Bapcor Stock price
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = A$592.02m | Revenue (TTM) = A$1.92b
Market Cap = A$592.02m | Estimated Revenue = A$1.97b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = A$956.62m | Revenue (TTM) = A$1.92b
Enterprise Value = A$956.62m | Forward Revenue = A$1.97b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Bapcor Stock Analysis
Analyst Opinions
16 Analysts have issued a Bapcor forecast:
Analyst Opinions
16 Analysts have issued a Bapcor forecast:
Bapcor Events
Past Events
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OCT
21
Shareholder/Analyst Call - Bapcor Limited
2 days ago
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AUG
26
Q4 2026 Earnings Call
about 2 months ago
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MAY
13
Special Call - Bapcor Limited
5 months ago
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FEB
25
Q2 2026 Earnings Call
8 months ago
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OCT
22
Shareholder/Analyst Call - Bapcor Limited
about one year ago
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StocksGuide Free
Bapcor — Shareholder/Analyst Call - Bapcor Limited
1. Management Discussion
Good afternoon, everyone, and welcome to the Bapcor Limited 2026 Annual General Meeting. My name is Lachlan Edwards, and I am Bapcor's Chair. On behalf of the Board, I would like to thank you all for joining today, both in person and for those of you who are online. I'd like to start by acknowledging the traditional custodians throughout the countries in which we operate. We recognize their continued connection of all First Nations people in Australia, New Zealand and Asia, and we embrace building communities together as multicultural nations. For those of us present in the room today, we meet on the traditional lands of the Wurundjeri Woi-wurrung people of the Kulin Nation. I pay my respects to their elders, past and present.
I would like to introduce my fellow directors here today. To my immediate right is Jackie Korhonen; Chris Wilesmith, Managing Director and CEO; my Deputy Chair, Kate Spargo; Annette Carey, and on the end over there is our newest Director, Andrew Fraser. For the sake of completeness, I should note that I am also an Independent Non-Executive Director. Also in the room today are Kim Kerr, the Bapcor's CFO; George Sakoufakis, who's the Company Secretary; as well as other members of the Bapcor executive management team.
I'd like to welcome the company's auditors, PwC, represented by Alison Milner, a partner, as well as Christina Piccolo, representing the company's share registry, Computershare Investor Services. It's now past 1:30, and the Company Secretary has advised me that a quorum is present, so I now declare the meeting open. The notice for this Annual General Meeting was circulated to shareholders within the required period. And accordingly, if there are no objections, I would like to move that the Notice of Meeting be taken as read.
Today's meeting is being physically held here at Bapcor's registered office located in the Melbourne Airport Business Park and online via the Computershare meeting platform. This format allows shareholders, proxy holders and guests to attend the meeting physically or virtually and to ask questions and submit their votes online. All attendees can watch a live webcast of the meeting, which will also be recorded and available to view after the AGM on Bapcor's website. Before moving to the formal business of the meeting, I will briefly cover the meeting procedures and the housekeeping matters.
Firstly, how to vote. If you're eligible to vote online, select the vote icon. Each resolution will be displayed and you may cast your vote by selecting the For, Against or Abstain options. There is no need to hit a Submit or Enter button as the vote is automatically recorded. If you would like to change your vote, you can do so until the time when I declare the vote closed. Eligible shareholders attending in person may vote by completing the reverse side of your blue voting card. These cards will be collected at the end of the meeting by a Computershare representative.
Shareholders will be given the opportunity to ask questions on each item of business. Questions relating to a particular resolution will be addressed and that resolution -- when that resolution is considered. General questions relevant to the management and business of the company will be addressed before the meeting closes. Online attendees may submit questions at any time by selecting the Q&A icon, typing your question in the text box and selecting the Send button. Although you can submit questions from now on, questions will be addressed at the appropriate point in the meeting. Please also note that your questions may be moderated. And if we receive multiple questions on one topic, we'll try and consolidate those into one question. Online attendees may also ask a verbal question using the instructions written below the broadcast. Shareholders attending in person may ask a question when invited by -- well, approaching the microphone or putting up your hand and the person with a microphone will come to you. Please show your blue card or yellow card and state your name.
I now declare voting open on all items of business. Please submit your votes at any time. I will give you a warning before voting closes. Prior to today's meeting, we have received valid proxy votes from the holders of approximately 490 -- sorry, 439 million ordinary shares, approximately 65% of the company's total issued share capital. As each item of business is read out at today's meeting, the total number of valid proxies received for that item and the way that those proxies have been directed will be shown on the screen. These figures are at the closing time for receipt of proxies, which was 1:30 p.m. on Tuesday, the 20th of October. I, as Chair of the meeting, intend on voting all available undirected proxies in favor of each item of business.
Before we move on to the formal business of today's meeting, I'd like to address shareholders in relation to the company's progress during 2026 and our objectives going forward. A copy of my addresses to shareholders and our CEO's address as well as the presentation delivered today has been lodged with the ASX and will be published on Bapcor's website.
I'm very pleased to present my first report as Chair of Bapcor for the year ending 30 June 2026. I joined the Board in October 2025, and was appointed as Chair on the 24th of November 2025. I joined Bapcor with a clear understanding that the company had experienced difficulties and that restoring performance would require significant effort, discipline and time. However, I also recognize the strength of the underlying business and the opportunities ahead.
My decision to join the Board was underpinned by 3 important factors.
First, the Australian and New Zealand automotive aftermarket sectors are essential industries supported by attractive long-term fundamentals.
Second, Bapcor holds leading market positions with very strong brands, extensive branch and store networks and meaningful competitive advantages.
And finally, our thousands of team members bring depth and deep industry experience and expertise and a strong commitment to serving customers and improving the business. These strengths give me the confidence that Bapcor can restore performance and create sustainable long-term value for shareholders. While these fundamental strengths remain intact, it was clear that decisive action was required to reset the business and establish the foundations for recovery.
Since becoming Chair, my priorities have been pretty clear: appoint an experienced automotive aftermarket Chief Executive Officer and Managing Director to lead Bapcor, to strengthen the capability and automotive aftermarket experience of the broader management team, resetting the balance sheet to support the turnaround, working constructively with Bapcor's lenders, strengthening governance and enabling management to focus on operational execution and commencing a review of Bapcor's strategy and business portfolio. Together, these actions are directed towards building a stronger, simpler and more resilient Bapcor, better positioned to deliver sustainable long-term value for shareholders.
The Board itself has also undergone substantial renewal over the past year. Annette Carey, Patria Mann and I joined the Board in October 2025. The roles of Chair and Chief Executive Officer were split in November, and then Andrew Fraser has joined the Board after the end of the financial year. Each of our directors brings relevant experience and a fresh perspective across logistics, supply chain, finance, governance, technology and business turnaround. Leadership renewal has also extended to the management team with the appointment of Chris Wilesmith as Chief Executive Officer and Managing Director in December 2025. He started in the role in January 2026, and together with several other key executive appointments since Chris took over as CEO, has significantly increased the depth of automotive aftermarket and operational experience within the senior leadership team.
On behalf of the Board, I acknowledge former directors and executives who've contributed to the initial stages of Bapcor's turnaround, and I thank them for their service. The Board fully recognizes that the 2026 financial year was difficult for shareholders, with underlying profit after tax of $10.8 million. However, the turnaround initiatives implemented during the second half of this year have contributed to improved operating momentum and will assist in delivering future profitable growth. Restoring Bapcor's financial resilience was and continues to be essential to supporting this turnaround. The $200 million equity raising conducted earlier this year, together with our improved working capital management that Chris and the team have delivered has enabled Bapcor to reduce its net debt to $135 million as at the 30th of June 2026. And I thank our shareholders very much, very much for supporting that equity raising.
No dividends were declared for the 2026 financial year as the Board considered it prudent to preserve cash and invest in the operational turnaround. The Board also understands that executive remuneration must be closely aligned with the company performance and shareholder outcomes. And accordingly, and unfortunately, no short-term incentives were awarded to the executive team for the financial year, and the long-term incentive due this year also did not vest, reflecting the company's performance.
A broader review of Bapcor's capital management framework is underway. This work will consider how the company should appropriate balance investment in growth, balance sheet strength and future shareholder returns. The Board and management have commenced a bottom-up strategy as a reset to leverage the depth of knowledge of the automotive industry within the business, position Bapcor for sustainable earnings growth and long-term shareholder value creation. As part of this process, a portfolio review is underway with an initial focus on the divestment of smaller noncore assets, directing attention and investment towards those businesses that are central to our strategy and can deliver the strongest returns on invested capital.
Chris will speak in greater detail about the reset strategy after I finish. Bapcor now has renewed leadership, stronger governance, a materially improved balance sheet and a clearer operational focus. The turnaround is underway, and it is delivering improved performance.
I would like to thank the management team and team members more broadly across Bapcor for their commitment and our shareholders for your ongoing support. I remain confident that the actions underway are positioning Bapcor for a stronger future and sustainable long-term value creation. Finally, I would like to share that Bapcor also intends to conduct a competitive tender for its external audit services during the 2027 financial year.
PwC has served as Bapcor's external auditor since 2012 and the current signing partner, Alison, will reach the end of her maximum 5-year rotation following the completion of the 2027 audit. So PwC will continue as Bapcor's external auditor for the 2027 financial year. The successful firm is expected to commence as Bapcor's external auditor for the 2028 financial year, subject to shareholder approval at next year's AGM. The Board thanks PwC for its service to Bapcor.
And I will now invite our Chief Executive Officer and Managing Director, Chris Wilesmith, to address the meeting.
Thanks, Lachlan. Welcome to all, and thank you for investing sometime this afternoon to come and talk with us. 9 months in the role and 21 years in the industry. That's an industry that I love. And it was a great honor to be given the opportunity to come and lead an organization, firstly, in turnaround and then also into the future. This business, I've admired for many years, firstly, as a competitor and watch it build to a very successful organization. It's had some challenging years. But as Lachlan has rightly mentioned, we are in turnaround. We've got a good team, and they're starting to see some positive momentum building.
The strengths of the organization, the foundations of the organization are strong. The industry has reengaged with us. And it's terrific to see the tremendous partnerships with many of our trade partners that are starting to be rebuilt, and it's fair to say that they are very supportive and wanting to have a very strong Bapcor to help them in their journeys of success. A lot of questions have been asked about the evolution of the industry. It's fair to say that there is significant change emerging, electric, hybrid, hydrogen in the future possibly. And for anyone of recent times might have seen quite an exciting evolution of what the motor vehicle might be like in the future just recently with Tesla talking about their roadster.
For any car passionates, you can actually place your interest on that vehicle in both Australia and U.S., so get your orders in early. And being someone that is very passionate about fast cars, I can tell you that I've already looked and started putting my name down for the future. It's an essential industry. It's evolving undoubtedly. The automotive has some very attractive long-term fundamentals.
And I might ask that we look to Page 9. If I look at what is happening with the overall size of the car park, there's no question that the construct of the car park is changing. What's driving those wheels forward is changing. But what you can see is a very positive long-term momentum of car ownership continuing to increase. Bapcor is passionate about keeping people on the road ahead. And for 50 years, the organization has done exactly that. There's been significant change already over those periods and the evolution of our business in the future will be just as critical.
I might ask to Page 10, if we could. Demand has certainly been supported by long-term fundamentals. The car park is now starting to create even more emerging opportunities. The parts are changing, but actually, the sophistication of cars says that they are different parts. They are more technologically advanced. And also, they come at a higher price in many cases. The vehicles are also heavier in some cases and actually wear parts at a faster rate than vehicles had before. At its most fundamental level, the aftermarket is driven by the number of vehicles on the road. And the graph that we had up just a little while ago gives you a very clear direction that, that is going to continue very positively into the future.
The graphs that are actually on the slides at the moment tell you 2 other things. The vehicle car park is actually aging and aging vehicles are very good for our industry. The older they are, the more they're likely to be serviced. The ongoing growth of the industry is forecast to be still in excess of 2.2% for many years to come. If I look at the -- some of the things that I would call out equally in both Australia and New Zealand. The age of the car park in Australia is now in excess of 11 years, and it is continuing to increase. In New Zealand, the average age of the car park is 14 years.
The graph that you see actually up on the left-hand side also shows a very interesting trend as people have become more affluent, multiple vehicles being in the garage and actually the growth of 20-plus year-old vehicles is also starting to become a very significant growth engine, passionate collectors like I am, and I'm happy to say that I've got quite a number that sit in that age group. So it's another growth opportunity into the future. What you can also see from the graphs that are in front of you right at the moment is actually the significant change in where vehicles are being manufactured. And so what we need to be very aware of is the change of not only the vehicle type, but where they're being manufactured in the world.
Once vehicles move beyond their warranty period, that is a very significant sweet spot for us. But what many people don't realize, although the extension of the vehicle warranties, what we still see is very significantly where people start making a choice to move into the aftermarket after about 3 to 4 years of ownership regardless of the length of warranty. Aging vehicles and increasingly diverse car park also creates greater complexity. We need to anticipate both the demand accurately into the future and also to be far better at managing a broader range to actually meet the requirements of the car park.
If you think about moving into the future, the evolution of AI can take significantly -- help us significantly to make certain that we are very relevant, not just to a generic range across an organization, but to use AI and intelligence, machine learning to make us even more relevant to local geographic markets. And this is a superpower that certainly our business has demonstrated in an analog world, and we are certainly looking very much as to how we embrace that going forward. Also, recognizing more complexity in the car park, embracing and deploying demand planning capabilities and also merchandise and range procurement capabilities and growing that in our business is a critical area for our future success.
It might surprise many people, although the car park is changing rapidly. And of recent times, we've seen the adoption of EVs at a far faster rate. We need to be aware of that. But when you think about an 11- or a 14-year average car park, it's fair to say that we have still many years to run before peak ICE vehicles in the car park are actually achieved, actually mid-2030s before peak ICE vehicles owned in this country and New Zealand will occur. 11 years and 14 years of age, it says that you've got a very strong business well into the 2040s but we need to continue to evolve to be able to service that changing car park.
We need to continue supporting a very large car park of ICE fleet vehicles in the fleet. But we also know that this has been the strength of Bapcor for over 50 years. We've evolved from analog vehicles to ECUs to software controlled and hover vehicles in the future. We just need to have the right parts to maintain what our customers need and to be successful in the future. We are also well positioned to actually meet the change of the Chinese car park coming into Australia and New Zealand. We've got strong connections and have had strong relations into Asia for many years. These fundamentals are why I'm very confident about the long-term opportunity in the segments that we actually operate. But it also highlights that we still need to be very aware of how important the evolution of our business is.
I might ask to move to Page 12. I suppose the question would be looking at this slide is which is EV and which is ICE. What a lot of people don't realize that even in an EV, it runs an individual battery that has hydraulic fluids. It has cables. It has more software and devices to help lane assist controls. It has many different parts, but it also has many similar parts that the current car park has today.
I might ask to move on to Page 13. So I'll just talk to our strategy, and this is the first time that we've actually shared our future strategy. And so what I'd like to do is really talk to a couple of elements because while we've been working on the turnaround, we've also been developing over the last few months from the ground up, starting with our teams, working with experts, working with our executive teams to be clear about how we're going to be successful in the future. What this strategy is very clearly calling out, our purpose, we recognize is that we are actually, as an organization, passionate about people -- keeping people on the road. And our vision is to be the most trusted automotive partner on the road ahead. This is a position that we have held and we can hold very significantly into the future.
The road is an important concept for Bapcor. We recognize the vehicle car park will continue to evolve, and our business must evolve with it. Success will depend equally on strong partnerships across the aftermarket. I'm happy to say that our trade partners, although had become quite disconnected from the organization over a number of years and a lot of change, have been connecting very strongly with myself, with the executive leadership team, and they are showing very strong support to help us to actually grow into the future. We're focused on working more closely with our customers, trade partners and also partners of choice across the industry. Our strategy sets out where we'll play and how we'll win.
Where we'll play is in the auto aftermarket segments where Bapcor brands, networks, products and customer relationships provide a genuine competitive advantage. We'll play in 4 distinct areas: distribution of parts for light commercial vehicles, distribution of parts for heavy commercial vehicles, retailing of automotive parts and accessories and servicing and repair of light commercial vehicles. These are the segments that we very clearly see that we can play to our strengths and win into the future. Our portfolio for many that have asked the questions of where we will play in the future and are there businesses that we should or shouldn't hold.
Today, we won't be announcing any areas where we'll be divesting businesses, but it's fair to say that we have already done significant work to assess which businesses align with our strategic direction to provide the ultimate solution for our customers where we want to win in the future. How we'll win? Within our chosen markets, we'll win by rebuilding the strengths for which Bapcor has traditionally been known. Personalized service, a deep knowledge of the industry, reach and responsiveness. Our speed of delivery has been known to be the first and best in the market for many years, and fair value. The organization has never been known for being the cheapest, but they have been for providing fair value at speed and the brands that customers know and trust.
To deliver the strategy, we'll need to focus on 5 priority areas. We call them our pillars and probably no surprise and given the significant turnover that many people have heard for many years coming of loss of great people in Bapcor team is at the first and the heart of the rebuilding of our organization. Team first, customers fascinated with what they want and what they need into the future. The building of the culture in our team to deliver what our customers need will be absolutely critical. The costs of our business have risen significantly, and we have started to look at where we can drive both efficiency and to take non-value-add cost out of the organization.
Early wins are being seen across the organization, and we will continue to build momentum in this space. The growth of both the markets we're in, the networks that we have, the products that we sell are a significant growth engine for us into the future. Bringing us into a digitally connected world and a seamlessly connected environment with our customers will be critical to our growth in the future. The appropriate ranges and services, even more relevant in an increasingly complex car park. Our network expansion. We have some tremendous sites. We have some sites that we still have a need to actually rationalize, but we also have an opportunity to expand into many geographic locations that we're not today.
Our proximity to the customer will be a part of our future success as much as optimizing the space that we have more effectively will also be critical to our future success. The industry fundamentals are really attractive. And hopefully, you get a sense and a confidence in the opportunities that present in this segment into the future.
I might ask that we go to Slide 14. Our performance in F '26. It was a difficult year, and I think Lachlan certainly put it very clearly, not a result that we were proud to deliver to our shareholders and a very difficult period over those last few years up to that point. The group revenue at $1.9 billion declined 1.8% and with a very modest profit of $10.8 million. Clearly, well below the expectations and where the opportunity exists into the future, and we're focused like lasers getting back to and beyond where this organization has been historically. The operating results reflect lower sales, margin pressures, higher costs right throughout the organization.
External conditions also affected the performance, including the rises that we've all seen at the bowser, the levies that we pay through diesel surcharges on all transport around the country, the macro pressures that have led to increases across our economies. Also, it's very obvious that the consumer has certainly been shaken and impacted in their wallet or purse. The external factors, however, don't change our responsibility to execute far better, and that's the focus that we can control. We may not be able to control those other factors. We can manage as best we can and mitigate.
The statutory net loss was significant, primarily goodwill and impairment, $431.6 million, which is clearly a confronting result, but mostly relating to noncash impairments of assets. Encouragingly, in the last 5 months of the year, we had significant movement in the actual trend that were being seen in all of the operating divisions, moving from negative results into positive. And that was a very pleasing change, validating the enormously hard work that the team had been putting in over 5 months in a very tough trading conditions to actually change trajectory. Networks, retail returned to like-for-like sales growth over the period. Trade stabilized and has picked up market share. I'm very pleased to say when you're picking up market share in tough environments, it will play very well when things do start returning to normal. They will. It's just when.
These are early progress has demonstrated the actions that we implemented in the turnaround are beginning to gain traction, and we're continuing to focus on both the turnaround as we then start moving to more strategic actions. The journey of turning the business around has also been developing our strategy, as shared with you.
I might move to 15, if I could. So the turnaround we talked about was really focusing on 4 areas: enhancing profitability, reducing the costs across the business, improving capital efficiency and you've heard a little bit of where we finished in the year, so a significant improvement. And also looking at how do we move back into sustainable growth across the organization. I'll briefly talk to each of those. Enhancing profitability, we're focusing on improving profitability through stronger price and margin discipline and better promotional effectiveness across the business.
We've actually moved from being seen and spoken of as being uncompetitive in market to now being competitive with market, and that's been helping to drive our market share growth. How did we do that without actually losing significant momentum in margin. We did it by the use of data analytics and actually using smart and technology to help us optimize the price that we had on items while also being competitive. Trade and retail have targeted pricing initiatives, which have improved competitiveness in those markets. And I'm happy to say through NPS results that our customers are telling us very clearly that price is no longer the reason why they don't want to actually come back and do business with us, and that's a significant change in 5 months. Competitive price controls were also put in place.
So as we reduced prices to have it more competitive, we also introduced disciplines around price discounting because our team knew we had uncompetitive prices, and they were discounting aggressively across the branches and store networks with a competitive price that's now reduced. In fact, it's reduced from 17% discounts to now less than 9%. So that gives you a fair sense of the power of having the right price on the product. Optimizing the cost of doing business, we've been simplifying the ways that we operate. Put simply, we've appointed a leader in the business that is looking for everything that is non-value add to either a team or customer experience and removing that out of our business. This is starting to yield dividends already.
Just one process introduced last week reduced 2 to 4 hours of work out of our Autobarn businesses by giving them a simpler process, allowing them to have more time-facing customers. We established an internal recruitment capability. We've significantly reduced high-cost emergency orders. When I first arrived, we talked that we had very significant stock in the DC, but not in the store network. We moved stock back out into the network. We improved in-stock across the business while reducing overall stock in the organization, and that's reduced the need for high-cost emergency orders to be placed. And we've improved supply chain efficiency, which is now starting to deliver significantly improved cost on a monthly basis compared to prior year. We also improved -- improving our capital efficiency, as you've heard, we had a capital raise. We reduced debtors.
We reduced overall stock in the organization. And I'm going to talk a little bit more about how that's continued into the New Year shortly. But we actually delivered $68.5 million worth of free cash benefit, reducing our debt further, and that momentum is continuing to grow. We've filled critical customer-facing roles when I arrived and our new Chief of People arrived, we had nearly 500 vacancies across the organization, and we were losing people at over 42% of our people were turning over in a year. We're at less than half of that vacancy rate at the moment, and we've now reduced to less than 33% turnover. A long way to go, but very clear directional change. These actions are helping us to improve the customer experience and build our momentum and market share. Our focus now is about disciplined execution.
Delivering the turnaround strategy requires experienced leaders. And I've been very humbled and proud to be joined by a number of significant industry experienced leaders and senior leaders that have joined the organization. And I'd just like to talk to some of those people now. Craig Magill, 16 years in the organization, 25 years in the industry, moved back into our trade business. Craig has taken a business that was declining at nearly 3% to a positive growth just as last week of 2.5% growth in our trade business again, a significant turnaround. We also welcomed Rebekah Newman, a pedigreed people leader that, as you heard, has helped us to start reducing turnover, reducing the need to use external recruiters at high cost. We've brought all of that capability in-house now, and we're actually recruiting internally.
We were joined by a significant leader in actually Guy Nicholls, who now heads up our Truckline business, former CEO of Ryco. I've had the pleasure of knowing Guy for nearly 20-odd years and to have the pedigree of Guy in the organization, really significant horsepower. We also had Angus McDonald join us, the former COO of Nick Scali and many years in the automotive industry, where I had the pleasure to work with Angus for 14 years in Supercheap. We had Kim Kerr join us now over 12 months ago and has made a significant improvement in everything to do with the governance and our financial controls. Martin Storey heading up our New Zealand organization, 10 years; Morris Lieberman, who understands the challenges and the opportunities for us as we evolve into a more digitally enabled organization in the future; and George Sakoufakis, who has introduced, leads the legal team and also Secretary for the organization.
We've got a strong senior leadership team making a real difference, and I'd thank all of them for their support in this turnaround. What we need to focus on in the future is now the clear priorities that have been identified in executing the turnaround and also displaying the accountabilities and the disciplines that we need as we move into our strategic delivery into the future. In the last 12 months, safety has not been a highlight of the organization. We need to change so that we are absolutely leading the reduction of injuries across our organization. We've no doubt introduced processes and equipment.
We've got monitoring, but we don't have true hearts and mind leadership in reducing injuries across the organization, and that's a focus starting with our conference that will be held next week as to how we get true hearts and mind leadership in reducing injuries. We're taking action. We've got clear objectives in every team member. That is for every team member to return home safely each day. We've introduced recognition programs across the organization. We've also reintroduced leadership training in conjunction with Deakin University. We had 100 leaders put through the program to start improving our ability to really lean into the opportunities and challenges of the future. And we continue to have more leaders going through that program in the coming months.
I might move to Page 17. So now I'd like to talk to the outcome of a lot of hard work that's been done in the early stages of the turnaround. That's our trading outlook. Firstly and most importantly, we'd like to reaffirm our confirmation of F '27 outlook that was provided just back in August. So confirming that the direction is in line with what we'd spoken about at that point. The first quarter performance, the turnaround initiatives, the implementation during that second half of F '26 has started to gain traction. Very pleased to say that the trade business has actually increased to a 2.5% growth and a 1.6% like-for-like growth in the early parts of this year. And I think there is some other large players that you've probably also seen releases, and that would say that we are growing our market share still as we move into the early part of the year.
With the first quarter also in our networks business, CVG, JAS, and also wholesale businesses are showing a growth of over 4%. I'm very pleased to see that continued momentum. We've achieved a modest like-for-like growth in New Zealand in local currency. I think anyone that understands the transfer between New Zealand and Australia has been very challenged by the actual deterioration of the currency between New Zealand dollars and Australia, but we've shown a modest like-for-like growth in that market. The market share in trade is higher than F '26. This is a positive sign and the focus on our competitive pricing, product availability and reengaging our teams is returning results. The retail environment, however, remains soft, probably no surprises that the cost of living pressures are continuing to affect consumer. Consumer confidence is at an all-time low.
And it's fair to say nondiscretionary or discretionary, it is seeing that the nondiscretionary items where the repair items are still being bought, but nondiscretionary is being certainly squeezed. Encouraging across the group on a constant currency basis, we've seen like-for-like sales of 0.5%, that's across the total group or a sales increase of 0.3%. Due to the depreciation in the New Zealand dollar and also store closures across the group, however, it is a decline of 0.5% year-on-year in the early stages. We've seen the benefits of becoming price competitive. The initiatives we've put in place and have implemented in F '26 are continuing to now see an improvement in our gross margin, both in trade and also retail. Alongside these revenue and margin initiatives, we're also progressing cost optimization and actions to remove cost out of all parts of our organization, including our supply chain.
Over the coming 12 months, we'll be doing reviews on over $300 million worth of nonstock purchases with tenders to try and improve the prices and the costs overall running in our business. Our continued cash generation due to activities to improve our efficiencies with inventory to reduce debtors that are sitting on our books and to optimize how we use capital has seen us reduce by another $19 million since the end of half. We're now sitting at $116 million of debt, which is a significant free cash improvement in the organization. First quarter performance provides further evidence that the turnaround initiatives are gaining traction. We remain confident about delivering against our F '27 outlook expectations.
In closing, it's early in F '27. We're encouraged by the progress, but it's in very tough trading conditions, and we've got a lot more to do. The auto aftermarket absolutely maintains an attractive market to participate in. And as we improve our fitness, there's no question that we will actually take advantage of the opportunities that are occurring right now. As I said earlier, whether the future is combustion engines or hybrid into the future, we remain ready to embrace that opportunity. You may see an image up there, and I would put it up there as an image that might be me in a little -- a few years to come. I may be a little bit more rotund. You can see me proudly in front of the Bapcor hovercar. We've been successful for 50-plus years. The future of our task is clear. Our strategy is clear. We've got significant work to do, but the work started, and we look forward to rebuilding the organization that we all want to be a part of.
We're committed to delivering a better experience for our team, our customers, creating opportunity and strengthening partnerships with our trade partners. I'd like to thank the Board and the GLT for giving me the pleasure of leading this organization and the 5-plus thousand people around the countries that we operate that we're responsible to actually help them be successful and to help grow the business that we all want to be proud of in the future. To the shareholders, I thank you for your patience and ongoing support. And I look forward to talking about our progression in the future with you all very soon again. Thank you for your time today. And on that note, I'll hand back to Lachlan. Thank you, Lachlan.
Thank you, Chris. Just for the purposes of clarity, I might get the AV to take us back to Slide 13, which is the strategy on a page. Sorry to break the flow of these things. But just on this, you'll note that Chris talked about the markets being parts distribution for PLCVs. He said light commercial vehicles, he meant passenger and light commercial vehicles. So for anyone who was thinking we're about to sell Burson, that is not happening. I just wanted -- well, just had terrors that the share price would move.
Okay. So we're now going to move on to the formal business of the meeting, which is Slide 19. The instructions on voting and asking questions were provided at the start of the meeting. Online attendees should refer to the Computershare virtual AGM online guide if they require further assistance. The online portal is open for verbal questions.
So moving to Slide 20. The first item of business is the consideration of the company's audited financial statements and related reports for the year ended 30 June 2026. The Corporations Act requires that these reports for 2026 be laid before the meeting. I declare that these reports, which were made available to shareholders on the 27th of August 2026 via the ASX and Bapcor websites have been laid before the meeting.
PricewaterhouseCoopers, the company's auditors, is represented today by its partner, Alison Milner, who is available to answer any questions concerning the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company and the auditor's independence.
Karen, am I correct in saying there are no written questions for the auditors received prior to the meeting?
There is no written questions.
Thank you. Are there any questions in the room for the auditors? Yes, gentlemen here.
Yes. Thanks, Mr. Chairman. My name is Steve Van Emmerick. I'm the Australian Shareholders' Association representative. Thanks to shareholders that have given us their proxies. And thanks for Kate and Lachlan getting together for a pre-AGM and having a candid chat, I think, in good spirit. So I appreciate it. Yes, big write-offs again this year. That suggests to me that those values on the balance sheets were probably questionable to begin with or were accepted without a lot of insight into their likely future value. Looking back over the last 5 years with the benefit of hindsight, which is always handy, what could you have done better?
Is that a question to me or to the auditors?
That's question to the auditors. Okay. Alison?
Yes. Thank you for the question. Just before I address the specific question, if I can just explain our role as auditors, management prepare the financial report, which the Board approved. Our role is to provide an independent opinion on the financial report as a whole, giving reasonable assurance, not absolute assurance. In respect to impairment, both in the current year and in prior years, you will note in our audit opinion, we have included impairment as a key audit matter. That is on the basis that there is significant judgment associated with consideration of the carrying value of goodwill and intangibles and also the magnitude of the balance. In the current year audit opinion, we do set out our audit procedures in respect to impairment and in particular, the significant level of judgment and estimate associated with assessing recoverable value of goodwill.
Management prepare those analysis in respect to the assessment, which we have audited in the current year and in prior years. In respect to the procedures that we do undertake, we look at those significant levels of judgment. We assess external information, the company's performance, both historic and current. And we also use the support of our specialist valuations team in respect to consideration of those key judgments. We don't provide specific conclusions on our key audit matter as our financial report is on the financial report as a whole. And we have signed an unmodified opinion both in the prior years and the current year with respect to the financial report and in particular, carrying value of goodwill.
So just I guess you haven't said anything about what you could have done better. You've said how well you've done. And then in the past couple of years, how much has been written off. And in those previous years, nothing was written off and those businesses were bought 3, 4, 5, 6 years ago, a heap of goodwill was paid. You seem to just accept that. And then now suddenly, on s***, well, we threw all that money away. Sorry about that, guys. We're writing it all off now.
That might be more a question for management in respect to the consideration of the goodwill. But certainly, I've outlined those audit procedures that we performed in respect to the company's performance over the last 5 years. And just noting over those 5 years, there were prior impairments in respect to goodwill and intangibles over the last number of years as well as the current year.
So if I can take over that. So in terms of the way that the Board exercises its judgment when it looks at these things, there is no doubt that there's an element of looking at everything fresh in the circumstances in which you find yourself. So I can't talk for previous boards because obviously, I wasn't there. I think that all of those discussions at any Board, and I've been on a few of them and my colleagues have been on a lot more boards than me, is there's always a robust debate about what's the right level of goodwill to keep on the balance sheet. Goodwill, as you know, you can write off, but you can never reinstate it. So once you take it off, it's gone. And so people look at what is the long-term value of the business.
They look at where the current valuation of the business is and the best proxy for that is the share price. As you know, the share price of this company has dropped dramatically over the course of the last 5 years. And so therefore, you have to take all those factors into account. In this year's case, we had to look at that goodwill, and we had to make the action that we did. So what are the lessons for the future from the past? It's always to be robust in the debate, to consider what you're paying for goodwill when you buy something in the future and then to look at it on its merits at each and every case.
Are there any other questions?
Well, I'd like to ask some questions related to what Chris presented.
Well, if I can just ask you to hold on for a second because we'll get to general questions a bit later. At the moment, it's questions for the auditor. But if there are no more questions for the auditor, then I'll move on. No more questions? Excellent. All right. So we've determined there are still no questions online, Karen, before I leave this.
No questions on this item.
Okay. All right. I'll now ask that the Company Secretary record that the audited financial statements and related reports for the year ended 30 June 2026 have been received and considered by shareholders.
The next resolution is Resolution 1A. It relates to the reelection of Andrew Fraser as a Director. Andrew was appointed to the Board on the 1st of July 2026, so after the 30 June year-end. He was appointed as an independent nonexecutive director, and his qualifications, background and experience are summarized in the note of meeting. I'll now invite Andrew to briefly address the meeting.
Thank you, Lachlan, and good afternoon, fellow shareholders. As Lachlan mentioned, I joined the Bapcor Board on the 1st of July, bringing more than 25 years of experience across the private and public sectors, including in funds management, institutional investment and supply chain infrastructure. I have a long-standing connection to the automotive industry for more than 60 years, my family were in the industry. And since 2019, I've been involved through my role at Motorsport Australia and globally through the FIA. I'm eager to be part of the work to help restore Bapcor's potential. If reelected, I'll bring an investors' perspective and a strong focus on capital discipline, risk management and long-term value creation. As a member of the Board's Audit and Risk Committee, I'll also support rigorous oversight of the company's financial performance, key risks and execution of the turnaround.
In addition to my role at Bapcor, I chair the Bank of Queensland, I'm President of Motorsport Australia, as I mentioned, Chancellor of Griffith University and Chair of Orange Sky Australia as well as serving as a Non-Executive Director of the Brisbane Broncos through thick and thin. These roles give me exposure to different industries, different operating models and innovations and I believe assist the Board in its overall decision-making. I'm also a Bapcor shareholder, and if reelected today, I will work with my fellow Directors and management to support a disciplined turnaround and deliver sustainable value to shareholders, and I thank you for your consideration.
Thank you, Andrew. The resolution appears on the screen, and I'll take it as being read. The valid proxy votes received are also displayed. Are there any questions in the room in relation to this resolution? Yes.
Andrew, well, yes, good luck. You've got a lot of different responsibilities, I guess. Just wondering, turnaround situations often require a lot of effort on behalf of the Board. I was just wondering, given all your responsibilities, how you're going to go putting in enough time into this one that you can make a real difference.
Sure. And thank you for the question. So my portfolio has been relatively the same for a number of years. But during the course of last year, I ceased to be the Chair of Australian Retirement Trust, which is Australia's second largest superannuation fund with more than $350 billion under management, which was a significant role. And I also concluded a role on a charity, the Hear and Say Center, which I reached term on as well. So 2 roles finished last year.
When considering this role, the first question I ask myself is, do I have the time and bandwidth and does the schedule work? And the answer to all of those questions was yes. I do think the breadth of what I do gives me a perspective that's valuable at the Board table. There are things which transcend different operating models and different scale and different industries. I would use the case in point of the way in which AI is being implemented. It affects everything I do and that breadth of perspective can be valuable at the Board table.
And I can assure shareholders that in the 5 months that Andrew has been a member of our Board, he has fulfilled all commitments and is an absolute delight to have on the Board. The insights and the support that he's given me as Chair have been nothing less than fantastic and very helpful as we run the operation of this business.
Are there any other questions? There are no -- being no more questions in the room. Karen, are there any questions online in relation to this resolution?
No.
No. Okay. I'll now formally put this resolution to the meeting. And I guess I have to ask those in favor, say aye and those against or do I not say that? I don't have to say that. Okay. That's great. Okay. On the basis that they are the votes, then they are the votes. So I think there's something satisfying about saying those in favor, say aye and those against. Right. Okay. Andrew, congratulations on being elected to the Board.
The next item of business, Resolution 1b relates to the reelection of Kate Spargo as a Director. Kate was appointed to the Board of Bapcor on the 1st of March 2023 as an Independent Non-Executive Director, and her qualifications, background and experience are summarized in the Notice of Meeting.
I'll now invite Kate to briefly address the meeting.
Thank you, Lachlan, and good afternoon, everyone. As Lachlan has said, I joined the Board on March -- in March of 2023, which is now just over 3 years ago and have served through a period of significant change in the company, which is probably something of an understatement. During my time -- during that time, my focus has been on bringing an independent judgment, strong governance and practical support to the Board and management as Bapcor undertakes its turnaround. I do bring more than 2 decades of Non-Executive Director experience across a range of industries, including infrastructure and energy, health care, construction, retail and financial services, together with the background as a legal adviser both in private practice and in government law.
I'm Deputy Chair and as Chair of the Nomination, Remuneration and ESG Committee, I've been closely involved in Board renewal, leadership succession and the development of remuneration and governance arrangements that support accountability and sustainable performance. If reelected, I'll continue to focus on leadership stability, disciplined execution and ensuring that the remuneration outcomes remain aligned with performance and shareholder experience. I am also a Bapcor shareholder, and I remain committed to working with my fellow Directors and management to restore performance, strengthen the company and deliver sustainable value for shareholders. So I thank you for your consideration.
Thank you, Kate. When I was asked to become Chair, I thought I should let you know that I specifically asked for Kate to serve as Deputy Chair. As the only Non-Exec Director who served on the Board for the past 3 years, Kate brings important continuity and a deep knowledge of Bapcor and considerable experience gained throughout the time that she's been on the Board and through its management and Board changes. This is a complex business, and Kate has been an invaluable sounding board and source of support to me over the past year, and I endorse Kate's reelection. The resolution appears on the screen, and I'll take it as being read. The valid proxies votes received are also displayed. And are there any questions in the room on this? Yes, there's a question here.
Yes. Just a question for Kate. I guess, Bapcor, fair to say since I've been following it the last 6 years, it's been a car crash. The share price is down from $6 to $0.75. You've had 4 different CEOs. You have had a massive turnover of staff, which I actually feel for the staff actually because that must be pretty hard having 4 different CEOs and being told to do this and do that and et cetera. But -- and I don't lay this all at your door because you came in halfway through this. But what do you think the Board should have challenged or recognized earlier? And how has that changed how you thought of your role at Bapcor?
Yes. I mean it's an interesting figure, obviously, to see on the Board. And I guess it reflects to me the difficult time that it has been as a Director, although I've not resolved from it at all, and I've been enthusiastic throughout to try and support shareholders as best as I have been able to as well as the staff and so on. It is a very complex question as to why we have found ourselves where we are. And you mentioned 4 CEOs in that time, which is, of course, very difficult. One of -- I mean, I do wish that we had been able to find and appoint Chris much sooner because he is seriously an automotive person, which is just what the company needed. I was very pleased to be able to be in a position as Chair of the Nominations Committee to find new Directors.
And I think we're -- the company is absolutely blessed to have found Lachlan in our Chair, Annette as well and Patria, who unfortunately is not here today to chair the Audit Committee, just terrific Directors, and that's given the company a lot more strength, if you like, in order to move forward. And of course, I've mentioned Chris being here. I was very pleased that Jackie was with me as well during that time because although she joined sort of halfway through my term, I'm the only Director left of the Directors that were on the Board when I joined, which is interesting in itself. Yes, there are lots of things that we all could have done differently.
And of course, you act as a group, as a Board. You don't act as individuals, particularly, and you've got to move and go with decisions as a group. And that's good in some ways, and it's a challenge in some ways. But I'm pleased to be able to continue on because I think for the last year, at least, we've been in a much, much better place.
Are there any other questions in the room?
Sorry. I think it was a reasonable answer, but I don't think you actually picked out 1 or 2 things that maybe could have been done differently.
Look, I mean, to be candid, one of the things that was difficult in the company was the Better Than Before program, which some of you may recall, which was commenced just before I started. I wished we had curtailed that probably. I wish we'd never started it. But hindsight, as you've said, is a wonderful thing. It probably wasn't the ideal program. There are not a lot of CEOs who are available and suitably qualified for a role such as this. And so while I would have loved a field of highly suitable CEOs to be able to choose from, it just isn't always the case. And so that's always a challenge for a Board to appoint the appropriate CEO.
All right. Are there any other questions in the room? Yes, the gentleman there.
Thank you, Byron Reilly, independent investor. Thank you, Kate, for your loyalty to the company over the last few years and go Cats. My question is about -- it doesn't seem that your loyalty is being rewarded in the vote. There's a strong against vote. Where is that coming from? And why do you think that's happening?
Well, look, I think the -- when I look at this, and I think it's reflected in the questions that you've asked and the gentleman before you asked is there's a question of accountability. And I guess the 36% is evidence of accountability. I think more importantly, though, there's a concept of responsibility that is important. It's -- companies get to a place like football teams for all manner of reasons and people have varying degrees of contribution to them. The test of any person is not is not how they got there. It's how they respond to fixing it. And Kate has presided over Board renewal, management renewal. And I think that desire to turn the business around and be responsible for that turnaround is why I endorse her strongly for this role. So I think that's the explanation of why that's there, but also why I think that's the approach that shareholders should take.
Are there any other questions in the room? No. Karen, do we have any questions online?
We've got one question online. I might shorten this because this has been partly answered. It's from Stephen Mayne. Did Kate meet or communicate with any proxy advisers or major shareholders ahead of today's AGM? And what is her understanding of the issues and people who caused this process -- protest vote? And what is her response? You've partly answered it.
Well, I think that's partly been answered by what I just said. But to take the first part of that question, yes, Kate and I both met with a number of proxy advisers and with our major shareholders in the lead up to this. That's a normal process that we go through. I think the question of was there general support? The answer was yes. And I think for Kate's election, we had unanimous support for the -- for her reelection from the proxy advisers. So I guess that part in answering the question was pretty clear. In terms of the shareholders, I think -- the shareholders are definitely making a statement about where the share price has gone. But the vast majority of shareholders and indeed by -- not only by number, but also by percentage are actually endorsing Kate's reelection. We tend to focus on the 36% against rather than the 63% for. So it's 63% for. And so therefore, Kate is duly reelected.
Are there any other questions on this matter, Karen? No. Okay. All righty. Congratulations, Kate.
Having put that to the meeting and it being resolved in the affirmative, we now move on to Slide 23, which is Resolution 2, adoption of the remuneration report. Resolution 2 is a nonbinding resolution to adopt Bapcor's remuneration report, which is set out in the company's 2026 annual report and is available on Bapcor's website. The resolution appears on the screen, and I will take it as read. The valid proxy votes received are also displayed and substantially in the positive. Are there any questions in the room in relation to this resolution? No. Karen, are there any questions online in relation to this resolution?
No.
Okay. Fantastic. Well, there being no more questions, I'll formally put this resolution to the meeting, and it is carried.
I'll now move on to Resolution 3. Resolution 3A is approval for the grant of the FY '26 performance rights to the CEO and Managing Director under the long-term incentive plan. It seeks shareholder approval for the grant of these performance rights to Chris Wilesmith, our Managing Director and CEO. The resolution appears on the screen, and again, I will take it as read. The valid proxies received are also displayed. Are there any questions in the room in relation to this resolution? Yes, there is a question here.
Yes. I guess in the ASA, we're always keen on executives to be rewarded on the base of long-term performance because sometimes what happens at the top can have repercussions like 5, 6, 7 years in the future, which I think is pretty well what's happened here. So I'm just wondering with the specific performance measure here like stuff that happened before Chris was here, not really down to him, what's happening here on, partly on his bet, partly on everyone's bet. How does this long-term incentive plan kind of break that out and make sure that he's rewarded if things go well and not rewarded if things don't go well?
Well, I think I'll have a go at this first. And Kate, if you want to clean up the mess I create afterwards. The first thing I would say is the Board would be absolutely delighted if we can pay Chris, a lot of money for this turnaround. And that turnaround, we believe, has already started, and we're very confident based on the actions that he has taken now and in the future will do that. The long-term incentive plan is entirely future focused. It is entirely based on performance metrics which go from here. So we look at all of the different marks both financial and nonfinancial in order to provide every opportunity for Chris to meet those and exceed them and thereby hopefully also translate into shareholder value.
So fortunately, there is nothing that hampers Chris' ability from the past other than the fact that he's starting from a position now, which is informed by the past. And that's tough, like there's no getting away from it. So yes, I think the opportunity is there and the structure has been created to reward him and his management team for that. Anything you wanted to add to that, Kate?
Only just to say that the nature of this request, of course, and there are several in this Notice of Meeting is with respect to the necessary shareholder approval of the grant of equity, which is what these performance rights are about. And so they're very positive and only positive side of that really is that it does align the CEO's position financially with that of shareholders because it aligns it via the holding of equity rather than cash.
And I should say that Chris is -- I hope you don't mind me saying this, Chris, but Chris is not only relying on the Board's LTIP or granting of the LTIP and shareholders approving of the LTIP, Chris is also personally substantially invested in the company and buying shares. So when you see the shares that are on the stock exchange announcements to date, they've all, I think, been acquired by you, Chris. So I think if there's something that really demonstrates that alignment, it's not just the LTIP, it's also the man who is putting his money on the line alongside shareholders.
Yes. Good on you for doing that, Chris. And I think the Board has been buying shares as well. And that hasn't always happened, I guess, 4, 5 years ago. So shareholders always love to see that, and it's a good sign. My questions may seem critical, but that's largely due to the past performance and shareholders should rightly be aggrieved. But it doesn't mean things can't be better going forward. And I hope Chris is still here in 3, 4 years' time and doing a great job. And I'm voting for the resolution. So possibly actions speak louder than words in that sense.
Thank you for your support. Are there any other questions in the room? No. Then Karen, are there any questions online in relation to this?
No questions.
No. There being no more questions in respect of Resolution 3A, I now formally put this resolution to the meeting, and it looks like it's carried.
So we'll now turn to Resolution 3B on Slide 25. This seeks shareholder approval for the grant of the FY '27 performance rights to Chris. The resolution appears on the screen, and I'll take it as read. The valid proxy votes received are also displayed. I'll very quickly ask, are there any questions because it's sort of the same approval as the last one. There not being any questions in the room. No questions online. Then I'll formally put this resolution to the meeting.
Resolution 4 is approval for the issue of equity rights to the CEO and MD under the group retention program. The resolution appears on the screen, and I'll take it as read. The valid proxy votes received are also displayed. You can see them there. Are there any questions in the room related to this resolution? Yes, there's a question here.
Yes. I guess in general, ASA guidelines are against sort of retention payments because we think if someone poaches you, they just pay the extra money anyway. But in this case, I think it's kind of fair enough. The stability of leadership is probably right up there with some of the most important things you'd be doing. So yes, I guess I'd just like to hear the reasoning behind the award.
Well, I think as Chair, you get appointed and you find the company as it is at that moment in time. At that moment in time, when I was appointed Chair, we had a significant loss of talent at all levels throughout the organization. And we were seeing significant change in the executive leadership team as well. So the question of retention became very, very clear very quickly. We had to ensure that people had every reason to stay. And given the performance of the business, frankly, that wasn't a given. And so therefore, the view was taken by the Board that it was appropriate to selectively retain people and to ensure that we were giving them no reason to leave.
I agree with you, somebody who wants to poach someone can pay that retention out, and there's nothing you can do about that. But in a sense, that's being taken up because someone wants to go. What we were looking to do was to give people reasons to stay that were important. And so I agree with you. It's not a regular way thing. It's not part of our ongoing remuneration plan, and Kate as Chair can speak to that if she thinks there's value to add. But essentially, this is a one-off thing, which is very important given the circumstances of the company, and we want Chris to have every motivation to continue the turnaround. Are there any other questions in the room on this? No. Karen, anything online?
None online.
Online. Okay. Great. So I'll now put this resolution to the meeting.
Resolution 5 on Slide 27 is approval for provision of potential termination benefits to the CEO and MD. These are put in place to cover circumstances in which he ceases to hold office or a position of employment in Bapcor or a related body corporate. The resolution appears on the screen, and I'll take it as being read. The valid proxy votes received are also displayed. Are there any questions in the room on this? No. Karen, are there any questions online in respect of this?
No.
Okay. There being no further questions on this, I'll put this resolution to the meeting.
On Slide 28, we have Resolution 6, approval for the issue of securities under the long-term incentive plan. The resolution appears on the screen, and I'll take it as being read. The valid proxy votes received are also displayed. Are there any questions on this motion? Are there any online -- oh, sorry, there is one. Sorry, I was too quick.
Yes. Just, I guess, ASA, we like it when these shares are purchased that they're purchased on market. Is that the case here? And is that something you commit to going forward?
They are purchased on market, are they? Thank you. Yes, they are. Okay. Are there any other questions? Karen?
No.
Excellent. All right. There being no further questions, I'll put this resolution formally to the meeting. All right. We'll now go to general questions. I confirm that all resolutions at this meeting have now been put to the shareholders. Before voting closes, I will now address any questions in relation to the Bapcor business generally. And I know there's one question in the room. So I'll go to you, sir.
Michael Barrett is my name. I've been a shareholder almost since day 1. I'm a small private investor. I have a couple of shareholdings. And I've come along to almost every AGM. If I have been in the state or overseas or doing something or sick, I haven't come along, but I've always made an effort to come along here and try and ask some positive questions. And I've seen quite a lot of various executives come and go and building premises come and go as well. So...
If you only had $1 for every person you have seen...
And I actually bought something this morning because I was early, at an Autobarn for $17 or $16, it always comes back. But I also invest in the broader space for the automotive industry. So I hold shares in several motor vehicle distributors. And the other thing is that I've got shareholdings in several mining companies that -- and that would be my main portfolio, is in the mining portfolio with lithium and some of the rare earths and also graphite. So there are just a few holdings that I've had.
All of which are used in cars.
Beg your pardon?
All of which are used in cars.
Absolutely. So I study what goes on in the primary market, but having worked in a few mining companies like Rio Tinto and BHP, I know how it's a pull-through effect, right? So you've got to monitor what goes on in the market and how technology is driving change as much as anything else, particularly with batteries. Now the thing is that in automotive distribution, there's been quite a revolution. It's been a quiet revolution driven by the major motor vehicle producers. And that's moving from a dealer model to an agency model. And the other thing, too, is there's a lot of embedded technology in EVs, right? So there's a lot of ICE products that can be easily copied. But because of patents and also secret technology and advanced technology, that's an opportunity for the vehicle producers to pull back into -- as replacement parts, the componentry, right?
So batteries, for instance, you might see that as a big opportunity, but it may not be as well because of the proprietary type technology. So I'm just wanting to -- for Chris to expand on what you actually spoke about before and how Bapcor is actually going to challenge that position. Now the next thing is that I'm of the opinion, and it's probably -- and I've observed it, that being a motor vehicle mechanic is not a career aspiration for kids coming out of school anymore, right? Usually, they're employees of a large dealership. And the other thing, too, is that they can make -- they see a greater future in being a chippy or a sparky or some other building industry and not being in the motor vehicle industry because the motor vehicle manufacturers have actually designed vehicles that don't need that type of maintenance.
And the other thing too is that with things like gearboxes and differentials and motors and everything else, the -- I've seen one show on YouTube, where BYD have actually consolidated pieces of drive chains, electric drive chains into one molding, not several parts, right? So -- and the other thing, too, is they're not component manufacturers. They are all being made under the one roof. Okay. So they're just some of the things -- and it's a little bit of an open debate, but I just want to see where you guys fit into the story because I've actually been wondering, do you really -- are you going to perform the role you used to perform?
Well, I think change is inevitable, except from a vending machine. But yes, we do see opportunity, and I'll hand over to Chris to answer the question more fully.
So there's a couple of comments. Certainly, if you go back about 15 years ago, the auto -- Australian Auto Aftermarket Association that I was sitting on the Board at the time, lobbied government around the right to repair. And if they hadn't have taken that action, frankly, a lot of parts today, particularly as you went from analog vehicles into CPU based and actually, even the fact that a battery needs to be recoded into your actual management system, you can't just change the terminals and operate it. Now that was the right to repair. The same conversations being had with the AAAA now with the government and for exactly the same reasons, the government doesn't want to see restricted access to coated equipment or more tech-related parts. They're parts.
And they want people, consumers, workshops to have the right to repair and the right to access of codes just in software, just the same as they had in that evolution of right to repair. Look, trades full stop in this country have been underinvested for years. Government focus was on going to university rather than going to trade. Well, I can tell you the plumber that lives next door to me has got a bigger house, a bigger boat, and I think he's made quite a bit of money out of being a tradesman. So look, I think it is an industry challenge and the AAAA again is very active in starting to create those opportunities where people can see. I started pushing a shopping trolley in a Woolworths store, and there was a path to a CEO.
And a wonderful privilege and a wonderful journey to get to this point. Well, actually, starting on the tools, I think we've got a man down the -- out the back that was the CEO of Ryco that's now leading Truckline that started on the tools in a workshop. We've got to create very clearly the sight line for young people to see there is a path in this industry, and that's what the AAAA is committed to. And equally, we as an organization is what can we do to create better learning pathways so young people can see this is a really vibrant and there are so many options for your future in the industry. So that would be the 2 comments.
But that's not the thrust of my whole question, though. How is Bapcor going to respond to this?
So the response is we support the AAAA, and we're embedded in that conversation with them and support them financially when they're needing to do what they need to do to win the support of the government. So that's the first thing. So we're embedded in, involved very closely. And Stuart and I often have conversations along what we need to do in this space. So it's a regular forum, regular conversation. What we do in the organization is what we're going to do in the introduction of learning pathways in our organization to show there's terrific career paths in the organization. What we do by supporting through our subscription and fees that we pay to the AAAA supports learning and training centers that they're putting out around the industry around Australia.
In New Zealand, we're embedded with the organization and in partnership with an apprenticeship -- pre-apprenticeship scheme to bring tradespeople into the segment. So I think we're doing quite a lot in those spaces.
And I think the answer to the question about what we're doing about the EVs, you covered quite a bit of that in the presentation, but we haven't got a hover car with persons on it yet, but it will come. Are there any other questions in the room? Yes.
My question relates to debt and dividend. I noticed you're chipping away at the debt, which is a good thing. Do you have a target in mind for the debt level? And where does where do dividends fit into that?
So the -- I think the simple answer on debt is our concern was to get it down to a level that we felt was supportable and sustainable, and we did that with the rights issue. So that brought it down substantially. You would have seen since the rights issue, it's continued to come down. That's not actually deliberately per se because we're targeting debt. It's a function of running the business better. And so a lot of the work that Kim and her team are doing with the different parts of the business is driving better financial outcomes through the work that Chris and the broader management team are doing. But where the debt goes then is a function of that cash generation. So I think we have a balance sheet that now supports our turnaround.
The question dividend is, I think, one that we will address down the track. I mean, as was commented by a couple of people earlier, all of the Board are shareholders. We're cognizant of the importance of a dividend, getting back into the indexes, all these sorts of things are important. But first and foremost is investing in the company to turn it around, and that will continue to be our focus for the moment. So I will come back to you on that point, but it's not now. If there are no more questions in the room, Karen, do we have any questions online?
Yes. I have a few, Lachlan.
Okay.
So this is a combination from -- of a question from a couple of shareholders. Bapcor's performance since its share price high of $8.50 in [ July 2001 ] and with Darryl Abotomey as MD has only been on a downward trajectory since then. Then there was an urgent capital raising earlier this year. What went wrong? What did you miss? And when will Bapcor recover and be a leader in its field?
Well, look, I think there's a number of components of today's meeting that have addressed that question in part. I guess what I would say is this, there's no single reason why a company underperforms. It's the accumulation of a whole lot of reasons. And this Board wasn't there in 2001. So we can't really comment on what changed then that brought it to this point. The rights issue in early 2026 was simply a function of getting our balance sheet set at a level that supported the turnaround and took off the table concerns about covenants and that sort of thing. And that has now been addressed. And so that's been done.
As -- so we -- all we can do is look forward and say, well, what can we do? We're very focused as a Board on supporting the management team in this turnaround trajectory. And I think I mentioned it in my speech. The first thing was to get the people right, and we've done that. The second thing was to get the balance sheet right, and we've done that. The third thing is now to operate the company better. And that means better profitability, getting the inventory in the right place at the right time. I mean we've got really one major challenge, get the right inventory part in the right location and get it to a mechanic in kind of a couple of hours. That's it. That's what we've got to do.
And so if we can do that well then we can structure all of the components around those 3 simple things, we'll drive a more profitable business, and that will turn it around. So I don't think there's anything other than clarity on what we've got to do now, and that will be the focus going forward. And I see no reason why we can't restore the profitability levels of the past in the future. It won't be quick, and Chris has indicated in his speech, the next 12 months, how we see that panning out. And that's evidence of the fact that this has started, but it still requires work. But are we confident we can do it? Absolutely.
Lachlan, why was Bapcor's retail capital raising restricted by allocating shares instead of allowing up to 30,000 shares purchased?
I might have to take that on notice. I mean my recollection was it was a rights issue. And so everybody had the opportunity to participate fully. I know I did. And I know I was annoyed that I couldn't buy more shares, but I couldn't buy more shares because it was so well supported by the shareholders in taking the company forward. So yes, I think Kim, I'm...
Also geographic issues with...
Yes, as in there outside of Australia. Yes. But we were very clear when we were doing that issue to make sure that all shareholders who had supported the company to date had the opportunity to support the company going forward. Are there any other questions?
Okay. I have a question -- a couple of questions from Stephen Mayne. The first one being referring to last year's AGM and have the new Chair and CEO read the transcript or watch an archive of the AGM webcast in preparations for today's AGM and any observations they wanted to make. Did any of last year's AGM influence their preparation ahead of today's AGM, including scheduling of any pre-AGM meetings with major shareholders or proxy advisers? How did those meetings go? And did they influence what was said in today's formal addresses?
Well, I was at last year's AGM. So my memory is not that bad yet that I couldn't remember what was done. So I didn't go back and look at the transcript. In terms of did it influence meetings with proxy advisers, or shareholders in the lead up to today, we have a process of meeting with proxy advisers and shareholders, which we go through every year. And so we did the usual round of meetings to that extent. And I think one of the gentlemen in the room was part of one of those meetings online. They were all online. Nobody seems to meet in person anymore. But did they influence the preparation of today's meeting? Well, today's meeting, as you will have sensed, is all about the turnaround and what we're going to do to restore shareholder value.
And so I haven't met a shareholder yet who wants the shares to go down. They only want them to go up. So every discussion with every shareholder influences us to that extent. What we wanted to do today was to lay out why shareholders should be continuing to support us because as the gentleman down here said, you can invest in anything. Why do you invest in us? You invest in us because we've got a great upside and a great future. So it didn't influence it any more than to that extent. Was there another question?
Yes. This is from Mr. Stephen Mayne. Congratulations for running a best practice hybrid AGM. I just want to check that you will publish a copy of the AGM webcast on your website and repeat last year's head count voting disclosure similar to with the scheme of arrangement vote. If you do all of that, you're in the top in the ASX for AGM best practice. Thanks and well done.
Well, it's very nice to have someone saying thank you and well done. I found in 12 months as Chairman of Bapcor, that doesn't happen very often. But in terms of the webcast, yes, we will be. In terms of what we put on the website in terms of voting, actually, the only thing that's really relevant is what the percentage is because the vote is either carried or not on that basis. So I'm not really sure that having numbers of people helps in any way because it's not relevant. So I guess we may not get an A+ next year from Mr. Mayne, for which I apologize, but that is the way it is. That's all the questions. Okay. Oh, there's another question in the room.
Yes. Thanks, Mr. Chairman. Last one. Yes. Well, firstly, just a little comment. You had a question of what's gone wrong, like I'll take a stab. I've been here for a few years. You probably haven't. Well, first thing that went wrong was I think there was 5, 6 years ago, there was a focus on short-term profitability and growing revenue and margins through purchasing businesses. That turns out all the goodwill then had to be written off. So obviously, too much was paid for those businesses. There was an integration of systems when those businesses were brought on board, they weren't -- they stored up long-term problems because the businesses weren't integrated because that would have cost something, and that would have probably meant not meeting targets that resulted in executive bonuses and share price going well. The Board didn't have enough oversight of the process to see what was going wrong.
They didn't have a long-term vision, I guess. Maybe I should say allegedly because I don't want to be sued for trying to tell the truth. The auditors didn't see that this was a problem and until it was too late. And actually, the market as a whole, the analysts didn't see that there were underlying problems in Bapcor, but it probably never should have been a $6 share because there are all those problems that were yet to come out. So that's my $0.02 worth on what I think went wrong. And then you had a whole range of CEOs to go through. And probably my question is, so since Darryl was shown the door, whatever, 5, 6 years ago, would Chris have been available at any time before he got appointed to take the job?
Well, there's a reasonable amount of time since Darryl left and Chris joined. So I'm sure the answer to that question would have been yes or no, depending on the day you asked him. But fortunately, we are in the position we are now, which is we do have Chris. And thank you for your insights. I think there will be much debate around this room as to what went on and what didn't. Some people will agree with all of what you said, some will agree with none. And the truth is always somewhere in the middle.
So with that, I will -- rather than keep you waiting for the poll, I propose to close the meeting at this point. The results of the poll will be notified to the ASX and will be put on Bapcor's website following the meeting.
That concludes the business of today's meeting. I thank you for your attendance. I thank you for your support. I thank you for your patience, and I now declare the meeting closed.
Bapcor — Shareholder/Analyst Call - Bapcor Limited
Bapcor — Q4 2026 Earnings Call
1. Management Discussion
Thank you for standing by, and welcome to the Bapcor Fiscal Year 2026 Results Conference Call. [Operator Instructions]
I would now like to hand the conference over to Mr. Chris Wilesmith, Chief Executive Officer and Managing Director. Please go ahead, sir.
Thank you, operator. It's a privilege to be here today with you all and certainly a privilege to serve the team and the shareholders as we develop and move our turnaround journey forward. I'm joined today by our Chief Financial Officer, Kim Kerr. And I remind everyone that you will only be able to participate in the Q&A session if you've joined via the dial-in and not via the webcast. Today's presentation should be read together with the Appendix 4E financial reports and the ASX release issued this morning.
Now turning to Slide 3, if I could, operator. I'd like to acknowledge the traditional custodians of the lands that we operate in across Australia, New Zealand and also Asia and acknowledge that Bapcor embraces building communities together in our multicultural nations. Today, we're on the lands of the Wurundjeri people, and I'd like to acknowledge and thank them for this day.
If I look at also the people that I would like to acknowledge 5,500 team members that I'm very privileged to serve in the role of Managing Director and CEO. These are good people. And as today, I would say the reflection in the performance is certainly not that of the effort, the willingness and the commitment that this team are making towards our turnaround. They are really amazing people that in the last few months have made a tremendous difference that we'll talk to during the presentation.
I'd also like to acknowledge what is largely a new executive team that are actually leading the organization, Kim Kerr, certainly Marty Storey, Craig Magill and then Rebekah Newman, Angus McDonald, Morris Lieberman, George Sakoufakis. And equally, I'd just like to thank all of them for their support of me as a leader in this turnaround.
Today's presentation is structured -- moving to Slide 4. Today's presentation is structured in 5 parts. We'll begin with group highlights. We'll cover off the performance of each segment. I'll hand to Kim then to take us through the financial summary, and I will close with the elements around our trading update and outlook for the coming year.
Turning to Slide 5, please, operator. F '26 is certainly a year of reset. And you will remember that I came into the organization, and we first talked back in February as we started developing the turnaround plan for the organization. Clearly, statutory results are disappointing, but I want to highlight some of the elements that really are very clear signs of the momentum and the reset that's occurring.
Fundamentally, this is a good business at the foundations, but it does need reset and the critical elements of the turnaround to really take us forward to where we want to be. $1.9 billion in turnover. That was a reduction year-on-year of 1.8%. EBITDA was $152.5 million, which was above our top end of May guidance range. Underlying net profit after tax was $10.8 million. Clearly, these results are at a lower level than we would expect in the future.
Importantly, we delivered $68.5 million worth of working capital initiatives in the second half, in line with our commitment -- and it is really pleasing to have seen our cash conversion rate actually increased to 109.4%. reduced net debt to $135 million. And if you think back to the half year point where we had a debt of over $400 million, it's fair to say that the activities and also the capital raise have put us into a significantly better position for the future.
The statutory loss was recorded at $431 million, 99% of which was primarily relating to impairments of goodwill trademarks across the segments that we operate. The results were impacted by certainly the challenging external environment, the Middle East conflict driving higher costs, certainly the weaker impact, the weakening of our economies, both in Australia and New Zealand and the real impact that, that's had on discretionary spending across the consumers and workshops that we actually serve.
Back in February, when we announced the turnaround, certainly, there was no war in the Middle East and nor were the impacts and inflationary pressures that have been felt in the last few months. Hopefully, with a little bit of normality in the future, this will only help building on the great foundational work we've done across the organization, which we'll talk to in the coming slides.
Turning to Slide 6, if we could. The turnaround plan when I announced it back in February was primarily focusing on, first and foremost, the team and actually what the customer required to meet their demands of us as an organization.
We've been focusing on key priorities, which have been absolutely centered around profitability improvement, optimizing costs, improving capital efficiency and returning the business to growth. We'll talk about this shortly, but we have certainly changed the direction of the momentum of the business.
The next 4 slides will summarize some of the actions we've taken between that February and June period and the priorities that we're also looking at as we move into FY '27. While there's a lot of information on these slides, I will highlight the sections of the key actions and progress made across each of these areas.
What I'm very pleased to say at the highest level is that we have significantly reduced turnover of our teams, and we're actually improving customer satisfaction, and I'll talk to that more in the coming slides. That is absolutely enhancing and putting us in a good position to increase our profitability.
We're also happy to talk about how we've improved our competitiveness across the business. Some of the challenges when I first arrived and we talked to the availability of stock in the right location in-store discounting that was running at elevated levels as our team tried to compensate for uncompetitive prices in that market. And this was something seen across all of our business units.
What I'm happy to say in the second half, we were able to take quick action around a number of these key focus areas. Competitiveness, I'm happy to say now that we have actually looked at our pricing in our trade businesses with over 80% of all prices being reviewed to put us into a competitive pricing market for our customers. This has been well received. We tightened controls around overrides and price discounting, reducing the discounting by 16% now running at around 8%, and we still see more improvements that can be made.
In our retail businesses, we've changed over 13,000 prices to ensure that we are actually both competitive and maximizing profit opportunity while ensuring the value at our consumer levels are in line with their expectations.
F '27 focus is certainly the building on through the introduction of data-led pricing management. We started introducing that across the business units, and we're actually seeing positive momentum and margin improvements as we mature that capability across our business.
Moving to Slide 7, optimizing our cost base. This summarizes a number of priority areas in our turnaround because as I talked previously, our cost of doing business at total organization needs to be reduced significantly to achieve best practice performance levels when looking at competitor sets. There is a big opportunity here.
In relation to costs, we're operating in a significantly elevated cost environment, whether that be cost of goods, fuel, freight, local, international. However, during the second half, we've established a number of key activities that are reducing the cost.
I've talked previously about high cost of recruitment and also the cost of our supply chain. We've been able to establish in-house recruitment functions now no longer reliant on external high-cost providers. reduced higher cost of emergency orders, which were right throughout our organization.
We've implemented supply chain labor efficiencies. And in the last 4 months, that already was delivering at over a $2.8 million saving just in the efficiencies in our supply chain. A lot more to do, but starting to build momentum.
F '27, the focus is to drive and continue cost out where nonproductive activity is occurring. We've got review of actually some $300 million worth of nonstock purchases occurring. The opportunity is great. We're increasing our capacity to undertake effective competitive tenders and reviewing, where we can remove price cost out of our organization.
Moving to Slide 8, strengthening our capital efficiency. This is a big area of focus and very happy to report that in the second half, we were able to reduce by a further $14.5 million our overdue debtors. That's a 35% reduction on the first half where we opened in January. Significant work by the team, and we're continuing to make improvements in that space.
We reduced our overall inventory in the business, which was a change from many years of escalating inventory being held in our organization. We reduced by some $22.5 million significant opportunity still.
We started introducing programs, lowering minimum order quantities, reduction of excess stocks, working very closely with our trade partners to remove nonproductive inventory and while improving the in-stocks across our organization. Our capital efficiency focus on inventory reductions will continue and build momentum as we move into this current year.
What is very pleasing, however, we both reduced inventory while significantly improving our in-stock in the stores and branches across our organization. When I talked back in February, we had some business units with in-stock levels at branch and store in the range of [ 50% through to 80% ] in stock available for customers. Today, all of those business units are sitting over [ 90% through to 96% ] in stocks, and we're aiming for 98%.
As the consumer confidence and also available discretionary income improves, we're in a very healthy position to start capitalizing on those sales -- the sales momentum out of having the right stock.
While we continue to work closely with our trade partners to ensure that the future health of our inventory, particularly around EV, hybrid and also the China manufactured vehicles, which is representing a significant opportunity.
Many people talk about the impact of EVs coming into the marketplace. I would say you this is an enormous opportunity for our business that we're very aware of -- these are heavier vehicles. They wear out parts like suspension, steering, braking at far more significant rates, and it represents a terrific opportunity. while also calling out that the aging car park is still boding very positively for sales momentum of ICE vehicle parts.
Moving to Slide 9. This slide covers initiatives to return our business to growth. I've talked about the organization's power of expertise, knowledge and our connection with customers before. And the reduction of team turnover is very significantly contributing to the positive momentum as we reconnect with our customers. We've got the right price. We've now got the items in the right locations and our team are reconnecting with our customers.
I'm very pleased to say that we've had a 15% reduction in the turnover rate since December as we closed at the end of the year in June, and we continue to build momentum in reducing the turnover rate. And I'm very pleased to say that we've got a number of prior team members starting to come back to our organization as well as some very pedigreed retail automotive and trade experience coming back into our organization.
We've been investing in our leadership training and happy to say that we had our first 80 senior frontline leaders go through the Beacon leadership training program before year-end. And by the end of the calendar year, we'll have some 200 of our leaders that have gone through that program of developing skills and leading and running organizations.
In F '27, our emphasis is on improving our team engagement and now moving into network expansion, particularly in our trade and networks and New Zealand businesses, while we need to look very clearly at what is the optimal footprint in some of our other retail businesses before we start looking to expansion of those businesses.
I do want to acknowledge that the growth and the future of our organization is very much linked to our trade partners. And I want to acknowledge and thank our trade partners. We've met with many of our very significant trade partners and their support of the turnaround of our organization has been overwhelming and humbling. I think those partners as we now form and build more strategic partnerships as we build forward.
Moving to Slide 10, please. As outlined in our previous 4 slides, we're working to recenter the business on customer, team first, customer fascinated. And what I'm very pleased to say is that over the months and certainly building momentum in the second half, the slide to the left is actually our Net Promoter Scores across the 3 channels fundamentally that we play, trade, our networks businesses and also retail.
You can see that all of the customer measures are starting to trend up. Clearly, the aspiration is to have a best-of-breed outcome somewhere near 80, but it's very pleasing to see now a consistent positive trend. Very clearly, what was significantly called out price and in-stock is now starting to really be removed from the feedback that we're receiving from our customers. We're meeting what they need.
And I'm also pleased to share the graph on the right-hand side of the slide is now confirming that we are picking up after 5 years of successive decline in our market share. again, further confirming that as the consumer and the trade workshops start coming into a more stable environment, we are well placed to continue building on our share momentum. 2 quarters in a row, still a long way to go, but certainly positive momentum.
I'd like to now move to Slide 11. It's fair to say that the building of the turnaround strategy team led. But as we are now moving into the next stage of the growth of our organization into the future, it is critical that our strategy around growth and performance improvement is in place. I'm happy to announce that we've been running in parallel with our turnaround program, the development of our strategic plan.
We've involved our team, our customers, experts and senior leadership team. We are well progressed, and it is unquestionably about how do we also simplify a very complex business. And so for many that have been asking what are we going to be doing, I can say very confidently that the strategy will address the simplification of this business, allowing us to focus more specifically on the core elements of our business and our future success.
Bapcor has many strengths. And what I will say that over the last 6 months, I can only reconfirm that this is a good business. There is significant customer demand for what we offer. Our trade partners are fully engaged. We have a good team, and we're building a path to our future success.
I'll now move to Slide 13, if I could. I'm now going to talk to some of the segment growth. But before I turn to that, the underlying strength of the Bapcor platform is strong. Our ability to evolve into the future, the trusted brands that we have relationships with, our extensive network of some 900 touch points with customers across the countries we operate is formidable and enviable across the competitor landscape.
We are known historically around experience delivery, the expertise of our team, availability, delivery and fair value. This is what we're focusing on as an organization to build us back to the organization we want to be in the future.
Moving to Slide 14. What I want to call out is a very significant change in momentum in a very constrained economic environment. I want to really highlight to you that in the second and the 5 months very specifically after the announcement of the turnaround strategy that we moved very significantly most of the operating business units from significant negative growth.
And as you can see on the slide in a like-for-like basis, the first 7 months was running at a negative 2.7%. In the remaining 5 months, we ran at a positive result. Although the number is small, the overall movement from the starting point of 3.1% is something that certainly is a credit to the team, and it is an absolute affirmation of the strategic elements that we've put in place are starting to build momentum.
I will say that it didn't happen as quickly as I would have liked to, but they are the right things that will build us forward. In total growth for the organization, taking into account store closures and rationalization, the right stores being removed out that were nonprofitable is certainly equally setting us for the future, but 2.7% movement from the first half moving toward to neutral, as we continue to build momentum to positive growth.
I might now move to Slide 15. To start now talking through some of the segments and very -- firstly, I'm going to talk to the overall performance. Clearly, disappointing at a 1.8% decline year-on-year. But if you looked at the contribution of the growth that we've seen in some of our businesses and particularly in the trade and the specialty wholesale business that contribute 72% of the growth of the organization. The recent improvement in momentum in those areas, which I'll talk to a little later, is certainly giving me confidence as we move into F '27.
I'll move to Slide 16, please. Well, I'm pleased to certainly not present the numbers in terms of the year that was, but I am pleased that the change in the second half momentum after the appointment of Craig Magill back into the leadership of the Trade business is starting to see a positive impact. Momentum is changing, and I'm happy to say that in some of the key and core elements of this business, we are starting to see growth.
Craig is a 30-year automotive pedigreed executive. He's also brought people back into the organization that had left previously at senior leadership levels and they are having an impact.
I'm happy to say that the market share growth that I talked to before is very significantly coming out of the initiatives and the energy that Craig and the team are bringing back into the business.
Quarter 4 and F '27 is really building momentum. We're now seeing growth into the 2-plus percent range in that business. EBITDA margins declined, reflecting what was a very poor historical pricing management, low pricing disciplines, and they are very directly related to the overrides price discounting that I've talked about before.
Pleasing the second half showed positive momentum. Parts growth was running at around about 1.2% in that second, and I've made mention that we're now seeing growth over 2%. We continue to be constrained in the tools and equipment. That's a heavy tools and equipment component of our business, which represents about 10% of trade. There are turnaround plans in place, and we will continue to monitor that business very carefully in the coming months to ensure that we return to a healthy position.
We are growing the network. And this year, there will be an additional 5 branches that will come on stream. The trade business, the branches in the right place, the right size are a very profitable business.
Turning to Slide 17. Networks, I'm happy to say that the clear momentum change that is occurring more and more in that business is certainly a credit to the individual team, but also I'm happy to say that the appointment of both Angus McDonald, our Chief Operating and Strategy Officer, which Networks reports into and more recently, Guy Nicholls, a pedigreed CEO, someone that learned from the ground up on the tools to being the CEO of a number of automotive businesses, joined us to lead our CVG and Truckline businesses, 50 years of pedigreed automotive executive experience.
So what are we seeing? EBIT increased by 7.3% to $67.7 million. reflecting the cost of doing business benefits from the prior year operating model review and consolidation. The segments that are experiencing disruption back in that period are showing positive momentum. The terrific leadership of JAS under Daniel Torre is having a significant build and continues to grow up 6.8% on the prior year.
CVG, as I mentioned, remains challenged Guy Nicholls only joined some 6 weeks ago, but the momentum under his leadership and the growth that we're seeing in recent weeks is very positive.
To also just acknowledge that our wholesale business under Chantelle's leadership is really significantly building the momentum. So overall, Networks is starting to show very clear and positive momentum.
Turning to Slide 18. Retail is really a moment where we need to look back to what the business was expertise, service, great brands and fair value. We're rebuilding the Autobarn business into the future. The performance improved materially throughout the year. It was a very challenging first half.
Momentum in the second half as our operational initiatives gain traction are showing very positive green shoots. Like-for-like sales returned to a growth in the second half from a very significant decline in the first, 1.4% and is supported by targeted promotional activity, Hyperdrive focusing on operational disciplines and execution in the physical environment.
Earnings momentum improved significantly in the second half from operating improvements that have been embedded in the second half period. We accelerated and grew our loyalty program. I'm happy to say we've got over now 2.1 million members, and this is a significant opportunity to be leveraged through closer and more targeted relationship connections with those customers moving forward.
We've also continued to work very specifically on range and in-stock across the network, improving from some 80% to now 96% in stock. There are new brands being introduced, roof racks, tools, refresh and a focus on how we use every square meter effectively in those stores. So watch this space a lot to happen in the coming years.
I'm also talking about the very positive impact that the introduction of data analytics around pricing in promotion on shelf, making certain both value is delivered to the customer that we're competitive while making more profit, and it's actually very positive signs in the first part of F '27.
I am now moving to New Zealand, Page 19. It's fair to say that the economic environment in New Zealand broadly is very challenging. Revenue decline year-on-year was 2%. The New Zealand dollar to the Australian dollar had a very significant decline, and that is also impacting when we bring these revenues and profits back into the Australian numbers. Total growth, however, with new sites was 4.5% over that period.
EBIT declined. It is a very competitive landscape. And I'm happy to say that there are very positive signs with a number of margin recovery activities now in place and starting to build momentum in F '27, but not reflected in F '26 results.
Positive like-for-like sales growth in Q2 and Q3 were certainly impacted in Q4 as we saw an even more constrained economic environment. Actions are underway to strengthen the performance momentum, focused around better customer interactions. We've introduced a customer call and contact center that can better serve the branch customers. as well as activating customers in that market.
We've opened a new Dunedin superstore. We're actually commencing our new DC, which is transitioning in Auckland, which will have positive impacts on the cost of doing business. And we stood up a brand-new DC in Christchurch to get stock closer to our customers. Hopefully, that gives you some insight as to what the actions are and what we're doing to continue positive momentum in F '27.
On that note, I'll hand over to Kim Kerr, our CFO, to talk through the financial results. Thank you, Kim.
Thanks, Chris, and good morning, everyone. I will start on Slide 21. Slide 21 outlines the main external factors that affected operating costs and consumer demand during the year. The Middle East crisis created a number of pressures across the business, including higher fuel, freight and oil-related product costs against a broader backdrop of elevated interest rates and softer consumer confidence.
First, higher fuel prices increased the cost of operating our vehicle fleet in the fourth quarter by approximately $2.2 million, most of which was absorbed by the group rather than being passed through to customers. Separately, freight providers imposed domestic fuel surcharges. The graph on the left shows the increase in this surcharge. We responded by implementing freight optimization initiatives, negotiating with providers to minimize the increases.
The crisis also placed upward pressure on oil-related product costs. While crude oil prices have declined, the base oil benchmark underpinning lubricant import costs have continued to increase due to ongoing demand and supply constraints. This has resulted in higher product costs and required targeted pricing actions.
The second graph was consumer confidence across Australia highlighted in -- the second factor, sorry, was consumer confidence across Australia highlighted in the middle graph. The softer consumer environment affected discretionary demand, particularly in retail, but also the level of car servicing activity. Management actions included price rollback initiatives in trade and in retail, targeted promotional activity and ensuring the business is ready to participate when demand rebounds.
The third factor was the significant weakness in the New Zealand dollar against the Australian dollar, impacting the results of the New Zealand segment in Australian dollars, which Chris discussed earlier. We are taking actions to address the impact of the currency movement. These external pressures do not change the need for Babcor to execute better, but they do provide important context for the FY '26 performance and the actions being taken.
Turning to the income statement on Slide 22. The statutory result for FY '26 was a loss of $431.6 million, including $442.4 million of post-tax significant items, which are largely due to the impairment of goodwill and intangible assets across each segment. This was flagged as a possibility in the 14th of May 2026 trading update.
The impairment charges reflect impairment testing assumptions that place a greater weight on recent trading performance and current market conditions over the benefits expected from future turnaround initiatives or improvement plans. In the appendix on Slide 28, we have outlined the significant items and provided a commentary on each one.
Revenue declined 1.8% to $1.924 billion, although, as Chris outlined earlier, positive signs were evident in the final 5 months of the year.
Gross margin was $872.1 million, down 3.3% on FY '25. The gross margin percentage was 45.3%, down 72 basis points. This reflects the impact of pricing actions to improve competitiveness, mix effects and market pressure, although the gross margin percentage improved in the second half as the turnaround initiatives gained traction.
Cost of doing business increased 7.6% to $719.6 million. The increase reflects continued investment in information technology and supply chain initiatives together with higher employee costs and other expenses.
Underlying EBITDA was $152.5 million and underlying EBIT was $51.4 million. Higher depreciation reflected historical investments in the network and distribution centers as well as investments in technology projects.
Finance costs reduced 4.4% to $35.6 million due to the lower debt levels following the equity raising as well as working capital initiatives in the second half, although pressure remains on property lease costs. Underlying NPAT was $10.8 million.
Turning to cash flow on Slide 23. Operating cash flow was $166.9 million. Cash conversion improved materially to 109.4% from 86.5% in the prior year. A key driver was the second half working capital program, which delivered $68.5 million of cash flow from inventory, overdue debtor collection and other cash improvement initiatives. This was in line with the $60 million to $75 million guidance range provided in February. Second half cash conversion was particularly strong at 125.8%.
Capital expenditure reduced to $29.2 million this year. This reflects lower expenditure following the completion of major network consolidation projects and a more disciplined approach to capital allocation.
Free cash flow increased to $55.2 million. This reflects lower CapEx and improved working capital management. The net cash movement was positive $35 million compared with the cash outflow of $26.5 million last year. Closing net debt reduced to $135 million, supported by the free cash flow -- positive free cash flow and the equity raising during the year.
Turning to the balance sheet on Slide 24. The key item to highlight in relation to the balance sheet is the decline in intangibles and right-of-use assets, which is due to the impairment outcomes.
The second half working capital initiatives improved the quality of receivables with a $14.5 million reduction in overdue debtors and inventory reduced by $20.4 million since June '25, driven by targeted actions to optimize ranges, lower minimum order quantities and reduce excess stock. This program continues into FY '27.
Turning to net debt and capital management on Slide 25. Net debt decreased by $229.8 million from June 2025. This was driven by the $200 million equity raising as well as the cash flow improvement initiatives delivered during the second half. Babcor complied with all debt covenants throughout the year.
At 30 June 2026, the net leverage ratio was 1.72x EBITDA compared with a covenant of less than 3.5x. And the fixed charge cover ratio was 1.62x EBITDA compared with the covenant of greater than 1.4x.
During the year, we repaid the maturing $100 million MetLife facility and reduced available debt facilities by a further $135 million. And this is to align better to the needs of the organization.
Total facilities are now $585 million, and we have an average remaining tenor of around 3 years. Importantly, the balance sheet has been materially strengthened and provides the financial flexibility needed to continue executing the turnaround.
I will now hand back to Chris for the summary and outlook. Over to you, Chris.
Thanks very much, Kim. And also just before turning to the trading outlook on Page 27. I just want to thank the Lachlan Edwards as the Chair and the Board and our shareholders for the honor that has been given to me in being a part of this turnaround with the new executive team in place.
This business is good at the core. The focus on team and customer and value returned to our customers is setting us up to really take benefit in the future as we see a more stable trading environment come back into our economies.
If I looked at the sales now in the first 6 weeks of F '27, we're slightly ahead of prior comparative periods. Trade and the parts very specifically in our trades business is building positive momentum and I talked about 2-plus percent growth. Networks continuing to grow quite strongly.
We are absolutely focusing on some of the areas that we've outlined that are still being challenged, and we still see certainly significant upside around retail, New Zealand and also our trade businesses.
I'm happy to say that the margin enhancement activities through the introduction of data analytics is starting to build momentum in most of our trading business units. We are also continuing to look at cost-out activities in the business, and we can certainly see that, that will build momentum as we continue to take cost out of our business in the coming months.
Bapcor expects modest growth in F '27 at a revenue line, particularly because of the conflicts and the economic impacts that are being felt in Australia and New Zealand very specifically. The benefits of our improvements will continue to build momentum as we move towards the full year.
The capital expenditure, depreciation and amortization are expected to be in line with F '26 levels, while capital utilization through effective planning and closer management will continue to build our capital benefit delivery on investments that we make. Underlying NPAT is expected to be materially weighted to that second half of the year.
Enhanced pricing analytics, promotional performance, improvements on effective management of costs throughout the business will be significant contributors to our future recovery. And as mentioned before, we're reviewing some $300 million worth of nonstock purchases in the business, and there are some really positive signs of being able to reduce those costs.
Strategically, the turnaround program is stabilizing the business, while very clearly, the comprehensive strategy that I outlined before that we are building starting in April, it is certainly coming to a point of maturity, and I can absolutely confirm that it will be addressing and simplifying our business as we move forward.
Turning to Slide 28. There's no question it was a tough year, bottoming out a multiyear decline. We've got a credentialed automotive executive team now in place. That enhanced leadership capability, especially through the appointment that I mentioned throughout the presentation, gives me great confidence that we have now the right people in place to execute both the turnaround and the strategic plan that we have put in place.
The skills that Kim Kerr has brought to the organization, the governing -- governance improvements around our financial controls are significant and should give us confidence in the future of the business.
The equity raising has actually put us into a good place in line with our strong and improving controls around generating cash into our business. With clarity of the strategy, improving capital management, we are going to continue to deploy and monitor very carefully our delivery to our plan in the coming year. And the early 6-week period is certainly giving me confidence in the year to come.
The 5 priorities are very clear: team, customer, trade partner and returning the business to both growth and improving profitability while actually optimizing and reducing the cost of doing business. The longer-term strategy will certainly be well developed, and it won't be that long before we'll be able to share that more fully with people.
We're under no illusion that the work still ahead is significant. However, Bapcor enters F '27 with stronger foundations, momentum that is very clearly starting to gather pace. We've got a clear set of priorities. The reset has been established and F '27 is about disciplined execution and translating that progress into sustainable performance growth.
Thank you very much for your time today. So handing back to the operator for the Q&A. Thank you.
[Operator Instructions] And our first question for today will come from Garth Francis with MST Marquee.
2. Question Answer
Could you maybe just elaborate on your plans for the store network across the various divisions? There have been a few store closures during FY '26. And we just want to get an idea of how comfortable you are with the current size and what might happen through '27 across the banners and looking forward?
So Garth, I mentioned the trade business will actually be expanding with additional sites coming online. There is no question that when you've got 900 sites, you need to continue to prune to ensure you've got a healthy network. But if you looked at networking, again, it will be a growth in the networks business. In the retail business, until we are very clear about the footprint is optimal to deliver performance, we will be resetting how we're using that space.
And I'd equally say that there is no question in my mind that we have excess space in the network. So renewing, you may actually move to a smaller site in particular geographic areas, but we need to more fully complete that review of space utilization in the retail business.
However, we have completed a network review on retail, which very clearly calls out quite a significant opportunity for growth in the future. We just need to be clear about what the optimal box to deliver improved performance is before we start moving forward. Hopefully, that answers your question.
It does. And perhaps just to follow on from that, you did mention earlier in the call when you're talking about the retail division that you were looking to improve space productivity in those stores. Can you talk to the measures that you are tracking there and whether those will be disclosed so we can track that progress outside of a like-for-like improvement, for example?
So right at the moment, we're working through the detail of the average performance at a rev and also a profit per square meter -- and so not at this point, am I in a position to give that to you. That's what we're working through at the moment. And then we will equally be looking at what's the optimal performance out of what size of business, notwithstanding I talked to the rebuilding of very clearly brands, ranges into that space.
So we just need to be a little bit careful not to jump too quickly before we actually introduce those programs that are going to better utilize the space that's available to us and what ranges that are actually in those businesses relevant to the geographic areas. So a bit of work to be done before I can share more detail around that.
[Operator Instructions] Our next question will come from Sam Teeger with Citi.
I just wanted your thoughts on how much of the modest sales improvement you're seeing has been driven by sustainable market share gains versus promotions, pricing resets or easier comps?
Yes. Good question, Sam. Certainly, the belief and looking at the lower level detail around customers where those growth occurring from, whether it be trade or retail businesses would say that it's sustainable share growth that's being achieved.
And equally, it would give me confidence that there's more upside in that while saying to the forecast, the reason we still believe it will be modest is quite clearly, there's a lot of headwinds in the market, consumer confidence, available income. But I think it is very clear that it is a trend and sustainable.
And the fact that in the last 5 years, this is the first 2 quarters that we've actually seen momentum continue rather than just one up and then back down again. So it would certainly appear that the activities we're taking are giving momentum that is now multi period upside.
That's good. And can you talk to the major drivers of the profit being materially weighted to the second half? I mean is it margin recovery, phasing of cost savings, sales acceleration, easier comps, like what's the main reason?
I think when you talk about the implementation of data analytics into pricing, for example, Sam, you can get the insight relatively quickly, actually getting then the embedment of a methodology to apply that across multiple customer types, channels, the maturing of that capability in your business takes a little longer.
Where I can give a very clear why we're so confident that, that will build momentum in one of the first divisions where we actually introduced the capability around pricing analytics, we're now seeing very significant margin improvement, and they are maturing that skill very quickly. So now we're rolling that capability out into the other business units. that's why we're very confident about that momentum building.
Equally, I made mention about the tremendous support from our trade partners in helping us to get the range absolutely relevant to car park with a [ C ], i.e., the cars that are on the road now. For a number of years, we were not keeping our range as relevant as it could be to the car park.
Generally, if you've got the right range and certainly more contemporary, you can actually achieve better margins out of it. That work cleansing has started but building momentum. So we'll have fresher and more relevant merchandise on the ground. So again, achieving higher margins from those sorts of activities.
Data analytics around pricing elasticity, so the promotions we're running very clearly looking at what's the optimal value equation for customer without giving away too much margin or margin that's actually not beneficial. So we're looking at that capability out of data analytics as well. So there's a number of fronts that as those sort of capabilities are maturing that will continue to build and deliver momentum.
And the other element is we've clearly talked about refreshing ranges with those trade partners, the renewal of the -- and the retirement of older stock that is being returned to trade partners. Again, that's helping -- there's a number of the areas that are helping.
And the final point that I would say, which was talked to during the presentation, we were seeing very specifically in trade business, but remember that trade networks, the, call it, discretionary discounting running around about 16% is now down to 8%.
And again, the -- although in the second half, that was very materially supporting the winding back of prices to be competitive in market, we're certainly starting to see that, that's a significant opportunity to be materialized in a gross profit coming and building momentum as we progress through the year. Hope that answers your question.
Yes, that's good. There's a lot there. Well done on the working capital improvements. How much further opportunity remains into FY '27?
There's certainly a number of different things that we're doing. We continue to focus on the rationalization of ranging and not reordering, call it, or substandard commercial performance ranges. And if you look at the work that we continue to optimize ranging right through the business units, we will see significant release through range rationalization.
But as I also shared, while we're improving in-stock and relevance to car park, so we're actually proving that can be done with lower inventory. So confident all those initiatives are going to continue to improve. We've actually introduced enterprise-wide open to buy as of 6 weeks ago. That was a new capability that's been embedded. And we're actually rolling out, which is mentioned through the presentation, planning capability, forecast demand planning capability in all the business units that hasn't been there before.
We're also working with partners to help us continue to improve our overdue accounts and also reconciliation of accounts, looking at machine learning, AI solutions that can help improve that space of recovery and cleanliness of our accounts. So that, again, will be positive impact on cash and capital health in the business. So hopefully, there are a few things that give you a bit of a sense of directionally, we're confident.
And I'd say pretty consistent with what our previous announcements have been that we continue to build momentum in releasing cash capital and what actions we're taking around inventory and better management.
But on that, so you did $68.5 million in the second half. Do you think you could do another $68.5 million over the full year '27? Or is that too much of a stretch?
Look, I think that it's fair to say that it will be material what we can continue to do and our budgets and forecasts reflect a material improvement in that space. And I can say the first whole 6 weeks, we're consistent with what we would expect it to continue to deliver.
Your next question will come from Adam Dellaverde with Blue Ocean Equities.
I just wanted to drill into the capital stuff. Actually, first, I'll just say the deck and kind of putting out all the information is really, really helpful. And I appreciate the candor and the amount of detail that we're getting now.
As for questions, just on working capital [Technical Difficulty] 57:27 so just on questions, working capital, what I'm hearing in lubricants is like repeated double-digit price rises. And I think it's a significant inventory category. And then so I'm just trying to get a feel for like oil-based or petroleum-based product inflation and how that's impacting working capital and then sort of what you're seeing in the other parts? And can you pass that through? Or are you absorbing, yes.
Look, terrific question. I'd just caveat it, however, by saying that lubricants, if you were a traditional business, retail business like Supercheap, you would be far more worried about lubricants cost escalation than you would be in our business as lubricants is significantly lower in terms of the mix of the overall business across all of our operating business units. But it is significant. So the annualized impact of cost increases through the inflation of the barrel of oil is about $24.7 million increase across the COGS over that full year.
What I've said previously, and that was certainly reflected in the second half year results, and I said this very publicly, that the business had done quite significant damage to itself around its price uncompetitive position to market, whether it be retail or trade. And I said very openly, we would not be the first movers when it came to pass prices through because we have to rebuild trust with our customers.
And so yes, we have very clear programs in place to make certain that we are passing through prices, but we are not leading putting price increases through. But my comment would be we would be a fast follower with relevance to market on those sorts of escalations.
And the early escalations that have already occurred, we are tracking very carefully. And I can say about 2/3 of the prices that have come through, we are actually seeing an improvement in the profitability in those lines, but there's still 1/3 that we need to better understand and improve on in that process.
But my honest opinion in this space will be we will continue to see not just lubricants increasing over the coming months, the cost of container movements, local freight movements, all of those are putting pressures on not only oil related, but many other products.
So what I am confident to say is we have processes and systems and visibility through reporting and the data lake that was stood up that marries our 16 RRPs together to give us trend analysis, and we'll be very close -- closely looking at that to ensure that we're not seeing erosion that can impact our performance results. in the coming months.
I guess just to sort of try and square that up to the sales guidance because I guess you want to be conservative because you want to put a set of numbers out there that isn't -- that can handle some volatility in a pretty unpredictable market. But if we're looking at [indiscernible] price inflation and flat sales guide would imply volume losses, which kind of contradicts some of the discussion around market share. So yes, just trying to get a handle of -- I thought of this business having a tailwind from a rising price environment as well. So yes, that guidance is kind of confusing me a little bit. If you could maybe add some color there.
I think our comment was modest growth. And I think anyone that was not taking into account what's happening with the consumer, the average consumers very short on what they had in their wallet or purse 12 months ago. So I think it would be naive to think that the inflationary pressures on nondiscretionary staples, utilities, insurances isn't taking money out of the more discretionary areas.
Now retail, quite clearly more discretionary by nature in automotive. But you can't underestimate the fact that when you look at the car park that we serve through our trade workshops, they're generally cars that have moved out of the OEM workshop environment. And I can tell you very clearly talking to those large owners of multi-trade workshops across Australia and New Zealand, they have customers coming in that are saying we don't want the full log book service done. We want other items, oil filter, things that are critical or brakes, but they may not be doing some of the other repair and service items. So there is a bit of moderation that we need to also be aware in that place.
And just last one, just on CapEx. I know there's sort of an IT debt that at some point needs to be dealt with. And you've come out of this distribution center reorganization period -- sorry, investment period. plant equipment depreciation versus CapEx, like how much reinvestment into the stores do you need to keep up just for stay in business purposes and also to kind of get that inventory visibility out to the stores with an open to buy setup?
Look, I think my first comment would be, you mentioned technology. Part of the strategic road map is very clearly looking at what we need to do to better provide technology enhancements that can connect us more effectively with our customer. It can actually take poor process, enhance system to deliver efficiency and cost out of our business.
Some of the simplification that I just talked to at a high level will certainly be about the continued growth of consolidation of how many ERPs that we're operating in. And we also stood up obviously a data lake to bring those elements together.
So my comment would be, would you like to invest more in technology to accelerate components? Possibly, but I don't think we're putting ourselves at a disadvantage. We will be moving through our technology -- targeted technology investments forward.
But certainly, that investment as we get clear about what the business shape is in the future, what the strategic elements are to enable and what we need to do in technology, that will be something that will mature in the coming months, certainly a year. So I couldn't say much more on that one at this point.
In terms of refurbishment, for example, in the retail network. What is quite clear, and it's been called out previously is that our capital management and return on capital investments needed to be at a high level. And so we're currently looking very clearly at what we need to have the right store footprint to deliver maximum performance as much as what is the future persons or BMT branch environment to get optimal performance. What's the size of it, what goes into it.
So I would say to you that we've taken a pause on investing more into refurbishing until we're clear about what the return benefit is for doing that. And so that's really this year where we really look at what those stores can be. There will be some light touch, but it will be a year of fairly modest investment in refurbishment of sites. I hope that gives you a bit of a sense or answers your question.
Your next question is a follow-up from Sam Teeger with Citi.
Just a couple of quick follow-ups. I guess what's the biggest factor that you think could derail the turnaround today? 6 months ago, probably would have said the balance sheet, but you guys have done a great job bringing down leverage to [ 1.7x ]. But right now, what do you see? Is it the macro? Is it execution? Is it competition? It would be good to get your thoughts.
I think when we announced the turnaround in February, there was no war in the Middle East and inflation and the pressures on the consumer were at a very different level to mortgage rate increases. So look, I think the volatility globally would be the area that I think we're all very sensitive to.
What I'm very clear about is we've got the right team at an executive level. We're reducing turnover. We're starting to satisfy customers with the right price, the right items in the branches. Now the disciplined execution of the turnaround as we evolve into the strategic, I think we've got the elements in place, Sam. So the biggest watch out for me would be the biggest variable that none of us know what would happen or what is going to unfold globally. And hopefully we get a bit of clear air and get a bit of stability.
Sure. And I guess if sales are now improving and the balance sheet has been degeared, how come you are still selling assets?
Investments.
Sorry, what?
Yes, how come we are still -- so we have commented in there around doing a portfolio review for simplification.
Look I think, Sam, it's really if you work through the strategic, and I'm not in a position to share broadly what that means. But if you look at the landscape of where an organization plays, the strengths of an organization, I don't think you would not be able to form a view that there are areas within our business that are not necessarily complementary and value-adding to provide the right solution for the customer in the ecosystem we serve.
And when you've got multiple ERP systems and the complexity around that, you've got subscale businesses that perhaps don't show growth path in the future, you would have to consider that to create a better environment so you can put more energy into the core businesses that can deliver the most growth for the future.
So I think it's pretty clear why we would consider it. We're not saying there's any that are at that point right now, but I think you would have to consider that in really forming the view of what a healthy business is going forward.
And then last question, at what point do you think we can stop describing Bapcor as a turnaround and start describing it as a growth company again? What specific metrics need to be achieved for that to occur?
I think the first will be to continue being able to deliver in line with what the expectation of the market is and beyond. Clearly, there's guidance in market, which I would say I think is appropriate today. There's a lot of initiatives that we're putting into the business now that will undoubtedly continue to build momentum.
But I think I've been pretty consistent back from when we talked in February and said that there was a stabilization. I think we've proved we've been able to stabilize and start getting momentum in the right direction, which was the last 5 months of last year. It was then building momentum in F '27. And as you start maturing those and moving into strategic execution moving into F '28. So I think I've been pretty consistent with saying it's at 6 through to a 24-month period.
And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Wilesmith for any closing remarks. Please go ahead.
Thank you very much, operator. Look, just a thank you to the interested parties on the call today. A very big thank you to the shareholders that certainly had a very tough number of years. But I equally just very clearly call out there is a new leadership in place. The turnaround is building momentum. The right strategic plan will be maturing over the coming months. And certainly, I look forward to continuing to talk the next time we're together about the build on where we are today and back to the recovery of where we want to be over this next 12, 24 months period. Thanks very much for your time and attendance today.
Bapcor — Q4 2026 Earnings Call
Bapcor — Special Call - Bapcor Limited
1. Management Discussion
Thank you for standing by, and welcome to the Bapcor Limited Turnaround and Trading Update. [Operator Instructions]. I would now like to hand the conference over to Mr. Chris Wilesmith Chief Executive Officer and Managing Director. Please go ahead.
Thank you, Ashley. Good morning, all, and thank you for making the time. Well, it is undoubtedly seen the update that we've released to work the market. That's really pleasing about to talk about the things that we're actually seeing in the business starting to emerge, but we thought it was absolutely appropriate to reach out and to update the market on also the impacts that are being felt from what's happening globally.
The announcement very clearly has given you a sense of the momentum change from the turnaround announcement. Notwithstanding 2 days after that, the global impact started occurring from the war in the Middle East. I wanted to really give you a sense of the actions that we talked about and have started taking in the business, having a material impact on the performance in each of the trading divisions.
You'll see that in the actual announcement that we provided very clearly, the difference in the momentum that we're seeing post starting the very early introduction of these initiatives across the business. When we first started talking back in February, I talked about the critical importance of having a team-led turnaround. I talked about focusing on the customer and actually creating an environment where we were lighting up our trading engines.
There's no question that what changed from that point, the impact on consumer, the cost of fuel at the barrels are hitting discretionary spend has had an impact. So I equally would say that the actions we've taken, and I would like to share some of the details that is actually supporting what we're seeing in terms of the very clear improvement in the post-February results, notwithstanding all of those challenges. I'm happy to report that customer measures across the business in the major trading divisions are actually improving significantly.
We talked about when we last met turnover rates of 50% and 40%, and I can say to you that we are rapidly seeing a decline in turnover in the organization. And I'm very pleased to say that many leaders that are now in place have been so highly regarded that we're seeing really high-quality team members coming back into our organization. But of course, we'll continue to build momentum, but just a tremendous start to see some of these take people coming back into our business that were part of the build of the success story of Bursons right from the Genesis.
Engagement programs have been commenced across the organization with senior executive leaders, director reports on my team, leading -- talking with these groups of people, frontline managers, senior leaders and actually middle managers. The people that touch the most of our population of team to understand what they want of us to create a better environment. These early conversations are being really well regarded, well received, and the team are actually building actions to create the culture that will create the future of our organization.
We've also reintroduced leadership and training programs. The first 2 groups of our senior leaders have now started going through a Deacon Leadership Program, again, to help to really lead our teams into the future. If I look at the activities that we talked about moving stock out of the DC networks and into our branches and stores. These activities have now been underway, and we're certainly seeing significantly improved stock available to customer at branch level, and that is also underpinning the results and the performance. Still lots more work to do.
We also introduced programs to stimulate and connect more effectively with customers that have been both declining and last customers making phone calls, visiting them. actually putting programs in place to ensure that more competitive pricing. And I talked previously about the impact on our customer of having uncompetitive pricing we have done significant work on the first phase of the price rollback.
So over 70% of our active customer accounts have now got market competitive pricing, and we're starting to see very lists that we expected coming out of those accounts with a more competitive price. We've also taken very clear actions on the price on particular segments within the business. And equally, we're seeing a very positive response, while being very careful and measured in terms of the impact of rolling the prices back has on margin.
I talked last time about our team initiatives that are underpinning the maintenance of the margin. It is clear that we need to just moderate and be careful with that as we continue to build momentum, just to ensure that it is a net positive profit impact, but work is well underway, being received very well. For me, good things are in place as much as the increased activity with very specific trade and retail marketing activations in market now and seeing really terrific consumer responses.
There's still a lot to do, but what I am confident is where we started focusing on team, customers and activating our sales teams with our customers is starting to pay dividends. Clearly, from the update, you can see there is an impact of recent events in the world that have impacted these local environment here in the countries that we operate in both Australia and New Zealand and that's why we felt it was really important to reach out.
So today, I wanted to be more about, one, just setting the scene in terms of why I'm so confident that the work that the team is doing is building the momentum. The flywheel is starting to move in the right direction, but we also had to give an update given what was occurring. So I'd like to pause at that point because I would like to hear from you and also answer questions that you may have of what we've released to the market.
So I think on that point, Karen, we had one question, and I think over to you to help with the facilitation.
We'll hand back to the operator there, actually.
[Operator Instructions] Your first question today comes from Craig Woolford with MST Marquee.
2. Question Answer
On the numbers, it looks like the EBITDA downgrade on a pre-AASB 16 basis is about $11 million. Can you just attribute how much of that is a result of slower sales versus changes to the gross margin percentage?
Kim, do you want to comment? I'm happy to give a summary level.
Yes. So there's a few things that are sitting in that change in guidance. So it's a combination of sales margin cost factors as well. So fuel and freight as well as some supplier input costs have also increased as a result of the conflict, and we've also had the FX impacts from New Zealand.
So what we're focusing here today is that within those changes, we have seen momentum building across the business units. We have seen customers returning. We have seen increase in our run rate leading into when this complex started to impact the market. We have seen our market share increase. Chris, if you want to add any more color as to what's driving those changes?
I think it's fair to say that there is a consumer that ultimately shops in many of the trade workshops that we serve and Craig I was just talking with the CEO of the AAAA, I'm actually the industry show for the next 2 days on the booth, meeting with our customers, partners -- and we're out sponsoring the event. And what is very clear talking to Stuart, who is the CEO of the AAAA, there's been a material drive in bookings in the workshops and also abandonment booked services. And quite clearly, the services are not occurring, then the parts are not coming out of the business.
So that has an impact. But I'd also say very clearly, when you think about the impact of freight and fuel costs running a fleet of delivery vehicles and obviously the carriers that are providing our longer haulage sharp movements around the country, the impact that's come from there is into the millions. In the final element that I would call out is more so the -- which goes to your question or your margin, there are very significant cost of good increases that we've seen come out of the implications as what people have had occurred to their businesses that are supplying into us.
So there's those number of elements that are impacting. However, Kim raised a very good point. When we look at our best point of reference in the trade business in terms of are we securing the market share. It is very clear in a very cost environment, we're not only showing a trend change, but we are picking up share, which will put us in a far healthier position as we continue to merge out of or into a more stable environment globally that will impact likely.
So just to clarify on the gross margin. There was something you said in your opening remarks, about having to manage the impact of the price rollback. So is growth -- I know it's hard to isolate, but is gross margin weaker than anticipated attributable to the rollback or better than I'm just trying to understand ...
It's a fair question. And so I would say it was not at the level that we would have liked to have been Craig, speaking very openly. But the -- when I first talked about this action being taken to roll back. I also talked about our team 8 activities to mitigate. One of those was very specifically in higher-margin categories, improving the mix in the business. And when you've got a more sensitive trade customer and consumer, it's fair to say that some of those elements that we thought would be more effectively offsetting the rollback haven't materialized at the pace of that.
So we're just now moderating back a little bit the levers because we try to move very quickly, and I said we would. But I equally said that, that could be 4 months, it could be 6 months, dependent on what we saw. So we're just given the conditions needing to moderate that a little bit, just to pick back up the margin cost, margin and the impact of the costing cost and there is clearly a headline revenue headwind that all those elements.
Your next question comes from Sam Teeger with Citi.
Just taking into account the slower trading and the slower inventory reduction, what are you now expecting for net leverage and fixed charge cover at FY '26?
It's a good question. I might just throw it to Kim, if you didn't mind.
Yes, for sure. So very clearly, we are within our covenants and anticipate to be the same as the -- June. So with the lower EBITDA and as you mentioned, where the inventory is at we had taken actions to ensure that we've got the inventory in the line lies at the branch and store network, we have taken actions to reduce the overall inventory.
Those actions will take some time to come through. And obviously, with the slowdown in sales will impact our inventory balances, but we are still taking those actions to reduce inventory. But the combination is that we will see leverage being higher than what we had anticipated in February, but still well within our covenants at 30th oof June and same with the SCR.
[indiscernible] on that.
Previously, I think you said 1.2% to 1.5% for leverage and you're saying it will be above that. But for the fixed charge cover ratio, which I think you have temporary relief in it, it's falling to 1.4x at FY '26, you think you'll be okay there?
Yes. So 1.4x is our covenant for 30th of June. And yes, we will be okay there is what this forecast is showing us.
I think just building on your comments, Kim, because it is a really important call out. We have worked on the early stages of more effectively looking at our ranging based on relevance to car park. There are nonperforming lines that have been removed. There's reductions of MOQs that have been put through thousands of items in our business and we're also moving on to Phase 2 of both driving the in-stock at the branch level and also continuing to pull back on nonperforming lines that just should not be in the greater organization.
If I looked at the actions taken, these are annualized reductions that are very, very significant into the double-digit millions that will be coming out but the moderated consumer sentiment is certainly affecting the sell-through of those right here and now.
Your next question comes from Wei-Weng with RBC Capital Markets.
Chris, sorry, I'm very new to this company. So apologies in advance if my question is really simplistic or missing any nuance here. But if I look at the midpoint of guidance. I think we established a kind of an impact of about $11.5 million for roughly $3 million to $4 million a month, assuming that it's still started in April. Can this be extrapolated into sort of FY '27 for as long as this kind of war is ongoing?
I think that the assessment of whatever the instability maintains. It's certainly going to create a consumer and business environment that is less positive than it would be outside. What I would say is that what we are very confident of is the actions we're taking are going to put us in a far better position as we start emerging. To be honest, so I said any further times I talk in a meeting like this, I'm going to say we're going to caveat, except for wars, macro or global pandemics that those things that are unseen sometimes are difficult.
But everything that we can see at the moment would say, yes, it's probably more moderated. But the direction is starting to build momentum. And so we're still confident of the direction as we start moving into F '27, but there will be quite clearly a little lower base to start on going into F '27.
Yes. And then maybe a bit more sort of, I guess, direct right now. As it stands right now, should the market be may be planning for a virtuality that FY '27 earnings might be below FY '26?
Your next question comes from Andrew Hodge with Canaccord Genuity.
Yes. So that's it hasn't be that what we can go back to it's been --
I think I've got a voice but maybe not a question or I didn't pick up the question, sorry.
We'll move on to the next question. This is from James Bales with Morgan Stanley.
I just wanted to clarify was the downgrade based on the trading performance that you've updated or that you've given to the end of April? Or are you factoring in trends you're seeing in May? And what are you seeing in terms of trading momentum in the last few weeks versus to the end of April where you've given the update?
There's no question in May and June, a very important as so. But yes, we've taken that into account with the updates that we're getting to today.
And so when -- has there been a material change versus in May trading versus the trajectory that you've outlined to the end of April?
Certainly, you started seeing the impacts coming into the April period, which we've considered moving forward. But the direction of an improvement over the prior year from the initiatives and actions we're taking is still directionally going in the right direction, not as quickly as we would like it to.
[Operator Instructions] Your next question comes from Angus Hewitt with Morningstar.
I just wanted to clarify what you were saying on increasing market share. So Supercheap noted market share gains in the March quarter. Genuine Parts is claiming market share gains. So what segments -- are you picking up share? And over what time period? Is it just in parts or trade segment overall? And how are you tracking in retail?
I think it's fair to say if you looked at the Supercheap number, which I think was just over 1%. I could say that the period post our turnaround are being released. We are growing in a very healthy position compared to the competitor set. If I looked at the broader trade business, I'd say that it is quite clear from the data we have.
We are picking up share broadly, not specific categories, but broadly, across the trade businesses, and we can certainly see that there are some other businesses that may not be as -- able to be seen visibly that would indicate that it's coming from them, and I suspect many customers are going back to the larger organizations that they can perhaps be more confident with at this sort of point and when the sort of challenges are in place. It's broad-based market share growth and I would suspect that it's coming from the smaller businesses, given your comment about the others. But I will say we are very well placed from what we can see with the other competitors around us.
Your next question is from Andrew Hodge with Canaccord Genuity.
Just -- you mentioned that the market share growth, but also at a slightly lower gross margin than you expected. Is there any risk you're effectively buying that share growth? And as you dial that gross margin back up, you lose some of that share growth?
Good question. No, I don't think it will to be honest. The other activities that we put in place to reestablish relationships to bring back people to more effectively serve. If you look at what the business has been known for, particularly on the trade and networks business, it's been about relationships. So if you have a team that is in a good condition, and you've got enough people to serve effectively.
Our delivery, which is still -- has always been considered to be better than the competitors, but also that we have a fair of value -- and we're winning back on a number of those dimensions. So no, I don't -- this is not about generating high low activity that's not a sustainable position, notwithstanding the other initiatives that we're putting in to actually increase margin but the right way while you're still delivering value.
But as I mentioned, that was an initiative that I always called out. We would need to pace and sequence it based on what was happening at the margin level. So we just -- we need to moderate a few of those levers and accelerate a few of the offsetting actions to have to do it. Hopefully, that answers your question.
[Operator Instructions]. There are no further questions at this time. I'll now hand back to Mr. Wilesmith for closing remarks.
Thank you very much, operator. Look very grateful for everyone's time. Hopefully, it gives you a sense of the actions we've taken are starting to deliver the momentum change that we needed in the organization. The impact of the global changes we've experienced has certainly moderated that. But it just says to -- well, to me, we need to continue to double down and really focus on those elements and they are going to put us in a very good position as we come back to a more normal environment.
It will come, and I know from previous events, such as the GSE, the investment, what we do put the seeds into the ground now are going to pay dividends. So thank you for your continued interest and support and look forward to getting together and updating you further in the future. Thanks again. Have a great day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.
Bapcor — Q2 2026 Earnings Call
1. Management Discussion
Thank you very much, Darcy. Welcome to everybody to this afternoon's update on the first half performance for Bapcor. So Chris Wilesmith is my name. It's a great pleasure to be with you. Certainly, my first now 4 weeks in the business to get a good understanding and to share some results today that will be certainly difficult to be in my first session and after 4 weeks.
But today, you'll also hear from Kim Kerr, our CFO, that's joining me. We'll run through the results. There will be some time for questions and answers. However, if you have joined via webcast, please note you won't be able to participate in the questions.
So I might ask the operator to move to Slide 8 for us, and I'd just like to recognize the First Nations people of the countries that we operate in and of the wonderful journey that we'll have together in the future as we build our nations together.
Moving to the next slide, Slide 9, if we could, the agenda. Firstly, we'll run through some group highlights. We'll talk to some of my early observations of the business, the performance of each segment. Kim will run through some more significant information around the financials. We'll provide an update on trading in the current half and also talk to the equity raising in the business. Thank you.
Turning to Slide 9. So a little bit about Bapcor but before I jump into some of the details of the performance, 4 weeks in the role, however, 22 years in the automotive industry. I'm very excited and privileged to have been appointed into my role. And I'm really looking forward to building the business together with the tremendous team in the organization and for the partner shareholders in our organization. Over those 22 years, I was lucky to lead Supercheap Auto for some 14 years as the Managing Director. I've worked and sat on the Boards of multiple suppliers to Bapcor Group, been a customer to Bapcor Group and also consulted widely in the industry.
There is no question that the Bapcor brand remains to be highly recognized in the market. But the business over recent years and the reason I opened with saying these are quite sobering results to be able to present to you is we've lost momentum. I'll talk as we go through the presentation a little bit more as to some of those reasons and more importantly, what are the opportunities outside of now. I can say that I am very excited now with 4 weeks being inside the business. The opportunities are so obvious and what I would call low-hanging fruit, there is lots of it. And so I can see a path back to where we all want the business to be.
I might move to Slide 11, if we could, and I'll talk to group highlights. Certainly, the first half was disappointing and a weaker overall performance than we would have liked. Revenue at $973 million is still very -- $973 million, very significant but that is a decline of 2.3%. And when we talk to the other components of the business, it will give a very clear view where that's come from. A net PAT loss at group level, $104.8 million. Very significantly contributed to that loss was the goodwill write-down of the New Zealand business. The underlying basis of net PAT was $5.5 million.
Trading conditions were certainly significantly difficult across the group. There were certainly some competitive activity that I would say that our competitors have taken advantage of some of the distraction of our business over the last few years. And so I would largely say there are economic reasons in New Zealand. There are competitive reasons in the Australian business but I'd say it's more self-inflicted, and we just need to look at that and very quickly put plans in place.
So then I'd like to just talk briefly some of the things that we've done, which are about building the business for the future. There was some significant investment in IT capabilities that will enable us to have better visibility of data to help us make better and faster decisions, also a significant investment in the centralization of the supply chain as we also closed many of the warehouses from the many discrete businesses that we integrated over the last 12 months. So that building of framework is really going to help us as we start moving forward from this point.
Happy to say in the Network business, there was some good positive momentum starting to occur. And certainly, the leadership in that area from a very credentialed long-term Bapcor leader has made a real difference and put us on a steady path. Retail in New Zealand -- Retail and New Zealand started to show some positive results at the end of the half, that we'll share more very shortly. The appointment of a new and energized Board in the last 5 months has seen some decisive actions being made. And part of that was the appointment of a number of significantly credentialed industry experienced executives on to the executive leadership team, but also the securing of a tremendous Chairman, Lachlan Edwards, that is very credentialed in this sort of turnaround opportunity. So terrific to have that Board support as we move forward.
Given where the business stands today, the unfortunate decision that had to be made to support our capital management moving forward was the pause of the interim dividend. So on that note, I'll move to Slide 12 and just talk to a little bit of why I'm so excited to be in the business. Watching this business for 22 years, I've seen it on a journey to great, and I've watched the last 5 years as it's become a little bit confused and lost momentum. But going through the door, it is a great business. The brand means a lot. It's got a very significant piece to play in connecting trade partners, suppliers to end user customers or workshop owners.
The industry wants us to be successful. And equally, when you look at our customers, many loyal customers, they've given us some very clear views of what we need to do in the future, but they need us and want to have healthy competition in the market that gives them choice. The opportunity really moving forward, they're right in front of us. We just need to be very, very selective of what we do, what we stop and what we accelerate, and I'll talk to that a little bit during this presentation.
So what are some of the things that I'm seeing in the business 4 weeks in. What I've spent time doing is actually listening and talking to many people, about 800 people across our organization. And it's been very clear to me, they are team that just want the support of the senior leadership. They want clarity and they want support to really be clear about what we're doing to be successful in the future. Bapcor does remain fundamentally a tremendous foundational business but we've got to make some changes across the organization.
I've seen a genuine commitment from many long-term team members that want to be a part of that. And certainly, the way forward, we need to take a team-first approach to really engage and be a part of the journey back to where we want to be. We are a complex business. We've made a lot of headroom in actually reducing complexity, 34 ERP systems, now 16 but we need to continue work on actually removing complexity from our business. It's certainly in publicly open, we've lost a lot of people. And that earlier statement about team first, we need to stop losing good people, retain and build moving into the future.
We've lost some control of our pricing management and also discounts across the organization. And as we've brought many parts of the business together, the heavy lifting has been done but it's come with cost, and we've not been able to realize reduced costs. We do have the infrastructure. We have the reporting capability now. Now we need to focus on how do we use that to fractionalize costs in our business. The customer is saying very clearly to us, we're uncompetitive, and we need to address that very quickly. We needed to have a strong and energized executive leadership team. They're now in place and ready to start taking action and in many cases, already taking action.
So on that point, I might then just move to Slide 17. I'm going to skip across Slides 14 and 15. They are provided in the pack, and they give you quite a bit of detail around our 6 strategic imperatives and the progress we've made. But I'll leave that for any questions you might have later in the session.
So Page 17, the segment overview and how we've been performing. There's certainly been some good signs of outcomes that are occurring from the realignment that's been undertaken, but there are equally some areas that are very clear that we need to continue to focus on in the path forward. Our largest 2 business areas are Trade and Network specialty wholesale. They actually contribute some 39% and 32% of the total group revenue or 75% of the group EBITDA. We are coming into a more constrained economic environment. But what I would say is the principle of as you come into these sorts of more constrained economic environments that was given to me by a great mentor in my early career, he said, it doesn't matter how many dollars or how few there are in market, there's just how many you get. And certainly, our focus will be about growing share as we move into the future. We are lucky to be in a nondiscretionary spend segments. And so we can be confident that even in a more constrained economic environment, the business is there to be had. We just need to do the right thing by our team and customers to ensure that we are securing more than our fair share.
I'll move on to Slide 18 and talk in a little bit more detail about the performance of the individual areas. The biggest trading engine is our Trade business. I'm very happy to say that although the results at minus 1.7% were certainly not pleasing, we've been able to move Craig Magill as one of our executive GMs back into the Trade business. He's been helping in networking, and I'll talk to networking in a minute, the last few years. He was instrumental in growing the Burson's business back in the day and has only more recent years moved away. He's very keen to get back into the business. He's already identifying a lot of opportunities for growth. And although only starting in December back in the Trade business, he's already got actions underway to really drive the recovery.
In the trade business, we had very significant pullback in our tool and equipment business, and that's serious commercial-grade tools and equipment. We've certainly lost a number of senior people and understanding of the business we're in. We're able to secure a new general manager that is now in the business and working on the turnaround program in that business. Some good green shoots occurring, some very clear areas of focus in the coming 6 months. That new executive comes to us from Caterpillar, where it's not just the product you sell but the service that's critical in being successful. He's got his fingers on the key areas and he's starting to drive the business forward. The EBITDA was also under pressure, both from the point of view of the impact of currency because this is significantly imported products and the fact that we've not kept pace with the right pricing on those products in the market.
I'll move to Slide 19 and talk to our Networks business. The Network performance for the half year was certainly impacted by the significant restructure across the group. The undertaking that activity is the right longer term, but it was very disruptive during the period. So sales decline of some 2.4%, although it's really pleasing to now see that some of the business units within networking with Craig's leadership before coming back to the trade business are starting to show good momentum.
JAS, one of those businesses now 5 consecutive months of growth. CVG, truckline business certainly has been impacted by some loss of some very key accounts as the transport industry goes through some consolidation but we also had some shortfall in quality team, which we're now getting to the point of having filled those vacancies and those relationships are so critical in that business that, that also impacted us significantly. EBITDA broadly declined in line with the decline in revenue. But as I said, and you'll see later on that we're starting to see recovery signs.
Slide 20, the Retail landscape. We've been lucky to secure a new leader, Dean Austin, 30 years in Retail. He's been in for about 2 months, and he's identified a 100-day recovery plan that he's put into place. The revenue for the first half, however, was a decline of 1.9%. EBITDA was equally impacted and significantly by some cost escalation and actually driven by our pricing being uncompetitive to market. It's very -- it was a terrific celebration just yesterday, the strongest growth seen in Autobarn in the last 12 months. So some of the actions is taking are starting to build momentum into the half leading up to the end of June. So we'll continue to watch and execute quickly to build momentum in our Retail businesses.
Moving to Slide 21, New Zealand. The New Zealand economy continues to be challenged at a macro level. But what we have seen was quite a significant decline in that business during the year, 3.9% down year-on-year in New Zealand dollars. That unfortunately increases with the currency transfer back into the consolidated numbers at a 5.9% decline. Happy to report, however, the stable management team, a reinvigorated sales team across there in the business in November, December started seeing positive signs of recovery. EBITDA declined as well in line with the revenue decline.
What I started with, it's a fairly sobering set of numbers to present but I can say that there are some green shoots that are starting to be seen. And equally, the areas of opportunities that I talked to briefly have got actions in place to really ensure that we've got a better set of numbers to start talking about the next time we're together.
On that note, I'll hand over to Kim, and we're moving to Slide 22. Thank you very much.
Thanks for that, Chris. So I might just move from 22 straight into Slide 23. And so our statutory NPAT for the first half of '26 was a loss of $104.8 million, as Chris mentioned, which included $110.3 million post-tax of significant items. And this is largely due to the impairment of goodwill in our New Zealand segment. And this impairment was flagged at our 20th of October 2025 trading update. In the appendix of our results pack, we have outlined the significant items, and we've provided commentary on each one of those, so I won't go through them here today.
Underlying NPAT was $5.5 million for the half, which was 87.2% lower versus the prior corresponding period. Group revenue declined by 2.3% versus the prior period, and our gross margin of $437.3 million was down 5.5% on the first half of last year. All of our segments were negatively impacted during the period with softer revenue across the board. Our cost of doing business increased by $26.7 million, which reflected higher employee costs, supply chain investment and strategic investment in our IT systems. These were compounded by the impacts of inflationary cost pressures and negative FX movements.
Depreciation for the half year increased by $0.5 million, reflecting our ongoing investments and financing costs increased by $300,000. We have undertaken a change in our operating model to refocus our business on the external customer. This realignment was previously announced at our April 2025 Strategy Day and was effective from 1 July 2025. Our segment report has been updated to reflect this change as has the prior period. Our ASX released today contains the updated segment note for the first half of '25 and also for the full year '25. It is important to note that these changes have no impact on the overall consolidated financial results for Bapcor.
Now turning to the cash flow on Slide 24. Operating cash flow decreased to $71.8 million, a reduction of $71.9 million compared to the first half of last year. This reflected our lower EBITDA performance. Cash conversion was 93.4%. Other notable items to call out is a reduction in capital expenditure to $15.7 million from $28.1 million in the prior period. Investment in new distribution centers and stores declined from $12.3 million in the prior period to $1.2 million this period, which reflected the completion of the warehouse consolidation program into our state-based distribution centers in the period last year.
Other capital expenditure relates to plant, property and equipment in our existing stores and distribution centers, investment in motor vehicles and IT software and was largely in line with the prior period. Free cash flow was down $52 million on the prior period, which meant we had a negative free cash flow of $5.3 million. The FY '25 final dividend of $18.7 million was paid during the half.
Now turning to the balance sheet on Slide 25. The key items to highlight in relation to the balance sheet are the decline in intangibles due to the $99.9 million impairment of goodwill in the New Zealand business. Also the reduction in right-of-use assets and lease liabilities due to exiting smaller warehouses in FY '25. Prior period assets and liabilities held for sale have been reclassified into existing assets and liabilities in this period as these are now to be retained by the company. The current borrowings relate to the reclassification of the MetLife facility due to mature in July 2026. We have facilities in place to refinance this facility when it falls due.
Following an externally supported review across all of our balance sheet during this period, we have restated our FY '25 comparatives for accounting issues that were identified in the Trade segment. The impact of this was an $8.9 million reduction in opening retained earnings for FY '26. In addition, we've identified a payroll issue relating to the period from February 2020 to now, which required the creation of a $4.6 million pretax provision to be recorded. This issue was identified as we prepare for our HR information system to be deployed in the next few months. As most of this issue relates to the prior period, it has been largely recorded as a reduction in opening retained earnings rather than in the current period. Further details of this matter are contained in the ASX release.
Now turning to Slide 26. Our net debt increased by $22.5 million during the period to $387.3 million as at 31 December 2025. Net leverage was 3.39x adjusted EBITDA, which is within the temporarily increased covenant of 3.5x as announced in December 2025. I will cover some further changes agreed with our lending syndicate to our covenants in the equity presentation shortly.
And with that, I'll hand back to Chris for an update on our January trading.
Thanks, Kim. And if we could move to Slide 28, if we can. So as you can see from the slide that's just come up, the Network business is starting to show and continuing positive ground. Retail is starting to build momentum as is the New Zealand business. The clear area of continuing challenge is the Trade business. And as I mentioned, the appointment of Craig as the EGM of that business unit, a credential Bapcor executive, he's built it. He's identified the problems, and we're working very hard to actually change that but it still needs significant focus.
What is very clear that the Network business, the underlying JAS continues to go in a positive direction. The Wholesale business is starting to show very consistent growth as well. We've got really the next 6 months is a stabilization as the -- some of the initiatives that we're deploying at the moment mature, we'll certainly see that build momentum as we move into the new financial year but that should give you a little bit of a sense of directionally where we're heading.
On that note, we're going to now move to Page 7, Kim, and handing back to Kim.
Thanks, Chris. So we're now moving over to the equity presentation that was also released today, and I'm going to start on Slide 7. So today, we are announcing that we are undertaking an equity raising of $200 million, which is structured as a 1 for 1.36 pro rata accelerated nonrenounceable entitlement offer of $150 million as well as a pro rata placement to raise a further $50 million. The entitlement offer consists of an offer to eligible institutional shareholders and an offer to eligible retail shareholders. Further details of this structure can be found in our presentation issued this morning.
These shares will be issued at an offer price of $0.60 per new share, which represents a 65% discount to Bapcor's last closing price of $1.72 on Wednesday, 18th of February 2026 and is a 48.4% discount to the theoretical ex-rights pricing of the raising. Approximately 333 million new shares will be issued under the offer, which represents approximately 98% of Bapcor's existing shares on issue. The proceeds from the raising will be strictly used to enhance Bapcor's balance sheet flexibility by repaying debt. This reduction in net debt will provide the business with sufficient headroom to focus on getting the engine running to improve operating performance and execution. As a result of this raising, Bapcor's pro forma net leverage ratio would be 1.7x at 31 December 2025, which was down from the 3.39x before the raising.
We've also received approval from our lender syndicate to temporarily lower our fixed cover charge ratio covenant for the next coming testing points. We have been engaging with our lending certificate during this period, and we continue to receive support for our business and the operational turnaround being pursued. These temporary changes provides Bapcor with further flexibility to execute the turnover strategy -- turnaround strategy.
With that, I'm going to hand back to Chris, who will continue.
Thanks very much, Kim. So what we're looking in terms of full year guidance, we expect to be delivering an underlying EBITDA of around $150 million to $160 million post AASB 16 or $74 million to $79 million on a pre-AASB 16 basis. Pro forma net leverage ratio of around about 1.7, and it's expected to reduce to between 1.2 and 1.5 by the end of June, with the net debt expected to benefit from the release of around $60 million to $75 million of cash flow through activities around the focus on reducing inventory and also receivables in the business. Going forward, we'll be targeting a net leverage ratio of no greater than 2 as part of our capital management initiatives.
So I think, Kim, I'm handing back to you for a moment or is that page -- now next Page 11.
Yes, you've got Page 11 as well, Chris.
Thank you. Page 11 is now up on the screen. So you heard Kim mention get the engines running. This is what's exciting me about this business. There is so much opportunity for the last few years, the focus on the re-scaffolding, the improvement of data and how we use it, the consolidation of ERPs and DCs that it's really distracted us from what now is the opportunity ahead. We've got great opportunities to improve revenue and profit through stock availability. It's a very key call out of our customers at the moment. We've got lots of stock in the network. It's just not in the right location.
We've become uncompetitive in the market. We've done the analysis. We know where that's occurred, and we're now starting to take action to get back to competitive pricing over the coming months. Craig moving into Trade has also identified that we lost some of the management controls around our discounting and the application of putting in management controls again is already starting to show an ability to improve margins. Some of that margin as we start pulling back on discounts will also be put into accelerating getting our whole offer back to being competitive with market. So key areas to drive revenue and profit.
Cost of doing business. We've done a lot of the hard lifting over the few years. The DC is ready to run. We just need to use it in a way that we can optimize and fractionalize the costs in the business. Our systems are ready to give us insights to take to action. And only 2 weeks ago, the report was able to be built to actually start helping us to improve in-stock across the network. Without that investment in the last few years, although it hasn't fractionalized or delivered growth at this point it has put us in a great place to deliver growth quickly in the future.
If I look at the next slide, moving to 12, if I could, capital efficiency. There is no doubt that we've identified some $100 million worth of excess stock in the business, moving, holding, financing stock costs a lot of money. It costs a lot of money to move it through the business and network. So we've introduced programs to actually reduce significantly over the coming half year excess stock by putting it into the right location and stop us from ordering more stock back into the network. We've looked at the range and the quality of the products, and we'll be looking at making certain the width is right and in the right locations.
At the moment, we've got a very, very wide product range offering, and there is certainly opportunity to actually refine that. So it's more customer-centered but reduces overall capital in the business. We also talked about the release of actual overdue debtors back into our cash. And right at the moment, we're working very hard on receivables, again, a capability that was built over the last 12 months that now gives us absolutely visibility of what accounts are overdue and why, and we're actively pulling those back into the business. We reduced our overdue receivables by over 10% in the last few weeks.
Returning growth to core. It is a great engine. We just need to focus on the team, reduce the turnover actions are already in place to actually address some of the significant issues leading to that. We've got a significant build with an executive team that is energized and ready to actually focus and drive the initiatives that can make a real difference. Team, customer and looking at every element of how we drive profit is what we're focusing on as we move forward.
So I'd now actually ask if you could move to Slide 19. Why is it coming into this business is so exciting to me. I go back 20 years, the first moment I walked into the door of Supercheap Auto. It reminds me in so many ways, the similarities. Bapcor is a great business. It's got strong brands. It's got trade partners and customers that need us. We just need to refocus like a laser on delivering what our team and what our customers want. Our customers said in stock, the right price. We're working on it. We've got a supply chain that can enable us to put the right stock in the right location and fractionalize our costs going forward. We closed many DCs as we centralized. It's now centralized, efficient. Now it's for us to really fine-tune the levers to take cost out.
I truly believe that our position today is a significant opportunity. We have scale. We've got a tremendous team. We just need to focus and with your support, move forward to the next phase of taking us not just back to where we were, but beyond. I'm excited by the strength of the network that we have right across all of the countries we operate in.
Bapcor's service and customer proposition is there. We just need to focus back again on the things that make a difference, difference for our customers. Our team are knowledgeable. We've got a renewed energy in the business just by doing simple things, celebrating the great things we're doing, recognizing as we build culture across our business.
I'd like to turn to Slide 20 now. So what are the things that we're going to focus on to get our engine running? Improving discounting controls, improved branch level ranging, category mix management to optimize and ensure we've got both the products that customers want but also the high-margin categories in our business are given absolutely the opportunity to grow and be more significant, the mix of the total revenue. Optimizing the cost, the removal of non-added activities, we've been looking. We're taking action as it speaks. Group-wide reviews of all major costs to see what else we can do to remove cost out of the business, reviewing of COGS escalation in key categories and to work with our partners to make certain that we've got the right price on the purchase of goods into the business.
Capital efficiency, you've heard me talk to a number of those initiatives. And the real drive to get the engines really going fast moving forward is stabilizing the team, rectifying the price position and having the right stock in the right locations.
So on that, I'd like to then move to question time, I believe.
[Operator Instructions] Your first question today comes from Sam Teeger from Citi.
2. Question Answer
Look, I've covered Bapcor for over 6 years, and I haven't seen many companies kick so many own goals like this. I guess given this is now the third management team trying to turn around the company, what's going to be different this time?
Good question. Thank you. Look, I think the first thing is actually involving the team, not just the executive. The exec clearly are here to stimulate to help refine and be clear about what we're focusing on. The last few years, there's been so many significant initiatives that have caused the team to lose the ability to focus on customer. It's actually meant that the team have been discombobulated and become disengaged. So the first thing is we've got the right team in place. We're now starting to rebuild the team confidence and actually to rebuild the culture. We've done an engagement survey. We know what to do. We're starting to move some of those things into action.
Coming into the business after being a supplier to over the business over the last 6 years, it was loud and clear in market, fix the price and getting in stock. Those initiatives have been stood up in the last few weeks, and we're rapidly moving to a target of improving our in-stock at site by 8%. Historically, in the business that I've run, I've seen the conversion of improved in-stock at about a 50% ratio. So if you improve in-stock by 8% across the network, you can only imagine there's a significant improvement of revenue and profit.
Getting competitive in market. We've given market share to our competitors as we became uncompetitive. We understand now how we got uncompetitive. We've developed a plan to get back in very short order, the next 5 to 7 months to having a competitive position in Retail and Trade. We've got 18 initiatives to make certain that, that doesn't negatively impact the profit result but it actually helps us to enhance the profit result over those periods, slowly in the coming half, building momentum quarter 4 and then certainly putting us in a good position for '27.
And when you grow your stockpile by 67% over 5 years, that's a significant cost burden that's come into the business. It's consumed a lot of cash, and we've got a very clear view of how we can optimize and remove excess without negatively impacting the customer. The only other thing that I would add in terms of all of those elements are going to drive growth. It's actually making certain we're not trying to focus on 268 initiatives, and that's how many I found when I joined the business but on the few that are going to make a real difference, and I've talked to some of those that we'll be focusing like a laser on the coming months.
Final point, what has occurred previously, I can't control but I can contribute and help the team to be successful in the future. I've got a 14-year history of driving team engagement, profit and revenue growth in the automotive sector but I'm known for disciplined execution and helping team to be clear but then execute with speed. And that's what will be different in these coming quarters and years beyond.
All right. Great. And I wish you all the best with it. I just have 2 questions on the equity raise. And I wouldn't normally ask questions like this but given the combination of just what's happened at Bapcor over the last couple of years, combined with the fact that the raise is at a 65% discount to last close and the existing shares on issue are almost being doubled. I think anything you can share might be helpful to investors around just giving them a bit more incremental confidence in the outlook. So the questions are, one, are all the top 5 major shareholders participating in the equity raise? And two, will management be participating in the placement?
So I can answer some of those questions, and I might defer to Kim to build on it. Yes, that there will be participation at a current Board level. We've had very strong commitments from our existing shareholders. And it's fair to say that we're actually in a very good position at this point as we move to officially launching the capital raises we did today.
Kim, would you like to add any additional flavor to that?
Yes. So strong support from existing shareholders and also strong interest coming in from new investors as well. So yes, thanks for the question on that.
Your next question comes from Craig Woolford from MST Marquee.
Plenty of questions. I'll try and keep it brief but hopefully, we can follow up down track as well. So the message here is about improving profitability. There is an emphasis on improving profit margins. But then on the same -- but you talk about the competitiveness or the lack of competitiveness that Bapcor's had. Should we expect gross margins to be structurally lower? You talked about the gross margins in the first half were down 150 basis points. It was cited as Trade. It looks like you're resetting your gross margins lower to be competitive and to stem losses of share. Is that a fair interpretation?
Craig, look, I think history would probably be the best determinant. You can actually do both. And if I look at the previous organization I led very low margins. We went through the higher margins. We maintained our value proposition, and we're very competitive in market. It's a lot to do with a number of elements. Profits only made, as you know, when you sell a good. So if you've got a high-margin item that's uncompetitively priced, you actually don't sell much of it. And we've seen significant degradation of the sales of high-margin products because they were more affected by our price increases over the last 3-year period.
So you put them back to being competitive, you increase the mix actively promoting it, driving it, getting -- sorry, your customers back on board because you've got a competitive price, that can have a positive impact. We actually built a tool called an elasticity modeling capability and system post the McKinsey review but we haven't used it. Two weeks ago, we've got a now expert in this area working with our team to make certain that the optimal price points are being applied to items that are not so impacted by being uncompetitive. Some prices will go down, some will go up but using elasticity modeling gives you a balance between optimal profit units and customer satisfaction. So that capability will be introduced into the business.
The other significant thing, and it's the same point that I made, one of the early findings of Craig in moving back into trade is some of those high-margin categories we're actually significantly out of stock in the store network, lots of stock in the DC. And so we started moving that back out into the network. That's just 3 of 18 initiatives that we've got running that are actually both about growing your total margin profitability while also reinvesting back into price. So hopefully, that gives you a sense of what we're doing.
Yes, it does. It's something to keep on I guess I get the point of focusing on gross profit dollar. Something I've raised with the company over a few years is just a lack of disclosure around D&A by division. It will be, I think, quite important given where profitability now sits to get that information. And what I'm really referring to is the rental component, which has to be surely allocated at segment or business level, there's rents paid on your retail stores, there's rents on your Burson's trade outlets, for example. Just to get a better understanding of true profitability, particularly, I'm sure Bapcor, like any business, you have a bell curve of stores, some are profitable, some are loss-making. I do wonder whether there's a need to shut more stores, particularly on the retail side of the business.
So Kim, do you want to answer part of that, and I'll answer to the retail closures.
Yes. Thanks for that. We are looking into that, and we'll come back to you on that one in the future.
And Craig, to stores, yes, you are right. You've always got to do pruning of networks, and there's a fair bit of work already underway looking at underperforming. We did close some underperforming sites in the last 6 months. Undoubtedly, there will be more as we do network reviews as we go forward, not significant because before we really get into the pruning mode, we've got to do what we do well, i.e., make certain that the business is optimizing the actual network that we've got. Autobarn is already showing positive momentum. We've got to get the revenue moving back through there, take the actions to be competitive and look at using the data we now have, labor management planning to ensure that we're running them at optimal levels. So there's plenty of things that we can do before we'd consider more significant closures in the business.
I'm also aware there's only about 10 minutes left for questions. So back to you, operator.
The next question comes from John Campbell from Jefferies.
Chris, just your comments, I think, around complexity at Bapcor would resonate with everyone. And you sort of indicated that you've had some success in reducing complexity across IT and collapsing ERP systems down to 16. I guess the question would be, when you look at that complexity of the totality, what needs to happen? I mean you've sort of talked a bit about this but what are the big things that need to happen to shrink it to a manageable, not necessarily the business footprint but just to shrink that complexity down to what you might consider a manageable level? And would that involve divestment of certain business units that just don't fit in with really the totality of what Bapcor is all about. I'm specifically thinking about truck parts as being seemingly somewhat outside the core. But yes, that's the general tenor of the question.
Look, I think the first thing that we need to do is get the engines running and just maximize revenue and profit firstly, before we start getting to a view of divesting. And I think it's too early in my tenure after 4 weeks to really give you a definitive on that. What I can say is the Board and certainly, I and the leadership team firstly need to look at more strategically what is the right ecosystem and actually how do the pieces fit together. So that will be more medium term, and I mean months, not weeks. So it's not that we're going to take a long time to get to that point.
The fractionalization of the cost that you referred to, I'll just give you one example because what it says is the business has done a lot of hard heavy lifting, absorbed a lot of cost. This rationalization of the DC saw many DCs closed but it saw a lot of stock moving into one central location. So if I looked at the current supply chain cost and looked at best practice across the industry, you'd say that we're running probably 2% to revenue higher than we need to be.
Now as we move stock away from the branches, we've introduced more high-cost freight movement from that central location, long miles to stores and branches. We can change the settings on that to actually move more stock less frequently on road freight standard rather than Express. So you can take cost out of doing that. You can take operational cost out of the DC by doing that. So you can actually become more efficient. Now if we hadn't done that consolidation work, you wouldn't have got that benefit.
There's other areas. I said we've got a bit discombobulated and lost focus on our team member. Our team members' turnover has been very high. We spent $17 million on recruiting new people. Do the right thing by your team, create the right culture and don't spend $17 million on recruiting people. So there are lots of elements in the reducing of the cost of doing business. We've identified significant ones. We're starting to take action. That will start occurring in the coming weeks and months. But if you sat at the highest level and looked at our cost of doing business relative to what I'd call best practice locally, Supercheap or GPC or globally, O'Reilly's, Halfords, I'd say there's a delta of about 10% to revenue.
So there's 2% in the supply chain. We need to keep delaminating that and removing those or fractionizing costs where we can. Hopefully, that gives you a sense of we're on a path. It's early days but there's no question it's there, and we've got infrastructure capability to deliver it.
Yes, that's very helpful. Could I just sort of follow on, on that? Just looking at, say, procurement, I mean, you've been talking about how you're going to move or manage inventory more efficiently. In actual procurement, if we went back 3 years or 4 years, it was identified that procurement was happening at a very sort of granular business unit level. And by consolidating or centralizing procurement, the opportunity to get significantly better terms from bigger volume orders was very real. And in fact, it was one of the big sort of buckets that was held out in the better than before transformation strategy. How do you see procurement being managed at the moment? And do you see significant opportunities from here?
Look, I think the last 4 or 5 years, there's been both good cost and bad cost removed out of the business. One of the areas that I think is significantly underinvested in has been our category and product and also planning teams in terms of resourcing effectively, the modernization of the tools to really optimize inventory. We ordered 130,000 items last year, less than 10,000 represent 50 -- sorry, to get the number right, 95% of our total volume. There's some 20,000 active lines that have got very suboptimal performance, and they're distributed right through the network. Those sort of lines, you need to hold less of them centrally. They're generally lines that people will wait a bit longer to get to it as much as the really critical lines, we need to put more of it out in the network.
So look, I think we've made steps forward. The centralization gives us now the capability to move pretty fast but there's equally a long way to go. What's the size of the prize? In the half year, we're targeting about $30 million just by doing some sanitizing and removing excess from the wrong location, putting it into the right, put it at a mature state, a customer-centered range, I think there's somewhere in the order of well over the $100 million mark that could come out of the stockpile while still improving the outcome for the customer. Hope that answers your question.
Yes, that sure does. Look, one last quick one, if I may. Looking at what you're sort of guiding to in terms of like-for-like growth in the second half and just with how you're talking about pickup in sales, do you feel that you're at a point now where maybe you're starting to not see share to GPC and to Supercheap? Or do you feel that arguably, you're still losing share?
Look, I think you could look at the results that were released from SRG this -- just in the last 24 hours and say that at a Retail level, we've lost share. I think the same would be of GPC. We're just starting to turn away from being in negative numbers, Trade still some heavy lifting. We know what the plan is. We're now executing it. But it is -- it doesn't just happen overnight. So there's a slow build. We've got momentum in most business units, but we're going to need to continue to really look after that and nurture it and actually put the foot on the gas where we see the opportunities to drive it harder. And that's why we've been moderate in our, call it, half year forecasting and what we have signaled to market.
But as it matures going into first half of F '27 a build and then in that sort of 12 to 24 months, I think it's going to take that order of time to really get up to the momentum that we know we can and have delivered before and actually start really pulling back share from those other players.
Thank you. Unfortunately, that concludes our time for questions today. I'll now hand back to Mr. Wilesmith for any closing remarks.
Look, I think just a final thank you to the shareholders. Thank you for your openness of question. But most importantly, for continuing to support us as a business. You can't change the past and the thing that I've been talking about with the exec team is so what, now what. We have made some mistakes. We've clearly identified some very clear areas of priority that can make a real difference, and we are focusing on that. We're moving fast to actually make a difference to actually improve the performance in the future.
So thank you for continuing to be shareholders, and I really look forward to continuing the journey and talking about more success and delivery of the numbers in the future. Thank you again for your time today.
Bapcor — Q2 2026 Earnings Call
Bapcor — Shareholder/Analyst Call - Bapcor Limited
1. Management Discussion
Good afternoon, everyone, and welcome to Bapcor Limited's 2025 Annual General Meeting. My name is Angus McKay, and I'm Bapcor's Executive Chair and Chief Executive Officer. On behalf of the Board, I'd like to thank you for joining us today, both in person and in line.
I'd like to start by acknowledging the traditional custodians of the land on which we meet today. For those of us present in the room today, we are on Wurundjeri country, home of the Kulin Nation, and I pay my respect to elders past and present. We recognize the continued connection of all First Nations people with country across Australia and on all the land where Bapcor operates.
I would like to also introduce my fellow directors. To my immediate right, Mark Powell, who is our Lead Independent Director. And then in alphabetical order, Lachlan Edwards, Jackie Korhonen, Patria Mann and Kate Spargo. For the sake of completeness, I should note that I'm an Executive Director and not considered to be independent. Also in the room today are Kim Kerr, Bapcor's Chief Financial Officer; and George Sakoufakis, Bapcor's Company Secretary as well as other members of the executive team from Bapcor.
I'd also like to welcome the company's auditors, PwC, represented by [ Alison Miller ] as well as the representative of the company's share registry, Computershare Investor Services. It is now time to start and the Company Secretary advises me that we have a quorum present, so I will now declare the meeting open.
The notice of this Annual General Meeting was circulated to shareholders within the required period. Accordingly, if there are no objections, I'd like to move that, that notice is taken as read. Today's meeting is being physically held at Bapcor's registered office located at Melbourne and online via Computershare Meetings platform. This format allows shareholders, proxy holders and guests to attend the meeting physically and virtually and to ask questions and submit votes online.
All attendees can watch the live webcast of the meeting, which will also be recorded and available to you after the AGM on Bapcor's website. Before we move to the formal business of the meeting, I'd like to run through a few procedural and housekeeping matters so we can ensure that the meeting proceeds smoothly. I will then turn to the agenda.
Before each resolution is put to shareholders, shareholders will be given the opportunity to ask questions on a specific resolution. To ensure an orderly meeting, the chair will only be taking questions that relate directly to that resolution at hand. Prior to the conclusion of the meeting, I will open the meeting to general and relevant questions.
Online attendees can submit questions at any time. To ask your question, please select the Q&A icon, type your question into the text box. Once you have finished typing, please hit the send button. Although you can submit questions from now on, the Chair will not address them until the relevant time of the meeting.
Please also note that your questions may be moderated or if we receive multiple questions on the same topic, we will consolidate them into a single question or query. To ask a verbal question, please follow the instructions written below the broadcast. For those attending the meeting in person, when questions are invited, you can ask it by approaching the microphone, showing your blue or yellow card and providing your name.
If you're eligible to vote, once voting opens, the icon and all solutions will be activated. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen.
If you'd like to change your vote, you can do so until the time when the Chair declares the voting is closed. If you're attending the meeting in person and are eligible to vote, you may complete the voting items on the reverse side of your blue voting card. These cards will then be collected at the end of the meeting by a Computershare representative.
I now declare the voting is open on all items of business. Please submit your votes at any time and the Chair will give you a warning before moving to closing of votes. As well as those shareholders online today, the holders of approximately 251 million ordinary shares or 74.13% of the company's issued capital -- share capital have already sent in valid proxies.
As each item of business is read out to today's meeting, the total number of valid proxies will receive for that item, and by way of those proxies that have been directed will be shown on the screen. These figures will be as at the closing time of the receipt of proxies, which was 1:30 p.m. Tuesday, the 21st of October.
In Mark Powell and my capacities as Chair during the meeting, we will be voting all available undirected proxies in favor of each item of business. Before we move to the formal address of the meeting, I'd like to address shareholders in relation to the company's progress during 2025 and our objectives going forward. A copy of my address to shareholders and the presentation will be delivered and has been lodged to the exchange and will be published on Bapcor's website.
As Executive Chair and CEO, I'll give you an overview of our progress during the fiscal '25 year and into fiscal year '26 before the formal items of business are considered. I will chair the meeting for the first 6 items of business, consideration of the company's financial audit accounts and related reports for the year ended 30 June 2025 and for resolutions 1A, B, C, D and E, the reelection of directors. I'll then pass over to Mark Powell, our Lead Independent Director, for the remuneration-related resolutions being Resolution 2 the adoption of the FY '25 remuneration report, and Resolution 3, approval of the grant of the FY '26 performance rights to the Executive Chair and CEO under the long-term incentive plan.
Once these resolutions are complete, I'll resume the role of Chair and put Resolution 4 to the meeting, the renewal of the proportional takeover bid provisions in Bapcor's constitution. I will then address general questions at the end of the meeting.
I started with Bapcor in late August 2024. When I began, I said I've been drawn to the company's strong position in the resilient automotive aftermarket industry, its healthy balance sheet and robust operating cash flows, its position amongst the top 3 in the markets where it competes and team members who are passionate about delivering for their customers.
After 14 months in the role, I remain of the belief I started with. There is clearly a positive future for Bapcor. It is a strong business with the committed team, loyal customers and very robust suppliers. But there is significant work to be done. The company is over-complex, too internally focused, too reactive and has not adjusted its operating model and rhythms.
This internal focus means the company has lost elements of the connection to its customers. It is that connection to its customers that made the company great. Our routes have been built on acquiring businesses, not integrating them. Some of the practices that have been accepted in the wider organization do not meet acceptable operational standards nor the required financial or commercial level of expectation.
In a trading update released last Monday on the 20th of October, we said that this work to methodically address these issues is progressing slightly and the complexity involved in turning around the business means it's taking longer than expected, but it will result in a stronger and more sustainable company.
We remain committed to delivering on this turnaround and achieving the 5-year indicative scorecard contained in our strategy. I'll speak more about Monday's trading update shortly. But before that, of detailed Bapcor's fiscal '25 performance and business results.
As I said, the company has been progressing its structure and its capability. restoring customer confidence and building its performance over the past 14 months. I acknowledge that the continued discovery of historical poor operating practices is frustrating. However, we're committed to facing into these issues and corrected them as and when required. Work undertaken at pace to begin the simplification of the business started in fiscal '25. These changes were necessary to drive simplification, create more customer-focused operations, eliminate waste, provide greater visibility to inventory and to strengthen the company's core business for its future growth.
I acknowledge that, that speed of change has impacted our operations, but drawing out such urgent actions over multiple time horizons would have been even more damaging. The actions taken include the final unwinding of the better than before headcount, consolidating small warehouse sites, reigniting store or branch openings and closures, technology upgrades and consolidations, integrating Bapcor's wholesale truck and electrical businesses under a single executive leader and the sale of the surplus business.
It has also been challenging on our team members who have not experienced this level of change before. I'd like to commend them for what is not only what they have achieved, but the way they've gone about doing it. In parallel to this work, we've set about delivering a clear strategy and communicating that to both team members, shareholders and our stakeholders. From my earliest days in the business, the company's shareholders and team members have asked for clear direction.
The 5-year strategy was announced in April of '25, articulating where and how the company will focus on building the business for long-term sustainable profitability. It leverages commonality across the group through strict strategic imperatives. Firstly, optimizing our network. Secondly, one supply chain; thirdly, customer focus; Fourth, the digitization of our business; fifth, making our stores fit and finally, simplifying the business.
In the 6 months since announcing the strategy, we've been busy bringing these plans to life. While there is certainly complexity to this execution, the articulation is deliberately designed to be clear and simple. To align with this strategy, we have also defined our cultural aspiration underpinned by a reset of our code of conduct. This might seem trivial but ensuring all Bapcor employees have a common understanding of what is acceptable behavior and what behaviors are critical to the longevity of our business is fundamentally sensible.
The executive team was reshaped to support the new plan with 3 key appointments. Simon Bromell was appointed as the Executive General Manager of Trade on the 28th of April. Simon brings a background in delivering results in complex chain and supply chain environments, including Orora, Fonterra and Mars. Kim Kerr was appointed as Chief Financial Officer on 12th May, Kim is an experienced CFO with 25 years working in ASX 100 listed companies in the mining, manufacturing, chemicals and digital solutions area, and most recently, CFO at Orica. Craig Magill was appointed to the expanded role of Executive General Manager of Networks, which combined is the CVG business, Jazz and our wholesale business units. This was effective on the 1st of June, bringing his 13 years of Bapcor experience into that role. Abdul Jaafar, George Sakoufakis, Martin Storey, Megan Foster, Morris Lieberman and Merryl Dooley remained in their existing executive roles.
As announced in both Bapcor's fiscal '24 annual report and the fiscal '24 Annual General Meeting, Margie Haseltine stepped down as the company Chair on the 22nd of August and left the Board on the 16th of October 2024. I was appointed as Executive Chair and CEO on the 22nd of August 2024. With this, Mark Powell was appointed as our Lead Independent Director on the 22nd of August 2024. Mark's role ensures Bapcor continues to have clear separation between Board and management, open communication in relation to the governance requirements and that my performance in my dual role is overseen and managed directly by the Board.
Kate Spargo remains on the Board and hope benefit from the experience and insight Kate provides. Jackie Korhonen was appointed to the Board as a Nonexecutive Director on the 1st of February 2025, bringing extensive executive and nonexecutive experience in strategy development, risk management, governance, data and technology. On the 23rd of July 2025, Mark Bernhard, Brad Soller and James Todd resigned from their positions as nonexecutive directors on the Board. The timing and the immediacy of those resignation was disappointing to all of us. but has presented us with the opportunity to accelerate the refresh of the Board that was already underway.
On October 1, 2026, 3 new nonexecutive directors joined the Board providing a wealth of experience and highly complementary skill sets. These individuals will be invaluable to the Bapcor business. Annette Carey brings 35 years and more of experience of legal and operational experience in logistics, supply chain and the security sector in Australia and internationally.
Lachlan Edwards brings 35-plus years of hands-on experience in capital management, corporate and debt advisory. Lachlan has an extensive turnaround background, including driving operational recovery, capital efficiency and sustainable value for shareholders. These are, of course, crucial to Bapcor's strategy and to restore growth and returns.
And finally, Patria Mann joins with 20-plus years of nonexecutive experience across ASX listed and financial services organizations and has deep experience in audit, risk and governance. Patria has served as the Audit and Risk Chair -- Committee chairs with multiple organizations and will lead Bapcor's Audit and Risk Committee. Annette, Lachlan and Patria were recruited through an independent process managed by an external consultant. You'll have the opportunity to hear from them, plus also Mark and Jackie later in the meeting.
To the financial results. I've been clear that these were not an acceptable level. Yes, the headline numbers reflect the disruption associated with simplifying the business, particularly in that Specialist Wholesale segment, the necessary cleanup of the balance sheet and the change in our inventory valuation policy, but the underlying trading performance was not at an acceptable level.
Statutory net profit after tax for the fiscal year '25 was $28.1 million. Group revenue of $1.9 billion declined by 1.5% on the prior year. Importantly, revenue in that Trade segment continued to grow. The New Zealand and Retail segments continue to trade in ongoing challenging conditions and the conditions in the Australian retail environment in the wider New Zealand economy. We delivered on the forecast cost saving measures. And the company's final quarter was poor, particularly in trade with both parts and equipment sales falling below our expected levels of delivery.
The significant work undertaken to simplify the business also disrupted trading. That work included consolidating operations in 23 warehouses across Australia and relocating them to the existing distribution centers, closing or consolidating a further 34 branches or stores across our network, relocating 13 stores or branches and opening 21 stores and branches.
Consolidating 3 auto electrical businesses into a specialist wholesale segment, previously known as AEG into a single business unit called Jazz, bringing together branch locations and ERP systems, restructuring the Specialist Wholesale segment, including the centralization of product functions and establishing a single selling entity, rebuilding the Autobarn business, including significant changes to both regional and store manager personnel, adjusting promotional cycles, enhancing our B2C capabilities and the new investment in the Autobarn brand, and investing in IT systems that included fiber to stores, a pricing engine in the Trade segment, commencing the implementation of a company-wide HR system and enhancing our cybersecurity tools and processes, and finally, introducing a common e-mail platform across the entire Bapcor Group.
Given the large volume change introduced during that period of time, an extensive review of the balance sheet was undertaken announced in the July trading update. This review resulted in the recognition of significant items of $52.3 million after tax, including the statutory net profit of the fiscal '25 year, of which 82% represented noncash items. I am disappointed at the quantum and the nature of those significant items announced by but the business needed to deal with the issues in a transparent manner.
It is inevitable that as a company, reviews like this in its current state will confront issues that do relate to our past. Our commitment is to deal with these as and when they arise and to do so quite transparently. The required business turnaround was always going to be challenging. However, I'm clear that the review as completed places us in a superior position to deal with the required business and importantly, operational change.
Central to our strategy is safety. Fiscal '25 saw a 43.5% reduction in our total recordable injury frequency rate. The reduction was driven by an increased focus on the safety program and embedding the early intervention initiatives inside of our business. utilizing and improving the available data from right across the organization. We also revised the definition of total recordable injuries in November of 2024 to better align with both the industry and our internal practices. We are a safer business today than we were 12 months ago. but it cannot afford to be complacent. Absolute TRIFR will reduce year-over-year when excluding that definitional change, but we are continually improving the way we use Donesafe, our safety management system, lifting the accuracy of incident data and reporting it as and when it occurs and focusing on health and safety as a reduction opportunity.
We continue to build a diverse workforce representing the communities in which we operate. It remains focused on creating an inclusive environment, particularly trying to improve our gender balance. The company has, however, made limited progress on a gender balance change with the total number of females employed at Bapcor increasing from 28% to 29% over the last 12 months. The expectation for us to make greater progress will be through a diverse cohort of managers setting the culture and making the right hiring decisions.
A voluntary engagement survey was offered to all team members in March of 2025 with 85% of the organization participating. This participation demonstrates an engaged workforce who want to be part of the solution and importantly, the turnaround. Our engagement rating was 52% and the company has been giving a significant amount of feedback on how it can improve its culture and build on opportunities to create flexibility, inclusivity and a sense of belonging for all our team members.
We have responded to this feedback with actions that include the strategy road shows that targeted our Australia and New Zealand personnel, career development conversations with every Bapcor employee and direct engagement by the leadership team right across the 2 big countries we operate in. Our responses continue as we look to change the culture of the organization.
In fiscal '25, we launched a refreshed ESG strategy and strategic framework to ensure that our sustainability efforts remain focused, measurable and aligned with stakeholder expectations, operational priorities and regulatory change. This strategy is shaped across 4 single pillars: environment, team members, supply chain and communities. It was informed by the insights from Bapcor's fiscal '24 double materiality assessment and consider the impact Bapcor has on the environment and society as well as the influence of ESG factors on the company's long-term performance.
Fiscal '25 also saw the development of a comprehensive decarbonization strategy and commenced preparation for the mandatory climate-related disclosure requirements under the Australian sustainability reporting standards. This is due to commence in fiscal year '26.
Earlier this week, we provided an update to the stock exchange of our Q1 performance and provided financial guidance for the first and second halves of the fiscal '26 year. Details can be found on our website. Management has continued its execution of the strategy. Operational reviews have been a feature of the first quarter of fiscal '26 and with the following key actions already undertaken.
Pricing reviews on key person categories to increase our competitiveness in the market, ranging reviews in Trade and Jazz to ensure the right stock is in the right location, utilizing key promotions to engage with new and lapsed customers with a particular focus on our key accounts, implementing a retail-specific demand and merchandising planning team, training for sales teams members particularly our new staff, utilizing NPS, Net Promoter Score feedback to drive our focus on customers, the recruitment of staff to key positions with the focus on filling open customer-facing role as a priority, optimizing our store network, including opening new stores, closures as required and refurbishments, and finally, an in-depth review of the Tools & Equipment business within the Trade segment is underway, and that has unfortunately identified unsatisfactory operational practices that have required our immediate attention.
In half 1 of fiscal '26, additional investment of some $16 million will be made, brand and product marketing activities to improve brand awareness in the sales and retail segments and in our business. technology of some $6 million and in our supply chain to support security of supply as we now finalize the embedding of the warehouse rationalization that was completed at the end of last fiscal year.
Cost savings initiatives have also been launched in quarter 1 of '26. These include the optimization of our supply chain structures and associated costs. simplification of some of our support office structures in line with our new operating model, the reprioritizing of people and technology spend to prioritize customer-facing activities and changes to the New Zealand distribution footprint to optimize site and distribution costs.
We expect statutory net profit after tax for half 1 of '26 to be in the range of $3 million to $7 million. excluding any potential impairments associated with the New Zealand segment. Underlying NPAT for half 1 of '26 before one-offs and nonrecurring items is expected to be in the range of $14 million to $18 million. Statutory NPAT for the full year '26 is expected to be in the range of $40 million to $50 million, again, excluding any potential half 1 impairment associated with the New Zealand segment. NPAT for the fiscal year '26 before any anticipated one-off or nonrecurring items recognized in half 1 is expected to be in the range of $51 million to $61 million.
NPAT in that second half of fiscal '26 is expected to significantly improve from the first half due to operational improvements where we're focusing our attention on sales growth, the benefits of the pricing realignment measures already underway, realization of the benefits from cost-saving initiatives that are built into that half 1, which are expected to generate $20 million in pretax savings in the half, and the nonrecurrence of $16 million worth of pretax first half items. Our NPAT and our cash flow forecast remain and demonstrate Bapcor will remain within our debt covenants and we have access to sufficient debt facilities to fund our ongoing operations.
We are privileged to have excellent lenders who support the turnaround that is underway. We're now firmly focused on delivering the strategy over the next 4 to 5 years. Growth in leadership in the Australian trade sector, expanding our store network, becoming a market leader in New Zealand, investing strategically in digital and e-commerce solutions, stabilizing and growing our retail organization and maximizing shareholder value. This will be undertaken with a ruthless focus on operationalizing the 6 imperatives that I spoke to before, and we'll invest further in technology and people capabilities as we are required by discrete segment earnings growth.
With the refreshed Board and leadership in place, the investment underway to implement the business strategy, the Board is confident the company is addressing its deficiencies, closing the performance gap and is positioning itself to return to sustainable growth. My first year at Bapcor has provided with numerous insights into the huge contribution of the team around me makes and with great pride that, that team members take on wearing the colors of our company. It is clear the team members are genuinely passionate about this business and the company, and they are here for customers and the communities in which the company serves.
As leaders, our job is to provide direction and stability. It's a privilege to lead Bapcor and I sincerely thank all our team members for what they do every single day. There is a great deal to accomplish. So on behalf of the Board and the group leadership team, thank you to our customers, suppliers, shareholders for supporting the company as we drive these required changes. I look forward to delivering the strategy and beyond in the 12 months and plus to come.
We'll now move to the formal part of the meeting. Shareholders and proxy holders can vote on each item of the business to be conducted at today's meeting in person or via the Computershare online platform. Instructions on how to vote and how to ask questions were provided at the start of the meeting. For those attending online, please refer to the Computershare online meeting guide for any further information.
The phone lines are now open for verbal questions. The first item of business is the consideration of the company's audited financial statements and the related report for the fiscal year ended 30 June 2025. The Corporations Act requires that the audited financial statements and related reports for the fiscal '25 year -- financial year be laid before the meeting. I now declare that these reports, which were made available to shareholders on the 29th of August 2025 via both the ASX and Bapcor's website have been laid before this meeting.
Although shareholders are not required to formally vote on the company's financial and related reports, I would welcome any discussion or questions on the reports. As I previously mentioned, the company's auditors, PricewaterhouseCoopers. and Alison Miller in participation in this meeting and present. And I'd ask you if you have any questions for the audit, we can direct those directly to them. So I will start by asking if there are any questions.
Yes. Thank you, Angus. This is [indiscernible]. Yes. I'm Stephen van Emmerik, I'm the representative of the Australian Shareholders Association. So a couple of quick comments, then I'll get into questions. I've got a couple of quick questions for the auditors.
Firstly, well, thanks to Angus and Mark and Kate get together with the pre-AGM meeting with us and I think give honest and useful responses, sometimes we agree to disagree, sometimes you have listened to us, and we do appreciate you've taken actions based on those concerns.
I guess, to the new Board of Directors, good luck. I don't think it's going to be a cushy job. We wish you all the best. We hope you align yourself with shareholders and get out there and buy a few shares. I will have questions for you when it comes to the votes. I guess, all the write-offs that have come to light this year, you've said you're cleaning up the balance sheet. You don't have to clean something up unless it's dirty to begin with.
I guess my question is related to previous year's financial statements. what was the problem really. I mean, is it incompetence? Is it fraud? Is it unreasonable optimism? That's the first question. What was going on?
The second question is why didn't the auditors find anything. I mean there's been multiple times that you reviewed and found extra problems. Why didn't the auditors find into those problems? And will they go back and review their past audits and see what they could do better, so there's not a repeat of this problem in the future? So really 3 questions for you, auditors.
So I might take the first one, if I could, and then I'll...
Feel free.
I think -- so the balance sheet review is designed to look at after having consolidated such a significant amount of the organization, what we needed to be aware of. Yes, we did find things that we, as a new management team, took a different judgment on, and we did take a different judgment on those and that represents the bulk of what is net -- was raised as an expense in the $52 million.
We, as a management team, also made a call and was backed by the Board to change our accounting policy on the way in which we value stock. So those are 2 things that we distinctly took a proactive approach to, Steve. I appreciate that the former had a very unpleasant consequence to the P&L. The final one around what we did note was a mistake around the intercompany balances. That has been something that has clearly been present for a while. We had to stare into that and recognize that and deal with it.
Why did it occur? The complexity of this business, the systems environment, and all those things contribute. But finally, I'm going to say, from a management perspective, that's on us to have got right before. I'm not going to look at the auditors and say it was their job to find that. We should have been on that first. But Alison, I might hand to you.
Thank you for the question. Before addressing the specific question, if I can just highlight our role as auditors. Management prepare the financial report, which the Board approve. Our role is to give an independent audit opinion on the financial report as a whole, providing reasonable, not absolute, assurance that it's free from misstatement. We plan those procedures based on areas where we believe there's a higher likelihood of misstatement.
We do acknowledge there was a prior year error. The prior year audit was performed in line with applicable accounting standards using the information available at the time. The issue later identified was not evident at the time we prepared -- performed our prior period audit. Once identified, we did work with management to assess the impact of those errors and ensured it was corrected and disclosed appropriately as you can see in Note 3 of the financial statements.
We updated our risk assessment and our audit approach accordingly in the current year. We also outlined in terms of the question in respect to the significant items in relation to our audit, we don't comment on specific matters. We do note, though, in respect to the audit work performed in those areas, we assessed those in line with Australian accounting standards, ensuring that they are appropriately treated and disclosed in respect to the financial report as a whole.
Did that answer those questions?
I think I've got as much answer as I'm going to get. I guess I have got a follow-up question, maybe that's more to the CFO or to Angus is like, has the review of the balance sheet been completed? And if so, does that mean you take ownership -- fair enough, mistakes we made in the past. Do you take ownership from this point forward as far as write-downs, et cetera? Or is it something that's still ongoing? I know there's -- you may be looking at the New Zealand business to some extent?
So the starting point is make sure I take account in ownership for what we've just done. So I'm not looking to blame the past. That's my responsibility now. And clearly, anything that happens to the future is without a doubt my responsibility. The balance sheet review that we conducted in July, that is complete. We continue to look through this business as we look to simplify it.
I think the simple stat is prior to me joining, lots of good work. We went from 43 ERPs to 19 over my single year tenure, 19 became 17, and our plan is for 17 to become 15 by the end of this year. That level of complexity probably tells you a story in its own right. I'm not looking to find issues nor is Kim, but when we do, we'll deal with them as and when they arise.
But our job is to make this business simpler to the comments I made earlier.
Okay. And will you be putting the audit out for tender or not?
Not this year, no.
We'll see if there's any other questions in the room? At the very end, there will be a general questions, please. Okay We'll come back to you then certainly, sir. So can I just check, are there any questions online?
There is one question from Stephen Mayne in relation to when was the external audit last competitively tendered and when will it next be competitively tendered.
So Stephen, I don't know the answer to the first part of your question. But as I said, for this year, we're not going to be changing away from PwC. With a newly constructed Board and newly constructed audit committee, we'll now look to what our plans are for the future. At this stage, for this fiscal year, there will be continuity. No other questions online?
No further question.
Fantastic. Thank you. So I would now ask the Company Secretary to record that the audited financial statements and the related reports for the year ended 30 June 2025 have been received and they've been considered by shareholders.
Moving to our next resolution. The next item of business, Resolution 1A, relates to the reelection of Jackie Korhonen as a Director. Jackie was appointed to the Board on the 1st of February 2025 as an independent Nonexecutive Director and her qualifications, background and experience are summarized in the Notice of Meeting. I'd now like to invite Jackie to briefly address the meeting.
Thanks, Angus. And good afternoon, fellow shareholders. As Angus mentioned, I joined the Bapcor Board as a nonexecutive Director in February this year and I have over 35 years' experience in the technology sector with a track record of leading large-scale transformation programs. I welcome this opportunity to continue to support Bapcor as we invest in technology to improve customer experience and to simplify our business.
If reelected, I'll bring practical hands-on experience in digital transformation, data and technology governance and risk management to the Board. My focus will be on helping to ensure Bapcor's technology investments deliver tangible improvements for customers and team members while strengthening our operational resilience and data-driven decision-making, all the while keeping our business and our customers safe.
As a member of Bapcor's Remuneration and ESG Committee, I will support remuneration and talent frameworks to attract and retain high-quality people while aligning risk and governance to drive sustainable performance and shareholder returns. In addition to my role at Bapcor, I sit on other boards in other industries.
I feel this exposure assists me bring different perspectives and insights to our Board decisions. If elected today, I'll work diligently with my fellow directors and management to drive growth and create shareholder value. Thank you for your consideration.
Thank you, Jackie. The resolution appears on the screen, and I'll take it as having been read. Also appearing on the screen are the details of the valid proxy votes on this resolution. I'll now turn to questions. Are there any questions in the room in relation to this resolution?
Steve, why don't you jump first? You go first and I'll then come to this gentleman.
Two questions. Same questions for all the directors up for -- I'll just ask them once, so I don't take up your time. First question is related to corporate governance. Given having an Executive Chairman is completely contrary to the ASX and ASA governance guidelines, what will you do beyond your usual director duties to ensure that high corporate governance standards are upheld? That's the first question.
Second question is, we represent retail shareholders. And really, you can't expect retail shareholders to put their money into Bapcor if directors aren't willing to. I know there's minimum standards. No one really achieve much in life aiming for the minimum. Will you commit to buying a significant number of shares compared to your own wealth given that Bapcor's share price is where it is, and hopefully, it gets to somewhere a lot better? That's my 2 questions.
Thanks, Steve, for the question. As part of taking on the role at Bapcor in February, I did some due diligence, particularly with Mark, our Lead Independent Director, on the Executive Chair and CEO role and how it worked. Mark explained to me how the role worked, particularly whenever there's decisions to be made or any conflict how that's handled. He gave me confidence that the Board and the understand the clear separation and appropriate governance when it comes to the performance of the CEO and that we provide opportunities for shareholders to talk to the nonexecutive directors.
And I got myself very comfortable that at this point in Bapcor's journey that this is the right thing to do for the company. Yes. And I think all of us have gone through the same process. There are times in meetings where Angus excuses himself, Mark takes the lead, and we have discussions that are appropriate without him being there. So I became quite confident, and I think it's the right governance at this point in time.
On the shareholding, we have a policy that I will adhere to. I've already commenced buying some shares to align with that policy. And yes, I'll absolutely comply.
Thanks, Jackie. Please pass the mic James. around to this gentleman, please.
Michael Barrett is my name. I'm just an ordinary shareholder. I was in the very early in the float. I think I paid $2 of the shares when they came on market. The question I have for the directors putting themselves up today, is have you done a formal training course in corporate governance either through the Institute of Directors as part of a degree program or something like that because I served on the Board at one stage, and I found that it was a real hassle having fellow directors who hadn't done that sort of formal training and contemporary as well because legislation is changing quite frequently?
Thanks, I appreciate it.
You want each of us to go along.
Yes, that might be the simple thing to do, please.
So yes, I did the AICD course as well. I also did the New Zealand Institute of Directors course. I also commit to keeping continuous learning. 3 years ago, I did an ESG course through London Business School as well. The past year, I've done a program through INSEAD on executive coaching as well. So I believe in continuous learning. And yes, so that would be my answer.
Thanks, Mark, and thank you for the question. Yes, I've also participated in the AICD course. I attend a lot of -- there are a lot of free seminars that you can attend through law firms and other professional services firms on matters that are particularly relevant and up-to-date and relevant for nonexecutive directors and for company Boards in general and I'm a lawyer by background, and I was the Company Secretary and General Counsel of and Lendlease subsidiary. So I'm very familiar with corporate governance requirements.
My name is Lachlan Edwards. I'm one of the new directors. Thank you for the question. I guess part of my executive role is that I advise companies and Boards. So I am keeping up to data on these matters every day as part of that. In addition, I chair a number of Boards or a nonexec director on them. So in those capacities, I have to keep up with all of the requirements, and I do so. And in my last public company Board, I also was Chair of the Responsible Entity Compliance Committee for that company, which kind of takes you to a higher level of governance again. So yes, I'd like to think that I keep up to date. And I think your question is very pertinent something we should do. Thank you.
Yes. Thanks for the question again. Yes, I did the AICD Company Directors course quite a few years ago. And as part of being a member of the AICD, I commit to annual training. The AICD actually has a target for its members to attend courses throughout the year. So I make sure I keep up to date.
I sit on a number of different Boards, 2 other listed Boards, 1 government Board and on nonlisted Board, 2 of them in the financial services sector. So as part of my Board responsibilities there, I get annual training from each of those Boards. and particularly on regulatory issues that are, as you mentioned, constantly changing.
And yes, I think part of the great thing about being a Board Director is that it is a job that gives you continuous learning, and that's part of the reason that I like being a director is because it is a role that I can continuously learn and developing.
As you'll hear when I give my presentation later, I've been a nonexecutive director for over 20 years. So obviously, so I have, obviously, quite a lot of non-executive experience, which I can draw upon. I'm also a fellow of the Australian Institute of Company Directors. I'm a former partner of KPMG and obviously, all those roles and memberships, et cetera, require and which I undertake regular professional development, which is very, very regular, very -- and there's lots of opportunities to do that.
Currently, the big one is obviously around AI, et cetera, but we certainly try to keep ourselves contemporary and up-to-date with what's going on. But the experience, I think, also accounts for an awful lot.
Yes, I agree also that it's a really important question. And similarly to some of my colleagues or all of my colleagues, I attend a variety of programs every year around governance as well as other topics relevant to non-exec directors. Sort of hesitate to say I've been a nonexecutive director for around 25 years that you learn and you keep learning during that time.
I was made a life fellow of the AICD 2 or 3 years ago. in recognition, I think, of the governance areas that I cover. I've attended various AICD programs, but I took the 5-day program for around 8 years back along. So I think it is important that we keep up because you're right, the rules do keep changing. But as Jackie said, it makes it interesting. It keeps us motivated and interested in what we're doing, it will be a shame if it was static. So it's a really great part of the role to actually keep that learning.
Can I ask both Kate and Karen at the back are there any questions online?
No questions on this item of business.
Great. Thank you. As such, I'd like to then formally put this resolution to the meeting. The next item of business is Resolution 1B and this relates to the reelection of Annette Carey as a director. Annette was appointed to the Board on the 1st of October 2025 as an independent Non-Executive Director and her qualifications, background and experience are summarized in the Notice of Meeting. I'd now like to invite Annette to briefly address the meeting.
Thank you, Angus, and good afternoon, everybody. So this month, I joined the Bapcor Board as a Nonexecutive Director bringing more than 35 years of executive, legal, operational experience in logistics, supply chain and security sectors. Before commencing my nonexecutive career, I held CEO roles at Linfox Logistics and Linfox Armaguard and was also the Executive General Manager International at Australia Post.
I'll bring practical expertise and operational leadership, supply chain and risk management to the Board with a focus on supporting Bapcor's extensive distribution network, strengthening supply chain resilience and helping deliver improved outcomes for our customers, our team and our shareholders. Some of you may know or may not know that Linfox has a very large network of mechanical workshops, so I also bring customer lens to my role as a director here.
I welcome the opportunity to support Bapcor as it continues to implement a robust supply chain strategy to safeguard Bapcor's competitive supply chain and ensure products are in the right place at the right time for our customers. In addition to my role at Bapcor, I sit on the Boards of Sigma Healthcare and Kinetic Group. And next month, I'll be joining down at ADI. These roles, along with my experience as an executive, allow me to support the Board and my Board colleagues and management team to deliver and implement Bapcor's strategy and to drive shareholder value. Thank you for your consideration.
Thank you, Annette. The resolution appears on the screen, and I'll take it as read. Also appearing on the screen are the details of the valid proxy votes on this resolution. I'll now turn to questions, and I'll see if there are any questions inside of the room.
Steve, I know that you've asked us all the same 2 questions. So just following up on Jackie's comments, I went through a very similar process, obviously, spoke to Mark, in particular, the Lead Independent Director about how the process of an Executive Chair and CEO worked. And I also spoke to the other nonexecutive directors on the Board.
And I also indeed spoke to Angus about the role and how it was working. And I was satisfied that there was sufficient framework around governance and separation when it needed to be separation and avoidance of any potential conflicts of interest. In terms of holding shares, yes, I plan to do that this month because of what has happened with the trading hold, et cetera. and the information that came to light was obviously cautious about buying shares until we got past the AGM, but it's certainly my intention to do so.
Just checking any other questions from inside the room. Karen, can I ask if any questions online?
Yes, I've got a question from Stephen Mayne. This situation at Bapcor is unusual. We had the mass resignation of 3 independent directors on July 23, and then their mass replacement with 3 new appointments effective October 1. As 1 of the new directors, could Annette Carey detail her experience with the recruitment process and whether she knew any of the existing directors before joining the Board? And could the Chair detail whether any of our major shareholders, such as Australian Super with 16% were consulted before the public announcement on the personnel being canvased to repopulate the Board in these trying circumstances? It's fine for this to happen, and I'll be voting in favor of all new directors today.
Okay. Thanks, Stephen. So the process was I was approached by the executive recruitment firm that was engaged by the Board to do the search. I had a discussion with them. I had a look at Bapcor obviously, I had been following Bapcor in the financial press, so I was aware of some of the issues.
I went through a series of interviews, both with the executive recruitment firm, and I was able to ask questions, get answers to any concerns that I had. I spoke to each of the nonexecutive directors. I spent time with Angus. I then went through another round of interviews and a process of due diligence, were provided with quite extensive information, which took some time to go through. I came back with follow-up questions.
And at the end of that process, I believe there are a number of people who were shortlisted, and I was offered the job and I took it knowing that it was going to be a real challenge, but I actually like a challenge. I led a cash business during COVID, so I'm not afraid of tricky times.
So yes, in terms of my relationship with other directors, I have known Angus professionally as a customer and service provider in my role, primarily at Linfox. We never met outside our professional relationship, but we would attend meetings to negotiate the rates, particularly for Pacific National as we're 1 of their biggest customers. So that was always fun.
And Kate Spargo, I met several years ago at Sigma. Kate and I served on the Board of Sigma Healthcare together for about 2 years, but I had never met Kate prior to that. So they are the only relationships that I have with members of the Board.
Thanks, Annette. Stephen, to your second -- to the second part of the question, and maybe I'll come back. The second part of the question in regard to the way the directors were selected if you like, so we did use an executive recruitment firm who went to the market and looked for people.
There were clearly a lot of names we've got thrown our way. They were all put into that executive recruiter for them to do the initial passing over that. And I can absolutely say no shareholders were consulted. We did not go to our shareholder base, asking for them to make nominations.
So Karen, any other questions?
I have another question from Stephen Mayne. Many thanks for embracing best practice transparency and releasing the proxy of votes to the ASX along with the formal addresses before trading commenced this morning. The 90-plus percent support for all resolutions, including Annette's 93% support is relevant given the media campaign activist investor, John Wiley has been running against the Board leading into the AGM.
It was great to also guess the head count data showing that only 365 of our 14,521 shareholders engaged with the Computershare proxy voting system. We know now that only 2.5% of the shareholders voted, but those who did collectively own 74.1% of issued capital. showing how corporate voting in Australia is a big investor game with retail shareholders barely participating.
What sort of engagement leading into the AGM did the Board have with the 7 substantial shareholders disclosed in the annual report, including Mr. Wiley? And the second part, I think Angus, you've answered, did one of them suggest a net carry to Board?
So Mark, I want to leave the -- between you and Kate, you led the pre-AGM engagement.
Look, going right back to 2020 when we had a strike against the rem report, we've realized we have to engage pre-AGM actively with our shareholders. That hadn't happened by the chair previously. So the chair and the Chair of Rem has always engage you with major shareholders and proxies. Obviously, now as we moved into a situation with an Executive Chair, what we've done last year and this year, is we've met with major shareholders and all the proxies, including the ASA, the Australian Shareholder Association.
Angus has joined on the first 10 minutes or so to answer any questions. He's dropped off the call. and then it's been left to us as myself and independents to cover governance matters to cover rem report, to cover ESG. And so that's what we did this year. And we think that's a good practice. And we answered the questions they had leading into this AGM.
I think just for completeness, those major shareholder engagement included.
Yes, it did include, sorry, I should have said that.
Karen, anything else online?
No further questions.
Thank you. As there are no further questions, I'm going to put this resolution formally to the meeting. Might need to offer a toilet stop along the way here. Although I will jinx myself and say that no planes have landed, that's a good start from noise.
So the next item of business is Resolution 1C. This relates to the reelection of Patria Mann as a Director. Patria was appointed to the Board on the 1st of October 2025 as an independent Non-Executive Director and her qualifications, background and experience are summarized in the Notice of Meeting. I'll now pass over to Patria and invite her to briefly address the meeting.
Thank you, Angus, and good afternoon, shareholders. I also joined the Bapcor Board as a Nonexecutive Director this month. I have more than 20 years of nonexecutive experience across ASX listed and financial services organizations. And I will draw on that experience to support the implementation of Bapcor's strategy aimed at improving shareholder value. As an experienced audit committee chair across multiple organizations, I have been appointed as the Chair of Bapcor's Audit and Risk Committee.
I will apply my deep expertise in audit, risk and governance to focus on the strengthening of financial discipline, controls, oversight and governance alongside Bapcor's CFO, Kim Kerr. In addition to my role at Bapcor, I sit on the Boards of Bega Cheese, GWA Limited, GDI Property Group. And from these, there are a number of relevant and overlapping experiences that I can bring to the Board.
I've considered my workload and confirm that I have the capacity to commit the time required to the Bapcor Board. I also believe my past and current roles provide me with relevant perspectives and insights to support well-rounded Board discussions and decision-making. If elected today, I look forward to being part of Bapcor's journey through its next chapter. Thank you.
And while I'm here, I'll answer, Steve, your 2 questions. On the executive chair role, I actually have that on another Board. So despite knowing it's not considered best governance, I know it can work if done properly. So -- and I also did my same due diligence because that was one of my first questions when approached about the Board. And I do believe after my diligence and discussing with all and now being attending the Board meeting and having exposure to the more that it is the right thing to do and the right place for this company right now just to lead us through this period, particularly with the focus that Angus has got on turning every rock and sorting this place out for shareholders.
On the shares, absolutely. I always invest in the companies I'm on the Board of. But with the timing of when we were appointed, it was all very last minute and the trading window has been closed. I believe it opens sometime after this meeting. So then we'll have the first opportunity to actually invest. Thank you.
Let me turn to the room again and see if there are any other questions from the floor. No. Karen?
No questions on this item. .
Fantastic. Thank you. With that, there are no other questions, I now formally put this resolution to the meeting. Behind me is the screen indicates the position. I'll take that as read. also appearing on the screen are the details of the valid proxy votes on this specific resolution.
Thank you. The next item of business is Resolution 1D and this relates to the reelection of Lachlan Edwards as a director. Together with Patria and Annette, Lachlan was appointed on the 1st of October 2025 as an independent nonexecutive director, and his qualifications, background and experience are summarized in the Notice of Meeting. I'd now invite Lachlan to briefly address the meeting.
Thank you, Angus. Good afternoon, fellow shareholders, and I say that partly to answer 1 of the 2 questions that I know I have to answer in that I am already a shareholder of Bapcor. I think I own about 14,000 shares. Let's take that as an approximate number. And it is my intention to acquire more shares.
I came off the Board of HPI in February, I think it was of this year when we completed a hostile takeover from Charter Hall. And if you go back and look at the shareholding I had in that, you'll see, yes, I do more than the minimum. So I intend to do so here. And once the window opens in the next day or so, then as long as Angus gives me permission or Mark, whatever the process is, then I will make sure that I might start doing so.
I bring extensive corporate advisory, capital markets and turnaround experience to complement the skills of my Board colleagues. I will apply that hands-on experience in capital management, corporate and debt advisory and turnaround to support our management team and perhaps particularly Kim, as they ensure that Bapcor is in the best possible position to restore growth, defend value and improve returns for all of us who are shareholders and stakeholders in this business.
Over 35 years, I have held a number of senior roles in major corporate advisory firms including Lazard Australia, Goldman Sachs, both in Asia and Europe, and then in Rothschild & Sons, again, in Asia and in London. In those roles, I've provided advice to the Boards of many public companies in some of the world's most complex situations across a range of industries.
Turnarounds are difficult and they require all stakeholders to come together to get through difficult times and create value on the other side. At the center of that is the Board and the management team, and I have had extensive experience in these particular situations.
And while I'm at that point, I will answer the other of Steve's questions. the ASA's questions, which is the question about the Executive Chair. It was my second question. My first question as a Board Director was always about health and safety. But the second question was, what is the reasoning behind this. I heard the reasoning behind it and the ability to judge how that works I think, will come with the fullness of time.
But what I would say is this, when you're in a restructuring and turnaround of the business and particularly one that's as large and complex as this, communication and understanding between Board and management is incredibly important. And I actually think there's great value in this situation for shareholders and stakeholders to actually combine the two roles. So in that way, I would say, while the general corporate governance principles are right, you do have to look at their applicability in each situation.
And my judgment is that this is a situation where it is warranted. And I look forward to seeing it play out, and I look forward to hopefully seeing that turn into benefit for shareholders over time. In addition to my role at Bapcor, I'm the Managing Director of Associates, which is an independent corporate advisory boutique, which I founded, and I serve as the Chair of a private hospital, Matilda Nepean Private Hospital in Sydney and I'm Deputy Chair of the company. Until recently, I was on the Board of HPI -- have I run out of that. Maybe that's a sign that I'm talking too long.
If reelected today, and I ask your vote, I will partner with my fellow directors to provide the governance appropriate to support the management team as they drive operational recovery, capital efficiency and sustained value for all of us as shareholders and uphold the Bapcor brand as great places for our staff and our customers to come together. Thank you very much.
Thank you, Lachlan. So the resolution appears on the screen, and I'll take that as read. Also appearing on the screen of the details of the valid proxy votes on this specific resolution.
With that, I'll turn to see whether there are questions in the room. And Steve, if you want to go again, you're more than welcome. But yes, are there anyone else inside of the room? No. Karen can I turn it to you?
No online questions have been received on this resolution.
Thank you. So I'll now formally put this resolution to the meeting. The next item of business is Resolution 1E and that relates to the reelection of Mark Powell as a Director. Mark was appointed to the Board on the 1st of September 2020 as an independent Nonexecutive Director and was appointed as Bapcor's Lead Independent Director on the 22nd of August 2024.
Mark's qualifications, background and experience are summarized in the Notice of Meeting, and I'll now invite Mark to briefly address the meeting.
Thank you, Angus, and good afternoon, everyone, both here and online. As outlined in the Notice of Meeting, I was originally appointed to the Board on the 1st of September 2020. And following Angus' appointment last year, I was also appointed as the Lead Independent Director. I've got over 30 years, it's probably 35 years now of CEO and executive experience, started out in mining but most of our experience in the last 30 years has been in retail, wholesale and logistics in Australia, New Zealand and internationally.
In my executive career, I was a Divisional Director for Booker Wholesale, in the U.K., Logistics Operations Director for the U.K. retailer, Tesco; Managing Director of a third-party logistics provider in Spain. I ran Walmart's logistics operations in Canada before immigrating to this side of the world.
Since being in this side of the world, I've been CEO of the retail operation warehouse Australia. I've been CEO of Warehouse Stationery in New Zealand, which is like office works. And my last executive role between 2011 and 2016 was Group CEO of the Warehouse Group, the retail group in New Zealand before transitioning into a nonexecutive director roles.
In addition to my role at Bapcor, I serve on the Board of JB Hi-Fi, NZX listed My Food Bag and still famous for making chainsaws, et cetera. I was for me on the Boards of 7-Eleven and Kiwi Property Group. These roles have given me a broad commercial viewpoint to contribute to Boardroom debate. And I can assure you that there is debate in the Boardroom and help management team focus on simplification and driving evidence-based decision-making.
The last 5 years on the Bapcor Board, have, without doubt, been a challenging journey, that's perhaps an understatement. If reelected today, my focus will be to help ensure a smooth Board transition with the recent significant Board refresh. and as Lead Independent Director to continue to support and provide appropriate challenge to Angus and the executive team to help deliver operational improvement value for our shareholders.
If reelected today, I will continue to work closely with the Board and management to drive the turnaround of this business. Probably, I'd like to comment on the Executive Chair and CEO role, obviously, my perspective is slightly different to some of the newer directors. I was here when it was put in place.
There was a context to why we put in place. It was shared very clearly at the time and with all our shareholders, and they supported that. It was put in place because we were in a difficult situation without a chair, without a CEO and subject to outside bid as well. I think it was the right thing to do then, and I think it's the right thing to do now without wanting to embarrass Angus. I think we've got Executive Chair and CEO, I think 3Ts and 3Cs. We've got -- not just CEO, CFO as well. I think I mentioned Kim. We've got a CEO and CFO, Executive Chair, who is completely committed to the truth, completely committed to transparency on that truth, and I trust them that they'll keep on turning over stones to get to that.
And the 3 Cs are I think they've got a character, competence and courage to drive that for the long-term sustainable benefits of shareholders, not just short term as well. And so I completely support that. I think they're doing that. It's hard, it's painful. I get that. but we've had to face into these things, and I think it's important as well.
So I think you can tell I support the role, the combined role to present time, and we've talked about it, Stephen. I know the questions, as others have said, but yes, I think it is appropriate for this time for this turnaround.
Thank you, Mark, and I will say -- so the resolution appears on the screen. And again, I'll take that as read. Also appearing on the screen of the details of the valid proxy votes for this specific resolution. And I'll now turn to the room to see if there are any questions. Steve?
Thank you. Thanks, Mark. Yes, I think we understand each other. Yes, I understand ASA has general guidelines. And then we have to have guidelines across all companies. We're volunteers. So if you had everyone just making their own choices, it will be chaos. So we understand that every business is different. I think those guidelines still make good sense overall. You've got to make your own judgment.
Just as a preamble to this question, I'd say I voted against every resolution at this company for the previous 2 years and I think with good reason. I think the share price would tend to bear out that there's been a lot of red flags. I'm voting for everything today for the reason I think you deserve the change to turn things around. Most of you are new. The same with a lot of key management people, I think there's a lot of new people. Good luck.
My question is about the past, I guess. Why did the 3 directors resign? And yes.
Yes. And I'm probably the only person who can speak to the past. And that question has been asked. They gave no reason. That is the official answer, that's the true answer. And I recognize that leaves people go in, that leaves it to inference. And I think people have made inference. They're probably not far off on some. It would be my guess. They line up with my inferences. But we don't know.
So anything beyond that goes to speculation. I recognize that for us was unsatisfactory, it was unsatisfactory to me and the whole way that happened is unsatisfactory.
Thanks, Mike. We check if there any other questions in the room? Karen, anything online?
Yes, Mr. Stephen Mayne has a question. It is not good practice for an Executive Chair to use the CEO voting exemption available under Australian law and not putting yourself up for election to the Board. Why didn't Angus McKay put himself up for election this year after I requested this last year? And will he commit to do it next year? Can Angus site any other ASX 300 company which has had an Executive Chair who has never been elected by shareholders? Given all the tumult and Board turnover at the company, it is reasonable for shareholders to be given an opportunity to reflect on the highly unusual situation of Bapcor opting for an Executive Chair.
As Chair of the Nomination Committee and Lead Independent Director, will Mark Powell, who is facing reelection today ensure this happens at next year's Annual General Meeting or are we intending to make it 3 straight AGMs where our new Executive Chairman is continuing to hold down the most powerful position at the company without receiving a mandate from shareholders?
We're not going to make that commitment. We'll take it on note. We've got a number of new members on the Board. We'll discuss that, but I'll take it on note, but I'm not going to make that commitment.
Karen, any other questions?
No further questions. .
Thank you. As there are no more questions, I'll now formally put this resolution to the meeting. So now as previously advised, I intend to hand over to Mark Powell for Resolutions #2 and 3.
Okay. Thank you, Angus. So we've got the slide up there on Resolution 2, which is the adoption of the remuneration report, and good afternoon again to everyone in the room and online. Resolution 2 is a nonbinding resolution to adopt Bapcor's remuneration report, which was set out in the company's 2025 annual report. The resolution appears on the screen, and I will take it as read.
Also appearing on the screen are the details of the valid proxy votes received on this resolution. So are there any questions in the room related to this resolution?
No questions in the room. Any online?
No questions online.
So as there's no questions received, so I'll now formally put this resolution to the meeting.
Now moving to Resolution 3. This is the approval of the grant of the FY '26 performance rights to the Executive Chair and CEO under the LTIP. Resolution 3 seeks shareholder approval for the grant of the FY '26 performance rights to Angus McKay, the company's Executive Chair and CEO, under the long-term incentive plan. The resolution again appears on the screen, and I will take it as being read.
Also appearing on the screen again are the details of the valid proxy votes received on the resolution. So again, are there any questions in the room regarding this resolution? There's no questions in the room, Karen, are there any questions online?
No questions online. .
Okay. There's no questions online. So I now formally put this resolution to the meeting. And I'll now hand back to Angus.
Again, thank you, Mark. I'll now turn to Resolution 4. Resolution 4 seeks shareholder approval to renew the proportional takeover bid provisions in the constitution for a further 3 years from the date of the meeting. which will ensure that in the event of a proportional takeover bid being made, a general meeting of the company will be convened in order for shareholders to vote on the proportional takeover bid.
The resolution appears on the screen, and I'll take it as having been read. Also appearing on the screen are the details of the valid proxy votes received on this specific resolution. I'll now turn to the room to see if there are any questions within the room.
We did have an approach going back about 9 months ago? Is it...
Longer.
How long ago was it?
15 months ago. 15, 16 months.
What was the process that the Board went through in evaluating that takeover bid because it's one of those things that we might be looking after our own little pile, but it might be better to give the shareholders their money back or do something different and open up the company for joint ventures or other types of strategies of ownership? But I'm really throwing it as an open question really.
I appreciate it. Mark, can I ask you to address it because I think between yourself and Kate, you were there.
Look, Firstly, I don't think the job of a Board is just reject any bid. We're here to do the best thing for shareholders. And if a bid is of a sufficient value that it exceeds the value that's seen in the company by that Board, they should look to recommend that pit. You're not here to just defend for the sake of it.
Back then, we attempted to engage with Bain at the time. It was painful. We had disagreements on the standstill process and some of the process. They were very slow, actually. We found that. And at the same time, we were proceeding to search for a CEO and Chair that's at that time. And it just was very slow progress.
We also had comments from shareholders, who expressed the view that they felt the bid wasn't sufficient either, and they expressed that quite loudly in the media as well. And when we appointed Angus to the role of Executive Chair and CEO, we closed that and moved on. They didn't come back and we moved on since then.
Any other questions inside the room? Steve?
Yes. It was a good question. Just following on for that, I guess, I think it was $5.40 they were offering. Given where the share price is, with the benefit of hindsight, what do you think about the decision that was made at that time? And secondly, has there been any other further approaches, whispers, et cetera, since then?
I'll refer to the time and then I'll hand to Angus perhaps. Look, it was a nonbinding indicative offer. It wasn't a firm offer, and we didn't get into any due diligence, et cetera, either. And I think we made the right decision at that time.
This business is a good, strong core business and with the information at the time, I think we made the right decision because we didn't actually reject it, we just didn't even really get into a process, to be honest. And so there wasn't something to really reject in that sense.
It wasn't like they went through due diligence, and we were recommending to shareholders to not accept a bid that was binding. It didn't get beyond a headline nonbinding indicative offer. It didn't get into anything further.
There have been no other approaches. And I just would reiterate, I mean as much as it perhaps is difficult to believe with people that are vested in the business and dare I say, with an appropriate offer, we will consider that and what is in the best interest of our owners. So that's the only commitment I can make to you and to you, Michael.
There's no other questions in the room. Karen, can I jump to online?
No online questions.
Great. So no further questions, then I will now formally put that resolution to the meeting. So I now confirm that all resolutions at this meeting have been put to shareholders.
But before I close the polling, I'd like to now address any questions in relation to Bapcor generally, and I'll start with questions that may be in the room.
Now I'm looking forward, okay, and I've been with this little company that's got bigger for a long time, okay? So my background is in marketing, okay? And I've been an academic for a period of time and in product management, in most multinational corporations, and have an MBA, graduate diploma in marketing and an economics degree. So that's my space, okay?
And for the last 20 years, I've been [ 708 ] investor. Now I raised it last time about where the company was going and whether you had a clear strategy. Now I actually wrote to Angus when I got home, and thank you very much because you actually replied about 2 days later. And I really appreciate that.
And it's also a test of -- it's my due diligence of whether you've got the right stuff and you do with shareholders. So thanks very much for that. The thing is that I still see a lot of change taking place in this auto space. And I do hold a lot of investment in the auto space. I have Bapcor, and I've got a couple of others related to it. And in addition to that, I invest in the mining industry.
And I've been at -- so in the mining industry, there's huge change taking place with lithium, cobalt, manganese, also graphite. I've got a big holding in graphite and one that I came up across yesterday was scandium. Scandium was used to strengthen aluminum and used in the bodies of motor vehicles in the future to replace high tensile steel because the weight of an EV.
Now I can't see in what I've read in the last couple of days. is that you're really not -- you're not looking into this change as seriously as I would like you to do that. So that's -- it is of concern. Because the other thing that I noticed is that there's a lot of proprietary technology in all of this. And therefore, a lot of mechanics will lose their little practices. And a lot of business will be taken back to the dealers.
Now in addition to that, there's change taking place with the dealers because they're going to become agents of the motor vehicle producers where they don't have to carry stock of cars because the best time to get a car is 3 days from the end of the month. okay? So that's one thing. And I got -- from my wife's little Hyundai, she got an absolutely screamer of a price because of that.
So that's an area that I believe that you need to be looking at a lot closer and I'm not thinking next year or the year after, but what all this building is going to be holding because you might not have the same sort of spare parts sitting in this building. So that's my first little point.
The other thing too is that you probably do realize that BWD, what do they call themselves...
BYD.
Started as a battery company, not as a motor vehicle producer. And they've got proprietary technology. And they're going to change the world quite rapidly. And now the cost of development is being recovered or has been recovered, same with Tesla, the car battery cars are going to become a lot cheaper.
So the thing that I'm starting to see is that I get a bulletin every day out of Germany and battery charging stations are starting to appear all over Europe. And the Americans are doing exactly the same thing. So what are we doing about that?
So if you allow me, I'll take a pass through some of those.
So that's -- yes, so charging stations. So there are fewer spare parts, right? There's 1,100 parts in approximately an ICE, internal combustion engine. Well, all you've got is just a layer of batteries, even the drivetrains are different. So a Tesla is driven through the wheels, not through a transfer of power. So that was -- now the other thing too, is that we're looking at a new divide in the world.
There's the Russian Chinese side, and there's the old-fashioned Western alliance.
I don't know whether we can go into geopolitical tensions in this room but...
So the thing is that's changing the game because of all Trump's tariffs is changing where products are going to be made. And in fact, Hyundai have got factories -- both Kia and Hyundai in Czech only to leave the walls of around the EU. So that's another thing.
If I may...
So I'm really just throwing a few propositions at you. I've got no answers here, but I felt that your strategic plan didn't far enough, okay?
So if I could, maybe I can address some of the questions you put to us.
Now the next point.
Certainly.
You talk about customer service here. My son is an electrician. He's an industrial electrician and he's working on a data center in at the moment, is running on 24-hour basis. They've not -- haven't finished it yet, but they're eager to get it up. And I actually paid for it, I -- paying me back at $500 a month, but we bought a Subaru outback, and the battery has gone flat. And it's a Panasonic battery, which has got a good quality battery. And he shopped around.
The dealers charge outrageous prices and so he rang out Autobarn and the guy said, I can do 1 in 3 weeks. Now that's not what I call customer service. right? So anyway, so -- and he lives in, that was And I think there's one. So I ended up on a 2-hour round trip driving him out in the northern suburbs of Melbourne. The battery he got was a model where the terminals around the wrong way. So we had to go -- we could have gone back to but he being an electrician just changed the terminals in the car, which is really not smart, but he needed to get to work that night.
So Angus, the customer service is still not there. It really needs to be looked after. The other thing is the observation I have from Autobarn because I do shop at Autobarn for a bit of soaps for washing my car is that there's not much traffic in those stores. And I just -- I don't think they're being properly utilized and foot traffic is the main thing of stores. So that's really my soapbox questions. And I'll be happy if you just respond as a gentleman.
I think you've asked -- you've made a number of very valid observations. So let me start with that. But maybe if I start with the bigger picture. So we do spend all the time trying to observe what is going on with, call it, the automobile industry globally and then specifically how that's being applied here in Australia.
I will not profess that we know enough about that yet. That's -- there's more work to be done there. If I go to the world of just the car park that we play in, so we are blessed with the car park in this country that is in excess of 12 years of age. It's one of the oldest car parks in the planet. New Zealand is one further. Yes.
So we are conscious of that. We don't play in the world of cars that are inside of warranty. We wait for them to move out, and we're very conscious of what I describe is from an OEM perspective, the extension of warranties that go on there. So we observe and make sure we're playing appropriately.
To your question around EVs and just the dynamic change in effectively the propulsion portion of the motor vehicle. We watch overhaul because here in Australia, it is progressing at a much slower rate than other markets, and you named Europe, I would agree with you. The second thing is the actual form of propulsion is also changing, the form of energy is changing.
If I go back 8 years, and I'd be happy to talk a little more one-on-one rather than taking the time, 8 years ago, the Australian car park was forecast by some highly paid consultants that we would be by now 2025 with over 35% of the car park being EVs. That's what they said. And that changed dialogues, lots of people started to invest behind charging points and all those kind of things.
Today, we're not even yet at the mid-single-digit point. And the driver I would argue for you is EVs work perfectly well, and we'll come back to where we play in an EV. The single biggest issue is it's range anxiety, yes. the battery. The bigger issue is where can I charge the vehicle. And there just are not enough charging points in Australia. And with a prior life at my disposal, the cost of investing in charging facilities is just exorbitant. You can't make money. So that's why it is not occurring.
The other thing that's occurring is you're now seeing a move from EVs, hybrids are now the dominant form of alternative engine vehicles being imported in the market. There's even again, talk around hydrogen. That's probably a lot longer out there.
So the marketplace we watch like a hawk because it is changing. So the vehicle itself, you're quite right. The motor of an electric vehicle is not something that our warehousing suppliers cater for. We're very focused on the things that go under the car and that I include all the sensor technology, where it be breaking, steering, suspension. Those things we do play in today. Where EVs are at, there's still Tesla beginning to come out of their warranties. So we're focused on where we can future proof the business that we have today, responsibly, and that's what we want to do.
So we do look at that. I won't get into the geopolitical, but yes, I mean the European versus American versus Chinese is going on. My understanding is that's been going on in this industry for quite a while. and we've got to watch that like a hawk, Equally, you have to watch the manufacturers as they bring new vehicles to the country. So again, we are trying to make sure we're abreast of what's going on in that space.
I've talked about charging. Tariffs I think we're all experiencing in the world of dynamic news. If I go back to the end of December, President Trump about to become elected, we all were looking at what that meant for our supply chain, how that would impact us. We did a piece of work that we got comfortable it wouldn't hurt us every week, though with the rattle of the new tariff, financial markets move, but we are very conscious of the production points of the parts that we ultimately sell to our customer base.
To your customer service piece. I wish I had a better answer than that sounds awful, What you just described, that is not customer service. and I will after that just make sure I get a few details. I won't. There will be no sort of -- no, no, there won't be, but I will make sure that I understand what has occurred there, but that is just simply not good enough. I can't say any...
I have another question for you, a supplementary question.
If I could maybe just 1 more and I'll then open it up. 1 more and then I'll open it up to the rest of the room.
Now I noticed that you've got New Zealand up and running, okay. and you've got Thailand. I've spent a little bit of time in Thailand. And the thing is that, for me, that seems like an international division, not one that is a part of the domestic business and one that is a part of an international operation.
And yet you're treating them as two different. One is -- Taiwan is treated as a domestic operation. And the other -- the New Zealand one that's much closer to Australia, the buyer behavior, the industry dynamics, all those sorts of things. Now I realize it's a joint venture in Thailand. But I can't understand the rationale for that.
So obviously, Simon has just recently joined our business and those businesses, the Asian-based business is pointing to our Trade segment. Simon and I are beginning the conversation now that he's got his feet under desk around how we think about those businesses. In all honesty, they are so small. Our priority is what's going on here in Australia, which I think you completely get that obviously, with Martin in New Zealand. So we will get to what we want to do in Asia, but the focus for us has to be Australia.
Other questions?
Michael Millard is my name. I'm representing Tinari Capital, who's CEO is currently overseas traveling. We're the second largest shareholder in Bapcor with 11.1% of shareholding. We have a question for the Lead Independent Director, it's Mark Powell. It is whether and why he and the Board believe it is appropriate and in the best interest of the company to continue to combine the roles of the Chairman and the CEO in the individual of Executive Chair, contrary to established good corporate governance practices and ASX listing rule guidelines. In posting this question, we note that we believe Mr. McKay is a competent executive in what is to believe has a successful track record in his prior role of CEO of 7-Eleven. We believe he is doing his best to improve the good fortunes of Bapcor. However, we believe he should not be both the Chair and the CEO of Bapcor at this time given the deterioration in trading performance of the business on many fronts. The company now needs to separate the roles of Chairman and CEO by appointing a new independent nonexecutive chair, who has the relevant experience and skills.
Mr. McKay's role would become solely as CEO. We believe this because the company faces a very substantial turnaround challenge evidenced by the halving of the share price. The continued run of fresh bad news and the lack of clarity from the Executive Chair as to whether a bottom has been found. To turn around this business, Mr. McKay needs to focus 100% of his time as CEO without having the responsibilities of the Board Chair as well.
The lack of separation of roles of Chair and CEO makes it more difficult for directors to hold the CEO accountable, especially when all of the proposed new directors, the majority of the Board have been invited to join the Board with Mr. McKay holding both roles blurring the accountability. There is no obvious reason why Bapcor should deviate from the accepted good corporate governance practices and ASX listing rules principle 2.4 which recommends separation of the Chairman and CEO roles, a recommendation which is almost universally adopted by corporate Australia.
If the answer is that the company does not propose to comply with the established good governance practices, can you please explain why not? And under what circumstances, it would change that position?
Questions are for me. The simple answer is execution. The simple answer is, and we communicated this when we put the role in place at the start, which was supported by the shareholders. We were very clear. We saw it as a 2- to 3-year time horizon as well. but it's about execution, speed of execution.
The clear question then people rightly ask, which was in your question, is the checks and balances for governance. We're comfortable that's in place. We have extensive processes, which I've shared with John directly as well. All the processes you would normally see in a listed company. We have a nonexecutive director a long time before meeting without Angus, we had it again this morning before the start. We just completed his 360 review. I spoke with every single one of his direct reports who are all here today, plus the Board.
And that's been shared with Angus, will be discussed as well. The question of independence and challenge is there. And as I shared with John as well, to be honest, and frank, I think we have more check in balance than I saw when we had the last 2 previous MDs in this business, and we have more robust debate and more challenge. And as I said at the beginning, I think we have -- for my first time on this Board, and this will sound quite strong. For the first time on this Board, which has been an interesting journey, , shall I say, in the sense of the word interesting. I feel we have a CEO and CFO, who is committed to finding the truth, is committed to the transparency of that, and I totally trust in that, has the character, the competence and the courage to address that.
That isn't about whether he's an MD, CEO, a Chair. That's about the person, and it's about the Board and working together. we need speedy execution and speedy decision-making. And whilst I get checks and bounce to the power and why I appreciate that asking questions today is asking truth to power, and that's good. we need it. And we actually believe it's working well.
Nothing would have been any different with a 2-tier structure other than we might not have gone as fast as we've gone overall. So that's where we're at. We do agree to disagree on the governance question. If there's other things that are of concern, we're happy to listen and engage as we'd always engage with major shareholders. We respect you as a major shareholder, and we'd be happy to engage post AGM, again, to understand evidence-based issues around the role, but rather not just general statements on governance because we addressed those last year when we made the appointment, and there wasn't any issue then in that context at the time.
And we were very clear of the time line on it. So -- but we're happy to discuss. We respect the role of as 1 of our major shareholders. We will listen and want to understand each other. Sometimes we'll agree to disagree because we've -- our duty is to represent all our shareholders. and the company and the good of the company. So sometimes we may agree to disagree with individual shareholders.
But we're always willing to listen and talk and we'll want to do that again post the AGM. Yes.
Other questions, Steve?
I think I've got a shorter question. It's about basically inventory control and distribution systems that I understand you're looking at everything. I guess, by way of background, I used to work for Caterpillar in that area. So I know it's maybe not a straight board as people might think, valuing moving around, et cetera, et cetera.
So the process you're going through. Are you just looking to find out what's actually in the inventory and what it's worth? Or are you looking at an inventory reduction program and looking, I guess, beyond that?
Fair question. Thanks, Steve. So I think the short answer, beyond that. I said in my opening address that the consolidation of those warehousing facilities actually achieved 1 fundamental thing, which sometimes gets lost. We actually regained visibility to all the stock dynamically that was out in those remote locations, incredibly important.
It gave us visibility to where there's duplicated stock, gave us then the opportunity now to slow down what's coming into the country or coming from domestic suppliers. So that allows you to control the supply chain. We still have disparate processing system. So the 1 supply chain notion under our strategy is around that commonality of approach that doesn't necessarily mean you need the same system, but it means you need a common approach to it.
We have a view, which I have shared quite publicly, we have too much inventory. Make sure that, that product is moved to the places where it might stand a chance of being sold, but we can do that quite dynamically and where we can actually have inventory that is relevant to the cars that it serves. So I'm happy to go in a lot more detail around what that might look like. But the reality is we have too much inventory by value, too much inventory by volume. So that is we think our ranges are too wide, and in some cases, too deep.
We need parts that are relevant to the cars that we provide for today and where those cars are much older that we need to have those available, but they don't need to be replicated over hundreds of sites around the country. My final comment is, I'm glad you said it is complex. It is very complex. Little changes can mean some big issues.
This literally is the big syndrome, one tweak here that slows down x and before you know it will be out of stock, and that costs to sales. So we're trying to do this in a very methodical way, but looking at the inventory from a life cycle perspective.
Other questions in the room? Karen, I'll dive to anything online.
Yes, I have a question from Mr. Stephen Mayne. Thanks for running a near perfect AGM from a process and disclosure point of view. Very few companies do this. You offered a full hybrid with both voting and online questions. The ASX didn't offer online voting at its hybrid AGM today.
You revealed the proxies early, allowing for a fully informed debate, something net will no Sigma didn't do yesterday. You followed the agenda, inviting questions on all resolutions something the likes of Macquarie and Cleanaway don't do, instead going for the single job lot approach to questions, which dilutes the focus on individual items and shortens the overall debate.
You even gave us head count voting data, meaning we can see retail shareholder sentiment and better understand the chronic lack of voting participation by retail shareholders at AGMs. Wouldn't you include the head count data in the poll results announced later today and continue your good practice of publishing the full AGM webcast on your website? Apart from all that praise you just need to put the Executive Chair up for election next year and get the share price up. Good luck and see you in 12 months.
Thank you, Steven. I was almost to give you a complete thank you, except for the but. But I would agree, particularly on the performance of the organization, and we get that right, and I'm very optimistic all things follow from there.
In terms of polling numbers unit shareholders, yes, that will come out once we've actually done the final tally. So that's clear. But Stephen, I will just simply take -- I'll take that as a yes. And maybe for the team, let's put this together. So thank you for that.
One last, if there's any other questions? So with that, there are no other questions, that concludes the discussion on general business. In 1 minute, and I will just make it to 1 minute. I won't shorten it or lengthen it. I'd ask that we close the voting system down and please ensure that you cast your votes to all resolutions. I'll now pause to allow you the time to do that. And if you're in the room, your polling cards can be collected. There we go. Thank you so much, but we'll wait 1 more minute before I close the meeting down.
[Voting]
20 seconds before we close the online process down. I think we're done on the minute. So with that, I'm now going to declare that our voting is closed. Rather than waiting to keep you for the result, I propose that we'll close the meeting at this point.
The results of the poll will be notified to the ASX and will be published on our website following the meeting. As this concludes the meeting, I'd like to thank everybody for their attendance, both online and in the room. and I now will declare the meeting is closed.
Bapcor — Shareholder/Analyst Call - Bapcor Limited
Financial data from Bapcor
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 1,924 1,924 |
3%
3%
100%
|
|
| - Direct Costs | 1,060 1,060 |
2%
2%
55%
|
|
| Gross Profit | 864 864 |
3%
3%
45%
|
|
| - Selling and Administrative Expenses | 613 613 |
5%
5%
32%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 138 138 |
20%
20%
7%
|
|
| - Depreciation and Amortization | 101 101 |
7%
7%
5%
|
|
| EBIT (Operating Income) EBIT | 37 37 |
53%
53%
2%
|
|
| Net Profit | -432 -432 |
2,355%
2,355%
-22%
|
|
In millions AUD.
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Bapcor Stock News
Company Profile
Bapcor Ltd. engages in the business of selling and distributing vehicle parts, accessories, automotive equipment, service, and solutions. The company is headquartered in Melbourne, Victoria and currently employs 5,500 full-time employees. The company went IPO on 2014-04-24. Its segments include Trade, Specialist Wholesale, Retail and New Zealand. Its Trade segment is a distributor of vehicle parts and equipment solutions for the Trade market. The company consists of the Burson Auto Parts, Precision Automotive Equipment and Independents business units in Australia, as well as the Thailand operations. Its Specialist Wholesale segment includes the specialized wholesale distribution and network channel areas that focus on a specific automotive area, such as AAD, BaxtersMTQ, Bearing Wholesalers, Roadsafe, Diesel Distributors, Federal Batteries, JAS, Premier Auto Trade, Toperformance, Truckline and WANO. Its Retail segment includes the operations of Autobarn, Autopro, Midas, ABS and Opposite Lock. The New Zealand segment includes the operations of Brake & Transmission (BNT), Autolign and HCB Technologies.
StocksGuide Premium
| Head office | Australia |
| CEO | Mr. Mckay |
| Employees | 5,200 |
| Website | www.bapcor.com.au |


