The Warehouse Group Interim Report

INTERIM REPORT
2018
— Progress
Report.
SIX MONTHS
PLAN IN ACTION

The Warehouse increased unit
sales volume by 6.7%
Percentage of products moved
to EDLP in Red is at 91%
India Sourcing Office operational
in H1 with more than 50 new
suppliers onboarded
Strong bricks and mortar retail
store sales in Torpedo7 with a
12.2% increase in Same Store Sales
Noel Leeming’s Same Store Sales
up 5.1%

YEAR IN PROGRESS
FINANCIAL HIGHLIGHTS
The Warehouse Group’s first half results are
influenced by the major changes occurring in the
business as we execute our Transformation Plan.
We are focused on delivering our strategy,
fixing our retail fundamentals and investing in our
digital future. The second half of FY18 will be all
about accelerating the pace of our Transformation.
$
1
,
5 9 8 .1
M
$
522.5
M
10
%
66
%
Group Retail
Sales for the
period.
Gross
Profit.
Group Online
Sales Growth.
Noel Leeming’s
Operating Profit
Increase.
01

Fig. 01
Joan Withers.
The Warehouse Group’s Adjusted Net Profit
After Tax of $37.7M for the half year to
28 January 2018 was above the guidance
range issued to the market in early January.
This was mainly due to a one-off impact
within the Noel Leeming business.
When restated to eliminate the impact of
the discontinued loss-making Financial
Services operations, this equates to a
decline of 16.4% on the comparative period
last year. However, within this year’s result
we have provisioned an additional $10M for
incentive payments.
Our Net Profit After Tax, including the Financial Services results for both years,
shows an increase of 134%, which is reflected in a similar level of growth to our
earnings per share.
Group retail sales for the half year were $1,598.1M, down 0.9% on the same period
last year. Gross Profit was up 0.7% and other Costs of Doing Business (CODB) were
up 3.3% on the prior period.
The Group’s Balance Sheet remains in good shape, with net debt reduced by
almost $100M on the prior period.
Six months
of progress.
CHAIR’S
REPORT.
Group
Increase in
Reported
Profit.
134
%
CHAIR’S REPORT
SIX MONTHS OF PROGRESS
02

Transformation. We need to demonstrate to the market our
ability to execute against strategy and we have secured globally-
credentialled expertise to increase our horsepower and to utilise
proven processes for effecting complex, value-enhancing change
programmes efficiently and sustainably.
Governance
The Board has also made changes to improve Corporate
Governance. A number of changes to committee structures
and charters have been made. Following the resignation of
Vanessa Stoddart and James Ogden in November last year and
an assessment of the skills we need around the board table, the
process is now in train to find new Directors to supplement our
existing skill mix. Sir Stephen Tindall is currently on 12 months’
leave of absence from the Board and Robbie Tindall, Sir Stephen’s
alternate, is fulfilling that directorial role.
During a time of major change, the Board’s role in maintaining
focus on key issues, such as Health and Safety and setting the
organisation’s culture, becomes increasingly important. The Board
has recently established a dedicated Health, Safety and Wellbeing
Committee. Ensuring that we pay attention to not only ‘what’
changes we are making but also to ‘how’ those changes are being
made to strengthen rather than weaken our company’s culture
is a key role that the Board is playing over the next 18 months.
We are acutely aware that we need fundamental change in order
to deliver sustainable profitability into the future. Organisational
health is a critical focus as we effect that change.
The appropriate remuneration and incentivisation of our people
during periods impacted by significant change is a focus for
the Board and its People and Remuneration Committee. Across
the Group we have a variety of incentive plans that mean the
participation rate of staff involved in those programmes is around
79%. This ranges from stores who are specifically incentivised to
hit performance targets, through to senior managers who hold
responsibility for achieving the Transformation. Not all of our
incentives are linked directly to short-term financial measures,
a significant component is linked to behaviours, reflecting the
importance of culture, and execution against agreed plans.
In this half-year result we have accrued for our incentive plans
to be triggered, due mainly to the fact that to this point we
haven’t experienced the sharp declines in performance that we
thought possible, and again to date, we are executing our change
programme on schedule. The final determination around incentives
will be made at year-end; however, based on our half-year
performance and forecast for the full year, the accrual is prudent.
Returning Value
The Board announced an interim dividend of 10 cents per share.
This reflects the Board’s confidence in our Transformation
journey, and the fact that except for accruals around our incentive
programmes, the first half’s results are almost on par with those
of last year. As detailed earlier, if we include the Financial Services
results for both periods, the bottom line is materially improved.
The Board has signalled that we intend to review our dividend
policy before year-end, given that the current policy references
performance of the retail group. This will, therefore, eliminate
losses from the now-divested Financial Services business in the
calculation of the dividend.
Our Transformation continues to accelerate into the second half,
and I look forward to being able to report against our progress in
the full-year report.
To all shareholders, please accept my and the Board’s sincere
thanks for your continued support. To our Team Members, we
express our gratitude for the enormous effort you are making
in ensuring The Warehouse Group retains its iconic status in the
New Zealand retail landscape.
Our Transformation Journey
The Warehouse Group is undergoing a major Transformation to
ensure that it is competitive and delivers sustainable profitability in
the future. We do not call it Transformation lightly; the changes that
the Group is undertaking are not incremental changes to its current
businesses but are fundamental changes in the way the Group
operates, services customers and competes in the market.
Transformation is not easy. Many organisations wait until they
are making losses or are at some crisis point before they make
the sorts of changes necessary to survive. For many, that delay
means the changes come too late, or are overshadowed by a lack
of financial capacity to deliver them.
The Board, the Group Chief Executive and the leadership team
are aligned about the need for change. The trajectory of our
earnings in recent years, the overly complex nature of our
operations, ever-intensifying competition, and changing customer
expectations are why we are acting now. Our Group CEO and
leadership team have witnessed traditional retail being challenged
in international markets. As detailed below, Nick Grayston has
galvanised formidable expertise and experience, both locally and
from across the world, to effect the changes that are required
within our business.
First Half Transformations
The first half of FY18 has seen the start of this Transformation.
A major first step has been the change from our hi-lo discounting-
based pricing in The Warehouse, to an Every Day Low Price (EDLP)
strategy. We believe that this gives us a stronger competitive
offer, does not expose us as much to international price-based
competition as a discounting strategy would, and fits with our desire
to streamline and simplify our operations to minimise our operating
costs so that we can provide better prices to customers.
These changes are never easy and offshore experience has many
examples where retailers suffer significant sales and profitability
declines in doing this. The Warehouse has made the change to
EDLP, has reduced the number of products it has in its ranges
while improving those that remain, and has achieved this with
only a [3.6%] reduction in sales (in The Warehouse) and a [4.4%]
reduction in Gross Profit. Some of this decline relates to clearance
activity in the shift to EDLP, and we see the second half-year being
the time where we start rebuilding our Gross Profit performance.
The second major change to our business has been the
operational integration of Warehouse Stationery with the core
Warehouse business, and Torpedo7 with Noel Leeming. This
operational integration means common management disciplines,
common teams doing many of the behind-the-scenes jobs
such as sourcing and merchandising, and combined back-office
processes. It doesn’t mean in-store integration, although we are
trialling some combined Warehouse and Warehouse Stationery
formats to test that concept. This second set of changes has
come with some teething problems, such as when people take on
unfamiliar responsibilities or migrate technology systems, some
of which have impacted our performance in the first half-year.
We continue to see value in the long term from making these
changes so are committed to staying the course.
Leadership
Critical to delivering a successful change programme is having
the right leadership, and getting assistance when we need it.
From a leadership perspective, Nick Grayston, our Group CEO,
has been making specific investments to boost our capabilities
and readiness for the Transformation challenge. We have been
able to attract and retain some key international and domestic
talent. Key hires this half have been Jonathan Waecker as Chief
Marketing Officer, Chris Foord as Head of Logistics, Scott Newton
as Chief Transformation Officer, Evelyn Ross as Chief People
Officer and Jonathan Oram as Deputy Chief Financial Officer.
As a result, we now have a world-class team, certainly one of the
strongest teams in retail in New Zealand. The experience of our
leadership team will play a key role in the successful execution of
our Transformation Plan.
Another key role will be played by the international consultancy
firm that we have engaged to assist us in the execution of the
Joan Withers
Chair
CHAIR’S REPORT
SIX MONTHS OF PROGRESS
03

$
49M
$
3.7M
The Warehouse’s
Operating Profit.
Warehouse
Stationery’s
Operating
Profit.
This first half-year at The Warehouse
Group has been about executing some
significant change programmes and
then focusing on trading the peak retail
season. Our financial results have been
directly affected by these changes, but
we saw an improving trend in our second
quarter results and this is continuing into
the second half.
We believe that we have the right
strategy in place to fix our retail
fundamentals and invest in our digital
future and the second half of FY18 is
all about accelerating the pace of our
Transformation.
Fig. 02
Nick Grayston.
Step change
for progress.
CEO
UPDATE.
CEO UPDATE
STEP CHANGE FOR PROGRESS
04

$
15.3M
$
0.8M
Noel Leeming’s
Operating
Profit.
Torpedo7
Group’s
Operating
Profit.
Key hires include Jonathan Waecker as Chief Marketing Officer.
As we continue to face intense competition, it is crucial that
we maximise our marketing and communications capabilities
to deliver for our customers, who are beginning to expect
customisation and personalisation when engaging with brands.
Jonathan will be working on building an integrated marketing
capability that delivers for our business and customers.
Chris Foord also joined us as Chief Logistics Officer leading
all aspects of our logistics and supply chain across the Group.
Chris was a transformation lead in the supply chain space in his
previous role, and we look forward to having this knowledge on
board as we transform our business.
I am delighted to have added Evelyn Ross as Chief People Officer.
One of our critical challenges as we move through Transformation
is to build a high-performance capability which increases
productivity without harming our precious culture. Evelyn and
I have worked together previously in this context and I am
confident that she will be able to add value quickly in her role.
Finally, we also made a key hire specifically related to our
change agenda with Scott Newton joining us in the role of
Chief Transformation Officer. Scott brings a wealth of general
management, finance and transformation experience to the
Group with an extensive track record in driving sustained
transformational change across a number of New Zealand and
international businesses.
In the second half of FY18 my Executive Team will be supported
by coaches from the international consultancy firm that we have
engaged to assist us on the execution of the Transformation.
Transformation in H2
As we move into the second half the business priority is about
realising the full potential of The Warehouse Group and ensuring
that we have captured all the right initiatives that will help us
drive a step change in performance.
External reviews have confirmed that our strategy is sound, and
that our challenge is in execution. With the assistance of our
external coaches, we are in the process of improving our internal
processes around executing change in the business. We will be
in a position to share more detail about our key Transformation
initiatives and milestones at the end of the financial year.
Our Performance
The Warehouse Group’s first-half results have been influenced by
major changes occurring in the business as we executed against
our Transformation Plan. Retail sales were down 0.9% on last year.
The Warehouse reported sales of $940.1M, down from $975.1M
in the first half of FY17. The reduction in sales revenue was an
anticipated effect of the move to an EDLP strategy, which meant
a reduction in average selling price. We did, however, see an
increase of 6.7% in unit volume of product sold. The first half’s
operating margin was also impacted as the business managed a
planned one-off clearance of discontinued stock lines as part of
the change in our go-to-market strategy.
Warehouse Stationery reported sales of $129M, down 7.1%
compared to the same period last year, and an operating profit
decrease of 43.4%. The operational integration of
The Warehouse and Warehouse Stationery caused significant
internal systems and process challenges which impacted
availability of products in store. Some of this was due to the
migration of legacy systems and complexities of our data
formatting, which led to replenishment and consequent
availability issues. This was coupled with softer trading in key
categories leading to a sharp decline in performance. We are
focused on returning the Blue business to normal performance
levels in the second half and ensuring we are providing additional
support to our teams during this transition period.
We are also committed to continuing to test our ‘store within a
store’ concept and the first half saw us open this newer format in
Rolleston. We are seeing encouraging results from this store and
intend to extend this trial before we make any long-term decisions.
Torpedo7 Group had a challenging first half. Sales were up 2.5%
with strong growth coming from Torpedo7 bricks and mortar
retail stores which were up 12.2%. However, product mix and
clearance of aged inventory have impacted Gross Profit.
We invested in brand awareness marketing which increased
CODB materially. We tackled legacy issues with inventory and
sales in No.1 Fitness and Shotgun.
Against this backdrop Noel Leeming was a shining light in terms
of performance with an increase in reported first-half sales of
7.5% and a 5.1% increase in same store sales compared to the
same period last year. Operating profit for the first half was up
65.7% to $15.3M, helped by a one-off impact.
People and Leadership
The first half has seen some international and domestic additions
to my Executive Team as we remain focused on ensuring we have
the right skills to deliver on our Transformation agenda.
Nick Grayston
Group Chief Executive Officer
CEO UPDATE
STEP CHANGE FOR PROGRESS
05

For the 26 weeks
ended 28 January 2018
CONTENTS:
Consolidated Income Statement 7
Consolidated Statement of Comprehensive Income 7
Consolidated Statement of Changes in Equity 8
Balance Sheet 9
Consolidated Statement of Cash Flows 10
Reconciliation of Operating Cash Flows 10
Notes to the Financial Statements 11
06
INTERIM FINANCIAL REPORT

Consolidated Income Statement
NOTE
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000 $000 $000
Continuing operations
Retail sales
3
1,598,0761,611,8622,980,771
Cost of retail goods sold(1,075,587)(1,092,854)(2,008,859)
Gross profit522,489 519,008971,912
Other income5,214 4,3728,144
Lease and occupancy expenses(80,564)(76,168)(156,659)
Employee expenses(264,397)(253,645)(486,196)
Depreciation and amortisation expenses
3
(28,838)(29,054)(58,376)
Other operating expenses(95,485)(94,589)(170,988)
Operating profit from continuing operations
3
58,419 69,924 107,837
Unusual items
4
(3,223)(4,773)(605)
Earnings before interest and tax from continuing operations55,196 65,151107,232
Net interest expense(5,516)(6,586)(12,527)
Profit before tax from continuing operations49,68058,565 94,705
Income tax expense(14,204)(16,854)(23,691)
Net profit for the period from continuing operations35,476 41,711 71,014
Discontinued operations
Loss from discontinued operations (net of tax)
15
(3,547)(28,073)(50,283)
Net profit for the period31,929 13,638 20,731
Attributable to:
Shareholders of the parent31,798 13,555 20,429
Minority interests131 83 302
31,929 13,638 20,731
Profit attributable to shareholders of the parent relates to:
Profit from continuing operations35,34541,628 70,712
Loss from discontinued operations(3,547)(28,073)(50,283)
31,79813,55520,429
Earnings per share attributable to shareholders of the parent:
Basic earnings per share9.2 cents3.9 cents5.9 cents
Diluted earnings per share9.2 cents3.9 cents5.9 cents
Earnings per share attributable to shareholders of the parent from continuing operations:
Basic earnings per share10.3 cents12.1 cents20.5 cents
Diluted earnings per share10.2 cents12.0 cents20.4 cents
Consolidated Statement of Comprehensive Income
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000 $000 $000
Net profit for the period
31,929 13,638 20,731
Items that may be reclassified subsequently to the Income Statement
Movement in foreign currency translation reserve
(6)
––
Movement in hedge reserves (net of tax)
4,867 13,423 7,265
Total comprehensive income for the period
36,790 27,061 27,996
Attributable to:
Shareholders of the parent
36,659 26,978 27,694
Minority interest
131 83 302
Total comprehensive income
36,790 27,061 27,996
Attributable to:
Total comprehensive income from continuing operations
40,337 55,134 78,279
Total comprehensive income from discontinued operations
(3,547)(28,073)(50,283)
Total comprehensive income
36,790 27,061 27,996
Total comprehensive income from continuing operations attributable to:
Shareholders of the parent
40,206 55,051 77,977
Minority interest
131 83 302
Total comprehensive income
40,337 55,134 78,279
INTERIM FINANCIAL STATEMENTS
07

Consolidated Statement of Changes in Equity
(UNAUDITED)
SHARE
CAPITAL
TREASURY
STOCK
HEDGE
RESERVES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
EMPLOYEE
SHARE
BENEFITS
RESERVE
RETAINED
EARNINGS
MINORIT Y
INTEREST
TOTAL
EQUIT Y
$000 $000 $000 $000 $000 $000 $000 $000
For the 26 weeks ended 28 January 2018
Balance at the beginning of the period
365,517 (7,471)(15,174)–2,138 140,512 867 486,389
Profit for the half year
– – –––31,798 131 31,929
Movement in foreign currency translation reserve
– – – (6)–––(6)
Movement in derivative cash flow hedges
–– 6,457 - – – –6,457
Movement in de-designated hedges
– – 303 - ––– 303
Tax related to movement in hedge reserve
––(1,893)- –––(1,893)
Total comprehensive income
––4,867 (6)– 31,798 131 36,790
Share rights charged to the income statement
– –– –288 –– 288
Share rights exercised
– 1,411 ––(1,725)314 ––
Dividends paid
– ––––(20,811)(4)(20,815)
Treasury stock dividends received
–––––101 – 101
Balance at the end of the period365,517 (6,060)(10,307)(6)701 151,914 994 502,753
(UNAUDITED)
SHARE
CAPITAL
TREASURY
STOCK
HEDGE
RESERVES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
EMPLOYEE
SHARE
BENEFITS
RESERVE
RETAINED
EARNINGS
MINORIT Y
INTEREST
TOTAL
EQUIT Y
$000 $000 $000 $000 $000 $000 $000 $000
For the 26 weeks ended 29 January 2017
Balance at the beginning of the period
365,517 (7,832)(22,439)–3,623 171,560 167 510,596
Profit for the half year
– – – –– 13,555 83 13,638
Movement in foreign currency translation reserve
– – – – –– – –
Movement in derivative cash flow hedges
–– 18,340 – –– –18,340
Movement in de-designated hedges
–– 303 ––– – 303
Tax related to movement in hedge reserve
– – (5,220)– – – –(5,220)
Total comprehensive income
– – 13,423 – – 13,555 83 27,061
Share rights charged to the income statement
– – – –1,048 – –1,048
Share rights exercised
– 2,224 – –(2,505)281 – –
Dividends paid
– –– – – (17,342)(67)(17,409)
Treasury stock dividends received
– – – ––73 – 73
Balance at the end of the period
365,517 (5,608)(9,016)– 2,166 168,127 183 521,369
(AUDITED)
SHARE
CAPITAL
TREASURY
STOCK
HEDGE
RESERVES
FOREIGN
CURRENCY
TRANSLATION
RESERVE
EMPLOYEE
SHARE
BENEFITS
RESERVE
RETAINED
EARNINGS
MINORIT Y
INTEREST
TOTAL
EQUIT Y
$000 $000 $000 $000 $000 $000 $000 $000
For the 52 weeks ended 30 July 2017
Balance at the beginning of the period
365,517 (7,832)(22,439)– 3,623 171,560 167 510,596
Profit for the year
–– –––20,429 302 20,731
Movement in derivative cash flow hedges
––9,484 –– – – 9,484
Movement in de-designated hedges
–– 606 –– – –606
Tax related to movement in hedge reserve
– – (2,825)––––(2,825)
Total comprehensive income
––7,265 ––20,429 302 27,996
Contributions by and distributions to owners:–
Share rights charged to the income statement
–– ––1,283 – – 1,283
Minority interest capital contribution
– –– –––750 750
Share rights exercised
–2,509 –– (2,768)259 – –
Dividends paid
–– –––(52,026)(352)(52,378)
Treasury stock dividends received
––– –– 290 – 290
Purchase of treasury stock
–(2,148)––– – – (2,148)
Balance at the end of the period
365,517 (7,471)(15,174)– 2,138 140,512 867 486,389
INTERIM FINANCIAL STATEMENTS
08

Balance Sheet
NOTE
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000 $000 $000
ASSETS
Current assets
Cash and cash equivalents
11
44,778 44,535 47,492
Finance business receivables
–
74,675
–
Trade and other receivables
6
75,367 80,427 71,088
Inventories
540,339 540,513 491,818
Derivative financial instruments
12
426 500
–
Taxation receivable
– –
4,959
660,910 740,650 615,357
Assets held for sale
17
20,368 52,281 77,142
Total current assets
681,278 792,931 692,499
Non-current assets
Property, plant and equipment
9
244,091 252,929 252,175
Intangible assets
10
133,922 150,778 127,726
Derivative financial instruments
12
647 291 541
Deferred taxation
45,723 41,853 40,911
Total non-current assets
424,383 445,851 421,353
Total assets
1,105,661 1,238,782 1,113,852
LIABILITIES
Current liabilities
Borrowings
11
74,237 81,162 49,593
Trade and other payables
7
291,308 329,092 267,304
Derivative financial instruments
12
10,980 9,634 17,299
Taxation payable
1,262 667
–
Provisions
8
58,962 49,525 49,769
436,749 470,080 383,965
Securitised borrowings associated with assets held for sale
– –
56,717
Other liabilities directly associated with assets held for sale
17
4,194
–
5,443
Total current liabilities
440,943 470,080 446,125
Non-current liabilities
Borrowings
11
139,712 164,121 159,453
Securitised borrowings
11
–
62,597
–
Derivative financial instruments
12
2,701 1,855 2,507
Provisions
8
19,552 18,760 19,378
Total non-current liabilities
161,965 247,333 181,338
Total liabilities
602,908 717,413 627,463
Net assets
502,753 521,369 486,389
EQUITY
Contributed equity
359,457 359,909358,046
Reserves
(9,612)(6,850)(13,036)
Retained earnings
151,914 168,127140,512
Total equity attributable to shareholders
501,759 521,186485,522
Minority interest
994 183867
Total equity
502,753 521,369486,389
Net assets per share
145.7 cents 151.0 cents141.2 cents
INTERIM FINANCIAL STATEMENTS
09

Consolidated Statement of Cash Flows
NOTE
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000 $000 $000
Cash flows from operating activities
Cash received from customers
1,603,868 1,613,069 2,996,090
Payments to suppliers and employees
(1,541,019)(1,509,992)(2,841,679)
Income tax paid
(12,174)(20,091)(27,454)
Interest paid
(5,868)(8,344)(16,008)
44,807 74,642 110,949
Loans repaid by finance business customers
25,775 86,898 171,188
New loans to finance business customers
(23,938)(82,998)(154,049)
Net cash flows from operating activities
46,644 78,542 128,088
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
107 14,827 79,714
Proceeds from business disposal
16
17,291
– –
Minority interest capital contribution
– –
750
Purchase of property, plant, equipment and software
(38,925)(38,434)(70,575)
Contingent consideration
–
(1,000)(1,000)
Other items
– –
(327)
Net cash flows from investing activities
(21,527)(24,607)8,562
Cash flows from financing activities
Proceeds from/(Repayment) bank borrowings
4,822 (43,651)(79,821)
Proceeds from/(Repayment) securitised borrowings
(11,555)2,472 (3,408)
Repayment of finance leases
(262)(629)(1,196)
Purchase of treasury stock
– –
(2,148)
Treasury stock dividends received
101 73 290
Dividends paid to parent shareholders
(20,933)(17,479)(52,404)
Dividends paid to minority shareholders
(4)(67)(352)
Net cash flows from financing activities
(27,831)(59,281)(139,039)
Net cash flow
(2,714)(5,346)(2,389)
Opening cash position
47,492 49,881 49,881
Closing cash position
44,778 44,535 47,492
Reconciliation of Operating Cash Flows
Profit after tax
31,929 13,638 20,731
Non-cash items
Depreciation and amortisation expenses
3
28,838 29,912 60,191
Intangible asset impairment
10 ,9
–
22,714 40,061
Share based payment expense
288 1,048 1,283
Interest capitalisation
238 272 524
Supplier contributions
(2,699)
– –
Movement in deferred tax
(5,042)(3,977)(555)
Movement in de-designated derivative hedges
218 218 436
Total non-cash items
21,841 50,187 101,940
Items classified as investing or financing activities
Net loss/ (gain) on sale of property, plant and equipment
399 1,289 (9,979)
Loss on business disposal
1,458
– –
Direct costs relating to business disposal
– –
946
Supplementary dividend tax credit
122 137 378
Total investing and financing adjustments
1,979 1,426 (8,655)
Changes in assets and liabilities
Trade and other receivables
(3,775)(3,368)4,248
Finance business receivables
2,229 (1,110)6,210
Inventories
(48,521)(38,800)9,895
Trade and other payables
25,435 66,450)7,557
Provisions
9,306 (8,480)(6,811)
Income tax
6,221 (1,401)(7,027)
Total changes in assets and liabilities
(9,105)13,291 14,072
Net cash flows from operating activities
46,644 78,542 128,088
INTERIM FINANCIAL STATEMENTS
10

Notes to the Financial Statements
1. GENERAL INFORMATION
The Warehouse Group Limited (the Company) and its subsidiaries
(together the Group) trade in the New Zealand retail and financial services
sectors. The Company is a limited liability company incorporated and
domiciled in New Zealand. The Group is registered under the Companies
Act 1993 and is an FMC Reporting Entity under Part 7 of the Financial
Markets Conduct Act (FMCA) 2013. The address of its registered office is
Level 4, 4 Graham Street, PO Box 2219, Auckland. The Company is listed
on the New Zealand Stock Exchange (NZX).
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The interim financial statements of the Group have been prepared in
accordance with Generally Accepted Accounting Practice in New Zealand
(NZ GAAP). They comply with NZ IAS 34 Interim Financial Reporting and
IAS 34 Interim Financial Reporting and, consequently, do not include all
the information required for full financial statements. These Group interim
financial statements should be read in conjunction with the annual report
for the year ended 30 July 2017.
These financial statements have been prepared under the historical cost
convention except for the revaluation of certain financial instruments
(including derivative instruments). The reporting currency used in the
preparation of the financial statements is New Zealand dollars, rounded
to the nearest thousands unless otherwise stated.
The accounting policies that materially affect the measurement of the
interim financial statements have been applied on a consistent basis with
those used in the audited financial statements for the 52 weeks ended
30 July 2017 and the unaudited interim financial statements for the
26 weeks ended 29 January 2017.
There have been no significant changes in accounting policies applied by
the Group during the current half year period.
Seasonality
The Group’s revenue and profitability follow a seasonal pattern with
higher sales and operating profits typically achieved in the first half of
the financial year as a result of additional sales generated during the
Christmas trading period.
Approval of Financial Statements
These consolidated interim financial statements were approved for
issue by the Board of Directors on 7 March 2018. Unless as otherwise
stated, the financial statements have been reviewed by our Auditors,
but are not audited.
3. SEGMENT INFORMATION
Operating segments
The Group has four operating segments trading in the New Zealand
retail sector. These segments form the basis of internal reporting used
by management and the Board of Directors to monitor and assess
performance and assist with strategy decisions.
Each of the four retail segments represent a distinct retail chain,
synonymous with its segment name. Customers can purchase product
from the retail chains either online or through the Group’s physical
retail store network. The Group’s store network currently has 93
The Warehouse stores, 70 Warehouse Stationery stores, 79 Noel
Leeming stores and 11 Torpedo7 stores. The Warehouse predominantly
sells general merchandise and apparel, Noel Leeming sells technology
and appliance products, Torpedo7 sells sporting equipment and, as the
name indicates, Warehouse Stationery sells stationery.
Group support office functions such as Information Systems, Finance,
Brand Executives and People Support are operated using a shared
services model which allocates the costs of these support office
functions to individual brands calculated on an arm’s-length basis.
The remaining support office functions, which relate to corporate and
governance functions, a property company and the Group’s interest in a
chocolate factory, are not allocated and form the main components of the
“Other Group operations” segment.
NOTES TO THE FINANCIAL STATEMENTS
11

Notes to the Financial Statements – continued
3. SEGMENT INFORMATION
OPERATING PERFORMANCE
REVENUEOPERATING PROFIT
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000 $000$000 $000 $000 $000
The Warehouse
940,055 975,0971,761,399 49,03159,50884,531
Warehouse Stationery
128,987 138,775278,1813,6566,455 15,743
Noel Leeming
453,853 422,149810,705 15,2539,207 19,264
Torpedo7
88,591 86,402157,7267762,4242,675
Other Group operations
5,501 5,436 8,603 (10,297)(7,670)(14,376)
Inter-segment eliminations
(18,911)(15,997)(35,843)
Retail Group
1,598,076 1,611,8622,980,771 58,41969,924 107,837
Unusual items
(3,223)(4,773)(605)
Earnings before interest and tax from continuing operations
55,19665,151107,232
Net interest expense
(5,516)(6,586)(12,527)
Profit before tax from continuing operations
49,680 58,565 94,705
Operating margin
The Warehouse (%)
5.2 6.1 4.8
Warehouse Stationery (%)
2.8 4.7 5.7
Noel Leeming (%)
3.4 2.2 2.4
Torpedo7 (%)
0.9 2.8 1.7
Total Retail Group (%)
3.7 4.3 3.6
CAPITAL EXPENDITURE AND DEPRECIATION
CAPITAL EXPENDITUREDEPRECIATION & AMORTISATION
NOTE
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000 $000 $000 $000 $000 $000
The Warehouse
19,322 18,330 36,374 20,132 20,332 40,819
Warehouse Stationery
409 1,386 3,861 2,829 3,403 6,722
Noel Leeming
8,411 6,996 10,382 4,675 4,044 8,421
Torpedo7
474 185 581 520 571 1,059
Other Group operations
10,421 2,541 10,253 682 704 1,355
Retail Group
39,037 29,438 61,451 28,838 29,054 58,376
Discontinued Finance business
335 1,303 2,513
–
858 1,815
Total Group
9
39,372 30,741 63,964 28,838 29,912 60,191
BALANCE SHEET INFORMATION
TOTAL ASSETSTOTAL LIABILITIES
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
$000
$000 $000
The Warehouse
499,216
492,567 461,772
224,399 210,479 182,389
Warehouse Stationery
84,358
85,345 72,176
12,863 38,569 32,746
Noel Leeming
171,883
176,379 160,287
117,684 126,137 108,008
Torpedo7
50,770
50,131 51,742
11,586 11,956 11,269
Other Group operations
92,709
138,198 90,229
3,290 2,575 2,039
Retail Group
898,936
942,620 836,206
369,822 389,716 336,451
Discontinued Finance business
8,550
102,382 77,142
4,194 7,661 5,443
Operating assets/liabilities
907,486
1,045,002 913,348
374,016 397,377 341,894
Unallocated assets/liabilities
Cash and borrowings
44,778
44,535 47,492
213,949 307,880 265,763
Derivative financial instruments
1,073
791 541
13,681 11,489 19,806
Intangible Goodwill and Brands
106,601
106,601 106,601
– ––
Taxation
45,723
41,853 45,870
1,262 667
–
Total
1,105,661
1,238,782 1,113,852
602,908 717,413 627,463
NOTES TO THE FINANCIAL STATEMENTS
12

4. ADJUSTED NET PROFIT
NOTE
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
ADJUSTED NET PROFIT RECONCILIATION
$000
$000 $000
Adjusted net profit
37,666 45,036 68,185
Add back: Unusual items
Gain/(loss) on property disposal
–
(812)11,455
Restructuring costs
14
(3,223)(3,961)(12,060)
Unusual items before taxation
(3,223)(4,773)(605)
Income tax relating to unusual items
902 1,336 169
Income tax expense related to depreciation recovered on building disposals
–
29 2,963
Unusual items after taxation
(2,321)(3,408)2,527
Net profit attributable to shareholders of the parent
35,345 41,628 70,712
Certain transactions can make the comparison of profits between years difficult. The Group uses adjusted net profit as a key indicator of
performance and considers it provides a better understanding of underlying business performance and the Group also uses it as the basis for
determining dividend payments (after adjusting for losses from the Financial Services Group). Adjusted net profit makes allowance for the after-tax
effect of unusual items which are not directly connected with the Group’s normal trading activities. The Group defines unusual items as any profits
or losses from the disposal of properties or investments, goodwill impairment, direct costs and adjustments relating to business acquisitions or
disposals and costs connected with restructuring the Group.
5. DIVIDENDS
CENTS PER SHAREDIVIDENDS PAID
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
DIVIDENDS PAID
$000
$000 $000
Prior year final dividend
6.0 5.0 5.0 20,811 17,342 17,342
Interim dividend
– –
10.0
– –
34,684
Total dividends paid
6.0 5.0 15.0 20,811 17,342 52,026
On 7 March 2018 the Board declared a fully imputed interim dividend of 10.0 cents per ordinary share to be paid on 12 April 2018 to all shareholders
on the Group’s share register at the close of business on 3 April 2018.
NOTES TO THE FINANCIAL STATEMENTS
13

Notes to the Financial Statements – continued
6. TRADE AND OTHER RECEIVABLES
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Trade receivables
41,789 44,576 45,207
Prepayments
11,719 10,538 9,453
Business disposal proceeds receivable
–
1,000
–
Rebate accruals and other debtors
21,859 24,313 16,428
75,367 80,427 71,088
7. TRADE AND OTHER PAYABLES
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Trade creditors and accruals
231,004 242,727 204,784
Goods in transit creditors
21,940 18,681 21,187
Capital expenditure creditors
549 1,716 2,802
Goods and services tax
12,725 37,913 10,768
Reward schemes, lay-bys, Christmas club deposits and gift vouchers
14,934 16,147 15,820
Interest accruals
928 1,505 1,089
Payroll accruals
9,228 10,403 10,854
Total trade and other payables
291,308 329,092 267,304
8. PROVISIONS
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Current liabilities
58,962 49,525 49,769
Non-current liabilities
19,552 18,760 19,378
Total provisions
78,514 68,285 69,147
Provisions consist of:
Employee entitlements
65,011 55,416 55,693
Make good provision
7,909 7,868 8,012
Sales returns provision
4,104 4,119 3,708
Onerous lease
1,490 882 1,734
Total provisions
78,514 68,285 69,147
NOTES TO THE FINANCIAL STATEMENTS
14

9. PROPERTY, PLANT, EQUIPMENT AND COMPUTER SOFTWARE
NOTE
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Assets held for sale
17
11,874 52,281 8,064
Property, plant and equipment
244,091 252,929 252,175
Computer software
10
27,321 44,177 21,125
Net book value
283,286 349,387 281,364
Movement in property, plant, equipment and software
Balance at the beginning of the period
281,364 364,673 364,673
Capital expenditure
3
39,372 30,741 63,964
Depreciation and amortisation
3
(28,838)(29,912)(60,191)
Impairment (Financial Services computer software)
– –
(17,347)
Disposals
(8,612)(16,115)(69,735)
Balance at the end of the period
283,286 349,387 281,364
10. INTANGIBLE ASSETS
NOTE
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Computer software
9
27,321 44,177 21,125
Brands
23,523 23,523 23,523
Goodwill
83,078 83,078 83,078
Net book value
133,922 150,778 127,726
Movement in Goodwill
Balance at the beginning of the period
83,078 105,792 105,792
Impairment
–
(22,714)(22,714)
Balance at the end of the period
83,078 83,078 83,078
The Group performs a detailed impairment assessment of the Group’s intangible assets and considers if there are any indicators of impairment at each
interim reporting date. The Group’s interim review did not identify any significant indicators of impairment in any of the Group’s cash generating units
(CGU) except for the Torpedo7 Group.
The Torpedo7 trading performance during the current half year was below expectation and caused the Group to reassess the carrying value of the
Torpedo7 Goodwill asset ($25.622 million). The assessment is predicated on an improvement in trading and margin uplift, but is principally based on
store expansion which will provide Torpedo7 with greater scale. The Board continues to support the concept of the store expansion but recognises there
is uncertainty and any adverse changes in key assumptions around the store roll-out programme and margin uplift could give rise to an impairment of
goodwill. The Board’s assessment is that the recoverable amount continues to support the existing carrying value of goodwill; however, the Board will
reassess the carrying value of goodwill at year-end when the current Torpedo7 strategy review has been completed and there is more evidence of the
impact of recently commenced business improvement initiatives.
NOTES TO THE FINANCIAL STATEMENTS
15

Notes to the Financial Statements – continued
11. BORROWINGS
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
NET DEBT
$000
$000 $000
Cash on hand and at bank
44,778 44,535 47,492
Bank borrowings
73,981 80,329 49,159
Lease liabilities
256 833 434
Current borrowings
74,237 81,162 49,593
Bank borrowings
15,000 40,000 35,000
Lease liabilities
104 305 169
Fixed rate senior bond (coupon: 5.30%)
125,000 125,000 125,000
Fair value adjustment relating to effective interest
647 291 541
Unamortised capitalised costs on senior bond
(1,039)(1,475)(1,257)
Non-current borrowings
139,712 164,121 159,453
Securitised borrowings
–62,597 56,717
Total borrowings
213,949 307,880 265,763
Net debt
169,171 263,345 218,271
Committed bank credit facilities at balance date are:
Bank debt facilities
260,000 340,000 280,000
Bank facilities used
(88,981)(120,329)(84,159)
Unused bank debt facilities
171,019 219,671 195,841
Securitised debt facility
–150,000 150,000
Securitised facility used
–(62,597)(56,717)
Unused securitised debt facility
–87,403 93,283
Letter of credit facilities
28,000 32,526 32,389
Letters of credit
(5,670)(11,933)(13,153)
Unused letter of credit facilities
22,330 20,593 19,236
Total unused bank facilities
193,349 327,667 308,360
12. DERIVATIVE FINANCIAL INSTRUMENTS
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Current assets
426 500 –
Non-current assets
647 291 541
Current liabilities
(10,980)(9,634)(17,299)
Non-current liabilities
(2,701)(1,855)(2,507)
Total derivative financial instruments
(12,608)(10,698)(19,265)
Derivative financial instruments consist of:
Current assets
426 500 –
Current liabilities
(10,980)(8,684)(16,899)
Foreign exchange contracts
(10,554)(8,184)(16,899)
Current liabilities
– (950)(400)
Non-current assets
647 291 541
Non-current liabilities
(2,701)(1,855)(2,507)
Interest rate swaps
(2,054)(2,514)(2,366)
Total derivative financial instruments
(12,608)(10,698)(19,265)
The Group continues to manage its foreign exchange and interest rate risks in accordance with the policies and parameters detailed in the 2017 Annual Report.
The Group’s foreign exchange contracts hedge forecast inventory purchases priced in US dollars over the next 12 months. The following table lists the
key inputs used to determine the fair value of the Group’s foreign exchange contracts at balance date.
US Dollar forward contracts – cash flow hedges
Notional amount (NZ$000)
353,576 310,758 331,674
Average contract rate ($)
0.7127 0.7034 0.7115
Spot rate used to determine fair value ($)
0.7355 0.7261 0.7520
NOTES TO THE FINANCIAL STATEMENTS
16

13. FAIR VALUE MEASUREMENT
The following table sets out the Group’s financial instruments that are measured subsequent to initial recognition at fair values and are grouped into
levels based on the degree to which the fair value is observable:
Level 1 – fair value measurements derived from quoted prices in active markets for identical assets.
Level 2 – fair value measurements derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 – fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not based on observable
market data.
ASSET/(LIABILITY)

NOTE
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
Derivatives used for hedging
$000
$000 $000
Foreign exchange contracts (Level 2)
12
(10,554)(8,184)(16,899)
Interest rate swaps (Level 2)
12
(2,054)(2,514)(2,366)
Senior bond fair value adjustment relating to effective interest (Level 2)
11
(647)(291)(541)
There have been no transfers between levels or changes in the valuation methods used to determine the fair value of the Group’s financial instruments
during the current and comparative periods. Sensitivities to reasonably possible changes in non-market observable valuation inputs would not have a
material impact on the Group’s financial results.
Specific valuation techniques used to value financial instruments are:
• Forward exchange contracts determined using forward exchange market rates at the balance date (refer note 12).
• Interest rate swaps calculated as the present value of the estimated future cash flows based on the applicable market interest yield rates at
balance date.
Except for the Group’s fixed rate senior bond (refer note 11) and derivatives (detailed above), the carrying value of the Group’s financial assets and
liabilities approximate fair value. The fixed rate senior bond is listed on the NZX and measured at amortised cost. The fair value of fixed rate senior
bonds at balance date, based on the last price traded on the New Zealand stock exchange (level 1 valuation), were as follows:
FIXED RATE SENIOR BOND

UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
Face value ($000)
125,000 125,000 125,000
Coupon (%)
5.30 5.30 5.30
Market yield (%)
3.85 4.15 4.03
Maturity
June 2020 June 2020 June 2020
NZX quoted closing price ($)
1.039 1.043 1.041
Fair value ($000)
129,905 130,328 130,109
14. RESTRUCTURING COSTS
In January 2017 the Group commenced a programme of changes to its business operating model. The changes were designed to drive an improvement
in financial performance, reduce costs and generate greater customer relevance. The changes focused primarily on simplification to reduce complexities,
drive efficiencies and increase business agility. This involved strengthening and consolidating the various Group support service functions to drive
synergy benefits, deliver efficiencies and reduce complexity. It also involved combining The Warehouse and Warehouse Stationery and similarly
combining the Noel Leeming and Torpedo7 Groups by integrating their operating structures and executive leadership teams.
The first stage of this process has now largely been concluded and a second phase has started. The Group has engaged global management
consultancy firm McKinsey & Company to assist with the second phase of the transformation process and strategy implementation.
NOTES TO THE FINANCIAL STATEMENTS
17

Notes to the Financial Statements – continued
15. DISCONTINUED OPERATIONS
On 24 July 2017 the Group announced it had approved the conditional sale of the Group’s Financial Services business except for Diners Club (NZ)
to Finance Now, a subsidiary of SBS Bank. Final agreement was reached on 9 September 2017 and a sale and purchase agreement was executed
on that date. The Group also has plans in place to exit the Diners Club (NZ) business. As a result, the Financial Services Group is reported as a
discontinued operation.
The full-year results and cash flows from the Financial Services Group are as follows:
FINANCIAL SERVICES GROUP RESULTS AND CASH FLOWS

UNAUDITED
26 WEEKS ENDED
28 JANUARY 2018
UNAUDITED
26 WEEKS ENDED
29 JANUARY 2017
AUDITED
52 WEEKS ENDED
30 JULY 2017
$000
$000 $000
Finance business revenue
3,315 10,321 20,392
Expenses
(5,893)(15,476)(28,893)
Business acquisition, disposal and restructuring costs
(1,458)– (1,283)
Impairment of assets
– (22,714)(40,061)
Loss before interest and tax
(4,036)(27,869)(49,845)
Interest expense
(324)(2,292)(4,049)
Loss before tax
(4,360)(30,161)(53,894)
Income tax expense
813 2,088 3,611
Loss from discontinued operations
(3,547)(28,073)(50,283)
Cash flows from discontinued operations
Net cash flows from operating activities
(683)(5,905)(169)
Net cash flows from investing activities
16,956 (1,303)(3,208)
Net cash flows from financing activities
(23,226)(470)(2,660)
16. BUSINESS DISPOSAL – FINANCIAL SERVICES GROUP
FOR THE 26 WEEKS ENDED 28 JANUARY 2018
NOTE TOTAL
$000
Cash and cash equivalents of the subsidiaries sold
(2,831)
Sale proceeds settled in cash
20,122
Consideration
17,291
Finance business receivables
56,669
Property, plant and equipment
1,011
Computer software
7,090
Securitised borrowings related to the sold subsidiaries
(45,162)
Other working capital
(2,317)
Carrying value of net assets sold
17,291
Claw back provision
1,458
Loss on business disposal
15
(1,458)
Claw-back provision
The sale of the Group’s Financial Services businesses on 9 September 2017 exposes the Group to a few actual and contingent liabilities connected
with a claw-back provision and warranties contained in the sale and purchase agreement.
The Group will be required to pay up to an aggregate of $3.0 million (termed claw back) if the Group’s Finance receivable’s impairment provisions are
less than the actual write-offs experienced during the 9 month period following completion. The Group estimates this liability to be $1.458 million at
balance date.
The Group was also required to make warranties, which are typical for a transaction of this nature. These warranties are largely covered by an insurance
contract; however, there are some items which are not covered, such as tax claims. These warranty claims are capped at $18.0 million (representing the
purchase consideration) and expire after 18 months and have been treated as contingent liabilities.
NOTES TO THE FINANCIAL STATEMENTS
18

17. HELD FOR SALE
The Group committed to a plan in July 2017 to exit its Financial Services credit card businesses and has executed the first part of the disposal plan when
it sold the Group’s Financial Services business excluding Diners Club (NZ) on 9 September 2017. Accordingly, assets and liabilities relating to the Financial
Services Group are classified as held for sale at balance date. In addition to the net assets of the Financial Services Group, the Group also held surplus
property assets which are intended to be sold. At balance date the Group is currently in the process of selling a property at Lunn Avenue, Auckland.
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
$000
$000 $000
Property
11,818 52,281 –
Financial Services Group assets classified as held for sale
Finance business receivables
8,457 – 67,355
Plant and equipment
17 –1,044
Computer software
39 – 7,020
Other assets
37 – 1,723
Total assets classified as held for sale
20,368 52,281 77,142
Other liabilities directly associated with assets held for sale
(4,194)– (5,443)
18. COMMITMENTS
UNAUDITED
AS AT
28 JANUARY 2018
UNAUDITED
AS AT
29 JANUARY 2017
AUDITED
AS AT
30 JULY 2017
(a) Capital commitments
$000
$000 $000
Within one year
2,969 5,258 7,339
(b) Operating lease commitments
Future minimum rentals payable
0-1 years
118,175 121,731 120,363
1-2 years
102,784 109,032 105,533
2-5 years
236,442 249,329 242,456
5+ years
247,459 299,121 270,975
Total operating lease commitments
704,860 779,213 739,327
19. RELATED PARTIES
Except for Directors’ fees, key executive remuneration and dividends paid by the Group to its Directors, there have been no other related party
transactions during the period.
20. CONTINGENT LIABILITIES
The Group has no material contingent liabilities other than those referrred to in note 16 and those arising in the normal course of business, being
primarily letters of credit issued to secure future purchasing requirements and store lease commitments.
NOTES TO THE FINANCIAL STATEMENTS
19

Independent Review Report
To the Shareholders of The Warehouse Group Limited
Report on the Interim Financial Statements
We have reviewed the accompanying interim financial statements of The Warehouse Group Limited (the Company)
including its subsidiaries (the Group) on pages 7 to 19, which comprise the balance sheet as at 28 January 2018, and
the consolidated income statement, consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the period ended on that date, and a summary of
significant accounting policies and selected explanatory notes. The Group comprises the Company and its controlled
entities at 28 January 2018 or from time to time during the financial period.
Directors’ Responsibility for the Financial Statements
The Directors are responsible on behalf of the Company for the preparation and presentation of these interim financial
statements in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) and New Zealand
Equivalent to International Accounting Standard 34 Interim Financial Reporting (NZ IAS 34) and for such internal controls
as the Directors determine are necessary to enable the preparation of interim financial statements that are free from
material misstatement, whether due to fraud or error.
Our Responsibility
Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We
conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 Review of Financial
Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude
whether anything has come to our attention that causes us to believe that the interim financial statements, taken as
a whole, are not prepared in all material respects, in accordance with IAS 34 and NZ IAS 34. As the auditors of the
Company, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial
statements.
A review of interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement. The
auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. The procedures performed in a review are
substantially less than those performed in an audit conducted in accordance with International Standards on Auditing
(New Zealand) and International Standards on Auditing. Accordingly, we do not express an audit opinion on these interim
financial statements.
We are independent of the Group. Our firm carries out other services for the Group as providers of treasury advisory
services and agreed-upon procedures at the Annual General Meeting. The provision of these other services has not
impaired our independence.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that these interim financial statements
of the Company are not prepared, in all material respects, in accordance with IAS 34 and NZ IAS 34.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our review work has been undertaken so that we
might state to the Company’s shareholders those matters, which we are required to state to them in our review 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 shareholders, as a body, for our review procedures, for this report, or for the conclusion we have formed.
For and on behalf of:
Chartered Accountants, Auckland
7 March 2018
INDEPENDENT REVIEW REPORT
20

Board of Directors
Joan Withers (Chair)
Keith Smith (Deputy Chair)
Sir Stephen Tindall
Tony Balfour
John Journee
Julia Raue
Group Chief Executive Officer
Nick Grayston
Group Chief Financial Officer
Mark Yeoman
Company Secretary
Kerry Nickels
Place of Business
26 The Warehouse Way
Northcote, Auckland 0627
PO Box 33470, Takapuna
Auckland 0740, New Zealand
Telephone: +64 9 489 7000
Facsimile: +64 9 489 7444
Registered Office
C/– BDO
Level 4, 4 Graham Street
PO Box 2219
Auckland 1140, New Zealand
Auditor
PricewaterhouseCoopers
Private Bag 92162
Auckland 1142, New Zealand
The Company is a member of the Sustainable
Business Council (SBC).
The SBC is a coalition of leading businesses
united by a shared commitment to sustainable
development via the three pillars of: economic
growth, ecological balance and social progress.
Its mission is to provide business leadership as
a catalyst for change toward sustainable
development and to promote eco-efficiency,
innovation and responsible entrepreneurship.
CEMARS®. A world-leading greenhouse gas
(GHG) certification programme and the first to be
accredited under ISO 14065. It ensures consistency
of emissions measurement and reduction claims.
CEMARS certification was developed at one of
New Zealand’s leading Crown Research Institutes,
Landcare Research. It recognises and rewards
the actions of businesses that measure their GHG
emissions and puts in place strategies to reduce
those emissions.
The Warehouse is a constituent company in the FTSE4Good
Index Series.
The FTSE4Good Index Series has been designed to
objectively measure the performance of companies
that meet globally recognised corporate responsibility
standards.
This document is printed on an environmentally responsible paper produced using elemental chlorine free (ECF) pulp sourced from well managed and legally harvested forests,
and manufactured under the strict ISO 14001 environmental management system.
Shareholder Enquiries
Shareholders with enquiries regarding share transactions, changes
of address or dividend payments should contact the Share Registrar.
You can also manage your shareholding electronically by using
Computershare’s secure website, www.computershare.co.nz/
investorcentre, whereby you can view your share balance, change
your address, view payment and tax information, update your
payment instructions and update your report options.
Share Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna
Private Bag 92119, Auckland 1142
New Zealand
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
Email: enquiry@computershare.co.nz
Website: www.computershare.co.nz/investorcentre
Direct Crediting of Dividends
To minimise the risk of fraud and misplacement of dividend
cheques, shareholders are strongly recommended to have
all payments made by way of direct credit to their nominated
bank account in New Zealand or Australia.
Investor Relations
For investor relations enquiries, email investor@twgroup.co.nz
Stock Exchange Listing
NZX trading code: WHS
Company Number
New Zealand Incorporation: AK/611207
Website
www.thewarehousegroup.co.nz