Bapcor Limited (BAP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It's a pleasure to welcome you here to Bapcor distribution center here in Redbank in Brisbane. I genuinely appreciate those of you that have been able to get into the room turning up. I know many of you have jumped off airplanes from holidays and other things or even jump the train up from the Gold Coast. So it's fantastic you're being in the room with us. Before outlining the events of today, let me just start by an acknowledgment to country. So I'd like to acknowledge the Jagera and the Ugarapul people as the traditional owners of the land and custodians upon which we're meeting today. I pay my respects to elders, both past and present. We recognize the continued connection of all First Nations people across Australia, but in particular, those lands where Bapcor operates. Before I walk you through the agenda for today, I'd like to introduce you to Abdul Jaafar. Abdul is the EGM for Supply Chain and Procurement here at Bapcor. Abdul is going to step us through the emergency procedures that are associated with this site, and he's going to make a repeat appearance in just a short while to talk to you a bit about our supply chain before we take you around the distribution center. So Abdul with that.

Thank you, everyone. So if you do hear the evac siren, which is the whoop, whoop, whoop, there are 2 exits throughout the facility. There's a set of stairs on this side, and the stairs that you all walked up over here. You will just follow the stairs down out to the emergency areas, which one is over there at the start of the car park, and one over here next to the water tanks, and then you'll be directed where to go post that by the fire wardens on site. And we also have the facilities on site, which are straight out of here as well, first doors to your left. And I'll see you again soon. Thank you.

Okay. So the formal part of the meeting is now officially over. And hopefully, we don't hear any of those noises. But thank you, Abdul, and look forward to welcome you back soon. Excellent. We're finally tuned machine here. So on the screen behind me is the agenda for today. So all things going to plan, I'm going to spend roughly sort of 40 minutes talking to you about the way Bapcor is going to move forward. And then there's circa 30 minutes after that for any questions and answers from in the room, but equally across the webinar. Abdul is then going to spend a few minutes with you just talking a bit about our supply chain. So where we've come from and, importantly, where we're going to. And then we're going to break those of you who are here into 3 groups, and we'll head around the facility, and you'll actually get to see the things that actually send product out to those people that pay the bills. After that, for anyone who wants to indulge, there will be proper food and some light refreshments to get you started before you make your way back to wherever next is. Now 2 weeks ago, I introduced several changes to the Bapcor leadership team. Those changes were focused on where Bapcor needs to go our future. In short, Bapcor needs to change, and that's the change that we have now made. The change, the way we work, the way we deal with our customers and, in particular, the way we operate day-to-day, the way we develop the people we have in our organization and, importantly, one of our bigger journeys here, the culture and if you like, the way we behave as individuals within Bapcor. All those things have been done for one reason, that's all around performance and the outcomes that we expect from this particular business. In the room today, I'm pleased to say that I have George Saoud with us, Merryl Dooley, Abdul Jaafar, Megan Foster, George Sakoufakis and Martin Storey, members of the leadership team. And I'm delighted to have Simon Bromell down here in the front row, who's the EGM of Trade, who is our latest addition to the business. So please go easy on Simon today. I can literally say he knows nothing at this point in time, and I don't want that to change. But it's fantastic to have you here. So thanks, Simon, for coming on day 1. The balance of the leadership team, Craig Magill and Morris Lieberman, are down in Melbourne, and they're leading a small group there listening into the webcast down there. So our aspiration is to drive sustainable growth. We recognize this requires us to be different from an attitude and action basis. Our customers need to be at the center of that aspiration, being able to not only service their needs, but being able to add value to their businesses, their hobbies and their passions. Our purpose is one that was actually created by the wider Bapcor team in 2023. It strikes at the heart of being relevant and being present for our customers, our employees and also our supply partners. Underpinning our business is a set of values that when linked to the behaviors that drive them are the foundational levels of what we want our culture to be. These values must be more than just words on a wall. And for those of you that are in this facility, you are literally seeing they are words on a wall, but they need to be the fabric of the organization. Given the silos and the fragmented history of the Bapcor business, we actually have a great deal of work to do in that space. Bapcor at the close of the fiscal '24 year was a $2 billion revenue business. We presented ourselves to you in 4 segments, Trade, representing 36% of our revenue and being split across the Burson, Precision and our smaller Asian businesses. These businesses are entirely externally customer-facing. The Burson business is our core operating asset. It's operated for over 50 years and has expanded both organically and inorganically by extending into the independent mechanic, national chain and service markets. Specialist Wholesale represents 36% of our revenue. This segment is the sum of multiple parts. The first specialist networks being both Auto Electrical or AEG and Commercial Vehicles, CVG, embracing a collection of brands that include Baxters, JAS, Federal Batteries, Truckline and WANO, just to name a few. This business is circa 25% of the total segment. The second Specialist Wholesale comprised of many individual brands that includes PAT, AAD, Bearing Wholesalers, and Roadsafe, just to name a few. This business is around 11% of the revenues. The complication with that part of the business is that it sells both internally and externally. More on that a little later. Retail represents approximately 20% of our revenue. This segment is made up of retail brands that are both franchise and corporate. It includes household brands like Autobarn, Autopro, Opposite Lock, and Midas. And finally, our fourth segment is New Zealand, which represents about 8% of our revenue. This segment houses our New Zealand operating brands, which include BNT, HCB, and Battery Town. Our New Zealand operations service the independent mechanic, national chains and service centers. Our customers are a valued collection of independent automotive mechanics, truck and commercial vehicle mechanics, DIYers, car enthusiasts, car carriers and specialized automotive mechanics and parts resellers. Now before diving into the strategy, let me talk about the characteristics of the market in which we play. Our market is advantaged. We have 2 major markets -- our 2 major markets share several common characteristics. The Australian car parcs and the New Zealand car parcs have been growing for the past decade. The forecast for both is to continue to grow at 2% and 1%, respectively. The Australian car parc is circa 11 years old and the New Zealand car parc at around 14 years of age. In both cases, they continue to grow. The drivers of growth are both population and the cost of new motor vehicles. New cars consistently move from the OEM warranty programs into the aftermarket, steadily building our available marketplace. The demand for servicing and parts remain positive as both age and the complexity of the engine continues to drive the need for repairs. Now our market has been subject to much speculation regarding the impact and the associated development and sale of EVs. Whilst imports are growing, their size and penetration is overstated. EVs are only 0.8% of the Australian parc. Now whilst EVs continue to grow, they don't pose a threat in the medium term. And frankly, with the increasing skew towards hybrids and PHE vehicles, market conditions for Bapcor look relatively favorable. At the 2024 results announcement, we committed to conduct reviews on our Retail segment and our Wholesale business unit. In the case of Wholesale, we examined the role played by the brands within this business unit. Again, those brands include PAT, Bearing Wholesalers, Roadsafe and AAD. Let me address the outcomes of those reviews in turn. I'll start with Retail. Our Retail business is perhaps our most challenging. There is real value to be delivered, but it requires work. We must stabilize the business and then initiate growth. To be clear, Retail is, in fact, multiple businesses. We are split between franchise and corporate operations. Keeping it simple, our franchisees are in the main good operators, and this part of the business is performing well. At a brand level, our Midas stores who are overwhelmingly franchisees are also performing strongly. Our Autopro stores that skew to regional areas are also performing. Autobarn, which is approximately 80% corporately operated and 20% franchise operated, is where our challenges lie and in the main that is on the corporate side of the network. I stand by the words on the chart. This business has not been historically well managed. I'm delighted with the way the current team front up each day and drive the business. They're making real progress and are doing so in the backdrop of what is a continually challenged retail environment. So why do we want to persist? Well, the brands are healthy. We've asked the consumer and they each play quite a distinct role and can remain quite distinct. Whilst the retail environment is challenging, our issues are more of our own making and therefore, solvable by ourselves. These solutions are about our offer, the range, store capability and management. Well before today, the team have been making changes to shift performance. These efforts go directly to value delivery. Across Bapcor, there is also leverage available in both procurement, technology, supply chain and e-commerce. Now the changes are already underway. Store management changes have already started to occur. We've been closing and relocating refurbishing stores as required. Network planning for the future, where do we want to be, noting that we're not going to add stores to our retail network, specifically Autobarn, until we've got the retail offer right, changing the cadence and the style of the language we promote inside of our business and shifting our mix away from those items that we consider discretionary. We've undertaken work on the Autobarn brand specifically. I have to admit I was positively surprised by the resilience of the brand and the position it holds. It skews more to women and is less price focused than we'd expected and is a clear knowledge and service-based positioning. Our Achilles' heel at present is the variability of the store experience. This directly goes to capability in store and the presentation of our offer, all very fixable and all underway. We've been changing and upgrading our store capability. This has seen an almost complete refresh of our regional management team and the proactive turnover at store manager and assistant manager level. Retail is about execution, and therefore, the right store-based teams is essential to that execution. We are refining our sales mix and our assortment, standardizing our layouts and displays and ensuring that the new store leaders adopt common processes and disciplines at that store level. Private label represents a real opportunity for us today and into the future. For instance, expanding our assortment into the paint and panel category and leveraging the wider group as we do so. The brand relaunched its e-commerce platform in November of 2024, and we're already enjoying the benefits of these changes, but there is even more opportunity in that space. Our loyalty platform has over 1.4 million registered customers, but we recognize that we need to look at it the way it works and make sure we truly recognize the customer and the value they add to us. That is what customer loyalty really adds to Bapcor or specifically our retail assets. This includes the use of data and the relationship we want to have with those loyalists. There are unfortunately no silver bullets in this space, but there is real value at stake, and we intend to drive after it. Now turning to our Wholesale business unit. For clarity, this is a slice of the segment that we report to ourselves. The other aspect of the segment is Specialist Networks, AEG and CVG. The Wholesale business unit is a product of our acquisitive past. Businesses we've acquired like PAT, Bearing Wholesalers, Roadsafe have simply been added to the overall group without integration. They came as trading businesses with third-party relationships as well as core trading relationships with Bapcor. For instance, Burson or our retail business. They also came with warehouses, the inventory that goes in those warehouses, ERPs, support teams and quite unique and distinct supply chains. Until recently, this siloed approach had been maintained. Given the lack of integration, they are complex and separate parts of our business. Over the past 10 months, we've been busy with the beginnings of the consolidation of warehouses across the business unit. These consolidations, which form part of the promised $20 million to $30 million in savings, are either into each other, so consolidating one PAT site into one PAT site, or into our centralized DC system like the one that you'll see a little later. This drives both efficiency and equally cost effectiveness across Bapcor. Operating teams have been moved into share locations and are now integrating with the wider Bapcor operations. The movement of stock holdings into these centralized systems has provided greater selling scope to those businesses because they now have access to the full range of Bapcor products. One of the core complexities of our past and present is that these separate businesses also trade intercompany, selling products into the wider Bapcor. Today, they are measured and managed on internal and external revenues and gain an internal margin on all internal sales. Behind the scenes, we have teams managing the categories, brands and the administration associated with the internal and external sales. The internal sales are focused on our own brand portfolio, but are really constructed only of the intercompany relationships, meaning that these own brands don't get the focus that they require and that they deserve. The internal sales complicates our business. They do not add value to the external performance as they involve non-value-added intercompany invoicing and believe it or not even cash settlement. They facilitate poor ranging decisions and leave margin in suboptimal segments. Overall, whilst our internal partners are important, it's the end customer that counts and needs to be our singular focus. Going forward, we will value the role of the wholesale business, but we'll focus solely on the external relationships and external customers, specifically the reseller market. We will shift category management activities closer to the end customer, and we will redirect internal margins to the business units that sell externally, e.g. Burson. The wholesale business must be aligned and cohesive. It must be an integral part of a single supply chain and be both skilled and capable of servicing the customers that it plays with. So now let me turn to our future, starting with the question of why we think we will win. There are 4 areas we see as critical to our future success. Today, we have a favorable starting position, but we need to ensure that we build upon these positions. The 4 areas are: focusing on our premium brands, including both owned and exclusive brands; secondly, an unmatched customer knowledge across all of our categories; thirdly, nationwide supply chains delivering to stores and customers as required; and finally, an extensive and optimized network. Let me deal with each of those in turn. Our portfolio of brands is an asset. Our own brand portfolio is also an asset, but we need to expand this portfolio into the relevant white space. We have excellent relationships with our suppliers, but I'd be the first to say that we can always be better. We are known today for our extensive range and the quality of our service. Tomorrow, we want to be known not only for a range, but its relevance to the car parc and the opportunity it provides for our customers with continued level of service excellence. The words on the front page are being obsessed by our customers. Knowledge of them for the purpose of being more relevant and helping them serve their end customer is paramount. Our knowledge needs to be deep and shared across our business units. Our team members today have an outstanding knowledge of parts and the auto product that they serve. The development of the product range to help customers is both a skill and an advantage. Coupling that product knowledge with deep direct customer knowledge has a potential to shape our service proposition, enhance service levels and unlock efficiencies right the way through our supply chain. Now speaking of supply chains, after a rocky start or at least here in Australia, our distribution center network is clearly already proving a game changer. Abdul will speak later this morning on the evolution of the network, but we've come a long way. From Preston, which was Burson's key site or Nunawading, Autobarn's key warehouse, we have shifted to centers in Tullamarine here in Redbank, Sydney, Perth, Adelaide, and of course, Auckland. Our DC network can now cater for the whole business. These centralized DCs service our branches and the balance of the holdings to ensure efficiency and customer service. Now to be clear, we've still got some way to go. DCV is fully operational as is Auckland. DCQ, I guess, would be about 70%. But Sydney, Perth, and Adelaide are only new to the network. We'll continue to consolidate our core holdings into these DCs and efficiently move stock closer to the customer, as required. In addition, our e-commerce platforms can avail themselves of this entire network to seamlessly move product into the hands of customers and into the hand of end consumers, as required. Finally, our fourth area of advantage is our network. We have over 900 sites across Australia, New Zealand, and Asia. Our proximity to our customers is excellent, but we can add to that network. These additions can and will be replicas of the existing sites, but also importantly can be different and reflect our ability to bring new sites and types of stores to our customers, satellite stores, store within the store, or even super sites. We'll actively experiment to determine what's best for our customer and equally what is an economically rational execution for Bapcor. We'll go to market in 4 segments that align to the way in which we operate internally. The first, Trade, which includes Burson, Precision, Blacktown Spares, and Asia. The second, Networks, which includes AEG, CVG, and the slim down wholesale world. The third, Retail, including Autobarn, Autopro, Midas, and Opposite Lock. And finally, New Zealand, including BNT and HCB. The different business units will line up against our core customer groups of the generalist mechanic, trucking commercial mechanics, DIYers, enthusiasts, car carers, the specialized auto mechanic, and parts resellers. Now our operating model needs to be a function of the customer-facing arms of our business and an integrated back-end service model that is leveraged right throughout the business. The customer-facing businesses and all the brands are outlined on the left-hand side of this chart. These are well-established in their customer-facing roles, but they must leverage the back end. Now this is a change from today. Our history was going to market and operating quite independently. More recently, we tried to adopt a one Bapcor approach, what is envisaged as a logical and sensible approach that leverages our customer-facing strengths but seeks to obtain efficiency and effectiveness right across that back end. It's not a new thing. We've already started to do that in a substantial way. We just need to go further and faster. We've already started to align our core functions and our supply chain. We need to harmonize and standardize processes and tools for longer-term prospect but will be well worth the course. Now we see 6 areas across the group from where we can organically grow. To be clear, our near-term priority is organic growth, but with a strong balance sheet and inorganic options available, each would be assessed and, as they arise, potentially executed. The 6 organic opportunities are: firstly, building on our Australian strengths and growing our market share; secondly, closing and then eclipsing the gap in New Zealand; thirdly, retail stabilization and then growth. This is both in franchise and corporate operations right across our core brands. Fourthly, it's about network expansion. We are a network business, and that means we need to grow that network in net terms. Fifth, we need to streamline our core systems, consolidating appropriately. We will also invest strategically in systems that transform the base and enhance our digital tools, and enhance our ability to directly talk to our consumers and customers. And finally, we'll maximize our value to our shareholders by consistently increasing our returns. The slide outlines across our 4 segments the allocation of these opportunities, or the application of these opportunities. These aligns to the way in which we want to win. The underpinning foundation for all activity is our team and the capability that we have within all our brands within Bapcor. So firstly, within our all-important Trade segment, the cornerstones of growth are network expansion, investing and growing in our equipment business, the development of our own brand portfolio, and finally, growing our margins. Within the new Networks segment, it is network expansion. It's continued consolidation of warehousing plus, and importantly, leveraging what we've already completed to date and it's expansion of our CVG offer into the European truck space. Within retail, it's the continued capability change at a store level, a continued focus on our own brands, the expansion of the Midas footprint, the reignition of investment in our core brand properties, and it's improving store level profitability. And finally, inside of New Zealand, it is about optimizing the existing network. It's investment in our selling capability and the contact centers we operate. It's core brand focus in that market. It's investing and growing in our equipment penetration. And finally, it's about our supply chain optimization. Now we must be set up for growth. Gone are 300-plus initiatives. We have a focused approach that should align to our wider business. It needs to be specific to the customers' needs, and it needs to leverage commonality right across the group. The left-hand side of this slide repeats what has been said to you consistently at our F '24 results, at the AGM and most recently at the half 1 '25 results. We've been consistent about execution and delivery, and that's a trait we intend to own. For what is to come, the 6 imperatives on the right-hand side will guide the business, and they are optimize the network, a single supply chain, a relentless focus on the customer, digitizing the business, making all our stores fit the demands of the customer, and last, but certainly by no means least, simplifying the business for the benefit of our employees and our customers. So let me turn to each of these in turn. Our network is an ideal platform from which we can drive growth. Whilst we have more than 900 sites across our operations, there is plenty of white space. Our job is to access that white space in an effective and capital-efficient manner. Whether that's a replica site, a satellite site or a super site, each will be taken for the unique needs it needs to provide to the customers. We have a firm belief we can add 12 sites per annum to our Trade business and between 4 and 6 sites to our Network business per annum. Retail will see us stabilize the base, closing stores as required, and then grow only once we have the optimal model to follow. Our supply chain will be the glue between these sites. Abdul will talk in a short while about what that means. But in conjunction with that distributor network, we'll optimize service to our customer and, importantly, optimize the inventory that we hold across our entire network. Now, a brief comment on inventory. We are the first to acknowledge we have a lot of work to do in this space. It is a focus for us. And over the medium term, we intend to address it pretty significantly. But right now, that's a balance of the service we need to provide to our customers and optimizing both our stock turns and the GMROI we derive from each of the SKUs within our range. The chart mentions a multi-brand potential. Well, in New Zealand, we already successfully operate multi-brand sites, and we intend to explore that potential here in Australia. Turning to the right-hand side of the chart, we believe a single supply chain is an advantage that we have yet to fully exploit. We have already laid down the foundations with the DCs of varying sizes in each capital city. I've already talked to you around the various stages of evolution of those sites. But clearly, the smaller sites in Sydney, Adelaide, and Perth have yet to show the potential that we truly believe they have. These sites will cater for all of our businesses, being the focal point of distribution to our store and branch network, along with direct deliveries to store and customers where the economics work. Efficiency and cost effectiveness are paramount. Therefore, the way stores are positioned, where they are positioned, will combine with the optimization of the dispatch routines to make them fundamental to customers' needs. We have plenty of opportunity to drive space across all this world. Now I've used the word experiment. Let me give you a real-time example. The chart refers to a micro fulfillment center. This is a single small warehouse experiment in Dandenong that looks to break the inventory span across the congested eastern suburb of Melbourne. It utilizes a larger footprint to allow smaller stores to pull from that site rather than from the Tullamarine DC. It's early days. It is an experiment, but it's already showing promise. Now moving through to customers. Well, they certainly count, and they need to be at the core of what we do. I'm pleased to say we actually have an excellent customer ethos, but we have to learn more. We have to do more, and we have to do more with the information that we have and ultimately help our customers be better and more profitable at what they do. Having a clear customer value proposition for each of our businesses, rewarding loyalty in a manner that is important to the customer, but it also delivers value to ourselves, being able to recognize that customers as they trade across the Bapcor Group are equally important, and we need to help them trade all the way across the Bapcor Group. Customers trade with us in all forms, professionals, amateur mechanics, DIYers, enthusiasts, et cetera, but they all count. And we want them to continue to play in each of those roles all the way through their trading lifetimes. We don't know enough about our customer to do that today. A specific investment that we'll be making is in the CRM platform, but one that services the entire organization. We've got plenty of place to digitalize our business. Given our decentralized origins, we have the opportunity to drive both efficiency in our business, but equally to reduce the friction that some of our customers do experience with us as they deal with the different operating units or to harmonize the back-end operations of our 2 e-commerce platforms. I mentioned that in November 2024, we went live with changes to our Autobarn systems or e-commerce platforms. We've rolled these changes already into the Autopro business over the past couple of months, and we're about to address Midas in the months to come, improving customer service, enhancing stocking, and the delivery options for small and bulk items that are on the list of improvements for things that we can do. Ezyparts, the online parts catalog in our Trade segment, has made excellent progress after a standing start about 3 years ago, and there is more to come on that world. Linking these tools with customers directly, enhancing the loyalty aspects of both systems and continuing to improve the customers' journey as they interact with us digitally are front of mind. But we need to optimize the location of our stock. Today, we carry an extensive range, but it's generic. That is a common range across most of our stores. We can match that range carried in each store with the car parc that surrounds that store. Requirements outside of that basic range can then be met through the centralized distribution network around the country. Now to be clear, we are not there yet, but we can move to that space. Bapcor needs to rediscover its performance ethic. This is throughout the organization at a store level, a regional level, a state level, business unit and group. Having a clear linkage between our group outcomes all the way through to the businesses that drive them, a clear line of sight on performance and importantly, the drivers of performance. I said earlier, we had a positive customer ethos, but this needs to be more balanced. The value exchange needs to be balanced between ourselves and the customer. Customer service across all business units will continue to be a driver based upon knowledge and the expertise we offer directly to those customers. As such, we need to invest behind some core capabilities, strengthening those that we have and enabling them to move into the 21st century. These include selling, category and merchandising skills. Knowledge management will be a core capability for us going forward. Our parts interpreters are our core employees that face many of our customers. We need to find ways to enhance their skills and their abilities. This includes the use of AI. A critical ingredient for managing our, I say, fulsome inventory levels will be machine-based learning and AI with the introduction of credible but fit-for-purpose sales and operation planning tools across our organization. Many of our stores are tired. We will invest appropriately to bring the look and feel of the networks to a current state. But not only the outside of the stores, we'll invest in appropriate processes and technology to standardize operations to provide a consistent customer feel and, importantly, an employee experience. Finally, whilst the last of these imperatives, simplifying our business is fundamental. We will provide focus, clarity to our employees and facilitate the best possible outcomes for our customers. Today, we spend too much time trading with ourselves. This will stop. No more internal transactions, margins or shadow teams. Critical resources will go as close to the customer as possible and where investment is required it will be made. We will align our pricing to ensure we do not compete against ourselves. And by realigning margin structures to the selling entity, we will ensure optimal rating decisions are made in each of our business units. Finally, we will be clear on the role of Bapcor compared to the business unit. Our business units face the customer, supported by a common back end. An example, safety. There's only one way we do safety, and that's a Bapcor way. Another example would be our values. There are only 4 values, and they are the Bapcor values. Now before I move on, I want to briefly touch on, dare I say, the complicated technology world we live with at Bapcor. I'm often asked, and I'm looking at faces in the room who have asked me this question, will we be investing hundreds of millions of dollars in technology? I've consistently said no, and I stand by the no. We will invest behind the best breed of tools that enhance our operating capabilities, and we'll continue to consolidate our ERPs from many into smaller numbers. In recent years, we've eliminated or consolidated from 42 ERPs down to 19 as of the end of 2024 fiscal year. 19 will become 17 by the end of this fiscal year and 17 will become 15 by the time we get to the end of 2026 fiscal. Now don't get me wrong, 15 is still too many, but the process to get to a state of, let's say, 1 per business unit will take several more years. We'll take a very sensible and logic approach as we simplify the infrastructure of our technology across the business. We've taken the opportunity to refresh our ESG position. The refreshments have been not radical. They're not a departure from what we've previously talked about, but they have been informed by our 2024 materiality assessment. Governance has moved from a single pillar to being a foundation, and we now have 4 pillars: our supply chain, the communities with which we play, our environment and our team members. The measurement of success and progress will align to our strategic imperatives. We are well-progressed for climate reporting under ASRS and will move in on time in 2026. In parallel, we're going to continue to make the good progress already in train under our modern slavery initiatives and our packaging requirements. Now Bapcor has a robust and a relatively conservative balance sheet. This is underpinned by our strong cash flows. We have ample lines of debt facilities, and we intend to maintain those. Our gearing is conservative at a net leverage ratio of about 1.65x as of the half year just reported, and we intend to maintain that conservative regime. We must focus on working capital, especially our inventory. Our dividend guidance remains appropriate at between 50% and 60% of statutory net PAT. The recently introduced investment committee is providing us with both discipline and importantly structure in our project management and our capital investments. We intend to maintain not only the committee, but that structure and that discipline, and we'll introduce all our new products through that process. Now we need to provide a picture of what success looks like, both internally and externally. The outcomes have to be a product of our strategy and be reflective of both the financial and nonfinancial requirements of the business. We are continuing to develop an internal balance scorecard, one that tracks the KPIs and one that we feel is essential to both monitor the outcomes in the near term to what we do and when we trade, but equally, those things that actually drive our longer-term strategy. The left-hand side of this slide carries forward the 6 imperatives. The right-hand side outlines some of the core KPIs we see for Bapcor. As mentioned just the slide before, this list remains a work in progress, but we will land the final list over the months to come, and we'll produce a scorecard at our full year '25 results. We'll stick with those measures that we've chosen, and we'll report at each half year following. To be clear, our internal KPIs will be far more extensive than those that we share publicly, but it's our intention to be consistent with what we share to the external world. On this next slide, we display the indicative scorecard in 5 years' time. Why 5 years? Well, it's appropriate for the horizon for a business of this scale. It's also appropriate for a business that needs to undergo the change that we're going through. By publishing our actual performance each half year, you'll be able to assess our progress against the goals that we've described, but it allows us the ability to drive change and momentum over that time horizon. It is just simply impossible for us to define precise annual or even biannual outcomes. The F '24 column is our base where it exists. In some cases, we've yet to determine the answer, but we intend to do so as soon as we can. The FY '30 column represents our indicative view of the direction and trajectory we expect to achieve. I would stress that these are a mix of absolute outcomes, but also expectations that we have over that 5-year trajectory. Our revenue aspiration shows that we have a strong view that we can outpace inflation and growth in the car parc. By implication, we want to grow market share. I made this clear when we spoke about our growth opportunities. We have the real ability to drive positive leverage at a profit level. We have demonstrated in the current year that we're able to generate cost savings and intend to keep that keen focus. But we also intend to appropriately reinvest in the base of our business, as you well know, it needs it. I've spoken about inventory being a core focus. It hasn't been in many years. Given the breadth of our range and the long lead times associated with our range, getting a firm grip on this space will take time, but it is a must do. The inventory measure, so inventory as a percentage of revenue, is our current thinking and aligns with external benchmarks. We'll combine that with the notion of stock turns and GMROI to formulate what we think our inventory should be in a business like ours here in Australia. A quick word on cash flow. The focus on inventory is self-evident, but cash flow and importantly conversion remain fundamental. At our half 1 '25 results, we spoke of the need for a consistent level of conversion in that 80% to 90% level. Nothing has changed. The scorecard must include a measure of safety. This has been a focus for us over the last 10 months, and I'm delighted to say we're making great progress. But in the world of safety, there is always more to be done. We have just conducted an engagement survey in March of 2025. The outcome of 52% engagement is nowhere close to what we want it to be. Our target will be to move to within the top quartile within Oceania. We do not underestimate that task, but it is simply a must-do activity. And again, the work has begun in that space. If we are faithful to our customer focus, we must find a measure of health and importantly understand the drivers of those outcomes. I have a preference to NPS and Net Promoter Score as it is a trend over time that demonstrates our focus on the things that are important to these stakeholders. NPS also allows us to measure customer sentiment across what is a vastly different assortment of business units. And we do not as yet have that measurement in place, but we will. Diversity is an opportunity and it's one that we historically have been need to take in what is a very male-dominated workforce. We have landed on the macro female-to-male ratio. It's a massive opportunity for us to shape Bapcor, particularly for us to take a leadership position in the industry. Internally, we will closely manage the more specific opportunities, for instance, increasing the levels of female senior leadership and continuing to drive the closure of our gender pay gap. Our focus on digital will give light to the required level of digital transactions. The target will be set based upon the business units that are playing in that space and encouraging and facilitating a frictionless journey for our customers who choose to pay with us in a digital environment. And finally, ESG also features, but it requires us to land a single measure for the purpose of this scorecard rather than the multiple ones that we have within our current ESG framework. So with that, let me open up to questions and answers in the room. Please wait for a microphone to come your way if you want to ask a question. And we'll spend the next sort of 20 to 30 minutes trying to answer the questions you might have.

So just in terms of the presentation, a lot of discussion around the store refresh, training of staff, investment in ERP, like a lot of investment. Is it expected that you have a significant rise in your CapEx over the 5 years? Or is it largely self-funding through the cost out that you'll be able to deliver during that same period?

So I probably -- yes, there is an investment we've got to make here. I wouldn't characterize it as literally all out with limited in, which can be sometimes the view of investment, maybe even sometimes the investment view in Bapcor. The capability changes we're making, particularly in the retail world, if I use that as an example, it is actually by bringing retailers into run store. So we are hiring for people who actually know what a customer needs and expects at that level. From a technology perspective, yes. Is that CapEx? I'll let the accountants determine what that ultimately becomes just given the way the accounting rules today work. But the way we'll fund it is out of our cash flows. I'm not saying to you that you can expect our CapEx levels to macro increase in the years to come. We will look to fund it from within our existing resources. But I think bear in mind, a lot of the capability we need is actually where we need to buy it into the businesses part of our full-time staff.

Angus, Craig Woolford with MST Marquee. Just I'd like to focus on the retail business. It's not the biggest revenue generator, but it does look like the weakest return on capital. It would be great in future to get some sort of measure of return on capital by segment. Is there some simple low-hanging fruit that can improve margins in that business? Or does it need to grow market share and improve through operating leverage to improve margins because it does look incredibly weak on the margin profile?

Yes. I think all true observations, so bull's eye. Margins will grow in a couple of ways. So firstly, it is around -- we have multiple stores that just aren't performing at the level that they need to be. And the way we will deal with those stores is to either close them or to improve them pretty dramatically and pretty quickly. Second component will be around the way we promote. So many of you have heard me say as we went through the half 1 results approach that our historic basis of trading was 5 to 6 all store sales in the year. That's what we've been doing for many years. We've changed that promotional rotation to now category-specific promotions that are in the main funded by our good suppliers who want us to support their products in that particular promotion. Two core changes occur. So firstly, you're not giving 20%, 25% off everything in the store, even though customers weren't necessarily wanting to buy everything. Second component obviously is where our good suppliers fund that margin differential. We get the benefit of traffic, the attach, hopefully, of things that are not on Pro and secondly, a supplier funding that margin. So those will be 2 basic examples. You used the word sort of low-hanging fruit. So I think in the world of our retail business, nothing is easy right now. I think that would be an honest reflection. But there is low-hanging fruit that we're going after. Megan, who you'll no doubt catch up with later on today, the amount of retail, Bapcor retail, generated staff turnover is large, all because we know when we take someone out of the business who doesn't know what they're doing and put someone in who does know what they're doing, we get an immediate lift at the store level. That's hard work. And you don't get the benefit day 1 because, obviously, they need to learn out peculiarities. But the reality is by making that change, having someone in the business who knows what they're doing, you get a valuable uplift that is quite sustainable.

So how are you curing them?

I'm going to be quite facetious and flippant here. We're looking for more than a pulse. I can't say any more bluntly than that. I mean I've been surprised when I walk into stores. I'm not an all-time retailer. I've spent a bit of time running around a retail environment. But the very first thing you do is you walk to a shelf. And second thing you do is you're right behind the first thing on display and you just look at the dust. I didn't need white guards to find the dust. We have stock that we just don't need in the store and the team has been doing a great job of getting rid of that stock. And yes, that's hurt our margins in the short term, but at least we're getting rid of that stock. But when you ask people how they deal with customers, what they do, you can sit there and watch and I'm now at a place where I can't do it anymore. My face is unfortunately a little known, but I used to be able to walk into most stores and just watch. And customer walks in the front door, how long before a retail assistant walks up and actually say, can I help you? Just the most basic things of retail service, we're now making sure we have in place. And they don't cost any more than the others we used to have.

Just a second question, if I can, Angus, just on private label. It's sort of weaved into the presentation, but maybe if you can just firstly level set where that opportunity is across the different business segments, probably more retail-centric. And is it an opportunity of higher private label penetration or just better sourcing and margin outcomes on those private labels?

I think right across the business, we have an opportunity for greater penetration into our portfolio, so whether that be at a retail level or even a trade level. We have some great private label brands. It amuses me when you go to a new organization trying to define what private label is versus own label versus exclusive versus white label. I mean, I can see the looks on your faces. But we have many good brands in our portfolio that we own. And we, in some cases, have allowed our brands to be traded out relative to third-party brands. And the reason that we have done that is at times because of the margin split. So if I use an example, well, we have a braking brand, predominantly sold through the Burson world. It's an entry-level braking brand. But because of the way in which we've allocated margin on that braking brand, the Burson team don't want to focus on it because they make more money selling a third-party brand. And yet we've got a very large part of that entry level to the brake world that we should be using to help customers navigate that brand range hierarchy.

Tim Piper from UBS. First one, just on network expansion. I think the last few years, the group has probably struggled for growth with no network expansion. You've kind of outlined 12 in trade per year. Maybe just broad brush strokes, 12 Trade stores per year, what kind of investment would that require? And then what would your expectation be on an EBITDA payback time frame per year on those new stores?

Yes. So thanks, Tim. So firstly, this will be the first year that we, I suppose, truly add net stores to Burson. We had 6 to 7 -- 6, I think, in the first half. And I know in many conversations, we said you could expect the same in the second half. So in our current year, we expect to do 12 in person. I'm not going to give you a payback. My view would be it's okay. It certainly pays back over inside of that planned horizon. The question for us is how we can do it faster. With all respect to our Burson network, I mean, it's not like a retail store where you're spending a lot of money on, call it, the look and feel and the fit out. Most of the investment in a Burson store would be racking and then inventory. And I think I've spoken a lot during this presentation on inventory. We don't need to hold that. But if you sort of think about a Burson store today, to put the full range into that store, we probably don't get change from a cash outlay of probably $600,000 just in terms of the value of the inventory that gets put in that store. And I sort of think of that as part of the payback criteria on a store. It doesn't need to hold $600,000. Could we do it with $300,000? Let's go for it and feed it out of a shed like this and just turn the stock faster inside of that store. That's the part that we've got to get right. But in fairness of the business today, the over 12 that are going today, I think crude numbers, 9 will be call it, what I describe as almost replica sites, sort of big 600 square meter kind of sites. And there's a couple of satellite sites in there that we're beginning to experiment. We'll find a better halfway house. So we end up with, call it, 12 new sites that are capable of servicing the mechanics in the area that they play with at that time. I've got the same view on retail around we need a network plan. We need to know where we want to go. We need to know when we can get access to that site. We need to know the mathematics associated with, call it, the build and the return criteria on that. And that should be quite formulaic. And even in that network kind of experience, you don't get them all right, but you get 80% of them right.

So $600,000 in working capital and then rough idea on CapEx per store?

I haven't got a number on the top of my head. It's not a huge amount. You just put your head around a Burson site. There's one on the way through here as you leave. They're not particularly sophisticated. It's the thing from a retail site where, yes, the investment in inventory at times is too big in that retail site, but a lot of the investment goes into your furniture and fixtures, and the lease out of the store.

Yes. Got it. And within the framework of those 5-year targets of revenue growth and EBITDA growth, have you kind of mapped out or thought about what the contribution from network expansion is in those 5-year plans versus what is just a like-for-like improvement in the underlying core business driving growth?

So I've given you total. I haven't given you a like-for-like there. But we have got that internally, yes.

Okay. And just maybe one more around sort of costs. You've kind of talked a lot about optimization and things like that. But does it seem unlikely that you'll come out with another quantified sort of cost-out target or cost-out range to be put through the business?

So it seems unlikely. It is. I don't want to put another cost target out. But to be clear, you can pretty clearly see we know that there's cost that's got to come out.

Elijah Mayr here from Goldman. Just a couple maybe on retail. Where are you at with the journey, I guess, in the store, the actual products that you store layout and the products that you're actually showcasing? Are there any stores you can point to as an example that are at where you want them to be? And how far are you at sort of rolling that out across the network?

So, Elijah, good question. So let me probably take that one on notice to come back and talk to you about a bit more around the direction we want. Our stores are very different. So when I look at the regional footprints that we operate, and regional doesn't have to be the back of nowhere. I mean it can be [indiscernible] where we've got some big stores that are up there. And they fulfill the role is very, very wide, everything from car seat covers, polishes all the way through to, in some cases, marine equipment as in batteries, et cetera. They are a full service store based upon the demography of the customer in that space, and they work really, really well. Probably fair to say the stores I'm least happy with would be our intercity stores. And what we want more of is to capitalize on the knowledge and service statement that customers would attach, particularly to the Autobarn brand. And in many cases, those intercity stores can't do the fitment work that's required there. So whether that be a set of roofs or even a bunch of wiper blades, they just don't have the space available. So that's what we want to find the right model around, which is how do we truly service the customer when they come in, not just to buy something off the shelf, but if they want to fit it to be able to find the opportunity to actually get that product fitted to them in the appropriate amount of time and equally, how we think about the inventory management around those things. Megan is already at the place we don't need to be carrying bull bar ranges, roof rack ranges, et cetera, et cetera, in every single store. We need to make sure that those products are available when the customer wants them fitted. They are fitted on time for the customer. They drive away with the successful purchase, not an instantaneous decision.

And then maybe just on the FY '30 targets. Obviously, noting that it's a CAGR, but are these the sort of growth rates you would expect going into sort of FY '26? Or is this going to be sort of back-end weighted, or no specific guidance?

I haven't, obviously [indiscernible] truly away from SKUs as the SKU of the line here.

And do those targets include any bolt-on acquisitions? Or is this purely organic from your perspective?

So right now, if you think about the year that we're in, as example, we've done little bolt-ons. We did one in the ACT that we announced as of the half-year. So those things are all in our contemplation. Talking 70, 80 site acquisitions, nothing on our minds right now, but onesies and twosies we'll keep doing and keep doing well.

Jared Gelsomino from Morgans. Just a question on the retail, I guess, piggyback on the network expansion a little bit. You obviously touched on the site growth for Specialist as well as Trade, but I guess Retail is not going anywhere until you get it right. I guess just interested on how many locations are unprofitable that you need to sort of exit before things are actually ready to go and look to growth again?

Yes. So you've summarized pretty well with one exception which you said we'll look to expand the Midas footprint, so continue growing that franchise network. There's a good legacy of that over certainly the last 12 to 24 months. So we do have unprofitable sites and Megan and the team are working through which ones we need to be smoking some drugs on, frankly, to believe that we can get them profitable as distinct from others where, frankly, we just need to shut the doors on them. So that's work we're doing, but there's a commercial position that goes around that as well, but we have clearly got those stores in sight.

And I guess what would like a rightsized retail offering look like before you can actually grow the network, I guess?

I don't have that number in mind.

Maybe just a real quick one on the employee engagement, obviously, quite low and it's not easy to turn those things around. I guess maybe you could just speak to sort of what initiatives you are going to put in place to drive towards that target of 75%.

Yes. Look, so I think 52% is not a number that we're happy with. It's not a number that we were surprised by. I think many of the message that I would get is, as an employee, what am I looking for? I'm looking for clarity of where I'm going as part of my business. So this is part of that, just being very clear around where we're going and why we believe we can get there. It's been clear that my boss is going to be in play. So the members of the leadership team here would have probably had a really we answer that question because I'm #4 in 4 years, maybe 3 given one didn't fund. So that clarity around who's leading the organization is what employees are wanting. They're wanting to understand this question of Bapcor's future. So just describe that to me and execute against it. And then there's a lot of churn going on in the organization. Whilst it's the right thing to be doing around consolidating sites, at an individual level, that's pretty disconcerting. If you've been left by yourself for 5, 10 years and then all of a sudden, you're being bundled up and even with the best change management well in the way, if you've been left by yourself and now all of a sudden, you're finding you have to pay with a whole lot of other people. That's a lot sometimes for an employee to take it. So they're wanting that kind of stability. So those would be those things. But we've started that process. And as a start, we communicated the results literally within 3 days of getting the results. That's a first of that call, just be really transparent around what's going on, what needs to be done. And the feedback we're getting from people is that's great. Please keep it coming. So a long way to go, but some pretty good starting points.

[indiscernible] You want people coming in and doing stuff slightly different. Does it go backwards before it goes forwards?

Look, in some cases, that is true. Yes, we'll go backwards before it goes forward. In other cases, with the right communication, we haven't lost a beat. I was talking earlier outside to one change we made in Melbourne, one of the first and probably one of our bigger consolidations that we did. And because of the way in which the 2 sides of the equation like partnered, that business literally didn't miss a beat. And then 2, the acceleration was stunning. We had -- I start with the people happy employees because they actually went from a place where the carpet wasn't -- well actually, there was carpet on the floor , you could simply say that. But all of a sudden, they went and the customers were getting the same, if not better, service levels. And all of a sudden, they had a range that they couldn't have played with beforehand all because of the way in which they went into the conversation. In other places, there is change resistance. And I get that. That's, call it, quite natural. Our job is to find ways to bring people with us on that journey. But where we do it well, the acceleration is incredibly positive.

You've mentioned sort of change and lots of change and inertia, et cetera. And it feels like better than before, struggled to get momentum in lots of different categories. What were the learnings from what didn't work in the past that you need to change as you go forward to generate the targets you've got for 2030?

So I sort of talked a bit about trying to never use those words again in a public forum. And I would probably say the first thing is you haven't seen 300 initiatives. That would be the starting. That would be part 1. Part 2 is being really clear by business unit, what we expect from them. Part 3, what we expect to do to a business unit in order to help them be successful and then how we go about engendering that change. But the starting point is what I put up here, I'm not trying to make this complex. None of us are. It's pretty simple in terms of the articulation. The doing is hard, don't get me wrong. And therefore, the doing then comes back to what are you going to do? When is it going to get done and where in the sequence does it get done? It is not trying to sequence 300 things. It sequence a smaller number of things and just do that once. So you don't have to come back. So we're not underestimating the degree of change here by any means, but we're trying to make sure that we just don't confuse a whole lot of people, including ourselves, frankly.

I guess probably a follow-up, different sort of way of attacking a similar issue, just around the risks. Like ultimately, your margin target, implicit margin target for 2030 is quite high, higher than where it was pre-COVID. It may have just been that during the peaks of COVID. But what do you see as your internal risk to achieving that outcome? And externally, what sort of competitive environment do you need to see? On the retail side, we've got Bunnings entering the market. We're seeing Repco taking market share as well. Interested in your comments on that side.

Yes. So ultimately, we need 4,500 people to sort of push in, call it, a common direction. So that's probably the hardest part about the whole process. I mean it's no amount of technology, no amount of smart and if you can't actually get the hearts and minds of people pointing in the right direction, then this won't work. And therefore, our job is to help those people get to that place. We're not underestimating one competitors. We do compete against good competitors. I will publicly talk to this question around market share, I mean, Craig, you raised. I have not seen any data that says we're losing share to Repco. So I really love to have that conversation given we're knee deep in that data, I'd love to see that. Retail, definitely, we're #3 in the market. We understand that the people we play against there are very, very good retailers in that space. So we need to make sure we're fit to fight there. We're acutely aware of where others are getting into the category and where they're playing and where we will win and where we won't. So well before Bunnings made its announcement the other day, we're well and truly aware of what they were doing. And they're good -- actually we take that back. They're a very good retailer. But we know what we stand for. We know where we think we'll win in that particular game. We're not assuming all of a sudden Australian market conditions turn to a racing gale behind our backs as we head into this space, nor are we assuming that the economy will suddenly turn to the better. We're trying to take a fairly pragmatic approach to where we are today. But we go into this with a fair bit of humility.

And just I guess, almost a housekeeping, but this internal sales piece, should we be conscious of how that might impact the segment reporting? What is the impact? And also, are there any significant items that we should be cognizant of with the new strategy of unveil?

Yes. So we don't have any market announcement today. You will get a revised segment view. We'll do that as part of our 2025 full year reporting. Obviously, our external result doesn't change. But when you see our segmental results, that includes internal and external margin, particularly in the wholesale world. So we'll pull that back and give you the clean 4 segments with comparatives when we do the full year FY '25.

Just variation on that same thing. I know you don't want to be drawn on the SKU of -- the targets and how they sort of plan out. But can you just talk about actually how you derived them and came up with the end result for FY '30 or the aspiration for FY '30?

So we've modeled the business based upon what we do today and what we need to do in the future. So it's quite an intricate process to, I suppose, assemble the mathematics. But just to make sure we're clear, McKinsey we know in the room.

When you modeled it, how did you work out when stuff starts to come through, and what comes through?

Good thought.

Thanks Angus. Peter Marks from Barrenjoey. Just a quick follow-up on, I guess, the Retail review. Just interested in, I guess, what else you considered for this business? Like, did you consider divesting it? It sounds like a lot of the issues are in the corporate stores rather than the franchise stores. So, did you consider shifting to a fully franchised model? And I guess maybe if you could compare what the franchisees are doing that you think might be some easy wins to get into the corporate stores?

Look, so I think we looked at all the alternatives that are around, and that's probably all I'll say there. Look, I've come from a world that was 100% franchised and moved into a corporate because we had to. Going back requires a whole lot of things to be possible. And I think once you've actually moved to the corporate store world, you can't go back, unfortunately. Financially, it would be awful, put it that way. Franchisees did perform well, and we have many of them, have got some pretty blessed locations. And no difference franchising to a corporate ownership location, location, location is important. But many of those franchise operations have got territories for which they are called the auto parts player in that space. And therefore, as I said a bit earlier, they get to trade across not just car seat covers, but all the way through parts and other things, including marine. Therefore, the side of our corporate stores needs to be the best. My view, personal view, we made some bad decisions when we corporatized. So we naively thought how hard is it to be a corporate store operator when you're a franchisor, incredibly difficult. Franchisees provide a lot of skill inside of their store that if you don't have that skill corporately, then you probably end up with a little bit of what we've got today. And the other part was I use the word humility, but we certainly didn't have any and certainly lacked, I think, plenty of hubris around. We sort of thought that's a great franchise store. How hard could this be? And we then went and bought the franchise store with none of the back-end skills, or even worse, we went and saw a poorly run franchise store and thought, hey, how hard can this be? We can turn it around. And we paid lots of money for a store that we had no skill or capability capable of turn around. So that's the legacy that Megan and the team have picked up, and we're now working our way through how to make those stores work. Some cases, we won't and we'll cut back. Others, we are turning them around. But a lot of what goes on in the store, I said it before in our corporate staff, the franchisees on the ground orchestrating that. So when a customer walks into a store and one of their employees hasn't within about 10 seconds gone and said, can I help you, ma'am, sir, whatever it might be, the franchisee is the person making that occur. If we don't have the right retail managers in there making sure that occurs, this is just a simple example of basic retail execution that just falls flat.

And can you give us a sense of how many you think might be closing, I guess, if you...

That question was asked before. I said no. We might be done. Nothing else. Well with that, thank you for your time. I appreciate that. Let me again ask Abdul to come up to the podium and just give you a bit of an overview on our supply chain before we head out.

Good afternoon, everyone, and welcome to Bapcor's distribution center here in Queensland, officially known to us as DCQ. My name is Abdul Jaafar, the Executive General Manager of Supply Chain and Procurement and it's a real pleasure to have you all here with us today. Today, I'll be taking you through Bapcor's supply chain evolution, which is a journey of improvement. So let's start with where we were 3 years ago. At that time, Bapcor operated a decentralized supply chain with each business unit managing its own stock and warehousing. Stock visibility was siloed, limited to individual business units. The structure created fragmentation and inefficiencies. Although we had opened a brand-new state-of-the-art distribution center in Victoria with high expectations, it didn't deliver the results we needed. We had major challenges. Orders were frequently incorrect. Our layout was inefficient. The network couldn't get the stock where it needed it. And ironically, instead of centralizing supply, our store network relied heavily on our external suppliers to deliver directly to them, essentially bypassing the very infrastructure we had built. But we didn't stay in that place. We took accountability and used that experience to spark real change. On the next slide, I'll talk to you about our current state. So fast forwarding to today, and while we're not at the finish line yet, we've made significant progress. Our supply chain has evolved into a more centralized, scale leveraged network. We're in the process of becoming fully efficient. There's still work to do, but we're well on our way. So far, we have optimized operations in our major DCs being Melbourne and Brisbane, supporting smoother, more reliable stock movement. Smaller distribution centers in Perth, Sydney and Adelaide bringing product closer to the customer, cutting down lead times and touch points. Our inventory approach is also evolving. While we're not yet operating with full enterprise-wide demand planning, we now have a much clearer view of total inventory across the network that visibility is allowing us to make smarter decisions. We're currently leveraging those insights to better position stock and reduce our inefficiencies. Through Project Nexus, which is the project name we have given to review our network, looking for opportunities in fulfillment. We're actively removing duplication in the network, ensuring the right inventory is in the right location without unnecessary overlap. Project Nexus itself has been a key enabler of this transformation. Over 25 noncore sites have been closed. Key businesses impacted are within the wholesale segment. Fulfillment has been streamlined, customers gaining great access to group-wide stock with many of the changes and service levels continue to improve while also reducing operational complexity. Our experimental micro fulfillment center that Angus touched on earlier in Dandenong is a step forward to a more responsive and efficient supply chain. It enables faster dispatch of higher turnover product, centralized management of slower-moving inventory and it helps optimize our store footprint to better service high-demand areas. Dandenong was selected due to its strong trade presence, over 240 mechanics and significant revenue. And because the site was surplus to need with an existing lease, this made for an ideal location to test and learn. Early signs are encouraging with improved stock positioning already helping enhance the customer experience. The insights we gain here will guide the future design of our network, including where micro fulfillment centers can add the most value alongside of our store network. Finally, our offshore consolidation center pilot is helping us rethink how we source product. We're consolidating stock overseas and shipping directly to high-demand states, cutting lead time costs and supply chain complexity. It's clear the transformation is underway, and we're not done, but we're moving in the right direction with greater visibility, smarter positioning and a stronger foundation for the future. Our future state supply chain looks much like this. Looking ahead, we're not just optimizing our operations. We're positioning Bapcor's supply chain as a true competitive advantage. We're looking at greater levels of consolidation in '25 -- FY '25. We're taking a holistic view, reassessing our entire network from purchase order to last mile delivery. So what might this future state look like? Greater use of our larger distribution centers where multiple businesses can share both space and inventory, increased stock visibility and broader product ranges available to our customers, smarter delivery models with micro fulfillment centers seamlessly integrated into our network, a fully optimized offshore consolidation network, enabling vendor-managed inventory and more direct efficient shipping. A key shift here is the way we handle inbound freight. We'll be bringing in more full containers directly into our larger distribution centers. These containers will then be broken down as part of the fulfillment process, allowing us to better position stock across the network based on demand before it even reaches the store. This approach reduces handling, cuts down lead time and ensures the right stock is in the right place at the right time. The goal is clear, to build a best-in-class supply chain, one that delivers faster fulfillment, higher accuracy, leaner inventory and an enhanced experience for every customer every time. So in closing, from where we started, fragmented and reactive, to where we are today, confident, efficient and forward-looking, we've made remarkable progress. We're proud of the transformation, but even more excited about the road ahead. Thank you for your time, and I am looking forward to hosting you with some key team members from our supply chain leadership team for a tour around the facility where we'll actually walk you through the way we operate in our distribution center in Queensland. Thank you. Back to you, Angus.

So that concludes this part of it. What I probably suggest is take a bathroom break, go grab some water. Abdul will then end up breaking us into 3 separate groups to head around the DC. As I said, the plan is to take around the DC, Abdul, what half an hour, max?

Yeah.

And then some food, some refreshment before you head off to wherever you need to go to next. So for those of you that have turned up at the facility, thank you so much for coming today. I do appreciate it. I do appreciate the questions. For those of you listening in, I hope you got the same out of it. For those of you that tried to get here, but couldn't because the airlines didn't avail themselves of that this morning, thank you for participating.