Slide 1: Investor Presentation
For personal use only Investor Presentation 23 AUGUST 2016
Slide 2: Important Notice
IMPORTANT NOTICE This disclaimer applies to this presentation and the information contained in it (the “Presentation”). For personal use only By reading this disclaimer you agree to be bound by it. Important notice and disclaimer: This presentation contains a general summary of the activities of Kog
Slide 3: Contents
CONTENTS For personal use only CEO Update Page 3 Financial Update Page 10 Outlook Page 26 Q&A Glossary Page 30 2
Slide 4: CEO Update
For personal use only CEO Update Ruslan Kogan Founder & CEO 3
Slide 5: FY16 Results
FY16 RESULTS FY16 Pro Forma EBITDA of $4.0 million represents an outperformance on Prospectus forecast of $1.1 million. For personal use only Pro Forma Pro Forma forecast1 actual1 FY2016 FY2016 Variance % Revenue $m 201.1 211.2 5.0% Gross Margin % 14.5% 15.5% 6.9% EBITDA $m 2.9 4.0 37.9% KEY DRIVERS
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue, Gross Margin and Pro Forma EBITDA exceeded FY16 Prospectus forecast. For personal use only REVENUE GROSS MARGIN Pro Forma1 EBITDA $225m 18% $5m 17% $4.0m $211.2m $4m 16% 15.5% 15% $3m $2.9m $201.1m 14.5% $200.3m 14.4% $200m 14% $2m $1.6m 13% 12% $1m 11% $175m 10% 0 FY15
Slide 7: FY16 Year in Review
FY16 YEAR IN REVIEW How we delivered value this year: For personal use only BEST-IN-CLASS DATA DRIVEN CULTURE COMPELLING OFFERING SERVICE & TECHNOLOGY Revenue growth through precision Increased automation driving faster Continual improvement of consumer purchasing, even while capital dispatch and im
Slide 8: Key Statistics
KEY STATISTICS Strong growth in Active Customers and Subscribers highlighting Kogan.com as a preferred online destination for Aussie shoppers. For personal use only Dec-15 Jun-16 Total Kogan Kogan Dick Smith unique4 Active Subscribers1 2.3m 2.9m 1.2m 3.7m Active Customers2 621,000 672,000 32,000 702
Slide 9: Successful Launch of Dick Smith
SUCCESSFUL LAUNCH OF DICK SMITH Dick Smith websites were integrated into the business ahead of schedule and launched on 4 May 2016. For personal use only 8
Slide 10: Third Party Domestic Achieved Strong Growth in FY16
THIRD PARTY DOMESTIC ACHIEVED STRONG GROWTH IN FY16 For personal use only Third Party Domestic continues to gain traction and exceed forecast as brands become more attracted to our active customer/subscriber base and distribution capability. THIRD PARTY DOMESTIC L3M GROSS SALES VERSUS NUMBER OF BRAN
Slide 11: Financial Update
For personal use only Financial Update David Shafer CFO/COO 10
Slide 12: FY16 Performance Against Forecast Highlights
FY16 PERFORMANCE AGAINST FORECAST HIGHLIGHTS Pro Forma EBITDA was 37.9% higher than the Prospectus forecast. For personal use only Pro Forma Pro Forma forecast3 actual3 $m FY2016 FY2016 Variance % Revenue 201.1 211.2 10.1 5.0% Gross Profit 29.2 32.7 3.5 12.0% Gross Margin % 14.5% 15.5% 1.0p.p 6.9% E
Slide 13: Pro Forma Historical & Forecast Results
PRO FORMA HISTORICAL & FORECAST RESULTS Pro Forma EBITDA outperformed Prospectus forecast, driven by higher than forecast gross margin. For personal use only Pro Forma Pro Forma forecast actual $m FY2016 FY2016 % Variance Gross Sales 209.1 221.3 5.8% OVERVIEW Revenue 201.1 211.2 5.0% Revenue was $10
Slide 14: Key Drivers of Kogan.com FY16 Financial Performance
KEY DRIVERS OF KOGAN.COM FY16 FINANCIAL PERFORMANCE For personal use only The business, excluding Dick Smith, outperformed forecast revenue by $3.6 million. In the six months to June, the business achieved solid growth in Active Subscribers1 and Active CUSTOMER GROWTH Customers2, excluding Dick Smit
Slide 15: Key Drivers of Kogan.com FY16 Financial Performance
KEY DRIVERS OF KOGAN.COM FY16 FINANCIAL PERFORMANCE For personal use only The business is reaping the rewards of the SAP implementation through improved efficiency, automation and reporting, allowing management to make faster and more informed decisions. Gross margin exceeded the Prospectus forecast
Slide 16: Pro Forma FY16 Results Compared to FY15
PRO FORMA FY16 RESULTS COMPARED TO FY15 Pro Forma EBITDA increased by 150.0% year on year. For personal use only REVENUE Pro Forma Pro Forma actual actual Growth in Third Party Branded Domestic revenue, $m FY2016 % Variance due to brand and product range expansion. FY2015 Launch of New Verticals Kog
Slide 17: FY16 Product Gross Sales Mix
FY16 PRODUCT GROSS SALES PRODUCT & BUSINESS MIX Third Party Domestic Gross Sales represented 24.2% of product Gross Sales compared to forecast of 18.4% For personal use only GROSS SALES MIX BY PRODUCT DIVISION PRIVATE LABEL PRODUCT GROSS SALES MIX (EXCLUDING NEW VERTICALS) Third Party Domestic 24.2%
Slide 18: Impact of Cash Constraints on Inventory Holding
IMPACT OF CASH CONTRAINTS ON INVENTORY HOLDING For personal use only Whilst Gross Sales increased year on year, management believes the reduction in inventory in FY16 represents a lost sales opportunity in the period. PRIVATE LABEL AND THIRD PARTY DOMESTIC GROSS SALES VERSUS AVERAGE INVENTORY HOLDIN
Slide 19: Private Label Strategy
PRIVATE LABEL STRATEGY IPO proceeds being invested in the Private Label range to drive growth. For personal use only Following the IPO, the business has sufficient funds to invest in Private Label. IPO proceeds are being deployed into products for which there is proven demand, with the benefits expe
Slide 20: New Verticals: Kogan Travel & Kogan Mobile
NEW VERTICALS KOGAN TRAVEL & KOGAN MOBILE For personal use only Kogan Travel and Kogan Mobile performed above forecast levels in FY16 Launched in May 2015 to market affordable travel Launched in October 2015 to offer affordable and holidays online through existing and new pre-paid mobile plans. cust
Slide 21: New Verticals
NEW VERTICALS Kogan Travel and Kogan Mobile outperformed forecast Gross Sales1. For personal use only OVERVIEW Pro Forma Pro Forma forecast actual Kogan Travel successfully outperformed FY16 $m FY2016 Variance % forecast as a result of compelling deals to a variety FY2016 of destinations. Gross Sale
Slide 22: Pro Forma Operating Costs
PRO FORMA OPERATING COSTS Whilst gross margins on Third Party Domestic products are ~3x higher than Third Party International, outperformance against forecast revenue leads to marginally higher operating costs. For personal use only PRO FORMA1 OPERATING COSTS PRO FORMA1 OPERATING COSTS BREAKDOWN FY1
Slide 23: Pro Forma Net Asset Summary
PRO FORMA NET ASSET SUMMARY Pro Forma1 Net Debt2 was $1.4 million lower at 30 June 2016 than the Prospectus forecast level of $4.0 million assumed prior to the listing. For personal use only Pro Forma actual $m 30-Jun-16 CURRENT ASSETS Cash & Cash Equivalents 2.3 Trade & Other Receivables 2.5 Invent
Slide 24: Statutory Reconciliation to Pro Forma Net Assets
STATUTORY RECONCILIATION TO PRO FORMA NET ASSETS Statutory Net Debt was $3.1 million at 30 June 2016. For personal use only Statutory Pro Forma $m 30-Jun-16 Transaction costs1 30-Jun-16 CURRENT ASSETS Cash & Cash Equivalents 1.8 0.5 2.3 Trade & Other Receivables 3.0 (0.5) 2.5 Inventories 20.5 - 20.5
Slide 25: Statutory Reconciliation to Pro Forma Results
STATUTORY RECONCILIATION TO PRO FORMA RESULTS FY16 Pro Forma EBITDA was $1.1 million above forecast, driven by revenue exceeding forecast by $10.1 million. For personal use only Pro Forma Statutory Transaction Pro-Forma Actual $m FY16 Costs Costs FY16 Revenue 211.2 - - 211.2 Cost of Sales (178.5) -
Slide 26: FY16 Statutory Cash Flow
FY16 STATUTORY CASH FLOW Working capital reduced by $8.1 million in FY16, resulting in operating cash flow before capital expenditure of $12.0 million. For personal use only Statutory $m FY16 OVERVIEW EBITDA 3.9 The business generated $12.0 million of operating Change in Net Working Capital 8.1 cash
Slide 27: Outlook
For personal use only Outlook 26
Slide 28: FY17 Outlook
FY17 OUTLOOK Positive outlook for FY17 due to growth in gross margins, and strong growth in Third Party Domestic and New Verticals. For personal use only Following stronger than expected results in FY16 and trading results for July that are ahead of the FY17 Prospectus forecast monthly projection, t
Slide 29: Delivering Growth in FY17 & Beyond
DELIVERING GROWTH IN FY17 & BEYOND Kogan.com’s growth initiatives are designed to support its vision to become Australia’s premier online retail destination through leveraging its core business strengths. For personal use only EXISTING GROWTH INITIATIVES USE OF NEW CAPITAL MEDIUM-TERM OPPORTUNITIES
Slide 30: Q&A
For personal use only Q&A 29
Slide 31: Glossary
GLOSSARY Cancellations and Refunds: occur when customers cancel an order before it is despatched (cancellations) or when customers return products to Kogan.com following delivery due to a defect or change of mind (refunds) For personal use only Consumer Electronics: includes audio, cameras, computer