PG Group, the company that runs the Pavi and Pama shopping malls and supermarkets, as well as the Zara and Zara Home brands in Malta, increased its turnover by 18.3 per cent to €173.9 million in its last financial year, which ended on 30th April 2023.

The increased revenue generated €18.9 million in operating profit, while profit before tax amounted to €17.6 million, compared to €16.7 million in the financial year 2021/22.

The group paid €5 million in tax, representing an effective tax rate of 28.2 per cent.

The results “exceeded expectations”, according to Group Chairman John B. Zarb, who noted that over the past years, PG Group has increased its turnover and post-tax profits by 61 per cent and 42 per cent respectively.

Rising inflation posed a challenge for the company, with the average cost per employee rising by 17.6 per cent during the period, in part reflecting the high Cost of Living Adjustment (COLA) and further wage increases due to the “highly competitive” labour market.

Coupled with the pricing strategy adopted by the group in its supermarkets, these pressures led to a drop of 1.4 per cent in the group’s overall gross profit margin.

This drops was however “more than offset” by the impact of higher sales – which increased by 25.2 per cent in terms of total product units sold – driven by a “healthy increase” in the number of customers shopping at Pavi and Pama.

The two supermarkets drew more than 3.5 million customers during the period, representing an increase of 14 per cent over the previous year.

“This equates to just under 10,000 customers a day.”

The supermarkets make up the great majority (83 per cent) of PG Group’s revenue.

Meanwhile, the Mosta shopping mall attracted over one million customers, which Group CEO Charles Borg described as “an important milestone”.

PG Group’s Zara and Zara Home franchise operations also had a successful year, generating turnover of €29.5 million, an increase of 13.9 per cent over the previous financial year. The group noted that volume growth accounted for eight per cent of the increase, reflecting the consistent popularity of the brands.

Online sales make up a significant portion of sales of both brands, responsible for 15.4 per cent and 17.6 per cent of Zara and Zara Home sales respectively.

Dividends

In terms of dividends, PG Group distributed a total of €6.8 million over the period, representing 53.3 per cent of its net profit. These distributions signify an increase of 15.4 per cent over the previous year’s dividends of €5.9 million.

These amount to a gross yield of 4.8 per cent on the group’s share price at 30th April 2023, and of 9.6 per cent on the share price at which PG plc was first listed in 2017.

“The group remains committed to its policy of distributing half of its annual post-tax profits by way of dividends and of ensuring that new projects, and the financing thereof, are undertaken in a manner that does not prejudice the regular payment of dividends,” it said.

Future plans

During the last financial year, PG Group acquired an 8,000 sqm site directly abutting Pavi to expand the retail offering and increase parking space, with the group planning to offer “a much wider and more diverse proposition in Qormi,” similar to its offering in Mosta.

Expansion is also planned at Pama, and in July 2022 the group took possession of a site measuring around 13,000 sqm adjacent to the complex.

Building development on this site is expected to be limited to its existing built-up area, which is however the portion of the land that is closest to Pama.

In addition, the Board of Directors is also analysing other investment opportunities: “We cannot say more about these proposals at the moment, but when the time comes we will issue a company announcement highlighting all the details of the transaction.”

Overall, the Board said it “looks forward to the future with confidence”.