BAPCOR LIMITED — Annual Report 2018

Aug 21, 2018

Bapcor Limited Appendix 4E Preliminary final report

1. Company details

Name of entity: Bapcor Limited ABN: 80 153 199 912 Reporting period: For the year ended 30 June 2018 (‘FY18’) Previous period: For the year ended 30 June 2017 (‘FY17’)

2. Results for announcement to the market

==> picture [534 x 242] intentionally omitted <==

----- Start of picture text -----

$’000s % $’000s
Revenue from continuing operations Up 223,128 22.0 to 1,236,681
Statutory Up 44,055 42.8 to 147,068
Earnings before interest, taxes, depreciation and
amortisation from continuing operations
Pro-forma Up 32,570 27.7 to 149,974
Statutory Up 30,769 57.3 to 84,501
Net profit after tax from continuing operations
Pro-forma Up 20,774 31.6 to 86,541
Net profit after tax ** Statutory Up 30,612 47.8 to 94,656
Statutory Up 10.14 cps 42.7 to 33.90 cps
Earnings per share - basic (cents per share)
Pro-forma Up 6.59 cps 27.0 to 30.99 cps
----- End of picture text -----*

• Pro-forma results exclude discontinued operations and include adjustments from statutory results to reflect the underlying performance of the business

** Net profit after tax attributable to the members of Bapcor Limited

Statutory revenue and statutory net profit after tax for FY18 increased by 22.0% and 47.8% respectively compared to FY17.

After adjusting statutory net profit after tax for once-off restructuring costs and divestment gains in the current year and transactions relating to the takeover of Hellaby Holdings Limited (‘Hellaby’) in the prior year, pro-forma net profit after tax from continuing operations increased by 31.6%. The increase in pro-forma net profit after tax reflects the full year impact of the Hellaby acquisition in FY17, as well as continued strong performance of Bapcor’s existing businesses.

Pro-forma earnings per share from continuing operations for FY18 was 30.99 cents per share, up 27.0% compared to FY17.

Net debt at 30 June 2018 was $289.5M representing a leverage ratio of less than 2.0X (Net Debt : FY18 EBITDA).

For a further explanation of the results above, refer to the Company’s ASX/Media Announcement for the year ended 30 June 2018 and the accompanying Directors’ Report.

Bapcor Limited Appendix 4E Preliminary final report

3. Dividends

3. Dividends
		Franked
	Amount per	amount per
	security	security
	Cents	Cents
2017 Interim dividend	5.5	5.5
2017 Final dividend	7.5	7.5
2018 Interim dividend	7.0	7.0
2018 Final dividend (declared after balance date but not yet paid)	8.5	8.5
Record date for determining entitlements to the dividend:	31 August 2018
Date dividend payable:	27 September	2018

4. Dividend reinvestment plans

Bapcor operates a Dividend Reinvestment Plan (‘DRP’), which provides shareholders with the opportunity to utilise all or part of their dividends to purchase shares in the Company. The DRP will be in operation for the 2018 final dividend.

Shareholders who elect to participate in the DRP for the 2018 final dividend will be issued shares at a DRP issue price which will be the average of the daily market price of Bapcor’s shares over the period of ten trading days between 10 September 2018 and 21 September 2018 (‘Pricing Period’), less a 1.5% discount.

The timetable in respect of the 2018 final dividend and DRP is as follows:

==> picture [534 x 97] intentionally omitted <==

----- Start of picture text -----

Event / Action Date
Record Date 31 August 2018
Election Date: Last date for shareholders to make an election to participate in the DRP 5.00 pm (Melbourne time)
on 7 September 2018
Pricing Period Commencement Date 10 September 2018
Last day of Pricing Period 21 September 2018
Announcement of DRP issue price 24 September 2018
Dividend Payment Date / Issue of DRP shares 27 September 2018
----- End of picture text -----*

*All dates are subject to change

Details of the DRP can be downloaded from http://www.bapcor.com.au/dividends. In order to participate in the DRP for the 2018 final dividend, shareholders should ensure that their DRP Election Form is received, or an online election is made, by no later than 5.00 pm (Melbourne time) on 7 September 2018. An online election can be made by visiting www.investorcentre.com.

5. Basis of preparation

The financial statements have been audited and an unqualified opinion has been issued.

6. Attachments

The Financial Report of Bapcor Limited for the year ended 30 June 2018 is attached.

==> picture [596 x 85] intentionally omitted <==

BAPCOR LIMITED ABN 80 153 199 912

Financial Report 30 JUNE 2018

==> picture [475 x 502] intentionally omitted <==

Bapcor Limited Directors' report 30 June 2018

The Directors present their report, together with the financial statements, on the consolidated entity ('consolidated entity') consisting of Bapcor Limited ('company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2018 (‘FY18’).

1. Directors

The following persons were directors of Bapcor Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Robert McEniry	Independent Non-Executive Chairman (resigned 4 April 2018)
Andrew Harrison	Independent, Non-Executive Chairman (appointed Chairman 4 April 2018)
	Independent, Non-Executive Director (to 4 April 2018)
Darryl Abotomey	Chief Executive Officer and Managing Director
Therese Ryan	Independent, Non-Executive Director
Margaret Haseltine	Independent, Non-Executive Director

2. Principal activities

During the year the principal activities of Bapcor were the sale and distribution of motor vehicle aftermarket parts and accessories, automotive equipment and services, and motor vehicle servicing.

Bapcor is one of the largest automotive aftermarket parts, accessories, equipment and services supplier in Australasia with a continuing operations store network covering over 800 sites.

3. Significant changes in the state of affairs

During FY18 Bapcor's operations included its principal automotive activities as well as the non-core businesses of Footwear and Resource Services which were acquired as part of the Hellaby Holdings Limited (‘Hellaby’) acquisition in January 2017. These non-core businesses are disclosed as discontinued operations and were successfully divested during FY18.

For the first time, Bapcor's Financial Report reflect a full year of results relating to the Hellaby automotive business acquisition. In the second half of FY18, there was a reorganisation of the reporting structure of the ex-Hellaby Australian automotive wholesale operations and as a result these operations are now included as part of the Specialist Wholesale segment rather than within the Bapcor New Zealand segment. This represents a change compared to Bapcor’s reporting of the FY17 and H1 FY18 results. The comparative FY17 results have been adjusted to reflect this change.

Bapcor completed a number of acquisitions in FY18 including Tricor Engineering ('Tricor') and AADi Australia Pty Ltd and A&F Drive Shaft Repair Qld Pty Ltd ('AADi') expanding the depth and breadth of its offering through the Trade and Specialist Wholesale segments. There were also a number of acquisitions of independent automotive parts stores that now trade under the Burson Auto Parts or Autobarn brands.

During FY18 Bapcor entered into a tri-party joint venture in Thailand holding 51% of the shares of the incorporated entity Car Bits Asia., Co. Ltd ('CarBits'). At the end of FY18, CarBits opened the first store in Thailand trading as Burson Auto Parts. This is the first store of four to five planned to open in calendar year 2018 which will test the trading model prior to possible future expansion.

1

Bapcor Limited Directors' report 30 June 2018

4. Dividends

Fully franked dividends paid during FY18 were as follows:

29 September 2017 $20,882,000 (7.5 cents per share); $4,896,000 settled via DRP 27 April 2018 $19,569,000 (7.0 cents per share); $3,774,000 settled via DRP

The Board has declared a final dividend in respect of FY18 of 8.5 cents per share, fully franked. The final dividend will be paid on 27 September 2018 to shareholders registered on 31 August 2018.

The final dividend takes the total dividends declared in relation to FY18 to 15.5 cents per share, fully franked, representing an increase of dividends paid of 19.2% compared to the prior financial year. Dividends paid and declared in relation to FY18 represents 50.3% of pro-forma net profit after tax from continuing operations.

5. Review of operations

The key highlights of Bapcor’s financial results for FY18 were:

• Revenue from continuing operations increased by 22.0% from $1,013.6M to $1,236.7M

• Pro-forma earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) from continuing operations increased by 27.7% to $150.0M

• Pro-forma net profit after tax (‘NPAT’) from continuing operations increased by 31.6% to $86.5M

• Pro-forma EPS based on NPAT from continuing operations increased by 27.0% to 30.99 cents per share

• Statutory NPAT increased by 47.8% to $94.7M

• Statutory earnings per share (‘EPS’) increased by 42.7% to 33.90 cents per share

• Net debt at 30 June 2018 was $289.5M representing a leverage ratio of less than 2.0X (Net Debt : last twelve months EBITDA).

The table below reconciles the pro-forma result to the statutory result for FY18 and FY17:

==> picture [534 x 97] intentionally omitted <==

==> picture [534 x 96] intentionally omitted <==

2

Bapcor Limited Directors' report 30 June 2018

Notes:

1. NPAT attributable to members of Bapcor Limited

2. Relates to one off costs incurred during FY17 for the acquisition of Hellaby. These costs included professional advisory fees, target defence costs, finance costs relating to the bridging facility and refinancing, restructuring costs, one time elimination of intercompany profit in stock and other costs.

3. The prior year interest adjustment reflects the additional interest expense that would have been incurred if the Hellaby related capital raising did not occur due to the reduction in borrowings between the time of the capital raising and the payment for Hellaby shares.

4. The depreciation and amortisation adjustment relates to the depreciation and amortisation in the Resource Services and Footwear divisions that was not recorded in the statutory accounts due to their held for sale status.

5. The gain on divestment relates to the completion of the divestments of discontinued operations.

6. Relates to the release of net investment hedge and foreign currency reserves to the profit and loss on divestment of Contract Resources and Footwear.

7. Relates to one off costs incurred during FY18 relating to restructuring activities including redundancies, site exit costs and recognition of onerous leases.

8. The tax adjustment reflects the tax effect of the above adjustments based on local effective tax rates.

The Directors’ Report includes references to pro-forma results to exclude the impact of the adjustments detailed above. The Directors believe the presentation of non-IFRS financial measures are useful for the users of this financial report as they provide additional and relevant information that reflect the underlying financial performance of the business. NonIFRS financial measures contained within this report are not subject to audit or review.

Pro-forma revenue and EBITDA for continuing operations by segment is as follows:

==> picture [490 x 118] intentionally omitted <==

It is worth noting that in FY18, every business segment increased its EBITDA compared to FY17.

Notes:

1. Revenue relates to intersegment sales eliminations. EBITDA includes intersegment EBITDA and acquisition costs.

2. Reclassifications in FY17 between segments have occurred to present them consistently with the FY18 reorganisation of the business segments to ensure comparability.

3

Bapcor Limited Directors' report 30 June 2018

5.1 Bapcor aftermarket supply chain

==> picture [334 x 381] intentionally omitted <==

5.2 Operating and financial review – Trade

The Trade segment currently consists of the Burson Auto Parts and Precision Automotive Equipment business units. This segment is a distributor of:

• Automotive aftermarket parts and consumables to trade workshops for the service and repair of passenger and commercial vehicles

• Automotive workshop equipment such as vehicle hoists and scanning equipment, including servicing of the equipment

• Automotive accessories and maintenance products to do-it-yourself vehicle owners.

4

Bapcor Limited Directors' report 30 June 2018

The Trade segment had a successful FY18, and compared to FY17, recorded revenue growth of 7.8% and EBITDA growth of 13.9%.

The increase in revenue of 7.8% included same store sales growth of 4.4% (compared to 4.6% in FY17). Trade’s EBITDA to revenue percentage was 0.8 percentage points above FY17 reflecting the impact of margin management initiatives.

During FY18, Burson Auto Parts continued to expand its store network with the number of stores increasing from 160 at 30 June 2017 to 170 at 30 June 2018. The increase of 10 stores consisted of 7 greenfield store developments and 3 acquisitions. The average cost per new greenfield store including inventory was $658,000.

The new stores are located in Narellan, Bathurst and Kempsey in New South Wales; Kingston in Tasmania; Albion, Ashmore and Hervey Bay in Queensland; and Dandenong South, Hastings and Grovedale in Victoria.

Trade also successfully completed the acquisition of Tricor Engineering during the first half of FY18. Tricor Engineering is a business specialising in the supply and installation of lubrication equipment in the Car Dealership and Heavy Vehicle Workshop market and operates out of the Precision Automotive Equipment business unit.

5.3 Operating and financial review – Bapcor New Zealand

Bapcor New Zealand (previously Hellaby Automotive and excluding the Australian wholesale operations) consists of Trade and Specialist Wholesale businesses based in New Zealand operating across more than 80 locations.

BNT is the predominant business with 57 stores supplying automotive parts and accessories to workshops, plus truck and trailer parts through the Truck and Trailer Parts brand. BNT is similar in nature to Bapcor’s Burson Automotive business in Australia.

Bapcor New Zealand also includes the Specialist Wholesale businesses of HCB – batteries, Autolign - steering and suspension specialists, and JAS - auto electrical. The FY18 results also included TRS, a tyre and wheel business predominantly supplying the agricultural market which was divested in early FY19.

Bapcor New Zealand's results in FY18 include a full year of trading versus six months in FY17. Bapcor New Zealand has performed very strongly and contributed $22.7M EBITDA to the FY18 group results. Revenue increased by 104.1% and EBITDA increased by 144.3%. EBITDA to revenue percentage increased to 12.8% in FY18, compared to 10.7% in FY17. In FY18 the Australian Dollar versus the New Zealand dollar has strengthened by approximately 3% versus the previous financial year which negatively impacted EBITDA by $0.7M.

As Bapcor New Zealand’s largest business, BNT achieved same store sales growth of 6.1% reflecting the success of organisational changes, range expansion, people engagement initiatives and underlying market growth. The first new BNT store in over five years was opened in December 2017 in Gore, New Zealand. Further new stores will follow.

5.4 Operating and financial review – Specialist Wholesale

The Specialist Wholesale segment consists of the operations that specialise in automotive aftermarket wholesale and include AAD, Bearing Wholesalers, Opposite Lock, Baxters, MTQ, Roadsafe, as well as JAS Oceania, Premier Auto Trade, Federal Batteries and Diesel Distributors that were previously aligned to the Bapcor New Zealand segment.

The Specialist Wholesale segment achieved revenue growth of 33.8% and EBITDA growth of 37.7% compared to FY17. This is partly due to the business units of JAS Oceania, Premier Auto Trade, Federal Batteries and Diesel Distributors now being included for the full twelve months in FY18, as well as improved performance in the existing businesses. EBITDA to revenue percentage increased to 10.6% in FY18, compared to 10.3% in FY17.

Continued progress was made during the financial year to increase the volume and product groups that the Specialist Wholesale segment sells into other Bapcor group businesses and this will continue in FY19 with growing the level of intercompany sales being a key business strategy.

5

Bapcor Limited Directors' report 30 June 2018

5.5 Operating and financial review – Retail & Service

The Retail & Service segment consists of business units that are retail customer focused, and include the Autobarn, Autopro, Sprint Auto Parts and Car Parts retail store brands, and the Midas and ABS workshop service brands. The majority of this segment is franchised stores and workshops and there are 67 company owned stores.

Revenue for the Retail & Service segment in FY18 increased by 8.2% compared to FY17 which includes the impact of a higher ratio of company owned stores versus franchise operations. Autobarn same store sales growth for franchise stores was approximately 1.4% and for company owned stores approximately 4.7%. As a result of the higher mix of company owned stores generating a higher level of sales relative to profit, EBITDA as a percentage of sales decreased by 0.5 percentage points from 12.5% in FY17 to 12.0% in FY18. EBITDA as a percentage of sales increased by 0.9 percentage points in H2 FY18 compared to H1 FY18. EBITDA in FY18 increased 4.4% over the prior year.

Bapcor has continued to grow the number of company owned Autobarn stores via both greenfield Autobarn stores as well as some select conversion of franchise stores to company owned stores. The total number of Autobarn stores at 30 June 2018 was 128 stores, a net increase of 6 stores since 30 June 2017. The number of company owned Autobarn stores increased from 31 to 48, with the 17 new stores consisting of 8 greenfield stores and the conversion of 9 franchise operations. The percentage of company owned to total Autobarn stores at 30 June 2018 was 38%, up from 25% at 30 June 2017.

At 30 June 2018 the total number of company owned and franchise stores in the Retail & Service segment was 378 consisting of Autobarn 128 stores, Autopro 84 stores, Sprint Auto Parts 38 stores and Midas and ABS 128 stores.

5.6 Operating and financial review – Unallocated / Head Office

The Unallocated / Head Office segment consists of all elimination and head office costs or adjustments that are not in the control of the other business segments. Unallocated costs increased from $10.8M in FY17 to $12.3M in FY18 due largely to an increase in business as usual acquisition costs of $0.7M as well as the additional resource and other costs associated with the increased size of the overall business.

5.7 Operating and financial review – Discontinued Operations

As part of the acquisition of Hellaby in January 2017, Bapcor acquired the businesses of Resource Services and Footwear. These assets were deemed non-core and reported as held for sale. During FY18, these businesses were all successfully divested. Total proceeds less costs to sell these divestments was $94.3M (NZD $102.8M) which was higher than the estimate of $87.7M (NZD $94.7M) estimate disclosed as part of the 31 December 2017 Financial Report.

In FY18, the discontinued operations contributed $145.6M revenue and $10.2M net profit after tax to the consolidated group. The net profit after tax contribution included $7.0M gain from the divestments.

5.8 Financial Position - Capital Raising and Debt

In September 2017, Bapcor issued 932,347 shares to participating shareholders under its Dividend Reinvestment Plan, in respect of the FY17 final dividend. In April 2018, Bapcor issued 679,325 shares to participating shareholders under its Dividend Reinvestment Plan, in respect of the FY18 interim dividend. As a result of these issues, ordinary shares on issue increased from 278,633,080 as at 30 June 2017 to 280,244,752 as at 30 June 2018.

Net debt at 30 June 2018 was $289.5M representing a leverage ratio of less than 2X (Net Debt : last twelve months EBITDA).

6

Bapcor Limited Directors' report 30 June 2018

6. Strategy

Bapcor’s strategy is to be Australasia’s leading provider of motor vehicle aftermarket parts and accessories, automotive equipment and services, and motor vehicle servicing.

Trade

Trade consists of the businesses Burson Auto Parts, Precision Automotive Equipment and the recently acquired Tricor Engineering. The business units are trade-focussed “parts professionals” businesses supplying service workshops. Bapcor’s target is to grow Burson Auto Parts’ store numbers via acquisitions and greenfields from 170 stores at the end of June 2018 to 230 stores by 2023 with 35% home brand product content.

Bapcor New Zealand

Bapcor New Zealand’s operations consist of its automotive aftermarket businesses of BNT and Truck and Trailer Parts, as well as its automotive electrical businesses of HCB and JAS Oceania. The strategy is to grow the BNT business from its current 57 stores to 65 by 2021, as well as grow its electrical businesses organically and potentially through acquisition. Bapcor New Zealand also has a target to grow home brand content to 35%.

Specialist Wholesale

The Specialist Wholesale business strategy objective is to be the number one or number two industry category specialists in the parts programs in which it operates. The parts programs in which the specialist wholesale segment has historically operated are brake, bearings, electrical, suspension, 4WD, cooling, engine control systems and gaskets.

The Specialist Wholesale businesses are focused on maximising internal sales, developing private label product ranges, and the evaluation of its distribution footprint including opportunities for shared facilities. Specialist Wholesale growth may also include acquisitions where they are complementary to the current product group offerings. The target is for Specialist Wholesale segment to be at least $450M in revenue by 2023.

Retail & Service

Autobarn – The premium retailer of automotive accessories, Autobarn had 128 stores at the end of 30 June 2018 including 48 company owned stores. The target is to grow to 200 Autobarn stores by 2023, with a majority of growth being company owned stores. Home brand content is also targeted to be 35%.

Independents – The independents group consists of the franchise stores of Autopro, Car Parts and Sprint Auto Parts. The strategy is to supply the independent parts stores via Bapcor’s extensive supply chain capabilities and brand support. Bapcor’s strategy is to strongly support the independent stores.

Service – The service business consists of the brands Midas and ABS and aims to be experts at scheduled car servicing at affordable prices. There were 128 stores at 30 June 2018 of which 118 were franchised. Bapcor consider Service a potential growth area due to the industry consolidation opportunities and the potential to vertically integrate supply of product through its Trade and Specialist Wholesale segments and will actively expand this segment.

Competitive advantages

People – Bapcor has a strong and experienced management team and a proven record of attracting, retaining and growing key talent across the group. Training and development of team members are a priority for the group.

Supply Chain – strength of distribution network ensures fast delivery to trade customers who rely on quick access to parts to improve service time to their customers.

Diversification – extensive breadth and depth of product range and capability across the group provides multiple revenue streams and continues to drive intercompany sales and margin improvements opportunities, whilst spreading reliance on profitability.

7

Bapcor Limited Directors' report 30 June 2018

7. Industry trends

The automotive aftermarket parts market in Australia continues to experience growth based on:

• (a) population growth;

• (b) increasing number of vehicles per person;

• (c) change in the age mix and complexity of vehicles (i.e. more vehicles in the four years or older range); and (d) an increase in the value of parts sold.

Demand for automotive parts, accessories and services is resilient as vehicle maintenance is critical to operating a vehicle. Vehicle servicing is driven by the number of kilometres travelled, with the number of kilometres travelled by passenger and light commercial vehicles not significantly impacted by economic conditions. Volatility in new vehicle sales does not directly impact demand as parts distributed by Bapcor are predominantly used to service vehicles that are aged four years or older.

Original equipment manufacturers have ceased manufacturing cars in Australia. Ford ceased production in October 2016, and Toyota and Holden ceased production in October 2017. Bapcor has not experienced and does not expect demand for parts to be affected by the decline in the Australian vehicle manufacturing industry, as Bapcor distributes parts for a wide range of vehicle makes and models irrespective of where the vehicle is manufactured, and demand for Bapcor’s services is driven by the total number of registered vehicles on the road in Australia and not the location of vehicle manufacture.

On-line channels to market is now a common medium for retail businesses albeit only a small percentage of automotive retail sales are on-line. Amazon has commenced trading in the Australian market and at some point in the future it is expected this may present a market place for Automotive parts and accessories.

Due to its fast delivery capabilities, wide product range and knowledgeable people being the key to Bapcor’s customer offering which on-line businesses cannot match, Bapcor does not believe the introduction of on-line competition will have a material impact to Bapcor’s business. Bapcor’s Autobarn brand has launched online capabilities in both ‘click & collect’ and ‘click & deliver’.

There is increased interest and production of electric vehicles. As Bapcor’s target market is vehicles greater than 3 to 4 years old, and due to the large size of the conventional vehicle car parc (approximately 18 million) and how long it would take for electric and hybrid vehicles to become a meaningful percentage of the total number of vehicles on the road (currently less than two percent), Bapcor considers that any impact to the Bapcor business within the foreseeable future is minimal.

8. Key business risks

There are a number of factors that could have an effect on the financial prospects of Bapcor. These include:

Competition risk - The Australian automotive aftermarket parts and accessories distribution industry is competitive and Bapcor may face increased competition from existing competitors (including through downward price pressure), new competitors that enter the industry, vehicle manufacturers, and new technologies or technical advances in vehicles or their parts. Increased competition could have an adverse effect on the financial performance, industry position and future prospects of Bapcor.

Increased bargaining power of customers - A significant majority of Bapcor’s sales are derived from repeat orders from customers. Bapcor may experience increased bargaining power from customers due to consolidation of existing workshops forming larger chains, greater participation of existing workshops in purchasing and buying groups, and closure of independent workshops resulting in greater market share of larger chains. An increase in bargaining power of customers may result in a decrease in prices or loss of customer accounts, which may in turn adversely affect Bapcor’s sales and profitability.

8

Bapcor Limited Directors' report 30 June 2018

Supplier pressure or relationship damage - Bapcor’s business model depends on having access to a wide range of automotive parts, in particular parts with established brands that drive customer orders. An increase in pricing pressure from suppliers or a damaged relationship with a supplier may increase the prices at which Bapcor procures parts or limit Bapcor’s ability to procure parts from that supplier. If prices of parts increase, Bapcor will be required to pass on or absorb the price increases, which may result in a decreased demand for Bapcor’s products or a decrease in profitability. If Bapcor is no longer able to order parts from a key supplier, Bapcor may lose customer orders and accounts, resulting in lower sales. Any decline in demand, sales or profitability may have an adverse effect on Bapcor’s business and financial performance.

Exchange rate risk - A large proportion of Bapcor’s parts are sourced from overseas, either indirectly through local suppliers or directly by Bapcor. This exposes Bapcor to potential changes in the purchase price of products due to exchange rate movements. Historically Bapcor has been able to pass on the majority of the impact of foreign exchange movements through to the market. If the situation arises where Bapcor is not able to recoup foreign exchange driven cost increases, this may lead to a decrease in profitability. To mitigate this risk, Bapcor enters into forward exchange contracts based on expected purchases for the upcoming twelve months.

Managing growth and integration risk - The integration of acquired businesses and the continued strategy of growing the store network will require Bapcor to integrate these businesses and where appropriate upscale its operational and financial systems, procedures and controls and expand and retain, manage and train its employees. There is a risk of a material adverse impact on Bapcor if it is not able to manage its expansion and growth efficiently and effectively, or if the performance of new stores or acquisitions does not meet expectations. Bapcor senior management take an active role in the integration of acquired businesses.

Expansion - A key part of Bapcor’s growth strategy is to increase the size of its store network, which it intends to achieve through store acquisitions and greenfield developments. If suitable acquisition targets are not able to be identified; acquisitions are not able to be made on acceptable terms; or suitable greenfield sites are not available, this may limit Bapcor’s ability to execute its growth strategy within its expected timeframe. Further, new stores may not prove to be as successful as Bapcor anticipates including due to issues arising from integrating new businesses. This could negatively impact Bapcor’s financial performance and its capacity to pursue further acquisitions. Bapcor senior management take an active role in the rollout and progress of store expansion.

Franchise regulations - Bapcor has a large franchise network within its Retail & Service segment. Changes in franchise law or regulations may have an impact on the responsibilities of the franchisor or the operations of these franchise businesses. Bapcor senior management seek ongoing professional advice to monitor any developments and implement appropriate changes.

People risk - Bapcor is a highly focussed customer service business and its staff and senior management are key to maintaining the level of operational service to its customers, as well as executing Bapcor’s strategy. Any significant turnover of staff or loss of key senior management has the potential to disrupt the profitability and growth of the business. Senior management risk is somewhat managed through notice period and non-compete contractual obligations, succession planning and long term incentives.

Information technology – All of Bapcor’s business operations rely on information technology platforms. Any sustained unplanned downtime due to system failures, cyber-attack or any other reason has the potential to have a material impact on the ability for Bapcor to service its customers. Bapcor’s business units operate with a number of different operating systems making it less likely that any unplanned downtime will occur across the entire business.

9. Likely development and expected results of operations

Bapcor expects to continue to see growth in FY19 due to a number of factors including continued store network growth and solid performance in the underlying businesses. Trading trends in July and for the month to date of August have been consistent with expectations.

Bapcor is forecasting continued revenue and profit growth in FY19. Consensus predictions of EBITDA of approximately $170M are reasonable, leading to an increase in NPAT of between 9% and 14% above FY18 proforma NPAT.

9

Bapcor Limited Directors' report 30 June 2018

10. Information on directors

Name:	Robert McEniry (sadly, Robert passed away on 4 July 2018)
Title:	Independent, Non-Executive Director and Chairman (resigned 4 April 2018)
Qualifications:	Master of Business Administration from the University of Melbourne
	Member of the Australian Institute of Company Directors
Experience and expertise:	Robert had extensive experience in the automotive industry both in Australia and
	overseas. Robert’s former roles include President and Chief Executive Officer (and
	Chairman) of Mitsubishi Motors Australia Ltd, Chief Executive Officer of Nucleus
	Network Ltd, Chief Executive Officer of South Pacific Tyres Ltd, and board member
	of the Executive Committee for the Federal Chamber of Automotive Industries.
Other current directorships:	Robert held positions on the boards of Multiple Sclerosis Ltd, Australian Home Care
	Services Ltd (Chairman), Automotive Holdings Group Ltd and Stillwell Motor Group
	Ltd (Chairman).
Former directorships (last 3 years): None
Special responsibilities:	Chair of the Board (resigned 4 April 2018)
	Member of the Nomination and Remuneration Committee (resigned 4 April 2018)
	Member of the Audit and Risk Management Committee (resigned 4 April 2018)
Interests in shares:	Nil (resigned 4 April 2018)
Name:	Andrew Harrison
Title:	Independent, Non-Executive Director and Chairman (appointed 4 April 2018)
Qualifications:	Bachelor of Economics from the University of Sydney
	Master of Business Administration from The Wharton School at the University of
	Pennsylvania
	Member of the Australian Institute of Company Directors
	Chartered Accountant
Experience and expertise:	Andrew is an experienced company director and corporate advisor. Andrew has
	previously held executive and non-executive directorships with public, private and
	private equity owned companies; including as Chief Financial Officer of Seven
	Group Holdings, Group Finance Director of Landis and Gyr, and Chief Financial
	Officer and a director of Alesco Limited. Andrew was previously a Senior Manager
	at Gresham Partners Limited, an Associate at Chase Manhattan Bank (New York)
	and a Senior Manager at Ernst & Young (Sydney and London).
Other current directorships:	Andrew is currently on the boards of Estia Health Limited, WiseTech Global Limited,
	Xenith IP Limited, and IVE Group Limited.
Former directorships (last 3 years): None
Special responsibilities:	Chairman (appointed 4 April 2018)
	Member of the Audit and Risk Management Committee (resigned as Chair 4 April
	2018)
	Member of the Nomination and Remuneration Committee
Interests in shares:	56,869 ordinary shares
Name:	Darryl Abotomey
Title:	Chief Executive Officer and Managing Director
Qualifications:	Bachelor of Commerce majoring in accounting and economics from the University
	of Melbourne
	Member of the Australian Institute of Company Directors
Experience and expertise:	Darryl has more than ten years’ experience in the automotive aftermarket industry.
	Darryl has extensive experience in business acquisitions, strategy, finance,
	information technology and general management in distribution and other industrial
	businesses. Darryl was a former Director and Chief Financial Officer of Exego
	Group (Repco). He has also previously held directorships with The Signcraft Group,
	PaperlinX Limited, CPI Group Limited and Pinegro Products Pty Ltd.
Other current directorships:	None
Former directorships (last 3 years): None
Interests in shares:	1,535,533 ordinary shares
Interests in rights:	484,395 performance rights

10

Bapcor Limited Directors' report 30 June 2018

Name:	Therese Ryan
Title:	Independent, Non-Executive Director
Qualifications:	Bachelor of Laws from the University of Melbourne
	Graduate of the Australian Institute of Company Directors
Experience and expertise:	Therese is a professional non-executive director and has extensive experience as a
	senior business executive and commercial lawyer working in widely diversified
	businesses in Australia and internationally. Previously, she was Vice President and
	General Counsel of General Motors International Operations based in Shanghai,
	Assistant Secretary of General Motors Corporation and prior to that General
	Counsel and Company Secretary of GM Holden.
Other current directorships:	Therese is currently a board member of VicForests, Gippsland Water and WA
	Super.
Former directorships (last 3 years): None
Special responsibilities:	Chair of the Nomination and Remuneration Committee
	Member of the Audit and Risk Management Committee
Interests in shares:	33,868 ordinary shares
Name:	Margaret Haseltine
Title:	Independent, Non-Executive Director
Qualifications:	Bachelor of Arts Degree
	Diploma in Secondary Teaching from the Auckland University
	Fellow of the Australian Institute of Company Directors
Experience and expertise:	Margaret has more than 30 years’ business experience in a broad range of senior
	positions, and 10 years’ experience in board directorship. A proven executive
	leader, Margaret has significant experience in the areas of supply chain and
	logistics, customer interface in the FMCG sector, change management,
	governance, and management within a large corporate environment. Previously,
	she held various senior positions with Mars Food Australia, including CEO,
	spanning a 20-year career.
Other current directorships:	Margaret is currently a board member of Southern Hospitality Ltd and Bagtrans Pty.
	Ltd. (Chairman).
Former directorships (last 3 years): Fantastic Holdings Ltd.
Special responsibilities:	Chair of the Audit and Risk Management Committee (appointed to Chair 4 April
	2018)
	Member of the Nomination and Remuneration Committee
Interests in shares:	31,327 ordinary shares

'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities.

11. Company secretary and officers

Current Chief Financial Officer and Company Secretary:

Gregory Lennox Fox (2 March 2012 – present)

Greg has more than 25 years’ experience in the automotive, industrial and public accounting sectors. Greg joined Bapcor as Chief Financial Officer in 2012 with responsibility for finance, legal, company secretarial and plays a key role in strategic initiatives. Greg was previously Chief Financial Officer at Atlas Steels and at Plexicor, which was a major supplier to the automotive industry. Greg also held various senior financial positions with Amcor Ltd after commencing his career as a chartered accountant.

11

Bapcor Limited Directors' report 30 June 2018

12. Meetings of directors

The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2018, and the number of meetings attended by each director were:

			Nomination and	Nomination and
	Full Board		Remuneration Committee		Audit and Risk	Committee
	Attended Held		Attended	Held	Attended	Held
Robert McEniry **	5	7	3	3	2	2
Andrew Harrison	11	11	4	4	3	3
Darryl Abotomey *	11	11	-	-	-	-
Margaret Haseltine	11	11	4	4	3	3
Therese Ryan	11	11	4	4	3	3

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

• The members of the Audit and Risk Management Committee are Margaret Haseltine (Chair), Andrew Harrison and Therese Ryan. By invitation from the Audit and Risk Management Committee, Darryl Abotomey attended all Audit and Risk Management Committee meetings.

The members of the Nomination and Remuneration Management Committee are Therese Ryan (Chair), Andrew Harrison, and Margaret Haseltine. By invitation from the Nomination and Remuneration Committee, Darryl Abotomey attended all Nomination and Remuneration Committee meetings.

** Robert McEniry resigned from the Board on 4 April 2018

==> picture [540 x 386] intentionally omitted <==

----- Start of picture text -----

13. Remuneration report
The Bapcor Board is very pleased to share with you our Remuneration Report for the financial year ended 30 June
2018.
Since listing on the Australian Securities Exchange (‘ASX’) in 2014, Bapcor, its executive and team members have
consistently delivered outstanding financial results and value for our shareholders. This performance and growth is again
a key feature of the Company’s results for FY18. Some of the significant outcomes of another very successful year
include a 22.0% increase in revenue from continuing operations from $1,013.6M to $1,236.7M and pro-forma net profit
after tax (‘NPAT’) of 31.6% from $65.8M to $86.5M. In addition, statutory NPAT increased by 47.8% from $64.0M to
$94.7M.
The following chart shows total return to shareholders over the previous four years:
Source: KPMG
----- End of picture text -----

12

Bapcor Limited Directors' report 30 June 2018

The Board is very conscious of the fact that these outstanding achievements reflect the leadership and talent of the executive key management personnel (‘KMP’) and that they should be appropriately rewarded.

We have approached remuneration as follows:

For fixed remuneration our focus is to provide competitive, appropriate remuneration aimed at retaining and motivating our talented team in what is now a highly competitive market. As Bapcor has continued to grow and become more complex, in FY18 increases were made to KMP pay based on independent market remuneration benchmarking. Consistent with previous years, we targeted 50[th] percentile of the benchmark, with a range of plus or minus 20%.

For the other elements of our remuneration strategy, the focus is to provide an incentive for targeted performance, with targets being considered in depth by the Bapcor Board each year.

The Short Term Incentive (‘STI’) payments are primarily driven by meeting and exceeding NPAT or earnings before interest and tax (‘EBIT’). The Board sets aggressive stretch targets for both indicators. Non-financial targets for each executive KMP are also a key feature. In respects of all elements, the Board’s approach is to set targets that encourage our executive KMP to deliver on our growth strategy and to take considered risks, benefitting our investors in the short term, but also establishing or improving the building blocks that contribute to the long term sustainability of the business.

The Long Term Incentive (‘LTI’) measures of relative shareholder return (‘TSR’) and statutory earnings per share (‘EPS’) growth have been consistently applied since Bapcor’s initial public offering (‘IPO’) in 2014. The Board is cognisant of the fact that there may be other measures favoured by various commentators and, after consideration, retains the view that this is a consistent and transparent way to measure long term shareholder value, and that it aligns the interests of our KMP with the interests of our investors. We believe our investors will be delighted with a compound annual statutory EPS growth rate over four years of 43.3% which has been achieved through a lot of very hard work and a wellconsidered and sustainable strategy, and that a management team that achieves such outstanding results should be rewarded for its extraordinary efforts. The Board is very pleased to report that that 100% of the three year tranche of the FY15 LTI and 98.2% of the two year tranche of the FY16 LTI vested.

To deliver on our strategy, in addition to our executive KMP, engaged, high calibre team members in every part of the Group are necessary to achieve financial targets and provide shareholder value. Over recent years there has been a focus on team member development to ensure the requirements of a growing business are met and in FY18 Bapcor undertook a Group-wide team member engagement survey with a response rate of 71% and pleasing results. Based on the insights gained from this survey, there are a range of activities underway at Group, business unit and site level to further improve and enhance the culture and engagement of the team. Ensuring all Bapcor team members are safe, able to realise their full potential and engaged is essential to the Group’s success.

The Board is delighted that the executive team, and the Bapcor team more broadly, continues to achieve the financial and non-financial results that have consistently improved returns to our shareholders and which provide a solid foundation for sustained performance.

13

Bapcor Limited Directors' report 30 June 2018

14. Remuneration report (audited)

The Directors present the Remuneration Report setting out the principles, policy and practices adopted by the Bapcor Board in respect of remuneration for the group's non-executive and executive Key Management Personnel (‘KMP’) in accordance with the requirements of the Corporations Act 2001 and its Regulations.

The Remuneration Report is set out under the following main headings:

• 14.1 Overview

• 14.2 Remuneration governance

• 14.3 Remuneration framework

• 14.4 Key management personnel

• 14.5 Executive remuneration

• 14.6 Cash and realisable remuneration

• 14.7 Statutory details of remuneration

The information provided in this Remuneration Report, which forms part of the Directors’ Report, has been audited as required by section 308(3C) of the Corporations Act 2001 .

14.1 Overview

14.1.1 Financial performance and remuneration over the last four years

Bapcor has grown in size and complexity in the four years since it listed on the ASX. During this time financial performance has consistently improved as have the returns provided to shareholders.

Remuneration Analysis FY14 - FY18

% increases of Market Cap, Revenue, Pro-forma NPAT and Executive KMP Fixed Remuneration

==> picture [522 x 259] intentionally omitted <==

----- Start of picture text -----

500%
450%
Market Cap
400%
350% Pro-formaNPAT
300%
250% Revenue
200%
E-KMP Fixed Rem
150%
100%
50%
0%
FY14 FY15 FY16 FY17 FY18
E-KMP fixed $M 1.66 1.87 2.87 3.91 4.93
E-KMP number at year end 5 6 7 9 9
Avg fixed $000's 333 312 410 435 548
% INCREASE
----- End of picture text -----

14

Bapcor Limited Directors' report 30 June 2018

14.1.2 Key Questions

==> picture [541 x 131] intentionally omitted <==

----- Start of picture text -----

Key Questions Our Approach
How is FY18 executive Adjustments have been made to executive remuneration based on independent market
remuneration different from benchmarks. Executive remuneration remains positioned at around 90% of the median
FY17? of the comparator peer companies, based on the information obtained from the
independent advisor retained by the Board, Godfrey Remuneration Group.
Were there any increases No. Non-executive directors fees were not increased during the year
to non-executive directors
in FY18?
----- End of picture text -----

Key Questions **Our Approach **	Key Questions **Our Approach **
How is FY18 executive remuneration different from FY17? Adjustments have been made to executive remuneration based on independent market benchmarks. Executive remuneration remains positioned at around 90% of the median of the comparator peer companies, based on the information obtained from the independent advisor retained by the Board, Godfrey Remuneration Group. Were there any increases to non-executive directors in FY18? No. Non-executive directors fees were not increased during the year
How much STI was earned by the executives for FY18 and what were the reasons for the level of payment?	STIs earned by executive KMP are based on targets established at the beginning of the financial year. The STIs at target level are 70% financial measures and 30% personal objectives with payment for achievement greater than target deferred for one year. At maximum level, the STIs are weighted 83.5% and 80% to financial measures respectively for the CEO and other executives. The aggregate of STI paid to the executive KMP for performance in FY18 was $2,729,000 which is 80.4% of the maximum that could have been paid. As the awards exceeded the target value, $602,000 has been deferred and will be paid to the executives in August 2019. STI payments were made as the company's financial performance exceeded target against a range of measures including:  Group revenue from continuing operations increase of 22.0% over FY17  Group pro-forma EBIT from continuing operations increase of 29.4% over FY17  Group pro-forma NPAT from continuing operations increase of 31.6% over FY17  Statutory NPAT increase of 47.8% over FY17. Each executive KMP also has specific personal objectives agreed at the beginning of the year and these are measured against actual performance at the end of the year. These objectives align to the strategic goals of Bapcor. All executive KMP have personal objectives relating to safety, talent and succession, team member development, team member engagement, strategic growth and the optimisation of synergies from acquisitions. Given their area of accountability other personal objectives include new store and same store sales growth, customer satisfaction, own brand development, improvements in IT systems, corporate compliance and governance and investor relations.

15

Bapcor Limited Directors' report 30 June 2018

==> picture [541 x 672] intentionally omitted <==

----- Start of picture text -----

Key Questions Our Approach
What LTI grants have The three year tranche of the LTI granted to 11 executives on 24 December 2015, being
vested in FY18? 65% of the total number vested, was independently tested by a third party against the
company's FY18 TSR and EPS performance. The extent to which they vested is as
What was the basis for the follows:
vesting of those grants?
Relative TSR Rights: Bapcor's TSR performance ranked at the 90th percentile of the
comparator group. This resulted in 100% of the tranche vesting.
Compound annual growth rate (‘CAGR’) of EPS : Bapcor's CAGR of statutory EPS was
43.3%. This resulted in 100% of the tranche vesting.
The two year tranche of the LTI granted to 10 executives on 20 December 2016, being
35% of the total number granted, was independently tested by a third party against the
company's FY18 TSR and EPS performance. The extent to which they vested is as
follows:
Relative TSR Rights : Bapcor's TSR performance ranked at the 74th percentile of the
comparator group. This resulted in 97.2% of the tranche vesting.
CAGR of EPS : Bapcor's CAGR of statutory EPS was 37.8%. This resulted in 100% of
the tranche vesting.
Shares from vested Performance Rights remain under a restriction on sale for a further
twelve months, reflecting further alignment of executive and shareholder interests.
What is the performance The grants of LTI in the years up to and including FY17 were for performance periods of
period for the LTIs? two years and three years, with tranches having a further twelve month restriction on
sale for vested LTI.
From FY18 the LTI opportunity is subject to a performance period of three years with a
further twelve month restriction on sale for vested LTI.
Did the Board make any There were no one-off payments to executive KMPs in FY18.
one-off payment to
executive KMP in FY18?
Did the Board exercise STIs include personal objectives, which may be non-financial, as these contribute to the
discretion when longer-term sustainability of the business. As such, some degree of judgement is
determining the payments required as to the achievement of these objectives as they are not all based on numeric
under the STI plan? outcomes.
What were the FY18 STI Section 14.5.1 and 14.5.2 of this report provides more details of the performance
performance measures for measures for FY18.
KMP’s?
How did the Board As in the previous financial year, the Board determined that the focus of the executive
establish the STI team should be on growing NPAT for the CEO and CFO and EBIT for all other
performance measures for managers. Therefore 70% of the target STI award is tied to this financial measure. All
FY18? above target STI awards are based on the financial measures.
Achievement of the non-financial measures will underpin the future growth and
sustainability of the company.
Is there provision for Yes. Payment to executive KMP of the STI component that is above target is deferred
deferral of STI and what if for twelve months. For FY18 a total of $602,000 has been deferred until August 2019.
any has been deferred?
----- End of picture text -----

16

Bapcor Limited Directors' report 30 June 2018

Key Questions	Our Approach
How does the company determine the number of LTI Performance Rights to grant? Has the company made any loans to the executives in FY18?	From FY18 the weighted average face value of shares is used to calculate the number of LTI Performance Rights granted. No loans were provided to any executive KMP in FY18.

14.2 Remuneration governance

Bapcor Board

• Overall accountability for Bapcor's remuneration approach

• Determines remuneration quantum and structure for executive and non-executive KMP after considering recommendations made by the NRC

• Has ultimate discretion in determining the outcomes of incentive arrangements to ensure anomalous outcomes do not arise. This discretion may be exercised for both positive and negative adjustments to incentive outcomes to ensure these outcomes reflect the experience of shareholders.

Nomination and Remuneration Committee (NRC)

Meets regularly to: - understand and review the effectiveness of the remuneration arrangements

• review the remuneration framework to ensure it remains fit for purpose

• make recommendations to the Board on the structure of the remuneration framework

• make recommendations to the Board regarding in fixed remuneration, STI awards and outcomes, and LTI awards and outcomes

• Has absolute discretion in determining the outcomes of incentive arrangements to ensure anomalous outcomes do not arise. This discretion may be exercised for both positive and negative adjustments to incentive outcomes to ensure these outcomes reflect the experience of shareholders.

• assess executive KMP performance - NRC's charter can be found at www.bapcor.com.au/about/governance.

External Advisors

• NRC seeks external advice and assistance from independent remuneration consultants as it considers appropriate. - Protocols are in place with the Board and NRC to ensure the engagement of remuneration advisors is independent of management and is able to be carried out free of any undue influence - During FY18 the NRC engaged Godfrey Remuneration Group to provide benchmarking reports in respect of executive KMP remuneration and NED fees. This resulted in Godfrey Remuneration Group providing remuneration recommendations as defined in section 9B of the Corporations Act 2001 in respect of the quantum and mix of the executive KMP remuneration and in respect of the NED fees. Godfrey Remuneration Group was paid $35,000 excluding GST and disbursements for these services.

17

Bapcor Limited Directors' report 30 June 2018

14.3 Remuneration framework

14.3.1 Executive remuneration structure

==> picture [477 x 412] intentionally omitted <==

----- Start of picture text -----

Total Remuneration
Fixed Annual Reward Short Term Incentive Long Term Incentive
(FAR) (STI) (STI)
Purpose Attract, motivate and Motivate and reward Reward long term
retain high calibre talent performance in current sustainable performance
year that delivers shareholder
returns
Method of payment Cash and benefits Annual cash payment Performance Rights which
Payment for do not attract dividends or
achievement beyond voting rights
target deferred for Vest after 3 years with
twelve months sale of vested shares
restricted for twelve
months
Structure Base salary, 70% financial targets 50% TSR
superannuation and 30% personal 50% EPS
non-cash benefits such objectives (which may
as motor vehicles be non-financial)
Measures Annual performance Financial targets are TSR > 50% companies in
review and independent NPAT for CEO/CFO and comparable peer group
market based EBIT for other executive
remuneration KMP Compound annual growth
benchmarks Payment threshold is rate of EPS ≥ 7.5% with
95% of target maximum vesting at 15%.
Personal objectives
include safety, team,
talent and sustainability
Link to strategy and Business complexity Drives growth as Motivates executives to
performance requires highly skilled financial targets are set take a long-term view of
executives to deliver at a growth level to the company performance
performance that meets previous year and and links reward the
shareholder personal targets reward investors' experience.
expectations the actions that build a
sustainable business
----- End of picture text -----

14.3.2 FY18 remuneration mix

==> picture [423 x 212] intentionally omitted <==

18

Bapcor Limited Directors' report 30 June 2018

14.4 Key management personnel

As defined by AASB 124 Related Party Disclosures , Bapcor's Key Management Personnel (‘KMP’) are those leaders with the authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly, and includes non-executive and executive directors. The KMP during FY18 and their positions are those in the following table.

==> picture [486 x 322] intentionally omitted <==

----- Start of picture text -----

Name Position
Non-executive Directors (‘NED’)
Robert McEniry Board Chair
(resigned 4 April 2018) Member Audit and Risk Committee
Member Nomination and Remuneration Committee
Andrew Harrison Board Chair (from 4 April 2018)
Chair Audit and Risk Committee (to 4 April 2018)
Member Audit and Risk Committee
Member Nomination and Remuneration Committee
Margaret Haseltine Member Nomination and Remuneration Committee
Member Audit and Risk Committee (to 4 April 2018)
Chair Audit and Risk Committee (from 4 April 2018)
Therese Ryan Chair Nomination and Remuneration Committee
Member Audit and Risk Committee
Executive Director
Darryl Abotomey Managing Director and Chief Executive Officer
Executive KMP
Greg Fox Chief Financial Officer and Company Secretary
Mathew Cooper Executive General Manager, Strategic Development
Colin Daly Chief Operating Officer, Strategic Marketing and Bapcor New Zealand
Paul Dumbrell Chief Operating Officer, Specialist Wholesale
Grant Jarrett Executive General Manager, Logistics
Alison Laing Executive General Manager, Human Resources
Craig Magill Executive General Manager, Burson Trade
Peter Tilley Executive General Manager, Retail & Service
----- End of picture text -----

19

Bapcor Limited Directors' report 30 June 2018

14.5 FY18 executive remuneration

The following sections explain FY18 executive KMP remuneration:

• 14.5.1 Financial performance over the last four years

• 14.5.2 STI performance metrics and outcomes

• 14.5.3 STI payment, deferral and clawback

• 14.5.4 LTI plan

• 14.5.5 LTI outcomes

14.5.1 Financial performance over the last four years

Bapcor's financial performance over the last four years will assist readers to understand the context of the remuneration framework, management's performance and how the company's performance impacts the remuneration outcomes for the executive KMP.

The table below shows measures of Bapcor’s financial performance over the four complete financial years since it listed on 23 April 2014.

==> picture [502 x 194] intentionally omitted <==

----- Start of picture text -----

2015 2016 2017 2018
Revenue from continuing operations $m 375.3 685.6 1,013.6 1,236.7
Increase/(decrease) in revenue 9.9% 82.7% 47.8% 22.0%
Pro-forma NPAT from continuing operations $m [2] 23.1 43.6 65.8 86.5
Increase/(decrease) in pro-forma NPAT 19.7% 88.7% 50.9% 31.6%
Pro-forma EPS from continuing operations – TERP adjusted (cents) [1] 13.62 17.85 24.40 30.99
Increase/(decrease) in pro-forma EPS – TERP adjusted 19.1% 31.0% 36.7% 27.0%
Statutory NPAT $m [2] 19.5 43.6 64.0 94.7
Increase/(decrease) in statutory NPAT 1,581.6% 123.4% 47.0% 47.8%
Statutory EPS – TERP adjusted (cents) [1] 13.62 17.85 23.76 33.90
Increase/(decrease) in statutory EPS – TERP adjusted 19.1% 31.0% 33.1% 42.7%
Dividend declared (cents per share) 8.7 11.0 13.0 15.5
Increase/(decrease) in dividend declared n/a 26.4% 18.2% 19.2%
Share price 30 June $ 3.40 5.52 5.49 6.55
Increase/(decrease) in share price 60.4% 62.4% (0.5%) 19.3%
Market capitalisation $m 30 June 746.9 1,357.1 1,529.7 1,835.6
----- End of picture text -----

1 2015 EPS has been adjusted to take into consideration the impact of the rights issue performed in 2016 and the impact on the number of shares as per AASB 133 Earnings Per Share

2 NPAT attributable to members of Bapcor Limited

14.5.2 FY18 STI performance metrics and outcomes

Participants in the STI Plan have a target cash payment that is a percentage of their fixed annual remuneration. Actual STI payments may be below, at or above that target depending on the achievement of financial and non-financial objectives set each year by the Board. No incentive payment for financial performance is payable if the threshold of 95% of financial target performance is not met.

70% of the target STI opportunity of the executive KMP is contingent on meeting annual NPAT or EBIT objectives . The FY18 objectives were set by the Board at levels significantly higher than the previous year’s achievement, with the threshold measure higher than the FY17 actual result.

30% of target STI is subject to meeting other annual personal objectives which may include both financial and nonfinancial measures.

20

Bapcor Limited Directors' report 30 June 2018

Type of performance measure and weighting at target	KMP Performance measure	FY18 performance
Financial 70% Personal (which may be non-financial) 30%	CEO and CFO is Group NPAT. Other Group executives is Group EBIT. Business segment executives is EBIT of the business segment they manage and Group EBIT. The group target was set significantly higher than the FY17 actual result and was set in the context of the business strategy and growth objectives. Percentage of FAR CEO CFO EGM Other KMP < Threshold Nil Nil Nil Nil Threshold 28.5% 20% 20% 20% Target 38.5% 28% 28% 28% Maximum 83.5% 48% 48% 48% Threshold level is 95% of target and requires significant improvement over FY17 actual result. There is a range of metrics across the following criteria that are applicable to the executive KMP depending on their role and accountabilities, several objectives are shared across all executive KMP:  Safety:various objectives requiring improved performance year on year including, for all executive KMP, a reduction in lost time injuries (LTIs) of 20% on FY17  People:with objectives requiring individual and team development, culture strategies, succession planning, and training and development outcomes  Team member engagement:shared objective amongst all executive KMP to undertake a Group wide team member engagement survey with a response rate of at least 65%  Customer engagement:including objectives to measure and improve customer sentiment  Strategic acquisitions and divestments:with objectives requiring the identification of suitable businesses for acquisition, or divestment, implementation of the business case and results regarding achieving the business case  Organic growth:for each business segment objectives are set to deliver organic growth and market share gains  New stores:the number of new stores required in business units to achieve growth targets  Systems and processes:with objectives focused on the long term sustainability of the company in areas such as information technology and logistics.  Compliance and governance:requiring processes and procedures to ensure achievement of compliance requirements  Optimisation projects:for achieving optimal benefits from acquisitions and improved cost structures.	Reported statutory Group NPAT for FY18 was $94.7M, a 47.8% increase over FY17. Pro-forma continuing operations EBIT performance increased 29.4% over FY17. EBIT by business segment varied as detailed in the financial report. A detailed explanation of the group’s achievements in the non-financial areas are contained in section 5 of the Directors’ Report.

21

Bapcor Limited Directors' report 30 June 2018

The following table shows the actual STI outcomes for each of the executive KMP for FY18:

==> picture [541 x 191] intentionally omitted <==

----- Start of picture text -----

Actual STI as STI forfeited as
Target STI as a Maximum STI a % of a % of Actual STI
KMP % of FAR as a % of FAR maximum maximum awarded $ Deferred STI $
Darryl Abotomey 55% 100.0% 95.0% 5.0% 1,130,548 476,048
Greg Fox 40% 60.0% 92.9% 7.1% 362,200 102,200
Mathew Cooper 40% 60.0% 68.4% 31.6% 172,368 4,368
Colin Daly 40% 60.0% 69.9% 30.1% 209,965 -
Paul Dumbrell 40% 60.0% 70.3% 29.7% 202,560 10,560
Grant Jarrett 40% 60.0% 65.2% 34.8% 158,355 -
Alison Laing 40% 60.0% 67.0% 33.0% 120,540 -
Craig Magill 40% 60.0% 69.7% 30.3% 204,820 8,820
Peter Tilley 40% 60.0% 65.2% 34.8% 168,130 -
----- End of picture text -----

The STI performance measures are tested annually after the end of the relevant financial year.

14.5.3 STI payment, deferral and clawback

Where STI awards have been determined, payments under the STI Plan are made immediately after the release of full year financial results to the ASX except in relation to any portion of an award above the target up to the maximum award.

The amount of STI award above target is deferred for a period of twelve months. The deferred amount is payable to the executive immediately after the release of the year ending 30 June 2019 financial results.

All payments are in cash.

Awards are subject to claw back for any material financial misstatements that are subsequently determined in respect of Bapcor’s performance for the relevant period.

14.5.4 LTI plan

The LTI is contingent on company performance over a three year performance period. Payments are rights to acquire shares (‘Performance Rights’). Performance Rights are granted at the start of the performance period. Vesting of Performance Rights varies with the extent that performance requirements have been met. On vesting, the Performance Rights entitle the executive to receive fully paid shares in the company.

The key terms of the LTI under which grants were made in FY18 and prior years are as follows:

Administration	The LTI is administered by the Board. In FY18 executive KMP were invited to participate. The LTI opportunity is the grant of Performance Rights that will vest on satisfaction of the applicable performance, service or other vesting conditions specified in the Offer at the time of the grant. The Board sets the terms and conditions on which it will offer Performance Rights under the LTI, including the vesting conditions, at the time of the offer. The LTI opportunity granted to participants in FY18 provides for the Performance Rights, upon satisfaction of the vesting conditions, to convert into a fully paid ordinary share for each vested right. The Performance Rights do not carry any voting rights or dividend entitlements.
Who participates?
What is the LTI opportunity?
Performance Rights

22

Bapcor Limited Directors' report 30 June 2018

==> picture [540 x 662] intentionally omitted <==

----- Start of picture text -----

How was the number of For the grants made in FY18, the number of Performance Rights was determined by
Performance Rights dividing the executive's LTI value by the face value of a Bapcor share at the time of grant.
determined?
Performance period Performance is assessed over a performance period specified at the time of the grant.
The performance period for the LTI opportunities granted in FY18 are set out following this
table.
Performance measures Each executive is granted two tranches of Performance Rights.
50% of the total grant value of Performance Rights granted to the executive under each
tranche are subject to the satisfaction of a TSR performance hurdle for the relevant
performance period (‘TSR Rights’), and 50% are subject to satisfaction of an EPS
performance hurdle for the relevant performance period (‘EPS Rights’).
These are described in more detail in the section following this table.
Shares Fully paid ordinary shares allocated on conversion of Performance Rights rank equally
with the other issued ordinary shares and carry the same rights and entitlements,
including dividend and voting rights. Shares may be issued by Bapcor or acquired on or
off market by a nominee or trustee on behalf of Bapcor, then transferred to the participant.
Participation in new Performance Rights granted in FY18 and earlier do not confer on a participant the right to
issues participate in new issues of shares or other securities in Bapcor, including by way of
bonus issues, rights issues or otherwise.
Limitations The number of shares to be received by participants on the conversion of the
Performance Rights must not exceed 5% of the total number of issued shares over a 5
year period.
Trustee Bapcor may appoint a trustee for the purpose of administering the LTI, including to
acquire and hold shares, or other securities of the company, on behalf of participants or
otherwise for the purposes of the LTI.
Quotation Performance Rights are not quoted on the ASX. Bapcor will apply for official quotation of
any shares issued under the LTI, in accordance with the ASX Listing Rules and having
regard for any disposal restrictions in place under the LTI.
Amendments To the extent permitted by the ASX Listing Rules, the Board retains the discretion to vary
the terms and conditions of the LTI. This includes varying the number of Performance
Rights or the number of shares to which a participant is entitled upon a reorganisation of
the capital of Bapcor. No discretion to vary LTI terms and conditions was made in FY18 or
prior years.
Clawback The Board has absolute discretion where it is determined a change in circumstances has
occurred including material financial misstatements or some other event or series of
events. Further, the Board has absolute discretion where a participant has engaged in
fraudulent or dishonest conduct, or has engaged in or is being investigated for conduct
which may adversely affect Bapcor’s financial position or reputation.
Other terms Shares acquired on the conversion of vested Performance Rights cannot be sold for a
period of twelve months from vesting date. Performance Rights cannot be transferred,
encumbered or hedged.
The LTI contains other terms relating to the administration, variation, suspension and
termination of the LTI.
----- End of picture text -----

23

Bapcor Limited Directors' report 30 June 2018

In FY18 offers to participate in the LTI included:

• In relation to FY17 for the Chief Operating Officer, Strategic Marketing and Bapcor New Zealand (C Daly), these allocated Performance Rights have a performance period that ends 30 June 2018 and 30 June 2019 at which time the performance hurdles are tested. This offer is in line with the FY17 offer that was previously made to other executives and was extended to the Chief Operating Officer, Strategic Marketing and Bapcor New Zealand as he joined Bapcor with the acquisition of Hellaby Holdings Ltd where he was previously the Chief Executive Officer, Hellaby Automotive.

==> picture [497 x 121] intentionally omitted <==

----- Start of picture text -----

Tranche 1 Tranche 2
Grant date 15/08/17 15/08/17
Performance hurdle Relative TSR EPS Relative TSR EPS
Performance period 1/07/16 to 30/06/18 1/07/16 to 30/06/18 1/07/16 to 30/06/19 1/07/16 to 30/06/19
Test date 30/06/18 30/06/19
Expiry date Once tested Once tested
Quantity granted 4,999 2,978 9,354 5,882
Exercise price Nil Nil
Fair value at 15/08/17 $2.892 $5.411 $3.037 $5.301
Other conditions Restriction on sale to 30/06/19 Restriction on sale to 30/06/20
----- End of picture text -----

• In relation to FY17 for the CEO and Managing Director (D Abotomey) following the successful passing of a resolution at the AGM. These allocated Performance Rights have a performance period that ends 30 June 2019 at which time the performance hurdles are tested.

==> picture [293 x 110] intentionally omitted <==

----- Start of picture text -----

Grant date 4/12/17
Performance hurdle Relative TSR EPS
Performance period 1/07/16 to 30/06/19
Test date 30/06/19
Expiry date Once tested
Quantity granted 88,802 88,801
Exercise price Nil
Face value at 1/07/17 $5.328 $5.328
Other conditions Restriction on sale to 30/06/20
----- End of picture text -----

• In relation to FY18 an offer to participate was made to all nine of Bapcor’s executive KMPs. These allocated Performance Rights have a performance period that ends 30 June 2020 at which time the performance hurdles are tested.

==> picture [293 x 109] intentionally omitted <==

----- Start of picture text -----

Grant date 4/12/17
Performance hurdle Relative TSR EPS
Performance period 1/07/17 to 30/06/20
Test date 30/06/20
Expiry date Once tested
Quantity granted 283,535 283,532
Exercise price Nil
Face value at 1/07/17 $5.328 $5.328
Other conditions Restriction on sale to 30/06/21
----- End of picture text -----

24

Bapcor Limited Directors' report 30 June 2018

Relative total shareholder return hurdle

Fifty per cent of the Performance Rights granted to a participant will vest subject to a TSR performance hurdle that assesses performance by measuring capital growth in the share price together with income returned to shareholders, measured over the performance period against a Comparator Group of companies. The Performance Rights will vest by reference to Bapcor's TSR performance ranking against this Comparator Group of companies, as follows:

==> picture [446 x 73] intentionally omitted <==

----- Start of picture text -----

Bapcor’s TSR relative to the Comparator Group over the Percentage of TSR Rights
performance period vesting
Less than 50th percentile Nil
Equal to 50th percentile 50%
Greater than 50th percentile and less than 75th percentile Pro-rata straight-line vesting
Equal to or greater than 75th percentile 100%
----- End of picture text -----

TSR for Bapcor and the companies in the Comparator Group will be calculated as follows:

• TSR will be measured between 30 June 2017 and 30 June 2020 (the Performance Period);

• For the purpose of this measurement, dividends will be assumed to have been re-invested on the ex-dividend date;

• Tax and any franking credits (or equivalent) will be ignored; and

• For the purpose of this measurement, the share price of Bapcor and the Comparator Group companies will be averaged over the 10 trading days up to and including 30 June at the start and end date of the Performance Period.

The Comparator Group for the FY18 LTI is set out below. The Board has the discretion to adjust the Comparator Group to take into account events including but not limited to takeovers, suspensions, mergers or demergers that might occur during the Performance Period.

==> picture [269 x 218] intentionally omitted <==

----- Start of picture text -----

ASX Code Company Name
APE AP Eagers Limited
AAD Ardent Leisure Group
API Australian Pharmaceutical Industries Limited
AHG Automotive Holdings Group
ARB ARB Holdings Group
BRG Breville Group Limited
CAR carsales.com Limited
CTD Corporate Travel Management Limited
GUD GUD Holdings Limited
JBH JB Hi-Fi Limited
MTR Mantra Group Ltd
MTS Metcash Limited
MYR Myer Holdings Limited
NVT Navitas Limited
PMV Premier Investments Limited
PRY Primary Health Care Limited
RFG Retail Foods Group Limited
----- End of picture text -----

25

Bapcor Limited Directors' report 30 June 2018

Earnings per share growth

Fifty per cent of the Performance Rights granted to a participant will vest by reference to an EPS performance hurdle that measures the basic EPS on a normalised basis over the performance period. Each tranche of Performance Rights subject to an EPS hurdle will vest as follows:

• The Board has determined that the EPS hurdle will be based on a compound annual growth rate (‘CAGR’) of basic EPS of between 7.5% and 15%, respectively, over the Performance Period.

• The starting point for these EPS rights is the FY16 Actual EPS of 17.85 cents per share.

• Basic EPS is calculated in accordance with AASB 133 Earnings Per Share .

• The proportion of the EPS Rights that vest at the end of the Performance Period will be determined as follows:

==> picture [453 x 73] intentionally omitted <==

----- Start of picture text -----

Bapcor's compound annual EPS growth over the
performance period Percentage of EPS Rights Vesting
Less than 7.5% Nil
7.5% 20%
Greater than 7.5% and less than 15% Pro-rata straight-line vesting
Equal to or greater than 15% 100%
----- End of picture text -----

If vesting conditions are met, Performance Rights granted in FY18 will convert into fully paid ordinary shares of the company. Shares that are allocated in respect of each tranche will be subject to a restriction on sale for twelve months from vesting of the Performance Rights.

14.5.5 LTI outcomes

During FY18 the following Performance Rights were independently tested by third parties:

The three year tranche of the LTI granted to 11 executives on 24 December 2015, being 65% of the total number vested, was independently tested by a third party against the company's FY18 TSR and EPS performance. The extent to which they vested is as follows:

Relative TSR Rights: Bapcor's TSR performance ranked at the 90th percentile of the comparator group. This resulted in 100% of the tranche vesting.

Compound annual growth rate (‘CAGR’) of EPS : Bapcor's CAGR of statutory EPS was 43.3%. This resulted in 100% of the tranche vesting.

The two year tranche of the LTI granted to 10 executives on 20 December 2016, being 35% of the total number granted, was independently tested by a third party against the company's FY18 TSR and EPS performance. The extent to which they vested is as follows:

Relative TSR Rights : Bapcor's TSR performance ranked at the 74th percentile of the comparator group. This resulted in 97.2% of the tranche vesting.

CAGR of EPS : Bapcor's CAGR of statutory EPS was 37.8%. This resulted in 100% of the tranche vesting.

Shares from vested Performance Rights remain under a restriction on sale for a further twelve months, reflecting further alignment of executive and shareholder interests.

26

Bapcor Limited Directors' report 30 June 2018

14.6 Cash and realisable remuneration

The following table shows the total cash remuneration received by executive KMP in respect of financial year. The total cash payments received are made up of fixed remuneration inclusive of superannuation and benefits and the amount of the FY18 STI award that is not deferred and is paid in August 2018.

The table also includes the value of previous years' deferred STI and LTI awards that vested during FY18 and became realisable. These values differ from the values in the table in section 14.7.1 that shows the accounting expense for both vested and unvested awards. The table does not show values for vested LTI that are not realisable because they remain under restriction from sale for twelve months after vesting.

==> picture [534 x 179] intentionally omitted <==

----- Start of picture text -----

Previous year awards that
vested during FY18
Total cash Prior year Vested and Total received
Fixed FY18 cash in respect deferred STI unrestricted and realisable
remuneration [1] STI [2] of FY18 received [3] LTI [4] during FY18
Executive KMP $ $ $ $ $ $
D Abotomey 1,190,000 654,500 1,844,500 427,837 395,901 2,668,238
G Fox 650,000 260,000 910,000 90,340 179,545 1,179,885
-
M Cooper 420,000 168,000 588,000 39,780 627,780
- -
C Daly 500,871 209,965 710,836 710,836
P Dumbrell 480,000 192,000 672,000 10,374 - 682,374
G Jarrett 405,000 158,355 563,355 - - 563,355
- -
A Laing 300,000 120,540 420,540 420,540
C Magill 490,000 196,000 686,000 38,385 102,344 826,729
- -
P Tilley 430,000 168,130 598,130 598,130
----- End of picture text -----

• 1 Fixed remuneration is the aggregate of cash salary, superannuation and fringe benefits.

• 2 FY18 cash STI is the amount accrued and payable in respect of FY18 STI opportunity. It is the cash amount to be paid in August 2018 and does not include any deferred amount in respect of the FY18 STI award.

• 3 Prior year deferred STI received is the STI amount awarded in August 2017 in respect of FY17 and deferred for twelve months. It is to be paid in August 2018.

• 4 Vested and unrestricted LTI is the value of the vested LTI on the day it is no longer under restriction from sale. The value is the closing share price on the date the LTI is no longer subject to restriction from sale. The FY15 LTI that vested during FY18 was restricted from sale until 1 August 2019.

14.7 Statutory details of remuneration

The statutory remuneration disclosures for the year ended 30 June 2018 are detailed below under the following headings and are prepared in accordance with Australian Accounting Standards (AASBs).

• 14.7.1 Remuneration of KMP

• 14.7.2 Service agreements

• 14.7.3 NED remuneration

• 14.7.4 Share-based compensation

• 14.7.5 Equity instrument disclosures relating to KMP

• 14.7.6 Total shares under option or right to KMP

• 14.7.7 Loans to KMP

27

Bapcor Limited Directors' report 30 June 2018

14.7.1 Remuneration of KMP

				Post employment	Long term	Share based		Percentage of remuneration fixed	Percentage of remuneration fixed	Percentage of remuneration fixed	and
	Short term benefits			benefits	benefits	payments			at risk
	Cash salary and		Non-		Long service
	fees5	Bonus4	monetary	Superannuation	leave	Equity settled	Total	Fixed	At risk - STI	At risk	- LTI
2018	$	$	$	$	$	$	$	%	%	%
NED
R McEniry6	203,204	-	-	16,193	-	-	219,397	100% -			-
A Harrison6	155,719	-	-	14,355	-	-	170,074	100% -			-
M Haseltine	118,721	-	-	11,279	-	-	130,000	100% -			-
T Ryan	127,854	-	-	12,146	-	-	140,000	100% -			-
Executive Director
D Abotomey	1,235,909	1,130,548	-	25,000	18,583	645,548	3,055,588	42% 37%			21%
Other KMP
G Fox	644,614	362,200	-	20,820	10,499	259,214	1,297,347	52% 28%			20%
M Cooper	402,978	172,368	-	20,049	6,666	141,327	743,388	58% 23%			19%
C Daly	461,243	208,003	-	13,837	-	100,115	783,198	60% 27%			13%
P Dumbrell2	449,728	202,560	-	20,049	7,283	203,345	882,965	54% 23%			23%
G Jarrett	398,804	158,355	-	20,049	6,095	137,554	720,857	59% 22%			19%
A. Laing	290,871	120,540	-	20,820	4,666	38,982	475,879	67% 25%			8%
C Magill	478,990	204,820	-	21,591	7,833	155,335	868,569	58% 24%			18%
P Tilley	417,671	168,130	-	20,049	5,937	140,894	752,681	59% 22%			19%
Total	5,386,306	2,727,524	-	236,237	67,562	1,822,314	10,239,943
2017	$	$	$	$	$	$	$	%	%	%
NED
R McEniry	260,384	-	-	19,616	-	-	280,000	100% -			-
A Harrison	126,700	-	-	13,300	-	-	140,000	100% -			-
M Haseltine	123,080	-	-	12,920	-	-	136,000	100% -			-
T Ryan	126,700	-	-	13,300	-	-	140,000	100% -			-
Executive Director
D Abotomey	1,043,300	1,005,402	-	25,000	16,555	334,616	2,424,873	45% 41%			14%
Other KMP
G Fox	551,112	305,340	-	19,616	9,256	263,113	1,148,437	51% 26%			23%
M Cooper	370,384	190,780	-	19,616	6,173	111,639	698,592	57% 27%			16%
C Daly1	222,912	108,698	-	6,894	-	-	338,504	68% 32%			-
P Dumbrell2	372,179	192,374		21,250	6,894	166,372	759,069	53% 25%			22%
G Jarrett	352,083	93,294	-	21,250	5,469	111,185	583,281	65% 16%			19%
A. Laing3	40,724	-	-	4,275	4,173	-	49,172	100% -			-
C Magill	395,384	203,185	-	19,616	6,590	152,397	777,172	54% 26%			20%
P Tilley	360,175	99,216	-	21,250	5,310	109,405	595,356	65% 17%			18%
Total	4,345,117	2,198,289	-	217,903	60,420	1,248,727	8,070,456

• 1 C Daly has been included in FY17 from when Bapcor took effective control of Hellaby in January 2017 2

P Dumbrell took 2.0 weeks (2017: 6.8 weeks) leave without pay during FY18

• 3

• A Laing commenced as Executive General Manager - Human Resources in May 2017

• 4

• Bonuses paid in relation to pre-acquisition ownership of Hellaby in FY18 or the ANA acquisition in FY17 have been excluded from the above table.

• 5 6 R McEniry resigned 4 April 2018 and A Harrison became Chair from that date

Cash salary and fees includes accrued annual leave 6 R McEniry resigned 4 April 2018 and A Harrison became Chair from that date

28

Bapcor Limited Directors' report 30 June 2018

14.7.2 Service agreements

Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements are as follows.

Name: Darryl Abotomey Title: Chief Executive Officer and Managing Director Agreement commenced: 21 April 2014 Term of agreement: 5 years (to 30 April 2019) Details:

Fixed annual remuneration was increased to $1,190,000 (inclusive of superannuation). This is adjusted annually. Fixed remuneration and incentives are based on independent advice from Godfrey Remuneration Group.

Bapcor or Darryl may terminate his employment contract by giving the other twelve months’ written notice before the proposed date of termination, or in Bapcor’s case, payment in lieu of notice. Bapcor may terminate Darryl’s employment immediately and without payment in lieu of notice in certain circumstances including for any serious misconduct. Darryl’s employment contract also includes a restraint of trade period of twelve months.

Other KMP

Each of Bapcor's executive KMP is employed under an individual employment agreement. The provisions of the employment agreements include:

==> picture [534 x 212] intentionally omitted <==

----- Start of picture text -----

Contract terms The commencement dates vary and all contracts are open ended.
Fixed annual Each executive's contract specifies the FAR inclusive of superannuation, motor
remuneration vehicle, non-cash benefits and FBT thereon. The amount for each executive is as set
out earlier in this report.
Review of FAR The executives' FAR is subject to annual review with no obligation on the company to
make changes.
Variable pay Each executive is eligible to participate in the company's incentive arrangements that
can vary from time to time. The maximum STI opportunity is 70% of the executive's
FAR and the maximum LTI opportunity is between 40% and 50% of the executive's
FAR.
Notice period The executive KMP are subject to a three to six month notice period both by the
company and by the executive.
Confidentiality Each contract includes provisions requiring the executive to maintain the confidentiality
of company information.
Leave Each contract provides for leave entitlements, as a minimum, in accordance with
respective legislation
Restraint of trade Each contract includes restraint of trade provisions for a period after termination of
employment.
----- End of picture text -----

29

Bapcor Limited Directors' report 30 June 2018

14.7.3 NED remuneration

Fees and payments to NEDs reflect the demands and the responsibilities of the directors. NED fees and payments are reviewed annually by the NRC. The NRC seeks to set fees at a level that will attract and retain high calibre NEDs who have a diverse range of experience, skills and qualifications to enable effective oversight of management and the company. The NRC may, from time to time, receive advice from independent remuneration consultants to ensure NED fees and payments are competitive, appropriate and in line with the market.

The maximum aggregate fee pool of $1,000,000 was approved by shareholders at the AGM on 21 October 2016.

The following fee policy for the Board and Committees took effect from 1 July 2016 and remained unchanged in FY18.

NEDtype Board $ Nomination & Remuneration Committee $ Audit & Risk Management Committee $	NEDtype Board $ Nomination & Remuneration Committee $ Audit & Risk Management Committee $	NEDtype Board $ Nomination & Remuneration Committee $ Audit & Risk Management Committee $	NEDtype Board $ Nomination & Remuneration Committee $ Audit & Risk Management Committee $
Chairman 280,000 20,000 20,000
Member	110,000	10,000	10,000

All fee amounts are inclusive of compulsory superannuation obligations.

Fees paid to NEDs in FY18 are set out in the following table. Fees are paid in cash and NEDs were not granted options or share rights. NEDs are not entitled to any payment on retirement or resignation from the Board. Directors may also be reimbursed for expenses properly incurred by the director in connection with the affairs of Bapcor including travel and other expenses whilst attending to company affairs.

==> picture [534 x 181] intentionally omitted <==

----- Start of picture text -----

Board fees Committee fees Superannuation Total
NED Financial year $ $ $ $
2018 209,961 - 16,193 226,154
R McEniry
2017 258,646 - 18,949 277,595
2018 134,225 21,494 14,355 170,074
A Harrison
2017 100,002 27,273 12,091 139,367
2018 100,457 18,265 11,279 130,000
M Haseltine
2017 105,948 18,267 11,800 136,016
2018 100,457 27,397 12,146 140,000
T Ryan
2017 100,002 27,273 12,091 139,367
----- End of picture text -----

Shares held by NEDs

The Board has a policy of encouraging directors to increase their holding of shares in the company so that over time it reaches a minimum level of one times the base board fees. The current shareholding interests of the NEDs is set out in section 14.7.5.

30

Bapcor Limited Directors' report 30 June 2018

14.7.4 Share-based compensation

The following table outlines the details of the LTI grants outstanding for each executive KMP participant and other movements in options and performance rights in the year. As options will not vest if the performance conditions are not satisfied, the minimum value of the option yet to vest is nil. LTI grants made to FY17 were on the basis of fair value calculated in accordance with Bapcor’s accounting policy as discussed in note 1 of the financial statements. From FY18 the weighted average face value of shares is used to calculate the number of LTI Performance Rights granted. There were no amounts paid and there were no amounts outstanding or due from KMP in relation to the grant of options during the year.

==> picture [747 x 354] intentionally omitted <==

----- Start of picture text -----

Value
Exercise Value at Forfeited/ expensed
Quantity price grant date Quantity Quantity lapsed this year
KMP Grant date granted Vest date $ $ [1] Vested% vested remaining % $ [2]
D Abotomey 24/04/14 220,08970,071 30/06/16 30/06/17 - 382,342 100% 220,08970,071 - - 0% -
24/12/15 105,79055,198 30/06/17 30/06/18 - 574,449 34% 55,198 - 105,790- 0% 124,092
4/12/17 201,002177,603 30/06/19 30/06/20 - 1,564,369 0% - - 177,603 201,002 0% 521,456
G Fox 24/04/14 99,81431,778 30/06/16 30/06/17 - 173,398 100% 31,778 99,814 - - 0% -
24/12/15 47,55824,814 30/06/17 30/06/18 - 258,243 34% 24,814 - 47,558- 0% 55,786
20/12/16 46,99524,605 30/06/18 30/06/19 - 307,393 0% - - 24,605 46,995 0% 102,078
4/12/17 73,194 30/06/20 - 304,052 0% - 73,194 0% 101,351
M Cooper 24/12/15 13,951 26,738 30/06/17 30/06/18 - 145,189 34% 13,951 - 26,738- 0% 31,364
20/12/16 25,50113,351 30/06/18 30/06/19 - 166,799 0% - - 13,351 25,501 0% 55,390
4/12/17 39,412 30/06/20 - 163,719 0% - 39,412 0% 54,573
C Daly 15/08/17 15,2367,977 30/06/18 30/06/19 - 90,156 0% - - 15,2367,977 0% 35,148
4/12/17 46,919 30/06/20 - 194,903 0% - 46,919 0% 64,968
P Dumbrell 24/12/15 21,230 40,688 30/06/17 300/6/18 - 220,940 34% 21,230 - 40,688- 0% 47,727
20/12/16 37,18819,470 30/06/18 30/06/19 - 243,244 0% - - 19,470 37,188 0% 80,775
4/12/17 54,051 30/06/20 - 224,529 0% - 54,051 0% 74,843
----- End of picture text -----

31

Bapcor Limited Directors' report 30 June 2018

==> picture [747 x 222] intentionally omitted <==

----- Start of picture text -----

G Jarrett 24/12/15 14,719 28,211 30/06/17 300/6/18 - 153,186 34% 14,719 - 28,211- 0% 33,092
20/12/16 23,86512,495 30/06/18 30/06/19 - 156,102 0% - - 12,495 23,865 0% 51,838
4/12/17 38,005 30/06/20 - 167,619 0% - 38,005 0% 52,625
A Laing 4/12/17 28,152 30/06/20 - 116,945 0% - 28,152 0% 38,982
C Magill 24/04/14 18,114 56,894 30/06/16 30/06/17 - 93,634 100% 18,114 56,894 - - 0% -
24/12/15 14,558 27,901 30/06/17 30/06/18 - 151,505 34% 14,558 - 27,901- 0% 32,728
20/12/16 27,13514,206 30/06/18 30/06/19 - 177,485 0% - - 14,206 27,135 0% 58,938
4/12/17 45,981 30/06/20 - 191,008 0% - 45,981 0% 63,669
P Tilley 24/12/15 13,180 25,261 30/06/17 30/06/18 - 137,168 34% 13,180 - 25,261- 0% 29,631
20/12/16 25,50113,351 30/06/18 30/06/19 - 166,799 0% - - 13,351 25,501 0% 55,390
4/12/17 40,351 30/06/20 - 157,874 0% - 40,351 0% 55,873
Total 2,008,103 6,683,049 654,410 1,353,693 1,822,317
----- End of picture text -----

1 Value at grant date has been determined as the fair value of performance rights at grant

2 Value expensed this year is the current years expense calculated by allocating the fair value (determined at grant), of the performance rights, over the relevant vesting period as required by the Accounting Standards.

32

Bapcor Limited Directors' report 30 June 2018

14.7.5 Equity instrument disclosures relating to KMP

The numbers of ordinary voting shares in the company held during the financial year by each director and other KMP, including their personally related parties, are set out below.

==> picture [534 x 455] intentionally omitted <==

----- Start of picture text -----

Balance at Received Dividend Balance at
start of the during the reinvestment Purchase Sale of Resigned the end of
year year plan of shares shares from role the year
2018
Directors
- - - - -
R McEniry 43,163 (43,163)
A Harrison 56,869 - - - - - 56,869
M Haseltine 15,713 - 614 15,000 - - 31,327
T Ryan 32,976 - 892 - - - 33,868
- -
D Abotomey 1,860,246 275,287 (600,000) 1,535,533
Other KMP
G Fox 594,195 124,628 - - (200,000) - 518,823
- - - -
M Cooper 8,500 13,951 22,451
- - - - - - -
C Daly
P Dumbrell 2,817,313 21,230 - - (1,053,313) - 1,785,230
G Jarrett - 14,719 - - - - 14,719
- - - - - - -
A Laing
- - -
C Magill 827,360 71,452 (309,246) 589,566
- - - - -
P Tilley 13,180 13,180
Total 6,256,335 534,447 1,506 15,000 (2,162,559) (43,163) 4,601,566
2017
Directors
- - -
R McEniry 40,294 2,869 43,163
A Harrison 44,000 - 2,869 10,000 - 56,869
M Haseltine - - 153 15,560 - 15,713
- - - -
T Ryan 32,976 32,976
- -
D Abotomey 1,787,306 70,071 2,869 1,860,246
Other KMP
G Fox 762,417 31,778 - - (200,000) 594,195
- - - -
M Cooper 8,500 8,500
P Dumbrell 2,817,313 - - - - 2,817,313
G Jarrett - - - - - -
- - -
C Magill 809,246 18,114 827,360
- - - - - -
P Tilley
Total 6,293,552 119,963 8,760 34,060 (200,000) 6,256,335
----- End of picture text -----

14.7.6 Total shares under option or right to KMP

==> picture [370 x 144] intentionally omitted <==

----- Start of picture text -----

Exercise
Expiry price of
Date granted Vest date date rights Quantity
Performance rights plans
24/12/15 30/06/18 n/a $0.00 302,147
20/12/16 30/06/18 n/a $0.00 97,478
20/12/16 30/06/19 n/a $0.00 186,185
15/08/17 30/06/18 n/a $0.00 7,977
15/08/17 30/06/19 n/a $0.00 15,236
4/12/17 30/06/19 n/a $0.00 177,603
4/12/17 30/06/20 n/a $0.00 567,067
Total shares under option of right 1,353,693
----- End of picture text -----

33

Bapcor Limited Directors' report 30 June 2018

14.7.7 Loans to executive KMP

No loans were made to executive KMP in FY18.

During FY16, loans were made to several executive KMP to assist in the purchase of shares under the retail component of the Entitlements Offer in that year. These loans are secured by the underlying shares. The loans are interest bearing and are repayable on the earlier of sale of the underlying shares, termination of employment or 5 years from the date of the loan. Any remuneration in relation to over achievement of target STIs is to be applied to repay the outstanding loan balance. The total amount of loans made during FY16 to executive KMP was $3,050,000. Subsequent to the loans being made, there have been repayments of $2,408,000 and as at 30 June 2018, the outstanding balance on these loans to executive KMP is $642,000. There are no outstanding loans to the CEO or the CFO.

15. Matters subsequent to the end of the financial year

On 3 July 2018, the consolidated entity sold the TRS Tyre and Wheel business in New Zealand ('TRS') to Trelleborg Wheel Systems, a subsidiary of Swedish listed Trelleborg AB for NZD $20M. Final completion is outstanding at the time of this financial report.

TRS is a distributor of tyres for agricultural, materials handling and construction vehicles in New Zealand, specialising in tyres and complete wheels for tyre and tractor dealers.

TRS contributed revenue of $24.3M and profit before tax of $2.5M in FY18.

On 1 August 2018, the consolidated entity exercised an option to make final settlement of the Baxter's deferred contingent consideration which was recorded as a current liability in the financial statements.

Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

16. Environmental regulation

The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

17.Indemnity and insurance of officers

During the financial year, the company paid a premium of $210,750 in respect of a contract to insure the directors and executives of the company against a liability for costs that may be incurred in defending civil or criminal proceedings that may be brought against the directors, in their capacity as a director, except where there is a lack of good faith.

18. Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

19. Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

34

Bapcor Limited Directors' report 30 June 2018

20. Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 29 to the financial statements.

The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

21. Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 36 of the Directors' Report.

22. Rounding of amounts

The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

==> picture [159 x 55] intentionally omitted <==

Andrew Harrison Chairman 22 August 2018 Melbourne

==> picture [136 x 42] intentionally omitted <==

Darryl Abotomey Chief Executive Officer and Managing Director

35

==> picture [77 x 59] intentionally omitted <==

Auditor’s Independence Declaration

As lead auditor for the audit of Bapcor Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Bapcor Limited and the entities it controlled during the period.

==> picture [95 x 54] intentionally omitted <==

Jason Perry Partner PricewaterhouseCoopers

Melbourne 22 August 2018

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001

T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

36

Bapcor Limited Contents 30 June 2018

Consolidated statement of comprehensive income	38
Consolidated statement of financial position	40
Consolidated statement of changes in equity	41
Consolidated statement of cash flows	43
Notes to the consolidated financial statements	44
Directors' declaration	97
Independent auditor's report to the members of Bapcor Limited	98
Corporate directory	105

General information

The financial statements cover Bapcor Limited as a consolidated entity consisting of Bapcor Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Bapcor Limited's functional and presentation currency.

Bapcor Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

61 Gower Street, Preston VIC 3072 AUSTRALIA

A description of the nature of the consolidated entity's operations and its principal activities are included in the Directors' Report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 22 August 2018. The Directors have the power to amend and reissue the financial statements.

37

Bapcor Limited Consolidated statement of comprehensive income For the year ended 30 June 2018

Note Revenue from continuing operations Expenses Cost of sales Employee benefits expense Freight Advertising Administration Motor vehicles IT & communications Occupancy Acquisition costs 5 Depreciation and amortisation expense 5 Finance costs 5 Profit before income tax expense from continuing operations Income tax expense 6 Profit after income tax expense from continuing operations Profit after income tax expense from discontinued operations 7 Profit after income tax expense for the year Other comprehensive income Items that may be reclassified to profit or loss Foreign currency translation Changes in the fair value of cash flow hedges Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit for the year is attributable to: Non-controlling interest Owners of Bapcor Limited 22 Total comprehensive income for the year is attributable to: Non-controlling interest: Continuing operations Discontinued operations Total non-controlling interest Owners of Bapcor Limited: Continuing operations Discontinued operations Total owners of Bapcor Limited	Consolidated 2018 2017 $'000 $'000 1,236,681 1,013,553 (667,290) (552,683) (260,123) (209,013) (20,189) (17,982) (23,766) (23,773) (47,646) (42,026) (10,836) (9,113) (12,963) (10,441) (46,098) (37,027) (702) (8,482) (15,582) (13,527) (13,452) (9,766)	Consolidated 2018 2017 $'000 $'000 1,236,681 1,013,553 (667,290) (552,683) (260,123) (209,013) (20,189) (17,982) (23,766) (23,773) (47,646) (42,026) (10,836) (9,113) (12,963) (10,441) (46,098) (37,027) (702) (8,482) (15,582) (13,527) (13,452) (9,766)
	118,034 (33,655)	79,720 (25,988)
	84,379 9,941	53,732 10,098
	94,320 (9,248) 3,834	63,830 (891) (1,967)
	(5,414)	(2,858)
	88,906	60,972
	(336) 94,656	(214) 64,044
	94,320	63,830
	(157) (214)	- (244)
	(371)	(244)
	80,669 8,608	52,524 8,692
	89,277	61,216
	88,906	60,972

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes

38

Bapcor Limited Consolidated statement of comprehensive income For the year ended 30 June 2018

		Consolidated	Consolidated
	Note	2018	2017
		$'000	$'000
		Cents	Cents
Earnings per share for profit from continuing operations attributable to the
owners of Bapcor Limited
Basic earnings per share	39	30.22	19.93
Diluted earnings per share	39	30.06	19.83
Earnings per share for profit from discontinued operations attributable to the
owners of Bapcor Limited
Basic earnings per share	39	3.56	3.75
Diluted earnings per share	39	3.54	3.73
Earnings per share for profit attributable to the owners of Bapcor Limited
Basic earnings per share	39	33.90	23.76
Diluted earnings per share	39	33.73	23.64

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes

39

Bapcor Limited Consolidated statement of financial position As at 30 June 2018

Note Assets Current assets Cash and cash equivalents Trade and other receivables 8 Inventories 9 Derivative financial instruments 26 Assets held for sale 10 Total current assets Non-current assets Trade and other receivables 11 Property, plant and equipment 12 Intangibles 13 Deferred tax asset 6 Other 14 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 15 Derivative financial instruments 26 Income tax Provisions 16 Liabilities relating to assets held for sale 17 Total current liabilities Non-current liabilities Borrowings 18 Derivative financial instruments 26 Provisions 19 Total non-current liabilities Total liabilities Net assets Equity Issued capital 20 Reserves 21 Retained profits/(accumulated losses) 22 Equity attributable to the owners of Bapcor Limited Non-controlling interest 23 Total equity	Consolidated 2018 2017 $'000 $'000 40,154 39,755 146,700 135,784 287,337 261,627 1,720 40 - 178,860	Consolidated 2018 2017 $'000 $'000 40,154 39,755 146,700 135,784 287,337 261,627 1,720 40 - 178,860
	475,911	616,066
	78 52,590 677,736 17,755 3,447	296 49,781 647,831 18,664 4,061
	751,606	720,633
	1,227,517	1,336,699
	187,753 124 2,442 52,342 -	174,768 1,780 3,455 32,131 70,842
	242,661	282,976
	326,488 330 15,692	429,747 637 33,372
	342,510	463,756
	585,171	746,732
	642,346	589,967
	606,456 (3,645) 37,138	600,675 (202) (17,067)
	639,949 2,397	583,406 6,561
	642,346	589,967

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

40

Bapcor Limited

Consolidated statement of changes in equity For the year ended 30 June 2018

Consolidated Balance at 1 July 2016 Profit/(loss) after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 20) Non-controlling interests on acquisition (note 23) Share-based payments (note 21) Treasury shares (note 20) Dividends paid (note 24) Balance at 30 June 2017	Contributed equity $'000 416,427 - -	Other $'000 - - -	Reserves $'000 845 - (2,828)	Accumulated losses $'000 (51,052) 64,044 -	Non- controlling Interests $'000 - (214) (30)	Total equity $'000 366,220 63,830 (2,858)
	- 186,144 - - - -	- - - - (1,896) -	(2,828) - - 1,781 - -	64,044 - - - - (30,059)	(244) - 6,805 - - -	60,972 186,144 6,805 1,781 (1,896) (30,059)
	602,571	(1,896)	(202)	(17,067)	6,561	589,967

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

41

Bapcor Limited Consolidated statement of changes in equity For the year ended 30 June 2018

Consolidated Balance at 1 July 2017 Profit/(loss) after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 20) Share-based payments (note 21) Treasury shares (note 20) Finalisation of prior year business combinations (note 34) Divestment of non-controlling interest (note 23) Creation of non-controlling interest on incorporation (note 23) Dividends paid (note 24) Balance at 30 June 2018	Contributed equity $'000 602,571 - -	Other $'000 (1,896) - -	Reserves $'000 (202) - (5,379)	Accumulated losses $'000 (17,067) 94,656 -	Non- controlling Interests $'000 6,561 (336) (35)	Total equity $'000 589,967 94,320 (5,414)
	- 8,380 - - - - - -	- - - (2,599) - - - -	(5,379) - 1,936 - - - - -	94,656 - - - - - - (40,451)	(371) - - - (4,820) (1,527) 2,554 -	88,906 8,380 1,936 (2,599) (4,820) (1,527) 2,554 (40,451)
	610,951	(4,495)	(3,645)	37,138	2,397	642,346

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

42

Bapcor Limited Consolidated statement of cash flows For the year ended 30 June 2018

Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Net cash converted Payments for new store initial inventory purchases Payments relating to restructuring activities Payments associated with discontinued operations Borrowing costs Transaction costs relating to acquisition of business Income taxes paid Net cash from operating activities 38 Cash flows from investing activities Payment for purchase of business, net of cash and cash equivalents 34 Payment for deferred settlements Payments for property, plant and equipment 12 Payments for intangibles 13 Proceeds from disposal of property, plant and equipment Proceeds from divestment of businesses 7 Net cash from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares 20 Share issue transaction costs Purchase of treasury shares 20 Repayment of acquired loans via acquisition 34 Net proceeds/(repayments) from borrowings 18 Dividends paid 24 Borrowing transaction costs Net cash from/(used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year	Consolidated 2018 2017 $'000 $'000 1,353,533 1,114,521 (1,205,282) (994,123)	Consolidated 2018 2017 $'000 $'000 1,353,533 1,114,521 (1,205,282) (994,123)
	148,251 (6,769) (1,964) (654) (14,668) (702) (38,063)	120,398 (11,532) - - (9,288) (8,482) (30,002)
	85,431	61,094
	(15,086) (9,954) (14,678) (966) 776 93,690	(373,238) (6,511) (15,096) (1,120) 974 -
	53,782	(394,991)
	- (414) (2,599) - (103,838) (31,781) (24)	182,022 (4,596) (1,896) (79,487) 283,429 (25,501) (2,618)
	(138,656)	351,353
	557 39,755 (158)	17,456 22,392 (93)
	40,154	39,755

Note: the consolidated statement of cash flows represents the statement of cash flows of the continuing operations only. Discontinued operation's cash flows have been excluded as cash flow disclosures are not required for disposal groups that are classified as held for sale on acquisition in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations .

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

43

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the AASB and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 33.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Bapcor Limited ('company' or 'parent entity') as at 30 June 2018 and the results of all subsidiaries for the year then ended. Bapcor Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency translation

The financial statements are presented in Australian dollars, which is Bapcor Limited's functional and presentation currency.

44

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Transactions and balances

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

Revenue is recognised when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the consolidated entity and specific criteria have been met for each of the revenue activities as described below. Where estimates are used, they are based on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Sale of goods

A sale is recorded when goods have been delivered to the customer, the customer has accepted the goods and collectability of the related receivables is probable.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

• ●When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

• ●When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

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

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Rendering of services - franchise and service fees Revenue from the provision of franchise and advertising services is recognised on an accruals basis.

Revenue from the provision of accounting and information technology support services is recognised on a periodical as-delivered basis.

45

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Discontinued operations

A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of comprehensive income.

Discontinued operations adhere to the accounting policies of the consolidated entity except for the following specific recognition and measurement policies only relating to the discontinued operations:

Revenue recognition and measurement:

Sale of services and unbilled revenue (specific to the Resource Services discontinued operation):

Where services are charged on the basis of actual time and materials incurred, revenue is recognised as costs are incurred. Revenue is generally calculated based on contractual billing rates for the services performed. To the extent that services rendered have not been invoiced at balance date but are billable under agreed contractual terms, an amount is recorded as unbilled revenue in the balance sheet as part of assets held for sale.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other shortterm, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Where services are under a fixed price arrangement then the percentage-of-completion method of contract accounting is applied. When the outcome of fixed price contracts can be measured reliably, revenue is recognised based on the proportion of work performed to date relative to the estimated total contract costs. When the outcome of fixed price contracts cannot be measured reliably, revenue is recognised only to the extent of the expenses incurred under the contract that are expected to be recoverable. If these services have not been invoiced at balance date but are billable, an amount is recorded as unbilled revenue in the balance sheet as part of assets held for sale.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 to 60 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables and also by an application of a percentage of aged debt. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

46

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Other receivables are recognised at amortised cost, less any provision for impairment.

Inventories

Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

Stock on hand is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

Hedges of a net investment

Hedges of a net investment in a foreign operation include monetary items that are considered part of the net investment. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised directly in equity whilst gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to profit or loss.

Plant and equipment

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

Derivatives are classified as current or non-current depending on the expected period of realisation.

Cash flow hedges

Cash flow hedges are used to cover the consolidated entity's exposure to variability in cash flows that is attributable to particular risks associated with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income through the cash flow hedges reserve in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction when the forecast transaction occurs.

Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts recognised in equity are transferred to profit or loss.

If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is no longer a designated hedge, the amounts previously recognised in equity remain in equity until the forecast transaction occurs.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their expected useful lives as follows:

Plant and equipment	2-15 years
Motor vehicles	3-7 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

47

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Brands and trademarks

Brands and trademarks are recognised as intangible assets where a registered trademark is acquired with attributable value. They are valued using a relief from royalty method and are considered indefinite life intangibles and are not amortised unless there is an intention to discontinue their use in which it is amortised over the estimated remaining useful life.

Customer contracts

Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite life which is currently between 10 and 20 years.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straightline basis over the term of the lease.

Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Software

Costs incurred in acquiring, developing, and implementing new software are recognised as intangible assets only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, licenses and direct labour. Software is amortised on a straight-line basis over the period of their expected benefit, being their finite life which is currently between 2 and 5 years. Large scale projects are individually assessed as part of the approval process and determination of finite life may exceed this range.

Impairment of assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their shortterm nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 to 90 days of recognition.

48

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least twelve months after the reporting date, the loans or borrowings are classified as noncurrent.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is amortised on a straight-line basis over the term of the facility.

Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within twelve months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within twelve months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Share-based payments

Share-based compensation benefits are provided to employees via the Long-Term Incentive ('LTI') plan. The fair value of performance rights granted under the LTI is recognised as an employee benefit expense over the period during which the employees become unconditionally entitled to the rights and options with a corresponding increase in equity.

The total amount to be expensed is determined by reference to the fair value of the rights and options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest which are revised at the end of each reporting period. The impact of the revision to original estimates, if any, is recognised in profit or loss, with a corresponding adjustment to equity.

The fair value is measured at grant date and the expense recognised over the life of the plan. The fair value is independently determined using a Black-Scholes or similar option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

49

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the company.

Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition-date. On an acquisition-by-acquisition basis, any non-controlling interest in the acquiree is recognised either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable assets.

The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Bapcor Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

50

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 1. Significant accounting policies (continued)

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Rounding of amounts

The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2018. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

The consolidated entity will adopt this standard from 1 July 2018. The consolidated entity has commenced the assessment of the impact of its adoption and has not identified any changes from either the classification and measurement for financial assets or hedge accounting requirements changes, however is still assessing any potential impact for the impairment changes under an expected credit losses method which may impact the calculation of the provision for doubtful debts.

AASB 15 Revenue from Contracts with Customers This standard is applicable to annual reporting periods beginning on or after 1 January 2018. This new standard will replace AASB 118 Revenue which covers revenue arising from the sale of goods and the rendering of services and AASB 111 Construction Contracts which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer and permits either a full retrospective or a modified retrospective approach for the adoption.

The consolidated entity will adopt this standard from 1 July 2018 and has performed an initial assessment of the impact of this change. Given the majority of the consolidated entity's revenue is derived from over the counter sale of goods with no above normal industry expected warranties provided or loyalty programs in place, it is not expected that this adoption will have a material impact.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 Leases and will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, as asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

The consolidated entity will adopt this standard from 1 July 2019 and has engaged with an external lease solution provider to consolidate the required leasing information in order to perform quantification of this change which is still underway. Given the number of operating leases in relation to warehouse and stores that the consolidated entity has in place, it is expected that this change will have a material impact on the balance sheet in particular via the recognition of the respective right-ofuse asset and corresponding liability as well as the income statement. The consolidated entity will continue to work with the external lease solution provider to assess the quantification of this change and the impact of its adoption.

51

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 2. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Share-based payment transactions

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 40.

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the ageing of receivables, historical collection rates and specific knowledge of the individual debtor's financial position. Refer to notes 8 and 11.

Provision for slow moving inventory

The provision for slow moving inventory assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. Refer to note 9.

Estimation of useful lives of assets

The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Refer to notes 12 and 13.

Goodwill and other indefinite life intangible assets

The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 13.

Deferred consideration

The deferred consideration liability is the difference between the total purchase consideration, usually on an acquisition of a business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. The consolidated entity applies provisional accounting for any business combination. Any reassessment of the liability during the provisional period is adjusted for retrospectively as part of the fair value of consideration. Thereafter, at each reporting date, the deferred consideration liability is reassessed against revised estimates and any increase or decrease in the net present value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the passage of time is recognised as a finance cost. Refer to note 16 and 19.

Business combinations

As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported. Refer to note 34.

52

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 3. Restatement of comparatives

Reclassifications

The financial statements contain reclassification of prior year disclosures to ensure comparability with the current year presentation.

Note 4. Operating segments

Description of segments

The consolidated entity has identified four operating segments based on the internal reports that are reviewed and used by the CEO and Managing Director (who is identified as the Chief Operating Decision Maker ('CODM')) and is supported by the other members of the Board of Directors where required in assessing performance and in determining the allocation of resources including capital allocations.

The operating results of the consolidated entity are currently reviewed by the CODM and decisions are based on four operating segments which also represent the four reporting segments, as follows:

Trade	Represents the trade focused automotive aftermarket parts distribution to independent
	and chain mechanic workshops. Includes the operations of Burson Auto Parts and
	Precision Automotive Equipment.
Bapcor NZ (previously	Represents the operations of Brake & Transmission, Autolign, HCB Technologies and
Hellaby Automotive)	TRS Tyre & Wheel.
Specialist Wholesale	Includes the specialised wholesale distribution areas of the organisation that focus on a
	specific automotive area. Includes the operations of AAD, Baxters, Bearing Wholesalers,
	MTQ Engine Systems, Roadsafe, Diesel Distributors, Federal Batteries, JAS Oceania,
	and Premier Auto Trade.
Retail & Service	Represents the retail focused accessory stores that are positioned as the first choice
	destination for both the everyday consumer and automotive enthusiast as well as the
	service areas of Bapcor. Includes the operations of Autobarn, Autopro, Sprint Auto Parts,
	Midas and ABS.

During FY18 there was a reallocation of the Bapcor NZ Australian business units of Diesel Distributors, Federal Batteries, JAS Oceania and Premier Auto Trade to the Specialist Wholesale segment reflecting the change in business organisation structure. The prior year comparatives have been adjusted to reflect this change.

The Thailand based operations have been included in the Unallocated / Head Office supporting segment as they are considered immaterial in nature for the financial period.

Segment revenue

Intersegment transactions are carried out at arm's length and eliminated on consolidation. The revenue from external parties reported to the CODM is measured in a manner consistent with that in the statement of comprehensive income.

Segment EBITDA

Segment performance is assessed on the basis of segment EBITDA. Segment EBITDA comprises expenses which are incurred in the normal trading activity of the segments and excludes the impact of depreciation, amortisation, interest, share-based payments and other items which are determined to be outside of the control of the respective segments.

53

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 4. Operating segments (continued)

Operating segment information

Consolidated - 2018 Revenue Sales Total segment revenue Intersegment sales Discontinued operations (note 7) Total revenue EBITDA Intersegment EBITDA Depreciation and amortisation Finance costs Acquisition costs Discontinued operations (note 7) Profit before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities	Trade $'000 501,591	Bapcor NZ $'000 177,850	Specialist Wholesale $'000 364,343	Retail & Service $'000 239,114	Unallocated / Head Office $'000 -	Total $'000 1,282,898
	501,591	177,850	364,343	239,114	-	1,282,898 (46,217) 145,647
	72,123	22,708	38,633	28,784	(11,546)
						1,382,328
						150,702 (2,932) (15,582) (13,452) (702) 13,870
	291,888	230,040	373,980	283,528	48,081
						131,904 (37,584)
						94,320
						1,227,517
	100,024	30,551	82,502	42,084	330,010	1,227,517
						585,171 585,171

54

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 4. Operating segments (continued)

Consolidated – 2017 Restated Revenue Sales Total segment revenue Intersegment sales Discontinued operations (note 7) Total revenue EBITDA Intersegment EBITDA Depreciation and amortisation Finance costs Acquisition costs Discontinued operations (note 7) Profit before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Held for sale assets (note 10) Total assets Liabilities Segment liabilities Held for sale liabilities (note 17) Total liabilities Geographical information Australia New Zealand Other	Trade $'000 465,102	Bapcor NZ $'000 87,121	Specialist Wholesale $'000 272,264	Retail & Service $'000 220,996	Unallocated / Head Office $'000 -	Total $'000 1,045,483
	465,102	87,121	272,264	220,996	-	1,045,483 (31,930) 196,603
	63,296	9,295	28,050	27,579	(11,126)
						1,210,156
						117,094 (5,599) (13,527) (9,766) (8,482) 15,135
	280,947	205,397	349,404	274,241	47,850
						94,855 (31,025)
						63,830
						1,157,839 178,860
	91,273	23,866	51,421	37,549	471,781
						1,336,699
			Sales to external customers 2018 2017 $'000 $'000 1,058,831 926,638 177,850 86,915 - - 1,236,681 1,013,553
				1,013,553	733,851	701,969

The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets and balances such as intercompany and investments that are eliminated on consolidation. It only pertains to the continuing operations of the consolidated entity.

Revenue is allocated to geographical segments on the basis of where the sale is recorded.

55

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 5. Expenses

Note 5. Expenses
Profit before income tax from continuing operations includes the following specific expenses: Depreciation and amortisation expense Plant and equipment Motor vehicles Amortisation Make good provision Acquisition and divestment costs Professional consultant costs Transaction success fees paid to advisors Other transaction costs Finance costs Interest and finance charges paid/payable Borrowing cost write offs due to refinancing process Rental expense relating to operating leases Minimum lease payments Superannuation expense Defined contribution superannuation expense	Consolidated 2018 2017 $'000 $'000 8,297 5,519 3,890 4,012 2,861 3,667 534 329
	15,582	13,527
	459 - 243	2,369 3,793 2,320
	702	8,482
	13,452 -	9,185 581
	13,452	9,766
	40,895	31,902
	16,075	13,740

56

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 6. Income tax

Income tax expense Current tax on profits for the year Deferred tax expense Adjustment recognised for prior periods Relating to discontinued operations Total income tax expense Income tax expense is attributable to: Profit from continuing operations Profit from discontinued operations Total income tax expense Deferred tax included in income tax expense comprises: Decrease/(increase) in deferred tax assets Decrease in deferred tax liabilities Total deferred tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense from continuing operations Profit before income tax expense from discontinued operations Tax at the statutory tax rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Acquisition costs Other Gain on divestment Adjustment recognised for prior periods Difference in overseas tax rates Income tax expense	Consolidated 2018 2017 $'000 $'000 33,318 26,907 610 (610) (273) (309) 3,929 5,037	Consolidated 2018 2017 $'000 $'000 33,318 26,907 610 (610) (273) (309) 3,929 5,037
	37,584	31,025
	33,655 3,929	25,988 5,037
	37,584	31,025
	1,345 (735)	(561) (49)
	610	(610)
	118,034 13,870	79,720 15,135
	131,904	94,855
	39,571 211 (657) (1,963) (273) 695	28,457 2,134 321 - (309) 422
	37,584	31,025

57

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 6. Income tax (continued)

Note 6. Income tax (continued)
Deferred tax asset Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Property, plant and equipment Employee benefits Trade and other receivables Inventory Other Amounts recognised in equity: Transaction costs on share issue Amounts recognised in other comprehensive income: Cash flow hedge Share-based payment Total deferred tax asset Set off deferred tax liabilities pursuant to set-off provisions Net deferred tax asset Movements in deferred tax asset Opening balance Credited/(charged) to profit or loss Credited/(charged) to equity Additions through business combinations (note 34) Charged to other comprehensive income Adjustment recognised for prior periods Foreign currency translation Closing balance	Consolidated 2018 2017 $'000 $'000 1,769 2,259 13,392 11,737 2,296 2,663 13,850 15,810 8,337 8,520
	39,644	40,989
	1,301	1,359
	394 597	447 882
	991 41,936	1,329 43,677
	(24,181)	(25,013)
	17,755	18,664
	43,677 (1,345) (58) 790 (338) (443) (347)	27,728 561 1,038 13,778 66 53 453
	41,936	43,677

58

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 6. Income tax (continued)

Note 6. Income tax (continued)
Deferred tax liability Deferred tax liability comprises temporary differences attributable to: Amounts recognised in profit or loss: Customer contracts Trademarks Other Amounts recognised in other comprehensive income: Cash flow hedge Total deferred tax liability Set off deferred tax liabilities pursuant to set-off provisions Net deferred tax liability Movements in deferred tax liability Opening balance Credited to profit or loss Charged/(credited) to equity Additions through business combinations (note 34) Finalisation of prior year business combinations (note 34) Foreign currency translation Adjustment recognised for prior periods Closing balance	Consolidated 2018 2017 $'000 $'000 6,158 6,688 17,643 17,721 249 376
	24,050	24,785
	131	228
	24,181	25,013
	(24,181)	(25,013)
	-	-
	25,013 (735) (97) - (78) 108 (30)	20,481 (49) 228 4,353 - - -
	24,181	25,013

59

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 7. Discontinued operations

Description

The discontinued operations relate to the businesses of Footwear and Resource Services that were acquired in the prior year as part of the Hellaby Holdings Limited acquisition and deemed held for sale on acquisition. During the year they were all successfully divested. Refer to notes 10 and 17 for further information.

Financial performance information

Footwear Resource Services Total revenue Footwear Resource Services Total expenses Profit before reserve reclassification Foreign currency reserve reclassification Net investment hedge reserve reclassification Total reserve reclassifications Profit before income tax expense post reserve reclassifications Income tax expense Profit after income tax expense Gain on divestment before income tax Income tax expense Gain on divestment after income tax expense Profit after income tax expense from discontinued operations Carrying amounts of assets and liabilities divested Assets held for sale Total assets Liabilities held for sale Total liabilities Net assets	Consolidated 2018 2017 $'000 $'000 27,245 64,697 118,402 131,906	Consolidated 2018 2017 $'000 $'000 27,245 64,697 118,402 131,906
	145,647 (28,135) (111,093)	196,603 (59,498) (121,970)
	(139,228) 6,419 (2,771) 3,211	(181,468) 15,135 - -
	440 6,859 (3,929)	- 15,135 (5,037)
	2,930	10,098
	7,011 -	- -
	7,011	-
	9,941	10,098
	Consolidated 2018 2017 $'000 $'000 110,963 -
	110,963	-
	52,190	-
	52,190	-
	58,773	-

Carrying amounts of assets and liabilities divested

60

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 7. Discontinued operations (continued)

Details of the divestments

Net cash sale consideration * Carrying amount of net assets divested Net accrued consideration to be received Accrued divestment and warranty costs Cash proceeds used to settle intercompany debt Derecognition of non-controlling interest (note 23) Foreign currency reserve reclassification Gain on divestment before income tax Gain on divestment after income tax	Consolidated 2018 2017 $'000 $'000 93,690 - (58,773) - 1,516 - (859) - (31,506) - 1,527 - 1,416 -	Consolidated 2018 2017 $'000 $'000 93,690 - (58,773) - 1,516 - (859) - (31,506) - 1,527 - 1,416 -
	7,011	-
	7,011	-

• Net of divestment costs and minority interest payments

The Footwear and Contract Resources (North America component only) businesses were divested effective 30 September 2017, the Contract Resources (excluding the North America component) business effective 31 October 2017 and the TBS business effective 31 March 2018.

The Contract Resources (excluding the North America component) divestment was finalised in March 2018 with a NZD $5.0M (AUD $4.6M) working capital settlement received, which is included in the net cash sale consideration amount in the table above. The final completion consideration for TBS is yet to be finalised.

Cash flow disclosures are not required for disposal groups that are classified as held for sale on acquisition in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations .

Note 8. Current assets - trade and other receivables

Trade receivables Less: Provision for impairment of receivables Customer loans Less: Provision for impairment of customer loans Other receivables Prepayments	Consolidated 2018 2017 $'000 $'000 134,735 126,524 (7,251) (8,296)	Consolidated 2018 2017 $'000 $'000 134,735 126,524 (7,251) (8,296)
	127,484	118,228
	1,352 (805)	1,366 (851)
	547	515
	12,586 6,083	12,118 4,923
	18,669	17,041
	146,700	135,784

61

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 8. Current assets - trade and other receivables (continued)

Trade receivables are non-interest bearing and repayment terms vary by business unit. The amount of provision for impairment of trade receivables has been measured as the difference between the carrying amount of the trade receivables and the estimated future cash flows expected to be received from the relevant debtors.

Customer loans relate to loans with franchisees. Loans with repayment terms of less than twelve months are classified as current. Non-current customer loans are discounted to their present value. Of the total customer loans balance including the non-current portion disclosed in note 11, $292,000 (2017: $265,000) are non-interest bearing. $1,281,000 (2017: $1,704,000) of loans have a weighted average annual interest rate of 10.2% (2017: 9.9%).

Other receivables are non-interest bearing. Receivables with repayment terms of less than twelve months are classified as current. These receivables are all neither past due nor impaired.

The ageing of the net trade receivables and loans above (including the non-current portion from note 11) are as follows:

Current and not due 31 - 60 days 61 - 90 days	Consolidated 2018 2017 $'000 $'000 82,001 84,431 40,355 28,424 5,753 6,184	Consolidated 2018 2017 $'000 $'000 82,001 84,431 40,355 28,424 5,753 6,184
	128,109	119,039

As at 30 June the amount of the provision for impairment of receivables and loans was $8,198,000 (2017: $9,454,000) represented by:

• Provision for trade doubtful debts $5,971,000 (2017: $7,130,000)

• Provision for credit notes $1,280,000 (2017: $1,166,000)

• Provision for customer loans $947,000 (2017: $1,158,000)

Bapcor recognised a loss of $420,000 (2017: $254,000) in respect of impaired receivables during the financial year.

Movements in the provision for impairment of receivables and loans are as follows:

Opening balance Additional provisions recognised Additions through business combinations Amounts used Foreign currency translation Change in provision from re-measurement Closing balance	Consolidated 2018 2017 $'000 $'000 9,454 8,295 420 254 88 2,846 (1,484) (1,356) (44) (9) (236) (576)	Consolidated 2018 2017 $'000 $'000 9,454 8,295 420 254 88 2,846 (1,484) (1,356) (44) (9) (236) (576)
	8,198	9,454

62

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 9. Current assets - inventories

Stock in transit - at cost Stock on hand - at cost Less: Provision for slow moving inventory Movements in provision for slow moving inventory Balance at 1 July 2017 Additional provisions recognised against profit1 Additions through business combinations2 Inventory written off against provision3 Foreign currency translation	Consolidated 2018 2017 $'000 $'000 15,271 13,325	Consolidated 2018 2017 $'000 $'000 15,271 13,325
	318,905 (46,839)	302,287 (53,985)
	272,066	248,302
	287,337	261,627
		53,985 1,977 1,224 (9,920) (427)
		46,839

Notes:

1. Represents inventory provisions raised during the normal course of business for slow moving and obsolete inventory and charged against profit

2. Represents inventory provisions created for acquired businesses to record inventory in line with Bapcor policy 3. Represents physical disposal and destruction of obsolete inventory which had been previously provided. This relates largely to inventory acquired as part of the Metcash Automotive and Hellaby Automotive acquisitions which were recognised as slow moving or obsolete at the time of acquisition and provided for in line with Bapcor policy

Note 10. Current assets - assets held for sale

Note 10. Current assets - assets held for sale
Footwear Resource Services	Consolidated 2018 2017 $'000 $'000 - 27,391 - 151,469
	-	178,860

As part of the Hellaby Holdings Limited acquisition in the prior year, the two acquired businesses of Footwear and Resource Services were immediately deemed assets held for sale at the time of acquisition. During the year ending 30 June 2018, these held for sale businesses were divested. The results of these held for sale businesses have been reported as discontinued operations. Refer to notes 7 and 17 for further information.

Refer to note 28 for information relating to the determination of the fair value of the assets held for sale.

63

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 11. Non-current assets - trade and other receivables

Note 11. Non-current assets - trade and other receivables
Customer loans Less: Provision for impairment of receivables	Consolidated 2018 2017 $'000 $'000 220 603 (142) (307)
	78	296

Customer loans relate to loans with franchisees. Refer to note 8 for further information on these customer loans.

Note 12. Non-current assets - property, plant and equipment

Plant and equipment - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation	Consolidated 2018 2017 $'000 $'000 62,105 55,016 (27,310) (22,409)	Consolidated 2018 2017 $'000 $'000 62,105 55,016 (27,310) (22,409)
	34,795	32,607
	29,850 (12,055)	27,396 (10,222)
	17,795	17,174
	52,590	49,781

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Additions Additions through business combinations Disposals Foreign currency translation Transfers in/(out) Depreciation expense Balance at 30 June 2017 Additions Additions through business combinations (note 34) Disposals Foreign currency translation Transfers in/(out) Depreciation expense Balance at 30 June 2018	Plant and equipment $'000 23,823 9,399 4,722 (210) (1) 393 (5,519)	Motor vehicles $'000 12,390 5,697 4,182 (685) (5) (393) (4,012)	Total $'000 36,213 15,096 8,904 (895) (6) - (9,531)
	32,607 9,338 946 (117) (50) 368 (8,297)	17,174 5,340 190 (599) (52) (368) (3,890)	49,781 14,678 1,136 (716) (102) - (12,187)
	34,795	17,795	52,590

64

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 13. Non-current assets - intangibles

Note 13. Non-current assets - intangibles
Goodwill Trademarks Customer contracts Less: Accumulated amortisation Software Less: Accumulated amortisation	Consolidated 2018 2017 $'000 $'000 594,118 561,844
	58,979	59,442
	25,520 (4,960)	25,543 (3,251)
	20,560	22,292
	9,925 (5,846)	8,959 (4,706)
	4,079	4,253
	677,736	647,831

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Additions Additions through business combinations (note 34) Foreign currency translation Amortisation expense Balance at 30 June 2017 Additions Additions through business combinations (note 34) Finalisation of prior year business combinations (note 34) Foreign currency translation Amortisation expense Balance at 30 June 2018	Computer software $'000 4,371 1,101 716 - (1,935)	Customer contracts $'000 24,024 - - - (1,732)	Trade names $'000 44,581 19 14,889 (47) -	Goodwill $'000 289,231 - 273,599 (986) -	Total $'000 362,207 1,120 289,204 (1,033) (3,667)
	4,253 966 - - (11) (1,129)	22,292 - - - - (1,732)	59,442 - - (277) (186) -	561,844 - 10,199 32,573 (10,498) -	647,831 966 10,199 32,296 (10,695) (2,861)
	4,079	20,560	58,979	594,118	677,736

65

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Impairment testing

Impairment testing of assets including goodwill and other intangible assets occurs each year on 31 March balances or when impairment indicators arise. The recoverable amount of assets including goodwill and other indefinite useful life intangible assets is determined based on value-in-use calculations at an individual or a combination of cash-generating units ('CGU') up to the operating segment level. These calculations require the use of key assumptions on which management has based its cash flow projections, as well as pre-tax discount rates.

Cash flow projections were derived from management forecasts based on the five year strategic plan. This has been compiled based on past experience, current performance and market position as well as structural changes and economic factors which have been derived based on external data and internal analysis.

The following key assumptions were used in testing for impairment:

• Pre-tax discount rate: 11.96% (2017: 11.96%)

• Terminal value growth rate beyond 5 years (set at current CPI): 1.90% (2017:1.30%)

• Forecast year on year revenue and EBITDA margin growth ranges as follows:

CGU	Revenue growth	EBITDA growth
Trade	2.0% - 5.1%	0 - 0.2 percentage points
Bapcor NZ	3.0% - 3.1%	0 - 0.4 percentage points
Specialist Wholesale	3.6% - 5.5%	0 - 0.4 percentage points
Retail & Service	4.2% - 4.6%	0 - 0.7 percentage points

A reasonable possible change in assumptions would not cause the carrying value of the CGUs to exceed its recoverable amount in the Trade, Specialist Wholesale and Bapcor NZ CGU’s. The Retail & Service CGU and Autopro brand are relatively more sensitive to changes in trading conditions.

There have been no further indicators of impairment after the impairment testing date of 31 March 2018 up until the date of this report.

The balances of goodwill and other intangible assets excluding computer software allocated to each segment as at 30 June were:

Goodwill Trade Retail & Service Specialist Wholesale Bapcor NZ Other intangible assets Retail & Service Specialist Wholesale * Bapcor NZ *	Consolidated 2018 2017 $'000 $'000 109,071 106,529 131,514 126,738 191,586 193,725 161,947 134,851	Consolidated 2018 2017 $'000 $'000 109,071 106,529 131,514 126,738 191,586 193,725 161,947 134,851
	594,118	561,843
	Consolidated 2018 2017 $'000 $'000 53,185 54,815 20,998 21,146 5,356 5,774
	79,539	81,735

• The prior year values have been reclassified to reflect the impact of the move of the Australian Bapcor NZ subsidiaries to be under the Specialist Wholesale segment.

66

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 14. Non-current assets - other

Note 14. Non-current assets - other
Make good asset Employee loans	Consolidated 2018 2017 $'000 $'000 1,261 1,085 2,186 2,976
	3,447	4,061

Employee loans were made to key management personnel and other personnel to assist in the purchase of shares. These loans are secured by the underlying shares acquired. The loans are interest bearing and are repayable on the earlier of sale of the underlying shares, termination of employment or five years from the date of the loan in cash, and cannot be settled by the employees returning the shares to the company.

Note 15. Current liabilities - trade and other payables

Note 15. Current liabilities - trade and other payables
Trade payables Accrued expenses	Consolidated 2018 2017 $'000 $'000 146,165 133,966 41,588 40,802
	187,753	174,768

Refer to note 27 for further information on financial risk management.

Note 16. Current liabilities - provisions

Note 16. Current liabilities - provisions
Employee benefits Deferred settlements Onerous lease provision	Consolidated 2018 2017 $'000 $'000 29,079 27,191 22,337 4,267 926 673
	52,342	32,131

Deferred settlements

This provision represents the obligation to pay consideration following the acquisition of a business. Some of these are only due to the vendor if certain future targets are met. It is measured at the present value of the estimated liability.

As at 30 June, the following deferred settlements are provided for (across both current and non-current deferred settlement provisions; refer to note 19 for details on non-current portion):

• Precision Automotive; currently provided at $646,000 (2017: $1,594,000)

• Baxters Pty Ltd; currently provided at $20,972,000 (2017: $20,288,000)

• Tricor; currently provided at $953,000 (2017: Nil)

• AADi; currently provided at $1,833,000 (2017: Nil)

67

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 16. Current liabilities - provisions (continued)

Onerous lease provision

This provision represents the present value of the estimated costs, net of any sub-lease revenue that will be incurred until the end of the lease terms where the obligation is expected to exceed the economic benefit to be received.

Amounts not expected to be settled within the next twelve months

The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or require payment within the next twelve months.

The following amounts reflect leave that is not expected to be taken within the next twelve months:

Employee benefits obligation expected to be settled after twelve months	Consolidated 2018 2017 $'000 $'000 5,282 4,742

Note 17. Current liabilities - liabilities relating to assets held for sale

Footwear Resource Services Eliminations	Consolidated 2018 2017 $'000 $'000 - 8,184 - 63,000 - (342)	Consolidated 2018 2017 $'000 $'000 - 8,184 - 63,000 - (342)
	-	70,842

The prior year liabilities relating to assets held for sale related to the Footwear and Resource Services businesses which were deemed to be held for sale on business combination of Hellaby Holdings Limited and subsequently divested during FY18. Refer to notes 7 and 10 for further information.

Note 18. Non-current liabilities - borrowings

Secured bank loans Less: unamortised transaction costs capitalised	Consolidated 2018 2017 $'000 $'000 328,391 432,229 (1,903) (2,482)	Consolidated 2018 2017 $'000 $'000 328,391 432,229 (1,903) (2,482)
	326,488	429,747

Refer to note 27 for further information on financial risk management.

68

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Bapcor has a $500M debt facility with ANZ, Westpac, The Bank of Tokyo-Mitsubishi UFJ and The Hongkong and Shanghai Banking Corporation. The debt facility comprises funding in three and five year tranches as follows:

• $200M three year tranche, available for general corporate purposes

• $250M five year tranche, available for general corporate purposes

• $50M three year tranche, available for working capital requirements

The facility is secured by way of a fixed and floating charge over Bapcor's assets. There were no changes to the debt covenants with the net leverage ratio being less than 3.0X and the fixed cover charge ratio being greater than 1.75X. Refer to note 27 for further information.

Borrowing costs of $23,000 (2017: $2,482,000) were incurred in establishing the new facility, and are being amortised over the life of the facility and will be expensed to finance costs as effective interest expense in the statement of comprehensive income. As at 30 June total borrowing costs of $1,903,000 (2017: $2,482,000) have not yet been amortised through the statement of comprehensive income.

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities Bank loans including overdraft Used at the reporting date Bank loans including overdraft Unused at the reporting date Bank loans including overdraft *	Consolidated 2018 2017 $'000 $'000 497,500 497,500	Consolidated 2018 2017 $'000 $'000 497,500 497,500
	328,391	432,229
	169,109	65,271

• Total facilities available at 30 June was $500M (2017: $500M). The amount used in the above table excludes $2.5M (2017: $2.5M) of facility which relates to bank guarantees under the working capital tranche.

Note 19. Non-current liabilities - provisions

Note 19. Non-current liabilities - provisions
Employee benefits Deferred settlements Make good provision Onerous lease provision	Consolidated 2018 2017 $'000 $'000 3,459 2,644 2,067 20,913 8,725 8,169 1,441 1,646
	15,692	33,372

Deferred settlements and onerous lease provision Refer to note 16.

Make good provision

This provision represents the present value of the estimated costs to make good the premises leased by the consolidated entity at the end of the respective lease terms.

69

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 19. Non-current liabilities - provisions (continued)

Movements in provisions

Movements in each class of provision during FY18, other than employee benefits, are set out below:

Consolidated - 2018 Carrying amount at the start of the year Additional provisions recognised Additions through business combinations Amounts transferred to current Amounts used Foreign currency translation Carrying amount at the end of the year	Deferred consideration $'000 20,913 19 2,048 (20,913) - -	Make good $'000 8,169 534 100 - (13) (65)	Onerous lease $'000 1,646 579 - (285) (466) (33)
	2,067	8,725	1,441

Note 20. Equity - issued capital

2018 Shares Ordinary shares 280,244,752 Treasury shares - 280,244,752 Movements in ordinary share capital Details Date Balance 1 July 2016 Issue for Baxters Pty Ltd acquisition 3 August 2016 Exempt Employee Share Scheme offer 9 September 2016 Issue for Hellaby Holdings Limited acquisition - Institutional placement (net of costs) 30 September 2016 Issue for Hellaby Holdings Limited acquisition - Retail placement (net of costs) 4 December 2016 Issue for Dividend Reinvestment Plan 21 April 2017 Share issue transactions costs Deferred tax credit recognised directly in equity Balance 30 June 2017 Issue for Dividend Reinvestment Plan 29 September 2017 Hellaby transaction costs (net of tax) Issue for Dividend Reinvestment Plan 27 April 2018 Balance 30 June 2018	2018 Shares 280,244,752 -	Consolidated 2017 2018 Shares $'000 278,633,080 610,951 (200,000) (4,495)	Consolidated 2017 2018 Shares $'000 278,633,080 610,951 (200,000) (4,495)	2017 $'000 602,571 (1,896)
	280,244,752	278,433,080	606,456	600,675
		Shares 245,857,351 500,000 138,519 28,205,129 3,115,772 816,309 - - 278,633,080 932,347 - 679,325 280,244,752	$'000 416,427 2,780 734 161,051 16,288 4,558 (648) 1,381
			602,571 4,896 (290) 3,774
			610,951

70

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 20. Equity - issued capital (continued)

Movements in treasury shares

Details Date Balance 1 July 2016 Treasury shares purchased 16 December 2016 Utilisation of treasury shares for LTI 16 December 2016 Balance 30 June 2017 Return of employee shares 1 July 2017 Purchase of treasury shares 14 September 2017 Utilisation of treasury shares for LTI 14 September 2017 Balance 30 June 2018	Shares - (351,344) 151,344	$'000 - (1,896) -
	(200,000) (22) (480,686) 680,708	(1,896) - (2,599) -
	-	(4,495)

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Treasury shares

The average purchase price of treasury shares during the period was $5.40 (2017: $5.40) per share.

Note 21. Equity - reserves

Note 21. Equity - reserves
Foreign currency reserve Cash flow hedge reserve Share-based payments reserve Net investment hedge reserve	Consolidated 2018 2017 $'000 $'000 (10,131) (918) 667 (2,519) 5,819 3,883 - (648)
	(3,645)	(202)

Foreign currency reserve

This reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars.

Cash flow hedge reserve

This reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge.

Share-based payments reserve

This reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

Net investment hedge reserve

This reserve is used to recognise the effective portion of the gain or loss of net investment hedge instruments that is determined to be an effective hedge.

71

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 21. Equity - reserves (continued)

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Consolidated Balance at 1 July 2016 Revaluation Deferred tax Share-based payment expense Foreign currency translation Balance at 30 June 2017 Revaluation Deferred tax Share-based payment expense Reclassified to profit and loss (note 7) Foreign currency translation Cancellation on divestment Balance at 30 June 2018	Foreign currency reserve $'000 - - - - (918)	Cash flow hedge reserve $'000 (1,256) (1,860) 541 - 56	Share-based payments reserve $'000 2,101 - 157 1,625 -	Net investment hedge reserve $'000 - (631) (17) - -	Total $'000 845 (2,491) 681 1,625 (862)
	(918) - - - 2,771 (11,984) -	(2,519) 3,999 (1,101) - - 89 199	3,883 - (284) 2,220 - - -	(648) 2,473 17 - (3,211) - 1,369	(202) 6,472 (1,368) 2,220 (440) (11,895) 1,568
	(10,131)	667	5,819	-	(3,645)

Note 22. Equity - retained profits/(accumulated losses)

Accumulated losses at the beginning of the financial year Profit after income tax expense for the year Dividends paid (note 24) Retained profits/(accumulated losses) at the end of the financial year	Consolidated 2018 2017 $'000 $'000 (17,067) (51,052) 94,656 64,044 (40,451) (30,059)	Consolidated 2018 2017 $'000 $'000 (17,067) (51,052) 94,656 64,044 (40,451) (30,059)
	37,138	(17,067)

72

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 23. Equity - non-controlling interest

Resource Services Balance at 1 July Non-controlling interest acquired on business combination Non-controlling interest loss for the period Foreign currency revaluation Finalisation of prior year business combinations (note 34) Divestment of non-controlling interest Balance at 30 June	Consolidated 2018 2017 $'000 $'000 6,561 - - 6,805 (214) (214) - (30) (4,820) - (1,527) -	Consolidated 2018 2017 $'000 $'000 6,561 - - 6,805 (214) (214) - (30) (4,820) - (1,527) -
	-	6,561

As part of the prior year acquisition of Hellaby Holdings Limited, the acquired Resource Services held for sale asset had a non-controlling interest that was material to the consolidated entity. Refer to note 34. This non-controlling interest was divested on the sale of the Contract Resources business unit that formed part of the Resource Services held for sale asset. The amounts relating to this non-controlling interest and subsequent transactions are represented above.

Investment in Car Bits Asia, Thailand Balance at 1 July Non-controlling interest on incorporation Non-controlling interest loss for the period Foreign currency revaluation Balance at 30 June	Consolidated 2018 2017 $'000 $'000 - - 2,554 - (122) - (35) -	Consolidated 2018 2017 $'000 $'000 - - 2,554 - (122) - (35) -
	2,397	-

In March 2018, the consolidated group entered into a tri-party joint venture in Thailand holding 51% of the shares of the incorporated entity Car Bits Asia., Co. Ltd for the purposes of opening the Burson stores in Thailand. The consolidated group is considered to have effective control.

Note 24. Equity - dividends

Dividends

Dividends paid during the financial year were as follows:

Final dividend for the year ended 30 June 2017 (2017: 30 June 2016) of 7.5 cents (2017: 6.0 cents) per ordinary share * Interim dividend for the year ended 30 June 2018 (2017: 30 June 2017) of 7.0 cents (2017: 5.5 cents) per ordinary share **	Consolidated 2018 2017 $'000 $'000 20,882 14,781 19,569 15,278	Consolidated 2018 2017 $'000 $'000 20,882 14,781 19,569 15,278
	40,451	30,059

• $4,896,000 of the final dividend for the year ended 30 June 2017 was settled under the Dividend Reinvestment Plan.

** $3,774,000 (2017: $4,558,000) of the interim dividend for the year ended 30 June 2018 (2017: 30 June 2017) was settled under the Dividend Reinvestment Plan.

73

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 24. Equity - dividends (continued)

The Board has declared a final dividend in respect of FY18 of 8.5 cents per share, fully franked. The final dividend will be paid on 27 September 2018 to shareholders registered on 31 August 2018.

The final dividend takes the total dividends declared in relation to FY18 to 15.5 cents per share, fully franked, representing an increase of dividends paid of 19.2% compared to the prior financial year. Dividends paid and declared in FY18 represents 50.3% of pro-forma net profit after tax from continuing operations.

Franking credits

Franking credits available for subsequent financial years based on a tax rate of 30%	Consolidated 2018 2017 $'000 $'000 51,234 38,252

• The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

• franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date

• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

Note 25. Net tangible assets

A large proportion of the consolidated entity's assets are intangible in nature, consisting of goodwill, customer contracts and trademarks acquired on business combination as well as software. These assets as well as any deferred taxes are excluded from the calculation of net tangible assets per security.

Net tangible assets per share at 30 June was (19.0) (2017: (16.0)) cents per share.

Net assets per share at 30 June was $2.25 (2017: $2.12) per share.

74

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 26. Derivative financial instruments

Note 26. Derivative financial instruments
Current assets Forward foreign exchange contracts - cash flow hedges Current liabilities Forward foreign exchange contracts - cash flow hedges Interest rate swap contracts - cash flow hedges Non-current liabilities Interest rate swap contracts - cash flow hedges Refer to note 27 for further information on financial risk management. Refer to note 28 for further information on fair value measurement.	Consolidated 2018 2017 $'000 $'000 1,720 40
	(116) (8)	(1,780) -
	(124)	(1,780)
	(330)	(637)
	1,266	(2,377)

Note 27. Financial risk management

Financial risk management objectives

The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and manages financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis.

75

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 27. Financial risk management (continued)

The consolidated entity holds the following financial instruments:

Financial assets Cash and cash equivalents Trade and other receivables Derivative financial instruments Total financial assets Financial liabilities Trade and other payables Derivative financial instruments Deferred consideration Borrowings * Total financial liabilities	Consolidated 2018 2017 $'000 $'000 40,154 39,755 140,695 131,157 1,720 40	Consolidated 2018 2017 $'000 $'000 40,154 39,755 140,695 131,157 1,720 40
	182,569	170,952
	187,753 454 24,404 328,391 541,002	174,768 2,417 25,180 432,229 634,594

• Trade and other receivables in the table excludes prepayments which are not classified as financial instruments

** Borrowings excludes any unamortised transaction costs capitalised

Market risk

Foreign currency risk

The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations, primarily with respect to the United States dollar and the New Zealand dollar.

Foreign exchange risk arises from future commercial transactions, primarily the purchase of inventory for sales, recognised financial assets and financial liabilities and net investments in foreign operations.

In order to protect against exchange rate movements, the consolidated entity has entered into forward foreign exchange contracts. These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Management has a risk management policy to hedge between 25% and 100% of anticipated foreign currency transactions for the subsequent twelve months. As well as this the consolidated entity also has foreign currency loans to offset foreign investments which create a natural hedge against foreign currency fluctuations.

The following table demonstrates the sensitivity to a change in the Australian dollar against other currencies, with all other variables held constant. The impact on profit before tax is due to changes in the fair value of monetary assets and liabilities. The pre-tax impact on equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges as well as foreign currency loans designated as net investment hedges.

AUD strengthened AUD weakened Consolidated - 2018 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity Derivative financial instruments 1% - 262 (1%) - 267 Other financial assets 1% (398) - (1%) 406 - Other financial liabilities 1% 367 - (1%) (374) - (31) 262 32 267	AUD strengthened AUD weakened Consolidated - 2018 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity Derivative financial instruments 1% - 262 (1%) - 267 Other financial assets 1% (398) - (1%) 406 - Other financial liabilities 1% 367 - (1%) (374) - (31) 262 32 267	AUD strengthened AUD weakened Consolidated - 2018 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity Derivative financial instruments 1% - 262 (1%) - 267 Other financial assets 1% (398) - (1%) 406 - Other financial liabilities 1% 367 - (1%) (374) - (31) 262 32 267
	32	267

76

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 27. Financial risk management (continued)

Note 27. Financial risk management (continued)	Note 27. Financial risk management (continued)	Note 27. Financial risk management (continued)
AUD strengthened AUD weakened Consolidated - 2017 % change Effect on profit before tax Effect on equity % change Effect on profit before tax Effect on equity Derivative financial instruments 1% - 589 (1%) - (601) Other financial assets 1% (287) - (1%) 293 - Other financial liabilities 1% 259 943 (1%) (264) (962) (28) 1,532 29 (1,563)
	29	(1,563)

In FY18, a net gain of $3.2M has been recognised in the discontinued operations income statement which relates to the favourable repayment of NZD denominated loans.

Price risk

The consolidated entity is not exposed to any significant price risk.

Interest rate risk

The consolidated entity's main interest rate risk arises from long-term borrowings. The interest rate and term for bank borrowings is determined at the date of each drawdown.

Borrowings obtained at variable rates expose the consolidated entity to cash flow interest rate risk. The consolidated entity, from time to time, enters into interest rate swap contracts under which it receives interest at variable rates and pays interest at fixed rates to manage the risk of adverse fluctuations in the floating interest rate on its borrowings.

As at the reporting date, the consolidated entity had the following variable rate borrowings and interest rate swap contracts outstanding:

	2018		2017
	Weighted		Weighted
	average		average
	interest rate	Balance	interest rate	Balance
Consolidated	%	$'000	%	$'000
Borrowings (principal)	3.62%	328,391	3.30%	432,229
Less: amounts covered by interest rate swaps	2.39%	(60,000)	2.39%	(60,000)
Net exposure to cash flow interest rate risk		268,391		372,229

As at 30 June, if the weighted average interest rate of the bank borrowings had changed by a factor of + / - 10%, interest expense would increase / decrease by $505,000 (2017: $1,427,000).

The amount recognised in other comprehensive income net of tax in relation to interest rate swaps was $209,000 (2017: $516,000).

77

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 27. Financial risk management (continued)

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. Credit risk is managed in the following ways:

• 1) The consolidated entity has a strict code of credit for all customers, including obtaining agency credit information, confirming references and setting appropriate credit limits.

• 2) Derivative counterparties and cash transactions are limited to high quality independently rated financial institutions with a minimum rating of 'A'.

3) Concentrations of credit risk are minimised by undertaking transactions with a large number of customers. 4) In some instances the consolidated entity holds collateral over its trade receivables and loans in the form of personal guarantees and charges under the Personal Property Securities Register.

The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes 8 and 11. No trade receivables have an external credit rating, and management classify trade receivables on aging profiles.

Liquidity risk

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Financing arrangements

Unused borrowing facilities at the reporting date:

Bank loans including overdraft *	Consolidated 2018 2017 $'000 $'000 169,109 65,271

• The unused facility value excludes any facility that relates to bank guarantees. Refer to note 18 for further information.

Remaining contractual maturities

The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Consolidated - 2018 Trade and other payables Borrowings Deferred consideration Total non-derivatives Derivatives* Interest rate swaps Forward foreign exchange contracts Total derivatives	1 year or less $'000 187,753 13,424 23,039	Between 1 and 2 years $'000 - 169,707 2,000	Between 2 and 5 years $'000 - 186,195 -	Over 5 years $'000 - - -	Remaining contractual maturities $'000 187,753 369,326 25,039
	224,216	171,707	186,195	-	582,118
	8 116 124	105 - 105	225 - 225	- - -	338 116 454

78

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 27. Financial risk management (continued)

Consolidated - 2017 Trade and other payables Borrowings Deferred consideration Total non-derivatives Derivatives* Interest rate swaps Forward foreign exchange contracts Total derivatives	1 year or less $'000 174,768 16,633 4,369	Between 1 and 2 years $'000 - 16,633 22,069	Between 2 and 5 years $'000 - 466,062 -	Over 5 years $'000 - - -	Remaining contractual maturities $'000 174,768 499,328 26,438
	195,770	38,702	466,062	-	700,534
	- 1,780 1,780	116 - 116	521 - 521	- - -	637 1,780 2,417

• Borrowings' contractual cash flows includes an interest component based on the drawn/undrawn ratio and interest rate applicable as at reporting date until maturity of the loan facility.

Fair value of financial instruments

The fair value of financial assets and liabilities disclosed in the statement of financial position do not differ materially from their carrying values.

Capital risk management

The consolidated entity's policy is to maintain a capital structure for the business which ensures sufficient liquidity and support for business operations, maintains shareholder and market confidence, provides strong stakeholder returns, and positions the business for future growth. In assessing capital management both equity and debt instruments are taken into consideration.

The ongoing maintenance of this policy is characterised by:

• ongoing cash flow forecast analysis and detailed budgeting processes which, combined with continual development of banking relationships, is directed at providing a sound financial positioning for the consolidated entity's operations and financial management activities; and

• a capital structure that provides adequate funding for potential acquisition and investment strategies, building future growth in shareholder value. The loan facility can be partly used to fund significant investments as part of this growth strategy.

The consolidated entity is not subject to externally imposed capital requirements, other than contractual banking covenants and obligations. All bank lending requirements have been complied with during the year and at the date of this report, which include the following covenants:

• Net leverage ratio not exceeding 3.00:1 (Net Debt : EBITDA);

• Fixed charge cover ratio not below 1.75:1 (EBITDA plus Rent : Net Total Cash Interest plus Rent)

79

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 28. Fair value measurement

Fair value hierarchy

The following tables detail the consolidated entity's financial instruments, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Consolidated - 2018 Assets Derivative financial instruments Total assets Liabilities Derivative financial instruments Deferred consideration Total liabilities Consolidated - 2017 Assets Derivative financial instruments Assets held for sale Total assets Liabilities Derivative financial instruments Liabilities held for sale Deferred consideration Total liabilities	Level 1 $'000 -	Level 2 $'000 1,720	Level 3 $'000 -	Total $'000 1,720
	-	1,720	-	1,720
	- - - Level 1 $'000 - -	454 - 454 Level 2 $'000 40 -	- 24,404 24,404 Level 3 $'000 - 178,860	454 24,404 24,858 Total $'000 40 178,860
	-	40	178,860	178,900
	- - - -	2,417 - - 2,417	- 70,842 25,180 96,022	2,417 70,842 25,180 98,439

There were no transfers between levels during the financial year.

Derivative financial instruments carried at fair value are forward foreign exchange contracts and floating interest rate to fixed interest rate swaps. These are considered to be Level 2 financial instruments because their measurement is derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Deferred consideration is considered to be a Level 3 financial instrument because inputs in valuing this instrument are not based on observable market data. The fair value of this instrument is determined based on an estimated discounted cash flow analysis.

Assets and liabilities held for sale are considered to be a Level 3 financial instrument because inputs in valuing these assets are not based on observable market data. The fair value of these instruments are determined based on information obtained by management during the sale process (e.g. indicative bids, adviser estimates) as well as estimates derived on earning multiples.

80

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 29. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the auditor of the company, and its network firms:

Audit services - PricewaterhouseCoopers Audit or review of the financial statements Other services - PricewaterhouseCoopers Tax compliance services Consulting services Audit services - network firms Audit or review of the financial statements Other services - network firms Tax compliance services Consulting services Total auditor remuneration	Consolidated 2018 2017 $ $ 622,752 510,000	Consolidated 2018 2017 $ $ 622,752 510,000
	61,594 49,600	60,602 106,000
	111,194	166,602
	733,946	676,602
	61,905	333,010
	121,799 65,451	88,102 12,000
	187,250	100,102
	249,155	433,112
	983,101	1,109,714

81

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 30. Commitments and contingent liabilities

Commitments

Commitments Committed at the reporting date but not recognised as liabilities, payable: Guarantees in relation to leases Letters of credit in relation to the purchase of inventory Guarantees in relation to performance of contracts Other commitments in relation to facility construction and consumable purchases Operating lease payables - continuing operations Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years More than five years Operating lease receivables - continuing operations Committed at the reporting date and recognised as assets, receivable: Within one year One to five years More than five years	Consolidated 2018 2017 $'000 $'000 3,372 2,982 555 343 - 483 - 1,571	Consolidated 2018 2017 $'000 $'000 3,372 2,982 555 343 - 483 - 1,571
	3,927	5,379
	40,792 73,171 5,463	40,650 72,802 6,257
	119,426	119,709
	3,840 5,879 19	4,298 7,110 291
	9,738	11,699

• The commitments in relation to performance of contracts and facility construction and consumable purchases in the prior year relate to the discontinued operations of Resource Services

Operating lease commitments includes contracted amounts for various retail outlets, warehouses, offices and plant and equipment under non-cancellable operating leases with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.

Contingent liabilities

There are no unrecorded contingent liabilities (2017: Nil).

82

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 31. Related party transactions

Parent entity

Bapcor Limited is the parent entity. Refer to note 33 for supplementary information about the parent entity including internal dividends received.

Subsidiaries

Interests in subsidiaries are set out in note 35.

Key management personnel

Disclosures relating to key management personnel are set out in note 32 and the Remuneration Report included in the Directors' Report.

Note 32. Related party transactions - key management personnel disclosures

Compensation

Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Loans Opening balance Amounts repaid Amounts recovered by deferred FY17 STI Closing balance	Consolidated 2018 2017 $ $ 8,114 6,543 236 218 68 60 1,822 1,249	Consolidated 2018 2017 $ $ 8,114 6,543 236 218 68 60 1,822 1,249
	10,240	8,070
	Consolidated 2018 2017 $'000 $'000 1,354 1,780 (583) (426) (129) -
	642	1,354

Loans

Refer to the audited Remuneration Report within the Directors' Report for further details on key management personnel compensation, as well as note 14 for further details on the loans made to key management personnel.

83

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 33. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of comprehensive income

Statement of comprehensive income Loss after income tax Internal dividend income Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Other reserves Current year profits/(losses) Dividends paid Prior years retained earnings Total equity	Parent 2018 2017 $'000 $'000 (9,809) (18,276) 51,337 108,000	Parent 2018 2017 $'000 $'000 (9,809) (18,276) 51,337 108,000
	41,528	89,724
	Parent 2018 2017 $'000 $'000 - -
	681,085	672,422
	-	-
	-	-
	606,456 5,819 41,528 (40,451) 67,733	600,675 4,014 89,724 (30,059) 8,068
	681,085	672,422

84

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 34. Business combinations

FY18 acquisitions

The consolidated entity acquired the net assets of the following businesses:

• Autobarn Auburn

• Autobarn Bendigo

• Autobarn Chirnside Park

• Autobarn Doncaster

• Autobarn Launceston

• Autobarn Noosa

• Autobarn O'Conner

• Autobarn Penrith

• Autobarn Waurn Ponds

• Autopro Bathurst

• Autopro Seymour

• Oxford Motor Spares

• Tricor Engineering ('Tricor')

• Ultra Cheap Spares

The consolidated entity also acquired 100% of the shares in the following companies:

• AADi Australia Pty Ltd and A&F Drive Shaft Repair QLD Pty Ltd ('AADi')

These acquisitions were made to strengthen the Bapcor offering as well as increase the company store network presence.

85

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 34. Business combinations (continued)

The assets and liabilities recognised as a result of these acquisitions are set out below. Store business combinations have been aggregated. These are provisional at the time of this report and the fair values are to be finalised within the acquisition period of twelve months from acquisition date.

Cash and cash equivalents Trade and other receivables Inventories Plant and equipment Motor vehicles Deferred tax asset Trade and other payables Provisions Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid Deferred and contingent consideration Debt forgiven Cash used to acquire business, net of cash acquired: Cash consideration Less: cash and cash equivalents Net cash used	Tricor Fair value $'000 - - 75 78 119 37 - (73)	AADi Fair value $'000 415 2,126 904 10 33 126 (298) (111)	Other Fair value $'000 17 7 4,580 858 38 627 (169) (568)
	236 2,133	3,205 2,421	5,390 5,645
	2,369	5,626	11,035
	1,455 914 -	3,804 1,822 -	10,259 - 776
	2,369	5,626	11,035
	1,455 -	3,804 (415)	10,259 (17)
	1,455	3,389	10,242

Goodwill in relation to these acquisitions relates to the anticipated future probability of their contribution to the consolidated entity's total business.

Each of the business acquisitions took place on different dates and are heavily integrated into the consolidated entity's operations and as such it is impractical to disclose the amount of profit since acquisition date.

Refer to note 5 for details on acquisition related costs incurred.

Deferred and contingent consideration

Deferred consideration has been estimated and provided for on the Tricor and AADi acquisitions and are currently accrued at $953,000 and $1,833,000 respectively as at 30 June 2018 (notes 16 and 19).

86

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 34. Business combinations (continued)

FY17 acquisitions

In the previous financial year the consolidated entity made the following acquisitions:

• Autobarn Beenleigh

• Autobarn Burleigh Heads

• Autobarn Nambour

• Autobarn Orange

• Autobarn Virginia

• Autopro Colac

• Autopro Gawler

• Autopro Gladstone

• Autopro Raymond Terrace

• Baxters Pty Ltd

• Hellaby Holdings Limited

• MTQ Engine Systems (Aust) Pty Ltd

• ● Roadsafe Automotive Products

There have been no material change to these business combinations except for the Hellaby Holdings Limited acquisition as per the below:

Trade receivables Inventories Assets held for sale Plant and equipment Intangible assets Deferred tax asset Trade and other payables Deferred tax liability Liabilities held for sale Provisions Bank overdraft Bank loans Net assets attributable to non-controlling interests Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred	30 June 2018 Fair value $'000 36,280 65,581 121,341 5,328 11,107 9,952 (34,984) (3,009) (59,624) (8,323) (1,065) (79,487) (1,985)	30 June 2017 Fair value $'000 36,280 65,581 163,334 5,328 11,384 9,952 (34,984) (3,087) (64,423) (8,323) (1,065) (79,487) (6,805)
	61,112 273,573	93,685 241,000
	334,685	334,685

The change to the held for sale valuation relate to the finalisation of working capital of the discontinued operating divisions of Hellaby Holdings Limited.

87

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 35. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policies of the consolidated entity:

		Ownership	interest
	Principal place of business /	2018	2017
Name	Country of incorporation	%	%
Bapcor Finance Pty Ltd	Australia	100.0%	100.0%
Bapcor Services Pty Ltd (formerly ACN 610 722 168)	Australia	100.0%	100.0%
Burson Automotive Pty Ltd	Australia	100.0%	100.0%
Car Bitz & Accessories Pty Ltd	Australia	100.0%	100.0%
Aftermarket Network Australia Pty Ltd	Australia	100.0%	100.0%
Automotive Brands Group Pty Ltd	Australia	100.0%	100.0%
Midas Australia Pty Ltd	Australia	100.0%	100.0%
Specialist Wholesalers Pty Ltd	Australia	100.0%	100.0%
MTQ Engine Systems (Aust) Pty Ltd	Australia	100.0%	100.0%
Baxters Pty Ltd	Australia	100.0%	100.0%
Bapcor Australia Pty Ltd (formerly Hellaby Australia
Pty Ltd)	Australia	100.0%	100.0%
Diesel Distributors Australia Pty Ltd	Australia	100.0%	100.0%
Bapcor Automotive Australia Pty Ltd (formerly Hellaby
Automotive Australia Pty Ltd)	Australia	100.0%	100.0%
Ryde Batteries Pty Ltd	Australia	100.0%	100.0%
Ryde Batteries (Wholesale) Pty Ltd	Australia	100.0%	100.0%
Federal Batteries Qld Pty Ltd	Australia	100.0%	100.0%
Bapcor Auto Electrical Pty Ltd (formerly Hellaby Auto
Electrical Pty Ltd)	Australia	100.0%	100.0%
Premier Auto Trade Pty Ltd	Australia	100.0%	100.0%
JAS Oceania Pty Ltd	Australia	100.0%	100.0%
Australian Automotive Electrical Wholesale Pty Ltd	Australia	100.0%	100.0%
Low Voltage Pty Ltd	Australia	100.0%	100.0%
Hellaby Auto Fuel Pty Ltd ***	Australia	100.0%	100.0%
ACN 119 121 729 Pty Ltd (formerly TRS Tyre &
Wheel Pty Ltd) ***	Australia	100.0%	100.0%
Bapcor New Zealand Ltd (formerly Hellaby Holdings
Ltd)	New Zealand	100.0%	100.0%
Bapcor Automotive Ltd (formerly Hellaby Automotive
Ltd)	New Zealand	100.0%	100.0%
Brake & Transmission NZ Ltd	New Zealand	100.0%	100.0%
Diesel Distributors Ltd	New Zealand	100.0%	100.0%
TRS Tyre & Wheel Ltd	New Zealand	100.0%	100.0%
Bapcor Services New Zealand Ltd (formerly Truck &
Trailer Parts Ltd)	New Zealand	100.0%	100.0%
HCB Technologies Ltd	New Zealand	100.0%	100.0%
Hellaby Resource Services Ltd *	New Zealand	100.0%	100.0%
Hellaby Investment No 8 Ltd *	New Zealand	100.0%	100.0%
Generator Fund Ltd ***	New Zealand	100.0%	100.0%
Renouf Corporation International	United States	100.0%	100.0%
Benequity Properties, LLC	United States	100.0%	100.0%
Bapcor International Pty Ltd	Australia	100.0%	-
Car Bits Asia Co. Ltd	Thailand	51.0%	-
AADi Australia Pty Ltd	Australia	100.0%	-
A&F Drive Shaft Repair Queensland Pty Ltd	Australia	100.0%	-
Dasko Ltd **	New Zealand	-	100.0%
Hellaby Brands Ltd ***	New Zealand	-	100.0%
Hellaby Investments Number 10 Ltd ***	New Zealand	-	100.0%
Hellaby Investment No 13 Ltd ***	New Zealand	-	100.0%

88

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 35. Interests in subsidiaries (continued)

		Ownership	interest
	Principal place of business /	2018	2017
Name	Country of incorporation	%	%
Hellaby Investment No 14 Ltd ***	New Zealand	-	100.0%
Hellaby Investment No 15 Ltd ***	New Zealand	-	100.0%
Number 1 Shoes Ltd *	New Zealand	-	100.0%
R Hannah & Co Ltd *	New Zealand	-	100.0%
TBS Group Ltd *	New Zealand	-	100.0%
TBS Farnsworth Ltd *	New Zealand	-	100.0%
Total Bridge Services JV *	New Zealand	-	50.0%
T.B.S. Coatings Ltd *	New Zealand	-	100.0%
TBS Remcon Ltd *	New Zealand	-	100.0%
Crow Refractory Ltd *	New Zealand	-	100.0%
Contract Resources Investments Ltd *	New Zealand	-	85.0%
Contract Resources South America Ltd *	New Zealand	-	85.0%
Nexxo Contract Resources Do Brasil Manuseio De
Catalisadores Ltda JV *	United States	-	42.5%
Contract Resources (New Zealand) Ltd *	New Zealand	-	85.0%
Contract Resources Holdings Pty Ltd *	Australia	-	85.0%
Contract Resources Finance Pty Ltd *	Australia	-	85.0%
Contract Resources Australia Pty Ltd *	Australia	-	85.0%
Contract Resources Equipment Pty Ltd *	Australia	-	85.0%
DDT International Pty Ltd *	Australia	-	85.0%
Contract Resources Pty Ltd *	Australia	-	85.0%
CR Travel Pty Ltd *	Australia	-	85.0%
Contract Resources (Karratha) Pty Ltd *	Australia	-	85.0%
Contract Resources USA Inc *	United States	-	85.0%
Contract Resources Ltd LLC *	United States	-	85.0%
Catalyst Handling Resources Holdings LLC *	United States	-	68.0%
Catalyst Handling Resources Ltd *	Trinidad & Tobago	-	68.0%
Catalyst Handling Resources LLC *	United States	-	68.0%
JACR (JV) *	The Kingdom of Saudi Arabia	-	41.7%
Contract Resources Technical and Industrial Services
LLC *	Oman	-	85.0%
Contract Resources Oilfield Services LLC *	United Arab Emirates	-	85.0%
Contract Resources Oilfield Services WLL *	Qatar	-	85.0%

• These subsidiaries relate to the disposed Footwear and Resource Services business units of the Hellaby Holdings Ltd acquisition. A number of these entities relate to the holding structure that was not disposed of and are in the process of being wound up.

** Dasko Ltd was amalgamated into HCB Technologies Ltd during the financial period.

*** These subsidiaries are non-trading. Some were wound up during the financial period and others are in the process of being wound up.

89

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 36. Deed of cross guarantee

The following entities are party to a deed of cross guarantee entered into in June 2017 under which each company guarantees the debts of the others. The companies below represent a 'Closed Group' for the purposes of the class order outlined below.

Bapcor Limited Bapcor Finance Pty Ltd Burson Automotive Pty Ltd Aftermarket Network Australia Pty Ltd Specialist Wholesalers Pty Ltd Automotive Brands Group Pty Ltd Midas Australia Pty Ltd MTQ Engine Systems (Aust) Pty Ltd Baxters Pty Ltd Car Bitz & Accessories Pty Ltd Bapcor Services Pty Ltd (formerly ACN 610 722 168) Australian Automotive Electrical Wholesale Pty Ltd Diesel Distributors Australia Pty Ltd Federal Batteries Qld Pty Ltd Bapcor Australia Pty Ltd (formerly Hellaby Australia Pty Ltd) Bapcor Automotive Australia Pty Ltd (formerly Hellaby Automotive Australia Pty Ltd) Bapcor Auto Electrical Pty Ltd (formerly Hellaby Auto Electrical Pty Ltd) Hellaby Auto Fuel Pty Ltd JAS Oceania Pty Ltd Low Voltage Pty Ltd Premier Auto Trade Pty Ltd Ryde Batteries Pty Ltd Ryde Batteries (Wholesale) Pty Ltd ACN 119 121 729 (formerly TRS Tyre & Wheel Pty Ltd)

By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and Directors' Report under Class Order 98/1418 issued by the Australian Securities and Investments Commission.

Set out below is a consolidated statement of comprehensive income and statement of financial position of the Closed Group.

Statement of comprehensive income Revenue Expenses Profit before income tax expense Income tax expense Profit after income tax expense Other comprehensive income Changes in fair value of cash flow hedges Other comprehensive income for the year, net of tax Total comprehensive income for the year	2018 $'000 1,057,362 (949,937)	2017 $'000 922,348 (844,420)
	107,425 (29,103)	77,928 (25,001)
	78,322 (5,378)	52,927 2,191
	(5,378)	2,191
	72,944	55,118

90

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 36. Deed of cross guarantee (continued)

Equity - retained profits/(accumulated losses) Accumulated losses at the beginning of the financial year Profit after income tax expense Dividends paid Retained profits/(accumulated losses) at the end of the financial year Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Income tax refund due Non-current assets Trade and other receivables Property, plant and equipment Intangibles Deferred tax Other Intercompany Investments Total assets Current liabilities Trade and other payables Derivative financial instruments Income tax Provisions Non-current liabilities Borrowings Derivative financial instruments Provisions Intercompany Total liabilities Net assets Equity Issued capital Reserves Retained profits/(accumulated losses) Total equity	2018 $'000 (28,184) 78,322 (40,451)	2017 $'000 (51,052) 52,927 (30,059)
	9,687	(28,184)
	2018 $'000 28,322 124,535 243,988 1,090 -	2017 $'000 30,905 114,618 221,179 27 1,045
	397,935	367,774
	78 49,096 506,788 10,260 3,447 - 340,416	296 46,679 426,157 10,356 4,061 30,879 334,685
	910,085	853,113
	1,308,020	1,220,887
	160,855 89 2,341 50,512	150,446 934 4,998 30,195
	213,797	186,573
	315,197 330 12,868 153,531	429,747 637 28,402 -
	481,926	458,786
	695,723	645,359
	612,297	575,528
	606,456 (3,846) 9,687	600,676 3,036 (28,184)
	612,297	575,528

91

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 37. Events after the reporting period

On 3 July 2018, the consolidated entity sold the TRS Tyre and Wheel business in New Zealand ('TRS') to Trelleborg Wheel Systems, a subsidiary of Swedish listed Trelleborg AB for NZD $20M. Final completion is outstanding at the time of this financial report.

TRS is a distributor of tyres for agricultural, materials handling and construction vehicles in New Zealand, specialising in tyres and complete wheels for tyre and tractor dealers.

TRS contributed revenue of $24.3M and profit before tax of $2.5M in FY18.

On 1 August 2018, the consolidated entity exercised an option to make final settlement of the Baxter's deferred contingent consideration which was recorded as a current liability in note 16.

Apart from the dividend declared as disclosed in note 24, no other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 38. Cash flow information

Reconciliation of profit after income tax to net cash from operating activities: Profit after income tax expense for the year Adjustments for: Depreciation and amortisation Net gain on disposal of property, plant and equipment Unwinding of the discount on deferred settlements Amortisation of capitalised borrowing costs Non-cash share-based payment expense Component relating to discontinued operations Change in operating assets and liabilities: Increase in trade and other receivables Increase in inventories Decrease/(increase) in other operating assets Increase in trade and other payables Decrease in provision for income tax Decrease in other operating liabilities Net cash from operating activities Net debt reconciliation Consolidated Cash and cash equivalents Cash and cash equivalents relating to non-controlling interest Borrowings excluding unamortised transaction costs capitalised (note 18) Net derivative financial instruments (note 26) Net debt	Consolidated 2018 2017 $'000 $'000 94,320 63,830 15,582 13,527 (60) (80) 858 833 604 752 2,220 1,625 (9,942) (10,098) (8,873) (396) (20,151) (12,450) 936 (1,027) 12,764 10,737 (1,013) (3,623) (1,814) (2,536)	Consolidated 2018 2017 $'000 $'000 94,320 63,830 15,582 13,527 (60) (80) 858 833 604 752 2,220 1,625 (9,942) (10,098) (8,873) (396) (20,151) (12,450) 936 (1,027) 12,764 10,737 (1,013) (3,623) (1,814) (2,536)
	85,431	61,094
		2018 $'000 40,154 (2,481) (328,391) 1,266
		(289,452)

92

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 39. Earnings per share

Note 39. Earnings per share
Earnings per share for profit from continuing operations Profit after income tax attributable to the owners of Bapcor Limited Basic earnings per share Diluted earnings per share Earnings per share for profit from discontinued operations Profit after income tax attributable to the owners of Bapcor Limited Basic earnings per share Diluted earnings per share Earnings per share for profit Profit after income tax Non-controlling interest Profit after income tax attributable to the owners of Bapcor Limited Basic earnings per share Diluted earnings per share Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share	Consolidated 2018 2017 $'000 $'000 84,379 53,732
	Cents Cents 30.22 19.93 30.06 19.83 Consolidated 2018 2017 $'000 $'000 9,941 10,098
	Cents Cents 3.56 3.75 3.54 3.73 Consolidated 2018 2017 $'000 $'000 94,320 63,830 336 214
	94,656	64,044
	Cents 33.90 33.73 Number 279,252,093 1,407,835	Cents 23.76 23.64 Number 269,599,050 1,337,272
	280,659,928	270,936,322

The weighted average number of ordinary shares for 2017 has been restated for the effect of the rights issues performed in accordance with AASB 133 Earnings Per Share .

93

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 40. Share-based payments

The Long Term Incentive ('LTI') plan is intended to assist in the motivation, retention and reward of nominated senior executives. The LTI is a payment contingent on two or three year performance and the payments are rights to acquire shares ('Performance Rights'). Refer to the audited Remuneration Report within the Directors' Report for further information on the LTI.

In FY18 the following offers were made to eligible participants:

• In relation to the FY17 year for the Chief Executive - Hellaby Automotive (C Daly). These allocated Performance Rights have a performance period that ends 30 June 2018 and 30 June 2019 in line with the FY17 offer that was previously made to other executives at which time the performance hurdles are tested.

==> picture [512 x 192] intentionally omitted <==

----- Start of picture text -----

Tranche 1 Tranche 2
Grant date 15/08/17 15/08/17
Performance hurdle Relative TSR EPS Relative TSR EPS
Performance period 1/07/16 to 1/07/16 to 1/07/16 to 1/07/16 to
30/06/18 30/06/18 30/06/19 30/06/19
Test date 30/06/18 30/06/19
Expiry date Once tested Once tested
Quantity granted 4,999 2,978 9,354 5,882
Exercise price Nil Nil
Fair value at 15/08/17 [1] $2.89 $5.41 $3.04 $5.30
Other conditions Restriction on sale to 30/06/19 Restriction on sale to 30/06/20
Share price on valuation $5.51 $5.51
date
Volatility 27.71% 27.71%
Dividend yield 2.09% 2.09%
Risk free rate 1.66% 1.76%
----- End of picture text -----

• In relation to the FY17 year for the CEO and Managing Director (D Abotomey) following the successful passing of a resolution at the FY17 Annual General Meeting. These allocated Performance Rights have a performance period that ends 30 June 2019 at which time the performance hurdles are tested.

==> picture [288 x 157] intentionally omitted <==

----- Start of picture text -----

Grant date 4/12/17
Performance hurdle Relative TSR EPS
Performance period 1/07/16 to 30/06/19
Test date 30/06/19
Expiry date Once tested
Quantity granted 88,802 88,801
Exercise price Nil
Fair value at 4/12/17 [1] $2.842 $5.372
Other conditions Restriction on sale to 30/06/20
Share price on valuation date $5.57
Volatility 26.80%
Dividend yield 2.33%
Risk free rate 1.74%
----- End of picture text -----

1. The fair value represents the value used to calculate the accounting expense as required by accounting standards.

94

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 40. Share-based payments (continued)

• In relation to the FY18 year an offer to participate in the LTI was made to nine of Bapcor’s senior executives. These allocated Performance Rights have a performance period that ends on 30 June 2020 at which time the performance hurdles are tested.

==> picture [288 x 158] intentionally omitted <==

----- Start of picture text -----

Grant date 4/12/17
Performance hurdle Relative TSR EPS
Performance period 1/07/17 to 30/06/20
Test date 30/06/20
Expiry date Once tested
Quantity granted 283,535 283,532
Exercise price Nil
Fair value at 4/12/17 [1] $3.059 $5.249
Other conditions Restriction on sale to 30/06/21
Share price on valuation date $5.57
Volatility 26.80%
Dividend yield 2.33%
Risk free rate 1.88%
----- End of picture text -----

1. The fair value represents the value used to calculate the accounting expense as required by accounting standards.

Relative total shareholder return ('TSR') hurdle

Fifty per cent of the Performance Rights granted to a participant will vest subject to a TSR performance hurdle that assesses performance by measuring capital growth in the share price together with income returned to shareholders, measured over the performance period against a Comparator Group of companies. The Performance Rights will vest by reference to Bapcor's TSR performance ranking against this Comparator Group of companies, as follows:

==> picture [446 x 73] intentionally omitted <==

----- Start of picture text -----

Bapcor’s TSR relative to the Comparator Group over the Percentage of TSR Rights
performance period vesting
Less than 50th percentile Nil
Equal to 50th percentile 50%
Greater than 50th percentile and less than 75th percentile Pro-rata straight-line vesting
Equal to or greater than 75th percentile 100%
----- End of picture text -----

Earnings per share ('EPS') growth

Fifty per cent of the Performance Rights granted to a participant will vest by reference to an EPS performance hurdle that measures the basic EPS on a normalised basis over the performance period. Each tranche of Performance Rights subject to an EPS hurdle will vest as follows:

==> picture [454 x 73] intentionally omitted <==

----- Start of picture text -----

Bapcor's compound annual EPS growth over the
performance period Percentage of EPS Rights Vesting
Less than 7.5% Nil
7.5% 20%
Greater than 7.5% and less than 15% Pro-rata straight-line vesting
Equal to or greater than 15% 100%
----- End of picture text -----

95

Bapcor Limited Notes to the consolidated financial statements 30 June 2018

Note 40. Share-based payments (continued)

Performance Rights issued up to 30 June 2017 are exercised as soon as the vesting conditions are met. If vesting conditions are met, Performance Rights will automatically convert into fully paid ordinary shares of the Company.

For Performance Rights issued on or after 1 July 2017, if vesting conditions are met, the Performance Rights are converted into fully paid ordinary shares of the Company at the election of the Participant.

There is no specific expiry date, however the Performance Rights lapse if the vesting conditions are not met.

Shares will be subject to a restriction on sale for twelve months from vesting of the Performance Rights.

Set out below are summaries of Performance Rights granted under the LTI:

2018 Exercise Grant date Vesting date price 24/04/14 30/06/17 $0.00 01/07/15 30/06/17 $0.00 01/07/15 30/06/18 $0.00 01/08/15 30/06/17 $0.00 01/08/15 30/06/18 $0.00 01/07/16 30/06/18 $0.00 01/07/16 30/06/19 $0.00 01/07/17 30/06/20 $0.00 2017 Exercise Grant date Vesting date price 24/04/14 30/06/16 $0.00 24/04/14 30/06/17 $0.00 01/07/15 30/06/17 $0.00 01/07/15 30/06/18 $0.00 01/08/15 30/06/17 $0.00 01/08/15 30/06/18 $0.00 01/07/16 30/06/18 $0.00 01/07/16 30/06/19 $0.00	Balance at the start of the year 475,362 128,868 246,986 76,478 146,574 124,286 237,389 - 1,435,943 Balance at the start of the year 151,344 475,362 128,868 246,986 76,478 146,574 - - 1,225,612	Granted - - - - - 7,977 192,839 567,067 767,883 Granted - - - - - - 124,286 237,389 361,675	Exercised (475,362) (128,868) - (76,478) - - - - (680,708) Exercised (151,344) - - - - - - - (151,344)	Expired/ forfeited/ other - - (23,252) - - (9,414) (17,981) - (50,647) Expired/ forfeited/ other - - - - - - - - -	Balance at the end of the year - - 223,734 - 146,574 122,849 412,247 567,067 1,472,471 Balance at the end of the year - 475,362 128,868 246,986 76,478 146,574 124,286 237,389 1,435,943

The weighted average exercise price for the Performance Rights exercised in FY18 was $5.4007 (2017: $5.3958).

The weighted average contractual lives are 1.74 years (2017: 1.48 years).

The expense arising from share-based payment transactions relating to the LTI during the year as part of employee benefits expense was $2,220,000 (2017: $1,625,000).

Refer to note 1 for details on the fair value determination of the share-based payments.

Employee Salary Sacrifice Share Plan

During the financial year, Bapcor issued shares to employees via an Employee Salary Sacrifice Share Plan ('ESSSP'). The ESSSP allowed eligible employees to acquire up to $1,000 of shares from their pre-tax wages. The value of this share-based payment transaction is deemed immaterial to the financial statements.

96

Bapcor Limited Directors' declaration 30 June 2018

In the Directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;

• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30 June 2018 and of its performance for the financial year ended on that date;

• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

• at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 36 to the financial statements.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the Directors

==> picture [159 x 55] intentionally omitted <==

Andrew Harrison Chairman

==> picture [136 x 42] intentionally omitted <==

Darryl Abotomey Chief Executive Officer and Managing Director

22 August 2018 Melbourne

97

==> picture [77 x 59] intentionally omitted <==

Independent auditor’s report

To the members of Bapcor Group Limited

Report on the audit of the financial report

Our opinion

In our opinion:

The accompanying financial report of Bapcor Group Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial performance for the year then ended

• (b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

What we have audited

The Group financial report comprises:

• the consolidated statement of financial position as at 30 June 2018

• the consolidated statement of changes in equity for the year then ended

• the consolidated statement of cash flows for the year then ended

• the consolidated statement of comprehensive income for the year then ended

• the notes to the consolidated financial statements, which include a summary of significant accounting policies

• the directors’ declaration.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Our audit approach

An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001 T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

PricewaterhouseCoopers, ABN 52 780 433 757

Liability limited by a scheme approved under Professional Standards Legislation.

98

==> picture [77 x 59] intentionally omitted <==

users taken on the basis of the financial report.

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates.

==> picture [211 x 117] intentionally omitted <==

Materiality

• For the purpose of our audit we used overall Group materiality of $5.5 million, which represents approximately 5% of the Group’s profit before tax.

• We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.

• We chose Group profit before tax because, in our view, it is the metric against which the performance of the Group is most commonly measured.

• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds.

Audit Scope

• Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events.

• Audit procedures were performed on the Australian and New Zealand operations assisted by local component auditors in New Zealand under the supervision of the Group engagement team.

• Our engagement team included valuation experts to assist in the audit procedures over goodwill impairment.

99

==> picture [77 x 59] intentionally omitted <==

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee.

Key audit matter	Key audit matter	How our audit addressed the key audit matter	How our audit addressed the key audit matter	How our audit addressed the key audit matter	How our audit addressed the key audit matter
Carrying value of goodwill and intangible		In assessing the models, our audit procedures
assets with indefinite lives		included, amongst others:
Refer to note 13 $653million
		▪	Assessing whether the division of the Group’s
▪	At 30 June 2018, the Group recognised		goodwill and intangible assets into CGUs,		was
	$594million of goodwill and $58.9million of		consistent with our knowledge of the Group’s
	intangible assets with indefinite lives (trade		operations and internal Group reporting,
	names).		based on discussions with Management and
▪	At least annually, an impairment test is performed by the Group to assess whether the		our understanding of the operation of the Group’s business.
	carrying value of the goodwill and intangible	▪	Assessing whether the grouping of CGUs
	assets with indefinite lives, in each of the		appropriately included the assets, liabilities
	Group’s cash generating units (CGUs) are		and cash flows directly attributable to each
	recoverable based on a ‘value in use’		CGU and a reasonable allocation of corporate
	discounted cashflow model, or ‘fair value less		overheads.
	costs of disposal’ model (the models). Where a shortfall in value is identified, an impairment charge is recognised in the consolidated statement of comprehensive income.	▪	Testing that forecast cash flows used in the models were consistent with the Group’s most up-to-date budgets and business plans formally approved by the Board.
▪	Significant judgement is required by the Group to estimate the key assumptions in the models to determine the recoverable amount	▪	Assessing the Group’s historical ability to forecast cash flows by comparing budgets with
	of the goodwill and intangible assets and the		reported actual results for the past year.
	amount of any resulting impairment (if any). The most significant areas of judgement relate to:	▪	Assessing the sensitivity to change of key assumptions used in the models that either individually or collectively would be required
	o cash flow forecasts, including the terminal		for assets to be impaired.
	value forecast	▪	Together with PwC valuation experts,
	o short-term and future growth rates in revenue and EBITDA margin		evaluating whether the discount rates used in the models appropriately reflected the risks of the CGUs by comparing the discount rates to
	o the discount rate adopted in the models		industry and market factors.
	o relief from royalty rate, in determining the	▪	Together with PwC valuation experts,
	fair value less costs to sell value of trade		assessing whether the value in use models
	names.		used to test Goodwill for impairment included
Giventhelevelofjudgement applied by the			the appropriate inputs as required under

100

==> picture [77 x 59] intentionally omitted <==

Group and the magnitude of the goodwill and intangible assets with indefinite lives recognised on the Group’s Consolidated statement of financial position we determined that this was a key audit matter.

Australian Accounting Standards.

• With the assistance of PwC valuation experts, assessing whether the appropriate valuation method was used to determine fair value less costs to sell for tradenames; in addition assessing whether the key inputs into the fair value calculation were appropriate including discount rate used, relief from royalty rate and marketing and administration cost recharge.

• Testing the mathematical accuracy of the models’ calculations on a sample basis.

• Considering the adequacy and accuracy of disclosures in note 13, including those regarding the key assumptions, in accordance with the requirements of Australian Accounting Standards.

Carrying value of Inventory Refer to note 9 $287.3 million

• The Group’s inventory is held at the lower of cost or net realisable value.

• At 30 June 2018, the Group recorded a provision for aged and slow moving inventory of $46.8million. The provision is estimated based on the application of judgemental provisioning rates to aged and slow moving inventory categories. Specific provisioning for items where the known net realisable value is lower than cost are also recorded.

• We consider this to be a key audit matter because of the significant judgement and estimation required by the Group in determining the net realisable value of inventory and the potentially material impact that the provision could have on the financial report.

Accounting for the sale of discontinued businesses Refer to note 7

The Group sold a number of businesses during the financial year ended 30 June 2018, which were all classified as held-for-sale assets at 30 June 2017. They were acquired as part of the Hellaby Holdings Limited (“Hellaby”) acquisition

Our audit procedures included the following, amongst others:

• Considering whether all the necessary inventory balances were included in the inventory provision calculation.

• Evaluating whether the methodology applied to the provision calculation was consistent with that applied in the prior year.

• Testing the movement in the inventory provision, including agreeing a sample of inventory written off to supporting documentation such as board approvals.

• Considered the adequacy and accuracy of disclosures in note 9 in light of the requirements of Australian Accounting Standards.

Our audit procedures included the following, amongst others:

• Agreeing the fair value of consideration received by the Group, for all the businesses sold during the year, to the relevant third party sale and purchase agreements, and agreeing a sample of payments received to the Group’s bank

101

==> picture [77 x 59] intentionally omitted <==

during the year ended 30 June 2017.

records.

As part of the finalisation of the Hellaby acquisition accounting, the fair value determined for assets classified as held-for-sale was finalised (refer to note 34 in the financial statements). This resulted in an increase to Goodwill in the current year of $32.5million.

We considered this a key audit matter because of the significant judgement required by the Group in estimating the fair values of assets classified as held for sale in finalising the Hellaby acquisition accounting and the material impact on the financial report of the change to acquisition accounting arising from the change to fair values .

• Testing the Group’s finalisation of acquisition accounting of the Hellaby acquisition, including:

• Agreeing a sample of revisions to the fair value of assets acquired as for held-for-sale to supporting sale and purchase agreements

• Testing the accuracy of the revised allocation of Goodwill on acquisition.

• Considering the adequacy of the disclosures made in note 7 and note 34, in light of the requirements of Australian Accounting Standards.

Other information

The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained included the Director’s Report and Corporate Directory. We expect the remaining other information to be made available to us after the date of this auditor's report, including Highlights, Chairman’s Report, Board of Directors, Chief Executive Officer’s Report, Executive Team, Our Reach, Our History, Segment Overview, Community & Sustainability and Information for Shareholders.

Our opinion on the financial report does not cover the other information and we do not and will not express an opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

102

==> picture [77 x 59] intentionally omitted <==

When we read the other information not yet received as identified above, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take.

Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report.

103

==> picture [77 x 59] intentionally omitted <==

Report on the remuneration report

Our opinion on the remuneration report

We have audited the remuneration report included in pages 14 to 34 of the directors’ report for the year ended 30 June 2018.

In our opinion, the remuneration report of Bapcor Group Limited for the year ended 30 June 2018 complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

==> picture [186 x 40] intentionally omitted <==

PricewaterhouseCoopers

==> picture [103 x 59] intentionally omitted <==

Jason Perry Partner

Melbourne 22 August 2018

104

Bapcor Limited Corporate directory 30 June 2018

Directors	Andrew Harrison (Independent, Non-Executive Director and Chairman)
	Darryl Abotomey (Chief Executive Officer and Managing Director)
	Therese Ryan (Independent, Non-Executive Director)
	Margaret Haseltine (Independent, Non-Executive Director)
Company secretary	Gregory Fox
Notice of annual general meeting	The details of the annual general meeting of Bapcor Limited are:
	Date: 29 October 2018
	Time: 1.30pm
	Address: Allens
	Level 28, 126 Phillip Street
	Sydney NSW 2000
Registered office	61 Gower Street
	Preston VIC 3072
	Australia
Share register	Computershare Investor Services Pty Ltd
	452 Johnston Street
	Abbotsford VIC 3067
	Australia
	Ph: +61 3 9415 4000
Auditor	PricewaterhouseCoopers
	2 Riverside Quay
	Southbank VIC 3006
	Australia
Stock exchange listing	Bapcor Limited shares are listed on the Australian Securities Exchange (ASX code:
	BAP)
Website	www.bapcor.com.au

105

==> picture [596 x 735] intentionally omitted <==