13 April 2018
2017 - Bestway Group Announces Financial Results
The Bestway Group has announced its financial results for the year ended 30 June 2017.
The Group's turnover increased by 0.3% to £3.29 billion from £3.28 billion in 2016 with all businesses profitable for the year under review.
Group profit before tax increased by 8.5% to £448.4 million as compared to £413.3 million in 2016. This was due to an improvement in the underlying performance of the Wholesale and Cement businesses as well as the benefit of devaluation in the British Pound following the Brexit announcement.
Business conditions in Pakistan have remained stable during the year and the group has capitalised on opportunities to enhance our market share in the cement and banking sectors through Bestway Cement Limited and United Bank Limited.
Mr Zameer Choudrey CBE, the Group Chief Executive said, 2017 has been a year of profit growth and rapid debt repayment for the Group. Despite difficult business conditions and uncertainty in the UK, we have maintained our market share across the Wholesale and Pharmacy businesses while delivering significant profit growth in our Cement and Banking interests in Pakistan.
In the UK, both the food and drink, and pharmacy sectors have been under significant pressure with the continuing encroachment of the multiple retailers into the convenience space and the reduction in NHS funding and drug reimbursement prices respectively.
There has been a strong emphasis on cash generation across all business units. During the year, the Group made repayments of £177.3 million as part of its ongoing de-leveraging strategy. This included £132.9 million of repayments of debt in the UK, which had been taken as part of the acquisition of Well Pharmacy, as well as repayments of £44.4 million of debt by Bestway Cement Limited as part of Pakcem s acquisition.
The Group refinanced the £290 million outstanding debt in September 2017 and this new facility provides the Group with the funding security to develop its businesses and execute its growth strategy.
Wholesale Businesses
Revenue in the wholesale business amounted to £2.13 billion, a decrease of 2.0% compared to the corresponding period last year. This decrease was in line with the performance of the broader wholesale sector due to tobacco sales being under pressure. Profit before tax rose from £19.7 million in 2016 to £42.7 million during the year. However, it should be noted that the 2017 figure include an exceptional profit on the disposal of certain non-strategic investment properties of £13.5 million (2016: £0.2 million).
This was an encouraging performance aided by margins increasing to historic levels and increase loyalty from customers following our decisions to invest in margin in 2016.
Trading stock as at 30 June 2017 amounted to £171.1 million as compared to £166.3 million in the previous year.
In symbol and club, Best-one and Xtra Local retail club membership continues to grow as we ensure greater discipline and compliance among our affiliated stores. During the year, sales through best-one increased by
19.7% - ex tobacco - and 12.9% overall. Retailers also benefitted from rebates in excess of £1m via the My Rewards rebate scheme.
In Foodservice, the company grew sales by 7.6% with increases in both its catering and contracts businesses while Pet sales were up 7.9%.
Our online business now has 62,000 registered users compared to 37,000 in the prior year. Weekly sales grew 12.0% with total app and website sales averaging £26 million a month. The mobile app accounts for nearly 25% of all online transactions, compared to 15% in the prior year.
Cement Manufacturing
Bestway Cement Limited (BCL) continues to maintain its position as the largest cement manufacturer and market leader in Pakistan and the largest exporter to Afghanistan and India.
Significant investments have been made in long-term growth drivers including infrastructure and human capital development.
During the period under review, BCL s despatches increased by 20.3% to 8.3 million tonnes from 6.9 million tonnes in 2016.
Domestic despatches increased by 10.2% to 6.5 million tonnes from 5.9 million tonnes in 2016. Exports grew by 5.1% to 989 thousand tonnes as compared to 941 thousand tonnes in 2016
Revenue for the financial year 2017 increased by 31.4% to £388.5 million with profits increased by 29.2% to £125.0 million.
Banking
UBL remains the second largest private bank in Pakistan and has a branch network of 1,363 branches globally, with presence in four continents and serving over 4 million customers.
The market in Pakistan for banks has been challenging given the low-interest rate environment and there is likely to be ongoing pressure on interest rates in Pakistan in the medium term. Despite these challenges, UBL increased its net interest income by 9.3% during the year from £395.6 million in 2016 to £432.3 million in 2017. UBL s profit before tax recognised in the Group s accounts during the period under review increased from £307.8 million in 2016 to £318.4 million.
UBL s total assets at 30 June 2017 were £14.6 billion compared to £12.1 billion for the corresponding period last year, an increase of 20.6%. UBL s deposit base grew by 12.4% to £9.7 billion for the year to 30 June 2017.
During the year UBL was awarded the Best Bank for Corporate Finance & Capital Market Development award at the 2nd Pakistan Banking Awards.
Pharmacy
The period under review reflects a difficult period of trading for Well Pharmacy. Significant challenges were presented by a reduction in NHS funding and the National Living Wage, which resulted in Well Pharmacy s revenues reducing to £779.2 million and profitability reducing to £3.6m for the year ended 30 June 2017.
This decline in profit was driven by a reduction in funding as well as a significant Category M clawback provision which related to a prior period. When adjusting for the prior periods clawback provision Well s profit before tax still decreased, but to a lesser extent. Despite, the continued reduction in Government funding, Well Pharmacy is well-placed to adapt to market conditions and deliver on its strategic plans. In the medium-term, there will need to be focus on driving efficiencies in the business without compromising on patient service, while concentrating on digital and technology services to grow market share. Well s market share of the prescriptions nationally remained broadly at 6.0%.
Social Responsibility
During the period under review Bestway Foundation donated £240,000 to fifteen local and national charities, including NSPCC, British Asian Trust, Crimestoppers, GroceryAid and Funding Neuro, among others.
Bestway Foundation also provided £174,000 in scholarships to students of South Asian origin to various universities such as University College London; London School of Economics; Westminster, Nottingham and Kings College London.
In Pakistan, Bestway Cement is actively supporting World Wildlife Fund in its mega tree plantation through the Earth Hour 2017 initiative. Under the said initiative Bestway Cement has planted 3,000 saplings in the vicinity of underprivileged schools around its five plant sites.
United Bank Limited donated £224,000 to the education and healthcare causes in Pakistan.