Admission to AIM and first day of dealings
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, REPUBLIC OF IRELAND OR SOUTH AFRICA, OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
This announcement is an advertisement and not an admission document or a prospectus. It does not constitute or form part of, and should not be construed as, an offer to sell or issue, or a solicitation of any offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the admission document (the "Admission Document") published by Focusrite Plc ("Focusrite" or the "Group") 5 December 2014 in connection with admission of the issued ordinary shares in the capital of Focusrite (the "Admission") to trading on AIM, a market operated by London Stock Exchange plc (the "London Stock Exchange"). Copies of the Admission Document are available free of charge to the public at the registered office of Panmure Gordon & Co, One New Change, London, EC4M 9AF during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) until the date falling one month after the date of Admission and on the Group's website at www.focusriteplc.com.
11 December 2014
Focusrite Plc
("Focusrite" or the "Group")
Admission to AIM and first day of dealings
Focusrite Plc, the global music and audio products company supplying hardware and software products used by professional and amateur musicians, is pleased to announce its flotation today on the London Stock Exchange's AIM market. This follows a successful vendor placing by Panmure Gordon (UK) Limited (the Nominated Adviser and Broker) raising £22.4 million (before expenses) (the "Placing") from institutional investors at a price of 126 pence per share (the "Placing Price").
Trading of Focusrite's ordinary shares will begin at 8.00am today under the ticker symbol "TUNE" and the ISIN number GB00BSBMW716.
Phil Dudderidge, Executive Chairman of Focusrite, said:
"This is a momentous day for Focusrite and I'm delighted that we've been able to successfully complete our flotation. We look forward to rewarding both our new and existing shareholders with continued growth in revenue and profits, and increasing our market share."
ADMISSION STATISTICS
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Placing Price per Placing Share |
126 pence |
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Number of Placing Shares being sold on behalf of the Selling Shareholders |
17,806,984 |
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Number of Ordinary Shares in issue |
58,075,000 |
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Expected market capitalisation of Focusrite Plc at the Placing Price immediately following Admission(1) |
£73.2 million |
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Percentage of Ordinary Share capital represented by Placing Shares |
30.7% |
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Gross proceeds of the Placing receivable by the Selling Shareholders |
£22.4 million |
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Estimated net proceeds of the Placing receivable by the Selling Shareholders(2) |
£21.9 million |
Notes:
(1) The market capitalisation of Focusrite Plc at any given time will depend on the market price of the Ordinary Shares at that time. There can be no assurance that the market price of an Ordinary Share will equal or exceed the Placing Price.
(2) Net proceeds receivable by the Selling Shareholders are stated after deducting Placing commissions (excluding VAT).
FOR FURTHER INFORMATION PLEASE CONTACT:
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Focusrite Plc |
+44 1494 462246 |
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Phil Dudderidge, Executive Chairman |
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Dave Froker, Chief Executive Officer |
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Jeremy Wilson, Chief Financial Officer |
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Panmure Gordon & Co. (Nominated Adviser and Broker) |
+44 20 7886 2500 |
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Corporate Finance |
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Freddy Crossley |
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Alina Vaskina |
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Richard Tunney |
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Corporate Broking |
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Tom Salvesen |
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Bell Pottinger (Financial Public Relations) |
+44 20 3772 2500 |
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Nick Lambert |
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Elly Williamson |
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Charlie Stewart |
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KEY STRENGTHS OF THE GROUP
Focusrite has the following key strengths:
Proven financial track record
The Group has achieved strong organic growth in revenue and profits over the last six years. Over the three year financial periods (ended 31 August 2014), the Group has delivered CAGRs of 27%, 57% and 43% in revenue, gross profit and EBITDA, respectively. In FY2014, gross margin was 39%, EBITDA margin was 20% and profit before tax margin was 14%. The growth and profitability track record is coupled with a strong balance sheet, and net cash of £3.8 million as at 31 August 2014.
Brand strength
Focusrite and Novation are both well established brands that bring high quality studio heritage to the wider market. Focusrite's customers include many world renowned musicians, artists and producers who use its products to record and/or perform live music.
Highly experienced management team
The management team of Focusrite has been built up over a number of years and has a range of experience and backgrounds. The team has considerable experience in the music technology industry both within Focusrite and with previous employers. This experience has helped to facilitate the continued profitable growth of the business.
Diversified and international customer base
The Company derives sales from a broad geographic area. The five main revenue generating regions are USA (35%), EMEA (20%), UK (17%), Germany (11%) and Asia (10%). At present, Focusrite mostly sells to local retail partners and distributors who in turn sell to the end users of the Group's products.
Focusrite has a marketing office in Los Angeles creating a presence in the United States, the largest market for the Group by revenue in FY2014. The United States marketing office enables the Group to market its products directly to end users building a stronger affinity with the Focusrite and Novation brands. Sales of such products in the US represent 35% of Focusrite's revenue in FY2014.
Continued product innovation
A key strength of Focusrite is its in-house development of new, technologically innovative products. The Company has a dedicated in-house team of approximately 40 employees working full time in its research and development ("R&D") department headed by Robert Jenkins, who has been with the Group for 25 years. The R&D team is split into four key product teams: "Professional and Project" (Focusrite brand); "Hobbyist" (Focusrite brand); "Commercial and Networked Audio" (Focusrite RedNet brand); and Novation. Each team has the capability to design and engineer prototypes and successfully take them to market. This allows for continued innovation of existing products, rapid new product development and the protection of know-how and intellectual property.
The R&D team has proven itself in the market in which the Group operates by taking products including: Launchpad, Scarlett and iTrack from concept, through design and into production. It is expected that up to 40 new products will be released by the Group by September 2016.
GROUP STRATEGY
The Group has four key elements to its growth strategy:
· Build on the currently low market share in current market segments through product innovation
· Exploit industry trends and technological industry transitions
· Continuously evolve the sales channel to capture margin
· Enter adjacent market segments organically and through acquisitions
The Directors believe that these four key elements will provide the platform to drive growth.
CURRENT TRADING AND PROSPECTS
Trading in the period since 31 August 2014 continues to be positive and in line with management's expectations with two new product launches in the first two months of the financial year. The Directors will continue to implement the Group strategy as detailed above and remain confident in the future prospects of the Group.
DIVIDEND
It is the Directors' intention to implement a progressive dividend strategy subject to the discretion of the Board and subject to Focusrite Plc having appropriate distributable reserves. It is the intention of the Directors to pay a total dividend for the current financial year ending 31 August 2015 that equates, in aggregate, to a dividend yield of between 1% and 2% calculated at the Placing Price. This may vary depending on a variety of factors and conditions and is dependent on Focusrite's cashflows, capital expenditure, budgets, earnings, financial condition and other factors as the Board may consider appropriate from time to time.
REASONS FOR THE PLACING AND ADMISSION
The Placing will enable the Directors and certain other Shareholders to realise part of their investment in the Group. In addition, the Directors expect that the Placing and Admission will provide a public market for the Ordinary Shares, which will benefit employee shareholders, and will enable Focusrite Plc, if required, to access the capital markets to support its strategic objectives.
NOTES TO EDITORS
Group description
Focusrite is a global music and audio products group supplying hardware and software products used by professional and amateur musicians, which enables the high quality production of music. The Group has two established and rapidly growing brands: Focusrite and Novation. The Focusrite brand makes audio interface and other products for audio recording musicians. The Novation brand allows its customers to make electronic music using synthesisers and computer-enabled technology.
The Group has a global customer base with a distribution network covering approximately 160 territories. Focusrite is headquartered in High Wycombe, United Kingdom with a marketing subsidiary in Los Angeles, United States and has over 140 employees.
Board biographies
Philip "Phil" Dudderidge, Executive Chairman and Founder, Age 65
Phil has a distinguished career in the professional audio industry, including working as Led Zeppelin's first dedicated live soundman. He set up RSD in 1971, building bespoke PA systems with custom-built mixing consoles. In 1973, Phil set up Soundcraft Electronics, a company specialising in live audio mixing consoles, which was sold to Harman International in 1988. Phil acquired the assets of Focusrite Ltd. in 1989. Phil served as Chief Executive Officer of Focusrite from 1989 until he became Chairman in 2012.
David "Dave" Froker, Chief Executive Officer, Age 59
Dave was appointed Chief Executive Officer of Focusrite in March 2012. Previously, he was Chief Marketing Officer at Line 6. He served as Chief Executive Officer of Stanton Group until 2007, where he led the turnaround of audio equipment businesses Stanton Magnetics, Cerwin-Vega and KRK. Prior to Stanton Group, Dave was the General Manager of a digital audio technology company Digidesign from 1996 to 2002, where he presided over the growth of Pro Tools into the industry's audio workstation standard, as Digidesign's revenue tripled to $135 million.
Jeremy Wilson, Chief Financial Officer, Age 48
Jeremy was appointed Chief Financial Officer of Focusrite in September 2014. Jeremy has prior public market experience in a number of finance roles. Most recently, Jeremy was Chief Financial Officer of Atex Group Ltd, a leading worldwide developer of content management and advertising software to the media industry. Previously, Jeremy was CFO at Regenersis plc, the AIM-listed support services business. Prior to his CFO roles, Jeremy held several senior finance roles at DHL Express (UK) Limited and Electrocomponents Plc. He qualified as a Chartered Accountant at KPMG in 1992.
David Bezem, Independent Non-executive Director, Age 54
David joined the Board of Focusrite in November 2014 bringing with him more than 25 years of experience of providing merger and acquisitions and general corporate finance advice to UK small and mid-market public and private companies. Most recently he was a Managing Director at Altium Corporate Finance between 2009 and 2011 and, prior to that, a Managing Director at Close Brothers Corporate Finance where he worked between 1999 and 2008. David qualified as a Chartered Accountant with Arthur Andersen & Co. in 1984. Currently, David is a Non-Executive Director at Harvey Nash Group Plc where he is also Chairman of the Remuneration Committee.
Paul Dean, Independent Non-executive Director, Age 53
Paul joined the Board of Focusrite in November 2014. Paul has over 30 years of experience across numerous sectors, including technology. Previously, he was Group Finance Director at Ultra Electronics Holdings Plc between 2009 and 2013 and Group Finance Director of Foseco Plc between 2001 and 2008, including the period of its flotation in 2005. He also held various senior finance roles at Burmah Castrol Plc from 1990 to 2000. Currently Paul is a Non-executive Director and Chairman of the Audit Committee at Polypipe Group Plc and Porvair Plc. He is also the Senior Independent director at Porvair Plc. Paul is a Chartered Management Accountant.
DEFINITIONS
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"Admission" |
the admission of the issued Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules for Companies; |
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"AIM" |
AIM, a market operated by the London Stock Exchange; |
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"CAGR" |
compound annual growth rate; |
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"Directors" or "Board" |
the directors of Focusrite Plc as at the date of this document, whose names are set out above; |
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"EMEA" |
Europe, Middle East and Africa; |
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"Focusrite Plc" |
Focusrite Plc incorporated and registered in England and Wales with company number 9312676; |
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"FY2014" |
financial year ending 31 August 2014; |
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"Group" or "Focusrite" |
Focusrite Plc and its subsidiaries (including Focusrite Audio Engineering Limited); |
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"London Stock Exchange" |
London Stock Exchange plc; |
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"Nominated Adviser" or "Panmure Gordon" |
Panmure Gordon (UK) Limited, a company incorporated in England and Wales (registered number 4915201) and having its registered office at One New Change, London EC4M 9AF; |
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"Ordinary Shares" |
ordinary shares of £0.001 each in the share capital of Focusrite Plc; |
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"Placing" |
placing of existing Ordinary Shares in the Group; |
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"Placing Price" |
126 pence per Placing Share; |
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"Placing Shares" |
the 17,806,984 Ordinary Shares currently held by the Selling Shareholders, to be placed pursuant to the Placing; |
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"Selling Shareholders" |
Phil Dudderidge, Jennifer Dudderidge, Christopher Gooddie, Michael Johnson, Robert Jenkins, Pauline Cornwell, Timothy Dingley, Damian Hawley, Philip Wagner, Giles Orford, Simon Jones and Mike Warriner; |
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"Shareholders" |
the holders of the Ordinary Shares; |
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"UK" or "United Kingdom" |
the United Kingdom of Great Britain and Northern Ireland;and |
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"USA" or "United States" |
United States of America, each state of the United States and the District of Columbia, its territories and possessions. |
IMPORTANT INFORMATION
This announcement is for information purposes only and does not constitute or form part of any offer or invitation to underwrite, sell or issue, or any solicitation of any offer to purchase or subscribe for, any ordinary shares or other securities in the capital of Focusrite, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract whatsoever relating to any ordinary shares or securities.
Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the Admission Document issued by Focusrite in connection with the Placing and Admission. In the event of any discrepancy between this announcement and the Admission Document in its final form, the Admission Document will prevail. The information contained in this announcement is for background purposes only. It is not the purpose of this announcement to provide, and reliance may not be placed on this announcement as providing, a complete and comprehensive analysis of Focusrite's financial or commercial position or prospects.
The date of Admission may be influenced by things such as market conditions. There is no guarantee that Admission will occur and financial decisions should not be based on Focusrite's intentions in relation to Admission at this stage. Investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering investment in such investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning any offer of securities. The value of securities can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of any investment for the person concerned.
Panmure Gordon & Co. is regulated by the Financial Conduct Authority and is acting exclusively for Focusrite and no one else in connection with the Placing and Admission and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Placing or Admission and will not be responsible to anyone other than Focusrite for providing the protections afforded to its clients or for providing advice in relation to the Placing, Admission or any transaction, arrangements or other matters referred to in this announcement.
No representation or warranty, express or implied, is or will be made by or on behalf of Focusrite or the Group, and no responsibility or liability is or will be accepted by Focusrite, the Group or its affiliates, as to the accuracy, completeness or verification of the information set out in this announcement, and nothing contained in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. Focusrite, the Group and each of their affiliates accordingly disclaims, to the fullest extent permitted by law, all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement or any such statement.
The Placing and the distribution of this announcement and other information in connection with the Placing in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such offer would be unlawful. In particular, this announcement does not constitute an offer to buy securities, and it is not for distribution, directly or indirectly, in or into the United States, Australia, the Republic of Ireland, South Africa, Canada or Japan.
The ordinary shares of Focusrite have not been and will not be registered under the United States Securities Act 1933 (as amended) nor under the applicable securities laws of the United States of America or any province or territory of Canada, Australia, the Republic of South Africa or Japan, nor in any country or territory where to do so may contravene local securities laws or regulations and will not be made to any national, resident or citizen of the United States of America, Canada, Australia, the Republic of South Africa or Japan.
Neither the content of the Group's website nor any website accessible by hyperlinks on the Group's website is incorporated in, or forms part of, this announcement.
Forward Looking Statements
Certain statements contained within the announcement are forward looking statements and are based on current expectations, estimates and projections about the potential returns of the Group and industry and markets in which the Group operates, the Directors' beliefs and assumptions made by the Directors. Words such as "expects", "anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "projects", "pipeline" and variations of such words and similar expressions are intended to identify such forward looking statements and expectations. These statements are not guarantees of future performance or the ability to identify and consummate investments and involve certain risks, uncertainties, outcomes of negotiations and due diligence and assumptions that are difficult to predict, qualify or quantify. Therefore, actual outcomes and results may differ materially from what is expressed in such forward looking statements or expectations. Among the factors that could cause actual results to differ materially are: the general economic climate, competition, interest rate levels, loss of key personnel, the result of legal and commercial due diligence, the availability of financing on acceptable terms and changes in the legal or regulatory environment.
These forward-looking statements speak only as of the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.
This information is provided by RNS
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