GAP Group plc - Updated Financial Analysis Summary

On 1 June 2023, Gap Group plc published an updated Financial Analysis Summary. The following are the main highlights of the expected financial performance and financial position of Gap Group plc in 2023:

  • Revenues are expected to increase to €38.5 million compared to €29.5 million in 2022, however this is lower than the amount of €46.4 million projected for 2023 in last year’s 2023 forecasts due to delays in the conclusion of the deeds of sale for the properties at the Mosta Development which will be executed in 2024. Meanwhile, Gap Group will also start placing on the market other residential units forming part of ongoing projects located in Qawra and Mosta.
  • Total operating costs are expected to amount to €29.5 million, largely reflecting the cost of property sold. As a result, operating profit is expected to amount to €9.0 million. The EBIT margin is projected to remain at 23.4%, virtually unchanged from the previous year.
  • Overall, Gap Group is forecasting a net profit of €6.1 million compared to €5 million recorded in 2022.
  • Apart from the redemption of the outstanding €8.35 million 4.25% secured bonds maturing in October 2023, Gap Group stated the intention of exercising the early redemption option for the outstanding €16.6 million 3.70% secured bonds 2023/25 on the first early redemption date, that is 18 December 2023.
  • Indeed, the forecasted Statement of Financial Position as at 31 December 2023 shows that total borrowings are expected to contract sharply to €49.4 million (31 December 2022: €76.3 million). However, net debt is anticipated to increase by 18% to €39.7 million on account of lower cash balances which will be used in ongoing development projects.
  • Coupled with the increase in the equity base to €32.9 million, the net debt to equity multiple is expected to improve to 1.2 times compared to 1.3 times as at the end of 2022. Likewise, the gearing ratio (calculated as total debt divided by total debt plus equity) is anticipated to drop to 60.1% from 74.4% in 2022 whilst the debt-to-asset ratio is forecasted to ease to 0.57 times from 0.69 times in 2022.