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Company Registration Number: C78333
PG p.l.c.
Annual Financial Report
30 April 2023
Readers are reminded that the official statutory Annual Financial Report 2023, authorised for
issue by the Board of Directors, is in European Single Electronic Format (ESEF) and is
published on the Malta Stock Exchange portal https://www.borzamalta.com.mt/. A copy of the
Independent auditor’s report issued on the official statutory Annual Financial Report 202 3, is
included within this document and comprises the audito r’s report on compliance with the
requirements of the European Single Electronic Format Regulatory Technical Standard (the
ESEF RTS), by reference to Capital Markets Rule 5.55.6.
PG p.l.c.
Annual Financial Report - 30 April 2023
Pages
Directors’ report 1 - 8
Corporate governance statement 9 - 20
Remuneration statement 21 - 24
Statements of financial position 25 - 26
Statements of comprehensive income 27
Statements of changes in equity 28 - 29
Statements of cash flows 30
Notes to the financial statements 31 - 71
PG p.l.c.
Annual Financial Report - 30 April 2023
1
Directors’ report
The directors present their Annual Financial Report for the year ended 30 April 2023.
Principal activities
The group is engaged in the retailing of food, household goods and other ancillary products through the
Pavi Shopping Complex and Pama Shopping Village, and the selling of Zara® clothing and Zara Home®
household goods as a franchisee of the Inditex Group. The group also leases a number of retail outlets
within Pavi Shopping Co mplex and Pam a Shopping Village to third p arties.
The business model of the group with respect to the two supermarket complexes remains that of focusing
its activities on areas closely aligned to its core expertise and to attain an adequate spread of risk.
Revenue is generated from three types of activity, namely:
• the retailing of food and non-food products, directly procured by the business and carried at its
own risk;
• rental arrangements with third party operators in respect of certain specialist activities carried out
from designated areas within the supermarkets; and
• the management, operation and letting of other retail and commercial outlets within the two
complexes.
The overall objective is that of creating destinations that cater for a number of the day-to-day needs of
shoppers, going beyond a routine visit to a supermarket, albeit that the latter remains of fundamental
importance to the group. The supermarkets are the key anchors of each complex. In both cases, they
are set out on one floor, employing a logical and customer-friendly layout that has proved popular with
patrons, supported by numerous check-out points that facilitate customer flows and minimise queues
during peak shopping hours. The overall shopping experience is accentuated by high levels of customer
service, supported by continual staff training, and a continued emphasis on competitive pricing.
In a time of rapidly rising food prices, the group maintained its focus on ensuring that it offers an entry
level brand, across its product range, that can match or better the prices offered by other supermarkets.
At the same time PG Group continues to stock a wide range of brands catering for differing client
preferences.
Conveniently accessible locations, coupled with extensive free car parking, characterise the shopping
facilities available both at Pama and at Pavi.
The PG Group’s Zara® franchise operations were initiated in 2001 at the Alhambra store in Tower Road,
Sliema. The outlet is owned on a freehold basis and is situated in what is possibly Malta’s prime retail
location, attracting a high footfall. The retail space within this outlet amounts to 3,311 sqm, apart from
supporting staff and storage facilities. The outlet houses one of the largest Zara® department stores in
Europe.
The Sliema also includes one floor dedicated completely to Zara Home®. Two further Zara Home®
outlets, measuring 880sm and 480sm respectively, are located within the Pama and Pavi complexes.
As the franchisee for Zara® and Zara Home®, the group is responsible, inter alia, for staff recruitment
and management, accounting, stock control as well as the security and upkeep of the premises.
Operations within the two stores are at the same time conducted in close liaison with the brands’ owner,
Inditex, which is closely involved in the placement of orders for stock, seeking to ensure that the range of
merchandise retailed in Malta at all times represents the current offerings of the two brands.
PG p.l.c.
Annual Financial Report - 30 April 2023
2
Directors’ report - continued
Review of the business
Trading operations
Turnover for the year ended 30 April 2023 amounted to €173,933,000 (€147,049,000 in 2022)
representing a growth of 18.3%.
Turnover in our supermarket and associated retail operations increased by 19.2%, which is encouraging.
Operations in this sector have again been characterised by the impact of high inflation in food prices,
albeit at a more contained level than the previous year. Faced with this environment, the group
maintained its emphasis of containing selling prices, reducing margins on certain core branded products
while placing added focus on direct procurement from more competitive sources. The objective remained
that of being able to offer a highly cost-effective entry level product in all major categories, matching in
price any other comparable offering on the local market, but without reducing the wider brand choices
available for our customers.
Our competitive pricing has been noted by consumers and has resulted in significant volume growth.
Total footfall within the two supermarkets increased by 14.6% to 3.5 million when compared to a year
earlier, while that the number of product units sold increased by 25.2% to 61.9 million. By the same token
it follows that the average sales price recorded per unit sold fell when compared to a year earlier, in spite
of continued inflation in food prices. This reduction reflects changes in consumer choices in favour of
cheaper food products, and/or cheaper brands, coupled with the group’s emphasis on moderating price
increases to the extent practicable.
The increase in footfall in turn also benefited our retail clients. Third party rentals earnings, in the main
under rental agreements linked to sales volumes, grew by 12.9% in the course of the financial year.
Pama and Pavi remain two mature complexes and in this context the growth registered has exceeded the
board’s expectations. Over the past five years, PG Group has increased its turnover and post-tax profits
by 61% and 42% respectively and its supermarket operations have been a key driver in attaining this
success.
Encouraging growth was also experienced in the group’s franchise operations, which benefited from a
period of continued high employment and from the continued improvement in tourist arrivals, which is
relevant to our flagship store in Sliema. Our franch ise operations recorded a turnover of €29,488,000,
representing an increase of 13.9% over the sales of €25,882,000 recorded in the previous financial year.
Volume growth accounted for 8.0% of this increase, reflecting the consistent popularity of the Zara and
Zara Home brands.
The growth in the product volumes handled by the group across its different operations was inevitably
reflected in a number of our direct operating costs, particularly sales and marketing. Inflation also had a
material impact, particularly where payroll costs are involved. The group’s employee complement,
measured in FTEs, grew very slightly to 393 in the course of the financial year, and in other
circumstances the growth registered in turnover would have been expected to yield operational
efficiencies. The average cost per employee however increased by 17.6% during the same period. This
reflects the high COLA awarded in 2023 in addition to further wage increases granted by the group in a
highly competitive labour market.
Such inflationary cost increments, coupled with the pricing strategy adopted by the group in its
supermarkets, resulted in a drop of 1.4% in the group’s overall gross profit margin. This reduction was
more than offset by the impact of higher sales. Across the span of its operations, the group succeeded in
increasing its gross profit by 7.5% to €24,0 20,000 (€22,352,000 in financial year 2022).
PG p.l.c.
Annual Financial Report - 30 April 2023
3
Directors’ report - continued
Review of the business - continued
Trading operations - continued
The resultant operating profit amounted to €18,923,000, an increase of 4.6% over the comparative of
€18,084,000 recorded in 2022.
Net finance costs amounted to €1,128,000, compared to €1,229,000 in the previous financial year.
Finance costs increased by €427,000 durin g the year due to higher interest rates, but this was matched
by finance income of €528,000 as the group was able to deploy profitably any available liquidity.
The group’s profit before taxation amounted to €17,64 7,000, compared to €16,688,000 in 2022. Th e
group incurred an effective tax expense of 28.2% (27.9% in 2022), which reflects in part the entitlement of
incurring a final tax of 15% on rental income received. The profit after taxation for the year under review
amounted to €12,66 8,000, an increase of 5.2% over the 2022 comparative of €12,037,000.
Cash flow and financing
The group generated a net cash flow from operating activities of €18,039,000 (€15,608,000 in 2022),
which was applied in the main towards the payment of dividends and towards the reduction of
borrowings. As at 30 April 2023, PG p.l.c. had a positive gearing position with cash in hand, net of bank
borrowings, of €2,925,000. The group had no material capital expenditure commitments at 30 April 2023,
but it has reached an agreement in principle with the Lands Department for a change of use costing
€4,900,000 on leasehold land recently acquired adjacent to Pavi. This change of use has since been
approved by the House of Representatives and the group expects to conclude this transaction in the near
future.
Financial position and associated financial and other risks and uncertainties
Group equity increased by 12.2% to €62,476,000 at 30 April 2023, when compared to 2022, as a result of
the retained profits for the year under review. As already noted above, the group’s net bank gearing was
positive at 30 April 2023.
The group operates in a highly competitive business environment and remains subject to various risks
such as increasing pressures on margins and increased competition to attract and retain customers.
Looking ahead at the current financial year, we have once again recorded a positive start, with sales in
the first quarter of this financial year showing increases of 23%. The Board of Directors does not expect
this rate of growth to continue unabated, but nevertheless has reasonable grounds for expecting another
successful financial year moving ahead. Our target for the coming year will remain that of again
improving upon the results attained in the financial year to 30 April 2023.
Much will depend of course on macro economic events that are beyond the group’s control. Global
inflation, the war in Ukraine and rising interest rates are all factors that could have a negative impact on
disposable income. This impact has to date been partly mitigated in Malta by the Government’s d ecision
to absorb the cost of rising energy prices, but one cannot assume the indefinite continuation of this policy.
Your board nevertheless remains confident on the group’s outlook in the years ahead. The group’s
business model is based on the retail of foodstuffs, an essential commodity, and of two franchise brands
that offer excellent value for money at affordable prices. It has a strong and experienced management
team and adequate financial resources. PG Group remains particularly well placed to weather adverse
market conditions.
PG p.l.c.
Annual Financial Report - 30 April 2023
4
Directors’ report - continued
Review of the business - continued
Financial position and associated financial and other risks and uncertainties - continued
The business of the group moreover continues to be conducted 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. In
particular:
• The major part of purchases and other expenditure, and all revenues, are denominated in euro and
the group does not maintain any material assets or liabilities denominated in foreign currency. Its
exposure to currency risk is negligible.
• The group’s term borrowings carry a fixed interest rate in their initial years, when capital outstanding
is higher than later in the term of the loans, and any future increases in interest rates would have a
minimal impact on its results. The group’s outstanding loans at 30 April 202 3 were moreover
exceeded by cash reserves in hand and the group is effectively free of any borrowing commitments
that could inhibit business resilience.
• The group operates retail businesses where the granting of credit is limited and the credit risk carried
is low in the overall context of the group.
• The group maintains a healthy relationship with its suppliers and care is taken to respect agreed
credit terms. Prudence is exercised in cash management to ensure that the group maintains at any
point in time a material liquidity cushion in terms of available unutilised overdraft facilities.
Further information on the group’s financial risk management is set out in note 2 to the financial
statements.
The income and equity movements statements are set out on pages 27 and 28 to 29 respectively.
An interim net dividend of €2,250,000 was distributed by the company in December 202 2. A second net
dividend of €4,500,000 was distributed in July 2023. The total net dividend distributed from the profits
earned in the financial year ended 30 April 2023 therefore amounted to €6,750,000 (€5,850,000 in 2022).
Directors
The directors of the company during the financial year ended 30 April 2023 and as at the date of this
report are:
Mr John Zarb – Non-Executive Chairman
Mr Paul Gauci – Executive Vice-Chairman
Mr Charles Borg – Executive Director & Chief Executive Officer
Mr Gianluca Borg – Executive Director
Ms Claire Alexia Borg Gauci – Non-Executive Director
Ms Maria Micallef – Non-Executive Director
Mr William Spiteri Bailey – Non-Executive Director
Mr Lawrence Zammit – Non-Executive Director.
In accordance with the company’s Memorandum and Articles of Association, Mr John Zarb and Mr
Gianluca Borg will retire by rotation at the next Annual General Meeting and, being eligible, have been
nominated, and accordingly offered themselves, for re-appointment.
PG p.l.c.
Annual Financial Report - 30 April 2023
5
Directors’ report - continued
Statement of directors’ responsibilities for the financial statements
The directors are required by the Maltese Companies Act (Cap. 386 of the Laws of Malta) (the
“Companies Act”) to prepare financial statements w hich give a true and fair view of the state of affairs of
the group and the parent company as at the end of each reporting period and of the profit or loss for that
period.
In preparing the financial statements, the directors are responsible for:
• ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
• selecting and applying appropriate accounting policies;
• making accounting estimates that are reasonable in the circumstances; and
• ensuring that the financial statements are prepared on the going concern basis unless it is
inappropriate to presume that the group and the parent company will continue in business as a going
concern.
The directors are also responsible for designing, implementing and maintaining internal control as
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error, and that comply with the Companies Act. They are also responsible for
safeguarding the assets of the group and the parent company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The financial statements of PG p.l.c. for the year ended 30 April 2023 are included in the Annual Report
2023 which is published on the group’s website (www.pggroup.com.mt) and available in hard copy
printed form upon request. The directors are responsible for the maintenance and integrity of the Annual
Report on the website in view of their responsibility for the controls over, and the security of, the website.
Access to information published on the group’s website is ava ilable in other countries and jurisdictions,
where legislation governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
The directors confirm that to the best of their knowledge:
• the financial statements give a true and fair view of the financial position of the group and the parent
company as at 30 April 2023, and of the financial performance and the cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the EU; and
• the Annual Report includes a fair review of the development and performance of the business and the
position of the group and the parent company, together with a description of the principal risks and
uncertainties that the group and the parent company face.
Going concern basis
After making due enquiries and taking account of all known factors that could impact the group’s
operations, the directors, at the time of approving the financial statements, have determined that there is
reasonable expectation that the group and the parent company have adequate resources to continue
operating for the foreseeable future. For this reason, the directors have adopted the going concern basis
in preparing the financial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
6
Directors’ report - continued
Additional information pursuant to Capital Markets Rule 5.64
Details of the company’s share capital are disclosed in note 13 of the financial statements on page 58.
The issued share capital consists of one class of ordinary shares with equal voting rights attached. All
shares are freely transferable.
Mr Paul Gauci owns 68.38% of the issued share capital of the company. No other shareholder holds 5%
or more of the share capital of the company.
Mr Paul Gauci also exercises the voting rights on 4,250,000 ordinary shares, equivalent to 3.93% of the
company’s issued share capital, which he had in past years donated to various charitable institutions. The
institutions concerned have expressed their preference not to be involved in the decision making of a
commercial concern, and the voting rights of the shares in question accordingly continue to be exercised
by Mr Gauci.
At present, in terms of the Articles of Association of the company, the board of directors shall consist of a
maximum of eight (8) directors, one of whom shall be the Chief Executive Officer. Once appointed to
office in accordance with the provisions of the Articles of Association of the Company, a director (not
being the Chief Executive Officer, who shall be appointed to the board by virtue of his office following his
engagement by the company) may serve in office for a minimum period of three (3) years and a
maximum period of five (5) years, unless s/he resigns or is earlier removed or is due to retire by rotation
in accordance with the Articles of Association of the company, provided that a director whose term of
office expires shall be eligible for re-appointment.
The term of office of all directors (excepting the Chief Executive Officer) shall be of three (3) years,
following which one third of such directors shall retire by rotation. In every subsequent year, 1/3 of the
directors or, if their number is not three (3) or a multiple of three (3), then the number nearest 1/3, shall
retire from office.
The appointment of the directors (not being the Chief Executive Officer, as aforesaid) shall take place at
the Annual General Meeting of the company. The Articles of Association of the company provide for a
mechanism pursuant to which recommendations of prospective directors to the Remuneration Committee
and Nominations Committee (the “RemNom Committee”) may be made by any shareholder or
shareholders holding in the aggregate not less than €250,000 in nominal value of shares having voting
rights in the company. No person shall be or become entitled to act or take office as a director of the
company unless approved by the RemNom Committee, which is empowered by the Articles of
Association of the company to reject any recommendation made if in its considered opinion, the
appointment of the person so recommended as a director could be detrimental t o the company’s interests
or if such person is not considered as fit and proper to occupy that position. Where the number of
candidates approved by the RemNom Committee is more than the number of vacancies on the board of
directors, then an election would take place in accordance with the provisions of the Articles, pursuant to
which those candidates obtaining the highest number of votes overall from amongst the candidates listed
on the ballot paper distributed in advance of the general meeting shall be elected and appointed
directors.
PG p.l.c.
Annual Financial Report - 30 April 2023
7
Directors’ report - continued
Additional information pursuant to Capital Markets Rule 5.64 - continued
Any director may be removed at any time by the ordinary resolution of the shareholders of the company
in accordance with the Companies Act, in accordance with any other applicable law, or in the specific
cases set out in the Articles of Association of the company.
The administration and management of the company shall be conducted by the directors, who shall
appoint one of their number to act as chairman. The Articles of Association of the company do not
contemplate any specific instances of administration and management of the company which are
reserved for the decision, or the prior approval of, the shareholders of the company and/or any committee
of the company.
The directors are empowered to act on behalf of the company and, in this respect, have the authority to
enter into contracts, sue and be sued in representation of the company. They may transact all business of
whatever nature of the company not expressly reserved to the shareholders in general meeting or by any
provision contained in any law for the time being in force.
The primary provisions regulating the board of directors’ workings, as well as the appointment and
replacement of directors, may be found in Articles 12-15 and 17-23 of the Articles of Association of the
company.
In terms of Article 3.16 of its Articles of Association, the company may, subject to the provisions of the
Companies Act acquire or hold any of its shares.
An extraordinary resolution approved by the shareholders in the general meeting is required to amend the
Articles of Association, however, no deletion, amendment or addition to the Articles of Association shall
have effect unless prior written approval has been sought and obtained from the Listing Authority
therefor.
It is hereby declared that, at 30th April 2023, with the exception listed below, the company is not party to
any significant agreement pursuant to Capital Markets Rule 5.64.10.
The franchise agreements with Inditex Group regarding Zara® and Zara Home® respectively require the
prior consent of Inditex to any change in control of the group. In the absence of such prior consent,
Inditex would be entitled to exercise its rights under an option agreement whereby Inditex could terminate
the franchise agreements and assume the ownership of the operation of the stores.
The board declares that the information required under Capital Markets Rules 5.64.4, 5.64.5, 5.64.6 and
5.64.11 is not applicable to the company.
Remuneration Report
The Remuneration Report is located on pages 21 to 24 of this Annual Report and sets out details of the
remuneration strategy and policy of the group. The Remuneration Report also contains, inter alia, details
of the financial packages of the directors and the Company’s senior executive team. In accordance with
Capital Markets Rules 12.26L and 12.26M, the Remuneration Report will be subject to an advisory vote
by the shareholders at the forthcoming Annual General Meeting and will be made available on the
Company's website for a period of 10 years thereafter. The contents of the Remuneration Report have
been reviewed by the external auditors to ensure that it confirms with the requirements of the Capital
Markets Rules.
PG p.l.c.
Annual Financial Report - 30 April 2023
8
Directors’ report - continued
Auditors
The auditors, PricewaterhouseCoopers, have indicated their willingness to continue in office, and a
resolution for their re-appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 24 August 2023 by John Zarb (Chairman) and Paul Gauci
(Executive Vice-Chairman) as per the Directors’ Declaration on ESEF Annual Financial Report submitted
in conjunction with the Annual Financial Report.
Registered Address:
PG Group Head Office,
PAMA Shopping Village,
Valletta Road,
Mosta,
Malta
Telephone (+356) 2349 6100
Dr Emma Grech
Company Secretary
24 August 2023
PG p.l.c.
Annual Financial Report - 30 April 2023
9
Corporate governance statement
A. Introduction
PG p.l.c. was incorporated on 25 November 2016 and acquired control of the subsidiaries and associates
that constitute the group’s business on 10 March 2017. The company’s equity was admitted to the Official
List of the Malta Stock Exchange on 4 May 2017.
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority, the company
endeavours to follow the Code of Principles of Good Corporate Governance contained in Appendix 5.1 to
Chapter 5 of the Capital Markets Rules (the “Code”). In terms of Capital Markets Rule 5.94, the company
hereby reports on the extent of its adoption of the principles of the Code covering the financial year ended
30 April 2023.
The company acknowledges that the Code does not prescribe mandatory rules, but recommends
principles of good practice. Nevertheless, the board strongly believes that such practices are generally in
the best interests of the company and its shareholders, and that compliance with the principles of good
corporate governance is not only expected by investors but also evidences the directors’ and the
company’s commitment to a high standard of good governance.
Good corporate governance is the responsibility of the board of directors, and in this regard the board has
carried out a review of the company’s compliance with the Code for the financial period being reported
upon.
B. General
The company’s governance is led by its board of directors, which is responsible for the overall
determination of the company’s business strategies and policies. The company has adopted a corporate
decision-making and supervisory structure that is tailored to suit its requirements and designed to ensure
the effective operation of adequate controls and procedures within the company, whilst retaining an
element of flexibility essential to allow the company to react promptly and efficiently to circumstances
arising in respect of its business, taking into account its size and the economic conditions in which it
operates. The directors are of the view that it has employed structures which are suitable and
complementary to the size and operations of the company. Accordingly and in general the directors
believe that the company has adopted appropriate structures to achieve an adequate level of good
corporate governance, together with an adequate system of control in line with the company’s
requirements.
This corporate governance statement (the “Statement”) sets out the structures and processes in place
within the company and explains how these effectively achieve the goals set out in the Code. For this
purpose, this Statement will make reference to the pertinent principles of the Code and then set out the
manners in which the directors believe that these have been adhered to. Where the company has not
complied with any of the principles of the Code, this Statement will provide an explanation for non-
compliance.
C. Compliance with the Code
Principle 1: The Board
The board’s role and responsibility is to provide the necessary leadership, to set strategy and to exercise
good oversight and stewardship. In terms of the Memorandum of Association of PG p.l.c., the affairs of
the company are managed and administered by a board composed of up to eight (8) directors.
PG p.l.c.
Annual Financial Report - 30 April 2023
10
Corporate governance statement - continued
C. Compliance with the Code - continued
Principle 1: The Board - continued
The board is in regular contact with the Chief Executive Officer, who is a board member, in order to
ensure that it is in receipt of timely and appropriate information in relation to the business of the group
and management performance. This enables the board to contribute effectively to the decision-making
process, whilst at the same time exercising prudent and effective controls.
The board delegates specific responsibilities to the Audit Committee and to the RemNom Committee.
Further detail in relation to the committees and the responsibilities of the board is found in Principles 4, 5
and 8 of this Statement.
Principle 2: Chairman and Chief Executive
The statute of PG p.l.c. provides for the board to appoint a Chairman from amongst the directors. It also
provides for the appointment of a Chief Executive Officer who serves, by virtue of his office, as a director
of the company. Mr John Zarb and Mr Charles Borg were appointed Chairman and Chief Executive
Officer respectively.
The Chairman is responsible to lead the board and set its agenda, ensure that the directors of the board
receive precise, timely and objective information so that they can take sound decisions and effectively
monitor the performance of the company, ensure effective communication with shareholders and
encourage active engagement by all directors during board discussions.
The Chief Executive Officer leads the management team of the group. He reports regularly to the Board
on the business and affairs of the group and the commercial, economic and other challenges facing it. He
is also responsible to ensure that all submissions made to the board are timely, give a true and correct
picture of the issue or issues under consideration, and are of a professional standard suited to the subject
matter concerned.
The Chief Executive Officer is supported by Mr Paul Gauci, the founder and major shareholder of the
company, who serves as Executive Vice-Chairman. Mr Gauci also takes a leading role in the business
development of the group and in identifying and developing opportunities for expansion.
The Chief Executive Officer chairs a Management Committee composed of the group’s senior executives.
The committee meets on a weekly basis to review the conduct of operations, to review and discuss
monthly management accounts and to review and approve annual plans and budgets prior to their
presentation to the board. The heads of the respective business areas are invited to attend the
Management Committee and to answer any questions of the members of the Management Committee.
The Deputy Chief Executive Officer, Mr Malcolm Camilleri, chairs a Purchasing Committee charged with
assisting the Chief Purchasing Officer in the operation of the group’s purchasing activities and in
negotiations with suppliers. The Purchasing Committee also exercises oversight on the group’s
relationships with its principal suppliers.
PG p.l.c.
Annual Financial Report - 30 April 2023
11
Corporate governance statement - continued
C. Compliance with the Code - continued
Principle 3: Composition of the Board
The composition of the company’s board of directors is designed to attain a diverse mix of professional
and business skills and backgrounds appropriate to the needs of the group, and an appropriate balance
between executive and non-executive directors.
The board of directors is composed of:
Non-Executive Directors
Mr John Zarb FCCA FIA CPA - Chairman
Ms Maria Micallef B.A. Hons Accty, FIA, CPA
Mr William Spiteri Bailey FIA CPA
Mr Lawrence Zammit MA (Econ)
Ms Claire Alexia Borg Gauci
Executive directors
Mr Paul Gauci - Executive Vice-Chairman
Mr Charles Borg BA Banking & Finance, MA Financial Services, FCIB - Chief Executive Officer
Mr Gianluca Borg
Independence of Non-Executive Directors
In line with supporting principle 3 (iii) of main Principle 3, at least one third of the board consists of non-
executive directors. With the exception of Ms Claire Alexia Borg Gauci, who resigned from employment
by the group in May 2020, all the non-executive directors are considered as independent within the
meaning of the Code. None of the independent non-executive directors:
(a) are or have been employed in any capacity by the company;
(b) receive significant additional remuneration from the company except, from time go time, in the
conduct of specific additional duties connected to their office as directors of the company;
(c) have close family ties with any of the executive members of the board;
(d) have been within the last three years an engagement partner or a member of the audit team of
the present or past external auditor of the company; and
(e) have a significant business relationship with the company.
In terms of Code Provision 3.4, each non-executive director has committed to the board that he/she
undertakes:
(a) to maintain in all circumstances his/her independence of analysis, decision and action;
(b) not to seek or accept any unreasonable advantages that could be considered as compromising
his/her independence; and
(c) to clearly express his/her opposition in the event that he/she finds that a decision of the board
may harm the company.
PG p.l.c.
Annual Financial Report - 30 April 2023
12
Corporate governance statement - continued
C. Compliance with the Code - continued
Principle 3: Composition of the Board - continued
Appointment and Removal of Directors
Pursuant to generally accepted practices, as well as the company’s Articles of Association, the
appointment of directors to the board is reserved exclusively to the company’s shareholders, except in so
far as an appointment is made to fill a vacancy on the board, which may be filled by co-option made by
the board on the recommendation of the RemNom Committee.
The Articles of Association regulate the appointment of directors. Any one or more shareholders who in
aggregate hold not less than €250,000 in nominal value of shares having voting rights in the company are
entitled to recommend fit and proper persons for appointment as directors of the company, such
nominations being subject to the approval of the RemNom Committee, which is empowered by the
Articles of Association of the company to reject any recommendation made if, in its considered opinion,
the proposed appointment could be detrimental to the company’s interests or if such person is not
considered as fit and proper to occupy that position. In addition, nominations may be made by the board
or the RemNom Committee itself for consideration by the shareholders at the Annual General Meeting of
the company. The RemNom Committee is also empowered on its own initiative to take steps to ensure
that the board remains constituted by a diverse mix of professional and business skills and backgrounds
appropriate to the needs of the group.
Any director may be removed at any time by the ordinary resolution of the shareholders of the company
in accordance with the Companies Act, in accordance with any other applicable law, or in the specific
cases set out in the Articles of Association of the company.
Principles 4 and 5: The Responsibilities of the Board and Board Meetings
The board meets regularly, usually on a monthly basis in addition to other occasions as may be needed
from time to time. Individual directors, apart from attendance at formal board meetings, participate in
other ad hoc meetings during the year as may be required, and are also active in board committees as
mentioned further below.
During the financial year ended 30 April 2023, twelve (12) board meetings were held. Attendance at
these meetings was as follows:
Board member Meetings attended
Mr John Zarb 12
Mr Paul Gauci 12
Mr Charles Borg 12
Mr Gianluca Borg 12
Ms Claire Alexia Borg Gauci 11
Ms Maria Micallef 12
Mr William Spiteri Bailey 11
Mr Lawrence Zammit 12
PG p.l.c.
Annual Financial Report - 30 April 2023
13
Corporate governance statement - continued
C. Compliance with the Code - continued
Principles 4 and 5: The Responsibilities of the Board and Board Meetings - continued
The board is entrusted with the overall direction, administration and management of the group. The
board, in fulfilling this mandate, assumes responsibility for the following:
• reviewing and approving the business plan and budgets that are submitted by management, and
working with management in the implementation of the business plan;
• identifying the principal business risks for the group and overseeing the implementation and
monitoring of appropriate risk management systems;
• ensuring that effective internal control and management information systems for the group are in
place;
• assessing the performance of the group’s executive officers, including monitoring the establishment of
appropriate systems for succession planning, and for approving the compensation levels of such
executive officers; and
• ensuring that the group has in place a policy to enable it to communicate effectively with shareholders,
other stakeholders and the public generally.
The board regularly reviews and approves various management reports as well as annual financial plans,
including capital budgets. In addition, the strategy, processes and policies adopted for implementation are
regularly reviewed by the board.
The board is also responsible for ensuring that the group recognises and meets its environmental, social
and governance responsibilities. These include, inter alia:
(a) Setting and maintaining the behavioural and ethical standards of the group.
(b) Safeguarding the health and safety of all customers and staff. This includes, amongst other
measures, ensuring that regular checks are carried out on the freshness and quality of the products
sold in the group’s supermarkets; the training of staff with specific responsibilities to help deal with
medical and other emergencies; the regular monitoring and maintenance of premises and
equipment; and the adherence at all times to prescribed safety measures. The board requests and
receives regular reports on the group’s procedures in these areas.
(c) Ensuring that all employees, customers and business partners are treated with full respect for
human rights and without any discrimination on the basis of race, gender or belief.
(d) Ensuring that the group conducts its business with a proper awareness of its social and
environmental responsibilities. This topic is commented upon in more detail in the Chief Executive
Officer’s report that also forms part of the group’s 202 3 Annual Report, and inter alia details the
group’s objectives with respect to reducing the distribution of water in non-returnable plastic
containers, a key focal point.
(e) Ensuring that the group maintains a zero–tolerance approach to bribery and corruption. The PG
Group has at no time been involved or implicated in corruption or bribery allegations. We will not
seek to influence others, either directly or indirectly, by paying bribes or kickbacks in any form, or by
any other measure that is illicit, unethical or that may in any manner tarnish our reputation.
PG p.l.c.
Annual Financial Report - 30 April 2023
14
Corporate governance statement - continued
C. Compliance with the Code - continued
Principles 4 and 5: The Responsibilities of the Board and Board Meetings - continued
The Chairman ensures that all issues relevant to long-term strategic and short-term performance of the
group are placed on the agenda of board meetings and, for the purpose of discussion thereon, are
supported by all available information, whilst encouraging the presentation of views pertinent to the
subject matter and giving all directors every opportunity to contribute to the discussion.
Principle 6: Information and Professional Development
The recruitment and selection of senior management is the responsibility of the Chief Executive Officer
acting in consultation with the board. Likewise, the Chief Executive Officer consults with the board on
matters relating to succession planning for senior management within the company. The board considers
and discusses succession planning measures at all senior management levels taking into account the
size and depth of the management team of the group.
The board, acting through the RemNom Committee, is also concerned with ensuring the ongoing
professional training and development of the group’s management team.
The directors have access to the advice and services of the Company Secretary, Dr Emma Grech, who is
responsible for ensuring that board procedures are adhered to. Additionally, directors may seek
independent professional advice on any matter should they deem such necessary in order to discharge
their responsibilities as directors, at the company’s expense.
Principle 7: Evaluation of the Board’s Performance
The RemNom Committee regularly evaluates the performance of the board and the contribution made by
the individual board members, and considers their continued suitability (including, but not limited to, the
two directors retiring by rotation at the next Annual General Meeting), and is of the view that over the
period under review, all members of the board, individually and collectively, contributed to proceedings in
line with the required levels of diligence and skill. In addition, the board believes that its current
composition endows the board with a cross-section of skills and experience relevant to the operations of
the group and achieves the appropriate balance required for it to function effectively and to ensure
appropriate succession.
Principle 8: Committees
The directors have constituted the following board committees, the terms of reference of which are
determined by the board from time to time with the purpose of fulfilling the below mentioned purposes:
Audit Committee
The Audit Committee is composed of Mr William Spiteri Bailey (Chairman), Mr Lawrence Zammit and Ms
Maria Micallef, all occupying an independent Non-Executive Director role within the company; and of Ms
Claire Alexia Borg Gauci. In light of their qualifications as well as their valuable experience, Mr William
Spiteri Bailey and Ms Maria Micallef are the Audit Committee members who are considered to be
competent in accounting and/or auditing in terms of the Capital Markets Rules.
PG p.l.c.
Annual Financial Report - 30 April 2023
15
Corporate governance statement - continued
C. Compliance with the Code – continued
Principle 8: Committees - continued
Audit Committee - continued
The committee is responsible for reviewing the financial reporting processes and policies, the system of
internal control and management of financial risk, the audit process, any transactions with related parties
and the company’s process for monitoring compliance with laws and regulations. When the Audit
Committee’s monitoring and review activities reveal ca use for concern or scope for improvement, it shall
make recommendations to the board on the action needed to address the issue or make improvements.
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best
interests of the group. Its primary objective is to assist the board in dealing with issues of risk, control and
governance and in reviewing the group’s reporting processes, financial policies and internal control
structure. The Audit Committee also oversees the conduct of the external audit and facilitates
communication between the board, management and external auditors.
The Audit Committee is a committee appointed by the board and is directly responsible and accountable
to the board. Its main role and responsibilities are:
(a) to review procedures and assess the effectiveness of the internal control systems, including financial
reporting;
(b) to assist the board in monitoring the integrity of the financial statements, the internal control
structures, the financial reporting processes and financial policies of the company;
(c) to make recommendations to the board in relation to the appointment of the external auditor and to
approve the remuneration and terms of engagement of the external auditor following appointment by
the shareholders in general meeting;
(d) to monitor and review the external audit functions, including the external auditor`s independence,
objectivity and effectiveness;
(e) to establish internal procedures and to monitor these on a regular basis;
(f) to establish and maintain access between the internal and external auditors of the company and to
ensure that this is open and constructive;
(g) to review and challenge where necessary, the actions and judgements of management, in relation to
the interim (if applicable) and annual financial statements before submission to the board, focusing
particularly on:
(i) critical accounting policies and practices and any changes in them;
(ii) decisions requiring a major element of judgement;
(iii) the extent to which the financial statements are affected by any unusual transactions in the
year and how they are disclosed;
(iv) the clarity of disclosures and compliance with International Financial Reporting Standards;
(v) significant adjustments resulting from the audit;
(vi) compliance with stock exchange and other legal requirements; and
(vii) reviewing the company’s Statement on Corporate Governance prior to endorsement by the
board.
PG p.l.c.
Annual Financial Report - 30 April 2023
16
Corporate governance statement - continued
C. Compliance with the Code – continued
Principle 8: Committees - continued
Audit Committee - continued
(h) to gain an understanding of whether significant internal control recommendations made by internal
and external auditors have been implemented by management;
(i) to establish and exercise oversight upon the internal audit function of the company, and to review its
plans, activities, staffing and organisational structure;
(j) to monitor the statutory audit of the annual and consolidated accounts;
(k) to discuss company policies with respect to risk assessment and risk management, review
contingent liabilities and risks that may be material to the company; and
(l) to consider other matters that are within the general scope of the committee that are referred to it by
the Board of Directors.
The terms of reference of the Audit Committee, approved by the Board, are modelled on the
recommendations of the Capital Markets Rules.
The Audit Committee has met seven (7) times in the financial year ended 30 April 2023, and the
attendance at these meetings was as follows:
Committee member Meetings attended
Mr William Spiteri Bailey 7
Ms Claire Alexia Borg Gauci 6
Ms Maria Micallef 7
Mr Lawrence Zammit 7
Remuneration and Nominations Committee
In view of its size, the company has taken the view that whilst it considers the role and function of each of
the Remuneration Committee and the Nomination Committee as important, it would be more efficient for
these committees to be merged into a single, ‘RemNom Committee’ that would serve a dual role.
The RemNom Committee is composed of Mr John Zarb (Chairman), Mr Paul Gauci and Mr Lawrence
Zammit.
In its function as Remuneration Committee, the RemNom Committee is charged with the oversight of the
remuneration policies implemented by the company with respect to its directors, management and
employees. Its objectives are those of deciding a remuneration policy aimed to attract, retain and
motivate directors, whether executive or non-executive, as well as senior management with the right
qualities and skills for the benefit of the company. It is responsible for making proposals to the board on
the individual remuneration packages of directors and senior management and is entrusted with
monitoring the level and structure of remuneration of the non-executive directors.
PG p.l.c.
Annual Financial Report - 30 April 2023
17
Corporate governance statement - continued
C. Compliance with the Code – continued
Principle 8: Committees - continued
Remuneration and Nominations Committee - continued
In its function as Nomination Committee, the RemNom Committee’s task is to propose to the board
candidates for the position of director, including persons considered to be independent in terms of the
Capital Markets Rules, whilst also taking into account any recommendation from shareholders. It is to
periodically assess the structure, size, composition and performance of the board and make
recommendations to the board regarding any changes, as well as consider issues related to succession
planning. It is also entrusted with reviewing the board’s policy for selection and appointment of senior
management.
The RemNom Committee met two (2) times during the financial year ended 30 April 2023 and these
meetings were attended by all committee members.
Remuneration of directors and senior management
Please refer to the Remuneration Report (see page 21) for information regarding the remuneration of the
company’s directors and senior executives.
Principles 9 and 10: Relations with Shareholders and with the Market, and Institutional
Shareholders
The company recognises the importance of maintaining a dialogue with its shareholders and of keeping
the market informed to ensure that its strategies and performance are well understood.
The company will communicate effectively with shareholders by publishing its results on a six-monthly
basis during the year, by way of half yearly and annual reports and financial statements, through interim
Directors’ Statements, through periodical company announcements and through press releases in the
local media to the market in general. The financial results will be made available on the group’s website
www.pggroup.com.mt.
Annual General Meeting
Within seven months of the end of the financial year, the Annual General Meeting of the shareholders will
be convened to consider the annual financial statements, the directors’ and auditors’ reports for the year,
to decide on any dividends recommended by the board, to elect directors, appoint auditors and to set
their remuneration.
A presentation will be given to the shareholders present showing how the group operated in the light of
prevailing economic and market conditions, and an assessment on future prospects will be given. The
Chairman arranges for all directors to attend the Annual General Meeting. More information on general
meetings of the company may be found in section F below.
PG p.l.c.
Annual Financial Report - 30 April 2023
18
Corporate governance statement - continued
C. Compliance with the Code – continued
Principle 11: Conflicts of Interest
It is the practice of the board that when a potential conflict of interest arises in connection with any
transaction or other matter, the potential conflict of interest is declared so that steps may be taken to
ensure that such items are appropriately addressed. By virtue of the company’s Articles of Association,
the directors are obliged to keep the board advised, on an ongoing basis, of any interest that could
potentially conflict with that of the company. The board member concerned shall not take part in the
assessment by the board as to whether a conflict of interest exists. A director shall not vote in respect of
any contract, arrangement, transaction or proposal in which he has a material interest in accordance with
the Articles of Association. The board believes that this is a procedure that achieves compliance with
Principle 11. None of the directors, save Mr Paul Gauci and Mr Gianluca Borg, have any shares in the
company.
Any material transactions with related parties, which pose intrinsic potential conflicts of interests, require
the approval of the Audit Committee, which is charged with ensuring that such transactions are necessary
for the conduct of the company’s business and are transacted on an arms’ length basis.
As explained in the prospectus issued by the company on 27 March 2017, the group was re-organised in
its current form to include, as far as practicable, all the businesses that were at the time controlled by Mr
Paul Gauci, and managed by his management team. This serves to reduce the scope for any future
potential conflicts of interests involving the majority shareholder. Mr Gauci has since invested in new
ventures overseas. These ventures are administered by a dedicated management and staff complement,
located in separate premises, and place no burdens or constraints on the resources of PG Group.
Principle 12: Corporate Social Responsibility
The company recognises the importance of its role in the corporate social responsibility arena and seeks
to ensure that in its operations the environment is respected. The directors are also aware of the
importance of having good relations with stakeholders and strive to work together with them in order to
invest in human capital, robust health and safety standards and to adopt environmentally responsible
practices (refer also to Principle 4 above and the Chief Executive Officer’s report that also forms part of
the 2023 Annual Report).
D. Non-compliance with the Code
The directors set out below the Code provisions with which the company does not comply and an
explanation as to the reasons for such non-compliance:
Principle 8: Committees (Code Provision 8.A.1.)
With respect to Code Provision 8.A.1. which sets out the composition requirements of remuneration
committees, particularly that the Remuneration Committee must be composed of non-executive directors,
the Board notes that the RemNom Committee is not composed in strict compliance with the Code, due to
Mr Paul Gauci, an executive director, being a member of the RemNom Committee. Mr Paul Gauci
founded and has led the business for many years and is its principal shareholder. The board believes that
this departure from the provisions of the Code is justified as, given his familiarity with the business and
with its management team, Mr Gauci’s membership within the RemNom Committee is conducive to
improving the functioning of said committee and to enhancing the governance of the group.
PG p.l.c.
Annual Financial Report - 30 April 2023
19
Corporate governance statement - continued
D. Non-compliance with the Code - continued
Principle 9: Relations with Shareholders and with the Market (Code Provision 9.3)
There are no formal procedures in place within the company for the resolution of conflicts between
minority and controlling shareholders, nor do the company’s Memorandum or Articles of Association as
recommended in Code Provision 9.3 contemplate any mechanism for arbitration in these instances. The
board is not aware that any such conflicts of interest have ever arisen.
Principle 9: Relations with Shareholders and with the Market (Code Provision 9.4)
The company does not have a policy in place to allow minority shareholders to present an issue to the
board. In practice, however, the open channel of communication between the company and minority
shareholders via the office of the Company Secretary is such that any issue that may merit bringing to the
attention of the board may be transmitted via the Company Secretary, who is in attendance at all
meetings of the Board of Directors.
Other than the above, and in the opinion of the board, the company has instituted governance procedures
which shall ensure full compliance with the Code.
E. Internal Control
The board is ultimately responsible for the company’s system of internal control and risk management
and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of
failure to achieve business objectives, and can only provide a reasonable, as opposed to absolute
assurance against material misstatement or loss.
The company operates through the board of directors and the management team with clear reportin g
lines and delegation of powers. The board of directors has adopted and implemented appropriate policies
and procedures to manage risks and internal control. The board plans, controls and monitors business
operations in order to achieve the set objectives.
The directors, with the assistance of management, are responsible for the identification, evaluation and
management of the key risks to which the company may be exposed. The company has clear and
consistent procedures in place for monitoring the system of internal financial controls. The directors also
receive periodic management information giving comprehensive analysis of financial and business
performance including variances against the group’s set targets. This process is applicable specifically in
relation to the group’s financial reporting framework.
Through the Audit Committee, the board reviews the effectiveness of the company’s system of internal
controls, including financial reporting, which is also monitored by an Internal Audit team. The Audit
Committee also analyses the internal audit reports prepared by the group’s internal auditors and en sures
that the recommendations therewith are adopted and implemented to further strengthen the company’s
processes and procedures. The Audit Committee also determines whether significant internal control
recommendations made by the external auditors have been implemented.
PG p.l.c.
Annual Financial Report - 30 April 2023
20
Corporate governance statement - continued
F. General Meetings
The manner in which the general meeting is conducted is outlined in Article 11 of the company’s Articles
of Association, subject to the provisions of the Companies Act.
As explained under Principles 9 and 10, within seven months of the end of the financial year, the Annual
General Meeting of the shareholders will be convened to consider the annual financial statements, the
directors’ and auditors’ reports for the year, to decide on any dividends recommended by the board, to
elect directors if necessary, appoint auditors and to set their remuneration. A presentation will be given to
the shareholders present showing how the company operated in the light of prevailing economic and
market conditions, and an assessment on future prospects will be given. The Chairman arranges for all
directors to attend the Annual General Meeting.
In addition, and in terms of Article 11.3 of the Articles of Association of the company, the board of
directors may convene an extraordinary general meeting whenever they think fit. If at any time there are
not sufficient directors capable of acting to form a quorum for a meeting of the directors (being four (4)
directors), any director, or any two shareholders holding at least ten per cent (10%) of the shares
conferring a right to attend and vote at general meetings of the company, may convene an extraordinary
general meeting in the same manner.
Adequate notice of general meetings must be given to shareholders as outlined in Articles 11.4-11.6 of
the company’s Articles of Association.
All shareholders registered in the Shareholders’ Register on the Record Date as defined in the Capital
Markets Rules have the right to attend, participate and vote in the general meeting. A shareholder who
cannot participate in the general meeting can appoint a proxy by written or electronic notification to the
company.
Signed by John Zarb (Chairman) and Paul Gauci (Executive Vice-Chairman) on 24 August 2023.
PG p.l.c.
Annual Financial Report - 30 April 2023
21
Remuneration statement
In terms of Rule 8A.4 of the Code of the Principles of Good Corporate Governance (the “Code”) contained
in the Capital Markets Rules issued by the Malta Financial Services Authority (the “Capital Markets
Rules”), and in terms of Appendix 12.1 of the said Capital Markets Rules, the company is to include a
Remuneration Report in its annual report which shall contain, inter alia, details of the Remuneration Policy
of the company and the financial packages of directors and the company’s senior executive team, which
for the purposes of this Remuneration Report shall be taken to refer to the Chief Executive Officer (the
“CEO”), the deputy CEO, as well as the Company’s chief officers, namely the Chief Operations Officer,
Chief Financial Officer, Chief Purchasing Officer, Head Information Technology and Head Marketing.
A. Rationale for Remuneration
The company’s Remuneration Policy, as mandated in terms of Chapter 12 of the Capital Markets Rules,
being borne in mind, the remuneration of the abovementioned individuals is established in the following
manner:
(a) At the time of the initial public offering and of the listing of the company’s shares, continuity was
assured in the salaries payable to the executive directors and the company’s senior executives after
these were reviewed by the board of directors and adjudged appropriate and suitable in the context
of the responsibilities and experience of the individuals concerned. These salaries were reflected in
the business results and forecasts published by the group at the time.
Executive salaries are reviewed annually by the co mpany’s Remuneration Committee and
Nominations Committee (the “RemNom Committee”), as set up in terms of its Memorandum and
Articles of Association, to ensure that they remain commensurate with the performance of the
individuals concerned and in line with the market.
(b) The remuneration of the non-executive directors is set by reference to the time they are expected to
dedicate, annually, to the affairs of the group, as well as the responsibilities pertinent to their role,
remunerated at a rate that acknowledges and is commensurate with the professional status and
experience of the individuals concerned and with market conditions. The process is designed to
attain transparency on the time input that the directors are expected to dedicate annually to t he
Group, whilst at the same time creating a basis upon which to determine future revisions should
directors be required to dedicate more time to the group’s affairs.
(c) A variable annual performance bonus scheme is in place. Annual bonuses are generally determined
on a discretionary basis, at first instance by the CEO, together with the Executive Vice-Chairman,
and are then approved by the RemNom Committee; provided, however, that bonuses pertaining to
the CEO and the deputy CEO are determined and approved directly by the RemNom Committee.
Bonuses are paid in cash by the group during the financial year, and do not constitute a material part
of the aggregate remuneration of directors.
For further information in this regard, please refer to the company’s Remun eration Policy, which is
available on the group’s website (www.pggroup.com.mt).
B. Nature of Remuneration
Save as specified above, the remuneration payable to the directors and the company’s senior executive
team is fixed and does not include any variable element based on performance indicators or the right to
purchase shares in the company by virtue of share options, nor any other deferred compensation or
pension benefits. The remuneration of directors is paid by entities within the Group.
PG p.l.c.
Annual Financial Report - 30 April 2023
22
Remuneration statement - continued
B. Nature of Remuneration - continued
Taking into consideration the management and operational set-up of the group, the board of directors
considers a combination of a fixed form of remuneration and a discretionary annual bonus to constitute a
suitable basis of remuneration for the executive team for the executive team and the executive directors,
whereas a fixed form of remuneration is best suited to the non-executive directors; provided, however,
that in terms of its Remuneration Policy, and in addition to their fixed remuneration, directors who are also
appointed to chair, or to sit as members of, one or more of the committees of the company, or who are
asked to serve as directors and, or chair of the board of subsidiaries of the company, may be entitled to
receive additional compensation, as shall be determined by the board from time to time. Such additional
remuneration shall form part of the aggregate emoluments of directors as approved by the general
meeting of the company. The basis upon which such additional remuneration is paid shall take into
account the skills, competencies, and technical knowledge that members of such committees require and
the respective functions, duties and responsibilities attaching to membership of such committees.
Two of the executive directors and all non-director senior executives are permitted the use of a company
vehicle. No other non-cash remuneration is paid to directors and the company’s senior executive team.
The RemNom Committee is satisfied that the base remuneration for the year under review is aligned with
the core principles of the company’s current Remuneration Policy, ensuring that market conditions and
remuneration rates offered by similar organisations for comparable roles have been taken into
consideration.
C. Remuneration amounts
The following is an outline of the directors’ and senior executive team’s cash remuneration for the year
under review:
Emoluments of directors [aggregate]
Fixed
remuneration
Variable
remuneration
Total
DYear ended 30 April 2023
Y
YYear ended 30 April 2022
€461,609
€460,811
€76,924
€107,693
€538,533
€568,504
PG p.l.c.
Annual Financial Report - 30 April 2023
23
Remuneration statement - continued
C. Remuneration amounts - continued
Emoluments of directors [individual]
Individually, the directors were paid the following amounts during the year under review:
Fixed
remuneration
Variable
remuneration
Total
2023
Total
2022
Mr John Zarb – Non-Executive Chairman
Mr Paul Gauci – Executive Vice-Chairman
Mr Charles Borg – Executive Director &
Chief Executive Officer
Ms Claire Alexia Borg Gauci – Non-
Executive Director*
Ms Maria Micallef – Non-Executive
Director
Mr William Spiteri Bailey – Non-Executive
Director
Mr Lawrence Zammit – Non-Executive
Director
Mr Gianluca Borg – Executive Director &
Chief Purchasing Officer
€49,500
€152,162
€81,227
€42,866
€15,000
€15,950
€15,950
€88,954
Nil
Nil
€38,462
Nil
Nil
Nil
Nil
€38,462
€49,500
€152,162
€119,689
€42,866
€15,000
€15,950
€15,950
€127,416
€80,269
€151,930
€119,591
€42,634
€15,000
€15,948
€15,948
€127,184
*Ms Claire Alexia Borg Gauci also serves as director on the subsidiary companies forming part of the
group.
None of the directors hold any share options in the company.
During the financial year ended 30 April 2022, Mr John Zarb was remunerated the amount of €30,769 in
respect of specific additional duties connected to his office as a director of the company, and this is
included within the variable remuneration noted above.
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the annual change of
remuneration over the three most recent financial years were as follows:
FY 2023 change
FY 2022
over FY 2022
over FY 2021
Directors and deputy group chief executive
(3.8%)
8.2%
Average employee remuneration
17.6%
11.1%
Performance of the group – Profit for the year
5.2%
14.0%
PG p.l.c.
Annual Financial Report - 30 April 2023
24
Remuneration statement - continued
C. Remuneration amounts - continued
Emoluments of the senior executive team, including the executive directors whose earnings are also
disclosed above [aggregate]
Fixed
remuneration
Variable
remuneration
Total
Year ended 30 April 2023
Year ended 30 April 2022
€570,479
€535,444
€234,615
€273,953
€805,094
€809,397
The deputy CEO
Emoluments paid and accrued to the deputy CEO for the year under review included €116,455 by way of
fixed remuneration and €76,923 by way of variable remuneration (€101,222 and €90,723 respectively in
2022).
The aggregate emoluments of all directors in any one financial year and any increases thereto are
approved by the shareholders in general meeting from time to time in accordance with Article 22.1 of the
company’s Articles of Association.
D. Director and senior executive contracts
None of the directors or senior executives are party to a service contract that contains provisions for
termination payments and other payments linked to early termination.
No changes were made during the year to the recurring fixed remuneration payable to the non-executive
directors. The remuneration of executive directors may be updated from time to time in line with market
conditions and with changes in their duties and responsibilities, and such in accordance with the
provisions of the company’s Remuneration Policy.
E. Remuneration Policy in accordance with Chapter 12 of the Capital Markets Rules
Pursuant to the requirements of Capital Markets Rule 12.26A, the group’s Remuneration Policy, which is
intended to provide an overarching framework that establishes the principles and parameters applied in
determining the remuneration to be paid to the company’s directors, CEO and deputy CE O, was
approved by the shareholders at the 4
th
Annual General Meeting of the company on 15 October 2020,
and is available on the group’s website. This Remuneration Policy shall be reviewed regularly, and any
material amendments thereto shall be submitted to a vote by the Annual General Meeting of the company
before adoption, and in any case at least every four (4) years. Such policy was drawn up in particular
having due regard to the responsibility vested in the functions and roles of the directors, the CEO and the
deputy CEO, market conditions, and the remuneration being offered by similar organisations.
F. Contents of the Remuneration Report
The contents of the Remuneration Report have been reviewed by the external auditors to ensure that
they conform with the requirements of Appendix 12.1 to Chapter 12 of the Capital Markets Rules.
PG p.l.c.
Annual Financial Report - 30 April 2023
25
Statements of financial position
As at 30 April
Group
Company
2023
2022
2023
2022
Notes
€’000
€’000
€’000
€’000
ASSETS
Non-current assets
Property, plant and equipment
4
60,428
61,558
-
-
Right-of-use assets
5
26,965
15,560
-
-
Investment property
6
3,947
3,817
-
-
Investment in subsidiaries
7
-
-
34,506
34,506
Investment in associates
8
2,872
3,020
3,502
3,502
Equity instruments at fair value
through other comprehensive income
9
238
260
-
-
Trade and other receivables
11
-
-
708
708
Total non-current assets
94,450
84,215
38,716
38,716
Current assets
Inventories
10
10,655
9,644
-
-
Trade and other receivables
11
9,154
7,959
-
-
Cash in bank and in hand
12
13,369
8,729
9
5
Total current assets
33,178
26,332
9
5
Total assets
127,628
110,547
38,725
38,721
PG p.l.c.
Annual Financial Report - 30 April 2023
26
Statements of financial position - continued
As at 30 April
Group
Company
2023
2022
2023
2022
Notes
€’000
€’000
€’000
€’000
EQUITY AND LIABILITIES
Capital and reserves
Share capital
13
27,000
27,000
27,000
27,000
Fair value reserve
14
(12)
10
-
-
Retained earnings
35,488
28,670
5,479
5,623
Total equity
62,476
55,680
32,479
32,623
Non-current liabilities
Trade and other payables
17
-
-
6,200
6,055
Borrowings
15
4,386
6,140
-
-
Lease liabilities
5
20,851
16,353
-
-
Deferred taxation
16
3,844
3,821
-
-
Total non-current liabilities
29,081
26,314
6,200
6,055
Current liabilities
Trade and other payables
17
28,094
23,657
46
43
Borrowings
15
6,058
2,810
-
-
Lease liabilities
5
198
315
-
-
Current tax liabilities
1,721
1,771
-
-
Total current liabilities
36,071
28,553
46
43
Total liabilities
65,152
54,867
6,246
6,098
Total equity and liabilities
127,628
110,547
38,725
38,721
The notes on pages 31 to 71 are an integral part of these consolidated financial statements.
The financial statements on pages 25 to 71 were approved and authorised for issue by the Board of
Directors on 24 August 2023. The financial statements were signed on behalf of the Company’s Board of
Directors by John Zarb (Chairman) and Paul Gauci (Executive Vice-Chairman) as per the Directors’
Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report
2023.
PG p.l.c.
Annual Financial Report - 30 April 2023
27
Statements of comprehensive income
Year ended 30 April
Group
Company
2023
2022
2023
2022
Notes
€’000
€’000
€’000
€’000
Revenue
18,23
173,933
147,049
9,000
8,385
Cost of sales
19
(149,913)
(124,697)
-
-
Gross profit
24,020
22,352
9,000
8,385
Selling and marketing costs
19
(971)
(867)
-
-
Administrative expenses
19
(5,064)
(4,381)
(144)
(143)
Other income
22
938
980
-
-
Operating profit
18,923
18,084
8,856
8,242
Finance income
24
528
-
-
-
Finance costs
25
(1,656)
(1,229)
-
-
Share of results of associates
8
(148)
(167)
-
-
Profit before tax
17,647
16,688
8,856
8,242
Tax expense
26
(4,979)
(4,651)
(3,150)
(2,935)
Profit for the year
12,668
12,037
5,706
5,307
Earnings per share for the year attributable
to shareholders
Basic earnings per share
28
€0.12
€0.11
The notes on pages 31 to 71 are an integral part of these consolidated financial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
28
Statements of changes in equity
Share
Fair value
Retained
capital
reserve
earnings
Total
Group
Notes
€’000
€’000
€’000
€’000
Balance at 1 May 2021
27,000
-
22,083
49,083
Comprehensive income
Profit for the year
-
-
12,037
12,037
Other comprehensive income
Fair value movement
14
-
10
-
10
Transactions with owners
Dividends for the year
27
-
-
(5,450)
(5,450)
Balance at 30 April 2022
27,000
10
28,670
55,680
Balance at 1 May 2022
27,000
10
28,670
55,680
Comprehensive income
Profit for the year
-
-
12,668
12,668
Other comprehensive income
Fair value movement
14
-
(22)
-
(22)
Transactions with owners
Dividends for the year
27
-
-
(5,850)
(5,850)
Balance at 30 April 2023
27,000
(12)
35,488
62,476
PG p.l.c.
Annual Financial Report - 30 April 2023
29
Statements of changes in equity - continued
Share
Retained
capital
earnings
Total
Company
Note
€’000
€’000
€’000
Balance at 1 May 2021
27,000
5,766
32,766
Comprehensive income
Profit for the year
-
5,307
5,307
Transactions with owners
Dividends for the year
27
-
(5,450)
(5,450)
Balance at 30 April 2022
27,000
5,623
32,623
Balance at 1 May 2022
27,000
5,623
32,623
Comprehensive income
Profit for the year
-
5,706
5,706
Transactions with owners
Dividends for the year
27
-
(5,850)
(5,850)
Balance at 30 April 2023
27,000
5,479
32,479
The notes on pages 31 to 71 are an integral part of these consolidated financial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
30
Statements of cash flows
Year ended 30 April
Group
Company
2023
2022
2023
2022
Notes
€’000
€’000
€’000
€’000
Cash flows from operating
activities
Cash generated from operations
29
24,173
20,565
9,004
8,279
Interest received
24
528
-
-
-
Interest paid
25
(1,656)
(1,229)
-
-
Tax paid
(5,006)
(3,728)
(3,150)
(2,935)
Net cash generated from operating
activities
18,039
15,608
5,854
5,344
Cash flows used in investing
activities
Purchases of property, plant and
equipment
4
(1,107)
(1,225)
-
-
Purchase of temporary utile dominium
5
(7,456)
-
-
-
Purchases of investment property
6
(130)
(1)
-
-
Purchases of equity instruments
-
(250)
-
-
Proceeds from disposal of property,
plant and equipment
10
-
-
-
Net cash used in investing
activities
(8,683)
(1,476)
-
-
Cash flows used in financing
activities
Repayments of bank borrowings
(1,771)
(1,814)
-
-
Payments of principal portion of lease
-
liabilities
(360)
(359)
-
-
Dividends paid
27
(5,850)
(5,450)
(5,850)
(5,450)
Net cash used in financing
activities
(7,981)
(7,623)
(5,850)
(5,450)
Net movement in cash and
cash equivalents
1,375
6,509
4
(106)
Cash and cash equivalents at
beginning of year
7,719
1,210
5
111
Cash and cash equivalents at end
of year
12
9,094
7,719
9
5
The notes on pages 31 to 71 are an integral part of these consolidated financial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
31
Notes to the financial statements
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
1.1 Basis of prepa ration
These consolidated financial statements include the financial statements of PG p.l.c. and its
subsidiaries. The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of
the Maltese Companies Act, 1995. They have been prepared under the historical cost convention,
as modified by the fair valuation of the land and buildings category within property, plant and
equipment and investment property, and except as disclosed in the accounting policies below.
Unless otherwise stated, all financial information presented has been rounded to the nearest
thousand.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires the directors to exercise their judgement in the
process of applying the group’s accounting policies (see note 3 – Critical accounting estimates and
judgements).
Standards, interpretations and amendments to published standards effective in 2023
In 2023, the group and the company adopted amendments and interpretations to existing
standards that are mandatory to the group and company’s accounting period beginning on 1 May
2022. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not
result in substantial chan ges to the group and c ompany’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for
accounting periods beginning after 1 May 2022. The group has not early adopted these revisions
to the requirements of IFRSs as adopted by the EU and the directors are of the opinion that there
are no requirements that will have a possible significant impact on the group’s current or future
reporting periods an d on foreseeable future transac tions.
1.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
They are de-consolidated from the date that control ceases.
The group uses the acquisition method of accounting to account for business combinations except
as disclosed in note 1.4. The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred and the equity interests issued by the group.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-
controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s n et assets.
PG p.l.c.
Annual Financial Report - 30 April 2023
32
1. Summary of significant accounting policies - continued
1.2 Consolidation - continued
(a) Subsidiaries - continued
The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair
value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference
is recognised directly in profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between entities
forming part of group are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the
group.
A listing of t he subsidiaries is set out in note 3 6 to the financi al statements.
(b) Associates
Associates are all entities over which the group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. In the consolidated
financial statements, investments in associates are accounted for using the equity method of
accounting. Under the equity method, the investment is initially recognised at cost, and the carrying
amount is increased or decreased to recognise the investor’s share of profit or loss and other
comprehensive income of the investee after the date on which significant influence is acquired. The
group’s investment in associates includes goodwill identified on acquisition, net of any accumulated
impairment loss.
The group’s share of its associates’ post-acquisition profits or losses is recognised in the income
statement, and its share of post-acquisition movements is recognised in other comprehensive
income. The cumulative post-acquisition movements are adjusted against the carrying amount of
the investment. When the group’s share of losses in an associate equals or exceeds its interest in
the associate, including any other unsecured receivables, the group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the group and its associates are eliminated to the extent
of the group’s interest in the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted
by the group.
If the ownership interest in an associate is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
Dilution gains and losses arising in investments in associates are recognised in profit or loss.
A listing of t he associates is set out in note 3 6 to the financ ial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
33
1. Summary of significant accounting policies - continued
1.3 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). The financial statements are presented in euro, which is the company’s and the group’s
presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss.
1.4 Business combinations involving entities under common control
PG p.l.c. acquired a 100% shareholding in a number of entities and 49% shareholding in two
associates on 10 March 2017, in exchange for the issue of shares to the previous ultimate
shareholders of these entities. In accordance with generally accepted accounting principles, the
pooling of interest basis of accounting has been adopted and this transaction has been recorded a s
if it had occurred at the beginning of the earliest period reported.
Business combinations involving entities under common control are transactions in which all of the
combining entities are controlled by the same party or parties before and after the transaction and
that control is not transitory. The key feature of a transaction among entities under common control
is that there is no change in the ultimate control of the combining entities as a result of the
transaction. Control could be exercised by a group of individuals that are all part of the same close
family group when they have the collective power to govern the financial and operating policies of
the entity.
The group has chosen to apply the pooling of interests method to account for transactions involving
entities under common control. The group accounts for business combinations involving entities
under common control by recording:
a) the transaction as if it had taken place at the beginning of the earliest period presented;
b) the assets and liabilities of the acquired entity using predecessor book values from the
consolidated financial statements of the controlling party, and
c) the difference between the consideration given and the aggregate book value of the assets
and liabilities of the acquired entity as an adjustment to equity.
When the controlling party does not prepare financial statements, the book values from the
financial statements of the acquired entity are us ed.
1.5 Property, plant and equipment
All property, plant and equipment is initially recorded at historical cost. Land and buildings, are
shown at fair value based on periodic valuations by valuers, less subsequent depreciation for
buildings. Valuations are carried out on a regular basis such that the carrying amount of property
does not differ materially from that which would be determined using fair values at the end of the
reporting period. Any accumulated depreciation at the date of revaluation is eliminated against the
gross carrying amount of the asset, and the net amount is restated to the revalued amount of the
asset.
PG p.l.c.
Annual Financial Report - 30 April 2023
34
1. Summary of significant accounting policies - continued
1.5 Property, plant and equipment - continued
All other property, plant and equipment is stated at historical cost less depreciation and impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the
items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repa irs and maintenance are c harged to profit or loss
during the financial per iod in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown in valuation reserves in shareholders’ equity. Decreases that
offset previous increases of the same asset are charged in other comprehensive income and
debited against the valuation reserves directly in equity; all other decreases are charged to profit or
loss. Each year the difference between depreciation based on the revalued carrying amount of the
asset charged to profit or loss and depreciation based on the asset’s original cost is transferred
from the valuation reserves to retained earnings.
Land is not depreciated as it is deemed to have an indefinite life. Depreciation on other assets is
calculated using the straight-line method to allocate their cost to their residual values over their
estimated useful lives as follows:
%
Buildings
1 - 2
Improvements to premises
3 - 10
Furniture and fittings
10 - 25
Plant, machinery and equipment
6.67 - 25
Motor vehicles
20
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. In particular, the group assesses on a periodic basis the economic useful
lives of integral and movable assets directly related to the retailing and fashion sector.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (note 1.7).
Gains and losses on disposals are determined by comparing the proceeds with carrying amount
and are recognised in profit or loss. When revalued assets are sold, the amounts included in the
valuation reserves r elating to the assets are tra nsferred to retain ed earnings.
1.6 Investment property
Investment property is held for long-term rental yields or for capital appreciation or both, and is not
presently occupied by entities forming part of the group. Investment property comprises freehold
land and buildings.
PG p.l.c.
Annual Financial Report - 30 April 2023
35
1. Summary of significant accounting policies - continued
1.6 Investment property - continued
Investment property is measured initially at its historical cost, including related transaction costs
and borrowing costs. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. After initial recognition, investment property is carried at fair value,
representing open market value determined annually. Fair value is based on active market prices,
adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If
this information is not available, the group uses alternative valuation methods such as recent prices
on less active markets or discounted cash flow projections. These valuations are reviewed
periodically by the group’s directors, after taking into consideration valuations prepared by external
professional valuers.
Investment property that is being redeveloped for continuing use as investment property or for
which the market has become less active continues to be measured at fair value. Fair value
measurement on property under construction is only applied if the fair value is considered to be
reliably measurable. The fair value of investment property reflects, among other factors, the value
of similar properties in the local market. The fair value also reflects, on a similar basis, any cash
outflows that could be expected in respect of the property.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that
future economic benefits associated with the expenditure will flow to the group and the cost of the
item can be measured reliably. All other repairs and maintenance costs are charged to profit or
loss during the financial period in which they are incurred. When part of an investment property is
replaced, the carrying amount of the replaced part is derecognised.
The fair value of investment property does not reflect future capital expenditure that will improve or
enhance the property and does not reflect the related future benefits from this future expenditure
other than those a rational market participant would take into account when determining the value
of the property.
Changes in fair values are recognised in profit or loss. Investment properties are derecognised
either when they have been disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit is expected from its disposal.
If an investment property becomes owner-occupied, it is reclassified as property, plant and
equipment. Its fair value at the date of the reclassification becomes its cost for subsequen t
accounting purposes. When the group decides to dispose of an investment property without
development, the group continues to treat the property as an investment property. Similarly, if the
group begins to redevelop an existing investment property for continued future use as investment
property, it remains an investment property during the redevelopment.
If an item of property, plant and equipment becomes an investment property because its use has
changed, any difference resulting between the carrying amount and the fair value of this item at the
date of transfer is treated in the same way as a revaluation under IAS 16. Any resulting increase in
the carrying amount of the property is recognised in profit or loss to the extent that it reverses a
previous impairment loss; with any remaining increase recognised in other comprehensive income,
directly to revaluation surplus within equity. Any resulting decrease in the carrying amount of the
property is initially charged to other comprehensive income against any previously recognised
revaluation surplus, with any remaining decrease charged to profit or loss. Upon the disposal of
such investment property, any surplus previously recorded in equity is transferred to retained
earnings; the transfer is not made through profit or loss.
Where an investment property undergoes a change in use, evidenced by commencement of
development with a view to sale, the property is transferred to inventories. A property’s deemed
cost for subsequent acc ounting as inventor ies is its fair value at the date of change in use.
PG p.l.c.
Annual Financial Report - 30 April 2023
36
1. Summary of significant accounting policies - continued
1.7 Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by whi ch the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of t he impairment at the en d of each reporting period.
1.8 Investments in subsidiaries and associates
In the company’s separate financial statements, investments in subsidiaries and associates are
accounted for by the cost method of accounting, that is, at cost less impairment. Provisions are
recorded where, in the opinion of the directors, there is an impairment in value. Where there has
been an impairment in the value of an investment, it is recognised as an expense in the period in
which the diminution is identified. The company gathers objective evidence that an investment is
impaired using the same process disclosed in note 1.9.3. The results of associates are reflected in
the company’s separate financial statements only to the extent of dividends receivable. On
disposal of an investment, the difference between the net disposal proceeds and the carrying
amount is charged or cr edited to profit or loss.
Loans for which settlement is neither planned nor likely to occur in the foreseeable future are, in
substance, an extension of the company's investment in that subsidiary. Loans to subsidiaries for
which settlement is planned are classified as loans and receivables in accordance with the
requirements of IFR S 9.
1.9 Financial assets
The group classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value through OCI, and
- those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and
the contractual terms of the cash flows.
For investments in equity instruments that are not held for trading, this will depend on whether the
group has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (FVOCI). The group reclassifies debt
investments when and only when its business model for managing those assets changes.
1.9.1 Recognition and derecognition
The group recognises a financial asset in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. Financial assets are derecognised when the
rights to receive cash flows from the financial assets have expired or have been transferred and the
Group has transferred su bstantially all the risks and rewards of ownersh ip.
PG p.l.c.
Annual Financial Report - 30 April 2023
37
1. Summary of significant accounting policies - continued
1.9 Financial assets - continued
1.9.2 Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly
attributable to the ac quisition of the fin ancial asset.
Debt instruments
Subsequent measurement of debt instruments depends on the group’s business model for
managing the asset and the cash flow characteristics of the asset. The group’s debt instruments
comprise trade receivables arising from contracts with customers. The accounting policy pertaining
to measures of trade receivable (excluding impairment) is disclosed in note 1.10.
Equity instruments
The group subsequently measures all equity investments at fair value. The group’s management
has elected to present fair value gains and losses on equity investments in OCI and therefore there
is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the group’s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
1.9.3 Impairment
The group assesses on a forward looking basis the expected credit losses associated with its debt
instruments carried at amortised cost. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the group applies the simplified approach permitted by IFRS 9, which
requires expected lifetime losses to be recognised from initial recognition of the receivables, see
note 2.1 for further deta ils.
1.10 Trade and other receivables
Trade receivables comprise amounts due from customers for goods sold or services performed
and rendered in the ordinary course of business. If collection is expected in one year or less (or in
the normal operating cycle of the business if longer), they are classified as current assets. If not,
they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less expected credit loss allowance (note 1.7).
The carrying amount of the asset is reduced through the use of an allowance account, and the
amount of the loss is recognised in profit or loss within administrative expenses. When a
receivable is uncollectible, it is written off against the allowance account for trade and other
receivables. Subsequent recoveries of amounts previously written off are credited against profit or
loss.
PG p.l.c.
Annual Financial Report - 30 April 2023
38
1. Summary of significant accounting policies - continued
1.1 1 Inventories
Goods held for resale
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a
weighted average basis. The cost of inventories comprises the invoiced value of goods, and, i n
general, cost also includes freight charges. Net realisable value is the estimate of the selling price
in the ordinary cours e of business less sel ling expenses.
1.12 Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity, respectively. Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the end of the reporting period, and any
adjustment to tax pay able in respect of previ ous years.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill;
deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Under this method the group is required to make provision for deferred income taxes on the
revaluation of certain property assets and provisions on the difference between the carrying values
for financial reporting purposes and their tax base.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits
will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets against current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or
different taxable ent ities where there is a n intention to s ettle the balances on a net basis.
1.13 Cash and cash equivalents
Cash and cash equivalents are carried in the statements of financial position at face value. In the
statements of cash flows, cash and cash equivalents include cash in hand and deposits held at call
with banks, net of bank overdrafts. In the statements of financial position, bank overdrafts are shown
wi th in b orr owi ng s in cu rr en t li ab il i tie s.
1.14 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs
directly attributable to the issue of new shares or for the acquisition of a business, are included in
the cost of acquisition as part of the purchas e consideration.
PG p.l.c.
Annual Financial Report - 30 April 2023
39
1. Summary of significant accounting policies - continued
1.15 Financial liabilities
The group recognises a financial liability in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. The group’s financial liabilities are classified
as financial liabilities which are not at fair value through profit or loss (classified as ‘other liabilities’)
under IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at
fair value, being the fair value of consideration received, net of transaction costs that are directly
attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently
measured at amortised cost. The group derecognises a financial liability from its statement of
financial position when the obligation specified in the contract or arrangement is discharged, is
cancelled or expires.
1.16 Trade and other payables
Trade payables comprise obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business, if longer).
If not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost us ing the effective interest method.
1.17 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over
the period of the borrowings using the effective interest method. Borrowings are classified as
current liabilities unless the group has an unconditional right to defer settlement of the liability for at
least twelve months a fter the end of the report ing period.
1.18 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.19 Deferred government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance
that the grant will be received and the group will comply with all attached conditions. Government
grants related to costs are deferred and recognised in profit or loss over the period necessary to
match them with the costs they are intended to compensate.
1.20 Provisions
Provisions for legal claims are recognised when the group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation, and the amount has been reliably estimated. Provisions are not recognised
for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of
time is recognised as f inance costs.
PG p.l.c.
Annual Financial Report - 30 April 2023
40
1. Summary of significant accounting policies - continued
1.21 Revenue recognition
(a) Sales of goods - retail
Sales of goods are recognised when the group sells a product to the customer. Retail sales are
usually in cash or by credit card. Certain retail sales are on credit. The recorded revenue includes
credit card fees payable for the transaction. Such fees are included in ‘cost of sales’.
It is the group’s policy to sell its products to the end customer with a right of return. Accumulated
experience is used to estimate and provide for such returns at the time of sale. Because the
number of products returned has been steady for years, it is highly probable that a significant
reversal in the cumulative revenue recognised will not occur. The validity of this assumption and
the estimated amount of returns are reassessed at each reporting date.
(b) Sales of goods - customer loyalty programme
The group operates a loyalty programme where retail customers accumulate points for purchases
made which entitle them to discount on future purchases. A contract liability for the award points is
recognised at the time of the sale. Revenue is recognised when the points are redeemed.
The points provide a material right to customers that they would not receive without entering into a
contract. Therefore, the promise to provide points to the customer is a separate performance
obligation. The transaction price is allocated to the product and the points on a relative stand-alone
selling price basis. Management estimates the stand-alone selling price per point on the basis of the
discount granted when the points are redeemed and on the basis of the likelihood of redemption,
based on pa st expe rience. A contra ct liabili ty is recognised unti l the poin ts are redeem ed.
(c) Sales of goods - wholesale
Sales of goods are recognised when the group has delivered products to the customer, the
customer has accepted the products and collectability of the related trade and other receivables is
reasonably assured. Delivery does not occur until the risks of obsolescence and loss have been
transferred to the customer.
(d) Sales of services
Revenue from services is generally recognised in the period the services are provided, based on
the services performed to date as a percentage of the total services to be performed. Accordingly,
revenue is recognised by reference to the stage of completion of the transaction under the
percentage of completion method.
(e) Property related income
Rentals receivable, short-term lets receivable and premia charged to tenants of immovable
property are recognised in the period when the property is occupied. Premia are taken to profit or
loss over the period of the leases to which they relate.
(f) Dividend income
Dividend income is rec ognised when the ri ght to receive paym ent is established.
PG p.l.c.
Annual Financial Report - 30 April 2023
41
1. Summary of significant accounting policies - continued
1.22 Finance income and costs
Finance income and costs are recognised in profit or loss for all interest-bearing instruments on an
accrual basis using the effective interest method. Finance income is recognised as it accrues,
unless collectability is i n doubt.
1.23 Borrowing costs
Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying non-
current assets are capitalised as part of its cost. Borrowing costs are capitalised while acquisition
or construction is actively underway, during the period of time that is required to complete and
prepare the asset for its intended use. Capitalisation of borrowing costs is ceased once the asset
is substantially complete and is suspended if the development of the asset is suspended. All other
borrowing costs are expensed.
Borrowing costs are recognised for all interest-bearing instruments on an accrual basis using the
effective interest method. Interest costs include the effect of amortising any difference between
initial net proceeds and re demption val ue in res pect of the gro up’s interest beari ng borrowings.
1.24 Leases
The group leases the land and buildings on which the PAMA Shopping Mall, the PAMA
Supermarkets and the parking area are located. The rental contracts are made with an associate
of the group for fixed periods of 30 years. The group also leases certain operational equipment
installed within the PAMA Shopping Village, however management does not consider these
arrangements material relative to the group’s other leasing arrangements.
On 28 June 2022, the group entered into an agreement for a period of 50 years for the lease of
property adjacent to PAMA Shopping Village. In addition, on 27 December 2022 the Group entered
into an agreement to purchase the temporary utile dominium on a parcel of land adjacent to the
PAVI Shopping Complex for the remaining period of 90 years.
Until the financial years ended 30 April 2019, leases of property, plant and equipment were
classified as either finance leases or operating leases. From 1 May 2019, leases are recognised as
a right-of-use asset and a corresponding liability at the date at which the leased asset is available
for use by the group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index
or rate as at the commencement date
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot
be readily determined, which is generally the case for leases in the group, the lessee’s incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with sim i lar terms, security an d conditions.
PG p.l.c.
Annual Financial Report - 30 April 2023
42
1. Summary of significant accounting policies - continued
1.24 Leases - continued
To determine the incremental borrowing rate, the group:
• where possible, uses recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party financing was
received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for
leases held by similar operators, which does not have recent third party financing, and makes
adjustments specific to the lease, eg term, country, currency and security.
The group is exposed to potential future increases in variable lease payments based on an index
or rate, which are not included in the lease liability until they take effect. When adjustments to lease
payments based on an index or rate take effect, the lease liability is reassessed and adjusted
against the right-of-use asset
Lease paym ents are allocated between principal and finance cost. T he fi nance c ost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of th e liability for each perio d.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of
lease liability. Right-of-use assets are generally depreciated over the shorter of the asset's useful
life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. While
the group revalues its land and buildings that are presented within property, plant and equipment, it
has chosen not to do so for the right-of-use land and buildings held by the group.
The group’s leases of land and buildings with its associate are subject to additional payments that
are based on 1.9% of the revenue generated from the PAMA Supermarket. Such terms are used
as a manner of minimising the fixed costs base, and are recognised in profit or loss in the period in
which the condition that triggers those payments (i.e. the sale) occurs. A 5% increase in sales in
PAMA Supermarket with such variable lease arrangements would increase total lease payments by
€68,000.
1.25 Dividend distribution
Dividend distribution to the shareholders is recognised as a liability in the financial statements in
the period in which t he dividends are approv ed by the s hareholders.
1.26 Earnings per sh are
1.26.1 Basic earnings per share
Basic earnings per share is calculated by dividing profit attributable to equity holders of the parent
by the weighted average number of ordinary shares in issue during the period.
1.26.2 Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary
shares outstanding to ass ume exercise of a ll dilutive potent ial ordinary shares.
PG p.l.c.
Annual Financial Report - 30 April 2023
43
1. Summary of significant accounting policies - continued
1.27 Segment reporting
The group determines and presents operating segments based on the information that internally is
provided to the board of directors, which is the group’s chief operating decision maker in
accordance with the requirements of IFRS 8 ‘Operating Segments’.
An operating segment is a component of the group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the group’s other components, and for which discrete financial information
is available. An operating segment’s operating results are reviewed regularly by the board of
directors to make decisions about resources to be allocated to the segment and to assess its
performance executin g the function of th e chief ope rating dec ision maker.
2. Financial risk management
2.1 Financial risk factors
The group’s activities potentially expose it to a variety of financial risks: market risk (including
currency risk, cash flow interest rate risk, and fair value interest rate risk), credit risk and liquidity
risk. The group’s overall risk management focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the group’s financial performance. The group did not
make use of derivative financial instruments to hedge certain risk exposures during the current and
preceding financial periods.
The directors provide policies for overall risk management, as well as policies covering risks
referred to above and specific areas such as investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities which are denominated in a currency that is not the respective group’s functional
currency. The group is not exposed to significant foreign exchange risk arising from the group’s
financing transactions as assets and liabilities are principally denominated in euro and the group is
not exposed to foreign exchange risk arising on trading transactions as these are principally
conducted in euro.
The group’s cash and cash equivalents, borrowings, loans and receivables, finance lease and
payables are denominated in euro.
Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity
would have been affected by changes in foreign exchange rates that were reasonably possible at
the end of the reporting period is not deemed necessary.
(ii) Cash flow and fair value interest rate risk
The group’s income and operating cash flows are substantially independent of changes in market
interest rates. The group’s interest rate risk arises from borrowings.
Borrowings issued at variable rates, comprising short-term bank borrowings (refer to note 15),
expose the group to cash flow interest rate risk. Certain group’s borrowings are subject to an
interest rate that var ies according to r evisions made to the Bank’s base ra te.
PG p.l.c.
Annual Financial Report - 30 April 2023
44
2. Financial risk management - continued
2.1 Financial risk facto rs - continued
(a) Market risk - continued
(ii) Cash flow and fair value interest rate risk - continued
Management monitors the level of floating rate borrowings as a measure of cash flow risk taken on.
Interest rates on these financial instruments are linked with the Central Intervention Rate issued by
the European Central Bank. At the reporting date, a reasonably possible change of 200 basis
points in interest rates would have increased/decreased equity and profit or loss by €108,326. Up
to the end of the reporting period, the group did not have any hedging arrangements with respect
to the exposure of floating interest rate risk.
The group has considerable bank borrowings issued at fixed rates (note 15). These bank loans do
not expose the group to cash flow interest rate risk.
(b) Cred it risk
Credit risk arises on cash and cash equivalents, deposits with banks, loans and receivables,
advances to related parties as well as credit exposures to customers, including outstanding
receivables and committed transactions. The carrying amount of financial assets represents the
maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Financial assets measured at
amortised cost:
Trade and other receivables (note 11)
7,655
6,368
708
708
Cash in bank and in hand (note 12)
13,369
8,729
9
5
21,024
15,097
717
713
The group banks and invests only with local financial institutions or entities with high quality
standing or rating. The group’s operations are principally carried out in Malta. The group has no
concentration of credit risk that could materially impact the sustainability of its operations.
The group sales are mainly generated from retail customers and are made in cash or via major
credit cards. Despite credit sales are limited, the group has policies in place to ensure that sales of
products and provision of services on credit (mainly related to rental activities) are effected to
customers with an appropriate credit history.
The group assesses the credit quality of its customers taking into account financial position, past
experience and other factors. It has policies in place to ensure that sales of products and services
are effected to customers with an appropriate credit history. The group monitors the performance of
its receivables on a regular basis to identify expected collection losses, which are inherent in the
group’s receivables, taking into account historical experience in collection of accounts receivable.
Impairment of financial assets
The group’s trade receivables and contract assets, as well as cash and cash equivalents, are
subject to IFRS 9’s expected credit loss model. The Company’s financial assets subject to IFRS
9’s expected credit loss model principally comprise amounts advanced to subsidiaries, classified
within ‘Trade and ot her receivables’.
PG p.l.c.
Annual Financial Report - 30 April 2023
45
2. Financial risk man agement - continued
2.1 Financial risk factors - continued
(b) Credit risk - continued
Impairment of financial assets - continued
(i) Trade receivables and contract assets
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped
based on shared credit risk characteristics and the days past due. The contract assets relate to
unbilled performance obligations and have substantially the same risk characteristics as the trade
receivables for the same types of contracts. The group has therefore concluded that the expected
loss rates for trade receivables are a reasonable approximation of the loss rates for the contract
assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 months
before 1 May 2022 respectively and the corresponding historical credit losses experienced within
this period. The historical loss rates are adjusted to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the customers to settle the receivables. The group
adjusts the historical loss rates based on expected changes in these factors.
Other than as noted below, as at 1 May 2022, no further identified expected credit loss allowance
in addition to the amount that had already been provided for as at 1 May 2022, on trade
receivables and contract assets, was deemed necessary. The movement in loss allowances as at
30 April 2023 is also deemed immaterial by management. On this basis, the information pertaining
to loss rates and loss allowances in the group’s provisions matrix, which would have otherwise
been required by IFRS 7, is not presented as at 30 April 2023 and 1 May 2022.
As of 30
April 2023, trade receivables of €4,202,000 (2022: €3,688,000) were fully performing.
Loss allowances of €46,000 (2022: €46,000) were present at year end in respect of trade and other
receivables that were overdue and that were not expected to be recovered. Other overdue trade
receivables that were not impaired amounted to €2,376,000 (2022: €1,769,000). The group holds
no security against these receivables. The unsecured overdue amounts consisted of €1,858,000
(2022: €1,335,000) that were less than three months overdue and €518,000 (2022: €434,000) that
were greater than three months.
(ii) Other receivables
The group revised its methodology in relation to such amounts in line with the requirements of
IFRS 9’s forward-looking expected loss model. The company monitors intra-group credit
exposures at individual entity level on a regular basis and ensure s timely performance of these
assets in the context of its overall liquidity management. The loss allowances for these financial
assets are based on assumptions about risk of default and expected loss rates. The Company’s
management uses judgement in making these assumptions, based on the counterparty’s past
history, existing market conditions, as well as forward-looking estimates at the end of each
reporting period.
As at year-end, based on the directors’ assessments of these factors, the equity position of the
respective counterparty, and, where the probability of default is high, the recovery strategies
contemplated by management together with the support of shareholders in place, the resulting
impairment charge re quired was deemed to be im material.
PG p.l.c.
Annual Financial Report - 30 April 2023
46
2. Financial risk management - continued
2.1 Financial risk factors - continued
(b) Credit risk - continued
Impairment of financ ial assets - continued
(iii) Cash at bank
The group’s cash is placed with reputable financial institutions, such that management does not
expect any institution to fail to meet repayments of amounts held in the name of the companies
within the group. While cash and cash equivalents are also subject to the impairment requirements
of IFRS 9, the identified impairment loss was insignificant.
(c) Liquidity risk
The group is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise principally trade and other payables and borrowings (refer to
notes 17 and 15). Prudent liquidity risk management includes maintaining sufficient cash and
committed credit lines to ensure the availability of an adequate amount of funding to meet the
group’s obligations.
Management monitors liquidity risk by means of cash flow forecasts on the basis of expected cash
flows over a twelve month period and ensures that when additional financing facilities are expected
to be required over the coming period there are adequate credit facilities in place with external
sources and within the treasury function of the group.
The group’s liquidity risk is monitored in view of the matching of cash inflows and outflows arising
from expected maturities of financial instruments, coupled with the group’s committed borrowing
facilities and group’s treasury support that it can access to meet liquidity needs as referred to
previously.
The group carries a net current liability position that results in large part from supplier credit being
extended to it in excess of its own investment in working capital. The group maintains a healthy
relationship with its suppliers and care is taken to respect agreed credit terms. Prudence is
exercised in cash management to ensure that the group maintains at any point in time a material
liquidity cushion in terms o f available unut ilised overdraft fac ilities.
PG p.l.c.
Annual Financial Report - 30 April 2023
47
2. Financial risk management - continued
2.1 Financial risk factors - continued
(c) Liquidity risk - continued
The following table analyses the group’s non-derivative financial liabilities into relevant maturity
groupings based on the remaining period at the statement of financial position to the contractual
maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows.
Balances due within twelve months equal their carrying balances, as the impact of discounting is
not significant.
Carrying
Contractual
Within
Between
Over
amount
cash flows
one year
1 and 5 years
5 years
€’000
€’000
€’000
€’000
€’000
30 April 2023
Bank borrowings
10,444
10,866
6,210
4,656
-
Trade and other
payables
28,094
28,094
28,094
-
-
Lease liabilities
21,049
50,194
1,667
6,606
41,921
59,587
89,154
35,971
11,262
41,921
30 April 2022
Bank borrowings
8,950
9,524
3,009
6,515
-
Trade and other
payables
23,657
23,657
23,657
-
-
Lease liabilities
16,668
30,358
1,368
5,477
23,513
49,275
63,539
28,034
11,992
23,513
2.2 Fair values of financial instruments
The carrying amounts of cash at bank, receivables (net of impairment provisions, if any), payables,
borrowings and lease liabilities reflected in the financial statements are reasonable estimates of fair
value in view of the nature of these instruments or the relatively short period of time between the
origination of the instruments and their exposed realisation. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the group for similar financial instruments.
As at the end of the reporting period, the fair values of financial assets and liabilities approximate
the carrying amounts shown in the state ment of financial posit ion.
2.3 Capital risk management
The group’s objectives when managing capital are to safeguard the group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders, and
to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust
the capital structure, the company may issue new shares or adjust the amounts of dividends paid to
shareholder s.
PG p.l.c.
Annual Financial Report - 30 April 2023
48
2. Financial risk management - continued
2.3 Capital risk management factors - continued
The group monitors the level of capital on the basis of the ratio of aggregated net debt to total
capital. Net debt is calculated as total borrowings including lease liabilities less cash and cash
equivalents. Total capital is calculated as equity, as shown in the statement of financial position,
plus net debt. The aggregated figures in respect of the group’s equity and borrowings are reflected
below:
Group
2023
2022
€’000
€’000
Total borrowings and lease liabilities (notes 15 and 5)
31,493
25,618
Less: Cash at bank and in hand (note 12)
(13,369)
(8,729)
Net borrowings and lease liabilities
18,124
16,889
Total equity
62,476
55,680
Total capital
80,600
72,569
Gearing
22.5%
23.3%
The group manages the relationship between equity injections and borrowings, being the constituent
elements of capital as reflected above from period to period, with a view to managing the cost of
capital. The level of capital of the group, as reflected in the statement of financial position, is
maintained by reference to its respective financial obligations and commitments arising from
operational requirements. In view of the nature of the group’s activities and the extent of
borrowings or debt, the capital level at the end of the reporting period is deemed adequate by
management.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances.
In the opinion of the directors, with the exception of the fair valuation of property, plant and
equipment and investment property (note 4 and note 6), the accounting estimates and judgements
made in the course of preparing these financial statements are not difficult, subjective or complex
to a degree which w ould warrant their des cription as critical in terms of the requiremen ts of IAS 1.
PG p.l.c.
Annual Financial Report - 30 April 2023
49
4. Property, plant and equipment
Assets
Machinery,
Furniture,
in the
motor
fixtures
Land and
course of
vehicles and
and
buildings
construction
equipment
fittings
Total
Group
€’000
€’000
€’000
€’000
€’000
At 30 April 2021
Cost or valuation
55,298
336
9,746
6,185
71,565
Accumulated depreciation
(2,655)
-
(3,613)
(2,683)
(8,951)
Net book amount
52,643
336
6,133
3,502
62,614
Year ended 30 April 2022
Opening net book amount
52,643
336
6,133
3,502
62,614
Additions
13
43
625
544
1,225
Disposals
(53)
-
-
(49)
(102)
Depreciation charge
(435)
-
(975)
(790)
(2,200)
Depreciation released on
disposal
-
-
-
21
21
Closing net book amount
52,168
379
5,783
3,228
61,558
At 30 April 2022
Cost or valuation
55,258
379
10,371
6,680
72,688
Accumulated depreciation
(3,090)
-
(4,588)
(3,452)
(11,130)
Net book amount
52,168
379
5,783
3,228
61,558
Year ended 30 April 2023
Opening net book amount
52,168
379
5,783
3,228
61,558
Additions
46
78
625
358
1,107
Disposals
-
-
(2,760)
(638)
(3,398)
Depreciation charge
(443)
-
(1,105)
(683)
(2,231)
Depreciation released on
disposal
-
-
2,754
638
3,392
Closing net book amount
51,771
457
5,297
2,903
60,428
At 30 April 2023
Cost or valuation
55,304
457
8,236
6,400
70,397
Accumulated depreciation
(3,533)
-
(2,939)
(3,497)
(9,969)
Net book amount
51,771
457
5,297
2,903
60,428
PG p.l.c.
Annual Financial Report - 30 April 2023
50
4. Property, plant and equipment - continued
Fair valuation of property
The group is required to analyse non-financial assets carried at fair value by level of the fair value
hierarchy within which the recurring fair value measurements are categorised in their entirety (Level
1, 2 or 3). The different levels of the fair value hierarchy have been defined as fair value
measurements using:
• Quoted prices (unadjusted) in active markets for identical assets (Level 1);
• Inputs other than quoted prices included within Level 1 that are observable for the asset, either
directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2); and
• Inputs for the asset that are not based on observable market data (that is, unobservable inputs)
(Level 3).
The group’s land and buildings within property, plant and equipment (note 4) and investment
property (note 6) comprises:
• the Zara Complex situated in Sliema, which mainly includes retail outlets selling Zara branded
fashion garments and home furnishings. This property is operated by Alhambra Trading
Limited and Centre Point Properties Limited (members of the group) and is classified as
property, plant and equipment.
• the PAVI Shopping Complex situated in Qormi, which operates a supermarket including the
management of shared activities within the retailing operations and the concessions of
commercial areas that compliment the complex.
• Undeveloped property situated in Qormi acquired in 2018 which is being held for investment
purposes and is classified as investment property (note 6).
All the recurring property fair value measurements at 30 April 2023 use significant unobservable
inputs and are accordingly categorised within Level 3 of the fair valuation hierarchy.
The group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the
beginning of the reporting period. There were no transfers between different levels of the fair value
hierarchy during the year ended 30 April 2023.
A reconciliation from the opening balance to the closing balance of land and buildings for recurring
fair value measurements categorised within Level 3 of the value hierarchy, is reflected in the table
above and as disclosed in note 6. The only movements in land and buildings classified as
property, plant and equipment and investment property reflect additions, transfers and depreciation
charge for the year ended 30 April 2023.
During this financial year, the directors assessed the valuation in respect of the Zara Complex and
PAVI Shopping Complex on valuation reports prepared by management. Valuations were made on
the basis of open market value after considering the returns being attained by the property and its
intrinsic value. Furthermore, during this financial year, the directors assessed the valuation in
respect of undeveloped property in Qormi. Valuations were made based on recent transactions of
nearby properties. These assessments resulted in valuations that are not materially different from
that as at 30 April 2022 and accordingly, no adjustment has been made to the carrying amount as
at 30 April 2023.
PG p.l.c.
Annual Financial Report - 30 April 2023
51
4. Property, plant and equipment - continued
Valuation processes
The valuations of the properties are performed regularly taking into consideration valuation reports
prepared by management. These reports are based on both:
• information provided by the entities operating the complexes which is derived from the group’s
financial systems and is subject to the group’s overall control environment; and
• assumptions and valuation models used by management – the assumptions are typically
market related. These are based on professional judgement and market observation.
The information used, together with the assumptions and the valuation models, are reviewed by the
board of directors. This includes a review of fair value movements over the period.
Valuation techniques
Given the specific nature of these assets, the valuations of the Level 3 property have been
performed by reference to valuation models. These valuation models include:
• in case of the Zara Complex and the PAVI Shopping Complex the management applied the
capitalised rental approach;
• in the case of the property in Qormi, the management based the valuation on recent
transactions of nearby properties.
The board of directors approved the respective fair values after taking into consideration the
intrinsic value of the property and specific tenure conditions.
In using the capitalised rentals approach, the significant unobservable inputs include a rental rate
per square metre, the capitalisation rate, and, if applicable, development or refurbishment costs
which must be incurred before the property can earn the potential rental cash flows. Information
about fair value measurements of property using significant unobservable inputs (Level 3) include a
rental rate on revenue of 10% and a capitalisation rate of 6.5% for the Zara Complex and average
rental rate per square metre of €120 with no inflationary growth discounted at an average rate of
6.5% for the PAVI Shopping Complex.
For the capitalised rental approach, the higher the rate per square metre, the higher the resultant
fair valuation. Conversely, the lower the capitalisation rate, the higher the resultant fair valuation.
Bank borrowings are secured by the group’s property, plant and equipment (note 15).
The charge for depreciation of property, plant and equipment is included in profit or loss as follows:
Group
2023
2022
€’000
€’000
Direct operating expenses
1,994
1,971
Selling and distribution expenses
42
30
Administrative expenses
195
199
Total depreciation charge (note 19)
2,231
2,200
PG p.l.c.
Annual Financial Report - 30 April 2023
52
5. Leases
This note provides information for leases where the group is a lessee.
(i) Amounts recognised on balance sheet
The balance sheet shows the following amounts relating to leases:
Group
2023
2022
€’000
€’000
Right-of-use assets
Land & buildings
26,728
15,274
Equipment
237
286
Closing cost and net book amount
26,965
15,560
Lease liabilities
Current
198
315
Non-current
20,851
16,353
21,049
16,668
On 28 June 2022, the group entered into an agreement for a period of 50 years for the lease of
property adjacent to PAMA Shopping Village. The right-of-use-asset for this property as at 30 April
2023 amounted to €4,673,551.
In addition, on 27 December 2022 the Group entered into an agreement to purchase the temporary
utile dominium on a parcel of land adjacent to the PAVI Shopping Complex for the remaining
period of 90 years. The right-of-use-asset for this property as at 30 April 2023 amounted to
€7,455,568. This amount was paid upfront upon entering into the agreement.
(ii) Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Group
2023
2022
€’000
€’000
Depreciation charge of right-of-use assets
Land and buildings
743
664
Equipment
49
49
792
713
Interest expense (included in finance costs)
1,264
999
Expense relating to variable lease payments not included
in lease liability (included in cost of sales)
1,364
1,174
The total cash outflow for leases during the year ended 30 April 2023 was €10,474,000 (2022:
€2,783,000).
PG p.l.c.
Annual Financial Report - 30 April 2023
53
6. Investment property
Group
2023
2022
€’000
€’000
Year ended 30 April
Opening cost and net book amount
3,817
3,816
Additions
130
1
Closing cost and net book amount
3,947
3,817
As at 30 April
Cost and fair value
3,947
3,817
7. Investments in subsidiaries
Company
2023
2022
€’000
€’000
Year ended 30 April
At the beginning and end of year
34,506
34,506
At 30 April
Cost and net book value
34,506
34,506
The principal subsidiaries all of which are unlisted at year end, together with the nature of their
business are disclosed in note 36.
On 10 March 2017, the company acquired the entire shareholding in a number of entities for a
consideration of €34,456,000 for subsidiaries and €3,502,000 for associates (note 8) from PG
Holdings Limited, a holding company owned by Paul Gauci. Under the requirements of the
predecessor basis of accounting (refer to note 1.4), the difference between the net asset value of
these undertakings as at this date and the consideration paid, should be disclosed as an
adjustment to equity.
8. Investments in associates
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Year ended 30 April
At beginning of year
3,020
3,187
3,502
3,502
Share of results of associates
(148)
(167)
-
-
At end of year
2,872
3,020
3,502
3,502
At 30 April
Cost
3,326
3,326
3,502
3,502
Share of results and reserves
(454)
(306)
-
-
Net book value
2,872
3,020
3,502
3,502
PG p.l.c.
Annual Financial Report - 30 April 2023
54
8. Investments in associates - continued
The principal associates all of which are unlisted at year end, together with the nature of their
business are disclosed in note 36. These associates have share capital consisting solely of
ordinary shares, which are held directly by the group; the country of incorporation or registration is
also their principal place of business. The financial year end of these entities is 30 April.
Associates are measured using the equity method in accordance with the group’s accounting
policy and there are no contingent liabilities relating to the group’s interest in the associates.
Summarised financial information of associates
Set out below are the summarised financial information for the above noted entities.
Summarised balance sheet
Group
2023
2022
€’000
€’000
Total current assets
2,723
2,486
Total current liabilities
(866)
(1,251)
1,857
1,235
Non-current assets
6,188
6,483
Non-current liabilities
(105)
(137)
6,083
6,346
Net assets as at year end
7,940
7,581
Summarised statement of comprehensive income
Group
2023
2022
€’000
€’000
Revenue
2,669
2,711
Profit before tax
720
562
Profit after tax
359
340
Associated results attributable to the group
176
167
The information above reflects the amounts presented in the financial statements of the associates
for the period which have been prepared in accordance with GAPSME. These have been adjusted
for the adoption of IFRSs when considered as associates of the group, amounting to €323,000
(2022: €334,000).
PG p.l.c.
Annual Financial Report - 30 April 2023
55
8. Investments in associates - continued
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of its
interest in associates:
Group
2023
2022
€’000
€’000
Opening net assets
7,581
7,491
Profit for the year
359
340
Dividend paid
-
(250)
Closing net assets
7,940
7,581
Carrying value at year end
2,872
3,020
9. Equity instruments at fair value through other comprehensive income
Group
2023
2022
€’000
€’000
Year ended 30 April
Opening carrying amount
260
-
Additions
-
250
(Losses)/gains from changes in fair value
(22)
10
Closing cost and net book amount
238
260
At 30 April
Cost
250
250
Fair value (losses)/gains (note 14)
(12)
10
Carrying amount
238
260
Equity instruments at FVOCI relate to an investment in a listed local company, M&Z p.l.c.. The
equity investment is not held for trading and which the group has irrevocably elected at initial
recognition to recognise in this category. This is a strategic investment and the group considers this
classification to be more relevant.
The fair value of the equity investment is estimated by reference to the current bid prices based on
active market.
PG p.l.c.
Annual Financial Report - 30 April 2023
56
10. Inventories
Group
2023
2022
€’000
€’000
Goods held for resale
10,655
9,644
The amount of inventory write-downs recognised in the income statement categories is as follows:
Group
2023
2022
€’000
€’000
Cost of sales
41
393
11. Trade and other receivables
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Non-current
Amounts owed by subsidiaries
-
-
708
708
Current
Trade receivables - net
4,202
3,688
-
-
Indirect taxation
-
137
-
-
Advance payments to suppliers
742
1,250
-
-
Amounts owed by associates and
related parties
173
326
-
-
Advance payments on non-current
assets
100
50
-
-
Other debtors
-
55
-
-
Prepayments and accrued income
3,937
2,453
-
-
9,154
7,959
-
-
Total trade and other receivables
9,154
7,959
708
708
Amounts owed by associates and related parties are unsecured, interest free and repayable on
demand. The group’s exposure to credit and currency risks relating to receivables are disclosed in
note 2. The other classes within trade and oth er receivables do not contain impair ed asse ts.
PG p.l.c.
Annual Financial Report - 30 April 2023
57
12. Cash and cash equ ivalents
For the purposes of the statement of cash flows, the period-end cash and cash equivalents
comprise the following:
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Cash at bank and in hand
9,397
8,729
9
5
Short term deposits
3,972
-
-
-
Bank overdraft (note 15)
(4,275)
(1,010)
-
-
Total cash and cash equivalents
9,094
7,719
9
5
13. Share capital
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Issued and fully paid up
27,000
27,000
27,000
27,000
The company’s authorised share capital of €40,000,000 is constituted by 160,000,000 ordinary
shares having a nominal value of €0.25 per share and the company’s issued share capital of
€27,000,000 is constituted by 108,000,000 ordinary shares having a nomina l value of €0.25 per
share. The issued share capital consists of one class of ordinary shares with equal voting rights
attached.
14. Fair value reserve
Group
2023
2022
€’000
€’000
At 1 May
10
-
(Losses)/gains from changes in fair value of equity instruments
(22)
10
At 30 April
(12)
10
The fair value reserve reflects the cumulative net changes in fair value of equity instruments
measured at fair value through other comprehensive income held by the Group, which changes are
recognised directly in equity in other comprehensive income.
Th e reserv e is non-distr ibutable.
PG p.l.c.
Annual Financial Report - 30 April 2023
58
15. Borrowings
Group
2023
2022
€’000
€’000
Non-current
Bank loans
4,386
6,140
4,386
6,140
Current
Bank overdrafts (note 12)
4,275
1,010
Bank loans
1,783
1,800
6,058
2,810
Total borrowings
10,444
8,950
During 2021, the group successfully applied for loans through the COVID-19 Guarantee Scheme
supported by the Malta Development Bank (MDB) which amounted to €3,000,000. These loans are
subject to interest of 3.25% during the second and third year, plus 3-month Euribor. However, in
line with the MDB COVID Guarantee Scheme, the loans benefit from a subsidy of 2.4% for the first
two years. Accordingly, the effective interest rate as at 30 April 2022 is of 0.8 5%. After year-end the
loans have been fully paid off.
The group’s banking facilities as at 30 April 2023 amounted to €15,968,762 (2022: €17,738,750).
The group’s bank borrowings are secured by:
(a) a general hypothec over the group’s assets and a special hypothec over its property;
(b) general and special hypothecs over the assets of related parties;
(c) pledge over insurance policies; and
(d) guarantees issued by the group and related parties.
The interest rate exposure of the borrowings of the group was as follows:
Group
2023
2022
€’000
€’000
Total bank borrowings:
At fixed rates
5,028
5,942
At floating rates
5,416
3,008
10,444
8,950
PG p.l.c.
Annual Financial Report - 30 April 2023
59
15. Borrowings - continued
Weighted average effective interest rate as at the end of the reporting year were:
Group
2023
2022
Bank loan
3.45%
2.75%
Bank overdraft
5.77%
2.50%
This note provides information about the contractual terms of the group’s borrowings. For more
information about the group’s exposure t o liquidity and interest rate ri s ks, see not e 2.
16. Deferred taxation
Deferred income taxes are calculated on all temporary differences under the liability method using
a principal tax rate of 35% (2022: 35%), except for temporary differences on immovable property
that are calculated under the liability method using a principal tax rate of 10% (2022: 10%) on the
carrying amounts of property. The movement on the deferred tax account is as follows:
Group
2023
2022
€’000
€’000
At beginning of year
3,821
3,850
Deferred tax on temporary differences
arising on depreciation of property,
plant and equipment
(30)
(29)
Under provision in deferred tax in prior year
53
-
At end of year
3,844
3,821
PG p.l.c.
Annual Financial Report - 30 April 2023
60
16. Deferred taxation - continued
Deferred tax is principally composed of deferred tax assets and liabilities which are to be recovered
and settled after more than twelve months.
The balance as at year-end represents temporary differences on or attributable to:
Group
2023
2022
€’000
€’000
Revaluation of non-current assets
3,023
3,023
Deprecation on property, plant and
equipment
821
798
3,844
3,821
17. Trade and other payables
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Non-current
Amounts owed to subsidiaries
-
-
6,200
6,055
-
-
6,200
6,055
Current
Trade payables
18,533
16,494
-
-
Amounts due to related parties
and associates
2,407
2,166
28
28
Capital payables
133
66
-
-
Other payables
512
577
-
-
Indirect taxation
2,387
853
-
-
Accruals and deferred income
4,122
3,501
18
15
28,094
23,657
46
43
Total trade and other payables
28,094
23,657
6,246
6,098
Amounts owed to related parties and associates are unsecured, interest free and repayable on
demand. The group’s exposure to liquidity and currency risks relating to trade and other payables
are disclosed in note 2.
Accruals include contract liabilities related to group’s customer loyalty programme amounted to
€1,635,997 (2022: €1,487,887).
In the company’s books, amounts owed to subsidiaries are unsecured, interest free and are not
expected to be repai d within the next twelve months.
PG p.l.c.
Annual Financial Report - 30 April 2023
61
18. Segment information
Management has determined the operating segments based on the reports reviewed by the board
of directors that are used to make strategic decisions.
The board of directors considers the group’s business mainly from a commercial perspective as
geographically operations are carried out, predominantly, on the local market. The group’s revenue
principally arises from the management of supermarket operations including management of shared
activities and rental activities and the invoiced value of branded garments, home furnishings and
related merchandise. The group’s commercial operations are segregated primarily into
supermarkets and associated retail operations and franchise operations which are considered to the
operating segments of the group.
The group does not have any particular major customer, as it largely derives revenue from a
significant number of consumers availing of its products and services. Accordingly, the group has
not identified any relevant disclosures in respect of reliance on major customers.
The board of directors assesses the performance of the operating segments based on operating
results adjusted for centralised costs. Interest income and expenditure are not allocated to
segments, as this type of activity is driven by the central treasury function, which manages the cash
position of the group.
Sales between segments are carried out at arm’s length. The revenue from external parties reported
to the board of directors is measured in a manner consistent with that in the income statements.
The amounts provided to the board of directors with respect to total assets are measured in a
manner consistent with that of the financial statements. These assets are allocated based on the
operations of the segment and the physical location of the asset. Segment assets consist primarily
of land and buildings, right-of-use assets, investment property, machinery and equipment,
inventories, trade and other receivables and cash and cash equivalents. Taxation is not considered
to be segment assets but rather is managed by the treasury function.
The amounts provided to the board of directors with respect to total liabilities are measured in a
manner consistent with that of the financial statements. These liabilities are allocated based on the
operations of the segment. Segment liabilities comprise trade and other payables and exclude tax
and borrowings. The group’s interest-bearing liabilities, lease liabilities and taxation are not
considered to be segm ent liabilities but rather are managed by th e treasury functi on.
PG p.l.c.
Annual Financial Report - 30 April 2023
62
18. Segment information - continued
Supermarkets
and
associated
retail
Franchise
operations
operations
Group
Group
€’000
€’000
€’000
2023
Revenue
172,956
31,581
204,537
Less: inter-segmental sales
(28,511)
(2,093)
(30,604)
144,445
29,488
173,933
Segment results
15,086
3,837
18,923
Finance income
528
Finance costs
(1,656)
Share of associates results
(148)
Profit before tax
17,647
Tax expense
(4,979)
Profit for the year
12,668
Segment assets
78,491
46,265
124,756
Investment in associates
2,872
Total assets
127,628
Segment liabilities
23,870
4,223
28,093
Unallocated liabilities
37,059
Total liabilities
65,152
Additions to non-current assets
8,501
192
8,693
Depreciation and amortisation
(2,093)
(930)
(3,023)
PG p.l.c.
Annual Financial Report - 30 April 2023
63
18. Segment information - continued
Supermarkets
and
associated
retail
Franchise
operations
operations
Group
Group
€’000
€’000
€’000
2022
Revenue
141,480
27,679
169,159
Less: inter-segmental sales
(20,313)
(1,797)
(22,110)
121,167
25,882
147,049
Segment results
14,273
3,811
18,084
Net finance costs
(1,229)
Share of associates results
(167)
Profit before tax
16,688
Tax expense
(4,651)
Profit for the year
12,037
Segment assets
70,401
37,126
107,527
Investment in associates
3,020
Total assets
110,547
Segment liabilities
20,642
3,018
23,660
Unallocated liabilities
31,207
Total liabilities
54,867
Additions to non-current assets
1,155
71
1,226
Depreciation and amortisation
(1,983)
(930)
(2,913)
PG p.l.c.
Annual Financial Report - 30 April 2023
64
19. Expenses by nature
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Employee benefit expense (note 20)
12,062
10,021
-
-
Depreciation of property, plant and
equipment (note 4)
2,231
2,200
-
-
Amortisation of right-of-use assets
(note 5)
792
713
-
-
Purchases of goods and consumables
131,569
111,226
-
-
Variable leases and parking fees
1,675
1,467
-
-
Movement in inventories
(828)
(2,663)
-
-
Utility costs
1,099
966
-
-
Other expenses
7,348
6,015
144
143
Total cost of sales, selling and
marketing costs and administration
expenses
155,948
129,945
144
143
-
Audit fees
Fees charged by the auditor and/or its related undertakings for services rendered during the
financial periods ended 30 April 2023 and 2022 relate to the following:
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Annual statutory audit
181
173
21
20
Tax advisory and compliance services
8
8
2
2
189
1 81
23
22
20. Employee benefit expense
Group
2023
2022
€’000
€’000
Wages and salaries
9,972
8,335
Social security
652
545
10,624
8,880
Subcontracted from third parties
1,438
1,141
12,062
10,021
PG p.l.c.
Annual Financial Report - 30 April 2023
65
20. Employee benefit expense - continued
Average number of persons employed during the year:
Group
2023
2022
Operational
324
318
Administration
64
61
Selling and distribution
5
5
393
384
Wages and salaries are presented net of wage supplement from the Government amounting to €Nil
(2022: €210,490) in view of the COVID-19 pandemic. Grants related to income are presented as a
deduction in reportin g the related expenses.
21. Directors’ remuneration
Group
2023
2022
€’000
€’000
Emoluments paid
539
569
A number of directors availed themselves of an allowance for the use of company cars during the
year. The estimated value of this benefit has been included within the directors’ salaries, which also
includes other allowa nces.
22. Other income
Group
2023
2022
€’000
€’000
Recharges of expenses to retail operators
938
980
23. Dividend income
The company’s revenue is derived from dividend income from its subsidiaries in accordance with
the group’s dividend policy.
During the year, the company received gross dividends from its subsidiaries totalling €9,000,000
(2022: €8,385,000).
PG p.l.c.
Annual Financial Report - 30 April 2023
66
24. Finance income
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Interest income
528
-
-
-
528
-
-
-
During financial year ending 30 April 2023 the group invested in €15 million 10% Fixed Rate
Resetting Senior Non-Preferred Callable Notes issued by Bank of Valletta plc. These Notes were
subscribed as a short-term treasury operation after an agreement was reached with PG Holdings
Limited, a related party, that it would acquire the Notes at par plus accrued interest by not later
than 30 April 2023.
25. Finance costs
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Bank interest
312
211
-
-
Finance costs on lease interest
1,264
1,000
-
-
Other financial charges
80
18
-
-
1,656
1,229
-
-
26. Tax expense
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Current tax expense:
on taxable profit subject to tax at 35%
3,772
3,548
3,150
2,935
on taxable profit subject to tax at 15%
1,227
1,132
-
-
Over provision of current tax in prior
years
(43)
-
-
-
Deferred tax charge/(credit)
23
(29)
-
-
4,979
4,651
3,150
2,935
PG p.l.c.
Annual Financial Report - 30 April 2023
67
26. Tax expense - continued
The tax on the company’s profit before tax differs from the theoretical amount that would arise
using the basic tax rate as follows:
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Profit before tax
17,647
16,688
8,856
8,242
Tax on profit at 35%
6,176
5,841
3,100
2,885
Tax effect of:
share of results of associates
(62)
(58)
-
-
maintenance allowance on rental
income
(276)
(255)
-
-
expenses and provisions not
allowable for tax purposes
510
666
50
50
unrecognised deferred tax related
to prior years
(4)
12
-
-
over-provision of deferred tax
in prior year
53
-
over-provision of current tax
in prior year
(33)
-
-
-
income subject to reduced rates of
tax
(1,388)
(1,509)
-
-
movement in unrecognised
deferred tax
2
(48)
-
-
other
1
2
-
-
Tax expense
4,979
4,651
3,150
2,935
27. Dividends paid
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Gross dividend
9,000
8,385
9,000
8,385
Tax at 35%
(3,150)
(2,935)
(3,150)
(2,935)
Total net dividend
5,850
5,450
5,850
5,450
Euro per share (net)
0.05
0.05
0.05
0.05
A first net interim dividend of €2,250,000 in respect of the year ended 30 April 2023 was announced
on 29 November 2022 and paid to the ordinary shareholders on 9 December 2022. A second net
interim dividend of €4,500,000 in respect of the year ended 30 April 2023 was announced on 23
June 2023, and paid to the ordinary shareholders on 12 July 2023.
The second net interim dividend was not reflected in the comparative financial statements as it is
accounted for in sh areholders’ equity in the curr ent year fin ancial statements.
PG p.l.c.
Annual Financial Report - 30 April 2023
68
28. Earnings per share
Earnings per share is based on the profit for the financial year attributable to the shareholders of PG
p.l.c. divided by the weighted average number of ordinary shares in issue during the year and
ranking for dividend.
Group
2023
2022
Profit attributable to shareholders (€’000)
12,668
12,037
Weighted average number of ordinary shares in
issue (thousands)
108,000
108,000
Basic and diluted earnings per share for the year attributable
to shareholders
€0.12
€0.11
The company does not have any dilutive contracts on own shares in issue.
29. Cash generated from operations
Reconciliation of operating profit to cash generated from operations:
Group
Company
2023
2022
2023
2022
€’000
€’000
€’000
€’000
Operating profit
18,923
18,084
8,856
8,242
Adjustment for:
Depreciation on property, plant and
equipment and right-of-use asset
(notes 4,5)
3,023
2,913
-
-
(Profit)/Loss on disposal of property,
plant and equipment
(4)
81
-
-
Changes in working capital:
Inventory
(1,011)
(2,663)
-
-
Trade and other receivables
(1,195)
(2,106)
-
-
Trade and other payables
4,437
4,256
148
37
Cash generated from operations
24,173
20,565
9,004
8,279
Net debt reconciliation
All the movements in the group’s net debt related only to cash flow movements and disclosed as
part of the financing activities in the statements of cash flows on page 30 with the exception for
movements in lease liabilities which include finance costs of these liabilities amounting to
€1,257,000 (2022: €999,000).
PG p.l.c.
Annual Financial Report - 30 April 2023
69
30. Commitments
(a) Capital commitments
As at 30 April, the group had commitments for capital expenditure relating to its property not
provided for in these financial statements as follows:
Group
2023
2022
€’000
€’000
Contracted but not provided for
752
270
(b) Lease commitments - where the group is a lessor
The future minimum lease payments receivable under non-cancellable property leases are as
follows:
Group
2023
2022
€’000
€’000
Within one year
574
226
Between 1 and 2 years
420
189
Between 2 and 3 years
110
145
Between 3 and 4 years
38
73
Between 4 and 5 years
38
-
Later than 5 years
16
-
1,196
633
31. Related party transactions
Parties are considered to be related if one party has the ability to control the other party or exercise
significant influence over th e other party in making financial or o perating policy dec isions.
As at year end, Mr Paul Gauci owned 68.38% of the shareholding in PG p.l.c. and hence controls
the group. The remaining 3 1.62% of the shares are widely held.
The entities constituting the PG Group are ultimately fully owned by PG p.l.c. Other entities on
which Mr Paul Gauci can exercise significant influence are also considered to be related parties.
Hence, related parties also include subsidiaries and associates of PG Holdings Limited.
During the financial year ending 30 April 2023 the group invested in €15 million 10% Fi xed Rate
Resetting Senior Non-Preferred Callable Notes issued by Bank of Valletta plc. These Notes were
disposed of during the same financial year in favour of PG Holdings Limited. The sale was
executed at €103.48 (i.e. €15,521,917), representing the nomin al value of the Notes plus accrued
interest. The market value of the Notes on the date of sale was €103.40 (i.e., €15,510,000).
Related party transactions also include transactions with a director of the Group who operates retail
outlets within the supermarkets. Rental and other income generated through such transactions
amounted to €6 58,000 (2022: €5 99,0 00).
PG p.l.c.
Annual Financial Report - 30 April 2023
70
31. Related party transactions - continued
In the opinion of the directors, disclosure of related party transactions, which are generally carried
out on commercial terms and conditions, is only necessary when the transactions effected have a
material impact on the operating results and financial position of the group. The aggregate invoiced
amounts in respect of a number of transaction types carried out with related parties are not
considered material and accordingly they do not have a significant effect on these financial
statements except for the following.
The group recognised the leasing arrangements with its associate as right-of-use assets and lease
liabilities. The group made payments of €2,669,000 (2022: €2,711,000) to its associate in relation
with such leases, and recognised €979,000 (2022: €999,000) as interest expenses and €1,364,000
(2022: €1,174,000) as variable lease payments.
Year-end balances with associated related parties are disclosed in notes 11 and 17 to these
financial statements.
Key management personnel compensation, consisting of directors’ and senior management
remuneration, is disclosed as follows:
Group
2023
2022
€’000
€’000
Directors
539
569
Senior Management
585
590
1,124
1,159
32. Events after reporting period
The group has reached an agreement in principle with the Lands Department for a change of use
costing €4,900,000 on leasehold land recently acquired adjacent to P avi Shopping Complex. This
change of use has since been approved by the House of Representatives and the group expects to
conclude this transact ion in the near f uture.
33. Contingent liabilities
At 30 April 2023, the group had contingent liabilities amounting to €5,200,000 (2022: €3,250,000)
with regards to guarantees mainly in favour of third parties issued by the bank on behalf of the
Group in the ordinary cours e of business.
34. Statutory information
PG p.l.c. is a public limited company and is incorporated in Malta.
35. Comparative information
Comparative figures disclosed in the main components of these financial statements have been
reclassified to conform with the current year’s presentation format for the purpose of fairer
presentation.
PG p.l.c.
Annual Financial Report - 30 April 2023
71
36. Subsidiaries and associates
The subsidiaries and associates at 30 April are shown below:
Percentage of
shares held
Registered office
Principal activities
2023
2022
Subsidiaries
Alhambra Investment Limited
PG Group Head Offices
Investment holding
100
100
PAMA Shopping Village
Valletta Road, Mosta
Alhambra Trading Limited
PG Group Head Offices
Operation of branded fashion
100
100
PAMA Shopping Village
retail outlet
Valletta Road, Mosta
Centre Point Properties Limited
PG Group Head Offices
Operation of branded fashion
100
100
PAMA Shopping Village
retail outlet
Valletta Road, Mosta
PAVI Supermarkets Limited
PG Group Head Offices
Operation of supermarket
100
100
PAMA Shopping Village
and management of retail
Valletta Road, Mosta
area
PAVI Shopping Complex Limited
PG Group Head Offices
Property leasing
100
100
PAMA Shopping Village
Valletta Road, Mosta
PAMA Supermarket Limited
PG Group Head Offices
Operation of supermarket
100
100
PAMA Shopping Village
Valletta Road, Mosta
PAMA Rentals Limited
PG Group Head Offices
Property leasing
100
100
PAMA Shopping Village
Valletta Road, Mosta
PG Finance Limited
PG Group Head Offices
Property leasing and Group
100
100
PAMA Shopping Village
treasury function
Valletta Road, Mosta
Pruna Trading Limited
PG Group Head Offices
Importation and wholesale
100
100
PAMA Shopping Village
of retail products
Valletta Road, Mosta
PG Developments Limited
PG Group Head Offices
Investment property
100
100
PAMA Shopping Village
Valletta Road, Mosta
Associates
PAMA Shopping Village Limited
PG Group Head Offices
Property leasing
49
49
PAMA Shopping Village
Valletta Road, Mosta
PAMA Carparks Limited
Ta’ Clara Farmhouse
Carpark management
49
49
Ramla Road,
Maghtab, Naxxar

Independent auditor’s report

To the Shareholders of PG p.l.c.

Report on the audit of the financial statements

Our opinion

In our opinion:

· The Group financial statements and the Parent Company financial statements (the “financial statements”) of PG p.l.c. give a true and fair view of the Group and the Parent Company’s financial position as at 30 April 2023, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and

· The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).

##### Our opinion is consistent with our additional report to the Audit Committee.

##### What we have audited

PG p.l.c.’s financial statements comprise:

· the Consolidated and Parent Company statements of financial position as at 30 April 2023;

· the Consolidated and Parent Company statements of comprehensive income for the year then ended;

· the Consolidated and Parent Company statements of changes in equity for the year then ended;

· the Consolidated and Parent Company statements of cash flows for the year then ended; and

· the notes to the financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

##### Independence

We are independent of the Group and the Parent Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).

The non-audit services that we have provided to the parent company and its subsidiaries, in the period from 1 May 2022 to 30 April 2023, are disclosed in Note 19 to the financial statements.

Our audit approach

#####

##### Overview

| · Overall group materiality: €887,000, which represents approximately 5% of profit before tax.
· The Group is composed of 11 reporting units all located in Malta. · The Group engagement team carried out the audit of the financial statements of the parent company as well as the audit of the financial statements of all the subsidiaries of the company.
· Existence, valuation and cut-off of inventory

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

##### Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality | €887,000
How we determined it | Approximately 5% of profit before tax
Rationale for the materiality benchmark applied | We applied this benchmark because, in our view, profit before tax is the metric against which the performance of the Group is most commonly measured. We chose 5% which is within the range of acceptable quantitative materiality thresholds.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €88,700 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

#### Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter | How our audit addressed the Key audit matter
Existence, valuation and cut-off of inventory Refer to note 10. Inventory for the Group as at 30 April 2023 amounted to €10.7 million and represented 32% of total current assets. This inventory mainly consists of stocks held in the supermarkets and stores and in the fashion retail outlets. Inventory is valued at the lower of cost and net realisable value. The valuation of inventory at cost is based on the weighted average cost per unit of inventory (the AVCO-principle). Due to the nature of the Group’s operations, the number of transactions recorded through the inventory cycle during the year is very significant and dependant on the reliability of the Group’s operating systems. We focused on this area because of the materiality of these balances and the related impact on working capital as well as on the cost of items sold. | We tested the existence of inventory mainly by attending a selection of inventory cycle counts in the supermarkets, attending the year-end count of related stores as well as observing the year-end stock counts in the fashion retail outlets. We performed test counts on a sample basis and compared the quantities counted by us with the results of the counts by the entities. We also checked that variances arising from our test counts were followed up by management and reflected in the accounting records. Our tests of detail on the valuation of inventory included the verification of inventory records against the respective supporting documentation on a sample basis. Furthermore, we also assessed slow moving items. Our audit procedures to assess inventory cut-off consisted of performing substantive procedures to ensure that the transfer of rights and obligations over inventory had been correctly reflected in the accounting records of the Group. Based on the procedures performed, we conclude that inventories as at year end are reasonably stated in the financial statements.

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The Group is composed of 11 reporting units all located in Malta. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The Group audit team performed all of this work by applying the overall group materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.

####

Other information

The directors are responsible for the other information. The other information comprises the Chairman’s Statement, the Chief Executive Officer’s Review, the Directors’ report, the Corporate governance statement and the Remuneration statement (but does not include the financial statements and our auditor’s report thereon).

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

#### Responsibilities of the directors and those charged with governance for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

· Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6

We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of PG p.l.c. for the year ended 30 April 2023, entirely prepared in a single electronic reporting format.

Responsibilities of the directors

The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.

Our responsibilities

Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the consolidated financial statements and the relevant electronic tagging therein, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.

Our procedures included:

· Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS.

· Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.

· Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Annual Financial Report for the year ended 30 April 2023 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.

Other reporting requirements

The Annual Financial Report 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.

The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.

Area of the Annual Financial Report 2023 and the related Directors’ responsibilities | Our responsibilities | Our reporting
Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. | We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements. In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. | In our opinion: · the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386). We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
Corporate governance statement The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles. | We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements. We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97. We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures. | In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
Remuneration statement The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. | We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. | In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
| Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: · adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. · the financial statements are not in agreement with the accounting records and returns. · we have not received all the information and explanations which, to the best of our knowledge and belief, we require for our audit. We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. | We have nothing to report to you in respect of these responsibilities.

Other matter – use of this report

Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.

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Appointment

We were first appointed as auditors of the Company on 25 November 2016. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 6 years.

Stefan Bonello

Principal

For and on behalf of

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

24 August 2023