Kogan's prospectus for its initial public offering reveals that the company paid $2.6 million to acquire assets of failed retailer Dick Smith, including brands, online website and customer database.
The online retailer gained 1.3 million active subscribers through the acquisition that weren’t already in its customer database. Kogan now boasts 3.6 million active subscribers and 52 million website visitors.
The Dick Smith acquisition is expected to generate significant earnings and revenue under its new owners, according to Kogan. The prospectus outlines synergies such as cross-marketing between Kogan and Dick Smith email databases, extracting sourcing and operating efficiencies and selling private label and third-party branded products through its new online store.
Kogan expects revenue to reach revenue of $201.1 million for the 2016 financial year ending 30 June, which would only be an increase of $800,000. However, Kogan forecasted revenue for FY2017 to hit $241.2 million even without Dick Smith. This would be an increase of $41.1 million, or close to 20 percent.
Earnings for FY2017 are expected to be $6.9 million, an increase of $4 million, and net profit up from $400,000 to $2.5 million.
Kogan pointed to its recently reopened telecommunications business, Kogan Mobile, as one example of a new vertical with potential for growth. Kogan Mobile made $400,000 in the FY2016, although it only reopened in October, meaning it had nine months of trading. The company expects sales to grow to $1.4 million in FY2017.
Kogan’s travel business made $4.3 million in revenue for FY2016, and is expected to grow to $5.4 million next year.
Kogan released a prospectus last week as part of its bid to raise $50 million through an IPO. The company plans to list on the Australian Securities Exchange on 30 June with a market capitalisation of $168 million.
Shares will be offered at $1.80 and will be used to fund a new growth platform for Kogan. Chief executive Ruslan Kogan will maintain a 50.5 percent share of the company, down from 70 percent, while chief operating officer and chief financial officer David Shafer will keep 19.1 percent, down from 30 percent.
Kogan also hired manufacturing executive and former World Vision CFO Greg Ridder as its chairman, and chief executive of produce company Costa, Harry Debney, as a non-executive director.