(Alliance News) - Best of the Best PLC's share price dived on Wednesday, after it reported that half-year profit was slashed by higher costs and warned of "potential volatility" ahead.
The stock was down 27% to 440.00 pence each in London on Tuesday near midday. The price fell to as far as 400.00p Tuesday morning, setting a new 52-week low.
The London-based operator of weekly online raffle competitions said pretax profit more than halved to GBP3.0 million in six months that ended October 31 from GBP6.8 million a year before.
Revenue was comparatively stable, decreasing by 13% to GBP19.1 million from GBP22.1 million. Increased costs were largely behind the drop in profit, as the cost of customer acquisition, increased prizes, and operational gearing all reduced margins.
Earnings per share were more than halved for the financial first half, dropping to 27.26 pence from 59.84p in the same period of financial 2020.
Best of the Best reported net assets of GBP6.4 million, not far down from GBP6.8 million in 2020, though cash balances dropped by a quarter to GBP8.3 million from GBP11.2 million in the previous year.
The raffle operator expects to report revenue for all of financial 2022, which ends on April 30, of GBP34 million to GBP35 million, and pretax profit of GBP4.3 million to GBP4.8 million. This would be just a third of financial 2021's pretax profit of GBP14.1 million. The new estimates are worse than November's profit warning, which predicted a profit drop of 57% for the current financial year.
The revised estimates follow a further increase in customer acquisition costs of 37% in November and December, compared to the average of the financial first half. This has resulted in fewer customer registrations.
William Hindmarch, BTOB Chief Executive, said: "Whilst we are facing a new set of challenges, we remain a profitable, cash-generative business with no debt and a large and loyal customer base which remains engaged. Understandably, we will be taking steps to reduce the bottom line impact of reduced revenues, by maintaining a sharp focus on costs, and prioritizing the most efficient marketing channels.
"We recognise that there is potential volatility ahead, which is evident in our cautious short-term outlook, but look to the medium and long term with confidence as we push towards a return to steady growth and more normalised marketing costs."
By Elizabeth Winter; elizabethwinter@alliancenews.com
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