Good day, and welcome to the Bapcor Fiscal Year 23 Half Year Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Simon. Please go ahead, sir. Thank you, operator, and warm welcome from our side as well. My name is Stefan Camphausen. I'm the CFO of Bapcor. With me are members of Bapcor's executive team, and together we will present Bapcor's FY23 half year results in the next 30 minutes or so, followed by a Q&A session. It is now my pleasure to hand over to Noel Meehan, Bapcor's CEO and Managing Director. Thanks, Stefan, good morning to everyone on the call. Let me first begin by acknowledging the traditional owners of the land on which we meet today, and pay my respects to their elders, past, present, and emerging. I extend that respect to Aboriginal and Torres Strait Islanders on the call. Secondly, can I also extend my thoughts to our New Zealand-based team, our customers in New Zealand, and our suppliers, and all the people in New Zealand who are dealing with a series of natural disasters over the past few weeks. As Stefan said, today we'll go through the half year results presentation for Bapcor. As you can see on slide two, there's two components that we'll work through today, in line with what we've sort of spoken to the market previously about in terms of perform and transform. I'll go through some group highlights. The EGMs will talk through their specific segments. Stefan will cover off some of the financials in more detail. I'll give an update on where we are at Better Than Before, and then we'll finish off with outlook and then some time for Q&A. Turning to slide three. You've seen this slide before, let me just reiterate a couple of the things if I can. Now, Bapcor is a business that has a market-leading position. With scale and a dedicated team of over 5,000 people servicing customers each and every day. We operate in a resilient industry. If you look at slide four, some data here on two key drivers that drive a lot of demand into our industry, the age of the car park on the left and the number of vehicles on the right. As you can see from both of these charts, the age of the car park in which we participate is increasing, and the number of vehicles on the road is also increasing. The market in which we operate in is generally pretty resilient. I will then talk through some key highlights which are shown on slide 6. Let me first of all kick off by some overarching comments. The results for the half year of FY23, pretty solid results. We need to do more on improving our cash conversion, and we've made some really good progress on Better Than Before. I won't go through every box on this slide, but I'll just talk through some of the key points. Starting on the left-hand side. In the 6 months ending 31 December 2022, we've seen revenue grow by 11% to a record of just over AUD 1 billion in the half, with strong growth across all our Australian segments. Pro forma net profit after tax has increased by just over 2% to AUD 62 million. We've seen very strong performance in our trade and wholesale businesses, offset by some margin compression in retail, partly driven by the conversion of franchisees into company stores. Our New Zealand businesses face some subdued economic conditions. We've announced an increase in interim dividend of a half a cent to AUD 0.105 per share, up 5%, with a payout ratio of 57.5%. We've gone into January, the strength that we've exhibited in the first half of 11% revenue growth and 2% profit growth has continued into the first month of the second half of the year. We've continued to renew the board with the addition of Brad Soller in the half, and the announcement that Kate Spargo will join as a Non-Executive Director on the 1st of March. Delighted to also announce that we've got two new EGMs who will be joining the business as we sort of further progress the Better than Before initiative. One of them has already joined, Christof Geyl, the EGM of Strategy and Transformation, and he is on day three of his time in Bapcor. EGM of Specialist Wholesale, a new EGM will join us in April, which will then complete the leadership team that we've sort of been building over the last 12 months. The addition of those resources, I'm sure, will complement the quality leadership team that we've already got in place. We continue to make investments in lifting capability and improving the culture in the business, particularly around things like safety and simplification. As investors will know, store expansion and network expansion continues to be something that we do and have done for many years. If I look at the past 12 months, we've added over, sorry, 31 additional stores across all segments. During the half, we've done some small acquisitions in the Specialist Wholesale space, and as I mentioned in the opening, we've converted a number of franchisee stores to company stores in Retail. Supply chain, which is a core capability of the business, we've made some great improvements across the year in supply chain capability. The distribution center at Melbourne, what we call DCV, we've added 2 more warehouses in, into that business, into that operation, very successfully during the half. We've got 3 more to do, they'll progressively be done in the next 6 months. One of the key steps that you've heard me talk about before in terms of emergency pick rates, we are averaging at least 99% each and every day. Delighted with the improvement there. We made significant investment in DCQ in Queensland, we're on track, as it said on the slide, for practical completion in the second half of 2023. We've actually taken practical completion ownership on the 31st of January, and we'll now progressively work through the rest of the year finishing that facility and then gradually then bringing the Queensland warehouses into that facility. Our inventory position. Inventory is a key component of the Bapcor story. Over a number of years with supply chain disruptions and growth and all those type of things, our inventory position has continued to increase. If I look during the half and the last couple of months, we've now seen that reduce and delighted to sort of see that in line with what we've said before. We expect in the second half of the year to make further reductions in inventory as we optimize position, coping with the long lead long lead time, sorry, on a number of our suppliers. I'll talk more later on the progress that we've made on Better Than Before. Everything that we announced on the 22nd November is going to plan. All of our work streams are now sort of in place. We're moving to the execution phase, which is very exciting. We're also putting in place an incentive plan across the whole organization, which I'll give a little bit detail on further, which will be self-funded. I'll talk about a little bit later on what we're doing there. Move to slide seven. Just as you can sort of see here, a number of sort of KPIs. Very pleasingly, if you look at the P&L related KPIs, some real good progress on all of those measures. We're seeing growth in all of those. Generally, we've seen positive market momentum. We have had, unlike other people, cost pressures and those type of things, which has temporarily impacted our margin. We have seen cash conversion improve towards the end of the first half. We know we need to do more on that. With what we're doing on inventory, I expect that to continue to improve. Balance sheet's in very good shape, and Stefan Camphausen takes us through cash flow and balance sheet a little bit later on. Health, safety, and wellbeing. We're making investments in this area. It's an important part of everything that we do each and every day. Very pleasingly, you can sort of see there on one KPI that we call out in terms of injury frequency rates. We have reduced that considerably over the last number of years. Obviously, more to do, and we continue to make sure that we're doing everything we can to ensure the health, safety, and wellbeing of all of our team members, and that will continue to be a key focus as we move forward. Moving forward now, just briefly into slide 10. You've seen sort of a part of this slide before. A couple of observations. We do have a diversified business, spanning mainly in trade and wholesale, obviously an exposure into retail. We operate in Australia and New Zealand with an emerging presence in Asia. On the right-hand side of the chart there, we've shown margins over a number of periods going back to FY20 through to FY23. You can sort of see, yeah, they go up and down, but overall pretty healthy margins, that do sort of give us sort of confidence as we look to the future, especially in what we're doing with Better than Before. Slide 11, you've seen before, again, it just reinforces the hard-to-replicate footprint that's been established over a number of years and also reinforces the non-discretionary purchase bias of our business in terms of revenue, which you see on the chart on the right-hand side. I'll come back a little bit later and talk through some more of the strategic segments of the presentation. Now I'd be delighted to hand over to the EGM, Bapcor Trade, Steve Drummy, to sort of go through his business performance. Thank you, Noel. Good morning, all. I'm proud to be presenting a strong set of numbers across the trade business. It's pleasing to maintain the edge of our margins from the prior year, mitigating the inflationary pressures in the Australian economy. From a business unit stream perspective, Burson Australia has had a strong first half and continues to deliver. It is a naturally defensive business, and it has robust earnings in all economic conditions, but especially in times when consumers are holding on to their vehicles longer. Our Precision business, record sales volumes, margins in line with expectations. The Blacktown Auto Spares business, pleasing results from acquisition and the business is performing as we expected it to and playing the role that we wanted it to. Our Thailand business is making good progress in an emerging market, localizing the business and also growing with independent garages. On a personal note, it's really important for me to be leading an initiative on mental health for the team. It is a passion for myself and the team. As always, the Bapcor Trade result is a true team effort. A big thank you to our dedicated and passionate team, our supplier partners, and our customers. Thank you. I will now hand over to Craig Magill, our EGM of Specialist Wholesale. Thank you, Steve. Good morning. In Specialist Wholesale, we had solid growth of revenue and profit in the first half. It stems from organic growth and own brand program growth. This was driven by growing internal brands more quickly than external brands, rather than just converting sales from external brands to internal growth. This is a terrific dynamic. Zero harm activity has been quite positive. We improved message cut-through, and it's coming through in positive statistic trends. Our truck business is trending well with solid growth, system integration and network growth. I'm very excited by the future of this particular business. Specialist Wholesale continues to lead the One Bapcor penetration, acting both as a value creator and a value enabler for other parts of Bapcor. Really positive steps here in our journey on to be Better than Before. I'll now hand over to Tim Cockayne, DGM of Retail. Thank you, Craig, good morning, everyone. We've had a solid half for Bapcor Retail trading. Revenue at AUD 220 million, up 11.5% on the previous year. As always, that includes our franchisee sales revenue. EBITDAR at AUD 35 million, up 4.9% on FY22. Private label continued focus up to 35.1% penetration, which is a solid 1.2 percentage points up on the previous year. Same-store sales across all brands reflects strong results being up 10.2%. As spoken about before, developing our digital roadmap continues to be a key focus with the new Accelerate Loyalty Club launched in December 2022. We're extremely pleased with our initial launch. We have more than 60,000 Accelerate members as at 31 December, with many more since then and on track to achieve our internal targets. We're now in a position where we can start to commence providing our Accelerate club members exclusive offers, digital catalogs and personalized offers tailored to their members' purchase history and preferences. I'd also like to highlight the Midas business. While it's not called out on the slide individually, the brand has seen significant growth in the market and is continuing to achieve double-digit like-for-like growth, which highlights the strength of the brand and the resilience of trade business in the market. Thank you. I'll hand over to Martin Storey, our EGM for New Zealand. Thanks, Tim, and also very proud to be able to represent the New Zealand business at this challenging time. first half has represented challenges to the New Zealand business group, primarily due to a weakening New Zealand economy. Same-store sales were positive despite all businesses encountering weaker market conditions than were forecast. This is primarily due to elevated fuel prices and general input cost pressures. You'll see EBITDAR was negatively impacted by limited access to and cost escalation around labor, coupled with COGS and other general OpEx increases. Continued strong management of price and base cost positions mean that the segment is well-placed to face into the likely second half conditions. Superior customer engagement remains a core focus, with good results evident from a large-scale share of wallet program. Ongoing spend remains at elevated levels across greater than 85% of the target group. A further positive came from an accelerated sales delivery in new branch operations, where full-year business case volumes have been achieved well ahead of plan. I'd like to also thank our 550 team members from across all operations, specifically for the way they've pulled together through the various events of the last 25 weeks. To thank also the team in Australia for their ongoing support of our New Zealand team as we work our way through those various issues. Thanks, and I'll now hand over to Noel Meehan, our EGM of Supply Chain. Thanks, Marty. And again, my thoughts are with you and your team in New Zealand. If I may just talk through slide 16 on supply chain. You can sort of see on the right-hand side a couple of recent pictures of the development that we're taking practical completion out in Queensland at the new distribution center. Pleasing to sort of say 3 things if I can. Supply rates across the business are improving, which is great. I've mentioned DCV in Melbourne. Fulfillment rates averaging at well over 99% consistently in the first half. The 2 businesses that we've brought in without any interruption on sort of the fulfillment, Bearing Wholesalers and Federal Batteries, have gone really well. Then we called out previously if you normalize inventory compared to the business case, we're on track to deliver the benefits from the investment in DCV. Moving to DCQ, again, just reiterating, we've previously called out that we expect to see EBITDAR benefits of AUD 4 million-AUD 6 million during the second half of 2024. No change there. We will progressively this year finish the total construction of the sites, the technology, everything else, then start bringing in the businesses in warehouses in Queensland into that DCQ consolidation. The really important message is the lessons that we've learned from the startup of the DCV have all been picked up and translated into the way we're thinking about DCQ. The lesson learned obviously now, should put us in a really good place as we then go into a commissioning phase on DCQ later this year. If I can now just hand over to Stefan to go through sort of the financial details in a bit more detail. Thanks, Noel, and moving on to the financial section and to the income statement on slide 18. From a top-line perspective, Bapcor has generated strong growth year-on-year with revenue, as mentioned before, exceeding AUD 1 billion, which is for the first time in any six-month period in Bapcor's history. That's a record result from a top-line perspective. In terms of bottom line, while net profit after tax has increased by 2% to AUD 62 million for the half year, we were subject to margin compression, particularly in retail in New Zealand. You heard from Tim and Martin on some of those backgrounds. We've also incurred higher depreciation costs, which are a consequence of our ongoing and past investment into distribution capability, and further to that, some increases to our finance costs, which is a consequence of interest rates being raised in Australia as well as our level of net debt. Turning to the cash flow on slide 19. Cash conversion is on a similar level compared to one year ago, with improvement towards the end of the first half of FY23. That has led to the overall OCF improving by 4% year-on-year to almost AUD 100 million by 31 December. However, additional actions are being implemented as further improvements in the cash conversion are required. Moving on to the balance sheet, the main focus in the first half of FY23 remained on our inventory levels. We have reduced those in terms of growth compared to previous half years and also, as Noel already highlighted, from a higher peak inventory position earlier in the first half of '23. However, and in line with my comment on the cash conversion, more progress is required in the second half of FY23. Slide 21 concludes the financial section with the overview of our dividends. On the back of the robust performance and the increased NPAT, the fully franked interim dividend of AUD 0.105 is up by 5% compared to a year ago and in line with Bapcor's dividend policy of payout between 50% and 60%. I will now hand back to Noel for the remainder of the presentation. Thank you, Stefan. As I said in the opening, the presentation is split into two parts. The perform section, which you've heard, and now we'll move into the transform section. If you look at slide 23, just a few comments, which are so taken from the Investor Day that we did on the 22nd of November. Bapcor is a good business. We intend to continue to be a good business, but make it a better business as we leverage the scale opportunities ahead of us of being a fully integrated business. At the heart of our business, Bapcor procures transports and sales parts. Our businesses can work better together to create leverage across procurement, pricing, property, and supply chain. We've got a leadership team that we've assembled over the last 12 months, both those who are value creators and those that are value enablers. That significant industry experience as well as operational experience and integration and transformation capability puts us in a really good place on the journey then to make Bapcor Better than Before, to continue to perform and continue to support further growth. If you look at the next slide, we announced on the Investor Day that we had completed diagnostic and we were building up the detailed planning in terms of the commitment. That first 2 phases have now been completed. We are in a really good position now as we move into a delivery phase. What we're aspiring to do as an organization is deliver even more value for our customers, unleash the power of people within Bapcor, and obviously drive more value for our shareholders. We're at that phase III now and have started already to commence in terms of delivery. Slide 25. You've seen this before for those that have seen the investor pack on 22nd November, where we said we were looking to, in 30 June of 2025 from the Better Than Before initiative, deliver an AUD 100 million net EBITDA number. No change to that. What you will see on the bottom of this slide is what the return on invested capital target is for 30 June 2025, which is a three-year average of greater than a 12% return on invested capital. It's not a point in time 12%, it's a three-year average. We're also doing lots and lots of work. I'll take you through some of the detail that we're doing to also make sure that we improve the organizational health of the business to ensure that the transformation that we're going through is sustainable. We've spent some money in the first half, which has been shown as a pro forma expense. All the money that we spent is in line with the previous guidance that we've given to the market, both in terms of OpEx and also the initial CapEx. Moving to slide 26. Very, very conscious of making sure we have a clear scorecard to track our progress throughout the journey. There's still more work to do, obviously, on the scorecard, but let me just sort of talk through the main components on the scorecard. On the health side, our ambition is to be the best place to work within the industry. We've got a score. It's called the Occupational Health Index score, which we've completed last year, where we have ranked in the third quarter on a number of measures across a number of categories. Our ambition is in FY25 to move into the second quarter. If you move to the performance side of things, again, no change here. We're looking to deliver from Better Than Before at least AUD 100 million net EBIT benefit. In terms of return on invested capital, as I said, Matt, this morning, historically we've been not in that about 10%, there or thereabouts. What we're endeavoring to do by June 30, 2025 is to get that return on invested capital to a three-year average, simple average over those three financial years to greater than 12%. We're developing a scorecard around what we're doing on customers and what we're doing on processes that we can continue to hold ourselves to account, deliver more for our customers and make it things easier for our team members to do what we need to do and leverage off the scale of Bapcor. The next chart, Better Than Before by the numbers. It's just to give you a quick snapshot of all of the activity that we've been working on over a number of months, particularly since it being invested in. A few call-outs here, if I can. We've energized around about 250 people in the organization for their ideas. The process started with in excess of 690 ideas. We've fine-tuned them, we've sequenced them, we've ranked them, we've risk weighted them. We've done all these type of things. Where we are today is we've got 290 business plans with milestones and initiatives and clear accountabilities across 120 people as part of the plan to execute. That's not to say some of those ideas that haven't made it through to the 291 continue to be pursued as we sort of go through the transformation journey. The rigor that we've gone to to make sure that we're confident of delivery, it's now up to us to build execution muscle to deliver. Very, very importantly, similar to what I've mentioned earlier, 16 of those initiatives are specifically related to improving the organizational health of the business. You can see on the right-hand side a number of change milestones where we're investing in change management. We're investing in training on how we sort of will go about executing all of these things. We're also very obviously concerned and about the way we need to make sure we bring all of our team members on the journey to make sure that we are Better Than Before. As part of that, you can see on the next slide, my quick summary. We've moved into execution phase. We've kicked off the first pilots initiative in procurement, and we have a number of them to do as we sort of move through the Better Than Before journey. We're on the process of establishing a Bapcor wide self-funding incentive plan to ensure we are aligned as an organization in delivering the outcomes. Two things I would say there. That incentive plan will only be payable if the program goals that we've articulated are met, which are the three-year return on invested capital has to be greater than 12%, and the net EBIT benefit after paying any incentive to anyone in Bapcor has to then be classified as more than AUD 100 million. I mentioned earlier, delighted to announce that we've brought in Christof Geyl to head up the strategy and transformation effort for Better Than Before. If I can now just go through to slide 30. Let me just make a couple of summary comments and then I'll talk about how we're sort of seeing the next six months. I think we've had a pretty good first half. We've got more to do to improve our safety. We've got more to do on improving cash conversion, and we've got more to do on us optimizing our inventory positions. We've made really good progress on putting ourselves in a great position on Better Than Before, and we're in the execution phase. In terms of the outlook for the second half of the year, you can see on the right-hand side, Bapcor continues to expect a solid underlying performance in FY23, with slight improvements in trading in the second half of 23 compared to the first half of 23, subject to market conditions. As we've said before, we expect to see more progress to further reduce the inventory levels. Thank you for your time today, and now we'll hand back to the operator, and we'll move into some Q&A. Thank you, Noel. This is the end of the presentation. As noted, we will now commence into Q&A. We would ask the operator to share the instructions for the Q&A and to go ahead. Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's press star one to ask a question, and we'll pause for a moment to allow everyone an opportunity to signal. We'll take our first question from Mitchell Sonogan with Macquarie. Please go ahead. Your line is now open. Yeah, good morning, Noel and Stefan. Can you hear me there? Loud and clear, Mitch. Yeah, thanks for taking the questions, guys. Just first of all, just on the guidance for slight improvement in second half. Can you maybe just talk through sort of what your base case assumptions are, from a segment perspective to get to that guidance? Obviously, we're seeing some softness around New Zealand and, some pressure on margins in retail, but, yeah, some pretty strong trading in the, in the Specialist Wholesale and Trade businesses. Just keen to understand, your base case assumptions. Thank you. Thanks, Mitch, thanks for the question. Let me sort of give some high level commentary. I won't go into specifics, obviously by segment by segment. Again, if you look at the first half of the year where we've been able to deliver, I think, a pretty solid result with AUD 62 million. What we're saying as we look into the second half is some of the cost pressures that we experienced in the first half, such as, for example, high freight costs, high container costs, elevated supply chain costs, high fuel costs. We think will sort of ameliorate somewhat in the second half of the year. We have put in some price increases to try and cope with that margin compression. We put those through towards the end of our first half, so we should see that come through. Again, if I go back to our view and we're obviously watching the retail sector, very carefully, albeit, obviously, we're mainly a trade and wholesale business. The underlying drivers for demand in trade and wholesale leverage off the age of the car park and obviously, the number of cars on the road. That is still pretty robust. We're expecting that to continue. In New Zealand, for lots of reasons, we're expecting, hopefully to see an improvement in underlying performance there, notwithstanding, obviously, some of the natural disasters that we're moving through. I guess my summary, Mitch, without sort of going through each specific example is, as we stand here today, and you look at that AUD 62 million, what do we expect going into the second half of the year? You know, to see sort of, some slight improvement on that 62 from a Bapcor perspective. Yeah. Thanks, Noel. Just moving on to the Victorian DC, you mentioned, more recently it's been operating at 99% to create, pretty consistently. Can you maybe just give us a bit of a sense, are you starting to see improvements in market share there? Obviously, there was some teething issues as you go through a ramp up like many big DC projects. Can maybe just give us a bit of an update on how that's tracking. I guess, how that also feeds into planned inventory reductions in the second half. Thanks. Yeah. Thanks, Mitch. Look, a number of people were fortunate to come out to the Melbourne DC on the 22nd of November, the investor day. If I look at the improvement we've made there, you know, it's a large investment. It will deliver a very substantial accretive return. If I look then at, yes, the teething issues that we had last year, which probably gave our competitors some opportunity to take some business away from it. I don't think there's always, particularly in the trade business, you know, massive shifts in market share. What we're trying to do each and every day is make sure we deliver in full on time as best we can to all of our customers. One of the big improvements in the Melbourne DC is we've now shifted the balance to more full-time team members away from the casual team members. Again, as people then get familiar with the products and the operations, and they're an integral part of the business, has given us substantial sort of operational improvement. In terms of the inventory position, we have got clear plans in place which we will execute against in the next six months to make sure that we optimize our inventory position and reduce a number of the dollars that we've got invested in inventory. Not just in the DC, but also we have a direct to store. I couldn't be more pleased with the improvement that we've seen on a day-to-day basis. 99 plus is a really hard measure, and if we miss out on 1 line item, then it's classified as a miss. It's not a case of sort of saying, "Well, we're nearly there." It's delivering on full, on time. We're doing that and have done that for a number of months. Delighted with the progress that we've made there. Very, very conscious as we translate those learnings into DCQ, that we don't rush DCQ just to make a deadline. We will be very, very, we know what happens when you do disappoint customers and do disappoint team members. We'll be very, very cautious as we move into DCQ, Mitch. Yeah, very clear, Noel. Thank you. Just a final, I guess, medium-term strategic one. There wasn't too much information about the Southeast Asian strategy in the pack there. Do you mind just giving a bit of an update on how that's tracking? I think you mentioned about localizing the stores and growing with some of the bigger chains or partners over there. Maybe just give an update about how you're thinking about that business over the next couple of years. Thank you. Yeah. Yeah, thanks, Mitch. As you've heard me say previously, Southeast Asia is a strategic option for obviously, Bapcor. We have put a new manager into Thailand who has moved to Thailand with his family. I guess that gives you some idea of our intention in Thailand, willing to take one of our top performers to run that part of the business. Really pleased with the progress that we're making. The localization, again, I think it's a lesson for lots of companies expanding Southeast Asia to, you know, localize, listen to your JV partners. A model in place that is fit for regions. We've obviously also got the investments in Punsung. The way I would summarize it, Mitch, it's a strategic option for us. We're making really good progress, and we will continue to make that progress and be very sort of careful in sort of rolling out network expansion in that part of the world. We're really pleased in what's been done in a relatively short period of time under a new leader. Great. That's all for me. Thanks, guys. We'll take our next question from the line of Tim Piper with UBS. Please go ahead. Your line is now open. Morning Noel and Stefan. Same questions. Just firstly, just around the Better program, I think you called out there are some underlying OpEx investments as well. I think the range between 3 was like 2.5-5. How much of that's in the 1H result, and is it on track to be around that level for FY23 at this stage? Tim, happy to take the question. From a pre-tax point of view, we've got AUD 7.6 million of one-off OpEx in the 1H result, which is in line with what we said on the 22nd of November. Also keeping in mind that on all things Better than Before, given that the 22nd of November was only a few working weeks out from the end of the year, that's obviously not so much that, you know, you achieve in those few working weeks. What we said just to remind ourselves is that we were expecting early phase OpEx of between AUD 20 million-AUD 25 million, of which 70%-80% would be spent in FY23. With the AUD 7.6 that we have spent, and we call those out separately in terms of pro forma adjustments and for everybody's transparency benefit, we are absolutely in line with what we said on 22nd of November and in line with our expectations in with regards to what that investment is enabling us to do, which was to move from the planning phase into implementation execution, which is where we are at this point in time. I guess that, I was more referring to the second point of capability build up. You say OpEx increases AUD 10 million-AUD 15 million, of which AUD 25 million-AUD 35 million will be in FY23. Is that also included in that AUD 7.6 million as one off? Apologies. I I was actually referring to that first bucket. The second bucket has started, so we've made some offer. We are in the process of making some additional appointments in terms of that capability build up, which in essence means that we are expanding, you know, the team so that we do have in-house capability around procurement, around property and so on. At 31 December, no kind of dollar has been spent. That goes to the point that, you know, between the 22nd of November and 31st of December, there's not so much you can achieve and not so much you can spend. From that perspective, we are still expecting what we said on the 22nd of November, but that will be in the second half of FY23. Got it. Thanks. Just on January trading, is it possible to provide a bit more detail around maybe what a like-for-like sales growth number or something like that would be for Jan? Some of your peers in sort of retail space, et cetera, have been giving sort of growth numbers for January. Yeah. Look, Tim, look, I won't go too, like for like. What I will say again, if you look at the statement I made, we had at a Bapcor level, 11% revenue growth and 2% profit growth. That has continued at the end of January. Okay, great. Thanks. Just one last one. On the inventory from a dollar point of view, I mean, how far away are you at the moment? Secondly, maybe just following on some commentary around stocking levels through the Trade channel and workshops, what's that been like and what's the key driver that's gonna drive that inventory down? Is it more on the demand side to get that dollar value down by sort of June? Look, from an inventory perspective, we finished the half year at AUD 562 million. That is roughly AUD 24 million up compared to the beginning of the year. 95% of that increase is with regards to new greenfield stores, business acquisitions, inflation, and the like. From a business as usual perspective, which is what we are focused on, the increase amounts to roughly, you know, AUD 2 million. That is a consequence of a lot of action that we have taken to optimize our inventory position, to increase stock turns, and to have obviously more of what is turning quickly and what, kind of referred to as bread and butter, and to have less of the tailed end of our inventory position, and therefore to optimize our stock. The demand side is one of it, and the other bit that we are working through and again, Better than Before will also help with regards to supplier interaction, is then to optimize our ordering patterns. Both of them within the end, from a all other things being equal perspective, would help to reduce the business as usual inventory position, which is our expectation as we move into the second half of FY23. Okay, thanks. We'll take our next question from the line of Sam Teeger with Citi. Please go ahead. Your line is now open. Hi, Noel. Hi, Stefan. Morning. Morning, Sam. Yeah, good morning. A couple of months ago, you gave us a presentation on Better than Before, where you talked about AUD 100 million in EBIT upside in FY25. Since then, the market's gonna increase its FY25 EBIT forecasts by less than AUD 20 million. Appreciate that, you know, some of the aspects are Better than Before you were doing already. You know, with less than AUD 20 million of a potential AUD 100 million upside, do you think the market's been too conservative on what Better than Before might deliver for the company? Look, let me give a comment if I can, Sam. You know, from my perspective, we've obviously called those, if you take Better than Before as an initiative, you know, we are looking for that initiative to make sure that we deliver at least AUD 100 million. How the market interprets that is obviously up to the market to do. I won't comment whether I've been conservative or optimistic. What I will say is, from our perspective, we are very determined to deliver at least AUD 100 million from the Better than Before initiatives. I think what will happen, and you guys will make your own determinations on this, as we get into the execution phase and get runs on the board and can then demonstrate this is truly Better than Before, people then will reassess how they're looking at things. Got it. We've seen good growth in your private label, but I'm wondering your thoughts on whether right now, you should dial down the investment you're making in this space, in the short term until you get the inventory, a bit more under control. Look, I think what I'd say to that, if I can, Sam, you currently say this at the investor day, so let me just again repeat it. I think, you know, obviously inventory availability is enormously key to the business. I think our approach to private label, what I've sort of said to the business and I've said to investors and I've said to everybody else, is we need to selectively work out which private labels we do and do them really well, as opposed to going, you know, across too many private labels and not doing them well. We are gonna be very, very targeted in terms of, I talk about inventory optimization, and so that also includes private label. We will make sure that we're enormously focused on the optimization of our inventory position to drive the return on invested capital. I don't think it's a question of dialing down. I think it's a question of being more focused on what we do. Understand. Has the solid start in January continued in February? Yeah. Not that we are commenting on it necessarily, but it's only been, you know, a short 2 weeks, but there's no change in conditions over those couple of days that we've seen so far. Excellent. Thanks, guys. Thanks, Sam. We'll take our next question from the line of James Fels with Morgan Stanley. Please go ahead. Your line is now open. Hi, guys. Firstly, I wanted to just reconcile a couple of things on the slide for New Zealand, where, the number of stores went up, the comps went up, and the revenue went down. Can you sort of just help us understand some of the moving parts there? Thanks for the question, James. The main driver is, you know, volume that has been impacted from that perspective, and that is a consequence of the economy, the economic pressure that we've had in New Zealand. I think Martin called out quite some of them, and we've also tried to highlight some on the second bullet point on that slide, where we talk about the reduced servicing retail volumes. That is a consequence of a number of things. We do know that obviously in New Zealand, the reaction to, you know, the post-COVID environment to inflation from a macro perspective has been stronger than in Australia. Interest rates have gone up higher and quicker. That's in, again, the backdrop of a generally lower average household income. While generally we say what we do is non-discretionary, but at some point in time there is an impact and it's, you know, kilometer travels do go down, then that does impact our business at some point in time, as you would expect. All of that then has led to what you can see from a revenue perspective, but more so from an EBITDA perspective, where margins have been under quite a bit of pressure. The other two things I would call out, and again, that is a bit New Zealand specific, and we have slides that some of those impacts, because they are New Zealand specific, what we're trying to outline here that we don't see that in the Australian business. The other impact that we see stronger in New Zealand than in Australia is foreign exchange. The movement of the New Zealand dollar versus all the other major currencies, isn't helping the economy, nor is it helping that the immigration volumes, normally, you know, add to spend patterns, that they haven't recommenced either. All of that, and that's from a New Zealand specific point of view, is impacting the business there. Okay. Got it. I just would like to reconcile a couple of the comments you made where you've seen the strength in sales and earnings growth continued in the first few weeks of the second half. You're essentially guiding to slight improvement half on half. Whereas what happened in the second half of last year is you had a meaningful step up in half on half in sales and earnings. Could you maybe just reconcile what you're expecting to play out to get the NPAT results in line with the guidance? Yeah. Thank you, James. I think the last year was... Every year is driven by specific circumstances, and the last couple of years with COVID and then post-COVID and also some more Bapcor specific ones in terms of the commissioning of DCV and the teasing issues that we were working through in the first half of last year, which impacted 1H 2022, and then we had a rebound in 2H 2022 as supply base came up. That is probably something where the half on half comparison has been more skewed to one or the other half compared to if you know, rewind many, many years in the pre-COVID environment, our halves were actually quite stable, and we had much less seasonality. Again, assuming, and that's what we're trying to outline with the subject to market conditions, assuming that we do have stable market conditions, that we've got clean air in front of us, and we can trade reasonably normal, and we would also expect for some of those impacts that we've had in the business into the latter half of last year not to occur and therefore for the second half, in terms of trading and also just spend, as noted earlier, to be up, slightly compared to 1H 2023. Okay. Got it. Maybe lastly, on, inventory and cash flow conversion, what are your expectations in terms of, the underlying or a normal conversion of EBITDA into cash? How much progress do you expect to make in the second half? Let me give a comment and then Stefan wants to answer it, but feel free. What we've publicly said, Sam, in terms of... Sorry, James. In terms of inventory, and again it goes back to what we said at the first half of the year earlier, we are expecting, and this is you've got to assume, you know, other like for likes. Forget, you know, new stores and those type of things. We're expecting to reduce inventory by AUD tens of millions. That was always our intention. The intention was it was always gonna be second half loaded because of the long lead items that you have to deal with in this business. We don't currently have any AUD tens of millions. The statement that we've sort of said is on a like for like basis, you should expect AUD tens of millions to come through. That will then flow into whatever happens on cash conversion, which ultimately mathematically then says it should be significantly higher than it is today. Okay. Got it. Great. Thanks, guys. Thanks, James. We'll take our next question from the line of Elijah Mayr with CLSA. Please go ahead. Your line is now open. Good morning, Noel and Stefan. Just a couple questions from me. Maybe just firstly on the price increases that you all sort of put through the back end of first half FY23. Can you sort of just comment on, I guess maybe the magnitude of those price increases and how much the price increases flowed into the same-store sales growth in the first half? Yeah. Good morning, Elijah. Look, it's always, you know, and it's sort of an interesting sort of, you know, analysis to sort of say, well, what price increase and did to hold and those type of things. You know, if I look at the Trade side of things, which is obviously the large part of the business, the price increases that went through in late the first half, sort of, you know, were, you know, very, very, you know. They weren't enormous, you know. Down at, you know, they probably averaged, you know, a couple of%, those type of things. No problem. I guess looking into second half of 2023 or maybe even calendar year 2024, is there any expectations of further price increases to come through? Again, look, it's something that we, you know. The business is always passing through as best it can supplier input cost increases on product. The other specific price increases that I'm sort of talking about then is again stuff that you're sort of looking at normally non-COGS related. We'll just continue to monitor what's happening in the marketplace. No problem. Maybe just on inventory again, going if we could speak about it briefly before. Can you comment on what the peak was early in first half 23? We can just get a relative sense of how much it's reduced by the, by December. Again, look, if I look into, you know, where it is to where it was, so, you know, a couple of months ago, you know, the reduction over a couple of months has been, you know, circa AUD 20 million. Excellent. Thanks. Are you able to comment on the impact, from an OpEx perspective that the elevated inventory has had, just sort of noting that Victoria's EBITDAR benefits were in line with expected, if you normalize for the change in inventory? I just wanna get a sense of how much of a cost impact the elevated inventory is, and should we expect that to, I guess, unwind in the second half or maybe? Yeah. Look, let me try and sort of, give some sort of, some statement, without giving a specific number, but just to give you an idea. The more inventory you have, again... This, please don't take this as, I'm not trying to be too simplistic here, but let me just try and sort of, explain it this way. The more inventory you have, obviously the more space we occupy, and then the more third-party warehouses that we have to then put in place. We have to have a third-party warehouse in place in Queensland for some of our inventory. We've now exited that. The more inventory you have in place and the fact that then we, you know, we've gotta make sure that we get inventory put away very quickly. The way you do that is then you bring in labor. You ultimately then, as you reduce your inventory levels, don't need to have that same labor bill. To complete the mounting ball, the more inventory you have, the more net debt you use, the higher interest you pay. Therefore, the less inventory you have, then the less debt you use and the interest benefit you should sort of recoup. But I won't give you a specific number, you know, what I will say is as we continue to optimize our inventory, then our supply chain cost should reduce where in the same sort of proportion. If we're just looking at second half 2023 sort of impact, and if you've got operationally the business is performing in line or sort of slightly better than the first half, and then you've got some of these tailwinds from reduction in costs related to inventory and perhaps interest, that should also flow through as well to a stronger second half. I think if you take all of those into account, which is obviously what we've done when we look at our expectation and then take the segment performances with the headwinds, with the tailwinds, with the expected improvements in inventory and supply chain costs, plus, you know, to take obvious, you can't just take all the upside. You also need to look at some of the cost elements in terms of building additional capability, as the business grows and matures. If you take all of that into account, that's how we then landed at our statement with regards to our expectation for 2H FY23, then we would net, net see some slight improvement compared to 1H FY23. Okay. Thanks for the question. I'll pass it on. Thanks, Elijah. We'll take our next line... Question from the line of James Casey with Ord Minnett. Please go ahead. Your line is now open. Good morning, James. Can I just clarify with the Burson same-store sales growth or the Trade same-store sales growth, was obviously very strong. Can you just clarify the composition, just roughly speaking between volume and inflation in that number? Yeah, look, it would be, you know, probably... I'm off the top of my head here, James. Yeah. That's okay. Yeah. Look, my best guess would be it's probably 50/50. Okay. With the DC consolidation in Victoria, Noel, can you just remind me how many DCs you started with, how many are in Tullamarine at the moment? I guess, by deduction, how many to go? Yeah. Let me start with the easy one, James. In terms of how many to go, there's 3 to go. I think we started with 13. Okay. As a percentage of sales, it's probably relatively small, I suspect. It's some of the wholesale businesses. Okay. Just finally on the inventory position, Just looking back through prior years, inventory to sales is kind of running 23%-25%. Taking the top end of that range, you're running at 28% at the moment. Is 25 a good guide for where you intend to land? Look, I won't be drawn on giving you know, whether it's a good guide or not. What I will say is, if you look at the last two years for lots of reasons, we've grown the business, we've vertically integrated, we've got private label, all those type of things. We've got supply chain disruptions, we've got long lead times, all of those type of things. I think my guide is if we can take tens of millions of AUD of that inventory, that then should translate obviously to a better inventory to sales number than you're seeing today, I won't be drawn on what the target's going to be. Just the last one, just in terms of your guidance, I just wanna make sure we're clear on this. You're expecting second half 2023 NPAT guidance, or second half 2023 NPAT to be ahead of first half 2023. You're not saying it's gonna be ahead of second half 2022. That's correct. We're saying the way to sort of read the words that we've got on the page is, again, we've made AUD 63 million in the first half. Our assumption subject to market conditions, is to expect a slight improvement against that half, that number in the second half. Okay. That's great. Thank you, James. Thanks, James. We'll take our next question from the line of Andrew Hodge with Credit Suisse. Please go ahead, your line is now open. Morning, Noel. Morning, Stefan, and the broader Bapcor team. Just I understand your point, Noel, around the cash conversion with regard to inventory. If we just put inventory to the side for a moment, normalizing for inventory, what do you think the business should cash convert at in through the cycle in time? Again, I look at this, Andrew. Again, sorry, I should have said good morning. That was rude of me not to say good morning. If I look at the business, and you sort of sit there and you sort of say, "Okay, how much should we are able to convert?" I think it should be obviously north of 80%. Sometimes it'll be higher than that. Currently, 67% is not where we'd like it to be. Theoretically, could it be much higher than 80% through a cycle? It probably could, I think sustainably it should be sort of, you know, north of 80%. Thank you. Just on the, I guess, Better than Before, I mean, the idea we're talking about margin improvements effectively captured in Better than Before. From your point of view, I understand your point about a three-year average ROIC target. When do you expect to start seeing, I guess, the margin improvement that begins to flow from Better than Before? Look, I think, Andrew, if you look at one of the charts that we put out on the 22nd of November, and I think it's also in the pack, you can sort of see, you know, the three bubble chart, three circle that sort of said, look, you know, net this year will be sort of, from Better than Before negative, then will be, you know, positive next year, and then obviously substantially positive in FY25. Again, the thing I would say on the return on invested capital, we're currently sitting today at just over 10%. 10.2, I think is our arithmetic. For us then to average 12, you work the math though, then you say, well, if the next two years we only do 12, then we don't average 12. By default, in 30 June 2025, we have to be north of 12 to average 12. FY25 is the year when you should see, you know, obviously Better than Before really coming on. Yeah. No, that makes sense. Thank you. Then just on the. I know you mentioned you've narrowed it down to, let's call it 300 million, sorry, 300 projects. I imagine that it's not an equally weighted benefit across the 300. What would be, you know, what's the value, if you like, of the, say, top 20 projects versus, maybe what the tail looks like? That's an interesting question. It is actually a large number and with a reasonably low average value, which in my mind means that when I kind of almost, you, probability weight the portfolio, there are multiple pathways on, how we can get to the overall benefit that we're targeting. There is not, just, you know, just to go back to your implied 80/20 question, there is not one large or the top five initiatives and, you know, when we hit those, that's it. When we miss those, then we've got a significant problem. It is actually a large number of initiatives with a reasonably kind of low average value across a lot of them. Thank you. Then just last question from me. Through phase I and phase II, as I understand it, are McKinsey in on the project as part of phase III, or are they now no longer required as you move into phase III? Let me respond to that, Andrew, if I can. You know, we're building capability. You know, part of the capability build is happening and knowledge transfer is happening. When we get into, you know, obviously the really big execution phase, which will be next financial year and the year after, your expectation should be that we've built the capability internally then to deliver it ourselves. Great. Thanks very much. Thanks, Andrew. We'll take our last question from the line of Tom Chapman with Jefferies. Please go ahead. Your line is now open. Yeah. Good morning, Noel. It's Tom. Thanks for taking questions. Just a quick one from me to finish off. Just wondering how your market share has tracked in second quarter compared with GPC? Following on from that, how have you viewed that going into Q3 and Q4 too? Yeah. Look, thanks, Tom. You know, market share is always a little bit subjective. Look, in fact, from my perspective, if I look at particularly the Burson business, you know, I think, you know, I don't see in that business large shifts in market share. I think, you know, we're carrying our own weight there. The retail business, it's always a little bit harder against, you know, doing comparisons and those type of things. We're a smaller business than some of our competitors in terms of scale. Again, I don't think you see massive market share shifts. Cool. Thanks, guys. Cheers. Thanks, Tom, and thank you, everyone. That concludes today's question and answer session. Stefan, at this time, I'll turn the conference back to you for any additional or closing remarks. Thank you, operator. Once again, we would like to thank all participants of today's call for your continued interest and support of Bapcor, and are looking forward to engaging with many of you over the next days and hopefully in person. Thanks, everyone, and stay safe. This concludes today's call. Thank you for your participation. You may now disconnect.