BAPCOR LIMITED — AGM Information 2019

Oct 31, 2019

2019 Annual General Meeting

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S
Retail
U
P
Trade:
P
Retail
•
Burson Australia
L
•
New Zealand
Y
•
Thailand
C
H Specialist Wholesale Group:
A • Mechanical
I • Engine Management
N
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Revenue $1.3 Billion

EBITDA: Net Debt < 2.0 X

EBITDA $165 Million Interest Cover >10.0 X NPAT $94 Million Locations > 950 ~ Market Cap $2.0 Billion Employees > 4,500

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Trade
Specialist Wholesale THAILAND
Retail & Service NT 4
13 4
3 3 7 THAI CAR PARC
• No. of vehicles 16m
QLD
• New cars sold p.a. 850k
163 • Ave. age of vehicles 10 yrs
WA VIC 43 28 92 • Ave. annual growth c. 5% p.a.
61 194
10 8 43 53 25 116
SA
ACT
98 7
13 6 79 3 1 3
NEW ZEALAND
NSW
216
AUS CAR PARC TAS 17352 21 100 59 18 139 NZ CAR PARC
•• No. of vehicles 19mNew cars sold p.a. 1.2m 176 1 10 •• No. of vehicles 5mNew cars sold p.a. 200k
• Ave. age of vehicles 11 yrs • Ave. age of vehicles 14 yrs
• Ave. annual growth c. 2% p.a. • Ave. annual growth c. 3% p.a.
"Underlying growth in every region”
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Revenue

EBITDA

Trade focused 84%

Notes:

1. Trade includes Trade and Bapcor NZ segments

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Record results in FY2019 on all key measures.

Revenue

Up 4.8% to $1,297M (continuing ops)

Up 6.9% (excluding TRS divestment)

EBITDA

Up 9.8% to $164.6M (proforma continuing ops)

Up 11.7% (excluding TRS divestment)

NPAT

Up 9.0% to $94.3M (proforma continuing ops)

Up 11.2% (excluding TRS divestment)

EPS

Up 8.0% to 33.45cps

(proforma continuing ops)

Up 10.3%

(excluding TRS divestment)

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FY2019	FY2019	FY2019	FY2018 Variance	FY2018 Variance
Continuing Operations1
Revenue	$’M	1,296.6	1,236.7	4.8%
Gross Margin	%	46.9%	46.0%	0.9 pp
EBITDA – proforma	$’M	164.6	150.0	9.8%
EBITDA	%	12.7%	12.1%	0.6 pp
NPAT – proforma	$’M	94.3	86.5	9.0%
EPS – proforma	cps	33.45	30.97	8.0%
Dividend	cps	17.0	15.5	9.7%
Continuing Operations excluding TRS
Revenue	$’M	1,296.6	1,212.4	6.9%
EBITDA – proforma	$’M	164.6	147.4	11.7%
NPAT – proforma	$’M	94.3	84.7	11.2%
EPS – proforma	cps	33.45	30.33	10.3%

Notes:

1. The TRS business which was divested 3 July 2018 and is not treated as a “discontinued operation” and is therefore included for the full year in FY2018.

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• FY2019 result in line with guidance

• Result reflects resilience to market conditions

• Major segments of Burson Trade, Bapcor New Zealand and Specialist Wholesale all recorded solid growth

• Retail segment challenged in H2 due to market conditions and high proportion of immature loss making stores

• Intercompany sales growth of 35%

• Commercial Truck Parts acquisition – a future growth platform

• Added 59 new company branch / store locations – now over 950 locations

• Thailand expansion showing positive signs

• Working capital management improved compared to H1 FY2019

• Debt refinanced with more favourable terms

• Major investments in new Point of Sale, Warehouse Management System, IT Infrastructure

• Reinvigoration of Senior Leadership Team

• Focus on training of team members

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AUD $’M proforma	Revenue	EBITDA FY2019 FY2018 % Change 78.2 72.1 8.5% 22.9 20.1 13.8% - 2.6 (100.0%) 46.3 38.6 20.0% 27.1 28.8 (6.0%) (9.9) (12.3) 20.0% 164.6 150.0 9.8%	EBITDA % Revenue
	FY2019 FY2018 % Change		FY2019 FY2018 Change
Trade	524.5 501.6 4.6%		14.9% 14.4% +0.5 pp
Bapcor NZ	165.0 153.6 7.4%		13.9% 13.1% +0.8 pp
Bapcor NZ – TRS1	- 24.3 (100.0%)
Specialist Wholesale	413.1 364.3 13.4%		11.2% 10.6% +0.6 pp
Retail	255.3 239.1 6.8%		10.6% 12.0% -1.4 pp
Group / Elims	(61.3) (46.2) (32.7%)
Continuing operations	1,296.6 1,236.7 4.8%		12.7% 12.1% +0.6 pp

		Revenue
AUD $’M proforma	FY2019	FY2018	% Change
Revenue from Intercompany sales	62.1	46.2	34.5%

Notes:

1. TRS in NZ was divested 3 July 2018, however is included in the above for FY2018 as it was not classified as a “discontinued operation”

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Revenue
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NPAT*

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EPS (cps)
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Dividends per share

Notes:

• Based on proforma continuing operations where appropriate

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Developing our ESG Strategy

• Established a sustainability governance process at Board level

• Integrated sustainability risks within our risk management framework

Ethical Supply Chain/Procurement Environmental Sustainability Formalising agreement of ESC/P Diverted >71% of total waste policy across supplier base (24,000 metric tonnes) from landfill Implemented structured risk Offset delivery fleet emissions; assessment to mitigate modern planting over 19,750 native trees to slavery risk capture 5,292 tonnes of carbon Monitoring international suppliers’ Energy savings of >2 million kW p.a. labour conditions and human rights delivered through Burson & policies through site visits Autobarn LED roll-out to date

Practise Good Governance

Safety Risk Registers operational in all business units

Promoting diversity in the workplace (26% of our workforce is female, 75% of NEDs are female)

Training & development programs, including: leadership, customer service, respect in the workplace, values workshops

Monitoring international suppliers’ labour conditions and human rights policies through site visits

• Achieved our FY19 objectives. Targets set for FY20 and beyond

Positively Impact Our Community

• ‘ Dress Like a Farmer Day ’ for Australian drought relief raised to $74,075 to support Burrumbuttock Hay Runners

Raised a combined total of $35,517 from 76 teams for Steptember

52 Auto Super Shoppes Academy graduates placed into full-time employment in New Zealand

More information on Bapcor’s ESG policy and strategy is available on our website.

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No change to targets – consistent, specific, measurable targets. Significant growth still to come.

• Grow sales

• Organic (circa 2% to 3% pa)

• Footprint expansion

  • Burson 10-12 stores pa

  • Retail up to 10 stores pa

  • NZ 5 stores pa

Margin

• Procurement / buying initiatives

• Pricing management

• Increase “own brand” sales

• Optimise intercompany sourcing of product

• Operating efficiencies

• Consolidate and optimise

• Strategic acquisitions / expansion

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• Estimated 19.2m registered vehicles at the end of 2018, an increase

of 2% on 2017

• Average age of vehicles stable at 10 - 11 years

• New vehicle sales in 2018 were down 3% on 2017 and ending four

years of YoY growth

• 60% of new vehicle sales were in the SUV & Utility categories;

33% in Passenger vehicles

• Electric vehicle penetration continues to be minimal , <0.5% of new

vehicle sales in 2018 were electric vehicles

Source: ABS Motor Vehicle Census; FCAI VFACTS;

No change to industry fundamentals.

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• Now operating 5 stores in Bangkok district

• A procurement office

• Stores making positive progress in new market dynamics

• Good relationships being established with significant chains presenting good growth opportunities as we grow more scale

• As with any start-up operation in a new market we are learning and will over time fine tune product ranges and operation methods to optimise outcomes.

Latest Burson store at retail shopping centre - at entrance to Thai Watsadu. A workshop is also on the shopping centre site.

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• Warehouse Evolution Program – feasibility and detailed planning reaching conclusion with more detailed announcement expected within the next two months

• Warehouse Management System – First location expected to go live in November 2019

• Point of Sale System Retail – some delays due to provider programming issues. Full roll out now expected during the course of FY20 (no impact on project cost)

• Technology Infrastructure – completion due November– improves systems redundancy and stability

• Future Acquisitions – Bapcor is always on the lookout for businesses that fit with our core strategy and are fairly priced. Additions to our commercial vehicle group announced today – Truckline and Diesel Drive

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• Bapcor have signed agreements to purchase Truckline and Diesel Drive

• Truckline is a heavy commercial parts business with 22 locations and revenue of approximately $100M

• Diesel Drive specialises in the sale of Japanese commercial spare parts in NSW with revenues of approximately $13M

• Total purchase price of $48M with underlying ROI of 15% in first full year (FY21)

• FY20 EBITDA impact will be immaterial due to acquisition and transitional costs

• Bapcor is now well positioned to service this sector now having 38 locations in its Commercial Vehicle Group and annual revenues of approximately $160M

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• Market fundamentals and appropriate opportunities continue to drive profit growth;

• YTD trading update

• Selling price increases occurring in all segments, predominately reflecting currency fluctuation / devaluation

• Trade segment same store sales more in line with pre FY19 historical levels however margin below FY19

• Specialist Wholesale continuing to perform reasonably

• NZ facing economic headwinds but still growing

• Retail showing green shoots and positive same store sales growth

• In all segments margins under pressure due to competitive environment

• Profit guidance reiterated for FY2020 of at least mid single digit percentage increase in pro-forma NPAT, with

• EBITDA approx. 2 percentage points higher increase due to additional depreciation from investment in technology and systems.

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QUESTIONS

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The material in this presentation has been prepared by Bapcor Limited (“Bapcor”) ABN 80 153 199 912 and is general background information about Bapcor’s activities current at the date of this presentation. The information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information should not be considered as advice or a recommendation to investors or potential investors and does not take into account investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.

Persons needing advice should consult their stockbroker, solicitor, accountant or other independent financial advisor.

The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions.

This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law.

Certain statements made in this presentation are forward-looking statements. These forward-looking statements are not historical facts but rather are based on Bapcor’s current expectations, estimates and projections about the industry in which Bapcor operates, and beliefs and assumptions. Words such as "anticipates”, "expects”, "intends,", "plans”, "believes”, "seeks”, "estimates”, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Bapcor, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward- looking statements. Bapcor cautions investors and potential investors not to place undue reliance on these forward-looking statements, which reflect the view of Bapcor only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. Bapcor will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority.

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