PG plc - Full-Year Results

On 29 August 2019, PG plc published the Annual Report and Financial Statements for the financial year ended 30 April 2019. 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 2017 to April 2018) as the company’s flagship Zara® store located in Sliema was closed for extension and complete refurbishment from July to November 2018.

Performance Overview

During the 2018/19 financial year, PG reported a 6.7% increase in revenues to just under €108 million (FY2017/18: €101.2 million). The growth emanated from the ‘supermarkets & associated retail operations’ segment which reported a 9.6% increase in revenues during the period under review to €92.9 million (FY2017/18: €84.8 million). On the other hand, revenues generated by the ‘franchise operations’ segment contracted by 8.3% to €15.1 million (FY2017/18: €16.5 million) due to the 5-month period during which the Zara® Sliema store was closed.

The higher level of business activity within the ‘supermarkets & associated retail operations’ segment, coupled with the investments in the new Zara® Sliema store as well as HR led to an overall increase in total overheads of 6.5% to €95.4 million (FY2017/18: €89.5 million). However, operating profit still improved by 7.8% to €12.6 million compared to €11.7 million in the previous financial year. Furthermore, PG also recorded a slight improvement in its operating profit margin to 11.7% against 11.5% in FY2017/18 despite the temporary closure of the Zara® Sliema store.

After taking into account a marginal profit of €0.01 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 €0.63 million (FY2017/18: €0.59 million), PG reported a pre-tax profit of nearly €12 million, representing an increase of 8.2% over the €11.1 million figure in the previous twelve months. The tax charge for the year amounted to €3.05 million, leading to a net profit of €8.94 million which is 16.7% higher than the previous comparable figure of €7.66 million. The net profit generated by PG for the 2018/19 financial year translates into a return on average equity of 24.7% which is virtually unchanged from the previous year.

The Statement of Financial Position as at 30 April 2019 when compared to the corresponding figures as at 30 April 2018 shows that total assets increased by 9.1% to €86 million mostly due to higher amounts of property, plant and equipment. Similarly, total liabilities increased by 5.5% to €47.5 million reflecting a higher level of borrowings as PG took on fresh debt to finance the extension and complete refurbishment of the Zara® Sliema store. Overall, PG’s equity base expanded by 13.9% to €38.5 million and its net gearing ratio increased to 36.8% from 34.4% as at 30 April 2018.

Dividend

PG paid out total net dividends of €0.0417 per share for the 2018/19 financial year. This represents a payout ratio of 50.4% 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 explained that PG operates in a highly competitive business environment and is subject to various risks such as increasing pressures on margins and increased competition to attract and retain customers. Furthermore, in a period of relatively high employment, the market is also characterised by increased difficulty in attracting and retaining staff, with corresponding pressures on compensation levels.

On the other hand, PG is currently operating in a buoyant economy and favourable economic conditions. Moreover, the Directors reiterated that PG continues to conduct its business in a prudent manner seeking to avoid undue levels of risk that could impair its resilience when faced with unfavourable market conditions or that could inhibit its ability to capitalise on suitable opportunities that may be identified from time to time.

Download

PG plc – 2018/19 Annual Report & Consolidated Financial Statements.