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REG - Best of the Best PLC - Half-year Report

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RNS Number : 8770Y  Best of the Best PLC  19 January 2022

 

Best of the Best plc

("Best of the Best", "BOTB", "the Company" or "the Group")

 

Interim results for the six months ended 31 October 2021

 

Best of the Best plc runs competitions online to win cars and other prizes.

 

 

 

 

Operational gearing, higher customer acquisition costs and increased prizes
have reduced margins on

broadly stable revenues

 

 

 

Key Financials:

·      Total revenue for the six months £19.12 million (2020: £22.09
million), in line with management's expectations

·      Profit before tax £3.04 million (2020: £6.80 million), in line
with management's expectations

·      Earnings per share 27.26p (2020: 59.84p)

·      Net assets of £6.35 million (2020: £6.75 million),
substantially underpinned by property and cash

·      Strong financial position with cash balances of £8.34 million
(2020: £11.18 million) and no borrowings

 

 

Outlook:

·      Following a period of stabilisation (albeit at a significantly
higher level than pre Covid), the cost of acquiring players increased by a
further c. 37% in November and December 2021 compared to the prior six month
average, resulting in fewer customer registrations for similar levels of
marketing investment.

·      Early January 2022 indications suggest that marketing costs may
be trending back towards levels experienced in the period under review, but
reduced customer acquisition in November and December 2021, together with a
cautious outlook means that we believe our revenues for the full 12 months
will now be £34 - £35 million, with pre-tax profits expected to be £4.25 -
£4.75 million.

·      We are a profitable, cash generative business with no debt and a
large and loyal customer base. We will be taking steps to reduce the bottom
line impact of reduced revenues by maintaining a sharp focus on costs, and
prioritising only the most efficient marketing channels.

 

 

 

William Hindmarch, Chief Executive, said:

"We are confident that the business, now operating purely online, is
positioned to grow above the traditional growth rates experienced when
operations were focused on bricks and mortar retail. Our very strong results
last year were driven by material increases in our marketing budget, the
addition of new competitions, prize enhancements and pricing changes,
delivering significant quantities of new customers and traffic to our website,
which our operationally geared business model converted into heightened levels
of profitability.  However, it is now also becoming apparent that the
business benefitted more than originally assumed from a tailwind during the
Covid period, whilst much of the country remained in lockdown with restricted
movement, travel, entertainment and other retail opportunities.

 

Emerging out of lockdowns, we have been faced with very tough comparatives,
however, revenues are running at twice the level of that when we exited our
last physical retail site and completed the transformation to a fully online
business.

 

 

 

 

 

 

 

During the period under review, the business traded in line with market
expectations as updated in August 2021 and, having exhibited the incredible
benefits of operational gearing during the financial year ended April 2021,
the Board remains fully focused on re-harnessing this opportunity by adjusting
customer acquisition, through product development and by seeking additional
revenue streams.

 

Whilst we are facing a new set of challenges, we remain a profitable, cash
generative business with no debt and a large and loyal customer base which
remains engaged.  Understandably, we will be taking steps to reduce the
bottom line impact of reduced revenues, by maintaining a sharp focus on costs,
and prioritizing the most efficient marketing channels.

 

We recognise that there is potential volatility ahead, which is evident in our
cautious short-term outlook, but look to the medium and long term with
confidence as we push towards a return to steady growth and more normalised
marketing costs."

 

 

 

 

Enquiries:

 

 Best of the Best plc             William Hindmarch, Chief Executive   T: 020 7371 8866

                                  Rupert Garton, Commercial Director

 Buchanan                         Chris Lane                           T: 020 7466 5000

                                  Toto Berger

 Oakvale Capital                  Daniel Burns                         T: 0207 580 3838

 (Financial Adviser)              Kieran Davey

 finnCap                          Corporate Finance                    T: 020 7220 0500

 (Nominated Adviser and Broker)   Carl Holmes

                                  Kate Bannatyne

                                  Teddy Whiley

                                  ECM

                                  Alice Lane

 

The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014  Please visit www.botb.com
(http://www.botb.com) for further information

 

 

 

Chief Executive's Statement

 

Interim Results

Revenue for the six months ended 31 October 2021 was £19.12 million (2020:
£22.09 million). Profit before tax was £3.04 million (2020: £6.80 million)
with earnings per share of 27.26p (2020: 59.84p). Net assets at 31 October
2021 stood at £6.35 million underpinned by cash balances at the period end of
£8.34 million and our 967-year leasehold office properties in London, valued
at £0.95 million. The Group has no borrowings.

 

Strategy, Competitions & CRM

With a principally fixed cost operating model and high levels of operational
gearing, our strategy focuses on increasing revenues, player numbers and
engagement by efficiently recruiting new customers through a variety of
principally digital marketing channels, whilst innovating and improving our
competitions and prizes. Our dedicated in-house marketing team also allocates
significant resources towards CRM, via a range of communications channels and
retention initiatives, to maximise customer LTVs and ROI.

BOTB's customer database and engagement with social media followers have
developed significantly in recent years, supporting existing revenue streams
and providing potential new monetisation opportunities in the future.  The
database now stands at 1.8 million contactable customers, with much of our CRM
and customer service carried out via daily content updates on our social media
accounts, mainly Facebook (420,000 followers) and Instagram (300,000
followers).

Our principal competitions are the Weekly Dream Car and Midweek
Competitions.  Both offer the opportunity to win brand new cars (from a
choice of up to 200 models) combined with the ability to add up to £50,000 in
cash with your prize.  Ticket prices start from just 45p with our largest
prizes valued at c. £250,000.

With tickets from just 25p, the Lifestyle Competition featuring motorbikes,
luxury watches, holidays, top technology and cash prizes, continues to be
popular, addressing a wider non-car market, as well as cross selling to our
core automotive audience.

We take significant time, effort and resources to try and surprise all of our
BOTB winners in person with the car they have won. Together with a film crew,
our presenter Christian Williams travels the length and breadth of the UK to
deliver these surprises, creating compelling and engaging video content,
marketing assets, website and social content.  Whilst this has been much
harder to enact in line with Government advice during the various stages of
lockdown and restricted movement, we are pleased to have continued to build
upon our uniquely emotive library of material, whilst celebrating our 600(th)
car winner and a number of other milestones.

 

New player acquisition

As previously mentioned, the costs of acquiring new customers (CPA) during the
period have increased significantly above pre-pandemic levels (see table
below).  This appears to have been driven by a number of market forces,
including the trend that, upon exiting lockdown, most businesses across all
sectors have sought to increase their online marketing budgets in order to
drive market share and to speed up their transition away from traditional
retail.  This has, in our experience, enabled channels (e.g. Meta Group -
Facebook & Instagram) to materially increase the cost of advertising
impressions (CPM's) on their platforms.

 

 Calendar Year       2019                                2020                                2021
 3 month average     Q1       Q2       Q3       Q4       Q1       Q2       Q3       Q4       Q1       Q2       Q3       Q4
 CPA (all-channels)  £22.65   £22.08   £17.74   £17.41   £14.77   £12.70   £13.22   £20.69   £21.43   £34.72   £41.29   £50.36
 CPM (Facebook)      £2.97    £3.78    £4.47    £4.32    £3.33    £3.04    £3.72    £4.58    £4.31    £5.65    £6.07    £6.27

 

 

 

Furthermore, as widely acknowledged during the same period and in line with
many online focused companies, the changes introduced by Apple's iOS14
operating system have undoubtedly reduced the accuracy of our targeting and
thereby the efficiency of our marketing, albeit it is hard to precisely
quantify the effects at this stage.

Whilst a smaller overall contributor to new players, we continue to use a
multitude of other channels beyond social media to acquire customers such as
Influencers, TV and other more traditional forms of advertising.

We are in early-stage discussions about working in partnership with larger
media companies to diversify and broaden our acquisition channels, whilst we
continue to explore possible overseas options and will report on both of these
developments as they materialise.  We recognise this to be an important area
of focus in the year ahead and will be allocating resources accordingly.

 

IT development

Our systems architecture, content management systems, websites and user
experience have continued to benefit from incremental improvements aimed at
both new and existing customers. Our in-house team of developers work to a
fortnightly deployment schedule with new code being released regularly and
consistently, to roll out new functionality. Most recently we have undertaken
a major upgrade of our Umbraco CMS, allowing increased flexibility and
automation of competition management, pricing, and new product development.

Our CRM is substantially driven by our email marketing program and during the
period we successfully migrated to a new provider Emarsys, which affords us
more sophisticated targeting, segmentation and content personalisation
opportunities going forward.  The iOS App is operating as expected, now
accounting for approximately 13% of total revenues.

 

Outlook

Emerging out of successive lockdowns and the Covid period, we have been faced
with very tough comparatives, however, revenues are running at twice the level
of that when we exited our last physical retail site and completed the
transformation to a fully online business. We are confident that the
business, now operating purely online, is positioned to grow above the
traditional growth rates experienced when operations were focused on bricks
and mortar retail.

 

During the period under review, the business traded in line with the market
expectations as updated in August 2021 and, having exhibited the incredible
benefits of operational gearing during the financial year ended April 2021,
the Board remains fully focused on re-harnessing this opportunity by adjusting
customer acquisition, through product development and by seeking additional
revenue streams.

 

Whilst we are facing a new set of challenges, we remain a profitable, cash
generative business with no debt and a large and loyal customer base which
remains engaged.  Understandably, we will be taking steps to reduce the
bottom line impact of reduced revenues, by maintaining a sharp focus on costs,
and prioritizing the most efficient marketing channels.

 

We recognise that there is potential volatility ahead, which is evident in our
cautious short term outlook, but look to the medium and long term with
confidence as we push towards a return to steady growth.

I look forward to updating shareholders in due course.

 

 

William Hindmarch

Chief Executive

 

 

 BEST OF THE BEST PLC

 Unaudited Consolidated Income Statement
 For the Six Months Ended 31 October 2021

 ___________________________________________________________________________________________________

                                                                Six Months Ended 31/10/21 Unaudited      Six Months Ended 31/10/20 Unaudited

                                                                                                                                                  Year Ended 30/04/21 Audited
                                                         Notes  £'000                                    £'000                                    £'000

 Revenue                                                 2      19,118                                   22,088                                   45,681

 Cost of sales                                                  (8,267)                                  (8,206)                                  (17,410)

 GROSS PROFIT                                                   10,851                                   13,882                                   28,271

 Administrative expenses                                        (7,813)                                  (7,083)                                  (14,209)

 OPERATING PROFIT                                               3,038                                    6,799                                    14,602

 Finance income                                                 -                                        1                                        1

 PROFIT BEFORE TAX                                              3,038                                    6,800                                    14,063

 Tax                                                            (472)                                    (1,188)                                  (2,569)

 PROFIT FOR THE PERIOD AND TOTAL COMPREHENSIVE INCOME           2,566                                    5,612

                                                                                                                                                  11,494

 Profit and total comprehensive income attributable to:
 Owners of the parent                                           2,566                                    5,612                                    11,494

 Profit on earnings per share expressed
 in pence per share:                                     3
 Basic from continuing operations                               27.26                                    59.84                                    122.52
 Diluted from continuing operations                             27.06                                    59.39                                    121.82

 

 BEST OF THE BEST PLC

 Unaudited Consolidated Statement of Financial Position
 As at 31 October 2021

 _________________________________________________________________________________________________

 

 

                                       Six Months Ended 31/10/21 Unaudited          Six Months Ended 31/10/20 Unaudited

                                                                                                                             Year Ended 30/04/21 Audited
                                Notes  £'000                                        £'000                                    £'000

 ASSETS

 NON-CURRENT ASSETS

 Development costs                     120                                          157                                      160
 Property, plant and equipment         1,087                                        1,098                                    1,103
 Deferred tax                          -                                            -                                        -

                                       1,207                                        1,255                                    1,263

 CURRENT ASSETS
 Trade and other receivables           420                                          105                                      271
 Cash and cash equivalents             8,346                                        11,183                                   11,814

                                       8,766                                        11,288                                   12,085

 TOTAL ASSETS                          9,973                                        12,543                                                 13,348

 EQUITY
 SHAREHOLDERS' EQUITY
 Called up share capital               471                                          469                                      471
 Share premium                         278                                          199                                      277
 Capital redemption reserve            237                                          237                                      236
 Foreign exchange reserve              27                                           20                                       27
 Retained earnings                     5,341                                        5,824                                    7,953

 TOTAL EQUITY                          6,354                                        6,749                                    8,964

 LIABILITIES
 CURRENT LIABILITES
 Trade and other payables              3,122                                        4,610                                    3,053
 Tax payable                           483                                          1,184                                    1,317
 Provision                             14                                           -                                        14

 TOTAL LIABILITIES                     3,619                                        5,794                                    4,384

 TOTAL EQUITY AND LIABILITIES          9,973                                        12,543                                   13,348

 

 

 

 

 

 

 BEST OF THE BEST PLC

 Unaudited Consolidated Statement of Changes in Equity
 For the Six Months Ended 31 October 2021

 

                             Called up
                             share          Retained                    Share
                             capital        earnings                    premium
                             £'000          £'000                       £'000

 Balance at 1 May 2020       469                     2,369              199
 Issue of share capital      2              -                           78
 Dividends                   -              (5,910)                     -
 Transactions with owners    -              -                           -
 Profit for the year         -              11,494                      -
 Total comprehensive income  -              11,494                      -

 Balance at 30 April 2021    471                     7,953              277

 Dividends                   -              (5,178)                     -
 Transactions with owners    -              -                           1
 Profit for the period       -              2,566                       -
 Total comprehensive income  -              2,566                       -

 Balance at 31 October 2021  471            5,341                       278

 

                             Capital         Foreign
                             redemption      exchange      Total
                             reserve         reserves      equity
                             £'000           £'000         £'000

 Balance at 1 May 2020       236             27            3,300

 Issue of share capital      -               -             80
 Dividends                   -               -             (5,910)
 Transactions with owners    -               -             -
 Profit for the year         -               -             11,494
 Total comprehensive income  -               -             11,494

 Balance at 30 April 2021    236             27            8,964

 Dividends                   -               -             (5,178)
 Transactions with owners    -               -             1
 Profit for the period       1               -             2,567
 Total comprehensive income  -               -             2,566

 Balance at 31 October 2021  237             27            6,354

 BEST OF THE BEST PLC

 Unaudited Consolidated Statement of Changes in Equity
 For the Six Months Ended 31 October 2021

 

                             Called up
                             share           Retained      Share
                             capital         earnings      premium
                             £'000           £'000         £'000

 Balance at 1 May 2020       469             2,369         199

 Dividends                   -               (2,157)       -
 Transactions with owners
 Profit for the period       -               5,612         -
 Total comprehensive income  -               5,612         -
                             -               -             -
 Balance at 31 October 2020  469             5,824         199

                             Capital         Foreign
                             redemption      exchange      Total
                             reserve         reserves      Equity
                             £'000           £'000         £'000

 Balance at 1 May 2020       237             26            3,300

 Dividends                   -               -             (2,157)
 Transactions with owners    -               -             -
 Profit for the period       -               (6)           5,606
 Total comprehensive income  -               -             5,606

 Balance at 31 October 2020  237             20            6,749

 

 

 

 BEST OF THE BEST PLC

 Unaudited Consolidated Cash Flow Statement
 For the Six Months Ended 31 October 2021

 ________________________________________________________________________________________________
                                                          Six Months Ended 31/10/21 Unaudited      Six Months Ended 31/10/20 Unaudited

                                                                                                                                            Year Ended 30/04/21 Audited

 Cash flows from operating activities              Notes  £'000                                    £'000                                    £'000

 Cash generated from operations                    5      3,022                                    8,697                                    14,270
 Tax paid                                                 (1,307)                                  (455)                                    (1,686)

 Net cash from operating activities                       1,715                                    8,242                                    12,584

 Cash flows from investing activities
 Purchase of intangible fixed assets                      -                                        (78)                                     (84)
 Purchase of tangible fixed assets                        (6)                                      (35)                                     (67)
 Sale of tangible fixed assets                            -                                        -                                        -
 Interest received                                        -                                        1                                        1

 Net cash from investing activities                       (6)                                      (112)                                    (150)

 Cash flows from financing activities
 Share issue                                              -                                        -                                        80
 Equity dividends paid                                    (5,177)                                  (2,157)                                  (5,910)

 Net cash from financing activities                       (5,177)                                  (2,157)                                  (5,830)

 Increase in cash and cash equivalents                    (3,468)                                  5,973                                    6,604

 Cash and cash equivalents at beginning of period         11,814                                   5,210                                    5,210

 Cash and cash equivalents at end of period               8,346                                    11,183                                   11,814

 

 

 
 

 

 

 

 

BEST OF THE BEST PLC

 

Notes to the Interim Financial Statements

For the Six Months Ended 31 October 2021

 

 

1.           BASIS OF PREPARATION

 

These condensed interim financial statements are for the six months ended 31
October 2021. They have been prepared with regard to the requirements of
International Financial Reporting Standards as adopted by the EU. They do not
include all of the information required for full financial statements and
should be read in conjunction with the financial statements (under IFRS) of
the Group for the year ended 30 April 2021.

 

The Group is listed on the AIM market of the London Stock Exchange and has
prepared the interim financial statements in accordance with AIM rule 18. The
Group has elected not to adopt the full scope of IAS 34 'Interim Financial
Reports', which is a voluntary requirement.

 

The financial statements have been prepared under the historical cost
convention. Principal accounting policies adopted are consistent with those of
the annual financial statements for the year ended 30 April 2021.

 

2.             SEGMENTAL REPORTING

 

  The Directors consider that the primary reporting format is by business
segment and that there is only one such segment being that of competition
operators. This disclosure has already been provided in these financial
statements.

 

 

3.            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.

 

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.

 

 

 

                                                                                     Six Months Ended 31/10/21      Six Months Ended 31/10/20

                                                                                     Unaudited                      Unaudited                      Year Ended 30/04/21

                                                                                                                                                   Audited
 Profit and basic and diluted earnings attributable to the owners of the parent      2,566                                                         11,494

                                                                                                                    5,611
 Weighted average number of ordinary shares                                          9,412,901                      9,377,253                      9,381,253
 Basic earnings per share                                                            27.26                          59.84p                         122.52
 Adjusted weighted average number of ordinary shares                                 9,482,360                      9,448,550                      9,435,186
 Diluted earnings per share                                                          27.06                          59.39p                         121.82

 

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.

 

 

4.          DIVIDENDS

 

A Special Dividend of 50.0 pence per ordinary share was paid on 2 July 2021 to
shareholders on the register at the close of business on 1 July 2021.

 

A final dividend of 5.0 pence per ordinary share for the full year ending 30
April 2021 was paid on 01 October 2021 to shareholders on the register at 17
September 2021.

 

BEST OF THE BEST PLC

 

Notes to the Interim Financial Statements

For the Six Months Ended 31 October 2021

 

 

5.          CASH GENERATED FROM OPERATIONS

 

                                                           Six Months Ended 31/10/21 Unaudited      Six Months Ended 31/10/20 Unaudited      Year

                                                                                                                                             Ended 30/04/21 Audited
                                                           £'000                                    £'000                                    £'000

 Profit before income tax                                  3,038                                    6,800                                    14,063
 Depreciation and amortisation charges                     63                                       25                                       55
 Finance income                                            -                                        (1)                                      (1)
 Decrease / (increase) in trade and other receivables      (149)                                    270                                      105
 Increase / (decrease) in trade and other payables         70                                       1,603                                    48
 (Decrease) / increase in provisions                       -                                        -                                        -
                                                           3,022                                    8,697                                    14,270

 

 

8.          PUBLICATION OF NON-STATUTORY ACCOUNTS

 

The financial information contained in this interim statement does not
constitute statutory accounts as defined in sections 434 of the Companies Act
2006.  All information is unaudited apart from that included for the year
ended 30 April 2021.

 

The statutory accounts for the financial year ended 30 April 2021 were
prepared under IFRS and in conformity with the requirements of the Companies
Act 2006 applicable to companies reporting under IFRS. These accounts, upon
which the auditor issued an unqualified opinion, did not include references to
any matters to which the auditor drew attention by way of emphasis without
qualifying their report and did not contain statements under 498(2) or (3),
(accounting records or returns inadequate, accounts not agreeing with records
and returns or failure to obtain necessary information and explanations) of
the Companies Act 2006, have been delivered to the Registrar of Companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This interim statement will be made available at the Company's registered
office at 2 Plato Place, 72-74 St. Dionis Road, London SW6 4TU and will be
available on the Company's website: www.botb.com.

 

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