Wednesday 18th February 2015
Bestway Group Announces Financial Results - Profits Exceed £267m
The Bestway Group has announced its financial results for the year ended 30 June 2014.
The Group’s annual turnover increased by 1.2% to £2.55 billion from £2.52 billion in 2013. Profit before tax for the year ended 30 June 2014 was up 44.7% to £267.1 million from £184.6 million in 2013. All group businesses continued to be profitable.
Mr Zameer Choudrey, the Group Chief Executive said, “despite a challenging business environment both in the UK and globally during the year under review, all the Group businesses continued to enhance their respective market share. In the last twelve months we have continued to demonstrate the strength of our business model and to create value for all our stakeholders.”
Talking about the future outlook, he said, “we see challenges ahead of us both in UK and in Pakistan as the respective economies go through an economic stabilisation phase.”
Wholesale Businesses
Turnover in the wholesale business was £2.38 billion as compared to £2.34 billion in the corresponding period last year. Profit before tax for the year ended 30 June 2014 was £54.3 million as compared to £54.2 million in 2013.
In line with the dynamics of the wholesale sector and keeping in mind the demands of our customers; two years ago we identified three major area on which we intended to focus in order to drive future growth. The key areas were Retail Symbol/Club Growth, Online Sales and Foodservice Distribution.
The Group’s three focus areas continue to grow robustly. Retail growth is driven by retail clubs. Our retail clubs, Best One and Xtra Local are the largest retail clubs in the UK with over 4,300 members and a turnover of £640 million per annum, an increase of 6.7% over 2013.
In digital, our web based online business continues to grow with over 26,000 registered users of our websites. During the year under review, web sales increased by 47.1% to £176.3 million. We are the first wholesaler to introduce a fully functional smart phone app which quickly shot up the rankings to be amongst the top 10 apps in Apple’s App Store. The Group believes that the app will change customer shopping behaviour and to further reinforce our leadership in digital innovation, we are also now at the forefront of pioneering new technologies for the channel such as geo-fencing and i-beacons.
Bestway Batleys foodservice now has 23 contracts covering an extensive range of local authorities, NHS hospitals, schools, private ventures with another 22 tenders in place. During the year, the Group invested in re launching its flagship catering own label brand, Essentially Catering. The new range includes over 50 everyday catering products and was made available to the customers from February 2014. Foodservice turnover increased by 2.3% to £128.3 million.
In April 2014 the Group acquired Sher Brothers, a business based in Glasgow. The new dual branded Bestway Batleys depot was opened to the customers in July and offers customers a brand new shopping experience from a 100,000 square feet sales area. This again underlines Bestway’s commitment to the wholesale sector and reiterates the Group’s mission of “Building Business for the Independents”.
Two years ago, the Group had announced an investment plan of £10 million to expand the Best Pets division and its pet retail club. We now have over 500 Best Pets branded stores all over UK.
Cement Manufacturing
During the period under review, Bestway Cement Limited’s (BCL) turnover amounted to £174.5 million compared to £177.8 million for 2013, a decrease of 1.9%. Despite an increase in retention prices, overall turnover was down due to the rupee devaluation.
During the period under review BCL’s despatches decreased by 1.5% to 4,371,841 tonnes from 4,437,731 tonnes. Despite an increase in domestic demand, overall despatches decreased as export sales were adversely effected.
BCL’s domestic sales increased by 2.4% to 3,533,761 tonnes in 2014 from 3,449,365 tonnes in 2013. Export sales decreased by 15.2% to 838,080 tonnes in 2014 as compared to 988,366 tonnes in 2013. Despite a decrease in exports to Afghanistan, we were able to maintain our position as the largest exporter of cement to the country.
Operating profits increased by 2.4% to £59.3 million in 2014 as compared to £57.9 million in 2013.
BCL reduced its total debt by £48.9 million during the year. Consequently, financial charges decreased to £2.7 million from £6.0 million in 2013. Profit before tax registered an increase of 14.3% from £49.8 million in 2013 to £56.9 million for the year to 30 June 2014.
For the year ended June 2014, the company has paid a total dividend of 80%.
In July 2014, BCL acquired Lafarge Pakistan’s 2.4 million tonnes per annum cement plant located in Chakwal for an enterprise value of US$ 329 million. With this acquisition, BCL has now become Pakistan’s largest cement manufacturer with an annual capacity of 8 million tonnes. We have recently launched a public tender and hope to complete this transaction by 27th April 2015.
Banking
UBL’s total assets as at 31 December 2013 were $10.3 billion as compared to $9.1 billion for the corresponding period last year, an increase of 13.2%. UBL’s deposit base grew by 18.2% to $8.45 billion for the year to 31 December 2013. UBL’s total advances for the year were $3.94 billion, an increase of 7.7%.
During the year under review, increase in cost of deposits further compressed the declining margins. However, as interest rates began to improve, this enabled UBL to contain the decline in net interest income. For the year ended June 2014, UBL’s Net Interest Income was up 9.5% at £275.2 million as compared to £251.4 million in 2013. With effective asset management and prudent lending strategy, the bank was able to register a 12.5% increase in its profit before tax from £190 million in 2013 to £213.8 million for the year ended June 2014.
UBL Omni Branchless banking was internationally recognised as one of 14 Sprinters by the GSMA Mobile Money for the Unbanked programme in 2013. After yet another successful year in Pakistan, UBL Omni was launched in UK in March 2014. The idea behind the UK launch is to offer a reliable transfer network to the UK’s growing Asian community. UBL UK is the only bank to offer such a service in the UK.
In September and December 2013, the Group increased its shareholding in UBL by 8.3%. The Group’s current shareholding in UBL is now 59.25%. The Group’s share of profit from UBL during the year under review increased from £84.9 million in 2013 to £103.3 million, an increase of 21.7% on equity accounting basis. This was because UBL has been consolidated for the first time in the Group accounts.
During the year, UBL declared 100% dividend.
Pharmacy
Co-operative Pharmacy (Well Pharmacy)
In July 2014, the Group ventured into the Pharmacy sector by acquiring The Co-operative Pharmacy for a purchase price of £620 million. The transaction was completed in October 2014. During the sale process, Bestway saw off competition from McKesson & Celesio, Alliance Boots and Carlyle.
The Co-operative Pharmacy is the third largest pharmacy business in the UK. It has 780 branches and over 7,000 employees.
Our initial focus was on re branding the pharmacy brand, followed by capital investment in the renovation and relocation of existing branches as well as acquiring more pharmacies going forward. In February 2015, the pharmacy business was re branded under the new name, “Well”.
Bestway Group has announced a 5 year investment programme of £200 million which will drive the business forward and create hundred of jobs across UK.
A further £1.6 million is being invested into establishing a new headquarters for Well in Manchester, relocating 227 employees from the current Co-operative Group head office. The business will move into the 22,000 sq ft Merchants Warehouse, a Grade II listed building in Manchester’s historic Castlefield district, in late 2015(Q4).