Chairman’s Report Business Performance and Outlook  I am delighted to announce another record year for the Harvey Norman group. The group consolidated operating  profit before tax was $233.29 million, for the twelve months ended 30 June 2003 compared to $189.41 million for the  prior year,  AN INCREASE  of  23.16%.  The operating profit after tax attributable to members of the company was $151.05 million compared to $128.28  million for the prior year, an increase of  17.8%  on the previous twelve month period. Basic earnings per share  increased from 12.33¢ to 14.31¢.  Sales in all categories of products sold by Harvey Norman franchisees or sold through Harvey Norman owned outlets  outside Australia (excluding Pertama Holdings Limited in Singapore), have increased by 14.4% during the year when  compared to the prior year. Like for like sales for the year ended 30 June 2003, when compared to the year ended 30  June 2002 have increased by 9.3%.  Since the end of the financial year sales for the months of July and August 2003 from the franchised “Harvey Norman”  complexes, Harvey Norman stores in New Zealand, Slovenia and other trading operations (excluding operations of  Pertama Holdings Limited, Singapore, and Rebel Sport Limited) totalled $590.4 million. When compared to sales for  July and August 2002 the increase was  21% . Like for like sales for the months of July and August 2003, when  compared to the same period last year, have increased by  12.7% .  During the twelve months to 30 June 2003, nine new stores or complexes have been opened in Australia, one small  lighting store was closed, and the flagship Harvey Norman store in Slovenia was opened in Ljubljana. Six retail stores  or complexes were opened in New Zealand. Since the end of the financial year, three stores have been opened in  Australia, and I am proud to announce that the first Harvey Norman store opened in Dublin (Swords), Ireland on 19  August 2003, and the second Irish store opened at Dundalk on 2 September 2003. Initial trading results from the Irish  stores have met expectations. I believe that the expansion into Ireland will be extremely positive for the company.  During the year Harvey Norman developed a new franchised retail concept known as “Mega Flooring Depot” (MFD). MFD franchisees will sell carpets, general floor coverings, rugs and timber flooring. The MFD roll-out will extend over  a number of years, throughout Australia.  In recent years developments in technology have resulted in increased sales in product categories such as plasma  television, DVD players, digital cameras, laptop computers and general home entertainment products. Although sales  in all areas including furniture, bedding, electrical and computers have increased, the new technology will have a  substantial impact on sales in years to come. The transition to digital video has been building rapidly, and consumers  are now buying more than twice as many DVD players as VCR’s. Consumers now choose digital technology to watch  the latest movies in their home theatres. Consumers prefer digital video and still cameras for better picture quality,  smaller size and editing capabilities. The future has become very clear - digital technology is not only here, but the features and capabilities of new digital  technologies are growing at a rapid pace. Bigger and brighter LCD and Plasma screens, better computer games,  smarter phones, higher resolution digital cameras, at mass market prices will allow Harvey Norman to be at the  forefront to satisfy consumer demands.  Harvey Norman was first in Australia to embrace the computer superstore concept, and continues to offer the most  outstanding product range to the consumer. Developments in digital technology will enhance the growth prospects for  Harvey Norman. 2  HARVEY NORMAN HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES – ANNUAL REPORT 2003 