Dick Smith Holdings enters into voluntary administration

Dick Smith Holdings announced the appointment of voluntary administrators this morning. The announcement notes sales and cash generation in December 2015 were below management expectations and while alternative funding was explored, the Board's view was it wouldn't arrive in a timely fashion to support short term funding and allow for inventory to be ordered over the next 4-6 weeks. The Board was unsuccessful in obtaining the necessary support of its banking syndicate: appointing a voluntary administrator (McGrath Nicol) was determined by the Directors to be the only option. An exercise is to revisit the list of announcements: 30 June 2014 (DSH beats sales forecasts in prospectus); 19 March 2015 (restructure to support Grow Strategy); 18 August 2015 (DSH total sales up 7.5%; comp sales up 1%); 18 October 2015 (Trading update ahead of AGM: sales growth for 1Q16 of 6.9%; comp sales up 1.3% and downgrades FY16NPAT forecast by $5m to $8M); 30 November 2015 (Non cash adjustment of $60m pre-tax) and today. The Grow Strategy is worth a closer look...