THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019

TRANSFORMATION ON TRACK

JOIN US FRONT COVER THE WAREHOUSE GROUP INTEGRATEDINTEGRATED ANNUALANNUAL REPORTREPORT 20192019 CONTENTS REPORT 2 Statutory Disclosures Report Governance Annual 5Year Summary Independent Auditor’s Report Statements Notes toFinancial Financial Statements Financial Capital Our Environment Our Relationships Our Expertise Our People Our Networks Risk &Materiality Integrated Reporting Board SkillsMatrix Our Board Our CEOandBoard CEO’s Report Chair’s Report Group Highlights andValuesPurpose, Vision

26-27 24-25 22-23 20-21 18-19 12-17 76-84 70-75 68-69 65-67 46-64 41-45 38-39 36-37 34-35 32-33 30-31 28-29 8-11 6-7 4-5 REPORT CONTENTS 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY terms ofprogressterms and results. we gottoagoodplacein retail environment. Thisyear, adapt totherapidlyevolving We continuetochangeand 3.

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THE WAREHOUSE GROUP WAREHOUSE THE PURPOSE, VISION, VALUES VISION, PURPOSE, REPORT CONTENTS THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 PURPOSE, VISIONAND also takeresponsibility forourenvironmental impactandthewehaveonpeople’s lives.We Being NewZealand’s mostsustainablebusinessmeans thatwewillnotonlybeprofitable butwe’ll range, andcompetitivepricesweare famousfor. Together theyspentmore than$3billionwithus know that sustainable business is good for our company and the wider economic climate in which know thatsustainablebusinessisgoodforourcompanyandthewidereconomicclimateinwhich we operate.We wanttobeNewZealanders’firstchoiceforconveniencebyproviding products TAKELEAD THE expectations andbeatourcompetitorsinawaythathaspositiveimpactoncommunities. and serviceswhenwhere they are needed,withaseasyaccesspossibleandavarietyof We useoursmarts Over two million New Zealanders shop with us every week, enjoying the convenience, quality Over twomillionNewZealandersshopwithuseveryweek,enjoyingtheconvenience,quality and makethings Every day, we’re livingourpurposebytransformingbusinesstoexceedcustomers’ We wanttobesynonymouswith‘customer-first’ inNewZealandandhelpcustomers understand thatqualityandgreat pricesdon’t needtobeatahighcost,andwecan happen last yearacross ournetworks,whichisunparalleledintheNewZealandmarket.

To buildNewZealand’s mostsustainable, 4 4 convenient andcustomer-first company Helping Kiwislivebettereveryday connection count EXPERIENCE We makeevery BE THE BE THE save themtimeaswellmoney. payment and collection options. payment andcollectionoptions. OUR PURPOSE OUR VALUES

OUR VISION VALUES

CREATEWAY THE We maketodaygreat and tomorrow even better

HERE FORGOOD We alwaysdothe right thing

PURPOSE, VISION AND VALUES in progress. ecosystem inaction.Furtherinitiativesare shopping platformTheMarketisoneexampleofour savvier shoppinghabits.Thelaunchofourdigital for ourcustomers’changingexpectationsand around ourcore businessthatwillprovide solutions we are workingatpacetobuild anecosystem Given thefast-moving,changingfaceofretail, our future. capability tomeetcustomerneedsandbuild opportunity tocontinueinvestinourdigital of transformativeinitiatives.We alsohavethe around fixingourfundamentalsthrough arange strategy atthisstage.There isstillmore todo and satisfiedcustomers. We are notchanging the delivering results intermsofprofit, revenue growth Our strategyisshowingpromising signsof 1. TOOURSHAREHOLDERS Leveraging: Enabled by: For: Ourreach, ourcustomerinsights,abilitytoserve Ourcommunities,ourinvestors,planet World-class team,partnersandtechnology 2. OUR ECOSYSTEM

GROUP MANAGEMENTREPORT OUR COMPANY

continue toadoptthroughout ourbusiness. increased nimblenessandagility, whichwewill greater disciplineandways ofworking,promoting Our transformationprogramme hasenabled support ourteamforongoingchangingskillsneeds. the future ofworkandhowwecanbestequip linked toourvalues.We are alsogivingthought to culture withnewleadershipbehavioursthatare upskilling ourteambybuildingaperformance processes andimplementation methods.We are need forustocontinuerefine ourbusiness With changingcustomerexpectationscomesa perception fortoday’s customer. in awaythatdrivespositivequalityandvalue say, before testingandlearningtoproblem-solve continue tolistenwhatourcustomershave Our strategyisbasedoncustomerinsights.We will 3.

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THE WAREHOUSE GROUP WAREHOUSE THE GROUP HIGHLIGHTS GROUP PURPOSE, VISION, VALUES THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 GROUP HIGHLIGHTS 6 1. GROUP of private labelmanufacturing of 100% We are thefirst retailer TOOURSHAREHOLDERS sites are required tomeetour (the third in the world) (the third intheworld) 2.25m ethical sourcing standards Noel Leeming isNewZealand’s 25.6% to gocarbonneutral. HIGHLIGHTS Noel Leeming Tech Experts visited over 35,000homes. average weeklycustomervisits in NewZealand largest TV installer, and increase inadjustedNPAT 2.

GROUP MANAGEMENTREPORT OUR COMPANY $67m New Zealand since1982 raised indonations for

$3.1b Group sales(up2.6%onlastyear) 3.

ADDITIONAL INFORMATION Development Development 175 18% of TheMarketof 5 * Based on normalised online sales online normalised on Based * adjusted for the closure of online adjusted fortheclosure of transformation initiatives and launch (online salesaccountfor reduction innetdebt 7.8% of totalsales*) 7.8% of online salesgrowth platforms duringFY19. 3% delivered 7

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REPORT ’S CHAIR GROUP HIGHLIGHTS THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 8 8 REPORT CHAIR’ one ofourstrongest profit results forsomeyears. environment, andnowinourfinancial results with our relationships withcustomers,ourimpactonthe throughout thebusiness.We are seeingprogress in transformation isstartingtobecomeapparent I ampleasedtoreport thattheevidenceofour the challengesweface. transparent abouttheprogress weare makingand delivering results ratherthanpromises, andbeing future. Overthattime,wehavebeenfocusedon fundamentals andinvestingintheGroup’s digital The Warehouse Group byfixingour retail improve thelong-termprofitability of Two andahalfyearsago,wesetoutplanto Where wesaidwouldbe total shareholder return forFY19is20.2%. dividends paidwiththechange in share price,the second half,and79.6%forthefull year. Combining pay-out ratioof80.5%onadjusted NPAT forthe the yearto17.0centspershare. Thisequatestoa in April,thisbringsthetotaldividend pay-outfor 9.0 centspershare, fullyimputed, thatwaspaid cents pershare. Addedtothe interimdividendof The Board hasconfirmedafinaldividendof8.0 basis isa31.1%improvement yearonyear. improvement intheretail group onalikefor result wouldshowthatthe underlying performance “TheMarket”. Backingthatinvestmentoutfrom the $6.0m investmentindevelopingournewventure, 25.6% improvement. Includedinthatresult isa NPAT. Infact,theadjustedNPAT represents a with anincrease of7%to12%onFY18adjusted year whichindicatedweexpectedtofinishthe result, andexceedstheguidancegivenathalf- FY19’s adjustedNPAT isalsowelluponlastyear’s the underlyingperformanceofbusiness. use adjustedNPAT forguidance;thismetricshows includes anumberofone-off items,whichiswhywe In linewithprevious reports, thisbottomlineresult was $65.4m,asignificantimprovement onlastyear. Net profit attributabletoshareholders fortheyear progress tocontinue. incremental improvements whichaugurwellforthat by ourprogress. We seetradingmomentumand over thelast12months,Board isheartened Given theoverallperformanceinretail market we are ontherighttrack. $74.1m forthisfinancialyearprovides comfortthat Our adjustedNetProfit After Tax (NPAT) result of S

CHAIR’S REPORT 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY “ ‘TheMarket’.” developing ournewventure, a $6.0minvestmentin Included inthatresult is a 25.6%improvement. the adjustedNPAT represents FY18 adjustedNPAT. Infact, increase of7%to12%on to finishtheyearwithan indicated weexpected given atthehalf-yearwhich and exceedstheguidance well uponlastyear’s result, FY19’s adjustedNPAT isalso 3.

ADDITIONAL INFORMATION The Warehouse Group Chair Joan Withers

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REPORT S CHAIR’ CHAIR’S REPORT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 embedded asour wayofdelivering. also provided toolsandresources thathavebecome tangible financialbenefitsbut the transformationhas determination. Notonlyare wealready seeing shifts intheirdaytoworking withcourageand people havesteppedupandfaced tremendous depend onstrong peopleengagement.Our transformation overthisperiod.Suchprogrammes the levelofintensityintermsexecutionour I amimpressed thatwehavebeenabletosustain logistics, non-tradespendandotherworkstreams. initiatives across merchandise, store performance, control ofourbrands.Sofar, wehavedelivered streamlining ourprocesses andtakinggreater through integratingandimproving oursystems, work andtoenableusexplore greater efficiencies continues toaddrigouranddisciplinehowwe Twelve monthsin,ourtransformationprogramme Considerable transformation environment. we knowhowtocompeteinanintensifyingretail increases ingross profit, reinforcing ourbeliefthat Stationery, andNoelLeeminghaveallreported through inourresults. TheWarehouse, Warehouse and torespond accordingly. Thatisstartingtocome and opportunitiesofthecompetitiveenvironment in astrong positiontounderstandtheimplications of retailing, andtheBoard isconfidentthatweare knowledge andunderstandingoftheglobalcontext We havealeadership teamwithtremendous never before. pushing ustoexamineourrangeandoffering as retailing toouralready competitivemarketand the optionsforshoppers,bringingnewwaysof same time,thearrivalofglobalretailers isaltering and willcontinuetodosoatarapidpace.Atthe half year, customershoppingbehaviourhaschanged change intheretail market.AsIpointedoutatthe It isdifficulttooverstatetheextentandspeedof Customer behaviourschangingquickly CHAIR ’S REPORT 10 175

the ability to execute an ambitious and multi-faceted the abilitytoexecuteanambitiousandmulti-faceted business. Thisyear’s performanceshowsthatwehave improvements andefficienciesrightacross the We havebeenable toimplementchange, margin of4%, deliveringannualEBITDAof $48m. $65m, NoelLeemingisnowperforming atanEBIT Having acquired thebusinessinDecember2012for investment thathasworkedvery wellfortheGroup. investments. NoelLeemingisan exampleofan allocation toensure thatwedrivereturns from these to improve ourinvestmentprocesses andcapital anticipated. Considerableworkhasbeendone investments havenotalwaysbeenasstrong as We are consciousthathistoricallythereturns from experiences andservicesthattheydeserve. our offerings tocustomers,andprovide themwiththe back-office technologies.Thiswillallowustoinnovate platform thebusinesswithmodern,efficient retail and allocated around $100mover severalyearstore- recent years.Systemsisone sucharea, andwehave where there hasbeenaninvestmentdeficitin The Board recognises theneedtoinvestinareas Strong capitalmanagement stakeholder groups. across allaspectsofthebusinessandourbroader financial benefits;itisalsoabout creating benefits financial capitaltobesteffect isnotjustaboutdriving relationships, responsibilities totheenvironment and wisely andmanagingournetworks,expertise,people, Our integratedreport showsthatusingourresources design, priceandexperiences. insights whichinformretail decisionssuchasproduct this istheenhanceduseofcustomerdatatoprovide our expertiseacross allbrands.Agoodexampleof working, becomingmore collaborativeandutilising The Group hasalsotransformedourinternalwayof stores andonline. millions ofcustomerswhoshopwithusthrough our programme whilestillmeetingtheneedsof “ our broader stakeholdergroups.” about creating benefitsacross allaspectsofthebusinessand best effect isnotjustaboutdrivingfinancialbenefits,italso responsibilities totheenvironment andfinancialcapitalto and managingournetworks,expertise,people,relationships, Our integratedreport showsthatusingourresources wisely on thatsubsidiary board. John Journee,who are theparent Board’s nominees Our interests are represented byRobbieTindalland operates asaseparatecompany withitsownboard. foray intothedigitalretail environment. TheMarket We recently launchedTheMarket,ourexcitingnew mitigate them. risks andthemovesweshouldbetakingto Board togainabetterunderstandingofourcritical working withtheexecutiveandassistingwhole Julia Raue.hasdoneanexemplaryjobin Wellbeing withourboard committeechaired by We continuedtofocusonourHealth,Safetyand his alternate,arole thathe continues toimpress in. private involvements.RobbieTindallwillcontinueas commitments withtheAmerica’s Cupandalsohis further year’s leaveofabsenceduetohiswork Sir StephenTindallhasdecidedtotakea working withheroverthenext18months. to ourBoard asafuture director. We lookforward to Agile teamleaderatSpark,hasjustbeenappointed announce thatReneeMateparae,whoiscurrently an can betremendously valuable.We are pleasedto perspectives andexperiencestotheBoard, which directors. Afuture director alsobringstheirown capabilities availableandthenextgenerationof important wayofstayingintouchwithboththe We seetheFuture Director programme asan are focusedonsuccessionplanning. in thefuture. Atbothboard andexecutivelevelwe to keeppacewiththeskillsneededforbusiness organisation though,weremain aware oftheneed improvement intheyearsahead.Likeanyevolving in theGroup andlookforward toongoing continuing toimprove thequalityofgovernance Directors individuallyandcollectively. We focuson have beendelightedwiththecommitmentof support thestrategyofbusinessandasChairI The Warehouse Group’s Board continuestoactively Board activity CHAIR’S REPORT 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY Chair Joan Withers help Kiwislivebettereveryday. shareholders forcontinuingtoinvestinourquest continue togiveme.Finally, thankyoutoallour commitment andenergy and forthesupportthey of. Mythanks,too,tomyfellowDirectors fortheir their support.Thisisaresult wecanallbeproud for theirbusiness,andourbusinesspartners teams across theGroup. We thankourcustomers his executiveleadershipandallthehard working On behalfoftheBoard, we thank NickGraystonand corporate governance. widest possibleviewofouractivitiesaspartgood and providing shareholders andanalystswiththe reflects ourcommitmenttoimproving transparency Our decisiontomoveafullyintegratedreport growth opportunitiesahead. excellent shapeandthebusinesshassomeexciting in thelongterm.Thebalancesheetisnow business, forourstakeholdersandshareholders and doingtherightthingforlongevityof has focusedoneffecting sustainableimprovement to improve shorttermresults. Instead,theGroup out ofthebusinessinanon-strategicwayorder been possibleatthatpointtosimplyhavetakencost doing whatwesaidwoulddo.Ithave commitment twoandahalfyearsagotofocuson I referred, atthebeginningofthisreport, toour evolve. how thewidermarketenvironment continuesto for andprobably betterthanweanticipatedgiven but progress hasbeenatleastasgoodwehoped always willbe,giventhechangingnature ofretail – Of coursethere isstillmuchworktobedone–there We completethe yearinanupbeatframeofmind. Doing right byourshareholders 3.

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THE WAREHOUSE GROUP WAREHOUSE THE CEO’S REPORT CEO’S CHAIR’S REPORT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 REPORT CEO’ 12 12 S

Board. of theleadership team,andbythesupportfrom the point. I’vebeenimpressed withtheworkandfocus everyone fortheir hard workingettingustothis to undertakesignificantchange and Iwanttothank across ourbusiness.Thishasrequired ourpeople broad portfolioofimprovement initiativesrunning the dynamicsofretail sector, andsowehave a No singleanswerisevergoingto beenoughgiven shopping behavioursofourcustomers. competitive environment, and thechanging of theretail sectortoday:therapidlyevolving breadth ofthesemeasures speaktothecomplexity improved ourpositionsignificantly. Therange and future –theseandotherstrategicinitiativeshaveall ongoing developmentandroll-out ofourdigital brand performanceacross the board, andthe our EveryDayLowPricingpricingmodel,lifting our businessprocesses, focusing onwhatweoffer, transformation programme, relentlessly improving Accelerating ourstrategythrough anambitious now starttobeseenonthebottomline. it andthatthecompany’s focusoverrecent yearscan progress showthatthehard yards havebeenworth recorded animpressive result. Tangible signsof period paidoff thisyearasTheWarehouse Group Discipline, patienceandhard workoverasustained Proud toserveNewZealanders

flexibility around drivingfoottraffic. introducing some limitedseasonalpromotions togiveus our ongoingcommitmenttoEvery DayLowPricingand We are now startingtofindtherightbalancebetween shopping experienceforKiwis. of ourproduct offering has delivered anenhanced units (SKUs)by17%.Continuedfocus ontheoptimisation further reduce ouroverallnumberoffullstockkeeping year aswecontinuetosimplifyourbrandportfolioand Unit volumeintheRedShedshasremained flatthis reduction inagedinventory. renegotiation ofoffshore suppliertradingtermsandthe through toareduced netdebtpositionfollowingthe capital efficiencysawprogress thisyear, translating Our drivetoreduce inventory andimprove working seen asixpointincrease interms ofperceived quality. Sheds. Aswellasimproved profitability, wehavealso 19% increase inoperatingprofit yearonfortheRed the costofgoodssold(COGS).Thistranslatedintoa especially around merchandising andimprovements in we sawclearbenefitsfrom thetransformationinitiatives, decision tomoveEveryDayLowPricingand The Warehouse ismakinggoodprogress followingthe across almostallofourbrands. It isparticularlysatisfyingthisyeartoseeimprovements Good progress across ourbrands CEO’S REPORT 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY

The Warehouse Group Chief ExecutiveOfficer Nick Grayston “ aged inventory.” terms andthereduction in of offshore suppliertrading following therenegotiation reduced netdebtposition translating through toa saw progress thisyear, working capitalefficiency inventory andimprove Our drive to reduce Our drivetoreduce 3.

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THE WAREHOUSE GROUP WAREHOUSE THE CEO’S REPORT CEO’S CEO’S REPORT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 CEO’ from Blue. from Red, and highqualityproducts and services strengths that theothercanbring:foottraffic country, andbothbrandsare benefitingfrom the are now10ofthesestores-within-a-store across the The Warehouse andWarehouse Stationery. There We havecontinuedtoroll outtheintegrationof increasing from 4.0%last yearto6.2%thisyear. this year. Operatingmargins keptpacewiththis, profit alsoincreased from $10.6minFY18to$16.7m on theprevious yearto$268.6minFY19.Operating Revenue forWarehouse Stationerywasupby1.8% stationery categories. record profit despite industryheadwindsinitscore Stationery hasperformedwellinFY19,reporting a Those issuesare nowbehind usandWarehouse systems integrationandstockavailabilityissues. this yearafterapoorFY18asresult ofinternal Warehouse Stationerymadeawelcomerecovery customers. end-to-end life-cycletechnologyservicesfrom demonstrate anincreasing demandformore increased 11.4%onlastyear. Growth intheseareas second istheongoinggrowth ofservices,which we seethisasasignificantgrowth opportunity. The activity. Commercial salescontinuetoimprove and first isthecontinuedriseofB2Bontop retail Leeming offering pointtoahealthyfuture. The Two importantfactorsinthenature oftheNoel FY19. in operatingmargins from 3.5%inFY18to4.1% operating profit upby22.3%to$38.1mandgains revenue grew by5.0%to$924.6mthisyear, with and more technologyintotheirlives.NoelLeeming valuable tocustomerslookingincorporatemore customers hasmadethebrandexperiencemore record result. Thetechnologyexpertiseoffered to Noel Leemingcontinuestoimpress, withanother transformation initiatives. Pricing andwesawclearbenefitsfrom the made followingthemovetoEveryDayLow Merchandise andHome.Goodprogress was Our bestperformingcategorieswere General to $1.7b,withgross margin up70basispoints. Revenue forTheWarehouse increased by0.6% S REPORT 14

specific issues. issues. specific Torpedo7, amovedesignedtofocusonbrand- the appointmentofSimonWest asCEOfor trading entity. To thatendwerecently announced needed toturngoodfundamentalsintoaprofitable considerable potentialbutthatmore focusis Our overallviewofthebusinessisthatithas this yearaswebuildscaleandtarget newmarkets. Torpedo7 hascontinuedtoroll outmore stores operated butbacked byTheWarehouse Group. sports andoutdoor. TheMarketis independently toys, healthand beauty, home,garden, electronics, categories includefashion,footwear, kidsandbaby, Cue, Billabong,CottonOnand The Nile.Key and Australianinternational brandsPENation, Walker, WORLD,FatherRabbit,CittaandBarkers, a millionproducts, includinglocalbrandsKaren merchants ontotheplatform–offering more than the factthat,atlaunch,wehadwelcomed150 in themarketforsuchinitiativescanbeseen Proof thatwecandothisand thatthere iscapacity release suchanelegantplatform tomarket. that theteamhasdoneinashortperiodoftimeto around ourbusiness.We’re veryproud ofthework wider strategytoconstructanenhancedecosystem platform TheMarket–partoftheexecutiona After balancedate,welaunchedournewdigital We launchanewdigitalera online andthatfigure isonlygoingtogetbigger. and operate.NewZealanderscurrently spend$4.2b specific constraintsofthebusinessesthatweown enable ustocreate vehiclesthatreach beyondthe critical partofourgrowth strategy. Digitalinitiatives sales represent 7.8%ofourtotalsales,andare a up 18%onlastyearto$239m.Currently, online Group onlinesalescontinuedtogrow thisyear, inventory. to buildgreater brandclarityandtorefine our their firstyearofoperation.Thiswecontinued stores haveproven toberelatively profit-neutral in expansion alonewillnotbeenoughbecauseall through 18stores. AsIhavesaidforsometime, $7.0m asweinvestedingreater marketpresence however, thecompanymadeanoperatinglossof $172.5m, up5.6%onlastyear’s result of$163.4m; Revenue forTorpedo7 increased againthisyearto CEO’S REPORT significant progress againstourclosecompetitors. the rightdirection andourmarketdataisshowing set, weare satisfiedthatourstrategyisheadedin at ourperformanceagainstcurrent competitor sophisticated data,insightsandcapabilities.Looking to newandexcitingdigitalinitiatives,guidedby people whoshopwithusandoffering themaccess leverage thembyrecognising andrewarding the of ourgreatest strengths, andwewillcontinueto As Isaidlastyear, scaleandbrandaffinityare two and deeprelationships withincommunities. retailer withasignificantfootprint,loyalcustomers the mostofouradvantagesasaNewZealand-based affect ustoo,pointtoourneedasaGroup tomake maturity inAustraliawhichwethinkwillstartto arrival ofCostco,alongwithAmazon’s growing competitors suchasZara,H&Mandtheupcoming or committedtocomehere. Thepresence of of fashionandlifestyleretailers havingarrived competition are beingrealised, withanumber retail environment. Ourpredictions ofincreased these changeswecouldnotthriveintomorrow’s We are more convincedthaneverthatwithout These developmentscomenotamomenttoosoon. Holding ourowninanintensetrading environment true ecosystem. to expandtheoffering inorder tobecomea various stagesofconsiderationanddevelopment programme, andwehaveanumberofservicesat The nextstepwillbethelaunchofaGroup loyalty New Zealanderslivetheirlivesbetter. the Group insupportingarangeofservicestohelp future, oneinwhichweseeamuchbroader role for TheMarket isakeyinvestmentforusinthedigital 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY

reorganise ourprocesses aspartofthat. merchandising andfinancesystemsto integrated systemstosupportourpeople, continuing toidentifyhowwecanusemodern In termsofourwiderbackoffice,weare also digitally. it isgreatly assistingustoserveourcustomers System isthefirstexpression ofthat.Atthisstage, capability. OurnewWarehouse Management in gettingthatrightisimproving ourfulfilment longer acompetitivedisadvantage.Thefirststep need tomakesure oursystemsofrecord are no systems andsupplychainlogisticscapabilities.We addressing asignificantunder-investment incore Boosting ourwiderproductivity startswith things thatmakeadifference forcustomers. being more efficientandonlyfocusingonthose We’ve already liftedproductivity inourstores by change. drive customer-centricity, productivity andcultural and we’llbelookingforbetterwaystoorganise and investment modeintermsofsystemsandprocesses, in order. Rightnow, weare movingtowards peak more importantthatwecontinuetoputourhouse light ofwhatishappeningaround us,itisallthe at thesametimeaswetakecare ofourpeople.In we drivethebusinessforward atanincreased pace faster –andourExecutiveTeam isfocusedonhow greatest challenge.We are determinedtomove market dynamicsatspeed,hasalwaysbeenour Speed, orrathertheinabilitytorespond tochanging Moving withspeed The Warehouse Limited / Warehouse Stationery. CEO Okhovat, Pejman Officer; Marketing Waecker, Chief Limited / Warehouse Jonathan Merchandise; Stationery Benyon, CEO Group & Sourcing The Warehouse Support Tania Officer; Operating Yeoman, Chief Mark CEO; Group Grayston, Nick CFO; Group Oram, Jonathan Officer; People Chief Ross, Evelyn Investments; Group Warehouse The CEO Torpedo7CEO West, Simon &Torpedo7 Group; Group Leeming Noel CEO Edwards, Tim Officer; Transformation Chief Newton, Scott to right: left from TeamSenior Executive 3.

ADDITIONAL INFORMATION (commenced 2 August 2019); 2August (commenced

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THE WAREHOUSE GROUP WAREHOUSE THE CEO’S REPORT CEO’S CEO’S REPORT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 future investments. to usethatinformourbrandperformanceand understanding ofourcustomersandtheirneeds will grow margins. We willcontinuetorefine our areas suchaspriceoptimisationbycategorywhich science hasenabledustostartbuildingstrength in On topofthat,themusclethatwe’vebuiltindata more collaborativestyleofworking. to embedintegratedsolutionsthatleadafar of thebusiness,andkeytosuccessiscontinuing better rightacross ourGroup, notjustinsomeparts collaborative. We’ve recognised thatweneedtoget effective becauseithasbeencross-functional and Our transformationprogramme hasbeen whole companyforward. but wealsoneedtouseitasalevermovethe want togetthebestvaluewecanfrom it,ofcourse, transformation required. Forus,it’s onepart.We change, wedon’t believethatistheextentof some companiesthathavebeenthrough significant While changinghowweworkisimportant,unlike behaviours required tobringthosevalueslife. by redefining ourvaluesandexaminingthe We madethefirst stepstowards thatthis year All ofthatrequires furtherdeepculturalchange. part ofhowweoperate. flexibility, minimumviableproduct andfail-fastas lean principlessuchasspeed-as-a-habit,agility, models, adjustingourculture andlookingtoadopt goal inmind,weare assessingdifferent operational focused onsolvingcustomerproblems. Withthat on supplytobecomeanimble,digitalcompany century commandandcontrol organisation focused need tomakethefullpivotfrom beingarigid,20 financial benefits.However, it’s alsoclearthatwestill us toliftourabilityexecute,whichisnowreaping helped uschangethewayweworkandhasenabled sufficient. OurRISEtransformationprogramme has New systemsandprocesses bythemselveswon’t be Transformation fronts onarange of CEO’ S REPORT 16 th

good business. good business. is notasingularanswer. We believethat’s also and recognising, asIsaidearlier, thatthere understandings ofourprogress onmultiplefronts; our vulnerabilitiesandopportunities;buildingclear integrating ourcapitalstogiveusaholisticviewof way weare addressing ourstrategicpriorities: are making.Itisalsoareflection oftheintegrated initiatives weare undertakingandtheprogress we stakeholders informedaboutthemanynon-financial is aboutfinancialvalueandwewanttokeepour this yearrecognises thatnoteverythingwedo Our commitmenttoafullyintegratedreport An integrated approach responsibly produced products. by reducing packagingmaterialsandpurchasing and enhancingourenvironmental performance carbon credits. We are reassessing ourrawmaterials is finalised);andbuyinginternationalGoldStandard (this willbecomeclearer ascarbontradinglegislation regeneration oflandandrenewing nativeforests waste; offsetting ourcarbonemissionsthrough the key focusareas: reducing ourcarbonemissionsand progress weare makinginthisspace.We havethree in thisreport spellsoutwhatweare doingandthe carbon footprint.Ourenvironment capitalsection committed to25initiativesfocusedonreducing our This yearwebecameacarboNZero New Zealanders. to thecommunityandinterests andprioritiesof operating principles,andsupportsourcommitments We believethisisfundamentaltoourvalues, such asmentalhealthandcarbonneutralitythisyear. value. Ithasprompted ustomakestandsonissues why wehaveadoptedHere forGoodasacore important tousandotherstakeholders.That’s of, andthere are otherelementsofvaluethatare but wealsoservethecommunitiesthatare part as efficientandmakethebest returns aswecan beyond justmakingprofits. Ofcoursewemustbe gives usbotharesponsibility andaremit tolook Our core purposetohelpKiwislivebettereveryday Meeting ourotherresponsibilities ™ company, and

CEO’S REPORT “ 1. TOOURSHAREHOLDERS and purchasing responsibly produced products.” environmental performancebyreducing packagingmaterials We are reassessing ourrawmaterialsandenhancing GoldStandardand buyinginternational carboncredits. will becomeclearer ascarbontradinglegislationisfinalised); the regeneration oflandandrenewing nativeforests (this emissions andwaste;offsetting ourcarbonemissionsthrough space. We havethree keyfocusareas: reducing ourcarbon out whatweare doingandtheprogress weare makinginthis footprint. Ourenvironment capitalsectioninthisreport spells committed to25initiativesfocusedonreducing ourcarbon This yearwebecameacarboNZero 2.

GROUP MANAGEMENTREPORT OUR COMPANY The Warehouse Group Chief Executive Officer Nick Grayston work thisyear. My thankstoeveryoneintheGroup foryourhard across allourchannels,current andemerging. strong andsustainablefuture forourorganisation balance thedemandsonourcapitalanddelivera our debtgearing,wenowhavethecapacityto the biginvestmentsinfront ofus.Havingreduced in goodhealth,weare well placed tomakesomeof Group. Withearningsrising andourbalancesheet time, gettingbestleveragefrom whatwedoasa so thatitachievesitsfullpotentialand,atthesame that basis:lookingforwaystobolstereachbrand The investmentswemakegoingforward willbeon competitive environment. formats aswefeelourwayintoarapidlyevolving of refining our retail experienceandtestingnew changes andrefinement ofourecosystem,isallpart year ofourtransformation,coupledwithproduct that majorsystemandprocess changeinthenext areas, buttheworkisfarfrom done.Andweknow We havemade good progress ineachofthese culture, mid-termstrategyandeCommerce. experience, systemsandprocesses, performance team: earningsfortheyear, product andretail indicators (KPIs)thatmattered tousasaleadership This yearwehaddefinedthekeyperformance Good progress ™ company, and 3.

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THE WAREHOUSE GROUP WAREHOUSE THE OUR CEO AND BOARD AND CEO OUR CEO’S REPORT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 OUR AND 18 CEO BOARD

1. OUR CEO AND BOARD 1. TOOURSHAREHOLDERS TOOURSHAREHOLDERS 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY Julia Raue. Tindall, Robbie Easton, Will Journee, John Smith, Keith (Chair), Withers Tony Joan Balfour, (CEO), Grayston Nick from Board and CEO Our left to right: to right: left 3. 3.

ADDITIONAL INFORMATION ADDITIONAL INFORMATION

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INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR BOARD OUR OUR CEO AND BOARD THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 • • • OTHER DIRECTORSHIPS Committee • Committee • • • • INTERNAL up roles inthehealthsector. Pacific Islandstudentstaking South AucklandMaoriand increase thepercentage of committee workingto and isChairofasteering Sweet LouiseFoundation Joan isaTrustee ofthe Airport. Auckland International New ZealandLimitedand positions atTelevision has previously heldChair ANZ BankNZLimited.Joan Limited, anddirector of The Warehouse Group of Mercury NZLimitedand rolesgovernance are Chair Fairfax Media.Hercurrent The RadioNetworkand holding CEOpositionsat media industry, previously 25 yearsworkinginthe 20 yearsandspentover director formore than Joan hasbeenaprofessional OUR Sweet LouiseFoundation ANZ BankNZLimited Mercury NZLimited(Chair) Health, SafetyandWellbeing People andRemuneration Disclosure Committee Audit &RiskCommittee Nomination Committee(Chair) Corporate Governanceand Non-Executive Director Chair &Independen Joan Withers MBA, CFinstD BOARD Board biosavailableat: 20

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Deputy Chair&Independen • • • OTHER DIRECTORSHIPS Committee • Committee • • • (Chair) • INTERNAL Australia and New Zealand. Accountants Chartered the of President apast is Keith companies. private other several Holdings Limited and NZ Limited, Healthcare Mercury of adirector is and Limited (NZ) Goodman company listed of Chair is Keith exporting. and media printing, services, rural sector,including the energy industries, of range diverse a in companies to advisor and adirector as leadership of record long-standing 2011. May to a has He 1995 from Chair was and and advice, corporate providing accounting, tax in store 1982,initially first his opened Stephen Sir The Warehousewith since involved been has Keith www.thewarehousegroup.co.nz/about-us/board-directors Healthcare Holdings Limited Mercury NZLimited Goodman (NZ)Limited(Chair) Health, SafetyandWellbeing People andRemuneration Nomination Committee Corporate Governanceand Disclosure Committee(Chair) Audit &RiskCommittee Non-Executive Director Keith Smit BCom, FCA h

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Limited • • Limited • • OTHER DIRECTORSHIPS • • INTERNAL Year award in2009. the NewZealandCIOof 2015) andshewasawarded Air NewZealand(2007– Officerof Chief Information Previously, Juliawasthe for-profit inNewZealand. sectors, aswellnot- and localgovernment airline, telecommunications strategic planningacross the and business transformation technology,information experience indigitaland Julia hasextensive Limited. Software Corporation Health SocietyandJade Cross Limited, Southern Television NewZealand Director forZEnergy, Julia isanIndependent Jade Software Corporation Southern Cross HealthSociety Television NewZealand Z Energy Limited Audit &RiskCommittee Committee (Chair) Health, SafetyandWellbeing Non-Executive Director CMinstD, GAICD Julia Rau Independen t e

(Alternate toSirStephenTindall) (Alternate Board meetings since his his since meetings Board attending been has Robbie him this during time. represents Robbie business. the from absence of leave a take to decided Tindall 2017 Stephen Sir October In • • • • OTHER DIRECTORSHIPS Committee • Committee • • • INTERNAL global. go to seek and grow they as companies and innovationtechnology Zealand’s exciting most New of –some in investing –and alongside working family investment company, a Limited, WOne K One for Today works he roles. merchandise and buying various in Warehouse The at years eight spending of Auckland before University the at Science and Arts studied Robbie in 2011.appointment Foundation ServicesLimited Franklin SmithLimited The TindallFoundation K OneWLimited Health, SafetyandWellbeing People andRemuneration Nomination Committee Corporate Governanceand Disclosure Committee Non Robbie Tindal - Executive Director BA, BSc l

uniu Limited Quantiful • • • • OTHER DIRECTORSHIPS Committee • • INTERNAL Hospitality. distributor Southern and Australasianfoodservice roles withNoelLeeming John hasalsohadCEO business development. sourcing international and marketing, merchandise, senior roles inoperations, and progressing through venture partnerin1990 Group, startingasajoint- years withTheWarehouse career hehasspent15 retailing. Overhis30-year hospitality andelectricity telecommunications, consumer electronics, fashion apparel, FMCG, general merchandise, across sectorsthatspan executive experience retail career, whichincludes John hashadanextensive BCom, CMinstD,MAICD (Member, AdvisoryBoard) Colonial MotorCompany Farmlands Society Vanishing PointLimited Health, SafetyandWellbeing Audit &RiskCommittee Non-Executive Director John Journe Independen 1. OUR BOARD TOOURSHAREHOLDERS

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• • OTHER DIRECTORSHIPS Committee • • • INTERNAL recruitment sites. successful online and Seek.com,both Monster.com includes seniorroles in His priorexperience business units. eCommerce andretail company’s rapidlygrowing as thedevelopmentof Europe andAsiaaswell Australia, USA,Canada, units inNewZealand, company’s globalbusiness responsibility forthe Icebreaker Clothingwith Manager (Markets)for recently, hewasGeneral range ofindustries.Most track record inadiverse experience withastrong retail andeCommerce Tony hasextensiveglobal

Journeys Limited) Wayfare Limited(formerlyReal Les MillsInternationalLimited Health, SafetyandWellbeing Nomination Committee Corporate Governanceand Committee (Chair) People andRemuneration Antony Balfou Non-Executive Director Independen BCom

2.

GROUP MANAGEMENTREPORT OUR COMPANY t

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• OTHER DIRECTORSHIPS Committee • INTERNAL organisational designs”. focus onimproving retail, provided retailers opportunities thanrisksin that “there are more Sales Managerandbelieves with Coca-ColaasaRetail career. Hestartedhiscareer retailers throughout his has workedcloselywith for theretail industryand hasapassion Division. Will the ConsumerProducts Sales atMicrosoft in region andDirector of Social intheAsiaPacific at GoogleforMobileand include RegionalDirector Other roles inhisportfolio Markets. for AsiaPacificEmerging President atFacebook and waspreviously Vice Australia andNewZealand Director ofFacebookfor He iscurrently Managing markets andtechnologies. growth across emerging track record ofdriving leader andhasanextensive isaseasonedbusiness Will Facebook PtyLimited Health, SafetyandWellbeing Non-Executive Director Will Easton Independen

3.

ADDITIONAL INFORMATION t

University. (Hons) from Massey (Automation andControl) Bachelor ofEngineering Administration anda Diploma inBusiness Renee holdsaPostgraduate PropertyNZ. and asBoard Observerat with AUTVentures Limited including asadirector experience, governance She alsohasprevious and businessoptimisation. development, engineering product strategy, product customer experience, strategy transformations, years includedroles in Her earliercareer and MacquarieGroup. such asAirNewZealand for majororganisations to thisrole, Reneeworked transition toAgile.Prior role intheorganisation’s played akeyleadership these. AtSpark,Reneehas and ’productisation’ of 5G andthetechnology of Things,marketplaces, including mobile,Internet for future connectivity taking aleadrole inlooking at SparkNewZealand, Lead forFuture Connectivity Renee iscurrently theTribe Renee Mateparae 21 Future Director BEng BEng

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE BOARD SKILLS MATRIX SKILLS BOARD OUR BOARD THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 MATRIX SKILLS BOARD 22

of corporategovernancefrom theirboards. business stakeholdersdeservethehigheststandards Governance playsacriticalrole inbusiness.All expertise. ‘secondary’ skillsintheirsuiteofexperienceand of whetherornotvariousskillswere ‘primary’or expertise. Directors thencompleted aself-assessment delivery ofGroup strategyand generalsubjectmatter categories: retail industryskills, skillsrelated tothe strategy. Thelistofskillswasgrouped intothree relevant todrivetheGroup’s three-to-five year key membersofthemanagementteamthatare attributes identifiedandagreed bytheChairand The assessmentconsistedofalistskillsand appointments. and willtakethemintoaccountinfuture director Directors intheseareas. We are mindfulofthese of skillssoare reliant onthoseofonlyoneortwo There are someareas where wedon’t havethedepth this timeoftransformationandbusinessdisruption. and bybuildingahigh-performanceculture through execution, brandmarketingandcustomerexperience the Group toachieveourstrategy, through great a highconcentrationofskillsinareas thatwilldrive a diversemixofskillsamongtheDirectors. There is relevant capabilityandgovernanceprocesses with holds manystrong attributes,includinghighly completed inFY19foundthefollowing:Board Our Board skillsanddiversityself-assessment 1. 1. BOARD SKILLS MATRIX The results oftheassessmentare reflected inthetablebelow: Financial marketsexperience Shareholder andinvestorrelations experience Iwi relationships andconnectivity HR /learninganddevelopmentexperience Regulatory knowledgeandexperience Audit committee/riskmanagementexperience Finance /accountingexpertise Large company leadershipexperience Governance experience Development andexecutionofbusinessstrategy Subject matterexpertise experience Environment andCorporateSocialResponsibility Union relations Government relations Innovation andentrepreneurism Transformation andbusiness disruption experience Senior leadershipofchangemanagementatscale Development ofahighperformanceculture Specific toGroup strategy Logistics experience Direct sourcing experience Digital andtechnologyexperience Omni-channel retail experience Brand, marketingandcustomerexperience Operation experienceintheretail industry Industry specific Relevant Board SkillstoexecuteGroup Strategy Health andsafetyexperience TOOURSHAREHOLDERS TOOURSHAREHOLDERS Primary skills Male 5 Female 2 Board Gender 2. 2. Secondary skills

GROUP MANAGEMENTREPORT GROUP MANAGEMENTREPORT OUR COMPANYOUR COMPANY Withers Joan ancestry 2 some Tongan NZ Euro with European 6 Ethnicity Smith Keith Primary skills Easton Will 3. 3.

ADDITIONAL INFORMATIONADDITIONAL INFORMATION Journee John Robbie Tindall 7+ years 3 –6years 0 – 2years Tenure Secondary skills 23 Raue Julia 2 2 3 Balfour

Tony

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE INTEGRATED REPORTING INTEGRATED BOARD SKILLS MATRIX THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 have astrong presence inthesmall-to-medium-sizedbusinesssegmentandasizeablecommercial business. Our core businessisretailing ofproducts andservicesprincipallyaimedatconsumers,howeverwedo OUR BUSINESSMODEL HOW WE CREATE VALUE THROUGH OURBUSINESSMODEL INTEGRATED OUR ENVIRONMENT OUR RELATIONSHIPS OUR EXPERTISE OUR PEOPLE OUR NETWORKS RETAIL VALUE CREATION PROCESS FINANCIAL CAPITAL 24 REPORTING for customers.for innovative paymentsolutions value creation. Developingandproviding access tocapitalasakey enablertoretail Maintaining ourfinancial resilience and consumption. quality andmaterials, packaging and Taking alead onsustainableproduct sourced raw materials. on ethicalworkpractices andsustainably suppliers andmanufacturers withafocus Developing long-termrelationships with forecasting. intersection. Demandplanningand market at therightprice/value/quality insights andanalytics. Fitting product to Understanding customers, through and product choices. centric feedback, feedingintodesign across theGroup toprovide customer Providing opportunities forteam members better understanddemandandvolume. Demand forecasting analyticsandtoolsto

pricing forourcustomers. FX riskthat maintainsattractiveof to maximiseleverage. Management capacity. working capital Efficient useof product riskandmaximisefinancial Trade termswithsuppliersthat manage material andmanufacturing processes. product qualitythrough sustainable Minimising wastageandenhancing manufacturers. and provide accesstomarket for partnerships torepresent product Developing mutuallybeneficial development. Ethicalsourcing practices. management andlong-termrelationship Contract negotiation, quality sourcing andwholesale. and experience across retail activitiesinto differences, givingend-to-endinsight value chain, valuinglanguageandcultural Providing career pathways across theretail upstream supplychain. focus andreach intomanufacturers and International supplyoffices toensure local

existing assetsinwaysthat create value. Exploring waystoutiliseandexpress Reducing wastageandbreakage. cost toserveandinventorytouchpoints. networkassets, use of minimisingour Optimising theeconomicallyefficient handling regulations. Maintaining compliancewithallmaterials minimising rework andharmful materials. packaging, labourmanagement, through technologies, smart useof Minimise ourimpactontheenvironment unavailable tostand-aloneoperators. in automation andtechnologythat maybe relationships giveusaccesstoinvestment a jack-of-all-trades. Mutuallybeneficial risks wemanage best, andavoidbeing market, andenableustofocusonthe bringingproduct an intrinsicpart to of Key partnerships withthird parties are model from within. core systemstodisruptourbusiness of change forthebetter. Modernisation NZ provides theopportunity toinfluence efficiency. bestpractice at scalein Useof Continuous improvement anddrivefor for progression andlearning. programmes. Opportunities remuneration. Supportive wellness experience andfairequitable of theday.safely at theendof Recognition an individual’s righttoreturn home A safeworkingenvironment that values into retail andbusinesscareer pathways. that recruit unskilledandskilledlabour Providing jobsthroughout thenetwork access tobranded products. management andinventorycosting delivery ontimetostore. Efficient process managed distribution, warehousing and Minimise costtoservethrough efficient, different ways.Externalforces, whichare covered inourapproach toriskmanagement,alsoinfluencethesixcapitals. inputs oroutputs,rather, theyare anintrinsicpartoftheprocess ofmanagingaretail businessandare impacted in many ways across eachcapitalatstageintheprocess ofmanagingourretail business.Thesixcapitalsare not commodity that valueisdeterminedinthecontextofeachcapital.Ascanbeseenbydiagrambelow, valueisdrivenindifferent to create financialvalue’.It recognises thatourbusinessmodeladdsvaluetoeachcapitalateverystepintheprocess, and Under IntegratedReportingourconceptofcreating valueisbroader than‘howourbusinessprocess consumestheseinputs 1. INTEGRATED REPORTING TOOURSHAREHOLDERS

2.

GROUP MANAGEMENTREPORT OUR COMPANY add services. Diversifying channelrisk. adjacent valuestreams through value- and minimisingclearance. Creating through improving inventoryturnrates seasonal eventsalldrivefinancialvalue channels. Price optimisation andon-target products in theright management of Effective sell-through andmargin modelling environmental stewardship. premium pricingthosechoices. Role choice andsustainableoptionswithout packaging andproviding customerswith at thecustomer edge, reducing plasticsin Reinforcing goodenvironmental practices process. feed upintotheproduct decision making investment onpromotional activityand Driving loyaltytoimprove thereturn on loyalty anddiscretionary participation. lifetime customerexperience that creates to buildtherelationship, howeveritisthe interactions. Eachtransaction isimportant customer A life-cycleperspectiveof expectations. time andtomeetorexceed customer Product availabilityandabilitytofulfilon product knowledgeandcustomerservice. Value iscreated through salesexpertise, retail changeinNZ. opportunity tocontribute toleading technologies inonlineretail andthe Career opportunities withcutting edge equal opportunity advancement. Flexible workingarrangements and would expect tobetreated yourself. training. Treating customersasyou Specialist salesandcustomerengagement channels. for customersacross physicalanddigital channel experiences. Seamless experience across thecountryaswellleading omni- with key presence localretail pointsof Almost universalcoverage across NZ,

3.

ADDITIONAL INFORMATION investors andfinancialpartners. to increase trustandconfidenceamong transparency andaccountablereporting Partnering toshare risk. Leading communities tomake adifference. incentives andnewopportunities for and facilitating inNZbusiness. Creating a leading role inmodelling, educating impact onenvironmental matters. Taking communitygroups tomaximise those of Combining theGroup’s objectiveswith they need. employment andgivingcustomerswhat local community, notaright. Creating a that itisaprivilege tobepart of part of. Sayingthankyouandrecognising our customersandteam membersare thecommunities Giving backinsupport of communities andstakeholders. on promises that are meaningful toour our communitiesenablesustodeliver support andempowerthepeoplein intentions. Practised processes to programmes deliverreal results, not Effective communityengagement we standfor. whoweareright thingispart andwhat of engagement andperformance. Doingthe superior customerexperiences, increased Group. Caring andcommitted teams drive the their communitywhilebeingpart of Enabling ourpeopletobeapart of provides choiceandaccess. needed. Extendedoperating hours can beleveraged todeliverwhat is ourinfluence. outside of Ourcapabilities Universal reach NZis means nopart of

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INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE RISK & MATERIALITY & RISK INTEGRATED REPORTING THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 RISK & level (bottom-up). level (bottom-up). at bothanenterpriselevel(top-down)andbusiness These risksare identified,assessedandmanaged and managementofriskinallbusinessprocesses. Our riskmanagementculture encouragesanalysis and tomonitortheeffectiveness ofthosecontrols. environment, toputinplaceappropriate controls have aparticularresponsibility toappraisetheirrisk responsibility ofeveryteammember. Managers important toallaspectsofouractivitiesandisthe The Group acknowledgesthatriskmanagementis manage riskacross allthebrandswithinGroup. ensure thatthere isaneffective process inplaceto The Group’s riskmanagementframeworkseeksto appetite. 2. 1. with twoprimaryconcerns: conducted usingastructured framework,anddeals Strategic RiskManagementwithintheGroup is programme orproject management. forecasting, daytooperations,investmentand our responsibilities intheareas ofstrategicplanning, Business specificrisksincludethose resulting from our tradingpartnersfrom animporter’s perspective. including thoserelating tointernationaltradeand economic, competitiveandindustrysectorrisks, within NewZealand.Theserisksincludemacro- The Group facesabroad rangeofrisksasaretailer the target risksettingsoracceptable the absenceofmitigationstrategies,falloutside to accept,transfer, share ormitigaterisksthat,in Making activedecisionsaround risksandwhether pursuit ofvalueandcompetitiveadvantage. or ourwillingnesstotakeandmanagerisksinthe Understanding whattheGroup’s riskappetiteis, MATERIALITY 26 26

• performance • uncertainty • management ofriskwhichconsidersourabilityto: brands. Thisreflects abalancedperspectiveonthe for theGroup takingintoaccountthevarious The diagramoppositeoutlinestheriskappetite and stakeholderaccountability. of integrity, maintaininghighqualityteammembers detailed processes thatemphasisetheimportance be significantandtheserisksare managedthrough Risks arisingfrom theGroup’s responsibilities can at Height). Product, Violent andAggressive Behaviour, Working Management, Hazardous Substances,Storageof which are activelymanagedasfocusareas (Traffic domain, wehaveidentifiedcertaincriticalrisks settings. Forexample,intheHealthandSafety on thenature ofthedomainandourriskappetite Specific Riskareas are thenmanageddepending deal withspecificoperationalrisks. are developedwithinbrandandGroup functionsto brand andtheGroup overall.OperationalRiskplans Strategic Riskplansare developedforeachprimary and theBoard. on itsactivitiestoboththeSeniorExecutiveTeam of materialrisks.Thecommitteewillprovide areport discuss itsapplication,monitoringandmanagement responsible forthisframeworkandmeetmonthlyto An EnterpriseRiskManagementCommitteewillbe

capital intoourdigitaltransformation. Ensure wemaintainfinancial rigourwhileinvesting over operationalcosts,qualityanddeliveryof to executeourstrategiesandmaintaincontrol Achieve growth andreturn. TheGroup needs continue toinnovateandacceptsome equity. To achievethis, the Group needsto Grow thebusinessandimprove thereturn on

RISK &MATERIALITY 1. TOOURSHAREHOLDERS less delegation,reduceexposure more delegation,investspeculatively Certainty, conservative, Uncertainty, pursueinnovation, Building onanimprovement maymeanwehave position anddefaulttrajectoryofperformance. compared tootheryearsdependingonthestarting outcomes, forexample,maybedifferent thisyear improvement inourenvironmental reduction outcomes andstrategiesineachcapital.Amaterial driven bytheriskappetitesettings,andspecific financial materialityintheFinancialStatements.Itis Materiality inthesixcapitalsisdifferent from Materiality approach. improve, refine andformaliseourriskmanagement and riskmanagementplans.We continuetowork detailed breakdown, identificationofcausalfactors Each riskdomaininthisframeworkhassubsequent eCommerce consumer trends/ more controls consumer spending preferences fewer controls supply chain new formats transformation internal fraud&corruption inventory customer fraud & RETAIL theft RISK business continuity 2. governance insights competition

pricing GROUP MANAGEMENTREPORT OUR COMPANY people strategic change OPERATIONAL health &safety STRATEGIC compliance sustainability reputation RISK RISK legal IT-peripheral governance data processes may operateacross capitals. of acapital,riskwithinthedomainstrategiesthat Risk andmaterialityisconsidered withinthedomain a degree ofinter-connection betweenthecapitals. Intrinsic intheIntegratedReportingFrameworkis capitals thatweare tryingtoinfluenceorimprove. performance report againstthoseelementsinthe has tosayonagiventopic,itisthematerial not thedefinitiveorlastword thattheorganisation reported andwhatisnot.TheIntegratedReport metric ineachcapitalandisusedtofilterwhat Materiality istherefore relative toeachstrategyand attempting toarrest adecliningperformance. a highermaterialityforchangethanifwewere section of theintegrated reportsection of followthefollowingkey: The progress diagrams that are reported inthesixcapitals positioning security brand IT core credit 3. project execution

ADDITIONAL INFORMATION FINANCIAL capital market RISK tax earnings volatility liquidity 27 Risk Appetite Very High Moderate Very Low

High

Low

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR NETWORKS OUR RISK & MATERIALITY THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 OUR in-home deliveryand installationteams. store network, theGroup hasprioritised flexibilityinourstore leaseprofile over tenure. Transport isoutsourced topartnersexceptfor and attractivestores that our customersenjoyshoppingin.In acknowledgementofthefuture needto re-purpose orreformat ourphysical to combatbyinvestingactivelyinour supplychainco-ordination, dataoptimisation around eachcustomer, improved digitalcapabilities and specialistretailers both here andoverseas.Thisrepresents aconsiderableandongoingmaterialrisktoourbusiness andoneweintend significant consumeractivity, onlineshoppingcontinuestogrow. Thatmeanswefacegreater competition from abroader rangeofgeneral Online commerce haschanged consumerexpectationsinregard totheirshoppingexperiences.Whilephysicalstore shoppingisstilla Materiality 1

balance date. venture, TheMarket,successfullylaunchedshortlyafter support viachatbotsandlivechats.OurothereCommerce We addednewinteractivecapabilitiestoenhancecustomer New Zealand;andtenancy/third partyservices. formats; future (flexible)formats;ourphysicalpresence across resolve toachievebestfuture useofourproperties: small(urban) We analysestore catchment, identifyingfourcriticalareas to the acquisitionofApplianceShed)andfournewTorpedo7 stores. co-located), three newNoelLeemingclearancestores (following store: Warehouse StationeryandTheWarehouse stores portfolio thisyear, rolling outsixSWAS stores (store withina We havemadesomesignificantchangeswithinourproperty Key initiatives network supply chain Optimise OUR OL optimisation optimisation channel facing Customer RE OUS optimisation optimisation Data Apple iOSApp Store andGoogle PlayStore NETWORKS assets todelivercustomerneedsandwantsinanefficient andinnovative way Create aworldclassomnichannelretail networkthat leverages physical digitalandinfrastructure RIORIIES customer choice tosupport capability Grow ourfulfilment and productivity Increase footprint ourdigital and productivity Improve ourstore experience deliveries and enhancestore Reduce ourcosttoserve sourcing Increase ourlevelofdirect of quality data of quality Increase ourpool 28 2

Customer voice UL RORESS (last year)

FY18 (this year) programme across theGroup’s core systemsofrecord. and weare planningamajor($100m)systemsmodernisation system. OurInformationSystemsstrategyhasbeenrefreshed commenced implementingournewwarehouse management trialling anautomateddistributiontoweratSylviaParkand Stationery, introducing Click&Collectlockers intosomestores, our onlinefulfilmentforThe Warehouse and Warehouse We enhancedourfulfilmentanddeliverycapabilities,centralising merchandise. give usgreater alignmentandvisibilityoftasksforsourcing and cross-functional, product criticalpathforeverycategory, tohelp into oursourcing andmerchandise structure. We completedour consolidating ourwholesaleandTorpedo7 sourcing functions We developedaGroup integratedsourcing modelby FY19 ofanyNZshoppingapp • TheWarehouse app,whichincreased by64basispoints reduction of30basispointsinTorpedo7, offset partially by • brandstonowrepresent sales anaverageof36% ofonline represents salesforTheWarehouse. 19%oftotalonline FY19 Progress • profit increased 3.8% whilestore foottraffic reduced gross 1.1%,howeveroverall • • andprofitability changes stores, ranging,customerexperience totestthe continuing • subjectofamajoroverhaulinFY20. • customers. foronline • improve performance. fulfilment online • postbalancedate) Stationery Centre Fulfilment forTheWarehouse (andWarehouse • • of97%vsourtarget of98% • andBangladesh. inChina,India purchases toourdirect sourcing offices • remained consistent • TheWarehouse most5-Starreviews app,whichhasthe conversionreduced Online by3basispointsdrivena traffic Online Group forthe increased 5.5%yearon 24%ofcapitalexpenditure toassetmaintenance allocated Co-located6Warehouse andTheWarehouse Stationery Our Master Data Management practices will bethe will OurMasterDataManagementpractices AchievedaPerfectOrder of88%vsourtarget of95% Deployedanewwarehouse managementsystemto Island intoour North fulfilment online Centralised Costtoserveincreased by11% Achievedastore DIFOT(Delivered OnTime) InFull $62m(FY18:$119m)ofproduct Movedafurther NetPromoter Score across improved brandseither all or Click&Collect salesgrewClick&Collect 57%across ouromni-channel 2 1 , grew salesby244%andnow

(next year) RODM O OUROL FY20 Development andimplementation Year onyearincremental growth of a quality dataprogrammeof aquality Ongoing improvement OUR NETWORKS Future focusareas them toshophowever, wheneverandwherever theywant. capabilities, improving ouromni-channelexperiencestoenable At thesametime,wewillcontinuetobuildoureCommerce formats andnewconceptsthatputourcustomers’needsfirst. our foottrafficandper-visit purchase byintroducing smaller a ‘store’ hasbroadened asaresult. Ourfocusnowistoincrease customers’ experiences.Ourunderstandingofwhatconstitutes Physical property andonlineenvironments are core elementsin Better experiences across channels Significance • • • These are theareas where weknowcan makeimportantgains: customers’ needsbest. enables ustobringtherightproduct totherightplaceat righttime,atacostthatmakeseconomicsense,andinwayservesour our customerswantandhowtheymosttobuyreceive it,weare compromising their willingnesstocomebackus.Ournetwork network isthecriticallinkbetweenwhatweoffer andwhatourcustomerschoosetospendtheirmoneyon.Ifwe failtounderstandwhat Retail isanunforgiving sector. Ifcustomerscannotbuywhattheyare looking for, theyhaveanumber ofotherplacestheycanturnto.Our 1. 1.

TOOURSHAREHOLDERS TOOURSHAREHOLDERS Achieving anintegrated viewofourinventoryandorder managementtounlock efficienciesandimprove ourcustomerservice. Improving ouromni-channel experiencestobetterlinkphysical anddigital Improving property footprintproductivity –workingwith insights anddatatocompletearobust catchment analysisforallourbrands, supporting theSWAS programme andobjectively evaluatingnewformatinitiatives FY21 FY22+ takingmarketshare across channels. digital • growth continued shopping inonline • upgradesproactively • • increasingly importantissue. • ofeffective changeanddecisionmaking • and processes causesunscheduledoutages. • resources capabilities anddistribution shoppinggrowth, online costs, challenge will • andmerchandise quality inthe particularly teams. • sourcing markets insideandoutsideofexisting suppliers • Local and international online retailers online Localandinternational Increasing customerdemandsdrivenby Somelandlords notresponding toseismic affordable Lackofwell-positioned retail space Datasecurityandprivacyisbecomingan speed issuesslowdownthe Dataquality Peakperiodstress onunderlyingsystems Significantincrease inretail spend,including We are aware risksofcorruption, ofthe innew, ofinvesting Challenge stronger 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY E RISS

drive value. and looktoutiliseourcore assetsandcapabilitiesinnewwaysto Network optimisationisakeyfocus for us,aswedriveefficiency and overseasfactories. between oursourcing teams,merchandise teams, shippingteams products willneedtoarriveontimethrough completealignment products andproduct informationfrom thebestsuppliers.Those unlocking efficienciesanddeliveringimproved quality, ontrend An integratedviewofinventoryandorder managementiskey to Better integration from source tosale 3. 3.

experiences around preferences. individual • issue/incident management. volumesand plansforpeaktrading continuity • accuracy, andreduce inventories. reduce collectively costs,improve forecast • wehold amountofthird-party minimisethe information quality and practices utilising externaladvisors. utilising andpractices quality andlaunchingTheMarket. • across personalisation channels. • Improve omni-channelexperienceby: the meetseismicriskrequirements. • Group other brands. vacatedWarehouse stores Stationery with stores Stationery are co-located,re-purpose • ourlarge formatstores. • • • team membersthrough categories. different merchandise leadership atsource andregularly rotating senior teamwith existing the supporting creating adirect inBangladesh, entity • ADDITIONAL INFORMATION ADDITIONAL INFORMATION

Unifycommerce strategiestotailorshopping Developrobust contingency, preparation and across Collaborate supplychainto the Reinventing our Click&Collect experiences ourClick&Collect Reinventing andscaling Linkingphysicalanddigital Work ourlandlords with toensure stores Asmore TheWarehouse andWarehouse Re-purposeandre-utilise excessspacewithin Consolidate ourinvestmentintoAsiaby Consolidate Develop a structured programme to improve data Continue to strengthen data protection and . MIIIONS 29

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR PEOPLE OUR OUR NETWORKS THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 OUR 2 1

anti-bullying andharassmentpolicy, launchednewHealth,Safety Key Health,SafetyandWellbeing changes:weintroduced anew solution powered bySmartRecruiters andPhenomPeople. established aconnectedtalentrelationship andrecruitment digital To helpuscontinuetosecure thebestpeopleavailable,we team members. also supportcoachingandtimelyfeedbackformanagers and deliverreal-time analyticsonstore performance.Thesetools In stores wehaveimplementedtoolstoimprove productivity across allourteammembers. and engagement,toshare vision,bestpracticesanddialogue Workplace byFacebookasourunifiedplatformofcommunication is critical,especiallythrough timesofchange.We deployed With adistributedemployeemodel,communicatingeffectively model aligninggoalsandmeasures forallpositions. activities andactions,withanewperformancedevelopment introduced aperformancefocusanddisciplinetoallofour a setofGroup valuesonwhichtoorientourculture. We also As partofashifttoGroup focusonperformance,wealigned Key initiatives Severity OneIncidents are thosewithahighpotentialforserious injury, long-term TRIFR ismeasured as a12-monthrolling and1millionhoursisused SV1FR ismeasured as a12-monthrolling and1millionhoursis used OUR OL talent Future-ready workplace performance High Wellbeing Safety and Health, RE OUS PEOPLE Build adynamicorganisation that hasthehighestperformingretail talentinNewZealand RIORIIES experiences and future-ready learning Introduce learning continuous workforce planning and pipeline Build ourskills Lift our diversity andinclusion Lift ourdiversity andengagement health Increase ourorganisational day work endoftheir safely atthe team memberswhogohome Increase numberofour the 30 UL RORESS FY18 (lastyear)

healtheffect ordeath. survey feedback. In FY20wewilladoptarevised setofprioritypracticesbasedon of thosepractices,withRewards &Recognitiongoingbackwards. at theendoffinancialyear, weimproved onfour outoffive Rewards &Recognition.Inourteammemberengagementsurvey Framework, Talent Development,PerformanceReview and our organisational culture: ChallengingLeadership,Performance During FY19wefocusedonfiveprioritypracticesforimproving and drivechangewillbeakeysuccessmeasure. rigid wayofworking,empoweringmore teammemberstoown move thebusinesstowards amore collaborative,less structurally across over150initiativeownersinthebusiness.Aswelook to programme hasdelegatedtheresponsibility fordriving change From ateamdevelopmentperspective,thetransformation people atsitesacross thecountry. Health andSafetyobservations,engagingdirectly withour improvements. Directors oftheBoard attendedanumberof and inFY20wewillbeallocatingcapitalforfurthersafety on trafficmanagementandmechanicalhandlingequipment three prioritycriticalrisks.Inourdistributioncentres, wefocused and Wellbeing Standards andcompletedBow-Tieanalysisfor FY19 (thisyear)

Our SeverityOneIncidentsFrequency Rate(SV1FR) ofnearmissreporting aminornature• • in FY18to25.9FY19againstatarget of18.3 increased from hoursworked) 21.5(permillion ‘learning,failfastanditerate’culture. • trainingprogrammes anddigital • vsourtarget of60days. • model • across Group the • FY18). hoursworked(notmeasuredwas 22.4permillion in DevelopmentFramework. • secondquartile inthe 68(FY18:71)maintainingourposition • ourstore network. • September2019 • Total Recordable InjuryFrequency Rate(TRIFR) FY19 Progress Highlevelofreporting highlevels inplace, with ThemajorityofTRIsare strainsandsprainsof Commencedworktobuilda facilitated Launched‘Ability2Execute’ Took roles anaverageof43daystofill Commencedleadershipbehavioural Introduced asinglesource ofrecruitment LaunchedGroup Performanceand Achieved anOrganisational Index(OHI)of Health Achieved100%genderpayequityin AchievedRainbowTickaccreditation in 1

2 FY20 (nextyear) Rainbow Tick accreditation SV1FR >10% million hours million year on TRIFR <20 decrease Maintain worked RODM O OUROL 1. OUR PEOPLE future of workinNewZealand. the conversations,helpingtoshape the government toensure we remain partof our relationships withindustrybodiesand We continually developandstrengthen and embeddingleadershipbehaviours. building theskillsoffuture anddefining are alsofocusedonattractingtoptalent, and everydayexperienceatwork.We this, wefocusonourpeople’s wellbeing insights todriveperformance.Alongside solutions toleveragepeopledataand To dothis,itiscriticalweinvestindigital sustainability. and achievelong-termbusiness future workplacewewillliftengagement them safeandpreparing themforthe focusing ontheirperformance,keeping our organisation andwebelievethatby Our teammembersare attheheartof Significance 1. TOOURSHAREHOLDERS TOOURSHAREHOLDERS Gender diversity isatbestpractice Gender diversity Retain RainbowTickaccreditation. SV1FR >10% million hours million year on OHI intop TRIFR <15 decrease quartile worked FY21 in ourstore network. improvement SV1FR >10% million hours million year on TRIFR <10 decrease Ongoing FY22+ worked andorganisation environments. forFuture ofWork resilience asweprepare ourculture experienceanddemonstrated • requirements change. andimpedesspeedof • • required talentcapability. • bargaining outcomes. changeand with dissatisfaction • • behaviourinourstores • • equipment • product fall • housekeepingorexcessivestock • goodsbyteammembers • 2. 2. Gapinchangemanagement Training doesnotmeetorganisational Resistancetochange and/or buying inbuilding Challenge Team memberand/orunion Storage ofhazardous substances. Exposure toviolentandaggressive from Falls heightfrom ladders Stockroom rackingfailure causing andtripsduetopoor Slips ofbulky, Handling heavyorawkward

GROUP MANAGEMENTREPORT OUR COMPANY Team moving with memberinteraction GROUP MANAGEMENTREPORT OUR COMPANY • insights • • • Our focusinFY20andbeyondwillbe toaccelerateinitiativesthatdeliver: Future focusareas health, safetyandwell-beingwillbecriticaltoreinvent productivity across theGroup. adaptive willtaketime.Financialinvestmentintotechnology, talentdevelopmentand organisation tomoveintothefuture ofworkenvironments. Movingourculture tobemore working. Thenextseveralyearswillseedeliberatechangeasweprepare ourculture and and technologyimprovements tounlockperformanceandenable improved waysof expectations continuetoevolve,weneedmakesignificantprocess, productivity Despite this,rapidlychangingtechnologyisshapingthefuture ofworkandascustomer impacted ourpotentialtoscaleperformance. the consciousdecisiontoexitimplementationofadigitalsolutionoption whichinturn some caseswehavenotmetthemilestonessetininitiatives. We alsomade Naturally, changecantaketimeandissometimesmetwithresistance. Thishasmeantin True transformationrequires culture changeandameaningfulshifttonewwayofworking. Materiality

of working. and productivity An evolvingorganisational structure, teamdesignandcapabilityto support future ways Connected digitalsolutionsthatfunction atscale,enablingproductivity andactionable Consequence managementandremuneration toreward output Simplified practicesandprocesses thatwillallowustotrackandmeasure performance E RISS 3. 3.

ADDITIONAL INFORMATION ADDITIONAL INFORMATION • riskstores • toreplace ladderusewhere practical • from equipment(MHE) mechanicalhandling centres distribution toseparatepeople • • Unit Health involvingAUTOccupational • instores andreview discomfort ofteammembertasks • governmentandexternalstakeholders. • • with visionandstrategy. with • from externalexperts leadershipbehavioursandseeksupport • • developmentandmobility. • capability tolift • • • mindsets guidanceandbyshifting • Introduce enhancedsecurityforhigh ofheightaccessequipment Consideration Invest intraffic control processes across forgoodshandling Equipment solutions improvement Manualhandling programme programme Earlyintervention forpainand Buildandnurture relationships with Developaclearemployeerelations strategy Align communication clearly andconsistently communication Align Definecleardirection around expected Investintechnologytoreinvent productivity approach asingle-entity Activate totalent Assignappropriate budgetandtechnology Proactively developtalentpipeline Streamline engagingcommunication. Supportchangereadiness through leadership Ongoing compliance with regulatory with Ongoing compliance standards. MIIIONS 31

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR EXPERTISE OUR OUR PEOPLE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 reduction ofunplannedvariabilityinourprocesses andoutcomes. are sources ofcompetitiveadvantage andscale.Alsorelevant isthetimeittakesforteammembers tobefullyproductive aswellthe Materiality canbethoughtofinthecontext ofreducing keypersonriskinareas where wecreate valueforcustomers, andareas that through innovation,forexample, willbeimportantintermsofcreating andmeasuring demand. human judgementsaround negotiation,relationship buildingandso muchmore. We recognise that leadingthecustomerexperience Automation willgiveusgreater resilience becauseitwillmeanweare notsodependentonindividuals’knowledge.We stillneedcritical of ourteammembersandonoldcore systemsthatrequire complementary manualresources. As acustomer-focused business, wedependontheexpertiseofourpeopleinsomanyways. We are heavilyreliant onthe expertise Materiality OUR mechanism toreadily address slowmovingstock. We are focusing price settingmore importantasthere isnotthesamediscounting Every DayLowPrices(EDLP)hasmadedemandplanningand our store network. to managerelevant andmodernexperiencesconsistentlyacross customer experienceandwehaveanumberofchallengesahead product range.Theformatofourstores isakeypartofthe applied toallstore typesdependingonstore size,shapeand Our strong store layoutmethodologyisdocumentedand support materialswillbedevelopedanddeployed. redesigned andimproved, documentationandoperational and consistencyofoperationsachallenge.Asprocesses are remain undocumented.Thispresents ariskandmakesinduction around datainterpretation andediting product assortment, and pricing,manyofourretail processes, particularlythose around rangemanagement,contracting,specification,quality planning. Whilewehaveinvestedinimproving processes cues andmarkettrends forproduct rangeandassortment experience. Ourmerchandise teamsalignthesewithourdesign We continuetousedatadriveninsightsimprove customer combines ourskillsacross product andcustomertodrivevalue. is atthecentre ofeverysuccessfulbusiness.Ourexpertise Product isattheheartofeverysuccessfulretailer. Customer Key initiatives Innovation processes systems and Enterprise our customers Understanding OUR OL RE OUS EXPERTISE Build ways of workingthat fosterrepeatableBuild waysof andcompetitiveexcellence model operating collaborative Move towards amore demand drive experiences that Create customer leading thinking edge usingcustomer-based customer Innovate atthe processes across Group the business Integrate andsimplify and more accurateforecasting planning, product/market fit demand to achievebetter andinsights Use dataanalytics RIORIIES 32 (last year) UL RORESS FY18 (this year) FY19 future innovation. Group, supportedbyamoderntechnologystackthatwillenable investment todriveefficiencyandcommonprocesses across the are abouttostartamajorsystemsandprocess modernisation core systemsofrecord, and34%onsystemsofengagement.We our InformationSystemsdevelopmentandsupporteffort on our differentiation. Across theGroup, wecurrently spend66%of upon whichthebrandscanacceleratetheirpointsofcompetitive more stablecore platformofsystemsandcommon processes different systemsandprocesses. Ourstrategy istoprovide a As agroup, weoperateanumberofbusinessesthatuse assortment management. focusing onbuildingourexpertiseinpriceoptimisationand on demandmanagementisstillaheadofus.We are currently made onassortmentandrangeplanning,mostofthework document ourprocesses, andwhilegoodprogress hasbeen We haverecognised theneedtostandardise, automateand management. Rightnow, thisisarelatively manualprocess. aged inventory. Criticaltogettingthisrightissmartdemand and seasonalstockloweringourweightedaveragecostof sell-through curveisaboutfindingtherightbalanceofongoing continuity ofproduct tomeetcustomerdemand.Masteringthe on improving ourforecast accuracyandachievingbetter developingplans FY19 Progress • andmobileappfeatures. launchofTheMarket the with checkoutsandongoinginnovation rollout atSylviaPark,continued beingtrialled ofself-service • reducing across numberofbespokesystemsby2%. the ourbrands.We amountofprogress, havemadeasmall • enablemore processes; focusonvalue-adding replacement back-office endofFY21, bythe integrated system will, whichisbelowourtarget ofover50%.Theinvestmentintoa valueforourcustomers.We of34%, haveachievedaratio • This yearwehavefocusedon: • andDesignteamstohelpdriveinsightsinformdecisionmaking • • • operating operating • ofworking.

Industryrecognition (Elastic). intechnologysolutions forinnovation tower anautomateddistribution with inClick&Collect Innovation increasing numberofstandardised the systemsandprocesses increasing ofeffort ratio the onsystemsandprocesses add that customer. developedaunifiedviewofthe Further inourDataSciences andmethodologies Investedincapability Maintainedastockturnof4.3 Reducedouragedinventoryby3.3% Much of the workload is still waterfall innature, waterfall workloadisstill Much ofthe agileteams with in the eCommercein the focuson domains.InFY20wewill tomovetowards amore customer-centric way

(next year) RODM O OUROL FY20 sell-through metrics enterprise systems implementation of implementation Investment inand Establish seasonal Establish 1. OUR EXPERTISE with apreferred supplierwillbemadeinFY20. decision astowhetherornotmoveaheadimplementation integrated solutiondiscoveryproject, whichiswellunderway. A available. Inrecognition ofthisrisk,theBoard has approved an integration isdifficultandcomplex,consolidateddatanoteasily channel experience.Havingalarge numberofsystemsmeans growth andadvancesincustomerdemandforaseamlessomni- supported andsomeare notfitforpurposegiventhebusiness Old legacycore systemswithlackofintegrationare notfully on documentationandsystemisationisapriority. the knowledgeleaveswiththem,sowerecognise thatafocus within ourteammembersandshouldtheyleavethebusiness, We haveakeypersonriskthatweneedtoresolve. Expertiselies demand. products attherightquantitylevelsthatalignwithourcustomer are continuingtodevelopthisidentifyandmaintaintheright more in-depthdetailthanhaspreviously beenavailable.We inventory ranges.Thisisenablingdatavisibilityandanalysisin only recently developedinteractivereporting onoptimumproduct and fullpriceproduct sell-through versusourtargets, wehave While wehavemadesomegoodprogress onagedinventory means weneedtofindnewwaysdelivervaluefaster. executing what’s relevant forthecustomer. Meetingtheirdemands To keepupwithchangingdemands,weneedtobecomebetterat Significance 1. TOOURSHAREHOLDERS TOOURSHAREHOLDERS FY21 FY22+ implementing change. implementing • notmeetcustomerdemands. • andtransparent approach. aGroup standardised, consistent,highlyvisible • configure somebuildatcustomeredge. with • • Waiting forcore systemstobe upgradedbefore Newcustomerexperiencetechnologiesdo Organisational resistance tochange, movingto Complexityofmovingfrom buildtobuy/ Concernsoverdataprivacy. 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY E RISS

• • • • Over thenexttwotothree years,wewillbefocusingon: Future focusareas

monitoring andunderstandingproduct demandversusour standardising ourretail systemsanddocumentingourprocesses systems andprocesses thataddvaluetoourcustomers, standardising systemsandprocesses byimplementingan forecasts toenabletimelycorrective action. across ourbrands for theGroup andanewB2Bplatform including upgradingourexistingB2CeCommerce platform a modernpointofsalesystemacross ourbrands of ournewwarehouse managementsystemandimplementing ‘out ofthebox’integratedsuite,completingimplementation 3. 3. design innovation capability andinvestment. capability designinnovation • andnewintegratedsolution. • mindsets guidanceandbyshifting • • • systemsdecommissioning forendoflife • Group. • andbestpractice privacylegislation approach with isconsistentandcompliant that • systemsofengagementfirst(eCommerce). •

ADDITIONAL INFORMATION Establish collaborative andcustomer-centric collaborative Establish Standardise processes bestpractice with inline Supportchangereadiness through leadership tosupportchosenplatforms. Buildcapability workloads Manageend-of-life retention Developpathways, andsupport programmes Runcustomerloyalty across the posture Adoptaconservative and ensure an ADDITIONAL INFORMATION Drivecustomer-centric waysofworkingin MIIIONS 33

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR RELATIONSHIPS OUR OUR EXPERTISE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 3 2 1 OUR

principles of Integrated Thinking in decision making, helps our principles ofIntegratedThinkingindecision making,helpsour of IntegratedReportingasevidenced bythisreport. Usingthe In ourrelationships withinvestors,weare drivingthe adoption suppliers more effectively. and focusourworktosupportup-stream programmes, reduction and todrivequalityeconomy, delivermore effective waste to ourbusiness,makingiteasierfor them tohelpusinnovate, Bangladesh, IndiaandPakistan.Thishelpsbringsupplierscloser fabrics buyby79%andshifted29%ofourapparel businessto strategic relationships. Forexample,weconsolidatedour business withfewer, stronger suppliersandcreating deeper We continuedtoconsolidateoursupplychain,placingmore meeting theirneeds. customers andhowtheywanttointeractwithusiscore tobetter saw goodgrowth inTheWarehouse app.Understandingour journey mapstocontinueoptimisecustomerexperiencesand entire marketingsupplychain.We furtherdevelopedcustomer This hassignificantlyincreased ouraccountabilityacross our function thatdeliversforourcustomersandbusiness. in-house tocreate afully-scaledandintegratedmarketing This yearwebeganatwojourneytobringallourmarketing Key initiatives but werecognise thatrelationships godeeperthanoutcomes.OurworkinFY20willinvolvemore focusonmeasurement inthisarea. available suchasmoneyraisedtosupportcharitiesandlocalcommunities,orinternationalsuppliersaccredited forethicalsourcing, Measuring ourimpactandthestrength ofrelationships isdifficult,andsomethingwecontinuetoworkon.Somebasic measures are with ourmanystakeholdersinwaysthataligntheirinfluenceandinvolvementthelifeofbusiness. We investinlong-standing,sustainablerelationships tobuildournetworksbasedonshared understandingandvalues.We engage Marketview (totalmarketincludes petrol, supermarkets andnon-retail spend) Market viewtokendata Customer voice OUR OL community and Government Investors members Team Suppliers Customers RE OUS RELATIONSHIPS Build strong relationships withstrategic stakeholder groups that deliversustainablevalue 34 RIORIIES and reputation Strong corporatebrand resultsdeliver to inourability including investment community inthe Reputable standing brand Strong employment relationships engaging supplier and Collaborative customer experiences Rewarding andengaging UL RORESS (last year) FY18 6 5 4

Colmar Brunton’s Corporate ReputationIndex2019 inpartnershipwith Wright Communications Randstad NewZealand Based onourfactoryassurance audits (this year) Boards of Directors atServiceIQandRetailNZ. through IndustryTraining Organisations andmembershiponthe solidly yearonyear. We are alsodrivingRetailasaCareer (BRBM) degree, whichhas nowbeenestablishedandisgrowing Massey UniversityBachelorofRetail andBusinessManagement We willbeconcluding ourfundingfortheestablishmentof for technologystudents. participants. We pilotedP-Tech, ahighschoolIBMpartnership experience programme) nowreaches more than2,000 The RedShirtsinSchools(ahighschoolbasedretail work Actions, FoodSafetyandFoamFilledFurniture. Bags, Waste, MinistryforPrimaryIndustries CostRecovery Relations AmendmentBill,EqualPayPlastic into avarietyoflegislationincludingDeMinimis,Employment to youthemploymenttechnology. We alsoprovided input related publicpartiesonissuesrangingfrom climate change We interactedwithappropriate GovernmentMinistriesand important inawaythatisunderstandableandconsistent. business torecognise thedifferent aspects ofvaluethatare FY19 attractiveness within the WholesaleandRetailTrade the within attractiveness sectors. • remained consistent • reputation its108 with • • havealongwaytogo westill • asignificantchangefrom 57.1%in2015. area inthis suppliers stringentfocuswith hasresulted in standards andmeasures, upfrom 90.1%lastyear. Our • FY19 Progress totalmarket • NoelLeemingandTorpedo7 programme through wasdigitised A the Group MinistryofSocialDevelopment.TheRSIC andthe (RSIC),aprogramme resulting from apartnershipbetween the • $0.3mforVictim Christchurch the Supportfollowing attacks • haveresilience companiesthat andreservoirs oftrust yearonyear • TheGroup has89%employmentbrandawareness and37% TheWarehouse inNewZealandforitscorporate isranked8th Achievementofforward-looking guidance. plan,however Displayedevidenceonstatedtransformation meetour‘goodfactory’ 90.7%ofouroverseassuppliers TheWarehouse Group marketshare grew to5.8%ofthe 700 New Zealand youth participated in Red Shirts in Communities inRedShirtsCommunities participated 700NewZealandyouth forNewZealandsince1982including $67mraisedindonations Net Promoter Score across improved brandseither all or While customerfrequency ofpurchase hasremained stable

3 2 . , there hasbeengoodgrowth inbasketsize 1

6 score globaltop10% of itinthe putting ccelerator platform. 4

5 (next year) RODM O OUROL FY20 OUR RELATIONSHIPS Future focusareas proposition thatwerepresent. that theyare appropriately informedaboutusand therisk/reward to exposeinvestorsourthinkingandwayofoperatingso our business.Ourgoalisnottopitchcompanyinvestors,but company willhelpinvestorsmakegooddecisionsaboutsupporting and open,aswellshowingourvalueswhoweare asa A trackrecord ofdoingwhatwesaywilldo,beingtransparent Investors Our customers Significance • • • • Our focusinFY20andbeyondwillbe to: and convenienceatthebestpossiblevalue. day byguaranteeingmarketleadingquality, availability, selection weekly householdbudget,wewanttohelpthemlivebetterevery As NewZealandersfaceincreasing challengeinbalancingtheir to grow inourmarket. dynamically anddeliverthelatesttrends quicklybypartneringandplanningwiththerightsupplierstoremain relevant andcontinue The continuingriseofglobalonlineretailing meansthatourcustomershaveunlimitedshoppingchoices24/7.We mustsource 1. 1.

TOOURSHAREHOLDERS TOOURSHAREHOLDERS and sourcing actionsthat ourcustomersnowexpect Continue towork within ourcommunities. Prepare ourculture andorganisation tomove our teammembersintothefuture ofwork environments Drive product developmentanddesignthrough strategic relationships withoursuppliersandtaketheethical Deliver stronger end-to-end customerexperiencesthatmotivateourcustomerstogiveuslifetime value FY21 FY22+ identified, leading toreputational leading identified, risk. • isexhausted orspread tobeeffective toothinly • long-termsustainable valuecreation. • more investorinterest active stock inthe • ofwage ‘catchup’andbasewageinflation. • • economies. driversinother • access • choicesforchangingbuyerpowerdynamics • yearsahead. constrainedinthe • everbefore brandsthan they Zealand,asNewZealandersshowthat are more ready overseas tointeractwith • Customer disposable incomeremains Customerdisposable isgrowing competition International inNew The Warehouse Group becomestoopolitically Our capacitytosupportGovernmentinitiatives ofshort-termprofitsMarket prioritisation over offreeLiquidity floatstockinsufficient todrive riskincreasesIndustrial Action duetoclimate Churn, drivingincreased staffing costs Cost ofgoodssold(COGS)exposure toinflation of tradebarriersorlimitations International inupstreamConsolidation our limits suppliers 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY E RISS can makeadifference inmanyways. Our purposeishelpingKiwislivebettereveryday. It isarole that partners, notonlyoftodaybutalsotomorrow. matter tothepeoplewhoare ourcustomers,suppliersand and ourcommunitiestoleveragecapabilitiesinwaysthat to bepartofthecommunitiesweserve.We workwithgovernment playing arole inthefuture wellbeingofourcountry. Itisaprivilege Operating inaderegulated industrydoesnotabsolveusfrom Government andcommunity strategic relationships, wecandrivelong-termvalue. support recycling. Byconsolidatingoursuppliersandbuildingmore sustainability objectivetosource sustainably, optimisedesignand Our relationships withoursuppliersfocusonmeetingproduct Our suppliers 3. 3. performance targets. • companyperformance, strategyand investments • investmentcommunity the with dialogue • • beyond wages. • • riskmanagementprocesses. • • propositions values. sustainability linking • surrounding retail •

ADDITIONAL INFORMATION ADDITIONAL INFORMATION Deliver onstatedGroupDeliver goalsand Provide andtransparent timely disclosure of tomaintainrecurringContinue andopen Continue routineContinue reporting. accountability Broader andvalues servicesofparticipation employeegroupsPartner with toapplyhedgingandappropriateContinue Diversify supplychaingeographically valueformoney Focus ondelivering services add-on/supporting Deliver MIIIONS

35

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE OUR ENVIRONMENT OUR OUR RELATIONSHIPS THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 4 3 (SGDs1,3,5,7,8,9, 13,15). operations–India,Bangladesh, China.Theseprojects deliversocial andcommunityco-benefitssatisfying eight oftheUnitedNations’SustainableDevelopment Goals, 2 1 targets isaminimumperformance threshold forus.OurKPIsagainst ourstatedstrategieshavebeensetwiththatinmind. in thisarea, andseeoursustainability credentials asamaterialelementofourreputational andbrandassets.Achievementofourstated significant uncertaintyinpredicting project benefits. We recogniseouropportunityinNewZealandtolead and rolemodelbehaviours for consideringsuchinvestments,albeit manyoftheunderlyingtechnologiesandmarketstructures are emergent, whichgivesriseto reaching sustainableoutcomes beyondthoseprogrammes thatcanbejustifiedon purely economicgrounds. We takealong-termview Achieving tangiblesustainabilitybenefitsforourstakeholdersisimportant tous.Consequently, weare prepared toover-invest in Materiality OUR

Enhance Offset Reduce OUR OL domestic offset strategy. the carboncredit trading,wehavedelayedthefinalisation of our Scheme, Zero CarbonBilllegislationanduncertaintyrelating to two years.Giventheemergent nature oftheEmissions Trading we havebeenexploringoptionsforeffective offset forthepast The offset elementofourstrategyisrelatively recent, although Offset industries andcompaniesare havingsuccesswith. stakeholders toshare knowledgeandadoptapproaches thatother principles intoourprocurement practices,andengagewidelywith Supporting theseinitiatives,wehaveincorporatedenergy efficiency of fluorescent lightingin-store withenergy-efficient LEDlighting. have beenrunningforseveralyears,example,thereplacement energy efficiencyandemissions reduction initiatives.Someofthese Across theGroup, wehaveamature programme ofover25specific Reduce Key initiatives RE OUS The Warehouse Group EthicalSourcing Policy2019 CarboNZeroCert To offset ouremissions,wehaveselectedCleanDevelopment Mechanismprojects thatgenerate GoldStandard carboncredits inregions where ourbusinesshas New ZealandCEMARS 2 ENVIRONMENT TM TM Retain ourcarboNZero status anddrivemore responsible practices andresource efficiency intoourbusiness ® RIORIIES Reassess ourrawmaterials waste by2022 Divert 85%ofouroperational by 2030(from 2015baseline) Source responsibly Standard carboncredits Gold Buying international by 2025 65% ofourcarbonemissions oflandtooffsetRegeneration materials Reduce ourpackaging 32% or12,742tonnesofCO Reduce carbonemissionsby certification 36 2

UL RORESS 3.4% yearon FY18 (lastyear) Reduction plans Reduction commenced increase

produced, consumedandultimatelyrecycled. attributes sothatthecore product itselfismore sustainably the developmentofproduct rangeswithstronger environmental packaging policy. OurotherfocusforFY20willbeonaccelerating product packaging.We are currently developingasustainable upstream supplierscreate, notonlyforshippingpurposesbutalso improve inthatarea, andournextfocusisonpackagingthat as abusiness,suchonlineorder fulfilment. We continueto this area, particularlytheworkaround packagingthatwegenerate We havemadesomegoodprogress onspecificprogrammes in Enhance benefits. as nativeforest regeneration, biodiversity andlocalcommunity 65% ofouremissionsby2025andprovide otherbenefitssuch Consequently weare developingourownapproach tooffset FY19 (thisyear) 4% yearon FY18 emissions 78% diverted 100% offset reduction this year this 1 3 FY19 Progress ascontainingsustainablysourced PalmOil. stockare PalmOilorcertified without either sources, andfrom March products 2019all we • We improvements toourproduct offering. sourcing roadmap measurable todeliver • D carbonneutral. companyinNZtobecertified • B Standard carboncredits. • Purchased Gold 41,000international emissionsoffset. voluntarydomestic Governmentregulations changeinthe of • Theprogramme isdevelopingagainst announced • Developingnewsustainablepackagingguidelines. initiatives. wastediversion areduction of25%yearonyear, toour thanks • Disposedof2,652tonneswastetolandfill, free toourcustomers. • fleettoElectricVehicles byendof2019 • required sourcing tomeetourethical standards • 100%ofourprivatelabelmanufacturingsitesare Our24ElectricVehicle chargers are available commercial Ontracktoconvert30%ofourlight ecame the thirdecame the retailer worldandlargest inthe eveloping anendtosustainable only sourced paperfrom sustainablewood

4 . FY20 (nextyear) Investment phase FY19 emissions still developing still still developing still Internal supply Programme is 80% diverted 100% offset Programme chain focus RODM O OUROL 1. OUR ENVIRONMENT audit activitieswithbestpractice.Ourorganisation iscertified inaccordance withISO14064-1:2006or PAS 2050:2011. times. TheGroup’s emissionsbaselineyearis2015.Asemerging internationalstandards developwewilllooktoalignourreporting and reduction guidelines,andare consistentwithkeeping temperature increase tonomore thantwodegrees Celsiusbasedonpre-industrial claims. Ourreduction targets are alignedwiththeClimateLeadersCoalitioncommitments, which followthecurrent ParisAgreement Reduction Scheme)programmes. Thesetwocertificationsensure accurateandconsistentcarbonmeasurement, reduction andneutrality We takethisseriously. Ouremissionsreporting follows theCarboNZeroCert Enhance framework. recycling, through tonewinitiativesacross ourReduce,Offset and standing activitiessuchasenergy efficiency, plastic reduction and The Group hasacomprehensive programme spanninglong downstream, are importanttobeableclearlycommunicateon. doing businessontheimmediateenvironment, bothupstream and demanding more transparency from business.Theimpactsof From asociallicencetooperateperspective,stakeholdersare As areputable NewZealand business Significance • • • • • Our sustainabilitystrategiescontinue toevolve.Keyfocusareas continuetoinclude: Future focusareas and isembeddedintoourbusinessstrategies,hasbeenformanyyears(theGroup begansustainabilityreporting in2001). Sustainability toTheWarehouse Group isnotjustabuzzword oracomplianceactivity, itisacentralpartofourvaluesasbusiness 1.

TOOURSHAREHOLDERS TOOURSHAREHOLDERS Consumer packaging Helping ourcustomers livemore sustainable livesbyoffering themnewpostconsumer wasterecycling solutions andpricevalued Developing arobust sustainable sourcing capabilitywithmeasurableimprovements oningredients certificationand recyclability Minimising theplasticpackagingand plasticwastegeneratedbyourprivatelabeloffering Reducing carbonemissionsthroughout ouroperations Accelerating thedeploymentofour ElectricVehicle fleet sustainable product choices. FY25 (fiveyears) 20% reduction 85% diverted Yield phase from 2015 focus Sustainable sourcing programme inplace FY30 (tenyears) 35% ofemissions 65% ofemissions 100% recyclable 32% reduction offset way this offset way this improvement packaging from 2015 ongoing 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY insufficient forconsumerdemand • quality, better lowerprice. • • Standard globalforces carboncredits drivenby • regulatory legislative, frameworks. • offset domestic regeneration activity • factoryre-tooling manufacture. atpointof • unavailable(e.g.softplastics). • • networks. logistics • prohibitive • businessgrowth orefficiency limits • transparency supplychain. upthe • Volume ofavailableproducts messagestosuppliers, Incompatible Provenance ofcredits undermined. G forinternational Marketvolatility emerging with Misalignment Insufficient landavailablefor Limitedbuyingpowertoinfluence Downstream recycling ineffective or offset Reduction bybusinessgrowth tocontrol Ability emissionsfrom Financialcostsofreduction become Carbonemissionsincrease dueto International attestation and attestation International E RISS

disadvantaged, tostillbeablemakesustainablechoices. including thosewhoare valueconsciousoreconomically Our aspirationandresponsibility istoenableallcustomers, produce, orclothingandgeneralmerchandise. consumers –betheyElectricVehicles, sustainablygenerated these choicestodayoftencomewithapremium pricetagfor available totheeconomicallyprivileged.Itisareality that Making positiveenvironmental choicesshouldnotbeonly For ourcustomers TM andCEMARS(CertifiedEmissionsMeasurement And

3. 3.

ADDITIONAL INFORMATION ADDITIONAL INFORMATION old valid third-party valid attestation. • managementdevelopments • direction. policy • strategiesforemissionoffset • forcustomers updifferent price/valuecombinations • preparation making. costs,toassistdecision decisionmaking,notjustproduct • packagingonourcostofgoodssold. • manufacturers andinnovatewith • governmenttotakealong-term NewZealandrecycling view. • • • visibleinourcostofdoingbusiness (CODB) • reduction initiatives • auditing practice. auditing • Ensure GoldStandard accreditation has Keepabreast ofhedging/risk stakeholderstoinfluence Liaisewith domestic Consideralternative Take more designin-houseand open cost in totallife-cycle Acceptthe impactofnon-sustainable Reviewthe retailers international Partnerwith businessand Partnerwith Maintainafocusonimprovements partners. Influenceourlogistics financialimpactofemissions Makethe emissionand Focusonactive Continue to elevate our ethical toelevateourethical Continue MIIIONS 37

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE FINANCIAL CAPITAL FINANCIAL OUR ENVIRONMENT THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 3 2 1 FINANCIAL

capital spendthisyearbelowguidance. Increased disciplinearound theallocationofcapitalhasresulted in and growth initiatives. advance ofexpectedfuture investmentinplannedtransformation The current lowlevelofgearingishelpingtobuildcapacity in $63.7m ofbankdebtandfundingcapitalexpenditure of$62.1m. dividend paidtoshareholders to17centspershare, whilerepaying sufficient free cashflowoverthecourseofyeartoincrease the in workingcapital.Consequently, thebusinesshasgenerated of thebenefitfrom theseundertakingswithameaningful reduction made throughout thefinancialyear, wehavebegunto realise some a keyfocusofourtransformationinitiatives.Inlinewithcomments In FY19,inventorymanagementandimproved supplierterms were Key initiatives open priceatthestart of theFinancialYear. Return onFundsEmployed calculatedasOperatingProfit from ContinuingOperationsasapercentage ofaverageFundsEmployed. Simple Total Shareholder Returncalculated as (closepriceatFinancialYear end +dividendspaidtoshareholders during theFinancialYear)/ Capital growth calculatedasclosepriceatFinancialYear end/openpriceatthestartofFinancialYear. capital Access to of capital Allocation Return Shareholder Total resilience Financial OUR OL RE OUS Ensure efficient financialcapitaltocompeteandenablegrowth utilisation of RIORIIES retail landscape to retain relevance inadynamic investinourbusiness Optimally on investment stronga consistently return Reward shareholders with capital sources Maintain accesstodiverse management through strong capital Maintain financialflexibility 38 CAPITAL UL RORESS (last year) FY18 start toexecuteourgrowth aspirations. looking toincrease ourpercentage ofgrowth capitalspendaswe to liftingourcapitalexpenditure versusdepreciation, wewillbe years ofcapitalspendinthe$100mto$120m purposes ofcapitalplanning,weare assumingtohaveseveral delivered improvement ineCommerce fulfilmentmetrics.Forthe logistics higherthananticipated,thefirstphaseofwhichhas management systemdrove theproportion ofcapitalspenton digital initiativesand21%onlogistics.Investmentinawarehouse stores anddistributioncentres, 40%oninformation systemsand the firsthalfofFY20.Ofcapitalexpenditure, 39%wason planned tolandinFY19whichare nowexpectedtooccurin There were alsotransformationinitiativesthatwere originally (this year) FY19 FY19 Progress to$794minFY19. • bond NZXlisted • duetoworkingcapitalinitiatives • cashflow, operating debt andequity • anddevelopmentofstrategicinitiatives. transformation depreciation inFY18to104%FY19duefocuson • perspective ratestoensure propositions ‘stackup’from afinancial internalhurdle assesseseachbusinesscaseandapplies • • ofFY1912.8%(FY18:-4.2%) • maintenancecapitalexpenditure. • seasonalcredit facility toa$50m (undrawnatbalancedate)inaddition • duetoincreased discipline capitalallocation reflects workingcapitalfocusandlowerexpenditure • • AfterTax • (FY18:3.3%) • Market capitalisation increased Marketcapitalisation from $704minFY18 Accesstodebtisthrough bankbilateralsandan multi improved cashflowhassignificantly Operating inFY19 TheGroup maintainsthree primarysources ofcapital in incapitalexpenditure Reduction from 121%capex/ Therecently InvestmentReviewCommittee established Greater around discipline ourcapitalexpenditure inFY19 Headroom provides toinvestforgrowth ability above of$180m bankdebtfacilities Accesstocommitted Reducedgearingfrom 25.3%inFY18to13.6%FY19 Strong capitalgrowth share inthe course priceoverthe Return onFundsEmployedof23.5%(FY18:16.9%) NetProfit of75%to85%adjusted Dividend policy Total Shareholder of20.2% Return(inclusiveofdividend) 2

range. In addition range. Inaddition 1

3 . (next year) Target 17%+ReturnonFundsEmployed FY20 of capitalspendongrowth initiatives Maintain diversity of funding sources offunding Maintain diversity Gearing levelsnotgreater 30% than RODM O OUROL Targeting increased proportion FINANCIAL CAPITAL Significance • • Our focusinFY20andbeyondwillbe to: Future focusareas we are here forgoodandNewZealanders. investment invalue-enhancinginitiatives andstrategies.Financialdisciplineisofutmostimportancetous iscore tomakingsure that The Group hasbeenfocused onachievingastrong balancesheetthat provides capitalheadroom toweatherpotential downturnsandfund customers withourproducts. Inorder tomake-goodonthatcommitment,theGroup needstoalsohavearobust financialcapitalbase. ‘Here forgood’isavaluewithintheGroup thatdisplaysourcommitmenttopeopleandplanetdeliveringgreat valueto Materiality results, itisalsoaboutdeliveringresults forthebettermentofGroup andourstakeholders. implement andachievethemisdependentonthefinancial resources oftheGroup. Financialcapitalistherefore notonlyaboutfinancial financial performance. We are investinginareas ofthebusiness where goalsare linkedtonon-financial measures buttheabilitytodevelop, our detailedtransformationplansaswellinvestingingrowth initiatives.Thetransformationplansare, however, notonlyassociated with sustainability oftheGroup anddevelopmentofitscapitalbase(financialnon-financial).Current focuses forthe Group are completing Financial capitalisanenablerthatallowstheGroup toexecute onthevariousinitiativesweidentifyasimportantforlong-term 1. 1.

TOOURSHAREHOLDERS TOOURSHAREHOLDERS – – Continue ourfocus onfinancialriskmanagement. Continue withthe transformationprocess through: Focusing ontheretail fundamentalstogrow thetop linewhileassessingareas tobemore costefficient Investing capitalin linewiththestrategyanddelivering shareholder value FY21 FY22+ retail experiences. are core customer exceptional todelivering • orlackofstrategicdirection under-investment duetodeferralofspend • to initial expectations. toinitial • priceofTheWarehouse Group. share financialmarketsmayimpactonthe • creating direct businesscompetition. retail the sector’s landscapeand competitive footprintinNewZealand, altering existing • offinancialperformance. adeterioration partners.Economicdownturnsmayresult in performanceofNewZealand’s majortrading Zealandeconomyandindirectly economic the New performanceofthe isimpactedbythe • ofcapital. globaleconomicfactorscausesarationing marketperformanceduetolocaland/or bankingregulations anddownturninequity • Under-investment ingrowth that initiatives Erosion assetbasefrom ofthe Underperformanceofinvestmentsrelative anddomestic Downturnininternational Offshore retailers mayenterorincrease Tighteningofcredit marketsand/orlocal Like many New Zealand businesses, the GroupLike manyNewZealandbusinesses,the 2. 2.

GROUP MANAGEMENTREPORT OUR COMPANY GROUP MANAGEMENTREPORT OUR COMPANY E RISS 3. 3.

ADDITIONAL INFORMATION ADDITIONAL INFORMATION and diversified product anddiversified offering canalleviate • cashflow. robustness the ofinvestmentsfrom an • customerexpectations. meetorexceed (physicalandonline) infrastructure andcustomerchannels expenditure programme toensure our • andcapitalgrowth. balanceofdividends valuetoourshareholders deliver through a • andtransparency ahighleveloffinancialreporting delivering • andnewwaystoshop,suchasTheMarket. • experienceforourcustomers • channels andonline NewZealandnon-foodmarketacross physical • store tomanageindividual performance. flexibility securitywith balancelocation • sources ofcapital • performancepressure from marketdownturns andconversionofearningsintooperating • shareholder stake hasmaintainedacontrolling that • bond NZXlisted an with Supplementourbankfunding headroom needs. inexcessofimmediate • TheGroup’s NewZealandbrands established Useourinvestmentreview process totest Refineourmaintenancecapital Maintainourcommitmenttoconsistently shareholders Developtrustwith through tocreate Continue anddevelopappealing toproviding Remaindedicated bestretail the footprintinthe Maintainourunparalleled manageourproperty Tightly to portfolio andquality Maintainaccesstodiverse Continue ourfocusonworkingcapitalcontrol Continue afounding fornearly25yearswith NZXlisted Retainourbankingrelationships and operational, strategicandfinancialperspective. operational, MIIIONS

39

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE FINANCIAL STATEMENTS FINANCIAL FINANCIAL CAPITAL THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 40 Level 4,4Graham Street, POBox 2219,Auckland. The Warehouse Group Limited isalimited liability companyincorporated and domiciled inNewZealand. Theaddress ofits registered office is 7.3 7.2 7.1 Adjusted netprofit 7.0 Dividends 6.0 5.0 4.3 4.2 4.1 4.0 3.5 3.4 3.3 3.2 3.1 3.0 2.3 2.2 2.1 2.0 FINANCIAL PERFORMANCE 1.5 1.4 1.3 1.2 1.1 1.0 BASIS OFPREPARATION Consolidated statement ofchanges inequity Reconciliation ofoperating cash flows Consolidated statement ofcash flows Consolidated balancesheet Consolidated statement ofcomprehensive income Consolidated incomestatement FINANCIAL STATEMENTS CONTENTS 24 September 2019 Joan Withers These financial statements have beenapproved forissue bythe Board ofDirectors on24September 2019. oftheGroup. financial performance along withdetails ofanykey judgements andestimates used. Thepurposeofthis format is to provide readers withaclearer understanding ofwhat drives risk management’ and disclosures ‘other note The disclosures’. Eachsection sets outthesignificant accountingpolicies ingreen text boxes appliedinproducing the relevant notes, shareholders. to have beengrouped into six sections: ‘basis ofpreparation’, ‘financialperformance’, ‘operating assets andliabilities’, ‘financingrelevant andmore capitaland structure’,complex less ‘financial them make The financial statements have beenpresented inastyle which attemptsto For the52weekperiodended28July2019 Financial Statements 1. FINANCIAL STATEMENTS TOOURSHAREHOLDERS Imputation credit account Dividends policyreconciliation Dividends paid Earnings pershare Taxation -Balancesheetdeferred taxation Taxation -Balancesheetcurrent taxation Taxation -Incomestatement Taxation Auditors’ fees Other operating expenses Employee expense Lease andoccupancyexpense Other income Income andexpenses Balance sheetinformation Capital expenditure, depreciation andamortisation Operating performance Segment information estimates andassumptions Critical accountingjudgements, Reporting period Basis ofpreparation Compliance statement Reporting entity Basis ofpreparation - Chair

2.

GROUP MANAGEMENTREPORT OUR COMPANY PAGE 46 50 50 49 49 49 46 46 46 46 49 46 48 44 44 48 48 48 48 45 48 43 42 42 47 47 47 47 51 51 51 51

24 September 2019 Keith Smith 8.0 OPERATING ASSETSANDLIABILITIES 19.0 18.0 17.0 16.0 15.2 15.1 15.0 14.0 13.0 OTHER DISCLOSURES 12.5 12.4 12.3 12.2 12.1 12.0 FINANCIAL RISKMANAGEMENT 11.4 11.3 11.2 11.1 11.0 Equity 10.3 10.2 10.1 10.0 Borrowings FINANCING ANDCAPITAL STRUCTURE 9.2 9.1 9.0 8.4 8.3 8.2 8.1 00 Newaccountingstandards -effectivenext year 20.0 Working capital New accountingstandards -adopted intheyear Related parties Contingent liabilities Commitments as held forsale GroupFinancial Services assets classified GroupFinancial Services results andcash flows Discontinued operations Share-based longterm incentive plans Key management Market risk Credit risk Liquidity risk Derivative financialinstruments Financial risk factors Financial riskmanagement Minority interest Reserves Contributed equity Capital management Bank facilities Net interest expense Net debt Intangible assets Property, plantandequipment Non current assets Provisions Trade andotherpayables Trade andotherreceivables Inventory - Deputy Chair 3.

ADDITIONAL INFORMATION

41

Page 60 55 56 53 58 56 56 52 54 63 63 63 62 64 64 59 59 55 55 55 53 58 58 53 62 62 52 52 52 57 57 61 61

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 The aboveconsolidated income statement andstatement ofcomprehensive incomeshould beread inconjunctionwiththeaccompanying notes. Total comprehensive loss from discontinuedoperations Total comprehensive incomefrom continuingoperations Attributable to: Total comprehensive income Minority interest Shareholders oftheparent Attributable to: Total comprehensive income Other comprehensive income Tax relating to movementinhedgereserve Movement inde-designated derivative hedges Movement inderivative cash flow hedges Movement inforeign currency translation reserve Items that maybereclassified subsequentlyto theincomestatement Net profit fortheperiod For the52weekperiodended28July2019 Consolidated Statement ofComprehensive Income Net interest expense Earnings before interest andtax from continuingoperations Unusual items Operating profit from continuingoperations Other operating expenses Depreciation andamortisation expense Employee expense Lease andoccupancyexpense Other income Gross profit Cost ofretail goodssold Retail sales Continuing operations For the52weekperiodended28July2019 Consolidated IncomeStatement Total comprehensive income Minority interest Shareholders oftheparent Total comprehensive incomefrom continuing operations attributable to: Total comprehensive income Net profit fortheperiod Loss from discontinued operations (netoftax) Discontinued operations Net profit fortheperiodfrom continuingoperations Income tax expense Profit before tax from continuingoperations Diluted earnings pershare -continuingoperations Basic earnings pershare Earnings pershare attributable to shareholders oftheparent Loss from discontinued operations Profit from continuingoperations Profit attributable to shareholders oftheparent relates to: Minority interests Shareholders oftheparent Attributable to: 42 NOTE NOTE 10.2 15.1 11.4 11.4 11.4 6.0 6.0 5.0 3.4 3.3 3.2 2.2 4.1 3.1 8.1 2.1 2.1

(2,042,722) (52 WEEKS) (52 WEEKS) 19.5 cents 18.9 cents (520,892) 1,028,635 3,071,357 (178,702) (164,375) (60,613) 102,943 (26,621) 94,064 53,460 (11,922) (17,165) 112,378 (9,435) 53,593 53,593 53,593 53,593 53,593 55,388 65,382 65,382 (8,879) 67,443 65,515 65,515 65,515 67,310 55,521 55,521 (1,928) (1,928) (1,928) 4,644 8,325 $000 $000 2019 2019 580 133 133 133 19 19 (2,003,396) (52 WEEKS) (52 WEEKS) 6.6 cents (524,673) 2,994,571 7.9 cents (159,587) (163,961) (59,630) (20,636) (10,067) (34,135) 49,000 49,000 49,000 991,175 25,880 35,346 (4,386) (4,386) (4,386) 53,386 53,386 27,506 48,758 57,307 22,878 22,878 27,264 23,120 23,120 23,120 (9,165) 53,144 91,442 48,142 $000 $000 2018 2018 8,118 606 242 242 242 (5) Total equity Minority interest Total equity attributable to shareholders Retained earnings Reserves Contributed equity EQUITY Net assets Total liabilities Total noncurrent liabilities Provisions Derivative financialinstruments Borrowings Non current liabilities Total current liabilities Other liabilities directly associated withassets heldforsale Provisions Taxation payable Derivative financialinstruments Trade andotherpayables Borrowings Current liabilities LIABILITIES Total assets Total noncurrent assets Deferred taxation Derivative financialinstruments Intangible assets Property, plantandequipment Non current assets Total current assets Assets held forsale Taxation receivable The aboveconsolidated balancesheet shouldberead inconjunctionwiththeaccompanyingnotes. Derivative financialinstruments Inventories Trade andotherreceivables Cash andcash equivalents Current assets ASSETS As at 28July2019 Consolidated BalanceSheet 1. FINANCIAL STATEMENTS TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION NOTE 15.2 15.2 12.2 12.2 12.2 12.2 10.1 10.1 10.1 11.4 11.3 11.2 8.4 8.4 4.3 9.2 8.3 4.2 4.2 2.3 2.3 8.2 9.1 8.1 43 1,050,821 540,463 540,463 482,033 482,033 360,061 665,673 665,673 568,788 352,575 125,465 385,148 122,469 517,758 90,670 481,314 125,512 49,297 28,325 38,475 221,161 60,771 21,270 21,270 (1,216) 7,055 7,948 $000 2019 939 939 719 713 - - - - - 1,049,748 400,564 649,083 480,284 480,284 480,284 523,840 479,405 569,464 656,643 168,900 279,028 396,678 359,457 238,592 393,105 108,476 144,954 144,954 43,840 20,552 19,030 26,455 115,331 79,758 67,422 38,418 11,472 7,560 3,886 6,388 3,394 $000 2018 764 879 879

- -

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 The aboveconsolidated statement ofcash flowsshouldbe read inconjunctionwiththeaccompanyingnotes. Net cashflowsfrom operating activities Total changesinassets andliabilities Income tax Provisions Trade andotherpayables Inventories Trade andotherreceivables Changes inassets andliabilities Total investingandfinancingadjustments Supplementary dividendtax credit (Gain)/Loss onbusiness disposal Loss/(Gain) ofproperty, onsale plant andequipment Items classified asinvestingor financingactivities Total noncashitems Movement inde-designated derivative hedges Movement indeferred tax Supplier contributions Interest capitalisation Share basedpaymentexpense Intangible asset impairment Depreciation andamortisation expense Non cashitems Net profit For the52weekperiodended28July2019 Reconciliation ofOperating Cash Flows Closing cashposition Opening cash position Net cash flow Net cashflowsfrom financingactivities Dividends paidto minority shareholders Dividends paidto parent shareholders Treasury stock dividends received Repayment offinanceleases Repayment ofbank borrowings Cash flowsfrom financingactivities Net cashflowsfrom investingactivities warrantyBusiness disposal claim Purchase ofproperty, plantandequipmentcomputer software Proceeds from business disposal Proceeds from ofproperty, sale plantandequipmentcomputer software Net cashflowsfrom operating activities New loansto financebusiness customers Loans repaid byfinancebusiness customers Interest paid Income tax paid Payments to suppliers andemployees Cash received from customers Cash flowsfrom operating activities For the52weekperiodended28July2019 Consolidated Statement ofCash Flows Finance business receivables Cash flowsfrom investingactivities 44 NOTE NOTE 15.0 15.0 15.0 10.1 4.3 9.2 3.3 4.2 2.2

(52 WEEKS) (52 WEEKS) (2,853,781) 3,083,748 (26,540) (52,302) (59,037) (10,392) 194,770 194,770 (61,326) (23,194) (116,114) (63,715) 197,993 197,993 (10,515) (6,628) 26,455 70,785 (8,657) (5,675) 49,297 22,842 60,613 72,232 65,515 70,761 70,761 26,417 (1,421) 6,082 5,929 4,857 5,478 1,860 1,850 (398) $000 $000 2019 2019 (135) (179) 420 446 446 268 268 275 275 418 217 - (2,875,770) (52 WEEKS) (52 WEEKS) 3,003,199 104,040 (88,240) (36,566) (46,595) (70,229) (55,822) (14,082) (31,999) (21,037) (40,711) 107,914 107,914 50,469 59,630 59,630 (9,307) (2,694) 26,455 (5,826) 25,622 47,492 77,988 23,120 18,768 (3,715) 12,227 11,522 3,305 11,347 17,291 (230) (456) 4,661 $000 $000 2018 2018 2,145 1,421 436 353 397 397 467 467 267 267 327 327 - The aboveconsolidated statement ofchangesinequity should beread inconjunctionwiththeaccompanyingnotes. For the52weekperiodended28July2019 For the52weekperiodended28July2019 Consolidated Statement ofChangesinEquity For the52weekperiodended29July2018 Balance at thebeginningofperiod Net profit fortheperiod Movement inforeign currency translation reserve Movement inderivative cash flow hedges Movement inde-designated derivative hedges Tax relating to movementinhedgereserve Total comprehensive income Contributions byanddistributions to owners Dividends paid Share rights vested Share rights charged to theincomestatement Treasury stock dividends received Balance at theendofperiod Adjustment onadoptionofNZIFRS15 Balance at thebeginningofperiod Restated balanceat thebeginningofperiod Net profit fortheperiod Movement inforeign currency translation reserve Movement inderivative cash flow hedges Movement inde-designated derivative hedges Tax relating to movementinhedgereserve Total comprehensive income Contributions byanddistributions to owners Dividends paid Share rights vested Share rights charged to theincomestatement Treasury stock dividends received Balance at theendofperiod 1. FINANCIAL STATEMENTS TOOURSHAREHOLDERS 4.2, 4.3 4.2, 4.3 7.1, 11.4 7.1, 11.4 NOTE 2.

GROUP MANAGEMENTREPORT OUR COMPANY (note: 11.2) (note: 11.2) CAPITAL 365,517 365,517 365,517 365,517 365,517 SHARE SHARE $000 ------TREASURY (note: 11.2) (note: 11.2) SHARES SHARES (6,060) (6,060) (6,060) (5,456) (7,471) $000 604 1,411 ------RESERVES RESERVES (note: 11.3) (note: 11.3) (10,067) HEDGE HEDGE (17,165) (15,174) 35,346 25,885 (11,941) (1,230) 4,644 10,711 10,711 10,711 $000 606 580 ------TRANSLATION 3. CURRENCY (note: 11.3) (note: 11.3)

ADDITIONAL INFORMATION RESERVE FOREIGN FOREIGN $000 (5) (5) (5) (5) (5) 19 19 19 19 14 14 ------EMPLOYEE (note: 11.3) (note: 11.3) BENEFITS RESERVE RESERVE SHARE (1,725) (829) $000 2,138 353 766 766 766 63 ------EARNINGS EARNINGS RETAINED (55,495) (52,027) 108,476 108,476 122,469 108,201 45 140,512 65,382 65,382 22,878 22,878 $000 (275) 696 696 267 267 314 217 ------MINORITY (note: 11.4) (note: 11.4) INTEREST INTEREST (230) $000 (179) (471) 242 242 879 879 879 879 879 879 357 357 867 867 133 133 719 ------480,009 480,284 480,284 480,284 480,284 (52,206) 482,033 486,389 (10,067) (55,725) EQUITY EQUITY 49,000 (17,165) 35,346 53,593 53,593 TOTAL 23,120 65,515 4,644 $000 (275) 606 580 420 353 267 267 217 (5) 19 19

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INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 (d) Intangible assets (note 9.2) (c) Derivative financialinstruments (note 12.2) (b) Provisions (note 8.4) (a) Inventory (note 8.1) financial statements are foundinthefollowing notes: and liabilities at balancedate andthereported amounts ofrevenues and expenses duringtheyear. Judgements andestimates whichare material to the The preparation ofthefinancial statements requires theGroup to make judgements, estimates andassumptions that effect the reported amounts of assets 1.5 Criticalaccountingjudgements, estimates and assumptions once every 5to 6years. Thenext 53week trading periodisnext year’s 2020financial year. 2018. TheGroup operates onaweekly trading andreporting cyclewhichmeans most financialyears represent a52week period,a53week yearoccurring These financial statements are forthe52weekperiod30July2018 to 28July2019.Thecomparative periodisforthe52week period31July 2017 to 29July 1.4 Reportingperiod TWP No.3Limited The Warehouse Nominees Limited Eldamos Investments Limited Diners Club(NZ)Limited The Warehouse Group Investments Limited Torpedo7 Limited Noel Leeming Group Limited Warehouse Stationery Limited The Warehouse Limited NAME OFENTITY below. The consolidated financial statements comprise thefinancial statements oftheCompany andits subsidiaries. Material subsidiaries at yearendare listed associated withassets heldforsale’ onthebalance sheet. classified as adiscontinuedoperation and are presented as asingleamountintheincomestatement andformpartof‘assets held forsale’ and‘liabilities in April 2019,theGroup’s remaining Diners Club franchise obligations cease inDecember2019.Theresults Group fortheFinancial Services have been The Group sold its business (excluding Financial Services Diners Club (NZ))inSeptember 2017 andthensold theDiners Club(NZ)financereceivables accounting policychoice,theGroup has appliedtherequirements ofNZIFRSbutadetailed accountingpolicyhasnotbeenspecifically included. choice is provided byNZIFRS,isneworhas changed,is specificto theGroup’s operations oris significant ormaterial. Where NZIFRSdonotprovide any The principal accountingpolicies applied inthepreparation ofthese financialstatements are set outintheaccompanying notes where anaccounting stated.otherwise Certain comparative amounts have beenreclassified to conformwiththecurrent year’s presentation. and liabilities at fair value.Thefinancial statements are presented inNewZealand dollars andall values are rounded to thenearest unless thousand, The measurement basis adopted inthepreparation ofthesefinancial statements is historic cost,as modifiedbytherevaluation ofcertain assets 1.3 Basisofpreparation authoritative notes asappropriate forprofit oriented entities.Thefinancial statements also comply withInternational Financial Reporting Standards (IFRS). They complywithNewZealand Equivalents to International FinancialReportingStandards (NZIFRS),otherapplicable Financial ReportingStandards, and These financial statements have beenprepared inaccordance with Generally Accepted Accounting Practice (GAAP), FMCA 2013andNZX listing rules. 1.2 Compliance statement Company islisted ontheNewZealand Stock Exchange (NZX). under Part 7oftheFinancialMarkets Conduct Act(FMCA) 2013.Theaddress ofits registered office is Level 4,4 Graham Street, PO Box 2219,Auckland. The limited liability companyincorporated anddomiciled inNewZealand. TheGroup is registered undertheCompanies Act1993 andis an FMCReportingEntity The Warehouse Group Limited (theCompany) andits subsidiaries (together theGroup) largely trade intheNewZealand retail sector. TheCompany isa 1.1 Reportingentity 1.0 BASIS OFPREPARATION For the52weekperiodended28July2019 Notes to theFinancialStatements -BasisofPreparation 46 Retail /Wholesale Investment Property Financial Services Digital Retail Retail Retail Retail Retail PRINCIPAL ACTIVITY CHANGE Amalgamated withTheWarehouse Limited Classified as discontinued operations Amalgamated withTheWarehouse Limited NOTE 15.0 11.4 PERCENTAGE OWNERSHIP 2019 100 100 100 100 100 100 N/A N/A 95 95 2018 100 100 100 100 100 100 100 100 100 Total Group Computer software Property, plantand equipment Comprising Total Group Discontinued operations Continuing Retail Group Other Group operations Digital Retail Noel Leeming Segment The Warehouse Segment 2.2 Capital expenditure, depreciation andamortisation Total Group Taxation assets/liabilities Intangible goodwillandbrands Derivative financial instruments Cash andborrowings Unallocated assets/liabilities Operating assets/liabilities Discontinued operations Continuing Retail Group Other Group operations Digital Retail Noel Leeming Segment The Warehouse Segment 2.3 Balancesheetinformation components ofthe“Other Group operations” segment. which relate to corporate andgovernancefunctions, aproperty companyandtheGroup’s interest inachocolate factory are notallocated andformthemain which allocates thecosts ofthese support officefunctions toindividual brands calculated onanarm’s lengthbasis. The remainingsupportofficefunctions Group supportofficefunctions, such as Information Systems, Finance, Brand Executives and PeopleSupport are operated using a shared model services Stationery sells stationery. merchandise andapparel, Noel Leeming sells technology andapplianceproducts, Torpedo7 sells sporting equipmentandasthenameindicates Warehouse (2018: 70) Warehouse Stationery stores, (2018:74) 77 NoelLeeming stores and18(2018:14)Torpedo7 stores. TheWarehouse predominantly sells general chains eitheronline orthrough theGroup’s physical retail store network. TheGroup’s store network currently has 93 (2018:93) TheWarehouse stores, 70 Each ofthefourmainretail segments represent adistinct retail chain,synonymous withits segment name.Customers canpurchase product from theretail strategic decisions. segments formthebasis ofinternal reporting used bysenior managementandtheBoard ofDirectors to monitor andassist with andassess performance The Group hasfouroperating segments trading intheNewZealand retail sector andastart-up venture to expand theGroup's digital offering. These Operating segments Profit before tax from continuingoperations Net interest expense Earnings before interest andtax from continuingoperations Unusual items Retail Group Inter-segment eliminations Other Group operations Digital Retail Noel Leeming Segment Torpedo7 Noel Leeming Warehouse Segment Warehouse Stationery The Warehouse 2.1 Operating performance 2.0 SEGMENTINFORMATION For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialPerformance 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY NOTE 10.2 5.0 1,705,687 3,071,357 4.2, 4.3 1,974,279 1,097,122 NOTE NOTE 924,648 268,592 268,592 172,474 (8,552) 12.2 10.1 8,508 9.2 9.2 $000 2019 9.1 REVENUE - 1,959,605 1,043,855 1,695,839 CAPITAL EXPENDITURE 2,994,571 3. 880,453 263,766 1,050,821 163,402 (18,544) 879,600 879,600 536,464

238,747 ADDITIONAL INFORMATION 9,655 34,676 62,103 62,103 62,103 49,297 38,475 97,483 97,483 47,753 10,276 75,501 $000 27,427 2018 TOTAL ASSETS 6,906 7,948 $000 3,641 2019 $000 2019 433 - - - OPERATING PROFIT 102,943 (14,446) 101,744 94,064 112,378 (5,996) 85,075 (9,435) (8,879) (7,027) 38,103 16,669 31,076 $000 2019 1,049,748 230,790 876,542 884,102 553,351 20,805 80,979 42,889 26,455 71,990 71,990 10,238 71,655 38,418 19,794 88,011 14,165 51,185 - 4,390 4,363 7,560 $000 2018 $000 2018 335 (34,135) 82,030 10,590 57,307 (19,171) 71,440 (9,165) 91,442 48,142 29,716 (1,447) 31,163 (1,133) $000 47 2018 - DEPRECIATION AND 302,333 TOTAL LIABILITIES 568,788 434,616 434,616 125,465 128,001 AMORTISATION 60,613 60,613 60,613 46,310 10,242 50,371 11,364 1,200 2,342 7,994 1,940 $000 2019 1,739 $000 2019 RETAIL OPERATING 713 -4.1% - 2019 - - 5.0% 6.2% 5.2% 2.8% 3.7% 4.1% MARGIN

367,002 230,594 569,464 370,888 133,356 188,794 59,630 59,630 59,630 59,630 52,368 46,477

11,685 2,720 6,388 3,886 3,394 -0.9% 7,262 1,468 $000 2018 $000 2018 2018 4.0% 3.5% 4.2% 4.2% 2.8% 332 3.1%

- - -

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Total feespaidto PricewaterhouseCoopers Other services Reviewing thehalf year financialstatements Auditing theGroup financial statements 3.5 Auditors’ fees considered to beinconflictwiththepreservation oftheindependenceauditor, subject to AuditandRisk Committee approval. this work wasapproved bytheGroup’s AuditandRisk Committee. TheGroup’s policy permits theauditfirm to provide that non-audit services are not at theAnnualShareholders’ Meetingandtax Inaccordance complianceservices. withtheGroup's policies regarding audit governanceandindependence Fees paidto PricewaterhouseCoopers relate forotherservices to treasury related market analysis andequity schemecommentary, agreed uponprocedures Audit Fees -Corporate Governance Net foreign currency exchange (gain)/loss Donations Loss ofplantandequipment ondisposal Provision forbadanddoubtfuldebts Other operating expenses include: 3.4 Otheroperating expenses Employee expense Equity settled share basedpayments expense Performance based compensation Directors' fees Wages andsalaries 3.3 Employeeexpense Lease andoccupancyexpense Other occupancycosts Operating lease costs 3.2 Lease andoccupancyexpense Other income Other Tenancy rents received 3.1 Otherincome 3.0 INCOME ANDEXPENSES For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialPerformance to team members. Details ofhowthese entitlements are calculated are foundinnotes 8.4and 14.0. The employee entitlements based compensation andshare expense performance based compensation includes wages andsalaries, paidoraccruing Employee expense the lease. under operating leases(netofanyincentivesreceived from thelessor) are charged to theincomestatement onastraight-line basis overtheperiodof Leases inwhichasignificantportionoftherisks and rewards ofownership are retained bythe lessor are classified asoperating leases. Payments made Lease expense the consideration received orreceivable, netofreturns, discounts andexcluding GST. isrecognisedtypical thesale whenthegoods are withonline sales, delivered. Retail revenue from ofgoodsisrecognised thesale at thefair valueof Retail are sales recognised at whenthecustomer thepointofsale receives thegoods orwhere deliveryofthegoods is notinstantaneous whichis Retail sales 48 520,892 493,514 164,375 127,346 37,029 26,249 3,348 8,325 4,977 4,977 1,369 $000 $000 $000 $000 $000 2019 2019 2019 2019 2019 520 420 709 709 677 677 281 90 90 64 64 89 67 67 490,610 524,673 125,295 159,587 33,010 34,292 4,002 $000 $000 $000 $000 $000 2018 2018 2018 2018 2018 4,116 8,118 1,174 700 700 660 803 366 663 663 353 (92) 90 90 53 53 Closing balance Supplementary dividendtax credit Transfer from cash flowhedge reserve Net taxation paid Current yearincometax payable Income tax expense Deferred taxation Current yearincometax payable Income tax expense comprises: Income tax expense attributable to continuingoperations Adjust forincometax expense attributable to losses from discontinued operations Income tax expense Income tax overprovided inprioryear Non deductibleexpenditure Share-based employeecompensation Closing balance ofsubsidiary Disposal Net charged to othercomprehensive income Charged/(credited) to theincomestatement Opening balance For the52weekperiodended29July2018 For the52weekperiodended28July2019 Balancesheetdeferred taxation 4.3 Taxation - The following table details themajordeferred incometax liabilities andassets recognised bytheGroup andthemovements duringthecurrent andprioryear. Opening balance 4.2 Taxation -Balancesheetcurrent taxation The following table details themovementinincometax receivable/(payable) duringthecurrent andprioryear. Goodwill impairment Adjusted forthetax effectof: Taxation calculated at 28% Profit before tax Loss before tax from discontinuedoperations Profit before tax from continuingoperations 4.1 Taxation -Incomestatement A reconciliation betweenthetax expense recognised intheincomestatement andtax expense calculated perthestatutory incometax rate is detailed below. 4.0 TAXATION For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialPerformance Closing balance Net charged to othercomprehensive income Charged/(credited) to theincomestatement Adjustment onadoptionofNZIFRS15 Opening balance sheet are stated netofGST withtheexception ofreceivables andpayables whichincludeGST invoiced. The incomestatement andstatement ofcash flowshave beenprepared sothat all components are stated exclusive of GST. All items inthebalance taxGoods andservices (GST) Current anddeferred tax balances attributable to amounts recognised inequity are similarly recognised inequity. reversal ofthetemporary differences anditis probable that thedifferences willnot reverse intheforeseeable future. between thecarryingamountandtax bases ofinvestments insubsidiaries andassociates where theparent entity is ableto control thetimingof will beavailable to utilise those temporary differences andlosses. Deferred tax liabilities andassets are not recognised for temporary differences Deferred tax assets are recognised fordeductibletemporary differences andunused tax losses onlyifitisprobable that future taxable amounts amounts ofdeductibleand taxable temporary differences to measure thedeferred tax asset orliability. liabilities are settled, based onthose tax rates whichare enacted orsubstantively enacted. Therelevant tax rates are appliedto thecumulative Deferred tax assets andliabilities are recognised fortemporary differences at the tax rates expected to apply whentheassets are recovered or the financialstatements. deferred tax assets andliabilities attributable to temporary differences betweenthe tax bases ofassets andliabilities andtheircarryingamounts in The incometax expense fortheperiod is thetax payable onthecurrent year’s taxable incomebased ontheincometax rate adjusted bychanges in Income taxation 1. NOTES TOFI THE TOOURSHAREHOLDERS

NANCIAL STATEMENTS NOTE 2. 4.1 4.1

GROUP MANAGEMENTREPORT OUR COMPANY NAMES BRAND (5,053) (6,586) (6,586) (6,586) $000 1,533 - - - - - INVENTORY (3,544) 12,530 15,387 15,387 11,843 2,857 $000 - - - - PROPERTY, PLANT SOFTWARE & EQUIPMENT 3. (1,634) 12,815 12,815

2,283 $000 2,431 11,181 ADDITIONAL INFORMATION 8,101 - - -

PROVISIONS EMPLOYEE NOTE NOTE 13,933 13,933 13,425 13,102 (508) $000 (122) 953 15.1 15.1 4.3 4.2 4.1 - - -

DERIVATIVES 49 (9,897) (4,391) (4,391) 5,506 4,806 (20,978) $000 94,064 26,540 20,978 (6,388) 25,835 25,835 25,578 91,350 26,621 (2,714) 415 4,857 $000 $000 2019 2019 (547) (162) (713) 786 738 275 275 - - - - 66 66 - OTHER 6,664 7,260 7,260 8,258 (704) (583) $000 (415) 108 - - (25,586) 20,636 TOTAL 42,880 (6,388) 12,006 25,586 (5,826) (5,262) (9,897) (4,857) 38,475 19,760 19,760 14,082 48,142 38,418 38,418 40,911 4,806 4,959 5,826 (296) $000 $000 1,563 (687) 2018 2018 $000 1,578 (170)

7,174

876 876 327 327 108

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Net profit from continuingoperations attributable to shareholders oftheparent Unusual items after taxation the share rights heldbytheGroup’s minority shareholders. material impact onthebasic EPS calculation, however, thiscouldchange inthefuture ifahigherconversion value is attributed to boththeputoptions and circumstances that woulddecrease thebasicEPS. Thedilutioncurrently attributed to theseshare rights andputoptionsisinsignificant does nothave a The Group’s share rights and related putoptions(refer note 14.0)are dilutive as theycreate afuture commitment fortheGroup to issue shares incertain Adjusted basic earnings pershare (cents) Basic earnings pershare from continuingoperations (cents) Basic earnings pershare (cents) Weighted average numberofordinary shares (netoftreasury stock) onissue (000s) Basic Adjusted netprofit ($000s) Net profit from continuingoperations attributable to shareholders oftheparent ($000s) Net profit attributable to shareholders oftheparent ($000s) Earnings pershare calculation 6.0 EARNINGSPERSHARE initiatives that are shown to have achieved theexpected outcomes. This phaseofthepartnership is scheduled to conclude inJanuary2020. retainer theGroup recognises anexpense forsuccess fees payableto themanagementconsultancy firmwhere theyhave beeninvolvedintransformation The Group haspartnered withamanagement consultancy firm to assist withthetransformation process andstrategy implementation. Inaddition to a (c) InJanuary2017, theGroup commencedatransformation programme to changeits business operating model, whichincludedshiftingThe Warehouse (b) TheGroup fully impaired theTorpedo7 brand assets associated withtheonline1-daybusiness ($5.478 million –refer note 9.2).IntheprioryearGroup (a) Thegroup entered agreement asale that becameunconditional inMay2019to sellsurplus landat its Auckland SupportOfficefor aconsideration of Unusual items Income tax relating to unusual items Unusual items before taxation Restructuring costs Brand andGoodwill impairment(Torpedo7) Gain onproperty disposals Add back:Unusualitems Adjusted netprofit Adjusted netprofit reconciliation 5.0 ADJUSTED NETPROFIT For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialPerformance business acquisitions or disposals and costsbusiness acquisitions ordisposals connected withrestructuring theGroup. Group defines unusualitems as anygains or losses from ofproperties thedisposal orinvestments, goodwillandbrand impairment,costs relating to net profit makes allowance forthe after tax effect ofunusual items which arenot directly connected withthe Group’s normal tradingactivities. The and considers itabetter TheGroup measure also uses itas thebasis ofunderlyingfordetermining business performance. dividendpayments. Adjusted Certain transactions canmake thecomparison ofprofits betweenyears difficult.The Group uses adjusted net profitas akeyindicator performance of EPS are similarly calculated using continuingandadjusted netprofit asthenumerator. shareholders bytheweighted average number ofordinary shares (netoftreasury shares) outstanding duringtheyear. Continuing andadjusted basic Earnings pershare (EPS)istheamountofpost tax profit attributable to each share. Basic EPS is calculated bydividingnetprofit attributable to by integrating theiroperating structures and executive leadership teams. synergy benefits. Italso involvedcombiningThe Warehouse and Warehouse Stationery andsimilarlycombiningtheNoel Leeming and Torpedo7 Groups drive efficiencies andincrease business agility. This involved strengthening andconsolidating thevarious functionsGroup support service todrive reduce costs andgenerate greater customer relevance. Thechangesfocused primarilyon simplification to reduce complexities, reduce working capital, away from a‘Hi-Lo’ pricingmodel to an‘EveryDayLow Price’ model.Thechanges have beendesigned to driveanimprovement infinancialperformance, impaired theTorpedo7 goodwill($25.622million). store development works foraconsideration of$12.036million, realising apre-tax profit of$0.218 million. will benolater thanApril2020.Theproperty intheprioryearrelated disposal to surplus landinAuckland andwas sold priorto the commencementof consideration ($11.050million refer note 8.2)oncethepurchaser hasobtained resource thenecessary consent forits proposed development works which $13.000 million representing apre-tax profit of$11.761 million. The Group received aninitialdepositof$1.950 million andwill receive thebalance ofthe 50 NOTE NOTE 5.0 9.2 345,229 (15,718) (9,435) 65,382 (6,793) (5,478) 74,103 74,103 67,310 67,310 2,642 11,761 $000 2019 2019 19.5 18.9 21.5

(25,622) 344,916 (34,135) (31,751) 59,015 59,015 22,878 27,264 27,264 (8,731) 2,384 $000 2018 2018 218 17.1 6.6 7.9 7.9 otherwise beliabletootherwise payonthose dividends, so theydonothave to pay"double tax". profits, to its shareholders whenitpaysdividends. These imputation credits offset theamountof taxation that theNew Zealand resident shareholders would payment oftheamountprovision forincometaxation. Imputation isamechanismthat acompanyuses to pass oncredits fortax ithas paidonits The aboveamounts represent thebalanceofGroup’s imputation credit accountat balancedate adjusted forimputation credits that willarise from the Imputation credits at balance date available forfuture distribution 7.3 Imputation credit account on theGroup's share register at theclose ofbusiness on22November2019. On 24September 2019theBoard declared afinalfullyimputed ordinary dividendof8.0cents pershare to bepaidon5December2019 to allshareholders 7.2 Dividendspolicyreconciliation All dividends paidwere fullyimputed. pay adividendto shareholders ofbetween75%and85%theRetail Group’s adjusted netprofit. The Board declares twodividends annually inrespect ofthehalfyear(interim dividend)andfullyearresults (finaldividend).TheGroup’s dividendpolicyis to Dividend policy 7.1 Dividendspaid 7.0 DIVIDENDS For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialPerformance and priorfinancialyears Total dividends paidanddeclared inrespect ofthecurrent Final dividend(declared after balancedate) Interim dividend Total dividendspaid Interim dividend Prior yearfinaldividend Pay-out ratio (%) Group adjusted netprofit 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY

NOTE 5.0 52,027 58,963 58,963 20,811 74,103 31,216 27,747 31,216 79.6% $000 2019 $000 2019 3.

ADDITIONAL INFORMATION 55,495 34,684 34,684 55,495 34,684 34,684 59,015 20,811 94.0% 20,811 $000 2018 $000 2018 CENTS PER SHARE CENTS PER SHARE 51 2019 2019 113,294 15.0 17.0 9.0 6.0 9.0 8.0 $000 2019 CENTS PER SHARE CENTS PER SHARE 117,178 2018 2018 $000 2018 10.0 16.0

10.0 16.0

6.0 6.0

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Trade andotherpayables Payroll accruals Interest accruals Reward schemes, lay-bys, Christmasclub deposits andgiftvouchers taxGoods andservices Capital expenditure creditors Goods intransit creditors Foreign currency trade creditors Local trade creditors andaccruals 8.3 Trade andotherpayables Prepayments Trade receivables 8.2 Trade andotherreceivables usually includea‘billoflading’)are received, andterms, assetoutinasupplier's letter ofcredit orinthesupplier's terms oftrade, are met. Goods intransit from overseas are recognised whentitleto thegoods ispassed to theGroup. Titleto thegoods ispassed whenvaliddocuments (which Goods intransit from overseas information from buyers aspartoftheprocess to determine theappropriate valueofthese provisions. errorsemployee theft,paperwork and supplier fraud. The Group considers awide range of factors includinghistorical data, current trends andproduct prices andexpected shrinkage rates betweenthemostrecent store stock counts and balancedate. Shrinkage is areduction ininventory dueto shoplifting, Assessing provisions forinventory obsolescence, netrealisable valueandshrinkage involves makingestimates andjudgements inrelation to future selling Significant judgements andestimates Inventory Goods intransit from overseas Retail stock Inventory adjustments Finished goods 8.1 Inventory 8.0 WORKING CAPITAL For the52weekperiodended28July2019 Notes to theFinancialStatements -Operating Assets andLiabilities Trade andotherreceivables Rebate accruals andotherdebtors Property proceeds disposal normally unsecured andare usually settled within60 to 120days ofrecognition. Dueto theshort term nature ofthese payables, theircarrying valueis Trade payables represent provided liabilities forgoods andservices to theGroup priorto theendoffinancial yearwhichare unpaid.Theamounts are collectability oftrade andotherreceivables is reviewed onanongoingbasis. based onthevalue oftheinvoicesent to thecustomer andadjusted forexpected credit losses to provide forfuture unrecovered debts. Theexpected suppliers’ payableaccounts. Trade receivables are non-interest bearing andare generally on30to 60 dayterms. Trade receivables are recognised Trade receivables arise from madeto sales customers oncredit orthrough thecollection ofrebates from suppliers deducted nototherwise from included incostofgoodssoldtheIncomeStatement. ordinary course ofbusiness less costs to necessary make Thecost ofinventories thesale. consumed duringtheyearare recognised as anexpense and incurred to purchase theinventory andtransport itto its current location. Netrealisable value is theestimated selling priceoftheinventory inthe Inventories are stated at thelowerofcost andnetrealisable value.Cost is calculated using aweighted average methodandincludes expenditure recognition offoreign currency trade creditors. terms have nowbeenextended whichmeans theinventory from overseas suppliers ispaidafter thegoods are received bythe Group and results inthe overseas suppliers uponthereceipt ofvalidshipping documentation whichwas priorto theinventory beingreceived inNewZealand. These payment The Group changedthe terms forpayments to overseas suppliers inNovember2018.TheGroup had previously paidforthepurchase ofinventory from assumed to approximate theirfair value. 52 NOTE 5.0 454,266 (23,968) 352,575 478,234 517,758 20,508 90,670 76,869 23,806 63,492 63,492 211,132 42,335 14,345 11,050 17,393 13,479 $000 $000 8,951 2019 2019 2,641 $000 2019 736 494,028 523,840 465,047 279,028 (28,981) 16,004 24,545 58,793 79,758 45,677 13,457 211,171 11,019 19,971 14,110 $000 $000 1,864 2018 2018 $000 2018 968 968 - - Total provisions Onerous lease Sales return provision Property, plantandequipment Less: Assets heldforsale Closing carryingamount Accumulated depreciation Cost Closing carryingamount Depreciation Disposals Additions Opening carryingamount Accumulated depreciation Cost 9.1 Property, plantandequipment 9.0 NONCURRENTASSETS completion ofindividualemployeeentitlementcalculations. hurdles linked against specified performance appraisals andcompanyperformance employeeto theGroup’s performance incentive schemes prior to the The calculation oftheGroup’s annual employee incentiveliability requires theGroup to use judgementto collectivelyestimate theoutcome ofindividual Significant judgements andestimates Make goodprovision Employee entitlements 8.4 Provisions For the52weekperiodended28July2019 Notes to theFinancialStatements -Operating Assets andLiabilities Statement. Costs incurred onrepairs and maintenance are charged to theincomestatement duringthefinancialperiodinwhich theyare incurred. Gains andlosseson disposals ofassets are determined bycomparingproceeds withthecarryingamount.Thesegains andlossesare includedintheIncome made to individual store profitability andany other known events orcircumstances that may indicate that thecarryingamountof an asset maybeimpaired. its recoverable amountiftheasset’s carryingamountis greater than its estimated recoverable amount.Inassessing whetheran asset is impaired, reference is The Group annually reviews thecarryingamounts ofproperty, plant andequipment forimpairment. Anasset’s carryingamountis written downimmediately to • Plant andequipment • Freehold land useful lifeofproperty, plant andequipmentare as follows: Property, plantandequipmentare depreciated onastraight line basis to allocate thecost, less anyresidual value,overtheiruseful life.Theestimated bringing theassets to thelocation fortheir intended andconditionnecessary use. equipment is thevalue oftheconsideration givento acquire theassets andthevalueofotherdirectly attributable costs, whichhave beenincurred in Property, plantandequipmentare measured at cost less accumulated depreciation andimpairmentlosses. Thecostofpurchased property, plantand represents theestimated return sales obligation at balancedate based onhistorical return sale rates. The Group provides various guarantees andwarranties to replace, repair orrefund customers forfaulty ordefectiveproducts sold. Thisprovision Sales return which mitigate thefinal liability prior to the lease expiry. value oftheexpected future make goodcommitment.Amounts charged to theprovision represent bothmake goodcosts incurred andcosts incurred The Group hasan obligation to restore certain leasehold sites to theiroriginal conditionwhenthelease expires. This provision represents thepresent Make goodprovision Zealand governmentbonds withterms to maturity that match, asclosely aspossible, theestimated future cash outflows. experience ofemployeedepartures Expected andperiods ofservice. future payments are discounted usingmarket yields at thereporting date onNew to bemadeinrespect provided ofservices byemployees upto thereporting date. Consideration isgivento expected future levels, wageandsalary The liability leave forlong service isrecognised intheprovision foremployeebenefits andmeasured as thepresent value of expected future payments (iii) Long leave service employee basedonachieving anagreed level ofindividualandcompanyperformance. The Group recognises aliability andexpense forincentives payable to employees where eitheracontractual orconstructive obligation arisesto payan (ii) Performance basedcompensation paid orpayable. to bepaidwhentheliabilitiesare settled. Liabilities fornon-accumulating sick leave are recognised whentheleave istaken andmeasured at therates the reporting date are recognised inprovisions inrespect upto ofemployees' services thereporting date andare measured at theamounts expected including non-monetaryLiabilities forwages andsalaries, benefits, annualleave andaccumulating sick leave expected to be settled within12months of (i)  Employee entitlements probable that anoutflowofeconomicbenefits willbe required to settletheobligation. A provision isrecognised if, as aresult ofapast event, theGroup hasapresent legal orconstructive obligation that canbeestimated reliably, anditis Wages annualleave andsalaries, andsickleave 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 3 -12years indefinite NOTE 2.2 2.2 LAND ANDBUILDINGS 2. (13,086) (11,840)

93,498 GROUP MANAGEMENTREPORT OUR COMPANY 80,412 80,412 80,412 (1,248) 91,018 79,178 3,594 3,594 (1,112) $000 2019 54,204 60,771 5,625 $000 2019 - CURRENT 942 942 - (10,650) • Work inprogress notdepreciated • Freehold buildings 50-100years (11,840) 15,003 (11,818) 87,833 (1,190) 91,018 79,178 79,178 79,178 77,183 $000 2018 - 62,427 67,422 3,724 $000 2018 1,017 PLANT ANDEQUIPMENT 254 254 (496,040) (520,497) 638,828 651,544 651,544 (49,123) 142,788 131,047 131,047 131,047 38,018 (636) $000 2019 - (496,040) NON-CURRENT 14,490 21,270 21,270 (447,871) 603,888 638,828 6,780 142,788 142,788 142,776 $000 156,017 2019 3. (51,178) 39,563 (1,614)

$000 2018 ADDITIONAL INFORMATION (12) - - WORK INPROGRESS (6,936) 16,638 16,638 9,702 9,702 9,702 9,702 $000 2019 20,552 13,636 6,916 $000 2018 ------20,019 20,019 16,638 16,638 16,638 16,638 (3,381) 53 $000 2018 - - - - - 68,694 82,041 5,625 $000 7,722 2019 (507,880) (533,583) 238,604 746,484 754,744 (50,371) TOTAL 34,676 221,161 221,161 221,161 (1,748) - $000 2019 TOTAL - (507,880) (458,521) 238,604 238,604 (52,368) 238,592 746,484 253,219 (13,432) 711,740 76,063 51,185 87,974 $000 2018 3,724 7,933 $000

2018

(12) 254 254

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Group fullyimpaired this asset. million), however thevaluation ofthesegment’s other“1-day” brand was significantly less thanthecarryingvalue($5.478 million)andas aconsequence the methodology using royalty rates derivedfrom comparable market data. Thebrand valuation forthe“Torpedo7” brand exceeded thecarryingvalue($2.545 assess thecarrying valuesofthesegment’s twobrand assets. Therecoverable amountofeachbrand was determined usinga relief from royalty valuation Impairment testing for theTorpedo7 performed cash generating unitat balancedate indicated apotential asset impairmentandcaused theGroup to 1-day brand Impairment goodwill andbrand assets were impaired. The annualimpairmenttesting fortheNoelLeeming andTheWarehouse cashgenerating units didnotindicate thecarryingamounts oftheattributed Key assumptions Closing carryingamount Brand names Goodwill Impairment testing extrapolate cash flowsbeyondthe5yearprojection periodare setoutinthe table below. brand assets (excluding theTorpedo7 brands) andtheallocation to cashgenerating units along withthekey assumptions used in theimpairmenttests to the lowest level withintheGroup at whichtheassets are monitored forinternal managementpurposes. Details ofthecarryingamounts ofgoodwilland The Group's goodwill andbrand assets are allocated to cash generating units andformthebasis forimpairmenttesting. Cash generating units represent align withtheaverage values assessed byaselection oftheGroup’s external equity research analysts. long term growth rates, integral to thevaluations. Inadeparture from prioryears theresults ofthesevaluations have beenfurtherrefined and scaled back to historical to performance formulate thefuture cashflowprojections. The Group also engages external advisors to determine appropriate discount rates and operating TheGroup considers performance. awiderange offactors includingtheGroup’s financialbudgets, strategic plans, external benchmarks and using the‘fair value less costs to sell’ method.This discounted cashflowvaluation method requires the use ofestimates andprojections regarding future future cash flowsare subjective and canbe significantly impacted bybusiness changes andeconomicconditions. The recoverable amounts are calculated Impairment testing requires bothjudgementandestimates to assess therecoverable amountoftheassets compared to thecarryingvalues. Estimates of Significant judgements andestimates -impairment testing In theprioryeargoodwill attributed to theTorpedo7 Group ($25.622million)was fullywritten off. Prior yearTorpedo7 Goodwillwrite-off Less: Assets heldforsale Closing carryingamount Impairment andaccumulated amortisation Cost Closing carryingamount Amortisation Impairment Disposals Additions Opening carryingamount Impairment andaccumulated amortisation Cost 9.2 Intangible assets For the52weekperiodended28July2019 Notes to theFinancialStatements -Operating Assets andLiabilities Post-tax discountrate (%) Terminal yeargrowth rate (%) Terminal yearEBIT margin (%) Intangible assets period ofbetweentwoto fifteen years. Costs incurred oncomputer software maintenance are expensed totheincome statement asthey areincurred. measured andare notintegral to arelated asset, are capitalised as intangible assets. Computer software is amortised ona straight line basis over a All costs directly incurred inthepurchase ordevelopment ofcomputer software orsubsequentupgrades andenhancements, whichcanbe reliably Computer software recoverable amount. carrying amountoftheasset maynotberecoverable. Animpairmentloss isrecognised fortheamount bywhichtheasset’s carryingamountexceeds its Assets that have anindefinite useful lifeare reviewed annually forimpairmentorwhenever events orchangesincircumstances indicate that the Impairment ofgoodwillandbrand names useful lives as theGroup have rights to use thesenames inperpetuity. Brand names acquired inabusiness combination are recognised at fair valueat theacquisition date. Brand names are considered to have indefinite Brand names liabilities andcontingentliabilities acquired. Goodwill arises ontheacquisitionofsubsidiaries andrepresents theexcess oftheconsideration paidabovethefair valueofthenetidentifiable assets, Goodwill 54 NOTE 15.2 2.2 2.2 (36,924) (36,924) 94,380 94,380 57,456 57,456 57,456 57,456 $000 2019 GOODWILL - - - - - (36,924) (25,622) (34,016) 117,094 94,380 83,078 57,456 57,456 57,456 $000 2018 - - - - 23,523 23,523 23,523 (5,478) (5,478) 18,045 18,045 18,045 BRAND NAMES $000 2019 - - - - - 23,523 23,523 23,523 23,523 23,523 23,523 $000 2018 ------15,500 NOEL LEEMING 47,276 31,776 $000 2019 9.3 1.5 5.1 COMPUTER SOFTWARE (92,300) (99,024) 149,035 (10,242) 126,689 34,389 50,011 50,011 50,011 (1,563) 27,427 $000 2019 - - 15,500 47,276 31,776 $000 2018 10.9 (105,033) (92,300) 3.1 1.7 126,689 20,805 133,178 34,389 34,389 34,352 (7,299) (7,262) 28,145 $000 2018 (37) - THE WAREHOUSE 25,680 25,680 (129,224) (141,426) 266,938 244,592 244,592 $000 2019 (10,242) 115,368 125,512 125,512 125,512 (5,478) (1,563) 27,427 8.5 1.5 $000 2019 7.1 7.1 - TOTAL - (139,049) (129,224) 244,592 244,592 (25,622) 273,795 134,746 20,805 115,368 115,368 115,331 (7,299) 25,680 25,680 (7,262) $000 2018 $000 2018 (37) 4.8 9.1 1.7 - Net interest expense from continuingoperations Less interest attributable to discontinued operations Net interest expense Interest onfixed rate seniorbond Interest onfinanceleases Interest onbankborrowings Net debt Total borrowings Non current borrowings Unamortised capitalised costs onseniorbondissuance Fair valueadjustment relating to senior bondinterest rate hedge Fixed rate seniorbond(coupon:5.30%) Lease liabilities Bank borrowings -interest rate: 2.74% Current borrowings $50.000 million(2018:$50.000million) to accommodate the increased fundingdemandsduringtheGroup’s peakfunding period. In additionto the$180.000million (2018:$210.000million)ofcommitted bank debtfacilities the Group has seasonal credit facilities (three months) of Interest ondeposits and use ofmoneyinterest received 10.2 Netinterest expense deemed alevel 1fair value measurement as itis derivedfrom aquoted price,inanactivemarket. the fair valueoftheGroup’s fixed rate senior bonds at balance date was $128.390million (2018:$129.211million). For accountingpurposes (NZIFRS13)thisis Based onthelast quoted closing priceof$1.02712 (2018:$1.03369)traded ontheNewZealand considers its long term fundingoptions before decidingtheamount,ifany, ofareplacement bondissuance. which have reduced theGroup’s debtrequirements. Thelowerdebtlevels will befactored into theGroup’s deliberations overthenext few months asit date. TheGroup has notyetdecidedifitwillreplace thebondwhenitmatures as anumberofworking capital initiatives were implemented duringtheyear December) basedona5.30%coupon.Thebondis classified asacurrent liability asitmatures inJune2020 whichis less than12months followingbalance The Group issued a5year fixed rate seniorbondontheNew Zealand Stock Fixed rate seniorbond balance date is always aSundaywhichmeansthethree previous day's store whichhave remain sales, uncleared beenpaidbyEFTPOS, at balance date. Cash onhand andat (electronic transactions whichhave funds transfer pointofsale) bank includesEFTPOS notbeencleared bythebank. TheGroup’s Cash onhandand at bank Unamortised capitalised costs onseniorbondissuance Fair valueadjustment relating to senior bondinterest rate hedge Fixed rate seniorbond(coupon:5.30%) Lease liabilities Bank borrowings at call-interest rate: 2.88% Cash onhandandat bank 10.1 Netdebt 10.0 BORROWINGS For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancingandCapital Structure Total unusedbankfacilities Unused letter ofcredit facilities Letters ofcredit Letters ofcredit facilities Unused bank debtfacilities Bank facilities used Bank debtfacilities 10.3 Bankfacilities for at least 12monthsafter thebalancedate. effective interest method.Borrowings are classified ascurrent liabilities unless the Group has anunconditional right todefer settlementoftheliability difference betweenthenetproceeds andthe redemption amountis recognised intheincome statement overtheperiodofborrowings using the Borrowings are initiallyrecognised at fair value,netoftransaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY E xchange inJune2015withinterest payable every six months (15Juneand15 S tock 3.

ADDITIONAL INFORMATION E xchange andamarket yieldof2.90%(2018:3.79%) NOTE 15.1 55 180,000 180,000 125,000 205,533 125,465 125,465 28,000 25,533 49,297 (2,467) 76,168 8,870 8,870 7,043 2,254 8,879 (436) (384) $000 $000 $000 2019 2019 2019 799 50 50 9 9 ------210,000 125,000 20,000 144,954 144,954 168,769 162,339 146,285 (63,715) 188,794 28,000 43,840 26,455 22,484 22,484 (5,516) (1,494) 43,715 3,968 3,968 7,043 9,547 9,547 (820) 9,165 $000 $000 $000 (382) 2018 2018 2018 723 125 30 30 51 51

- - -

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 to theshares are heldbythetrustees oftheemployeeshare plans, anddividends paid ontheshares are retained bythetrustee forthebenefitofGroup. winding upoftheGroup. TheGroup retains its ownordinary shares whichare used foremployee share based paymentarrangements. Voting rights attached Ordinary shares onissue are fully paidandcarryonevote pershare andparticipate equally individends, otherdistributionsfrom equity andanysurplus ona Closing balance Ordinary shares issued to settle share rights planobligations Opening balance Treasury shares Contributed equity Treasury shares Share capital 11.2 Contributed equity covenant ratios anadjustment is madeto exclude operations. thediscontinuedfinancialservices The Group was incompliancewiththenegative pledgecovenants throughout thecurrent andprevious financialyear. For thepurposes ofcalculating debt Retail Group book interest cover(timescover) Retail Group book gearing ratio (percentage) DEBT COVENANT RATIOS AT BALANCE DATE deeds are: year withtheimpactofthis newaccountingstandard outoftheratio carved calculations. Thetwoprincipal covenants, whichare forbothtrust thesame covenants. Theunderlyingbasis forthecalculation oftheseratios remains unchangedwhenthenewNZIFRS16lease accountingstandard isadopted next The trustdeeds provide aguarantee that theparent andits guaranteeing Group companies willcomplywithcertain quarterly debtratios andrestrictive Externally imposedcapital requirements expense willbeexcluded from ourinternal gearinganddebtcovenantcalculations. internal purposesandfortesting debtcovenantcompliancewithourexternal fundingproviders, thesenewlease liabilitiesandtheassociated interest significantly increase bookgearingas operating lease liabilitieswill be recorded onthebalance sheet. This new standard isnon-cash innature andfor The introduction ofthenewNZIFRS16leaseaccountingstandard (refer note 20.0),whichis effective fortheGroup from the2020financialyearwill transformation projects. between 20%to 40%.Current gearinglevels are tracking belowthis bandas theGroup buildscapacity inadvanceofexpected future investment inplanned (debt) versus shareholders (equity) andis comfortable to maintain gearinglevels (except fortheGroup’s first quarter peak fundingperiod) at levels of The Group monitors gearingwhichisameasure ofacompany’s financialleverage and shows the extent to whichits operations are fundedbylenders adjusted netprofit back to shareholders (refer note 7.0). shares, ofassets debtissuance, sale oracombination ofthese.TheGroup's current dividendpolicyis basedondistributingbetween75%to 85%ofthe Group regularly reviews its capital structure andmaymake adjustments bymeans including changes to theGroup’s dividendpay-outratio, issue ofnew Group’s ability to continueas agoingconcern,to provide anappropriate rate ofreturn to shareholders andto optimise theGroup’s cost ofcapital. The Capital is definedbythe Group to bethe total equity as shown inthebalance sheet. TheGroup’s capital management objectivesare safeguardto the 11.1 Capital management 11.0 EQUITY For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancingandCapital Structure received, netofanydirectly attributable incremental transaction costs, is includedinequity attributable to shareholders. is deducted from equity attributable to theshareholders until theshares are cancelled orreissued. Where such shares are reissued, anyconsideration Where theGroup purchases its ownequity share capital (treasury shares), theconsideration paid,includinganydirectly attributable incremental costs proceeds oftheshare issue. Ordinary shares are classified as equity. Incremental costs, directly attributable to theissue ofnew shares, are shown inequity as adeductionfrom the 56 will notbeless than2timesoperating profit 50% ineachoftheremaining three quarters oftheyear will notexceed 60%inthefirst quarter endingOctober or exceed QUARTERLY COVENANT REQUIREMENT NOTE 14.0 CONTRIBUTED EQUITY TREASURY SHARES 360,061 365,517 (5,456) 6,060 5,456 (604) $000 2019 $000 2019 359,457 365,517 (6,060) 6,060 (1,411) $000 2018 $000 2018 7,471 ORDINARY SHARES ORDINARY SHARES 346,843 345,286 (1,557) 2019 000 (236) 2019 1,793 1,557 000 2019 13.7 12.7 s s 345,050 346,843 (1,793) 2,346 2018 2018 (553) 000 2018 1,793 000 25.6 9.8 s s Total reserves Share basedpayments reserve Foreign currency translation reserve Hedge reserves (2018: nil)shareholding andassociated share rights inTheWarehouse Group Investments (Digital Retail venture). At balance date theGroup's minority interest represents a50.0% (2018:50.0%)minority shareholding heldinWaikato Valley Chocolates anda5.3% Closing balance Dividends paidto minority shareholders Share rights vested Share rights charged to theincomestatement Net profit attributable to minority interest Opening balance 11.4 Minority interest detailed innote 12.2). statement overtheeffective periodoftheoriginalinterest rate swaps.(Refer to theconsolidated statement ofchanges inequity andaccountingpolicies in prioryears whichresulted ina numberofinterest rate swaps beingmonetised.Thecost to close theinterest rate swaps isrecognised intheincome The de-designated derivative reserve isusedto record theafter tax mark to market losses realised from realigning theGroup’s interest rate hedgeportfolio De-designated derivative reserve and accountingpoliciesdetailed innote 12.2). nature hedgeditem ofthehedge,is included ina non-financial whenthehedged event occurs. (Refer to theconsolidated statement ofchangesinequity deferred gainorloss onthehedgeis recognised intheincomestatement whenthehedgedtransaction impacts theincomestatement, ordependingon the This reserve records theportionofgainorloss onahedgingderivative inacash flowhedgethat is determined to beaneffective hedge.Thecumulative Cash flowhedgereserve De-designated derivative reserve Cash flowhedge reserve 11.3 Reserves For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancingandCapital Structure shareholder, withanydifference inthevalue attributed to settling thecommitmenttransferred to retained earnings. interest reserve relating to theshare rights is offset against theproportionate share ofthenet asset valueofthe subsidiary acquired bytheminority the vestingperiodwithacorresponding increase intheminority interest reserve. Uponvesting oftheseshare rights, thebalance oftheminority The fair valueofshare rights granted inasubsidiary are measured at grant date andrecognised as anemployeeshare based paymentexpense over share basedpaymentexpense. (Note 14.0provides furtherdetails regarding theplan). also includes theaccumulated value ofunvested shares rights intheminority subsidiarywhichhave beengranted andrecognised as anemployee over decisions.Minority interests are measured based ontheminority shareholders proportionate share ofthenetasset valueofthesubsidiary and A minority interest isanownership positioninaGroup subsidiary where theshareholder ownsless than 50%ofoutstanding shares andhas nocontrol Minority interest reserve of changes inequity). settle theobligation, withanydifference inthecostof settling thecommitmenttransferred to retained earnings. (Refer to theconsolidated statement statement. Uponthevestingofshare rights, thebalanceofreserve relating to theshare rights is offset against thecost oftreasury stock allotted to This reserve was used to record theaccumulated value oftheunvested shares rights, whichhave beenrecognised as anexpense intheincome conditions uponwhichtheywere granted. (Note 14.0provides furtherdetails regarding theplan). equity. Thefair valueat grant date oftheshare rights were independently determined usinga valuation model that madeallowance fortheterms and under theplanwere measured at grant date andrecognised as anemployeeexpense overthevestingperiodwithacorresponding increase in Share rights were granted to employees inaccordance withtheGroup’s discontinued executive share rights plan.Thefair valueofshare rights granted Share basedpayments reserve separate reserve withinequity. Thecumulative amount isreclassified to theincome statement whenthenetinvestment is sold. Exchange differences arising ontranslation oftheGroup's subsidiary inIndiaare recognised inothercomprehensive incomeandaccumulated in a Foreign currency translation 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION 57 (1,230) (1,067) (1,216) $000 2019 $000 2019 (179) (471) (163) 879 879 357 357 133 719 14 14 -

11,292 11,472 (230) 10,711 $000 2018 $000 2018 (581) 242 879 879 867 867 766 (5)

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INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 measurements as theyare not derived from aquoted price inanactive market but rather, avaluation technique that relies market on otherobservable data. on theapplicable market interest yield rates at balancedate. For accountingpurposes (NZIFRS13)these valuations are deemedto beLevel 2fair value the forward exchange market rates at thebalance date andinterest rate swaps are calculated asthepresent valueofestimated future cash flowsbased fair value the Group usesvaluation techniques whichrely market onobservable data. Thefair valueofforward exchange contracts are determined using The Group’s derivatives are nottraded inanactivemarket whichmeans quoted prices are notavailable to determine thefair value. To determine the Significant judgements andestimates Total derivative financialinstruments Fair valuehedges Cash flowhedges Classified as: Total derivative financialinstruments Non-current liabilities Current liabilities Non-current assets Current assets 12.2 Derivative financialinstruments instruments andinvestingexcess cash. management, as wellaswritten policies coveringspecific areas, such as mitigating foreign exchange, interest rate andcredit risks, use ofderivative financial identifies, evaluates andhedges financial risks inclose co-operation withthe Group’s operating units. TheBoard provides written principlesforoverall risk Risk managementis carriedoutbyacentral treasury department(Group Treasury) underpolicies approved bytheBoard ofDirectors. Group Treasury currency fluctuation risks arisingfrom the Group’s sources offinanceandforeign currency purchases. The Group enters into derivative transactions, principally interest rate swaps andforward currency contracts. Thepurposeisto manage theinterest rate and financial performance. Group’s overall risk managementprogramme focuses ontheuncertainty offinancial markets andseeks to minimise potential adverse effects onthe Group’s The Group’s activities expose itto various financialrisks including,liquidity risk, credit risk andmarket risk (including currency risk andinterest rate risk). The 12.1 Financialriskfactors 12.0 FINANCIALRISKMANAGEMENT For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialRiskManagement statement, together withanychangesinthefair valueofthehedgedasset orliability that are attributed to thehedgedrisk. Ifthehedgenolonger currency trade creditors. Changes inthefair valueofderivatives that are designated andqualify as fair value hedges are recorded intheincome The Group applies fair value hedgeaccountingforhedgingfixed interest onborrowings andmanagingthecurrency risk associated withforeign Fair valuehedge income statement. When aforecast transaction is nolongerexpected to occur, the cumulative gainorloss that was reported inequity isimmediately transferred to the loss existing inequity at that timeremains inequity andis recognised whentheforecast transaction isultimately recognised intheincomestatement. When ahedginginstrument expires oris sold orterminated, orwhenahedge nolonger meets thecriteria forhedgeaccounting, any cumulative gainor of theinitial cost orcarryingamountoftheasset orliability. financial asset (for example, inventory), thegains andlosses previously deferred inequity are transferred from equity andincludedinthemeasurement the forecast interest paymentthat ishedgedtakes place).However, whentheforecast transaction that is hedgedresults intherecognition ofanon- Amounts accumulated inequity are recycled intheIncomeStatement intheperiods whenthehedgeditem willaffectprofit orloss (forinstance when statement. is recognised inequity inthecash flowhedge Thegainorloss reserve. relating to theineffective portion is recognised immediately intheincome inventory inforeign currencies. Theeffective portionofchanges inthe fair value ofderivatives that are designated and qualifyas cash flowhedges The Group applies cashflow hedgeaccountingforhedgingvariable interest onborrowings andmanagingthecurrency risk associated withpurchasing Cash flowhedge in fair values orcash flows ofhedgeditems. documented, ofwhetherthederivatives that are used inhedgingtransactions have beenandwill continueto behighlyeffectiveinoffsetting changes management objectiveandstrategy forundertaking thehedgetransactions. Anassessment, bothat hedgeinceptionandonanongoingbasis is also The Group documents at theinceptionoftransaction therelationship betweenhedginginstruments andhedged items, as well as its risk • Fair valuehedges whentheyhedgetheexposure to changes infair valueofarecognised asset orliability. • Cash flowhedgeswhen they hedgean exposure to ahighlyprobable forecast transaction; or the item beinghedged.For thepurposesofhedgeaccounting,hedgesare classified as: The methodofrecognising theresulting gainorloss depends onwhetherthederivative is designated asahedginginstrument, andifso, thenature of Derivatives are initially recognised at fair value onthedate aderivative contract is entered into andare subsequently remeasured to theirfair value. hedge accounting are recognised immediately intheincomestatement. Certain derivative instruments donotqualifyforhedgeaccounting.Changesinthefair valueofany derivative instrument that doesnotqualifyfor Derivatives that donotqualifyforhedgeaccounting immediately intheincomestatement as eitheraninterest expense orforeign exchange gainorloss basedonthenature ofthehedgedrisk. meets thecriteria forhedgeaccounting,ortheis notfullyeffective, thenthehedgeorportionofwhich is noteffectiveis recognised 58 CURRENCY CONTRACTS (939) $000 5,518 2019 6,132 6,132 7,071 614 614 - - 19,030 19,030 19,030 19,030 $000 2018 - - - - INTEREST RATE SWAPS (7,055) (7,055) (6,178) (6,178) $000 2019 877 877 877 - - (2,630) (2,630) (3,394) (3,394) $000 2018 764 764 - - (7,055) (1,537) 7,948 (939) $000 2019 1,491 (46) (46) TOTAL - 16,400 16,400 19,030 (3,394) 15,636 $000 2018 764 764 - Net derivatives Interest rate swaps - inflow - outflow Forward currency contracts Financial liabilities Fixed rate seniorbond Finance lease liabilities Bank borrowings Trade andotherpayables Contractual maturity analysis industry oreconomicsector. Group’s total credit exposure. As theGroup transacts with adiversity ofcounterparties itdoesnothave any significant exposure to anyindividualcustomers, in economic,industryorgeographical factors similarly affect thegroup ofcounterparties whoseaggregate credit exposure is significant in relation tothe balances are monitored onanongoingbasis to ensure theGroup’s baddebtexposure isnotsignificant. Concentrations ofcredit risk exist whenchanges The Group controls its credit risk from trade andotherreceivables bytheapplication ofcredit approval, limits andmonitoring procedures. Receivable A (2018:A). with specifiedtreasury policy limits. TheGroup’s treasury policy requires bank counter-parties to have aminimumStandard & Poor’s credit rating of at least The Group places its cash andshort-term investments andderivatives withhighcredit quality financial institutions approved bydirectors andinaccordance financial institutions. amount ofthese assets. Inthe normal course ofbusiness theGroup incurs credit risk from trade andotherreceivables, derivatives andtransactions with Credit risk arises from the financial assets ofthe Group which are exposed to potential counter-party default, with a maximum exposure equal to the carrying 12.4 Credit risk balance date. amountsthe “inflow” represent thecorresponding receipt offoreign currency arising from settlement ofthecontracts, converted using the spot rate at currency contracts “outflow” amounts disclosed inthe table represent thegross amountpayable bythe Group forthepurchase offoreign currency, whereas the contractual maturity date. Thecash flowamounts disclosed inthe table represent undiscounted cash flows liablefor payment bythe Group. Theforward The table below analyses theGroup’s financialliabilities andderivatives into relevant maturity bands, based onthe remaining periodfrom balancedate to ahead ofthebondmaturity theGroup is maintaining additionalbank facility headroom (refer note 10.0). the maturity ofthefixed rate senior bondinJune 2020buthas notyetdetermined its preferred fundingsolution. To ensure theGroup has fundingflexibility reduction indebtoffset byacorresponding increase inoverseas trade creditors. TheGroup is currently reviewing its funding requirements andmixahead of The Group improved its workingcapital positionduringtheyearbyincreasing thepaymentterms ofoverseas creditors whichresulted inasignificant permitted gearingcovenants increase duringthis periodfrom 50%to 60%(refer note 11.1)to accommodate fortheeffect of seasonal funding. the buildupofinventory, conversely theGroup’s liquidity positionisat its strongest immediately after theChristmas trading period.TheGroup’s maximum The Group’s liquidity positionfluctuates throughout theyear. Themonths leading up to Christmas typically have thegreatest demandforcash flowsdue to when theyarise. Liquidity risk arisesfrom financial liabilities oftheGroup andthe Group’s subsequent ability to meettheobligation to repay thesefinancial liabilities as and 12.3 Liquidity risk For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialRiskManagement 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS (483,399) (373,386) (352,575) (130,774) 380,582 2.

GROUP MANAGEMENTREPORT OUR COMPANY 7,578 $000 2019 0 -1 YEARS (50) 382 - (369,225) (352,259) (282,601) 388,622 (63,715) (5,808) 19,189 (208) $000 2018 (135) (5,831) (5,831) $000 2019 1 -3YEARS ------(138,250) (138,425) (2,153) (2,153) $000 2018 3. (175)

ADDITIONAL INFORMATION - - - - (1,004) (1,004) $000 2019 > 3YEARS ------(500) (500) $000 2018 59 (4) (4) - - - - - (483,399) (373,386) (352,575) (130,774) 380,582 (6,453) $000 2019 (50) 743 743 TOTAL - (490,688) (369,225) (144,058) (282,601) 388,622 (63,715) 16,536 (2,861)

$000 2018 (314)

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Total increase/(decrease) Forward currency contracts -cashflow hedges Derivative financialinstruments At 29July2018 Total increase/(decrease) Interest rate swaps -fair valuehedges Interest rate swaps -cash flowhedges Derivative financialinstruments Fixed rate seniorbond Cash onhandandat bank Finance business receivables At 29July 2018 At 28July2019 Interest rate sensitivity table movements onafter tax profit andequity, withallothervariables heldconstant. The following sensitivity table, based oninterest rate risk exposures inexistence at balancedate shows theeffect of reasonably possible interest rate interest rates. TheGroup uses fixed rate debtandinterest rate swaps to managethefixed interest rate pricingand profile. policy is to maintain between50%to 90%ofcore borrowings at fixed rates. At balance date77% (2018:65%)oftheGroup’s core borrowings were at fixed treasury managementpurposes. TheGroup’s treasury policyisto manageits financecosts usingamixoffixed andfloating rate debt.The Group’s treasury The Group’s exposure to market interest rates primarilyrelates to theRetail Group’s core borrowings estimated to be$150million(2018:$200million)for Interest rate risk has beenassumed theywillbe100%hedgeeffective. There is noprofit andloss sensitivity, as theforward currency contracts have beendesignated as cash flowhedges andbased onhistorical performance it At 28July2019 Foreign currency sensitivity table exchange rate movements onafter tax profit andequity, with all othervariables heldconstant. The following sensitivity table, based onforeign currency contracts inexistence at balancedate, showsthepositive/(negative) effect of reasonably possible to determine themark-to-market carryingvalue oftheUSdollar forward contracts at balancedate was$0.6631 (2018:$0.6795). The Group didnotholdanyforeign exchange derivatives witha maturity exceeding 1yearat eitherthecurrent orlast year's balancedate. Thespotrate used Buy USdollars/Sell NewZealand dollars Forward exchange contracts Currency positionat balancedate • where foreign currency hedgingextends beyonda12monthtimehorizon,thisrequires specificapproval • where exposures to othercurrencies arise, theGroup hedges theserisks onceafirmcommitmentis inplace • to hedge0%to 85%offorecast USdollar commitments expected inthenext 7to 12months • to hedge40%to 100%offorecast USdollar commitments expected inthenext 0to 6months policy to managethis foreign exchange risk. Thepolicy parameters forhedgingforecast currency exposures are: probable forecast purchases andare timedto mature whenthepayments are scheduled to besettled.Managementworkto aboard approved treasury to managetheinventory costingprocess, theGroup enters into forward exchange contracts to purchase foreign currencies. These contracts hedgehighly The Group purchases inventory directly from overseas suppliers, primarilypricedinUSdollars. Inorder to protect againstexchange rate movements and Foreign exchange risk 12.5 Market risk For the52weekperiodended28July2019 Notes to theFinancialStatements -FinancialRiskManagement Total increase/(decrease) Total increase/(decrease) Interest rate swaps -fair valuehedges Interest rate swaps -cash flowhedges Derivative financialinstruments Fixed rate seniorbond Cash onhandandat bank Forward currency contracts -fair value hedges Forward currency contracts -cashflow hedges Derivative financialinstruments Foreign currency trade creditors 60 $000 2019 6,132 CARRYING VALUE

19,030 $000 2018 NOTIONAL AMOUNT(NZD) NOTE NOTE 373,386 15.2 12.2 12.2 12.2 12.2 10.1 10.1 10.1 10.1 12.1 12.1 12.1 8.3 $000 2019 AMOUNT AMOUNT (124,903) (125,415) (76,869) (37,260) (7,055) 19,030 (3,394) 369,225 49,297 $000 $000 5,518 7,381 $000 764 2018 877 877 614 614 + 100 BASIS POINTS PROFIT PROFIT EXCHANGE RATE (5,013) 0.6759 CENTS + 10 PERCENT 5,031 (268) (358) $000 $000 (107) 2019 (371) 355 463 463 358 108 108 AVERAGE 371 371 53 53 18 18 - - -

EQUITY EQUITY (19,639) (25,196) (25,196) (19,657) CENTS 0.7153 (5,013) 2018 2,367 5,031 2,012 2,012 (268) (358) $000 $000 1,797 (371) 355 358 371 371 53 53 PERCENTAGE - 100 BASIS POINTS PROFIT PROFIT 0 TO 12MONTH (6,150) HEDGE LEVEL - 10 PERCENT 2019 (355) (463) $000 $000 (432) 6,128 (108) (108) 64.8 (541) (53) 268 268 432 (22) 107 107 541 541 - - - PERCENTAGE EQUITY EQUITY 24,009 (2,066) 30,796 30,796 (6,150) (2,106) 24,031 (2,461)

(1,851) (355) $000 $000 (432) 6,128 2018 (541) 65.4 (53) 268 268 432 541 541 in theGroup ofequivalentvalue(using thevolumeweighted average market priceoftheGroup’s shares). required to purchase theTWGI shares at apricebased onthefair value oftheshares at that time,inconsideration forproviding theparticipantwithordinary shares during the3years followingMarch 2021 orwithin3months ofcertain ‘good leaver’ events, suchas death orincapacity. Iftheputoptionis exercised, theGroup is share transfer to fundtheparticipants tax obligations arising undertheplan; and afurtherputoptionovertheparticipants entire TWGI shareholding, exercisable Under theplanGroup also granted participants putoptions overaproportion oftheirTranche 2andTranche 3TWGI shares, exercisable within4weeks ofthe 16% minority shareholding inTWGI. independently valuedat $5.00pershare whentheywere granted inJune2019 and iftheentitlements are fullyvested would provide theparticipants withupto a number ofshares inMarch 2020 (Tranche 2)andMarch 2021(Tranche 3),subject to certain conditions,whichinclude continuedemployment. Theshare rights were (TWGI). As partoftheshare planparticipants were collectively transferred 53,333TWGI shares inJune2019(Tranche 1),andare entitledto receive thesame Share rights were incentiveto provided as aperformance key executives intheGroup’s Digital Retail start-up venture, TheWarehouse Group Investments Limited Digital Retail share rights plan in October 2018were valuedat $2.16and$0.81,respectively at thetimetheywere granted. the Group achieved aspecified total shareholder return onthevesting date. The award shares whichvested share whichwere andtheperformance forfeited targets.performance Performance shares provided participants withaconditionalrightto betransferred ordinary shares at theendofvestingperiodif Award shares provided participants withaconditionalrightto be allocated andtransferred ordinary shares uponachieving certain companyand individual share overthe3yearvestingperiodwas notmet. shares) vested shares andthelast tranche (392,000 ofperformance shares) were forfeited as thetotal shareholder return target performance of$0.78per ratherperformance Thelegacyshare thanshare rightplanconcludedinOctober priceperformance. 2018whenthelast tranche ofaward shares (236,000 subsequently replaced byathree yearcashbased incentiveplan inNovember2016.Inthis revised planemployee valuecreation was linked to company The Groups legacyshare basedexecutive incentiveplanceasedinOctober 2015whenthelast twotranches ofshare rights were granted. Theplan was Executive share rights plan 14.0 SHARE-BASED LONG TERMINCENTIVEPLANS (LTIP) Total Termination benefits Equity settled share-based compensation (refer note: 14.0) based cashsettled compensationThree year performance based compensation Annual performance Base salary Key management both received $8,000 asadditionalfees as directors oftheGroup’s subsidiaries. discontinuedFinancial Services In 2019 JohnJourneereceived anadditionalfeeof$16,500asadirector oftheGroup’s Digital Retail subsidiary. IntheprioryearKRSmithandJHOgden Total Sir Stephen Tindall V CMStoddart (retired November2017) J MRaue J HOgden(retired November2017) J WMJournee W KEaston (appointed October 2018) A JBalfour K RSmith(Deputy Chair) J Withers (Chair) Directors’ Fees Compensation madeto Directors andothermembers ofkey managementoftheGroup isset outinthetwotables below: Markets Conduct Act2013,beingtheGroup ChiefExecutive Officerandhis 9(2018:8)direct reports. Key management includes theDirectors oftheCompany andthoseemployees deemedto have disclosure obligations undersubpart 6oftheFinancial 13.0 KEYMANAGEMENT For the52weekperiodended28July2019 Notes to theFinancialStatements -OtherDisclosures 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION 61 12,282 2,492 7,433 $000 $000 2,195 2019 2019 709 709 166 107 107 162 115 65 65 86 86 85 85 85 - - - 11,240 2,944 2,944 $000 $000 1,389 2018 2018 6,101 700 700 666 140 166 115 86 86 39 86 85 85 85 38 38

-

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Other liabilitiesdirectly associated withassets heldforsale Total assets classifiedasheld forsale Other assets Computer software Property, plantandequipment Finance business receivables Group15.2 FinancialServices assets classifiedasheldforsale Net cash flowsfrom financingactivities Net cash flowsfrom investing activities Net cash flowsfrom operating activities Cash flowsfrom discontinuedoperations Loss from discontinuedoperations Income tax credit Loss before tax Interest expense Loss before interest andtax Gain/(Loss) onbusiness disposal Expenses Finance business revenue Group15.1 FinancialServices results andcashflows The full yearresults andcash flows from Group theFinancialServices are as follows. a furtheryear through to December2019. expired inDecember2018butas partofthetransitional obligations contained intheNPA theGroup isrequired to continueto provide franchise for services The remaining Diners Club (NZ)merchant acquisition business is part ofanetwork participation agreement (NPA) withDiners ClubInternational. TheNPA claim periodwhichexpires inOctober 2019andinline withindustry practice thevalue ofanyclaim is cappedat thevalue oftheconsideration received. card issuing business andthefinance receivables were sold inApril2019for$1.850million sale is subject realising againof$0.398million.The to awarranty The Diners Club(NZ)business was subsequently splitbetweenthemerchant acquisition business andthecard issuance business. Abuyerwas foundforthe million inAugust 2018. level ofimpairmentprovisions includedinthecarryingvalue ofthefinance receivables whichwere sold. Aclaimfor recovery was madeandsettledfor$1.421 the carryingvalueofbusiness assets at was subject to Thesale thetimeofsale. a9monthclaw back provision to recover baddebts whichexceeded the The Group soldits business (excluding FinancialServices Diners Club(NZ))inSeptember 2017foraconsideration of$17.291 million whichwasequivalentto 15.0 DISCONTINUED OPERATIONS For the52weekperiodended28July2019 Notes to theFinancialStatements -OtherDisclosures assets are notdepreciated oramortised whiletheyaresale. classified as heldfor subsequent increase infair valueless cost to sell ofanasset, butnotmore than anycumulative impairmentloss previously recognised. Non-current An impairmentloss isrecognised for anyinitial orsubsequent write downoftheasset to fair value less costs to sell. Againis recognised forany tax assets, assets arising from employeebenefits andfinancial assets which are specifically exempt fromthis requirement. is considereduse andasale highly probable. Theyare measured at theloweroftheircarryingamountandfair valueless costs to sell, except fordeferred A group ofassets aresale iftheircarryingamountwill be classified as held for recovered principally throughsale transaction a rather than continuing discontinued operations are presented separately as asingle amountintheIncomeStatement. A discontinuedoperation is acomponentoftheGroup that represents a separate majorline ofbusiness that plan.The results is partofadisposal of 62 NOTE 10.2 4.1 (4,383) (3,327) (2,723) (1,928) (2,714) $000 $000 2019 2019 2,461 1,262 398 429 786 9 ------(28,753) (4,880) (4,386) (3,886) (5,262) (8,188) 16,957 5,069 (1,421) 7,560 4,729 $000 $000 (382) 2018 2018 7,381 876 876 130 37 12 12 to dividends. (iv) Key management(asdetailed innote 13.0)collectively held333,586shares (2018:263,166 shares) at balancedate whichcarrythenormal entitlement oftheCompaniesof section 148(2) Act1993. Details ofthesetransactions canbefoundaspartofthestatutory disclosures intheannualreport. (iii) Share transactions undertaken bytheDirectors duringtheyearandDirectors non-beneficial shareholdings are required to bedisclosed in respect entitlement to dividends. (ii) TheGroup's otherDirectors collectively hadbeneficialshareholdings of198,964 shares (2018:198,964 shares) at balancedate whichcarrythenormal to million(2018:$14.990million)were received dividends.Dividends of$14.054 onthese shares duringtheyear. (i) SirStephen Tindall(Director) hasabeneficial shareholding of 93,687,096 shares (2018: 93,687,096 shares) whichcarrythenormalentitlement Shareholdings No amounts owedbyrelated parties have beenwritten off orforgiven duringtheperiod. During theperiodGroup has notentered into anymaterial contracts involvingrelated parties orDirectors' interests whichare notdisclosed. 18.0 RELATED PARTIES Contingent liabilitiesconnected to oftheGroup's thesale businesses are FinancialServices detailed innote 15.0. Total contingentliabilities Bank guarantees provided to landlords andtheNew Zealand Stock Exchange Limited Less includedas agoodsintransit creditor Bank letters ofcredit issued to secure future purchasing requirements 17.0 CONTINGENT LIABILITIES Within oneyear Capital commitments Capital expenditure contracted forat balancedate, butnotrecognised as liabilities,is set outbelow: Operating leases 5+ years 2-5 years 1-2 years 0-1 years Future minimumrentals payable cancellable operating leases at balancedate are asfollows: escalation clauses andrenewal rights. Onrenewal, theterms oftheleases are renegotiated. Commitments forminimumlease payments inrelation to non- The Group's non-cancellable operating leases mainly relate to buildingoccupancyleases andtypically expire within ten years. Theleaseshave varyingterms, Operating leases 16.0 COMMITMENTS For the52weekperiodended28July2019 Notes to theFinancialStatements -OtherDisclosures 1. NOTES TOFI THE TOOURSHAREHOLDERS NANCIAL STATEMENTS 2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION 63 240,375 108,034 661,508 185,957 127,142 2,254 2,467 2,710 $000 $000 $000 2019 2019 2019 1,452 (213) 456

249,550 234,207 107,531 121,473 712,761 5,584 2,783

5,516 $000 $000 $000 4,941 (575) 2018 2018 2018

643

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 lease renewals. calculated inaccordance withNZ IAS17whichare calculated usingnon-cancellableleaseterms, undiscounted cashflowsanddonotallow for expected The leaseliabilities calculated inaccordance withNZIFRS 16at transition are higherthanthedisclosedlease commitments of $661.508 million(refer note 16.0) renewals underleasearrangements change. lease contracts are entered into bythe Group, changesare made to existing lease contracts andmanagement’s judgements regarding exercising rights of The estimated potential financialadjustments are expected to bedifferent from next year’s actual resultasthe transition calculations are further refined,new leasetermthe includingpotential rights ofrenewals.• incrementalthe borrowing rate • used to discountleaseassets andliabilities; determining: shareholders isexpected to belessthan $1million.To calculate theseestimates managementwasrequired to make variouskey judgements whichincluded amortisation expenses (approximately $91million) andincrease interest expenses (approximately $40million).Theoverall impactonnetprofit attributable to The impactontheincomestatement fornext leasesisexpected yearbasedonthesame to decrease occupancyexpenses (approximately $130million),increase • Decrease inopeningretained earningsofapproximately $113million. • Recognitionofaleaseliability ofapproximately $986million;and • Recognitionofadeferred taxation assetofapproximately million; $44 • Recognitionofarightuseassetapproximately $829 million; Group’s estimate ofthebalancesheetimpactat thedate oftransition ofadoptingNZIFRS16basedon theGroup’s current operating leasesisdetailed below. using the‘modified retrospective approach’ expedient isthat itdoesnotpermittheGroup to restate comparative amounts fortheperiods prior to adoption.The The newstandard provides achoice oftransition methods.TheGroup hasdecidedto useasimplifiedtransition approach to adoptNZIFRS16.Theproblem with nature andwillnot impacttheGroup’s cashflowsitwillhave amaterial impactontheGroup’s reported financial position. evaluating practical expedient andaccountingpolicyelections,assessingtheoverall financialstatement impact.WhiletheimpactofNZIFR16isnon-cashin The Group hasbeenevaluating andplanningfortheadoption implementation ofNZIFRS16whichincludedsettingupanewleaseaccountingsystem, The incomestatement isimpacted bytherecognition ofinterest anddepreciation expenses andtheremoval ofthecurrent rental expense. exemption forshortterm leasesandoflowvalueassets whichtheGroup haselected to apply. the Group, asalessee to recognise aleaseliability reflecting future leasepayments anda‘right-of-useasset’ forvirtually allleasecontracts. There isanoptional accounting modelforleasesrequires adistinctionbetweenfinancelease(onbalancesheet)andanoperating lease(offbalancesheet).NZIFRS16 requires NZ IFRS16,‘Leases’, replaces thecurrent guidanceinNZIAS17andwillbeadopted bytheGroup next yearcommencingfrom 29July2019.Thecurrent NZ IFRS16:Leases 20.0 NEWACCOUNTING STANDARDS -EFFECTIVENEXTYEAR Thischangeresultedfull valueofthesale. inareduction inbothrevenue ($8.666million) but didnotchangethereported andthecostofsales gross profit. Revenue from ofthird thesale party warranties wasreduced inthecurrent year to record thenetwarranty commissionduefrom thesuppliers rather thanthe to reflect supplier recoveries arisingfrom predicted customersales returns whichhadpreviously beennettedsales againstthe return provision inprioryears. related to thetreatment ofwarranty revenue sales intheincomestatement. Receivablesandthesales return provision were bothgrossed up($1.818million) There were alsotworeclassifications whicharose from theadoptionofNZIFRS15,one related sales to the return provision inthebalancesheetandsecond Reclassifications in thetimingofrevenue recognition arisingfrom theadoptionofNZIFRS15whichresulted inanadjustmentto openingretained earningsof$0.275 million. measurement andclassification of revenue recognised. TheGroup hasassessedthe implications ofthesematters andconcludedthat there wasasmalldeferral the goods.Anotherconsideration iswhetherarranging foronlinesales thedeliveryofgoodsisaseparate obligation performance that impacts thetiming, must bemadeinthesearrangements whethercontrol hastransferred to thecustomer, even thoughthecustomer doesnothave physicalpossessionof The Group's onlinetransactions provide customers withtheoptionfordirect deliveryorcollectionofgoodsfrom thestore. UnderNZIFRS15,anassessment Accounting foronlinesales impact ontheGroup. satisfied sale, withlessthan10%earnedthroughat thepointof sales. Accountingforonline sales wastheonlyarea online identifiedaspotentially having a profit arising from thenewaccountingstandard. Themajority oftheGroup's revenue ismadeupofinstore transactions obligations where performance are generally The Group assessedthepotential impactofNZIFRS15whichinvolvedsegregating thedifferent revenue streams w

64

account thestructure oftheGroup, theaccountingprocesses andcontrols, andtheindustry inwhichtheGroup operates. We tailored thescope ofourauditinorder to sufficient work perform toenable us to provide anopiniononthefinancial statements asawhole, taking into bias that represented arisk ofmaterial misstatement dueto fraud. we also addressed therisk ofmanagementoverrideinternal controls includingamongothermatters, consideration ofwhetherthere wasevidence of We designed ourauditbyassessing therisks ofmaterial misstatement inthefinancial statements andour application ofmateriality. As inall ofouraudits, Audit scope and extent ofourauditprocedures and to evaluate theeffectofmisstatements, bothindividually andinaggregate onthefinancial statements asawhole. statements as awhole as set outabove. These, together withqualitative considerations, helpedus to determine thescope ofouraudit,thenature, timing Based onourprofessional judgement,wedetermined certain quantitative thresholds formateriality, including theoverall Group materiality forthefinancial The scope ofouraudit was influencedbyourapplication ofmateriality. Materiality Overview OUR AUDIT APPROACH hasnotimpairedthese otherservices ourindependenceasauditor oftheGroup. within theordinary course oftrading activitiesoftheGroup. Theserelationships have notimpaired ourindependenceasauditor oftheGroup. Theprovision of the AnnualShareholders’ Meetingandtax Inaddition,certain complianceservices. partners andemployeesofourfirmmaydealwiththeGroup onnormal terms Our firmcarriesoutotherservices fortheGroup intheareas oftreasury related market analysisandequity schemecommentary, agreed uponprocedures at Accountants by theNewZealand AuditingandAssurance Standards Board andtheInternational EthicsStandards Board forAccountants’ We are independentoftheGroup inaccordance withProfessional andEthicalStandard 1(Revised) We believe that theauditevidence wehave obtained issufficientandappropriate to provide abasisforouropinion. responsibilities underthosestandards are furtherdescribed inthe We conducted ourauditinaccordance withInternational Standards onAuditing(NewZealand) (ISAs(NZ))andInternational Standards onAuditing(ISAs).Our BASIS FOR OPINION (IFRS). in accordance withNewZealand Equivalents to International Financial ReportingStandards (NZIFRS)andInternational FinancialReportingStandards in all material respects, thefinancialpositionofGroup as at 28July2019,its and financialperformance its cash flows forthe52week periodthenended In ouropinion,theaccompanyingfinancial statements ofThe Warehouse Group Limited (the Company), includingits subsidiaries (the Group), present fairly, OUR OPINION • thenotes to thefinancial statements, whichinclude significant accountingpolicies. • theconsolidated statement ofcash flowsforthe52weekperiodthenended;and • theconsolidated statement ofchangesinequity forthe52week periodthenended; • theconsolidated statement ofcomprehensive incomeforthe52weekperiodthenended; • theconsolidated incomestatement forthe52weekperiodthenended; • theconsolidated balance sheet as at 28July 2019; We have audited thefinancial statements whichcomprise: To theshareholders ofTheWarehouse Group Limited Independent Auditor’s Report Audit scope INDEPENDENT AUDITOR’SREPORT 1. TOOURSHAREHOLDERS Materiality Key audit Key audit (IESBA Code), andwehave fulfilledourotherethical responsibilities inaccordance withthese requirements. matters • Valuation ofinventory We have determined that there is onekey auditmatter: most commonly measured byusers. We chosethisas thebenchmark because, inourview, oftheGroup is itisthebenchmark against whichtheperformance adjusted forthegainonproperty brand disposals, impairmentand restructuring costs. Overall Group materiality: $5.1 million, whichrepresents approximately 5%ofprofit before tax from continuingoperations, An auditis designed to obtain reasonable assurance whetherthefinancial statements are free from material misstatement. 2.

GROUP MANAGEMENTREPORT OUR COMPANY Auditor’s responsibilities fortheauditoffinancialstatements Code ofEthicsforAssurance Practitioners 3.

ADDITIONAL INFORMATION Code ofEthicsforProfessional 65 sectionofourreport.

(PES1)issued

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 provide aseparate opiniononthese matters. period. These matters were addressed inthecontext ofourauditthefinancialstatements asawhole, and informingouropinionthereon, andwedonot Key auditmatters are those matters that, inourprofessional judgement,were ofmostsignificance inourauditofthefinancial statements ofthe52week Key auditmatters To theshareholders ofTheWarehouse Group Limited Independent Auditor’s Report determining theinventory provision. inventory andthejudgements andestimates applied bymanagementin Note 8.1ofthefinancial statements describes theaccountingpolicy on area offocus fortheaudit. involved inestimating theinventory provisions, weconsidered thisas an Because ofthesignificanceinventory balance andthejudgements accordance withsupplier agreement terms. finished goods and recognised intheconsolidated income statement in Provision forrebates from suppliers are also recorded against the cost of adjustments. expectations offuture levels sales andestimation ofselling price level ofprovisioning involvesjudgements includingmanagement’s trends andproduct information from buyers. Determining theappropriate determined based onvarious factors inculdinghistorical data, current measure finished goods at the lower ofcost and net valueisrealisable The inventory provision whichrepresents adeductionfrom costto transport itto its current location. method andincludes expenditure incurred to purchase theinventory and The cost offinished goods is calculated using aweighted average Inventory ismeasured at thelower cost ornetrealisable value. $24.0 million (2018:$29.0million). $478.2 million (2018: $494.0 million)exclusive ofinventory provisions of As at balancedate, theGroup’s finished goodsinventory amounted to Valuation ofinventory KEY AUDIT MATTER 66 •  •  •  •  Our procedures overinventory provisions included: •  •  Our auditprocedures overinventory cost included: HOW OUR AUDIT ADDRESSEDTHEKEYAUDIT MATTER From theprocedures wehave performed, nomatters to report. •  •  •  changes. and obtaining andvalidating therationale formaterial orunexpected as apercentage ofthegross carryingamountversus theprioryear supplier agreement andtheinventory levels held at balance date. relating to inventory bycomparing therebate recorded against the appropriate basedonreview ofagedstock and netrealisable value. items, andconsidering whethertheadditionalprovisions were for certain inventory categories, such as discontinued andclearance Group policy. whether provisions were recorded foragedstock inaccordance with the assumptions usedto estimate inventory provisions. confirm that agedandclearance items were identifiedandaccounted for. management’sObserving stocktake process at selected locations to freight invoices. thecalculation. basis, byreperforming sample Testing basis, onasample Holding discussions withmanagementto understand andcorroborate Reviewing theinventory ageingschedules to basis, check,onasample Validating thecostofinventory, basis, to onasample supplier and Testing theaccuracy oftheweighted average cost calculation, ona Comparing all inventory provisions foreachfinished goodscategory Testing basis, theaccountingtreatment onasample ofsupplier rebates Obtaining anunderstanding ofspecific inventory provisions calculated • • that finished goodsare valued at lower ofcostornet value. realisable finished goods againstthemost recent retail price less cost to sell; and the netrealisable valueoffinished goods bycomparingthecostof 24 September 2019 Chartered Accountants, Auckland For andonbehalfof: The engagementpartnerontheauditresulting inthisindependentauditor’s report Crooke. isLisa anyone otherthantheCompany andtheCompany’s shareholders, asabody, forourauditwork,thisreport orfortheopinionswehave formed. required to state to theminanauditor’s report andfornootherpurpose. To thefullestextent permitted bylaw, wedonotacceptorassumeresponsibility to This report ismadesolelyto theCompany’s shareholders, asabody. Ourauditworkhasbeenundertaken sothat wemightstate thosematters whichweare WHO WEREPORT TO benefits of such communication. communicated intheauditor’s report because theadverse consequences ofdoingso wouldreasonably beexpected to outweighthepublic interest regulation precludes publicdisclosure aboutthematter orwhen,inextremely rare circumstances, theauditor determines that amatter shouldnotbe statements ofthecurrent periodandare therefore thekey auditmatters. Theauditor describes these matters intheauditor’s report unless law or From thematters communicated withtheDirectors, theauditor determines thosematters that were ofmost significance intheauditoffinancial related safeguards. communicate withthemallrelationships and othermatters that mayreasonably bethoughtto bearontheauditor’s independence,andwhere applicable, The auditor also provides theDirectors withastatement that theauditor hascomplied with relevant ethicalrequirements regarding independence,and to including anysignificantdeficiencies ininternal control that theauditor identifies duringtheaudit. The auditor communicates withtheDirectors regarding, amongothermatters, theplannedscopeandtimingofauditsignificant auditfindings, •  •  •  •  •  •  The auditor also: As partofanauditinaccordance withISAs (NZ),theauditor exercises professional judgementandmaintains professional scepticism throughout theaudit. on thebasis ofthesefinancial statements. error andare considered material if, individually orintheaggregate, theycould reasonably beexpected to influence theeconomicdecisions ofusers taken an auditconducted inaccordance withISAs (NZ)andISAs will always detect amaterial misstatement whenitexists. Misstatements canarise from fraud or to fraud orerror, andto issue anauditor’s report that includes ouropinion.Reasonable assurance is ahighlevel ofassurance, butis notaguarantee that Our objectives are to obtain reasonable assurance aboutwhetherthefinancialstatements, asawhole,are free from material misstatement, whetherdue AUDITOR’S RESPONSIBILITIESFOR THEAUDIT OFTHEFINANCIALSTATEMENTS operations, orhave norealistic alternative butto doso. matters related to goingconcernandusing thegoingconcernbasis ofaccountingunless theDirectors eitherintend to liquidate theGroup orto cease In preparing thefinancial statements, theDirectors are responsible forassessing theGroup’s ability to continueas agoingconcern,disclosing, as applicable, misstatement, whetherdueto fraud orerror. and IFRS,forsuchinternal control as theDirectors determine to is necessary enablethepreparation offinancialstatements that are free from material The Directors are responsible, onbehalfoftheCompany, forthepreparation andfair presentation ofthefinancialstatements inaccordance withNZIFRS RESPONSIBILITIES OFTHEDIRECTORS FOR THEFINANCIALSTATEMENTS material misstatement ofthis otherinformation, weare required to report that fact. We have nothingto report inthis regard. If, basedonthework wehave ontheotherinformation performed that weobtained priorto thedate ofthis auditor’s report, weconclude that there is a information ismaterially inconsistent withthefinancial statements orourknowledgeobtained appears intheaudit,orotherwise to bematerially misstated. In connectionwithourauditofthefinancialstatements, our responsibility is to read theotherinformation and,indoingso,consider whethertheother report andwedonotexpress anyformofassurance conclusionontheotherinformation. The Directors are responsible fortheannual report. Ouropinion onthefinancial statements does notcovertheotherinformation includedintheannual INFORMATION OTHER THANTHEFINANCIALSTATEMENTS ANDAUDITOR’S REPORT To theshareholders ofTheWarehouse Group Limited Independent Auditor’s Report solely responsible fortheauditopinion. opinion onthefinancial statements. Theauditor ofthe Group is audit. Theauditorresponsible forthedirection, andperformance supervision remains represent theunderlyingtransactions andevents in amanner that achieves fair presentation. going concern. audit evidence obtained upto thedate oftheauditor’s report. However, future events orconditionsmaycause theGroup to cease to continueas a disclosures inthefinancialstatements or, if such disclosures are inadequate, to modifytheauditor’s opinion.Theauditor’s conclusions are based onthe concern. Iftheauditor concludes that amaterial uncertainty exists, theauditor is required to draw attention intheauditor’s report to therelated whether amaterial uncertainty exists related to events orconditions that maycast significant doubtonthe Group’s ability to continue as agoing management. for thepurposeofexpressing anopinionontheeffectiveness oftheGroup’s internal control. Obtains sufficient appropriate audit evidence regarding thefinancial information oftheentities or business activitieswithinthe Group to express an Evaluates theoverall presentation, structure andcontent ofthefinancialstatements, includingthedisclosures, andwhetherthefinancial statements Concludes ontheappropriateness oftheuse ofthegoingconcernbasis ofaccountingbytheDirectors and,based ontheauditevidence obtained, Evaluates theappropriateness ofaccountingpolicies usedand thereasonableness ofaccounting estimates andrelated disclosures made by Obtains anunderstanding ofinternal control relevant to theauditinorder to design audit procedures that are appropriate inthecircumstances, butnot omissions, misrepresentations, ortheoverrideofinternal control. not detecting amaterial misstatement resulting from fraud ishigherthanforoneresulting from error, as fraud mayinvolvecollusion, forgery, intentional procedures responsive to those risks, andobtains auditevidence that is sufficient andappropriate to provide abasis forthe auditor’s opinion.Therisk of Identifies andassesses therisks ofmaterial misstatement ofthefinancial statements, whetherdue to fraud orerror, audit designs andperforms INDEPENDENT AUDITOR’SREPORT 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION

67

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 DIVIDEND DISTRIBUTIONS Store footprint(square metres) NOEL LEEMING Store footprint(square metres) WAREHOUSE STATIONERY Store footprint (square metres) THE WAREHOUSE Adjusted netprofit Net interest expense Earnings before interest andtax Intangible asset impairment Restructuring costs Gain/(losses) from business acquisition Gain onbusiness disposals Digital Retail venture Torpedo7 Noel Leeming Warehouse Stationery The Warehouse Retail sales Inter-segment eliminations Other group operations Torpedo7 Noel Leeming Warehouse Stationery The Warehouse SUMMARY INCOME STATEMENTS Annual 5Year Summary Basic adjusted earnings pershare (cents) Basic earnings pershare (cents) Ordinary dividendsdeclared (cents pershare) Final (cents pershare) Interim (cents pershare) Number ofstores Same store growth sales (%) Operating margin (%) Number ofstores Same store growth sales (%) Operating margin (%) Number ofstores Same store growth sales (%) Operating margin (%) Discontinued operations (netoftax) Minority interests Income tax relating to unusual items Unusual items (detailed above) ADJUSTED PROFIT RECONCILIATION Profit attributable to shareholders Minority interests Profit after tax Income tax expense Profit before tax Equity earningsofassociate Retail operating profit Other group operations Discontinued operations (netoftax) 68 (52 WEEKS) 1,705,687 3,071,357 924,648 268,592 268,592 102,943 501,537 (14,446) (26,621) 172,474 70,550 94,064 (15,718) 112,378 (5,996) 85,075 80,273 65,382 (8,552) (2,642) (8,879) (5,478) (7,027) 67,443 38,103 16,669 74,103 (1,928) 8,508 9,435 11,761 2019 1,928 (133) $000 18.9 17.0 21.5 9.0 5.0 8.0 6.2 2.8 70 93 1.5 4.1 1.4 77 77 - -

(52 WEEKS) 1,695,839 2,994,571 505,645 (20,636) 880,453 263,766 (25,622) 163,402 (18,544) 76,055 10,590 (4,386) 27,506 (2,384) 57,307 59,015 (19,171) 22,878 71,440 (9,165) 91,442 34,135 48,142 (1,447) (8,731) 31,163 (1,133) 71,491 9,655 4,386 (242) 2018 (6.0) (3.0) $000 10.0 16.0 218 6.0 4.0 17.1 6.6 3.5 4.2 5.7 70 93 74 74 - - -

(52 WEEKS) 2,980,771 1,738,751 (50,283) (12,060) 810,705 501,807 (23,691) (14,376) 107,232 107,837 (12,527) 157,726 (13,195) 50,283 20,429 94,705 94,705 278,181 68,185 19,264 84,531 (3,132) 73,591 73,216 15,743 71,014 11,455 8,603 2,675 (302) 2017 (0.3) $000 10.0 605 16.0 19.8 6.0 5.9 6.4 4.9 2.4 5.7 69 69 92 1.2 77 77 - - - - -

(52 WEEKS) 2,924,179 (25,890) 1,741,831 499,547 148,660 128,046 279,155 (11,602) 752,137 88,002 (16,158) (14,154) 113,892 (5,526) 12,050 89,376 89,376 78,338 (7,929) 10,625 13,998 (4,138) (2,163) 69,157 111,165 14,288 71,927 71,927 71,169 3,380 5,526 5,533 3,614 2016 $000 16.0 22.7 20.1 14.2 723 11.0 5.0 6.5 66 66 92 1.6 5.1 5.1 4.1 75 75 - - -

(52 WEEKS) 1,702,955 2,770,421 665,628 262,780 497,702 79,600 (12,491) (21,148) (15,123) (8,806) 70,999 88,093 59,208 70,445 (5,555) (2,074) 72,970 72,970 93,226 131,231 16,633 51,822 51,310 12,723 (1,170) 2,802 5,533 6,424 2,074 7,935 2015 1,562 (977) (941) $000 16.0 15.2 11.0 17.2 5.0 4.8 4.7 1.0 1.0 65 65 34 34 92 1.4 1.4 78 78 - -

Capex/depreciation (times) Return onfundsemployed(%) Net debt/netdebtplus equity (%) Net debt/EBITDA (times) Fixed charge cover(times) Interest cover(times) Operating margin (%) FINANCIAL RATIOS Closing debt Opening debt Net cashflow Other items Acquisition ofsubsidiaries andminorities Employee share schemes Net dividends paid Dividend from associate Proceeds from divestments Capital expenditure Operating cashflow Loss ofplantand equipment onsale Discontinued EBITDA Restructuring costs Supplier contributions Share basedpaymentexpense Net interest paid Income tax paid Change intrade working capital Continuing Operating EBITDA Continuing depreciation andamortisation Continuing operating profit SUMMARY CASH FLOW Sources offunds Minority interest Equity attributable to shareholders Net debt Capital employed Derivative financialinstruments Goodwill andbrand names Contingent anddeferred consideration Taxation (liabilities)/assets Funds employed Investments Held forsale Fixed assets Working capital Creditors andprovisions Trade andotherreceivables Inventories SUMMARY BALANCE SHEETS ANNUAL 5 YEAR SUMMARY 1. TOOURSHAREHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY (434,616) (162,339) (26,540) 444,984 444,984 (52,264) 558,201 558,201 (61,326) (76,168) 197,993 517,758 90,670 481,314 172,991 (15,718) 173,812 112,378 271,172 (8,657) 60,613 75,501 77,249 37,762 76,168 (1,942) (3,121) 86,171 3,710 1,369 2019 $000 23.5 420 (46) 13.6 12.7 719 0.5 2.2 3.7 1.0 ------

(367,002) (162,339) 523,840 479,405 (218,271) (70,229) 236,596 642,623 642,623 (55,785) 272,944 272,944 (14,082) 162,339 32,030 151,072 107,914 513,214 59,630 59,630 80,979 (9,307) 74,680 16,400 (3,459) (2,694) (5,853) 55,932 79,758 91,442 (8,731) 3,674 (648) 2018 $000 10.0 25.3 16.9 353 879 879 615 615 2.0 3.1 1.2 1.1 - - - - -

3.

ADDITIONAL INFORMATION (299,980) (336,451) 704,660 704,660 273,300 (218,271) (16,008) (52,466) (70,575) 226,455 485,522 (27,454) 128,088 106,601 (19,265) 487,274 571,454 (12,397) 107,837 166,213 (1,000) (6,686) 218,271 45,870 45,870 58,376 75,632 81,709 71,699 (2,148) 79,714 21,661 1,283 1,476 2017 $000 31.0 867 867 17.4 2.0 8.6 3.6 96 1.4 1.1 - - - - (299,980) (299,573) (347,073) 69 299,980 305,264 (28,037) 669,937 162,460 510,429 150,624 (74,367) 810,576 810,576 (75,180) (16,495) (28,619) (58,162) 312,396 169,375 501,713 129,315 (1,000) 40,943 45,870 45,870 (2,528) (1,930) 58,210 52,277 35,198 111,165 (1,195) 3,208 2,695 (407) 2016 $000 37.0 1,141 16.7 167 167 3.8 7.9 7.9 1.8 1.2 2.1 - - -

(220,878) (299,573) (109,345) 540,060 (315,565) (20,043) (59,640) 386,709 (35,343) (78,695) 120,092 670,744 670,744 (22,398) 299,573 150,996 (18,662) 841,543 841,543 841,543 510,461 281,257 (3,250) 76,469 35,358 (2,455) 93,226 57,770 18,599 86,361 31,120 5,565 2,778 (366) (929) 2015 1,910 2,114 $000 35.6 15.0 691 2.0 2.0 6.3 3.4 2.1

- - -

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 responsibilities contained intheCharter include: Charter isreviewed as required andat least every twoyears. TheBoard’s and is available intheCorporate Governance section ofthewebsite. The will achieve its purpose. TheCharter was last approved inMarch 2018 The Board hasadopted aBoard Charter whichsets out howtheBoard shareholders. primary objectiveto create andcontinueto buildsustainable valuefor to oversee theCompany’s management andbusiness activities withthe appoint theCompany's Group ChiefExecutive Officer (Group CEO) and The central role oftheBoard is to setthestrategic direction, to selectand Responsibilities oftheBoard skills, knowledge, experience and perspectives.” “To ensure aneffective Board, there should beabalanceofindependence, BOARD COMPOSITION ANDPERFORMANCE which is available ontheCompany’s intranet. and timingofblack-out periods issetoutintheSecurities Trading Policy securities byDirectors, employees and otherassociated persons. Thepolicy regulations. TheSecurities Trading Policy governs trading intheCompany’s all ofits stakeholders andto ensuringadherence to all applicable laws and The Company is committed to transparency andfairness indealingwith Securities Trading Policy on theCorporate Governancesectionofthewebsite. the inductionandtraining process ofnewemployees. TheCode is available specific circumstances. Anintroduction to the Code ofEthicsforms partof remedies, all to theextent permitted bylaw andas appropriate giventhe disciplinary action,removal from as well as other officeanddismissal procedures foranybreaches. Sanctionsforbreaches mayincludeserious business goalsandlegal obligations, andoutlines internal reporting conduct that isconsistent withtheCompany’s values andbehaviours, contractors andotheragents. TheCode ofEthics provides aguideto the everyone working at TheWarehouse Group includingDirectors, ourpeople, The Code ofEthics sets outthestandards ofconductexpected of Code ofEthics behaviour anddecision-making. integrity andethicalconductacross theorganisation inday-to-day reputation as atrusted andrespected companythat promotes honesty, behaviour andgoodconduct.We believe thisisat theheart ofhaving a The Company is committed to fostering thehighest standards ofethical standards beingfollowedthroughout theorganisation.” behaviour, and hold managementaccountable fordelivering these “Directors should set ahigh standard ofethicalbehaviour, model this CODE OFETHICAL BEHAVIOUR www.thewarehousegroup.co.nz/investor-centre/corporate-governance policies referred to inthis statement are available to viewat The Company’s constitution, theBoard andcommittee charters, codes and 2019 andis current as at that date. This governance statement was approved bytheBoard on24September considers its governancepractices are compliantwiththeNZX Code. As at thedate ofthepublication ofthisAnnualReport,theCompany follows thestructure ofthenewCode andaddresses its recommendations. which replaced theBest Practice Code from October 2017. This statement We support theNZXCorporate Governance Code 2017 (theNZXCode), corporate governanceare followed. in placethroughout theCompany that ensure best-practice standards of This statement ofthepolicies andprocesses givesanoverview that are within thewidercommunity. relationships withteam members, improving theexperience weofferourcustomers andcontributing to ourplace and believe itisacriticalcomponentincreating sustainable long-term valueforourshareholders, buildingstrong At TheWarehouse Group Limited (theCompany) weare committed to highstandards ofcorporate governance Governance Report 70

•  •  •  •  •  •  •  •  •  •  •  •  •  •  •  •  it puts forward will enabletheBoard to: anddesirablenecessary competencies that will ensure that any candidate as andwhentheyarise.Indoingso theCommittee will seek to identifythe nominating, for the approval of the Board, candidates to fill Board vacancies Committee is delegated withtheresponsibility ofidentifyingand the Company’s constitution. TheCorporate Governance andNominations Procedures fortheappointment andremoval ofDirectors are governedby Director Appointments personnot bethesame whois theCompany’s Chief Executive Officer. The Warehouse Group Limited charter states theCompany’s Chairmust •  •  •  •  •  •  •  •  responsibilities include: 2016. Mrs Withers is anindependent,non-executive director. Mrs Withers’ Joan Withers is ChairofTheWarehouse Board andwas first appointed in Chair can befoundintheRemuneration sectiononpages 79-81. its delegated to duties andforperformance beassessed. More information implemented appropriate procedures to enable management to undertake management team indeliveringtheCompany’s strategy. TheBoard has approved bytheBoard. TheGroup CEO is assisted bytheexecutive by theGroup CEO inaccordance with thestrategy, plans anddelegations Day-to-day management andadministration oftheCompany is undertaken •  •  and and/or industry experience and diversity ofbackgrounds andthought); and betweentheBoard andManagement; Directors; are addressed; changing needsoftheCompany. objectives, andmeasure achievement against theobjectives; and in placeincluding standards ofethicalbehaviour; Company; contractors andvisitors; environment is provided andmaintained forallemployees, customers, being used; and retention oftheexternal auditor; including thepaymentofdividends; approve his orherremuneration; the senior executive team; Company’s objectives; ensure theCompany hasappropriate corporate governancestructures promote and authorise ethical andresponsible decision-making bythe ensure, so far asisreasonably practicable, andhealthy working asafe approve timelyandbalancedcommunication to shareholders; ensure that effective risk managementprocedures are inplace and are subject to shareholder approval beinggranted, approve theappointment monitor thefinancial solvency ofthe Company; approve and monitor financial reporting andcapital management set criteria for, andevaluate of, theperformance theGroup CEO and appoint andremove theGroup CEO andoversee succession plans for ensure there are adequate resources available to meetthe monitor Management’s withinthose frameworks; performance set strategic direction andappropriate operating frameworks; competently address accounting,finance and legal matters. represent avariety ofskills, expertise, experience (including commercial fulfil its responsibilities; chairing Board andshareholder meetings. promoting consultative andrespectful relations betweenBoard members facilitating theeffective contributionandongoingdevelopment ofall briefing all Directors in relation to issues arising at Board meetings; facilitating Board discussions to ensure core issues facing theCompany monitoring annually; Board performance ensuring theefficient organisation andconductoftheBoard; providing leadership to theBoard andto theCompany; ensure that theBoard is andremains appropriately skilled to meetthe annually review, approve andadopttheDiversity Policy anddiversity

Will Easton Julia Raue John Journee Antony (Tony) Balfour Keith Smith Sir Stephen Tindall Joan Withers DIRECTOR NAME OF alternate director. Robert (Robbie)Tindallhasacted andwillcontinueto actasSirStephen’s leave ofabsenceandthishasbeenapproved bytheBoard. Duringthistime until October 2019.SirStephen hasdecidedto take afurther12months October 2017untilOctober 2018, whichwasextended forafurtherperiod Sir Stephen Tindallwasgranted aninitialleave ofabsencefrom theBoard in judgement regardless oflengthservice. Board considers that Directors retain independenceofcharacter and with theDirector’s ability to actinthebest interests oftheCompany. The period whichcould,orcouldreasonably beperceived to, materially interfere The Board doesnotbelieve that anyDirector ontheBoard hasserved fora last elected ordeemedelected. Directors to retire are thosewhohave beenlongest inofficesincetheywere may offerthemselvesfor re-election at theannualmeetingofshareholders. multiple ofthree thenthenearest numberto three, shallretire from officeand five and10.Eachyear, onethird oftheDirectors, oriftheirnumberisnota The Constitution provides that thesizeofBoard shouldbebetween Board Tenure Company’s expense. duties andresponsibilities, to seek independentprofessional adviceat the Directors andBoard committees have theright,inconnectionwiththeir regular Institute ofDirector (IOD)courses. study tours andsite-visits. Directors are activelyencouraged to attend speakers onrelevant industry andcompetitiveissues, occasionaloverseas On-going training includes briefings by senior managementandguest businesses andstrategy. induction programme to familiarise themselves withtheCompany’s When appointed to theBoard, allnewDirectors undergo adetailed Director inductionandDevelopment contained onpages 22and23. are detailed onpages20and21.Acomprehensive matrix ofDirector skills is strategic directions. Qualifications and experience ofindividualDirectors and experience appropriate to theCompany’s existing operations and The current Board comprises Directors withamixofqualifications, skills Board structure, composition skillsand brought against themas Directors. in accordance withTheCompanies Actforcertain claims whichmaybe In addition,theCompany indemnifies andprovides insurance to Directors centre/coporate-governance. Governance section ofthewebsite at remuneration. Acopyofthestandard letter is available intheCorporate (subject to shareholder approval), expectations oftherole and appointment whichdetails theDirector’s duties, term ofappointment The terms andconditionsofappointmentare set outina letter of Governance Report GOVERNANCE REPORT 1.

TOOURSHAREHOLDERS 3 October 2018 23 September 2016 17 October 2013 15 October 2012 10 June1994 10 June1994 23 September 2016 APPOINTED ORIGINALLY thewarehousegroup.co.nz/investor- 7+years 3-6years 0-3years Tenure 23 November2018 25 November2016 25 November2016 20 November2015 24 November2017 24 November2017 25 November2016 ELECTED LAST REAPPOINTED/ 2.

GROUP MANAGEMENTREPORT OUR COMPANY

NZX Corporate GovernanceCode 2017. The Company has takeover protocols that meettherequirements ofthe Takeover OfferProtocols are reviewed as required andat leastevery twoyears. Corporate Governancesectionofthewebsite. Going forward charters authority andoperations ofthecommittee andcanbefoundinthe All committees operate underformalcharters whichdefinethe role, Committee Charters The current committee structure is set outinthetable below. Current Committees statement, theCompany has nootherad hoccommittees. committees to examine specificissues onits behalf. As at thedate ofthis requiring Board decisions. From time-to-time, theBoard maycreate adhoc The committees report to the full Board onall material matters andissues of theBoard, andtheachievement ofCorporate Governanceoutcomes. the Board’s responsibilities andtogether ensure theefficientperformance The Board hasestablished Committees that focus onparticular areas of effectiveness in key areas, while still retaining board responsibility.” “The Board should use committees where this would enhanceits BOARD COMMITTEES will continueforthenext 18months. attended herfirst Board meetingon22August 2019andherappointment administered by theInstitute ofDirectors inNewZealand. Ms Mateparae Mateparae inAugust2019as partoftheFuture Directors programme of governancetalent inNew Zealand, theBoard appointed Ms Renee Continuing theCompany’s commitmentto supportingthenext generation Future Directors Programme facilitator. A formal evaluation is regularly conducted withassistance from anoutside oftheChair. oftheBoard andtheperformance the collectiveperformance of individual Directorsassesses the performance while Directors also assess The Chair, withtheassistance ofappropriate external advisors, regularly Board Evaluation minimise anypotential conflicts inlinewiththe Company’s must disclosetheirinterest. Directors and Team Members are required to interests. Where conflicts ofinterest do exist at law thentheDirector conflicts ofinterest betweentheirduty to the Company andtheirown The Board is conscious ofits obligations to ensure that Directors avoid annually thereafter. assesses theindependenceofdirectors ontheirappointmentandat least be independentbyvirtue oftheirshareholding intheCompany. TheBoard Stephen Tindall,andhis alternate director RobbieTindall,are notdeemedto (Will) Easton are considered to beindependentnon-executive Directors. Sir (Deputy Chair),Antony (Tony) Balfour, JohnJournee,JuliaRaueandWilliam The Board consists ofseven Directors. JoanWithers (Chair),Keith Smith person.by thesame the roles of Chair and Group Chief Executive Officer (CEO) are not exercised Under thiscriteria, theBoard has amajority ofindependentDirectors and Board Charter. including therequirements oftheNZX ListingRules,are setoutinfullthe The Board’s standards fordetermining theindependenceofaDirector, Director IndependenceandConflicts 3.

ADDITIONAL INFORMATION 71 Code ofEthic

s.

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Committee and Wellbeing Health, Safety 1 Julia Raue Will Easton Joan Withers Robbie Tindall Sir Stephen Tindall Keith Smith John Journee Tony Balfour NUMBER OFMEETINGS The table belowreports attendance ofmembers at Board andBoard Committee meetings during theyearended28July2019. Committee and Risk Audit Committee Disclosure Committee Nomination and Governance Corporate Committee Remuneration People and COMMITTEE Governance Report Non-committee memberinattendance

3

safety andwellbeing. Assist theBoard to governhealth, audit responsibilities. Assist theBoard to fulfilits riskand compliance withthispolicy. regulations byoverseeing theCompany’s the Companies Actandanyotherapplicable obligations assetoutintheNZXListingRules, Support theCompany inmeetingits disclosure judgement required. collectively provide thediversity ofthoughtand an appropriate mixofskills andexperience who bodies. Ensure that theBoard is populated with promulgated bytherelevant authoritative corporate governancebest practice as through continuous monitoring ofinternational Ensure ahighlevel ofcorporate governance Chief Executive Officer. remuneration oftheGroup andperformance remuneration policiesandpractices andthe to thehumanresources strategy, theCompany’s Review andmake recommendations inrelation ROLES ANDRESPONSIBILITIES 2 72 2 Leave ofabsenceAugust 2018to July 2019 BOARD 16 16 16 16 15 15 15 8

COMMITTEE AND RISK AUDIT • JuliaRaue Chair Comprised ofall Directors Australia andNewZealand (CAANZ) Keith SmithisaFellow oftheChartered Accountants • JuliaRaue • JohnJournee • Keith Smith(Chair) • JoanWithers Current members: Chair oftheCompany. The Chairwillbeindependentandmaynotthe Comprised ofat least three independent Robbie Tindall asalternate • to SirStephen Tindall Joan Withers • Keith Smith (Chair) • Current members: Financial Officer, Disclosure Officerand Founder. and RiskCommittee, Group ChiefExecutive Officer, Chief Comprised oftheChair, Deputy Chair, ChairoftheAudit Robbie Tindall asalternate • to SirStephen Tindall Tony • Balfour Joan Withers (Chair) • Keith Smith • Current members: Disclosure Officerand Founder. Comprised ofamajority ofindependentDirectors. • RobbieTindall as alternate forSirStephen Tindall • Keith Smith • JoanWithers • Tony Balfour(Chair) Current members: independent Directors. Comprised ofamajority ofnon-executive, MEMBERSHIP 4 1 4 4 4 4 4 1 1

REMUNERATION PEOPLE AND COMMITTEE

3 3 Joined Board inOctober 2018 2

5 5 5 5

3 1 1

GOVERNANCE AND NOMINATION CORPORATE COMMITTEE D

irectors. 1 1 1 1 1

AND WELLBEING

HEALTH, SAFETY

COMMITTEE the Committee Chair. At thediscretion of attend byinvitation. Employees mayonly year. At leastthree timeseach Held asrequired. At leastonceayear. attend byinvitation. Employees mayonly At leasttwiceayear. MEETINGS 10 10 10 10 10 10 10 5

DISCLOSURE COMMITTEE

2 2 2 1

Sir Stephen Tindall John Journee Julia Raue William Easton Tony Balfour Chair) Keith Smith(Deputy Joan Withers (Chair) NAME OFDIRECTOR Actual Director Remuneration 2018/19 1 The feespaidto non-executive Directors intheircapacity forservices asdirectors duringtheyearended 28July2019totalling $725,017were paidasfollows: 1 Disclosure Committee Corporate GovernanceandNomination Committee Health, Safety andWellbeing Committee People and Remuneration Committee Audit andRisk Committee Board ofDirectors BOARD/COMMITTEE NAME CFO have provided theBoard withwritten confirmation that reporting is reinforced bycertification from theCEO and theCFO. TheCEO and Management accountability fortheintegrity oftheCompany’s financial requirements, andtheresults oftheexternal andinternal audit. judgement, compliance withaccountingstandards, stock exchange and legal recommendations to theBoard concerningaccountingpolicies, areas of It reviews half-yearly and annual financialstatements andmakes and objectivefinancial reporting. financial statements. The Committee iscommitted to providing balanced, clear financial reporting includingthe accuracy, completeness andtimeliness of The Auditand Risk Committee oversees thequality and integrity ofexternal Financial Reporting requirements, andoverseeing andco-ordinating disclosure to themarket. has responsibility forensuringcompliance withthecontinuous disclosure Policy. TheCompany Secretary is theDisclosure Officerofthe Companyand decisions onwhat should bedisclosed publiclyundertheMarket Disclosure appointed aDisclosure Committee. TheCommittee is responsible formaking To assist theCompany withits Market Disclosure Policy, theBoard has disclosure objectivesandall disclosure obligations undertheNZX Listing Rules. processes designedto ensure that theCompany meets its reporting and The Board has approved a Market Disclosure Policy whichdescribes the Market Disclosure Policy ensure thesecuritiesare valued fairly. As alisted Company, keeping themarket informedis akey componentto financial information that is accurate, balanced, meaningful and consistent. The Board is committed to providing fulland timelyfinancial andnon- and inthetimelinessbalanceofcorporate disclosures.” “The Board shoulddemandintegrity infinancialandnon-financial reporting REPORTING ANDDISCLOSURE Governance Report Tindall. RobbieTindall received additional feesof$16,500asadirector oftheGroup’s Digital Retail subsidiary. additional feesof$16,500 asadirector oftheGroup's Digital Retail subsidiary. Includes attendances at committee meetings  Julia Rauereceived $9,000backpayforduties undertaken as ChairoftheHealth,Safety andWellbeing Committee inFY18. GOVERNANCE REPORT 1. 1 TOOURSHAREHOLDERS 2 3 (Deputy Chair) $100,000 $166,000 $78,525 $78,525 $78,525 $78,525 $65,417 (Chair) BOARD FEES

COMMITTEE (member) (member) (member) $15,000 AND RISK $7,500 $7,500 (Chair) AUDIT - - - -

2. REMUNERATION

GROUP MANAGEMENTREPORT OUR COMPANY PEOPLE AND COMMITTEE (member) (member) (member) $6,000 $6,000 (Chair) - - - - -

AND NOMINATION GOVERNANCE CORPORATE COMMITTEE (member) 3 (Chair) Director feeson-paidto RobbieTindall,Alternate Director to SirStephen the pool limitat the2019Annual Shareholders Meeting. when setting remuneration levels and willnotbeseeking anyincrease in The Board considers theadviceofindependentremuneration consultants receive additional fees formembership ofother Board committees. associated withfulfilling his orherrole. TheChair andDeputy Chair donot below. Directors are reimbursed forreasonable travel andothercosts shareholders. Fees are paid forBoard andcommittee roles as indicated by theshareholders at the22November2013 annual meetingof The current Directors’ feepoollimit is $900,000whichwas approved criteria)performance are discussed onpages 79-81. executives’ remuneration (including remuneration components and The Company’s remuneration philosophy, policyand details regarding fair andreasonable.” “The remuneration ofdirectors andexecutives should betransparent, REMUNERATION pages. material environmental, economicandsocialrisks are alsooutlinedonthese as wellaudited figures onits greenhouse gasemissions.The Company’s reports annuallyits contribution financialandnon-financial tothecommunity, Our philosophyandachievements are outlinedonpages36-37. TheCompany Communities andEnvironment are at theheartofCompany’s culture. Committee Charters andrelevant Company policies. all key governancedocuments includingtheCode ofEthics,Board and The Warehouse’s Corporate Governancesectiononthewebsite includes Non-Financial Reporting standards. and that operational results are inaccordance withrelevant accounting respects, oftheCompany’s financial positionfortheyearended28July2019, the Company’s financial report presents atrue and fair view, inall material Member Chair Member Chair Member Chair Member Chair Member Chair Member Deputy Chair Chair POSITION ------

DISCLOSURE COMMITTEE (member) (member) (Chair) -

------3.

ADDITIONAL INFORMATION COMMITTEE SAFETY AND WELLBEING (member) (member) (member) (member) (member) (member) $21,000 HEALTH, (Chair) ------

COMMITTEES OTHER OTHER ------

2 John Journeereceived OTHER PAYMENTS 73 OR BENEFITS SHARES AND $16,500 FEES (PER ANNUM) ------REMUNERATION $166,000 $115,000 $166,000 INDIVIDUAL $115,000 $107,025 $102,525 $15,000 $12,000 $12,000 $84,525 $84,525 $78,525 $6,000 $7,500 $65,417 TOTAL

- - - - -

1 1

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 •  •  •  •  of whichare: The Board has adopted apolicy onaudit independence,thekey elements in these areas. ensure its policiesandpractices are consistent withemerging best practice developments intheareas ofauditandthreats to auditindependenceto for overseeing theexternal auditoftheCompany. Accordingly, itmonitors shareholders andtheBoard. TheAuditandRisk Committee is responsible The independenceoftheexternal auditor is ofparticular importance to Approach to auditgovernance audit process.” “The Board should ensure thequality and independence oftheexternal AUDITORS can befoundonpages 30-31. The Company’s approach andprocess on healthandsafety initiatives Health andsafety results andquarterly reports oninternal auditfindings. integrity ofreporting. Thesereports includequarterly reviews ofstore audit designed to safeguard theCompany’s assets andinterests andensure the in discharging this responsibility, the Board has in place a number of strategies systems forinternal control, financial reporting andriskmanagement. To assist management andtheexternal andinternal auditors ontheeffectivenessof of theCompany, theAuditandRiskCommittee reviews thereports of While theBoard ofDirectors isultimately responsible fortheriskmanagement Risk monitoring andevaluation business unit. that responsibility formanagingrisks inthebusiness is thedomainof to executive andotherofficers. Inherent inthisdelegation is thebelief risk to theGroup CEO whomay furtherdelegate such responsibilities management strategy. TheBoard delegates day-to-day managementof The Board is responsible forreviewing andapproving theCompany’s risk Risk managementroles andresponsibilities is outlinedonpages 26-27. Information onmaterial risks thebusiness faces andhowtheyare managed, Material risks identified •  •  •  The Company recognises three maintypes ofrisk: manage risk inthebusiness. Company’s approach isto identify, analyse, evaluate andappropriately business objectives.Having established anacceptable risk tolerance, the Risk is thechanceofsomething happeningthat willhave animpacton Risk ManagementFramework potential and material risks.” that theissuer has appropriate processes that identify andmanage by theissuer and howto managethem.TheBoard should regularly verify “Directors should have a sound understanding ofthematerial risks faced RISK MANAGEMENT Governance Report value ofnon-auditworkmustbereported at every Board meeting. audit work assignments that are awarded to anexternal auditor, andthe in conflictwiththepreservation oftheindependence oftheauditor; and in theAuditandRisk Committee Charter, that are notconsidered to be to theBoard that ithas remained independent; (CAANZ) Code ofEthics; and complywiththeChartered Accountants Australia andNewZealand (such as interest rate, foreign exchange andliquidity risk). activity, product risk andrisk associated withchanges infinancial markets legal, complianceorregulatory risk; and or failed internal processes, peopleandsystems orfrom external events; the AuditandRisk Committee must approve significant permissible non- the auditfirmis permitted to provide certain set out non-audit services, the external auditor must monitor its independenceandannuallyreport the external auditor must remain independentoftheCompany at all times Market risk –risk to earnings andreputation arising from competitor Business risk –risk to earnings andreputation from business event risk, Operational risk –risk to earnings andreputation arising from inadequate 74

[email protected] the opportunity to direct questions andcomments through provide animportant opportunity forthis dialogue.Shareholders also have Company andinvestors. ASMs, analyst andinvestor briefings and roadshows and retail investors, andbelieves effective engagementbenefits boththe The Company values its dialoguewithstrategic stakeholders, institutional Engagement withinvestors •  •  •  •  •  communication through: The Company has aninvestor relations programme whichincludes 1 March 2019. The Company transitioned to thenewNZXListing Rules witheffectfrom communication isgovernedby the make informedassessments of the Company’s valueandprospects. Investor equal accessto timely, accurate andcomplete information allowsinvestors to to its investors. TheCompany believes effectivecommunication achieved by The Company iscommitted to providing ahighstandard ofcommunication to engagewiththeissuer.” constructive relationships withshareholders that encourage them “The Board should respect therights ofshareholders and foster SHAREHOLDER RIGHTSANDRELATIONS •  •  •  The role ofinternal auditisto: that are plannedorcurrently underway. assessment. Theprogramme considers risks also inrelation to majorprojects of theCompany andconsideration ofthefindings ofthe strategic risk discussions withsenior management, review ofthebusiness process model areas ofbusiness risk intheCompany andisdeveloped following Committee. Theprogramme ofauditworkconsiders themost significant Each year, theinternal auditprogramme is approved bytheAuditand Risk Risk Committee. respective internal auditteams report to andare directed bytheAuditand undertaken byErnst andYoung andtheCompany’s internal Auditteam. The Company’s external auditors. Theinternal auditfunctionoftheCompany is The Company has aninternal auditfunctionwhichis independentofthe Internal audit the Annual Meeting. The Company’s corporate legaladvisors, Russell McVeagh, will also attend independence oftheauditor inrelation to theconductofaudit. accounting policies adopted byTheWarehouse Group Limited andthe the conductofaudit,preparation andcontent oftheauditors’ report, this year’s AnnualMeetingand willbeavailable to answer questions about PwC, as auditor ofthe2019FinancialStatements, hasbeeninvited to attend Attendance at theAnnualMeeting reappointed as auditor underSection200 oftheAct. with theprovisions oftheCompanies Act1993 (Act).PwCisautomatically was appointed byshareholders at the2004AnnualMeetinginaccordance The Company’s external auditor is PricewaterhouseCoopers (PwC).PwC Engagement oftheexternal auditor information, andkey Corporate Governance information; and responsibilities. controls, business processes, systems and practices; and as to theadequacyofCompany’s internal operating andfinancial operations, processes andbusiness risks; analyst andinvestor briefings and roadshows. the Company’s website whichincludes financialandoperational the Annual Shareholders’ Meeting(ASM); annual reports; periodic andcontinuousdisclosure to NZX; assist theBoard inmeetingits corporate governanceandregulatory provide theBoard withan assessment, independentofmanagement, assess thedesign andoperating effectiveness ofcontrols governing key . Investor Communications Policy.

Inclusion (D&I) Diversity and Maori Culture Gender Areas offocus This wayofthinkingis embeddedinournewleadership behaviours. where diversity andinclusion are embraced. That iswhywe’re committed to continuously identifyingways wecanimprove diversity andinclusivity. The Group strives to create a workplace where ourpeoplefeeltheycanbringtheirwholeselves to work. We believe that can onlyhappeninanenvironment CELEBRATING DIVERSITYANDINCLUSION the meetingorbypollingifattending themeetinginperson. and shareholders are giventheopportunity to vote byproxy aheadof refers anysignificant matters to shareholders for approval at theASM, In accordance withtheCompanies ActandListing Rules, theCompany before themeeting)andwill beposted ontheCompany’s website. The NoticeofMeetingwill becirculated as soon as possible (at least 28days to maximise participation. The2019ASMwill beheld on22November2019. The ASMis heldat a convenienttimeand location as well as beingwebcast and answer anyquestions theymay have. management and theCompany’s external auditor to meetshareholders The ASMprovides anopportunity forDirectors, theGroup CEO, senior Annual Shareholders Meeting(ASM) materials andall oftheCompany’s governancecharters andpolicies. annual reports, share-price anddividendinformation, shareholder meeting material anddata includingNZXdisclosures andmediareleases, interim and The Company’s website contains acomprehensive set ofinvestor-related Website Governance Report and providing senior managers withunconscious bias training andmanaging diversity intheworkplace workshops. communications platform Workplace, rolling outMaoricultural competency training to aninitialgroup ofsenior leaders viatheTe Kaa programme, our diversity. Ourinitiatives will includesupporting ourGroup D&Icommunities to driveD&Istrategy for theircommunity using ourcompany For 2020 weare focused ongenderequity, buildingourMaoricultural competency andbetter understanding, developing andcelebrating GOVERNANCE REPORT 1. TOOURSHAREHOLDERS Policy Transition Policy andFamily Violence Continue to supportourGender Develop andcelebrate ourdiversity Build ourMaoricultural competency Close genderpaygaps at seniorlevels ofbusiness Improve representation ofwomen Objective 2.

GROUP MANAGEMENTREPORT OUR COMPANY

return to work Support parental leave policiessuchas Ease Backto Work to encourage mothers to Continue to supportourGender Transition Policy andFamily ViolencePolicy Establish 5D&Icommunities build D&Iunderstanding Launch Diversity to &Inclusion survey the workplaceworkshops bias training andmanagingdiversity in Senior managers complete unconscious Competency Programme by2021 Kaa –ignitingyourMaoriCultural selected seniorleaders complete Te 100 Group Executive Team and other senior management Gender paygapiswithin+/-2.5%for 1 woman management roles mustinclude 100% ofshortlists forall senior 2021 positions heldbywomen 40% ofsenior management

Email: Telephone: Computershare Investor Limited Services shareholder materials electronically. email addresses to Computershare to enablethem to receive allother share registrar. We would also encourage shareholders to provide their to bemailedto themfree ofcharge bycontacting Computershare, our everyone, so shareholders canrequest ahard copyoftheannual report the Board movedto electronic reporting. We understand suit this doesn’t minimising theCompany’s impactontheenvironment. Therefore, in2016 A key componentoftheCompany’s strategy is costeffectiveness and Electronic communication Target 3.

ADDITIONAL INFORMATION 40% 2021 [email protected] 8777 +64 9488 Maori Language Week Diwali, Pasifika, Matariki, Chinese New Year, Carried outteam celebrations centred on Obtained RainbowTickaccreditation English) inoursupportoffice Introduced bilingual signage (Maoriand Closed genderpaygapsinstores Board Executive Senior management Female representation 75 Actual 33% 27% 36% 2018

29% 21% 38% 2019

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 indemnity costs and expenses incurred to defendanactionthat falls outside thescopeof the indemnity. Directors andemployeesoftheGroup andits subsidiariesfor losses from actionsundertaken inthecourse oftheirlegitimate duties.The insurance includes In accordance withsection162oftheCompanies Act1993 andtheconstitution oftheCompany, theCompany hasprovided insurance for, andindemnitiesto, INDEMNITY ANDINSURANCE Trustee, SweetLouise Foundation Member, Appointments Panel Fonterra farmer elected directors Director, OnBeingBoldLimited Director, ANZBank NewZealand Limited Chair, Mercury NZLimited JOAN WITHERS Member, Risk &AuditCommittee ofTheTreasury Director, RowdyConsulting Limited Director, ZEnergy Limited Director, Television NewZealand Limited Director, SouthernCross HealthSociety Director, JadeSoftware Corporation Limited JULIA RAUE Trustee, Cornwall Park Trust Board Member, Advisory Board NZTax Traders Limited Director, Westland Co-operative DairyLimited Director, Tree ScapeLimited Director, Mercury NZLimited Director, James RaymondHoldingsLimited (non-trading) Director, Gwendoline Holdings Limited (non-trading) Director, Enterprise Group Limited andsubsidiaries Director, Community Limited FinancialServices Chairman, HJAsmuss &Co Limited andsubsidiaries Chairman, Mobile Surgical Limited Services Chairman, Healthcare Holdings Limited andsubsidiaries Chairman, Goodman(NZ)Limited Chairman, Anderson &O’Leary Limited KEITH SMITH Member, Advisory Board, QuantifulLimited Director, Vanishing Point Limited Director, Colonial Motor Company Director, Farmlands Society Chairman, MaxFashions HoldingsLimited andsubsidiary JOHN JOURNEE Director, Facebook Pty Ltd WILLIAM EASTON Director, SilverFern Farms Co-operative Limited Director, Wayfare Limited (formerlyReal Journeys Limited) Director, MtDifficulty WinesLimited Director, MethvenLimited Director, Les Mills International Limited ANTONY (TONY) BALFOUR The following are particulars ofgeneral disclosures ofinterest givenbytheDirectors oftheCompany pursuant to section 140(2)oftheCompanies Act 1993: General disclosures DISCLOSURES OFINTERESTS BY DIRECTORS Statutory Disclosures (resigned) 76 (resigned) (resigned) (resigned) (resigned) (resigned) #alternate to SirStephen Tindall Director, KOneW One(No.4)Limited Director, KOneW One(No.3)Limited Director, KOneW One(No.2)Limited Director, KOneW One Limited Director, Franklin SmithLimited Director, Foundation Limited Services Trustee, TheTindall Foundation ROBERT TINDALL (ALTERNATE DIRECTOR) *Indirect interest Shareholder*, VWork Ltd Shareholder*, 1AboveLtd Shareholder*, TNXLtd Shareholder*, Sportsground Ltd Shareholder*, Snakk MediaLtd Shareholder*, QotientGroup Ltd Shareholder*, PicsOS Ltd Shareholder*, MEAMobile Ltd Shareholder*, Career EngagementGroup Ltd Shareholder*, Auror Ltd Shareholder*, Ask NicelyLtd Shareholder*, Velocity MadeGood HoldingsLtd Shareholder*, Solar City Ltd Trustee, TheTindall Foundation Trustee, Team NewZealand Trust Director, America’s Cup EventLimited Director, Team NewZealand Limited Director, TheGorse Company Limited Director, NoHoldings Limited Director, Investments Norwood Limited Director, Lake Pupuke Investments Limited Director, KOneW One(No.4)Limited Director, KOneW One(No.3)Limited Director, KOneW One(No.2)Limited Director, KOneW OneLimited Director, ElliottStreet No.5Limited Director, Foundation Limited Services Director, Byron Corporation Limited Director, Branches Station Limited Founding Director, KEANewZealand SIR STEPHEN TINDALL # SHARE TRANSACTION shares as follows: During theyear, theDirectors oftheCompanies disclosed inrespect ofsection 148(2) Act1993 that theyacquired ordisposed ofarelevant interest in Share dealingsbyDirectors •  Major shareholdings inwhichmore thanoneDirector hasaninterest parcel inthesame ofshares are asfollows: 1 J Withers Sir Stephen Tindall R JTindall K RSmith J Journee At 28July2019thefollowing Directors, orentities related to them,heldinterests inthe Directors’ shareholdings asat 28July2019 DIRECTORS’ SECURITYPARTICIPATION Statutory Disclosures Management Trustee Company No.2Limited J Withers andKRSmithas trustees ofTheWarehouse Alternate director Sir Stephen Tindall and RobertTindallbothholdaninterest in93,687,096 shares and othersmaller parcels byvirtue oftheirfamily relationship. STATUTORY DISCLOSURES 1. 1 TOOURSHAREHOLDERS BENEFICIAL 93,687,096 INTEREST 172,000 2. 13,250 4,800 8,914

2019 GROUP MANAGEMENTREPORT OUR COMPANY

BENEFICIAL 93,687,096 INTEREST October 2018 TRANSACTION 172,000 13,250 4,800 8,914 2018 DATE OF

NON-BENEFICIAL

C ompany shares: 7,986,050 INTEREST 1,797,697 ACQUIRED/(DISPOSED) 2019 ORDINARY SHARES 3.

ADDITIONAL INFORMATION NUMBER OF (236,403) NON-BENEFICIAL 7,986,050 7,602,572 7,233,252 INTEREST 1,797,697

2018 under theexecutive share scheme

77 93,721,184 RELATED Settlement ofobligations 34,088 35,144 PARTY 2019

CONSIDERATION 84,738,511 RELATED 32,800 9,600 PARTY 2018

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 TW HouseSourcing Private Limited (India) The Warehouse Management Trustee Company No.2Limited The Warehouse Management Trustee Company Limited Warehouse Stationery Limited Waikato Valley Chocolates Limited TWP No.6Limited TWP No.5Limited TWP No.4Limited TWP No.1Limited TWL Australia Pty Limited TWGA Pty Ltd Torpedo7 Limited TWGI Operations Limited The Warehouse Nominees Limited The Warehouse Limited The Warehouse Investments Limited The Warehouse Group Investments Limited The Warehouse Group Limited SupportServices The Warehouse Card Limited The Book DepotLimited Noel Leeming Group Limited Noel Leeming Limited Noel Leeming Furniture Limited Noel Leeming Limited Financial Services Noel Leeming FinanceLimited Eldamos NomineesLimited Eldamos Investments Limited Diners Club(NZ)Limited Boye Developments Limited Bond andLimited 1-Day LiquorLimited 1-Day Limited COMPANY The following peopleheldoffice as directors of subsidiary companies at28July2019.Those who retired duringtheyear are indicated withan(R). SUBSIDIARY COMPANY DIRECTORS Statutory Disclosures 78 K Kramer, APassi, TBenyon K Smith,JWithers K Smith,JWithers P Judd(R),P Okhovat (R),BMoors N Craig, PJudd,MRazey, HVetsch, MAnderson K Smith,MYeoman B Moors, P Okhovat B Moors, KNickels P Judd(R),NTuck I McGill,BMoors, KSmith,SirStephen Tindall I McGill,BMoors, KSmith,SirStephen Tindall P Okhovat, BMoors (R),TEdwards J Oram K Nickels, BMoors P Judd(R),KSmith,NGrayston, MYeoman K Nickels N Grayston, TKasbe (R),JJournee,RTindall,KNickels, MYeoman P Judd(R),KNickels K Nickels K Nickels B Moors (R),KNickels (R),TEdwards B Moors, KNickels B Moors, KNickels B Moors, KNickels B Moors P Judd(R),KNickels P Judd(R),KNickels, P Okhovat M Yeoman, KNickels K Nickels, MYeoman B Moors, KNickels K Nickels K Nickels DIRECTORS 260 -270 250 -260 240 -250 230 -240 220 -230 210 -220 200 -210 190 -200 180 -190 170 -180 160 -170 150 -160 140 -150 130 -140 120 -130 110 -120 100 -110 ($000) REMUNERATION determined using theshare priceonthedate whentheshare rights vested. statements). Theamountattributed to share-based remuneration presented inthetable belowrepresents thevalueto theemployeeofcompensation Team Members also received share-based remuneration note duringtheyearas partof theGroup’s 14to thefinancial share-based incentiveplans (refer haveotherwise beenincludedinthetable reported below. Remuneration includes redundancy payments andtermination payments madeduringtheyearto Team Members whose remuneration would not directors orformerdirectors, whoreceived remuneration andotherbenefits valued at or exceeding $100,000duringtheyearunder review. Grouped below, inaccordance withsection 211(1)(g)oftheCompanies Act1993, are thenumberofTeam Members orformerTeam Members, notbeing TEAM MEMBERS’REMUNERATION Statutory Disclosures STATUTORY DISCLOSURES 1. TOOURSHAREHOLDERS

TEAM MEMBERS NUMBER OF 106 60 60 24 24 42 19 19 16 19 19 61 15 15 15 31 31 81 11 11 6 9 7

530 -540 500 -510 -490 480 -450 440 430 -440 420 -430 410 -420 400 -410 390 -400 360 -370 350 -360 330 -340 320 -330 310 -320 300 -310 280 -290 270 -280 ($000) REMUNERATION 2.

GROUP MANAGEMENTREPORT OUR COMPANY

TEAM MEMBERS NUMBER OF 6 4 4 3 3 8 2 2 2 2 2 2 2 2 1 1 1

3.

ADDITIONAL INFORMATION 2,260 -2,270 1,320 -1,330 1,190 -1,200 1,110 -1,120 950 -960 920 -930 830 -840 780 -790 670 -680 650 -660 640 -650 610 -620 600 -610 580 -590 -550 540 ($000) REMUNERATION

79 TEAM MEMBERS NUMBER OF 2 2

1 1 1 1 1 1 1 1 1 1 1 1 1

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 Nick Grayston 4. 5yearsummaryoftotal shareholder return performance The aboveSTI andLTI payments for2019will bepaid inFY20. (LTI) Incentive Long-term (STI) Incentive Short-term 3. Breakdown (2019) ofpayforperformance 5.  4.  3.  2. Theactual remuneration paidincludes holidaypaypaidas perNZlegislation. 1.  Explanation oftheaboveitems * 2019 YEAR 2. 5yearsummaryofgroup CEO remuneration ($000s) 1. Group CEO remuneration 2019($000s) REMUNERATION REPORT Statutory Disclosures 2015 2016 2017 2018 The 2016 base salary andShortTermThe 2016basesalary Incentive(STI) paymentforNick Grayston were pro-rata based onhisstart date ofNovember2015. CEO remuneration is based onactual remuneration paidwithinafinancialyear. The2019 STI value relatesFY20. FY19 butwill bepaidin to handover period. Nick Grayston joinedthegroup inNovember2015andreplaced Mark Powell, wholeft at theendofJanuary 2016following athree-month Taxable benefits are thevalue ofemployer Kiwisaver contributions. The LTI forMarkPowell’s equity-settled share-based compensation represents thevalueofshare rights vested based ontheshare price at thevestingdate. -20% -10% 30% 20% 10% 0% GROUP CEO Mark Powell Mark Powell Nick Grayston Nick Grayston Nick Grayston Nick Grayston

date ofNovember2015. On Target For performance. pro-rated FY17 to start Cash based scheme. Potential for 50%ofbase salary be achieved. must and aminimumlevel ofindividualperformance a gate openerof100%theAdjusted NPAT budget For this to bepayable,theGroup must firstly achieve measures. performance Combination offinancial and non-financial Set at forOnTarget 50%ofbase salary performance. DESCRIPTION FY15 80 FY16 SALARY 1,435 TOTAL EARNINGS BENEFITS TAXABLE FY17 BASE PACKAGE 2,237 1,808 1 1,398 1,773 PAID ,972 759 66

SUBTOTAL achievement of125%target. achieved, increasing to amaximumof150%potential for Adjusted NPAT. 50%ofpotential paidif>95%oftarget NPAT, calculated asapercentage ofthebudgeted Group 100% weightingbasedonthethree-year Group Adjusted delivering core business drivers andbuildingcapability. Individual goals relate to delivery ofstrategic priorities, Individual Measures 30% weighting: Individual Measures 30%weighting: budget (excluding STI). The financialmeasure isbased onachieving Group EBIT Financial Measures: 70% weighting: PERFORMANCE MEASURES FY18 1,501 BASE 1,435 1,263 934* 1,415 1,415 733 FY19 BENEFITS TAXABLE 471 STI 66 54 26 38 25 PAY FOR PERFORMANCE -

464* 333 768 471 Financial Year 2019(FY19) Financial Year 2018(FY18) Financial Year 2017(FY17) Financial Year 2016(FY16) Financial Year 2015(FY15) TOTAL SHAREHOLDERRETURN LTI STI - - - STI AS%OF SUBTOTAL MAXIMUM 66% 96% 48% 31% 471 PERCENTAGE ACHIEVED - - REMUNERATION

70% x40.3% 30% x125% TOTAL 110.6% -18.9% -11.0% 1,972 20.2% 15.2% 507 3.3% LTI - - - - -

8. Related Parties 7. Withholdings 6. Benefits 5. AnyOtherItems 4. Omissions 3. Board Discretion 2 TSRMethodology 1. Group CEO Pay as aMultiple DESCRIPTION 7. Required disclosures perguidelines FY20 FY19 FY18 FY17 YEAR INVITED 6. SchemeInvestments awarded to Group CEO is payable if125%ofGroupbase salary Adjusted NPAT budgetis achieved. period is achieved. Thegate for paymentis 95%ofGroup Adjusted NPAT budgetandthis would result inLTI of50% ofbase salary. Amaximumof75% of basesalary, settled incash,andis payableat periodiftheaggregated theendofthree-year performance Group Adjusted NPAT forthethree year exceeded andbudgeted EBIT is exceeded. TheSTI is split: 70% based onGroup financial results against goals. and30%individualperformance LTI is 50% 2020 Group Adjusted NPAT budgetandthis wouldresult inanSTI of50%base salary. is payableifindividual goals are Amaximumof60%base salary Explanation 5. REMUNERATION POLICY ANDDISCLOSURES Statutory Disclosures Nick Grayston $000 * FY17 scheme was pro-ratedFY17 to start date ofNovember2015. Potential Group CEO remuneration (2020) 3000 2000 4000 1000 STATUTORY DISCLOSURES 1. TOOURSHAREHOLDERS 0 : Base salary issetatmillion forthefinancial year. Base salary $1.461 salary forOn STI is50%ofbase ThegateTarget performance. forpayment is90%of 50% 50% 50% 50% % OFSALARY 100% BASE SALARY 1,461 No related parties are involved withtheGroup CEO remuneration. No partoftheGroup CEO remuneration has beenwithheld foranypurpose. There are nobenefits attributable to theGroup CEO due to anyloans made. There are nootheritems payableto theGroup CEO that are notdisclosed. No information has beenomitted relating to Group CEO remuneration. Any payments madeorforecasted are inlinewithcontractual or scheme criteria. The Board ofDirectors has exercised discretion withregards to Group CEO STI for2019. payforperformance dividends paid. Total Shareholder Return has beencalculated as themovementinshare priceduringtheperiodplus any 34,9 m PERFORMANCE MEASURES easured onfixed remuneration. Medianhourly rate ofall Team Members is $19.71perhour. Cash Cash Cash Cash SETTLEMENT BENEFITS TAXABLE 2. ON TARGET BASE PACKAGE

GROUP MANAGEMENTREPORT OUR COMPANY 50% 66 25% 25%

August 2019to July2022 August 2018to July2021 August 2017to July 2020 August 2016to July2019* PERFORMANCE PERIOD SUBTOTAL 1,527 MAXIMUM 25% 43% 32% PAY FOR PERFORMANCE AT TARGET as a percentage ofthebudgeted Group Adjusted NPAT. Three-year Group Adjusted NPAT achieved calculated as a percentage ofthebudgeted Group Adjusted NPAT. Three-year Group Adjusted NPAT achieved calculated as a percentage ofthebudgeted Group Adjusted NPAT. Three-year Group Adjusted NPAT achieved calculated MEASURE as a percentage ofthebudgeted Group Adjusted NPAT. Three-year Group Adjusted NPAT achieved calculated 731 STI 3.

ADDITIONAL INFORMATION 731 LTI BASE STI LTI SUBTOTAL 81 1,462 REMUNERATION

TOTAL 2,989

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 The Tindall Foundation Sir Stephen Tindall Wardell Bros &Coy Limited, Cash Wholesalers Limited andFoodstuffs (Auckland) Nominees Limited James Pascoe Limited Company andtheirrelevant interests are noted below: According to noticesgivento theCompany undertheFinancialMarkets Conduct Act2013,asat 28July 2019,thesubstantial product holders inthe SUBSTANTIAL PRODUCTHOLDERS 1 The Warehouse Management Trustee Company No.2Limited John Francis Managh Custodial Limited Services James RaymondHoldings Limited The Warehouse Management Trustee Company Limited FNZ Custodians Limited Stephen RobertTindall+JohnRichard Avery +BrianMayo-Smith–Merani A/C HSBC Nominees (NewZealand) Limited -NZCSD Forsyth BarrCustodians Limited HSBC Nominees (NewZealand) Limited –A/CState Street NZCSD RG Tindall, SirStephen Tindall&Pupuke Trustee Limited Accident Compensation Corporation -NZCSD Sir Stephen Tindall, BrianMayo-Smith&JRAvery (asTrustees) Citibank Nominees (NewZealand) Limited -NZCSD A/C Wardell Bros &Coy Ltd Foodstuffs (Auckland) Nominees Limited Cash Wholesalers Limited James Pascoe Limited The Tindall Foundation Inc. Sir Stephen Tindall TWENTY LARGEST REGISTERED SHAREHOLDERSASAT 31JULY 2019 Statutory Disclosures holdings inNZSCDwere 10,740,740 or3.09% ofshares onissue. New Zealand Central Securities Depository Limited (NZCSD) is adepository system whichallows electronic trading ofmembers. Asat 31July2019 total 82 ORDINARY SHARES NUMBER OF 290,254,174 73,920,496 93,687,096 68,270,081 31,120,089 84,141,524 66,323,220 68,671,082 10,373,363 10,373,363 10,373,363 RELEVANT 4,456,392 3,455,103 3,544,441 INTEREST 3,778,149 1,138,525 1,066,311 600,000 752,798 739,757 549,673 588,528 973,341 545,419 667,174

ORDINARY SHARES PERCENTAGE OF 23 March 2007 19 March 2004 19 March 2004 10 May2018 DATE OF NOTICE 83.68% 19.80% 27.01% 21.31% 0.33% 0.28% 0.22% 2.99% 2.99% 2.99% 1.00% 0.16% 0.16% 0.19% 1.09% 0.31% 0.21% 1.02% 0.17% 0.17% 1.28%

Statutory Disclosures DISTRIBUTION OFBONDHOLDERSANDHOLDINGSASAT 31JULY 2019 DISTRIBUTION OFSHAREHOLDERSANDHOLDINGSASAT 31JULY 2019 Other Overseas Otago andSouthland Canterbury, Marlborough andWestland Lower NorthIsland andWellington Waikato andCentral NorthIsland Auckland andNorthland GEOGRAPHIC DISTRIBUTION 1,000,000 andover 500,000 -999,999 100,000 -499,999 50,000 -99,999 10,000 -49,999 5,000 -9,999 SIZE OFBONDHOLDING Other Overseas Australia Otago andSouthland Canterbury, Marlborough andWestland Lower NorthIsland andWellington Waikato andCentral NorthIsland Auckland andNorthland GEOGRAPHIC DISTRIBUTION 100,000 andover 10,001 -100,000 5,001 -10,000 1,001 -5,000 1 -1,000 SIZE OFSHAREHOLDING STATUTORY DISCLOSURES 1. TOOURSHAREHOLDERS SHAREHOLDERS BONDHOLDERS 2.

GROUP MANAGEMENTREPORT OUR COMPANY NUMBER OF NUMBER OF 10,152 10,152 3,807 4,072 1,066 1,043 2,102 1,220 3,916 1,449 1,074 1,879 1,879 600 390 209 330 746 776 199 691 144 121 78 10 11 5 3

PERCENTAGE PERCENTAGE 100.00% 100.00% 100.00% 100.00% 39.70% 20.76% 37.50% 56.73% 38.57% 10.59% 10.58% 12.02% 20.71% 10.27% 31.93% 17.56% 14.27% 40.11% 0.59% 6.44% 0.27% 0.10% 11.12% 7.64% 0.16% 6.81% 4.15% 1.42% 3.

ADDITIONAL INFORMATION 125,000,000 125,000,000 286,439,066 NUMBER OF 346,843,120 346,843,120 80,697,000 49,524,000 304,141,645 19,549,000 19,644,000 15,664,000 37,278,000 42,809,828 2,807,000 11,518,000 3,763,000 11,658,953 7,476,000 OF BONDS 9,006,391 1,997,000 6,808,107 7,753,436 1,395,895 4,694,219 16,031,171 NUMBER 1,779,728 1,167,801 SHARES 83,000

83 PERCENTAGE PERCENTAGE 100.00% 100.00% 100.00% 100.00% 64.56% 82.59% 29.82% 87.69% 15.64% 39.61% 12.53% 12.34%

15.72% 0.40% 0.07% 0.34% 2.60%

5.98% 3.36% 4.62% 2.25% 2.24% 1.60% 0.51% 3.01% 1.96% 1.35% 9.21%

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED THE WAREHOUSE GROUP WAREHOUSE THE THE WAREHOUSE GROUP INTEGRATED ANNUAL REPORT 2019 the closeofbusiness on22November2019. will bepaidon5December2019 to all shareholders ontheshare register at per share. Thedividends willbefully imputed at arate of28.0percent and of 8.0cents pershare bringingthetotal dividendfortheyearto 17.0 cents On 24September 2019theDirectors declared a fully imputed finaldividend adjusted netprofit to shareholders. dividend policyisto distribute between75%and85%oftheRetail Group’s in September 2015, commencingfrom the2016financial year. TheGroup’s in 1994. TheGroup’s current dividendpolicywasapproved bytheBoard every yearwithoutinterruption since listing ontheNewZealand Exchange The Warehouse Group Limited haspaiddividends onits ordinary shares DIVIDENDS ONORDINARY SHARES has nosecurities subject to anescrow agreement. Apart from theshares heldundertheStaff Purchase Plan, the Company ESCROW on-market share buy-backs. The Company is not,at thedate ofthis annualreport, undertaking any O Each oftheCompany’s ordinary shares entitles theholderto onevote. or attorney. Voting may beconducted byvoice,ashow ofhands orapoll. ordinary shares mayvote at ameetinginperson, orbyproxy, representative a poll at anygeneral meetingofshareholders onanyresolution. Holders of shareholders. Ordinary shares intheCompany eachcarryarightto vote on Clauses 20-22oftheCompany’s constitution setoutthevotingrights of RIGHTS ATTACHING TO SHARES Ordinary Shares SECURITY CLASS OFEQUITY Holders ofeachclassequity security asat 31July2019 fullypaidordinary31 July 2019was346,843,120 shares. The total numberofvotingsecurities oftheCompany onissue on ORDINARY SHARES New Zealand Stock Exchange (NZX). The ordinary shares ofTheWarehouse Group Limited are listed onthe STOCK EXCHANGE LISTING Statutory Disclosures N-MARKET SHAREBUY-BACKS

84 NUMBER OF HOLDERS 10,152 SHARES ORRIGHTS 346,843,120 NUMBER OF

NZX WAIVERS were madeduringtheyear. charities duringtheyear. InlinewithBoard policy, nopoliticalcontributions Company records that itdonated $89,000 (2018$663,000) to various In accordance withsection 211(1)(h)oftheCompanies Act1993, the DONATIONS the periodunderreview. The NZX has nottaken anydisciplinary actionagainst theCompany during DISCIPLINARY ACTION 2019 year. and have undertaken theauditoffinancial statements forthe28July PricewaterhouseCoopers have continuedto actas auditors ofthe AUDITOR Total Final Interim DIVIDENDS Cents pershare as follows: The dividends declared foreachofthelast fivefinancial years were Company’s website before thedate ofpublication ofthisannualreport are available onthe the Company inthe12months immediately preceding thedate twomonths Details ofall waivers granted and published byNZXwithinorrelied uponby www.thewarehousegroup.co.nz 2019 17.0 9.0 8.0 2018 10.0 16.0 6.0 10.0 2017 16.0 6.0 2016 16.0 11.0 5.0 C ompany

2015 16.0 11.0 5.0 www.thewarehousegroup.co.nz Website New Zealand Incorporation: 9429038 766633. New Zealand BusinessNumber(NZBN) NZX trading code:WHS Stock Exchange Listing For investor relations enquiries,email [email protected] Investor Relations Website: www.computershare.co.nz/investorecentre Email: [email protected] Facsimile: 8787 +649488 Telephone: 8777 +649488 New Zealand Private Bag 92119, Auckland 1142 Level 2,159 Hurstmere Road,Takapuna Computershare Investor Limited Services Share Registrar your report options. payment andtax information, update yourpaymentinstructions andupdate whereby youcanviewyourshare balance,changeyouraddress, view Computershare’s secure website, www.computershare.co.nz/investorcentre, You canalso manageyourshareholding electronically byusing address ordividendpayments should contact theShare Registrar. Shareholders withenquiriesregarding theshare transactions, changes of Shareholder Enquiries Auckland 1142,NewZealand Private Bag 92162 PricewaterhouseCoopers Auditor Auckland 1140,NewZealand PO Box 2219 Level 4,4Graham Street C/-BDO Registered Office Facsimile: +649489 7444 Telephone: +649489 7000 Auckland 0740, NewZealand PO Box 33470, Takapuna Northcote, Auckland 0627 26 TheWarehouse Way Place ofBusiness Kerry Nickels Company Secretary Jonathan Oram Group ChiefFinancialOfficer Nick Grayston Group ChiefExecutive Officer Julia Raue Will Easton John Journee Antony Balfour Robbie Tindall (alternate to SirStephen Tindall) Keith Smith(Deputy Chair) Joan Withers (Chair) Board ofDirectors Directory

DIRECTORY 1. TOOURSHAREHOLDERS

2.

GROUP MANAGEMENTREPORT OUR COMPANY 3.

ADDITIONAL INFORMATION

85

INTEGRATED ANNUAL REPORT 2019 REPORT ANNUAL INTEGRATED

THE WAREHOUSE GROUP WAREHOUSE THE BACK COVER BACK