Fisher & Paykel Appliances Holdings Limited …companyresearch.nzx.com/reports/nz/2008/FPA2008.pdfFisher & Paykel Appliances Holdings Limited CHAIRMAN'S REVIEW 3 Results Normalised

GLOBAL EXPANSIONANNUAL REPORT

2007/08

Fisher & Paykel Appliances Holdings Limited

Contents

1 Key Highlights

2 Chairman’s Review

6 Chief Executive Officer and Managing Director’s Review

20 Directors

24 Report from the Directors

26 Corporate Governance

30 Auditors’ Report

32 Income Statement

33 Balance Sheet

34 Statement of Recognised Income and Expense

35 Cash Flow Statement

36 Contents of the Notes to the Financial Statements

37 Notes to the Financial Statements

120 Five Year Trend Statement (Unaudited)

121 Group Structure

122 Shareholder Information

124 Subsidiary Company Directors

126 Disclosure of Interest by Directors

127 Additional Information

128 Executive and Directory

Laundry Factory relocation from New Zealand to Thailand

Appliances sales revenue for the Fisher & Paykel brands in North America up 5.5%

North AmericaThailand


1KEY HIGHLIGHTS

High New Zealand Dollar conceals sales growth...

1,000,000

Strategic Partnership

Entered a strategic partnership with Arcelik A.S. of Turkey

Record Appliances sales revenues in Australia and Europe

Robust performance from Finance Business

Increased normalised Group Profit up 4.3% to $65.545 million

Announcement of new DishDrawer® production facility in North America

Production of 1,000,000th DishDrawer®

North America

RecordRobust

up 4.3% DishDrawer®

2

GARY PAYKEL CHAIRMAN


3CHAIRMAN'S REVIEW

ResultsNormalised Group profit after taxation for the year ended 31 March 2008 was $65.545 million, an increase of 4.3% on the previous year. This is in sharp contrast to competitors performances in the global appliance industry.

After one off costs, Group profit after taxation was $54.212 million, compared with $63.437 million for the previous year.

The one-off items represent costs associated with relocating New Zealand based manufacturing operations to Thailand and Mexico of $13.856 million ($18.263 million before tax) and costs associated with the proposed sale of the Finance business of $2.089 million ($2.335 million before tax). These were partially offset by the profit on the sale of land and buildings of $4.612 million ($5.021 million before tax).

Taxation for the year was reduced by $2.590 million following an adjustment to the Group’s deferred tax liability to reflect the reduction in the New Zealand company tax rate to 30%, effective 1 April 2008.

Appliances Operating Revenue of $1,275.8 million was down $16.9 million (1.3%). Currency translation effects, due to the appreciation in the value of the New Zealand dollar, reduced sales revenue by $74.9 million compared to the previous year and concealed sales growth of 4.5% in local currency. Record sales were achieved in the Australian and European markets. North America, in the face of depressed market conditions was down 3.7% but contributed increased revenue of 5.5% across the combined Fisher & Paykel and DCS brands.

The Company relocated its Laundry manufacturing plant from Auckland, New Zealand to Rayong, Thailand. Production of dryers commenced on 19 March 2008. The initial stage of the relocation project has progressed on time and within budget.

NET PROFIT PERFORMANCE

2008NZ$000

2007NZ$000

%Change

Normalised Operating Profit Before Interest and Taxation

– Appliances 83,264 84,382 (1.3)– Finance 26,888 29,157 (7.8)

110,152 113,539 (3.0)

One-off Relocation Costs (See Note Below)

– Appliances (18,263) - -One-off Restructuring Costs (See Note Below)

– Appliances (5,934) -– Finance (591) -One-off Costs Associated with the Proposed Sale of the Finance Business

– Appliances (1,590) - -– Finance (745) - -Profit on Sale of Land & Buildings

– Appliances 5,021 7,127 (29.5)

94,575 114,141 (17.1)

Interest, excluding Finance Business Operating Interest (21,566) (20,695) 4.2

Operating Profit before Taxation 73,009 93,446 (21.9)Taxation (18,797) (30,009) (37.4)Group Profit after Taxation 54,212 63,437 (14.5)

Normalised Group Profit After Taxation 65,545 62,820 4.3

One-off Relocation Costs in the current year represent costs associated with relocating New Zealand based manufacturing operations to Thailand and Mexico.

One-off Restructuring Costs in the previous year were for staff redundancies and other costs due to the relocation of manufacturing operations.


4 CHAIRMAN'S REVIEW4

Manufacturing Sites

Auckland, New Zealand: Refrigeration, Electronics, Production Machinery Limited

Dunedin, New Zealand: Cooking and DishDrawer® Brisbane, Australia: Refrigeration

Clyde, Ohio, USA: Laundry and Motors Rayong, Thailand: Laundry

Los Angeles, USA: DCS Cooking Borso del Grappa, Italy: Cooking

5

The Finance business contributed a normalised operating profit of $26.888 million before interest and taxation. This result was a robust performance given the market conditions.

In November 2007, the Company reviewed its strategic options for the Finance business. Given the approaches it had received during the year to acquire the business, the Company decided to investigate the level of potential interest. Potential buyers were invited to submit indicative bids and initial interest was strong.

In late March 2008, the Directors decided to withdraw the Finance business from sale after an assessment of the interest from bidders who conducted due diligence. Market conditions changed late in the bidding process and transactional funding became a concern for potential buyers.

The Group adopted New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) effective 1 April 2007. As a consequence, the comparative financial statements for the year ended 31 March 2007 have been restated. A reconciliation of the differences between the previously reported financial statements, which were prepared under New Zealand Financial Reporting Standards (NZ FRS), has been provided in Note 44 of the Group’s Consolidated Financial Statements.

Corporate GovernanceThe Company’s increasing global footprint has made us aware of the need to maintain the high standards of governance and risk and compliance management that have been set. This is primarily the responsibility of the Audit and Risk Committee which is ably chaired by our Deputy Chairman, Mr John Gilks. The Committee met on five occasions during the year to monitor and review progress against the approved internal audit and compliance plan.

The Finance business maintains its own separate Board of Directors chaired by our CEO and Managing Director, Mr John Bongard. It is imperative, in these challenging

economic times, that the Board closely governs the affairs of the Finance business and ensures sound Liquidity and Prudential Policies are maintained.

As the Company expands globally, it is important we remunerate our executive management competitively. This is the responsibility of the Remuneration Committee. The Committee takes advice from outside agencies for all the countries in which we operate.

DividendThe final dividend of 9 cents per share brings the total dividend to 18 cents per share for the full year. The dividend will carry a partial imputation credit of 1.2 cents (equivalent to 12 cents in the dollar) for New Zealand tax residents and be fully franked for Australian tax residents. Qualifying non-resident shareholders will receive a supplementary dividend of 0.494 cents per share.

The Company has implemented a Dividend Reinvestment Plan under which eligible resident New Zealand and Australian Shareholders are able to elect to apply some or all of their dividend payments to acquire additional ordinary shares in the Company.

The price at which shares will be acquired under the Plan will be at a discount of 2.5% of the average weighted trading sale price for the Company’s ordinary shares calculated on all price setting trades which take place through the NZSX and ASX over a 10 day trading period commencing on the third business day after the Shares first trade ex-entitlement on the NZSX.

PeopleI would like to thank the Board for their continuing insight and wise guidance. All have contributed to the business with their blend of skills and experience. The knowledge the Board brings to the table is invaluable, especially during this period of major change for the Appliances business.

Mr Peter Lucas and I retire as Directors by rotation and stand for re-election at this year’s Annual Shareholders meeting.

CENTS PER SHARE

2007/08 2006/07 2005/06Interim 9.0 9.0 9.0Final 9.0 9.0 9.0Total Dividend 18.0 18.0 18.0Earnings per Share 19.1 22.8 24.2

6

JOHN BONGARD CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR


7CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR'S REVIEW

OverviewThe year just concluded has again proven to be a challenging one. Continuing high raw material prices and a strong New Zealand currency supported by rising interest rates have hindered growth. Nonetheless the development of our markets offshore continues to progress well. It was especially pleasing to see record sales revenues in Australia and Europe and the Fisher & Paykel and DCS brands performed strongly in deteriorating market conditions in the USA.

In October 2007 we entered into a strategic partnership with Europe’s third largest appliance manufacturer, Arcelik A.S. This relationship will initially provide distribution opportunities in Eastern Europe and allow us to fill out our product range by sourcing selected products from Arcelik.

We relocated the Laundry manufacturing facility during the year from Auckland, New Zealand to Rayong, Thailand. I am pleased to say that the transfer of the plant and equipment has gone smoothly, in what is another step in our new global manufacturing strategy.

The Finance business performed stoutly in trying market conditions. Increased operating revenue of 4.9%, along with continuing operating efficiency gains, helped offset growing interest costs and bad debt expenses. Their normalised operating profit before interest and tax of $26.888 million was a robust performance given the economic conditions in which they operated.


8 CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR'S REVIEW

Appliances BusinessThe Appliances business maintained an operating margin of 6.5% notwithstanding functioning in an unhelpful environment. Strong sales growth in Australia was offset by a slowing North American market. Revenues were impacted by the high New Zealand dollar, resulting in a decline in overall revenue in New Zealand dollar terms. The effect of the strong currency corresponded to a revenue reduction of $74.9 million in constant currency terms compared to the previous year. Raw material prices remained at high levels throughout the year.

Our global manufacturing strategy, which involves relocating selected plants to the lower cost economies of Thailand and Mexico, will improve the competitiveness of the business and is expected to lift profitability. The first stage of this strategy has been implemented with the relocation of the Laundry plant from New Zealand to Thailand.

The Company’s internal cost down programme continues to be driven in all disciplines of the business. Substantial gains have been made during the year and have gone some way to offsetting the high raw material prices that persist. We continue to work with current suppliers and explore new supply channels to maximise these opportunities.

OPERATING PERFORMANCE

2008NZ$000

2007NZ$000

%Change

Operating Revenue 1,275,816 1,292,741 (1.3)Normalised Operating Profit Before Interest & Taxation 83,264 84,382 (1.3)– One-off Costs for Relocation to Thailand and Mexico (18,263) - -– One-off Restructuring Costs (5,934) -– One-off Costs Associated with the Proposed Sale of the Finance Business (1,590) - -– Profit on Sale of Surplus Land & Buildings 5,021 7,127 (29.5)Reported Operating Profit before Interest and Taxation 68,432 85,575 (20.0)Assets Employed 1,051,612 1,043,339 0.8Operating Margin * 6.5% 6.5% -

* Normalised Operating Profit before Interest and Taxation to Operating Revenue

This year has seen the start up of the new Thailand manufacturing facility with the initial production of dryers commencing in March 2008. When completed, the site located in Rayong will house production facilities for washers, dryers, DishDrawers, large refrigerators and electronics.

9

THAILAND: Relocation



Market CommentNew Zealand The New Zealand market remained static during the financial year. However revenue was up 0.7%. This was a direct result of model mix, with a bias towards higher value, higher featured products. The New Zealand dollar remained strong, resulting in continuing retail price pressure in the market from imports. Market shares have been maintained within the 50-55% range.

The ELBA brand was successfully launched into the New Zealand market in February. This brand is positioned at entry level and will compete directly against imports in that segment of the market across all product categories. This will allow the Fisher & Paykel brand to be positioned at the mid to top end of the mass market, with IZONA as a premium sub-brand. The ELBA brand is fully supported by the Fisher & Paykel Customer Care Centre and after sales Service Franchise.

Australia The Australian economy remained buoyant throughout the second half, resulting in sales finishing up 11.3% on the previous year. The overall whiteware market increased between 3-4% during the year. New products released towards the end of the last fiscal year, along with the full AquaSmart™ washer range, contributed to market share growth.

The AquaSmart™ washer continued to dominate the top loading washer segment of the market and has lifted Fisher & Paykel’s share of that category to over 40%. Additional models to expand the AquaSmart™ range were introduced during the year.

The French Door refrigerator, along with the Ice & Water refrigerator models, continue to gain market acceptance and share. These fully featured and higher priced models also contributed to increased revenues.

North America The Company continued to make inroads in North America, notwithstanding deteriorating market conditions. Industry commentators have estimated the market to be down between 10-15%, year-on-year. In local currency terms, total revenue inclusive of components and OEM sales, was down 3.7% to US$287.3 million (US$298.2 million for the previous year). However, in aggregate, the Fisher & Paykel and DCS brands were up 5.5 percent on the previous year. The expanded product range offering has increased the profiles of the two brands.

Canada continues to grow as a market for the Company. Buoyant market conditions contributed to a healthy increase over the previous year. The strongest growth category is in refrigerators, where our European styled products have been readily accepted in the market. Canada now makes up 10% of our North American sales.

Europe European sales revenue was up 18.4% in a softening market. The strength of the Euro relative to the GBP, as well as large stainless steel price increases, have suppressed margins for the Italian manufactured product.

Rest of World A slower finish to the year restricted growth in Rest of World markets and as a result sales were slightly up on the previous year. The strength of the New Zealand dollar made trading conditions difficult. Asian countries, particularly Singapore and Hong Kong, showed consistent growth.

OPERATING REVENUE IN LOCAL CURRENCY TERMS

2008$000

2007$000

%Change

New Zealand NZD 242,987 241,366 0.7Australia AUD 407,907 366,420 11.3North America USD 287,282 298,213 (3.7)Europe EUR 60,224 50,849 18.4Rest of World (incl. Singapore) NZD 74,757 72,235 3.5

New Zealand remains a key location for the Company. The Auckland site accommodates Head Office, Refrigeration, Electronics and Product Development. Located nearby are the Production Machinery facility and the Finance Company. The New Zealand market accounts for 19% of Appliances global revenue.

NEW ZEALAND: Base

11

12

Keeping our brand development on course in continental Europe is our Italian cooking manufacturing facility acquired from De’Longhi S.p.A. in 2006. The factory produces cooking products for the European, UK and Rest of World markets and is a key factor in our drive for European growth.

ITALY: European Drive



Global Manufacturing StrategyThe relocation of the Auckland Laundry plant to Rayong, Thailand has been substantially completed without major difficulty.

The dryer manufacturing line was shut in Auckland on December 20th 2007 and produced its first product following relocation to Thailand on March 19th 2008. The relocation teams have done a tremendous job to achieve this in such a short time frame. Subsequently the washer line was shifted and started production in late May. I am very pleased with the Thailand personnel that we have employed and the quality of the products being produced from the Rayong facility.

We are also very pleased to report that the initial relocation phase was on time and on budget. We anticipate that the ongoing annual cost savings of between $10 million and $15 million before tax, as advised at the time of the relocation announcement, will be fully realised.

OPERATING REVENUE MIX

2006/07

2007/08

North America 35.2%

Australia 32.9%

New Zealand 18.7%

Other 5.6%

Europe 7.6%

2006/07

2006/07

2007/08

North America 29.7%

Australia 36.6%

New Zealand 19.0%

Other 5.9%

Europe 8.8%

2007/08



Environmental IssuesLong before the words sustainability and global warming became commonplace, Fisher & Paykel had been committed to sustainable and environmentally responsible processes.

For example, the Company’s refrigerators and freezers have always been well insulated. This meant that we were able to respond quickly to reduce the usage of chlorofluorocarbons (CFCs) when it was recognised in the 1990s that these chemicals contributed to Ozone depletion.

The Company has made and continues to make a point of never using materials that are relatively scarce or energy hungry. There has also been a change from wet paint to powder coat to conserve energy and, while solvents are used, this is done so in a more environmentally efficient manner.

In addition to energy efficiency, water conservation is practiced in a number of areas. One such example is Fisher & Paykel’s factories where cooling towers are used to recycle water used in the production process.

The Company’s environmental commitment is not only evident in its finished products, but also through all aspects of the organisation. Production procedures for example are constantly reviewed to ensure that processes are clean and efficient.

This philosophy has delivered numerous innovations in energy saving, establishing the Company as a leader in the home appliance market both in New Zealand and overseas.

Fisher & Paykel started recycling in New Zealand15 years ago and now has its own recycling centre in Auckland, which processes approximately 25,000 appliances annually. An estimated 1,600 tonnes of separated materials and 800 tonnes of composite materials are recovered and sold to various merchants for reprocessing and recycling.

The Company and its people also take an active role in lobbying government and have assisted in setting industry standards. We have made submissions on environmental legislation including the Ozone Protection Bill and the Waste Minimisation Bill, and led the charge in New Zealand to introducing energy labelling on appliances.

15

Australia, with its increasing pressure on its natural resources has been the catalyst behind the development of our new water and energy saving technologies. This is evident today in our latest laundry, dishwashing and refrigeration products, that have lifted sales to record levels this year.

AUSTRALIA: Precious Resources



Finance BusinessThe Finance business contributed a solid earnings performance for the year. Normalised earnings before interest and tax of $26.888 million (last year $29.157 million) were driven from improvements in yield, growth in interest income, lower operating costs, and an increase in insurance and warranty earnings. These gains have offset the adverse impact of higher interest funding costs, additional bad debt expense and provisioning, and the continuing contraction of big ticket finance written through Farmers Trading Company stores. Whilst on a normalised basis the year’s earnings were down 7.8%, the previous year included the benefit of a one-off GST tax refund of $1.6million.

Finance receivables increased by 9% during the year, driven by strong growth in Q Card and Farmers Finance Card receivables. The number of retailers accepting Q Card continued to grow and the performance of the Farmers Finance Card portfolio was again pleasing and continues to contribute significantly to the overall earnings of the Finance business.

The level of bad debt expense and provisioning increased during the year, reflecting the increasing financial pressure on households. Equipment Finance lending activities provided a consistent level of earnings.

There has been a significant tightening of liquidity within the credit markets driven by events emanating out of the United States. This has placed funding pressure on the finance sector within New Zealand. The Finance business has diverse funding sources incorporating retail debentures, commercial paper and wholesale bank facilities. While the reinvestment rate on retail debentures has reduced recently from historical levels of 80%, current reinvestment levels are at a very satisfactory 50%-60%. In addition, strong support from banks, together with sound governance, has ensured that the Finance business has maintained a steady and solid funding position during this period of uncertainty.

The Finance business continues to maintain its Standard & Poors A1+ credit rating for its Commercial Paper programme and the A M Best A- Excellent rating for its Insurance businesses.

OPERATING PERFORMANCE

2008NZ$000

2007NZ$000

%Change

Operating Revenue 123,893 118,129 4.9Normalised Operating Profit Before Interest and Taxation * 26,888 29,157 (7.8)– One-off Restructuring Costs - (591)– One-off Costs Associated with the Proposed Sale of the Finance Business (745) -Reported Operating Profit Before Interest and Taxation * 26,143 28,566 (8.5)Finance Receivables 584,931 536,791 9.0

* Includes Operating Interest

17

AppreciationWe appreciate the support we have received throughout the year from shareholders, suppliers, retailers and staff alike. Without your ongoing belief, commitment and dedication we would not have been able to achieve the highlights this year that we have.

To our shareholders, thank you for your continuing support. It is with your ongoing endorsement that we are able to pursue the Company’s objectives and set in place definitive plans to take the Company forward.

As the business develops offshore, so too does our supplier and retailer base. Your support is imperative if we are to successfully continue the expansion plans that we have announced. In times of rising raw material pricing, we continue to work closely with our suppliers for suitable alternatives to existing processes and materials. We recognise our retailers have a choice and thank you for your ongoing support. We will endeavour to continue to provide you with world leading innovative appliances that offer the consumer real features and benefits.

Our staff in Appliances and Finance has performed admirably. Their dedication and commitment has been essential during these challenging times and is very much appreciated. As we relocate some of our manufacturing offshore, I continue to be impressed with the professionalism and devotion of all staff affected. Their efforts have been paramount in the smooth transition to new factory sites. I welcome on board our new employees and am sure they will share in the unique culture the Fisher & Paykel family brings with it.

The Board has been faced with hard decisions this year. I would like to thank them for their support, wise guidance and direction as the Company embarks on its global manufacturing strategy.

KEY HIGHLIGHTS

High NZ dollar conceals sales growth:

to $65.545 million.

Australia and Europe.

Fisher & Paykel brands in North America up 5.5%.

New Zealand to Thailand.

th DishDrawer®.

Arcelik A.S. of Turkey.

DishDrawer® production facility in North America.

18

A near new facility in Reynosa, Mexico, was recently purchased as part of the Global Manufacturing Strategy. The 2 building facility, located on 60 acres, will manufacture side-by-side refrigerators, DCS cooking products and a new DishDrawer® product range, all servicing the North American market. This reinforces our global manufacturing policy of locating key plants in or near our prime markets.

MEXICO: Global Manufacturing Strategy



OutlookThe new financial year will see the Company continuing its new global manufacturing strategy to reposition itself as a significantly more cost competitive industry player. This involves relocating selected plants from New Zealand, Australia and the USA to Thailand and Mexico. The financial benefits arising from the new strategy are expected to be in the vicinity of $50 million per annum, at a one-off cost of $50 million, both at pre-tax levels. Capital expenditure of $100 million will be substantially funded from the sale of surplus property in Australia and New Zealand. It is expected that these moves will be completed by the second half of the 2009/10 financial year. The results achieved from the recent Laundry factory relocation to Thailand have given the Company confidence in the proposed future moves.

The range of IZONA products is due to be released during the first half of the year. These high end products will initially be launched in New Zealand and Australia, then progressively rolled out to the USA and Europe later in the year. The range includes the CookSurface and VentSurface and the ground breaking CoolDrawer refrigerator. These products which were profiled to architects and specifiers in Auckland, Melbourne and Chicago in March, have received extremely positive feedback.

Raw materials prices remain at very high levels with no immediate relief in sight. Steel prices have risen further this year and all appliance manufacturers will face significant increases. Copper and oil based plastics also remain at historically high levels.

In order to recover some of these ongoing material cost increases, the Company is proposing general price increases in all markets. These are envisaged to be implemented in the second half of the year.

The New Zealand market is expected to tighten further during the year as economic pressures take effect. Continuing high interest rates, along with higher food and fuel costs will put household expenditure under pressure. This is expected to result in a slowing retail market, however a significant reduction in the strength of the New Zealand dollar this year would put pricing pressure on importers.

The Australian market remains steady. After good sales growth last year, the economy is showing signs of slowing. Recent interest rate rises have dampened market confidence.

The Fisher & Paykel brand continues to grow against market trends in the USA. The market is forecast to contract further this year. The purchase of the Whirlpool side-by-side refrigerator plant in Mexico will present further sales opportunities. This is a product category the Company has historically not offered in the US market.

Side-by-side refrigerators represent approximately 30% of the US refrigeration market. With continuing acceptance of the brand name, along with a managed distribution growth strategy and new product introductions, further market share gains are forecasted this year.

Growth is expected to continue in Europe off a small base. The Fisher & Paykel brand is gaining acceptance in the UK and Irish markets. ELBA branded products for the Italian market are now showing signs of growth after the distribution of those models was taken back in house. The Fisher & Paykel brand is due to be launched in Italy during September. Arcelik have started distributing the DishDrawer® product in Turkey under their brand. Fisher & Paykel branded models are expected to be distributed in a further 5 Eastern European countries during the second half of the year.

The aggressive internal cost down programme continues and the relocation of manufacturing plants to offshore locations will present further opportunities. As has been found with the initial shift of the Laundry plant to Thailand, local vendor introductions have proved to be cost beneficial.

The Finance business will continue to broaden retail distribution for Q Card and Farmers Finance Card products. In addition, promotion to raise awareness of the retail debenture scheme will be introduced during the 2008/09 year, along with measures to further enhance the benefits of the card products. Finance customers will continue to face ongoing pressure to service high levels of household debt, making the management of customer accounts and new business credit approvals a key and important focus over the next 12 months.

As at 31 March 2008 the Finance business had available over $220 million of undrawn committed banking facilities across its total portfolio which, together with over $100 million invested by way of loans and capital from Fisher & Paykel Appliances Holdings Limited ensures that the Finance business continues to be solidly funded.


20 DIRECTORS

John Bongard, 54, was appointed Chief Executive Officer and Managing Director on 30 April 2004. He has been an Executive Director of the Company since separation from Fisher & Paykel Industries Limited in November 2001 (the Separation). Prior to the Separation he was General Manager of the Appliances Whiteware Group. He has over 30 years experience in marketing appliances around the world and has established new sales companies in Australia and the USA. Mr Bongard has held a variety of management positions in the procurement and marketing departments of the appliances business of the Fisher & Paykel Group since 1973, including General Manager, Marketing from 1991 to 1998. He received a Bachelor of Commerce degree in marketing and economics from the University of Auckland.

Gary Paykel, (CNZM), 66, has been Chairman of the Company since 30 April 2004. Prior to that he was Executive Chairman following the separation from Fisher & Paykel Industries Limited. He also chairs the Remuneration and Nomination Committees. Mr Paykel was a director of Fisher & Paykel Industries Limited from August 1979; Managing Director from April 1987 and Chief Executive Officer from December 1989. He was appointed Chairman of Fisher & Paykel Healthcare Corporation Limited (previously Fisher & Paykel Industries Limited) following the Separation in November 2001. Mr Paykel joined Fisher & Paykel Industries Limited in 1960 and, prior to his appointment to the position of sales director in 1985, held a variety of positions in the manufacturing, engineering, purchasing and sales departments. Mr Paykel is a Companion of the New Zealand Order of Merit.

Peter Lucas, 62, has been a director of the Company since November 2001. Mr Lucas was Chief Executive Officer of Heinz New Zealand and Australia from 2002 until 31 August 2005. Previously, Mr Lucas was the Managing Director of Tegel Foods Limited from April 1996, the General Manager of J. Watties Foods Limited from August 1992 to April 1996 and General Manager of Watties Frozen Foods Limited from August 1985 to August 1992. Mr Lucas received a BE (civil) (first class hons) and Mcom (econs) (first class hons) from Canterbury University and was the recipient of a Post Graduate Scholarship to Cambridge University.

Ralph Waters, 59, has been a director of the Company since November 2001. Mr Waters was Chief Executive Officer of Fletcher Building Limited from June 2001 until August 2006 and is now a non-executive director of that company. Mr Waters is also a director of Fonterra Co-operative Group Limited and Westpac New Zealand Limited. Previously, Mr Waters was Managing Director of Email Limited from May 1998 to February 2001 and prior to that held a number of senior management positions at Email Limited from November 1983. Mr Waters was employed by Carrier Air Conditioning and other units of United Technologies Corporation in Australia and the UK from February 1970 to November 1983. Mr Waters has a Master of Business degree, is a Chartered Professional Engineer and a Fellow of Institution of Engineers (Australia).

21

John Gilks, 66, has been Deputy Chairman of the Company since the Separation. He also chairs the Audit and Risk Management Committee. Prior to the Separation, Mr Gilks was a director of Fisher & Paykel Industries Limited from May 1986, and Deputy Chairman from June 1989. Mr Gilks is Chairman of Port Otago Limited and a director of Dunedin City Holdings Limited and its four trading subsidiaries. Mr Gilks was a practising chartered accountant from 1970 to 1993. During that time he founded Motor Trade Finances Limited and was its Managing Director until 1997. Mr Gilks is a Fellow of the Institute of Chartered Accountants of New Zealand and a Distinguished Fellow of the Institute of Directors in New Zealand.

Lindsay Gillanders, 58, has been a director of the Company since November 2001. Mr Gillanders has also served as a director of Fisher & Paykel Industries Limited (now Fisher & Paykel Healthcare Corporation Limited) since May 1992. He is currently Chairman of Auckland Packaging Company Limited and Vita New Zealand Limited and is also a director of Rangatira Limited. Until the Separation, Mr Gillanders was responsible for Fisher & Paykel Industries Limited’s legal, regulatory, compliance and intellectual property rights, and worked on major commercial agreements including acquisitions and divestments by both the Appliances and Healthcare businesses. From November 2001 to December 2004, Mr Gillanders continued to provide legal services to the Company under a consultancy agreement. Mr Gillanders received his Bachelor of Laws degree with honours from the University of Auckland.

Norman Geary, (CBE), 69, has been a director of the Company since completion of the Separation. Prior to that he served on the board of directors of Fisher & Paykel Industries Limited from December 1990. In New Zealand and various overseas locations, he was employed by BP for 23 years in sales, marketing and general management roles and served on its board in New Zealand and various North West Europe companies before being appointed Chief Executive of Air New Zealand from 1982-1988. Since 1988, he has served on the boards of a number of New Zealand listed and unlisted companies. He is a director of DB Breweries Ltd, ANZ National Bank Ltd and Otago Innovation Ltd. He is also a board member of the New Zealand Institute of Economic Research and a member of the Advisory Committee to Rio Tinto Aluminium. He was the President of the Institute of Directors in New Zealand in 2000 and 2001. He was elected a Distinguished Fellow of the Institute of Directors in New Zealand in 2003. Mr Geary received his Bachelor of Commerce degree from the University of Otago, is a Fellow of the Institute of Chartered Accountants of New Zealand, attended the Sloan Programme at the Graduate School of Business, Stanford University in 1974/1975 and holds a CBE.

22

23

Financial Contents

24 Report from the Directors

26 Corporate Governance

30 Auditors’ Report

32 Income Statement

33 Balance Sheet

34 Statement of Recognised Income and Expense

35 Cash Flow Statement

36 Contents of the Notes to the Financial Statements

37 Notes to the Financial Statements

120 Five Year Trend Statement (Unaudited)

121 Group Structure

122 Shareholder Information

124 Subsidiary Company Directors

126 Disclosure of Interest by Directors

127 Additional Information

128 Executive and Directory


24 REPORT FROM THE DIRECTORS

Your Directors are pleased to submit to shareholders their Annual Report, incorporating the financial statements and the auditors’ report, for the year ended 31 March 2008.

Profit

Profit after taxation was $54.2 million, compared to $63.4 million for the previous year.

Earnings per share were 19.1 cents per share (2007 22.8 cents).

Shareholders’ Equity

Shareholders equity as at 31 March 2008 totalled $646.4 million (2007 $652.3 million).

Share Issues

During the year, 1,154,829 shares were issued following the exercise of options granted to employees under the approved Share Option Plan.

Dividends

The Directors have approved a final dividend of 9.0 cents per share for the year ended 31 March 2008, which is unchanged from the prior period. The dividend will carry a partial imputation credit of 1.20 cents per share (equivalent to 11.76 cents in the dollar) for New Zealand tax residents and be 100% franked for Australian tax residents. Qualifying non-resident shareholders will receive a supplementary dividend of 0.494 cents per share. The dividend will be paid on 15 July 2008.

Dividends for the year ended 31 March 2008 totalled 18.0 cents per share (2007 18.0 cents).

International Financial Reporting Standards

Effective 1 April 2007, the Company adopted New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS).

As a result of the transition to NZ IFRS, comparative financial information for the prior year has been restated for the new Financial Reporting Standards. Details of the transition are provided in Note 3 to the financial statements and a reconciliation of the differences between the previously reported results for the prior year and the restated amounts under NZ IFRS is provided at Note 44 to the financial statements.

Directors

In accordance with the Constitution, Messrs Paykel and Lucas retire and, being eligible, offer themselves for re-election.

Disclosure of Interests by Directors

Directors certificates to cover entries in the Interests Register in respect of remuneration, insurance, indemnities, dealing in the Company’s shares and other interests have been disclosed as required by the Companies Act 1993.

New Zealand Stock Exchange Waivers

NZSX Listing Rule 7.3.2(a) At the Company’s Annual Shareholders Meeting held on 16 August 2004, shareholders approved a cancellation facility for option holders (the Cancellation Offer), whereby option holders accepting the Cancellation Offer would not exercise their relevant options but instead those options would, at the option holder’s notice, be cancelled in return for the issue of shares in the Company. The Cancellation Offer was designed to reduce the number of shares the Company is required to issue in relation to options granted under the Company’s Employee Share Option Plan, thus reducing the dilution effect to existing shareholders from the exercise of options.

The NZXR granted a waiver subject to certain conditions (including the review of the waiver in respect of any options issued after the third anniversary of the waiver) from compliance with NZSX Listing Rule 7.3.2(a), which provides that an issue of securities that has been approved by shareholders must be made within 36 months of the approval. The Company requested a review of this waiver in accordance with the conditions imposed by the NZXR, and on 14 March 2007 the Company was granted a renewed waiver from compliance with NZSX Listing Rule 7.3.2(a), again subject to certain conditions.

25

The Company sought this waiver and the renewed waiver in order to be able to issue shares under the Cancellation Offer outside the time frame set out in the NZSX Listing Rules as some of the options issued under the Company’s Employee Share Option Plans may be exercisable outside this time frame. The terms of the renewed waiver prohibit the Company from materially changing the terms and conditions of issue of relevant unexercised options.

Remuneration of Directors

The remuneration of the Directors for the year ended 31 March 2008 has been disclosed on page 28 of this report.

Outlook

Recently the Appliances business announced a new global manufacturing strategy to reposition itself as a significantly more cost competitive industry player. This involves relocating selected plants from New Zealand, Australia and the USA to Thailand, Mexico and Italy. The financial benefits arising from the new strategy are expected to be in the vicinity of $50 million per annum, at a one-off cost of $50 million, both at pre-tax levels. Capital expenditure of $100 million will be substantially funded from the sale of surplus property in Australia and New Zealand. The results achieved from the recent Laundry relocation to Thailand have given the Company confidence in the proposed future moves.

Given the uncertainty surrounding the position of the New Zealand dollar, interest rates, market conditions and future trends for raw material pricing, the Directors have decided against giving guidance for the 2008/09 financial year at this time. For and on behalf of the Board.

G A Paykel J H Bongard Chairman Chief Executive Officer & Managing Director

29 May 2008


26 CORPORATE GOVERNANCE

The Board and management of the Company is committed to ensuring that the Company adheres to best practice governance principles and maintains the highest ethical standards. The Board has agreed to regularly review and assess the Company’s governance structures to ensure that they are consistent, both in form and substance, with best practice.

The Company operates under a dual listed company structure, being listed in both New Zealand and Australia. Corporate governance requirements apply in both jurisdictions. These requirements include the ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations, the NZX Corporate Governance Best Practice Code and the New Zealand Securities Commission’s Governance Principles and Guidelines contained in its report entitled “Corporate Governance in New Zealand – Principles and Guidelines” (the Principles).

The Board has adopted a Governance Manual for the Company, consisting of various charters and policies which reflect the Principles.

The Board considers that the Company’s corporate governance practices and procedures are not materially different to the Principles.

Code of Conduct (Ethics)

The Company expects its Directors and employees to maintain high ethical standards. A Code of Conduct for the Company and a separate Directors’ Code of Conduct apply.

Both Codes address, amongst other things:

Director believes to be the best interests of the Company.

The full content of the Company’s Codes of Conduct can be found on the Company’s website (www.fisherpaykel.com). At the date of this Annual Report, no serious instances of unethical behaviour have been reported under the Company’s Code of Conduct.

Responsibilities of the Board and Management

The business and affairs of the Company are managed under the direction of the Board of Directors. At a general level, the Board is elected by shareholders to:

The Board Charter regulates internal board procedure and describes the Board’s specific role and responsibilities. A copy of the Board Charter is provided on the Company’s website.

The Board delegates management of the day-to-day affairs of the Company to the Executive team under the leadership of the Chief Executive Officer & Managing Director to deliver the strategic direction and goals determined by the Board.

The Board

Board Composition At present there are seven Directors on the Board, of which six are non-executive Directors.

The Executive Director is Mr John Bongard, who is the Chief Executive Officer & Managing Director of the Company.

Mr Gary Paykel relinquished the position of Executive Chairman on 30 April 2004, but remains as Chairman of the Board.

Independence of Directors The factors the Board considers to assess the independence of its Directors are set out in its Board Charter. No materiality thresholds have been adopted, as the Board’s approach is to determine independence on a case by case basis.

After consideration of these factors and criteria, the Board is of the view that:

1. No Director is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial

2. There are two Directors who within the last three years have been employed in an executive capacity by the Company or another Group member, or been a Director after ceasing to hold any such

27

3. There is one Director who within the last three years has been a principal of a material professional adviser or professional consultant to the Company or another Group member, or an employee materially associated with the service provided. That

4. No Director is a material supplier or customer of the Company or other Group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer, other than Mr Norman Geary and Mr Ralph Waters. Mr Geary is a director of a registered bank that provides credit facilities to the Group in the ordinary course of business. Mr Waters is a director of a registered bank that provides credit facilities to the Finance business in the

5. No Director has a material contractual relationship with the Company or another Group member other than as a Director of

6. No Director has served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the

7. All Directors are free from any interest or business or other relationship, which could or could reasonably be perceived to, materially interfere with the Director’s ability to act in the best interests of the Company.

Based on the above assessments, the Company considers that four of the current seven Directors are independent directors, namely, Mr John Gilks, Mr Norman Geary, Mr Ralph Waters and Mr Peter Lucas. The Company considers that Mr Geary and Mr Waters are independent directors of the Company notwithstanding their respective directorships of the registered banks referred to above. The Company’s reasons for this conclusion include the facts that no Director takes part in the individual lending decisions of the registered banks and in particular Mr Geary and Mr Waters have not taken part in the decision of the banks to make credit facilities available to Group members or in setting the terms on which those facilities are made available to Group members.

As Mr Paykel and Mr Bongard held executive positions and Mr Gillanders held a consultancy position either during the financial year or in the previous three financial years, these Directors are not, in the Board’s opinion, independent. The Company notes it has a minimum of three independent directors as required by the NZX Listing Rules. Having reviewed the position, the Company considers that the Board comprises an appropriate mix of skills, expertise and independence.

Committees

Specific responsibilities are delegated to the Audit & Risk Management Committee, the Remuneration Committee and the Nomination Committee. These Board Committees support the Board by working with management on relevant issues at a suitably detailed level and then reporting back to the Board. Each of these Committees has a charter setting out the committee’s objectives, procedures, composition and responsibilities. These charters can be viewed on the Company’s website.

Audit & Risk Management Committee The Audit & Risk Management Committee’s role is to assist the Board in its oversight of all matters relating to the financial accounting and reporting of the Company. The Committee also monitors risk management, the processes which are undertaken by management and both external and internal auditors. External auditors are monitored in accordance with the External Auditors Policy, a summary of which appears on the Company’s website.

Under the Board Charter, a majority of the Committee’s members must be independent. The current members of the Committee are Mr Gilks, Mr Geary and Mr Gillanders. Messrs. Gilks and Geary are independent Directors.

Remuneration Committee The Remuneration Committee’s role is to assist the Board in establishing coherent remuneration policies and practices. The current members of the Remuneration Committee are Mr Paykel, Mr Lucas and Mr Geary. The composition of the Committee satisfies the requirement of the Committee Charter that a majority of the members be independent.

Nomination Committee The procedure for the appointment and removal of Directors is ultimately governed by the Company’s Constitution. A Director is appointed by ordinary resolution of the shareholders, although the Board may fill a casual vacancy.

The Board has delegated to the Committee the responsibility for recommending candidates to be nominated as a Director on the Board and candidates for the committees. When recommending candidates to act as a Director, the Committee takes into account such factors as it deems appropriate, including the experience and qualifications of the candidate.

The current members of the Nominations Committee are Mr Paykel, Mr Lucas and Mr Geary. The composition of the Committee satisfies the requirement of the Committee Charter that a majority of the members be independent.

The Nominations Committee was not required to meet in the year ended 31 March 2008.


28 CORPORATE GOVERNANCE

Board Processes

The Board held 10 meetings during the year ended 31 March 2008. The table above shows attendance at the Board, Finance business board and Committee meetings. With the exception of January, Board meetings are normally held monthly.

There is a separate board for the Finance business, which includes Messrs. Bongard, Gilks, Gillanders and Paykel.

There is no formal procedure agreed by the Board to allow Directors to take independent professional advice at the expense of the Company. However, if circumstances arose where a Director needed to obtain independent advice, that Director would as a matter of practice be at liberty to seek such advice at the expense of the Company.

Directors’ Remuneration

Shareholders fix the total remuneration available to non-executive Directors. Shareholders approved the current fee pool limit in 2004 as $900,000 effective 1 July 2006. The fee pool limit includes $150,000 per annum, which has been set aside as a contingency to cover extraordinary Director involvement or commitments, including but not limited to involvement in sub-committees and/or the board of the Finance business.

The Company recognises the key role personnel play in the pursuit of its strategic objectives. The Remuneration Committee reviews Director remuneration and is charged with establishing remuneration policies and guidelines to ensure links exist between corporate performance and remuneration paid to Directors. The policies are also designed to enable the Company to attract, retain and motivate Directors who will create value for shareholders.

The Company takes advice from independent consultants to benchmark Directors fees with fees paid to directors of comparable companies in New Zealand and Australia.

The Company’s policy is to pay its non-executive Directors fees in cash. However, the Company encourages the Directors to hold shares in the Company. All Directors hold shares in the Company.

Non-executive Directors received the following Directors fees from the company in the year ended 31 March 2008:

N M T Geary $102,200

J W Gilks $151,500

W L Gillanders $124,200

P D Lucas $87,200

G A Paykel $208,200

R G Waters $79,200

Mr Bongard does not receive remuneration as a Director of the company or any subsidiary company. Mr Bongard acting in his capacity as an employee of the Company and subsidiaries received total remuneration, inclusive of the value of other benefits, in respect of the year ended 31 March 2008 of $1,142,593.

Except as stated above, no employee of the Company or its subsidiaries receives or retains any remuneration or other benefits in their capacity as a Director. Remuneration, inclusive of the value of other benefits received by such employees, is included in relevant bandings of employee remuneration received exceeding $100,000 in Note 45.

Under the Company’s constitution, the Board is permitted under the NZX Listing Rules to authorise the payment of retirement allowances to any Director who was in office before 1 May 2004 and has continued to hold office since that date, where such payments do not exceed the total remuneration of a Director in any three years

The Board has resolved, however, that it will not pay out any future retirement benefits for Directors appointed prior to 1 May 2004, other than at the Board’s discretion, an amount equivalent to one year’s fees calculated according to the per annum average of the fees paid to that Director in their last three years of office. Subject to Board approval, any such retirement benefit will be payable following each Director’s retirement.

Board Meetings

Finance Board Meetings

Other Sub-Committee Meetings

Audit & Risk Management Committee Meetings

Remuneration Committee Meetings

J H Bongard 10 9 3 - -

N M T Geary 10 - - 5 2

J W Gilks 10 9 3 5 -

W L Gillanders 10 10 2 5 -

P D Lucas 9 - - - 2

G A Paykel 9 8 3 - 2

R G Waters 10 - - - -

Total Meetings Held 10 10 3 5 2

29

Mr JJA Williams retired from the Board on 31 March 2007 and during the year ended 31 March 2008 the Board approved payment of a retirement allowance of $63,800 based on the per annum average of the fees received by Mr Williams in the previous three years. Except for Mr Williams, no Director was paid a retirement benefit by the Company in the year ended 31 March 2008.

As at 31 March 2008, the Company has a total contingent liability of $704,375 (2007 N/A) for non-executive Directors’ retirement allowances, based on the per annum average of the fees received by the Directors in the previous three years.

Senior Management Remuneration

The Remuneration Committee is responsible for reviewing the remuneration of the Company’s senior management in consultation with the Chief Executive Officer & Managing Director of the Company. Similar policies and principles that guide remuneration of Directors apply to the remuneration of the Company’s senior management, although remuneration packages consist of a mixture of cash and other benefits, including Company share based payments. The expected outcomes of the Company’s remuneration policies for senior management are to balance motivating and retaining key employees, attracting quality management and providing performance incentives that allow executives to share the rewards of the success of the Company. In addition, the existing share based payment plans operated by the Company are intended to encourage the senior management team to ensure the Company performs well for the shareholders through long-term growth and increasing shareholder value.

The Company’s existing share option plan was approved by shareholders of the Company prior to the listing of the Company in 2001.

The ASX recommends that companies listed in Australia disclose the top five (5) senior management remuneration packages paid by the Company. The Company has decided that it is not appropriate for the Company to follow this recommendation as these figures are distorted by the Company having a number of senior managers who reside outside of New Zealand, where remuneration market levels differ widely. Senior management remuneration is included in the wider disclosure made by the Company at Note 45 to these financial statements, where the company has included in relevant bandings the number of employees, whose remuneration, inclusive of the value of other benefits received by such employees, exceeds $100,000.

Performance Evaluation

The Board has a range of policies in place relating to the performance evaluation of the Board, the Board’s committees, individual Directors and executives. During the financial year the Chairman led a performance evaluation in accordance with its policies. A summary of the Company’s Performance Evaluation Policy is available on the Company’s website.

The Board Charter requires the Board to undertake an annual performance evaluation of itself that:

or appropriate.

Risk Management

The Company has a number of risk management policies, as well as related internal compliance systems that are designed to:

The Board, through management, ultimately has responsibility for internal control and compliance. Twice a year a detailed independent audit report is prepared for and presented to the Board.

Policies

In addition to the policies mentioned in this section on Corporate Governance, the Company has in place a number of other policies including those in relation to external auditors, remuneration, market disclosure, communication with shareholders, share trading and health & safety.


30 AUDITORS' REPORT

PricewaterhouseCoopers

188 Quay Street Private Bag 92162 Auckland, New Zealand www.pwc.com/nz Telephone +64 9 355 8000 Facsimile +64 9 355 8001 Auditors’ Report

To the shareholders of Fisher & Paykel Appliances Holdings Limited

We have audited the financial statements on pages 32 to 119. The financial statements provide information about the past financial performance and cash flows of the Company and Group for the year ended 31 March 2008 and their financial position as at that date. This information is stated in accordance with the accounting policies set out on pages 37 to 46.

Directors’ Responsibilities

The Company’s Directors are responsible for the preparation and presentation of the financial statements which give a true and fair view of the financial position of the Company and Group as at 31 March 2008 and their financial performance and cash flows for the year ended on that date.

Auditors’ Responsibilities

We are responsible for expressing an independent opinion on the financial statements presented by the Directors and reporting our opinion to you.

Basis of Opinion

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

(a) the significant estimates and judgements made by the Directors in the preparation of the financial statements; and

(b) whether the accounting policies are appropriate to the circumstances of the Company and Group, consistently applied and adequately disclosed.

We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as providers of audit and assurance services.

31

Auditors’ Report


Unqualified Opinion

We have obtained all the information and explanations we have required.

In our opinion:

(a) proper accounting records have been kept by the Company as far as appears from our examination of those records; and

(b) the financial statements on pages 32 to 119:

(i) comply with generally accepted accounting practice in New Zealand;

(ii) comply with International Financial Reporting Standards; and

(iii) give a true and fair view of the financial position of the Company and Group as at 31 March 2008 and their financial performance and cash flows for the year ended on that date.

Our audit was completed on 29 May 2008 and our unqualified opinion is expressed as at that date.

Chartered Accountants Auckland


32 INCOME STATEMENT

For the year ended 31 March 2008

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

Notes $’000 $’000 $’000 $’000

Revenue

Operating revenue 8 1,399,709 1,410,870 - -

Other income 8 6,636 8,211 33,000 40,500

Total revenue and other income 1,406,345 1,419,081 33,000 40,500

Operating profit 94,575 114,141 32,497 39,924

Finance costs 9 (21,566) (20,695) - -

Profit before income tax 73,009 93,446 32,497 39,924

Income tax expense 10 (18,797) (30,009) (3,515) (3,632)

Profit for the year 54,212 63,437 28,982 36,292

Cents Cents

Earnings per share for profit attributable to the ordinary equity holders of the Company during the year:

Basic earnings per share 29 19.1 22.8

Diluted earnings per share 29 18.7 22.2

The above Income Statement should be read in conjunction with the accompanying Notes.

For and on behalf of the Board Date: 29 May 2008

GA Paykel JH Bongard Chairman Chief Executive Officer & Managing Director

33BALANCE SHEET

As at 31 March 2008

CONSOLIDATED APPLIANCES BUSINESS

FINANCE BUSINESS PARENT

31 March 2008

31 March 2007

31 March 2008

31 March 2007

31 March 2008

31 March 2007

31 March 2008

31 March 2007

Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

AssetsCurrent assets

Cash and cash equivalents 11 95,468 76,776 47,269 45,304 48,199 31,472 1 1Trade receivables and other current assets

12 166,594 198,915 161,029 194,612 5,565 4,303 26 31

Finance receivables 13 393,139 383,613 - - 393,139 383,613 - - Inventories 14 277,379 233,674 277,379 233,674 - - - - Non-current assets classified as held for sale

15 - 4,127 - 4,127 - - - -

Derivative financial instruments 16 2,117 6,308 1,532 5,795 585 513 - - Current tax receivables 8,561 7,430 7,612 7,430 949 - 2,464 3,739 Future taxation benefit 17 1,104 2,523 1,104 2,523 - - - - Intergroup advances 40 - - - - - - 428,058 445,903

Total current assets 944,362 913,366 495,925 493,465 448,437 419,901 430,549 449,674

Non-current assetsProperty, plant & equipment 18 331,002 329,502 329,463 327,374 1,539 2,128 - - Investment in subsidiaries 38 100,255 100,225 Investment in Finance business 189,917 176,641 Other non-current assets 2,062 1,870 1,053 846 1,009 1,024 - - Finance receivables 13 191,792 153,178 - - 191,792 153,178 - - Intangible assets 19 331,308 336,124 195,473 194,297 135,835 141,827 - - Derivative financial instruments 16 156 523 156 523 - - - - Deferred taxation 20 29,542 26,834 29,542 26,834 - - - -

Total non-current assets 885,862 848,031 745,604 726,515 330,175 298,157 100,255 100,225

Total assets 1,830,224 1,761,397 1,241,529 1,219,980 778,612 718,058 530,804 549,899

LiabilitiesCurrent liabilities

Bank overdrafts 11 1,474 5,274 1,474 5,274 - - - - Current finance leases 36 3,341 3,587 3,341 3,587 - - - - Trade creditors 21 119,408 124,589 119,408 124,589 - - - - Provisions 22 28,682 20,250 28,682 20,006 - 244 - - Finance borrowings 23 534,976 466,381 - - 534,976 466,381 - - Derivative financial instruments 16 3,288 857 3,258 857 30 - - - Current tax liabilities 1,837 527 1,837 - - 527 - - Other current liabilities 24 82,139 72,854 61,668 50,122 20,471 22,732 - -

Total current liabilities 775,145 694,319 219,668 204,435 555,477 489,884 - -

Non-current liabilitiesNon-current borrowings 25 337,615 310,251 337,615 310,251 - - - - Non-current finance leases 36 866 2,904 866 2,904 - - - - Finance borrowings 23 9,199 21,298 - - 9,199 21,298 - - Deferred taxation 26 33,393 39,777 9,845 10,950 23,548 28,827 - - Other non-current liabilities 27 3,728 13,028 3,728 12,339 - 689 266 - Provisions 22 23,830 27,564 23,359 26,845 471 719 - -

Total non-current liabilities 408,631 414,822 375,413 363,289 33,218 51,533 266 -

Total liabilities 1,183,776 1,109,141 595,081 567,724 588,695 541,417 266 -

Shareholders’ equityContributed equity 28 642,082 639,463 642,082 639,463 642,594 639,975 Retained earnings 30 18,623 15,581 18,623 15,581 (113,946) (91,758)Reserves 30 (14,257) (2,788) (14,257) (2,788) 1,890 1,682 Investment in Finance business 189,917 176,641

Total shareholders’ equity 646,448 652,256 646,448 652,256 189,917 176,641 530,538 549,899

Total liabilities and shareholders’ equity 1,830,224 1,761,397 1,241,529 1,219,980 778,612 718,058 530,804 549,899

The above Balance Sheet should be read in conjunction with the accompanying Notes.


34 STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the year ended 31 March 2008CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Exchange differences on translation of overseas operations (4,635) (9,686) - -

Cash flow hedges taken to equity, net of tax (4,094) 7,450

Interest rate hedges taken to equity, net of tax (3,724) (157) - -

Commodity hedges taken to equity, net of tax 776 (273) - -

Net income and expense recognised directly in equity (11,677) (2,666) - -

Profit for the year 54,212 63,437 28,982 36,292

Total recognised income and expense for the year 42,535 60,771 28,982 36,292

The above Statement of Recognised Income and Expense should be read in conjunction with the accompanying Notes.

35CASH FLOW STATEMENT

For the year ended 31 March 2008CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

Notes $’000 $’000 $’000 $’000

Cash flows from operating activities

Receipts from customers 1,305,914 1,248,898 - -

Financing interest and fee receipts 122,551 118,046 - -

Interest received 805 1,084 - -

Dividends received - - 33,000 40,500

Payments to suppliers and employees (1,254,365) (1,203,328) (1,101) (1,434)

Income taxes paid (27,892) (19,318) (2,299) (3,732)

Interest paid (63,341) (58,614) - -

83,672 86,768 29,600 35,334

Principal on loans repaid by Finance business customers 607,292 678,951 - -

New loans to Finance business customers (670,942) (655,415) - -

Net cash inflow / (outflow) from operating activities 39 20,022 110,304 29,600 35,334

Cash flows from investing activities

Sale of property, plant and equipment 9,815 22,138 - -

Purchase of property, plant & equipment 18 (40,084) (40,949) - -

Capitalisation of intangible assets 19 (6,840) (6,106) - -

Acquisition of Elba S.p.A. 37 - (161,786) - -

Net cash inflow / (outflow) from investing activities (37,109) (186,703) - -

Cash flows from financing activities

Employee share purchase scheme - 275 - -

New non-current borrowings 44,258 341,554 - -

New Finance business borrowings 173,554 216,114 - -

Repayment of non-current borrowings (10,289) (219,052) - -

Repayment of Finance business borrowings (117,811) (266,977) - -

Lease liability payments (721) - - -

Issue of share capital 2,619 78,461 2,619 78,461

Dividends paid 33 (51,170) (49,359) (51,170) (49,359)

Intercompany borrowings - - 18,951 (64,436)

Net cash inflow / (outflow) from financing activities 40,440 101,016 (29,600) (35,334)

Net increase (decrease) in cash and cash equivalents 23,353 24,617 - -

Cash and cash equivalents at the beginning of the financial year 71,502 48,494 1 1

Cash obtained from acquisitions - (9) - -

Effects of foreign exchange rate changes on cash and cash equivalents (861) (1,600) - -

Cash and cash equivalents at end of year 11 93,994 71,502 1 1

The above Cash Flow Statement should be read in conjunction with the accompanying Notes.


36 CONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS

1 General information ........................................................................................................................................ 37

2 Summary of significant accounting policies ......................................................................................... 38

3 Transition to NZ IFRS ..................................................................................................................................... 47

4 Critical accounting estimates and judgements ................................................................................... 48

5 Financial risk management – Appliances business & Parent ....................................................... 50

6 Financial risk management – Finance business ................................................................................. 54

7 Segment information ...................................................................................................................................... 60

8 Revenue and other income ........................................................................................................................... 62

9 Expenses............................................................................................................................................................... 63

10 Income tax expense ......................................................................................................................................... 64

11 Cash & cash equivalents ................................................................................................................................ 65

12 Trade receivables & other current assets ............................................................................................... 66

13 Finance receivables ......................................................................................................................................... 68

14 Inventories ........................................................................................................................................................... 71

15 Non-current assets classified as held for sale ..................................................................................... 71

16 Derivative financial instruments ................................................................................................................ 72

17 Future taxation benefit ................................................................................................................................... 73

18 Property, plant & equipment ........................................................................................................................ 74

19 Intangible assets ............................................................................................................................................... 76

20 Deferred tax assets .......................................................................................................................................... 80

21 Trade creditors ................................................................................................................................................... 81

22 Provisions ............................................................................................................................................................. 81

23 Finance borrowings ......................................................................................................................................... 83

24 Other current liabilities .................................................................................................................................. 85

25 Non-current borrowings ................................................................................................................................. 86

26 Deferred tax liabilities .................................................................................................................................... 88

27 Other non-current liabilities ......................................................................................................................... 89

28 Contributed equity ............................................................................................................................................ 89

29 Earnings per share ........................................................................................................................................... 91

30 Reserves and retained earnings................................................................................................................. 92

31 Imputation credits ............................................................................................................................................ 94

32 Retirement benefit obligation ..................................................................................................................... 95

33 Dividends .............................................................................................................................................................. 97

34 Remuneration of auditors ............................................................................................................................. 98

35 Contingencies ..................................................................................................................................................... 99

36 Commitments ..................................................................................................................................................... 100

37 Business combination .................................................................................................................................... 100

38 Investments in subsidiaries ......................................................................................................................... 101

39 Reconciliation of profit after income tax to net cash inflow from operating activities ..... 102

40 Related party transactions ............................................................................................................................ 103

41 Share-based payments .................................................................................................................................. 104

42 Government Grants .......................................................................................................................................... 107

43 Events occurring after the Balance Sheet date ................................................................................... 107

44 Explanation of transition to New Zealand equivalents to IFRS .................................................. 108

45 Employee remuneration ................................................................................................................................ 119

46 Foreign currency exchange rates ............................................................................................................... 119

37NOTES TO THE FINANCIAL STATEMENTS

1. General information

The Group and Company are profit-oriented limited liability entities incorporated and domiciled in New Zealand. The Company is dual listed on the New Zealand and Australian Stock exchanges and, under dual listing rules, the Company is required to have registered offices in each country. The addresses are:

The financial statements were authorised for issue by the Board of Directors on 29 May 2008.

The Group has two principal areas of business:

The principal activity of the Appliances business is the design, manufacture and marketing of innovative major household appliances. Its major markets are New Zealand, Australia, North America and Europe. The Appliances business has manufacturing operations in New Zealand, Australia, North America, Italy and Thailand.

The Finance business is a leading provider of retail point of sale consumer finance (including the Farmers Finance Card), insurance services and rental & leasing finance.

2. Summary of significant accounting policies

These general purpose financial statements for the year ended 31 March 2008 have been prepared in accordance with New Zealand generally accepted accounting practice (NZ GAAP) and comply with New Zealand Equivalents to International Reporting Standards (NZ IFRS).

(a) Basis of preparation Entities reporting and statutory base The Parent Company’s financial statements are for Fisher & Paykel Appliances Holdings Limited as a separate legal entity (“the Company”) and the consolidated financial statements are for the Fisher & Paykel Appliances Holdings Limited Group (“the Group”), which includes all its subsidiaries. The Group and Company are reporting entities for the purpose of the Financial Reporting Act 1993 and the financial statements comply with that Act and the Companies Act 1993. Reliance is placed on the Group continuing as a going concern.

These financial statements are stated in New Zealand dollars rounded to the nearest thousand unless otherwise indicated.

Application of NZ IFRS1 First-time Adoption of New Zealand Equivalents to International Financial Reporting Standards The Group and Company financial statements have been prepared in accordance with NZ IFRS and the transition between previous New Zealand Financial Reporting Standards (NZ FRS) is governed by NZ IFRS1, with 1 April 2006 as the transition date. The comparative figures in respect of the year ended 31 March 2007 have been restated to reflect these adjustments and reconciliations and descriptions of the effect of transition from NZ FRS to NZ IFRS on the Group’s equity and profit are given in Note 44.

In preparing these financial statements in accordance with NZ IFRS1 the Company and Group have applied mandatory exceptions and certain optional exemptions from full retrospective application of NZ IFRS. Further details are given in Note 3.

Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

Critical accounting estimates and judgements The preparation of financial statements in conformity with NZ IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are highlighted in Note 4.


38 NOTES TO THE FINANCIAL STATEMENTS

2. Summary of significant accounting policies (continued)

(b) Principles of consolidation Subsidiaries are entities that are controlled either directly by the Parent Company or where the substance of the relationship between the Company and the entity indicates the Company controls it. A list of subsidiaries appears in Note 38. The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the date of acquisition or up to the date of disposal.

The Company and subsidiary company accounts (including special purpose entities) are consolidated using the purchase method of accounting. The cost of an acquisition is measured as the fair value of the assets acquired, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

All material intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries are consistent with those adopted by the Group.

The Finance business, comprising Fisher & Paykel Finance Holdings Limited and its subsidiary companies, is independently funded and is not guaranteed by the Parent company or any other non-Finance business companies.

(c) Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographic segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

The Board has determined that the Group’s primary segments are business and its secondary segments are geographic.

(d) Business combinations The purchase method of accounting is used to account for all business combinations. Cost is measured as the fair value of assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, transaction costs arising on the issue of equity instruments are recognised directly in equity.

(e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (‘the functional currency’). The consolidated and Parent financial statements are presented in New Zealand dollars, which is the Group’s presentation currency.

Where settlement of any cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the Group’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained under the Group’s existing funding arrangements.

The excess of the cost of an acquisition over the fair value of the net identifiable assets acquired is recorded as goodwill. Refer Note 2(t).

(ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or at the hedged rate if financial instruments have been used to reduce exposure.

At balance date, monetary assets and liabilities in foreign currency are translated at the year-end closing or hedged rates.

Translation differences are recognised in the Income Statement, except when deferred in equity as qualifying cash flow hedges or net investment hedges.

(iii) Foreign Operations The financial statements of independent foreign operations with a different functional currency are translated to the presentation currency at the following exchange rates:

Exchange differences arising from the translation of any net investment in foreign operations and any related hedges are taken to shareholders’ equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operation and translated at the closing rate.

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(f) Revenue recognition (i) Sales of goods Revenue from sales of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer.

(ii) Sales of services Revenue from sales of services is recognised when the service, such as installation or repair of products, has been performed.

(iii) Long-term contracts Revenue on long-term contracts is recognised over the period of the project, once the outcome can be estimated reliably. The stage of completion method is used to determine the appropriate amount of revenue to recognise at the Balance Sheet date. The stage of completion is determined by reference to contract terms agreed with the customer. The full amount of any expected loss, including that related to future work on the contract, is recognised in the Income Statement as soon as it becomes probable.

(iv) Income on Finance receivables Income on Finance receivables is recognised on an actuarial basis (effective interest method) calculated on the net amount outstanding.

Yield related fees for Finance receivables are accrued to income over the term of the loan on an actuarial basis. Facility fee income on amounts advanced to bulk finance retailers is accrued to income on a straight-line basis over the term of the facility.

Fees charged to customer accounts in arrears are recognised as income at the time the fees are charged.

(v) Premium revenue Premium revenue comprises revenue from direct business and includes amounts charged to the insured but excludes fire service levies, GST and other amounts collected on behalf of third parties.

Premium revenue is recognised in the Income Statement when it has been earned from the attachment date over the period of the contract for direct business. The proportion of premium received or receivable not earned in the Income Statement as at Balance Date is recognised in the Balance Sheet as an unearned premium liability.

(vi) Interest income Interest income is recognised on a time-proportionate basis using the effective interest method, which takes into account the effective yield on the financial asset.

(vii) Royalty income Royalty income is recognised on an accruals basis in accordance with the substance of the relevant agreements.

(viii) Dividend income Dividend income from investments is recognised when the shareholder’s right to receive payment is established.

(g) Government grants Government grants include government assistance relating to specific research activities and also to encourage set up of operations in certain regions. Grants are deducted against the expenses they are intended to compensate.

(h) Income tax The income tax expense for the period is the total of the tax payable on the current period’s taxable income based on the income tax rate for each jurisdiction. This is then adjusted for any changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and any unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rate expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantially enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.




(i) Goods and Services Tax (GST) The financial statements have been prepared so that all components are stated exclusive of GST except where the GST is not recoverable from the IRD. In these circumstances the GST component is recognised as part of the underlying item. Trade and other receivables and payables are stated GST inclusive. The net amount of GST recoverable from or payable to the IRD is included within these categories.

(j) Leases (i) Group as lessee Leases under which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Income Statement on a straight-line basis over the term of the lease. Assets acquired under finance leases are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and any impairment losses.

(ii) Group as lessor Assets leased out to third parties under a finance lease are recognised as a receivable at an amount equal to the present value of the minimum lease payments. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Finance lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.

(k) Insurance expenses (Finance business) Claims handling costs include costs that can be associated directly with individual claims, such as legal and other professional fees, and costs that can only be indirectly associated with individual claims, such as claims administration costs. Discounting is not applied as claims are typically resolved within one year.

Reinsurance is expensed on a straight-line basis.

(l) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, bank overdrafts and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within current liabilities on the Balance Sheet.

The Finance business has determined that its money market deposits and government stock are held to back general insurance liabilities. These assets are designated at fair value through profit or loss. Initial recognition is at cost in the Balance Sheet and subsequent measurement is at fair value with any resultant fair value gains or losses recognised in the Income Statement. The fair value of these assets is recorded at amounts based on valuations using rates of interest equivalent to the yields obtainable on comparable investments at Balance Date.

(m) Trade receivables Trade receivables are recognised initially at fair value and, if applicable, subsequently measured at amortised cost less an allowance account for impaired receivables. The amount of any loss is recognised in the Income Statement within Administration Expenses.

Collectability of trade receivables is reviewed on an ongoing basis when there is objective evidence the Appliances business will not be able to collect all amounts due, they are written off against the allowance account for impaired trade receivables.

(n) Inventories Inventories are valued at the lower of cost, on a first-in, first-out basis, or net realisable value. Cost includes direct materials, direct labour, an appropriate proportion of variable and fixed overhead expenditure (the latter being allocated on the basis of normal operating capacity) but excludes finance, administration, research & development and selling & distribution overheads. Net realisable value is the estimated selling price in the ordinary course of business less all estimated costs of completion and the costs incurred in marketing, selling and distribution.

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(o) Financial assets Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held to maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition and management re-evaluates this designation at each balance date.

Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance date.

Held to maturity investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group has the positive intention and ability to hold to maturity.

Loans & receivables Loans & receivables are non-derivative instruments with fixed or determinable payments and fixed maturities that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are classified as non-current assets. Loans & Receivables are reported separately in Trade or Finance receivables on the Balance Sheet.

Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the company intends to dispose of the investment within 12 months of the balance date.

Available-for-sale financial assets and financial assets at fair value through profit or loss are carried at fair value. Held to maturity investments and loans & receivables are carried at amortised cost less impairment using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets through profit or loss category are recognised in the Income Statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold, the accumulated fair value adjustments are included in the Income Statement as gains and losses from investment securities.

(p) Insurance assets (Finance business) Assets that back general insurance liabilities are designated at fair value through profit or loss. Initial recognition is at cost in the Balance Sheet and subsequent measurement is at fair value with any resultant fair value gains or losses recognised in the Income Statement. The fair value of these assets is recorded at amounts based on valuations using rates of interest equivalent to the yields obtainable on comparable investments at the reporting date.

Other insurance assets with fixed or determinable payments, fixed maturities and which management has the intention and ability to hold are classified as held to maturity at inception.

Acquisition costs incurred in obtaining general insurance contracts are deferred and recognised as assets where they can be reliably measured and where it is probable that they will give rise to premium revenue that will be recognised in the Income Statement in subsequent reporting periods.

Deferred acquisition costs are amortised systematically in accordance with the expected pattern of the incidence of risk under the general insurance contracts to which they relate. This pattern of amortisation corresponds to the earning pattern of the corresponding premium revenue.




(q) Derivatives The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risk and interest rate risk including forward foreign exchange contracts, interest rate swaps and options. Further details of derivative financial instruments are provided in Note 16.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance date. Recognition of the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and the nature of the item being hedged. As appropriate, the Group designates derivatives as either hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow hedges).

(i) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.

Amounts accumulated in equity are recycled in the Income Statement in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the asset or liability.

When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets the hedge accounting criteria, any cumulative gain or loss existing in equity at that time remains in equity and is recognised in the Income Statement when the forecast transaction is ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is immediately transferred to the Income Statement.

(ii) Net investment hedge Hedges of net investments in foreign subsidiaries are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity and the gain or loss relating to the ineffective portion is recognised immediately in the Income Statement.

(iii) Derivatives that do not qualify for hedge accounting Changes in the fair value of derivatives that do not qualify for hedge accounting are recognised immediately in the Income Statement.

(r) Non-current assets held for sale Non-current assets held for sale are stated at the lower of their carrying amount and fair value less costs to sell. Non-current assets are not depreciated or amortised while they are classified as held for sale.

(s) Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses if applicable. Historical cost includes all expenditure directly attributable to the acquisition or construction of the item, including interest.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.

Property, plant & equipment, other than Freehold Land and Capital Work-in-Progress, is depreciated on a straight-line basis over its estimated useful life as follows:

Buildings 50 years

Plant & equipment 3-15 years

Vehicles 5 years

Tooling 3 years

An asset’s useful life is reviewed and adjusted, if appropriate, at each balance date.

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(t) Intangible assets Acquired intangible assets (i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets acquired. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units for the purpose of impairment testing.

(ii) Patents, trademarks and licences Patents, trademarks and licences are finite life intangible assets and are recorded at cost less accumulated amortisation and impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives, which vary from 10 to 20 years. The estimated useful life and amortisation method is reviewed at each balance date.

(iii) Computer software External software costs together with payroll and related costs for employees directly associated with the development of software are capitalised. Costs associated with upgrades and enhancements are capitalised to the extent they result in additional functionality. Amortisation is charged on a straight-line basis over the estimated useful life of the software of 3-10 years.

(iv) Brands Acquired brands, for which all relevant factors indicate there is no limit to the foreseeable net cash flows, are not amortised on the basis that they have an indefinite useful life and are carried at fair value acquired less any accumulated impairment losses. The carrying amount of acquired brands is tested annually for impairment.

(v) Customer relationships Customer relationships are finite life intangible assets and are recorded at fair value acquired less accumulated amortisation and any impairment losses. Amortisation is charged on a straight-line basis over their estimated useful life of 10 years. The estimated useful life and amortisation method is reviewed at each balance date.

Internally generated intangible assets (vi) Research & development Research expenditure is expensed as it is incurred. Development expenditure is expensed as incurred, unless that expenditure directly relates to new or improved products where the level of certainty of their future economic benefits and useful life is probable, in which case the expenditure is capitalised and amortised on a systematic basis reflecting the period of consumption of the benefit, which varies from 3-5 years.

(u) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).




(v) Impairment of financial assets (Finance business) The Finance business classifies its receivables at amortised cost (using the effective yield method) less any impairment adjustment.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or, where appropriate, a shorter period.

At each balance date, Finance receivables are assessed for objective evidence of any impairment. Impairment losses are incurred if, and only if:

(a) objective evidence exists of impairment as a result of one or more events (“loss events”) that occurred after the initial recognition of the asset

(b) the loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably measured.

Loss events include:

Assessment of Finance receivables is completed at both an individual (if significant) and group level. Receivables with similar credit risk characteristics are grouped together for the purpose of impairment assessment.

If impaired, the carrying amount of the receivable is reduced indirectly through the use of an allowance account and the amount of the loss is recognised in the Income Statement.

Realised and unrealised gains and losses arising from derecognition of these receivables are included in the Income Statement in the period in which they arise.

(w) Borrowings and borrowing costs Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Income Statement over the period of the borrowings using the effective interest method.

Borrowing costs are expensed, except for costs directly attributable to assets under construction, which are capitalised during the period of time that is required to complete and prepare the asset for its intended use.

(x) Trade and other payables Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchases of goods and services.

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(y) Employee benefits (i) Wages & salaries, annual leave and sick leave Liabilities for wages & salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave Liabilities for long service leave, which are not expected to be settled within 12 months of the balance date are measured as the present value of estimated future cash outflows from the Group in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

(iii) Defined contribution plan Contributions to the defined contribution superannuation plans are expensed when incurred.

(iv) Defined benefit plan This plan is closed to new members and the majority of existing members transferred to the defined contribution plan on 1 October 2006. The cost of providing benefits is determined using the Projected Unit Credit Method, with independent actuarial valuations being carried out annually. All actuarial gains and losses at 1 April 2006, the date of transition to IFRS, have been recognised. Since transition, actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of the plan assets or 10% of the defined benefit obligation are charged or credited to income over the expected average remaining working lives of employees’ participating in the plan. Otherwise, the actuarial gain or loss is not recognised.

Net provision for post-employment benefits in the Balance Sheet represents the present value of the Group’s obligations at year-end less market value of plan assets, together with adjustments for unrecognised actuarial gains and losses and unrecognised past service costs.

Where the calculation results in a net benefit to the Group, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

(v) Share-based payments The Group operates equity-settled employee share option and share ownership schemes and a cash settled share-based payment scheme.

NZ IFRS2 is applied to all share options granted and shares issued after 7 November 2002 that had not vested on 1 April 2006. The fair value of the share options and shares is expensed on a straight-line basis over the vesting period with a corresponding increase in equity. The fair value of options granted is measured using a binomial model taking into consideration factors such as expected dividends and estimates of the number of options that are expected to become exercisable and shares expected to be distributed. Advances from within the Group fund the initial purchase of shares in the share ownership scheme, which is taken into consideration in arriving at fair value.

For cash-settled schemes, the Group recognises an employee benefit expense over the life of the scheme and remeasures the fair value of the associated liability at each reporting date, with any change in fair value recognised in profit or loss for the period.

(vi) Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(z) Insurance liabilities (Finance business) The liability for outstanding claims is measured as the central estimate of the present value of expected future payments against claims incurred at the reporting date under general insurance contracts issued by the Company, with an additional risk margin to allow for the inherent uncertainty in the central estimate.

incurred but not enough reported (IBNER) and anticipated claims handling costs.




(aa) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount recognised is the present value of the estimated expenditures.

Warranty Provisions for warranty costs are recognised at the date of sale of the relevant products or resultant from specific issues, at management’s best estimate of the expenditure required to settle the Group’s liability based on historical warranty trends. Warranty terms vary, but generally are 2 years parts & labour.

(ab) Contributed Equity Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are included in the cost of the acquisition as part of the purchase consideration.

(ac) Dividends Provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date.

Certain comparatives have been restated in order to conform to current year presentation.

(ad) Changes in accounting policies There have been no significant changes in accounting policies during the current year. Accounting policies have been applied on a basis consistent with the prior half-year ended 30 September 2007 and year ended 31 March 2007 financial statements restated for NZ IFRS.

(ae) Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for later periods and which the Group has not early adopted. The key items applicable to the Group include:

NZ IFRS8: Operating Segments (mandatory for annual periods beginning on or after 1 January 2009). NZ IFRS8 requires segments to be identified on the basis of reporting to chief operating decision makers of the organisation and requires information provided to chief operating decision makers to be presented in the financial statements.

NZ IFRS3, Business Combinations (Revised) and NZ IAS27, Consolidated and Separate Financial Statements (Revised) (mandatory for annual periods beginning on or after 1 January 2009). Transaction costs associated with any future acquisition are expensed when incurred and no longer included in the cost of acquisition. In addition, any contingent consideration is required to be recognised at fair value at the acquisition date with any subsequent changes taken to the Income Statement. Where less than a 100% interest is acquired, the acquirer can recognise either the entire goodwill or the goodwill proportionate to the interest acquired.

NZ IAS1 (Amendments): Presentation of financial statements (mandatory for annual periods beginning on or after 1 January 2009). The amendments require an entity to present all owner changes in equity, separately from non-owner changes in equity, in a Statement of Changes in Equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one Statement of Comprehensive Income or in two statements (an Income Statement and Statement of Comprehensive Income). Components of comprehensive income are not permitted to be presented in a Statement of Changes in Equity.

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3 Transition to NZ IFRS

Basis of transition to NZ IFRS Application of NZ IFRS1 The Group and Parent financial statements for the year ended 31 March 2008 are the first annual financial statements that comply with NZ IFRS. These financial statements have been prepared as described in Note 2(a). The Group has applied NZ IFRS1 in preparing these consolidated financial statements.

Fisher & Paykel Appliances Holdings Limited transition date is 1 April 2006. The Group prepared its opening NZ IFRS Balance Sheet at that date. The reporting date of these financial statements is 31 March 2008. The Group’s NZ IFRS adoption date was 1 April 2007.

In preparing these consolidated financial statements in accordance with NZ IFRS1, the Group has applied the mandatory exceptions and certain of the optional exemptions from full retrospective application of NZ IFRS.

Exemptions from full retrospective application elected by the Group The Group has elected to apply the following optional exemptions from full retrospective application.

(a) Business combinations exemption The Group has applied the business combinations exemption in NZ IFRS1. Business combinations that took place prior to the 1 April 2006 transition date have not been restated.

(b) Fair value as deemed cost exemption The Group has elected to measure selected parcels of land using fair value as deemed cost as at 1 April 2006. The application of this exemption is detailed in Note 44.

(c) Employee benefits exemption The Group has elected to recognise all cumulative actuarial gains and losses as at 1 April 2006. The application of this exemption is detailed in Note 44.

(d) Cumulative translation differences exemption The Group has elected to set the previously accumulated cumulative translation to zero at 1 April 2006. This exemption has been applied to all subsidiaries in accordance with NZ IFRS1. The application of this exemption is detailed in Note 44.

(e) Share-based payment transaction exemption The Group has elected to apply the share-based payment exemption. It applied NZ IFRS2 from 1 April 2006 to those options that were issued after 7 November 2002 but that had not vested by 1 April 2006. The application of the exemption is detailed in Note 44.

Exceptions from full retrospective application followed by the Group The Group has applied the following mandatory exceptions from retrospective application.

(f) Hedge accounting exception Management has claimed hedge accounting from 1 April 2006 only if the hedge relationship meets all the hedge accounting criteria under NZ IAS39. The application of this exception is detailed in Note 44.

(g) Estimates exception Estimates under NZ IFRS at 1 April 2006 should be consistent with estimates made for the same date under previous GAAP, unless there is evidence that those estimates were in error.

Reconciliations between NZ IFRS and previous NZ GAAP The reconciliations in Note 44 provide a quantification of the effect of the transition to NZ IFRS. The first reconciliation provides an overview of the impact on equity of the transition at 1 April 2006 and 31 March 2007 and the second reconciliation provides an overview of profit for the year ended 31 March 2007.



4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Impairment of goodwill and other indefinite life intangible assets The Group annually tests whether goodwill or brands have suffered any impairment, in accordance with the accounting policy stated in Note 2(t). The recoverable amounts of cash generating units for goodwill impairment testing have been determined based on value-in-use calculations and recoverable amounts for brands have been based on relief-from-royalty calculations. These calculations require the use of assumptions. Refer to Note 19 for details of these assumptions and the potential impact of changes to the assumptions.

(ii) Warranty provision Provision is made for estimated warranty claims in respect of products sold which are still under warranty at Balance Date. The majority of these claims are expected to be settled within the next 24 months but this may extend to 5 years for certain refrigeration components. Management estimates the present value of the provision based on historical warranty claim information and any recent specific trends that may suggest future claims could differ from historical amounts.

While changes in management’s assumptions would result in different valuations, management considers the effect of any likely changes would be immaterial to the Group’s result or financial position.

As at 31 March 2008, the Group has recognised a warranty provision amounting to $31.9 million (2007 $34.2 million).

(iii) Finance receivables Allowance is made for losses to Finance receivables where there is objective evidence that impairment has occurred due to one or more loss events. Management assesses whether these loss events have an impact upon the estimated future cash flows of the receivables on either an individual (if significant) or collective (if similar characteristics) basis.

While changes in management’s assumptions would result in different valuations, management considers the effect of any likely changes would be immaterial to the Group’s result or financial position.

As at 31 March 2008, the Group has recognised an allowance for impairment losses amounting to $19.2 million (2007 $14.3 million).

(iv) Income taxes The Group is subject to income taxes in New Zealand and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination may be uncertain. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

As at 31 March 2008, the Group had recognised $3.9 million net deferred tax liabilities in excess of deferred tax assets. The Group has included all available tax loss carry forwards and other deductible temporary differences in the computation of deferred tax assets except for $5.8 million of USA energy tax credits.

(v) Employment benefits The Group provides long service leave benefits to employees in certain countries and calculation of the provision for the unvested component of these obligations is based on assumptions about future salary/wage increases, promotion rates and employee turnover. The discount rates used to calculate the present value of these obligations are based on 10 year Government bond yields as no deep market is deemed to exist for high quality corporate bonds in these countries.

While changes in management’s assumptions would result in different liabilities, management considers the effect of any likely changes would be immaterial to the Group’s result or financial position.

As at 31 March 2008, the Group has recognised a provision for unvested long service leave amounting to $12.7 million (2007 $13.2 million).

49

(vi) Restructuring provisions Restructuring charges include required asset impairments, relocation costs and estimated costs for redundancies. These charges are calculated based on detailed plans that are expected to improve the Group’s cost structure and productivity. The outcomes of similar historical restructuring plans are used as a guideline to minimise any uncertainties arising. The restructuring plans announced during the year ended 31 March 2008 resulted in restructuring charges of $18.3 million.

(b) Critical judgements in applying the entity’s accounting policies Special purpose entity The activities of Retail Financial Services Limited are funded through a master trust securitisation structure established on 8 May 2006. This structure allows for the creation of multiple, separate, standalone trusts. The first trust created under the master trust structure was the RFS Trust 2006-1 (the Trust). Fisher & Paykel Financial Services Limited is the residual income and capital beneficiary of the Trust and therefore the financial statements of the Trust have been consolidated in the Group’s financial statements. Refer Note 38.

5 Financial risk management – Appliances business & Parent

The Group’s business activities expose it to a variety of financial risks, namely market risk (including currency risk and interest rate risk) and credit risk. The overall risk management approach focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the business. Derivative financial instruments such as foreign exchange contracts and interest rate swaps are used to hedge certain risk exposures.

The Board of Directors has approved policy guidelines for the Appliances business and Parent that identify, evaluate and authorise various financial instruments to hedge financial risks. These policy guidelines are reviewed regularly and when there is a fundamental change in the business and/or debt levels.

The principal financial risks and hedging policies for the Appliances business and Parent are shown below.

(a) Market risk (i) Foreign exchange risk The Appliances business operates internationally and is exposed to foreign exchange risk arising from various currency exposures.

The principal currency exposures are the New Zealand dollar cross rates with the Australian dollar, US dollar and Euro.

The Appliances business monitors current and anticipated future foreign currency operating cash flows to determine net exposures, which are hedged with forward exchange contracts and options within prescribed bands for up to a maximum period of 24 months (36 months by exception). Major capital expenditure in foreign currency is hedged with forward foreign exchange contracts and options.

Notional principal of foreign exchange and option agreements outstanding at 31 March 2008 were as follows:

– Purchase commitments forward exchange contracts $44,461,000 (2007 $18,826,000)

– Sale commitments forward exchange contracts $140,370,000 (2007 $147,948,000)

– Foreign currency sold under option agreements $6,250,000 (2007 $Nil)

(ii) Interest rate risk Debt funding for the Appliances business is subject to floating interest rates which can impact on the segment’s financial result. When considered appropriate, in accordance with the policy guidelines, the Appliances business enters into interest rate swaps to manage its exposure to such fluctuations. These financial instruments are subject to the risk that interest rates may change subsequent to implementation.

Notional principal or contract amounts outstanding on interest rate swaps at 31 March 2008 were $133,148,000 (2007 $103,081,000).

(iii) Commodity risk Pricing for some of the Appliances business’ raw material purchases is subject to fluctuations in commodity indices for base metals and crude oil. This is routinely managed through agreements with suppliers however, when considered appropriate and in accordance with the policy guidelines, the Appliances business enters into commodity derivatives to manage its exposure to such fluctuations.

Notional principal or contract amounts outstanding on copper derivatives at 31 March 2008 were $2,139,000 (2007 $4,245,000).

(iv) Summarised sensitivity analysis The following table summarises the sensitivity of the Appliances business’ financial assets and financial liabilities (with all other variables held constant) to interest rate risk, foreign exchange risk and commodity risk.



5 Financial risk management – Appliances business & Parent

Consolidated Interest rate risk Foreign exchange risk Commodity risk-1% +1% -10% +10% -10% +10%

31 March 2008 Carryingamount

Profit Equity Profit Equity Profit Equity Profit Equity Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents

95,468 (668) (668) 668 668 5,290 5,290 (4,328) (4,328) - - - -

Trade receivables 144,873 - - - - 8,603 8,603 (7,038) (7,038) - - - -Foreign exchange derivatives

1,769 - - - - (3,833) (17,857) 3,136 14,610 - - - -

Commodity derivatives

504 - - - - - 56 - (46) - (214) - 214

Financial liabilitiesInterest rate derivatives

(3,288) - (1,331) - 1,331 - 362 - (296) - - - -

Trade creditors (119,408) - - - - (7,381) (7,381) 6,039 6,039 - - - -Borrowings (339,089) 2,272 2,272 (2,272) (2,272) (20,425) (20,425) 16,712 16,712 - - - -Total increase/ (decrease)

1,604 273 (1,604) (273) (17,746) (31,352) 14,521 25,653 - (214) - 214

Consolidated Interest rate risk Foreign exchange risk Commodity risk-1% +1% -10% +10% -10% +10%

31 March 2007 Carrying amount

Profit Equity Profit Equity Profit Equity Profit Equity Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


76,776 (480) (480) 480 480 3,540 3,540 (2,897) (2,897) - - - -

Trade receivables 180,760 - - - - 11,618 11,618 (9,506) (9,506) - - - -Foreign exchange derivatives

5,900 - - - - (2,341) (14,829) 1,915 12,133 - - - -

Interest rate derivatives

418 - (1,031) - 1,031 - 46 - (38) - - - -

Financial liabilitiesForeign exchange derivatives

(450) - - - - 1,095 1,095 (896) (896) - - - -

Commodity derivatives

(407) - - - - - 46 - (37) - (424) - 424

Trade creditors (124,589) - - - - (5,966) (5,966) 4,882 4,882 - - - -Borrowings (315,525) 2,085 2,085 (2,085) (2,085) (19,604) (19,604) 16,040 16,040 - - - -Total increase/ (decrease)

1,605 574 (1,605) (574) (11,658) (24,054) 9,538 19,681 - (424) - 424

Parent Interest rate risk Foreign exchange risk-1% +1% -10% +10%


Profit Equity Profit Equity Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


1 - - - - - - - -

Intergroup advances

428,508 - - - - - - - -

Total increase/ (decrease)

- - - - - - - -

Parent Interest rate risk Foreign exchange risk-1% +1% -10% +10%


Profit Equity Profit Equity Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


1 - - - - - - - -

Intergroup advances

445,903 - - - - - - - -

Total increase/ (decrease)

- - - - - - - -

51

The previous sensitivity analyses represent the range of movements for each type of risk that are considered reasonably possible as at Balance Date. The risk profile will vary throughout the financial year.

Figures disclosed within profit in the sensitivity analyses, represent the after tax impact of the variable movements.

(b) Credit risk The Appliances business incurs credit risk with trade receivables and has a credit policy which is used to manage exposure to this credit risk. As part of this policy, limits are reviewed on a regular basis. In addition, risk is selectively mitigated through trade indemnity policies and letters of credit where an unacceptably high credit risk is perceived to exist.

Foreign currency forward exchange contracts, foreign currency option agreements and interest rate swaps have been entered into with trading banks. The Appliances business’ exposure to credit risk from these financial instruments is limited because it does not expect non-performance of the obligations contained therein due to the credit rating of the financial institutions concerned. The Appliances business does not require collateral or other security to support financial instruments. Further disclosure on Trade receivables is reported in Note 12.

(i) Concentrations of credit exposure As at 31 March 2008, the Appliances business had recognised trade receivables from certain major Australian customers of $19,360,072 (2007 $36,202,530). However, since 2007, all Australian receivables balances are covered by trade indemnity insurance, the main terms of which include:

Excluding the Australian customers above, the Appliances business had no other concentrations of credit exposure.

(ii) Geographic concentrations of trade receivables The Appliances business’ maximum exposure to credit risk for trade receivables by geographic region is as follows:

31 March2008

31 March2007

$’000 $’000

New Zealand 24,933 34,665

Australia 46,154 68,395

North America 31,189 38,494

Europe 40,210 37,152

Rest of World 2,387 2,054

144,873 180,760

(c) Liquidity risk The Board of Directors approves all new loans and funding facilities, including the refinancing of existing facilities. The Board is updated monthly on liquidity risk and management is required to maintain committed facilities at an amount that exceeds projected peak debt levels over the following 12 months in accordance with policy guidelines.

The following table analyses the Appliances business’ financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, except for interest rate swaps.



5 Financial risk management – Appliances business & Parent (continued)

At 31 March 2008 Less than 1 year

$’000

Between 1 and 2 years

$’000


$’000

Over 5 years$’000

Bank overdrafts and loans 1,518 233,725 138,625 -

Trade creditors 119,408 - - -

Finance lease liabilities 3,341 556 310 -

Interest rate swaps * 945 799 1,237 22


$’000


$’000


$’000

Over 5 years$’000

Bank overdrafts and loans 5,457 58,194 298,218 -

Trade creditors 124,589 - - -

Finance lease liabilities 3,587 1,942 962 -

Interest rate swaps * (316) (186) (128) -

* The amounts expected to be payable in relation to the interest rate swaps have been estimated using forward interest rates applicable at the reporting date.

The table below analyses the Appliances business’ derivative financial instruments that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the Balance Sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. They are expected to occur and affect profit or loss at various dates between Balance Date and the following 24 months.


$’000


$’000

Forward foreign exchange contracts – cash flow hedges

– inflow 139,449 7,171

– outflow 44,461 -


$’000


$’000

Forward foreign exchange contracts – cash flow hedges

– inflow 135,674 12,274

– outflow 18,826 -

(d) Fair value estimation The fair value of financial instruments are estimated using discounted cash flows. Fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the Balance Sheet date.

The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Appliances business for similar financial instruments.

Unless otherwise stated, all other carrying amounts are assumed to equal or approximate fair value.

53

(e) Financial instruments by categoryAssets as per Balance Sheet

Derivatives used for hedging

Loans and receivables

Total

$’000 $’000 $’000

Appliances business

At 31 March 2008Cash and cash equivalents - 47,269 47,269

Trade receivables - 144,873 144,873

Derivative financial instruments 1,688 - 1,688

1,688 192,142 193,830

At 31 March 2007Cash and cash equivalents - 45,304 45,304

Trade receivables - 180,760 180,760


6,318 226,064 232,382

Parent

At 31 March 2008Cash and cash equivalents - 1 1

Intergroup advances - 428,058 428,058

- 428,059 428,059

At 31 March 2007Cash and cash equivalents - 1 1

Intergroup advances - 445,903 445,903

- 445,904 445,904

Liabilities as per Balance SheetDerivatives

used for hedging

Measured at amortised

cost

Total

$’000 $’000 $’000

Appliances business

At 31 March 2008Borrowings - 339,089 339,089


Finance leases - 4,207 4,207

3,258 343,296 346,554

At 31 March 2007Borrowings - 315,525 315,525

Derivative financial instruments 857 - 857

Finance leases - 6,491 6,491

857 322,016 322,873



6 Financial risk management – Finance business

The Finance business’ activities expose it to a variety of financial risks including credit risk, liquidity risk and interest rate risk. The Finance business has a separate Board of Directors, which has approved the following committees and other specialists to manage these risks in accordance with approved policy guidelines:

Asset & Liability Committee Comprises the Managing Director, Chief Operating Officer, Chief Financial Officer (Chair) and Treasury & Funding Manager. It is responsible for managing interest rate risk, liquidity risk and balance sheet and capital structure. Its activities are governed by a formal charter to ensure all treasury risk management policies are followed.

Pricing Committee Comprises the Managing Director, Chief Operating Officer (Chair) and Chief Financial Officer. Its principal responsibility is to establish and review interest rates on money advanced to customers.

Credit Committee Comprises the Managing Director, Chief Operating Officer, Chief Financial Officer and Chief Credit Risk Officer (Chair). The committee’s principal responsibility is to oversee all aspects of credit risk assessment and management. It operates within formal credit policies and guidelines that ensure any credit risk incurred falls within acceptable parameters.

Treasury The Treasury function’s principal responsibility is the day-to-day management of the liability side of the Balance Sheet, especially focusing on maintaining the appropriate level and mix of funding sources and ensuring that the Finance business has sufficient liquidity for its requirements. In addition, Treasury is responsible for:

(i) execution of interest rate risk management strategies including the use of derivative financial instruments in accordance with policy

(ii) ensuring compliance with all internal and external measures, covenants and ratios.

(a) Market risk The Finance business is exposed to fluctuations in the prevailing levels of market interest rates on both fair value and cash flow risks relating to its financial instruments. Interest margins may increase or decrease, as the case may be, as a result of changes in market interest rates.

(i) Interest rate risk management process The Asset & Liability Committee is responsible for managing interest rate risk in accordance with its charter and treasury risk management policy. A Pricing Committee is responsible for establishing and reviewing interest rates on money lent.

The Finance business manages interest rate risk through:

risk management policies approved by the Finance business Board of Directors

(ii) Concentrations of interest rate exposure The Finance business’ borrowings are generally short term in nature to match the profile of the maturing assets. Borrowings issued at variable rates expose the Finance business to cash flow interest rate risk. Borrowings issued at fixed rates expose the Finance business to fair value interest rate risk.

55

(iii) Repricing schedule The Finance business has a policy which establishes risk control limits for the net repricing gap. Interest rate exposure is monitored on a regular basis and reported to and reviewed monthly by the Asset and Liability Committee and the Finance business Board of Directors.

The table below summarises the Finance business’ exposure to interest rate risks. It includes the Finance business’ financial instruments at carrying amounts, categorised by the earlier of their contractual repricing or expected maturity dates.

Consolidated Weighted average effective interest

rate

0 to 6 months

7 to 12 months

13 to 24

months

25 to 60

months

Over 60

months

Non interest bearing

Total

31 March 2008 % $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 8.3 48,199 - - - - - 48,199

Derivative financial instruments 8.2 135 293 155 2 - - 585

Finance receivables 17.6 242,612 150,527 128,246 62,007 1,539 - 584,931

Other financial assets 1.9 - - - 1,009 - 2,349 3,358

290,946 150,820 128,401 63,018 1,539 2,349 637,073

Financial liabilitiesFinance borrowings

Bank loans 8.9 211,456 - - - - - 211,456

Debentures 8.4 66,684 29,170 6,828 2,371 - - 105,053

Notes 9.2 167,018 - - - - - 167,018

Committed liquidity facilities 9.1 60,648 - - - - - 60,648

Derivative financial instruments 8.6 - - 30 - - - 30

Other financial liabilities - - - - - - 4,333 4,333

505,806 29,170 6,858 2,371 - 4,333 548,538

Net effective interest rate gap (214,860) 121,650 121,543 60,647 1,539 (1,984) 88,535

Consolidated Weighted average effective interest

rate

0 to 6 months

7 to 12 months

13 to 24

months

25 to 60

months

Over 60

months

Non interest bearing

Total

31 March 2007 % $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 7.2 31,472 - - - - - 31,472

Derivative financial instruments 7.6 59 155 245 54 - - 513

Finance receivables 16.9 240,426 143,093 112,528 40,058 686 - 536,791

Other financial assets 1.8 - - - 1,025 - 2,661 3,686

271,957 143,248 112,773 41,137 686 2,661 572,462


Bank loans 7.7 104,666 - - - - - 104,666

Debentures 7.5 110,920 57,800 8,522 2,776 - - 180,018

Notes 7.8 202,995 - - - - - 202,995

Other financial liabilities - - - - - - 6,363 6,363

418,581 57,800 8,522 2,776 - 6,363 494,042

Net effective interest rate gap (146,624) 85,448 104,251 38,361 686 (3,702) 78,420



6 Financial risk management – Finance business (continued)

(iv) Summarised sensitivity analysis The following table summarises the sensitivity of the Finance business’ financial assets and liabilities to interest rate risk in terms of the effect on post-tax profit and equity. The analysis is based on the assumption that all other variables remain constant.

Interest rate risk

-1% +1%


Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 48,199 (338) (338) 338 338

Finance receivables 584,931 (4,095) (4,095) 4,095 4,095

Derivative financial instruments 585 (441) (441) 643 643

Other financial assets 3,358 (7) (7) 7 7

Financial liabilitiesFinance borrowings 544,175 3,792 3,792 (3,792) (3,792)


Other financial liabilities 4,333 - - - -

Total increase/ (decrease) (1,270) (1,270) 1,470 1,470

Interest rate risk

-1% +1%


Profit Equity Profit Equity

$’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 31,472 (205) (205) 205 205

Finance receivables 536,791 (3,596) (3,596) 3,596 3,596


Other financial assets 3,686 (7) (7) 7 7

Financial liabilitiesFinance borrowings 487,679 3,256 3,256 (3,256) (3,256)

Other financial liabilities 6,363 - - - -

Total increase/ (decrease) (1,169) (1,169) 1,354 1,354

(b) Credit risk Credit risk arises principally on advances made to customers and deposits held with other entities and also in off-balance sheet items such as loan commitments.

(i) Credit risk management process A Credit Committee oversees all aspects of credit risk assessment and management and operates within credit policies and guidelines approved by the Finance business Board of Directors. These policies ensure that any credit risk incurred falls within acceptable parameters.

The Finance business manages credit risk in a number of ways:

scorecards, credit checks, business rules and review of customer credit history to assess a customer’s creditworthiness. Wherever appropriate, a charge will be taken by way of reservation of title over the asset financed, except for personal loans, where advances are generally unsecured.

contracts are assessed in accordance with a range of credit criteria and the amount of each advance. Criteria include credit checks, trade references and financial account analysis. These contracts are secured over the goods financed and guarantees are requested from business proprietors in certain circumstances. Assets financed include machinery and plant & equipment but do not include residential or commercial property.

57

amount of money advanced, including average yield and arrears levels. A prudential security reserve is also maintained to ensure that a margin exists between the amounts advanced and the estimated market value of the underlying Finance receivables.

instruments is limited because it does not expect non-performance of the obligations contained therein due to the credit rating of the financial institutions concerned. The Finance business does not require collateral or other security to support these financial instruments.

(ii) Concentrations of Credit Exposure As at 31 March 2008, the Finance business had advanced $88.5 million to Smithcorp Finance Limited, a bulk finance merchant (2007 $83.6 million). Security is a general security interest charging all present and after acquired property and a specific interest over finance receivables. These receivables, taken as individual finance receivable agreements, are largely low value advances to retail customers.

Excluding Smithcorp Finance Limited, the Finance business had no exposure to retailers, commercial accounts or individual receivable agreements that exceeded 10% of Finance business equity (2007 $Nil).

Maximum exposure to credit risk before collateral held or other credit enhancements is shown in the table below:

31 March2008

31 March2007

$’000 $’000

Credit exposures relating to on-Balance Sheet assets:

Cash & cash equivalents 48,199 31,472

Derivative financial instruments 585 513

Finance receivables 584,931 536,791

Other financial assets 3,358 3,686

Credit exposures relating to off-Balance Sheet items:

Undrawn lending commitments* 1,203,395 1,323,967

1,840,468 1,896,429

*Undrawn lending commitments include unutilised Q Card and Farmers Finance Card limits, which can be unconditionally cancelled at any time.

The above table represents a worst case scenario of credit risk exposure at 31 March 2008, without taking into account any collateral held, other credit enhancements attached or the cancellation of undrawn lending commitments. For on-Balance Sheet assets, the exposures set out above are based on net carrying amounts as reported in the Balance Sheet.

Further details on Finance receivables and impairment are disclosed in Note 13.

(iii) Geographic Concentrations of Finance Receivables The table below details the geographic split of Finance receivables:

31 March2008

31 March2007

$’000 $’000

Upper North Island 201,457 189,016

Central North Island 141,299 129,117

Lower North Island 80,647 67,682

South Island 161,528 150,976

584,931 536,791

Upper North Island comprises the Auckland and Northland regions. Lower North Island comprises the Wellington and Manawatu regions.

(c) Liquidity risk Prudent liquidity risk management implies ensuring the Finance business is able to meet its payment obligations associated with its financial liabilities when they fall due. This includes the risk that the Finance business may have insufficient liquid funds, or may not be able to raise sufficient funds at short notice, to meet these payment obligations. This arises when there is a significant mismatch between its financial assets and financial liabilities.



6 Financial risk management – Finance business (continued)

(i) Liquidity risk management process The Asset & Liability Committee oversees all aspects of Balance Sheet risk assessment and management, including liquidity risk in accordance with its Charter. All treasury related activity must comply with treasury risk management policies approved by the Finance business Board of Directors.

Liquidity risk is managed through:

The Asset & Liability Committee also monitors the level and type of undrawn lending commitments against committed credit facilities to ensure there is sufficient capacity.

The table below analyses the Finance business’ financial assets and financial liabilities and net settled derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, except for derivative financial instruments.

Call 0 to 6 months

7 to 12 months

13 to 24 months

25 to 60 months

Over 60 months

Total

31 March 2008 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 32,797 15,768 - - - - 48,565

Derivative financial instruments* - 471 327 78 - - 876

Finance receivables - 216,729 152,949 169,206 192,536 51,107 782,527

Other financial assets - 2,380 30 60 1,120 - 3,590

32,797 235,348 153,306 169,344 193,656 51,107 835,558


Bank loans - 87,761 133,314 - - - 221,075

Debentures 9,412 60,090 30,171 8,544 2,670 - 110,887

Notes - 168,500 - - - - 168,500

Committed liquidity facilities - 61,461 - - - - 61,461

Other financial liabilities - 4,333 - - - - 4,333

9,412 382,145 163,485 8,544 2,670 - 566,256

Call 0 to 6 months

7 to 12 months

13 to 24 months

25 to 60 months

Over 60 months

Total

31 March 2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assetsCash & cash equivalents 15,671 15,976 - - - - 31,647

Derivative financial instruments* - 166 169 128 4 - 467

Finance receivables - 206,379 146,032 152,213 152,013 39,331 695,968

Other financial assets - 2,692 30 60 1,180 - 3,962

15,671 225,213 146,231 152,401 153,197 39,331 732,044


Bank loans - 19,444 80,460 10,021 - - 109,925

Debentures 13,726 101,619 59,311 11,226 3,089 - 188,971

Notes - 205,013 - - - - 205,013

Other financial liabilities - 6,363 - - - - 6,363

13,726 332,439 139,771 21,247 3,089 - 510,272

* The amounts expected to be payable in relation to the derivative financial instruments have been estimated using forward interest rate applicable at the reporting date.

59

(d) Fair value estimation The fair value of financial instruments that are not traded in an active market is determined using generally accepted valuation techniques. The Finance business uses a variety of methods and makes assumptions that are based on market conditions existing at each Balance Date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows.

The fair value of financial liabilities and assets for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Finance business for similar financial instruments. For short-term financial assets and liabilities, their carrying amount is a reasonable approximation of their fair values.

(e) Financial instruments by category

Assets as per Balance Sheet

Fair value through

profit or loss - designated

Fair value through

profit or loss - held for

trading

Loans and receivables

Total

$’000 $’000 $’000 $’000

At 31 March 2008

Cash and cash equivalents 17,200 - 30,999 48,199

Derivative financial instruments - 585 - 585

Finance receivables 88,512 - 496,419 584,931

Other financial assets 1,009 - 2,349 3,358

106,721 585 529,767 637,073

At 31 March 2007

Cash and cash equivalents 19,525 - 11,947 31,472

Derivative financial instruments - 513 - 513

Finance receivables 83,579 - 453,212 536,791

Other financial assets 1,025 - 2,661 3,686

104,129 513 467,820 572,462

Liabilities as per Balance Sheet

Fair value through

profit or loss – held for

trading

Measured at amortised

cost

Total

$’000 $’000 $’000

At 31 March 2008

Finance borrowings - 544,175 544,175

Derivative financial instruments 30 - 30

Other financial liabilities - 4,333 4,333

30 548,508 548,538

At 31 March 2007

Finance borrowings - 487,679 487,679

Derivative financial instruments - - -

Other financial liabilities - 6,363 6,363

- 494,042 494,042



7 Segment information

(a) Description of segments

Business segments The Group is organised into the following main business segments:

Appliances business Manufacturer, distributor and marketer of major household appliances.

Finance business Financial services sector entirely within New Zealand.

Geographic segments The Appliances business operates in the following geographic areas:

New Zealand Comprises corporate head office, manufacturing operations in Auckland and Dunedin, product development & engineering services, customer services, sales & distribution operations.

Australia

North America Comprises manufacturing operations in Huntington Beach, California and Clyde, Ohio and sales & distribution operations in the United States and Canada.

Italy

Thailand Comprises a manufacturing operation in Amata City, Rayong Province. (Note: Production is still in the work-up phase.)

Overseas sales companies Comprises UK, Ireland, Singapore and Rest of World sales & distribution operations.

61

(b) Combined segment analysis

For the year ended 31 March 2008 New Zealand

Australia North America

Italy Thailand Overseas sales

companies

Appliances business

Finance business

Consolidated operations

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

External operating revenue 286,521 458,094 346,449 147,554 - 37,198 1,275,816 123,893 1,399,709 Intersegment sales - - -Total operating revenue 1,275,816 123,893 1,399,709

Other income 6,556 80 6,636 Total revenue and other income 1,282,372 123,973 1,406,345

Cost of goods sold (897,812)Gross margin 384,560

Administration expenses (159,160)Selling, marketing and distribution expenses

(156,968)

Impairment charge for credit losses (13,310)Operating interest expenses and similar charges

(43,427)

Other Finance business expenses (41,093)

Operating profit before amortisation 76,339 33,203 109,542

Operating profit 68,432 26,143 94,575

Depreciation expense (34,510) (846) (35,356)Impairment loss (718) (308) (1,026)Amortisation expense (7,907) (7,060) (14,967)Employee benefits expense (282,616) (16,605) (299,221)1One-off costs of Factory relocations to Thailand and Mexico*

(18,263) - (18,263)

Costs associated with proposed sale of Finance business

(1,590) (745) (2,335)

Total assets 271,669 189,087 248,149 245,611 48,196 97,096 1,051,612 778,612 1,830,224

Total liabilities (595,081) (588,695) (1,183,776)

Capital expenditure 22,227 3,294 2,699 1,747 8,853 510 39,330 1,632 40,962

* Includes staff redundancy costs of $9.2 million also reported as part of employee benefits expense and $0.7 million also reported as an impairment loss.

For the year ended 31 March 2007 New Zealand

Australia North America

Italy Thailand Overseas sales

companies

Appliances business

Finance business

Consolidated operations

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

External operating revenue 308,733 422,621 406,205 122,312 - 32,870 1,292,741 118,129 1,410,870 Intersegment sales - - -Total operating revenue 1,292,741 118,129 1,410,870

Other income 8,145 66 8,211 Total revenue and other income 1,300,886 118,195 1,419,081

Cost of goods sold (907,059)Gross margin 393,827

Administration expenses (151,224)Selling, marketing and distribution expenses

(157,028)

Impairment charge for credit losses (8,623)Operating interest expenses and similar charges

(38,634)

Other Finance business expenses (42,372)

Operating profit before amortisation 93,495 36,650 130,145

Operating profit 85,575 28,566 114,141

Depreciation expense (35,302) (720) (36,022)Amortisation expense (7,920) (8,084) (16,004)Employee benefits expense (268,201) (16,531) (284,732)2One-off staff retrenchment & other costs (5,934) (591) (6,525)

Total assets 343,823 182,583 265,038 235,753 - 16,142 1,043,339 718,058 1,761,397

Total liabilities (567,724) (541,417) (1,109,141)

Capital expenditure 30,466 2,400 10,037 2,901 - 1,088 46,892 2,196 49,088 1These represent costs associated with relocating the New Zealand Laundry Products and Electronics Factories to Thailand. 2These costs represent staff redundancies and other costs due to the relocation of plant closer to our major markets, the integration of acquired businesses and component outsourcing.



7 Segment information (continued)

(c) Notes to and forming part of the segment information

(i) Inter-segment transfers Inter-segment transactions between the Appliances and Finance businesses are immaterial and those that do occur are arm’s length transactions.

8 Revenue and other income

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

From continuing operations

Appliances business sales revenue

New Zealand 242,987 241,366 - -

Australia 466,808 425,385 - -

North America 378,980 455,114 - -

Europe 112,284 98,641 - -

Rest of World 74,757 72,235 - -

Finance business revenue 123,893 118,129 - -

Total operating revenue 1,399,709 1,410,870 - -

Other income

Interest 805 1,084 - -

Gains on disposal of property, plant & equipment 4,952 7,127 - -

Fee income 477 - - -

Other 402 - - -

Dividends - - 33,000 40,500

6,636 8,211 33,000 40,500

1,406,345 1,419,081 33,000 40,500

(a) Sales revenue Revenue figures reported above are disclosed by location of customer and therefore do not agree directly to Segment disclosures at Note 7, where revenue is reported by country of operation.

(b) Net gains on disposal of property, plant & equipment Net gains on disposal of property, plant & equipment for the period ending 31 March 2008 includes a gain on sale of land and buildings of $5.0 million (2007 $7.1 million).

63

9 Expenses

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Net gains and expenses

Profit before income tax includes the following specific expenses:

Depreciation 35,356 36,022 - -

Amortisation1 14,967 16,004 - -1 Amortisation is reported within Administration expenses in the Income Statement.

Refer to Note 7.

Finance costs2

External interest expense 22,132 20,695 - -

Amount capitalised – Property, plant & equipment (Note (a)) (566) - - -

21,566 20,695 - -2 Excludes Finance business operating interest. Refer to Note 7.

Rental expense relating to operating leases Minimum lease payments 19,460 19,862 - -

Foreign exchange gains and losses Net foreign exchange (gains)/losses (3,292) 2,279 - -

Defined contribution superannuation expense 10,662 9,587 - -

Research & development 17,330 17,311 - -

Sundry expenses Donations 266 104 - -

Employee benefits 299,221 284,732 502 640

Impairment charge for credit losses Receivables written off during the year 10,970 10,249 - -

Recovery of amounts previously written off (2,564) (2,427) - -

Movement in allowance for impairment 4,904 801 - -

Total impairment charge for credit losses 13,310 8,623 - -

Impairment of other assets(Note (b)) Plant & equipment 718 - - -

Software 308 - - -

Total impairment charge of other assets 1,026 - - -

(a) Capitalised borrowing costs The capitalisation rate used to determine the amount of borrowing costs to be capitalised was 9.3% (2007 N/A) except for isolated costs related to construction of buildings in Thailand which have been capitalised at 4.6%. This represents the weighted average interest rate to the Group’s applicable outstanding New Zealand dollar borrowings during the year.

(b) Asset Impairments Following the relocation of laundry manufacturing plant & equipment from New Zealand to Thailand, surplus assets were written down to their recoverable amount.

The Finance business retired certain operating software during the period and wrote off the remaining book value.



10 Income tax expense

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

(a) Income tax expense

Current tax 27,192 28,540 (166) (195)

Deferred tax (6,942) 1,129 - -

Under (over) provided in prior years (1,453) 340 3,681 3,827

18,797 30,009 3,515 3,632

Deferred income tax (revenue) expense included in income tax expense comprises:

Decrease (increase) in deferred tax assets (Note 20) (906) 3,546 - -

(Decrease) increase in deferred tax liabilities (Note 26) (6,036) (2,417) - -

(6,942) 1,129 - -

(b) Numerical reconciliation of income tax expense to prima facie tax payable

Profit from continuing operations before income tax expense 73,009 93,446 32,497 39,924

Tax at the New Zealand tax rate of 33% (2007 33%) 24,093 30,837 10,724 13,175

Tax effect of a change in tax rate to 30% (2,590) - - -

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:

Fully imputed dividends received - - (10,890) (13,365)

Other non-assessable income (1,279) (5,218) - (5)

Non-deductible amounts 1,420 6,825 - -

Attributed foreign income 103 (6) - -

USA energy tax credits (2,851) (1,377) - -

18,896 31,161 (166) (195)

Difference in overseas tax rates 1,354 (1,492) - -

Under (over) provision in prior years (1,453) 340 3,681 3,827

(99) (1,152) 3,681 3,827

Income tax expense 18,797 30,009 3,515 3,632

The weighted average applicable tax rate was 25.7% (2007 32.1%). The decrease from 2007 is primarily due to the change in New Zealand tax rates applied to deferred tax balances, reversal of deferred tax liabilities on derivative financial instruments under revised tax rules, reversal of deferred tax liability on sale of land & buildings and an increase in the deferred tax asset associated with future tax credits in the USA.

65

11 Cash & cash equivalents

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Cash at bank and on hand 77,952 57,251 1 1

Deposits 17,516 19,525 - -

95,468 76,776 1 1

(a) Reconciliation to cash at the end of the year The above figures are reconciled to cash at the end of the financial year as shown in the Cash Flow Statement as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Balance as above 95,468 76,776 1 1

Bank overdrafts (Note 25) (1,474) (5,274) - -

Balance per Cash Flow Statement 93,994 71,502 1 1

(b) Cash at bank and on hand This consists of both interest and non-interest bearing balances denominated in various currencies. The weighted average interest rate as at 31 March 2008 was 5.0% (2007 6.3%).

(c) Deposits These are Finance business call and term deposits. The call deposits bear a weighted average interest rate of 8.7% (2007 7.7%). The term deposits bear a weighted average interest rate ranging between 8.7% to 9.1% (2007 7.7% to 7.9%) and an average maturity period of 95 days (2007 57 days).

(d) Fair value The carrying amount for cash & cash equivalents equals the fair value.



12 Trade receivables & other current assets

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Net trade receivables

Trade receivables 146,491 182,166 - -

Provision for impairment of trade receivables (1,618) (1,406) - -

144,873 180,760 - -

Prepayments

Other debtors & prepayments 21,721 18,155 26 31

166,594 198,915 26 31

(a) Impaired receivables As at 31 March 2008 current trade receivables of the Group with a nominal value of $1,617,508 (2007 $1,406,366) were impaired. The amount of the provision was $1,617,508 (2007 $1,406,366). There were no impaired trade receivables in the Parent in 2008 or 2007.

The ageing of these impaired receivables is as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

0 to 60 days 285 248 - -

61 to 120 days 376 327 - -

Over 120 days 957 831 - -

1,618 1,406 - -

As of 31 March 2008, trade receivables of $15.9 million (2007 $22.0 million) were past due but not impaired. These relate to a number of customers who pay slightly outside terms (but consistent with custom & practice for their sector) and for whom there is no recent history of default. The ageing analysis of these past due but not impaired receivables is as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

0 to 60 days 11,436 15,716 - -

61 to 120 days 2,728 4,287 - -

Over 120 days 1,774 1,981 - -

15,938 21,984 - -

67

Movements in the provision for impairment of receivables are as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

At 31 March

Carrying amount at the start of the year 1,406 707 - -

Exchange rate variance on opening balance (40) (67) - -

Acquisition of Elba S.p.A. - 377 - -

Additional provision recognised 252 389 - -

Carrying amount at the end of the year 1,618 1,406 - -

The creation and release of the provision for impaired receivables has been included in Administration expenses in the Income Statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The other classes within trade and other current assets do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due.

(b) Bad and doubtful trade receivables The Group has recognised a loss of $336,747 (2007 $3,772,000) in respect of bad and doubtful trade receivables during the year ended 31 March 2008. The loss has been included in Administration expenses.

The loss recognised in 2007 was largely due to one major buying group in Australia.

(c) Other debtors & prepayments These amounts generally arise from transactions outside the usual operating activities of the Group.

(d) Foreign exchange and interest rate risk A summarised analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk can be found in Note 5.

(e) Fair value and credit risk Due to the short-term nature of these trade receivables, carrying value is assumed to approximate their fair value.



13 Finance receivables

31 March2008

31 March2007

$’000 $’000

Current


Provision for unearned interest (11,618) (15,721)

Allowance for impairment (12,903) (10,216)

Total current Finance receivables 393,139 383,613

Non-current


Provision for unearned interest (5,668) (6,274)

Allowance for impairment (6,294) (4,077)

Total non-current Finance receivables 191,792 153,178

Total Finance receivables 584,931 536,791

Finance receivables principally comprise advances on credit cards, fixed instalment agreements, finance lease receivables and bulk finance receivables.

The Finance business recognised a loss of $13.3 million in respect of impaired receivables for the year ended 31 March 2008 (2007 $8.6 million). Refer to Note 9.

(a) Finance business leases The Finance business provides lease finance to customers for office and other equipment.

31 March2008

31 March2007

$’000 $’000

Finance lease receivables

Gross receivables from finance leases:

Not later than 1 year 27,684 30,085

Later than 1 year and not later than 5 years 28,118 28,038

Later than 5 years 174 -

55,976 58,123

Unearned finance income (4,469) (4,526)

Allowance for uncollectible minimum lease payments receivable (292) (333)

(4,761) (4,859)

Net investment in finance leases 51,215 53,264

The net investment in finance leases may be analysed as follows:

31 March2008

31 March2007

$’000 $’000

Not later than 1 year 25,009 27,109

Later than 1 year and not later than 5 years 26,067 26,155

Later than 5 years 139 -

51,215 53,264

69

(b) Impaired receivables Net finance receivables are summarised as follows:

31 March2008

31 March2007

$’000 $’000

Neither past due nor impaired 523,834 456,750

Past due but not impaired - 104

Impaired – individually 177 450

Impaired – collectively 80,117 93,780

Gross 604,128 551,084

Less:

Allowance for impairment – individually 121 190

Allowance for impairment – collectively 19,076 14,103

Net 584,931 536,791

The Finance business’ policy is to provide for impairment when receivables are one day or more in arrears.

Included within the neither past due nor impaired figures for Finance receivables are restructured receivables that would otherwise be impaired whose terms have been renegotiated. The carrying amount of Finance receivables that would otherwise be past due or impaired whose terms have been renegotiated at 31 March 2008 was $15.3 million (2007 $6.6 million).

The table below shows a reconciliation of the movement in net Finance receivables (after provision for unearned interest and allowance for impairment) that are collectively determined to be impaired.

31 March2008

31 March2007

$’000 $’000

Opening balance 79,677 98,834

Movement in allowance for impairment (4,973) (611)

Net additions/(deletions) to class (2,713) (8,297)

Receivables written off during the year (10,950) (10,249)

Balance at 31 March 61,041 79,677

The ageing of Finance receivables determined to be individually or collectively impaired is as follows:

31 March2008

31 March2007

$’000 $’000

Up to 30 days 34,541 50,369

31-60 days 14,366 16,173

61-90 days 5,311 5,013

Over 90 days 26,076 22,675

80,294 94,230

Past due receivables of $104,000 for the year ended 31 March 2007 are over 90 days.



13 Finance receivables (continued)

Movements in the allowance for impairment of Finance receivables collectively determined to be impaired is as follows:

31 March2008

31 March2007

$’000 $’000

Opening balance 14,103 13,492

Movement in allowance for impairment during the year 4,973 611

Balance at end of year 19,076 14,103

The creation and release of the allowance for impaired Finance receivables has been included in the ‘Impairment charge for credit losses’ in the Segment Note. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

(c) Fair values The fair values and carrying values of Finance receivables are as follows:

31 March 2008 31 March 2007

Carrying amount

Fair value Carrying amount

Fair value

$’000 $’000 $’000 $’000

Finance receivables 584,931 582,392 536,791 538,283

The fair values of Finance receivables other than bulk finance receivables are based on cash flows discounted using current lending rates ranging between 13.0% to 20.9% (2007 13.4% to 17.1%).

The fair values of bulk Finance receivables are based on cash flows discounted using current lending rates ranging between 9.4% to 10.1% (2007 7.8% to 8.0%).

The fair value of other Finance receivables equals their carrying amount as the effect of discounting was immaterial.

(d) Interest rate risk For an analysis of the sensitivity of Finance receivables to interest rate risk, refer to Note 6.

(e) Credit risk Refer to Note 6 for more information on credit risk from Finance receivables including objectives, policies and processes for managing credit risk.

71

14 Inventories

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Raw materials 89,893 77,528 - -

Spare parts 11,226 10,573 - -

Work-in-progress 21,813 24,262 - -

Finished goods 154,447 121,311 - -

277,379 233,674 - -

(a) Inventory expense Raw materials, consumables and changes in finished goods and work-in-progress recognised as cost of goods sold in the year ending 31 March 2008 was $657.7 million (2007 $656.3 million).

Write-downs of inventories to net realisable value recognised as an expense during the year ended 31 March 2008 amounted to $1,475,036 (2007 $2,088,434). This expense has been included in Administration expenses in the Income Statement.

(b) Inventory stock build Owing to the relocation of Laundry manufacturing facilities from New Zealand to Thailand, finished goods inventory as at 31 March 2008 was temporarily $20.8 million above normal stockholding levels (2007 N/A). This is expected to reverse through the first half of the 2008/09 financial year.

15 Non-current assets classified as held for sale

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Land & buildings - 4,127 - -

- 4,127 - -

The Appliances business’ Northern Region Warehouse in Auckland, New Zealand was sold for $9.8 million on 29 June 2007.



16 Derivative financial instruments

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Current assets

Forward foreign exchange contracts ((a)(ii)) 1,028 5,784 - -

Interest rate swaps ((a)(i)) 585 931 - -

Commodity hedges 504 (407) - -

Total current derivative financial instrument assets 2,117 6,308 - -

Non-current assets

Forward foreign exchange contracts – cash flow hedges ((a)(ii)) 156 523 - -

Total non-current derivative financial instrument assets 156 523 - -

Total derivative financial instrument assets 2,273 6,831 - -

Current liabilities

Forward foreign exchange contracts ((a)(ii)) - 857 - -

Interest rate swaps ((a)(i)) 3,288 - - -

Total current derivative financial instrument liabilities 3,288 857 - -

Total derivative financial instrument liabilities 3,288 857 - -

Total derivative financial instruments (1,015) 5,974 - -

Derivative financial assets and liabilities are classified as current or non-current according to the underlying hedge relationship. Where the hedged item has a remaining maturity of more than 12 months it is classified as non-current.

(a) Instruments used by the Group The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest and foreign exchange rates and commodity prices in accordance with the Group’s financial risk management policies. (Refer Notes 5 & 6)

(i) Interest rate derivatives The Appliances business has loans totalling US$60million, 56million and THB200million that form part of the core investment rather than operational floats. The Group Treasury Policy states between 30 and 70 percent of these loans should be fixed via interest rate swaps to protect the Group from exposure to fluctuations in interest rates. Accordingly, the Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

Swaps currently in place cover approximately 67% (2007 67%) of the US dollar, 67% (2007 43%) of the Euro and 100% (2007 N/A) of the Thai baht loan principals outstanding and the swaps are timed to expire as each loan repayment falls due. The swap cover on the Thai baht loan is temporarily outside Policy limits (with Board approval) as the core investment in Thailand is incomplete as at Balance Date. The core investment will be completed in the first half of the 2008/09 financial year and the swap cover will be within Policy limits at that time.

The fixed interest rates average 4.95% for the US dollar loan (2007 4.95%), 4.43% for the Euro loan (2007 3.83%) and 4.62% (2007 N/A) for the Thai baht loan. The variable rates are set at the LIBOR 90 day settlement rates for the US dollar and Euro loans and the Reuters THBFIX 180 day settlement rate for the Thai baht loan, which at Balance Date were 2.69% (2007 5.35%) for the US dollar, 4.73% (2007 3.93%) for the Euro and 2.93% (2007 N/A) for the Thai baht.

The contracts require settlement of net interest receivable or payable each 90/180 days as appropriate. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.

The gain or loss from remeasuring the hedging instruments at fair value is deferred in equity in the interest rate hedge reserve, to the extent that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised. Any ineffective portion is recognised in the Income Statement immediately, however, there was no hedge ineffectiveness in the current or prior year.

73

The Finance business has not adopted hedge accounting, so its interest rate derivatives are classified as held for trading and recognised at fair value through profit or loss. The Finance business enters into interest rate derivatives in the normal course of business in order to convert floating to fixed rate exposure according to policy guidelines.

The Finance business uses interest rate swaps to economically hedge bulk funding receivables and a portion of the asset/liability gap.

The Finance business enters into interest rate options to hedge a portion of the asset/liability gap.

(ii) Forward exchange contracts The Group hedges net receipts of Australian and Singapore dollars from related parties for products manufactured in New Zealand.

The Group hedges net payments in US dollars for raw materials and imported appliances from third parties into New Zealand and Australia.

In addition, the Group hedges Canadian dollar receipts into the USA operations.

These contracts are hedging highly probable forecasted purchases and receipts for up to two years and the contracts are timed to mature when payments are scheduled to be made or when sales have been recognised.

The Group also hedges significant capital expenditure transactions with a policy de minimis of NZ$500,000.

The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity. When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the Balance Sheet by the related amount deferred in equity.

During the year ended 31 March 2008 a gain of $3,797,000 (2007 loss of $687,000) was reclassified from equity and included in sales revenue. There was no hedge ineffectiveness in the current or prior year.

(iii) Commodity contracts The Group manufactures motors under contract. To fix the cost of copper wire, copper hedge contracts covering 100% of the Group’s projected copper usage on this contract are in place.

(b) Credit risk exposures Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. At reporting date $1,688,000 is receivable (New Zealand dollar equivalents) for the Appliances business from interest rate swap contracts, commodity hedge contracts and forward foreign exchange contracts (2007 $6,318,000).

The Appliances business undertakes 100% of its transactions in foreign exchange, interest rate and commodity price contracts with financial institutions. Management spreads this risk across several counterparties, all of which are required to hold a minimum Standard & Poor’s long-term credit rating of BBB+. Credit risk control limits are then applied to Board approved counterparties dependent on the rating.

The Finance business enters into interest rate derivatives with approved financial institutions. All approved counterparties have a minimum Standard & Poor’s long-term credit rating of AA and the Finance business does not require collateral or other security to support these financial instruments.

At reporting date, $585,000 (2007 $513,000) is receivable in respect of these financial instruments.

(c) Interest rate risk exposures For an analysis of the sensitivity of derivatives to interest rate risk refer to Notes 5 and 6.

17 Future taxation benefitCONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Future taxation benefit 1,104 2,523 - -

1,104 2,523 - -

The future taxation benefit of $1.1 million at 31 March 2008 (2007 $2.5 million) relates to a US$100 per unit energy tax credit available in the USA. The Barton-Domenici Policy Act provides the tax credit for US production of energy efficient clothes washers. Fisher & Paykel Appliances clothes washers produced in Ohio since 2006 meet the 2007 Energy Star Clothes Washer specification and therefore qualify for this tax credit. At Balance Date, $4.4 million has been recognised in deferred tax assets.



18 Property, plant & equipment

Consolidated Freehold land

Freehold buildings

Leasehold improvements

Plant & equipment

Fixtures & fittings

Motor vehicles

Capital Work-in-

Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 April 2006

Cost 33,665 100,205 4,451 231,153 6,412 1,394 38,869 416,149

Accumulated depreciation - (8,703) (902) (93,990) (2,551) (829) - (106,975)

Net book amount 33,665 91,502 3,549 137,163 3,861 565 38,869 309,174

Year ended 31 March 2007

Opening net book amount 33,665 91,502 3,549 137,163 3,861 565 38,869 309,174

Additions - 9,440 2,166 66,638 933 109 (24,834) 54,452

Acquisition of Elba S.p.A. 8,390 24,584 - 8,224 188 75 163 41,624

Fair value adjustment 2,758 (10,314) - - - - - (7,556)

Disposals - - (10) (16,642) (1) - - (16,653)

Transfers to assets held for sale (865) (3,262) - - - - - (4,127)

Depreciation charge - (2,828) (909) (31,253) (817) (215) - (36,022)

Exchange differences (944) (1,531) (358) (1,345) (178) (8) (7,026) (11,390)

Closing net book amount 43,004 107,591 4,438 162,785 3,986 526 7,172 329,502

At 31 March 2007

Cost 43,004 129,832 6,095 317,221 7,881 2,077 7,172 513,282

Accumulated depreciation - (22,241) (1,657) (154,436) (3,895) (1,551) - (183,780)

Net book amount 43,004 107,591 4,438 162,785 3,986 526 7,172 329,502

Consolidated Freehold land

Freehold buildings

Leasehold improvements

Plant & equipment

Fixtures & fittings

Motor vehicles

Capital Work-in-

Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


Opening net book amount 43,004 107,591 4,438 162,785 3,986 526 7,172 329,502

Additions 3 116 775 16,738 888 22 30,016 48,558

Disposals - (3) - (7,484) (2) (13) - (7,502)

Depreciation charge - (3,803) (808) (29,762) (768) (215) - (35,356)

Impairment charge - - - (718) - - - (718)

Exchange differences 695 1,001 (383) (3,780) (58) 1 (958) (3,482)

Closing net book amount 43,702 104,902 4,022 137,779 4,046 321 36,230 331,002

At 31 March 2008

Cost 43,702 121,677 6,287 312,672 9,213 2,054 36,230 531,835

Accumulated depreciation - (16,775) (2,265) (174,893) (5,167) (1,733) - (200,833)

Net book amount 43,702 104,902 4,022 137,779 4,046 321 36,230 331,002

75

(a) Valuations of land & buildings The valuation basis of land & buildings is fair value being the amounts for which the assets could be exchanged between willing parties in an arms length transaction, based on current prices in an active market for similar properties in the same location and condition. Independent assessments performed by Extensor Advisory Services Limited (New Zealand and Australia) and American Appraisal Italia S.r.l. (Italy) as at 31 March 2008 totalled $212.957 million (2007 $224.456 million).

Land & buildings in Thailand are near completion and fair value has been assumed to equal book value of $23.269 million at 31 March 2008 (2007 N/A).

(b) Capitalised borrowing costs Refer to Note 9 for information on capitalised borrowing costs included in property, plant & equipment.

(c) Leased assets Plant & equipment includes the following amounts where the Group is a lessee under a finance lease:

31 March2008

31 March2007

$’000 $’000

Plant & equipment

Cost 4,558 7,737

Accumulated depreciation (1,460) (734)

Net book amount 3,098 7,003

(d) Impairment loss The Appliances business recognised an impairment loss of $718,000 (2007 Nil) in the Income Statement associated with Laundry assets not transferred from New Zealand to Thailand and whose recoverable amount was assessed as Nil.



19 Intangible assets

Consolidated Development costs

Goodwill Patents & trademarks

Computer software

Other intangible

assets

Brands Licences Customer relationships

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 April 2006

Cost - 46,597 4,195 26,849 - 46,531 121,619 - 245,791

Accumulated amortisation - - (925) (14,035) - - (14,695) - (29,655)

Net book amount - 46,597 3,270 12,814 - 46,531 106,924 - 216,136


Opening net book amount - 46,597 3,270 12,814 - 46,531 106,924 - 216,136

Additions 6,106 - 1,253 3,022 1,065 - 36 - 11,482

Acquisition of subsidiary 1,949 92,030 - - - 9,401 26,895 - 130,275

Fair value adjustment* (244) (19,183) - - - 11,255 (18,723) 38,448 11,553

Amortisation charge (700) - (1,053) (2,906) (1,065) - (7,341) (2,939) (16,004)

Exchange differences (193) (6,552) 40 41 - (8,077) 213 (2,790) (17,318)

Closing net book amount 6,918 112,892 3,510 12,971 - 59,110 108,004 32,719 336,124

At 31 March 2007

Cost 7,920 112,892 5,448 29,178 - 59,110 140,548 35,658 390,754

Accumulated amortisation (1,002) - (1,938) (16,207) - - (32,544) (2,939) (54,630)

Net book amount 6,918 112,892 3,510 12,971 - 59,110 108,004 32,719 336,124

Consolidated Development costs

Goodwill Patents & trademarks

Computer software

Brands Licences Customer relationships

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


Opening net book amount 6,918 112,892 3,510 12,971 59,110 108,004 32,719 336,124

Additions 5,446 - 794 2,435 - - - 8,675

Amortisation charge (1,389) - (618) (2,924) - (6,394) (3,642) (14,967)

Impairment charge** - - - (308) - - - (308)

Disposals (79) - (42) (141) - - - (262)

Exchange differences (245) 3,358 286 (31) (2,894) (247) 1,819 2,046

Closing net book amount 10,651 116,250 3,930 12,002 56,216 101,363 30,896 331,308

At 31 March 2008

Cost 13,430 116,250 6,748 31,115 56,216 140,195 37,832 401,786

Accumulated amortisation (2,779) - (2,818) (19,113) - (38,832) (6,936) (70,478)

Net book amount 10,651 116,250 3,930 12,002 56,216 101,363 30,896 331,308

* Fair value adjustments are detailed further in Business Combinations – refer Note 37.

**The carrying amount of certain retired operating software in the Finance business has been reduced to its recoverable amount through recognition of an impairment loss.

77

(a) Goodwill (i) Impairment tests for goodwill Goodwill is allocated to the Group’s cash-generating units (CGUs) according to the operations expected to benefit from the synergies of the combination.

A summary of the goodwill allocation is shown below:

2008 Sales, marketing & distribution

Manufacturing Consumer finance

Other Total

$’000 $’000 $’000 $’000 $’000

Appliances New Zealand 8,187 15,812 - - 23,999

Appliances North America 3,030 6,879 - - 9,909

Appliances Italy - 40,838 - - 40,838

Appliances Australia 4,457 - - - 4,457

Appliances Rest of World 3,323 - - - 3,323

Finance business - - 32,118 1,606 33,724

18,997 63,529 32,118 1,606 116,250

2007 Sales, marketing & distribution

Manufacturing Consumer finance

Other Total

$’000 $’000 $’000 $’000 $’000

Appliances New Zealand 7,942 14,903 - - 22,845

Appliances North America 2,856 7,656 - - 10,512

Appliances Italy - 38,478 - - 38,478

Appliances Australia 4,201 - - - 4,201

Appliances Rest of World 3,132 - - - 3,132

Finance business - - 32,118 1,606 33,724

18,131 61,037 32,118 1,606 112,892



19 Intangible assets (continued)

(ii) Key assumptions used for value-in-use calculations The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets prepared by management and approved by the Board covering a five-year period. Cashflow projections are derived using past experience, expectations for the future and external sources of financial and economic data where appropriate.

In arriving at the projected cashflows, management has made assumptions about sales revenue growth, key raw material prices and foreign currency average exchange rates based on industry and economic indicators.

The following EBITDA (operating earnings before interest, taxation, depreciation & amortisation) growth rates (Finance business uses NPBT or net profit before taxation) have been applied by management in the budgeted cashflow projections:

The terminal growth rates used to extrapolate cash flows beyond the budget period were:

The following pre-tax discount rates have been applied to the cash flow projections:

(iii) Impact of possible changes in key assumptions The recoverable amount of the Italy CGU is estimated to be 57.3 million. This exceeds the carrying amount of all related assets at 31 March 2008 by 1.2 million. If the pre-tax discount rate applied to the cash flow projections of the Italy CGU was 11.89% instead of 11.70%, the recoverable amount of the CGU would equal its carrying amount.

Raw material price increases and foreign currency movements have had a negative effect on EBITDA of the Italy CGU. Should the Euro revert to 2006 levels relative to the British pound, US dollar, Australian dollar and New Zealand dollar, the recoverable amount of the Italy CGU is estimated to be 78.0 million. This exceeds the carrying amount of all related assets at 31 March 2008 by 21.9 million.

Management does not consider any reasonably possible change in other key assumptions applied would reduce recoverable amounts below their carrying amounts.

79

(b) Brands (i) Impairment tests for brands Acquired brands are allocated to the Group’s cash-generating units (CGUs) identified according to country of operation.

A summary of the brands allocation is shown below:

2008 “DCS” “Elba” Total

$’000 $’000 $’000

Appliances North America 35,935 - 35,935

Appliances New Zealand - 20,281 20,281

35,935 20,281 56,216

2007 “DCS” “Elba” Total

$’000 $’000 $’000

Appliances North America 39,995 - 39,995

Appliances New Zealand - 19,115 19,115

39,995 19,115 59,110

(ii) Key assumptions used for relief-from-royalty calculations The recoverable amount for brands is determined based on relief-from-royalty calculations. These calculations use cash flow projections based on financial budgets prepared by management and approved by the Board covering a five-year period. Cashflow projections are derived using past experience, expectations for the future and external sources of financial and economic data where appropriate.

In arriving at the projected cashflows, management has made assumptions about sales revenue growth and foreign currency average exchange rates based on industry and economic indicators.

The following growth rates have been applied to brand sales revenue by management in the budgeted cashflow projections:

The royalty rates used in the relief-from-royalty calculations were as follows:

The terminal growth rates used to extrapolate cash flows beyond the budget period were:

The following pre-tax discount rates have been applied to the cash flow projections:

(iii) Impact of possible changes in key assumptions The recoverable amount of the DCS brand is estimated to be US$34.4 million. This exceeds the carrying amount of the DCS brand at 31 March 2008 by US$5.9 million. The recoverable amount is based on continuing sales growth supported by targeted promotion campaigns. Sales growth may be adversely affected by the tightening economic conditions currently being experienced in North America. Detailed sales figures for the DCS brand are considered commercially sensitive and therefore are not disclosed.

Management does not consider any reasonably possible change in other key assumptions applied would reduce the recoverable amount of the DCS brand below its carrying amount.

Management does not consider any reasonably possible change in any key assumption relating to the Elba brand would reduce its recoverable amount below its carrying amount.

(c) Capitalised borrowing costs Refer to Note 9 for further information on capitalised borrowing costs included in intangible assets.



20 Deferred tax assets

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

The balance comprises temporary differences attributable to:

Doubtful debts 284 317 - -

Employee benefits 8,853 8,402 - -

Inventory 3,904 1,646 - -

Warranty provisions 4,821 875 - -

Non-deductible provisions 3,012 3,132 - -

Fixed assets (3,448) 2,238 - -

DCS brand 474 2,479 - -

Defined benefit liability 192 3,097 - -

Accrued rent expense 976 1,268 - -

USA Energy tax credit * 4,419 1,858 - -

Tax losses to carry forward * 3,925 3,932 - -

Other temporary differences 2,130 (1,188) - -

29,542 28,056 - -

Amounts recognised directly in equity

Cash flow hedge reserve - (1,222) - -

Commodity hedge reserve - - - -

Net deferred tax assets 29,542 26,834 - -

Movements:

Opening balance at 1 April 26,834 32,536 - -

Credited (charged) to the Income Statement (Note 10) 906 (3,546) - -

Credited (charged) to equity 3,173 (1,222) - -

Foreign exchange differences (1,371) (934) - -

Closing balance at 31 March 29,542 26,834 - -

Expected settlement:

Within 12 months 22,279 17,555 - -

In excess of 12 months 7,263 9,279 - -

29,542 26,834 - -

* The utilisation of this deferred tax asset is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences. The recognition of the deferred tax asset is evidenced by forecasts of taxable income arising in the next ten years.

81

21 Trade creditors

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Trade creditors 119,408 124,589 - -

119,408 124,589 - -

(a) Foreign currency risk The carrying amounts of the Group’s trade creditors are denominated in the following currencies:

31 March2008

31 March2007

$’000 $’000

New Zealand dollars 12,963 13,525

Australian dollars 15,934 16,625

United States dollars 48,206 50,298

Euros 41,104 42,887

British pounds 782 816

Other 419 438

119,408 124,589

For an analysis of the sensitivity of trade creditors to foreign currency risk refer to Note 5.

22 Provisions

CONSOLIDATED PARENT

31 March2008

31 March 2007

31 March 2008

31 March 2007

$’000 $’000 $’000 $’000

Current

Employee benefits 185 186 - -

Warranty 20,857 19,820 - -

Redundancy 7,381 - - -

Other 259 244 - -

Total current provisions 28,682 20,250 - -

Non-current

Employee benefits 12,748 13,201 - -

Warranty 11,082 14,363 - -

Total non-current provisions 23,830 27,564 - -

Total provisions 52,512 47,814 - -



22 Provisions (continued)

(a) Employee benefits Current In certain jurisdictions, the Group is required to accrue for accumulating short-term benefits such as sick leave.

Non-current Provision is made for both vested and unvested long service leave accruing to employees. Vested long service leave is calculated on unused entitlements according to Group policy and unvested long service leave is calculated on an actuarial basis taking into account future entitlements under Group policy. Key assumptions in the actuarial model include:

(b) Warranty Provision is made for estimated warranty claims in respect of products sold which are still under warranty at Balance Date. The majority of these claims are expected to be settled within the next 24 months but this may extend to 5 years for certain refrigeration components. Management estimates the present value of the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.

The warranty provision has been discounted using an interest rate of 9.42% (2007 7.69%).

(c) Redundancy Provision is made for estimated redundancy costs from staff retrenchment, owing to the relocation of factories to Thailand.

(d) Movements in provisions Movements in each class of provision during the financial year are set out below:

Employee benefits

Warranty Redundancy Other provisions

Total

$’000 $’000 $’000 $’000 $’000

Consolidated – 2008

Carrying amount at start of year 13,387 34,183 - 244 47,814

Exchange rate variance on opening balance 61 (1,488) - 15 (1,412)

Additional provision recognised 107 34,222 9,189 - 43,518

Utilised during the year (617) (34,534) (1,808) - (36,959)

Change in discounted amount arising from passage of time and effect of any change in the discount rate

(5) (444) - - (449)

Carrying amount at end of year 12,933 31,939 7,381 259 52,512

Employee benefits

Warranty Redundancy Other provisions

Total

$’000 $’000 $’000 $’000 $’000

Consolidated – 2007

Carrying amount at start of year 12,480 41,661 - - 54,141

Exchange rate variance on opening balance (73) (3,512) - - (3,585)

Additional provision recognised 476 27,492 - 244 28,212

Utilised during the year (558) (31,458) - - (32,016)

Change in discounted amount arising from passage of time and effect of any change in the discount rate

1,062 - - - 1,062

Carrying amount at end of year 13,387 34,183 - 244 47,814

83

23 Finance borrowings

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Current

Secured

Bank loans 211,456 94,666 - -

Debentures 95,854 168,720 - -

Notes 167,018 202,995 - -

Committed liquidity facilities 60,648 - - -

Total current Finance borrowings 534,976 466,381 - -

Non-current

Secured

Bank loans - 10,000 - -

Debentures 9,199 11,298 - -

Total non-current Finance borrowings 9,199 21,298 - -

Total Finance borrowings 544,175 487,679 - -

There were no unsecured Finance borrowings as at 31 March 2008 (2007 Nil).

(a) Assets pledged as security (i) Bank loans and debentures Bank loans and debentures are secured by a first ranking general security interest in favour of the Trustee over the undertaking and assets of the Fisher & Paykel Finance Limited Charging Group (the Charging Group). The Charging Group consists of Fisher & Paykel Finance Limited and all of its subsidiaries excluding Consumer Insurance Services Limited. Bank overdrafts and bank borrowings are secured by Security Stock issued under the terms of the Trust Deed.

The carrying amounts of Charging Group assets pledged as security for Charging Group bank loans and debentures are:

31 March2008

31 March2007

$’000 $’000

Current

Cash and cash equivalents 157 803


Derivative financial instruments 251 243

Current tax receivables 1,192 291

Other assets 5,984 6,048

Total current assets pledged as security 368,416 325,053

Non-current

Property, plant & equipment 1,538 2,117

Intangible assets 7,348 7,254

Total non-current assets pledged as security 8,886 9,371

Total assets pledged as security 377,302 334,424



23 Finance borrowings (continued)

(ii) Notes and Committed liquidity facilities Notes issued and Committed liquidity facilities utilised under the securitisation plan are secured by a first ranking general security interest over Finance receivables purchased by the special purpose entity RFS Trust 2006-1. The book value of these Finance receivables at 31 March 2008 was $225,413,000 (2007 $220,834,000).

(b) Bank loans Bank loans are on call and bear interest at a weighted average interest rate of 8.9% (2007 7.7%).

(c) Debentures Debenture stock which is issued on the basis that it is repayable on demand may be repaid by the Finance business at any time. Other debenture stock is issued on terms ranging from 3 months to 5 years and is repayable on the maturity date. For the majority of debentures, interest is payable quarterly in arrears on the last day of March, June, September and December. On other debentures, interest is paid on the last working day of each month. The effective weighted average interest rate of the debenture stock at 31 March 2008 was 8.4% (2007 7.5%).

(d) Notes and Committed liquidity facilities Each Note issued has a minimum subscription price of $500,000 and must be a multiple of $100,000. The term of Notes cannot exceed 364 days or the maturity of the Committed liquidity facility, whichever is earlier. Notes are normally issued on the basis that they bear no interest but are issued at a discount to their principal amount. The effective weighted average interest rate of Notes at 31 March 2008 was 9.2% (2007 7.8%).

Liquidity support for the Notes is provided under a Committed liquidity facility.

(e) Financing arrangements Unrestricted access was available at 31 March 2008 to the following lines of credit:

31 March2008

31 March2007

$’000 $’000

Committed credit facilities

Total facilities

Bank loans 360,000 230,000

Bank overdrafts 2,000 2,000

Notes/ Committed liquidity facilities 300,000 300,000

662,000 532,000

Used at Balance Date

Bank loans 211,250 104,600

Bank overdrafts - -


436,447 305,743

Unused at Balance Date

Bank loans 148,750 125,400



225,553 226,257

85

(f) Fair value The fair values of Finance business borrowings are:

31 March 2008 31 March 2007

Carrying amount

Fair value Carrying amount

Fair value

$’000 $’000 $’000 $’000

On-balance sheet

Bank loans 211,456 211,456 104,666 104,666

Notes 167,018 167,006 202,995 202,982

Committed liquidity facilities 60,648 60,636 - -

Debentures 105,053 104,670 180,018 180,092

544,175 543,768 487,679 487,740

(i) On-balance sheet The fair value of Bank loans equals their carrying amount, as the impact of discounting is not significant.

The fair value of Notes is based on cash flows discounted using borrowing rates varying from 9.0% to 9.8% depending on the maturity date of those Notes. (2007 7.7% to 7.9%)

The fair value of the Committed liquidity facilities is based on cash flows discounted using a borrowing rate of 9.2% (2007 N/A).

The fair values of Debentures are based on cash flows discounted using borrowing rates varying from 8.3% to 9.5%, depending on the maturity date of those debentures. (2007 6.9% to 7.6%).

(ii) Contingent liabilities There were no contingent liabilities as at 31 March 2008 (2007 Nil).

(g) Priority of claims In the event the Finance business was liquidated or ceased trading, bank loans and debentures rank equally as to the priority of claims over the assets of the Charging Group. Notes are secured over the Finance receivables held by the special purpose entity RFS Trust 2006-1.

(h) Interest rate risk For an analysis of the sensitivity of Finance business borrowings to interest rate risk refer to Note 6.

24 Other current liabilities

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Employee entitlements 39,241 29,560 - -

Other creditors 42,898 43,294 - -

82,139 72,854 - -

Employee entitlements is primarily comprised of liabilities for employee leave entitlements, wage & salary withholdings and wages & salaries payable.



25 Non-current borrowings

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Non-current borrowings 323,157 310,251 - -

Bills payable 14,458 - - -

337,615 310,251 - -

(a) Assets pledged as security Non-current borrowings are secured by a negative pledge deed with the Group’s bankers. The Guaranteeing Group, under the negative pledge deed, excludes all Finance business entities. All non-current borrowings are drawn down at interest rates current at draw down date. The weighted average interest rate at 31 March 2008 was 5.72% (2007 5.75%).

The negative pledge deed imposes certain covenants on the Group including to limit any other security over its assets to 10% of total tangible assets and to ensure that the following financial ratios are met:

(i) the Debt Cover ratio of the Guaranteeing Group for each period shall not exceed 3.50

(ii) the Interest Cover ratio of the Guaranteeing Group for each period shall not be less than 3.00

(iii) Net tangible assets of the Guaranteeing Group at all times shall not be less than NZ$300 million

(iv) Total tangible assets of the Guaranteeing Group and EBITDA of the Guaranteeing Group shall constitute not less than 95% of Total tangible assets and EBITDA of the Consolidated Group for each period

(b) Financing arrangements The Appliances business had unrestricted access at 31 March 2008 to the following lines of credit:

31 March2008

31 March2007

$’000 $’000

Committed credit facilities

Total facilities


Non-current borrowings 450,117 444,116

476,489 470,773

Used at Balance Date

Bank overdrafts (Note 11) 1,474 5,274


339,089 315,525

Unused at Balance Date



137,400 155,248

(c) Fair value The carrying amounts of non-current borrowings at 31 March 2008 were equal to their fair values.

87

(d) Risk exposures The exposure of the Appliances business’ borrowings to interest rate changes and the contractual repricing dates at the balance dates are as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Less than 12 months - - - -

One to two years 226,233 53,643 - -

Two to three years - 144,833 - -

Over four years 111,382 111,775 - -

337,615 310,251 - -

These borrowings have been aged in accordance with the facilities’ terms.

The carrying amounts of the Appliances business’ borrowings are denominated in the following currencies:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

New Zealand dollars 83,801 59,527 - -

US dollars 119,783 133,315 - -

Australian dollars 14,458 8,489 - -

Euros 111,576 108,920 - -

Thai baht 7,997 - - -

337,615 310,251 - -

(e) Interest rate risk For an analysis of the sensitivity of the Appliance business borrowings to interest rate risk refer to Note 5.



26 Deferred tax liabilities

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

The balance comprises temporary differences attributable to:

Amounts recognised directly in profit or loss

Provisions (8,767) (2,365) - -

Property, plant & equipment 12,004 7,735 - -

Intangible assets 28,429 33,278 - -

Fair value adjustments re Elba S.p.A. acquisition 1,843 1,991 - -

Other temporary differences (116) (784) - -

33,393 39,855 - -

Amounts recognised directly in equity

Cash flow hedges - (78) - -

Net deferred tax liabilities 33,393 39,777 - -

Movements:

Opening balance at 1 April 39,777 36,081 - -

Charged/(credited) to the Income Statement (Note 10) (6,036) (2,417) - -

Charged/(credited) to equity (Notes 28 and 30) - (78) - -

Acquisition of subsidiary (Note 37) - 6,623 - -

Foreign exchange differences (348) (432) - -

Closing balance at 31 March 33,393 39,777 - -

Expected settlement:

Within 12 months (5,074) (4,157) - -

In excess of 12 months 38,467 43,934 - -

33,393 39,777 - -

89

27 Other non-current liabilities

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Employee Entitlements 266 - 266 -

Accrued rent expense 2,811 3,641 - -

Retirement benefit obligation 640 9,387 - -

Other 11 - -

3,728 13,028 266 -

(a) Employee entitlements Further details of the Group’s Executive Long-Term Performance Incentive are provided at Note 41.

(b) Accrued rent expense In certain jurisdictions where the Group operates, operating lease agreements for land & buildings contain periodic fixed rental increases. The associated lease payments are recognised on a straight-line basis resulting in an accrued rent expense.

(c) Retirement benefit obligation Further details of the Group’s retirement benefit obligation are provided at Note 32.

28 Contributed equity

(a) Movements in ordinary share capital:

31 March2008

31 March2007

31 March2008

31 March2007

Shares Shares $’000 $’000

Opening balance of ordinary shares authorised and issued 283,453,478 264,742,568 639,463 560,121

Issues of ordinary shares during the year

Issue of shares re acquisition of Elba S.p.A. - 16,370,824 - 73,091

Exercise of options 1,154,829 2,340,086 2,619 5,370

Reclassified as Treasury Stock - - - (98)

Transfer from reserves - - - 979

Closing balance of ordinary shares authorised and issued 284,608,307 283,453,478 642,082 639,463

In August 2006, $979,000 was transferred from the share-based payments reserve to share capital on maturity of an Employee Share Scheme.

(b) Ordinary shares All shares issued are fully paid and have no par value. All ordinary shares rank equally with one vote attached to each fully paid ordinary share.

(c) Options Information relating to the Group Employee Share Option Scheme, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in Note 41.



28 Contributed equity (continued)

(d) Capital risk management – Appliances business & Parent The Company’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company’s options include adjusting the amount of dividends paid to shareholders, returning capital to shareholders, issuing new shares or selling assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by net debt plus shareholders’ equity. Net debt is calculated as total borrowings less cash & cash equivalents (excluding the Finance business).

During 2008, the Company’s capital risk management strategy, which was unchanged from 2007, was to maintain a gearing ratio within 25% to 35%. The gearing ratios at 31 March 2008 and 31 March 2007 were as follows:

31 March2008

31 March2007

$’000 $’000

Total borrowings 339,089 315,525

Less: cash & cash equivalents (47,269) (45,304)

Net debt 291,820 270,221

Total equity 646,448 652,256

Total net debt plus shareholders’ equity 938,268 922,477

Gearing ratio 31.1% 29.3%

(e) Capital risk management – Finance business The Finance business’ objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns to its shareholder and to maintain a strong capital base to support the development of its business.

Fisher & Paykel Finance Limited The level and mix of capital in Fisher & Paykel Finance Limited (the Charging Group) is determined by its internal Corporate Governance Policies and the Debenture Trust Deed, under which Fisher & Paykel Finance Limited issues debentures.

The Debenture Trust Deed imposes three major covenants on borrowing activities:

i) secured debts do not exceed 87.5% of security

ii) total liabilities do not exceed 91.0% of tangible assets plus 6.5% of public sector and other approved securities

iii) prior charges do not exceed 7.5% of security assets

In addition to these covenants the Charging Group has adopted a modified version of the Reserve Bank of New Zealand’s Capital Adequacy Framework, Part IV (BS2-March 2007) applicable to banks in New Zealand. This places further restrictions on the level of subordinated debt funding that can be used.

Fisher & Paykel Finance Holdings Limited and Fisher & Paykel Financial Services Limited Whilst there are no minimum levels of capital required in Fisher & Paykel Finance Holdings Limited and Fisher & Paykel Financial Services Limited, capital is maintained at a level to ensure compliance with the Finance business capital management objectives outlined above.

Fisher & Paykel Financial Services Limited is the company that owns and operates the Famers Finance operation, which is funded under a master trust securitisation programme.

The securitisation programme requires a minimum level of credit enhancement that is provided by way of a subordinated loan from Fisher & Paykel Financial Services Limited. The minimum level of credit enhancement is the greater of 5.5% of receivables or the amount established by applying a dynamic credit enhancement calculation.

91

29 Earnings per share

31 March2008

31 March2007

Earnings per share for profit attributable to the shareholders of the Company

Basic earnings per share (cents) 19.1 22.8

Diluted earnings per share (cents) 18.7 22.2

(a) Reconciliations of earnings used in calculating earnings per share

31 March2008

31 March2007

$’000 $’000

Basic earnings per share

Profit attributable to the ordinary equity holders of the Company in calculating basic earnings per share 54,212 63,437

Diluted earnings per share

Profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per share 54,212 63,437

(b) Weighted average number of shares used as the denominator

31 March2008

31 March2007

Number Number

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 284,289,219 278,502,988

Adjustments for calculation of diluted earnings per share:

Share options 5,777,842 7,777,448

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 290,067,061 286,280,436

(c) Information concerning the classification of securities (i) Share options Options granted to employees under the Share Option Plan are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the share options are set out in Note 41.



30 Reserves and retained earnings

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

(a) ReservesTreasury stock 512 512 - -

Cash flow hedge reserve 602 4,696 - -

Share-based payments reserve 1,890 1,682 1,890 1,682

Foreign currency translation reserve (14,321) (9,686) - -

Interest rate hedge reserve (3,443) 281 - -

Commodity hedge reserve 503 (273) - -

(14,257) (2,788) 1,890 1,682

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:Treasury Stock

Opening balance 1 April 512 414 - -

Returns to Trustee from staff share scheme - 98 - -

Closing balance 31 March 512 512 - -

In the Parent Company financial statements, amounts showing as Treasury Stock in the Group financial statements are recorded as share capital. This increases share capital in the Parent Company by $512,000 at Balance Date (2007 $512,000).

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:Cash flow hedge reserve

Opening balance 1 April 4,696 2,815 - -

Recognised income & expense (4,094) 1,881 - -

Closing balance 31 March 602 4,696 - -

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:Share-based payments reserve

Opening balance 1 April 1,682 2,021 1,682 2,021

Equity settled share based payments expense 208 640 208 640

Transfers to share capital - (979) - (979)

Closing balance 31 March 1,890 1,682 1,890 1,682

93

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:

Foreign currency translation reserveOpening balance 1 April (9,686) (2,565) - -

Translation differences arising during the year (4,635) (7,121)

Closing balance 31 March (14,321) (9,686) - -

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:

Interest rate hedge reserveOpening balance 1 April 281 438 - -

Recognised income & expense (3,724) (157) - -

Closing balance 31 March (3,443) 281 - -

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Movements:

Commodity hedge reserveOpening balance 1 April (273) - - -

Recognised income & expense 776 (273) - -

Closing balance 31 March 503 (273) - -

(b) Nature and purpose of reserves (i) Treasury Stock Treasury stock is used to recognise those shares held and controlled by Fisher & Paykel Employee Share Purchase Trustee Limited.

(ii) Cash flow hedge reserve The cash flow hedge reserve is used to record gains or losses on a hedging instrument in a forward foreign currency cash flow hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.

(iii) Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options granted but not exercised and discounted employee share scheme entitlements.

(iv) Foreign currency translation reserve Exchange differences arising on translation of foreign operations are taken to the foreign currency translation reserve. When any net investment is disposed of, the related component of the reserve is recognised in profit and loss.

(v) Interest rate hedge reserve The interest rate hedge reserve is used to record gains or losses on a hedging instrument in an interest rate hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.

(vi) Commodity hedge reserve The commodity hedge reserve is used to record gains or losses on a hedging instrument in a commodity hedge that are recognised directly in equity. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.



30 Reserves and retained earnings (continued)

(c) Retained earnings

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Balance 1 April 15,581 1,503 (91,758) (78,691)

Net profit for the year 54,212 63,437 28,982 36,292

Dividends (Note 33) (51,170) (49,359) (51,170) (49,359)

Balance 31 March 18,623 15,581 (113,946) (91,758)

31 Imputation credits

CONSOLIDATED

31 March2008

31 March2007

$’000 $’000

Balance at beginning of year 377 11,130

Tax payments, net of refunds 13,098 9,824

Credits attached to dividends paid (13,331) (20,577)

Balance at end of year 144 377

Imputation credits are available to shareholders as follows:

Direct – Fisher & Paykel Appliances Holdings Limited Imputation Group 144 96

Indirect – interests in subsidiaries not in Imputation Group - 281

Balance at end of year 144 377

95

32 Retirement benefit obligation

(a) Superannuation Scheme All New Zealand employees of the Group are entitled to benefits from the Group’s superannuation scheme on retirement, disability or death. Previously, the New Zealand scheme consisted of a defined benefit plan and a defined contribution plan.

The defined benefit plan provided lump sum benefits based on years of service and final average salary and has been closed to new members for several years. On 1 October 2006, all except 30 members transferred from the defined benefit plan to a new defined contribution master trust plan. There are 26 members remaining in the plan at Balance Date.

At 31 March 2007, a $9.4 million retirement benefit obligation was held in the Group Balance Sheet in respect of the former defined benefit plan. To mitigate the risks associated with this liability, the Group paid $8.4 million (including Specified Superannuation Contribution Withholding Tax) into the Scheme during the year, reducing the retirement benefit obligation as at 31 March 2008 to $0.6 million. The remaining obligation is largely in respect of certain defined benefit guarantees provided to members who transferred from the defined benefit plan to the new defined contribution master trust plan and is fully provided for as at Balance Date.

The defined contribution plan receives fixed contributions from Group companies and the Group’s legal or constructive obligation is limited to these contributions.

The following tables set out details in respect of the defined benefit liabilities only.

(b) Balance sheet amounts The amounts recognised in the balance sheet are determined as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Present value of the defined benefit obligation 886 6,503 - -

Fair value of defined benefit plan assets (457) (214) - -

Present value of unfunded obligations 429 6,289 - -

Adjustment for SSCWT 211 3,098 - -

Net liability in the Balance Sheet 640 9,387 - -

(c) Categories of plan assets The major categories of plan assets are as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

% % % %

Cash 77 91 - -

Equity instruments 12 1 - -

Debt instruments 9 8 - -

Property 2 - - -



32 Retirement benefit obligation (continued)

(d) Reconciliations

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Reconciliation of the present value of the defined benefit obligation, which is partly funded:

Balance at the beginning of the year 6,503 87,738 - -

Current service cost 47 33 - -

Interest cost 258 18 - -

Actuarial gains & losses (4,835) - - -

Benefits paid (1,087) - - -

Past service cost - 6,452 - -

Settlements - (87,738) - -

Balance at the end of the year 886 6,503 - -

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Reconciliation of the fair value of plan assets:

Balance at the beginning of the year 214 86,350 - -

Expected return on plan assets 152 2,524 - -

Actuarial gains & losses (4,625) (3,630) - -

Contributions by Group companies 5,803 2,092 - -

Contributions by plan participants - 2,090 - -

Benefits paid (1,087) (8,585) - -

Settlements - (80,627) - -

Balance at the end of the year 457 214 - -

(e) Amounts recognised in Income Statement The amounts recognised in the Income Statement are as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Current service cost 47 2,543 - -

Interest cost 258 1,710 - -

Expected return on plan assets (152) (2,524) - -

Net actuarial losses (gains) recognised in year (210) 189 - -

Total included in employee benefits expense (57) 1,918 - -

Actual return on plan assets 382 - - -

97

(f) Principal actuarial assumptions The principal actuarial assumptions used (expressed as weighted averages) were as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

Discount rate 4.54% 3.95% - % - %

Expected return on plan assets 6.30% 6.00% - % - %

Future salary increases 4.50% 4.50% - % - %

The expected rate of return on assets has been based on historical and future expectations of returns for each of the major categories of asset classes as well as the expected and actual allocation of plan assets to these major categories. This resulted in the selection of a 6.30% rate of return net of tax (and expenses).

(g) Employer contributions Employer contributions to the defined benefit plan ceased on 30 September 2006.

(h) Historic summary

31 March 2008

31 March 2007

$’000 $’000

Defined benefit plan obligation 886 6,503

Plan assets (457) (214)

429 6,289

SSCWT 211 3,098

Surplus / (deficit) 640 9,387

Experience adjustments arising on plan liabilities (4,835) -

Experience adjustments arising on plan assets (4,625) (3,630)

33 Dividends

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Prior year’s final dividend of 9.0 cents per share (2007 9.0 cents) 25,555 23,855 25,555 23,855

Current year interim dividend of 9.0 cents per share (2007 9.0 cents) 25,615 25,504 25,615 25,504

Total dividends 51,170 49,359 51,170 49,359

The prior year’s final dividend carried a partial imputation credit of 3.25 cents (2007 Fully imputed), equivalent to 26.5 cents in the dollar (2007 33.0 cents).

The current year interim dividend carried a partial imputation credit of 2.25 cents (2007 Fully imputed), equivalent to 20.0 cents in the dollar (2007 33.0 cents).



34 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the Parent entity, its related practices and non-related audit firms:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

(a) Assurance services

Audit services


Statutory audit fees – current year 925 906 - -

Statutory audit fees – prior year 110 87 - -

Audit of Fisher & Paykel Finance Limited Debenture Prospectus 8 9 - -

Farmers Finance securitisation compliance audit 25 27 - -

Other audit firms - - - -

Statutory audit fees – current year 16 - - -

Total remuneration for audit services 1,084 1,029 - -

Other assurance services


Review of Group Interim financial statements 100 114 - -

Advice re International Financial Reporting Standards 117 122 - -

Accounting advice re Elba S.p.A. - 18 - -

Other assurance services 24 67 - -

Total remuneration for other assurance services 241 321 - -

Total remuneration for assurance services 1,325 1,350 - -

(b) Other services


Statutory reporting software 30 48 - -

Other

Italian Statutory Board of Auditors 46 - - -

Total remuneration for other services 76 48 - -

Total remuneration 1,401 1,398 - -

35 Contingencies

As at 31 March 2008 the Group and Company had no contingent liabilities or assets other than the $704,375 Directors’ retirement allowances contingent liability reported in the Corporate Governance section of this Annual Report (2007 $Nil).

Periodically, the Group is party to litigation including product liability claims. To date, such claims have been settled for relatively small amounts, which have either been expensed or covered by insurance.

99

36 Commitments

(a) Capital commitments Capital expenditure contracted for at balance date but not recognised as liabilities is as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Within one year 5,949 4,824 - -

Between one and two years - 1,540 - -

5,949 6,364 - -

The above balances have been committed in relation to future expenditure on capital projects. Amounts already spent have been included as work in progress in the current year results.

(b) Lease commitments (i) Operating leases These relate mainly to building occupancy leases under non-cancellable operating leases expiring within ten years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Commitments for minimum lease payments in relation to non-cancellable operating leases:

Within one year 19,864 20,526 - -

Between one and two years 16,169 17,795 - -

Between two and three years 12,347 14,454 - -

Between three and four years 9,423 10,333 - -

Between four and five years 8,519 7,967 - -

Over five years 19,728 23,149 - -

86,050 94,224 - -

(ii) Finance leases The Appliances business leases various buildings, plant & equipment with a carrying amount of $3,098,000 (2007 $7,003,000) under finance leases expiring within one to four years. Under the finance leases, the Appliances business has the right of renewal or the option to purchase the leased items at the expiry of the lease.

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Commitments for minimum lease payments in relation to finance leases are as follows:

Within one year 3,341 3,587 - -

Between one and two years 557 1,942 - -

Between two and three years 293 615 - -

Between three and four years 16 330 - -

Between four and five years - 17 - -

4,207 6,491 - -

The weighted average interest rate implicit in the finance leases is 6.4% (2007 7.1%).



36 Commitments (continued)

(c) Undrawn lending commitments (Finance business) Undrawn lending commitments include unutilised Q Card and Farmers Finance Card limits, which can be unconditionally cancelled at any time.

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Undrawn lending commitments 1,203,395 1,318,952 - -

37 Business combination

On 15 June 2006, the company acquired all the shares in Elba S.p.A. (now renamed Fisher & Paykel Appliances Italy S.p.A.), a leading manufacturer and distributor of cookware. Economic ownership transferred on 1 June 2006. The purchase consideration was 80.0 million, including 1.8 million of capitalised professional fees, with 41.0 million goodwill arising on acquisition.

Details of the fair value of the assets and liabilities finally determined as arising from the acquisition are as follows:

As at 1 June 2006:

Acquiree’s carrying amount

Fair value Acquiree’s carrying amount

Fair value

’000 ’000 $’000 $’000

Trade receivables 21,045 21,015 42,488 42,428

Inventories 13,569 12,598 27,328 25,343

Other current assets 1,674 1,674 3,381 3,381

Current liabilities (32,855) (32,855) (66,565) (66,565)

Property, plant & equipment 20,663 16,835 41,624 34,068

Provisions (8,291) (8,321) (16,745) (16,805)

Deferred taxation - (937) - (1,892)

Intangible assets:

– Capitalised development 1,150 844 1,949 1,705

– Licenses 13,317 4,032 26,895 8,172

– Elba brand 4,642 10,179 9,401 20,656

– Customer relationships - 18,988 - 38,448

– Goodwill* 45,106 35,968 92,030 72,847

Net identifiable assets acquired 80,020 80,020 161,786 161,786

*Acquiree’s carrying amount for goodwill includes 4.1 million of pre-acquisition goodwill.

New Zealand dollar amounts are shown as at acquisition date.

The Group engaged an independent third party to assist in the determination of the fair value of intangible assets to facilitate a purchase price allocation. Brands and licenses were valued based on relief from royalty methodologies and customer relationships on a multi-period excess earnings approach. Goodwill is attributable to numerous revenue and cost synergies arising from the acquisition and was valued and allocated to cash generating units using a discounted cash flow analysis. No acquisition provisions were created.

Fair value of land & buildings at acquisition date was confirmed through an independent NZ IAS16 compliant valuation performed by American Appraisal Italia S.r.l.

Contribution to operating profit before interest and taxation from 1 June 2006 to 31 March 2007 was NZ$1.6 million ( 0.8 million).

There were no acquisitions in the year ended 31 March 2008.

101

38 Investments in subsidiaries

The Parent Company’s investment in subsidiaries comprises shares at cost. The assets and liabilities attributed to Fisher & Paykel Appliances Holdings Limited are largely owned by the following subsidiaries:

Name of entity Country of incorporation

Principal activity Equity holding

2008 2007

% %

Appliances business

AF Investments Limited* New Zealand Non-trading holding company 100 100

Fisher & Paykel Appliances Limited* New Zealand Manufacture & distribution of appliances 100 100

Fisher & Paykel Production Machinery Limited* New Zealand Machinery manufacturer 100 100

Fisher & Paykel Employee Share Purchase Trustee Limited

New Zealand Employee share purchase scheme 100 100

Fisher & Paykel Australia Holdings Limited* Australia Non-trading holding company 100 100

Fisher & Paykel Australia Pty Limited* Australia Distribution of appliances 100 100

Fisher & Paykel Manufacturing Pty Limited* Australia Manufacture of appliances 100 100

Fisher & Paykel Customer Services Pty Limited* Australia Servicing of appliances 100 100

Fisher & Paykel Appliances (USA) Holdings Inc* USA Non-trading holding company 100 100

Fisher & Paykel Appliances Inc* USA Distribution of appliances 100 100

Dynamic Cooking Systems Inc* USA Manufacture of appliances 100 100

Fisher & Paykel Laundry Manufacturing Inc* USA Manufacture of appliances 100 100

Fisher & Paykel Appliances Limited* UK Distribution of appliances 100 100

Fisher & Paykel Appliances Italy Holdings S.r.l.* Italy Non-trading holding company 100 100

Fisher & Paykel Appliances Italy S.p.A. (formerly Elba S.p.A.)*

Italy Manufacture & distribution of appliances 100 100

Fisher & Paykel (Singapore) Pte Limited* Singapore Distribution of appliances 100 100

Fisher & Paykel Appliances (Thailand) Co. Ltd* Thailand+ Manufacture of appliances 100 -

Finance business

Fisher & Paykel Finance Holdings Limited New Zealand Non-trading holding company 100 100

Fisher & Paykel Finance Limited New Zealand Consumer & bulk finance 100 100

Fisher & Paykel Financial Services Limited New Zealand Securitisation services & extended warranty 100 100

Consumer Finance Limited New Zealand Consumer finance 100 100

Consumer Insurance Services Limited New Zealand Consumer insurance & extended warranty 100 100

Equipment Finance Limited New Zealand Commercial finance 100 100

Credit & General Insurance Limited New Zealand Consumer insurance 100 100

Retail Financial Services Limited New Zealand Consumer finance 100 100

+Fisher & Paykel Appliances (Thailand) Co. Ltd was incorporated on 2 July 2007 and its immediate parent is Fisher & Paykel (Singapore) Pte Limited (486,194 ordinary shares). Thai law requires a minimum of seven shareholders, therefore in accordance with normal practice, six ordinary shares are also held individually by Company executives.

Fisher & Paykel Appliances Holdings Limited together with the companies above marked with an asterisk are the major companies in the Negative Pledge Deed.



38 Investments in subsidiaries (continued)

On 31 January 2008, Prime Distributors Limited was amalgamated into Fisher & Paykel Appliances Limited.

All subsidiaries have a balance date of 31 March.

The activities of Retail Financial Services Limited are funded through a master trust securitisation structure established on 8 May 2006. This structure allows for the creation of multiple, separate, standalone trusts. The first trust created under the master trust structure was the RFS Trust 2006-1 (the Trust). Fisher & Paykel Financial Services Limited is the residual income and capital beneficiary of the Trust. The financial statements of the Trust have been consolidated in the Group’s financial statements.

On 1 October 2007, Fisher & Paykel Finance Limited ceased to be a direct subsidiary of AF Investments Limited and became a direct subsidiary of Fisher & Paykel Finance Holdings Limited.

39 Reconciliation of profit after income tax to net cash inflow from operating activities

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Profit for the year after income tax 54,212 63,437 28,982 36,292

Add/(deduct) non-cash items

Depreciation of property, plant & equipment to recoverable amount 35,356 36,022 - -

Impairment loss on plant & equipment 1,026 - - -

Amortisation of intangible assets 14,967 16,004 - -

(Gain)/loss on sale of non-current assets (4,952) (7,127) - -

Finance business bad debts written off 15,874 10,249 - -

Movement in accrued interest 337 3,249 - -

Net (increase)/decrease in loans and advances to customers (63,650) 23,536 - -

Movement in provisions 5,190 (7,793) - -

Movement in tax (7,484) 8,786 1,275 (103)

Movement in payables and accruals (8,032) (12,087) - -

Movement in debtors and other current assets 32,269 (17,766) 6 (13)

Movement in inventories (43,705) 6,447 - -

Fair value adjustment to derivative financial instruments (566) (484) - -

Non-cash share-based payments expense 532 640 502 576

Internal cash flow from financing activities - - (1,165) (1,418)

Foreign currency exchange translation (11,352) (12,809) - -

Net cash inflow from operating activities 20,022 110,304 29,600 35,334

103

40 Related party transactions

(a) Key management personnel compensation Key management personnel compensation for the years ended 31 March 2008 and 31 March 2007 is set out below. The key management personnel are all the Directors’ of the Company and the Executive as listed in the Directory of this Annual Report.

Disclosures on non-executive Directors’ fees are made in the Corporate Governance section at page 28 of this Annual Report.

Short-term benefits

Post-employment

benefits

Other long-term

benefits

Share-based

payments

Total

$ $ $ $ $

2008 8,847,250 516,507 134,757 340,195 9,838,7092007 8,346,732 480,572 114,149 314,397 9,255,850

Mr A Pilati was appointed Chief Operating Officer Europe on 1 November 2007, prior to which he was Managing Director of Fisher & Paykel Appliances Italy S.p.A. Amounts shown above for the year ending 31 March 2008 include Mr Pilati’s remuneration from 1 November 2007.

Key management personnel received no termination benefits.

(b) Other transactions with key management personnel or entities related to them Information on transactions with key management personnel or entities related to them, other than compensation, are set out below.

(i) Loan transactions and balances

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Loans to key management personnel

Unsecured loans - 35 - -

- 35 - -

Interest on unsecured loans was payable at the rate of 2.5% per annum.

(ii) Other transactions and balances Key management personnel invested cash in debenture stock issued by the Finance business during the period. The debenture stock was acquired on the same terms & conditions that applied to other investors at the time the investments were made.

During the year the company sold household appliances to key management personnel on the same terms and conditions as available to all staff.

A Director, Mr John Gilks, is a director and shareholder of Receivables Management (NZ) Limited, a company which provides debt collection services to the Finance business. The services were provided on normal commercial terms and conditions.

A Director, Mr Norman Geary, is a director of ANZ National Bank Limited, a registered bank that provides credit facilities to the Group on normal commercial terms and conditions.

A Director, Mr Ralph Waters, is a director of Westpac New Zealand Limited, a registered bank that provides credit facilities to the Finance business on normal commercial terms & conditions.

(c) Subsidiaries Interests in subsidiaries are set out in Note 38.

(d) Parent Company As at 31 March 2008, the Parent company had advanced funds to Group companies of $428,058,000 (2007 $445,903,000). These intra-Group advances are interest free and repayable on demand.

(e) Separation from Fisher & Paykel Industries Limited On separation from Fisher & Paykel Industries Limited in November 2001, the Appliances and Finance businesses were acquired at a valuation of $309 million, which was $27.5 million below book value (net of $15 million deferred tax). This was substantially allocated to fixed assets and lowers the amount of depreciation charged over a seven year period ending 31 March 2008.



41 Share-based payments

(a) Share Option Plan The Group has an established Share Option Plan (the Plan) for executives, managers and selected employees. Under the Plan, the Board may make annual grants of options to Plan participants to subscribe for ordinary shares in the Company. For options granted in November 2001 and August 2002, the exercise price per share was equal to the market value of a share at or around the date of option grant. Both these Plans have now expired. For options granted in August 2004, the exercise price per share is recalculated on each anniversary of the grant date and is equal to the higher of the base price at grant date or the recalculated base price.

One third of the options granted pursuant to the Plan on a particular grant date become exercisable after each of the second, third and fourth anniversaries of the grant date and all unexercised options expire on the fifth anniversary of the grant date.

Options also become exercisable if a person (or group of persons acting in concert) acquires more than half of the ordinary shares on issue. On leaving employment due to death, serious illness, accident, permanent disablement, redundancy or in other circumstances determined by the Board, the participant (or participant’s executor) will have one month to exercise all outstanding options.

Options granted under the Plan carry no dividend or voting rights.

In the year ended 31 March 2008, the Board granted no options to acquire shares under the Plan (2007 No options granted)

Set out below are summaries of options granted under the plan:

Grant Date Expiry date Exercise price Balance at start of the

year

Exercised during the

year

Lapsed/ forfeited

during the year

Balance at end of the

year

Exercisable at end of the year

Number Number Number Number Number

Consolidated and Parent – 2008

13/11/01 13/11/06 $2.305 - - - - -

26/08/02 26/08/07 $2.525 1,432,011 (1,432,011) - - -

31/08/04 31/08/09 $4.775* 5,410,000 - (120,000) 5,290,000 3,526,667

Total 6,842,011 (1,432,011) (120,000) 5,290,000 3,526,667

Grant Date Expiry date Exercise price Balance at start of the

year

Exercised during the

year

Lapsed/ forfeited

during the year


year

Exercisable at end of the year

Number Number Number Number Number


13/11/01 13/11/06 $2.305 1,401,037 (1,401,026) (11) - -

26/08/02 26/08/07 $2.525 2,602,010 (1,069,998) (100,001) 1,432,011 1,432,011

31/08/04 30/08/09 $4.640* 5,940,000 (30,000) (500,000) 5,410,000 1,803,333

Total 9,943,047 (2,501,024) (600,012) 6,842,011 3,235,344

*Represents the weighted average exercise price of those options exercisable at Balance Date.

The weighted average share price for options exercised during the year ended 31 March 2008 was $3.59 (2007 $4.44).

The weighted average remaining contractual life of share options outstanding at Balance Date was 1.4 years (2007 2.0 years).

Fair value of options granted The assessed fair value of options granted in August 2004 was 37.0 cents per option, which is recognised over the vesting period.

105

The recalculated base price of the August 2004 Plan uses a binomial model and is calculated by multiplying the last base price by a percentage determined by the Board to represent the Group’s cost of capital and reducing the resulting figure by the amount of any net cash dividends paid by the Group.

The model inputs for calculating the exercise price of options granted in August 2004 that vested during the year included:

(a) exercise price: $4.775 (2007 $4.640)

(b) grant date: 31 August 2004

(c) expiry date: 30 August 2009

(d) share price at grant date: $4.190

(e) expected price volatility of the Company’s shares: 20%

(f) expected dividend yield: 4.4%

(g) risk-free interest rate: 6.00%

The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the terms of the Scheme.

(b) Executive Long Term Performance Incentive Effective 1 July 2007, the Board introduced an executive long-term performance incentive scheme (the Scheme) for 46 senior managers to link their remuneration with shareholder returns and encourage those employees to hold and retain shares in the Company. Payment of any benefit is dependent on remaining employed during the vesting period and also on the Group’s total shareholder return exceeding the 75th percentile of the total shareholder return (including imputation credits) of a comparative group of companies over a three year vesting period.

Entitlements are granted under the Scheme for no consideration. At the end of the vesting period, the Group will pay a cash bonus to the participating employees equivalent to half their allocated entitlement, which must be used to buy shares in the Company on-market (subject to Insider Trading rules) unless the employee’s personal shareholding (calculated at current market values) is greater than 50% of their annual fixed remuneration. To the extent performance targets have been met, up to half of the allocated entitlement will also be paid as a cash bonus to the participating employee and this must be used to buy shares on-market (subject to Insider Trading rules) unless the employee’s personal shareholding (calculated at current market values) is greater than 50% of their annual fixed remuneration.

If employment ceases prior to the vesting date due to death, serious illness, accident, permanent disablement or redundancy, the Board will make a pro rata payment or other such payment as may be determined at their sole discretion.

Set out below is a summary of movements in the number of shares attached to cash benefits granted under the Scheme (commenced in 2007/08):

Grant Date Expiry date Balance at start of the

year

Granted during the

year

Lapsed/ forfeited

during the year


year

Number Number Number Number


01/07/07 30/06/10 - 477,000 (5,000) 472,000

Total - 477,000 (5,000) 472,000

No entitlements were forfeited during the period covered by the above table.



41 Share-based payments (continued)

Fair value of the Scheme The assessed fair value of the Scheme during the year ended 31 March 2008 and at Balance Date was $266,312 (2007 $Nil). This fair value was derived using a Monte Carlo simulation model that takes into account the vesting criteria, the share price at grant date and the volatility of the returns on Group shares and shares of a comparative Group of companies.

Share based payments expense is recognised over the vesting period and adjusted for movements in fair value at each Balance Date and on maturity.

The model inputs for entitlements granted during the year ended 31 March 2008 included:

(a) entitlements are granted for no consideration, vesting three years after grant date

(b) grant date: 1 July 2007

(c) expiry date: 30 June 2010

(d) share price at grant date: $3.45

(e) expected price volatility of the Company’s shares: 30%

(f) expected dividend yield: 7.8%

(g) risk-free interest rate: 6.84%

The expected price volatility is derived by analysing the historic volatility over a recent historical period similar to the terms of the Scheme.

(c) Employee Share Scheme Share purchase loans are made by the Group under a Share Purchase Scheme (the Scheme) to assist employees with the purchase of fully paid ordinary shares in the Company.

Shares are normally issued at a 20% discount to market price, on terms permitted by the Scheme in accordance with section DC11 of the Income Tax Act 2004, with no interest being charged on the related loans. The qualifying period between grant and vesting date is normally 3 years. Dividends paid during the qualifying period on shares allocated to employees under the Scheme are paid to the employees. Voting rights on shares under the Scheme are exercisable by the Trustees under the Scheme. Once vested, an employee participant may elect to transfer the shares into his or her own name, after which the shares are freely transferable.

No employee share offers were in operation during the year ended 31 March 2008.

As at 31 March 2008 202,444 (2007 202,444) shares were held by the Trustee, being 0.07% (2007 0.07%) of the Group’s issued and paid up capital. No shares are allocated to employees (2007 Nil) as there is no current offer under the Scheme. All shares are allocated to employees at the time of issue, on the condition that should they leave the company before the qualifying period ends, their shares will be repurchased by the Trustees at the lesser of market price and the price at which the shares were originally allocated to the employee, subject to the repayment of the original loan. Any such repurchased shares are held by the Trustees for allocation to future issues under the Scheme. (Refer to Note 28(b)).

The total value of employee loans receivable is $Nil (2007 $Nil).

Directors of the Scheme Trustee are appointed by the Company.

107

(d) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows:

CONSOLIDATED PARENT

31 March2008

31 March2007

31 March2008

31 March2007

$’000 $’000 $’000 $’000

Expenses in relation to Group Share Option Plan 266 640 236 576

Expenses in relation to Long-Term Incentive Scheme 266 - 266 -

532 640 502 576

42 Government Grants

The Appliances business receives funding for selected research & development activities from the Foundation for Research, Science and Technology, a Crown Agent that invests in such activities on behalf of the New Zealand government. The detailed nature and extent of this funding is commercially sensitive. $1,630,000 was recognised in the financial statements for the year ended 31 March 2008 (2007 $2,052,000).

On occasion the Group also receives local government assistance, e.g. rates relief, both within and outside New Zealand.

43 Events occurring after the Balance Sheet date

(a) Global Manufacturing Strategy and Plant Acquisition in Mexico On 17 April 2008, the Directors announced a major restructuring of the Group’s operations and a new global manufacturing strategy. This involves shifting three of the Appliances business manufacturing facilities to a combination of existing sites in Thailand and Italy and a recently purchased facility in Mexico. The relocations are scheduled to occur over the next 12-18 months.

The transaction to purchase the facility in Reynosa, Mexico cost US$33 million and will be paid in 4 equal annual instalments and includes land, buildings and refrigerator manufacturing plant & equipment. A further US$8 million capital will be required to modify the refrigerator manufacturing plant & equipment.

The financial effects of the new strategy are expected to be cost savings in the vicinity of $50 million per annum at a one-off cost of $50 million, both at a pre-tax level. One-off costs of the relocations will be substantially provisioned in the 2008/09 financial year.

At this stage, it is too early to identify any associated asset impairment issues. However, based on very recent experience with the relocation of the New Zealand laundry manufacturing operation to Thailand, any asset impairment losses are expected to be immaterial.

(b) Final dividend for the year ended 31 March 2008 On 29 May 2008, the Directors approved a final dividend of 9.0 cents per share for the year ended 31 March 2008. The dividend will carry a partial imputation credit of 1.20 cents per share (equivalent to 11.76 cents in the dollar) for New Zealand tax residents and be 100% franked for Australian tax residents. Qualifying non-resident shareholders will also receive a supplementary dividend of 0.494 cents per share. The dividend will be paid on 15 July 2008.



44 Explanation of transition to New Zealand equivalents to IFRS

(1) Reconciliation of equity reported under previous New Zealand Generally Accepted Accounting Principles (NZ GAAP) to equity under New Zealand equivalents to IFRSs (NZ IFRS)

(a) At the date of transition to NZ IFRS: 1 April 2006

Previous NZ GAAP

Effect of transition

to NZ IFRS

NZ IFRS Previous NZ GAAP


to NZ IFRS

NZ IFRS

Sub-Notes $’000 $’000 $’000 $’000 $’000 $’000

Assets

Current assets

Cash and cash equivalents 50,382 - 50,382 1 - 1

Trade receivables & other current assets

155,053 - 155,053 - - -

Finance receivables 377,952 - 377,952 - - -

Inventories 215,008 - 215,008 - - -

Non-current assets classified as held for sale

(4)(j) - 921 921 - - -

Derivative financial instruments (4)(d) - 1,705 1,705 18 - 18

Current tax receivables 23,412 - 23,412 3,638 - 3,638

Future taxation benefit 5,241 - 5,241 - - -

Intergroup advances - - - 380,048 - 380,048

Total current assets 827,048 2,626 829,674 383,705 - 383,705

Non-current assets

Property, plant & equipment (4)(e), (j) 313,792 (4,618) 309,174 - - -

Investment in subsidiaries (5)(b) - - - 218,146 (117,985) 100,161

Other non-current assets 2,261 - 2,261 - - -

Finance receivables (4)(f) 193,736 1,494 195,230 - - -

Intangible assets (4)(j) 200,052 16,084 216,136 - - -

Derivative financial assets (4)(d) - 653 653 - - -

Deferred tax assets (4)(l) 23,762 7,462 31,224 - - -

Total non-current assets 733,603 21,075 754,678 218,146 (117,985) 100,161

Total assets 1,560,651 23,701 1,584,352 601,851 (117,985) 483,866

Liabilities

Current liabilities

Bank overdrafts 1,888 - 1,888 - - -

Current borrowings 20,000 - 20,000 - - -

Current finance leases 624 - 624 - - -

Trade creditors 83,139 - 83,139 - - -

Provisions 26,473 237 26,710 - - -

Finance borrowings 501,562 - 501,562 - - -

Derivative financial instruments (4)(d) - 6,018 6,018 - - -

Current tax liabilities 2,223 - 2,223 - - -

Other current liabilities 63,092 - 63,092 - - -

Total current liabilities 699,001 6,255 705,256 - - -

109

Previous NZ GAAP


to NZ IFRS



to NZ IFRS

NZ IFRS

Sub-Notes $’000 $’000 $’000 $’000 $’000 $’000

Non-current liabilities

Non-current borrowings 201,028 - 201,028 - - -

Non-current finance lease 2,302 - 2,302 - - -


Deferred tax liabilities (4)(l) 18 36,063 36,081 - - -

Other non-current liabilities (4)(g), (i), (k) 4,283 8,709 12,992 - - -

Provisions (4)(i) 15,188 12,243 27,431 - - -

Derivative financial instruments (4)(d) - 539 539 - - -

Total non-current liabilities 259,799 57,554 317,353 - - -

Total liabilities 958,800 63,809 1,022,609 - - -

Net assets 601,851 (40,108) 561,743 601,851 (117,985) 483,866

Equity

Contributed equity 560,535 (414) 560,121 560,535 - 560,535

Retained earnings (4)(m) 43,881 (42,378) 1,503 (76,829) (1,861) (78,690)

Reserves(5)(d)

(2,565) 2,684 119 118,145 (116,124) 2,021

Total equity 601,851 (40,108) 561,743 601,851 (117,985) 483,866



44 Explanation of transition to New Zealand equivalents to IFRS (continued)

(b) At the end of the last reporting period under previous NZ GAAP: 31 March 2007

Previous NZ GAAP


to NZ IFRS



to NZ IFRS

NZ IFRS

Sub-Notes $’000 $’000 $’000 $’000 $’000 $’000

Assets

Current assets

Cash and cash equivalents 76,773 3 76,776 1 - 1

Trade receivables & other current assets

(5)(c) 201,351 (2,436) 198,915 31 - 31

Finance receivables 383,779 (166) 383,613 - - -

Inventories 235,390 (1,716) 233,674 - - -

Non-current assets classified as held for sale

(4)(j) - 4,127 4,127 - - -

Derivative financial instruments (4)(d) - 6,308 6,308 - - -

Finance receivables 6,933 497 7,430 3,739 - 3,739

Future taxation benefit 2,523 - 2,523 - - -

Intergroup advances - - - 445,903 - 445,903

Total current assets 906,749 6,617 913,366 449,674 - 449,674

Non-current assets

Property, plant & equipment (4)(e), (j) 344,799 (15,297) 329,502 - - -

Investment in subsidiaries - - - 232,773 (132,548) 100,225

Other non-current assets 1,861 9 1,870 - - -

Finance receivables 153,178 - 153,178 - - -

Intangible assets (4)(j) 305,919 30,205 336,124 - - -


Deferred tax assets (4)(l) 26,784 50 26,834 - - -

Total non-current assets 832,541 15,490 848,031 232,773 (132,548) 100,225

Total assets 1,739,290 22,107 1,761,397 682,447 (132,548) 549,899

Liabilities

Current liabilities

Bank overdrafts 5,274 - 5,274 - - -

Current finance leases 3,587 - 3,587 - - -

Trade creditors 124,589 - 124,589 - - -

Provisions 20,064 186 20,250 - - -



Current tax liabilities 1,829 (1,302) 527 - - -

Other current liabilities 72,854 - 72,854 - - -

Total current liabilities 694,578 (259) 694,319 - - -

111

Previous NZ GAAP


to NZ IFRS



to NZ IFRS

NZ IFRS

Sub-Notes $’000 $’000 $’000 $’000 $’000 $’000

Non-current liabilities

Non-current borrowings 310,251 - 310,251 - - -

Non-current finance leases 2,904 - 2,904 - - -


Deferred tax liabilities (4)(l) 8,822 30,955 39,777 - - -

Other non-current liabilities (4)(g), (k) 4,627 8,401 13,028 - - -

Provisions (4)(i) 14,363 13,201 27,564 - - -

Total non-current liabilities 362,265 52,557 414,822 - - -

Total liabilities 1,056,843 52,298 1,109,141 - - -

Net assets 682,447 (30,191) 652,256 682,447 (132,548) 549,899

Equity

Contributed equity 638,996 467 639,463 638,996 979 639,975

Retained earnings (4)(m) 55,702 (40,121) 15,581 (89,320) (2,438) (91,758)

Reserves(5)(d)

(12,251) 9,463 (2,788) 132,771 (131,089) 1,682

Total equity 682,447 (30,191) 652,256 682,447 (132,548) 549,899

(2) Reconciliation of profit for the year ended 31 March 2007

Previous NZ GAAP


to NZ IFRS



to NZ IFRS

NZ IFRS

Sub-Notes $’000 $’000 $’000 $’000 $’000 $’000

Revenue

Operating revenue 1,410,870 - 1,410,870 - - -

Other income (4)(b) 1,084 7,127 8,211 40,500 - 40,500

Total revenue and other income 1,411,954 7,127 1,419,081 40,500 - 40,500

Operating profit 114,513 (372) 114,141 40,500 (576) 39,924

Finance costs (20,695) - (20,695) - - -

Profit before income tax 93,818 (372) 93,446 40,500 (576) 39,924

Income tax expense (32,638) 2,629 (30,009) (3,632) - (3,632)

Profit for the year 61,180 2,257 63,437 36,868 (576) 36,292

(3) Reconciliation of cash flow statement for the year ended 31 March 2007 The adoption of NZ IFRS has not resulted in any material adjustments to the Cash Flow Statement other than loan advances/loans repaid in the Finance business, which on transition are reclassified as operating activities from investing activities.




(4) Notes to the reconciliations (a) Goodwill Goodwill is no longer amortised under NZ IFRS but is reviewed on an annual basis for impairment and when an indicator of impairment exists. The Group has reviewed its goodwill balances and determined there is no impairment. The effect of the transition adjustment to Goodwill amortisation is shown below:

Fair value movements arising from the Elba S.p.A. (since renamed Fisher & Paykel Appliances Italy S.p.A.) acquisition in June 2006 result in adjustments to amortisation expense on certain intangible assets.

The effects of this are as below: At 1 April 2006 No effect on the Group or Parent entity.

At 31 March 2007 Increase in goodwill and retained earnings of $5.9 million. There is no effect on the Parent entity.

Decrease in intangible assets of $2.9 million and retained earnings of $1.8 million (net of tax). There is no effect on the Parent entity.

For the year ended 31 March 2007 A net decrease in amortisation expense of $2.9 million.

(b) Gains on sale of property, plant & equipment Consistent with the NZ Framework, gains on sale of property, plant & equipment have been reclassified from expenses to other income.

The effects of this are as shown below: (i) At 1 April 2006 and 31 March 2007 No effect on the Group or Parent entity.

(ii) For the year ended 31 March 2007 An increase in other income of $7.1 million and a corresponding decrease in administration expenses.

(c) Foreign currency translation reserve: cumulative translation differences The Group has elected to apply the exemption in NZ IFRS1 First-time Adoption of New Zealand Equivalents to International Financial Reporting Standards. The cumulative translation differences for all foreign operations represented in the foreign currency translation reserve are deemed to be zero at the date of transition to NZ IFRS.

The effect of this is as below: (i) At 1 April 2006 and 31 March 2007 The $2.6 million debit balance in the foreign currency translation reserve is reduced to zero and retained earnings are decreased by this amount.

There is no effect on the Parent entity.

113

(d) Derivative financial instruments Under NZ IFRS, all derivative financial instruments, whether used as hedging instruments or otherwise, have been recognised at fair value in the Balance Sheet. Further detail on derivatives is reported at section (5)(d) of this Note.

The effects of this are as below: (i) At 1 April 2006 An increase in derivative financial assets of $2.4 million, an increase in derivative financial liabilities of $6.6 million and a decrease in retained earnings of $1.8 million (net of tax and reserve movements). There is no effect on the Parent entity.

(ii) At 31 March 2007 An increase in derivative financial assets of $6.8 million, an increase in derivative financial liabilities of $0.9 million and an increase in retained earnings of $0.7 million (net of tax and hedge movements). There is no effect on the Parent entity.

(iii) For the year ended 31 March 2007 A fair value gain of $0.6 million and an increase in income tax expense of $0.2 million. There is no effect on the Parent entity.

(e) Carrying value of land Under NZ IFRS1 entities are permitted to adjust the carrying value of selected fixed assets to their fair value and use that fair value as deemed cost at the date of transition. The Group has elected to revalue certain parcels of land within New Zealand. This land was valued with an effective date of 1 April 2006 by Extensor Advisory Limited. The basis of the valuation is fair value being the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

The effect of this is as below: (i) At 1 April 2006 and 31 March 2007 For the Group there has been an increase in both retained earnings and property, plant & equipment of $12.4 million. There is no effect on the Parent entity.

(ii) For the year ended 31 March 2007 No effect on the Group or Parent entity.

(f) Finance Business receivables Under NZ IFRS, Finance business receivables are assessed for objective evidence of impairment at each balance date, calculated as the difference between the carrying amount of the loan and the present value of future expected cashflows associated with the loan discounted at the loan’s original effective interest rate.

Significant loans were individually assessed for impairment while smaller loans were impairment tested in portfolios based on similar risk profiles. Objective evidence of impairment was based on historical experience for such portfolios, adjusted to reflect current conditions at each balance date.

Under previous NZ GAAP, a specific provision was maintained to cover all identified doubtful debts and a general provision was maintained to cover all unidentifiable possible losses and latent risks inherent in the overall portfolio of loans.

The effect of this is as below: (i) At 1 April 2006 A decrease in loan impairment on loans (previously provision for doubtful debts) of $1.5 million with an increase in retained earnings of $1 million (net of tax). There is no effect on the Parent entity.

(ii) At 31 March 2007 There is no effect on the Group or Parent entity.

(iii) For the year ended 31 March 2007 There is no effect on the Group or Parent entity.




(g) Retirement benefit obligations The Group sponsors a superannuation plan with both a defined benefit section (now closed with 30 members remaining) and a defined contribution section. Under previous NZ GAAP, cumulative actuarial gains and losses on the defined benefit section were not recognised on the Balance Sheet. At the date of transition a liability is recognised in the provision for employee benefits. It is measured as the difference between the present value of the employees’ accrued benefits at that date and the net market value of the superannuation fund’s assets at that date.

The effect of this is as below: (i) At 1 April 2006 An increase of $10.6 million in retirement benefit obligations and a decrease in retained earnings of $7.1 million (net of tax). There is no effect on the Parent entity.

(ii) At 31 March 2007 An increase of $9.4 million in retirement benefit obligations and a decrease in retained earnings of $6.3m (net of tax). There is no effect on the Parent entity.

(iii) For the year ended 31 March 2007 A decrease in employee benefits expense of $1.2 million and an increase in income tax expense of $0.4 million. There is no effect on the Parent entity.

(h) Share-based payments Under NZ IFRS2 Share-based Payment from 1 April 2006 the Group is required to recognise an expense for options and shares that were granted to employees under the Company’s various option and share ownership plans after 7 November 2002 but that had not vested by 1 January 2007. The effect of this is shown below.

In accordance with NZ IAS32 and NZ SIC12, the Group has recorded shares held by the Trustee of the Fisher & Paykel Appliances Share Purchase Scheme as treasury stock until the shares vest, are reissued or otherwise disposed of, when any consideration received will then be included in the Group’s contributed equity. The effect of this is as below.

Pursuant to NZ IFRIC11, amounts expensed will differ between the Parent and Group in relation to those equity settled Parent share based payments recognised by the subsidiaries.

(i) At 1 April 2006 For the Group a decrease in retained earnings of $2.0 million and a corresponding increase in reserves. For the Parent entity a decrease in retained earnings of $1.8 million and a corresponding increase in reserves.

An increase in treasury stock of $0.4 million with a corresponding decrease in contributed equity. There is no effect on the Parent entity.

(ii) At 31 March 2007 For the Group a decrease in retained earnings of $2.7 million and a corresponding increase in reserves. For the Parent entity a decrease in retained earnings of $2.4 million and a corresponding increase in reserves.

On maturity of an employee share purchase scheme in August 2006, a decrease in reserves of $1.0 million and an increase in contributed equity of $1.0 million. The effect is the same for the Parent entity.

An increase in treasury stock of $0.5 million and a corresponding decrease in contributed equity. There is no effect on the Parent entity.

(iii) For the year ended 31 March 2007 For the Group and the Parent entity, an increase in employee benefits expense of $0.6 million.

(i) Other long-term employee benefits Under NZ IFRS, the Group is required to recognise long service leave on an actuarial basis, whereas under previous NZ GAAP, the benefit was only recognised when it had accrued to employees and was fully vested. The effect of this is shown below.

In addition, both vested and unvested long service leave are now disclosed as provisions, which has resulted in reclassification of amounts previously disclosed for vested benefits from other non-current liabilities to provisions.

115

(i) At 1 April 2006 An increase in the provision for employee benefits of $8.0 million and a decrease in retained earnings of $5.3 million (net of tax). There is no effect on the Parent entity.

$4.3 million reclassified from Other non-current liabilities to Provisions.

(ii) At 31 March 2007 An increase in the provision for employee benefits of $8.6 million and a decrease in retained earnings of $5.7 million (net of tax). There is no effect on the Parent entity.

$4.6 million reclassified from Other non-current liabilities to Provisions.

(iii) For the year ended 31 March 2007 An increase in employee benefits expense of $0.6 million. There is no effect on the Parent entity.

(j) Reclassification of property, plant & equipment Under NZ IFRS, software, patents & trademarks are classified as part of intangible assets rather than property, plant & equipment. This has resulted in reclassifications between intangible assets and property, plant & equipment as shown below. While the amount previously depreciated on these assets is unchanged, it is now classified as amortisation.

Under NZ IFRS5, non-current assets meeting specified criteria are reclassified as held for sale in current assets and depreciation ceases. This has resulted in reclassification between non-current assets held for sale and property, plant & equipment as shown below. Depreciation is unaffected as the assets involved were primarily land and the reclassification occurred at or near balance date.

There is no effect on the Parent entity.

(i) At 1 April 2006 An increase in intangible assets of $16.1 million with a corresponding decrease in property, plant & equipment.

An increase in non-current assets held for sale of $0.9 million and a corresponding decrease in property, plant & equipment.

(ii) At 31 March 2007 An increase in intangible assets of $16.5 million with a corresponding decrease in property, plant & equipment.

An increase in non-current assets held for sale of $4.1 million and a corresponding decrease in property, plant & equipment.

(iii) For the year ended 31 March 2007 There is no effect on the Group or Parent entity.

(k) Leases Under NZ IFRS, the Group is required to expense operating lease payments on a straight-line basis where there is a fixed increase in rentals, regardless of the basis of making those payments.

The effect of this is as below: (i) At 1 April 2006 An increase in accrued rental expenses of $2.4 million and a decrease in retained earnings of $1.6 million (net of tax). There is no effect on the Parent entity.

(ii) At 31 March 2007 An increase in accrued rental expenses of $3.6 million and a decrease in retained earnings of $2.4 million (net of tax). There is no effect on the Parent entity.

(iii) For the year ended 31 March 2007 An increase in rental expense of $1.2 million. There is no effect on the Parent entity.




(l) Deferred tax Under previous NZ GAAP income tax expense was calculated by reference to the accounting profit after allowing for permanent differences. Deferred tax was not recognised in relation to amounts recognised directly in equity. The adoption of NZ IFRS has resulted in a change in accounting policy. The application of NZ IAS12 Income Taxes has resulted in the recognition of deferred tax assets and liabilities on the items listed in the table below.

Under NZ IAS12, an additional deferred tax asset has been recognised in respect of the DCS brand. On transition this amounts to $4.0 million and transposes over the remaining useful tax life to a deferred tax liability. There is no effect on the Parent entity.

Under NZ IAS12, an additional deferred tax liability of $35.3 million has been recognised on transition in respect of the Farmers Finance licenses, which crystallises over the finite life of the licenses. There is no effect on the Parent entity.

Under previous NZ GAAP the benchmark for recognition of a deferred tax asset was “virtual certainty” of recovery while under NZ IFRS the benchmark for recognition is “probable” recovery. This results in an additional deferred tax asset of $0.7 million being recognised as at 31 March 2007 in respect of a tax credit available in the USA for production of qualifying laundry products.

There are no deferred tax effects on the Parent entity.

The effects on deferred tax of the adoption of NZ IFRS are as follows:

CONSOLIDATED

31 March2007

1 April2006

$’000 $’000

Adjustments arising from adoption of NZ IAS12 6,595 3,860

Application of NZ IAS12 to adjustments arising from adoption of other NZ IFRS:

DCS brand (1,982) (3,998)

Farmers Finance licenses 33,278 35,285

Derivative financial instruments 1,971 (74)

Retirement benefit obligation (3,097) (3,502)

Other long-term employee benefits (2,829) (2,627)

Loan impairment - 493

Leases (1,268) (836)

Fair value adjustment (1,095) -

USA tax credit (668) -

Increase in deferred tax liability 30,905 28,601

117

(m) Retained earnings The effect on retained earnings of the changes set out above are as follows:

CONSOLIDATED PARENT

31 March2007

1 April2006

31 March2007

1 April2006

$’000 $’000 $’000 $’000

Foreign currency translation reserve (2,565) (2,565) - -

Property, plant & equipment 12,387 12,387 - -

Goodwill amortisation 5,880 - - -

Derivative financial instruments 721 (1,809) - -

Share-based payments (2,661) (2,021) (2,438) (1,861)

Retirement benefit obligation (6,289) (7,111) - -

Other long-term employee benefits (5,744) (5,333) - -

Loan impairment - 1,001 - -

Leases (2,374) (1,543) - -

Fair value adjustments (1,844) - - -

Other adjustments (818) (159) - -

Investment in subsidiaries - - - -

Deferred tax (36,814) (35,225) - -

Total adjustment to retained earnings (40,121) (42,378) (2,438) (1,861)

(5) Other effects of the transition to NZ IFRSs (a) Business combinations On transition to NZ IFRS, the Group has elected to apply the exemption available in NZ IFRS1 First-time Adoption of New Zealand Equivalents to International Financial Reporting Standards and has not restated business combinations that took place prior to the transition date.

(b) Investments in subsidiaries On transition to NZ IFRS, the Parent entity has restated investments in subsidiaries at cost consistent with NZ IAS27. This results in the elimination of the Parent entity’s asset revaluation reserve at each balance date, with a corresponding adjustment to investments in subsidiaries.

(c) Reclassification from previous NZ GAAP Changes in the mark-to-market value of dedesignated forward foreign exchange derivatives were held in other current assets under previous NZ GAAP during 2006/07 to offset against the movement in cash receipts from the sales they had been hedged against. These amounts have been reclassified under NZ IFRS to the fair value of derivative financial instruments.

The effects of this are as below:

(i) At 31 March 2007 A decrease in other current assets of $1.2 million and a corresponding increase in the fair value of derivatives. There is no effect on the Parent entity.




(d) Derivatives Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

At the inception of the transaction the company documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

(i) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in either the cash flow hedge reserve, commodity hedge reserve or interest rate hedge reserve. The gain or loss relating to any ineffective portion is recognised immediately in the Income Statement.

Amounts accumulated in equity are recycled in the Income Statement in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Income Statement.

(ii) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the Income Statement.

119

45 Employee remuneration

The Group operates in a number of countries where remuneration market levels differ widely. During the year, the number of employees, not being Directors of Fisher & Paykel Appliances Holdings Limited, who received remuneration and the value of other benefits exceeding $100,000 was as follows:

Remuneration Number of employees Remuneration Number of employees

$ 2008 2007 $ 2008 2007

100,001-110,000 71 73 320,001-330,000 - 2

110,001-120,000 79 62 330,001-340,000 - 2

120,001-130,000 53 36 340,001-350,000 2 1

130,001-140,000 29 31 350,001-360,000 3 1

140,001-150,000 17 24 360,001-370,000 - 1

150,001-160,000 18 22 370,001-380,000 1 -

160,001-170,000 13 15 380,001-390,000 1 -

170,001-180,000 8 9 390,001-400,000 - 1

180,001-190,000 8 11 400,001-410,000 2 1

190,001-200,000 6 10 410,001-420,000 1 -

200,001-210,000 3 4 420,001-430,000 - 2

210,001-220,000 8 3 430,001-440,000 1 1

220,001-230,000 7 5 460,001-470,000 1 -

230,001-240,000 3 2 490,001-500,000 2 -

240,001-250,000 3 6 500,001-510,000 - 1

250,001-260,000 1 3 550,001-560,000 1 -

260,001-270,000 2 - 560,001-570,000 - 2

270,001-280,000 2 3 590,001-600,000 1 -

280,001-290,000 2 2 630,001-640,000 1 -

290,001-300,000 2 2 660,001-670,000 - 1

300,001-310,000 1 1 760,001-770,000 - 1

310,001-320,000 2 1 1,040,001-1,050,000 1 -

46 Foreign currency exchange rates

31 March2008

31 March2007

NZ$1.00 =

Australian dollar 0.8646 0.8835

United States dollar 0.7931 0.7126

Euro 0.5019 0.5325

British pound 0.3976 0.3615

Thai baht 25.0100 -

The above foreign currency exchange rates have been applied at Balance Date.


120 FIVE YEAR TREND STATEMENT (UNAUDITED)

NZ$’000 except where stated otherwise NZ IFRS 2008

NZ IFRS 2007

NZ FRS 2007

NZ FRS 2006

NZ FRS 2005

NZ FRS 2004

Group

Total operating revenue 1,399,709 1,410,870 1,410,870 1,208,580 1,038,358 938,051

Net profit after taxation 54,212 63,437 61,180 63,945 68,561 85,306

Normalised net profit after taxation 1 65,545 62,820 60,563 62,043 68,561 85,306

Cashflow from operations

– Before movement in Finance business receivables 83,672 86,768 86,768 106,284 28,374 140,452

– Movement in Finance business receivables (63,650) 23,536 - - - -

20,022 110,304 86,768 106,284 28,374 140,452

Total assets 1,830,224 1,761,397 1,739,290 1,560,651 1,449,699 1,245,728

Earnings per share - basic (cents)

– Basic 19.1 22.8 22.0 24.2 26.1 32.7

– Diluted 18.7 22.2 21.4 23.3 25.2 31.8

Dividends per share (cents) 18.0 18.0 18.0 18.0 18.0 41.3*

Appliances business

Operating revenue 1,275,816 1,292,741 1,292,741 1,082,178 914,240 852,748

Operating profit before interest and taxation 68,432 85,575 85,286 81,447 77,223 102,109

One-off abnormal items 14,832 (1,193) (1,193) (196) - -

Normalised operating profit before interest and taxation 83,264 84,382 84,093 81,251 77,223 102,109

Normalised operating margin2 6.5% 6.5% 6.5% 7.5% 8.4% 12.0%

Assets employed 1,051,612 1,043,339 1,018,532 996,038 894,011 712,572

Finance business

Operating revenue 123,893 118,129 118,129 126,402 124,118 75,119

Operating profit before interest and taxation3 26,143 28,566 29,227 28,399 30,032 17,690

One-off abnormal items 745 591 591 (2,589) - -

Normalised operating profit before interest and taxation 26,888 29,157 29,818 25,810 30,032 17,690

Finance receivables 584,931 536,791 536,957 571,688 567,367 565,619

1 Excludes one-off abnormal items

2 Normalised operating profit to operating revenue

3 Includes operating interest

* Includes special dividend of 21.0 cents per share on sale of shareholding in Fisher & Paykel Healthcare Corporation Limited

Note: Data for the years 2004-6 is reported under previous NZ GAAP (NZ FRS), 2007 is reported under previous NZ FRS and NZ IFRS and 2008 under NZ IFRS

121GROUP STRUCTURE

* FISHER & PAYKEL APPLIANCES HOLDINGS LIMITED owns: * AF Investments Limited

AF INVESTMENTS LIMITED owns: * Fisher & Paykel Appliances Limited Fisher & Paykel Finance Holdings Limited

FISHER & PAYKEL APPLIANCES LIMITED owns: * Allied Industries Limited, which owns the Australian subsidiaries: * Fisher & Paykel Australia Holdings Limited * Fisher & Paykel Australia Pty Limited * Fisher & Paykel Manufacturing Pty Limited * Fisher & Paykel Customer Services Pty Limited * Fisher & Paykel Finance Pty Limited * Fisher & Paykel Appliances Limited (UK), which owns the Italian subsidiaries: * Fisher & Paykel Appliances Italy Holdings S.r.l. * Fisher & Paykel Appliances Italy S.p.A. (formerly Elba S.p.A.) * Fisher & Paykel Production Machinery Limited * Fisher & Paykel (Singapore) Pte Limited, which owns: * Fisher & Paykel Appliances (Thailand) Co Ltd * Fisher & Paykel Appliances (USA) Holdings Inc, which owns the USA subsidiaries: * Fisher & Paykel Appliances Inc * Dynamic Cooking Systems Inc * Fisher & Paykel Laundry Manufacturing Inc Fisher & Paykel Appliances Employee Share Purchase Trustee Limited New Zealand Export Corporation Limited

FISHER & PAYKEL FINANCE HOLDINGS LIMITED owns: # Fisher & Paykel Finance Limited, which owns: Consumer Finance Limited Consumer Insurance Services Limited Equipment Finance Limited Fisher & Paykel Financial Services Limited, which owns: (Refer Note 38) Retail Financial Services Limited Credit & General Insurance Limited

* Companies operating under a negative pledge deed.

# Fisher & Paykel Finance Limited operates under its own Debenture Trust Deed. All subsidiaries are charging subsidiaries under the Debenture Trust Deed, with the exception of Consumer Insurance Services Limited.

All companies are wholly owned, except for Fisher & Paykel Appliances (Thailand) Co. Ltd. Thai law requires a minimum of seven shareholders, therefore in accordance with normal practice, six ordinary shares are held individually by Company Executives.


122 SHAREHOLDER INFORMATION

Size of Holdings Number of Holders

% Number of Ordinary Shares

%

1 – 999 2,561 17.63 1,403,477 0.49

1,000-4,999 7,516 51.76 18,476,482 6.49

5,000-9,999 2,457 16.92 16,331,646 5.74

10,000-99,999 1,867 12.86 37,924,167 13.33

Over 100,000 121 0.83 210,472,535 73.95

Total 14,522 100.00 284,608,307 100.00

611 shareholders held less than a marketable parcel of shares as per the ASX Listing Rules 4.10.8.

The details set out above were as at 31st May 2008.

Substantial Security Holders Pursuant to Section 26 of the Securities Amendment Act 1988, the substantial security holders as at 31st May 2008 were as follows:

Ordinary Shares

452 Capital Pty Limited (notice dated 22 February 2008) 14,814,087

Commonwealth Bank of Australia and Subsidiaries (notice dated 25 February 2008) 21,463,641

Macquarie Group Limited and controlled bodies corporate (notice dated 21 April 2008) 23,437,786

Principal Shareholders The names and holdings of the twenty largest registered shareholders as at 31 May 2008 were:

Holder Ordinary Shares %

New Zealand Central Securities Depository Limited 117,611,854 41.32HSBC Custody Nominees (Australia) Limited 11,807,921 4.14RBC Dexia Investor Services Australia Nominees Pty Limited 5,696,487 2.00J P Morgan Nominees Australia Limited 5,619,444 1.97Portfolio Custodian Limited 4,350,000 1.52FNZ Custodians Limited 4,277,022 1.50Citicorp Nominees Pty Limited 4,162,263 1.46RBC Dexia Investor Services Australia Nominees Pty Limited 3,508,104 1.23Cogent Nominees Pty Limited 2,958,664 1.03Woolf Fisher Trust Inc 2,857,880 1.00Masfen Securities Limited 2,700,892 0.94Gurshon Fisher 2,314,384 0.81Gurshon Fisher Family Account 2,226,560 0.78Investment Custodial Services Limited 2,204,704 0.77Gary Albert Paykel and Dorothy Mary Paykel and Keith Raymond Rushbrook 2,091,660 0.73Custodial Services Limited 1,964,049 0.69Joyce Fisher and Anthony John James Agar and Graeme Louis Collinson and Noel Stuart Robinson 1,814,608 0.63Joyce Fisher 1,712,992 0.60Maurice and Phyllis Paykel Trust Incorporated 1,381,911 0.48Australian Reward Investment Alliance 1,310,600 0.46

New Zealand Central Securities Depository Limited provides a custodial depository service to institutional shareholders and does not have a beneficial interest in these shares. Its major holders as at 31 May 2008 were:

National Nominees New Zealand Limited 30,609,932HSBC Nominees (New Zealand) Limited 13,202,120Citibank Nominees (New Zealand) Limited 11,736,183Accident Compensation Corporation 11,304,674NZ Superannuation Fund Nominees Limited 11,081,353HSBC Nominees (New Zealand) Limited 8,689,301TEA Custodians Limited 7,418,652ANZ Nominees Limited 5,598,088

A number of these registered shareholders hold shares as nominees on behalf of other parties.

123

Directors’ Shareholdings

Directors held interests in the following shares in the Company at 31 March 2008:

2008 2007

Ordinary Shares

Ordinary Shares

J H Bongard

Ordinary Shares

Beneficially Owned 90,754 68,928

Held by an Associated Person 138,116 138,116

Options to Acquire Ordinary Shares


N M T Geary

Ordinary Shares



J W Gilks

Ordinary Shares


W L Gillanders

Ordinary Shares


P D Lucas

Ordinary Shares


G A Paykel

Ordinary Shares

Beneficially Owned - 115,748

Held by an Associated Person 2,091,660 1,975,912

R G Waters

Ordinary Shares


To meet Stock Exchange requirements, the same shares may be included in more than one category.

Share Dealings by Directors In accordance with Section 148 (2) of the Companies Act 1993, the Board has received disclosures from the Directors named below of acquisitions or dispositions of relevant interests in the Company between 31 March 2007 and 31 March 2008.

Particulars of such disclosures are: Mr JH Bongard cancelled 66,667 options on 29 May 2007 in consideration for the issue of 21,826 ordinary shares pursuant to the Company’s Share Option Plan.

Mr GA Paykel transferred 115,748 shares to an associated person on 20 June 2007.


124 SUBSIDIARY COMPANY DIRECTORS

Section 211(2) of the Companies Act 1993 requires the Company to disclose, in relation to its subsidiaries, the total remuneration and value of other benefits received by Directors and former Directors, and particulars of entries in the interests registers, made during the year ended 31 March 2008.

The remuneration and other benefits of such employees (received as employees) totalling $100,000 or more during the year ended 31 March 2008, are included in the relevant bandings for remuneration disclosed in the Notes to the Financial Statements.

No employee of the Group appointed as a Director of the Company’s subsidiaries receives or retains any remuneration or other benefits in their capacity as Director. Payments were made to persons who are not employees of the Group for their directorships of subsidiary companies. Gary Paykel, Lindsay Gillanders and John Gilks each received $30,000 (included as part of their total remuneration as Directors of the Group outlined on page 28 for their directorships in the Finance Group of companies, and Boardroom Corporate & Advisory Services Pte Limited received S$1,800 for providing a nominee director, as required by Singaporean law, and services for the Company’s wholly-owned subsidiary Fisher & Paykel Singapore Pte Limited.

The following persons respectively held office as Directors of the Company’s subsidiaries at the end of this financial year:

AF Investments Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders

Fisher & Paykel Appliances Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders

Fisher & Paykel Production Machinery Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders

Allied Industries Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders

Fisher & Paykel Australia Holdings Limited John Bongard, Mark Richardson, Michael Church, Timothy Kirkup, Roger Cooper, Kevin Pullar

Fisher & Paykel Finance Pty Limited John Bongard, Mark Richardson, Michael Church, Timothy Kirkup, Roger Cooper, Kevin Pullar

Fisher & Paykel Australia Pty Limited John Bongard, Mark Richardson, Michael Church, Timothy Kirkup, Roger Cooper, Kevin Pullar

Fisher & Paykel Manufacturing Pty Limited John Bongard, Mark Richardson, Michael Church, Timothy Kirkup, Roger Cooper, Kevin Pullar

Fisher & Paykel Customer Services Pty Limited John Bongard, Mark Richardson, Michael Church, Timothy Kirkup, Roger Cooper, Kevin Pullar

Fisher & Paykel Appliances Limited (UK) John Bongard, Mark Richardson, Lindsay Gillanders

Fisher & Paykel Appliances Italy Holdings S.r.l. John Bongard, Mark Richardson

Fisher & Paykel Appliances Italy S.p.A. John Bongard, Antonio Pilati, Stuart Broadhurst

Fisher & Paykel (Singapore) Pte Limited John Bongard, Mark Richardson, Gary Paykel, Baey Cheng Song

Fisher & Paykel Appliances (Thailand) Co Limited John Bongard, Mark Richardson, Gary Paykel, Roger Cooper, Andrew Paykel

Fisher & Paykel Appliances Employee Share Purchase Trustee Limited Mark Richardson, Michael Matson, Richard Kempthorne

New Zealand Export Corporation Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders

125

Fisher & Paykel Appliances (USA) Holdings Inc John Bongard, Mark Richardson, Gary Paykel

Dynamic Cooking Systems Inc John Bongard, Mark Richardson, Gary Paykel

Fisher & Paykel Appliances Inc John Bongard, Mark Richardson, Gary Paykel

Fisher & Paykel Laundry Manufacturing, Inc John Bongard, Mark Richardson, Gary Paykel

Fisher & Paykel Finance Holdings Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Fisher & Paykel Finance Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Consumer Finance Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Consumer Insurance Services Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Equipment Finance Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Fisher & Paykel Financial Services Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Credit & General Insurance Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks

Retail Financial Services Limited John Bongard, Mark Richardson, Gary Paykel, Lindsay Gillanders, Alastair Macfarlane, Dennis Churches, John Gilks


126 DISCLOSURE OF INTEREST BY DIRECTORS

In accordance with Section 140 (2) of the Companies Act 1993, the Directors named below have made a general disclosure of interest, by a general notice disclosed to the Board and entered in the Company’s interests register. General notices of interest were given by these Directors:

G A Paykel Chairman of: Fisher & Paykel Healthcare Corporation Limited Milly Molly Group Holdings Limited

a Director of: ACG Capital Limited Endeavour Yachting Limited Fisher & Paykel Healthcare Employee Share Purchase Trustee Limited Howgate Holdings Limited Keano Enterprises Limited Lady Ruby Investments Limited Levante Holdings Limited Levante Marine Services Ltd New Zealand 93 Limited Premier Icons New Zealand Ltd Sport Lemonade Corporation Limited Stonex Systems Limited Team New Zealand Ltd The Friends of Milly Molly (NZ) Ltd

a Trustee of: Andsar Family Trust Endeavour Yachting Limited Levante No. 2 Trust Maurice Paykel Charitable Trust (Inc) Maurice & Phyllis Paykel Trust (Inc) Team New Zealand Trust

a Shareholder in: Fisher & Paykel Appliances Holdings Limited

J W Gilks Chairman of: Port Otago Limited and Subsidiaries

a Director of: Botry-Zen Limited Business in the Community Limited Dublin Bay Investments Limited Fundit Holdings Limited Receivables Management (NZ) Limited and Subsidiaries Upstart Angels Limited


J H Bongard a Shareholder in: Fisher & Paykel Appliances Holdings Limited

N M T Geary a Director of: ANZ National Bank Limited and Subsidiaries DB Breweries Limited Otago Innovation Limited


a Board Member of: New Zealand Institute of Economic Research

a Member of: Rio Tinto Aluminium Advisory Committee

W L Gillanders Chairman of: Auckland Packaging Company Limited Vita New Zealand Limited

a Director of: Fisher & Paykel Healthcare Corporation Limited LRS Management Limited Rangatira Limited


P D Lucas a Shareholder in: Fisher & Paykel Appliances Holdings Limited

R G Waters a Director of: Argie Pty Ltd Fletcher Building Finance Limited Fletcher Building Limited Fonterra Co-operative Group Limited Gragill Pty Ltd Tyree Australia Pty Ltd Tyree Holdings Pty Ltd Westpac New Zealand Limited

a Trustee of: Waters Superannuation Trust


Directors Indemnity and Insurance The Group has arranged, as provided for under its Constitution, policies of Directors and Officers Liability Insurance which, with a Deed of Indemnity, entered into with all Directors, ensures that generally Directors will incur no monetary loss as a result of actions undertaken by them as Directors. Certain actions are specifically excluded, for example, the incurring of penalties and fines, which may be imposed in respect of breaches of the law.

Use of Company Information There were no notices from Directors of the Company requesting to use Company information received in their capacity as Directors, which would not otherwise have been available to them.

127ADDITIONAL INFORMATION

The Company was incorporated in Auckland, New Zealand.

The Company is not subject to Chapters 6, 6A, and 6C of the Corporations Act 2001 (Australia) dealing with the acquisition of shares (ie substantial holdings and takeovers).

Limitations on the acquisition of securities imposed by the jurisdiction in which the Company is incorporated (New Zealand) are:

a. In general, securities in the Company are freely transferable and the only significant restrictions in relation to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and competition.

b. The Takeovers Code creates a general rule under which the acquisition of more than 20% of the voting rights in the Company, or the increase of an existing holding of 20% or more of the voting rights in the Company, can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances) or compulsory acquisition if a shareholder holds 90% or more of the shares in the Company.

c. The Overseas Investment Act 2005 and various Overseas Investment Regulations regulate certain investments in New Zealand by overseas persons. In general terms, the consent of the Overseas Investment Office is likely to be required where an “overseas person” acquires shares or an interest in shares in the Company that amount to more than 25% of the shares issued by the Company, or, if the overseas person already holds 25% or more, the acquisition increases that holding.

d. The Commerce Act 1986 is likely to prevent a person from acquiring shares in the Company if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.

The Company’s securities are quoted on the NZX and ASX.

Each of the Company’s ordinary shares entitles the holder to one vote.


128 EXECUTIVE AND DIRECTORY

Executive

John Bongard – Chief Executive Officer and Managing Director Mark Richardson – Chief Financial Officer and Company Secretary

Appliances John Bongard – Managing Director Stuart Broadhurst – VP Supply Chain Management Paul Brockett – VP Global Planning, Logistics, Investor Relations Brett Butterworth – VP Corporate Planning, Customer Services, Production Machinery Roger Cooper – VP Operations Michael Church – Chief Operating Officer, Australia Andrew Cooke – VP Information Technology Craig Douglas – VP Sales & Marketing Christian Gianni – VP Engineering Michael Goadby – President, North America Malcolm Harris – Chief Operating Officer, New Zealand Rebecca Holbrook – General Counsel Matt McConnell – VP Procurement Antonio Pilati – Chief Operating Officer, Europe Mark Richardson – Chief Financial Officer John Wardrop – VP Human Resources, Cost Management

Finance Alastair Macfarlane – Managing Director Dennis Churches – Chief Financial Officer Greg Shepherd – Chief Operating Officer Richard Blackburn – Chief Information and Support Services Officer Adrian Lichkus – Chief Credit Risk & Portfolio Performance Officer

Directory


Registered Offices New Zealand 78 Springs Road, East Tamaki, Auckland 2141, New Zealand

Australia Weippin Street, Cleveland, Queensland 4163, Australia

Contact Details New Zealand PO Box 58546, Greenmount, Auckland 2141, New Zealand Telephone: +64 9 2730600 Facsimile: +64 9 2730609

Australia PO Box 798, Cleveland, Queensland 4163, Australia Telephone: +61 7 38269100 Facsimile: +61 7 38212666

USA 5900 Skylab Road, Huntington Beach, CA 92647, USA Telephone: +1 714 3727000 Facsimile: +1 714 3727002

United Kingdom Maidstone Road, Kingston, Milton Keynes, MK10 0BD, UK Telephone: +44 1908 585577 Facsimile: +44 1908 586235

Europe Via Fabbian Matteo 7, Borso Del Grappa, Treviso 31030, Italy Telephone: +39 0423 9121 Facsimile: +39 0423 9124

Singapore 5150 Ubi Avenue 4, Ubi Biz-Hub #02-00, Singapore 408825 Telephone: +65 6547 0100 Facsimile: +65 6547 0123

Internet Address www.fisherpaykel.com

e-Mail [email protected]

Share Registry New Zealand Computershare Investor Services Ltd Private Bag 92119, Auckland 1142, New Zealand Telephone: +64 9 4888777 Facsimile: +64 9 4888787

Australia Computershare Investor Services Pty Ltd GPO Box 242, Melbourne, Victoria 3001, Australia Telephone Within Australia: 1800 501366 Telephone Outside Australia: +61 3 94154083 Facsimile: +61 3 94732009

Fisher & Paykel Appliances Holdings Limited …companyresearch.nzx.com/reports/nz/2008/FPA2008.pdfFisher & Paykel Appliances Holdings Limited CHAIRMAN'S REVIEW 3 Results Normalised

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