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K3 Business Technology GroupAnnuAl RepoRt 2013 DickeR DAtA limiteD ABN: 95 000 969 362 Contents Background 1 Our Brands 2 Board of Directors & Senior Management 3 CEO & Chairman’s Commentary 4 Highlights Summary 5 Directors’ Report 15 Corporate Governance Statement 21 Statement of Profit or Loss and Other Comprehensive Income 22 Statement of Financial Position 23 Statement of Changes In Equity 24 Statement of Cash Flows 25 Notes to the Financial Statements 50 Director’s Declaration 51 Auditor’s Declaration of Independence 52 Independent Auditor’s Report 54 Shareholder Information Dicker Data is an Australian owned and operated, ASX listed hardware distributor with over 35 years’ experience. The dedicated sales and presales teams are comprised of experienced specialists that are focused on using their in-depth knowledge to help customers’ tailor solutions to suit their client’s needs. Selling to over 3000 resellers, Dicker Data prides itself on establishing and developing strong long term relationships with its customer base. Dicker Data’s customer- centric approach allows for dynamic reseller engagement and the ability to shift with changing market conditions. Dicker Data’s product portfolio is comprised of leading technology vendors including HP, Toshiba, ASUS, Lenovo, Microsoft and other tier 1 global brands. Currently positioned as the leading distributor for several of these vendors in Australia, Dicker Data has enjoyed steady growth despite the current economic climate. Dicker Data plans to continue this growth through reseller enablement, expanding on the success experienced with the competitive strategies. bb Dicker Data LimiteD Dicker Data LimiteDOur Brands 11 AnnuAl RepoRt 2013BoARD of DiRectoRs & senioR mAnAgement Board of Directors 01. DAviD DiCker chairman and ceO 02. MAry STOjCevSki executive Director 03. MiCHAeL DeMeTre executive Director 04. CHriS PriCe executive Director 05. FiOnA BrOwn Non-executive Director Senior Management Senior management team serving at year end 01. DAviD DiCker chairman and ceO 02. MAry STOjCevSki Chief Financial Officer 03. MiCHAeL DeMeTre Logistics Director 04. CHriS PriCe commercial Director 06. vLADiMir MiTnOveTSki category manager 04 05 06 01 02 03 22 Dicker Data LimiteDceo & chAiRmAn’s commentARy As promised in our H1 report, we exceeded last year’s results, and by almost $1m. nPAT was $9.2m vs $8.3m. Up 11.7%. in the current economic climate this is an outstanding result by everyone at Dicker Data. Welcome to our third full year report as a public company. The last year has been a pretty difficult one, with economic conditions still subdued. As a result sales were slightly lower than the previous financial year. $451m vs $455m. Down less than 1 percent. However, as promised in our H1 report, we exceeded last year’s results, and by almost $1m. NPAT was $9.2m vs $8.3m. Up 11.7%. In the current economic climate this is an outstanding result by everyone at Dicker Data. The year ahead still looks difficult, but there should be some improvement after the election. Despite relentless negativity in the media, I remain confident that conditions are not that bad and are steadily improving. The share of our business with other Vendors had a pleasing increase delivering 40% of our revenue with HP providing the rest. We finally got access to HP’s printers and their supplies products. We now have the full HP range. During the year we completed the addition of 5,000 square meters of additional warehouse space, more than doubling our existing capacity. Our shares have been trading extremely well and closed at 90 cents on 28 June. As we listed at 20 cents, this is a very satisfying outcome, although we are still struggling to convince the analyst community. thank you to all our customers for another very good year. David Dicker ceO and chairman Sydney, 29 August 2013 33 AnnuAl RepoRt 2013highlights summARy for the year ended 30 June 2013 results Summary - year end 30 june 2013 Key Financial Data total revenue Net profit before tax Earnings before interest, tax, depreciation [EBITDA] Net profit after tax [NPAT] earnings per share (cents) Dividends paid Dividends per share (cents) Dividend payout ratio Operating Revenue ($m), Movement % YOY 500 456 452 400 300 200 100 0 384 267 285 6.7% 34.9% 18.7% -0.9% FY09 FY10 FY11 FY12 FY13 2013 451,582 13,260 17,414 9,246 7.28 7,946 6.25 85.9% 2012 455,902 12,265 16,098 8,276 6.55 6,780 5.36 81.9% Net Profit before Tax ($m) 15000 12000 9000 6000 3000 0 13,260 12,265 8,788 6,135 6,509 FY09 FY10 FY11 FY12 FY13 Total Revenue declined by -0.9% to $452m (2012: $456m) Net Profit before Tax increased by 8.1% to $13.2m (2012:$12.2m) Total Dividends Paid in Fy (cents per share) 0,08 1,0 Share Price ($) as at the end of Fy 0.90 0.0625 0.0536 0.03 FY11 FY12 FY13 0,8 0,6 0,4 0,2 0,0 0.44 FY11 FY12 FY13 Dividend payments increased by 16.6% to 6.25c (2012: 5.36c) Share Price increased by 105% to $0.90c as at 30 June 2013 0,07 0,06 0,05 0,04 0,03 0,02 0,01 0,00 44 Dicker Data LimiteD DiRectoRs’ RepoRt The directors present their report on Dicker Data Limited (Dicker Data), together with the financial statements for the year ended 30 June 2013. Principal Activities The principal activities of the company during the year were wholesale distribution of computer hardware and related products. There were no significant changes in the nature of the activities carried out during the year. Dividends Record Date Payment Date Type Cents $’000 Dividends declared and paid during the financial year: 25 Sep 2012 07 Jan 2013 27 Mar 2013 25 Sep 2012 11 Jan 2013 09 Apr 2013 Final 2012 Interim 2013 Interim 2013 Dividends declared during the financial year but not paid: 03 Jul 2013 10 Jul 2013 Interim 2013 $0.0200 $0.0100 $0.0200 $0.0125 $0.0625 2,530 1,266 2,554 1,596 7,946 Total dividend paid for the year ended 30 June 2013 was 6.25c per share (2012: 5.36c), an increase of 16.6%. This represents a dividend payout ratio of 85.9% (2012: 81.9%) in line with the company’s dividend policy. Our dividend policy provides for fully franked dividends to be paid on a quarterly basis, with the aim to pay out 100% of the underlying after tax profits from operations after taking into account projected capital expenditure and cash requirements. Operating and Financial review A snapshot of the operations of the company for the full year and the results of those operations are as follows total revenue Gross Profit Operating expenses Net Profit After Tax Net Profit After Tax $’000 451,582 37,375 24,478 13,260 8.3% 5.4% 2.9% 9,246 2.0% $’000 455,902 33,113 21,714 12,265 8,276 7.3% 4.8% 2.7% 1.8% $’000 Change % (4,320) -0.9% 4,262 12.9% (2,764) 12.7% 995 970 8.1% 11.7% Revenue Total revenue for the full year was $452m (2012: $456m), down by 0.9% on the same period last year. This was a solid result given the downturn in PC sales in SMB sectors impacting revenues from some of our key vendors. With most of the decline coming from HP Personal Services Group and Toshiba, this was significantly offset by increase in revenues from Lenovo (new vendor since June 2012) and strong education orders in second half of FY13, resulting in an increase year on year in revenue for the second half. 55 for the year ended 30 June 2013AnnuAl RepoRt 2013DiRectoRs’ RepoRt continued for the year ended 30 June 2013 Operating revenue for the second half of FY13 was $238m, an increase of $4m year on year compared to second half of FY12, partly attributable to strong education orders and partly due to the increased capacity and improved logistic capability provided by the extension to our warehousing facility. As reported in our half year report the new warehouse extension was operational from February 2013. Gross Profit Gross profit for the full year was $37.4m (2012: $33.1m), an increase of 12.9%. In line with our continued strategy in aligning our revenue with more profitable product lines, the increase in gross profit can be attributed to a number of factors and changes implemented throughout the year. Firstly we were able to maximise vendor rebates by consistently meeting buying and sell through targets. There were also savings in freight as result of a review of freight costs and changes to our freight policy and in the second half of the year we were able to take advantage of additional settlement discounts as a result of the new purchase finance facility implemented in February 2013. Operating Expenses Operating costs for the 2013 financial year increased by $2.7m. This was largely accounted for by an increase in employment expenses. Staff costs increased by $3m as a result of additional headcount, an increase in profit based commission payments and an increase in leave provisions as a result of additional headcount. This was partially offset by savings across a number of key areas including transactional banking costs as a result of the changes in banking arrangements implemented in the later part of the FY12 financial year. There was also a significant reduction in bad debts written off during the year compared to last year. the reduction in bad debts demonstrates a continued focus on our credit management policy. Profit Despite lower revenues in 2013 financial year, net profit before tax increased to $13.2m (2012: $12.2m) up by 8.1%, as a result of higher gross profit. Net Profit after tax amounted to $9.2m (2012: $8.3m), an increase of 11.8% for the full year. Earnings per share increased by 11.1% to 7.28 cents per share. 66 Balance Sheet Trade receivables decreased from $69m to $64m, with an improvement to debtor days outstanding further demonstrating our focus on collections and a further reflection of improvements in the credit management cycle. However, inventory increased from $41m to $50m. With the take on of new vendors in the last quarter of FY13 and in particular the extension of our HP distribution agreement to include the full range of HP Printing and Supplies products there were some larger strategic inventory buys in the last quarter and particularly in June which puts us well placed for the first quarter of the new financial year. Property, plant and equipment increased from $17m to $20m, with $3.4m towards an extension of our existing warehouse by 5,000 square metres completed in February 13. This investment is reflected under investing activities on the statement of cash flows. as reported in our half year report the company entered into a new $20m inventory purchase finance facility with Macquarie Bank in February 2013. As a result trade payables decreased from $59m to $47m, but borrowings increased from $46m to $63m. The whole of this facility was used to pay for HP inventory purchases. Short term provisions for annual leave and long service leave also increased from $580k to $902k. Net assets increased from $19m to $20m, an increase of 8.7% over the year. earnings Per Share Basic Earnings Per Share (cents) Diluted Earnings Per Share (cents) * * on basis options exercised 2013 7.28 2012 6.55 7.24 6.49 Significant Changes in the State if Affairs Extension of Warehouse In August, 2012 the company entered into a contract to extend the current warehouse facility by an additional 5,000 square metres. Construction was funded by drawing on our existing finance facilities provided by St George Bank. This is reflected in our cash flow statement from investing activities with outflows of $3.4m for payments for property, plant and equipment. Dicker Data LimiteDThe extension more than doubled the existing warehouse capacity and sets the company up for future growth. Construction commenced in September 2012 and the project was completed 20 February, 2013. New Finance Facility with Macquarie Bank In January 2013 the company entered into a new $20m inventory purchase finance facility with Macquarie Bank. Under the terms of the agreement the facility is available to the company for the purchase of inventory from HP, the company’s largest vendor. This new facility has enabled the company to achieve greater flexibility in inventory purchases, including the opportunity to take advantage of early settlement discounts available and has provided greater flexibility in day to day management of working capital. As the facility has worked well in terms of providing the anticipated benefits expected and as a result of the extension of our HP supply agreement the limit on this facility has been increased by $5m in August 2013. Extension of Hewlett Packard Agreement In June 2013 the company was pleased to announce the extension of our distribution agreement with HP to include access to the full range of HP Printing and Supplies products, allowing us to now offer the full range of HP products to our resellers. Access to this product set will be an integral factor in driving increased HP revenue for the 2014 financial year. Exercise of Options During the year all the outstanding options were fully exercised. The options granted to Stonebridge Securities Ltd and related parties were to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 expiring on 24 January 2014. As at 18 February 2013 all options had been fully exercised. The table below is a summary of shares issued. Date Option Holder Options Exercised Strike Price Funds Received Shares Issued Shareholder 12 Dec 2012 SB2 Securities Pty Ltd 100,000 14 Jan 2013 SB2 Securities Pty Ltd 200,000 14 Jan 2013 Exit Out Pty Ltd 200,000 04 Feb 2013 SB2 Securities Pty Ltd 150,000 04 Feb 2013 12 Feb 2013 Exit Out Pty Ltd 200,000 Exit Out Pty Ltd 200,000 18 Feb 2013 SB2 Securities Pty Ltd 150,000 0.25c 0.25c 0.25c 0.25c 0.25c 0.25c 0.25c $25,000 100,000 Oldco Nominees Pty Ltd $50,000 200,000 Oldco Nominees Pty Ltd $50,000 200,000 Exit Out Pty Ltd $37,500 150,000 Oldco Nominees Pty Ltd $50,000 200,000 $50,000 200,000 Exit Out Pty Ltd Exit Out Pty Ltd $37,500 150,000 Oldco Nominees Pty Ltd There were no other significant changes in the state of affairs of the company during the year. Significant Events After Balance Date No matter or circumstance has arisen since 30 June 2013 that has significantly affected or may significantly affect the company’s operations, the results of those operations or the state of affairs in future financial years. Likely Developments and expected results In the 2014 financial year we will continue with the strategy set in place in 2013 to focus on product sets related to off-premise IT capabilities (datacentre and cloud strategies), which is anticipated will result in higher infrastructure, service and annuity revenues. We are constantly reviewing our vendor and supplier mix with the objective of long term profitability for Dicker Data. The increased warehouse capacity will also position the company for future growth and improvements in efficiency. 77 AnnuAl RepoRt 2013 DiRectoRs’ RepoRt continued for the year ended 30 June 2013 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. Directors The following persons were directors of Dicker Data Limited during the whole of the financial year end up to the date of this report. Directors were in office for this entire period unless otherwise stated. David J Dicker Fiona T Brown Mary Stojcevski Chris Price michael Demetre David Dicker – Chief Executive Officer (CEO) and Chairman David is the co-founder of the company and has been a director of the company since its inception. David’s role as ceO requires focus on Dicker Data’s business strategy and decision making and under David’s strategic guidance the company has enjoyed material growth, establishing Dicker Data as one of the leading australia- based distributors of it products. Interest in Equities 63,750,000 Ordinary shares in Dicker Data Limited Interest in Contracts Nil Special Responsibilities chairman and responsible for the overall business management as chief executive officer. Other Current Listed Company Directorships None Other Current Listed Company Directorships Held in Previous 3 Years None 88 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 has been involved with the business since it started in 1978 and has been a director of the company since 1983. Fiona acted as General Manager and Marketing manager of Dicker Data from the inception of the business until 2004 when she left her executive position. Fiona’s business development, negotiation, management and leadership skills were of material importance to the success and growth of Dicker Data. 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 56,270,757 Ordinary 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 Officer Mary joined Dicker Data as Financial Controller in 1999. Her responsibilities include all of the financial management, administration and compliance functions of the company. Prior to joining Dicker Data Mary had over 15 years’ experience in accounting and taxation. Mary holds a Bachelor of Commerce Degree with a major in Accounting from the University of New South Wales. mary is also an executive Director of the company and has been a director since 31 August 2010. Interest in Equities 10,000 Ordinary shares in Dicker Data Limited 40,136 Ordinary Shares held by Stojinvest Pty Ltd as trustee for Stojinvest Superannuation Fund Interest in Contracts Nil Dicker Data LimiteDSpecial Responsibilities Responsible for the overall financial 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 brings over 14 years of IT industry experience to the company. Prior to joining Dicker Data, Chris worked in various positions with distributors Ingram Micro and Tech Pacific as well as with vendors Dell and IBM. Chris holds a Bachelor of Commerce Degree from the University of Newcastle. Chris is also an Executive Director of the company and has been a director since 21st September 2010. 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, where 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 and has been a director since 21st September 2010. Interest in Equities 10,000 shares in Dicker Data Limited Interest in Contracts Nil 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 Company Secretary Mrs Leanne Ralph B.Bus, ACIS, AAICD was appointed to the position of company Secretary on the 8th of February 2011. Leanne has over 22 years’ experience as a Chief Financial Officer and Company Secretarial roles for various publicly listed and unlisted entities. Leanne is a qualified Chartered Secretary and Director of Boardworx Australia Pty Ltd which provides bespoke outsourced company secretarial services to companies. 99 AnnuAl RepoRt 2013DiRectoRs’ RepoRt continued for the year ended 30 June 2013 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 Eligible to Attend Number Attended 5 5 5 5 5 5 5 5 5 5 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 (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. 1010 Executives The executive pay and reward framework includes the following components: – Base pay and benefits – 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-financial benefits 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 financial and non-financial 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 profit margin targets. Using a profit target ensures variable reward is only available when value has been created for shareholders and when profit 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 profit with reconciliation at the end of the financial year against full-year actual profit. 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 reflect 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. Dicker Data LimiteD(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. Details of Remuneration for Directors and Key Management Personnel Short term Cash Salary & Fees FY Short term Incentive Cash Bonus Long- Term Share Based Payments Super- Long annuation Non-Cash Service Shares Options Total FBT Reportable Leave Proportion of remuneration that is performance based % of Value of remuneration that consists of share Based Payments $ % $ $ $ $ $ $ $ Executive Directors David Dicker – Chief Executive Officer 2013 2012 Chris Price – Commercial Director 750,657 2013 2012 701,385 67,559 63,125 67,134 12,313 Mary Stojcevski – Chief Financial Officer 2013 200,000 136,670 30,300 2012 200,000 123,410 29,107 Michael Demetre – Logistics Director 200,000 2013 136,670 2012 200,000 123,410 30,300 29,107 Non-Executive Directors Fiona Brown 2013 2012 Other Key Management Personnel $ 0 0 885,350 776,823 100.00% 100.00% 366,970 352,517 366,970 352,517 37.24% 35.01% 37.24% 35.01% 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Vladimir Mitnovetski – Category Manager 2013 571,077 51,397 2012 393,022 35,372 622,474 428,394 100.00% 100.00% 0.00% 0.00% Total 2013 400,000 1,595,074 179,557 67,134 Total 2012 400,000 1,341,227 156,710 12,313 0 0 0 0 0 2,241,764 0 1,910,250 1111 AnnuAl RepoRt 2013DiRectoRs’ RepoRt continued for the year ended 30 June 2013 (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 Officer and Executive Director of the company on an as-needed basis. the Consultancy Agreement is dated 26 October 2010. The engagement is for an indefinite 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. 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 confirms Mr Price’s continuous service with the company for all purposes commenced from 21 September 2010. The appointment of Mr Price is for an unspecified 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 profit per month, subject to net profit 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 the motor vehicle expenses to be deducted from his gross remuneration. the eSa also contains a number of post- termination restraints. 1212 Executive Service Agreement for Mary Stojcevski The company has appointed Mary Stojcevski as Chief Financial Officer 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 confirms Ms Stojcevski’s continuous service with the company for all purposes commenced from 31 August 2010. The appointment of Ms Stojcevski is for an unspecified 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 $200,000 per annum plus superannuation at 9%. Ms Stojcevski is also entitled to a performance bonus equal to 1% of the company’s net profit before tax, subject to net profit 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 confirms Mr Demetre’s continuous service with the company for all purposes commenced from 21 September 2010. The appointment of Mr Demetre is for an unspecified time. Either the company or Mr Demetre may terminate the ESA with 3 months’ notice. the remuneration payable to mr Demetre comprises a base remuneration of $200,000 per annum plus superannuation at 9%. Mr Demetre is also entitled to a performance bonus equal to 1% of the Company’s net profit before tax, subject to net profit margin before tax not being less than 2.5%. The ESA also contains a number of post-termination restraints. Executive Service Agreement for Vladimir Mitnovetski The company has appointed Vladimir Mitnovetski as Category Manager by way of an Executive Service Agreement (ESA). The ESA is dated 1 January 2011. The appointment of Mr Mitnovetski is for an unspecified time. either the company or mr mitnovetski may terminate the ESA with 3 months’ notice. The remuneration payable to Mr Mitnovetski is $22,750 per month, subject to achieving monthly net profit targets for his Business Unit as set at the start of each financial year. On achievement of the monthly target for his Business Unit the company will pay a further 15% of net profit that is above $250,000 per month. the eSa also contains a number of post- termination restraints. Dicker Data LimiteD(d) Share-based compensation No shares, rights, or options were granted to directors or key management personnel during the year ended 30 June 2013, 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 financial year with greater emphasis given to improving performance over the prior year. Despite a tougher year and small decrease in revenue, management were still able to achieve an increase in net profit before tax by 8.11%. As a large proportion of the executives remuneration package is based on net profit outcomes the average executive remuneration also increased. Since 2008, the net profit before tax has grown at an average rate of 25% per annum, whilst the average executive remuneration has increased by an average of 23% per annum. Shareholder wealth has also increased at an average rate of 23% per annum over this period. This concludes the remuneration report which has been audited. Share Options During the year all the outstanding options were fully exercised. The options granted to Stonebridge Securities Ltd and related parties were to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 expiring on 24 January 2014. As at 18 February 2013 all options had been fully exercised. The table below is a summary of shares issued. Date Option Holder Options Exercised Strike Price Funds Received Shares Issued Shareholder 12 Dec 2012 SB2 Securities Pty Ltd 100,000 14 Jan 2013 SB2 Securities Pty Ltd 200,000 14 Jan 2013 Exit Out Pty Ltd 200,000 04 Feb 2013 SB2 Securities Pty Ltd 150,000 04 Feb 2013 12 Feb 2013 Exit Out Pty Ltd 200,000 Exit Out Pty Ltd 200,000 18 Feb 2013 SB2 Securities Pty Ltd 150,000 0.25c 0.25c 0.25c 0.25c 0.25c 0.25c 0.25c $25,000 100,000 Oldco Nominees Pty Ltd $50,000 200,000 Oldco Nominees Pty Ltd $50,000 200,000 Exit Out Pty Ltd $37,500 150,000 Oldco Nominees Pty Ltd $50,000 200,000 $50,000 200,000 Exit Out Pty Ltd Exit Out Pty Ltd $37,500 150,000 Oldco Nominees Pty Ltd Indemnification and Insurance of Directors and Officers During the financial year, Dicker Data Limited paid a premium of $23,136 to insure the directors and members of the executive management team of the company against any liability incurred by them in their capacity as officers, unless the liability arises out of conduct involving a lack of good faith. The executive officers of the company are also indemnified against any liability for costs and expenses incurred in defending civil or criminal proceedings involving them as such officers if judgement is given in their favour or if they are acquitted or granted relief. indemnity and insurance of Auditor The company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. 1313 AnnuAl RepoRt 2013The directors are satisfied 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 51. This report is made in accordance with a resolution of the directors. David Dicker ceO and chairman Sydney, 29 August 2013 DiRectoRs’ RepoRt continued for the year ended 30 June 2013 Proceedings on Behalf of the Company No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. environmental regulation and Performance The company is subject to the requirements of the Product Stewardship (Televisions and Computers) Regulations 2011. rounding of Amounts the company is of a kind referred to in class Order 98/100, issued by the Australian Securities and Investments Commission, relating to ‘rounding- off’. amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. Officers of the Company Who Are Former Audit Partners of Bdo There are no officers of the company who are former audit partners of BDO East Coast Partnership. Auditor independence and non-Audit Services BDO East Coast Partnership continue in office in accordance with section 327 of the Corporations Act 2001. During the year an amount of $67,230 in fees was paid or payable to the auditor for non-audit services. Non-audit services The company employs BDO 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 satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 1414 Dicker Data LimiteDcoRpoRAte 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 the company 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 www.dickerdata.com.au. 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 ceO and also monitoring the performance of key management personnel. the performance of the ceO is measured by comparing actual performance against planned performance in terms of the budget, the company’s share price and corporate strategy development. the ceO is responsible for assessing the performance of the key executives within Dicker Data. The basis of evaluation of senior executives is 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. Performance evaluations are undertaken annually, in September, by managers. Some key responsibilities of the Board are as follows: This policy is reviewed annually. 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 financial 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 financial, operational, compliance and risk management controls function adequately; and report to shareholders. f. 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 Officer (CEO) or executive team, must be made by the Board. 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 five Directors, including one non-executive Director: Name David Dicker Position chairman and chief Executive Officer Fiona Brown Non-Executive Director Mary Stojcevski Executive Director Chris Price Executive Director michael Demetre executive Director When considering independence, Dicker Data considered the following recommendation made by the ASX Corporate Governance Council: 1515 AnnuAl RepoRt 2013coRpoRAte goveRnAnce stAtement continued for the year ended 30 June 2013 Expansion of the Board is subject to various contingencies including some over which the Board has no control, including but not limited to the availability of suitably qualified and experienced individuals with a desire to join the Board. Directors may obtain independent professional advice at the company’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, history of the business and the nature of its activities. Recommendation 2.3: The roles of chairperson and chief executive officer should not be exercised by the same individual. the roles of chairman and ceO are currently being carried out by the same individual. The Board considers this to be appropriate for the company’s current operational structure and the nature of its activities. Recommendation 2.4: The board should establish a nomination committee. The Board does not currently 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 to be 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 believes that the requirements and nomination processes are currently appropriate for the company. the Board will establish a nomination committee in the future should the requirement arise. 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 officer 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 officer 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 group member other than as a director.’ the ceO 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 currently no independent Directors on the Board. The Board considers that its composition is appropriate to Dicker Data’s size and operational structure, the directors’ experience and their collective knowledge of Dicker Data’s assets. Details on the skills, experience and expertise of each director in office are outlined on page 9 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. 1616 Dicker Data LimiteDRecommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual directors. The Board has considered the merits of undertaking a review of its performance and the performance of individual directors and has determined that the current size and composition of the board allows for: a. decisions to be made appropriately and expediently; b. a range of different perspectives to be put forward regarding issues before the board; c. a range of different skills to be brought to board deliberations; and d. board decisions to be made in the best interests of Dicker Data as a whole rather than of individual shareholders or interest groups. As a result of this determination, the Board has chosen not to undertake this review process for the year ended 30 June 2013. It is the view of the Board that the existing composition of the Board is optimal for current stage of the business and that the operations do not require additional skill sets at this point in time to drive the business and shareholder returns. The Board acknowledges the benefit of establishing a process to review and evaluation the performance of individual directors and the Board as a whole and as the business evolves, the Board expects to conduct a review of its performance and composition, to ensure that it has the appropriate mix of expertise and experience, taking into account the size and nature of Dicker Data’s activities. There are currently no committees of the Board which require a review. 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 confidence 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 specifically for directors and key officers 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 conflicts of interest are reported and that it’s code of conduct for Dicker Data’s obligations to Stakeholders and code of Conduct for directors and key officers 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. Currently, the Board does not consider a formal policy to be warranted as the Company is one which has an open policy to diversity, including gender diversity. This is evident in the number of females to males in the whole organization, at management level and also on the Board. This information is disclosed below. 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 specific gender diversity objectives for the company as it does not yet have a formal Diversity Policy. The Board is of the view that there is an adequate balance between genders across the business and the numbers disclosed below reflect this. 1717 AnnuAl RepoRt 2013coRpoRAte goveRnAnce stAtement continued for the year ended 30 June 2013 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: Organisation-wide: 37 Females (40%): 56 Males (60%) Senior Executive Positions: The Board of Directors: 2 Females: 3 Males Principal 4: Safeguard integrity in financial reporting Recommendation 4.1: The board should establish an audit committee. The Board considers that its relatively small size and the expertise of existing 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. 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 confirm 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 1818 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 company has adopted a continuous Disclosure Policy that 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. Under the Board’s Continuous Disclosure Policy, all senior personnel must ensure that they report any material event or development within their area of responsibility to their manager and to one or more of the CEO, CFO and the Company Secretary. The Company Secretary is 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. The Continuous Disclosure Policy is available on the company website on www.dickerdata.com.au. Dicker Data LimiteDPrincipal 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 financial 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 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 identified, monitored and managed and to embedding in its management and reporting systems a number of risk management controls. The Board monitors and receive advice on areas of operational and financial risk, and considers strategies for appropriate risk management arrangements. Specific areas of risk to be regularly considered at Board meetings are to include intellectual property, changes in government regulation, technology changes, human resources, statutory compliance and continuous disclosure obligations. 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 ceO and cFO manages Dicker Data’s material business risks and reports to the Board. materiality thresholds Dicker Data regularly reviews procedures, and ensures timely identification 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. 1919 AnnuAl RepoRt 2013coRpoRAte goveRnAnce stAtement continued for the year ended 30 June 2013 Recommendation 7.3: The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (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 financial reporting risks. The Board confirms that the Chief Executive Officer and the Chief Financial Officer have made the following certifications to the Board: The financial records of the company have been properly maintained in accordance with Section 286 of the Corporations Act 2001; The financial 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 financial statements and notes thereto give a true and fair view, in all material respects, of the financial 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 financial statements and the accompanying notes are satisfied. 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. Rather, the Board will have processes and procedures in place that will address the issues that would otherwise be considered by the remuneration committee. Recommendation 8.2: The remuneration committee should be structured so that it: – consists of a majority of independent directors – is chaired by an independent chair – has at least three members The Board will establish a remuneration committee in the future if it deems appropriate. For reasons stated above, the Board does not consider that there is a need for a separate board committee to carry out remuneration- related functions. 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 ensures 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 benefits); c. non-executive Directors are not provided with retirement benefits 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. there is currently only one non-executive director on the Board of Dicker Data, Fiona Brown, and she does not currently receive any remuneration for her role. With respect to executives, the Board ensures that: a. executive remuneration packages involve a balance between fixed and incentive pay, reflecting 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. 2020 Dicker Data LimiteDstAtement of pRofit oR loss AnD otheR compRehensive income Revenue Sales revenue Other revenue: interest received recoveries Other revenue Expenses changes in inventories Purchases of inventories employee benefits expense Depreciation and amortisation Finance costs Other expenses Profit before income tax expense income tax expense Profit after income tax expense for the year Profit attributable to members of the company Other comprehensive income, net of tax Total comprehensive income for the year Total comprehensive income attributable to members of the company Earnings per share basic earnings per share (cents) diluted earnings per share (cents) Notes 2013 $’000 2012 $’000 451,219 455,036 4 107 252 5 592 269 451,582 455,902 8,362 1,223 (422,206) (423,146) (15,780) (12,767) (700) (3,455) (4,543) (684) (3,149) (5,114) (438,322) (443,637) 13,260 12,265 (4,014) (3,989) 9,246 9,246 – 9,246 9,246 8,276 8,276 – 8,276 8,276 7.28 7.24 6.55 6.48 3 4 4 4 5 6 6 The statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes. 2121 for the year ended 30 June 2013AnnuAl RepoRt 2013 stAtement of finAnciAl position as at 30 June 2013 ASSETS Current Assets cash and cash equivalents trade and other receivables inventories Total Current Assets Non-Current Assets Property, plant and equipment intangible assets Deferred tax assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities trade and other payables Borrowings current tax liabilities Short-term provisions Total Current Liabilities Non-Current Liabilities Borrowings Deferred tax liabilities Long-term provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to Equity Holders issued capital reserves retained profits TOTAL EQUITY Notes 2013 $’000 2012 $’000 10 11 12 13 14 15 16 17 15 18 17 15 18 20 21 505 64,429 49,685 222 68,671 41,323 114,619 110,216 19,573 16,548 173 783 93 621 20,529 17,262 135,148 127,478 47,190 63,187 1,539 902 58,520 46,145 1,342 580 112,818 106,587 588 1,254 341 2,183 959 1,183 202 2,343 115,001 108,930 20,147 18,548 1,145 369 18,633 20,147 844 370 17,334 18,548 The statement of financial position is to be read in conjunction with the attached notes. 2222 Dicker Data LimiteD stAtement of chAnges in equity Balance at 1 July 2011 Profit after income tax for the year Other comprehensive income for the year net of tax total comprehensive income for the year Transactions with owners in their capacity as owners: Share issue Share Option reserve Dividend Paid (Note 9) Issued Capital $’000 Retained Profits $’000 540 15,837 – – – 300 4 – 8,276 – 8,276 – – (6,780) Balance at 30 June 2012 844 17,333 Profit after income tax for the year Other comprehensive income for the year net of tax total comprehensive income for the year Transactions with owners in their capacity as owners: Share Issue (Note 19) Share Option Reserve (Note 19) Dividend Paid (Note 9) Balance at 30 June 2013 – – – 300 1 – 9,246 – 9,246 – – (7,946) 1,145 18,633 Share Option Reserve $’000 5 – – – – (4) – 1 – – – – (1) – – Capital profits reserve $’000 369 – – – – – – Total Equity $’000 16,751 8,276 – 8,276 300 – (6,780) 369 18,547 – – – – – – 9,246 – 9,246 300 – (7,946) 369 20,147 The statement of changes in equity is to be read in conjunction with the attached notes. 2323 for the year ended 30 June 2013AnnuAl RepoRt 2013 stAtement of cAsh flows CASH FLOWS FROM OPERATING ACTIVITIES receipts from customers (inclusive of GSt) Payments to suppliers and employees (inclusive of GST) interest received interest and other finance costs paid income tax paid Notes 2013 $’000 2012 $’000 500,462 495,798 (497,720) (501,911) 4 (3,455) (3,908) 5 (3,149) (3,738) NET CASH FROM (USED IN) OPERATING ACTIVITIES 26 (4,617) (12,994) CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Payments for intangibles NET CASH FROM (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Proceeds/(Repayment) from borrowings Payment of dividends NET CASH FROM (USED IN) FINANCING ACTIVITIES NET CASH FLOWS cash at beginning of financial year CASH END OF FINANCIAL YEAR The statement of cash flows is to be read in conjunction with the attached notes. 13 14 (3,737) – (103) (3,840) (970) 325 (93) (738) 19 301 304 16,671 18,521 (8,232) (4,871) 8,740 13,954 283 222 505 222 1 222 10 2424 for the year ended 30 June 2013Dicker Data LimiteD notes to the finAnciAl stAtements The financial statements cover Dicker Data Limited (Dicker Data) as an individual entity. Dicker Data is a listed public company incorporated and domiciled in australia. 1. Summary of Significant Accounting Policies Basis of Preparation The financial report is a general purpose financial 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, as appropriate for profit oriented entities. australian accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial reporting Standards (iFrS). material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. The financial report is presented in Australian Dollars and was authorised for issue by the directors on 29 August 2013. 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 profit 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 profit or loss when the tax relates to items that are recognised outside profit 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 financial 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 profit or loss. Deferred income tax expense reflects 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 reflects 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 profit will be available against which the benefits 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 significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. 2525 for the year ended 30 June 2013AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 1. Summary of Significant Accounting Policies Depreciation (continued) b. 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. c. Trade Receivables Trade receivables, which are non-interest bearing and generally due for settlement within 30 days from end of month, are recognised initially at fair value and subsequently measured at amortised cost, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectable are written off by reducing the carrying amount directly. a provision for impairment of trade receivables is raised when there is objective evidence that the company will not be able to collect all amounts due according to original terms. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable may be impaired. the amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate. Other receivables are recognised at amortised cost, less any provision for impairment. d. 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. e. 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 depreciable amount of all fixed 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 is: Class of Fixed Asset Buildings Property Improvements Plant and equipment Motor vehicles Useful Life 25 years 10 – 20 years 2 – 10 years 8 years 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 re-valued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. f. Intangible Assets intangible assets acquired are initially recognised at cost. intangible assets are subsequently measured at cost less amortisation and any impairment. the gains and losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. the method and useful lives of finite life intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Website Design and Development Significant costs associated with the website design and development are deferred and amortised on a straight line basis over a period of its expected benefit, being its finite life of 4 years. Amortisation of the asset commenced when the website first became available for use. 2626 for the year ended 30 June 2013Dicker Data LimiteDg. Leases Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership are transferred to the company are classified as finance 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 benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. h. Financial Instruments Initial Recognition and Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within time frames established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs. Where the instrument is classified ‘at fair value through profit or loss’ transactions costs are expensed to profit or loss immediately. Classification 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 financial asset or financial 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 financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. (i) Financial assets at fair value through profit or loss Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of short term profit taking. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. The company has not held any financial assets at fair value through profit and loss in the current or comparative financial year. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. 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 classified as non-current assets. (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 classified as current assets. If during the period the company sold or reclassified more than an insignificant amount of the held-to-maturity investments before maturity, the entire category of held- to-maturity investments would be tainted and would be reclassified as available-for-sale. (iv) Available-for-sale financial assets Available-for-sale financial 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 classified as current assets. (v) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. 2727 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 1. Summary of Significant Accounting Policies (continued) 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 financial instrument has been impaired. In the case of available-for-sale financial 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. i. 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 profits. 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. j. Employee Benefits Provision is made for the company’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. 2828 Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may not satisfy vesting requirements. those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. k. Trade and Other Payables these amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are unpaid. Due to their short term nature they are measured at amortised cost and not discounted. the amounts are unsecured and are usually paid within 30–60 days of recognition. l. 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 outflow of economic benefits will result and that outflow 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. m. 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 financial 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 financial asset to the net carrying amount of the financial asset. all revenue is stated net of the amount of goods and services tax (GSt). Other revenue is recognised when it is received or when the right to receive payment is established. for the year ended 30 June 2013Dicker Data LimiteDn. 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. o. 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 Office. 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 financial position are shown inclusive of GST. Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. p. Contributed Equity Ordinary shares are classified 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. q. Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current year. r. Critical Accounting Estimates and Adjustments The directors evaluate estimates and judgements incorporated into the financial 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 identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial 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 Profit or Loss and Other comprehensive income net of supplier rebates and settlement discounts. Supplier rebates can be paid monthly, quarterly or half yearly. At the end of the financial year an estimate of rebates due, relating to the financial 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. Significant 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 its current understanding of the tax law. 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 profits. An assumption has been made that it is unlikely that future capital profits 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 definite life intangible assets. The useful lives could change significantly 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. 2929 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 1. Summary of Significant Accounting Policies (continued) Long Service Leave Provision the liability for long service leave is recognised and measured at the present value of the estimated future cash flows 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 specific knowledge of the individual debtors’ financial 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. s. Rounding of Amounts the company is of a kind referred to in class Order 98/100, issued by the Australian Securities and Investments Commission, relating to ‘rounding- off’. amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar. t. 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 financial statements of the company. Any new revised or amending Accounting standards or interpretation that are not yet mandatory have not been adopted u. New Accounting Standards for Application in Future Periods Refer to the following page for 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 financial statements at reporting date. The new and amended Accounting Standards and interpretations are not expected to have any material impact on the annual financial statements of the company. 3030 for the year ended 30 June 2013Dicker Data LimiteDNew Accounting Standards for Application in Future Periods AASB No. Title 9 10 11 12 13 Financial instruments consolidation Joint Arrangements Disclosure of interests in Other entities Fair Value Measurement 119 Employee Benefits 2010 – 2 amendments to australian accounting Standards arising from reduced Disclosure requirements Operative Date (Annual reporting periods beginning on or after) 1 Jan 2015 1 Jan 2013 1 Jan 2013 1 Jan 2013 1 Jan 2013 1 Jan 2013 1 Jul 2013 Issue Date Dec 2010 Aug 2011 Aug 2011 Aug 2011 Sep 2011 Sep 2011 Jun 2010 2010 – 7 Amendments to Australian Accounting Standards arising from AASB 9 Dec 2010 1 Jan 2013 (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] 2010 – 10 Further Amendments to Australian Accounting Standards – Removal of Fixed Dec 2010 1 Jan 2013 Dates for First-time Adopters [AASB 2009-11 & AASB 2010-7] 2011 – 4 amendments to australian accounting Standards to remove individual key Jul 2011 1 Jul 2013 Management Personnel Disclosure Requirements[AASB 124] 2012 – 2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Jun 2012 1 Jan 2013 Financial Assets and Financial Liabilities [AASB 7 & AASB 132] 2012 – 3 Amendments to Australian Accounting Standards – Offsetting Financial Jun 2012 1 Jan 2014 Assets and Financial Liabilities [AASB 132] 2012 – 5 amendments to australian accounting Standards arising from annual Jun 2012 1 Jan 2013 Improvements 2009–2011 Cycle [AASB 1, AASB 101, AASB 116, AASB 132 & AASB 134 and Interpretation 2] 2012 – 6 Amendments to Australian Accounting Standards – Mandatory Effective Date Sep 2012 1 Jan 2015 of AASB9 and Transition Disclosures 2012 – 9 Amendments AASB 1048 arising from the withdrawal of Australian Dec 2012 1 Jan 2013 Interpretation 1039 3131 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 2. restatement of Comparatives In the previous year early settlement discounts were incorrectly disclosed as revenue when they should have been treated as a reduction in cost of sales in accordance with AASB102. There is no impact to the net profit reported but comparatives have been restated to reflect this correctly. Extracts for the restatement of the comparatives is disclosed below. 2012 As Reported $’000 Adjustment $’000 2012 As Restated $’000 455,036 5 746 592 269 – – (746) – – 455,036 5 – 592 269 456,648 (746) 455,902 1,223 (423,892) (422,669) – 746 746 1,223 (423,146) (421,923) Note 2013 $’000 2012 $’000 2 451,219 455,036 4 – 107 252 5 – 592 269 451,582 455,902 Extract of Statement of Comprehensive Income Revenue and other income Sales revenue Other revenue: interest received Discounts received recoveries Other revenue Total Revenue Expenses changes in inventory consumables used Cost of Sales 3. revenue and Other income Sales revenue: Sale of goods Other revenue: interest received Discounts received recoveries Other revenue Total Revenue 3232 for the year ended 30 June 2013Dicker Data LimiteD4. expenses for the year Cost of sales Finance costs Superannuation expense Other Expenses: insurance Bad and doubtful debts Net loss on disposal of non-current assets Rental expense – operating leases 5. 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 2013 $’000 2012 $’000 413,844 421,923 3,455 1,200 1,147 180 31 28 2013 $’000 4,090 15 4,105 (80) (11) (91) 3,149 1,015 1,174 706 48 44 2012 $’000 3,819 37 3,856 (119) 252 133 4,014 3,989 Note 15 3333 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 5. income Tax expense (continued) b. The prima facie tax payable on profit before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit before income tax at 30% (2012: 30%) Add tax effect of: Under provision for income tax in prior year Non-deductible expenses Less tax effect of: Investment allowance Income tax expense attributable to entity The applicable weighted average effective tax rates are as follows: 6. earning Per Share 2013 $’000 3,978 4 32 2012 $’000 3,679 289 21 4,014 3,989 – 4,014 30.3% – 3,989 32.5% 2013 $’000 2012 $’000 a Basic earnings per share (cents) From continuing operations attributable to the ordinary equity holders of the company 7.28 6.55 b Diluted earnings per share (cents) From continuing operations attributable to the ordinary equity holders of the company 7.24 6.48 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 127,016 126,336 127,700 127,568 3434 for the year ended 30 June 2013Dicker Data LimiteD 7. key Management Personnel Disclosures Compensation The aggregate compensation made to directors and other members of key management personnel is set out below: Short-term benefits Post-employment benefits Total compensation 2013 $’000 2,062 180 2,242 2012 $’000 1,754 157 1,910 Shareholding The number of shares held during the financial year by each director and other members of key management personnel, including personally related parties is set out below: 2013 Ordinary Shares David Dicker Fiona Brown Mary Stojcevski Chris Price michael Demetre Vlad Mitnovetski 2012 Ordinary Shares David Dicker Fiona Brown Mary Stojcevski Chris Price michael Demetre Vlad Mitnovetski Balance at start of year Additions Disposals Balance at end of year 63,750,000 56,250,000 10,000 15,500 10,000 24,439 – 21,757 40,136 – – – – 63,750,000 1,000 56,270,757 – – – – 50,136 15,500 10,000 24,439 120,059,939 61,893 1,000 120,120,832 Balance at start of year Additions Disposals Balance at end of year 63,750,000 56,250,000 10,000 15,500 10,000 14,439 – – – – – 10,000 – 63,750,000 – 56,250,000 – – – – 10,000 15,500 10,000 24,439 120,049,939 10,000 – 120,059,939 3535 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 8. Auditors’ remuneration Auditing or reviewing the financial report Other services – Tax compliance 9. Dividends Dividends declared and paid in 2013: Final dividend – 30 June 2012. Fully franked at $0.0200 per ordinary share paid 08 October 2012 (2011: $0.0200) Interim dividend – 30 June 2013. Fully franked at $0.010 per ordinary share paid 11 January 2013 (2012: $0.0093) Interim dividend – 30 June 2013. Fully franked at $0.020 per ordinary share paid 9 April 2013 (2012: $0.0093) Dividend declared 2013 but not yet paid: Interim dividend – 30 June 2013. Fully franked at $0.0125 per ordinary share declared 24 June 2013 and paid 10 July 2013 (2012: $0.0150) 2013 $’000 2012 $’000 99 67 166 102 79 181 2013 $ 2012 $ 2,530 2,530 1,266 1,176 2,554 1,176 1,596 7,946 1,898 6,780 The tax rate that dividends have been franked is 30% (2012: 30%) Franking credit balance: Franking credits available for subsequent financial years based on a tax rate of 30% (2012: 30%) 6,648 6,146 The above amounts represent the balance of the franking account as at the end of the financial year adjusted for franking credits arising from: – franking credits from dividends recognised as receivables at year end – franking credits that will arise from payment of the current tax liability – franking debits arising from payment of proposed dividends recognised as a liability 10. Cash and Cash equivalents cash at bank 3636 2013 $ 505 505 2012 $ 222 222 for the year ended 30 June 2013Dicker Data LimiteD11. Trade and Other receivables Current trade debtors Less provision for impairment of receivables Other receivables Movements in the provision for impairment of receivables: Opening balance charge for the year closing balance 2013 $ 2012 $ 59,052 64,369 (79) (104) 58,973 5,456 64,429 64,265 4,406 68,671 104 (25) 79 135 (32) 104 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 specific 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 $3,429,670 as at 30 June 2013 (2012: $4,495,729). The company did not consider a credit risk on these balances after reviewing credit terms of customers and trading history. Past due and impaired: Gross Impaired Receivables over 90 days Less: Expected Recoveries Past due but not impaired: 31 – 60 days overdue 61 – 90 days overdue 2013 $ 236 (157) 79 3,286 144 3,430 2012 $ 205 (101) 104 3,556 940 4,496 3737 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued Note 2013 $ 2012 $ 50,104 41,687 (419) (364) 49,685 41,323 Note 13 (a) 2013 $ 6,904 11,772 (575) 11,197 18,101 1,127 (312) 815 1,090 (749) 341 580 (264) 316 1,472 19,573 1,019 2012 $ 6,904 8,312 (340) 7,972 14,876 1,025 (208) 817 1,127 (687) 440 710 (295) 415 1,672 16,548 1,212 12. inventories Current At cost: Stock on hand Less provision for impairment of stock 13. Property, Plant and equipment Freehold land 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 Total property, plant and equipment Carrying amount of assets under finance lease 3838 for the year ended 30 June 2013Dicker Data LimiteD13 a. Movement in Carrying Amounts Movements in carrying amounts for each class of property, plant and equipment. Balance at 1 July 2011 additions Disposals Depreciation expense Freehold land $000’ 6,904 – – – Carrying amount at 30 June 2012 6,904 additions Disposals Depreciation expense – – – Buildings $000’ 8,092 87 (207) 7,972 3,462 (2) (235) Carrying amount at 30 June 2013 6,904 11,197 Fitout $000’ 938 – – (121) 817 106 (3) (105) 815 14. intangible Assets Website development – at cost Less accumulated amortisation Plant and equipment $000’ Motor vehicles $000’ 431 336 (63) (264) 440 169 (26) (242) 341 Note 270 547 (310) (92) 415 – (4) (95) 316 2013 $ 196 (23) 173 Total $000’ 16,635 970 (373) (684) 16,548 3,737 (35) (677) 19,573 2012 $ 93 – 93 3939 AnnuAl RepoRt 2013 notes to the finAnciAl stAtements continued 15. Tax a. Assets Non-current Deferred tax assets The balance comprises temporary differences attributable to: Note 2013 $ 2012 $ 24 373 130 102 74 – 80 783 621 162 – 783 31 235 17 114 104 – 120 621 798 (177) – 621 Amounts recognised in profit 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 profit or loss Credited/(charged) to equity Closing Balance 4040 for the year ended 30 June 2013Dicker Data LimiteDb. Liabilities Current Provision for income tax Non-current Deferred tax Liability The balance comprises temporary differences attributable to: Amounts recognised in profit or loss: Land and Buildings Plant and Equipment accrued income Deferred tax liability Movements in Deferred Tax Liability Opening Balance Credited/(charged) to profit or loss Credited/(charged) to equity Closing Balance 16. Trade and Other Payables Current trade creditors Unearned Revenue Other creditors Note 2013 $ 2012 $ 1,539 1,342 220 74 960 220 96 867 1,254 1,183 1,183 1,226 71 – (44) – 1,254 1,183 Note 2013 $ 2012 $ 43,189 54,809 1,060 2,941 1,031 2,680 47,191 58,520 4141 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 17. Borrowings Current Debtor Finance Purchase finance facility Lease liability Non-current Lease liability a. Total current and non-current secured liabilities: Debtor Finance Purchase finance facility Lease liability b. The carrying amounts of non-current assets pledged as security are: Leased assets Note 2013 $ 2012 $ 43,399 19,514 274 45,988 – 156 63,187 46,145 588 959 43,399 19,514 862 63,775 45,988 – 1,115 47,103 1,019 1,223 c. The debtor finance facility is secured by a registered fixed and floating charge over all assets and undertakings of the company, fixed charge over all debtors, a Deed of Amendment and Acknowledgement between the financier and a major supplier to the aggregate of the finance facility and assignment of trade debtor insurance.The purchase finance facility is an unsecured facility. 4242 for the year ended 30 June 2013Dicker Data LimiteD18. Provisions Provision for long service leave: Opening balance at 1 July 2012 additional provisions raised amounts used Balance at 30 June 2013 Provision for annual leave: Opening balance at 1 July 2012 additional provisions raised Balance at 30 June 2013 Total Provisions Opening balance at 1 July 2012 additional provisions raised amounts used Balance at 30 June 2013 Analysis of Total Provisions current Non-current Note 2013 2012 365 181 (8) 538 417 288 705 782 469 (8) 1,243 902 341 1,243 232 174 (41) 365 241 176 417 473 350 (41) 782 580 202 782 4343 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 19. issued Capital Ordinary shares – fully paid 1,145 127,700,000 844 126,500,000 2013 2012 $’000 Shares $’000 Shares a. Ordinary class Shares Movements in ordinary share capital Balance at 1 July 2011 Shares issued on exercise of options Share Option reserve Balance at 30 June 2012 Shares issued on exercise of options Shares issued on exercise of options Shares issued on exercise of options Shares issued on exercise of options Shares issued on exercise of options Share Option reserve Balance at 30 June 2013 Date $ Number 09.08.11 09.08.11 12.12.12 14.01.13 04.02.13 12.02.13 18.02.13 539,895 125,000,000 300,000 1,500,000 4,162 – 844,057 126,500,000 25,000 100,000 100,000 400,000 87,500 50,000 37,500 513 350,000 200,000 150,000 – 1,144,570 127,700,000 Fully paid ordinary shares rank equally in all respects. All ordinary shares issued as at 30 June 2013 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. b. Share Options In the 2011 financial year options were granted to Stonebridge Securities Ltd and related parties. The options granted were to acquire 1,200,000 fully paid ordinary shares, exercisable at $0.25 anytime within 36 months from the date of granting, expiring on 24 January, 2014. All of these options have now been exercised. There are currently no share options outstanding. c. capital management Management controls the capital of the company in order to 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 financial liabilities, supported by financial assets. Management effectively manage the company’s capital by assessing the company’s financial 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. The company’s previously announced dividend policy continues which provides for quarterly dividends to be paid, with the aim to pay out dividends of up to 100% of underlying after tax profits from operations. In determining the amount of dividends management will take into account historical earnings of the company, available free cash flow from trading and projected capital expenditure. 4444 for the year ended 30 June 2013Dicker Data LimiteD20. reserves a. Capital Profits Reserve (Pre-CGT) Note 2013 $ 2012 $ the capital profits reserve records non-taxable profits on sale of investments. 369 369 b. Share Option reserve the share option reserve is used to recognise the grant fair value of options issued but not exercised. – 369 1 370 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. The share option reserve has been adjusted for options exercised during the period. 21. Capital And Leasing Commitments Note 2013 $ 2012 $ a. Operating Lease commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable: not later than 12 months between 12 months and five years b. capital expenditure commitments Capital expenditure commitments contracted for: Balance of road works to be completed 189 398 587 159 346 505 395 3,600 22. related Party Transactions 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: a. Loans to/(from) directors The directors had unsecured loan accounts, which have since been paid out. – – Note 2013 $ 2012 $ 4545 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 23. Operating Segments During the year the company operated in one business segment being wholesale distribution of computers and related products. Operations were carried out mainly in Australia. 24. Financial risk Management Financial assets cash and cash equivalents Loans and receivables Total Financial Assets Financial Liabilities trade and other payables Borrowings Total Financial Liabilities Note 2013 $ 2012 $ 9 10 16 17 505 65,005 65,510 222 68,670 68,893 47,766 63,775 58,520 47,103 111,541 105,624 Financial Risk Management Policies The directors’ overall risk management strategy seeks to assist the company in meeting its financial targets, whilst minimising potential adverse effects on financial 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 specific credit allowances are undertaken to manage credit risk. Liquidity risk is managed through general business budgets and forecasts. The main purpose of non-derivative financial instruments is to raise finance 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 financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. Specific Financial Risk Exposures and Management The main risks the company is exposed to through its financial instruments are: a. credit risk b. liquidity risk and c. interest rate risk 4646 for the year ended 30 June 2013Dicker Data LimiteDa. credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the company. Credit risk is reviewed regularly by the directors and key management personnel. It predominantly arises from exposures to customers. 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 specified in the policy after an aggregate first loss of $100,000. Receivables balances are monitored on an ongoing basis with the result that the company’s exposure to bad debts has not been significant. It is the company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their credit rating, financial 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. Credit risk exposures The maximum exposure to credit risk by class of recognised financial assets at balance date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the statement of financial position. The company has no significant 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 difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The company manages this risk through the following mechanisms: – preparing forward-looking cash flow analyses in relations to its operational, investing and financing activities; – monitoring undrawn credit facilities; – obtaining funding from a variety of sources; – maintaining a reputable credit profile; – managing credit risk related to financial assets. The tables below reflect an undiscounted contractual maturity analysis for financial 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 flows realised from financial instruments reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest contractual settlement dates and do not reflect management’s expectations that banking facilities will roll forward. 4747 AnnuAl RepoRt 2013notes to the finAnciAl stAtements continued 24. Financial risk Management (continued) Financial liability maturity analysis Financial liabilities due for payment trade and other payables Borrowings Total contractual outflows Financial liabilities due for payment Borrowings Total contractual outflows Financial Liabilities trade and other payables Borrowings Total expected outflows Financial assets pledged as collateral Note 2013 $ 2012 $ Within 1 Year Within 1 Year 47,191 63,187 58,520 46,145 110,378 104,665 1 to 5 Years 1 to 5 Years 588 588 959 959 16 17 47,191 63,775 58,520 47,103 110,966 105,624 Certain financial assets have been pledged as security for the 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 flows and interest charges and is indicated by the following floating interest rate financial liabilities: Floating rate instruments Debtor finance facility Purchase finance facility Sensitivity Analysis Note 17 17 2013 $ 2012 $ 43,399 19,513 62,912 45,988 – 45,988 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 profit would have been $440,384 lower/higher (2012: $321,920 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 financing and the mix of fixed and variable interest rates. 4848 for the year ended 30 June 2013Dicker Data LimiteD25. Cash Flow information a. reconciliation of cash Cash at the end of financial year as shown in the Statement of Cash Flows is reconciled to the related items in the statement of financial position as follows: cash at bank b. Reconciliation of cash flow from operations with profit Profit after income tax Non-cash flows in profit: Depreciation amortisation in intangibles Changes in Assets & Liabilities: Decrease (increase) in current inventories Decrease (increase) in current receivables Decrease (increase) in deferred tax assets (Decrease) increase in deferred tax liabilities (Decrease) increase in payables & Other (Decrease) increase in provisions (Decrease) increase in non-current assets (Decrease) increase in current tax liabilities Note 9 2013 $ 505 505 2012 $ 222 222 9,246 8,276 677 23 (8,362) 4,266 (162) 71 684 – (1,223) (6,994) 177 (44) (11,043) (14,311) 436 34 197 278 44 118 Net cash provided by (used in) operating activities (4,617) (12,994) c. credit Stand-by arrangement and Loan Facilities Total facility amount available under our banking arrangements with St George Bank is $56.8m, which includes debtor financing, asset financing and other working capital facilities. The unused limits of the facility as at balance date amounted to $11,601,522 (2012: $9,335,000). A new purchase finance facility was also entered into with Macquarie Bank for $20m in February 2013. Under the terms of the agreement the facility is available to the company for the purchase of inventory from HP only, the company’s largest vendor. The unused limit of this facility as at balance date amounted to $486,257. 26. Contingent Liabilities The directors are not aware of any contingent liabilities related to the company as at report date. 27. events after Balance Date There are no other matters or circumstances that have arisen since 30 June 2013 that have significantly affected, or may significantly affect the company’s operations, the results of those operations or the company’s state of affairs in future financial years. 4949 AnnuAl RepoRt 2013DiRectoR’s DeclARAtion for the year ended 30 June 2013 In the directors’ opinion: – the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; – the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; – the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the financial year ended on that date; – there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors David Dicker ceO and chairman Sydney, 29 August 2013 5050 Dicker Data LimiteDAuDitoR’s DeclARAtion of inDepenDence Dicker Data Limited |Annual Report 2013 | 49 Dicker Data Limited |Annual Report 2013 | 49 5151 AnnuAl RepoRt 2013 inDepenDent AuDitoR’s RepoRt Dicker Data Limited |Annual Report 2013 | 49 Dicker Data Limited |Annual Report 2013 | 50 Dicker Data Limited |Annual Report 2013 | 50 Dicker Data Limited |Annual Report 2013 | 50 5252 Dicker Data LimiteD Dicker Data Limited |Annual Report 2013 | 49 Dicker Data Limited |Annual Report 2013 | 51 5353 AnnuAl RepoRt 2013 shAReholDeR infoRmAtion The shareholder information set out below was applicable as at 8 August 2013 Ordinary Share Capital As at 8 August 2013, the issued capital of the Company was 127,700,000 ordinary fully paid shares. 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 options 26 86 310 126 10 558 17,650 270,492 2,999,204 2,918,988 121,493,666 127,700,000 – – – – – – – – – – – – There were 4 holders of less than a marketable parcel of ordinary shares. Unquoted Options The Company had no unquoted options on issue as at 30 June 2013 or as at 8 August 2013. 5454 Dicker Data LimiteDTwenty largest holders of quoted equity securities Ordinary shares Shareholder MR DAVID JOHN DICKER MS FIONA TUDOR BROWN DeNmaN iNcOme LimiteD MR ZHEN PENG LI MARTRE PROPERTIES PTY LIMITED (SUPER FUND ACCOUNT) MR IAN DAVIES MR JAMES GORDON MAXWELL MOFFATT EGP FUND NO 1 PTY LTD MR RONALD JOHN BOND MRS MARGARET JOYCE STUART mr FraNk SieW kHOON mOk MR JOSEPH JOHN HILL mr aLLiSter cOOk FORDHOLM CONSULTANTS PTY LTD (DIANA BOEHME SUPER FUND) MR BRIAN ROBINS PKN NOMINEES PTY LTD (EUMER INVEST STAFF SUPER FUND) mr cOLiN cHarLeS StONer MRS MIWA SUMIYOSHI MR JOHN SLAVIN Total for top 20 Substantial holders Substantial holders in the company are set out below: Number held 63,750,000 56,270,757 444,000 204,279 190,000 176,050 163,597 147,000 113,850 113,850 83,000 76,250 66,932 60,000 52,868 50,000 50,000 50,000 46,060 Percentage of quoted shares % 49.92% 44.06% 0.35% 0.16% 0.15% 0.14% 0.13% 0.11% 0.09% 0.09% 0.06% 0.06% 0.05% 0.05% 0.04% 0.04% 0.04% 0.04% 0.04% 122,108,493 95.62% Name of substantial shareholder Number of shares held Percentage of issued shares Mr David John Dicker Ms Fiona Tudor Brown 63,750,000 56,270,757 49.92% 44.06% 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. b. Options No voting rights. 55 230 Captain Cook Drive, Kurnell NSW 2231 T. 1800 688 586 F. 1800 688 486 www.dickerdata.com.au ABN: 95 000 969 362
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