Commentary to the Statement of Cash Flows:  (A) The amount of net receipts from franchisees is calculated by deducting from the aggregate amount of receipts  from franchisees (including loan repayments), the aggregate amount of advances made to franchisees by the  consolidated entity during the year ended 30 June 2003. All advances made to each franchisee are secured. The amount of advances to franchisees has increased to provide financial accommodation to franchisees for the  purpose of funding anticipated strong trading after balance date together with the cost of acquisition of inventory  by franchisees at new Harvey Norman and Domayne stores opened during the year.  (B) Payments to suppliers and employees have increased as a result of opening new non-franchised Harvey Norman  stores in Slovenia, New Zealand and new Rebel stores in Australia.  (C) Network Consumer Finance (NCF) does not provide “no deposit interest free finance” to consumers due to the  perceived risk. This form of finance is provided by external financiers. This has resulted in a decrease in the  level of consumer finance provided by NCF.  (D) The above factors have resulted in a decrease in net cash flows from operating activities.  (E) For the year ended 30 June 2003, payment for purchases of land and buildings totalled $97.82 million and  payment for purchases of plant and equipment totalled $63.26 million.  (F) This relates to the reduction of units held in Financial Assets Specialised Trust No. 1 (“FAST”).  (G) This relates to an amount of $7.9 million being proceeds of redemption of a promissory note owned by Rebel  Sport Limited.  (H) This relates to the successful takeover of Rebel Sport Limited by Becto Pty Limited, a wholly owned subsidiary of  Harvey Norman Holdings Limited.  (I)  Relates to the balance of funds received from the rights issue completed on 14 January 2002 when 37,717,029  new shares were allotted and issued. The total amount raised was $103.75 million. An amount of approximately  $53.99 million had already been received by the consolidated entity from related parties. This amount was set off  against the issue price payable on issue of shares to those related parties.  (J) Proceeds from borrowings of $101.3 million relates to the draw-down of commercial bill facilities which fluctuate  on a monthly basis.  HARVEY NORMAN HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES – ANNUAL REPORT 2003  21  Statement of Cash Flows  Year Ended 30 June 2003 (continued) 