Slide 1: Focusrite plc
Focusrite plc December 2015 1
Slide 2: Disclaimer
Disclaimer The content of this document (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”), as amended. Reliance on this document for the purpose of engaging in any investment activity may expose an individual
Slide 3: Agenda and Presentation Team
Agenda Presentation Team Highlights Refresher Markets and Products Dave Froker Financial Review Jeremy Wilson Dave Froker Jeremy Wilson Outlook and Summary Chief Executive Chief Financial Dave Froker Officer Officer International Track 200 Two Queen’s Awards 100 Best Small Co’s to Work For
Slide 4: Highlights
Highlights Successful first year of trading since Revenue £m IPO in December 2014 50 48.0 40 41.0 19 new products launched including 36.1 30 higher priced segments (LaunchPad 25.3 Pro and Clarett) and live / broadcast 20 20.2 segment (Rednet) 13.9 10 9.1 0 Rated, for fourth consecutive year, a
Slide 5: Refresher: Leading Brands
Refresher: Leading Brands Studio reputation brought to the Positioned in fastest* wider market growing segment of music Mic Headphones Scarlett 2i2 Plug-ins Headphones, mic and interface make up Focusrite’s “Scarlett Studio”; Red Grid and knobs are Novation’s “LaunchPad” and “LaunchControl”; softwar
Slide 6: Refresher: Five Key Product Teams
Refresher: Five Key Product Teams £48m FY15 = 1.8% of £2.7B Market(1) 30% of FY14 group 65% of FY15 group revenue(2) revenue(2) 1 RedNet/COMMERCIAL 2 PRO & PROJECT 3 HOBBYIST 4 EDM Producer Performers Will Hoult Rob Jenkins Rob Jenkins Olly Burke Product Manager Product Manager Product Manager Produ
Slide 7: Refresher: Over 800,000 Products Sold Last Year
Refresher: Over 800,000 Products Sold Last Year From Artists and Institutions to Hobbyists Professional Musicians & Artists Institutions & Events Amateur Musicians References "I love Novation gear. In my studio, I have the “I put faith in Focusrite, as they have a track record of over 20 years of Im
Slide 8: Refresher: Growth Drivers To-Date
Refresher: Growth Drivers To-Date Product-Driven Innovation – c.1/3 staff in R&D – Aspire to have best products at all prices – Aim to enter new segments – 64 new products since September 2011 High Levels of End-User Focusrite Studio Console 1990 Satisfaction Vision Strong Brand Differentiatio
Slide 9: Refresher: Established Distribution & Supply Channel
Refresher: Established Distribution & Supply Channel UK 17% DE 9% USA 38% 64% of sales marketed directly to resellers and dealers 36% of our sales go through distributors in c160 territories Third-party logistics warehouses Manufacturing (contract 3rd-parties) 9
Slide 10: 2015: Markets
2015: Markets Segmental revenue FY15 FY14 Growth Regional split of revenue £m £m % FY15 USA 18.5 14.3 29.3% EMEA 21.5 19.6 9.4% RoW 8.1 7.0 14.5% Total 48.0 41.0 17.2% • All major regions growing • USA: up 29.3% to £18.5m – Economy & Amazon growth • EMEA: up 9.4% to £21.5m FY14 – Affected by the wea
Slide 11: Sectors: Focusrite
Sectors: Focusrite Focusrite FY15 FY14 Growth £m £m % Revenue 31.2 26.8 16.3% • Major products launched – iTrack Pocket: new channel & refresh – Scarlett Solo (first time under $100) – Clarett (moving above $500) – RedNet versions for Live and Broadcast 11
Slide 12: Sectors: Novation
Sectors: Novation Novation FY15 FY14 Growth £m £m % Revenue 14.2 11.5 22.7% • LaunchPad Pro • Circuit • Mark II versions of existing products • Rebrand successful 12
Slide 13: Sectors: UK Distribution
Sectors: UK Distribution Distribution FY15 FY14 Growth £m £m % Revenue 2.7 2.6 2.8% • KRK Studio Monitors holding steady • Strategic interest 13
Slide 14: Agenda
Agenda Highlights Refresher Markets and Products Dave Froker Financial Review Jeremy Wilson Outlook and Summary Dave Froker 14
Slide 15: Financial Highlights
Financial Highlights Financial Highlights • Group revenue up by 17.2% to £48.0 million (FY14: £41.0 million) • Adjusted EBITDA up by 13.1% to £9.3 million (FY14: £8.2 million) • Operating profit up by 10.7% to £6.3 million (FY14: £5.7 million) • Adjusted diluted earnings per share up by 4.3% to 10.5
Slide 16: Income statement
Income statement Income Statement £ million IFRS IFRS Revenue up 17.2%. FY15 FY14 Growth • Both major brands and all major territories Revenue 48.0 41.0 17.2% increasing. Cost of sales -29.4 -25.1 • 14.9% at constant exchange rates (Stronger Gross profit 18.6 15.9 17.3% US$ outweighs weaker €). Oper
Slide 17: Balance Sheet
Balance Sheet Balance £ million Sheet IFRS IFRS Intangible fixed assets include £3.5m of FY15 FY14 capitalised R&D and £0.4m of goodwill Intangible assets 3.9 3.0 • Greater R&D spend. Prudent capitalisation (c80%) Tangible assets 1.3 1.0 and aggressive amortisation (3 years) Total non current assets
Slide 18: Cash flow
Cash flow £Cash million flow statement IFRS IFRS Working capital remains controlled (16.6% of FY15 FY14 revenue) Adjusted EBITDA 9.3 8.2 Movement in wc (ex non- Operating cash flow before non-underlying items underlying items) -1.1 0.5 88% of Adjusted EBITDA (FY14, 107%) Operating cash flow ( ex non
Slide 19: Dividend
Dividend Dividend Proposed final dividend 1.2p, making 1.8p for the full year. • Full year cost c£1.0m • Leading to free cash flow cover of nearly 4 times. Important dates • Ex div date 17 December 2015 • Record date 18 December 2015 • Payment date 3 February 2016 19
Slide 20: Agenda
Agenda Highlights Refresher Markets and Products Dave Froker Financial Review Jeremy Wilson Outlook and Summary Dave Froker 20
Slide 21: Our Growth Strategy
Our Growth Strategy Innovate • 19 products launched We have grown quickly while we’ve invested heavily in R&D to turn out innovative, high-quality and attractive products for musicians • Innovative, high-quality and Innovate attractive and audio professionals. We spend around 7% of revenue on produc
Slide 22: Current Trading
Current Trading Outlook Products launched at the end of the financial year have been well received by the market, with excellent reviews across the industry. Revenue in the first quarter of the current year was ahead of that for FY15, itself a record quarter, in spite of slower than expected initial
Slide 23: A Good Year
A Good Year Summary Revenue up 17% with growth in both the Focusrite and Novation divisions and in all major territories Adjusted EBITDA up by 13.1% to £9.3 million (FY14: £8.2 million) Significant new products launched (including Clarett, LaunchPad Pro and Circuit) and continued investment in FY16
Slide 24: Back up slides
Focusrite plc Back up slides 24
Slide 25: Foreign exchange
Foreign exchange Exchange rates FY15 FY14 Average US$ : £ 1.56 1.65 €:£ 1.35 1.21 Year end US$ : £ 1.54 1.68 €:£ 1.37 1.26 Average US$ strengthened by 5.8%. – US and ROW. Total 55% of revenue Avg € weakened by 10.4% and average € hedged rate has weakened from €1.275 to €1.39. – Europe. Total c27
Slide 26: Number of shares
Number of shares Shares in issue currently 58,075,000 But required to deduct EBT shares for EPS calculation 7.2m options in issue. 5.7m shares held by EBT so vast majority of dilution already taken. 26
Slide 27: Earnings per share
Earnings per share Earnings per share FY15 FY14 Growth p p % Basic 10.4 10.3 1.6% Diluted 9.3 8.8 5.6% Adjusted basic 11.8 11.7 0.4% Adjusted diluted 10.5 10.1 4.3% % Increase in EPS lower than increase in Increase in Adjusted EBITDA 13.1% Adjusted EBITDA Effect of higher dep'n and amort'n -3.9% Eff
Slide 28: 19 new products in FY15
19 new products in FY15 Audiohub 2X4 Scarlett Solo Studio LaunchPad Pro Saffire PRO 40 (Dice III variant) iTrack Solo (Lightning) iTrack Studio (Lightning) Rednet D16R Rednet HD32R Rednet MP8R Rednet D64R Clarett 8PreX Clarett 8Pre LaunchPad Mk2 LaunchKey 25 Mk2 LaunchK
Slide 29: Experienced PLC board
Experienced PLC board Phil Dudderidge Dave Froker Jeremy Wilson Executive Chairman & Chief Executive Officer Chief Financial Officer Founder Distinguished career in the professional audio CEO of Focusrite since March 2012 CFO of Focusrite since September 2014 industry; live mixer for Led Zeppe
Slide 30: Management and Corporate Structure
Management and Corporate Structure Highly experienced management team with 12 years* of service on average PLC Board executives Non-executive directors PLC Board NEDs Phil Dudderidge Management board Executive Chairman David Bezem (26 years) Non-Executive Director Dave Froker Chief Executive Officer
Slide 31: Investment Case
Investment Case • Experienced management team and 25 year operational history 1 Proven • Established track record of organic and acquisitive growth • Leading brands 2 Differentiated • Key sales partnerships in place • The heart of our growth 3 Product Innovators • One third of our people • EBITDA CA
Slide 32: Making Music Easy to Make
Making Music Easy to Make 32