Bestway Group Announces Financial Results – Profit Up 6.5%
The Bestway Group has announced its financial results for the year ended 30 June 2013. The Group’s annual turnover increased by 1.2% to £2.52 billion from £2.49 billion in 2012.
Profit before tax for the year ended 30 June 2013 was up 6.6% from £173.2 million in 2012 to £184.6 million. All group businesses continued to be profitable.
Mr Zameer Choudrey, the Group Chief Executive said, “in the past twelve months, the business environment in the UK and globally has faced many challenges. Despite the adverse economic environment the Group has been able to increase profitability and I am pleased to say that the inherent strength of the Group has ensured that all our businesses maintained their respective market shares during the year under review”. Mr Choudrey also said, “Bestway Wholesale continues to be the UK’s largest trade only wholesaler. Our cement operations are still the second largest in Pakistan and United Bank Limited (UBL) remains the second largest private bank in Pakistan”.
Turnover in the wholesale business was £2.34 billion as compared to £2.33 billion in the corresponding period last year. Profit before tax for the year ended 30 June 2013 decreased by 6.9% to £54.3 million from £58.3 million in 2012. The decrease in profit was due to the Group consciously reducing its margins to support its customers, who are facing increased competition from the high street retailers.
The Group has endeavoured to play its role in supporting its customers, i.e. the independents, regardless of their size, due to the firm belief that their success is tied to the company’s own success. Bestway’s mission is “Building Business for the Independents”, offering customers the lowest prices and the widest product range in the wholesale sector.
Mr Choudrey reiterated that whilst the Group’s commitment to the wholesale sector is second to none, it was conscious of the evolving dynamics of the industry. With this in mind, the Group has identified three key focus areas for the business to sustain a robust growth trajectory. These are Foodservice, Digital and Symbol & Club Retailing.
In line with these key focus areas, Bestway Batleys Foodservice was launched in August 2013. This new approach focuses on offering the customers a tailor made solution to their catering needs. To complement its launch, a comprehensive series of promotions under the banner of “Price Hold Guarantee” has been launched where the caterers are guaranteed a fixed price for a 12-week period.
The foodservice business has been successful in winning large scale catering and local government contracts including The City of Edinburgh Council, Glasgow and North East Procurement Organization. The foodservice distribution capability has now been extended nationwide.
As part of the second focus area, the business has continued to develop the online offering and consequently, the transactional Bestway and Batleys websites have been successful. Currently web sales average £4 million per week and are growing, and this year a dedicated E-Commerce team has developed a specialist app for customers.
The third pillar of growth is Symbol & Club Retailing. Bestway’s retail clubs are the largest in the UK with a current membership of over 3,500, and Pet retail club membership has now increased to 526. The total turnover of the business’ retail clubs is over £0.5 billion.
November 2013 saw the launch of the My Rewards Scheme aimed towards the Best One members. This unique retailer rebate scheme will help the retailer in increasing their business.
The Group has continued to invest in other aspects of the business, underlined by the investment in its own chilled distribution facility in Coventry, which became operational in October 2012.
Mr Choudrey also announced that the Group had begun to implement the £10 million investment plan, announced in August 2012, to expand its Best Pets division. To this effect, a new site has been developed at Glasgow and the Group is about to considerably enhance its highly successful pet retail club offering, which allows members to enjoy extra promotional offers.
During the period under review Bestway Cement Limited’s (BCL) turnover increased by 12.5% to £177.7 million from £158.0 million in 2012. Operating profit for the year ended 30 June 2013 increased 33.4% to £57.9 million from £43.4 million in 2012. The increase in profit was due to BCL increasing revenue while controlling its cost base.
Construction activity in Pakistan picked up during the year leading to an increase in the demand of cement. Consequently, BCL’s despatches grew 5.8% from 4,192,512 tonnes to 4,437,731 tonnes. As demand in the domestic market increased, it led to an increase in the net retention price.
Despite a decline in overall industry exports, BCL’s export sales increased by 12.6% to 988,366 tonnes in 2013 as compared to 877,934 tonnes in 2012. BCL was able to counter the decrease in exports to Afghanistan (BCL remains the largest exporter of cement to the region), with an increase in exports to India, while also exploring new markets such as South Africa and Mauritius.
BCL reduced its total debt from £105.5 million in 2012 to £48.9 million, a decrease of £56.6 million, resulting in healthier cash flows and lower financial charges. As a result, profit before tax registered an increase of 92.9% from £25.8 million in 2012 to £49.9 million for the year to 30 June 2013.
The increase in profit allowed the company to pay an interim dividend of 20% in April 2013 and a final dividend of 20% in November 2013.
In December 2012, Bestway acquired the EC Certificate of Conformity which will allow exports to the European Community.
In May 2013, the merger of Mustehkam Cement Limited with Bestway Cement Limited was approved and was effective from 31st December 2012.
Bestway Cement is conscious of its environmental responsibilities and, to this effect, invested in additional Chinese boilers to supplement the Waste Heat Recovery Plant at Chakwal. These boilers were successfully commissioned in October 2013.
United Bank Limited’s (UBL) total assets as at 31 December 2012 were $9.89 billion as compared to $8.31 billion for the corresponding period last year, an increase of 19.0%. UBL’s deposit base grew by 18.9% to $7.77 billion for the year to 31 December 2012. UBL’s total advances for the year were $3.97 billion. During the year, UBL declared 85% dividend.
Over the past year, regulatory changes in Pakistan increased the cost of deposits and, coupled with the low interest rate environment, UBL’s net interest income declined. Despite this, UBL’s performance remained flat in PKR terms.
However, due to the continued devaluation of the Rupee against Sterling, the Group’s share of UBL profit before tax has decreased from £96.9 million in 2012 to £84.9 million in 2013, a decrease of 12.5%.
UBL continued to extend its branch network over the year, with 64 new branches in addition to the 100 new branches in the prior year. In the same period, UBL Omni branchless banking inducted over 3,000 new agents.
During the year, a fully owned banking subsidiary was established in Tanzania to extend UBL’s footprint to Africa. The branch was inaugurated by the Vice President of Tanzania and attended by other dignitaries.
UBL was awarded Bank of the Year in Pakistan for 2013 by Banker Magazine for the second year running. The bank was singled out for particular praise as “UBL has been working hard to overcome challenges and push ahead with its own strategy for the local market achieving 35% growth in non-funded income and significant growth in UBL Omni, its branchless banking proposition.”