Interim Results

Best of the Best PLC 29 January 2007 BEST.L Best of the Best plc ('Best of the Best' or 'the Company') Maiden interim results for the six months ended 31 October 2006 Best of the Best plc displays luxury cars as competition prizes within airport terminals and online Key points • New competition pricing accelerating growth following the difficult trading conditions experienced during period due to UK airport security disruptions during the summer • Strong trading in November and December • Significant growth in online players: database at 180,000 and growing at approximately 10,000 new registered players per month • New site in Heathrow Terminal 4 operational and new site at Heathrow Terminal 5 secured with additional airport site discussions underway • In discussions with new non-airport sites • Management strengthened with two key appointment to drive airport terminal and online sales • Directors confident of steady progress in the year ahead William Hindmarch, Chief Executive, said: 'Since the flotation on AIM last year, there have been a number of significant developments for the business. Our new competition structure has led to record trading levels since the period end and we are in discussions to open new sites at airports in the UK and abroad, as well as at major shopping centres. Our database of registered players is growing rapidly and during the current year we plan to market new products to this customer base. 'We are optimistic with regards to the opportunities that lie ahead for our business and I look forward to updating shareholders with further progress in due course.' Enquiries: Best of the Best plc William Hindmarch, Chief Executive T: 020 7371 8866 Rupert Garton, Commercial Director Biddicks Shane Dolan T: 020 7448 1000 Charles Stanley Securities Mark Taylor T: 020 7953 2000 Freddy Crossley Please visit www.bestofthebest.co.uk for further information Chief Executive's Statement The Company has made significant progress since its flotation on AIM last year and we are pleased to report that trading has improved significantly since the disruptions caused by the major security alerts which affected the UK's airports during August 2006. Since this time, I am pleased to report that airport operators have made significant improvements to the speed and capacity of security scanning facilities, which have in turn returned passenger dwell times to normal. In addition, procedures have been put in place in order to deal with future alerts which we believe will both improve security as well as help minimise disruptions. Results Revenue for the six months ended 31 October 2006 was £2.17 million (2005: £2.51 million), a reduction of 16 per cent on the six months for the previous year. The reduction is primarily due to the Company's revenue recognition accounting policy whereby the Company does not account for revenue generated by competitions that have not been closed on or before the end of a statutory accounting period. Competitions not closed generated strong revenues of £0.37 million in October 2006 but spanned the accounting period end, and are therefore accounted for as deferred revenue. All of these competitions are now complete and prizes have been paid in full. The statutory financial statements therefore show a first half loss of £0.05 million against a prior year first half profit of £0.39 million. On a management cash accounting basis, however, the first half figures report a profit of £0.12 million compared to a prior year first half profit of £0.28 million largely due to the difficult summer trading as previously reported. In the same way earnings per share shows a loss for the period of 0.38 pence (2005: 3.27 pence). Since October we have shortened our Supercar Competition period to four weeks and therefore do not anticipate deferring any significant revenue at future period ends. The cash position of the Company remains solid at £1.70 million, underpinned by the August fundraising of £2.5 million (before expenses) and admission to AIM, and we have increased the inventory by £0.28 million to accommodate new competition prizes on display. Dividend The Board is not recommending the payment of an interim dividend but as stated in the Admission Document it intends to pay a dividend for the following financial year ending 30 April 2008. Business During the period we reformatted our competitions, changing the ticket price for our main Supercar Competition from £60 to £20 and shortened competition lengths to 4 weeks resulting in more competitions at lower prices, which has been very well received by new and existing customers. Trading since then has been particularly strong in the, typically, quieter months of November and December. The Company can report record levels of sales in December, both online and at the airports. This has been driven primarily by the move to the new price and format of the Supercar Competition, as well as by some significant operational improvements. The reduction in price has opened the competition up to a wider cross section of the terminal passengers. An additional benefit of the new £20 ticket is that our database is growing at record levels. It now stands at over 180,000 and is increasing by approximately 10,000 registered players each month. This is a significant asset to the Company as it increases the scope and penetration of our higher margin online offering. New Site Contracts The Company currently operates from 12 sites within 11 airport terminals. During the period, we opened a second site in Heathrow's Terminal 4, and as announced in December, we have signed an agreement to open a flagship site within the new Heathrow Terminal 5. This is expected to become operational during the first half of 2008. We are also in discussions with a number of other airports in the UK and overseas. In addition, we are also in discussion with non-airport sites such as major shopping centres in the UK and we anticipate launching trial sites in such venues within the next quarter. We believe that lowering the price point of the Supercar competition to £20 opens up considerable opportunities in this market. Strategy Our core strategy continues to focus on growing sales at the physical airport sites and building our database accordingly. The higher margin online competitions then benefit from the increase in customers on the database. The new competition format strongly supports this strategy, as we are now growing our database much more rapidly, and we have identified significant potential to offer additional games, including an instant win offering, which we will shortly be launching on our website. Management team strengthened In order to improve the Company's operating infrastructure we have made two key senior appointments to the management team. Our new Airport Sales Director who joined us in September 2006 will use his considerable experience recruiting and managing direct sales teams to help drive airport sales further. Our new Online Sales Director who joined us in October 2006 will be developing and growing our online business. Outlook The Board remains positive of the trading prospects for the Group in the second half of the year, which has been underpinned by record trading in the last two months of 2006. We continue to monitor developments and review opportunities in our skill gaming sector and look forward to updating shareholders with further progress in due course. William Hindmarch Chief Executive 29 January 2007 BEST OF THE BEST PLC Unaudited Income Statement for the period ended 31st October 2006 Six Months Six Months Year Ended Ended Ended 31/10/06 31/10/05 30/04/06 Unaudited Unaudited Audited Notes £000's £000's £000's CONTINUING OPERATIONS Revenue 2 2,170 2,516 4,748 Cost of sales (1,022) (1,046) (2,031) -------- -------- -------- GROSS PROFIT 1,148 1,470 2,717 Administrative expenses (1,207) (1,068) (2,103) -------- -------- -------- OPERATING (LOSS)/PROFIT (59) 402 614 Finance costs (10) (13) (23) Finance income 16 - - -------- -------- -------- (LOSS)/PROFIT BEFORE TAX (53) 389 591 Tax 14 (104) (158) -------- -------- -------- (LOSS)/PROFIT FOR THE PERIOD (39) 285 433 ======== ======== ======== (Loss)/Earnings Per Share expressed in pence per share: Basic & Diluted 3 (0.38) 3.27 4.95 Best of the Best plc Unaudited Balance Sheet 31 October 2006 Six Months Six Months Year Ended Ended Ended 31/10/06 31/10/05 30/04/06 Unaudited Unaudited Audited Notes £000's £000's £000's ASSETS NON-CURRENT ASSETS Property, plant and equipment 440 481 444 Deferred tax 12 3 8 --------- -------- -------- 452 484 452 --------- -------- -------- CURRENT ASSETS Inventories 1,436 1,002 1,161 Trade and other receivables 64 49 47 Cash and cash equivalents 1,698 - - --------- -------- -------- 3,198 1,051 1,208 --------- -------- -------- LIABILITIES CURRENT LIABILITIES Trade and other payables 839 683 631 Financial liabilities - borrowings Bank overdrafts - 185 187 Interest bearing loans and borrowings 15 10 16 Tax payable 95 75 105 --------- -------- -------- 949 953 939 --------- -------- -------- NET CURRENT ASSETS 2,249 98 269 NON-CURRENT LIABILITIES Financial liabilities - borrowings Interest bearing loans and borrowings 174 186 177 --------- -------- -------- NET ASSETS 2,527 396 544 ========= ======== ======== SHAREHOLDERS' EQUITY Called up share capital 5 636 63 63 Share premium 5 1,815 138 138 --------- -------- -------- Share-based payment reserve 4,5 9 - - --------- -------- -------- Profit and loss account 67 195 343 --------- -------- -------- TOTAL EQUITY 2,527 396 544 ========= ======== ======== BEST OF THE BEST PLC Unaudited Cash Flow Statement for the period 1 May 2006 to 31 October 2006 Six Months Six Months Year Ended Ended Ended 31/10/06 31/10/05 30/04/06 Unaudited Unaudited Audited Notes £000's £000's £000's Cash flows from operating activities (70) 132 184 Cash generated from operations Interest paid (10) (13) (24) Tax paid - - (28) ------- ------- ------- Net cash from operating activities (80) 119 132 ------- ------- ------- Cash flows from investing activities Purchase of tangible fixed assets (62) (72) (89) Interest received 16 - - ------- ------- ------- Net cash from investing activities (46) (72) (89) ------- ------- ------- Cash flows from financing activities Loan repayments in year (3) (1) (10) Amount withdrawn by directors - (11) - Share issue 2,500 - - Share issue costs (487) - - ------- ------- ------- Net cash from financing activities 2,010 (12) (10) ------- ------- ------- Increase in cash and cash equivalents 1,884 35 33 ------- ------- ------- Cash and cash equivalents at beginning of period (187) (220) (220) ------- ------- ------- Cash and cash equivalents at end of period 1,697 (185) (187) ------- ------- ------- BEST OF THE BEST PLC Unaudited Interim Statement of Changes in Equity for the period ended 31 October 2006 Share Called up Based Share Share Payment Retained Total Capital Premium Reserve Earnings Equity £000's £000's £000's £000's £000's Balance at 1 May 2005 63 138 - (90) 111 Profit for the year - - - 433 433 -------- ------- -------- -------- -------- Balance at 30 April 2006 63 138 - 343 544 Bonus share issue 375 (138) - (237) - Cash share issue 198 1,815 - - 2,013 Loss for the period - - - (39) (39) Employee share option charge in period - - 9 - 9 -------- ------- -------- -------- -------- Balance at 31 October 2006 636 1,815 9 67 2,527 ======== ======= ======== ======== ======== Balance at 1 May 2005 63 138 - (90) 111 Profit for the period - - - 285 285 -------- ------- -------- -------- -------- Balance at 31 October 2005 63 138 - 195 396 ======== ======= ======== ======== ======== BEST OF THE BEST PLC Notes to the Interim Financial Statements for the period ended 31 October 2006 1. Basis of preparation The interim financial statements and all the comparative information for 31st October 2005 are unaudited and the comparative information for 30th April 2006 is audited. All financial statements have been prepared under International Financial Reporting Standards as adopted by the EU (IFRS). The restatement of 2005 and 2006 financial information from UK Generally Accepted Accounting Principles (UK GAAP) to IFRS and the accounting policies of the company under IFRS have been applied to all three periods reported. No restatement of the financial information is required. 2. Segment analysis 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. (Loss)/Earnings per share Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of equity shares in issue is 10,403,440 (31st October 2005: 8,750,000; 30th April 2006: 8,750,000). The share options are not dilutive. The earnings, being the loss after tax, are £39,000 (31st October 2005: £286,000 (Profit); 30th April 2006: £433,000 (Profit)). 4. Share options In accordance with IFRS 2 the fair value of share options, calculated when the share options were granted has been recognised as an expense over the vesting period of the grants. Once calculated these fair values cannot be reassessed. The credit entry for this charge is taken to the income statement reserve and reported in the statement of changes in equity. Included within the income statement under administration expenses is a charge of £8,669 representing the amount accrued to date in respect of share based payments. 5. Statement of changes in equity The movement during the current reporting period on the called up share capital and share premium account, net of issue costs of £487,000 arose from the issue of 3,968,254 shares at 63p per share. The share based payment reserve reflects the charge for the period in relation to share options granted during the period. The company will continue to accrue these costs at the same rate until the vesting period is over. 6. Publication of non-statutory accounts The financial information contained in this interim statement does not constitute statutory accounts as defined in sections 240 of the Companies Act 1985. All information is unaudited apart from that included for the year ended 30th April 2006. The statutory accounts for the financial year ended 30th April 2006 were prepared under UK GAAP. These accounts, upon which the auditors issued an unqualified opinion did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under 237(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 1985, 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. This information is provided by RNS The company news service from the London Stock Exchange

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