Final Results

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:

Trading Outlook and Strategy:

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:

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

* 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

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.

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

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%).

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

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).

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:

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.

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

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

The accompanying notes form an integral part of the consolidated financial report.

Consolidated Statement of Financial Position

The notes 1 to 19 form part of the consolidated financial report.

Company registered number: 07786708

Consolidated Statement of Changes in Equity

The accompanying notes form an integral part of the consolidated financial report.

Consolidated Statement of Cash Flows

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

Administrative expenses by Geography

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.

3 Expenses and other income

Included in profit/loss are the following:

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:

The aggregate payroll costs of these persons were as follows: