Bestway Holdings Plc Annual Report

Bestway (Holdings) Limited Annual Report & Accounts 2013

13483_Bestway_Holdings_Group_AR_Cover_AW.indd 1-2

27/03/2014 18:41

Images opposite clockwise from top left: Bestway Cement Limited plant – Pakistan Bestway (Holdings) Group head office – London, United Kingdom Bestway Wholesale – Luton, United Kingdom

Contents Chairman’s Statement 02 Group Chief Executive’s Review 04 Directors’ Report 16 Statement of Directors’ responsibilities in respect 18 of the Directors’ Report and the financial statements Independent Auditor’s report to the members 19 of Bestway (Holdings) Limited Consolidated profit and loss account 20 Consolidated balance sheet 21 Company balance sheet 22 Consolidated cash flow statement 23 Consolidated statement of total recognised 24 gains and losses Notes 25 68 Depot information Company information 72

Designed by Spinach spinachdesign.com

13483_Bestway_Holdings_Group_AR_Cover_AW.indd 3-4

27/03/2014 18:41

2013 Annual Report & Accounts

estway (Holdings) Limited continues B to grow from strength to strength.

The business has successfully evolved and diversified over the years, and now comprises of Bestway Wholesale (the UK’s 2nd largest Cash and Carry operator), Bestway Cement Limited (the 2nd largest cement manufacturer in Pakistan) and United Bank Limited (the 2nd largest private bank in Pakistan).

Welcome to the Bestway (Holdings) Limited 2013/14 Annual Report.

Introduction 01

13483_Bestway_Holdings_Group_AR_Text_AW.indd 1

27/03/2014 18:35

Bestway (Holdings) Limited

Chairman’s Statement

“ P rofit before tax increased by 5.1% to £164.35 million.”

02

13483_Bestway_Holdings_Group_AR_Text_AW.indd 2

27/03/2014 18:35

2013 Annual Report & Accounts

On behalf of the Board of Directors, I am pleased to place before you the consolidated financial statements of Bestway (Holdings) Limited and its subsidiaries (the Group) for the year ended 30 June 2013.

Business overview Our unique corporate values and culture are the key ingredients of our continued success. Our Board led by the Group Chief Executive has put into place an ambitious plan to secure long-term growth of our businesses. This well articulated plan has been contributing to greater efficiency, stronger supplier partnerships, deeper customer loyalty and increased engagement with our global workforce; all of which ultimately generates and enhances long term value.

Performance Group turnover for the year ended 30 June 2013 was flat at £1.96 billion compared with £1.95 billion in the previous year.

Profit before tax increased by 5.1% to £164.35 million compared to £156.41 million in the previous year. This was primarily due to growth in Bestway Cement Limited (in which the group own 55.32%). The Group’s fixed assets increased to £904.03 million compared to £881.91 million in the previous year predominately as a result in the increased value of the group’s share in United Bank Limited (UBL).

In December 2012 Bestway won the Federation of Wholesale Distributors (FWD) Gold Medal Award Medal for Wholesale Service to Retail.

During the period under review Batleys launched its first fully interactive transactional website in March 2013. This new delivery channel provides our customers instant access to over 17,000 product lines.

In Pakistan, Bestway Cement operations have experienced robust growth with turnover increasing by 12.5% to £177.7 million and Bestway Cement contributing £57.9 million towards Group operating profit, an impressive increase of 33.4%.

In December 2012 Turkey’s Council of Quality & Environment granted its seal of approval to Bestway Cement’s Portland cement thus allowing Bestway to market its cement in the world’s fifth largest cement producing nation.

During the period under review our banking subsidiary UBL experienced a period of strong growth with the asset base increasing by 19.0% to US$9.89 billion and deposits growing by 18.9% to US$7.77 billion for the year ending December 2012.

In November 2012, UK’s Banker Magazine declared UBL ‘The Bank of the Year in Pakistan 2012’.

Social responsibility During the period under review Bestway Group has been recertified under the Carbon Trust Standard for achieving further reduction in carbon emissions over the last two years. Notwithstanding the growth of its UK business, the effectiveness of its energy efficiency strategy has improved, resulting in an average reduction of 5.6% since the last assessment in 2010.

In November 2012 our Group Chief Executive launched GroceryAid’s 24/7 Freephone Welfare Helpline. GroceryAid with whom Bestway Foundation has a long and historical association is at the forefront of providing welfare services to former members of the grocery industry that have fallen on hard times.

In June 2013 Bestway Group organised its 19th annual charity event at Royal Ascot. The chosen charity this year was Dyslexia Action.

Dyslexia Action is the country’s leading provider of services and support for people with dyslexia and literacy difficulties.

Bestway Group donated £587,000 to the Bestway Foundation in the UK. The Bestway Foundation continues to provide vital support to university students and to local, national and international charities.

Bestway Cement donated £289,000 to Bestway Foundation in Pakistan to assist the charitable trust in managing village schools; providing funding for universities and hospitals in the country.

Outlook Despite current global economic uncertainties, we remain committed to delivering value for stakeholders and growing our business while making investments for the future. We shall continue to provide great quality, value and services, and remain true to our values and corporate heritage.

In conclusion on behalf of the Board of Directors, I thank our supplier partners; our customers and staff for their enthusiasm, professionalism and dedication.

Sir MA Pervez, OBE HPk Chairman 31 January 2014

In August 2012 the State Bank of Pakistan gave UBL permission to launch operations in India. With the State Bank’s permission, UBL finds itself in the enviable position of being the only private sector bank from Pakistan to be granted a licence to commence operations in India.

Chairman’s Statement 03

13483_Bestway_Holdings_Group_AR_Text_AW.indd 3

27/03/2014 18:35

Bestway (Holdings) Limited

Group Chief Executive’s Review

04

13483_Bestway_Holdings_Group_AR_Text_AW.indd 4

27/03/2014 18:35

2013 Annual Report & Accounts

On behalf of the Board of Directors, I am pleased to present the audited financial statements for Bestway (Holdings) Limited for the year ended 30 June 2013.

Review of business Strategic objectives In the past twelve months, the business environment in the UK and globally has faced many challenges. I am pleased to say that the inherent strength of the Group ensured that all our businesses maintained their respective market shares during the year under review.

Bestway Wholesale continues to be the UK’s largest trade only wholesaler.

Key highlights –T he Group’s turnover for the year ended 30 June to £1.96 billion. ll our businesses were profitable –A for the year under review, and the overall Group profit before tax increased by 5.1% to £164.3 million.

–T he Group’s total loans and overdrafts decreased by £98.0 million during the period under review.

Our cement operations are still the second largest in Pakistan and United Bank Limited (UBL) remains the second largest private bank in Pakistan.

Group financial performance During the year under review, turnover for the wholesale business was £1.78 billion, while turnover for the cement business in Pakistan saw an increase of 12.5% to £177.7 million. Overall, the Group’s turnover for the year ended 30 June 2013 increased by £4.8 million to £1.96 billion.

All our businesses were profitable for the year under review, and the overall Group profit before tax increased by 5.1% to £164.3 million as compared to £156.4 million in 2012.

Profit before tax for the wholesale business was £30.4 million, a decrease of 17.6% over last year. The decrease was due to the prevalent economic condition which adversely effected consumer demand which in turn added pressure on margins.

Bestway Cement Limited, 55.32% owned

by Bestway (Holdings) Limited, continued to trade well and saw its profit before tax increase by 92.9% from £25.8 million in 2012 to £49.9 million. This was due to increased volumes, improved gross profit margins coupled with a reduction in finance costs and increasing cost efficiency.

Despite a low interest rate environment as well as regulatory changes that increased the cost of deposits and adversely affected the net interest margin, UBL’s results remained flat in terms of Pakistan Rupee.

However, due partly to the devaluation of the Rupee against Sterling, the Group’s share of profit from UBL during the year under review decreased by 12.5% from £96.9 million in 2012 to £84.9 million.

Fixed assets after depreciation as at 30 June 2013 stood at £458.7 million, compared to £466.3 million in the previous year. During the period under review, fixed asset additions amounted to £14.3 million; these included investment in the launch of delivered operations from two depots.

The Group’s total loans and overdrafts decreased by £98.0 million during the period under review. The Group managed to reduce debt in the UK and Pakistan by £42.0 million and £56.7 million respectively, which consequently reduced the related financial charges in the Group.

Image left: ZM Choudrey Chief Executive Group Chief Executive’s Review 05

13483_Bestway_Holdings_Group_AR_Text_AW.indd 5

27/03/2014 18:35

Bestway (Holdings) Limited

“ We’ve reduced our margins to support our customers who are facing increased competition from the high street retailers.”

06

13483_Bestway_Holdings_Group_AR_Text_AW.indd 6

27/03/2014 18:35

2013 Annual Report & Accounts

Our mission is “Building Business for the Independents” and the Group has endeavoured to play its role in supporting the independents, regardless of their size, as we firmly believe that their success is our success.

Wholesale business Turnover in our wholesale business amounted to £1.78 billion, a decrease of £8.6 million from 2012. Export sales increased by 12.3% to £30.2 million.

The Group maintained its market share in the food, drinks and wholesale sector.

Profit before tax however, decreased by £6.5 million to £30.4 million as we reduced our margins to support our customers who are facing increased competition from the high street retailers. Trading stock as at 30 June 2013 amounted to £134.9 million as compared to £151.1 million in the previous year.

M Younus Sheikh Managing Director of Wholesale Business

Key highlight – In December 2012 Bestway won the Federation of Wholesale Distributors (FWD) Gold Medal Award Medal for Wholesale Service to Retail.

Our mission is “Building Business for the Independents” and the Group has endeavoured to play its role in supporting the independents, regardless of their size, as we firmly believe that their success is our success. We continue to support our customers by offering the lowest prices and the widest product range in the wholesale sector.

In August 2012, the Group announced an investment plan of £10 million to expand its Bestpets division over the next three years with the addition of major hubs across the country. During the year, new hubs were opened in Newcastle and Nottingham whilst the hubs in Exeter and Luton were doubled in size. The Group has also developed a new site in Glasgow.

The investment plan will roll out across the Group, and will include a considerable enhancement of the highly successful pet retail club, which allows traders to join our ‘club’ and enjoy extra promotional offers from their membership. Other elements of the new plan will also see increasing numbers of sales development managers and depot staff along with additional delivery vehicles joining the existing fleet to ensure smoother and more regular deliveries.

During the year the Group has invested in setting up its own chilled distribution facility at Coventry. This facility became operational in October 2012 with chilled products being distributed directly to our depots. Six months later the service was extended to our Best One retailers.

£1.78bn

12.3%

£4m

Turnover for wholesale business

Increase in export sales

Our average weekly web sales… and growing

Group Chief Executive’s Review 07

13483_Bestway_Holdings_Group_AR_Text_AW.indd 7

27/03/2014 18:35

Bestway (Holdings) Limited

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.

Wholesale business (continued) Whilst our commitment to the wholesale sector is second to none, we are also 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 our key focus areas, we launched Bestway Batleys Foodservice 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.

During the year, additional investment was made to expand delivered operations (Drinks Direct and Bestway Batleys Foodservice) to our Brighton and Newcastle depots, which has proved successful.

The transactional Bestway and Batleys websites have been successful. Currently our web sales average £4 million per week and are growing. Our dedicated ecommerce team has now developed a specialist app for our customers for both Android and iOS platforms.

The third pillar of growth is Symbol & Club Retailing. Our retail clubs are the largest in the UK with a current membership of over 3,500. Pet retail club membership has increased to 526. The total turnover of our retail clubs is now over £0.5 billion.

In November 2013, we launched the My Rewards Scheme aimed towards the Best One members. This unique retailer rebate scheme will help the retailer in increasing their business.

08

13483_Bestway_Holdings_Group_AR_Text_AW.indd 8

27/03/2014 18:35

2013 Annual Report & Accounts

“ In August 2012, the group announced an investment plan of £10 million to expand its Bestpets division over the next three years with the addition of major hubs across the country.”

Group Chief Executive’s Review 09

13483_Bestway_Holdings_Group_AR_Text_AW.indd 9

27/03/2014 18:35

Bestway (Holdings) Limited

During the year, Bestway Cement Limited’s operating profits increased by 33.4% to

£57.9 million Bestway Cement Limited (owned 55.32%

by Bestway (Holdings) Limited) During the period under review Bestway Cement Limited’s despatches increased by 5.8% to 4,437,731 tonnes from 4,192,512 tonnes in the corresponding period last year.

As construction activity picked up, it led to increased demand of cement in the domestic market which consequently led to an increase in the net retention price.

Whilst the overall exports of the industry declined, Bestway Cement Limited’s export sales increased by 12.6% to 988,366 tonnes in 2013 as compared to 877,934 tonnes in 2012.

Despite a decrease in exports to Afghanistan, we were able to maintain our position as the largest exporter of cement to the region.

Our exports to India and other countries increased as Bestway explored new markets including South Africa and Mauritius.

Turnover net of excise duty, rebates and discounts to customers amounted to £177.7 million compared to £158.0 million for 2012, an increase of 12.5%. The increase in turnover is due to the increase in volumes and better retention price.

During the year, operating profits increased by 33.4% to £57.9 million as compared to £43.4 million in 2012. Due to healthy cash flows and lower interest rates financial charges were reduced from £17.6 million in 2012 to £8.2 million in 2013.

Bestway Cement reduced its total debt from £105.6 million in 2012 to £48.9 million, a decrease of £56.7 million. Consequently, 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.

Key highlights – During the period under review Bestway Cement Limited’s despatches increased by 5.8% to 4,437,731 tonnes.

– Bestway Cement reduced its total debt from £105.6 million in 2012 to £48.9 million, a decrease of £56.7 million.

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 31 December 2012.

During the year, Bestway invested in additional Chinese boilers to supplement the Waste Heat Recovery Plant at Chakwal. These boilers were successfully commissioned in October 2013.

10

13483_Bestway_Holdings_Group_AR_Text_AW.indd 10

27/03/2014 18:35

2013 Annual Report & Accounts

“ W hilst the overall exports of the industry declined, Bestway Cement Limited’s export sales increased by 12.6% to 988,366 tonnes in 2013.”

Group Chief Executive’s Review 11

13483_Bestway_Holdings_Group_AR_Text_AW.indd 11

27/03/2014 18:35

Bestway (Holdings) Limited

“ U BL was awarded Bank of the Year in Pakistan for 2013

by Banker Magazine for the second year running.�

12

13483_Bestway_Holdings_Group_AR_Text_AW.indd 12

27/03/2014 18:35

2013 Annual Report & Accounts

UBL’s total assets as at 31 December 2012 were

$9.89bn an increase of 19.0%.

United Bank Limited UBL’s 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.

During the year under review, the bank added 64 branches to its network in addition to 100 branches that were added a year before. 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.

During the year under review, regulatory changes in Pakistan increased the cost of deposits and coupled with the low interest rate environment, UBL’s net interest income UBL was awarded Bank of the Year in declined. Despite this, UBL’s performance Pakistan for 2013 by Banker Magazine for remained broadly flat in local currency terms. the second year running. UBL was singled out for particular praise as “UBL has been However, due to the continued devaluation working hard to overcome challenges and of the Pakistan Rupee against Sterling, our push ahead with its own strategy for the share of UBL profit before tax has decreased local market achieving 35% growth in non from £97.0 million in 2012 to £84.9 million funded income and significant growth in in 2013, a decrease of 12.5%.

UBL Omni, its branchless proposition.”

Key highlights During the year under review: – The bank added 64 branches to its network.

– 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 Group acquired additional shareholding in UBL in September and December 2013, thus increasing its shareholding by 8.3% to 59.25% at a cost of $95 million.

Group Chief Executive’s Review 13

13483_Bestway_Holdings_Group_AR_Text_AW.indd 13

27/03/2014 18:35

Bestway (Holdings) Limited

14

13483_Bestway_Holdings_Group_AR_Text_AW.indd 14

27/03/2014 18:35

2013 Annual Report & Accounts

“ In the last twelve months we have continued to demonstrate the strength of our business model and to create value for all our stakeholders.”

Financial performance indicators in the cement business are net retention price, daily despatches and cost of production.

The non-financial performance indicators are staff turnover, staff / supplier / customer satisfaction, health and safety reports, among others. The Board is of the belief that the monitoring of the above-mentioned indicators is an effective aspect of business performance review.

Principal risks & uncertainties Working capital, capital expenditure and major acquisitions are funded by the Group’s cash flows and banking facilities. In light of the prevalent economic environment, regular monitoring of banking requirements, cash flow and net debt is undertaken.

One of the commercial risks faced by the Group is the increasing influence of multiples in the wholesale sector, which consequently imposes pressure on margins. Another risk that the wholesale division of the Group faces is the duty fraud on alcohol.

Due to the Group’s presence in Pakistan, it is exposed to foreign exchange risk.

Additionally, the increase in power costs in Pakistan continues to pose a threat to the cement sector.

Key performance indicators The Board of Directors uses many performance indicators, both financial and non financial, to monitor the Group’s position.

Among the financial performance indicators within the wholesale business, the most important ones are gross profit margin, sales per depot, sales per department, wages per depot, stock availability and stock levels.

Future outlook The focus of the Group’s wholesale business on organic growth is supported by investments in existing and new initiatives. Despite the tough trading conditions, we are confident that we will continue to provide maximum support to our customers by delivering the best prices, value and service to them.

In Pakistan we remain committed to our long term investments. With the newly elected pro investment government in Pakistan, we expect an increase in economic activity which should have a positive impact on cement demand in the domestic market.

The recent EC Certification that Bestway has received has opened up new export markets in the European Community and countries where EC certification is required.

We see challenges ahead of us both in UK and in Pakistan as the respective economies go through an economic stabilisation phase.

We will continue to enhance our market share both in UK wholesale sector and in the Pakistan cement and banking sectors whenever suitable opportunities arise.

In the last twelve months we have continued to demonstrate the strength of our business model and to create value for all our stakeholders. This has been accomplished with the continued support of our employees and our highly successful relationships with suppliers and customers.

I would like to thank all our suppliers and employees for their commitment to the business. I would also like to thank my fellow directors for their contribution to our strategic deliberations.

ZM Choudrey, BA (Hons), FCA Group Chief Executive 31 January 2014

Pakistan has also been given the Generalized System of Preferences (GSP) plus status which will help tremendously Pakistan’s exports to the EU. UBL continues its focus on managing its asset portfolio, improving asset quality and expanding its network both through branches and through Omni branchless banking.

Group Chief Executive’s Review 15

13483_Bestway_Holdings_Group_AR_Text_AW.indd 15

27/03/2014 18:35

Bestway (Holdings) Limited

Directors’ Report

1.

2.

3.

4.

5.

6.

7.

8.

1. Sir MA Pervez, OBE HPk Chairman 2. ZM Choudrey, BA (Hons), FCA Chief Executive 3. MY Sheikh Managing Director 4. AK Bhatti Director 5. AK Chaudhary Director 6. AM Chaudhary, MBA Director 7. R Pervez, ACA Director 8. D Pervez, BA (Hons), FRSA MA Oxon, Solicitor Director and Company Secretary 16

13483_Bestway_Holdings_Group_AR_Text_AW.indd 16

27/03/2014 18:35

2013 Annual Report & Accounts

The directors submit their report and the financial statements of Bestway (Holdings) Limited for the year ended 30 June 2013.

Principal activities The principal activity of the Group during the year was the operation of cash and carry warehouses in the UK supplying groceries, tobacco, wines and spirits, beers, and other household goods, together with property investment in the UK, the production and sale of cement in Pakistan, and general insurance through its subsidiary UBL Insurers Limited. At the balance sheet date the Group held 50.95% (2012: 50.95%) of the issued share capital of United Bank Limited which is involved in commercial and retail banking primarily in Pakistan and the Gulf. The Group purchased a further 8.3% shareholding in United Bank Limited after the balance sheet date, giving the Group a total shareholding of 59.25% as of January 2014.

Review of the business and future developments A detailed review of the business and an indication of likely future developments are contained in the Chairman’s Statement and Group Chief Executive’s Review on pages 4 to 15.

Results and dividends The profit for the year after taxation was £109.4 million (2012: £104.3 million).

The directors do not recommend the payment of a dividend (2012: £nil).

Directors The directors who held office during the year were as follows: Sir MA Pervez, OBE HPk ZM Choudrey, BA (Hons), FCA MY Sheikh AK Bhatti AK Chaudhary AM Chaudhary, MBA R Pervez, ACA D Pervez, BA (Hons), FRSA MA Oxon, Solicitor

Financial instruments The Group’s policy is to finance its operations on a medium term basis from retained profits, inter-company borrowings and bank facilities. Additional uncommitted borrowing and overdraft facilities are utilised for short term financing requirements.

The financial instruments utilised by the Group are borrowings, short-term cash deposits and items such as trade creditors which arise directly from its operations.

Borrowing and deposit facilities are on a floating rate basis. Further details are included in note 22.

Employee involvement and disabled persons The Group informs and consults regularly with employees on matters affecting their interests with a view to achieving a common awareness of the financial and economic factors affecting its performance. The views expressed by employees have been taken into account when making decisions where appropriate.

The Group is an equal opportunities employer and its policies for the recruitment, training, career development and promotion of employees are based on the relevant merits and abilities of the individuals concerned. It recognises its responsibilities towards disabled persons and gives full and fair consideration to applications for employment from them and, so far as particular disabilities permit, will give continued employment to any existing employee who becomes disabled. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Policy and practice on payment of creditors The Group aims to settle supplier accounts in accordance with their individual terms of business, and as such no specific code or standard on payment practice is followed.

At the year end there were 39 days (2012: 41 days) purchases in trade creditors.

Donations The Group made charitable donations of £876,000 (2012: £981,000) to the Bestway Foundation whose objectives are the advancement of education, the relief of sickness, the preservation and protection of health and the relief of suffering of the old, disabled and needy. Donations of £11,300 (2012: £7,900) were made to other charities. The Group made political donations of £67,000 (2012: £85,000) to the Conservative party.

Disclosure of information to auditors The directors who held office at the date of the approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditors are unaware, and each director has taken all steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

Auditors Pursuant to Section 487 of the Companies Act 2006, the auditors will be deemed to be reappointed and KPMG LLP will therefore continue in office.

By order of the board

ZM Choudrey, BA (Hons), FCA Director 31 January 2014 2 Abbey Road Park Royal London NW10 7BW

Directors’ Report 17

13483_Bestway_Holdings_Group_AR_Text_AW.indd 17

27/03/2014 18:35

Bestway (Holdings) Limited

Statement of directors’ responsibilities in respect of the Directors’ Report and the financial statements

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

– select suitable accounting policies and then apply them consistently; – make judgments and estimates that are reasonable and prudent;

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the group and parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

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 parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the directors are required to:

– state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; – prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

18 Statement of Directors’ responsibilities

13483_Bestway_Holdings_Group_AR_Text_AW.indd 18

27/03/2014 18:36

2013 Annual Report & Accounts

Independent Auditor’s report to the members of Bestway (Holdings) Limited

We have audited the financial statements of Bestway (Holdings) Limited for the year ended 30 June 2013 set out on pages 20 to 67.

Opinion on financial statements In our opinion the financial statements:

The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).

– g ive a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 June 2013 and of the group’s profit for the year then ended;

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

– have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and

Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 18, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).

Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

– have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: – adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or – the parent company financial statements are not in agreement with the accounting records and returns; or – certain disclosures of directors’ remuneration specified by law are not made; or – we have not received all the information and explanations we require for our audit.

Peter Selvey Senior Statutory Auditor for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants

KPMG LLP 8 Salisbury Square London EC4Y 8BB United Kingdom 31 January 2014 Independent Auditors report 19

13483_Bestway_Holdings_Group_AR_Text_AW.indd 19

27/03/2014 18:36

Bestway (Holdings) Limited

Consolidated profit and loss account for the year ended 30 June 2013

Turnover Cost of sales

Note

2013 ÂŁ000

2012 ÂŁ000

2

1,957,186 (1,809,761)

1,952,373 (1,818,566)

147,425 (64,904)

133,807 (60,083)

82,521

73,724

9,508

9,167

92,029

82,891

84,873

96,972

Gross profit Administrative expenses

Other operating income

4

Group operating profit Share of operating profit: Joint ventures Underlying operating profit Amortisation of goodwill Share options expense Operating profit Interest receivable Interest payable Profit on ordinary activities before taxation Taxation: Group Joint ventures

Profit on ordinary activities after taxation Minority interest Profit for the financial year attributable to shareholders

12 187,929 (9,029) (1,998)

190,536 (9,029) (1,644)

5 6

176,902 1,362 (13,918)

179,863 1,604 (25,054)

3-7

164,346

156,413

(23,502) (31,488)

(15,427) (36,733)

(54,990)

(52,160)

30

109,356 (18,873)

104,253 (13,936)

20, 21

90,483

90,317

8

The results shown above are derived entirely from continuing operations.

The notes on pages 25 to 67 form part of these financial statements.

20 Consolidated profit and loss account

13483_Bestway_Holdings_Group_AR_Text_AW.indd 20

27/03/2014 18:36

2013 Annual Report & Accounts

Consolidated balance sheet at 30 June 2013

Fixed assets Intangible assets Tangible assets Investments Investments in joint ventures: Goodwill Share of gross assets Share of gross liabilities

Current assets Stocks Debtors: due within one year Debtors: due after more than one year

Investments Cash at bank and in hand

Creditors: amounts falling due within one year

Note

2013 £000

2012 £000

10 11

7,832 458,662

8,286 466,294

12

13 14 14

63,206 3,687,707 (3,313,373)

72,235 3,274,043 (2,938,947) 437,540

407,331

904,034

881,911

170,071 75,941 683

15

16

Net current liabilities Total assets less current liabilities

183,974 70,758 719

76,624

71,477

5,572 47,400

4,959 49,457

299,667

309,867

(306,155)

(349,498)

(6,488)

(39,631)

897,546

842,280

Creditors: amounts falling due after more than one year

17

(103,999)

(180,578)

Provisions for liabilities

18

(28,292)

(11,811)

765,255

649,891

(4,054)

(5,885)

761,201

644,006

Net assets excluding pension liabilities Pension scheme liability

29

Net assets including pension liabilities Capital and reserves Called up share capital Share premium account Revaluation reserve Investment property revaluation reserve Capital redemption reserve Profit and loss account

19 20 20 20 20 20

96 3,055 35,864 32,354 14 610,848

96 3,055 21,511 32,354 14 526,442

Minority interest

21 30

682,231 78,970

583,472 60,534

761,201

644,006

Shareholders’ funds The notes on pages 25 to 67 form part of these financial statements. These financial statements were approved by the board on 31 January 2014 and were signed on its behalf by: Z M Choudrey, BA (Hons), FCA M Y Sheikh Director Director

Consolidated balance sheet 21

13483_Bestway_Holdings_Group_AR_Text_AW.indd 21

27/03/2014 18:36

Bestway (Holdings) Limited

Company balance Sheet at 30 June 2013 Note

2013 £000

2012 £000

11 12

115,463 340,413

116,014 340,413

455,876

456,427

7,287 20,000

23,224 25,000

27,287

48,224

573 6,673

519 9,227

34,533

57,970

(86,537)

(98,436)

Net current liabilities

(52,004)

(40,466)

Total assets less current liabilities

403,872

415,961

Fixed assets Tangible assets Investments

Current assets Debtors: due within one year Debtors: due after more than one year

Investments Cash at bank and in hand

Creditors: amounts falling due within one year

14 14

15

16

Creditors: amounts falling due after more than one year

17

(66,962)

(117,044)

Provisions for liabilities

18

(759)

(746)

336,151

298,171

19 20 20 20 20 20

96 3,055 1,401 6,482 14 325,103

96 3,055 1,549 6,482 14 286,975

21

336,151

298,171

Net assets Capital and reserves Called up share capital Share premium account Revaluation reserve Investment property revaluation reserve Capital redemption reserve Profit and loss account Shareholders’ funds

The notes on pages 25 to 67 form part of these financial statements. These financial statements were approved by the board on 31 January 2014 and were signed on its behalf by: Z M Choudrey, BA (Hons), FCA M Y Sheikh Director Director Company registered number: 01392861

22 Company balance sheet

13483_Bestway_Holdings_Group_AR_Text_AW.indd 22

27/03/2014 18:36

2013 Annual Report & Accounts

Consolidated cash flow statement for the year ended 30 June 2013

Cash flow from operating activities Dividends received from joint ventures Returns on investments and servicing of finance Taxation Capital expenditure and financial investment

Note

2013 ÂŁ000

2012 ÂŁ000

23a

98,788 35,953 (17,348) (9,854) (13,805)

96,781 33,906 (23,600) (9,559) (13,352)

93,734

84,176

(688) (95,766)

(285) (66,935)

(2,720)

16,956

(2,720) 95,766 688

16,956 66,935 285

93,734 3,250

84,176 8,517

96,984

92,693

23b 23b

Cash inflow before management of liquid resources and financing Management of liquid resources Financing

23b 23b

(Decrease) / increase in cash in the year Reconciliation of net cash flow to movement in net debt (Decrease) / increase in cash Cash outflow from movement in debt Cash outflow from movement in liquid resources Change in net debt resulting from cash flows Movement due to exchange rate

23c 23c

23c

Movement in net debt in the period Net debt at the start of the period

23c

(190,698)

(283,391)

Net debt at the end of the period

23c

(93,714)

(190,698)

Consolidated cash flow statement 23

13483_Bestway_Holdings_Group_AR_Text_AW.indd 23

27/03/2014 18:36

Bestway (Holdings) Limited

Consolidated statement of total recognised gains and losses for the year ended 30 June 2013

Profit for the financial year after minority interests Group Share of joint ventures

Actuarial gains / (losses) recognised in the pension scheme (note 29) Deferred tax arising on (gains) / losses in the pension scheme (note 29) Net unrealised surplus on revaluation of properties (note 20) Exchange differences on retranslation of net investments Total gains recognised for the year

2013 £000

2012 £000

37,099 53,384

30,078 60,239

90,483

90,317

1,793 (412) 14,501 (2,673)

(3,202) 768 1,606 (18,991)

103,692

70,498

Unrealised surplus on revaluation of properties includes £14.50 million (2012: £2.20 million) in relation to joint ventures.

Note of consolidated historical cost profits and losses for the year ended 30 June 2013 2013 £000

2012 £000

164,346

156,413

148

148

Historical cost profit on ordinary activities before taxation

164,493

156,561

Historical cost profit for the year retained after taxation and minority interests

83,896

90,465

Reported profit on ordinary activities before taxation Difference between historical cost depreciation charge and the actual depreciation charge

24 Consolidated statement of total recognised gains and losses / Note of consolidated historical cost profits and losses

13483_Bestway_Holdings_Group_AR_Text_AW.indd 24

27/03/2014 18:36

2013 Annual Report & Accounts

Notes (forming part of the financial statements) 1. Accounting policies The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Group’s financial statements, except as noted below.

Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules, modified to include the revaluation of certain land and buildings / certain assets. The Group has applied the transitional rules contained in FRS 15 Tangible fixed assets to retain previous valuations as the basis on which certain of these assets are held.

The Group accounts have been prepared on a going concern basis.

Notwithstanding the net current liabilities of £6.49 million, which is a common operating position in the cash and carry sector, the directors are confident that the group has access to sufficient financial resources to meet its liabilities as they fall due.

The Directors have considered compliance with covenants within certain UK loan agreements and are satisfied that no events of default have occurred. The Directors are confident that Bestway Cement Limited can meet capital and interest payments as they fall due, and that no default events will be experienced in the foreseeable future.

Basis of consolidation The Group financial statements consolidate the financial statements of Bestway (Holdings) Limited and all its subsidiaries made up to 30 June 2013. Under section 408 of the Companies Act 2006, the company is exempt from the requirement to present its own profit and loss account.

Accounting for acquisitions and disposals The results of businesses acquired or disposed of are consolidated from or to the effective date of acquisition or disposal. On the acquisition of subsidiary undertakings or businesses, the acquisition cost is allocated against the fair value of net assets acquired, after adjustments to bring accounting policies into line with the Group.

Joint venture A joint venture is an undertaking in which the Group has a long-term interest and over which it exercises joint control. The Group’s share of the profits of the joint venture is included in the consolidated profit and loss account and its interest in their net assets is included in investments in the consolidated balance sheet. Goodwill arising on the acquisition of a joint venture is included in the carrying value of the investment but is accounted for as detailed below.

Goodwill and amortisation Goodwill represents the excess or shortfall of the cost of an acquisition over the fair value attributed to the net assets at acquisition which is capitalised.

If the net assets and goodwill were to exceed the value-in-use, an impairment would be deemed to have occurred and the resulting write-down in the goodwill would be charged to the profit and loss account immediately.

Goodwill arising on acquisitions is written off on a straight line basis over its useful economic life, which is expected not to exceed 20 years, or the period in which the assets acquired are recovered, whether through depreciation or sale. Provision is made for any impairment.

Negative goodwill arising on business combinations in respect of acquisitions is included within fixed assets and released to the profit and loss account in the periods in which the fair values of the non-monetary assets purchased on the same acquisition are recovered, whether through depreciation or sale.

Tangible fixed assets Fixed assets include certain properties professionally valued in prior years by Chartered Surveyors on an existing use open market basis, in accordance with the Statement of Assets Valuation Practice No 4 and the Guidance Notes of the Royal Institute of Chartered Surveyors. Other fixed assets are stated at historical cost.

Depreciation is provided on all tangible fixed assets other than freehold and long leasehold land, and freehold and leasehold investment properties where the lease has over 20 years to run, at rates calculated to write each asset down to its estimated residual value over its expected useful life as follows: Freehold and long leasehold properties 2% straight line Short leasehold properties

over life of lease

Plant and machinery

5–25% straight line or reducing balance

Fixtures, fittings and equipment

10–25% reducing balance

Motor vehicles

20–25% reducing balance

The carrying values of tangible fixed assets are subject to annual review and any impairment is charged to the profit and loss account.

In accordance with Statement of Standard Accounting Practice No.19, the Group’s investment properties have been revalued in the current year to market valuations.

In accordance with Statement of Standard Accounting Practice No.19, no depreciation is provided in respect of freehold investment properties and leasehold investment properties where the lease has over 20 years to run.

This treatment, as regards certain of the Group’s investment properties, may be a departure from the requirements of the Companies Act concerning depreciation of fixed assets.

The useful economic life of the goodwill arising on each acquisition is determined at the time of acquisition. In accordance with FRS 11, impairment of the goodwill is evaluated by comparing the present value of the expected future cash flows, excluding financing and tax, (the ‘value-in-use’) to the carrying value of the underlying goodwill.

Notes 25

13483_Bestway_Holdings_Group_AR_Text_AW.indd 25

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

1. Accounting policies (continued) However, these properties are not held for consumption but for investment and the directors consider that systematic annual depreciation would be inappropriate. The accounting policy adopted is therefore necessary for the financial statements to give a true and fair view. Depreciation or amortisation is only one of the many factors reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or quantified.

Stocks and work in progress Stocks and work in progress are valued at the lower of cost and net realisable value. Work in progress comprises the cost of direct materials, labour and appropriate manufacturing overheads.

Provision is made for obsolete and slow moving items.

Stores, spares and loose tools are valued at the lower of moving average cost and net realisable value, while items considered obsolete are carried at nil value. Net realisable value signifies estimated selling price less costs necessary to be incurred to affect such a sale.

Lease payments are treated as consisting of capital and interest elements and the interest is charged to the profit and loss account in proportion to the remaining balance outstanding.

All other leases are “operating leases” and the annual rentals are charged to the profit and loss account on a straight line basis over the lease term.

Post retirement benefits The Group makes contributions towards the personal money purchase pension schemes of certain directors and senior employees. Contributions to the defined contribution fund are charged to the profit and loss account and represent a fixed percentage of pensionable salaries of scheme members.

Contributions to both the defined contribution fund and the defined benefit fund continue to be made to separately administered trust funds.

The Group operates a pension scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the Group.

Deferred taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profit and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

Pension scheme assets are measured using market values which for quoted securities is the bid price. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.

Deferred tax is recognised in the statement of total recognised gains and losses on revaluations where, at the balance sheet date, there is an agreement to sell the asset.

Turnover Turnover represents the invoiced value, net of Value Added Tax and discounts, of goods sold to customers. Turnover is recognised when the risks and rewards of ownership are transferred to the customer.

Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associate.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

Leased assets and obligations Where assets are financed by leasing agreements that give rights approximating to ownership (“finance leases”), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable during the lease term. The corresponding leasing commitments are shown as obligations to the lessor.

The pension scheme deficit is recognised in full. The movement in the scheme deficit is split between operating charges, finance items and, in the statement of total recognised gains and losses, actuarial gains and losses.

Turnover from cement sales is recorded on despatch of goods to the customer.

Return on investments is accounted for on an accruals basis.

Dividend income is recognised upon receipt.

Retrospective rebates and discounts The Group’s cash and carry subsidiaries negotiate discounts directly with suppliers. These discounts are accounted for once the directors are confident that those companies are entitled to the discount.

Investments In the Company’s financial statements, investments in subsidiary undertakings and joint ventures are stated at cost.

26

13483_Bestway_Holdings_Group_AR_Text_AW.indd 26

27/03/2014 18:36

2013 Annual Report & Accounts

1. Accounting policies (continued) Foreign currencies Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rates ruling at the date of the transactions. All differences are taken to the profit and loss account.

The assets and liabilities of overseas subsidiary, joint ventures and associates undertakings are translated at the closing exchange rates.

Profit and loss accounts of such undertakings are consolidated at the average rates of exchange during the year. Gains and losses arising on these translations are taken to reserves.

Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand and deposits repayable on demand, less overdrafts payable on demand.

Liquid resources are current asset investments which are disposable without curtailing or disrupting the business and are either readily convertible into known amounts of cash at or close to their carrying values or traded in an active market. Liquid resources comprise term deposits of less than one year (other than cash), and investments in money market managed funds.

Non-derivative financial instruments The Group has adopted FRS 26 Financial Instruments: Measurement and FRS 29 Financial Instruments Disclosures.

Non-derivative financial instruments comprise investments, trade and other debtors, cash and cash equivalents, loans and borrowings, and trade and other creditors.

Trade and other debtors are recognised initially at fair value.

Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

Financial income and expenses costs Financial income comprises interest receivable on cash balances and foreign exchange gains. Interest income is recognised as it accrues, using the effective interest method.

Financial expenses comprise interest on loans as well as the interest element of finance lease repayments and pension scheme liabilities.

Interest is recognised in the profit and loss as it accrues.

Finance costs of debt are recognised in the profit and loss account over the term of such arrangements at a constant rate on the carrying amount.

Capitalisation of interest Interest is accrued up to the time that identifiable major capital projects are ready for service and is capitalised as part of the costs of the assets.

Discounting If the effect is material, other debtors are determined by discounting the expected, risk adjusted, future cash flows at a pre-tax risk-free rate.

Rental income Rental income is included within other operating income and represents amounts invoiced by the Group in respect of rent receivable during the year. Rental income from investment property leased out under an operating lease is recognised in the profit and loss account on a straight-line basis over the term of the lease.

Insurance business The group’s insurance subsidiary (UBL Insurers Limited) carries on general insurance. Its results and net assets are not significant to the group. Revenue, net of reinsurance costs and claims is included in Other Income. Premium income is recognised over the period of the insurance policy. Provision is made for the estimated costs of settling both unpaid reported claims and claims incurred but not yet reported (net of reinsurance recoveries).

Trade and other creditors are recognised initially at fair value.

Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Investments in debt and equity securities held by the Group are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity (in the revaluation reserve), except for impairment losses.

When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss.

Investments in joint ventures, associates and subsidiaries are carried at cost less impairment.

Notes 27

13483_Bestway_Holdings_Group_AR_Text_AW.indd 27

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

2. Turnover and profit on ordinary activities before taxation The Group’s turnover was derived from the following classes of business and was earned in the following geographical areas:

Operation of cash and carry business – UK Production of cement – Pakistan Other

2013 £000

2012 £000

1,779,365 177,700 121

1,794,357 158,016 -

1,957,186

1,952,373

2013 £000

2012 £000

15,486 50

15,234 53

59 598

53 524

48

99

183 72 65 20 454 9,029 2,895 28

165 69 52 2 348 9,029 (91)

2013 £000

2012 £000

6,636 3,920 (1,048)

7,152 4,392 (2,377)

9,508

9,167

Further segmental information has not been given since, in the opinion of the directors, this might be seriously prejudicial to the commercial interests of the Group.

3. Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging / (crediting): Depreciation and amounts written off tangible fixed assets Owned assets Leased assets Operating lease rentals: Plant and machinery Land and buildings Auditors’ remuneration Audit of these financial statements Amounts receivable by auditors and their associates in respect of: Audit of financial statements of subsidiaries pursuant to legislation Taxation compliance services Taxation advisory services All other services Amortisation of goodwill (note 10) Amortisation of joint venture goodwill (note 12) Impairment losses (note 11) Loss / (profit) on sale of fixed assets Amounts paid to the Company’s auditor and their associates in respect of services to the Company, other than the audit of the Company’s financial statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis.

4. Other operating income

Net rental income Other operating income Loss on exchange

28

13483_Bestway_Holdings_Group_AR_Text_AW.indd 28

27/03/2014 18:36

2013 Annual Report & Accounts

5. Other interest receivable and similar income

Bank interest Other interest Expected return on defined benefit pension plan assets

2013 £000

2012 £000

282 96 984

297 3 1,304

1,362

1,604

2013 £000

2012 £000

12,586 79 49 1,204

23,510 140 110 1,294

13,918

25,054

2013 Number

2012 Number

956 2,555 879 440

861 2,680 886 350

4,830

4,777

2013 £000

2012 £000

78,326 6,449 899

74,011 6,220 1,142

85,674

81,373

6. Interest payable and similar charges

On bank loans, overdrafts and other loans Finance charges in respect of finance leases Other interest Interest on defined benefit pension plan obligation

Interest payable of £6,000 (2012: £45,000) has been transferred to fixed assets. The amount transferred represents the cost of funds forming part of the Group’s general borrowings which were used in financing major capital projects.

7. Employees, contract employees and directors The average monthly number of persons employed by the Group (including directors) during the year was:

Office and management Retailing Manufacturing Distribution

Staff costs for the above persons:

Wages and salaries Social security costs Other pension costs (see note 29)

Notes 29

13483_Bestway_Holdings_Group_AR_Text_AW.indd 29

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

7. Employees, contract employees and directors (continued) The year end number of contract employees was: 2013 Number

2012 Number

834

882

2013 £000

2012 £000

1,446

1,498

2013 £000

2012 £000

Emoluments Contribution to money purchase pension schemes

13,887 56

12,335 317

Total emoluments

13,943

12,652

2013 Number

2012 Number

7

4

2013 £000

2012 £000

2,966

4,845

Contract employees (manufacturing) Costs for the above persons:

Fees Directors’ emoluments

The number of directors to whom relevant benefits are accruing in respect of qualifying services to the company is as follows:

Money purchase schemes Emoluments in respect of the highest paid director amounted to:

Emoluments

30

13483_Bestway_Holdings_Group_AR_Text_AW.indd 30

27/03/2014 18:36

2013 Annual Report & Accounts

8. Taxation Analysis of charge in period 2013 £000

2012 £000

5,814 2,035 1,237 30,084

9,389 1,612 (1,442) 38,334

Total current tax

39,170

47,893

Deferred taxation Origination and reversal of timing differences Movement in FRS17 liability Effect of corporation tax rate change Adjustments in respect of previous periods

15,440 302 (174) (1,152)

8,075 149 (363) (1,993)

Share of joint venture’s deferred tax

14,416 1,404

5,868 (1,601)

Total deferred tax

15,820

4,267

Tax on profit on ordinary activities

54,990

52,160

2013 £000

2012 £000

164,346

156,413

39,032

39,885

630 530 274 (5,263) 16,555 1,237 (13,825)

860 391 193 369 13,082 (1,442) (5,445)

39,170

47,893

Current tax UK corporation tax on profits of the period Overseas tax Adjustments in respect of previous periods Share of joint venture’s current tax

Factors affecting the current tax charge for the current period The tax assessed for the period is higher (2012: higher) than the standard rate of corporation tax in the UK. The differences are explained below:

Profit on ordinary activities before tax Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.75% (2012: 25.5%) Effects of: Expenses not allowable for tax purposes Income not treated as taxable Capital allowances less than depreciation Other timing differences Higher rates of tax on overseas earnings Adjustment to tax charge in respect of previous periods Utilisation of losses Current tax charge for period Factors that may affect future current and total tax charges On 21 March 2012 the Chancellor announced the reduction in the main rate of UK corporation tax to 24% with effect from 1 April 2012 and a further reduction to 23% with effect from 1 April 2013.

These changes became substantively enacted on 26 March 2012 and 3 July 2012 respectively and therefore the effect of the rate reductions creates a reduction in the deferred tax liability which has been included in the figures above.

The Chancellor proposed a further change to reduce the main rate of corporation tax to 21% with effect from 1 April 2014 and to 20% with effect from 1 April 2015, but as at the balance sheet date these further rate changes had not yet been substantively enacted and therefore are not included in the figures above.

The overall effect of the further reductions from 23% to 20%, if these applied to the deferred tax balance at 30 June 2013, would be to further reduce the deferred tax liability by approximately £557,000.

Notes 31

13483_Bestway_Holdings_Group_AR_Text_AW.indd 31

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

9. Profit attributable to members of the parent company The year end number of contract employees was: 2013 £000

2012 £000

37,980

31,528

Positive goodwill £000

Negative goodwill £000

Total £000

Cost 1 July 2012

12,373

(2,879)

9,494

30 June 2013

12,373

(2,879)

9,494

Amortisation 1 July 2012 Charged / (credited) in the year

1,762 619

(554) (165)

1,208 454

30 June 2013

2,381

(719)

1,662

Net book value 30 June 2013

9,992

(2,160)

7,832

30 June 2012

10,611

(2,325)

8,286

Profit for the financial year (see note 20)

10. Intangible fixed assets Group

The directors consider each acquisition separately for the purpose of determining the amortisation period of any goodwill that arises. The following sets out the periods over which goodwill is amortised and the net book values: Benson (Grocers) Limited – amortised over 20 years: net book value £2,246,000; Batleys Limited – amortised over 20 years: net book value £6,213,000; Martex Cash & Carry – amortised over 20 years: net book value £935,000; Mustehkam Cement Limited – amortised over 20 years: net book value of positive goodwill £542,000; net book value of negative goodwill £2,160,000; and UBL Insurers Limited – amortised over 20 years: net book value £56,000.

32

13483_Bestway_Holdings_Group_AR_Text_AW.indd 32

27/03/2014 18:36

2013 Annual Report & Accounts

11. Tangible fixed assets Group

Land and buildings

Investment properties

Plant and machinery

£000

£000

£000

Fixtures, fittings and equipment £000

Motor vehicles £000

Assets in course of construction £000

Total

Cost or valuation At 1 July 2012 Additions Disposals Exchange rate movement Transfers

£000

252,561 1,790 (80) (802) 92

93,712 1,188 (42) -

203,717 6,172 (430) (2,888) 1,481

28,279 1,211 (64) (23) -

9,059 1,438 (1,229) (23) -

1,697 2,501 (28) (1,573)

589,025 14,300 (1,803) (3,806) -

At 30 June 2013

253,561

94,858

208,052

29,403

9,245

2,597

597,716

Depreciation At 1 July 2012 Charged in year Impairment losses Disposals Exchange rate movement

33,326 4,080 (38) (178)

-

62,006 9,042 2,895 (396) (624)

21,789 1,300 (64) (11)

5,610 1,114 (782) (15)

-

122,731 15,536 2,895 (1,280) (828)

At 30 June 2013

37,190

-

72,923

23,014

5,927

-

139,054

Net book value At 30 June 2013

216,371

94,858

135,129

6,389

3,318

2,597

458,662

At 30 June 2012

219,235

93,712

141,711

6,490

3,449

1,697

466,294

Land and buildings

Investment properties

Plant and machinery

Motor vehicles

£000

£000

£000

Assets in course of construction £000

Total

£000

Fixtures, fittings and equipment £000

£000

243,005 506 2,950 7,100 -

94,858

208,052 -

29,403 -

9,245 -

2,597 -

492,302 506 2,950 7,100 94,858

253,561

94,858

208,052

29,403

9,245

2,597

597,716

Cost or valuation at 30 June 2013 is represented by: Group

Cost Valuation in 1981 Valuation in 1984 Valuation in 1985 Valuation in 2013 Total

Included within the net book value of plant and machinery is an amount of £1,264,000 (2012: £1,338,000) in respect of assets held under finance leases. Depreciation for the year on these assets was £50,000 (2012: £53,000).

Included within the cost of land and buildings is £58.5 million (2012: £58.4 million) of land which is not depreciated.

The UK investment properties were revalued in the year by the directors based on advice from Malcolm Carter, a RICS qualified staff member of the Bestway Group, taking into account selling costs. The investment property held by Bestway Cement Limited was valued by Asrem (Private) Limited, an independent valuer who holds a recognised and relevant professional qualification. The last external valuation of the UK investment properties was carried out as at 30 June 2011 by Jones Lang LaSalle. Jones Lang LaSalle is a member of the Royal Institution of Chartered Surveyors.

Notes 33

13483_Bestway_Holdings_Group_AR_Text_AW.indd 33

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

11. Tangible fixed assets (continued) Company

Land and buildings £000

Investment properties £000

Total £000

Cost or valuation At 1 July 2012 Additions

104,913 84

26,153 782

131,066 866

At 30 June 2013

104,997

26,935

131,932

Depreciation At 1 July 2012 Charged in year

15,052 1,417

-

15,052 1,417

At 30 June 2013

16,469

-

16,469

Net book value At 30 June 2013

88,528

26,935

115,463

At 30 June 2012

89,861

26,153

116,014

Land and buildings £000

Investment properties £000

Total £000

94,441 506 2,950 7,100 -

26,935

94,441 506 2,950 7,100 26,935

104,997

26,935

131,932

Land and buildings 2013 £000

Investment properties 2013 £000

Land and buildings 2013 £000

Company Investment properties 2013 £000

198,039 18,332

94,169 689

85,223 3,305

26,935 -

216,371

94,858

88,528

26,935

Cost or valuation at 30 June 2013 is represented by: Company

Cost Valuation in 1981 Valuation in 1984 Valuation in 1985 Valuation in 2013 Total Included within the cost of land and buildings is £31.8 million (2012: £31.8 million) of land which is not depreciated.

Group and Company Land and buildings and investment properties at net book value comprise: Group

Freehold Long leasehold

34

13483_Bestway_Holdings_Group_AR_Text_AW.indd 34

27/03/2014 18:36

2013 Annual Report & Accounts

11. Tangible fixed assets (continued) The following information relates to tangible fixed assets carried out on the basis of revaluations in accordance with SSAP19 Accounting for investment properties and FRS 15 Tangible fixed assets.

Land and buildings £000

Group Investment properties £000

Land and buildings £000

Company Investment properties £000

Historical cost At 30 June 2013

243,005

65,823

94,441

23,663

At 30 June 2012

242,005

64,635

94,357

22,881

37,073

-

15,209

-

33,110

-

13,954

-

Joint Ventures 2013 £000

Joint Ventures 2012 £000

Cost At 1 July

285,612

285,612

At 30 June

285,612

285,612

Share of post acquisition reserves At 1 July Profit after tax for the year Goodwill amortisation Dividends received Exchange rate movement Revaluation of fixed assets

121,719 62,414 (9,029) (35,953) (1,724) 14,501

110,101 69,268 (9,029) (33,906) (16,921) 2,206

At 30 June

151,928

121,719

Net book value At 30 June

437,540

407,331

Share of net assets, other than goodwill Goodwill

374,334 63,206

335,096 72,235

At 30 June

437,540

407,331

Aggregate depreciation At 30 June 2013 At 30 June 2012

12. Fixed asset investments Group

Bestway (Holdings) Limited hold 50.95% in United Bank Limited at 30 June 2013. The interest in United Bank Limited has not been recognised as a subsidiary as, by virtue of the shareholder agreement over United Bank Limited, Bestway (Holdings) Limited has joint control with another shareholder.

After the balance sheet date Bestway (Holdings) Limited acquired a further 8.3% ownership of United Bank Limited giving the group an overall holding of 59.25%. The joint venture agreement ended as the other party to the agreement no longer holds any shares.

Goodwill in relation to United Bank Limited is amortised over a period of 10 years. The impact of this amortisation in the year ending 30 June 2013 is a charge to the Profit and Loss Account of £9,029,000 (2012: £9,029,000).

Notes 35

13483_Bestway_Holdings_Group_AR_Text_AW.indd 35

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

12. Fixed asset investments (continued) Company

Subsidiary undertakings £000

Joint ventures £000

Total £000

Cost At 1 July 2012

76,427

263,986

340,413

30 June 2013

76,427

263,986

340,413

The undertakings in which the Company’s interest at the year end is more than 20% are as follows: Country of incorporation and operation

Principal activity

Class of shares held

Percentage of equity held

England England England Pakistan England England England England Scotland Scotland Pakistan England England Pakistan

Wholesalers Milling and processing of rice Investment property Cement production Dormant Wholesalers Wholesalers Property and related services Holding company Property and related services Dormant Dormant Dormant Insurance brokers and related services

Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary

100.00 100.00 100.00 55.32 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 55.60

Pakistan

Banking and related services

Ordinary

50.95

Subsidiary undertaking: Bestway Cash & Carry Limited MAP Trading Limited Palmbest Limited Bestway Cement Limited Euroimpex (U.K.) Limited Bestway Direct Limited Batleys Limited Batleys Properties Limited* Benson (Grocers) Limited* Bellevue Cash and Carry Limited* Bestway Power Limited MAP (UK) Limited Bestway Limited UBL Insurers Limited * Held through a subsidiary Joint ventures: United Bank Limited

36

13483_Bestway_Holdings_Group_AR_Text_AW.indd 36

27/03/2014 18:36

2013 Annual Report & Accounts

12. Fixed asset investments (continued) United Bank Limited joint venture Included within joint ventures is the following individually significant undertaking: 2013 £000

2012 £000

265,455 (122,153) 32,731 7,444 31,797 (94,188) (1,979)

286,302 (122,501) 29,561 7,435 15,374 (86,649) (2,276)

119,107 (7,584) (2,780) (873) 343

127,246 (11,763) 444 (1,612) 243

108,213 (31,488) (14,311)

114,558 (36,733) (8,557)

62,414

69,268

Group’s share of Cash and balance with treasury banks Balances with other banks Lending to financial institutions Investments Loans and advances Operating fixed assets Investment property Deferred tax asset Other assets

317,779 88,618 75,214 1,612,965 1,338,785 98,417 6,312 5,411 144,206

321,769 87,308 86,995 1,197,609 1,329,958 97,822 5,962 17,968 128,652

Total assets

3,687,707

3,274,043

Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Minority interests Other liabilities

70,047 236,695 2,761,029 22,960 95,759 126,823

28,476 153,779 2,482,831 35,728 97,896 140,237

Total liabilities

3,313,373

2,938,947

374,334

335,096

Group’s share of Interest income Interest expense Fees and commission income Net trading income Other operating income General administrative expenses Operating expenses Operating profit before impairment losses and taxation Impairment losses on loans and advances and other credit risk provisions Provision for diminution in value of investments Other impairment movements Profit from associates Profit before taxation Tax Minority interest Group’s share of profits after tax for the year to 30 June before goodwill amortisation of £9,029,000 (2012: £9,029,000)

Group’s share of net assets as at 30 June Further disclosures in relation to the operations of United Bank Limited are included in Note 31.

Notes 37

13483_Bestway_Holdings_Group_AR_Text_AW.indd 37

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

13. Stocks Group

Stores, spares and loose tools Raw materials Work in progress Goods for resale

Company

2013 £000

2012 £000

2013 £000

2012 £000

23,450 1,886 9,821 134,914

23,200 1,400 8,258 151,116

-

-

170,071

183,974

-

-

2013 £000

2012 £000

2013 £000

2012 £000

26,495 306 30,786 17,657 697

25,291 895 26,769 17,213 590

275 6,015 136

278 22,386 560

75,941

70,758

6,426

23,224

683

719

20,000 -

25,000 -

76,624

71,477

26,426

48,224

14. Debtors Group

Due within one year: Trade debtors Amounts owed by group undertakings Amounts owed by related parties Other debtors* Prepayments and other accrued income Corporation tax debtor

Due in more than one year: Amounts owed by group undertakings Other debtors

Company

*Included within group other debtors are £6,571,000 (2012: £4,638,000) of debtors relating to UBL Insurers Limited business, which principally relate to reinsurance assets and insurance receivables.

15. Current asset investments Group

Company

2013 £000

2012 £000

2013 £000

2012 £000

Listed investments UBL Insurers Limited investments

573 4,999

519 4,440

573 -

519 -

Market value of investments

5,572

4,959

573

519

Listed investments in current assets are held at fair value.

UBL Insurers Limited investments include £nil (2012: £4,200,000) of held to maturity investments which are measured at amortised cost less provision for impairment in value.

The remaining £4,999,000 (2012: £240,000) relates to available for sale investments in mutual funds which are measured at fair value.

38

13483_Bestway_Holdings_Group_AR_Text_AW.indd 38

27/03/2014 18:36

2013 Annual Report & Accounts

16. Creditors: amounts falling due within one year Group

Bank loans Bank overdraft Obligations under finance leases Trade creditors Amounts due to group undertakings Amounts due to related parties (note 17) Corporation tax Other taxation and social security costs Other creditors Accruals and deferred income

Company

2013 £000

2012 £000

2013 £000

2012 £000

42,092 684 425 194,809 1,392 3,991 14,068 22,703 25,991

69,606 444 202,915 16,657 3,808 8,216 18,459 29,393

25,761 52 52,685 30 289 7,720

21,085 54,552 16,600 220 5,979

306,155

349,498

86,537

98,436

2013 £000

2012 £000

2013 £000

2012 £000

103,485 514

174,634 430 5,000 514

66,962 -

112,044 5,000 -

103,999

180,578

66,962

117,044

Certain overdrafts are secured by debentures giving fixed or floating charges over all the assets of the Group.

17. Creditors: amounts falling due after more than one year Group

Bank loans Obligations under finance leases Amounts owed to related parties (see below) Other creditors

Company

The related party loan included within amounts falling due within one year and falling due after more than one year of £21,600,000 from Bestway Northern Limited was repaid during the year.

Group

Repayment analysis: Bank loans in one year or less in more than one year but less than two in the third to fifth year in more than five years

Total

Bank loans

£000

2013 Debt issue costs £000

£000

42,587 48,836 55,433 -

(495) (495) (289) -

146,856

(1,279)

Bank loans

£000

2012 Debt issue costs £000

£000

42,092 48,341 55,144 -

70,107 55,656 114,074 6,177

(501) (501) (772) -

69,606 55,155 113,302 6,177

145,577

246,014

(1,774)

244,240

Total

Notes 39

13483_Bestway_Holdings_Group_AR_Text_AW.indd 39

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

17. C reditors: amounts falling due after more than one year (continued) Company

Repayment analysis: Bank loans in one year or less in more than one year but less than two in the third to fifth year

Total

Bank loans

£000

2013 Debt issue costs £000

£000

26,256 25,704 42,042

(495) (495) (289)

94,002

(1,279)

Bank loans

£000

2012 Debt issue costs £000

£000

25,761 25,209 41,753

21,586 23,456 89,861

(501) (501) (772)

21,085 22,955 89,089

92,723

134,903

(1,774)

133,129

Total

At 30 June 2013 the Group had total utilised bank and overdraft facilities of £146.86 million (2012: £246.01 million). These facilities comprise the following elements: i) At 30 June 2013 the Group had total utilised term loan facilities with HSBC Bank plc of £97.95 million (2012: £140.45 million).

The £96.67 million (2012: £138.23 million) bank loan from HSBC Bank plc is divided between Bestway (Holdings) Limited with £92.72 million (2012: £133.13 million) and Palmbest Limited with £3.95 million (2012: £5.55 million).

This is shown after deduction of unamortised issue costs.

The Palmbest Limited tranche of the bank loan is repayable by equal quarterly instalments until 30 June 2015 and bears an interest rate of LIBOR plus a margin of 0.7%. The loan is secured by a fixed charge on properties owned by Palmbest Limited.

Bestway (Holdings) Limited loans include bank loans from HSBC Bank Plc of £37.5 million (2012: £68.7 million) denominated in US Dollars, £38.1 million (2012: £46.4 million) and £18.4 million (2012: £18.4 million). These loans are repayable by fixed quarterly instalments until 31 January 2016 and bears interest at rates between 1.50% and 2.50% per annum above the Bank of England base rate.

The loans are secured by a fixed charge on properties owned by the Company. ii) The Group has a running finance facility of £0.17 million (2012: £nil million) for a period of one year from Barclays Bank Limited. Markup is payable on a quarterly basis at the rate of one months’ KIBOR plus 1.00% (2012: one months’ KIBOR plus 2.50%) per annum. The facility is secured by first pari passu hypothecation charge on all present and future current assets of Bestway Cement Limited for an amount of £4.46 million (with 25% margin) and ranking charge over fixed assets of the Company of the same amount.

iii) The Group has a running finance facility of £0.01 million for a period of one year (2012: £0.83 million) from Soneri Bank Limited. Mark up is payable on a quarterly basis at the rate of three months’ KIBOR plus 0.60% (2012: three months’ KIBOR plus 1.00%) per annum. The facility is secured by first pari passu hypothecation charge on all present and future current assets of Bestway Cement Limited for an amount of £2.67 million. iv) The Group has a running finance facility of £4.37 million for a period of one year (2012: £0.09 million) from Allied Bank Limited. Mark up is payable on quarterly basis at the rate of one months’ KIBOR plus 0.60% (2012: one month’s KIBOR plus 1.00%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets excluding land and buildings) of Bestway Cement Limited for an amount of £8.91 million. (2012: £9.06 million). v) The Group had an Istisna Finance facility of £Nil million (2012: £3.40 million) for a period of 180 days with extension of a further 90 days from Meezan Bank Limited. Mark up is payable at the time of maturity at the rate of six months’ KIBOR plus 0.75% per annum and at one months’ KIBOR plus 0.75% per annum (2012: six months’ KIBOR plus 0.75% per annum and at one months’ KIBOR plus 0.75% per annum) per annum. vi) The Group has a running finance facility of £0.09 million for a period of one year (2012: £0.27 million) from Habib Bank Limited. Markup is payable on a quarterly basis at the rate of three months’ KIBOR plus 0.60% (2012: three months’ KIBOR plus 1.50%) per annum. The facility is secured by a first pari passu hypothecation charge over all present and future movable assets and receivables of the Company for an amount of £1.56 million and first pari passu hypothecation charge on all present and future current assets of the Company for an amount of £0.67 million (2012: £0.68 million) and first pari passu hypothecation charge over all present and future movables and current assets of Bestway Cement Limited for the amount of £6.41 million.

40

13483_Bestway_Holdings_Group_AR_Text_AW.indd 40

27/03/2014 18:36

2013 Annual Report & Accounts

17. Creditors: amounts falling due after more than one year (continued) vii) The Group has a running finance facility of £0.25 million (2012: £0.53 million) from Allied Bank Limited for a period of one year. Mark up is payable on a quarterly basis at the rate of one month’s KIBOR plus 0.60% (2012: one months’ KIBOR plus 1.00%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets of Bestway Cement Limited excluding land and buildings for an amount of £1.34 million (with 25% margin). viii) The Group has a running finance facility of £1.47 million (2012: nil) for a period of one year. Mark up is payable on a quarterly basis at the rate of three months KIBOR plus 0.60% (2012: nil) per annum. The facility is secured by first pari passu hypothecation charge on all present and future current and movable assets of Bestway Cement Limited (with 25% margin) for an amount of £2.67 million.

xv) The Group has an export refinance facility of £Nil million (2012: £0.34 million) from Bank Alfalah Limited for a period of one year with maximum tenure of 180 days. Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00 % (2012: 1.00%) per annum. xvi) The Group has an export refinance facility of £Nil million (2012: £3.06 million) from Standard Chartered Bank Limited for a period of one year with maximum tenure of 180 days.

Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00% per annum. xvii) The Group has an export refinance facility of £Nil million (2012: £0.68 million) from Askari Bank Limited for a period of one year with maximum tenure of 180 days. Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00% per annum.

ix) The Group has a foreign currency import finance facility of US$Nil million (2012: US$ 5.79 million) obtained for a maximum tenure of 180 days from Habib Bank Limited, for the import of raw materials. The facility carries mark up at the rate of six months’ LIBOR plus 2.00 to 2.50% (2012: six months’ LIBOR plus 2.00 to 2.50%) per annum payable on maturity.

xviii) The Group has an export refinance facility of £Nil million (2012: £2.04 million) from Habib Bank Limited for a period of one year with maximum tenure of 180 days. Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00% per annum.

x) The Group had a foreign currency import finance facility of US$Nil million (2012: US$ 2.82 million) repayable on 13 October 2012 from MCB Bank Limited, for the import of raw materials. The facility carries mark up at the rate of six months’ LIBOR plus 2.00% (2012: six months’ LIBOR plus 2.00%) per annum payable on maturity.

xix) The Group has an export refinance facility of £Nil million (2012: £1.35 million) from Faysal Bank Limited for a period of one year with maximum tenure of 180 days. Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00% per annum.

xi) The Group has a foreign currency import finance facility of US$Nil million (2012: US$ 2.88 million) repayable on 17 September 2012 from Bank Alfalah Limited, for the import of raw materials. The facility carries mark up at the rate of 3.10% (2012: 3.10%) per annum payable on maturity.

xx) The Group has an export refinance facility of £Nil million (2012: £1.14 million) from Standard Chartered Bank Limited for a period of one year with maximum tenure of 180 days.

Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00% per annum.

xii) The Group has a foreign currency import finance facility of US$Nil million (2012: US$ 3.95 million) repayable on 14 September 2012 from Faysal Bank Limited, for the import of raw materials. The facility carries mark up at the rate of six months’ LIBOR plus 2.50% (2012: 2.50%) per annum payable on maturity. xiii) The Group has an export refinance facility of £Nil million (2012: £0.68 million) obtained from Soneri Bank Limited for a period of one year with a maximum tenure of 180 days.

Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank of Pakistan plus 1.00 % (2012: plus 1.00%) per annum. xiv) The Group has an export refinance facility of £Nil million (2012: £2.38 million) from Allied Bank Limited for a period of one year with maximum tenure of 180 days. Mark up is payable at the time of maturity or on a quarterly basis, whichever comes earlier, at the rate defined by State Bank 0of Pakistan plus 1.00 % (2012: plus 1.00%) per annum.

xxi) The group has a term finance facility from MCB Bank Limited of £Nil million (2012: £2.80 million). This facility was repayable in 8 equal biannual instalments starting from April 2010. Mark up is payable on a quarterly basis at three months’ KIBOR plus 0.55 % (2012: six months’ KIBOR plus 0.55%) per annum. xxii) The group has a term finance facility from Allied Bank of £2.23 million (2012: £3.78 million). This facility is repayable in 9 equal semi-annual instalments starting from June 2011.

Mark up is payable on a semi-annual basis at six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 1.50%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets excluding land and buildings of Bestway Cement Limited for an amount of £8.91 million. Bestway Cement Limited has prepaid the principal instalment falling due in December, 2013.

Notes 41

13483_Bestway_Holdings_Group_AR_Text_AW.indd 41

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

17. C reditors: amounts falling due after more than one year (continued) xxiii) The group has a term finance facility from Habib Bank Limited of £2.00 million (2012: £8.16 million). The facility is repayable in 10 equal semi-annual instalments starting from December 2009. Mark up is payable on a quarterly basis at three months’ KIBOR plus 1.00% (2012: three months’ KIBOR plus 1.25%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future current and movable assets of Bestway Cement Limited and equitable mortgage ranking pari passu charge over immovable assets of Bestway Cement Limited including land and buildings for an amount of £10.69 million.

The group has prepaid the principal instalment falling due in December 2013. xxiv) The group has a utilized portion of demand finance facility from Habib Bank Limited of £10.63 million (2012: £Nil million).

This facility is repayable in 06 equal semi-annual instalments after a period of 18 months from the date of first disbursement. Mark is payable on quarterly basis at the rate of three month’s KIBOR plus 1.00% (2012: £Nil million) per annum. The facility is secured by first pari passu hypothecation charge on all present and future assets of Bestway Cement Limited (with 25% margin), equitable mortgage ranking pari passu over the immovable fixed assets of the Company including land and buildings for an amount of £17.81 million The Group has availed £12.76 million during the year and prepaid principal instalment falling due on January, 2014. xxv) The group has a term finance facility from Soneri Bank Limited of £2.00 million (2012: £2.04 million). The facility is repayable in 8 equal semi-annual instalments starting from December 2014. Mark up is payable on a semi-annual basis at six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 1.25%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets of Bestway Cement Limited for an amount of £2.72 million. xxvi) The group has a term finance facility from Faysal Bank Limited of £3.34 million (2012: £5.44 million). This facility is repayable in 6 equal semi-annual instalments starting from June 2014. Mark up is payable on a semi-annual basis at the rate of six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 2.00%) per annum. The facility is secured by a first pari passu hypothecation and mortgage charge (with 25% margin) on all present and future current and fixed assets including land and buildings of Bestway Cement Limited amounting to £5.34 million. The principal instalment falling due in 2014 has been prepaid.

xxvii) The group has a term finance facility from Soneri Bank Limited of £1.75 million (2012: £2.04 million). This facility is repayable in 8 equal semi-annual instalments starting from June 2014. Mark up is payable on a semi-annual basis at the rate of six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 1.50%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets of Bestway Cement Limited including land and buildings for an amount of £ 2.67 million (with 25% margin). The principal instalment falling due in 2014 has been prepaid. xxviii) The group has a term finance facility from Allied Bank Limited of £4.38 million (2012: £5.10 million). The facility is repayable in 8 equal semi-annual instalments starting from September 2014. Mark up is payable on a semi-annual basis at the rate of six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 1.80%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future assets of Bestway Cement Limited (with 25% margin) and equitable mortgage over land and buildings of Bestway Cement Limited for an amount of £ 8.91 million. The first instalment falling due in 2014 has been prepaid. xxix) The group has a term finance facility of £Nil million (2012: £1.81 million) from a syndicate of Habib Bank Limited, MCB Bank Limited and Allied Bank Limited. This facility was repayable in 12 biannual instalments which started from May 2007. A mark up is payable on a quarterly basis at six months’ KIBOR plus 1.25 % (2012: six months’ KIBOR plus 1.25%) per annum. xxx) The group has a syndicated term finance facility of £Nil million (2012: £10.61 million) from a syndicate of Allied Bank Limited, Bank Alfalah Limited, Standard Chartered Bank (Pakistan) Limited, Askari Bank Limited, Faysal Bank Limited, Habib Bank Limited, Silk Bank Limited, HSBC Bank Middle East Limited, Bank AL Habib Limited, Habib Metropolitan Bank Limited and Soneri Bank Limited.

This facility was repayable in 10 equal biannual instalments starting from April 2009. Mark up is payable on biannual basis at six months’ KIBOR plus 2.05% (2012: six months’ KIBOR plus 2.05%) per annum.

42

13483_Bestway_Holdings_Group_AR_Text_AW.indd 42

27/03/2014 18:36

2013 Annual Report & Accounts

17. Creditors: amounts falling due after more than one year (continued) xxxi) The group has a syndicated term finance facility of £6.85 million (2012: £9.29 million) from a syndicate of Allied Bank Limited, Habib Bank Limited, the Bank of Punjab and Faysal Bank Limited. This facility is repayable in 6 equal semi-annual instalments starting from December 2012.

Mark up is payable on semi-annual basis at six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 2.25%) per annum. The facility is secured by a first pari passu hypothecation charge on all the present and future assets of Bestway Cement Limited excluding land and buildings for an amount of £18.26 million in favour of the syndicate.

The group has prepaid the principal instalment falling due in December, 2013. xxxii) The group has a syndicated term facility of £6.01 million (2012: £12.24 million) from a syndicate of Allied Bank Limited, Summit Bank Limited, Standard Chartered Bank (Pakistan) Limited, Askari Bank Limited, Bank AL Habib Limited and MCB Bank Limited. This facility is repayable in 10 equal semi-annual instalments starting from November 2010.

Mark up is payable on a semi-annual basis of 6 months’ KIBOR plus 0.75 % (2012: six months’ KIBOR plus 0.75%) per annum. The facility is secured by a first pari passu hypothecation charge on all present and future fixed assets of Bestway Cement Limited with 25% margin and equitable mortgage over land and building of Bestway Cement Limited inclusive of 25% margin representing the amount of £26.72 million. The group has prepaid the principal instalment falling due in 2013.

xxxv) The group has a diminishing musharaka finance facility of £2.00 million (2012: £2.04 million). This facility is repayable in 6 semi-annual instalments starting from December 2013.

Mark up is payable on semi-annual basis at the rate of six months’ KIBOR plus 1.00% (2012: six months’ KIBOR plus 1.85%) per annum. The facility is secured by first pari passu hypothecation charge on all present and future assets of the Company excluding land and buildings for an amount of £2.67 million. xxxvi) The group has a Shirkat-ul-melk cum irjarah facility of £1.34 million (2012: £1.36 million). This facility is repayable in 4 equal semi-annual instalments starting from December 2013. Mark up is payable on a semi-annual basis at the rate of six months’ KIBOR plus 0.90% (2012: six months’ KIBOR plus 1.10%) per annum. The facility is secured by first pari passu hypothecation charge on all present and future fixed assets of the Company excluding land and buildings for an amount of £1.78 million.

xxxiii) The group has a Murabaha Finance facility from Faysal Bank Limited of £Nil million (2012: £0.61 million) repayable in 10 equal biannual instalments which started from April 2009. Mark up is payable on a biannually basis at six months’ KIBOR plus 2.05 % (2012: six months’ KIBOR plus 2.05%) per annum. xxxiv) The group has a Murabaha Finance facility from Meezan Bank Limited of £Nil million (2012: £11.39 million) repayable in a bullet instalment at the time of maturity. Mark up is payable on an annual basis at the rate of two years’ KIBOR (2012: two years’ KIBOR) per annum.

Notes 43

13483_Bestway_Holdings_Group_AR_Text_AW.indd 43

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

17. Creditors: amounts falling due after more than one year (continued) The maturity of obligations under finance leases and hire purchase contracts is as follows: Group

Within one year In the second to fifth years

Company

2013 £000

2012 £000

2013 £000

2012 £000

425 -

444 430

-

-

425

874

-

-

Insurance claims excess £000

Deferred taxation £000

Insurance contract liabilities £000

Total £000

75 (75) -

6,848 14,395 (68)

4,888 2,316 (87)

11,811 16,636 (155)

-

21,175

7,117

28,292

2013 £000

2012 £000

29,989 (2,344) (6,470)

33,594 (2,948) (23,798)

21,175

6,848

18. Provisions for liabilities Group

At 1 July 2012 Movement in profit and loss account Exchange rate movement At 30 June 2013

Deferred taxation provided in the financial statements is made up as follows:

Excess of capital allowances over depreciation Short term timing differences Losses

The carry forward of tax losses arise in Bestway Cement Limited as a result of claiming capital allowances and business trading losses. Local tax laws in Pakistan allow losses arising from capital allowances to be carried forward for an indefinite period of time. Accordingly, such losses are not expected to expire. A small proportion of the deferred tax asset consists of business losses which can be carried forward for a period of up to six years as per local tax laws.

Company

Deferred taxation £000

At 1 July 2012 Charge to profit and loss account

746 13

At 30 June 2013

759

44

13483_Bestway_Holdings_Group_AR_Text_AW.indd 44

27/03/2014 18:36

2013 Annual Report & Accounts

18. Provisions for liabilities (continued) Deferred taxation provided in the financial statements is made up of the following:

Excess of tax allowances over depreciation

2013 £000

2012 £000

759

746

759

746

2013 £000

2012 £000

500

500

96

96

Group and Company Deferred taxation No provision has been made for deferred tax in either the Group or Company on gains recognised on revaluing property to its market value as there is currently no commitment to sell these assets. The total amounts unprovided for by the Group and Company are £15.0 million (2012: £12.4 million) and £1.8 million (2012: £1.8 million), respectively.

At present, it is not envisaged that any tax will become payable in the foreseeable future.

Insurance claims excess provision The amounts included above relate to a provision to cover the estimated cost of insurance claim excesses for which the Group will be liable to pay in the event of successful claims against it, as the group no longer believes it necessary to hold this provision it has been removed in the current year.

Insurance contract liabilities The amounts included above relate to provisions for outstanding claims and unearned premiums in relation to UBL Insurers Limited.

19. Called up share capital

Authorised: 500,000 ordinary shares of £1 each Issued and fully paid: 95,940 (2012: 95,940) ordinary shares of £1 each

Notes 45

13483_Bestway_Holdings_Group_AR_Text_AW.indd 45

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

20. Reserves Group

Share premium account

Revaluation reserve

Capital redemption reserve

Profit and loss account

£000

Investment property revaluation reserve £000

£000

£000

£000

At beginning of year Profit for the year Exchange rate movement Share of revaluation of properties in joint ventures Actuarial gain recognised in the pension schemes Deferred tax arising on gains in the pension schemes Excess depreciation on revalued basis

3,055 -

21,511 -

32,354 -

14 -

526,442 90,483 (7,606)

-

14,501 (148)

-

-

1,793 (412) 148

At end of year

3,055

35,864

32,354

14

610,848

2013 £000

2012 £000

Profit and loss reserve excluding pension liability Pension liability

614,902 (4,054)

532,327 (5,885)

Profit and loss reserve including pension liability

610,848

526,442

Company

Share premium account

Revaluation reserve

Capital redemption reserve

Profit and loss account

£000

Investment property revaluation reserve £000

£000

£000

£000

At beginning of year Profit for the year Excess depreciation on revaluations

3,055 -

1,549 (148)

6,482 -

14 -

286,975 37,980 148

At end of year

3,055

1,401

6,482

14

325,103

46

13483_Bestway_Holdings_Group_AR_Text_AW.indd 46

27/03/2014 18:36

2013 Annual Report & Accounts

21. Reconciliation of movement in shareholders’ funds Group

Company

2013 £000

2012 £000

2013 £000

2012 £000

90,483 (7,606) 14,501 1,793 (412)

90,317 (19,019) 2,206 (600) (3,202) 768

37,119 -

31,528 -

98,759

70,470

37,119

31,528

Opening shareholders’ funds

583,472

513,002

298,171

266,643

Closing shareholders’ funds

682,231

583,472

335,290

298,171

Profit for the financial year Translation exchange difference Share of revaluation of properties in joint ventures Revaluation of properties Actuarial gain / (loss) recognised in the pension schemes Deferred tax arising on (gain) / loss in the pension schemes

22. Financial instruments (a) Fair values of financial instruments Investments The fair value of current asset investments is determined by reference to their quoted bid price at the balance sheet date.

Trade and other debtors The fair value of trade and other debtors is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Trade and other creditors The fair value of trade and other creditors is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect is material.

Cash and cash equivalents The fair value of cash and cash equivalents is estimated as its carrying amount.

Interest-bearing borrowings Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.

Financial instruments by class (excluding related party balances) as shown in the balance sheet are as follows: Group

Carrying amount 2013 £000

Carrying amount 2012 £000

Current asset investments Trade and other debtors Cash and cash equivalents Trade and other creditors Loans and borrowings (including finance leases and bank overdraft)

5,572 57,964 47,400 (218,028) (146,686)

4,959 52,779 49,457 (221,888) (245,114)

(253,778)

(359,807)

Notes 47

13483_Bestway_Holdings_Group_AR_Text_AW.indd 47

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

22. Financial instruments (continued) (a) Fair values of financial instruments (continued) Company

Current asset investments Trade and other debtors Cash and cash equivalents Trade and other creditors Loans and borrowings (including finance leases)

Carrying amount 2013 £000

Carrying amount 2012 £000

573 275 6,673 (288) (92,724)

519 278 9,227 (220) (133,129)

(85,491)

(123,325)

The fair values are not significantly different from the carrying amounts set out above.

(b) Credit risk Financial risk management Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

The group manages credit risk principally through the performance of credit checks on new customers and credit control procedures. The trade debtor balances are made up of a large number of individual customer balances, none of which are individually significant.

Cash and cash equivalents represent deposits at high quality financial institutions.

The carrying amount of financial assets represents the maximum credit exposure.

The maximum exposure to credit risk at the reporting date was: Group

Trade debtors Amounts owed by group undertakings Amounts owed by related parties Other debtors Cash at bank and in hand

Company

2013 £000

2012 £000

2013 £000

2012 £000

26,495 306 31,469 47,400

25,291 895 27,488 49,457

275 57,016 31 6,673

278 47,386 9,227

105,670

103,131

63,995

56,891

The maximum exposure to credit risk for trade debtors at the balance sheet date by geographic region was: Group

UK Pakistan

Company

2013 £000

2012 £000

2013 £000

2012 £000

24,567 1,928

22,147 3,144

275 -

278 -

26,495

25,291

275

278

48

13483_Bestway_Holdings_Group_AR_Text_AW.indd 48

27/03/2014 18:36

2013 Annual Report & Accounts

22. Financial instruments (continued) (b) Credit risk (continued) The maximum exposure to credit risk for trade receivables at the balance sheet date by type of counterparty was: Group

Company

2013 £000

2012 £000

2013 £000

2012 £000

24,149 1,928 418

21,718 3,144 429

275

278

26,495

25,291

275

278

Group

Gross 2013 £000

Impairment 2013 £000

Gross 2012 £000

Impairment 2012 £000

Not past due Past due 0–30 days Past due 31–120 days More than 120 days

21,125 3,335 572 2,482

(1,019)

22,136 1,253 593 1,923

(45) (569)

27,514

(1,019)

25,905

(614)

Gross 2013 £000

Impairment 2013 £000

Gross 2012 £000

Impairment 2012 £000

172 102 1

-

278

-

275

-

278

-

2013 £000

2012 £000

2013 £000

2012 £000

(614) (430) 25

(1,139) (123) 648

-

-

(1,019)

(614)

-

-

UK cash and carry customers Cement customers Other

Credit quality of financial assets and impairment losses The aging of trade debtors at the balance sheet date was:

Company

Not past due Past due 0–30 days Past due 31–120 days More than 120 days

The movement in the allowance for impairment in respect of trade receivables during the year was as follows: Group

Balance at 1 July Impairment loss recognised Impairment loss reversed Balance at 30 June

Company

The allowance account for trade receivables is used to record impairment losses unless the Group or Company is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.

Notes 49

13483_Bestway_Holdings_Group_AR_Text_AW.indd 49

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

22. Financial instruments (continued) (c) Liquidity risk Financial risk management Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

The group’s approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation.

Liquidity risk – Group The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements: 2013

Non-derivative financial liabilities Bank loans and overdrafts Obligations under finance leases Trade creditors

Carrying amount £000

Contractual cash flows £000

1 year or less £000

1 to <2years £000

2 to <5years £000

5 years and over £000

146,261 425 194,809

160,345 425 194,809

46,931 425 194,809

48,933 -

64,481 -

-

341,495

355,579

242,165

48,933

64,481

-

Carrying amount £000

Contractual cash flows £000

1 year or less £000

1 to <2years £000

2 to <5years £000

5 years and over £000

244,240 21,657 874 202,915

270,871 22,057 874 202,915

77,190 15,278 444 202,915

61,279 6,779 430 -

125,600 -

6,802 -

469,686

496,717

295,827

68,488

125,600

6,802

2012

Non-derivative financial liabilities Bank loans and overdrafts Amounts owed to related parties Obligations under finance leases Trade creditors

Liquidity risk – Company The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting agreements: 2013

Non-derivative financial liabilities Bank loans and overdrafts

Carrying amount £000

Contractual cash flows £000

1 year or less £000

1 to <2years £000

2 to <5years £000

5 years and over £000

92,724

97,453

26,145

26,352

44,956

-

92,724

97,453

26,145

26,352

44,956

-

50

13483_Bestway_Holdings_Group_AR_Text_AW.indd 50

27/03/2014 18:36

2013 Annual Report & Accounts

22. Financial instruments (continued) Liquidity risk – Company (continued) 2012

Non-derivative financial liabilities Bank loans and overdrafts Amounts owed to related parties

Carrying amount £000

Contractual cash flows £000

1 year or less £000

1 to <2years £000

2 to <5years £000

5 years and over £000

133,129 21,600

139,092 22,000

21,285 15,278

23,392 6,722

94,515 -

-

154,729

161,092

36,563

30,114

94,515

-

It is not expected that the cash flows included in the maturity analysis could occur earlier or at significantly different amounts. (d) Market risk Financial risk management Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments.

Market risk – Foreign currency risk Group The Group’s exposure to foreign currency risk is as follows.

This is based on the carrying amount for assets and liabilities held by the group: 30 June 2013

Assets Liabilities Cash Balance sheet exposure

30 June 2012

US Dollar £000 728 (28,604) 531 (27,345)

US Dollar £000

Assets Liabilities Cash

759 (84,007) 419

Balance sheet exposure

(82,829)

The Group has decided not to take out any foreign currency hedges to manage this risk.

Company The Company’s only exposure to foreign currency risk is a US Dollar loan held with HSBC Bank Plc for £37.5 million (2012: £68.7 million).

Sensitivity analysis Group A 1% percent weakening of the following currencies against pound sterling at 30 June would have increased or decreased equity by the amounts shown below. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis is performed on the same basis for 2012.

Notes 51

13483_Bestway_Holdings_Group_AR_Text_AW.indd 51

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

22. Financial instruments (continued) (d) Market risk (continued)

US Dollars

2013 £000

2012 £000

273

828

2013 £000

2012 £000

92,029 15,536 28 2,895 454 (906) 13,302 9,119 (35,884) 2,215

82,891 15,287 (91) 348 (212) 1,301 (994) (2,786) 1,037

98,788

96,781

A 1% percent strengthening of the above currencies against the pound sterling at 30 June 2013 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Market risk – Interest rate risk The Group has exposure to interest rate risk on bank loans of £47.3 million which bear interest on a KIBOR plus basis. A 1.0% change in interest rates will increase or decrease equity by £473,000.

The Group has exposure to interest rate risk on bank loans of £1.6 million which bear interest on a State Bank of Pakistan plus basis. A 1.0% change in interest rates will increase or decrease equity by £16,000.

The Group and company have exposure to interest rate risk on bank loans of £92.7 million which bear interest on a Bank of England base rate plus basis. A 1.0% change in interest rates will increase or decrease equity by £927,000.

The Group and Company have decided not to take out any interest rate hedges to manage this risk.

Market risk – Equity price risk The Group’s and Company’s exposure to equity price risk arises from its investment in equity securities which are classified as available for sale financial assets or designated at fair value through profit or loss and are shown on the balance sheet as current asset investments (see note 15).

23. Cash flows a) Reconciliation of operating profit to net cash flow from operating activities

Operating profit Depreciation Loss / (profit) on sale of tangible fixed assets Impairment losses Goodwill amortisation Pension payments Decrease / (increase) in stocks Increase in debtors Decrease in creditors Increase in provisions Net cash inflow from operating activities

52

13483_Bestway_Holdings_Group_AR_Text_AW.indd 52

27/03/2014 18:36

2013 Annual Report & Accounts

23. Cash flows (continued) b) Analysis of cash flows for headings netted in the cash flow statement 2013 £000

2012 £000

Returns on investments and servicing of finance Interest received Interest paid Interest element of finance lease rental payments Dividends paid to minority interests

378 (12,714) (79) (4,933)

300 (23,760) (140) -

Net cash outflow from returns on investments and servicing of finance

(17,348)

(23,600)

Capital expenditure and financial investment Purchase of tangible fixed assets Sale of tangible fixed assets

(14,300) 495

(13,730) 378

Net cash outflow from capital expenditure and financial investment

(13,805)

(13,352)

Management of liquid resources Purchase of listed investments

(688)

(285)

Net cash outflow from management of liquid resources

(688)

(285)

Financing Repayment of borrowings New borrowings from third parties Capital element of finance lease rental payments

(112,071) 16,557 (252)

(95,433) 28,988 (490)

Net cash outflow from financing

(95,766)

(66,935)

c) Analysis of net debt

Cash at bank and in hand Overdrafts

Debt due within one year Debt due after one year Finance leases

Current asset investments Total

At 1 July 2012 £000

Cash flow £000

Other non-cash changes £000

At 30 June 2013 £000

49,457 -

(2,036) (684)

(21) -

47,400 (684)

49,457

(2,720)

(21)

46,716

(69,606) (174,634) (874)

26,578 68,936 252

936 2,213 197

(42,092) (103,485) (425)

(245,114)

95,766

3,346

(146,002)

4,959

688

(75)

5,572

(190,698)

93,734

3,250

(93,714)

The above table excludes loans from related parties as set out in notes 16 and 17.

Notes 53

13483_Bestway_Holdings_Group_AR_Text_AW.indd 53

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

24. Commitments under operating leases At 30 June 2013 the Group and company had annual commitments under non-cancellable operating leases as follows: 2013 Group

Operating leases which expire: Within one year In the second to fifth years inclusive Over five years

2012

Land and buildings £000

Other

Other

£000

Land and buildings £000

348 149

-

325 92

-

497

-

417

-

Land and buildings £000 -

Other

Other

£000 -

Land and buildings £000 -

-

-

-

-

2013 Company

Operating leases which expire: Within one year In the second to fifth years inclusive Over five years

£000

2012

£000 -

25. Contingent liabilities – Group and Company There is an unlimited Cross Guarantee dated 18 February 1993 between Bestway (Holdings) Limited, MAP Trading Limited, MAP (UK) Limited, Palmbest Limited, Bestway Limited and Bestway Cash & Carry Limited in favour of HSBC Bank Plc. The Company, together with other companies in the Bestway (Holdings) Limited group is party to a Composite Accounting and Guarantee Agreement with HSBC Bank plc, whereby the liabilities to HSBC Bank plc of each of the subsidiaries are cross guaranteed by each of the companies.

The exposure under the guarantee at 30 June 2013 amounts to £93,700,000 (2012: £138,680,000).

The group has a guarantee in the favour of the Council of The City of Salford for £700,000.

Bestway Cement Limited and associates had various appeals pending adjudication related to income tax payable. These appeals are filed with either the Commissioner Inland Revenue (appeals) or the Appellant Tribunal Inland Revenue depending on the stage of the appeal.

As management are confident of favourable outcomes in these cases no provision has been made at the balance sheet date.

54

13483_Bestway_Holdings_Group_AR_Text_AW.indd 54

27/03/2014 18:36

2013 Annual Report & Accounts

26. Transactions with directors During the year sales transactions were entered into with certain directors or persons connected with the directors. These transactions were entered into during the normal course of business, with one of the Group companies, on an arm’s length basis with certain of the directors’ retail shops; although no specific payment terms are set.

The total value of the sales to those retail shops was £3.9 million (2012: £4.1 million). Certain of the retail shops have common directors. As required by the Companies Act 2006, the total transaction value, by director, is set out below:

MA Pervez ZM Choudrey AK Bhatti AK Chaudhary AM Chaudhary R Pervez D Pervez

2013 £000

2012 £000

2,238 2,238 252 616 616 2,238 539

883 883 261 653 653 883 272

2013 £000

2012 £000

239 239 22 22 239 9

64 64 3 4 4 64 -

The outstanding balances due from directors in respect of these transactions were:

MA Pervez ZM Choudrey AK Bhatti AK Chaudhary AM Chaudhary R Pervez D Pervez

Notes 55

13483_Bestway_Holdings_Group_AR_Text_AW.indd 55

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

27. Related party disclosures The Group’s related parties (as defined by Financial Reporting Standard 8), the nature of the relationship and the amount of transactions with them during the year were as follows:

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

27.

28.

29.

Sales made by Bestway Cash & Carry Limited to Bestway Northern Limited Purchases made by Bestway Cash & Carry Limited from Bestway Northern Limited Management fee charged by Bestway Cash & Carry Limited to Bestway Northern Limited Year end intercompany balance due (to) / from Bestway Northern Limited (from) / to Bestway Cash & Carry Limited Sales made by MAP Trading Limited to Bestway Northern Limited Sales to Bestway Stores by Bestway Cash & Carry Limited Sales to Peppermill Supermarket Limited by Bestway Cash & Carry Limited Year end intercompany balance due from Bestway Northern Limited to MAP Trading Limited Sales made by Bestway Direct Limited to Bestway Stores Sales made by Bestway Direct Limited to Peppermill Supermarket Limited Purchases made by Bestway Direct Limited from Bestway Northern Limited Year end intercompany balance due to Bestway Northern Limited from Bestway (Holdings) Limited Charitable donation paid to the Bestway Foundation from Bestway (Holdings) Limited Charitable donation paid to the Bestway Foundation from Bestway Cement Limited Year end intercompany balance due from Bestway Stores to Bestway Cash & Carry Limited Sales made by Bestway Cash & Carry Limited to London Food & Wine Year end intercompany balance due from London Food & Wine to Bestway Cash & Carry Limited Sales made by Bestway Cash & Carry Limited to Food Corner / Russell Supermarket Year end intercompany balance due from Food Corner / Russell Supermarket to Bestway Cash & Carry Limited Year end intercompany balance due from Bestway Stores to Bestway Direct Limited Sales made by Bestway Direct Limited to Best of Food & Wine Year end intercompany balance due (to) / from Best of Food & Wine (from) / to Bestway Direct Limited Year end intercompany balance due (to) / from Peppermill Supermarkets Limited (from) / to Bestway Direct Limited Year end intercompany balance due (to) / from Peppermill Supermarkets Limited (from) / to Bestway Cash & Carry Limited Year end intercompany balance due (to) / from Bestway Direct Limited to / (from) Bestway Northern Limited Year end intercompany balance due (to) / from Bestway Northern Limited to Bestway (Holdings) Limited Year end intercompany balance due from Bestway Stores to MAP Trading Limited Sales made by MAP Trading Limited to Bestway Stores Sales made by MAP Trading Limited from Map Rice Mills (Pvt) Limited

Sub notes

2013 £000

2012 £000

1 1 1 1

22,907 121 2,000 (1,244)

23,946 162 2,000 535

1 1 1 1

1,831 1,697 539 264

1,680 610 272 162

1 1 1 1

731 92 18,659 -

1,921 380 19,112 *(21,600)

2 2 1 1 1

587 289 230 252 -

670 311 64 261 3

1 1

616 22

653 4

1 1

7 -

102 4 -

1

4

9

1

9

-

1

142

57

1

-

(1)

1 1 3

2,380

7 13 2,680

*represents loans due after more than one year of £nil million and £nil million due within one year (2012: £5 million due after more than one year and £16.6 million due within one year).

Sub notes 1. C ertain directors of Bestway (Holdings) Limited are also directors of Batleys Limited, Bestway Northern Limited, Bestway Cash & Carry Limited, Bestway Cement Limited, MAP Trading Limited, Euroimpex (UK) Limited, Bestway Direct Limited, Bestway Stores, Peppermill Supermarket Limited and Buybest Limited.

2. T he trustees of the Bestway Foundation are also directors of Bestway (Holdings) Limited and Bestway Cement Limited.

3. Map Trading Limited and Map Rice Mills have common shareholders.

56

13483_Bestway_Holdings_Group_AR_Text_AW.indd 56

27/03/2014 18:36

2013 Annual Report & Accounts

28. Capital commitments 2013 £000

2012 £000

538

417

£000

£000

-

-

2013 £000

2012 £000

(25,424) 20,159

(25,732) 17,988

Deficit Related deferred tax asset

(5,265) 1,211

(7,744) 1,859

Net liability

(4,054)

(5,885)

Group Capital expenditure contracted for but not provided in the financial statements

Company Capital expenditure contracted for but not provided in the financial statements

29. Pension commitments Group The Group’s main pension commitments relate to its two occupational pension schemes; the Batleys Limited Retirement Benefits Scheme (the “principal scheme”) and the Batleys Limited Officers’ Retirement Benefits Scheme (the “officers’ scheme”). Both schemes are funded by the payment of contributions to separately administered trust funds.

The principal scheme is a mixed scheme in that it provides benefits on both a defined benefit basis and on a defined contribution basis. All defined benefit rights within the principal scheme are deferred in that they relate to member service prior to 4 May 2002, the date when the accrual of benefits was converted to a defined contribution basis for all non-officer members. The officers’ scheme operates entirely on a defined benefit basis.

The Group currently pays funding contributions at the rate £15,500 per month for the Batleys Limited Officers’ Retirement Scheme, and deficit funding contributions of £60,000 per month for the Batleys Limited Retirement Benefits Scheme.

Defined contribution pension scheme The pension cost charge for the period represents contributions payable by the Group to the scheme and amounted to £899,000 (2012: £1,060,000).

At the end of the year contributions of £84,000 (2012: £78,000) were outstanding.

Defined benefit pension schemes The Group operates two schemes in the UK. A full actuarial valuation of the Batleys Limited Retirement Benefits Scheme was carried out at 30 April 2011 and 31 December 2009 for the Batleys Limited Officers’ Retirement Benefits Scheme. Both have been updated to 30 June 2013 by a qualified independent actuary.

The best estimate of contributions to be paid by the Company to the schemes for the period commencing 1 July 2013 is £906,000.

Present values of scheme liabilities, fair values of assets and deficit:

Present value of scheme liabilities Fair value of assets and deficit

Notes 57

13483_Bestway_Holdings_Group_AR_Text_AW.indd 57

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

29. Pension commitments (continued) Group (continued) Movements in present value of defined benefit obligation 2013 £000

2012 £000

Defined benefit obligation at beginning of year Current service cost Interest cost Actuarial gains / (losses) Contributions by members Benefits paid

(25,732) (1,204) 506 1,006

(23,680) (82) (1,294) (1,632) (8) 964

At end of year

(25,424)

(25,732)

2013 £000

2012 £000

Value of scheme assets at beginning of year Expected return on plan assets Actuarial gains / (losses) Contributions by employer Contributions by members Benefits paid

17,988 984 1,287 906 (1,006)

18,916 1,304 (1,570) 294 8 (964)

At end of year

20,159

17,988

2013 £000

2012 £000

1,204 (984)

82 1,294 (1,304)

220

72

2013 £000

2012 £000

1,204 (984)

82 1,294 (1,304)

220

72

Movements in fair value of plan assets

Expense recognised in the profit and loss account

Current service cost Interest on defined benefit pension plan obligation Expected return on defined benefit pension plan assets Total The expense is recognised in the following line items in the profit and loss account:

Administrative expenses Interest payable and similar charges Interest receivable and similar income

The cumulative amount of actuarial loss recognised in the statement of total recognised gains and losses since the adoption of FRS17 is £2,730,000.

58

13483_Bestway_Holdings_Group_AR_Text_AW.indd 58

27/03/2014 18:36

2013 Annual Report & Accounts

29. Pension commitments (continued) Group (continued) The fair value of the plan assets and the return on those assets were as follows:

Equities Bonds Cash Hedge funds

Actual return / (loss) on plan assets

2013 Fair value £000

2012 Fair value £000

13,253 5,035 14 1,857

11,570 4,596 61 1,761

20,159

17,988

2,271

(266)

None of the fair values of the assets shown in the above table include any of the Company’s own financials instruments or any property occupied by, or other assets used by the Company.

Principal actuarial assumptions (expressed as weighted averages) at the year end were as follows:

Discount rate Future salary increases Future pension increases Mortality – current pensioners* Actuarial tables used

Male life expectancy at age 60 Mortality – future pensioners* Actuarial tables used

Male life expectancy at age 60

2013

2012

5.00% 3.50% 3.50%

4.75% 2.95% 3.40%

100% of S1PxA YOB CMI_2009 improvements with a 1.5% long-term rate

100% of S1PxA YOB CMI_2009 improvements with a 1.5% long-term rate

27.3

27.2

100% of S1PxA YOB CMI_2009 improvements with a 1.5% long-term rate

100% of S1PxA YOB CMI_2009 improvements with a 1.5% long-term rate

29.8

29.7

*main scheme The expected rates of return for each asset class, net of investment manager expenses, were:

Equities Bonds Cash Hedge Funds

2013

2012

6.20% 3.30% 4.25% 6.20%

7.75% 4.50% 5.50% 7.75%

The long-term expected rate of return on cash is determined by reference to the expected return on bonds at the balance sheet dates. The long-term expected return on bonds is determined by reference to UK long dated government and corporate bond yields at the balance sheet date.

The long-term expected rate of return on equities is based on the rate of return on bonds with an allowance for out-performance.

Notes 59

13483_Bestway_Holdings_Group_AR_Text_AW.indd 59

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

29. Pension commitments (continued) Group (continued) History of plans Balance sheet

Present value of scheme liabilities Fair value of scheme assets Adjustment due to imposed limits Scheme deficit

2013 £000

2012 £000

2011 £000

2010 £000

2009 £000

25,424 (20,159) -

25,732 (17,988) -

23,680 (18,916) -

23,369 (15,746) -

20,164 (13,402) (53)

5,265

7,744

4,764

7,623

6,709

2013 £000

2012 £000

2011 £000

2010 £000

2009 £000

10 (1,287)

500 (1,570)

128 2,125

441 991

1,730 (3,738)

Experience adjustments

Experience adjustments on scheme liabilities Experience adjustments on scheme assets

Company The Company does not participate in any pension schemes.

30. Minority interest Minority interest £000 At 1 July 2012 Minority interest share of profits for the year Exchange rate movement At 30 June 2013

60,534 18,873 (437)

78,970

60

13483_Bestway_Holdings_Group_AR_Text_AW.indd 60

27/03/2014 18:36

2013 Annual Report & Accounts

31. Additional disclosure for United Bank Limited The following additional disclosures have been presented in relation to United Bank Limited Group (UBL Group) due to it being a significant joint venture. The disclosures reflect Bestway (Holdings) Limited’s share of assets and results. (a) Investments i) Breakdown of investments by type Held by bank £000

30 June 2013 Given as collateral £000

£’000

112,618 1,748 953,369 17,566 378,911 (8,945) 3,995

153,717 (14) -

112,618 1,748 1,107,086 17,552 378,911 (8,945) 3,995

1,459,262

153,703

1,612,965

Held by bank £000

30 June 2012 Given as collateral £000

£’000

Total held-for-trading securities Deficit on revaluation of held-for-trading investments Available-for-sale securities Deficit on revaluation of available-for-sale securities Held-to-maturity securities Provision for diminution in the value of investments Investments in associates

14,377 (261) 809,206 (4,537) 295,300 (7,092) 3,767

86,863 (14) -

14,377 (261) 896,069 (4,551) 295,300 (7,092) 3,767

Total investments

1,110,760

86,849

1,197,609

2013 £000

2012 £000

1,243,387 279,373 38,740 28,993 8,122 3,995 (8,945) 17,552 1,748

948,112 181,514 20,674 30,373 25,073 3,767 (7,092) (4,551) (261)

1,612,965

1,197,609

Total held-for-trading securities Deficit on revaluation of held-for-trading investments Available-for-sale securities Deficit on revaluation of available-for-sale securities Held-to-maturity securities Provision for diminution in the value of investments Investments in associates Total investments

Total

Total

The provision for diminution in value includes £Nil (2012: £Nil) in relation to held for trading securities, £3,751,000 (2012: £4,881,000) in relation to available for sale securities and £5,194,000 (2012: £2,212,000) in relation to held to maturity securities. (ii) Breakdown of investments by segment

Federal government securities Foreign securities Ordinary shares Term finance facilities Other Investments in associates Provision for diminution in the value of investments Deficit on revaluation of available-for-sale securities Surplus on revaluation of held-for trading investments

Notes 61

13483_Bestway_Holdings_Group_AR_Text_AW.indd 61

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

31. Additional disclosure for United Bank Limited (continued) (a) Investments (continued) (iii) Provision for diminution in value of investments Held-to-maturity securities

2013 £000

2012 £000

Opening balance at 1 July Charge / (reversal) for the year Reversed on disposal Transfers Movement due to foreign exchange

7,092 2,797 (399) (427) (118)

14,592 (424) (6,227) 50 (899)

Closing balance at 30 June

8,945

7,092

2013 £000

2012 £000

1,488,157 (149,372)

1,473,848 (143,890)

1,338,785

1,329,958

b) Loans and advances i) Breakdown

Loans and advances Provision against loans and advances

ii) Provisions required and held Required £000

30 June 2013 Held £000

Required £000

30 June 2012 Held £000

85,165 28,100 2,848 33,259

85,165 28,100 2,848 33,259

85,478 29,497 3,007 25,908

85,478 29,497 3,007 25,908

149,372

149,372

143,890

143,890

2013 £000

2012 £000

Opening balance at 1 July Exchange Net charge for the year Transfers Amounts written off

143,890 (634) 6,148 2,877 (2,909)

139,502 (6,454) 9,314 3,268 (1,740)

Closing balance at 30 June

143,372

143,890

Domestic – corporate Domestic – consumer Domestic – other Overseas

iii) Movement in provision

62

13483_Bestway_Holdings_Group_AR_Text_AW.indd 62

27/03/2014 18:36

2013 Annual Report & Accounts

31. Additional disclosure for United Bank Limited (continued) b) Loans and advances (continued) iv) Collective impairment Included within provisions of £149.372 million (2012: £143.889 million) is £28.100 million (2012: £29.497 million) of consumer provisions and £32.509 million (2012: £35.298 million) of corporate provisions which have been calculated using collective evaluation of impairment models.

For the purpose of collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the historical loss experience for assets with credit risk characteristics similar to these in the group.

c) Fair value of financial assets The following table shows financial instruments recognized at fair value, analysed between those whose fair value is based on: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Held-for-trading Available-for-sale

Held-for-trading Available-for-sale

Level 1 £000

30 June 2013 Level 2 £000

Level 3 £’000

10,822 31,883

103,544 1,087,044

3,543

Level 1 £000

30 June 2012 Level 2 £000

Level 3 £’000

7,562 26,847

6,413 850,872

141 6,707

Notes 63

13483_Bestway_Holdings_Group_AR_Text_AW.indd 63

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

31. Additional disclosure for United Bank Limited (continued) d) Financial risk management i) Risk management This section presents information about the UBL Group’s exposure to and its management and control of risks, in particular, the primary risks associated with its use of financial instruments such as credit, market, liquidity, and operational risks.

Managing risk is one of the major challenges for the banking industry. The main goal is not to eliminate risk, but rather to be proactive in identifying, assessing and managing risks to the organisation’s strategic advantage.

The Bank has an integrated risk management structure in place. The Board Risk Management Committee (‘BRMC’) oversees the entire risk management process of the Bank. The Risk and Credit Policy Group is responsible for the implementation of policies as approved by the BRMC. The group is organized into the functions of Market and Treasury Risk, Commercial and Financial Institution Risk Management Unit Credit Policy, Consumer and Retail Credit, Credit Risk Management and Operational Risk and Basel II. Each risk function is headed by a senior manager who reports directly to the Group Executive, Risk and Credit Policy.

The role of the Risk and Credit Policy Group includes: – Determining guidelines relating to the Bank’s appetite for risk.

– Recommending risk management policies in accordance with the Basel II framework and international best practices.

– Reviewing policies / manuals and ensuring that these are in accordance with BRMC approved risk management policies.

– Developing systems and resources to review the key risk exposures of the Bank.

– Approving credits and granting approval authority to qualified and experienced individuals.

– Reviewing the adequacy of credit training across the Bank.

– Organizing portfolio reviews focusing on quality assessment, risk profiles, industry concentrations, etc.

– Setting systems to identify significant portfolio indicators, problem credits and level of provisioning required.

ii) Credit risk Credit risk is the risk that a customer or counterparty may not settle an obligation for full value, either when due or at any time thereafter. This risk arises from the potential that a customer or counterparty’s willingness to meet an obligation or its ability to meet such an obligation is impaired, resulting in an economic loss to the UBL Group.

The credit risk management process is driven by the UBL Group’s Credit Policy, which provides policies and procedures in relation to credit initiation, approval, documentation and disbursement, credit maintenance and remedial management.

Individual credit authorities are delegated to credit officers by the Board according to their seasoning / maturity. Approvals for Corporate and Consumer loans are centralized, while approval authorities for Commercial and SME exposures are delegated to a Regional level.

All credit policy functions are centrally organized.

64

13483_Bestway_Holdings_Group_AR_Text_AW.indd 64

27/03/2014 18:36

2013 Annual Report & Accounts

31. Additional disclosure for United Bank Limited (continued) d) Financial risk management (continued) ii) Credit risk (continued) The UBL Group manages, limits and controls concentrations of credit risk to individual counterparties and groups, and to industries, where appropriate. Concentrations of credit risk exist if clients are engaged in similar activities, or are located in the same geographical region, or have comparable economic characteristics such that their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. Limits are also applied to portfolios or sectors where the UBL Group considers it appropriate to restrict credit risk concentrations or to areas of higher risk, or to control the rate of portfolio growth. iii) Market risk Market risk is the uncertainty that the UBL Group may experience due to movements in market prices. It results from changes in interest rates, exchange rates, equity prices and volatilities of individual market factors as well as the correlations between them.

Each component of risk includes a general market risk and a specific aspect of market risk that originates in the portfolio structure of the UBL Group.

Measuring and controlling market risk is usually carried out at the portfolio level.

However, certain controls are applied, where necessary, to individual risk types, to particular books and to specific exposures. Controls are also applied to prevent any undue risk concentrations in trading books, taking into account variations in price, volatility, market depth and liquidity. These controls also include limits on exposure to individual market risk variables as well as on concentrations of tenors, issuers etc.

Trading activities are centred in the Treasury and Capital Markets (‘TCM’) Group to facilitate clients as well as run proprietary positions. The UBL Group is active in the cash and derivative markets for equity, interest rate and foreign exchange.

The Market and Treasury Risk (‘MTR’) division performs market risk management activities. The division is composed of two units, Market Risk Management and Treasury Middle Office. The Market Risk Management unit is responsible for the development and review of market risk policies and processes, and is involved in research, financial modelling and testing / implementation of risk management systems. Treasury Middle Office is responsible for implementation and monitoring of market risk and other policies, escalation of any deviation to senior management and MIS reporting.

The scope of market risk management is as follows: –T o keep the market risk exposure within the UBL Group’s risk appetite as assigned by the board of directors and the BRMC. o develop, review and upgrade procedures for the effective implementation of Market –T Risk Management policies approved by the board of directors and BRMC jointly with the senior management through the Market Risk Committee (MRC).

–T o review new product proposals and propose / recommend / approve procedures for the management of their market risk. Various limits are assigned to different businesses on a product / portfolio basis. The products are approved through product programs, where risks are identified and limits and parameters are set. Any transactions / products falling outside these product programs are approved through separate transaction / product memos.

–T o maintain a comprehensive database for performing risk analysis, stress testing and scenario analysis. Stress testing activities are performed on a quarterly basis on both the Banking and Trading books.

Notes 65

13483_Bestway_Holdings_Group_AR_Text_AW.indd 65

27/03/2014 18:36

Bestway (Holdings) Limited

Notes (continued)

31. Additional disclosure for United Bank Limited (continued) d) Financial risk management (continued) iv) Foreign exchange risk Foreign Exchange Risk is the uncertainty that the UBL Group is exposed to due to changes in exchange rates. Limits are used to monitor exposure in individual currencies and also on an overall basis to ensure compliance with the SBP’s Foreign Exchange Exposure Limit.

The UBL Group is an active participant in the cash and derivatives markets for currencies and carries currency risk from these trading activities, conducted primarily by Treasury and Capital Markets Group. These trading exposures are subject to monitoring through prescribed stress tests and sensitivity analysis.

The UBL Group’s functional currency is the Pakistan Rupee, but its assets, liabilities, income and expenses are denominated in different currencies. Treasury and Capital Markets Group from time to time, proactively hedges expected foreign currency exposures, in accordance with the instructions of the SBP and subject to pre-defined limits. v) Equity position risk Equity position risk arises due to changes in the prices of individual stocks or levels of equity indices. The UBL Group’s equity book comprises of held for trading (‘HFT’) and available for sale (‘A FS’) portfolios. The objective of the HFT portfolio is to make short-term capital gains, whilst the AFS portfolio is maintained with a medium-term view of both capital gains and dividend income. Product program manuals have been developed to provide guidelines on the objectives and policies, risks and mitigants, limits and controls for the equity portfolios of the UBL Group. vi) Yield / interest rate risk Interest rate risk is the uncertainty resulting from changes in interest rates, including changes in the shape of yield curves. Interest rate risk is inherent in many of the UBL Group’s businesses and arises from mismatches between the contractual maturities or the re-pricing of on and off balance sheet assets and liabilities or shifts in the yield curve. The interest rate sensitivity profile is prepared on a quarterly basis based on the re-pricing or contractual maturities of assets and liabilities.

The objective of yield / interest rate risk management is to minimize adverse impacts to the UBL Group’s profitability. Interest rate risk is monitored and managed by performing periodic gap analysis, sensitivity analysis and stress testing and taking appropriate actions where required. vii) Liquidity risk Liquidity risk is the risk that the UBL Group may be unable to meet its obligations or to fund increases in assets as they fall due without incurring unacceptable costs or losses.

The Assets and Liability Management Committee (‘A LCO’) of the UBL Group has the responsibility for the formulation of overall strategy and oversight of liquidity management and meets on a monthly basis or more frequently, if required.

The UBL Group’s approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking sustained damage to business franchises. A centralized approach is adopted, based on an integrated framework incorporating an assessment of all material known and expected cash flows and the availability of collateral which could be used to secure additional funding if required.

The framework entails careful monitoring and control of the daily liquidity position, and regular liquidity stress testing under a variety of scenarios. These encompass both normal and stressed market conditions, including general market crises and the possibility that access to markets could be impacted by a stress event affecting some part of the UBL Group’s business.

66

13483_Bestway_Holdings_Group_AR_Text_AW.indd 66

27/03/2014 18:36

2013 Annual Report & Accounts

31. Additional disclosure for United Bank Limited (continued) d) Financial risk management (continued) viii) Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The UBL Group’s Operational Risk Management implementation framework is based on the Advanced Risk Management architecture. The framework is flexible enough to implement in stages, and permits the overall risk management approach to evolve in response to organizational learning and the future needs of the organization.

Following are the high-level strategic initiatives that the Bank has undertaken for the effective implementation of Operational Risk Management: – Recruiting skilled resources for Operational Risk Management.

– Developing an operational risk management infrastructure.

– Determining the current state of key risks and their controls residing in each business unit.

– Developing policies, procedures and defining end-to-end information flow to establish a vigorous governance infrastructure.

– I mplementing systems for data collection, migration, validation and retention for current and historical reference and calculation.

A consolidated Business Continuity Plan is being augmented for the UBL Group which encompasses roles and responsibilities, recovery strategy, IT and structural backups, scenario and impact analyses and testing directives.

There are several IT developments underway in the credit, market and operational risk areas. Specifically for operational risk mitigation and control, an IT infrastructure is being developed along with the other high-level initiatives, including process re-engineering and creating an inventory of risks and controls within the UBL Group. A methodology for Risk and Control Self Assessment has been implemented at all core units of the UBL Group. ix) Capital management The objective of managing capital is to safeguard the UBL Group’s ability to continue as a going concern. It is the policy of the UBL Group to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the UBL Group maintains a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.

32. Post Balance Sheet Events After the year ending 30 June 2013 Bestway (Holdings) Limited acquired additional shareholding in United Bank Limited in 2 tranches, bringing the total shareholding as of 31 January 2014 to 59.25%.

Notes 67

13483_Bestway_Holdings_Group_AR_Text_AW.indd 67

27/03/2014 18:36

Bestway (Holdings) Limited

Depot information

Bestway Cash and Carry depots at 30 June 2013

Location

1.

Acton

2.

3.

4.

Park Royal

5.

Romford

6.

Edgware Road

Sq Ft

Address

General Manager

58,000

11 Chandos Road, Acton, London NW10 6NF

Mohammad Bashir

Southall

110,000

International Trading Estate, Brent Road, Southall, Middlesex UB2 5LG

David Baker

Hackney

60,000

260 Cambridge Heath Road, Hackney, London E2 9DA

Sajid Mahmood

242,000

Abbey Road, London NW10 7BW

Mohammed Gulistan

100,000

Spilsby Road, Harold Hill Industrial Estate, Romford, Essex RM3 8SB

Pervez Choudhary

Geron Way, Edgware Road, Nr Staples Corner, London NW2 6LJ

Dilip Joshi

110,000

7.

Bristol 92,000 7-12 Dixon Road, Brislington Trading Estate, Bristol BS4 5QW

Raja Khudadad Banaras

8.

241 Loughborough Road, Leicester LE4 5PN

Sarbjit Singh Ubhey

9.

Tottenham 85,000

Leicester

109,000

Block 3, Industrial Trading Estate, Brantwood Road, Tottenham, London N17 0XX

Ghufran Ashraf

10.

Croydon 92,000

Croydon Trading Park, Beddington Farm Road off Purley Way, Croydon, Surrey CR9 4QJ

Syeda Jamal Malik Akhtar

11.

Luton

106,000

356-366 Dallow Road, Luton, Bedfordshire LU1 1DE

Shafaq Hussain

12.

Lewisham

100,000

St Mildreds Road, Hither Green, London SE12 9RL

Sohail Rana

13.

Cardiff

82,000

Brindley Road, Grangetown, Cardiff CF11 8TL

Javed Chaudhry

14.

Swansea

90,000

Camffrwd Way, Swansea Enterprise Park, Swansea SA6 8DQ

Aizad Durrani

15.

Northampton 92,000

Hill Close, Lodge Farm Industrial Estate (off Harlestone Road), Northampton NN5 7UN

Michael McCann

16.

Peterborough

81,000

Woodstone Industrial Estate, Shrewsbury Avenue, Peterborough PE2 7BY

Mohammed Dar

17.

Exeter

88,000

Unit P, Matford Park, Exeter, Devon EX2 8FD

Asif Hussain

18.

Plymouth

84,000

Burrington Way, Burryington Way Industrial Estate, Plymouth PL5 3LR

Shamsher Ali Sheikh

19.

Barking

70,000

Gascoigne Wharf, Alfreds Way, Barking, Essex IG11 0AU

Muhammad Asad

20.

Enfield

90,000

Ardra Road, Meridian Way, Enfield, London N9 0BD

M. Ejaz Ali

21.

Brighton

65,000

6 Crowhurst, Hollingbury Trading Estate, Brighton BN1 8AF

Fida Hussain

Units 1&2, Massey Complex, Broadlane Trading Centre, Banner Lane, Coventry CV4 9WH

Brian Hale

Central Distribution 22. Coventry 250,000

The following pages do not form part of the audited statutory financial statements.

68

13483_Bestway_Holdings_Group_AR_Text_AW.indd 68

27/03/2014 18:36

2013 Annual Report & Accounts

Leicester Peterborough

Swansea Cardiff

Coventry (Central Distribution) Bristol

Exeter Plymouth

Northampton Luton London Brighton

Acton Barking Croydon Edgware Road Enfield Hackney Lewisham Park Royal Romford Southall Tottenham

Depot information 69

13483_Bestway_Holdings_Group_AR_Text_AW.indd 69

27/03/2014 18:36

Bestway (Holdings) Limited

Depot information (continued)

Batleys Cash and Carry depots at 30 June 2013

Location

23.

Huddersfield

24.

25.

Sq Ft

Address

General Manager

58,000

977 Leeds Road, Huddersfield HD2 1UP

Barry Routledge

Sheffield

76,000

Park House Lane, Bawtry Road, Tinsley, Sheffield S9 1XA

Robert Hodgkinson

Bradford

93,000

Euroway Estate, Bradford BD4 6RY

Danny Greenwood

26.

Preston

83,000

Unit 70 Walton Summit Road, Bamber Bridge, Preston PR5 8AD

Gareth McKevitt

27.

Doncaster

80,000

Chappel Drive, Docking Hill, Doncaster DN1 2RG

Tony Hirst

28.

Newcastle

124,000

Drum Industrial Estate, Birtley, Chester-le-Street DH2 1SR

Robert Reid

29.

Manchester

106,000

Ohio Avenue, Off Broadway, Salford Enterprise Zone, Manchester M50 2GT

Anthony Hogg

30.

Liverpool

107,000

Windy Arbor Road, Venture Park Industrial Estate, Whiston, Liverpool L35 1RX

Eugene Mulroy

31.

Edinburgh

106,000

M8 Estate, Clifton Hall Road, Newbridge EH28 8TP

Steve Wilkie

32.

Birmingham

124,000

Kenrick Way, Sandwell, West Bromwich B71 4LT

Jonathan Griffin

33.

Cleveland

107,000

Concorde Way, Preston Farm Industrial Estate, Stockton-on-Tees TS18 3RB

David Bolam

34.

Leeds

138,000

Skelton Grange Road, Stourton, Leeds LS10 1RZ

Jason Longstaff

35.

Coventry

108,000

Geilgud Way, Walsgrave, Coventry CV2 2SZ

Mark Wright

36.

Glasgow

124,000

Clydesmill Place, Cambuslang Investment Park, Cambuslang G32 8RF

Derek Davidson

37.

Nottingham 118,000

Firth Way, Blenheim Industrial Estate, Camberley Road, Bulwell, Nottingham NG6 8XF

Steven Lee

38.

Longwood Drive, Forest Farm, Coryton, Cardiff CF14 7HY

Marc Rees

39. Southampton 115,000

Cardiff

120,000

Talbot Road, Off Stephenson Road, Segensworth South, Fareham PO15 5RY

Anton James

40.

Swindon

Blagrove Industrial Estate, Franklands Road, Blagrove, Swindon SN5 8YG

Alan Redman

41.

Exeter (Bestpets hub)

10,330

Unit P, Matford Park, Exeter, Devon EX2 8FD

Alan Hippsley

42.

Gillingham

95,000

Courteney Road, Gillingham, Kent ME8 0RT

Alan McCarten

43.

Bristol (Bestpets hub)

14,500

7-12 Dixon Road, Brislington Trading Estate, Bristol BS4 5QW

Allen Brown

44.

Luton (Bestpets hub)

15,000

356-366 Dallow Road, Luton, Bedfordshire LU1 1DE

Chris Law

45.

Stirling

25,000

Colquhoun Street, Stirling FK7 7PX

Gary Thomson

46.

Dundee

53,000

334 Clepington Road, Dundee DD3 8RZ

Mike Bradley

47.

Perth

34,000

Inveralmond Industrial Estate, Perth PH1 3EE

David Good

48.

Aberdeen

58,000

Scotstown Road, Bridge of Don, Aberdeen AB23 8HG

Steven Young

97,000

Bellevue Cash and Carry depots at 30 June 2013 49.

Edinburgh 54,000 30 McDonald Place, Edinburgh EH7 4NH David Howe (Bellevue) Chilled Distribution 50.

Coventry

15,000

Geilgud Way, Walsgrave, Coventry CV2 2SZ

John Attwater

70

13483_Bestway_Holdings_Group_AR_Text_AW.indd 70

27/03/2014 18:36

2013 Annual Report & Accounts

Aberdeen

Dundee Perth Stirling Bellevue

Glasgow

Batleys

Edinburgh

Newcastle

Cleveland

Preston Bradford Leeds Huddersfield Liverpool Doncaster Manchester Sheffield Nottingham Birmingham Coventry (Chilled Distribution) Luton (Bestpets Cardiff Swindon hub) Bristol Gillingham (Bestpets hub) Exeter (Bestpets hub)

Southampton

Depot information 71

13483_Bestway_Holdings_Group_AR_Text_AW.indd 71

27/03/2014 18:36

Bestway (Holdings) Limited

Company information

Company registration number 01392861

Registered Office 2 Abbey Road

Park Royal London

NW10 7BW

Directors Sir MA Pervez, OBE HPk (Chairman)

ZM Choudrey, BA (Hons), FCA (Group Chief Executive)

MY Sheikh (Managing Director of Wholesale Businesses)

AK Bhatti

AK Chaudhary

AM Chaudhary, MBA

R Pervez, ACA

D Pervez, BA (Hons), FRSA MA Oxon, Solicitor

Secretary D Pervez, BA (Hons), FRSA MA Oxon, Solicitor

Bankers HSBC Bank Plc

Apex Plaza Reading

RG1 1AX

Solicitors Hogan Lovells International LLP

Atlantic House

Holborn Viaduct London

EC1A 2FG

Auditors KPMG LLP

8 Salisbury Square London

EC4Y 8BB

72 Company information

13483_Bestway_Holdings_Group_AR_Text_AW.indd 72

27/03/2014 18:36

Images opposite clockwise from top left: Bestway Cement Limited plant – Pakistan Bestway (Holdings) Group head office – London, United Kingdom Bestway Wholesale – Luton, United Kingdom

Contents Chairman’s Statement 02 Group Chief Executive’s Review 04 Directors’ Report 16 Statement of Directors’ responsibilities in respect 18 of the Directors’ Report and the financial statements Independent Auditor’s report to the members 19 of Bestway (Holdings) Limited Consolidated profit and loss account 20 Consolidated balance sheet 21 Company balance sheet 22 Consolidated cash flow statement 23 Consolidated statement of total recognised 24 gains and losses Notes 25 68 Depot information Company information 72

Designed by Spinach spinachdesign.com

13483_Bestway_Holdings_Group_AR_Cover_AW.indd 3-4

27/03/2014 18:41

Bestway (Holdings) Limited Annual Report & Accounts 2013

13483_Bestway_Holdings_Group_AR_Cover_AW.indd 1-2

27/03/2014 18:41