Initial Public Offering Details: The company has officially launched an IPO and is expected to have a market capitalisation of $168 million after listing on the ASX on June 30, 2016 with an aim to raise $50 million from investors. The online retail website is a pure play offering shares for $ 1.80 each to be used for funding business expansion through new products and marketing. The founders, Ruslan Kogan and CFO David Shafer together are retaining a stake of about 69.2% in the business, which was founded in 2006 with an initial product range of only two private label LCD TVs.  Mr Kogan and Mr Shafer are said to be entitled to sell part of the combined 69% stake 14 months after the IPO.


Forecast Numbers (Source - Company Prospectus)
 
Prospects at the back of stable history: The revenue forecast is $ 241.2 million for 2017 and EBITDA for that year is forecast at $ 6.9 million. Net profits are expected to surge to $2.5 million against a profit of $400,000 in 2016 and a loss of $300,000 in 2015. Kogan says that the company has become a challenger brand dominating price leadership through the use of digital efficiency. The goal is to make products that are in demand, as well as services that are affordable and accessible. The company wants to ensure that every investor becomes a part of its story and believes in its mission. The business has shown robust growth over the past 10 years without the need for any external equity financing and the business culture is characterised by high levels of personal responsibility, demonstrating the strength and sustainability of the business. The prospectus implies that Kogan and his team have accomplished a fair amount of learning, adaptation and improvement over the past couple of years because of their share of difficulties. This means that unlike other tech businesses, an investment in this company is not an investment promising the high level of growth promised by a unicorn, but resembles a business which is in recovery mode. Kogan had acquired the Dick Smith online business from receivers for an undisclosed sum earlier this year.


Significant Interests (Source - Company Prospectus)
 
The recent half-year, which ended on 31 December 2015, was not easy with revenue declining by 3.1%, EBITDA margins declining from 4.6% to 2.5% and an almost 50% fall in net profit. Management attributes the subdued performance to the fall in the AUD, the limitation of the platform for enterprise software and a reduction in marketing spend because of cash constraints. Consequently, in consultation with its bankers, the company reduced its credit facility to $ 5.5 million from $ 9 million which, though the right decision under the circumstances, exacerbated the cash constraints. The business is forecast to transform the net loss of $ 300,000 in 2014-15 to a profit in 2015-16 and increase to $ 2.4 million in FY 2017. The prospectus implies that the company does not resemble anything else on the ASX. Moreover, it is classified as a tech company, but without the usual extravagant growth promises characterising these companies. Finally, it is a retailer operating on thin margins, which does not operate any stores. The book build is reported to be oversubscribed but, doubtless, many investors seem to watch the progress over the next year before making up their minds.


Australian Retail Market (Source - Company Prospectus)

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