WHITE BACKGROUND
COLOURED BACKGROUND
Making music 
easy to make
FOCUSRITE PLC | ANNUAL REPORT 2016
Focusrite Plc Annual Report 2016 Focusrite is a global 
music and audio products 
group supplying hardware 
and software products 
used by professional and 
amateur musicians, which 
enables the high-quality 
production of music.
Key strengths
Global leadership 
We have always aimed to produce the best 
quality product at every price point. The 
result of this is that we are now the number 
one audio interface company in the world 
and we are developing our other ranges 
such as Novation, RedNet and iOS software 
to widen that global leadership position.
Product innovation 
Product innovation is a cornerstone of our 
continued growth. We spend approximately 
7% of our revenue on research and 
development introducing between 10  
and 20 new products each year.
Solid growth and profitability
Since 2009, we have grown our revenue from 
£9 million to £54 million. Our EBITDA is 
approximately 19% of revenue and we have 
been highly cash generative over that period.
Geographic diversity
Our product is sold in around 160 territories 
and we are increasing our own global 
footprint with employees now based in the 
UK, the USA, Germany and Hong Kong.  FOCUSRITE PLC | ANNUAL REPORT 2016 01
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
£million
Group revenue 
2016
2015
2014
54.3
48.0
41.0
00.0
+13.1
%
£54.3m
£million
Adjusted EBITDA
1
2016
2015
2014
10.2 
9.3 
8.2 
00.0
+10.2
%
£10.2m
£million
Operating profit
2016
2015
2014
7.1
6.3
5.7
00.0
£7.1m
+13.0
%
Highlights
Strategic Report 01–25
Highlights 01
Focusrite at a Glance 02
Market Context 03
Strategy 04
Strategy in Action: Innovate 06
Chairman’s Statement 08
Strategy in Action: Disrupt 10
Chief Executive’s Statement 12
Strategy in Action: Make Easy 14
Financial Review  16
Strategy in Action: Expand 20
Principal Risks and Uncertainties  22
Corporate Social Responsibility  24
Governance 26–39
Board of Directors 26
Executive Management Team 28
Corporate Governance Report 30
Directors’ Report  33
Directors’ Remuneration Report 35
Statement of Directors’ Responsibility 39
Financial Statements 40–79
Independent Auditor’s Report to  
the Members of Focusrite Plc 40
Consolidated Income Statement 41
Consolidated Statement of Comprehensive 
Income 42
Consolidated Statement of Financial Position 43
Consolidated Statement of Changes  
in Equity 44
Consolidated Cash Flow Statement 45
Notes to the Financial Statements 46
Company Balance Sheet  72
Company Statement of Changes in Equity 73
Company Cash Flow Statement 74
Notes to the Company Accounts 75
Company Information and Advisers 79
By following our mission – to make music easy to  
make – we are successfully delivering transparent 
technology that liberates musicians, allowing them  
to create, produce, record and distribute their music.  
In turn, we are creating a profitable, international  
and sustainable AIM-quoted company.
Operational highlights
• Continued growth across all geographies with 16 new products launched this year.
• Strong performance from Focusrite products with the launch of a new generation  
of the world’s number one audio interface, Scarlett.
• Entrance into lucrative adjacent price segments with Clarett and Red ranges 
receiving positive channel and consumer reaction.
• Further strong sales growth of RedNet products, targeted at the live sound and 
broadcast business-to-business markets.
• Novation strategy executing to plan with new software updates to the Circuit and 
Launchpad Pro products.
• Launch of highly intuitive Blocs Wave app, making it easier for musicians to create 
their own sounds and songs from scratch on any iOS smartphone or tablet, with  
over 47,000 downloads to date.
• Strong growth in Rest of World with sales improving by 28.1% and opening of  
a new dedicated Asia office in Hong Kong to support further growth.
• Launch of new e-commerce websites in the UK and USA.
• Queen’s Award for Enterprise for International Trade and named in the ‘Sunday Times 
100 Best Small Companies to Work For’ for fifth successive year.
• Profit before tax grew 9.9% to £7.1 million (FY15: £6.5 million)
• Basic earnings per share grew 13.5% to 11.8p (FY15: 10.4p)
• Adjusted
2
 diluted earnings per share grew 8.6% to 11.4p (FY15: 10.5p)
• Net cash of £5.6 million (FY15: £6.2 million)
• Proposed final dividend increased by 8.3% to 1.3p recommended 
making 1.95p for the year (FY15: 1.8p)
1 Comprising of earnings adjusted for interest, taxation, depreciation, amortisation and non-underlying items.
2 Adjusted for non-underlying items (see note 13).
Financial Review
see p16–19
STRATEGIC REPORT | KEY NUMBERS
Financial highlights 02 FOCUSRITE PLC | ANNUAL REPORT 2016
BLACK
WHITE
WHITE BACKGROUND
COLOURED BACKGROUND
STRATEGIC REPORT | COMPANY OVERVIEW
The Group’s products are sold in around 160 territories and countries all over the world. 
Roughly one-third of our business is direct to retailers – online and ‘bricks and mortar’, one-
third is through distributors and the final third through a hybrid approach in the USA, where 
we provide marketing and sales support to drive demand. We sold 700,000 products to 
end-users last year. Our suppliers are chiefly Asian and we use third-party logistics support. 
We employ around 1 70 people in the UK, USA, Germany and Hong Kong.
Focusrite at a Glance
of Group revenue
2
/3
1
/3
of Group revenue
The Focusrite division has evolved from 
selling large studio consoles 25 years ago. 
It now provides a spectrum of products, 
from recording equipment to hobbyists all 
the way to audio networking systems to 
large organisations such as NBC and 
Microsoft. The Focusrite brand has always 
meant legendary sound quality; through 
innovation we now offer the best value  
too in a wide range of segments. We’ve 
become the number one producer of  
audio interfaces in the world.
Bought by Focusrite in 2005, Novation 
now represents about a third of our 
revenue. Making new instruments  
and software for electronic music,  
the fastest-growing music creation 
segment, Novation is disrupting how 
music is made with its grid controllers, 
iOS software and new approaches to 
mobile music making. FOCUSRITE PLC | ANNUAL REPORT 2016 03
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
BLACK
WHITE
WHITE BACKGROUND
COLOURED BACKGROUND
Market Context
Worldwide leader  
with room to grow
The Company’s Scarlett range is the largest selling range of audio 
interfaces in the world, with a market share of more than 40%. 
Our RedNet range of products with Audio over IP connectivity 
is penetrating new B2B high-end markets in broadcast and live 
sound. Just in the last year Focusrite launched new Red and 
Clarett interfaces for professional markets, with Clarett already 
capturing 14% of the market. A new iOS app, Blocs Wave, is 
disrupting how mobile music is made and recorded, making it  
easy for musicians to create ‘on the fly’. 
• 11% share of currently addressable market
• Number one in sales of audio interfaces
• Moved successfully into broadcast and live sound 
markets with RedNet Audio Networking
Software
iTrack
Scarlett
Clarett
Red
RedNet
Price
The ubiquitous LaunchPad range, at the centre of 
electronic music making, is Novation’s largest selling 
instrument: more than 300,000 sold since inception. 
The new Circuit instrument – a mashup of grids and 
synthesisers – lets electronic musicians create tunes  
in minutes without being encumbered by a computer.  
The LaunchPad iOS app has been downloaded five  
million times, moving the Company to the forefront of 
mobile, easy music making.
• Introduced iOS apps with over five million downloads
• Disrupting how new music is made with grids 
and synthesisers
• Distributed in 160 countries
Grids
Grid Controllers (Launchpad)
Groove Box (Circuit)
Keyboards
Keyboard Controllers (Launchkey)
Synths (Bass Station II)
Controllers Stand-alone 04 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | OUR KEY OBJECTIVES
Innovate
Disrupt
Focusrite’s four-pronged strategy relies on our 
strengths, understands our customers, foresees 
impending technology and differentiates us from 
our competitors.
Strategy
Music making is going through 
a profound time of change: 
it’s performed, recorded 
and distributed in new ways. 
Focusrite is at the forefront of 
these changes: creating new 
instruments, disrupting how music 
is recorded, and helping musicians 
find new paths to listeners.
We’ve grown quickly while  
we’ve invested heavily in research 
and development to turn out 
innovative, high-quality and attractive 
products for musicians and 
audio professionals. We spend 
over 6% of revenue on product 
development and seek to achieve 
about a third of our revenue from 
products launched within the last 
1 2 months. The result: in FY16 
we launched 16 new products.
Strategy in action
see p10-11
Strategy in action
see p06-07 FOCUSRITE PLC | ANNUAL REPORT 2016 05
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Focusrite’s addressable 
market currently represents 
only 16% of the larger market 
for musical instruments and 
professional audio products. 
We are actively moving into 
new segments organically 
and are carefully considering 
acquisitions. For example, 
RedNet, our audio networking 
over IP product line, is taking 
us into live sound, broadcast 
and other new segments.
Technology has been a double-
edged sword for musicians: it 
has created inexpensive ways 
to make, record and distribute 
music but it has also made giant 
demands on them. In the past, for 
example, a musician went into a 
studio where an audio engineer 
recorded them. Now the musician 
IS the engineer. Focusrite develops 
transparent technology to liberate 
the musician, to make music easy 
to make, at all levels of expertise.
Strategy in action
see p20-21
Strategy in action
see p14-15
Make Easy
Expand 06 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | OUR PROGRESS
Scarlett 2
nd
 generation
Our mission for the follow-up to the world’s best-selling 
audio interface was to deliver a product range that was 
‘Better, Faster and Easier’ than its predecessor. We made 
it better by refining the design both inside and out and 
more beautiful by adopting an industrial design concept 
we call the ‘screw-less’ design, visually and physically 
communicating ‘I am quality’. Moreover, the audio circuits 
were enhanced for higher performance and robustness, 
delivering quality and ease of use. Scarlett II is faster, 
resulting in audio latency times that have been slashed in 
half. This lower latency not only makes Focusrite the class 
leader in terms of performance but also transforms a 
customer’s recording experience, making it easier to 
record live music more naturally. Finally we made it easier 
by redesigning our entire software user interface using an 
extensive ‘real user’ customer experience testing process 
to validate our product innovation hypotheses.
Case Study
Innovate
Strategy in Action FOCUSRITE PLC | ANNUAL REPORT 2016 07
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com 08 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | PHIL DUDDERIDGE
“ Overall it has been a real year of progress and  
I am delighted that as a result of all our employees’ 
hard work, we were the proud winners of the 
Queen’s Award for Enterprise for International Trade.”
An excellent second year 
of trading as a plc
Chairman’s Statement
Phil Dudderidge, Executive Chairman
Focusrite has had an excellent second 
year of trading as a public company 
and I am very pleased to report on 
the Company’s performance and 
progress over the last 12 months.
We have continued to grow revenue and 
correspondingly our profits as we deliver 
on our strategic goals. The year-on-year 
performance has been strong, showing a 
significant increase in revenue of 13.1% to 
£54.3 million. There have been a number 
of drivers for this increase including 
improving market share globally, a strong 
performance from new and existing 
products, and a number of new sales, 
marketing and distribution initiatives. FOCUSRITE PLC | ANNUAL REPORT 2016 09
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Given the cash-generative characteristics 
of the business and the strength of our 
balance sheet, the Board has decided to 
recommended a final dividend of 1.3 pence 
per share (FY15 final dividend 1.2 pence), 
giving a total of 1.95 pence per share for the 
year (FY15: 1.8 pence). The final dividend 
is subject to shareholder approval, which is 
being sought at Focusrite’s Annual General 
Meeting (‘AGM’) to be held in January 2017.
Importantly, all our achievements 
represent the collective efforts of an 
outstanding workforce. With the majority 
of our employees being active musicians 
there is a real enthusiasm for what we 
do and a wealth of inherent expertise.
Approximately a third of our people are 
engaged in product development and I am 
very proud of their world-class capabilities. 
Our marketing and sales staff are exemplars 
in the global market we inhabit, employing 
state-of-the-art digital marketing techniques 
to ensure that the Focusrite and Novation 
brands are recognised as the ‘Best Choice 
at Every Price Point’, a company ambition 
that we are continually striving to achieve.
In this regard, FY16 produced a number 
of significant product achievements, 
most notably the complete renewal of 
our Focusrite Scarlett audio interface 
range, the global leader in the sub-$500 
product category. This complete design 
revision of Scarlett improves the audio 
performance, industrial design and control 
software, and as a result will continue to 
defend and improve our market share in 
a competitive market. Scarlett Gen.2 is 
also bundled free with ‘Avid Pro Tools | 
First’ recording software for the first time. 
This is a ringing endorsement of Focusrite 
as the perfect partner for Pro Tools. 
Additionally we remain active across all 
price points in the professional music 
recording market, addressing identified 
market requirements. The new Focusrite 
Clarett and Red ranges ($500-$4,000) 
were successfully launched this year, as 
were second generation RedNet products, 
targeted at high-calibre institutional 
customers such as Microsoft and Disney, 
as well as broadcasters and universities.
Progress at Novation, our Company’s 
music creation brand, was predominantly 
driven by our innovative Circuit product. 
Launched in the first half of FY16, Circuit 
is a new concept musical instrument, which 
actually inspires and helps in the creation 
of electronic music. Regular software 
enhancements are meeting customer 
aspiration and Circuit is becoming a 
considerable success in this new category.
During FY16, we have also been active on 
the sales, distribution and marketing side 
of the business and recently established 
a marketing and sales subsidiary in 
the Asia Pacific region to represent 
our brands in these territories, working 
without third-party distributors. This region 
continues to show substantial growth.
In Europe we appointed a new distributor 
for France and Benelux. Algam is the 
market-leading distributor of musical 
instruments and professional audio 
products in these geographies and 
this move has resulted in a valuable 
increase in sales in these territories.
Our largest market remains the USA and 
six years ago we established Focusrite 
Novation Inc. as a marketing subsidiary 
to promote and support our brands 
alongside our third-party distributor. 
This continues to prove a successful 
business model with sales into the retail 
channel continuing to increase in FY16.
We acknowledge our excellent relationships 
with all our authorised retailers, distributors 
and resellers in the USA and across the 
rest of the world and we thank them for 
their continued custom and support.
Overall it has been a real year of progress 
and I am delighted that as a result of all our 
employees’ hard work, we were the proud 
winners of the Queen’s Award for Enterprise 
for International Trade and, for the fifth year 
running, were included in the Sunday Times 
100 Best Small Companies to Work For.
Finally, I would also like to take this 
opportunity to express my appreciation 
to retiring Chief Executive Officer, Dave 
Froker. He has been a valuable and 
integral member of the Focusrite team 
for several years and has made a terrific 
contribution to our success. We wish him 
every happiness in his retirement back 
home in the USA. The process for finding 
a successor to Dave Froker continues and 
is well advanced. Furthermore, I would also 
like to acknowledge the entire executive 
team for their tireless commitment to 
growing the business and, most importantly, 
to ‘always making things happen’!
As we look forward to the next financial year, 
we will be focused on the same mantra!
Phil Dudderidge
Executive Chairman
22 November 2016 10 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | OUR PROGRESS
Disrupt
Strategy in Action FOCUSRITE PLC | ANNUAL REPORT 2016 11
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Circuit: the new instrument 
and composition tool
Music software is designed primarily to satisfy the deep 
detailed needs of high-end users and not for ease of use 
of music composition. Many users simply find computers 
and software for ‘music making’ slow, frustrating and 
ultimately unproductive. Our mission for Circuit was to give 
users the ability ‘to make a tune in minutes’ without their 
computer. The approach was to get the user out of the 
software and into a new hardware-based work flow we call 
Circuit. We combine the features of a drum machine, 
synthesiser, grid-based musical user interface and a 
multi-part composition note sequencer in one ‘whole’ easy 
to use product. This combination of parts creates both a 
new easy-to-play instrument and a very immediate and 
powerful composition tool for making original music.
 
Case Study 12 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | DAVE FROKER
A positive year and well 
positioned for growth 
Chief Executive’s Statement
“ Focusrite has been quoted 
on the AIM market now for 
almost two years and during 
that time we have gone from 
strength to strength. We 
continue to hit our growth 
benchmarks and perform 
well both operationally 
and financially.”
Dave Froker, Chief Executive Officer
Financial performance
Having clearly outlined to investors our 
strategy for growth, which focuses on 
the four key areas of Innovate, Disrupt, 
Make Easy and Expand, we have this year 
shown that the wider operational team has 
the capability to execute that strategy.
As a result, we have grown Group revenues 
by 13.1% to £54.3 million (FY15: £48.0 
million). Following last year’s Novation 
product introductions and growth, the 
real engine for growth this year has 
been the Focusrite products, with sales 
increasing by 20.4% from £31.2 million 
to £37.6 million. Profitability also grew 
with adjusted EBITDA up by 10.2% to 
£10.2 million (FY15: £9.3 million).
Regionally, the USA grew by 15.6% 
with further growth in our Scarlett 
range, boosted by the launch of the 2nd 
generation, and strong uptake of our 
Clarett and Red products in the second 
half. Europe grew by 5.2%, despite Brexit 
and currency movements and the Rest 
of World region grew by 28.1%, notably 
in Asia where our Novation products, in 
particular, have proved very popular.
The market
Pleasingly, the overall music equipment 
market still continues to grow and the 
Company grew market share despite 
facing some macroeconomic headwinds.
The most notable of these was the UK’s 
Brexit vote in June 2016 and the resulting 
significant currency exchange rate volatility 
both before and after the result. It is too 
early to know if there will be any impact 
on underlying consumer demand for 
our products as a result of Brexit, but to 
date we have seen no evidence of this.
The USA still has a relatively healthy 
economy, and overall seems in better shape 
than the Eurozone and Latin America. 
Asia continues to grow faster than the rest 
of the world despite China’s slowdown, 
although it is currently a small part of our 
business, but we hope to capitalise more 
on this region of the world now we have 
a dedicated presence in Hong Kong.
Our growth this year was driven by new 
product releases which were supported by 
positive industry and consumer acceptance. 
The Group continues to penetrate new 
market segments and price points with best 
in class, user-friendly products. Customer 
and sales channel satisfaction feedback 
remains strong on new and existing 
products and continued high levels of end-
user satisfaction are illustrated by our top 
net promotor scores for individual products.
Growth strategy
Our strategy of innovation and expansion 
continues to work and we are leading 
the market with our cutting edge 
technology and design, which continues 
to attract industry recognition. We 
remain committed to making music 
easier to make for professionals and 
hobbyists and our success is driven by 
our entrepreneurial and pioneering team, 
many of whom are themselves musicians. FOCUSRITE PLC | ANNUAL REPORT 2016 13
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Products
During the year we introduced 16 new 
products across our business segments. 
Our major product launches and growth 
drivers this year have been within the 
Focusrite business segment, which 
accounts for 69.2% of our overall turnover. 
All new products were delivered on 
schedule and are gaining market share. 
The feedback via our sales channels and 
from end customers has been positive.
Within Focusrite our major initiative this 
year was the launch of the new generation 
of Scarlett, an improved version of the 
world’s number one audio interface. The 
new and upgraded Scarlett range is 
targeted widely, from aspiring musicians 
recording at home (a large market) through 
to professional producers and sound 
engineers. This second generation of 
Scarlett has been well received by our sales 
channels and consumers and has received 
enthusiastic industry media reviews.
Alongside this, we also entered the lucrative 
adjacent price segments with new Clarett 
and Red interfaces. The Clarett Thunderbolt 
line is priced between $500 and $1,300 
and has sold well since its introduction. The 
Red series offers unequalled sound quality, 
speed and ease of use for professional 
recording engineers and producers, and 
has been widely acclaimed in the trade 
media. It started shipping in April and 
sales are now starting to build up nicely.
We also continue to open up new market 
segments with our RedNet products, which 
enable numerous high-quality audio signals 
to be distributed via ‘Audio over IP’ based 
technology, utilising common off-the-
shelf networking infrastructure. Delivered 
in real time across a network, these 
products are targeted at the live sound and 
broadcast business-to-business markets.
In the previous financial year we introduced 
a large number of new Novation products 
and so this year has been a quieter year 
for this brand as expected. We have 
executed our new strategy for this market 
segment by continuously upgrading our 
innovative Circuit groove box with new 
software. We continue to strive to make 
music easier to make and in this regard 
we are particularly pleased with the 
performance and market acceptance of 
Circuit, across all our sales channels.
As announced at the time of the interim 
results, we launched Blocs Wave, the 
second iOS app from our London based 
software team. The app has been designed 
for everybody to use, whether a professional 
or beginner, and is highly intuitive. Blocs 
Wave makes it easier for musicians to 
create their own sounds and songs from 
scratch on any iOS smartphone or tablet. 
With initial support from Apple, downloads 
have been strong with over 47,000 to date. 
Finally, although a small part of our overall 
product mix, we continue to distribute 
third-party products and during the year, 
we agreed a new distribution deal for 
sE Electronics microphones in the UK.
New initiatives
We are always looking at ways to 
expand our sales channels, improve 
our distribution and capture margin.
During the year we opened an office 
in Hong Kong as mentioned above. This 
will give us a better understanding of 
our customers and help to maintain close 
links with our contract manufacturers 
in China. Ultimately, we plan to increase 
the proportion of the Group’s revenue 
coming from Asia.
Additionally, we launched Focusrite’s 
first web-store in the UK. We have now 
expanded this to the USA and some 
European territories and although still in its 
infancy we see the potential for creating 
a direct sales channel for our products. 
In addition, where customers wish to try 
our products prior to buying, we will direct 
them to the dealers that sell our products, 
providing a further benefit to those dealers.
On the logistics side of the business, we 
successfully transitioned our business to 
Kuehne + Nagel to achieve more highly 
integrated supply chain and delivery 
management. This is expected to impact 
our logistics positively and further improve 
the efficiency of our operations.
Our people
Managed by a skilled operations board 
with combined music industry experience 
in excess of 100 years and with an 
average Focusrite service of over 12 years 
each, we can truly demonstrate strength 
and depth in our management team.
Supporting them we have an energetic, 
committed and creative young workforce 
who develop, market and sell our products. 
A very high proportion of our workforce 
are users of our products, 62% are 35 
years of age or below and 87% own 
shares or stock options in Focusrite 
Plc. It has been my great pleasure and 
privilege to help guide and lead them 
while I have been Chief Executive.
Current trading and outlook
Pleasingly, our positive trading momentum 
has continued in the period since the 
year end. Our strategy is paying off as 
we grow our market share, revenue and 
profits. We’ve energetically introduced new 
innovative products which continue to be 
well received by our customers. We are 
managing our way through macroeconomic 
turbulence and the expansion of our 
channels to market is driving opportunities 
for growth. We look ahead with confidence.
This will be my last report as Chief 
Executive of Focusrite, as I have announced 
my retirement and intention to return to the 
USA. I would like to thank all of my Board 
colleagues, as well as all of our employees, 
who are truly world-class colleagues, for 
their support and dedication. I remain 
a shareholder in the business and am 
confident that the Company can achieve 
even greater things over the longer term.
Dave Froker
Chief Executive Officer
22 November 2016 14 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | OUR PROGRESS
Make Easy
Strategy in Action FOCUSRITE PLC | ANNUAL REPORT 2016 15
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Making the recording 
setup foolproof
The vast majority of our users are primarily musicians, not 
technology or engineering experts, who have trouble with 
the set-up and use of recording interface equipment. Our 
ease of use campaign creates new solutions to remove 
the speed bumps and barriers that inhibit customers from 
making music. Our customer support team is a key data 
mining resource in the battle for ease of use, feeding 
‘real world’ customer issues into a prioritised backlog of 
important product updates. Over time we have refined our 
products with extensive user experience testing to validate 
the simplicity and ease of use of new features. Software 
updates are ‘pushed’ to our customers using auto-updating 
software programs that ‘nudge’ customers to update 
regularly to the latest versions rather than waiting for 
problems to occur and then contacting support for solutions.
Case Study 16 FOCUSRITE PLC | ANNUAL REPORT 2016
£million
Group revenue 
2016
2015
2014
54.3
48.0
41.0
00.0
+13.1
%
£54.3m
STRATEGIC REPORT | JEREMY WILSON
Financially  
robust
Financial Review
“ The performance this year has continued the trend of 
consistent annual growth and the Group is taking the 
appropriate steps to maintain that positive progress 
going forward.”
Jeremy Wilson, Chief Financial Officer 
Overview
The Group has delivered another positive 
year exceeding market expectations 
with revenue up 13.1%, adjusted 
EBITDA up 10.2% and adjusted 
diluted earnings per share up 8.6%.
Income statement
Revenue
Revenue grew from £48.0 million to £54.3 
million, continuing the record of double digit 
percentage growth achieved each year 
since 2009. In FY15, the faster growth 
was in the Novation range as the Group 
launched several new or updated products 
within that brand. In FY16, the Group has 
launched more new or updated products in 
the Focusrite range and consequently the 
Focusrite brand has increased revenue by 
20.4%. This included the high-end RedNet 
range which increased by 15.9%. The 
Novation brand declined by 3.4% although 
consumer registrations increased by 1 1.9% 
indicating that the revenue decline was due 
to the managing of stock held by dealers 
rather than a decline in consumer demand.
Regionally, the USA grew by 15.6% 
to £21.4 million, Europe by 5.2% to 
£22.6 million and the Rest of World 
by 28.1% to £10.3 million. The primary 
driver of growth in the Rest of World 
region was Asia, which has been a great 
market for the Novation products and in 
which the Group launched a new sales 
office in Hong Kong in early 2016.
As ever, exchange rates played a 
part with the US Dollar and the Euro 
both strengthening against Sterling 
during FY16. At constant exchange 
rates, revenue grew by 7.5%.
Gross profit
Gross profit increased to £20.9 million 
(FY15: £18.6 million), a gross margin of 
38.4% (FY15: 38.8%). The gross margin 
reduced slightly due to the strengthening 
of the US Dollar which increased revenue 
but also increased cost of sales by a similar 
value in Sterling terms, thereby reducing the 
gross margin as a percentage of revenue. FOCUSRITE PLC | ANNUAL REPORT 2016 17
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
£million
Adjusted EBITDA
1
2016
2015
2014
10.2 
9.3 
8.2 
00.0
+10.2
%
£10.2m
£million
Operating profit
2016
2015
2014
7.1
6.3
5.7
00.0
£7.1m
+13.0
%
Income statement
2016
£m
Reported
2016
£m
Non-
underlying
2016
£m
Adjusted
2015
£m
Reported
2015
£m
Non-
underlying
2015
£m
Adjusted
Revenue 54.3 – 54.3 48.0 – 48.0 
Cost of sales (33.4) – (33.4) (29.4) – (29.4)
Gross profit 20.9 – 20.9 18.6 – 18.6 
Administrative expenses (13.8) 0.5 (13.3) (12.3) 0.7 (11.6)
Operating profit 7.1 0.5 7.6 6.3 0.7 7.0 
Net finance income (0.0) – (0.0) 0.2 – 0.2 
Profit before tax 7.1 0.5 7.6 6.5 0.7 7.2 
Income tax expense (0.8) (0.1) (0.9) (1.0) – (1.0)
Profit for the period 6.3 0.4 6.7 5.5 0.7 6.2 
2016
£m
Reported
2016
£m
Non-
underlying
2016
£m
Adjusted
2015
£m
Reported
2015
£m
Non-
underlying
2015
£m
Adjusted
Operating profit 7.1 0.5 7.6 6.3 0.7 7.0 
Add – amortisation of intangible assets 2.1 – 2.1 1.9 – 1.9 
Add – depreciation of tangible assets 0.5 – 0.5 0.4 – 0.4 
EBITDA 9.7 0.5 10.2 8.6 0.7 9.3 
Adjusted EBITDA
Adjusted EBITDA (earnings before interest, 
tax, depreciation, amortisation and non-
underlying items) increased by 10.2% to 
£10.2 million (FY15: £9.3 million). The rate 
of growth was slightly slower than the rise 
in revenue due to the lower gross margin, 
a greater amount spent on sales (with 
the US and Asia offices) and marketing 
(with significant new product launches).
In FY16, there was a non-underlying cost 
of £0.5 million due to legal cases relating 
to intellectual property and distribution 
contracts which have no significant 
effect on our ongoing business. The one 
remaining case relates to the cessation 
of a distribution contract and the Group 
continues to defend its position vigorously.
In FY15, there was a non-underlying cost of 
£0.7 million relating to the costs of the Initial 
Public Offering, when the Group floated 
on the AIM market in December 2014.
Foreign exchange and hedging
During the period, there have been 
significant movements in both the US Dollar 
and the Euro.
Exchange rates FY16 FY15
Average
USD:GBP 1.45 1.56
EUR:GBP 1.29 1.35
Year end 
USD:GBP 1.31 1.54
EUR:GBP 1.18 1.37
1 Comprising of earnings adjusted for interest, taxation, 
depreciation, amortisation and non-underlying items. 18 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | JEREMY WILSON
Financial Review continued
Earnings per share
FY16
p
FY15
p
Growth
%
Basic 11.8 10.4 13.5%
Diluted 10.7 9.3 15.1%
Adjusted basic 12.6 11.8 6.8%
Adjusted diluted 11.4 10.5 8.6%
Balance sheet
2016
£m
2015
£m
Non-current assets 6.4 5.3 
Current assets  
 Inventories 11.4 8.6 
 Trade and other receivables 11.2 7.7 
 Other current assets – 0.2 
 Cash 5.6 6.2 
Current liabilities (10.4) (8.8)
Non-current liabilities (0.3) (0.7)
Net assets 23.9 18.5 
Cash flow
2016
£m
2015
£m
Free cash flow
1
0.2 2.7 
Add – non-underlying cash outflows 0.2 1.2 
Underlying free cash flow 0.4 3.9 
1 Defined as net cash from operating activities less net cash used in investing activities. 
The Group has a largely effective natural 
hedge in US Dollars. Therefore, while the 
US Dollar strengthened from an average 
USD:GBP exchange rate of $1.56 in FY15 
to $1.45 in FY16, the positive impact on 
revenue is negated by the impact on cost 
of sales because the Group’s products 
are bought in US Dollars from China 
and therefore become correspondingly 
more expensive in Sterling terms.
The Euro represents approximately 25% 
of revenue and little cost. The Group 
hedges its Euro cash flows up to one 
financial year ahead. In FY16, the average 
rate was €1.29 and approximately 75% of 
the flows were hedged at €1.39 creating 
an effective exchange rate of €1.37. In 
FY15, the average EUR:GBP exchange 
rate was €1.35 and approximately 75% 
of the Euro flows were hedged at €1.27 
creating an effective exchange rate of 
€1.29. The hedged exchange rate for the 
coming financial year (FY17) is €1.28.
In previous years, the outstanding hedging 
contracts have been revalued and 
movement in fair value shown in the income 
statement. The hedging contracts relating to 
FY17 have been matched to income flows 
and, providing the hedging contracts remain 
effective, movements in fair value are shown 
in a hedging reserve in the balance sheet.
Corporation tax
The effective tax rate for FY16 was 
approximately 12.2% as the Group 
is expected to benefit from tax 
credits in respect of research and 
development and share options.
Earnings per share
The basic earnings per share increased 
by 13.5% to 1 1.8p (FY15: 10.4p) driven 
by the higher profit before tax and the 
lower effective tax rate. In a similar fashion, 
the adjusted diluted earnings per share 
increased by 8.6% to 1 1.4p (FY15: 10.5p).
Balance sheet
Non-current assets
The non-current assets comprise mainly 
capitalised research and development 
costs. Approximately 80% of research and 
development costs are capitalised and 
they are amortised over three years. The 
typical product life is three to six years. 
This policy is unchanged from last year.
Working capital
Working capital increased from 15.7% of 
revenue to 22.4% of revenue. The biggest 
factor driving this was the increased level of 
stock. The Group developed and launched 
several new and innovative Focusrite and 
Novation products without a demand history 
both this financial year and in the previous 
year and, in light of the lead times being 
as long as six months, decided to increase 
stock to reduce the risk of running out of 
stock, should demand soar. As the demand 
pattern becomes more predictable, the 
stock quantities will be reduced. A second, 
less significant factor was a change in 
payment terms afforded to one customer.
Cash flow
Cash at the period end was £5.6 million, 
up from £4.0 million at the half year but 
down from £6.2 million at 31 August 2015, 
driven by the higher stock and debtors 
explained previously. Notwithstanding 
these factors, the free cash flow remained 
positive at £0.2 million (FY15: £2.7 
million) and the Group has a £10 million 
revolving credit facility with HSBC.
Dividend
In accordance with the Group’s progressive 
dividend policy, the Board is proposing 
a final dividend of 1.3 pence per share 
(FY15 final dividend 1.2 pence), which 
would result in a total of 1.95 pence per 
share for the year (FY15: 1.8 pence). 
At this level, the dividend is covered 
approximately six times by earnings. The 
Group remains focused on growth and 
maintains a significant dividend cover to 
afford continued investment in order to 
generate further growth in the future.
Summary
The Group has grown revenue by 
13.1% in the year, adjusted EBITDA by 
10.2% and adjusted diluted earnings 
per share by 8.6%. The Group is cash-
generative and well-funded, supported 
by £5.6 million of cash and a £10 million 
revolving credit facility. The performance 
this year has continued the trend, over 
many years, of strong growth and the 
Group is working hard to maintain that 
positive progress going forward. 
Jeremy Wilson
Chief Financial Officer
22 November 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 19
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
£million
Adjusted EBITDA
1
10.2
9.3
£10.2m
FY16
FY15
£million
Group revenue 
54.3
48.0
00.0
£54.3m
FY16
FY15
%
NPI revenue as % of full year revenue
3
29% 
27% 
29%
FY16
FY15
£million
Underlying free cash flow
2
0.4 
3.9 
£0.4m
FY16
FY15
%
Make Easy
5
FY16
FY15
97
96
97%
%
Net promotor score
4
62
60
62%
FY16
FY15
Key performance indicators (‘KPIs’)
The main KPIs used by the Group are either financial or related to product, especially new 
products introduced and customer satisfaction.
1 Comprising of earnings adjusted for interest, taxation, 
depreciation, amortisation and non-underlying items.
3 This is the first 12-month revenue for new products  
as a percentage of total revenue.
2 This is free cash flow prior to non-underlying items. It has 
declined due largely to increased investment in stock 
and increased terms for one customer.
5 We aim to make our products easy to use. This is the 
proportion of people who buy a Focusrite product, 
register their purchase and have no need to call our 
technical helpline. We target at least 95%.
4 This asks the question ‘How likely are you to 
recommend Focusrite to a friend or colleague?’. 
The score is based on subtracting the percentage of 
detractors (score 0-6, unhappy customers) from the 
percentage of promoters (score 9-10, loyal enthusiasts) 
and yields the net promoter score of the Company. 20 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | OUR PROGRESS
Expand
Strategy in Action FOCUSRITE PLC | ANNUAL REPORT 2016 21
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
RedNet: moving us into 
new markets
Audio networking technology is now transforming 
professional audio industries, such as live sound and 
broadcasting, where very high channel densities and high 
quality, reliable audio are demanded. Focusrite saw this 
technology trend early and invested in the development of 
a networked audio solution to expand into these new 
larger market segments. RedNet combines Focusrite’s 
premium audio reputation and a rock-solid Audio over IP 
platform to create a highly modular networked audio 
range. This modularity allows audio architects and 
professionals to combine any number of individual units 
over multiple sites, up to many kilometres apart, to create 
enormous synchronised audio networks using a single 
ethernet cable.
Case Study 22 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | RISKS
Principal Risks and Uncertainties
Risk area Description Mitigation
Economic environment The Group operates in the global economy and 
ultimately within a retail environment to consumer 
end-user musicians. Such operations are influenced 
by global and national economic factors. 
The Group sells products in around 160 territories 
worldwide via two distinct product categories and 
so aims to avoid being unduly reliant on any single 
product or territory.
UK exit from the 
European Union
The impact of the decision to exit the European 
Union remains uncertain. There has already been 
foreign exchange volatility and it is possible that, 
in future, the UK may not be part of the European 
free trade zone, or the Customs Union.
The Group has increased selling prices in UK to 
correct the imbalance caused by the significant 
foreign exchange rate changes. The Group will 
continue to monitor other possible effects of Brexit 
and act accordingly as they become known.
Technological changes, 
product innovation and 
competition
The market for the Group’s products is 
characterised by continued evolution in 
technology, evolving industry standards, changes 
in customer needs and frequent new competitive 
product introductions. If the Group is unable to 
anticipate or respond to these challenges, or fails 
to develop and introduce successful products on 
a timely basis, it could have an adverse impact on 
the Group’s business and prospects.
The Group invests significantly in its research and 
development and operates a rigorous, disciplined 
product introduction process to ensure that as far 
as possible the fast-changing needs of its target 
markets are met. In addition, the Board aims to 
operate an efficient, low-cost business.
Dependence on a small 
number of suppliers
The Group is dependent on a small number of 
suppliers, in particular its largest supplier, which 
supplies Focusrite interfaces. Failure or material 
delay by its suppliers to perform or failure by the 
Group to renew such arrangements could have a 
material adverse effect on the Group’s business, 
operating results and financial position.
The Group aims to diversify its risk by using four 
major Chinese manufacturers for the production of 
its products. Relationships are long-lasting and 
strong. Typically, members of the operations 
department within Focusrite meet each supplier 
every quarter to review performance and costs. 
Key resellers and 
distributors
In certain countries, the Group operates via a 
single distributor or has large individual reseller 
customers. In certain cases, a failure of or 
breakdown in the relationship with a key reseller 
could significantly and adversely affect the 
Group’s business.
In cases where there is a large distributor in a 
significant market (e.g. the USA), the Group also 
maintains contact with the major retailers. In 
addition, the Group carefully monitors customer 
credit limits and has credit insurance which typically 
covers the majority of the customer debts 
outstanding at any point in time. 
Risk factors
In common with all businesses, the Group faces risks, the effective management of which is necessary to enable it to achieve its strategic 
objectives and secure the resilience of the business for the long term. Management of risk is critical to the effective running of the business 
and is considered as part of the Group’s decision-making processes. FOCUSRITE PLC | ANNUAL REPORT 2016 23
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Risk area Description Mitigation
Development of the 
channels to market
Significant change in the methods by which 
end-users wish to buy Focusrite products could 
significantly affect the Group’s business. 
The Group or its distributors sell to both ‘bricks and 
mortar’ and e-commerce retailers so that the Group 
can satisfy customer demand via both methods.
Currency risks The Group is exposed to currency and exchange 
rate fluctuations which may affect the Group’s 
revenue and costs when reported in Sterling.
There is a largely effective natural hedge 
for US Dollar transactions in as much as the 
Group uses its generation of US Dollars to buy 
product in US Dollars. In addition, the Group 
mitigates its Euro exposure by entering into 
forward foreign exchange hedging contracts 
for the conversion of Euros to Sterling. 
Scarcity of experienced 
technical personnel
The nature of the Group’s business requires its 
employees in the technical and development teams 
to be highly skilled and experienced in their 
respective fields. The Group is dependent for its 
continued success on being able to hire and retain 
such individuals.
The Group is a leading music industry company 
in the UK and so attracts high-quality technical 
personnel. The Group also attracts graduates 
from music technology courses at local universities. 
The Group has wide-ranging share ownership 
incentives and other employment benefits to 
aid retention.
Intellectual property and 
data protection 
The intellectual property and data developed by  
the Group is valuable and the Group could be 
harmed by infringement or loss.
The Group has data and information technology 
controls which are reviewed by the Group Board. 
Additionally, the Group includes data protection 
provisions in the contracts of all Group employees. 
The Group also aims to protect its intellectual 
property and pursues infringements.
Information security Information security and cyber threats are currently 
a priority across all industries and remain a key 
Government agenda item.
The Group is undergoing a detailed review of 
IT systems to upgrade older elements. There 
has already been a widespread upgrade of 
core IT functionality and the improvement 
of back up and disaster recovery processes. 
There is an improving business continuity 
framework and a dedicated internal IT support 
team aided by external support providers. 24 FOCUSRITE PLC | ANNUAL REPORT 2016
STRATEGIC REPORT | RESPONSIBILITY
Committed to acting 
responsibly
Corporate Social Responsibility
We have a duty to maintain the trust of 
the end-users of our products as well as 
our customers, suppliers, staff and other 
stakeholders by ensuring that we act with 
integrity at all times. Corporate Social 
Responsibility (‘CSR’) is a core part of that 
commitment. We recognise that by acting 
in a responsible and considerate way with 
everyone who comes into contact with us, 
we will positively impact both the societies 
we operate in and the music-making 
communities that lie at the heart of our 
business, supporting the long-term value 
of Focusrite. Our CSR policy builds on the 
foundations we have put in place to reduce 
our impact on the environment, ensuring we 
act as a responsible and fair employer and 
supporting the national and local community 
projects that our staff are involved in.
Impact on society
Focusrite carefully considers its social 
impact at both the local and global levels. 
Local initiatives include always trying to 
recruit locally to minimise commuting 
miles and encouraging employees living 
further afield to relocate locally, which 
in turn supports the local community.
Focusrite has successfully established 
and maintained links with educational 
establishments on a local and national level. 
Working with educational establishments 
is not a new concept for Focusrite. Since 
1999 Focusrite has worked closely with 
Surrey University and its Institute of Sound 
Recording under the banner of the world-
renowned Tonmeister course. Each year 
Focusrite takes on two Tonmeister third year 
undergraduate interns and provides them 
with a year of intense work experience. 
Several of Focusrite’s current technical 
staff have been recruited as a result of this 
close relationship with Surrey University.
Moving further afield Focusrite works with 
four major Chinese contract manufacturers. 
Focusrite visits its contract manufacturers at 
least once every three months to check on 
compliance issues, manufacturing control 
and general relationship management. 
Environmental impact
There are two aspects which Focusrite 
evaluates when assessing environmental 
impact, the first being the environmental 
impact of the corporation and its activities 
and the second being the environmental 
impact of Focusrite’s products.
In terms of the environmental impact of 
the corporation there are a number of 
policies that have been introduced to 
lower any negative impacts. These include 
Focusrite supporting the government 
initiative of the Bike to Work scheme, of 
which 16% of staff have participated. 
Employees are encouraged to lower 
their carbon footprint by lift sharing and 
there is an unofficial car pool scheme for 
those who live in London and in the local 
area which is used on a daily basis.
In terms of waste, Focusrite is registered for 
WEEE and Focusrite has deployed recycling 
bins in every office and communal work 
area with shredding bins for secure waste.
Focusrite has also stopped using 
alkaline (non-rechargeable) batteries 
across the Company and has replaced 
these with high capacity nickel metal 
hydride (rechargeable) batteries.
Focusrite has started to conduct video 
conferencing for international meetings 
that has resulted in a reduction in 
the annual number of international 
flights undertaken by employees.
The packaging for Focusrite products 
has been designed to have minimal 
environmental impact and Focusrite 
has recently substituted the use of 
expanded polyethylene foam with 
moulded recycled pulp paper.
All Focusrite products which rely on mains 
power comply with all current power 
efficiency directives and either have internal 
high efficiency switchable power supplies 
or external high efficiency power supplies.
Relations with suppliers, partners 
and contractors
Whilst price will always play an important 
part in the commercial decision making of 
Focusrite in terms of suppliers, partners 
and contractors, it is by no means the only 
significant consideration. Focusrite prides 
itself not only on what it does but the way 
that it does it and this must also be true for 
those third parties with which it partners.
Examples of this include a strategic 
partnership with Kuehne + Nagel which 
provides inbound and outbound third-party 
logistics to Focusrite. Kuehne + Nagel 
is committed to lowering the negative 
environmental impact of its operations 
as well as maximising the positive social 
impact. It achieves this by reviewing each 
shipment to determine the most efficient 
methods of transporting products, both 
inbound and outbound. Focusrite forward 
plans the production and shipment of its 
products so that air freight is not required.
The electricity supplier to Focusrite is 
Total, which has demonstrated a true 
year-on-year reduction in CO
2
 emissions 
from its power stations, transportation and 
from its own offices. The fact that Total 
states that sustainability is its business, its 
strategy and its future aligns it well with 
the sustainability ethos of Focusrite.
Focusrite’s choice of Chinese contract 
manufacturers is critical to the business, 
not only in terms of quality of manufacture 
but also in terms of social responsibility 
and sustainability. An example of this is our 
largest manufacturer, which is ISO9002, 
TS9000, ISO9001:2000, ISO14001, 
TL9001, ISO13488 and TS16949 certified 
as well as having a commitment to providing 
a safe and enjoyable working environment 
for its 3,500 contract manufacturing staff. 
Slavery and human trafficking
Focusrite is committed to ensuring that 
there is no modern slavery or human 
trafficking in its supply chain or any part 
of its business. The Focusrite Anti-slavery  FOCUSRITE PLC | ANNUAL REPORT 2016 25
STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS
For more information visit
focusriteplc.com
Policy, as published on the Group’s websites, 
reflects the commitment to acting ethically 
and with integrity in all the Group’s business 
relationships and to implementing and 
enforcing effective systems and controls to 
ensure slavery and human trafficking is not 
taking place anywhere in its supply chain. 
All Focusrite contract manufacturers 
operate with a minimum accreditation of 
ISO 9001 and ISO 14001. Our largest 
manufacturer also holds SA 8000 and 
OHSAS 18001 accreditation with a strong, 
active CSR programme in place to improve 
worker engagement, health and safety. All 
of Focusrite’s contract manufacturers are 
responsible employers which comply with 
local employment law and provide good 
working and living conditions for their staff. 
As part of the ongoing relationship with 
these manufacturers, senior members of the 
Group visit each supplier around four times 
per year. These visits include inspection 
of the production lines, the people 
working on those production lines and 
their working, eating and living conditions 
to ensure that they are acceptable.
To ensure a high level of understanding 
of the risks of modern slavery and 
human trafficking in our supply chains 
and our business, we provide training to 
our staff. An introduction to our modern 
slavery and human trafficking practices 
and policies forms part of the induction 
process for each new member of staff.
Relations with employees
Whilst Focusrite has clear leadership and 
reporting structures in place it enjoys 
a flat hierarchy amongst its staff. This 
approach, together with an ‘open door’ 
policy, means that anyone at any time can 
talk to any of the Directors to raise any 
matters for discussion, ask questions or 
share ideas. The fluidity of knowledge 
sharing in the Company is one of its core 
strengths and that together with the true 
sense that all staff are members of the 
Focusrite family means that challenges 
can often turn into opportunities.
Focusrite has been awarded a three star 
accreditation (the highest possible) six 
years in a row from Best Companies, 
the organisation which conducts and 
manages The Sunday Times 100 Best 
Small Companies to Work For. Focusrite 
has also been included in the list of The 
Sunday Times 100 Best Small Companies 
to Work For from 201 1 to 2016.
To assist in the dynamic flow of knowledge 
within the Company, Focusrite has 
an internal company blog, WIKI, and 
message board for the sharing of 
ideas, information and best practice.
Focusrite staff enjoy the use of a fully 
subsidised kitchen for both breakfast 
and lunch as well as free coffee, tea and 
biscuits throughout the working day.
To ensure that both employees and 
Focusrite are getting the best out of 
each other there are formal employee 
assessments on an annual basis and 
informal assessments throughout the year.
The Company has a comprehensive 
documented health and safety policy 
in place which is reviewed by the 
Compliance Committee regularly.
The Group has implemented a whistle 
blowing policy. All employees are clear 
that they are able to contact the Chairman, 
Chief Executive Officer or either of the 
Non-executive Directors of the Group if they 
have an issue which they feel they cannot 
discuss with their immediate manager.
Relations with customers
Focusrite has three types of customer: 
distributor, retailer and end-user. Ultimately 
Focusrite makes product for the end-users 
of those products and that is where its 
customer attention is most acutely focused. 
Communicating with end-users is realised 
through direct e-comms, social media sites 
and YouTube channels. Relevance and 
authenticity are the hallmarks of Focusrite’s 
end-user communication strategy, with 
industry-leading videos as the primary 
medium for content. A genuine bi-directional 
line of communication with swift response 
rates has helped to grow Focusrite’s social 
media channels, most notably with the 
Novation brand. With paid advertising on 
social media kept relatively low, investments 
are instead made in the generation of 
strong relevant content that the community 
shares organically. Social media channels 
include Facebook, Twitter, Instagram, 
Periscope and Google+, as well as YouTube.
Both the Focusrite and Novation brands 
have worldwide recognition as being class 
leading. With over 10% of the Company’s 
staff dedicated to end-user customer 
support, Focusrite makes sure that  
the users of its products have the 
best possible experience. 
The customer support team meets 
weekly to discuss end-user, distributor 
and retailer topics which have come up 
during the week and review past topics. 
The customer support team also relays this 
information directly to the research and 
development team, either to effect improved 
usability of a product or to influence 
future product innovation and design.
Dave Froker
Chief Executive Officer
Jeremy Wilson
Chief Financial Officer
22 November 2016 26 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | BOARD OF DIRECTORS
Philip ‘Phil’ Dudderidge
Executive Chairman and Founder
Phil has a distinguished career in the 
professional audio industry. He co-founded 
Soundcraft in 1973 which became a leading 
brand of sound mixing consoles, and was sold 
to Harman International in 1988. Phil acquired 
the assets of Focusrite Ltd in 1989. Phil 
served as Chief Executive Officer of Focusrite 
from 1989 until he became Chairman in 2012.
Jeremy Wilson
Chief Financial Officer
Jeremy was appointed Chief Financial 
Officer of Focusrite in September 2014. 
Prior to Focusrite, Jeremy was Chief 
Financial Officer of Atex Group Ltd, a 
leading worldwide developer of content 
management and advertising software to 
the media industry. Before that, Jeremy 
was Chief Financial Officer of Regenersis 
plc, the AIM-quoted support services 
business. Prior to his Chief Financial Officer 
roles, Jeremy held several senior finance 
roles at DHL Express (UK) Limited and 
Electrocomponents Plc. He qualified as a 
Chartered Accountant at KPMG in 1992.
David ‘Dave’ Froker
Chief Executive Officer
Dave was appointed Chief Executive Officer of 
Focusrite in March 2012. Previously, he was Chief 
Marketing Officer at Line6. He served as Chief 
Executive Officer of Stanton Group until 2007, 
where he led the turnaround of audio equipment 
businesses Stanton Magnetics, Cerwin-Vega and 
KRK. Prior to Stanton Group, Dave was the General 
Manager of the digital audio technology company, 
Digidesign (a division of Avid Technology), from 
1996 to 2002, where he presided over the growth 
of Pro Tools into the industry-standard audio 
workstation, as Digidesign’s revenue tripled to 
$135 million. As previously announced, Dave 
Froker will be retiring in December 2016.
Board of Directors FOCUSRITE PLC | ANNUAL REPORT 2016 27
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
Paul Dean
Independent Non-executive Director
Paul joined the Board of Focusrite in December 
2014. Paul has over 30 years of experience 
across numerous sectors, including technology. 
Previously, he was Group Finance Director at 
Ultra Electronics Holdings Plc between 2009 and 
2013 and Group Finance Director of Foseco Plc 
between 2001 and 2008, including the period 
of its flotation in 2005. He also held various 
senior finance roles at Burmah Castrol Plc from 
1990 to 2000. Currently, Paul is a Non-executive 
Director and Chairman of the Audit Committee at 
Porvair Plc, Polypipe Group Plc and Wincanton 
Plc. He is also the Senior Independent Director 
at Porvair Plc and Polypipe Group Plc. Paul 
is a Chartered Management Accountant. 
David Bezem
Independent Non-executive Director
David joined the Board of Focusrite in 
December 2014. He brings with him more 
than 25 years’ experience as an investment 
banker advising UK public companies across 
a range of sectors. Most recently David was a 
Managing Director at Altium Corporate Finance 
and prior to that a Managing Director at Close 
Brothers Corporate Finance. David qualified as 
a Chartered Accountant with Arthur Andersen 
& Co. in 1984. He is also a Non-executive 
Director and Chairman of the Remuneration 
Committee at Harvey Nash Group plc. 28 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | MANAGEMENT
The executive management team are 
known internally as the Operations Board.
As a team, they have huge experience of the music industry 
and have worked at Focusrite for a combined period of over 
100 years. It is this team that has generated the strong growth 
over the last decade and it signals significant strength in depth 
within the Group.
Executive Management Team FOCUSRITE PLC | ANNUAL REPORT 2016 29
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
Back row (standing)  Giles Orford, Jeremy Wilson, Tim Dingley
Front row (seated) Mike Warriner, Simon Holt, Phil Dudderidge, Dave Froker, Rob Jenkins, Damian Hawley
Inset  Phil Wagner 30 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | CORPORATE GOVERNANCE REPORT
The Company was admitted to trading on AIM in December 
2014. Accordingly, compliance with the governance framework 
contained in the UK Corporate Governance Code published by 
the Financial Reporting Council (the ‘Code’) is not currently 
mandatory. Nevertheless, the Board remains committed to high 
standards of corporate governance and endeavours to comply 
with the Code to the extent practicable for a public company of 
its size. Furthermore, the Board confirms that it has complied 
with the QCA Corporate Governance Guidelines (as devised by 
the QCA in consultation with a number of significant institutional 
small company investors), to the extent appropriate and 
practicable for a company of its nature and size.
Board of Directors and Board committees 
The Board comprises five Directors of whom three are 
Executives and two Non-executives, and reflects a blend of 
different experience and backgrounds. The Board considers the 
two Non-executive Directors to be independent. Biographical 
details of all the Directors at the date of this report are set out  
on pages 26 to 27. 
The roles of Chairman and Chief Executive are separate. The 
Chairman leads Board meetings and Board discussions and has 
responsibility for the Board’s overall effectiveness. The Chief 
Executive is responsible for the achievement of the Group’s 
strategic and commercial objectives, within the context of the 
Group’s resources and the risk tolerances laid down by the 
Board. The Board is responsible to shareholders and provides 
leadership and direction to the Group. It is the role of the Board 
to set the strategic direction and goals of the Group within the 
risk tolerances and control mechanisms the Board believes  
are appropriate. 
The Board has a list of matters reserved for its consideration 
which include, but are not limited to, matters of strategy, risk 
management, consideration and approval of financial budgets, 
major capital expenditure decisions, acquisitions and disposals, 
approval of the interim and final results and the recommendation 
of any dividends. 
An Executive Committee (known as the Operations Board) 
supports the Board in implementing strategy and reports relevant 
matters to the Board for its consideration and approval. This 
Executive Committee comprises three Executive Directors and 
seven members of senior management. 
Corporate Governance Report
All the Directors have access to the advice and services of the 
General Counsel and Company Secretary who are responsible 
for ensuring compliance with applicable rules, regulations and 
Board procedures.
Directors have the right to request that any concerns they have 
are recorded in the appropriate committee or Board minutes. 
The Board has three committees, each with defined terms of 
reference. They are the Audit Committee, the Remuneration 
Committee and the Nomination Committee. The Board meets  
on a regular basis. During the year from 1 September 2015, the 
Board met ten times. A formal agenda and briefings are prepared 
for Board meetings, allowing all Directors to participate fully. The 
Directors all have access to independent advice, if required, in 
respect of their duties from a variety of professional advisers. 
The Company maintains an appropriate Directors’ and Officers’ 
insurance policy in respect of any legal actions against the 
Directors and Officers.
Re-election of Directors
At every AGM, one-third of the Directors for the time being 
(excluding any Director appointed since the previous AGM) or, if 
their number is not divisible by three, the number nearest to but 
not exceeding one-third, shall retire from office by rotation. On 
this basis, Phil Dudderidge will offer himself for re-election at the 
forthcoming AGM. As noted above, Dave Froker will stand down 
as Chief Executive before the end of 2016.
Information and professional development
Prior to the Company’s admission to AIM in December 2014,  
all Directors received a briefing from the Company’s nominated 
adviser of their duties, responsibilities and liabilities as a Director 
of an AIM company. Directors are encouraged to keep abreast  
of developments and attend training courses to assist them with 
their duties. 
In addition to the formal meetings of the Board, the Chairman  
is available to the other Non-executive Directors to discuss any 
issues of concern they may have relating to the Group or as 
regards their area of responsibility and to keep them fully briefed 
on ongoing matters relating to the Group’s operations.
The Chairman is responsible for ensuring that new Directors each 
receive a full, formal and tailored induction on joining the Board.
Meetings of the Board and its Committees
The following table sets out the number of meetings of the Board 
and its Committees during the year under review and individual 
attendance by the relevant members at these meetings:
Board Audit Committee Remuneration Committee Nomination Committee
Number Attended Number Attended Number Attended Number Attended
Dave Froker 10 10 – – – – – –
Jeremy Wilson 10 10 – – – – – –
Phil Dudderidge 10 9 – – – – 2 2
David Bezem 10 10 3 3 3 3 2 2
Paul Dean 10 10 3 3 3 3 2 2 FOCUSRITE PLC | ANNUAL REPORT 2016 31
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
In the event that Directors are unable to attend a meeting, their 
comments on the business to be considered at the meeting are 
discussed with the Chairman ahead of the meeting so that their 
contribution can be included in the wider Board discussion.
Board committees
As noted above, the Board has three principal committees  
with clearly defined terms of reference. The members of the 
committees and their duties are set out below.
Audit Committee
The Audit Committee assists the Board in discharging its 
responsibilities, within agreed terms of reference, with regard  
to corporate governance, financial reporting and external and 
internal audits and controls. 
This includes, amongst other things, reviewing the Group’s 
interim and annual financial statements and reviewing the 
auditor’s findings from the audit including discussions with the 
auditor without executive management being present. The 
interim and annual reporting processes also include review of 
going concern, judgements and significant accounting policies. 
The Committee’s work also includes the appointment of external 
auditors, the approval of their audit plan and fees, reviewing and 
monitoring the extent of the non-audit services undertaken by 
external auditors. Additionally, the Audit Committee reviews the 
effectiveness of the Group’s internal controls and risk 
management systems. 
In this second year post-IPO, the Group has extended its  
internal audit work. Areas of perceived higher financial control 
risk were identified and internal reviews carried out by personnel 
independent of those areas. The resultant findings and 
recommendations were documented, discussed with local 
management and then the final reports presented to the Audit 
Committee for their review. The Committee believes that these 
internal review processes are appropriate for a group of this  
size and complexity, and will continue to assess this on an 
ongoing basis. 
The ultimate responsibility for reviewing and approving the 
Annual Report and Accounts and the half-yearly reports remains 
with the Board. Membership of the Audit Committee comprises 
the two independent Directors and is chaired by Paul Dean. The 
Audit Committee meets formally not less than three times every 
year and otherwise as required.
Remuneration Committee
The Remuneration Committee is responsible, within agreed 
terms of reference, for establishing a formal and transparent 
procedure for developing policy on executive remuneration and 
for setting the remuneration packages of individual Directors. 
This includes agreeing with the Board the framework for 
remuneration of the Executive Directors, the General Counsel 
and the executive management team. It is furthermore 
responsible for determining the total individual remuneration 
packages of each Director including, where appropriate, 
bonuses, incentive payments and share options. No Director may 
be involved in any decision as to their own remuneration. The 
membership of the Remuneration Committee comprises the two 
independent Directors and the Committee is chaired by David 
Bezem. The Remuneration Committee meets not less than  
twice a year and at such other times as the Chairman of the 
Committee shall require.
Nomination Committee
The Nomination Committee has responsibility for reviewing the 
structure, size and composition of the Board and recommending 
to the Board any changes required, for succession planning, and 
for identifying and nominating for approval of the Board 
candidates to fill vacancies as and when they arise. The 
Committee is also responsible for reviewing the results of any 
Board performance evaluation process and making 
recommendations to the Board concerning the Board’s 
Committees and the re-election of Directors at the AGM. 
Membership of the Nomination Committee comprises the two 
independent Directors and Phil Dudderidge. The Committee is 
chaired by David Bezem. The Nomination Committee meets not 
less than once a year and at such other times as the Chairman of 
the Committee shall require.
Board evaluation
The Chairman, as part of his responsibilities, informally  
assesses the performance of the Board and its Directors on  
an ongoing basis and brings to the Board’s attention any areas 
for improvement. For the time being, the Board will continue  
to evaluate in this way the balance of skills, experience, 
independence and knowledge required to ensure that its 
composition is appropriate to the Group’s size and complexity. 
Following the announcement on 19 July 2016 that Dave Froker, 
Chief Executive Officer, will retire from the Board towards the 
end of 2016, the Nomination Committee agreed to defer any 
formal evaluation process until after the appointment of a new 
Chief Executive Officer. 
Internal control and risk management 
The Board is responsible for the Group’s systems of internal 
controls and, together with the Audit Committee, reviewing those 
systems. The systems put in place are designed to manage, limit 
and control risk but cannot eliminate all risk completely. 
The Executive Directors of the Company are actively involved in 
the daily management of the operations of the Group. Business 
risks are regularly identified and appropriate control systems are 
implemented to manage those risks. Such systems are designed 
to manage rather than eliminate the risk of failure to achieve 
business objectives and can provide only reasonable and not 
absolute assurance against material misstatement or loss. Steps 
have been taken to embed internal control and risk management 
further into the operations of the business. The monthly results 
of each area of the business are reported, discussed and 
compared to forecast.
Auditor independence 
The Audit Committee and the external auditor, KPMG LLP, have 
safeguards in place to avoid the possibility that the auditor’s 
objectivity and independence could be compromised. These 
safeguards include the auditor’s report to the Audit Committee 
on the actions they take to comply with the professional and 
regulatory requirements and best practice designed to ensure 
their independence from the Company. In addition, a formal 
policy for audit and non-audit services has been agreed by the 
Audit Committee, ensuring that there is appropriate high level 
authorisation before the auditor is engaged in providing a 
material non-audit service.  32 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | CORPORATE GOVERNANCE REPORT
The overall performance and the independence of the auditor is 
reviewed annually by the Audit Committee taking into account 
the views of management. The Audit Committee also has 
discussions with the auditor without management being present 
on the adequacy of controls and on any judgemental areas. 
The annual appointment of auditors by shareholders in the  
AGM is a fundamental safeguard of auditor independence. 
Beyond this, the Group has implemented an audit service policy, 
compliant with the latest guidance, that considers whether 
additional work performed by the auditor may be appropriate for 
sound commercial and practical reasons, including confidentiality. 
Examples of work that would fall into this category include 
regulatory advice, taxation services and financial due  
diligence work.
Shareholder relations and the Annual General Meeting
The Chief Executive and Chief Financial Officer meet analysts 
and institutional shareholders of the Company after the interim 
and annual results announcements and on an as-needed basis 
at other times in the year to update shareholders on the progress 
of the Group. Additionally, the Non-executive Directors are 
available to meet shareholders if requested. 
The Directors encourage the participation of all shareholders, 
including private shareholders, at the AGM. The Annual Report 
and Accounts are published on the Company’s website, 
www.focusriteplc.com, and can be accessed by shareholders  
and potential investors. 
Notice of the AGM will be sent to shareholders at least 21 clear 
days before the meeting. The voting results will be announced 
following the meeting.
The Company uses its corporate website (www.focusriteplc.com) 
to communicate with its institutional shareholders and private 
investors and posts the latest announcements, press releases 
and published financial information together with market updates 
and other information about the Group.
Corporate Governance Report continued FOCUSRITE PLC | ANNUAL REPORT 2016 33
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
GOVERNANCE | DIRECTORS’ REPORT
The Directors present their report for the year ended 31 August 
2016 in accordance with section 415 of the Companies Act 
2006. Particulars of important events affecting the Group, 
together with the factors likely to affect its future development, 
performance and position are set out in the strategic report on 
pages 1 to 25 which is incorporated into this report by reference 
together with the corporate governance report on pages 26 to 
37. In addition, this report should be read in conjunction with 
information concerning employee share schemes, which can be 
found in the Directors’ Remuneration Report on page 37 and in 
note 31 to the financial statements, and which is incorporated by 
way of cross-reference into the Directors’ Report. The Company 
did not make any political donations during the year.
Results and dividends
The results for the year are set out in the consolidated statement 
of comprehensive income on page 42. During the year the 
Directors approved the payment of an interim dividend of 0.65 
pence per share. Following the year end the Directors assessed 
the appropriateness of the Group declaring a final dividend and 
are recommending that a dividend of 1.3 pence should be paid. 
This dividend recommendation shall be put to the shareholders 
to vote on at the AGM to be held on 10 January 2017.
Directors
There were no changes to the Board during the year and details 
of the Director offering himself for re-election at the AGM are set 
out in the corporate governance statement on page 30.
The Executive Directors have service contracts in place with  
a six-month notice period. The Non-executive Directors were 
appointed on 11 December 2014 to serve for an initial three-year 
term. Details of each Director’s contractual arrangements, 
including notice periods, are included as part of the Directors’ 
Remuneration Report on pages 35 to 38 and that information  
is incorporated by reference into the Directors’ Report. 
The Directors who served during the year were as follows:
P Dudderidge
D Froker
J Wilson
D Bezem
P Dean
Directors’ interests and indemnity arrangements
At no time during the year did any Director hold a material 
interest in any contract of significance with the Group or any of 
its subsidiary undertakings other than an indemnity provision 
between each Director and the Group and employment contracts 
between each Executive Director and the Group. The Group has 
purchased and maintained throughout the year Directors’ and 
Officers’ liability insurance in respect of all Group companies. 
The number of ordinary shares of the Company in which the 
Directors were beneficially interested at 31 August 2016 is set 
out in the Directors’ Remuneration Report on page 38.
On 5 December 2014, the Group entered into an agreement 
with Phil Dudderidge (the ‘Investor’). This agreement contains, 
inter alia, provisions to allow the Group to operate independently 
of the Investor and any person connected with him for as long 
as they together hold not less than 25% or more of the voting 
rights. This agreement, known as the Relationship Agreement, 
is described in more detail in the Admission Document.
Significant agreements – change of control 
A number of agreements take effect, alter or terminate upon a 
change of control of the Group, such as the employee share-
based incentive schemes. 
Articles of Association
Any amendments to the Articles of Association of the Company 
may be made by special resolution of the shareholders. 
Share capital 
Details of the Company’s share capital are set out in note 
27 to the financial statements. The Company has one class 
of share capital: 58,075,000 ordinary shares with a nominal 
value of £0.001 each which, following the Company’s IPO, 
were admitted to AIM on 11 December 2014. The rights and 
obligations attached to the ordinary shares are governed by 
UK law and the Company’s Articles of Association. Ordinary 
shareholders are entitled to receive notice and to attend 
and speak at general meetings. On a show of hands, every 
shareholder present in person or by proxy (or a duly authorised 
corporate representative) shall have one vote and, on a poll, 
every member who is present in person or by proxy (or a duly 
authorised corporate representative) shall have one vote 
for every share held. Other than the general provisions of 
the Articles of Association and prevailing legislation, there 
are no specific restrictions on the size of a holding of the 
Company’s share capital. The Directors are not aware of any 
agreements between holders of the Company’s shares that 
may result in the restriction on the transfer of securities or 
on voting rights. No shareholder holds securities carrying any 
special rights or control over the Company’s share capital.
Restrictions on the transfers of shares 
The Articles of Association do not contain any restrictions on  
the transfer of ordinary shares in the Company other than the 
usual restrictions, which are applicable where a share instrument 
is not duly stamped or certified as exempt from stamp duty,  
is in respect of more than one class of share, relates to joint 
transferees and such transfer is in favour of more than four  
such transferees, or relates to shares that are not fully paid.
Directors’ Report
For the year ended 31 August 2016 34 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | DIRECTORS’ REPORT
Major interests in shares 
As at 31 August 2016, the following substantial interests (3% or 
more) in voting rights attaching to the Company’s ordinary shares 
had been notified to the Company:
Shareholder
Number of 
voting rights 
as at 
31 August 
2016
% 
voting rights 
as at 
31 August 
2016
Philip Dudderidge and family 30,249,000 52.09%
Schroder Investment Management 4,911,108 8.46%
Focusrite Employee Benefit Trust 4,494,504 7.74%
Highclere International Investors 2,542,055 4.38%
Investec Asset Management 2,381,000 4.10%
Polar Capital Partners 2,000,000 3.44%
Financial risk management
The Group uses financial instruments to manage certain 
types of risks, including those relating to credit and foreign 
currency exchange. The Group’s objectives and policies on 
financial risk management including information on liquidity, 
capital, credit and risk can be found in note 33 of the financial 
statements and in the risks section on pages 22 to 23.
Future business developments
The strategy of the Group is explained in the Strategic Report 
section of this Annual Report and Accounts which, as noted in 
the preamble to the Directors’ Report, is incorporated into this 
report by reference.
Research and development
The Group continues to invest in its research and development 
activities, as explained in the Chairman’s Statement and the 
Chief Executive’s Statement.
Health and safety
The Group is committed to providing a safe and healthy working 
environment for all staff and contractors. The Group’s health and 
safety standard sets out the range of policies, procedures and 
systems required to manage risks and promote wellbeing. The 
General Counsel has overall accountability for health and safety 
across the organisation.
Going concern 
The Company’s business activities, together with risk factors 
which potentially affect its future development, performance or 
position can be found in the Strategic Report on pages 1 to 25. 
Details of the Company’s financial position and its cash flows  
are outlined in the Financial Review on pages 16 to 19. 
After making reasonable enquiries, the Board has an expectation 
that the Group and the Company have adequate financial 
resources together with a strong business model to ensure 
they continue to operate for the foreseeable future. The 
Company is a cash-generative business that, when required, 
has access to borrowing facilities to meet the Group’s future 
cash requirements. Accordingly, the Directors have adopted 
the going concern basis in preparing the financial statements. 
Auditor
As recommended by the Audit Committee, pursuant to section 
487 of the Companies Act 2006 and having indicated its 
willingness to act, the Company will propose a resolution at the 
AGM that KPMG LLP be reappointed as auditor of the Company.
Audit information 
Each of the Directors at the date of the Directors’ Report 
confirms that so far as he is aware, there is no relevant audit 
information of which the Company’s auditor is unaware and 
he has taken all the reasonable steps that he ought to have 
taken as a Director to make himself aware of any relevant 
audit information and to establish that the Company’s auditor 
is aware of the information. 
The confirmation is given and should be interpreted in accordance 
with the provisions of section 418 of the Companies Act 2006. 
Annual General Meeting 
Details of the Company’s AGM and the resolutions to be 
proposed will be set out in a separate notice of meeting. 
The Directors’ Report has been approved by the Board of 
Directors on 22 November 2016. 
Signed on behalf of the Board.
Prism Cosec
Company Secretary
22 November 2016
Focusrite Plc
Windsor House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3FX
Company number: 9312676
Directors’ Report continued
For the year ended 31 August 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 35
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
Introduction
This is the second Remuneration Report since Focusrite’s 
IPO on the Alternative Investment Market (AIM) in December 
2014 and the first since the Company shares have been 
traded on AIM for a full financial year. As reported last year, 
following the IPO a review of the executive Directors’ and 
senior management’s remuneration structures was conducted 
with assistance from third party advisers. Following this 
work, changes were made by the committee in order to 
bring the Company’s remuneration structures more into line 
with those of other quoted companies of similar size and 
complexity. The review also helped inform the formulation of 
new performance targets intended to align the interests of 
the Directors and management with those of its shareholders. 
During this financial year the committee has monitored the 
effectiveness of these new remuneration structures and 
where appropriate is continuing this process by making further 
changes which will take effect in the next financial year. 
As a company admitted to AIM, Focusrite Group Plc is 
not required to prepare a Directors’ Remuneration Report, 
however, the Board supports the principle of transparency and 
has therefore prepared this report in order to provide useful 
information to shareholders on its executive remuneration 
arrangements. Accordingly, although not required to comply 
with Schedule 8 of the Large and Medium-sized Companies 
and Groups (Accounts and Reports) Regulations 2008 (the 
‘Regulations’), the Company has used these Regulations as 
guidance for presenting selected disclosures where it considers 
these to be both relevant, helpful and appropriate. Accordingly, 
this report sets out information about the remuneration of the 
Directors of the Company for the year ended 31 August 2016. 
Remuneration Committee 
The members of the Remuneration Committee are David Bezem 
(Chairman) and Paul Dean who are both independent Non-
executive Directors. 
Terms of reference have been approved for the Remuneration 
Committee and are reviewed annually. The Committee’s primary 
responsibility is to determine, on behalf of the Board, the policy 
for the remuneration of the Executive Directors and such other 
members of the executive management team of the Group as  
is deemed appropriate. The remuneration of the Non-executive 
Directors is a matter for the Chairman and the executive 
members of the Board. 
The Executive Chairman, Chief Executive Officer, General 
Counsel, Company Secretary and external advisers may be 
invited to attend meetings of the Remuneration Committee  
but do not take part in the decision making. 
Attendance at meetings of the Remuneration Committee by 
individual members is detailed in the Corporate Governance 
Report on page 30.
The Committee members have no personal financial interest, 
other than as shareholders, in the matters to be decided. They 
have no conflicts of interest arising from cross-directorships  
or from being involved in the day-to-day business of the Group. 
The Committee members do not participate in any bonus, share 
awards or pension arrangements.
Remuneration policy
The Committee’s overarching aims in setting the remuneration 
policy are to attract, retain and motivate high-calibre senior 
management and to focus them on the delivery of the 
Group’s strategic and business objectives, to promote a 
strong and sustainable performance culture, to incentivise 
growth, and to align the interests of Executive Directors 
and senior managers with those of shareholders.
The remuneration package for each Executive Director is 
designed to include performance and non-performance-related 
elements. Non-performance elements include salary, taxable 
benefits and employer pension contributions. All other 
components of the remuneration package are performance-
related and comprise a mixture of cash and share-based, and 
short and long-term incentives, as set out below.
The main elements of the remuneration packages for Executive 
Directors are:
• basic salary;
• performance-related annual bonus;
• long-term share incentive; 
• pension contribution; and 
• benefits.
Base salary
Base salaries for each Executive Director are reviewed  
annually and determined by individual performance, scope of 
responsibility, relative pay levels within the Group and reference 
to external market data such as other AIM-quoted companies  
of similar size and complexity and those operating in related 
industries. In particular, as mentioned in last year’s annual report, 
during the financial year ended 31 August 2015, the committee 
commissioned Kepler Associates, a brand of Mercer Limited, to 
carry out a remuneration benchmarking survey in respect of the 
Executive Directors and senior management, the data from 
which the committee has taken into account in setting base 
salaries and other remuneration for the financial year ended 
31 August 2016 and for the following financial year.
The Executive Directors’ base salaries for the financial year 
ended 31 August 2016 are set out on the table on page 38. 
As explained in last year’s annual report, the base salary of 
Dave Froker, the Chief Executive Officer, was increased to be  
set at the same level as Jeremy Wilson’s, the Chief Financial 
Officer, who joined the Group shortly before the IPO during  
the preceding financial year.
Directors’ Remuneration Report 36 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
Performance-related annual bonus
Dave Froker and Jeremy Wilson were awarded a performance-based cash bonus for the financial year ended 31 August 2016. Phil 
Dudderidge, the Executive Chairman, does not receive an annual bonus. The bonuses for the year ended 31 August 2016 were based 
upon EBITDA targets as set out in the table below. The table shows the lower and upper boundaries, the target and the actual 
bonuses achieved:
Performance range
Below which no bonus is paid and above which 
no additional bonus is paid, and calculated on a 
straight-line basis between the lower boundary and 
the target as well as between the target and the 
upper boundary
FY16 bonus 
payout –  
EBITDA  
achieved 
Lower 
boundary Target
Upper 
boundary
Dave Froker EBITDA target £9.3m £11.054m £12.269m £10.249m
Bonus payout £0 £84,200 £127,500 £47,210
% salary 0% 50.0% 75.8% 28.0%
Jeremy Wilson EBITDA target £9.3m £11.054m £12.269m £10.249m
Bonus payout £0 £67,300 £102,000 £37,770
% salary 0% 40.0% 60.6% 22.4%
For the financial year ending 31 August 2017 the annual performance bonus parameters have been set by the Remuneration 
Committee and will be set out in next year’s annual report.
Long-term incentive plans
A bespoke share incentive plan was put in place for Dave Froker when he joined the Group in September 2012. In addition, an award 
of options under the existing Enterprise Management Incentive Scheme (the ‘EMI Scheme’) was made to Jeremy Wilson pre-IPO 
when he joined Focusrite in September 2014. Phil Dudderidge does not participate in a long-term incentive plan. The details of these 
awards are as follows:
Dave Froker Vesting criteria
£9m
1
£12m
2
£15m
2
EBITDA attainment
Exercisable options 619,000 632,000 646,000
Exercise price 10.3p 10.3p 10.3p
Jeremy Wilson Vesting criteria To FY17 To FY18 To FY19
Three-year EPS CAGR
3
12.5% to 22.5% or greater 12.5% to 22.5% or greater 12.5% to 22.5% or greater
Exercisable options 0 to 133,333 0 to 133,333 0 to 133,333
Exercise price 14.6p 14.6p 14.6p
1 During FY15 the vesting threshold of £9 million EBITDA was exceeded and consequently the Remuneration Committee approved the vesting of the 619,000 options.
2 Dave Froker will retire on 31 December 2016 as a consequence of which the remaining unvested options granted to him will lapse at that time.
3 Compound Annual Growth Rate.
As part of the post-IPO review of the remuneration structures referred to above, the Remuneration Committee looked at the role  
of long-term incentive plans for both the Executive Directors and other senior management within the Group. This resulted in the 
introduction of a PSP during the financial year ending 31 August 2015, the terms of which were set out in last year’s annual report. 
Currently the PSP is not being used for the Executive Directors due to their pre-existing long-term incentive awards described above 
although it is the intention to do so in the future. However, awards over a total of 139,935 shares were made during the year to certain 
other senior executives as part of the Remuneration Committee’s ambition to retain, reward and incentivise individuals whose 
contribution is considered to be a significant factor in the Group’s overall performance.
Directors’ Remuneration Report continued FOCUSRITE PLC | ANNUAL REPORT 2016 37
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
The Group also operates both approved EMI Schemes and unapproved option schemes for the benefit of other employees of the 
Group. These schemes, which were set up prior to the IPO, form part of the programme of incentives to promote the successful 
recruitment, retention and rewarding of all employees. Currently there is an employment benefit trust (‘EBT’), also established prior  
to the IPO, which holds a sufficient number of shares to satisfy vested options under these schemes. It should be noted that these 
awards do not vest on performance-based criteria but rather as the result of spent time, typically in thirds over three years.
Dilution
All of the Group’s equity-based awards are subject to an overall limit on the number of new ordinary shares that can be issued which 
will be dilutive. Other than awards to be satisfied by shares held by the EBT at the time of the IPO, these must not, in aggregate, 
exceed 10% of the Company’s issued share capital over any rolling ten-year period post-IPO. The following table illustrates the 
maximum outstanding share awards and the potential net dilution as at 31 August 2016:
Plan
Maximum number of shares 
relating to award % of issued share capital
Dave Froker LTIP
1
1,897,000 3.27%
Jeremy Wilson LTIP 400,000 0.69%
Senior management PSP 278,811 0.48%
Other general employee share option plans 3,809,338 6.56%
Options outstanding at end of period 6,385,149 11.00%
Less: issued shares held in EBT
2
 (4,494,504) (7.74%)
Potential net dilution 1,890,645 3.26%
1 With regard to the 1,897,000 options held by Dave Froker, 619,000 have vested and will be exercised.  The remaining unvested options granted to him will lapse upon his retirement. 
2 Represents the number of shares held by the EBT as at the IPO less the number of shares used by the EBT since then to satisfy options that have vested and been exercised.
Pension contributions
Dave Froker and Jeremy Wilson are members of a money purchase pension scheme. In the financial year ended 31 August 2016, the 
Company made defined contributions, of 1% of gross salary including any annual bonus. The Company does not have any final salary 
pension schemes.
Benefits
The Company provides life assurance, membership of the Group’s healthcare insurance scheme, critical illness cover and travel 
insurance to the Executive Directors. These benefits do not form part of their pensionable earnings. The value of these benefits  
is set out in the Directors’ emoluments table overleaf.
Executive Directors’ service contracts
The service contracts for the Executive Directors are terminable by either the Company or the Executive Directors on not less than six 
months’ notice. There are no predetermined special provisions for Executive Directors with regard to compensation in the event of loss 
of office. 
Non-executive Directors’ terms of appointment
Both Non-executive Directors have letters of appointment with the Company for an initial period of three years, subject to 
reappointment at the AGM. The appointment letters for the Non-executive Directors provide that no compensation is payable 
on termination. The appointments are terminable by the Company or the Non-executive Directors on six months’ notice. 38 FOCUSRITE PLC | ANNUAL REPORT 2016
GOVERNANCE | DIRECTORS’ REMUNERATION REPORT
Directors’ emoluments table
Executive Directors
Salary/fees 
£’000
Other 
taxable 
benefits
Annual
 bonus 
£’000
Pension 
contribution 
£’000
Total 
£’000
Dave Froker FY15 154 2 36 2 194
FY16 168 3 47 2 220
Jeremy Wilson FY15 161 – 66 2 229
FY16 168 2 38 1 209
Phil Dudderidge FY15 168 – – – 168
FY16 168 3 – – 171
Non-executive Directors
David Bezem
1
FY15 26 – – – 26
FY16 36 – – – 36
Paul Dean
1
FY15 26 – – – 26
FY16 36 – – – 36
1 The remuneration for David Bezem and Paul Dean each comprises a basic fee of £30,700 per annum, for their roles as Non-executive Directors of the Group, and an additional 
£5,000 per annum for their roles as Chairmen of Board committees.  
Directors’ interest in shares
The interests of the Directors and their families in the shares of the Company at end of the financial year were as follows:
0.1p ordinary 
shares as at 
31 August 2016
Outstanding options 
over shares as at 
31 August 2016
0.1p ordinary 
shares as at
 31 August 2015
Phil Dudderidge 30,249,000 – 30,249,000
Dave Froker
1
1,202,000 1,897,000 1,202,000
Jeremy Wilson 31,746 400,000 31,746
David Bezem 7,937 – 7,937
Paul Dean 7,937 – 7,937
1 With regard to the 1,897,000 options held by Dave Froker, 619,000 have vested and will be exercised.  The remaining unvested options granted to him will lapse upon his retirement.
Approval
This report was approved by the Directors and signed by order of the Board.
David Bezem
Chairman of the Remuneration Committee
22 November 2016
Directors’ Remuneration Report continued FOCUSRITE PLC | ANNUAL REPORT 2016 39
GOVERNANCE STRATEGIC REPORT FINANCIAL STATEMENTS
GOVERNANCE | STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Statement of Directors’ Responsibilities
In respect of the Annual Report and Accounts
The Directors are responsible for preparing the Annual Report 
and the Group and Parent Company financial statements in 
accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and 
Parent Company financial statements for each financial year. 
As required by the AIM Rules of the London Stock Exchange 
they are required to prepare the Group financial statements in 
accordance with International Financial Reporting Standards 
(‘IFRS’) as adopted by the EU and applicable law and have 
elected to prepare the Parent Company financial statements in 
accordance with UK Accounting Standards and applicable law 
(UK Generally Accepted Accounting Practice), including FRS 
101 Reduced Disclosure Framework. Under company law the 
Directors must not approve the financial statements unless they 
are satisfied that they give a true and fair view of the state of 
affairs of the Group and Parent Company and of their profit or 
loss for that period. In preparing each of the Group and Parent 
Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply  
them consistently;
• make judgements and estimates that are reasonable  
and prudent;
• for the Group financial statements, state whether they  
have been prepared in accordance with IFRS as adopted  
by the EU;
• for the Parent Company financial statements, state whether 
applicable UK Accounting Standards have been followed, 
subject to any material departures disclosed and explained in 
the financial statements; and
• prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group and the 
Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Parent 
Company’s transactions and disclose with reasonable accuracy 
at any time the financial position of the Parent Company and 
enable them to ensure that its financial statements comply with 
the Companies Act 2006. They have general responsibility for 
taking such steps as are reasonably open to them to safeguard 
the assets of the Group and to prevent and detect fraud and 
other irregularities.
The Directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
Company’s website. Legislation in the UK governing the 
preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions. FINANCIAL STATEMENTS 
40 FOCUSRITE PLC | ANNUAL REPORT 2016
We have audited the financial statements of Focusrite Plc for  
the year ended 31 August 2016 set out on pages 41 to 78.  
The financial reporting framework that has been applied in  
the preparation of the Group financial statements is applicable  
law and IFRS as adopted by the EU. The financial reporting 
framework that has been applied in the preparation of the  
Parent Company financial statements is applicable law and UK 
Accounting Standards (UK Generally Accepted Accounting 
Practice), including FRS 101 Reduced Disclosure Framework. 
This report is made solely to the Company’s members, as a body, 
in accordance with Chapter 3 of Part 16 of the Companies Act 
2006. Our audit work has been undertaken so that we might 
state to the Company’s members those matters we are required 
to state to them in an auditor’s report and for no other purpose. 
To the fullest extent permitted by law, we do not accept or 
assume responsibility to anyone other than the Company and 
the Company’s members, as a body, for our audit work, for this 
report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 39, the Directors are responsible 
for the preparation of the financial statements and for being 
satisfied that they give a true and fair view. Our responsibility  
is to audit, and express an opinion on, the financial statements  
in accordance with applicable law and International Standards  
on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards  
for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements 
is provided on the Financial Reporting Council’s website at  
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state 
of the Group’s and of the Parent Company’s affairs as at 
31 August 2016 and of the Group’s profit for the year  
then ended;
• the Group financial statements have been properly prepared 
in accordance with IFRS as adopted by the EU;
• the Parent Company financial statements have been properly 
prepared in accordance with UK Generally Accepted 
Accounting Practice;
• the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006.
Independent Auditor’s Report to the  
Members of Focusrite Plc
Opinion on other matter prescribed by the Companies 
Act 2006
In our opinion information given in the Strategic Report  
and the Directors’ Report for the financial year for which  
the financial statements are prepared is consistent with  
the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion:
• adequate accounting records have not been kept by the 
Parent Company, or returns adequate for our audit have 
not been received from branches not visited by us; or
• the Parent Company financial statements are not in 
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified 
by law are not made; or
• we have not received all the information and explanations 
we require for our audit.
Peter Meehan (Senior Statutory Auditor)
for and on behalf of KPMG LLP
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
22 November 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 41
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
Note
2016 
£’000
2015
 £’000
Revenue 5 54,301 48,029
Cost of sales (33,439) (29,381)
Gross profit 20,862 18,648
Administrative expenses (13,722) (12,328)
Adjusted EBITDA (non-GAAP measure) 10,249 9,302
Depreciation and amortisation (2,572) (2,278)
Non-underlying items 13 (537) (704)
Operating profit 7,140 6,320
Finance income 9 325 164
Finance costs 10 (339) –
Profit before tax 7,126 6,484
Income tax expense 14 (870) (1,022)
Profit for the period from continuing operations 6,256 5,462
Earnings per share
From continuing operations
Basic (pence per share) 16 11.8 10.4
Diluted (pence per share) 16 10.7 9.3
Consolidated Income Statement
For the year ended 31 August 2016 42 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
Note
2016 
£’000
2015 
£’000
Profit for the period 6,256 5,462
Items that may be reclassified subsequently to the income statement
Exchange differences on translation of foreign operations 45 –
Loss on forward foreign exchange contracts designated and effective as a hedging instrument 33 (1,143) –
Tax on hedging instrument 24 229 –
Total comprehensive income for the period 5,387 5,462
Profit attributable to:
Equity holders of the Company 5,387 5,462
5,387 5,462
Notes 1 to 35 form part of the financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 August 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 43
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
Note
2016 
£’000
2015 
£’000
Assets
Non-current assets
Goodwill 17 419 419
Other intangible assets 18 4,373 3,522
Property, plant and equipment 19 1,575 1,323
Total non-current assets 6 6,367 5,264
Current assets
Inventories 21 11,361 8,633
Trade and other receivables 22 11,224 7,737
Other investments including derivatives 23 – 223
Cash and cash equivalents 30 5,606 6,173
Total current assets 28,191 22,766
Total assets 34,558 28,030
Equity and liabilities
Capital and reserves
Share capital 27 58 58
Merger reserve 28 14,595 14,595
Merger difference reserve 28 (13,147) (13,147)
Translation reserve 28 39 (6)
Hedging reserve 28 (914) –
Treasury reserve 28 (5) (6)
Deferred tax reserve 28 333 –
Retained earnings 29 22,918 16,984
Equity attributable to owners of the Company 23,877 18,478
Total equity 23,877 18,478
Current liabilities
Trade and other payables 26 8,612 8,406
Current tax liabilities 644 403
Derivative financial instruments 33 1,143 –
Total current liabilities 10,399 8,809
Non-current liabilities
Deferred tax 24 282 743
Total liabilities 10,681 9,552
Total equity and liabilities 34,558 28,030
The financial statements were approved by the Board of Directors and authorised for issue on 22 November 2016. They were signed 
on its behalf by:
Dave Froker    Jeremy Wilson
Chief Executive Officer   Chief Financial Officer
The company number of Focusrite plc is 09312676
The notes on pages 46 to 71 form part of the financial statements.
Consolidated Statement of Financial Position
As at 31 August 2016 44 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
Share 
capital
£’000
Merger 
reserve
£’000
Merger 
difference 
reserve
 £’000
Translation 
reserve
 £’000
Deferred tax 
reserve
£’000
Hedging 
reserve
£’000
Treasury 
share
reserve
1
£’000
Share-based 
payment
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 1 September 2014 52 – 1,448 (6) – – – 140 11,574 13,208
Profit for the period – – – – – – – – 5,462 5,462
Other comprehensive income  
for the period – – – – – – – – – –
Total comprehensive income  
for the period – – – – – – – – 5,462 5,462
Transactions with owners of  
the Company:
Issue of ordinary shares 6 – – – – – – – – 6
Ordinary shares issued to the EBT – – – – – – (6) – – (6)
Share for share exchange – 14,595 (14,595) – – – – – – –
Share-based payments – – – – – – – 122 – 122
Dividends paid – – – – – – – – (314) (314)
Balance at 1 September 2015 58 14,595 (13,147) (6) – – (6) 262 16,722 18,478
Profit for the period – – – – – – – – 6,256 6,256
Other comprehensive income  
for the period – – – 45 – (914) – – – (869)
Total comprehensive income  
for the period – – – 45 – (914) – – 6,256 5,387
Transactions with owners of  
the Company:
Share-based payment deferred 
tax deduction in excess of 
remuneration expense – – – – 333 – – – – 333
Share-based payment current 
tax deduction in excess of 
remuneration expense – – – – – – – – 363 363
Shares from EBT exercised – – – – – – 1 – 171 172
Share-based payments – – – – – – – 120 – 120
Dividends paid – – – – – – – – (976) (976)
Balance at 31 August 2016 58 14,595 (13,147) 39 333 (914) (5) 382 22,536 23,877
1 Of the retained earnings totalling £22,536,000, £171,317 relates to the gain on exercise of share options from the EBT and is therefore non-distributable.
The notes on pages 46 to 71 form part of the financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 August 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 45
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
Note
2016 
£’000
2015 
£’000
Net cash from operating activities 30 3,912 6,243
Investing activities
Purchases of property, plant and equipment 19 (773) (782)
Purchases of intangible assets 18 (2,902) (2,778)
Proceeds from disposal of intangible assets – 1
Net cash used in investing activities (3,675) (3,559)
Financing activities
Issue of equity shares 172 –
Equity dividends paid 15 (976) (314)
Net cash used in financing activities (804) (314)
Net (decrease)/increase in cash and cash equivalents (567) 2,370
Cash and cash equivalents at beginning of year 6,173 3,803
Cash and cash equivalents at end of year 30 5,606 6,173
Consolidated Cash Flow Statement
For the year ended 31 August 2016 46 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
1 GENERAL INFORMATION
Focusrite Plc (the ‘Company’), is a company incorporated in the UK. The consolidated financial statements (‘financial statements’)  
as at and for the year ended 31 August 2016 comprised the Company and its subsidiaries (together referred to as the ‘Group’).
The Group is a business engaged in the development, manufacture and marketing of professional audio and electronic music products.
Basis of preparation
Statement of compliance
The financial statements for the year ended 31 August 2016 are presented in pounds Sterling (‘GBP’). This is the functional currency 
of the Group. The financial statements have been prepared in accordance with the IFRS, International Accounting Standards (‘IAS’) 
and interpretations currently endorsed by the International Accounting Standards Board (‘IASB’) and its committees as adopted by  
the EU and as required to be adopted by UK companies.
The Company has elected to prepare its Parent Company accounts in accordance with Financial Reporting Standard 101 Reduced 
Disclosure Framework (‘FRS 101’).
The Group has chosen to take advantage of the exemption available under IFRS 1, ‘First time adoption of IFRS’, for reassessing 
acquisitions completed before 30 March 2006. The goodwill arising on business combinations of the Group prior to March 2006 
remains unchanged up to 31 August 2011 and is subject to an annual impairment review.
These financial statements were authorised for issue by the Company’s Board of Directors on 22 November 2016.
2 ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the Group has applied a number of amendments to IFRS that are mandatorily effective. Their adoption has not had 
any material impact on the disclosures or on the amounts reported in these financial statements.
Standards not affecting the reported results or the financial position
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied 
in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
• Annual improvements to IFRS 2012-2014 cycle 
• IFRS 9 ‘Financial Instruments’
• IFRS 15 ‘Revenue from Contracts with Customers’
• IFRS 16 ‘Leases’
Of these, only IFRS 16 is expected to have a material impact on the future financial statements of the Group since it would require  
the substantial majority of the Group’s operating lease commitments (c£1.0m on an undiscounted basis as shown in note 25 of the 
financial statements) to be brought on to the balance sheet, resulting in the recognition of significant lease assets and liabilities which 
would be depreciated and amortised separately. IFRS 16 would first apply to the Group for the financial year ending August 2020.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently for all periods presented in the financial statements.
Any standards and interpretations that have been issued but are not yet effective, and that are available for early application, have not 
been applied by the Group in these financial statements.
Application of these standards and interpretations is not expected to have a material effect on the financial statements in the future.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating 
policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting 
rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial 
statements of subsidiaries are included in the financial statements from the date that control commences until the date control ceases.
Going concern
The Group’s business activities and position in the market are described in the Strategic Report. The Directors believe that the Group 
is well placed to manage its business risks successfully despite the current uncertainties within the global economy. The Group has 
considerable financial resources, ongoing revenue streams and a broad spread of customers. As a consequence of these factors 
and having reviewed the forecasts for the coming year, the Directors have a reasonable expectation that the Group has adequate 
resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of 
accounting in preparing the annual financial statements. Further detail is contained in the Strategic Report on pages 1 to 25.
Notes to the Financial Statements
For the year ended 31 August 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 47
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
3 SIGNIFICANT ACCOUNTING POLICIES continued
Earnings per share
The Group presents basic and diluted earnings per share (‘EPS’) data for its ordinary shares. Basic EPS is calculated by dividing 
the 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.
As explained in the basis of consolidation accounting policy, the Group’s financial statements reflect the continuation of the 
pre-existing Group headed by Focusrite Audio Engineering Limited (‘FAEL’).
For the period reported, the Group has chosen to present an adjusted EPS (note 16) calculation with profit adjusted for 
non-underlying items to aid comparability and to provide a consistent measure of performance.
Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). 
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the 
acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the net of the amounts of the 
identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the 
consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously  
held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated 
to the Group’s cash-generating units (‘CGUs’) expected to benefit from synergies arising from the combination. CGUs to which 
goodwill has been attributed under IFRS 3 ‘Business Combinations’ are tested for impairment annually, or more frequently when there 
is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the 
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of 
the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not 
reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in determining profit or loss on disposal.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course 
of the Group’s activities. Revenue is shown net of sales taxes and discounts.
The Group recognises revenue when all the following conditions are satisfied:
• The Group has transferred to the buyer the significant risks and rewards of ownership of the goods.
• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control 
over the goods sold.
• The amount of revenue can be measured reliably.
• It is probable that the economic benefits associated with the transaction will flow to the entity.
• The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue recognised in the income statement but not yet invoiced is held on the balance sheet within ‘Trade and other receivables’. 
Revenue invoiced but not yet recognised in the income statement is held on the balance sheet within ‘Deferred revenue’.
Revenue is classified as follows:
Sale of goods
Revenue from the supply of goods is recognised as soon as all substantial risks and rewards relating to the title of the goods have 
been transferred to the customer.
Sale of apps
Revenue from the download of apps is recognised upon confirmation from the app store provider.
Interest income
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be 
measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest 
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset 
to that asset’s net carrying amount on initial recognition. 48 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
3 SIGNIFICANT ACCOUNTING POLICIES continued
Non-underlying items
Non-underlying items are those items that are unusual because of their size, nature or incidence. The Directors consider that these items 
should be separately identified within their relevant income statement category to enable a full understanding of the Group’s result.
Leasing
The Group’s leases are currently all operating leases (leases in which a significant portion of the risks and rewards of ownership are 
retained by the lessor). Rentals payable under operating leases are charged to the income statement on a straight-line basis over the 
term of the relevant lease (net of any incentive received from the lessor).
Foreign currencies
The individual financial statements of each subsidiary are presented in the currency of the primary economic environment in which 
it operates (its functional currency). Sterling is the predominant functional currency of the Group and presentation currency for the 
consolidated financial information.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency 
(foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, 
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-
monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the 
fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• Exchange differences on transactions entered into to hedge certain foreign currency risks (see below under financial instruments/
hedge accounting).
• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned 
nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other 
comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.
For the purpose of presenting consolidated financial information, the assets and liabilities of the Group’s foreign operations are 
translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange 
rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of 
the transactions are used. Exchange differences arising, if any, are recognised in the income statement.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-
managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group’s obligations 
under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Equity-settled share-based payments
The Group issues equity-settled payments to certain employees (including Directors). Where employees are rewarded using share-
based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument 
granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions 
(for example, profitability and sales growth targets).
Share options are valued at the date of grant using the Black-Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model for options with market vesting conditions attached, and are charged to operating profit 
over the vesting period of the award with a corresponding credit to the ‘other reserves’.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best 
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication 
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is 
recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately 
exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and, where 
appropriate, share premium account.
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 49
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
3 SIGNIFICANT ACCOUNTING POLICIES continued
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes 
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted 
or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities 
in the consolidated financial information and the corresponding tax bases used in the computation of taxable profit, and is accounted 
for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences 
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible 
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial 
recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a 
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are only recognised for taxable temporary differences arising on investments in subsidiaries, where the Group 
is unable to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the 
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer 
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised 
based on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the income 
statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also 
dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax 
assets and liabilities on a net basis.
Tangible and intangible assets
Property, plant and equipment
The Group has held no land and buildings for the period covered by the consolidated financial information.
Other items of property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is recognised so as to write off the cost or valuation of assets less residual value over their useful lives, using the 
straight-line method, on the following bases:
Plant, equipment and tooling 3 to 5 years
Computer equipment  2 years
Fixtures and fittings  5 years
Leasehold improvements  5 to 8 years
Customer demonstration units  2 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying 
amount of the asset and is recognised in income on the transfer of the risks and rewards of ownership.
The Group has no class of tangible fixed asset that has been revalued. On transition to IFRS the net book values recorded at 
1 September 2012 have been applied and these are based on historic cost or fair value recognised at the date of acquisition. 50 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
3 SIGNIFICANT ACCOUNTING POLICIES continued
Intangible assets
Intangible assets are amortised over the following periods on a straight-line basis:
Development expenditure  3 years
Purchased intellectual property 2 years
Licences    2 to 5 years
Computer software  2 years
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the Group’s development of new and enhanced products is recognised only if all 
of the following conditions are met:
• An asset is created that can be identified (such as product designs and new processes).
• It is probable that the asset created will generate future economic benefits.
• The costs of developing this asset can be measured reliably.
Where no internally-generated intangible asset can be recognised, the expenditure is recognised as an expense in the period in which 
it is incurred.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there 
is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset 
is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are 
independent from other assets, the Group estimates the recoverable amount of the CGU to which the asset belongs. An intangible 
asset with an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may  
be impaired. Capitalised development costs are calculated by reference to the Group’s product development department and will 
therefore be tested for impairment at CGU level.
Recoverable amount is the higher of: (i) fair value less costs to sell and (ii) value in use. In assessing value in use, the estimated future 
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time 
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or 
CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is 
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the extent that the revaluation 
balance is greater than the impairment loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its 
recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have 
been determined had no impairment loss been recognised in prior years for the asset (or CGU). A reversal of an impairment loss is 
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the 
impairment loss is treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct 
labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is 
calculated using either the First-In-First-Out method. Net realisable value represents the estimated selling price less all estimated 
costs of completion and costs to be incurred in marketing, selling and distribution.
Trade and other receivables
Trade debtors, which generally have 30–90 day terms, are recognised and carried at the lower of their original invoiced value and 
recoverable amount. Provision for impairment is made through profit or loss when there is objective evidence that the Company will 
not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the 
contractual provisions of the instrument.
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 51
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
3 SIGNIFICANT ACCOUNTING POLICIES continued
Financial assets
All financial assets are normally recognised and derecognised on a trade date basis where the purchase or sale of a financial asset 
is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and  
are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit  
or loss (‘FVTPL’), which are initially measured at fair value. On derecognition, however, where a specific transaction is entered into  
with a counterparty that is judged to carry a high credit or liquidity risk, then management may determine that derecognition of the 
financial asset shall be based on settlement date rather than trade date, with any realised gain or loss taken to profit and loss on  
date of settlement.
Financial assets are classified into the following specified categories: financial assets at FVTPL, ‘held-to-maturity’ investments, 
‘available-for-sale’ (‘AFS’) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the 
financial assets and is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over 
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and 
points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through 
the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
Classes of financial asset
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or is designated as at FVTPL.
A financial asset is classified as held for trading if:
• it has been acquired principally for the purpose of selling in the near term; or
• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent 
actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance 
is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and 
information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 ‘Financial Instruments: Recognition and 
Measurement’ permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. 
The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included 
in the ‘other gains and losses’ line in the income statement. Fair value is determined in the manner described in note 33.
Held-to-maturity investments
The Group holds no financial assets classified as held-to-maturity investments.
AFS financial assets
The Group holds no financial assets classified as AFS. 
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are 
classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less 
any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the 
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets 
are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the 
financial asset, the estimated future cash flows of the investment have been affected.
For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below 
its cost is considered to be objective evidence of impairment. 52 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
3 SIGNIFICANT ACCOUNTING POLICIES continued
For all other financial assets, including finance lease receivables, objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial reorganisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in 
addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include 
the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average 
credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade 
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered 
uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited 
against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent 
actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance 
is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and 
information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and IAS 39 ‘Financial Instruments: Recognition and 
Measurement’ permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. 
The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other 
gains and losses’ line in the income statement. Fair value is determined in the manner described in note 33.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense 
recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense 
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the 
expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
Derivative financial instruments
The Group is able to enter into a variety of derivative financial instruments to manage its exposure to interest rate and foreign 
exchange rate risk, including foreign exchange forward contracts, interest rate swaps and cross-currency swaps. Further details 
of derivative financial instruments are disclosed in note 33.
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 53
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
3 SIGNIFICANT ACCOUNTING POLICIES continued
Hedge accounting
Up to 31 August 2015 the Group had not adopted hedge accounting for the foreign currency forward contracts purchased to hedge 
against short-term movements in cash flows of the underlying hedged item. For the year ended 31 August 2016 and subsequent 
years, the Group has adopted hedge accounting for qualifying transactions. Derivatives are initially recognised at fair value at the date 
a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain 
or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which 
event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The Group designates certain 
derivatives as either hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedges), hedges of 
highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges), or hedges of net 
investments in foreign operations.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a 
highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly 
in the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the income statement.
For cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the income statement in the 
same period or periods during which the hedged forecast transaction affects profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but 
the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised 
in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the 
cumulative unrealised gain or loss recognised in equity is recognised in the income statement immediately.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as 
a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument 
is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current 
assets or current liabilities.
4 CRITICAL JUDGEMENTS AND ESTIMATIONS IN APPLYING THE GROUP’S ACCOUNTING POLICIES
The following are the critical judgements and estimations that the Directors have made in the process of applying the Group’s 
accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial information.
Revenue recognition
In making its judgement, management considered the detailed criteria for the recognition of revenue set out in IAS 18. Management 
is satisfied that the significant risks and rewards of ownership are transferred and that the recognition of revenue upon despatch 
is appropriate.
Inventory valuation
The Group has an inventory provisioning policy that reflects the fact that there are strong physical controls carried out by the 
independent service provider which manages the Group’s inventory resulting in low inventory loss or damage. Also, the levels  
of inventory are managed with the aim that inventory is sold before it becomes obsolete.
Share option scheme
The Group has established a share option scheme known as the EMI Scheme. The fair value of the options issued under the EMI 
Scheme is derived by the Company using the Black-Scholes model and the resultant values are allocated to the income statement 
over the period of vesting. In arriving at the fair value using this model, the Company calculates a number of inputs to the model, 
including estimated share price volatility.
Further details regarding the EMI Scheme are set out in note 31.
Recoverability of internally-generated intangible asset
Management reconsidered the recoverability of its internally-generated intangible asset for development costs which is included in  
the balance sheet at 31 August 2016 at £4,172,000 (2015: £3,419,000). These projects continue to progress in a very satisfactory 
manner, and customer reaction has reconfirmed management’s previous estimates of anticipated revenues from the project. 
Management is confident that the carrying amount of the asset will be recovered in full. This situation will be closely monitored, and 
adjustments made in future periods if future market activity indicates that such adjustments are appropriate.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the CGUs to which goodwill has been allocated. 
The value in use calculation requires an entity to estimate the future cash flows expected to arise from the CGU and a suitable 
discount rate in order to calculate present value. The carrying amount of goodwill at 31 August 2016 was £419,000 (2015: 
£419,000). Further details are given in note 17. 54 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
4 CRITICAL JUDGEMENTS AND ESTIMATIONS IN APPLYING THE GROUP’S ACCOUNTING POLICIES continued
Allowance for doubtful debts
Management undertakes a review of all new customers and a periodic review of existing customers to determine whether specific 
risks of default exist. A substantial proportion of the Group’s trade receivables ledger is covered by credit insurance. Beyond 
identification of specific risks, management undertakes periodic reviews into the calculation of allowances for doubtful debts to 
ensure historic trends continue to provide a basis for determining a reliable estimate for them.
5 REVENUE
An analysis of the Group’s revenue is as follows:
Year ended 31 August
2016 
£’000
2015 
£’000
Continuing operations
USA 21,382 18,498
Europe, Middle East and Africa 22,582 21,460
Rest of World 10,337 8,071
Consolidated revenue 54,301 48,029
6 BUSINESS SEGMENTS
Information reported to the Group’s Chief Executive (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 Focusrite 
sells. The Group’s reportable segments under IFRS 8 are therefore as follows:
Focusrite – Sales of Focusrite branded products
Novation – Sales of Novation branded products
Distribution –  Distribution of third-party brands including KRK speakers, Ableton, Stanton, Cerwin-Vega, Cakewalk and sE Electronics
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable segment:
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3. 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 Group’s Chief Executive 
for the purpose of resource allocation and assessment of segment performance.
Central administration costs comprise principally the employment-related costs and other overheads incurred by Focusrite and its 
USA subsidiary, net of inter-Company commission income. Also included within central administration costs is the charge relating  
to the share option scheme (note 32) of £120,000 for the year ended 31 August 2016 (2015: £122,000).
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 55
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
6 BUSINESS SEGMENTS continued
Segment net assets and other segment information
Management does not make use of segmental data relating to net assets and other balance sheet information for the purposes  
of monitoring segment performance and allocating resources between segments. Accordingly, other than the analysis of the  
Group’s non-current assets by geographical location shown below, this information is not available for disclosure in the consolidated 
financial information.
Year ended 31 August
2016 
£’000
2015 
£’000
Revenue from external customers
Focusrite 37,563 31,187
Novation 13,683 14,169
Distribution 3,055 2,673
Total 54,301 48,029
Segment profit
Focusrite 17,159 14,221
Novation 6,743 6,842
Distribution 917 846
24,819 21,909
Central distribution costs and administrative expenses before non-underlying items (17,142) (14,885)
Adjusted operating profit before non-underlying items 7,677 7,024
Non-underlying items (537) (704)
Operating profit 7,140 6,320
Finance income 325 164
Finance costs (339) –
Profit before tax 7,126 6,484
Tax (870) (1,022)
Profit after tax 6,256 5,462
The Group’s non-current assets, analysed by geographical location were as follows:
2016 
£’000
2015 
£’000
Non-current assets
USA 60 29
Europe, Middle East and Africa 5,602 4,683
Rest of World 705 552
Total non-current assets 6,367 5,264
Information about major customers
Included in revenues shown for 2016 is £21.4 million (2015: £18.5 million) attributed to the Group’s largest customer. Amounts owed 
at end of year is £5.2 million (2015: £2.7 million). 56 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
7 PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging (crediting):
Year ended 31 August
Note
2016 
£’000
2015 
£’000
Net foreign exchange (gains)/losses 9,10 (96) (53)
Research and development costs 779 743
Non-underlying costs 13 537 704
Depreciation and impairment of property, plant and equipment 19 521 374
Profit on disposal of property, plant and equipment – (1)
Amortisation of intangibles 18 2,051 1,902
Operating lease rental expense 25 183 156
Cost of inventories recognised as an expense 27,955 25,606
Staff costs 11 7,505 6,059
Impairment loss recognised on trade receivables 22 4 12
Change in fair value of financial instruments 33 223 (105)
Share-based payments charge to profit and loss 31 120 122
8 AUDITOR’S REMUNERATION
Year ended 31 August
2016 
£’000
2015 
£’000
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 25 20
Fees payable to the Company’s auditor and its associates for other services:
Audit of the accounts of subsidiaries pursuant to legislation 38 29
Audit-related assurance services 2 9
Tax compliance services 4 11
Other assurance services 30 313
99 382
In 2015 the other assurance services comprised mainly of services supporting the Initial Public Offering process.
9 FINANCE INCOME
Year ended 31 August
2016 
£’000
2015 
£’000
Bank deposit interest 6 6
Exchange gain 319 53
Change in fair value of financial instrument – 105
Finance income 325 164
10 FINANCE COSTS
Year ended 31 August
2016 
£’000
2015 
£’000
Bank charges 116 –
Change in fair value of financial instrument 223 –
Finance costs 339 –
Other financial expenses include bank charges arising on transactions executed and completed in the corresponding period.
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 57
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
11 STAFF COSTS
Year ended 31 August
2016 
£’000
2015 
£’000
Wages and salaries 6,586 5,250
Social security costs 646 587
Other pension costs 273 222
7,505 6,059
The average number of persons, including Executive Directors, employed by the Group during the year was as follows:
2016 
Number
2015 
Number
Research and development 57 50
Sales and marketing 45 43
Operations 39 39
Administration and central 24 23
165 155
12 DIRECTORS’ REMUNERATION
A detailed analysis of Directors’ remuneration, including salaries, bonuses and long-term incentives, and the highest paid Director, is 
provided in the remuneration table in the Directors’ Remuneration Report, which forms part of these financial statements (page 38).
13 NON-UNDERLYING ITEMS
During the year ended 31 August 2016, the Group incurred one-off litigation costs relating to intellectual property and distribution 
contracts, totalling £0.5 million, which were charged to the income statement. This is stated net of a receipt of £0.25m on a legacy 
dispute, which had previously been written off. In December 2014, the Group floated on the AIM. Non-recurring IPO related costs 
totalled £0.7 million, which were charged to the income statement for the year ended 31 August 2015.
14 TAX
Year ended 31 August
2016 
£’000
2015 
£’000
Corporation tax charges:
Overprovision in prior year (231) (69)
Current year 1,000 878
769 809
Deferred taxation
Current year 101 213
870 1,022
Corporation tax is calculated at 20.00% (2015: 20.58%) of the estimated taxable profit for the year. Taxation for the USA subsidiary 
is calculated at the rates prevailing in the respective jurisdiction. 58 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
14 TAX continued
The tax charge for each year can be reconciled to the profit per the income statement as follows:
Year ended 31 August
2016 
£’000
2015 
£’000
Current taxation
Profit before tax on continuing operations 7,126 6,484
Tax at the UK corporation tax rate of 20.00% (2015: 20.58%) 1,425 1,334
Effects of:
Expenses not deductible for tax purposes 480 564
Income not taxable for tax purposes (1) –
Research and development tax credit (706) (816)
Overseas tax (8) 36
Prior period adjustment – current tax (231) (69)
Prior period adjustment – deferred tax (12) –
Effect of change in standard rate of corporation tax - (27)
Share options expense deductible – current tax (25) –
Share options expense deductible – deferred tax (52) –
Current tax charge for period 870 1,022
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) 
were substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 
2020) were substantively enacted on 26 October 2015. The deferred tax liability at 31 August 2016 has been calculated based on 
these rates.
An additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the 
company’s future current tax charge accordingly and reduce the deferred tax liability.
15 DIVIDENDS
The following equity dividends have been declared and paid.
Year to 
31 August 
2016
Year to 
31 August 
2015
Dividend per qualifying ordinary share 1.95p 1.8p
During the year, the Company paid an interim dividend in respect of the year ended 31 August 2016 of 0.65 pence per share.
On 22 November 2016, the Directors recommended a final dividend of 1.3 pence per share (2015: 1.2 pence per share), making 
a total of 1.95 pence per share for the year (2015: 1.8 pence per share).
16 EARNINGS PER SHARE
Reported EPS
The calculation of the basic and diluted EPS is based on the following data:
Year ended 31 August
Earnings
2016 
£’000
2015 
£’000
Earnings for the purposes of basic and diluted EPS being net profit for the period 6,256 5,462
Year ended 31 August
Number of shares
2016 
Number 
‘000
2015 
Number 
‘000
Weighted average number of ordinary shares for the purposes of basic EPS calculation 53,207 52,399
Effect of dilutive potential ordinary shares:
EMI Scheme and unapproved share option plan 5,297 6,416
Weighted average number of ordinary shares for the purposes of diluted EPS calculation 58,504 58,815
EPS Pence Pence
Basic EPS 11.8 10.4
Diluted EPS 10.7 9.3
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 59
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
16 EARNINGS PER SHARE continued
At 31 August 2016, the total number of ordinary shares issued and fully paid was 58,075,000. This included 4,494,504 (2015: 
5,676,000) 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 total number of shares in issue (58,075,000) less the number of shares held by the EBT (4,494,504). 
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.
Adjusted EPS
Year ended 31 August
Earnings
2016 
£’000
2015 
£’000
Profit for the financial period 6,256 5,462
Non-underlying items 537 704
Tax on non-underlying items (107) –
Total underlying profit for adjusted EPS calculation 6,686 6,166
Year ended 31 August
Number of shares
2016 
Number 
‘000
2015 
Number 
‘000
Weighted average number of ordinary shares for the purposes of basic EPS calculation 53,207 52,399
Effect of dilutive potential ordinary shares:
EMI Scheme and unapproved share option plan 5,297 6,416
Weighted average number of ordinary shares for the purposes of diluted EPS calculation 58,504 58,815
EPS Pence Pence
Adjusted basic EPS 12.6 11.8
Adjusted diluted EPS 11.4 10.5
17 GOODWILL
Total 
£’000
Cost
At 1 September 2014 419
At 31 August 2015 419
At 31 August 2016 419
Carrying amount
At 31 August 2014 419
At 31 August 2015 419
At 31 August 2016 419
No impairment losses have been required on goodwill amounts recognised in the Group to date. 60 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
17 GOODWILL continued
Goodwill arose as a result of a transfer on 31 August 2006 of the assets and liabilities of Novation Digital Music Systems Limited for 
a consideration of £711,000. Accordingly, the whole of the value of goodwill is attributable to the Novation operating segment and 
cash CGU.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The 
recoverable amount of the CGU is determined using ‘value in use’ calculations. The key assumptions for the value in use calculations 
are those regarding the discount rates, growth rates and expected changes to earnings before interest, tax, depreciation and 
amortisation (EBITDA is used as a proxy of free cash flows) as well as the level of capital expenditure required to maintain the existing 
business into the future. These assumptions are reviewed and revised annually in light of current economic conditions and the future 
outlook for each CGU. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time 
value of money and the risks specific to each CGU. This has been set at 10%.
The growth rates used are based on management’s assessment of the cash flow forecasts over the medium term. The growth for the 
next five years is based on the lower of 2% and either the rate forecast for year five or the average annual growth rate derived over 
the initial five-year term and does not exceed the average long-term growth rate for the relevant economies in which these CGUs 
operate. These are based on conservative estimates of the Group’s ability to participate in growth expected in the industry and a 
modest dilution in market share as more competitors enter the market over the next ten years. Changes in selling prices and direct 
costs are based on past practices and expectations of future changes in the market.
The value of goodwill recognised in the accounts has been compared to the derived value in use. Throughout the three-year period 
the goodwill carrying value has been below its value in use. The Group has conducted a sensitivity analysis on the impairment test 
results for each CGU and concluded no material sensitivity exists in these calculations.
18 OTHER INTANGIBLE ASSETS
Intellectual 
property 
£’000
Development 
costs 
£’000
Licences 
£’000
Computer 
software 
£’000
Total 
£’000
Cost
At 1 September 2014 182 7,237 – – 7,419
Additions 72 2,667 29 10 2,778
Transfers between classes (182) – 182 – –
Transfer from property, plant and equipment – – – 97 97
At 31 August 2015 72 9,904 211 107 10,294
Additions 133 2,716 – 53 2,902 
At 31 August 2016 205 12,620 211 160 13,196 
Depreciation
At 1 September 2014 134 4,669 – – 4,803
Charge for the year 30 1,816 31 25 1,902
Transfers between classes (134) – 134 – –
Transfer from property, plant and equipment – – – 67 67
At 31 August 2015 30 6,485 165 92 6,772
Charge for the year 42 1,963 32 14 2,051 
At 31 August 2016 72 8,448 197 106 8,823 
Carrying amount
At 31 August 2016 133 4,172 14 54 4,373 
At 31 August 2015 42 3,419 46 15 3,522
At 31 August 2014 48 2,568 – – 2,616
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 61
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
19 PROPERTY, PLANT AND EQUIPMENT
Plant, tooling 
equipment 
and machinery 
£’000
Fixtures, 
fittings and 
leasehold 
improvements 
£’000
Computer 
equipment 
£’000
Customer 
demonstration 
units 
£’000
Total 
£’000
Cost
At 1 September 2014 2,269 898 760 – 3,927
Additions 540 133 109 – 782
Exchange differences – – (97) – (97)
Disposals (2) – (8) – (10)
At 31 August 2015 2,807 1,031 764 – 4,602
Additions 402 18 177 176 773
At 31 August 2016 3,209 1,049 941 176 5,375
Accumulated depreciation and impairment
At 31 August 2015 1,911 418 659 – 2,988
Charge for the year 215 90 69 – 374
Exchange differences – (2) (4) – (6)
Transfer to other intangible assets – – (67) – (67)
Eliminated on disposals (2) – (8) – (10)
At 31 August 2015 2,124 506 649 – 3,279
Charge for the year 275 92 118 36 521
At 31 August 2016 2,399 598 767 36 3,800
Carrying amount
At 31 August 2016 810 451 174 140 1,575
At 31 August 2015 683 525 115 – 1,323
At 31 August 2014 358 480 101 – 939
20 SUBSIDIARIES
The Group’s principal subsidiary undertakings for the period are listed below, including the name, country of incorporation, and 
proportion of ownership interest:
Name Country of registration or incorporation Principal activity
Class of 
shares
2016 
%
2015 
%
Focusrite Audio Engineering Limited England and Wales Manufacture and distribution Ordinary 100 100
Focusrite Novation Inc
1
United States of America Marketing services Ordinary 100 100
Focusrite Novation Asia Limited
1
Hong Kong Marketing services Ordinary 100 n/a
1 Owned indirectly through FAEL.
21 INVENTORIES
2016 
£’000
2015 
£’000
Raw materials 94 65
Finished goods 11,267 8,568
11,361 8,633
The stock value includes a provision of £844,000 (2015: £344,000). No inventories have been pledged as security against 
borrowings (2015: £nil). Stock days recorded against cost of goods sold amounted to 148 days in 2016 (2015: 123 days).
22 TRADE AND OTHER RECEIVABLES
2016 
£’000
2015 
£’000
Amount receivable for the sale of goods 9,643 6,499
Allowance for doubtful debts (40) (36)
9,603 6,463
Other debtors 1,407 1,109
Prepayments 214 165
 11,224 7,737 62 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
22 TRADE AND OTHER RECEIVABLES continued
Trade receivables
Trade receivables disclosed above are classified as loans and receivables and are measured at amortised cost.
The average credit period offered on sales of goods during 2016 was 57 days (2015: 45 days). The days’ sales outstanding (‘DSO’)  
at 31 August 2016 was 63 days (2015: 48 days). 
The Group has not charged interest for late payment of invoices in 2015 or 2016.
Allowances against doubtful debts are recognised against overdue trade receivables based on estimated irrecoverable amounts 
determined by reference to past default experience. Specific counterparty risk is also considered where an analysis of the 
counterparty’s current financial position indicates a change in credit risk.
Before accepting any significant new customer, the Group uses a variety of credit scoring systems to assess the potential customer’s 
credit quality and to define credit limits for each customer. Limits and scoring attributed to customers are reviewed regularly. A single 
major distributor accounted for 53% of the total balance of trade receivables net of allowances for doubtful debts on 31 August 2016 
(2015: 45%). No other single customer accounted for more than 10% of the total balance of trade receivables net of allowances for 
doubtful debts during the period under review.
Trade receivables disclosed above include amounts (see below for aged analysis) which are past due at the year end but against 
which the Group has not recognised an allowance for doubtful receivables. There has not been a significant change in credit quality 
and the amounts are still considered recoverable.
Ageing of not impaired receivables:
2016 
£’000
2015 
£’000
Not overdue 8,835 5,225
Overdue between 0–30 days 460 1,098
Overdue between 31–60 days 262 140
Overdue between 61–90 days 27 –
Overdue between 91–120 days 19 –
Overdue more than 120 days – –
 9,603 6,463
Movement in the allowance for doubtful debts:
2016 
£’000
2015 
£’000
Balance at the beginning of the period 36 24
Movement in provision and impairment losses recognised 4 12
Balance at the end of the period 40 36
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from 
the date credit was initially granted up to the relevant year end. Aside from the major customer mentioned above, the concentration of 
credit risk is limited due to the customer base being large and diverse in terms of industry sector. The Group’s exposure to credit risk 
for trade receivables is substantially covered by credit insurance, including amounts in relation to its largest customer. In addition, the 
Group maintains a close operational relationship with the key management of its major customer, so as to monitor any changes in the 
level of credit risk associated with that business.
Ageing of impaired trade receivables:
2016 
£’000
2015 
£’000
Overdue up to 30 days – –
Overdue between 31–60 days – –
Overdue between 61–90 days – –
Overdue between 91–120 days – –
Overdue more than 120 days 40 36
40 36
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 63
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
22 TRADE AND OTHER RECEIVABLES continued
Trade receivables net of allowance for doubtful debts:
2016 
£’000
2015 
£’000
Gross value of not impaired receivables 9,603 6,463
Gross value of impaired receivables 40 36
Allowance for doubtful debts (40) (36)
9,603 6,463
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
23 OTHER INVESTMENTS INCLUDING DERIVATIVES
During 2016 and 2015 the Group entered into a number of foreign currency forward contracts to provide economic hedging for known 
cash flow transactions. The fair values of the contracts outstanding at the year end are summarised below. In each case the forward 
contracts were settled during the year with any realised gain or loss recognised in profit and loss.
2016 
£’000
2015 
£’000
Fair value of outstanding forward contracts:
Euros to US Dollars – 76
Euros to pounds Sterling – 147
– 223
24 DEFERRED TAX
The following are the major deferred tax liabilities and assets recognised by the Group:
Accelerated 
tax 
depreciation 
£’000
Share-based 
payments 
£’000
Hedging 
instrument
£’000
Total 
£’000
Cost
At 1 September 2014 530 – – 530 
Credit to profit or loss 213 – – 213 
At 31 August 2015 743 – – 743 
Debit/(credit) to profit or loss 153 (52) – 101 
Credit to equity – (333) (229) (562)
At 31 August 2016 896 (385) (229) 282 
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of 
the deferred tax balances (after offset) for financial reporting purposes:
2016
 £’000
2015 
£’000
Deferred tax liabilities 896 743
Deferred tax assets (614) –
 282 743
25 OPERATING LEASE ARRANGEMENTS
Minimum lease payments
2016 
£’000
2015 
£’000
Minimum lease payments under operating leases recognised as an expense during the year 183 156
At the balance sheet date the Group had outstanding commitments for future minimum lease payments under non-cancellable 
operating leases, which fall due as follows:
Present value of  
minimum lease payments
2016 
£’000
2015 
£’000
Within one year 164 167
In the second to fifth years inclusive 650 654
After five years 216 383
1,030 1,204
Operating lease payments typically represent rentals payable by the Group for its office properties and office equipment. Rent reviews 
and break clauses apply to leased property agreements. 64 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
26 TRADE AND OTHER PAYABLES
2016 
£’000
2015 
£’000
Trade payables 6,265 5,197
Accrued expenses 2,104 2,976
Other taxation and social security payable 243 233
8,612 8,406
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit 
period taken for trade purchases was 68 days (2015: 66 days). No interest costs have been incurred in relation to trade payables. The 
Group policy is to ensure that payables are paid within the pre-agreed credit terms and to avoid incurring penalties and/or interest on 
late payments. Other creditors include sales taxes, property taxes, social security and employment taxes due to local tax authorities.
The Directors consider that the carrying amount of trade payables approximates their fair value.
27 SHARE CAPITAL
2016 
Number
2015 
Number
Issued and fully paid:
Ordinary shares of £1 each – –
Ordinary shares of £0.001 each 58,075,000 58,075,000
2016 
£
2015 
£
Issued and fully paid:
Ordinary shares of £0.001 each 58,075 58,075
58,075 58,075
The Company has one class of ordinary shares which carry no right to fixed income. On 17 September 2014, FAEL undertook a share 
subdivision of 1,000 £0.001 ordinary shares for each of its £1 ordinary shares. On 4 December 2014, the Company issued 58,074,998 
ordinary shares of £0.001 each at par in consideration for 58,075,000 ordinary shares in FAEL.
28 OTHER RESERVES
Merger reserve
2016 
£’000
2015 
£’000
Balance at 1 September 14,595 –
Share for share exchange – 14,595
Balance at 31 August 14,595 14,595
Merger difference reserve
2016 
£’000
2015 
£’000
Balance at 1 September (13,147) 1,448
Share for share exchange – (14,595)
Balance at 31 August (13,147) (13,147)
Treasury share reserve
2016 
£’000
2015 
£’000
Balance at 1 September (6) –
Shares exercised from EBT 1 (6)
Balance at 31 August (5) (6)
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 65
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
28 OTHER RESERVES continued
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s USA and Hong Kong subsidiaries from its functional 
currency into the Parent’s functional currency are recognised directly in the translation reserve.
2016 
£’000
2015 
£’000
Balance at 1 September (6) (6)
Exchange differences on translating the net assets of foreign operations 45 –
Balance at 31 August 39 (6)
Hedging reserve
2016 
£’000
2015 
£’000
Balance at 1 September – –
Loss on forward foreign exchange contracts designated and effective as a hedging instrument (1,143) –
Tax on hedging instrument 229 –
Balance at 31 August 914 –
Deferred tax reserve
Deferred tax recognised in the deferred tax reserve represents the estimated future tax deduction which exceeds the amount of the 
related cumulative remuneration expense. The tax deduction, in this case, is deemed to relate to an equity item and therefore should 
be recognised directly in equity.
2016 
£’000
2015 
£’000
Balance at 1 September – –
Deferred tax recognised directly in equity 333 –
Balance at 31 August 333 –
29 RETAINED EARNINGS
£’000
Balance at 1 September 2014 11,714
Net profit for the year 5,462
Share-based payments 122
Dividends (314)
Balance at 31 August 2015 16,984 
Net profit for the year 6,256 
Share-based payment current tax deduction in excess of remuneration expense 363
Shares exercised from EBT 171
Share-based payments 120
Dividends (976)
Balance at 31 August 2016 22,918  66 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
30 NOTES TO THE CASH FLOW STATEMENT
Note
2016 
£’000
2015
£’000 
Profit for the financial year 6,256 5,462
Adjustments for: 
Income tax expense 14 870 1,022
Net interest 9,10 14 (164)
(Profit) on disposal of property, plant and equipment – (1)
Amortisation of intangibles 18 2,051 1,902
Depreciation of property, plant and equipment 19 521 368
Share-based payments charge 31 120 122
Operating cash flows before movements in working capital 9,832 8,711
Increase in trade and other receivables (3,487) (1,370)
Increase decrease in inventories (2,728) (2,037)
Increase in trade and other payables 206 1,718
Operating cash flows before interest and tax paid 3,823 7,022
Net interest (paid)/received (111) 6
Income taxes paid (165) (838)
Cash generated by operations 3,547 6,190
Net foreign exchange movements 365 53
Net cash from operating activities 3,912 6,243
Cash and cash equivalents
2016 
£’000
2015
£’000 
Cash and bank balances 5,606 6,173
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of 
outstanding bank overdrafts. The carrying amount of these assets is approximately equal to their fair value.
31 SHARE-BASED PAYMENTS
Equity-settled share option schemes
The Group operates three option schemes: the 2012 EMI Scheme, the 2014 EMI Scheme and an unapproved option scheme (‘Share 
Option Schemes’). Prior to Focusrite Plc’s incorporation, its major trading subsidiary, FAEL operated the Share Option Schemes and 
granted options over its share capital (‘Old Options’). The movements in the numbers of the Old Options are set out below.
2014 
Number of 
options
2014 
Weighted 
average 
exercise 
price 
£
Outstanding at start of period 8,143 58
Cancelled during the period (8,143) 58
Outstanding at end of period – –
Exercisable at end of period – –
Following the admission of Focusrite Plc to AIM, the Old Options were rolled over into options over shares in Focusrite Plc and 
Focusrite Plc has taken over the operation of the Share Option Schemes. Following admission to AIM the total number of ordinary 
shares under option in Focusrite Plc was 7,382,097 of which 5,085,097 were to be satisfied by non-dilutive ordinary shares that had 
been issued to the EBT.
1,181,498 options over Focusrite Plc’s shares were exercised during the year ended 31 August 2016 (2015: nil). As at 31 August 2016, 
the total number of ordinary shares under option in Focusrite Plc was 6,385,149 (2015: 7,155,331) of which 4,494,504 (2015: 5,085,097) 
were to be satisfied by non-dilutive ordinary shares that are held in the EBT. 
The remaining number of options will be held by the Directors and would, if exercised, result in the issue of 1,890,645 (2015: 2,297,000) 
ordinary shares. The options to be held by the Directors are subject to performance-related vesting conditions. 
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 67
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
31 SHARE-BASED PAYMENTS continued
The weighted average share price at the date of exercise for share options exercised during the year ended 31 August 2016 was 
£186.80. For the share options outstanding at the end of the year, the weighted average remaining contractual life was 3.2 years 
(2015: 3.2 years).
2016 2015
Number of 
options
Weighted 
average 
exercise 
price 
£
Number of 
options
Weighted 
average 
exercise 
price 
£
Outstanding at start of period 7,155,331 0.13 – –
Granted during the period:
2014 EMI Scheme: D Froker – – 1,004,000 0.10
Unapproved Option Agreement: D Froker – – 893,000 0.10
2014 EMI Scheme: J Wilson – – 400,000 0.15
2014 EMI Scheme: Other employees – – 5,085,097 0.15
2015 EMI Scheme: Other employees 574,209 1.71 – –
2015 Performance Share Plan – – 138,876 0.00
2016 Performance Share Plan 139,935 0.00 – –
Exercised during the year
2014 EMI Scheme: Other employees (1,181,496) 0.15 – –
Cancelled during the period: 2014 EMI Scheme other employees (302,830) 0.15 (365,642) 0.15
Outstanding at end of year 6,385,149 0.27 7,155,331 0.13
Exercisable at end of year 619,000 0.10 619,000 0.10
2016
 £’000
2015 
£’000
Expense arising from share-based payment transactions 120 122
The estimated fair value of the share options was calculated by applying a Black-Scholes model. The model inputs were:
Grant date 
1 Dec 2015
Grant date 
18 Sept 2014
Grant date 
1 Sept 2014
Share price at date of grant £1.76 £0.15 £1.74-£2.00
Exercise price £0.15 £0.15 £0.001
Expected volatility 37.2%-40.6% 51.80% 51.80%
Dividend yield 1.50% 1.50% 1.50%
Contractual life of option 3-5 years 3.2 years 3.2 years
Risk free interest rate 1.46%–1.59% 0.56%–1.93% 1.93%
32 RETIREMENT BENEFIT SCHEME
The Group operates a stakeholder retirement benefit scheme which is open to all employees.
Other than amounts that are deducted from employees’ remuneration and accrued pending payment to the pension fund, no further 
obligations fall on the Group as the assets of these arrangements are held and managed by third parties entirely separate from 
the Group.
The pension charge for the period represents contributions payable to the fund and amounted to £273,000 for the year ended 
31 August 2016 (2015: £222,000). Contributions totalling £20,000 (2015: £20,000) were payable to the fund at the balance 
sheet date and are included in trade and other payables. 68 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
33 FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure entities within the Group are able to continue as going concerns while maximising the return 
to stakeholders. The Group’s overall strategy has evolved in the last five years in response to organic growth opportunities.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the Parent, 
comprising issued capital, reserves and retained earnings as disclosed in notes 28 to 30.
The Group is not subject to any externally imposed capital requirements. Equity includes all capital and reserves of the Group that 
are managed as capital.
Categories of financial instruments
2016 
(audited) 
£’000
2015 
(audited) 
£’000
Financial assets
Cash and cash equivalents 5,606 6,173
Forward exchange contracts – 223
Trade receivables 9,603 6,464
15,209 12,860
Financial liabilities
Designated cash flow hedge relationships
Derivative financial liabilities designated and effective as cash flow hedging instruments 1,143 –
Amortised cost
Trade payables 6,265 5,197
7,408 5,197
Financial risk management objectives
The Group’s finance function is responsible for all aspects of corporate treasury. It co-ordinates access to financial markets, monitors 
and manages the financial risks relating to the operations of the Group through internal reports which analyse exposures by degree 
and magnitude. The risks reviewed include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, 
liquidity risk and cash flow interest rate risk.
The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge these risk exposures. 
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provides guidance to 
the finance function in addressing all risks, including foreign exchange risk, credit risk and the appropriate use of financial derivatives 
and non-derivative financial instruments, and the investment of excess liquidity. The Group does not enter into or trade financial 
instruments, including derivative financial instruments, for speculative purposes.
The Group’s bankers are party to a debenture which provides for security over the whole of the Company’s assets and undertaking. 
This debenture is in place to support the revolving credit facility, provision of forward contracts and a duty deferment facility.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see below). The Group 
enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk. Currently the exposure 
to short-term foreign exchange rate risks is mitigated through the purchase of forward foreign exchange contracts to hedge the 
exchange rate risk arising on trading with overseas customers.
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate fluctuations arise. 
Exchange rate exposures are managed within approved policy parameters, utilising forward foreign exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the relevant period end 
dates are as follows:
Liabilities Assets
2016 
£’000
2015 
£’000
2016
 £’000
2015 
£’000
US Dollars 5,875 4,844 9,965 6,544
Euros 22 20 2,227 2,135
Pounds Sterling 3,359 3,947 4,638 5,232
 9,256 8,811 16,830 13,911
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 69
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
33 FINANCIAL INSTRUMENTS continued
Foreign currency sensitivity analysis
The Group is mainly exposed to the Euro and US Dollar.
The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling against the relevant foreign 
currencies.
The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the 
period end for a 10% change in foreign currency rates.
A negative number below indicates a decline in profits and other equity where Sterling strengthens 10% against the relevant currency. 
For a 10% weakening of Sterling against the relevant currency, there would be a comparable impact on the profit and other equity, 
and the balances below would be positive.
Euro impact
1
US Dollar impact
2
2016 
£’000
2015 
£’000
2016 
£’000
2015 
£’000
Profit or loss 221 211 409 170
1 This is mainly attributable to the exposure outstanding on Euro net payables and receivables at the balance sheet date.
2 This is mainly attributable to the exposure to US Dollar net payables and receivables at the balance sheet date.
In management’s opinion, the sensitivity analysis is representative of the inherent foreign exchange risk through the year.
Forward foreign exchange contracts
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts 
with the aim that approximately 75% of the foreign exchange exposure is covered. Basis adjustments are made to the carrying 
amounts of non-financial hedged items when the anticipated sale or purchase transaction takes place.
For cash flow hedges the following table sets out the periods when the cash flows are expected to occur and when they are expected 
to affect profit or loss:
2016
Carrying 
amount 
£’000
Expected 
cash flow 
£’000
Within 
1 year 
£’000
Between 
1 and 5 years 
£’000
Over 
5 years 
£’000
Forward exchange contracts
Liabilities (1,143) (1,143) (1,143) – –
Total (1,143) (1,143) (1,143) – –
2015
Carrying 
amount 
£’000
Expected 
cash flow 
£’000
Within 
1 year 
£’000
Between 
1 and 5 years 
£’000
Over 
5 years 
£’000
Forward exchange contracts
Liabilities – – – – –
Total – – – – –
Interest rate risk management
The Group is not currently exposed to interest rate risk because it does not have any external borrowings.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The 
Group has a well-established system of credit limits and credit insurance, typically covering around 90% of the Group’s trade receivables.
The carrying amount recorded for financial assets in the consolidated financial information is net of impairment losses and represents 
the Group’s maximum exposure to credit risk. No guarantees have been given in respect to third parties.
Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. To counter 
this risk, the Group operates with a high level of cash and no bank debt. In addition, it benefits from strong cash flow from its normal 
trading activities. 70 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
33 FINANCIAL INSTRUMENTS continued
The following table details the Group’s expected maturity for its non-derivative financial assets. The tables below have been drawn up 
based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The 
inclusion of information on non-derivative financial assets is necessary to understand the Group’s liquidity risk management as the 
liquidity is managed on a net asset and liability basis.
Weighted 
average 
effective 
interest rate
%
Less than 
1 month 
£’000
1–3 months 
£’000
3 months 
to 1 year 
£’000
1–5 years 
£’000
5+ years 
£’000
Total 
£’000
2015
Non-interest bearing 4,414 – – – – 4,414
Variable interest rate instruments 0.4% 1,759 – – – – 1,759
6,173 – – – – 6,173
2016
Non-interest bearing 5,606 – – – – 5,606
5,606 – – – – 5,606
The maturity of non-derivative financial liabilities, comprising trade payables and other creditors, is less than three months for both of 
the financial period ends.
The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities is subject 
to change if changes in variable interest rates differ to those estimates of interest rates determined at the relevant year ends 
presented above.
Fair value of financial instruments
Fair value of financial instruments carried at amortised cost
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial 
statements approximate their fair values.
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of financial assets and financial liabilities are determined as follows:
• The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets 
are determined with reference to quoted market prices (includes listed redeemable notes, bills of exchange, debentures and 
perpetual notes).
• The fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with 
generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions 
and dealer quotes for similar instruments.
• The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, a discounted cash 
flow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option 
pricing models for optional derivatives. Foreign currency forward contracts are measured using quoted forward exchange rates and 
yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps are measured at the present 
value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates.
Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value. 
The grouping into Levels 1 to 3 is based on the degree to which their fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets  
or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are 
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that 
are not based on observable market data (unobservable inputs).
Notes to the Financial Statements continued FOCUSRITE PLC | ANNUAL REPORT 2016 71
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
33 FINANCIAL INSTRUMENTS continued
The financial instruments held by the Group that are measured at fair value all relate to financial assets/(liabilities) measured  
at FVTPL using methods associated with Level 2.
2016
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Financial assets/(liabilities) at FVTPL
Financial assets designated at FVTPL – – – –
Total – – – –
2015
Level 1 
£’000
Level 2 
£’000
Level 3 
£’000
Total 
£’000
Financial assets/(liabilities) at FVTPL
Financial assets designated at FVTPL – 223 – 223
Total – 223 – 223
Under IAS 39, all derivative financial instruments not in a hedge relationship are classified as derivatives at fair value through the 
income statement. The Group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are 
underpinned by firm orders from customers or to suppliers or where there is a high degree of certainty that orders will be received.
34 CONTINGENT LIABILITIES
The Company and its subsidiaries may, from time to time, be involved in a number of legal proceedings that are incidental to their 
operations. During the year, the Group incurred one-off litigation costs, which are explained in note 13. In the opinion of the Directors, 
the Company and its subsidiaries are not involved currently in any other legal proceedings which, at 31 August 2016 and for the 
period up to the date of approval of these financial statements, have had a significant effect on the financial position or profitability  
of the Company and its subsidiaries.
Further information is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of the litigation. 
The Company continues to vigorously defend its position and to seek appropriate legal counsel. 
35 RELATED PARTY TRANSACTIONS
Balances and transactions between the Parent Company and its subsidiary, which are related parties, have been eliminated on 
consolidation and are not disclosed in this note. Transactions between the Group and other related parties are disclosed below.
Remuneration of key management personnel
The key management personnel are the operational Directors of the Group and the remuneration that they have received during the 
year is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures’.
2016
 £’000
2015 
£’000
Short-term employee benefits 1,415 1,378
Share-based payments 42 15
Pension contributions 150 50
1,607 1,443
Aggregate emoluments of the highest paid Director 207 229
Transactions involving Directors and key management personnel
Loans to related parties (in the previous period)
On 25 July 2014 the Company made an unsecured loan of £24,000 to Mr D Froker, a Director of the Company. Interest was charged 
at 1% above bank base rate and repayment was dependent on the fulfilment of a number of terms, but at the latest, by the date of 
finalisation of the Company’s accounts for the year ended 31 August 2015. The principal terms of the loan are considered by 
management to be determined on an arm’s length basis. The loan, together with accrual interest thereon, was repaid in full on 
17 November 2014.
Other related party transaction
During the year, the Company continued a commercial lease agreement in Lincoln Road, High Wycombe. Mr P Dudderidge, a Director 
and shareholder of the Company, is the landlord of the property in Lincoln Road, High Wycombe. The annual rental is £19,750 
(2015: £15,000). 72 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
Note
2016 
£’000
2015 
£’000
Assets
Non-current assets
Investment in subsidiaries 6 14,647 14,647
Total fixed assets 14,647 14,647
Current assets
Trade and other receivables 7 4,884 1,847
Corporate tax recoverable 48 38
Cash at bank and in hand 90 847
Total current assets 5,022 2,732
Creditors: amounts falling due within one year
Creditors 8 (3) –
Net current assets 5,019 2,732
Total assets less current liabilities 19,666 17,379
Net assets 19,666 17,379
Capital and reserves
Share capital 9 58 58
Merger reserve 10 14,595 14,595
Share-based payment reserve 382 –
Treasury share reserve 11 (5) (6)
Retained earnings 12 4,636 2,732
Total equity and shareholders’ funds 19,666 17,379
The financial statements were approved by the Board of Directors and authorised for issue on 22 November 2016. They were signed 
on its behalf by:
Dave Froker    Jeremy Wilson
Chief Executive Officer   Chief Financial Officer
The notes on pages 75 to 78 form part of the financial statements.
Company Balance Sheet
As at 31 August 2016 FOCUSRITE PLC | ANNUAL REPORT 2016 73
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
Share 
capital 
£’000
Merger 
reserve 
£’000
Treasury 
share reserve 
£’000
Share-based 
payment 
reserve 
£’000
Retained 
earnings 
£’000
Total 
£’000
Balance at 14 November 2014 – – – – – –
Profit for the period – – – – 3,046 3,046
Issue of ordinary shares 58 14,595 – – – 14,653
Dividends – – – – (314) (314)
Ordinary shares issued to the EBT – – (6) – – (6)
Net movement 58 14,595 (6) – 2,732 17,379
Balance at 31 August 2015 58 14,595 (6) – 2,732 17,379
Profit for the period – – – – 2,709 2,709
Dividends – – – – (976) (976)
Transfer of brought forward share-based payment reserve 262 - 262
Share-based payment charge – – – 120 - 120
Shares from EBT exercised – – 1 – 171 172
Net movement 58 14,595 (5) 382 4,636 19,666
Balance at 31 August 2016 58 14,595 (5) 382 4,636 19,666
The notes on pages 75 to 78 form part of the financial statements.
Company Statement of Changes in Equity
For the year ended 31 August 2016 74 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
Note
2016 
£’000
2015 
£’000
Loss for the financial year (195) (148)
Adjustments for:
Share option charge 382 –
Income tax expense (48) (38)
Operating cash flows before movements in working capital 139 (186)
Increase in trade and other receivables (3,047) (17)
Increase in trade and other payables 3 203
Operating cash flows before interest and tax paid (2,905) –
Income taxes received 48 –
Net cash from operating activities (2,857) –
Investing activities
Dividend received 2,904 1,161
Net cash from/(used in) investing activities 2,904 1,161
Financing activities
Issue of equity shares 172 –
Equity dividends paid 5 (976) (314)
Net cash (used in) financing activities (804) (314)
Net (decrease)/increase in cash and cash equivalents (757) 847
Cash and cash equivalents at beginning of year 847 –
Cash and cash equivalents at end of year 90 847
Company Cash Flow Statement FOCUSRITE PLC | ANNUAL REPORT 2016 75
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
1 AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH FRS 101
The Parent Company financial statements of Focusrite plc for the year ended 31 August 2016 were authorised for issue by the Board 
of Directors on 22 November 2016 and the balance sheet was signed on the Board’s behalf by Dave Froker and Jeremy Wilson.
Focusrite Plc is a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary shares are traded 
on AIM. These financial statements were prepared in accordance with FRS 101.
No profit and loss account is presented by the Company as permitted by section 408 of the Companies Act 2006.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the period ended 
31 August 2016.
2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These financial statements were prepared in accordance with FRS 101. The amendments to FRS 101 (2014/15 Cycle) issued in  
July 2015 and effective immediately have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of IFRS, but 
makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the 
FRS 101 disclosure exemptions has been taken. 
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account. 
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 
31 August 2016.
Going concern
The Group’s business activities and position in the market are described in the Strategic Report. The Directors believe that the Group 
is well placed to manage its business risks successfully despite the current uncertainties within the global economy. The Group has 
considerable financial resources, recurring revenue streams and a broad spread of customers. As a consequence of these factors 
and having reviewed the forecasts for the coming year, the Directors have a reasonable expectation that the Group has adequate 
resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of 
accounting in preparing the annual financial statements. Further detail is contained in the Strategic Report on pages 1 to 25.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
Cash
Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with an original 
maturity of three months or less.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, 
based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their 
carrying amounts in the financial statements, with the following exception:
• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which 
the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the 
related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. 
The carrying amount of deferred income tax assets is reviewed at each balance sheet date.
Deferred income tax assets and liabilities are offset only if a legally enforced right exists to set off current tax assets against current 
tax liabilities, the deferred income taxes relate to the same taxation authority and that authority permits the Company to make a single 
net payment.
Income tax is charged or credited to other comprehensive income if it relates to items that are charged or credited to other 
comprehensive income. Similarly, income tax is charged or credited directly to equity if it relates to items that are credited or charged 
directly to equity. Otherwise income tax is recognised in the income statement.
Notes to the Company Accounts
For the year ended 31 August 2016 76 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-
managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group’s obligations 
under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Equity-settled share-based payments
The Company issues equity-settled payments to certain employees (including Directors). All goods and services received in exchange 
for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based 
payments the fair values of employees’ services are determined indirectly by reference to the fair value of the instrument granted to 
the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example, 
profitability and sales growth targets).
Share options are valued at the date of grant using the Black-Scholes option pricing model for options with non-market vesting 
conditions attached and a simulation model for options with market vesting conditions attached, and are charged to operating profit 
over the vesting period of the award with a corresponding credit to the ‘other reserves’.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period based on the best 
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication 
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is 
recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately 
exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and, where 
appropriate, share premium account.
The share option charge related to the grant by the Company of options over its equity instruments to the employees of subsidiary 
undertakings is subsequently recharged to the relevant employing subsidiary.
3 DIRECTORS’ REMUNERATION
Directors’ emoluments:
2016 
£’000
2015 
£’000
Salaries, bonuses and other employee benefits 656  449 
Social security costs 76  58 
Pension costs 3  3 
 735  510 
The comparative period, 2015, represents the period from the incorporation of the Company on 14 November 2014 to 31 August 2015.
During the year retirement benefits were accruing to three Directors (2015: three) in respect of defined contribution pension schemes. 
The highest paid Director received remuneration of £220,000 (2015: £156,000).
The value of the Company’s contributions paid to a defined contribution pension scheme in respect of the highest paid Director 
amounted to £2,000 (2015: £nil). During the year, no share options were exercised by Directors (2015: nil).
Notes to the Company Accounts continued FOCUSRITE PLC | ANNUAL REPORT 2016 77
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
3 DIRECTORS’ REMUNERATION continued
The Directors’ remuneration for the year:
Executive Directors
Salary/fees 
£’000
Other taxable 
benefits 
£’000
Annual 
bonus 
£’000
Pension 
contribution 
£’000
Total 
£’000
Dave Froker FY15 115 2 – 1 118
FY16 168 3 47 2 220
Jeremy Wilson FY15 124 – 30 2 156
FY16 168 2 38 1 209
Phil Dudderidge FY15 126 – – – 126
FY16 168 3 – – 171
Non-executive Directors
David Bezem FY15 26 – – – 26
FY16 36 – – – 36
Paul Dean FY15 26 – – – 26
FY16 36 – – – 36
4 STAFF COSTS
Staff costs, including Directors’ remuneration, were as follows:
2016 
£’000
2015 
£’000
Wages and salaries 714 563
Social security costs 84 71
Other pension costs 99 17
 897 651
The average monthly number of employees, including the Directors, during the year was as follows:
2016 
Number
2015 
Number
Management and administration 7 7
 7 7
5 DIVIDENDS
The following equity dividends have been declared:
2016 
£’000
2015 
£’000
Dividend per qualifying ordinary share 1.95p 1.80p
6 INVESTMENTS IN SUBSIDIARIES
2016 
£’000
2015 
£’000
At 1 September 14,647 –
Additions in the period – 14,647
At 31 August 2016 14,647 14,647
The investments in subsidiaries comprise:
Name Country of registration or incorporation Principal activity
Class of 
shares
2016 
%
2015 
%
Focusrite Audio Engineering Limited England and Wales Manufacture and distribution Ordinary 100 100
Focusrite Novation Inc
1
United States of America Marketing services Ordinary 100 100
Focusrite Novation Asia Limited
1
Hong Kong Marketing services Ordinary 100 100
1 Owned indirectly through FAEL. 78 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
7 DEBTORS
2016 
£’000
2015 
£’000
Other debtors 10 17
Amounts owed by Group undertakings 4,874 1,830
 4,884 1,847
The amounts owed by Group undertakings are interest free and repayable on demand.
8 CREDITORS
2016 
£’000
2015 
£’000
Other creditors 3 –
3 –
9 SHARE CAPITAL
2016 
Number
2015 
Number
Issued and fully paid:
Ordinary shares of £0.01 each 58,075,000 58,075,000
58,075,000 58,075,000
2016 
£
2015 
£
Issued and fully paid:
Ordinary shares of £0.01 each 58,075 58,075
58,075 58,075
The Company has one class of ordinary shares which carry no right to fixed income. On 4 December 2014 the Company issued 
58,074,998 ordinary shares of £0.01 each at par in consideration for 58,075,000 ordinary shares in FAEL.
10 MERGER RESERVE
2016 
£’000
2015 
£’000
At 1 September 14,595 –
Transferred in the period – 14,595
At 31 August 14,595 14,595
The merger reserve represents the difference between the cost of the investment in FAEL (and its subsidiary, Focusrite Novation Inc.) 
of £14,647,000 and the nominal value of the ordinary shares issued in exchange of £52,000.
11 TREASURY RESERVE
2016 
£’000
2015 
£’000
At 1 September (6) –
Transferred in the period – (6)
Shares exercised from EBT 1 –
At 31 August (5) (6)
12 RETAINED EARNINGS
2016 
£’000
2015 
£’000
At 1 September 2,732 –
Net profit for the period 2,709 3,046
Dividend (976) (314)
Shares from EBT exercised 171 –
At 31 August 4,636 2,732
The Company has taken advantage of section 408 of the Companies Act 2006 and has not included its own profit and loss account 
in these financial statements. The Parent Company’s profit for the year was £2,709,000 (2015: £3,046,000).
Notes to the Company Accounts continued FOCUSRITE PLC | ANNUAL REPORT 2016 79
FINANCIAL STATEMENTS STRATEGIC REPORT GOVERNANCE
Registered office
Windsor House
Turnpike Road
High Wycombe 
Buckinghamshire
HP12 3FX
Company number
09312676
Auditor
KPMG LLP
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
Nominated adviser and broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Legal adviser
Stephenson Harwood
1 Finsbury Circus
London 
EC2M 7SH
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing 
West Sussex
BN99 6DA
Financial public relations
Belvedere Communications Limited
43 Manchester Street
London
W1U 7LP
 
Company Secretary
Prism Cosec Limited
Company Information and Advisers 80 FOCUSRITE PLC | ANNUAL REPORT 2016
FINANCIAL STATEMENTS 
Notes  Focusrite Plc Annual Report 2016
Focusrite Plc
Windsor House 
Turnpike Road 
High Wycombe 
Buckinghamshire HP12 3FX 
United Kingdom
T: +44 1494 462246
www.focusriteplc.com Focusrite Plc Annual Report 2016