TIDMBOTB
RNS Number : 4656O
Best of the Best PLC
30 January 2019
Best of the Best plc
("Best of the Best", "BOTB", "the Company" or "the Group")
Interim results for the six months ended 31 October 2018
Best of the Best plc runs competitions online to win cars and
other prizes.
Key Highlights:
-- Revenue of GBP7.12 million up 28.5% (2017: GBP5.54 million)
-- Adjusted profit before tax increased by 14.7% to GBP1.08 million (2017: GBP0.95 million)
-- Net assets of GBP3.88 million (2017: GBP1.83 million)
-- Cash balances of GBP6.94 million (2017: GBP2.05 million)
-- Tender offer announced to return up to circa GBP3.50m to
shareholders following conclusion of VAT claim
-- Adjusted earnings per share increased by 17.7% to 9.03p (2017: 7.67p)
-- Revenues now almost entirely online with just one airport location remaining
-- Competitions, pricing and strategy now tailored exclusively
for our growing and increasingly diversified online customer
base
-- Continued growth in online marketing investment to increase
player acquisition, with encouraging results
William Hindmarch, Chief Executive, said:
"I am pleased to announce good progress with an encouraging set
of interim results as the business continues to grow both revenues
and profits. Our marketing strategy has continued to perform well
and driven strong revenue numbers as well as promising growth in
newly acquired customers. We have one remaining physical location
at Birmingham Airport and revenues are now generated almost
exclusively online.
Trading since the period end has been encouraging, with the
Company well placed for future growth and currently operating ahead
of management expectations for the full year. The impending
increase in Remote Gaming Duty (RGD) will impact margins going
forward but we are exploring options to mitigate this effect. We
look forward to updating shareholders with further progress in due
course."
Enquiries:
Best of the Best plc William Hindmarch, Chief T: 020 7371
Executive 8866
Rupert Garton, Commercial
Director
KTZ Communications Katie Tzouliadis T: 020 3178
6378
finnCap Corporate Finance T: 020 7220
(Nominated Adviser and Carl Holmes 0500
Broker) Anthony Adams
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 for further information
Chief Executive's Statement
During the period we completed our move away from physical
retail locations (principally airports) to become an online focused
operation. With the exception of one remaining site at Birmingham
Airport, we now acquire customers almost exclusively through online
and digital channels. Our investment in marketing continues to
increase and has been returning encouraging results. As a result,
our competitions, pricing and product strategy can now be tailored
exclusively for our growing and increasingly diversified online
customer base.
Results
Revenue for the six months ended 31 October 2018 was GBP7.12
million, an increase of 28.5% (2017: GBP5.54 million). Adjusted
profit before tax rose by 14.7% to GBP1.08 million (2017: GBP0.95
million) with adjusted earnings per share (excluding exceptional
items) increasing by a similar percentage to 9.03p (2017:
7.67p).
GBP4.50 million of exceptional income was recognised as a result
of the Company's claim for overpaid VAT in prior years, offset by
GBP2.0m of exceptional expenses, relating to a retrospective RGD
assessment by HMRC together with associated legal and professional
fees incurred. Profit before tax including exceptional items was
GBP3.59 million with fully diluted earnings per share (including
exceptional items) from continuing operations at 29.08p.
A total of GBP5.14 million of cash flow was generated from
operations during the period (2017: GBP0.69 million). Net assets at
31 October 2018 stood at GBP3.88 million (2017: GBP1.83 million),
underpinned by cash balances of GBP6.94 million (2017: GBP2.05
million) and our 967-year leasehold office properties valued at
GBP0.95 million. Current cash balances stand at approximately
GBP5.9 million.
Marketing strategy
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
that it was able to execute its marketing strategy more effectively
using predominantly digital media complemented by traditional
advertising channels.
Competitions and pricing
In recent years, a reducing number of physically serviced
airport and retail customers were disproportionately affecting our
pricing strategy and our ability to innovate online. A further
positive consequence of the move to becoming an almost purely
online operator with an online customer base, has therefore been
our ability to tailor our competitions, pricing and innovations
exclusively towards the online player.
Our Dream Car competition continues to perform well and
improvements to the online user experience, pricing and choice of
cars have been well received. Together, these incremental changes
have had a positive effect on revenues, whilst maintaining customer
order values despite reduced ticket prices. Our online content and
weekly "In the Headlights" edit section provides an incentive for
people to keep returning to the site and continues to maintain
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 very affordable
offering.
New player acquisition
We have continued to invest strongly to attract new customers,
resulting in sales growth of 28.5% compared with the prior period.
This been achieved through a wide range of digital marketing
channels, as well as TV, Radio, Print and PR with new creative
content that has delivered increasingly efficient customer
acquisition figures.
Social media in particular continues to be a core marketing
channel, driving both customer acquisition and brand awareness.
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 TV creative was launched just before the
start of the period and is currently performing at its most
efficient level since first utilised in 2015. Investment in print
and public relations has secured frequent coverage of weekly
winners and is working well to positively promote the brand.
Customer retention and data analytics
BOTB's substantial and valuable database receives frequent
emails promoting both the Dream Car and Lifestyle Competitions.
Revenues from this channel continue to perform well and the
Company's loyalty scheme - the 'Supercharged Club' - provides
additional benefits to regular players. New rewards are currently
in development to enhance the appeal of becoming a Gold, Silver or
Bronze member.
Engagement is further maintained through our growing social
media following, which currently stands at 238k on Facebook, 65k on
Instagram, 30k across our two YouTube channels and 17k on Twitter.
With a dedicated data analyst in-house, our marketing investment is
carefully tracked and constantly fine-tuned to ensure we are
optimising returns. As confidence improves, we continue to increase
our marketing budget across the full range of previously tested
channels.
Continued investment in IT development and technology
With the focus now almost 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 on whatever screen or
device a customer is viewing.
We have introduced a bi-monthly development and release cycle,
through which we are continually refining our technology and
introducing new functionality, to make using botb.com simpler,
easier and more accessible for everyone.
Indirect Tax - VAT claim and Remote Gaming Duty (RGD)
As previously announced, BOTB noted the VAT decision given by
the Supreme Court in favour of Sportech PLC on 8 December 2016,
where the Supreme Court refused Her Majesty's Revenue & Customs
("HMRC") permission to appeal the Court of Appeal's unanimous
decision regarding its VAT repayment claim on the "Spot the Ball"
game. This resulted in a successful VAT reclaim by Sportech (the
"Sportech Claim").
The Company submitted a protective claim in 2013 to recover
overpaid VAT. Following the Supreme Court decision and after taking
further specialist legal and tax advice, BOTB submitted a top-up
claim. Combined with the original claim, the Company submitted
claims totaling GBP4.5m to recover VAT paid over an eight year
period on its own "Spot the Ball" competitions.
On 20 December 2018, BOTB concluded this claim having received
from HMRC the overpaid VAT and having also paid a retrospective
assessment for Remote Gaming Duty ("RGD") due for the previous four
years. After the deduction of associated professional fees there
has been a net gain to the company of approximately GBP2.5m before
corporation tax.
As previously stated BOTB will now be paying RGD instead of VAT
on its "Spot the Ball" competitions going forward and as announced
in the most recent Budget the rate of RGD payable will raise by 40%
in April 2019, increasing from 15% to 21%. This will directly
impact our operating margins going forward and represents a
significantly increased tax burden, when combined with material
sums of irrecoverable VAT on our cost base that we are also now
absorbing.
Tender Offer
The Company is announcing today that it intends to return
surplus cash generated as a result of the long running VAT claim to
Shareholders by way of a tender offer, pursuant to which finnCap
Ltd, the Company's broker, will purchase, as principal, up to
approximately 7.14 per cent. of the Company's Ordinary Shares (1
Ordinary Share for every 14 held) at a price of 485 pence per
Ordinary Share. These Ordinary Shares may then be purchased from
finnCap by the Company pursuant to a Repurchase Agreement.
The Company has been cash generative for a number of years and
has benefited from a strong balance sheet with sufficient
distributable cash reserves. The conclusion of the VAT claim has
led to surplus cash on the balance sheet which the Board believes
that the Company does not require to fund its growth plans in the
short term. Following the capital distribution, the Company will
retain a robust balance sheet, maintaining cash balances in excess
of GBP1.5 million, which the Directors consider to be sufficient
working capital to fund its activities over the next 12 month
period. As such, the Board deems it appropriate to return surplus
cash to shareholders via the Tender Offer.
In determining the level of return of value, the Board has taken
into consideration its aim of improving the Company's earnings per
share, as well as targeting a more efficient capital structure
through returning excess balance sheet cash to Shareholders.
If the maximum number of Ordinary Shares under the Tender Offer
are acquired this will result in an amount of GBP3.50m being paid
to Qualifying Shareholders. The Company will shortly file at
Companies House an unaudited Company balance sheet as at 31 January
2019 demonstrating that it has sufficient distributable
reserves.
The Proposals require shareholder approval under the Companies
Act and all shareholders will be receiving the information in a
shareholder circular and form of acceptance by post. If
implemented, the Tender Offer will enable Qualifying Shareholders
to achieve a partial realisation of their holding at 485 pence per
Ordinary Share.
Outlook
The first half of the year has delivered encouraging results
ahead of management forecasts. The business is well placed for
future growth and continues to operate ahead of management
expectations for the full year, with encouraging trading since the
period end. The impending increase in RGD will unavoidably impact
operating margins in the next financial year, but we are exploring
options to mitigate this effect. We look forward to updating
shareholders with further progress in due course.
William Hindmarch
Chief Executive
30 January 2019
BEST OF THE BEST PLC
Unaudited Consolidated Income Statement
For the Period Ended 31 October 2018
___________________________________________________________________________________________________
Six Months Six Months
Ended 31/10/18 Ended 31/10/17 Year Ended
Unaudited Unaudited 30/04/18
Audited
Notes GBP'000 GBP'000 GBP'000
Revenue 2 7,123 5,541 12,948
Cost of sales (3,171) (1,838) (5,505)
---------------- ---------------- -------------
GROSS PROFIT 3,952 3,703 7,443
Administrative expenses (2,873) (2,758) (5,844)
OPERATING PROFIT BEFORE EXCEPTIONAL
ITEMS 1,079 945 1,599
Exceptional income 3 4,495 - -
Exceptional expense 3 (1,994) - -
OPERATING PROFIT 3,580 945 1,599
Finance income 5 - 1
---------------- ---------------- -------------
PROFIT BEFORE TAX 3,585 945 1,600
Tax (647) (169) (253)
---------------- ---------------- -------------
PROFIT FOR THE PERIOD 2,938 776 1,347
================ ================ =============
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to
profit or loss
Exchange differences on translating
foreign operations - (16) 2
---------------- ---------------- -------------
OTHER COMPREHENSIVE INCOME FOR THE
YEAR, NET OF INCOME TAX 2,938 760 1,349
---------------- ---------------- -------------
Profit attributable to:
Owners of the parent 2,938 776 1,347
---------------- ---------------- -------------
Total comprehensive income attributable
to:
Owners of the parent 2,938 760 1,349
---------------- ---------------- -------------
Profit on earnings per share expressed
in pence per share: 4
Basic from continuing operations 29.09 7.67 13.32
Diluted from continuing operations 29.08 7.65 13.29
Adjusted from continuing operations 9.03 7.67 13.32
Adjusted diluted from continuing operations 9.03 7.65 13.29
BEST OF THE BEST PLC
Unaudited Consolidated Statement of Financial Position
31 October 2018
_________________________________________________________________________________________________
Six Months Six Months
Ended 31/10/18 Ended 31/10/17 Year Ended
Unaudited Unaudited 30/04/18
Audited
Notes GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Development costs 110 145 127
Property, plant and equipment 1,120 1,244 1,145
Investments - 70 -
Deferred tax 21 21 41
--------------- --------------- ------------
1,251 1,480 1,313
CURRENT ASSETS
Trade and other receivables 150 265 150
Cash and cash equivalents 6,944 2,045 2,322
--------------- --------------- ------------
7,094 2,310 2,472
TOTAL ASSETS 8,345 3,790 3,785
=============== =============== ============
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 505 506 505
Share premium 199 179 199
Capital redemption reserve 201 198 201
Foreign exchange reserve 26 6 26
Retained earnings 2,947 938 615
--------------- --------------- ------------
TOTAL EQUITY 3,878 1,827 1,546
=============== =============== ============
LIABILITIES
CURRENT LIABILITES
Trade and other payables 3,784 1,578 1,929
Tax payable 627 365 103
Provisions 56 20 207
--------------- --------------- ------------
TOTAL LIABILITIES 4,467 1,963 2,239
=============== =============== ============
TOTAL EQUITY AND LIABILITIES 8,345 3,790 3,785
=============== =============== ============
BEST OF THE BEST PLC
Unaudited Consolidated Statement of Changes in Equity
For the Period Ended 31 October 2018
Called
up
share Retained Share
capital earnings premium
GBP'000 GBP'000 GBP'000
Balance at 1 May 2017 506 962 179
----------- --------- --------
Issue of share capital 2 - 20
Dividends - (1,557) -
Effect of share buy back (3) (137) -
----------- --------- --------
Transactions with owners (1) (1,694) 20
----------- --------- --------
Profit for the year - 1,347 -
Other comprehensive income:
Exchange differences on translating - - -
foreign operations
----------- --------- --------
Total comprehensive income - 1,347 -
----------- --------- --------
Balance at 30 April 2018 505 615 199
----------- --------- --------
Issue of share capital - - -
Dividends - (606) -
----------- --------- --------
Transactions with owners - (606) -
----------- --------- --------
Profit for the period - 2,938 -
Other comprehensive income:
Exchange differences on translating - - -
foreign operations
----------- --------- --------
Total comprehensive income - 2,938 -
----------- --------- --------
Balance at 31 October 2018 505 2,947 199
=========== ========= ========
Capital Foreign
redemption exchange Total
reserve reserves equity
GBP'000 GBP'000 GBP'000
Balance at 1 May 2017 198 25 1,870
----------- ------------- ------------
Issue of share capital - - 22
Dividends - - (1,557)
Effect of share buy back 3 - (137)
----------- ------------- ------------
Transactions with owners 3 - (1,672)
----------- ------------- ------------
Profit for the year - - 1,347
Other comprehensive income:
Exchange differences on translating
foreign operations - 1 1
----------- ------------- ------------
Total comprehensive income - 1 1,348
----------- ------------- ------------
Balance at 30 April 2018 201 26 1,546
----------- ------------- ------------
Issue of share capital - - -
Dividends - - (606)
----------- ------------- ------------
Transactions with owners - - (606)
----------- ------------- ------------
Profit for the period - - 2,938
Other comprehensive income:
Exchange differences on translating - - -
foreign operations
----------- ------------- ------------
Total comprehensive income - - 2,938
----------- ------------- ------------
Balance at 31 October 2018 201 26 3,878
=========== ============= ============
BEST OF THE BEST PLC
Unaudited Consolidated Statement of Changes in Equity
For the Period Ended 31 October 2018
Called
up
share Retained Share
capital earnings premium
GBP'000 GBP'000 GBP'000
Balance at 1 May 2017 506 962 179
----------- --------- ----------
Dividends - (800) -
----------- --------- ----------
Transactions with owners - (800) -
----------- --------- ----------
Profit for the period - 776 -
Other comprehensive income:
Exchange differences on translating - - -
foreign operations
----------- --------- ----------
Total comprehensive income - 776 -
----------- --------- ----------
Balance at 31 October 2017 506 938 179
=========== ========= ==========
Capital Foreign
redemption exchange Total
reserve reserves Equity
GBP'000 GBP'000 GBP'000
Balance at 1 May 2017 198 25 1,870
----------- ------------- ------------
Dividends - - (800)
----------- ------------- ------------
Transactions with owners - - (800)
----------- ------------- ------------
Profit for the period - - 776
Other comprehensive income:
Exchange differences on translating
foreign operations - (19) (19)
------------
Total comprehensive income - (19) 757
----------- ------------- ------------
Balance at 31 October 2017 198 6 1,827
=========== ============= ============
BEST OF THE BEST PLC
Unaudited Consolidated Cash Flow Statement
For the Period Ended 31 October 2018
________________________________________________________________________________________________
Six Months Six Months
Ended 31/10/18 Ended 31/10/17 Year Ended
Unaudited Unaudited 30/04/18
Audited
Cash flows from operating activities Notes GBP'000 GBP'000 GBP'000
Cash generated from operations 6 5,243 749 2,237
Tax paid (103) (63) (429)
----------------- ----------------- -------------
Net cash from operating activities 5,140 686 1,808
Cash flows from investing activities
Purchase of intangible fixed assets (27) (12) (38)
Purchase of tangible fixed assets (94) (11) (14)
Sale of tangible fixed assets 204 76 132
Interest received 5 - 1
----------------- ----------------- -------------
Net cash from investing activities 88 53 81
Cash flows from financing activities
Share issue - - 22
Cost of share buy back - - (137)
Equity dividends paid (606) (800) (1,558)
Net cash from financing activities (606) (800) (1,673)
----------------- ----------------- -------------
Increase / (decrease) in cash and
cash equivalents 4,622 (61) 216
Cash and cash equivalents at beginning
of period 2,322 2,106 2,106
----------------- ----------------- -------------
Cash and cash equivalents at end
of period 6,944 2,045 2,322
================= ================= =============
BEST OF THE BEST PLC
Notes to the Interim Financial Statements
For the Period Ended 31 October 2018
1. BASIS OF PREPARATION
These condensed interim financial statements are for the six
months ended 31 October 2018. 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 2018.
The Group is listed on the Alternative Investment Market ("AIM")
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 2018.
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. EXCEPTIONAL INCOME AND EXPENSE
On 19 May 2018 the Company received a retrospective VAT refund
from H M Revenues & Customs (HMRC) on its "Spot the Ball" game
of approximately GBP4.5 million for the period from 1 March 2009 to
30 June 2017. Accordingly, this sum has been recognised as
exceptional income in the period. On 20 December 2018 the Company
settled an agreed assessment issued by HMRC for Remote Gaming Duty
making a payment of approximately GBP1.7 million. Accordingly, this
sum has been recognised as an exceptional cost in the period,
together with associated legal and professional costs of
approximately GBP0.3 million incurred in connection with these
claims.
4. 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.
Six Months Six Months
Ended Ended Year Ended
31/10/18 31/10/17 30/04/18
Unaudited Unaudited Audited
Profit and basic and diluted earnings
attributable to the owners of the GBP2,937,830 GBP776,346 GBP1,347,018
parent
Weighted average number of ordinary
shares 10,098,580 10,121,247 10,112,997
Basic earnings per share 29.09p 7.67p 13.32p
Adjusted basic earnings per share 9.03p 7.67p 13.32p
Adjusted weighted average number
of ordinary shares 10,103,865 10,145,127 10,137,887
Diluted earnings per share 29.08p 7.65p 13.29p
Adjusted diluted earnings per share 9.03p 7.65p 13.29p
BEST OF THE BEST PLC
Notes to the Interim Financial Statements
For the Period Ended 31 October 2018
5. DIVIDS
A final dividend, based on the results for the year ended 30
April 2018, of 1.5p per share was paid on 21 September 2018 (30
April 2017: 1.4p).
In addition, a Special Dividend of 4.5 pence per share for the
year ending 30 April 2018 was paid on 20 July 2018 to shareholders
on the register at the close of business on 6 July 2018.
6. CASH GENERATED FROM OPERATIONS
Six Months Six Months
Ended 31/10/18 Ended 31/10/17 Year Ended
Unaudited Unaudited 30/04/18
Audited
GBP'000 GBP'000 GBP'000
Profit before income tax 3,585 945 1,600
Depreciation and amortisation
charges 60 123 215
Profit on disposal of fixed
assets (101) (30) (32)
Investment impairment charge - - 70
Finance income (5) - (1)
(Increase) / decrease in trade
and other receivables - (20) 95
Increase / (decrease) in trade
and other payables 1,855 (140) 211
(Decrease) / increase in provisions (151) (110) 77
Exchange differences - (19) 2
---------------- ---------------- -------------
5,243 749 2,237
---------------- ---------------- -------------
7. 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 six months ended
31 October 2018, payments were made to him totalling GBP6,000
(GBP6,000 for the six months ended 31 October 2017) in respect of
consultancy services provided.
8. ULTIMATE CONTROLLING PARTY
The ultimate controlling party at the end of this interim period
was W S Hindmarch, the Chief Executive Officer of the Company, who
owns 50.4% of the issued share capital at the balance sheet
date.
9. 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 2018.
The statutory accounts for the financial year ended 30 April
2018 were prepared under IFRS as adopted by the EU. 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.
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.
END
IR BIGDBBXDBGCC
(END) Dow Jones Newswires
January 30, 2019 02:00 ET (07:00 GMT)
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