ANNUAL FINANCIAL REPORT Year ended 30 June 2011 ABN: 95 000 969 362 EXPERIENCE IS THE DIFFERENCE... Dicker Data Ltd Australia ABN: 95 000 969 362 Registered Offi ces: 230 Captain Cook Drive KURNELL NSW 2231 T: 1800 688 586 F: 1800 688 486 www.dickerdata.com.au Auditors: PKF Chartered Accountants Level 10, 1 Margaret Street Sydney NSW 2000 T: +61 2 9251 4100 F: +61 2 9240 9821 www.pkf.com.au Share Registry: Boardroom Pty Limited Level 7, 207 Kent Street Sydney NSW 2000 T: +61 2 9290 9637 F: +61 2 9279 0664 www.boardroomlimited.com.au Australian Securities Exchange: ASX Code: DDR Dicker Data Limited | Annual Report 2011 1 3 3 4 5 16 25 26 27 28 29 56 58 59 60 Table of Contents THE BOARD OF DIRECTORS THE SENIOR MANAGEMENT TEAM CEO AND CHAIRMAN’S COMMENTARY DIRECTORS’ REPORT CORPORATE GOVERNANCE STATEMENT STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION DIRECTORS’ DECLARATION AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT 2 Dicker Data Limited | Annual Report 2011 Dicker Data Ltd – Board of Directors David Dicker Chairman and Chief Executive Offi cer Fiona Brown Non-Executive Director Mary Stojcevski Executive Director (Appointed 31st August, 2010) Michael Demetre Executive Director (Appointed 21st September, 2010) Chris Price Executive Director (Appointed 21st September, 2010) The Senior Management Team Senior Management Team Serving at Year End David Dicker Executive Director and Chief Executive Offi cer Chris Price Commercial Director Mary Stojcevski Chief Financial Offi cer Michael Demetre Logistics Director Vladimir Mitnovetski Category Manager Dicker Data Limited | Annual Report 2011 3 CEO Commentary The Business in 2011 Welcome to our fi rst annual report as an ASX listed public company. On behalf of the board I am pleased to report on the 2011 fi nancial year. Our profi t from operations was $10m. This excludes the loss on the property disposals and IPO expenses that were identifi ed as costs in the fi nancial year. The inclusion of these resulted in a fi nal profi t before tax of $8.8m. Operating revenues fi nished at $385m for the year, a record number for the company. This was up by 34.4% on the same period last year of $287m. Both profi t and revenue were a record number for the company and a very encouraging result, due to our dedicated staff and management team who performed extremely well. During the year we moved into a new and larger facility at 230 Captain Cook Drive, Kurnell. We sold the land that we had acquired for expansion of our Taren Point facility and also our old facility in Sir Joseph Banks Drive. We recorded a small profi t on the land sale but took a loss on the property transaction. We were able to partially offset that loss with the land gain. With the disposal of the old property assets and our new facility fully operational we expect continued growth to follow in 2012. Best Regards David Dicker CEO and Chairman Sydney, 7 September 2011 4 Dicker Data Limited | Annual Report 2011 Directors’ Report Your directors present their report on Dicker Data Limited (Dicker Data) for the year ended 30 June 2011. 1. Principal activities The principal activities of the company during the year were wholesale distribution of computer hardware and related products. There were no signifi cant changes in the nature of the activities carried out during the year. 2. Dividends Ordinary Shares Current Period - Interim Period (cents) Class “A” Shares Final Dividend 2010 Class “B” Shares Final Dividend 2010 $’000 $ 0.01 1,250 $ 360.07 1,800 $ 211.04 1,055 3. Operating and fi nancial review A snapshot of the operations of the company for the full year and the results of those operations are as follows: Operating Revenues Gross Profi t Earnings before tax from Continuing Activities Earnings Before Tax Earnings Before Interest, Tax and Depreciation (EBITDA) Net Profi t after Tax Earnings Per Share (cents) 2011 (in 000’s) 385,246 26,178 10,043 8,788 11,779 6,132 5.02 2010 (in 000’s) 286,731 17,907 6,509 6,509 8,809 4,523 3.77 % Change 34.4% 46.2% 54.3% 35.0% 33.7% 35.6% 33.2% Total revenue for the full year was $385,246,074 (2010 - $286,731,311), an improvement of 34.4% on the same period last year. This was a due to strong sales in the second half of FY2011, with higher than expected vendor sales for Hewlett Packard, Toshiba and Asus products. Growth in our software and licensing business has also led to an increase in revenue during the period. Gross margin for the full year was $26,177,700 (2010 - $17,906,852) an increase of 46.2% which is refl ective of increased sales volume in the current year. Gross margin percentage increased marginally from 6.2% to 6.8% with better margins across major product lines. Earnings before tax from continuing activities amounted to $10,043,325 an increase of 54.3% for the full year (2010: $6,509,032). Earnings from continuing operations exclude a net loss on sale of property of $816,132 and IPO expenses of $438,847 that were expensed in the current year. Dicker Data Limited | Annual Report 2011 5 Directors’ Report Profi t before tax amounted to $8,788,346 an increase of 35% for the full year (2010 : $6,509,029). Net Profi t after tax increased by 35.6% to $6,132,045 an increase of 35.6% compared to previous year (2010 : $4,523,404). Earnings Per share increased by 33.2% to 5.02 cents per share. 4. Earnings per share Basic Earnings Per Share (cents) Diluted Earnings Per Share (cents) * * on basis options exercised 2011 5.02 5.00 2010 3.77 3.77 5. Signifi cant changes in the state of affairs (a) During the fi nancial year the company converted from a private proprietary limited company to a listed public company and changed its name from Rodin Corporation Pty Limited to Dicker Data Limited. On 14 October 2010 the 4,999 A class shares and 4,999 B class shares were converted to ordinary shares and then subsequently split to 120,000,000 ordinary shares. A prospectus was lodged with the Australian Securities & Investment Commission (ASIC) on 26 October 2010 for an Initial Public Offering (IPO) of its shares to raise $1,000,000 by the issue of 5,000,000 new shares at issue price of $0.20 per share. The company was successfully admitted to the offi cial list of the Australian Securities Exchange (ASX) on 24 January 2011. (b) During the fi nancial year the company disposed of two properties which were in excess of its requirements for its operations - land owned at Production Rd, Taren Point and warehouse facility at Sir Joseph Banks Drive, Kurnell. The sale of the land settled during the year and the proceeds from the disposal were applied against borrowings. Contracts for the sale of the warehouse facility were exchanged on 29th June, 2011 and settled on 17th August, 2011. The proceeds from this sale were applied against borrowings at the time. 6. Signifi cant events after the balance date (a) The following options had been granted at balance date: 1. 1,500,000 Options to acquire 1,500,000 fully paid ordinary shares, exercisable at $0.20 anytime within 36 months from the date of granting to Newport Capital Pty Ltd, expiring 24 January, 2014 2. 1,200,000 Options to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 anytime within 36 months from the date of granting to Stonebridge Securities Limited and related parties, expiring 24 January, 2014. On the 9th of August 2011 Newport Capital Pty Ltd exercised all the options held at the strike price of $0.20c per share. The company has received the payment for the options and has issued the shares to Newport Capital Pty Ltd (b) The company had disclosed in its Half Year Report that it had received a Statement of Claim for preference payments. The claim was in relation to payments received from a debtor that had since gone into liquidation. Whilst the claim was highly defendable based on legal advice sought, in an effort to avoid incurring further costs and inconvenience of trial a confi dential settlement was agreed on and a confi dential Deed of Settlement was entered into on 11 August 2011. 6 Dicker Data Limited | Annual Report 2011 7. Likely developments and expected results In the 2012 fi nancial year, we will focus on reviewing our vendor and supplier mix and adjust accordingly to meet current market conditions. Consequently, the objective will be long term profi tability for Dicker Data. During the year, we reviewed our existing vendor line up and ceased vendors that were unprofi table so to improve the fi nancial performance of the company. Further information on likely developments in the operations of the company and the expected results of operations has not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company. 8. Directors The following persons were directors of Dicker Data Limited during the whole of the fi nancial year end up to the date of this report. Directors were in offi ce for this entire period unless otherwise stated. David J Dicker Fiona T Brown Mary Stojcevski (Appointed 31st August, 2010) Chris Price (Appointed 21st September, 2010) Michael Demetre (Appointed 21st September, 2010) David Dicker – CEO and Chairman David is the co-founder of the Company. He began his career of entrepreneur and businessman by taking over his father’s steel fabrication business and successfully growing its operations over a short period. A self-trained programmer, David developed a keen interest in micro computing technologies in the 1980’s and he continued to challenge his entrepreneurial ability by establishing a new microcomputer distribution company – Dicker Data, for which he believed there was a growing market. David’s role as Managing Director required focus on Dicker Data’s business strategy and decision making, rather than on day-to-day operations, which were the responsibility of the co-founder Fiona Brown. Under David’s strategic guidance the Company enjoyed material growth, establishing Dicker Data as one of the leading Australia-based distributors of IT products. Interest in Equities 63,750,000 shares in Dicker Data Limited Interest in Contracts Nil Special Responsibilities Responsible for the overall business management as chief executive offi cer. Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None Dicker Data Limited | Annual Report 2011 7 Directors’ Report Fiona Brown – Non-Executive Director Fiona Brown is the co-founder of Dicker Data and currently serves as Non-Executive Director of the Company. Fiona acted as General Manager and Marketing Manager of Dicker Data from the inception of the Company until 2004 when she left her executive position due to family commitments. Fiona’s business development, negotiation, management and leadership skills were of material importance to the success and growth of Dicker Data. During the period of Fiona’s executive involvement, Dicker Data was voted several times as the number one distributor by resellers - based on customer service levels, speed of delivery and technical support. Fiona was voted one of the top 5 fi gures in the Australian computer industry in July 2002 by Australian Reseller News. As a Non-Executive Director, Fiona brings her knowledge of the business and 25 years of experience in the IT distribution industry. Interest in Equities 56,250,000 shares in Dicker Data Limited Interest in Contracts Nil Special Responsibilities None Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None Mary Stojcevski – Chief Financial Offi cer Mary joined Dicker Data as Financial Controller in 1999. Her responsibilities include the management of all fi nancial and management accounting duties and functions, all Company compliance and management of administration staff. Mary is also an Executive Director of the Company. Mary has over 15 years of experience in accounting and taxation. She started her career as an Accountant Trainee at Jego, Apolloni & Associates Chartered Accountants. She quickly progressed to an Intermediate Accountant at Horwath & Horwath Chartered Accountants and then to Senior Accountant at Quinn Consultants Chartered Accountants, which position she held for about seven years. Prior to joining Dicker Data, Mary spent about 18 months at Colonial Ltd as Assistant Tax Manager. Mary holds a Bachelor of Commerce Degree with major in Accounting from the University of New South Wales. Interest in Equities 10,000 shares in Dicker Data Limited Interest in Contracts Nil 8 Dicker Data Limited | Annual Report 2011 Special Responsibilities Responsible for the overall fi nancial management of the Company. Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None Chris Price – Commercial Director Chris joined Dicker Data as Sales Manager in 2006. His sales experience and IT industry knowledge have been instrumental in the Company’s growth over recent years. Dicker Data’s revenues have grown materially since Chris has been heading the Company’s sales team. Chris is also an Executive Director of the Company. Chris brings over 13 years of IT industry experience to the Company. Prior to joining Dicker Data, Chris worked in various positions with distributors Ingram Micro and Tech Pacifi c as well as with vendors Dell and IBM. Chris holds a Bachelor of Commerce Degree from the University of Newcastle. Interest in Equities 15,500 shares in Dicker Data Limited Interest in Contracts Nil Special Responsibilities Responsible for the sales operations of the Company. Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None Michael Demetre – Logistics Director Michael joined Dicker Data in 2001 as a Web/System Maintenance Administrator. He later took up the position of Warehouse Storeman which he held for about 5 years. Michael’s experience in the operations of the warehouse, general knowledge of the Company and established relationships with other employees allowed him to undertake the position of Logistics Director. He has successfully held this position since 2007. Michael is also an Executive Director of the Company. Interest in Equities 10,000 shares in Dicker Data Limited Interest in Contracts Nil Dicker Data Limited | Annual Report 2011 9 Directors’ Report Special Responsibilities Responsible for the warehouse and logistic operations of the Company. Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None 9. Company secretary Mrs Leanne Ralph B.Bus, CPA, ACIS, AAICD was appointed to the position of Company Secretary on the 8th of February 2011. Leanne has over 20 years experience as Chief Financial Offi cer and Company Secretarial roles for various publicly listed and unlisted entities. Leanne is a qualifi ed Chartered Secretary and Director of Boardworx Australia Pty Ltd which provides bespoke outsourced Company Secretarial services to companies. 10. Director meetings The numbers of meetings of the Company’s Board of directors and of each Board committee held during the year and the number of meetings attended by each director were: Board Meetings David Dicker Fiona Brown Mary Stojcevski Chris Price Michael Demetre Leanne Ralph (Secretary) Number Eligible to Attend Number Attended 7 7 7 7 7 3 7 5 6 6 6 3 11. Remuneration report All information in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share-based compensation E Additional information 10 Dicker Data Limited | Annual Report 2011 (A) Principles used to determine the nature and amount of remuneration The board addresses remuneration policies and practices generally, and determines remuneration packages and other terms of employment for senior executives. Executive remuneration and other terms of employment are reviewed annually by the board having regard to performance against goals set at the start of the year and relevant comparative information. Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the company’s operations, achieving the company’s strategic objectives, and increasing shareholder wealth. Executives The executive pay and reward framework includes the following components: - Base pay and benefi ts - Performance-related bonuses - Other remuneration such as superannuation. The combination of these comprises the executive’s remuneration. Base pay Base pay is structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-fi nancial benefi ts at the executive’s discretion. There are no guaranteed base pay increases included in any senior executives’ contracts. Performance-related bonuses Performance-related cash bonus entitlements are linked to the achievement of fi nancial and non-fi nancial objectives which are relevant to meeting the company’s business objectives. A major part of the bonus entitlement is determined by the actual performance against net profi t margin targets. Using a profi t target ensures variable reward is only available when value has been created for shareholders and when profi t is consistent with the business plan. The executives’ cash bonus entitlements are assessed and paid monthly based on the actual performance against the relevant monthly profi t with a reconciliation at the end of the fi nancial year against full-year actual profi t. The chairman and CEO is responsible for assessing whether an individual’s targets have been met Non-executive directors Fees and payments to non-executive directors refl ect the demands which are made on, and the responsibilities of, the directors. The board determines remuneration of non-executive directors within the maximum amount approved by the shareholders from time to time. This maximum currently stands at $250,000 per annum in total for salary and fees, to be divided among the non-executive directors in such a proportion and manner as they agree. The Board does not currently have any independent directors. The only current non-executive director is Fiona Brown, who represents a major shareholder. No director fees have been received by Fiona Brown (B) Details of remuneration Compensation paid to key management personnel is set out below. Key management personnel include all directors of the company and executives who, in the opinion of the board and CEO, have authority and responsibility for planning, directing and controlling the activities of the group directly or indirectly. Comparative information is not shown for individuals who were not considered to be key management personnel in the previous year. The following also includes the four most highly remunerated executives of the company. Dicker Data Limited | Annual Report 2011 11 Directors’ Report Details of Remuneration for Directors and Key Management Personnel Short-Term Cash FY Salary & Fees Long-Term Share Based Payments Short term Incentive Cash Bonus Super- annuation Non-Cash FBT Reportable Long Service Leave Shares Options Total Proportion of remuneration that is performance based % of Value of remuneration that consists of share Based Payments $ $ $ $ $ $ $ $ $ % Executive Directors David Dicker – Chief Executive Offi cer 2011 2010 Chris Price - Commercial Director 2011 2010 556,164 50,055 11,955 338,145 30,433 14,241 Mary Stojcevski - Chief Financial Offi cer 2011 2010 191,003 89,822 25,274 144,970 69,545 19,306 Michael Demetre - Logistics Director 2011 2010 184,505 129,230 89,822 69,545 24,689 17,890 Non-Executive Directors Fiona Brown 2011 2010 Other Key Management Personnel Vladimir Mitnovetski - Category Manager 0 0 618,174 382,819 100.00% 100.00% 306,099 233,821 29.34% 29.74% 299,017 216,665 30.04% 32.10% 0 0 2011 2010 Total 95,673 235,416 29,798 360,887 65.23% (N/a - Position appointed in October, 2010) 0 2011 471,181 971,224 129,816 11,955 2010 274,200 477,235 67,629 14,241 0 0 0 0 0 0 1,584,177 833,305 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% (C) Service agreements Terms of employment for the executive directors and other key management personnel are by way of Consultancy Agreement or an Executive Service Agreement (ESA). The contract details the base salary and performance-related bonuses. Consultancy Agreement for David Dicker The Company has engaged Rodin FZC (a company incorporated in Dubai) to provide the services of David Dicker to act as the Chief Executive Offi cer and Executive Director of the Company on an as-needed basis. The Consultancy Agreement is dated 26 October 2010. The engagement is for an indefi nite term. Either party may terminate the agreement on the provision of 6 months notice. No fee is payable by the Company to Rodin FZC for the provision of the services. The agreement contains a number of post-termination restraints. 12 Dicker Data Limited | Annual Report 2011 Deed of Adherence for David Dicker The Company and David Dicker have entered into a Deed of Adherence whereby Mr Dicker has agreed to adhere and comply with all covenants and obligations of Rodin FZC (a company incorporated in Dubai) set out in the Consultancy Agreement (between the Company and Rodin FZC) to the maximum allowable extent permitted by law as if Mr Dicker was named as Rodin FZC therein. The Deed is dated 26 October 2010. Executive Service Agreement for Chris Price The Company has appointed Chris Price as Commercial Director and Director of the Board of the Company by way of an Executive Service Agreement (ESA). The ESA is dated 25 October 2010. The ESA confi rms Mr Price’s continuous service with the Company for all purposes commenced from 21 September 2010. The appointment of Mr Price is for an unspecifi ed time. Either the Company or Mr Price may terminate the ESA with 3 months notice. The remuneration payable to Mr Price is equal to 6.75% of the Company’s net profi t per month, subject to net profi t margin before tax not being less than 2.5%, less his total motor vehicle expenses for that month. Mr Price is also entitled to a company car (with expenses to be deducted from his remuneration) and a mobile telephone and laptop, of which all business related telephone calls and service plan fees are paid for by the Company. The ESA also contains a number of post-termination restraints. Executive Service Agreement for Mary Stojcevski The Company has appointed Mary Stojcevski as Chief Financial Offi cer and Director of the Board of the Company by way of an Executive Service Agreement (ESA). The ESA is dated 25 October 2010. The ESA confi rms Ms Stojcevski’s continuous service with the Company for all purposes commenced from 31 August 2010. The appointment of Ms Stojcevski is for an unspecifi ed time. Either the Company or Ms Stojcevski may terminate the ESA with 3 months notice. The remuneration payable to Ms Stojcevski comprises of a base remuneration of $218,000 per annum (inclusive of mandatory employer superannuation contributions). Ms Stojcevski is also entitled to a performance bonus equal to 1% of the Company’s net profi t before tax, subject to net profi t margin before tax not being less than 2.5%. The ESA also contains a number of post-termination restraints. Executive Service Agreement for Michael Demetre The Company has appointed Michael Demetre as Logistics Director and Director of the Board of the Company by way of an Executive Service Agreement (ESA). The ESA is dated 25 October 2010. The ESA confi rms Mr Demetre’s continuous service with the Company for all purposes commenced from 21 September 2010. The appointment of Mr Demetre is for an unspecifi ed time. Either the Company or Mr Demetre may terminate the ESA with 3 months notice. The remuneration payable to Mr Demetre comprises a remuneration package of $218,000 per annum (inclusive of mandatory employer superannuation contributions). Mr Demetre is also entitled to a performance bonus equal to 1% of the Company’s net profi t before tax, subject to net profi t margin before tax not being less than 2.5%. The ESA also contains a number of post-termination restraints. (D) Share-based compensation No shares, rights, or options were granted to directors or key management personnel during the year ended 30 June 2011, no rights or options vested or lapsed during the year, and no rights or options were exercised during the year by directors. (E) Additional information Relationship between remuneration and company performance The overall level of executive reward takes into account the performance over the fi nancial year with greater emphasis given to improving performance over the prior year. Compared to previous period, net profi t has grown by 35%, as a result the average executive remuneration has increased. Since 2006, the net profi t has grown at an average rate of 23.7% per annum, whilst the average executive executive remuneration has increased by an average of 38.6% per annum. Shareholder wealth has also increased at an average rate of 23.9% per annum over this period. This concludes the remuneration report which has been audited. Dicker Data Limited | Annual Report 2011 13 Directors’ Report 12. Shares options The following options were granted during the year: (a) 1,500,000 Options to acquire 1,500,000 fully paid ordinary shares, exercisable at $0.20 anytime within 36 months from the date of granting to Newport Capital Pty Ltd, expiring 24 January, 2014. (b) 1,200,000 Options to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 anytime within 36 months from the date of granting to Stonebridge Securities Limited and related parties, expiring on 24 January, 2014. On the 9th of August, 2011 Newport Capital Pty Ltd exercised all the options held at the strike price of $0.20c per share. The company has received the payment for the options and has issued the shares to Newport Capital Pty Ltd 13. Indemnifi cation and insurance of directors and offi cers During the fi nancial year, Dicker Data Limited paid a premium of $21,943 to insure the directors and members of the executive management team of the company and the group against any liability incurred by them in their capacity as offi cers, unless the liability arises out of conduct involving a lack of good faith. The executive offi cers of the group are also indemnifi ed against any liability for costs and expenses incurred in defending civil or criminal proceedings involving them as such offi cers if judgement is given in their favour or if they are acquitted or granted relief. 14. Environmental regulation and performance The company is not subject to any particular and signifi cant environmental regulations. 15. Rounding Although the company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to “rounding off”, amounts in the directors’ report and fi nancial report have not been rounded off to the nearest thousand dollars. 16. Auditor independence and non-audit services PKF Chartered Accountants continues in offi ce in accordance with section 327 of the Corporations Act 2001. During the year an amount of $59,910 in fees were paid or payable to the auditor for non-audit services. Non-audit services The company employs PKF Chartered Accountants in addition to its statutory duties where the auditor’s expertise and experience with the company are important. The board of directors has considered the position and is satisfi ed that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. 14 Dicker Data Limited | Annual Report 2011 The directors are satisfi ed that the provision of non-audit services by the auditor (refer above) did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: - all non-audit services have been reviewed by the board of directors to ensure they do not impact the impartiality and objectivity of the auditor - none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 62. This report is made in accordance with a resolution of the directors. Best Regards David Dicker CEO and Chairman Sydney, 7 September 2011 Dicker Data Limited | Annual Report 2011 15 Corporate Governance Statement Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied by Dicker Data Limited (Dicker Data or Company). Principal 1: Lay Solid Foundations for Management and Oversight Recommendation 1.1: Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. The Board is accountable to shareholders for the performance of Dicker Data and has overall responsibility for its direction and management and the formulation of policies to be applied in Dicker Data’s business. The Board has adopted a Charter which outlines the responsibilities reserved for the Board in detail. This Charter is published on Dicker Data’s website ww.dickerdata.com.au. Some key responsibilities of the Board are as follows: (a) appoint and review the performance of the Chairman and management; (b) develop and approve strategy, planning and major capital expenditure; (c) arrange for effective budgeting and fi nancial supervision; (d) ensure that appropriate audit arrangements are in place; (e) ensure that effective and appropriate reporting systems in place will, in particular, assure the Board that proper fi nancial, operational, compliance and risk management controls function adequately; and (f) report to shareholders. The Board is also responsible to shareholders for Dicker Data’s strategic direction and the execution of Dicker Data’s overall objective, which is to increase long-term shareholder value. Decisions which are not part of the day to day management of Dicker Data or which have not been delegated to the Chief Executive Offi cer or executive team, must be made by the Board. Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives. The Board is responsible for reviewing the performance of the Chairman and key management personnel. Dicker Data’s goals are used as the basis for evaluating performance of senior executives. Performance evaluations are undertaken annually, in September, by managers. Senior Executives The Chief Executive Offi cer is responsible for assessing the performance of the key executives within Dicker Data. The basis of evaluation of senior executives will be on agreed performance measures, examining the effectiveness and quality of the individual, assessing key contributions, identifying areas of potential improvement and assessing whether various expectations of shareholders have been met. The Board will also monitor the performance of Dicker Data’s senior executives, including measuring actual performance against planned performance. This policy is reviewed annually. 16 Dicker Data Limited | Annual Report 2011 Principal 2: Structure the Board to Add Value Recommendation 2.1: A majority of the board should be independent directors. As at the reporting date, the Board is composed of the following fi ve Directors, including one non-executive Director: Name David Dicker Fiona Brown Mary Stojcevski Chris Price Michael Demetre Position Chairman and Chief Executive Offi cer Non Executive Director Executive Director Executive Director Executive Director When considering independence, Dicker Data considered the following recommendation made by the ASX Corporate Governance Council: ‘When determining the independent status of a director the board should consider whether the director: 1. is a substantial shareholder of the company or an offi cer of, or otherwise associated directly with, a substantial shareholder of the company; 2. is employed, or has previously been employed in an executive capacity by the company or another group member, and there has not been a period of at least three years between ceasing such employment and serving on the board; 3. has within the last three years been a principal of a material professional adviser or a material consultant to the company or another group member, or an employee materially associated with the service provided; 4. is a material supplier or customer of the company or other group member, or an offi cer of or otherwise associated directly or indirectly with a material supplier or customer; or 5. has a material contractual relationship with the company or another groupmember other than as a director.’ The Chief Executive Offi cer is a substantial shareholder of Dicker Data and has been engaged by Dicker Data on a consultancy basis. He is not considered to be independent. Three of the Directors are employed by Dicker Data and are not considered to be independent. Fiona Brown, the non-executive Director, is a substantial shareholder of Dicker Data and is not considered to be independent. As such, there are no independent Directors. The Board considers that the Board’s composition is appropriate to Dicker Data’s size and structure in the context of Dicker Data’s recent history, and the directors’ experience and knowledge of Dicker Data’s assets. Details on the skills, experience and expertise of each director in offi ce are outlined on page 7 of the Annual Report. Should the Directors determine to expand the Board by the appointment of one or more non-executive Directors, such non-executive Directors will be selected on the basis of their capacity to add value to the business, and to provide independent governance to the operations of Dicker Data. At this stage, the Board has made no offers to any person to join the Board. Expansion of the Board is subject to various contingencies over which the Board has no control, including but not limited to the availability of suitably qualifi ed and experienced individuals with a desire to join the Board. Dicker Data Limited | Annual Report 2011 17 Corporate Governance Statement The Board will review its performance and composition at least on an annual basis as Dicker Data’s operations evolve, to ensure that it has the appropriate mix of expertise and experience, taking into account the size and nature of Dicker Data’s activities. In time, the Board may consider the appointment of independent directors as it deems appropriate. Directors may obtain independent professional advice at Dicker Data’s expense, subject to prior approval by the Chairman, on matters arising in the course of Dicker Data’s business. Directors also have unrestricted access to any employees of Dicker Data and, subject to the law, access to all Dicker Data records and information held by employees and external advisers. Recommendation 2.2: The chairperson should be an independent director. The current Chairman of the Board is not an independent Director. The Board considers this to be appropriate to Dicker Data’s size, structure and the nature of its activities. The roles of Chairman and Chief Executive Offi cer are currently being carried out by the same individual. The Board considers this to be appropriate to Dicker Data’s size, structure and the nature of its activities. Recommendation 2.3: The roles of chairperson and chief executive offi cer should not be exercised by the same individual. Recommendation 2.4: The board should establish a nomination committee. The Board does not have a nomination committee. The Board considers that its relatively small size and the expertise of its directors allow the full Board to perform a nomination committee function. Accordingly, the Board does not consider it necessary or appropriate in the context to establish a separate committee for this purpose. Recommendations of candidates for new Directors are made to and by the Board. The Board as a whole must make such appointments as it considers the most appropriate for Dicker Data. The Board will review the requirements and processes of Dicker Data at least on an annual basis, and otherwise as Dicker Data’s operations evolve, to ensure that the board nomination process is being appropriately handled. The Board will establish a nomination committee in the future as it deems appropriate. Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual directors. The Board reviews the performance of the Chief Executive Offi cer. Potential nominations to the Board are assessed by the full Board. The Board will consider undertaking a self assessment individual performance in 2012 if it is deemed appropriate. As part of the annual review of the performance of the Board, the appropriate size, composition and terms and conditions of appointment to and retirement from the Board are considered. The level of remuneration for non-executive Directors is considered with regard to practices of other public companies and the aggregate amount of fees approved by shareholders. The Board also reviews the appropriate criteria for Board membership collectively. 18 Dicker Data Limited | Annual Report 2011 The Board has established formal processes to review its own performance and the performance of individual Directors (including the Chief Executive Offi cer) and the committees of the Board. Board A process has been established to review and evaluate the performance of the Board. The Board is required to meet annually with the specifi c purpose of reviewing the role of the Board, assessing its performance over the previous 12 months, including comparison with others, and examining ways in which the Board can better perform its duties. The review will incorporate the performance of the Board. The annual review includes consideration of the following measures: (a) assessment of the performance of the Board over the previous twelve months having regard to the corporate strategies, operating plans and the annual budget; (b) review the Board’s interaction with management; (c) identifi cation of any particular goals and objectives of the Board for the next year; (d) review the type and timing of information provided to the Directors; and (e) identifi cation of any necessary or desirable improvements to Board. The method and scope of the performance evaluation will be set by the Board and which may include a Board self- assessment checklist to be completed by each Director. The Board may also use an independent adviser to assist in the review. Committees Similar procedures to those for the Board review will be applied to evaluate the performance of any Board committees established by Dicker Data. An assessment will be made of the performance of each committee against each charter and areas identifi ed where improvements can be made. Non-executive Directors The Chairman will have primary responsibility for conducting performance appraisals of non-executive Directors in conjunction with them, having particular regard to: (a) contribution to Board discussion and function; (b) degree of independence including any confl icts of interest; (c) availability for and attendance at Board meetings and other relevant events; (d) contribution to Company strategy; (e) membership of and contribution to any Board committees; and (f) suitability to Board structure and composition. Where the Chairman, following a performance appraisal, considers that action must be taken in relation to a Director’s performance, the Chairman must consult with the remainder of the Board regarding whether a Director should be counselled to resign, not seek re-election, or in exceptional circumstances, whether a resolution for the removal of a Director be put to shareholders. Dicker Data Limited | Annual Report 2011 19 Corporate Governance Statement Principal 3: Promote ethical and responsible decision making Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to: ■ The practices necessary to maintain confi dence in the company’s integrity ■ The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders ■ The responsibility and accountability of individuals for reporting and investigating reports of unethical practices. Dicker Data has two codes of conduct – one specifi cally for directors and key offi cers and another outlining the obligation to stakeholders. Generally, Dicker Data requires that its Directors, management and staff comply with and respect the law, conduct themselves professionally and commit to the standards of employment set down by Dicker Data. Dicker Data also requires that all potential confl icts of interest are reported and that its Code of Conduct for Dicker Data’s obligations to Stakeholders and Code of Conduct for directors and key offi cers be otherwise complied with. Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them. The company has not adopted a formal Diversity Policy at this stage. The Board will consider how appropriate such a policy is for the Company in due course. Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. The Board has not set any specifi c gender diversity objectives for the Company. The Board is of the view that there is an adequate balance between genders across the business and the numbers disclosed below refl ect this. Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board. The Company employees the follow ratio of women to men throughout the organisation: 33 Females (40%) : 48 Males (60%) The Board of Directors comprises fi ve members, two of which are women. Principal 4: Safeguard integrity in fi nancial reporting Recommendation 4.1: The board should establish an audit committee. The Board considers that its relatively small size and the expertise of directors allows the full Board to perform an audit committee function. Accordingly, the Board does not consider it necessary or appropriate in the context to establish a separate committee for this purpose. 20 Dicker Data Limited | Annual Report 2011 Rather, the Board will have processes and procedures in place which will address the issues that would otherwise be considered by the audit committee including: ■ ■ monitoring the independence of the external auditor who is required to confi rm such independence on at least a semi-annual basis; and monitoring and the performance and terms of the audit engagement on an annual basis and updating, changing or replacing them as appropriate. The Board will review the audit requirements and processes of Dicker Data at least on an annual basis, and otherwise as Dicker Data’s operations evolve, to ensure that its audit requirements are being appropriately handled. The Board will establish an Audit Committee in the future as it deems appropriate. Recommendation 4.2: Structure the audit committee so that it consists of: - only non-executive directors - a majority of independent directors - an independent chairperson, who is not chairperson of the board - at least three members For the reasons noted above and due to the relative size and nature of Dicker Data’s activities, the Board does not consider it necessary or appropriate to adopt Recommendation 4.2. However, should an Audit Committee be established in the future, it will be structured to be commercially cost effective and appropriate to Dicker Data’s size and structure, having regard to Recommendation 4.2. Recommendation 4.3: The audit committee should have a formal charter. For the reasons noted above and due to the relative size and nature of Dicker Data’s activities, the Board does not consider it necessary or appropriate to adopt Recommendation 4.3. However, should an Audit Committee be established in the future, a formal Audit Committee Charter will be adopted in compliance with Recommendation 4.3. Principal 5: Make timely and balanced disclosure Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance and disclose those policies or a summary of those policies. The Board aims to ensure that the market is properly informed of all the information that is required to be disclosed under the Listing Rules of the ASX. The ultimate determination as to whether or not to disclose in doubtful cases may be made by the Board and/or the Chairman, taking into account the overall situation of Dicker Data and, if necessary, legal or other advice. The Board will consider establishing a Continuous Disclosure Compliance Committee to deal with continuous disclosure issues when and if it is deemed necessary. In this event, the Continuous Disclosure Compliance Committee will consist of the Chairman, the Company Secretary and, where available, any other Director. Dicker Data has adopted a formal Continuous Disclosure Policy which is available on the company website on www.dickerdata.com.au. Under the Board’s Continuous Disclosure Policy, all senior personnel must ensure that all reporting staff report any material event or development within their area of responsibility to their manager and to one or more of the Chairman and the Company Secretary. Dicker Data Limited | Annual Report 2011 21 Corporate Governance Statement The Company Secretary will be the point of contact with the ASX. As a listed company, Dicker Data will not release information that is for release to the market to any person until it has given the information to the ASX and has received an acknowledgement from the ASX that the information has been released to the market. Principal 6: Respect the Rights of Shareholders Recommendation 6.1: Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. Dicker Data aims to convey to its shareholders pertinent information in a detailed, regular, factual and timely manner. The Board has ensured that the annual report includes relevant information about the operations of Dicker Data during the year, and changes in the state of affairs of Dicker Data, in addition to the other disclosures required by the Corporations Act. Information will be communicated to shareholders by Dicker Data through: 1. Placement of market announcements on Dicker Data’s web-site www.dickerdata.com.au after the information has been given to the ASX and the usual acknowledgement has been received; 2. The annual and interim fi nancial reports; 3. Disclosures to the ASX; 4. Notices and explanatory memoranda of annual general meetings; and 5. All shareholders are invited to attend and raise questions at the annual general meeting. All shareholders are welcome to communicate directly with Dicker Data. All queries will be answered to the maximum extent possible (with consideration given to commercially sensitive information, privacy requirements and Dicker Data’s disclosure obligations) and in a timely fashion. Dicker Data has not established any other formal policy document other than as noted above. Principle 7: Recognise and Manage Risk Recommendation 7.1: Companies should establish policies for the oversight and management and management of material business risks and disclose a summary of those policies. Although no formal policy has been adopted, the Board is committed to ensuring that the risks associated with Dicker Data’s business activities are properly identifi ed, monitored and managed and to embedding in its management and reporting systems a number of risk management controls. The Board is to monitor and receive advice on areas of operational and fi nancial risk, and consider strategies for appropriate risk management arrangements. Specifi c areas of risk to be regularly considered at Board meetings are to include intellectual property, changes in government regulation, technology changes, human resources, integrity of data, statutory compliance and continuous disclosure obligations. 22 Dicker Data Limited | Annual Report 2011 Recommendation 7.2: The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks. The Chief Executive Offi cer manages Dicker Data’s material business risks and reports to the Board. Materiality thresholds Dicker Data regularly reviews procedures, and ensures timely identifi cation of material information and materiality thresholds. Materiality judgments can only be made on a case by case basis, when all the facts are available. In accordance with Accounting Standard AASB 1031, the Board would consider an amount which is: (a) equal or more than 10% of an appropriate base amount to be material unless there is evidence or convincing argument to the contrary; and (b) equal to or less than 5% of an appropriate base amount to be immaterial unless there is evidence or convincing argument to the contrary. The level between 5% and 10% of an appropriate base amount is considered to be a subjective area to be resolved by the Board. Recommendation 7.3: The board should disclose whether it has received assurance from the chief executive offi cer (or equivalent) and the chief fi nancial offi cer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to fi nancial reporting risks. The Board confi rms that the Chief Executive Offi cer and the Chief Financial Offi cer have made the following certifi cations to the Board: The fi nancial records of the company have been properly maintained in accordance with Section 286 of the Corporations Act 2001; The fi nancial statements and notes thereto comply with the relevant accounting standards in all material respects as required by Section 296 of the corporations Act 2001; The fi nancial statements and notes thereto give a true and fair view, in all material respects, of the fi nancial position and performance of the company as required by Section 297 of the corporations Act 2001; and Any other matters are prescribed by the regulations in relation to the fi nancial statements and the accompanying notes are satisfi ed. Principle 8: Remunerate Fairly and Responsibly Recommendation 8.1: The board should establish a remuneration committee. The Board considers that its relatively small size and the expertise of directors allows the full Board to also perform a remuneration committee function. Accordingly, the Board does not consider it necessary or appropriate in the context to establish a separate committee for this purpose. Dicker Data Limited | Annual Report 2011 23 Corporate Governance Statement Rather, the Board will have processes and procedures in place which will address the issues that would otherwise be considered by the remuneration committee including ensuring that fees and remuneration to directors accord with the principles set out in 8.2 below. The Board will establish a remuneration committee in the future if it deems appropriate. Recommendation 8.2: The remuneration committee should be structure so that it: - consists of a majority of independent directors - is chaired by an independent chair - has at least three members Recommendation 8.3: Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives. With respect to non-executive Directors, the Board (or if established, the Remuneration Committee) is to ensure that: (a) fees paid to non-executive Directors are within the aggregate amount approved by shareholders and make recommendations to the Board with respect to the need for increases to that aggregate amount at the Annual General Meeting; (b) non-executive Directors are remunerated by way of fees (in the form of cash and/or superannuation benefi ts); (c) non-executive Directors are not provided with retirement benefi ts other than statutory superannuation entitlements; and (d) non-executive Directors are not entitled to participate in equity-based remuneration schemes designed for executives without due consideration and appropriate disclosure to Dicker Data’s shareholders. With respect to executives, the Board (or if established, the Remuneration Committee) is to ensure that: (a) executive remuneration packages involve a balance between fi xed and incentive pay, refl ecting short and long term performance objectives appropriate to Dicker Data’s circumstances and objectives; (b) a portion of executives’ remuneration is structured in a manner designed to link reward to corporate and individual performances; and (c) recommendations are made to the Board with respect to quantum of bonuses to be paid to executives. 24 Dicker Data Limited | Annual Report 2011 Statement of Comprehensive Income For the year ended 30 June, 2011 Revenue Changes in inventories Consumables used Employee benefi ts expense Depreciation and amortisation expenses Finance costs Insurance Profi t / (Loss) on Asset Disposals Bad Debts Credit Card Fees Consultancy Fees IPO Expenses Other expenses Profit before income tax Income tax expense Profi t for the period Profi t attributable to members of the company Other comprehensive income, net of tax Total Comprehensive Income for the period Total comprehensive income attributable to members of the company Earnings per share - basic earnings per share (cents) - diluted earnings per share (cents) The statement of comprehensive income is to be read in conjunction with the attached notes. Note 2 30-Jun-11 $ 30-Jun-10 $ 385,246,074 286,731,311 15,723,711 (373,589,310) (9,734,258) (698,434) (2,291,896) (913,609) (835,576) (713,028) (675,746) (514,693) (438,847) (1,776,044) 8,788,345 (2,656,301) 6,132,045 6,132,045 - (3,626,990) (263,255,496) (6,381,109) (506,199) (1,793,257) (743,596) (13,553) (1,046,380) (557,594) (282,798) - (2,015,307) 6,509,032 (1,985,628) 4,523,404 4,523,404 - 6,132,045 4,523,404 6,132,045 4,523,404 5.02 5.00 3.77 3.77 4 5 Dicker Data Limited | Annual Report 2011 25 Statement of Financial Position For the year ended 30 June, 2011 Note 30-Jun-11 30-Jun-10 01-Jul-09 $ $ $ 9 10 11 12 13 14 15 16 17 15 18 19 17 15 18 20 21 600 20,600 20,600 63,554,061 38,254,594 37,094,488 1 40,100,630 - 103,655,292 16,635,516 797,795 17,433,310 1 24,376,919 1,495,841 64,147,954 18,169,468 254,644 18,424,112 - 28,003,909 - 65,118,997 12,966,448 179,328 13,145,776 121,088,602 82,572,066 78,264,773 72,830,833 27,618,137 1,224,230 414,351 - 35,164,120 30,372,364 1,003,704 244,083 220,500 45,522,084 18,431,748 384,375 159,784 522,499 102,087,552 67,004,771 65,020,490 964,183 1,226,194 58,222 2,248,598 293,166 1,011,655 71,637 1,376,457 209,163 1,068,100 99,587 1,376,850 104,336,150 68,381,228 66,397,340 16,752,452 14,190,837 11,867,433 539,895 374,097 9,998 369,422 9,998 369,422 15,838,460 13,811,417 11,488,013 16,752,452 14,190,837 11,867,433 The statement of fi nancial position is to be read in conjunction with the attached notes. ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other fi nancial assets Inventories Non-current assets held for sale Total Current Assets Non-Current Assets Property, plant and equipment Deferred tax assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Current tax liabilities Short-term provisions Other Total Current Liabilities Non-Current Liabilities Borrowings Deferred tax liabilities Long-term provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained profi ts TOTAL EQUITY 26 Dicker Data Limited | Annual Report 2011 Statement of Changes In Equity For the year ended 30 June, 2011 Class ‘A’ Class ‘B’ Ordinary $ $ Balance at 1 July 2009 4,999 4,999 Balance at 1 July 2009 Restated (After change in accounting policy) 4,999 4,999 $ - - Retained Earnings Share Option Reserve Asset revaluation reserve Capital profi ts reserve Total $ $ $ $ $ 11,488,013 1,052,912 369,422 12,920,345 11,488,013 - 369,422 11,867,433 Profi t attributable to members of the company Subtotal Dividend Paid 4,523,404 4,523,404 4,999 4,999 - 16,011,417 369,422 16,390,837 (2,200,000) (2,200,000) Balance at 30 June 2010 4,999 4,999 - 13,811,417 369,422 14,190,837 Share capital restructure (4,999) (4,999) 9,998 Share Capital - IPO Costs associated with IPO Share Offer Share Option Reserve Profi t attributable to members of the company Subtotal Dividend Paid Balance at 30 June 2011 1,000,000 (465,428) (4,675) 4,675 6,132,043 - 1,000,000 (465,428) - 6,132,043 - - - - 539,895 19,943,460 4,675 (4,105,000) 539,895 15,838,460 4,675 - - 369,422 20,857,452 (4,105,000) 369,422 16,752,452 The statement of changes in equity is to be read in conjunction with the attached notes. Dicker Data Limited | Annual Report 2011 27 Statement of Cashfl ows For the year ended 30 June, 2011 Note 30-Jun-11 30-Jun-10 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of GST) Interest received 398,831,475 9,589 313,815,838 4,608 Payments to suppliers and employees (inclusive of GST) (388,785,275) (313,070,638) Interest and fi nance costs paid Income tax paid (2,291,896) (2,764,387) (1,551,783) (1,498,059) NET CASH FROM (USED IN) OPERATING ACTIVITIES 26(b) 4,999,506 (2,300,034) CASH FLOWS FROM INVESTING ACTIVITIES Payments for property plant and equipment Proceeds from sale of property plant and equipment Proceeds on sale of investments Shares-unlisted (2,240,621) 1,820,717 (7,222,061) 3,619 - (1) NET CASH FROM (USED IN) INVESTING ACTIVITIES (419,904) (7,218,443) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Share issue expenses Proceeds/(Repayment) from borrowings Payment of dividends 1,000,000 (470,103) (2,718,189) (2,411,310) - - 11,744,420 (2,200,000) NET CASH FROM (USED IN) FINANCING ACTIVITIES (4,599,602) 9,544,420 NET CASH FLOWS Cash at beginning of fi nancial year CASH AT THE END OF FINANCIAL YEAR The statement of cashfl ows is to be read in conjunction with the attached notes. (20,000) 20,600 600 25,943 (5,343) 20,600 28 Dicker Data Limited | Annual Report 2011 Notes to the Financial Statements For the year ended 30 June, 2011 The fi nancial statements cover Dicker Data Limited (Dicker Data) as an individual entity. Dicker Data is a listed public company, incorporated and domiciled in Australia. During the fi nancial year the company converted from a private proprietary limited company to a listed public company and changed its name from Rodin Corporation Pty Limited to Dicker Data Limited. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The fi nancial report is a general purpose fi nancial report that has been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) of the Australian Accounting Standards Board and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a fi nancial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the fi nancial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this fi nancial report are presented below. They have been consistently applied unless otherwise stated. The fi nancial report has been prepared on an accruals basis and is based on historical costs modifi ed by the revaluation of selected non-current assets, and fi nancial assets and fi nancial liabilities for which the fair value basis of accounting has been applied. The fi nancial report is presented in Australian Dollars and was authorised for issue by the directors on 7 September 2011. Changes in Accounting Policy Dicker Data has made a change to its accounting policy for the fi nancial year ending 30 June 2011 relating to the measurement of Property, Plant and Equipment, specifi cally in relation to Land and Buildings. This class of asset was previously carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The company has now elected to measure its Land and Buildings using the cost model permitted under AASB116 Property, Plant and Equipment. This change has been implemented as the directors are of the opinion that the cost model is the most appropriate method to provide reliable and more relevant information on the company’s fi nancial postion. The aggregate effect of the change in accounting policy on the annual fi nancial statements for the year ended 30 June 2011 is presented below. As the company has retrospectively applied a change in accounting policy and made a retrospective restatement of items in the fi nancial statements, an additional statement of fi nancial position as at the beginning of the earliest comparative period, being 1 July 2009, has been disclosed within the fi nancial statements. Dicker Data Limited | Annual Report 2011 29 Notes to the Financial Statements For the year ended 30 June, 2011 Changes in Accounting Policy (Continued) At the beginning of the earliest comparative period STATEMENT OF FINANCIAL POSITION EXTRACT 01-Jul-09 Reported Adjustments 01-Jul-09 Restated ASSETS Current Assets Non-current assets held for sale - - Total Current Assets Non-Current Assets Property plant and equipment Deferred tax assets Total Non-Current Assets 65,118,997 - 65,118,997 14,470,607 (1,504,159) 12,966,448 179,328 179,328 14,649,935 (1,504,159) 13,145,776 TOTAL ASSETS 79,768,932 (1,504,159) 78,264,773 LIABILITIES Non-Current Liabilities Deferred tax liabilities Total Non-Current Liabilities TOTAL LIABILITIES EQUITY Retained Profi ts Reserves TOTAL EQUITY 1,519,347 1,828,097 (451,247) (451,247) 1,068,100 1,376,850 66,848,587 (451,247) 66,397,340 11,488,013 1,422,334 (1,052,912) 11,488,013 369,422 12,920,345 (1,052,912) 11,867,433 30 Dicker Data Limited | Annual Report 2011 Changes in Accounting Policy (Continued) COMPREHENSIVE INCOME STATEMENT EXTRACT 30-Jun-10 Reported Adjustments 30-Jun-10 Restated Other comprehensive income net of tax Net gain (loss) on revaluation of land and buildings Total Comprehensive Income for the period (700,000) 3,823,404 700,000 700,000 - 4,523,404 At the end of the earliest comparative period ASSETS Current Assets Non-current assets held for sale Total Non-Current Assets Non-Current Assets Property plant and equipment Deferred tax assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Non-Current Liabilities Deferred tax liabilities Total Non-Current Liabilities Total Liabilities EQUITY Retained Profi ts Reserves TOTAL EQUITY 30-Jun-10 Reported Adjustments 30-Jun-10 Restated 2,000,000 64,652,113 (504,159) (504,159) 1,495,841 64,147,954 18,169,468 254,644 18,424,112 18,169,468 254,644 - 18,424,112 83,076,225 (504,159) 82,572,066 1,162,902 1,527,704 (151,247) (151,247) 1,011,655 1,376,457 68,532,475 (151,247) 68,381,228 13,811,417 722,334 14,543,749 (352,912) (352,912) 13,811,417 369,422 14,190,837 Dicker Data Limited | Annual Report 2011 31 Notes to the Financial Statements For the year ended 30 June, 2011 (a) Income Tax Income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profi t or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Current and deferred income tax expense (income) is charged or credited outside profi t or loss when the tax relates to items that are recognised outside profi t or loss. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profi t or loss. Deferred income tax expense refl ects movements in deferred tax asset and deferred tax liability balance during the year as well as unused tax losses. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates enacted or substantively enacted as at the end of the reporting period. Their measurement also refl ects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profi t will be available against which the benefi ts of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which signifi cant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (b) Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average cost. Net realisable value is the estimated selling price in the ordinary course of business. 32 Dicker Data Limited | Annual Report 2011 (c) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. The carrying amount of property, plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of expected net cash fl ows that will be received from the assets employment and subsequent disposal. The expected net cash fl ows have been discounted to present values in determining recoverable amounts. 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 benefi ts associated with the item will fl ow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the fi nancial period in which they are incurred. Depreciation The depreciable amount of all fi xed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated on a straight line basis over their estimated useful lives to the entity commencing from the time the asset is held ready for use. The useful life in years used for each class of depreciable asset are: Class of Fixed Asset: Buildings Plant and equipment Motor vehicles Useful Life 25 Yrs 4 - 16 2/3 Yrs 8 Yrs The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (d) Leases Leases of fi xed assets, where substantially all the risks and benefi ts incidental to the ownership of the asset, but not the legal ownership are transferred to the company are classifi ed as fi nance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefi ts remain with the lessor, are charged as expenses in the periods in which they are incurred. Dicker Data Limited | Annual Report 2011 33 Notes to the Financial Statements For the year ended 30 June, 2011 (e) Financial Instruments Initial recognition and measurement Financial instruments, incorporating fi nancial assets and fi nancial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for fi nancial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs. Where the instrument is classifi ed ‘at fair value through profi t or loss’ transactions costs are expensed to profi t or loss immediately. Classifi cation and subsequent measurement Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: (I) the amount at which the fi nancial asset or fi nancial liability is measured at initial recognition; (ii) less principal repayments; (iii) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and (iv) less any reduction of impairment. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction cost and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the fi nancial instrument to the net carrying amount of the fi nancial asset or fi nancial liability. Revisions to expected future net cash fl ows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profi t or loss. (i) Financial assets at fair value through profi t or loss Financial assets are classifi ed at ‘fair value through profi t or loss’ when they are either held for trading for the purpose of short term profi t taking. Such assets are subsequently measured at fair value with changes in carrying value being included in profi t or loss. The company has not held any fi nancial assets at fair value through profi t and loss in the current or comparative fi nancial year. (ii) Loans and receivables Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period, which will be classifi ed as non-current assets. Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. (iii) Held-to-maturity investments Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period, which will be classifi ed as current assets. 34 Dicker Data Limited | Annual Report 2011 If during the period the company sold or reclassifi ed more than an insignifi cant amount of the held-to-maturity investments before maturity, the entire category of held-to-maturity investments would be tainted and would be reclassifi ed as available-for-sale. (iv) Available-for-sale fi nancial assets Available-for-sale fi nancial assets are included in non-current assets, except for those which are expected to be disposed of within 12 months after the end of the reporting period, which will be classifi ed as current assets. (v) Financial liabilities Non-derivative fi nancial liabilities (excluding fi nancial guarantees) are subsequently measured at amortised cost. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At the end of each reporting period, the company assesses whether there is objective evidence that a fi nancial instrument has been impaired. In the case of available-for-sale fi nancial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of comprehensive income. (f) Impairment of assets At the end of each reporting period, the company assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profi ts. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. (g) Employee Benefi ts Provision is made for the company’s liability for employee benefi ts arising from services rendered by employees to the end of the reporting period. Employee benefi ts that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefi ts payable later than one year have been measured at the present value of the estimated future cash outfl ows to be made for those benefi ts. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting requirements. Those cash fl ows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash fl ows. Dicker Data Limited | Annual Report 2011 35 Notes to the Financial Statements For the year ended 30 June, 2011 (h) Provisions Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that an outfl ow of economic benefi ts will result and that outfl ow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. (i) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. (j) Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable. Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns. Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a fi nancial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial asset to the net carrying amount of the fi nancial asset. Other revenue is recognised when it is received or when the right to receive payment is established. All revenue is stated net of the amount of goods and services tax (GST). (k) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in expenses in the period in which they are incurred. (l) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Offi ce. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of fi nancial position are shown inclusive of GST. Cash fl ows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and fi nancing activities, which are disclosed as operating cash fl ows. (m) Contributed Equity Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of shares or options are shown in equity as a deduction, net of tax from proceeds. 36 Dicker Data Limited | Annual Report 2011 (n) Comparative Figures When required by Accounting Standards, comparative fi gures have been adjusted to conform to changes in presentation for the current year. (o) Critical Accounting Estimates and Adjustments The directors evaluate estimates and judgements incorporated into the fi nancial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company. The directors have identifi ed the following critical accounting policies for which signifi cant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the fi nancial results or the fi nancial position in future periods. Further details on the nature of these assumptions and conditions are noted below: Consumables Used Cost of goods are represented in the Statement of Comprehensive Income net of supplier rebates. Supplier rebates can be paid monthly, quarterly or half yearly. At the end of the fi nancial year an estimate of rebates due relating to the fi nancial year is accounted for based on best available information at the time of the rebate being paid. Income tax The company is subject to income taxes based on the income tax laws of Australia. Signifi cant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognises liabilities for anticipated tax expense based on it’s current understanding of the tax law. Where the fi nal tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. Recovery of deferred tax assets Judgement is required in assessing whether certain deferred tax assets and deferred tax liabilities are recognised on the Statement of Financial Position. Deferred tax assets including those arising from capital losses are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future capital profi ts. An assumption has been made that there is a likelihood that future capital profi ts will be earned. Estimation of useful lives of assets The company determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and defi nite life intangible assets. The useful lives could change signifi cantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Dicker Data Limited | Annual Report 2011 37 Notes to the Financial Statements For the year ended 30 June, 2011 Long service leave provision The liability for long service leave is recognised and measured at the present value of the estimated future cash fl ows to be made in respect of all employees at the reporting date. Provision for impairment of receivables The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specifi c knowledge of the individual debtors fi nancial position. The impairment for receivables has been calculated net of estimated insurance recoveries Provision for impairment of inventories The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence. Share Option Reserve The share option reserve represents fair value of options on grant date. Fair value is independently determined using Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. (p) Adoption of New & Revised Accounting Standards During the current year, the company has adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. The adoption of these Standards has not had any material impact on the fi nancial statements of the company. Any new revised or amending Accounting standards or interpretation that are not yet mandatory have not been adopted. 38 Dicker Data Limited | Annual Report 2011 (q) New Accounting Standards for Application in Future Periods The following Australian Accounting Standards issued or amended which may be applicable to the company but are not yet effective and have not been adopted in preparation of the fi nancial statements at reporting date. The new and amended Accounting Standards and interpretations are not expected to have any material impact on the company. AASB No. Title Operative Date (Annual reporting periods beginning on or after) Application by Company (Annual reporting periods beginning on or after) 9 10 11 12 13 Financial Instruments 1-Jan-13 1-Jul-13 Consolidation Joint Arrangements 1-Jan-13 1-Jul-13 1-Jan-13 1-Jul-13 Disclosure of Interests in Other Entities 1-Jan-13 1-Jul-13 Fair Value Measurement 1-Jan-13 1-Jul-13 1053 Application of Tiers of Australian Accounting Standards 1-Jul-13 1-Jul-13 2009 – 12 Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031and Interpretations 2, 4, 16, 1039 & 1052] 1-Jan-11 1-Jul-11 2010 – 2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements 1-Jul-13 1-Jul-13 2010 – 4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] 1-Jan-11 1-Jul-11 2010 – 5 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] 1-Jan-11 1-Jul-11 Dicker Data Limited | Annual Report 2011 39 Notes to the Financial Statements For the year ended 30 June, 2011 (q) New Accounting Standards for Application in Future Periods AASB No. Title Operative Date (Annual reporting periods beginning on or after) Application by Company (Annual reporting periods beginning on or after) 2010 – 6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets 1-Jul-11 1-Jul-11 [AASB 1 & AASB 7] 2010 – 7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] 1-Jan-13 1-Jul-13 2010 – 8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets 1-Jan-12 1-Jul-12 [AASB 112] 2010 – 9 Amendments to Australian Accounting Standards – Severe Hyperinfl ation and Removal of Fixed Dates for First-time Adopters [AASB 1] 2010 – 10 Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009-11 & AASB 2010-7] 2011 – 1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project [AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121, AASB 128, AASB 132, AASB 134 and Interpretations 2, 112 & 113] 2011 – 2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project – Reduced Disclosure Requirements [AASB 101 & AASB 1054] 1-Jul-11 1-Jul-11 1-Jan-13 1-Jul-13 1-Jul-11 1-Jul-11 1-Jul-13 1-Jul-13 2011 – 4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements 1-Jul-13 1-Jul-13 [AASB 124] 40 Dicker Data Limited | Annual Report 2011 2. REVENUE AND OTHER INCOME Sales revenue: Sale of goods Other revenue: Interest received Discounts received Recoveries Other revenue Total Revenue (a) Interest received from: Other corporations 3. EXPENSES FOR THE YEAR Expenses: Finance costs Cost of sales Bad and doubtful debts Net loss on disposal of non-current assets: Property, plant and equipment 4. INCOME TAX EXPENSE (a) The components of tax expense comprise: Current tax Over/(Under) provision in respect of prior years Deferred tax Over/(Under) provision in respect of prior years Note 2(a) 15 2011 $ 2010 $ 384,043,299 284,789,338 9,589 580,258 386,885 226,043 4,608 596,407 901,310 439,648 385,246,074 286,731,311 9,589 4,608 2,291,896 357,865,599 713,028 1,793,257 266,882,488 1,046,380 (835,576) (13,553) 2,798,409 (12,966) 2,785,443 (145,846) 16,704 (129,142) 2,656,301 2,117,389 - 2,117,389 (153,753) 21,992 (131,761) 1,985,628 (b) The prima facie tax payable on profi t before income tax is reconciled to the income tax as follows: Prima facie tax payable on profi t before income tax at 30% (2010: 30%) 2,636,504 1,952,709 Add tax effect of: Under provision for income tax in prior year Non-deductible expenses Income tax expense attributable to entity The applicable weighted average effective tax rates are as follows: 3,738 16,059 2,656,301 30.23% 21,991 10,928 1,985,628 30.17% Dicker Data Limited | Annual Report 2011 41 Notes to the Financial Statements For the year ended 30 June, 2011 Note 2011 2010 5. EARNING PER SHARE (a) Basic earnings per share (cents) From continuing operations attributable to the ordinary equity holders of the company (b) Diluted earnings per share (cents) From continuing operations attributable to the ordinary equity holders of the company (c) Weighted average number of shares used as denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Weighted average number of ordinary shares and options granted are used as the denominator in calculating diluted earnings per share 6. KEY MANAGEMENT PERSONNEL COMPENSATION Short-term benefi ts Post employment benefi ts Total compensation 7. AUDITORS’ REMUNERATION Auditing or reviewing the fi nancial report Other services 8. DIVIDENDS Distributions paid Dividend paid: Fully franked ‘A’ class dividend of $360.072 (2010: $220.044) per share franked at the rate of 30% (2010: 30%) Fully franked ‘B’ class dividend of $211.042 (2010: $220.044) per share franked at the rate of 30% (2010: 30%) Fully franked ‘Ord’ class dividend of $0.01c (2010: $0.00) per share franked at the rate of 30% (2010: 30%) 42 Dicker Data Limited | Annual Report 2011 5.02 5.00 3.77 3.77 122,151,000 120,000,000 122,734,000 120,000,000 $ 1,454,360 129,816 1,584,177 92,377 63,190 155,567 $ 765,676 67,629 833,305 110,000 56,645 166,645 1,800,000 1,100,000 1,055,000 1,100,000 1,250,000 - 4,105,000 2,200,000 Note 2011 $ 2010 $ 8. DIVIDENDS (continued) Dividends: Balance of franking account at year end adjusted for franking credits arising from: - payment of provision for income tax - dividends recognised as receivables, franking debits arising from payment of proposed dividends, and franking credits that may be prevented from distribution in subsequent fi nancial years 9. CASH AND CASH EQUIVALENTS Cash on hand Cash at bank 10. TRADE AND OTHER RECEIVABLES CURRENT Other receivables Trade debtors Less provision for impairment of receivables Loans to related corporations: Dicker Data Direct Pty Ltd Rodin Cars Limited (NZ) Prepaid IPO expenses Loans to directors: D.J. Dicker F.T. Brown (a) Loans to related corporations: Beginning of the year Loans advanced / repaid End of year 5,419,215 5,265,689 600 - 600 9,106,871 54,582,609 (135,418) 54,447,190 - - - - - 600 20,000 20,000 3,633,092 33,360,728 (106,001) 33,254,727 4,397 895,541 303,511 95,001 68,325 63,554,061 38,254,594 899,937 (899,937) - 609,070 290,867 899,937 Dicker Data Limited | Annual Report 2011 43 Notes to the Financial Statements For the year ended 30 June, 2011 (b) Provision for impairment of receivables Current trade receivables are generally receivable on 30 days from end of month terms. A provision for impairment is recognised when there is objective evidence that an individual trade receivable is impaired. The provision for impairment of receivables has been calculated net of estimated insurance recoveries. Movements in the provision for impairment of receivables: Opening balance Charge for the year Closing balance Note 2011 $ 106,001 29,417 135,418 2010 $ 89,852 16,149 106,001 Past due but not impaired The following table details the company’s trade receivables exposed to credit risk with ageing analysis and impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled within the terms and conditions agreed between the company and the customer or counterparty to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specifi c circumstances indicating that the debt may not be fully repaid to the company. Customers with balances past due but without provision for impairment of receivables amount to $2,140,523 as at 30 June 2011 (2010: $895,794). The company did not consider a credit risk on these balances after reviewing credit terms of customers and trading history. Note Past due and impaired : Gross Impaired Receivables over 90 days Less: Expected Insurance Recoveries Past due but not impaired:: 31 – 60 days overdue 61 – 90 days overdue 11. FINANCIAL ASSETS CURRENT Available-for-sale fi nancial assets (a) (a) Available-for-sale fi nancial assets: Shares in unlisted companies 44 Dicker Data Limited | Annual Report 2011 2011 $ 403,684 (268,266) 135,418 1,856,730 12,958 2,140,523 1 1 2010 $ 532,147 (426,146) 106,001 370,325 525,469 895,794 1 1 12. INVENTORIES CURRENT At cost: Stock on hand Less provision for impairment of stock 13. NON-CURRENT ASSETS HELD FOR SALE CURRENT Freehold land – at fair value Note 2011 $ 40,472,105 (371,475) 40,100,630 2010 $ 24,675,554 (298,636) 24,376,918 - 1,495,841 On 22nd March, 2011 the company sold the freehold land at Taren Point for $1.8m plus GST. Net profi t on disposal of this property has been included in net loss on disposal of assets. 14. PROPERTY, PLANT AND EQUIPMENT Note Freehold land Property improvements Less accumulated depreciation Buildings Less accumulated depreciation Total land and buildings Fitout Costs - 230 Captain Cook Drive Less accumulated depreciation Plant and equipment Less accumulated depreciation Motor vehicles Less accumulated depreciation Total plant and equipment 2011 $ 6,903,666 - - - 8,225,022 (132,952) 8,092,070 14,995,736 1,025,457 (87,033) 938,424 1,355,869 (924,575) 431,294 626,903 (356,842) 270,061 1,639,780 2010 $ 8,433,970 986,557 (542,658) 443,899 8,330,904 (92,972) 8,237,932 17,115,801 323,585 - 323,585 1,208,305 (842,355) 365,950 665,553 (301,421) 364,132 1,053,667 Total property, plant and equipment 16,635,516 18,169,468 Dicker Data Limited | Annual Report 2011 45 Notes to the Financial Statements For the year ended 30 June, 2011 14(a) MOVEMENT IN CARRYING AMOUNTS Movements in carrying amounts for each class of property, plant and equipment. Freehold land Property improvements Buildings Plant and equipment Motor vehicles Total $ $ $ $ $ $ Balance at 1 July 2009 11,411,100 580,941 1,640,381 527,022 311,163 14,470,607 Additions Disposals (977,130) (2,000,000) - - 6,628,542 438,587 132,233 6,222,232 - (12,225) (4,947) (2,017,172) Depreciation expense - (137,042) (30,991) (263,849) (74,317) (506,199) Carrying amount at 30 June 2010 8,433,970 443,899 8,237,932 689,535 364,132 18,169,468 Additions Capitalised borrowing costs Disposals Depreciation expense 860,820 1,038,893 32,700 1,932,413 272,930 272,930 (1,530,304) (342,698) (1,115,669) (19,833) (32,386) (3,040,890) (101,201) (163,943) (338,876) (94,385) (698,405) Carrying amount at 30 June 2011 6,903,666 - 8,092,070 1,369,719 270,061 16,635,516 15. TAX (a) Liabilities CURRENT Provision for income tax NON CURRENT Deferred Tax Liability The balance comprises temporary differences attributable to: Amounts recognised in profi t or loss: Land and Buildings Plant and Equipment Accrued income Deferred tax liability Movements in Deferred Tax Liability Opening Balance Credited / (charged) to profi t or loss Credited / (charged) to equity Closing Balance 46 Dicker Data Limited | Annual Report 2011 Note 2011 $ 2010 $ 1,224,230 1,003,704 219,831 50,563 955,800 137,951 64,188 809,516 1,226,194 1,011,655 1,011,655 214,539 - 1,226,194 1,068,100 (56,445) - 1,011,655 Note (b) Assets NON CURRENT Deferred Tax Assets The balance comprises temporary differences attributable to: Amounts recognised in profi t or loss: Provision for receivables impairment Provision for employee entitlements Accrued expenses Inventory Capitalised expenditure Tax losses Amounts recognised in equity: Transaction costs on share issue Deferred tax asset Movements in Deferred Tax Asset Opening Balance Credited / (charged) to profi t or loss Credited / (charged) to equity Closing Balance 16. TRADE AND OTHER PAYABLES CURRENT Trade creditors Other creditors 17. BORROWINGS CURRENT Bank overdraft Lease liability Bank loan - secured NON CURRENT Lease liability (a) Total current and non-current secured liabilities: Bank overdrafts Bank loans Lease liability 2011 $ 40,625 141,772 38,671 78,108 114,768 224,276 159,575 797,795 254,644 343,681 199,470 797,795 72,337,197 493,637 72,830,833 20,230,379 229,625 7,158,133 27,618,137 2010 $ 31,800 94,716 17,102 66,749 46,277 - - 256,644 179,328 75,316 - 254,644 34,391,926 772,194 35,164,120 20,146,263 48,787 10,174,237 30,372,364 964,183 293,166 20,230,379 7,158,133 1,193,808 28,582,320 20,146,263 10,177,314 341,953 30,665,530 Dicker Data Limited | Annual Report 2011 47 Notes to the Financial Statements For the year ended 30 June, 2011 The carrying amounts of non-current assets pledged (b) as security are: Mortgaged land and buildings Note 2011 $ 2010 $ 16,635,516 19,439,386 (c) The bank overdraft, and loans are secured by a fi rst registered company charge over all assets and undertakings of the company, a fi xed charge over all debtors, fi rst registered mortgages over the freehold properties owned by the company, a deed of priority between the fi nancier and a major supplier to the aggregate of the fi nance facility and credit card limits and assignment of trade debtor insurance. The covenants within the bank borrowings require meeting minimum interest cover ratios, current ratio and tangible net worth calculations, dividend and a limit on the maximum amount of debt. In September 2010, Dicker Data did not meet the current ratio requirement, this was reported to the fi nancier and no action has been taken in relation to this breach. Dicker Data has complied with all other externally imposed capital requirements during the year. 18. PROVISIONS Provision for long service leave: Opening balance at 1 July Additional provisions raised Amounts used Balance at 30 June 2011 Provision for annual leave: Opening balance at 1 July Additional provisions raised Balance at 30 June 2011 Total Provisions Opening balance at 1 July Additional provisions raised Amounts used Balance at 30 June 2011 Analysis of Total Provisions Current Non-current 19. OTHER LIABILITIES CURRENT Income in advance 48 Dicker Data Limited | Annual Report 2011 $ $ 172,982 66,196 (7,431) 231,748 142,738 98,088 240,826 315,720 164,284 (7,431) 472,573 414,351 58,222 472,573 148,035 52,898 (27,951) 172,982 111,336 31,401 142,738 259,371 84,299 (27,950) 315,720 244,083 71,637 315,720 - 220,500 Note 2011 20. ISSUED CAPITAL 4,999 fully paid ‘A’ class shares 4,999 fully paid ‘B’ class shares 125,000,000 fully paid Ordinary class shares The company has share capital amounting to: 125,000,000 fully paid Ordinary class shares (a) Ordinary ‘A’ Class Shares At beginning of reporting period Converted to Ordinary class shares At the end of the reporting period ‘A’ class shares were converted to ordinary shares during the year. (b) Ordinary ‘B’ Class Shares At beginning of reporting period Converted to Ordinary class shares At the end of the reporting period ‘B’ class shares were converted to ordinary shares during the year. (c) Ordinary Class Shares At beginning of reporting period Converted and split ‘A’ class shares Converted and split ‘B’ class shares Shares Issued IPO Cost associated with issuing shares, net of tax At the end of the reporting period Date 22.10.10 Date 22.10.10 Date 22.10.10 22.10.10 19.01.11 19.01.11 $ - - 539,895 539,895 $ 4,999 (4,999) - $ 4,999 (4,999) - $ 4,999 4,999 1,000,000 (470,103) 539,895 2010 $ 4,999 4,999 - 9,998 No. 4,999 (4,999) - No. 4,999 (4,999) - No. - 60,000,000 60,000,000 5,000,000 125,000,000 Fully paid ordinary shares rank equally in all respects. All ordinary shares issued as at 30 June 2011 are fully paid. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. The issue of shares in the company, subject to legislative requirements, is under the control of the directors. Dicker Data Limited | Annual Report 2011 49 Notes to the Financial Statements For the year ended 30 June, 2011 (d) Share Options The following options had been granted at balance date: 1. 1,500,000 Options to acquire 1,500,000 fully paid ordinary shares, exercisable at $0.20 anytime within 36 months from the date of granting to Newport Capital Pty Ltd, expiring 24 January, 2014. On the 9th of August Newport Capital Pty Ltd exercised all the options held at the strike price of $0.20c per share. The company has received the payment for the options and has issued the shares to Newport Capital Pty Ltd. 2. 1,200,000 Options to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 anytime within 36 months from the date of granting to Stonebridge Securities Limited and related parties, expiring 24 January, 2014. (e) Capital Management Management controls the capital of the company in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and to ensure that the company can fund its operations and continue as a going concern. The company’s debt and capital includes ordinary share capital and fi nancial liabilities, supported by fi nancial assets. Management effectively manage the company’s capital by assessing the company’s fi nancial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholder and share issues. There have been no changes in the strategy adopted by management to control the capital of the company since the prior year. 21. RESERVES (a) Capital Profi ts Reserve (Pre-CGT) The capital profi ts reserve records non-taxable profi ts on sale of investments. (b) Share Option Reserve The share option reserve is used to recognise the grant fair value of options issued but not exercised. Note 2011 $ 2010 $ 369,422 369,422 4,675 374,097 - 369,422 The share option reserve represents fair value of options on grant date. Fair value is independently determined using Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. 50 Dicker Data Limited | Annual Report 2011 Note 22. CAPITAL AND LEASING COMMITMENTS (a) Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the fi nancial statements Payable: not later than 12 months between 12 months and fi ve years (b) Capital Expenditure Commitments Capital expenditure commitments contracted for: Construction of warehouse and offi ce facilities including roadworks as per development application 23. RELATED PARTY TRANSACTIONS 2011 $ 104,152 323,627 427,779 2010 $ 62,183 225,807 287,990 409,417 1,506,795 Other than the noted transactions all dealings with related parties are trivial or domestic in nature and occurred within a normal employee/ customer/supplier relationship on terms and conditions no more favourable than those which it is reasonable to expect would have been adopted than if dealing at arm’s length in the circumstances. Transactions with related parties: Note (a) Loans to/(from) directors The directors had unsecured loan accounts, which have since been paid out. (b) Loans to related entities Dicker Data Ltd has made loans to associated companies. These loans were unsecured and at call. All loans were paid out in the current year 24. OPERATING SEGMENTS $ - - $ 163,326 899,937 During the year the company operated in one business segment being wholesale distribution of computers and related products. It’s operations were carried out solely in Australia. 25. FINANCIAL RISK MANAGEMENT The company’s fi nancial instruments consist mainly of accounts receivable and payable and fi nance and lease liabilities. The totals for each category of fi nancial instruments are as follows: Financial Risk Management Financial Assets Cash and cash equivalents Loans and receivables Total Financial Assets Note 9 10 $ 600 63,554,061 63,554,661 $ 20,600 38,175,318 38,195,918 Dicker Data Limited | Annual Report 2011 51 Notes to the Financial Statements For the year ended 30 June, 2011 Financial Liabilities Trade and other payables Borrowings Total Financial Liabilities Note 16 17 2011 $ 2010 $ 72,830,833 35,164,120 28,582,320 30,372,364 101,413,154 65,536,484 Financial Risk Management Policies The directors’ overall risk management strategy seeks to assist the company in meeting its fi nancial targets, whilst minimising potential adverse effects on fi nancial performance. Although the company does not have any documented policies and procedures, the key management personnel manage the different types of risks to which the company is exposed by considering risk and monitoring levels of exposure to interest rate and credit risk and by being aware of market forecasts for interest rates. Ageing analyses and monitoring of specifi c credit allowances are undertaken to manage credit risk. Liquidity risk is managed through general business budgets and forecasts. The main purpose of non-derivative fi nancial instruments is to raise fi nance for company operations. The company does not have any derivative instruments at year end. The directors and key management personnel meet on a regular basis to analyse fi nancial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. Specifi c Financial Risk Exposures and Management The main risks the company is exposed to through its fi nancial instruments are interest rate risk, liquidity risk and credit risk. (a) Credit risk Exposure to credit risk relating to fi nancial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a fi nancial loss to the company. Credit risk is reviewed regularly by the directors and key management personnel. It arises from exposures to customers, as well as through deposits with fi nancial institutions. The company’s exposure to credit risk is limited due to debtor insurance which is held over its trade receivables. The insurance policy limits the exposure of the company to 10% of the individual customer’s balance plus the excess as specifi ed in the policy after an aggregate fi rst loss of $200,000. Receivables balances are monitored on an ongoing basis with the result that the company’s exposure to bad debts has not been signifi cant. It is the company’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures including an assessment of their credit rating, fi nancial position, past experience and industry reputation. Credit limits are set for each individual customer in accordance with parameters set by the directors. These credit limits are regularly monitored. Customers that do not meet the company’s strict credit policies may only purchase in cash or using recognised credit cards. 52 Dicker Data Limited | Annual Report 2011 Credit risk exposures The maximum exposure to credit risk by class of recognised fi nancial assets at balance date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classifi cation of those fi nancial assets (net of any provisions) as presented in the statement of fi nancial position. The company has no signifi cant concentration of credit risk with any single counterparty or group of counterparties. Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. (b) Liquidity Risk Liquidity risk arises from the possibility that the company might encounter diffi culty in settling its debts or otherwise meeting its obligations related to fi nancial liabilities. The company manages this risk through the following mechanisms: - preparing forward-looking cash fl ow analyses in relations to its operational, investing and fi nancing activities; - monitoring undrawn credit facilities; - obtaining funding from a variety of sources; - maintaining a reputable credit profi le; - managing credit risk, related to fi nancial assets. The tables below refl ect an undiscounted contractual maturity analysis for fi nancial liabilities. Financial guarantee liabilities are treated as payable on demand since the company has no control over the timing of any potential settlement of the liability. Cash fl ows realised from fi nancial instruments refl ect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash fl ows presented in the table to settle fi nancial liabilities refl ect the earliest contractual settlement dates and do not refl ect management’s expectations that banking facilities will roll forward. Financial liability maturity analysis Financial liabilities due for payment Trade and other payables Borrowings Total contractual outfl ows Financial liabilities due for payment Borrowings Total contractual outfl ows Financial Liabilities Trade and other payables Borrowings Total expected outfl ows Note 16 17 2011 $ Within 1 Year 72,830,833 27,618,137 100,448,971 1 to 5 Years 964,183 964,183 72,830,833 28,582,320 101,413,154 2010 $ 35,164,120 30,372,364 65,536,484 293,166 293,166 35,164,120 30,665,530 65,829,650 Dicker Data Limited | Annual Report 2011 53 Notes to the Financial Statements For the year ended 30 June, 2011 Financial assets pledged as collateral Certain fi nancial assets have been pledged as security for debt and their realisation into cash may be restricted subject to terms and conditions attached to the relevant debt contracts. (c) Interest Rate Risk The company’s main interest rate risk arises from borrowings. All borrowings are at variable interest rates and expose the company to interest rate risk which will impact future cash fl ows and interest charges and is indicated by the following fl oating interest rate fi nancial liabilities: Floating rate instruments Bank Overdrafts Debtor fi nance Bank loans - secured Sensitivity Analysis Note 17 17 17 2011 $ 20,230,379 - 7,158,133 27,388,512 2010 $ 20,146,263 3,077 10,174,237 30,323,577 The company has performed a sensitivity analysis relating to its exposure to interest rate risk at balance date. If interest rates changed by -/+ 1% from the year end rates with all other variables held constant, post tax profi t would have been $191,720 lower/ higher (2010: $212,265 lower/higher) as a result of higher/lower interest payments. The company constantly analyses its interest rate exposure. Within this analysis consideration is given to alternative fi nancing and the mix of fi xed and variable interest rates. 26. CASH FLOW INFORMATION (a) Reconciliation of Cash Cash at the end of fi nancial year as shown in the Statement of Cash Flows is reconciled to the related items in the statement of fi nancial position as Cash Cash at bank $ 600 - 600 $ 600 20,000 20,600 54 Dicker Data Limited | Annual Report 2011 (b) Reconciliation of cash fl ow from operations with profi t Profi t after income tax Non-cash fl ows in profi t: Depreciation Loss on disposal of fi xed assets Changes in Assets & Liabilities: Decrease (increase) in current inventories Decrease (increase) in current receivables & Other Decrease (increase) in deferred tax assets (Decrease) increase in deferred tax liabilities Note 2011 $ 2010 $ 6,132,045 4,523,404 698,405 - - (15,723,711) (24,476,648) (543,151) 214,539 506,627 13,553 - 3,626,991 (869,840) (75,316) (56,445) (Decrease) increase in payables & Other 37,450,765 (10,644,685) (Decrease) increase in provisions (Decrease) increase in non current assets (Decrease) increase in current tax liabilities 190,945 835,792 220,526 56,349 - 619,328 Net cash provided by (used in) operating activities 4,999,506 (2,300,034) (c) Credit Stand-by Arrangement and Loan Facilities The company has bank overdraft, credit cards, cash advance and asset fi nance facility amounting to $28,566,720 (2010: $26,320,000). The unused limits of the facility amount to $948,583 (2010: $1,259,965). 27. CONTINGENT LIABILITIES The company had disclosed in its Half Year Report that it had received a Statement of Claim for preference payments. The claim was in relation to payments received from a debtor that had since gone into liquidation. Whilst the claim was highly defendable based on legal advice sought, in an effort to avoid incurring further costs and inconvenience of trial a confi dential settlement was agreed on and a confi dential Deed of Settlement was entered into on 11 August 2011. This is due to be paid by 12th September, 2011. This liability will be reduced by our entitlement to claim a proportion of the settlement amount under our debtor insurance policy. The directors believe this will not have a material impact on the fi nancial statements. Dicker Data Limited | Annual Report 2011 55 Shareholder Information The shareholder information set out below was applicable as at 6 September, 2011 1. Ordinary Share Capital As at 6 September 2011, the issued capital of the Company was 126,500,000 ordinary fully paid shares. 2. Distribution of equity securities Analysis of numbers of equity security holders by size of holding Holding 1 to 1,000 1,001 to 5000 5,001 to 10,000 10,001 to 100,000 100,000 and over ORDINARY SHARES OPTIONS Number of Holders Number of Shares Number of Holders Number of Shares 2 7 336 21 8 374 1,800 22,850 3,354,597 644,818 122,475,935 126,500,000 0 0 0 0 2 2 1,200,000 1,200,000 There were 2 holders of less than a marketable parcel of ordinary shares. 3. Twenty largest holders of quoted equity securities Name Mr David John Dicker Ms Fiona Tudor Brown Mr D Dippie & Mrs J Dippie & Bramwell Grossman Trustees (Dippie Family A/c) Bluedale Pty Ltd (Comb Superannuation Fund A/c) Can Elturan Mr S F Borness & Mrs C A BornessMrs J M Bond 147 049 938 Pty Ltd <938 Super Fund A/c> Mr D A Dyer & Mrs A M Dyer Newport Capital Group Pty Ltd Mr R Keown & Mrs T J Keown Mr B Robins Mr J P Steinert Mr P J Buncle Mr N J Remfrey & Mrs S A Remfrey Penson Australia Nominees Pty Ltd Seacomber Investments Pty Ltd Mr T H N Trinh ABN AMRO Clearing Sydney Nominees Pty Ltd Mr M A Renier Hilin & Mrs S L Helin Mr R A Humphries Nomex Nominees Pty Ltd Mr L H Trinh Total for TOP 20 56 Dicker Data Limited | Annual Report 2011 Number Held Percentage of issued shares % 63,750,000 56,250,000 925,925 602,310 340,000 230,000 227,700 150,000 100,000 86,112 57,132 52,868 32,501 30,000 30,000 25,000 25,000 25,000 20,000 20,000 20,000 20,000 20,000 50.40% 44.47% 0.73% 0.48% 0.27% 0.18% 0.18% 0.18% 0.12% 0.08% 0.07% 0.05% 0.04% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 123,039,548 97.46% 4. Substantial Holders Substantial holders in the company are set out below: Name Mr David John Dicker Ms Fiona Tudor Brown Number Held Percentage of issued shares % 63,750,000 56,250,000 50.40% 44.47% 5. Voting Rights The voting rights attaching to each class of equity securities are set out below: (a) Ordinary Shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. (a) Options No voting rights. Dicker Data Limited | Annual Report 2011 57 Director’s Declaration The directors of the company declare that: 1. In the Directors’ opinion the fi nancial statements and notes, as set out on pages 5 to 55 are in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the company’s fi nancial position as at 30 June 2011 and of its performance, for the fi nancial year ended on that date; and (b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001. 2. the fi nancial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board as disclosed in Note 1; and 3. there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations by the Chief Executive Offi cer and the Chief Financial Offi cer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors. David Dicker CEO and Chairman Sydney, 7 September 2011 58 Dicker Data Limited | Annual Report 2011 Auditor’s Independence Declaration To the Directors of Dicker Data Limited I declare to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2011 there have been: no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit, and no contraventions of any applicable code of professional conduct in relation to the audit. PKF Arthur Milner Partner 7 September 2011 Sydney Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. Dicker Data Limited I Annual Report 2011 I 59 Independent Auditor's Report To the members of Dicker Data Limited Report on the Financial Report We have audited the accompanying financial report of Dicker Data Limited, which comprises the statement of financial position as at 30 June 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. Dicker Data Limited I Annual Report 2011 I 60 Opinion In our opinion: (a) the financial report of Dicker Data Limited is in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the company’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 10 to 13 of the directors’ report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Dicker Data Limited for the year ended 30 June 2011 complies with section 300A of the Corporations Act 2001. PKF Arthur Milner Partner 7 September 2011 Sydney Dicker Data Limited I Annual Report 2011 I 61 230 Captain Cook Drive, Kurnell NSW 2231 Phone: 1800 688 586 Fax: 1800 688 486 www.dickerdata.com.au ABN: 95 000 969 362