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Notes to and forming part of the Financial Statements – continued<br />
For the 52 WEEK period ended 31 July 2011<br />
39. Related Parties (CONTINUED)<br />
(f) Parent<br />
During the period the Parent advanced and repaid loans to its subsidiaries by way of internal current accounts. In presenting the<br />
financial statements of the Group, the effect of transactions and balances between fellow subsidiaries and those with the Parent<br />
have been eliminated. All transactions with related parties were in the normal course of business and provided on commercial terms.<br />
The Parent entered into certain transactions with its subsidiaries as follows:<br />
Material amounts outstanding between the Parent and its subsidiaries at year end were:<br />
(i) Loans from the Parent to subsidiaries $316.508 million (2010: $316.149 million).<br />
Material transactions between the Parent and its subsidiaries were:<br />
(ii) The parent entered a $100.000 million loan agreement in April 2010 with a subsidiary on terms aligned to finance the interest<br />
and principal commitments of the Group’s fixed rate senior bond (refer note 29)<br />
(iii) Interest received by the Parent from its subsidiaries $7.682 million (2010: $2.269 million)<br />
(iv) Dividends received by the Parent from its subsidiaries $90.246 million (2010: $101.139 million).<br />
(g) Subsidiaries<br />
The following subsidiaries have been included in the consolidated financial statements:<br />
Guaranteeing Subsidiaries<br />
PRINCIPAL ACTIVITY EQUITY HOLDING<br />
2011 2010<br />
% %<br />
New Zealand subsidiaries<br />
The Warehouse Limited Retail 100 100<br />
Boye Developments Limited Investment 100 100<br />
Eldamos Investments Limited Property owner 100 100<br />
The Warehouse Nominees Limited Investment 100 100<br />
Waikato Valley Chocolates Limited 1 Chocolate factory 50 50<br />
Warehouse Stationery Limited Retail 100 100<br />
New Zealand employee share plan trustees<br />
The Warehouse Management Trustee Company Limited 1 Share plan trustee 100 100<br />
The Warehouse Management Trustee Company No 2. Limited 1 Share plan trustee 100 100<br />
New Zealand non-trading subsidiaries<br />
The Warehouse Card Limited 100 100<br />
The Warehouse Cellars Limited 100 100<br />
Eldamos Nominees Limited 1 100 100<br />
Non-trading Australian subsidiaries<br />
TWGA Pty Limited 1 100 100<br />
TWL Australia Pty Limited 1 100 100<br />
Non-Guaranteeing Subsidiaries<br />
New Zealand subsidiaries<br />
TWNL Projects Limited Store development 50 50<br />
TWP No.1 Limited Retail 49 49<br />
TWP No.2 Limited Retail 49 49<br />
New Zealand non-trading subsidiaries and joint ventures<br />
Farran Nine Limited 50 50<br />
Lincoln West Limited 50 50<br />
The Warehouse Investments Limited 100 100<br />
1<br />
For the purposes of the fixed rate senior bond trust deed these subsidiaries are designated as non-guaranteeing subsidiaries which differs from the negative pledge<br />
deed held by the Group’s banks where they are designated as guaranteeing subsidiaries.<br />
Auditors’ Report<br />
THE WAREHOUSE GROUP LIMITED<br />
Independent Auditors’ Report<br />
To the shareholders of The Warehouse Group Limited<br />
Report on the Financial Statements<br />
We have audited the financial statements of The Warehouse Group Limited on pages 29 to 74 which comprise the balance sheets as<br />
at 31 July 2011, the income statements, statements of comprehensive income and statements of changes in equity and statements<br />
of cash flows for the 52 week period then ended, and the notes to the financial statements that include a summary of significant<br />
accounting policies and other explanatory information for both the Company and the Group. The Group comprises the Company and<br />
the entities it controlled at 31 July 2011 or from time to time during the financial year.<br />
Directors’ Responsibility for the Financial Statements<br />
The Directors are responsible for the preparation of these financial statements in accordance with generally accepted accounting<br />
practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal controls as the<br />
Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement,<br />
whether due to fraud or error.<br />
Auditors’ Responsibility<br />
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance<br />
with International Standards on Auditing (New Zealand) and International Standards on Auditing. These standards require that we<br />
comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial<br />
statements are free from material misstatement.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.<br />
The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the<br />
financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider the internal controls<br />
relevant to the Company and the Group’s preparation of financial statements that give a true and fair view of the matters to which<br />
they relate, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an<br />
opinion on the effectiveness of the Company and the Group’s internal control. An audit also includes evaluating the appropriateness<br />
of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the<br />
financial statements.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.<br />
We have no relationship with, or interests in, The Warehouse Group Limited or any of its subsidiaries other than in our capacities as<br />
auditors of the financial statements and providers of other assurance services. These services have not impaired our independence<br />
as auditors of the Company and the Group.<br />
Opinion<br />
In our opinion, the financial statements on pages 29 to 74:<br />
(i) comply with generally accepted accounting practice in New Zealand;<br />
(ii) comply with International Financial Reporting Standards; and<br />
(iii) give a true and fair view of the financial position of the Company and the Group as at 31 July 2011, and their financial<br />
performance and cash flows for the 52 week period ended on that date.<br />
Report on Other Legal and Regulatory Requirements<br />
We also report in accordance with Sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993. In relation to our audit of the<br />
financial statements for the 52 week period ended 31 July 2011:<br />
(i) we have obtained all the information and explanations that we have required; and<br />
(i) in our opinion, proper accounting records have been kept by the Company and the Group as far as appears from an examination<br />
of those records.<br />
Restriction on Distribution or Use<br />
This report is made solely to the Company’s shareholders, as a body, in accordance with Section 205(1) of the Companies Act 1993.<br />
Our audit work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to<br />
state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume<br />
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for<br />
the opinions we have formed.<br />
Chartered Accountants, Auckland<br />
15 September 2011<br />
FINANCIAL STATEMENTS 74<br />
AUDITORS’ REPORT 75