BOTB.L Regulatory News (BOTB)

Best of the Best plc

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

Preliminary results for the year ended 30 April 2020

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

Move to online completed, delivering strong financial performance with encouraging outlook

Financial Highlights:

Operational Highlights:

William Hindmarch, Chief Executive, said:

"I am pleased to announce strong revenue, profit growth and cash generation as the business has completed its transformation to a wholly online operation, away from its historic presence in airports and retail sites. Our growth strategy is now exclusively focused on driving digital sales, with our 'Dream Car' and 'Lifestyle' competitions recently joined by a new 'Midweek Car' competition.

Our digital only model gives us more flexibility and focus, as well as efficiency and cost savings, combined with ever increasing confidence in our accelerating online marketing investment. This has delivered strong results with both revenue and profit building throughout the second half of the financial year, leading to strong cash generation. Sales momentum since the period end has been encouraging and ahead of management's original expectations, and we look forward to updating shareholders with further progress in due course."

Enquiries:

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

Over the past few years the Company has actively reduced the estate of physical sites upon which it was established 20 years ago. Having previously traded from up to twenty-six airport and shopping centre locations, the business has completed its evolution and now operates entirely online. Our marketing activity is exclusively focused on driving traffic, registrations and returning loyal customers to our website, botb.com.

I am pleased with the smooth and controlled way in which this transition has been executed, with no loss of overall revenue or unwelcome exceptional costs. With the transformation complete, the Company now has a very effective platform from which it can continue to leverage its proprietary systems, software and the extensive and valuable database it has built, whilst further enhancing the products and experience it offers both new and existing players.

The transformation to becoming a purely digital business has been very successful, giving us more flexibility and focus. The financial results for the year also clearly reflect the benefits of this transition with increased operating margins, improved capital efficiency and cost savings. Our competitions, pricing and product strategy are also now tailored exclusively for our growing and increasingly diversified online customer base, with our 'Dream Car' and 'Lifestyle' competitions recently enhanced by a new 'Midweek Car' competition.

During the year, BOTB's investment in online marketing and customer acquisition continued to accelerate, delivering strong results, profit growth and cash generation, with ongoing sales momentum since the period end.

Preliminary Results

Revenue for the year ended 30 April 2020 increased by 20.1% to £17.79 million (2019: £14.81 million) and profit before tax rose to £4.20 million (2019: £2.11 million operating profit before exceptional items), slightly ahead of management expectations, with both revenue and profit building throughout the second half of the financial year. Earnings per share increased to 37.51p (2019: adjusted 17.62p).

A total of £4.89 million of cash flow was generated from operations during the period. Net assets at 30 April 2020 stood at £3.30 million (2019: £1.28 million), underpinned by cash balances of £5.21 million (2019: £2.54 million) and our 966-year leasehold office properties valued at £0.95 million. The Group has no borrowings.

BEST OF THE BEST PLC

Preliminary Results (continued)

For the year ended 30 April 2020

Dividends

The Board is recommending a final dividend of 3.0p per share (2019: 2.0p) for the full year ended 30 April 2020 subject to shareholder approval at the Annual General Meeting on 16 September 2020. The final dividend will be paid on 2 October 2020 to shareholders on the register on 18 September 2020.

As the Company continues to be profitable, cash generative and benefits from a robust balance sheet, the Board is also pleased to declare the return of approximately £1.88 million to shareholders by way of a special dividend (the "Special Dividend") of 20.0p per ordinary share.

The Special Dividend will be paid on 10 July 2020 to shareholders on the register at the close of business on 26 June 2020. The ex-dividend date is 25 June 2020. Following the payment of the Special Dividend the Company will retain working capital cash balances in excess of £4.0 million, which the Directors consider to be sufficient working capital to fund the Company's activities over the next 12 month period.

Strategy, competitions, pricing

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 has proved it can execute its marketing strategy more effectively using predominantly digital media, complemented by traditional advertising channels. The historical 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.

Both our 'Dream Car' and 'Lifestyle' competitions delivered encouraging results during the period and we marked the exciting milestones of celebrating both our 500th Dream Car and our 100th Lifestyle winners.

BOTB's principal competition is the Weekly Dream Car, which continued to perform well. It has benefited from the improvements made to the overall user experience, including price points, choice of cars and the 'Spot the Ball' mechanic, which has helped to drive both revenues and customer engagement.

The Weekly Lifestyle Competition, which features luxury watches, motorbikes, holidays, other gadgets/technology and cash prizes, has also performed encouragingly. While there is a meaningful overlap with players of our Dream Car competitions, the range of prizes in the Lifestyle competition, with entry prices starting at just 15p, has significantly broadened our addressable market.

We have recently added a third weekly 'Midweek Car' competition, focusing on a slightly cheaper entry point with £1 to £2 ticket prices and ending on a Wednesday night. This has been well received by our customers and we will continue to improve on this and explore other competition offerings.

The weekly 'In The Headlights' edits, significant amount of in-house generated content on our YouTube and other social media channels, together with our 'Supercharged' Loyalty Club provide additional benefits and valuable engagement with regular players.

With over 75% of new visits and 50% of revenue now coming via mobile devices, there has been a deliberate strategy to keep the core offering simple and focused to maximise conversion. This approach is yielding results and BOTB has built a substantial and valuable database of players, which not only supports its existing competitions, but also offers interesting opportunities for new products and partnerships.

Continued investment in IT development

The vast majority of our website visits and over half of our revenue are now from mobile devices. As a result, we are becoming increasingly 'mobile first' in our approach to IT development, making incremental improvements to our platform and our user experience by constantly updating the interface.

Our conversion rate on mobile devices, however, is still lower than on desktop and we see an opportunity to increase revenues by further improving the mobile interface. We have released major changes to improve the mobile registration, playing and payment experience, which in turn will assist both conversion and frequency of play. Native iOS and Android apps are also in the final stages of development and testing, to better capitalise on this shift to mobile devices and to further optimise conversion.

BEST OF THE BEST PLC

Preliminary Results (continued)

For the year ended 30 April 2020

New player acquisition and CRM

As confidence in our approach has increased, we have accelerated our marketing investment, particularly in the second half of the year, resulting in encouraging returns on investment and lifetime value metrics. Encouraging revenue growth has been delivered by an enlarged, in-house marketing team through a wide range of digital marketing channels, as well as TV, Radio, Print, PR and YouTube Influencers, alongside new creative content that has achieved increasingly efficient new customer acquisition.

Social media continues to be a core marketing channel, driving both customer acquisition and brand awareness. Our Facebook page now attracts over 290,000 followers with BOTB's YouTube channel at over 40,000 subscribers, whilst Instagram followers exceed 150,000.

An increasing proportion of our marketing budget is directed at Social Influencers who introduce customers and promote BOTB on their various YouTube channels. We have also seen gains in the efficiency of our TV advertising, as we test and optimise the creative and messaging. This activity is complemented by promotional campaigns executed on traditional media to maximise the Company's exposure to a wide range of ages and demographics, including our 'traditional' airport customer. Investment in print and public relations has secured frequent coverage of weekly winners and continues to positively promote the brand.

All marketing investment is strictly calibrated on the cost per acquisition of a new customer, versus their predicted lifetime value. This metric, which is tracked and analysed in considerable detail across the various channels, is the primary determinant for where and how we continue to grow our marketing budget in the year ahead. 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 customer retention initiatives.

Outlook

We are pleased that BOTB has delivered increased revenue and profit ahead of our expectations. The cash generative model and robust balance sheet presents an excellent platform for continued future growth. The initiatives taken to reorientate our marketing strategy toward an online-only model have proven successful, giving us confidence for the new financial year which has started very encouragingly.

We are confident that our streamlined, digital business is well positioned to take advantage of future growth opportunities, and I look forward to updating shareholders on our progress in due course.

William Hindmarch

Chief Executive

15 June 2020

BEST OF THE BEST PLC

Preliminary Results (continued)

For the year ended 30 April 2020

KEY PERFORMANCE INDICATORS

The Directors have monitored the performance of the Company and Group with particular reference to the following key performance indicators:

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

BEST OF THE BEST PLC

Preliminary Results (continued)

For the year ended 30 April 2020

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

15 June 2020

BEST OF THE BEST PLC

Consolidated Statement of Comprehensive Income

For the year ended 30 April 2020

The notes form part of these financial statements

BEST OF THE BEST PLC

Consolidated Statement of Financial Position

As at 30 April 2020

The financial statements were approved by the Board of Directors on 15 June 2020 and were signed on its behalf by:

……………………………..

W S Hindmarch

Director

The notes form part of these financial statements

BEST OF THE BEST PLC

Company Statement of Financial Position

As at 30 April 2020

The profit attributable to shareholders dealt with in the financial statements of the Company was £3,517,893 (2019: £3,840,909).

The financial statements were approved by the Board of Directors on 15 June 2020 and were signed on its behalf by:

……………………………..

W S Hindmarch

Director

The notes form part of these financial statements

BEST OF THE BEST PLC

Consolidated Statement of Changes in Equity

For the year ended 30 April 2020

The notes form part of these financial statements

BEST OF THE BEST PLC

Company Statement of Changes in Equity

For the year ended 30 April 2020

The notes form part of these financial statements

BEST OF THE BEST PLC

Consolidated Statement of Cash Flows

For the year ended 30 April 2020

The notes form part of these financial statements

BEST OF THE BEST PLC

Company Statement of Cash Flows

For the year ended 30 April 2020

The notes form part of these financial statements

BEST OF THE BEST PLC

Notes to the Preliminary Announcement

For the year ended 30 April 2020

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.

2.1 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 2019. The Company and Group have not early adopted any other Standards, Amendments or Interpretations that have been issued but are not yet effective.

IFRS 16 'Leases' was issued by the IASB in January 2017 and is effective for accounting periods beginning on or after 1 January 2019. The new standard has replaced IAS 17 'Leases' and eliminates the classification of leases as either operating leases or finance leases and, instead, introduce a single lessee accounting model. The standard, which has been endorsed by the EU, provides a single lessee accounting model, specifying how leases are recognised, measured, presented and disclosed.

The following standards have been issued but not applied:

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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:

Development costs not meeting the criteria for capitalisation are expensed as incurred.

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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.

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

2.12 IMPAIRMENT

The carrying amounts of the Company's and the 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:

All other assets are classified as non-current.

A liability is current when:

The Company and Group classify all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.14 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.

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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 Company and Group has applied IFRS 16 using the modified retrospective approach resulting in a nil impact on opening equity and comparative amounts have not been restated.

The cost of leases of low value items and those with a term of less than one year at inception are recognised as incurred.

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.

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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 becomes 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:

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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.

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.

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 £14,940,207 (2019: £12,098,896) whilst sales from non-UK activities totalled £2,848,381 (2019: £2,708,076) ) and included £73,030 (2019: £nil) of ticket sales brought forward from the previous year.

On 19 May 2018, the Company received a retrospective VAT refund from H M Revenue and Customs ("HMRC") on it "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 previous financial year. On 20 December 2019, the Company settled an agreed assessment issued by HMRC for Remote Gaming Duty, making a payment of £1,758,875. Accordingly, this sum has been recognised as an exceptional expense in the previous financial year, together with associated legal and professional costs of £264,625 incurred in connection with these claims. There was no exception income or expense in the financial year ended 30 April 2020.

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

The average monthly number of employees during the year, including the Directors, was as follows:

The number of Directors to whom retirement benefits were accruing was as follows:

The Directors consider themselves to be the only key management personnel. As such, a separate analysis of remuneration paid to key management personnel has not been presented.

Information regarding the highest paid Director is as follows:

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

The profit before income tax is stated after charging/(crediting):

10. INCOME TAX

Analysis of tax expense

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:

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

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 £3,517,893 (2019: £3,840,909).

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.

13. DIVIDENDS

The Company paid a final dividend of 2.0 pence per share on 27 September 2019, as recommended in the financial statements to 30 April 2019. Furthermore, a Special Dividend of 14.0pence per share was paid on 21 February 2020 to shareholders on the register at the close of business on 6 February 2020.

The Board is recommending a final dividend of 3.0pence per share (2019: 2.0pence per share) for the full year ending 30 April 2020 subject to shareholder approval at the Annual General Meeting on 16 September 2020. The final dividend will be paid on 02 October 2020 to shareholders on the register on 18 September 2020.

14. INTANGIBLE ASSETS - GROUP AND COMPANY

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

14. INTANGIBLE ASSETS - GROUP AND COMPANY (continued)

15. PROPERTY, PLANT AND EQUIPMENT - GROUP AND COMPANY

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

15. PROPERTY, PLANT AND EQUIPMENT - GROUP AND COMPANY (continued)

BEST OF THE BEST PLC

Notes to the Preliminary Announcement (continued)

For the year ended 30 April 2020

16. INVESTMENTS

Group