Shares in online competitions firm Best of the Best (BOTB:AIM) careered lower by as much as 32% to £18 after the company delivered blow-out results for the year to April but cautioned that interest in its games had fallen in recent weeks.
LOCKDOWN WINNER
Revenues for the 12 months just ended were up by 157% to £45.7 million while the move to digital-only boosted pre-tax profits by 235% to a shade over £14 million, even after a significant rise in marketing and player acquisition costs.
With a year-end cash pile of £11.8 million and zero debt, the firm proposed a final dividend of 5p per share and a special dividend of 50p per share - just shy of a 2% pay-out based on last night’s closing price - to be paid in mid-July.
Chief executive William Hindmarch said he was ‘excited about the opportunities that the year ahead holds for BOTB, with a recovering economy and hopefully a return to normality’.
REOPENING LOSER?
However, Hindmarch admitted that ‘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’.
While the firm expects customer engagement ‘to return to normal levels before too long’, the inference that BOTB had over-delivered during lockdown and was now set to under-deliver sent investors scrambling for the exit.
NURSING LOSSES
The statement won’t sit at all well with investors who bought shares at £24 at the beginning of April, when the firm placed a substantial part of the directors’ shareholding ‘to increase the shares’ liquidity’.
Broker FinnCap says the drop in consumer engagement ‘is possibly the initial sign of the easing of the ‘COVID tailwind’ that the group has to a degree probably benefited from’, but say the extent is ‘impossible to quantify given the change in business model, its transition online and the increase in the number of competitions over the course of the pandemic’.
By mid-morning the shares had settled at £21, down 20%, with more than 50,000 shares traded against an average daily volume over the last week of around 4,000 shares.
