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The Dick Smith Group

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The Dick Smith Group The Dick Smith Group Report to creditors pursuant to Section 439A of the Corporations Act 2001 13 July 2016 Table of contents Table of contents ............................................................................................................................................................................... 1 Glossary................................................................................................................................................................................................ 4 Listing of tables .................................................................................................................................................................................. 7 Listing of figures ................................................................................................................................................................................ 7 1 Executive summary ............................................................................................................................................................. 9 2 Introduction ....................................................................................................................................................................... 14 2.1 Appointment of Voluntary Administrators .................................................................................................................. 14 2.2 Appointment of Receivers and Managers .................................................................................................................... 14 2.3 Objective of voluntary administration .......................................................................................................................... 15 2.4 First meetings of creditors .............................................................................................................................................. 15 2.5 Committee of Creditors ................................................................................................................................................... 15 2.5.1 DS Holdings and DS Electronics ..................................................................................................................................... 15 2.5.2 DS NZ .................................................................................................................................................................................. 15 2.6 Extension of convening period ....................................................................................................................................... 15 2.7 Second meetings of creditors ......................................................................................................................................... 16 2.7.1 DS Australia and Mac 1 ................................................................................................................................................... 16 2.7.2 DS NZ .................................................................................................................................................................................. 16 2.8 Purpose of this report ...................................................................................................................................................... 17 2.9 Context of this report ...................................................................................................................................................... 17 2.10 Declaration of Independence, Relevant Relationships and Indemnities ................................................................. 17 3 Background information .................................................................................................................................................. 19 3.1 Group structure ................................................................................................................................................................. 19 3.1.1 Deed of Cross Guarantee ................................................................................................................................................. 19 3.2 Ownership and control .................................................................................................................................................... 20 3.2.1 Early history of the Dick Smith business ...................................................................................................................... 21 3.2.2 Acquisition of the Dick Smith business by Anchorage .............................................................................................. 21 3.2.3 Dick Smith becomes a public company ........................................................................................................................ 21 3.3 Business operations .......................................................................................................................................................... 23 3.3.1 Business overview ............................................................................................................................................................. 23 3.3.2 Operating locations .......................................................................................................................................................... 25 3.3.3 Products .............................................................................................................................................................................. 25 3.3.4 Employees........................................................................................................................................................................... 26 3.4 Shareholders ...................................................................................................................................................................... 27 3.5 Officers ................................................................................................................................................................................ 29 3.6 Secured lenders and charges .......................................................................................................................................... 30 3.7 Gift cards ............................................................................................................................................................................ 30 4 Financial information ........................................................................................................................................................ 31 4.1 Historical profit and loss ................................................................................................................................................. 31 4.2 Historical balance sheet ................................................................................................................................................... 32 4.3 Historical cash flow........................................................................................................................................................... 34 5 Management Accounts .................................................................................................................................................... 37 1 5.1 Monthly profit and loss ................................................................................................................................................... 37 5.2 Summary balance sheet ................................................................................................................................................... 38 5.3 EBITDA and cash flow to 31 December 2015 .............................................................................................................. 39 6 Commentary on events from October 2015 to December 2015 .............................................................................. 40 6.1 Introductory remarks........................................................................................................................................................ 40 6.2 October 2015 to December 2015 ................................................................................................................................... 40 7 Report as to Affairs and Directors’ reasons for failure .............................................................................................. 43 7.1 Report as to Affairs .......................................................................................................................................................... 43 7.2 Directors’ opinions as to the reasons for failure ........................................................................................................ 44 7.3 Conclusion .......................................................................................................................................................................... 44 8 Administrators’ opinion as to the reasons for failure ................................................................................................ 45 8.1 Market related factors...................................................................................................................................................... 45 8.2 Declining comparable sales ............................................................................................................................................
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