Page Key Financial Highlights Key Drivers of Improved Profitability Strategy Global Sales Revenue Franchisee Sales Revenue 10 Review of the Income

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2 2 Page 3 Key Financial Highlights 4 Key Drivers of Improved Profitability 5 Strategy 8 Global Sales Revenue 9 Franchisee Sales Revenue 10 Review of the Income Statement for the half year ended 31 December Review of the Balance Sheet as at 31 December Review of the Statement of Cash Flows for the half year ended 31 December Segment Analysis: Franchising Operations, Property & Company-Operated Retail 20 Outlook Questions (limited to 30 minutes)

3 3 HY2016 DEC15 DEC14 Incr/(Decr) EBIT $276.65m $218.21m +26.8% REPORTED PBT $262.01m $200.79m +30.5% PBT (excluding impairment losses 1 ) PBT (excluding property revaluations 2 ) $279.52m $205.74m +35.9% $240.82m $196.93m +22.3% REPORTED NPAT $185.51m $141.98m +30.7% NPAT (excluding impairment losses 1 ) NPAT (excluding property revaluations 2 ) $197.76m $145.45m +36.0% $170.66m $139.13m +22.7% Net Assets $2.65bn $2.54bn +4.1% Net Debt to Equity % 22.29% 22.18% Dividends Per Share 13.0c 9.0c +44.4% Special Dividend c EPS 16.70c 13.19c +26.6% 1 HY2016 impairment losses was $17.51m before tax ($12.26m after tax) impairment losses was $4.96m before tax ($3.47m after tax) 2 HY2016 net property revaluation increment was $21.19m before tax ($14.85m after tax) net property revaluation increment was $3.86m before tax ($2.85m after tax)

4 4 Main factors impacting net profit before tax: a 30.7% (+$35.33m) increase in the profitability of the franchising operations segment to $150.42m for HY16 due to: 10.2% (+$38.34m) increase in franchise fees; -26.5% (-$10.54m) decrease in tactical support provided to franchisees; an increase of $17.33m in the net property revaluation increment, from $3.86m in HY15 to $21.19m in HY16; a $10.94m turnaround in the profitability of the company-operated stores in Asia, from a loss of $5.48m in HY15 to a profit of $5.46m in HY16; a 30.8% (+$7.96m) increase in the profitability of the company-operated stores in New Zealand; a $4.89m turnaround in the profitability of the company-operated stores in Ireland & Northern Ireland, from a loss of $4.07m in HY15 to a profit of $0.82m in HY16 (its first profit since Dec-2007); recognition of an impairment loss of $17.51m, $13.20m from the write-down of equity-accounted investments and loans advanced to several mining camp accommodation joint ventures and $4.31m from the impairment of commercial loans in Australia, compared to $4.96m in prior period; a $4.17m decrease in the contribution of the mining camp accommodation joint ventures from a profit of $1.18m in HY15 to a trading loss of $3.00m in HY16; and $1.79m in equity-accounted start-up losses attributable to the 49.9% investment in Coomboona Holdings Pty Limited, comprising dairy farm operations, pedigree breeding and a genetics division.

5 5 Property: the ownership of high-quality, well-located complexes, with Harvey Norman, Domayne and Joyce Mayne franchisees as anchor tenants, is the foundation of the Harvey Norman integrated model and is the basis for our success attracts additional customers to Harvey Norman complexes through a cross-beneficial tenancy mix; delivers steady and reliable income stream from market-based rents and outgoings; and $2.37 billion property portfolio represents 52% of our total asset base and underpins the strength of Harvey Norman s consolidated balance sheet Total Property Segment Assets HY2014 DEC13 DEC14 HY2016 DEC15 Investment Properties $1.887bn $1.920bn $1.986bn Owned Land & Buildings* $355.12m $364.04m $380.52m Joint Venture Properties $20.92m $27.64m $2.59m Properties Held for Resale $8.84m $2.87m - Total Property Segment Assets $2.27bn $2.31bn $2.37bn * comprises owned land & buildings in New Zealand, Singapore, Slovenia & Australia

6 6 Omni Channel Strategy provides a seamless experience across digital and physical stores, creating a leading Australian integrated retail network. Platform (online, mobile, social) distinctions increasingly meaningless; one digital experience Geographically distributed fulfilment meets customer needs Big Data provides insights to customer preferences and processes Catalyst for new services Click and collect

7 7 Continued rollout of the two initiatives implemented in FY15 1. Merchandise, inventory and supplier management: good progress in expanding the number of categories and suppliers being replenished via the merchandise, inventory and supplier management system majority of larger categories and suppliers should be completed during early part of 2017 financial year 2. Workforce productivity technology: rollout was completed to all franchised complexes in October 2015 each franchisee now has access to information and tools to optimise how they recruit, roster and manage their staff Optimised Rostering is to be completed by 31 May 2016 will be deployed to all company-operated stores in NZ towards end of 2016 calendar year

8 8 Global Sales Increase / (Decrease) in Constant Local Currencies TOTAL SALES Headline Sales Increase / (Decrease) % 1Q2016 vs 1Q2015 2Q2016 vs 2Q2015 HY2016 vs Australia $A 5.7% 9.4% 7.7% New Zealand $NZ 4.8% 7.7% 6.4% Slovenia / Croatia Euro 3.2% (-3.6%) (-0.5%) Ireland Euro 13.5% 12.2% 12.7% Northern Ireland Pound 21.7% 12.6% 16.7% Global Sales Increase / (Decrease) in Constant Local Currencies LIKE-FOR-LIKE SALES Like-for-Like Sales Increase / (Decrease) % 1Q2016 vs 1Q2015 2Q2016 vs 2Q2015 HY2016 vs Australia $A 7.1% 10.3% 8.8% New Zealand $NZ 3.4% 7.3% 5.6% Slovenia / Croatia Euro 2.3% (-3.8%) (-1.1%) Ireland Euro 11.7% 12.2% 12.0% Northern Ireland Pound 21.7% (-7.9%) 5.4%

9 headline Australian franchisee sales revenue increased 7.7% to $2.72bn in HY16 vs $2.53bn in HY15 like-for-like franchisee sales increased 8.8% to $2.71bn in HY16 vs $2.52bn in HY15 Q2 of FY16 marked the 12 th consecutive quarter-on quarter increase in Australian franchisee sales on a like-for-like basis since March 2013 quarter franchisee sales turnover for the period 1 Jan 2016 to 25 Feb 2016 increased 6.7% over the corresponding prior period and 7.3% on a like-for-like basis 9 Retail sales in Harvey Norman, Domayne and Joyce Mayne complexes in Australia are made by independently owned franchised business entities that are not consolidated with the consolidated entity s results.

10 10 Total Revenues HY2016 DEC15 DEC14 Incr/(Decr) % Sales Revenue* $911.98m $839.33m +$72.66m +8.7% Gross Profit $282.42m $246.13m +$36.28m +14.7% Revenues & Other Income $626.43m $565.16m +$61.27m +10.8% Sales Revenue by $72.66m Revenues & Other Income by $61.27m $23.42m increase in NZ sales due to: full 6 months trading for Napier store (opened Sep-14); high consumer sentiment, solid macroeconomic conditions and the robust housing market in Auckland $25.98m increase in Ireland & Northern Ireland due to continued recovery in the Irish economy and high consumer confidence. The new flagship furniture store at Balmoral Plaza, off Boucher Road in South Belfast, opened in Nov-15 $16.40m increase in Asia sales mainly due to appreciation of the SGD against AUD by 12.1%. $8.10m increase in other non-franchised retail sales $2.55m increase in Slovenia & Croatia primarily due to appreciation of the Euro against AUD by 5.5% $38.34m increase in gross franchise fees received on the back of a 7.7% increase in headline franchisee sales revenue $21.19m net property revaluation increase in HY16 vs $3.86m net increase in HY15 $1.66m increase in rent & outgoings received from franchisees & external tenants

11 11 Expenses & Profit HY2016 DEC15 DEC14 Incr/(Decr) % Total Expenses ($647.16m) ($617.49m) +$29.67m +4.8% Share of JV investments $0.34m $6.99m -$6.65m -95.2% Profit Before Tax $262.01m $200.79m +$61.23m +30.5% Income Tax Expense ($74.94m) ($58.68m) +$16.26m +27.7% Non-Controlling Interests ($1.57m) ($0.12m) +$1.44m +1172% Profit After Tax & NCI $185.51m $141.98m +$43.52m +30.7% Total Expenses by $29.67m Share of JV investments $6.65m Higher tax charge by $16.26m $14.15m increase in administrative expenses mainly due to higher wages paid and higher consultancy costs from the implementation of operational efficiencies $6.58m increase in marketing expenses to promote the Harvey Norman, Domayne and Joyce Mayne brands in Australia and drive franchisees sales, and higher advertising costs in company-operated stores, including the promotion of the new flagship store at Millenia Walk, Singapore and the upgrading of the brand in Northern Ireland with the opening of the premier Home Centre in South Belfast. $11.85m increase in other expenses primarily due to: $12.55m higher impairment loss ($17.51m in HY16 vs $4.96m in HY15) attributable to loans and investments in mining camp accommodation JVs and other commercial loans in Australia; offset by $10.54m reduction in tactical support provided to franchisees during period $0.97m increase in occupancy expenses mainly related to new store openings in Singapore and Northern Ireland $4.17m decrease in the contribution of the mining camp accommodation joint ventures $1.79m in equity-accounted start-up losses for the 49.9% investment in Coomboona Holdings Pty Ltd $16.26m increase in tax expense in HY16 due to higher taxable income vs HY15 HY16 effective tax rate of 28.60% vs HY15 effective tax rate of 29.23%

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13 13 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Total Assets $4.20bn $4.24bn $4.39bn $4.36bn $4.58bn Total Liabilities $1.94bn $1.93bn $1.94bn $1.82bn $1.93bn Net Assets $2.26bn $2.32bn $2.45bn $2.54bn $2.65bn Total Assets by $220.49m Total Liabilities by $115.34m $152.41m increase in trade & other receivables mainly due to a rise in aggregate working capital advances to franchisees and a rise in company-operated store debtors $66.10m increase in the fair value of investment properties due to net property revaluation increases totalling $26.06m since Dec-14 and capital refurbishments of existing properties $17.75m increase in inventory due to higher stock holdings in offshore company-operated stores (namely in NZ, Ireland and Northern Ireland) in response to increased demand from customers $1.84m decrease in equity-accounted investments due to new joint venture investment in Coomboona Holdings Limited of $25m offset by the impairment of equity-accounted investments in the mining camp accommodation JV s of $7.24m, operating trading losses mining camp JV s of $3.00m and the sale of the investment in the Lincoln Junction JV in New Zealand in Sep-15 offset by: $12.59m decrease in cash & cash equivalents due to higher utilisation of existing cash reserves for investing activities, including cash outflows to acquire/refurbish investment properties and other fixed assets, the capital contribution of the new dairy JV, higher loans granted to related and other entities, and $50m repayment of Syndicated Facility $69.79m increase in trade & other payables due to the ramp-up of stock holdings for the Christmas trading period $13.70m increase in interest-bearing loans & borrowings due to higher short-term borrowings by companyoperated stores and increased amounts owing to Director-related entities. The utilisation of the Syndicated Facility in Australia remained $410m $3.54m increase in current tax liabilities due to higher taxable income relative to prior period $20.76m increase in deferred tax liabilities due to temporary differences raised on the net property revaluation increases since Dec-14

14 14 HY2016 DEC15 DEC14 Incr/(Decr) % Operating Cash Flows $141.77m $136.21m +$5.56m +4.1% Operating cash flows by $5.56m $46.24m increase in net receipts from franchisees mainly due to increase in revenue received from franchisees by $38.22m and reduction in tactical support payments by $10.54m $80.97m increase in receipts from customers mainly due to higher sales revenue from company-operated stores, assisted by new store openings and the buoyant Christmas trading period $3.09m reduction in interest paid due to lower utilisation of debt facilities throughout the period $1.71m reduction in distributions from JVs Offset by: $102.33m increase in payments to suppliers and employees mainly due to higher stock purchases by company-operated stores, higher wages and salaries and a rise in marketing expenses to publish Harvey Norman branded content to drive sales in Australia and overseas $14.78m increase in income taxes paid and $5.82m increase in GST payments

15 HY2016 DEC15 DEC14 Incr/(Decr) % Investing Cash Flows ($106.64m) ($30.89m) -$75.75m -245% Financing Cash Flows ($180.28m) ($197.16m) +$16.88m +8.6% Net Increase/(Decrease) in Cash Flows ($145.15m) ($91.83m) -$53.32m Cash & Cash Equivalents At Beginning of Period $153.22m $115.17m m Cash & Cash Equivalents At End of Period $8.07m $23.34m -$15.27m -65.4% 15 Investing cash outflows by $75.75m Financing cash outflows by $16.88m $12.91m increase in loans granted to related parties and other unrelated entities $25m capital contribution to Coomboona Holdings Pty Limited representing a 49.9% investment in its dairy farm operations $23.21m increase in cash outflows to acquire new investment property assets and the capital refurbishment of existing properties $6.07m increase in payments to acquire and refurbish plant and equipment assets in Australian franchised complexes and new offshore store openings $10.52m reduction in proceeds from insurance claim as the prior period receipt related to the final settlement of two claims in NZ $52.00m decrease in repayments of the Syndicated Facility Agreement $111.46m decrease in dividends paid due to the Special Dividend of $148.72m paid in Dec-14 offset by a higher final dividend paid in Dec-15 (11.0c per share) vs Dec-14 (8.0c per share) offset by: $118.44m reduction in proceeds from new share issued (HY16 amount related to the exercise of options by directors of $2.28m and HY15 amount related to the proceeds from the Renounceable Rights Offer of $120.72m) $28.88m increase in repayments to related parties

16 16 HY2016 DEC15 DEC14 Incr/(Decr) % Franchising Operations Revenue $489.88m $454.64m +$35.24m +7.8% Franchising Operations Result $150.42m $115.09m +$35.33m +30.7% Franchising Operations Margin % 5.53% 4.55% the franchising operations segment contributes over 57% to the overall profit before tax of the consolidated entity the increase in gross franchising operations revenue of 7.8% is directly proportional to the increase in headline Australian franchisee sales revenue of 7.7% for the Dec-15 half year the increase in the net franchising operations result of 30.7% is significantly higher than the rise in franchisee sales revenue as the segment s expenses have marginally decreased on prior period, despite the rise in revenue and increased franchise activity

17 17 Franchised Complexes Number of franchised complexes in Australia Openings during period HY2014 DEC13 DEC14 HY2016 DEC HN HN - Rebranded during period DM -1 JM Closures during period -7 HN -3 JM -5 HN -2 JM -3 HN -2 JM Number of franchisees in Australia Franchising operations revenue by $35.24m Franchising operations result by $35.33m increase is primarily due a $38.34m rise in gross franchise fees received due to increased franchisee turnover particularly in the December 2015 quarter where like-for-like franchisee sales revenue increased by 10.3% on the previous corresponding quarter franchising operations segment revenue increased by $35.24m but operating expenses for the segment actually marginally decreased despite higher franchise sales and increased business activity franchising operations segment expenses decreased from $339.55m in HY15 to $339.46m despite a 7.8% rise in segment revenue reduced operating expenses include lower tactical support payments by $10.54m (-26.5%) relative to prior period offset by higher marketing expenses incurred in publishing Harvey Norman, Domayne and Joyce Mayne branded content in Australia

18 18 Total Property Segment HY2016 DEC15 DEC14 Incr/(Decr) % Property Revenue $137.13m $119.24m +$17.89m +15.0% Net Property Revaluation Adjust. $21.19m $3.86m +$17.33m +449% Property EBITDIA $97.12m $80.45m +$16.67m +20.7% Property Result Before Tax $76.80m $66.05m +$10.75m +16.3% Property segment revenue by $17.89m Property segment result before tax by $10.75m increase includes $17.33m increase in the net property revaluation adjustment relative to previous period ($21.19m net increase in HY16 vs $3.86m net increase in HY15) $17.89m increase in property segment revenue offset by: $7.24m impairment of equity-accounted investments in mining camp accommodation joint ventures during the period; $3.00m equity accounted trading loss incurred by mining camp accommodation joint ventures vs a profit of $1.18m in the previous half year

19 19 Companyoperated retail revenue by $78.77m Companyoperated retail result by $21.92m $24.15m increase in NZ revenue due to: $23.42m increase in sales partly due to a full 6-month s contribution from the Napier store (opened Sep-14), favourable economic conditions and robust housing market $26.54m increase in Ireland & Northern Ireland revenue due to improved performances across all product categories, particularly bedding and electrical. $17.55m increase in Asian revenue due to the strengthening of the SGD vs AUD $8.10m increase in revenue from non-franchised retail controlled entities $2.43m increase in Slovenia & Croatia $10.94m increase in profitability in Asia due to gross margin improvements through more effective inventory management assisted by the implementation of the information technology system in 2014 $7.96m increase in profitability of company-operated stores in NZ. $4.89m turnaround in the result from Ireland & Northern Ireland (HY16 profit of $0.82m vs HY15 loss of - $4.07m) offset by: $1.75m decrease in profit from non-franchised retail controlled entities $0.11m decrease in result from Slovenia & Croatia

20 20 The omni channel strategy, incorporating the Harvey Norman integrated retail, franchise, property and digital platforms, is robust and remains the most flexible and adaptable format to effectively capitalise on changes in consumer demand and emerging trends. This integrated operating model, supplemented by the momentum of the continued rollout of operational efficiencies introduced over the last couple of years, has enabled franchisees to strengthen and grow their market position in key product categories. The expectation is this will continue. Franchisee sales turnover for the period 1 Jan 2016 to 25 Feb 2016 increased 6.7% over the corresponding prior period and 7.3% on a likefor-like basis.

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