Bapcor Limited (BAP) Earnings Call Transcript

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 [indiscernible] 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 Wilesmit, 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 is 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 Christine Piccolo representing the company's share registry, Computershare Investor Services. It's now past 1:30, and the Company's 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. Well, 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 1 topic, we'll try and consolidate those into 1 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 address 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 was 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 Wilesmit 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 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 is 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 and 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 will reach the end of a maximum 5-year rotation following the completion of the 2027 audit. So PwC will continue as Bapcor's external auditor for the 2021 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 Wilesmit, to address the meeting.

Thanks, Lachlan. Welcome to all, and thank you for investing some time this afternoon to come and talk with us. Nine months in the role and 21 years in the industry. It's an industry that I love. And it was a great honor to be given the opportunity to come and lead an organization, first, in turn around 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 I get your orders in early. And being someone who 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 is certainly being 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 is that they are different parts. They're 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 have before. At its most fundamental level, the aftermarket is driven by the number of vehicles on the road. 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 are 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 in 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 our 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, an 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 super power that certainly our business is 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 car vehicles to ICUs 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 strong relations into Asia for many years. The fundament why I'm very confident about the long-term opportunity in the segments that we operate. But it also highlights that we still need to be very aware of how important the evolution of our business. 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 have 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 of 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 will 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, the 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 that core 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've started to look at where we can drive both efficiency and to take non-value-add costs 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 browser, 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 is certainly being 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 has been putting in over 5 months in a very tough trading conditions to actually change trajectory. Networks retail return to like-for-like sales growth over the period. Trade stabilized and has picked up market share. Very pleasing to say, when you're picking up market share in tough environments, it will play very well when things do start returning to a normal. They will. It's just when. These are early progresses demonstrated the actions that we implemented in the turnaround, are beginning to gain traction, and we are 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 part 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 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 significant momentum in margin, we did it by the use of data analytics and actually using 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 the 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 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 have 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. We're 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 our capital raise. We reduced our 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 experience leaders and senior leaders that have joined the organization. And I'd just like to talk to some of those people now. Craig Mcgill, 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 the 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, Guy Nicholls, who now heads up our truck line business, former CEO of Rico. 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 Super Cree. We had 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 Story, heading up our New Zealand organization 10 years. Morris Libenen 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 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 have 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 Deacon 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 being done in the early stage of the turnaround. And 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've 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 are 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, Jazz and also our 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 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 has been 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 of that 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 if 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, have seen us reduce by another $19 million since the end of the 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 is 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 rotunded. You can see me proudly in front of the Bapcor Hover car. We've been successful for 50-plus years. The future at 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 5,000-plus 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 think, 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 persons, that is not -- just wanted -- 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 -- sorry, 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?

It's no written question.

Thank you. Are there any questions in the room for the auditors? Yes, gentleman here.

Yes. Thanks, Mr. Chairman. My name is Steve van Emmerik. 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 appreciated. Yes, big write-offs again this year. That suggests to me that those values on their balance sheets were probably a questionable to begin with or were accepted without a lot of insight into a 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?

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 approve. 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'll 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 have signed an unmodified opinion both in the prior years and the current year with respect to the financial report and in particular, carrying bay 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, heap of goodwill was paid. You can't just accept that. And then now suddenly, "S***, well, we throw all that money away. Sorry about that, guys. We're riding all 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 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 each and every case. Are there any other questions?

Well, I'd like to ask some questions 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's 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 1 of July 2026, so after the 30 June year-end. He was appointed as an Independent Non-Executive 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 1 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 going to be part of the work to help restore Bapcor's potential. If elected, I'll bring an investor's 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, to support rigorous oversight of the company's financial performance, key risk 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 University and Chair of Orange Sky Australia as well as serving as a Non-Executive Director of the Brisbane Bronchos 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?

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 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 of the 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 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 and the support that he's given me as Chair have been nothing less than fantastic and very hopeful 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?

None.

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 first 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 3 -- just over 3 years ago, and I have served through a period of significant change in the company, which is probably something of an understatement. During that time, our 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 nonexecutive 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 ask for Kate to serve as Deputy Chair. As the only nonexec director has served on the Board for the past 3 years, Kate brings important continuity and decade of 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 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 since I've been following it in the last 6 years, it's been a car crash, share price is down from $6 to $0.75. We've had 4 different CEOs. You had a massive turnover of staff, which I actually feel for the staff actually because they must be pretty hard having CEOs and being told to do this and do that, et cetera. But -- and I don't -- lady saw 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 have 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 comps question as to why we have found ourselves where we are. And you mentioned 4 CEOs in that time, which as difficult. 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 -- 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 better place.

Are there any other questions?

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, 1 of the things that was difficult in the company was the Better than Before Program, which some of you may recall, which was commenced before -- just before I started, I wished we had curtailed that probably. I wish we'd never started it. But it 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 Relly ], 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, is strong against vote. Where is that coming from? And why do you think that's happening?

Well, look, I think there -- 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 1 question online. I might shorten this because this has been partly answered. It's from Stephen Maine. Did Kate meet or communicate with any proxy advisers or major shareholders ahead of today's AGM. And what is her understanding of issues and people who caused this process -- protest vote and what is her response? You've partly answered?

Well, I think that's partly been answered by what I just say. But 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 their 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? No? Okay. All right. 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 were 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 or 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 Wilesmit, 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's 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 could 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 at all 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 after it. 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, we'll 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's 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 by 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 in 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 if there's something that really demonstrates that alignment, it's not just the LTIP, but it's also the man is putting his money on the line alongside shareholders.