BUNNINGS LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE Page 1. Contents. 2. Annual Report. 3. Corporate Information

Transcription

1 ANNUAL REPORT Page 1. Contents 2. Annual Report 3. Corporate Information 4. Statement of Comprehensive Income 5-6. Statement of Financial Position 7. Statement of Changes in Equity 8. Statement of Cash Flows Notes to the Financial Statements Auditor's Report 1

2 ANNUAL REPORT The Directors are pleased to present Bunnings Limited's Annual Report for the year ended 30 June 2017 covering the Bunnings operations in New Zealand. There are certain matters that the shareholders can determine need not be disclosed in the Annual Report. The shareholders have unanimously agreed under section 211(3) of the Companies Act 1993, to take advantage and not comply with any of paragraphs (a) and (e) to (j) of Section 211(1) of the Act. For and on behalf of the Board of Directors 02/11/2017 Michael Schneider Director Date 02/11/ Director Date 2

3 ANNUAL REPORT BUNNINGS LIMITED Registered Office 78 Carbine Road Mt Wellington Auckland New Zealand PO Box , Panmure, Auckland Telephone: Facsimile: Website: Corporate Information Directors Jacqueline Coombes John Gillam (ceased 28 December 2016) Justin Williams Michael Schneider Richard Goyder Principal Place of Business New Zealand Solicitors Simpson Grierson Lumley Centre 88 Shortland Street Private Bag Auckland 1141 New Zealand Bankers Westpac 79 Queen Street Branch Auckland PO Box 53 Auckland New Zealand 3

4 STATEMENT OF COMPREHENSIVE INCOME Notes Revenue Cost of sales Gross profit Other income Marketing expenses Selling expenses Occupancy expenses Administrative expenses Profit on sale of assets (lmpainnent)/reversal ofimpainnent of property, plant and equipment Operating profit/ (loss) before income tax and finance income I (costs) Finance costs Profit before income tax Income tax (expense) Profit after income tax Other comprehensive income 4 5 1,118,363 1,008,066 (768,283) (690,335) 350, ,731 1,761 1,850 (10,692) (9,127) (210,069) (180,357) (42,739) (39,159) (43,133) (41,968) 3, (4,030) ,482 50,034 (6,159) (11,245) 38,323 38,789 (10,378) (11,548) 27,945 27,241 Other comprehensive income fur the period net of tax Total comprehensive income for the period 27,945 27,241 These statements are to be read in conjunction with the notes to the financial statements 4

5 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Notes EQUITY Issued share capital Retained earnings TOTAL EQUITY Represented by : 6 I 112,126 84, ,127 84,182 CURRENT ASSETS Cashon hand Trade receivables Intra-group receivables Inventories Prepayments and other receivables Assets held for sale Total Current Assets NON-CURRENT ASSETS Property, plant and equipment Deferred tax Intangibles Total Non-Current Assets ,385 20,625 51,438 51, , ,169 11,863 10,524 37,700 2, , , , ,793 13,850 9, , ,987 TOTAL ASSETS 547, ,767 These statements are to be read in conjunction with the notes to the financial statements 5

6 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE CURRENT LIABILITIES Trade creditors Income tax payable Accrued charges Provisions Deferred revenue Intra-group payable Related party bans ,268 3,172 49,775 13,163 2, ,000 64,758 6,228 31,295 13,139 2,150 14, ,000 Total Current Liabilities 427, ,467 NON-CURRENT LIABILITIES Provisions Accrued charges 9 7, ,118 Total Non-Current Liabilities 7,965 7,118 TOT AL LIABILITIES 435, ,585 NET ASSETS 112,127 84,182 For and on behalf of the Board which authorised the issue of these financial statements on Director QQ-:> s Director 02/11/ /11/2017 Date Date These statements are to be read in conjunction with the notes to the financial statements 6

7 STATEMENT OF CHANGES IN EQUITY Notes Issued Capital Retained Earnings Total As at 1 Ju]y 2015 Profit for the year 1 56,940 56,941 27,241 27,241 Other comprehensive income Total comprehensive income As at 30 June 2016 As at 1 Ju]y 2016 Profit for the year ,241 27,241 84,181 84,182 84,181 84,182 27,945 27,945 Other comprehensive income Total comprehensive income As at 30 June ,945 27, , ,127 These statements are to be read in conjunction with the notes to the financial statements 7

8 STATEMENT OF CASH FLOWS Notes Operating Activities Profit before tax from continuing operations 38,323 38,789 Profit before Tax 38,323 38,789 Adjustment to reconcile profit before tax to net cash flows Depreciation and impairment of property, plant & equipment 3 19,542 14,821 Reversal oflmpainnent 3 (965) Gain on disposal of property, plant & equipment 3 (3,304) (99) Bad and Doubtful Debts 3 2,258 2,881 Interest Income (74) (12) Finance Costs 6,159 11,245 Movement in provisions 569 2,799 Working capital adjustments Decrease / (Increase) in trade receivables and prepayments (3,701) 6,687 Decrease / (Increase) in inventories (14,440) (13,422) (Decrease)/ Increase in trade and other payables 6,204 10,065 51,536 72,789 Interest received Interest paid 4 (6,159) (11,245) Income tax paid (18,190) (11,044) Net cash flow.. from operating activities 27,261 50,512 Investing Activities Proceeds from sale of property, plant & equipment 28,667 22,931 Purchase of property, plant & equip1nent (58,168) (48,295) Net cash flow.. used in investing activities (29,501) (25,364) Financial Activities Repayment of borrowings (13,000) (8,000) Net cash flow.. used in financing activities (13,000) (8,000) Net increase/( decrease) in cash and cash equivalents (15,240) 17,148 Cash and cash equivalents at I July 20,625 3,477 Cash and cash equivalents at 30 June 5,385 20,625 These statements are to be read in conjunction with the notes to the financial statements 8

9 1. CORPORA TE INFORMATION The consolidated financial statements of Bunnings Limited (the Company) and subsidiaries (collectively, the ) for the year ended 30 June 2017 were authorised for issue in accordance with a resolution of directors on 02 November Bunnings Limited is incorporated in New Zealand and registered under the Companies Act 1993; its operations include retail and wholesale distribution of building and home improvement products. 2. STATEMENT OF ACCOUNTING POLICIES Statement of Compliance and Basis of Preparation (a) Basis of preparation The financial statements have been prepared in accordance with generally accepted accounting practise in New Zealand (NZ GAAP) and requirements of the Companies Act 1993 and the Financial Reporting Act For the purposes of complying with NZ GAAP the entity is a for-profit entity. The group is a Tier 2 for-profit entity and has elected to report in accordance with Tier 2 For-profit Accounting Standards. The is eligible to report in accordance with Tier 2 For-profit Accounting Standards on the basis that it does not have public accountability and is not a large for-profit public sector entity. The financial statements are presented in New Zealand Dollars and have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. All values are rounded to the nearest thousand dollars ($000). (b) Basis of consolidation The consolidated financial statements comprise the financial statements of Bunnings Limited and its subsidiaries as at and for the period ended 30 June each year (note 14). Subsidiaries are all those entities over which the has the power to govern the financial and operating policies so as to obtain benefits from their activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company. Subsidiaries are fully consolidated from the date on which control is obtained by the and cease to be consolidated from the date on which control is transferred out of the. 9

10 (c) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. For sales of goods, revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer. ( d) Finance income Interest income is recognised as interest accrues (using the effective interest method which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset. (e) Inventories Inventories are stated at the lower of cost and net realisable value. Costs have been assigned to inventory quantities on hand at reporting date using the weighted average cost. Cost of finished goods comprises the cost of direct materials. (f) Property, Plant and Equipment Plant, machinery, other assets, vehicles and mobile equipment are stated at cost less accumulated depreciation and any impairment in value. Land and buildings are stated at cost less any impairment in value and less accumulated depreciation for buildings. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Vehicles and mobile equipment Plant, machinery and other assets Buildings 5-7 Years 3-15 Years 40 Years An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise :from the continued use of the asset. 10

11 (f) Property, Plant and Equipment (continued) Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the year the item is derecognised. A non-current asset is considered held for sale where sale contracts have been exchanged, the asset is available for immediate sale in present condition, and the sale is considered highly probable. Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Impairment loss is recognised where the carrying value of the assets held for sale are greater than fair value less costs to sell. Impairment The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognised in the statement of comprehensive income. (g) Cash and cash equivalents Cash in the statement of financial position comprise cash at bank and on hand and short term deposits with an original maturity of three months or less. (h) Trade Receivables Trade receivables, which generally have day terms are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis at an operational unit level. Individual debts that are known to be uncollectible are written off when identified. 11

12 (i) Interest-bearing loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised and through the amortisation process referred to above. (j) Foreign Currency translation The functional and presentation currency of Bunnings Limited and subsidiaries is New Zealand Dollars. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. (k) Borrowing Costs Borrowing costs are recognised as an expense when incurred. (l) Deferred Revenue The amount recognised as deferred revenue are gift card sales that are unredeemed. (m) Other Tax (GST) The statement of comprehensive income has been prepared so that all components are stated exclusive of GST. All items in the statement of financial position are stated net of GST, with the exception ofreceivables and payables, which includes GST invoiced. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. 12

13 (n) Income Tax Current tax assets and liabilities for the current and prior reporting periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rate and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income tax relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income. ( o) Provisions Provisions are recognised when the has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 13

14 (p) Leased Assets as Lessee The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term. ( q) Employee Entitlements A liability for annual leave and long service leave is accrued and recognised in the statement of financial position. The liability is equal to the present value of the estimated future cash outflows as a result of employee services provided at reporting date. (r) Share-based Payment Transactions The company provides benefits to its employees in the form of share-based payments with the issue of Wesfarmers Limited ordinary shares, whereby employees render services in exchange for shares. The cost of share based payments are recognised in the statement of comprehensive income through an intercompany charge, over the period in which the performance conditions are fulfilled, ending on the date which the relevant employees become fully entitled to the award (vesting date). (s) Changes in Accounting Policies The accounting policies adopted are consistent with those of the prev10us financial year. New and amended New Zealand Equivalents to International Financial Reporting Standards and IFRIC interpretations did not have any impact on the accounting policies, financial position or performance of the group and company. (t) Comparative figures The classification of certain amounts in the Statement of Comprehensive Income and accompanying notes have been reclassified to conform to the current year's accounting practices. Other amounts are presented and classified consistently for each annual reporting period. 14

15 3. OPERATING PROFIT BEFORE INCOME TAX AND FINANCE (INCOME)/COSTS INCLUDES THE FOLLOWING: Included in income statement Depreciation - Vehicles and mobile equipment 989 Depreciation - Plant, machinery and other assets 12,940 Depreciation - Buildings 1,583 Depreciation expense 15,512 Impairment of property, plant and equipment 4,030 Reversal of impairment Auditors remuneration - Audit of the financial statements 85 Auditors remuneration - other services Wages and salaries 130,143 Wages and salaries on-costs 22,267 Share-based payments 3,784 Employee benefits expense 156,194 Profit on sale of assets - other fixed assets 32 Profit on Sale and Leaseback 3,271 Profit on sale of property 1 Net gains on sale of assets 3,304 Bad and doubtful debts 2,258 Minimum lease payments - operating leases 40,545 Sublease payments received (1,522) ,438 1,542 14,821 (965) ,296 20,397 4, , (6) 99 2,881 37,136 (1,676) 4. FINANCE (INCOME) / COSTS Bank interest income (74) Total finance income (74) Interest expense on related party loans 6,159 Bank interest income/( expense) Total finance costs 6,159 (12) (12) 11, ,245 15

16 5. INCOME TAX Major components of income tax expense for the years ended 30 June 2017 and 2016 are: Income Statement Current income tax ClllTent income tax charge Adjustments in respect of current income tax of previous years ,081 (1,916) ,081 (2,706) Deferred income tax charge Relating to origination and reversal of temporary differences (4,787) (1,827) Income tax expense reported in income statement 10,378 11,548 A reconciliation of income tax expense applicable to accounting profit before income tax at the statuto,y income tax rate to income tax expense at the company's effective income rate for the years ended 30 June 2017 and 2016 is as follows: Profit before income tax 38,323 38,789 At the statutory income tax rate of28% (2016: 28%) Adjustments in respect of current income tax of previous years Expenditure/(income) not allowable/(assessable) for income tax purposes Other 10,731 (1,916) ,861 (2,706) 454 2,939 Income tax expense/(credit) reported in income statement 10,378 11,548 16

17 5. INCOME TAX (continued) Deferred income tax Deferred income tax charge relates to: Net difference between accounting and tax depreciation Post-employment benefits Stock provisions Restructuring and lease provisions Other ,529 (649) Deferred income tax charge 4,756 1,826 Deferred income tax assets at 30 June relates to: Net difference between accounting and tax depreciation Post-employment benefits Stock provisions Restructuring and lease provisions Other (3,395) (3,656) 6,085 5,665 3,792 3,358 1,947 1,835 5,421 1,892 Deferred income tax asset 13,850 9,094 Imputation Credit Account The company is a member of a Trans-Tasman Imputation with its parent and other related entities. The combined imputation credits of the Trans-Tasman Imputation are available to the shareholders of the Trans-Tasman Imputation. The company's individual Imputation Credit Account has a nil balance (2016: nil). 6. SHARE CAPITAL The issued and paid up capital comprises of 1,000 ordinary shares (2016: 1,000). Shares have no par value. All shares rank equally with one vote attached. 17

18 7. PROPERTY, PLANT AND EQUIPMENT Land: - cost - impairment costs Buildings: - cost - accumulated depreciation Vehicles and mobile equipment: - cost - accumulated depreciation Plant, machinery and other assets: - cost - accumulated depreciation Capital work in progress: - cost Total property, plant and equipment 59,718 62,913 (2,944) (2,944) 56,774 59,969 72,430 68,318 (8,602) (7,644) 63,828 60,674 15,368 13,258 (9,714) (10,089) 5,654 3, , ,866 (103,286) (91,452) 46,454 37,414 48,770 82,567 48,770 82, , ,793 Capital works in progress is stated at cost incurred and not depreciated until assets are completed. 8. CASH AT BANK Wesfarmers Industrial and Safety NZ Limited, Bunnings Limited, NZ Finance Holdings Pty Limited ( members), and the Westpac Banking Corporation are parties to a set off, overdraft, and cross-guarantee agreement dated 26 April Under this agreement each member jointly and severally guarantees the obligations of each member to the Westpac Banking Corporation to a gross indebtedness limit of $10,000,000. As at 30 June 2017 the net bank balance amounted to $2,928,287 (2016: $18,718,311). 18

19 9. PROVISIONS Current Liabilities - Provisions Annual leave Ahemative leave Long service leave Closed store provision Stepped leases ,041 2,212 1, , ,628 1,930 1, ,139 Non-Current Liabilities - Provisions Stepped leases Long service leave 6,699 6, ,663 7, DEFERRED REVENUE Opening balance Deferred during the year Released to the statement of comprehensive income 2,150 2,113 28,610 25,007 (28,193) (24,970) 2,567 2, COMMITMENTS Capital expenditure contracted for at reporting date but not provided for amounts to $12,852,536 (2016: $7,447,535). 19

20 12. LEASE COMMITMENTS Operating lease commitments - as lessee Operating leases payable full due: Within one year Between one and five years More than five years Total minimwn lease payments , ,621 76, , , ,573 86, ,321 Operating lease commitments - as lessor Operating leases receivable full due: Within one year Between one and five years Total minimwn lease payments 1,268 3,587 4, ,459 6,202 The leases premises and vehicles. Operating leases held over properties give the the right to renew the lease subject to a redetermination of the lease rental by the lessor. There are no options to purchase in respect of operating leases of vehicles. 13. FINANCIAL INSTRUMENTS The 's financial instruments comprise interest bearing loans, cash, trade debtors and trade creditors. The main purpose of interest bearing loans are to raise finance for the 's operations. Interest rate risk The 's exposure to market risk for changes in interest rates relates primarily to the 's interest bearing loan. Credit risk The trades only with recognised, creditworthy third parties. It is the policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the 's exposure to bad debts is not significant. Liquidity risk The 's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and interest bearing loans. 20

21 13. FINANCIAL INSTRUMENTS (continued) Fair value The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable knowing parties in an arm's length transaction, other than in a forced or liquidation sale. The carrying amounts and estimated fair values of financial assets and financial liabilities are as follows: Carrying Carrying Amount Fair Value Amount Fair Value Financial assets Receivables - cwtent 51,438 51,438 51,333 51,333 Cash on hand 5,385 5,385 20,625 20,625 Financial liabilities Payables - CWTent 66,268 66,268 64,758 64,758 The methods and assumptions used to estimate the fair value of financial instruments are outlined below: Cash The carrying amount approximates its fair value due to the liquid nature of these assets. Receivables I Payables Due to the short term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values. 21

22 14. RELATED PARTY INFORMATION Subsidiaries The consolidated financial statements include the financial statements of Bunnings Limited and the subsidiaries listed in the following table. Name Country of % Equity Interest Investment $000 Incorporation Bunnings (NZ) Limited New Zealand 100% 100% - - Masters Home Improvement Limited New Zealand 100% 100% - - Masters Hardware Limited New Zealand 100% 100% - - Identity of related parties The company's parent company is Valley Investments Pty Limited (ACN ), which is owned by Bunnings Limited. The ultimate holding company is Wesfarmers Limited incorporated in Australia and is listed on the Australian Stock Exchange. Bunnings (NZ) Limited, Masters Home Improvement Limited and Masters Hardware Limited are subsidiaries of Bunnings Limited. Intercompany borrowings Bunnings Limited pays interest quarterly on the loan from NZ Finance Holdings Pty Limited. The current rate is 2.02% (2016: 2.37%). The intercompany borrowings are unsecured and repayable on demand. However, NZ Finance Holdings Pty Limited has confirmed that they will not recall the loan unless the has sufficient surplus working capital to make the repayment and continue to operate as a going concern. Allowance for impairment loss on trade receivables For the year ended 30 June 2017, the has not made any allowance for impairment loss relating to amounts owed by related parties (2016: $nil). Balances with related parties are unsecured, interest-free and repayable on demand. 22

23 14. RELATED PARTY INFORMATION (continued) Transactions with related parties The following table provides the total amount of transactions, which have been entered into with related parties in the year and outstanding balances at year-end. Related party Nature of Transaction Type Sales/Loan Purchases/Loan Amounts Amounts relationship repayments advancement owed by owed to to related from related related related parties parties parties parties Related party loans NZ Finance Holding,, Pty Common owner Advance of funds, Limited interest bearing loan , , , ,000 Int r a-group Bunning,, Limited Owner Expense reimbursements, and Royalties charges ,273 6, , ,897 Wesfanners Limited Ultimate Management shareholder charges Wesfanners Risk Common owner Insurance charges, recovery Wesfanners Industrial & Common owner Purchase of trading Safety NZ Limited stock Blackwoods Paykels Common owner Purchase of trading Limited stock Total Intra-group ,312 7, , ,897 23

24 14. RELATED PARTY INFORMATION (continued) Fair value measurement hierarchy for liabilities as at 30 June 2017: Liabilities measured at fair value Date of valuation Total Fair value measurement using Quotes prices in Significant Significant active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) $000 $000 $000 NZ Finance Holdings Pty Limited 30 June , ,000 Bunnings Limited 30 June Fair value measurement hierarchy for liabilities as at 30 June 2016: Liabilities measured at fair value Date of valuation Total Fair value measurement using Quotes prices in active markets (Level 1) $000 Significant observable inputs (Level 2) $000 Significant unobservable inputs (Level 3) $000 NZ Finance Holdings Pty Limited 30 June , ,000 Bunnings Limited 30 June ,897 14, EVENTS AFTER REPORTING DATE There has not been any matter or circumstance in the interval between the end of the year and the date of this report that has significantly affected, or may significantly affect the operations of the, and the result of those operations or the state of affairs of the in subsequent financial years. 24

25 EY Building a bet;ff working worid Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO 8ox M939 Perth WA 6843 Tel: Fax: ey.com/au Independent auditor's report to the Shareholder of Bunnings Limited Report on the audit of the financial statements Opinion We have audited the financial statements of Bunnings Limited ("the Company") on pages 4 to 24, which comprise the statement of financial position of the Company as at 30 June 2017, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended of the Company, and the notes to the financial statements including a summary of significant accounting policies. In our opinion, the financial statements on pages 4 to 24 present fairly, in all material respects, the financial position of the Company as at 30 June 2017 and its financial performance and cash flows for the year then ended in accordance with New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime. This report is made solely to the Company's shareholder, as a body. Our audit has been undertaken so that we might state to the Company's shareholder those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholder, as a body, for our audit work, for this report, or for the opinions we have formed. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (New Zealand). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with Professional and Ethical Standard 1 (revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Ernst & Young provides taxation services to the Company. Partners and employees of our firm may deal with the Company on normal terms within the ordinary course of trading activities of the business of the Company. We have no other relationship with, or interest in, the Company. Information other than the financial statements and auditor's report The directors of the Company are responsible for the Annual Report, which includes information other than the financial statements and auditor's report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation GB:EH:WES:057

26 EY Building a better working \';orld In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Directors' responsibilities for the financial statements The directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial statements in accordance with New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing on behalf of the entity the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (New Zealand) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located at the External Reporting Board website: This description forms part of our auditor's report. The engagement partner on the audit resulting in this independent auditor's report is Gavin Buckingham. Ernst & Young Perth 2 November 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation GB:EH:WES:057