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 would 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 CFO, George Sakoufakis, who is the company secretary, as well as other members of the Bapcor executive management team. I would 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 is now past 1:30 P.M. 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 are 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 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 will 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 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 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, 20th 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 would 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 am 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 24th 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 recognized the strength of the underlying business and the opportunities ahead. My decision to join the board was underpinned by three 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. Chris. 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, 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 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 is 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 AUD 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 AUD 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 AUD 135 million as at the 30th of June 2026. 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. 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 non-core 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 five-year rotation following the completion of the 2027 audit. 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. 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 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, 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 re-engaged 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. 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 passionate, you can actually place your interest on that vehicle in both Australia and U.S., so get your orders in early.
Being someone that is very passionate about fast cars, I can tell you that I have already looked and started putting my name down for the future. It is an essential industry. It is evolving undoubtedly. The automotive has some very attractive long-term fundamentals. I might ask that we look to page nine. If I look at what is happening with the overall size of the car park, there is no question that the construct of the car park is changing. What is driving those wheels forward is changing. 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 has 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 is 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 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 two 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 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+-year-old vehicles, is also starting to become a very significant growth engine.
Passionate collectors like I am, and I am happy to say that I have got quite a number that sit in that age group. So it is 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. So what we need to be very aware of is the change of not only the vehicle type, but where they are being manufactured in the world. Once vehicles move beyond their warranty period, that is a very significant sweet spot for us. What many people do not 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 three to four 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 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. 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-fleeted 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. It 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 would like to do is really talk to a couple of elements, because while we have been working on the turnaround, we have 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 are 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 keeping people on the road. 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 am 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 are focused on working more closely with our customers, trade partners, and also partners of choice across the industry. Our strategy sets out where we will play and how we will win. Where we will play is in the auto aftermarket segments where Bapcor brands, networks, products, and customer relationships provide a genuine competitive advantage.
We will play in four 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 will win. Within our chosen markets, we will 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 will need to focus on five priority areas. We call them our pillars. Probably no surprise, 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 FY 2026. 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 AUD 1.9 billion, declined 1.8%, and with a very modest profit of AUD 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, AUD 431.6 million, which was clearly a confronting result, but mostly relating to non-cash impairments of assets. Encouragingly, in the last five 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. That was a very pleasing change, validating the enormously hard work that the team had been putting in over five months in 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. 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 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're continuing to focus on both the turnaround as we then start moving into 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. The turnaround we talked about was really focusing on four 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. 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 smarts 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. 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 five months. Competitive price controls were also put in place.
As we reduced prices to have it more competitive, we also introduced disciplines around price discounting. 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%. 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 two to four 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. 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 our capital efficiency, as you've heard. We had our capital raise. We reduced debtors. We reduced overall stock in the organization.
I am going to talk a little bit more about how that has continued into the new year shortly. We actually delivered AUD 68.5 million worth of free cash benefit, reducing our debt further, and that momentum is continuing to grow. We have 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 are at less than half of that vacancy rate at the moment, and we have 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. I have been very humbled and proud to be joined by a number of significant industry experienced leaders and senior leaders that have joined the organization. I would 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 of 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 have brought all of that capability in-house now, and we are actually recruiting internally.
We were joined by a significant leader in Guy Nicholls, who now heads up our Truckline business, former CEO of Ryco. I have 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.
George Sakoufakis, who as introduced, leads the legal team and also Secretary for the organization. We have got a strong senior leadership team making a real difference. I would 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 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.
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, and that's our trading outlook. Firstly, and most importantly, we'd like to reaffirm our confirmation of FY 2027 outlook that was provided just back in August. Confirming that the direction is in line with what we'd spoken about at that point. The first quarter of performance, the turnaround initiatives, the implementation during that second half of FY 2026, 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. I think there's 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 FY 2026. This is a positive sign, and the focus on our competitive pricing, product availability, and in 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.
It's fair to say, non-discretionary or discretionary, it is seeing that the non-discretionary items, where the repair items are still being bought, but non-discretionary 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 FY 2026 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 will be doing reviews on over AUD 300 million worth of non-stock 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 AUD 19 million since the end of half. We are now sitting at AUD 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 FY 2027 outlook expectations. In closing, it is early in FY 2027. We are encouraged by the progress, but it is in very tough trading conditions and we have got a lot more to do.
The auto aftermarket absolutely maintains an attractive market to participate in, and as we improve our fitness, there is 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 few years to come. I may be a little bit more rotund. You can see me proudly in front of the Bapcor hovercar. We have been successful for 50+ years. The future task is clear. Our strategy is clear. We have got significant work to do, but the work has started, and we look forward to rebuilding the organization that we all want to be a part of.
We are committed to delivering a better experience for our team, our customers, creating opportunity, and strengthening partnerships with our trade partners. I would like to thank the board and the GLT for giving me the pleasure of leading this organization, and the 5,000+ people around the countries that we operate that we are 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 will 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 will 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 are about to sell Burson, that is not happening.
Thanks for clarifying.
Well, just had terrors that the share price would move. Okay, so we are 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. 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 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. Gentleman here.
Yeah. Thanks, Mr. Chairman. My name's 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 appreciate it. Yeah. 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 five 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 a question to the auditors.
To the auditors. 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 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 do not provide specific conclusions on our key audit matter, as our financial report is on the financial report as a whole. 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.
Just, I guess you have not said anything about what you could have done better. You have said how well you have done and then, in the past couple of years, how much has been written off. In those previous years, nothing was written off and those businesses were bought three, four, five, six years ago. A heap of goodwill was paid.
Yes, so-
You seem to just accept that. And then now suddenly, "Oh, shit. Well, we threw all that money away. Sorry about that, guys. We are writing it all off now.
That might be more a question for management in respect to the consideration of the goodwill. But certainly, I have outlined those audit procedures that we performed in respect to the company's performance over the last five years, and just noting over those five years, there were prior impairments in respect to goodwill and intangibles over the last number of years as well as the current year.
If I can take over then. In terms of the way that the board exercises its judgment, when it looks at these things, there is no doubt that there is an element of looking at everything fresh in the circumstances in which you find yourself. I cannot talk for previous boards because obviously I was not there. I think that all of those discussions at any board, and I have been on a few of them, and my colleagues have been on a lot more boards than me, there is always a robust debate about what is 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 is 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 five years. 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. 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 sec because we'll get to general questions a bit later.
Okay.
At the moment, it's questions for the auditor.
Okay.
But if there are no more questions for the auditor, then I'll move on. No more questions? Excellent. All right. 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 re-election 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 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 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've a longstanding 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 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, 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 am 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 am 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 will 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.
Hi, Andrew. Well, good luck. You have 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 are going to go putting in enough time into this one that you can make a real difference?
Sure, and I thank you for the question. 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 AUD 350 billion under management, which was a significant role. And I also concluded a role on a charity, the Hear and Say Centre, which I had reached term on as well. So two roles finished last year. When considering this role, the first question I asked 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 is 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.
I can assure shareholders that in the five 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 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. I guess I have to ask those in favor say I, 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're the votes, then they're the votes. I think there's something satisfying about saying those in favor say I and those against. Right. Okay. Andrew, congratulations on being elected to the board. The next item of business, Resolution 1B, relates to the re-election 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 in March of 2023, which is now just over three years ago, and I've served through a period of significant change in the company, which is probably something of an understatement. 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 two decades of Non-Executive Director experience across a range of industries, including infrastructure and energy, healthcare, construction, retail, and financial services, together with a background as a legal advisor, both in private practice and in government law.
I am Deputy Chair and as Chair of the Nomination, Remuneration, and ESG Committee, I have been closely involved in board renewal, leadership succession, and the development of remuneration and governance arrangements that support accountability and sustainable performance. If re-elected, I will 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. 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-Executive Director who has served on the board for the past three years, Kate brings important continuity and a deep knowledge of Bapcor and considerable experience gained throughout the time that she has 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 re-election. The resolution appears on the screen, and I will take it as being read. The valid proxies votes received are also displayed. Are there any questions in the room on this? Yes, there is a question here.
Yeah, just a question for Kate. I guess, Bapcor, fair to say, since I have been following it the last six years, it has been a car crash. The share price is down from AUD 6 to AUD 0.75. You have had four 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 four different CEOs and being told to do this and do that, et cetera. I do not lay this all at your door because you came in halfway through this.
What do you think the board should have challenged or recognized earlier? How has that changed how you have thought of your role at Bapcor?
Yes. Sorry. It's an interesting figure, obviously, to see on the board. 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. You mentioned four CEOs in that time, which of course was very difficult. 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.
I think the company's 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. 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. 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.
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?
I guess I just
Sorry.
I think it was a reasonable answer, but I do not think you actually picked out one or two things that maybe could have been done differently.
Look, 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 had never started it. But hindsight, as you have said, is a wonderful thing. It probably was not the ideal program. There are not a lot of CEOs who are available and suitably qualified for a role such as this. While I would have loved a field of highly suitable CEOs to be able to choose from, it just is not always the case. That is always a challenge for a board to appoint the appropriate CEO.
Thank you. All right. Are there any other questions in the room? Yes, the gentleman there. Sorry.
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's 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 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. 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 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. 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 advisors or major shareholders ahead of today's AGM? What is her understanding of the issues and people who caused this protest vote? What is her response? You've partly answered it.
Well, I think that's partly been answered
Yeah
by what I just said.
Yeah.
But to take the first part of that question, yes, Kate and I both met with a number of proxy advisors 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 her re-election from the proxy advisors. 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 not only by number, but also by percentage, are actually endorsing Kate's re-election. We tend to focus on the 36% against rather than the 63% for. So it's 63% for, and so therefore Kate is duly re-elected.
Are there any other questions on this matter, Karen? No. Okay. Alrighty. 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 non-binding 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? Nope. Karen, are there any questions online in relation to this resolution?
No.
Okay. Fantastic. Well, there being no more questions, I will formally put this resolution to the meeting, and it is carried. I will now move on to Resolution 3. Resolution 3A is approval for the grant of the FY 2026 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.
Yeah. I guess in the ASA, we are 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 five, six, seven years in the future, which I think is pretty well what has happened here. So I am just wondering, with the specific performance measure here, like stuff that happened before Chris was here, not really down to him. What is happening hereon, 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 is rewarded if things go well, and not rewarded if things do not go well?
Well, I think I will 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 are 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 non-financial, 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 is starting from a position now which is informed by the past, and that is tough. There is no getting away from it. So yes, I think the opportunity is there and the structure is being 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. The 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.
I should say that Chris is, I hope you do not 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 have all, I think, been acquired by you, Chris. So I think if there is something that really demonstrates that alignment, it is not just the LTIP, it is also the man is putting his money on the line alongside shareholders.
Yeah. Thank you. Good on you for doing that, Chris, and I think the board has been buying shares as well.
We have.
That hasn't always happened, I guess, four, five years ago. 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.
Absolutely.
It doesn't mean things can't be better going forward. I hope Chris is still here in three, four years' time and doing a great job. 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? Karen, are there any questions online in relation to this resolution?
No questions.
There being no more questions in respect of Resolution 3A, I now formally put this resolution to the meeting, and it looks like it is carried. We now turn to Resolution 3B on slide 25. This seeks shareholder approval for the grant of the FY 2027 performance rights to Chris. The resolution appears on the screen, and I will take it as read. The valid proxy votes received are also displayed. I will very quickly ask, are there any questions? Because it is sort of the same approval as the last one. There not being any questions in the room, no questions online.
Then I will 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 will 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 is a question here.
Yep. I guess in general, ASA guidelines are against retention payments, because we think if someone poaches you, they just pay the extra money anyway. But in this case, I think it is kind of fair enough. The stability of leadership is probably right up there with some of the most important things you will be doing. So yeah, I guess I would 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. The question of retention became very clear very quickly. We had to ensure that people had every reason to stay. Given the performance of the business, frankly, that was not a given. 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 is nothing you can do about that.
But in a sense, that is being taken up because someone wants to go. What we were looking to do was to give people reasons to stay that were important. I agree with you, it is not a regular way thing. It is not part of our ongoing remuneration plan, and Kate as Chair can speak to that if she thinks there is 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 will 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 will 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 will 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 will 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 was one. Sorry.
Yeah.
I was too quick.
I guess ASA, we like it when these shares are purchased that they are 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. Are there any other questions? Karen?
No.
Excellent. All right. There being no further questions, I will put this resolution formally to the meeting. All right. We will 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. I know there is one question in the room, so I will go to you, sir.
Okay. Michael Barrett's my name. I have been a shareholder almost since day one. I am a small private investor. I have a couple of shareholdings. I have come along to almost every AGM. If I have been interstate or overseas or doing something, or sick.
Right
I have not come along, but I have always made an effort to come along here and try and ask some positive questions.
Thank you.
I have seen a lot of various executives come and go, and building premises come and go as well.
If you only had a dollar for every person you have seen-
That is right.
on this stage. Yeah.
I actually bought something this morning because I was early, at an Autobarn for AUD 17, or AUD 16.
Thank you for your support.
It always comes back.
Indeed.
I also invest in the broader space for the automotive industry.
Yes.
I hold shares in several motor vehicle distributors. The other thing is that I've got shareholdings in several mining companies. That would be my main portfolio, is in the mining portfolio, with lithium, and some of the rare earths and also graphite. They're 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.
Yes.
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?
Indeed.
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. 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. The other thing, too, is there's a lot of embedded technology in EVs. 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. Batteries, for instance, you might see that as a big opportunity.
It may not be as well because of the proprietary-type technology. So I'm just wanting for Chris to expand on what you actually spoke about before and how Bapcor is actually going to challenge that position. The next thing is that, I'm of the opinion, and I've observed it, that being a motor vehicle mechanic is not a career aspiration for kids coming out of school anymore. Usually, they're employees of a large dealership. The other thing, too, is that 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.
The other thing, too, is that with things like gearboxes and differentials and motors and everything else, 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.
Yes.
Right? And the other thing, too, is they are not component manufacturers. They are all being made under the one roof.
Okay.
Okay.
Well, Chris-
So they are just some of the things that-
Yep
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, are you going to perform the role you used to perform?
Well, I think change is inevitable except from a-
Absolutely
vending machine.
That's the-
But, yes, we do see opportunity, and I will hand over to Chris to answer the question more fully.
There is a couple of comments. Certainly, if you go back about 15 years ago, the Australian Automotive Aftermarket Association that I was sitting on the board at the time, lobbied the government around the right to repair. If they had not have taken that action, frankly, a lot of parts today, particularly as you went from analog vehicles into ECU-based, and actually even the fact that a battery needs to be recoded into your actual management system. You cannot just change the terminals and operate it. That was the right to repair. The same conversation is being had with the AAAA now with the government and for exactly the same reasons. The government does not want to see restricted access to coded equipment or more tech-related parts.
They are 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 under-invested 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, he has got a bigger house, a bigger boat, and I think he has 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 cart trolley in a Woolworths store, and there was a path to CEO.
And a wonderful privilege and a wonderful journey to get to this point. Well, actually starting on the tools, I think we have got a man down the, out the back that was the CEO of Ryco that is now leading Truckline that started on the tools in a workshop. We have got to create very clearly a sight line for young people to see there is a path in this industry, and that is what the AAAA is committed to. 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 two comments.
But that's not the thrust of my whole question, though. How is Bapcor going to respond to this?
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. 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 a pre-apprenticeship scheme to bring tradespeople into the segment. So I think we're doing quite a lot in those spaces.
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 notice you are chipping away at the debt, which is a good thing.
Yes.
Do you have a target in mind for the debt level, and where do dividends fit into that?
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. That brought it down substantially. You would have seen since the rights issue, it has continued to come down. That is not actually deliberately per se because we are targeting debt. It is a function of running the business better. 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. I think we have a balance sheet that now supports our turnaround.
The question of dividend is, I think, one that we will address down the track. As was commented by a couple of people earlier, all of the board are shareholders. We are 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. I will come back to you on that point, but it is 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.
This is a combination of a question from a couple of shareholders. Bapcor's performance since its share price high of AUD 8.50 in July 2001, and with Darryl Abotomey as MD, has only been on a downward trajectory since then. There was an urgent capital raising earlier this year. What went wrong? What did you miss? 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. 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. That has now been addressed. That's been done.
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. We've got really one major challenge, get the right inventory part in the right location and get it to a mechanic in a couple of hours. That's it. That's what we've got to do.
If we can do that well, then we can structure all of the components around those three simple things. We will drive a more profitable business, and that will turn it around. I do not think there is anything other than clarity on what we have got to do now, and that will be the focus going forward. I see no reason why we cannot restore the profitability levels of the past in the future. It will not be quick, and Chris has indicated in his speech, the next 12 months, how we see that panning out, and that is evidence of the fact that this has started, but it still requires work. 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. 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 could not buy more shares. I could not buy more shares because it was so well supported by the shareholders in taking the company forward. I think, Kim, I am-
Also geographic issues with-
Yeah. Oh, as in they are outside of Australia.
Yeah.
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 forwards. Are there any other questions?
Okay. I have 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 watched an archive of the AGM webcast in preparations for today's AGM? 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 advisors? 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 could not remember what was done. I did not go back and look at the transcript. In terms of did it influence meetings with proxy advisors or shareholders in the lead up to today, we have a process of meeting with proxy advisors 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. 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 are going to do to restore shareholder value.
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. 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've 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.
Yep. Thanks, Mr. Chairman. Last one. Well, firstly, just a little comment. You had a question of what's gone wrong. 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, five, six 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 stored up long-term problems because the businesses weren't integrated. Because that would've cost something, and that would've probably meant not meeting targets that resulted in executive bonuses and the 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 until it was too late. Actually, the market as a whole, the analysts didn't see that there were underlying problems in Bapcor. It probably never should have been a AUD 6 share because there were all those problems that were yet to come out. That's my two cents worth on what I think went wrong. Then you had a whole range of CEOs to go through. Probably my question is, since Darryl was shown the door, whatever, five, six 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've 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. 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. The truth is always somewhere in the middle. 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.