Final Results
Summary by AI BETAClose X
Strictly embargoed until: 07.00, 29 June 2026
Focusrite plc
("Focusrite" or "the Company" or "the Group")
Final Results for the 18 months ended 28 February 2026
Revenue, Margins and EBITDA Increase; Strong Cash Generation Drives Substantially Reduced Net Debt
New Technology Platform with Proprietary Silicon Create a Stronger Platform for Future Growth
Focusrite plc (AIM: TUNE), the global music and audio products group supplying hardware and software used by professional and amateur musicians and the entertainment industry, announces its results for the 18 months ended 28 February 2026.
Commenting on the results Tim Carroll CEO, said:
"The Group delivered a resilient set of results for the 18-month period to 28 February 2026, our new financial year end. I'd like to recognise the efforts of everyone across the Group on this performance, which reflects the benefits of disciplined pricing, supply chain management and a growing direct-to-consumer sales channel. Adjusted EBITDA for the pro-forma 12-month period to February 2026 increased to £24.7 million from £23.3 million, demonstrating the Group's ability to grow profitability despite a challenging macro-economic backdrop characterised by tariff instability, geopolitical pressures and subdued consumer confidence in several key markets.
Both divisions contributed to this performance, with Content Creation returning to organic constant currency growth of 3.6% and Audio Reproduction broadly stable. Our businesses are market leading and we have a differentiated, diversified portfolio of unrivalled and world-leading brands that are loved by our passionate customers. Innovation is central to our growth strategy and we are excited to reveal our new technology platform utilising our proprietary silicon chip which underpins our confidence in the Group's long-term competitive positioning.
Trading in the first quarter has been ahead of the prior year, with underlying demand remaining healthy across both Content Creation and Audio Reproduction. Whilst remaining mindful of the broader macro-economic environment, the Board expectations for the year to 28 February 2027 remain unchanged, and the Group enters the new financial year with improving operational momentum, a strengthened product portfolio and a growing direct-to-consumer presence that continues to support both revenue growth and margin progression."
Financial Performance
|
|
Pro-forma Unaudited12 months to 28 February 2026 |
Pro-forma Unaudited 12 months to 28 February 2025 |
Change |
|
Reported 18 months to 28 February 2026 |
Restated5 Reported 12 months to 31 August 2024 |
|
Revenue (£ million) |
164.6 |
162.5 |
1.3% |
|
245.5 |
158.5 |
|
Gross margin % |
45.1% |
43.4% |
+1.7% pts |
|
44.7% |
44.3% |
|
Adjusted1 EBITDA2 (£ million) |
24.7 |
23.3 |
5.7% |
|
34.9 |
24.9 |
|
Operating (loss)/profit (£ million) |
(0.9) |
4.0 |
|
|
2.1 |
5.5 |
|
Adjusted1 operating profit (£ million) |
15.1 |
14.9 |
1.3% |
|
20.8 |
16.5 |
|
Basic (loss)/earnings per share (p) |
(7.0) |
3.4 |
|
|
(3.9) |
4.2 |
|
Adjusted1 diluted earnings per share (p) |
15.6 |
16.9 |
-7.7% |
|
22.1 |
17.8 |
|
Total dividend per share (p) |
6.74 |
6.6 |
|
|
8.84 |
6.6 |
|
Net debt3 (£ million) |
(8.6) |
(17.9) |
+£9.3m |
|
(8.6) |
(12.5) |
Financial Highlights (pro-forma 12 months to February 2026)
· Revenue increased by 1.3%, (+2.7% organic, after adjusting for currency4). Underlying growth of 6.9% (OCC) after adjusting for US sales phasing to mitigate tariff exposure in prior year
o Content Creation: Revenue grew by 2.0% (+3.6% organic constant currency), led by growth in our market leading audio interfaces
o Audio Reproduction: Revenue stable -0.6% (+0.5% organic constant currency), with growth in the key US market offsetting a normalising market in APAC
· Gross margin increased by 1.7 percentage points, driven by Content Creation despite a challenging US tariff backdrop.
· Adjusted1 EBITDA2 increased by 5.7%, with gross margin improvements supported by cost restructuring
· Reported Operating profit was impacted by a non-cash impairment charge of £9.8 million of Sequential assets reflecting the current difficult market for premium synthesizers and an accelerated relocation of manufacturing operations
· Adjusted1 diluted EPS decreased by 7.7% due to a lower tax benefit in the current year from patent box tax relief and higher amortisation and depreciation
· Net debt decreased by £9.3 million to £8.6 million, primarily due to improvements in working capital, with reductions in both debtors and inventory across the period
· For the 18 months to February 2026 revenue was £245.5 million and EBITDA was £34.9 million
Operational Highlights
· Launch of 38 new products and 66 updates to existing product lines across our divisions, reflecting our commitment to continuous improvement and market-led innovation.
· Innovation: Developed a new technology platform for use across future Content Creation products
o Move to shared software platform and a proprietary silicon chip
o Enables enhanced product performance and more efficient product development
o De-risks supply chains away from third party silicon
· New direct to reseller route to market established in Japan, bringing us closer to the customer and driving sales growth
· Our direct-to-consumer (D2C) eCommerce business continued to grow in the period, becoming an increasingly important component of our overall routes to market model
Current Trading and Outlook
· Trading for the first quarter has been ahead of the prior year, with healthy underlying demand across both the Content Creation and Audio Reproduction divisions
· The Board expectations for the year to 28 February 2027 remain unchanged
The Group will host a Capital Markets Event before the end of the year to set out in detail its strategic priorities, growth drivers and the value creation opportunity ahead
1 Adjusted for amortisation of acquired intangible assets, impairments, acquisition and restructuring costs and other adjusting items
2 Comprising operating profit adjusted for interest, taxation, depreciation and amortisation
3 Net debt defined as cash and cash equivalents, overdrafts and amounts drawn against the RCF including the costs of arranging the RCF
4 This is calculated by comparing revenue for the 12 months to February 2026 to revenue for the 12 months to February 2025 adjusted for exchange rates for the 12 months to February 2026.
5 Restated due to adjustments in the prior year - see note 1 to the financial statements
Availability of Annual Report and Notice of AGM
The Annual Report and Accounts for the period ended 28 February 2026 and notice of the Annual General Meeting ("AGM") of Focusrite will be posted to shareholders by Tuesday 30 June and will be available on Focusrite's website at www.focusriteplc.com.
Dividend timetable
The final dividend is subject to shareholder approval, which will be sought at Focusrite's AGM on 4 August 2026.
The timetable for the final dividend is as follows:
|
4 August 2026 |
AGM to approve the recommended final dividend |
|
9 July 2026 |
Ex-dividend Date |
|
10 July 2026 |
Record Date |
|
07 August 2026 |
Dividend payment date |
-Ends-
|
Enquiries: |
|
|
Focusrite plc |
+44 (0) 1494 462246 |
|
Tim Carroll (CEO) / Sally McKone (CFO) |
|
|
Investec Bank plc (Nominated Adviser and Broker) |
+44 (0) 20 7597 5970 |
|
David Flin / Nick Prowting |
|
|
Rosewood Reputation Limited (Financial PR) |
+44 (0) 20 7653 8702 |
|
John West / Llew Angus / Lily Pearce |
|
Analyst meeting
A live online briefing for analysts will be conducted at 10:30am this morning on the Investor Meet Company platform. This meeting is only open to analysts. If you are an analyst and would like to attend this meeting, please send an email to: lpearce@rosewoodpr.co.uk.
Investor presentation
A live online presentation open to all existing and potential investors will be held at 11:00am on 1 July 2026 on the Investor Meet Company platform. If you would like to attend this online presentation, please sign up via the following link: https://www.investormeetcompany.com/focusrite-plc/register-investor.
Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9am the day before the presentation or at any time during the live presentation.
Notes to Editors
Focusrite plc is a global audio products group that develops and markets proprietary hardware and software products. Used by audio professionals and musicians, its solutions facilitate the high-quality production of recorded and live sound. The Focusrite Group trades under eleven established brands: Focusrite, Novation, ADAM Audio, Martin Audio, Optimal Audio, Linea Research Sequential, Oberheim, Sonnox, OutBoard and TiMax.
With a high-quality reputation and a rich heritage spanning decades, its brands are category leaders in the music-making and audio recording industries.
The Group operates through two divisions: Content Creation and Audio Reproduction.
· Within its Content Creation business, Focusrite offers audio interfaces and other products for recording musicians, producers and professional audio facilities. Novation products are used in the creation of electronic music, from synthesizers and grooveboxes to industry-shaping controllers and inspirational music-making apps. ADAM Audio studio monitors have earned a worldwide reputation based on technological innovation in the field of studio loudspeaker technology. Sonnox is a leading designer of innovative, high-quality, award-winning audio processing software plug-ins for professional audio engineers. Sequential designs and manufactures high end analogue synthesizers under the Sequential and Oberheim brands.
· The Audio Reproduction division provides high-quality, professional-grade solutions for both live sound and permanent installations. Martin Audio designs and manufactures performance-ready systems across the spectrum of sound reinforcement applications. TiMax specialises in innovative immersive audio and show control technologies. OutBoard manufactures and sells industry standard rigging control products for live events, together with enterprise-level safety test, preparation and quality management for global rental companies and venues. Linea designs, develops, manufactures and sells innovative professional audio equipment globally.
The Company has offices in four continents and a global customer base with a distribution network covering approximately 240 territories.
Focusrite plc is traded on the AIM market, London Stock Exchange.
Chairman's Report
This will be my final Statement as Chairman, following my decision to step down at the forthcoming Annual General Meeting in
August 2026. I will remain on the Board as a Non-executive Director, reflecting my family's shareholding status and my continued commitment to the long-term success of the business.
I am delighted that Ian Barkshire has joined the Board and will succeed me as Chair. Ian brings significant experience of leading and scaling a global, technology-led public company, and I am confident he will guide the Group successfully through its next phase.
I would like to thank David Bezem, who will be stepping down from the Board at the forthcoming AGM, for his valued contribution and support over many years. When I founded the business in 1989, it was with a simple ambition: to build products that enabled musicians and creators to produce exceptional sound. Over the decades since then, the industry has been through multiple cycles of technological change, economic disruption and shifting consumer behaviour. What has remained constant throughout is the enduring demand for music creation and live performance.
That resilience continues today. The global music market has now delivered over a decade of sustained growth, supported by new technologies, expanding audiences and the continued importance of music as a form of expression and shared experience. Against that backdrop, Focusrite has continued to evolve, building a portfolio of strong, complementary brands with leading positions across Content Creation and Audio Reproduction.
This growth has been achieved through a combination of organic innovation and selective acquisitions, including Novation, ADAM Audio, Martin Audio, Sequential and Oberheim, each contributing to a broader, more diversified and globally relevant Group.
Following the exceptional demand for our products experienced during the pandemic, the business has now moved through a period of normalisation and is focused on execution. Our Focusrite-branded products have maintained market leadership and continued to grow, while Audio Reproduction has benefited from the recovery seen in live events and installations.
Throughout this period, the Group has remained disciplined, remaining focused on our strategy and continuing to invest in product innovation and capability.
Today, Focusrite is a cash-generative business with a portfolio of market-leading brands and a clear strategy for growth beyond underlying market expansion. Investment in areas such as proprietary silicon chip design and platform development provides a strong foundation for future product innovation, enhanced functionality, greater control over core technologies and improved margins.
Looking ahead, I am confident in the Group's trajectory. The business is well positioned to benefit from continued global demand for music creation and live audio experiences, supported by its strong brands, global reach and disciplined operational approach, with the model ready to translate consistent revenue growth into greater profit progression.
Under the leadership of the executive team, and with Ian as Chair, I believe Focusrite is now stepping into a decisive phase of development, moving from a period of adjustment to one of enhanced delivery and pushing the boundaries of performance.
I would like to thank our shareholders, colleagues and partners for their continued support over many years.
Phil Dudderidge
Non-executive Chairman and Founder
CEO Statement
Overview: resilient performance
I am pleased to present our audited financial results for the 18 months to February 2026. Overall, our performance achieved a year-on-year (for the pro-forma 12 months to February 2026) Organic Constant Currency ('OCC') revenue increase of 2.7% and an increase in gross margin of 1.7% points while navigating the challenging and dynamic macro-economic environment.
The demand across our product portfolio remained strong, with market-leading product lines like Scarlett continuing to maintain top rankings while up-and-coming brands delivered growth in market share and brand awareness in key regions. Additionally, the Group released 28 new products that have all been warmly received by the market, proving once more the positive impact of our continued investment in R&D and our enduring connection with our customers. During the period, we took numerous actions to mitigate the impacts of tariff instability and continued cost of living and inflationary pressures, driving results in line with our expectations.
Importantly, actions we have taken over recent years, including portfolio expansion, platform investment, pricing discipline and cost control, now position the Group to move from a period of adjustment to one of enhanced delivery, growth and value creation. The investments made over recent years in product development, platform capability and operational efficiency have improved our visibility over both operational performance and quality of earnings, and have established the foundations required to support this next phase.
Given that these reported results cover an 18 month period from September 2024 to February 2026, direct comparison with the prior 12 month period to August 2024 is limited. To aid comparison and simplify interpretation, therefore, we have provided pro-forma unaudited results for the 12 months to February 2026, alongside comparative figures for the 12 months to February 2025, throughout the Strategic Report.
Successful management of short-term volatility and margin protection
During the latest 12-month period, the international trading environment was significantly impacted by fluctuating tariffs on goods sold to the US, which accounts for approximately one third of Group revenue. Tariffs on China-origin products ranged from 25% to over 75%, with additional tariffs affecting goods manufactured in Malaysia, Vietnam, the UK and Germany. These changes created material cost pressures and required a proactive operational response.
In the first six months of the period, the Group acted decisively to mitigate these impacts. We increased inventory levels within our US Content Creation sales channels to take advantage of lower duty windows, relocated certain manufacturing activities to alternative locations provided by our contract manufacturing partners, and increased inventory levels in our US warehouse for Audio Reproduction. These actions were carefully managed within forecast demand to avoid excess stock and ensure that channel inventory remained controlled throughout the period.
In parallel, we implemented targeted pricing actions across multiple product categories to offset increased input and logistics costs, while successfully maintaining competitive positioning in key markets. These combined measures contributed to an improvement in gross margin and supported 5.9% OCC growth in the US, despite ongoing volatility.
Content Creation: performance underpinned by a clear and consistent approach to growth
Our Content Creation division delivered revenue growth of 3.6% (organic constant currency basis) for the 12 months to February 2026, against a challenging macro-economic backdrop. We took action to bring inventory into the US early in 2025, to mitigate expected tariff increases. Adjusting for this rephasing underlying OCC growth in the 12 months to February 2026 was 9.5% for Content Creation as a division.
Despite several price increases introduced to offset tariffs and inflation, as well as continued pressure on consumer spending, underlying demand for our products has remained robust. Our leading brands have maintained their positions in relevant product categories, while our lower-share brands have continued to expand, reflecting the enduring strengths of our portfolio and our multi-brand strategy.
This performance is underpinned by a clear and consistent approach to growth, reflecting the Group's core strategy: to grow our market share in established categories, expand into adjacent product segments and improve margins through pricing discipline, product mix and direct customer engagement.
We continue to strengthen our presence in established markets through our global distribution network and strategic partnerships with major retailers, studios and educational institutions. These relationships not only reinforce brand credibility but also expand our reach to new customer segments.
Additionally, the Group continues to refine its routes to market, with the focus on getting closer to our end users. To gain an edge and leverage our scale, we are constantly diversifying our routes to market. As part of this strategy, the Group has gone direct to the reseller, bypassing traditional distribution, in key markets like the UK, Germany, Australia, and now Japan. This initiative has netted a positive uplift on brand awareness, market share and gross margin in all targeted regions.
At the same time, we are increasing the awareness and adoption of new innovative products through targeted digital marketing, influencer partnerships and educational initiatives, including online content and training. By leveraging the strength of our established brands, we are able to introduce innovative products to wider audiences and customers.
Operating Review
|
|
Pro-forma Unaudited 12 months to 2026 |
Pro-forma Unaudited 12 months to |
Reported Growth |
OCC Growth1 |
Reported 18 months to 2026 |
Reported 12 months to 2024 |
|
Revenue from external customers |
£'000 |
£'000 |
% |
% |
£'000 |
£'000 |
|
Content Creation |
118,482 |
116,167 |
2.0% |
3.6% |
177,932 |
110,818 |
|
Audio Reproduction |
46,116 |
46,380 |
-0.6% |
0.5% |
67,573 |
47,706 |
|
Total |
164,598 |
162,547 |
1.3% |
2.7% |
245,505 |
158,524 |
1 Organic constant currency (OCC) growth rate is calculated by comparing revenue for the 12 months to February 2026 to revenue for the 12 months to February 2025 adjusted for exchange rates for the 12 months to February 2026
Content Creation
Breaking new ground: product innovation and platform development
Our trailblazing approach remains central to our strategy, with innovation being a key driver of both growth and market share. Over the past 12 months, the Content Creation brands have launched 22 new products and delivered 58 updates to existing product lines, reflecting our commitment to continuous improvement and market-led innovation.
In addition, we have successfully completed a multi-year investment programme to develop a new proprietary platform which utilises our own custom design silicon (FAESIC: Focusrite Audio Engineering Specific Integrated Circuit). This new platform which the Group will continue to develop and build upon, will enable greater control over product development, improved scalability across product categories and enhanced differentiation as well as improved margin potential over time. This technology and IP will be a core element of the Group's long-term strategy in innovation and product delivery.
The first product utilising this technology is scheduled for release later this year, with many more to follow over the next three years and beyond.
In the past four years, this segment faced a number of external challenges, including certain component shortages, rising input and shipping costs, global inflation, US tariff volatility and geopolitical friction. Recent industry reports suggest that the market is now approaching an inflection point, with signs of stabilization and sustainable growth.
Against this backdrop, our performance in the period reflects both the resilience of underlying demand and the benefits of our continued investment in product development and portfolio expansion.
Portfolio development and operational efficiency
Over the course of the period, we undertook a detailed review of our brand architecture and reporting structure to ensure that the Group is optimally positioned to scale and leverage its intellectual property.
As a result, we have simplified the portfolio, with the Focusrite Pro and Ampify brands folding into the core Focusrite and Novation brands, respectively. Additionally, the Sonnox business is now aligned under the Focusrite leadership team, allowing tight integration with the development teams and enabling increased scale and awareness for the Sonnox brand. A clear example of this was the launch of Sonnox's "Soften" plug-in. Exclusively for Focusrite users, Soften significantly expanded the market awareness and adoption of Sonnox products.
These changes reflect a clear direction towards a more unified and integrated product ecosystem, improving operational efficiency, enhancing customer experience and enabling us to deploy our technology and intellectual property more effectively across the Group.
Focusrite: core brand and market leadership
The Focusrite brand remains central to the Group and continues to lead the global market in audio interfaces. Our Scarlett range, which serves both entry-level and professional users, remains the most widely used audio interface platform globally. Its breadth of functionality, ease of use and compatibility across recording software continues to make it the product of choice for a wide range of creators, from first-time users to professional studios. Recent updates to the 4th-generation Scarlett range have introduced new features and enhanced performance, driving increased customer engagement and further strengthening its market position.
Alongside Scarlett, our Clarett, Red and RedNet ranges continue to serve more advanced users and professional environments, providing high-performance solutions across studio and live applications. These products also provide a technology and brand halo that supports the wider portfolio.
Following a period of industry-wide overstocking, we have successfully normalised channel inventory levels back to historic ranges, positioning the business for more consistent trading going forward.
Sonnox is a well-established brand in the professional audio community, creating audio plug-ins that allow professionals the capability to sculpt and refine their sound in numerous ways. Along with these professional tools, Sonnox has expanded their portfolio to add more user-friendly plug-ins, designed for the home studio enthusiast to solve common issues in audio production. As mentioned earlier, Sonnox launched Soften, an exclusive free plug-in for Focusrite users. This initiative, together with the launch of DrumGate2, a new professional user's plug-in, led to increased sales across the entire Sonnox portfolio and a strong performance for Sonnox over the 12 months to February 2026.
Novation, ADAM Audio and Sequential: further expanding the addressable market
Our Novation brand continues to support electronic musicians through a growing portfolio of controllers, grooveboxes, synthesisers and software tools. Recent product launches, including updates to the Launchkey and Launch Control ranges, have been well received, with strong end-user engagement and continued growth in end-user registrations.
Whilst growth compared to the prior year was impacted by strong sales in the 6 months to August 2024 with the successful update and channel load-in of our Launchkey range, underlying demand remains strong and the brand continues to expand its reach across both established and emerging segments.
ADAM Audio offers a wide range of studio monitor solutions for any setup, from the home recording enthusiast to the most demanding professional recording facilities. Demand for ADAM products remained robust throughout the period, especially in EMEA and APAC. In the US, ADAM did experience some short-term pressure on the more price-sensitive products following price adjustments to offset increased tariffs, which was in part offset by the successful launch of the lower price point desktop speakers (D3V). Overall, the brand continues to gain market share globally, offering premium solutions to fit any monitoring workflow.
ADAM launched a range of new desktop speakers (D3V) in August 2025 and the first of a range of new studio monitor headphones (H200) in September 2025. The desktop speakers received numerous awards for sound quality and their three-inch design, gaining popularity particularly in Japan, among Hi-Fi companies who serve the mainstream consumer segment. Both launches expand the ADAM offering into product adjacencies and support future growth.
The Sequential and Oberheim brands comprise iconic, well-loved electronic instruments that have been used by a wide range of artists across several decades on numerous hits. Flagship offerings like the Prophet 5 and Oberheim OBX8 are considered state of the art analogue synthesizers sought out by professional musicians globally. Over the last 12 months this category of products experienced softer demand, most notably in the US, with Music Trades in the US citing US retail sales in this category down 4% on the prior year. One significant factor contributing to this was the retail price increases that were needed to offset US tariffs on Chinese imports, with synthesizers not qualifying for tariff exemptions unlike many of the Group's other products. Additionally, the Group was notified that Sequential's US contract manufacturer would be ceasing US operations at the end of this year, accelerating the Group's existing transition plan to a non-US contract manufacturer. As a result of this increased uncertainty the Group has further impaired the Sequential assets as detailed in note 6 to the financial statements.
While this segment has experienced softer demand, the introduction of more affordable products, including the TEO-5 and Fourm, is enabling the brands to reach a wider audience including emerging musicians and enthusiasts. Reaction to these lower priced products has been positive and the Group remains confident in the future of these brands.
Content Creation by region
|
|
Pro-forma Unaudited 12 months to 2026 |
Pro-forma Unaudited 12 months to |
Reported Growth |
OCC Growth1 |
Reported 18 months to 2026 |
Reported 12 months to 2024 |
|
Content Creation |
£'000 |
£'000 |
% |
% |
£'000 |
£'000 |
|
Americas2 |
52,388 |
51,636 |
1.5% |
5.9% |
76,869 |
52,297 |
|
EMEA |
50,914 |
52,604 |
-3.2% |
-4.8% |
79,671 |
47,715 |
|
APAC2 |
15,180 |
11,927 |
27.3% |
32.6% |
21,392 |
10,806 |
|
Total |
118,482 |
116,167 |
2.0% |
3.6% |
177,932 |
110,818 |
1 Organic constant currency (OCC) growth rate is calculated by comparing revenue for the 12 months to February 2026 to revenue for the 12 months to February 2025 adjusted for exchange rates for the 12 months to February 2026
2 Regions restated to reflect the revised Group operating model, with LATAM now part of the Americas and APAC replacing "Rest of World".
Geographically, performance across all regions reflects resilient underlying demand, despite region-specific challenges.
The Americas delivered stable performance, supported by effective inventory management and pricing actions in response to tariffs. Sales into the US were rephased in 2025 to increase stock levels in the period to February 2025, prior to expected tariff changes. This has resulted in a strong comparator for the period to February 2026, which has reduced the overall growth in this period.
EMEA experienced some short-term disruption due to reseller consolidation in several countries. These impacts are localised and have not altered underlying demand across the broader region. APAC delivered strong growth, particularly in Japan and Australia, supported by our transition to a direct-to-reseller model and increased local presence.
Across all regions, we have continued to see strong sell-through to end-customers, with both existing products and new launches performing well. Strategic initiatives, including investment in D2C platforms and refinements to our route to market, have supported both customer acquisition and market share growth.
Direct-to-consumer: scaling a key growth and margin driver
Our direct-to-consumer (D2C) eCommerce business continues to grow and is an increasingly important component of our overall model.
For the six months to February 2026, D2C represented 12% of Content Creation revenue, reflecting continued growth across all brands. The investments made in building a robust and scalable D2C platform are delivering strong returns in terms of both customer acquisition and margin expansion.
D2C enables us to build direct relationships with our customers, improve our product mix and increase customer lifetime value, while also enhancing pricing control and supporting higher-margin, more repeatable revenue streams.
Audio Reproduction
Stabilisation, resilience and share opportunity
The Audio Reproduction division provides high-quality, professional-grade solutions for both live sound and permanent installations. Since entering this market with the acquisition of Martin Audio in 2019, the Group has continued to build a broader and more integrated offering through targeted investment in R&D and acquisitions.
As previously reported, the Audio Reproduction market has continued to normalise, following a period of exceptional post-pandemic demand in 2024. Industry trade reports indicate that the market has declined in the mid-to-high single digits over the past 12 months.
Against this backdrop, the Group delivered a resilient performance, with revenue broadly flat year-on-year, representing outperformance relative to the wider market.
A broader portfolio
Martin Audio has been shaping live sound since 1972, being dedicated to "Uniting the Audience" through exceptional audio. Its loudspeakers are renowned for precise sound quality, achieved by combining acoustic engineering with advanced digital signal processing (DSP) - software that fine-tunes audio in real time for clarity and consistency. The concept of "throw" is central here: it refers to how far sound travels to reach listeners while maintaining the same quality, whether at the front or back of a venue.
Martin Audio's range of solutions offer world-class sound for every conceivable live sound scenario ensuring that no seat is left out and providing the venue with sound quality that will satisfy the most demanding audience.
Optimal Audio has quickly become a force in commercial audio, thanks to its accessible solutions and ongoing expansion. With a steadily growing presence, Optimal Audio's products are designed for ease of installation and reliability, making them a favourite in restaurants, retail spaces and conference centres.
Linea Research is the backbone of Martin Audio's amplification needs and continues to serve a broad customer base. Its products feature built-in DSP, offering a unique combination of power, efficiency and sonic purity, recognised in 2024 with the King's Award for Innovation for its commitment to engineering excellence.
TiMax is at the forefront of immersive audio - technology that creates a three dimensional sound environment, enveloping audiences and enhancing engagement, which is used in theatres and theme parks to deliver dynamic, spatially accurate soundscapes. As one audio designer put it, "TiMax lets us move sound around the room in real time, making every seat the best in the house."
Over the past year, our Audio Reproduction brands released 16 new products and 8 updates. The Blackline Q series is particularly notable for its advanced sound dispersion technology, which ensures even coverage across wide spaces by directing audio precisely where it's needed. Its robust, weather-resistant construction guarantees durability in demanding environments, from outdoor festivals to busy nightclubs. The Linea NSC controllers are a standout, with a user-friendly design enabling rapid turnaround between acts at multi-artist festivals, ensuring consistent sound quality and smooth transitions. All of these solutions are focused on delivering every seat in the house a world-class audio experience. Software improvements further simplify integration, making it easier than ever to tailor system performance to any event or venue.
Audio Reproduction by region
|
|
Pro-forma Unaudited 12 months to 2026 |
Pro-forma Unaudited 12 months to |
Reported Growth |
OCC Growth1 |
Reported 18 months to 2026 |
Reported 12 months to 2024 |
|
Audio Reproduction |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Americas2 |
14,065 |
13,246 |
6.2% |
10.8% |
19,938 |
13,317 |
|
EMEA |
18,804 |
19,143 |
-1.8% |
-2.4% |
27,381 |
19,414 |
|
APAC2 |
13,247 |
13,991 |
-5.3% |
-4.8% |
20,254 |
14,975 |
|
Total |
46,116 |
46,380 |
-0.6% |
0.5% |
67,573 |
47,706 |
1 Organic constant currency (OCC) growth rate is calculated by comparing revenue for the 12 months to February 2026 to revenue for the 12 months to February 2025 adjusted for exchange rates for the 12 months to February 2026
2 Regions restated to reflect the revised Group operating model, with LATAM now part of the Americas and APAC replacing "Rest of World".
This division's performance reflects the strength of our expanded portfolio and the effectiveness of our strategy. Through the addition of amplification, immersive audio and control technologies, the division is now able to provide a comprehensive end-to-end solution across a wide range of applications.
There remains a significant opportunity to grow share across key regions, particularly in the US, where Martin's expanded product range competes against three larger global competitors.
Regionally, APAC revenue declined by 5% compared to the 12 months to February 2025, a year which included high levels of sales to China from a bounce back of live events. EMEA declined slightly compared to the prior 12 months, with business suppressed in Middle Eastern markets due to the conflicts in this region.
The Americas delivered strong performance, with revenue increasing by 10.8% on an organic constant currency basis compared to the prior 12 months, driven by an increase in investment in the sales team to complement the expanded portfolio of offerings. Our enhanced range attracted more customers and helped us gain market share. As a result, Audio Reproduction revenue was broadly flat year-on-year.
We believe that our significantly broader product offering and increased market presence have had a positive impact on our results compared to industry reports. Overall, the order book for our Audio Reproduction business is robust, and with our extended offerings - including immersive options with TiMax - we continue to find new opportunities to grow our pipeline.
Summary and outlook: a clear pathway to improving performance
The Group delivered a resilient set of results for the 18-month period to 28 February 2026, our new financial year end. I'd like to recognise the efforts of everyone at Focusrite on this performance, which reflects the benefits of disciplined pricing, supply chain management and a growing direct-to-consumer sales channel. Adjusted EBITDA for the pro-forma 12 month period to February 2026 increased to £24.7 million from £23.3 million, demonstrating the Group's ability to grow profitability despite a challenging macro-economic backdrop characterised by tariff instability, geopolitical pressures and subdued consumer confidence in several key markets.
Both divisions contributed to this performance, with Content Creation returning to organic constant currency growth of 3.6% and Audio Reproduction broadly stable. Our businesses are market leading and we have a differentiated, diversified portfolio of unrivalled and world-leading brands that are loved by our passionate customers. Innovation is central to our growth strategy and we are excited to reveal our proprietary silicon chip platform which will bring benefits across our future product launches and underpins our confidence in the Group's long-term competitive positioning.
Trading in the first quarter has been ahead of the prior year, with underlying demand remaining healthy across both Content Creation and Audio Reproduction. Whilst remaining mindful of the broader macro-economic environment, the Board expectations for the year to 28 February 2027 remain unchanged, and the Group enters the new financial year with improving operational momentum, a strengthened product portfolio and a growing direct-to-consumer presence that continues to support both revenue growth and margin progression.
Tim Carroll
Chief Executive Officer
28 June 2026
Financial Review
Change of year end
As announced in October 2024, the Group changed its year end from 31 August to 28 February. This was done to allow the Group to report full year‑end results after the busy Christmas and Thanksgiving holiday season and so provide greater clarity on trading to investors. Accordingly, these reported results cover an 18‑month transition period from September 2024 to February 2026, results that have limited comparability to the 12‑month period to August 2024 (together, the "reported results"). To provide more insight and aid comparability in addition to the reported results, we have also provided proforma results for the 12 months to February 2026 ("12 months to February 2026"), with comparatives for the 12 months to February 2025 ("12 months to February 2025") throughout the Strategic Report (together, the "pro‑forma results").
A summary is provided at the end of this report reconciling these pro‑forma figures to previously reported interim figures (both the first interim results for the six months to 28 February 2025 and the second interim results for the 12 months to 31 August 2025) and the reported results in these financial statements. These tables are also provided as Appendices to the Results presentation, which is available on the Group's website.
Overview - reported results
The Group remains in a resilient financial position, reflecting sustained efficiency gains, tighter operational control and a more balanced working capital cycle. As the business continues to scale, it is increasingly able to convert incremental top-line progress into a more pronounced uplift in earnings. Targeted investment across products, technology infrastructure and direct customer engagement is expected to strengthen profitability further, while supporting consistent cash generation. These underlying positive trends were impacted by a non-cash impairment charge of £9.8 million to our Sequential business segment, reflecting an ongoing difficult market and greater uncertainty in future cashflows following the planned closure of our US contract manufacturing partner.
Revenue of £245.5 million for the 18-month period increased from £158.5 million in the 12-month prior period, whilst adjusted EBITDA of £34.9 million for the 18-month period increased from £24.9 million in the prior 12-month period. There was a loss before tax of £2.2 million for the 18 months compared to a profit before tax of £2.3 million in the prior 12 months, whilst basic earnings per share decreased to a loss per share of 3.9 pence from a profit per share of 4.2 pence.
We have restated our results for the 12 months to August 2024 following the identification of errors relating to inventory and amortisation of trademarks in two of our subsidiaries. This has resulted in a reduction in inventory at August 2024 of £1.0 million, a reduction in accruals of £0.4 million and a reduction in accumulated amortisation of £1.0 million. For the 12 months to August 2024 gross profit and EBITDA reduced by £0.3 million and operating profit by £0.2 million. Opening reserves increased by £0.5 million. All figures are shown as restated in these financial statements.
For the remainder of this Financial Review of the income statement, the pro-forma 12-month performance provides the clearest view of underlying trading and progression and has been used to provide insight on the underlying performance of the Group.
Income statement
|
|
|
|
|
|||
|
|
Unaudited Pro-forma 12 months to 28 February 2026 |
Unaudited Pro-forma 12 months to 28 February 2025 |
|
Reported 18 months to 28 February 2026 |
Restated1 Reported 12 months to 31 August 2024 |
|
|
|
£m |
£m |
|
£m |
£m |
|
|
Revenue |
164.6 |
162.5 |
|
245.5 |
158.5 |
|
|
Cost of sales |
(90.3) |
(91.9) |
|
(135.9) |
(88.3) |
|
|
Gross profit |
74.3 |
70.6 |
|
109.6 |
70.2 |
|
|
Administrative overheads |
(49.6) |
(47.3) |
|
(74.7) |
(45.3) |
|
|
Adjusted2 EBITDA3 |
24.7 |
23.3 |
|
34.9 |
24.9 |
|
|
Amortisation |
(6.9) |
(5.6) |
|
(10.0) |
(5.5) |
|
|
Depreciation |
(2.7) |
(2.8) |
|
(4.1) |
(2.9) |
|
|
Adjusted2 Operating profit |
15.1 |
14.9 |
|
20.8 |
16.5 |
|
|
Adjusting items |
(0.8) |
- |
|
(0.8) |
(0.1) |
|
|
Impairment |
(9.8) |
(5.4) |
|
(9.8) |
(5.4) |
|
|
Amortisation on acquired assets |
(5.4) |
(5.5) |
|
(8.1) |
(5.5) |
|
|
Reported operating (loss)/profit |
(0.9) |
4.0 |
|
2.1 |
5.5 |
|
|
Net finance expense |
(3.3) |
(2.9) |
|
(4.3) |
(3.2) |
|
|
(Loss)/profit before tax |
(4.2) |
1.1 |
|
(2.2) |
2.3 |
|
|
Income tax credit/(expense) |
0.2 |
0.8 |
|
(0.1) |
0.2 |
|
|
(Loss)/Profit for the period |
(4.0) |
1.9 |
|
(2.3) |
2.5 |
|
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
2 Adjusted for amortisation of acquired intangible assets and other adjusting items detailed in note 6 to the financial statements.
3 Earnings (Profit after Tax) before Interest, Tax, Depreciation and Amortisation.
Overview - pro-forma results
Revenue for the 12 months to February 2026 increased by 1.3% compared to the prior 12 months to February 2025. This growth, together with an increase in gross margin, partially offset by an anticipated normalisation of overheads, led to an increase in adjusted EBITDA from £23.3 million to £24.7 million. Operating profit increased slightly following an increase in amortisation, and adjusted basic EPS decreased from 16.9p to 15.3p as a result of increased tax and finance costs.
Revenue analysis
|
|
Unaudited Pro-forma 12 months to 28 February 2026 |
Unaudited Pro-forma 12 months to 28 February 2025 |
Unaudited Adjustments 12 months to 28 February 2025 |
Unaudited Pro-forma Adjusted 12 months to 28 February 2025 |
Unaudited Pro-forma Growth |
Unaudited Pro-forma OCC Growth1 |
|
|
£m |
£m |
£m |
£m |
% |
% |
|
Content Creation |
118.5 |
116.1 |
(1.8) |
114.3 |
2.0% |
3.6% |
|
Audio Reproduction |
46.1 |
46.4 |
(0.5) |
45.9 |
-0.6% |
0.5% |
|
Total |
164.6 |
162.5 |
(2.3) |
160.2 |
1.3% |
2.7% |
[1] Organic constant currency (OCC) growth rate is calculated by comparing 12 months to February 26 revenue to 12 months to February 25 revenue adjusted for average exchange rates for the 12 months to February 2026.
Group revenue increased by 1.3% to £164.6 million (12 months to February 2025: £162.5 million). When adjusted for constant currency effects, this equates to an organic constant currency (OCC) growth of 2.7%. Currency movements experienced headwinds, reducing revenue by approximately £2.3 million, which was primarily due to the weakening of the US dollar.
The Content Creation division reported overall revenue growth of 2.0% (3.6% OCC) to £118.5 million for the 12 months to February 2026. This growth was achieved despite pricing and tariff challenges in the Americas region and channel consolidation in EMEA continued with several resellers reporting insolvencies in the period. Sales in the US were brought forward into the period to February 2025 to manage tariff risk, resulting in lower sales levels in the period to August 2025 and a strong comparator for sales in the period to February 2026.
The Focusrite Novation segment, which now includes the Sonnox brand, achieved revenue of £84.5 million, an increase of 4.6% (OCC: 6.3%) compared to the prior year. Focusrite growth of 7.2% (9.0% OCC) was further supported by the release of a special 40th anniversary Scarlett in August 2025 and strong ongoing sales of the Scarlett Gen 4 range, the update of which is now complete and with stock levels now largely normalised across all regions and channels. Novation sales declined by 6.9% (negative 5.2% OCC), due to sales phasing in the US to mitigate tariffs and following successful product launches in the 12 months to February 2025. Sonnox sales grew by 23.8% (24.7% OCC) following successful marketing campaigns to Focusrite users and the successful launch of a new plug-in, Drumgate 2, in January 2026.
ADAM Audio declined slightly in the 12 months to February 2026 following the phasing of sales into the period to February 2025 in the US to mitigate tariffs, resulting in a decline in this region. Growth remains strong outside the US, in particular in APAC, where the new desktop speakers have proved particularly popular, with the region reporting 35.0% growth for the brand.
Sequential launched the new lower-price-point Fourm in September 2025, which supported growth for the brand outside the US, where price points were impacted by the increased prices due to tariffs.
As previously reported, the Audio Reproduction market continues to normalise following a period of strong growth after the lifting of COVID-19 restrictions. Sales returned to growth of 1.1% in the 6-month period to February 2026, with particular strength in the US at 10.8% growth in the 12 months to February 2026, due to the investment in this area to drive sales. Overall, the division reported a slight decline of 0.6% (OCC: positive 0.5%) for the 12 months to February 2026.
Currency impact
The US Dollar weakened during the period (with detailed exchange rate movements provided below), accounting for the £2.3 million negative translation impact on Group revenue for the 12 months to February 2026 relative to the comparable 12 months in 2025. However, the impact at the profit level was minimal, as purchases of inventory from manufacturers in China and Malaysia are also denominated in USD, creating a natural hedge that offsets much of the currency fluctuation.
Segment profit
Segment profit is disclosed in more detail in note 4 to the Financial Statements, named 'Business Segments'. These segments compare the revenue of the products of the relevant brands with the directly attributable costs to create segment profit.
Gross profit analysis
The Group's gross margin percentage for the 12 months to February 2026 was 45.1%, an increase of 1.7 percentage points compared to the prior 12 months. This was largely due to improvements in Content Creation, with Audio Reproduction margins remaining stable between the periods.
In the Content Creation division, gross margin increased by 3.1 percentage points to 45.9% from 42.8% in the prior year. This improvement was driven by price increases that offset initial tariff impacts in the US, further enhanced by the inventory build in the US before the introduction of tariffs. In addition, inflationary increases elsewhere in the world together with cost reductions resulting from production efficiencies improved margin across regions outside the US. This demonstrates the Group's ability to protect and expand margins in a volatile operating environment, supported by pricing discipline, product mix and operational execution. We continue to closely monitor the situation and are actively pursuing tariff refunds, although the timing or level of refunds remains uncertain and, as a result, the impact of any refunds have not been included in these results.
The Group has managed the tariff risk through a combination of inventory management, supplier selection and proactive pricing policies. Pricing updates were made across both divisions outside the US in September 2025, with targeted pricing in the US in May 2025 and February 2026.
Our Audio Reproduction division, which has historically reported margins of around 43%, has seen margins stabilise back to this level throughout the period. The twelve months to February 2025 (and to August 2024) were inflated by higher sales to the Chinese market, where a portion of sales are recognised on a royalty basis via our contract manufacturers. Sales to APAC were broadly flat in the 12 months to February 2026, leading to a more stabilised margin. Increased tariffs have also impacted this market, but with the majority of products imported to the US being made in the UK, this effect has been less significant than in the Content Creation division.
Freight rates remained relatively stable across the period at a similar level to the prior year, although we are starting to see surcharges and increases due to energy cost inflation as a result of the conflict in the Middle East, which we are passing on as appropriate through our differentiated routes to market pricing actions.
Looking ahead, the outlook for gross margins remains somewhat uncertain, given the ongoing changes to tariff regulations and the inflationary impacts of ongoing geopolitical conflicts. Our target is to maintain underlying gross margins in all regions through a combination of proactive pricing and supply-chain management, enabling us to maximise gross profit. With the launch of our Japanese distribution entity in March, this should provide a small uplift to gross margins, although these are partially offset by increased overheads from the establishment of a local team.
Administrative expenses
Administrative expenses include sales, marketing, operations, the uncapitalised element of R&D (partially offset by the Research and Development Expenditure Credit regime ('RDEC') tax credit), as well as central functions such as legal, finance and the Group Board. Total expenses were £49.6 million for the 12 months to February 2026, up from £47.3 million in the prior year. There were adjusting costs (see below) in the period of £10.6 million, relating to an impairment of £9.8 million to the Sequential Cash Generating Unit (CGU) and a restructuring charge of £0.8 million (12 months to February 2025: £5.4 million).
The £2.3 million increase in adjusted administrative expenses reflects the impact of labour cost inflation and the normalisation of variable remuneration from the low levels in the year to August 2024. In addition, we have invested in our Audio Reproduction sales teams in the US and our eCommerce platforms in Content Creation. This has been offset by a cost restructuring programme undertaken in the current year to deliver efficiencies across Content Creation. Overall, this reflects a combination of disciplined cost control alongside targeted investment to support future growth. This resulted in a one-off cost of £0.8 million and is expected to generate annualised savings of over £1.4 million, with administrative expenses for the six months to February 2026 totalling £24.3 million, £1.0 million lower than in the 6 months to August 2025.
The launch of our Japanese entity in March 2026 will result in an increase in overheads, which will be more than offset by a resulting gross margin improvement. We will also continue to invest in sales resources in the US and the final stages of investment in our new product platforms in Focusrite and ADAM, with the increment partially offset by the annualisation of savings from this year's restructuring.
Adjusted EBITDA
Adjusted EBITDA is an alternative performance measure widely used by securities analysts, investors and other stakeholders to assess a company's underlying profitability. Within the Group, it also forms the basis for elements of senior management incentivisation, both at the operating company and at Group level. This has been amended for the year to February 2027 to be based on operating profit, to recognise the impact of the capitalisation of development costs on the Group's results.
Adjusted EBITDA increased from £23.3 million for the 12 months to February 2025 to £24.7 million for the 12 months to February 2026. This reflects the impact of higher sales and gross margins offsetting the increase in administrative overheads.
A reconciliation of adjusted EBITDA to operating profit can be found in note 2 to the financial statements.
Depreciation and amortisation
Depreciation is charged on tangible fixed assets using the straight-line method over the assets' estimated useful lives, typically ranging between two and five years.
Amortisation is primarily applied to capitalised development costs, with charges spread over the expected lifecycle of the related product. Product lifespans vary across the Group's brands, from approximately three years for Focusrite and Novation, up to 11 years for Martin Audio and 15 years for Sequential.
During the 12 months to February 2026, £11.2 million of development costs were capitalised (12 months to February 2025: £9.1 million). Amortisation totalled £6.9 million (12 months to February 2025: £5.6 million), increasing as more new products are released and as we begin to amortise the development of our new silicon chip platform.
The amortisation of the acquired intangible assets totalled £5.4 million during the period (12 months to February 2025: £5.5 million) and has been disclosed within adjusting items.
Adjusting items
In the 12 months to February 2026, adjusting items totalled £10.6 million, £9.8 million relating to the impairment of the acquired and internally generated intangible assets of the Sequential CGU, with the remainder relating to the restructuring costs referred to above, following a review of the Content Creation division cost base, offset by a £0.1 million reduction in the final earnout for the Sheriff acquisition (see note 6 to the financial statements). The Sequential CGU has strong brands and an ambitious plan for growth through range expansion and margin improvement through relocation of manufacturing. We were recently informed that the brand's existing US contract manufacturer would be ceasing operations requiring a review of the product roadmap, leading to a greater uncertainty of cashflows, which together with the existing difficult market led to the current year impairment. More detail is provided in note 6 to the financial statements. We remain confident in the brand's future plans and a return to profitable growth.
A tax provision of £1.0 million relating to an adjustment to a deferred tax asset following a capital restructuring has been treated as an adjusting item in the 12 months to February 2026.
In the 12 months to February 2025, adjusting items of £5.4 million relate to the impairment of the goodwill and acquired intangible assets relating to the acquisition of Sequential.
£5.4 million (12 months to February 2025: £5.5 million) relating to the amortisation of acquired intangible assets is also shown as an adjusting item in the 12 months to February 2026.
Foreign exchange and hedging
The exchange rates were as follows
|
Exchange rates |
Pro-forma 12 months to 28 February2026 |
Pro-forma 12 months to 28 February 2025 |
|
Reported 18 months to 28 February 2026 |
Reported 12 months to 31 August 2024 |
|
Average |
|
|
|
|
|
|
USD:GBP |
1.33 |
1.28 |
|
1.32 |
1.26 |
|
EUR:GBP |
1.16 |
1.19 |
|
1.18 |
1.17 |
|
|
|
|
|
|
|
|
Period end |
|
|
|
|
|
|
USD:GBP |
1.35 |
1.26 |
|
1.35 |
1.31 |
|
EUR:GBP |
1.14 |
1.21 |
|
1.14 |
1.19 |
The average USD rate has weakened to $1.33 for the 12 months to February 2026 (12 months to February 2025: $1.28). The USD accounts for over half of Group revenue but nearly all of the cost of sales, so there is a useful natural hedge against currency fluctuations.
The Group enters into forward contracts to convert Euro to GBP. The policy adopted by the Group is to hedge approximately 75% of the anticipated Euro flows for the current 12-month period (year ending 28 February 2027) and 50% for the following 12 months (year ending 29 February 2028).
Corporation tax
The tax credit has been impacted by several factors in both periods, resulting in an overall reduction in the tax credit. The inclusion of patent box benefits in both periods has reduced the effective rates on UK profits, with a benefit to the tax charge of approximately £0.5 million in both 12 month periods to February. This has been offset in the 12 months to February 2026 by a provision of £1.0 million relating to a deferred tax asset following a capital restructuring. This has been shown as an adjusting item.
The headline effective tax rate is expected to remain broadly around the UK corporate tax rate in future years, due to the ongoing permitted deductions under the Patent Box scheme offsetting the impact of higher tax rates on profits from non-UK entities.
Earnings per share ('EPS')
The basic EPS for the 12 months to February 2026 was a loss per share of 7.0 pence, down from a profit per share of 3.4 pence in the 12 months to February 2025. This decrease has resulted from the change in reported profit after tax, which was largely due to the £9.8 million impairment charge relating to Sequential. The weighted average number of shares used for the calculation has increased marginally compared with the prior year to 58,662,000 shares (12 months to February 2025: 58,628,000 shares). The more comparable measure, excluding adjusting items and including the dilutive effect of share options, is the adjusted diluted EPS. This decreased to a profit per share of 15.6 pence from 16.9 pence in the 12 months to February 2025, a decrease of 7.7%, mainly due to the increase in finance charges and taxation.
|
|
Unaudited Pro-forma 12 months to 28 February 2026 |
Unaudited Pro-forma 12 months to 28 February 2025 |
|
Reported
18 months to 28 February 2026 |
Restated1 Reported 12 months to 31 August 2024 |
|
|
Pence |
Pence |
|
Pence |
Pence |
|
Basic |
(7.0) |
3.4 |
|
(3.9) |
4.2 |
|
Diluted |
(6.8) |
3.3 |
|
(3.9) |
4.2 |
|
Adjusted basic |
15.8 |
17.2 |
|
22.5 |
18.1 |
|
Adjusted diluted |
15.6 |
16.9 |
|
22.1 |
17.8 |
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
Balance sheet
As noted above, due to the change in year end, the reported results include the balance sheet as at 28 February 2026, with comparatives as at 31 August 2024. To aid comparability, the balance sheet review below also includes the balance sheet as at 31 August and 28 February 2025, as previously reported in the first and second interim results (adjusted for prior year restatements).
|
|
Reported 28 February 2026 |
Restated1 Unaudited Pro-forma 31 August 2025 |
Restated1 Unaudited Pro-forma 28 February 2025 |
Restated1 Reported 31 August 2024 |
|
|
£m |
£m |
£m |
£m |
|
Goodwill |
14.4 |
14.3 |
14.1 |
14.2 |
|
Other intangible assets |
57.2 |
67.1 |
67.5 |
67.1 |
|
Property Plant and Equipment |
11.6 |
10.5 |
10.3 |
11.1 |
|
Deferred tax assets |
4.6 |
2.5 |
2.7 |
2.7 |
|
Non-current assets |
87.8 |
94.5 |
94.7 |
95.0 |
|
Current assets |
|
|
|
|
|
Inventories |
44.1 |
40.8 |
47.5 |
48.3 |
|
Trade and other receivables |
32.0 |
42.8 |
38.8 |
37.4 |
|
Cash |
20.6 |
19.5 |
15.6 |
22.0 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade, other payables and provisions |
(27.4) |
(33.4) |
(31.6) |
(34.5) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Bank loan |
(29.2) |
(30.3) |
(33.5) |
(34.6) |
|
Deferred tax |
(9.1) |
(9.7) |
(9.9) |
(10.6) |
|
Other non-current liabilities |
(7.8) |
(5.7) |
(6.3) |
(6.8) |
|
Net assets |
111.0 |
118.5 |
115.3 |
116.2 |
|
|
|
|
|
|
|
Working capital2 |
48.7 |
50.1 |
54.7 |
51.2 |
|
Working capital as a % of the last 12 months revenue |
29.6% |
29.7% |
33.6% |
32.3% |
1Restated due to adjustments to the prior year - see note 1 to the financial statements.
2 Working capital is defined as inventories plus trade and other receivables, less trade and other payables and provisions.
Non current assets
Goodwill within non current assets totals £14.4 million (February 2025: £14.1 million) and, in line with accounting standards, is not amortised; the movement in the 12 months to February 2026 relates to translation adjustments for foreign exchange.
Intangible assets include both acquired assets and internally generated assets. Acquired assets include goodwill, brands and capitalised development costs. Internally generated intangible assets comprise capitalised R&D and acquired licences, trademarks and software.
Acquired assets relating to brands and acquired development costs in use had a combined net book value at the end of February 2026 of £25.4 million (February 2025: £36.8 million), with the reduction due to an impairment charge of £5.6 million and amortisation of £5.4 million in line with the expected useful economic lives of the brands.
Internally generated technology and patent costs in use had a carrying value, net of amortisation, of £10.2 million (February 2025: £14.8 million). They comprise capitalised research and development costs for products currently in use. The amortisation periods range from three years to fifteen years, depending on the expected life of the products. The shorter amortisation periods are more usual for Focusrite and Novation products and the longer periods more usual for the ADAM Audio monitors, Martin Audio live speakers and Sequential synthesisers.
Capitalised technology and patent costs still under development comprise acquired and internally generated technology and patent costs for products currently still in development. The carrying value of these items has increased from £8.4 million at 1 March 2025 to £14.3 million as at 28 February 2026, as a result of our £10.1 million ongoing investment in new products, net of the transfer of £3.4 million of costs to products now in use and £1.1 million of the impairment of Sequential assets.
Overall, the amortisation of intangible assets totals £12.3 million (12 months to February 2025: £11.1 million). This is split between the amortisation of acquired intangible assets of £5.4 million (12 months to February 2025: £5.5 million), and other amortisation of £6.9 million (12 months to February 2025: £5.7 million). The amortisation of acquired intangible assets has been treated as an adjusting item. In the 12 months to February 2026, the assets relating to the Sequential acquisition were impaired by £9.8 million as discussed above. In the 12 months to August 2024 £2.8 million of intangible assets and goodwill of £2.5 million relating to Sequential was impaired.
The remaining £7.2 million of net book value of intangible assets (28 February 2025: £7.5 million) is in respect of purchased licences, software and trademarks. This includes licences relating to the development of our new platform technology.
Tangible non-current assets of £11.6 million (28 February 2025: £10.5 million) consist mainly of right-of-use assets relating to the Group's leased offices and warehouses, together with one owned building and tooling equipment for the manufacture of products.
Working capital analysis
As of 28 February 2026, working capital represented 29.6% of the last 12 months' revenue, a decrease from 33.6% at February 2025 and 32.3% at August 2024.
The decrease in working capital primarily reflects lower inventory levels over the past year, including a significant reduction in Scarlett stock, particularly of Gen 3 products. This was achieved despite a £2 million increase in Audio Reproduction inventory in the US, held to mitigate the impact of tariffs and improve service levels. The reduction was further helped by a reduction in debtors at the period end, due to sales phasing earlier in the final quarter as shipments were brought forward to manage shipments around the Lunar New Year.
We expect working capital to remain stable over the next six months, resulting in a modest cash inflow during the year.
Cash Flow analysis
As noted above, due to the change in year end, the reported results include a statement of cash flows for the 18 months to February 2026, with comparatives for the 12 months to August 2024. To aid comparability, the cash flow review below also includes the pro-forma cash flows for the 12 months to February 2026 and February 2025. A summary is provided at the end of this report reconciling these pro-forma figures to previously reported interim figures (both the first interim results for the six months to 28 February 2025 and the second interim results for the 12 months to 31 August 2025) and the reported results in these financial statements.
|
|
|
|
|
|||||
|
|
Unaudited Pro-forma 12 months to 28 February 2026 |
Unaudited Pro-forma 12 months to 28 February 2025 |
|
Reported 18 months 28 February 2026 |
Restated1 Reported 12 months to 31 August 2024 |
|
||
|
|
£m |
£m |
|
£m |
£m |
|
||
|
Cash and cash equivalents at the beginning of the year |
15.6 |
8.9 |
|
22.0 |
26.8 |
|
||
|
Foreign exchange movements |
(0.1) |
- |
|
0.1 |
(0.4) |
|
||
|
Cash and cash equivalents at the end of the year |
20.6 |
15.6 |
|
20.6 |
22.0 |
|
||
|
Net increase/(decrease) in cash and cash equivalents |
5.1 |
6.7 |
|
(1.5) |
(4.4) |
|
||
|
Change in bank loan |
3.4 |
3.2 |
|
5.1 |
(6.6) |
|
||
|
Decrease/(increase) in net debt |
8.5 |
9.9 |
|
3.6 |
(11.0) |
|
||
|
Add back equity dividend paid |
2.5 |
3.9 |
|
5.1 |
3.9 |
|
||
|
Add back acquisition of subsidiary (net of cash acquired) |
0.6 |
0.2 |
|
0.6 |
2.5 |
|
||
|
Free cash inflow/ (outflow) |
11.6 |
14.0 |
|
9.3 |
(4.6) |
|
||
|
Add back adjusting items (cash outflow) |
1.3 |
- |
|
0.7 |
0.1 |
|
||
|
Underlying free cash inflow/(outflow) 1 |
12.9 |
14.0 |
|
10.0 |
(4.5) |
|
||
1 Defined as cash flow before equity dividends, acquisition of subsidiary (net of cash acquired) and adjusting items
The underlying free cash inflow in the 12 months to February 2026 was £12.9 million, compared to a cash inflow of £14.0 million in the twelve months to February 2025. The movement in free cash flow reflects the improvement in working capital noted above, with both inventories and debtors reducing from levels that were inflated due to the high levels of stock in the channel and our own warehouses in 2024. The net debt balance at the period-end was £8.6 million (28 February 2025: net debt of £17.9 million). The net debt includes the arrangement fee for the revolving credit facility (RCF) of £0.5 million, which is being amortised across the period of the facility.
The Group has a £50 million RCF facility split evenly between HSBC and NatWest, which was renewed in September 2023 and extended in September 2024 and is due to expire in September 2028, together with an uncommitted facility for a further £50 million. As at the balance sheet date, £29.7 million was drawn down from the facility (28 February 2025: £35.1 million).
Dividend
The Board has approved a final dividend of 4.64p, which will bring the total dividends declared in the 18-month period to date to 8.84p (12 months to August 2024: 6.6p). This consists of two interim dividends of 2.1p each declared in May 2025 and in November 2025, together with the proposed final dividend, reflecting the longer accounting period, and compares to one interim and one final dividend for the 12 months to August 2024.
Summary
The Group's financial position remains strong, supported by improving margins, disciplined cost management and a normalising working capital profile. Looking ahead, the business is increasingly well positioned to benefit from operating leverage, with modest revenue growth expected to translate into materially stronger profit growth over time. Continued investment in product development, platform capability and direct-to-consumer sales channels will further support margin progression and cash generation.
STRATEGIC REPORT APPENDIX
PRO FORMA RESULTS FOR THE 12 MONTHS TO FEBRUARY 2026
|
Income Statement |
Reported 18 months to to February 2026
|
Unaudited Pro-forma Less 6 months to February 2025 3 |
Unaudited Pro-forma 12 months to to February 2026 |
|
|
£m |
£m |
£m |
|
Revenue |
245.5 |
80.9 |
164.6 |
|
Cost of sales |
(135.9) |
(45.6) |
(90.3) |
|
Gross profit |
109.6 |
35.3 |
74.3 |
|
Administrative overheads |
(74.7) |
(25.1) |
(49.6) |
|
Adjusted1 EBITDA2 |
34.9 |
10.2 |
24.7 |
|
Amortisation |
(10.0) |
(3.1) |
(6.9) |
|
Depreciation |
(4.1) |
(1.4) |
(2.7) |
|
Adjusted1 Operating profit |
20.8 |
5.7 |
15.1 |
|
Adjusting items |
(0.8) |
- |
(0.8) |
|
Impairment of intangible assets |
(9.8) |
- |
(9.8) |
|
Amortisation on Acquired assets |
(8.1) |
(2.7) |
(5.4) |
|
Reported operating profit/(loss) |
2.1 |
3.0 |
(0.9) |
|
Net finance expense |
(4.3) |
(1.0) |
(3.3) |
|
(Loss)/Profit before tax |
(2.2) |
2.0 |
(4.2) |
|
Cashflow |
18 months to to February 2026 Reported |
Pro-forma Unaudited Less 6 months to February 2025 3 |
Pro-forma Unaudited 12 months to to February 2026 |
|
|
£m |
£m |
£m |
|
Cash and cash equivalents at the beginning of the year |
22.0 |
22.0 |
15.6 |
|
Foreign exchange movements |
0.1 |
0.2 |
(0.1) |
|
Cash and cash equivalents at the end of the period |
20.6 |
15.6 |
20.6 |
|
Net (decrease)/increase in cash and cash equivalents |
(1.5) |
(6.6) |
5.1 |
|
Change in bank loan |
5.1 |
1.7 |
3.4 |
|
Decrease/(increase) in net debt |
3.6 |
(4.9) |
8.5 |
|
Add back equity dividends paid |
5.1 |
2.6 |
2.5 |
|
Add back acquisition of subsidiary |
0.6 |
- |
0.6 |
|
Free cash inflow/(outflow) |
9.3 |
(2.3) |
11.6 |
|
Add back non underlying items (cashflow) |
0.7 |
- |
0.7 |
|
Underlying free cash inflow/(outflow) |
10.0 |
(2.3) |
12.3 |
|
Underlying free cash flow as % of EBITDA |
30.4% |
-22.5% |
52.2% |
1 Adjusted for amortisation of acquired intangible assets and other adjusting items detailed in note 2 to the financial statements.
2 Earnings (Profit after Tax) before Interest, Tax, Depreciation and Amortisation.
3 Extracted from the interim results for the six months to February 2025, as announced on 28 April 2025 and adjusted for prior year restatements.
PRO FORMA RESULTS FOR THE 12 MONTHS TO FEBRUARY 2025
|
Income Statement |
Reported 12 months to August 2024
|
Unaudited Pro-forma Less 6 months to February 2024 3 |
Unaudited Pro-forma Plus 6 months to February 2025 4 |
Unaudited Pro-forma
12 months to February 2025 |
|
|
£m |
£m |
£m |
£m |
|
Revenue |
158.5 |
76.9 |
80.9 |
162.5 |
|
Cost of sales |
(88.3) |
(42.0) |
(45.6) |
(91.9) |
|
Gross profit |
70.2 |
34.9 |
35.3 |
70.6 |
|
Administrative overheads |
(45.3) |
(23.1) |
(25.1) |
(47.3) |
|
Adjusted1 EBITDA2 |
24.9 |
11.8 |
10.2 |
23.3 |
|
Amortisation |
(5.5) |
(3.0) |
(3.1) |
(5.6) |
|
Depreciation |
(2.9) |
(1.5) |
(1.4) |
(2.8) |
|
Adjusted1 Operating profit |
16.5 |
7.3 |
5.7 |
14.9 |
|
Adjusting items |
(0.1) |
(0.1) |
- |
- |
|
Impairment of intangible assets |
(5.4) |
- |
- |
(5.4) |
|
Amortisation on Acquired assets |
(5.5) |
(2.7) |
(2.7) |
(5.5) |
|
Reported operating profit |
5.5 |
4.5 |
3.0 |
4.0 |
|
Net finance expense |
(3.2) |
(1.2) |
(0.9) |
(2.9) |
|
Profit before tax |
2.3 |
3.3 |
2.1 |
1.1 |
|
Cashflow |
Reported 12 months to August 2024
|
Unaudited Pro-forma Less 6 months to February 2024 3 |
Unaudited Pro-forma Plus 6 months to February 2025 4 |
Unaudited Pro-forma
12 months to February 2025 |
|
|
£m |
£m |
£m |
£m |
|
Cash and cash equivalents at the beginning of the year |
26.8 |
26.8 |
22.0 |
8.9 |
|
Foreign exchange movements |
(0.4) |
(0.2) |
0.2 |
- |
|
Cash and cash equivalents at the end of the period |
22.0 |
8.9 |
15.6 |
15.6 |
|
Net (decrease)/increase in cash and cash equivalents |
(4.4) |
(17.7) |
(6.6) |
6.7 |
|
Change in bank loan |
(6.6) |
(8.1) |
1.7 |
3.2 |
|
Decrease/(increase) in net debt |
(11.0) |
(25.8) |
(4.9) |
9.9 |
|
Add back equity dividends paid |
3.9 |
2.6 |
2.6 |
3.9 |
|
Add back acquisition of subsidiary |
2.5 |
2.3 |
- |
0.2 |
|
Free cash inflow/(outflow) |
(4.6) |
(20.9) |
(2.3) |
14.0 |
|
Add back non underlying items (cashflow) |
0.1 |
0.1 |
- |
- |
|
Underlying free cash inflow/(outflow) |
(4.5) |
(20.8) |
(2.3) |
14.0 |
|
Underlying free cash flow as % of EBITDA |
-18.0% |
-177% |
-22.1% |
60.4% |
1 Adjusted for amortisation of acquired intangible assets and other adjusting items detailed in note 2 to the financial statements.
2 Earnings (Profit after Tax) before Interest, Tax, Depreciation and Amortisation.
3 Extracted from the interim results for the six months to February 2024, as announced on 24 April 2024 and adjusted for prior year restatements.
4 Extracted from the interim results for the six months to February 2025, as announced on 28 April 2025 and adjusted for prior year restatements.
FORWARD-LOOKING STATEMENTS
Certain statements in this announcement are forward-looking. Although the Directors believe that their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
Consolidated Income Statement
For the 18 months ended 28 February 2026
|
|
Note |
18 months to February 2026 |
Restated1 12 months to August 2024 |
|
|
|
£000 |
£000 |
|
Revenue |
4 |
245,505 |
158,524 |
|
Cost of Sales |
|
(135,867) |
(88,374) |
|
Gross Profit |
|
109,638 |
70,150 |
|
Administrative Expenses |
|
(107,584) |
(64,618) |
|
Adjusted EBITDA (non-GAAP measure) |
|
34,901 |
24,876 |
|
Depreciation and Amortisation |
|
(14,097) |
(8,395) |
|
Adjusting items: |
|
|
|
|
Amortisation of acquired intangible assets |
|
(8,122) |
(5,510) |
|
Impairment of intangible assets |
6 |
(9,843) |
(5,355) |
|
Other adjusting items |
6 |
(785) |
(84) |
|
Operating profit |
|
2,054 |
5,532 |
|
Finance income |
|
266 |
100 |
|
Finance costs |
|
(4,545) |
(3,292) |
|
(Loss)/Profit before tax |
|
(2,225) |
2,340 |
|
Income tax (charge)/credit |
7 |
(75) |
145 |
|
(Loss)/Profit for the period |
(2,300) |
2,485 |
|
|
|
|
|
|
|
(Loss)/earnings per share |
|
|
|
|
Basic (pence per share) |
9 |
(3.9) |
4.2 |
|
Diluted (pence per share) |
9 |
(3.9) |
4.2 |
Consolidated Statement of Comprehensive Income
For the 18 months ended 28 February 2026
|
|
Note |
18 months to February 2026 |
Restated1 12 months to August 2024
|
|
|
|
|
|
£000 |
£000 |
|
|
| (Loss)/Profit for the period (attributable to equity shareholders) |
(2,300) |
2,485 |
|||
|
Items that may be subsequently reclassified to the income statement |
|
|
|||
|
Exchange gains/ (losses) on translation of foreign operations |
|
1,530 |
(923) |
|
|
|
Loss on forward exchange contracts |
|
(458) |
(491) |
|
|
|
Tax on hedging instrument |
|
115 |
190 |
|
|
|
Total other comprehensive income/(expense) for the period |
|
1,187 |
(1,224) |
|
|
|
Total comprehensive (expense)/income for the period |
|
(1,113) |
1,261 |
|
|
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
The accompanying notes form part of these abbreviated financial statements.
Consolidated Statement of Financial Position
|
|
Note |
28 February 2026 |
Restated1 31 August 2024 |
|
|
|
£000 |
£000 |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
|
14,403 |
14,194 |
|
Other intangible assets |
10 |
57,157 |
67,061 |
|
Property, plant and equipment |
|
11,580 |
11,096 |
|
Deferred tax assets |
|
4,612 |
2,666 |
|
Total non-current assets |
|
87,752 |
95,017 |
|
Current assets |
|
|
|
|
Inventories |
|
44,105 |
48,303 |
|
Trade and other receivables |
|
30,657 |
37,391 |
|
Cash and cash equivalents |
|
20,623 |
22,040 |
|
Current tax asset |
|
1,282 |
226 |
|
Total current assets |
|
96,667 |
107,960 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(23,716) |
(30,381) |
|
Other liabilities |
|
(1,336) |
(1,527) |
|
Current tax liabilities |
|
(1,440) |
(2,274) |
|
Provisions |
|
(259) |
(522) |
|
Derivative financial instruments |
|
(601) |
- |
|
Total current liabilities |
|
(27,352) |
(34,704) |
|
Net current assets |
|
69,315 |
73,256 |
|
Total assets less current liabilities |
|
157,067 |
168,273 |
|
Non-current liabilities |
|
|
|
|
Deferred tax |
|
(9,059) |
(10,574) |
|
Bank loan |
|
(29,218) |
(34,565) |
|
Provisions |
|
(1,389) |
- |
|
Other liabilities |
|
(6,368) |
(6,793) |
|
Total non-current liabilities |
|
(46,034) |
(51,932) |
|
Total liabilities |
|
(73,386) |
(86,636) |
|
Net assets |
|
111,033 |
116,341 |
|
|
|
|
|
|
Capital and Reserves |
|
|
|
|
Share capital |
|
59 |
59 |
|
Share premium |
|
115 |
115 |
|
Merger reserve |
|
14,595 |
14,595 |
|
Merger difference reserve |
|
(13,147) |
(13,147) |
|
Translation reserve |
|
(2,150) |
(3,680) |
|
Hedging reserve |
|
(343) |
- |
|
EBT reserve |
|
(1) |
(1) |
|
Retained earnings |
|
111,905 |
118,400 |
|
Equity attributable to the owners of the Company |
111,033 |
116,341 |
|
|
Total Equity |
|
111,033 |
116,341 |
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 28 June 2026. They were signed on its behalf by:
Sally McKone
Chief Financial Officer
Consolidated Statement of Changes in Equity
|
|
Share capital |
Share premium |
Merger reserve |
Merger difference reserve |
Translation reserve |
Hedging reserve |
EBT reserve |
Restated1 Retained earnings |
Restated1 Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Balance at 1 September 2023 |
59 |
115 |
14,595 |
(13,147) |
(2,757) |
491 |
(1) |
119,097 |
118,452 |
|
Adjustments in relation to prior period errors1 |
- |
- |
- |
- |
- |
- |
- |
508 |
508 |
|
Balance at 1 September 2023 (restated) 1 |
59 |
115 |
14,595 |
(13,147) |
(2,757) |
491 |
(1) |
119,605 |
118,960 |
|
Profit for the period |
- |
- |
- |
- |
- |
- |
- |
2,485 |
2,485 |
|
Other comprehensive (loss)/income |
- |
- |
- |
- |
(923) |
(491) |
- |
190 |
(1,224) |
|
Total comprehensive (loss)/income |
- |
- |
- |
- |
(923) |
(491) |
- |
2,675 |
1,261 |
|
Share based payments: deferred tax |
- |
- |
- |
- |
- |
- |
- |
(84) |
(84) |
|
EBT shares issued |
- |
- |
- |
- |
- |
- |
- |
22 |
22 |
|
Share-based payments |
- |
- |
- |
- |
- |
- |
- |
158 |
158 |
|
Shares withheld to settle tax obligations |
- |
- |
- |
- |
- |
- |
- |
(106) |
(106) |
|
Dividends paid |
- |
- |
- |
- |
- |
- |
- |
(3,870) |
(3,870) |
|
Balance at 31 August 2024 (restated)¹ |
59 |
115 |
14,595 |
(13,147) |
(3,680) |
- |
(1) |
118,400 |
116,341 |
|
Loss for the period |
- |
- |
- |
- |
- |
- |
- |
(2,300) |
(2,300) |
|
Other comprehensive (loss)/income |
- |
- |
- |
- |
1,530 |
(343) |
- |
- |
1,187 |
|
Total comprehensive (loss)/income |
- |
- |
- |
- |
1,530 |
(343) |
- |
(2,300) |
(1,113) |
|
Share based payments: deferred tax |
- |
- |
- |
- |
- |
- |
- |
73 |
73 |
|
EBT shares issued |
- |
- |
- |
- |
- |
- |
- |
21 |
21 |
|
Share-based payments |
- |
- |
- |
- |
- |
- |
- |
762 |
762 |
|
Shares withheld to settle tax obligations |
- |
- |
- |
- |
- |
- |
- |
(103) |
(103) |
|
Share based payments in lieu of bonuses |
- |
- |
- |
- |
- |
- |
- |
152 |
152 |
|
Dividends paid |
- |
- |
- |
- |
- |
- |
- |
(5,100) |
(5,100) |
|
Balance at 28 February 2026 |
59 |
115 |
14,595 |
(13,147) |
(2,150) |
(343) |
(1) |
111,905 |
111,033 |
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
Consolidated Cash Flow Statement
For the 18 months to 28 February 2026
|
|
|
18 months to February 2026 |
Restated1 12 months to August 2024
|
|
|
Note |
£000 |
£000 |
|
Operating activities |
|
|
|
|
(Loss)/profit for the financial year |
|
(2,300) |
2,485 |
|
Income tax charge/(credit) |
7 |
75 |
(145) |
|
Net interest expense |
|
4,279 |
3,192 |
|
Loss on disposal of property, plant and equipment |
|
63 |
13 |
|
Loss on disposal of intangible assets |
|
54 |
75 |
|
Amortisation of intangibles |
|
18,122 |
11,019 |
|
Impairment of goodwill and acquired intangibles |
|
9,843 |
5,355 |
|
Depreciation of property, plant and equipment |
|
4,097 |
2,887 |
|
Other non-cash items |
|
(683) |
(625) |
|
Share-based payments charge |
|
762 |
158 |
|
Operating cashflow before movements in working capital |
|
34,312 |
24,414 |
|
Decrease/(increase) in trade and other receivables |
|
6,200 |
(4,909) |
|
Decrease in inventories |
|
3,908 |
7,069 |
|
Decrease in trade and other payables and provisions |
|
(5,070) |
(10,731) |
|
Operating cash flows before interest and tax |
|
39,350 |
15,843 |
|
Interest paid |
|
(3,843) |
(2,503) |
|
Interest received |
|
266 |
100 |
|
Income tax paid |
|
(2,695) |
(1,781) |
|
Cash generated by operations |
|
33,078 |
11,659 |
|
Net foreign exchange movements |
|
799 |
(563) |
|
Net cash from operating activities |
|
33,877 |
11,096 |
|
Investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(2,734) |
(1,540) |
|
Purchase of intangible assets |
|
(1,722) |
(3,040) |
|
Capitalised R&D costs |
|
(18,321) |
(9,660) |
|
Acquisition of businesses, net of cash acquired2 |
|
(570) |
(2,494) |
|
Net cash used in investing activities |
|
(23,347) |
(16,734) |
|
Financing activities |
|
|
|
|
Proceeds from loans and borrowings |
|
- |
9,355 |
|
Repayments of loans and borrowings |
|
(5,100) |
(2,750) |
|
Payment of lease liabilities |
|
(1,877) |
(1,423) |
|
Equity dividends paid |
|
(5,100) |
(3,870) |
|
Net cash (used in)/generated from financing activities |
|
(12,077) |
1,312 |
|
Net decrease in cash and cash equivalents |
|
(1,547) |
(4,326) |
|
Cash and cash equivalents at the beginning of the year |
|
22,040 |
26,787 |
|
Foreign exchange movements |
|
130 |
(421) |
|
Cash and cash equivalents at the end of the year |
|
20,623 |
22,040 |
1 Restated due to adjustments to the prior year - see note 1 to the financial statements.
2 The acquisition cashflow in the 18 months to February 2026 relates to a staged acquisition payment for the purchase of the Oberheim brand, acquired in April 2022.
Notes to the Results
For the 18 months to 28 February 2026
1. BASIS OF PREPARATION
The financial information set out above does not constitute the company's statutory accounts for the 18 months ended 28 February 2026 or the year ended 31 August 2024 but is derived from those accounts. Statutory accounts for the year ended 31 August 2024 have been delivered to the registrar of companies, and those for the 18 months ended 28 February 2026 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Board of Directors has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence and meet their liabilities as they fall due for a period of 12 months from the approval of these financial statements ('the going concern period'). Accordingly, the financial statements have been prepared on a going concern basis.
The Group meets its day-to-day working capital requirements from cash balances and a revolving credit facility of £50 million, of which £29.7 million was drawn at the Balance Sheet date, which has a maturity date of September 2028. The availability of the revolving credit facility is subject to continued compliance with certain covenants.
The Directors have prepared projected cash flow forecasts for the going concern period. These forecasts include the base case, along with three discrete severe but plausible downside scenarios, which include potential impacts from risks identified from the business, including:
· loss of our largest customer, our distributor for Focusrite, Novation and ADAM Audio in the US;
· loss of a key contract manufacturer, potentially due to increased storm intensity, as flagged in our climate risk analysis; and
· a reduction in gross margin due to ongoing pricing pressures and the potential impact of import tariffs for goods imported into the US.
Whilst climate change is considered to bring both risks and opportunities to the Group, as outlined in our Environmental, Social, Governance ('ESG') section on pages 44 to 55 of our Annual Report, we consider the quantifiable risk in the short term to relate to increased storm intensity, resulting in the potential loss of a distributor or contract manufacturer and this is included within our scenarios. The increased geopolitical risk that could impact our manufacturing partners in China has also been considered, but has not been modelled, given that the considered likelihood and scale of global sanctions would not make this a plausible scenario.
The base case covers a period of 12 months from the date of signing and includes demanding but achievable forecast growth.
The forecast has been extracted from the Group's budget for the 12 months to February 2027 and three-year plan for the remainder of the going concern period.
Key assumptions include:
· future growth assumptions consistent with those assumed in the Group's internal plans for market growth and new product introductions;
· working capital requirements in line with historic trends;
· continued investment in research and development in all areas of the Group;
· dividends consistent with the Group's dividend policy;
· no additional investment in acquisitions in the forecast period; and
· foreign exchange rates in line with those prevailing as at 28 February 2026.
Throughout the period, the forecast cash flow information indicates that the Group will have sufficient cash reserves and headroom on the revolving credit facility to continue to meet its liabilities throughout the forecast period, as well as continuing to maintain covenant compliance.
The Directors have modelled three severe but plausible downside scenarios to take account of the risks identified above, together with a combined scenario, containing elements from each of these scenarios. These models assume that purchases of stock will, in time, reduce to reflect reduced sales. The Group would respond to a revenue or gross margin shortfall by taking reasonable steps to reduce dividends, overheads and capital expenditure within its control. These mitigants have been included in each of the downside scenarios. Across these scenarios, the most significant impact expected would be a level of net debt of around £27 million for a period of 7 months; however, the Group would be expected to remain well within the terms of its loan facility with the leverage covenant (net debt to adjusted EBITDA) in the period not exceeding the maximum of 2.5x.
Separately, as a reverse stress test, the Directors estimate that if the Group were to experience a reduction in revenue expectations of greater than 30% compared to the base case, permanently from the start of the forecast period, interest cover limits would exceed those allowed by the banking covenants by May 2027. This scenario includes consequential reductions in the purchases of stock and dividends, as well as other mitigating cost reductions. However, the Directors' view is that any scenario of a revenue shortfall of greater than the severe yet plausible scenario above is not realistic.
In practice, the Group is still currently experiencing stable levels of consumer registrations and underlying customer demand, and therefore the revenue levels have been maintained at expected levels since year end. The Group is focused on working capital, with the Group's net debt balance increasing from a net position of £8.6 million reported at the period end to approximately net debt of £10.7 million at 19 June 2026, due to working capital phasing and is expected to improve by the end of the next reporting period. As a result, the Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as they fall due for 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Prior year restatements
During the preparation of the current year financial statements, three errors were identified which resulted in a restatement of the prior year. These errors have been corrected through prior year adjustments and restatement of the comparative information.
· The first error relates to the understatement of the provision for unrealised profits in stock on intercompany sales ('PURP'). Upon restatement, this results in a decrease in inventory, a corresponding increase in cost of sales, and an associated deferred tax impact.
· The second error relates to the overstatement of goods received not invoiced (GRNI) balances in respect of inventory purchases. Upon restatement, this results in a decrease in trade and other payables and a corresponding decrease in cost of sales and an associated current tax impact.
· The third error related to the over amortisation of capitalised trademarks. Upon restatement this results in a decrease in accumulated amortisation and a reduction in amortisation charged in the year and an associated current tax impact.
These errors have been corrected through the restatement of the comparative information presented in these financial statements, as set out below:
|
|
Balance as previously reported at 31 August 2024 £000 |
Impact of PURP error correction £000 |
Impact of GRNI error correction £000 |
Impact of amortization correction £000 |
Balance as restated at 31 August 2024 £000 |
|
Income Statement |
|
|
|
|
|
|
Cost of Sales |
(88,031) |
(707) |
364 |
- |
(88,374) |
|
Gross profit |
70,493 |
(707) |
364 |
- |
70,150 |
|
Amortisation |
(8,574) |
- |
- |
179 |
(8,395) |
|
Operating profit/(loss) |
5,696 |
(707) |
364 |
179 |
5,532 |
|
Income tax credit/(charge) |
104 |
177 |
(91) |
(45) |
145 |
|
Profit/(loss) for the period |
2,608 |
(530) |
273 |
134 |
2,485 |
|
Basic EPS (p) |
4.5 |
(0.9) |
0.5 |
0.2 |
4.2 |
|
Diluted basic EPS (p) |
4.4 |
(0.9) |
0.5 |
0.2 |
4.2 |
|
Adjusted basic EPS (p) |
18.3 |
(0.9) |
0.5 |
0.2 |
18.1 |
|
Adjusted diluted EPS (p) |
18.0 |
(0.9) |
0.5 |
0.2 |
17.8 |
|
|
|
|
|
|
|
|
Balance Sheet |
|
|
|
|
|
|
Other intangible assets |
66,065 |
- |
- |
996 |
67,061 |
|
Inventory |
49,267 |
(964) |
- |
- |
48,303 |
|
Trade and other payables |
(30,745) |
- |
364 |
- |
(30,381) |
|
Current Tax Liability |
(2,022) |
- |
(91) |
(161) |
(2,274) |
|
Deferred Tax Liability |
(10,815) |
241 |
- |
- |
(10,574) |
|
Opening Net Assets |
118,452 |
(193) |
- |
701 |
118,960 |
|
Closing Net Assets |
115,956 |
(723) |
273` |
835 |
116,341 |
The impact of these restatements also resulted in a £508,000 increase in opening reserves as shown in the Statement of Changes in Equity. The Statement of Cash Flows and related disclosure notes have also been restated where relevant.
The Directors have reviewed the Group's relevant financial reporting controls and implemented additional review procedures over
spreadsheet-based calculations within the consolidation process and year end balance sheet reviews to reduce the risk of similar errors arising in future periods.
During the period, there was also an update to IAS 1: Presentation of Financial Statements required entities to consider the substance of liabilities and their classification as either current or non-current and the conditions applicable to any renewal of the loan. The directors have the right to defer payment of the loans for longer than 12 months from the Balance Sheet date and, as a result, the bank loans held by the Group have been reclassified as non-current, with the change being applied retrospectively. As at 31 August 2024, a total of £34.6 million has been reclassified as non-current liabilities from current liabilities.
2. ALTERNATIVE PERFORMANCE MEASURES ('APMs)
The Group has applied certain alternative performance measures ('APMs') within these financial results. A reconciliation to GAAP measures is provided in the table below or are cross referenced to tables within the Financial review section. The APMs presented are used in discussions with the Board, management and investors to aid the understanding of the performance of the Group. The Group considers that the presentation of APMs allows for improved insight to the trading performance of the Group. The Group considers that the term 'Adjusted' together with an adjusting items category, best reflects the trading performance of the Group.
Adjusting items are those items that are unusual because of their size, nature or incidence, and are applied consistently year on year. The Directors consider that these items should be separately identified within their relevant income statement category to enable full understanding of the Group's results. Items included are acquisition costs, earnout payable to employees of acquired businesses, impairment of goodwill and acquired intangible assets and restructuring costs.
The following APMs have been used in these financial results:
• Organic constant currency growth - this is calculated by comparing current period revenue to prior period revenue adjusted for current period exchange rates and the impact of acquisitions, shown within the Financial Review.
• Adjusted EBITDA - comprising earnings (operating profit) adjusted for interest, taxation, depreciation, amortisation and adjusting items. This is shown on the face of the income statement.
• Adjusted operating profit - operating profit adjusted for adjusting items.
• Adjusted earnings per share ('EPS') - earnings per share excluding adjusting items.
• Free cash flow - net increase/(decrease) in cash and cash equivalents excluding net cash used acquisitions, movements on the bank loan and dividends paid.
• Underlying free cash flow - as free cash flow but adding back adjusting items.
• Net debt - comprised of cash and cash equivalents, overdrafts and amounts drawn against the RCF including the costs of arranging the RCF.
A reconciliation of all items is provided in the table below
|
|
18 months to 28 February2026
|
Restated1 12 months to 31 August 2024
|
||||||
|
Profit definitions |
Adjusted EBITDA |
Adjusted Operating Profit |
Adjusted Diluted Earnings Per Share |
Adjusted EBITDA |
Adjusted Operating Profit |
Adjusted Diluted Earnings Per Share |
||
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
||
|
Reported: |
|
|
|
|
|
|
||
|
Operating Profit |
2,054 |
2,054 |
- |
5,532 |
5,532 |
- |
||
|
(Loss)/Profit after tax |
- |
- |
(2,300) |
- |
- |
2,485 |
||
|
Add back/(deduct): |
|
|
|
|
|
|
||
|
Underlying depreciation and amortisation |
14,097 |
- |
- |
8,395 |
- |
- |
||
|
Amortisation on acquired intangibles |
8,122 |
8,122 |
8,122 |
5,510 |
5,510 |
5,510 |
||
|
Acquisition costs |
- |
- |
- |
98 |
98 |
98 |
||
|
Impairment of goodwill and intangibles |
9,843 |
9,843 |
9,843 |
5,355 |
5,355 |
5,355 |
||
|
Earnout in relation to acquisitions |
(60) |
(60) |
(60) |
- |
- |
- |
||
|
Restructuring costs |
845 |
845 |
845 |
(14) |
(14) |
(14) |
||
|
Tax on adjusting items |
- |
- |
(4,292) |
|
|
(2,842) |
||
|
Tax-related adjusting item |
- |
- |
1,025 |
- |
- |
- |
||
|
Adjusted |
34,901 |
20,804 |
13,183 |
24,876 |
16,481 |
10,592 |
||
|
|
|
|
|
|
|
|
||
|
Weighted average number of total ordinary shares including dilutive impact (000's) |
59,705 |
|
|
59,400 |
||||
|
Adjusted diluted EPS (p) |
|
|
22.1 |
|
|
17.8 |
||
1 Restated due to prior year adjustments. See note 1.
|
|
18 months to 28 February 2026 |
|
12 months to 31 August 2024 |
||
|
Cashflow definitions |
Free cash flow |
Underlying free cash flow |
|
Free cash flow |
underlying free cash flow |
|
|
£000 |
£000 |
|
£000 |
£000 |
|
Net decrease in cash and cash equivalents during the year |
(1,547) |
(1,547) |
|
(4,326) |
(4,326) |
|
Add back: dividends paid |
5,100 |
5,100 |
|
3,870 |
3,870 |
|
Add back: cash outflow in relation to acquisition of business |
570 |
570 |
|
2,494 |
2,494 |
|
Change in bank loan |
5,100 |
5,100 |
|
(6,605) |
(6,605) |
|
Add back: adjusting items |
- |
739 |
|
- |
84 |
|
Free cashflow/Underlying free cashflow |
9,223 |
9,962 |
|
(4,567) |
(4,483) |
|
Definition of net debt |
28 February 2026 Net debt £000 |
31 August 2024 Net debt £000 |
|
Cash and cash equivalents |
20,623 |
22,040 |
|
Bank loan |
(29,745) |
(35,101) |
|
RCF arrangement fee |
527 |
536 |
|
Net debt |
(8,595) |
(12,525) |
3. Revenue
An analysis of the Group's revenue by reportable segment and by location of customer is as follows:
|
|
18 months to 28 February 2026 |
|
12 months to 31 August 2024 |
|
|
£000 |
|
£000 |
|
Focusrite Novation2 |
125,017 |
|
78,503 |
|
ADAM Audio |
38,002 |
|
22,610 |
|
Sequential |
14,913 |
|
9,705 |
|
Content Creation |
177,932 |
|
110,818 |
|
Audio Reproduction3 |
67,573 |
|
47,706 |
|
Total |
245,505 |
|
158,524 |
|
|
18 months to 28 February 2026 |
|
12 months to 31 August 2024 |
|
|||||||
|
|
Americas |
EMEA |
APAC |
Total |
|
Americas1 |
EMEA |
APAC1 |
Total |
||
|
|
£000 |
£000 |
£000 |
£000 |
|
£000 |
£000 |
£000 |
£000 |
||
|
Content Creation |
76,869 |
79,671 |
21,392 |
177,932 |
|
52,297 |
47,715 |
10,806 |
110,818 |
||
|
Audio Reproduction3 |
19,938 |
27,381 |
20,254 |
67,573 |
|
13,317 |
19,414 |
14,975 |
47,706 |
||
|
Total |
96,807 |
107,052 |
41,646 |
245,505 |
|
65,614 |
67,129 |
25,781 |
158,524 |
||
1 Regions restated to reflect the revised Group operating model with LATAM now part of Americas and APAC replacing 'Rest of World'.
2 During this period, the Focusrite, Novation and Sonnox brands have been merged into one operating segment within the financial statements following the reorganisation of the relevant R&D teams, resulting in joint product development.
3 In the prior period the Audio Reproduction division was called Martin, it has been renamed to reflect the broader composition of the division.
Revenue is attributed to countries based on the location of the external customer. The amount of revenue sold to external customers in the UK was £22,372,000 (12 months to 31 August 2024: £11,759,000) and in the USA, it was £86,013,000 (12 months to 31 August 2024: £60,177,000). No revenue from any other foreign country was individually material.
4. Business segments
Information reported to the Group Chief Executive Officer, who has been determined to be the Group's Chief Operating Decision-maker for the purposes of resource allocation and assessment of segment performance is focused on the main product groups which the Group sells. The Group's reportable segments under IFRS 8 are as follows:
Focusrite Novation - Sales of Focusrite, Novation products and Sonnox software plug-ins
ADAM Audio - Sales of ADAM Audio products
Sequential - Sales of Sequential and Oberheim products
Audio Reproduction - Sales of Martin Audio, Optimal Audio, Linea Research, panLab, Timax & OutBoard products
Segment revenues and results
The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit represents the profit earned by each segment without allocation of the share of central administration costs including Directors' salaries, investment revenue and finance costs, and income tax expense. This is the measure reported to the Board of Directors for the purpose of resource allocation and the assessment of segment performance.
Central administrative costs comprise principally the employment-related costs and other overheads incurred by the Group. Also included within central administrative costs is the expense relating to the share option scheme of £762,000 for the period to 28 February 2026 (12 months to 31 August 2024: £158,000).
The following is an analysis of the Group's revenue and results by reportable segment:
|
|
18 months to February 2026 |
Restated2 12 months to August 2024
|
|
|
£'000 |
£'000 |
|
Revenue from external customers |
|
|
|
Focusrite Novation1 |
125,017 |
78,503 |
|
ADAM Audio |
38,002 |
22,610 |
|
Sequential |
14,913 |
9,705 |
|
Content Creation |
177,932 |
110,818 |
|
Audio Reproduction |
67,573 |
47,706 |
|
Total |
245,505 |
158,524 |
|
Segment profit |
|
|
|
Focusrite Novation1 |
55,978 |
32,398 |
|
ADAM Audio |
18,501 |
11,217 |
|
Sequential |
6,038 |
4,044 |
|
Content Creation |
80,517 |
47,659 |
|
Audio Reproduction |
29,121 |
22,491 |
|
|
109,638 |
70,150 |
|
Central distribution costs and administrative expenses |
(88,834) |
(53,669) |
|
Adjusting items (note 6)4 |
(18,750) |
(10,949) |
|
Operating profit |
2,054 |
5,532 |
|
Finance income |
266 |
100 |
|
Finance costs |
(4,545) |
(3,292) |
|
Loss/Profit before tax |
(2,225) |
2,340 |
|
Tax (charge)/credit |
(75) |
145 |
|
Loss/Profit after tax |
(2,300) |
2,485 |
1 During this period, the Focusrite, Novation and Sonnox brands have been merged into one operating segment within the financial statements following the reorganisation of the relevant R&D teams, resulting in joint product development.
2 Restated due to adjustments in the prior year. See note 1.
3 In the prior period the Audio Reproduction division was called Martin, it has been renamed to reflect the broader composition of the division.
4 Restated to include impairment on goodwill and intangible assets in the prior year
The Group's non-current assets, analysed by geographical location, were as follows:
|
|
28 February 2026 |
Restated1 31 August 2024 |
|
|
£'000 |
£'000 |
|
Non-current assets |
|
|
|
North America |
10,610 |
8,014 |
|
Europe, Middle East and Africa |
77,068 |
86,977 |
|
Rest of the World |
74 |
26 |
|
Total non-current assets |
87,752 |
95,017 |
|
|
|
|
|
UK |
62,123 |
69,394 |
1 Restated due to adjustments in the prior year. See note 1.
Information about major customers
Included in the revenues shown for the 18 months to 28 February 2026 is £55.9 million (12 months to 31 August 2024: £29.8 million) attributed to the Group's largest customer, which is located in North America.
5. (LOSS)/Profit for the PERIOD
(Loss)/profit for the period has been arrived at after charging/(crediting):
|
|
|
18 months to February 2026 |
12 months to August 2024 |
|
|
Note |
£000 |
£000 |
|
Net foreign exchange losses |
|
361 |
241 |
|
Loss on disposal of property, plant and equipment |
|
63 |
13 |
|
Loss on disposal of intangible assets |
|
54 |
75 |
|
Research and development costs |
|
5,578 |
2,241 |
|
Depreciation of property, plant & equipment |
|
4,097 |
2,887 |
|
Amortisation of intangibles |
10 |
18,122 |
11,019 |
|
Impairment of goodwill and intangibles |
|
9,843 |
5,355 |
|
Cost of inventories within cost of sales |
|
105,562 |
74,147 |
|
Staff costs |
|
48,433 |
27,341 |
|
Movement in expected credit loss |
|
(12) |
88 |
|
Share based payments |
|
762 |
158 |
6. Adjusting ITEMS
The following adjusting items have been disclosed in the period because they do not reflect the underlying business activities for the Group:
|
|
18 months to February 2026 |
12 months to August 2024 |
|
|
£000 |
£000 |
|
Acquisition and due diligence costs |
- |
98 |
|
Earnout accrual in relation to acquisitions |
(60) |
- |
|
Restructuring costs |
845 |
(14) |
|
Adjusting items |
785 |
84 |
|
Impairment of goodwill and acquired intangible assets |
9,843 |
5,355 |
|
Amortisation of acquired intangible assets |
8,122 |
5,510 |
|
Total adjusting items for Adjusted operating profit |
18,750 |
10,949 |
|
Tax on adjusting items |
(4,292) |
(2,842) |
|
Adjusting tax item |
1,025 |
- |
|
|
15,483 |
8,107 |
Acquisition and due diligence costs are nil in the 18 months to 28 February 2026 (12 months to 31 August 2024: £98,000 relating to the acquisition of Sheriff Technology Ltd in December 2023).
The impairment of goodwill and intangible assets relates to the write down of the goodwill and intangible assets in relation the Sequential CGU. The Sequential CGU comprises the Sequential and Oberheim brands, managed through one management and innovation team. Sequential was acquired in 2021 for £14.5 million, and the Oberheim brand was acquired in 2022 for £4.5 million. The assets of the CGU have a net book value of £17.2 million at the 28 February 2026, before the impact of the current period impairment charge.
Sequential operates at the premium semi-professional end of the synthesizer market, with products priced around $3,000 - $5,000, with this segment of the market being particularly impacted by recent pricing pressures. The Sequential team have reacted to this by introducing lower cost synthesizers across both Sequential and Oberheim brands and moving some elements of production to China to improve margins. As a result Sequential has seen revenue somewhat stabilise in the 12 months to February 2026, with a reduction of 7.3% compared to the 12 months to February 2025.
The Sequential team have plans to return the brand to growth through range expansion which is included in the current Five Year Forecast. However given the lower base in the year to February 2025, the volatility in the US market due to tariff policy changes together with the acceleration of the transition of existing products to China and following the closure of the brand's US contract manufacturer, this has resulted in a lower overall cashflow going forward and a resulting impairment of £9.8 million. This impairment has been allocated to acquired brands and intellectual property and research and development.
A reasonable possible change could be a six month delay in the launch of the products in the roadmap, which would result in a further impairment of £3.6 million. Gross margins are assumed to improve due to production efficiencies. A reasonable possible change would be an assumption that margin improvements are offset by increased promotions, resulting in flat gross margins throughout the Five Year Forecast, which would result in a further impairment of £3.0 million. The long term growth rate is assumed to be 2.2% based on Economist Intelligence Unit estimates. A reasonable possible change would be a drop of 1.0% which would result in a further impairment of £0.9 million. A reasonable possible increase in the WACC of 1.0% point would result in a further impairment of £1.1 million.
This impairment was calculated using a five year forecast, calculating a post tax cashflow and using a post tax WACC of 10.6%, with profits taxable in the US in California.
In the 12 months to August 2024, an impairment of Sequential assets of £5.5 million was made relating to the impairment of goodwill of £2.2 million and of intangible assets in use of £2.3 million.
7. Tax
|
|
18 months to February 2026 |
Restated1 12 months to August 2024 |
|
|
£000 |
£000 |
|
Corporation tax charges |
|
|
|
Under/(over) provision in prior year |
445 |
(359) |
|
Current year |
2,947 |
3,150 |
|
|
3,392 |
2,791 |
|
Deferred taxation |
|
|
|
Under/(over) provision in prior year |
160 |
(140) |
|
Current year |
(3,477) |
(2,796) |
|
Tax charge/(credit) for the year |
75 |
(145) |
1 Restated due to adjustments to the prior year. See note 1.
.
UK Corporation tax is calculated at 25% (12 months to 31 August 2024: 25%) of the estimated taxable profit for the year. Taxation for the US and German subsidiaries are calculated at the rates prevailing in the respective jurisdiction.
The tax charge/(credit) for each period can be reconciled to the (loss)/profit per the income statement as follows:
|
|
18 months to February 2026 |
Restated1 12 months to August 2024 |
|
|
£000 |
£000 |
|
Current taxation |
|
|
|
(Loss)/Profit before tax on continuing operations |
(2,225) |
2,340 |
|
Tax at the UK corporation tax rate of 25% (12 months to 31 August 2024: 25%) |
(556) |
585 |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
(5) |
236 |
|
Other differences |
(328) |
200 |
|
Derecognised deferred tax on capital restructuring |
1,025 |
- |
|
Rate changes |
(49) |
(177) |
|
Additional UK tax reliefs |
(853) |
(428) |
|
Prior period adjustment |
601 |
(499) |
|
Impact of foreign tax rates |
240 |
(62) |
|
Tax charge/(credit) for the year |
75 |
(145) |
1 Restated due to adjustments to the prior year. See note 1.
The prior period adjustment relates to adjustments made upon finalisation of the prior year tax returns, none of which are significant in isolation.
Tax credited directly to equity
In addition to the amount charged to the income statement and other comprehensive income, the following amounts of tax have been recognised in equity:
|
|
18 months to February 2026 |
12 months to August 2024 |
|
|
£'000 |
£'000 |
|
Share based payment deferred tax deduction |
73 |
(84) |
The net corporation tax creditor at 28 February 2026 is £92,000 (31 August 2024: £2,048,000).
8. Dividends
The following equity dividends have been paid or proposed for the period:
|
|
18 months to |
12 months to |
|
Total dividend per qualifying ordinary share |
8.84p |
6.6p |
During the 18 months to 28 February 2026, the Company paid two interim dividends of 2.1p per share each (12 months to 31 August 2024: one interim dividend of 2.1p per share).
On 25 June 2026, the Directors recommended a final dividend of 4.64p per share (12 months to 31 August 2024: 4.5p per share), making a total dividend of 8.84p per share for the 18 month period (12 months to 31 August 2024: 6.6p per share).
9. (Loss)/Earnings per share ('EPS')
The calculation of the basic and diluted EPS is based on the following data:
|
Earnings |
18 months to February 2026 |
Restated1 12 months to August 2024 |
|
|
£'000 |
£'000 |
|
(Loss)/Profit after tax |
(2,300) |
2,485 |
|
Adjusting items (note 6) |
18,750 |
10,949 |
|
Tax on adjusting items |
(4,292) |
(2,842) |
|
Adjusting tax item |
1,025 |
- |
|
Total underlying profit for adjusted EPS calculation |
13,183 |
10,592 |
|
|
|
|
|
|
Number |
Number |
|
|
'000 |
'000 |
|
Number of shares |
|
|
|
Weighted average number of ordinary shares |
58,662 |
58,612 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
Share option plans |
1,043 |
788 |
|
Weighted average number of ordinary shares including dilutive impact |
59,705 |
59,400 |
|
|
|
|
|
EPS |
Pence |
Pence |
|
Basic EPS |
(3.9) |
4.2 |
|
Diluted EPS |
(3.9) |
4.2 |
|
Adjusted basic EPS |
22.5 |
18.1 |
|
Adjusted diluted EPS |
22.1 |
17.8 |
1 Restated due to adjustments to the prior year. See note 1.
The Group presents basic and diluted EPS data for its ordinary shares. Basic EPS is calculated by dividing the (loss)/profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For diluted EPS, the weighted average number of ordinary shares is adjusted for the dilutive effect of potential ordinary shares arising from the exercise of granted share options.
At 28 February 2026, the total number of ordinary shares issued and fully paid was 59,211,639 (31 August 2024: 59,211,639). This included 447,408 (31 August 2024: 588,017) shares held by the EBT to satisfy options vesting in future years. The operation of this EBT is funded by the Group, so the EBT is required to be consolidated, with the result that the weighted average number of ordinary shares for the purpose of the basic EPS calculation is the net of the weighted average number of shares in issue of 59,211,639 (31 August 2024: 59,211,639), less the weighted average number of shares held by the EBT of 549,791 (31 August 2024: 599,129). It should be noted that the only right relinquished by the Trustees of the EBT is the right to receive dividends. In all other respects, the shares held by the EBT have full voting rights. The effect of dilutive potential ordinary share issues is calculated in accordance with IAS 33 and arises from the employee share options currently outstanding, adjusted by the profit element as a proportion of the average share price during the period.
10 OTHER INTANGIBLE ASSETS
Notes
1 Restated to adjust for prior year corrections. See note 1 for details.
The impairments in the year ended 31 August 2024 and the 18 month period ended 28 February 2026 both relate to the Sequential CGU. Refer to note 6 for more details.
10 OTHER INTANGIBLE ASSETS
|
|
|
|
Technology, products and patents |
|
|
|
||
|
|
Brands |
Acquired- in use |
Internally generated - in use |
Internally generated and acquired - In development |
Intellectual property, licences and trademarks |
Computer software |
Total |
|
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
Cost |
|
|
|
|
|
|
|
|
|
At 31 August 2023 |
25,708 |
35,051 |
31,531 |
8,529 |
5,430 |
1,565 |
107,814 |
|
|
Additions: Acquired separately |
- |
- |
- |
- |
3,037 |
3 |
3,040 |
|
|
Additions: Products developed during the year |
- |
- |
1,859 |
6,934 |
- |
- |
8,793 |
|
|
Additions: Business combinations |
- |
2,242 |
- |
- |
- |
- |
2,242 |
|
|
Transfers |
- |
- |
8,306 |
(8,306) |
- |
- |
- |
|
|
Disposals |
- |
- |
(2,446) |
- |
(55) |
- |
(2,501) |
|
|
Foreign exchange |
(468) |
(135) |
(207) |
(54) |
(11) |
- |
(875) |
|
|
At 31 August 2024 |
25,240 |
37,158 |
39,043 |
7,103 |
8,401 |
1,568 |
118,513 |
|
|
Additions: Acquired separately |
- |
- |
- |
- |
1,564 |
158 |
1,722 |
|
|
Additions: Products developed during the year |
- |
- |
2,041 |
14,025 |
- |
- |
16,066 |
|
|
Transfers |
- |
465 |
5,399 |
(6,033) |
65 |
104 |
- |
|
|
Disposals |
- |
- |
(4,758) |
(53) |
(811) |
(955) |
(6,577) |
|
|
Foreign exchange |
14 |
14 |
(33) |
367 |
113 |
- |
475 |
|
|
At 28 February 2026 |
25,254 |
37,637 |
41,692 |
15,409 |
9,332 |
875 |
130,199 |
|
|
Amortisation |
|
|
|
|
|
|
|
|
|
At 31 August 2023 |
5,598 |
10,797 |
21,522 |
- |
2,024 |
1,164 |
41,105 |
|
|
Opening balance sheet adjustment |
- |
- |
- |
- |
(817) |
- |
(817) |
|
|
Charge for the year1 |
1,888 |
3,622 |
4,988 |
- |
291 |
230 |
11,019 |
|
|
Impairment |
1,303 |
784 |
745 |
- |
- |
- |
2,832 |
|
|
Eliminated on disposal |
- |
- |
(2,411) |
- |
(15) |
- |
(2,426) |
|
|
Foreign exchange |
(156) |
(67) |
(33) |
- |
(5) |
- |
(261) |
|
|
At 31 August 2024 |
8,633 |
15,136 |
24,811 |
- |
1,478 |
1,394 |
51,452 |
|
|
Charge for the period |
2,662 |
5,460 |
8,225 |
- |
1,446 |
329 |
18,122 |
|
|
Impairment |
3,816 |
1,811 |
3,116 |
1,100 |
- |
- |
9,843 |
|
|
Eliminated on disposal |
- |
- |
(4,758) |
- |
(810) |
(955) |
(6,523) |
|
|
Foreign exchange |
(36) |
2 |
80 |
- |
102 |
- |
148 |
|
|
At 28 February 2026 |
15,075 |
22,409 |
31,474 |
1,100 |
2,216 |
768 |
73,042 |
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
At 28 February 2026 |
10,179 |
15,228 |
10,218 |
14,309 |
7,116 |
107 |
57,157 |
|
|
At 31 August 20241 |
16,607 |
22,022 |
14,232 |
7,103 |
6,923 |
174 |
67,061 |
|
|
At 31 August 20231 |
20,110 |
24,254 |
10,009 |
8,529 |
3,406 |
401 |
66,709 |
|
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