Bestway Group

Annual Report & Accounts

2019
Bestway Group Contents
Annual Report &
2 34
Accounts 2019 Chairman’s Statement Financial Statements:

8
Bestway Group was founded in 1963
Strategic Report: 35
by Sir Anwar Pervez. It is the UK’s 13th Group Chief Executive’s Review Consolidated Income Statement
largest privately-owned company and 7th
largest family-owned business. The Group
12 37
consists of: Bestway Wholesale, the largest Bestway Wholesale Consolidated Statement of
independent wholesaler in the UK; Well 16 Comprehensive Income
Pharmacy, the 3rd largest retail pharmacy
in the UK; Bestway Cement, the largest
Well Pharmacy 38
cement manufacturer in Pakistan; and 18 Consolidated Statement of
United Bank Limited, the 2nd largest private Bestway Cement Financial Position
bank in Pakistan. Bestway continues to
consolidate its growth in all these areas. 20 40
United Bank Limited Consolidated Statement of

26 Changes in Equity
Directors’ Report 42
30 Consolidated Cash Flow
Bestway in Numbers Statement

32 44
Bestway Worldwide Company Information
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 CHAIRMAN’S STATEMENT (CONTD.)

Chairman’s
statement

On behalf of the Board of Directors, I am pleased to Despite the challenges, it has been an exciting year for
present the financial report and audited consolidated the Group and we have been able to capitalise on market
financial statements of Bestway Group Limited (the opportunities. During the year under review the various
“Company”) and its subsidiaries (the “Group”) for the retail and distribution businesses we acquired over the
year ended 30 June 2019. last year were integrated into our Wholesale business. We
believe that these investments will be value accretive and
enable us to broaden our customer proposition.
Business overview
The business has continued its investment in technology
The Group continues to boast a portfolio consisting of assets across the Group. Well Pharmacy launched a
the largest independent wholesaler and 3rd largest retail beta version of its app in July 2018, which offers repeat
pharmacy in the UK, in addition to the largest cement prescriptions and is designed to work with a customer’s GP
manufacturer and 2nd largest private bank in Pakistan. to organise prescription delivery and refills. A full marketing
campaign was launched in January 2019 and to date there
Group revenue for the year ended 30 June 2019 totalled have been more than 62,500 sign-ups with almost 100,000
£3.4 billion compared to £3.2 billion in the previous year, items dispensed.
an increase of 7%. Profit before tax decreased by 20% to
£227.7 million compared to £283.5 million in the previous In July 2018, UBL Digital was launched and it has grown
year. to become the highest rated finance app in Pakistan with
over 1 million downloads and more than 700,000 active
The decline in profitability was due to a tough trading customers. During the year, a host of new capabilities were
environment within the UK wholesale sector as well as the deployed on the app including the ability to undertake
impact of the acquisition, out of administration, of Bestway contactless payments, the first of its kind in Pakistan.
Retail which has required stabilising. Economic conditions
in Pakistan have also been challenging resulting in softer Bestway Wholesale’s digital channels have also grown.
trading results in our cement business as well as the impact The wholesale app now has over 81,000 registered users
of the rupee devaluation on conversion of our results into averaging sales of £33 million per month and accounting
sterling. for 31% of total online transactions.

Despite the challenges, it has been

an exciting year for the Group and
we have been able to capitalise on
market opportunities.

Sir MA Pervez OBE HPK

Bestway Group Chairman
02 03
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 CHAIRMAN’S STATEMENT (CONTD.)

Key highlights

Bestway Foundation provided in excess of £225,000 (2018:

£200,000) in grants to students of South Asian origin to
attend a number of universities in the United Kingdom.

in 2019, Bestway Cement and United Bank Limited have

donated in excess of £2 million to a range of educational
and health charities.

Social responsibility

Bestway Group is committed to giving back to the Bestway Cement undertook a project of converting its
communities it operates in through its charitable arm Waste Heat Recovery Power Plants in Chakwal to Air
Bestway Foundation as well as through its various Cooled Condenser Systems. The purpose of the conversion
subsidiaries. I am proud to report that both of our Pakistani was to reduce the reliance of the business on water which
subsidiaries, Bestway Cement Limited and United Bank is fast becoming a scarce resource in Pakistan. This
Limited, have been included in the Top 10 list of publicly formed part of Bestway Cement’s comprehensive water
listed companies in Pakistan with regards to charitable conservation strategy at all of its sites in order to ensure
giving. sustainable water for all of the communities it operates in.

During the year under review, Bestway Foundation provided

in excess of £225,000 (2018: £200,000) in grants to students Awards and recognition
of South Asian origin to attend a number of universities
in the United Kingdom. In addition, Bestway Foundation On 10 September 2019 it was announced that our Group
donated over £240,000 (2018: £185,000) to nine charities in Chief Executive, Zameer Choudrey CBE SI Pk, would
the UK, including amongst others, The Duke of Edinburgh be appointed to the House of Lords under the Queen’s
Award, Crimestoppers and Grocery Aid. intention of conferring Peerages of the United Kingdom.
Lord Zameer Choudrey CBE SI Pk assumed his role in the
In June 2019 Bestway Wholesale held its 26th annual charity House of Lords on 5 November 2019. The award was in
race day at the Royal Ascot. This year’s beneficiary charity recognition of his considerable contributions to Britain’s
was Save The Children. During the year, Well Pharmacy domestic and foreign trade and his philanthropic work.
under its carrier bag levy, donated over £13,000 to local
charities such as the Marine Conservation Society in United Bank Limited was recognised as the “Bank
England and the Scottish Wildlife Trust. of the Year 2018” at The Banker Awards. The award
was in recognition of the role the bank has played in
Additionally, in 2019, Bestway Cement and United Bank spearheading digital innovation in Pakistan as well as
Limited have donated in excess of £2 million to a range expanding the scope of financial services in the region.
of educational and health charities including, amongst
others, National University of Science & Technology Bestway Cement Limited was recognised by the National
Islamabad, Shaukhat Khanum Memorial Hospital and Forum for Environment and Health at their 16th Annual
Abdul Sattar Edhi Foundation. They have also provided Environment Excellence Awards for its vision and effective
scholarships, both local and international, to a number of implementation of environmentally responsible policies at
university students across Pakistan. all of its plants.

The business has continued its

investment in the technology assets
across the Group.
Bestway Wholesale, Tottenham depot

04 05
Bestway Group Bestway Group
CHAIRMAN’S STATEMENT (CONTD.) Annual Report & ACCOUNTS 2019

The Group continues to boast a

portfolio consisting of the largest
independent wholesaler and 3rd
largest retail pharmacy in the UK,
in addition to the largest cement
manufacturer and 2nd largest private
bank in Pakistan.

Outlook Bestway Group Bestway Group profit

turnover (% by sector) (£ m) before tax
We anticipate more challenging operating conditions £ million
600
in the year ahead both in the UK and Pakistan. The
uncertainty regarding Brexit will likely result in further 500

£551.1m
austerity and continue to dampen economic growth. In
Pakistan, economic growth is likely to slow down in the £3.4bn 400

£413.3m
aftermath of the IMF bailout package and the focus of the 300
government on addressing the balance of payments issue.

£283.5m
200

£227.7m
However, we believe that our fundamental strengths and Well Pharmacy (£790.2m) 100
the benefits of our business model make us resilient and Bestway Cement (£303.5m)
able to perform well in testing market conditions. Looking Bestway Wholesale (£2,300m) 0
(including Bestway Retail) 2016 2017 2018 2019
to the future, we aim to grow our businesses and reach
UBL figure not included as
more customers through investments in new technologies banking group has no turnover

and processes. I am confident that the combination of our

experienced Board, and long-term growth objectives, puts
Bestway on course for a successful future.

Sir MA Pervez OBE HPK

Bestway Group Key figures
Chairman
turnover (£ bn)
£ billion
5

4
£3.4bn
Bestway Group revenue

£986.1m
3
£3.4bn
£3.3bn

£3.3bn

£3.2bn

2 Tangible fixed assets

after depreciation
1

0 £227.7m
2016 2017 2018 2019 Profit before tax

Bestway Foundation School classroom, Lahore, Pakistan

06 07
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 STRATEGIC REPORT: group chief executive’s review

GROUP CHIEF
EXECUTIVE’S
REVIEW
I would like to thank all our
suppliers and employees
for their commitment to On behalf of the Board of Directors, I am pleased to Well Pharmacy has been focused on maintaining market
the Group. present the Annual Report and audited financial share whilst generating efficiencies to counteract the
statements for Bestway Group Limited for the year ended flat funding imposed by the Department of Health. There
30 June 2019. has remained a focus on leveraging technology assets to
help drive both market share and efficiency gains via our
Central Fulfilment and Digital Projects. The Department
Principal activities of Health has also agreed a new 5-year contract with
the pharmacy business where funding will remain flat.
The principal activities of the Group during the year were Specific details of the mechanics of the funding are yet
in the wholesale, pharmacy, cement and financial services to be determined yet again there is an onus from the
sectors. The principal activity of the Company was as a government on the sector to become more efficient.
holding company.
Business conditions in Pakistan have been the most difficult
in recent times. In the lead-up to the IMF deal being
Review of business signed, there was a significant increase in interest rates
and material currency devaluation. With the signing of the
2019 has been a challenging year for Bestway Group as IMF deal the new government is focused on addressing
there has been significant economic uncertainty within the the country’s balance of payments issue and as a result
geographies we operate in. However, despite these difficult has undertaken austerity measures which have slowed
business conditions in both the UK and Pakistan, all our economic growth.
businesses remain profitable.
Bestway Cement Limited was able to maintain its market
The UK economy has witnessed unprecedented uncertainty share despite these challenges; however, margins have
in the aftermath of the Brexit referendum and this has compressed due to the impact of currency devaluation
had an impact on business confidence which has been on input costs. Moreover, competitors began introducing
compounded by the ongoing challenges of increased new capacity towards the end of the year which resulted in
National Living Wage. additional pricing pressure which may continue.

The Wholesale business has been focused on integrating

Conviviality Retail (now known as Bestway Retail) and
landing the associated scale benefits. This is against the
backdrop of a difficult wholesale environment that has
seen a number of major players withdraw from the market.
Trading conditions remain difficult due to the ongoing Key highlights
competition from the grocers, increased National Living
Wage as well as the impact of Brexit on our supplier An increase of 7% in Group revenue: £3.4 billion in 2019,
partners. compared to £3.2 billion in the previous year.

Overall Group profit before tax decreased by 20 % to

£227.7 million compared to £283.5 million in the previous
year.

Lord Zameer Choudrey, SI PK, BA (Hons), FCA The Trading Group had cash balances of £154.2 million in
Bestway Group Chief Executive 2019 compared to £170.1 million in the previous year.

08 09
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 group chief executive’s review

GROUP CHIEF
EXECUTIVE’S Despite difficult trading
REVIEW conditions, all of our businesses
(continued) remained profitable

United Bank Limited has been able to benefit from the The decline in profitability has been driven by underper-
higher interest rate environment as net interest margins formance in the Bestway Wholesale and Bestway Cement
have increased. There has also been a focus on the busi- businesses as well as Pakistani Rupee devaluation, of 29%
ness becoming more efficient and significant investments in the year, on translation into our financial statements.
have been made in digital technologies to help increase Bestway Wholesale has been impacted by the time taken
market share as well as bring operational efficiencies. to turnaround Bestway Retail a previously loss-making
Deteriorating credit quality in the international book has business that was bought out of administration in the prior
remained an issue because of prevailing conditions in the year, whilst Bestway Cement has been impacted by the
Gulf region, particularly Qatar. economic slowdown and austerity measures in Pakistan.

The net book value of investment properties and property,

Group financial performance plant and equipment as at 30 June 2019 stood at £986.1
million, compared to £1,133.4 million in the previous year.
During the year ended 30 June 2019 Group revenue was
£3.4 billion compared to £3.2 billion in the previous year, The Trading Group had cash balances of £154.2 million in
an increase of 7% driven predominantly by the full year 2019 compared to £170.1 million in the previous year.
impact of Bestway Retail revenue. Despite difficult trading
conditions, all of our businesses remained profitable, During the year, the UK Group repaid external borrowings
however, overall Group profit before tax decreased by 20 % of £48 million as part of its ongoing de-leveraging strategy.
to £227.7 million compared to £283.5 million in the previous The Group retired its loan facility with Habib Bank Limited
year (profit before tax in the prior year included two in October 2018.
adjusting items totalling a net expense of £49.3 million).

UBL regional office building, Lahore, Pakistan

Bestway Cement, Kalar Kahar plant

10 11
Bestway Group
Annual Report & ACCOUNTS 2019

BESTWAY Key highlights

WHOLESALE
Revenue in the Wholesale business grew 13.0% to £2.3
billion in 2019 from £2.1 billion in 2018.

The UK’s largest independent wholesaler

Revenue in the Bestway Wholesale business grew 13% to moved to a strategy of designated delivery hubs to offer
£2.3 billion in 2019 from £2.1 billion in 2018. The market better service levels and to complement its growing
conditions in the wholesale sector are continuously under online and digital business as it embraces technology
pressure from the grocery multiples, and whilst this has and innovation for the future. Bestway Wholesale has over
traditionally been in the convenience retail space, it has 60 depots, alongside 600+ retail stores including 450+
now broadened and intensified with Tesco, Morrisons and franchisees for Bestway Retail.
Asda, all entering the wholesale market.
The revenue increase was driven due to the continued
Management has been focused on incorporating Bestway focus of Bestway Wholesale on growing volume through its
Retail into the business, delivering the associated scale various customer channels. The Best-one, Multiple Accounts
benefits, and absorbing a number of ‘one off’ costs that and Xtra Local retail club membership continues to grow
accompanied the acquisition. The sector has also had as we ensure greater discipline and compliance amongst
to absorb the continued impact of National Living Wage our affiliated stores. During the year, we continued the
as well as the additional costs and associated ongoing MyRewards scheme to help our customers increase their
economic uncertainty surrounding Brexit. margins and profitability.

Bestway Wholesale has remained committed to its strategic Catering sales grew 2.5% during the year to £162 million
plans of offering improved service and convenience to while online business now has over 81,000 registered users
customers, delivering competitive advantage as well as compared to 62,000 the previous year. Weekly sales grew
providing a reason for suppliers to invest and partner with by 12% vs the previous year with total web and app sales
the business. There has also been an increased emphasis averaging £33m per month.
and investment in the supply chain as the business has

Key figures Bestway Wholesale Bestway Wholesale Number of Depots

Turnover (£ bn) Pre-exception EBITDA
£2.3bn 2.5
£ billion
50
£ million
Turnover 67 Total
£184.7m
£2.3bn

2 40
35 Bestway Wholesale
£2.13bn

£2.1bn

£41m

28 Batleys
£39m

Trading stock 1.5 30 3 Bestpets

£31m

£31.0m
1 Central
1 20

Pre-exception EBITDA Symbol Group sales

0.5 10

+13% 0 0
£628m
(£608m, 2018)
Revenue increase 2017 2018 2019 2017 2018 2019 +3.3% increase

Top row: BB Foodservice, Bestway Wholesale and best-one trucks outside Abbey Road depot; Middle row: best-one
12 Dunstable store; inside best-one Sunbury store; Bottom row: Bestpets Newcastle depot; Bargain Booze shop front.
07
13
Bestway Group
Annual Report & ACCOUNTS 2019

BESTWAY Despite these challenges, Bestway

Wholesale has remained committed
WHOLESALE to its strategic plans of offering
(continued) improved service and convenience to
customers.

The retail mobile app accounted for 31% of all online trans-
actions, vs 25% the previous year and the new foodservice Bestway Retail
app launched at the end of the year, accounted for 3% of Turnover (£ m)
total online transactions and is a further step in Bestway’s £ million
500
strategy to become a progressive, technology led business
that supports its customers and supply partners to optimise
400
business opportunity in the years’ ahead.
£380.78m

300
Whilst the tobacco category came under pressure, soft
drinks, frozen & licenced products proved to be the best
200
performing categories during the year. Revenue also
£80.63m

improved by the inclusion of the full year impact of Bestway

100
Retail in 2019 compared to 3 months in 2018.

0
Bestway Wholesale Pre-exception EBITDA reported at £31
2018* 2019
million, down from £39 million in 2018. *(under 3 months of trading activity in 2018)

Total inventory balances as at 30 June 2019 amounted to

£184.7 million, compared to £203.1 million in the previous
year.

Van Direct sales Digital sales Bestway Retail Retail Clubs

(£ m) (£ m) Number of stores store members
£33m
App + web sales 629 3,406
£43.60m per month Total Xtra Local
(£12.04m 2018) 31%
+362% increase App sales as % of 315 Bargain Booze
total online sales
128 Select Convenience
2,000
Catering sales (£ m) 81,000 best-one
No. of registered 22 Wine Rack
online users
£162m 103 Central 629
(£158.1m, 2018) 35,205 Franchise/
+2.5% increase App downloads 61 JCR corporate

Top row: Bestway Vans Direct delivery; Select Convenience store front; Middle row: best-one Corby store
14 interior; BB foodservice customer; Bottom row: Wine Rack point-of-sale; Wine Rack Maida Vale store.
15
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 WELL PHARMACY

WELL Key highlights

PHARMACY
Revenue for the Pharmacy business for the year ended 30
June 2019 increased 0.9% to £790.2 million compared to
£783.7 million in the prior year.

Well’s market share of prescriptions nationally remained

broadly at 5.8%.

Well Pharmacy Well Pharmacy Well Pharmacy profit Key figures

in numbers Turnover (£ m) (£ m) before tax
£ million £ million
1000 10
773
Branches
800 8
£790.2m
Well Pharmacy revenue
£8.6m

6,955
£790.2m
£783.7m
£779.2m

Employees 600 6

+0.9%
£6.2m

93.7k 400 4
Increase in revenue
Sales (orders)
£3.6m

via mobile app 200 2

72.7m 0 0 £6.2m
Prescription volume 2017 2018 2019 2017 2018 2019 Profit before tax

The UK’s 3rd largest retail pharmacy

In previous years, the pharmacy sector received a funding and grow market share as well as diversifying its product
cut from the Department of Health and there was uncer- offering away from solely medication dispensing. The
tainty around whether a long-term deal was imminent. Central Fulfilment project has been rolled out to the
Encouragingly, the Department of Health has announced majority of the estate and the business has seen strong
a 5-year deal, however, the amount of funding provided growth in its digital and wholesale offerings.
to the pharmacy sector will remain flat. Although, this
provides some certainty over long-term funding, trading Revenue for the Pharmacy business for the year ended
conditions within the sector remain challenging as the 30 June 2019 increased 0.9% to £790.2 million compared
onus is on the sector to absorb inflationary pressures within to £783.7 million in the prior year. The growth was
the sector, both wage and cost, against the backdrop of broadly in line with the market and Well’s market share of
increasing patient demand. There is still a lack of clarity prescriptions nationally remained broadly at 5.8%.
around the specific funding mechanism and the business is
reviewing how this may impact its operations. Profit before tax decreased from £8.6 million in 2018 to
£6.2 million in 2019. Underlying trading remains robust and
Despite this environment, Well Pharmacy has over 750 the decrease in profitability was driven predominantly by
pharmacies and has been able to retain its market share higher depreciation charges due to the increased capex
of national prescriptions and has retained its focus on the business has incurred as a result of its Digital and
leveraging technology to improve operational efficiency Central Fulfilment projects.

16 Opposite page: Well Pharmacy new Northenden store, UK

17
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 BESTWAY CEMENT LTD

BESTWAY Key highlights

CEMENT
Revenue for the financial year 2019 decreased by 14.2%
to £303.5 million compared to £355.3 million in 2018.

LIMITED BCL’s profit before tax decreased 27.0% to £66.8 million

compared to £91.5 million in 2018.

Pakistan’s largest cement manufacturer

Trading conditions in Pakistan have been challenging for Exports decreased by 32.3% to 0.7 million tonnes due to
the cement sector in 2019 and are likely to remain so for the imposition on trade restrictions with India as well as
the foreseeable future. Economic uncertainty has resulted increased competition in the Afghanistan market.
in austerity measures, such as reduction in development
budgets, which has dampened economic growth and as Revenue for the financial year 2019 decreased by 14.2%
a result cement demand decreased for the first time in a to £303.5 million compared to £355.3 million in 2018.
decade. This has been further exacerbated by increased BCL’s profit before tax decreased 27.0% to £66.8 million
finance costs and higher input costs due to the material compared to £91.5 million in 2018. The decrease in
interest rate increases and currency devaluation the profitability has been driven by lower retention prices in
economy has had to withstand. Moreover, competitors who the market as well as margin compression linked to higher
had made decisions to expand their capacities during a input costs. It should also be noted that a portion of the
year of relative economic stability are now going live with negative variance can be explained by the weakening of
their new plants. Consequently, there is excess supply in the the rupee during the year (from PKR161/£1 to PKR 207/£1)
market at a time of demand compression which is resulting
in downward pricing pressure. For the year ended 30 June 2019, BCL declared total
dividends of 11 PKR per share (£0.06 per share) (2018: 12
Despite these conditions, BCL maintained its position PKR per share (£0.08 per share)).
as Pakistan’s market leader and largest cement
manufacturer, with an annual clinker capacity of 10.8
million tonnes (2018: 10.8 million tonnes).

BCL’s despatches decreased by 9.6% to 8.1 million

tonnes in 2019 from 9.0 million tonnes in 2018. Domestic
despatches decreased by 2.0% during the year to 7.4
million tonnes from 7.6 million tonnes.

Domestic dispatches BCL Profit BCL Turnover (£ m) Key figures

(Mt, Million tones) before tax (£ m)
£ million £ million
8 Mt 150 600

£303.5m
7.6 Mt 7.4 Mt

6.5 Mt 125 500

6 Mt Turnover

£125m
100 400

£66.8m

£388.7m
£91.5m
4 Mt 75 300

£355.3m

£303.5m
Profit before tax

£66.8m
50 200

£8.1Mt
2 Mt
25 100
Oposite page: Bestway Cement Kalar Kahar plant, (Million tonnes)
0 Mt 0 0
Pakistan; Above from left: Chakwal & Kalar Kahar Bestway 2017 2018 2019 2017 2018 2019 2017 2018 2019 Global despatches
Cement plants.
18 19
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 UNITED BANK LIMITED

UNITED BANK Key highlights

LIMITED
UBL’s net interest income decreased by 12.2% during the
year from £392.7 million in 2018 to £344.3 million in 2019.

UBL’s profit before tax decreased by 2.4% from £181.7

million in 2018 to £177.4 million in 2019.

Over 1 million downloads of the UBL Digital app with over

700,000 registered customers during the year.

‘UBL’ – Pakistan’s 2nd largest private bank

During the year, Pakistan reached an agreement with the its focus on expanding its low-cost deposit base and
IMF on a bailout package. As part of the IMF package, improving its non-fund income and it was able to grow in
Pakistan had to adjust its foreign exchange rates to these areas ahead of the competition. Digital remains a
be in line with the Real Effective Exchange Rate, which key strategic initiative of the bank and during the year it
resulted in significant rupee devaluation. The government has seen over 1 million downloads of the UBL Digital app
consequently took austerity measures and Pakistan has with over 700,000 registered customers. UBL is committed
been in a rapidly increasing interest rate cycle where rates to investing technology to improve its customer proposition
have risen 575bps over the financial year from 6.50% to as well as bring efficiency to its operations and several
12.25%. Rates currently stand at 13.25% and there is a view strategic work streams are planned for 2020.
that these may peak at 14.25%. Although this is positive
from a UBL perspective with regards to increased net The International business has not performed as well
interest margins, higher foreign exchange volatility and and there was significant provisioning during the year
the ability to invest in higher rated risk-free government associated with the Gulf economies. Management has
returns, there is likely to be increased stress in the rationalised the portfolio and has identified certain non-
corporate lending book as businesses will need to adapt core territories and will look to exit or de-risk the business
their operating model to withstand these pressures. The model accordingly. In line with this strategy, UBL closed
business will have to be selective in its lending and ensure down its New York branch, sold off its Omani assets and
its customers are robust. UBL Tanzania subsidiary during the year.

UBL’s net interest income decreased by 12.2% during the The bank declared a total dividend of 10PKR (£0.06) per
year from £392.7 million in 2018 to £344.3 million in 2019. share during the year ended 30 June 2019 (13PKR (£0.09)
UBL’s profit before tax decreased by 2.4% from £181.7 per share during the year ended 30 June 2018).
million in 2018 to £177.4 million in 2019. The decrease in
reported profit is driven by the weakening of the rupee UBL’s total assets at 30 June 2019 were £9.9 billion
during the year, although when reported in PKR UBL’s profit compared to £12.2 billion in the previous year, a decrease
before tax increased during the year. of 18.6%. UBL’s deposit base decreased by 14.6% to £7.4
billion for the year to 30 June 2019 as UBL actively decided
On the domestic front, UBL enjoyed a strong performance to shed expensive deposits and improve its cost to income
buoyed by higher interest rates and higher foreign ratio.
exchange volatility. UBL has successfully continued

UBL in numbers Profit before tax Net interest income Key figures
£ million £ million
350 450
400 £344.3m
£432.3m

1,375 0.7m 300

£318.4m

Net interest income

£392.7m

Branches Mobile app 350

worldwide registered 250
£344.3m

users 300

1,361
200 250
£177.4m
In Pakistan 1m 200 Profit before tax
£181.7m

150
£177.4m

14 App
150
Rest of world downloads 100

50
100
50
£9.9bn
7.4bn Total assets
Deposits 0 0
2017 2018 2019 2017 2018 2019
UBL Headquarters interior, Karachi, Pakistan

20 21
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 GROUP CHIEF EXECUTIVE’S REVIEW (CONTD.)

The Group ensures that it has robust

GROUP CHIEF EXECUTIVE’S strategic planning and budgetary monitoring
processes…
REVIEW (continued)

Principal risks & uncertainties transacting. The Group ensures that it undertakes period The Bank’s capital adequacy is reported using the rules Key performance indicators
cyber assessments and system penetration testing with and ratios provided by the State Bank of Pakistan. The
The Group faces a range of risks and uncertainties subject matter experts. The threats are then systematically capital adequacy ratio is a measure of the amount of Among the financial performance indicators within the
as a result of changing external environments such managed, and its security is enhanced via improvement a Bank’s capital expressed as a percentage of its risk wholesale business, the key performance indicators
as regulation, economic conditions, competition and programmes. weighted assets (RWAs). are like for like sales, sales per department gross profit
consumer trends. The Group has taken the necessary margin, sales per depot, sales per department, operating
measures to reduce the impact of key risks in the business Banking operations are categorised as either Trading Book expenses, wage cost per depot, stock availability, stock
with appropriate policies where possible, however, not all or Banking Book and RWAs are determined according to levels and cash generation.
risks and uncertainties can be controlled. Capital risk management and applicable specific treatments as per the requirements of SBP that
regulations in Pakistan for the Banking Group measure the varying levels of risk attached to on balance The financial performance indicators within the pharmacy
The impact of the UK’s exit from the EU continues to be a sheet and off-balance sheet exposures. business include, the key performance indicators are
risk for the Group’s UK subsidiaries due to the prevailing Background prescription growth, over the counter sales growth,
uncertainty and the structural changes it has on business’ The objective of managing capital is to safeguard the Under the current capital adequacy regulations, credit profitability per branch, operating expenses, stock levels,
supply chain. The Group has undertaken a review of the Bank’s ability to continue as a going concern. It is the risk and market risk exposures are measured using the cost per prescription and cash generation.
impact of Brexit on its businesses under varied scenarios policy of the Bank to maintain a strong capital base so Standardised Approach and operational risk is measured
and has looked to manage these risks where possible. as to maintain investor, depositor and market confidence using the Basic Indicator Approach. Credit risk mitigants Financial performance indicators in the cement business
Given the delays in negotiating a Brexit deal, this analysis and to sustain future development of the business. The are also applied against the Bank’s exposures based on are net retention, gross margin, operating expenses, daily
and the associated mitigants are reviewed periodically for Bank aims to maintain an optimum level of capital along eligible collateral. despatches and cost of production.
reasonableness. with maximising shareholders’ return as we consider a
sound capital position as more appropriate as opposed to Applicable capital ratios under Basel III Among the financial performance indicators within the
Competition is another key risk across all of the Group’s leverage supporting business growth. Banks are also required to maintain a minimum Capital banking business, the key performance indicators are
businesses due to the landscape in which we operate. Adequacy Ratio (CAR) of 10.0%, capital conservation buffer deposit levels, assets under management, return on assets,
Competitiveness has increased due to an increase in Minimum paid up capital of 1.90% and High Loss Absorbency Requirement of 1.5% of return on equity, net interest margin, non-financial income,
market entrants within the cement and banking businesses, The State Bank of Pakistan (SBP) through its BSD Circular the risk weighted exposures of the Bank. operating expenses, cost to income ratio, cost of deposits
whilst there are market cost and pricing pressures within No. 7 dated 15 April 2009 has prescribed the minimum and capital adequacy ratio.
the UK businesses. The Group ensures that it has robust paid-up capital (net of accumulated losses) for Banks to Further, under Basel III instructions, as at 30 June 2019, the
strategic planning and budgetary monitoring processes be raised to Rs.10.0 billion by the year ended 31 December Banks is required to maintain a Common Equity Tier 1 (CET General non-financial performance indicators are staff
and that it leverages market intelligence to ensure our 2015. The paid-up capital of the Bank as at 30 June 2019 1) ratio of 6.0% and Tier 1 ratio of 7.5%. The actual ratios turnover, staff, supplier and customer satisfaction and
subsidiaries remain relevant in the market. totalled Rs.12.2 billion (2018: Rs.12.2 billion). for the Bank as at 30 June 2019, which are unaudited, for health and safety reports, amongst others.
Common Equity Tier 1 (CET 1) was 12.5% and 13.5% for Tier
Regulation is a key risk across all of the Group’s businesses Basel III capital instructions 1 ratio. The Board is of the belief that the monitoring of the
given the sectors that we operate in. Regulation has The SBP through its BPRD Circular No. 6 dated 15 August indicators is an important aspect of the regular business
increased across all subsidiaries with a focus in the UK on 2013 has issued Basel III Capital instructions for Banks/ Lower Buffer required in 2020 performance reviews conducted by management.
data protection, on environmental standards in cement DFIs. The revision to the previously applicable Capital As per SBP’s designation of D-SIBs for the year 2019, the
and in capital adequacy in the banking sector. The Adequacy regulations pertain to components of eligible HLA capital charge required to be maintained by UBL has The following financial KPI’s (turnover, PBT and cash) are
Group ensures that it remains apprised on the changing capital and related deductions. The amendments have been reduced from 1.5% to 1.0%. The revised HLA capital referred to in the business review.
regulatory landscape and its impact on the business. been introduced with an aim to further strengthen the charge will be applicable from 31 March 2020 and will
The Group also ensures it has robust project teams that existing capital related rules. Basel III instructions became remain effective till next D-SIB designation is announced by
oversee operational compliance. effective from 31 December 2013; however, there is a the State Bank of Pakistan. (continues overleaf)
transitional phase during which the complete requirements
IT & Cyber is an increasing risk across all Group businesses would become applicable with full implementation by 31
given the increased focus on digital systems of record and December 2019.

22 Left page: UBL Head office lobby, Karachi, Pakistan; Above: Bestway Wholesale depot, Tottenham, London, UK
23
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 GROUP CHIEF EXECUTIVE’S REVIEW (CONTD.)

GROUP CHIEF EXECUTIVE’S

REVIEW (continued)
We believe the Group is in a strong position
to withstand these pressures and continue to
gain share within its respective markets.

Future outlook

We see challenges in both the UK and Pakistani economies. continue to retain its focus on managing corporate
The UK is faced with unprecedented uncertainty as a result accounts during these turbulent economic times whilst
of the decision to leave the EU, whilst Pakistan will have to also leveraging digital capabilities to enable it to increase
balance its need for economic growth with the austerity its market share of deposits and reduce its cost to income
measures emanating from the IMF bailout package. ratio. UBL will also remain focused on rationalising and
However, we believe the Group is in a strong position to de-risking its international portfolio and ensure adherence
withstand these pressures and continue to gain share to international compliance standards across the
within its respective markets. organisation.

The wholesale business will continue to focus on It has been a challenging twelve months and it is likely that
growing share in a competitive market by leveraging the the headwinds our businesses have faced will remain for
complementary infrastructure of Bestway Retail as part the near future. Notwithstanding these pressures, we have
of its service offering. The business will also be focused on been able to show the resilience of our business model and
delivering operational efficiencies working better together all of our businesses have been able to maintain market
with Bestway Retail as well as optimising its supply chain share and are well positioned to grow going forward and
infrastructure. create value for all stakeholders.

Well Pharmacy will continue to focus on outperforming the I would like to thank all our suppliers and employees for
market in both prescription volumes and margin delivery their commitment to the Group. I would also like to thank
by investing in technology initiatives that will enable us to my fellow Directors for their contribution to our strategic
reduce our cost to serve as well as grow our market share. and operational priorities.
The business will look to respond to the new NHS funding
contract to ensure it is delivering all of the services required On behalf of the board,
and achieve the efficiency gains implicit in the new 5-year
contract provided by the Department of Health.

Bestway Cement will remain focused on reducing its Lord Z M Choudrey CBE, SI Pk, BA (Hons), FCA
operational and administrative cost base and retain its Group Chief Executive
status as the lowest cost operator in the sector to better
enable it to withstand sustained margin pressure.

United Bank Limited will rebalance its investment portfolio

in the increasing interest rate environment. It will also

24 Left page: Chakwal cement plant; this page: Well Pharmacy Northenden store
25
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 DIRECTORS’ REPORT From left to right:
Sir MA Pervez, OBE HPk (Group Chairman),
Lord ZM Choudrey CBE, SI PK, BA (Hons), FCA
(Group Chief Executive),
M Y Sheikh,

DIRECTORS’
R Pervez, ACA,
D Pervez, BA (Hons), MA Oxon, Solicitor,
HZ Choudrey, MA (Hons) Cantab, ACA

REPORT

The Directors present their report and the audited Indemnity provisions It recognises its responsibilities towards the disabled Disclosure of information to auditor
financial statements of Bestway Group Limited for the and gives full and fair consideration to applications for
year ended 30 June 2019. The Group has made qualifying third-party indemnity employment from them, having regard to their aptitudes The Directors who held office at the date of approval of
provisions for its Directors in relation to certain losses and abilities. So far as particular disabilities permit, the this Directors’ report confirm that, so far as they are each
Principal activities and liabilities that may occur in the course of acting as Group will give continued employment and arrange aware, there is no relevant audit information of which
Directors of the Company, its subsidiaries or associates appropriate training for any existing employee who the Company’s auditor is unaware, and each Director
The principal activities of the Group during the year were which were in force during the year and remain in force at becomes disabled. It is the policy of the Group that the has taken all the steps that they ought to have taken as a
in the wholesale, pharmacy, cement and financial services the date of this report. training, career development and promotion of disabled Director to make themselves aware of any relevant audit
sectors. The principal activity of the Company was as a persons should as far as possible be identical to that of information and to establish that the Company’s auditor is
holding company. Employee involvement and equal opportunities other employees. aware of that information.

Directors The Group systematically provides employees with Dividends Auditors

information on matters of concern to them and consults
The Directors who held office during the year, and up to the with employees on a regular basis to ensure that their On 26 June 2019, Bestway Group Limited declared and KPMG LLP resigned as auditors on 24 January 2019.
date of signing these financial statements, were as follows: views can be considered in making decisions which are paid a final ordinary dividend of £4.00 per share for the PricewaterhouseCoopers LLP were subsequently
likely to affect their interests. The Group encourages the year ended 30 June 2018. This is in addition to the £6.00 appointed as auditors in accordance with Section
• Sir MA Pervez OBE HPk (Group Chairman) involvement of employees in the Group’s performance and per share interim dividend declared and paid on 21 May 485 of the Companies Act 2006 on 6 March 2019.
• Lord Z M Choudrey CBE, SI Pk, BA (Hons), FCA ensures that it provides employees with the information 2018 for the year ended 30 June 2018. Together, this divi- PricewaterhouseCoopers LLP, have indicated their
(Group Chief Executive) required such that they can achieve a common awareness dend totalled £10 million. willingness to continue in office and a resolution
• M Y Sheikh of the financial and economic factors affecting its No dividend has yet been declared for the year ended concerning their re-appointment will be proposed at the
• R Pervez, ACA performance. 30 June 2019. Annual General Meeting.
• D Pervez, BA (Hons), MA Oxon, Solicitor
• H Z Choudrey, MA (Hons) Cantab, ACA The Group is an equal opportunities employer and its Political donations (Directors’ Report continues overleaf)
policies for the recruitment, training, career development
and promotion of employees are based on the relevant Political donations made in the year totalled £132,106 to
merits and abilities of the individuals concerned. the Conservative party (2018: £101,155).

26 07
27
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 DIRECTORS’ REPORT (CoNTD.)

DIRECTORS’ REPORT
(continued)

Going Concern and Company for that period. In preparing the financial
statements, the Directors are required to:
The financial statements have been prepared on a
going concern basis. The Group made a profit before • select suitable accounting policies and then apply
tax of £227.7 million (2018: £283.5 million) and has net them consistently;
assets of £1.7 billion (2018: £1.9 billion) and total assets of • state whether applicable IFRSs as adopted by the
£11.9 billion (2018: £14.4 billion). Additionally, the Group European Union have been followed for the group
generated cash of £474.5 million (2018: £45.7 million) in the financial statements and United Kingdom Accounting
financial year ended 30 June 2019. Standards, comprising FRS 101, have been followed
for the Company financial statements, subject to
The Directors have also reviewed the detailed budgets and any material departures disclosed and explained in
cash flow forecasts for the businesses and also considered the financial statements;
the liquidity requirements of the banking operations and • make judgements and accounting estimates that are
believe that the group has access to sufficient financial reasonable and prudent; and
resources to enable it to continue its operations and meet • prepare the financial statements on the going
its liabilities as they fall due for at least 12 months from the concern basis unless it is inappropriate to presume
date of approval of these financial statements. that the Group and Company will continue in
business.
The Company financial statements have also been
prepared on a going concern basis. The Company made The Directors are also responsible for safeguarding the
a profit before tax of £4.0 million and has net assets of assets of the group and company and hence for taking
£578.0 million. This relates predominately to an investment reasonable steps for the prevention and detection of fraud
in Bestway (Holdings) Limited. The Directors consider that and other irregularities.
this will enable the Company to continue in operational
existence for the foreseeable future by meeting its liabilities The Directors are responsible for keeping adequate
as they fall due for payment. accounting records that are sufficient to show and explain
the Group and Company’s transactions and disclose with
Based on these indications the Directors believe that it reasonable accuracy at any time the financial position of
remains appropriate to prepare the consolidated and the Group and Company and enable them to ensure that
company financial statements on a going concern basis. the financial statements comply with the Companies Act
2006.
Statement of Directors’ Responsibilities
The financial statements were approved by the Board of
The directors are responsible for preparing the Annual Directors and signed on its behalf by:
Report and the financial statements in accordance with
applicable law and regulation.

Company law requires the directors to prepare financial Lord Z M Choudrey CBE, SI Pk, BA (Hons), FCA
statements for each financial year. Under that law the Group Chief Executive
directors have prepared the Group financial statements
in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union
and company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS
101 “Reduced Disclosure Framework”, and applicable
law). Under Company law the directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group

Bestway Cement plant, Chakwal, Pakistan

28 29
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 BESTWAY IN NUMBERS

BESTWAY IN NUMBERS
Bestway Group PROFIT Bestway Group Turnover United Bank Limited Bestway Cement Limited

£ million £ billion
600 5 1,375 No.1 £10.8Mt
Branches Largest cement Million Tonnes
500
£551.1m

worldwide manufacturer Total Capacity

4 in Pakistan
400
3

£3.4bn
DESPATCHES (million tonnes)

£3.3bn

£3.2bn
300
2
£283.5m

200
£227.7m

100 1
= 100 branches
0 0
= Rest of = in Pakistan
8.1Mt 7.4Mt 0.7Mt
2017 2018 2019 2017 2018 2019 world (14) (1,361)
Globally Pakistan Rest of world

bESTWAY Group TURNOVER BY SECTOR BESTWAY Group—Total No. Employees Well Pharmacy Bestway Wholesale: depots
2018 2019
31,341 29,172
£7m 93,717
Medications Mobile app
usage sales

EMPLOYEES 6,955
23.29% 8.94% 67.77% PRESCRIPTION
VOLUME 72.7m
Well Pharmacy (£790.2m) UBL figure not
Bestway Cement (£303.5m) included as banking
group has no BRANCHES 773
Bestway Wholesale (£2.3bn) turnover Central
= 1000 employees Wholesale 35 BestPets 3 Batleys 28 Distribution 1

BESTWAY RETAIL IN NUMBERS BESTWAY WHOLESALE IN NUMBERS SOCIAL RESPONSIBILITY & AWARDS Bestway RETAIL—REVENUE BY BUSINESS
Bestway retail Depots Vans direct sales (£ m) Bestway Foundation
629 turnover (£ m) (£12.04m
£225k £240k
Total 500 £ million in 2018)
Grants to Donations £380.78m
+362% students of to charities Total
400 = 67 £43.60m increase South-Asian
origin
in UK
315 Bargain
Booze
£380.78

Digital Sales (£ M)
300 Bargain Booze £170.26m (44.71%)
35 Bestway £33m Bestway businesses
128 Select Wholesale Monthly
Convenience Central £105.08m (27.59%)
200
81,000 £2m UBL
£80.63m

UBL
28 Batleys Registered online £2 million “Bank of the
22 Wine Rack
100 users donated by Bank of the Year
Year 2018” Select Convenience £73.93m (19.42%)
BCL and 2018 at The Banker
Catering sales UBL towards Awards
103 Central 3 Bestpets educational
0 and health JCR £19.25m (5.05%)
2018* 2019
* (under 3 months of trading activity
1 Central £162m charities.

61 JCR in 2018) Distribution £13,000 donated by Well Pharmacy (with carrier bag levy) Wine Rack £12.26m (3.23%)

30 31
 Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 BESTWAY WORLDWIDE

BESTWAY
WORLDWIDE

Bestway Cement HQ
UBL HQ

Bestway Wholesale HQ

Well Pharmacy HQ

Bestway Wholesale HQ Bestway Wholesale trade

Well Pharmacy HQ Well Pharmacy trade
Bestway Cement HQ Bestway Cement trade
United Bank Limited HQ UBL presence
UBL International branches/
subsidiaries

Bestway Group HQ, London, UK BCL Kalar Kahar, Pakistan Well Pharmacy, Northenden, UK UBL Branch, Karachi, Pakistan BCL Chakwal, Pakistan Well Pharmacy, Bristol, UK

Bestway Wholesale, London, UK UBL HQ, Karachi, Pakistan Bestpets depot, UK Best-One store, Liverpool, UK Bestway Foundation School, Bargain Booze store, Birkdale, UK
Chakwal, Pakistan
32 33
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 Financial statements 2019

Consolidated Income Statement

For the year ended 30 June 2019

Trading Banking
Trading Total
Banking Total
Group Group Consolidated
Group Group Consolidated
2019 2019
(restated) 2019
(restated) (restated)
2018 2018 2018
£000 £000 £000 £000 £000 £000


Revenue 3,447,911 - 3,447,911 3,224,375 - 3,224,375
Cost of sales (2,948,412) - (2,948,412) (2,717,961) - (2,717,961)

499,499 - 499,499 506,414 - 506,414

Interest income - 736,695 736,695 - 776,133 776,133
Interest expense - (392,359) (392,359) - (383,394) (383,394)

Net interest income - 344,336 344,336 - 392,739 392,739

Gross written premium - 22,048 22,048 - 20,804 20,804
Premium ceded to reinsurer - (11,668) (11,668) - (11,376) (11,376)

Net written premiums - 10,380 10,380 - 9,428 9,428

Gross benefits and claims paid - (12,050) (12,050) - (11,613) (11,613)
Claims ceded to reinsurer - 7,748 7,748 - 8,367 8,367
Movement in technical provisions - 282 282 - (716) (716)

Net benefits and claims - (4,020) (4,020) - (3,962) (3,962)

Fee, commission
and brokerage income - 94,232 94,232 106,651 106,651
Fee, commission
and brokerage expense - (2,708) (2,708) - (2,287) (2,287)

Net fee and commission income - 91,524 91,524 - 104,364 104,364

Gross profit
499,499 442,220 941,719 506,414 502,569 1,008,983

Dividend income from investments - 8,772 8,772 - 11,867 11,867

Other operating income 4,302 2,482 6,784 3,986 1,716 5,702
Gains and losses on investments - 7,560 7,560 - 59,799 59,799
Other gains and losses 2,153 1,398 3,551 4,358 541 4,899
Distribution expenses (18,898) - (18,898) (13,946) - (13,946)
Administrative expenses (411,712) (254,753) (666,465) (382,729) (264,328) (647,057)
Credit impairment losses - (33,205) (33,205) - (76,608) (76,608)
Share of profits of associates net of tax - 2,899 2,899 - 2,600 2,600
Other operating expenses (3,710) - (3,710) (1,524) - (1,524)

Total operating profit 71,634 177,373 249,007 116,559 238,156 354,715

Finance income 69 - 69 34 - 34
Finance expense (21,391) (8) (21,399) (21,948) - (21,948)

Net finance expense (21,322) (8) (21,330) (21,914) - (21,914)

Underlying profit before taxation
before adjusting items 50,312 177,365 227,677 94,645 238,156 332,801

UBL building, Karachi, Pakistan Continued overleaf >

34 35
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 Financial statements 2019

Consolidated Income Statement (CONTINUED) Consolidated Statement of

For the year ended 30 June 2019 Comprehensive Income
For the year ended 30 June 2019

Trading Banking Total Trading Banking Total Trading Banking

Trading Total
Banking Total
Group Group Consolidated Group Group Consolidated Group Group Consolidated
Group Group Consolidated
2019 2019 2019 (restated) (restated) (restated) 2019 2019
(restated) 2019
(restated) (restated)
2018 2018 2018 2018 2018 2018
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000


Underlying profit before taxation Profit after taxation 22,501 92,994 115,495 73,201 128,001 201,202
before adjusting items 50,312 177,365 227,677 94,645 238,156 332,801
Items that will not be reclassified
Adjusting items: subsequently to profit or loss:
Gain on acquisition - - - 7,156 - 7,156 Profit attributable to investors of
International pension provision - - - - (56,470) (56,470) UBL funds - (195) (195) - (222) (222)
Gains on investments on equity
Profit before tax 50,312 177,365 227,677 101,801 181,686 283,487 instruments designated at FVOCI
– net of tax - 675 675 - - -
Taxation (27,811) (84,371) (112,182) (28,600) (53,685) (82,285) Remeasurement of net defined
benefit liability – net of tax (582) 13,268 12,686 1,809 (1,533) 276
Profit for the year 22,501 92,994 115,495 73,201 128,001 201,202
(582) 13,748 13,166 1,809 (1,755) 54

Attributable to: Items that are or may be
reclassified subsequently to profit
Equity holders of the parent 1,079 53,888 54,967 38,552 72,468 111,020 or loss when specific conditions
Non-controlling interests 21,422 38,911 60,333 34,649 55,311 89,960 have been met:
Investors of UBL funds - 195 195 - 222 222 Surplus / (loss) arising on
revaluation of fixed assets - (3,517) (3,517) - 44,177 44,177
Surplus / (loss) arising on
Profit for the year 22,501 92,994 115,495 73,201 128,001 201,202 investments in securities as
’at FVOCI’ – net of tax (2) (28) (30) 551 (98,666) (98,115)
Net loss on investments in debt
instruments classified as
’at FVOCI’ – net of tax - (20,080) (20,080) - - -
Exchange (loss) / gain on
translation of foreign operations (69,211) (155,754) (224,965) (54,635) (145,203) (199,838)

(69,213) (179,379) (248,592) (54,084) (199,692) (253,776)

Other comprehensive (loss)

for the year (69,795) (165,629) (235,424) (52,275) (201,447) (253,722)


Total comprehensive (loss) /
income for the year (47,294) (72,635) (119,929) 20,926 (73,446) (52,520)

Total comprehensive (loss) /
income attributable to:
Equity holders of the Parent (35,424) (45,990) (81,414) 12,149 (40,178) (28,029)
Non-controlling interests (11,870) (26,645) (38,515) 8,777 (33,268) (24,491)

Total comprehensive (loss) /
income for the year (47,294) (72,635) (119,929) 20,926 (73,446) (52,520)

36 37
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 Financial statements 2019

Consolidated Statement of Consolidated Statement of

Financial Position Financial Position (CONTINUED)
For the year ended 30 June 2019 For the year ended 30 June 2019

At 30 June At 30 June At 30 June

At 30 June
2019 2018 2019 2018
(restated) (restated)
£000 £000 £000 £000

Non-current assets Non-current liabilities
Goodwill 141,711 173,487 Trading Group
Trading Group Other interest-bearing loans and borrowings 176,786 275,141
Intangible assets 400,088 432,221 Preference shares 58,178 58,178
Property, plant and equipment 600,500 681,017 Net deferred tax liabilities 122,810 129,044
Investment property 116,442 114,612 Net employee benefits 7,475 9,611
Banking Group Provisions 3,419 -
Intangible assets 7,445 9,175 Banking Group
Property, plant and equipment 253,231 318,390 Other financial liabilities 21,154 26,201
Investment property 15,919 19,454 Deposits and other accounts 299,693 535,828
Reinsurance assets 10,262 11,396 Other interest-bearing loans and borrowings 174,333 165,605
Investments in associates 14,371 23,693 Subordinated loans 49,202 -
Investments in financial assets 1,942,928 2,894,350 Net employee benefits 2,112 62,043
Lending to financial institutions and advances 1,715,703 2,222,911
Net deferred tax asset 39,629 5,866
915,162
1,261,651
5,258,229
6,906,572

Current assets TOTAL LIABILITIES 10,215,823

12,457,315
Trading Group
Tax recoverable 18,323 17,030
Inventories 284,908 328,786
Trade and other receivables 249,154 258,259 TOTAL NET ASSETS 1,685,162
1,928,203
Cash and cash equivalents 154,181 170,121
Banking Group Equity
Tax recoverable 99,257 136,590 Share capital 10 10
Investments in financial assets 2,465,728 2,390,652 Revaluation reserve 239,276 265,196
Trade and other receivables 248,757 299,973 Merger difference reserve 3,165 3,165
Lending to financial institutions and advances 1,764,113 2,647,665 Statutory reserve 226,635 217,273
Cash and cash equivalents 1,337,440 1,229,870 Reserve pertaining to UBL funds 6,884 4,973
Assets classified as held for sale 20,895 - Translation reserves 41,626 134,002
Retained earnings 638,460 661,567
6,642,756 7,478,946
Equity attributable to equity holders of the parent 1,156,056 1,286,186

TOTAL ASSETS 11,900,985 14,385,518 Non-controlling interests 529,106 642,017

Current liabilities TOTAL EQUITY 1,685,162 1,928,203

Trading Group
Tax payable 2,360 3,555
Bank overdraft 107,148 140,649 These financial statements were approved
Trade and other payables 541,204 582,764 by the Board of Directors and were signed on its behalf by:
Other interest-bearing loans and borrowings 111,403 91,658
Provisions 8,365 22,588 Lord Z M Choudrey, CBE, BA (Hons), FCA M Y Sheikh
Banking Group Group Chief Executive Director
Bank overdraft 2,085 6,201
Trade and other payables 263,530 287,079
Deposits and other accounts 7,109,108 8,205,299
Payable to investors of UBL funds 9,536 7,487
Bills payable 143,886 96,844
Other interest-bearing loans and borrowings 967,260 1,734,563
Liabilities directly associated with assets classified
as held for sale 20,016 -
Provisions 14,760 16,977

9,300,661
11,195,664

38 39
Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 Financial statements 2019

Consolidated Statement of Consolidated Statement of

Changes in Equity Changes in Equity
For the year ended 30 June 2019 For the year ended 30 June 2019

Share Share Revaluation Capital Merger Statutory Reserve Translation Retained Total Non- Total
capital premium reserve redemption difference reserve pertaining to reserve earnings attributable controlling
reserve reserve UBL funds to equity interest
holders
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

At 1 July 2017 71 3,055 271,243 39 - 205,124 At 1 July 2017 1,178 225,775 612,618 1,319,103 720,113 2,039,216
Profit for the period - - - - - - Profit for the period 222 - 111,020 111,242 89,960 201,202
Other comprehensive loss for the period - - (5,715) - - - Other comprehensive loss for the period - (91,773) (41,783) (139,271) (114,451) (253,722)

Total comprehensive income for the period - - (5,715) - - - Total comprehensive income for the period 222 (91,773) 69,237 (28,029) (24,491) (52,520)
Issue of ordinary shares 10 - - - - - Issue of ordinary shares - - - 10 - 10
Dividends paid - - - - - - Dividends paid - - (6,000) (6,000) (53,595) (59,595)
Repurchase of own shares - - - - - - Repurchase of own shares 3,573 - (2,471) 1,102 (10) 1,092
Acquisition of subsidiaries Acquisition of subsidiaries
under common control (71) (3,055) - (39) 3,165 - under common control - - - - - -
Transfers - - (332) - - 12,149 Transfers - - (11,817) - - -

At 30 June 2018 (restated) 10 - 265,196 - 3,165 217,273 At 30 June 2018 (restated) 4,973 134,002 661,567 1,286,186 642,017 1,928,203
Adoption of IFRS 9 - - (6,280) - - - Adoption of IFRS 9 - - (30,962) (37,242) (29,361) (66,603)

At 1 July 2018 (restated) 10 - 258,916 - 3,165 217,273 At 1 July 2018 (restated) 4,973 134,002 630,605 1,248,944 612,656 1,861,600
Profit for the period - - - - - - Profit for the period 195 - 54,967 55,162 60,333 115,495
Other comprehensive loss for the period - - (19,640) - - - Other comprehensive loss for the period - (83,171) (33,765) (136,576) (98,848) (235,424)

Total comprehensive (loss) / Total comprehensive (loss) /

income for the period - - (19,640) - - - income for the period 195 (83,171) 21,202 (81,414) (38,515) (119,929)
Dividends paid - - - - - - Dividends paid - - (4,000) (4,000) (46,211) (50,211)
Change in non-controlling interest - - - - - - Change in non-controlling interest - - 15 15 (15) -
Issuance and repurchase - - - - - - Issuance and repurchase 1,716 - - 1,716 1,191 2,907
Transfers - - - - - 9,362 Transfers - - (9,362) - - -
Realisation of exchange translation reserve - - - - - - Realisation of exchange translation reserve - (9,205) - (9,205) - (9,205)

At 30 June 2019 10 - 239,276 - 3,165 226,635 At 30 June 2019 6,884 41,626 638,460 1,156,056 529,106 1,685,162

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Bestway Group Bestway Group
Annual Report & ACCOUNTS 2019 Financial statements 2019

Consolidated Cash Flow Statement Consolidated Cash Flow Statement (continued)

For the year ended 30 June 2019 For the year ended 30 June 2019

Trading Banking Total

Trading Banking Total Trading Banking Total Trading Banking Total
Group Group cashflow
Group Group cashflow Group Group cashflow Group Group cashflow
2019 2019 20192018 2018 2018 2019 2019 2019 2018 2018 2018
(restated) (restated) (restated) (restated) (restated) (restated)
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Cash flows from operating activities Cash flows from financing activities
Profit before tax 50,312 177,365 227,677 101,801 181,686 283,487 Dividends paid to Trading Group - (43,131) (43,131) - (63,361) (63,361)
Dividends paid to owners of the parent (4,000) - (4,000) (6,000) - (6,000)
Adjustments for: Dividends paid to non-controlling interest (16,182) (29,664) (45,846) (20,956) (43,578) (64,534)
Share of profit of associates - (2,899) (2,899) - (2,600) (2,600) Interest received 69 - 69 34 - 34
Finance income (69) - (69) (34) - (34) Interest paid (21,391) - (21,391) (21,948) - (21,948)
Finance costs 21,391 - 21,391 21,948 - 21,948 Proceeds from the issue of shares - 2,908 2,908 - 1,092 1,092
One off gain on acquisition - - - (7,156) - (7,156)
Other gains (2,153) (1,398) (3,551) (4,358) (541) (4,899) Net cash (outflow) from financing activities (93,694) (399,330) (493,024) (121,007) (736,837) (857,844)
Depreciation of property,
plant and equipment 45,686 14,653 60,339 42,182 17,117 59,299 Net increase / (decrease) in cash
Amortisation of intangible assets 38,671 3,509 42,180 39,040 3,805 42,845 and cash equivalents 18,115 456,389 474,504 (40,905) 86,584 45,679
Profit on disposal of property,
plant and equipment (111) - (111) (1,224) - (1,224) Cash and cash equivalents at beginning
Profit on disposal of investment of year 29,472 1,223,669 1,253,141 70,653 1,350,390 1,421,043
property (58) - (58) (892) - (892)
(Decrease) / increase in provisions (11,073) (39,327) (50,400) (2,747) (55,624) (58,371) Effect of foreign exchange rate changes (554) (344,703) (345,257) (276) (213,305) (213,581)
(Decrease) / increase in retirement
benefits (2,836) (53,215) (56,051) (213) 4,528 4,315 Cash and cash equivalents at end of year 47,033 1,335,355 1,382,388 29,472 1,223,669 1,253,141
Impairment of goodwill 3,258 - 3,258 10,055 - 10,055
Impairment of intangible assets 95 - 95 1,123 - 1,123

Net cash inflow from operating

activities before movements
in working capital 143,113 98,688 241,801 199,525 148,371 347,896
Decrease / (increase) in inventories 30,236 - 30,236 (28,636) - (28,636)
Decrease / (increase) in receivables 1,896 (22,025) (20,129) (46,998) (42,899) (89,897)
Decrease / (increase) in lending
to financial institutions and advances - 341,619 341,619 - (923,725) (923,725)
(Decrease) / increase in payables (29,148) 58,880 29,732 61,745 (81,872) (20,127)
Increase / (decrease) in bills payable - 81,048 81,048 - (13,539) (13,539)
Increase / (decrease) in deposits
and other accounts - 755,326 755,326 - 534,513 534,513
Decrease in investments - (361,091) (361,091) - 1,344,701 1,344,701

146,097 952,444 1,098,541 185,636 965,550 1,151,186

Tax paid (27,213) (76,727) (103,940) (45,298) (102,767) (148,065)

Net cash inflow from operating activities 118,884 875,717 994,601 140,338 862,783 1,003,121

Cash flows from investing activities
Proceeds on disposal of property,
plant and equipment 3,680 6,266 9,946 4,608 10,622 15,230
Proceeds on disposal of
investment property - 1,572 1,572 5,412 2,182 7,594
Purchases of property, plant
and equipment (46,804) (23,741) (70,545) (125,097) (41,801) (166,898)
Purchase of investment property - (477) (477) (38) (3,479) (3,517)
Purchase of intangible assets (7,082) (3,618) (10,700) (1,829) (6,886) (8,715)
Acquisition of subsidiary net of cash - - - (6,653) - (6,653)
Repayment of borrowings from third parties (52,306) (387,304) (439,610) (72,188) (630,990) (703,178)
Borrowings from related parties 116 - 116 51 - 51
Borrowings from subordinated loan - 57,861 57,861 - - -
Dividends received from Banking Group 43,131 - 43,131 63,361 - 63,361

Net cash (outflow) from investing activities (7,075) (19,998) (27,073) (60,236) (39,362) (99,598)

42 43
Bestway Group
Annual Report & ACCOUNTS 2019

Company
information

Registered number 11003305

It has been a challenging twelve months
and it is likely that the headwinds our
Registered Office 2 Abbey Road businesses have faced will remain for
Park Royal
London the near future. Notwithstanding these
United Kingdom pressures, we have been able to show the
NW10 7BW
resilience of our business model and all of
Directors Sir MA Pervez OBE HPk (Chairman) our businesses have been able to maintain
Lord Z M Choudrey CBE, SI Pk, BA (Hons), FCA
(Group Chief Executive)
market share and are well positioned to
MY Sheikh grow going forward and create value for
R Pervez, ACA
D Pervez, BA (Hons), MA Oxon, Solicitor
all stakeholders.
H Z Choudrey, MA (Hons) Cantab, ACA

Secretary RY Sheikh, BA (Hons), Solicitor

Auditor PricewaterhouseCoopers LLP Lord Z M Choudrey CBE, SI Pk, BA (Hons), FCA
The Atrium Group Chief Executive
1 Harefield Road
Uxbridge
Middlesex
UB8 1EX

Solicitors Hogan Lovells International LLP

Atlantic House
Holborn Viaduct
London
EC1A 2FG

44