Best of the Best plc

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

Preliminary results for the year ended 30 April 2021

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

100% of revenues derived from online operations, delivering a very strong financial performance

Financial Highlights: 

·      Revenue increased to £45.68 million (2020: £17.79 million)

·      Profit before tax of £14.06 million (2020: £4.19 million)

·      Earnings per share increased to 122.52p (2020: 37.51p)

·      Net assets of £8.96 million, substantially underpinned by property and cash

·      Cash balances of £11.8 million at 30 April 2021 - the Group is debt free

·      Proposed 5.0p Final Dividend to be paid on 1 October 2021 (2020: 3.0p)

·      Special Dividend of 50.0p to be paid on 16 July 2021

Operational Highlights:  --

·      Move to digital only model significantly improved capital efficiency following the strategic move away from lower margin, capital intensive retail estate comprising up to 26 locations

·      Successful continuation of the Midweek competition

·      Significant year-on-year growth in online marketing investment and player acquisition, combined with increased competition frequency, delivered very strong results in the period

·      Strategic options review concluded with ongoing focus on existing strategy

William Hindmarch, Chief Executive, said:

"In what has been an unprecedented and extremely challenging year for so many individuals personally, as well as many businesses, the Company was fortunate to have made the strategic decision some time ago to exit its predominantly airport-based retail estate and to concentrate on a pure online strategy.

As a result, I am pleased to announce strong revenue, profit growth and cash generation as the business continued to benefit from its transformation to a wholly online operation, combined with material increases in marketing investment and our broader product offering. Our growth strategy remains focused on driving digital sales, with our 'Dream Car' and 'Lifestyle' competitions joined by the 'Midweek Car' competition, now fully supported by native iOS and Android apps. Our digital only model gives us flexibility and focus, as well as capital efficiency and cost savings, combined with the potential to further increase online marketing investment.

We are excited about the opportunities that the year ahead holds for BOTB, with a recovering economy and hopefully a return to normality.  However, in contrast to the summer 2020 period, we have experienced somewhat of a reduction in customer engagement since the latest easing of lockdown restrictions on April 12, 2021, specifically relating to the understandably long-awaited re-opening of hospitality and non-essential retail.  We are closely monitoring this, but with our flexible model, growth strategy and plans for the year ahead, we expect customer engagement to return to normal levels before too long. I look forward to updating shareholders in due course."

BEST OF THE BEST PLC

Preliminary Results (continued)

For The Year Ended 30 April 2021

Enquiries:

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.  Please visit www.botb.com for further information

CHIEF EXECUTIVE'S STATEMENT

Having made the strategic decision to exit our predominantly airport-based retail estate and concentrate on a pure online strategy, we have been able to tailor our business, product and pricing specifically to a much more scalable, online only proposition.   The exit from our final physical site in September 2019 was, with the benefit of hindsight, opportune given the restrictions on travel that have been in place due to the pandemic.  Our online only strategy to significantly increase year on year growth in online marketing investment and player acquisition, combined with additional competition frequency, delivered a materially enhanced top line performance, strong profitability and cash generation.

As a purely online business, we are now completely focused on enhancing the products and experience we offer to both new and existing players by leveraging our proprietary systems, software and the extensive and valuable database that we have created over many years.  We now have our best ever product proposition following the investments we have made to enhance prize values and reduce ticket prices.  These initiatives have enabled us to retain existing players and acquire new ones. It is this focus and continued engagement with our customers that has driven our strong performance during the period.

The financial results for the year clearly reflect the benefits of our online only focus, with increased operating margins, improved capital efficiency and cost savings, enabling investment in new competitions, additional headcount, IT and app development. 

During the year we also launched a strategic review and explored early-stage discussions with a number of interested parties in an orderly fashion. The "formal sale process" mechanism was adopted in order to facilitate these discussions with certain regulatory dispensations under the Takeover Code.  Following extensive talks with a range of parties, the Board concluded that it was is in shareholders' best interests to focus on the continuing growth of the business under its existing strategy as a publicly quoted business. This pure online strategy, with a focus on cash generation, has enabled a policy of consistent shareholder returns and we are confident will continue to do so.

BEST OF THE BEST PLC

Preliminary Results (continued)

For The Year Ended 30 April 2021

Final Results

This financial year was the first year that 100% of revenue has been derived from online operations and the positive effect of this transition can be clearly seen in our strong financial performance.  Revenue for the year ended 30 April 2021 increased to £45.68 million (2020: £17.79 million) and profit before tax rose to £14.06 million (2020: £4.19 million).  Earnings per share increased to 122.52p (2020: 37.51p).

A total of £14.27 million of cash flow was generated from operations during the period. Net assets at 30 April 2021 stood at £8.96 million (2020: £3.30 million), underpinned by cash balances of £11.8 million (2020: £5.21 million) and our 965-year leasehold office properties valued at £0.95 million. The Group is debt free.

Dividends

In line with our progressive dividend policy, the Board is recommending a final dividend of 5.0p per share (2020: 3.0p) for the full year ended 30 April 2021 subject to shareholder approval at the Annual General Meeting on 15 September 2021.  The final dividend will be paid on 1 October 2021 to shareholders on the register on 17 September 2021. 

As the Company continues to be profitable, cash generative and benefits from a robust balance sheet, the Board is also pleased to declare the return of approximately £4.71 million to shareholders by way of a special dividend (the "Special Dividend") of 50.0p per ordinary share. 

The Special Dividend will be paid on 16 July 2021 to shareholders on the register at the close of business on 2 July 2021. The ex-dividend date is 1 July 2021. Following the payment of the Special Dividend the Company will retain working capital cash balances in excess of £6.0 million, which the Directors consider to be sufficient working capital to fund the Company's activities over the next 12 month period.

Strategy, competitions, pricing

The period to 30 April 2021 marked the first financial year since our inception in 2000 that the Company did not generate any physical site revenues.  Our strategic decision to move to an online only model was based on efficiencies that can be delivered, both financially and operationally, using evolving digital channels. 

We have continued to innovate and have successfully executed marketing strategies more effectively using predominantly digital media, complemented by traditional advertising channels. 

In recent years, we have successfully diversified our offering and significantly broadened our addressable market by offering players prizes across new categories and at a variety of ticket prices.  BOTB's principal competitions are the Weekly Dream Car Competition, which continued to perform well and the more recently launched Midweek Competition, with a more focussed selection of prizes.  During the year, the improvements we have made to enhance the overall user experience included materially reduced prices, a wider choice of cars, cash included as standard, and further improvements to the 'Spot the Ball' mechanic. 

I am pleased to report that our continued innovation is popular with our players and has driven increased levels of engagement and repeat play.

The Weekly Lifestyle Competition, which features luxury watches, motorbikes, holidays, other gadgets/technology and cash prizes, has continued to perform well.

Whilst the COVID-19 restrictions in place during most of the year significantly curtailed the ability of our presenting team to surprise winners at home or at work, we were pleased that the video calling alternatives available were well received by our players and continued to provide the engaging content for which BOTB has become so well regarded.

BOTB now has a database of over 1.7 million which supports existing competitions and can also provide us with new opportunities.  We have continued to consider and review potential new products and partnerships and will update shareholders as appropriate in due course.

BEST OF THE BEST PLC

Preliminary Results (continued)

For The Year Ended 30 April 2021

Continued investment in IT development

With the vast majority of our website visits and over half of our revenue now from mobile devices, mobile usage remains fundamental in our approach to IT development.  During the year, we have made further progress to enhance our mobile interface which has led to higher conversion rates, including improvements to the mobile registration, playing and payment experience, including Apple Pay, which in turn will assist both conversion and frequency of engagement.

Following a longer than expected period of development and testing, both our native iOS app and our native Android app are now live in the respective Apple and Play stores. Whilst the Android App was only recently released, customer reaction has so far been pleasingly positive and has now given us the confidence to commence a programme of customer awareness and app marketing activity.

New player acquisition and CRM

As planned, during the financial year we accelerated marketing investment, in particular using digital marketing to engage with new players and this has delivered efficient returns on investment and lifetime value metrics. All marketing investment is strictly calibrated on the cost per acquisition of a new customer versus their predicted lifetime value.    

We have continued to focus on social media as a core marketing channel, driving both customer acquisition and brand awareness.  Our engagement metrics increased with our Facebook page now attracting over 400,000 followers, with BOTB's YouTube channel at over 60,000 subscribers, and Instagram followers nearing 300,000.

Two new TV ads were produced and aired during the period, with ongoing testing and optimisation for different audiences. We have continued to complement our social media activities with campaigns executed on traditional media to maximise our exposure to a wide range of ages and demographics, including our 'traditional' airport customer.

Board Changes

In March 2021, Ben Hughes and Daniel Burns joined the Board as Executive Director and Non-Executive Director, respectively. 

Ben Hughes has served as Marketing Director for Best of the Best since 2010 and leads all marketing strategy, budgeting and delivery for the Company. During his tenure Ben has been responsible for devising and implementing the Company's marketing strategies to increase online revenues and to significantly grow the brand's online presence. Previously, Ben spent nine years at News International where he was Head of Marketing (Digital) for News Group Media.

Daniel Burns is an experienced corporate financier in the gaming, competitions, lottery and media sector with over 20 years of advisory experience covering both public and private companies. Daniel is Managing Partner at Oakvale Capital LLP, a corporate finance advisor in the gaming and media industry. Daniel previously worked as a corporate lawyer at Macfarlanes, focusing on venture capital and international mergers and acquisitions. He has sat on the advisory boards of a number of the largest gaming companies.

Following the appointment of Ben and Daniel, the Company had three Executive Directors and three Non-Executive Directors, of which one can be considered independent. The Board continues to place significant importance on corporate governance and as a result will seek to appoint an additional independent director in due course.  In consideration of this, Michael Hindmarch, Non-Executive Chairman, has also agreed to step down as Chairman by 1 October 2021, with an independent Non-Executive Chairman appointed in due course.

Outlook

Our performance in 2020 reflects our online focus and efficient investment in marketing activities and we are pleased that BOTB has delivered substantially increased revenue and profit.   BOTB's ability to generate cash, our strong balance sheet and the fact that we have no debt gives us confidence in our ability to deliver continued future growth.

We are excited about the opportunities that the year ahead holds for BOTB, with a recovering economy and hopefully a return to normality.  However, in contrast to the summer 2020 period, we have experienced somewhat of a reduction in customer engagement since the latest easing of lockdown restrictions on April 12, 2021, specifically relating to the understandably long-awaited re-opening of hospitality and non-essential retail.  We are closely monitoring this, but with our flexible model, growth strategy and plans for the year ahead, we expect customer engagement to return to normal levels before too long. I look forward to updating shareholders in due course.

BEST OF THE BEST PLC

Preliminary Results (continued)

For The Year Ended 30 April 2021

KEY PERFORMANCE INDICATORS

The Directors have monitored the performance of the Company 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 now operates wholly online, it is heavily reliant on the effective operation of its website and associated IT infrastructure.  Any interruption to the website or IT infrastructure would therefore have an immediate and significant impact on the Company.

The Company 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 to a significant extent is dependent on the Executive Directors and other senior managers.  To mitigate the risk of losing such personnel, the Company endeavour to ensure that they are fairly remunerated and well incentivised.

Regulatory change

The Company currently operates weekly skilled competitions, which are not regulated.  This could be subject to change in the future and the Company continue to seek appropriate legal advice to ensure they comply with all relevant legislation and licensing.

ON BEHALF OF THE BOARD

William Hindmarch

Chief Executive