Should you invest in Best of the Best?

AIM-listed Best of the Best PLC has had a torrid time of late. Whilst the business served up excellent numbers in 2021, with revenue growth of 156%, a notable decline in customer engagement, as stated by BOTB’s William Hindmarch in their Preliminary Results for 2021, sent the shares reeling 27% down on the day with a further decline of 20% seen since. So, with this significant decline in BOTB’s shares, this article will aim to take a look at the prospects for the business and summarise my thoughts on the investment case for Best of the Best.

Before we start, I must confess I had been eyeing up and considering purchasing BOTB on recent weakness (prior to the update on the 16th of June) and so, out of a mix of pure chance and capital restrictions stopping me from investing, I write this after BOTB’s recent troubles as opposed to before them!

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History and Business Overview

Best of the Best PLC is a dream car and lifestyle competition company that was listed on the AIM market in July 2006. It was founded in 1999 by William Hindmarch, who serves as its CEO. It became known for its display of luxury cars as competition prizes in retail spaces within airport terminals and shopping centres. Their first site was at Heathrow’s Terminal 4, before expanding into Gatwick, Stansted, Edinburgh, Manchester, Luton and Birmingham, with a site also at Westfield Shopping Centre in London. BOTB’s revenue was initially largely derived from ticket sales to passing airport passengers.

Over time, BOTB has shifted to an online-only presence. The progression to completely online was completed in July 2019. In terms of their physical presence, they still attend major car shows in the UK such as Goodwill Festival of Speed. Online, they now run weekly competitions, giving away cars, cash, luxury watches and motorbikes.

How BOTB Works

Even if you are aware of who BOTB are, I think there is much to learn about their customer journey, which has proved so successful in their path to becoming an online-only operator.

Car Selection, Source: BOTB website

Once BOTB has acquired you as a ‘punter’ to their online landing page (probably through their digital marketing campaigns), you will be greeted by an ever-growing list of dream vehicles that you can potentially win. You simply click on the car you would like and add it to your basket. Once the vehicle is added, players must play a "skill" game of ‘spot the ball’, where you attempt to get as close to the panel of expert judges' predictions to where the ball actually is. Players can use line drawing tools to help their predictions.

Spot the ball, Source: BOTB website

Once the entries have been completed and the results from the competition are revealed a winner is selected. BOTB surprises them in a very lewd fashion, turning up to their house with a briefcase full of cash, champagne and typically a loud and flashy motor. This footage is then plastered over BOTB’s social media and website, acting as attractive bait for future players.

BOTB Midweek Winner, Source: BOTB website

Finally, all players are notified by email of the winner of the competition with a ‘better luck next time’ style response. In this email, you are able to see how accurate your guess was versus the panel of judges. Depending on how accurate you were, there are levels of small winnings paid for those close to the judges' estimate.

The Twenties Trader’s result during BOTB research

Recent Performance

BOTB reported its full year results on the 16th of June, and looking specifically at the 2021 period, its results were fantastic. To summarise them briefly:

  • Revenue grew 156% to £45.7m

  • Operating profits grew 250% to £14m

  • Gross and operating margins grew to 62% and 31% respectively

  • The company remained debt free (albeit having placed new share capital during the year)