Harvey Norman silent partner wins $14.6m slice of success

IAN NORMAN, the reclusive co-founder of the Harvey Norman retail chain with Gerry Harvey, paid himself nearly $15 million in dividends from his private company Dimbulu last year.

By InvestSMART · 8 Feb 2010

By InvestSMART ·
8 Feb 2010

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IAN NORMAN, the reclusive co-founder of the Harvey Norman retail chain with Gerry Harvey, paid himself nearly $15 million in dividends from his private company Dimbulu last year.

Filings lodged with the corporate regulator show Dimbulu paid a $14.6 million dividend in 2009 to its only shareholder, a private company controlled by Ian Norman and his wife Shirley.

Mr Norman, who remains a non-executive director of Harvey Norman and its second largest shareholder with a stake worth some $630 million, received a $17.9 million dividend the previous year.

Dimbulu, which operates as Mr Norman's family private investment company, reported a net profit of $20.9 million in 2009, down from $23 million in 2008, earning its income from a steady stream of dividends, distributions and interest.

While the bulk of the revenue comes from dividends payable on Dimbulu's 175 million Harvey Norman shares, the accounts show the Normans also had a sizeable investment portfolio. Among investments are $5 million worth of shares in Westpac and $2 million worth of shares in each of Paperlinx, Commonwealth Bank and IAG.

Dimbulu's accounts also detail two unsecured loans as "non-current receivables" to Harvey Norman directors John Slack-Smith and David Ackery. Mr Slack-Smith, an executive director of Harvey Norman, has an unsecured loan at call payable with interest to Dimbulu worth $5.3 million, up from $5 million the previous year.

Mr Ackery, also an executive director, has a $1.5 million loan, down slightly from the previous year. The interest terms on the loan are not disclosed.

Mr Norman was ranked No.90 on last year's BRW Rich List.

For his part, Mr Harvey's stake in Harvey Norman would have seen him earn $34 million in dividends last year, a million-dollar executive chairman's salary, plus the near $2 million in dividends earned by his wife, the chief executive, Katie Page, and her $1.3 million salary. Mr Harvey was No.24 on last year's BRW Rich List.

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Frequently Asked Questions about this Article…

Who is Ian Norman and what is Dimbulu in relation to Harvey Norman?

Ian Norman is the reclusive co-founder of the Harvey Norman retail chain and a non-executive director and major shareholder. Dimbulu is his family’s private investment company that holds large Harvey Norman shareholdings and receives dividend income on those shares.

How much did Ian Norman receive in dividends from Dimbulu in 2009 and the year before?

According to filings, Dimbulu paid a $14.6 million dividend in 2009 to its sole shareholder controlled by Ian Norman and his wife. The previous year he received about $17.9 million in dividends.

What were Dimbulu’s reported profits in 2009 and how did they compare to 2008?

Dimbulu reported a net profit of $20.9 million in 2009, down from $23 million in 2008. The company earned income mainly from dividends, distributions and interest.

How significant are Harvey Norman shares to Dimbulu’s revenue?

The bulk of Dimbulu’s revenue comes from dividends payable on its 175 million Harvey Norman shares, making those shareholdings a primary source of the company’s income.

What other investments does Ian Norman’s Dimbulu hold besides Harvey Norman shares?

Dimbulu’s accounts show a diversified investment portfolio that includes about $5 million worth of Westpac shares and roughly $2 million each in shares of Paperlinx, Commonwealth Bank and IAG.

What director loans or related-party transactions appear in Dimbulu’s accounts?

Dimbulu’s accounts list unsecured loans to Harvey Norman directors: John Slack-Smith had an at-call loan of $5.3 million (up from $5 million the prior year) payable with interest to Dimbulu, and David Ackery had an unsecured loan of $1.5 million. The interest terms on Ackery’s loan were not disclosed.

What payments did Gerry Harvey and CEO Katie Page receive according to the report?

The report states Gerry Harvey’s Harvey Norman stake would have earned him about $34 million in dividends that year plus a roughly $1 million executive chairman’s salary. CEO Katie Page reportedly earned near $2 million in dividends and had a salary of about $1.3 million.

What should everyday investors note from Dimbulu’s and Harvey Norman’s disclosure?

Everyday investors may want to note that large shareholders receive substantial dividend income, that a family investment company (Dimbulu) can be a material holder of company shares, and that related-party items such as unsecured director loans are disclosed in accounts—details that can be relevant when assessing a company’s shareholder structure and related-party risks.