PG plc - Full-Year Results
On 28 August 2018, PG plc published the annual report and financial statements for the financial year ended 30 April 2018. In this respect, it is important to highlight that these financial results are not directly comparable with those of the previous financial year (reflecting the period from May 2016 to April 2017) as the retail mall within the PAMA Shopping Village was inaugurated in October 2016. As such, the financial year ended 30 April 2018 is the first one to include the operation and contribution of all three business units of PG – namely the PAVI and PAMA supermarkets, as well as the franchise operations related to the sale of Zara branded products.
Performance Overview
During the 2017/18 financial year, PG reported an increase in revenues of 8.9% to €99.8 million. Both the supermarket (+8.3% to €83.4 million) and the franchise operations (+12.3% to €16.5 million) registered strong growth, on the back of the increased maturity of the PAMA Shopping Village as well as the impact of a full twelve-month period of the PAMA retail mall.
The higher level of business activity, coupled with investments in HR, led to increased costs which in aggregate amounted to €88.2 million (net of other income of just €0.77 million) compared to €80.3 million in the previous twelve months. Nonetheless, as the growth in revenues was higher than the increase in costs, operating profits improved by 2.7% to €11.7 million (FY2016/17: €11.4 million). Excluding depreciation charges of €1.2 million, EBITDA improved by 1.9% to €12.9 million compared to €12.6 million in FY2016/17. This is 10.5% lower than the projected EBITDA of €14.4 million at the time of the equity IPO, reflecting much higher actual costs incurred than previously estimated (€83.4 million) while actual revenues of just under €100 million were 3.6% superior to the projected figure of €96.3 million.
After taking into account a marginal loss of €0.03 million related to the share of results of associates (namely PAMA Shopping Village Ltd and PAMA Carparks Ltd) as well as net finance costs amounting to €0.59 million (FY2016/17: €0.56 million), the Group reported a pre-tax profit of €11.1 million, representing an increase of 2.5% over the €10.8 million figure in the previous twelve months. The tax charge for the year amounted to €3.42 million, leading to a net profit of €7.66 million. This translates into an earnings per share of €0.0709 (FY2016/17: €0.0681) and a return on average equity of almost 25%.
The Statement of Financial Position as at 30 April 2018, compared to the corresponding figures as at 30 April 2017, shows that total assets increased by 11.8% to €78.8 million (30 April 2017: €70.5 million). This reflects higher amounts of property, plant and equipment following investments to the complete renovation of Zara Sliema which is currently ongoing and refurbishment works done at PAVI, as well as a higher cash balance of €3.01 million compared to €1.32 million as at 30 April 2017.
Total liabilities also increased and reached €45 million (30 April 2017: €42.7 million), mostly due to an increase of almost 30% in trade and other payables. On the other hand, total borrowings dropped by 13.4% to €20.7 million while net borrowings contracted by nearly 28% to €17.7 million (30 April 2017: €22.6 million). Overall, the Group’s equity base expanded by 21.4% to €33.8 million. This translates into a net asset value per share of €0.3128 (30 April 2017: €0.2576 per share).
Dividend
The Directors declared a net dividend of €0.0236 per share which will be paid on 5 September. Coupled with the net dividend of €0.0157 per share which was paid on 11 December 2017, the total net dividend distribution for the year amounts to €0.0394. This represents a payout ratio of 55.5% which is in line with the indicated dividend policy at the time of the equity IPO of a minimum dividend distribution of 50%.
Outlook
In their commentary, the Directors made reference to the highly competitive business environment in which the Group operates as well as to the prevailing tight labour market conditions which are translating into higher staff costs for the Group. On the other hand, however, the Directors also noted the current favourable macro-economic conditions which, on the whole, are beneficial to the Group. Looking ahead, Zara Sliema is scheduled to re-open for business in November 2018.