BAPCOR LIMITED — Interim / Quarterly Report 2023

Feb 15, 2023

Bapcor Limited

ABN 80 153 199 912

Appendix 4D and Financial Report - 31 December 2022

Lodged with the ASX under Listing Rule 4.2A

Bapcor Limited Appendix 4D Half-year report

1. Company details

Name of entity: Bapcor Limited (‘Bapcor’ or the ‘company’) ABN: 80 153 199 912 Reporting period: For the half-year ended 31 December 2022 (‘H1 FY23’) Previous period: For the half-year ended 31 December 2021 (‘H1 FY22’)

2. Results for announcement to the market

	$’000s % $’000s
IFRS financial measures
Revenue Net profit after tax1 Earnings per share - basic (cents per share)	Statutory Up 100,664 11.2 to 1,000,784
	Statutory Down 2,486 4.3 to 55,239
	Statutory Down 0.74 cps 4.3 to 16.27 cps
Non-IFRS financial measures2
Earnings before interest, taxes, depreciation and amortisation Net profit after tax1 Earnings per share - basic (cents per share)	Statutory Up 4,805 3.6 to 137,771
	Pro-forma3 Up 9,150 6.7 to 146,307
	Pro-forma3 Up 1,365 2.3 to 62,024
	Pro-forma3 Up 0.40 cps 2.3 to 18.27 cps

Revenue in H1 FY23 increased by 11.2% compared to H1 FY22. Pro-forma earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) and pro-forma net profit after tax (‘NPAT’) in H1 FY23 increased by 6.7% and 2.3% respectively compared to H1 FY22.

Pro-forma earnings per share for H1 FY23 were 19.27 cents per share, up 2.3% compared to H1 FY22.

Pro-forma net debt[4] at 31 December 2022 was $329.1M, representing a leverage ratio of 1.45X, and providing Bapcor with a sound financial position and flexibility to implement the Better than Before transformation, pursue acquisition opportunities and invest into growth. The increase in net debt of $67.1M compared to 30 June 2022 is driven by temporarily elevated levels of inventory, which is non-perishable in nature, due to prudent operational procurement strategies to mitigate global supply chain disruptions and associated longer lead times.

For a further explanation of the results above, refer to the ASX/Media Announcement for the half-year ended 31 December 2022 and the accompanying directors’ report.

1 Net profit after tax attributable to the members of Bapcor Limited.

2 The directors believe the presentation of non-IFRS financial measures are useful for the users of the financial report as they provide additional and relevant information that reflect the underlying financial performance of the business. Non-IFRS financial measures contained within this report are not subject to audit or review. Refer to the directors’ report for further details.

3 Pro-forma results include adjustments from statutory results for transition costs associated with the new Distribution Centres in Victoria and Queensland of $1.4M after tax and for transformation costs associated with the ‘Better than Before’ program of $5.3M after tax. Refer to reconciliations provided in the directors’ report.

4 Pro-forma net debt is calculated by dividing pro-forma net debt by the last twelve months’ pro-forma EBITDA. Pro-forma net debt is excluding the impact of lease liabilities and adjusting for the net derivative financial instruments relating to forward exchange contracts position. Pro-forma EBITDA excludes any impact of AASB16. This approach is consistent with banking covenant requirements. Refer to note 14 of the financial report for a reconciliation between statutory and pro-forma net debt.

1

Bapcor Limited Appendix 4D Half-year report

3. Dividends

3. Dividends
		Franked
	Amount per	amount per
	security	security
	Cents	Cents
2022 Interim dividend	10.0	10.0
2022 Final dividend	11.5	11.5
2023 Interim dividend (declared after balance date but not yet paid)	10.5	10.5
Record date for determining entitlements to the dividend	28	February 2023
Date dividend payable		17 March 2023

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. Given the financial position of Bapcor and in accordance with the DRP rules, the Board decided to continue to suspend the DRP for the 2023 interim dividend.

5. 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, right-of-use assets and lease liabilities are excluded from the calculation of net tangible assets per share.

Net tangible assets per ordinary security	31 Dec 2022 Cents 93.0	30 Jun 2022 Cents 91.7

6. Attachments

The Financial Report of Bapcor Limited for the half-year ended 31 December 2022 is attached.

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Bapcor Limited Contents 31 December 2022

Directors' report	4
Auditor's independence declaration	10
Consolidated statement of comprehensive income	11
Consolidated statement of financial position	12
Consolidated statement of changes in equity	13
Consolidated statement of cash flows	14
Notes to the consolidated financial statements	15
Directors' declaration	32
Independent auditor's review report to the members of Bapcor Limited	33

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 half-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 127-139 Link Road, Melbourne Airport VIC 3045 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 16 February 2023. The directors have the power to amend and reissue the financial statements.

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Bapcor Limited Directors' report 31 December 2022

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Bapcor Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2022 ('H1 FY23').

Directors

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

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||||
|---|---|---|
|Margaret Haseltine|Independent, Non-Executive Chair|
|Noel Meehan|Chief Executive Officer and Managing Director (appointed as Managing Director|
|on 1 September 2022)|
|James Todd|Independent, Non-Executive Director|
|Mark Powell|Independent, Non-Executive Director|
|Mark Bernhard|Independent, Non-Executive Director|
|Brad Soller|Independent, Non-Executive Director (appointed 1 November 2022)|
|Jennifer Macdonald|Independent, Non-Executive Director (retired 19 October 2022)|
|-|
|Therese Ryan|Independent, Non|Executive Director (retired 30 September 2022)|

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Principal activities

The principal activities of Bapcor were the sale and distribution of vehicle parts, accessories, automotive equipment, service and solutions.

Bapcor is one of the largest suppliers of vehicle parts, accessories, equipment, service and solutions in Asia Pacific with an operational network covering c. 1,000 locations and employing c. 5,000 team members.

Significant changes in the state of affairs

Bapcor appointed Stefan Camphausen as Chief Financial Officer effective 4 July 2022.

On 2 August 2022, it was announced that Chief Executive Officer ('CEO') Noel Meehan had been appointed to the Board as CEO and Managing Director of Bapcor effective from 1 September 2022. It was also announced that as part of continued Board renewal, Therese Ryan would retire as Independent, Non-Executive Director effective from 30 September.

On 19 September 2022, it was announced that Jenny Macdonald would retire as Independent, Non-Executive Director and Chair of Bapcor's Audit and Risk Committee effective 19 October 2022.

On 12 October 2022, it was announced that Brad Soller would be appointed as Independent, Non-Executive Director effective 1 November 2022 and will serve as Chair of Bapcor's Audit and Risk Committee upon his appointment.

At the Investor Day held on 22 November 2022, Bapcor announced the ‘Better than Before’ program – a strategic multiphased transformation program to enable additional, sustainable growth with a goal of at least $100M net earnings before interest and tax benefit, a further improved return on invested capital and an enhanced organisational health. During H1 FY23, Bapcor completed both the diagnostics and planning phases and moved into implementation and execution.

During H1 FY23, the construction of a state-of-the-art distribution centre in Queensland has continued to consolidate seven existing distribution centres into the new location.

There were no other significant changes in the state of affairs of the consolidated entity during the financial half-year.

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Bapcor Limited Directors' report 31 December 2022

Review of operations

In H1 FY23, Bapcor has delivered record revenue of $1.0BN, up 11.2% on H1 FY22, with strong growth in all Australian segments demonstrating the resilience of Bapcor’s diversified business model. The strong performances in the Trade and Specialist Wholesale segments were partially offsetting temporary margin compression in the Retail and New Zealand segments. This resulted in pro-forma NPAT of $62.0M, up 2.3% on H1 FY23. Bapcor has announced a fully franked interim dividend of 10.5 cents per share, up 5.0% on the FY22 interim dividend, which represents a payout ratio of 57.5% of pro-forma NPAT.

Statutory (versus H1 FY22):

• Revenue increased by 11.2% from $900.1M to $1,000.8M

• Statutory earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) increased by 3.6% to $137.8M

• Statutory net profit after tax (‘NPAT’) decreased by 4.3% to $55.2M

• Statutory earnings per share (‘EPS’) decreased by 4.3% to 16.27 cents per share

Pro-forma (versus H1 FY22):

• Revenue increased by 11.2% from $900.1M to $1,000.8M

• Pro-forma EBITDA increased by 6.7% to $146.3M

• Pro-forma NPAT increased by 2.3% to $62.0M

• Pro-forma EPS increased by 2.3% to 18.27 cents per share

Net debt:

• Pro-forma net debt[5] at 31 December 2022 was $329.1M, representing a leverage ratio of 1.45X and well within debt capacity

The tables below, which are subject to rounding, reconcile the pro-forma results to the statutory results for H1 FY23 and H1 FY22.

		Consolidated	Consolidated
$M	Note	H1 FY23	H1 FY22
Statutory NPAT	1	55.2	57.7
DC consolidations	2	2.1	4.2
Transformation activities	3	7.6	-
Tax adjustment	4	(2.9)	(1.3)
Pro-forma NPAT		62.0	60.7

• Note 1: NPAT attributable to members of Bapcor Limited.

• Note 2: DC consolidations relate to the significant transition costs incurred in relation to the Victorian and Queensland DCs.

• Note 3: Transformation activities in current period relate to one-off costs incurred relating to the ‘Better than Before’ transformation.

• Note 4: Tax adjustment reflects the tax effect of the above adjustments based on local effective tax rates.

5 Pro-forma net debt is calculated by dividing pro-forma net debt by the last twelve months’ pro-forma EBITDA. Pro-forma net debt is excluding the impact of lease liabilities and adjusting for the net derivative financial instruments relating to forward exchange contracts position. Pro-forma EBITDA excludes any impact of AASB16. This approach is consistent with banking covenant requirements. Refer to note 14 of the financial report for a reconciliation between statutory and pro-forma net debt.

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Bapcor Limited Directors' report 31 December 2022

		Consolidated	Consolidated
$M	Note	H1 FY23	H1 FY22
Statutory NPBT		77.8	81.7
Add depreciation and amortisation		48.0	42.0
Add finance costs		12..0	9.3
Statutory EBITDA		137.8	133.0
DC consolidations	1	0.9	4.2
Transformation activities	2	7.6	-
Pro-forma EBITDA		146.3	137.2

• Note 1: DC consolidations relate to the significant transition costs incurred in relation to the Victorian and Queensland DCs.

• Note 2: Transformation activities in current period relate to one-off costs incurred relating to the ‘Better than Before’ transformation.

The table below, which is subject to rounding, reconciles the statutory and pro-forma results for H1 FY23 and H1 FY22 to the earnings per share.

				Consolidated	Consolidated
		H1	FY23		H1	FY22
$M	Note	Statutory		Pro-forma	Statutory		Pro-forma
NPAT	1	55.2		62.0	57.7		60.7
Weighted average number of ordinary shares		339.4		339.4	339.4		339.4
Earnings per share (cps)		16.27		18.27	17.01		17.87

• Note 1: NPAT attributable to members of Bapcor Limited.

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.

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Bapcor Limited Directors' report 31 December 2022

Operating and financial review – Segment Overview

The table below, with amounts subject to rounding and change percentages based on non-rounded values, presents revenue and pro-forma EBITDA by segment.

			Revenue		Pro-forma EBITDA	Pro-forma EBITDA	Pro-forma EBITDA
$M	Note	H1 FY23	H1 FY22	Change	H1 FY23	H1 FY22	Change
Trade	1	374.0	325.6	14.9 %	60.1	52.2	15.1%
Specialist Wholesale		377.8	341.2	10.7%	50.1	46.9	6.9%
Retail		219.9	197.2	11.5 %	35.2	33.6	4.9 %
New Zealand		85.8	86.1	(0.3 %)	13.4	16.1	(16.4 %)
Unallocated / Head Office	1, 2	(56.6)	(50.0)	-	(12.6)	(11.6)	-
Total		1,000.8	900.1	11.2 %	146.3	137.2	6.7 %

• Note 1: Comparatives have been amended for the move of the Thailand operation from Unallocated / Head Office to Trade.

• Note 2: Revenue relates to intersegment sales eliminations. EBITDA relates to Bapcor head office costs, intersegment EBITDA elimination and profit from associates.

Operating and financial review – Trade

The Trade segment consists of the Burson Auto Parts, Precision Automotive Equipment and Independents business units in Australia as well as the Thailand operations. 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

The Trade segment achieved revenue growth of 14.9% and EBITDA growth of 15.1% compared to H1 FY22. The increase in revenue of 14.9% included same store sales growth of 12.0% (1.1% in H1 FY22), with the EBITDA margin increasing by 0.1 percentage points compared to H1 FY22.

Trade continued to expand its store network in H1 FY23 with the number of stores increasing from 224 at 30 June 2022 to 226 at 31 December 2023 with the opening of two greenfield Burson stores.

Operating and financial review – Specialist Wholesale

The Specialist Wholesale segment consists of operations that specialise in automotive aftermarket wholesale specialist networks and includes AAD, Bearing Wholesalers, Baxters/MTQ, Roadsafe, JAS Oceania, Premier Auto Trade, Federal Batteries, Diesel Distributors, AADi; as well as the Commercial Truck Parts group comprising Truckline and WANO.

The Specialist Wholesale segment achieved revenue growth of 10.7% and EBITDA growth of 6.9% compared to H1 FY22.

EBITDA margins were reasonably stable at 13.3%, supported by growth in own brand penetration and solid volumes in internal supplies into other Bapcor segments.

In H1 FY23, Specialist Wholesale further strengthened its operations with the network expanding from 168 to 172 locations.

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Bapcor Limited Directors' report 31 December 2022

Operating and financial review – Retail

The Retail segment consists of business units that are retail customer focused, and include the Autobarn, Autopro and Opposite Lock brands as well as the Midas and ABS workshop service brands. This segment is comprised of franchised stores and workshops, as well as an increasing proportion of company owned Autobarn and Autopro stores.

The Retail segment achieved revenue growth of 11.5% compared to H1 FY22, driven by same store sales for company owned stores increasing by 10.2% (after declined by 8.2% in H1 FY22), while cost pressures led to a lower EBITDA growth of 4.9% and margin compression.

Retail has continued to grow the number of company-owned stores via both greenfield stores as well as conversion of franchise stores to company-owned stores. The total number of company-owned stores at 31 December 2022 was 115 stores, an increase of 8 from the 107 as at 30 June 2022.

Operating and financial review – New Zealand

The New Zealand segment consists of Trade and Specialist Wholesale businesses based in New Zealand operating across 90 locations, as well as 129 Battery Town and Shock Shop locations.

Brake & Transmission (‘BNT’) is the predominant business with 77 stores supplying automotive parts and accessories to workshops, truck and trailer parts through the Truck and Trailer Parts brand. BNT is similar in nature to Bapcor’s Burson Auto Parts business in Australia.

New Zealand also includes the Specialist Wholesale businesses of HCB – batteries, Autolign – steering and suspension, JAS – auto electrical and Precision Equipment NZ – vehicle workshop equipment.

The New Zealand segment revenue declined by 0.3%, notwithstanding a same store sales increase of 6.0% (declined by 1.6% in H1 FY22), while EBITDA declined by 16.4% H1 FY22, mainly due to the generally subdued New Zealand economic climate.

In H1 FY23, New Zealand further strengthened its operations through the opening of two greenfield locations. The overall New Zealand network expanded from 88 to 90 locations (excluding Battery Town and Shock Shop locations).

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 segments. It also includes the elimination of intercompany sales and EBITDA. Intercompany sales increased by 13.2% compared to H1 FY22, reflecting a higher proportion of sourcing product internally and increasing the volume of own brand product, while the continued build-up of capabilities led to an increase of head office costs.

Financial Position - Capital Raising and Debt

There have been no issues of new shares during the half-year. As a result, ordinary shares on issue remain at 339,412,500 as at 31 December 2022.

During H1 FY23, Bapcor entered into fixed interest rate swaps to hedge the impact of rising interest rates. A total of $120M of swaps were entered into at an average interest rate of 3.79%. Refer to note 14 of the financial report for further details.

AASB 16 Leases increases reportable net debt by the inclusion of $268.0M of lease liabilities as at 31 December 2022. Given this is excluded from a banking covenant perspective, pro-forma net debt[6] has also been disclosed. Pro-forma net debt at 31 December 2022 was $329.1M, representing a leverage ratio of 1.45X and well within debt capacity.

6 Pro-forma net debt is calculated by dividing pro-forma net debt by the last twelve months’ pro-forma EBITDA. Pro-forma net debt is excluding the impact of lease liabilities and adjusting for the net derivative financial instruments relating to forward exchange contracts position. Pro-forma EBITDA excludes any impact of AASB16. Refer to note 14 of the financial report for a reconciliation between statutory and pro-forma net debt.

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Bapcor Limited Directors' report 31 December 2022

Likely development and expected results of operations

Bapcor has had a robust operational performance in H1 FY23, with growth in revenue and profit and improving intraperiod capital efficiency. The Australian Trade and Wholesale markets remain resilient, with ongoing macro headwinds due to challenges in Retail and the weakness of the economy in New Zealand, coupled with a temporary increase in supply chain-related cost.

Bapcor continues to expect a solid underlying[7] performance in FY23 with slight improvements in trading in 2H23 compared to 1H23, subject to market conditions; and more progress required to further reduce the still elevated inventory levels[8] . In line with the plan, Bapcor’s ‘Better Than Before’ transformation is progressing into the implementation phase in H2 FY23.

Bapcor continues to place ongoing focus on operational health, safety and wellbeing as well as team member development and training.

Matters subsequent to the end of the financial half-year

On 30 January 2023, Bapcor announced the appointment of Kate Spargo as a new Independent, Non-Executive Director (effective 1 March 2023).

Apart from this announcement and the dividend declared, no other matter or circumstance has arisen since 31 December 2022 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.

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 10 of the directors’ report.

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 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

_________Margaret Haseltine Chair

_________Noel Meehan Managing Director and Chief Executive Officer

16 February 2023 Melbourne

7 Excludes costs / benefits from Better Than Before and DC consolidation.

8 All other things being equal and subject to global supply chain risk.

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Auditor’s Independence Declaration

As lead auditor for the review of Bapcor Limited for the half-year ended 31 December 2022, 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 review; and

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

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

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Alison Tait Milner Partner PricewaterhouseCoopers

Melbourne 16 February 2023

PricewaterhouseCoopers, ABN 52 780 433 757 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

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

Liability limited by a scheme approved under Professional Standards Legislation.

Bapcor Limited Consolidated statement of comprehensive income For the half-year ended 31 December 2022

Note Revenue 4 Share of profits of associate 9 Other income 5 Expenses Cost of sales Employee expenses Advertising Freight IT and communications Motor vehicles Other expenses Depreciation and amortisation expense 6 Finance costs 6 Profit before income tax expense Income tax expense Profit after income tax expense for the half-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 Share of other comprehensive income of associate Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Profit for the half-year is attributable to: Non-controlling interest Owners of Bapcor Limited Total comprehensive income for the half-year is attributable to: Non-controlling interest Owners of Bapcor Limited Basic earnings per share Diluted earnings per share	Consolidated 31 Dec 2022 31 Dec 2021 $'000 $'000 1,000,784 900,120 863 395 1,165 828 (534,526) (484,443) (217,619) (193,409) (19,851) (17,033) (16,596) (13,269) (15,632) (13,121) (8,803) (6,493) (52,014) (40,609) (47,978) (41,969) (12,007) (9,305)	Consolidated 31 Dec 2022 31 Dec 2021 $'000 $'000 1,000,784 900,120 863 395 1,165 828 (534,526) (484,443) (217,619) (193,409) (19,851) (17,033) (16,596) (13,269) (15,632) (13,121) (8,803) (6,493) (52,014) (40,609) (47,978) (41,969) (12,007) (9,305)
	77,786 (22,773)	81,692 (24,017)
	55,013 7,640 (3,948) 604	57,675 2,915 448 -
	4,296	3,363
	59,309	61,038
	(226) 55,239	(50) 57,725
	55,013	57,675
	(183) 59,492	(63) 61,101
	59,309	61,038
	Cents 16.27 16.24	Cents 17.01 16.95

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

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Bapcor Limited Consolidated statement of financial position As at 31 December 2022

Note Assets Current assets Cash and cash equivalents Trade and other receivables 7 Inventories 8 Derivative financial instruments Income tax receivable Total current assets Non-current assets Investments accounted for using the equity method 9 Right-of-use assets 10 Property, plant and equipment 11 Intangibles 12 Derivative financial instruments Deferred tax Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Provisions 13 Lease liabilities 15 Derivative financial instruments Total current liabilities Non-current liabilities Provisions 13 Borrowings 14 Lease liabilities 15 Total non-current liabilities Total liabilities Net assets Equity Issued capital 17 Reserves Retained profits Equity attributable to the owners of Bapcor Limited Non-controlling interest Total equity	Consolidated 31 Dec 2022 30 June 2022 $'000 $'000 41,928 80,213 227,756 209,955 561,681 538,688 2,828 6,393 10,747 6,410	Consolidated 31 Dec 2022 30 June 2022 $'000 $'000 41,928 80,213 227,756 209,955 561,681 538,688 2,828 6,393 10,747 6,410
	844,940	841,659
	9,864 242,627 120,078 790,354 302 32,819	9,071 230,199 106,924 779,788 - 23,934
	1,196,044	1,149,916
	2,040,984	1,991,575
	219,348 50,697 68,112 2,676	236,561 45,958 65,067 344
	340,833	347,930
	17,144 369,831 199,870	16,744 346,702 187,942
	586,845	551,388
	927,678	899,318
	1,113,306	1,092,257
	867,972 8,174 236,095	867,972 3,149 219,888
	1,112,241 1,065	1,091,009 1,248
	1,113,306	1,092,257

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

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Bapcor Limited

Consolidated statement of changes in equity For the half-year ended 31 December 2022

Consolidated Balance at 1 July 2021 Profit/(loss) after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Share-based payments Non-controlling interest incremental capital Dividends paid (note 18) Balance at 31 December 2021 Consolidated Balance at 1 July 2022 Profit/(loss) after income tax expense for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Share-based payments Dividends paid (note 18) Balance at 31 December 2022	Contributed equity $’000 878,652 - -	Other $’000 (10,680) - -	Reserves $’000 8,412 - 3,376	Retained profits $’000 165,406 57,725 -	Non- controlling Interests $’000 1,405 (50) (13)	Total equity $’000 1,043,195 57,675 3,363
	- - - -	- - - -	3,376 413 - -	57,725 - - (37,335)	(63) - 78 -	61,038 413 78 (37,335)
	878,652	(10,680)	12,201	185,796	1,420	1,067,389
	Contributed equity $’000 878,652 - -	Other $’000 (10,680) - -	Reserves $’000 3,149 - 4,253	Retained profits $’000 219,888 55,239 -	Non- controlling Interests $’000 1,248 (226) 43	Total equity $’000 1,092,257 55,013 4,296
	- - -	- - -	4,253 772 -	55,239 - (39,032)	(183) - -	59,309 772 (39,032)
	878,652	(10,680)	8,174	236,095	1,065	1,113,306

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

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Bapcor Limited Consolidated statement of cash flows For the half-year ended 31 December 2022

Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Payments for new store initial inventory purchases Payments for restructuring costs Payments for transformation costs Transaction costs relating to acquisition of business Borrowing costs Income taxes paid Net cash from operating activities Cash flows from investing activities Payments for purchase of business, net of cash and cash equivalents 19 Payments for investments Payments for property, plant and equipment 11 Payments for intangibles 12 Proceeds from disposal of property, plant and equipment9 Net cash used in investing activities Cash flows from financing activities Net proceeds from borrowings Dividends paid 18 Repayment of lease liabilities Borrowing transaction costs Net cash from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year	Consolidated 31 Dec 2022 31 Dec 2021 $'000 $'000 1,093,895 968,239 (994,717) (873,012)	Consolidated 31 Dec 2022 31 Dec 2021 $'000 $'000 1,093,895 968,239 (994,717) (873,012)
	99,178 (6,573) (938) (5,587) - (5,919) (33,445)	95,227 (5,592) (5,689) - (194) (4,119) (31,902)
	46,716	47,731
	(8,489) (386) (25,235) (2,657) 887	(5,103) - (20,372) (7,417) 15,077
	(35,880)	(17,815)
	22,500 (39,032) (34,001) -	80,000 (37,335) (32,011) (1,012)
	(50,533)	9,642
	(39,697) 80,213 1,412	39,558 39,598 619
	41,928	79,775

9 Proceeds from disposal of property, plant and equipment in the prior period includes the sale of assets for $13.7M to Australia Pacific Airports (Melbourne) Pty Ltd.

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

14

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 1. Significant accounting policies

This consolidated financial report for the interim half-year reporting period ended 31 December 2022 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This half-year financial report does not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2022 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

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 half-year reporting period ended 31 December 2022.

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, that 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 are as disclosed in the 30 June 2022 financial statements.

Note 3. Segment information

Description of segments

The consolidated entity has identified four operating segments based on the internal reports that are reviewed and used by the CEO (who is identified as the Chief Operating Decision Maker (‘CODM’)) and is supported by the other members of the executive team and 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, Precision Automotive
	Equipment, Blacktown Auto and the Thailand based operation.
Specialist	Includes the specialised wholesale distribution and network channel areas that focus on a
Wholesale	specific automotive area such as AAD, BaxtersMTQ, Bearing Wholesalers, Roadsafe, Diesel
	Distributors, Federal Batteries, JAS, Premier Auto Trade, Toperformance, Truckline and WANO.
Retail	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, Midas, ABS and Opposite Lock.
New Zealand	Includes the operations of Brake & Transmission (‘BNT’), Autolign and HCB Technologies.

The results of the associate investment in Tye Soon Limited as well as the 50.5% controlling interest in FIIVIQ Pty Ltd have been included in the Unallocated/Head Office supporting segment as they are considered immaterial in nature for the half-year financial period.

15

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 3. Segment information (continued)

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, tax and other items which are determined to be outside of the control of the respective segments.

Operating segment information

Consolidated – 31 Dec 2022 Revenue Sales Total segment revenue Intersegment sales Total revenue EBITDA Intersegment EBITDA Depreciation and amortisation Finance costs Profit before income tax expense Income tax expense Profit after income tax expense Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities	Trade $’000 373,975	Specialist Wholesale $’000 377,755	Retail $’000 219,863	New Zealand $’000 85,839	Unallocated / Head Office $’000 -	Total $’000 1,057,432
	373,975	377,755	219,863	85,839	-	1,057,432 (56,648)
	60,116	50,124	35,234	13,420	(22,877)
						1,000,784
						136,017 1,754 (47,978) (12,007)
	447,031	656,295	530,192	282,740	124,726
						77,786 (22,773)
						55,013
						2,040,984
	150,542	118,942	156,153	54,029	448,012	2,040,984
						927,678 927,678

16

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 3. Segment information (continued)

Consolidated – 31 Dec 2021 Revenue Sales Total segment revenue Intersegment sales Total revenue EBITDA Intersegment EBITDA Depreciation and amortisation Finance costs Profit before income tax expense Income tax expense Profit after income tax expense Consolidated – 30 June 2022 Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities Australia New Zealand Other	Trade10 $’000 325,571	Specialist Wholesale $’000 341,205	Retail $’000 197,247	New Zealand $’000 86,140	Unallocated / Head Office10 $’000 -	Total $’000 950,163
	325,571	341,205	197,247	86,140	-	950,163 (50,043)
	52,224	46,867	33,604	16,058	(15,282)
						900,120
						133,471 (505) (41,969) (9,305)
	438,474	633,512	486,240	285,021	148,328
						81,692 (24,017)
						57,675
						1,991,575
	153,658	131,630	137,784	48,598	1,991,575 427,648 899,318 899,318 Geographical non-current assets 31 Dec 2022 30 June 2022 $’000 $’000 972,669 911,650 189,430 189,003 824 987	1,991,575
					1,162,923	1,101,640

The geographical non-current assets above are exclusive of, where applicable, derivative financial instruments, deferred tax assets and balances such as intercompany and investments that are eliminated on consolidation.

10 Comparatives have been amended for the move of the Thailand operation from Unallocated / Head Office to Trade.

17

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 4. Revenue

Note 4. Revenue
Revenue from contracts with customers Disaggregation of revenue	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 1,000,784 900,120

The disaggregation of revenue from contracts with customers is as follows:

Geographical regions Australia New Zealand Thailand Intersegment sales Timing of revenue recognition Goods transferred at a point in time Services transferred over time Intersegment sales	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 968,143 861,818 85,839 86,140 3,450 2,205 (56,648) (50,043)	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 968,143 861,818 85,839 86,140 3,450 2,205 (56,648) (50,043)
	1,000,784	900,120
	1,040,832 16,600 (56,648)	934,850 15,313 (50,043)
	1,000,784	900,120

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

Note 5. Other income

Note 5. Other income
Rental income Rental income relates to rental recoveries from franchise locations.	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 1,165 828

18

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 6. Expenses

Note 6. Expenses
Profit before income tax includes the following specific expenses: Depreciation and amortisation expense Plant and equipment Motor vehicles Properties right-of-use assets Motor vehicles right-of-use assets Amortisation Finance costs Interest and finance charges paid/payable Interest and finance charges paid/payable on lease liabilities	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 8,171 6,984 3,674 3,363 31,821 27,807 353 510 3,959 3,305
	47,978	41,969
	6,004 6,003	3,942 5,363
	12,007	9,305

Income tax expense

Income tax expense is recognised based on management’s estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average tax rate used for the half-year to 31 December 2022 is 29.6%, compared to 29.5% for the half-year ended 31 December 2021.

Note 7. Trade and other receivables

Note 7. Trade and other receivables
Current assets Trade receivables Less: Allowance for credit notes Less: Allowance for expected credit losses (trade receivables) Customer loans Less: Allowance for expected credit losses (customer loans) Other receivables Prepayments	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 177,617 181,609 (1,576) (1,574) (4,668) (6,783)
	171,373	173,252
	172 (172)	210 (210)
	-	-
	35,900 20,483	24,220 12,483
	56,383	36,703
	227,756	209,955

19

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 8. Inventories

Note 8. Inventories
Current assets Stock in transit – at cost Stock on hand – at cost Less: Provision for slow moving inventory	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 41,050 46,878
	580,149 (59,518)	550,246 (58,436)
	520,631	491,810
	561,681	538,688

Total inventories increased by $23.5M since 30 June 2022, of which new greenfield stores, business acquisitions, inflation and foreign currency translation account for $21.1M of the movement, with the remainder relating to businessas-usual movements.

Movements in provision for slow moving inventory:

Opening balance Provision recognised against profit Additions through business combinations Inventory written off against provision Foreign currency translation Closing balance	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 (58,436) (53,792) 249 (5,751) (2,045) (3,594) 964 4,512 (250) 189	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 (58,436) (53,792) 249 (5,751) (2,045) (3,594) 964 4,512 (250) 189
	(59,518)	(58,436)

Note 9. Investments accounted for using the equity method

Non-current assets Investment in Tye Soon Limited Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial half-year are set out below: Opening carrying amount Profit after income tax Other comprehensive loss Foreign currency translation Closing carrying amount	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 9,864 9,071	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 9,864 9,071
	9,071 863 (604) 534	8,102 1,296 (721) 394
	9,864	9,071

20

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 9. Investments accounted for using the equity method (continued)

In March 2021, Bapcor acquired 25% of the issued equity of Tye Soon Limited, a company listed on the Singapore Securities Exchange. The reported total of profit after income tax of $0.9M and other comprehensive loss of $0.6M has been estimated using the latest publicly available information on the Singapore Securities Exchange which is the Tye Soon Limited half-year financial report ended 30 June 2022.

Note 10. Right-of-use assets

Note 10. Right-of-use assets
Non-current assets Properties – right-of-use Less: Accumulated depreciation Motor vehicles – right-of-use Less: Accumulated depreciation	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 431,761 387,719 (189,638) (158,149)
	242,123	229,570
	4,664 (4,160)	4,626 (3,997)
	504	629
	242,627	230,199

Reconciliations

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

Consolidated Balance at 1 July 2022 Additions Additions through business combinations Disposals Remeasurement Foreign currency translation Depreciation expense Accelerated depreciation expense Balance at 31 December 2022	Properties $’000 229,570 8,673 816 (3,215) 37,273 827 (31,076) (745)	Motor vehicles $’000 629 - - - 212 16 (353) -	Total $’000 230,199 8,673 816 (3,215) 37,485 843 (31,429) (745)
	242,123	504	242,627

Remeasurements occur when options to renew that were previously excluded are subsequently included or when rentals change due to non-fixed rent reviews, causing an adjustment to both right-of-use asset and lease liability balances. Accelerated depreciation relates to the DC Consolidation projects and is based on the estimated exit dates of each site.

21

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 11. Property, plant and equipment

Note 11. Property, plant and equipment
Non-current assets Plant and equipment – at cost Less: Accumulated depreciation Motor vehicles – at cost Less: Accumulated depreciation	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 172,645 150,817 (75,862) (67,348)
	96,783	83,469
	48,587 (25,292)	47,404 (23,949)
	23,295	23,455
	120,078	106,924

The amount of work in progress included in plant and equipment is $15.3M (30 June 2022: $8.7M) and relates to projects that are not yet completed and therefore are not being depreciated; predominately in relation to the Queensland DC consolidation project.

Reconciliations

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

Consolidated Balance at 1 July 2022 Additions Additions through business combinations Disposals Foreign currency translation Accelerated depreciation Depreciation expense Balance at 31 December 2022	Plant and equipment $’000 83,469 21,492 42 (248) 200 (411) (7,760)	Motor vehicles $’000 23,455 3,743 - (330) 101 - (3,674)	Total $’000 106,924 25,235 42 (578) 301 (411) (11,434)
	96,783	23,295	120,078

Accelerated depreciation relates to the DC Consolidation projects and is based on the estimated exit dates of each site.

22

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 12. Intangibles

Note 12. Intangibles
Non-current assets Goodwill Trademarks Less: Accumulated amortisation Customer contracts Less: Accumulated amortisation Software Less: Accumulated amortisation	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 689,053 677,382
	59,161 (1,346)	58,973 (1,346)
	57,815	57,627
	25,900 (12,991)	25,899 (12,091)
	12,909	13,808
	52,502 (21,925)	49,837 (18,866)
	30,577	30,971
	790,354	779,788

The amount of work in progress included in software is $4.0M (30 June 2022: $12.4M) and relates to several eCommerce and inventory management projects that are not yet completed and therefore are not yet being amortised.

Reconciliations

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

Consolidated Balance at 1 July 2022 Additions Additions through business combinations (note 19) Disposals Foreign currency translation Amortisation expense Balance at 31 December 2022	Goodwill $’000 677,382 - 6,135 - 5,536 -	Trademarks $’000 57,627 - - - 188 -	Customer contracts $’000 13,808 - - - 1 (900)	Computer software $’000 30,971 2,657 - (11) 19 (3,059)	Total $’000 779,788 2,657 6,135 (11) 5,744 (3,959)
	689,053	57,815	12,909	30,577	790,354

23

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 12. Intangibles (continued)

Impairment testing

All cash generating units (‘CGU’) and brands have been assessed for indicators of impairment. Among other indicators, this assessment includes consideration of the current year’s performance to determine if there would be any significant changes to the outcome of the previous impairment testing.

As a result, the New Zealand CGU was assessed as having impairment indicators, so impairment testing was performed. Cash flow projections were based on management forecast expectations based on the H1 FY23 actuals and forecast for H2 FY23 as well as the latest five-year forecast model and strategy outlook. This has been compiled based on 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: 13.8% (2022: 12.6%)

• Terminal value growth rate beyond 5 years: 2.50% (2022: 2.65%)

• Forecast year on year revenue growth average of 5.5% and EBITDA margin growth average of 0.2 percentage points

The result of the testing was that the recoverable amount of the New Zealand CGU was estimated to exceed its carrying amount at 31 December 2022 by NZ$23.9M, an increase of $1.7M from the 30 June 2022 test.

The following table show sensitivities based on a set of possible changes in assumptions to major financial metric percentages within the calculations, and the resulting change to the headroom:

==> picture [398 x 135] intentionally omitted <==

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

Financial Metric +5% Change -5% Change -10% Change -15% Change
Decrease Increase
Discount Rate headroom to headroom to
$7.3M $42.8M
Increase Decrease Decrease Decrease
Revenue growth
headroom to headroom to headroom to headroom to
(average)
$25.7M $22.1M $20.3M $18.5M
Increase Decrease
EBITDA margin Impairment of Impairment of
headroom to headroom to
(average) $3.4M $17.1M
$37.6M $10.2M
Increase Decrease
Terminal growth
headroom to headroom to
rate
$27.1M $20.8M
----- End of picture text -----

Impairment indicators will continue to be monitored, with the annual impairment testing to be performed in line with accounting policy on the annual testing date of 31 March.

24

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 13. Provisions

Note 13. Provisions
Current liabilities Employee benefits Deferred settlements Lease make good Restructuring Non-current liabilities Employee benefits Deferred settlements Lease make good	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 44,182 39,154 1,006 1,006 2,618 2,884 2,891 2,914
	50,697	45,958
	3,581 125 13,438	3,661 125 12,958
	17,144	16,744
	67,841	62,702

Note 14. Borrowings

Non-current liabilities Secured bank loans Less: unamortised transaction costs capitalised	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 371,159 348,287 (1,328) (1,585)	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 371,159 348,287 (1,328) (1,585)
	369,831	346,702

Refinancing

Bapcor continues to have access to a $520M debt facility with ANZ, Westpac, MUFG Bank, HSBC and MetLife. The debt facility comprises the following tranches:

• $150M five year tranche, available for general corporate purposes – expires July 2024

• $200M three year tranche, available for general corporate purpose – expires July 2025

• $70M four year tranche, available for working capital purposes – expires July 2026; and

• $100M seven year tranche, available for general corporate purposes – expires July 2026

The facility is secured by way of a fixed and floating charge over Bapcor’s assets. There have been 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 (on a pre-AASB 16 basis).

25

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 14. Borrowings (continued)

Net debt reconciliation

Cash and cash equivalents Lease liabilities Borrowings excluding unamortised transaction costs capitalised Net debt Add: Lease liabilities Add: Net derivative financial instruments for forward exchange contracts Pro-forma net debt as per debt facility agreement	Consolidated 31 Dec 2022 30 Jun 2022 $’000 $’000 41,928 80,213 (267,982) (253,009) (371,159) (348,287)	Consolidated 31 Dec 2022 30 Jun 2022 $’000 $’000 41,928 80,213 (267,982) (253,009) (371,159) (348,287)
	(597,213)	(521,083)
	267,982 152	253,009 6,049
	(329,079)	(262,025)

Interest rate swaps

During H1 FY23, Bapcor entered into a total of $120M interest rate swaps across ANZ, Westpac, MUFG Bank and HSBC in order to hedge against interest rate changes. These have an average fixed interest payable of 3.79% and mature in July 2024 ($50M) and July 2025 ($70M). These have been determined to be cash flow hedges and have been treated as such.

Note 15. Lease liabilities

Note 15. Lease liabilities
Current liabilities Lease liability – Properties Lease liability – Motor vehicles Non-current liabilities Lease liability – Properties Lease liability – Motor vehicles	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 67,736 64,544 376 523
	68,112	65,067
	199,723 147	187,834 108
	199,870	187,942
	267,982	253,009

The increase in property lease liabilities in H1 FY23 was due to liabilities being recognised on rental commencement and remeasurement. There was a corresponding increase to the right-of-use assets by the same amount (refer to note 10).

26

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 16. 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 – 31 Dec 2022 Assets Derivative financial instruments Total assets Liabilities Derivative financial instruments Deferred consideration Total liabilities Consolidated – 30 June 2022 Assets Derivative financial instruments Total assets Liabilities Derivative financial instruments Deferred consideration Total liabilities	Level 1 $’000 -	Level 2 $’000 3,130	Level 3 $’000 -	Total $’000 3,130
	-	3,130	-	3,130
	- - - Level 1 $’000 -	2,676 - 2,676 Level 2 $’000 6,393	- 1,131 1,131 Level 3 $’000 -	2,676 1,131 3,807 Total $’000 6,393
	-	6,393	-	6,393
	- - -	344 - 344	- 1,131 1,131	344 1,131 1,475

There were no transfers between levels during the financial half-year.

Derivative financial instruments carried at fair value are forward foreign exchange contracts and floating interest rate to fixed interest rate swaps (current period only). 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.

27

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 17. Issued capital

Note 17. Issued capital
Ordinary shares Treasury shares	31 Dec 2022 Shares 339,412,500 -	Consolidated 30 June 2022 31 Dec 2022 Shares $’000 339,412,500 878,652 - (10,680)		30 June 2022 $’000 878,652 (10,680)
	339,412,500	339,412,500	867,972	867,972

The average purchase price of treasury shares during the financial half year period was nil (2022: nil) per share.

Note 18. Dividends

Dividends

Dividends paid during the financial half-year were as follows:

Final dividend for the year ended 30 June 2022 (2022: 30 June 2021) of 11.5 cents (2022: 11.0 cents) per ordinary share	Consolidated 31 Dec 2022 31 Dec 2021 $’000 $’000 39,032 37,335

The Board has declared an interim dividend in respect of H1 FY23 of 10.5 cents per share, fully franked. The interim dividend will be paid 17 March 2023 to shareholders registered on 28 February 2023.

Franking credits

Franking credits available for subsequent financial years based on a tax rate of 30%	Consolidated 31 Dec 2022 30 June 2022 $’000 $’000 138,964 118,725

The above amounts represent the balance of the franking account as at the end of the financial half-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

28

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 19. Business combinations

During the financial half-year, the consolidated entity acquired the net assets of the following businesses:

• Absolute Spares

• Autobarn Altona

• Autobarn Cranbourne

• Autobarn Dandenong

• Autobarn Ferntree Gully

• Autobarn Frankston

• Autobarn Mornington

• MJF Truck and Trailer Parts

These acquisitions were made to strengthen the Bapcor offering as well as increase network presence. Total consideration relating to these acquisitions was $9.1M (cash of $8.5M and debts forgiven of $0.6M), acquiring net assets of $3.0M and resulting in goodwill of $6.1M. These acquisitions 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.

Note 20. 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 a three year performance period and the payments are rights to acquire shares (‘Performance Rights’). Refer to the 30 June 2022 audited Remuneration Report within the Directors’ Report for further information on the LTI.

In relation to the FY23 year an offer to participate in the LTI was made to eight of Bapcor’s senior executives. These allocated Performance Rights have a performance period that ends on 30 June 2025 at which time the performance hurdles are tested. A summary of the terms for the Performance Rights granted in the current financial half-year are set out in the following table:

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

Grant Date 12/10/22 19/10/22
Performance Hurdle TSR ROIC TSR ROIC
Performance Period 01/07/22 – 30/06/25 01/07/22 – 30/06/25
Test Date 30/06/25 30/06/25
Expiry Date 12/10/37 19/10/37
Quantity Granted [11] 171,711 171,716 92,148 92,149
Exercise Price Nil Nil
Fair Value at Grant Date [12] $2.46 $6.02 $2.46 $6.02
Other Conditions Sale restriction to 30/06/26 Sale restriction to 30/06/26
Share Price on Value Date $6.35 $6.34
Volatility 40.55% 40.55%
Dividend Yield 5.75% 5.76%
Risk-free Rate 3.41% 3.41%
----- End of picture text -----

11 Due to rounding the total shares per tranche are not an exact 50/50 split but approximate that.

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

29

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 20. Share-based payments (continued)

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 (being the S&P/ASX 200 index as at 30 June 2022). The Performance Rights will vest by reference to Bapcor’s TSR performance ranking against this Comparator Group of companies, as follows:

Bapcor’s TSR relative to Comparator Group	Percentage of TSR Rights vesting
Less than 50thpercentile	Nil
Equal to 50thpercentile	50%
Greater than 50thpercentile and less than 75thpercentile	Pro-rata straight-line vesting
Equal or greater than 75thpercentile	100%

Return on Invested Capital (‘ROIC’)

Fifty per cent of the Performance Rights granted to a participant will vest by reference to a ROIC performance hurdle over the performance period (being the simple average of the ROIC as at 30 June 2023, 30 June 2024 and 30 June 2025). Each tranche of Performance Rights subject to the ROIC hurdle will vest as follows:

Bapcor’s ROIC	Percentage of ROIC Rights vesting
Less than 11.5%	Nil
11.5%	50%
Greater than 11.5% and less than 12.0%	Pro-rata straight-line vesting
Equal or greater than 12.0%	100%

If the vesting conditions are met, the Performance Rights are converted into fully paid ordinary shares of the company at the election of the Participant.

As per the Bapcor Employee Equity Plan, the expiry date is 6 September 2035, however the Performance Rights lapse if vesting condition 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 LTIP:

31 Dec 2022

Exercise Grant date Vesting date price 10/09/2020 30/06/2023 $0.00 20/10/2020 30/06/2023 $0.00 30/08/2021 30/06/2024 $0.00 19/10/2021 30/06/2024 $0.00 29/03/2022 30/06/2024 $0.00 12/10/2022 12/10/2022 $0.00 12/10/2022 30/06/2025 $0.00 19/10/2022 30/06/2025 $0.00	Balance at the start of the half-year 264,030 134,006 201,434 47,126 27,040 - - - 673,636	Granted - - - - - 41,122 343,427 184,297 568,846	Vested/ Exercised - - - - - (41,122) - - (41,122)	Expired/ forfeited/ other - (134,006) - (47,126) - - - - (181,132)	Balance at the end of the half-year 264,030 - 201,434 - 27,040 - 343,427 184,297 1,020,228

30

Bapcor Limited Notes to the consolidated financial statements 31 December 2022

Note 20. Share-based payments (continued)

The Performance Rights with a grant and vesting date of 12 October 2022 relate to the FY22 deferred STI which was to be issued as Performance Rights as detailed in the Remuneration Report within the 30 June 2022 Financial Report. They vested on the same day they were granted with no incremental performance hurdles (as the performance hurdles were met as part of the FY22 STI offer).

Note 21. Contingent liabilities and capital commitments

Commitments

In December 2021, Bapcor entered into a new supply of equipment contract with Schaefer Systems International Pty Ltd (‘Schaefer’) in relation to the Queensland Distribution Centre. The total of this contract (with subsequent amendments) was $20.5M. As at 31 December 2022, the balance not yet paid was $7.2M.

Contingent liabilities

There are no contingent liabilities as at 31 December 2022 (30 June 2022: nil).

Note 22. Events after the reporting period

On 30 January 2023, Bapcor announced the appointment of Kate Spargo as a new Independent, Non-Executive Director (effective 1 March 2023).

Apart from this announcement and the dividend declared, no other matter or circumstance has arisen since 31 December 2022 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.

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Bapcor Limited Directors' declaration 31 December 2022

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 Interim Financial Reporting , the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2022 and of its performance for the financial half-year ended on that date; and

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

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

Margaret Haseltine Chair

Noel Meehan

Managing Director and Chief Executive Officer

16 February 2023 Melbourne

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Independent auditor's review report to the members of Bapcor Limited

Report on the half-year financial report

Conclusion

We have reviewed the half-year financial report of Bapcor Limited (the Company) and the entities it controlled during the half-year (together the Group), which comprises the consolidated statement of financial position as at 31 December 2022, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, significant accounting policies and explanatory notes and the directors' declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of Bapcor Limited does not comply with the Corporations Act 2001 including:

1. giving a true and fair view of the Group's financial position as at 31 December 2022 and of its performance for the half-year ended on that date

2. complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (ASRE 2410). Our responsibilities are further described in the Auditor’s responsibilities for the review of the half-year financial report section of our report.

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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Responsibilities of the directors for the half-year financial report

The directors of the Company are responsible for the preparation of the half-year 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 half-year financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.

Auditor's responsibilities for the review of the half-year financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true

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

Liability limited by a scheme approved under Professional Standards Legislation.

and fair view of the Group's financial position as at 31 December 2022 and of its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

PricewaterhouseCoopers

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Alison Tait Milner Partner

Melbourne 16 February 2023