Main Web Site and Car Competitions : http://www.bestofthebest.co.uk

Best of the Best Poker Site : http://www.bestofthebestpoker.com/

Best of the Best Casino Site : http://www.bestofthebestcasino.com/

Information : http://www.investegate.co.uk/Article.aspx?id=200608140700154984H


Best of the Best plc Locations:
Heathrow T1, T3, & T4, Gatwick North & South, Stansted, Luton, Manchester T1 & T2, Edinburgh and Glasgow



Shares in Issue : 12,718,254 Ordinary Shares.

Major Shareholders :

William Hindmarch 46.8%
BAA Enterprises Limited 13.8%
Stancroft Trust Limited 7.1%
Michael Hindmarch 5.5%
Octopus Investments Limited 5.0%
Charles Stanley & Co. Limited 3.9%


Recent Director Buys :

5th April 07 R Garton 9,000 @ 60p
27th Mar 07 R Garton 15,421 @ 57.5p
5th Mar 07 R Garton 10,000 @ 56p
8th Feb 07 M Hindmarch 10,000 @ 54p
30th Jan 07 M Hindmarch 15,421 @ 43.5p

http://www.market-insider.net/market-whispers/best-of-the-best/


Best of the Best

Posted on May 17th, 2007 in Market whispers.

Charles Stanley says buy after the trading update. Broker says: The new stand at Gatwick South has resulted in a material increase in sales while we understand that the group has a number of new regional airport locations in the pipeline.

Nice enough set of interims.

http://www.investegate.co.uk/Article.aspx?id=200801150700457504L

Recommended by UK-Analyst.com today :


Buy Best of the Best at 59.5p

Says exclusive small cap specialist website UKMicrocap.com

The Investment Case: Best of the Best (BEST) has secured a niche market in displaying luxury cars as competition prizes in rented sites within airport terminals throughout the UK, charging customers between 1 and 20 for tickets depending on the value of the prize. Its recently secured 7-year contract with BAA has cemented the company's position within this novelty market, providing exclusivity and barriers to entry along with a high level of earnings visibility. Although it is not uncommon to see automobiles on show in shopping centres which are up for grabs in competitions, these are usually for promotional purposes and are generally mass-market models. Best of the Best - as the name implies - offers the chance to win the kind of cars that the vast majority of people would not normally have the chance to own in their lifetime. As the company's recent performance demonstrates, this is something that people are prepared to pay for.

Company Description: Best of the Best was founded by its chief executive William Hindmarch in 1999 and began trading in 2000 as a very modest outfit with just one stand in Heathrow's Terminal 4. In 2001 the company began selling tickets over the internet and by 2002 BAA had took notice of the company and purchased a 20% stake. In 2003 the firm negotiated its first non-BAA airport contract and in 2006 the company's shares were admitted to AIM following a placing that raised 2.5 million (2 million after costs).

The proliferation of Best of the Best sites in airports across the UK has been impressive. From just the one stand in 2000, the company now has 15 stands in top airport locations throughout the UK, including all the Heathrow terminals along with Manchester, Stansted, Gatwick and Glasgow. These 15 locations have combined passenger volumes of 84 million per annum, many of whom will come into contact with a Best of the Best stand at some point during their transit. The company is currently in discussions to open further sites during the current year and its first international contract was signed with Copenhagen Airport in January 2008.

In addition to this, the company's online operations have made leaps and bounds since their inception in 2001, with online sales up by 39% during the first half of 2007 compared to the first half of 2006. Meanwhile, the number of registered customers on the company's database grew from just over 160,000 in November 2006 to 250,000 in October 2007, and continues to grow at a rate of around 7,500 customers per month. As the website's usership grows, so does its potential as a commercial and strategic asset. Advertising opportunities are the most obvious example, but there are also less obvious sources of revenue such as market research possibilities.

Results for the six months to 31 October were a milestone for Best of the Best, in that it recorded its first pre-tax profit as a quoted company. Profits before tax came in at 453,000, as opposed to losses of 53,000 the previous year, achieved on the back of a 67.3% increase in revenues to 3.63 million pounds. Earnings per share were 2.55p compared with losses of 0.38p in 2006

The company's balance sheet looks solid, with net assets of 3.5 million, 1.7 million of which is cash. 1.9 million of current assets are accounted for by its stock of sports cars which are, reassuringly, on the balance sheet at net realisable value. The company has no long-term debt and only 150,000 of short term borrowings.

Year to
30th April
Sales
(m)
Pre-Tax Profit (Loss) (m)
Normalised Earnings (Loss) Per Share (p)
PE Ratio

2006A
4.7
0.6
3.41
17.4

2007A
5.9
0.7
4.4
13.5

2008E
7.5
1.1
6.04
9.85

2009E
8.5
1.3 7.15 8.32

2010E 9.2 1.6 8.61 6.91

Management:

Founder and CEO William Hindmarch worked at Kleinwort Benson as a graduate trainee before founding Best of the Best in 1999. William obviously has formidable business acumen for a relatively young CEO, judging from the growth record of the business. He is also the largest shareholder in the company with a 46.78% stake. Although it is always good to see the management's interests aligned with those of other investors through large equity holdings, this can raise problems when it comes to the liquidity of the stock. However, this is often the case when dealing with companies of this size, and investors should always be aware that they may experience problems dealing in the shares.

William is also supported by his father, non-executive chairman Michael Hindmarch, who has a wealth of business experience. In 1970 Michael founded Plantpak Plastics, a horticultural plastics company, which he reversed into Falcon Industries in 1985. Since 1990 Michael has acted as an independent business consultant to a number of small firms.

Commercial director Rupert Garton joined JP Morgan as a graduate trainee in 1997. After moving to Dresdner Kleinwort Wasserstein to take up a position in its equity capital markets division, he spent a further four years with the firm's corporate finance division, working in London, Milan and Johannesburg. He left Dresdner in 2003 to do an MBA at the Oxford Said Business School, after which he worked for a specialist retailer as Commercial Director. He joined the company in 2006.

Bull Points:

- 7-year contract secured with BAA;

- International expansion recently commenced;

- Formidable barriers to entry;

- Strong cash position;

Bear Points:

- Potentially exposed to a slowdown in discretionary spending, although the company has seen no sign of this thus far;

- Exposed to a potential slow-down in air travel;

Valuation and 3-year Target:

Arriving at a valuation for Best of the Best is going to be somewhat of an improvisation as there are no direct peer comparisons available. During the current year to April 2008, the company should post pre-tax profits of 1.1 million on sales of 7.5 million, rising to 1.3 million on the back of sales of 8.5 million in 2009. This puts the stock on a current year price to earnings ratio of 9.85, falling to 8.32 for 2009 on the basis of forecast earnings of 6.04p and 7.15p respectively. This kind of valuation certainly appears cheap in absolute terms, but with so many small companies trading on seemingly ridiculously low ratings at the moment, investors need to focus on other aspects of a stock rather than how cheap it looks at face value.

The company's seven-year contract with BAA is a particular case in point, providing the company with high levels of earnings visibility and giving it a dominant position in the UK. Furthermore, the shares had been attracting a lot of interest in the beginning of 2007, reaching highs of around 80p in May. However, illiquidity took its toll when the market downturn set in, with the shares reaching lows of around 36p towards the end of 2007. It would appear that the fall in the share price has simply been down to the wider market, as the company has met its earnings targets and continues to grow rapidly. Given the shares attracted a current rating of around 20 at their peak, it would not seem unlikely for them to move towards the mid teens again when the markets begin to recover, suggesting triple-digit upside from here.

Assessment:

Best of the Best has virtually created for itself a completely novel niche market, in which it is the completely dominant player. With an impressive growth record behind it, its first international site secured and negotiations for new site licences underway, there should be plenty to look forward to in the current year and beyond. Buy at 59.5p with a two year target of 90p

Key Data:

Spread: 57-62p
Market Capitalisation: 7.567 million
Number of shares in issue: 12.72 million
Ticker: BEST