The Bestway Group has announced its financial results for the year ended 30th June 2019. The Group’s annual turnover increased 6.3% to £3.4 billion with all businesses profitable for the year under review. Group profit before tax decreased to £227.7 million as compared to £283.5 million in the previous year. The decline in profitability was primarily due to the challenging economic conditions in Pakistan as well as the impact of the rupee devaluation on conversion of results into pound sterling.
Lord Zameer Choudrey CBE SI Pk (pictured), the Group Chief Executive said: “2019 was a challenging year for Bestway Group as there was significant economic uncertainty within the geographies we operate in. However, despite these difficult business conditions all our businesses remained profitable.”
Bestway Group is committed to giving back to the communities it operates in through its charitable arm Bestway Foundation, as well as through its various subsidiaries. During the period under review, Bestway Group donated in excess of £2.5m to charitable causes predominantly focused on education and healthcare. Bestway Cement Limited and United Bank Limited, were also included in the Top 10 list of publicly listed companies in Pakistan with regards to charitable giving.
The Wholesale business focused on integrating the various retail and distribution businesses it acquired in 2018, most notably Conviviality Retail, and landing the associated benefits. The business also focused on improving efficiency via the implementation of its delivery hub project and continued its focus on digital channels, which has over 81,000 registered users averaging sales of £33m per month. This was against the backdrop of a difficult trading environment with ongoing competition from the grocers, increased National Living Wage as well as the impact of Brexit on consumer confidence.
Well Pharmacy focused on maintaining market share whilst generating efficiencies to counteract the flat funding imposed by the Department of Health. There remained a focus on leveraging technology assets to help drive both market share and efficiency gains via our Central Fulfilment and Digital Projects. Well’s digital prescription app has over 160,000 registered users. The Department of Health has also agreed a new 5-year contract with the pharmacy sector where funding will remain flat. Specific details of the mechanics of the funding are yet to be determined but there is an onus from the government on the sector to become more efficient.
Business conditions in Pakistan were the most difficult. In the lead-up to the IMF deal being signed, there was a significant increase in interest rates and material currency devaluation. With the signing of the IMF deal the new government is focused on addressing the country’s balance of payments issue and as a result has undertaken austerity measures which have slowed economic growth.
Bestway Cement Limited was able to maintain its market share despite these challenges; however, margins compressed due to the impact of currency devaluation on input costs. Moreover, competitors began introducing new capacity towards the end of the year which resulted in additional pricing pressure which persisted and will likely continue in the medium-term.
United Bank Limited was able to benefit from the higher interest rate environment in Pakistan as net interest margins have increased. There was a focus on the business becoming more efficient and significant investments were made in digital technologies to help increase market share as well as bring operational efficiencies. Deteriorating credit quality in the international book remained an issue because of prevailing conditions in the Gulf region, particularly Qatar. Digital remained a focus and UBL Digital has over 1 million downloads and more than 700,000 active customers. During the year, a host of new capabilities were deployed on the app including the ability to undertake contactless payments, the first of its kind in Pakistan.
Commenting on the current COVID-19 situation, Lord Choudrey noted: “We are now in unprecedented times. However, all of us at the Bestway Group, are in a position to be able to provide vital lifelines to local communities across the UK during this COVID-19 outbreak. As communities continue to stay local as a result of calls for social distancing to increase, our depots, pharmacies, retail outlets and the independent retailers/pharmacies we supply will become increasingly important. They play a pivotal role in ensuring access to necessities such as food and medicine, as well as invaluable advice for families across the UK.
Our Bestway Wholesale business is the UK’s largest independent wholesaler and Well Pharmacy is the UK’s largest independent retail pharmacy. We are leaders in our fields and we have a responsibility to remain open and provide these vital services to society.
Equally in Pakistan, United Bank Limited and Bestway Cement Limited will continue to provide vital services to customers and small and medium sized businesses as they navigate through these difficult times.
None of this would be possible without the unsung heroes, our employees who, as key workers, will have a pivotal role to play in the coming weeks and months. I am extremely proud of how they have come together in the face of adversity and worked tirelessly to ensure we are servicing our local communities. The health and safety of our colleagues is of paramount importance and we are providing all necessary facilities and support to ensure that they remain safe and well, both in the UK and Pakistan.”