PG plc - Interim Results

On 18 December 2023, PG plc published its interim financial results for the six-month period ended 31 October 2023.

Revenue increased by 19.1% to a new record (at interim stage) of €96.2 million (FY2022/23 €80.8 million) reflecting the higher level of turnover achieved by both the ‘Supermarkets & Associated Retail Operations’ (+20.3% to €80.8 million) and the ‘Franchise Operations’ (+13.3% to €15.4 million). In this respect, PG explained that the Group continued to ensure that entry products are offered at prices which match other alternatives available on the market.

Operating costs increased by 19.4% to €85.4 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. Nonetheless, the operating profit in absolute terms increased by 16.9% to €10.9 million compared to €9.30 million in the same period last year, which translates into a marginally lower EBIT margin of 11.3% compared to 11.5% in H1 2022/23. The deterioration in EBIT margin was mainly impacted by the decline in ‘Supermarkets & Associated Retail Operations’ to 10.9% from 11.3% in H1 2022/23. Meanwhile, the EBIT margin of the ‘Franchise Operations’ rose to 13.3% from 12.6% in the same period last year.

Overall, PG reported a pre-tax profit of €10.1 million. After accounting for a tax charge of €2.89 million, PG’s net profit amounted to €7.21 million, which is 18.2% higher than the €6.10 million figure reported for H1 2022/23. The net profit reported during the period under review translates into an annualised return on equity of 23.4% compared to 22.1% in H1 2022/23.

The Statement of Financial Position as at 31 October 2023, when compared to the corresponding figures as at 30 April 2023, shows that total assets increased by €5.1 million (+4.0%) to €132.7 million whilst total liabilities grew by €2.4 million (+3.7%) to €67.6 million. PG stated that as at 31 October 2023, its cash at the bank exceeded its bank borrowings by €9.8 million. Total equity expanded by 4.3% to €65.2 million.

Dividend

On 11 December 2023, PG paid out a net interim dividend of €0.025463 per share, which is 22.2% higher than the corresponding interim dividend paid out for the first half of the 2022/23 financial year. As a result, PG’s payout ratio increased to 38.1% compared to 36.9% in H1 2022/23.

Outlook

In their commentary, the Directors explained that PG remains committed to expanding the scope of its operations in its core business reflected in the acquisition of land adjacent to the PAVI outlet for €7 million in 2022 and has since applied for a change of permitted use for the leasehold property. Furthermore, the Group has leased a sizeable site adjacent to PAMA.

The Board of Directors also reiterated its aim to improve upon the record results achieved during the previous financial year. The Directors stated that the performance in the first six months of the year exceeded expectations. Nonetheless, the Board noted that it would be more challenging to improve on the performance of the second half of 2022/23, which was already very strong. However, early indications are positive. The Directors also stated that following the end of the reporting period, PG settled all its remaining bank borrowings.

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.