It wasn't the detail in Focusrite 's (TUNE) first set of full-year results as a listed group, but a forecast downgrade by house broker Panmure Gordon, that wiped 17 per cent off the audio equipment manufacturer's market value. Chief executive Dave Froker was unperturbed by the fall, however - highlighting that, at 157p, the stock is where it was a month ago.
Focusrite serves a growing market with high-margin, high-quality products benefiting from a strong brand. The result is excellent cash flows and a net cash position. In its first year on Aim, the company has launched 19 new products and grown revenue in all of its business segments and regions, including a 29 per cent increase in the US, its largest market.
Focusrite reports steady demand for its music-making hardware and software from both amateur and professional musicians. The product range could soon widen significantly: Mr Froker says the group is in discussions with a number of potential acquisition targets that make complementary audio equipment.
Foreign-exchange hedging and a balance between dollar-denominated costs and sales meant the effect of a strengthened greenback was neutral, but the weak euro weighed on revenue and profit and contributed to Panmure's downgrade. The broker now expects pre-tax profit of £6.7m and EPS of 9.4p for the year to August 2016 (from £7.2m and 10.5p in 2015).
FOCUSRITE (TUNE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 157p | MARKET VALUE: | £82m | |
| TOUCH: | 153-161p | 12-MONTH HIGH: | 191p | LOW: 126p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 35p* | NET CASH: | £6.2m | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012** | 25.3 | 2.96 | na | na |
| 2013** | 36.1 | 5.24 | na | na |
| 2014** | 41.0 | 5.81 | 10.3 | na |
| 2015 | 48.0 | 6.48 | 10.4 | 1.80 |
| % change | +17 | +12 | +1 | - |
Ex-div: 17 Dec Payment: 3 Feb *Includes intangible assets of £3.9m, or 7.5p a share **Prior to flotation in Dec 2014; pro-forma EPS | ||||
