At the end of May, Simonds Farsons Cisk plc published its annual report and financial statements for the year ended January 31, 2026, and held its annual meeting with financial analysts earlier this week.
During the 2025-26 financial year, the spin-off of the food businesses was finalised via the distribution of shares in Quinco Holdings plc to shareholders of Farsons as a ‘dividend in kind’. This is identical to the corporate action of the property business some years ago with a similar distribution of shares in Trident Estates plc.
As a result of the latest spin-off, the food operations are now reported as a discontinued activity within the 2025-26 annual report and the continuing operations relate solely to the beverage businesses.
The spin-off of the food businesses led to a €21.9 million fair-value gain, which is a large, non-recurring item heavily boosting the bottom-line of the 2025-26 financial performance and resultant performance metrics and investor ratios.
The total net profit for the year of €39.1m also includes a net profit from discontinued operations of €2.2m for the eight-month period of the food business. As such, an analytical review of Farsons’ 2025-26 performance must exclude these one-off line items.
Beverage business revenue rises to €106.5m
During the 12-month period to January 31, 2026, turnover from the beverage businesses rose 4.6% to a new record of €106.5m, thereby continuing the upward trajectory in recent years “despite an increasingly dynamic and competitive operating environment”, as described by the directors in the annual report.
Over the past two financial years, revenue across the beverage businesses has increased by just over €10m.
The gross margin edged up to 42.7% from 42.5%, notwithstanding a 9% rise in selling, distribution and administrative costs, as Malta’s exceptionally tight labour market continued to push wage costs higher.
The directors attribute the increase in the gross margin to “ongoing investments in efficiency-enhancing initiatives, alongside disciplined and ongoing management of the cost base”.
Operating profit advanced by 7.5% to €16.8m, with the operating margin improving to 15.8% from 15.3%. At the EBDITA level, the beverage businesses generated €24.3m, which is 5.8% ahead of the prior year.
Profit before tax from the beverage segment improved by 8.2% to €15.9m. The tax expense for the year amounted to just over €900,000, giving a profit after tax of €15m.
In his address to financial analysts earlier this week, outgoing CEO Norman Aquilina noted that the positive performance is not reflective of easier market conditions. On the contrary, he mentioned the dynamics of the changing market and ongoing margin pressure, but highlighted that the company continued to respond well to the challenges being presented.
There was a significant increase in cash generation during the 2025-26 financial year. Net cash from operations (including the eight-month period of the food business) increased to €22.2m from €18.8m in the previous financial year.
Net capital expenditure was marginally higher at €11.8m, resulting in a free cash flow of €10.4m. The capital expenditure of the beverage business alone amounted to just under €7m.
Conservatism has long defined the Farsons balance sheet
A continued, gradual increase in dividends
At next week’s annual general meeting, shareholders are being requested to approve the distribution of a final net dividend of €0.145 per share (FY2024-25: €0.14) out of tax-exempt profits.
Together with the net interim dividend of €0.065 per share paid in October 2025, the total net cash dividend attributable to the 2025-26 financial year amounts to €0.21 per share, which is 5% higher than the €0.20 per share attributable to the prior year.
The total cash payout to shareholders (of both the interim and final dividends) of €7.56m translates into a payout ratio of 50% when considering the net profit from continuing operations of €15m.
Despite the gradual increase in dividends over the years, supported by rising profits as well as a higher dividend payout ratio to 50%, the group’s indebtedness has reduced.
This suggests clear headroom to continue to lift the payout ratio beyond the 50% level without compromising either the ongoing capital expenditure requirements or the conservatism that has long defined the Farsons balance sheet.
Comparison to forecasts
As a bond issuer, Farsons is obliged to publish its financial projections annually, and it is always worth comparing the actual figures against the projections published in the Financial Analysis Summary. The 2025-26 projections were published on July 23, 2025.
Revenue from continuing operations (beverage) of €106.5m came in marginally below the €108.0m forecast – a shortfall of less than 1.5%. Operating profit of €16.8m was also practically in line with the €16.9m forecast.
Likewise, profit before tax from the beverage businesses at €15.9m was also very close to the projected €16.0m.
The strength of the balance sheet
As at January 31, 2026, net debt amounted to just over €19.2m (largely made up of the €20m 3.5% bond maturing in September 2027), including lease liabilities of €2.1m. With the EBDITA of the beverage businesses at just over €24m in the last financial year, the net debt to EBDITA multiple is of only 0.8 times.
This ratio again confirms that Farsons is effectively under-leveraged. It is generating strong cash flow that could support ongoing capital expenditure requirements as well as a more generous distribution policy going forward.
CEO designate Michael Farrugia, who will become CEO as from July 1, 2026, also addressed financial analysts and noted that he is assuming the role with a great sense of responsibility but with confidence on what lies ahead.
Farrugia highlighted that it is important for the group to have a culture of continuous improvement and to have robust digital systems in place.
Given Farsons’ dominance across the local beverage market, the incoming CEO mentioned the continued quest to grow internationally by pursuing profitable growth initiatives.
The leadership transition with Farrugia stepping up as CEO and Aquilina moving on to chairperson of Quinco Holdings plc comes at an important time.
As CFO, Anne Marie Tabone noted in her intervention earlier this week, the past financial year was marked by “a strategic refocusing of the group’s principal activities by returning the business to its original routes as a brewer, bottler and importer of beverages”.
The local economy’s robust performance and the very strong increase in tourism bodes well for yet another record year for Farsons.
This should be confirmed upon the publication of the Financial Analysis Summary due by the end of July. Particular attention should continue to be given to the margins being achieved to determine the group’s continued success within the evolving market dynamics of the beverage and retail sectors, and the group’s ability to maintain a double-digit return on equity.
In the next reporting periods, it would also be interesting to note any references to the refinancing plans of the €20m bond due in September 2027 as well as progress on the master planning of the large parcel of land adjacent to Trident Park.
Edward Rizzo is executive director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
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