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10 March 2021
By Maynard Paton
One of my favourite SharePad screens identifies good-quality companies that have grown without acquisition. The screen uses the following filter criteria:
- Positive five-year turnover and operating profit growth;
- A minimum 15% for both return on equity and operating margin;
- Net borrowing of no more than zero (i.e. a net cash position), and;
- A five-year acquisition spend of zero.
I ran the screen the other day and found 28 matches. I studied Best of the Best — or BOTB as it now calls itself — because I was already aware of:
- Some very remarkable financials;
- An extraordinary share-price performance, and;
- Management deciding not to sell the business despite “extensive talks with a range of parties”.
Read my full Best of the Best article for SharePad.
4 thoughts on “[SharePad] Screening For My Next Long-Term Winner: BEST OF THE BEST”
Some remarkable financials.
Interestingly, although they have not spent anything on acquisitions they do have, amongst their small team of employees, a Head Of Acquisition (Vikki). See ‘Meet The Team’ on their website.
I can only assume her role is / was related to the now cancelled Formal Sale Process, in which case presumably the role (and the roles of anyone reporting to her) no longer exist.
Perhaps this has led to a further reduction in employees and further increase in already stratospheric £1m+ sales per employee?
Thanks for the comment. I wonder if ‘Head of Acquisition’ actually means ‘customer acquisition’ and her being responsible for social media and conversion of website visitors into paying customers etc. I think with BOTB, corporate acquisitions and the FSP would be the responsibility of the board executives. Although in very acquisitive companies, there could well be a ‘head of [corporate] acquisitions’!
(EDIT 23 March 2021: Board appointments RNS. The execs have appointed a non-exec to help perhaps with acquisitions:
“Daniel’s appointment as a Non-Executive Director recognises the contribution that he made before, during and after the Company’s recent strategic options review. The Board believes that the Company will benefit greatly from his expertise, network and strategic input as a Non-Executive Director, in providing relevant advice, experience and industry relationships as BOTB continues to grow.“)
Best of the Best (BOTB)
I have looked closer at BOTB’s regulatory situation:
I am not comfortable with the legal situation. The courts ruled during 2018 that spot-the-ball competitions are games of chance, while the Gambling Act 2005 declares the competitions to be games of skill. The latter provides BOTB with an exemption from regulation. The 2005 Act is currently up for review, and I worry the rules covering spot-the-ball competitions could be changed to reflect the court verdict and therefore remove BOTB’s exemption from gambling regulation.
Best of the Best (BOTB)
Lockdown growth faltering?
I have revisited BOTB following the FY 2021 results (published 16 June 2021) and the shares falling 25% to £20: