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HOLDINGS LIMITED

2012 A N N U A L R E P O R T

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

31 August 2012 Announcement of Full Year Profit to 30 June 2012

Announcement of Final 2012 Dividend

2 November 2012 Record date for determining entitlement to Final 2012 Dividend

27 November 2012 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

3 December 2012 Payment of Final 2012 Dividend

28 February 2013 Announcement of Half-Year Profit to 31 December 2012

Announcement of Interim 2013 Dividend

12 April 2013 Record date for determining entitlement to Interim 2013 Dividend

6 May 2013 Payment of Interim 2013 Dividend

ABN 54 003 237 545

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 42

Income Statement 43

Statement of Comprehensive Income 44

Statement of Changes in Equity 45

Statement of Cash Flows 47

Operating Segments 49

Statement of Significant Accounting Policies 56

Notes to and forming part of the Financial Statements for the

Year Ended 30 June 2012

Directors‟ Declaration 137

Independent Audit Report 138

Shareholder Information 140

Directory of Harvey Norman, Domayne and Joyce Mayne

Shopping Complexes

141

FINANCIAL HIGHLIGHTS

Financial Highlights FY2008 FY2009 FY2010 FY2011 FY2012

No. of franchised complexes in Australia1

194

195

194

195

213

No. of franchisees in Australia

604

635

637

667

702

No. of company-operated stores2

Franchisee sales revenue1

$4.86bn

$5.06bn

$5.19bn

$5.08bn

$4.83bn

Company-operated sales revenue2

$1,428.85m

$1,440.65m

$1,344.46m

$1,556.38m

$1,407.34m

Other revenues and other income items

$1,058.16m

$1,035.10m

$1,097.39m

$1,122.46m

$1,061.23m

Earnings before interest and tax (EBIT)

$555.11m

$382.95m

$420.10m

$416.92m

$276.86m

Profit after tax and non-controlling interests

$358.45m

$214.35m

$231.41m

$252.26m

$172.47m

Net cash flows from operating activities

$289.45m

$442.50m

$386.87m

$358.97m

$200.95m

Basic earnings per share

33.76c

20.18c

21.78c

23.75c

16.24c

Dividends per share (fully franked)

14.0c

11.0c

14.0c

12.0c

9.0c

Net debt to equity ratio (%)

25.80%

20.82%

15.94%

21.87%

26.60%

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-operated stores in New Zealand, Ireland, Northern Ireland, Singapore, Malaysia, Slovenia

and Croatia and the “Clive Peeters” and “Rick Hart” branded company-operated stores in Australia (prior to the restructure).

CHAIRMAN‟S REPORT

Business Performance

2012 proceeded to be the most challenging year due to unprecedented price and margin deflation in our television and

devices categories. External factors being the demise of WOW Sight & Sound (turnover estimated at approximately $225

million), the closure of numerous Retravision stores and the restructure of the Dick Smith brand (resulting in a Dick Smith

provision of $420 million) created a glut of product being sold at never before seen prices.

We continue, however, to see good growth in the stores located near the mining areas of Western Australia, Queensland

and the Hunter Valley in New South Wales. The capital cities of Sydney, Melbourne and Brisbane are not yet seeing the

flow-on effects of the mining boom but our franchisees are well-placed when that happens.

We are fortunate to have an integrated retail, franchise, property and digital operation that enables us to diversify and

adapt to the changing retail landscape and mitigate some of the detrimental headwinds experienced in the past few

years. We have endured one of our most challenging years since inception, but remain confident that our system is robust

and is the most viable format to effectively compete in a difficult market.

Our Omni Channel strategy, incorporating our integrated retail, franchise, property & digital operations, provides strategic

advantages over our competitors including:

1. The ability to diversify the product offering within the franchising operations segment to focus on more profitable product

categories - Unlike many of our competitors that are solely exposed to the challenging audio visual and information

technology (“AV/IT”) category, we operate in a number of different product categories that continue to perform solidly.

The flexibility of our franchising operations segment allows us to diversify and tailor the product offering of our franchisees

towards the more profitable Homemaker categories.

2. A strong balance sheet underpinned by real, tangible property assets – As at balance date, we have a total asset base

of approximately $4 billion which is inclusive of a property portfolio valued at $2.12 billion. Our strong balance sheet

affords quick access to capital and the ability to seize opportunities in the marketplace as they arise. Property ownership

offers the distinct advantage of a reliable income stream in an uncertain retail climate.

3. Our strong asset position and prudent management of working capital allows us to conservatively manage our debt

levels. Whilst a cautious level of investment in our system is necessary to maintain and grow market share, our debt to

equity ratio remains low at 34.16% and our net debt to equity ratio is 26.60%.

4. Our digital, store and distribution centre channels are fully integrated with consumers supporting our buy online, pick-up

in-store capability.

Our Omni Channel strategy requires that we provide our franchisees with tactical support, when and where necessary. Our

franchisees will continue to deliver quality, service and value to their customers.

The challenging retail environment and intense competitive pressures have resulted in a net profit before tax of $227.41

million for the year ended 30 June 2012 compared to $373.94 million for the previous year, a decrease of $146.53 million or

39.2%. This result is inclusive of a net property revaluation decrement of $24.99 million before tax for the year compared to a

net property revaluation increment of $15.46 million before tax for the preceding year, a deterioration of $40.45 million

before tax. Excluding the impact of the net property revaluation adjustments from both years, the net profit before tax

would have been $252.40 million for the current year compared to $358.48 million for the previous year, a reduction of

$106.08 million or 29.6%.

Our Omni Channel strategy is the backbone of the business and we have made strong progress throughout the year. With

the successful launch of new online sites in both Australia and New Zealand throughout 2012, we continue to build on our

Omni Channel capability. Since the site‟s launch, we have made further enhancements through mobile capability and

improved functionality in response to the ongoing customer feedback that we have received. Online sales are performing

to our initial expectations and, whilst low, our digital platform has been established for the future. Our “Customer First”

system which receives and manages communications from consumers across all of our channels as well as providing the

workflow for our online sites has been a very good development throughout 2012.

Our digital, store and distribution centre channels are fully integrated with consumers supporting our buy online, pick-up in-

store capability. This is proving to be a successful model in other markets around the world and with an established network

of stores in metropolitan, regional and country areas, we are well-placed to be able to deliver product and services to

consumers as these integrated channels grow.

We continue to develop, support and invest in the skills of our franchisees as well as the information tools of the company

for the future. With the natural progression of consumers being more connected, our aim is to continually provide a

consistent and quality experience to all Harvey Norman, Domayne and Joyce Mayne customers with a clear focus on our

channels and our capability within them.

CHAIRMAN‟S REPORT (CONTINUED)

Financial Analysis and Commentary: Net Profit After Tax and Non-Controlling Interests

Net profit after tax and non-controlling interests was $172.47 million for the year ended 30 June 2012 compared with $252.26

million for the preceding year, a decrease of $79.78 million or 31.6%.

This decrease can be explained as follows:

 a reduction in the profitability of the franchising operations segment by $127.61 million or 50.1% before tax ($89.33

million after tax) due to lower franchise fees and a higher level of tactical support during the year. The aggregate

amount of tactical support provided to franchisees was $124.19 million in the current year compared to $60.37 million

in the previous year;

 the net property revaluation decrement of $27.77 million before tax ($19.44 million after tax) recorded by the

Australian investment property portfolio and joint venture entities for the current year compared to a net revaluation

increment of $15.46 million before tax ($10.82 million after tax) in the preceding year, a deterioration of $43.23 million

before tax ($30.26 million after tax);

 restructuring and closure costs associated with the restructure of the Clive Peeters and Rick Hart businesses during the

year of $8.07 million before tax ($5.65 million after tax);

 a decline of $9.76 million before tax ($6.83 million after tax) in the market value of the listed public securities and

dividends received by the consolidated entity; and

 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 in the previous year.

The impact of the above decreases has been minimised by the following increases in profit:

 a reduction in the trading losses (excluding restructure and closure costs) incurred by the Clive Peeters and Rick Hart

businesses during the year by $34.35 million before tax ($24.05 million after tax) as the businesses did not trade for the

full year following the closure of seven (7) stores and the conversion of eighteen (18) stores to Harvey Norman and

Joyce Mayne franchised stores in the first half of the year;

 an increase of $24.68 million before tax ($17.27 million after tax) in rent received from franchisees and third party

tenants;

 profit of $10.00 million before tax ($7.00 million after tax) recognised on the successful completion and opening of the

Springvale development during the current year; and

 a reduction in the trading losses incurred in Ireland and Northern Ireland by $4.56 million before and after tax

attributable to favourable foreign currency movements and the continued focus on operational efficiencies and cost

control measures.

The tax charge in the income statement was lower by $63.22 million for the year ended 30 June 2012 compared to prior

year mainly attributable to:

 a reduction in profit before tax from $373.94 million in the previous year to $227.41 million in the current year, a

decrease of $146.53 million translating to a reduction in our tax liability by approximately $40 million;

 the tax benefit recognised in the current year of $16.29 million associated with the treatment of support payments

provided to Harvey Norman Holdings (Ireland) Limited during 2010, 2011 and 2012 as agreed under the terms of an

Advance Pricing Arrangement with the Australian Taxation Office dated 6 February 2012; and

 the tax benefit recognised in the current year of $6.31 million associated with the reversal of future tax liabilities

previously recognised on certain pre-CGT properties.

Key Elements of an Integrated Retail, Franchise, Property and Digital System

Review of the Franchising Operations Segment in Australia:

The result before tax of the franchising operations segment was $126.98 million for the year ended 30 June 2012 compared

to $254.59 million for the preceding year, a reduction of $127.61 million 50.1%. The discretionary retail sector in Australia has

been affected by a perfect storm of challenges, including deteriorating global economic confidence, a prudent

consumer, deflationary headwinds, particularly in the AV/IT categories and a high Australian dollar limiting growth in non-

mining related sectors. This has seen consolidation occur in the AV/IT category and has forced many retailers to struggle to

maintain margins in the fight for market share. These factors have reduced franchise fees received. Gross revenue from

the franchising operations segment has reduced from $938.93 million in the previous year to $858.01 million for the year

ended 30 June 2012, a reduction of $80.92 million or 8.6%. Our Omni Channel strategy enables us to provide a higher level

of tactical support to assist franchisees to manage the challenging environment and effectively compete in their local

markets.

Sales Revenue Generated by Independent Franchisees:

Sales revenue generated by independent franchisees amounted to $4.83 billion for the year ended 30 June 2012

compared with $5.08 billion for the preceding period, a decline of 4.9%.

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]

(c) The Australian retail property segment result and EBIT figures are inclusive of the Australian net revaluation increments/(decrements)

Our retail franchisees will continue to innovate, invest and improve their product offering, online channel, staff training and

strategic category enhancements. Trading conditions continue to be challenged particularly in the technology categories.

Home appliances, furniture and bedding remain stable and the businesses are well-placed for any upturn in housing starts.

Franchising Operations Margin and Key Statistics:

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 2.63% for the year ended 30 June 2012

compared to 5.01% for the year ended 30 June 2011.

Franchising Operations Margin 2010 2011 2012

No. of franchised outlets in Australia1 194 195 213

Franchising operations segment result before tax $310.68m $254.59m $126.98m

Franchisee sales revenue1 $5.19bn $5.08bn $4.83bn

Franchising operations margin (%)

5.99%

5.01%

2.63%

Franchising Operations Segment

Key Statistics:

2010

2011

2012

Return on franchising operations equity (a) 44.13% 37.52% 19.90%

Return on franchising operations assets (b) 25.70% 20.88% 11.42%

Revenue from franchising operations $944.32m $918.49m $858.01m

Franchising operations EBITDA $384.80m $332.46m $202.81m

Review of the Integrated Franchising Operations and Retail Property Segments in Australia:

The integrated franchising and retail property system in Australia (excluding freehold property located in New Zealand,

Singapore and Slovenia) delivered a segment result before tax of $223.57 million for the year ended 30 June 2012

compared to a result before tax of $377.90 million for the comparative year, a reduction of $154.33 million or 40.8%.

Integrated Franchising & Retail Property Segment in Australia 2010 2011 2012

Franchising operations segment result before tax $310.68m $254.59m $126.98m

Australian retail property segment result before tax $53.64m $123.31m $96.59m

Total integrated franchising & Australian retail property

segment result before tax

$364.32m

$377.90m

$223.57m

Australian Retail Property Segment – Key Statistics:

The retail property segment in Australia is an ideal complement to the franchising operations segment. The existence of a

robust property portfolio in Australia gives franchisees access to high-quality retail premises and a dynamic, cross-beneficial

tenancy mix.

Australian Retail Property Portfolio Statistics 2010 2011 2012

Weighted average capitalisation rates 8.70% 8.77% 8.89%

Average occupancy rates 96.96% 97.56% 96.94%

Net property yield (a) 4.61% 9.10% 7.09%

Return on equity (b) 7.91% 16.35% 12.39%

Australian Retail Property Portfolio: $000 $000 $000

Australian retail property segment result (c)

53,639

123,313

$96,587

Australian retail property EBIT (c) 67,457 141,051 $122,198

Australian net revaluation increment / (decrement) (39,906) 15,455 (27,768)

(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)

1 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.

CHAIRMAN‟S REPORT (CONTINUED)

Australian Net Property Revaluation Adjustments:

The investment property portfolio in Australia is subject to a bi-annual review to fair market value at each reporting period.

At each reporting period, one-sixth of the investment property portfolio is independently valued with the remaining five-

sixths fair-valued by Directors where appropriate. The whole portfolio is independently valued every three years.

During the year ended 30 June 2012, thirty (30) investment and joint venture properties in Australia have been

independently reviewed. The review for the current year resulted in a revaluation decrement of $27.77 million. The

revaluation decrement is isolated to a small number of sites including the devaluation of surplus land at Cambridge,

Tasmania and a devaluation of the Maroochydore, Queensland development which was driven by higher development

and construction costs relative to fair market valuations. The Maroochydore development is currently under construction

(approximately 75% complete) and is expected to commence trading in November 2012. The softer fair market valuation

of Maroochydore also takes into consideration the fact that the site is not fully tenanted as at balance date and the

challenging leasing conditions in the local area.

Valuations for fully operational sites have generally remained stable. We have seen some slight softening of capitalisation

rates but these have been offset by improvements in rental income from existing tenants and supported by stable

occupancy rates.

Review of the Property Portfolio of the Consolidated Entity:

Total Property Portfolio of the Consolidated Entity (Inclusive of Freehold Property located in New Zealand, Singapore and

Slovenia):

A strong property portfolio is an essential component of our Omni Channel strategy. Physical stores and distribution centres

are key channels of the business that are integrated with our digital operations. Since inception, we have adopted a

selective and prudent acquisition and development strategy. Over the years, the property portfolio has grown substantially

to a mixture of predominantly retail properties, a number of industrial sites and some selected non-retail property assets.

The combination of multi-tenant retail centres and stand-alone sites, which are geographically spread across Australia,

provides a wide selection of retail floor space. The property portfolio is well-placed to adapt and respond to prevailing

opportunities both in retail and other sectors of the market.

Our consolidated property portfolio is valued at $2.12 billion as at 30 June 2012. This represents over 50% of our total asset

base as at balance date. The result before tax generated by our property segments represents 37% of our consolidated

profit before tax for the year ended 30 June 2012 or 48% if we excluded the impact of the net property revaluation

decrement for the year.

The segment result before tax of our property segments was $84.44 million for the year ended 30 June 2012 compared to a

result of $112.02 million for the previous year, a decrease of $27.58 million or 24.6%. If the net property revaluation

adjustments were excluded from both years, the segment result before tax would have been $109.43 million for the current

year compared to $96.56 million for the preceding year, an increase of $12.87 million or 13.3%.

Composition of the

Property Portfolio

2010

$000

2011

$000

2012

$000

Investment properties 1,393,991 1,403,181 1,578,659

Investment properties under

construction

95,209

198,420

75,087

Joint venture properties 140,581 158,978 157,992

Owned land & buildings in

New Zealand, Singapore

& Slovenia

230,595

257,765

280,717

Properties held for resale 17,485 26,579 26,739

Total Property Portfolio

1,877,861

2,044,923

2,119,194

Benefits of Property Ownership:

Property ownership 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 quality local operators to co-locate within the same

complex. This provides us 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.

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,

Harvey Norman stores in Slovenia, properties

held under joint venture agreements and

land and buildings in Australia for

development and

resale at a profit.

CHAIRMAN‟S REPORT (CONTINUED)

Breakdown of Owned and Leased Sites:

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-

operated stores in New Zealand, Ireland, Northern Ireland, Singapore, Malaysia, Slovenia and Croatia as at 30 June 2012.

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

Store Openings Due to Conversions from the Clive Peeters and Rick Hart brands

In August 2011, we announced that we would restructure the Clive Peeters and Rick Hart businesses. By the end of August

2011, we had closed seven (7) Clive Peeters and Rick Hart retail sites. In September 2011 we commenced the conversion

process for the remaining eighteen (18) Clive Peeters and Rick Hart stores to the franchised model. Eighteen (18) new

franchised complexes were opened pursuant to this conversion. Sixteen (16) stores were converted to the Harvey Norman

brand format and two (2) stores were converted to the Joyce Mayne brand format.

Franchised Complex Openings, Conversions and Closures

Three (3) new franchised Harvey Norman complexes, located at Ballina (NSW), Springvale (VIC) and Atherton (QLD)

commenced trading during the current year.

One (1) new franchised Domayne complex commenced trading at the landmark Springvale development.

During the year we closed two (2) Harvey Norman complexes located at Indooroopilly (QLD) and Woden (ACT) and two

(2) Joyce Mayne complexes located at Alexandria (NSW) and Morayfield (QLD).

There were 213 franchised complexes in Australia as at 30 June 2012 under the following brand names:

 Harvey Norman 183

 Domayne 16

 Joyce Mayne 14

30 June 2012 Number of

Owned

Sites

Number of

Leased

Sites *

Total

Australia: Franchised complexes 77 136 213

New Zealand 17 14 31

Slovenia 5 - 5

Croatia - 1 1

Ireland & Northern Ireland - 16 16

Asia - 23 23

TOTAL 99 190 289

Ireland 14

Nth. Ireland 2 Northern Ireland 2

* leased from external parties

CHAIRMAN‟S REPORT (CONTINUED)

Company-Operated Store Openings and Closures in Offshore Markets

During the year, we entered into the Croatian market with our first store opening at Zagreb, the capital of Croatia, in

October 2011.

One (1) new store was opened in Maribor, Slovenia‟s second largest city, in October 2011 bringing the total number of

stores in Slovenia to five (5).

The flagship Space showroom located in Bencoolen Street, Singapore, was officially opened in November 2011 following

extensive redesign and restoration work by WOHA Architects. Two (2) new stores were opened in Malaysia, both in May

2012, located in Setia City Mall and Paradigm Mall. We now have ten (10) stores in total in Malaysia.

There were no other store openings or closures in other overseas markets.

There are thirty-one (31) stores in total in New Zealand under the Harvey Norman and Norman Ross brand names. There are

thirteen (13) Harvey Norman stores in Singapore. We remain committed to our company-operated stores in Ireland and

Northern Ireland with fourteen (14) and two (2) Harvey Norman stores respectively.

There were 76 company-operated stores located in offshore markets as at 30 June 2012.

Review of the Company-Operated Retail Segments:

In overseas markets our stores are company-operated. Our total retail segment primarily consists of company-operated

stores in New Zealand, Singapore, Malaysia, Ireland, Northern Ireland, Slovenia and Croatia and the stores previously

trading under the Clive Peeters and Rick Hart brand names in Australia.

The total retail segment result before tax was a profit of $9.70 million for the year ended 30 June 2012 compared to a loss of

$10.59 million before tax for the previous year, a turnaround of $20.29 million. This improvement is predominantly due to an

improved loss generated by the Clive Peeters and Rick Hart businesses during the year by $26.28 million following the

restructure of the brands in the first half of the year.

We are pleased with the performance of our retail operations in New Zealand. Despite the subdued state of the New

Zealand economy, the retail stores in New Zealand delivered a solid result of $39.13 million before tax, an 8.5% reduction

from prior year. The 100% company-owned Space brand in Singapore and Malaysia is ideally placed for the growing

prestige market in the Asia Pacific region. Our controlling investment interest in Pertama Holdings Limited, Singapore is a

platform for future growth and expansion of the Harvey Norman brand in Singapore and Malaysia.

Restructure and Closure of the Clive Peeters and Rick Hart Stores and Brand Names:

In August 2011 we advised the market of our intention to restructure the Clive Peeters and Rick Hart businesses and to cease

trading under the impaired brand names. By the end of August 2011, we had closed four (4) former Clive Peeters stores

and three (3) former Rick Hart stores. The remaining thirteen (13) Clive Peeters stores and five (5) Rick Hart stores were

converted to Harvey Norman and Joyce Mayne franchised operations.

We incurred restructuring and closure costs of $8.07 million before tax mainly attributable to redundancy and termination

costs, fixed asset write-downs and onerous lease costs for the closed sites. This is less than the expected closure costs

previously estimated and reported in August 2011 of approximately $10.00 million before tax.

Consolidated sales revenue for the year ended 30 June 2012 was $134.41 million for the Clive Peeters and Rick Hart brands,

under the company-operated retail model. Consolidated sales revenue for the preceding year was $279.66 million.

Excluding restructuring and closure costs of $8.07 million before tax, the trading loss incurred by the Clive Peeters and Rick

Hart businesses amounted to $6.72 million before tax. This is a reduction from $41.07 million of losses incurred in the previous

year.

CHAIRMAN‟S REPORT (CONTINUED)

Sales and Profitability of the Overseas Controlled Entities:

New Zealand

Sales revenue from the New Zealand company-operated

stores decreased by $NZ29.38 million (decrease of 4.0%)

due to a combination of natural disasters and the

challenging retail climate in New Zealand. The store

closures in Christchurch arising from the earthquakes in

early 2011 negatively impacted sales revenue. Upon

translation into Australian dollars, the decrease in sales

revenue was $13.64 million (decrease of 2.4%). The rate of

decrease in Australian dollars was reduced due to a 1.7%

appreciation in the New Zealand dollar relative to the

Australian dollar.

Similar to the trend experienced by franchisees in

Australia, the Homemaker categories in New Zealand,

mainly the bedding category, are doing particularly well,

assisted by the closures of key bedding suppliers during

the year which gave our company-operated stores in New Zealand an opportunity to seize market share. The AV/IT

categories in New Zealand have also been significantly hampered by severe price deflation and intense discounting by

competitors.

The retail segment result in New Zealand was $39.13 million for the year ended 30 June 2012 compared to $42.78 million for

the previous year, a decrease of 8.5%. The decrease in local currency was 10.0%.

Despite the depressed economic climate in New Zealand, our operations are robust, being the market leader across all

major product categories.

Ireland and Northern Ireland

Sales revenue from the company-operated stores in Ireland increased by €8.02 million (increase of 6.3%) from €126.90 million

in the previous year to €134.92 million for the year ended 30 June 2012. Upon translation into Australian dollars, sales revenue

actually decreased by $0.10 million (decrease of 0.1%). The lower increase was due to a 6.0% decline in the Euro relative to

the Australian dollar.

Sales revenue from the two company-operated stores in Northern Ireland increased by £0.20 million (increase of 2.0%) from

£10.40 million in the previous year to £10.60 million for the year ended 30 June 2012. Upon translation into Australian dollars,

sales revenue actually decreased by $0.47 million (decrease of 2.8%) due to a 4.7% decline in the UK Pound Sterling relative

to the Australian dollar.

The segment result for the operations in Ireland and Northern Ireland was a trading loss of $34.04 million for the year ended

30 June 2012 compared to a loss of $38.59 million for the preceding year. The loss was reduced by $4.56 million or 11.8% due

to the combination of an appreciation in the Australian dollar relative to the Euro and the implementation of operational

efficiencies by management that have effectively controlled costs. With growth in market share and strong brand

awareness across Ireland and Northern Ireland, the operations are well positioned to take advantage of any improvements

in macroeconomic conditions.

CHAIRMAN‟S REPORT (CONTINUED)

Ireland reported a loss of €22.30 million for the year ended 30 June 2012 compared to a loss of €24.54 million in the previous

year, a reduced loss of 9.1% in local currency. The Irish loss in Australian dollars improved on the previous year by 14.6%.

Northern Ireland reported a loss of £3.32 million for the year ended 30 June 2012 compared to a loss of £2.93 million in the

previous year, a deterioration of 13.3% in local currency. In Australian dollars, there was an 8.0% deterioration in the Northern

Ireland segment result.

In early July 2012, the Company announced the restructure of the Irish and Northern Irish businesses with the aim of

reducing future losses and increasing growth. The main features of the restructure include:

 The launch of a large new furniture and bedding store in West Dublin;

 The launch of Harvey Norman Online, a new e-commerce initiative in Ireland and Northern Ireland;

 The closure of the store located at Mullingar, Ireland which has underperformed;

 The reformatting of the Dundalk Outlet store in Ireland to focus on the furniture and bedding categories;

 The reformatting of the two stores in Northern Ireland located at Newtownabbey and Holywood to focus on the

furniture and bedding categories.

We have not recognised the costs of the above restructure in the financial statements and notes disclosed in this report as

the announcement to affected parties in Ireland and Northern Ireland and the general public was made subsequent to 30

June 2012.

The Board remains committed to the operations in Ireland and Northern Ireland for the long-term.

Asia

Sales revenue from controlled entity Pertama Holdings

Limited, Singapore and trading as “Harvey Norman”,

increased by $S5.41million (increase of 1.2%). Upon

translation into Australian dollars, sales actually decreased by

$1.69 million (decrease of 0.5%). There was a devaluation of

1.7% in the Singapore dollar relative to the Australian dollar.

The Harvey Norman branded stores in Singapore and

Malaysia continue to grow market share. The segment result

in Asia was $9.44 million in the year ended 30 June 2012

compared to $13.05 million in the previous year, a decrease

of 27.7%. The decrease in local currency was 26.4%. The

profitability of the Asian segment reduced on prior year due

to price deflation, particularly in the AV/IT categories,

disruption of trade to the Millenia Walk flagship store in

Singapore attributed to resumption of floorspace by the landlord and the operation of two warehouses in lieu of purchasing

a large warehouse to service all stores in Singapore.

We are pleased with the performance of the Harvey Norman branded stores in Singapore and Malaysia, and the plan is to

increase the Harvey Norman brand in the Malaysian market.

The investment in the 100% company-owned Space brand in Singapore and its relocation to the recently redeveloped

world-class showroom in Bencoolen Street, Singapore will position it to take advantage of growth in demand for premium

furniture within this key global market.

CHAIRMAN‟S REPORT (CONTINUED)

Slovenia and Croatia

Sales revenue from the company-operated stores in

Slovenia and Croatia increased by €16.90 million (increase

of 35.1%) relative to the previous year. This increase is

mainly attributable to the sales revenue recorded by the

two new stores at Maribor in Slovenia and Zagreb in

Croatia that commenced trading in October 2011 and a

full year‟s trading of the Novo Mesto store that opened in

October 2010.

Upon translation into Australian dollars, the increase in

sales was $17.74 million (increase of 26.7%).

The retail segment result in Slovenia and Croatia was $2.43

million for the year ended 30 June 2012 compared to

$5.37 million for the previous year, a decrease of 54.8%.

Slovenia reported a profit of €3.21 million for the year ended 30 June 2012 compared to a profit of €3.89 million in the

previous year, a reduction in local currency of 17.6%. Croatia reported a loss of €1.34 million or a loss of $1.73 million in

Australian dollars primarily due to the start-up investment costs of opening the Zagreb store.

Despite the challenging economic conditions in Europe, the retail business in Slovenia continues to be robust and growing

market share. With the opening of the store in Maribor, Slovenia‟s second largest city and located in the country‟s north

east region, the existing 5 stores cover a wide geographic area of Slovenia.

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 $106.26 million for the year ended 30 June 2012 compared to

$112.58 million for the previous year, a decrease of 5.6%.

The segment result for the non-franchised retail segment was a profit of $7.53 million for the current year compared to a

profit of $7.87 million in the prior year, a decrease of $0.34 million or 4.4%.

Outlook and Other

Equity

Consolidated equity as at 30 June 2012 was $2.27 billion compared to $2.23 billion at 30 June 2011 – an increase of $38.42

million or 1.7%. Included within consolidated equity is an amount of $30.93 million (June 2011: $34.88 million) attributable to

non-controlling interests, of which $28.21 million relates to non-controlling interests in Pertama Holdings Limited, Singapore.

Consolidated equity was diluted by $14.74 million as a result of the payment of consideration for the on-market acquisition

of a further 12,592,150 shares in Pertama Holdings Limited, Singapore and the acquisition of a further 24.9% shareholding in a

retail controlled entity in Australia which was in excess of the carrying value of the non-controlling interest.

Dividend

The recommended final dividend is 4.0 cents per share fully franked (June 2011: 6.0 cents per share fully franked). This final

dividend will be paid on 3 December 2012 to shareholders registered at 5:00 pm on 2 November 2012. No provision has

been made in the Statement of Financial Position for this recommended final dividend.

CHAIRMAN‟S REPORT (CONTINUED)

Outlook

We continue to execute our Omni Channel strategic plan to deliver improved performance for the Australian franchisees

and company-operated stores internationally. We are convinced that this will deliver improved results and a sustainable

and growing future.

Our integrated retail, franchise, property and digital operations are the backbone of our Omni Channels. This is unique

within the categories and markets in which we operate. The online operations of the business across Australia and New

Zealand will continue to develop and will deliver incremental revenue in the year ahead for our existing franchisees and

company-operated stores. Continuing refinement of our digital platform will create new opportunities for growth in which

we continue to invest. There will be an increase in the number of products that are available online in the coming year and

we will continue to improve our online offer to consumers.

We continue to implement our merchandising and supply-chain improvements program. Our investment will deliver

improved information from both our suppliers and customers and provide a seamless customer experience across all

channels.

Within the Australian franchising operations segment, we anticipate that the Home Entertainment and Technology

category will continue to remain volatile and uncertain however with further retailer and supplier rationalisation occurring,

there is the opportunity for improvement. Whilst the predictions for market values remain flat at best, we are cautiously

optimistic of consolidating and increasing our market shares in the technology categories and geographies in which we

compete. The strong performance of the Home Appliance, Furniture and Bedding categories will continue to deliver

results. We are more than well positioned to capitalise on any resurgence in the domestic home market.

Our New Zealand operation remains strong and will be positively supported by the re-opening of the main complex within

Christchurch in late 2012.

Our Irish business has improved and we expect this to continue in the year ahead within this challenged economy. We

have a strong position with both Irish consumers and suppliers that is supporting the ongoing improvements to this business.

Within central Europe, Slovenia has a solid position for growth and we expect that the investment in the initial store in

Croatia will develop positively throughout the year.

The flagship homemaker centre at Maroochydore in Queensland will open as scheduled in November 2012 adding to the

strong asset base of the company‟s property portfolio.

The balance sheet of the company remains strong through conservative fiscal management. The low net debt to equity

ratio with tangible property assets in excess of $2.12 billion has the company well positioned to manage the core business

within the respective territories and take advantage of opportunities in the future.

I would like to thank my fellow directors, Harvey Norman employees, franchisees and their staff for their continuing efforts

and loyalty.

G. HARVEY

Executive Chairman

Sydney, 28 September 2012

DIRECTOR‟S REPORT

Your directors submit their report for the year ended 30 June 2012.

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 73, 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 – Executive Director and Chief Executive Officer

Ms. Page, aged 55, 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 member of the NSW Public Service Commission Advisory Board.

Ms. Page is a director of the following other listed/public companies:

 Pertama Holdings Limited, Singapore

 Australian National Retailers Association (ANRA)

 Museum of Contemporary Art, Sydney

Ms. Page was a director of the public company, National Rugby League Limited, until February 2012.

John Evyn Slack-Smith – Executive Director and Chief Operating Officer

Mr. Slack-Smith, aged 43, 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 – Executive Director

Mr. Ackery, aged 52, 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 home appliances,

home entertainment and technology franchisees and strategic partners. Mr. Ackery is a director of the public company, St.

Joseph‟s College Foundation Limited.

Chris Mentis B.Bus., FCA, FCIS – Executive Director, Chief Financial Officer and Company Secretary

Mr. Mentis, aged 46, 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 25

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 73, 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 47, 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 62, 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 (Independent)

Mr. Gunderson-Briggs, aged 50, 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, Glenaeon Rudolph Steiner School Limited and

Glenaeon Foundation Limited.

Graham Charles Paton AM, B.Ec., FCPA, MAICD - Non-Executive Director (Independent)

Mr. Paton, aged 67, 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.

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 11

Audit 8

Remuneration 8

Nomination 1

Attendance at Remuneration Committee Meetings:

 C.H. Brown (Chairman): 8 [8]

 K.W. Gunderson-Briggs: 8 [8]

 G.C. Paton AM: 8 [8]

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 11 [11] n/a

K.L. Page 11 [11] n/a

J.E. Slack-Smith 11 [11] n/a

D.M. Ackery 10 [11] n/a

M.J. Harvey 9 [11] n/a

C.H. Brown 10 [11] 8 [8]

I.J. Norman 9 [11] n/a

K.W. Gunderson-

Briggs

11 [11]

8 [8]

G.C. Paton 11 [11] 8 [8]

C. Mentis 11 [11] 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

Options

G. Harvey 312,509,532 -

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 1,678,000

D.M. Ackery 146,667 1,678,000

K. W. Gunderson-

Briggs

3,000

G.C. Paton 15,000 -

C. Mentis 7,450 1,678,000

TOTAL

508,135,461

5,034,000

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

8,101,858 shares held by K. Page

Pty Limited, 318,406 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.

Share Options

As at the date of this report, there were 5,034,000

unissued ordinary shares under options (30 June 2011:

3,000,000). Details of share options are set out in Note 28

and Note 30 to the financial statements and form part

of this report.

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,

Northern Ireland and Croatia

 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 in Singapore and Malaysia.

Results

The profit after tax and non-controlling interests for the

year ended 30 June 2012 was $172.47 million. This

represents a reduction of 31.6% on the profit after tax and

non-controlling interests for the year ended 30 June 2011.

DIRECTOR‟S REPORT (CONTINUED)

Dividends

The directors recommend a fully franked dividend of 4.0

cents per share to be paid on 3 December 2012 (total

dividend, fully franked - $42,492,671). 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 $

2011 final fully

franked dividend

5 December 2011 63,739,007

2012 interim fully

franked dividend

7 May 2012 53,115,839

The dividend payment in respect of the year ended 30

June 2012 represents 55.43% (2011: 50.54%) 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 2012 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;

 Net profit 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 early July 2012, the Company announced the

restructure of the Irish and Northern Irish businesses with

the aim of reducing future losses and increasing growth.

The main features of the restructure include:

 The launch of a large new furniture and bedding

store in West Dublin;

 The launch of Harvey Norman Online, a new e-

commerce initiative in Ireland and Northern Ireland;

 The closure of the store located at Mullingar, Ireland

which has underperformed;

 The reformatting of the Dundalk Outlet store in

Ireland to focus on the furniture and bedding

categories;

 The reformatting of the two stores in Northern Ireland

located at Newtownabbey and Holywood to focus

on the furniture and bedding categories.

The consolidated entity is in the process of assessing and

quantifying the impact of the proposed restructure and,

based on early estimates, does not believe that the costs

would have a material impact to the results of the group.

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 2012

and up to the date of this report.

Company Secretary

Mr Chris Mentis, aged 46, is a chartered accountant and

became Company Secretary on 20 April 2006. Mr. Mentis

has over 25 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 2012 outlines the remuneration arrangements of 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

consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the parent company.

For the purposes of this report, the term “executive” includes the Chief Executive Officer (CEO), executive directors and

other senior executives of the consolidated entity.

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 of the Company and consolidated entity are set out below.

Key Management Personnel

(i) Directors

Gerald Harvey Executive Chairman

Kay Lesley Page Executive Director and 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

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 (Independent)

Graham Charles Paton AM Non-Executive Director (Independent)

(ii) Executives

Martin Anderson General Manager – Generic Publications Pty Limited

Rodney Orrock General Manager – Domayne

Thomas James Scott General Manager – Property

Gordon Ian Dingwall Chief Information Officer (appointed 1 December 2011 formerly General Manager

– Information Technology)

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 2012 financial year. For the 2012

performance period, the STI was in the form of a performance cash incentive ("PCI") payment based on attainment of

measures including, internal financial budget achievement, operating priorities, retail operations including franchising

operations, overseas retail and other non-franchised retail, maintenance and growth of the strategic retail property

portfolio and execution of Omni Channel strategic initiatives. In recognition of the performance of the executives during

the year, a total of $1,455,000 in PCI was earned by executive directors during the 2012 financial year (2011: $2,250,000).

Long-term incentive awards consisting of share options that vest based on attainment of pre-determined performance

goals, subject to conditions, are awarded to select executive directors. On 23 November 2010, shareholders of the

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

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”).

For the 2012 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 2012 financial year, the performance

hurdles for the 2012 grant of options pursuant to the 2010 Share Option Plan were partially met and 25.0% of the relevant

options in respect of the 2012 financial year was determined to meet the performance conditions, 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, and certain determinations by, 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.

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.

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

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 NED pool of $1,000,000 per year.

The board will not seek any increase for the NED pool at the 2012 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 2012 and 30

June 2011 are disclosed in table 1 on page 28 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 50th and 100th 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 approximately 75% fixed remuneration and 25% target STI opportunity. The

CEO did not have any target LTI during the year. Target remuneration mix of executive directors ranges from 50% to 55%

fixed remuneration, 15% to 25% target STI opportunity and 0% to 30% LTI.

Structure

In the 2012 financial year, the executive remuneration framework consisted of the following components:

 Fixed remuneration

 Variable remuneration

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,

including execution of Omni

Channel strategic initiatives.

LTI

component

 Awards are made in

the form of options

pursuant to the 2010

Share Option Plan.

 Rewards executive directors (except

for Chairman, Mr. G. Harvey and CEO,

Ms. K.L. Page) 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.

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

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 28 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 in respect 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

 Reduce the financial accommodation to franchisees

25%

Non-financial measures:

 Operating priorities including execution of digital initiatives

 Retail operations

 Property

 Risk management

 Execution of Omni Channel strategic initiatives

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 review by 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.

STI Awards for 2011 and 2012 Financial Years

For the 2011 financial year, 100% of the STI performance cash incentive of $2,250,000, as previously accrued in that period,

vested in executive directors and was paid in the 2012 financial year. There were no forfeitures. The remuneration

committee considered the STI payments for the 2011 financial year in August 2011.

For the 2012 financial year, 100% of the STI performance cash incentive of $1,455,000, as previously accrued in that period,

vested in executive directors and is to be paid in the 2013 financial year. There were no forfeitures. The remuneration

committee considered the STI payments for the 2012 financial year in September 2012.

There was no alteration to the STI performance cash incentive plan for the year, but performance measures were

expanded to include measures relating to:

 Reduce the financial accommodation to franchisees

 Execution of digital initiatives

 Risk management

 Execution of Omni Channel strategic initiatives

Variable Remuneration – Long-Term Incentives (LTI)

LTI awards are made annually to executive directors (other than Chairman, Mr. G. Harvey and CEO, Ms. K.L. Page) in order

to align remuneration with the creation of shareholder value over the long-term. LTI awards are only made to executive

directors who have an impact on the performance of the consolidated entity against relevant long-term performance

measures.

LTI – Share Options

Structure

LTI awards to select 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

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

general meeting on 23 November 2010. Options are awarded to select executive directors with more than 12 months

service. The options will vest over a period of three years subject to meeting performance measures and service conditions.

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 – First Tranche of Options issued 29 November 2010

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").

Each of the options the subject of the First Tranche of Options is subject to performance conditions. The performance

conditions are subject to service conditions and:

(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; and

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;

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.

The remuneration committee may at any time reduce the number of exercisable options if there is only partial

achievement of the performance conditions.

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

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.

Performance Measures to Determine Vesting – Second Tranche of Options issued 29 November 2011

Subject to the terms and conditions of the 2010 Share Option Plan, on 29 November 2011 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 $2.03 per option to each

of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith ("Second Tranche of Options"). Details in respect of the

awards are set out in table 2 on page 29 of this report.

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

Each of the options the subject of the Second Tranche of Options is subject to performance conditions. The performance

conditions are subject to service conditions and:

(a) as to 30% - to a financial performance condition ("2012 Financial Performance Condition"); and

(b) as to 70% - to non-financial performance conditions ("2012 Non-Financial Performance Conditions").

The 2012 Financial Performance Condition (the “2012 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; and

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 2012 Non-Financial Performance Conditions (the “2012 Critical Success Factors”) were weighted:

(a) as to 20% relating to the achievement of key operating priorities including development of Omni Channel strategic

initiatives, improvement in customer engagement and efficiency of systems, and the maintenance, improvement

and implementation of risk management programs;

(b) as to 20% relating to the level of operating working capital, inventory control and cost control generally;

(d) as to 20% relating to improvements in market share and sustainability of retailing operations; and

(e) as to 20% relating to the maintenance and growth of the retail property portfolio.

The remuneration committee may at any time reduce the number of exercisable options if there is only partial

achievement of the performance conditions.

Service conditions in respect of a grantee of the Second Tranche of Options will be deemed to be satisfied if at the time of

exercise of an option the subject of the Second 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

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 2012 Financial Year

The Second Tranche of Options under the 2010 Share Option Plan were granted to David Matthew Ackery, Chris Mentis and

John Evyn Slack-Smith on 29 November 2011. Details in respect of the awards are set out in table 2 on page 29 of this

report.

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

Independent Valuation of the Second Tranche of Options

The Second Tranche of Options were independently valued by Mercer (Australia) Pty Limited at grant date utilising the

assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option in the

Second Tranche of Options was $0.51 per option or $1,530,000 in total.

LTI Awards for Previous Financial Years

LTI Awards for 2011 Financial Year

The First Tranche of Options under the 2010 Share Option Plan were granted to David Matthew Ackery, Chris Mentis and

John Evyn Slack-Smith on 29 November 2010.

Independent Valuation of the First Tranche of Options

The First Tranche of Options were independently valued by Mercer (Australia) Pty Limited at grant date utilising the

assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option in the

First Tranche of Options was $0.87 per option or $2,610,000 in total.

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 the

terms and conditions, including service 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 the terms and conditions, including service conditions, of the 2010 Share Option Plan.

Satisfaction of Performance Conditions in Respect of Second Tranche of Options

The earnings per share in respect of the Company for the year ended 30 June 2012 was $0.1624c. The 2012 EPS Condition

was not satisfied.

The remuneration committee had regard to certificates and reports from officers of the Company, other board committees

and management, and own enquiries, noted that the 2012 Critical Success Factors had been only partially satisfied, noted

that the net profit after tax of the consolidated entity was down 31.6% on the 2011 year, and determined, in accordance

with the terms and conditions of the 2010 Share Option Plan that as there had been only partial achievement of the

relevant performance conditions, to reduce the aggregate number of exercisable options in the Second Tranche of

Options to 750,000, as follows:

(a) David Matthew Ackery – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the company at an issue

price of $2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan);

(b) John Evyn Slack-Smith – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the company at an issue

price of $2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan);

(c) Chris Mentis – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the company at an issue price of

$2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan).

Company Performance and the Link to Remuneration

The net profit after tax of the consolidated entity in respect of the year ended 30 June 2012 was down 31.6% on the prior

year. The aggregate amount of PCI/STI target remuneration for executive directors in the year ended 30 June 2011 was

$2,250,000. The aggregate amount of PCI/STI for executive directors in respect of the year ended 30 June 2012 was

$1,455,000, a reduction of 35.3% on the prior year. That reduction in PCI/STI for 2012 resulted from the only partial

achievement of 2012 Critical Success Factors and the fact that net profit after tax for the year ended 30 June 2012 was

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

down 31.6% on the prior year. Despite substantial achievement of non-performance measures, targets and initiatives by

executive directors, the remuneration committee determined and the board of the Company accepted, the reduction by

35.3% of the aggregate PCI/STI pool for 2012 to $1,455,000 in comparison with the previous year of $2,250,000.

The award of 2012 LTI target remuneration in the form of share option awards to certain executive directors, subject to the

terms and conditions of the 2010 Share Option Plan, was approved by shareholders at the annual general meeting of the

Company held 23 November 2010. The terms and conditions for the award of 2012 LTI target remuneration in the form of

share option awards to certain executive directors, required satisfaction and achievement of both financial (weighted as to

30%) and non-financial (weighted as to 70%) performance measures, including the 2012 Critical Success Factors, subject to

Service Conditions (as defined in the 2010 Share Option Plan). The financial measure required an increase on a cumulative

basis in earnings per share of at least 10% over the base year ("2012 EPS Condition"). The 2012 EPS Condition was not

satisfied, but would otherwise be eligible for further testing up to 30 June 2013. The 2012 LTI non-financial measures included

the 2012 Critical Success Factors described on page 24, and were substantially achieved. The terms and conditions of the

2010 Share Option Plan empowered the remuneration committee to determine the question as to whether Non-Financial

Performance Conditions have been satisfied.

In addition, the remuneration committee may at any time reduce the number of exercisable options if there is only partial

achievement of the performance conditions. The remuneration committee took into account all matters that the

remuneration committee considered relevant and determined to reduce the aggregate number of the Second Tranche of

Options to 750,000, as follows:

(a) David Matthew Ackery – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the Company at an issue

price of $2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan);

(b) John Evyn Slack-Smith – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the Company at an issue

price of $2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan); and

(c) Chris Mentis – 250,000 options to subscribe for 250,000 fully paid ordinary shares in the Company at an issue price of

$2.03 per share, subject only to Service Conditions (as defined in the 2010 Share Option Plan).

The decision of the remuneration committee to reduce the aggregate number of the Second Tranche of Options, because

there has been only partial achievement of 2012 performance conditions, has been accepted by the board and executive

directors, despite the fact that apart from the determination by the remuneration committee, 30% of the 2012 Options

would remain available for retesting pursuant to the financial performance conditions of the 2010 Share Option Plan and

the 2012 Non-Financial Performance Conditions were substantially achieved. The reduction in the aggregate amount of

the 2012 PCI/STI pool and in the aggregate number of the Second Tranche of Options directly linked the remuneration of

executive directors to Company performance.

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 2012 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.

DIRECTOR‟S REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

Standard KMP

Termination Provisions

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

Relationship between Remuneration and the Performance of the Company

The remuneration policies of the Company are intended to motivate directors and employees to pursue relevant short-term

goals, long-term growth and success of the Company. The different remuneration components disclosed in table 1 and

table 3 in the Remuneration Report reflect the link between “at risk” remuneration of executives and the performance of

the Company. The amount of “at risk” remuneration of an executive is wholly dependent upon satisfaction of the

respective service conditions and performance conditions under each of the First Tranche of Options and Second Tranche

of Options.

The graphs below illustrate the Company‟s performance for the past five financial years.

Where: NPAT & NCI = net profit after tax and non-controlling interests; PCI/STI = performance cash incentive / short-term

incentive; LTI = long-term incentive; EPS = earnings per share; DPS = dividends per share

DIRECTORS‟ REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

TABLE 1: Compensation of Key Management Personnel for the Year Ended 30 June 2012 - 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

Options

TOTAL

Reversal of

Options

Expense

(b)

TOTAL

% of

options

G. Harvey 2012 723,825 285,000 10,400 - 15,775 - - 1,035,000 - 1,035,000 - Executive Chairman 2011 724,401 400,000 10,400 - 15,199 - - 1,150,000 - 1,150,000 -

K.L. Page 2012 1,442,830 300,000 - 41,395 15,775 - - 1,800,000 - 1,800,000 - Exec Director / CEO 2011 1,441,677 500,000 - 43,124 15,199 - - 2,000,000 - 2,000,000 -

J.E. Slack-Smith 2012 1,210,525 325,000 - 23,700 15,775 - 263,913 1,838,913 (210,617) 1,628,296 3.3% Exec Director / COO 2011 1,201,839 500,000 - 32,962 15,199 - 139,544 1,889,544 - 1,889,544 7.4%

D.M. Ackery 2012 1,216,225 325,000 18,000 - 15,775 - 263,913 1,838,913 (210,617) 1,628,296 3.3% Executive Director 2011 1,216,801 500,000 18,000 - 15,199 - 139,544 1,889,544 - 1,889,544 7.4%

C. Mentis 2012 882,338 220,000 - 51,887 15,775 - 263,913 1,433,913 (210,617) 1,223,296 4.4% Exec Director / CFO 2011 888,279 350,000 - 46,522 15,199 - 139,544 1,439,544 - 1,439,544 9.7%

A.B. Brew (a) 2012 - - - - - - - - - - - 2011 68,816 - - 5,195 2,533 - - 76,544 - 76,544 -

M.J. Harvey 2012 110,092 - - - 9,908 - - 120,000 - 120,000 - Non-Executive Dir 2011 110,092 - - - 9,908 - - 120,000 - 120,000 -

C.H. Brown 2012 110,092 - - - 9,908 - - 120,000 - 120,000 - Non-Executive Dir 2011 110,092 - - - 9,908 - - 120,000 - 120,000 -

I.J. Norman 2012 18,349 - - - 1,651 - - 20,000 - 20,000 - Non-Executive Dir 2011 18,349 - - - 1,651 - - 20,000 - 20,000 -

K.W. Gunderson –

Briggs

2012

110,093

9,907

120,000

Non-Executive Dir 2011 109,646 - - - 10,354 - - 120,000 - 120,000 -

G.C.Paton 2012 110,092 - - - 9,908 - - 120,000 - 120,000 - Non-Executive Dir 2011 110,500 - - - 9,500 - - 120,000 - 120,000 -

TOTAL

2012

5,934,461

1,455,000

28,400

116,982

120,157

791,739

8,446,739

(631,851)

7,814,888

2.05%

TOTAL

2011

6,000,492

2,250,000

28,400

127,803

119,849

418,632

8,945,176

4.7%

(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) Certain performance conditions in respect of the First Tranche of Options were not satisfied. On 13 June 2012, the Board determined that options over 966,000 shares granted in

respect of the First Tranche of Options had lapsed. This resulted in the reversal of the cumulative share based payments expense recognised in respect of the First Tranche of

Options totalling $631,851, of which $399,388 was recognised in the year ended 30 June 2012 and $232,463 was recognised in the year ended 30 June 2011.

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 (a)

Options Lapsed During the Year (b)

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

J.E. Slack-Smith 29/11/2011 1,000,000 $0.51 $510,000 01/01/2015 30/06/2017 - - 322,000 $280,140

D.M. Ackery 29/11/2011 1,000,000 $0.51 $510,000 01/01/2015 30/06/2017 - - 322,000 $280,140

C. Mentis 29/11/2011 1,000,000 $0.51 $510,000 01/01/2015 30/06/2017 - - 322,000 $280,140

TOTAL

3,000,000

$1,530,000

966,000

$840,420

(a) 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 $2.03 per option, on 29 November 2011, to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith ("Second Tranche of Options"). The

qualifying period for the Second Tranche of Options is the three years ending 30 June 2014. The Second Tranche of Options were independently valued by Mercer (Australia) Pty

Limited at grant date utilising the assumptions underlying the Black-Scholes methodology. Under this valuation methodology, the value of each option in the Second Tranche of

Options was $0.51 per option or $1,530,000 in total.

(b) On 13 June 2012 the Company announced that options over 322,000 shares granted to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith, a total of 966,000

options over 966,000 shares, previously granted on 29 November 2010 (“First Tranche of Options”) have lapsed and will never be exercisable.

(c) 750,000 options over 750,000 shares of the Second Tranche of Options may be exercised subject to the satisfaction of service conditions and the terms and conditions of the 2010

Share Option Plan. 2,250,000 options over 2,250,000 shares of the Second Tranche of Options cannot be exercised but remain in existence.

DIRECTORS‟ REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

TABLE 3: Compensation of Key Management Personnel for the Year Ended 30 June 2012 – 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

Options

Termin-

ation

Benefits $

TOTAL

% of

options

R. Orrock

2012

513,638

82,400

21,162

15,775

632,975

General Manager: Domayne 2011 513,639 - 21,162 - 15,199 - - - 550,000 -

M.L. Anderson 2012 337,252 - - 21,973 15,775 - - - 375,000 -

General Manager: Advertising 2011 331,618 - - 21,466 15,199 - - - 368,283 -

L.R. Greeff 2012 - - - - - - - - - -

CIO / Program Director –

Merchandise Management

System Program

(a)

2011

366,475

7,600

226,663

600,738

G.I. Dingwall 2012 334,800 50,000 - - 15,775 - - - 400,575 -

General Manager: IT / CIO (b) 2011 306,269 50,000 - - 15,199 - - - 371,468 -

T.J. Scott 2012 450,000 - - - 15,775 - - - 465,775 -

General Manager: Property 2011 384,248 50,000 - - 15,199 - - - 449,447 -

TOTAL KEY MANAGEMENT

PERSONNEL 2012

1,635,690

132,400

21,162

21,973

63,100

1,874,325

TOTAL KEY MANAGEMENT

PERSONNEL 2011

1,902,249

100,000

21,162

21,466

68,396

226,663

2,339,936

(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. On 1 December 2011 he was appointed to Chief Information Officer.

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

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 2012 are as follows:

 Tax compliance services $245,057 (2011: $479,655);

 Other services $45,135 (2011: $23,491)

DIRECTORS‟ 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 2012, 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

Katrina Zdrilic

Partner

Sydney

28 September 2012

Signed in accordance with a resolution of directors.

G. HARVEY K.L. PAGE

Executive Chairman Executive Director / Chief Executive Officer

Sydney Sydney

28 September 2012 28 September 2012

Liability limited by a scheme approved

under Professional Standards Legislation

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 19-27 & 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 19-27 & 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 diversity

and disclose the policy or a summary of that policy. The

policy should include requirements for the board to

establish measureable objectives for achieving gender

diversity for the board to assess annually both the

objectives and progress in achieving them.

Yes Pages 40 & 41 ASXLR 3.2

3.3 Companies should disclose in each annual report the

measureable objectives for achieving gender diversity set

by the board in accordance with the diversity policy and

progress toward achieving them.

ASXLR 3.3

3.4 Companies should disclose in each annual report the

proportion of women employees in the whole

organisation, women in senior executive positions and

women on the board.

Yes Page 40 ASXLR 3.4

3.5 Companies should provide the information indicated in

the guide to reporting on Principle 3.

Yes ASXLR 3.5

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Recommendation

Comply

Reference/

Explanation

ASX Listing Rule/

Recommendation Yes No in Annual Report

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

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 5.2

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 The remuneration committee should be structured so that

it:

 consists of a majority of independent directors

 is chaired by an independent chair

 has at least three members

Yes

Pages 20, 38 & 39 ASXLR 8.2

8.2 Companies should clearly distinguish the structure of non-

executive directors' remuneration from that of executive

directors and senior executives.

Yes Pages 19-27, 38 &

ASXLR 8.3

8.3 Companies should provide the information indicated in

the Guide to reporting on Principle 8.

Yes

ASXLR 8.3

CORPORATE GOVERNANCE STATEMENT (CONTINUED) ASX Listing Rule/

Recommendation

The corporate governance practices of the Company were in place throughout the year ended

30 June 2012.

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.

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. The board considers

that the present board has an appropriate mix of skills and diversity. 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

Non-Executive Director

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

ASX Listing Rule/

Recommendation

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

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.

ASX Rec 2.1

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 Executive Director and CEO 1987

John Evyn Slack-Smith Executive Director and COO 2001

David Matthew Ackery Executive Director 2005

Chris Mentis Executive 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.

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,

ASX Rec 2.6

CORPORATE GOVERNANCE STATEMENT (CONTINUED) ASX Listing Rule/ Recommendation

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 2012.

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.

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,

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

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.

ASX Listing Rule/

Recommendation

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

ISO 31000:2009 Risk Management).

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

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

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

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 Listing Rule/

Recommendation

ASX Rec 8.3

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

ASX Rec 8.3

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 has 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.

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

Diversity

In accordance with the ASX Corporate Governance Council's "Corporate Governance Principles and Recommendations"

in June 2012, the Company established a policy concerning diversity which includes requirements for the Board to establish

measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress

in achieving them. The Board is developing measurable objectives for the year ending 30 June 2013, in accordance with

that policy. Present measurements are set out below.

Diversity Policies

The Company has established both a Board Diversity Policy and Employee Diversity Policy during the current financial year.

The Company recognises the importance of having a diverse workplace and embraces the corporate benefits that a

diverse workforce adds to an organisation. The Company believes that increasing diversity in the Company is essential to

producing greater value for its shareholders, as it allows the Company to become more innovative, responsive, productive

and competitive.

The Company is committed to promoting an environment that embraces and promotes diversity and that is conducive of

the selection of well qualified employees and senior management candidates from diverse backgrounds, experiences and

perspectives. The Company recognises that employees of all levels will assume changing domestic responsibilities

throughout their careers.

In relation to the Board the Company recognises the importance of having a diverse Board and embraces the corporate

benefits that a Board comprising members of diverse backgrounds, experiences and perspectives brings to an

organisation. The Company views increasing diversity at board level as essential to producing greater value for its

shareholders as it allows the Company become more innovative, responsive, productive and competitive.

The Company is committed to promoting an environment that embraces and promotes diversity and that is conducive of

the appointment of well qualified candidates to the Board. The Company recognises that members of the Board will

assume changing domestic responsibilities throughout their careers.

Both policies are available on the Company's website.

Present Measurements

The Company presently measures:

1) the number of female and male employees;

2) the different positions held by female and male employees;

3) the number of female and male employees in full time, part time and casual roles; and

4) the salaries of female and male employees and whether a pay gap exists in the Company.

Workforce Gender Profile (2012)

As at 30 June 2012 women represent 41.23% of total employees of the Company, 31.18% of employees in senior executive

positions and 10.00% of the Board.

Diversity Objectives 2013

The Company is committed to increasing the participation of women in the Company so as to broaden the talent pool

from which future leaders of the Company can be drawn.

The following gender diversity objectives and initiatives have been agreed by the Board for the financial year ended 30

June 2013.

1) Formalise a Flexible Work Policy and a Working From Home Policy.

2) Review the Company's employee diversity survey to include a wider range of questions to obtain more detailed

information about the diversity of the composition of the workforce with a view to assessing the progress of the

Company towards achieving greater diversity in the workplace.

3) Undertake an annual employee diversity and opinion survey and analyse data collected about the composition of

the workforce to assess the progress of the Company towards achieving greater diversity in workplace.

4) Review HR policies and processes to ensure that they are inclusive in nature and do not expressly or implicitly operate

in a manner contrary to the Employee Diversity Policy or the Board Diversity Policy.

5) Conduct an annual internal audit of the bullying and harassment training completed by employees and the Board to

eliminate bullying and harassment in the workplace.

6) Become a member of Diversity Council Australia to reinforce the Company's commitment to an inclusive culture and

diversity in the workplace and to add value to diversity related initiatives.

CORPORATE GOVERNANCE STATEMENT (CONTINUED)

7) Hold an event to celebrate International Women's Day on 8 March 2013 to raise awareness of gender equality issues.

8) Continue to develop the Harvey Norman Foundations Program.

9) Undertake a pay equity audit for the year ending 30 June 2013 and analyse data to assess whether a gender pay

gap exists in the company.

10) Continue to develop the Learning Management System which assists managers to identify skill gaps of employees

and monitors whether compulsory online sexual harassment training has been completed by employees, to eliminate

sexual harassment in the workplace.

11) Continue to develop systems to enable regular reporting and assessment of progress towards the adopted gender

diversity objectives.

12) Wherever possible include:

a. at least one female on a short list of applicants for all senior management roles; and

b. at least one woman in the selection panel for all senior management roles.

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

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

C O N S O L I D A T E D

NOTE 2012 2011

$000 $000

Current Assets

Cash and cash equivalents 27(a) 172,459 162,779

Trade and other receivables 5 1,017,973 1,065,232

Other financial assets 6 24,396 41,229

Inventories 7 263,421 336,742

Other assets 8 20,161 21,040

Intangible assets 9 531 322

Total current assets 1,498,941 1,627,344

Non-Current Assets

Trade and other receivables 10 10,556 14,538

Investments accounted for using equity method 36 157,992 158,978

Other financial assets 11 9,355 8,294

Property, plant and equipment 12 536,277 512,479

Investment properties 13 1,653,746 1,601,601

Intangible assets 14 57,442 58,294

Deferred income tax assets 4(d) 27,507 22,481

Total non-current assets 2,452,875 2,376,665

Total Assets 3,951,816 4,004,009

Current Liabilities

Trade and other payables 15 647,279 854,897

Interest–bearing loans and borrowings 16 234,876 105,275

Income tax payable 13,487 7,366

Other liabilities 17 1,631 1,603

Provisions 18 20,497 25,235

Total current liabilities 917,770 994,376

Non-Current Liabilities

Interest-bearing loans and borrowings 19 544,471 546,483

Provisions 18 8,954 9,675

Deferred income tax liabilities 4(d) 198,849 208,036

Other liabilities 21 14,890 16,978

Total non-current liabilities 767,164 781,172

Total Liabilities 1,684,934 1,775,548

NET ASSETS 2,266,882 2,228,461

Equity

Contributed equity 22 259,610 259,610

Reserves 23 19,376 32,621

Retained profits 24 1,956,966 1,901,350

Parent entity interest 2,235,952 2,193,581

Non-controlling interests 25 30,930 34,880

TOTAL EQUITY 2,266,882 2,228,461

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012

C O N S O L I D A T E D

NOTE 2012 2011

$000 $000

Sales revenue 2 1,407,342 1,556,384

Cost of sales (1,025,359) (1,129,517)

Gross profit

381,983

426,867

Revenues and other income items 2 1,061,233 1,122,459

Distribution expenses (10,869) (8,591)

Marketing expenses (355,456) (373,314)

Occupancy expenses (242,986) (217,637)

Administrative expenses (404,228) (447,951)

Other expenses from ordinary activities (164,050) (102,960)

Finance costs 3 (49,455) (42,984)

Share of equity accounted entities:

- Share of net profit of joint venture entities (a)

- Share of joint venture property revaluation (a)

13,742

(2,505)

17,888

158

Profit before income tax

227,409

373,935

Income tax expense

4(a)

(51,094)

(114,315)

Profit after tax

176,315

259,620

Attributable to:

Owners of the parent 172,471 252,255

Non-controlling interests 3,844 7,365

176,315

259,620

Earnings Per Share:

Basic earnings per share (cents per share) 26 16.24 cents 23.75 cents

Diluted earnings per share (cents per share) 26 16.24 cents 23.75 cents

Dividends per share (cents per share) 9.0 cents 12.0 cents

(a) The total share of net profit of joint venture entities, including the share of joint venture property revaluation, was

$11.24 million before tax for the year ended 30 June 2012 (June 2011: $18.05 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 2012

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

C O N S O L I D A T E D

2012 2011

$000 $000

Profit for the year 176,315 259,620

Other comprehensive income

Foreign currency translation 1,402 (23,756)

Net fair value gains on available-for-sale investments 1,027 973

Cash flow hedges:

- (Losses) / gains taken to equity (18,741) 567

- Transferred realised gains / (losses) to other income 100 (57)

- Transferred to Statement of Financial Position (4) (4)

Fair value revaluation of land and buildings 9,040 (544)

Income tax on items of other comprehensive income 2,223 (1,988)

Other comprehensive income for the year (net of tax)

(4,953)

(24,809)

Total comprehensive income for the year

171,362

234,811

Total comprehensive income attributable to:

- Owners of the parent 166,713 235,315

- Non-controlling interests 4,649 (504)

171,362

234,811

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

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

Interests

TOTAL

EQUITY

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

At 1 July 2011

259,610

1,901,350

66,557

(35,934)

2,327

(864)

7,452

(6,917)

34,880

2,228,461

Other comprehensive income:

Revaluation of land and buildings - - 5,672 - - - - - (32) 5,640

Reverse expired or realised cash

flow hedge reserves

Currency translation differences - - - 565 - - - - 837 1,402

Fair value of interest rate swaps - - - - - (13,091) - - - (13,091)

Fair value of forward foreign

exchange contracts

(26)

Fair value of available for sale

financial assets

1,027

Other comprehensive income

5,672

565

1,027

(13,022)

805

(4,953)

Profit for the year - 172,471 - - - - - - 3,844 176,315

Total comprehensive income

for the year

172,471

5,672

565

1,027

(13,022)

4,649

171,362

Shareholder equity contribution - - - - - - - - 1,500 1,500

Change in control of controlled

entities

(4,521)

Acquisition of non-controlling

interest

(7,821)

Cost of share based payments - - - - - - 334 - - 334

Dividends paid - (116,855) - - - - - - (4,248) (121,103)

Distribution to members - - - - - - - - (1,330) (1,330)

At 30 June 2012

259,610

1,956,966

72,229

(35,369)

3,354

(13,886)

7,786

(14,738)

30,930

2,266,882

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012 (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

Acquisition

Reserve

Non-

controlling

Interests

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

Other comprehensive income:

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 forward foreign

exchange contracts

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

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 CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

47 47

C O N S O L I D A T E D

NOTE 2012 2011

$000 $000

Cash Flows from Operating Activities

Inflows / (Outflows)

Net receipts from franchisees A 757,348 998,052

Receipts from customers B 1,463,238 1,634,885

Payments to suppliers and employees C (1,905,301) (2,130,828)

Distributions received from joint ventures D 12,651 37,217

GST paid E (33,963) (22,294)

Interest received 9,422 7,738

Interest and other costs of finance paid F (49,340) (43,045)

Income taxes paid (57,016) (126,924)

Dividends received 2,919 2,587

Cash flows from operation activities prior to consumer

finance related cash flows

199,958

357,388

Consumer finance related cash flows:

Consumer finance loans granted by the consolidated entity (918) (1,330)

Repayments received from consumers on

consumer finance loans granted by the consolidated entity

1,905

2,915

Consumer finance related cash flows

987

1,585

Net Cash Flows from Operating Activities

27 (b)

200,945

358,973

Cash Flows from Investing Activities

Payment for purchases of property, plant and

equipment and intangible assets

(108,547)

(170,783)

Payment for the purchase of Investment properties G (88,631) (172,709)

Proceeds from sale of property, plant and equipment 5,322 5,836

Payment for the purchase of units in unit trusts (195) (4)

Payments for purchase of equity investments H (222) (5,643)

Proceeds from sale of listed securities 18,941 4,838

Loans repaid from / (granted to) other entities 2,260 (6,776)

Net Cash Flows Used in Investing Activities

(171,072)

(366,726)

Cash Flows from Financing Activities

Payment for purchase of shares in a controlled entity I (12,101) (21,485)

Proceeds from Syndicated Facility and Syndicated

Working Capital Facility

104,100

164,500

Dividends paid (116,855) (138,101)

Repayment of loans from directors and other persons (1,211) (1,149)

Proceeds from borrowings J 17,558 322

Net Cash Flows (Used in) / From Financing Activities

(8,509)

25,572

Net increase in Cash and Cash Equivalents

21,364

17,819

Cash and Cash Equivalents at Beginning of the Year 118,729 100,910

Cash and Cash Equivalents at End of the Year

27 (a)

140,093

118,729

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012 (CONTINUED)

Commentary to the Statement of Cash Flows:

<A> Net receipts from franchisees decreased by $180.33 million compared to the previous year partly attributed to

the reduction in total revenue received from franchisees from $989.04 million for the prior year to $945.64 million

for the year ended 30 June 2012, a decrease of $43.40 million or 4.4% (refer note 2).

Cash flows from operating activities are also affected by movement in franchisee working capital loans

receivable as at 30 June 2012 relative to the previous corresponding period. The aggregate amount of loans

advanced to franchisees as at 30 June 2012 exceeded the aggregate amount of loans advanced to

franchisees as at 30 June 2011 by $135.55 million. This is primarily due to a lower rate of reduction in franchisee

loan balances from reduced cash receipts from franchisee sales and a higher level of tactical support provided

to franchisees which offset the reduced outflows from inventory and working capital management. The

aggregate amount of tactical support for the current year was $124.19 million compared to $60.37 million for the

previous year, an increase of $63.82 million.

<B> Sales revenue to external customers derived by company-operated stores decreased for the year ended 30

June 2012 relative to the previous year due to the closure of seven (7) Clive Peeters and Rick Hart stores and the

conversion of the remaining eighteen (18) Clive Peeters and Rick Hart stores to the franchised model during the

first half of the financial year. The sale of Clive Peeters and Rick Hart inventory upon conversion to the franchised

model was made via several working capital advances to franchisees and not settled in cash.

The reductions were offset by the opening of five (5) new stores in offshore markets located in Maribor, Slovenia

Zagreb, Croatia and Malaysia.

<C> The decrease in payments to suppliers and employees is due to the closure of seven (7) Clive Peeters and Rick

Hart stores and the conversion of the remaining eighteen (18) Clive Peeters and Rick Hart stores to the franchised

model during the current year. The consolidated entity continues to focus on the prudent management of

working capital and has made a concerted effort to effectively manage inventory and control operating costs

in a difficult retail climate.

<D> The decrease in distributions received from joint venture entities is because the prior year balance included

proceeds received from the sale of a development property located in Mentone, Victoria.

<E>

Net GST payments increased by $11.67 million in the year ended 30 June 2012 compared to the prior year. The

previous year contained higher GST input tax credits (cash inflows) resulting from increased real property

acquisitions and developments.

<F> Interest and other costs of finance paid increased by $6.30 million due to an increase in the utilised portion of the

Syndicated Facilities and other short term borrowings in Australia and the increase in commercial bill facilities

utilised by overseas controlled entities. During the current year, the consolidated entity has entered into a further

separate agreement with certain banks in relation to a loan facility of $85.00 million (the “Syndicated Working

Capital Facility”).

<G> Payments for the purchases of property, plant and equipment, intangible assets and investment properties

decreased by $146.31 million relative to the previous year. Higher payments in the prior year were attributable to

several significant property acquisitions including the At Home Centre at Penrith, the new development under

construction at Springvale, Victoria, the Space Asian showroom in Singapore and the acquisition of plant and

equipment assets from the former owners of Clive Peeters and Rick Hart.

<H> The decrease in payments for the purchase of equity investments is because the prior year balance included

capital contributions required for a mining camp joint venture in Queensland of $4.76 million.

<I> During the current year, the consolidated entity acquired an additional 12,592,150 shares in Pertama Holdings

Limited, Singapore for a total purchase consideration of $6.32 million. The consolidated entity also acquired a

further 24.9% interest in a controlled entity for a total purchase consideration of $5.78 million.

<J> The utilised Syndicated Facility and Syndicated Working Capital Facility increased to $590.00 million during the

year ended 30 June 2012 to fund operating activities (refer to Notes 16 & 19 for further information on these

facilities).

OPERATING SEGMENTS

OPERATING SEGMENTS – 30 June 2012

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 are 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

from Outside the

Consolidated Entity

Share of Net

Profit/(Loss) of

Equity Accounted

Investments

Segment

Revenue

June 2012

$000

June 2012

$000

June 2012

$000

June 2012

$000

FRANCHISING OPERATIONS 4,546 853,466 - 858,012

Retail – New Zealand 544,324 10,180 - 554,504

Retail – Asia 342,213 3,308 - 345,521

Retail – Slovenia & Croatia 84,136 731 - 84,867

Retail – Ireland & Northern Ireland 191,340 3,654 - 194,994

Non-Franchised Retail –

Clive Peeters & Rick Hart

134,412

9,496

143,908

Other Non-Franchised Retail 106,260 3,282 - 109,542

TOTAL RETAIL

1,402,685

30,651

1,433,336

Retail Property 111 180,650 13,558 194,319

Property Under Construction for Retail - 11 479 490

Property Development for Resale - 10,913 (295) 10,618

TOTAL PROPERTY

111

191,574

13,742

205,427

Equity Investments - 4,095 - 4,095

Other - 12,872 - 12,872

Inter-company eliminations - (31,425) - (31,425)

Total Segment Revenue

1,407,342

1,061,233

13,742

2,482,317

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2012 (continued)

SEGMENT RESULT Segment Result Before Interest,

Taxation,

Depreciation,

Impairment &

Amortisation

Interest

Expense

Depreciation

Expense

Amortisation

& Impairment

Expense

Segment

Result Before

Tax

June 2012

$000

June 2012

$000

June 2012

$000

June 2012

$000

June 2012

$000

FRANCHISING OPERATIONS 202,813 (15,274) (50,943) (9,613) 126,983

Retail – New Zealand 46,077 (70) (6,839) (36) 39,132

Retail – Asia 13,763 637 (4,932) (28) 9,440

Retail – Slovenia & Croatia 5,242 (1,495) (1,271) (48) 2,428

Retail – Ireland & Northern Ireland (27,501) (3,385) (2,641) (509) (34,036)

Non-Franchised Retail –

Clive Peeters & Rick Hart

(13,120)

(776)

(895)

(14,791)

Other Non-Franchised Retail 10,653 (1,461) (1,516) (149) 7,527

TOTAL RETAIL

35,114

(6,550)

(18,094)

(770)

9,700

Retail Property 124,814 (25,611) (4,749) - 94,454

Property Under Construction for Retail (18,254) (1,250) - - (19,504)

Property Development for Resale 9,974 (489) - - 9,485

TOTAL PROPERTY

116,534

(27,350)

(4,749)

84,435

Equity Investments 4,784 (375) - - 4,409

Other 9,742 (963) (4,455) (2,442) 1,882

Inter-company eliminations (1,057) 1,057 - - -

Total Segment Result Before Tax

367,930

(49,455)

(78,241)

(12,825)

227,409

Income tax expense (51,094)

Profit attributable to non-controlling

interests

(3,844)

Net Profit for the Year Attributable

to Owners of the Parent

172,471

OPERATING SEGMENTS (CONTINUED)

Operating Segments – 30 June 2012 (continued)

SEGMENT ASSETS SEGMENT LIABILITIES Segment

Assets

Inter-

company

Eliminations

Segment

Assets After

Eliminations

Segment

Liabilities

Inter-

company

Eliminations

Segment

Liabilities After

Eliminations

2012

$000

2012

$000

2012

$000

2012

$000

2012

$000

2012

$000

FRANCHISING OPERATIONS 3,098,231 (1,852,155) 1,246,076 1,341,590 (494,960) 846,630

Retail – New Zealand 192,793 - 192,793 45,136 (960) 44,176

Retail – Asia 129,060 - 129,060 76,666 (28,009) 48,657

Retail – Slovenia & Croatia 36,994 (1,578) 35,416 33,650 (5) 33,645

Retail – Ireland & Northern Ireland 46,585 - 46,585 210,840 (163,010) 47,830

Non-Franchised Retail –

Clive Peeters and Rick Hart

11,179

(10,042)

1,137

52,889

(52,333)

556

Other Non-Franchised Retail 71,002 (14,160) 56,842 96,432 (64,770) 31,662

TOTAL RETAIL

487,613

(25,780)

461,833

515,613

(309,087)

206,526

Retail Property 2,055,693 (53,867) 2,001,826 1,361,110 (980,995) 380,115

Property Under Construction

for Retail

84,505

(142)

84,363

91,631

(75,970)

15,661

Property Development for Resale 33,049 (44) 33,005 44,433 (38,306) 6,127

TOTAL PROPERTY

2,173,247

(54,053)

2,119,194

1,497,174

(1,095,271)

401,903

Equity Investments 32,290 - 32,290 4,659 - 4,659

Other 112,418 (47,502) 64,916 93,052 (80,172) 12,880

CONSOLIDATED 5,903,799 (1,979,490) 3,924,309 3,452,088 (1,979,490) 1,472,598

Unallocated

27,507

212,336

TOTAL

3,951,816

1,684,934

OPERATING SEGMENTS (CONTINUED)

OPERATING SEGMENTS – 30 June 2011

SEGMENT REVENUE Sales to

Customers

Outside the

Consolidated

Entity

Other Revenues

from Outside

the

Consolidated

Entity

Share of Joint

Venture

Revaluation

Share of Net

Profit/(Loss) of

Equity

Accounted

Investments

Segment

Revenue

June 2011

$000

June 2011

$000

June 2011

$000

June 2011

$000

June 2011

$000

FRANCHISING OPERATIONS 3,836 914,656 - - 918,492

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 149 183,926 - 9,958 194,033

Property Under Construction for Retail - (1,133) - 367 (766)

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

TOTAL PROPERTY

149

176,770

158

17,888

194,965

Equity Investments - 14,657 - - 14,657

Other - 12,248 - - 12,248

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

Total Segment Revenue

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

June 2011

$000

June 2011

$000

June 2011

$000

June 2011

$000

June 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 Segment Result Before Tax

508,357

(42,984)

(81,594)

(9,844)

373,935

Income tax expense (114,315)

Profit 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

2011

$000

2011

$000

2011

$000

2011

$000

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)

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

Operating 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 &

Croatia

Consists of the wholly-owned operations of the consolidated entity in the retail trading

operations in Slovenia and Croatia 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 & Rick

Hart

Consists of the wholly-owned operations of the consolidated entity under the Clive Peeters

and Rick Hart brands prior to the restructure in August 2011.

Non-Franchised Retail

Consists of the retail trading operations in Australia which are controlled by the consolidated

entity and do not include any operations of Harvey Norman franchisees. This segment

includes the Space 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

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, Slovenia and Croatia 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 2012 was authorised for issue in accordance with

a resolution of the directors on 28 September 2012.

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 2012. For details on the

impact of future accounting standards, refer to page 69.

(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.

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)

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

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.

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.

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.

(ii) Basis of consolidation

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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Basis of consolidation (continued)

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.

(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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(iv) Foreign currency translation (continued)

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.

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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(v) Property, plant and equipment (continued)

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.

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 market 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

 current market rental value, being the amount that could be exchanged between knowledgeable, willing parties in

an arm‟s length transaction

 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

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(vii) Investment properties (continued)

Investment Properties under Construction

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.

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.

(viii) 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.

(ix) 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.

(x) Impairment of non-financial 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 (CGU) 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.

In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such

transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation

multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(x) Impairment of non-financial assets (continued)

The consolidated entity bases its impairment calculation on detailed budgets and forecast calculations, which are

prepared separately for each of the consolidated entity‟s CGUs to which the individual assets are allocated. These budgets

and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated

and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the income statement in

expense categories consistent with the function of the impaired assets, except for a property previously revalued and the

revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other

comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously

recognised impairment losses may no longer exist or may have decreased. If such indication exists, the consolidated entity

estimates the asset‟s or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has

been a change in the assumptions used to determine the asset‟s recoverable amount since the last impairment loss was

recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor

exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been

recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a

revalued amount, in which case, the reversal is treated as a revaluation increase.

(xi) Financial instruments – initial recognition and subsequent measurement

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. The consolidated entity determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded

at fair value through profit or loss.

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.

The consolidated entity‟s financial assets include cash and short-term deposits, trade and other receivables, loans and

other receivables, quoted financial instruments and derivative financial instruments.

The subsequent measurement of financial assets depends on their classification as described below:

 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)

(xi) Financial instruments – initial recognition and subsequent measurement (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 entity‟s right to receive the dividends is established.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is

derecognised when:

 The rights to receive cash flows from the asset have expired.

 The consolidated entity has transferred its rights to receive cash flows from the asset or has transferred substantially all the risks and rewards of the asset.

Impairment of financial assets

The consolidated entity assesses, at each reporting date, whether there is any objective evidence that a financial asset or

a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only

if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition

of the asset (an incurred ”loss event”) and that loss event has an impact on the estimated future cash flows of the financial

asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that

the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal

payments, the probability that they will enter bankruptcy.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is

recognised in the income statement. Loans together with the associated allowance are written off when there is no realistic

prospect of future recovery and all collateral has been realised or has been transferred to the consolidated entity. If, in a

subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after

the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the

allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the income

statement.

For available-for-sale financial investments, the consolidated entity assesses at each reporting date whether there is

objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as

available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment

below its cost. ”Significant” is evaluated against the original cost of the investment and ”prolonged” against the period in

which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss – measured

as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment

previously recognised in the income statement – is removed from other comprehensive income and recognised in the

income statement. Impairment losses on equity investments are not reversed through the income statement; increases in

their fair value after impairment are recognised directly in other comprehensive income.

Financial liabilities

Financial liabilities within the scope of AASB 139 are classified as financial liabilities at fair value through profit or loss, loans

and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The

consolidated entity determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable

transaction costs. The consolidated entity‟s financial liabilities include trade and other payables, bank overdrafts, loans and

borrowings and derivative financial instruments.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xi) Financial instruments – initial recognition and subsequent measurement (continued)

The measurement of financial liabilities depends on their classification, described as follows:  Financial liabilities at fair value through profit or loss: Financial liabilities at fair value through profit or loss include

financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through

profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the

near term. Gains or losses on liabilities held for trading are recognised in the income statement. Financial liabilities

designated upon initial recognition at fair value through profit and loss only if the criteria of AASB 139 are satisfied. The

consolidated entity has not designated any financial liability as at fair value through profit or loss.

 Loans and borrowings: After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (“EIR”) method. Gains and losses are recognised in the income

statement when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is

calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part

of the EIR. The EIR amortisation is included in finance costs in the income statement.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an

existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original

liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the income

statement.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference

to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any

deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using

appropriate valuation techniques. Such techniques may include:

 Using recent arm‟s length market transactions

 Reference to the current fair value of another instrument that is substantially the same

 A discounted cash flow analysis or other valuation models

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note

34(e).

(xii) 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 include 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.

(xiii) 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.

During the year the consolidated entity reassessed the classification of certain cash flow transactions. This resulted in a

reclassification within the Statement of Cash Flows for the current year and prior year comparative balances have been

restated for consistency.

(xiv) 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. 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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xv) 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.

(xvi) 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 present 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.

(xvii) 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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xvii) Leases (continued)

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.

(xviii) 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 discounts

estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the

financial asset.

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.

(xix) 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:

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xix) Income tax (continued)

 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.

(xx) 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.

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 in the Statement of Cash Flows exclude GST. The GST component of cash flows arising from operating, investing

and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash

flows.

(xxi) 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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xxi) Derivative financial instruments (continued)

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 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.

(xxii) 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.

(xxiii) 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.

(xxiv) Investment in controlled entities

Investments in controlled entities are carried at cost.

(xxv) 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 makers 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.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(xxv) Operating Segments (continued)

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”.

During the year the consolidated entity restated the segment revenue attributable to the franchising operations, retail

property and property under construction segments for the previous year ended 30 June 2011. This restatement only

occurred between the above-named segments and had no impact on the total segment revenue of the consolidated

entity.

(xxvi) Business combinations

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.

(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 2012.

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 amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2012

AASB 2011-

Amendments to

Australian

Accounting

Standards –

Presentation of

Other

Comprehensive

This Standard requires entities to

group items presented in other

comprehensive income on the

basis of whether they might be

reclassified subsequently to profit

or loss and those that will not.

1 July 2012 The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2012

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference Title Summary Application date of

standard*

Impact on Group

financial report

Application

date for

Group*

Income

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.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

AASB 9 Financial Instruments AASB 9 includes requirements for

the classification and

measurement of financial assets.

It was further amended by AASB

2010-7 to reflect amendments to

the accounting for financial

liabilities.

These requirements improve and

simplify the approach for

classification and measurement

of financial assets compared with

the requirements of AASB 139. The

main changes are described

below.

 Financial assets that are

debt instruments will be

classified based on (1) the

objective of the entity‟s

business model for

managing the financial

assets; (2) the

characteristics of the

contractual cash flows.

 Allows an irrevocable

election on initial

recognition to present gains

and losses on investments in

equity instruments that are

not held for trading in other

comprehensive income.

Dividends in respect of

these investments that are a

return on investment can be

recognised in profit or loss

and there is no impairment

or recycling on disposal of

the instrument.

 Financial assets can be

designated and measured

at fair value through profit

or loss at initial recognition if

1 January

2015

The consolidated

entity is in the

process of assessing

the impact on the

consolidated entity‟s

financial statements

and disclosures.

1 July 2015

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reference Title Summary Application

date of

standard*

Impact on Group

financial report

Application

date for

Group*

doing so eliminates or

significantly reduces a

measurement or

recognition inconsistency

that would arise from

measuring assets or

liabilities, or recognising the

gains and losses on them,

on different bases.

Where the fair value option is

used for financial liabilities the

change in fair value is to be

accounted for as follows:

 The change attributable to

changes in credit risk are

presented in other

comprehensive income

(OCI)

 The remaining change is

presented in profit or loss

If this approach creates or

enlarges an accounting

mismatch in the profit or loss, the

effect of the changes in credit risk

are also presented in profit or loss.

Consequential amendments

were also made to other

standards as a result of AASB 9,

introduced by AASB 2009-11 and

superseded by AASB 2010-7 and

2010-10.

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. 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.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

net asset position or

profit after tax and

non-controlling

interests.

The consolidated

entity anticipates

that land and

buildings assets

accounted for using

the equity method

will be classified as

investment

properties

accounted for using

proportionate

consolidation in the

statement of

financial position.

1 July 2013

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

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference Title Summary Application date of

standard*

Impact on Group

financial report

Application

date for

Group*

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.

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 amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

AASB 119 Employee Benefits The main change introduced by

this standard is to revise the

accounting for defined benefit

plans. The amendment removes

the options for accounting for

the liability, and requires that the

liabilities arising from such plans is

recognized in full with actuarial

gains and losses being

recognized in other

comprehensive income. It also

revised the method of

calculating the return on plan

assets. The revised standard

changes the definition of short-

term employee benefits. The

distinction between short-term

and other long-term employee

benefits is now based on

whether the benefits are

expected to be settled wholly

within 12 months after the

reporting date.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

Annual

Improveme

-nts

2009-2011

Cycle

Annual

Improvements to

IFRSs 2009-2011

Cycle

This standard sets out

amendments to International

Financial Reporting

Standards (IFRSs) and the related

bases for conclusions and

guidance made during the

International Accounting

Standards Board‟s Annual

Improvements process. These

amendments have not yet been

adopted by the AASB.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reference Title Summary Application

date of

standard*

Impact on Group

financial report

Application

date for

Group*

The following items are

addressed by this standard:

1) IFRS 1 First-time Adoption of

International Financial Reporting

Standards

Repeated application of

IFRS 1

Borrowing costs

2) IAS 1 Presentation of Financial

Statements

Clarification of the

requirements for comparative

information

3) IAS 16 Property, Plant and

Equipment

Classification of servicing

equipment

4) IAS 32 Financial Instruments:

Presentation

Tax effect of distribution to

holders of equity instruments

5) IAS 34 Interim Financial

Reporting

Interim financial reporting

and segment information for

total assets and liabilities

AASB 2012-

Amendments to

Australian

Accounting

Standards –

Disclosures –

Offsetting Financial

Assets and Financial

Liabilities

AASB 2012-2 principally amends

AASB 7 Financial Instruments:

Disclosures to require disclosure of

information that will enable users

of an entity‟s financial statements

to evaluate the effect or

potential effect of netting

arrangements, including rights of

set-off associated with the entity‟s

recognised financial assets and

recognised financial liabilities, on

the entity‟s financial position.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

AASB 2012-

Amendments to

Australian

Accounting

Standards –

Government Loans

AASB 2012-4 adds an exception

to the retrospective application

of Australian Accounting

Standards under AASB 1 First-time

Adoption of Australian

Accounting Standards to require

that first-time adopters apply the

requirements in AASB 139

Financial Instruments: Recognition

and Measurement (or AASB 9

Financial Instruments) and AASB

120 Accounting for Government

Grants and Disclosure of

Government Assistance

prospectively to government

loans (including those at a below-

market rate of interest) existing at

the date of transition to Australian

Accounting Standards.

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

AASB 2012-

Amendments to

Australian

Accounting

Standards arising

from Annual

Improvements 2009–

2011 Cycle; and

AASB 2012-5 makes amendments

resulting from the 2009-2011

Annual Improvements Cycle. The

Standard addresses a range of

improvements, including the

following:

• repeat application of AASB 1 is

1 January

2013

The amendments

are not expected to

have any material

impact on the

consolidated entity‟s

financial statements.

1 July 2013

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reference Title Summary Application date of

standard*

Impact on Group

financial report

Application

date for

Group*

permitted (AASB 1); and

• clarification of the comparative

information requirements when

an entity provides a third balance

sheet (AASB 101 Presentation of

Financial Statements).

AASB 2012-

Amendments to

Australian

Accounting

Standards –

Offsetting Financial

Assets and Financial

Liabilities;

AASB 2012-3 adds application

guidance to AASB 132 Financial

Instruments: Presentation to

address inconsistencies identified

in applying some of the offsetting

criteria of AASB 132, including

clarifying the meaning of

“currently has a legally

enforceable right of set-off” and

that some gross settlement

systems may be considered

equivalent to net settlement.

1 January

2014

The consolidated

entity is in the

process of assessing

the impact on the

consolidated entity‟s

financial statements

and disclosures.

1 July 2014

*designates the beginning of the applicable annual reporting period

(f) New Accounting Standards and Interpretations

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of

amendments contained in AASB 124 Related Party Disclosures that are effective for financial reporting periods

commencing on or after 1 January 2011.

AASB 124 Related Party Transactions (Amendment)

The revised AASB 124 Related Party Disclosures (December 2009) simplifies the definition of a related party, clarifying its

intended meaning and eliminating inconsistencies from the definition, including:

 The definition now identifies a subsidiary and an associate with the same investor as related parties of each other

 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

 The definition now identifies that, 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

The amended accounting standard has a disclosure impact in Note 5 Trade and Other Receivables (Current) that results in

the reclassification of non-trade debts receivable of $18.30 million from “other unrelated persons” to “related parties” for

the year ended 30 June 2012. This amendment was applied retrospectively resulting in the reclassification of non-trade

debts receivable of $25.90 million from “other unrelated persons” to “related parties” for the year ended 30 June 2011.

NOTES TO THE FINANCIAL STATEMENTS

C O N S O L I D A T E D

2012 2011

NOTE $000 $000

Revenues

Revenue from the sale of products 1,407,342 1,556,384

Gross revenue from franchisees:

- Franchise fees 690,141 750,563

- Rent 222,586 204,181

- Interest 32,909 34,292

Total revenue received from franchisees

945,636

989,036

Rent received from other third parties 50,492 44,219

Interest received from other unrelated parties 9,422 7,739

Dividends from other unrelated parties 2,919 2,587

Total other revenues

62,833

54,545

Share of net profit of joint venture entities

13,742

17,888

Share of joint venture property revaluation

158

Total revenues

2,429,553

2,618,011

Other Income Items:

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

Reversal of a previous property revaluation decrement 2,775 -

Net profit on the revaluation of equity investments to fair value 1,866 12,070

Net foreign exchange gains 1,318 2,258

Unrealised gain on interest rate swap - 230

Other revenue 46,805 49,023

Total other income items

52,764

78,878

Total revenues and other income items

2,482,317

2,696,889

Total revenue is disclosed on the Income Statement as follows:

Sales revenue 1,407,342 1,556,384

Other revenues 1,008,469 1,043,581

Other income items 52,764 78,878

Total other revenues and income items

1,061,233

1,122,459

Share of net profit of joint venture entities

13,742

17,888

Share of joint venture property revaluations

158

Total revenues and other income items

2,482,317

2,696,889

2,482,317

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

3. Expenses and Losses

In arriving at profit before income tax, the following items were taken into account:

Tactical support:

Tactical support provided to franchisees 124,186 60,372

Depreciation, amortisation and impairment:

Depreciation of:

- Buildings 4,749 4,097

- Plant and equipment 73,492 77,416

Amortisation of:

- Leased plant and equipment 39 81

- Computer software 9,782 7,773

Impairment of (included in administrative and other expenses line

in the Income Statement):

- Plant and equipment – Ireland 509 968

- Capitalised IT projects 2,356 1,093

- Other assets 139 10

Total depreciation, amortisation and impairment

91,066

91,438

Finance costs:

Interest paid or payable:

- Loans from directors and director-related entities 2,672 2,835

- Bank interest paid to financial institutions 43,017 37,694

- Other 3,766 2,455

Total finance costs

49,455

42,984

Employee benefits expense:

- Wages and salaries 200,092 228,862

- Workers‟ compensation costs 786 1,539

- Superannuation contributions expense 10,659 13,231

- Payroll tax expense 8,977 10,934

- Share-based payment expense 334 419

- Other employee benefit expense 4,660 6,776

Total employee benefits expense

225,508

261,761

Property revaluation decrements:

- Net revaluation decrement for Australian investment properties 25,263 -

- Share of joint venture property revaluations (Note 36) 2,505 -

Total property revaluation decrements

27,768

Other expense items:

- Net bad debts – provided for or written off 1,438 1,999

- Net charge to provision for doubtful debts 1,324 (2,533)

- Net loss on disposal of plant and equipment 5,491 2,344

- Minimum lease payments 157,707 161,009

- Provision for obsolescence of inventories (1,901) (336)

- Provision for employee benefits (5,672) 5,494

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$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 79,494 93,701

Adjustments in respect of current income tax of previous years (361) (1,284)

Support payments provided to Harvey Norman Holdings (Ireland) Limited during

2010, 2011 and 2012 as agreed under the terms of an Advance Pricing

Arrangement with the Australian Taxation Office dated 6 February 2012

(16,292)

Deferred income tax:

Relating to the origination and reversal of temporary differences (5,436) 21,898

Reversals of deferred tax balances raised in previous years (6,311) -

Total income tax expense reported in the income statement

51,094

114,315

(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 (5,613) 169

Net gain on revaluation of land and buildings 3,400 1,819

Total income tax expense reported in equity

(2,213)

1,988

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 227,409 373,935

At the consolidated entity‟s statutory income tax rate of 30% (2011: 30%)

68,223

112,181

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

Support payments provided to Harvey Norman Holdings (Ireland) Limited during

2010, 2011 and 2012 as agreed under the terms of an Advance Pricing

Arrangement with the Australian Taxation Office dated 6 February 2012

(16,292)

Adjustments in respect of current income tax of previous years (361) (1,284)

Share-based payment expenses 100 125

Expenditure not allowable for income tax purposes 306 84

Income not assessable for income tax purposes 23 (878)

Unrecognised tax losses 10,363 13,368

Utilisation of tax losses (321) (691)

Reversal of deferred tax balances raised in previous years (6,311) -

Tax concession for research and development expenses (885) (6,004)

Difference between tax capital gain and accounting profit on asset sales (227) -

Non-allowable building and motor vehicle depreciation 270 90

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

Receipt of fully franked dividends (919) (776)

Sundry items (547) (615)

Effect of different rates of tax on overseas income and exchange rate differences (2,328) (1,372)

Total adjustments

(17,129)

2,134

Total income tax expense reported in the income statement

51,094

114,315

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4. Income Tax (continued)

S T A T E M E N T O F

F I N A N C I A L P O S I T I O N

I N C O M E S T A T E M E N T

2012 2011 2012 2011

$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 (127,715) (136,021) (8,306) 4,424

Adjustments in respect of deferred tax liabilities

of previous years

6,311

(6,311)

Revaluations of owner-occupied land and

buildings to fair value

(10,467)

(7,199)

Non-allowable building depreciation due to a

legislative change in New Zealand

(18,605)

(19,150)

(814)

Reversal of building depreciation expense for

investment properties

(31,864)

(25,519)

6,345

5,371

Differences between accounting carrying amount

and tax cost base of computer software assets

(746)

(700)

(206)

Unrealised profits on investments (352) (4,062) (3,762) 2,707

Accretion of FAST receivables (3,542) (3,496) 46 65

Unrealised foreign exchange gains - (360)

Research and development (10,827) (10,673) 673 8,642

Other items (1,042) (1,216) (552) 904

(198,849)

(208,036)

CONSOLIDATED

Deferred tax assets:

Employee provisions 4,752 6,428 1,692 (235)

Unused tax losses and tax credits 308 233 (75) 594

Other provisions 2,016 1,874 26 76

Provision for lease makegood 215 135 (80) 528

Provision for deferred lease expenses 1,489 1,633 144 (106)

Lease incentives 443 511 68 76

Provision for executive remuneration 437 675 238 30

Inventory valuation adjustments 1,565 1,565 - -

Unearned income for accounting purposes - 7 7 109

Unrealised foreign exchange losses 35 139 93 (19)

Finance leases 2,699 1,507 (1,282) (608)

Discount interest-free receivables 3,589 3,564 (25) (45)

Equity-accounted investments 2,127 2,078 (11) (19)

Provisions for onerous leases 633 728 95 164

Revaluation of interest rate swaps to fair value 5,966 371 (8) -

Other items 1,233 1,033 6 (281)

27,507

22,481

(11,747)

21,898

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4. Income Tax (continued)

The consolidated entity has not recognised deferred tax assets relating to tax losses of $228.10 million (2011: $194.27

million) which are available for offset against taxable profits of the companies in which the losses arose. The tax losses

of $228.10 million as at 30 June 2012 exclude the adjustments relating to support payments provided to Harvey

Norman Holdings (Ireland) Limited during 2010, 2011 and 2012 as agreed under the terms of an Advance Pricing

Arrangement with the Australian Taxation Office dated 6 February 2012.

At 30 June 2012, there is no recognised or unrecognised deferred income tax liability (2011: $0) 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 are members of a tax

consolidated group. 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 principles 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)

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

2012 ($000) 968,205 4,937 1,501 10,439 32 12 800 985,926

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

C O N S O L I D A T E D

2012 2011

$000 $000

Reconciled to:

Trade debtors (Current) 985,542 1,022,892

Trade debtors (Non-Current – Note 10) 384 440

Total trade debtors

985,926

1,023,332

C O N S O L I D A T E D

2012 2011

$000 $000

5. Trade and Other Receivables (Current)

Trade debtors (a) 985,542 1,022,892

Provision for doubtful debts (a) (845) (990)

Trade debtors, net

984,697

1,021,902

Consumer finance loans (b) 2,874 2,970

Amounts receivable in respect of finance leases (c) 9,907 8,685

Non-trade debts receivable from: (d)

- Related parties 20,442 27,696

- Other unrelated persons 4,916 7,371

- Provision for doubtful debts (d) (4,863) (3,392)

Non-trade debts receivable, net

20,495

31,675

Total trade and other receivables (current)

1,017,973

1,065,232

(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 reversal of $0.22 million

(2011: an impairment loss of $1.78 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 $16.88 million

(2011: $12.48 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 fair value of the collateral held over the past due not impaired trade receivables is

$3.87 million (2011: $0).

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:

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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:

C O N S O L I D A T E D

2012 2011

$000 $000

At 1 July 990 3,289

Charge for the year (22) 1,780

Foreign exchange translation (2) (275)

Amounts written off (121) (3,804)

At 30 June

845

990

(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 11,610 10,658

Later than one year but not later than five years 9,687 14,089

21,297

24,747

Future finance revenue:

Not later than one year (1,703) (1,973)

Later than one year but not later than five years (808) (1,493)

Net finance lease receivables

18,786

21,281

Reconciled to:

Trade and other receivables (Current) 9,907 8,685

Trade and other receivables

(Non-current – Note 10)

8,879

12,596

18,786

21,281

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 $1.45 million (2011: $0.20

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 $1.15

million (2011: $1.26 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 (2011: $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

2012 ($000) 19,349 - - 1,146 - - 4,863 25,358

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

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

C O N S O L I D A T E D

2012 2011

$000 $000

At 1 July 3,392 3,622

Charge for the year 1,447 202

Amounts written off 24 (432)

At 30 June

4,863

3,392

6. Other Financial Assets (Current)

Listed shares held for trading at fair value 23,346 40,171

Other investments 1,050 1,058

Total other financial assets (current)

24,396

41,229

7. Inventories (Current)

Finished goods at cost 241,071 316,453

Provision for obsolescence (4,389) (6,290)

Finished goods at cost, net

236,682

310,163

Finished goods at net realisable value

26,739

26,579

Total current inventories at the lower of cost and

net realisable value

263,421

336,742

8. Other Assets (Current)

Prepayments 10,753 16,378

Other current assets 9,408 4,662

Total other assets (current)

20,161

21,040

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

10. Trade and Other Receivables (Non-Current)

Trade debtors (a) 384 440

Consumer finance loans (b) 1,307 1,518

Provision for doubtful debts (b) (14) (16)

1,677

1,942

Amounts receivable in respect of finance leases

8,879

12,596

Total trade and other receivables (non-current)

10,556

14,538

(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 $0.014 million (2011: $0.016 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,

$0.47 million (2011: $0.54 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

2012 ($000) 3,695 247 50 175 - - 14 4,181

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

C O N S O L I D A T E D

2012 2011

$000 $000

9. Intangible Assets (Current)

Net Licence Property 531 322

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

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

C O N S O L I D A T E D

2012 2011

$000 $000

Reconciled to:

Consumer finance loans (Current – Note 5) 2,874 2,970

Consumer finance loans (Non – Current) 1,307 1,518

Total consumer finance loans

4,181

4,488

Movements in the allowance for doubtful debts for non-current consumer finance loans were as follows:

At 1 July 16 20

Charge for the year 14 16

Amounts written off (16) (20)

At 30 June

11. Other Financial Assets (Non-Current)

Listed shares held for trading 1,750 2,000

Listed shares held as available for sale 7,194 6,080

Units in unit trusts held as available for sale 204 210

Other non-current financial assets 207 4

Total other financial assets (non-current)

9,355

8,294

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment are as follows:

Land (at fair value):

Opening balance 95,928 102,527

Additions - 4,217

Increase / (decrease) resulting from revaluation 5,923 (6,852)

Transfers from land under construction at cost 20,509 1,403

Net foreign currency differences arising from foreign operations (863) (5,367)

Closing balance

121,497

95,928

C O N S O L I D A T E D

2012 2011

$000 $000

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

Summary

Land

- At fair value 121,497 95,928

- Properties under construction, at cost - 20,325

Total Land

121,497

116,253

Buildings

- At fair value 159,220 127,940

- Properties under construction, at cost - 13,572

Total buildings

159,220

141,512

Net land and buildings

280,717

257,765

Plant and equipment

- At cost 768,731 755,771

- Accumulated depreciation (514,724) (501,557)

Net plant and equipment, at cost

254,007

254,214

Lease make good asset

- At cost 3,713 2,723

- Accumulated depreciation (2,160) (2,223)

Net lease make good asset, at cost

1,553

500

Total plant and equipment

255,560

254,714

Total property, plant and equipment

- Land and buildings at cost and fair value 280,717 257,765

- Plant and equipment at cost 772,444 758,494

Total Property, plant and equipment

1,053,161

1,016,259

Accumulated depreciation and amortisation (516,884) (503,780)

Total written down amount 536,277 512,479

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

Reconciliations (continued)

C O N S O L I D A T E D

2012 2011

$000 $000

Accumulated Depreciation

Opening balance - -

Transfers from land under construction (at cost) 468 -

Reversal upon revaluation (468) -

Closing balance

Net book value of land (at fair value)

121,497

95,928

Land under construction (at cost):

Opening balance 20,565 1,403

Transfers from investment properties - 22,733

Transfers to land at fair value (20,509) (1,403)

Net foreign currency differences arising from foreign operations (56) (2,168)

Closing balance

20,565

Accumulated Depreciation

Opening balance 240 -

Depreciation for the year (a) 230 240

Transfers to land (at fair value) (468) -

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

Closing balance

240

Net book value of land under construction

20,325

Buildings (at fair value):

Opening balance 127,940 125,549

Additions 11,575 6,981

Increase resulting from revaluation 3,525 803

Reversal of depreciation upon revaluation (948) 61

Transfers from buildings under construction at cost 19,367 1,116

Net foreign currency differences arising from foreign operations (2,239) (6,570)

Closing balance

159,220

127,940

Accumulated Depreciation

Opening balance - -

Depreciation for the year 23,355 19,989

Reversal upon revaluation (23,318) (19,987)

Net foreign currency differences arising from foreign operations (37) (2)

Closing balance

Net book value of buildings

159,220

127,940

(a) The depreciation charge relates to a leasehold land located in Singapore.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

Reconciliations (continued)

C O N S O L I D A T E D

2012 2011

$000 $000

Buildings under construction (at cost):

Opening balance 13,572 1,116

Additions 5,518 5,721

Transfers to buildings at fair value (19,367) (1,116)

Transfers from investment properties - 8,684

Net foreign currency differences arising from foreign operations 277 (833)

Closing balance

13,572

Net book value of land and buildings

280,717

257,765

Plant and equipment (at cost):

Opening balance 755,328 692,032

Additions 84,475 132,136

Disposals (67,555) (77,773)

Transfers from / (to) leased plant and equipment 123 (416)

Transfers from other assets - 21,238

Impairment (139) (419)

Net foreign currency differences arising from foreign operations (3,797) (11,470)

Closing balance

768,435

755,328

Accumulated Depreciation

Opening balance 501,267 485,564

Depreciation for the year 72,922 76,751

Disposals (56,887) (57,418)

Transfers from / (to) leased plant and equipment 100 (252)

Transfers from other assets - 4,211

Impairment (a) 509 968

Net foreign currency differences arising from foreign operations (3,392) (8,557)

Closing balance

514,519

501,267

Net book value

253,916

254,061

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

Ireland and Northern Ireland operations incurred a trading loss of $33.53 million for the current year compared to a

loss of $37.63 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 $0.51 million (2011: $0.97 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 2012 based on financial budgets approved by senior management. The pre-tax discount

rate applied to the cash flow projections was 16.0% (2011: 16.0%). The terminal growth rate applied to the cash flow

projections was 4.23% (2011: 4.23%).

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 $226.98 million (2011: $162.33 million).

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

Reconciliations (continued)

C O N S O L I D A T E D

2012 2011

$000 $000

Lease make good asset (at cost):

Opening balance 2,723 4,921

Additions 1,909 781

Disposals (950) (2,503)

Net foreign currency differences arising from foreign operations 31 (476)

Closing balance

3,713

2,723

Accumulated Depreciation

Opening balance 2,223 3,046

Amortisation for the year 569 665

Disposals (659) (1,147)

Net foreign currency differences arising from foreign operations 27 (341)

Closing balance

2,160

2,223

Net book value

1,553

500

Leased Plant and Equipment (at cost):

Opening balance 443 139

Additions - 35

Disposals (25) (126)

Transfers (to) / from plant and equipment (123) 416

Net foreign currency differences arising from foreign operations 1 (21)

Closing balance

296

443

Accumulated Depreciation

Opening balance 290 44

Amortisation for the year 39 81

Disposals (25) (74)

Transfers (to) / from plant and equipment (100) 252

Net foreign currency differences arising from foreign operations 1 (13)

Closing balance

205

290

Net book value

153

Total plant and equipment

255,560

254,714

Total property, plant and equipment

536,277

512,479

The financing facilities as disclosed in Note 20 to the financial statements are secured by charges over all of the assets

of the consolidated entity and by mortgages over certain assets of the consolidated entity.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

13. Investment Properties (Non-Current)

Reconciliations C O N S O L I D A T E D

Completed

investment

property

Investment

property

under

construction

Total Completed

investment

property

Investment

property

under

construction

Total

2012

$000

2012

$000

2012

$000

2011

$000

2011

$000

2011

$000

Opening balance 1,403,181 198,420 1,601,601 1,362,574 126,626 1,489,200

Additions 14,110 78,909 93,019 58,945 113,939 172,884

Transfer to property, plant and

equipment - -

- - (31,417)

(31,417)

Transfer to investments

accounted for using equity

method - -

- (32,532) -

(32,532)

Transfer from / (to) completed

investment property 183,807 (183,807)

- 8,705 (8,705)

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

Adjustment to fair value (6,828) (18,435) (25,263) 17,320 (2,023) 15,297

Disposals (15,611) - (15,611) (2,962) - (2,962)

Closing balance 1,578,659 75,087

1,653,746 1,403,181 198,420

1,601,601

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 $154.46 million for the year ended 30 June 2012

(2011: $140.91 million). Operating expenses recognised in the income statement in relation to investment properties

amounted $34.31 million for the year ended 30 June 2012 (2011: $32.50 million).

Investment Property Valuation Policy

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 market 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

 current market rental value, being the amount that could be exchanged between knowledgeable, willing

parties in an arm‟s length transaction

 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

The investment property portfolio in Australia is subject to a bi-annual review to fair market value at each reporting

period. At each reporting period, one-sixth of the investment property portfolio is independently valued with the

remaining five-sixths fair-valued by Directors where appropriate. The whole portfolio is independently valued every

three years.

Fair value has been calculated using the capitalisation method of valuation. For Director valuations, where

appropriate, management also undertook a discounted cash flow valuation of the same properties for means of

comparison. There were no material differences between the capitalisation method result and the discounted cash

flow method result.

During the year ended 30 June 2012, the consolidated entity obtained external, independent valuations in respect of

thirty (30) properties, which completed the independent valuation of all properties within the three-year cycle per the

Investment Property Valuation Policy. Based on the results of these independent valuations, further properties were

identified by management for internal Director valuations. These were selected where properties had been similarly

affected by the same factors or characteristics of the properties which were independently valued, particularly with

yields and market rentals.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Goodwill (c)

Opening balance 9 11

Net foreign currency differences arising from foreign operations 1 (2)

Carrying value

Licence property:

Net book value 484 494

Total intangible assets

57,442

58,294

13. Investment Properties (Non-Current) (continued)

Property Portfolio in Australia (Inclusive of Joint Venture and Development Properties)

Primary sites (as determined by management), which have been operating for greater than a twelve-month period,

totalling $1.44 billion (2011: $1.29 billion) generally have capitalisation rates within the range of 8.5% to 10.0% (2011:

8.25% to 9.0%). Secondary sites (as determined by management), which have been operating for greater than a

twelve-month period, totalling $233.69 million (2011: $242.06 million) generally have capitalisation rates within the range

of 8.75% to 11.5% (2011: 8.75% 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 3.06% (2011: 2.44%).

Investment properties can be analysed as follows:

C O N S O L I D A T E D

2012 2011

$000 $000

Completed investment properties at fair value 1,578,659 1,403,181

Investment properties under construction at fair value 75,087 198,420

Total investment properties

1,653,746

1,601,601

14. Intangible Assets (Non-Current)

Computer Software (summary)

Cost (gross carrying amount) 106,052 98,236

Accumulated amortisation and impairment (49,104) (40,445)

Net carrying amount

56,948

57,791

Computer Software (a):

Net of accumulated amortisation and impairment

Opening balance 57,791 23,745

Additions 12,133 42,648

Disposals (847) (142)

Impairment (b) (2,356) (674)

Amortisation (9,782) (7,773)

Net foreign currency differences arising from foreign operations 9 (13)

Net book value

56,948

57,791

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

15. Trade and Other Payables (Current)

Trade creditors 553,570 701,823

Accruals 49,957 77,761

Other creditors 43,752 75,313

Total trade and other payables (current)

647,279

854,897

16. Interest-Bearing Loans and Borrowings (Current)

Secured:

Non trade amounts owing to:

- Bank overdraft (a) 32,366 44,050

- Commercial bills payable (b) 9,750 15,075

- Other short-term borrowings (c) 146,675 -

Unsecured:

Derivatives payable 1,199 -

Lease liabilities (d) Note 32 (b)(i) 117 168

Non trade amounts owing to:

- Directors (e) 32,406 36,944

- Other related parties (e) 12,253 8,844

- Other unrelated persons 110 194

Total interest-bearing loans and borrowings (current)

234,876

105,275

14. Intangible Assets (Non-Current) (continued)

(a) 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.

(b) Impairment of Computer Software

During the year ended 30 June 2012, the consolidated entity reviewed the capitalised software costs incurred in

relation to the merchandising and supply-chain improvements program. During this review management identified

certain specific elements of design and scope of the program that no longer contained future economic benefits for

the consolidated entity. The consolidated entity had written off $2.36 million of specific costs that were no longer

aligned with the current design and strategic direction of the program.

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)

16.

Interest-Bearing Loans and Borrowings (Current) (continued)

(a) Bank Overdraft

Relates to a fully-drawn bank overdraft in the sum of $32.37 million due by Harvey Norman Trading (Ireland) Limited to

Bank of Ireland (“BOI”) (the “BOI Overdraft Facility”). Australia and New Zealand Banking Group Limited (“ANZ”) has

provided an Indemnity/Guarantee/Stand-by Letter of Credit Facility in favour of BOI in support of the BOI Overdraft

Facility, at the request of the Company (“ANZ-BOI Facility”). The ANZ-BOI Facility is further secured by the Syndicated

Facility Agreement described in Note 19(a).

(b) Commercial Bills Payable

The commercial bills payable form part of facilities granted by ANZ. The payment of each commercial bill is secured

by the securities given pursuant to the Syndicated Facility Agreement (as defined in Note 19(a)), and subject to

annual review by ANZ. Each commercial bill has a tenure not exceeding 180 days but is repayable on demand by

ANZ, upon the occurrence of any event of default or Relevant Event (as defined in Note 19(a)) under the Syndicated

Facility Agreement, or after any annual review date.

Of the total short term borrowings of $146.68 million:

 a total of $79.80 million is secured by the securities given pursuant to the Syndicated Facility Agreement (as

defined in Note 19(a)). The facilities are located in Singapore, Slovenia and Croatia and have a maturity date

of December 2012.

 a total of $65.00 million is secured by the securities given pursuant to a separate further facility agreement that

was established on 17 February 2012 by a subsidiary of the Company (as borrower), and several other

subsidiaries of the Company (as guarantors), with certain banks totalling $85.00 million (the “Syndicated Working

Capital Facility”). Refer to further details below on the Syndicated Working Capital Facility.

 a total of $1.41 million relates to a revolving credit facility with Hype Alpe-Adria-Bank d.d. in Slovenia. This facility

will be repaid in full in October 2013 and is secured by an independent first demand corporate guarantee from

the Company.

 a total of $0.46 million relates to a revolving credit facility with AmBank (M) Berhad in Malaysia. This facility is

reviewed on an annual basis and is secured by a corporate guarantee from the Company.

Syndicated Working Capital Facility

The Syndicated Working Capital Facility is a twelve (12) month revolving facility, secured by properties located in

Australia and New Zealand. The utilised portion of $65.00 million is secured by the securities given pursuant to the

Syndicated Working Capital Facility and $1.90 million is applicable to other banking facilities with financiers that are

external to the Syndicated Facility Agreement. The security provided under these facilities is a parental guarantee by

the Company.

The Syndicated Working Capital Facility is repayable:

(a) on 17 February 2013;

(b) otherwise on demand by or on behalf of the lenders under the Syndicated Working Capital Facility (the

“Syndicated Working Capital Facility Lenders”) upon the occurrence of any one of a number of events (each a

“Syndicated Working Capital Facility Relevant Event”), including events which are not within the control of the

Company, the Borrower or the Guarantors. Each of the following is a Syndicated Working Capital Facility

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 Syndicated Working Capital Facility

Lender to perform its obligations under the Syndicated Working Capital Facility Agreement or fund or maintain

the amount committed by that Syndicated Working Capital Facility Lender to the provision of the Syndicated

Working Capital Facility ("Syndicated Working Capital Facility Commitment"), the Syndicated Working Capital

Facility Lender may by notice to the Borrower, require the Borrower to repay the secured moneys in respect of

the Syndicated Working Capital Facility Commitment of that Syndicated Working Capital Facility Lender, in full on

the date which is forty (40) business days after the date of that notice.

The Company has not received notice of the occurrence of any Relevant Event from any Financier.

(d) Lease Liabilities

The implicit interest rate on lease liabilities is within a range of 3.24% to 9.5% over a term of 3 years (2011: 1.0% to 9.5%).

(e) Directors and Other Related Parties

Interest is payable at normal commercial bank bill rates. The loans are unsecured and repayable at call.

(f) 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.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

17. Other Liabilities (Current)

Lease incentives 1,503 1,545

Unearned revenue 128 58

Total other liabilities (current)

1,631

1,603

18. Provisions

Current:

Employee benefits (Note 28) 15,843 20,450

Make good provision 1,061 658

Deferred lease expenses 737 1,058

Onerous lease costs 2,110 2,426

Other 746 643

Total provisions (current)

20,497

25,235

Non-Current:

Employee benefits (Note 28) 1,278 2,343

Make good provision 3,028 2,058

Deferred lease expenses 4,648 5,274

Total provisions (non-current)

8,954

9,675

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

18. Provisions (continued)

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 2011 2,716 6,332 2,426 643 12,117

Arising during the year 2,250 1,153 5,971 488 9,862

Utilised (937) (2,073) (6,287) (394) (9,691)

Discount rate adjustment 9 - - - 9

Exchange rate variance 51 (27) - 9 33

At 30 June 2012

4,089

5,385

2,110

746

12,330

Current 2012 1,061 737 2,110 746 4,654

Non-current 2012 3,028 4,648 - - 7,676

Total provisions 2012

4,089

5,385

2,110

746

12,330

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

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 2012

was $4.09 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

1 to 3 years. During the year ended 30 June 2012, the consolidated entity closed four (4) leased franchised stores and

had restructured the company-operated Clive Peeters and Rick Hart business. This restructure resulted in the closure

of seven (7) Clive Peeters and Rick Hart retail sites, all of which were leased from external parties. The balance of the

provision for onerous lease costs as at 30 June 2012 was $2.11 million. The majority of this provision relates to the

franchised and company-operated closures during the current year.

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.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

19. Interest-Bearing Loans and Borrowings (Non-Current)

Secured:

Non trade amounts owing to:

Other borrowings

- Syndicated Facility Agreement (a)

525,000

485,900

- Other non-current borrowings - 26,886

Secured bills payable 675 32,428

Unsecured:

- Derivatives payable 18,784 1,269

- Lease liabilities – Note 32 (b)(i) 12 -

Total interest-bearing liabilities (non-current)

544,471

546,483

(a) Non-Current Borrowings – Syndicated Facility Agreement

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

“Financier”) in relation to a loan facility of $435.00 million (the “Original Facility”). The Original Facility was to be

otherwise repayable on 3 December 2012.

On 22 December 2011, the Borrower and Guarantors entered into arrangements to increase the amount of the

Original Facility to $610.00 million (the “Increased Facility”) and to further secure the liability of the Company to ANZ

pursuant to the ANZ-BOI Facility (refer to Note 16(a)).

The Increased 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.

Under the terms of the Syndicated Facility Agreement, the Increased Facility is repayable:

(a) as to $370 million, on 22 December 2014;

(b) as to $240 million, on 22 December 2016;

(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 the Increased 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.

(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.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

20. Financing Facilities Available

At reporting date, the following financing facilities had been negotiated and were available:

C O N S O L I D A T E D

2012 2011

$000 $000

Total facilities:

- Bank overdraft 38,114 47,692

- Other short term borrowings 175,467 56,105

- Commercial bank bills 11,832 64,909

- Syndicated Facility Agreement 610,000 560,000

Total Available Facilities

835,413

728,706

Facilities used at balance date:

- Bank overdraft 32,366 44,050

- Other short term borrowings 146,675 26,886

- Commercial bank bills - current 9,750 15,075

- Commercial bank bills - non-current 675 32,428

- Syndicated Facility Agreement 525,000 485,900

Total Used Facilities

714,466

604,339

Facilities unused at balance date:

- Bank overdraft 5,748 3,642

- Other short term borrowings 28,792 29,219

- Commercial bank bills 1,407 17,406

- Syndicated Facility Agreement 85,000 74,100

Total Unused Facilities

120,947

124,367

Refer to Note 16 Interest-Bearing Loans and Borrowings (Current) and Note 19 Interest-Bearing Loans and Borrowings

(Non-Current) for details regarding the security provided by the consolidated entity over each of the financing

facilities disclosed above.

21. Other Liabilities (Non-Current)

Lease incentives 14,868 16,956

Unearned revenue 22 22

Total other liabilities (non-current)

14,890

16,978

22. Contributed Equity

Ordinary shares 259,610 259,610

Total contributed equity

259,610

2012 2011

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.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

Options Issued on 29 November 2010 (“First Tranche of Options”)

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.

On 13 June 2012 the Company announced that options over 322,000 shares granted to each of David Matthew

Ackery, Chris Mentis and John Evyn Slack-Smith, a total of 966,000 options over 966,000 shares, have lapsed and will

never be exercisable. 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 Non-

Financial Performance Conditions had been satisfied as to 54% of the 70% weighting of those 2011 Non-Financial

Performance Conditions, resulting in the forfeiture of 966,000 options in total.

Refer to detailed information in the Remuneration Report for the terms and conditions of the First Tranche of Options.

Options Issued on 29 November 2011 (“Second Tranche of Options”)

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 $2.03 per option, on 29 November

2011, to each of David Matthew Ackery, Chris Mentis and John Evyn Slack-Smith ("Second Tranche of Options").

The qualifying period for the second tranche of options is the three years ending 30 June 2014. The second 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 4.6%

 expected volatility 37.0%

 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 Second Tranche of Options was $0.51 per option or

$1,530,000 in total.

Refer to detailed information in the Remuneration Report for the terms and conditions of the Second Tranche of

Options.

22. Contributed Equity (continued)

C O N S O L I D A T E D

No.

$‟000

Movements in ordinary shares on issue

At 1 July 2010 1,062,316,784 259,610

Issue of shares under executive share option plan - -

At 1 July 2011

1,062,316,784

259,610

Issue of shares under executive share option plan - -

At 30 June 2012

1,062,316,784

259,610

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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.

This reserve records fair value changes on available-for-sale investments.

(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.

23.

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 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 gain on interest rate swap - - - 563 - - 563

Tax effect of net gain on

interest rate swap

(169)

Reverse expired or realised

cash flow hedge reserves

(61)

Net gain on forward foreign

exchange contracts

Currency translation differences - (15,827) - - - - (15,827)

Acquisition of non-controlling

interests

(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

At 1 July 2011 66,557 (35,934) 2,327 (864) 7,452 (6,917) 32,621

Revaluation of land and buildings 9,072 - - - - - 9,072

Tax effect of revaluation of land

and buildings

(3,400)

Unrealised gains on available-

for-sale investments

1,027

Net loss on interest rate swap - - - (18,704) - - (18,704)

Tax effect of net loss on interest

rate swap

5,613

Reverse expired or realised

cash flow hedge reserves

Net loss on forward foreign

exchange contracts

(37)

Tax effect of net loss on forward

foreign exchange contracts

Currency translation differences - 565 - - - - 565

Acquisition of non-controlling

interests

(7,821)

Share based payment - - - - 966 - 966

Reversal of share expenses - - - - (632) - (632)

At 30 June 2012

72,229

(35,369)

3,354

(13,886)

7,786

(14,738)

19,376

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23. Reserves (continued)

(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.

(f) Acquisition reserve

This reserve is used to record the consideration paid in excess of carrying value of non-controlling interests. The

additional acquisition reserve of $7.82 million recognised in the current year is primarily attributable to the additional

shareholding acquired in Pertama Holdings Limited, Singapore (“Pertama”) 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 12,592,150 shares in Pertama were purchased by HNS in several on-market

acquisitions during the year for a total purchase consideration of $8.18 million Singaporean dollars. These acquisitions

resulted in an increase in the effective shareholding of HNS in Pertama from 58.23% to 63.41%.

The charge to the acquisition reserve of $7.82 million represents the excess of the consideration paid for the shares

relative to the carrying value of non-controlling interest in Pertama and an additional controlled partnership. The

additional shareholding resulted in an increase in the controlling interest of the subsidiary and has been recognised

as a negative adjustment to equity.

C O N S O L I D A T E D

2012

2011

$000 $000

24. Retained Profits and Dividends

Movements in retained earnings were as follows:

Balance 1 July 1,901,350 1,787,196

Profit for the year 172,471 252,255

Dividends (116,855) (138,101)

Balance at end of the year

1,956,966

1,901,350

Dividends declared and paid during the year:

Dividends on ordinary shares:

Final franked dividend for 2011: 6.0 cents (2010: 7.0 cents) 63,739 74,362

Interim franked dividend for 2012: 5.0 cents (2011: 6.0 cents) 53,116 63,739

Total dividends paid

116,855

138,101

The final dividend for the year ended 30 June 2011 was paid on 5 December 2011.

The interim dividend for the year ended 30 June 2012 was paid on 7 May 2012.

Proposed for approval at AGM (not recognised as a liability as at 30 June):

Dividends on ordinary shares:

Final franked dividend for 2012: 4.0 cents (2011: 6.0 cents) 42,493 63,739

The proposed final dividend for the year ended 30 June 2012 is to be paid on 3 December 2012 to shareholders

registered at 5:00 pm, 2 November 2012.

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% 665,794 667,917

- franking credits that will arise from the payment of income tax payable as at the

end of the financial year

7,673

3,635

- franking credits that will be utilised in the payment of proposed final dividend (18,211) (27,317)

The amount of franking credits available for future reporting periods:

655,256

644,235

100

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

25. Non-Controlling Interests

Interest in:

- Ordinary shares 12,404 26,991

- Reserves 5,746 (8,407)

- Retained earnings 12,780 16,296

Total non-controlling interests

30,930

34,880

26. 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 176,315 259,620

Profit after tax attributable to non-controlling interests (3,844) (7,365)

Profit after tax attributable to the parent

172,471

252,255

Number of Shares

2012 2011

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 30 June 2012 was 1,062,316,784 (June 2011: 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 Executive Option Plan (“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 (the

“First Tranche of Options”). 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 Remuneration Committee assessed each component of the 2011 Critical Success Factors to determine whether

the non-financial performance conditions of the First Tranche of Options (weighted as to 70%) were met. The

Remuneration Committee had regard to certificates and reports from officers of the Company, other board

committees and management, and own enquires, and determined that the 2011 Critical Success Factors had been

satisfied as to 54% of the 70% weighting, resulting in the resolution that 966,000 options over 966,000 shares in the First

Tranche of Options had lapsed and will never be exercisable.

On 29 November 2011, the consolidated entity issued 3,000,000 unlisted options to certain executive directors (the

“Second Tranche of Options”). These options are capable of exercise from 1 January 2015 to 30 June 2017 at an

exercise price of $2.03 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 $0.51 per option or

$1,530,000 in total.

Options issued pursuant to the First Tranche and the Second Tranche have both 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 as calculated during the year.

There have been no other conversions to, calls of, or subscriptions for ordinary shares or issues of potential ordinary

shares since the reporting date.

101

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

C O N S O L I D A T E D

2012 2011

$000 $000

27. 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 141,159 114,353

Short term money market deposits 31,300 48,426

172,459 162,779

Bank overdraft (32,366) (44,050)

Cash and cash equivalents at end of year 140,093 118,729

(b) Reconciliation of Profit After Income Tax to Net Operating Cash Flows:

Profit after tax

176,315

259,620

Adjustments for:

Net foreign exchange gain (1,318) (2,258)

Bad and doubtful debts 1,438 1,999

Provision for inventory obsolescence (1,901) (336)

Share of joint ventures (13,742) (17,888)

Depreciation of property, plant and equipment 78,241 81,594

Amortisation 9,821 7,773

Impairment of fixed assets 3,004 2,071

Revaluation of investment properties and properties held under joint ventures 27,768 (15,455)

Reversal of a previous property revaluation decrement (2,775) -

Net profit on property development (10,000) -

Deferred lease expenses (477) 353

Provision for onerous leases 2,912 860

Other provisions 104 107

Discount on interest-free long term receivables 83 150

Accretion of interest-free long term receivables (152) (216)

Executive remuneration including shares and options expense 1,789 2,669

Realised / unrealised gain on interest rate swap - (230)

Accrued income items (5,511) (3,150)

Transfers to provisions:

- Employee entitlements (5,672) 5,494

- Doubtful debts 1,324 (2,533)

Profit on disposal and revaluation of:

- Property, plant and equipment, and listed securities 3,625 (9,726)

Changes in assets and liabilities net of effects from purchase and

sale of controlled entities:

(Increase)/decrease in assets:

Receivables 47,331 36,299

Inventory 75,222 (74,732)

Other current assets 879 (127)

Deferred tax assets (5,026) 7

Increase/(decrease) in liabilities:

Payables and other current liabilities (188,458) 120,302

Income tax payable 6,121 (33,674)

Net cash from operating activities 200,945 358,973

102

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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

2012 2011 2012 2011

26/11/2007

25/11/2012

$6.77

29/11/2010

30/06/2016

$3.02

2,034,000

3,000,000

29/11/2011

30/06/2017

$2.03

3,000,000

5,034,000

3,000,000

Refer to Note 30 Key Management Personnel for further information.

C O N S O L I D A T E D

2012 2011

$ $

29. 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

1,434,377

1,563,265

- tax services in relation to the entity and any other entity in the

consolidated entity

245,057

479,655

- other services in relation to the entity and any other entity in the

consolidated entity

45,135

23,491

Total received by Ernst & Young

1,724,569

2,066,411

C O N S O L I D A T E D

2012 2011

number number

28. Employee Benefits

The number of full-time equivalent employees employed as at 30 June are: 4,937 5,579

2012 2011

$000 $000

The aggregate employee benefit liability is comprised of:

Accrued wages, salaries and on-costs 8,087 10,021

Provisions (current – Note 18) 15,843 20,450

Provisions (non-current – Note 18) 1,278 2,343

Total employee benefit provisions

25,208

32,814

103

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

30. 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 Executive Director and

Chief Executive Officer

Rodney Orrock General Manager – Domayne

John Evyn Slack-Smith Executive Director and Chief

Operating Officer

Thomas James Scott General Manager – Property

David Ackery Executive Director Gordon Ian Dingwall Chief Information Officer

(appointed 1 December 2011

formerly General Manager –

Information Technology)

Chris Mentis Chief Financial Officer and

Company Secretary

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

(Independent)

Graham Charles Paton AM Non-Executive Director

(Independent)

(b) Compensation of Key Management Personnel

The total remuneration paid or payable to Key Management Personnel of the consolidated entity is as follows:

C O N S O L I D A T E D

2012 2011

$ $

Short – term 9,346,068 10,451,572

Post employment 183,257 188,245

Share – based payment 791,739 418,632

Reversal of share-based payment expenses (631,851) -

Termination payment - 226,663

9,689,213

11,285,112

104

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

30. Key Management Personnel (continued)

Vested at 30 June 2012

30 June 2012 Balance at

Beginning of

Period

Granted

Remuner-

ation

Options

Exercised

Net Change

Other (a)

Balance at

End of

Period

Total Exercisable Not

Exercisable

Directors 01/07/2011 30/06/2012

G. Harvey - - - - - - - -

K.L. Page - - - - - - - -

J.E. Slack-Smith 1,000,000 1,000,000 - (322,000) 1,678,000 - - -

D.M. Ackery 1,000,000 1,000,000 - (322,000) 1,678,000 - - -

C. Mentis 1,000,000 1,000,000 - (322,000) 1,678,000 - - -

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 - - - - - - - -

G.I. Dingwall - - - - - - - -

3,000,000 3,000,000 - (966,000) 5,034,000 - - -

(a) Explanation of Net Change Other Column:

The Remuneration Committee assessed each component of the 2011 Critical Success Factors to determine whether the

non-financial performance conditions of the First Tranche of Options (weighted as to 70%) were met. The Remuneration

Committee had regard to certificates and reports from officers of the Company, other board committees and

management, and own enquires, and determined that the 2011 Critical Success Factors had been satisfied as to 54% of the

70% weighting, resulting in the resolution that 966,000 options over 966,000 shares in the First Tranche of Options had lapsed

and will never be exercisable.

Vested at 30 June 2011

30 June 2011 Balance at

Beginning of

Period

Granted

Remuner-

ation

Options

Exercised

Net Change

Other (b)

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 - - - - - - - -

G.I. Dingwall - - - - - - - -

3,850,000 3,000,000 - (3,850,000) 3,000,000 - - -

(b) 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.

105

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) .

30. Key Management Personnel (continued)

(d) Shareholdings of Key Management Personnel

Shares held in Harvey Norman Holdings Limited (number):

30 June 2012 Balance

1 July 2011

Granted as

Remuneration

On Exercise of

Options

Net Change

Other (a)

Balance

30 June 2012

Directors

G. Harvey 311,959,532 - - 550,000 312,509,532

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 - - - - -

G.I. Dingwall - - - - -

Total

507,585,461

550,000

508,135,461

(a) Net change other includes the market acquisitions and market disposals of ordinary shares in the Company as well as

any off-market trades and off-market transfers of ordinary shares.

On 6 October 2011, K. L. Page conducted several off-market transfers to dispose of 138,196 ordinary shares which were

directly held and disposed of her beneficial interest in 30,210 ordinary shares held by K. Page Pty Limited. These

ordinary shares were acquired by her beneficial interest in K. Page Superannuation Fund Pty Limited. There was no

change in the total number of ordinary shares either directly or indirectly held by K. L. Page during the year ended 30

June 2012.

On 19 December 2011, G. Harvey acquired 550,000 shares in the Company thereby increasing his shareholding to

312,509,532 ordinary shares in Harvey Norman Holdings Limited as at 30 June 2012.

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 - - - - -

G.I. Dingwall - - - - -

Total

507,578,011

7,450

507,585,461

106

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

30. 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.

2012

Directors 200 4 - - - 1

Executives - - - - - -

200

2011

Directors - 4 - - 200 1

Executives 110 9 - - 55 2

110

255

Terms and Conditions of Loans

No new loans were granted to key management personnel during the year ended 30 June 2012. The loan to a director of

the Company was repaid in full in August 2011.

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.

(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.

2012

Directors 200 4 - - - 201

Executives - - - - - -

2011

Directors - 4 - - 200 201

Executives - - - - - -

107

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

30. Key Management Personnel (continued)

(f) Other Transactions and Balances with Key Management Personnel

C O N S O L I D A T E D

2012 2011

$ $

(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.

32,406,368

36,943,812

Net amounts (paid to) / received from entities associated with the above

mentioned directors and their related parties.

(4,537,444)

4,246,509

Interest paid/payable 2,122,905 2,166,333

(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.

2,242,169

1,045,252

(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:

4,087,523

3,977,720

(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:

1,148,527

1,605,224

(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 2012 this

has been accounted for as a joint venture entity as disclosed in Note 36 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 2012 was $1.73 million each and for the

year ended 30 June 2011 was $1.78 million.

108

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

30. 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 2012, this has been

accounted for as a joint venture entity as disclosed in Note 36. 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 received capital

distributions in the sum of $0.65 million (2011: $0.55 million). Each of the GH entity and a subsidiary of Harvey Norman

Holdings Limited made additional capital contributions to the Byron Bay JV of $0.20 million (2011: $0.34 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 $0.11 million for the year ended 30 June 2012 (2011: $0.10 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 $0.64 million for the year ended 30 June 2012 (2011: $0.32 million). The Michael Harvey Entity is

entitled to one eighth of the rental and outgoings paid by the G.C. Lessee amounting to $0.32 million for the year

ended 30 June 2012 (2011: $0.16 million).

The Gepps Cross Joint Venture has been accounted for as equity accounted investment as disclosed in Note 36. The

Gerald Harvey Entity is entitled to one quarter of the profits generated by the retail complex on the G.C. Land

amounting to $1.37 million for the year ended 30 June 2012 (2011: $0.66 million). The Michael Harvey Entity is entitled

to one eighth of the profits generated by the retail complex on the G.C. Land amounting to $0.68 million for the year

ended 30 June 2012 (2011: $0.33 million).

(viii) National Rugby League Limited

Ms. K.L. Page was a director of National Rugby League Limited and resigned in February 2012. During the financial

year, wholly owned subsidiaries of Harvey Norman Holdings Limited paid for advertising and sponsorships totalling

$3.91 million (2011: $3.38 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 $1.75 million as at 30 June 2012 (2011: $2.00 million). The consolidated

entity received dividends from Gazal Corporation Limited amounting to $0.18 million for the year ended 30 June 2012

(2011: $0.13 million).

During the year ended 30 June 2012 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 $0.087 million (2011: $3.89 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.

109

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

31. 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.

C O N S O L I D A T E D

2012 2011

$ $

(b) Transactions with Other Related Parties

- Several controlled entities of Harvey Norman Holdings Limited operate inter-

company loan accounts with other wholly owned subsidiaries. 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 at balance date were: 217,589,235

234,490,962

- 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: 40,284,121 43,114,358

- 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:

988,415

1,224,886

Several controlled entities of Harvey Norman Holdings Limited operate loan

accounts with other related parties, mainly consisting of joint venture entities and

the other joint venturer to joint venture entities. Refer to Note 5.

The amount of other related party loans at balance date was:

20,442,118

27,695,629

The consolidated entity has a payable to other related parties at arm‟s length

terms and conditions amounting to the following at balance date:

12,253,069

7,370,996

32. Commitments

2012 2011

(a) Capital expenditure contracted but not provided is payable as follows: $000 $000

Not later than one year 37,589 95,562

Later than one year but not later than five years 2,893 7,004

Total capital expenditure commitments

40,482

102,566

The consolidated entity had contractual obligations to purchase property, plant and equipment, investment

properties and joint venture properties of $40.48 million (2011: $102.57 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. Included in the above disclosure are the contractual obligations relating to joint venture

properties of $1.28 million for the year ended 30 June 2012 (2011: $0).

(b) Lease expenditure commitments:

(i) Finance lease rentals are payable as follows:

Not later than one year 131 198

Later than one year but not later than five years 12 -

Minimum finance lease payments

143

198

Deduct future finance charges (14) (30)

Total finance lease liabilities

129

168

110

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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 152,976 153,049

- Later than one year but not later than five years 413,202 433,424

- Later than five years 268,814 371,803

Total operating lease liabilities

834,992

958,276

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 2012 Australia

$000

New

Zealand

$000

Asia

$000

Ireland and

Northern

Ireland

$000

Croatia

$000

Total

$000

- Not later than one year 111,838 8,441 13,440 17,738 1,519 152,976

- Later than one year but not

later than five years

301,055

22,549

13,334

71,213

5,051

413,202

- Later than five years 110,870 4,335 - 153,609 - 268,814

Total operating lease liabilities

523,763

35,325

26,774

242,560

6,570

834,992

30 June 2011 Australia

$000

New

Zealand

$000

Asia

$000

Ireland and

Northern

Ireland

$000

Croatia

$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

33. Contingent Liabilities

Guarantees

As at 30 June 2012, 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 $274.93 million

(2011: $352.07 million).

C O N S O L I D A T E D

2012 2011

$000 $000

32. Commitments (continued)

(b) Lease expenditure commitments (continued):

Disclosed as follows:

Current liabilities (refer Note 16) 117 168

Non-current liabilities (refer Note 19) 12 -

Total finance lease liabilities

129

168

111

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34.

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;

 Malaysian ringgit; and

 Croatian kuna

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.

112

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34. Financial Risk Management (continued)

(i) Foreign Currency Risk Management (continued)

At 30 June 2012, 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.

C O N S O L I D A T E D

2012 2011

$000 $000

Financial assets

Cash and cash equivalents 4,838 9,260

Trade and other receivables 1,413 1,592

Other financial assets 1,292 8

7,543

10,860

Financial liabilities

Trade and other payables 12,149 6,755

Interest bearing loans and borrowings 7,106 4,738

Derivatives payable 184 34

19,439

11,527

Net exposure

(11,896)

(667)

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 2012, 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)

2012 2011 2012 2011

$000 $000 $000 $000

Consolidated

Australian subsidiaries

AUD/EURO + 5% (2011: + 5%) 14 (138) (51) (32)

AUD/EURO - 10% (2011: - 5%) (33) 153 118 35

AUD/USD + 5% (2011: + 5%) 4 (24) (8) (2)

AUD/USD - 5% (2011: - 20%) (5) 126 9 12

Slovenia subsidiaries

EURO/USD + 15% (2011: + 10%) (37) (12) - -

EURO/USD - 5% (2011: - 15%) 15 23 - -

Croatia subsidiaries

HRK/EURO + 5% 400 - - -

HRK/EURO - 5% (442) - - -

HRK/USD + 15% 39 - - -

HRK/USD - 5% (16) - - -

Singapore subsidiaries

SGD/USD + 5% (2011: + 5%) 1 1 - -

SGD/USD - 5% (2011: - 15%) (1) (5) - -

SGD/EURO + 5% (2011: + 5%) (71) 10 - -

SGD/EURO - 10% (2011: - 5%) 165 (11) - -

SGD/MYR + 5% (2011: + 5%) 14 (135) - -

SGD/MYR - 5% (2011: - 5%) (15) 149 - -

SGD/AUD + 5% (2011: + 30%) - 2 - -

SGD/AUD - 5% (2011: - 10%) - (3) - -

New Zealand subsidiaries/branches

NZ/EURO + 5% (2011: + 5%) (6) 3 - -

NZ/EURO - 10% (2011: - 5%) 13 (3) - -

NZ/USD + 10% (2011: + 5%) 2 3 - -

NZ/USD - 10% (2011: - 15%) (2) (10) - -

113

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34. 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 2012 is comparable to 2011. The

movements in other comprehensive income in 2012 are more sensitive than in 2011 because of the increased 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 and other unrelated persons;

 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 2012 Principal

Subject to

Floating

interest rate

1 year

or less

Over

1 to 5

years

than

5 years

Non-

interest

bearing

Total

Average interest rate

$000 $000 $000 $000 $000 $000 Floating Fixed

Financial assets

Cash 126,245 31,300 - - 14,914 172,459 0.20%-5.96% 0.045%-0.86%

Consumer

finance

Loans

4,041

4,181

9.00%-12.50%

Finance lease

receivables

9,907

8,879

18,786

10.50%-12.50%

Trade debtors - - - - 985,926 985,926 - -

Other financial

assets

33,751

Non-trade

debtors & loans

19,511

4,144

673

1,030

25,358

6.65%-9.46%

5.00%-12.50%

145,756 45,447 9,596 - 1,039,662 1,240,461

Financial liabilities

Bank overdraft 32,366 - - - - 32,366 2.22%-3.47% -

Borrowings (*) 671,211 464 - - - 671,675 0.63%-6.65% 3.67%-5.47%

Interest rate

swaps (notional

amount)

(100,000)

(350,000)

(450,000)

4.97%-5.54%

Net exposure 671,211 (99,536) (350,000) - - 221,675 0.63%-6.65% 3.67%-5.54%

Trade creditors - - - - 647,279 647,279 - -

Finance lease

liabilities

117

129

3.24%-9.50%

Other loans 44,578 107 - - 84 44,769 4.50%-6.46% 5.00%-12.00%

Bills payable (*)

- Australia 9,750 - - - - 9,750 3.69%-4.96% -

- Slovenia 675 - - - - 675 1.70%-3.57% -

Other financial

liabilities

1,015

18,784

184

19,983

4.97%-5.54%

758,580 1,703 18,796 - 647,547 1,426,626

114

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34.

Financial Risk Management (continued)

(ii) Interest Rate Risk Management (continued)

Fixed interest rate

maturing in

30 June 2011 Principal

Subject to

Floating

interest rate

1 year

or less

Over

1 to 5

years

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% -

Interest rate

swaps (notional

amount)

(100,000)

(200,000)

(300,000)

4.97%-5.51%

Net exposure 512,786 (100,000) (200,000) - - 212,786 1.00%-7.60% 4.97%-5.51%

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

* 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 2012, 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:

115

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34. Financial Risk Management (continued)

(ii) Interest Rate Risk Management (continued)

C O N S O L I D A T E D

Post Tax Profit

increase/(decrease)

Other comprehensive

income

increase/(decrease)

2012 2011 2012 2011

$000 $000 $000 $000

If there was 50 (2011: 50) basis points higher in interest

rates with all other variables held constant

(2,320)

(2,000)

(2,542)

1,845

If there was 50 (2011: 50) basis points lower in interest

rates with all other variables held constant

2,320

2,000

(8,673)

(1,666)

The movements in post tax 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 2012 are more sensitive than the movements in 2011 because of an increase in

financial liabilities that are subject to variable interest rates. The movements in other comprehensive income in 2012

are more sensitive than the movements in 2011 because of the increased use of interest rate swaps which are

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 $25.10

million as at 30 June 2012 (2011: $42.17 million). The fair value of the equity investments publicly traded on the NZX

was $9.19 million as at 30 June 2012 (2011: $6.08 million).

As at 30 June 2012, if equity prices had been 10% higher/lower while all other variables are held constant, post tax

profit and other comprehensive income would have been affected as follows:

C O N S O L I D A T E D

Post Tax Profit

increase/(decrease)

Other comprehensive

income

increase/(decrease)

2012 2011 2012 2011

$000 $000 $000 $000

If there was 10% (2011: 10%) increase movement in

equity prices with all other variables held constant

1,832

3,074

719

427

If there was 10% (2011: 10%) decrease movement in

equity prices with all other variables held constant

(1,832)

(3,074)

(719)

(427)

A sensitivity of 10% has been selected as this is considered reasonable given the current level of equity prices, the

volatility observed on a historic basis and market expectations for future movement.

116

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34.

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:

C O N S O L I D A T E D

2012 2011

Location of credit risk $000 $000

Australia 992,199 1,043,402

New Zealand 20,973 20,246

Asia 10,362 11,696

Slovenia and Croatia 2,963 2,249

Ireland and Northern Ireland 2,032 2,177

Total

1,028,529

1,079,770

(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.

117

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34.

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 2012

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 172,459 - - - 172,459

Trade and other receivables 1,019,785 8,159 2,872 384 1,031,200

Other financial assets 24,396 - - 9,355 33,751

Total financial assets

1,216,640

8,159

2,872

9,739

1,237,410

Non derivative financial liabilities

Trade and other payables 647,279 - - - 647,279

Interest bearing loans and borrowings 261,337 28,310 555,332 - 844,979

Derivative financial liabilities

Derivatives 1,199 984 17,800 - 19,983

Total financial liabilities

909,815

29,294

573,132

1,512,241

Net maturity

306,825

(21,135)

(570,260)

9,739

(274,831)

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)

For detailed information on financing facilities available as at 30 June 2012 refer to Note 20.

118

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34. 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-option derivatives and option pricing models for option 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 2012

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 32,290 - - 32,290

Total Financial Assets

32,290

Financial Liabilities

Foreign exchange contracts - 183 - 183

Interest rate swaps - 19,800 - 19,800

Total Financial Liabilities

19,983

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

119

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

34. 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 19, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital,

reserves and retained earnings as disclosed in Notes 22, 23 and 24 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 2012 and 2011 were as follows:

C O N S O L I D A T E D

2012 2011

$000 $000

Borrowings (a) 779,347 651,758

Total equity (b) 2,281,620 2,235,378

Debt to equity ratio

34.16%

29.16%

If cash and cash equivalents were to be deducted from total borrowings, the net debt to equity ratio would have

been 26.60% for the year ended 30 June 2012 and 21.87% for the year ended 30 June 2011.

(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 $14.74 million.

120

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35. Derivative Financial Instruments

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.

C O N S O L I D A T E D

2012 2011

$000 $000

Current Assets

Forward currency contracts – held for trading - 8

Current Liabilities

Interest swap contracts – cash flow hedges 1,015 -

Forward currency contracts – held for trading 147 -

Forward currency contracts – cash flow hedges 37 -

Non-current Liabilities

Forward currency contracts – held for trading - 28

Forward currency contracts – cash flow hedges - 6

Interest swap contracts – cash flow hedges 18,784 1,235

(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.

C O N S O L I D A T E D

2012 2011

Currency Average Exchange Rate Buy Sell Buy Sell

2012 2011 $000 $000 $000 $000

Euro (0-12 months) 79.79 75.02 4,660 - 666 -

US Dollar (0-12 months) - - - - - -

Euro (12-18 months) - 70.90 - - 1,415 -

US Dollar (12-18 months) - 106.09 - - 353 -

Total

4,660

2,434

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 $0.15 million for the consolidated entity (2011: $0.02 million).

(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:

C O N S O L I D A T E D

2012 2011

Currency Average Exchange Rate Buy Sell Buy Sell

2012 2011 $000 $000 $000 $000

Euro (0-12 months) 79.21 - 1,553 - - -

US Dollar (0-12 months) 100.31 - 241 - - -

Euro (12-18 months) - 73.76 - - 914 -

US Dollar (12-18 months) - 104.08 - - 69 -

Total

1,794

983

121

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

35. Derivative Financial Instruments (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 (2011: 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:

C O N S O L I D A T E D

2012 2011

$000 $000

Increase/(Decrease)

Opening balance 4 2

Transferred to inventory (4) (2)

Charged to other comprehensive income (26) 4

Closing balance

(26)

(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

$000

Fair value

(Loss)/Gain

$000

30 June 2012

Less than 1 year 5.51% 100,000 (1,015)

1 to 2 years 4.97% 50,000 (984)

2 to 5 years 5.38% 300,000 (17,800)

30 June 2011

Less than 1 year - - -

1 to 2 years 5.37% 200,000 (1,034)

2 to 5 years 5.09% 100,000 (202)

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 is considered to be highly effective.

The swap is settled on a net basis. The swap is measured at fair value and the gain or loss attributable to the hedged

risk is taken directly to equity and reclassified into profit and loss when the interest expense is recognised.

Movement in interest rate swap contract cash flow hedge reserve:

C O N S O L I D A T E D

2012 2011

$000 $000

Increase/(Decrease)

Opening balance (866) (1,203)

Transferred to interest expense/interest income 97 (57)

Charged to equity (13,091) 394

Closing balance

(13,860)

(866)

122

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

Name and Principal activities Ownership

Interest

Contribution to

Net Profit / (Loss)

Contribution to

Property Revaluation

2012

2011

2012

2011

2012

2011

% % $000 $000 $000 $000

New Zealand

- Lincoln Junction

50%

311

Noarlunga

- Shopping complex

50%

1,012

925

1,193

Perth City West

- Shopping complex

50%

3,954

3,917

Kelso

- Residential development

50%

(2)

(1)

Tweed Heads Expo Park

- Shopping complex

50%

1,102

1,006

(1,519)

Warrawong King St (a)

- Shopping complex

62.5%

1,015

939

250

Tweed Heads Traders Way

- Building development

50%

(1,398)

Sylvania

- Residential development

40%

(182)

Mentone

- Development of land for resale

50%

(295)

7,196

Byron Bay

- Residential / convention development

50%

(702)

(730)

Byron Bay 2

- Resort operations

50%

434

504

Dubbo

- Shopping complex

50%

540

459

(1,031)

Cubitt

- Showroom and warehouse

50%

550

158 Bundaberg

- Warehouse 50% 50% (5) (6) - - Bundaberg 2 - Land held for investment 50% 50% (3) (4) - - QCV Chinchilla (b) - Miners residential complex 50% 50% 3,071 1,704 - - Gepps Cross - Shopping complex 50% 50% 2,737 1,326 - - QCV Benaraby 1 (c) - Miners residential complex 50% 50% 195 (78) - - QCV Benaraby 2 - Land held for investment 50% 50% (27) (8) - - QCV Fairview (d) - Miners residential complex 50% - 656 - - - QCV Other - Other miners residential complexes 50% - (14) - - -

13,742 17,888 (2,505) 158

(a) This joint venture has 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) 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 Chinchilla Facility”). The amount of the Chinchilla Facility

is $5.20 million plus interest and costs. HNHL has granted a joint and several guarantee to CBA in respect of the

JV under the Chinchilla Facility.

C O N S O L I D A T E D C O N S O L I D A T E D

Investment Share of net profit

36. Associates and Joint Venture Entities 2012 2011 2012 2011

$000 $000 $000 $000

Total joint venture entities accounted for using the

equity method

157,992

158,978

13,742

17,888

123

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

36. Associates and Joint Venture Entities (continued)

camp accommodation. The JV was granted a finance facility by ANZ Bank (“ANZ”) (“the Benaraby Facility”).

The total amount of the Benaraby Facility is $14.1 million plus interest and costs. HNHL has granted a joint and

several guarantee to ANZ in respect of the JV under the Benaraby Facility.

(d) 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 has been granted a finance facility by CBA

(“the Fairview Facility”). The amount of the Fairview Facility is $23.30 million plus interest and costs. HNHL has

granted a joint and several guarantee to CBA in respect of the JV under the Fairview Facility.

Aggregate carrying amounts of joint venture entities

C O N S O L I D A T E D

2012

Retained

Profits

Other

Reserves

Cost Total

Carrying Amount

$000 $000 $000 $000

Balance at the beginning of the year - 31,323 127,655 158,978

Movements during the year:

Capital contributions - - 338 338

Revaluation increment - (2,505) - (2,505)

Distributions received (13,742) - 1,090 (12,652)

Share of net profit 13,742 - - 13,742

Net foreign currency differences arising from

foreign operations

Balance at the end of the year

28,909

129,083

157,992

C O N S O L I D A T E D

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

Financial summary of joint venture entities

C O N S O L I D A T E D

2012 2011

$000 $000

Current assets 23,350 11,135

Non-current assets 292,513 261,813

Current liabilities (35,131) (9,671)

Non-Current liabilities (37,269) (15,184)

Net Assets

243,463

248,093

Revenues 57,524 57,495

Expenses (30,268) (22,840)

Net profit

27,256

34,655

Share of net profit of joint venture entities

13,742

17,888

124

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

37. 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 (“the Vendors”) 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

In August 2011 the consolidated entity advised the market of its intention to restructure the Clive Peeters and Rick Hart

businesses and to cease trading under the impaired brand names. By the end of August 2011, four (4) former Clive Peeters

stores and three (3) former Rick Hart stores were closed. The remaining thirteen (13) Clive Peeters stores and five (5) Rick

Hart stores were converted to Harvey Norman and Joyce Mayne franchised operations.

The consolidated entity incurred restructuring and closure costs of $8.07 million before tax mainly attributable to

redundancy and termination costs, fixed asset write-downs and onerous lease costs for the closed sites. This is less than the

expected closure costs previously estimated and reported in August 2011 of approximately $10.00 million before tax.

125

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. 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 Limited27

Achiever Computers Pty Ltd

Aloku Pty Limited1

Anwarah Pty Limited1

Arisit Pty Limited1, 2

Arlenu Pty Limited1

Armidale Holdings Pty Limited21

Arpayo Pty Limited1

Aubdirect Pty Limited

Australian Business Skills Centre Pty Limited23

Balwondu Pty Limited1

Barrayork Pty Limited

Becto Pty Limited1

Bellevue Hill Pty Limited

Bencoolen Properties Pte Limited 16

Bestest Pty Limited1

Bossee Pty Limited

Bradiz Pty Limited1

Braxpine Pty Limited1

Byron Bay Facilities Pty Limited24

Byron Bay Management Pty Limited25

Caesar Mosaics Pty Limited

Calardu Albany Pty Limited

Calardu Albury Pty Limited

Calardu Alexandria DM Pty Limited1

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 Limited1

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 Limited1

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 Limited1

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 Limited1

Calardu Marion Pty Limited1

Calardu Maroochydore Pty Limited

Calardu Maroochydore Warehouse Pty Limited

Calardu Maryborough Pty Limited

Calardu Melville Pty Limited1

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

Calardu Noosa Pty Limited1

Calardu North Ryde No. 1 Pty Limited7

Calardu North Ryde Pty Limited

Calardu Northbridge Pty Limited1

Calardu Nowra Pty Limited

Calardu Penrith Pty Limited1

Calardu Perth City West Pty Limited

Calardu Port Macquarie Pty Limited1

Calardu Preston Pty Limited1

Calardu Pty Limited1

Calardu Queensland Pty Limited1

Calardu Raine Square Pty Limited

Calardu Richmond Pty Limited1

Calardu Rockhampton Pty Limited

Calardu Rockingham Pty Limited1

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 Limited1

Calardu Springvale Pty Limited

Calardu Swan Hill Pty Limited

Calardu Sylvania Pty Limited

Calardu Taree Pty Limited

Calardu Taren Point Pty Limited

Calardu Thebarton Pty Limited

Calardu Toorak Pty Limited

Calardu Toowoomba WH Pty Limited

Calardu Townsville Pty Limited

Calardu Tweed Heads Pty Limited1

Calardu Tweed Heads Traders Way Pty Limited

Calardu Vicfurn Pty Limited

Calardu Victoria Pty Limited1

Calardu Warrawong (Homestarters) Pty Limited

Calardu Warrawong Pty Limited

Calardu Warrnambool Pty Limited1

Calardu Warwick Pty Limited

Calardu West Gosford Pty Limited

Calardu Whyalla Pty Limited

Calardu Wivenhoe Pty Limited

Carlando Pty Limited1

Charmela Pty Limited1

Clambruno Pty Limited1

Consolidated Design Group Pty Ltd

Contemporary Design Group Pty Limited1,2

CP Aspley Pty Limited

CP Belmont Pty Limited

CP Bendigo Pty Limited

CP Braybrook Pty Limited

CP Bundaberg Leasing Pty Limited

CP Bundaberg Pty Limited

CP Burleigh Waters Pty Limited

CP Coburg Pty Limited

CP Commercial Division Pty Limited

CP Corporate VIC Pty Limited

CP Dandenong Pty Limited

CP Joondalup Pty Limited

CP Loganholme Pty Limited

CP Macgregor Pty Limited

CP Mackay Pty Limited

CP Malvern Pty Limited

CP Mandurah Pty Limited

CP Maroochydoore Pty Limited

CP Maryborough Leasing Pty Limited

CP Maryborough Pty Limited

CP Midland Pty Limited

CP Moonah Pty Limited

CP Moorabbin Pty Limited

CP Morayfield Pty Limited

CP Mornington Pty Limited

CP Mt Druitt Leasing Pty Limited

CP Mt Druitt Pty Limited

CP O'Connor Pty Limited

CP Online Pty Limited

CP Osborne Park CL Pty Limited

CP Osborne Park Pty Limited

CP Richmond Pty Limited

CP Ringwood Pty Limited

CP Thomastown Pty Limited

CP Victoria Park Pty Limited

CP Welshpool DC Pty Limited

Cropp Pty Limited

D.M. Alexandria Franchisor Pty Limited1

D.M. Alexandria Leasing Pty Limited

D.M. Alexandria Licencing Pty Limited

D.M. Auburn Franchisor Pty Limited1

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 Limited1

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 Limited1

D.M. Fyshwick Leasing Pty Limited

D.M. Kotara Franchisor Pty Limited1

D.M. Kotara Leasing Pty Limited

D.M. Leicht Franchisor Pty Limited

D.M. Liverpool Franchisor Pty Limited1

D.M. Liverpool Leasing Pty Limited

D.M. Maroochydore Franchisor Pty Limited7

D.M. Maroochydore Leasing Pty Limited7

D.M. North Ryde Franchisor Pty Limited

126

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Shares held by Harvey Norman Holdings Limited (continued)

D.M. North Ryde Leasing Pty Limited

D.M. Penrith Franchisor Pty Limited1

D.M. Penrith Leasing Pty Limited

D.M. QVH Franchisor Pty Limited1

D.M. QVH Leasing Pty Limited

D.M. Springvale Franchisor Pty Limited7

D.M. Springvale Leasing Pty Limited7

D.M. Warrawong Franchisor Pty Limited1

D.M. Warrawong Leasing Pty Limited

D.M. West Gosford Franchisor Pty Ltd 1

D.M. West Gosford Leasing Pty Ltd

Daldere Pty Limited1

Dandolena Pty Limited1

Derni Pty Limited1,2

Divonda Pty Limited1

DM Online Franchisor Pty Limited

DM Online Leasing Pty Limited

Domain Holdings Pty Limited

Domayne Furnishing Pty Limited

Domayne Holdings Limited9, 10

Domayne Online.com Pty Limited

Domayne P.E.M. Pty Limited1

Domayne Plant & Equipment Pty Limited1

Domayne Pty Limited

Dubbo JV Pty Limited

Durslee Pty Limited1

Edbrook Everton Park Pty Limited

Edbrook Pty Limited1,6

Farane Pty Limited1

Flormonda Pty Limited1

Forgetful Pty Limited

Ganoru Pty Limited1

Generic Publications Pty Limited

Geraldton WA Pty Limited

Gestco Greensborough Pty Limited1

Gestco Pty Limited1

Glo Light Pty Limited22

H.N. Adelaide CK Franchisor Pty Limited1

H.N. Adelaide CK Leasing Pty Limited

H.N. Albany Creek Franchisor Pty Limited7

H.N. Albany Creek Leasing Pty Limited7

H.N. Albany Franchisor Pty Limited1

H.N. Albany Leasing Pty Limited

H.N. Albury Franchisor Pty Limited1

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 Limited1

H.N. Armadale WA Leasing Pty Limited

H.N. Armidale Franchisor Pty Limited1

H.N. Armidale Leasing Pty Limited

H.N. Aspley Franchisor Pty Limited1

H.N. Aspley Leasing Pty Limited

H.N. Atherton Franchisor Pty Limited7

H.N. Atherton Leasing Pty Limited7

H.N. Auburn Franchisor Pty Limited1

H.N. Auburn Leasing Pty Limited

H.N. Ayr Franchisor Pty Limited1

H.N. Ayr Leasing Pty Limited

H.N. Bairnsdale Franchisor Pty Limited1

H.N. Bairnsdale Leasing Pty Limited

H.N. Balgowlah Franchisor Pty Limited1

H.N. Balgowlah Leasing Pty Limited

H.N. Ballarat Franchisor Pty Limited1

H.N. Ballarat Leasing Pty Limited

H.N. Ballina Franchisor Pty Limited

H.N. Ballina Leasing Pty Limited

H.N. Batemans Bay Franchisor Pty Limited

H.N. Batemans Bay Leasing Pty Limited

H.N. Bathurst Franchisor Pty Limited1

H.N. Bathurst Leasing Pty Limited

H.N. Belmont Franchisor Pty Limited1

H.N. Belmont Leasing Pty Limited

H.N. Belmont North Franchisor Pty Limited7

H.N. Belmont North Leasing Pty Limited7

H.N. Bendigo Franchisor Pty Limited1

H.N. Bendigo Leasing Pty Limited

H.N. Bernoth Franchisor Pty Limited1

H.N. Bernoth Leasing Pty Limited

H.N. Bernoth Plant & Equipment Pty Limited1

H.N. Blacktown Franchisor Pty Limited1

H.N. Blacktown Leasing Pty Limited

H.N. Bondi Junction Franchisor Pty Limited

H.N. Bondi Junction Leasing Pty Limited

H.N. Braybrook Franchisor Pty Limited7

H.N. Braybrook Leasing Pty Limited7

H.N. Broadmeadow (VIC) Franchisor Pty Limited

H.N. Broadmeadow (VIC) Leasing Pty Limited

H.N. Broadway (Sydney) Franchisor Pty Limited1

H.N. Broadway (Sydney) Leasing Pty Limited

H.N. Broadway on the Mall Franchisor Pty Limited1

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 Limited1

H.N. Browns Plains Leasing Pty Limited

H.N. Bunbury Franchisor Pty Limited1

H.N. Bunbury Leasing Pty Limited

H.N. Bundaberg Franchisor Pty Limited1

H.N. Bundaberg Leasing Pty Limited

H.N. Bundall Franchisor Pty Limited1

H.N. Bundall Leasing Pty Limited

H.N. Burleigh Heads Franchisor Pty Limited1

H.N. Burleigh Heads Leasing Pty Limited

H.N. Burleigh Waters Franchisor Pty Limited7

H.N. Burleigh Waters Leasing Pty Limited7

H.N. Busselton Franchisor Pty Limited1

H.N. Busselton Leasing Pty Limited

H.N. Cairns Franchisor Pty Limited1

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 Limited1

H.N. Campbelltown Leasing Pty Limited

H.N. Cannington W.A. Franchisor Pty Limited1

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 Limited1

H.N. Carindale Leasing Pty Limited

H.N. Caringbah Franchisor Pty Limited1

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 Limited1

H.N. Chatswood Leasing Pty Limited

H.N. Chirnside Park Franchisor Pty Limited1

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 Limited1

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. Coburg Franchisor Pty Limited7

H.N. Coburg Leasing Pty Limited7

H.N. Coffs Harbour Franchisor Pty Limited1

H.N. Coffs Harbour Leasing Pty Limited

H.N. Coorparoo Franchisor Pty Limited

H.N. Coorparoo Leasing Pty Limited

H.N. Cranbourne Franchisor Pty Limited1

H.N. Cranbourne Leasing Pty Limited

H.N. Dalby Franchisor Pty Limited1

H.N. Dalby Leasing Pty Limited

H.N. Dandenong Franchisor Pty Limited1

H.N. Dandenong Leasing Pty Limited

H.N. Darwin Franchisor Pty Limited1

H.N. Darwin Leasing Pty Limited

H.N. Deniliquin Franchisor Pty Limited1

H.N. Deniliquin Leasing Pty Limited

H.N. Dubbo Franchisor Pty Limited1

H.N. Dubbo Leasing Pty Limited

H.N. Edgewater Franchisor Pty Limited7

H.N. Edgewater Leasing Pty Limited7

H.N. Enfield Franchisor Pty Limited1

H.N. Enfield Leasing Pty Limited

H.N. Everton Park Franchisor Pty Limited1

H.N. Everton Park Leasing Pty Limited

H.N. Fortitude Valley Franchisor Pty Limited1

H.N. Fortitude Valley Leasing Pty Limited

H.N. Frankston Franchisor Pty Limited

H.N. Frankston Leasing Pty Limited

H.N. Fremantle Franchisor Pty Limited1

H.N. Fremantle Leasing Pty Limited

H.N. Fyshwick Franchisor Pty Limited1

H.N. Fyshwick Leasing Pty Limited

H.N. Geelong Franchisor Pty Limited1

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 Limited1

H.N. Gladstone Franchisor Pty Limited1

H.N. Gladstone Leasing Pty Limited

H.N. Gordon Franchisor Pty Limited1

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 Limited1

H.N. Grafton Leasing Pty Limited

H.N. Great Eastern Highway Franchisor Pty Limited7

H.N. Great Eastern Highway Leasing Pty Limited7

H.N. Greensborough Franchisor Pty Limited1

H.N. Greensborough Leasing Pty Limited

H.N. Griffith Franchisor Pty Limited1

H.N. Griffith Leasing Pty Limited

H.N. Gunnedah Franchisor Pty Limited7

H.N. Gunnedah Leasing Pty Limited7

H.N. Guthrie Street Franchisor Pty Limited7

H.N. Guthrie Street Leasing Pty Limited7

H.N. Gympie Franchisor Pty Limited

H.N. Gympie Leasing Pty Limited

H.N. Hamilton Franchisor Pty Limited1

H.N. Hamilton Leasing Pty Limited

H.N. Hervey Bay Franchisor Pty Limited1

H.N. Hervey Bay Leasing Pty Limited

H.N. Hoppers Crossing Franchisor Pty Limited1

H.N. Hoppers Crossing Leasing Pty Limited

H.N. Horsham Franchisor Pty Limited1

H.N. Horsham Leasing Pty Limited

H.N. Hyperdome Franchisor Pty Limited7

H.N. Hyperdome Leasing Pty Limited7

H.N. Indooroopilly Franchisor Pty Limited1

H.N. Indooroopilly Leasing Pty Limited

H.N. Innisfail Franchisor Pty Limited1

H.N. Innisfail Leasing Pty Limited

H.N. Inverell Franchisor Pty Limited1

H.N. Inverell Leasing Pty Limited

H.N. Ipswich Franchisor Pty Limited

H.N. Ipswich Leasing Pty Limited

H.N. Joondalup Franchisor Pty Limited1

H.N. Joondalup Leasing Pty Limited

H.N. Kalgoorlie Franchisor Pty Limited1

H.N. Kalgoorlie Leasing Pty Limited

H.N. Karratha Franchisor Pty Limited1

H.N. Karratha Leasing Pty Limited

H.N. Kawana Waters Franchisor Pty Limited1

H.N. Kawana Waters Leasing Pty Limited

127

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Shares held by Harvey Norman Holdings Limited (continued)

H.N. Kingaroy Franchisor Pty Limited

H.N. Kingaroy Leasing Pty Limited

H.N. Knox Towerpoint Franchisor Pty Limited1

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 Limited1

H.N. Leichhardt Leasing Pty Limited

H.N. Lismore Franchisor Pty Limited1

H.N. Lismore Leasing Pty Limited

H.N. Lithgow Franchisor Pty Limited

H.N. Lithgow Leasing Pty Limited

H.N. Liverpool Franchisor Pty Limited1

H.N. Liverpool Leasing Pty Limited

H.N. Loganholme Franchisor Pty Limited1

H.N. Loganholme Leasing Pty Limited

H.N. Loughran Contracting Pty Limited

H.N. Macgregor Franchisor Pty Limited7

H.N. Macgregor Leasing Pty Limited7

H.N. Mackay Franchisor Pty Limited1

H.N. Mackay Leasing Pty Limited

H.N. Maddington Franchisor Pty Limited1

H.N. Maddington Leasing Pty Limited

H.N. Maitland Franchisor Pty Limited1

H.N. Maitland Leasing Pty Limited

H.N. Malaga Franchisor Pty Limited

H.N. Malaga Leasing Pty Limited

H.N. Mandurah Franchisor Pty Limited1

H.N. Mandurah Leasing Pty Limited

H.N. Maribyrnong Franchisor Pty Limited1

H.N. Maribyrnong Leasing Pty Limited

H.N. Marion Franchisor Pty Limited1

H.N. Marion Leasing Pty Limited

H.N. Maroochydore CP Franchisor Pty Limited7

H.N. Maroochydore CP Leasing Pty Limited7

H.N. Maroochydore Franchisor Pty Limited1

H.N. Maroochydore Leasing Pty Limited

H.N. Martin Place Sydney Franchisor Pty Limited1

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 Limited1

H.N. Midland Leasing Pty Limited

H.N. Mildura Franchisor Pty Limited1

H.N. Mildura Leasing Pty Limited

H.N. Moe Franchisor Pty Limited1

H.N. Moe Leasing Pty Limited

H.N. Moonah Franchisor Pty Limited

H.N. Moonah Leasing Pty Limited

H.N. Moorabbin Franchisor Pty Limited1

H.N. Moorabbin Leasing Pty Limited1

H.N. Moorabbin SC Franchisor Pty Limited7

H.N. Moorabbin SC Leasing Pty Limited7

H.N. Moore Park Franchisor Pty Limited1

H.N. Moore Park Leasing Pty Limited

H.N. Morayfield Franchisor Pty Limited1

H.N. Morayfield Leasing Pty Limited

H.N. Moree Franchisor Pty Limited

H.N. Moree Leasing Pty Limited

H.N. Morley Franchisor Pty Limited1

H.N. Morley Leasing Pty Limited

H.N. Mornington Franchisor Pty Limited7

H.N. Mornington Leasing Pty Limited7

H.N. Morwell Franchisor Pty Limited

H.N. Morwell Leasing Pty Limited

H.N. Moss Vale Franchisor Pty Limited1

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 Limited1

H.N. Mt Gambier Leasing Pty Limited

H.N. Mt Gravatt Franchisor Pty Limited1

H.N. Mt Gravatt Leasing Pty Limited

H.N. Mt Isa Franchisor Pty Limited1

H.N. Mt Isa Leasing Pty Limited

ited1

H.N. Mudgee Franchisor Pty Limited

H.N. Mudgee Leasing Pty Limited

H.N. Munno Para Franchisor Pty Limited1

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 Limited1

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 Limited1

H.N. Nowra Leasing Pty Limited

H.N. Nunawading Franchisor Pty Limited1

H.N. Nunawading Leasing Pty Limited

H.N. O‟Connor Franchisor Pty Limited1

H.N. O‟Connor Leasing Pty Limited

H.N. Oakleigh CK Franchisor Pty Limited1

H.N. Oakleigh CK Leasing Pty Limited

H.N. Orange Franchisor Pty Limited1

H.N. Orange Leasing Pty Limited

H.N. Osborne Park Franchisor Pty Limited1

H.N. Osborne Park Leasing Pty Limited

H.N. Oxley Franchisor Pty Limited1

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 Limited1

H.N. Parkes Leasing Pty Limited

H.N. Penrith Franchisor Pty Limited1

H.N. Penrith Leasing Pty Limited

H.N. Peppermint Grove Franchisor Pty Limited1

H.N. Peppermint Grove Leasing Pty Limited

H.N. Port Hedland Franchisor Pty Limited1

H.N. Port Hedland Leasing Pty Limited

H.N. Port Kennedy Franchisor Pty Limited1

H.N. Port Kennedy Leasing Pty Limited

H.N. Port Macquarie Franchisor Pty Limited1

H.N. Port Macquarie Leasing Pty Limited

H.N. Preston Franchisor Pty Limited1

H.N. Preston Leasing Pty Limited

H.N. Richmond Franchisor Pty Limited7

H.N. Richmond Leasing Pty Limited7

H.N. Ringwood Franchisor Pty Limited7

H.N. Ringwood Leasing Pty Limited7

H.N. Riverwood Franchisor Pty Limited

H.N. Riverwood Leasing Pty Limited

H.N. Rockhampton Franchisor Pty Limited1

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 Limited1

H.N. Sale Leasing Pty Limited

H.N. Shepparton Franchisor Pty Limited1

H.N. Shepparton Leasing Pty Limited

H.N. South Tweed Franchisor Pty Limited1

H.N. South Tweed Leasing Pty Limited

H.N. Southland Franchisor Pty Limited1

H.N. Southland Leasing Pty Limited

H.N. Springvale Franchisor Pty Limited7

H.N. Springvale Leasing Pty Limited7

H.N. Sunshine Franchisor Pty Limited

H.N. Sunshine Leasing Pty Limited

H.N. Swan Hill Franchisor Pty Limited1

H.N. Swan Hill Leasing Pty Limited

H.N. Tamworth Franchisor Pty Limited1

H.N. Tamworth Leasing Pty Limited

H.N. Taree Franchisor Pty Limited

H.N. Taree Leasing Pty Limited

H.N. Thomastown Franchisor Pty Limited

H.N. Thomastown Leasing Pty Limited

H.N. Toowoomba Franchisor Pty Limited1

H.N. Toowoomba Leasing Pty Limited

H.N. Townsville Franchisor Pty Limited1

H.N. Townsville Leasing Pty Limited

H.N. Traralgon Franchisor Pty Limited1

H.N. Traralgon Leasing Pty Limited

H.N. Vic/Tas Commercial Project

Franchisor Pty Limited

H.N. Vic/Tas Commercial Project

Leasing Pty Limited

H.N. Victoria Park Franchisor Pty Limited7

H.N. Victoria Park Leasing Pty Limited7

H.N. Wagga Franchisor Pty Limited1

H.N. Wagga Leasing Pty Limited

H.N. Wangaratta Franchisor Pty Limited1

H.N. Wangaratta Leasing Pty Limited

H.N. Warragul Franchisor Pty Limited1

H.N. Warragul Leasing Pty Limited

H.N. Warrawong Franchisor Pty Limited1

H.N. Warrawong Leasing Pty Limited

H.N. Warrnambool Franchisor Pty Limited1

H.N. Warrnambool Leasing Pty Limited

H.N. Warwick (WA) Franchisor Pty Limited1

H.N. Warwick (WA) Leasing Pty Limited

H.N. Warwick Franchisor Pty Limited1

H.N. Warwick Leasing Pty Limited

H.N. Watergardens Franchisor Pty Limited1

H.N. Watergardens Leasing Pty Limited

H.N. Waurn Ponds Franchisor Pty Limited1

H.N. Waurn Ponds Leasing Pty Limited

H.N. West Gosford Franchisor Pty Limited1

H.N. West Wyalong Franchisor Pty Limited

H.N. West Wyalong Leasing Pty Limited

H.N. Whyalla Franchisor Pty Limited1

H.N. Whyalla Leasing Pty Limited

H.N. Wiley Park Franchisor Pty Limited1

H.N. Wiley Park Leasing Pty Limited

H.N. Windsor Franchisor Pty Limited1

H.N. Windsor Leasing Pty Limited

H.N. Woden Franchisor Pty Limited1

H.N. Woden Leasing Pty Limited

H.N. Wonthaggi Franchisor Pty Limited1

H.N. Wonthaggi Leasing Pty Limited

H.N. Woodville Franchisor Pty Limited

H.N. Woodville Leasing Pty Limited

H.N. Young Franchisor Pty Limited1

H.N. Young Leasing Pty Limited

Hardly Normal Discounts Pty Limited1

Hardly Normal Limited9,10

Hardly Normal Pty Limited1

Harvey Cellars Pty Limited

Harvey Liquor Pty Limited

Harvey Norman (ACT) Pty Limited1

Harvey Norman (N.S.W.) Pty Limited

Harvey Norman (QLD) Pty Limited1,6

Harvey Norman 2007 Management Pty Limited

Harvey Norman Big Buys Pty Limited

Harvey Norman Burnie Franchisor Pty Limited1

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

Harvey Norman Devonport Franchisor Pty Limited1

Harvey Norman Devonport Leasing Pty Limited

Harvey Norman Education and Training Pty Limited

128

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Shares held by Harvey Norman Holdings Limited (continued)

Harvey Norman Energy Pty Limited1

Harvey Norman Europe d.o.o12

Harvey Norman Export Pty Limited1

Harvey Norman Fitouts Pty Limited

Harvey Norman Furnishing Pty Limited

Harvey Norman Gamezone Pty Limited

Harvey Norman Glenorchy Franchisor Pty Limited1

Harvey Norman Glenorchy Leasing Pty Limited

Harvey Norman Hobart Franchisor Pty Limited1

Harvey Norman Hobart Leasing Pty Limited

Harvey Norman Holdings (Ireland) Limited19,27

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) Limited18,19

Harvey Norman Leasing (Drogheda) Limited18,19

Harvey Norman Leasing (Dublin) Limited18,19

Harvey Norman Leasing (Dundalk) Limited18,19

Harvey Norman Leasing (Eastgate) Limited18,19

Harvey Norman Leasing (Limerick) Limited18,19

Harvey Norman Leasing (Mullingar) Limited18,19

Harvey Norman Leasing (N.Z.) Limited9,10

Harvey Norman Leasing (Naas) Limited18,19

Harvey Norman Leasing (NI) Limited18,19

Harvey Norman Leasing (Rathfarnham) Limited18,19

Harvey Norman Leasing (Tralee) Limited18,19

Harvey Norman Leasing (Waterford) Limited18,19

Harvey Norman Leasing Pty Limited

Harvey Norman Limited10

Harvey Norman Loughran Plant & Equipment

Pty Limited

Harvey Norman Mortgage Service Pty Limited

Harvey Norman Music Pty Limited

Harvey Norman Net. Works Pty Limited1

Harvey Norman OFIS Pty Limited1

Harvey Norman Online.com Pty Limited

Harvey Norman Ossia (Asia) Pte Limited11,16,17

Harvey Norman P.E.M. Pty Limited

Harvey Norman Plant and Equipment Pty Limited

Harvey Norman Properties (N.Z.) Limited9,10

Harvey Norman Rental Pty Limited

Harvey Norman Retailing Pty Limited1

Harvey Norman Rosney Franchisor Pty Limited1

Harvey Norman Rosney Leasing Pty Limited

Harvey Norman Security Pty Limited

Harvey Norman Shopfitting Pty Limited1

Harvey Norman Singapore Pte Limited11,15,16

Harvey Norman Stores (N.Z.) Pty Limited1

Harvey Norman Stores (W.A.) Pty Limited

Harvey Norman Stores Pty Limited1

Harvey Norman Superlink Pty Limited

Harvey Norman Tasmania Pty Limited

Harvey Norman Technology Pty Limited1

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) Limited18,19

Harvey Norman Trading d.o.o.12

Harvey Norman Ulverstone Franchisor Pty Limited1

Harvey Norman Ulverstone Leasing Pty Limited

Harvey Norman Victoria Pty Limited1

Harvey Norman Zagreb d.o.o.14

Havrex Pty Limited1,6

HN Blenheim Leasing Limited7,9,10

HN Byron No. 2 Pty Limited27

HN Byron No. 3 Pty Limited27

HN Online Franchisor Pty Limited

HN Online Leasing Pty Limited

HN Paraparaumu Leasing Limited9,10

HN QCV Benaraby No.1 Pty Limited33

HN QCV Benaraby Pty Limited29

HN QCV Fairview Pty Limited7,30

HN QCV Injune Pty Limited7,31

HN QCV Pty Limited

HN QCV Sarina Pty Limited7,32

HN Tory Street Leasing Limited7,9,10

HN Zagreb Investment Pty Limited

HNL Pty Limited

Hodberg Pty Limited1,5

Hodvale Pty Limited1,5

Home Mart Furniture Pty Limited

Home Mart Pty Limited

Hoxco Pty Limited1,6

J.M. Albury Franchisor Pty Limited

J.M. Albury Leasing Pty Limited

J.M. Alexandria Franchisor Pty Limited

J.M. Alexandria Leasing Pty Limited

J.M. Auburn Franchisor Pty Limited1

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 Limited1

J.M. Campbelltown Leasing Pty Limited

J.M. Caringbah Franchisor Pty Limited1

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 Limited1

J.M. Dubbo Franchisor Pty Limited

J.M. Dubbo Leasing Pty Limited

J.M. Leasing Pty Limited

J.M. Mackay Franchisor Pty Limited7

J.M. Mackay Leasing Pty Limited7

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 Limited1

J.M. Marrickville Leasing Pty Limited

J.M. McGraths Hill Franchisor Pty Limited

J.M. McGraths Hill Leasing Pty Limited

J.M. Morayfield Franchisor Pty Limited7

J.M. Morayfield Leasing Pty Limited7

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 Limited1

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 Limited1

JM Online Franchisor Pty Limited

JM Online Leasing Pty Limited

Jondarlo Pty Limited1

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 Limited1

Kita Pty Limited1

Kitchen Point Pty Limited

Koodero Pty Limited1

Korinti Pty Limited1

Lamino Pty Limited1

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 Aspley Pty Limited7

Lesandu Atherton Pty Limited7

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 Brisbane City Pty Limited

Lesandu Broadbeach Pty Limited

Lesandu Broadway Pty Limited

Lesandu Brooklyn Pty Limited

Lesandu Browns Plains No. 1 Pty Limited

Lesandu Browns Plains Pty Limited

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

Lesandu CP Bayswater Pty Limited

Lesandu CP Belmont Pty Limited

Lesandu CP Bendigo Pty Limited

Lesandu CP Braybrook Pty Limited

Lesandu CP Bundaberg Pty Limited

Lesandu CP Bundaberg WH 2 Pty Limited

Lesandu CP Bundaberg WH Pty Limited

129

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Shares held by Harvey Norman Holdings Limited (continued)

Lesandu CP Burleigh Waters Pty Limited

Lesandu CP Coburg Pty Limited

Lesandu CP Dandenong Pty Limited

Lesandu CP Joondalup Pty Limited

Lesandu CP Loganholme Pty Limited

Lesandu CP Macgregor Pty Limited

Lesandu CP Macgregor WH Pty Limited

Lesandu CP Mackay Pty Limited

Lesandu CP Malvern Pty Limited

Lesandu CP Malvern WH Pty Limited

Lesandu CP Mandurah Pty Limited

Lesandu CP Maroochydoore Pty Limited

Lesandu CP Maroochydoore WH Pty Limited

Lesandu CP Maryborough Pty Limited

Lesandu CP Midland Pty Limited

Lesandu CP Moonah Pty Limited

Lesandu CP Moorabbin Pty Limited

Lesandu CP Morayfield Pty Limited

Lesandu CP Mornington Pty Limited

Lesandu CP Mt Druitt Pty Limited

Lesandu CP O'Connor Pty Limited

Lesandu CP Osborne Park CL Pty Limited

Lesandu CP Osborne Park Pty Limited

Lesandu CP Osborne Park WH Pty Limited

Lesandu CP Richmond CL Pty Limited

Lesandu CP Richmond Pty Limited

Lesandu CP Richmond WH Pty Limited

Lesandu CP Ringwood CL Pty Limited7

Lesandu CP Ringwood Home Pty Limited

Lesandu CP Ringwood Pty Limited

Lesandu CP Ringwood WH Pty Limited

Lesandu CP Thomastown Pty Limited

Lesandu CP Victoria Park Pty Limited

Lesandu CP Welshpool WH Pty Limited7

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 Limited1

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 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

Lesandu Moore Park Pty Limited

Lesandu Moree Pty Limited

Lesandu Morley Pty Limited

Lesandu Mornington Pty Limited

Lesandu Morwell WH Pty Limited

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 Murray Bridge Pty Limited7

Lesandu Muswellbrook JM Pty Limited

Lesandu Muswellbrook Pty Limited

Lesandu Narrabri Pty Limited

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

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

Lesandu Pty Limited1

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 Limited1

Lesandu Underwood Pty Limited

Lesandu WA Furniture Pty Limited

Lesandu WA Pty Limited1

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

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

Lexeri Pty Limited1

Lightcorp Pty Limited

Lighting Venture Pty Limited1

Lodare Pty Limited1

Loreste Pty Limited1

Malvis Pty Limited1

Manutu Pty Limited1

Maradoni Pty Limited1

Marinski Pty Limited1

Mega Flooring Depot Pty Limited

Misstar Pty Limited

Murry Street Development Pty Limited

Mymasterpiece Pty Limited 5

Nedcroft Pty Limited1

Network Consumer Finance (Ireland) Limited18,19

Network Consumer Finance (N.Z.) Limited9,10

Network Consumer Finance Pty Limited1

Nomadale Pty Limited1,6

Norman Ross Limited 9,10

Norman Ross Pty Limited1

Oldmist Pty Limited1

Oslek Developments Pty Limited

Osraidi Pty Limited1

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

PEM Corporate Pty Limited

Pertama Holdings Limited11,16,17

Plezero Pty Limited1

Poliform Pty Limited26

QCV Benaraby Pty Limited 29

QCV Fairview Pty Limited 30

QCV Injune Pty Limited 31

QCV Pty Limited 28

QCV Sarina Pty Limited 32

R.Reynolds Nominees Pty Limited

Recline A Way Franchisor Pty Limited

RH Online Pty Limited

Rosieway Pty Limited1

Sarsha Pty Limited1

Setto Pty Limited1

Shakespir Pty Limited

Signature Computers Pty Limited

Solaro Pty Limited1

Space Furniture Pte Limited11,16

Space Furniture Pty Limited3

130

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Shares held by Harvey Norman Holdings Limited (continued)

Spacepol Pty Limited

Stonetess Pty Limited1

Stores (NZ) Limited 9,10

Stores Securitisation (NZ) Limited10

Stores Securitisation Pty Limited

Strathloro Pty Limited1

Stupendous Pty Limited1,20

Superguard Pty Limited

Swaneto Pty Limited1

Swanpark Pty Limited1,6

Tatroko Pty Limited1

Tessera Stones & Tiles Australia Pty Limited

Tessera Stones & Tiles Pty Limited1,13

The Byron At Byron Pty Limited1

Tisira Pty Limited1

Ventama Pty Limited1,4

Wadins Pty Limited1

Waggafurn Pty Limited

Wanalti Pty Limited1

Warungi Pty Limited1

Waytango Pty Limited1

Webzone Pty Limited

Wytharra Pty Limited1

Yoogalu Pty Limited1,2

Zabella Pty Limited1

Zavarte Pty Limited1

Zirdano Pty Limited1

Zirdanu Pty Limited1

Notes

Shareholdings in companies listed in Note 38 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 39.

3 Derni Pty Ltd owns 100% 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 33.80%

(2011:28.60%) of the shares in Pertama Holdings Limited.

17 Harvey Norman Ossia (Asia) Pte Limited holds 49.38% 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 75% (2011: 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 Derni Pty Ltd owns 100% of the shares in Poliform Pty Ltd.

27 Yoogalu Pty Limited holds 63.5% of the shares in ABSC Online 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

30 HN QCV Fairview Pty Limited holds 50% of the shares in QCV Fairview Pty Limited

31 HN QCV Injune Pty Limited holds 50% of the shares in QCV Injune Pty Limited

32 HN QCV Sarina Pty Limited holds 50% of the shares in QCV Sarina Pty Limited

33 HN QCV Benaraby No 1 Pty Limited holds 50% of the shares in QCV Benaraby No 1 Pty Limited

131

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. 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

ABSC Online Trust ***

Alanlect No. 2 Trust

Albanall No. 2 Trust

Albany Stores No. 2 Trust

Albany Superstore No. 2 Trust

Albavit No 2 Trust**

Alburcom No. 2 Trust

Alburel No. 2 Trust

Albwick No. 2 Trust

Alexall No 2 Trust

Alexandria Superstore No. 2 Trust

Alistore No. 2 Trust

Andersfurn No 2 Trust**

Angefurn No. 2 Trust

Angestore No 2 Trust**

Anwarah No. 2 Trust

Appcann No. 2 Trust

Ardera No. 2 Trust

Armabert No. 2 Trust

Armadale Furniture No 2 Trust

Armadale Superstore No 2 Trust**

Armastore No. 2 Trust

Armavit No 2 Trust**

Armlect No. 2 Trust

Arulect No. 2 Trust

Arwon Computers No. 2 Trust

Arwon Electrics No. 2 Trust

Aspfloor No 2 Trust**

Aspley Flooring No 2 Trust**

Asptec No. 2 Trust

Aubapp No. 2 Trust

Aubdirect No. 2 Trust

Aublect No. 2 Trust

Aubtrade No. 2 Trust

Australian Business Skills Centre Trust***

Avitmont No 2 Trust**

Ayravit No 2 Trust**

Ayrtec No. 2 Trust

Bakfurn No. 2 Trust

Ballinall No 2 Trust**

Bamsett No. 2 Trust

Barlect No. 2 Trust

Becto Trust

Bedba No 2 Trust**

Bedholme No. 2 Trust

Bedton No. 2 Trust

Bedwick No. 2 Trust

Belavit No. 2 Trust

Bellbed No. 2 Trust

Bena No. 2 Trust

Bendcomp No. 2 Trust

Bendlect No. 2 Trust

Benstore No. 2 Trust

Berelect No. 2 Trust

Bervit No. 2 Trust

Big Apple Trust

BM Superstore No. 2 Trust

Bojarda No. 2 Trust

Bondcom No. 2 Trust

Bondlect No. 2 Trust

BP Flooring No 2 Trust

Bradiz No. 2 Trust

Broadel No. 2 Trust

Broadway Superstore No 2 Trust**

Brockland No. 2 Trust

Brocomp No. 2 Trust

Brofloor No. 2 Trust

Bronlect No.2 Trust

Brookstore No. 2 Trust

Brownavit No 2 Trust**

Browns Plains Bedding No 2 Trust

Browns Plains Superstore No. 2 Trust

Brownslect No. 2 Trust

Buddlect No. 2 Trust

Bunbury Superstore No 2 Trust**

Bunburyfurn No. 2 Trust

Buncomp No. 2 Trust

Bundaberg Superstore No 2 Trust**

Bundalect No. 2 Trust

Bundall Superstore No. 2 Trust

Bundatec No. 2 Trust

Bundhill No. 2 Trust

Bundware No. 2 Trust

Bunstore 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

Busselton Superstore No 2 Trust**

Bussfurn No 2 Trust**

Busstor No. 2 Trust

Buycom No. 2 Trust

Byrncom No. 2 Trust

Cairnlect 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

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 Browns 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 No 2 Trust

Calardu North Ryde No. 1 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 No 2 Trust

Calardu Rockhampton Trust

132

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

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

Calel No. 2 Trust

Cambridge Computers No. 2 Trust

Cambridge Park Electrics No 2 Trust**

Canecom No. 2 Trust

Canelect No. 2 Trust

Canner No. 2 Trust

Cannington Superstore No.2 Trust

Cannonel No. 2 Trust

Cannontec No. 2 Trust

Cannstore No. 2 Trust

Cannters No. 2 Trust

Capalaba Bedding No. 2 Trust

Capalaba Computers No. 2 Trust

Capalaba Flooring No. 2 trust

Capalaba Furniture No 2 Trust**

Caplect No. 2 Trust

Carcom No. 2 Trust

Cardlect No. 2 Trust

Carebed No. 2 Trust

Carinlect No. 2 Trust

Carintec No. 2 Trust

Carolander No. 2 Trust

Castleware No 2 Trust**

Castore No. 2 Trust

CBG Trust

Cellorcom No. 2 Trust

Chadcom No. 2 Trust

Chadfloor No. 2 Trust

Chanavit No 2 Trust**

Chancelect No. 2 Trust

Charmela No. 2 Trust

Chatcom No. 2 Trust

Chatex No. 2 Trust

Chatlect No. 2 Trust

Chirncom No. 2 Trust

Chirnel No. 2 Trust

Citistore No 2 Trust**

City Superstore No. 2 Trust

City West Superstore No. 2 Trust

Clevcom No. 2 Trust

Cleveland Superstore No 2 Trust**

Clevelcom No. 2 Trust

Clevelect No. 2 Trust

Comalb No. 2 Trust

Comaub No. 2 Trust

Combal No. 2 Trust

Combalg No. 2 Trust

Comben Nominees No. 2 Trust

Combier No. 2 Trust

Combron No. 2 Trust

Combury No. 2 Trust

Comcam No. 2 Trust

Comdaw No. 2 Trust

Comdore No. 2 Trust

Comgos No.2 Trust

Comgreen No. 2 Trust

Comhill No. 2 Trust

Comkaw No 2 Trust

Commil No. 2 Trust

Compalaba No. 2 Trust

Comparoo No. 2 Trust

Compgrav No. 2 Trust

Compuville No. 2 Trust

Comroc No. 2 Trust

Comtam No. 2 Trust

Comtoon No. 2 Trust

Comvey No. 2 Trust

Comwick No 2 Trust**

Coorparoo Electrics No. 2 Trust

Coorparoo Furniture No. 2 Trust

Coravit No. 2 Trust

Cosgrove Shopfitting Services No. 2 Trust

Cosher 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

CW Superstore No 2 Trust**

Dalefurn No. 2 Trust

Dalelect No. 2 Trust

Dalfurn No. 2 Trust

Dallbed No 2 Trust**

Dallcom No. 2 Trust

Dalstore No. 2 Trust

Daltel No. 2 Trust

Daltonel No. 2 Trust

Dancomp No. 2 Trust

Danstore No. 2 Trust

Darolect No. 2 Trust

Daystore No. 2 Trust

Deltharmo No. 2 Trust

Denili 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

Dubbocom No. 2 Trust

Durahlect No. 2 Trust

E P Bedding No. 2 Trust

Elebat No. 2 Trust

Electgos No. 2 Trust

Electham No. 2 Trust

Electley No. 2 Trust

Electmil No. 2 Trust

Electvale No. 2 Trust

Electwind 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

Enfield Bedding No 2 Trust**

Enstore No. 2 Trust

Everton Bedding No. 2 Trust

Everton Park Computers No. 2 Trust

Evtonel No. 2 Trust

Favstore No 2 Trust

Filfurn No. 2 Trust

Floholme No. 2 Trust

Flooraba No. 2 Trust

Floorcom No. 2 Trust

Floordore No 2 Trust**

Floorwell No. 2 Trust

Fortavit No 2 Trust**

Fortitude Furniture No. 2 Trust

Fortley No. 2 Trust

Frankcom No. 2 Trust

Frankstonel No. 2 Trust

Fraserfurn No. 2 Trust

Freeson Superstore No. 2 Trust

Fremstore No. 2 Trust

Fremtel No. 2 Trust

Furnbayel No. 2 Trust

Furncam No. 2 Trust

Furndall No 2 Trust**

Furneld No. 2 Trust

Furnholme No. 2 Trust

Furnkay No. 2 Trust

Furnking No 2 Trust**

Furnmarn No. 2 Trust

Furnmore No 2 Trust

Furnoosa No. 2 Trust

Furnpel No 2 Trust

Furnroc No. 2 Trust

Furnsprings No. 2 Trust

Furnstar No. 2 Trust

Furnwhy No. 2 Trust

Furnwood No. 2 Trust

FV Superstore No 2 Trust**

Fyshcom No. 2 Trust

Gamstore No. 2 Trust

Gamtec No. 2 Trust

Gardfurn No. 2 Trust

Gardstore No 2 Trust

GC Bedding No. 2 Trust

GC Store No 2 Trust**

GC Superstore No. 2 Trust

Gelfurn No. 2 Trust

Gellect No. 2 Trust

Gepavit No 2 Trust**

Gepps Cross Superstore No. 2 Trust

Geraldcom No. 2 Trust

Geraldstore No. 2 Trust

Geraldtec No 2 Trust**

Geraldton WA No 1 Trust

Geraldton WA No 2 Trust

Geralect No 2 Trust

Gladlect No. 2 Trust

Gladstone Superstore No 2 Trust**

Gladstores No. 2 Trust

Gladstores Qld No. 2 Trust

Glenorchy Computers No 2 Trust**

Glenorchy Electrics No. 2 Trust

Glenorchy Furniture No. 2 Trust

Gocomp No. 2 Trust

Golect No. 2 Trust

Goscane No. 2 Trust

Gostec No. 2 Trust

Granovi 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

133

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

Hamlect No. 2 Trust

Hamptonel No. 2 Trust

Hanazil No. 2 Trust

Hanfurn 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

HB Superstore No 2 Trust**

Hedavit No 2 Trust**

Helect No. 2 Trust

Hervey Bay Superstore No. 2 Trust

Herveyfurn No. 2 Trust

Herveylect No. 2 Trust

Hobart City Electrics No. 2 Trust

Hobartcom No. 2 Trust

Holmebed No. 2 Trust

Holmlect No 2 Trust**

Homedall No 2 Trust**

Homefloor No. 2 Trust

Hoodtec No. 2 Trust

Horshamcom No. 2 Trust

Hytoru No. 2 Trust

Indavit No 2 Trust**

Indooroopilly Superstore No. 2 Trust

Indycom No. 2 Trust

Inelect No. 2 Trust

Innistec No. 2 Trust

Inrolect No. 2 Trust

Inropel No. 2 Trust

Ipswich Superstore No. 2 Trust

Irbed No 2 Trust**

Jamitec No. 2 Trust

Jasbeds No. 2 Trust

Jaslect 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

Joolbed No. 2 Trust

Joonapp No. 2 Trust

Joonlect No. 2 Trust

Joonstore No. 2 Trust

Kaboola No. 2 Trust

Kainel No. 2 Trust

Kalgoorlie Computers No. 2 Trust

Kalinya Unit Trust

Kallie No. 2 Trust

Kawana Superstore No 2 Trust**

Kawatec No. 2 Trust

Kayfurn No. 2 Trust

Kelsocom No. 2 Trust

Kenstore No. 2 Trust

Kingalect No. 2 Trust

Kingarel No. 2 Trust

Kingaroy Superstore No 2 Trust**

Kingatec 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

Launceston Computers No. 2 Trust

Launceston Electrics No. 2 Trust

Lecany No. 2 Trust

Lecedy No. 2 Trust

Lectaba No. 2 Trust

Lectdore No. 2 Trust

Lectox 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

Leybed 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

Loganel No. 2 Trust

Loganholme Computers No. 2 Trust

Lunabed No 2 Trust**

Lunel No. 2 Trust

Mackay Superstore No. 2 Trust

Mackay Trust

Macvit No. 2 Trust

Magatec No 2 Trust**

Magavit No. 2 Trust

Maglect No. 2 Trust

Maitrics No. 2 Trust

Makelect No. 2 Trust

Malaga Electrics No. 2 Trust

Malbed No. 2 Trust

Mallway No. 2 Trust

Malstore No. 2 Trust

Malvis No 2 Trust

Manavit No 2 Trust**

Mandalec No. 2 Trust

Mandcom No. 2 Trust

Mandurah Superstore No 2 Trust**

Mandurbed No. 2 Trust

Maracom No. 2 Trust

Marfurn No 2 Trust**

Marion Bedding No 2 Trust**

Marioncom No. 2 Trust

Marlect 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 Toowoomba No 2 Trust

Midland Superstore No 2 Trust**

Midlandel No. 2 Trust

Midlander No. 2 Trust

Midlect No 2 Trust**

Midtyme No. 2 Trust

Millsberg No. 2 Trust

Moore Park Computers No 2 Trust**

Moratec No 2 Trust**

Moraystore No. 2 Trust

Mosscom No 2 Trust**

Moybed No. 2 Trust

Moyel No. 2 Trust

MP Bedding No 2 Trust**

Mt Barker Superstore No 2 Trust**

Mt Gambier Furniture No 2 Trust

Mt Gambier Superstore 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

Munno Para Superstore No 2 Trust**

Munnofloor No 2 Trust**

Muracom No. 2 Trust

Murray Street Development Trust

Nawcom No. 2 Trust

Noaravit No 2 Trust**

Noarlunga Superstore No. 2 Trust

Noartec No. 2 Trust

Noosa Computers No. 2 Trust

Noostore 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

Novaab No 2 Trust**

Nowracom No. 2 Trust

Noxel No. 2 Trust

Nusound No 2 Trust**

OC Superstore No. 2 Trust

Oconavit No 2 Trust**

Ollec No. 2 Trust

Olscom No. 2 Trust

Orancom No. 2 Trust

Osbcomm No. 2 Trust

Osborne Park Computers No. 2 Trust

Oslect No. 2 Trust

Oslek Developments Trust

Osraidi No 2 Trust

Oxel No. 2 Trust

Oxley Superstore No 2 Trust**

Oxleybed No. 2 Trust

Packcom No. 2 Trust

Paralect No. 2 Trust

Parkbed No. 2 Trust

Parkel No. 2 Trust

Parksel No. 2 Trust

Pepavit No. 2 Trust

Peppercom No. 2 Trust

Pepperlect No 2 Trust

Pettivil No. 2 Trust

PH Superstore No. 2 Trust

Plainavit No 2 Trust**

Plainsbed No. 2 Trust

Plainsfloor No 2 Trust**

Plainsfurn No. 2 Trust

Playel No. 2 Trust

Plomara No. 2 Trust

Porterel No. 2 Trust

Punable No. 2 Trust

QCV Benaraby No. 1 Trust

QVCom No. 2 Trust

QVElect No. 2 Trust

Rathstore No. 2 Trust

Renovic No 2 Trust

Richfloors No. 2 Trust

134

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

38. Controlled Entities and Unit Trusts (continued)

Units in Unit Trusts held by Harvey Norman Holdings Limited (continued)

Roamcom No. 2 Trust

Roccom No. 2 Trust

Rockavit No 2 Trust**

Rockhampton Furniture No. 2 Trust

Rohancom No. 2 Trust

Rosny Computers No 2 Trust

Rosny Electrics No 2 Trust

Rosny Furniture No 2 Trust

Rothbed 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

Rugware No. 2 Trust

Rydefurn No 2 Trust**

Rydewares No 2 Trust**

Sakotec No. 2 Trust

Sandstore No. 2 Trust

Sergfurn No 2 Trust

Setes 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

Southel No. 2 Trust

Southland Superstore No. 2 Trust

Supershepp No. 2 Trust

Sydney No. 1 Trust

Symlect No. 2 Trust

Tarcom No. 2 Trust

Taretec No. 2 Trust

Tarilpe No 2 Trust**

Tarzello No. 2 Trust

Tecalla No. 2 Trust

Tecaroy 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

Tecplace No. 2 Trust

The Calardu Trust

Thomlect No. 2 Trust

Toocomp QLD No. 2 Trust

Toofloor No. 2 Trust

Toolect No. 2 Trust

Toowoomba Superstore No 2 Trust**

Torcarsa No 2 Trust

Town Furniture No. 2 Trust

Townlect No. 2 Trust

Townsville Superstore No. 2 Trust

Towntec No. 2 Trust

Tralgel No. 2 Trust

Tralgstore No. 2 Trust

Tweedcom No. 2 Trust

Ulverstone Homemaker No. 2 Trust

Valecomp No. 2 Trust

Valley Superstore No. 2 Trust

Valleyfurn No. 2 Trust

Verlect No. 2 Trust

Veycom No. 2 Trust

Viczat No. 2 Trust

Villel No. 2 Trust

Volect No. 2 Trust

Wacomp No. 2 Trust

Waggacom No. 2 Trust

Wakel No. 2 Trust

Walesfloor No. 2 Trust

Wangarcom No. 2 Trust

Wangarel No. 2 Trust

Waravit No 2 Trust**

Wardfloor No. 2 Trust

Warncom No. 2 Trust

Warnerstore No. 2 Trust

Warracom No. 2 Trust

Warralect No. 2 Trust

Warratec No. 2 Trust

Warrawong Computers No. 2 Trust

Warrcom No. 2 Trust

Warrics No 2 Trust

Wartec No. 2 Trust

Warwick Superstore No. 2 Trust

Warwicom No. 2 Trust

Watec No. 2 Trust

Waurncom No. 2 Trust

Waurnel No. 2 Trust

Waylect No. 2 Trust

Waystore No. 2 Trust

Westkis No. 2 Trust

Westore No. 2 Trust

Westwond No. 2 Trust

WG Superstore No 2 Trust**

Whyalla Superstore No 2 Trust**

Whyel No. 2 Trust

Wicktec No 2 Trust**

Wikavit 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

Wodenfurn No 2 Trust**

Wolfene No. 2 Trust

Wonel No. 2 Trust

Woodel No. 2 Trust

Woodville Computers No. 2 Trust

Woodville Superstore 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

Dalltec No. 2 Trust**

Geraldel No. 2 Trust**

Stonecom No. 2 Trust**

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.

135

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

39. 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 38) marked 1 are members of the “Closed Group”.

 Controlled Entities (Refer Note 38) marked 2 are relieved under the Class Order.

The consolidated statement of financial position and income statement of the entities that are members of the “Closed

Group” are as follows:

Consolidated Statement of Financial Position

2012 2011 $000 $000

Current Assets Cash and cash equivalents 91,574 83,048 Trade and other receivables 1,086,449 1,152,033 Other financial assets 24,396 41,229 Inventories 59,819 142,218 Intangible assets 531 322 Other assets 15,421 14,378

Total current assets 1,278,190 1,433,228

Non-Current Assets

Trade and other receivables 9,427 13,582 Investments accounted for using equity method 151,502 152,580 Other financial assets 111,257 111,310 Property, plant and equipment 197,969 203,275 Investment properties 1,653,746 1,601,601 Intangible assets 56,659 57,831 Deferred income tax assets 24,711 19,804

Total non-current assets 2,205,271 2,159,983

Total Assets 3,483,461 3,593,211

Current Liabilities Trade and other payables 491,978 730,987 Interest-bearing loans and borrowings 120,821 39,802 Income tax payable 7,673 (102) Provisions

9,964 15,838 Other liabilities 325 327

Total current liabilities 630,761 786,852

Non-Current Liabilities Interest-bearing loans and borrowings 543,796 487,352 Provisions 7,769 8,384 Deferred income tax liabilities 169,378 180,655 Other liabilities 1,251 1,420

Total non-current liabilities 722,194 677,811

Total Liabilities 1,352,955 1,464,663

NET ASSETS 2,130,506 2,128,548

Equity Contributed equity 259,610 259,610 Reserves (4,220) 9,298 Retained profits 1,875,116 1,859,640

TOTAL EQUITY 2,130,506 2,128,548

136

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

39. Deed of Cross Guarantee (continued)

Consolidated Income Statement

2012 2011

$000 $000

Profit from continuing operations before income tax expense

166,289

350,267

Income tax expense

(33,958)

(80,356)

Profit after tax from continuing operations 132,331 269,911

Profit for the year 132,331 269,911

Retained earnings at the beginning of the year 1,859,640 1,727,830

Dividends provided for or paid

(116,855)

(138,101)

Retained earnings at the end of the year

1,875,116

1,859,640

40. Parent Entity Financial Information

(a) Summary Financial Information

P A R E N T E N T I T Y

2012 2011

$000 $000

Statement of Financial Position

Current assets 36 -

Non-current assets 1,866,914 1,779,868

Total assets

1,866,950

1,779,868

Current liabilities 8,504 4,367

Non-current liabilities 45,926 42,482

Total liabilities

54,430

46,849

Contributed equity 259,610 259,610

Retained profits 1,552,910 1,473,409

Total Equity

1,812,520

1,733,019

Profit for the Year

196,356

295,194

Total Comprehensive Income

196,356

295,194

(b) Contingent Liabilities

As at 30 June 2012, 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 $274.93 million (2011: $352.07 million).

41. Significant Events After Balance Date

In early July 2012, the Company announced the restructure of the Irish and Northern Irish businesses with the aim of

reducing future losses and increasing growth. The main features of the restructure include:

 The launch of a large new furniture and bedding store in West Dublin;

 The launch of Harvey Norman Online, a new e-commerce initiative in Ireland and Northern Ireland;

 The closure of the store located at Mullingar, Ireland which has underperformed;

 The reformatting of the Dundalk Outlet store in Ireland to focus on the furniture and bedding categories;

 The reformatting of the two stores in Northern Ireland located at Newtownabbey and Holywood to focus on the

furniture and bedding categories.

The consolidated entity is in the process of assessing and quantifying the impact of the proposed restructure and, based on

early estimates, does not believe that the costs would have a material impact to the results of the group.

137

DIRECTOR‟S DECLARATION

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 consolidated entity are 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 2012 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

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 2012.

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 38 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

Executive Chairman Executive Director / Chief Executive Officer

Sydney Sydney

28 September 2012 28 September 2012

138

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 stateme nt of financial

position as at 30 June 2012, the consolidated income statement and consolidated statement of compr ehensive income, the consolidated

statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summa ry 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 a ccordance 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 er ror. In Note 1, the directors also state, in

accordance with Accounting Standard AASB 101 Presentation of Financial Statements, 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 purpos e 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

139

Auditor's 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 2012 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 2012. 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.

Auditor's opinion

In our opinion, the Remuneration Report of Harvey Norman Holdings Limited for the year ended 30 June 2012, complies with section 300A of the

Corporations Act 2001.

Ernst & Young

Katrina Zdrilic

Partner

Sydney

28 September 2012

SHAREHOLDER INFORMATION

140

Distribution of Shareholdings as at 27 September 2012

Size of Holding

Ordinary

Shareholders

1 – 1,000 6,558

1,001 – 5,000 8,132

5,001 – 10,000 2,042

10,001 – 100,000 1,595

100,001 and over 146

18,473

Number of Shareholders

With less than a marketable parcel

1,636

Voting Rights

All ordinary shares issued by Harvey Norman Holdings Limited carry one vote per share.

Twenty Largest Shareholders as at 27 September 2012

Number of

Ordinary Shares

Shareholder

Percentage of

Ordinary Shares

312,509,532 Mr Gerald Harvey & G. Harvey Nominees Pty Limited 29.42%

175,249,660 Dimbulu Pty Limited 16.50%

103,472,919 National Nominees Limited 9.74%

90,548,407 J P Morgan Nominees Australia Limited 8.52%

55,733,733 RBC Dexia Investor Services Australia Nominees Pty Limited 5.25%

54,036,041 HSBC Custody Nominees (Australia) Limited 5.09%

49,990,575 Ms Margaret Lynette Harvey 4.71%

36,817,958 Citicorp Nominees Pty Limited 3.47%

23,010,567 Cogent Nominees Pty Limited 2.17%

17,118,200 Enbeear Pty Limited 1.61%

16,995,133 Ms Kay Lesley Page 1.60%

11,148,435 UBS Nominees Pty Limited 1.05%

4,030,000 Argo Investments Limited 0.38%

3,945,966 QIC Limited 0.37%

2,845,553 Mr Michael Harvey 0.27%

1,869,646 Bond Street Custodians Limited 0.18%

1,805,078 Omnilab Media Investments Pty Limited 0.17%

1,704,354 AMP Life Limited 0.16%

1,286,143 CS Fourth Nominees Pty Limited 0.12%

1,078,051 BNP Paribas Noms Pty Limited 0.10%

965,195,951

90.86%

Total held by twenty largest shareholders as a percentage of total ordinary shares is 90.86% as at 27 September 2012.

141

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

AUSTRALIAN CAPITAL TERRITORY

FYSHWICK

Cnr Barrier & Ipswich Streets

Fyshwick 2609

Phone: (02) 6280 4140

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

McGraths Hill 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

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

BALLINA

26 Boeing Avenue

Ballina 2478

Phone: (02) 6620 5300

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

DUBBO

223 Cobra Street

Dubbo 2830

Phone: (02) 6826 8800

FORSTER

29 Breese Parade

Forster 2428

Phone: (02) 6554 5700

142

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

NEW SOUTH WALES (COUNTRY) (CONTINUED)

FRISCO HOME FURNISHERS

(NEWCASTLE)

391 Hillsborough Road

Warners Bay 2282

Phone: (02) 4954 3344

GOSFORD (ERINA)

Harvey Norman Shopping

Complex

Karalta Lane

Erina 2250

Phone: (02) 4365 9500

GOULBURN

180 - 186 Auburn Street

Goulburn 2580

Phone: (02) 4824 3000

GRAFTON

125 Prince Street

Grafton 2460

Phone: (02) 6643 3266

GRIFFITH

Cnr Jondaryn &

Willandra Avenues

Griffith 2680

Phone: (02) 6961 0300

INVERELL

50 Evans Streets

Inverell 2360

Phone: (02) 6721 0811

LAKEHAVEN

59 - 83 Pacific Highway

Lakehaven 2263

Phone: (02) 4394 6000

LISMORE

17 Zadoc Street

Lismore 2480

Phone: (02) 6621 8888

LITHGOW

175 Mian Street

Lithgow 2790

Phone: (02) 6351 2321

MACLEAN

211 River Street

Maclean 2463

Phone: (02) 6645 2611

MAITLAND

557 High Street

Maitland 2320

Phone: (02) 4934 2423

MOREE

103 Balo Street

Moree 2400

Phone: (02) 6752 7531

MOSS VALE

137 - 157 Lackey Road

Moss Vale 2577

Phone: (02) 4868 1039

MUDGEE

33 Castlereagh Highway

Mudgee 2850

Phone: (02) 6372 6514

MUSWELLBROOK

19 Rutherford Road

Muswellbrook 2333

Phone: (02) 6541 6800

NEWCASTLE

(BENNETTS GREEN)

7 Abdon Close

Bennetts Green 2290

Phone: (02) 4948 4555

NOWRA

Cnr Central Avenue

& Princess Highway

Nowra 2541

Phone: (02) 4421 1300

ORANGE

Unit 1, Orange Grove

H/maker Centre

Mitchell Highway

Orange 2800

Phone: (02) 6393 2222

PARKES

Shop 1, Saleyards Road

Parkes 2870

Phone: (02) 6862 2800

PORT MACQUARIE

140 Lake Road

Port Macquarie 2444

Phone: (02) 6581 0088

SALAMANDER BAY

270 Sandy Point Road

Salamander Bay 2317

Phone: (02) 4981 1292

TAMWORTH

43 The Ringers Road

Tamworth 2340

Phone: (02) 6765 1100

TAREE

9 Mill Close

Taree 2430

Phone: (02) 6551 3699

TEMORA

102 Hoskins Street

Temora 2666

Phone: (02) 6977 1777

WAGGA

Homebase Centre

7 - 23 Hammond Avenue

Wagga 2650

Phone: (02) 6933 7000

WARRAWONG

Cnr King Street &

Shellharbour Road

Warrawong 2502

Phone: (02) 4275 2722

WEST WYALONG

114 Main Street

West Wyalong 2671

Phone: (02) 6972 2077

YOUNG

326 Boorowa Street

Young 2594

Phone: (02) 6382 5744

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

BURLEIGH WATERS

1 Santa Maria Crt

Burleigh Waters 4220

Phone: (07) 5586 2000

BRISBANE

BROADWAY ON THE MALL

Shop SF01

170 Queen Street

Brisbane 4000

Phone: (07) 3013 2800

CAPALABA

Shop 32 - 33 Capalaba

Centre

38-62 Moreton Bay Road

Capalaba 4157

Phone: (07) 3362 6200

BROWNS PLAINS

Unit 3

28 - 48 Browns Plains Road

Browns Plains 4118

Phone: (07) 3380 0600

CARINDALE

Homemaker Centre

Cnr Carindale Street and

Old Cleveland Road

Carindale 4152

Phone: (07) 3398 0600

BUNDALL

29 - 45 Ashmore Road

Bundall 4217

Phone: (07) 5584 3111

CLEVELAND

Shop 1A, 42 Shore Street

West

Cleveland 4163

Phone: (07) 3488 8900

143

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

QUEENSLAND (BRISBANE SUBURBAN) (CONTINUED)

EVERTON PARK

429 Southpine Road

Everton Park 4053

Phone: (07) 3550 4444

FORTITUDE VALLEY

Brisbane City Gate

Shop 1, 1058 Ann Street

Fortitude Valley 4006

Phone: (07) 3620 6600

LOGANHOLME

3890 - 3892 Pacific Highway

Loganholme 4558

Phone: (07) 3440 9200

LOGANHOLME

Hyperdome Home Centre

Pacific Highway

Loganholme 4129

Phone: (07) 3451 5000

MACGREGOR

555 Kessels Road

Macgregor 4109

Phone: (07) 3849 9500

MAROOCHYDORE

Shop 5, Pacific Highway

Sunshine Homemaker

Centre

Maroochydore 4558

Phone: (07) 5452 7144

MAROOCHYDORE

(Mega Flooring)

Unit 6

Sunshine Homemaker

Centre

Maroochydore 4558

Phone: (07) 5479 3711

MT GRAVATT

2049 Logan Street

Upper Mt Gravatt 4122

Phone: (07) 3347 7000

OXLEY

2098 Ipswich Road

Oxley 4075

Phone: (07) 3332 1100

QUEENSLAND (COUNTRY)

ALBANY CREEK

Cnr Gayford Street

& Albany Creek Road

Aspley 4035

Phone: (07) 3630 9000

ATHERTON

57 Tolga Road

Atherton 4883

Phone: (07) 4091 0900

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

KAWANA WATERS

Lot 28 Nicklin Way

Minyama Gardens

Kawana Waters 4575

Phone: (07) 5457 6800

HERVEY BAY

134 - 136 Boat Harbour

Drive

Hervey Bay 4655

Phone: (07) 4124 3870

KINGAROY

18 - 20 Rogers Drive

Kingaroy 4610

Phone: (07) 4160 0400

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

MORAYFIELD

Lot 8 Cnr Morayfield &

Station Roads

Morayfield 4506

Phone: (07) 5428 8000

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

144

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

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 Sts

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

VICTORIA (MELBOURNE SUBURBAN)

BRAYBROOK

227 Ballarat Road

Braybrook 3019

Phone: (03) 9304 6200

BROADMEADOWS

1185 - 1197 Pascoe Vale Rd

Broadmeadows 3047

Phone: (03) 9621 2800

CHADSTONE

699 Warrigal Road

Chadstone 3148

Phone: (03) 9567 6666

COBURG

Shop 8, 64 - 74 Gaffney St

Coburg 3058

Phone: (03) 9240 2500

CHIRNSIDE PARK

286 Maroondah Highway

Mooroolbark 3138

Phone: (03) 9722 4400

FRANKSTON

87 Cranbourne Road

Frankston 3199

Phone: (03) 8796 0600

MARIBYRNONG

(Highpoint)

169 Rosamond Road

Maribyrnong 3032

Phone: (03) 9318 2700

MORNINGTON

Building C3

Peninsula Centre

Bungower Road

Mornington

Phone: (03) 5970 2500

CRANBOURNE

Cnr South Gippsland H/Way

& Thompson Road

Cranbourne 3977

Phone: (03) 5991 0000

GREENSBOROUGH

(Electrical & Computers)

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

NUNAWADING

400 Whitehorse Road

Nunawading 3131

Phone: (03) 9872 6366

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

MOORABBIN

420 South Road

Moorabbin 3189

Phone: (03) 9555 1222

PRESTON

121 Bell Street

Preston 3072

Phone: (03) 9269 3300

FOUNTAIN GATE

Fountain Gate S/Centre

Overland Drive

Narre Warren 3805

Phone: (03) 8796 6777

KNOX

Shop 3105, Knox Centre

425 Burwood Highway

Wantirna South 3152

Phone: (03) 9881 3700

MOORABBIN

(Warrigal Road)

444 Warrigal Road

Moorabbin 3189

Phone: (03) 9552 7100

RICHMOND

479 Bridge Street

Richmond 3131

Phone: (03) 8416 4100

145

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

VICTORIA (MELBOURNE SUBURBAN) (CONTINUED)

RINGWOOD

Shops 1 & 4

166 Maroondah Highway

Ringwood 3134

Phone: (03) 9871 2200

WATERGARDENS

450 Melton Highway

Taylors Lakes 3038

Phone: (03) 9449 6300

SPRINGVALE

26/917 Princes Highway

Springvale 3171

Phone: (03) 9518 8500

SUNSHINE

484 Ballarat Road

Sunshine 3020

Phone: (03) 9334 6000

THOMASTOWN

308 - 320 Settlement Road

Thomastown 3074

Phone: (03) 9463 4777

VICTORIA (COUNTRY)

BAIRNSDALE

294 Main Road

Bairnsdale 3875

Phone: (03) 5153 9700

BALLARAT

Cnr Howitt & 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

MORWELL

232 Commercial Road

Morwell 3840

Phone: (03) 5120 0200

HORSHAM

148 Firebrace Street

Horsham 3400

Phone: (03) 5381 5000

SALE

363 - 373 Raymond Street

Sale 3850

Phone: (03) 5144 3677

MILDURA

Cnr Fifteenth Street &

Etiwanda Ave

Mildura 3500

Phone: (03) 5051 2200

SHEPPARTON

7950 Goulburn Valley Hwy

Shepparton 3630

Phone: (03) 5823 2530

MOE

19 Moore Street

Moe 3825

Phone: (03) 5127 9500

SWAN HILL

68 Nyah Road

Swan Hill 3585

Phone: (03) 5032 2901

TRARALGON

Cnr Princes Hwy & Liddiard

Rds 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

CITY WEST

25 Sutherland Street

West Perth 6005

Phone: (08) 9215 8600

BELMONT

Shop 80 Belmont Forum

Abernethy Rd Belmont 6104

Phone: (08) 9479 4377

EDGEWATER

Cnr Joondalup Drive &

Eddystone Ave

Joondalup 6210

Phone: (08) 9301 4833

BELMONT NORTH

52 Belmont Avenue

Belmont 6104

Phone: (08) 9373 4400

GREAT EASTERN HIGHWAY

195 Great Eastern Highway

Midland 6056

Phone: (08) 9267 9700

CANNINGTON

1363 Albany Highway

Cannington 6107

Phone: (08) 9311 1100

GUTHRIE STREET

(OSBORNE PARK)

52 Guthrie Street

Osborne Park 6017

Phone: (08) 9445 5000

JOONDALUP

36 Clarke Crescent

Joondalup 6027

Phone: (08) 9301 3311

O‟CONNOR

133 Garling Street (Cnr

Stock Road)

O‟Connor 6163

Phone: (08) 9337 0888

MALAGA

27 Kent Way

Malaga 6090

Phone: (08) 9270 6300

OSBORNE PARK

469 - 475 Scarborough

Beach Road

Osborne Park 6017

Phone: (08) 9441 1100

MANDURAH

9 Gordon Road

Cnr Mandurah Terrace

Mandurah 6210

Phone: (08) 9582 5800

PEPPERMINT GROVE

Shop 1A

The Grove Shopping Centre

460 Stirling Highway

Peppermint Grove 6011

Phone: (08) 9285 5700

MIDLAND

Cnr Clayton and Lloyd Sts

Midland 6056

Phone: (08) 9374 8600

PORT KENNEDY

400 - 402 Saltaire Way

Port Kennedy 6168

Phone: (08) 9524 0111

146

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

WESTERN AUSTRALIA (PERTH SUBURBAN) (CONTINUED)

VICTORIA PARK

1010 Albany Highway

East Victoria Park 6010

Phone: (08) 9470 4949

WARWICK

Shop 4, Warwick Grove

S/Centre Beach Road

Warwick 6024

Phone: (08) 9243 2300

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

WARRAWONG

119 - 121 King Street

Warrawong 2502

Phone: (02) 4255 1800

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

SPRINGVALE

10/971 Princes Highway

Springvale 3171

Phone: (03) 9565 8200

JOYCE MAYNE

ALBURY

Unit 6

94 Borella Road

Albury 2640

Phone: (02) 6043 0800

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

MACKAY

2 - 8 Trade Crt

Mt Pleasant

Aspley 4109

Phone: (07) 4942 9744

MAITLAND

Unit 6

366 New England Highway

Rutherford 2320

Phone: (02) 4932 2300

MAROOCHYDOORE

64 - 70 Aerodrome Road

Maroochydoore 4558

Phone: (07) 5409 0200

147

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

JOYCE MAYNE (CONTINUED)

NOWRA

Cnr Central Ave &

Princes Highway

Nowra 2541

Phone: (02) 4448 0000

ROCKHAMPTON

407 Yaamba Road

North Rockhampton 4701

Phone: (07) 4926 224

TOOWOOMBA

675 Rithven Street

Toowoomba 4350

Phone: (07) 4632 9444

TOUKLEY

223 Main Road

Toukley 2263

Phone: (02) 4396 4133

TOWNSVILLE

238 - 262 Woolcock St

Garbuck 4814

Phone: (07) 4729 5400

WAGGA WAGGA

7 Riverina Plaza

15 - 27 Berry Street

Wagga Wagga 2650

Phone: (02) 6921 4994

WARRAWONG

113 King Street

Warrawong 2502

Phone: (02) 4276 0000

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 Hwy

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

148

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

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 5800

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

NOVO MESTO

Ljubljanska Cesta 95

8000 Novo Mesto

Phone: 0011 386 7309 9920

KOPER

Ankaranska c3C

Koper

Phone: 0011 386 5610 0102

LJUBLJANA

Letališka 3D

1000 Ljubljana

Phone: 0011 386 1585 5000

MARIBOR

Bohora La

He wants 2311

Phone: 0011 386 2300 4850

CROATIA

ZAGREB

Rudera 34/2

10000 Zagreb

Phone: 0011 385 1556 6200

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

149

DIRECTORY OF HARVEY NORMAN, DOMAYNE & JOYCE MAYNE SHOPPING COMPLEXES

SINGAPORE (CONTINUED)

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

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 F 42 1st 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

MONT KIARA

L2-07 & L2-08

No 1 Jalan Kiara

Mont Kiara

50480 Kuala Lumpur

Phone: 0011 963 6203 6380

HARVEY NORMAN

CITTA MALL

No 1 Jalan PJU 1A/48

PJU 1A, Ara Damansara

47301 Petalang Jaya

Phone: 0011 963 7846 1025

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

HARVEY NORMAN

IKANO POWER CENTRE

Unit F3 1st 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

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

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

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