By now, it's common knowledge that PMT ( S&T Audio Ltd) have gone into administration, never to return in pretty much any form.

This is sad for everyone, apart from those in competition with them! However it's not just the people that worked there that we feel for, it's the suppliers and more importantly the customers that may have gift vouchers or deposits on equipment, which they are unlikely to see back.

Why did they fail?

It wasn't for lack of customers. Their last published accounts showed a turnover of just shy of £50 million and a reasonable gross profit. However, every year they were making a loss.

In addition, since a management buyout, they were having to pay the lenders back. These guys don't wait around for their money!

Without a forensic deep dive into the accounts we can't know for sure what the problems were, but there were definitely problems. These include:

End of business rate relief. The post-Covid business rates relief is being phased out, so businesses have been paying substantially more.

Increase in Minimum Wage. Whether PMT were paying minimum wage / Living wage or some other hourly rate, there has been an increase in wage costs. Add to this the recent National insurance hike, pension contributions and other payroll costs against a stagnant market and it erodes your net profit.

High Rent on Retail Properties.

Rent is normally paid quarterly. That's a big chunk of cash out and there's a pattern that businesses tend to fail around the December/ January,  March/April and June/July and September/ October as the rent is due on the 25th March, 24th June, and 29th September and December. If a company can see that they may not be able to fulfil their obligations then they may consider appointing a business restructuring agent, who may suggest that administration is the only way to recover some money quickly and sell off assets. This appears to have been the case here.

Suppliers who are not customer friendly.

There are certain suppliers who will send what they want, when they want and cannot or will not give any idea when stock is on its way, despite the information been known to them.

This has a deleterious effect on cash flow as planning for bills goes out of the window.

Before the management buy out, the company was owned and run by two colourful characters who could get pretty much what they wanted by pretty much any means to their disposal. With them gone, it looks like the deals that they had then, were not as good as they got later, meaning again that cash flow and margin suffered.

There had been industry rumours for around 2 years that things were not good. These must have come from within the company as the figures from Companies House showed a reasonable business, able to weather the business climate. So it was a shock to hear of their demise. It was a shame as it was a good business and didn't deserve to fail. They did most things right.