Dicker Data Annual Report 2016

FY2016 Annual Report · Dicker Data

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ANNUAL
REPORT
2016

Dicker Data is an Australian
owned and operated, ASX listed
distributor of computer hardware,
software and related products
with over 39 years’ experience.

Incorporated in 1978, Dicker Data’s mission
is to inspire, educate and enable ICT resellers
to achieve their full potential through the
delivery of unparalleled service, technology and
logistics. Dicker Data is Australia’s largest locally
owned and operated ICT distributor. Serving
in excess of 5,000 registered reseller partners
annually, Dicker Data boasted revenues in
excess of $1.1b in FY16. Since listing on the
ASX in January 2011, Dicker Data has delivered
consistently profitable results for shareholders
whilst maintaining a 100% dividend policy.

ABN: 95 000 969 362

Dicker Data Limited1

CONTENTS

Chairman’s Letter

Our Brands

Results Highlights

Board of Directors and Senior Management

Directors’ Report

Statement of Profit or Loss and Other Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Directors’ Declaration

Auditor’s Declaration of Independence

Independent Auditor’s Report

Shareholder Information

Annual Report 20162

Chairman’s Letter

David Dicker Chairman and Chief Executive Officer

REVENUE

$1.2billion

up 10% over FY 2015

OPERATING PROFIT

$36.6million

up 24.5% over FY 2015

Welcome to our full
year report for 2016.

Financial Year 2016 was our most
successful year ever.

Record Sales and Record Profits.

A very satisfying outcome.

It’s 6 years since we first listed on
the ASX with an IPO share price of
20 cents and a market cap of $25m.

As I write this, our share price is $2.32
with market capitalisation of $371m.

A pretty good result for a company
not considered a growth stock…

Combined with our dividend policy
I think we have provided our
shareholders with a very solid return.

As I said in last year’s letter, I’d like
to thank all our people for doing an
outstanding job and I hope they are
as proud and happy as I am with
the result.

David Dicker
Chairman and CEO

Sydney, 27 February 2017

Dicker Data Limited3

Our Brands

Dicker Data – Experience is the Difference

OUR VENDOR PORTFOLIO INCLUDES:
Our Vendor Portfolio includes:

xRM

Experience is the Difference...
Call your Dicker Data representative today on 1800 688 586
F 1800 688 486 E orders@dickerdata.com.au www.dickerdata.com.au

† Credit accounts paid with a VISA or Mastercard will incur a 1% surcharge. ˆSame day freight available for Sydney metro orders placed before 10am is NOT guaranteed, it is on a case by case basis. Zone One is inclusive of selected parts of NSW, VIC,

QLD, WA and TAS. For a full listing please see https://www.dickerdata.com.au. Free freight is on standard road service only. Dicker Data reserves the right to charge freight cost for unusual delivery circumstances. Resellers must have an account with

Dicker Data. All offers are limited to stock availability on a first served basis. All other normal trading conditions apply. Errors and omissions are excluded. All trademarks, brand names and product names are the property of their respective owners. 78864

78864-DD_WhyDicker Data_Feb2017 _2A.indd 2

15/2/17 11:48 am

Annual Report 20164

Results Highlights

NET PROFIT
BEFORE TAX

REVENUE

24.5%

10.0%

GROSS
PROFIT

6.0%

RESULTS SUMMARY

Key Financial Data

Total revenue

Gross Profit

Earnings before interest, tax, depreciation [EBITDA]

Operating profit before tax

Net profit before tax

Net profit after tax [NPAT]

Earnings per share (cents)

Dividends paid

Dividends per share (cents)

* before one-off integration and restructure costs

DIVIDENDS
PER SHARE

27.5%

NET PROFIT
AFTER TAX

25.0%

2016
$’000

2015
$’000

1,185,543

1,077,556

109,733

103,533

45,408

*42,640

36,568

*31,628

36,568

29,379

25,624

20,499

16.04

*15.54

24,833

18,127

15.55

12.20

Dicker Data Limited

REVENUE ($M)

GROSS PROFIT ($M)

1200

1000

800

600

400

200

6
7
7
0
1

5
6
3
9

8
2
6
6

5
5
8
1
1

7
9
0
1

5
3
0
1

1
2
8

2
4
5

120

100

FY14

Jan–Dec14

FY15

FY16

FY14

Jan–Dec14

FY15

FY16

EBITDA ($M)

OPERATING PROFIT BEFORE TAX ($M)

4
5
4

*
6
2
4

*
4
5
2

6
0
2

6
6
3

*
6
1
3

3
4
1

*
4
5
1

FY14

Jan–Dec14

FY15

FY16

FY14

Jan–Dec14

FY15

FY16

* before tax and one-off integration and share acquisition costs

In February 2015, the Company changed its financial year end from a June year end to a December year end. For the period
July 2014 to December 2014 financial statements were prepared for a 6 month transitional financial year. In the tables above
the information for FY14 is based on a June year end. The last three years reflect a January to December 12 month period.

Annual Report 20166

Board of Directors
and Senior Management

DAVID DICKER

Chairman and CEO

MARY STOJCEVSKI

MICHAEL DEMETRE

Executive Director

VLADIMIR MITNOVETSKI

IAN WELCH

FIONA BROWN

Executive Director

Non-executive Director

Board of Directors

Senior Management

1. David Dicker
Chairman and Chief Executive Officer

2. Mary Stojcevski
Executive Director

3. Michael Demetre
Executive Director

4. Vladimir Mitnovetski
Executive Director

5. Ian Welch
Executive Director

6. Fiona Brown
Non-executive Director

2. Mary Stojcevski
Chief Financial Officer

3. Michael Demetre
Logistics Director

4. Vladimir Mitnovetski
Chief Operating Officer

5. Ian Welch
Chief Information Officer

Dicker Data LimitedDirectors’ Report

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the ‘consolidated entity’) consisting of Dicker Data Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and
the entities it controlled at the end of, or during, the year ended 31 December 2016.

DIRECTORS
The following persons were directors of Dicker Data Limited during 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

Michael Demetre

Vladimir Mitnovetski

Ian Welch

PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the year were wholesale distribution of computer hardware, software
and related products. There were no significant changes in the nature of the activities carried out during the year.

DIVIDENDS
Dividends paid during the financial year were as follows:

Record Date:

Payment Date:

Dividend
(in Dollars)

Amount
($’000)

9-Mar-16

8-Jun-16

7-Sep-16

7-Dec-16

Total

16-Mar-16

16-Jun-16

16-Sep-16

15-Dec-16

0.0400

0.0385

0.1555

$6,378

$6,146

$6,152

$6,157

$24,833

Type

Final

Interim

2015

2016

Amount
Franked

100%

The total dividends paid during the financial year were 15.55 cents per share or a total of $24.8 million, fully franked. Total
dividends paid for the 12-month period in the year ended 31 December 2015 were 12.20 cents per share.

Our dividend policy provides for fully franked dividends to be paid on a quarterly basis, with the intent to pay out 100% of the
underlying after tax profits from operations after taking into account projected capital expenditure and cash requirements. The
Dividend Reinvestment Plan introduced in March 2014 has been retained for the 2016 year. Of the $24.8m dividends paid,
$23.8m was paid as cash dividends and $1m participated in the DRP.

OPERATING AND FINANCIAL REVIEW
A snapshot of the operations of the consolidated entity for the full year and the results of those operations are as follows:

Dec-16
(in 000’s)

Dec-15
(in 000’s)

Change $
(in 000’s)

Change %

Revenues from ordinary activities

$1,185,543

$1,077,556

$107,987

Gross Profit

Net operating profit before tax

Net profit before tax

Net profit after tax

$109,733

$103,533

$36,568

$31,628

$36,568

$29,379

$25,624

$20,499

$6,200

$4,940

$7,189

$5,125

10.0%

6.0%

15.6%

24.5%

25.0%

for the year ended 31 December 2016Annual Report 2016

Directors’ Report

REVENUE
The revenue for the consolidated entity for the 12 months
to 31 December 2016 was $1,185.5m (2015: $1077.6m),
up by $108m (+10.0%) and in line with our expectations.

GROSS PROFIT
Gross profit for the reporting period was $109.7m (2015:
$103.5m) an increase of 6.0%. Gross profit margins have
abated slightly at 9.3% (2015: 9.6%) due to product mix
and market competition.

Sources of Revenue Growth 2016

OPERATING EXPENSES

$25.1m

$32.5m

120

100

$51.1m

Exis(cid:15)ng Vendors

2015 Vendor Addi(cid:15)ons 2016 Vendor Addi(cid:15)ons

Since completion of the Express Data Holdings acquisition
and integration in 2014, Dicker Data has continued to add
new vendors and increased the breadth of products offered
by existing vendors, whilst still driving growth and market
share in its existing vendor portfolios.

Of the existing vendors, we saw growth of $51.1m (+4.8%),
with new vendors added during 2015 contributing growth
of $32.5m (+173.5%) after their first full year of trade.

A total of 8 new vendors were on-boarded during 2016
and contributed an incremental $25.1m.

At a country level, Australia grew $105.5m (+11.1%) and
New Zealand grew $3m (+3%).

At a sector level, we maintained our strong growth
in Hardware (+$86m, +10%), Software (+$10m, +5%)
and Services (+$1m, +26%), and have added the Storage
business unit which contributed +$11m to our growth.

Operating Expenses Excluding Integration and
Restructuring Costs
Operating costs for the reporting period were $66.3m
(2015: $63.2m), an increase of $3.1m (4.8%). As a proportion
of sales, operating costs fell to 5.6% (2015: 5.9%), with salary
related expenses falling slightly to 4.5% of sales (2015: 4.6%),
and other operating expenses falling to 1.1% of sales (2015:
1.3%). Headcount across the group finished FY16 at 374
reflecting investment in new vendors and portfolios.

Depreciation, Amortisation and Interest
Depreciation and Amortisation for the reporting period
was $2.9m, down from the prior period of $4.0m.

Interest in the reporting period was $6.3m (2015: $7.5m)
as the company has improved its working capital efficiencies,
and taken advantage of the first full year’s inclusion of the
impact of the share capital raising in August 2015.

PROFIT
Profit before tax finalised at $36.5m (2015: $29.4m) up
by 24.5%.

Net Profit after tax increased to $25.6m (2015: $20.5m),
up by 25.0%.

Weighted average earnings per share increased to
16.04 cents per share (2015: 14.39 cents), up by 11.5%.

STATEMENT OF FINANCIAL POSITION
Total assets as at 31 December 2016 increased to $365.7m
(2015: $358.3m).

The company balance sheet reflected an increase in working
capital efficiency with working capital finishing lower than
the previous period. Cash finalised at $17.5m, up by $1.7m
(2015: $15.8m). Trade receivables were slightly down
from the previous period to $162.7m (2015: $164.0m).
Inventories at period end were $107.0m, down from $116.3m
in 2015. Trade and other payables were up to $155.1m
(2015: $142.6m). Net working capital decreased by $23.1m,
or 12 days.

Property, plant and equipment increased to $43.9m during
the period (2015: $26.1m) as a result of the purchase of the
adjacent land ($18.4m) in preparation for expansion. With
regard to the planned expansion we don’t anticipate any
major capital expenditure for the FY17 year for the current
trading operations. We do expect however to incur planning
and preliminary costs for the design and Development
Application for a new warehouse facility.

continued9

Total liabilities as at 31 December 2016 were $291.7m,
up from the prior period (2015: $286.4m).

Current borrowings comprising a receivables purchase facility
with Westpac finished $15.0m lower, at $75.0m versus
the prior period $90.0m, reflecting the improved working
capital efficiencies.

Equity has increased to $74.0m during the period
(2015: $71.8m).

We are currently in the advanced planning stage of the
project. Following the Company’s intended expansion
onto this property, any excess land may be subdivided and
sold. Whilst our business continues to grow this purchase
places us in a very good position to expand our operations
and provides the capacity that will be required to support
future growth.

There were no other significant changes in the state of affairs
of the company during the year.

Equity Movement

Equity 31 Dec 2015

Comprehensive Income for FY16

Dividends Paid

Share Issue (DRP)

Reserves

Equity 31 Dec 2016

$’000

71,832

25,624

(24,833)

1,043

292

73,958

The company’s improved working capital and increased equity
levels have continued to improve both the Balance Sheet
Leverage (2016: 2.5x v 2015: 3.0x) and Net Tangible Assets
position (2016: $43.5m v 2015: $39.7m). The Debt Service
Cover Ratio has improved also from 5.6x to 7.2x.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Financial Instruments
On 27 January 2016, the Company entered into a
Derivative Financial Instrument transaction with Westpac
Banking Corporation. The transaction is an Interest Rate
Swap Transaction for $40 million with an effective date
of 29 March 2016 and a tenure of 2 years, maturing on
26th March 2018.

The Company entered the transaction as an interest
rate hedge against the partial tenure of the floating
rate Corporate Bond issued during 2015 and reflects
the Company’s active capital management, providing
some pricing certainty over the next 2 budget cycles for
working capital planning.

Land Acquisition
On 13 May, 2016 the Company purchased a 17.2 hectare
parcel of land adjacent to the Company’s current warehouse
facility in Kurnell NSW. The purchase price was $18.4m
excluding GST. Of the total new property purchased there
is 10.0 hectares of useable land. This represents a land size
four times the size of our current location. The purchase
was funded by the Westpac Receivables Purchase Facility
and available cash. It is the intention to sell the current
distribution centre.

MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
There were no other significant matters subsequent to the
end of the financial year.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS
OF OPERATIONS
We will continue strengthening our enterprise and midmarket
capabilities across ANZ. Leveraging our existing and newly
on boarded vendors to drive new market opportunities and
innovation for our customers. Market trends such as cloud,
digital transformation and Internet of Things (IOT) continue
to present new market opportunities and new revenue
streams for Dicker Data and our customers.

We are seeing convergence of traditional Telco channel
and IT which represents great cross sell opportunities
for our ecosystem partners. This is driven by customers
implementing hybrid IT strategies across their organization.
Leveraging Dicker Data’s strengths and capabilities, we are
well positioned to support and grow this partner community.

We are continuing to invest in our rapidly growing “as a
service” recurring revenue streams. Dicker Data’s stated
position as a leading cloud aggregator continues to gain
momentum in driving cloud adoption.

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.

ENVIRONMENTAL REGULATION
The consolidated entity is subject to the requirements
of the Product Stewardship (Televisions and Computers)
Regulations 2011. There have been no instances of non-
compliance throughout the year.

Directors’ Report

INFORMATION ON DIRECTORS

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:
60,553,495 Ordinary shares in Dicker Data Limited

Interest in Contracts:
Nil

Special Responsibilities:
Chairman and responsible for the overall business
management and strategy as Chief Executive Officer.
Member of the Audit Committee.

Other Current Listed Company Directorships:
None

Other Current Listed Company Directorships Held
in Previous 3 Years:
None

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.
As a Non-Executive Director, Fiona brings her knowledge
and experience in the IT distribution industry for over
39 years, of which the first 26 years was in the role of
General Manager of the business.

Interest in Equities:
53,945,808 Ordinary shares in Dicker Data Limited
56,470 Ordinary shares held by South Coast
Developments Pty Ltd as trustee for the Brown
Family Superfund

Interest in Contracts:
Nil

Special Responsibilities:
Member of the Work Health and Safety Committee
Chairperson of the Audit Committee

Other Current Listed Company Directorships:
None

Other Current Listed Company Directorships
Held in Previous 3 Years:
None

Vladimir Mitnovetski – Chief Operating Officer
Vlad joined the company in 2010 in his role as Category
Manager. In this role he was responsible for the
establishment and growth of key volume vendors and was
instrumental in the introduction of new vendors to Dicker
Data’s portfolio. Vlad is a business technology professional
with over 16 years of distribution industry experience.
Vlad started his career at Tech Pacific and then Ingram
Micro where he worked in various roles before progressing
to business unit manager roles in enterprise and personal
systems, working closely with many leading vendors. Vlad
holds a bachelor of business degree from University of
Technology and a master degree in Advanced Marketing
and Management from the University of New South Wales.
Vlad was appointed to the position of Chief Operating
Officer on 8th September 2014.

Interest in Equities:
99,451 Ordinary shares in Dicker Data Limited

Interest in Contracts:
Nil

Special Responsibilities:
Responsible for the sales, vendor alliances and operations
of the consolidated entity.

Member of the Audit Committee.

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:
21,631 Ordinary shares in Dicker Data Limited

130,177 Ordinary Shares held by Stojinvest Pty Ltd as
trustee for Stojinvest Superannuation Fund

Interest in Contracts:
Nil

continued11

Special Responsibilities:
Responsible for the overall financial management of the
consolidated entity

Interest in Contracts:
Nil

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 and since
taking on this role has overseen and been responsible for
expansion of our logistic capabilities. 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:
18,571 Ordinary shares in Dicker Data Limited

Interest in Contracts:
Nil

Special Responsibilities:
Responsible for the warehouse and logistics operations.

Other Current Listed Company Directorships:
None

Other Current Listed Company Directorships
Held in Previous 3 Years:
None

Ian Welch – Chief Information Officer
Ian joined Dicker Data in March 2013 as General Manager –
IT before he was appointed Chief Information Officer on
6 August 2015. Prior to officially joining Dicker Data Ian
spent more than 15 years consulting to Dicker Data in
various roles. During this period Ian had been instrumental in
establishing and maintaining the IT Systems for Dicker Data
and as a result has a deep understanding of the business
and all related processes. Ian started his career as an IT
Professional working as consultant to businesses in various
sectors. A large proportion of these were in the logistics
space which have allowed Ian to develop a fundamental
understanding of such operations. Ian is also an Executive
Director of the company and was appointed 6 August 2015.

Interest in Equities:
30,000 Ordinary shares in Dicker Data Limited

Special Responsibilities:
Responsible for IT operations, systems and processes

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 25 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.

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

Directors

David Dicker (Chairperson)

Fiona Brown

Mary Stojcevski

Vladimir Mitnovetski

Michael Demetre

Ian Welch

Audit Committee Meetings

Directors

Fiona Brown (Chairperson)

David Dicker

Vladimir Mitnovetski

Number
Eligible to
Attend

Number
Attended

Number
Eligible to
Attend

Number
Attended

–

Directors’ Report

REMUNERATION REPORT (AUDITED)
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:

Principles used to determine the nature and amount
of remuneration

b. Details of remuneration
c. Service agreements
d. Share-based compensation
e. Additional information
f.

Additional disclosures relating to key management
personnel

(a) Principles used to Determine the Nature and

Amount of Remuneration

The board addresses remuneration policies and practices
generally, and determines remuneration packages and other
terms of employment for senior executives. Executive
remuneration and other terms of employment are reviewed
annually by the board having regard to performance against
goals set at the start of the year and relevant comparative
information. Remuneration packages are set at levels that
are intended to attract and retain executives capable of
managing the company’s operations, achieving the company’s
strategic objectives, and increasing shareholder wealth.

Executives
The executive pay and reward framework includes the
following components:

– Base pay and 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 either monthly or quarterly 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.

(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.

It was agreed that for executive directors who report to
the CEO, for the purpose of satisfying the performance
condition, that the one-off non-recurring costs would be
excluded. Performance measure was based on the operating
profit before tax excluding share acquisition, borrowing,
restructure and integration costs. This was considered the
appropriate measure as these one-off costs were incurred to
facilitate the acquisition, which was undertaken for the long
term benefit of the company and its shareholders.

continued13

Details of Remuneration for Directors and Key Management Personnel

Short-
Term

Long-
Term

Share Based
Payments

Short term
Incentive
Cash Bonus

Cash

Super-

annuation Non-Cash

Annual
Leave

Long

Service Shares Options

Total

Salary &
Fees

FBT
Reportable

Leave

% of
Value of
remuner-
ation that
consists
of share
Based
Payments

Proportion
of remuner-
ation that is
performance
based

Executive Directors

David Dicker - Chief Executive Officer

December
2016

December
2015

–

Vladimir Mitnovetski - Chief Operating Officer

December
2016

December
2015

– 1,528,280 145,187

– 1,581,402 150,233

Mary Stojcevski - Chief Financial Officer

December
2016

December
2015

200,000

547,451

71,008

200,000

474,421

64,070

Michael Demetre - Logistics Director

December
2016

December
2015

225,000

365,969

56,142

225,000

316,280

51,422

Ian Welch - Chief Information Officer

December
2016

December
2015

250,000

364,969

58,422

105,769

114,456

20,921

–

25,390 12,115

34,383

7,960

1,434

3,205

8,220

3,453

71,614

3,605

11,867

3,884

10,749

26,475

–

0.00%

– 1,710,971

100.00%

0.00%

– 1,773,979

100.00%

0.00%

–

823,097

72.83%

0.00%

750,164

63.24%

0.00%

722,330

55.48%

0.00%

608,453

51.98%

0.00%

684,140

58.42%

0.00%

267,621*

46.83%

0.00%

Directors’ Report

Short-
Term

Long-
Term

Share Based
Payments

Short term
Incentive
Cash Bonus

Cash

Super-

annuation Non-Cash

Annual
Leave

Long

Service Shares Options

Total

Salary &
Fees

FBT
Reportable

Leave

% of
Value of
remuner-
ation that
consists
of share
Based
Payments

Proportion
of remuner-
ation that is
performance
based

Non-Executive Directors
Fiona Brown

December
2016

December
2015

TOTAL

December
2016

December
2015

–

675,000 2,806,668 330,758

– 109,186 18,925

530,769 2,486,559 286,646

–

80,945 15,298

–

– 3,940,537

– 3,400,217

–

0.00%

–

*Earnings since appointment as director on 6 August 2015.

(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.

continued15

Executive Service Agreement for Vladimir Mitnovetski
The Company has appointed Vladimir Mitnovetski as Chief
Operating Officer and Director of the Board of the company
by way of an Executive Service Agreement (ESA). The
ESA is dated 1 September 2014. 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 will
be a performance based salary of the higher amount of
either: (i) $50,000; or (ii) 5% of Net Profit in the month for
the first quarter of FY16, and 4% of Net Profit in the month
effective from 01 April 2016 as per ESA amendment from
that date. Profit bonus is subject to the Company achieving
a monthly Net Profit Margin of 2.5% in a calendar quarter.
Superannuation is uncapped and payable on total of base
and performance payments at 9.5%. The ESA also contains
a number of post-termination restraints.

Executive Service Agreement for Mary Stojcevski
The company has appointed Mary Stojcevski as Chief
Financial 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. Ms Stojcevski
is also entitled to a performance bonus equal to 1.5% of the
company’s net profit before tax. This is subject to net profit
margin before tax not being less than 2.5%, unless otherwise
agreed. Superannuation is uncapped and payable at 9.5%
on total of base and performance payments. 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 $225,000 per annum. Mr Demetre
is also entitled to a performance bonus equal to 1% of the
Company’s net profit before tax. This is subject to net profit
margin before tax not being less than 2.5%, unless otherwise
agreed. Superannuation is uncapped and payable at 9.5%
on total of base and performance payments. The ESA also
contains a number of post-termination restraints.

Executive Service Agreement for Ian Welch
The Company has appointed Ian Welch as Chief Information
Officer and Director of the Board of the company by way
of an Executive Service Agreement (ESA). The ESA is dated
1 September 2015. The ESA confirms Mr Welch’s continuous
service with the company for all purposes commenced
from 30 March 2013. The appointment of Mr Welch is for
an unspecified time. Either the company or Mr Welch may
terminate the ESA with 3 months’ notice. The remuneration
payable to Mr Welch comprises a base remuneration
of $250,000 per annum. Mr Welch is also entitled to a
performance bonus equal to 1% of the Company’s net
profit before tax. This is subject to net profit margin before
tax not being less than 2.5%, unless otherwise agreed.
Superannuation is uncapped and payable at 9.5% on total
of base and performance payments. The ESA also contains
a number of post-termination restraints.

As the net profit margin percentage was achieved each
director received 100% of the performance bonus they
were entitled to.

(d) Share-Based Compensation
No shares, rights, or options were granted to directors or key
management personnel during the year ended 31 December
2016, 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.
Operating profit for the consolidated entity grew by 15.6%,
excluding one off integration and restructure costs. As a large
proportion of the executive’s remuneration package is based
on net operating profit outcomes the average executive
remuneration also increased. Since 2013, the net profit
before tax has grown at an average rate of 40.6% per annum,
whilst the average executive remuneration has increased
by an average of 33.0% per annum. Shareholder wealth has
increased at an average rate of 31.5% per annum over this
period.

Voting and Comments made at the Company’s 2016 Annual
General Meeting (AGM)
At the 2016 AGM, 78.82% of the votes received supported
the adoption of the remuneration report for the financial
year ended 31 December 2015. The company did not
receive any specific feedback at the AGM regarding its
remuneration practices.

Directors’ Report

(f) Additional Disclosures Relating to Key Personnel Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their related parties, is set out below:

December 2016

Ordinary Shares

David Dicker

Fiona Brown

Vladimir Mitnovetski

Mary Stojcevski

Michael Demetre

Ian Welch

December 2015

Ordinary Shares

David Dicker

Fiona Brown

Vladimir Mitnovetski

Mary Stojcevski

Michael Demetre

Ian Welch*

Balance at the
start of the year

Additions

Disposals

60,553,495

52,783,040

63,010

120,162

18,571

30,000

–

1,219,238

36,441

31,646

–

113,568,278

1,230,855

–

Balance at the
start of the year

Additions

Disposals

62,549,354

54,909,399

24,439

72,340

10,000

1,004,141

873,641

38,571

47,822

8,571

20,000

3,000,000

–

Balance at the
end of the year

60,553,495

54,002,278

99,451

151,808

18,571

30,000

114,799,133

Balance at the
end of the year

60,553,495

52,783,040

63,010

120,162

18,571

30,000

117,575,532

1,992,746

6,000,000

113,568,278

*appointed on 6 August 2015

This concludes the remuneration report which has been audited.

TRANSACTIONS WITH RELATED PARTIES
There are no transactions with related parties made during the year.

SHARE OPTIONS
There were no outstanding options at the end of this financial year.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of liability and the amount of the premium.

continued
17

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.

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.

NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for
non-audit services provided during the financial year by the
auditor are outlined in Note 24 to the financial statements.

The directors are satisfied that the provision of non-audit
services during the financial year, by the auditor (or by
another person or firm on the auditor’s behalf), is compatible
with the general standard of independence for auditors
imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed
in Note 24 to the financial statements do not compromise
the external auditor’s independence requirements of the
Corporations Act 2001 for the following reasons:

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.

ROUNDING OF AMOUNTS
The company is of a kind referred to in ASIC Corporations
(Rounding in Financial / Directors’ Report) Instrument
2016/191, 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.

AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 is set out
on page 52.

AUDITOR
Accounting Firm BDO East Coast Partnership continues in
office in accordance with section 327of the Corporations
Act 2001.

This report is made in accordance with a resolution of
directors, pursuant to section 298(2)(a) of the Corporations
Act 2001.

On behalf of the directors

– all non-audit services have been reviewed and approved to
ensure that they do not impact the integrity and objectivity
of the auditor; and

David Dicker
CEO and Chairman

– none of the services undermine the general principles

Sydney, 27 February 2017

relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by
the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for
the company, acting as advocate for the company or jointly
sharing economic risks and rewards.

Statement of Profit or Loss and
Other Comprehensive Income

for the year ended 31 December, 2016

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

Borrowing costs

Integration and restructure 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

Items that may be reclassified subsequently to profit or loss

Foreign Currency Translation

Total comprehensive income for the year

Total comprehensive income attributable to members of the company

Earnings per share

Weighted earnings per share

Diluted earnings per share

Consolidated

Note

31-Dec-16
$’000

31-Dec-15
$’000

1,183,357

1,074,660

284

700

560

224

1,202

2,112

1,185,543

1,077,556

(9,303)

31,714

(1,064,321)

(1,002,842)

(53,595)

(49,098)

(2,874)

(6,250)

(441)

–

(4,029)

(7,543)

(341)

(2,249)

(12,191)

(13,789)

(1,148,975)

(1,048,177)

36,568

(10,944)

25,624

292

25,916

Cents

16.04

29,379

(8,880)

20,499

(353)

20,146

Cents

14.39

The statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes.

Dicker Data Limited

Statement of Financial Position

as at 31 December, 2016

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

The statement of financial position is to be read in conjunction with the attached notes.

Consolidated

Note

31-Dec-16
$’000

31-Dec-15
$’000

17,459

162,718

107,025

287,202

43,872

30,492

4,135

78,499

365,701

15,835

163,978

116,329

296,142

26,073

31,902

4,153

62,128

358,270

155,149

75,000

9,967

6,082

142,607

90,000

3,500

5,288

246,198

241,395

39,075

5,144

1,326

45,545

38,829

5,183

1,031

45,043

291,743

286,438

73,958

71,832

56,046

664

17,248

73,958

55,003

372

16,457

71,832

Annual Report 2016

Statement of Changes in Equity

for the year ended 31 December, 2016

Consolidated

Note

Balance at 1 January 2015

Profit after income tax for the year

Other comprehensive income for year net of tax

Total comprehensive income for the year

Transactions with the owners in their capacity
as owners:

Share Issue (Capital Raising)

Share Issue (DRP)

Dividends Paid

Issued
Capital
$’000

6,891

–

43,989

4,123

Retained
Profits
$’000

14,085

20,499

–

20,499

–

(18,127)

Reserves
$’000

725

–

(353)

Total
Equity
$’000

21,701

20,499

(353)

20,146

–

43,989

4,123

(18,127)

Balance at 31 December 2015

55,003

16,457

372

71,832

Balance at 1 January 2016

Profit after income tax for the year

Other comprehensive income for the year net of tax

Total comprehensive income for the year

Transactions with the owners in their capacity
as owners:

Share Issue (DRP)

Dividends Paid

55,003

–

16,457

25,624

–

25,624

372

–

292

71,832

25,624

292

25,916

1,043

–

(24,833)

–

1,043

(24,833)

Balance at 31 December 2016

56,046

17,248

664

73,958

The statement of changes in equity is to be read in conjunction with the attached notes.

Dicker Data Limited

Statement of Cash Flows

for the year ended 31 December, 2016

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

NET CASH FROM (USED IN) OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property, plant and equipment

Payments for intangibles

NET CASH FROM (USED IN) INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from share issue

Net proceeds from bond issue

Repayments of borrowings

Payment of dividends

NET CASH FROM (USED IN) FINANCING ACTIVITIES

NET CASH FLOWS

Cash and cash equivalents at the beginning of the period

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD

The statement of cash flows is to be read in conjunction with the attached notes.

Consolidated

Note

31-Dec-16
$’000

31-Dec-15
$’000

1,304,598

1,165,771

(1,234,391)

(1,177,009)

283

(6,250)

(4,498)

560

(7,543)

(4,342)

59,743

(22,563)

(19,219)

(63)

(1,176)

(73)

(19,282)

(1,250)

–

(47)

43,988

38,618

(15,000)

(32,658)

(23,790)

(14,003)

(38,837)

35,945

1,624

15,835

17,459

12,132

3,703

15,835

Annual Report 2016

Notes to the Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of the financial statements are set out below and in the
following notes. These policies have been consistently
applied to all the years presented, unless otherwise stated.

New, Revised or Amending Accounting Standards and
Interpretations Adopted
The consolidated entity has adopted all of the new, revised
or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (‘AASB’)
that are mandatory for the current reporting period.

Any other new, revised or amending Accounting Standards
or Interpretations that are not yet mandatory have not been
early adopted. The adoption of these Accounting Standards
and Interpretations did not have any significant impact on the
financial performance or position of the consolidated entity.

Basis of Preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the Corporations
Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International
Financial Reporting Standards as issued by the International
Accounting Standards Board (‘IASB’).

Historical Cost Convention
The financial statements have been prepared under the
historical cost convention, except for, where applicable,
the revaluation of available-for-sale financial assets,
financial assets and liabilities at fair value through profit
or loss, certain classes of property, plant and equipment
and derivative financial instruments.

Critical Accounting Estimates
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the consolidated entity’s accounting policies. The
areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant
to the financial statements, are disclosed in the notes.

Parent Entity Information
In accordance with the Corporations Act 2001, these
financial statements present the results of the consolidated
entity only. Supplementary information about the parent
entity is disclosed in Note 27.

Principles of Consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Dicker Data Limited
(‘company’ or ‘parent entity’) as at 31 December 2016 and
the results of all subsidiaries for the year then ended. Dicker
Data Limited and its subsidiaries together are referred to in
these financial statements as the ‘consolidated entity’.

Subsidiaries are all those entities over which the consolidated
entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct
the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the
consolidated entity. They are de-consolidated from the date
that control ceases.

Intercompany transactions, balances and unrealised gains on
transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as
an equity transaction, where the difference between the
consideration transferred and the book value of the share
of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.

Non-controlling interest in the results and equity of
subsidiaries are shown separately in the statement of profit
or loss and other comprehensive income, statement of
financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated
entity are attributed to the non-controlling interest in full,
even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary,
it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity.
The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment
retained together with any gain or loss in profit or loss.

for the year ended 31 December 2016Dicker Data Limited23

1. SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

Foreign Currency Translation
The financial statements are presented in Australian dollars,
which is Dicker Data Limited’s functional and presentation
currency.

Foreign Currency Transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in profit or loss.

Foreign Operations
The assets and liabilities of foreign operations are translated
into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign
operations are translated into Australian dollars using the
average exchange rates, which approximate the rate at the
date of the transaction, for the period. All resulting foreign
exchange differences are recognised in other comprehensive
income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss
when the foreign operation or net investment is disposed of.

Current and Non-Current Classification
Assets and liabilities are presented in the statement
of financial position based on current and non-current
classification.

An asset is current when: it is expected to be realised or
intended to be sold or consumed in normal operating cycle;
it is held primarily for the purpose of trading; it is expected to
be realised within twelve months after the reporting period;
or the asset is cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for at least
twelve months after the reporting period. All other assets are
classified as non-current.

A liability is current when: it is expected to be settled in
normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within twelve months after
the reporting period; or there is no unconditional right to
defer the settlement of the liability for at least twelve months
after the reporting period. All other liabilities are classified
as non-current.

Deferred tax assets and liabilities are always classified
as non-current.

Goods and Services Tax (‘GST’) and Other Similar Taxes
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it
is recognised as part of the cost of the acquisition of the
asset or as part of the expense.

Receivables and payables are stated inclusive of the amount
of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included
in other receivables or other payables in the statement of
financial position.

Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax
authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to,
the tax authority.

Rounding of Amounts
The company is of a kind referred to in ASIC Corporations
(Rounding in Financial / Directors’ Reports) Instrument
2016/191, 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.

New Accounting Standards and Interpretations not yet
Mandatory or early Adopted
Australian Accounting Standards and Interpretations that
have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated
entity for the annual reporting period ended 31 December
2016, unless otherwise stated. The consolidated entity’s
assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant
to the consolidated entity, are set out below.

AASB 9 Financial Instruments and its Consequential
Amendments
This standard and its consequential amendments are
applicable to annual reporting periods beginning on or
after 1 January 2018 and completes phases I and III of
the IASB’s project to replace IAS 39 (AASB 139) ‘Financial
Instruments: Recognition and Measurement’. This standard
introduces new classification and measurement models
for financial assets, using a single approach to determine
whether a financial asset is measured at amortised cost or
fair value. The accounting for financial liabilities continues
to be classified and measured in accordance with AASB
139, with one exception, being that the portion of a change
of fair value relating to the entity’s own credit risk is to
be presented in other comprehensive income unless it
would create an accounting mismatch. Chapter 6 ‘Hedge
Accounting’ supersedes the general hedge accounting
requirements in AASB 139 and provides a new simpler
approach to hedge accounting that is intended to more
closely align with risk management activities undertaken
by entities when hedging financial and non-financial risks.
The consolidated entity will adopt this standard and the
amendments from 1 January 2018 but the impact of its
adoption is yet to be assessed by the consolidated entity.

Notes to the Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

The main changes introduced by the new Standard
include:

IFRS 15 Revenue from Contracts with Customers
This standard is expected to be applicable to annual reporting
periods beginning on or after 1 January 2018. The standard
provides a single standard for revenue recognition. The
core principle of the standard is that an entity will recognise
revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for
those goods or services. The standard will require: contracts
(either written, verbal or implied) to be identified, together
with the separate performance obligations within the
contract; determine the transaction price, adjusted for the
time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations
on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when
each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to
revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods.
For services, the performance obligation is satisfied when
the service has been provided, typically for promises to
transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate
measure of progress to determine how much revenue should
be recognised as the performance obligation is satisfied.
Contracts with customers will be presented in an entity’s
statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship
between the entity’s performance and the customer’s
payment. Sufficient quantitative and qualitative disclosure is
required to enable users to understand the contracts with
customers; the significant judgments made in applying the
guidance to those contracts; and any assets recognised from
the costs to obtain or fulfil a contract with a customer. The
consolidated entity will adopt this standard from 1 January
2018 but the impact of its adoption is yet to be assessed
by the consolidated entity.

AASB 16: Leases (applicable to annual reporting periods
beginning on or after 1 January 2019)
When effective, this Standard will replace the current
accounting requirements applicable to leases in
AASB 117: Leases and related Interpretations. AASB
16 introduces a single lessee accounting model that
eliminates the requirement for leases to be classified
as operating or finance leases.

– recognition of a right-to-use asset and liability for all leases
(excluding short-term leases with less than 12 months of
tenure and leases relating to low-value assets);
– depreciation of right-to-use assets in line with AASB
116: Property, Plant and Equipment in profit or loss
and unwinding of the liability in principal and interest
components;

– variable lease payments that depend on an index or a rate
are included in the initial measurement of the lease liability
using the index or rate at the commencement date;
– by applying a practical expedient, a lessee is permitted to
elect not to separate non-lease components and instead
account for all components as a lease; and

– additional disclosure requirements.

The transitional provisions of AASB 16 allow a lessee to
either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of
retrospective application as an adjustment to opening equity
on the date of initial application.

Although the directors anticipate that the adoption of
AASB 16 will impact the Group’s financial statements, it is
impracticable at this stage to provide a reasonable estimate
of such impact.

2. CRITICAL ACCOUNTING JUDGEMENTS,

ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management
bases its judgements, estimates and assumptions on
historical experience and on other various factors, including
expectations of future events, management believes to
be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial
year are discussed at each note.

3. OPERATING SEGMENTS
Operating segments are presented using the ‘management
approach’, where the information presented is on the same
basis as the internal reports provided to the Chief Operating
Decision Makers (‘CODM’). The CODM is responsible for the
allocation of resources to operating segments and assessing
their performance.

continued25

3. OPERATING SEGMENTS (CONTINUED)

Identification of Reportable Operating Segments
The consolidated entity is organised into two operating segments: Australian and New Zealand operations. These operating
segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the
Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no
aggregation of operating segments.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). Reportable revenue is for only the
one product being sale of IT goods and services. The accounting policies adopted for internal reporting to the CODM are
consistent with those adopted in the financial statements.

The information reported to the CODM is on at least a monthly basis.

Intersegment Transactions
During the year there was a dividend paid from Dicker Data NZ Ltd to Express Data Holdings Pty Ltd for $2,532,715.

Intersegment Receivables, Payables and Loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that
earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated
on consolidation.

Operating Segment Information

Consolidated – December 2016

Revenue

Sale of goods

Other revenue:

Interest received

Recoveries

Other revenue

Total Revenue

EBITDA

Depreciation & Amortisation

Interest revenue

Finance costs

Integration and restructure costs

Profit before income tax

Income tax expense

Profit after income tax expense

Asset

Segment Current Assets

Segment Non Current Assets

Segment Assets

Liabilities

Segment Current Liabilities

Segment Non Current Liabilities

Segment Liabilities

Australia
$’000

New Zealand
$’000

Eliminations/
Unallocated
$’000

TOTAL
$’000

1,056,470

126,887

176

700

3,477

108

257

1,060,823

127,252

44,367

(2,568)

176

(6,244)

–

35,732

(9,994)

25,738

258,470

77,755

336,225

226,630

45,545

272,175

3,574

(307)

108

(7)

–

3,369

(950)

2,419

28,742

744

29,486

19,578

–

19,578

–

(2,533)

–

(2,533)

–

(2,533)

(10)

–

(10)

1,183,357

284

700

1,201

1,185,543

45,408

(2,874)

284

(6,250)

–

36,568

(10,944)

25,624

287,202

78,499

365,701

246,198

45,545

291,743

Notes to the Financial Statements

3. OPERATING SEGMENTS (CONTINUED)

Operating Segment Information

Consolidated – December 2015

Revenue

Sale of goods

Other revenue:

Interest received

Recoveries

Other revenue

Total Revenue

EBITDA

Depreciation & Amortisation

Interest revenue

Finance costs

Integration and restructure costs

Profit before income tax

Income tax expense

Profit after income tax expense

Segment Current Assets

Segment Non Current Assets

Segment Assets

Segment Current Liabilities

Segment Non Current Liabilities

Segment Liabilities

Australia
$’000

New Zealand
$’000

Eliminations/
Unallocated
$’000

TOTAL
$’000

950,968

123,692

–

1,074,660

454

224

6,787

259

–

460

958,433

124,411

42,743

(3,660)

454

(7,696)

(2,233)

29,608

(7,472)

22,136

274,918

61,065

335,983

5,032

(369)

259

–

(16)

4,906

(1,408)

3,498

29,674

1,063

30,738

220,386

21,009

45,043

265,429

–

21,009

(153)

–

(5,135)

(5,288)

(5,135)

–

(153)

153

–

(5,135)

–

(5,135)

560

224

2,112

1,077,556

42,640

(4,029)

560

(7,543)

(2,249)

29,379

(8,880)

20,499

(8,450)

296,142

–

62,128

(8,450)

358,270

–

241,395

45,043

286,438

continued27

4. REVENUE
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Sale of Goods
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 and trade discounts.

Interest
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.

Other Revenue
Other revenue is recognised when it is received or when the right to receive payment is established.

Sales revenue:

Sale of goods

Other revenue:

Interest

Recoveries

Other revenue

Total Revenue

5. EXPENSES

Consolidated

Dec-16
$’000

Dec-15
$’000

Note

1,183,357

1,074,660

284

700

560

224

1,202

2,112

1,185,543

1,077,556

Cost of Sales
Cost of goods sold are represented 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. Estimate of rebates is based on information provided
by our suppliers on our tracking to targets and on management’s judgement based on historical achievements.

Depreciation and Amortisation
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives. Amortisation of intangibles is calculated on a straight-line basis over their
expected useful lives, as either determined by management or by an independent valuation.

Finance Costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred, including:

– interest on any bank overdraft
– interest on short-term and long-term borrowings
– interest on finance leases

Notes to the Financial Statements

5. EXPENSES (CONTINUED)

Defined Contribution Superannuation Expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Operating leases
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.

Depreciation

Building

Plant and equipment

Total depreciation

Amortisation

Development

Software

Customer Contracts

Total amortisation

Total depreciation and amortisation

Finance costs

Interest and finance charges paid/payable

Superannuation expense

Defined contribution superannuation expense

Operating Leases

Property Rental Expense

Equipment rental expense

Consolidated

Note

Dec-16
$’000

Dec-15
$’000

463

937

1,400

1,382

1,474

2,874

497

1,399

1,896

2,032

2,133

4,029

6,250

7,543

3,864

3,538

844

864

1,257

1,277

continued

Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against
deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different
taxable entity’s which intend to settle simultaneously.

Dicker Data Limited (the ‘head entity’) and its wholly-
owned Australian subsidiaries have formed an income
tax consolidated group from 01 April 2014, under the tax
consolidation regime. The head entity and each subsidiary
in the tax consolidated group continue to account for their
own current and deferred tax amounts. The tax consolidated
group has applied the ‘separate taxpayer within group’
approach in determining the appropriate amount of taxes
to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts,
the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from each subsidiary
in the tax consolidated group.

Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in
the tax consolidated group. The tax funding arrangement
ensures that the intercompany charge equals the
current tax liability or benefit of each tax consolidated
group member, resulting in neither a contribution by
the head entity to the subsidiaries nor a distribution
by the subsidiaries to the head entity.

6. INCOME TAX
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment
recognised for prior periods, where applicable. With the
change in financial year, the Company has applied and has
been approved for a substituted accounting period for the
lodgement of its tax return based on the calendar year
January to December.

Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based
on those tax rates that are enacted or substantively enacted,
except for:

– When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at
the time of the transaction, affects neither the accounting
nor taxable profits; or

– When the taxable temporary difference is associated

with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse
in the foreseeable future.

Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.

The carrying amount of recognised and unrecognised
deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits will be
available for the carrying amount to be recovered. Previously
unrecognised deferred tax assets are recognised to the
extent that it is probable that there are future taxable profits
available to recover the asset.

Notes to the Financial Statements

6. INCOME TAX (CONTINUED)

Income Tax Critical Judgements
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. 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 consolidated entity recognises liabilities for anticipated
tax audit issues based on the consolidated entity’s current understanding of the tax law. Where the final tax outcome of these
matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period
in which such determination is made.

(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

Deferred tax included in income tax expense comprises:

(Increase) Decrease in deferred tax assets

Increase (Decrease) in deferred tax liabilities

Consolidated

Dec-16
$’000

Dec-15
$’000

11,179

(59)

11,120

(176)

–

(176)

10,944

(137)

(39)

(176)

9,250

(170)

9,080

(200)

–

(200)

8,880

907

(1,107)

(200)

(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%

10,970

8,814

Add tax effect of:

Under provision for income tax in prior year

Non-deductible expenses

Less tax effect of:

Under Provision of deferred tax

Differences in overseas tax rates

Income tax expense attributable to entity

The applicable weighted average effective tax rates are as follows:

(59)

11,005

–

(61)

10,944

29.9%

–

329

9,143

(170)

(93)

(263)

8,880

30.2%

continued7. CURRENT TAX

Current tax liability

8. DEFERRED TAX ASSET

Deferred tax asset comprises temporary differences attributable to:

Amounts recognised in profit or loss:

Provision for receivables impairment

Provision for employee entitlements

Accrued expenses

Inventory

Capitalised expenditure

Property Plant and Equipment

Amounts recognised in equity:

Share Issue Costs

Deferred tax asset

Movements in Deferred Tax Asset

Opening Balance

Credited / (charged) to profit or loss

Credited / (charged) to equity

Closing Balance

Consolidated

Dec-16
$’000

Dec-15
$’000

9,967

3,500

2,112

305

778

277

179

389

4,135

1,777

803

643

321

518

4,153

4,541

112

(130)

(907)

519

4,135

4,153

Notes to the Financial Statements

9. DEFERRED TAX LIABILITIES

The balance comprises temporary differences attributable to:

Amounts recognised in profit or loss:

Land and Buildings

Prepayments

Accrued income

Intangible assets

Deferred tax liability

Movements in Deferred Tax Liability

Opening Balance

Credited / (charged) to profit or loss

Credited / (charged) to equity

Closing Balance

Consolidated

Dec-16
$’000

Dec-15
$’000

187

–

1,189

3,768

5,144

5,183

(39)

–

5,144

192

795

4,182

5,183

6,290

(1,107)

–

5,183

10. CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.

Cash at bank

17,459

15,835

continued33

11. TRADE AND OTHER RECEIVABLES
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days from end of month.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which 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 consolidated entity will not be able to collect all amounts due according to the original terms of the receivables.
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 estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment. Other receivables include cash deposits
that are held with maturity periods longer than 3 months.

Trade receivables

Less: Provision for impairment of receivables

Other receivables

Consolidated

Dec-16
$’000

Dec-15
$’000

151,397

144,744

(237)

(312)

151,160

144,432

11,558

19,546

162,718

163,978

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 consolidated entity has recognised a decrease in the provision of $75,326 (December 2015: $221,116 decrease) in profit
or loss in respect of impairment of receivables for the year ended 31 December 2016.

Past due but not Impaired
Customers with balances past due but without provision for impairment of receivables amount to $6,748,170 as at 31 December
2016 (2015: $10,168,559). The consolidated entity did not consider a credit risk on these balances after reviewing credit terms of
customers and trading history.

Past due but not impaired:

0 to 3 Months overdue

3 to 6+ Months overdue

6,466

283

6,749

9,598

571

10,169

Notes to the Financial Statements

12. INVENTORIES
Finished goods are stated at the lower of cost or net realisable value. Costs are assigned to individual items of inventory on
the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts
received or receivable.

Stock in transit is stated at the lower of cost and net realisable value. Cost comprises purchase and delivery costs, net of rebates
and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.

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.

Finished Goods

Less: Provision for Impairment

Consolidated

Dec-16
$’000

Dec-15
$’000

109,198

118,349

(2,173)

(2,020)

107,025

116,329

13. PROPERTY, PLANT AND EQUIPMENT
Land and buildings are carried at cost less subsequent depreciation for buildings and accumulated impairment for land
and buildings. Each class of plant and equipment and property improvements is carried at cost less, where applicable, any
accumulated depreciation and impairment losses.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:

Buildings

Property improvements

Leasehold improvements

Plant and equipment

Plant and equipment under lease

Motor vehicles

–

40 Years

10 - 20 Years

2 - 10 Years

8 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

continued35

13. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Estimation of Useful Lives of Assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite 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.

Freehold land

Building - at cost

Less accumulated depreciation

Total land and buildings

Fitout & Leasehold improvements - at cost

Less accumulated depreciation

Plant and equipment - at cost

Less accumulated depreciation

Motor vehicles

Less accumulated depreciation

Total plant and equipment

Total property, plant and equipment

Consolidated

Dec-16
$’000

25,338

18,707

Dec-15
$’000

6,904

18,418

(2,034)

(1,571)

16,673

42,011

3,083

(1,813)

1,270

2,439

(1,874)

565

252

(225)

1,862

43,872

16,847

23,751

2,887

(1,283)

1,604

2,761

(2,078)

683

252

(217)

2,323

26,073

Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Freehold
land
$’000

Buildings
$’000

Fitout
Costs
$’000

Plant and
equipment
$’000

Motor
vehicles
$’000

Balance at 1 January 2015

6,904

16,634

1,898

1,323

Additions

Depreciation expense

Effect of movements in exchange rate

–

716

(497)

(6)

263

(551)

(6)

Balance at 31 December 2015

6,904

16,847

1,604

Additions

Disposals

Depreciation expense

Effect of movements in exchange rate

18,434

–

289

–

(463)

–

138

–

(472)

–

Balance at 31 December 2016

25,338

16,673

1,270

197

(836)

(1)

683

358

(22)

(456)

564

–

(12)

–

(8)

–

Total
$’000

26,806

1,176

(1,896)

(13)

26,073

19,219

(22)

(1,399)

43,872

Notes to the Financial Statements

14. INTANGIBLES
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets
are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the de-
recognition 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 intangible assets are reviewed annually. Changes in the expected
pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Customer Contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their expected
benefit, being their finite life which varies between 18 months and 12 years.

Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected
benefit, being their finite life of 4 years.

Impairment of Intangibles
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form
a cash-generating unit.

Goodwill

Customer Contracts

Less: Accumulated amortisation

Software - at cost

Less: Accumulated amortisation

Website - at cost

Less: Accumulated amortisation

Consolidated

Dec-16
$’000

17,799

17,657

Dec-15
$’000

17,799

17,657

(5,098)

(3,715)

(44)

258

(164)

137

(103)

258

(131)

30,492

31,902

continued37

14. INTANGIBLES (CONTINUED)

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Goodwill
$’000

Customer
Contracts
$’000

Software
$’000

Development
(Website)
$’000

Balance at 1 January 2015

Additions

Amortisation expense

Balance at 31 December 2015

Additions

Amortisation expense

Effect of movements in exchange rate

17,799

15,974

–

17,799

–

(2,032)

13,942

–

(1,383)

–

Balance at 31 December 2016

17,799

12,559

Goodwill and other Indefinite Life Intangible Assets Estimates

(60)

(59)

141

(41)

126

–

(32)

–

Total
$’000

33,963

(2,133)

31,902

(1,474)

30,492

The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations
require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the
estimated future cash flows

The recoverable amount of the consolidated entity’s goodwill has been determined by a value-in-use calculation using a
discounted cash flow model, based on a 1 year EBITDA projection period approved by management and extrapolated for a
further 4 years using a steady rate, together with a terminal value.

Management considers the cash generating units (CGU) of the group to be Australia and New Zealand. Goodwill has been
allocated $10.5m and $7.3m, respectively.

The following key assumptions were used in the discounted cash flow model for each cash generating unit:

a. 11.2% (2015: 11.2%) post-tax discount rate;

b. 5.6% in year 1 and 2.5% thereafter (2015: 2.5%) per annum EBITDA growth rate;

The discount rate of 11.2% post-tax reflects management’s estimate of the time value of money and the consolidated
entity’s weighted average cost of capital, the risk free rate and the volatility of the share price relative to market movements.
Management believes the projected 2.5% EBITDA growth rate is reasonable based on general market growth.

Based on the above, the recoverable amount of each cash generating unit exceeded the carrying amount and therefore no
impairment of goodwill.

Sensitivity Analysis

As disclosed in Note 2, the directors have made judgements and estimates in respect of impairment testing of goodwill.
Management believes that any reasonable changes in the key assumptions on which the recoverable amount of division goodwill
is based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount. The sensitivities are as
follows: (a) EBITDA would need to decrease by more than 50% to trigger impairment for the Australian CGU, and 28% for the
New Zealand CGU, with all other assumptions remaining constant; b) The discount rate would be required to increase to 24.5% to
trigger impairment for the Australian CGU, and 29.5% for the New Zealand CGU, with all other assumptions remaining constant.

Notes to the Financial Statements

15. TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the consolidated entity 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 are not discounted. The
amounts are unsecured and are usually paid within 30 - 60 days of recognition.

Trade payables

Other payables

Consolidated

Dec-16
$’000

Dec-15
$’000

145,372

132,822

9,777

9,786

155,149

142,607

The consolidated entity has entered into a bailment facility with Wells Fargo (previously GE Capital) for the purchase of Cisco
and Dell products up to a limit of $95.7 million. Included in trade payables is an amount of $39,836,266 (2015: $54,926,577)
payable to Wells Fargo under this arrangement, whereby Wells Fargo has legal title and first priority over its bailed goods and
proceeds. The bailment facility is supported by a Westpac Bank Guarantee in favour of Wells Fargo. The nature of the bailment
facility is such that the arrangement is treated as a trade payable.

16. BORROWINGS
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date,
the loans or borrowings are classified as non-current.

Current

Receivables Facility

Non-Current

Corporate Bond

Total current and non-current borrowings

(a) Total current and non-current secured liabilities:

Receivables Facility

75,000

90,000

39,075

38,829

114,075

128,829

75,000

90,000

(b) The receivables purchase facility is secured by a registered fixed and floating charge over all assets and undertakings of the
company and fixed charge over all debtors. The corporate bond is an unsecured facility.

Receivables Facility

120,000

The drawn amount of these facilities as at the report date is as per Note 16 above.

Corporate Bond
On 16th March 2015, the Company engaged FIIG Securities Limited to arrange the issue of a 5 year unsecured corporate bond.
The offering was fully subscribed raising $38.7 million net of transaction costs at a floating coupon rate over the 90 day bank bill
swap rate. The bond offering increased the tenure of our debt maturity profile and diversified our debt funding sources. The net
proceeds of the offering were used to reduce existing bank debt and to fund working capital investment.

The bond offering is part of our active approach to capital management. This bond issue is an important initiative for the
Company which reflects our strategy to ensure that we have multiple sources of funding and the security of longer term debt.

continued39

17. PROVISIONS
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event,
it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.

Current

Employee Benefits

Lease make-good provision

Non Current

Employee Benefits

Consolidated

Dec-16
$’000

Dec-15
$’000

5,913

169

6,082

5,066

222

5,288

1,326

1,031

Short-Term Employee Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.

Other Long-Term Employee Benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.

Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement.
However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued
leave or require payment within the next 12 months.

The following amounts reflect leave that is not expected to be taken within the next 12 months:

Employee benefits obligation expected to be settled after 12 months

2,543

2,703

Lease Make Good Provision
A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision
includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions
such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and
updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are
recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed
the carrying amount of the asset will be recognised in profit or loss.

Notes to the Financial Statements

18. ISSUED CAPITAL
Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.

Ordinary shares - fully paid

160,005,955 159,443,267

56,046

55,003

Dec 2016
Issued Shares

Dec 2015
Issued Shares

Dec 2016
$’000

Dec 2015
$’000

Movements in Ordinary Share Capital

Details

Opening Balance

Issue of shares on dividend re-investment plan (DRP)

Date

No of Share

Issue Price

1-Jan-15 131,140,033

2-Apr-15

921,551

Issue of shares on dividend re-investment plan (DRP)

26-Jun-15

1,010,734

Shares issued - capital raising

Shares issued - SPP

Share issue costs (net of tax)

10-Aug-15 23,000,000

31-Aug-15

3,000,000

31-Aug-15

–

Issue of shares on dividend re-investment plan (DRP)

11-Sep-15

218,609

Issue of shares on dividend re-investment plan (DRP)

16-Dec-15

152,340

$’000

6,891

1,465

1,971

40,250

5,250

(1,512)

418

270

$1.59

$1.95

–

$1.91

$1.77

Balance

31-Dec-15 159,443,267

–

55,003

Issue of shares on dividend re-investment plan (DRP)

16-Mar-16

200,914

Issue of shares on dividend re-investment plan (DRP)

16-Jun-16

152,648

7-Sep-16

117,551

15-Dec-16

91,575

$1.61

$1.85

$1.92

$2.31

323

282

225

212

Balance

31-Dec-16 160,005,955

–

56,046

Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does
not have a limited amount of authorised capital. 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.

Share Buy-Back
There is no current on-market share buy-back.

Capital Risk Management
The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

During 2016, the Company raised $1.0m through the Company’s Dividend Reinvestment Policy (DRP) for existing shareholders.

In the future the consolidated entity would look to raise capital when an opportunity to invest in a business or company was
seen as value adding relative to the current company’s share price at the time of the investment. In light of the recent capital
raising in August 2015 the consolidated entity is not actively pursuing additional investments in the short term.

The consolidated entity is subject to certain financing arrangements and covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

The capital risk management policy remains unchanged from the 31 December 2015 Annual Report.

continued19. RESERVES

Capital Profits Reserve (Pre-CGT)

Foreign currency reserve

Consolidated

Dec-16
$’000

Dec-15
$’000

369

295

664

369

372

Capital Profits Reserve (Pre-CGT)
The capital profits reserve records non-taxable profits on sale of investments.

Foreign Currency Reserve
The foreign currency reserve is used to recognise exchange differences arising from translation of the financial statements
of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in
foreign operations.

Movements in reserves

Opening Balance

Foreign currency translation

Closing Balance

20. DIVIDENDS

Dividends declared or paid during the financial year were as follows:

Final Dividend - 31 December 2015. Fully franked at 0.04 per ordinary share, paid 16.03.16
[Prior Period Final Dividend - 31 December 2014. Fully franked at $0.020, paid 02.04.15]

Interim Dividend - 31 December 2016. Fully franked at 0.0385 per ordinary share, paid 16.06.16
[Prior Period Interim Dividend - 31 December 2015. Fully franked at $0.027, paid 26.06.15]

Interim Dividend - 31 December 2016. Fully franked at 0.0385 per ordinary share, paid 16.09.16
[Prior Period Interim Dividend - 31 December 2015. Fully franked at $0.04, paid 11.09.15]

Interim Dividend - 31 December 2016. Fully franked at 0.0385 per ordinary share, paid 15.12.16
[Prior Period Interim Dividend - 31 December 2015. Fully franked at $0.035, paid 16.12.15]

372

292

664

725

(353)

372

Dec-16
$’000

Dec-15
$’000

6,378

2,623

6,146

3,566

6,152

6,363

6,157

24,833

5,575

18,127

The tax rate that dividends have been franked is 30% (2015: 30%)

Franking credit balance:

Franking credits available for subsequent financial years based on a tax rate of 30% (2015: 30%)

6,868

7,341

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

Notes to the Financial Statements

The company has a number of financial instruments
which are not measured at fair value in the statement of
financial position, including cash, receivables, payables and
borrowings. The fair value of these financial assets and
financial liabilities approximates their carrying amount.

The fair value of Borrowings in Note 16, is estimated by
discounting the future contractual cash flows at the current
market interest rates for loans with similar risk profiles and
has been measured under Level 2 of the hierarchy.

22. FINANCIAL INSTRUMENTS

Derivative Financial Instruments
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The
accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged. Derivatives
are classified as current or non-current depending on the
expected period of realisation.

Investments and Other Financial Assets
Investments and other financial assets are initially measured
at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value
through profit or loss. They are subsequently measured
at either amortised cost or fair value depending on their
classification. Classification is determined based on the
purpose of the acquisition and subsequent reclassification
to other categories is restricted.

Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have
been transferred and the consolidated entity has transferred
substantially all the risks and rewards of ownership.

Impairment of Financial Assets
The consolidated entity assesses at the end of each
reporting period whether there is any objective evidence
that a financial asset or group of financial assets is impaired.
Objective evidence includes significant financial difficulty of
the issuer or obligor; a breach of contract such as default
or delinquency in payments; the lender granting to a
borrower concessions due to economic or legal reasons that
the lender would not otherwise do; it becomes probable
that the borrower will enter bankruptcy or other financial
reorganisation; the disappearance of an active market for
the financial asset; or observable data indicating that there
is a measurable decrease in estimated future cash flows.

21. FAIR VALUE DISCLOSURES
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement
date; and assumes that the transaction will take place either:
in the principle market; or in the absence of a principal
market, in the most advantageous market.

Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For
non-financial assets, the fair value measurement is based
on its highest and best use. Valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, are used, maximising
the use of relevant observable inputs and minimising the
use of unobservable inputs.

Assets and liabilities measured at fair value are classified,
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed each reporting date and
transfers between levels are determined based on a
reassessment of the lowest level input that is significant
to the fair value measurement.

For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise
is either not available or when the valuation is deemed
to be significant. External valuers are selected based
on market knowledge and reputation. Where there is a
significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which
includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable, with
external sources of data.

Fair Value Measurement Hierarchy
The consolidated entity is required to classify all assets and
liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the
entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at
the measurement date;

Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly;

Level 3: Unobservable inputs for the asset or liability.
Considerable judgement is required to determine what is
significant to fair value and therefore which category the
asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is
determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable
inputs that require significant adjustments based on
unobservable inputs.

continued43

22. FINANCIAL INSTRUMENTS (CONTINUED)
The amount of the impairment allowance for financial assets carried at cost is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the current market rate of return for similar
financial assets.

Financial Assets and Liabilities

Financial Assets

Cash and cash equivalents

Loans and receivables

Total Financial Assets

Financial Liabilities

Trade and other payables

Borrowings

Total Financial Liabilities

Consolidated

Dec-16
$’000

Dec-15
$’000

17,459

15,835

162,718

180,177

163,978

179,813

155,149

114,075

142,607

128,829

269,224

271,436

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 manage foreign
currency risk. The company had open forward contracts as at the end of the financial year to mitigate this risk. 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:

– credit risk
– liquidity risk
– interest rate risk
– foreign exchange risk

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 $200,000. Receivables balances are monitored on an ongoing basis and as a result
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.

Notes to the Financial Statements

22. FINANCIAL INSTRUMENTS (CONTINUED)
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 reporting 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.

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 relation 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.

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

Consolidated

Dec-16
$’000

Dec-15
$’000

Within 1 Year Within 1 Year

155,149

75,000

230,149

142,607

90,000

232,607

1 to 5 Years

47,429

51,740

Financial Assets Pledged as Collateral
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. Refer to Note 16(c).

continued45

22. FINANCIAL INSTRUMENTS (CONTINUED)

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:

Interest Rate Risk

Floating rate instruments

Receivable finance facility

Corporate Bond

Dec-16
$’000

Dec-15
$’000

75,000

39,075

90,000

38,829

114,075

128,829

With a view to mitigate some of this risk on 27 January 2016, the company entered into a Derivative Financial Instrument
transaction with the Westpac Banking Corporation. The transaction is an Interest Rate Swap Transaction for $40 million
with an effective date of 29 March 2016 and a tenure of 2 years, maturing on 26th March 2018. The company entered that
transaction as an interest rate hedge against the partial tenure of the floating rate Corporate Bond issued during 2015 and
reflects the company’s active capital management, providing some pricing certainty over the next 2 budget cycles.

Sensitivity Analysis
The company has performed a sensitivity analysis relating to its exposure to interest rate risk at reporting date. If interest rates
changed by -/+ 1% from the year end rates with all other variables held constant, post-tax profit would have been $798,525
lower/higher (December 2015: $901,803 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.

Foreign Exchange Risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised
financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured
using sensitivity analysis and cash flow forecasting.

In order to protect against exchange rate movements, the consolidated entity has entered into forward foreign exchange
contracts. These contracts are hedging highly probable forecasted cash flows for the ensuing financial year. Management has
a risk management policy to hedge between 30% and 80% of anticipated foreign currency transactions for the subsequent
4 months.

The maturity, settlement amounts and the average contractual exchange rates of the consolidated entity’s outstanding forward
foreign exchange contracts at the reporting date was as follows:

Sell Australian dollars

Average exchange rates

Sell New Zealand dollars

Average exchange rates

31-Dec-16
$’000

31-Dec-15
$’000

31-Dec-16 31-Dec-15 31-Dec-16
$’000

31-Dec-15
$’000

31-Dec-16 31-Dec-15

Buy US dollars

Maturity:

0 - 3 months

3 - 6 months

Buy Australian dollars

Maturity:

0 - 3 months

3 - 6 months

6,687

4,287

0.7349

0.7167

10,260

6,532

0.7015

0.6497

–

3,600

–

0.6714

1,263

973

0.9486

0.9099

–

400

–

0.9365

Notes to the Financial Statements

22. FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities at the
reporting date was as follows:

Consolidated

Cash at bank

Trade receivables

Trade payables

Net statement of financial position exposure

Dec-16

US$’000

NZ$’000

471

674

(18,926)

(17,781)

6,382

13,919

(8,497)

11,804

Based on the financial instruments held at 31 December 2016, a strengthening/weakening of AUD against USD$ and NZD$
would have resulted in the following changes to the Groups reported profit and loss and/or equity.

Sensitivity Analysis
(Effects in Thousands)

US$ (5% movement)

NZD$ (5% movement)

Equity

Profit or Loss

Strengthening

Weakening

Strengthening

Weakening

–

(472)

–

521

847

(118)

(936)

130

23. KEY MANAGEMENT PERSONNEL COMPENSATION

Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is
set out below:

Short-term benefits

Long-term benefits

Post employment benefits

Total compensation

Consolidated

Dec-16
$

Dec-15
$

3,590,854

3,098,273

18,925

15,298

330,758

286,646

3,940,537

3,400,217

24. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by BDO, the auditor of the company,
its network firms and unrelated firms:

Audit services - BDO

Auditing or reviewing the financial report

Audit Services - Other BDO Network Firms

Auditing or reviewing the financial report

Other services - BDO East Coast Partnership

Indirect Tax Services

Tax and Corporate Services

Other services - Other BDO Network Firms

Indirect Tax Services

Tax & Corporate Services

182,388

188,000

27,262

21,985

31,737

17,061

174,982

270,189

206,719

287,250

1,248

–

17,286

35,308

1,248

52,594

continued47

25. CONTINGENT LIABILITIES
The directors are not aware of any contingent liabilities related to the Consolidated entity as at the report date.

26. COMMITMENTS

Capital Commitments
Capital expenditure commitments contracted for at reporting date but not recognised as liabilities:

Property, plant and equipment

Consolidated

Dec-16
$’000

Dec-15
$’000

122

The current year contracted commitment is for the expansion and improvement of car parking facilities at the Company’s
distribution centre in Kurnell.

Lease Commitments
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the
present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability
and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful
life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the
lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.

Lease Commitments - Operating

Committed at the reporting date but not recognised as liabilities, payable:

Within one year

One to five years

More than five years

1,104

3,117

502

4,723

938

–

1,742

Notes to the Financial Statements

27. PARENT ENTITY INFORMATION
Set out below is the supplementary information about the parent entity:

Statement of profit or loss and other comprehensive income

Profit after income tax

Total comprehensive income

Statement of financial position

Total current assets

Total assets

Total current liabilities

Total liabilities

Equity

Issued capital

Reserves

Retained profits

Total Equity

Dec-16
$’000

Dec-15
$’000

22,710

14,957

234,346

327,749

225,822

267,599

243,135

320,993

217,733

259,764

56,046

55,003

369

3,735

369

5,857

60,150

61,229

Guarantees Entered into by the Parent Entity in Relation to the Debts of its Subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees
the debts of the others. No deficiencies of assets exist in any of these subsidiaries.

Contingent Liabilities
The parent entity had the contingent liabilities as disclosed at Note 25 as at 31 December 2016.

Capital Commitments – Property, Plant and Equipment
The parent entity had the capital commitments for property, plant and equipment as detailed in Note 26.

Significant Accounting Policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1
and throughout the notes.

continued
49

28. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in Note 1:

Name

Express Data Holdings Pty Limited

Dicker Data New Zealand Ltd

Simms International Pty Ltd

29. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH

Principal place of
business/country
of incorporation

Australia

New Zealand

Australia

Ownership Interest

2016
%

100%

2015
%

100%

Profit after income tax

Adjustments for:

Depreciation

Amortisation on intangibles

Profit / (Loss) on the Disposals of PPE

Changes in Assets & Liabilities:

Decrease (increase) in current inventories

Decrease (increase) in current receivables

Decrease in deferred tax assets

(Decrease) in deferred tax liabilities

Increase (Decrease) in payables & Other

Increase in provisions

Increase in current tax liabilities

Net cash from operating activities

30. NON-CASH INVESTING AND FINANCING ACTIVITIES

Shares issued under dividend reinvestments plan (DRP)

Consolidated

Dec-16
$’000

Dec-15
$’000

25,624

20,499

1,400

1,474

9,303

1,336

(39)

12,833

1,306

6,467

1,896

2,133

–

(31,714)

(17,607)

388

(1,107)

(2,782)

473

5,258

59,744

(22,563)

1,043

4,123

Notes to the Financial Statements

31. EARNINGS PER SHARE

Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Dicker Data Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Profit after income tax

Profit after income tax attributable to the owners of Dicker Data Limited

Dec-16
$’000

Dec-15
$’000

25,624

20,499

Weighted average number of shares used as denominator

Number

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

Basic earnings per share (cents)

Diluted earnings per share (cents)

32. RELATED PARTY TRANSACTIONS

Parent Entity:
Dicker Data Limited is the parent entity.

Subsidiaries:
Interests in subsidiaries are set out in Note 28.

159,727

142,436

159,727

142,436

Cents

16.04

14.39

Key Management Personnel:
Disclosures relating to key management personnel are set out in Note 23 and the remuneration report in the directors’ report.

Transactions with Related Parties
There were no transactions with related parties during the year.

33. SUBSEQUENT EVENTS
There were no other significant matters subsequent to the end of the financial year.

continuedDirectors’ Declaration

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 31st December 2016 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, 27 February 2017

Annual Report 201652

Auditor’s Declaration of Independence

Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au

Level 11, 1 Margaret St
Sydney NSW 2000
Australia

DECLARATION OF INDEPENDENCE BY KIERAN GOULD TO THE DIRECTORS OF DICKER DATA LIMITED

As lead auditor of Dicker Data Limited for the year ended 31 December 2016, I declare that, to the
best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Dicker Data Limited and the entities it controlled during the year.

Kieran Gould
Partner

BDO East Coast Partnership

Sydney, 27 February 2017

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

Dicker Data Limited

Independent Auditor’s Report

Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au

Level 11, 1 Margaret St
Sydney NSW 2000
Australia

INDEPENDENT AUDITOR'S REPORT

To the members of Dicker Data Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Dicker Data Limited (the Company) and its subsidiaries (the
Group), which comprises the statement of financial position as at 31 December 2016, the statement of
profit and loss and other comprehensive income, the statement of changes in equity and the statement
of cash flows for the year then ended, and notes to the financial report, including a summary of
significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:

(i)

Giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its
financial performance for the year ended on that date; and

(ii)

Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.

Annual Report 2016

Independent Auditor’s Report

Valuation of inventory

As at 31 December 2016, the Group held inventory of $107,025,251, which is disclosed in note 12. Our
focus in relation to this matter was to consider whether inventory was being appropriately carried at
the lower of cost and net realisable value. Due to the industry in which the Group operates, the
products held in inventory have an inherent risk of obsolescence.

To determine whether the valuation of inventory was appropriate at reporting date we undertook,
amongst others, the following audit procedures:

•

Agreed inventory on hand to initial purchase invoice and subsequent sales invoice on a sample
basis and compared the carrying amount to the realisable value

Analysed inventory turnover and inventory by vendor in comparison to prior periods and
investigated unexpected fluctuations

Performed gross margin analysis by product group in comparison to expectations to determine
if any evidence of negative or declining gross margin was present

Reviewed management’s calculation for the inventory obsolescence provision and considered if
this was appropriate in light of the Group’s accounting policies, historic sales trends and
analysis of slow moving inventory

Reviewed the allocation of rebates outstanding at year end to inventory on hand.

Other information

The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2016, but does not include
the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

continued

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_files/ar2.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 31
December 2016.

In our opinion, the Remuneration Report of Dicker Data Limited, for the year ended 31 December 2016,
complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.

BDO East Coast Partnership

Kieran Gould
Partner

Sydney, 27 February 2017

Shareholder Information

The shareholder information set out below was applicable as at 6 February 2017.

ORDINARY SHARE CAPITAL
As at 31 December 2016, the issued capital of the Company was 160,005,955 ordinary fully paid shares.

DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:

Size of Holding

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Number of
Shareholders

Number of
Shares

% of Issued
Capital

499

448

1,090

779

140,541,264

87.83%

12,445,529

3,632,447

2,940,416

446,299

7.78%

2.27%

1.84%

0.28%

2,863

160,005,955

100.00%

UNQUOTED OPTIONS
The Company had no unquoted options on issue as at 6 February 2017.

LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES
There were 59 holders of less than a marketable parcel of ordinary shares. The number of shares in aggregate of these
unmarketable parcels is 2,358.

TWENTY LARGEST HOLDERS OF QUOTED EQUITY SECURITIES

MR DAVID JOHN DICKER

MS FIONA TUDOR BROWN

J P MORGAN NOMINEES AUSTRALIA LIMITED

BNP PARIBAS NOMINEES PTY LTD

BNP PARIBAS NOMS PTY LTD

RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

NATIONAL NOMINEES LIMITED

AUST EXECUTOR TRUSTEES LTD [CHARITABLE FOUNDATION]

CITICORP NOMINEES PTY LIMITED

LINK TRADERS (AUST) PTY LTD

BOND STREET CUSTODIANS LIMITED

ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD

MEURER INVESTMENTS PTY LTD

UBS NOMINEES PTY LTD

MR CRAIG GRAEME CHAPMAN

MR TIMOTHY BRYCE KLEEMANN

GWYNVILL TRADING PTY LTD

CITICORP NOMINEES PTY LIMITED

AUST EXECUTOR TRUSTEES LTD [BIPETA]

Totals

SUBSTANTIAL HOLDERS
The names of the Substantial Shareholders listed in the Company’s Register as at 6 February 2017:

Shareholder

MR DAVID JOHN DICKER

MS FIONA TUDOR BROWN

Number of fully
paid Ordinary
Shares

% of Issued
Capital

60,553,495

53,945,808

8,551,960

3,038,248

2,400,890

1,166,118

1,025,552

967,213

926,021

741,861

500,000

442,480

419,788

301,332

285,058

280,000

235,000

228,627

224,249

221,121

37.84%

33.71%

5.34%

1.90%

1.50%

0.73%

0.64%

0.60%

0.58%

0.46%

0.31%

0.28%

0.26%

0.19%

0.18%

0.17%

0.15%

0.14%

136,454,821

85.28%

Number of
Ordinary Fully
Paid Shares

% of Issued
Capital

60,553,495

54,002,278

37.84

33.75

VOTING RIGHTS
In accordance with the Constitution each member present at a meeting whether in person, or by proxy, or by power of attorney,
or in a duly authorised representative in the case of a corporate member, shall have one vote on a show of hands, and one vote
for each fully paid ordinary share, on a poll.

ON-MARKET BUY-BACKS
There is no current on-market buy-back in relation to the Company’s securities.

230 Captain Cook Drive
Kurnell NSW 2231

T. 1800 688 586
F. 1800 688 486

www.dickerdata.com.au

ABN: 95 000 969 362