REG - Best of the Best PLC - Final Results
BEST OF THE BEST PLC
Preliminary Results
For the year ended 30 April 2019
KEY HIGHLIGHTS:
· Revenue increased by 14.4% to £14.81 million (2018: £12.95 million)
· Online sales during the period accounted for £14.3 million of revenue or circa 97% of the total
· Operating profit before exceptional items increased by 31.9% to £2.11 million (2018: £1.60 million)
· Net assets of £1.28 million, underpinned by cash balances of £2.54 million
· Proposed 2.0p ordinary dividend to be paid on 27 September 2019
· Tender offer completed in February 2019 returned £3.5m to qualifying shareholders following successful conclusion of a VAT claim
· Adjusted earnings per share increased by 32.3% to 17.62p (2018: 13.32p)
· Continued success with marketing initiatives, resulting in an encouraging increase in online sales
· Revenues now almost exclusively online, with just one airport location remaining
· Competitions, pricing and strategy now designed for our growing online customer base, enabling increased marketing investment in player acquisition and retention
William Hindmarch, Chief Executive, said:
"I am pleased to report continued solid progress with an encouraging set of final results showing both increased revenues and profits before tax, both of which are slightly ahead of management's expectations. The transformation to become a pure online business is largely complete and has been a success, giving us more flexibility and focus, as well as efficiency and cost savings.
We continue to increase our marketing investment across all acquisition and retention channels and look forward to updating shareholders with further progress in due course."
Enquiries:
Best of the Best plc
William Hindmarch, Chief Executive
Rupert Garton, Commercial Director
T: 020 7371 8866
KTZ Communications
Katie Tzouliadis
T: 020 3178 6378
finnCap
(Nominated Adviser and Broker)
Corporate Finance
Carl Holmes
Anthony Adams
ECM
Alice Lane
T: 020 7220 0500
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014. Please visit www.botb.com for further information
CHIEF EXECUTIVE'S STATEMENT
During the year we have almost completed our move away from physical retail locations (principally airports) to become, in due course, an entirely online focused operation. With the exception of one remaining site at Birmingham Airport, all customer acquisition activity is focused on driving traffic and registrations to our website botb.com.
The transformation to become a pure online business has been a proven success, giving us more flexibility and focus, as well as material efficiency and cost savings. Our investment in marketing continues to increase and has been returning encouraging results. As a result, our competitions, pricing and product strategy are now tailored exclusively for our growing and increasingly diversified online customer base.
Preliminary Results
Revenue for the year ended 30 April 2019 increased by 14.4% to £14.81 million (2018: £12.95 million) and operating profit before exceptional items rose by 31.9% to £2.11 million (2018: £1.60 million). Adjusted earnings per share (excluding exceptional items and associated tax) increased by 32.3% to 17.62p (2018: 13.32p).
£4.5 million of exceptional income was also recognised as a result of the Company's successful claim for overpaid VAT in prior years, offset by £2.0 million of exceptional expenses related to retrospective taxation and professional fees. This finally concludes the already well documented VAT claim which has been ongoing since 2013 and the Directors are pleased this has come to a conclusion. Profit before tax including exceptional items was £4.70 million with fully diluted earnings per share (including exceptional items) from continuing operations at 38.52p. Following the conclusion of the VAT claim a tender offer was completed in February 2019 to return £3.5m to qualifying shareholders.
A total of £4.24 million of cash flow was generated from operations during the period (2018: £1.81 million). Net assets at 30 April 2019 stood at £1.28 million (2018: £1.55 million), underpinned by cash balances of £2.54 million (2018: £2.32 million) and our 967-year leasehold office properties valued at £0.95 million. Current cash balances stand in excess of £3.0 million.
The Company is now deriving almost all of its income from our higher margin online operations. During the year we exited our two Gatwick Airport sites as well as our sites at both Edinburgh and Manchester airports. Our only remaining physical site is at Birmingham airport. Although these closures (we previously occupied up to 12 airport sites and several shopping centre sites) have held back the top line revenue growth in the last few years, the business is now much better placed to grow profitably and efficiently. Online sales grew strongly during the period, accounting for £14.3 million of revenue or circa 97% of the total.
Dividends
The Board is recommending a final dividend of 2.0p per share (2018: 1.5p) for the full year ending 30 April 2019 subject to shareholder approval at the Annual General Meeting on 11 September 2019. The final dividend will be paid on 27 September 2019 to shareholders on the register on 13 September 2019. A Special Dividend of 4.5p per ordinary share was also paid to shareholders on 20 July 2018.
Strategy, competitions and pricing
Since inception in 2000, BOTB leased physical sites in locations such as airports and shopping centres to acquire new players, service existing players and encourage customers to play online. However, our costs and in particular rent and staff expenditure in these retail locations continued to increase significantly year-on-year, resulting in reduced efficiency when compared to other available channels.
Through continued trials in previous years, the Company proved it could execute its marketing strategy more effectively using predominantly digital media complemented by traditional advertising channels. The physically serviced airport and retail customers were also disproportionately affecting our pricing strategy and our ability to innovate online. A further positive consequence of the move to becoming a purely online operator has therefore been our ability to design our competitions, pricing and innovations exclusively for the online player.
BOTB's principal competition is the Weekly Dream Car, which continues to perform well and benefit from improvements to the online user experience, pricing and the choice of cars. Together, these incremental changes have had a positive effect on revenues. Our online content and weekly "In the Headlights" edit section provides an incentive for people to keep returning to the site and maintains engagement.
The Lifestyle Competition which features luxury watches, motorbikes, holidays and other gadgets/technology as well as cash prizes also continues to perform encouragingly. There is a substantial overlap with players of our Dream Car competitions, but the range of prizes in the Lifestyle Competition has significantly broadened our addressable market for this affordable offering.
Continued investment in IT development
With the focus now exclusively online, our ability to acquire players and encourage their loyalty - whether playing for the car they have always dreamt about or for the lifestyle prize they really want but cannot justify buying - relies heavily on providing the best possible user experience and seamless checkout on whatever screen or device a customer is viewing.
Over half our revenues and circa 80% of our visits are now on mobile (and tablet) devices. Whilst a new platform and responsive website was deployed in early 2017, we believe there are significant further opportunities to enhance the mobile experience for our customers and to improve conversion rates for both new and existing players.
Our two-weekly development and release cycle is continually refining our technology and introducing new functionality to make using botb.com simpler, easier and more accessible for everyone. Improvements to server responsiveness, reporting, device UX analysis specifically for mobile, purchase path streamlining and improved payment integration are planned for the current year. We will also be re-introducing android and iOS apps, to complement an improved mobile website experience.
New player acquisition and CRM
We have continued to invest strongly to attract new customers and during the year BOTB's marketing strategy has delivered encouraging online revenue growth. An enlarged, predominantly in-house marketing team has invested in a multitude of channels across the spectrum, including Social Media, TV, Radio, PR and YouTube Influencers to acquire new players. These players replace those once acquired through our many physical face-to-face channels and, because they were acquired online, respond well to our content, marketing initiatives and to the wider BOTB community.
Social media continues to be a core marketing channel, driving both customer acquisition and brand awareness. Our Facebook page now attracts over 249,000 followers with BOTB's YouTube channel at over 31,000 subscribers, whilst Instagram followers exceed 80,000.
This activity is complemented by campaigns executed on traditional media channels to ensure the Company is promoted to a wide range of ages and demographics. New updated TV creative was run throughout the period and performed at its most efficient level since we first utilised TV advertising in 2015. Investment in print and public relations has secured frequent coverage of weekly winners and is working well to positively support and promote our brand.
Our key business metric is the cost per acquisition of new customers, versus their lifetime value. This metric, which is tracked and analysed in considerable detail across the channels, is the primary driver in dictating where and how we continue to grow our online marketing investment in the year ahead, to acquire new BOTB customers and advocates.
A further focus in this financial year will be on maximising customer retention and engagement and hence lifetime values. A new hire has been made specifically to assist with this project, including a full review of our loyalty programme to promote initiatives.
Outlook
BOTB has delivered increased revenues and profits slightly ahead of management's expectations and remains cash generative, with a strong balance sheet and sufficient funds to invest in our online growth. We believe the streamlined, online-only business is well positioned for the new financial year which has started well and I look forward to updating shareholders on further progress in due course.
KEY PERFORMANCE INDICATORS
The Directors have monitored the performance of the Company and Group with particular reference to the following key performance indicators:
1. Sales, both online and at retail sites, compared to the prior year.
2. Marketing efficiency, calculated using the twelve month Lifetime Value per customer, against the Cost per Acquisition.
RISK MANAGEMENT
In order to execute the Company's strategy, the Company will be exposed to both financial and non-financial risks. The Board has overall responsibility for the Company's risk management and it is the Board's role to consider whether those risks identified by management are acceptable within the Company's strategy and risk appetite. The Board therefore regularly reviews the principal risks and considers how effective and appropriate the controls that management has in place to mitigate the risk exposure are and will make recommendations to management accordingly.
Financial Risk Management
Credit risk
The exposure to credit risk is limited to the carrying amounts of financial assets. There is considered to be little exposure to credit risk arising on receivables due to the low value of receivables held at the year-end. The credit risk arising on cash balances is limited because the third parties are banks with high credit ratings assigned by international credit rating agencies.
Liquidity risk
Sufficient cash balances are maintained to ensure that there are available funds for operations. Operations are financed principally from equity and cash reserves.
Non-financial Risk Management
Interruption to website and associated IT infrastructure
As the Company and Group now operate substantially online, they are heavily reliant on the effective operation of their website and associated IT infrastructure. Any interruption to the website or IT infrastructure would therefore have an immediate and significant impact on the Company and Group.
The Company and Group have various processes and controls in place to ensure the likelihood of interruption is minimised and, in the unlikely event that the website or IT infrastructure failed, it could be returned to operation in a short space of time. This includes having contracts in place with third party suppliers to ensure any potential source of interruption is identified promptly and also to ensure that data, including customers' data, is protected.
Management and key personnel
The success of the Company and the Group to a significant extent is dependent on the Executive Directors and other senior managers. To mitigate the risk of losing such personnel, the Company and Group endeavour to ensure that they are fairly remunerated and well incentivised.
Regulatory change
The Company and Group currently operate weekly skilled competitions, which are not regulated. This could be subject to change in the future and the Company and Group continue to seek appropriate legal advice to ensure they comply with all relevant legislation and licensing.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). 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 Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state that the financial statements comply with IFRS; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's and the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.
ON BEHALF OF THE BOARD
William Hindmarch
Chief Executive
19 June 2019
Notes
2019
2018
£
£
CONTINUING OPERATIONS
Revenue
14,806,972
12,947,716
Cost of sales
(6,541,790)
(5,504,906)
GROSS PROFIT
8,265,182
7,442,810
Administrative expenses
(6,157,945)
(5,843,662)
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
2,107,237
1,599,148
Exceptional income
6
4,597,926
-
Exceptional expense
6
(2,023,500)
-
OPERATING PROFIT
4,681,663
1,599,148
Finance income
8
17,902
947
PROFIT BEFORE INCOME TAX
9
4,699,565
1,600,095
Income tax
10
(858,411)
(253,077)
PROFIT FOR THE YEAR
3,841,154
1,347,018
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations
(55)
1,578
OTHER COMPREHENSIVE INCOME FOR THE
YEAR, NET OF INCOME TAX
(55)
1,578
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
3,841,099
1,348,596
Profit attributable to:
Owners of the parent
3,841,154
1,347,018
Total comprehensive income attributable to:
Owners of the parent
3,841,099
1,348,596
Earnings per share expressed in pence per share
Basic from continuing operations
12
38.54
13.32
Diluted from continuing operations
12
38.52
13.29
Adjusted basic from continuing operations
12
17.62
13.32
Adjusted diluted from continuing operations
12
17.61
13.29
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Consolidated Statement of Financial Position
As at 30 April 2019
Notes
2019
2018
£
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
14
9,200
127,316
Property, plant and equipment
15
1,117,368
1,144,830
Investments
16
-
-
Deferred tax
21
12,578
40,445
1,139,146
1,312,591
CURRENT ASSETS
Trade and other receivables
17
159,756
150,123
Cash and cash equivalents
18
2,544,636
2,322,073
2,704,392
2,472,196
TOTAL ASSETS
3,843,538
3,784,787
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital
19
468,860
504,926
Share premium
199,324
199,324
Capital redemption reserve
236,517
200,451
Foreign exchange reserve
26,372
26,427
Retained earnings
351,641
614,838
TOTAL EQUITY
1,282,714
1,545,966
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
20
1,792,894
1,929,039
Tax payable
407,930
103,232
Provision
22
360,000
206,550
TOTAL LIABILITIES
2,560,824
2,238,821
TOTAL EQUITY AND LIABILITIES
3,843,538
3,784,787
The financial statements were approved by the Board of Directors on 19 June 2019 and were signed on its behalf by:
……………………………..
W S Hindmarch
Director
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Company Statement of Financial Position
As at 30 April 2019
Notes
2019
2018
£
£
ASSETS
NON-CURRENT ASSETS
Intangible assets
14
9,200
127,316
Property, plant and equipment
15
1,117,368
1,144,830
Investments
16
-
-
Deferred tax
21
12,578
40,445
1,139,146
1,312,591
CURRENT ASSETS
Trade and other receivables
17
159,756
149,733
Cash and cash equivalents
18
2,544,311
2,315,988
2,704,067
2,465,721
TOTAL ASSETS
3,843,213
3,778,312
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital
19
468,860
504,926
Share premium
199,324
199,324
Capital redemption reserve
236,517
200,451
Retained earnings
372,240
635,682
TOTAL EQUITY
1,276,941
1,540,383
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
20
1,798,342
1,927,439
Tax payable
407,930
103,940
Provision
22
360,000
206,550
TOTAL LIABILITIES
2,566,272
2,237,929
TOTAL EQUITY AND LIABILITIES
3,843,213
3,778,312
The profit attributable to shareholders dealt with in the financial statements of the Company was £3,840,909
(2018: £1,488,635).
The financial statements were approved by the Board of Directors on 19 June 2019 and were signed on its behalf by:
……………………………..
W S Hindmarch
Director
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Consolidated Statement of Changes in Equity
For the year ended 30 April 2019
Called up
share capital
Share premium
Capital redemption reserve
£
£
£
Balance at 1 May 2017
506,226
179,074
197,651
Issue of share capital
1,500
20,250
-
Dividends paid
-
-
-
Share re-purchase
(2,800)
-
2,800
Transactions with owners
(1,300)
20,250
2,800
Profit for the year
-
-
-
Other comprehensive income
Exchange differences arising on translating
foreign operations
-
-
-
Total comprehensive income
-
-
-
Balance at 30 April 2018
504,926
199,324
200,451
Dividends paid
-
-
-
Share re-purchase
(36,066)
-
36,066
Transactions with owners
(36,066)
-
36,066
Profit for the year
-
-
-
Other comprehensive income
Exchange differences arising on translating
foreign operations
-
-
-
Total comprehensive income
-
-
-
Balance at 30 April 2019
468,860
199,324
236,517
Foreign exchange reserve
Retained earnings
Total
£
£
£
Balance at 1 May 2017
24,849
962,108
1,869,908
Issue of share capital
-
-
21,750
Dividends paid
-
(1,557,535)
(1,557,535)
Share re-purchase
-
(136,753)
(136,753)
Transactions with owners
-
(1,694,288)
(1,672,538)
Profit for the year
-
1,347,018
1,347,018
Other comprehensive income
Exchange differences arising on translating
foreign operations
1,578
-
1,578
Total comprehensive income
1,578
1,347,018
1,348,596
Balance at 30 April 2018
26,427
614,838
1,545,966
Dividends paid
-
(605,915)
(605,915)
Share re-purchase
-
(3,498,436)
(3,498,436)
Transactions with owners
-
(4,104,351)
(4,104,351)
Profit for the year
-
3,841,154
3,841,154
Other comprehensive income
Exchange differences arising on translating
foreign operations
(55)
-
(55)
Total comprehensive income
(55)
3,841,154
3,841,099
Balance at 30 April 2019
26,372
351,641
1,282,714
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Company Statement of Changes in Equity
For the year ended 30 April 2019
Called up
share capital
Share premium
Capital redemption reserve
£
£
£
Balance at 1 May 2017
506,226
179,074
197,651
Issue of share capital
1,500
20,250
-
Dividends paid
-
-
-
Share re-purchase
(2,800)
-
2,800
Transactions with owners
(1,300)
20,250
2,800
Profit for the year
-
-
-
Total comprehensive income
-
-
-
Balance at 30 April 2018
504,926
199,324
200,451
Dividends paid
-
-
-
Share re-purchase
(36,066)
-
36,066
Transactions with owners
(36,066)
-
36,066
Profit for the year
-
-
-
Total comprehensive income
-
-
-
Balance at 30 April 2019
468,860
199,324
236,517
Retained
earnings
Total
£
£
Balance at 1 May 2017
841,335
1,724,286
Issue of share capital
-
21,750
Dividends paid
(1,557,535)
(1,557,535)
Share re-purchase
(136,753)
(136,753)
Transactions with owners
(1,694,288)
(1,672,538)
Profit for the year
1,488,635
1,488,635
Total comprehensive income
1,488,635
1,488,635
Balance at 30 April 2018
635,682
1,540,383
Dividends paid
(605,915)
(605,915)
Share re-purchase
(3,498,436)
(3,498,436)
Transactions with owners
(4,104,351)
(4,104,351)
Profit for the year
3,840,909
3,840,909
Total comprehensive income
3,840,909
3,840,909
Balance at 30 April 2019
372,240
1,276,941
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Consolidated Statement of Cash Flows
For the year ended 30 April 2019
Notes
2019
2018
£
£
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
28
4,763,838
2,236,879
Tax paid
(525,846)
(428,901)
Net cash from operating activities
4,237,992
1,807,978
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets
(9,200)
(38,250)
Purchase of property, plant and equipment
(128,550)
(14,137)
Sales of property, plant and equipment
208,770
131,917
Interest received
17,902
947
Net cash from investing activities
88,922
80,477
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue
-
21,750
Share re-purchase
(3,498,436)
(136,753)
Equity dividends paid
(605,915)
(1,557,535)
Net cash from financing activities
(4,104,351)
(1,672,538)
Increase in cash and cash equivalents
222,563
215,917
Cash and cash equivalents at beginning of year
2,322,073
2,106,156
Cash and cash equivalents at end of year
18
2,544,636
2,322,073
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Company Statement of Cash Flows
For the year ended 30 April 2019
Notes
2019
2018
£
£
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
28
4,770,306
2,262,980
Tax paid
(526,554)
(431,839)
Net cash from operating activities
4,243,752
1,831,141
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets
(9,200)
(38,250)
Purchase of property, plant and equipment
(128,550)
(14,137)
Sales of property, plant and equipment
208,770
131,917
Interest received
17,902
947
Net cash from investing activities
88,922
80,477
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue
-
21,750
Share re-purchase
(3,498,436)
(136,753)
Equity dividends paid
(605,915)
(1,557,535)
Net cash from financing activities
(4,104,351)
(1,672,538)
Increase in cash and cash equivalents
228,323
239,080
Cash and cash equivalents at beginning of year
2,315,988
2,076,908
Cash and cash equivalents at end of year
18
2,544,311
2,315,988
The notes form part of this preliminary announcement
BEST OF THE BEST PLC
Notes to the Preliminary Announcement
For the year ended 30 April 2019
1. GENERAL INFORMATION
The principal activity of the Company and the Group is to operate weekly competitions to win luxury cars and other prizes online.
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretation Committee ("IFRIC") Interpretations as issued by the International Accounting Standards Board and adopted by the European Union and in accordance with those parts of the Companies Act 2006 applicable to those companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all years presented, unless otherwise stated.
The financial statements are presented in Pounds Sterling. All amounts, unless otherwise stated, have been rounded to the nearest Pound.
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying those accounting policies. The areas where significant judgements and estimates have been made in preparing these financial statements and their effect are disclosed in Note 4.
The Directors are satisfied that the Company and Group have adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
2. PRINCIPAL ACCOUNTING POLICIES
2.1 NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
The Company and Group applied for the first time certain Standards, Amendments and Interpretations which are effective for annual periods commencing on or after 1 May 2018. The Company and Group have not early adopted any other Standards, Amendments or Interpretations that have been issued but are not yet effective.
IFRS 2 Share Based Payments
Amendments to IFRS 2 clarify the classification and measurement of share-based payment transactions. The Amendments apply to certain types of share-based payment transactions, including those which are cash-settled and those with net settlement features and also apply where an entity has to account for modifications of share-based payment transactions from cash-settled to equity-settled. The Company and Group have not entered into any of these types of share-based payment transactions during the current or prior year and the Amendments have therefore not affected the Company or Group.
IFRS 9 Financial Instruments
Amendments to IFRS 9 address the classification, measurement, impairment and de-recognition of financial assets and financial liabilities together with a new hedge accounting model.
The Amendments have not resulted in any classification, measurement, impairment or de-recognition changes to the Company's or Group's financial assets and liabilities. In particular, the Company's and Group's financial assets comprise of trade and other receivables and cash and short-term deposits. These financial assets continue to be classified and measured at amortised cost. The Company's and Group's principal financial liabilities include trade and other payables. These financial liabilities continue to be classified and measured at amortised cost.
The Company and Group applies the simplified approach to providing for expected credit losses in accordance with applicable guidance for non-banking entities. Under the simplified approach the Company and Group are required to measure lifetime expected credit losses for all trade receivables.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (continued)
IFRS 15 Revenue from Contracts with Customers
The Standard is effective for periods beginning on or after 1 January 2018 and sets out at what point and how revenue is recognised and also requires enhanced disclosures. Revenue contracts should be recognised in accordance with a single, principles based five-step plan and when control of goods and services has transferred to the customer, with revenue recognised at the value the Company and Group expects to be entitled to receive.
The Company and Group have adopted IFRS 15 for the first time in the year ended 30 April 2019, although the revenue recognition policy remains unchanged from that previously disclosed in the 2018 financial statements and adopting IFRS 15 has not resulted in a change of timing of revenue recognition for the Company or Group, which continues to be recognised on the date that the result of an individual competition is determined.
Adoption of IFRS 15 has not resulted in any changes to the Company's and Group's results as previously reported.
IFRIC 22 Foreign Currency Transactions and Advance Consideration
The Interpretation clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency.
Adoption of the IFRIC has not resulted in any change in the accounting for receipts or payments of advance consideration in a foreign currency.
At the date of authorisation of these financial statements, certain new Standards, Amendments and Interpretations to existing Standards have been published but are not yet effective and have not been adopted early by the Company and Group.
Management anticipates that all of the pronouncements will be adopted in the accounting periods for the first period beginning after the effective date of the pronouncement. Information on new Standards, Amendments and Interpretations that are expected to be relevant to the financial statements is provided below. Certain other new Standards, Amendments and Interpretations have been issued but are not expected to be relevant to the financial statements.
IAS 12 Income Taxes
The Amendments result from the Annual Improvements 2015-2017 cycle and address the income tax consequences of dividends. The Amendments are effective for accounting periods commencing on or after 1 January 2019.
IFRS 16 Leases
The Standard will replace IAS 17 Leases and will eliminate the classification of leases as either operating leases or finance leases and, instead, introduce a single lessee accounting model. The Standard provides a single lessee accounting model, specifying how leases are recognised, measured, presented and disclosed. The Directors are currently evaluating the financial and operational impact of this Standard. This review will require an assessment of all leases and the impact of adopting this Standard cannot be reliably estimated until this work is substantially complete. The Standard is effective for accounting periods commencing on or after 1 January 2019.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 is to be applied in determining the taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates. It is to be applied where there is uncertainty over the income tax treatment under IAS 12. The Interpretation is effective for accounting periods commencing on or after 1 January 2019.
The Directors do not expect that the adoption of the Standards, Amendments and Interpretations listed above will have a material impact on the financial statements of the Company and Group in future periods, although the detailed impact has not yet been quantified.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.2 BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiary undertakings). Where necessary, adjustments are made to the financial statements of the subsidiaries to bring their accounting policies in line with those of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
2.3 REVENUE RECOGNITION
The Company and Group operate weekly competitions to win luxury cars and other prizes online. Revenue represents the value of tickets sold in respect of these competitions and is stated net of VAT, where applicable, and returns, rebates and discounts. Revenue in respect of weekly competitions is recognised on the date the result of those individual competitions is determined, being the point when all performance obligations have been fulfilled.
2.4 COST OF SALES
Cost of sales comprises principally of the cost of competition prizes, duties, rent and the associated costs of operating retail sites.
2.5 EXCEPTIONAL ITEMS
Exceptional items are those items the Company and Group consider to be non-recurring or material in nature that may distort an understanding of financial performance or impair comparability.
2.6 SEGMENT REPORTING
The accounting policy for identifying segments is based on internal management reporting information which is reviewed by the chief operating decision maker. The Company and Group are considered to have a single business segment, being the operation of weekly competitions to win luxury cars and other prizes.
2.7 RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research is recognised as an expense in the period in which it is incurred.
Development costs are capitalised when all of the following conditions are satisfied:
· Completion of the intangible asset is technically feasible so that it will be available for use or sale;
· The Company or Group intends to complete the intangible asset and use or sell it;
· The Company or Group has the ability to use or sell the intangible asset;
· The intangible asset will generate probable future economic benefits. Amongst other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;
· There are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
· The expenditure attributable to the intangible asset during its development can be measured reliably.
Development costs not meeting the criteria for capitalisation are expensed as incurred.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.8 FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into Sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into Sterling at the rates of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.
The assets and liabilities in the financial statements of foreign subsidiaries are translated into the Parent Company's presentation currency at the rates of exchange ruling at the statement of financial position date. Income and expenses are translated at the actual rate on the date of the transaction. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are recognised in other comprehensive income and taken to the foreign exchange reserve in equity. On disposal of a foreign subsidiary, the cumulative translation differences are transferred to profit or loss as part of the gain or loss on disposal.
2.9 SHARE BASED PAYMENT
The Company and Group have applied the requirements of IFRS 2 to share option schemes allowing certain employees within the Group to acquire shares of the Company. For all grants of share options, the fair value as at the date of grant is calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that are likely to vest, except where forfeiture is only due to market-based conditions not achieving the threshold for vesting. The expense is recognised over the expected life of the option.
2.10 PENSION CONTRIBUTIONS AND OTHER POST EMPLOYMENT BENEFITS
The Company operates a money purchase pension scheme for certain employees. The cost of the contributions is charged to the statement of comprehensive income as incurred.
2.11 TAXATION
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the statement of financial position date.
The tax currently payable is based on the taxable profit for the year. Taxable profit/(loss) differs from the net profit/(loss) reported in the statement of comprehensive income as it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition (other than in a business combination) of other assets or liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of the deferred tax asset is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case deferred tax is also dealt with in equity.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.12 IMPAIRMENT
The carrying amounts of the Company's and Group's assets are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indicator exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income.
The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised.
2.13 CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Company and Group present assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:
· expected to be realised or intended to be sold or consumed in the normal operating cycle; or
· held primarily for the purpose of trading; or
· expected to be realised within twelve months after the reporting period; or
· cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets are classified as non-current.
A liability is current when:
· it is expected to be settled in the normal operating cycle; or
· it is held primarily for the purpose of trading; or
· it is due to be settled within twelve months after the reporting period; or
· there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting date.
The Company and Group classify all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.14 INTANGIBLE ASSETS
Intangible assets are recognised at cost less any accumulated amortisation and impairment.
An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Company or Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separate or when it arises from contractual or other legal rights.
The Company's and Group's intangible assets consist of its IT platform, infrastructure and website. The Directors have estimated the useful economic life of the assets to be three years and they are being amortised over that period on a straight line basis.
2.15 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
Depreciation is provided at the following annual rates in order to write off each asset over its useful economic life:
Long leasehold property - 1% on cost
Improvements to property - 4% on cost
Display equipment - At varying rates on cost
Fixtures and fittings - At varying rates on cost
Motor vehicles - 25% on reducing balance
Computer equipment - At varying rates on cost
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from the use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognised.
The residual values, useful economic lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
2.16 INVESTMENTS
Investments in subsidiaries are recorded at cost less any provision for permanent diminution in value.
2.17 LEASES
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company and Group is classified as a finance lease. The Company and Group have not entered into any finance leases during any financial year included in these financial statements.
An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating expense in the statement of comprehensive income on a straight line basis over the lease term.
2. PRINCIPAL ACCOUNTING POLICIES (continued)
2.18 PROVISIONS
Provisions are liabilities where the exact timing or amount of the obligation is uncertain. Provisions are recognised when the Company or Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the time value of money is material, provisions are discounted to current values using appropriate rates of interest. The unwinding of the discounts is recorded in net finance income or expense.
2.19 FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognised in the Company's and Group's statement of financial position when the Company and Group become a party to the contractual provisions of the instrument. The Company's and Group's financial instruments comprise cash, trade and other receivables and trade and other payables.
Trade and other receivables
Trade and other receivables are initially stated at their fair value plus transaction costs, then subsequently at amortised cost using the effective interest method, if applicable, less impairment losses. Provisions against trade and other receivables are made when there is objective evidence that the Company and Group will not be able to collect all amounts due to them in accordance with the original terms of those receivables. The amount of the write down is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows.
Cash and cash equivalents
The Company and Group manage short-term liquidity through the holding of cash and highly liquid interest-bearing deposits. Only deposits that are readily convertible into cash with maturities of three months or less from inception, with no penalty of lost interest, are shown as cash and cash equivalents.
Trade payables
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company and Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the statement of comprehensive income.
2.20 EQUITY
Equity comprises the following:
· Called up share capital represents the nominal value of the equity shares;
· Share premium represents the excess over nominal value of the fair value of consideration received from the equity shares, net of expenses of the share issue;
· Capital redemption reserve represents the value of the re-purchase by the Company of its own share capital;
· Foreign exchange reserve represents accumulated exchange differences from the translation of subsidiaries with a functional currency other than Sterling; and
· Retained earnings represent accumulated profits and losses from incorporation and any credit arising under share based payments
3. CAPITAL MANAGEMENT
The Company defines capital as the total equity of the Company. The objective of the Company's capital management is to ensure that it makes the maximum use of its capital to support its business and to maximise shareholder value. There are no external constraints on the Company's capital.
4. CRITICAL JUDGEMENTS AND ACCOUNTING ESTIMATES
The Company and Group make certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual expenditure may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Impairment of assets
The Company and Group are required to consider assets for impairment where such indicators exist, using value in use calculations or fair value estimates. The use of these methods may require the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. Actual outcomes may vary.
Useful lives of property, plant and equipment and intangible assets
Property, plant and equipment are depreciated and intangible assets are amortised over their useful lives. Useful lives are based on management's estimates, which are periodically reviewed for continued appropriateness. Changes to estimates can result in variations in the carrying values and amounts charged to the statement of comprehensive income in specific periods.
5. SEGMENTAL REPORTING
For management purposes, the Company and Group are considered to have one single business segment, being the operation of weekly competitions to win luxury cars and other prizes. The Group comprises Best of the Best PLC and its subsidiary company BOTB Ireland Limited. BOTB Ireland Limited generated no sales during either the current or prior year and it holds few assets and is expected to have very little trading activity going forward. The two companies do not transact with each other. Further segment information is therefore not presented in these financial statements.
Sales from UK activities totalled £12,098,896 (2018: £10,386,359) whilst sales from non-UK activities totalled £2,708,076 (2018: £2,561,357).
6. EXCEPTIONAL INCOME AND EXPENSE
On 19 May 2018, the Company received a retrospective VAT refund from H M Revenue and Customs ("HMRC") on its "Spot the Ball" game of £4,494,697 for the period from 1 March 2009 to 30 June 2017. Accordingly, this sum, as well as an associated interest receipt, has been recognised as exceptional income in the financial year. On 20 December 2018, the Company settled an agreed assessment issued by HMRC for retrospective taxation, making a payment of £1,758,875. Accordingly, this sum has been recognised as an exceptional expense in the financial year, together with associated legal and professional costs of £264,625 incurred in connection with these claims.
7. EMPLOYEES AND DIRECTORS
Group
Company
2019
2018
2019
2018
£
£
£
£
Wages and salaries
1,772,484
2,420,722
1,772,484
2,308,814
Social security costs
218,326
265,978
218,326
254,367
Other pension costs
62,892
64,520
62,892
64,520
2,053,702
2,751,220
2,053,702
2,627,701
The average monthly number of employees during the year, including the Directors, was as follows:
Group
Company
2019
2018
2019
2018
Number
Number
Number
Number
Sales
10
37
10
32
Administration
16
18
16
18
Management
3
2
3
2
29
57
29
52
2019
2018
£
£
Directors' remuneration
528,717
487,634
The number of Directors to whom retirement benefits were accruing was as follows:
2019
2018
Number
Number
Money purchase schemes
2
2
Information regarding the highest paid Director is as follows:
2019
2018
£
£
Emoluments
250,967
228,590
8. FINANCE INCOME
2019
2018
£
£
Finance income:
Deposit account interest
17,902
947
9. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging/(crediting):
2019
2018
£
£
Depreciation and impairment of property, plant and equipment
80,174
126,036
Amortisation of intangible assets
127,316
89,067
Profit on disposal of property, plant and equipment
(132,932)
(31,658)
Operating lease expense - buildings
200,808
676,234
Operating lease expense - other
17,635
10,629
Foreign exchange losses/(gains)
-
6,813
Auditor's remuneration
Audit fees
33,500
34,025
Taxation services
2,631
6,750
Other
22,500
13,000
10. INCOME TAX
Analysis of tax expense
2019
2018
£
£
Current tax:
Current year charge
830,544
256,558
Total current tax
830,544
256,558
Deferred tax
Origination and reversal of temporary timing differences
27,867
(3,481)
Total deferred tax
27,867
(3,481)
Total tax charge for the year
858,411
253,077
Factors affecting the tax expense
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:
2019
2018
£
£
Profit on ordinary activities before income tax
4,699,565
1,600,095
Profit on ordinary activities multiplied by the standard rate of corporation
tax in the UK of 19% (2018: 19%)
892,917
304,018
Effects of:
Depreciation in excess of capital allowances
38,222
7,632
Other timing differences
1,074
(3,247)
Non-deductible expenses
5,018
12,574
Research and development enhanced deduction
(78,820)
(67,900)
Tax expense
858,411
253,077
Future tax developments
A reduction in the UK corporation tax rate from 19% to 17%, effective from 1 April 2020, was substantively enacted on 15 September 2016. This will reduce the company's future tax charge accordingly.
11. PROFIT OF THE PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the income statement of the Parent Company is not presented as part of these financial statements. The parent Company's profit for the financial year was £3,840,909 (2018: £1,488,635).
12. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
Adjusted earnings per share is calculated by dividing the earnings attributable to the ordinary shareholders, before exceptional income and exceptional expense and associated corporation tax, by the weighted average number of ordinary shares outstanding during the year.
Diluted and adjusted diluted earnings per share is calculated using the weighted average number of shares outstanding during the year, adjusted to assume the exercise of all dilutive potential ordinary shares under the company's share option plans.
2019
2018
Profit for the year and basic and diluted earnings attributable to the
owners of the parent - £
3,841,154
1,347,018
Adjusted profit for the year and basic and diluted earnings attributable to the
owners of the parent - £
1,755,869
1,347,018
Weighted average number of ordinary shares - number
9,965,495
10,112,997
Basic earnings per share - pence
38.54p
13.32p
Adjusted basic earnings per share - pence
17.62p
13.32p
Adjusted weighted average number of ordinary shares - number
9,971,206
10,137,887
Diluted earnings per share - pence
38.52p
13.29p
Adjusted diluted earnings per share - pence
17.61p
13.29p
13. DIVIDENDS
The Company paid a final dividend of 1.5 pence per share on 21 September 2018, as recommended in the financial statements to 30 April 2018. Furthermore, a Special Dividend of 4.5 pence per share was paid on 20 July 2018 to shareholders on the register at the close of business on 6 July 2018.
The Board is recommending a final dividend of 2.0 pence per share (2018: 1.5 pence per share) for the full year ending 30 April 2019 subject to shareholder approval at the Annual General Meeting on 11 September 2019. The final dividend will be paid on 27 September 2019 to shareholders on the register on 13 September 2019.
14. INTANGIBLE ASSETS - GROUP AND COMPANY
Development costs
£
COST
At 1 May 2018
305,450
Additions
9,200
At 30 April 2019
314,650
AMORTISATION
At 1 May 2018
178,134
Charge for year
127,316
At 30 April 2019
305,450
NET BOOK VALUE
2019
9,200
2018
127,316
14. INTANGIBLE ASSETS - GROUP AND COMPANY (continued)
Development costs
£
COST
At 1 May 2017
267,200
Additions
38,250
At 30 April 2018
305,450
AMORTISATION
At 1 May 2017
89,067
Charge for year
89,067
At 30 April 2018
178,134
NET BOOK VALUE
2018
127,316
2017
178,133
15. PROPERTY, PLANT AND EQUIPMENT - GROUP AND COMPANY
Long
leasehold
Improvements to property
Display
equipment
Fixtures and fittings
£
£
£
£
COST
At 1 May 2018
954,034
25,950
473,591
170,219
Additions
-
-
-
2,110
Disposals
-
-
(370,927)
-
At 30 April 2019
954,034
25,950
102,664
172,329
DEPRECIATION AND IMPAIRMENT
At 1 May 2018
6,998
2,078
342,970
160,717
Charge for the year
3,500
1,090
31,106
11,612
Eliminated on disposals
-
-
(297,183)
-
At 30 April 2019
10,498
3,168
76,893
172,329
NET BOOK VALUE
2019
943,536
22,782
25,771
-
2018
947,036
23,872
130,621
9,502
Motor vehicles
Computer equipment
Total
£
£
£
COST
At 1 May 2018
58,275
115,137
1,797,206
Additions
112,582
13,858
128,550
Disposals
(15,486)
-
(386,413)
At 30 April 2019
155,371
128,995
1,539,343
DEPRECIATION AND IMPAIRMENT
At 1 May 2018
35,078
104,535
652,376
Charge for the year
21,085
11,781
80,174
Eliminated on disposals
(13,392)
-
(310,575)
At 30 April 2019
42,771
116,316
421,975
NET BOOK VALUE
2019
112,600
12,679
1,117,368
2018
23,197
10,602
1,144,83
15. PROPERTY, PLANT AND EQUIPMENT - GROUP AND COMPANY (continued)
Long
leasehold
Improvements to property
Display
equipment
Fixtures and fittings
£
£
£
£
COST
At 1 May 2017
954,034
25,950
713,060
170,219
Additions
-
-
-
-
Disposals
-
-
(239,469)
-
At 30 April 2018
954,034
25,950
473,591
170,219
DEPRECIATION AND IMPAIRMENT
At 1 May 2017
3,500
1,040
414,855
139,177
Charge for the year
3,498
1,038
67,325
21,540
Eliminated on disposals
-
-
(139,210)
-
At 30 April 2018
6,998
2,078
342,970
160,717
NET BOOK VALUE
2018
947,036
23,872
130,621
9,502
2017
950,534
24,910
298,205
31,042
Motor vehicles
Computer equipment
Total
£
£
£
COST
At 1 May 2017
58,275
101,000
2,022,538
Additions
-
14,137
14,137
Disposals
-
-
(239,469)
At 30 April 2018
58,275
115,137
1,797,206
DEPRECIATION AND IMPAIRMENT
At 1 May 2017
27,341
79,637
665,550
Charge for the year
7,737
24,898
126,036
Eliminated on disposals
-
-
(139,210)
At 30 April 2018
35,078
104,535
652,376
NET BOOK VALUE
2018
23,197
10,602
1,144,830
2017
30,934
21,363
1,356,988
16. INVESTMENTS
Group
Unlisted investments
£
COST
At 1 May 2018 and 30 April 2019
70,000
IMPAIRMENT
At 1 May 2018 and 30 April 2019
70,000
NET BOOK VALUE
At 1 May 2018 and 30 April 2019
-
Unlisted investments relate to the cost of acquiring options in another company.
Company
Shares in group undertakings
Unlisted investments
Total
£
£
£
COST
At 1 May 2018 and 30 April 2019
85
70,000
70,085
IMPAIRMENT
At 1 May 2018 and 30 April 2019
85
70,000
70,085
NET BOOK VALUE
At 1 May 2018 and 30 April 2019
-
-
-
Shares in Group undertakings comprise of the following subsidiary company:
Name of company
Nature of business
% holding
Country of incorporation
BOTB Ireland Limited
Competition operator
100
Republic of Ireland
17. TRADE AND OTHER RECEIVABLES - GROUP AND COMPANY
Group
Company
2019
2018
2019
2018
£
£
£
£
Trade receivables
765
10,961
765
10,961
Other receivables
32,560
56,290
32,560
56,290
Prepayments and accrued income
126,431
82,872
126,431
82,482
159,756
150,123
159,756
149,733
The fair value of trade and other receivables approximates to their carrying values.
18. CASH AND CASH EQUIVALENTS - GROUP AND COMPANY
Group
Company
2019
2018
2019
2018
£
£
£
£
Cash in hand
2,543,094
3,783
2,542,770
3,783
Bank accounts
1,542
2,318,290
1,541
2,312,205
2,544,636
2,322,073
2,544,311
2,315,988
19. CALLED UP SHARE CAPITAL - COMPANY
Allotted, issued and fully paid
2019
2018
2019
2018
Ordinary shares of 5pence each
Number
Number
£
£
At the start of the year
10,098,580
10,124,580
504,926
506,226
Shares allotted during the year
-
30,000
-
1,500
Purchased for cancellation in the year
(721,327)
(56,000)
(36,066)
(2,800)
At the end of the year
9,377,253
10,098,580
468,860
504,926
On 15 February 2019, subject to a circular dated 30 January 2019, shareholders approved a proposed tender offer by finnCap Ltd to purchase Ordinary shares in the Company up to approximately 7.1% of the issued share capital at a price of 485 pence per share. Further to a repurchase agreement between the Company and finnCap Ltd, the Company exercised the call option and bought back and subsequently cancelled, 721,327 Ordinary Shares at a price of 485 pence per share.
No shares were allotted during the year. In the prior year, 30,000 Ordinary shares of £0.05 per share were allotted as fully paid at a premium of £0.675 per share. Furthermore, in the prior year 56,000 Ordinary shares of £0.05 per share were purchased by the Company and subsequently cancelled.
An amount equal to the nominal value of the Ordinary shares has been transferred to the capital redemption reserve. The amount paid per share was £4.85 (2018: Between £2.20 and £2.55). The difference between the amount paid and the nominal value of the shares re-purchased has been deducted from the retained earnings reserve.
20. TRADE AND OTHER PAYABLES - GROUP AND COMPANY
Group
Company
2019
2018
2019
2018
£
£
£
£
Trade creditors
343,186
388,063
343,186
387,396
Amounts owed to group undertakings
-
-
5,448
-
Social security and other taxes
392,533
463,946
392,533
463,946
Other creditors
978,262
1,076,798
978,262
1,075,865
Contract liability balances
73,030
-
73,030
-
Pension creditor
5,883
232
5,883
232
1,792,894
1,929,039
1,798,342
1,927,439
21. DEFERRED TAX - GROUP AND COMPANY
Group
Company
2019
2018
2019
2018
£
£
£
£
Asset at 1 May
40,445
36,964
40,445
36,964
Movement in the year
(27,867)
3,481
(27,867)
3,481
Asset at 30 April
12,578
40,445
12,578
40,445
Deferred tax assets have been recognised in respect of accelerated capital allowances giving rise to deferred tax assets where the Directors believe that it is probable that these assets will be recovered.
22. PROVISIONS - GROUP AND COMPANY
Group
Company
2019
2018
2019
2018
£
£
£
£
At 1 May
206,550
129,816
206,550
129,816
Utilised during the year
(151,050)
(129,816)
(151,050)
(129,816)
Additions
304,500
206,550
304,500
206,550
Asset at 30 April
360,000
206,550
360,000
206,550
The Directors have assessed that its retail site lease is onerous and a provision has been recognised in respect of future rental payments.
23. SHARE BASED PAYMENT - GROUP AND COMPANY
Details of the share options outstanding during the year are as follows:
Grant date
Outstanding at 1 May 2018
Granted
Exercised
Forfeited
Outstanding at 30 April 2019
Expiry date
Exercise price
19-12-2017
45,000
-
-
-
45,000
19-12-2027
£2.25
The Company and Group operate a share option scheme for certain Directors and employees. Options are exercisable at a price defined by the individual option agreements. The vesting period on each option is three years. If the options remain unexercised during the specified period from the date of grant, the options expire. Options are generally forfeited if the employee leaves the Group before the options vest, however, this is at the discretion of the Board.
Details of the share options and the weighted average exercise price ('WAEP') outstanding during the year are as follows:
2019
2019
2018
2018
Number
WAEP
Number
WAEP
Outstanding at the beginning of year
45,000
225.00
30,000
72.50
Granted during the year
-
-
45,000
225.00
Exercised during the year
-
-
(30,000)
(72.50)
Lapsed during the year
-
-
-
-
Outstanding at the end of the year
45,000
225.00
45,000
225.00
Exercisable at the end of the year
-
-
-
-
The weighted average remaining contractual life of share options outstanding as at 30 April 2019 was 8 years and 8 month (2018: 9 years and 8 months).
No amount has been recognised in these financial statements in respect of share option charges as the amount would be insignificant (2018: £Nil).
24. LEASE COMMITMENTS - GROUP AND COMPANY
Future minimum rentals payable under operating leases at 30 April 2019 were as follows:
Buildings
Other
2019
2018
2019
2018
£
£
£
£
Due within one year
124,125
223,050
4,437
6,762
Due between one and two years
226,050
368,000
-
-
350,175
591,050
4,437
6,762
25. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS - GROUP AND COMPANY
The principal financial assets of the Group are bank balances. The Group's principal financial liabilities are trade and other payables. The main purpose of these financial instruments is to generate sufficient working capital for the Group to continue its operations.
Credit risk
The Group's exposure to credit risk is limited to the carrying amounts of financial assets recognised at the statement of financial position date, as summarised below. Management considers that the Group is exposed to little credit risk arising on its receivables due to the value of those receivables. The credit risk on cash balances is limited because the third parties are banks with high credit ratings assigned by international credit rating agencies.
2019
2018
£
£
Financial assets classified as loans and receivables - carrying amounts:
Trade receivables
765
10,961
Other receivables
32,560
56,290
Cash and cash equivalents
2,544,636
2,322,073
2,577,961
2,389,324
Liquidity risk
The Group's funding strategy is to generate sufficient working capital to settle liabilities as they fall due and to ensure sufficient financial resource is in place to support management's long-term growth plans.
The Group's financial liabilities have contractual maturities as follows:
2019
2018
£
£
£
£
Financial liabilities measured at amortised cost - carrying amounts
Up to 1 year
After 1 year
Up to 1 year
After 1 year
Trade and other payables
1,719,864
-
1,929,039
-
1,719,864
-
1,929,039
-
26. RELATED PARTY DISCLOSURES
M W Hindmarch is considered to be a related party as he is a Non-Executive Director of the Company. During the year ended 30 April 2019, payments were made to him totaling £12,000 (2018: £12,000) in respect of consultancy services provided. The total amount due to M W Hindmarch at 30 April 2019 was £1,000 (2018: £1,000).
27. ULTIMATE CONTROLLING PARTY
The Company is under the ultimate control of W S Hindmarch, the Chief Executive Director of the Company, by virtue of his controlling shareholding at the statement of financial position date.
28. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
Group
Company
2019
2018
2019
2018
£
£
£
£
Profit before income tax
4,699,565
1,600,095
4,699,320
1,741,712
Depreciation charges
80,174
126,036
80,174
126,036
Amortisation charges
127,316
89,067
127,316
89,067
Profit on disposal of property, plant and equipment
(132,932)
(31,658)
(132,932)
(31,658)
Investment impairment charge
-
70,000
-
70,085
Exchange differences
(55)
1,578
-
-
Finance income
(17,902)
(947)
(17,902)
(947)
4,756,166
1,854,171
4,755,976
1,994,295
(Increase) / decrease in trade and other receivables
(9,633)
95,063
(10,023)
34,323
(Decrease) / increase in trade and other payables
(136,145)
210,911
(129,097)
157,628
Increase in provision
153,450
76,734
153,450
76,734
Cash generated from operations
4,763,838
2,236,879
4,770,306
2,262,980
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR SFAFWUFUSEDM
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