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 ("FY25")
Year ended 31 March 2024 ("FY24")
Change on 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 Andrew Wass, Executive Chair Gareth Bevan, Chief Executive Officer Chris Scott, Chief Financial Officer
+44 (0)20 3405 0205
Singer Capital Markets - Nominated Adviser and Broker Peter Steel/Sam Butcher, Corporate Finance Tom Salvesen, Corporate Broking
+44 (0)20 7496 3000
Alma - Financial PR Rebecca Sanders-Hewett Joe Pederzolli Sarah Peters
+44 (0)20 3405 0205 Gear4music@almastrategic.com
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
Note
Year ended31 March 2025
Year ended 31 March 2024
£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 Other comprehensive income Items that will not be reclassified to profit or loss: Revaluation of property, plant and equipment Deferred tax movements Items that are or may be reclassified subsequently to profit or loss: Foreign currency translation differences - foreign operations Total comprehensive income for the year
8
832 5 36 873
651 - 150 177 978
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 31 March 2025
Year ended 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 capital
Share premium
Foreign currency translation reserve
Revaluation reserve
Retained earnings
Total 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 Depreciation of right-of-use assets
1,065 1,620
1,227 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 subsidiaries
82
80
Auditor remuneration - non-audit fees - Other audit related services
7
6
Year ended 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 31 March 2024
£000
£000
Bank interest
115
44
Total financial income
115
44
7 Taxation
Recognised in the income statement
Year ended 31 March 2025
Year ended 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 31 March 2025
Year ended 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 equipment
Fixtures and fittings
Motor Vehicles
Computer equipment
Land and Buildings
Total
£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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 15)
45
(30)
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 31 March 2025
Year ended 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 2025
31 March 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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 31 March 2025
Year ended 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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