On 15 December 2022, PG plc published its interim financial results for the six-month period ended 31 October 2022.
Revenue increased by 13.8% to a new record (at interim stage) of €80.8 million reflecting the higher level of turnover achieved by both the ‘Supermarkets & Associated Retail Operations’ (+14.9% to €67.1 million) and the ‘Franchise Operations’ (+9% to €13.6 million). In this respect, PG explained that despite the high inflation particularly in food prices which has also resulted in changes to buying patterns to cheaper alternatives, the efforts made by the Group to dampen the impact of price increases within its supermarkets and associated retail outlets were appreciated by the market and led to sales volume growth of around 9%. PG explained that it increased the scale of its direct buying and ensured that across all major categories it offered an entry level product that can match the alternatives on the market.
Operating costs increased by 16.2% to €71.5 million reflecting the overall growth in business as well as the impact of the Group’s decision to absorb an element of the cost price increases to maintain its competitiveness. As a result, the operating profit eased by 0.3% to €9.30 million compared to €9.32 million in the same period last year, which translates to a lower EBIT margin of 11.5% compared to 13.1% in H1 2021/22. The deterioration in EBIT margin was impacted in both operating segments as the profitability of the ‘Supermarkets & Associated Retail Operations’ declined to 11.3% from 12.6% in H1 2021/22, while the EBIT margin of the ‘Franchise Operations’ fell to 12.6% from 15.7% in the same period last year.
Overall, PG reported a pre-tax profit of €8.52 million. After accounting for a tax charge of €2.41 million, PG’s net profit amounted to €6.10 million, which in turn is 1.7% lower than the €6.21 million figure reported during H1 2021/22. The net profit reported during the period under review also translates into an annualised return on equity of 22.1% compared to 25.4% in H1 2021/22, which also reflects the further expansion in the equity base of the company.
The Statement of Financial Position as at 31 October 2022, when compared to the corresponding figures as at 30 April 2022, shows that total assets increased by €11.6 million (+10.5%) to €122.2 million whilst total liabilities grew by €9.15 million (+16.7%) to €64 million. PG stated that as at 31 October 2022, the cash at bank exceeded its bank borrowings. As the increase in total assets in absolute terms offset the rise in total liabilities, shareholders’ funds expanded by 4.5% to €58.2 million.
On 9 December 2022, PG paid out a net interim dividend of €0.0208333 per share, which is unchanged from the corresponding interim dividend paid out for the first half of the 2021/22 financial year. In view of the marginally lower profitability during the period, the payout ratio increased to 36.9% compared to 36.2% in H1 2021/22.
In their commentary, the Directors explained that PG remains committed to pursue new growth opportunities in its core line of business, as indicated in its recent announcement regarding the promise of sale agreement to acquire a site adjacent to PAVI.
The Board of Directors also reiterated its aim to maintain, and possibly improve upon, the record results achieved during the previous financial year. The Directors also noted that the broad economic outlook appears to be less negative than at the start of the financial year, notwithstanding the uncertainty and concern that remains due to the conflict in Ukraine.
Looking ahead, the Directors stated that they are also encouraged by the influx of new customers that the business has enjoyed in recent months and its efforts to dampen the impact of higher prices will lead to further customer loyalty in the long term.