Conviviality businesses to add £500m to revenue, Bestway Group claims

The UK’s Bestway Group – which bought Conviviality’s retail brands after its collapse last April – has claimed the companies including Bargain Booze will add around £500 million to its annual revenue.

In its annual results filed at Companies House and available this week, the group said that although a “significant“ amount of work needed to be done to stabilise the newly acquired business and reassure franchisees, the management were confident that the deal would “complement the wider Bestway offering and be value accretive in the long-run”.

“It is expected that the c.800 strong retail portfolio will add close to £0.5 million to the Group‘s annual revenue in the future,” chairman Sir Mohammed Anwar Pervez said in the annual statement.

Pervez admitted it had been a challenging year for the group but that all the businesses, which includes Bestway Wholesale, the UK’s largest independent wholesale group which bought around 800 stores from Conviviality for £7.5 million last April, remained profitable.

The retail business, which comprises the Bargain Booze, Wine Rack, Select Convenience and Central Convenience fascias, including 600 franchisee stores and 207 corporate-owned stores, is now organised under a previously dormant company, Bestway Retail Limited, but the wholesale business committed to be one of its key financial supporters for around a year.

The group’s results showed the group’s overall revenues rose 9% to £3.2 billion, despite profits falling on the back of some of its international businesses. Underlying profit before tax fell by 25% to £331.9 million, it said, due to difficult trading conditions in Pakistan and the devaluation of the Pakistani rupee (In addition to its UK wholesale and retail operations, the group operates the largest cement factory and the second largest private bank in Pakistan).

Pervez also warned that “the uncertainly regarding Brexit will likely result in further austerity and continue to dampen economic growth”, confirming that the group had taken necessary measures to reduce key risks to the business.

Bestway Wholesale

Turnover at the wholesale business, which were also filed at Companies House last week, fell 2% last year on flat profits, the documents revealed. Recorded turnover fell 2.45% to £1,612 million, while profits were down nearly 1% to £6.623 million, although operating profit before tax rose £3.9 million to £10.3 million, or around 38%.

Group chief executive Zameer Choudrey said market conditions remained challenging, with the continued pressure of the multiple grocers taking a “keener interest” in the wholesale sector, although he noted the online business had nearly doubling its number of registered users and mobile transactions had grown by nearly 10% in the last year.

“The market environment is increasingly competitive and the strain has been too much for certain providers, with Palmer & Harvey and Conviviality PLC entering administration and Blakemore closing down its wholesale arm,” he wrote.

“Despite these challenge, BW has remained committed to its strategic plans and has been able to grow its market share and profitability on the back of the increased customer turmoil.”

He added the UK wholesale business would focus on growing its market share and developing its infrastructure, while the retail business would concentrate on stabilising itself and rebuilding trust and relationships with customers “following a tumultuous period”, as well as improving the quality of franchisees going forward.

In December, Bestway Retail posted results at Companies House reflecting the three months of trading since the acquisition, in which it recorded a loss of £0.3million on turnover of £80.5 million to 30 June 2018.

The directors said this was in line with expectations and that synergies and improvements being put in place would deliver improved financial results next year. It added that had the Conviviality businesses been acquired at the start of the financial year, it would have made profits of £1.1 million on turnover of nearly £400 million (£399.6 m).

 

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