BAPCOR LIMITED — Investor Presentation 2018

Aug 21, 2018

FY2018 Results Presentation

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

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

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

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

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

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AFTERMARKET SUPPLY CHAIN

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1 FY2018 Results 2 FY2018 Result Details 3 Strategy Update 4 FY2019 Trading Update 5 Q&A

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1 FY2018 Results 2 FY2018 Result Details 3 Strategy Update 4 FY2019 Trading Update 5 Q&A

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22% 32% 27%

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REVENUE NPAT Up 22% to $1,237M Up 32% to $86.5M (continuing ops) (proforma continuing ops ) Up 48% to $94.7M Statutory

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EPS Up 27% to 30.99 cps (proforma continuing ops) Up 43% to 33.90 cps Statutory

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• Delivered result in line with guidance – have done each year since IPO in 2014

• Every business segment showing improvement on prior year

• Trade continues to perform extremely well, as does Specialist Wholesale and Bapcor New Zealand

• Retail & Service making good progress, in line with plan

• Intercompany sales & own brand increasing

• Completed divestment of non-core assets with investment proceeds of NZ$103M

• Resulting in a gain on divestments of $7M in statutory NPAT

• Successful integration of Hellaby Automotive acquisition and delivered on synergies.

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FY18 FY17 Variance
Continuing Operations
Revenue $’M 1,236.7 1,013.6 22.0%
Gross Margin % 46.0% 45.7% 0.3 pp
EBITDA – proforma $’M 150.0 117.4 27.7%
EBITDA % 12.1% 11.6% 0.5 pp
NPAT – proforma $’M 86.5 65.8 31.6%
EPS – proforma cps 30.99 24.40 27.0%
Total Bapcor (including Discontinued Operations)
NPAT – statutory $’M 94.7 63.8 47.8%
EPS – statutory cps 33.90 23.76 42.7%
Dividend cps 15.5 13.0 19.2%
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Notes:

1. Hellaby was acquired in January 2017 and hence is included for the full year FY18, but only six months in the prior year.

2. Discontinued Operations include Hellaby Footwear, Contract Resources and TBS.

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Revenue
1,236.7
1,013.6
685.6
375.3
FY2015 FY2016 FY2017 FY2018
NPAT
86.5
65.8
43.6
23.1
FY2015 FY2016 FY2017 FY2018
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EPS (cps)
31.0
24.4
17.9
13.6
FY2015 FY2016 FY2017 FY2018
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Dividends per share
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Interim Final
8.5
7.5
6.0
4.7
7.0
5.0 5.5
4.0
FY2015 FY2016 FY2017 FY2018
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* Based on continuing operations only and proforma results where appropriate

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Source: KPMG

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$’M Proforma	Revenue	EBITDA EBITDA % Revenue
	FY18 FY17 % Change	FY18 FY17 % Change Change
Trade	501.6 465.1 7.8%	72.1 63.3 13.9% +0.8 pp
Bapcor NZ	177.9 87.1 104.1%	22.7 9.3 144.3% +2.1 pp
Specialist Wholesale	364.3 272.3 33.8%	38.6 28.0 37.7% +0.3 pp
Retail & Service	239.1 221.0 8.2%	28.8 27.6 4.4% -0.5 pp
Group / Elims	(46.2) (31.9) 44.7%	(12.3) (10.8) (13.5%)
Continuing operations	1,236.7 1,013.6 22.0%	150.0 117.4 27.7% +0.5 pp

NOTE: The former Hellaby Automotive Specialist Wholesale businesses based in Australia have been reallocated to Specialist Wholesale Group for FY18 and FY17. Refer ASX release on 20 July 2018.

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Total Auto Revenue
FY2018 FY2017
28% 26%
$1.2B $1.0B
53% 53%
19% 21%
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Total Auto EBITDA
FY2018 FY2017
24% 22%
$150M $117M
58% 57%
18% 22%
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Revenue and "Same Store" growth EBITDA % of Sales
14.4%
501.6 13.6%
465.1
12.4%
419.1 11.8%
375.3
4.6% 4.6% 4.6% 4.4%
FY2015 FY2016 FY2017 FY2018
FY Same Store growth % FY2015 FY2016 FY2017 FY2018
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EBITDA $M Store numbers
170
72.1 160
63.3 145
130
51.8
44.3
FY2015 FY2016 FY2017 FY2018 FY2015 FY2016 FY2017 FY2018
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				•	Good revenue and EBITDA growth
$’M	FY18	FY17	Change	•	FY18 same store sales growth of 4.4%
Revenue	501.6	465.1	7.8%	•	Equipment sales growth very strong
EBITDA	72.1	63.3	13.9%	•	Margin up 0.8pp for the full year
EBITDA %	14.4%	13.6%	+0.8 pp	•	+10 new stores in FY18, now at 170.
Stores	170	160	+10	•	5 year target number of total stores increased from 200 to 230
				•	Workstreams in place to increase Own Brand ratio
				•	People pipeline and training a high priority

• Acquired Tricor Engineering, specialising in supply & installation of lubrication equipment for workshops, on 3 July 2017.

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$’M NZD	FY18	FY17	Change	•	Significant Revenue and EBITDA growth with full 12 months in
Revenue	192.9	92.8	107.8%		FY18 versus 6 months results in FY17 post Hellaby acquisition
EBITDA	24.6	9.9	148.7%	•	Revenue growth of 5.7% and EBITDA growth of 33.1% (assuming include full year of Hellaby FY17 results)
EBITDA %	12.8%	10.7%	+1.2 pp	•	Full year BNT same store sales up 6.1%
BNT Stores	57	56	+1		• H2 lower than H1 due to stronger comparative period

• Good margin growth reflecting optimisation benefits and pricing management.

• Optimisation benefits on target

• Bapcor NZ reflects the NZ based operations of the Hellaby acquisition. The Australian based operations have been moved to Specialist Wholesale. FY17 comparatives have been changed to reflect this change.

• Many growth opportunities in progress

• Implemented leadership and sales training

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• Specialist Wholesale reflects a full twelve months results of the Australian based Hellaby Automotive businesses.

				•	Specialist Wholesale reflects a full twelve months result
$’M	FY18	FY17	Change		Australian based Hellaby Automotive businesses.
Revenue	364.3	272.3	33.8%		• 11 business units now comprise Specialist Wholesale
				•	Revenue growth of 11.0% and EBITDA growth of 16.2%
EBITDA	38.6	28.0	37.7%		(assuming include full year of Hellaby FY17 results)
EBITDA %	10.6%	10.3%	+0.3 pp	•	Good performance throughout the portfolio of business

Good performance throughout the portfolio of businesses

• Large pipeline of projects for intercompany product range substitution.

• A number of business units back office function transitioned into Shared Services centre

• Specialist Wholesale now includes the Australian based operations of the Hellaby acquisition. These were moved from the Bapcor NZ segment. FY17 comparatives have been changed to reflect this change.

• DC improvements delivering improved customer service

• Acquired AADi, a specialist importer/distributor of driveshafts, CV’s, wheel bearings and shock absorbers, on 30 April 2018

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$’M	FY18	FY17	Change	•	Growth in Autobarn company stores driving revenue growth of
Revenue	239.1	221.0	8.2%		8.2%
				•	EBITDA increased by 4.4%
EBITDA	28.8	27.6	4.4%	•	Autobarn same store sales of 4.7% for company owned and
EBITDA %	12.0%	12.5%	-0.5 pp		1.4% for franchise stores
				•	Autobarn Number 1 in Auto Stores customer satisfaction survey
Autobarn store numbers					conducted by Roy Morgan – significant jump compared to last
Company owned	48	31	+17		year
Franchise	80	91	-11	•	8 greenfield stores and 9 franchise conversions during the
Total	128	122	+6		period
% coy stores	38%	25%	+13 pp	•	Now 38% of Autobarn stores are company owned. Number of company stores has tripled in the last two years
Other stores	250	263	-13	•	EBITDA % of revenue down 0.5 pp due to increased sales from
					company stores that impacts revenue mix

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$	FY18	FY17	Change	•	Divested in FY18;	Divested in FY18;
Revenue	145.6	196.6	(25.9%)		•	Footwear –
					•	Contract Res
NPAT – stat1	10.2	10.3	(1.0%)		•	TBS dit

• Footwear – divested end September 2017

• Contract Resources – divested September / October 2017

• TBS – divested March 2018

NPAT Reconciliation:

Disc Operations during year until divested1 Reserve reclassifications Gain on sale of divestments Tax Statutory NPAT 1. Includes minority interest adjustment of $0.3M (PY: $0.2M)	6.7 0.4 7.0 (3.9)
	10.2

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1 FY2018 Results 2 FY2018 Result Details 3 Strategy Update 4 FY2019 Trading Update 5 Q&A

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 Revenue growth of 22% delivered by

	Segment Growth
Burson Trade	7.8%
Bapcor NZ	104.1%
Specialist Wholesale	33.8%
Retail & Service	8.2%

• Same Store sales growth

• Burson Trade 4.4%

• BNT 6.1%  Autobarn company stores 4.7%  Autobarn Franchised stores 1.4%

• Gross margin % up 0.3 percentage points

• GM% is a continuous focus across all segments

• Includes the benefits of the optimisation projects

• CODB as a % of sales down 0.2 percentage points  Cost control focus across all segments and optimisation benefits

• Finance costs up due to Hellaby acquisition funding

• Proforma NPAT from continuing operations up 31.6%

Pro-forma, $’M	FY18	FY17	Change
Continuing Operations
Revenue	1,236.7	1,013.6	22.0%
Gross Profit	569.4	463.3	22.9%
Margin (%)	46.0%	45.7%	0.3 pp
CODB	(419.4)	(345.9)	21.3%
CODB (%)	(33.9%)	(34.1%)	0.2 pp
EBITDA	150.0	117.4	27.7%
EBITDA (%)	12.1%	11.6%	0.5 pp
Depreciation and Amortisation	(15.6)	(13.5)	15.2%
EBIT	134.4	103.9	29.4%
Finance Costs	(13.5)	(9.6)	40.3%
Profit Before Tax	120.9	94.3	28.3%
Income Tax Expense	(34.5)	(28.5)	21.0%
Non-controlling Interest	0.1	-	100%
NPAT - continuing	86.5	65.8	31.6%
NPAT (%)	7.0%	6.5%	0.5 pp
EPS(1) (CPS)	30.99	24.40	27.0%

• EPS from continuing operations up 27.0%

Note: 1. EPS is based on the TERP adjusted weighted number of shares on issue during the year as per accounting standard AASB-133

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 Strong cash conversion of 98.9%  Working capital excluding impact of acquisitions and new stores as a % of sales has decreased by 1.7 pp to 17.5% compared to June 2017  Capex and acquisitions  Capex mainly reflects investment in new stores, purchase of motor vehicles, IT development and front of store refurbs  Business acquisitions includes Tricor and AADi and deferred payments for Precision, Sprints and TBS  Net cash generated is positive $57.1M excluding acquisitions, dividends and divestment proceeds.  Divestment proceeds  Cashflow includes proceeds related to divestments of Contract Resources, TBS and Footwear divisions of Hellaby	$’M	FY18
	EBITDA – Proforma Operating cash flow before finance, transaction and tax costs	150.0 148.3
	Cash conversion	98.9%
	Financing costs Payments associated with discontinued operations Payments associated with restructuring activities Transaction costs Tax paid Operating cash flows	(14.7) (0.7) (2.0) (0.7) (38.1)
		92.1
	Store acquisition andgreenfields	(17.0)
	Business acquisitions – net of cash – includingdeferredpayments	(14.8)
	Capital expenditure(excludingnew stores)	(15.6)
	Dividend paid Treasury shares and equity costs Other	(31.8) (3.0) 0.6
	Cash generated excluding divestments	10.5
	Divestment proceeds – net of expenses	93.7
	Cash generated	104.2
	Opening cash on hand	39.8
	Borrowing repayments	(103.8)
	Net cash movement	104.2
	Closing cash on hand	40.2

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• Net Debt/Cash  Net debt at June 2018 is $289.5M

• Represents annualised leverage ratio of less than 2.0X on a twelve month EBITDA basis

 Dividends

• Final dividend declared for FY18 of 8.5 cents per share fully franked

• Record date 31 August 2018

• Pay date 27 September 2018

• Dividend reinvestment plan will continue for the FY18 final dividend

Notes:

1. Net debt is based on borrowings less cash of ($286.3M), adding in financial derivative assets of $1.3M, less capitalized borrowing costs including in borrowings of ($2.0) and removing cash pertaining to the non-controlling interest of ($2.5M)

	$’M	FY18	FY17
	Cash	40.2	39.8
	Trade and other receivables	146.8	136.1
	Inventories	287.3	261.6
	PP&E	52.6	49.8
	Deferred tax assets	17.8	18.7
	Intangible assets	677.7	647.8
	Assets held for sale	-	178.9
	Other assets	5.2	4.1
	Total assets	1,227.5	1,336.7
	Trade and other payables	187.8	174.8
	Tax liabilities	2.4	3.5
	Provisions	68.0	65.5
	Borrowings	326.5	429.7
	Liabilities held for sale	-	70.8
	Other	0.5	2.4
	Total liabilities	585.2	746.7
	Net assets	642.3	590.0

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$	$’M
Balance at 1 July 2017 Additional provisions recognised against profit Additions through business combinations Inventory written off against provision Foreign currency translation Balance at 30 June 2018	54.0 1.9 1.2 (9.9) (0.4)
	46.8

• Profit has not been enhanced by the release of inventory provision

• No inventory provision was released to profit in FY18; in fact there was an expense charged to profit of $1.9M representing businesses as usual recognition of slow and obsolete inventory

• Provisions of $1.2M were raised during the year relating to acquired businesses by applying Bapcor’s provisioning policy which is consistently applied to all acquisitions

• Obsolete inventory scrapped (sent to recycling) of $9.9M in FY18 – related to previous Metcash and Hellaby acquisitions. This had been recognised and provided for at time of acquisition in line with Bapcor’s policy

• We continue to apply inventory provisioning policy consistently and disclose all movements in reporting

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1 FY2018 Results 2 FY2018 Result Details 3 Strategy Update 4 FY2019 Trading Update 5 Q&A

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• Consistent strategy with specific, clear, measurable targets.

• No changes to direction.

• We know what we do best and stick with it.

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FY2018 Results FY2018 Result Details Strategy Update FY2019 Trading Update Q&A

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• TRS, a NZ tyre & wheel specialist business, was divested in July 2018 for NZ$20M

• First store in Asia opened – formal grand opening was held 10 August 2018

• FY19 YTD all business segments tracking to expectations

• FY19 expect continued revenue & profit growth

• Consensus EBITDA circa $170M

• Increase NPAT between 9% & 14% above FY18 proforma NPAT

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FY2018 Results FY2018 Result Details Strategy Update FY2019 Trading Update Q&A

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