People are changing the way they produce, perform and record music, and that's an excellent thing for Aim debutant Focusrite (TUNE). Founded by former Led Zeppelin sound technician Phil Dudderidge, the UK-based company caters to both amateur and professional musicians through its hardware and software products, which were in high demand in the six months to March.
Sales from its core range - which comprises audio interface and audio networking products - grew by 22 per cent, while revenues from the Novation brand - including synths and controllers used in electronic dance music - were up 11 per cent. The company also increased revenues in each of its three geographic markets, with US sales up 23 per cent to give a market share as high as 13 per cent.
There are several reasons to expect growth to continue. Adoption of Focusrite's RedNet interface has been wider than originally anticipated, and is now used by customers as disparate as Usher, Red Bull's Formula 1 racing team and the Beltway Park Baptist Church in Abilene, Texas. Plans to enter the microphone and monitor markets would also vastly expand Focusrite's product range, although chief executive Dave Froker says an acquisition is unlikely in the next six months. Management believes revenues from its Novation app are a more likely source of earnings growth in the near term.
Analysts at Panmure Gordon forecast full-year pre-tax profit of £7.2m and EPS of 10.2p this year, rising to £7.8m and 10.9p in 2016.
| FOCUSRITE (TUNE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 169p | MARKET VALUE: | £97.9m | |
| TOUCH: | 167-170p | 12-MONTH HIGH: | 191p | LOW: 126p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 27p* | NET CASH: | £4.7m | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 20.3 | 2.9 | 5.0 | nil |
| 2015 | 23.8 | 3.5 | 5.5 | 0.6 |
| % change | +17 | +22 | +10 | - |
Ex-div: 7 May Payment: 8 Jun *Includes intangible assets of £3.6m, or 6.2p a share | ||||
