BOTB.L Regulatory News (BOTB)

14 Aug 2006 07:00

Best of the Best PLC14 August 2006 Best of the Best plc ("Best of the Best" or "the Company") Best of the Best plc is a profitable business that displays luxury cars as competition prizes in rented retail space within airport terminals and on its website www.bestofthebest.co.uk ADMISSION TO AIM • Dealings on AIM commence today • Placing of 3,968,254 Ordinary Shares of 5p each at 63p per share • £2.5 million (before expenses) raised via a Placing and represents all new money • The proceeds will be used for the financing of new sites, adapting existing locations, increasing online sales, marketing and to augment the Company's existing working capital facilities • The Company was founded by CEO, William Hindmarch, in 1999 and started trading at Heathrow's Terminal 4 in 2000 • BAA retains original stake post flotation • The Company has expanded into eight BAA operated airports and two airport terminals in Manchester and one in Luton, operated by Manchester Airports Group plc and TBI plc respectively • The Company is currently in discussions for the roll out of further sites within a number of airport terminals both in the UK and internationally. The Directors believe that this will result in an increase in the number of sites operating in the current financial year • The Directors have been approached by the operators of other retail site locations, such as ferry terminals, railway stations, cinemas, supermarkets, motorway service stations and shopping centres, and are continually reviewing new sites as the Company develops its product range • Charles Stanley Securities Limited is the Company's Nominated Adviser and Broker William Hindmarch, Chief Executive, commented, "We believe that there are significant opportunities to develop our business,which is well positioned to benefit from the rapid growth in UK airportpassengers. The DTI suggests that over the next 15 years in the UK alone numberswill increase from 229 million per annum to 401 million per annum. Such stronggrowth in our core market, in addition to our growing online capability andopportunities to develop an online gaming service, create the foundations forrapid growth." 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/Freddy Crossley T: 020 7953 2000 The Business Best of the Best runs competitions, typically over a fixed period of two months,with different price points depending on the prize. The competitions are runsimultaneously from both its airport terminal sites and online. Typically,tickets at airport terminal sites are sold to passing airport passengers. Theircontact information, which is essential to entering the competition, iscollected and added to a database. Towards the end of the competition an emailis sent to the database of prior customers which stimulates further sales ascustomers enter the competition online. There are three different competitions that Best of the Best runs both at theairport terminal sites and online, in the following formats as at 1 June 2006: Supercar Competition Sportscar Competition Superbike Competition Ticket Cost £60 £25 £10 Duration of Competition 2 months 2 months 2 monthsTypical Prizes Aston Martin DB9 Porsche Boxter S Ducati 999S Ferrari F430 Porsche Cayman S MV Augusta Bentley Continental GT TVR Sagaris Triumph Rocket III Aston Martin AMV8 + £10,000 Audi RS4 Harley Davidson V Rod Range Rover Sport + £40,000 Mercedes SLK 55 AMG Yamaha FX Cruiser Wet Bike The Company, since it began trading, has given away prizes with a value of over£6 million from more than 100 competitions Strong financial performance Best of the Best has been profitable for the last two financial years. Totalturnover increased by 29.6 per cent between the years ending 30 April 2005 and30 April 2006 and online sales by 100 per cent for the period to 30 April 2004to 30 April 2006. The Directors believe that the planned increase in the numberof terminal sites operating will have a significant impact on turnover in thecurrent financial year. 30 April 30 April 30 April 2004 2005 2006 £'000 £'000 £'000Turnover 2,904 3,663 4,748Operating (loss)/profit (74) 112 615(Loss)/profit before taxation (81) 103 591 Development of physical sites The Company is in discussions for the roll out of further sites within a numberof airport terminals both in the UK and internationally. The Directors believethat this will result in an increase in the number of sites operating in thecurrent financial year. The Directors believe that by varying the price of ticket, type of prize andnature of the game, including instant win tickets, at selected sites it would bepossible to target a wider audience of the departing passengers that pass by itssites resulting in an increase in turnover. Additionally, the Company will continue to improve the sites and make them moreattractive to passengers. Furthermore by basing the stands themselves on morefunctional common design with recyclable parts the Directors consider they canreduce the cost and improve the functionality of new stands. The operating systems and software used by the Company allows the sites to befully scalable allowing the Company's sites to be easily reproduced withidentical systems and financial controls. Furthermore, the Directors have been approached by the operators of other retailsite locations which they have placed under review such as ferry terminals,railway stations, cinemas, supermarkets, motorway service stations and shoppingcentres, and are continually reviewing new sites as the Company develops itsproduct range. Development of online sales Approximately 20 per cent. of the Company's revenue is derived from the highermargin online sales of tickets which has increased by 24 per cent. for the sixmonths to 30 April 2006 compared to the same period in the previous year andapproximately 100 per cent. for the year to 30 April 2006 compared to the sameperiod in the year to 30 April 2004. Following the growth and development of the Company's online sales, largelythrough the conversion of customers using physical site sales, the Companyexpects to increase its online product range. Online sales generatesignificantly higher margins than sales in physical sites due to the latter'shigher operating costs, and the Company therefore intends to focus on marketingstrategies to increase the level of online sales. The Company has also developedaffiliate sales and marketing relationships driving a significant number ofindividuals to its site and the Directors believe that these relationships canbe improved both in the UK and internationally. Currently the web site receivesan average of 250,000 unique visits per month and 1.5 million page impressions. Best of the Best is in the early stages of developing its white labelled onlinecasino and poker business and the Directors are confident that this area of thebusiness offers wide ranging synergistic benefits and its contributions toturnover will continue to increase. Database The Best of the Best database currently has approximately 150,000 individualsregistered and is growing at approximately 5,000 per month. The Directorsconsider this database to be a significant asset for marketing both theCompany's core product, especially towards the end of competitions, and formarketing complementary services, such as the online casino. Approximately 10per cent. of the individuals on the database have played on more than oneoccasion, with the highest spending 5 per cent. of such repeat customers havingspent on average of £290 per customer. There are also third party arrangementsfor commercially utilising the database under review. REASONS FOR THE PLACING The net proceeds of the Placing available to the Company after the expenses ofthe Placing and Admission will be £ 2 million. The funds will be used for thefinancing of new sites, adapting existing sites, marketing, investment in staffand technology and the remainder to augment the Company's existing workingcapital facilities. The Company also relies on an experienced management team and skilled workforceand the Directors believe that Admission will help the Company attract andretain key employees whom the Company will be able to incentivise through thegrant of share options. The Directors William Hindmarch, aged 32 - Chief ExecutiveWilliam graduated from the University of Durham in 1996 and joined KleinwortBenson as a graduate trainee. He founded the business in 1999. He has been theChief Executive of the Company for 6 years. Michael Hindmarch, aged 66 - Non Executive ChairmanMichael qualified as a Polymer Technologist at the National College of Rubberand Plastics Technology, London. He founded Plantpak (Plastics) Ltd., ahorticultural plastics company in 1970. In 1985 he reversed Plantpak into FalconIndustries Plc, a listed conglomerate, becoming Chairman and CEO. Since 1990 hehas acted as an independent business consultant to a number of small companies. Nick Ziebland, aged 53 - Non Executive DirectorNick joined BAA in 1987 as commercial manager looking after retail at HeathrowTerminal 1, before moving on to become Head of Retail at Gatwick. In 1995 Nickbecame Group Retail Strategy Director and took on a dual role in 2004, when healso became Retail Director of Heathrow Terminal 5. Rupert Garton, aged 31 - Commercial DirectorRupert graduated from the University of Durham in 1997 and joined JP Morgan as agraduate trainee. After 18 months he moved to Dresdner Kleinwort Wasserstein totake up a position in the equity capital markets division. He then spent afurther four years in Dresdner Kleinwort Wasserstein's corporate financedivision, working in London, Milan and Johannesburg. In 2003, he left to do aMasters in Business Administration (MBA) at the Oxford Said Business School,before joining a specialist furniture retailer with £10 million turnover asCommercial Director. He joined the Company in January 2006. William Henbrey, aged 60 - Non Executive Finance DirectorWilliam, a Chartered Accountant, was a partner in BDO Stoy Hayward LLP, Londonfrom 1978 until his retirement from the firm in June 2006 and was head of the UKBetting & Gaming and Leisure & Hospitality Units. He has been involved in all aspects of the betting and gaming sector for over 30years. He has acted for a wide range of clients in both the private and quotedarena and, in recent years, leading online gaming and sports book operators. Hehas extensive experience of advising and assisting these clients with businessand strategic planning, flotations, acquisitions and disposals. Current Airport Locations Existing Best of the Best Departing Passenger Airport Terminal Sites Numbers during 2005 Edinburgh 3,917,697Glasgow 4,392,434Heathrow Terminal 1 7,076,764Heathrow Terminal 3 9,534,282Heathrow Terminal 4 8,072,121Gatwick North Terminal 6,765,679Gatwick South Terminal 9,566,040Luton 4,573,888Manchester Terminal 1 5,243,136Manchester Terminal 2 3,616,141Stansted 11,018,684Total 73,776,866 This information is provided by RNS The company news service from the London Stock Exchange