses have been included within Other expenses in the Consolidated Income
Statement. All trade receivables that are not impaired are expected to be received.

 

The dividends paid by the Company were fully franked at the tax rate of 30% (2020: 30%) and the recommended dividends will be
fully franked at the tax rate of 30%.

 

The final dividend was declared subsequent to 30 June 2021 and is therefore not recognised as a liability at 30 June 2021.

28

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

8. INVENTORIES

 

2021 2020
$’000 $’000

 

Current
Raw materials and work in progress
Finished goods
Goods in transit, at cost
Less: Provision for stock obsolescence

 

33,871 29,641
99,796 75,912
48,381 18,520
(9,090) (4,903)

 

172,958 119,170

 

9. OTHER ASSETS

 

2021 2020
$’000 $’000

 

Current
Prepayments

 

6,292 3,683

 

10. PROPERTY, PLANT AND EQUIPMENT

 

2021 2020
$’000 $’000

 

Land and buildings, at cost
Less: accumulated depreciation

 

167,111 143,605
(18,574) (15,210)
148,537 128,395

 

Plant and equipment, at cost
Less: accumulated depreciation

 

135,024 125,504
(82,127) (73,500)
52,897 52,004

 

Total property, plant and equipment

 

201,434 180,399

 

Land & Plant &
Buildings Equipment Total
$’000 $’000 $’000

 

(a) Movements in the carrying amounts

 

2021
Balance at the beginning of financial year
Additions
Business acquisitions
Disposals
Depreciation
Foreign exchange impact

 

128,395 52,004 180,399
20,123 13,015 33,138
6,598 1,548 8,146
(602) (602)
(3,189) (10,471) (13,660)
(3,390) (2,597) (5,987)

 

Balance at the end of financial year

 

148,537 52,897 201,434

 

2020
Balance at the beginning of financial year
Additions
Business acquisitions
Disposals
Depreciation
Transfers
Foreign exchange impact

 

124,816 44,604 169,420
7,613 10,144 17,757
156 5,548 5,704
(21) (609) (630)
(2,831) (9,741) (12,572)
(1,817) 1,817
479 241 720

 

Balance at the end of financial year

 

128,395 52,004 180,399

 

(b) Property, plant and equipment have been granted as security over bank facilities. Refer to note 15 for details.

 

(c) Fair value of freehold land and buildings – The Group obtains independent property valuations of freehold land and buildings
on a 3 year rotational basis. The total current valuations for freehold land and buildings are $177.3 million, compared with the
collective carrying value of $148.5 million. The fair value measurements have been determined as level 3 in the fair value
measurement hierarchy. The valuations are based on the expected vacant possession sales price with consideration of
comparable sales information and prevailing rental capitalisation rates.

29

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

11. INTANGIBLE ASSETS

 

2021 2020
$’000 $’000

 

Goodwill

 

49,844 22,660

 

Development costs
Less: accumulated amortisation

 

30,043 27,289
(19,123) (16,614)
10,920 10,675

 

Intangible software assets
Less: accumulated amortisation

 

11,691 10,250
(9,345) (8,061)
2,346 2,189

 

Total intangible assets

 

63,110 35,524

 

Intangible
Software
Assets Total
$’000 $’000

 

Development
Costs
$’000

 

Movements in the carrying amounts

 

Goodwill
$’000

 

2021
Balance at the beginning of financial year
Additions
Business acquisitions
Amortisation
Foreign exchange impact

 

22,660 10,675 2,189 35,524
2,754 711 3,465
27,197 473 27,670
(2,509) (1,035) (3,544)
(13) 8 (5)

 

Balance at the end of financial year

 

49,844 10,920 2,346 63,110

 

2020
Balance at the beginning of financial year
Additions
Amortisation
Foreign exchange impact

 

16,917 10,017 2,641 29,575
5,774 3,299 734 9,807
(2,641) (1,184) (3,825)
(31) (2) (33)

 

Balance at the end of financial year

 

22,660 10,675 2,189 35,524

 

Impairment

 

Goodwill Growth Discount Period of
$’000 rate Rate projection
(post tax)

 

2021
GoActive Outdoors 2,008 5.0% 10.0% 5 years
Kingsley Enterprises 3,226 4.5% 10.0% 5 years
SmartBar 1,648 5.0% 10.0% 5 years
ARB Corporation (Australia) 12,486 6.5% 10.0% 5 years
ARB New Zealand 3,279 5.0% 10.0% 5 years
Auto Styling Truckman Group Limited 27,197 (i) (i) (i)
(i) Auto Styling Truckman Group Limited is a recent acquisition. No formal assumptions have been developed, but no
indicators of impairment have been noted from acquisition date to balance date.

 

2020
GoActive Outdoors
Kingsley Enterprises
SmartBar
ARB Corporation (Australia)
ARB New Zealand

 

2,008 5.0% 10.0% 5 years
3,226 4.5% 10.0% 5 years
1,648 5.0% 10.0% 5 years
12,486 6.5% 10.0% 5 years
3,292 5.0% 10.0% 5 years

 

No reasonable change in any of the key assumptions would result in a statutory impairment.

 

Goodwill is allocated to the cash-generating units in the table below. The impairment test for each of these units has been
prepared using a value-in-use calculation with a calculation for year 1 cash flows approved by management and years 2 to 5
projected using the growth rate below. Growth rates are based upon Directors’ assumptions and consideration of historical
averages.

30

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

12. RIGHT-OF-USE ASSETS

 

2021 2020
$’000 $’000

 

Lease Assets
Land and buildings under lease arrangements at cost
Accumulated depreciation

 

60,207 57,395
(20,528) (17,220)

 

39,679 40,175

 

Movements in the carrying amounts

 

2021 2020
$’000 $’000

 

Balance at the beginning of financial year (initial application of AASB 16 on 1 July 2019)
Additions
Disposals
Depreciation
Foreign exchange impact

 

40,175 25,030
6,312 20,427
(460)
(6,309) (5,336)
(39) 54

 

Balance at the end of financial year

 

39,679 40,175

 

13. PAYABLES

 

2021 2020
$’000 $’000

 

Current
Trade payables
Other payables

 

10,929 9,118
62,305 26,591

 

73,234 35,709

 

14. DERIVATIVE FINANCIAL INSTRUMENTS

 

2021 2020
$’000 $’000

 

Derivatives that are designated and effective as hedging instruments carried at fair value.

 

Current assets
Forward exchange contracts

 

151

 

Current liabilities
Forward exchange contracts

 

74 5

 

The Group leases various properties for retail and warehouse operations. Lease terms are typically contracted for an initial period
of 10 years with an option to renew at the end of the initial term. Lease payments are renegotiated every five years to reflect
prevailing market conditions.

31

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

15. FINANCING ARRANGEMENTS

 

2021 2020
$’000 $’000

 

Financing arrangements

 

The Group has access to the following lines of credit:

 

Total facilities available:
Market loans
International facility
Lease guarantees
Standby letter of credit

 

20,000 50,000
5,606
2,000 1,650
3,000 450

 

25,000 57,706

 

Facilities utilised at balance date:
Market loan
International facility
Lease guarantees
Standby letter of credit

 

1,302 1,157
1,447 385

 

2,749 1,542

 

Facilities not utilised at balance date:
Market loan
International facility
Lease guarantees
Standby letter of credit

 

20,000 50,000
5,606
698 493
1,553 65

 

22,251 56,164

 

(i) Market loan and International facility

 

(ii) Security & conditions

 

16. LEASE LIABILITIES

 

2021 2020
$’000 $’000

 

Lease liabilities
Current lease liabilities
Non-current lease liabilities

 

5,927 4,716
39,200 39,814

 

45,127 44,530

 

Lease expenses and cashflows
Interest expense on lease liabilities
Amortisation expense on lease assets
Cash outflow in relation to leases

 

1,864 1,553
6,309 5,336
7,263 6,125

 

The market loans and international facility are subject to annual review. Following such review, the bank retains the right at its
discretion to review all of the terms and conditions of the facilities including without limitation all facility limits, fees, pricing, security
and facility conditions.

 

The above facilities are secured by a First Registered Company Charge over all assets and undertakings of the Company and its
Australian controlled entities.

32

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

17. PROVISIONS

 

2021 2020
$’000 $’000

 

Current
Employee benefits
Provision for interim dividend (refer note 6)
Provision for deferred consideration

 

16,989 15,135
14,769
2,425

 

19,414 29,904

 

Non-current
Employee benefits
Provision for deferred consideration

 

1,228 1,162
18,307

 

19,535 1,162

 

Total employee benefits

 

18,217 16,297

 

18. CONTRIBUTED EQUITY

 

2021 2020
$’000 $’000

 

Issued and paid up capital

 

81,533,865 ordinary shares (2020: 79,830,525)

 

170,789 116,916

 

Fully paid ordinary shares carry one vote and carry the right to dividends.

 

2021 2020
Shares Shares

 

2021 2020
$’000 $’000

 

Movements during the year

 

Balance at the beginning of the financial year
Dividend reinvestment plan, Bonus share plan
and associated underwriting
Other shares issued
Transaction costs of share issue

 

79,830,525 79,725,131

 

116,916 115,181

 

1,698,660 93,744
4,680 11,650

 

54,279 1,534
145 201
(551)

 

Balance at the end of the financial year

 

81,533,865 79,830,525

 

170,789 116,916

 

Capital management

 

When managing capital, the Board monitors, with consideration of the domestic and international economic climates, the Group’s
debt and liquidity levels. The capital management objective is to maintain the dividend payout ratio, whilst generating cash for
future growth. It is the Board’s current intention to maintain a dividend payout ratio of between 40% to 60% of Net Profit after Tax,
excluding any special dividends.

33

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

19. RESERVES

 

2021 2020
$’000 $’000

 

Note

 

Capital profits reserve
Foreign currency translation reserve
Cash flow hedge reserve

 

(i) 4,090 4,090
(ii) 5,355 19,179
(iii) 77 (5)

 

9,522 23,264

 

(i) Capital profits reserve reflects previously realised profits on sale of capital assets.

 

(ii) Foreign currency translation reserve reflects exchange differences on translation of foreign operations into Australian
dollars.

 

(iii) Cash flow hedge reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges.

 

Foreign
Currency Cash Flow
Translation Hedge
Reserve Reserve Total
$’000 $’000 $’000

 

Capital
Profits
Reserve
$’000

 

Movements in the carrying amounts

 

2021

 

Balance at the beginning of the financial year
Amount recognised in other comprehensive income

 

4,090 19,179 (5) 23,264
(13,824) 82 (13,742)

 

Balance at the end of the financial year

 

4,090 5,355 77 9,522

 

2020

 

Balance at the beginning of the financial year
Amount recognised in other comprehensive income

 

4,090 18,731 (14) 22,807
448 9 457

 

Balance at the end of the financial year

 

4,090 19,179 (5) 23,264

 

20. RETAINED EARNINGS

 

2021 2020
$’000 $’000

 

Note

 

Retained earnings

 

305,466 232,081

 

Retained earnings

 

Balance at the beginning of the financial year

 

232,081 208,606

 

Net profit attributable to members of the parent entity
Dividends recognised
Adjustment on change of accounting policy, net of tax

 

112,895 57,295
(39,510) (31,338)
(2,482)

 

6
1 (h)

 

Balance at the end of the financial year

 

305,466 232,081

34

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

21. PARENT ENTITY INFORMATION

 

2021 2020
$’000 $’000

 

Profit before income tax expense
Income tax expense

 

109,337 60,647
(32,544) (18,398)

 

Profit attributable to members of the parent entity

 

76,793 42,249

 

Total comprehensive income for the year attributable to members of the parent entity

 

77,146 42,734

 

Current assets
Non-current assets
Total assets

 

220,412 151,154
285,714 224,557
506,126 375,711

 

Current liabilities
Non-current liabilities
Total liabilities

 

92,202 70,637
51,343 33,460
143,545 104,097

 

Net assets

 

362,581 271,614

 

Equity
Contributed equity
Reserves
Retained earnings

 

170,789 116,916
3,997 4,186
187,795 150,512

 

Total equity

 

362,581 271,614

 

Capital expenditure commitments

 

Contracted, but not provided for and payable within one year

 

141 7,337

35

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

22. BUSINESS COMBINATIONS

 

Current year

 

Prior year

 

Summary of the acquisitions:

 

2021 2020
$’000 $’000

 

Total cost of combination

 

48,127 17,478

 

Assets and liabilities acquired:

 

Cash
Receivables
Inventories
Current tax asset
Other assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Goodwill
Right-of-use assets
Payables
Borrowings
Lease liabilities
Provisions
Other liabilities
Deferred tax liabilities

 

12,937
1,685
5,153 6,702
205
152
8,146 5,704
473
20
27,197 5,774
163
(3,315)
(3,391)
(163)
(126) (507)
(215)
(989)

 

Net assets acquired

 

48,127 17,478

 

The cost of combination recognised at acquisition date:

 

Payments for business acquisition (net of cash acquired)
Cash acquired
Payments for business acquisition
Current provision for deferred consideration valued at time of acquisition
Non current provision for deferred consideration valued at time of acquisition
Non current provision for contingent deferred consideration valued at time of acquisition (i)

 

15,188 17,478
12,937
28,125 17,478
2,355
4,453
13,194

 

Total cost of combination

 

48,127 17,478

 

Acquisitions in the current year have been accounted for on a provisional basis as at 30 June 2021.

 

During the prior year the Group purchased retail stores in Bundaberg, Queensland (July 2019) and Rockhampton, Queensland
(September 2019), the assets of Advanced Equipment Limited (trading as Beaut Utes) in New Zealand (October 2019) and the
assets of Proform Plastics Limited in New Zealand (March 2020).

 

The Company acquired 100% of the shares of Auto Styling Truckman Group Limited (trading as Truckman) and indirectly its
wholly owned subsidiary Auto Styling UK Limited on 2 March 2021, both of which are private companies incorporated in the United
Kingdom.

 

(i) The contingent deferred consideration is quantified based on the company acquired achieving the maximum target EBITDA
during the three years following completion. Acquisition price adjustments have also been agreed to (a) share any profit
generated on the sale of the property if sold during the three years following completion, and (b) pass through any proceeds
received for COVID-19 business interuption or other claims.

 

The goodwill on acquisition arises as a result of the reputation, quality of employees and profitability of the businesses
acquired.

36

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

22. BUSINESS COMBINATIONS (continued)

 

Contributions since acquisition

 

Current year

 

Prior year

 

23. CASH FLOW INFORMATION

 

2021 2020
$’000 $’000

 

(i) Reconciliation of cash

 

Cash

 

84,771 41,569

 

(ii) Reconciliations of the net profit after tax to the net cash flows from operations:

 

Net profit

 

112,895 57,295

 

Add/(less) items classified as Investing/financing activities:
(Profit)/loss on disposal of non-current assets

 

(181) (12)

 

Add/(less) non-cash items
Interest cost
Depreciation and amortisation
Allowance for credit losses of receivables
Provision for inventory obsolescence
Impact of foreign exchange
Share issue

 

138
23,513 21,733
(81) 706
3,627 1,453
(7,643) (292)
145 201

 

Net cash provided by operating activities before change in assets and liabilities

 

132,413 81,084

 

Change in assets and liabilities
(Increase)/decrease in trade receivables
(Increase)/decrease in other receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Increase)/decrease in deferred tax asset
(Decrease)/increase in payables
(Decrease)/increase in income tax payable
(Decrease)/increase in deferred tax liability
(Decrease)/increase in provisions

 

(16,126) 647
(1,896) (2,010)
(52,262) 11,419
(2,457) (550)
(3,731) (1,094)
34,067 (389)
11,425 1,709
(56)
1,794 421

 

Net cash flow from operating activities

 

103,171 91,237

 

(iii) Credit stand-by arrangements are identified at note 15.

 

(iv) Reconciliation of liabilities arising from financing activities:

 

Opening borrowings
Acquired
Repayments

 

3,391
(3,391)

 

Closing borrowings

 

 

For the financial year ended 30 June 2020, the businesses acquired contributed revenue of $24,033,000 and a profit after tax of
$1,802,000 which was included within the consolidated profit for the financial year. ARB was previously a major supplier to three
of the businesses acquired and the Group’s sales to these businesses and profits generated on those sales since acquisition were
included in these numbers.

 

For the financial year ended 30 June 2021, the businesses acquired contributed revenue of $12,817,000 and a profit after tax of
$1,439,000 which is included within the consolidated profit for the financial year.

37

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

24. COMMITMENTS AND CONTINGENCIES

 

2021 2020
$’000 $’000

 

Capital expenditure commitments

 

Contracted, but not provided for and payable within one year

 

Land & buildings
Plant & equipment

 

20,699 7,337
2,566 295

 

23,265 7,632

 

25. EARNINGS PER SHARE

 

2021 2020
cents cents

 

Earnings per share (cents)

 

140.0 71.8

 

Weighted average number of ordinary shares used in the calculation of basic
earnings per share

 

80,662,800 79,798,819

 

Diluted earnings per share do not differ from basic earnings per share and are therefore not separately disclosed.

 

26. AUDITORS’ REMUNERATION

 

2021 2020
$ $

 

Remuneration of Pitcher Partners, the auditors of the parent entity for:
Auditing or reviewing the financial report
Taxation services (i)

 

195,000 198,750
124,500 42,932

 

Auditing or reviewing the financial report of subsidiaries:
Remuneration of network firms of Pitcher Partners
Remuneration of other non-related auditors

 

76,759 30,241
89,800 73,727

 

Total auditors’ remuneration

 

486,059 345,650

 

27. SUBSEQUENT EVENTS

 

(a) the operations, in financial years subsequent to 30 June 2021 of the Group;

 

(b) the results of those operations; or

 

(c) the state of affairs, in financial years subsequent to 30 June 2021 of the Group.

 

.
Government imposed lockdowns in response to COVID-19 continue to create uncertainty in various states around Australia.
Lockdowns since the end of the financial year have not had a material impact on the business as at the date of this report.

 

There has been no matter or circumstance, which has arisen since 30 June 2021 that has significantly affected or may significantly
affect:

 

(i) The taxation services provided by the auditors of the parent entity related to compliance activities and represent 25.6% of
the total auditors’ remuneration in the current financial year. The Directors are satisfied that the provision of the taxation
services and associated remuneration did not compromise the auditor’s professional independence.

38

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

28. CONTROLLED ENTITIES

 

Country of Incorporation

 

2021 2020
% %

 

Parent entity
ARB Corporation Limited

 

Australia

 

Controlled entities
Air Locker, Inc.
Kingsley Enterprises Pty Ltd
Off Road Accessories Ltd
ARB Off Road Ltd
ARB Europe s.r.o
ARB Middle East FZE
ARB New Zealand Limited
Auto Styling Truckman Group Limited
Auto Styling UK Limited

 

United States of America
Australia
Thailand
Thailand
Czech Republic
United Arab Emirates
New Zealand
United Kingdom
United Kingdom

 

100 100
100 100
100 100
100 100
100 100
100 100
100 100
100
100

 

29. DIRECTORS AND EXECUTIVES

 

Details of Key Management Personnel

 

Roger G Brown
Andrew H Brown
Adrian R Fitzpatrick
John R Forsyth
Robert D Fraser
Karen L Phin
Andrew P Stott

 

Non-executive Director and Chairman
Managing Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director

 

2021 2020
$ $

 

Key Management Personnel remuneration by category
Short term employment benefits
Long term employment benefits
Post employment benefits

 

1,024,194 901,296
5,960 11,769
71,978 72,679

 

1,102,132 985,744

 

30. RELATED PARTY TRANSACTIONS

 

Directors
The name of each person holding the position of Director of ARB Corporation Limited during the financial year is:
Roger G Brown, Andrew H Brown, Adrian R Fitzpatrick, John R Forsyth, Robert D Fraser, Karen L Phin and Andrew P Stott.

 

Controlled entities
Details of interests in the controlled entities, being wholly-owned subsidiary companies, are set out at note 28. All transactions
between the Company and its controlled entities have been eliminated on consolidation.

 

Ultimate parent entity
The immediate parent entity and ultimate parent entity is ARB Corporation Limited.

 

Terms and conditions of transactions with related parties
Sales to related parties for goods and services are made at arm’s length transactions at normal prices and on normal commercial
terms.

 

The consolidated financial statements include the financial statements of ARB Corporation Limited and its controlled entities listed
below:

 

No Director has entered into a material contract with the Company or the consolidated entity since the end of the previous financial
year and there were no material contracts involving Directors’ interests subsisting at year end.

39

ARB CORPORATION LIMITED

 

NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2021

 

31. SEGMENT INFORMATION

 

(a) Income Statement

 

Australasia USA Thailand Middle East
Europe & UK
Eliminations Consolidated
$’000 $’000 $’000 $’000 $’000 $’000

 

Segment revenue
Total segment revenue 610,228 87,956 121,235 38,845 (232,407) 625,857
Intersegmental revenues (118,709) (113,644) (54) 232,407
491,519 87,956 7,591 38,791 625,857
2021
Segment revenue from external source

 

Total segment result 80,971 7,325 30,552 3,815 (9,768) 112,895
Intersegmental eliminations 18,876 (28,639) (5) 9,768
99,847 7,325 1,913 3,810 112,895
Segment result from external source

 

Items included within the segment result:
Net interest income (expense)
Depreciation and amortisation expense
Income tax expense

 

(1,638) (76) 10 (9) (1,713)
17,497 862 4,448 706 23,513
32,982 2,080 1,324 742 37,128

 

Segment revenue
Total segment revenue 446,823 65,086 71,544 21,368 (137,833) 466,988
Intersegmental revenues (71,710) (11) (66,106) (6) 137,833
375,113 65,075 5,438 21,362 466,988
Segment revenue from external source
2020

 

Total segment result 44,073 2,724 8,490 2,043 (35) 57,295
Intersegmental eliminations 7,811 (7,845) (1) 35
51,884 2,724 645 2,042 57,295
Segment result from external source

 

Items included within the segment result:
Net interest income (expense)
Depreciation and amortisation expense
Income tax expense

 

(1,577) (72) 25 (50) (1,674)
15,937 900 4,363 533 21,733
19,079 735 581 402 20,797

 

(b) Statement of Financial Position

 

Australasia USA Thailand Middle East
Europe & UK
Eliminations Consolidated
$’000 $’000 $’000 $’000 $’000 $’000

 

Segment assets
Segment liabilities
2021

 

560,412 40,674 127,995 45,145 (115,964) 658,262
173,193 15,423 19,025 15,933 (51,089) 172,485

 

Segment acquisition of property,
plant, equipment and intangibles

 

53,556 140 12,530 6,193 72,419

 

Segment assets
Segment liabilities
2020

 

423,794 33,620 97,746 14,384 (83,025) 486,519
131,659 13,927 6,793 4,734 (42,855) 114,258

 

Segment acquisition of property,
plant, equipment and intangibles

 

27,958 284 4,954 72 33,268

 

The major products/services from which the economic entity derived revenue during the year remained unchanged and were the
design, manufacture, distribution and sale of motor vehicle accessories and light metal engineering works.

 

The reportable segments of the Group are based on geographical locations comprising operations in Australia & New Zealand,
USA, Thailand and Middle East, Europe & United Kingdom.

40

ARB CORPORATION LIMITED

 

DIRECTORS’ DECLARATION

 

(a) Complying with Accounting Standards, and the Corporations Regulations 2001, and other mandatory professional reporting
requirements;

 

(b) Complying with International Financial Reporting Standards as indicated in note 1; and

 

(c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2021 and of its performance for the
year ended on that date.

 

This declaration is made in accordance with a resolution of the Directors.

 

Roger G Brown
Director

 

John R Forsyth
Director

 

Melbourne, 17 August, 2021

 

In the Directors’ opinion there are reasonable grounds to believe that ARB Corporation Limited will be able to pay its debts as and
when they become due and payable.

 

This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section
295A of the Corporations Act 2001 for the financial year ended 30 June 2021.

 

The Directors declare that the financial statements and notes set out on pages 13 to 40 are in accordance with the Corporations
Act 2001, including:

41
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
42
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of ARB Corporation Limited “the Company” and its controlled
entities “the Group”, which comprises the consolidated statement of financial position as at 30 June
2021, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations
Act 2001
, including:

(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
complying with Australian Accounting Standards and the
Corporations Regulations 2001.
(b)

Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial
Report
section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the
Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional
Accountants (including Independence Standards)
“the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the
Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
43
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au

Key Audit Matter How our audit addressed the key audit matter
Revenue Recognition
Refer to note 1(d) and Note 3
The Group’s revenue, $623.0M (2020:
$465.4M), is primarily derived from the sale
of product through retail and wholesale
channels, domestically and internationally.
We focused on the existence and
appropriate recognition of revenue as a key
audit matter as revenue is a key contributor
to the determination of profit.
Our testing of revenue transactions focused on
evidencing that the underlying transactions existed
in the period.
Our procedures included:
• Reviewing the Group’s terms and conditions of
sale.
• Understanding and evaluating the design and
implementation of the Group’s controls and
processes for recognising and recording revenue
transactions.
• Testing the existence of revenue by agreeing a
sample of revenue transactions to supporting
documentation.
• Analysing general journal entries impacting
revenue and analysing transactions considered
to be outside ordinary transaction cycles for
testing.
• Assessing the adequacy and accuracy of the
disclosures in the financial statements
Inventory valuation
Note 1 (f) and Note 8

As at 30 June 2021, the Group held
inventories of $173.0M (2020: $119.2M).
In recent years, the Group has increased its
revenue, as well as increasing its
warehousing and retail presence in
numerous geographic locations and
expanding the product range.
The Group must make judgements to
identify and quantify inventory that is
valued in excess of its recoverable value.
The Group undertakes this by reference to
historic sales volumes, levels of inventory
held and market conditions.
We focused on the value of inventory as a
key audit matter as it involves judgement
as to the recoverable value of inventory.
Our testing of inventory valuation focused on
assessing the appropriateness of management’s
judgements as to which items of inventory were
identified and the amounts provided for.
Our procedures included:
• Understanding and evaluating the design and
implementation of the Group’s controls and
processes for recognising inventory valuation.
• Assessing the inventory provisioning policy and
methodology for determination of the provision.
• Reviewing the Group’s provisioning assessment
including challenging inventory items not provided
for and potentially at risk of overstatement.
• For a sample of inventory items agreeing that they
are held at the lower of cost and net realisable
value, through comparison to recent purchase
invoices and sales prices.
• Assessing the adequacy and accuracy of the
Group’s disclosures in the financial statements.

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
44
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au

Key Audit Matter How our audit addressed the key audit matter

Acquisition of Auto Styling Truckman Group
Limited and Auto Styling UK Ltd
Note 1(r), Note 11 and Note 22

During the year the Group acquired 100%
of the shares of Auto Styling Truckman
Group Limited and Auto Styling UK Ltd for
gross purchase consideration of £26.9m
($48.1m AUD).
The purchase contract included deferred
and contingent consideration which
required an estimate of fair value at date
of acquisition.
Further, accounting for this transaction
required management to determine the
fair value of acquired assets and liabilities,
in particular determining the allocation of
purchase consideration to goodwill and
intangible assets on a provisional basis.
Due to the judgements involved, the
calculations and assumptions required to
determine individual right-of-use asset and
lease liability values, we have considered
this to be a key audit matter.
The transaction has been provisionally
accounted for within the financial
statements for year ended 30 June 2021.
Our testing of the acquisition focused on assessing the
appropriateness of management’s judgements and
estimates on fair value of consideration, assets
acquired and liabilities assumed.
Our procedures included, amongst others:
• Reviewing the sale and purchase agreement to
understand key terms and conditions.
• Understanding and evaluating the design and
implementation of the Group’s controls and
processes for the acquisition.
• Evaluating the assumptions and methodology of
management’s valuation and calculation of
deferred and contingent consideration.
• Evaluating the assumptions and methodology of
acquisition-date fair values of assets acquired and
liabilities assumed.
• Assessing the adequacy and accuracy of the
Group’s disclosures in the financial statements.

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
45
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
46
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
31 006 708 756
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
47
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 11 to 12 of the directors’ report for the
year ended 30 June 2021. In our opinion, the Remuneration Report of ARB Corporation Limited, for
the year ended 30 June 2021, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the
Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
K L BYRNE PITCHER PARTNERS
Partner Melbourne
17 August 2021

ARB CORPORATION LIMITED AND ITS CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ARB CORPORATION LIMITED
48
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth pitcher.com.au
In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and
belief there have been:

(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of APES 110
Code of Ethics for Professional Accountants (including Independence
Standards)
.

This declaration is in respect of ARB Corporation Limited and the entities it controlled during the year.
K L BYRNE PITCHER PARTNERS
Partner Melbourne
17 August 2021

ARB CORPORATION LIMITED

 

ASX ADDITIONAL INFORMATION

 

SHAREHOLDINGS

 

Substantial Shareholders

 

Shareholder

 

Ordinary

 

Rogand Pty Ltd
Bennelong Funds Management Group Pty Ltd

 

5,935,976
8,953,876

 

Class of Shares and Voting Rights

 

Distribution of shareholders (as at 27 July 2021):

 

Holders % Shares Held %

 

1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 or more

 

4,870 62.48 1,711,426 2.10
2,161 27.73 4,992,186 6.12
415 5.32 3,014,571 3.70
314 4.03 7,122,873 8.74
34 0.44 64,692,809 79.34

 

7,794 100.00 81,533,865 100.00

 

Twenty largest shareholders (as at 27 July 2021)

 

Number of % of issued
ordinary ordinary
shares held shares held

 

Name of Holder

 

HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
Rogand Pty Ltd
Australian Foundation Investment Company Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C)
Formax Pty Ltd (Reparar A/C)
BNP Paribas Noms Pty Ltd (DRP)
Netwealth Investments Limited (Wrap Services A/C)
BKI Investment Company Limited
Milton Corporation Limited
Mirrabooka Investments Limited
Ms Judith Caroline Carpenter + Ms Gillian Clare Carpenter (Est Late P Carpenter A/C)
Santos L Helper Pty Ltd (The Van Paassen Fam Account)
Illabarook Pty Ltd
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
AMCIL Limited
BNP Paribas Nominees Pty Ltd Six Sis Ltd <DRP A/C>
Djerriwarrh Investments Limited

 

14,892,439 18.27
14,352,919 17.60
9,781,922 12.00
5,851,183 7.18
3,502,724 4.30
3,223,524 3.95
1,746,607 2.14
1,586,723 1.95
1,306,977 1.60
1,017,345 1.25
945,447 1.16
911,065 1.12
700,720 0.86
653,831 0.80
405,834 0.50
350,000 0.43
337,296 0.41
310,769 0.38
290,766 0.36
284,091 0.35

 

The 20 largest shareholders hold 76.60% of the ordinary shares of the Company.

 

There is no current on market buy back of shares.

 

The number of shareholders holding less than a marketable parcel at 27 July 2021 was 193.

 

Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report.

 

The number of shares to which substantial shareholders were entitled as listed in the Company’s register of substantial
shareholders at 27 July 2021 was:

 

At 27 July 2021, there were 7,794 holders of ordinary shares of the Company. The voting rights attaching to the ordinary shares
are set out in the Company’s Constitution.

49
ARB CORPORATION LIMITED
CORPORATE GOVERNANCE STATEMENT
50
The Board of ARB Corporation Limited is committed to
high standards of corporate governance and supports
the principles of good corporate governance and best
practice recommendations as published in the Corporate
Governance Principles and Recommendations 4th
Edition (the “Guidelines”) of the ASX Corporate
Governance Council released in February 2019.
ASX Listing Rule 4.10.3 requires ARB to disclose the
extent to which it has followed these best practice
recommendations. This statement outlines the key
corporate governance practices of ARB, as they relate
to the recommendations of the ASX Corporate
Governance Council.
The Board recognises that some practices are more
relevant to larger companies. The Board has adopted
those practices that it believes are in the best interests
of its stakeholders and will enhance long term
shareholder value given ARB’s specific circumstances.
This Corporate Governance Statement was approved by
the Board on 16 August 2021 and is current as at that
date.
1. The Roles of the Board and Management
The Board of Directors is responsible for increasing
shareholder value and overseeing good governance
practices through leadership and direction of the
Company. The Board Charter is disclosed at
http://www.arb.com.au/about/investor-relations/ and sets
out the roles, responsibilities and processes of the
Board. Matters reserved for the Board include:
setting the strategic direction and values of the
Company
appointing and reviewing the performance of the
Managing Director
setting objectives for which the Managing
Director is responsible
approving major investment decisions and
financial budgets
monitoring financial and operating performance
determining capital, funding and dividend policies
planning Board and management succession
defining the limits to management’s
responsibilities
setting the Company’s risk appetite and
monitoring the effectiveness of risk management
ensuring the Company complies with the law and
conforms to the highest standards of financial
and ethical behaviour.
Board Meetings are held regularly and the Board meets
on other occasions to deal with matters that require
attention between scheduled meetings.
The responsibility for the operation and administration of
the economic entity is delegated by the Board to the
Managing Director and the departmental executives.
The Board of ARB and senior management monitor the
performance of all Divisions through fortnightly
management meetings and the preparation of monthly
management accounts.
Minutes of the fortnightly management meetings are
circulated to all Board members to ensure that they are
aware of key developments within the Company and in the
industry and environment in which it operates.
The monthly management accounts are prepared using
accrual accounting principles and report each Division’s
results. These monthly management accounts are
compared by management with monthly targets. Each
Division has key performance indicators and are reviewed
by the Board monthly.
The monitoring of ARB’s performance by the Board and
management assists in identifying the areas where
additional attention is required.
The Managing Director evaluates the performance of the
senior management team on an informal basis throughout
the year and on a formal basis once per year. A
performance evaluation was undertaken in the current
reporting period. The Managing Director also ensures
appropriate checks are undertaken before appointing a
senior executive.
The Company Secretary is accountable directly to the
Board on all matters to do with the proper functioning of
the Board, through the Chairman.
There is a written agreement with each Director and
Senior Executive setting out the terms of their
employment.
The Board has not adopted a formal diversity policy or set
measurable objectives based on diversity alone for the
reasons explained in section 3 of this Corporate
Governance Statement.
2. The Structure of the Board
The composition of the Board is determined in accordance
with ARB’s constitution and the ASX Listing Rules.
The Board regards a Director as independent if he or she
is free from any material interest in, or other material
relationship with, the Company, other than as a Director,
which could reasonably be perceived to materially
interfere with the Director’s ability to exercise independent
judgement with respect to the matter being considered.
Independence and materiality are considered by the
Board in the context of all of the relevant circumstances.
The Board presently comprises one Executive Director
and six non-executive Directors (four of whom are
independent non-executive Directors). The Board believes
that, at present, this structure combines the skills,
experience and efficiency of operation best suited to
governing the Company.
The Chairman became a non-executive Director on 1 July
2016. Prior to this, the Chairman had been the Executive
Chairman since the company listed on the ASX in 1987.
The Board acknowledges the recommendation of the ASX
Corporate Governance Council that this role be carried out
by an independent Director. However, the Board believes
that the wealth of knowledge and expertise of the current
Chairman and his interest in the Company as a substantial
shareholder, make it appropriate for him to be the
Chairman.

ARB CORPORATION LIMITED
CORPORATE GOVERNANCE STATEMENT (continued)
51
The Board comprises a majority of independent
Directors. The Board believes that all of its Directors
exercise due care and skill with respect to the matters
which they consider and bring independent judgement to
bear in decision making.
Committees
The Board of Directors, as part of its responsibility to
oversee the strategic direction of the Company, has
established guidelines and committees to ensure that its
businesses operate ethically and fairly and to ensure
that the assets of the Company are properly protected.
The committees which the Board has established are as
follows:
Audit Committee
Risk Management Committee
Remuneration and Nomination Committee.
The Board, either directly or through the Remuneration
and Nomination Committee, periodically and objectively
assesses its performance and that of its committees and
individual members. The Board and the Audit and
Remuneration and Nomination Committees undertook
formal performance evaluations during the current
reporting year. The Board periodically undertakes
performance reviews on an informal basis.
The requirement for membership of the Remuneration
and Nomination Committee is that the member must be
a non-executive Director and able to make a contribution
to this decision making process. This committee is
composed of four independent non-executive Directors
of ARB and is chaired by one of these independent nonexecutive Directors.
The committee’s Charter is disclosed in the Investor
Relations section of the Company’s web site
(
http://www.arb.com.au/about/investor-relations/).
Appointment of Directors
One of the roles and responsibilities of the
Remuneration and Nomination Committee is to
recommend to the Board the selection and appointment
of suitable Directors to the Company after undertaking
appropriate checks.
The committee considers the size and composition of
the Board and the selection and appointment of new
Directors as required based upon the existing expertise
and experience of the Board, the future requirements of
the Company and the desirability of increasing diversity
as a means of enhancing shareholder value.
The Board’s objective is to achieve the mix of skills and
diversity that is best suited to maximising long-term
shareholder value given the circumstances at any
particular time. The Board believes that the
Remuneration and Nomination Committee is best placed
to assess these requirements rather than using
intermediaries.
The conditions relating to a Director’s appointment are
provided to the Director in writing prior to appointment.
All Directors are subject to re-election by rotation in
accordance with ARB’s constitution. The Board provides
shareholders with the necessary information in order to
make an informed decision prior to the election of
Directors.
Board Skills Matrix
The Board has identified the skills required of the
members of the Board, which are:
management experience
business experience, particularly in international
sales and distribution
financial management
risk management
corporate governance
corporate finance
regulatory knowledge
legal knowledge
sales and marketing experience
automotive and/or four-wheel drive industry
experience
manufacturing experience
engineering experience
director experience
ability to think strategically
high level of business acumen and integrity.
The skills matrix is subject to periodic review. The Board
is satisfied that, as a group, the current Directors meet the
requirements of this skills matrix.
Further information with respect to the Board is provided in
the Directors’ Report in the Company’s Annual Report.
The Company provides appropriate induction as and when
required for new Directors. The Board and the
Remuneration and Nomination Committee periodically
review whether there is a need for existing Directors to
undertake professional development to maintain the skills
and knowledge needed to perform their roles as Directors
effectively.
Directors may obtain independent professional advice, at
the Company’s expense, on matters arising in the course
of their Board duties after obtaining the Chairman’s
approval, which cannot be unreasonably withheld.
3. Ethical Business Practices
ARB is committed to being a socially responsible
corporate citizen, using honest and fair business practices.
The Company has articulated its values which are
disclosed at
http://www.arb.com.au/about/.
The Company’s Code of Conduct and policies, including
the Whistleblower and Anti-bribery and Corruption
policies, apply to everyone who works for ARB and its
subsidiaries including employees, consultants and
Directors. The Board is informed of any material breaches
of the Company’s Code of Conduct or its various policies.
The Company’s Code of Conduct and its policies are
disclosed at
http://www.arb.com.au/about/policy/.
The Company also believes that an effective means of
enhancing investor confidence and actively promoting

ARB CORPORATION LIMITED
CORPORATE GOVERNANCE STATEMENT (continued)
52
ethical and responsible decision-making is for the Board
and the senior management team to foster, through their
own actions, an ethical corporate culture.
Similarly, the Board believes that it has fostered and that
the Company and its employees have a governance
culture that encourages excellence and ethical business
practices to enhance long term shareholder value,
including the advancement of all employees in an ethical
manner as appropriate irrespective of gender, age,
ethnicity and cultural background.
Accordingly, the Board has not adopted a formal
diversity policy or set measurable objectives based on
diversity alone that might otherwise endorse diversity as
the principal criteria for the selection and promotion of
the Company’s employees and directors. An employee
or Director’s skills, experience and overall prospects of
adding value to the Company shall take precedence
over diversity considerations. The Board believes that
this is consistent with its objective of generating long
term shareholder value in an ethical manner.
The Company benefits from and actively employs staff
in Australia and internationally from a diverse range of
ethnicities and backgrounds.
The proportion of women employed by the consolidated
entity in the following roles is as follows:
Board 14%
Senior executives 13%
Consolidated entity 15%
The Company complies with its reporting obligations as
a relevant employer under the Workplace Gender
Equality Act 2012 (Cth).
Senior executives are general managers of key
business departments. The Board promotes open and
honest disclosure and discussion, together with
consideration and respect for the interests of all
stakeholders, at all Board and fortnightly management
meetings.
In addition, the Board and the senior management of the
Company regularly consider relevant matters including
conflicts of interest, corporate opportunities, business
practices, confidentiality, fair dealing, complaints
handling, protection and proper use of the Company’s
assets, compliance with laws and regulations and
reporting unlawful and unethical behaviour.
The Board has ultimate responsibility for resolving all
matters concerning ethical and responsible decisionmaking.
These procedures are designed to ensure that the
integrity of the Company is maintained and that investor
confidence is enhanced.
The Company is aware of its legal and other obligations
to all legitimate stakeholders. The Board believes that
appropriate recognition of these interests will enhance
shareholder value in the long term.
The Board believes that the shareholders of the
Company ultimately assess the performance of the
Board, its committees, individual Directors and senior
management based on the financial performance of the
Company in the context of the commercial, legal and
ethical framework within which the Company operates.
Directors’ share trading
The Board of Directors has a formal policy for share
dealing by Directors. This policy allows for the buying and
selling of ARB shares only after approval has been
obtained from the Chairman with such approval only to be
given in blackout periods in exceptional circumstances
and when the market is fully informed.
4. Safeguard Integrity
ARB has an Audit Committee with a formal charter that is
available on the Company’s web site
(
http://www.arb.com.au/about/investor-relations/).
The Audit Committee is composed of four independent
non-executive Directors of ARB and is chaired by one of
these independent non-executive Directors.
The Board considers that the composition of the present
Audit Committee maintains integrity and is most
operationally effective for a Company of ARB’s size and
Board composition.
The primary function of the Audit Committee is to
recommend to the Board the selection and appointment of
the external auditors, based on the audit requirements of
the Company and the independence and suitability of the
auditors. The Audit Committee also acts as an interface
between the Board and the external auditors to:
ensure that the external auditors who are selected
and appointed remain appropriate to the needs of
the Company
review the independence of the external auditors
ensure the rotation of external audit engagement
partners in accordance with regulatory
requirements
review, with management and the auditors, the
Company’s periodic statutory accounts and reports
review the systems and controls established by
management to safeguard the assets of the
Company
monitor procedures in place aimed at ensuring
compliance with the Corporations Act and the
Australian Stock Exchange Listing Rules
monitor the effective management of financial and
other business risks.
The Audit Committee has reviewed the external auditor’s
independence and is satisfied that they are not restricted
in forming an independent view on the Group’s financial
report.
The provision of non-audit services by the external
auditors to the Group has been restricted by the Board to
ensure audit independence.
Further information with respect to the Audit Committee is
provided in the Directors’ Report in the Company’s Annual
Report.

ARB CORPORATION LIMITED
CORPORATE GOVERNANCE STATEMENT (continued)
53
Prior to approving the financial statements, the Board
received a declaration from the Managing Director and
Chief Financial Officer that, in their opinion, the financial
records have been properly maintained and that the
financial statements comply with the appropriate
accounting standards and give a true and fair view of the
financial position and performance of the Group and that
the opinion has been formed on the basis of a sound
system of risk management and internal control which is
operating effectively.
The Company’s process to verify the integrity of any
periodic corporate reports released to the market that
are not audited or reviewed by an external auditor is
similar to the process it follows for all releases to the
market and is designed to ensure the relevant personnel
who prepare the reports are appropriately qualified and
have appropriate information available to them to
support the relevant report; to ensure that such reports
have been checked and approved for release by
authorised personnel in accordance with the Company’s
delegation of authority and to ensure that relevant
personnel are aware of the Company’s policies,
procedures and practices which are designed to assure
integrity of process and avoid any improper practices
which may compromise such integrity e.g. Code of
Conduct, continuous disclosure, whistle-blower and antibribery and corruption policies.
5. Timely Disclosure of Material Matters
The Company’s aim is to ensure timely, balanced and
continuous disclosure to the market of all material
matters concerning the Company in accordance with the
ASX continuous disclosure regime.
The policies and procedures designed to ensure
compliance with ASX Listing Rules and Corporations Act
disclosure requirements and to ensure accountability at
a senior management level for that compliance are as
follows:
the Company must notify the market, via the ASX
continuous disclosure regime, of any price
sensitive information
the Directors, the Company Secretary and the
Chief Financial Officer are designated as
Disclosure Officers who are responsible for
reviewing potential disclosures and deciding what
information should be disclosed
only a Disclosure Officer may authorise
communication with external parties on behalf of
the Company thereby safeguarding
confidentiality of corporate information
the onus is on all executives to inform a
Disclosure Officer of all potential disclosures as
soon as they become aware of the information.
The senior management team is responsible for
ensuring staff understand and comply with this
policy
ASX and media releases must be approved by a
Director who is a Disclosure Officer
All material market announcements are sent to
members of the Board
Copies of presentations to investors or analysts
are released to the ASX Market Announcements
Platform ahead of the presentation.
6. Rights of Shareholders
The shareholders of ARB are responsible for voting on the
election of Directors at the Annual General Meeting in
accordance with the Company’s constitution.
The Annual General Meeting also provides shareholders
with the opportunity to express their views on matters
concerning the Company and to vote on other items of
business for resolution by shareholders. ARB’s policy is to
facilitate and encourage effective shareholder participation
at general meetings through clear and succinct notices of
meeting and explanatory notes, taking time to explain the
Company’s future direction and strategy and through
direct interaction during question times at each meeting.
ARB requires that the audit partner of the firm of auditors
attends the Annual General Meeting and be available to
answers shareholder questions about the conduct of the
audit and the preparation and content of the auditor’s
report.
All substantive resolutions at a meeting of security holders
are decided by a poll rather than by a show of hands.
The Company’s investor relations programme creates

effective
through:
two-way communication with shareholders

the Annual Report which is distributed to all
shareholders
disclosures made to the ASX
letters to shareholders after half year and full year
results’ announcements
notices and explanatory memoranda in relation to
resolutions to be put to a vote
AGMs at which shareholders are given an
opportunity to participate
analyst briefings and presentations as appropriate

the Company’s web site:
http://www.arb.com.au/about/investor-relations/

The Company provides security holders with the option of
receiving communications from, and sending
communications to, the Company and its share registry
electronically.
7. Risk Management
The Board has established a Risk Management
Committee to oversee the management of business risks
and internal control. This committee is chaired by a nonexecutive Director and also includes the Chairman, the
Managing Director and the Chief Financial Officer (rather
than a committee as outlined in Recommendation 7.1(a) of
the Guidelines).
The Risk Management Committee identifies, assesses,
monitors and manages business risks and internal control
procedures by considering such matters as part of the
regular fortnightly meetings of the senior management
team of the Company.
Minutes of every management meeting are circulated to
the Board which has the ultimate responsibility of ensuring
that the risk mitigation actions recommended at these
meetings are implemented.

ARB CORPORATION LIMITED
CORPORATE GOVERNANCE STATEMENT (continued)
54
Risk management is a standing agenda item at all Board
meetings and a Risk Register is maintained and
reviewed by the Board.
The Board reviews the risk management framework of
the Company annually and is satisfied through its
evaluation in the current reporting year, that the
framework remains sound and that the Company is
operating with due regard to the risk appetite set by the
Board.
The Company does not have an internal audit function.
Instead, the fortnightly management reports of the
senior management team of the Company, including the
Risk Management Committee, are circulated to all Board
members for them to evaluate and continually improve
the effectiveness of the risk management framework
and internal control processes.
ARB has identified certain risks that could materially
impact the Company’s performance and prospects and
has implemented measures to manage those risks, as
summarised below:
Economic risk: ARB is exposed to general risks
posed by the Australian and international economies,
which may cause general or local downturns in
consumer confidence and demand and in the
automotive industry in particular. Strategies
employed to manage these risks include the use of
multiple facilities for manufacturing, distribution and
sales.
Foreign exchange risk: ARB is exposed to foreign
exchange rate influences in its dealings with a
number of countries. This risk is managed through
hedging arrangements as required and by operating
in different currency environments.
Business continuity risk: ARB faces business
continuity risks which may include: a natural disaster
affecting one or more sites, global pandemics, major
outage of services (eg electricity), a raw material
shortage and prolonged failure of a supplier to
supply a critical component. This risk is managed
through businesses spread across multiple sites to
mitigate site specific risks, site specific Emergency
Response Plans and appropriate policies of
insurance.
Tax Risk: The Company has effective policies and
processes in place to manage tax risk including
direct, indirect and excise taxes.
Key personnel: Finding and retaining the right
employees is important to ARB’s ongoing success.
ARB has appropriate succession planning strategies
and career development plans in place to manage this
risk.
Regulatory: Regulatory burdens and changes to
regulatory requirements may adversely impact ARB’s
competitiveness. ARB addresses this risk though its
globally diversified facilities and being at the forefront
of relevant industry technology to meet changing
regulatory requirements more effectively.
Environmental / Sustainability: ARB is not
significantly impacted by, but complies with, all
environmental regulations or laws as reported in its
Environmental, Social and Governance Report located
at
http://www.arb.com.au/about/investor-relations/.
The Company does not face any material exposure to
risks that would compromise its ability to continue
operating in a socially and environmentally sustainable
way.
8. Fair and Responsible Remuneration
ARB has established a Remuneration and Nomination
Committee. This Committee is composed of four
independent non-executive members of the Board. The
Chairman of the Committee is appointed by the Board and
is one of the independent non-executive Directors.
The primary function of the Remuneration and Nomination
Committee is to review senior executive remuneration
structures, review senior management succession plans
and monitor Directors’ remuneration levels.
The committee may engage appropriately qualified
consultants to provide it with advice and
recommendations.
The committee’s Charter is disclosed in the Investor
Relations section of the Company’s web site
(
http://www.arb.com.au/about/investor-relations/).
Non-executive Directors are renumerated by way of fees
and other than statutory superannuation, they do not
receive any retirement benefits.
Additional information with respect to remuneration,
including separate disclosure of policies and practices
regarding the remuneration of non-executive Directors and
the remuneration of the Executive Director and other
senior management, is provided in the Remuneration
Report in the Company’s Annual Report.

ARB drives excellence with passion
ARB will continue to strive for
innovation and engineering
excellence in 2021/2022, using
advanced technologies to bring
new and improved products
to market, to roll out new ARB
Flagship stores across Australia
and to continue to build on the
growth experienced over the past
year in export and OE markets.