REG - Gear4music - Final Results
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RNS Number : 0660O Gear4music (Holdings) PLC 24 June 2025
24 June 2025
Gear4music (Holdings) plc
Audited results for the year ended 31 March 2025
"Revenue and profit growth, continued net debt reduction, and a strengthening
trajectory in FY26 to date"
Gear4music (Holdings) plc, ("Gear4music" or "the Group") (LSE: G4M), the
largest UK based online retailer of musical instruments and music equipment,
today announces its financial results for the year ended 31 March 2025.
FY25 Highlights:
£m Year ended 31 March 2025 Year ended 31 March 2024 Change on FY24
("FY25") ("FY24")
Revenue 146.7 144.4 +2%
Gross profit 39.7 39.4 +1%
Gross margin 27.0% 27.3% -30bps
EBITDA 10.0 9.4 +7%
PBT 1.6 0.6 +166%
· Revenue growth during H2 FY25 was 4%, reflecting early progress of returning
to growth in a challenging market
· Gross margin remained stable at 27.0% (FY24: 27.3%; FY23: 25.7%)
· EBITDA of £10.0m, an increase of 7% on FY24 (FY24: £9.4m; FY23: £7.4m)
· Profit Before Tax of £1.6m is a £1.0m improvement on FY24 (FY24: £0.6m;
FY23: -£0.4m)
· Further reduction in net debt to £6.4m at the year-end (FY24: £7.3m; FY23:
£14.5m)
Trading Outlook and Strategy:
· UK market consolidating following the previously reported failure of two
significant competitors
· Growth strategy evolved to capitalise on emerging opportunities
· Double digit growth from mid-March 2025 with a strengthening trajectory in
FY26 to date
· Board's expectations for FY26 uplifted accordingly, reflecting the positive
trajectory of the last three months*
Commenting on the results, Andrew Wass, Executive Chair said:
"We are pleased to confirm that our FY25 financial results are in line with
the Year-End trading update published on 2 April 2025, with growth in revenue,
EBITDA and Profit Before Tax, alongside a further reduction in Net Debt.
Following the implementation of a wide range of cost reduction measures during
FY24, and the relaunch of our Growth Strategy in June 2024, our primary focus
during FY25 has been to begin the successful execution of this revised
strategy.
On 16 April 2025, we reported a return to double-digit sales growth from
mid-March onwards, and we are pleased to confirm that since then, both sales
momentum and gross margins have continued to increase.
This encouraging performance reflects the early positive impact of our revised
strategy, alongside a more favourable competitive landscape following the
recent failure of two UK competitors. As previously reported the Group
subsequently acquired selected assets from their Administrators, further
strengthening our market position.
Although it remains early in the new financial year, the Group has benefited
from these developments and the Board is uplifting its expectations for the
Group's financial performance for the year ending 31 March 2026."*
*Gear4music believes that, prior to the publication of this announcement,
current consensus market expectations for the year ending 31 March 2026 are
revenue of £153.8 million, EBITDA of £10.9 million and profit before tax of
£2.65 million.
- Ends -
Enquiries:
Gear4music +44 (0)20 3405 0205
Andrew Wass, Executive Chair
Gareth Bevan, Chief Executive Officer
Chris Scott, Chief Financial Officer
Singer Capital Markets - Nominated Adviser and Broker +44 (0)20 7496 3000
Peter Steel/Sam Butcher, Corporate Finance
Tom Salvesen, Corporate Broking
Alma - Financial PR +44 (0)20 3405 0205
Rebecca Sanders-Hewett Gear4music@almastrategic.com
Joe Pederzolli
Sarah Peters
About Gear4music (Holdings) plc
Operating from a Head Office in York, Distribution Centres in York, Bacup,
Sweden, Germany, Ireland & Spain, and showrooms in York, Bacup, Sweden
& Germany, the Group sells own-brand musical instruments and music
equipment alongside premium third-party brands including Yamaha, Roland and
Roland, to customers ranging from beginners to musical enthusiasts and
professionals, in the UK, Europe and the Rest of the World.
Having developed its own e-commerce platform, with multilingual, multicurrency
websites delivering to over 190 countries, the Group continues to build its
overseas presence.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the
publication of this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public domain.
Chairman's Statement
Strategic and Financial Overview
As communicated at the beginning of the financial year, following the
successful execution of our cost reduction initiatives, enhanced operational
efficiencies, and meaningful improvements in working capital management in
FY24, in FY25 it was important that the Group refocused its strategic
priorities back to the delivery of sustainable, profitable growth. This
objective is being pursued through the execution of our clearly defined Growth
Plan and is bearing fruit.
Operational and Commercial progress
I am pleased to announce that the Group has delivered improved financial and
operational performance amidst what continues to be a challenging
macro-economic environment. This reflects the resilience of our business model
and the disciplined execution of our strategic initiatives.
Building on the strategic and financial progress of FY24, the Group
prioritised a return to top-line growth while maintaining prudent financial
management. These efforts have resulted in increased revenue, enhanced
profitability, and a third consecutive year of net debt reduction.
To further support our long-term strategic ambitions, we successfully extended
our committed £30 million Revolving Credit Facility (RCF) to at least June
2027. This facility is secured by £81.4 million of assets, including £7.4
million in freehold property, thereby ensuring a strong liquidity position and
enabling the Group to respond swiftly to growth opportunities as they emerge.
Environmental, Social and Governance
The Group remains committed to generating a positive and lasting impact on
society, the environment, and our workforce. Recognising interest from a broad
spectrum of stakeholders in our ESG performance, we are pleased to have
published our second Climate Report, covering the financial year ended 31
March 2025.
This year's report reflects an improvement in the depth and transparency of
our disclosures, and we intend to continue enhancing our ESG reporting in
future periods. This ongoing development will further support our ability to
evaluate and mitigate environmental impact wherever feasible and align with
evolving stakeholder expectations.
Board Changes
Following the Board changes announced last year and implemented in July 2024,
I wish to formally express the Board's gratitude to Ken Ford and Dean Murray
for their nine years of exemplary service. Their stewardship has been
instrumental in scaling the Group from FY15 revenue of £24.2 million to
£146.7 million in FY25.
I am also pleased to report that their successors, Neil Catto, appointed as
Senior Independent Director, and Sharon Daly, appointed as Non-Executive
Director, have smoothly integrated into the Board. With their expertise and
perspectives Neil and Sharon are already meaningfully contributing to our
strategic development and enhancing our governance capability and Board
oversight.
Additionally, the transition of Gareth Bevan into the role of Chief Executive
Officer has been executed seamlessly, ensuring leadership continuity across
the organisation. In my capacity as Executive Chair, I remain actively engaged
in the formulation of strategic direction and the oversight of our long-term
growth agenda, while continuing to provide guidance and support to our senior
leadership and broader stakeholder base.
Outlook
The Board remains confident in the Group's ability to achieve its long-term
strategic goals, underpinned by our leading customer proposition, scalable
operational infrastructure, and robust balance sheet. Our focus remains on
driving profitable growth and reinforcing our market leadership position
across the UK and Europe.
During FY25, we laid strong foundations for the execution of our refreshed
Growth Strategy, which included the development of new own-brand products,
expansion of our second-hand product offering, the enhancement of our
marketing capabilities, and continued investment in our proprietary e-commerce
platform.
These strategic investments, coupled with ongoing developments within the
competitive landscape, position the Group well to maintain recent positive
momentum and drive accelerated commercial and financial performance in FY26
and beyond.
Andrew Wass
Executive Chair
23 June 2025
Chief Executive's Statement
Financial KPIs
FY25 FY24 Change on FY24
Revenue * £146.7m £144.4m +2%
UK Revenue * £90.2m £83.1m +8%
International Revenue * £56.5m £61.3m -8%
Gross margin 27.0% 27.3% -30bps
Gross profit £39.7m £39.4m +6%
Total Admin expenses including redundancy costs * £37.3m £37.6m -1%
European Admin expenses * £4.7m £4.9m -4%
Reported EBITDA £10.0m £9.4m +7%
Adjusted EBITDA ** £10.0m £9.9m +1%
Profit before tax £1.6m £0.6m +£1.0m
Adjusted profit before tax £1.6m £1.1m +£0.5m
Net debt *** (£6.4m) (£7.3m) +£0.9m
* See note 2 of the Financial Information
** Defined as Reported EBITDA less one-off redundancy
costs. See note 1.3 to the Financial Information
*** See notes 13 and 14 of the Financial Information
Commercial KPIs
FY25 FY24 Change on FY24
Website users 24.9m 23.7m +5%
Conversion rate 4.04% 3.93% +11bps
Average order value £147 £153 -4%
Active customers 846,000 799,000 +6%
Products listed 63,300 63,000 -
Business review
I am pleased to report a resilient performance in FY25, having delivered
financial and strategic progress despite ongoing macroeconomic pressures and a
subdued consumer spending environment, a temporary setback in H1 due to issues
with an outsourced AI-based marketing system that has since been resolved, and
aggressive discounting from underperforming competitors prior to their market
exit. These achievements are underpinned by the exceptional commitment and
contribution of our entire team, to whom I extend my sincere appreciation.
In the face of these challenges, the Group achieved year-on-year revenue
growth, maintained gross margin stability, and upheld rigorous cost
discipline. These efforts contributed to an increase in reported EBITDA and a
£1.0 million year-on-year improvement in Profit Before Tax. Additionally, we
recorded a further reduction in net bank debt, resulting in a leverage ratio
of 0.6x FY25 EBITDA (FY24: 0.8x), marking a further strengthening of the
Group's financial position. Combined with the extension of our £30 million
Revolving Credit Facility, the Group possesses the financial stability and
flexibility to accelerate growth initiatives while continuing to enhance
profits and profitability.
Strategy
Our Profitable Growth Strategy has evolved to adapt to changing market
dynamics, and strategically pivot to capitalise on emerging opportunities. Our
growth strategy focuses around four pillars:
1. Continuous development of our platform through targeted AI
initiatives
2. Enhancing our product offering
3. Diversifying our channels to market
4. Expanding our capabilities to enhance customer experience
Continuous development of our platform through targeted AI initiatives
This will boost productivity and elevate the customer experience through
unique solutions in our market, such as our innovative second-hand system,
which we expect to significantly increase our market share.
We delivered a series of substantial upgrades to our e-commerce platform
throughout the year. These included important infrastructure enhancements,
increased efficiency in some warehouse processes, and the initial deployment
of a customer-facing AI-chatbot. Looking ahead, the Group expects to launch
its proprietary AI-driven purchasing platform during Q3 FY26.
Enhancing our product offering
This includes scaling up our second-hand and digital download propositions,
developing and launching a greater number of best-in-class own-brand products,
and exploring additional strategic brand partnerships. These initiatives are
designed to ensure value for money while simultaneously strengthening our
market share. Additionally, we will continue to evaluate opportunities to
acquire legacy brands as they arise, such as Studiospares and sub-brands
acquired in the year, and GAK and S&T Audio/PMT brands acquired post
year-end.
Further expansion of our in-house product design and development capabilities
enabled the successful launch of a record 702 new own-brand products. This
strategic initiative supports our focus on differentiated offerings and margin
expansion, further consolidating our market and value proposition.
Our second-hand trading platform has been enhanced during the year through a
broadened SKU range across varied product conditions. This has resulted in
revenue growth of 161%, reaching £3.0 million for FY25, and we see
significant headroom for further expansion within this high-margin category.
Diversifying our channels to market
We will integrate with new European marketplaces and develop affiliate
programs, leveraging influencers to expand our reach. Where appropriate, these
efforts will be driven and informed by AI to maximise their effectiveness.
Expanding our capabilities to enhance customer experience
Seeking and reacting to growth opportunities, we will invest into our
operational infrastructure to maximise efficiency and ensure an exceptional
customer experience at every touchpoint.
Outlook
In FY25 in light of continued pressure on discretionary consumer spending and
the impact of aggressive discounting by financially distressed competitors in
both the UK and Europe, the Group maintained a prudent balance between revenue
growth ambitions and disciplined cost and working capital management.
There is now clear evidence of market consolidation and rationalisation with a
number of weaker competitors ceasing operations in FY26 to date and this is
creating opportunities for us, as seen by our purchases of the GAK and S&T
Audio/PMT brands. This trend may signal a more favourable competitive
landscape ahead. Accordingly, the Board remains confident in the Group's
ability to deliver further profitable growth in FY26 and beyond, supported by
strong operational foundations, a robust capital structure, and the
disciplined execution of our strategic roadmap.
Gareth Beven
Chief Executive Officer
23 June 2025
Chief Financial Officer's statement
Overview
Heading into the financial year, the Board reaffirmed its focus on delivering
a return to profitable growth, building on the operational and financial
progress achieved in FY24. Against this backdrop, the Group is pleased to
report that it has delivered revenue growth, sustained stable gross margins,
and maintained a disciplined approach to cost control throughout FY25. These
combined efforts resulted in a year-on-year increase in reported EBITDA and a
£1.0 million improvement in Profit Before Tax compared to the prior financial
year.
Further strengthening the Group's balance sheet, net bank debt was reduced to
£6.4 million as at 31 March 2025. This reduction has resulted in a year-end
leverage ratio of 0.6x FY25 EBITDA, compared to 0.8x in FY24, reinforcing the
Group's robust financial position and capacity to support future growth
initiatives.
The strategic and financial progress achieved during FY25 positions the Group
well as it enters FY26. With the competitive landscape evolving and moving in
our favour, the Group is well-placed to accelerate the execution of its
refreshed growth strategy and continue delivering enhanced value for
shareholders and stakeholders alike.
Revenue
FY25 FY24 Change on FY24
£m £m %
UK revenue 90.2 83.1 +8%
European revenue 54.7 59.2 -8%
Rest of the World revenue 1.8 2.1 -13%
Revenue 146.7 144.4 +2%
Revenue increased £2.3m (2%) on FY24 with a 1% decrease in H1 more than
offset by a 4% increase in H2.
UK revenue of £90.2m was £7.1m (8%) ahead of last year reflecting the
enduring strength of brand and proposition in our most mature market, and new
initiatives being launched in the UK first. This takes our estimated UK market
share to 10.1% (FY24: 9.5%).
European revenues of £54.7m were £4.5m (8%) behind FY24, reflecting a
challenging market, with certain underperforming competitors resorting to
aggressive discounting whilst we maintained our pricing levels in-line with
our strategy, and continuing weak consumer confidence.
Revenues from sales outside of Europe accounted for 1.2% of total revenue
(FY24: 1.4%).
FY25 FY24 Change on FY24
£m £m %
Other-brand product revenue 104.7 100.4 +4%
Own-brand product revenue 35.7 37.6 -5%
Carriage income 5.7 5.8 -1%
Other 0.6 0.6 -
Revenue 146.7 144.4 +2%
Other brand revenue of £104.7m was £4.3m ahead of last year (4%) reversing a
£5.8m (5%) decrease in FY24, reflecting opportunities for particular brands
in certain territories.
Own-brand revenue of £35.7m was £1.9m (5%) down on FY24, impacted by a slow
start to the year as teething problems with an outsourced AI-based marketing
system led to an under-allocation of spend on higher margin categories
including own-brand. Nevertheless own-brand still accounted for 24.3% of total
revenue (FY24: 26.0%) from 8.8% (FY24: 8.5%) of SKUs. It is our ambition to
grow our own-brand business and to support this we have further invested in
our own-brand team.
Carriage income totalled £5.7m representing a small decrease of £0.1m (1%)
compared to the prior year. This equated to 3.9% of total sales, down slightly
from 4.0% in the previous year, reflecting a lower level of cost recharging in
a highly competitive market environment.
Other revenue comprises paid for extended warranty income, and commissions
earned on facilitating point-of-sale credit for retail customers. The
proportion of revenue coming from these sources was 0.4% of total revenue in
FY25 and FY24.
Gross profit
FY25 FY24 Change on FY24
Product revenue (£m) 140.4 138.0 2.4
Product profit (£m) 43.8 43.2 0.6
Product margin 31.2% 31.3% -10bps
Carriage costs (£m) 9.7 9.4 0.3
Carriage costs as % of sales 6.6% 6.5% +10bps
Gross profit (£m) 39.7 39.4 0.3
Gross margin 27.0% 27.3% -30bps
A 2% increase in revenue resulted in gross profit ahead of last year despite a
30bps fall in gross margin.
Product margin was broadly maintained demonstrating ongoing pricing
discipline, and supported by an improvement in own-brand margin and increased
contribution from higher-margin categories such as second-hand products. These
gains offset the impact of a lower proportion of own-brand revenue, which
accounted for 24.3% of total revenue compared to 26.0% in FY24.
A 10bps increase in carriage costs reflects inflationary increases in cost of
delivery, and a 5% lower AOV.
The Group benefits from buying scale relative to its UK competitors, and its
ability to source other-branded products in Swedish Krona and Euros and
receive product directly into its European distribution centres is a point of
differentiation. The Group purchases its own-brand products in US Dollars and
product margin can be impacted by exchange rate fluctuations.
Administrative expenses and Operating profit
Operating profit of £3.2m is £0.4m ahead of FY24 reflecting a revenue
increase and a tightly controlled cost base.
EBITDA of £10.0m was £0.6m ahead of FY24 EBITDA and £0.1m ahead of FY24
Adjusted EBITDA (adjusted for £0.5m of one-off redundancy costs).
FY25 FY24 Change on FY24
£m £m £m
UK Administrative expenses (32.6) (32.7) 0.1
European Administrative expenses (4.7) (4.9) 0.2
Administrative expenses (37.3) (37.6) 0.3
Other income 0.9 0.9 -
Operating profit 3.2 2.8 0.4
Depreciation and amortisation 6.8 6.6 0.2
EBITDA 10.0 9.4 0.6
Exceptional item - Redundancy costs - 0.5 -
Adjusted EBITDA 10.0 9.9 0.1
Adjusted EBITDA margin 6.8% 6.9% -10bps
Administrative expenses increased 1% (£0.2m) on underlying FY24 (excluding
one-off redundancy costs), broadly in-line with the 2% increase in revenue.
Combined marketing and labour costs of £23.9m (FY24: £23.6m) accounted for
64% of administrative expenses in both FY25 and FY24:
- Marketing expenditure increased 3% in FY25 to £10.4m (FY24: £10.1m) equating
to 7.1% of revenue (FY24 7.0%), reflecting the aforementioned H1 problems with
an outsourced AI-based marketing system leading to cost-allocation
inefficiencies and over-spend. Marketing as a proportion of revenue was 7.3%
in H1 and 6.9% in H2; and
- Labour costs increased 1% year-on-year to £13.6m (FY24: 13.5m) reflecting a
7% decrease in average headcount offset by an 8% increase in average cost per
head. Labour costs accounted for 9.3% of revenue (FY24: 9.4%).
Other expenses and net profit
Financial expenses of £1.7m (FY24: £2.2m) include £1.1m of bank interest
(FY24: £1.5m) reflecting a lower average net debt position and lower interest
rates, £0.4m of IFRS16 lease interest (FY24: £0.4m), and a £0.2m net
foreign exchange loss (FY24: £0.2m loss).
The Group reports a profit before tax of £1.6m (FY24: £0.6m) that after tax
translates into basic earnings per share of 4.0p and diluted earnings per
share of 3.8p (FY24: 3.1p basic and 3.0p diluted loss per share).
The FY25 tax charge of £0.7m reflects increased profits generated in the
year, a £0.2m deferred tax charge, and a £0.3m charge arising following
adjustments to the Corporate Income Tax position of the Group's overseas
subsidiaries per their latest local statutory audits.
Cash-flow
Net bank debt decreased from £7.3m at the start of the year to £6.4m,
representing 0.6x FY25 EBITDA (£10.0m), and secured by £81.4m of assets
including two freehold properties with a combined carrying value of £7.4m.
FY25 FY24 Change on FY24
£m £m £m
Opening cash 4.7 4.5 0.2
Profit for the year 0.8 0.7 0.1
Movement in working capital (1.8) 4.7 (6.5)
Depreciation and amortisation 6.8 6.6 0.2
Financial expense 1.6 2.1 (0.5)
Tax and Other operating adjustments 0.9 0.5 0.4
Net cash from operating activities: 8.3 14.6 (6.3)
Net cash used in investing activities: (3.9) (3.9) -
Net cash used in financing activities: (3.5) (10.5) 7.0
Increase in cash in the year 0.9 0.2 (0.7)
Closing cash 5.6 4.7 0.9
In June 2025 the Group extended its RCF at £30m for a further year to June
2027 with its bankers, HSBC, providing the headroom to invest in opportunities
as and when they arise.
Net cash outflow in investing activities is flat on the previous year at
£3.9m including £3.6m of capitalised software development costs (FY24:
£3.7m) and £0.3m property, plant and equipment additions (FY24: £0.2m).
Depreciation and amortisation of £6.8m (FY24: £6.6m) is added back in 'net
cash from operating activities'.
Net cash outflow from financing activities of £3.5m (FY24: £10.5m outflow)
represents net nil movement on the RCF (FY24: paid down by £7.0m), £1.7m
payment of lease liabilities (FY24: £1.4m), and £1.8m interest paid (FY24:
£2.1m).
Balance sheet
31 March 2025 31 March 2024 Change on 31 March 2024
£m £m £m
Property, plant and equipment 10.1 10.9 (0.8)
Right-of-use assets 6.5 8.1 (1.6)
Software platform 12.3 12.8 (0.5)
Other intangible assets 9.3 9.2 0.1
Total non-current assets 38.2 41.0 (2.8)
Inventory 34.2 25.6 8.6
Cash 5.6 4.7 0.9
Other current assets 3.4 3.9 (0.5)
Total current assets 43.2 34.2 9.0
Trade payables (12.1) (6.9) (5.2)
Lease liabilities (1.9) (1.8) (0.1)
Other current liabilities (7.8) (6.6) (1.2)
Total current liabilities (21.8) (15.3) (6.5)
Loans and Borrowings (12.0) (12.0) -
Lease liabilities (5.9) (7.6) 1.7
Other non-current liabilities (2.4) (1.9) (0.5)
Total non-current liabilities (20.3) (21.5) 1.2
Net assets 39.3 38.4 0.9
Capital expenditure on property, plant and equipment totalled £0.3m across
all sites (FY24: £0.2m).
The Group capitalised £3.6m of software development costs during the year
(FY24: £3.7m), relating to the ongoing enhancement of our proprietary
e-commerce platform. Related amortisation of £4.1m (FY24: £3.7m) resulted in
a year-end net book value of £12.3m (FY24: £12.8m).
Other intangible assets include £5.3m goodwill and £3.0m domain names.
Inventory of £34.2m is £8.6m (33%) higher than at 31 March 2024 reflecting
an increased Own-brand range and breadth across all DCs, and investment in
branded-products as and when the opportunity arose.
The Group carried net bank debt of £6.4m at the year-end (31 March 2024 net
bank debt: £7.3m).
Dividends
The Board is confident in the prospects for the business and recognises the
importance of generating and retaining cash reserves to support future growth,
and as such the Board does not consider it appropriate to declare a dividend
at this time but will continue to review this position on an annual basis.
Chris Scott
Chief Financial Officer
23 June 2025
Consolidated Statement of Profit and Loss and Other Comprehensive Income
Year ended31 March Year ended
31 March 2024
2025
Note
£000 £000
Revenue 2 146,720 144,384
Cost of sales (107,057) (104,947)
Gross profit 39,663 39,437
Administrative expenses 2,3,4 (37,335) (37,609)
Other income 3 910 935
Operating profit before exceptional items 3,238 3,250
Exceptional items 1.3 - (487)
Operating profit 3,238 2,763
Financial expenses 6 (1,791) (2,223)
Financial income 6 115 44
Profit before tax 1,562 584
Taxation 7 (730) 67
Profit for the year 832 651
Other comprehensive income
Items that will not be reclassified to profit or loss:
Revaluation of property, plant and equipment 8 -
Deferred tax movements 5 150
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
Total comprehensive income for the year 36 177
873 978
Basic profit per share 5 4.0p 3.1p
Diluted profit per share 5 3.8p 3.0p
The accompanying notes form an integral part of the consolidated financial
report.
Consolidated Statement of Financial Position
Year ended Year ended
31 March 2025 31 March 2024
Note £000 £000
Non-current assets
Property Plant and Equipment 8 10,134 10,862
Right-of-use assets 9 6,479 8,099
Intangible assets 10 21,606 22,049
38,219 41,010
Current assets
Inventories 11 34,193 25,643
Trade and other receivables 12 3,147 3,079
Corporation tax receivable 239 768
Cash and cash equivalents 13 5,576 4,696
43,155 34,186
Total assets 81,374 75,196
Current liabilities
Trade and other payables 15 (19,921) (13,478)
Lease liabilities 16 (1,869) (1,794)
(21,790) (15,272)
Non-current liabilities
Interest-bearing loans and borrowings 14 (12,000) (12,000)
Other payables 15 (238) (90)
Lease liabilities 16 (5,940) (7,599)
Deferred tax liability (2,103) (1,868)
(20,281) (21,557)
Total liabilities (42,071) (36,829)
Net assets 39,303 38,366
Equity
Share capital 17 2,098 2,098
Share premium 17 13,286 13,286
Foreign currency translation reserve 17 140 (74)
Revaluation reserve 17 1,145 1,171
Retained earnings 17 22,634 21,708
Total equity 39,303 38,366
The notes 1 to 19 form part of the consolidated financial report.
Company registered number: 07786708
Consolidated Statement of Changes in Equity
Share Share Foreign currency translation reserve Revaluation reserve Retained Total
capital premium earnings equity
£000 £000 £000 £000 £000 £000
Balance at 31 March 2023 2,098 13,286 (74) 1,203 20,721 37,234
Comprehensive income for the year
Profit for the year - - - - 651 651
Other Comprehensive income:
Foreign currency translation difference - - 177 - - 177
Deferred tax adjustment - - - - 150 150
Depreciation transfer - - - (32) 32 -
Total comprehensive income for the year - - 177 (32) 833 978
Transactions with owners
Share based payments charge - - - - 154 154
Total transactions with owners - - - - 154 154
Balance at 31 March 2024 2,098 13,286 103 1,171 21,708 38,366
Comprehensive income for the year
Profit for the year - - - - 832 832
Other Comprehensive income:
Foreign currency translation difference - - 37 - - 37
Deferred tax adjustment - - - - 5 5
Depreciation transfer - - - (26) 26 -
Total comprehensive income for the year - - 37 (26) 863 874
Transactions with owners
Share based payments charge - - - - 63 63
63 63
Balance at 31 March 2025 2,098 13,286 140 1,145 22,634 39,303
The accompanying notes form an integral part of the consolidated financial
report.
Consolidated Statement of Cash Flows
Note Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Cash flows from operating activities
Profit for the year 832 651
Adjustments for:
Depreciation and amortisation 3 6,802 6,642
Financial expenses and financial income 7 1,553 2,173
Profit on sale of property, plant and equipment (5) (16)
Share based payment charge 63 184
Taxation expense/(income) 8 340 (456)
9,585 9,178
(Increase)/decrease in trade and other receivables 15 (69) 355
(Increase)/decrease in inventories 14 (8,550) 8,738
Increase/(decrease) in trade and other payables 18 6,860 (4,383)
7,826 13,888
Tax received 8 429 736
Net cash generated from operating activities 8,255 14,624
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 16 26
Acquisition of property, plant and equipment 9 (349) (166)
Capitalised development expenditure 11 (3,573) (3,726)
Business combinations: Deferred consideration 11 (25) (25)
Purchase of other intangibles 11 (102) (12)
Interest received 7 115 44
Net cash used in investing activities (3,918) (3,859)
Cash flows from financing activities
Interest paid (1,774) (2,106)
Repayment of borrowings 17 - (7,000)
Payment of lease liabilities 19 (1,692) (1,401)
Net cash used in financing activities (3,466) (10,507)
Net increase in cash and cash equivalents 871 258
Cash at beginning of year 4,696 4,460
Foreign exchange movement 9 (22)
Cash at end of year 16 5,576 4,696
The accompanying notes form an integral part of the consolidated financial
report.
Notes to the consolidated financial report
(forming part of the financial report)
General Information
Gear4music (Holdings) plc is a public limited company, is incorporated and
domiciled in the United Kingdom, and is listed on the Alternative Investment
Market ('AIM') of the London Stock Exchange.
The group financial statements consolidate those of the Company and its
subsidiaries (collectively referred to as the "Group").
The principal activity of the Group is the retail of musical instruments and
equipment.
The registered office of Gear4music (Holdings) plc (company number: 07786708),
Gear4music Limited (company number: 03113256), and Cagney Limited (dormant
subsidiary; company number: 04493300) is Holgate Park Drive, York, YO26 4GN.
At the financial year-end the Group has four trading European subsidiaries:
Gear4music Sweden AB, Gear4music GmbH, Gear4music Europe Limited (formerly
known as Gear4music Ireland Limited), and Gear4music Spain SL. All four are
100% subsidiaries of Gear4music Limited.
Accounting policies
1.1 Basis of preparation
The financial information set out in this announcement does not constitute
statutory accounts as defined by section 434 of the Companies Act 2006.
It has been prepared in accordance with the recognition and measurement
principles of UK-adopted International Accounting Standards, including IFRIC
interpretations issued by the International Accounting Standards Board, and in
accordance with the AIM rules and is not therefore in full compliance with
IFRS. The principal accounting policies of the Group have remained unchanged
from those set out in the Group's 2024 annual report. The financial statements
have been prepared under the historical cost convention with the exception of
land and buildings which are accounted for at fair value.
The results for the year ended 31 March 2025 have been extracted from the full
accounts of the Group for that year which have not yet been delivered to the
Registrar of Companies. Grant Thornton UK LLP has reported on those accounts
and their report is (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The financial information for the year ended 31 March 2024 is derived from the
statutory accounts for that year, which have been delivered to the Registrar
of Companies. Grant Thornton UK LLP reported on those accounts and their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in financial position
and performance of the Group.
The announcement will be published on the Company's website. The maintenance
and integrity of the website is the responsibility of the directors. The work
carried out by the auditors does not involve consideration of these matters.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Accounting period
The financial report presented covers the years ended 31 March 2025 and 31
March 2024.
Measurement convention
The financial report has been prepared on the historical cost basis except for
land and buildings that are stated at their fair value.
Monetary amounts are expressed in Sterling (GBP) and rounded to the nearest
£1,000.
1.2 Adoption of new and revised standards
Various new or revised accounting standards have been issued which are not yet
effective.
The following new standards, and amendments to standards, have been adopted by
the Group during the year ended 31 March 2025, and the impact was not
material:
- Amendments to IFRS 16 - lease liability in a sale and leaseback
- Amendments to IAS 1 - classification of liabilities as current or
non-current
- Amendments to IAS 7 and IFRS 7 - supplier finance arrangements
- Amendments to IAS 21 - Lack of exchangeability
These are considered either not relevant or to have no material impact on the
Group.
1.3 Exceptional items
The business classifies certain events as exceptional items due to their size
and nature where it feels that separate disclosure would help understand the
underlying performance of the business. Restructuring and transformational
costs are considered on a case-by-case basis as to whether they meet the
exceptional criteria. Other items are considered against the exceptional
criteria based on the specific circumstances. In order for an item to be
presented as exceptional items, it should typically meet at least one of the
following criteria:
- It is unusual in nature or outside the normal course of business and
significant in value.
- Items directly incurred as a result of either a significant
acquisition or a divestment, or arising from a major business change or
restructuring programme which of itself has significant impact on the Income
Statement.
The presentation is consistent with the way Financial Performance is measured
by management and reported to the Board.
The FY24 exceptional costs of £487,000 related to redundancy costs incurred
during the restructure of various Head Office teams, principally Software
Development. These costs were paid in full in FY24.
1.4 Going concern presumption for the period to 30 June 2026
The Group's business activities and position in the market, and principal
risks, uncertainties and mitigations are described in the Group's annual
report.
The Group sets an annual budget against which performance is compared, and
operates a monthly reporting and rolling forecasting cycle, which the board
uses to ensures that the profitability, cash flow and capital requirements of
the business are sufficient to ensure its ongoing viability. Management relies
on weekly and monthly financial, commercial and operational reporting to
monitor, assess and control performance through the financial year. These
reports form the basis upon which the board satisfies its requirements to
update stakeholders with relevant financial performance and prospects.
In June 2025 the Group extended its RCF with HSBC at £30m for a further
one-year period to 15 June 2027. This facility provides a good and appropriate
level of headroom that has been factored into the Directors going concern
assessment.
The Group is focused on continuing to reduce its net debt from a financial
year-end peak of £24.2m at 31 March 2022 to £7.3m at 31 March 2024 and
£6.4m at 31 March 2025.
The Group has conducted a reverse stress test where revenue was assumed to
decrease 30% over the period to 30 June 2026 below a reasonable base case, and
the Group was able to rely on cost reduction and working capital mitigations
to continue to trade. The Group has therefore concluded that there is no
plausible scenario where the Group breaches its covenants, re-affirming the
assessment of the Group as a going concern.
The Directors have considered the Group's position and prospects in the period
to 30 June 2026 based on its offering in the UK and Europe and concluded that
potential growth rates remain strong. There is a diverse supply chain with no
key dependencies.
The Group's policy is to ensure that it has sufficient facilities to cover its
future funding requirements. At 31 March 2025 the Group had net debt of £6.4m
(31 March 2024: £7.3m), with £5.6m cash (31 March 2024: £4.7m cash).
Having duly considered all of these factors and having reviewed the forecasts
for the period to 30 June 2026, the Directors have a reasonable expectation
that the Group has adequate resources to continue trading for the foreseeable
future, and as such continue to adopt the going concern basis of accounting in
preparing the financial statements.
2 Segmental reporting
The Group's revenue and profit was derived from its principal activity which
is the sale of musical instruments and equipment.
In accordance with IFRS 8 'Operating segments', the Group has made the
following considerations to arrive at the disclosure made in these financial
statements. IFRS 8 requires consideration of the 'Chief Operating Decision
Maker ('CODM') within the Group, which in the Group's case is the Executive
Board. Operating segments have been identified based on the internal reporting
information and management structures with the Group. Based on this
information it has been noted that the CODM reviews the business as one
segment and receives internal information on this basis. Therefore, it has
been concluded that there is only one reportable segment.
Revenue by Geography
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
UK 90,230 83,109
Europe 54,695 59,222
Rest of the World 1,795 2,053
146,720 144,384
Administrative expenses by Geography
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
UK 32,605 32,669
Europe 4,730 4,940
37,335 37,609
In the year ended 31 March 2024 UK Administrative expenses of £32.7m include
£487,000 of exceptional redundancy costs.
The majority of Group assets are held in the UK except for local right of use
assets and property, plant and equipment, and cash in Sweden (31 March 2025:
£2.9m; 31 March 2024: £3.2m), Germany (31 March 2025: £1.5m; 31 March 2024:
£2.2m), Spain (31 March 2025: £0.8m; 31 March 2024: £1.2m), and Ireland (31
March 2025: £0.3m; 31 March 2024: £0.6m).
Revenue by Product category
All revenue is recognised on a point-in-time basis except for warranty income
which is spread over time.
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Other-brand products 104,677 100,404
Own-brand products 35,665 37,607
Carriage income 5,763 5,809
Warranty income 412 411
Other 203 153
146,720 144,384
3 Expenses and other income
Included in profit/loss are the following:
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Expenses
Rentals - short-term rentals of plant & machinery 7 10
Equity-settled share-based payment charges 46 184
Depreciation of property, plant and equipment 1,065 1,227
Depreciation of right-of-use assets 1,620 1,677
Amortisation of Intangible assets 4,118 3,739
Profit on disposal of property, plant and equipment (5) (16)
R&D expenditure recognised as an expense 126 183
Auditor remuneration - audit of the Group financial statements 75 72
Auditor remuneration - this year's audit of financial statements of 82 80
subsidiaries
Auditor remuneration - non-audit fees - Other audit related services 7 6
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Other income
RDEC tax credits 390 389
Rental income 289 244
Other 231 302
910 935
Rental income relates to our freehold Head-office in York. 'Other' includes
income from on-site café at York Head-office, and marketing support.
4 Staff numbers and costs
The average number of persons employed by the Group (including directors)
during the year, analysed by category, was as follows:
Year ended Year ended
31 March 2025 31 March 2024
Nos. Nos.
Administration 164 198
Selling and Distribution 287 286
451 484
The aggregate payroll costs of these persons were as follows:
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Wages and salaries 13,472 14,319
Social security costs 1,657 1,681
Contributions to defined contribution plans 881 994
Less: capitalised as development costs (2,386) (3,473)
13,624 13,521
In the year ended 31 March 2024, wages and salaries, social security costs, and staff pension costs of £487,000 relating to redundancy costs were reported as 'exceptional costs' and not included in the figures above.
Directors' remuneration
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Directors' emoluments 769 747
The aggregate remuneration of the highest paid director was £215,000 during
the year (2024: £230,000), including company pension contributions of £7,000
(2024: £8,000) that were made to a money purchase scheme on their behalf.
There were seven directors (2024: five) for whom retirement benefits accrued under a money purchase pension scheme.
5 Earnings per share
Diluted profit per share is calculated by dividing the net profit for the
period attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period plus the weighted average number
of ordinary shares that would be issued on the conversion of CSOP and LTIP
dilutive potential ordinary shares into ordinary shares.
Year ended Year ended
31 March 2025 31 March 2024
Profit attributable to equity shareholders of the parent (£'000) 832 651
Basic weighted average number of shares 20,976,938 20,976,938
Dilutive potential ordinary shares 969,604 1,102,450
Diluted weighted average number of shares 21,946,542 22,079,388
Basic profit per share 4.0p 3.1p
Diluted profit per share 3.8p 3.0p
6 Financial expenses and Financial income
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Bank interest 1,192 1,545
IFRS16 lease interest 418 490
Net foreign exchange loss 179 185
Unwinding of discount on deferred consideration 2 3
Total financial expenses 1,791 2,223
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Bank interest 115 44
Total financial income 115 44
7 Taxation
Recognised in the income statement
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Current tax expense
UK Corporation tax 125 -
Overseas Corporation tax 30 32
Adjustments for prior periods 334 (82)
Current tax expense/(credit) 490 (50)
Deferred tax expense
Origination and reversal of temporary differences 294 215
Adjustments for prior periods (54) (232)
Deferred tax expense/(credit) 240 (17)
Total tax expense/(credit) 730 (67)
The corporation tax rate applicable to the company was 25% for the years ended
31 March 2025 and 31 March 2024. The deferred tax assets and liabilities at 31
March 2025 have been calculated based on that rate.
Reconciliation of effective tax rate
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Profit before taxation 1,562 584
Current tax at 25% (2024: 25.0%)
Tax using the UK corporation tax rate for the relevant period: 371 146
Non-deductible expenses 61 94
Share based payment - permanent difference 6 -
Adjustments relating to prior year - deferred tax (54) (232)
Adjustments relating to prior year - current tax 334 (82)
Impact of overseas tax rate (8) (4)
R&D credit 20 11
Total tax charge/(credit) 730 (67)
8 Tangible fixed assets
Property, Plant and Equipment
Plant and Fixtures and fittings Motor Computer equipment Land and Buildings Total
equipment Vehicles
£000 £000 £000 £000 £000 £000
Cost or Valuation
At 1 April 2023 2,438 7,392 39 1,421 8,201 19,491
Additions - 157 - 8 - 165
Disposals - - (9) (33) - (42)
Balance at 31 March 2024 2,438 7,549 30 1,396 8,201 19,614
Additions 78 226 - 44 - 348
Disposals (49) (4) - (34) - (87)
Balance at 31 March 2025 2,467 7,771 30 1,406 8,201 19,875
Depreciation and impairment
At 1 April 2023 1,867 4,072 33 1,105 480 7,557
Depreciation charge for the year 235 682 1 144 165 1,227
Disposals - - (9) (23) - (32)
Balance at 31 March 2024 2,102 4,754 25 1,226 645 8,752
Depreciation charge for the year 185 616 1 99 164 1,065
Disposals (50) (2) - (24) - (76)
Balance at 31 March 2025 2,237 5,368 26 1,301 809 9,741
Net book value as at 31 March 2025 230 2,403 4 105 7,392 10,134
Net book value as at 31 March 2024 336 2,795 5 170 7,556 10,862
Net book value as at 31 March 2023 571 3,320 6 316 7,721 11,934
Freehold property valuation - Holgate Park Head Office
At 31 March 2023 the freehold office premises at Holgate Park were revalued at
market value using information provided by an independent chartered surveyor.
The valuation was carried out in accordance with the provisions of RICS
Appraisal and Valuation Standards ('The Red Book'). The appraisal was carried
out using level 3 inputs observable inputs including prices for recent market
transactions for similar properties and incorporates adjustments for factors
specific to the property in question, including plot size, location,
encumbrances and current use. Market value at 31 March 2023 was confirmed at
£6.5m.
Management have reviewed the fair value at 31 March 2025 and concluded that
this would not be materially different. If the property had not been revalued
the net book value would have been £4.7m.
Freehold property valuation - Bacup distribution centre
In December 2021 the Group acquired a 25,145 sq. ft freehold warehouse
property in Bacup, Lancashire as part of the acquisition of AV Distribution
Ltd. The property was valued on 10 August 2021 at £1.26m by an independent
chartered surveyor on behalf of HSBC Bank plc for loan security purposes.
In consultation with independent chartered surveyors, Management reviewed the
fair value as at 31 March 2025 and concluded that this would not be materially
different.
Security
The Group's bank borrowings are secured by fixed and floating charges over the
Group's assets.
9 Right-of-use assets
Leasehold properties
At 31 March 2025 the Group has five leased properties comprising Distribution
Centres and Showrooms in York, Sweden and Germany, and Distribution Centres in
Ireland and Spain.
The associated right-of-use assets are as follows:
Short leasehold properties
£000
Cost
At 1 April 2023 12,765
Modifications 2,666
Net exchange differences (178)
Balance at 31 March 2024 15,253
Modifications -
Net exchange differences -
Disposals -
Balance at 31 March 2025 15,253
Depreciation
At 1 April 2023 5,477
Depreciation charge for the year 1,677
Balance at 31 March 2024 7,154
Depreciation charge for the year 1,620
Balance at 31 March 2025 8,774
Net book value as at 31 March 2025 6,479
Net book value as at 31 March 2024 8,099
Net book value as at 31 March 2023 7,288
1
10 Intangible assets
Software platform additions in the year-ended 31 March 2025 comprised
£2,386,000 (2024: £3,473,000) of internally developed additions being 95% of
software developer wages and salaries, £1,049,000 (2024: £78,000) of
externally developed additions, £117,000 (2024: £149,000) of capitalised
interest, and £21,000 (2024: £26,000) of software licences for tools used in
development.
The amortisation charge is recognised in Administrative expenses within the
profit and loss account.
Goodwill Software platform Brand Domains Other Intangibles Total
£000 £000 £000 £000 £000 £000
Cost
At 1 April 2023 5,324 25,005 1,372 3,031 149 34,881
Additions - 3,726 - 12 - 3,738
Balance at 31 March 2024 5,324 28,731 1,372 3,043 149 38,619
Additions - 3,573 98 4 - 3,675
Balance at 31 March 2025 5,324 32,304 1,470 3,047 149 42,294
Amortisation
At 1 April 2023 - 12,217 563 3 49 12,832
Amortisation for the year - 3,699 - 3 37 3,739
Balance at 31 March 2024 - 15,916 563 6 85 16,570
Amortisation for the year - 4,076 - 4 38 4,118
Balance at 31 March 2025 - 19,992 563 10 123 20,688
Net book value as at 31 March 2025 5,324 12,312 907 3,037 26 21,606
Net book value as at 31 March 2024 5,324 12,814 809 3,037 64 22,049
Net book value as at 31 March 2023 5,324 12,788 809 3,028 100 22,049
Other intangibles
Other intangibles comprise customer relationships, trademarks, and domain
names acquired on acquisition of AV Distribution Ltd.
Goodwill
On 19 March 2012 goodwill arose on the acquisition of the entire share capital
of Gear4music Limited (formerly known as Red Submarine Limited).
On 1 January 2017 goodwill arose on the acquisition of a software development
business from Venditan Limited, which effectively brought development of the
group's proprietary software platform in-house
On 21 June 2021 goodwill arose on the acquisition of the business and assets
of Premier Music International Limited and High House 123 Limited Liability
Partnership for £1.685m.
On 1 December 2021 goodwill arose on the acquisition of the share capital of
AV Distribution Ltd, an online retailer of Home Cinema and HiFi equipment, for
total consideration of £6.05m (on a cash free, debt free basis).
Goodwill balances are denominated in Sterling:
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Gear4music Limited 417 417
Software development business 1,431 1,431
Premier business 960 960
AV Distribution Ltd 2,516 2,516
5,324 5,324
Impairment testing
In accordance with IAS 36 Impairment of Assets, the Group reviews the carrying value of its intangible assets. A detailed review was undertaken at 31 March 2025 to assess whether the carrying value of assets was supported by the net present value in use calculations based on cash-flow projections from formally approved budgets and longer-term forecasts.
Intangible assets include the proprietary software platform, the Gear4music and Premier brand names, the AV.com domain, goodwill and 'other intangibles'. Goodwill and the AV.com domain have an indefinite useful life.
A Cash Generating Unit ("CGU") is defined as the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups thereof. The Group has considered its operational and commercial configuration at 31 March 2025 and concluded it has a single CGU to which all intangibles are allocated. The carrying value of the CGU includes these intangibles, the right-of-use assets, and all other PPE was £30.8m (2024: £33.7m). An impairment review has been performed on this CGU. The recoverable amount of this CGU has been determined based on value-in-use calculations. In assessing value in use, a two-year forecast to 31 March 2027 was used to provide cash-flow projections that have been discounted at a pre-tax discount rate of 14.40% (2024: 13.58%). The cash flow projections are subject to key assumptions in respect of revenue growth, gross margin performance, overhead expenditure, and capital expenditure. Management has reviewed and approved the assumptions inherent in the model:
- Annual forecast revenue growth of 8% in 2026; 4% in 2027 and 2% from 2028 based on growth by geographical market, based on market size and estimate of opportunity, trends, and Management's experience and expectation.
- 2029-30 and into perpetuity revenue growth of 2%;
- Gross margins are forecast to improve in the 2026-2027 forecast period; and
- Wage increases are a function of recruitment and review of current
staff, with a range of % increases.
No impairment loss was identified in the current year (2024: £nil). The
valuation indicates significant headroom and a number of reasonable revenues,
profitability and capital expenditure-based sensitivities were put through the
model, and the results did not result in an impairment.
11 Inventories
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Finished goods 34,193 25,643
The cost of inventories recognised as an expense and included in cost of sales
in the year amounted to £97.6m (2024: £95.8m).
Management has included a provision of £81,000 (31 March 2024: £52,000),
representing a 100% provision against returns stock subsequently found to be
faulty, that is retained to be used for spare parts on the basis there is no
direct NRV value, and a provision based on the expected product loss on
dealing with returns stock.
12 Trade and other receivables
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Trade receivables 1,100 1,125
Social security and other taxes 406 538
Prepayments 1,641 1,416
3,147 3,079
Corporation tax asset of £239,000 (31 March 2024: £768,000) has been disclosed separately on the face of balance sheet in both years, in accordance with IAS 1.54(n).
Credit risk and impairment
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The carrying amount of trade receivables represents the maximum credit exposure. The Group does not take collateral in respect of trade receivables.
Trade receivables comprise balances dues from schools and colleges, and funds lodged with payment providers. The value of the Expected Credit Loss ('ECL') is immaterial.
Customer receivables
The Group faces low credit risk as customers typically pay for their orders in full on shipment of the product, with the only exception being a small number of education accounts with schools and colleges that have 30-day terms (2.9% of 2025 revenues; 2.7% of 2024 revenues).
Funds lodged with payment providers
Funds lodged with Amazon, Digital River, Klarna and V12 Retail Finance totalled £549,000 on 31 March 2025 (31 March 2024: £508,000) and are included in Trade receivables. Credit risk in relation to cash held with financial institutions is considered very low risk, given the credit rating of these organisations.
13 Cash and cash equivalents
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Cash and cash equivalents 5,576 4,696
Cash-in-transit to the Group at 31 March 2025 was £697,000 (31 March 2024: £434,000) and is included above, representing uncleared lodgements where money providers have notified transfers pre-year-end.
14 Interest-bearing loans and borrowings
This note contains information about the Group's interest-bearing loans and
borrowing which are carried at amortised cost.
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Bank loans 12,000 12,000
12,000 12,000
Revolving Credit Facility
At 31 March 2025 bank loans were drawn loans under the Group's three-year
£30m Revolving Credit Facility ('RCF') with HSBC. This facility expires in
June 2027 and is secured by a debenture over the Group's assets.
Loans incur interest at variables rates linked to SONIA, with a margin
non-utilisation fee.
Changes in interest-bearing loans and borrowings
Year ended 31 March 2025 Year ended 31 March 2024
£000 £000
Opening balance 12,000 19,000
Changes from financing cash flows
Proceeds from loans and borrowings - -
Repayment of borrowings - (7,000)
Total changes from financing cash flows - (7,000)
Other changes
Interest expense (note 6) 1,192 1,545
Interest expense capitalised into intangible assets (note 10) 117 149
Interest paid (1,356) (1,667)
Movement in interest accrual (included in accruals and deferred income - note 45 (30)
15)
Fair value movement on loans 2 3
Total other changes - -
Closing balance 12,000 12,000
Other bank facilities
Gear4music has a number of guarantees in relation to VAT, and issues letter of credits to its suppliers. At 31 March 2025 the Group had guarantees of £711,000 in place (31 March 2024: £724,000) and letters of credit of £30,000 (31 March 2024: £57,000).
15 Trade and other payables
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Current
Trade payables 12,112 6,895
Accruals and deferred income 4,802 3,585
Deferred consideration - 23
Other taxation and social security 3,007 2,975
19,921 13,478
Non-current
Accruals and deferred income 238 90
238 90
Year-end accruals and deferred income included:
- £1,425,000 (31 March 2024: £1,353,000) relating to customer prepayments; and
- £50,000 (31 March 2024: £90,000) relating to the estimated cash bonuses
accrued relating to the CSOP schemes.
The Directors consider the carrying amount of other 'trade and other payables'
to approximate their fair value. The interest expense of £2,000 (2024:
£2,000) in relation to the unwinding of the discount is disclosed in note 6.
16 Lease liabilities
Short-term leases and leases of low value of £7,000 (31 March 2024: £10,000)
are included in administrative expenses.
The Group has a lease for a motor vehicle, and five properties (31 March 2024:
six). Each lease is reflected on the statement of financial position as a
right-of-use asset and a lease liability. The Group classifies its
right-of-use assets in a consistent manner to its property, plant and
equipment.
The table below describes the nature of the Group's leasing activities by type
of right-of-use asset:
Right-of-use asset No of right-of-use assets leased Range of remaining term Average remaining lease term No of leases with extension options No of leases with options to purchase No of leases with termination options
Property 5 16 to 96-months 40-months - - -
Motor vehicles 1 8-months 8-months - 1 -
Future minimum lease payments due at 31 March 2025 were as follows:
Within 1 year 1-5 years More than 5 years
£000 £000 £000
Lease payments 2,156 4,594 2,084
Finance charge (287) (549) (188)
Net present value 1,869 4,045 1,896
Future minimum lease payments due at 31 March 2024 were as follows:
Within 1 year 1-5 years More than 5 years
£000 £000 £000
Lease payments 2,138 7,011 1,923
Finance charge (394) (1,124) (161)
Net present value 1,744 5,887 1,762
Lease liabilities are presented in the statement of financial position as
follows:
31 March 31 March
2025 2024
£000 £000
Current 1,869 1,794
Non-current 5,940 7,599
Total 7,809 9,393
In July 2023 the Group concluded a rent review in relation to its York
distribution centre resulting in a lease modification.
17 Share capital and reserves
Year ended Year ended
31 March 2025 31 March 2024
Share capital Number Number
Authorised, called up and fully paid:
Ordinary shares of 10p each 20,976,938 20,976,938
The Company has one class of ordinary share and each share carries one vote
and ranks equally with the other ordinary shares in all respects including as
to dividends and other distributions.
Share premium
Year ended Year ended
31 March 2025 31 March 2024
£'000 £'000
Opening 13,286 13,286
Issue of shares - -
Closing 13,286 13,286
Proceeds received in addition to the nominal value of the shares issued have
been included in share premium, less registration and other regulatory fees
and net of related tax benefits.
Foreign currency translation reserve
Year ended Year ended
31 March 2025 31 March 2024
£'000 £'000
Opening 103 (74)
Translation gain 37 177
Closing 140 103
The foreign currency translation reserve comprises exchange differences
relating to the translation of the net assets of the Group's foreign
subsidiaries from their functional currency into the parent's functional
currency.
Revaluation reserve
Year ended Year ended
31 March 2025 31 March 2024
£'000 £'000
Opening 1,176 1,203
Depreciation transfer (26) (32)
Closing 1,145 1,171
The revaluation reserve represents the unrealised gain generated on
revaluation of the freehold office property in York on 28 February 2018, 31
March 2020 and 31 March 2023. It represents the excess of the fair value over
historic net book value.
Retained earnings
Year ended Year ended
31 March 2025 31 March 2024
£'000 £'000
Opening 21,708 20,721
Share based payment charge 63 154
Deferred tax 5 150
Depreciation transfer 26 32
Profit/(loss) for the year 832 651
Closing 22,634 21,708
Retained earnings represents the cumulative net profits recognised in the
consolidated income statement.
18 Related parties
Transactions with key management personnel
The compensation of key management personnel is as follows:
Year ended Year ended
31 March 2025 31 March
2024
£000 £000
Key management emoluments including social security costs 734 715
Short-term employee benefits 8 7
Company contributions to money purchase pension plans 27 25
Employers National Insurance 83 83
852 830
Key management personnel comprise the Chair, CEO, CFO, CCO and NEDs. All
transactions with key management personnel have been made on an arms-length
basis.
In 2025 seven directors accrued retirement benefits under a money purchase
scheme (2024: five).
Compensation includes share-based payments of £97,000 (2024: £97,000) in
relation to the LTIP.
19 Post balance sheet events
In April 2025 the Group purchased stock and certain intangible assets from
Administrators of GAK.co.uk Ltd and The Guitar, Amp & Keyboard Centre Ltd.
In June 2025 the Group purchased stock and certain intangible assets from
Administrators of S&T Audio Limited trading as 'PMT Play Music Today'.
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