Focusrite Plc · LSE:TUNE

Focusrite — H1 FY2017 Earnings Presentation

24 slides from Focusrite's earnings presentation, May 2017

1. Slide 1: Interim results for the period ending 28 February 2017

   Interim results for the period ending 28 February 2017 May 2017 1

2. 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

3. Slide 3: Agenda

   Agenda  Introduction and Highlights  Product Sectors  Markets Tim Carroll  Financial Review Jeremy Wilson  Final Comments Tim Carroll Jeremy Wilson Tim Carroll Chief Executive Chief Financial Officer Officer 3

4. Slide 4: Introduction

   Introduction  Global music and audio technology company supplying hardware and software solutions to musicians and sound professionals.  Founded in 1989  Two established brands: – Focusrite: audio recording equipment – Novation: hardware and software for creating and playing electronic music  Gl

5. Slide 5: Highlights

   Highlights  Revenue up 23.7% including continued Revenue £m growth in all regions. 50 54.3 48.0  Strong sales of the second generation 40 41.0 Scarlett USB audio interface range which 30 36.1 32.0 continues to gain market share across all 25.3 20 geographies. 20.2 10 13.9 9.1  Significant strengt

6. Slide 6: Sectors: Focusrite

   Sectors: Focusrite  RedNet: Enterprise, Live, Broadcast, Education. Networked Audio over IP – $3,000 upwards – c3% market share  Red: Creative Professional: Music, Post – $2,500 to $3,500 – New range so small market share  Clarett: Intermediate/ professional user. – $500 to $1,300. – c14% market

7. Slide 7: Sectors: Focusrite

   Sectors: Focusrite Focusrite HY17 HY16 FY16 Growth £m £m £m % Revenue 20.8 16.9 37.6 23.1%  Scarlett 2nd Generation: Already world’s best selling interface and gaining more market share since June 2016 launch.  Launched 5 new Focusrite branded products in first half.  RedNet: Continues to show st

8. Slide 8: Sectors: Novation

   Sectors: Novation CONTROLLERS GRIDS Sectors: Novation KEYBOARDS/Synths SOFTWARE Grid Controllers Keyboard Controllers Freemium IOS Apps (Launchpad) $100 to $300 (Launchkey) $80 to $400 Add on packs starting at $  Portfolio designed for creation ofIOS Apps Freemium Grid Controllers Keyboard Controll

9. Slide 9: Sectors: Novation

   Sectors: Novation Novation HY17 HY16 FY16 Growth £m £m £m % Revenue 9.6 7.3 13.7 31.8%  Strong growth year on year driven by elevated demand for Launch Grid and Keyboard Controller products.  Registration data points to many net new customers coming from more mainstream retail channels.  Apps. La

10. Slide 10: Sectors: UK Distribution

    Sectors: UK Distribution Distribution HY17 HY16 FY16 Growth £m £m £m % Revenue 1.6 1.6 3.1 -5.3%  Portfolio focused on complementary products in the traditional recording value chain  KRK monitors are 80% of this distribution revenue.  sE mics: Range of studio quality microphones suited for vocal

11. Slide 11: Markets

    Markets Segmental Revenue HY17 HY16 FY16 Growth Regional split of revenue £m £m £m % USA 13.2 9.1 21.4 46.1% HY17 Europe, Middle East and Africa 13.0 12.1 22.6 7.4% Rest of World 5.8 4.7 10.3 22.5% RoW, Consolidated revenue 32.0 25.9 54.3 23.7% 18% USA, 41%  USA: up 46.1% to £13.2m – Constant FX gr

12. Slide 12: Agenda

    Agenda  Introduction and Highlights  Product Sectors  Markets Tim Carroll  Financial Review Jeremy Wilson  Final Comments Tim Carroll Jeremy Wilson Tim Carroll Chief Executive Chief Financial Officer Officer 12

13. Slide 13: Financial highlights for the period ended 28 February 2017

    Financial highlights for the period ended 28 February 2017  Strong organic growth across all key financial metrics and KPIs  Group revenue up by 23.7% to £32.0 million (HY16: £25.9 million)  Adjusted EBITDA1 up by 27.2% to £6.1 million (HY16: £4.8 million)  Operating profit up by 44.9% to £4.6 m

14. Slide 14: Income statement

    Income statement £ million HY17 HY16 Growth  Revenue up 23.7%. Revenue 32.0 25.9 23.7% – Constant FX growth 12%. Cost of sales -19.1 -15.6 Gross profit 12.9 10.3 24.7% – All major territories increasing. Operating expenses before non-underlying items -8.3 -6.6 25.3% Operating profit before non-  G

15. Slide 15: Balance Sheet

    Balance Sheet £ million HY17 HY16  Intangible fixed assets include £4.5m of Intangible assets 5.2 4.4 capitalised R&D and £0.7m of goodwill & other Tangible assets 1.5 1.4 intangibles Total non current assets 6.7 5.8 – R&D spend is >6% of revenue. Inventories 10.1 10.7 – Capitalise c75% and write o

16. Slide 16: Cash flow

    Cash flow £ million HY17 HY16  Working capital reduction. Adjusted EBITDA 6.1 4.8 – Lower stock and continued careful management of Movement in wc (ex non- debtors. underlying items) 0.1 -4.1 Operating cash flow (ex non-  Investing £2.0m, (HY16, £1.7m) underlying items) 6.2 0.7 – Capitalised R&D £

17. Slide 17: Agenda

    Agenda  Introduction and Highlights  Product Sectors  Markets Tim Carroll  Financial Review Jeremy Wilson  Final Comments Tim Carroll Jeremy Wilson Tim Carroll Chief Executive Chief Financial Officer Officer 17

18. Slide 18: Summary and current trading

    Summary and current trading  Revenue up 23.7% with growth in all major territories.  R&D continues to be our key ongoing investment: 6 further new products launched.  Significant increase in demand for Novation products, especially Launchpad.  Adjusted EBITDA up by 27.2% to £6.1 million (HY16: £

19. Slide 19: Focusrite Growth Strategy

    Focusrite Growth Strategy Continued investment in R&D and Grow core customer base Innovation, Disruption, Differentiation Increase lifetime value of our customers people Add-on software & content Participation in more of the traditional value chain Expand into new markets Leverage current portfolio

20. Slide 20: Additional information

    Focusrite plc Additional information May 2017 20

21. Slide 21: Products launched FY17 to date

    Products launched FY17 to date 6 products launched:  Red 8 Pre  Clarett Octopre  Scarlett Octopre  Scarlett Octopre Dynamic  iTrack One Pre Software:  Launch Control XL MK2  Circuit Components update 21

22. Slide 22: Experienced PLC board

    Experienced PLC board Phil Dudderidge Tim Carroll Jeremy Wilson Executive Chairman & Chief Executive Officer Chief Financial Officer Founder  Distinguished career in the professional audio industry; live mixer for Led Zeppelin  CEO of Focusrite since January 2017  CFO of Focusrite since September

23. Slide 23: 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 (27 years) Non-Executive Director Tim Carroll Chief Executive Officer

24. Slide 24: Making Music Easy to Make

    Making Music Easy to Make 24

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