Earnings Release • Jun 20, 2019
Earnings Release
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RNS Number : 8221C
Best of the Best PLC
20 June 2019
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 [email protected] or visit www.rns.com.
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