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H arvey N

orm an A

nnual R ep

ort 2011

Holdings Limited

2011 Annual Report

Company Information

Registered Office

A1 Richmond Road Homebush West NSW 2140 Ph: 02 9201 6111 Fax: 02 9201 6250

Company Secretary Mr Chris Mentis

Share Registry Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 Ph: 02 9290 9600

Stock Exchange Listing

Harvey Norman Holdings Limited shares are quoted on the Australian Securities Exchange Limited (“ASX”)

Bankers Australia and New Zealand Banking Group Limited

Auditors Ernst & Young

Solicitors Brown Wright Stein

Key Dates

30 August 2011 Announcement of Full Year Profit to 30 June 2011 Announcement of Final 2011 Dividend

4 November 2011 Record date for determining entitlement to Final 2011 Dividend

29 November 2011 Annual General Meeting of Shareholders The Annual General Meeting of the Shareholders of Harvey Norman Holdings Limited will be held at Tattersalls 181 Elizabeth Street, Sydney, at 11:00am

5 December 2011 Payment of Final 2011 Dividend

28 February 2012 Announcement of Half-Year Profit to 31 December 2011 Announcement of Interim 2012 Dividend

13 April 2012 Record date for determining entitlement to Interim 2012 Dividend

7 May 2012 Payment of Interim 2012 Dividend

ABN 54 003 237 545

CONTENTS

Contents

Company Information 1

Contents 2

Financial Highlights 3

Chairman‟s Report 4

Directors‟ Report 14

Remuneration Report 19

Corporate Governance Statement 33

Statement of Financial Position 40

Income Statement 41

Statement of Comprehensive Income 42

Statement of Changes in Equity 43

Statement of Cash Flows 45

Operating Segments 47

Statement of Significant Accounting Policies 54

Notes to and forming part of the Financial Statements for the Year Ended 30 June 2011

Directors‟ Declaration 138

Independent Audit Report 139

Shareholder Information 141

Directory of Harvey Norman, Domayne and Joyce Mayne Shopping Complexes

142

FINANCIAL HIGHLIGHTS

Financial Highlights FY2007 FY2008 FY2009 FY2010 FY2011

no. of franchised outlets in Australia

192

194

195

194

195

no. of company-owned stores

franchisee sales revenue

$4.50bn

$4.86bn

$5.06bn

$5.19bn

$5.08bn

company-owned sales revenue

$1,329.43m

$1,428.85m

$1,440.65m

$1,344.46m

$1,556.38m

other revenues and other income items from continuing operations

$1,005.46m

$1,058.16m

$1,035.10m

$1,097.39m

$1,122.46m

earnings before interest and tax (EBIT) from continuing operations

$522.27m

$555.11m

$382.95m

$420.10m

$416.92m

profit from continuing operations after tax and non-controlling interests

$324.10m

$358.45m

$214.35m

$231.41m

$252.26m

profit from discontinued operations after tax and non-controlling interests

$83.15m

$0m

net profit after tax and non - controlling interests

$407.25m

$358.45m

$214.35m

$231.41m

$252.26m

net cash flows from operating activities

$444.43m

$289.45m

$442.50m

$386.87m

$358.97m

basic earnings per share

30.63c

33.76c

20.18c

21.78c

23.75c

dividends per share (fully franked)

11.0c

14.0c

11.0c

14.0c

12.0c

return on invested capital (ROIC) %

24.36%

22.66%

15.39%

16.80%

15.30%

debt to equity ratio (%)

32.58%

29.12%

28.49%

23.23%

29.16%

1 Sales made by franchisees in Australia do not form part of the financial results of the consolidated entity.

2 Includes the “Harvey Norman” and “Norman Ross” branded company-owned stores in New Zealand, Ireland, Northern Ireland, Singapore, Malaysia and Slovenia

and the “Clive Peeters”, “Rick Hart” and “OFIS” brand names in Australia. The OFIS brand ceased during the last quarter of the June 2009 financial year.

CHAIRMAN’S REPORT

Business Performance Our integrated retail, franchise and property system is sustainable and robust, despite the current economic and market headwinds. We have a strong balance sheet underpinned by a $2.04 billion property portfolio and generate strong free net cashflows from our franchising operations segment. Furniture and bedding franchisees continue to outperform the Australian market. Electrical and computer franchisees have maintained their dominant market position despite intense competition and deflationary pressure in key categories. Although retail trading conditions remain challenging, our integrated retail, franchise and property system has delivered a net profit from continuing operations after tax and non-controlling interests of $252.26 million for the year ended 30 June 2011 compared to $231.41 million for the previous year, an increase of $20.85 million or 9.0%. This solid result has been achieved by focusing on our core competencies and by the prudent allocation of resources to those activities and assets that are capable of generating long term sustainable growth and value for our stakeholders. These core competencies include:

■ Investing in the growth and performance of our Franchising Operations segment:

The result before tax of the franchising operations segment was $254.59 million for the year ended 30 June 2011 compared to a result of $310.68 million for the preceding year, a reduction of 18.1%. Our franchisees are committed to driving sales growth and growing market share. However, the strength of the Australian dollar, price deflation and intense competition has eroded average selling prices and, ultimately, retail gross profit margins. These factors have reduced franchise fees received. Our franchisees have managed a difficult trading environment well and are in good stead to take advantage of any uplift in discretionary spending in the local market. We will continue to invest in the ongoing development of our robust franchise system and will continue to support our franchisees where necessary to effectively manage changing retail trends and varying consumer habits.

■ Investing in and maintaining the high standard of quality of our consolidated property portfolio: A strong property portfolio is an essential component of the Harvey Norman brand and integrated retail and franchise system. Sustained but prudent investment in the property portfolio offers strength to our balance sheet and provides us with a steady and reliable income stream in the form of rent charged to franchisees and other third party tenants. Our consolidated property portfolio is valued at $2.04 billion as at 30 June 2011. Property-related income has seen an increasing trend year upon year and the combination of rental growth and stabilising capitalisation rates has delivered a net revaluation increment of $15.46 million for our Australian investment property portfolio and joint venture entities for the year ended 30 June 2011. We continued our store roll-out program in Australia and have opened two (2) Harvey Norman complexes, re-branded three (3) former Clive Peeters stores to the Harvey Norman brand and re-branded one (1) former Clive Peeters store to the Joyce Mayne brand. We opened three (3) Harvey Norman company-owned stores in offshore markets located in Novo Mesto, Slovenia in October 2010, Mont Kiara, Malaysia in January 2011 and Gisborne, New Zealand in May 2011. We have invested in a number of extensive new developments currently under construction or refurbishment. The large-scale developments at Springvale, Victoria (opening in October 2011) and Maroochydore, Queensland (opening in October 2012) will be anchored by Harvey Norman and Domayne franchised complexes and a vast array of dynamic external tenants to showcase the attributes of a truly integrated retail, franchise and property system.

■ Maintaining a conservative gearing ratio

We are conservatively geared and maintain a low debt to equity ratio of 29.16% and a low net debt to equity ratio of 21.87% as at 30 June 2011. Throughout the 2011 financial year, we have embarked on a number of projects and opportunities that have the capacity to enhance our enterprise and strengthen our brand. Investment in our integrated retail, franchise and property system and the reorganisation of our investment in several controlled retail entities has necessitated a rise in funding requirements. We will continue to take advantage of our strong balance sheet and low gearing to seize opportunities in the marketplace as they arise.

CHAIRMAN’S REPORT (CONTINUED)

Financial Analysis and Commentary

■ Net Profit from Continuing Operations After Tax and Non-Controlling Interests

Net profit from continuing operations after tax and non-controlling interests was $252.26 million for the year ended 30 June 2011 compared with $231.41 million for the previous year, an increase of $20.85 million or 9.0%. This increase is mainly attributable to:  the net property revaluation increment of $15.46 million before tax ($10.82 million after tax) recorded by the Australian

investment property portfolio and joint venture entities for the current year compared to a net revaluation decrement of $39.91 million before tax ($27.93 million after tax) in prior year, a turnaround of $55.37 million before tax (or $38.75 million after tax);

 an increase of $16.70 million before tax ($11.69 million after tax) in rent received from franchisees and third party tenants;  a reduction in the losses incurred by the company-run operations in the Republic of Ireland and Northern Ireland by $12.55

million before and after tax attributable to favourable foreign currency movements, lower impairment charges recognised during the current year and operational efficiencies and cost control measures implemented by management during the year;

 the profit of $7.34 million before tax ($5.14 million after tax) recognised on the sale of a development property located in Mentone, Victoria;

 a rise of $4.24 million before tax ($2.97 million after tax) in the market value of the listed public securities and dividends received by the consolidated entity relative to prior year; and

 the stronger result generated by the retail operations in Singapore, Malaysia and Slovenia which have increased profitability by $4.65 million before tax collectively compared to the previous year.

The impact of the above increases have been minimised by the following decreases in profit:  a reduction in the profitability of the franchising operations segment by $56.09 million or 18.1% before tax ($39.26 million

after tax) due to lower franchise fees collected during the year;  start-up investment costs and trading losses of $41.07 million before tax ($28.75 million after tax) incurred in the Clive

Peeters and Rick Hart operations since its acquisition in July 2010; and  a reduction in the result of the retail operations in New Zealand by $5.63 million before tax ($3.94 million after tax) due to the

turbulent trading environment which has deteriorated further pursuant to the GST increase in October 2010 and the major natural disasters in Christchurch.

The above factors contributed to a lower tax charge in the income statement by $34.16 million mainly attributable to:  a reduction in profit before tax from $386.46 million in the previous year to $373.94 million in the current year, a decrease of

$12.53 million;  the recognition of deferred tax expense of $19.67 million in the previous year (nil in the current year) resulting from a New

Zealand legislative change effectively excluding a tax deduction for future building depreciation expense; and  an increase in the research and development tax concessions following increased capital expenditure on eligible information

technology projects.

■ Franchising Operations Segment

The franchising operations segment in Australia delivered a lower segment result before tax of $254.59 million for the year ended 30 June 2011 compared with a segment result of $310.68 million for the previous year, a decrease of 18.1%. The reduction in franchisee sales revenue has translated into a decrease in the profitability of the franchising operations segment. Franchise fees received during the year decreased. Franchisees continued to grow market share across key product categories. Franchisees are well placed to take advantage of any improvement in discretionary retail. The franchising operations margin is calculated as the segment result before tax of the franchising operations segment over franchisee aggregate sales revenue. The franchising operations margin was 5.01% for the year ended 30 June 2011 compared to 5.99% for the year ended 30 June 2010.

CHAIRMAN’S REPORT (CONTINUED)

The table below shows the franchising operations margin for the following half-year (“HY”) and full-year (“FY”) periods.

Franchising Operations Margin FY June 2009 FY June 2010 FY June 2011

no. of franchised outlets in Australia 1 195 194 195

franchising operations segment result before tax

$293.04m

$310.68m

$254.59m

franchisee sales revenue 1 $5.06bn $5.19bn $5.08bn

franchising operations margin (%)

5.79%

5.99%

5.01%

HY Dec-08 HYJun-09 HY Dec-09 HY Jun-10 HY Dec-10 HY Jun-11

no. of franchised outlets in Australia

198

195

194

198

195

franchising operations segment result before tax

$148.17m

$144.87m

$186.79m

$123.89m

$150.36m

$104.23m

franchisee sales revenue 1 $2.61bn $2.45bn $2.78bn $2.41bn $2.74bn $2.34bn

franchising operations margin (%)

5.67%

5.91%

6.71%

5.15%

5.48%

4.46%

Franchising Operations Segment Key Statistics:

2007

2008

2009

2010

2011

Franchising operations margin 6.30% 5.88% 5.79% 5.99% 5.01%

Return on franchising operations equity (a) 49.63% 47.95% 44.12% 44.13% 37.52%

Return on franchising operations assets (b) 27.08% 27.75% 24.85% 25.70% 20.88%

$000

Revenue from franchising operations 828,676 865,836 913,312 944,323 938,927

Franchising operations EBITDA 356,035 354,454 377,277 384,800 332,459

Net operating cash flows from franchising operations

287,298

312,439

280,708

286,907

301,771

■ Sales Revenue of Franchisees in Australia:

Sales made by franchisees in Australia do not form part of the financial results of the consolidated entity. Retail sales in Harvey Norman, Domayne and Joyce Mayne complexes in Australia are made by independently owned franchised business entities that are not consolidated with the consolidated entity‟s results. Australian franchisee sales data for the year ended 30 June 2011 indicated the following:  Furniture and bedding franchisees continue to grow revenue and market share despite continued slowdown in the industry.

We expect that our brands will again outperform the market in FY12.  Electrical franchisees are operating in an extremely challenging environment accentuated by the strength of the Australian

dollar. Price deflation in the television category has continued and has resulted in reduced revenues, however transactions continue to grow. The franchisees‟ continued focus on white goods, cooking, home appliances and floor care has resulted in growth in these categories. Deflation will continue to dampen revenue growth in the coming year.

 Computer franchisee sales continue to be affected by a cautious consumer. Average selling price (ASP) declines are hiding positive unit sales growth in major categories. We believe the IT retail industry is entering a new phase of product re- generation with great mainstream technology, where new product lines in major categories are offering real benefits for consumers. “Tablets”, “Smart Phones”, “Ultrabooks”, “All in One Computers” and new generation DSLR cameras offer the next generation of exciting products. Harvey Norman franchisees are well positioned to continue to lead this market.

1 Sales made by franchisees in Australia do not form part of the financial results of the consolidated entity

(a) Calculated as: EBIT from Franchising Operations ÷ Franchising Operations Equity* [*equity allocated to franchising operations segment based on franchising operations assets as a proportion of total assets] (b) Calculated as: EBIT from Franchising Operations ÷ Franchising Operations Segment Assets (after eliminations)

Franchising Operations Segment (continued)

CHAIRMAN’S REPORT (CONTINUED)

■ Acquisition of Clive Peeters and Rick Hart Retail Brands and Assets

On 1 July 2010 Harvey Norman CP Pty Limited, a wholly-owned subsidiary of Harvey Norman Holdings Limited, entered into an Asset Sale Agreement (“ASA”) with Clive Peeters Limited ACN 058 868 018 (Administrators Appointed) (Receivers & Managers Appointed) (“CP”) and certain associated companies of CP to purchase certain assets for an estimated purchase price of $55 million inclusive of GST. The ASA was completed on 7 July 2010 and, subsequent to the satisfactory completion of the due diligence by management, a final purchase price of $54.75 million inclusive of GST was agreed with the Receivers. The inventory and plant and equipment assets of each of the twenty-eight (28) Clive Peeters and Rick Hart stores and the Rick Hart seconds store listed in the table below, the know-how and intellectual property rights and systems of the Vendors were acquired less an allowance for employee entitlement provisions and customer deposits received in advance. There was no goodwill recognised pursuant to the Clive Peeters business combination as the purchase consideration paid for the net assets acquired approximated fair value as at acquisition date.

■ Clive Peeters and Rick Hart – Sales and Profit Performance

Consolidated sales revenue for the year ended 30 June 2011 was $209.20 million for Clive Peeters and $70.46 million for Rick Hart, a total of $279.66 million for the two brands. This was below management‟s expectations highlighting the impact of the damage to the brands prior to acquisition and the lead-time for customer acceptance and confidence following the period of receivership. Heavy discounting continued post acquisition to expedite the sale of inventory acquired from the former business whilst management focused on building a stronger retail offering to consumers by implementing a new computer business. The subdued sales result was compounded by the difficult trading conditions experienced by all retailers and price deflation on electrical goods. The consolidated result for the Clive Peeters and Rick Hart brands for the year ended 30 June 2011 was a loss of $41.07 million before tax. This loss reflects investment costs in attempting to rebuild the damaged Clive Peeters and Rick Hart brands. Significant investment costs included higher advertising and promotion costs to repair the brand, start-up costs associated with establishing the new computer business and the costs associated with altering and integrating the existing operations into the Harvey Norman system. The consolidated entity has determined that the Clive Peeters and Rick Hart retail operations were not viable businesses in its current form and as a result of worsening economic circumstances. The consolidated entity has acted decisively to cease trading under the impaired brands. In August 2011, the consolidated entity announced its intention to close seven (7) stores and to convert the eighteen (18) remaining stores to the Harvey Norman and Joyce Mayne brand formats. The closure of the 4 Clive Peeters and 3 Rick Hart stores will result in a charge against the pre-tax profit of the consolidated entity of an amount presently estimated to be approximately $10 million in respect of the financial year ending 30 June 2012.

Clive Peeters * Rebranding to Harvey Norman and Joyce Mayne formats will commence in September 2011 and will be completed by December 2011

Victoria Queensland

 Bendigo Closure (Aug 2011)  Aspley Rebrand to Harvey Norman *

 Braybrook Rebrand to Harvey Norman *  Bundaberg Rebranded to Joyce Mayne in Oct 2010

 Coburg Rebrand to Harvey Norman *  Burleigh Waters Rebrand to Harvey Norman *

 Dandenong Closure (Aug 2011)  Loganholme Rebrand to Harvey Norman *

 Malvern Closure (Aug 2011)  Macgregor Rebrand to Harvey Norman *

 Moorabbin Rebrand to Harvey Norman *  Mackay Rebrand to Joyce Mayne *

 Mornington Rebrand to Harvey Norman *  Maroochydore Rebrand to Harvey Norman *

 Richmond Rebrand to Harvey Norman *  Maryborough Rebranded to Harvey Norman in Sep 2010

 Ringwood Rebrand to Harvey Norman *  Morayfield Rebrand to Joyce Mayne *

 Thomastown Closure (Aug 2011)

Tasmania New South Wales

 Moonah Rebranded to Harvey Norman in Nov 2010

 Mt. Druitt Rebranded to Harvey Norman in Aug 2010

Rick Hart Western Australia

 Belmont Rebrand to Harvey Norman *  O‟Connor Closure (Aug 2011)

 Joondalup Rebrand to Harvey Norman *  Osborne Park Rebrand to Harvey Norman *

 Mandurah Closure (Aug 2011)  Victoria Park Rebrand to Harvey Norman *

 Midland Rebrand to Harvey Norman *  Osborne Park Seconds

Closure (Aug 2011)

CHAIRMAN’S REPORT (CONTINUED)

■ Sales and Profitability of the Overseas Controlled Entities

New Zealand the GST increase in October 2010 and the major Christchurch earthquakes in September 2010 and February 2011. The New Zealand economy remains challenging characterised by low consumer confidence, high inflation and the significant decline in property prices. Whilst unit sales have increased, New Zealand turnover and gross profit margins have been adversely impacted by significant price erosion of key products, consistent with trends seen across the globe. The New Zealand operations are robust and continue to dominate and grow market share across key categories, despite the volatility in the New Zealand economy. Republic of Ireland and Northern Ireland Sales revenue from the company-owned stores in the Republic of Ireland decreased by €0.32 million (decrease of 0.3%) from €127.22 million in the previous year to €126.90 million for the year ended 30 June 2011. When sales in Ireland were translated into Australian dollars for the purposes of this report, sales revenue decreased by $25.03 million (decrease of 12.5%). This decrease is due to a 12.3% decline in the Euro relative to the Australian dollar used for translation purposes. Sales revenue from the two company-owned stores in Northern Ireland increased by £0.32 million (increase of 3.2%) from £10.08 million in the previous year to £10.40 million for the year ended 30 June 2011. The sales increase can be attributed to increased brand awareness in Northern Ireland as the two (2) stores have been trading for over two years. When sales in Northern Ireland were translated into Australian dollars for the purposes of this report, sales revenue actually decreased by $1.30 million (decrease of 7.2%) due to a 10.0% decline in the UK Pound Sterling relative to the Australian dollar used for translation purposes. The segment result for the operations in Ireland and Northern Ireland was a trading loss of $38.59 million for the current year compared to a loss of $51.14 million for the preceding year. The loss was reduced by $12.55 million or 24.5% partly due to the combination of an appreciation in the Australian dollar relative to the Euro, lower impairment charges recognised during the current year and cost control measures and operational efficiencies put in place by new management. We continue to grow market share in Ireland and are well positioned to take advantage of any improvement in macroeconomic conditions. Ireland reported a loss of €24.54 million for the current year compared to a loss of €23.47 million in the previous year, an increase in loss of 4.6% in local currency. The Irish loss in Australian dollars improved on the previous year by 8.3%. Northern Ireland reported a loss of £2.93 million for the year compared to a loss of £7.94 million in the prior year, an improvement of 63.1% in local currency. In Australian dollars, the improvement in the Northern Ireland segment result was 66.8%. In the previous year ending 30 June 2010, the consolidated entity had incurred an impairment charge of $6.62 million attributable to the write-down of plant and equipment assets located in Northern Ireland. The Board remains committed to Ireland for the long-term.

Sales revenue from the New Zealand company-owned stores decreased by $NZ29.42 million (decrease of 3.9%) due to the New Zealand downturn and low consumer sentiment. When sales in New Zealand were translated into Australian dollars for the purposes of this report, the decrease in sales revenue was $A45.31 million (decrease of 7.5%). This decrease is due to a 3.8% devaluation in the New Zealand dollar relative to the Australian dollar used for translation purposes. The retail segment result in New Zealand was $42.78 million for the year ended 30 June 2011 compared to $48.41 million for the previous year, a decrease of 11.6%. The decrease in local currency would have been 8.2%. New Zealand‟s challenging retail environment was further exacerbated by

CHAIRMAN’S REPORT (CONTINUED)

Sales and Profitability of Overseas Controlled Entities (continued) Asia

Sales revenue from the controlled entity Pertama Holdings Limited, Singapore, trading as “Harvey Norman” increased by $S20.87 million (increase of 5.0%). When sales in Singapore were translated into Australian dollars for the purposes of this report, the increase in sales was $A6.65 million (increase of 2.0%). There was a devaluation of 2.9% in the Singapore dollar relative to the Australian dollar used for translation purposes. The Harvey Norman branded stores in Singapore and Malaysia continue to grow market share and outperform competitors. There has been an improvement in the segment result for the Asian operations during the year from $10.41 million in the previous year to $13.05 million for the year ended 30 June 2011, an increase of 25.4%. The increase in local currency was 29.1%. The Harvey Norman stores in Singapore have performed well.

The Malaysian operations are expected to be a growth area within the Asian segment. The investment in the “Space Furniture” brand in Singapore has resulted in a 13.5% increase in sales revenue. Slovenia Sales revenue from the company-owned stores in Slovenia increased by €6.33 million (increase of 15.2%) relative to the previous year. This increase is mainly attributable to the sales revenue recorded by the new store at Novo Mesto which commenced trading in October 2010 and a full year‟s trading of the Celje store which opened in August 2009. When sales in Slovenia were translated into Australian dollars for the purposes of this report, the increase in sales was $A0.67 million (increase of 1.0%). With the recent opening of Novo Mesto, there are now four (4) stores in Slovenia with strong market share in all categories. The segment result was $5.37 million for the year ended 30 June 2011 compared to $3.36 million for the preceding year. Other Non-Franchised Retail The non-franchised retail segment consists of the retail trading operations in Australia which are controlled by the consolidated entity and does not include any operations of Harvey Norman franchisees. Sales revenue for the other non-franchised retail segment was $112.58 million for the year ended 30 June 2011 compared to $116.56 million for the previous year, a decrease of 3.4%. The segment result for the non-franchised retail segment was a profit of $7.87 million for the current year compared to a profit of $7.02 million in the prior year, an improvement of $0.85 million or 12.1%.

CHAIRMAN’S REPORT (CONTINUED)

(a) Calculated as: EBIT from Australian Retail Property Segment ÷ Australian Retail Property Segment Assets (after eliminations) (b) Calculated as: EBIT from Australian Retail Property Segment ÷ Australian Retail Property Equity* [*equity allocated to Australian retail property segment based on Australian retail property assets as a proportion of total assets]

■ Property Portfolio Composition of the Property Portfolio The Harvey Norman property portfolio consists of Harvey Norman, Domayne and Joyce Mayne complexes in Australia, Harvey Norman and Norman Ross stores in New Zealand, properties located in Singapore, four (4) Harvey Norman stores in Slovenia, properties held under joint venture agreements and land and buildings in Australia for development and resale at a profit.

Composition of the Property Portfolio FY2007 FY2008 FY2009 FY2010 FY2011

Investment properties 1,020,906 1,178,784 1,316,572 1,393,991 1,401,158

Investment properties under construction 79,620 134,829 80,172 95,209 200,443

Joint venture properties 106,416 187,222 189,571 140,581 158,978

Owned land & buildings in New Zealand, Singapore and Slovenia

207,089

183,500

214,184

230,595

257,765

Properties held for resale - - 20,063 17,485 26,579

Total Property Portfolio

1,414,031

1,684,335

1,820,562

1,877,861

2,044,923

Benefits of Property Ownership

The ownership of a substantial property portfolio is an essential complement to the Harvey Norman brand and retail system. It enables shareholders to indirectly participate in the ownership of high-quality bulky goods retail and warehouse properties, geographically spread. Core properties within the portfolio comprise of bulky goods retail centres, stand-alone showrooms and warehouses. Property ownership is integral to the success of the integrated retail, franchise and property system and delivers the following benefits to the consolidated entity:  The presence of Harvey Norman, Domayne or Joyce Mayne franchisees as anchor tenants in a complex is a key drawcard to

attract superior national third-party tenants and dynamic local operators to co-locate within the same complex. This provides the consolidated entity with a distinct advantage in its ability to create a solid, dynamic and cross-beneficial tenancy mix in order to maximise the profitability of the retail property segment.

 Despite the softening retail sector, property ownership delivers a steady and reliable income stream in the form of rent charged to franchisees and complementary third-party tenants.

 A large property portfolio under management creates economies of scale, delivers operational cost efficiencies and enhanced negotiating power in the property sector.

Key Statistics Relating to the Australian Property Portfolio:

Australian Property Portfolio Statistics FY2007 FY2008 FY2009 FY2010 FY2011

Weighted average capitalisation rates 8.69% 8.21% 8.36% 8.70% 8.77%

Average occupancy rates 98.56% 98.46% 97.89% 96.96% 97.56%

Net property yield (a) 14.11% 14.95% 6.76% 4.61% 9.10%

Return on equity (b) 25.86% 25.84% 12.00% 7.91% 16.35%

Australian Retail Property Portfolio: $000 $000 $000 $000 $000

Australian Retail Property Segment Result

139,128

177,666

82,813

53,639

123,313

Australian Retail Property EBIT 156,228 189,783 96,044 67,457 141,051

Revaluation increment/(decrement):

(a) Australian investment properties 64,483 64,709 (4,620) (30,052) 15,297

(b) Share of joint venture properties 866 37,572 14,304 (9,854) 158

Total revaluation increment/(decrement)

65,349

102,281

9,684

(39,906)

15,455

CHAIRMAN’S REPORT (CONTINUED)

New Developments and Store Refurbishment Programme

The consolidated entity has embarked on an extensive new development and store refurbishment programme that is driven by a commitment to growing the Harvey Norman brands and maintaining the high standard of presentation of the franchised complexes and company-owned stores. The highlights of the programme are large-scale developments at Springvale and Maroochydore and a boutique restoration in Singapore to house the flagship Space Furniture retail brand.

30 June 2011 Number of Owned Sites

Leased** Total

Australia: Franchised complexes 74 121 195

Australia: Clive Peeters & Rick Hart

0 25 25

New Zealand 15 16 31

Slovenia 4 0 4

Ireland & Northern Ireland 0 16 16

Asia 0 20 20 TOTAL 93 198 291

** leased from external parties

Springvale, VIC: Opening October 2011 Springvale is a landmark development that showcases for the first time the joint retail powers of Harvey Norman and IKEA together under one roof. The development includes both Harvey Norman and Domayne as part of the 72,000 sqm centre.

Maroochydore, QLD: Opening October 2012 The Maroochydore development is well located close to the CBD. The centre will boast over 32,600 sqm of lettable area anchored by Harvey Norman and Domayne. Construction of the multi-level centre commenced in April 2011 and is due for completion in October 2012.

Bencoolen Street, Singapore: Opening September 2011 In Singapore, a mixture of conservation restoration and cutting-edge design will combine to form the new SPACE Asian hub. The heritage site in the very heart of Singapore‟s arts district was purchased in 2007. An intense design and construction programme will see the world class showroom open in September 2011.

Breakdown of Owned and Leased Complexes

CHAIRMAN’S REPORT (CONTINUED)

■ Geographic Spread

This diagram displays the geographic spread of the franchised Harvey Norman (“HN”), Domayne (“DM”) and Joyce Mayne (“JM”) franchised complexes in the Australian market, the Harvey Norman and Norman Ross (“NR”) branded company-owned stores in New Zealand, Ireland, Northern Ireland, Singapore, Malaysia and Slovenia and the Clive Peeters (“CP”) and Rick Hart (“RH”) branded company-owned stores in Australia as at 30 June 2011.

■ Acquisitions, New Complex and Store Openings, Closures and Conversions

Store Openings Due to Acquisitions In July 2010 the consolidated entity acquired the Clive Peeters and Rick Hart brand names and the inventory and plant and equipment assets of twenty-eight (28) former CP and RH stores and a discounts “seconds” store at Osborne Park. The retail sites continued to trade under the Clive Peeters and Rick Hart brand names, with the exception of the following stores located at Mt. Druitt, Maryborough and Moonah, which were rebranded to Harvey Norman, and Bundaberg which was rebranded to Joyce Mayne during the year. As at 30 June 2011, there were seventeen (17) CP stores located in Victoria and Queensland and seven (7) Rick Hart stores and one (1) Rick Hart seconds store located in Western Australia. In August 2011, the consolidated entity announced its intention to restructure the Clive Peeters and Rick Hart businesses with the proposed closure of seven (7) CP and RH retail sites and the conversion of sixteen (16) CP and RH stores to the Harvey Norman brand format and two (2) CP stores to the Joyce Mayne brand format. This restructure will take place during the first half of the 2012 financial year.

Franchised Complex Openings, Conversions and Closures Two (2) new franchised Harvey Norman complexes, located at Morwell and Ipswich, commenced trading during the current year. There were 195 franchised complexes in Australia as at 30 June 2011 under the following brand names:  Harvey Norman 166  Domayne 15  Joyce Mayne 14 Included in the above figures are the rebranding of the HN Bernoths store at Toowoomba and the former CP Bundaberg store to Joyce Mayne and the rebranding of three (3) former CP stores to Harvey Norman. One (1) Harvey Norman franchised complex located at Ulverstone, Tasmania ceased trading during the year. Company-Owned Store Openings and Closures in Offshore Markets One (1) new store was opened in Novo Mesto, Slovenia in October 2010 bringing the total number of stores in Slovenia to four (4). In New Zealand, one (1) new Harvey Norman store opened in May 2011 at Gisborne and the Lower Hutt Norman Ross store ceased trading. There are thirty-one (31) stores in total in New Zealand under the Harvey Norman and Norman Ross brand names. There are seven (7) HN stores in Malaysia with the opening of a new store at Mont Kiara in January 2011. There are thirteen (13) HN stores in Singapore following one (1) store closure during the year. We remain committed to our company-owned stores in the Republic of Ireland and Northern Ireland with fourteen (14) and two (2) HN stores respectively. There were 71 company-owned stores located in offshore markets as at 30 June 2011.

Ireland 14

Nth. Ireland 2 Northern Ireland 2

CHAIRMAN’S REPORT (CONTINUED)

■ Outlook

In the midst of challenging macroeconomic conditions, the outlook for the integrated retail, franchise and property system of the company remains positive. There is a clear strategy that is supported by a strong asset base. The franchising operations within Australia are performing strongly in the cooking, white goods, and furniture and bedding categories. Intense competition and the improved and ongoing strength of the Australian dollar has continued to drive deflationary pressure within the electrical and computer categories. The franchise system remains strong in this challenging market. The most significant addition to our business in the first half of the 2012 financial year will be the launching of our e-commerce site for Harvey Norman in early October 2011. Using market intelligence we have already gained from our successful photo- finishing and Domayne sites, we are confident our on-line transactional strategy will produce incremental dollars to the existing channel. Added to this, we will be pioneering a “software on demand” multi-channel offer as an extension to our successful photo-finishing business. Our Irish business continues to outperform the Irish market although the economic environment remains very challenging. We continue to be resilient and committed to the Ireland and Northern Ireland markets. Within New Zealand, our strong position will be enhanced by the positive stimulus that is expected from the commencement of the rebuilding of the city of Christchurch. A projected net population and employment growth within New Zealand, combined with the national economic uplift of the rugby world cup, has us well placed in this competitive market. Within the property portfolio, the Springvale development in Victoria, comprising 72,000 sqm, will open in October 2011 accommodating Harvey Norman, Domayne and IKEA along with 25 other retail tenancies all integrated under the one roof. This landmark development will be the largest of its kind in Australia. Construction has recently commenced at Maroochydore Queensland to develop an internal centre comprising 32,600sqm of space, accommodating both Harvey Norman and Domayne along with 23 other retail tenancies. Completion is scheduled for October 2012. We continue to grow market share within our Slovenian business despite the challenging European conditions. The Maribor store, opening in the north east of Slovenia in October 2011, will provide us with a broad coverage of Slovenia, bringing the total number of stores to 5. Maribor is Slovenia's second largest city, and we have high expectations from this 10,000 sqm store. October 2011 will also see the opening of our first Croatian store in the capital Zagreb. Croatia is set to join the European Union in 2013, which will provide us with many opportunities to continue our European growth and expansion. With a population of almost 1 million people, a catchment of approximately double this, and located 1 hour from Ljubljana (the capital of Slovenia) we anticipate the 9,500 sqm single-level leased Zagreb store to perform well. The balance sheet of the company remains strong through conservative fiscal management. The low debt to equity ratio with tangible property assets in excess of $2 billion has the company well positioned to manage the core business within the respective territories and take advantage of opportunities in the future.

■ Equity

Consolidated equity as at 30 June 2011 was $2.23 billion compared to $2.16 billion at 30 June 2010 – an increase of $71.25 million or 3.3%. Of the total equity of $2.23 billion, an amount of $34.88 million (June 2010: $53.99 million) is attributable to non- controlling interests mainly relating to Pertama Holdings Limited, Singapore. The reduction of $19.11 million in equity relating to non-controlling interests is due to the on-market acquisitions during the year totalling 44,459,000 shares in Pertama Holdings Limited, Singapore by Harvey Norman Singapore Pte Limited, a wholly-owned subsidiary of Harvey Norman Holdings Limited. Consolidated equity was diluted by $6.92 million due to the consideration paid in excess of the carrying value of the non- controlling interest.

■ Dividend

The recommended final dividend is 6.0 cents per share fully franked (June 2010: 7.0 cents per share fully franked). This final dividend will be paid on 5 December 2011 to shareholders registered at 5:00 pm on 4 November 2011. No provision has been made in the Statement of Financial Position for this recommended final dividend. I would like to thank my fellow directors, Harvey Norman employees, franchisees and their staff for their continuing efforts and loyalty.

G. HARVEY Chairman Sydney, 29 September 2011

Slovenia 4 Singapore 14 Malaysia 6 Australia (Franchise) 198

DIRECTOR’S REPORT

Your directors submit their report for the year ended 30 June 2011.

■ Directors

Names, qualifications, experience and special responsibilities: The names and details of the directors of Harvey Norman Holdings Limited (the “Company”) in office during the financial year and until the date of this report are as follows. Unless otherwise indicated, all directors (collectively termed the “Board”) held their position as a director throughout the entire financial year and up to the date of this report.

■ Gerald Harvey – Executive Chairman Mr. G. Harvey, aged 72, was the co-founder of Harvey Norman Holdings Limited in 1982 with Mr. I. Norman. Mr. G. Harvey has overall executive responsibility for the strategic direction of the consolidated entity, and in particular, property investments. Mr. G. Harvey is a director of Pertama Holdings Limited, a company listed on the Stock Exchange of Singapore.

■ Kay Lesley Page – Director and Chief Executive Officer

Ms. Page, aged 54, joined Harvey Norman in 1983 and was appointed a director of Harvey Norman Holdings Limited in 1987. Ms. Page became the Chief Executive Officer of the Company in February 1999 and has overall executive responsibility for the consolidated entity. Ms. Page is a director of the following other listed/public companies:  Pertama Holdings Limited, Singapore  National Rugby League Limited  Australian National Retailers Association (ANRA)  Museum of Contemporary Art, Sydney

■ John Evyn Slack-Smith – Director and Chief Operating Officer Mr. Slack-Smith, aged 42, was a Harvey Norman computer franchisee between 1993 and 1999. Mr. Slack-Smith became a director of the Company on 5 February 2001. Mr. Slack-Smith has overall executive responsibility for the operations of the consolidated entity. Mr Slack-Smith is a director of the public company, Lifehouse At RPA.

■ David Matthew Ackery – Director Mr. Ackery, aged 51, was appointed a director of Harvey Norman Holdings Limited on 20 December 2005. Mr. Ackery has overall executive responsibility for the relationship between the consolidated entity and Harvey Norman electrical franchisees and strategic partners.

■ Chris Mentis B.Bus., CA, ACIS – Director, Chief Financial Officer and Company Secretary Mr. Mentis, aged 45, was appointed a director of Harvey Norman Holdings Limited on 30 August 2007. Mr. Mentis joined Harvey Norman as Financial Controller on 15 December 1997. On 20 April 2006, he became Chief Financial Officer and Company Secretary. Mr. Mentis is a chartered accountant and a chartered secretary with over 24 years experience in financial accounting. Mr. Mentis has overall executive responsibility for the accounting and financial matters of the consolidated entity. Mr. Mentis is an alternate director on the Board of Pertama Holdings Limited, Singapore.

■ Ian John Norman - Non-Executive Director

Mr. Norman, aged 72, was co-founder of Harvey Norman with Mr. G. Harvey in 1982.

DIRECTOR’S REPORT (CONTINUED)

■ Michael John Harvey B.Com. - Non-Executive Director

Mr. M. Harvey, aged 46, joined Harvey Norman in 1987, having completed a Bachelor of Commerce degree. Mr. M. Harvey gained extensive experience as a Harvey Norman franchisee from 1989 to 1994. Mr. M. Harvey became a director of the Company in 1993 and was appointed Managing Director in July 1994. Mr. M. Harvey ceased to be an Executive Director and Managing Director on 30 June 1998.

■ Christopher Herbert Brown LL.M, FAICD, FTIA - Non-Executive Director Mr. Brown, aged 61, holds the degree of Master of Laws from the University of Sydney. Mr. Brown is the senior partner in Brown Wright Stein Lawyers. Brown Wright Stein Lawyers has acted as lawyers for the consolidated entity since 1982. Mr. Brown was appointed a director of the Company in 1987, when it became a listed public company. Mr. Brown is Chairman of the Remuneration and Nomination Committees and a member of the Audit Committee. Mr. Brown is the Chairman of Windgap Foundation Limited.

■ Kenneth William Gunderson-Briggs B.Bus., FCA, MAICD – Non-Executive Director Mr. Gunderson-Briggs, aged 49, was appointed a director of Harvey Norman Holdings Limited on 30 June 2003. Mr. Gunderson-Briggs is a chartered accountant and a registered company auditor. Mr. Gunderson-Briggs has been involved in public practice since 1982 and a partner in a chartered accounting firm since 1990. Mr. Gunderson-Briggs‟ qualifications include a Bachelor of Business from the University of Technology, Sydney and he is a fellow of the Institute of Chartered Accountants. Mr. Gunderson-Briggs is a member of the Audit, Remuneration and Nomination Committees. Mr. Gunderson- Briggs continues to serve as a director of Windgap Foundation Limited and Glenaeon Rudolph Steiner School Limited.

■ Graham Charles Paton AM, B.Ec., FCPA, MAICD - Non-Executive Director Mr. Paton, aged 66, holds a Bachelor of Economics degree from the University of Sydney. During his twenty-three years as a partner of an international chartered accounting practice, he was involved in the provision of professional services to the retail industry. He retired from public practice in July 2001. Mr. Paton is a Fellow and Life Member of CPA Australia and was the National President of that professional accounting body in 1993/1994. In 2001 he was awarded membership of the General Division of the Order of Australia for his services to the accounting profession and for his services to the deaf community through his chairmanship of the Shepherd Centre for Deaf Children for the decade to 2001. Mr. Paton was appointed a director of Harvey Norman Holdings Limited on 20 June 2005. Mr. Paton was also appointed as a member of the Audit, Remuneration and Nomination Committees on 30 June 2005 and was appointed Chairman of the Audit Committee on 9 March 2006. Mr Paton is an independent non-executive director of Gazal Corporation Limited, a company listed on the ASX.

■ Arthur Bayly Brew - Director Mr. Brew, aged 61, retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr. Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company.

Ireland 13

DIRECTOR’S REPORT (CONTINUED)

■ Committee Membership

As at the date of this report, the Company had an Audit Committee, a Remuneration Committee and a Nomination Committee. Members acting on the committees of the board during the year were:

■ Audit Committee  G.C. Paton AM (Chairman)  C.H. Brown  K.W. Gunderson-Briggs

■ Nomination Committee  C.H. Brown (Chairman)  K.W. Gunderson-Briggs  G.C. Paton AM

■ Remuneration Committee  C.H. Brown (Chairman)  K.W. Gunderson-Briggs  G.C. Paton AM

■ Directors’ Meetings

The number of meetings of the Board of directors and of its Board committees during the year were:

Board / Committee

Number of Meetings

Full Board 10 Audit 8 Remuneration 10 Nomination 1

Attendance at Remuneration Committee Meetings:  C.H. Brown (Chairman): 7 [10]  K.W. Gunderson-Briggs: 10 [10]  G.C. Paton AM: 7 [10]

Attendance at Nomination Committee Meeting: Each of Mr G.C. Paton, Mr C.H. Brown, and Mr K.W. Gunderson-Briggs attended the Nomination Committee meeting held during the year.

The attendance of directors at meetings of the Board and Audit Committee were:

Director Board of Directors

Audit Committee

G. Harvey 10 [10] n/a K.L. Page 10 [10] n/a J.E. Slack-Smith 10 [10] n/a D.M. Ackery 10 [10] n/a M.J. Harvey 10 [10] n/a C.H. Brown 7 [10] 6 [8] I.J. Norman 9 [10] n/a K.W. Gunderson- Briggs

10 [10]

8 [8]

G.C. Paton 9 [10] 8 [8] C. Mentis 10 [10] n/a

The above table represents the directors‟ attendance at meetings of the Board and the Audit Committee. The number of meetings for which the director was eligible to attend is shown in brackets. In addition, the executive directors held regular meetings for the purpose of signing various documentation. The details of the functions and memberships of the Audit Committee of the Board are presented in the Corporate Governance Statement.

■ Directors’ Interests

At the date of this report, the relevant direct and indirect interest of each director in the shares, options or other instruments of the Company and related bodies corporate are:

HARVEY NORMAN HOLDINGS LIMITED Director

Ordinary Shares

Options

G. Harvey 311,959,532 - I.J. Norman 175,249,660 - K.L. Page 16,995,133 - M.J. Harvey 2,845,553 - C.H. Brown 103,467 - J.E. Slack-Smith 259,999 1,000,000 D.M. Ackery 146,667 1,000,000 K. W. Gunderson- Briggs

3,000

G.C. Paton 15,000 - C. Mentis 7,450 1,000,000

TOTAL

507,585,461

3,000,000

Mr A.B. Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. On the date of retirement, Mr Brew had 1,169,871 ordinary shares in Harvey Norman Holdings Limited.

DIRECTOR’S REPORT (CONTINUED)

■ Beneficial Interest

Included in the Directors‟ Interests table on page 16 are the following shareholdings indirectly held by each of the directors:

Director Beneficial Interest in Shares

G. Harvey has a beneficial interest in 140,629,301 shares held by G Harvey Nominees Pty Limited, and 333,333 shares held by HVN Share Plan Pty Limited.

I.J. Norman has a beneficial interest in 175,249,660 shares held by Dimbulu Pty Limited.

K.L. Page has a beneficial interest in 8,132,068 shares held by K. Page Pty Limited, 150,000 shares held by K. Page Superannuation Fund Pty Limited and 333,333 shares held by HVN Share Plan Pty Limited.

J.E. Slack-Smith has a beneficial interest in 59,999 shares held by HVN Share Plan Pty Limited and 200,000 shares held by J. E. Slack-Smith as Trustee for Slack-Smith 2003 Option Trust (Shares).

D.M. Ackery

has a beneficial interest in 133,334 shares held by HVN Share Plan Pty Limited and 13,333 shares held by D.M. Ackery as Trustee for Ackery 2005 Option Trust (Shares).

M.J. Harvey has a beneficial interest in 678,735 shares held by M.J. Harvey Option Trust.

C.H. Brown has a beneficial interest in 41,763 shares held by PWSD Pty Limited and 61,704 shares held by Starmoro Pty Limited.

K.W. Gunderson- Briggs

has a beneficial interest in 3,000 shares held by Nosrednug Superannuation Fund Pty Limited.

G.C. Paton has a beneficial interest in 15,000 shares held by G.C. Paton and V. Paton as trustee for The St. Georges Superannuation Fund.

Mr A.B. Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. On the date of retirement, Mr Brew had a beneficial interest in 627,408 shares held by ANZ nominees, and 40,000 shares held by HVN Share Plan Pty Limited.

■ Share Options

As at the date of this report, there were 3,000,000 unissued ordinary shares under options (30 June 2011: 3,000,000). Details of share options are set out in Note 29 and Note 31 to the financial statements and form part of this report. The options pursuant to the 2007 Executive Option Plan (“EOP”) Allocations had lapsed as at 27 September 2010.

■ Principal Activities

The principal activities of the consolidated entity are that of an integrated retail, franchise and property enterprise including:  Franchisor  Sale of furniture, bedding, computers, communications

and consumer electrical products in New Zealand, Slovenia, Republic of Ireland and Northern Ireland

 Property investment  Lessor of premises to Harvey Norman franchisees and

other third parties  Media placement  Provision of consumer finance and other commercial

advances The consolidated entity holds a controlling interest in Pertama Holdings Limited (“Pertama”). Shares in Pertama are listed on the Stock Exchange of Singapore. The principal activities of Pertama are retail sales of furniture, bedding, computers, communications and consumer electrical products.

■ Results

The profit after tax and non-controlling interests for the year ended 30 June 2011 was $252.26 million. This represents an increase of 9.0% on the profit after tax and non- controlling interests for the year ended 30 June 2010.

DIRECTOR’S REPORT (CONTINUED)

■ Dividends

The directors recommend a fully franked dividend of 6.0 cents per share to be paid on 5 December 2011 (total dividend, fully franked - $63,739,007). The following fully franked dividends of the parent entity have also been paid, declared or recommended since the end of the preceding financial year:

Dividend Payment Date $

2010 final fully franked dividend

6 December 2010 74,362,175

2011 interim fully franked dividend

2 May 2011 63,739,007

The dividend payment in respect of the year ended 30 June 2011 represents 54.75% (2010: 59.68%) of profit after tax and non-controlling interests, as set out on page 3 of the financial statements.

■ Review of Group Operations

The total equity of the consolidated entity for the year ended 30 June 2011 increased over the previous financial year due to the following:  Net profit generated by the Franchising Operations

segment;  Profit attributable to increased rental income from

franchisees and external tenants;  The net property revaluation increment recorded by

the Australian investment property portfolio and joint venture entities;

 The profit recognised on the sale of a development property; and

 The stronger result generated by the retail operations in Singapore, Malaysia and Slovenia.

■ Significant Changes in the State of Affairs

In the opinion of the directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year.

■ Likely Developments and Future Results

The directors have excluded from this report any further information on the likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years, as the directors believe that it would be likely to result in unreasonable prejudice to one or more entities in the consolidated entity.

■ Significant Events After Balance Date

In August 2011, the consolidated entity announced its intention to close seven (7) Clive Peeters and Rick Hart stores and to convert the eighteen (18) remaining Clive Peeters and Rick Hart stores to the Harvey Norman and Joyce Mayne brand formats. The closure of the 4 Clive Peeters and 3 Rick Hart stores will result in a charge against the pre-tax profit of the consolidated entity of an amount presently estimated to be approximately $10 million in respect of the financial year ending 30 June 2012.

■ Environmental Regulation Performance

The consolidated entity‟s environmental obligations are regulated under both State and Federal Law. All environmental performance obligations are monitored by the Board. The consolidated entity has a policy of at least complying, but in most cases exceeding its environmental performance obligations. No environmental breaches have been notified to the consolidated entity by any Government agency during the year ended 30 June 2011 and up to the date of this report.

■ Company Secretary

Mr Chris Mentis, aged 45, is a chartered accountant and became Company Secretary on 20 April 2006. Mr. Mentis has over 24 years experience in financial accounting and has been with the consolidated entity since 1997. Mr. Mentis is a member of the Institute of Chartered Secretaries.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) This remuneration report for the year ended 30 June 2011 outlines the remuneration arrangements of the Company and the consolidated entity in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Company and the consolidated entity receiving the highest remuneration. The remuneration report is presented under the following sections:  Individual key management personnel disclosures  Remuneration at a glance  Board oversight of remuneration  Non-executive director remuneration arrangements  Executive remuneration arrangements  Company performance and the link to remuneration  Executive contractual arrangements

■ Individual Key Management Personnel Disclosures

Details of KMP including the top five remunerated executives of the Company and consolidated entity are set out below. Key Management Personnel (i) Directors Gerald Harvey Executive Chairman Kay Lesley Page Chief Executive Officer John Evyn Slack-Smith Executive Director and Chief Operating Officer David Matthew Ackery Executive Director Chris Mentis Executive Director, Chief Financial Officer and Company Secretary Arthur Bayly Brew Executive Director (retired on 1 September 2010) Christopher Herbert Brown Non-Executive Director Michael John Harvey Non-Executive Director Ian John Norman Non-Executive Director Kenneth William Gunderson-Briggs Non-Executive Director Graham Charles Paton AM Non-Executive Director (ii) Executives Martin Anderson General Manager – Generic Publications Pty Limited Rodney Orrock General Manager – Domayne Thomas James Scott General Manager – Property Sasha Luke Naish General Manager – Computers (resigned with effect from 31 December 2010) Leslie Robert Greeff Chief Information Officer to 30 April 2010, 1 May 2010 appointed Program Director –

Merchandise Management System Program (resigned with effect from 17 December 2010)

Benjamin Scott McIntosh General Manager – Computers (appointed 18 October 2010) Gordon Ian Dingwall General Manager – Information Technology (appointed 1 February 2011) Other than the resignation and retirement of A.B. Brew, S.L. Naish and L.R. Greeff, there were no other changes to KMP after reporting date and before the date the financial report was authorised for issue.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ Remuneration At A Glance

The remuneration strategy of the consolidated entity is designed to attract, motivate and retain employees and non-executive directors (“NEDs”) by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the consolidated entity. The remuneration policy is to position total employment cost (“TEC”) close to the median of its defined talent market to ensure a competitive offering. There have been no material changes to the short-term incentive bonus plan (“STI”) for the 2011 financial year. For the 2011 performance period, the STI was in the form of a performance cash incentive ("PCI") payment based on attainment of non- financial measures including, internal financial budget achievement, operating priorities, retail operations including franchising operations, overseas retail and other non-franchised retail and maintenance and growth of the strategic retail property portfolio. In recognition of the performance of the executives during the year, a total of $2,250,000 in PCI was earned by executive directors during the 2011 financial year. Long-term incentive awards consisting of share options that vest based on attainment of pre-determined performance goals are awarded to select executive directors. On 23 November 2010, shareholders of the Company in general meeting approved the grant of 3,000,000 options to subscribe for 3,000,000 fully paid ordinary shares in the Company to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith, subject to terms and conditions ("2010 Share Option Plan"). The terms and conditions included the following provisions: (i) up to one third of the options will be granted within seven (7) days of the meeting and will be exercisable between 1

January 2014 and 30 June 2016 (the “First Tranche”); (ii) up to one third of the options will be granted within seven (7) days of the first anniversary of the meeting and will be

exercisable between 1 January 2015 and 30 June 2017 (the “Second Tranche”); and (iii) up to one third of the options will be granted within seven (7) days of the second anniversary of the meeting and will be

exercisable between 1 January 2016 and 30 June 2018 (the “Third Tranche”). The issue of each of the second tranche of options and the third tranche of options is subject to the discretion of the Board of the Company. For the 2011 financial year, the Company used a combination of financial and non-financial performance measures for the share option awards pursuant to the 2010 Share Option Plan (“LTI”). During the 2011 financial year, the performance hurdles for the 2011 grant of options pursuant to the 2010 Share Option Plan were partially met and 37.8% of the relevant options in respect of the 2011 financial year, vested, subject to the terms and conditions of the 2010 Share Option Plan, including service conditions. The remuneration of non-executive directors of the Company consists only of directors‟ fees. Director fees were maintained at a similar level to the prior year.

■ Board Oversight of Remuneration

Remuneration Committee The remuneration committee is responsible for making recommendations to the board on the remuneration arrangements for executive directors and NEDs. The remuneration committee assesses the appropriateness of the nature and amount of remuneration of NEDs and executives on a periodic basis by reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high performing director and executive team. In determining the level and composition of executive remuneration, the remuneration committee has not engaged external consultants to provide independent advice or make any remuneration recommendation. The remuneration committee comprises three NEDs, two of whom are independent NEDs. Further information on the committee‟s role, responsibilities and membership can be seen at www.harveynormanholdings.com.au. Remuneration Approval Process The board approves the remuneration arrangements of the CEO and executives and all awards made under the LTI, following recommendations from the remuneration committee. The board sets the aggregate remuneration of NEDs, subject to shareholder approval. The remuneration committee approves, having regard to the recommendations made by the CEO, the level of the consolidated entity STI pool, in the form of PCI, for executive directors. No director may participate in deliberations about, or decisions, in respect of the remuneration of that director.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued) Remuneration Strategy The remuneration strategy of the consolidated entity is designed to attract, motivate and retain employees and NEDs by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the consolidated entity. To this end, key objectives of the reward framework of the consolidated entity are to ensure that remuneration practices:  are aligned to the business strategy of the consolidated entity  offer competitive remuneration benchmarked against the external market  provide strong linkage between individual and consolidated entity performance and rewards  align the interests of executive directors with shareholders through the LTI Remuneration Structure In accordance with best practice corporate governance, the structure of NED and executive remuneration is separate and distinct.

■ Non-Executive Director Remuneration Arrangements

Remuneration Policy The board seeks to set aggregate remuneration at a level that provides the consolidated entity with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed annually against fees paid to NEDs of comparable companies. The board considers published material from external sources and makes its own enquiries when undertaking the annual review process. The Company‟s constitution and the ASX listing rules specify that the NED fee pool shall be determined from time to time by a general meeting. The latest determination was at the 2006 annual general meeting (AGM) held on 21 November 2006 when shareholders approved an aggregate fee NED pool of $1,000,000 per year. The board will not seek any increase for the NED pool at the 2011 AGM. Structure

The remuneration of NEDs consists of directors‟ fees. NEDs do not receive retirement benefits, nor do they participate in any incentive programs. Each NED receives a fee for being a director of the Company. The structure of NED remuneration is separate and distinct from executive remuneration. The remuneration of NEDs for the year ended 30 June 2011 and 30 June 2010 are disclosed in table 1 on page 27 of this report.

■ Executive Remuneration Arrangements

Remuneration Levels and Mix

The consolidated entity aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the consolidated entity and to align operations with strategy. The policy of the consolidated entity is to position total employment cost (TEC) so as to ensure a competitive offering. Total reward opportunities are between the 50

th and 75

th percentile of the comparator group. The Company and the consolidated

entity undertakes an annual remuneration review to determine the total remuneration of executives having regard to the circumstances of the consolidated entity. The CEO‟s target remuneration mix comprises 75% fixed remuneration, 25% target STI opportunity. The CEO did not have any target LTI during the year. Target remuneration mix of executive directors ranges from 65% to 75% fixed remuneration, 24% to 35% target STI opportunity and 0% to 10% LTI. Structure In the 2011 financial year, the executive remuneration framework consisted of the following components:  Fixed remuneration  Variable remuneration

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

The table below illustrates the structure of the executive remuneration arrangements of the consolidated entity:

Remuneration component

Method Purpose Link to performance

Fixed remuneration

 Represented by total employment cost (TEC).

 Comprises base salary, superannuation contributions and other benefits.

 Set with reference to role, market and experience.

 Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the consolidated entity.

 No link to company performance.

STI component

 Paid in cash, as PCI.  Rewards executives for their contribution to the achievement of consolidated entity and business unit outcomes, as well as individual key performance indicators (KPIs).

 Linked to internal financial and non- financial performance measures including achievement of internal budgets, operating priorities, franchising operations, property priorities, and risk management.

LTI component  Awards are made in the form of options pursuant to the 2010 Share Option Plan.

 Rewards executive directors for their contribution to the creation of shareholder value over the longer term.

 Vesting of awards is dependent on satisfaction of terms and conditions of the 2010 Share Option Plan.

Fixed Remuneration Executive contracts of employment do not include any guaranteed base pay increases. TEC of executive directors is reviewed annually by the remuneration committee. The process consists of a review of company, business unit and individual performance, relevant comparative remuneration internally and externally and, where appropriate, external advice independent of management. The fixed component of the remuneration of executive directors is disclosed in Table 1 on page 27 of this report. Variable Remuneration – Short-Term Incentive (STI) The consolidated entity operates an annual STI program that is available to executives and awards a cash bonus or PCI, subject to the attainment of clearly defined consolidated entity, business unit and individual measures. The total potential STI available is set at a level so as to provide sufficient incentive to executive directors to achieve the operational targets and such that the cost to the consolidated entity is reasonable in the circumstances. Actual STI payments awarded to each executive director depend on the extent to which specific targets set at the beginning of the financial year are met. The targets consist of a number of performance measures covering both financial and non-financial, corporate and individual measures of performance.

Performance measures Proportion of STI award

measure applies to

Financial measure:  Achievement of internal budgets

25%

Non-financial measures:  Operating Priorities  Retail Operations  Property

75%

These measures were chosen as they represent the key drivers for the short-term success of the business and provide a framework for delivering long-term value. The aggregate of annual STI payments available for executive directors is subject to the approval of the remuneration committee. On an annual basis, after consideration of performance measures, the remuneration committee confirms the amount, if any, of the STI to be paid to each executive director. This process usually occurs within three months after the reporting date. Payments made are delivered as a cash bonus or PCI in the following reporting period.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

STI Awards for 2010 and 2011 Financial Years For the 2010 financial year, 100% of the STI performance cash incentive of $2,350,000 as previously accrued in that period vested in executive directors and was paid in the 2011 financial year. There were no forfeitures. The remuneration committee considered the STI payments for the 2011 financial year in August 2011. The PCI for the 2011 financial year was confirmed as $2,250,000. This amount has been accrued on the basis that the STI conditions for the year ended 30 June 2011 have been met. There was no alteration to the STI performance cash incentive plan for the year. Variable Remuneration – Long-Term Incentives (LTI) LTI awards are made annually to executive directors in order to align remuneration with the creation of shareholder value over the long-term. As such, LTI awards are only made to executive directors who have an impact on the performance of the consolidated entity against the relevant long-term performance measures. LTI – Share Options Structure

LTI awards to executive directors are made under the 2010 Share Option plan and are delivered in the form of share options. Each option entitles the holder to one fully paid ordinary share in the Company. The number, and terms and conditions of each issue of options to executive directors was approved by shareholders of the Company in the annual general meeting on 23 November 2010. Options are awarded to executive directors with more than 12 months service. The options will vest over a period of three years subject to meeting performance measures. The exercise price of the options is set at the market price at the date of grant. Executive directors are able to exercise the options up to two years after vesting, before the options lapse, subject to the satisfaction of performance conditions, including service conditions. Performance Measures to Determine Vesting

(a) as to 30% - to a financial performance condition ("2011 Financial Performance Condition"); and

(b) as to 70% - to non-financial performance conditions ("2011 Non-Financial Performance Conditions"). The 2011 Financial Performance Condition (the “2011 EPS Condition”) is:

(a) partly satisfied if the earnings per share growth is 10% per annum or more on a cumulative basis over the earnings per share in respect of the year ended 30 June 2010 ("Base Year"); or

(b) wholly satisfied if the earnings per share growth is 15% per annum or more on a cumulative basis over the earnings per share in respect of the Base Year.

Earnings per share growth was selected as a performance measure in respect of the 2010 Share Option Plan for reasons which included the following: (i) rises (or falls) in share prices can often be attributable to general market trends, unrelated to the performance of

executives or contribution by executives to the creation of long-term shareholder values; (ii) long-term value for shareholders is best created by requiring that the executive director team should focus on, and

achieve and execute measures, targets and initiatives critical to the execution of the strategic objectives of the company; and

(iii) relevant measures, targets and initiatives will involve both financial and non-financial criteria , and flexibility to adjust to changing circumstances, to avoid short-term decision-making.

The 2011 Non-Financial Performance Conditions (the “2011 Critical Success Factors”) were weighted:

(a) as to 20% relating to the achievement of key operating priorities including implementation of IT systems within budget and timeframe constraints, operational consistency, and the maintenance, improvement and implementation of risk management programs;

(b) as to 20% relating to the level of operating cash flow and operating budget constraints by reference to cost control;

(c) as to 20% relating to the successful achievement of the integration of any specified developed or acquired discrete business unit;

(d) as to 20% relating to improvements in retailing operations; and

(e) as to 20% relating to the maintenance and growth of the retail property portfolio, by reference to return on equity and completion of any key designated developments within the cost estimates and construction time lines.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

Service conditions in respect of a grantee of the First Tranche of Options will be deemed to be satisfied if at the time of exercise of an option the subject of the First Tranche of Options:

(a) the grantee has not resigned or provided notice of resignation of employment from the Company, except in order to retire from the workplace;

(b) the Company has not terminated the employment of the grantee for cause; or

(c) the board has not determined that the relevant options should lapse as a result of any fraud, gross misconduct or conduct of the grantee which brings the Company into disrepute.

If a grantee has died before a relevant option is exercised, but the performance conditions have been satisfied, the estate of the grantee may exercise the relevant options. Termination and change of control provisions

Subject to ASX Listing Rules relevant options may be exercised before their specified exercise date, but only if:

(a) a change of control of the Company happens; or

(b) in special circumstances, including retirement, redundancy, death or permanent disability of the grantee. Where a participant ceases employment prior to the vesting of their award, the options are forfeited unless the board applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances. In the event of a change of control of the Group, the performance period end date will generally be brought forward to the date of the change of control and awards will vest subject to performance over this shortened period, subject to ultimate board discretion. LTI Awards for 2011 Financial Year Options were granted under the 2010 Share Option Plan to David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith on 29 November 2010. Details in respect of the awards are set out in table 2 on page 28 of this report. Independent Valuation of Options Granted Under The 2010 Share Option Plan The options in respect of the 2010 Share Option Plan were independently valued at grant date utilising the assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option in the 2010 Share Option Plan was $0.87 per option or $2,610,000 in total. LTI Awards for Previous Financial Years Proposed Issue of Options (the “2008 EOP Allocation” and the “2009 EOP Allocation”) The proposed grant of 4,150,000 options to executive directors prior to 25 November 2008 in respect of the three years ending 30 June 2011 (“2008 EOP Allocation”) did not take place. The proposed grant of 4,150,000 options to executive directors prior to 25 November 2009 in respect of the three years ending 30 June 2012 (“2009 EOP Allocation”) did not take place. Options Issued on 26 November 2007 (“2007 EOP Allocation”) On 26 November 2007, 4,150,000 options to subscribe for 4,150,000 fully paid ordinary shares were issued, free of charge, to the respective trustees of trusts for the benefit of certain executive directors at an exercise price of $6.77 per option. The qualifying period for the 2007 EOP Allocation is the three years ending 30 June 2010. The 2007 EOP Options were valued at grant date utilising the assumptions underlying the Black-Scholes methodology to produce a Monte-Carlo simulation model which allows for the incorporation of the vesting conditions (namely Performance Condition 2). Under this valuation methodology, the value of each option in the 2007 EOP Allocation was $1.69 per option or $7,013,500 in total. The options pursuant to the 2007 EOP Allocation were subject to testing during each of the financial years in the qualifying period to determine whether Performance Conditions 1 and 2 were satisfied in accordance with the terms set out in the notice of meeting that accompanied the allocation. During each of the three financial years ending 30 June 2010, the earnings per share hurdle was not satisfied. As this performance condition must be met in order for any of the options to vest, the options in respect of the 2007 EOP Allocation did not vest as at 31 August 2010 and were not capable of exercise by the participants from 1 September 2010. On 27 September 2010, the Board of the Company determined that the 2007 EOP Allocation had lapsed. The lapsing of the 2007 EOP Allocation resulted in the reversal of the cumulative share based payments expense previously recognised in the Income Statement of the Company (reported in the Employee Benefits expense line item of the Income Statement) and a reversal of the share-based payments remuneration previously disclosed in the Remuneration Report for executive directors of the Company. The reversal of the cumulative expense recognised for the 2007 EOP Allocation amounted to $1,899,445 and this has been disclosed as a reduction in the total remuneration paid to executive directors on Table 1 of the Remuneration Report on page 27.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued) Hedging of Equity Awards The Company prohibits executive directors from entering into arrangements to protect the value of unvested LTI awards. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package. Adherence to this policy is monitored on an annual basis and involves each KMP signing an annual declaration of compliance with the hedging policy. Margin Loans If a director or executive, acting reasonably, would believe that there will be an unmet margin call or event of default in relation to any margin loan arrangements, the director or executive must immediately disclose to the chairman, company secretary or chief executive officer, full and complete details of the arrangement as is necessary to ensure the Company can comply with continuous disclosure obligations of the Company under ASX Listing Rules and the law. Satisfaction of Performance Conditions in Respect of First Tranche of Options

The earnings per share in respect of the Company for the year ended 30 June 2011 was $0.2375c. The 2011 EPS Condition was not satisfied but 30% of the First Tranche of Options are still eligible for further testing up to 30 June 2013, subject to service conditions and the terms and conditions of the 2010 Share Option Plan. The remuneration committee had regard to certificates and reports from officers of the Company, other board committees and management, and own enquiries, and determined that the 2011 Critical Success Factors had been satisfied as to 54% of the 70% weighting of those 2011 Critical Success Factors, resulting in the vesting of 37.8% of the First Tranche of Options, subject to service conditions and the terms and conditions of the 2010 Share Option Plan.

■ Company Performance and the Link to Remuneration

The award of 2011 STI target remuneration to executive directors required satisfaction and achievement of non-financial performance measures, targets and initiatives, critical to the success of the enterprise in 2011, as disclosed on page 23 of this report (“2011 Critical Success Factors”). The 2011 Critical Success Factors were satisfied, in respect of the 2011 STI target remuneration, resulting in an increase in net profit after tax and non-controlling interests, and basic earnings per share, over the prior year. The award of 2011 LTI target remuneration in the form of share option awards to executive directors, required satisfaction and achievement of both financial (weighted as to 30%) and non-financial (weighted as to 70%) performance measures, including the 2011 Critical Success Factors. The financial measure required an increase in earnings per share of at least 10% over the base year (“2011 EPS Condition”). The 2011 EPS Condition was not satisfied but is eligible for further testing up to 30 June 2013. In respect of the 2011 LTI target remuneration, the 2011 Critical Success factors have been satisfied as to 54% of the 70% weighting allocated to this performance condition. Both the 2011 EPS Condition and the 2011 Critical Success Factors are subject to the satisfaction of service conditions as stipulated in the 2010 Share Option Plan. The individual performance of each executive director and the overall performance of the consolidated entity are assessed over the three-year vesting period of the 2010 Share Option Plan. The value recognised as share-based payments remuneration in table 1 of this report represents the Company‟s expectation of achieving the performance measures in respect of the 2010 Share Option Plan.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ Executive Contractual Arrangements

Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below. Chief Executive Officer The CEO, Ms. K.L. Page is employed under a rolling contract. Under the terms of the present contract:  The CEO receives fixed remuneration of $1,500,000 per annum  The CEO‟s maximum STI opportunity in respect of the year ended 30 June 2011 was 25% of annual TEC  The CEO did not have an LTI target opportunity under her present contract The CEO’s termination provisions are as follows:

Notice period Payment in lieu of notice

Treatment of STI on termination

Treatment of LTI on termination

Employer-initiated termination

4 weeks 4 weeks Pro-rated for time and performance

Board discretion

Termination for serious misconduct

None None Unvested awards forfeited

Unvested awards forfeited

Employee-initiated termination

4 weeks 4 weeks Unvested awards forfeited, subject to Board discretion

Unvested awards forfeited subject to board discretion

Minimum Shareholding Requirement There are no minimum shareholding requirements imposed on the CEO. Other KMPs All other KMPs have rolling contracts. Standard KMP termination provisions are as follows:

Notice period Payment in lieu of notice

Treatment of STI on termination

Treatment of executive director LTI on termination

Employer-initiated termination

4 weeks 4 weeks Pro-rated for time and performance

Board discretion

Termination for serious misconduct

None None Unvested awards forfeited

Unvested awards forfeited

Employee-initiated termination

4 weeks 4 weeks Unvested awards forfeited, subject to Board discretion

Unvested awards forfeited subject to board discretion

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ TABLE 1: Compensation of Key Management Personnel for the Year Ended 30 June 2011 - Directors of Harvey Norman Holdings Limited:

Short Term Benefits Post- Employment

Share-Based Payments Total Remuneration

Salary & fees

Perform- ance Cash Incentive $

Other Short- Term $

Non monetary benefits $

Super- annuation

Value of Shares

Value of Options

TOTAL $

Reversal of 2007 EOP (b)

TOTAL $

% of options

G. Harvey 2011 724,401 400,000 10,400 - 15,199 - - 1,150,000 - 1,150,000 - Chairman 2010 725,139 400,000 10,400 - 14,461 - - 1,150,000 (411,928) 738,072 -

K.L. Page 2011 1,441,677 500,000 - 43,124 15,199 - - 2,000,000 - 2,000,000 - Chief Executive Officer 2010 1,431,866 500,000 - 53,673 14,461 - - 2,000,000 (457,698) 1,542,302 -

J.E. Slack-Smith 2011 1,201,839 500,000 - 32,962 15,199 - 139,544 1,889,544 - 1,889,544 7.4% Executive Director 2010 1,210,315 500,000 - 25,224 14,461 - - 1,750,000 (366,158) 1,383,842 -

D.M. Ackery 2011 1,216,801 500,000 18,000 - 15,199 - 139,544 1,889,544 - 1,889,544 7.4% Executive Director 2010 1,217,539 500,000 18,000 - 14,461 - - 1,750,000 (366,158) 1,383,842 -

C. Mentis 2011 888,279 350,000 - 46,522 15,199 - 139,544 1,439,544 - 1,439,544 9.7% Executive Director 2010 909,777 350,000 - 25,762 14,461 - - 1,300,000 (160,194) 1,139,806 -

A.B. Brew (a) 2011 68,816 - - 5,195 2,533 - - 76,544 - 76,544 - Executive Director 2010 413,633 100,000 - 21,906 14,461 - - 550,000 (137,309) 412,691 -

M.J. Harvey 2011 110,092 - - - 9,908 - - 120,000 - 120,000 - Non-Executive 2010 150,000 - - - - - - 150,000 - 150,000 -

C.H. Brown 2011 110,092 - - - 9,908 - - 120,000 - 120,000 - Non-Executive 2010 110,092 - - - 9,908 - - 120,000 - 120,000 -

I.J. Norman 2011 18,349 - - - 1,651 - - 20,000 - 20,000 - Non-Executive 2010 18,349 - - - 1,651 - - 20,000 - 20,000 -

K.W. Gunderson – Briggs

2011

109,646

10,354

120,000

Non-Executive 2010 110,958 - - - 10,354 - - 121,312 - 121,312 -

G.C.Paton 2011 110,500 - - - 9,500 - - 120,000 - 120,000 - Non-Executive 2010 112,156 - - - 8,086 - - 120,242 - 120,242 -

TOTAL

2011

6,000,492

2,250,000

28,400

127,803

119,849

418,632

8,945,176

4.7%

TOTAL

2010

6,409,824

2,350,000

28,400

126,565

116,765

9,031,554

(1,899,445)

7,132,109

(a) Mr Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. The 2011 remuneration for Mr Brew disclosed in Table 1 above is for the period from 1 July 2010 up to the date of retirement, 1 September 2010. Mr. Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company.

(b) The performance conditions in respect of the 2007 EOP Allocation were not satisfied. On 27 September 2010, the Board determined that the 2007 EOP Allocation had lapsed. This resulted in the reversal of the cumulative share based payments expense previously recognised in the Income Statement and a reversal of the share-based payments remuneration previously disclosed in the Remuneration Report for executive directors of the Company in respect of the year ended 30 June 2008 (of $600,000) and the year ended 30 June 2009 (of $1,299,445). The listed parent entity, Harvey Norman Holdings Limited, does not have any employees.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ TABLE 2: Options Granted to Executive Directors as Part of Remuneration:

Options Granted as Remuneration During the Year (b)

Options Lapsed During the Year (c)

Grant Date Grant Number

Value per option at

Grant Date $

Total Value of Options

Granted During the

Year $

First Exercise

Date

Last Exercise

Date

Number of Options Vested

During the Year

Value of Options

Exercised During the

Year

Number of Options

Lapsed During the Year

Value of Options

Lapsed During the Year $

G. Harvey - - - - - - - - 900,000 $1,521,000 K.L. Page - - - - - - - - 1,000,000 $1,690,000 J.E. Slack-Smith 29/11/2010 1,000,000 $0.87 $870,000 01/01/2014 30/06/2016 - - 800,000 $1,352,000 D.M. Ackery 29/11/2010 1,000,000 $0.87 $870,000 01/01/2014 30/06/2016 - - 800,000 $1,352,000 C. Mentis 29/11/2010 1,000,000 $0.87 $870,000 01/01/2014 30/06/2016 - - 350,000 $591,500 A.B. Brew (a) - - - - - - - - 300,000 $507,000

TOTAL

3,000,000

$2,610,000

4,150,000

$7,013,500

(a) Mr Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr. Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company.

(b) Subject to the terms and conditions of the 2010 Share Option Plan, the Company issued 1,000,000 options to subscribe for 1,000,000 fully paid ordinary shares in the Company, at an exercise price of $3.02 per option, on 29 November 2010, to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith ("First Tranche of Options"). The qualifying period for the 2010 EOP Allocation is the three years ending 30 June 2013. The 2010 EOP Options were valued at grant date utilising the assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option in the 2010 EOP Allocation was $0.87 per option or $2,610,000 in total.

(c) The options issued on 26 November 2007 to the respective trustees of trusts for the benefit of certain executive directors of the Company (“2007 EOP Allocation”) were subject to testing during each of the financial years in the qualifying period to determine whether performance conditions were satisfied. As the performance conditions applicable to the 2007 EOP Allocation were not satisfied, the Board of the Company determined that the 2007 EOP Allocation had lapsed on 27 September 2010.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ TABLE 3: Compensation of Key Management Personnel for the Year Ended 30 June 2011 – Executives of Harvey Norman Holdings Limited:

Short-Term Benefits Post- Employ-

ment

Share-Based Payments

Other

Salary & fees

Perform- ance Cash Incentive

Other Short- Term

Non monetary benefits

Super- annuation

Value of Shares

Value of Options

Termin- ation

Benefits $

TOTAL

% of options

R. Orrock 2011 513,639 - 21,162 - 15,199 - - - 550,000 -

General Manager: Domayne 2010 320,976 362,930 21,162 - 14,461 - - - 719,529 -

M.L. Anderson 2011 331,618 - - 21,466 15,199 - - - 368,283 - General Manager: Advertising 2010 318,039 - - 22,688 16,240 - - - 356,967 -

L.R. Greeff 2011 366,475 - - - 7,600 - - 226,663 600,738 - CIO / Program Director – Merchandise Management System Program

(a)

2010

653,916

14,461

668,377

G.I. Dingwall 2011 306,269 50,000 - - 15,199 - - - 371,468 - General Manager: IT (b) 2010 - - - - - - - - - -

T.J. Scott 2011 384,248 50,000 - - 15,199 - - - 449,447 -

General Manager: Property 2010 384,986 50,000 - - 14,461 - - - 449,447 -

B.S. McIntosh 2011 405,531 - - 105 15,199 - - - 420,835 -

General Manager: Computers (d) 2010 - - - - - - - - - -

TOTAL KEY MANAGEMENT PERSONNEL 2011

2,589,011

100,000

21,162

21,571

91,195

226,663

3,049,602

TOTAL KEY MANAGEMENT PERSONNEL 2010

2,163,456

462,930

21,162

22,688

74,084

2,744,320

(a) Mr L. R. Greeff was the Chief Information Officer (“CIO”) of Harvey Norman Holdings Limited up to 30 April 2010. He was appointed to Program Director – Merchandise Management

System Program on 1 May 2010. Mr. Greeff resigned with effect from 17 December 2010. (b) Mr G. I. Dingwall was appointed as General Manager – Information Technology on 1 February 2011. (c) Mr S. L. Naish resigned as General Manager – Computers with effect from 31 December 2010. (d) Mr B. S. McIntosh was appointed as General Manager – Computers on 18 October 2010.

DIRECTOR’S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

■ TABLE 4: Compensation of the Five Named Executives Who Receive the Highest Remuneration in the Consolidated Entity for the Year Ended 30 June 2011

Short Term Benefits Post Employment

Share-Based Payments

Salary & fees $

Performance Cash

Incentive $

Other Short- Term $

Non monetary benefits $

Super $

Value of Shares

Value of Options

TOTAL $

S. Taylor Chief Executive Officer: Arisit Pty Ltd 183,486 2,131,609 - 50,446 18,584 - - 2,384,125

B. Callard Chief Executive Officer: Ireland & Northern Ireland 981,449 - 38,647 19,667 - - - 1,039,763

N. Papa

General Manager – Clive Peeters 215,000 700,000 - 69,801 15,199 - - 1,000,000

J. Wieden

Chief Executive Officer: Harvey Norman Slovenia 565,893 279,485 - 42,933 - - - 888,311

A.A. Augustus

Chief Executive Officer: Pertama Holdings Limited, Singapore

469,814

208,160

35,211

6,970

720,155

TOTAL

2,415,642

3,319,254

73,858

182,847

40,753

6,032,354

DIRECTOR’S REPORT (CONTINUED)

■ Indemnification of Officers

During the financial year, insurance and indemnity arrangements were continued for officers of the consolidated entity. An indemnity agreement was entered into between the Company and each of the directors of the Company named earlier in this report and with each full-time executive officer, director and secretary of all group entities. Under the agreement, the Company has agreed to indemnify those officers against any claim or for any expenses or costs which may arise as a result of work performed in their respective capacities.

■ Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of the Company support and have adhered to the principles of corporate governance. The Company‟s Corporate Governance Statement follows the Directors‟ Report.

■ Tax Consolidation

Effective 1 July 2002, for the purposes of income taxation, Harvey Norman Holdings Limited and its 100% owned subsidiaries have formed a tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a pro-rata basis. In addition the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations.

■ Rounding of Amounts

The parent entity is a company of the kind specified in the Australian Securities and Investments Commission class order 98/0100. In accordance with the class order, amounts in the financial statements and the Directors‟ Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.

■ Auditor Independence and Non-Audit Services

During the year, the auditors of Harvey Norman Holdings Limited, Ernst & Young, provided non–audit services to Harvey Norman Group entities. In accordance with the recommendation from the Audit Committee of the Company, the directors are satisfied that the provision of the non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act. Also, in accordance with the recommendation from the Audit Committee, the directors are satisfied that the nature and scope of each type of non–audit service provided means that auditor independence was not compromised. Details of the amounts paid or payable to the auditor, Ernst & Young, for the provision of non–audit services during the year ended 30 June 2011 are as follows:  Tax compliance services $479,655 (2010: $165,824);  Other services $23,491 (2010: $9,102)

DIRECTOR’S REPORT (CONTINUED)

■ Auditor Independence and Non-Audit Services

The directors received the following declaration from the auditor of Harvey Norman Holdings Limited.

Auditor’s Independence Declaration to the Directors of Harvey Norman Holdings Limited In relation to our audit of the financial report of Harvey Norman Holdings Limited for the financial year ended 30 June 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Christopher George Partner Sydney 29 September 2011 Signed in accordance with a resolution of directors. G. HARVEY K.L. PAGE

Chairman Director / Chief Executive Officer Sydney Sydney 29 September 2011 29 September 2011

Liability limited by a scheme approved under Professional Standards Legislation

33 49

CORPORATE GOVERNANCE STATEMENT

The board of directors of Harvey Norman Holdings Limited ("Company") is responsible for establishing the corporate governance framework of the consolidated entity having regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance principles and recommendations. The board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.

Recommendation Comply

Reference/ Explanation

ASX Listing Rule/ Recommendation Yes No in Annual Report

■ Principle 1 – Lay solid foundations for management and oversight

1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

Yes Page 35 ASXLR 1.1

1.2 Companies should disclose the process for evaluating the performance of senior executives.

Yes Pages 20-24 & 36 ASXLR 1.2

1.3 Companies should provide the information indicated in the guide to reporting on Principle 1.

Yes ASXLR 1.3

■ Principle 2 – Structure the board to add value

2.1 A majority of the board should be independent directors. No Page 35 ASXLR 2.1

2.2 The chair should be an independent director. No Pages 35 & 36 ASXLR 2.2

2.3 The roles of chair and chief executive officer should not be exercised by the same individual.

Yes Page 36 ASXLR 2.3

2.4 The board should establish a nomination committee. Yes Pages 36 & 37 ASXLR 2.4

2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.

Yes Pages 20-24 & 36 ASXLR 2.5

2.6 Companies should provide the information indicated in the guide to reporting on Principle 2.

Yes ASXLR 2.6

■ Principle 3 – Promote ethical and responsible decision-making

3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:  The practices necessary to maintain confidence in the

company's integrity.  The practices necessary to take into account their

legal obligations and the reasonable expectations of their stakeholders.

 The responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Yes Please refer to the website of the

Company.

ASXLR 3.1

3.2 Companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy.

Yes Page 36 ASXLR 3.2

3.3 Companies should provide the information indicated in the guide to reporting on Principle 3.

Yes ASXLR 3.3

■ Principle 4 – Safeguard integrity in financial reporting

4.1 The board should establish an audit committee. Yes Page 37 ASXLR 4.1

4.2 The audit committee should be structured so that it:  Consists only of non-executive directors  Consists of a majority of independent directors  Is chaired by an independent chair, who is not chair of

the board  Has at least three members

Yes Page 37 ASXLR 4.2

ASXLR 12.7

4.3 The audit committee should have a formal charter. Yes Page 37 ASXLR 4.3

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Recommendation Comply

Reference/ Explanation

ASX Listing Rule/ Recommendation Yes No in Annual Report

4.4 Companies should provide the information indicated in the Guide to reporting on Principle 4.

Yes ASXLR 4.4

■ Principle 5 – Make timely and balanced disclosures

5.1 Companies should establish written policies designed to ensure compliance with ASX listing rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.

Yes Please refer to the website of the

Company.

ASXLR 5.1

5.2 Companies should provide the information indicated in the guide to reporting on Principle 5.

ASXLR 5.1

■ Principle 6 – Respect the rights of shareholders

6.1 Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.

Yes Page 39 ASXLR 6.1

6.2 Companies should provide the information indicated in the guide to reporting on Principle 6.

Yes ASXLR 6.2

■ Principle 7 – Recognise and manage risk

7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

Yes Pages 37 & 38 ASXLR 7.1

7.2 The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company's management of its material business risks.

Yes Pages 37 & 38 ASXLR 7.2

7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Yes Page 38 ASXLR 7.3

7.4 Companies should provide the information indicated in the guide to reporting on Principle 7.

Yes ASXLR 7.4

■ Principle 8 – Remunerate fairly and responsibly

8.1 The board should establish a remuneration committee. Yes Pages 20, 38 & 39 ASXLR 8.1

8.2 Companies should clearly distinguish the structure of non- executive directors' remuneration from that of executive directors and senior executives.

Yes Pages 20-24, 38 & 39

ASXLR 8.2

8.3 Companies should provide the information indicated in the Guide to reporting on Principle 8.

Yes ASXLR 8.3

ASX Listing Rule/ Recommendation

The corporate governance practices of the Company were in place throughout the year ended 30 June 2011.

ASXLR 4.10.3

Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by the Company, refer to the website: www.harveynormanholdings.com.au.

35 49

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/ Recommendation

■ Board functions

The board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

ASX Rec 1.1

To ensure that the board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the board.

The responsibility for the operation and administration of the Company is delegated, by the board, to the CEO and the executive management team. The board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the CEO and the executive management team.

Whilst at all times the board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship it makes use of sub-committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the board.

To this end the board has established the following committees: Audit, Nomination, Remuneration and Risk.

The roles and responsibilities of these committees are discussed throughout this corporate governance statement.

The board is responsible for ensuring that management's objectives and activities are aligned with the expectations and risk identified by the board. The board has a number of mechanisms in place to ensure this is achieved including: (i) Board approval of strategic plans designed to meet stakeholders' needs and manage business

risk. (ii) Ongoing development of strategic plans and approving initiatives and strategies designed to

ensure the continued growth and success of the entity. (iii) Implementation of budgets by management and monitoring progress against budget – via the

establishment and reporting of both financial and non financial key performance indicators.

Other functions reserved to the board include: (i) Approval of the annual and half-yearly financial reports. (ii) Approving and monitoring the progress of major capital expenditure, capital management, and

acquisitions and divestitures. (iii) Ensuring that any significant risks that arise are identified, assessed, appropriately managed

and monitored. (iv) Reporting to shareholders.

■ Structure of the board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report are included in the directors' report. Directors of the Company are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgement.

ASX Rec 2.6

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of the Company are considered to be independent:

ASX Rec 2.6

Name

Kenneth William Gunderson-Briggs Graham Charles Paton

Position

Director Director

A majority of the board does not consist of independent directors. The majority of the board consists of executive directors. The board recognises the Corporate Governance Council's recommendation that a majority of the board should consist of independent directors.

The board believes that each executive director is able to and does bring quality and independent judgement to all relevant issues falling within the scope of the role of that executive director and that the Company as a whole benefits from the long-standing experience of that director in relation to the operations and business relationships of the Company.

The board recognises the Corporate Governance Council's recommendation that the Chair should be an independent director. The board further recognises that it can be argued that Mr Gerald Harvey does not meet the definition of independence.

The board believes that Mr Gerald Harvey is the most appropriate person to lead the board as

ASX Rec 2.1

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/ Recommendation

Executive Chairman and that he is able to and does bring quality and independent judgement to all relevant issues falling within the scope of the role of Chairman and that the Company as a whole benefits from his long standing experience of its operations and business relationships.

There are procedures in place, agreed by the board, to enable directors in furtherance of their duties to seek independent professional advice at the expense of the Company.

ASX Rec 2.6

The term in office held by each director in office at the date of this report is as follows: ASX Rec 2.6

Name Position Appointed to Board of Company

Gerald Harvey Executive Chairman 1987

Kay Lesley Page Director and CEO 1987

John Evyn Slack-Smith Executive Director and COO 2001

David Matthew Ackery Executive Director 2005

Chris Mentis Director and CFO 2007

Ian John Norman Non-Executive Director 1987

Michael John Harvey Non-Executive Director 1993

Christopher Herbert Brown Non-Executive Director 1987

Kenneth William Gunderson-Briggs Independent Non-Executive Director 2003

Graham Charles Paton Independent Non-Executive Director 2005

For additional details regarding board appointments, please refer to our website.

■ Performance

The performance of the board and key executives is reviewed regularly against both measurable and qualitative indicators. During the reporting period, the nomination committee conducted performance evaluations that involved an assessment of the performance of each board member against specific and measurable qualitative and quantitative performance criteria.

ASX Rec 2.5

The performance criteria against which directors and executives are assessed are aligned with the financial and non-financial objectives of the Company. Directors whose performance is consistently unsatisfactory may be asked to retire.

■ Trading policy

Under the Share Trading Policy of the Company, an executive or director must not trade in any securities of the Company at any time when they are in possession of unpublished, price-sensitive information in relation to those securities.

ASX Rec 3.2

Before commencing to trade, an executive must first obtain the approval of the Company Secretary or CEO to do so and a director must first obtain approval of the chairman.

Only in exceptional circumstances will approval be forthcoming outside of the period which is 30 days after: (i) One day following the announcement of the half yearly and full year results as the case may be (ii) One day following the holding of the Annual General Meeting

As required by the ASX listing rules, the Company notifies the ASX of any transaction conducted by directors in the securities of the Company.

■ Nomination committee

The board has established a nomination committee, which meets at least annually, to ensure that the board continues to operate within the established guidelines, including when necessary, selecting candidates for the position of director. The nomination committee is comprised of non-executive directors, Christopher Herbert Brown (Chairman), Kenneth William Gunderson-Briggs and Graham Charles Paton through the year ended 30 June 2011.

ASX Rec 2.6

The nomination committee recognises the Corporate Governance Council's recommendation that the Chair should be an independent director. The nomination committee further recognises that it can be argued that Mr Christopher Herbert Brown does not meet the definition of independence.

37 49

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/ Recommendation

The nomination committee believes that Mr Christopher Herbert Brown is the most appropriate person to lead the nomination committee as non-executive Chairman and that he is able to and does bring quality and independent judgement to all relevant issues falling within the scope of the role of Chairman and that the Company as a whole benefits from his long standing experience of its operations and business relationships.

For details of directors‟ attendance at meetings of the nomination committee, refer to the directors‟ report.

ASX Rec 2.6

For additional details regarding the nomination committee including its charter please refer to the website of the Company.

■ Audit committee

The board has established an audit committee, which operates under a charter approved by the board. It is the board‟s responsibility to ensure that an effective internal control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The board has delegated responsibility for oversight of the framework of internal control and ethical standards to the audit committee.

The committee also provides the board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. All members of the audit committee are non- executive directors.

The members of the audit committee during the year were:  Graham Charles Paton (Chairman)  Christopher Herbert Brown  Kenneth William Gunderson-Briggs

Qualifications of audit committee members

Graham Charles Paton is an experienced certified practising accountant, financially literate and Chairman of the audit committee.

Christopher Herbert Brown is an experienced solicitor, financially literate and has been a Non- Executive Director of the Company since 1987.

Kenneth William Gunderson-Briggs is an experienced chartered accountant, financially literate and has been an Independent Non-Executive Director of the Company since 2003.

ASX Rec 4.4

For details on the number of meetings of the audit committee held during the year and the attendees at those meetings, refer to the directors‟ report.

ASX Rec 4.4

For additional details regarding the audit committee, including a copy of its charter, please refer to the website of the Company.

■ Risk

The board acknowledges the Revised Supplementary Guidance to Principle 7 issued by the ASX in June 2008 and has continued its proactive approach to risk management. The identification and effective management of risk, including calculated risk-taking is viewed as an essential part of the approach of the Company to creating long-term shareholder value.

ASX Rec 7.1

In recognition of this, the board determines the risk profile of the Company and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The board has established a separate risk committee, to assist the board.

The board oversees an annual assessment of the effectiveness of risk management and internal compliance and control. The tasks of undertaking and assessing risk management and internal control effectiveness are delegated to management through the Chief Executive Officer, including responsibility for the day to day design and implementation of the risk management and internal control system of the Company. Management reports to the board on the key risks of the Company and the extent to which it believes these risks are being adequately managed.

Management is required by the board to carry out risk specific management activities in core areas, including strategic risk, operational risk, reporting risk and compliance risk. It is then required to assess risk management and associated internal compliance and control procedures and report back on the efficiency and effectiveness of these efforts by benchmarking performance in substantially accordance with Australian/New Zealand Standard for Risk Management (AS/NZS 4360 Risk Management).

38 DI

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/ Recommendation

The board has a number of mechanisms in place to ensure that management‟s objectives and activities are aligned with the risks identified by the board. These include the following: (i) Board approval of strategic plans designed to meet stakeholders‟ needs and manage business

risk. (ii) Implementation of board approved operating plans and budgets and board monitoring of

progress against these budgets, including the establishment and monitoring of KPIs of both a financial and non-financial nature.

As part of its duties, the internal audit function of the Company is responsible for the objective assessment of: (i) the systems of internal control; (ii) the risk and control framework; and (iii) generally, objective assessment of compliance by the Company with risk management

protocols of the Company.

In order to ensure the independence of the internal audit function, the head of internal audit meets privately with the audit committee without management present on a regular basis and is responsible for making the final decision on the head of internal audit‟s tenure.

Underpinning these efforts is a comprehensive set of policies and procedures directed towards achieving the following objectives in relation to the requirements of Principle 7: (i) Effectiveness and efficiency in the use of the resources of the Company (ii) Compliance with applicable laws and regulations (iii) Preparation of reliable published financial information

■ CEO and CFO certification

In accordance with section 295A of the Corporations Act, the chief executive officer and chief financial officer have provided a written statement to the board that: (i) Their view provided on the Company‟s financial report is founded on a sound system of risk

management and internal compliance and control which implements the financial policies adopted by the board

(ii) The Company‟s risk management and internal compliance and control system is operating effectively in all material respects

ASX Rec 7.3

The board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures.

In response to this, internal control questions are required to be answered and completed by the key management personnel of all significant business units, including finance managers, in support of these written statements.

■ Remuneration

It is the Company‟s objective to provide maximum stakeholder benefit from the retention of a high quality board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the remuneration committee links the nature and amount of executive directors‟ and officers‟ remuneration to the Company‟s financial and operational performance. The expected outcomes of the remuneration structure are: (i) Retention and motivation of key executives. (ii) Attraction of high quality management to the Company. (iii) Performance incentives that allow executives to share in the success of Harvey Norman

Holdings Limited.

ASX Rec 8.2

For a full discussion of the Company‟s remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the remuneration report, which is contained with the directors‟ report.

ASX Rec 8.3

There is no scheme to provide retirement benefits to non-executive directors. ASX Rec 8.3

39 49

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/ Recommendation

The board is responsible for determining and reviewing compensation arrangements for the directors themselves, the chief executive officer and executive team. The board has established a remuneration committee, comprising three non-executive directors. Members of the remuneration committee throughout the year were Christopher Herbert Brown (Chairman), Kenneth William Gunderson-Briggs and Graham Charles Paton.

ASX Rec 8.1

The remuneration committee recognises the Corporate Governance Council's recommendation that the Chair should be an independent director. The remuneration committee further recognises that it can be argued that Mr Christopher Herbert Brown does not meet the definition of independence.

The remuneration committee believes that Mr Christopher Herbert Brown is the most appropriate person to lead the remuneration committee as non-executive Chairman and that he is able to and does bring quality and independent judgement to all relevant issues falling within the scope of the role of Chairman and that the Company as a whole benefits from his long standing experience of its operations and business relationships.

For details on the number of meetings of the remuneration committee held during the year and the attendees at those meetings, refer to the directors‟ report.

ASX Rec 8.3

For additional details regarding the remuneration committee, including a copy of its charter, please refer to website of the Company.

■ Shareholder communication policy

Pursuant to Principle 6, the objective of the Company is to promote effective communication with its shareholders at all times.

ASX Rec 6.2

The Company is committed to: (i) Ensuring that shareholders and the financial markets are provided with full and timely

information about the activities of the Company in a balanced and understandable way. (ii) Complying with continuous disclosure obligations contained in applicable the ASX listing rules

and the Corporations Act 2001 in Australia. (iii) Communicating effectively with its shareholders and making it easier for shareholders to

communicate with the Company.

To promote effective communication with shareholders and encourage effective participation at general meetings, information is communicated to shareholders: (i) Through the release of information to the market via the ASX (ii) Through the distribution of the annual report and Notices of Annual General Meeting (iii) Through shareholder meetings and investor relations presentations (iv) Through letters and other forms of communications directly to shareholders (v) By posting relevant information to the website of the Company

The Company's website www.harveynormanholdings.com.au is a dedicated Investor Relations section for the purpose of publishing all important company information and relevant announcements made to the market (refer to the corporation information section of the website).

The external auditors are required to attend the Annual General Meeting and are available to answer any shareholder questions about the conduct of the audit and preparation of the audit report.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

CO NS O LI D ATE D

NOTE 2011 2010

$000 $000

Current Assets

Cash and cash equivalents 28(a) 162,779 157,236

Trade and other receivables 5 1,065,232 1,081,645

Other financial assets 6 41,229 34,400

Inventories 7 336,742 261,674

Other assets 8 21,040 20,913

Intangible assets 9 322 761

Total current assets 1,627,344 1,556,629

Non-Current Assets

Trade and other receivables 10 14,538 25,182

Investments accounted for using equity method 37 158,978 140,581

Other financial assets 11 8,294 7,171

Property, plant and equipment 12 512,479 439,033

Investment properties 13 1,601,601 1,489,200

Intangible assets 14 58,294 24,229

Deferred income tax assets 4(d) 22,481 22,488

Total non-current assets 2,376,665 2,147,884

Total Assets 4,004,009 3,704,513

Current Liabilities

Trade and other payables 15 854,897 739,715

Interest–bearing loans and borrowings 16 105,275 154,342

Income tax payable 7,366 41,040

Other liabilities 17 1,603 2,930

Provisions 18 25,235 23,326

Total current liabilities 994,376 961,353

Non-Current Liabilities

Payables 19 - 23,332

Interest-bearing loans and borrowings 20 546,483 346,824

Provisions 18 9,675 8,819

Deferred income tax liabilities 4(d) 208,036 184,990

Other liabilities 22 16,978 21,984

Total non-current liabilities 781,172 585,949

Total Liabilities 1,775,548 1,547,302

NET ASSETS 2,228,461 2,157,211

Equity

Contributed equity 23 259,610 259,610

Reserves 24 32,621 56,418

Retained profits 25 1,901,350 1,787,196

Parent entity interest 2,193,581 2,103,224

Non-controlling interests 26 34,880 53,987

TOTAL EQUITY 2,228,461 2,157,211

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2011

CO NS O LI D ATE D

NOTE 2011 2010

$000 $000

Continuing Operations

Sales revenue 2 1,556,384 1,344,455

Cost of sales (1,129,517) (968,273)

Gross profit

426,867

376,182

Revenues and other income items 2 1,122,459 1,097,389

Distribution expenses (8,591) (8,108)

Marketing expenses (373,314) (355,039)

Occupancy expenses (217,637) (228,121)

Administrative expenses (447,951) (373,836)

Other expenses from ordinary activities (102,960) (85,773)

Finance costs 3 (42,984) (33,638)

Share of equity accounted entities: - Share of net profit of joint venture entities (a) - Share of joint venture property revaluation (a)

37 37

17,888

158

7,260

(9,854)

Profit from continuing operations before tax

373,935

386,462

Income tax expense

4(a)

(114,315)

(148,474)

Profit from continuing operations after tax

259,620

237,988

Attributable to:

Owners of the parent 252,255 231,409

Non-controlling interests 7,365 6,579

259,620

237,988

Earnings Per Share From continuing operations: Basic earnings per share (cents per share) 27 23.75 21.78

Diluted earnings per share (cents per share) 27 23.75 21.78

Dividends per share (cents per share) 12.0 cents 14.0 cents

(a) The total share of net profit of joint venture entities, including the share of joint venture property revaluation, was $18.05 million before tax for the year ended 30 June 2011 (2010: a net loss of $2.59 million before tax).

The above Income Statement should be read in conjunction with the accompanying notes.

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

CO NS O LI D ATE D

2011 2010

$000 $000

Profit for the year 259,620 237,988

Other comprehensive income

Foreign currency translation (23,756) 431

Net fair value gains on available-for-sale investments 973 981

Cash flow hedges:

Gains / (losses) taken to equity 567 (1,797)

Transferred realised (losses) / gains to other income (57) 67

Transferred to statement of financial position (4) 450

Fair value revaluation of land and buildings (544) 4,176

Income tax on items of other comprehensive income (1,988) 415

Other comprehensive income for the year (net of tax)

(24,809)

4,723

Total comprehensive income for the year

234,811

242,711

Total comprehensive income attributable to:

Owners of the parent 235,315 237,303

Non-controlling interests (504) 5,408

234,811

242,711

Dividends per share (cents per share) 12.0 cents 14.0 cents

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011

Attributable to Equity Holders of the Parent

Contributed

Equity

Retained

Profits

Asset

Revaluation Reserve

Foreign

Currency Translation

Reserve

Available for Sale Reserve

Cash Flow

Hedge Reserve

Employee

Equity Benefits Reserve

Acquisition

Reserve

Non-controlling

Interest

TOTAL EQUITY

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

AT 1 JULY 2010

259,610

1,787,196

68,980

(20,107)

1,354

(1,201)

7,392

53,987

2,157,211

Revaluation of land and buildings - - (2,423) - - - - - 60 (2,363)

Reverse expired or realised cash flow hedge reserves

(61)

Currency translation differences - - - (15,827) - - - - (7,929) (23,756)

Fair value of interest rate swaps - - - - - 394 - - - 394

Fair value of forward foreign exchange contracts

Fair value of available for sale financial assets

973

Other comprehensive income

(2,423)

(15,827)

973

337

(7,869)

(24,809)

Profit for the year

252,255

7,365

259,620

Total comprehensive income for the year

252,255

(2,423)

(15,827)

973

337

(504)

234,811

Acquisition of non-controlling interest - - - - - - - (6,917) (13,992) (20,909)

Cost of share based payments - - - - - - 419 - - 419

Reversal of share expenses - - - - - - (359) - - (359)

Dividends paid - (138,101) - - - - - - (4,611) (142,712)

AT 30 JUNE 2011

259,610

1,901,350

66,557

(35,934)

2,327

(864)

7,452

(6,917)

34,880

2,228,461

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011 (CONTINUED)

Attributable to Equity Holders of the Parent

Contributed

Equity

Retained

Profits

Asset

Revaluation Reserve

Foreign

Currency Translation

Reserve

Available for Sale Reserve

Cash Flow

Hedge Reserve

Employee

Equity Benefits Reserve

Non-controlling

Interest

TOTAL EQUITY

$000 $000 $000 $000 $000 $000 $000 $000 $000

AT 1 JULY 2009

259,610

1,693,888

64,928

(21,715)

373

(460)

9,419

53,139

2,059,182

Revaluation of land and buildings - - 4,052 - - - - - 4,052

Reverse expired or realised cash flow hedge reserves

517

Currency translation differences - - - 1,608 - - (6) (1,171) 431

Fair value of interest rate swaps - - - - - (1,260) - - (1,260)

Fair value of forward foreign exchange contracts

Fair value of available for sale financial assets

981

Other comprehensive income

4,052

1,608

981

(741)

(6)

(1,171)

4,723

Profit for the year

231,409

6,579

237,988

Total comprehensive income for the year

231,409

4,052

1,608

981

(741)

(6)

5,408

242,711

Cost of share based payments - - - - - - 843 - 843

Reversal of share expenses - - - - - - (2,864) - (2,864)

Dividends paid - (138,101) - - - - - (2,800) (140,901)

Distribution to members - - - - - - - (1,760) (1,760)

AT 30 JUNE 2010

259,610

1,787,196

68,980

(20,107)

1,354

(1,201)

7,392

53,987

2,157,211

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011

CO NS O LI D ATE D

NOTE 2011 2010

$000 $000

Cash Flows from Operating Activities

Inflows / (Outflows)

Net receipts from franchisees A 998,052 1,016,090

Receipts from customers B 1,634,885 1,392,072

Payments to suppliers and employees C (2,130,828) (1,824,296)

Distributions received from joint ventures D 37,217 7,811

GST paid E (22,294) (49,837)

Interest received 7,738 5,786

Interest and other costs of finance paid F (43,045) (33,515)

Income taxes paid (126,924) (132,752)

Dividends received 2,587 1,916

Cash flows from operation activities prior to consumer finance related cash flows

357,388

383,275

Consumer finance related cash flows:

Consumer finance loans granted by the consolidated entity (1,330) (1,559)

Repayments received from consumers on consumer finance loans granted by the consolidated entity

2,915

5,151

Consumer finance related cash flows

1,585

3,592

Net Cash Flows from Operating Activities

28(b)

358,973

386,867

Cash Flows from Investing Activities

Payment for purchases of property, plant and equipment and intangible assets

(170,783)

(84,089) Payment for the purchase of Investment properties G (172,709) (87,709)

Proceeds from sale of property, plant and equipment 5,836 8,287

(Payments to) / proceeds from sale of units in unit trusts (4) 6

Payments for purchase of equity investments H (5,643) (1,744)

Payments for purchase of listed securities - (3,487)

Proceeds from sale of listed securities 4,838 2,944

Loans (granted to) / repaid from other entities (6,776) 2,752

Payment for purchase of shares in a controlled entity I (21,485) -

Net Cash Flows Used in Investing Activities

(366,726)

(163,040)

Cash Flows from Financing Activities

Proceeds from syndicated loan facility J 164,500 321,400

Dividends paid (138,101) (138,101)

(Repayments) / proceeds of loans from directors and other persons (1,149) 8,824

Proceeds / (repayments) of borrowings J 322 (376,415)

Net Cash Flows Used in Financing Activities

25,572

(184,292)

Net increase in cash and cash equivalents

17,819

39,535

Cash and cash equivalents at beginning of year 100,910 61,375

Cash and Cash Equivalents at End of Year

28 (a)

118,729

100,910

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011 (CONTINUED)

■ Commentary to the Statement of Cash Flows:

<A> Total revenue received from franchisees decreased from $1.024 billion for the prior year to $989.04 million for the

year ended 30 June 2011, a decrease of $35.14 million or 3.4% (see note 2). As a result, net receipts from franchisees decreased by $18.04 million compared to the prior year.

<B> Sales revenue derived by company-owned stores increased for the year ended 30 June 2011 relative to the previous year due to the inclusion of seventeen (17) Clive Peeters stores, seven (7) Rick Hart stores and one (1) Rick Hart seconds store pursuant to the acquisition of the two brands in July 2010. The consolidated sales revenue for the year ended 30 June 2011 for Clive Peeters and Rick Hart was $279.66 million. Three (3) new stores commenced trading in offshore markets located in Novo Mesto, Slovenia, Mont Kiara, Malaysia and Gisborne, New Zealand.

<C> The increase in payments to suppliers and employees is attributable to the acquisition of inventory of selected Clive Peeters and Rick Hart stores in July 2010 and the build up of inventory for the Clive Peeters and Rick Hart businesses. The remainder of the increase relates to increased inventory payments and operating expenses by company-owned stores.

<D> The distributions received from joint venture entities in the current year included $21.99 million in proceeds received from the sale of a development property located in Mentone, Victoria.

<E> Net GST payments are lower by $27.54 million in the year ended 30 June 2011 compared to the previous year. The current year contained higher GST input tax credits (cash inflows) resulting from increased capital acquisitions and lower GST outputs (cash outflows) due to lower revenue received from franchisees.

<F> Interest and other costs of finance paid have increased by $9.53 million largely due to an increase in the utilised Syndicated Facility in Australia. The increase in interest rates in Australia also had the effect of increasing interest payments.

<G> Payments for the purchases of property, plant and equipment, intangible assets and investment properties increased by $171.69 million relative to the previous year. This increase is attributable to several significant property acquisitions during the current year including the At Home Centre at Penrith and several extensive new developments under construction including the Springvale complex in Victoria, the Maroochydore development in Queensland and the new SPACE Asian hub at Bencoolen Street in Singapore.

<H> The increase in payments for the purchase of equity investments is largely due to capital contributions required for a mining camp joint venture in Queensland of $4.79 million.

<I> During the current year, the consolidated entity acquired an additional 44,459,000 shares in Pertama Holdings Limited, Singapore for a total purchase consideration of $21.49 million.

<J> On 2 December 2009, the Company entered into the Syndicated Facility Agreement (as defined in Note 20(a)) in

relation to the Facility. Proceeds from the Facility were used to repay the short-term facility previously provided by the Australia and New Zealand Banking Group Limited of $220.00 million and the secured bill facility in Australia of $161.50 million. As at 30 June 2011, $485.90 million had been drawn down pursuant to the Facility to fund operating activities and investing activities including significant property acquisitions (see Note G above) and the Clive Peeters asset acquisition.

OPERATING SEGMENTS

■ OPERATING SEGMENTS – 30 June 2011

The consolidated entity has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The operating segments are identified by management based on the manner in which the nature of services provided and country of origin. Discrete financial information about each of these operating segments is reported to the executive management team on a monthly basis. The reportable segments are based on aggregated operating segments determined by the similarity of the services provided or country of origin, as these are the sources of the consolidated entity‟s major risks and have the most effect on the rates of return.

SEGMENT REVENUE Sales to

Customers Outside the

Consolidated Entity

Other Revenues

Share of Joint

Venture Revaluation

Share of Net

Profit/(Loss) of Equity

Accounted Investments

Segment Revenue

2011 $000

FRANCHISING OPERATIONS 3,836 935,091 - - 938,927

Retail – New Zealand 557,959 11,986 - - 569,945

Retail – Asia 343,901 2,519 - - 346,420

Retail – Slovenia 66,395 406 - - 66,801

Retail – Ireland & Northern Ireland 191,903 3,161 - - 195,064

Non-Franchised Retail – Clive Peeters and Rick Hart

279,663

12,677

292,340

Other Non-Franchised Retail 112,578 2,738 - - 115,316

TOTAL RETAIL

1,552,399

33,487

1,585,886

Retail Property 149 161,468 - 9,958 171,575

Property Under Construction for Retail - 890 - 367 1,257

Property Development for Resale - (6,023) 158 7,563 1,698

TOTAL PROPERTY

149

156,335

158

17,888

174,530

Equity Investments - 14,657 - - 14,657

Other - 12,248 - - 12,248

Inter-company eliminations - (29,359) - - (29,359)

Total from continuing operations

1,556,384

1,122,459

158

17,888

2,696,889

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2011 (continued)

SEGMENT RESULT Segment Result Before Interest,

Taxation, Depreciation, Impairment & Amortisation

Interest Expense

Depreciation

Expense

Amortisation &

Impairment Expense

Segment Result

Before Tax

2011 $000

FRANCHISING OPERATIONS 332,459 (15,887) (54,925) (7,055) 254,592

Retail – New Zealand 49,963 (416) (6,748) (22) 42,777

Retail – Asia 16,952 (828) (2,991) (83) 13,050

Retail – Slovenia 7,267 (1,055) (811) (27) 5,374

Retail – Ireland & Northern Ireland (31,654) (2,565) (3,407) (968) (38,594)

Non-Franchised Retail – Clive Peeters and Rick Hart

(37,085)

(737)

(2,871)

(375)

(41,068)

Other Non-Franchised Retail 11,312 (1,704) (1,516) (221) 7,871

TOTAL RETAIL

16,755

(7,305)

(18,344)

(1,696)

(10,590)

Retail Property 139,765 (17,738) (3,810) - 118,217

Property Under Construction for Retail (3,899) (2,314) (289) - (6,502)

Property Development for Resale 683 (380) - - 303

TOTAL PROPERTY

136,549

(20,432)

(4,099)

112,018

Equity Investments 14,657 (488) - - 14,169

Other 9,897 (832) (4,226) (1,093) 3,746

Inter-company eliminations (1,960) 1,960 - - -

Total from continuing operations

508,357

(42,984)

(81,594)

(9,844)

373,935

Income tax expense (114,315) Profit from continuing operations attributable to non-controlling interests (7,365)

Net profit for the year attributable to owners of the parent

252,255

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2011 (continued)

SEGMENT ASSETS SEGMENT LIABILITIES Segment

Assets Inter-

company Eliminations

Segment Assets After Eliminations

Segment Liabilities

Inter- company

Eliminations

Segment Liabilities

After Eliminations

2011 $000

FRANCHISING OPERATIONS

3,299,119

(2,003,809)

1,295,310

1,556,043

(594,789)

961,254

Retail – New Zealand 161,842 - 161,842 44,293 (1,071) 43,222

Retail – Asia 131,981 - 131,981 73,325 (24,125) 49,200

Retail – Slovenia 23,667 - 23,667 19,146 217 19,363

Retail – Ireland & Northern Ireland 53,343 - 53,343 197,175 (129,331) 67,844

Non-Franchised Retail – Clive Peeters and Rick Hart

96,135

137,695

(65,940)

71,755

Other Non-Franchised Retail 76,116 (24,454) 51,662 99,639 (68,780) 30,859

TOTAL RETAIL

543,084

(24,454)

518,630

571,273

(289,030)

282,243

Retail Property 1,784,562 (13,938) 1,770,624 1,162,629 (927,496) 235,133

Property Under Construction for Retail 246,468 (6,119) 240,349 232,477 (174,091) 58,386

Property Development for Resale 50,903 (16,951) 33,952 44,298 (39,147) 5,151

TOTAL PROPERTY

2,081,933

(37,008)

2,044,925

1,439,404

(1,140,734)

298,670

Equity Investments 48,251 - 48,251 6,398 - 6,398

Other 119,156 (44,744) 74,412 97,043 (85,462) 11,581

CONSOLIDATED

6,091,543

(2,110,015)

3,981,528

3,670,161

(2,110,015)

1,560,146

Unallocated

22,481

215,402

TOTAL

4,004,009

1,775,548

OPERATING SEGMENTS (CONTINUED)

■ OPERATING SEGMENTS – 30 June 2010

SEGMENT REVENUE Sales to

Customers Outside the

Consolidated Entity

Other Revenues

Share of Net

Profit/(Loss) of Equity Accounted

Investments

Segment Revenue

2010 $000

FRANCHISING OPERATIONS 86 944,237 - 944,323

Retail – New Zealand 603,266 9,621 - 612,887

Retail – Asia 337,250 2,467 - 339,717

Retail – Slovenia 65,728 (101) - 65,627

Retail – Ireland & Northern Ireland 218,229 2,760 - 220,989

Other Non-Franchised Retail 116,561 5,062 - 121,623

TOTAL RETAIL

1,341,034

19,809

1,360,843

Retail Property 39 146,124 7,581 153,744

Property Under Construction for Retail - 8 (283) (275)

Property Development for Resale 3,296 92 (38) 3,350

TOTAL PROPERTY

3,335

146,224

7,260

156,819

Equity Investments - 10,406 - 10,406

Other - 6,053 - 6,053

Inter-company Eliminations - (29,340) - (29,340)

Total from continuing operations

1,344,455

1,097,389

7,260

2,449,104

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2010 (continued)

SEGMENT RESULT Segment Result Before Interest,

Taxation, Depreciation, Impairment & Amortisation

Interest Expense

Depreciation

Expense

Amortisation &

Impairment Expense

Segment Result

Before Tax

2010 $000

FRANCHISING OPERATIONS 384,800 (13,678) (53,717) (6,721) 310,684

Retail – New Zealand 56,823 (922) (7,488) (2) 48,411

Retail – Asia 14,222 (102) (3,621) (90) 10,409

Retail – Slovenia 5,132 (937) (805) (25) 3,365

Retail – Ireland & Northern Ireland (a) (35,933) (2,277) (5,130) (7,803) (51,143)

Other Non-Franchised Retail 10,183 (1,424) (1,430) (305) 7,024

TOTAL RETAIL

50,427

(5,662)

(18,474)

(8,225)

18,066

Retail Property 66,124 (13,818) (3,438) (703) 48,165

Property Under Construction for Retail (2,382) (969) - - (3,351)

Property Development for Resale 32 (262) - - (230)

TOTAL PROPERTY

63,774

(15,049)

(3,438)

(703)

44,584

Equity Investments 10,406 (356) - - 10,050

Other 3,806 (532) (196) - 3,078

Inter-company Eliminations (1,639) 1,639 - - -

Total from continuing operations

511,574

(33,638)

(75,825)

(15,649)

386,462

Income tax expense (148,474) Profit from continuing operations attributable to non-controlling interests (6,579)

Net profit for the year attributable to owners of the parent

231,409

(a) Included in the Ireland & Northern Ireland segment is the impairment expense of $7.80 million in respect of the write-down of plant and equipment assets to recoverable amount.

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2010 (continued)

SEGMENT ASSETS SEGMENT LIABILITIES Segment

Assets Eliminations Segment

Assets After Eliminations

Segment Liabilities

Eliminations Segment Liabilities

After Eliminations

2010 $000

FRANCHISING OPERATIONS

3,684,531

(2,422,266)

1,262,265

2,114,491

(1,301,561)

812,930

Retail – New Zealand 166,673 (16,250) 150,423 65,347 (1,028) 64,319

Retail – Asia 145,623 - 145,623 50,619 (3,633) 46,986

Retail – Slovenia 21,994 - 21,994 35,130 (5) 35,125

Retail – Ireland & Northern Ireland

55,232

171,502

(85,495)

86,007

Other Non-Franchised Retail 79,482 (16,946) 62,536 107,204 (49,612) 57,592

TOTAL RETAIL

469,004

(33,196)

435,808

429,802

(139,773)

290,029

Retail Property 1,725,807 (34,132) 1,691,675 1,090,802 (923,109) 167,693

Property Under Construction for Retail 154,290 (523) 153,767 114,131 (67,296) 46,835

Property Development for Resale 46,252 (13,833) 32,419 41,147 (37,531) 3,616

TOTAL PROPERTY

1,926,349

(48,488)

1,877,861

1,246,080

(1,027,936)

218,144

Equity Investments 40,314 - 40,314 - - -

Other 118,805 (53,028) 65,777 87,877 (87,708) 169

CONSOLIDATED

6,239,003

(2,556,978)

3,682,025

3,878,250

(2,556,978)

1,321,272

Unallocated

22,488

226,030

TOTAL

3,704,513

1,547,302

OPERATING SEGMENTS (CONTINUED)

The consolidated entity operates predominantly in twelve (12) primary segments:

Segment Description of Segment

Franchising Operations

Consists of the franchising operations of the consolidated entity (other than retailing, property and financial services).

Retail – New Zealand

Consists of the wholly-owned operations of the consolidated entity in New Zealand.

Retail – Asia

Consists of the controlling interest of the consolidated entity in the retail trading operations in Singapore and Malaysia under the Harvey Norman and Space brand names.

Retail – Slovenia

Consists of the controlling interest of the consolidated entity in the retail trading operations in Slovenia under the Harvey Norman brand name.

Retail – Ireland & Northern Ireland

Consists of the wholly-owned operations of the consolidated entity in Ireland and Northern Ireland.

Non-Franchised Retail – Clive Peeters and Rick Hart

Consists of the wholly-owned operations of the consolidated entity under the Clive Peeters and Rick Hart brands.

Non-Franchised Retail

Consists of the retail trading operations in Australia which are controlled by the consolidated entity and does not include any operations of Harvey Norman franchisees. This segment includes the Space Furniture brand in Malaysia.

Retail Property

Consists of land and buildings for each retail site that is fully operational or is ready and able to be tenanted. The revenue and results of this segment consists of rental income, outgoings recovered and the net property revaluation increments and/or decrements recognised in the Income Statement for each retail site that is owned by the consolidated entity which is fully operational (or ready for operations) as at year-end. The property is held for the purpose of facilitating the expansion and operation of the franchising operations.

Property Under Construction for Retail

Consists of sites that are currently undergoing construction at year-end intended for retail leasing. It also includes vacant land that has been purchased for the purposes of generating future investment income and facilitating the expansion and operation of the franchising operations.

Property Developments for Resale

Consists of land and buildings acquired by the consolidated entity, to be developed, or currently under development, for the sole purpose of resale at a profit.

Equity Investments

This segment refers to the trading of, and investment in, listed securities.

Other

This segment primarily relates to credit facilities provided to third parties and other unallocated income and expense items.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

54 54

1. ■ Statement of Significant Accounting Policies

(a) Corporate Information Harvey Norman Holdings Limited (the “Company”) is a company limited by shares incorporated in Australia and operating in Australia, New Zealand, Ireland, Northern Ireland, Singapore, Malaysia and Slovenia whose shares are publicly traded on the Australian stock exchange (trading under the symbol HVN).

(b) Basis of Preparation The financial report has been prepared on a historical cost basis, except for investment properties, completed land and buildings, derivative financial instruments, listed shares held for trading and available-for-sale investments, which have been measured at fair value. The carrying values of recognised assets and liabilities that are hedged items in fair value hedges, and are otherwise carried at cost, are adjusted to record changes in the fair values attributable to the risks that are being hedged. The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($‟000) unless otherwise stated under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the class order applies. The financial report of the consolidated entity for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the directors on 29 September 2011.

(c) Statement of Compliance The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and interpretations, and complies with other requirements of the law. The financial report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards Board, and International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board. Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the consolidated entity for the annual reporting period ended 30 June 2011. For details on the impact of future accounting standards, refer to page 67.

(d) Summary of Significant Accounting Policies (i) Significant accounting judgements, estimates and assumptions

Significant Accounting Judgements: In applying the consolidated entity‟s accounting policies management continually evaluates judgments, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the consolidated entity. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgments, estimates and assumptions. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below: Operating lease commitments – consolidated entity as lessor The entity has entered into commercial property leases on its investment property portfolio. The entity has determined that it retains all the significant risks and rewards of ownership of these properties and has thus classified the leases as operating leases. Refer to Note 13 to the financial statements. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i) Significant accounting judgements, estimates and assumptions (continued)

Impairment of non-financial assets other than goodwill The consolidated entity assesses impairment of all assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined. This involves value in use calculations, which incorporate a number of key estimates and assumptions. Significant Accounting Estimates and Assumptions: The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of certain assets and liabilities within the next annual reporting period are: Revaluation of investment properties

The consolidated entity values investment properties at fair value. The valuations are determined by either appropriately qualified independent valuers or directors‟ valuations. The properties are valued using market rental returns and capitalisation rates deemed appropriate for a 30-day rental agreement. Refer to Note 13 for further details.

Revaluation of investment properties under construction The consolidated entity has adopted the amendments to AASB 140. Consequently, investment property under construction is valued at fair value if it can be reliably determined. If a fair value cannot be determined, then investment property under construction is measured at cost. The fair value of investment property under construction is calculated using the capitalisation method of valuation. Share-based payment transactions

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Make good provisions Provision is made for the anticipated costs of future restoration of leased premises. The provision includes future cost estimates associated with dismantling and removing the assets and restoring the leased premises according to contractual arrangements. These future cost estimates are discounted to their present value. The related carrying amounts are disclosed in Note 18. Allowance for impairment loss on trade receivables Where receivables are outstanding beyond the normal trading terms or beyond the terms specified in the loan agreement, the likelihood of the recovery of these receivables are assessed by management. For trade receivables, due to the large number of debtors, this assessment is based on supportable past collection history and historical write-offs of bad debts. Non-trade debts receivable are assessed on an individual basis if impairment indicators are present. The impairment loss is outlined in Note 3.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

56 56

(ii) Basis of consolidation

Subsequent to 1 July 2009 The consolidated financial statements comprise the financial statements of Harvey Norman Holdings Limited and its controlled entities (the “consolidated entity”). The financial statements of controlled entities are prepared for the same reporting period as the parent company, using consistent accounting policies. Investments in wholly-owned subsidiaries are carried at cost less accumulated impairment losses in the separate financial statements of the parent. Subsidiaries are all those entities (including special purpose entities) over which the consolidated entity has the power to govern the financial and operating policies so as to obtain benefits from their activities. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. Franchisees are not controlled by the consolidated entity and have not been consolidated. Subsidiaries are consolidated from the date on which control is transferred to the consolidated entity and cease to be consolidated from the date on which control is transferred out of the consolidated entity. Financial statements of foreign controlled entities presented in accordance with overseas accounting principles are, for consolidation purposes, adjusted to comply with group policy and generally accepted accounting principles in Australia. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the consolidated entity‟s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent. Losses are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary (without a change in control) is to be accounted for as a transaction with owners in their capacity as owners. Therefore such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss in the statement of comprehensive income. Prior to 1 July 2009

In comparison to the above mentioned requirements which were applied on a prospective basis from 1 July 2009, the following differences applied:

 Acquisitions of non-controlling interests were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired was recognised in goodwill.

 Losses incurred by the consolidated entity were attributed to the non-controlling interest until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover the losses.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

57 57

(iii) Investments accounted for using equity method

Interests in associated and joint venture entities are brought to account using the equity method of accounting in the consolidated financial statements. Under this method, the investment in associates and joint ventures is initially recognised at its cost of acquisition and its carrying value is subsequently adjusted for increases or decreases in the investor‟s share of post- acquisition results and reserves of the associated and joint venture entities. The investment in associated and joint venture entities is decreased by the amount of dividends received or receivable. After application of the equity method, the consolidated entity determines whether it is necessary to recognise any impairment loss with respect to the entity‟s net investment in the joint venture entities. (iv) Foreign currency translation

Both the functional and presentation currency of Harvey Norman Holdings Limited and its Australian subsidiaries is Australian dollars. Transactions in foreign currencies are initially recorded in the functional currency at exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at balance date. All differences in the consolidated financial report are taken to the income statement in the period they arise. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The functional currency of overseas subsidiaries is the currency commonly used in their respective countries. As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Harvey Norman Holdings Limited at the rate of exchange ruling at the balance date and the income statements are translated at the weighted average exchange rates for the period. The exchange differences arising on the retranslation are taken directly to a separate component of equity called the foreign currency translation reserve (“FCTR”). On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. (v) Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Land and buildings are measured at fair value less accumulated depreciation on buildings and any impairment losses recognised after the date of the revaluation. Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:  Land – not depreciated  Leasehold land – lease term  Buildings under construction – not depreciated  Buildings – 20 to 40 years  Owned plant and equipment – 3 to 20 years  Plant and equipment under finance lease – 1 to 10 years

The assets‟ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For plant and equipment, impairment losses are recognised in the income statement. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

58 58

(v) Property, plant and equipment (continued) Revaluations Following initial recognition at cost, land and buildings are carried at a revalued amount which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated impairment losses. Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm‟s length transaction as at the valuation date. Properties in New Zealand, Slovenia and Singapore owned by the consolidated entity, upon any revaluation, are valued at fair value, determined by independent licensed valuers, in accordance with the respective local statutory requirements. Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position unless it reverses a revaluation decrease of the same asset previously recognised in the income statement. Any revaluation deficit is recognised in the income statement unless it directly offsets a previous surplus of the same asset in the asset revaluation reserve. In addition, any accumulated depreciation as at revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the asset‟s fair value at the balance date. Derecognition and Disposal

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. (vi) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as an expense when incurred. (vii) Investment properties

Completed Investment Property Initially, investment properties, which is property held to earn rentals and / or for capital appreciation are measured at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the period in which they arise. Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the derecognition of an investment property are recognised in the income statement in the period of derecognition. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the ending of owner- occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner- occupation or commencement of development with a view to sale. Properties in ACT which are held under a 99 year ground crown land sublease from the Commonwealth Government are not amortised over the remaining life of the lease, as the expectation is that these leases will be renewed at minimal cost once they expire. Properties in ACT have been accounted for as investment properties as they are primarily held to earn rental income.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(vii) Investment properties (continued)

Each investment property is valued at fair value. Each investment property is the subject of a lease or licence in favour of independent third parties, including franchisees. Franchisees occupy properties pursuant to a licence for an initial term of 30 days, thereafter terminable at will. The fair value in respect of each investment property has been calculated using the capitalisation method of valuation, against current rental value, and having regard to, in respect of each property:  the highest and best use  quality of construction  age and condition of improvements  recent market sales data in respect of comparable properties  tenure of Harvey Norman franchisees and external tenants  adaptive reuse of buildings  the specific circumstances of the property not included in any of the above points  non-reliance on turnover rent Investment Properties under Construction

Effective from 1 July 2009, investment properties under construction are valued at fair value if fair value can be reliably determined. The assessment of fair value may be based on an internal assessment conducted by the Board of the Company which may engage independent, qualified valuers to assist in the valuation process. The fair value of investment property under construction is calculated using the capitalisation method of valuation. (viii) Discontinued operation

A discontinued operation is a component of an entity that has been disposed of or is classified as held for sale and that represents a single major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a review to resale. The results of discontinued operations are presented separately on the face of the income statement. (ix) Goodwill

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer‟s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of acquisition. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. As at acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination‟s synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. When goodwill forms part of a cash-generating unit and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Impairment losses recognised for goodwill are not subsequently reversed.

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(x) Intangible assets

Intangible assets, consisting of capitalised computer software assets and licence property, are initially recorded at cost and are amortised on a straight line basis over their estimated useful lives but not greater than a period of seven and a half (7.5) years. Intangible assets are tested for impairment where an indicator of impairment exists, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and are recognised in the income statement when the intangible asset is derecognised. (xi) Recoverable amount of assets

At each reporting date, the consolidated entity assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the consolidated entity makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset‟s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (xii) Other financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The consolidated entity determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place.  Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category „financial assets at fair value through profit or loss‟. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss.  Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the consolidated entity has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment with revenue recognised on an effective yield basis.  Loans and receivables

Loans and receivables including loan notes and loans to key management personnel are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Interest income is recognised by applying the effective interest rate.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xii) Other financial assets (continued)

 Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity with the exception of impairment losses, foreign exchange gains / losses recognised directly in the income statement until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business at balance date. For investments with no active market, fair values are determined using valuation techniques. Dividends on available-for-sale equity instruments are recognised in the income statement when the consolidated entities right to receive the dividends is established. (xiii) Inventories

Inventories are valued at the lower of cost and net realisable value and are recorded net of all volume rebates, marketing and business development contributions and settlement discounts. Costs are on a weighted average basis and includes the acquisition cost, freight, duty and other inward charges. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale. (xiv) Trade and other receivables

Trade receivables are carried at amortised cost. An allowance for doubtful debts is made when there is objective evidence that the consolidated entity will not be able to collect the debts. Bad debts are written off when identified. Receivables from related parties are recognised and carried at amortised cost. Interest is taken up as income using the effective interest method. Under AASB 139, long-term interest free trade receivables are discounted to their present value at balance date, less an allowance for any uncollectible amounts. The discounting is recognised as an expense in the income statement as a period cost. Accretion of the discounted long-term interest free trade receivables balance is recognised as income. The short-term portion of the discounted long-term interest free trade receivables is recognised in current assets. (xv) Cash and cash equivalents

Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the Statement of Financial Position.

(xvi) Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least twelve months after the balance date.

(xvii) Provisions

Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows, at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

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(xvii) Provisions (continued)

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost, in the Income Statement. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the reporting date. (xviii) Trade and other payables

Trade payables and other accounts payable are carried at amortised cost. Liabilities for trade creditors and other amounts are recognised at cost, which is the fair value of the consideration to be paid in the future for inventories and other goods or services received, whether or not billed to the consolidated entity at balance date. Trade accounts payable are non-interest bearing and are normally settled within sixty days of statement date. Payables to related parties are recognised at cost. (xix) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. Defined contribution plans Contributions to defined contribution superannuation plans are expensed when incurred. (xx) Share-based payment transactions

The consolidated entity provides benefits to certain employees (including executive directors) of the consolidated entity in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares („equity-settled transactions‟). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer either using a binomial valuation methodology or Black Scholes- Merton valuation methodology. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award („vesting date‟). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the consolidated entity, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xxi) Leases

Consolidated entity as lessor Amounts due from lessees under finance leases are recorded as receivables. Finance lease receivables are initially recognised at amounts equal to the present value of the minimum lease payments receivable plus the present value of any unguaranteed residual value expected to accrue at the end of the lease term. Finance lease payments are allocated between interest revenue and reduction of the lease receivable over the term of the lease in order to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease. Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Consolidated entity as lessee Finance leases, which transfer to the consolidated entity substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Lease Incentives Financial incentive contributions received from lessors of certain stores are recognised at their fair value on receipt as a liability in the financial statements. The liability is reduced and recognised as income, by offsetting against occupancy expenses in the Income Statement over the period the consolidated entity expects to derive a benefit from the incentive contribution. Lease incentives are normally amortised to the income statement on a straight-line basis over the term of the lease. (xxii) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred, or to be incurred, in respect of the transaction can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer. Lay-by sales are recognised after the final payment is received from the customer. Interest

Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

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(xxii) Revenue (continued) Dividends Revenue is recognised when the shareholders‟ right to receive the payment is established. Rental income Rental income arising on investment properties is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned. Franchisee income

Revenue attributable to franchise fees is brought to account only when the franchise fees have been earned, or where franchise fees are unpaid but recovery is certain. (xxiii) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by balance date. Deferred income tax is provided on all temporary differences at balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:  except where the deferred income tax asset relating to the deductible difference arises from the initial recognition of an

asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss: and

 in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are recognised for all taxable temporary differences:  except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is

not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

 in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (xxiv) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:  Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case

the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and  Receivables and payables are stated with the amount of GST included.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xxiv) Other taxes (continued)

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. (xxv) Derecognition of financial instruments

The derecognition of a financial instrument takes place when the consolidated entity no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. (xxvi) Derivative financial instruments

The consolidated entity uses derivative financial instruments such as foreign currency contracts to hedge its risks associated with foreign currency fluctuations and interest rate swaps to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are stated at fair value. The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swaps is calculated with reference to current interest rates for contracts with similar maturity profiles. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. For the purposes of hedge accounting, hedges are classified as either fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability; or cash flow hedges where they hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction. Foreign currency contracts and interest rate swaps are generally considered to be cash flow hedges. In relation to cash flow hedges to hedge firm commitments which meet the conditions for special hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised in the income statement. When the hedged firm commitment results in the recognition of an asset (being the inventory purchase), at the time the asset is recognised, the associated gains or losses that had previously been recognised in equity are included in the initial measurement of the acquisition cost of the inventory. For interest rate swaps that are designated as cash flow hedges under AASB 139, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss. For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement. (xxvii) Earnings Per Share (EPS)

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus elements. Diluted EPS is calculated as net profit attributable to members, adjusted for:  Costs of servicing equity (other than dividends);  The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised

as expenses; and  Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential

shares, divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(xxviii) Contributed equity

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

(xxix) Investment in controlled entities

Investments in controlled entities are carried at cost.

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(xxx) Operating Segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments have been identified based on the information provided to the chief operating decision makers – being the executive management team.

The consolidated entity aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in each of the following respects:  Nature of the products and services,  Nature of the production processes,  Type or class of customer for the products and services,  Methods used to distribute the products or provide the services, and if applicable  Nature of the regulatory environment.

Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements.

Information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category for “all other segments”. (xxxi) Business combinations Subsequent to 1 July 2009 Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred, and included in administrative expenses. When the consolidated entity acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity‟s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. Prior to 1 July 2009 In comparison to the above-mentioned requirements, the following difference applied: Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree's identifiable net assets. Business combinations achieved in stages were accounted for in separate steps. Any additional acquired share of interest did not affect previously recognised goodwill. The goodwill amounts calculated at each step acquisition were accumulated. When the consolidated entity acquired a business, embedded derivatives separated from the host contract by the acquire were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the consolidated entity had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were adjusted against goodwill.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Future Accounting Standards Certain Australian Accounting Standards and UIG Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the year ended 30 June 2011.

Reference Title Summary Application date of standard*

Impact on Group financial report

Application date for Group*

AASB 9 AASB 2009-11

Financial Instruments, Amendments to Australian Accounting Standards arising from AASB 9

The standard addresses the classification and measurement of financial assets, including: 1) two categories for financial assets being amortised cost or fair value. 2) Financial assets can only be classified as amortised cost if the contractual cash flows from the instrument represent principal and interest and the entity‟s purpose for holding the instrument is to collect the contractual cash flows. 3) An option for equity investments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profit or loss on derecognition.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

AASB 124 (revised)

Related Party Disclosures

The revised standard simplifies the definition of a related party, including: 1) entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other. 2) whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other.

1 January 2011

The amendments are not expected to have any material impact on the consolidated entity‟s financial statements.

1 July 2011

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(e) Future Accounting Standards (continued)

Reference Title Summary Application date of standard*

Impact on Group financial report

Application date for Group*

AASB 1054

Australian Additional Disclosures

The standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB. This standard relocates all Australian specific disclosures from other standards to one place and revises disclosure in the following areas: 1) Compliance with Australian Accounting Standards; 2) The statutory basis or reporting framework for financial statements; 3) Whether the financial statements are general purpose or special purpose; 4) Audit fees; 5) Imputation credits

1 July 2011 The amendments are not expected to have any material impact on the consolidated entity‟s financial statements.

1 July 2011

AASB 2010-4

Further amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, 7, 101, 134 and Interpretation 13]

Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments. An entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.

1 January 2011

The amendments are not expected to have any material impact on the consolidated entity‟s financial statements.

1 July 2011

AASB 2010-6

Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]

The amendments increase the disclosure requirements for transactions involving transfers of financial assets. Disclosures require enhancements to the existing disclosures in IFRS 7 where an asset is transferred but is not derecognised and introduce new disclosures for assets that are derecognised but the entity continues to have a continuing exposure to the asset after the sale.

1 July 2011 The amendments are not expected to have any material impact on the consolidated entity‟s financial statements.

1 July 2011

AASB 2010-7

Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127]

The requirements for classifying and measuring financial liabilities were added to AASB 9. The existing requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities the change in fair value is accounted for as follows: 1) The change attributable to changes in credit risk are presented in other comprehensive income (OCI). The remaining change is presented in profit or loss.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Future Accounting Standards (continued)

Reference Title Summary Application date of standard*

Impact on Group financial report

Application date for Group*

AASB 2010-8

Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112]

These amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that the carrying amount will be recoverable through sale. The amendments also incorporate SIC-21 Income Taxes – Recovery of Revalued Non-Depreciable Assets into AASB 112.

1 January 2012

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2012

AASB 10 Consolidated Financial Statements

AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation – Special Purpose Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This is likely to lead to more entities being consolidated into the group.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

AASB 11 Joint Arrangements AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly- controlled Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

70 70

(e) Future Accounting Standards (continued)

Reference Title Summary Application date of standard*

Impact on Group financial report

Application date for Group*

Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. This may result in a change in the accounting for the joint arrangements held by the group.

AASB 12 Disclosure of Interests in Other Entities

AASB 12 includes all disclosures relating to an entity‟s interests in subsidiaries, joint arrangements, associates and structured entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

AASB 13 Fair Value Measurement

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.

1 January 2013

The consolidated entity is in the process of assessing the impact on the consolidated entity‟s financial statements and disclosures.

1 July 2013

*designates the beginning of the applicable annual reporting period

NOTES TO THE FINANCIAL STATEMENTS

CO NS O LI D ATE D

2011 2010

NOTE $000 $000

2. ■ Revenues from Continuing Operations

Revenues from Continuing Operations:

Revenue from the sale of products 1,556,384 1,344,455

Gross revenue from franchisees:

- Franchise fees 750,563 789,625

- Rent 204,181 196,336

- Interest 34,292 38,219

Total revenue received from franchisees

989,036

1,024,180

Rent received from other third parties 44,219 34,274

Interest received from other unrelated parties 7,739 5,786

Dividends from other unrelated parties 2,587 1,916

Total other revenues from continuing operations

54,545

41,976

Share of net profit of joint venture entities

17,888

7,260

Share of joint venture property revaluation 37 158 -

Total revenues from continuing operations

2,618,011

2,417,871

Other Income Items:

Net property revaluation increment on Australian investment properties 15,297 -

Net profit on the revaluation of equity investments to fair value 12,070 8,499

Net foreign exchange gains 2,258 357

Unrealised gain on interest rate swaps 230 246

Other revenue 49,023 22,131

Total other income items

78,878

31,233

Total revenues and other income items from continuing operations

2,696,889

2,449,104

Total revenues from continuing operations is disclosed on the Income Statement as follows:

Sales revenue 1,556,384 1,344,455

Other revenues from continuing operations 1,043,581 1,066,156

Other income items 78,878 31,233

Total other revenues and income items

1,122,459

1,097,389

Share of net profit of joint venture entities

17,888

7,260

Share of joint venture property revaluations 158 -

Total revenues and other income items from continuing operations

2,696,889

2,449,104

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010 $000 $000

3. ■ Expenses and Losses from Continuing Operations

In arriving at profit from continuing operations before Income tax, the following items were taken into account:

Depreciation, amortisation and impairment:

Depreciation of:

- Buildings 4,097 3,438

- Plant and equipment 77,416 72,445

Amortisation of:

- Leased plant and equipment 81 28

- Computer software 7,773 7,016

Impairment of (included in administrative and other expenses line in the Income Statement):

- Plant and equipment – Ireland 968 1,182

- Plant and equipment – Northern Ireland - 6,621

- Capitalised IT projects 1,093 41

- Other assets 10 703

Total depreciation, amortisation and impairment

91,438

91,474

Finance costs:

Interest paid or payable:

- Loans from directors and director-related entities 2,835 1,972

- Bank interest paid to financial institutions 37,694 29,540

- Interest paid on non-trade amounts owing to Commercial Mortgage Backed Securities

281

- Other 2,455 1,845

Total finance costs

42,984

33,638

Employee benefits expense:

- Wages and salaries 228,862 182,893

- Workers‟ compensation costs 1,539 1,390

- Superannuation contributions expense 13,231 8,602

- Payroll tax expense 10,934 7,994

- Share-based payment expense 419 (2,021)

- Other employee benefit expense 6,776 5,216

Total employee benefits expense

261,761

204,074

Property revaluation decrements:

- Net revaluation decrement for Australian investment properties - 30,052

- Share of joint venture property revaluations - 9,854

Total property revaluation decrements

39,906

Other expense items: - Net bad debts – provided for or written off 1,999 1,587 - Net charge to provision for doubtful debts (2,533) (3,182) - Net loss on disposal of plant and equipment 2,344 272 - Minimum lease payments 161,009 146,941 - Provision for obsolescence of inventories (336) 977 - Provision for employee benefits 5,494 (56)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

4. ■ Income Tax

(a) ■ Income tax recognised in the Income Statement

The major components of income tax expense are: Current income tax: Current income tax charge 93,701 133,906 Adjustments in respect of current income tax of previous years (1,284) (476) Deferred income tax: Relating to the origination and reversal of temporary differences 21,898 14,339 Write-downs (reversals of previous write- downs) of deferred tax assets - 705

Total income tax expense reported in the income statement

114,315

148,474

(b) ■ Income tax recognised in the Statement of Changes in Equity

The following deferred amounts were charged directly to equity during the year: Deferred income tax: Net loss on revaluation of cash flow hedges 169 (539) Net gain on revaluation of land and buildings 1,819 124

Total income tax expense reported in equity

1,988

(415)

A reconciliation between tax expense and the product of accounting profit before

income tax multiplied by the consolidated entity’s applicable income tax rate is as follows:

Accounting profit before tax from continuing operations 373,935 386,462

At the consolidated entity‟s statutory income tax rate of 30% (2010: 30%)

112,181

115,939

Adjustments to arrive at total income tax expense recognised for the year:

Adjustments in respect of current income tax of previous years (1,284) (476)

Share-based payment expenses 125 (606)

Expenditure not allowable for income tax purposes 84 (65)

Income not assessable for income tax purposes (878) 69

Unrecognised tax losses 13,368 16,111

Utilisation of tax losses (691) (365)

Reversal of deferred tax balances raised in previous years - 705

Tax concession for research and development expenses (6,004) (114)

Investment allowance on eligible assets - (269)

Non-allowable building and motor vehicle depreciation 90 86

Non-allowable building depreciation due to a legislative change in New Zealand 87 19,672

Receipt of fully franked dividends (776) (486)

Sundry items (615) (531)

Effect of different rates of tax on overseas income and exchange rate differences (1,372) (1,196)

2,134

32,535

Total income tax expense reported in the income statement

114,315

148,474

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4. ■ Income Tax (continued)

STATE M E N T O F F IN AN CI A L POS I T I O N

INC OM E STATE M E NT

2011 2010 2011 2010

$000 $000 $000 $000

(d) ■ Deferred income tax assets and liabilities:

Deferred income tax at 30 June relates to the following:

CONSOLIDATED

Deferred tax liabilities:

Revaluations of investment properties to fair value (136,021) (131,596) 4,424 (12,251)

Revaluations of owner-occupied land and buildings to fair value

(7,199)

(5,682)

Non-allowable building depreciation due to a legislative change in New Zealand

(19,150)

(20,062)

19,672

Reversal of building depreciation expense for investment properties

(25,519)

(20,152)

5,371

4,819

Differences between accounting carrying amount and tax cost base of computer software assets

(700)

(906)

(206)

(72)

Unrealised profits on investments (4,062) (1,355) 2,707 2,611

Adjustments in respect of deferred tax liabilities of previous years

(1,053)

Accretion of FAST receivables (3,496) (3,431) 65 101

Unrealised foreign exchange gains - (360) (360) (47)

Research and development (10,673) (441) 8,642 441

Other items (1,216) (1,005) 904 1,074

(208,036)

(184,990)

CONSOLIDATED

Deferred tax assets:

Employee provisions 6,428 5,077 (235) (197)

Unused tax losses and tax credits 233 817 594 918

Other provisions 1,874 2,001 76 568

Provision for lease makegood 135 698 528 (392)

Provision for deferred lease expenses 1,633 1,527 (106) (159)

Lease incentives 511 580 76 88

Provision for executive remuneration 675 705 30 (705)

Inventory valuation adjustments 1,565 1,565 - -

Unearned income for accounting purposes 7 1,004 109 (762)

Unrealised losses on foreign exchange Transactions

139

129

(19)

Finance leases 1,507 580 (608) (555)

Discount interest-free receivables 3,564 3,520 (45) (52)

Adjustments in respect of deferred tax assets of previous years

1,053

Equity-accounted investments 2,078 1,931 (19) 35

Provisions for onerous leases 728 892 164 30

Other items 1,404 1,462 (281) (137)

22,481

22,488

21,898

15,044

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4. ■ Income Tax (continued) The consolidated entity has not recognised deferred tax assets relating to tax losses of $194.27 million (2010: $157.09

million) which are available for offset against taxable profits of the companies in which the losses arose. At 30 June 2011, there is no recognised or unrecognised deferred income tax liability (2010: $nil) for taxes that would be payable on the unremitted earnings of certain subsidiaries, associates or joint ventures, as the consolidated entity has no liability for additional taxation should such amounts be remitted.

■ Tax consolidation Harvey Norman Holdings Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated

group with effect from 1 July 2002. Harvey Norman Holdings Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement which provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote. Wholly owned companies of the tax consolidated group have entered into a tax funding agreement. The funding agreement provides for the allocation of current and deferred taxes on a modified standalone basis in accordance with the principals as outlined in UIG 1052 Tax Consolidation Accounting. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries‟ inter- company accounts with the tax consolidated group head company Harvey Norman Holdings Limited.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

5. ■ Trade and Other Receivables (Current)

Trade debtors (a) 1,022,892 1,042,461

Provision for doubtful debts (a) (990) (3,289)

Trade debtors, net

1,021,902

1,039,172

Consumer finance loans (b) 2,970 3,735

Amounts receivable in respect of finance leases (c) 8,685 14,068

Non-trade debts receivable from: (d)

- Related parties 1,797 1,550

- Other unrelated persons 33,270 26,742

- Provision for doubtful debts (d) (3,392) (3,622)

Non-trade debts receivable, net

31,675

24,670

Total trade and other receivables (current)

1,065,232

1,081,645

(a) ■ Trade receivables and allowance for doubtful debts

Trade receivables are non-interest bearing and are generally on 30 day terms. An allowance has been made for estimated irrecoverable trade receivable amounts arising from the past sale of goods and rendering of services when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $1.78 million (2010: $0.73 million) has been recognised by the consolidated entity in the current year for the current trade debtors. These amounts have been included in the other expenses line item in the Income Statement. Included in the consolidated entity‟s trade receivable balance are debtors with a carrying amount of $12.48 million (2010: $9.85 million) which are past due at the reporting date for which the consolidated entity has not provided for as there has not been a significant change in credit quality and the consolidated entity believes that the amounts are still considered recoverable. The consolidated entity does not hold any collateral over these balances. Other balances within trade receivables do not contain impaired assets and are not past due. It is expected that these balances will be received when due. At 30 June, the ageing analysis of current and non-current trade debtors is as follows:

Past due but not impaired Past due and impaired

Neither past due

nor impaired

31-60 Days

61-90 Days

+90 Days

31-60 Days

61-90 Days

+90 Days Total

2011 ($000) 1,009,866 6,338 1,153 4,985 5 60 925 1,023,332

2010 ($000) 1,030,551 6,661 992 2,192 65 14 3,211 1,043,686

CO NS O L ID AT E D

2011 2010

$000 $000

Reconciled to: Trade debtors (Current) 1,022,892 1,042,461

Trade debtors (Non- Current – Note 10) 440 1,225

1,023,332

1,043,686

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

5. ■ Trade and Other Receivables (Current) (continued)

(a) ■ Trade receivables and allowance for doubtful debts (continued) Movements in the allowance for doubtful debts for trade debtors were as follows:

CO NS O LI D ATE D

2011 2010 $000 $000

At 1 July 3,289 4,336 Charge for the year 1,780 728 Foreign exchange translation (275) (131) Amounts written off (3,804) (1,644)

At 30 June

990

3,289

(b) ■ Consumer finance loans

For terms and conditions, allowance for doubtful debts and collateral held for consumer finance loans refer to Note 10.

Finance lease receivables are reconciled to amounts receivable in respect of finance leases as follows:

Aggregate of minimum lease payments and guaranteed residual values: Not later than one year 10,658 17,083 Later than one year but not later than five years 14,089 24,514

24,747

41,597

Future finance revenue: Not later than one year (1,973) (3,015) Later than one year but not later than five years (1,493) (2,454)

Net finance lease receivables

21,281

36,128

Reconciled to: Trade and other receivables (Current) 8,685 14,068 Trade and other receivables

(Non-current – Note 10)

12,596

22,060

21,281

36,128

The consolidated entity offers finance lease arrangements as part of the consumer finance business. Finance leases are

offered in respect of motor vehicles, livestock and fixtures and fittings with lease terms not exceeding 4 years. All finance leases are at fixed rates for the term of the lease. Included in the consolidated entity‟s current and non-current finance lease receivables, there are no lease receivables that are past due at the reporting date. Any defaults in repayments by customers are secured by the leased assets. The collateral that is held by the consolidated entity relates to the underlying leased assets. As at balance date, there are no events that require the consolidated entity to sell or re-pledge the leased assets. Finance receivables are reconciled to amounts receivable in respect of finance leases.

(d) ■ Non trade debts receivable and allowance for doubtful debts

Non trade receivables are generally interest bearing and are normally payable at call. An allowance has been made for estimated irrecoverable non trade receivable amounts. An impairment loss of $0.20 million (2010: $0.84 million) has been recognised by the consolidated entity in the current year for the non trade debtors. These amounts have been included in the other expenses line item in the Income Statement.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

■ Trade and Other Receivables (Current) (continued)

(d) ■ Non trade debts receivable and allowance for doubtful debts (continued)

Included in the consolidated entity‟s non trade receivable balance are debtors with a carrying amount of $1.26 million

(2010: $1.83 million) which are past due at the reporting date for which the consolidated entity has not provided for based on the assessment that the amounts are still recoverable. The fair value of the collateral held over the past due not impaired non-trade receivables is $0.85 million (2010: $0.85 million).

Other balances within non trade receivables do not contain impaired assets and are not past due. It is expected that these balances will be received when due. At 30 June, the ageing analysis of non trade debts receivable is as follows:

Past due but not impaired Past due and impaired

Neither

past due nor

impaired 31-60 Days

61-90 Days

+90 Days

31-60 Days

61-90 Days

+90 Days Total

2011 ($000) 30,417 - - 1,258 - - 3,392 35,067

2010 ($000) 22,838 - - 1,832 - - 3,622 28,292

Movements in the allowance for doubtful debts for current non-trade debts receivable were as follows:

CO NS O LI D ATE D

2011 2010 $000 $000

At 1 July 3,622 5,747 Charge for the year 202 839 Amounts written off (432) (2,964)

At 30 June

3,392

3,622

6. ■ Other Financial Assets (Current)

Listed shares held for trading at fair value 40,171 33,350 Other investments 1,058 1,050

Total other financial assets (current)

41,229

34,400

7. ■ Inventories (Current)

Finished goods at cost 316,453 250,815 Provision for obsolescence (6,290) (6,626)

Finished goods at cost, net

310,163

244,189

Finished goods at net realisable value

26,579

17,485

Total current inventories, net

336,742

261,674

8. ■ Other Assets (Current)

Prepayments 16,378 17,209 Other current assets 4,662 3,704

Total other assets (current)

21,040

20,913

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

9. ■ Intangible Assets (Current)

Net Licence Property 322 761

10. ■ Trade and Other Receivables (Non-Current)

Trade debtors (a) 440 1,225

Consumer finance loans (b) 1,518 1,917

Provision for doubtful debts (b) (16) (20)

1,942

3,122

Amounts receivable in respect of finance leases

12,596

22,060

Total trade and other receivables (non-current)

14,538

25,182

(a) ■ Trade debtors

For terms and conditions, allowance for doubtful debts and collateral held for trade debtors refer to Note 5.

(b) ■ Consumer finance loans and allowance for doubtful debts

Majority of the consumer finance loans are non-interest bearing and are generally on 6 to 48 months interest free terms. An impairment loss of $0.016 million (2010: $0.02 million) has been recognised by the consolidated entity in the current year for the consumer finance loans. These amounts have been included in the other expenses line item in the Income Statement. If a customer has missed a repayment in a consumer finance loan, the remaining balance of the consumer finance loan is treated as past due. Included in the consolidated entity‟s current and non-current consumer finance loans, $0.54 million (2010: $0.39 million) are past due at the reporting date for which the consolidated entity has not provided for. It is the consolidated entity‟s responsibility to collect the outstanding receivables from customers. In an event where the consolidated entity cannot collect the outstanding receivables from customers, the consolidated entity has recourse to franchisees for reimbursement of receivables. For consumer finance loans initiated from the consolidated owned stores, there has not been a significant change in credit quality and therefore the consolidated entity believes that the amounts are still considered recoverable. The consolidated entity does not hold any collateral over these balances. Other balances within consumer finance loans do not contain impaired assets and are not past due. It is expected that these balances will be received when due. At 30 June, the ageing analysis of current and non-current consumer finance loans is as follows:

Past due but not impaired Past due and impaired

Neither

past due nor

impaired 31-60 Days

61-90 Days

+90 Days

31-60 Days

61-90 Days

+90 Days Total

2011 ($000) 3,930 163 180 199 - - 16 4,488

2010 ($000) 5,243 140 66 183 - - 20 5,652

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

10. ■ Trade and Other Receivables (Non-Current) (continued)

(b) ■ Consumer finance loans and allowance for doubtful debts (continued)

CO NS O LI D ATE D

2011 2010

$000 $000

Reconciled to: Consumer finance loans (Current – Note 5) 2,970 3,735

Consumer finance loans (Non – Current) 1,518 1,917

4,488

5,652

Movements in the allowance for doubtful debts for non-current consumer finance loans were as follows: At 1 July 20 30 Charge for the year 16 20 Amounts written off (20) (30)

At 30 June

11. ■ Other Financial Assets (Non-Current)

Listed shares held for trading 2,000 1,590 Listed shares held as available for sale 6,080 5,375 Units in unit trusts held as available for sale 210 206 Other non-current financial assets 4 -

Total other financial assets (non-current)

8,294

7,171

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

12. ■ Property, Plant and Equipment (Non-Current)

■ Summary

Land

- At fair value 95,928 102,527 - Properties under construction, at cost 20,325 1,403

Total Land

116,253

103,930

Buildings

- At fair value 127,940 125,549 - Properties under construction, at cost 13,572 1,116

Total buildings

141,512

126,665

Net land and buildings

257,765

230,595

Plant and equipment

- At cost 755,771 692,172

- Accumulated depreciation (501,557) (485,609)

Net plant and equipment, at cost

254,214

206,563

Lease make good asset

- At cost 2,723 4,921

- Accumulated depreciation (2,223) (3,046)

Net lease make good asset, at cost

500

1,875

Total plant and equipment

254,714

208,438

Total property, plant and equipment

- Land and buildings at cost and fair value 257,765 230,595

- Plant and equipment at cost 758,494 697,093

Total Property, plant and equipment

1,016,259

927,688

Accumulated depreciation and amortisation (503,780) (488,655)

Total written down amount 512,479 439,033

■ Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year are as follows:

Land (at fair value):

Opening balance 102,527 90,730

Additions 4,217 8,774

(Decrease) / increase resulting from revaluation (6,852) 3,023

Transfers to investment properties - (545)

Transfers from land under construction at cost 1,403 3,775

Net foreign currency differences arising from foreign operations (5,367) (3,230)

Closing balance

95,928

102,527

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

12. ■ Property, Plant and Equipment (Non-Current) (continued)

■ Reconciliations (continued)

CO NS O LI D ATE D

2011 2010

$000 $000

Land under construction (at cost):

Opening balance 1,403 61,114

Transfers from / (to) investment properties 22,733 (55,636)

Transfers to land at fair value (1,403) (3,775)

Net foreign currency differences arising from foreign operations (2,168) (300)

Closing balance

20,565

1,403

Accumulated Depreciation

Opening balance - -

Depreciation for the year (a) 240 -

Closing balance

240

Net book value of land under construction

20,325

1,403

Buildings (at fair value):

Opening balance 125,549 109,590

Additions 6,981 17,055

Increase resulting from revaluation 803 -

Reversal of depreciation upon revaluation 61 (2,531)

Transfers from buildings under construction at cost 1,116 8,277

Net foreign currency differences arising from foreign operations (6,570) (6,842)

Closing balance

127,940

125,549

Accumulated Depreciation

Opening balance - -

Depreciation for the year 19,989 18,623

Disposals - 20

Reversal upon revaluation (19,987) (18,607)

Net foreign currency differences arising from foreign operations (2) (36)

Closing balance

Net book value of buildings

127,940

125,549

(a) The depreciation charge for the current year relates to a leasehold land located in Singapore.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

12. ■ Property, Plant and Equipment (Non-Current) (continued)

■ Reconciliations (continued)

CO NS O LI D ATE D

2011 2010

$000 $000

Buildings under construction (at cost):

Opening balance 1,116 32,923

Additions 5,721 1,026

Transfers to buildings at fair value (1,116) (8,277)

Transfers from / (to) investment properties 8,684 (24,537)

Net foreign currency differences arising from foreign operations (833) (19)

Closing balance

13,572

1,116

Net book value of land and buildings

257,765

230,595

Plant and equipment (at cost): Opening balance 692,032 670,040 Additions 132,136 42,764 Disposals (77,773) (35,410) Transfers (to) / from leased plant and equipment (416) 671 Transfers - 22,919 Transfers from other assets 21,238 - Impairment (419) - Net foreign currency differences arising from foreign operations (11,470) (8,952)

Closing balance

755,328

692,032

Accumulated Depreciation Opening balance 485,564 417,409 Depreciation for the year 76,751 71,563 Disposals (57,418) (29,709) Transfers (to) / from leased plant and equipment (252) 262 Transfers - 22,919 Transfers from other assets 4,211 - Impairment (a) 968 7,803 Net foreign currency differences arising from foreign operations (8,557) (4,683)

Closing balance

501,267

485,564

Net book value

254,061

206,468

(a) Impairment of Fixed Assets – Republic of Ireland and Northern Ireland

Ireland and Northern Ireland operations incurred a trading loss of $37.63 million for the current year compared to a loss of $42.65 million for the preceding year. Consequently, the recoverable amount of plant and equipment assets in Ireland and Northern Ireland was reviewed. As a result of this review, an impairment loss of $0.97 million (2010: $7.80 million) was recognised in the Republic of Ireland to reduce the carrying amount of plant and equipment to recoverable amount. This has been recognised in the Income Statement in the “other expenses” line item and in the “Retail – Ireland & Northern Ireland” reportable segment. Management determined the cash generating units to be each of the 14 retail stores in the Republic of Ireland. Within each of the retail store cash generating units, the recoverable amount was estimated for plant and equipment assets. The recoverable amount has been determined based on a value in use calculation using cash flow projections as at 30 June 2011 based on financial budgets approved by senior management. The pre-tax discount rate applied to the cash flow projections was 16.0% (2010: 9.9% to 11.0%). The terminal growth rate applied to the cash flow projections was 4.23% (2010: 2.43% to 3.15%).

Had the consolidated entity‟s land and buildings (other than land and buildings classified as investment properties, owner occupied land and buildings under construction and land and buildings owned under joint ventures) been measured on a historical cost basis, the net book value of land and buildings would have been $162.33 million (2010: $160.97 million).

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

12. ■ Property, Plant and Equipment (Non-Current) (continued)

■ Reconciliations (continued)

CO NS O LI D ATE D

2011 2010

$000 $000

Lease make good asset (at cost): Opening balance 4,921 3,604 Additions 781 1,990 Disposals (2,503) (676) Net foreign currency differences arising from foreign operations (476) 3

Closing balance

2,723

4,921

Accumulated Depreciation

Opening balance 3,046 2,509 Amortisation for the year 665 882 Disposals (1,147) (380) Net foreign currency differences arising from foreign operations (341) 35

Closing balance

2,223

3,046

Net book value

500

1,875

Leased Plant and Equipment (at cost): Opening balance 139 820 Additions 35 - Disposals (126) - Transfers from / (to) plant and equipment 416 (671) Transfers from accumulated depreciation - (10) Net foreign currency differences arising from foreign operations (21) -

Closing balance

443

139

Accumulated Depreciation

Opening balance 44 288 Amortisation for the year 81 28 Disposals (74) - Transfers from / (to) plant and equipment 252 (262) Transfers to leased plant and equipment at cost - (10) Net foreign currency differences arising from foreign operations (13) -

Closing balance

290

Net book value

153

Total plant and equipment

254,714

208,438

Total property, plant and equipment

512,479

439,033

The financing facilities as disclosed in Note 21 to the financial statements are secured by charges and mortgages over all of

the assets of the consolidated entity.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

13. ■ Investment Properties (Non-Current)

■ Reconciliations

CO NS OL ID AT E D

Completed investment

property

Investment property under

construction

Total Completed investment

property

Investment property under construction

Total

2011 $000

2010 $000

Opening balance 1,362,574 126,626 1,489,200 1,316,572 - 1,316,572

Additions 58,945 113,939 172,884 81,595 30,124 111,719

Transfer (to) / from property, plant and equipment - (31,417)

(31,417) 545 80,173

80,718

Transfer (to) / from investments accounted for using equity method (32,532) -

(32,532) 14,088 -

14,088

Transfer from / (to) completed investment property 8,705 (8,705)

- (16,357) 16,357

Transfer to inventory (8,869) - (8,869) - - -

Net foreign currency differences arising from foreign operations - -

- (140) -

(140)

Adjustment to fair value 17,320 (2,023) 15,297 (30,052) - (30,052)

Disposals (2,962) - (2,962) (3,677) (28) (3,705)

Closing balance 1,403,181 198,420

1,601,601 1,362,574 126,626

1,489,200

Each completed investment property is valued at fair value. Each completed investment property is the subject of a lease or

licence in favour of independent third parties, including franchisees. Franchisees occupy properties pursuant to a licence for an initial term of 30 days, thereafter terminable at will. The fair value in respect of each completed investment property has been calculated using the capitalisation method of valuation, against current rental value, and having regard to, in respect of each property:  the highest and best use  quality of construction  age and condition of improvements  recent market sales data in respect of comparable properties  tenure of Harvey Norman franchisees and external tenants  adaptive reuse of buildings  the specific circumstances of the property not included in any of the above points  non-reliance on turnover rent

For the properties valued using the capitalisation method of valuation during the year, management also undertook a discounted cash flow valuation of the same properties. There were no material differences between the capitalisation method result and the discounted cash flow method result. Primary sites (as determined by management), which have been operating for greater than a twelve-month period, totalling $1.29 billion (2010: $1.14 billion) generally have capitalisation rates within the range of 8.25% to 9.00% (2010: 8.0% to 9.5%). Secondary sites (as determined by management), which have been operating for greater than a twelve-month period, totalling $242.06 million (2010: $236.53 million) generally have capitalisation rates within the range of 8.75% to 11.0% (2010: 8.5% to 11.0%). The consolidated entity has a strict property maintenance program to ensure that all investment properties are continuously maintained to a high standard. The vacancy rate of the investment property portfolio in Australia is 2.44% (2010: 3.04%). Included in rent received from franchisees and rent received from other third parties as disclosed in Note 2 to the financial statements is rent received from investment properties of $140.91 million for the year ended 30 June 2011 (2010: $128.38 million). Operating expenses recognised in the income statement in relation to investment properties amounted $32.50 million for the year ended 30 June 2011 (2010: $27.12 million).

Investment properties can be analysed as follows:

CO NS O LI D ATE D

2011 2010

$000 $000

Completed investment properties at fair value 1,403,181 1,362,574

Investment properties under construction at fair value 198,420 126,626

Total investment properties

1,601,601

1,489,200

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

14. ■ Intangible Assets (Non-Current)

Computer Software (summary) Cost (gross carrying amount) 98,236 58,325 Accumulated amortisation and impairment (40,445) (34,580)

Net carrying amount

57,791

23,745

Computer Software: Net of accumulated amortisation and impairment Opening balance 23,745 17,772 Additions 42,648 14,441 Disposals (142) (1,429) Impairment (674) - Amortisation (7,773) (7,016) Net foreign currency differences arising from foreign operations (13) (23)

Net book value

57,791

23,745

Goodwill: Opening balance 11 11 Net foreign currency differences arising from foreign operations (2) -

Carrying value

Licence property: Net book value 494 473

Total intangible assets

58,294

24,229

■ Computer Software Computer software is carried at cost less accumulated amortisation and accumulated impairment losses. The intangible asset has been assessed as having a finite life and is amortised using the straight-line method over a period of no greater than 7.5 years. If impairment indicators are present, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.

■ Goodwill After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis whenever there is an indication of impairment. Pertama Holdings Limited, Singapore The recoverable amount of the cash generating unit of Pertama Holdings Limited, Singapore has been determined based on a fair value less costs to sell calculation as the asset, being the shares held by the consolidated entity in Pertama Holdings Limited, Singapore, are traded in an active market. Based on the annual impairment review, the goodwill recognised in respect of Pertama Holdings Limited, Singapore is not impaired.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

15.

■ Trade and Other Payables (Current)

Trade creditors 701,823 656,042 Accruals 77,761 36,900 Other creditors 75,313 46,773

Total trade and other payables (current)

854,897

739,715

16.

■ Interest-Bearing Loans and Borrowings (Current)

Secured: Non trade amounts owing to: - Commercial bills payable (a) 15,075 15,988 - Other short-term borrowings - 34,507 - Bank overdraft (a) 44,050 56,326 Unsecured: Derivatives payable - 209 Lease liabilities (b) Note 33 (b)(i) 168 182 Non trade amounts owing to: - Directors (c) 36,944 33,189 - Other related parties (c) 8,844 13,733 - Other unrelated persons 194 208

Total interest-bearing loans and borrowings (current)

105,275

154,342

(a) Commercial Bills Payable and Bank Overdraft The commercial bills payable and bank overdraft (“Other ANZ Facilities”) are secured by the securities given pursuant to the Syndicated Facility Agreement (as defined in Note 20(a)) , and subject to annual review by Australian and New Zealand Banking Group Limited (“ANZ”). The Other ANZ Facilities are repayable on demand by ANZ, upon the occurrence of any event of default or Relevant Event (as defined in Note 20(a)) under the Syndicated Facility Agreement, or after any annual review date. (b) Lease Liabilities The implicit interest rate on lease liabilities is within a range of 1.0% to 9.5% over a term of 3 years. (c) Directors and Other Related Parties Interest is payable at normal commercial bank bill rates. The loans are unsecured and repayable at call. (d) Defaults and Breaches During the current and prior years, there were no defaults or breaches on any of the interest-bearing loans and borrowings referred to in this note. The Company has not received notice of the occurrence of any Relevant Event from the financier.

17. ■ Other Liabilities (Current)

Lease incentives 1,545 2,003 Unearned revenue 58 927

Total other liabilities (current) 1,603 2,930

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

18.

■ Provisions

Current: Employee benefits (Note 29) 20,450 15,360 Make good provision 658 3,507 Deferred lease expenses 1,058 801 Onerous lease costs 2,426 2,972 Other 643 686

Total provisions (current)

25,235

23,326

Non-Current: Employee benefits (Note 29) 2,343 1,939 Make good provision 2,058 1,437 Deferred lease expenses 5,274 5,443

Total provisions (non-current)

9,675

8,819

Movements in the provisions for the year are as follows:

CONSOLIDATED

Make Good Provision

$000

Deferred Lease Expenses

$000

Onerous Lease Costs $000

Other

$000

Total

$000

At 1 July 2010 4,944 6,244 2,972 686 14,846

Arising during the year 769 1,190 1,076 919 3,954

Utilised (2,586) (1,012) (1,622) (930) (6,150)

Discount rate adjustment 8 - - - 8

Exchange rate variance (419) (90) - (32) (541)

At 30 June 2011

2,716

6,332

2,426

643

12,117

Current 2011 658 1,058 2,426 643 4,785

Non-current 2011 2,058 5,274 - - 7,332

Total provisions 2011

2,716

6,332

2,426

643

12,117

Current 2010 3,507 801 2,972 686 7,966

Non-current 2010 1,437 5,443 - - 6,880

Total provisions 2010

4,944

6,244

2,972

686

14,846

■ Make good provision In accordance with certain lease agreements, the consolidated entity is obligated to restore certain leased premises to a specified condition at the end of the lease term. The balance of the make good provision as at 30 June 2011 was $2.72 million representing the expected costs to be incurred in restoring the leased premises to the condition specified in the lease. The provision has been calculated using a discount rate of 3 per cent.

■ Onerous lease costs The provision for onerous lease costs represents the present value of the future lease payments that the consolidated entity is presently obligated to make in respect of onerous lease contracts under non-cancellable operating lease agreements. This obligation may be reduced by the revenue expected to be earned on the lease including estimated future sub-lease revenue, where applicable. The estimate may vary as a result of changes in the utilisation of the leased premises and sub-lease arrangements where applicable. The unexpired term of the leases ranges from 3 to 5 years. During the year ended 30 June 2011, the consolidated entity closed one (1) leased franchised store. The balance of the provision for onerous lease costs as at 30 June 2011 was $2.43 million.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18.

■ Provisions (continued)

■ Deferred lease expenses Deferred lease expenses represent the present value of the future lease payments that the consolidated entity is presently obligated to make under non-cancellable operating lease agreements to enable the even recognition of lease payments as an expense on a straight-line basis over the lease term.

■ Other The other provisions relates to provisions for employees‟ day in lieu incurred by a controlled entity within the consolidated entity.

CO NS O LI D ATE D

2011 2010

$000 $000

19. ■ Trade and Other Payables (Non-Current)

Other creditors - 23,332

20. ■ Interest-Bearing Loans and Borrowings (Non-Current)

Secured: Non trade amounts owing to: - Syndicated Facility Agreement (a) 485,900 321,400 - Commercial bills payable 32,428 23,544 - Other non-current borrowings 26,886 - Unsecured: - Derivatives payable 1,269 1,798 - Lease liabilities – Note 33 (b)(i) - 82

Total interest-bearing liabilities (non-current)

546,483

346,824

(a) Non-Current Borrowings – Syndicated Facility Agreement

1) On 2 December 2009, the Company, a subsidiary of the Company (“Borrower”) and certain other subsidiaries of the Company (“Guarantors”) entered into a syndicated facility agreement with certain banks (“Financiers” and each a “Financer”) in relation to a loan facility of $435,000,000 (“Facility”) made available by the Financiers to the Borrower (“Syndicated Facility Agreement”). During the year ended 30 June 2011, the amount of the Facility was increased to $560,000,000. In September 2011, the amount of the Facility was increased to $610,000,000.

2) The Facility is secured by:

(a) a fixed and floating charge granted by the Company and each of the Guarantors in favour of a security trustee for the Financiers; and

(b) real estate mortgages granted by certain Guarantors in favour of the security trustee for the Financiers over various real properties owned by those Guarantors.

3) The Facility is repayable:

(a) on 3 December 2012; or

(b) on demand by or on behalf of the Financiers upon the occurrence of any one of a number of events (each a “Relevant Event”), including events which are not within the control of the Company, the Borrower or the Guarantors. Each of the following is a Relevant Event:

(i) an event occurs which has or is reasonably likely to have a material adverse effect on the business, operation, property, condition (financial or otherwise) or prospects of the Borrower or the Company and the subsidiaries of the Company;

(ii) if any change in law or other event makes it illegal or impractical for a Financier to perform its obligations under the Syndicated Facility Agreement or fund or maintain the amount committed by that Financier to the provision of Facility (“Commitment”), the Financier may by notice to the Borrower, require the Borrower to repay the secured moneys in respect of the Commitment of that Financier, in full on the date which is forty (40) business days after the date of that notice.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

20. ■ Interest-Bearing Loans and Borrowings (Non-Current) (continued)

(b) Defaults and Breaches

During the current and prior years, there were no defaults or breaches on any of the interest-bearing loans and

borrowings referred to in this note. The Company has not received notice of the occurrence of any Relevant Event from any Financier.

21. ■ Financing Facilities Available

At reporting date, the following financing facilities had been negotiated and were available:

CO NS O LI D ATE D

2011 2010

$000 $000

Total facilities: - Bank overdraft 47,692 62,943 - Other short term borrowings 56,105 79,165 - Commercial bank bills 64,909 72,088 - Syndicated facility 560,000 435,000

Total Available Facilities

728,706

649,196

Facilities used at balance date: - Bank overdraft 44,050 56,326 - Other short term borrowings 26,886 34,507 - Commercial bank bills - current 15,075 15,988 - Commercial bank bills - non-current 32,428 23,544 - Syndicated facility 485,900 321,400

Total Used Facilities

604,339

451,765

Facilities unused at balance date: - Bank overdraft 3,642 6,617 - Other short term borrowings 29,219 44,658 - Commercial bank bills 17,406 32,556 - Syndicated facility 74,100 113,600

Total Unused Facilities

124,367

197,431

■ Commercial Bank Bills and Bank Overdrafts

The commercial bank bills and bank overdraft (“Other ANZ Facilities”) are secured by the securities given pursuant to the Syndicated Facility Agreement (refer to Notes 16(a) and 20(a)) and subject to annual review by ANZ. The Syndicated Facilities are repayable on demand, upon the occurrence of any event of default or Relevant Event (as defined in Note 20 (a)) under the Syndicated Facility Agreement, or after any annual review date. For additional financing facilities not disclosed above, refer to Notes 16 and 31(f)(i) for details in relation to loans by directors to Derni Pty Limited (a wholly owned subsidiary of Harvey Norman Holdings Limited).

22. ■ Other Liabilities (Non-Current)

Lease incentives 16,956 19,385 Unearned revenue 22 2,599

Total other liabilities (non-current)

16,978

21,984

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

23.

■ Contributed Equity

Ordinary shares 259,610 259,610

Total contributed equity

259,610

2011 2010 number number Ordinary shares: Issued and fully paid 1,062,316,784 1,062,316,784

Fully paid ordinary shares carry one vote per share and carry the right to dividends. CO NS O LI D ATE D

No.

$‟000

Movements in ordinary shares on issue At 1 July 2009 1,062,316,784 259,610 Issue of shares under executive share option plan - -

At 1 July 2010

1,062,316,784

259,610 Issue of shares under executive share option plan - -

At 30 June 2011

1,062,316,784

259,610

■ Ordinary Shares – Terms and Conditions

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to

participate in any surplus on winding up in proportion to the number of and amounts paid up on shares held. Each ordinary share entitles the holder to one vote, either in person or by proxy, at a meeting of the company.

■ Share Options

■ Harvey Norman Holdings Limited

Subject to the terms and conditions of the 2010 Share Option Plan, the Company issued 1,000,000 options to subscribe for 1,000,000 fully paid ordinary shares in the Company, at an exercise price of $3.02 per option, on 29 November 2010, to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith ("First Tranche of Options"). The qualifying period for the 2010 EOP Allocation is the three years ending 30 June 2013. The first tranche of options were independently valued at grant date by Mercer (Australia) Pty Limited utilising the assumptions underlying the Black- Scholes methodology. These assumptions included the following:  dividend yield 3.8%  expected volatility 37.1%  risk free rate as derived from the yield on Australian Government Bonds of the appropriate term Under this valuation methodology, the value of each option in the 2010 EOP Allocation was $0.87 per option or $2,610,000 in total. The performance conditions in respect of the 2007 EOP Allocation were not satisfied and therefore the 4,150,000 options in respect of the 2007 EOP Allocation did not vest as at 31 August 2010 and had lapsed on 27 September 2010.

■ Pertama Holdings Limited, Singapore There were no options (2010: 4,000,000 options) over unissued ordinary shares outstanding at 30 June 2011. At an Extraordinary General Meeting of shareholders held on 25 October 2005, shareholders approved the grant of 4,000,000 options to Mr Augustus. These options are exercisable from 1 October 2008 and must be exercised before 1 October 2010. Mr Augustus exercised the 4,000,000 options granted to him on 30 September 2010 at the exercise price of $S0.365 per option resulting in the issue of 4,000,000 of ordinary shares in Pertama Holdings Limited, Singapore. Refer to Note 29 to the financial statements for further information.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24. ■ Reserves

CONSOLIDATED $000 Asset

revaluation reserve

Foreign currency

translation reserve

Available for sale reserve

Cash flow hedge

reserve

Employee equity

benefits reserve

Acquisition reserve

Total

At 1 July 2009 64,928 (21,715) 373 (460) 9,419 - 52,545

Revaluation of land and buildings 4,176 - - - - - 4,176

Tax effect of revaluation of land and buildings

(124)

Unrealised gain on available-for- sale investments

981

Net loss on interest rate swaps swaps

- - - (1,799) - - (1,799)

Tax effect of net loss on interest rate swaps

- - - 539 - - 539

Ineffective interest rate swaps - - - (53) - - (53)

Reverse expired or realised cash flow hedge reserves

570

Net gains on forward foreign exchange contracts

Currency translation differences - 1,608 - - (6) - 1,602

Share based payment - - - - 843 - 843

Reversal of share expenses - - - - (2,864) - (2,864)

At 30 June 2010

68,980

(20,107)

1,354

(1,201)

7,392

56,418

At 1 July 2010 68,980 (20,107) 1,354 (1,201) 7,392 - 56,418

Revaluation of land and buildings (604) - - - - - (604)

Tax effect of revaluation of land and buildings

(1,819)

Unrealised gains on available-for- sale investments

973

Net gains on interest rate swaps - - - 563 - - 563

Tax effect of net loss on interest rate swaps

(169)

Reverse expired or realised cash flow hedge reserves

(61)

Net gains on forward foreign exchange contracts

Currency translation differences - (15,827) - - - - (15,827)

Acquisition of non-controlling interests - - - - - (6,917) (6,917)

Share based payment - - - - 419 - 419

Reversal of share expenses - - - - (359) - (359)

At 30 June 2011

66,557

(35,934)

2,327

(864)

7,452

(6,917)

32,621

Nature and purpose of reserves

(a) Asset revaluation reserve The asset revaluation reserve is used to record increases in the fair value of “owner occupied” land and buildings and decreases to the extent that such decreases relate to an increase on the same asset previously recognised in equity.

(b) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(d) Cash flow hedge reserve This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

(e) Employee equity benefits reserve

This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24. ■ Reserves (continued)

(f) Acquisition reserve

This reserve is used to record the consideration paid in excess of carrying value of non-controlling interests. The acquisition reserve of $6.92 million is attributable to the additional shareholding acquired in Pertama Holdings Limited, Singapore (“Pertama”) during the year by Harvey Norman Singapore Pte Limited (“HNS”), a wholly-owned subsidiary of Harvey Norman Holdings Limited. Shares in Pertama are listed on the Stock Exchange of Singapore. A total of 44,459,000 shares in Pertama were purchased by HNS in several on-market acquisitions in December 2010 and May 2011 for a total purchase consideration of $28.37 million Singaporean dollars. These acquisitions resulted in an increase in the effective shareholding of HNS in Pertama from 40.45% to 58.23%. The charge to the acquisition reserve of $6.92 million represents the excess of the consideration paid for the shares relative to the carrying value of non- controlling interest. The additional shareholding resulted in an increase in the controlling interest of the subsidiary and has been recognised as a negative adjustment to equity.

CO NS O LI D ATE D

June 2011

June 2010

$000 $000

25.

■ Retained Profits and Dividends

Movements in retained earnings were as follows: Balance 1 July 1,787,196 1,693,888 Profit for the year 252,255 231,409 Dividends (138,101) (138,101)

Balance 30 June

1,901,350

1,787,196

Dividends declared and paid during the year: Dividends on ordinary shares: Final franked dividend for 2010: 7.0 cents (2009: 6.0 cents) 74,362 63,739 Interim franked dividend for 2011: 6.0 cents (2010: 7.0 cents) 63,739 74,362

Total dividends paid

138,101

The final dividend for the year ended 30 June 2010 was paid on 6 December 2010. The interim dividend for the year ended 30 June 2011 was paid on 2 May 2011. ■ Proposed for approval at AGM

(not recognised as a liability as at 30 June):

Dividends on ordinary shares: Final franked dividend for 2011: 6.0 cents (2010: 7.0 cents) 63,739 74,362 The proposed final dividend for the year ended 30 June 2011 is to be paid on 5 December 2011 to shareholders

registered at 5:00 pm, 4 November 2011.

■ Franking credit balance

The amount of franking credits available for the subsequent financial years are:

- franking account balance as at the end of the financial year at 30% (2010: 30%) 667,917 617,846 - franking credits that will arise from the payment of income tax payable as at the end

of the financial year

3,635

33,848

- franking credits that will be utilised in the payment of proposed final dividend (27,317) (31,870)

The amount of franking credits available for future reporting periods:

644,235

619,824

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

26.

■ Non-Controlling Interests

Interest in: Ordinary shares 26,991 35,050 Reserves (8,407) (3,365) Retained earnings 16,296 22,302

Total non-controlling interests

34,880

53,987

27. ■ Earnings Per Share

The following reflects the income and share data used in the

calculations of basic and diluted earnings per share:

Profit after tax from continuing operations

259,620

237,988

Profit after tax attributable to non-controlling interests (7,365) (6,579)

Profit from continuing operations after tax attributable to the parent

252,255

231,409

Number of Shares

2011 2010

Weighted average number of ordinary shares used in calculating basic earnings per share (a):

1,062,316,784

Effect of dilutive securities (b):

- Share Options - -

Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share

1,062,316,784

(a) Weighted Average Number of Ordinary Shares

The number of ordinary shares on issue at 30 June 2011 was 1,062,316,784 (2010: 1,062,316,784). There has been no movement in the weighted average number of ordinary shares used in calculating basic earnings per share as there has been no movement in the number of shares on issue since the previous reporting period. There has been no exercise of share options granted under the EOP in respect of previous years. (b) Effect of Dilutive Securities On 29 November 2010, the consolidated entity issued 3,000,000 unlisted options to certain executive directors. These options are capable of exercise from 1 January 2014 to 30 June 2016 at an exercise price of $3.02 per option. The options were valued at grant date utilising the assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option was $0.87 per option or $2,610,000 in total. The 3,000,000 options have been excluded from the calculation of diluted earnings per share as the exercise price of each of the options granted was higher than the average market price of an ordinary share in the Company from grant date up to 30 June 2011. There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of this financial report.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

28.

■ Cash and Cash Equivalents

(a) ■ Reconciliation to the Statement of Cash Flows

Cash and cash equivalents comprise the following at end of the year: Cash at bank and on hand 114,353 105,285 Short term money market deposits 48,426 51,951

162,779 157,236 Bank overdraft (44,050) (56,326)

Cash and cash equivalents at end of year 118,729 100,910

(b) ■ Reconciliation of Profit After Income Tax to Net Operating Cash Flows:

Profit after tax

259,620

237,988

Adjustments for: Net foreign exchange gain (2,258) (357) Bad and doubtful debts 1,999 1,587 Provision for inventory obsolescence (336) 977 Share of joint ventures (17,888) (7,260) Depreciation of property, plant and equipment 81,594 75,825 Amortisation 7,773 7,102 Impairment of fixed assets 2,071 7,844 Impairment of assets held in joint venture entities - 703 Revaluation of investment properties and properties held under joint ventures (15,455) 39,906 Deferred lease expenses 353 530 Provision for onerous leases 860 2,214 Other provisions 107 687 Discount on interest-free long term receivables 150 175 Accretion of interest-free long term receivables (216) (335) Executive remuneration including shares and options expense 2,669 329 Realised / unrealised gain on interest rate swap (230) (246) Accrued income items (3,150) - Transfers to provisions: - Employee entitlements 5,494 (56) - Doubtful debts (2,533) (3,182) Profit on disposal and revaluation of: - Property, plant and equipment, and listed securities (9,726) (8,227) Changes in assets and liabilities net of effects from purchase and

sale of controlled entities:

(Increase)/decrease in assets: Receivables 36,299 (14,493) Inventory (74,732) (2,774) Other current assets (127) (5,845) Deferred tax assets 7 409 Increase/(decrease) in liabilities: Payables and other current liabilities 120,302 53,124 Income tax payable (33,674) 242

Net cash from operating activities 358,973 386,867

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

number number

29.

■ Employee Benefits

The number of full-time equivalent employees employed as at 30

June are:

5,579

4,691

2011 2010 $000 $000

The aggregate employee benefit liability is comprised of:

Accrued wages, salaries and on-costs 10,021 4,127 Provisions (current – Note 18) 20,450 15,360 Provisions (non-current – Note 18) 2,343 1,939

Total employee benefit provisions

32,814

21,426

The consolidated entity makes contributions to complying superannuation funds for the purpose of provision of

superannuation benefits for eligible employees of the consolidated entity. The amount of contribution in respect of each eligible employee is not less than the prescribed minimum level of superannuation support in respect of that eligible employee. The complying superannuation funds are independent and not administered by the consolidated entity.

■ Share Options

■ Harvey Norman Holdings Limited At balance date, the following options over unissued ordinary shares were outstanding and vested (or able to be exercised) by, or for the benefit of, directors of Harvey Norman Holdings Limited:

Grant Date

Expiry Date Exercise Price

Number of Options Outstanding Number of Options Vested

2011 2010 2011 2010

26/11/2007

25/11/2012

$6.77

4,150,000

29/11/2010

30/06/2016

$3.02

3,000,000

4,150,000

Refer to Note 31 Key Management Personnel for further information.

■ Pertama Holdings Limited, Singapore At balance date, the following options over unissued ordinary shares were outstanding and vested (or able to be exercised) by directors and employees of Pertama Holdings Limited, Singapore:

Grant Date

Expiry Date Exercise Price

Number of Options Outstanding Number of Options Vested

2011 2010 2011 2010

25/10/2005

01/10/2010

$SGD 0.365

4,000,000

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

29. ■ Employee Benefits (continued)

On 25 October 2005, at an Extraordinary General Meeting of shareholders, options to subscribe for up to 4,000,000

ordinary shares of par value $0.38 Singapore Dollars each in the capital of Pertama Holdings Limited, were granted to Mr A.A. Augustus at the exercise price of $0.365 Singapore Dollars per option. The terms of the option agreement entered into between Pertama Holdings Limited and Mr. Augustus in respect of these 4,000,000 options are:  The exercise price of these options is subject to annual review by the Board  The options are exercisable for the period commencing the third anniversary of 1 October 2005 and must be

exercised before the fifth anniversary of 1 October 2005 Mr. Augustus exercised the 4,000,000 options granted to him on 30 September 2010 at the exercise price of $S0.365 per option resulting in the issue of 4,000,000 of ordinary shares in Pertama Holdings Limited, Singapore. The share price of Pertama Holdings Limited on the date of exercise was $S0.455 per share.

CO NS O LI D ATE D

2011 2010

$ $

30.

■ Remuneration of Auditors

Amounts received or due and receivable by Ernst & Young for: - an audit or review of the financial report of the entity and any other entity in the

consolidated entity

1,563,265

1,396,696

- tax services in relation to the entity and any other entity in the consolidated entity 479,655 165,824 - other services in relation to the entity and any other entity in the consolidated entity 23,491 9,102

Total received by Ernst & Young

2,066,411

1,571,622

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31.

■ Key Management Personnel

(a) ■ Details of Key Management Personnel

(i) DIRECTORS

Title (ii) EXECUTIVES Title

Gerald Harvey Executive Chairman Martin Anderson General Manager – Generic

Publications Pty Limited Kay Lesley Page Chief Executive Officer Rodney Orrock General Manager – Domayne John Evyn Slack-Smith Executive Director and Chief

Operating Officer Thomas James Scott General Manager – Property

Arthur Bayly Brew* Executive Director – retired on 1

September 2010 Sasha Luke Naish General Manager – Computers

Resigned with effect from 31 December 2010

David Ackery Executive Director Leslie Robert Greeff Chief Information Officer – up

to 30 April 2010. Chris Mentis Chief Financial Officer and

Company Secretary Appointed to Program Director

– Merchandise Management System Program on 1 May 2010

Christopher Herbert Brown

Non-Executive Director Resigned with effect from 17 December 2010

Michael John Harvey Non-Executive Director Benjamin Scott McIntosh Appointed to General Manager

– Computers on 18 October 2010

Ian John Norman Non-Executive Director Gordon Ian Dingwall Appointed to General Manager

– Information Technology on 1 February 2011

Kenneth William

Gunderson-Briggs Non-Executive Director (Independent)

Graham Charles Paton AM Non-Executive Director

(Independent)

* Mr Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company.

(b) ■ Compensation of Key Management Personnel The total remuneration paid or payable to Key Management Personnel of the consolidated entity is as follows:

CO NS O LI D ATE D

2011 2010

$ $

Short – term 11,138,439 11,585,025 Post employment 211,044 190,849 Share – based payment 418,632 - Reversal of share-based payment expenses - (1,899,445) Termination payment 226,663 -

11,994,778

9,876,429

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31.

■ Key Management Personnel (continued)

Vested at 30 June 2011 30 June 2011 Balance at

Beginning of Period

Granted as Remuner-

ation

Options Exercised

Net Change Other (a)

Balance at End of Period

Total Exercisable Not Exercisable

Directors 01/07/2010 30/06/2011

G. Harvey 900,000 - - (900,000) - - - - K.L. Page 1,000,000 - - (1,000,000) - - - - J.E. Slack-Smith 800,000 1,000,000 - (800,000) 1,000,000 - - - D.M. Ackery 800,000 1,000,000 - (800,000) 1,000,000 - - - C. Mentis 350,000 1,000,000 - (350,000) 1,000,000 - - - M.J. Harvey - - - - - - - - C.H. Brown - - - - - - - - I.J. Norman - - - - - - - - K.W. Gunderson- Briggs

G.C. Paton - - - - - - - - Executives R. Orrock - - - - - - - - M.L. Anderson - - - - - - - - T.J. Scott - - - - - - - - B.S. McIntosh - - - - - - - - G.I. Dingwall - - - - - - - -

3,850,000

3,000,000

(3,850,000)

3,000,000

The above disclosures exclude the option holdings by Mr A. Brew as he had retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr A. Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company. (a) Explanation of Net Change Other Column: The options pursuant to the 2007 EOP Allocation were subject to testing during each of the financials years in the qualifying period to determine whether Performance Conditions 1 and 2 were satisfied in accordance with the terms set out in the notice of meeting that accompanied the allocation. During each of the three financial years ending 30 June 2010, the earnings per share hurdle was not satisfied. As this performance condition must be met in order for any of the options to vest, the options in respect of the 2007 EOP Allocation did not vest as at 31 August 2010 and were not capable of exercise by the participants from 1 September 2010. On 27 September 2010, the Board of the Company determined that the 2007 EOP Allocation had lapsed.

Vested at 30 June 2010 30 June 2010 Balance at

Beginning of Period

Granted as Remuner-

ation

Options Exercised

Net Change Other

Balance at End of Period

Total Exercisable Not Exercisable

Directors 01/07/2009 30/06/2010

G. Harvey 900,000 - - - 900,000 - - - K.L. Page 1,000,000 - - - 1,000,000 - - - A.B. Brew* 300,000 - - - 300,000 - - - J.E. Slack-Smith 800,000 - - - 800,000 - - - D.M. Ackery 800,000 - - - 800,000 - - - C. Mentis 350,000 - - - 350,000 - - - M.J. Harvey - - - - - - - - C.H. Brown - - - - - - - - I.J. Norman - - - - - - - - K.W. Gunderson- Briggs

G.C. Paton - - - - - - - - Executives R. Orrock - - - - - - - - M.L. Anderson - - - - - - - - L.R. Greeff - - - - - - - - T.J. Scott - - - - - - - - S.L. Naish - - - - - - - -

4,150,000

* Mr Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company.

100

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31.

■ Key Management Personnel (continued)

(d) ■ Shareholdings of Key Management Personnel Shares held in Harvey Norman Holdings Limited (number):

30 June 2011 Balance 1 July 2010

Granted as Remuneration

On Exercise of Options

Net Change Other

Balance 30 June 2011

Directors G. Harvey 311,959,532 - - - 311,959,532 K.L. Page 16,995,133 - - - 16,995,133 J.E. Slack-Smith 259,999 - - - 259,999 D. Ackery 146,667 - - - 146,667 C. Mentis - - - 7,450 7,450 M.J. Harvey 2,845,553 - - - 2,845,553 C.H. Brown 103,467 - - - 103,467 I.J. Norman 175,249,660 - - - 175,249,660 K.W. Gunderson-Briggs 3,000 - - - 3,000 G.C. Paton 15,000 - - - 15,000 Executives R. Orrock - - - - - M.L. Anderson - - - - - T.J. Scott - - - - - B.S. McIntosh - - - - - G.I. Dingwall - - - - -

Total

507,578,011

7,450

507,585,461

30 June 2010 Balance 1 July 2009

Granted as Remuneration

On Exercise of Options

Net Change Other

Balance 30 June 2010

Directors G. Harvey 311,959,532 - - - 311,959,532 K.L. Page 16,995,133 - - - 16,995,133 A.B. Brew* 1,169,871 - - - 1,169,871 J.E. Slack-Smith 1,659,999 - - (1,400,000) 259,999 D. Ackery 496,667 - - (350,000) 146,667 C. Mentis - - - - - M.J. Harvey 2,845,553 - - - 2,845,553 C.H. Brown 103,467 - - - 103,467 I.J. Norman 175,249,660 - - - 175,249,660 K.W. Gunderson-Briggs 3,000 - - - 3,000 G.C. Paton 15,000 - - - 15,000 Executives R. Orrock - - - - - M.L. Anderson - - - - - L.R. Greeff - - - - - T.J. Scott - - - - - S.L. Naish 2,000 - - (2,000) -

Total

510,499,882

(1,752,000)

508,747,882

* Mr Brew retired as director of Harvey Norman Holdings Limited on 1 September 2010. Mr Brew remains an executive employee of Yoogalu Pty Limited, a wholly-owned subsidiary of the Company. On 17 September 2009, J.E. Slack-Smith sold 1,400,000 shares in the Company on market reducing his shareholding to 259,999 ordinary shares in Harvey Norman Holdings Limited as at 30 June 2010. On 17 September 2009, D.M. Ackery sold 350,000 shares in the Company on market reducing his shareholding to 146,667 ordinary shares in Harvey Norman Holdings Limited as at 30 June 2010.

101

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31.

■ Key Management Personnel (continued)

(d) ■ Shareholdings of Key Management Personnel (continued) All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the consolidated entity would have adopted if dealing at arm‟s length.

(e) ■ Loans to Key Management Personnel (i) Details of aggregates of loans to key management personnel are as follows :

Balance at beginning of

period

Interest charged

Interest not charged

Write-off Balance at End of Period

Number in Group

$000

No.

2011 Directors - 4 - - 200 1 Executives 110 9 - - 55 2

110

255

2010 Directors - - - - - - Executives 58 5 - - 40 1

Terms and Conditions of Loans

During the year ended 30 June 2011, the consolidated entity advanced a loan to two (2) key management personnel and has charged the individuals a commercial rate of interest. The loan to a director of the Company has been repaid in full in August 2011. As at the date of this report, there is one (1) loan outstanding to an executive which is repayable on arm‟s length commercial terms and conditions. During the year ended 30 June 2008, the consolidated entity had advanced a loan to one (1) key management personnel and has charged the executive a commercial rate of interest of 9.0%. This loan to an executive KMP has been repaid in full during the current financial year. (ii) Details of individuals with loans above $100,000 in the reporting period are as follows:

Balance at beginning of

period

Interest charged

Interest not charged

Write-off Balance at End of Period

Highest Owing in Period

$000

No.

2011 Directors - 4 - - 200 201 Executives - - - - - - 2010 Directors - - - - - - Executives - - - - - -

102

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31.

■ Key Management Personnel (continued)

(f) ■ Other Transactions and Balances with Key Management Personnel

CO NS O LI D ATE D 2011 2010 $ $

(i) Loans from directors to subsidiaries of Harvey Norman Holdings Limited: Derni Pty Limited (a wholly owned subsidiary of Harvey Norman Holdings Limited)

borrowed money from entities associated with I.J. Norman, M.J. Harvey, A.B. Brew and G. Harvey. Interest is payable at commercial rates. These loans are unsecured and repayable at call.

36,943,812

33,188,672 Net amounts received from entities associated with the above mentioned directors

and their related parties.

4,246,509

4,311,229

Interest paid/payable 2,166,333 1,426,099 (ii) Legal fees paid to a director-related entity: Legal fees were paid to the firm of which Mr C.H. Brown is a partner for professional

services rendered to the consolidated entity in the normal course of business.

1,045,252

579,522 (iii) Lease of business premises from Ruzden Pty Limited: The consolidated entity leases business premises at Bundall, Queensland from

Ruzden Pty Limited. Mr G. Harvey, Ms K.L. Page, Mr M.J. Harvey, Mr I.J. Norman and Mr A.B. Brew have an equity interest in Ruzden Pty Limited. The lease arrangements were approved by shareholders in the General Meeting held 25 May 1993, and in the General Meeting held 31 August 1999. The lease is subject to normal commercial terms and conditions. Rent paid by the consolidated entity to Ruzden Pty Limited is:

3,977,720

3,821,846 (iv) Other income derived by related entities of key management personnel: Certain franchises are operated by entities owned or controlled by relatives of key

management personnel under normal franchisee terms and conditions. Aggregated net income derived by entities owned or controlled by relatives of key management personnel is:

1,605,224

1,859,926 (v) Perth City West Retail Complex

By a contract for sale dated 31 October 2000, Gerald Harvey, as to a one half share as tenant in common, and a subsidiary of Harvey Norman Holdings Limited, as to a one half share as tenant in common, purchased the Perth City West retail complex for a purchase price of $26.60 million. In the financial report for the year ended 30 June 2011 this has been accounted for as a joint venture entity as disclosed in Note 37 to the financial statements. This transaction was executed under terms and conditions no more favourable than those which it is reasonable to expect would have applied if the transaction was at arm‟s length. The property was purchased subject to a lease of part of the property in favour of a subsidiary of Harvey Norman Holdings Limited (the "Lessee"). That lease had been granted by the previous owner of the property on arm's length normal terms and conditions. Gerald Harvey is entitled to one half of the rental paid by the Lessee. The amount of rental and outgoings paid by the Lessee to Gerald Harvey and the subsidiary of Harvey Norman Holdings Limited for the year ended 30 June 2011 was $1.78 million each and for the year ended 30 June 2010 was $1.56 million.

103

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31. ■ Key Management Personnel (continued)

(f) ■ Other Transactions and Balances with Key Management Personnel (continued) (vi)

The Byron at Byron Resort, Spa and Conference Centre

By a contract for sale dated 15 May 2002, a company (of which Gerald Harvey was a director) acting in its capacity as trustee of a trust, as to a one half share as tenant in common (the “GH entity”), and a subsidiary of Harvey Norman Holdings Limited, as to a one half share as tenant in common, purchased the Byron at Byron Resort, Spa and Conference Centre (the “Byron Bay JV”). In the financial report for the year ended 30 June 2011, this has been accounted for as a joint venture entity as disclosed in Note 37. This transaction was executed under terms and conditions no more favourable than those which it is reasonable to expect would have applied if the transaction was at arms‟ length. Each of the GH entity and a subsidiary of Harvey Norman Holdings Limited was entitled to a share in profit in the sum of $0.55 million (2010: $0.62 million). Each of the GH entity and a subsidiary of Harvey Norman Holdings Limited made additional capital contributions to the Byron Bay JV of $0.34 million (2010: $0.11 million). A subsidiary of Harvey Norman Holdings Limited held a conference at The Byron at Byron Resort and paid the Byron Bay JV conference fees amounting to $0.101 million for the year ended 30 June 2010 (2010: $0.095 million).

(vii) Gepps Cross Retail Complex

By a contract for sale dated 18 December 2007, a subsidiary of the Company (“HNHL G.C. Entity”) and Axiom Properties Fund Limited (“G.C. Co-Owner”) purchased land located in Gepps Cross, South Australia (“G.C. Land”) in equal shares as tenants in common, for the purpose of constructing and subsequently managing a retail complex on the G.C. Land (“the Gepps Cross Joint Venture”). In November 2009, HNHL G.C. Entity and the G.C. Co-Owner granted a lease of part of the G.C. Land and retail complex to a subsidiary of the Company (“G.C. Lessee”) on arm‟s length commercial terms (“G.C. Lease”). In August 2010, the G.C. Co-Owner informally advised the Company that the G.C. Co-Owner intended or wished to dispose of its interest in the Gepps Cross Joint Venture, triggering first and last rights of refusal in the HNHL G.C. Entity. At a meeting of the Company held 26 August 2010, it was resolved that the Company not purchase the share of the G.C. Co-Owner in the Gepps Cross Joint Venture (including G.C. Land). On 6 October 2010, HNHL G.C. Entity formally waived the right to purchase the interest of the G.C. Co-Owner in the Gepps Cross Joint Venture (including the G.C. Land). By a contract for sale dated 23 December 2010, GH Gepps Cross Pty Limited, an entity associated with Gerald Harvey (“Gerald Harvey Entity”) and MJH Gepps Cross Pty Limited, an entity associated with Michael Harvey (“Michael Harvey Entity”) and, M&S Gepps Cross Pty Limited, purchased the one half share as tenant in common of the G.C. Co-Owner in the G.C. Land and retail complex. The sale was subject to the G.C. Lease. The Gerald Harvey Entity is entitled to one quarter of the rental and outgoings paid by the G.C. Lessee amounting to $0.32 million for the year ended 30 June 2011. The Michael Harvey Entity is entitled to one eighth of the rental and outgoings paid by the G.C. Lessee amounting to $0.16 million for the year ended 30 June 2011. The Gepps Cross Joint Venture has been accounted for as equity accounted investment as disclosed in Note 37. The Gerald Harvey Entity is entitled to one quarter of the profits generated by the retail complex on the G.C. Land amounting to $0.66 million for the year ended 30 June 2011. The Michael Harvey Entity is entitled to one eighth of the profits generated by the retail complex on the G.C. Land amounting to $0.33 million for the year ended 30 June 2011.

(viii) National Rugby League Limited

Ms. K.L. Page is a director of National Rugby League Limited. During the financial year, wholly owned subsidiaries of Harvey Norman Holdings Limited paid for advertising and sponsorships totalling $3.38 million (2010: $2.53 million) to National Rugby League Limited. All dealings with that entity are in the ordinary course of business and on arm‟s length commercial terms and conditions.

(ix) Gazal Corporation Limited

Mr. G.C. Paton is an independent, non-executive director of Gazal Corporation Limited, a public company listed on the Australian Stock Exchange. A wholly-owned subsidiary of the consolidated entity owns 1.0 million shares in Gazal Corporation Limited with a market value of $2.00 million as at 30 June 2011 (2010: $1.59 million). The consolidated entity received dividends from Gazal Corporation Limited amounting to $0.13 million for the year ended 30 June 2011 (2010: $0.08 million).

During the year ended 30 June 2011 Harvey Norman Shopfitting Pty Limited, a wholly-owned subsidiary of Harvey

Norman Holdings Limited, provided shopfitting services on normal commercial terms and conditions to Gazal Corporation Limited. The value of the shopfitting sales to Gazal was $3.89 million (2010: $5.94 million). Mr. G.C. Paton did not direct, manage or otherwise participate in any of the arrangements between Harvey Norman Shopfitting Pty Limited and Gazal Corporation Limited.

104

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

32.

■ Related Party Transactions

(a) ■ Ultimate Controlling Entity

The ultimate controlling entity of the consolidated entity is Harvey Norman Holdings Limited, a company incorporated in Australia.

CO NS O LI D ATE D 2011 2010 $ $

(b) ■ Transactions with Other Related Parties

- Several wholly owned subsidiaries of Harvey Norman Holdings Limited operate inter-

company loan accounts with controlled entities such as Harvey Norman Stores (NZ) Pty Limited, Pertama Holdings Limited, Singapore, Harvey Norman Holdings Ireland Limited, Harvey Norman Europe d.o.o, OFIS and Clive Peeters. The function of these inter-company loans is to facilitate the reimbursement of expenses paid by wholly- owned subsidiaries in Australia including travel expenses, advertising, marketing support, courier costs, other miscellaneous expenses and to provide working capital funding from time to time. Inter-company loans have been eliminated on consolidation. The amount of such inter-company loans on balance date were: 234,490,962

87,923,420 - Network Consumer Finance Pty Limited (a wholly owned subsidiary of Harvey

Norman Holdings Limited) acts as financier to several controlled partnerships and controlled entities. These controlled partnerships and controlled entities request advances from Network Consumer Finance Pty Limited to pay for general working capital expenses including, but not limited to, wages, travel, rental and other operating costs. Inter-company loans are at arm‟s length terms and conditions and have been eliminated on consolidation.

- The amount of inter-company loans at balance date was: 43,114,358 49,692,031 - The aggregate amount of interest charged by Network Consumer Finance Pty

Limited to controlled partnerships and controlled entities was at normal commercial terms and conditions. The aggregate amount of interest charged was:

1,224,886

1,016,401

33.

■ Commitments

(a) Capital expenditure contracted but not provided is payable as follows: Not later than one year 95,562 64,642 Later than one year but not later than five years 7,004 44,026

102,566

108,668

The consolidated entity had contractual obligations to purchase property, plant and equipment and investment properties

of $102.57 million (2010: $108.67 million). The contractual obligations relating to property, plant and equipment are mainly for the construction of new stores of overseas controlled entities. The contractual obligations relating to investment properties are mainly for the construction of proposed franchised complexes in Australia.

(b) Lease expenditure commitments: (i) Finance lease rentals are payable as follows: Not later than one year 198 220 Later than one year but not later than five years - 86

Minimum finance lease payments

198

306

Deduct future finance charges (30) (42)

Total finance lease liabilities

168

264

105

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

CO NS O LI D ATE D

2011 2010

$000 $000

33.

■ Commitments (continued)

(b) Lease expenditure commitments (continued): Disclosed as follows: Current liabilities (refer Note 16) 168 182 Non-current liabilities (refer Note 20) - 82

168

264

All lease payments are determined at the commencement of the lease and remain fixed for the lease term. The finance lease liabilities are secured by charges over the underlying assets financed (refer to Note 12 for net book value of capitalised lease assets).

(ii) Operating lease expenditure contracted for is payable as follows: Not later than one year 153,049 140,496 Later than one year but not later than five years 433,424 418,796 Later than five years 371,803 402,787

Total operating lease liabilities

958,276

962,079

Operating leases are entered into as a means of acquiring access to retail property and warehouse facilities. Rental

payments are renewed annually in line with rental agreements. (iii) Geographic representation of operating lease expenditure:

30 June 2011 Australia

$000

New Zealand

$000

Asia $000

Ireland and Northern

Ireland $000

Total $000

Not later than one year 112,576 7,703 13,903 18,867 153,049 Later than one year but not later than five years 315,162 24,397 16,462 77,403 433,424 Later than five years 160,545 7,010 - 204,248 371,803

Total operating lease liabilities

588,283

39,110

30,365

300,518

958,276

30 June 2010 Australia

$000

New Zealand

$000

Asia $000

Ireland and Northern

Ireland $000

Total $000

Not later than one year 94,778 8,131 15,751 21,836 140,496 Later than one year but not later than five years 258,648 26,077 16,000 118,071 418,796 Later than five years 131,033 11,658 - 260,096 402,787

Total operating lease liabilities

484,459

45,866

31,751

400,003

962,079

34.

■ Contingent Liabilities

Guarantees

As at 30 June 2011, Harvey Norman Holdings Limited had guaranteed the performance of a number of controlled entities which have entered into operating leases and facilities with other parties totalling $352.07 million (2010: $453.63 million).

106

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management

(a) ■ Financial Risk Management Objectives and Policies The consolidated entity‟s principal financial instruments are comprised of:

 receivables  payables  bills payable  available for sale investments  shares held for trading; and  derivatives

The consolidated entity manages its exposure to key financial risks, such as interest rate and currency risk in accordance with the consolidated entity‟s financial risk management policy, as outlined in the Treasury Policy. The objective of the policy is to support the delivery of the consolidated entity‟s financial targets whilst protecting future financial security. The consolidated entity enters into derivative transactions, principally interest rate swaps and forward currency contracts. The purpose is to manage the interest rate and currency risks arising from the consolidated entity‟s operations and its sources of finance. The main risks arising from the consolidated entity‟s financial instruments are:  foreign currency risk  interest rate risk  equity price risk  credit risk; and  liquidity risk

The consolidated entity uses different methods to measure and manage different types of risks to which it is exposed. These include:  monitoring levels of exposure to interest rate and foreign exchange risk;  monitoring assessments of market forecasts for interest rate, foreign exchange and commodity prices;  ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk; and  liquidity risk is monitored through the development of future rolling cash flow forecasts.

The Board reviews and endorses policies for managing each of these risks as summarised below:  the setting of limits for trading in derivatives; and  hedging cover of foreign currency and interest rate risk, credit allowances, and future cash flow forecast projections.

(b) ■ Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

market prices. Components of market risk to which the consolidated entity are exposed are discussed below. (i) ■ Foreign Currency Risk Management Foreign currency risk refers to the risk that the value of financial instruments, recognised asset or liability will fluctuate due

to changes in foreign currency rates. The consolidated entity undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The consolidated entity‟s foreign currency exchange risk arises primarily from:  receivables or payables denominated in foreign currencies; and  firm commitments or highly probable forecast transactions for payments settled in foreign currencies.

The consolidated entity is exposed to foreign exchange risk from various currency exposures, primarily with respect to:  United States dollars;  New Zealand dollars;  Euro;  Singapore dollars; and  Malaysian ringgit.

The consolidated entity minimises its exposure to foreign currency risk by initially seeking contracts effectively denominated in the consolidated entity‟s functional currency where possible and economically favourable to do so. Foreign exchange risk that arises from firm commitments or highly probable transactions is managed principally through the use of forward foreign currency exchange contracts. The consolidated entity hedges a proportion of these transactions in each currency in accordance with the Treasury Policy.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

107

35.

■ Financial Risk Management (continued)

(i) ■ Foreign Currency Risk Management (continued) At 30 June 2011, the consolidated entity had the following exposure to foreign currency risk that is not denominated in the

functional currency of the relevant subsidiary. All amounts have been converted to Australian dollars using applicable rates.

CO NS O LI D ATE D

2011 2010

$000 $000

Financial assets

Cash and cash equivalents 9,260 24,084

Trade and other receivables 1,592 2,539

Other financial assets 8 13

10,860

26,636

Financial liabilities Trade and other payables 6,755 15,912 Interest bearing loans and borrowings 4,738 16,250 Derivatives payable 34 -

11,527

32,162

Net exposure

(667)

(5,526)

The following sensitivity analysis is calculated based on the foreign currency risk exposures that are not denominated in

the functional currency of the relevant subsidiary at balance date. At 30 June 2011, had the various currencies moved, as illustrated in the table below, with all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:

Post Tax Profit

increase/(decrease)

Other comprehensive income

increase/(decrease) 2011 2010 2011 2010 $000 $000 $000 $000

Consolidated Australian subsidiaries AUD/NZD + 5% (2010: + 5%) - 544 - - AUD/NZD - 5% (2010: - 10%) - (1,270) - - AUD/EURO + 5% (2010: + 5%) (138) (17) (32) (55) AUD/EURO - 5% (2010: - 20%) 153 91 35 289 AUD/USD + 5% (2010: + 5%) (24) (12) (2) - AUD/USD - 20% (2010: - 10%) 126 28 12 - AUD/SGD + 5% (2010: + 5%) - (11) - - AUD/SGD - 10% (2010: - 10%) - 26 - - Ireland and Slovenia subsidiaries EURO/USD + 10% (2010: + 20%) (12) (149) - - EURO/USD - 15% (2010: - 5%) 23 47 - - Singapore subsidiaries SGD/USD + 5% (2010: + 5%) 1 (6) - - SGD/USD - 15% (2010: - 20%) (5) 30 - - SGD/EURO + 5% (2010: + 5%) 10 38 - - SGD/EURO - 5% (2010: - 25%) (11) (267) - - SGD/MYR + 5% (2010: + 5%) (135) (497) - - SGD/MYR - 5% (2010: - 5%) 149 549 - - SGD/AUD + 30% 2 - - - SGD/AUD - 10% (3) - - - New Zealand subsidiaries/branches NZ/EURO + 5% (2010: +5%) 3 4 - - NZ/EURO - 5% (2010: - 25%) (3) (27) - - NZ/USD + 5% (2010: +15%) 3 7 - - NZ/USD - 15% (2010: -25%) (10) (16) - -

108

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(i) ■ Foreign Currency Risk Management (continued)

The sensitivity increases and decreases in exchange rates have been selected as this is considered reasonable given the current level of exchange rates and the volatility observed both on a 5-year historical data basis and market expectations for potential future movement. The sensitivities of post tax profit in 2011 is less than in 2010 due to the lower level of NZ Dollar payables at balance date. The movements in other comprehensive income in 2011 are less sensitive than in 2010 because of the decreased use of foreign currency contracts designated as cash flow hedges.

(ii) ■ Interest Rate Risk Management Interest rate risk refers to the risk that movements in variable interest rates will affect financial performance by increasing

interest expenses or reducing interest income. Interest rate risk arises from financial assets and liabilities that are subject to floating interest rates. The consolidated entity‟s exposure to market interest rates relates primarily to:  Cash and cash equivalents;  Non-trade debts receivable from related parties and other unrelated persons;  Bank overdraft;  Non-trade amounts owing to related parties;  Borrowings; and  Bills payable.

The consolidated entity manages the interest rate exposure by adjusting the ratio of fixed interest debt to variable interest debt to management‟s desired level based on current market conditions. Where the actual interest rate profile on the physical debt profile differs substantially from the desired target, the consolidated entity uses derivatives, principally interest rate swaps, to adjust towards the target net debt profile. Under the interest rate swaps the consolidated entity agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts.

Fixed interest rate

maturing in

30 June 2011 Principal Subject to Floating

interest rate

1 year or less

Over 1 to 5 years

More than

5 years

Non-

interest bearing

Total

Average interest rate

$000 $000 $000 $000 $000 $000 Floating Fixed

Financial assets Cash 102,175 48,361 - - 12,243 162,779 0.02%-10.40% 0.01%-3.00% Consumer finance loans

164

4,244

4,488

9.00%-12.50%

Finance lease receivables

8,685

12,596

21,281

10.5%-12.50%

Trade debtors - - - - 1,023,332 1,023,332 - - Other financial assets

49,523

Non-trade debtors & loans

22,836

10,494

1,737

35,067

6.87%-9.47%

7.00%-12.50%

125,011 67,704 12,676 - 1,091,079 1,296,470

Financial liabilities

Bank overdraft 44,050 - - - - 44,050 2.40%-3.30% - Borrowings (*) 512,786 - - - - 512,786 1.00%-7.60% - Trade creditors - - - - 854,897 854,897 - - Finance lease liabilities

168

1.00%-9.50%

Other loans 45,788 107 - - 87 45,982 5.62%-6.46% 9.00%-12.00% Bills payable (*) - Australia 9,750 - - - - 9,750 4.65%-4.91% - - Singapore 3,787 - - - - 3,787 0.34%-0.40% - - Slovenia 33,503 - - - - 33,503 1.70%-3.50% - - Space Malaysia

463

3.67%-5.13%

Other financial liabilities

1,235

1,269

4.97%-5.51%

650,127 275 1,235 - 855,018 1,506,655

109

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(ii) ■ Interest Rate Risk Management (continued) Fixed interest rate

maturing in

30 June 2010 Principal Subject to Floating

interest rate

1 year or less

Over 1 to 5 years

More than

5 years

Non-

interest bearing

Total

Average interest rate

$000 $000 $000 $000 $000 $000 Floating Fixed

Financial assets Cash 87,077 52,337 - - 17,822 157,236 2.35%-3.50% 0.02%-2.50% Consumer finance loans

219

109

5,324

5,652

9.00%-14.50%

Finance lease receivables

14,068

22,060

36,128

8.00%-12.50%

Trade debtors - - - - 1,043,686 1,043,686 - - Other financial assets

41,571

Non-trade debtors & loans

24,142

2,341

1,809

28,292

4.37%-9.30%

8.00%-12.50%

111,219 68,965 22,169 - 1,110,212 1,312,565

Financial liabilities

Bank overdraft 36,649 19,677 - - - 56,326 2.40%-6.20% 2.50%-10.15% Borrowings (*) 355,907 - - - - 355,907 1.42%-7.51% - Trade creditors - - - - 763,047 763,047 - - Finance lease liabilities

182

264

3.24%-9.25%

Other loans 46,922 123 - - 85 47,130 3.62%-6.30% 9.00% Bills payable (*) - Australia 9,750 - - - - 9,750 3.18%-4.80% - - Singapore 4,606 - - - - 4,606 1.61%-2.19% - - Slovenia 24,635 - - - - 24,635 1.60%-3.10% - - Space Malaysia

541

3.92%-5.45%

Other financial liabilities

246

1,798

(37)

2,007

3.27%-5.51%

479,010 20,228 1,880 - 763,095 1,264,213

* The consolidated entity is required to pay interest costs at various floating rates of interest on bank bills. In order to

protect part of the loans from exposure to increasing interest rates, the consolidated entity has entered into several interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

Sensitivity analysis

The following sensitivity is based on interest rate risk exposures in existence at balance date: A sensitivity of 50 basis points increase and 50 basis points decrease has been selected as this is considered reasonable given the current level of both short term and long term Australian dollar interest rates.

At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:

110

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(ii) ■ Interest Rate Risk Management (continued)

CONSOLIDATED Post Tax Profit

increase/(decrease)

Other comprehensive income

increase/(decrease) 2011 2010 2011 2010 $000 $000 $000 $000

If there was 50 (2010: 100) basis points higher in interest

rates with all other variables held constant

(2,000)

(2,667)

1,845

2,447

If there was 50 (2010: 50) basis points lower in interest

rates with all other variables held constant

2,000

1,333

(1,666)

(1,254)

The movements in profit are due to higher/lower interest costs from variable rate debt and cash balances. The movement

in other comprehensive income is due to an increase/decrease in the fair value of derivative instruments designated as cash flow hedges. The movements in post tax profit in 2011 are more sensitive than the movements in 2010 because of an increase in financial liabilities that are subject to variable interest rates. The movements in other comprehensive income in 2011 are more sensitive than the movements in 2010 because of the increased use of interest rate swaps which designated as cash flow hedges.

(iii) ■ Equity Price Risk Management

The consolidated entity is exposed to equity price risk arising from equity investments. Equity investments are held for strategic rather than trading purposes. The consolidated entity does not actively trade these investments. The exposure to the risk of a general decline in equity market values is not hedged as the consolidated entity believes such a strategy is not cost effective. The fair value of the equity investments publicly traded on the ASX was $42.17 million as at 30 June 2011. The fair value of the equity investments publicly traded on the NZX was $6.08 million as at 30 June 2011. As at 30 June 2011, if equity prices had been 10% higher/lower while all other variables are held constant, post tax profit and equity would have been affected as follows:

CONSOLIDATED Post Tax Profit

increase/(decrease)

Other comprehensive income

increase/(decrease) 2011 2010 2011 2010 $000 $000 $000 $000

If there was 10% (2010: 10%) increase movement in

equity prices with all other variables held constant

3,074

2,457

427

377

If there was 10% (2010: 10%) decrease movement in

equity prices with all other variables held constant

(3,074)

(2,457)

(427)

(377)

A sensitivity of 10% has been selected as this is considered reasonable given the current level of equity prices and the

volatility observed on a historic basis and market expectations for future movement.

111

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

Credit risk refers to the loss that the consolidated entity would incur if a debtor or other counterparty fails to perform under its contractual obligations. Credit risk arises from the financial assets of the consolidated entity, which comprise trade and non-trade debtors, consumer finance loans and finance lease receivables. The consolidated entity‟s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The consolidated entity‟s policies to limit its exposure to credit risks are as follows:  Conducting appropriate due diligence on counterparties before entering into an arrangement with them. It is the

consolidated entity‟s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with parameters set by the Board. These risk limits are regularly monitored; and

 For finance lease receivables or non-trade debts receivable from related parties and other unrelated persons, the consolidated entity obtains collateral with a value equal or in excess of the counterparties‟ obligation to the consolidated entity.

The consolidated entity minimises concentrations of credit risk by undertaking transactions with a large number of debtors in various countries and industries. In addition, receivable balances are monitored on an ongoing basis. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The major geographic concentration of credit risk arises from the location of the counterparties to the consolidated entity‟s financial assets as shown in the following table:

CO NS O LI D ATE D

2011 2010 Location of credit risk $000 $000

Australia 1,043,402 1,070,545

New Zealand 20,246 20,927

Asia 11,696 10,811

Slovenia 2,249 2,246

Ireland and Northern Ireland 2,177 2,298

Total

1,079,770

1,106,827

(d) ■ Liquidity Risk

Liquidity risk includes the risk that, as a result of the consolidated entity‟s operational liquidity requirements:  the consolidated entity will not have sufficient funds to settle a transaction on the due date;  the consolidated entity will be forced to sell financial assets at a value which is less than what they are worth; or  the consolidated entity may be unable to settle or recover a financial asset at all.

To help reduce these risks, the consolidated entity:  has readily accessible standby facilities and other funding arrangements in place; and  maintains instruments that are tradeable in highly liquid markets.

112

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(d) ■ Liquidity Risk (continued)

The Board reviews this exposure on a monthly basis from a projected 12 month cash flow forecast, listing of banking facilities, explanations of variances from the prior month reports and current funding positions of the overseas controlled entities provided by the Finance Department. The following table details the consolidated entity‟s remaining contractual maturity for its financial assets and financial liabilities. The financial assets have been disclosed based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The financial liabilities have been disclosed based on the undiscounted cash flows of the financial liabilities based on the earliest date on which the consolidated entity can be required to pay.

Year ended 30 June 2011

Less than 1 year

1 to 2 years

2 to 5 years

Over 5 years

Total

CONSOLIDATED $000 $000 $000 $000 $000

Non derivative financial assets Cash and cash equivalents 162,779 - - - 162,779 Trade and other receivables 1,067,357 9,644 6,059 406 1,083,466 Other financial assets 41,221 - - 8,294 49,515 Derivative financial assets Derivatives 8 - - - 8

Total financial assets

1,271,365

9,644

6,059

8,700

1,295,768

Non derivative financial liabilities Trade and other payables 854,897 - - - 854,897 Interest bearing loans and borrowings 138,985 558,390 741 - 698,116 Derivative financial liabilities Derivatives - 1,068 201 - 1,269

Total financial liabilities

993,882

559,458

942

1,554,282

Net maturity

277,483

(549,814)

5,117

8,700

(258,514)

Year ended 30 June 2010

Less than 1 year

1 to 2 years

2 to 5 years

Over 5 years

Total

CONSOLIDATED $000 $000 $000 $000 $000

Non derivative financial assets Cash and cash equivalents 157,236 - - - 157,236 Trade and other receivables 1,084,856 14,494 12,812 431 1,112,593 Other financial assets 34,400 - - 7,171 41,571

Total financial assets

1,276,492

14,494

12,812

7,602

1,311,400

Non derivative financial liabilities Trade and other payables 739,715 23,332 - - 763,047 Interest bearing loans and borrowings 178,815 26,469 353,900 - 559,184 Derivative financial liabilities Derivatives 209 493 1,305 - 2,007

Total financial liabilities

918,739

50,294

355,205

1,324,238

Net maturity

357,753

(35,800)

(342,393)

7,602

(12,838)

For detailed information on financing facilities available as at 30 June 2011 refer to note 21.

113

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(e) ■ Fair Value of Financial Instruments

The fair value of financial assets and financial liabilities are determined as follows:  The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active

liquid markets are determined with reference to quoted market prices.  The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in

accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions.

 The fair value of current trade receivables and payables is assessed to equal carrying value due to the short-term nature of the assets.

 The fair value of derivative instruments, are calculated using quoted prices. Where such prices are not available use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

The consolidated entity uses various methods in estimating the fair value of a financial instrument. The methods comprise: Level 1 – the fair value is calculated using quoted prices in active markets. Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below.

Year ended 30 June 2011 CONSOLIDATED

Quoted market price

(Level 1) $000

Valuation technique –

market observable inputs

(Level 2) $000

Valuation technique – non market

observable inputs

(Level 3)

$000

Total

$000

Financial Assets

Listed investments 48,251 - - 48,251

Foreign exchange contracts - 8 - 8

Total Financial Assets

48,251

48,259

Financial Liabilities

Foreign exchange contracts - 34 - 34

Interest rate swaps - 1,235 - 1,235

Total Financial Liabilities

1,269

Year ended 30 June 2010 CONSOLIDATED

Quoted market price

(Level 1) $000

Valuation technique –

market observable inputs

(Level 2) $000

Valuation technique – non market

observable inputs

(Level 3)

$000

Total

$000

Financial Assets

Listed investments 40,315 - - 40,315

Total Financial Assets

40,315

Financial Liabilities

Foreign exchange contracts - (37) - (37)

Interest rate swaps - 2,044 - 2,044

Total Financial Liabilities

2,007

114

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35.

■ Financial Risk Management (continued)

(e) ■ Fair Value of Financial Instruments (continued)

Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for transaction costs. The fair value of the listed equity investments are based on quoted market prices and are included in level 1. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Foreign currency forward contracts are measured using quoted forward exchange rates. Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates. These instruments are included in level 2. In the circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such instruments are included in level 3.

(f) ■ Capital Risk Management Policy When managing capital, management‟s objective is to ensure the entity continues as a going concern as well as to

maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The capital structure of the consolidated entity consists of debt, which includes the borrowings disclosed in Note 16 and 20, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 23, 24 and 25 respectively. None of the consolidated entity‟s entities are subject to externally imposed capital requirements. Management monitor capital through the debt to equity ratio (borrowings / total equity). The target for the consolidated entity‟s debt to equity ratio is a tolerance level of up to 50%. The debt to equity ratios based on continuing operations at 30 June 2011 and 2010 were as follows:

CONS O L ID AT E D

2011 2010

$000 $000

Borrowings (a) 651,758 501,166 Total equity (b) 2,235,378 2,157,211

Debt to equity ratio

29.16%

23.23%

If cash and cash equivalents were to be deducted from total borrowings, the net debt to equity ratio would have been

21.87% for the year ended 30 June 2011 and 15.94% for the year ended 30 June 2010.

(a) Borrowings for the purpose of calculating this debt to equity ratio consists of:  Bank overdraft;  Borrowings (current and non-current);  Commercial bills payable (current and non-current);  Derivatives payable (current and non-current);  Lease liabilities (current and non-current); and  Non trade amounts owing to directors, other related parties and other unrelated persons.

(b) For the purpose of calculating this debt to equity ratio, total equity for the current year excluded the negative acquisition reserve of $6.92 million.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

115

36. ■ Derivative Financial Instruments (continued)

■ Hedging Instruments

The following table details the derivative hedging instruments as at balance date. The fair value of a hedging derivative is classified as a non current asset or liability if the remaining maturity of the hedged item is more than 12 months and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months.

CO NS O L ID AT E D

2011 2010

$000 $000

Current Assets Forward currency contracts – held for trading 8 - Current Liabilities Interest swap contracts – cash flow hedges - 246 Forward currency contracts – held for trading - (39) Forward currency contracts – cash flow hedges - 2 Non-current Liabilities Forward currency contracts – held for trading 28 - Forward currency contracts – cash flow hedges 6 - Interest swap contracts – cash flow hedges 1,235 1,798

(a) ■ Forward currency contracts – held for trading The consolidated entity has entered into forward currency contracts which are economic hedges but do not satisfy the requirements of hedge accounting.

CONSOLIDATED 2011 2010 Currency Average Exchange Rate Buy Sell Buy Sell 2011 2010 $000 $000 $000 $000

Euro (0-12 months) 75.02 69.76 666 - 2,344 - US Dollar (0-12 months) - 85.14 - - 1,421 - Euro (12-18 months) 70.90 - 1,415 - - - US Dollar (12-18 months) 106.09 - 353 - - -

Total

2,434

3,765

These contracts are fair valued by comparing the contracted rate to the market rates at balance date. All movements in fair value are recognised in profit or loss in the period they occur. The net fair value losses on foreign currency derivatives during the year were $20,000 for the consolidated entity.

(b) ■ Forward currency contracts – cash flow hedges The consolidated entity purchases inventories from various overseas countries. As such, the consolidated entity is

exposed to foreign exchange risk from various currency exposures, primarily with respect to:  United States dollars; and  Euro.

In order to protect against exchange rate movements and to manage the inventory costing process, the consolidated entity has entered into forward exchange contracts to purchase US dollars and Euro. These contracts are hedging highly probable forecasted purchases and they are timed to mature when payments are scheduled to be made. The following table details the forward foreign currency contracts outstanding as at reporting date:

CONSOLIDATED 2011 2010 Currency Average Exchange Rate Buy Sell Buy Sell 2011 2010 $000 $000 $000 $000

Euro (0-12 months) - 69.84 - - 1,642 - US Dollar (0-12 months) - - - - - - Euro (12-18 months) 73.76 - 914 - - - US Dollar (12-18 months) 104.08 - 69 - - -

Total

983

1,642

116

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

36. ■ Derivative Financial Instruments (continued)

(c) ■ Forward currency contracts – cash flow hedges (continued) The forward currency contracts are considered to be highly effective hedges as they are matched against forecast inventory purchases and firm committed invoice payments for inventory purchases. During the year the hedges were 100% effective (2010: 100% effective), therefore gain or loss on the contracts attributable to the hedged risk is taken directly to equity. When the inventory is delivered the amount recognised in equity is adjusted to the stock account in the Statement of Financial Position. Movement in forward currency contract cash flow hedge reserve:

CO NS O L ID AT E D

2011 2010

$000 $000

Increase/(Decrease) Opening balance 2 (450) Transferred to inventory (2) 450 Charged to other comprehensive income 4 2

Closing balance

(d) ■ Interest rate swap contracts – cash flow hedges Under interest rate swap contracts, the consolidated entity agrees to exchange the difference between fixed and floating

rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the consolidated entity to mitigate the risk of changing interest rates on the cash flow exposures on the issued variable rate debt held. The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting date:

Outstanding floating for fixed contracts Average contracted fixed

interest rate

Notional principal amount

Fair value (Loss)/Gain

30 June 2011 Less than 1 year - 1 to 2 years 5.37% 200,000,000 (1,033,581) 2 to 5 years 5.09% 100,000,000 (201,676)

30 June 2010 Less than 1 year 3.27% 26,381,910 (246,002) 1 to 2 years 5.23% 100,000,000 (492,707) 2 to 5 years 5.51% 100,000,000 (1,305,267)

The floating rate on the Australian interest rate swap is the Australian BBSY. The interest rate swap settles on a monthly

basis and the settlement dates coincide with the dates on which interest is payable on the underlying debt. The swap is matched directly against the appropriate loan and interest expense and as such is considered highly effective. The swap is settled on a net basis. The swap is measured at fair value and gain and loss attributable to the hedged risk is taken directly to equity and re-classified into profit and loss when the interest expense is recognised. Movement in interest rate swap contract cash flow hedge reserve:

CO NS O L ID AT E D

2011 2010

$000 $000

Increase/(Decrease) Opening balance (1,203) (10) Transferred to interest expense/interest income (57) 67 Charged to equity 394 (1,260)

Closing balance

(866)

(1,203)

Unrealised loss on interest rate swaps recognised immediately in profit and loss

246

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

117

CONSOLIDATED CONSOLIDATED Investment Share of net profit/(loss) 37. ■ Associates and Joint Venture Entities June

2011 June 2010

June 2011

June 2010

$000 $000 $000 $000

Total joint venture entities accounted for using the equity method

158,978

140,581

17,888

7,260

Name and Principal activities Ownership Interest

Contribution to Net Profit (Loss)

Contribution to Property revaluation

June 2011

June 2010

June 2011

June 2010

June 2011

June 2010

% % $000 $000 $000 $000

New Zealand - Lincoln Junction

50%

311

(225)

Noarlunga - Shopping complex

50%

925

881

1,067

Perth City West - Shopping complex

50%

3,917

3,132

(7,746)

Kelso - Development of land for resale

50%

(1)

Tweed Heads – Stage 1 - Shopping complex

50%

1,006

955

(2,764)

Warrawong King St (a) - Shopping complex

62.5%

939

976

Tweed Heads Traders Way - Building development

50%

Sylvania - Residential development

40%

(182)

(80)

Mentone - Shopping complex/residential development

50%

7,196

(198)

Byron Bay - Residential/convention development

50%

(730)

(895)

Byron Bay No. 2 - Resort operations

50%

504

697

Dubbo - Shopping complex / building development

50%

459

510

(411)

Cubitt - Showroom and warehouse

50%

550

158

Cambridge (b) - Building and office complex/building development

100%

1,326

Bundaberg 50

(6)

- Warehouse 50% 50% (6)

( (6)

(1) -

- Bundaberg No. 2

- Land held for investment 50% - (4)

((( - -

- -

Mining Camp (c) 50

- Miners residential complex 50% - 1,704 - - - Gepps Cross

- Shopping complex 50% - 1,326 - -

- -

QCV Benaraby (d) 50

- Miners residential complex 50% - (8) - -

- -

- QCV Benaraby

- Land held for investment 50% - (78) - - -

17,888 7,260 158 (9,854)

(a) These joint ventures have not been consolidated as the consolidated entity does not have control over operating and

financing decisions, and all joint venture parties participate equally in decision making. (b) During the prior year, the consolidated entity acquired the 50% share of the Cambridge joint venture property from the

other joint venture partner for a purchase consideration of $33.32 million. This resulted in 100% ownership of the land and buildings in the Cambridge Park joint venture, the wind up of the joint venture entity and the cessation of equity accounting.

(c) A wholly-owned subsidiary of Harvey Norman Holdings Limited (“HNHL”) has entered into a joint venture with an unrelated party to provide mining camp accommodation (“the JV”). The JV has been granted a finance facility by the Commonwealth Bank of Australia (“CBA”) (“the Facility”). The amount of the Facility is $15.20 million plus interest and costs. HNHL has granted a guarantee to CBA in respect of the obligation of the JV under the Facility.

(d) A wholly-owned subsidiary of HNHL has entered into a joint venture with an unrelated party to provide mining camp accommodation.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

118

37. ■ Associates and Joint Venture Entities (continued)

Aggregate carrying amounts of joint venture entities

CONSOLIDATED 2011

Retained Profits

Other Reserves

Cost Total carrying amount

$000 $000 $000 $000

Balance at the beginning of the year - 32,021 108,560 140,581

Movements during the year: Capital contributions - - 38,424 38,424

Revaluation increment - 158 - 158 Reverse revaluation upon disposal - (537) - (537)

Distributions received (17,888) - (19,329) (37,217) Share of net profit 17,888 - - 17,888

Net foreign currency differences arising from foreign operations

(319)

Balance at the end of the year

31,323

127,655

158,978

CONSOLIDATED 2010

Retained Profits

Other Reserves

Cost Total carrying amount

$000 $000 $000 $000

Balance at the beginning of the year - 56,603 132,968 189,571

Movements during the year: Capital contributions - - 2,238 2,238

Revaluation increment - 1,067 - 1,067 Revaluation decrement - (10,921) - (10,921)

Impairment expense - (703) - (703) Distributions received (7,260) (14,088) (26,646) (47,994)

Share of net profit 7,260 - - 7,260 Net foreign currency differences arising from foreign operations

Balance at the end of the year

32,021

108,560

140,581

Financial summary of joint venture entities

CONS O LI D ATE D

2011 2010 $000 $000

Current assets 11,135 4,052 Non-current assets 261,813 209,205 Current liabilities (9,671) (2,592) Non-Current liabilities (15,184) -

Net Assets

248,093

210,665

Revenues 57,495 85,261 Expenses (22,840) (70,721)

Net profit

34,655

14,540

Share of net profit of joint venture entities

17,888

7,260

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

119

38. ■ Business Combination

On 1 July 2010 Harvey Norman CP Pty Limited, a wholly-owned subsidiary of Harvey Norman Holdings Limited (“the Purchaser”), entered into an Asset Sale Agreement (“ASA”) with Clive Peeters Limited ACN 058 868 018 (Administrators Appointed) (Receivers & Managers Appointed) (“CP”) and certain associated companies of CP to purchase certain assets for an estimated purchase price of $55 million inclusive of GST. The ASA was completed on 7 July 2010 and, subsequent to the satisfactory completion of the due diligence by management, a final purchase price of $54.75 million inclusive of GST was agreed with the Receivers. The Purchaser acquired the inventory and plant and equipment assets of twenty-eight (28) Clive Peeters and Rick Hart stores, the know-how and intellectual property rights and systems of the Vendors less an allowance for employee entitlement provisions and customer deposits received in advance. There was no goodwill recognised pursuant to the Clive Peeters business combination as the purchase consideration paid for the net assets acquired approximated fair value as at acquisition date. The fair values of the identifiable assets and liabilities of Clive Peeters and Rick Hart as of the date of acquisition were:

7 July 2010

$000

Assets Inventory 44,180 Plant and equipment 10,544

Total assets acquired

54,724

Liabilities Employee entitlements 2,869 Customer deposits received in advance 2,087

Total liabilities assumed

4,956

Fair value of identifiable net assets 49,768 Non-controlling interest in identifiable net assets acquired - Goodwill arising on acquisition -

Fair value of identifiable net assets acquired

49,768

Acquisition date fair value of consideration transferred: Cash paid to Receivers 49,768 GST on assets acquired 4,977

Consideration transferred

54,745

Net cash outflow on acquisition is as follows: Cash paid 49,768 Net cash acquired on business combination -

Net consolidated cash outflow

49,768

At the date of acquisition, Clive Peeters Limited was involved in the sale of computers, communications and consumer electrical products under the Clive Peeters and Rick Hart brands in Australia. This principal activity continued post acquisition date. The consolidated statement of comprehensive income includes sales revenue of $209.20 million for the Clive Peeters brand and $70.46 million for the Rick Hart brand, a total of $279.66 million. The consolidated result for the Clive Peeters and Rick Hart brands for the year ended 30 June 2011 was a loss of $41.07 million before tax. This loss reflects investment costs in attempting to rebuild the damaged Clive Peeters and Rick Hart brands. Significant investment costs included higher advertising and promotion costs to repair the brand, start-up costs associated with establishing the new computer business and the costs associated with altering and integrating the existing operations into the Harvey Norman system. In August 2011, the consolidated entity announced its intention to close seven (7) Clive Peeters and Rick Hart stores and to convert the eighteen (18) remaining stores to the Harvey Norman and Joyce Mayne brand formats. The consolidated entity has determined that the Clive Peeters and Rick Hart retail operations were not viable businesses in its current form and as a result of worsening economic circumstances. The consolidated entity has acted decisively to cease trading under the impaired brands. The closure of the 4 Clive Peeters and 3 Rick Hart stores will result in a charge against the pre-tax profit of the consolidated entity of an amount presently estimated to be approximately $10 million in respect of the financial year ending 30 June 2012.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

120

39. ■ Controlled Entities and Unit Trusts

■ Shares held by Harvey Norman Holdings Limited

The following companies are 100% owned by Harvey Norman Holdings Limited and incorporated in Australia unless marked otherwise. The financial years of all controlled entities are the same as that of the parent entity.

A.C.N. 098 004 570 Pty Limited

ABSC Online Pty Limited 27

Achiever Computers Pty Ltd

Aloku Pty Limited 1

Anwarah Pty Limited 1

Arisit Pty Limited 1, 2

Arlenu Pty Limited 1

Armidale Holdings Pty Limited 21

Arpayo Pty Limited 1

Aubdirect Pty Limited

Australian Business Skills Centre Pty Limited 23

Balwondu Pty Limited 1

Barrayork Pty Limited

Becto Pty Limited 1

Bellevue Hill Pty Limited

Bencoolen Properties Pte Limited 16

Bestest Pty Limited 1

Bossee Pty Limited

Bradiz Pty Limited 1

Braxpine Pty Limited 1

Byron Bay Facilities Pty Limited 24

Byron Bay Management Pty Limited 25

Caesar Mosaics Pty Limited

Calardu Albany Pty Limited

Calardu Albury Pty Limited

Calardu Alexandria DM Pty Limited 1

Calardu Alexandria WH Pty Limited

Calardu Alice Springs Pty Limited

Calardu Armadale WA Pty Limited

Calardu Armidale Pty Limited

Calardu Auburn Pty Limited

Calardu Ballarat Pty Limited

Calardu Ballina No. 1 Pty Limited

Calardu Ballina Pty Limited

Calardu Bathurst Pty Limited

Calardu Beaufort Street Pty Limited

Calardu Belrose DM Pty Limited

Calardu Berri (SA) Pty Limited

Calardu Berrimah Pty Limited

Calardu Broadmeadow Pty Limited

Calardu Broadmeadows VIC Pty Limited

Calardu Browns Plains No. 1 Pty Limited

Calardu Browns Plains Pty Limited

Calardu Bunbury (WA) Pty Limited 1

Calardu Bundaberg Pty Limited

Calardu Bundaberg WH Pty Limited

Calardu Bundall Pty Limited

Calardu Burnie Pty Limited

Calardu Cambridge Pty Limited

Calardu Campbelltown Pty Limited

Calardu Cannington Pty Limited 1

Calardu Caringbah (Taren Point) Pty Limited

Calardu Caringbah Pty Limited

Calardu Chatswood Pty Limited

Calardu Crows Nest Pty Limited

Calardu Cubitt Pty Limited

Calardu Darwin Pty Limited

Calardu Devonport Pty Limited

Calardu Dubbo Pty Limited

Calardu Emerald Pty Limited

Calardu Frankston Pty Limited

Calardu Frankston WH Pty Limited

Calardu Fyshwick DM Pty Limited

Calardu Gepps Cross Pty Limited

Calardu Gladstone Pty Limited

Calardu Gordon Pty Limited

Calardu Guildford Pty Limited

Calardu Gympie Pty Limited

Calardu Hervey Bay Pty Limited

Calardu Hobart Pty Limited

Calardu Hoppers Crossing Pty Limited

Calardu Horsham Pty Limited

Calardu Innisfail Pty Limited

Calardu Jandakot No. 1 Pty Limited

Calardu Jandakot Pty Limited

Calardu Joondalup Pty Limited 1

Calardu Kalgoorlie Oswald St Pty Limited

Calardu Kalgoorlie Pty Limited

Calardu Karana Downs Pty Limited

Calardu Karratha Pty Limited

Calardu Kawana Waters Pty Limited

Calardu Kemblawarra Pty Limited

Calardu Kingaroy Pty Limited

Calardu Kotara Pty Limited

Calardu Launceston Pty Limited

Calardu Lismore Pty Limited

Calardu Loganholme Pty Limited

Calardu Mackay No. 1 Pty Limited

Calardu Mackay No. 2 Pty Limited

Calardu Maitland Pty Limited

Calardu Malaga Pty Limited

Calardu Mandurah Pty Limited

Calardu Maribyrnong Pty Limited 1

Calardu Marion Pty Limited 1

Calardu Maroochydore Pty Limited

Calardu Maroochydore Warehouse Pty Limited

Calardu Maryborough Pty Limited

Calardu Melville Pty Limited 1

Calardu Mentone Pty Limited

Calardu Midland Pty Limited

Calardu Milton Pty Limited

Calardu Morayfield Pty Limited

Calardu Morwell Pty Limited

Calardu Moss Vale Pty Limited

Calardu Mount Isa Pty Limited

Calardu Mt Gambier Pty Limited

Calardu Mudgee Pty Limited

Calardu Munno Para Pty Limited

Calardu Noarlunga Pty Limited

Calardu Noble Park WH Pty Limited 7

Calardu Noosa Pty Limited 1

Calardu North Ryde Pty Limited

Calardu Northbridge Pty Limited 1

Calardu Nowra Pty Limited

Calardu Penrith Pty Limited 1

Calardu Perth City West Pty Limited

Calardu Port Macquarie Pty Limited 1

Calardu Preston Pty Limited 1

Calardu Pty Limited 1

Calardu Queensland Pty Limited 1

Calardu Raine Square Pty Limited

Calardu Richmond Pty Limited 1

Calardu Rockhampton Pty Limited

Calardu Rockingham Pty Limited 1

Calardu Roselands Pty Limited

Calardu Rothwell Pty Limited

Calardu Rutherford Pty Limited

Calardu Rutherford Warehouse Pty Limited

Calardu Sale Pty Limited

Calardu Silverwater Pty Limited

Calardu South Australia Pty Limited 1

Calardu Springvale Pty Limited

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

121

Calardu Swan Hill Pty Limited

Calardu Sylvania Pty Limited

Calardu Taree Pty Limited

Calardu Taren Point Pty Limited 7

Calardu Thebarton Pty Limited

Calardu Toorak Pty Limited

Calardu Toowoomba WH Pty Limited

Calardu Townsville Pty Limited

Calardu Tweed Heads Pty Limited 1

Calardu Tweed Heads Traders Way Pty Limited

Calardu Vicfurn Pty Limited

Calardu Victoria Pty Limited 1

Calardu Warrawong (Homestarters) Pty Limited

Calardu Warrawong Pty Limited

Calardu Warrnambool Pty Limited 1

Calardu Warwick Pty Limited

Calardu West Gosford Pty Limited

Calardu Whyalla Pty Limited

Calardu Wivenhoe Pty Limited

Carlando Pty Limited 1

Charmela Pty Limited 1

Clambruno Pty Limited 1

Consolidated Design Group Pty Ltd

Contemporary Design Group Pty Limited 1,2

CP Aspley Pty Limited 7

CP Belmont Pty Limited 7

CP Bendigo Pty Limited 7

CP Braybrook Pty Limited 7

CP Bundaberg Leasing Pty Limited 7

CP Bundaberg Pty Limited 7

CP Burleigh Waters Pty Limited 7

CP Coburg Pty Limited 7

CP Commercial Division Pty Limited 7

CP Corporate VIC Pty Limited 7

CP Dandenong Pty Limited 7

CP Joondalup Pty Limited 7

CP Loganholme Pty Limited 7

CP Macgregor Pty Limited 7

CP Mackay Pty Limited 7

CP Malvern Pty Limited 7

CP Mandurah Pty Limited 7

CP Maroochydoore Pty Limited 7

CP Maryborough Leasing Pty Limited 7

CP Maryborough Pty Limited 7

CP Midland Pty Limited 7

CP Moonah Pty Limited 7

CP Moorabbin Pty Limited 7

CP Morayfield Pty Limited 7

CP Mornington Pty Limited 7

CP Mt Druitt Leasing Pty Limited 7

CP Mt Druitt Pty Limited 7

CP O'Connor Pty Limited 7

CP Online Pty Limited 7

CP Osborne Park CL Pty Limited 7

CP Osborne Park Pty Limited 7

CP Richmond Pty Limited 7

CP Ringwood Pty Limited 7

CP Thomastown Pty Limited 7

CP Victoria Park Pty Limited 7

CP Welshpool DC Pty Limited 7

Cropp Pty Limited

D.M. Alexandria Franchisor Pty Limited 1

D.M. Alexandria Leasing Pty Limited

D.M. Alexandria Licencing Pty Limited

D.M. Auburn Franchisor Pty Limited 1

D.M. Auburn Leasing Pty Limited

D.M. Auburn Licencing Pty Limited

D.M. Belrose Franchisor Pty Limited

D.M. Belrose Leasing Pty Limited

D.M. Bundall Franchisor Pty Limited 1

D.M. Bundall Leasing Pty Limited

D.M. Castle Hill Franchisor Pty Limited

D.M. Castle Hill Leasing Pty Limited

D.M. Fyshwick Franchisor Pty Limited 1

D.M. Fyshwick Leasing Pty Limited

D.M. Kotara Franchisor Pty Limited 1

D.M. Kotara Leasing Pty Limited

D.M. Leicht Franchisor Pty Limited

D.M. Liverpool Franchisor Pty Limited 1

D.M. Liverpool Leasing Pty Limited

D.M. North Ryde Franchisor Pty Limited

D.M. North Ryde Leasing Pty Limited

D.M. Penrith Franchisor Pty Limited 1

D.M. Penrith Leasing Pty Limited

D.M. QVH Franchisor Pty Limited 1

D.M. QVH Leasing Pty Limited

D.M. Warrawong Franchisor Pty Limited 1

D.M. Warrawong Leasing Pty Limited

D.M. West Gosford Franchisor Pty Ltd 1

D.M. West Gosford Leasing Pty Ltd

Daldere Pty Limited 1

Dandolena Pty Limited 1

Derni Pty Limited 1,2

Divonda Pty Limited 1

DM Online Franchisor Pty Limited 7

DM Online Leasing Pty Limited 7

Domain Holdings Pty Limited

Domayne Furnishing Pty Limited

Domayne Holdings Limited 9, 10

Domayne Online.com Pty Limited

Domayne P.E.M. Pty Limited 1

Domayne Plant & Equipment Pty Limited 1

Domayne Pty Limited

Dubbo JV Pty Limited

Durslee Pty Limited 1

Edbrook Everton Park Pty Limited

Edbrook Pty Limited 1,6

Farane Pty Limited 1

Flormonda Pty Limited 1

Forgetful Pty Limited

Ganoru Pty Limited 1

Generic Publications Pty Limited

Geraldton WA Pty Limited

Gestco Greensborough Pty Limited 1

Gestco Pty Limited 1

Glo Light Pty Limited 22

H.N. Adelaide CK Franchisor Pty Limited 1

H.N. Adelaide CK Leasing Pty Limited

H.N. Albany Franchisor Pty Limited 1

H.N. Albany Leasing Pty Limited

H.N. Albury Franchisor Pty Limited 1

H.N. Albury Leasing Pty Limited

H.N. Alexandria Franchisor Pty Limited

H.N. Alexandria Leasing Pty Limited

H.N. Alice Springs Franchisor Pty Limited

H.N. Alice Springs Leasing Pty Limited

H.N. Armadale WA Franchisor Pty Limited 1

H.N. Armadale WA Leasing Pty Limited

H.N. Armidale Franchisor Pty Limited 1

H.N. Armidale Leasing Pty Limited

H.N. Aspley Franchisor Pty Limited 1

H.N. Aspley Leasing Pty Limited

H.N. Auburn Franchisor Pty Limited 1

H.N. Auburn Leasing Pty Limited

H.N. Ayr Franchisor Pty Limited 1

H.N. Ayr Leasing Pty Limited

H.N. Bairnsdale Franchisor Pty Limited 1

H.N. Bairnsdale Leasing Pty Limited

H.N. Balgowlah Franchisor Pty Limited 1

H.N. Balgowlah Leasing Pty Limited

H.N. Ballarat Franchisor Pty Limited 1

H.N. Ballarat Leasing Pty Limited

H.N. Ballina Franchisor Pty Limited 7

H.N. Ballina Leasing Pty Limited 7

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

122

H.N. Batemans Bay Franchisor Pty Limited

H.N. Batemans Bay Leasing Pty Limited

H.N. Bathurst Franchisor Pty Limited 1

H.N. Bathurst Leasing Pty Limited

H.N. Belmont Franchisor Pty Limited 1

H.N. Belmont Leasing Pty Limited

H.N. Bendigo Franchisor Pty Limited 1

H.N. Bendigo Leasing Pty Limited

H.N. Bernoth Franchisor Pty Limited 1

H.N. Bernoth Leasing Pty Limited

H.N. Bernoth Plant & Equipment Pty Limited 1

H.N. Blacktown Franchisor Pty Limited 1

H.N. Blacktown Leasing Pty Limited

H.N. Bondi Junction Franchisor Pty Limited

H.N. Bondi Junction Leasing Pty Limited

H.N. Broadmeadow (VIC) Franchisor Pty Limited

H.N. Broadmeadow (VIC) Leasing Pty Limited

H.N. Broadway (Sydney) Franchisor Pty Limited 1

H.N. Broadway (Sydney) Leasing Pty Limited

H.N. Broadway on the Mall Franchisor Pty Limited 1

H.N. Broadway on the Mall Leasing Pty Limited

H.N. Brooklyn Franchisor Pty Limited

H.N. Brooklyn Leasing Pty Limited

H.N. Browns Plains Franchisor Pty Limited 1

H.N. Browns Plains Leasing Pty Limited

H.N. Bunbury Franchisor Pty Limited 1

H.N. Bunbury Leasing Pty Limited

H.N. Bundaberg Franchisor Pty Limited 1

H.N. Bundaberg Leasing Pty Limited

H.N. Bundall Franchisor Pty Limited 1

H.N. Bundall Leasing Pty Limited

H.N. Burleigh Heads Franchisor Pty Limited 1

H.N. Burleigh Heads Leasing Pty Limited

H.N. Busselton Franchisor Pty Limited 1

H.N. Busselton Leasing Pty Limited

H.N. Cairns Franchisor Pty Limited 1

H.N. Cairns Leasing Pty Limited

H.N. Cambridge Park Franchisor Pty Limited

H.N. Cambridge Park Leasing Pty Limited

H.N. Campbelltown Franchisor Pty Limited 1

H.N. Campbelltown Leasing Pty Limited

H.N. Cannington W.A. Franchisor Pty Limited 1

H.N. Cannington W.A. Leasing Pty Limited

H.N. Canonvale Franchisor Pty Limited

H.N. Canonvale Leasing Pty Limited

H.N. Capalaba Franchisor Pty Limited

H.N. Capalaba Leasing Pty Limited

H.N. Cards Pty Limited

H.N. Carindale Franchisor Pty Limited 1

H.N. Carindale Leasing Pty Limited

H.N. Caringbah Franchisor Pty Limited 1

H.N. Caringbah Leasing Pty Limited

H.N. Castle Hill Franchisor Pty Limited

H.N. Castle Hill Leasing Pty Limited

H.N. Chadstone Franchisor Pty Limited

H.N. Chadstone Leasing Pty Limited

H.N. Chatswood Franchisor Pty Limited 1

H.N. Chatswood Leasing Pty Limited

H.N. Chirnside Park Franchisor Pty Limited 1

H.N. Chirnside Park Leasing Pty Limited

H.N. City Cross Franchisor Pty Limited

H.N. City Cross Leasing Pty Limited

H.N. City West Franchisor Pty Limited 1

H.N. City West Leasing Pty Limited

H.N. Cleveland Franchisor Pty Limited

H.N. Cleveland Leasing Pty Limited

H.N. Cobar Franchisor Pty Limited

H.N. Cobar Leasing Pty Limited

H.N. Coffs Harbour Franchisor Pty Limited 1

H.N. Coffs Harbour Leasing Pty Limited

H.N. Coorparoo Franchisor Pty Limited

H.N. Coorparoo Leasing Pty Limited

H.N. Cranbourne Franchisor Pty Limited 1

H.N. Cranbourne Leasing Pty Limited

H.N. Dalby Franchisor Pty Limited 1

H.N. Dalby Leasing Pty Limited

H.N. Dandenong Franchisor Pty Limited 1

H.N. Dandenong Leasing Pty Limited

H.N. Darwin Franchisor Pty Limited 1

H.N. Darwin Leasing Pty Limited

H.N. Deniliquin Franchisor Pty Limited 1

H.N. Deniliquin Leasing Pty Limited

H.N. Dubbo Franchisor Pty Limited 1

H.N. Dubbo Leasing Pty Limited

H.N. Enfield Franchisor Pty Limited 1

H.N. Enfield Leasing Pty Limited

H.N. Everton Park Franchisor Pty Limited 1

H.N. Everton Park Leasing Pty Limited

H.N. Fortitude Valley Franchisor Pty Limited 1

H.N. Fortitude Valley Leasing Pty Limited

H.N. Frankston Franchisor Pty Limited

H.N. Frankston Leasing Pty Limited

H.N. Fremantle Franchisor Pty Limited 1

H.N. Fremantle Leasing Pty Limited

H.N. Fyshwick Franchisor Pty Limited 1

H.N. Fyshwick Leasing Pty Limited

H.N. Geelong Franchisor Pty Limited

H.N. Geelong Leasing Pty Limited

H.N. Gepps Cross Franchisor Pty Limited

H.N. Gepps Cross Leasing Pty Limited

H.N. Geraldton Leasing Pty Limited

H.N. Geraldton WA Franchisor Pty Limited 1

H.N. Gladstone Franchisor Pty Limited 1

H.N. Gladstone Leasing Pty Limited

H.N. Gordon Franchisor Pty Limited 1

H.N. Gordon Leasing Pty Limited

H.N. Gosford Leasing Pty Limited

H.N. Goulburn Franchisor Pty Limited

H.N. Goulburn Leasing Pty Limited

H.N. Grafton Franchisor Pty Limited 1

H.N. Grafton Leasing Pty Limited

H.N. Greensborough Franchisor Pty Limited 1

H.N. Greensborough Leasing Pty Limited

H.N. Griffith Franchisor Pty Limited 1

H.N. Griffith Leasing Pty Limited

H.N. Gympie Franchisor Pty Limited

H.N. Gympie Leasing Pty Limited

H.N. Hamilton Franchisor Pty Limited 1

H.N. Hamilton Leasing Pty Limited

H.N. Hervey Bay Franchisor Pty Limited 1

H.N. Hervey Bay Leasing Pty Limited

H.N. Hoppers Crossing Franchisor Pty Limited 1

H.N. Hoppers Crossing Leasing Pty Limited

H.N. Horsham Franchisor Pty Limited 1

H.N. Horsham Leasing Pty Limited

H.N. Indooroopilly Franchisor Pty Limited 1

H.N. Indooroopilly Leasing Pty Limited

H.N. Innisfail Franchisor Pty Limited 1

H.N. Innisfail Leasing Pty Limited

H.N. Inverell Franchisor Pty Limited 1

H.N. Inverell Leasing Pty Limited

H.N. Ipswich Franchisor Pty Limited 7

H.N. Ipswich Leasing Pty Limited 7

H.N. Joondalup Franchisor Pty Limited 1

H.N. Joondalup Leasing Pty Limited

H.N. Kalgoorlie Franchisor Pty Limited 1

H.N. Kalgoorlie Leasing Pty Limited

H.N. Karratha Franchisor Pty Limited 1

H.N. Karratha Leasing Pty Limited

H.N. Kawana Waters Franchisor Pty Limited 1

H.N. Kawana Waters Leasing Pty Limited

H.N. Kingaroy Franchisor Pty Limited

H.N. Kingaroy Leasing Pty Limited

H.N. Knox Towerpoint Franchisor Pty Limited 1

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

123

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

H.N. Knox Towerpoint Leasing Pty Limited

H.N. Lake Haven Franchisor Pty Limited

H.N. Lake Haven Leasing Pty Limited

H.N. Leichhardt Franchisor Pty Limited 1

H.N. Leichhardt Leasing Pty Limited

H.N. Lismore Franchisor Pty Limited 1

H.N. Lismore Leasing Pty Limited

H.N. Lithgow Franchisor Pty Limited

H.N. Lithgow Leasing Pty Limited

H.N. Liverpool Franchisor Pty Limited 1

H.N. Liverpool Leasing Pty Limited

H.N. Loganholme Franchisor Pty Limited 1

H.N. Loganholme Leasing Pty Limited

H.N. Loughran Contracting Pty Limited

H.N. Mackay Franchisor Pty Limited 1

H.N. Mackay Leasing Pty Limited

H.N. Maddington Franchisor Pty Limited 1

H.N. Maddington Leasing Pty Limited

H.N. Maitland Franchisor Pty Limited 1

H.N. Maitland Leasing Pty Limited

H.N. Malaga Franchisor Pty Limited

H.N. Malaga Leasing Pty Limited

H.N. Mandurah Franchisor Pty Limited 1

H.N. Mandurah Leasing Pty Limited

H.N. Maribyrnong Franchisor Pty Limited 1

H.N. Maribyrnong Leasing Pty Limited

H.N. Marion Franchisor Pty Limited 1

H.N. Marion Leasing Pty Limited

H.N. Maroochydore Franchisor Pty Limited 1

H.N. Maroochydore Leasing Pty Limited

H.N. Martin Place Sydney Franchisor Pty Limited 1

H.N. Martin Place Sydney Leasing Pty Limited

H.N. Mentone Franchisor Pty Limited

H.N. Mentone Leasing Pty Limited

H.N. Midland Franchisor Pty Limited 1

H.N. Midland Leasing Pty Limited

H.N. Mildura Franchisor Pty Limited 1

H.N. Mildura Leasing Pty Limited

H.N. Moe Franchisor Pty Limited 1

H.N. Moe Leasing Pty Limited

H.N. Moonah Franchisor Pty Limited 7

H.N. Moonah Leasing Pty Limited 7

H.N. Moorabbin Franchisor Pty Limited 1

H.N. Moorabbin Leasing Pty Limited 1

H.N. Moore Park Franchisor Pty Limited 1

H.N. Moore Park Leasing Pty Limited

H.N. Morayfield Franchisor Pty Limited 1

H.N. Morayfield Leasing Pty Limited

H.N. Moree Franchisor Pty Limited

H.N. Moree Leasing Pty Limited

H.N. Morley Franchisor Pty Limited 1

H.N. Morley Leasing Pty Limited

H.N. Morwell Franchisor Pty Limited 7

H.N. Morwell Leasing Pty Limited 7

H.N. Moss Vale Franchisor Pty Limited 1

H.N. Moss Vale Leasing Pty Limited

H.N. Mt Barker Franchisor Pty Limited

H.N. Mt Barker Leasing Pty Limited

H.N. Mt Gambier Franchisor Pty Limited 1

H.N. Mt Gambier Leasing Pty Limited

H.N. Mt Gravatt Franchisor Pty Limited 1

H.N. Mt Gravatt Leasing Pty Limited

H.N. Mt Isa Franchisor Pty Limited 1

H.N. Mt Isa Leasing Pty Limited

H.N. Mudgee Franchisor Lty Limited 1

H.N. Mudgee Leasing Pty Limited

H.N. Munno Para Franchisor Pty Limited 1

H.N. Munno Para Leasing Pty Limited

H.N. Muswellbrook Franchisor Pty Limited

H.N. Muswellbrook Leasing Pty Limited

H.N. Narre Warren Franchisor Pty Limited

H.N. Narre Warren Leasing Pty Limited

H.N. Newcastle Franchisor Pty Limited 1

H.N. Newcastle Leasing Pty Limited

H.N. Newcastle West Franchisor Pty Limited

H.N. Newcastle West Leasing Pty Limited

H.N. Noarlunga Franchisor Pty Limited1

H.N. Noarlunga Leasing Pty Limited

H.N. Noosa Franchisor Pty Limited1

H.N. Noosa Leasing Pty Limited

H.N. Norwest Franchisor Pty Limited

H.N. Norwest Leasing Pty Limited

H.N. Nowra Franchisor Pty Limited 1

H.N. Nowra Leasing Pty Limited

H.N. Nunawading Franchisor Pty Limited 1

H.N. Nunawading Leasing Pty Limited

H.N. O‟Connor Franchisor Pty Limited 1

H.N. O‟Connor Leasing Pty Limited

H.N. Oakleigh CK Franchisor Pty Limited 1

H.N. Oakleigh CK Leasing Pty Limited

H.N. Orange Franchisor Pty Limited 1

H.N. Orange Leasing Pty Limited

H.N. Osborne Park Franchisor Pty Limited 1

H.N. Osborne Park Leasing Pty Limited

H.N. Oxley Franchisor Pty Limited 1

H.N. Oxley Leasing Pty Limited

H.N. Pacific Fair Franchisor Pty Limited

H.N. Pacific Fair Leasing Pty Limited

H.N. Parkes Franchisor Pty Limited 1

H.N. Parkes Leasing Pty Limited

H.N. Penrith Franchisor Pty Limited 1

H.N. Penrith Leasing Pty Limited

H.N. Peppermint Grove Franchisor Pty Limited 1

H.N. Peppermint Grove Leasing Pty Limited

H.N. Port Hedland Franchisor Pty Limited 1

H.N. Port Hedland Leasing Pty Limited

H.N. Port Kennedy Franchisor Pty Limited 1

H.N. Port Kennedy Leasing Pty Limited

H.N. Port Macquarie Franchisor Pty Limited 1

H.N. Port Macquarie Leasing Pty Limited

H.N. Preston Franchisor Pty Limited 1

H.N. Preston Leasing Pty Limited

H.N. Riverwood Franchisor Pty Limited

H.N. Riverwood Leasing Pty Limited

H.N. Rockhampton Franchisor Pty Limited 1

H.N. Rockhampton Leasing Pty Limited

H.N. Rothwell Franchisor Pty Limited

H.N. Rothwell Leasing Pty Limited

H.N. Salamander Bay Franchisor Pty Limited

H.N. Salamander Bay Leasing Pty Limited

H.N. Sale Franchisor Pty Limited 1

H.N. Sale Leasing Pty Limited

H.N. Shepparton Franchisor Pty Limited 1

H.N. Shepparton Leasing Pty Limited

H.N. South Tweed Franchisor Pty Limited 1

H.N. South Tweed Leasing Pty Limited

H.N. Southland Franchisor Pty Limited 1

H.N. Southland Leasing Pty Limited

H.N. Sunshine Franchisor Pty Limited

H.N. Sunshine Leasing Pty Limited

H.N. Swan Hill Franchisor Pty Limited 1

H.N. Swan Hill Leasing Pty Limited

H.N. Tamworth Franchisor Pty Limited 1

H.N. Tamworth Leasing Pty Limited

H.N. Taree Franchisor Pty Limited 7

H.N. Taree Leasing Pty Limited

H.N. Thomastown Franchisor Pty Limited

H.N. Thomastown Leasing Pty Limited

H.N. Toowoomba Franchisor Pty Limited 1

H.N. Toowoomba Leasing Pty Limited

H.N. Townsville Franchisor Pty Limited 1

H.N. Townsville Leasing Pty Limited

H.N. Traralgon Franchisor Pty Limited 1

H.N. Traralgon Leasing Pty Limited

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

124

H.N. Vic/Tas Commercial Project Franchisor Pty Limited

H.N. Vic/Tas Commercial Project Leasing Pty Limited

H.N. Wagga Franchisor Pty Limited 1

H.N. Wagga Leasing Pty Limited

H.N. Wangaratta Franchisor Pty Limited 1

H.N. Wangaratta Leasing Pty Limited

H.N. Warragul Franchisor Pty Limited 1

H.N. Warragul Leasing Pty Limited

H.N. Warrawong Franchisor Pty Limited 1

H.N. Warrawong Leasing Pty Limited

H.N. Warrnambool Franchisor Pty Limited 1

H.N. Warrnambool Leasing Pty Limited

H.N. Warwick (WA) Franchisor Pty Limited 1

H.N. Warwick (WA) Leasing Pty Limited

H.N. Warwick Franchisor Pty Limited 1

H.N. Warwick Leasing Pty Limited

H.N. Watergardens Franchisor Pty Limited 1

H.N. Watergardens Leasing Pty Limited

H.N. Waurn Ponds Franchisor Pty Limited 1

H.N. Waurn Ponds Leasing Pty Limited

H.N. West Gosford Franchisor Pty Limited 1

H.N. West Wyalong Franchisor Pty Limited

H.N. West Wyalong Leasing Pty Limited

H.N. Whyalla Franchisor Pty Limited 1

H.N. Whyalla Leasing Pty Limited

H.N. Wiley Park Franchisor Pty Limited 1

H.N. Wiley Park Leasing Pty Limited

H.N. Windsor Franchisor Pty Limited 1

H.N. Windsor Leasing Pty Limited

H.N. Woden Franchisor Pty Limited 1

H.N. Woden Leasing Pty Limited

H.N. Wonthaggi Franchisor Pty Limited 1

H.N. Wonthaggi Leasing Pty Limited

H.N. Woodville Franchisor Pty Limited

H.N. Woodville Leasing Pty Limited

H.N. Young Franchisor Pty Limited 1

H.N. Young Leasing Pty Limited

Hardly Normal Discounts Pty Limited 1

Hardly Normal Limited 9,10

Hardly Normal Pty Limited 1

Harvey Cellars Pty Limited

Harvey Liquor Pty Limited

Harvey Norman (ACT) Pty Limited 1

Harvey Norman (N.S.W.) Pty Limited

Harvey Norman (QLD) Pty Limited 1,6

Harvey Norman 2007 Management Pty Limited

Harvey Norman Big Buys Pty Limited 7

Harvey Norman Burnie Franchisor Pty Limited 1

Harvey Norman Burnie Leasing Pty Limited

Harvey Norman CEI d.o.o. 12

Harvey Norman Commercial Your Solution Provider Pty Limited

Harvey Norman Computer Club Pty Limited

Harvey Norman Computer Training Pty Limited

Harvey Norman Contracting Pty Limited

Harvey Norman Corporate Air Pty Limited

Harvey Norman CP Pty Limited 7

Harvey Norman Devonport Franchisor Pty Limited 1

Harvey Norman Devonport Leasing Pty Limited

Harvey Norman Education and Training Pty Limited

Harvey Norman Energy Pty Limited 1

Harvey Norman Europe d.o.o 12

Harvey Norman Export Pty Limited 1

Harvey Norman Fitouts Pty Limited

Harvey Norman Furnishing Pty Limited

Harvey Norman Gamezone Pty Limited

Harvey Norman Glenorchy Franchisor Pty Limited 1

Harvey Norman Glenorchy Leasing Pty Limited

Harvey Norman Hobart Franchisor Pty Limited 1

Harvey Norman Hobart Leasing Pty Limited

Harvey Norman Holdings (Ireland) Limited 19,27

Harvey Norman Home Cellars Pty Limited

Harvey Norman Home Loans Pty Limited

Harvey Norman Home Starters Pty Limited

Harvey Norman Homemaker Centre Pty Limited

Harvey Norman Launceston Franchisor Pty Limited 1

Harvey Norman Launceston Leasing Pty Limited

Harvey Norman Leasing (Blanchardstown) Limited 18,19

Harvey Norman Leasing (Carrickmines) Limited 18,19

Harvey Norman Leasing (Castlebar) Limited 18,19

Harvey Norman Leasing (Cork) Limited 18,19

Harvey Norman Leasing (Drogheda) Limited 18,19

Harvey Norman Leasing (Dublin) Limited 18,19

Harvey Norman Leasing (Dundalk) Limited 18,19

Harvey Norman Leasing (Eastgate) Limited 18,19

Harvey Norman Leasing (Limerick) Limited 18,19

Harvey Norman Leasing (Mullingar) Limited 18,19

Harvey Norman Leasing (N.Z.) Limited 9,10

Harvey Norman Leasing (Naas) Limited 18,19

Harvey Norman Leasing (NI) Limited 18,19

Harvey Norman Leasing (Rathfarnham) Limited 18,19

Harvey Norman Leasing (Tralee) Limited 18,19

Harvey Norman Leasing (Waterford) Limited 18,19

Harvey Norman Leasing Pty Limited

Harvey Norman Limited 10

Harvey Norman Loughran Plant & Equipment Pty Limited

Harvey Norman Mortgage Service Pty Limited

Harvey Norman Music Pty Limited

Harvey Norman Net. Works Pty Limited 1

Harvey Norman OFIS Pty Limited 1

Harvey Norman Online.com Pty Limited

Harvey Norman Ossia (Asia) Pte Limited 11,16,17

Harvey Norman P.E.M. Pty Limited

Harvey Norman Plant and Equipment Pty Limited

Harvey Norman Properties (N.Z.) Limited 9,10

Harvey Norman Rental Pty Limited

Harvey Norman Retailing Pty Limited 1

Harvey Norman Rosney Franchisor Pty Limited 1

Harvey Norman Rosney Leasing Pty Limited

Harvey Norman Security Pty Limited

Harvey Norman Shopfitting Pty Limited 1

Harvey Norman Singapore Pte Limited 11,15,16

Harvey Norman Stores (N.Z.) Pty Limited 1

Harvey Norman Stores (W.A.) Pty Limited

Harvey Norman Stores Pty Limited 1

Harvey Norman Superlink Pty Limited

Harvey Norman Tasmania Pty Limited

Harvey Norman Technology Pty Limited 1

Harvey Norman The Bedding Specialists Pty Limited

Harvey Norman The Computer Specialists Pty Limited

Harvey Norman The Electrical Specialists Pty Limited

Harvey Norman The Furniture Specialists Pty Limited

Harvey Norman Trading (Ireland) Limited 18,19

Harvey Norman Trading d.o.o. 12

Harvey Norman Ulverstone Franchisor Pty Limited 1

Harvey Norman Ulverstone Leasing Pty Limited

Harvey Norman Victoria Pty Limited1

Harvey Norman Zagreb d.o.o. 14

Havrex Pty Limited 1,6

HN Byron No. 2 Pty Limited 27

HN Byron No. 3 Pty Limited 27

HN Online Franchisor Pty Limited 7

HN Online Leasing Pty Limited 7

HN Paraparaumu Leasing Limited 7,9,10

HN QCV Benaraby No1 Pty Limited 7,29

HN QCV Benaraby Pty Limited 7,28

HN QCV Pty Limited 7

HN Zagreb Investment Pty Limited

HNL Pty Limited

Hodberg Pty Limited 1,5

Hodvale Pty Limited 1,5

Home Mart Furniture Pty Limited

Home Mart Pty Limited

Hoxco Pty Limited 1,6

J.M. Albury Franchisor Pty Limited

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

125

J.M. Albury Leasing Pty Limited

J.M. Alexandria Franchisor Pty Limited

J.M. Alexandria Leasing Pty Limited

J.M. Auburn Franchisor Pty Limited 1

J.M. Ballina Franchisor Pty Limited

J.M. Ballina Leasing Pty Limited

J.M. Bennetts Green Franchisor Pty Limited

J.M. Bennetts Green Leasing Pty Limited

J.M. Campbelltown Franchisor Pty Limited 1

J.M. Campbelltown Leasing Pty Limited

J.M. Caringbah Franchisor Pty Limited 1

J.M. Caringbah Leasing Pty Limited

J.M. Chancellor Park Franchisor Pty Limited

J.M. Chancellor Park Leasing Pty Limited

J.M. Contracting Services Pty Limited 1

J.M. Dubbo Franchisor Pty Limited

J.M. Dubbo Leasing Pty Limited

J.M. Leasing Pty Limited

J.M. Maitland Franchisor Pty Limited

J.M. Maitland Leasing Pty Limited

J.M. Maroochydoore Franchisor Pty Limited

J.M. Maroochydoore Leasing Pty Limited

J.M. Marrickville Franchisor Pty Limited 1

J.M. Marrickville Leasing Pty Limited

J.M. McGraths Hill Franchisor Pty Limited

J.M. McGraths Hill Leasing Pty Limited

J.M. Mudgee Franchisor Pty Limited

J.M. Mudgee Leasing Pty Limited

J.M. Muswellbrook Franchisor Pty Limited

J.M. Muswellbrook Leasing Pty Limited

J.M. Newcastle Franchisor Pty Limited 1

J.M. Nowra Franchisor Pty Limited

J.M. Nowra Leasing Pty Limited

J.M. Plant & Equipment Hire Pty Limited

J.M. Rockhampton Franchisor Pty Limited

J.M. Rockhampton Leasing Pty Limited

J.M. Share Investment Pty Limited

J.M. Toukley Franchisor Pty Limited

J.M. Toukley Leasing Pty Limited

J.M. Townsville Franchisor Pty Limited

J.M. Townsville Leasing Pty Limited

J.M. Wagga Wagga Franchisor Pty Limited

J.M. Wagga Wagga Leasing Pty Limited

J.M. Wallsend Franchisor Pty Limited

J.M. Wallsend Leasing Pty Limited

J.M. Warners Bay Franchisor Pty Limited

J.M. Warners Bay Leasing Pty Limited

J.M. Warrawong Franchisor Pty Limited

J.M. Warrawong Leasing Pty Limited

J.M. West Gosford Franchisor Pty Limited

J.M. West Gosford Leasing Pty Limited

J.M. Young Franchisor Pty Limited

J.M. Young Leasing Pty Limited

Jartoso Pty Limited 1

JM Online Franchisor Pty Limited 7

JM Online Leasing Pty Limited 7

Jondarlo Pty Limited 1

Joyce Mayne Furnishing Pty Limited

Joyce Mayne Home Cellars Pty Limited

Joyce Mayne Kotara Leasing Pty Limited

Joyce Mayne Liverpool Leasing Pty Limited

Joyce Mayne Penrith Pty Limited

Joyce Mayne Shopping Complex Pty Limited

Kalinya Development Pty Limited

Kambaldu Pty Limited 1

Kita Pty Limited 1

Kitchen Point Pty Limited 7

Koodero Pty Limited 1

Korinti Pty Limited 1

Lamino Pty Limited 1

Lesandu Adelaide City Pty Limited

Lesandu Adelaide CK Pty Limited

Lesandu Albany Pty Limited

Lesandu Albury Pty Limited

Lesandu Alexandria (JM) Pty Limited

Lesandu Alexandria DM Pty Limited

Lesandu Alexandria Pty Limited

Lesandu Alice Springs Pty Limited

Lesandu Auburn Stone Pty Limited

Lesandu Ayr Pty Limited

Lesandu Bairnsdale Pty Limited

Lesandu Balgowlah Pty Limited

Lesandu Ballina JM Pty Limited

Lesandu Batemans Bay Pty Limited

Lesandu Bathurst Pty Limited

Lesandu Bella Vista Pty Limited

Lesandu Belmont Pty Limited

Lesandu Belrose DM Pty Limited

Lesandu Benalla Pty Limited

Lesandu Bennetts Green JM Pty Limited

Lesandu Bentleigh Pty Limited

Lesandu Blacktown Pty Limited

Lesandu Bondi Junction Pty Limited

Lesandu Braybrook Pty Limited 7

Lesandu Brisbane City Pty Limited

Lesandu Broadbeach Pty Limited

Lesandu Broadway Pty Limited

Lesandu Brooklyn Pty Limited

Lesandu Brown Plains No. 1 Pty Limited

Lesandu Browns Plains Pty Limited

Lesandu Bundaberg Pty Limited 7

Lesandu Bundaberg WH 2 Pty Limited 7

Lesandu Bundaberg WH Pty Limited 7

Lesandu Burleigh Heads Flooring Pty Limited

Lesandu Busselton Pty Limited

Lesandu Cambridge Pty Limited

Lesandu Cannington Pty Limited

Lesandu Cannonvale Pty Limited

Lesandu Capalaba Pty Limited

Lesandu Carindale Pty Limited

Lesandu Castle Hill DM Pty Limited

Lesandu Castle Hill Pty Limited

Lesandu Cessnock (JM) Pty Limited

Lesandu Chadstone Pty Limited

Lesandu Charmhaven Pty Limited

Lesandu Chatswood Express Pty Limited

Lesandu Chatswood Pty Limited

Lesandu Cheltenham Pty Limited

Lesandu Chirnside Park Pty Limited

Lesandu Cleveland Pty Limited

Lesandu Cobar Pty Limited

Lesandu Coffs Harbour Pty Limited

Lesandu Coorparoo Pty Limited

Lesandu CP Aspley Pty Limited 7

Lesandu CP Bayswater Pty Limited 7

Lesandu CP Belmont Pty Limited 7

Lesandu CP Bendigo Pty Limited 7

Lesandu CP Braybrook Pty Limited 7

Lesandu CP Bundaberg Pty Limited 7

Lesandu CP Bundaberg WH 2 Pty Limited 7

Lesandu CP Bundaberg WH Pty Limited 7

Lesandu CP Burleigh Waters Pty Limited 7

Lesandu CP Coburg Pty Limited 7

Lesandu CP Dandenong Pty Limited 7

Lesandu CP Joondalup Pty Limited 7

Lesandu CP Loganholme Pty Limited 7

Lesandu CP Macgregor Pty Limited 7

Lesandu CP Macgregor WH Pty Limited 7

Lesandu CP Mackay Pty Limited 7

Lesandu CP Malvern Pty Limited 7

Lesandu CP Malvern WH Pty Limited 7

Lesandu CP Mandurah Pty Limited 7

Lesandu CP Maroochydoore Pty Limited 7

Lesandu CP Maroochydoore WH Pty Limited 7

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

126

Lesandu CP Maryborough Pty Limited 7

Lesandu CP Midland Pty Limited 7

Lesandu CP Moonah Pty Limited 7

Lesandu CP Moorabbin Pty Limited 7

Lesandu CP Morayfield Pty Limited 7

Lesandu CP Mornington Pty Limited 7

Lesandu CP Mt Druitt Pty Limited 7

Lesandu CP O'Connor Pty Limited 7

Lesandu CP Osborne Park CL Pty Limited 7

Lesandu CP Osborne Park Pty Limited 7

Lesandu CP Osborne Park WH Pty Limited 7

Lesandu CP Richmond CL Pty Limited 7

Lesandu CP Richmond Pty Limited 7

Lesandu CP Richmond WH Pty Limited 7

Lesandu CP Ringwood Home Pty Limited 7

Lesandu CP Ringwood Pty Limited 7

Lesandu CP Ringwood WH Pty Limited 7

Lesandu CP Thomastown Pty Limited 7

Lesandu CP Victoria Park Pty Limited 7

Lesandu Cranbourne Pty Limited

Lesandu Dalby Pty Limited

Lesandu Dandenong Pty Limited

Lesandu Deniliquin Pty Limited

Lesandu Dubbo JM Pty Limited

Lesandu Dubbo Pty Limited

Lesandu Engadine Pty Limited

Lesandu Erina Flooring Pty Limited

Lesandu Forster Pty Limited

Lesandu Fremantle No 2 Pty Limited

Lesandu Fremantle Pty Limited

Lesandu Fyshwick Pty Limited

Lesandu Gaven Pty Limited

Lesandu Gepps Cross Pty Limited

Lesandu Gladstone Pty Limited

Lesandu Gordon Pty Limited

Lesandu Goulburn Pty Limited

Lesandu Grafton Pty Limited

Lesandu Greensborough Pty Limited

Lesandu Griffith Pty Limited

Lesandu Hamilton (VIC) Pty Limited

Lesandu Hamilton Pty Limited

Lesandu Hervey Bay Pty Limited

Lesandu HN Pty Limited

Lesandu Horsham Pty Limited

Lesandu Indooroopilly Pty Limited 1

Lesandu Innisfail Pty Limited

Lesandu Inverell Pty Limited

Lesandu Ipswich Pty Limited

Lesandu Jandakot Pty Limited

Lesandu Joondalup Pty Limited

Lesandu Kalgoorlie Pty Limited

Lesandu Karratha Pty Limited

Lesandu Knox Towerpoint Pty Limited

Lesandu Kotara DM Pty Limited

Lesandu Launceston Pty Limited

Lesandu Leichhardt M Pty Limited

Lesandu Light Street DM Pty Limited

Lesandu Lismore Pty Limited

Lesandu Lithgow Pty Limited

Lesandu Loganholme Pty Limited

Lesandu Loganholme Pty Limited 7

Lesandu Mackay Pty Limited

Lesandu Maddington Pty Limited

Lesandu Maitland JM Pty Limited

Lesandu Maitland Pty Limited

Lesandu Malaga Pty Limited

Lesandu Mandurah Pty Limited

Lesandu Marion Pty Limited

Lesandu Maroochydoore JM Pty Limited

Lesandu Maroochydore Flooring Pty Limited

Lesandu McGraths Hill (JM) Pty Limited

Lesandu Melbourne City DM Pty Limited

Lesandu Mentone Pty Limited

Lesandu Midland Pty Limited

Lesandu Mile End Pty Limited

Lesandu Mitchell Pty Limited

Lesandu Moe Pty Limited

Lesandu Moorabbin Pty Limited 7

Lesandu Moore Park Pty Limited

Lesandu Moree Pty Limited

Lesandu Morley Pty Limited

Lesandu Mornington Pty Limited

Lesandu Morwell WH Pty Limited 7

Lesandu Moss Vale Pty Limited

Lesandu Mt Barker Pty Limited

Lesandu Mt Gravatt Pty Limited

Lesandu Mt Isa Pty Limited

Lesandu Munno Para Pty Limited

Lesandu Muswellbrook JM Pty Limited

Lesandu Muswellbrook Pty Limited

Lesandu Narrabri Pty Limited 7

Lesandu Narre Warren Pty Limited

Lesandu Newcastle West Pty Limited

Lesandu Noarlunga Pty Limited

Lesandu Noosa Pty Limited

Lesandu North Ryde DM Pty Limited

Lesandu Notting Hill Pty Limited

Lesandu Nowra Pty Limited

Lesandu Oakleigh CK Pty Limited

Lesandu O'Connor Pty Limited 7

Lesandu Orange Pty Limited

Lesandu Osborne Park Pty Limited

Lesandu Oxley Pty Limited

Lesandu Penrith DM Pty Limited

Lesandu Penrith Pty Limited

Lesandu Peppermint Grove Pty Limited

Lesandu Perth City West Pty Limited

Lesandu Port Macquarie Pty Limited 7

Lesandu Pty Limited 1

Lesandu Raymond Terrace Pty Limited

Lesandu Richlands Pty Limited

Lesandu Richmond (VIC) Pty Limited

Lesandu Riverwood Pty Limited

Lesandu Rockhampton Pty Limited

Lesandu Rothwell Pty Limited

Lesandu S.A. Pty Limited

Lesandu Salamander Bay Pty Limited

Lesandu Sale Pty Limited

Lesandu Silverwater Pty Limited

Lesandu Sippy Downs JM Pty Limited

Lesandu Southport Pty Limited

Lesandu Stanmore Pty Limited

Lesandu Sunshine Pty Limited

Lesandu Swan Hill Pty Limited

Lesandu Sydenham Pty Limited

Lesandu Sydney City SS Pty Limited

Lesandu Tamworth Pty Limited

Lesandu Taree Home Mart Pty Limited

Lesandu Taree Pty Limited

Lesandu Taren Point Pty Limited

Lesandu Tasmania Pty Limited

Lesandu Temora Pty Limited

Lesandu Thomastown Pty Limited

Lesandu Toukley Pty Limited

Lesandu Townsville Pty Limited

Lesandu Tweed Heads Flooring Pty Limited

Lesandu Tweed Heads Pty Limited 1

Lesandu Underwood Pty Limited

Lesandu WA Furniture Pty Limited

Lesandu WA Pty Limited 1

Lesandu Wagga Wagga JM Pty Limited

Lesandu Wagga Wagga Pty Limited

Lesandu Wallsend JM Pty Limited

Lesandu Wangaratta Pty Limited

Lesandu Warana JM Pty Limited

Lesandu Warana Pty Limited

Lesandu Warners Bay JM Pty Limited

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

127

Lesandu Warragul Pty Limited

Lesandu Warrawong Pty Limited

Lesandu Warwick (WA) Pty Limited

Lesandu Warwick Pty Limited

Lesandu Waurn Ponds Pty Limited

Lesandu West Gosford DM Pty Limited

Lesandu West Gosford JM Pty Limited

Lesandu West Wyalong Pty Limited

Lesandu Wiley Park Pty Limited

Lesandu Windsor Pty Limited

Lesandu Wonthaggi Pty Limited

Lesandu Woodville Pty Limited

Lesandu Young JM Pty Limited

Lesandu CP Richmond WH Pty Limited 7

Lesandu CP Ringwood CL Pty Limited 7

Lexeri Pty Limited 1

Lightcorp Pty Limited

Lighting Venture Pty Limited 1

Lodare Pty Limited 1

Loreste Pty Limited 1

Malvis Pty Limited 1

Manutu Pty Limited 1

Maradoni Pty Limited 1

Marinski Pty Limited 1

Mega Flooring Depot Pty Limited

Misstar Pty Limited

Murray Street Development Pty Limited

Mymasterpiece Pty Limited 5

Nedcroft Pty Limited 1

Network Consumer Finance (Ireland) Limited 18,19

Network Consumer Finance (N.Z.) Limited 9,10

Network Consumer Finance Pty Limited 1

Nomadale Pty Limited 1,6

Norman Ross Limited 9,10

Norman Ross Pty Limited 1

Oldmist Pty Limited 1

Oslek Developments Pty Limited

Osraidi Pty Limited 1

P & E Crows Nest Pty Limited

P & E Homewest Pty Limited

P & E Leichhardt Pty Limited

P & E Maddington Pty Limited

P & E Shopfitters Pty Limited

Packcom Pty Limited 7

PEM Corporate Pty Limited

Pertama Holdings Limited 11,16,17

Plezero Pty Limited 1

Poliform Pty Limited 26

QCV Benaraby Pty Limited 7,29

QCV Pty Limited 7,28

R.Reynolds Nominees Pty Limited

Recline A Way Franchisor Pty Limited

RH Online Pty Limited

Rosieway Pty Limited 1

Sarsha Pty Limited 1

Setto Pty Limited 1

Shakespir Pty Limited

Signature Computers Pty Limited

Solaro Pty Limited 1

Space Furniture Pte Limited 11,16

Space Furniture Pty Limited 3

Spacepol Pty Limited

Stonetess Pty Limited 1

Stores (NZ) Limited 9,10

Stores Securitisation (NZ) Limited 10

Stores Securitisation Pty Limited

Strathloro Pty Limited 1

Stupendous Pty Limited 1,20

Superguard Pty Limited

Swaneto Pty Limited1

Swanpark Pty Limited 1,6

Tatroko Pty Limited 1

Tessera Stones & Tiles Australia Pty Limited

Tessera Stones & Tiles Pty Limited 1,13

The Byron At Byron Pty Limited 1

Tisira Pty Limited 1

Ventama Pty Limited 1,4

Wadins Pty Limited 1

Waggafurn Pty Limited

Wanalti Pty Limited 1

Warungi Pty Limited 1

Waytango Pty Limited 1

Webzone Pty Limited

Wytharra Pty Limited 1

Yoogalu Pty Limited 1,2

Zabella Pty Limited 1

Zavarte Pty Limited 1

Zirdano Pty Limited 1

Zirdanu Pty Limited 1

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

128

Notes

Shareholdings in companies listed in Note 39 are consistent with prior year unless otherwise stated below.

1 Company is a member of the “Closed Group”. 2 Company is relieved under the Class Order described in Note 40. 3 Kita Pty Limited owns 51% and Derni Pty Ltd owns 49% of the shares in Space Furniture Pty Limited. 4 Shares held by Sarsha Pty Limited. 5 Shares held by Harvey Norman Retailing Pty Limited. 6 Shares held by Harvey Norman Stores Pty Limited. 7 Company acquired during the year. 8 Company disposed of during the year. 9 Shares held by Harvey Norman Limited. 10 Company incorporated in New Zealand. 11 Company incorporated in Singapore. 12 Company incorporated in Slovenia. 13 Shares held by Stonetess Pty Limited. 14 Company incorporated in Croatia. 15 Shares held by Setto Pty Limited. 16 Harvey Norman Singapore Pte Limited owns 100% of the shares in Bencoolen Properties Pte Limited, 60% of the

shares in Harvey Norman Ossia (Asia) Pte Limited, 100% of the shares in Space Furniture Pte Limited, and 28.60% (2010:10.49%) of the shares in Pertama Holdings Limited.

17 Harvey Norman Ossia (Asia) Pte Limited holds 49.38% (2010: 50.21%) of the shares in Pertama Holdings Limited. 18 Shares held by Harvey Norman Holdings (Ireland) Limited. 19 Company incorporated in Ireland. 20 Shares held by Calardu Pty Limited. 21 Shares held by Calardu Armidale Pty Limited. 22 Lighting Venture Pty Limited owns 50.1% of shares in Glolight Pty Limited. 23 Yoogalu Pty Ltd holds 50.5% of the shares in Australian Business Skills Centre Pty Limited. 24 HN Byron No 3 Pty Limited holds 50% of the shares in Byron Bay Facilities Pty Limited. 25 Yoogalu Pty Ltd holds 50% of the shares in Byron Bay Management Pty Limited. 26 Kita Pty Ltd holds 99% and Derni Pty Ltd owns 1% of the shares in Poliform Pty Ltd. 27 Shares held by Yoogalu Pty Limited. 28 HN QCV Pty Limited holds 50% of the shares in QCV Pty Limited 29 HN QCV Benaraby Pty Limited holds 50% of the shares in QCV Benaraby Pty Limited

■ 39. Controlled Entities and Unit Trusts (continued)

■ Shares held by Harvey Norman Holdings Limited (continued)

129

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited

A.C.N. 098 004 570 No. 2 Trust

A.C.N. 100 478 402 No. 2 Trust

Abari No. 3 Trust****

ABSC Online Trust ***

Alanlect No. 2 Trust**

Albanall No. 2 Trust**

Albanlect No. 2 Trust****

Albany Stores No. 2 Trust

Albany Superstore No. 2 Trust**

Albanycom No 2 Trust****

Albcom No 2 Trust****

Albfurn No 2 Trust****

Alburcom No. 2 Trust**

Alburel No. 2 Trust**

Albwick No. 2 Trust**

Alexall No 2 Trust

Alexandria Superstore No. 2 Trust**

Alicefurn No 2 Trust****

Alistore No. 2 Trust**

Allacom No. 2 Trust****

Angefurn No. 2 Trust**

Anwarah No. 2 Trust

Apfurn No. 2 Trust****

Appcann No. 2 Trust

Appcar No 2 Trust****

Ardera No. 2 Trust**

Armabed WA No. 2 Trust****

Armabert No. 2 Trust**

Armacom WA No. 2 Trust****

Armadale Furniture No 2 Trust

Armadale WA Computers No 2 Trust****

Armafurn WA No. 2 Trust****

Armalect WA No 2 Trust****

Armastore No. 2 Trust**

Armcomp NSW No. 2 Trust****

Armdel WA No 2 Trust****

Armlect No. 2 Trust

Arulect No. 2 Trust**

Arwon Computers No. 2 Trust**

Arwon Electrics No. 2 Trust**

Aspley Bedding No. 2 Trust****

Aspley Computers No. 2 Trust****

Aspley Electrics No. 2 Trust****

Aspleyfloor QLD No. 2 Trust****

Asptec No. 2 Trust**

Aubapp No. 2 Trust

Aubdirect No. 2 Trust

Aublect No. 2 Trust

Aubtrade No. 2 Trust

Auburnapp No. 2 Trust****

Auburncom No. 2 Trust****

Australian Business Skills Centre Trust***

Ayr Qld No 2 Trust****

Ayr Superstore No. 2 Trust****

Ayrcom No. 2 Trust****

Ayrel No. 2 Trust****

Ayrstore No. 2 Trust****

Ayrtec No. 2 Trust

Bakfurn No. 2 Trust**

Bamsett No. 2 Trust

Barlect No. 2 Trust**

Bathard No. 2 Trust****

Baylect No. 2 Trust****

Becto Trust

Bedcity No. 2 Trust****

Beddington No. 2 Trust****

Bedholme No. 2 Trust**

Bedton No. 2 Trust**

Bedwick No. 2 Trust

Belavit No. 2 Trust

Belcomp WA No. 2 Trust****

Bellbed No. 2 Trust

Bellect No. 2 Trust****

Belmcom No. 2 Trust****

Belmont Superstore No. 2 Trust****

Belmstore No. 2 Trust****

Belmtec No 2 Trust****

Belmtel No. 2 Trust****

Bena No. 2 Trust

Bendcomp No. 2 Trust**

Bendlect No. 2 Trust**

Benlect No. 2 Trust****

Benstore No. 2 Trust**

Berafurn No. 2 Trust****

Berelect No. 2 Trust**

Bergcom No. 2 Trust****

Bergston No 2 Trust****

Berlel No. 2 Trust****

Berncal No. 2 Trust****

Bernect No 2 Trust****

Berntoo No. 2 Trust****

Bervit No. 2 Trust**

BH Flooring No. 2 Trust****

Big Apple Trust

Blackbed No. 2 Trust****

BM Superstore No. 2 Trust**

Bojarda No. 2 Trust**

Bondcom No. 2 Trust**

Bondlect No. 2 Trust**

Bornapp No. 2 Trust****

Borncom No. 2 Trust****

Bornlec No. 2 Trust****

BP Flooring No 2 Trust

Bradiz No. 2 Trust

Broadel No. 2 Trust**

Brockland No. 2 Trust**

Brocomp No. 2 Trust**

Brofloor No. 2 Trust

Broncom No. 2 Trust****

Bronel No. 2 Trust****

Bronlect No.2 Trust

Brookstore No. 2 Trust

Browns Plains Bedding No 2 Trust

Browns Plains Superstore No. 2 Trust**

Brownsell No. 2 Trust****

Brownslect No. 2 Trust**

Buddlect No. 2 Trust

Bumbury Computers No. 2 Trust****

Bunbury WA No 2 Trust****

Bunburybed No. 2 Trust****

Bunburycom No. 2 Trust****

Bunburyfurn No. 2 Trust

Buncomp No. 2 Trust**

Bundalect No. 2 Trust

Bundall Superstore No. 2 Trust**

Bundallfurn No. 2 Trust****

Bundalltec No. 2 Trust****

Bundatec No. 2 Trust

Bundell No. 2 Trust****

Bundhill No. 2 Trust**

Bundware No. 2 Trust**

Burleigh Flooring No. 2 Trust****

Burnie Computers (TAS) No. 2 Trust**

Burnie Electrics No. 2 Trust**

Bussall No. 2 Trust**

Busselcom No. 2 Trust

Busseltec No. 2 Trust

Busstor No. 2 Trust

Buycom No. 2 Trust**

Byrncom No. 2 Trust**

C C Superstore No. 2 Trust****

Cairnlect No. 2 Trust

Cairnsel No. 2 Trust****

Cairnson No 2 Trust****

Cajanoe No. 2 Trust**

Calardu A.C.T. No. 2 Trust

Calardu ACT Trust

Calardu Adderley Street Trust

Calardu Albany Trust

Calardu Albury Trust

Calardu Alexandria DM Trust

Calardu Alexandria WH Trust

Calardu Alice Springs Trust

Calardu Armadale WA Trust

Calardu Armidale Trust

Calardu Aspley Trust

Calardu Auburn No. 1 Trust

Calardu Auburn No. 2 Trust

Calardu Auburn No. 3 Trust

Calardu Auburn No. 4 Trust

Calardu Auburn No. 5 Trust

Calardu Auburn No. 6 Trust

Calardu Auburn No. 7 Trust

Calardu Auburn No. 8 Trust

Calardu Auburn No. 9 Trust

Calardu Ballarat Trust

Calardu Ballina No. 1 Trust

Calardu Ballina Trust

Calardu Bathurst Trust

Calardu Beaufort Street Trust

Calardu Bellevue Hill Trust

130

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Calardu Belrose DM Trust

Calardu Bennetts Green Trust

Calardu Bennetts Green Warehouse Trust

Calardu Berri Trust

Calardu Berrimah Trust

Calardu Brickworks (S.A.) Trust

Calardu Broadmeadow No. 1 Trust

Calardu Broadmeadow No. 2 Trust

Calardu Broadmeadows VIC Trust

Calardu Brookvale Trust

Calardu Brown Plains No. 1 Trust

Calardu Browns Plains Trust

Calardu Bunbury Trust

Calardu Bundaberg No. 1 Trust

Calardu Bundaberg Trust

Calardu Bundaberg WH Trust

Calardu Bundall Trust

Calardu Burnie Trust

Calardu Cambridge Trust

Calardu Campbelltown Trust

Calardu Cannington Trust

Calardu Caringbah (Taren Point) Trust

Calardu Caringbah Trust

Calardu Crows Nest Trust

Calardu Cubitt Trust

Calardu Darwin Trust

Calardu Devonport Trust

Calardu Dubbo Trust

Calardu Emerald Trust

Calardu Frankston Trust

Calardu Frankston WH Trust

Calardu Fyshwick DM Trust

Calardu Gepps Cross No 2 Trust

Calardu Gepps Cross Trust

Calardu Gladstone Trust

Calardu Gordon Trust

Calardu Guildford Trust

Calardu Gympie Trust

Calardu Hervey Bay Trust

Calardu Hobart Trust

Calardu Hoppers Crossing Trust

Calardu Horsham Trust

Calardu Innisfail Trust

Calardu Jandakot No 1 Trust

Calardu Jandakot Trust

Calardu Joondalup Trust

Calardu Kalgoorlie Oswald St Trust

Calardu Kalgoorlie Trust

Calardu Karana Downs Trust

Calardu Karratha Trust

Calardu Kawana Waters Trust

Calardu Kemblawarra Trust

Calardu Kingaroy Trust

Calardu Kotara Trust

Calardu Launceston Trust

Calardu Lismore Trust

Calardu Loganholme Trust

Calardu Mackay No 1 Trust

Calardu Mackay No 2 Trust

Calardu Maitland Trust

Calardu Malaga Trust

Calardu Mandurah Trust

Calardu Maribyrnong 1995 Trust

Calardu Maribyrnong Trust

Calardu Marion No. 1 Trust**

Calardu Marion Trust

Calardu Maroochydore Trust

Calardu Maroochydore Warehouse Trust

Calardu Maryborough Trust

Calardu Melville Trust

Calardu Mentone Trust

Calardu Midland Trust

Calardu Milton Trust

Calardu Morayfield Trust

Calardu Morwell Trust

Calardu Moss Vale Trust

Calardu Mt Isa Trust

Calardu Mt. Gambier Trust

Calardu Mudgee Trust

Calardu Munno Para Trust

Calardu No. 1 Trust

Calardu No. 2 Trust

Calardu No. 3 Trust

Calardu Noarlunga Trust

Calardu Noble Park WH Trust**

Calardu Noosa Trust

Calardu North Ryde 2 Trust

Calardu North Ryde Trust

Calardu Northbridge Trust

Calardu Nowra Trust

Calardu Oxley Trust

Calardu Penrith No. 1 Trust**

Calardu Penrith Trust

Calardu Perth City West Trust

Calardu Port Macquarie Trust

Calardu Preston Trust

Calardu Raine Square Trust

Calardu Richmond Trust

Calardu Rockhampton 2 Trust

Calardu Rockhampton Trust

Calardu Rockingham Trust

Calardu Rosebery Trust

Calardu Roselands Trust

Calardu Rothwell Trust

Calardu Rutherford Trust

Calardu Rutherford Warehouse Trust

Calardu Sale Trust

Calardu Silverwater Trust

Calardu Springvale Trust

Calardu Swan Hill Trust

Calardu Sylvania Trust

Calardu Taree Trust

Calardu Taren Point Trust**

Calardu Thebarton Trust

Calardu Thomastown Trust

Calardu Toorak Trust

Calardu Toowoomba No 1 Trust

Calardu Toowoomba Trust

Calardu Toowoomba WH Trust

Calardu Townsville Trust

Calardu Tweed Heads Traders Way Trust

Calardu Tweed Heads Trust

Calardu Vicfurn Trust

Calardu Warrawong (Homestarters) No 1 Trust

Calardu Warrawong (Homestarters) Trust

Calardu Warrawong No. 1 Trust

Calardu Warrawong No. 2 Trust

Calardu Warrawong Trust

Calardu Warrnambool Trust

Calardu Warwick Trust

Calardu West Gosford Trust

Calardu Whyalla Trust

Calardu Wivenhoe Trust

Calect No. 2 Trust****

Calel No. 2 Trust

Calfurn No. 2 Trust****

Cambridge Computers No. 2 Trust**

Camfurn No. 2 Trust****

Canecom No. 2 Trust**

Canelect No. 2 Trust**

Cannbed No. 2 Trust****

Cannbed WA No. 2 Trust****

Canner No. 2 Trust**

Canniance No. 2 Trust****

Canningfurn No 2 Trust****

Cannington Appliances No. 2 Trust****

Cannington Superstore No.2 Trust

Cannonel No. 2 Trust**

Cannontec No. 2 Trust**

Cannstore No. 2 Trust

Cannters No. 2 Trust

Cantonel No 2 Trust****

Cantrics No. 2 Trust****

Capalaba Bedding No. 2 Trust**

Capalaba Computers No. 2 Trust**

Capalaba Flooring No. 2 trust

Caplect No. 2 Trust

Carcom No. 2 Trust

Cardinel No. 2 Trust****

Cardlect No. 2 Trust

Carebed No. 2 Trust**

Carecom No 2 Trust****

Carefurn No 2 Trust****

Carindale Computers No. 2 Trust****

Carinel No. 2 Trust****

Carinlect No. 2 Trust

Carintec No. 2 Trust**

Carolander No. 2 Trust**

Castore No. 2 Trust

CBG Trust

Cellfurn No 2 Trust****

Cellorcom No. 2 Trust**

Chadcom No. 2 Trust**

Chadfloor No. 2 Trust**

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

131

Chancelect No. 2 Trust**

Charmela No. 2 Trust

Chatapp No. 2 Trust****

Chatcom No. 2 Trust**

Chatex No. 2 Trust

Chatlect No. 2 Trust**

Chatsell No. 2 Trust****

Chirncom No. 2 Trust**

Chirnel No. 2 Trust**

City Cross Computer No. 2 Trust****

City Cross Electrics No. 2 Trust****

City Cross Superstore No. 2 Trust****

City Superstore No. 2 Trust

City West Appliances No. 2 Trust****

City West Bedding No 2 Trust****

City West Electrics No. 2 Trust****

City West Furniture No. 2 Trust****

City West Superstore No. 2 Trust**

Citycomp No. 2 Trust****

Citystore No. 2 Trust****

Clanlect No 2 Trust****

Clevcom No. 2 Trust

Clevel No. 2 Trust****

Clevelcom No. 2 Trust**

Clevelect No. 2 Trust**

Clevlect No 2 Trust****

Comalb No. 2 Trust**

Comarm WA No. 2 Trust****

Comaub No. 2 Trust

Combal No. 2 Trust**

Combalg No. 2 Trust**

Comben Nominees No. 2 Trust

Combier No. 2 Trust**

Comblack No. 2 Trust****

Comborne No. 2 Trust****

Combron No. 2 Trust**

Combury No. 2 Trust**

Comcam No. 2 Trust

Comdaw No. 2 Trust

Comdore No. 2 Trust

Comgamb No. 2 Trust****

Comgel No. 2 Trust****

Comgos No.2 Trust

Comgreen No. 2 Trust**

Comhill No. 2 Trust

Comkaw No 2 Trust

Commara No. 2 Trust****

Commil No. 2 Trust**

Compalaba No. 2 Trust**

Compall No. 2 Trust****

Comparoo No. 2 Trust

Compdall No. 2 Trust****

Compgrav No. 2 Trust

Compliance No. 2 Trust****

Computa Park No 2 Trust****

Computen No. 2 Trust****

Compuville No. 2 Trust**

Comroc No. 2 Trust

Comstore No. 2 Trust****

Comtam No. 2 Trust**

Comtoon No. 2 Trust**

Comunno No. 2 Trust****

Comvey No. 2 Trust

Conbed No. 2 Trust****

Conocom No. 2 Trust****

Coorar No. 2 Trust****

Coorparoo Computers No. 2 Trust****

Coorparoo Electrics No. 2 Trust

Coorparoo Flooring No. 2 Trust****

Coorparoo Furniture No. 2 Trust

Coravit No. 2 Trust

Cosher No. 2 Trust**

Cosgrove Shopfitting Services No. 2 Trust

Craigstore No. 2 Trust

Craigtec No. 2 Trust**

Cranbell No. 2 Trust**

Crancom No. 2 Trust**

Croscom No. 2 Trust**

Crossel No. 2 Trust**

Crosslect No. 2 Trust**

Crosstore No. 2 Trust

Custom Cinema No. 2 Trust****

Dalball No. 2 Trust****

Dalby Superstore No 2 Trust****

Dalefurn No. 2 Trust

Dalelect No. 2 Trust**

Dalfurn No. 2 Trust**

Dallac No. 2 Trust****

Dallcom No. 2 Trust

Dallect No. 2 Trust****

Dallware No. 2 Trust****

Dalstore No. 2 Trust

Daltel No. 2 Trust

Daltonel No. 2 Trust**

Dalupbed No. 2 Trust****

Danapp No. 2 Trust****

Dancomp No. 2 Trust**

Danstore No. 2 Trust**

Darolect No. 2 Trust**

Darwel No. 2 Trust****

Dawlec No. 2 Trust****

Dawncom No. 2 Trust****

Dawnel No. 2 Trust****

Dawnfurn No. 2 Trust****

Daylect No. 2 Trust****

Daystore No. 2 Trust

Deltharmo No. 2 Trust**

Derindale No. 2 Trust

Devonport Computers No. 2 Trust**

Devonport Electrics No. 2 Trust**

Disinter No. 2 Trust**

Dovefurn No. 2 Trust**

Druin ACT No 2 Trust****

Dubbobed No 2 Trust****

Dubbocom No. 2 Trust**

Dubora No. 2 Trust****

Duostore No. 2 Trust****

Durahlect No. 2 Trust**

E P Bedding No. 2 Trust

E P Furniture No. 2 Trust****

Eastim No. 2 Trust****

Eldalb No 2 Trust****

Elebat No. 2 Trust**

Electall No. 2 Trust****

Electcam No. 2 Trust****

Electcann No. 2 Trust****

Electen No. 2 Trust****

Electham No. 2 Trust**

Electley No. 2 Trust

Electmil No. 2 Trust**

Electmore No. 2 Trust****

Electgos No. 2 Trust

Electoo No. 2 Trust****

Electvale No. 2 Trust**

Electwind No. 2 Trust

Elekaw No. 2 Trust****

Elekot No. 2 Trust**

Elepilly No. 2 Trust**

Eleroo No. 2 Trust**

Elholme No. 2 Trust**

Ellicom No. 2 Trust**

Elmoray No. 2 Trust

Eltcom No. 2 Trust**

Enbed No. 2 Trust****

Enfiel No. 2 Trust****

Enfield Computers No. 2 Trust****

Enstore No. 2 Trust**

Evcomputers No. 2 Trust****

Everel No. 2 Trust****

Everton Bedding No. 2 Trust**

Everton Park Bedding No. 2 Trust****

Everton Park Computers No. 2 Trust

Everton Park Electrics No. 2 Trust****

Everton Park Furniture No.2 Trust****

Evlect No. 2 Trust****

Evtonel No. 2 Trust

Ewencom No. 2 Trust****

Favstore No 2 Trust

Fedrics No. 2 Trust****

Fieldbed No.2 Trust****

Fieldlect No. 2 Trust****

Fieldstore No. 2 Trust****

Filfurn No. 2 Trust

Finreg No. 2 Trust****

Floholme No. 2 Trust**

Floor Rug No. 2 Trust****

Flooraba No. 2 Trust**

Floorcom No. 2 Trust

Floormar No. 2 Trust****

Floortim No. 2 Trust****

Floorwell No. 2 Trust**

Fortitude Furniture No. 2 Trust

Fortitude Valley Electrics No. 2 Trust****

Fortley No. 2 Trust

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

132

Frankcom No. 2 Trust**

Frankstonel No. 2 Trust**

Fraserfurn No. 2 Trust

Freeson Superstore No. 2 Trust**

Frelcom No. 2 Trust****

Fremlect No 2 Trust****

Fremstore No. 2 Trust

Fremtel No. 2 Trust

Furnaley No. 2 Trust****

Furnall No. 2 Trust****

Furnap No 2 Trust****

Furnbay No. 2 Trust****

Furnbayel No. 2 Trust**

Furnbund No. 2 Trust****

Furnbury No. 2 Trust****

Furncam No. 2 Trust**

Furncann No. 2 Trust****

Furncity No. 2 Trust****

Furneld No. 2 Trust**

Furnfield No. 2 Trust****

Furngamb No. 2 Trust****

Furnholme No. 2 Trust**

Furnjoon No. 2 Trust****

Furnkay No. 2 Trust

Furnmarn No. 2 Trust**

Furnmay No. 2 Trust****

Furnmore No 2 Trust

Furnoosa No. 2 Trust

Furnor No. 2 Trust****

Furnpel No 2 Trust

Furnplain No. 2 Trust****

Furnroc No. 2 Trust

Furnsal No. 2 Trust****

Furnsoon No. 2 Trust****

Furnsprings No. 2 Trust**

Furnstar No. 2 Trust**

Furntoo No. 2 Trust****

Furnville No. 2 Trust****

Furnwhy No. 2 Trust

Furnwick No. 2 Trust****

Furnwood No. 2 Trust**

Fyshcom No. 2 Trust

Gablect No. 2 Trust****

Gambiel No. 2 Trust****

Gamcomp No 2 Trust****

Gamfurn No. 2 Trust****

Gamlect No 2 Trust****

Gamstore No. 2 Trust

Gamtec No. 2 Trust**

Gardcom No. 2 Trust****

Garden City Bedding No 2 Trust****

Garden City Furniture No 2 Trust****

Garden City Superstore No. 2 Trust****

Gardfurn No. 2 Trust

Gardstore No 2 Trust

GC Bedding No. 2 Trust**

GC Superstore No. 2 Trust

Gelfurn No. 2 Trust

Gellect No. 2 Trust

Gepps Cross Superstore No. 2 Trust**

Geradel No. 2 Trust****

Geraldcom No. 2 Trust

Geraldfurn No. 2 Trust****

Geraldlect No. 2 Trust****

Geraldstore No. 2 Trust

Geraldton WA No 1 Trust

Geraldton WA No 2 Trust

Geralect No 2 Trust

Gerancom No 2 Trust****

Gladlect No. 2 Trust**

Gladstores No. 2 Trust

Gladstores Qld No. 2 Trust

Glenorchy Furniture No. 2 Trust

Glenorchy Electrics No. 2 Trust**

Gocomp No. 2 Trust**

Golect No. 2 Trust**

Goscane No. 2 Trust

Gosfordcom No. 2 Trust****

Gostec No. 2 Trust**

Granovi No. 2 Trust**

Gravlec No. 2 Trust****

Griffcom No. 2 Trust**

Griffel No. 2 Trust**

Grovelect No. 2 Trust**

Grovit No. 2 Trust**

Gymlect No. 2 Trust**

Gympie Superstore No. 2 Trust**

Gympiestore No. 2 Trust**

Gymtec No. 2 Trust**

H.N. Cards Trust

Hamlect No. 2 Trust**

Hamptoncom No. 2 Trust****

Hamptonel No. 2 Trust**

Hanazil No. 2 Trust**

Hanfurn No. 2 Trust

Haproc No. 2 Trust****

Harborcom No. 2 Trust**

Harborel No. 2 Trust**

Harvey Norman Burnie Franchisor Unit Trust

Harvey Norman Devonport Franchisor Unit Trust

Harvey Norman Discounts No. 1 Trust

Harvey Norman Glenorchy Franchisor Unit Trust

Harvey Norman Hobart Franchisor Unit Trust

Harvey Norman Launceston Franchisor Unit Trust

Harvey Norman Lighting Asset Trust

Harvey Norman Lighting No. 1 Trust

Harvey Norman Liquor Unit Trust

Harvey Norman No. 1 Trust

Harvey Norman Rosney Franchisor Unit Trust

Harvey Norman Shopfitting Trust

Harvey Norman Tasmania Agent Unit Trust

Harvey Norman Ulverstone Franchisor Unit Trust

Havencom No. 2 Trust**

Havenel No. 2 Trust**

Havnet No. 2 Trust

Helect No. 2 Trust

Hervey Bay Electrics No 2 Trust****

Hervey Bay Superstore No. 2 Trust**

Herveyel No. 2 Trust****

Herveyfurn No. 2 Trust

Herveylect No. 2 Trust**

Heycom No. 2 Trust****

Heyfurn No. 2 Trust****

Hillect No. 2 Trust****

Hobart City Electrics No. 2 Trust**

Hobartcom No. 2 Trust**

Holmebed No. 2 Trust**

Homefloor No. 2 Trust

Homefurn No. 2 Trust****

Homely No. 2 Trust****

Hoodtec No. 2 Trust**

Horshamcom No. 2 Trust**

HS Computers No 2 Trust****

Huntfurn No 2 Trust****

Hytoru No. 2 Trust**

Incomputers No 2 Trust****

Indel No. 2 Trust****

Indolect No. 2 Trust****

Indooroopilly Superstore No. 2 Trust**

Indycom No. 2 Trust**

Inelect No. 2 Trust

Inniscom No. 2 Trust****

Innisfail Superstore No 2 Trust****

Innistec No. 2 Trust**

Innistore No. 2 Trust****

Innlect No. 2 Trust****

Inrocom No. 2 Trust****

Inrolect No. 2 Trust

Inropel No. 2 Trust

Ipswich Superstore No. 2 Trust**

Jadlec No 2 Trust****

Jamitec No. 2 Trust**

Jasbeds No. 2 Trust**

Jaslect No. 2 Trust**

Jayola No 2 Trust****

Jazap No. 2 Trust**

Jefrondo No. 2 Trust**

Jenbed No. 2 Trust**

Jenfurn No. 2 Trust**

JMC Warrawong No. 2 Trust**

JME Warrawong No. 2 Trust**

Jonbed No. 2 Trust****

Joolbed No. 2 Trust

Joonapp No. 2 Trust

Joondalup Administrative Services Trust****

Joondalup Superstore No 2 Trust****

Joondalup Warehousing Services Trust****

Joonlect No. 2 Trust

Joonstore No. 2 Trust**

Joshcom No 2 Trust****

Kaboola No. 2 Trust

Kainel No. 2 Trust**

Kalgcom No. 2 Trust****

Kalgel No. 2 Trust****

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

133

Kalgfurn No. 2 Trust****

Kalgoorlie Computers No. 2 Trust

Kalgoorlie Electrics No 2 Trust****

Kalinya Unit Trust

Kallect No. 2 Trust****

Kallie No. 2 Trust

Kalofurn No. 2 Trust****

Karral No 2 Trust****

Karrasel No. 2 Trust****

Karratec No 2 Trust****

Karrif No. 2 Trust****

Karstore No. 2 Trust****

Kawana Computers No. 2 Trust****

Kawana Electrics No. 2 Trust****

Kawatec No. 2 Trust**

Kawfurn No. 2 Trust****

Kawlect No. 2 Trust****

Kayfurn No. 2 Trust**

Kelect No 2 Trust****

Kelsocom No. 2 Trust**

Kennely No. 2 Trust****

Kennylect No. 2 Trust****

Kenstore No. 2 Trust**

Kingalect No. 2 Trust

Kingarel No. 2 Trust**

Kingatec No. 2 Trust**

Kotbed No 2 Trust****

KW Electrics No. 2 Trust****

Kyabzah No. 2 Trust****

Labatec No. 2 Trust**

Lamino Investments No. 1 Trust

Lamino Investments No. 2 Trust

Lamino Investments No. 3 Trust

Lamino Investments No. 4 Trust

Lamino Investments No. 5 Trust

Lamino Investments No. 6 Trust

Lanbed No 2 Trust

Landstore No 2 Trust****

Lanlect No. 2 Trust****

Launceston Computers No. 2 Trust**

Launceston Electrics No. 2 Trust**

Lecany No. 2 Trust**

Lecedy No. 2 Trust**

Lectaba No. 2 Trust**

Lectapp No. 2 Trust****

Lectayr No. 2 Trust****

Lectdore No. 2 Trust**

Lectoo Air No. 2 Trust****

Lectoo No. 2 Trust****

Lectox No. 2 Trust**

Lectville No 2 Trust****

Lecwar No. 2 Trust**

Lesandu Albury Trust

Lesandu Campbelltown Trust

Lesandu Fairfield Trust

Lesandu Gordon Trust

Lesandu Gosford Trust

Lesandu Miranda Trust

Lesandu Newcastle Trust

Lesandu No. 1 Trust

Lesandu Penrith Trust

Lesandu Tamworth Trust

Lesandu Warrawong Trust

Lesandu Warringah Mall Trust

Lesoon No. 2 Trust**

Lexancom No. 2 Trust****

Leybed No 2 Trust

Leyel No. 2 Trust****

Leyfurn No 2 Trust****

Leylect No 2 Trust

Leytrics No. 2 Trust**

Limel No. 2 Trust

Lis Computers No. 2 Trust**

Lisbed No. 2 Trust

Lisstore No. 2 Trust**

Livel No. 2 Trust**

Lodare No 2 Trust

Loganap No. 2 Trust****

Loganbed No. 2 Trust****

Logancom No. 2 Trust****

Loganel No. 2 Trust

Loganfloor No 2 Trust****

Loganfurn No. 2 Trust****

Loganholme Bedding No 2 Trust****

Loganholme Computers No. 2 Trust**

Loganlect No 2 Trust****

Lonecom No. 2 Trust****

Lunafurn No. 2 Trust****

Lunel No. 2 Trust**

Mackay Superstore No. 2 Trust**

Mackay Trust

Mackcom No. 2 Trust****

Mackfurn No. 2 Trust****

Mactrics No. 2 Trust****

Macvit No. 2 Trust**

Maddlect No. 2 Trust****

Madoncom No. 2 Trust****

Magavit No. 2 Trust**

Maglect No. 2 Trust**

Mainbed No. 2 Trust****

Maitrics No. 2 Trust**

Makelect No. 2 Trust**

Malacom No 2 Trust****

Malaga Electrics No. 2 Trust

Malagel No 2 Trust****

Malbed No. 2 Trust**

Malfurn No 2 Trust****

Mall Computers No. 2 Trust****

Mallanzo No. 2 Trust****

Mallcom No. 2 Trust****

Mallic No. 2 Trust****

Mallway No. 2 Trust

Malstore No. 2 Trust

Malvis No 2 Trust

Mandalec No. 2 Trust**

Mandbed No. 2 Trust****

Mandcom No. 2 Trust**

Mandlect No. 2 Trust****

Mandurbed No. 2 Trust

Mandurcom No. 2 Trust****

Mandurfurn No. 2 Trust****

Mandurtec No. 2 Trust****

Manrahcom No 2 Trust****

Mantoncom No. 2 Trust****

Maracom No. 2 Trust**

Maribed No 2 Trust****

Marioncom No. 2 Trust

Marionel No. 2 Trust****

Marionfurn No. 2 Trust****

Marlect No. 2 Trust

Marncom No. 2 Trust****

Marnfurn No. 2 Trust****

Marocom No. 2 Trust

Marootec No. 2 Trust**

Marstore No. 2 Trust**

Martin Place Electrics No. 2 Trust**

Maryfloor No. 2 Trust

Maylect No. 2 Trust

Mayorti No. 2 Trust**

Mayotec No. 2 Trust**

Mentone Superstore No. 2 Trust**

MFD Bundall No. 2 Trust****

MFD Burleigh Heads No. 2 Trust****

MFD Maroochydore No. 2 Trust****

MFD Toowoomba No 2 Trust

Micomp No. 2 Trust****

Midbed No 2 Trust****

Midcom No. 2 Trust****

Midfurn No. 2 Trust****

Midlandel No. 2 Trust

Midlander No. 2 Trust**

Midtyme No. 2 Trust**

Millsberg No. 2 Trust**

Moecom No. 2 Trust****

Moorcom No 2 Trust****

Morafel No. 2 Trust****

Morayfield Computers No 2 Trust****

Moraystore No. 2 Trust

Morfurn No. 2 Trust****

Morlcom No. 2 Trust****

Morlect No. 2 Trus****

Morley Computers No 2 Trust****

Morleyel No. 2 Trust****

Mountel No. 2 Trust****

Moybed No. 2 Trust

Moycom No. 2 Trust****

Moyel No. 2 Trust

Moyfurn No. 2 Trust****

Moylect No. 2 Trust****

Mt Gambier Computers No. 2 Trust****

Mt Gambier Electrics No. 2 Trust****

Mt Gambier Furniture No 2 Trust

Mt Gambier Superstore No. 2 Trust**

Mt Gravatt Furniture No. 2 Trust****

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

134

Mt Isa Computers No. 2 Trust****

Mt Isa Homeware No. 2 Trust**

Mt Isa Retailing No. 2 Trust

MTI Computers No. 2 Trust**

Mudgee Electrics No. 2 Trust**

Mudgee Retailing No. 2 Trust**

Munnara No. 2 Trust**

Munnel No. 2 Trust**

Munnolect No 2 Trust****

Muracom No. 2 Trust**

Murray Street Development Trust

Nawcom No. 2 Trust**

Noarlect No. 2 Trust****

Noarlunga Bedding No 2 Trust****

Noarlunga Computers No 2 Trust****

Noarlunga Electrics No 2 Trust****

Noarlunga Furniture No. 2 Trust****

Noarlunga Superstore No. 2 Trust**

Noartec No. 2 Trust**

Nolcom No. 2 Trust****

Nolfurn No. 2 Trust****

Noose Computers No. 2 Trust**

Noosa Furniture No 2 Trust****

Noosel No. 2 Trust****

Noravit No. 2 Trust****

Nordley No. 2 Trust****

Norfurn No. 2 Trust

Norlect No. 2 Trust**

Norstcom No. 2 Trust**

North Ryde Furniture No 2 Trust

North Ryde Homewares No 2 Trust

Norwel No2 Trust****

Nowracom No. 2 Trust**

Noxcom No. 2 Trust****

Noxel No. 2 Trust**

NSW Home Services No. 2 Trust****

OC Superstore No. 2 Trust**

O‟Connor Appliances No. 2 Trust****

O‟Connor Furniture No. 2 Trust****

O‟Connor Superstore No. 2 Trust****

Oconnel No. 2 Trust****

Ollec No. 2 Trust**

Olscom No. 2 Trust**

Orancom No. 2 Trust**

Osbcomm No. 2 Trust

Osbed WA No. 2 Trust****

Osborne Park Computers No. 2 Trust

Osbornel No. 2 Trust****

Oslect No. 2 Trust

Oslek Developments Trust

Osraidi No 2 Trust

Oxel No. 2 Trust**

Oxfurn No. 2 Trust****

Oxlan No. 2 Trust****

Oxlect No 2 Trust****

Oxleybed No. 2 Trust**

Packcom No. 2 Trust**

Parafurn No. 2 Trust****

Paralect No. 2 Trust**

Parkbed No. 2 Trust

Parksel No. 2 Trust**

Parkborne No. 2 Trust****

Parkel No. 2 Trust

Penricom No. 2 Trust****

Pepavit No. 2 Trust**

Pepcom No. 2 Trust****

Peppel No. 2 Trust****

Peppercom No. 2 Trust

Pepperel No 2 Trust****

Pepperlect No 2 Trust

Pepperstore No 2 Trust****

Pepstore No. 2 Trust****

Pettivil No. 2 Trust**

PG Computers No. 2 Trust****

PG Superstore No 2 Trust****

PH Superstore No. 2 Trust

Plainsbed No. 2 Trust**

Plainsfurn No. 2 Trust**

Planlect No. 2 Trust****

Playel No. 2 Trust

Plazacom No. 2 Trust****

Plomara No. 2 Trust**

Podalza No 2 Trust****

Porterel No. 2 Trust

Portfurn No. 2 Trust****

Portkenn No. 2 Trust****

Portlect No. 2 Trust****

Prestbed No. 2 Trust****

Prestoncom No. 2 Trust****

Punable No. 2 Trust**

QCV Benaraby No. 1 Trust**

QVCom No. 2 Trust**

QVDesign No. 2 Trust****

QVElect No. 2 Trust**

Rathstore No. 2 Trust**

Recway No. 2 Trust****

Renovic No 2 Trust

Richfloors No. 2 Trust

Roamcom No. 2 Trust**

Roccom No. 2 Trust**

Rockel No. 2 Trust****

Rockhampton Furniture No. 2 Trust

Rocklect No. 2 Trust****

Rockstore No. 2 Trust****

Rohancom No. 2 Trust**

Rosny Computers No 2 Trust

Rosny Electrics No 2 Trust

Rosny Furniture No 2 Trust

Rothcom No. 2 Trust**

Rothfloors No. 2 Trust

Rothlect No. 2 Trust**

Rothwell Computers No. 2 Trust

Rothwell Electrics No. 2 Trust

Rothwell Flooring No. 2 Trust

Rothwell Furniture No 2 Trust

Rugles No. 2 Trust****

Rugware No. 2 Trust

Sakotec No. 2 Trust**

Sandstore No. 2 Trust**

Savel No. 2 Trust****

Seltcom No 2 Trust****

Sergfurn No 2 Trust

Shinefurn No. 2 Trust

Shortell No. 2 Trust

Showtara No. 2 Trust

Sinestore No. 2 Trust**

Sinetec No. 2 Trust**

Snipap No. 2 Trust**

Sohlect No. 2 Trust**

Sotel No. 2 Trust****

Southel No. 2 Trust**

Southland Superstore No. 2 Trust**

Spencity No 2 Trust****

Storeville No. 2 Trust****

Storfurn No. 2 Trust****

Storland No. 2 Trust****

Storwest No. 2 Trust****

Supershepp No. 2 Trust**

Sydney No. 1 Trust

Symlect No. 2 Trust**

Tarcom No. 2 Trust**

Taretec No. 2 Trust**

Tarshe No. 2 Trust****

Tarzello No. 2 Trust**

Tecalla No. 2 Trust**

Tecaroy No. 2 Trust**

Tecayr No 2 Trust****

Tecberg No. 2 Trust**

Tecdale No. 2 Trust**

Tecgrove No 2 Trust

Tecisa No. 2 Trust**

Teckal No. 2 Trust**

Tecken No. 2 Trust

Tecmont No 2 Trust****

Tecplace No. 2 Trust**

The Calardu Trust

Thomlect No. 2 Trust**

Throntar No. 2 Trust****

Tonfurne No. 2 Trust****

Toocomp QLD No. 2 Trust**

Toofloor No. 2 Trust

Toofurn Qld No 2 Trust****

Toolect No. 2 Trust**

Toowel No. 2 Trust****

Toowoomba Bedding No. 2 Trust****

Torcarsa No 2 Trust

Town Electrics No.2 Trust****

Towncom No. 2 Trust****

Townfurn No. 2 Trust****

Townlect No. 2 Trust**

Towntec No. 2 Trust**

Town Furniture No. 2 Trust**

Townsville Superstore No. 2 Trust**

Tracfurn No. 2 Trust****

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

135

Tralgel No. 2 Trust**

Tralgfurn No. 2 Trust****

Tralgstore No. 2 Trust**

Tweedcom No. 2 Trust**

Ulverstone Homemaker No. 2 Trust**

Valecomp No. 2 Trust

Vallcom No. 2 Trust****

Vallect No. 2 Trust****

Vallel No. 2 Trust****

Valley Superstore No. 2 Trust

Valleybed No. 2 Trust****

Valleyfurn No. 2 Trust

Vallfurn No. 2 Trust****

Vallit No. 2 Trust****

Vallstore No. 2 Trust****

Vallware No. 2 Trust****

Verlect No. 2 Trust

Veycom No. 2 Trust**

Viczat No. 2 Trust**

Villect No. 2 Trust****

Villel No. 2 Trust**

Volect No. 2 Trust

Waccom No. 2 Trust****

Wacomp No. 2 Trust**

Waggacom No. 2 Trust**

Wakel No. 2 Trust**

Walesfloor No. 2 Trust**

Wallect No 2 Trust****

Wallel No. 2 Trust****

Wallfurn No. 2 Trust****

Wangarcom No. 2 Trust**

Wangarel No. 2 Trust**

Warborne No 2 Trust****

Wardfloor No. 2 Trust**

Wardrew No. 2 Trust****

Warfurn No. 2 Trust****

Warian No. 2 Trust****

Warifurn QLD No. 2 Trust****

Warlect No 2 Trust****

Warncom No. 2 Trust**

Warnerstore No. 2 Trust

Warracom No. 2 Trust

Warralect No. 2 Trust**

Warrapp No. 2 Trust****

Warratec No. 2 Trust**

Warrawong Computers No. 2 Trust**

Warrcom No. 2 Trust**

Warrics No 2 Trust

Warstore No. 2 Trust****

Wartec No. 2 Trust

Warwick Superstore No. 2 Trust**

Warwickfurn No. 2 Trust****

Warwicom No. 2 Trust**

Watec No. 2 Trust**

Watlect No. 2 Trust****

Waurncom No. 2 Trust**

Waurnel No. 2 Trust**

Waycom No. 2 Trust****

Wayel No. 2 Trust****

Wayfurn No 2 Trust****

Waylect No. 2 Trust**

Waystore No. 2 Trust**

Westerncom No. 2 Trust****

Westernel No. 2 Trust****

Westernfurn No. 2 Trust****

Westfurn No. 2 Trust****

Westkis No. 2 Trust**

Westlect No. 2 Trust****

Westore No. 2 Trust

Westwond No. 2 Trust**

Whyel No. 2 Trust**

Wickson No. 2 Trust****

Wicomp No. 2 Trust****

Wikstore No. 2 Trust****

Wiley Park Computers No. 2 Trust

Wileycom No. 2 Trust**

Willect No. 2 Trust**

Windsorall No. 2 Trust

Winell No. 2 Trust**

Wolfene No. 2 Trust**

Wonbed No. 2 Trust****

Wonel No. 2 Trust**

Woodel No. 2 Trust**

Woodville Computers No. 2 Trust**

Yalltec No. 2 Trust**

Yoogalu Albury Trust

Yoogalu Campbelltown Trust

Yoogalu Fairfield Trust

Yoogalu Gordon Trust

Yoogalu Gosford Trust*

Yoogalu Lismore Trust

Yoogalu Miranda Trust

Yoogalu Newcastle Trust

Yoogalu Warrawong Trust

Yoogalu Warringah Mall Trust

■ 39. Controlled Entities and Unit Trusts (continued)

■ Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

Notes * All the units in the Unit Trusts are held by Harvey Norman Holdings Limited. ** These trusts were acquired during the year. *** Some of the units in this trust are held by Yoogalu Pty Limited, a wholly owned subsidiary of Harvey Norman Holdings Limited. **** These trusts were vested during the year.

136

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

40. ■ Deed of Cross Guarantee

Certain controlled entities (Closed Group) have entered into a deed of cross guarantee dated 1 June 2004 with Harvey Norman Holdings Limited which provides that all parties to the deed will guarantee to each creditor payment in full of any debt of each company participating in the deed on winding-up of that company. As a result of the Class Order issued by the Australian Securities and Investments Commission certain companies within the consolidated entity are relieved from the requirements to prepare financial statements.  Controlled Entities (Refer Note 39) marked

1 are members of the “Closed Group”.

 Controlled Entities (Refer Note 39) marked 2 are relieved under the Class Order.

The consolidated balance sheet and income statement of the entities that are members of the “Closed Group” are as follows: Consolidated Balance Sheet

CO NS O LI D AT E D

2011 2010 $000 $000

Current Assets Cash and cash equivalents 83,048 84,936 Trade and other receivables 1,152,033 1,081,258 Other financial assets 41,229 18,150 Inventories 142,218 53,917 Intangible assets 322 761 Other assets 14,378 15,078

Total current assets 1,433,228 1,254,100

Non-Current Assets

Trade and other receivables 13,582 24,110 Investments accounted for using equity method 152,580 134,144 Other financial assets 111,310 110,892 Property, plant and equipment 203,275 124,694 Investment properties 1,601,601 1,489,200 Intangible assets 57,831 23,786 Deferred income tax assets 19,804 17,903

Total non-current assets 2,159,983 1,924,729

Total Assets 3,593,211 3,178,829

Current Liabilities Trade and other payables 730,987 585,382 Interest-bearing loans and borrowings 39,802 42,000 Income tax payable (102) 29,724 Provisions

15,838 10,956 Other liabilities 327 1,266

Total current liabilities 786,852 669,328

Non-Current Liabilities Trade and other payables - 23,332 Interest-bearing loans and borrowings 487,352 318,855 Provisions 8,384 7,204 Deferred income tax liabilities 180,655 159,214 Other liabilities 1,420 4,239 Total non-current liabilities 677,811 512,844

Total Liabilities 1,464,663 1,182,172

NET ASSETS 2,128,548 1,996,657

Equity Contributed equity 259,610 259,610 Reserves 9,298 9,217 Retained profits 1,859,640 1,727,830

TOTAL EQUITY 2,128,548 1,996,957

137

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

40. ■ Deed of Cross Guarantee (continued)

Consolidated Income Statement

CONS O L ID AT E D

2011 2010 $000 $000

Profit from continuing operations before income tax expense

350,267

374,150

Income tax expense

(80,356)

(108,602)

Profit after tax from continuing operations 269,911 265,548

Profit for the year 269,911 265,548

Retained earnings at the beginning of the year 1,727,830 1,600,383

Dividends provided for or paid

(138,101)

Retained earnings at the end of the year

1,859,640

1,727,830

41. ■ Parent Entity Financial Information

(a) Summary Financial Information

PARE N T EN T I T Y

2011 2010 $000 $000

Statement of Financial Position

Non-current assets

1,779,868

1,634,871

Total assets

1,779,868

1,634,871

Current liabilities 4,367 34,561 Non-current liabilities 42,482 24,384

Total liabilities

46,849

58,945

Contributed equity 259,610 259,610 Retained profits 1,473,409 1,316,316

Total Equity

1,733,019

1,575,926

Profit for the Year

295,194

297,163

Total Comprehensive Income

295,194

297,163

(b) Contingent Liabilities As at 30 June 2011, the parent entity had guaranteed the performance of a number of controlled entities which have entered into operating leases and facilities with other parties totalling $352.07 million (2010: $453.63 million).

42. ■ Significant Events After Balance Date

DIRECTORS’ DECLARATION

138

In accordance with a resolution of the directors of Harvey Norman Holdings Limited, we state that:

In the opinion of the directors:

(a) the financial statements, notes and the additional disclosures included in the Directors‟ Report designated as audited, of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Company‟s and consolidated entity‟s financial position as at 30 June 2011

and of their performance for the year ended on that date; and (ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and the

Corporations Regulations 2001; (b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note

1; and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable

This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2011.

In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in Note 39 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee. On behalf of the Board. G. HARVEY K.L. PAGE

Chairman Director / Chief Executive Officer Sydney Sydney 29 September 2011 29 September 2011

139

Independent auditor’s report to the members of Harvey Norman Holdings Limited

Report on the financial report

We have audited the accompanying financial report of Harvey Norman Holdings Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1 the directors also state, that the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.

Liability limited by a scheme approved under Professional Standards Legislation

140

Opinion

In our opinion:

a. the financial report of Harvey Norman Holdings Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the remuneration report

We have audited the Remuneration Report included in pages 19 to 30 of the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Harvey Norman Holdings Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.

Ernst & Young

Christopher George Partner Sydney 29 September 2011

SHAREHOLDER INFORMATION

141

■ Distribution of Shareholdings as at 26 September 2011

Size of Holding

Ordinary Shareholders

1 – 1,000 7,238 1,001 – 5,000 9,424 5,001 – 10,000 2,375 10,001 – 100,000 1,844 100,001 and over 159

21,040

Number of Shareholders With less than a marketable parcel

1,745

■ Voting Rights

All ordinary shares issued by Harvey Norman Holdings Limited carry one vote per share.

■ Twenty Largest Shareholders as at 26 September 2011

Number of Ordinary Shares

Shareholder

Percentage of Ordinary Shares

311,959,532 Mr Gerald Harvey & G Harvey Nominees Pty Limited 29.37% 175,249,660 Dimbulu Pty Limited 16.50% 105,466,253 National Nominees Limited 9.93%

91,046,800 JP Morgan Nominees Australia Limited 8.57% 72,991,709 HSBC Custody Nominees (Australia) Limited 6.87% 49,990,575 Ms Margaret Lynette Harvey 4.71% 27,822,903 Citicorp Nominees Pty Limited 2.62% 23,331,295 RBC Dexia Investor Services Australia Nominees Pty Limited 2.20% 18,990,418 Cogent Nominees Pty Ltd 1.79% 17,118,200 Enbeear Pty Limited 1.61% 16,995,133 Ms Kay Lesley Page 1.60% 9,762,603 Queensland Investment Corporation 0.92% 4,030,000 Argo Investments Limited 0.38% 3,242,039 Bond Street Custodians Limited 0.31% 2,845,553 Mr Michael Harvey 0.27% 2,774,549 ABN AMRO Clearing Sydney Nominees Pty Limited 0.26% 2,198,340 UBS Nominees Pty Ltd 0.21% 2,045,626 CS Fourth Nominees Pty Ltd 0.19% 2,017,506 AMP Life Limited 0.19% 1,805,078 Omnilab Media Investments Pty Limited 0.17%

941,683,772

88.64%

Total held by twenty largest shareholders as a percentage of total ordinary shares is 88.64% as at 26 September 2011.

142

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

AUSTRALIAN CAPITAL TERRITORY FYSHWICK Cnr Barrier & Ipswich Streets Fyshwick 2609 Phone: (02) 6280 4140

WODEN Shop 5 Mezzanine Level Woden Plaza Woden 2606 Phone: (02) 6282 2511

NEW SOUTH WALES (SYDNEY SUBURBAN) ALEXANDRIA 494-504 Gardeners Road Alexandria 2015 Phone: (02) 9693 0666

AUBURN 250 Parramatta Road Auburn 2144 Phone: (02) 9202 4888

AUBURN (Renovations & Seconds) 233-239 Parramatta Road Auburn 2144 Phone: (02) 9202 4888

BALGOWLAH 176-190 Condamine Street Balgowlah 2093 Phone: (02) 9948 4511

BALGOWLAH (HOMESTARTERS) 176-190 Condamine Street Balgowlah 2093 Phone: (02) 9948 4511

BLACKTOWN Unit C5 Cnr Blacktown & Bungarribee Roads Blacktown 2148 Phone: (02) 9831 2155

BONDI Shop 5016, Westfield Shopping Centre 500 Oxford Street Bondi Junction 2022 Phone: (02) 8305 8800

BROADWAY Shop 119 Broadway Bay Street Broadway 2007 Phone: (02) 9211 3933

CAMPBELLTOWN 22A Blaxland Road Campbelltown 2560 Phone: (02) 4621 5200

CARINGBAH 41 – 49 Willarong Road Caringbah 2229 Phone: (02) 9542 7088

CASTLE HILL 18 Victoria Avenue Castle Hill 2154 Phone: (02) 9840 8800

CHATSWOOD Level 2 Chatswood Chase Cnr Archer & Victoria Ave Chatswood 2067 Phone: (02) 9419 1100

GORDON 1st Floor 802-808 Pacific Highway Gordon 2072 Phone: (02) 9498 1499

LIVERPOOL Liverpool Mega Centre 2/18 Orangegrove Road Liverpool 2170 Phone: (02) 9600 3333

MARTIN PLACE 19-29 Martin Place MLC Centre Sydney CBD 2000 Phone: (02) 8236 6600

McGRATHS HILL Unit 6A 264-272 Windsor Road 2756 Phone: (02) 4577 9577

MOORE PARK Level 2, North SupaCenta Cnr South Dowling Street & Dacey Avenue Moore Park 2021 Phone: (02) 9662 9888

MT DRUITT Westfield Building 2 Carlisle Avenue Mt Druitt 2770 Phone: (02) 8887 7300

NORWEST Unit 20 Homemaker Collection 4 - 6 Celebration Drive Bella Vista 2153 Phone: (02) 8884 8800

PENRITH Cnr Mulgoa Rd & Wolseley St Penrith 2750 Phone: (02) 4737 5111

WILEY PARK 1018 Canterbury Road Wiley Park 2195 Phone: (02) 9740 6055

WILEY PARK (Hardware) 1155 Canterbury Road Punchbowl 2196 Phone: (02) 9740 1153

NEW SOUTH WALES (COUNTRY) ALBURY 430 Wilson Street Albury 2640 Phone: (02) 6041 1944

ARMIDALE Shop 8, Girraween Shopping Centre Queen Elizabeth Drive Armidale 2350 Phone: (02) 6771 3788

BATEMAN BAY Shop 5 Bay Central 1 Clyde Street Bateman‟s Bay 2536 Phone: (02) 4472 5994

BATHURST Sydney Road Kelso 2795 Phone: (02) 6332 3399

BENNETTS GREEN (HOMESTARTERS) 7 Abdon Close Bennetts Green 2290 Phone: (02) 4948 4555

BROADMEADOW (HOMESTARTERS) 35-43 Lambton Road Broadmeadow 2292 Phone: (02) 4962 1770

COBAR 27 Marshall Street Cobar 2835 Phone: (02) 6836 3222

COFFS HARBOUR 252 Coffs Harbour Highway Coffs Harbour 2450 Phone: (02) 6651 9011

DENILIQUIN Cnr. Hardinge & Harfleur Streets Deniliquin 2710 Phone: (03) 5881 5499 GOSFORD (ERINA) Harvey Norman Shopping Complex Karalta Lane Erina 2250 Phone: (02) 4365 9500

DUBBO 223 Cobra Street Dubbo 2830 Phone: (02) 6826 8800 GOULBURN 180-186 Auburn Street Goulburn 2580 Phone: (02) 4824 3000

FORSTER 29 Breese Parade Forster 2428 Phone: (02) 6554 5700 GRAFTON 125 Prince Street Grafton 2460 Phone: (02) 6643 3266

FRISCO HOME FURNISHERS (NEWCASTLE) 391 Hillsborough Road Warners Bay 2282 Phone: (02) 4954 3344 GRIFFITH Cnr Jondaryn & Willandra Avenues Griffith 2680 Phone: (02) 6961 0300

143

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

NEW SOUTH WALES (COUNTRY) (CONTINUED) INVERELL 50 Evans Streets Inverell 2360 Phone: (02) 6721 0811 MACLEAN 211 River Street Maclean 2463 Phone: (02) 6645 2611 MUDGEE 33 Castlereagh Highway Mudgee 2850 Phone: (02) 6372 6514 ORANGE Unit 1, Orange Grove H/maker Centre Mitchell Highway Orange 2800 Phone: (02) 6393 2222 TAMWORTH 43 The Ringers Road Tamworth 2340 Phone: (02) 6765 1100 WARRAWONG Cnr King Street & Shellharbour Road Warrawong 2502 Phone: (02) 4275 2722

LAKEHAVEN 59-83 Pacific Highway Lakehaven 2263 Phone: (02) 4394 6000 MAITLAND 557 High Street Maitland 2320 Phone: (02) 4934 2423 MUSWELLBROOK 19 Rutherford Road Muswellbrook 2333 Phone: (02) 6541 6800 PARKES Shop 1, Saleyards Road Parkes 2870 Phone: (02) 6862 2800 TAREE 9 Mill Close Taree 2430 Phone: (02) 6551 3699 WEST WYALONG 114 Main Street West Wyalong 2671 Phone: (02) 6972 2077

LISMORE 17 Zadoc Street Lismore 2480 Phone: (02) 6621 8888 MOREE 103 Balo Street Moree 2400 Phone: (02) 6752 7531 NEWCASTLE (BENNETTS GREEN) 7 Abdon Close Bennetts Green 2290 Phone: (02) 4948 4555 PORT MACQUARIE 140 Lake Road Port Macquarie 2444 Phone: (02) 6581 0088 TEMORA 102 Hoskins Street Temora 2666 Phone: (02) 6977 1777 YOUNG 326 Boorowa Street Young 2594 Phone: (02) 6382 5744

LITHGOW 175 Mian Street Lithgow 2790 Phone: (02) 6351 2321 MOSS VALE 137-157 Lackey Road Moss Vale 2577 Phone: (02) 4868 1039 NOWRA Cnr Central Avenue & Princess Highway Nowra 2541 Phone: (02) 4421 1300 SALAMANDER BAY 270 Sandy Point Road Salamander Bay 2317 Phone: (02) 4981 1292 WAGGA Homebase Centre 7-23 Hammond Avenue Wagga 2650 Phone: (02) 6933 7000

NORTHERN TERRITORY ALICE SPRINGS 1 Colson Street Alice Springs 0870 Phone: (08) 8950 4000

DARWIN 644 Stuart Highway Berrimah 0828 Phone: (08) 8922 4111

QUEENSLAND (BRISBANE SUBURBAN) ASPLEY 1411-1419 Gympie Road Aspley 4034 Phone: (07) 3834 1100 CAPALABA Shop 32-33 Capalaba Centre 38-62 Moreton Bay Road Capalaba 4157 Phone: (07) 3362 6200

BRISBANE – BROADWAY ON THE MALL Shop SF01 170 Queen Street Brisbane 4000 Phone: (07) 3013 2800 CARINDALE Homemaker Centre Cnr Carindale Street and Old Cleveland Road Carindale 4152 Phone: (07) 3398 0600

BROWNS PLAINS Unit 3 28-48 Browns Plains Road Browns Plains 4118 Phone: (07) 3380 0600 CLEVELAND Shop 1A, 42 Shore Street West Cleveland 4163 Phone: (07) 3488 8900

BUNDALL 29-45 Ashmore Road Bundall 4217 Phone: (07) 5584 3111 EVERTON PARK 429 Southpine Road Everton Park 4053 Phone: (07) 3550 4444

FORTITUDE VALLEY INDOOROOPILLY LOGANHOLME MAROOCHYDORE Brisbane City Gate Shop 2044 3890-3892 Pacific H/way (Mega Flooring) Shop 1, 1058 Ann Street Westfield Shoppingtown Loganholme 4558 Unit 6 Fortitude Valley 4006 318 Moggill Road Phone: (07) 3440 9200 Sunshine Homemaker Centre Phone: (07) 3620 6600 Indooroopilly 4068 Maroochydore 4558 Phone: (07) 3327 1300 Phone: (07) 5479 3711

MORAYFIELD Lot 8 Cnr Morayfield & Station Roads Morayfield 4506 Phone: (07) 5428 8000

MT GRAVATT 2049 Logan Road Upper Mt Gravatt 4122 Phone: (07) 3347 7000

OXLEY 2098 Ipswich Road Oxley 4075 Phone: (07) 3332 1100

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

144

QUEENSLAND (REGIONAL) AYR 101 Queens Street Ayr 4807 Phone: (07) 4783 3188

BUNDABERG 125 Takalvan Street Bundaberg 4670 Phone: (07) 4151 1570

CAIRNS 101 Spence Street Portsmith 4870 Phone: (07) 4051 8499

CANNONVALE Shop B2 Centro Whitsunday Ctr 8 Galbraith Drive Cannonvale 4802 Phone: (07) 4969 8800

DALBY 58 Patrick Street Dalby 4405 Phone: (07) 4672 4444

GLADSTONE Shop 1B Centro Centre 220 Dawson Highway Gladstone 4680 Phone: (07) 4971 5000

GYMPIE 35-37 Edwin Campion Drive Monkland 4570 Phone: (07) 5480 1500

HERVEY BAY 134 - 136 Boat Harbour Drive Hervey Bay 4655 Phone: (07) 4124 3870

INNISFAIL 52/57 Ernest Street Innisfail 4860 Phone: (07) 4061 1433 MACKAY Cnr Bruce Highway & Heath‟s Road Glenella 4740 Phone: (07) 4942 2688

IPSWICH Ipswich City Square 606-616, 163 Brisbane St Ipswich 4305 Phone: (07) 3280 7400 MARYBOROUGH 72-74 Bazaar Street Maryborough 4650 Phone: (07) 4123 1699

KAWANA WATERS (SUNSHINE COAST) Lot 28 Nicklin Way Minyama Gardens Kawana Waters 4575 Phone: (07) 5457 6800 MORAYFIELD Lot 8 Cnr Morayfield & Station Roads Morayfield 4506 Phone: (07) 5428 8000

KINGAROY 18-20 Rogers Drive Kingaroy 4610 Phone: (07) 4160 0400 MT ISA 33-35 Miles Street Mt Isa 4825 Phone: (07) 4743 5220

NOOSA 7-9 Gibson Road Noosaville 4566 Phone: (07) 5473 1911

ROCKHAMPTON 407 Yaamba Road North Rockhampton 4701 Phone: (07) 4926 2755

ROTHWELL Unit 1 439-443 Anzac Avenue Rothwell 4022 Phone: (07) 3897 8800

TOOWOOMBA 910-932 Ruthven Street Toowoomba 4350 Phone: (07) 4636 7300

TOOWOOMBA (HOMESTARTERS) 910-932 Ruthven Street Toowoomba 4350 Phone: (07) 4636 7300

TOWNSVILLE 103-142 Duckworth Street Garbutt 4814 Phone: (07) 4725 5561

WARWICK Cnr Victoria St & Palmerin Sts Warwick 4370 Phone: (07) 4666 9000

TASMANIA BURNIE 64 Mount Street Burnie 7320 Phone: (03) 6431 2134

CAMBRIDGE PARK Unit B11 66-68 Kennedy Drive Cambridge Park 7170 Phone: (03) 6248 3300

DEVONPORT Cnr Best Street & Fenton Way Devonport 7310 Phone: (03) 6424 5155

HOBART CITY 171 Murray Street Hobart 7000 Phone: (03) 6230 1100

LAUNCESTON Cnr William and Charles Streets Launceston 7250 Phone: (03) 6337 9411

MOONAH 191 -197 Main Road Moonah 7009 Phone: (03) 6277 7777

SOUTH AUSTRALIA (ADELAIDE SUBURBAN) CITY CROSS Shop L1 31-33 Rundle Mall Adelaide 5000 Phone: (08) 8168 8800 MUNNO PARRA Lot 2005, Main North Road Smithfield 5114 Phone: (08) 8254 0700

GEPPS CROSS Unit 1, 760 Main North Road Gepps Cross 5094 Phone: (08) 8342 8888 NOARLUNGA Seaman Drive Noarlunga 5168 Phone: (08) 8329 5400

MARION 822-826 Marion Road Marion 5043 Phone: (08) 8375 7777 WOODVILLE 853-867 Port Road Woodville 5011 Phone: (08) 8406 0100

MILE END COMMERCIAL 20 William Street Mile End 5031 Phone: (08) 8150 8000

SOUTH AUSTRALIA (COUNTRY) MT BARKER 6 Dutton Road Adelaide Hills Homemaker Centre Mt Barker 5251 Phone: (08) 8393 0800

MT GAMBIER Jubilee Highway East Mt Gambier 5290 Phone: (08) 8724 6800

WHYALLA Cnr Jamieson and Kelly Streets Whyalla 5600 Phone: (08) 8645 6100

145

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

VICTORIA (MELBOURNE SUBURBAN) BROADMEADOWS 1185-1197 Pascoe Vale Rd Broadmeadows 3047 Phone: (03) 9621 2800

CHADSTONE 699 Warrigal Road Chadstone 3148 Phone: (03) 9567 6666

CHIRNSIDE PARK 286 Maroondah Highway Mooroolbark 3138 Phone: (03) 9722 4400

CRANBOURNE Cnr South Gippsland Highway & Thompson Road Cranbourne 3977 Phone: (03) 5991 0000

DANDENONG 141-165 Frankston- Dandenong Road Dandenong 3175 Phone: (03) 9706 9992 HOPPERS CROSSING Unit 1, 201-219 Old Geelong Road Hoppers Crossing 3029 Phone: (03) 8734 0000 MENTONE 25-29 Nepean Highway Mentone 3194 Phone: (03) 8551 0000 SOUTHLAND (Cheltenham) Shop M2 Westfield Southlands Cnr Nepean & Bay Road Cheltenham 3192 Phone: (03) 9585 6500

FOUNTAIN GATE Fountain Gate Shopping Centre, Overland Drive Narre Warren 3805 Phone: (03) 8796 6777 KNOX Shop 3105, Knox Shopping Centre 425 Burwood Highway Wantirna South 3152 Phone: (03) 9881 3700 MOORABBIN 420 South Road Moorabbin 3189 Phone: (03) 9555 1222 SUNSHINE 484 Ballarat Road Sunshine 3020 Phone: (03) 9334 6000

FRANKSTON 87 Cranbourne Road Frankston 3199 Phone: (03) 8796 0600 MARIBYRNONG (Highpoint) 169 Rosamond Road Maribyrnong 3032 Phone: (03) 9318 2700 NUNAWADING 400 Whitehorse Road Nunawading 3131 Phone: (03) 9872 6366 THOMASTOWN 308-320 Settlement Road Thomastown 3074 Phone: (03) 9463 4777

GREENSBOROUGH (Electrical & Computers only) Shop 227, 25 Main Street Greensborough 3088 Phone: (03) 9433 5555 MELBOURNE QV Cnr Swanston & Lonsdale Streets, Level 4 9 - 13 Upper Terrace QV Melbourne 3000 Phone: (03) 8664 4300 PRESTON 121 Bell Street Preston 3072 Phone: (03) 9269 3300 WATERGARDENS 450 Melton Highway Taylors Lakes 3038 Phone: (03) 9449 6300

VICTORIA (COUNTRY) BAIRNSDALE 294 Main Road Bairnsdale 3875 Phone: (03) 5153 9700

BALLARAT Cnr Howitt and Gillies Street Wendouree 3355 Phone: (03) 5332 5100

BENDIGO Cnr High & Ferness Streets Kangaroo Flat 3555 Phone: (03) 5447 2333

GEELONG 420 Princes Highway Corio 3214 Phone: (03) 5274 1077

HAMILTON Shop 10 Hamilton Central Plaza 148 Gray Street Hamilton 3300 Phone: (03) 5551 3500

HORSHAM 148 Firebrace Street Horsham 3400 Phone: (03) 5381 5000

MILDURA Cnr Fifteenth Street & Etiwanda Ave Mildura 3500 Phone: (03) 5051 2200

MOE 19 Moore Street Moe 3825 Phone: (03) 5127 9500

MORWELL 232 Commercial Road Morwell 3840 Phone: (03) 5120 0200

SALE 363-373 Raymond Street Sale 3850 Phone: (03) 5144 3677

SHEPPARTON 7950 Goulburn Valley Highway Shepparton 3630 Phone: (03) 5823 2530

SWAN HILL 68 Nyah Road Swan Hill 3585 Phone: (03) 5032 2901

TRARALGON Cnr Princes Highway & Liddiard Road Traralgon 3844 Phone: (03) 5174 8177 WARRNAMBOOL 84 Raglan Parade Warrnambool 3280 Phone: (03) 5564 7700

VIC / TAS COMMERCIAL 951 Nepean Highway Bentleigh 3204 Phone: (03) 8530 6300 WAURN PONDS 33 Princes Highway Waurn Ponds 3216 Phone: (03) 5240 6200

WANGARATTA 8-12 Murphy Street Wangaratta 3677 Phone: (03) 5721 6377 WONTHAGGI 37 McKenzie Street Wonthaggi 3995 Phone: (03) 5672 1490

WARRAGUL 33 Victoria Street Warragul 3820 Phone: (03) 5623 9000

WESTERN AUSTRALIA (PERTH SUBURBAN) ARMADALE 10 Prospect Road Armadale 6112 Phone: (08) 9498 4400

BELMONT Shop 80 Belmont Forum Abernethy Road Belmont 6104 Phone: (08) 9479 4377

CANNINGTON 1363 Albany Highway Cannington 6107 Phone: (08) 9311 1100

CITY WEST 25 Sutherland Street West Perth 6005 Phone: (08) 9215 8600

JOONDALUP 36 Clarke Crescent Joondalup 6027 Phone: (08) 9301 3311

MALAGA 27 Kent Way Malaga 6090 Phone: (08) 9270 6300

MANDURAH 9 Gordon Road Cnr Mandurah Terrace Mandurah 6210 Phone: (08) 9582 5800

MIDLAND Cnr Clayton and Lloyd Streets Midland 6056 Phone: (08) 9374 8600

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

146

WESTERN AUSTRALIA (PERTH SUBURBAN) (CONTINUED) O‟CONNOR 133 Garling Street (Cnr Stock Road) O‟Connor 6163 Phone: (08) 9337 0888 WARWICK Shop 4, Warwick Grove S/Centre Beach Road Warwick 6024 Phone: (08) 9243 2300

OSBORNE PARK 469-475 Scarborough Beach Road Osborne Park 6017 Phone: (08) 9441 1100

PEPPERMINT GROVE Shop 1A The Grove Shopping Centre 460 Stirling Highway Peppermint Grove 6011 Phone: (08) 9285 5700

PORT KENNEDY 400-402 Saltaire Way Port Kennedy 6168 Phone: (08) 9524 0111

WESTERN AUSTRALIA (COUNTRY) ALBANY 136 Lockyer Avenue Albany 6330 Phone: (08) 9841 1628 GERALDTON (Computers) 16 Anzac Terrace Geraldton 6530 Phone: (08) 9964 0111

BUNBURY Cnr Sandridge and Denning Road East Bunbury 6230 Phone: (08) 9721 4811 KALGOORLIE Southland Shopping Centre Oswald Street Kalgoorlie 6430 Phone: (08) 9021 1400

BUSSELTON 24-26 Bussell Highway Busselton 6280 Phone: (08) 9781 0700 KARRATHA Unit 5 Lot 3818 Balmoral Road Karratha 6174 Phone: (08) 9144 1589

GERALDTON (Furniture & Bedding) 38 Chapman Road Geraldton 6530 Phone: (08) 9964 0111 PORT HEDLAND Boulevarde Shopping Centre Anderson Street Port Hedland 6721 Phone: (08) 9173 8000

DOMAYNE ALEXANDRIA 84 O‟Riordan Street Alexandria 2015 Phone: (02) 8339 7000 CARINGBAH 212 Taren Point Road Caringbah 2229 Phone: (02) 8536 5200 FYSHWICK 80 Collie Street Fyshwick 2604 Phone: (02) 6126 2500 MELBOURNE QV Cnr Swanston & Lonsdale Streets Level 4 9-13 Upper Terrace QV Melbourne 3000 Phone: (03) 8664 4300

AUBURN 103-123 Parramatta Road Auburn 2144 Phone: (02) 9648 5411 CASTLE HILL 16 Victoria Avenue Castle Hill 2155 Phone: (02) 9846 8800 GOSFORD 400 Manns Road West Gosford 2250 Phone: (02) 4322 5555 NORTH RYDE 31-35 Epping Road North Ryde 2113 Phone: (02) 9888 8888

BELROSE GO1 4-6 Niangala Close Belrose Phone: (02) 9479 8800 CITY WEST 25 Sutherland Street City West 6004 Phone: (08) 9215 8600 KOTARA 18 Bradford Place Kotara 2289 Phone: (02) 4941 3900 PENRITH 1st Floor Cnr Wolseley Street and Mulgoa Road Penrith 2750 Phone: (02) 4737 5000

BUNDALL 29-45 Ashmore Road Bundall 4217 Phone: (07) 5553 2100 FORTITUDE VALLEY Brisbane City Gate Shop 1, 1058 Ann Street Fortitude Valley 4006 Phone: (07) 3620 6600 LIVERPOOL Liverpool Mega Centre 2/18 Orangegrove Road Liverpool 2170 Phone: (02) 8778 2222 WARRAWONG 119-121 King Street Warrawong 2502 Phone: (02) 4255 1800

JOYCE MAYNE ALBURY Unit 6 94 Borella Road Albury 2640 Phone: (02) 6043 0800

ALEXANDRIA Homestyle Centre 49-59 O‟Riordan Street Alexandria 2015 Phone: (02) 8339 2042

BENNETTS GREEN Unit 1 7 Groves Road Bennetts Green 2290 Phone: (02) 4014 1800

BUNDABERG 7-9 / 1-9 Enterprise Street Bundaberg 4670 Phone: (07) 4151 6500

CHANCELLOR PARK Showroom 2 Chancellor Park Blvd Sippy Downs 4556 Phone: (07) 5477 2200

MAITLAND Unit 6 366 New England Highway Rutherford 2320 Phone: (02) 4932 2300

MAROOCHYDOORE 64-70 Aerodrome Road Maroochydoore 4558 Phone: (07) 5409 0200

NOWRA Cnr Central Ave & Princes Highway Nowra 2541 Phone: (02) 4448 0000

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DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

JOYCE MAYNE (CONTINUED) ROCKHAMPTON 407 Yaamba Road North Rockhampton 4701 Phone: (07) 4926 2241 WAGGA WAGGA 7 Riverina Plaza 15-27 Berry Street Wagga Wagga 2650 Phone: (02) 6921 4994

TOOWOOMBA 675 rithven Street Toowoomba 4350 Phone: (07) 4632 9444 WARRAWONG 113 King Street Warrawong 2502 Phone: (02) 4276 0000

TOUKLEY 223 Main Road Toukley 2263 Phone: (02) 4396 4133

TOWNSVILLE 238-262 Woolcock St Garbuck 4814 Phone: (07) 4729 5400

NEW ZEALAND ASHBURTON Cnr West & Moore Streets Ashburton Phone: 0011 643 307 5000

BLENHEIM 19-21 Maxwell Road Blenheim Phone: 0011 643 520 9700

BOTANY 500 Ti Rakau Drive Botany Downs Phone: 0011 649 272 5700

CHRISTCHURCH Cnr Moorhouse Ave & Colombo Street Christchurch Phone: 0011 643 353 2440

DUNEDIN Cnr MacLaggan & Rattay Streets Dunedin Phone: 0011 643 471 6510

GISBORNE 51 Customshouse Street Gisborne North Island 4011 Phone: 0011 646 869 2900

HAMILTON 10-16 The Boulevard Te Rapa Hamilton Phone: 0011 647 850 7300

HASTINGS 303 St Aubyns Street East Hastings Phone: 0011 646 873 7150

HENDERSON 10-12 Ratanui Street Henderson Phone: 0011 649 835 5000

INVERCARGILL 245 Tay Invercargill Phone: 0011 643 219 9100

LOWER HUT 28 Rutherford Street Lower Hutt Phone: 0011 644 894 8200

MANUKAU Manukau SupaCenta Ronwood Avenue Manukau City Auckland Phone: 0011 649 262 7050

MT MAUNGANUI 2-10 Owens Plae Mt Maunganui Phone: 0011 647 572 7200 NORTHWOOD Unit 1 Radcliffe Road Northwood Christchurch Phone: 0011 646 375 98002 PUKEKOHE Pukekohe Mega Centre 182-192 Manukau Road Pukekohe Phone: 0011 649 237 3500 WANGANUI 287 Victoria Street Wangtanui Phone: 0011 646 349 6000

MT WELLINGTON 20-54 Mt Wellington Highway Mt Wellington Auckland Phone: 0011 649 570 3440 PALMERSTON NORTH 361-371 Main Steet West Palmerston North Phone: 0011 646 350 0400 ROTORUA 35 Victoria Street Rotorua Phone: 0011 647 343 9800 WELLINGTON 77-87 Tory Street Wellington Phone: 0011 644 381 4250

NELSON 69 Vincent Street Nelson Phone: 0011 643 539 5000 PARAPARAUMU Coastlands S/Centre State Highway 1 Paraparaumu Phone: 0011 644 296 3100 TIMARU 226 Evans Street Timaru Phone: 0011 643 687 7000 WHANGAREI 5 Gumdigger Place Whangarei Phone: 0011 649 470 0300

NEW PLYMOUTH Cnr Smart & Devon Roads New Plymouth Phone: 0011 646 759 2900 PORIRUA 19 Parumoana Street Porirua Wellington Phone: 0011 644 237 2600 WAIRAU PARK 10 Croftfield Lane Wairau Park North Glenfield Phone: 0011 649 441 9750 WHAKATANE The Hub State Highway 30 Whakatane Phone: 0011 649 306 0600

NORMAN ROSS BOTANY DOWNS Unit F 451 Ti Rakau Drive Botany Phone: 0011 649 253 9200

PALMERSTON NORTH Unit C 210-248 Rangitikei Street Palmerston North Phone: 0011 646 953 3500

TOWER JUNCTION Clarence Building 66 Clarence Street Tower Junction Christchurch Phone: 0011 643 968 3600

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DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

IRELAND

BLANCHARDSTOWN Unit 421 Blanchardstown Retail Park Blanchardstown Dublin 15 Phone: 0011 353 1 824 7400

CARRICKMINES Unit 230 The Park Carrickmines Dublin 18 Phone: 0011 353 1 824 7400

CASTLEBAR Unit D,E & F Castlebar Retail Park Breaffy Road Castlebar Phone: 0011 353 94 906 3900

CORK Kinsale Road Ballycurreeh Cork, Dublin Phone: 0011 353 21 425 0900

DRUGHEDA Units 8-11 Drogheda Retail Park Donore Road Drogheda Phone: 0011 353 4 1987 8200 MULLINGAR Unit O Lakepoint Retail Park Mullingar Co Westmeath Phone: 0011 353 44 934 6800 TRALEE Unit 8A Manor West Retail Park Tralee, Co Kerry Phone: 0011 353 66 716 4900

DUNDALK Units 2-7 Dundalk Retail Park Inner Relief Road Dundalk, Co Louth Phone: 0011 353 42 939 6600 NAAS Unit GHIJK New Holl Retail Park Naas Ireland Phone: 0011 353 04 590 7700 WATERFORD Units 5-8 Butlerstown Retail Park Butlerstown Roundabout Outer Ring Road Co Waterford Phone: 0011 353 5131 9900

LIMERICK Units 5, 6 & 7 City East Retail Park Ballysimon Road Limerick Dublin Phone: 0011 353 61 422 800 RATHFARNHAM Nutgrove Retail Park Nutgrove Avenue Rathfarnham Dublin 18 Phone: 0011 353 1 291 0100

LITTLE ISLAND Units 9-11 Eastgate Retail Park Little Island Cork Phone: 0011 353 21 500 1500 SWORDS Units 5, 6 & 7 Airside Retail Park Swords Road Swords, Co Dublin Phone: 0011 353 1 890 9900

NORTHERN IRELAND HOLYWOOD Units A-D Holywood Exchange Airport Road Belfast Phone: 0011 44 28903 95800

NEWTOWNABBEY Units 1&2 Valley Retail Park Church Road Newtownabbey Phone: 0011 44 28903 60800

SLOVENIA CELJE Kidričeva ulica 26A 3000 Celje Phone: 0011 386 3425 0050

KOPER Ankaranska c3C Koper Phone: 0011 386 5610 0102

LJUBLJANA Letališka 3D 1000 Ljubljana Phone: 0011 386 1585 5000

NOVO MESTO Ljubljanska Cesta 95 8000 Novo Mesto Phone: 0011 386 7309 9920

SINGAPORE HARVEY NORMAN BUKIT PANJANG 1 Jelebu Road Singapore Phone: 0011 65 6767 1500

HARVEY NORMAN CENTREPOINT 176 Orchard Road #03-08 Centrepoint Singapore 238843 Phone: 0011 65 6732 8686

HARVEY NORMAN FUNAN CENTRE 109 North Bridge Road #02-02/08 Funan Centre Singapore 170097 Phone: 0011 65 6334 5432

HARVEY NORMAN HOUGANG MALL 90 Hougang Avenue 10 #02-13 NTUC Hougang Mall Singapore 538766 Phone: 0011 65 6488 2305

HARVEY NORMAN JURONG POINT 1 Jurong West Central 2 #03-37 Jurong Point Shopping Centre Singapore 648886 Phone: 0011 65 6795 2135

HARVEY NORMAN MILLENIA WALK No. 9 Raffles Boulevard #02-27 Millenia Walk Singapore 039596 Phone: 0011 65 6311 9988

HARVEY NORMAN NORTHPOINT 930 Yishun Avenue 2 #B02-05/09 Northpoint Shopping Centre Singapore 769098 Phone: 0011 65 6757 7695

HARVEY NORMAN PARKWAY 80 Marine Parade Road #02-34/36 Parkway Parade Singapore 449269 Phone: 0011 65 6346 4705

HARVEY NORMAN RAFFLES CITY 252 North Bridge Road #03-22 Raffles City Shopping Centre Singapore 179103 Phone: 0011 65 6339 6777

HARVEY NORMAN SUNTEC CITY 3 Temasek Boulevard #02-001 Suntec City Mall Singapore 038983 Phone: 0011 65 6332 3463

HARVEY NORMAN SQUARE TWO Square 2, B1 – 06t o 75 10 Sinaran Drive Singapore Phone: 0011 65 6397 6190

HARVEY NORMAN TAMPINES MART No. 9 Tampines Mart #02-01 Tampines Street 32 Singapore 529286 Phone: 0011 65 6789 3818

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES (CONTINUED)

149

SINGAPORE (CONTINUED) HARVEY NORMAN THE CENTRAL 6 Eu Tong Sen Street Singapore Phone: 0011 65 6327 5581

HARVEY NORMAN WESTMALL No. 1 Bt Batok Central Link #03-06/09 West Mall Singapore 658713 Phone: 0011 65 6794 2812

MALAYSIA HARVEY NORMAN BUKIT TINGGI Lot F42 1

st Floor

AEON Bukit Tinggi S/Centre No. 1 Persiaran Batu Nilam 1/KS 6 Bandar Bukit Tinggi 2 41200 Klang, Selangor D.E. Malaysia Phone: 0011 963 3326 2630 HARVEY NORMAN QUEENSBAY Lot 2F-86 South Zone Queensbay Mall No 100 Persiaran Bayan Indah 11900 Bayan Lepas Penang Malaysia Phone: 0011 964 630 8210

HARVEY NORMAN IKANO POWER CENTRE Unit F3 1

st Floor Ikano Ctr

No 2 Jalan PJU 7/2 Mutiara Damansara 47800 Petailing Jaya Salangor Darul Ehsan Kuala Lumpur Phone: 0011 963 7718 5200 HARVEY NORMAN SUNWAY PYRAMID LG2.140 Lower Grount Two Sunway Pyramid S/Centre No. 3 Jalan PJS 11/15 Bandar Darul Ehsan Malaysia Phone: 0011 963 5622 1300

HARVEY NORMAN MID VALLEY Lot AT-1 Lower Ground Floor Mid Valley Megamall Mid Valley City Lingkaran Syed Putra 59100 Kuala Lumpur Phone: 0011 963 2282 2860

HARVEY NORMAN PAVILION Lot 5.24.04 Level 5 Pavilion Kuala Lumpur No. 168 Jalan Bukit Bintang 55100 Kuala Lumpur Phone: 0011 963 2142 3735

CLIVE PEETERS ASPLEY Aspley Hypermart Gympie Road Aspley 4034 Phone: (07) 3630 9000

BENDIGO Rocklea Homemaker Centre 239 High Street Kangaroo Flat 3555 Phone: (03) 5447 5200

BRAYBROOK 227 Ballarat Road Braybrook 3019 Phone: (03) 9304 6200

BURLEIGH WATERS 1 Santa Maria Crt Burleigh Waters 4220 Phone: (07) 5586 2000

COBURG Shop 8 64-74 Gaffney Street Coburg 3058 Phone: (03) 9240 2500

DANDENONG Cnr Dandenong & Zenith Roads Dandenong 3175 Phone: (03) 9794 4100

LOGANHOLME Hyperdome Home Centre Pacific Highway Loganholme 4129 Phone: (07) 3451 5000

MACGREGOR 555 Kessels Road Macgregor 4109 Phone: (07) 3849 9500

MACKAY 2-8 Trade Crt Mt Pleasant Aspley 4109 Phone: (07) 4942 9744

MALVERN 1287 Malvern Road Malvern 3144 Phone: (03) 9832 3300

MAROOCHYDORE Shop 5 Sunshine Homemaker Ctr 100 Maroochydore Road Maroochydore 4558 Phone: (07) 5452 7144

MOORABBIN 444 Warrigal Road Moorabbin 3189 Phone: (03) 9552 7100

MORAYFIELD 135 Morayfield Road Morayfield 4506 Phone: (07) 5428 9000

MONRNINGTON Building C3 Peninsula Centre Bungower Road Mornington 3031 Phone: (03) 5970 250

RICHMOND 479 Bridge Street Richmond 3131 Phone: (03) 8416 4100

RINGWOOD Factory 1 & 4 166 Maroondah Highway Ringwood 3134 Phone: (03) 9871 2200

THOMASTOWN 18-24 Dalton Road Thomastown 3074 Phone: (03) 9474 2500

RICK HART BELMONT 52 Belmont Avenue Belmont 6104 Phone: (08) 9373 4400

JOONDALUP Cnr Joondalup Drive & Eddystone Ave Joondalup 6210 Phone: (08) 9301 4833

MANDURAH Cnr Mandurah Terrace & Mandurah Road Mandurah 6210 Phone: (08) 9586 4700

MIDLAND 195 great Eastern Highway Midland 6056 Phone: (08) 9267 9700

O‟CONNOR Cnr Stock Road & South St O‟Connor 6163 Phone: (08) 9337 7822

OSBORNE PARK 52 Guthrie Street Osborne Park 6017 Phone: (08) 9445 5000

OSBORNE PARK SECONDS 42 Guthrie Street Osborne Park 6017 Phone: (08) 9442 7400

VICTORIA PARK 1010 Albany Highway East Victoria Park 6010 Phone: (08) 9470 4949

Harvey Norman Holdings Limited ABN 54 003 237 545