PG plc - Interim Results

On 18 December 2019, PG plc published its Interim Financial Report covering the six months ended 31 October 2019. In this respect, it is important to highlight that these financial results are not directly comparable with those of the previous financial period (reflecting the period from May 2018 to October 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 interim financial period ended 31 October 2019, PG reported a 16.8% increase in revenues to €58.1 million reflecting a full six-month period of the newly refurbished ZARA store in Sliema as well as continued growth at both PAVI and PAMA. In fact, the ZARA franchise operations generated €10.4 million in revenues during the period under review compared to just €4.9 million in the same period last year. The Directors noted that this level of turnover is also 37.7% higher than the €7.5 million turnover achieved during the six month period ended 31 October 2017, representing a full six months of the ZARA store in Sliema before the extensive refurbishment and expansion carried out during 2018. Furthermore, a 6.4% increase in turnover was also achieved across the Group’s supermarkets and associated retail operations to €47.7 million. This includes a 14% increase in revenue at PAVI as the supermarket underwent a gradual refurbishment which is now almost complete whilst sales at PAMA only increased at around 1% as operations stabilised. The PAMA operation also benefited from a growing rental income stream.

Given the growth in business activity, cost of sales also increased by 14.5% to €48.4 million leading to a gross profit of €9.7 million representing a 29.3% increase over the previous comparable period. Moreover, the gross profit margin improved from 15% to 16% (excluding the impact of IFRS16) reflecting the higher margins generated by the franchise operations which were boosted by the additional contribution from the newly refurbished and expanded ZARA store in Sliema as well as reflecting the Group’s largely fixed cost base.

Other operating expenses eased by 6.1% to €1.6 million leading to an operating profit of €8.1 million compared to €5.8 million in the same period last year. Similar to past years, the supermarkets and associated retail operations remain the major contributor with a segmental operating profit of almost €6.4 million representing a 23.1% improvement over the same period last year. The reopening of the ZARA store in Sliema also boosted the franchise operations which returned a segmental operating profit of €1.7 million compared to €0.59 million in the same period last year.

Net finance costs amounted to just under €0.8 million compared to €0.29 million in the same period last year. The increase is mostly related to the adoption of IFRS16 whereby lease obligations are now being accounted for under amortisation as well as finance costs.

Overall, PG registered a pre-tax profit of €7.3 million representing a 32.3% improvement over the comparable figure for the same period last year. After accounting for a tax charge of just over €2 million, PG’s net profit for the period under review amounted to €5.3 million representing a 28.3% increase from the €4.1 million net profit registered during the previous comparable period ended 31 October 2018. This translates into an earnings per share figure of €0.0491 (H1 2018: €0.0383).

The Statement of Financial Position as at 31 October 2019 when compared to the corresponding figures as at 30 April 2019 shows that total assets increased by 20.6% to €103.7 million largely reflecting the inclusion of the value of the right-of-use asset arising from the leases in line with the requirements of the newly adopted IFRS16. Similarly, total liabilities grew by 32.1% to €62.7 million reflecting the inclusion of the present value of the Group’s lease liabilities in line with IFRS16. The Directors further noted that net debt dropped to €17.5 million from €22 million as at the end of April 2019 as the Group’s liquidity further strengthened during the six months under review. Overall, PG’s total equity improved by 6.5% to just below €41 million which translates into a net asset value of €0.3794 per share.


PG paid out a net interim dividend of €0.0185185 per share for the interim period under review. This represents a payout ratio of 37.7%.


In their commentary, the Directors noted that the completion of the new ZARA store in Sliema and the refurbishment program at PAVI have brought all the Group’s facilities to a consistently high level of quality.

The PAMA operations are expected to remain steady although the product offering has been enhanced with the opening of a pharmacy, the refurbishment of the bakery (which now includes on-premises baked products) and the construction of a new drinks outlet.

The PAVI refurbishment is scheduled to be completed in 2020 whilst the catering offering will be greatly enhanced during 2020 as the Group intends to convert a currently unutilised space. Furthermore, subject to the issuance of planning permissions, an additional car parking floor will be developed at PAVI which will be roofed over by PV panels. The Directors noted that although PAVI continues to show encouraging growth, this will eventually diminish as the refurbished complex reaches its optimum performance level.

The ZARA and ZARA Home operation at the Sliema store have stabilised and reached a sales level and profit contribution commensurate with the €10.2 million investment undertaken.

The Directors noted that competition remains intense and although, to date, the Group has not been adversely impacted by the prevailing political uncertainty, it is vulnerable to such uncertainty. Nonetheless, the Directors are cautiously optimistic that the Group will deliver results in the second half of its financial year which are not inferior to those recorded in the comparable period in the previous financial year ended 31 April 2019.

Meanwhile, the Group is focusing on upgrading its core IT system. Currently, PG is negotiating the final contract with the selected bidder and is expecting to complete the project in 2021. The new IT system should allow the Group to offer an enhanced shopping experience to its customers whilst also enabling it to expand its operations. In this respect, the Directors noted that the Group’s strong liquidity position enables it to pursue new growth opportunities whilst retaining a strong element of resilience. In fact, the Group has already identified opportunities to expand its supermarket and associated retail business although these are still at a very early stage and subject to the successful conclusion of commercial negotiation and/or the issuance of the relevant development permits.


PG plc – Interim Financial Report covering the six month period ended 31 October 2019.

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