City briefs: Gear4music and CPP Group

Online musical instruments and music equipment retailer, Gear4music, has recorded revenues of £49.5m for the three months to 31 December 2022, a 5% rise on FY22 Q3.

The business says an 11% rise in European sales growth reflects successful execution of infrastructure investment during FY22 to improve its European customer proposition.

But UK revenues were affected by continued weak consumer sentiment and the consequences of the Royal Mail strikes through December.

Gear4music believes current consensus market expectations for the year ending 31 March 2023 are revenues of £155.1m, EBITDA of £8.9m, pre-tax profits of £1m.

Chief executive officer, Andrew Wass, said: “UK revenues during December were impacted by Royal Mail strikes and the knock-on disruption of other couriers, which led to longer delivery times and an earlier pre-Christmas cut-off date than we would expect under normal trading conditions.

“A continuing targeted reduction of both on-hand inventory and net debt, combined with a period of weaker consumer sentiment and lower own-brand sales led to subdued gross margins, although tight control over marketing and labour costs largely compensated for this and we expect margins to recover during FY24.

“As we continue to make good progress with new growth orientated projects, we remain confident in our long-term profitable growth strategy, and that the Group is appropriately resourced and well placed to make the most of opportunities as they arise.”

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In its trading update for the year ended 31 December 2022, CPP Group, a provider of assistance and insurance products, expects revenues from continuing operations will be around 19% ahead of the prior year.

EBITDA from continuing operations is expected to be better than market expectations, at about £6.9m (2021 restated: £7.2m) for the year.

In October 2022 the Leeds-headquartered group set out the conclusions from its strategy review which will see it exit from its legacy operations, address critical IT infrastructure requirements, and migrate the Group towards an InsurTech business led by Blink and supported by CPP India and CPP Turkey.

Blink is CPP’s InsurTech platform servicing the global travel sector.

The group notes it has made good progress with regard to its legacy operations, withdrawing from China, Bangladesh, and Mexico.

In the fourth quarter of last year, the CPP agreed terms with third party underwriters to exit from its Spanish and Portuguese operations over the next 12 months.

CPP’s update explains: “The group’s change management programme is a complex set of seven inter-dependent projects that is not expected to conclude before the end of the 2025 financial year.

“Inevitably, given the scale of the changes being implemented, there will be hiccups along the way, which in turn may lead to some adjustment to both targets and deadlines.

“Notwithstanding the challenges of implementation, the direction and speed of travel is considered to be both right and necessary.

“The core business (Blink, CPP India, CPP Turkey and Globiva) performed well during 2022 and we expect to make further progress in the current financial year.”

CPP is due to publish its audited full year results on 28 March 2023.