Eve Sleep plc (EVE) 
Eve Sleep plc: Final Results 
18-March-2021 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 
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The issuer is solely responsible for the content of this announcement. 
eve Sleep plc ("eve" the "Company" or the "Group") 
Full Year Results 
2020 results ahead of twice raised expectations, strong start to 2021 
eve, a direct-to-consumer sleep wellness brand operating in the UK, Ireland (together the "UK&I") and France, today 
issues its audited results for the year ended 31 December 2020 (the "Period"). 
Financial Highlights 1 
                             2020  2019 
Year ended 31 December                    Movement 
                             GBPm    GBPm 
Revenue                      25.2  23.9   +6% 
Gross profit                 14.5  12.7   +14% 
Gross profit margin          57.3% 53.1%  +418 bps 
Marketing contribution2      4.3   (2.5)  +GBP6.8m 
Underlying EBITDA loss3      (2.0) (10.9) (81%) 
Statutory loss for the year  (2.0) (12.1) (83%) 
Net cash                     8.4   8.0    +0.4 

Financial Highlights ? Revenue increased to GBP25.2m, with year-on-year growth in the second half of 19% ? Gross margin improvement of 418 bps enabled by focus on profitable sales ? Group marketing efficiency4 improved by 2634 bps to 24.2% (2019: 50.5%) ? The UK&I and France generated a positive marketing contribution ? Cash flow neutral for the first time, after adjusting for GBP0.3m of tax payments deferred until after the year end

Operational Highlights ? Entry into sleep gifts market with launch of 'well slept' range online and in partnership with Boots UK seeing

strong success ? UK brand awareness grew 200 bps to 17% in August 2020 and is expected to have remained strong since, with the

launch of eve's latest TV campaign from November ? Group conversion rate grew year-on-year by 60 bps, the third consecutive year of improvement ? Re-platformed the UK&I websites to Shopify, with the French website also completed post year end, to secure more

stable, scalable and lower maintenance websites ? Upgraded supply chains to localise manufacturing ahead of Brexit ? Restructured warehousing and distribution to allow shipments to customers to be consolidated into one delivery,

deriving lower costs and better customer experience ? Winner of the best two mattresses in the UK according to Which? and 3 of the top 5, and the best mattress in France

according to Que Choisir

Current trading

Revenues in the first two months of the year increased 16%, representing an acceleration from the last quarter of 2020, where growth was held back by some supply constraints.

Cheryl Calverley, CEO of eve Sleep, commented:

"eve's rebuild strategy is essentially complete, six months ahead of plan. We move now to accelerate our business, with a mind to leveraging our strong brand, efficient marketing, high performing products and excellent customer service to allow us to diversify across markets, channels and categories. But we do so carefully. Successful e-commerce businesses win through balancing growth, with customer experience and business resilience, and we will do the same. We seek sustainable, profitable growth and will avoid growth at any cost, and certainly to the detriment of customer experience or business resilience. We're excited about the opportunities the next few years bring, and we now have a business ready to grasp those opportunities."

The management team will be hosting a live presentation with Q&A for retail investors at 13:30 GMT today. The presentation can be accessed via the Investor Meet Company platform. Interested investors can sign up to Investor Meet Company for free and add to meet EVE SLEEP PLC via the link: https://www.investormeetcompany.com/eve-sleep-plc/ register-investor


1 Financial data has been rounded for presentation purposes. As a result of this rounding the totals, comparatives and calculations presented in this document may vary slightly from the arithmetic totals or calculations using such data.

2 Marketing contribution is defined as the profit/loss after marketing expenditure but before payroll and overhead costs; a measure also referred to as operational profitability.

3 Underlying EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, impairment, share-based payment charges connected with employee remuneration, fundraise-related expenditure (2019 only) adding back IFRS16 adjustments for the office lease costs.

4 Marketing efficiency is defined as total reported marketing cost divided by the reported revenue for the specified segment, thus as the reported percentage falls marketing efficiency improves.

For further information, please contact: 
eve Sleep plc 
Cheryl Calverley, Chief Executive Officer   via M7 Communications LTD 
Tim Parfitt, Chief Financial Officer 
finnCap Limited (NOMAD and Broker) 
Matt Goode / Ed Whiley (Corporate Finance) +44(0)20 7220 0500 
Alice Lane (ECM) 
M7 Communications LTD 
                                           +44(0) 7903 089 543 
Mark Reed 

chairman's statement

"eve is now a stronger, more resilient business, with a ready-made platform for future growth." - Paul Pindar

completing the rebuild strategy

In what has been one of the most difficult and unpredictable years for business, eve has exited 2020 in far better shape than it entered the year, through a combination of favourable external factors and sound execution of the strategy. The accelerated transition to online ordering and the strength of the homewares market brought about by the pandemic has provided tailwinds for the business. Whilst the sector remains highly competitive, there has been an improvement in the landscape, with the retrenchment of some online mattress companies, as well as reduced store based competition, from both temporary and permanent shop closures.

The rebuild strategy is largely complete and eve now has a more resilient and efficient technology, logistics and operational platform for future growth. The product ranges have been expanded, alongside a broadening of distribution in both the UK and France, which has had the added benefit of further raising brand awareness. Underpinning the whole business is the quality of the mattresses themselves, which have been widely recognised as best in class. Consumer champion Which? in November 2020 rated eve's original and its premium hybrid the two best mattresses in the UK. The Premium Hybrid has also been awarded 'Meilleur Choix' (best choice) by the French equivalent of Which? - Que Choisir.

eve has continued to build on its differentiated strategy of focusing on the broader sleep wellness category as compared to more mattress focused peers where competition is largely price driven. Existing product categories have been deepened with further products, as well as eve's move into new categories. eve's first foray into gifting with Boots for a 'well slept' range of sleep gifts for the Christmas period sold out and the new partnership with the French homewares retailer Olivier Desforges goes from strength to strength. In tandem with new partnerships, eve has exited those which were not economically viable, including Amazon UK, in order to stay focused on profitable sales growth.

The Company continued its ongoing investment in broadcast TV and supported its existing 'wake up dancing' campaign with an additional new campaign designed to build long term brand presence for eve as a sleep wellness brand. This longer term investment is a sign of increasing confidence in the business and its ongoing growth potential. The new 'switch off with eve sleep' campaign launched in November 2020 and runs every Sunday night across the Channel 4 estate, digital and mobile advertising through until spring 2021. The analytics on the campaign performance so far have been very positive, with payback above projected expectations.

Over the last two years the entire operations and processes of the business have been carefully analysed and restructuring plans put in place. The consumer websites have been re-platformed to Shopify, which, in addition to providing an improved customer experience and a more stable platform, reduces ongoing maintenance costs and is easily replicable across markets. As part of wider Brexit preparations to minimise any trade frictions and stay cost competitive, mattress manufacturing has been largely localised in the UK for the UK and Irish markets and Belgium for sales to the French market. Distribution capability for the UK&I, in terms of both warehousing and carriers has also been upgraded, resulting in an improved customer experience and a reduction in logistics cost through the consolidation of all items in an order into a single delivery.

financial performance ahead of expectations

The central focus of the rebuild strategy has always been to reduce losses and cash burn in order to put the business on a secure and sustainable long term footing. Great progress in 2020 has been made in this regard, with underlying EBITDA[1] losses cut by 81% to GBP2.0m and statutory loss reduced by 83% to GBP2.0m. Cash generation was even stronger, achieving a cash improvement of GBP0.4m, which after adjusting for GBP0.3m of tax payments deferred until post period end, resulted in a maiden cash flow neutral position for the full year. Accordingly, eve closed the year with a healthy statement of financial position, with GBP8.4m (2019: GBP8.0m) of cash and no debt (other than the lease liability for our office premises), without recourse to any further funding.

The period was dominated by the pandemic, with heightened sales volatility in the early months of the year. Sales from May onwards grew strongly and have remained at elevated levels as a result of the trend to online ordering and the strength of the homewares market. Sales for the full year grew by 6% to GBP25.2m, driven by 19% growth in the second half. This result, which exceeded the Board's twice raised expectations, was achieved on a marketing budget 49% lower than the previous year. Overheads (defined as wages, salaries and other administrative expenses but excluding share based payment charges) were also kept under tight control and 33% lower than the prior year.

The improved financial performance of the business was UK led, with Ireland also benefitting in the fourth quarter from some marketing investment. This is reflected in the UK&I's increased share of total revenues, which has risen from 78% in 2019 to 81% in 2020. The French business, which has been reset during the year with minimal marketing investment, improved its marketing contribution; defined as profit after all direct costs including marketing but before overheads, by GBP1.5m.

acting responsibly

We will continue to evolve our business to minimise our wider impact on the world and be a better corporate citizen. Our major initiative during the year was forming a partnership with TFR Group in the UK, a prominent furniture recycling company, on the removal, rejuvenation and recycling of mattresses. This policy is part of ensuring that 100% of eve sleep's returned mattresses are diverted away from landfill, saving over 100 tonnes of waste, whilst also optimising revenue recovery. A separate partnership with our carriers also encourages customers to have their previous mattress removed and recycled at the point their new mattress is delivered.

all credit to our people

This year has brought about unprecedented change for our team, who have been working through the rebuild strategy since late 2018. During the first national lockdown in May we announced a change in CEO with the promotion of Cheryl Calverley, eve's Chief Marketing Officer at the time, replacing James Sturrock, who has stayed on as a non-executive director. The entire team has once again adapted and stepped up to the challenge, showing great flexibility and fortitude, including making a seamless move to home working from March and ensuring a smooth transition to Cheryl's leadership.

We are proud to have been able to navigate 2020 without the need to announce new redundancies or furlough staff. Having met our targeted performance objectives for the year we have been able to pay a bonus to each and every staff member by way of a thank you to our team for their unswerving commitment to eve. Our team remain our greatest asset and we will continue to invest in their development, safety and well-being.

A brighter outlook

Trading for January and February has continued to be strong, benefitting from the ongoing weekly TV campaign in the UK, the latest Which? ratings and the wider behavioural shift to online purchasing. Revenue growth for the first two months of the year of 16% represents an improvement from the last quarter of 2020 and has been boosted by an easing of supply constraints and improved stock management, which had previously held back the rate of growth in late 2020. Whilst we are still experiencing some challenges in componentry supply and inflationary pressures, we expect these issues to further ease in the coming months.

In the year ahead we will continue to expand and deepen our product offering. These wider categories including gifting and CBD are initially trialled through a license model, which limits both the initial risk but also the financial upside.

We will continue to invest steadily in the UK, with efficient marketing now driving consistent growth and a positive marketing contribution. We anticipate a slowing in our rate of UK progress from around May as a result of tougher comparatives and a likely shift in consumer spending to out of home as the country exits lockdown measures. However, we firmly believe that the recent shift to e-commerce will not reverse, and the underlying trend of sleep wellness, on which the eve brand is built, is a fundamental societal force that will continue in the long term.

We plan to increase investment in France through 2021 and build on the higher profile that our highly successful retail partnership with Olivier Desforges has provided. This will accelerate our growth in the country and provide a more balanced and sustainable growth profile to the wider business. Unlike the UK, France has not experienced such an accelerated shift to e-commerce over the past year, having maintained 'open high streets' through most of the pandemic. We expect good growth from France in 2021 and beyond through a combination of the continued structural shift to online, combined with investment in our own established and award winning proposition.

With the rebuild strategy now largely behind us, eve is now well placed to embrace the future with renewed confidence.

Paul Pindar


17 March 2021 strategic report

strategic review

"well placed in a large, fragmented, rapidly changing market"

Sleep is increasingly recognised as an essential element of wellness at a time when wellness has never been more important. There is a growing body of research and evidence which testifies to the importance of sleep and the risks to physical and mental health of insufficient sleep. In a poll commissioned by eve and taken shortly after the start of the pandemic, as many as 48% of respondents said that they were kept up due to worry about Covid19 and nearly one in four admitted that their quality of sleep was worse than ever. 'Sleep' has now overtaken both 'diet' and 'exercise' as the most searched for term on google (UK) across the 'wellbeing triad' of 'sleep', 'diet' and 'exercise', showing the increased awareness that consumers have of this vital component of wellbeing.

With the increasing understanding of the importance of sleep has come consumer change. Consumers are spending more on wellness and the sleep market has been a beneficiary of this. Not only are consumers spending more on sleep wellness related products, they are also willing to spend more on the central element of a good night's sleep; the mattress. The strong sales performance of eve's premium hybrid mattress testifies to this point, generating over 30% of mattress sales by volume. Every customer that purchases an eve mattress is asked at 100 days whether they're sleeping better thanks to their eve, and 80% tell us they are. A strong piece of advocacy for the quality and effectiveness of our products.

Sleep is a huge market, which has evolved substantially since the start of the pandemic. Data from Euromonitor estimates that the European sleep market is worth approximately GBP26bn, with the Core Markets that eve is focused on (UK &I and France) being worth approximately GBP6bn. The advent of the first national lockdown from March 2020 and the consequent switch to working from home, coupled with a lack of leisure spending alternatives, drove a strong increase in industry wide demand for bedding and homewares products. Consumers en masse literally 'bedded down' for lockdown as they sought to renovate their homes and bedrooms. Data from Barclays UK Consumer Spending Reports show that spending in the Household category experienced double digit year-on-year growth each and every month from June 2020 through December 2020.

The growth in spending has been online led, resulting in an acceleration of the trend to ecommerce. Data from the Office for National Statistics shows that non-food retail sales online grew to 25.5% of all sales in Q4 2020, from 12.9% in Q4 2019. Historic data suggests that shifts to online show limited tendency to reverse, and with the country entering 2021 in its third national lockdown and all but essential shops closed, it is reasonable to assume that a substantial element of the shift to online will become permanent.

Whilst the sector remains fragmented and highly competitive the competitive landscape across beds and mattresses has eased, with a number of online mattress providers choosing to retrench from the UK market, alongside a reduction in store based competition, both permanent and temporary as a result of the pandemic. There is also evidence to suggest that the mattress in a box brands are growing their share of the market. Despite the level of ongoing competition in mattresses, there is no company that as yet has established itself as a sleep wellness brand which commands widespread recognition and brand loyalty. eve's ambition is to achieve just this; to be seen as the go to brand for sleep wellness products, content and support across a range of categories and sales channels.

business model

eve is an agile, digitally native business, with a direct to consumer (DTC) led proposition, supported by partnerships with leading retailers. This omni-channel approach reflects how consumers increasingly identify, research and purchase items, moving seamlessly between online and offline channels. By being where the customer is, without incurring the fixed costs of a large store estate, eve increases its potential sales opportunities and grows its brand awareness and product understanding.

Building a strong brand and customer experience and ultimately therefore enjoying repeat sales is at the centre of the eve model and is essential to attaining profitability. To achieve this goal eve is focused on establishing itself as a go to brand for sleep wellness products, providing the authority and consumer trust to sell a broader range of products at a greater frequency across the category.

As a DTC focused business, eve has the privilege of vast amounts of first party data from which to better understand customer needs and to evolve both its marketing and its product offering. This enables the business to deliver better targeted incentives for customers to return and buy further products directly from eve. Some 13.2% of customers that purchased an eve product in 2018 have returned to buy further eve products in the subsequent two years.

As a brand led business, resources in terms of investment and talent are focused on the key operations of product development, marketing, operations and customer experience. In-line with many in the industry, manufacturing and fulfilment, which require heavy fixed cost investment, are outsourced to leading third party suppliers in the UK and Continental Europe. This set-up helps to de-risk the business in terms of currency and any potential trade frictions. It has also proved to be highly scalable and flexible, enabling significant seasonal variations in product demand to be met without any noticeable margin impact or variance in stock holding. There is a close working relationship with eve's manufacturing partners to innovate and develop best in class products that out perform competitors in terms of function and design, as evidenced by the high performance of the Premium Hybrid and Original Hybrid ranges in Which? Consumer surveys.

The outsourced manufacturing and fulfilment model, coupled with the DTC led setup, enables a lower and more flexible cost base than a traditional retailer. This has been evident throughout the rebuild strategy, where non-profitable sales have been cut, processes completely overhauled without the negative margin impact and/or incurrence of substantial restructuring costs which would typically be expected from a more asset backed business. For eve, marketing is one of its largest costs, but unlike rent, it is flexible in nature and is quick and easy to scale up and down as well as optimise and accelerate where opportunities arise.

chief executive's report

"we have navigated the many challenges of 2020 well and enter 2021 in good shape thanks to the tireless dedication, creativity and commitment of the entire eve team" - Cheryl Calverley


Taking on your first CEO role can be daunting at the best of times but add in a global pandemic, an unplanned for acceleration in demand and your entire team working from home and the challenges quickly multiply. However, I am pleased to say that the transition in May 2020 went smoothly, with no noticeable impact on performance. This has been aided by my deep involvement in the rebuild strategy since joining eve in December 2018 as Chief Marketing Officer and the strong culture of dedication, care, creativity and commitment across the entire eve team, something that has been a priceless asset during this remarkable period.

I first joined eve because I could see the unique opportunity to build a sleep wellness brand. A brand of significant size and strength occupying an uncontested territory, meeting a rapidly growing consumer need with a differentiated proposition to the more price led, mattress focused competitors, or generalist homewares retailers. I am pleased to say that the opportunity still remains and during 2020 we've made good progress towards achieving this, as part of our wider rebuild strategy.

Since taking over as CEO the focus has remained on delivering the rebuild strategy, with the central goal of putting the business on a more sustainable, long term financial footing. The improvement in the financial performance is clear to see with underlying EBITDA losses in 2020 reduced by 81% year-on-year to GBP2.0m on revenues 6% higher than 2019, and statutory losses reduced by 83% to GBP2.0m. The improvement in cash generation has been even more dramatic, with the Group reporting its first ever neutral cash flow for the year, after adjusting for GBP0.3m VAT payments from 2020 Q1, which were deferred until after the year-end under the UK Government's Coronavirus support measures. This compares with a net cash outflow of GBP10.1m (excluding GBP12.0m equity funding) in 2019 and an outflow of GBP21.0m in 2018. This means eve exits 2020 with a healthy cash balance of GBP8.4m and no debt, other than the lease liability on our office premises.

The improvements to infrastructure and operations of the business are less visible but of equal, if not greater importance. The restructuring that has taken place to date is about more than just greater efficiency, it is about building a platform and a collection of product and marketing assets that can be readily scaled across markets, without markedly increased overhead or damaging the customer experience. We have been rebuilding in preparation for future growth, and whilst work will remain ongoing, eve now has a tech platform that can be rolled out across new markets without incurring higher overheads. Complementing this more scalable platform is a broader product set, a brand positioning and a marketing strategy that is instantly replicable across markets, supported by a highly scalable logistics and customer service operation.

the rebuild strategy

To best evaluate the performance of the business in 2020 it is necessary to analyse the performance against the three core pillars of the rebuild strategy: ? differentiated brand positioning; ? expanded product range; and ? lower friction customer experience.

differentiated brand positioning

To differentiate eve from the other mattress in a box brands, where competition is largely price led, our strategy is to establish eve as a trusted destination for high quality sleep wellness products. To achieve this, we have refocused our marketing communications on the benefits that eve can bring consumers in sleep wellness. A fine example is where eve partnered with Channel 4 to celebrate World Sleep Day on 13 March 2020 by removing the brain-stimulating blue light from TV ads and replacing it with an amber-coloured filter to lull viewers into a good night's sleep. This initiative was supported by an eve ad, which aired on a Sunday evening time slot on Channel 4 and related channels, providing simple and effective sleep tips to further amplify the eve message.

The concept evolved further with the new UK campaign, 'switch off with eve sleep,' which leant on some of the key themes from the World Sleep Day campaign. The new campaign, which launched in November 2020 and runs every Sunday night on Channel 4 through to spring 2021, revived the iconic 'test Card F', which until 1997, signalled the end of programming in a bid to encourage the nation to switch off their minds and bodies and start winding down for bed. The campaign extends to casual gaming, popping up on the screens of popular gaming apps such as Candy Crush, to remind users that it is time to grab some sleep.

During the first half of the year, we grasped the opportunity offered by the depressed TV market to run our existing, highly effective campaigns in both the UK and France. These drove a strong customer response and further gains in marketing efficiency.

The success of our marketing is demonstrated in our unprompted UK brand awareness, which increased from 15% in August 2019 to 17% at August 2020. This understates the full improvement achieved during the year, with the benefits of the latest TV campaign that launched in November and the brand presence in Boots to come through in the next survey.

Our Irish business, which is now ready for growth, benefited from some increased marketing investment in the fourth quarter of the year, though this was not extended to TV. Marketing investment in France, with the exception of the running of a small amount of TV media utilising an existing TV campaign in May was minimal during the year, as the business is at an earlier stage in its development than the UK.

In addition to refocusing the positioning of our brand, considerable effort has gone into improving marketing efficiency, including the development of enhanced data analytics. Subsequent marketing investment has been evaluated in depth, with the removal of channels that were not generating a sufficient return, in line with our strategy of focusing on profitable sales. The success of this strategy is best evidenced in the efficiency of our marketing spend, which has improved in all three of our markets in tandem with growing awareness in the UK. In the UK&I marketing efficiency has improved from 52.3% in 2019 to 25.1% in 2020. This is the fourth successive year of improvement and we are now confident our marketing efficiency has reached sustainable levels. In France, marketing efficiency improved from 44.1% in 2019 to 21.0% in 2020, though it should be recognised that our ambition is not to sustain these levels, but to invest for further growth in France.

expanded product range

Range expansion offers eve a clear trajectory to leading the sleep wellness space and provides the opportunity to grow the frequency of customer purchases. Mattresses remain at the heart of the business and increased from four to seven products in the year, with the relaunch of the original Hybrid mattress in October a key move in response to the increasing importance of the hybrid category to the mattress market. eve also offers a cot mattress as part of its child and baby offering. Recognition of the quality of the product range is widespread and eve now has the top two most highly rated mattresses in the UK - the original and premium hybrid - and three of the top five mattresses, according to consumer champion Which?. In France the premium hybrid mattress has been awarded the 'Meilleurs Choix' (best choice) by the French equivalent of Which?.

eve has further expanded its range of bedframes, and now offers four distinct styles, two of which offer 'storage' options. Furniture represents 5.8% of eve's sales value for 2020, with furniture sales growing 40% year on year in the UK. As with mattresses, eve sees particularly strong sales in its premium ranges, with the more expensive 'spindle back' range now representing almost 10% of bedframe sales across the Group.

Complimenting the increased mattress and bedframe range is ongoing growth in the bedding ranges, with the notable addition of eve's first weighted blanket in the second half of the year, to combat anxiety and aid a restful sleep. The weighted blanket forms part of eve's exploration into sleep accessories alongside its new 'well slept' range of sleep wellness gifting products and supporting items such as bedside storage and sleep aids.

In the second half of the year eve announced the launch of this first ever gifting range of sleep wellness products, with Boots UK. The range was launched online and exclusively in 446 Boots wellness areas nationwide as part of its Christmas promotion and comprised a range of smaller items from candles and diffusers to hot water bottles and pyjamas. The range proved highly successful and sold-out quickly, despite the turbulence on the high street. The partnership's key focus was to further raise eve's brand awareness and extend knowledge of our products to a wider audience.

To best measure the success of range extension we have introduced a new KPI, which is the percentage of customers who make a repeat purchase within two years of their initial order. This new KPI will replace the existing KPI that measures sales of non-mattress products as a percentage of total revenues. For the base year of 2020 the percentage of customer who had repeated was 13.2%.

lower friction customer experience

During the year there has been extensive work on restructuring the e-commerce platform, manufacturing and distribution processes that ultimately underpin the customer experience and drive a higher conversion rate, as well as improving cost efficiency. The ecommerce websites for our three markets of the UK, Ireland and France were re-platformed to Shopify during the year, with France completing shortly after the period end. The new platform requires less ongoing maintenance and provides greater stability at times of high traffic, which proved invaluable during the record Black Friday and winter sale periods. This has improved our baseline performance, reducing failure and error on-site, and opens up opportunity for further improvement in functionality without increasing overhead.

In 2020 the business restructured its mattress manufacturing, which remains outsourced to third parties, to run along geographic lines. Having previously worked with three manufacturers in the UK, France and Belgium, this was reduced to two, resulting in mattresses for the UK and Irish markets being made in the UK and those for the French market largely manufactured in Belgium. Concentrating manufacturing within end markets has clear benefits in the post-Brexit era in terms of frictionless trade, speed of delivery to customers and lower warehousing and delivery costs.

Historically eve has worked with a variety of carriers in each of its three territories depending on the size of the product being delivered. Customer orders, which contained products of different sizes, would be delivered separately by several carriers, increasing costs and providing the customer with a sub-optimal experience. Since the implementation of Shopify, this issue has been resolved for the UK and Irish markets and will be extended to France in 2021. Orders are now consolidated to allow all items in an order to be delivered in a single delivery. In Q2 eve further introduced a new delivery service of 'remove and recycle' allowing customers to have their previous mattress removed and recycled at the point their new mattress was delivered. This has had a strongly positive customer response with uptake over 30% of all orders.

Warehouse consolidation took place in 2019 in the UK, moving from three to one facility. The new site, which is under third party professional management has a superior stock management system and this has enabled further efficiencies and improvements in 2020, including the need to hold less stock and occupy less warehouse space.

The rapid and unplanned for uplift in demand that followed the start of the pandemic caused some early capacity issues in terms of speed of delivery and an overstretched customer service team, resulting in not all customers receiving the first rate service that they rightfully deserve. To address this issue, eve invested in bolstering the Customer experience team with new hires over the summer months. To further support customers during a difficult socio-economic time, in April, eve increased its 'risk free trial' period from 100 to 200 nights and introduced an additional discount for all NHS staff. The trial period has now returned to 100 days, having seen very little uptake beyond the usual 100-night end point, but the NHS staff discount remains.

The aggregate impact of the above initiatives that should continue to benefit 2021 has been a 60 bps increase in the group wide conversion rate in 2020, which follows a 30 bps increase in 2019.

responsible business

As a business we recognise our responsibility to our stakeholders and the wider community at large. We continue to make improvements throughout our operations in order to reduce our environmental footprint. Our localised production facilities mean that we are not trucking or airfreighting long distances, while our mattress packaging boxes are produced in the UK and made from Forest Stewardship Council approved card.

In early 2020 eve partnered with TFR Group in the UK, a prominent furniture recycling company, on the removal, rejuvenation and recycling of mattresses. The partnership includes taking them through stringent sanitisation and quality-check processes before rolling and boxing, saving on CO2 emissions, storage and re-delivery. This also lets the end refurbished mattress customer enjoy the benefits of a rolled mattress. To date the partnership has achieved a rejuvenation rate of approximately 60%. Remaining mattresses that are not capable of being rejuvenated are broken down and each material individually recycled. This policy is part of ensuring that 100% of eve sleep's returned mattresses are diverted away from landfill, saving over 100 tonnes of waste, whilst also optimising revenue recovery. A separate partnership also encourages customers to have their previous mattress removed and recycled at the point their new mattress is delivered.

culture and diversity

We thrive on individuality at eve. We believe that irrespective of age, gender, ethnic origin, religion, sexual orientation, gender identity, gender expression, or disability, eve should be a place of opportunity, respect and support for individuals to be themselves, allowing them to do their best work. We understand that our people, capability and culture are one of the most powerful competitive advantages that we have, and a focus on developing talent, retaining high performers and attracting a diverse intake are core to our future success. There has been significant investment in the period and beyond in the development of our leadership team, with leadership skills training and individual coaching core to this. To widen our positive impact on development further, we have been working with 'You Can Now' giving students of design globally the opportunity to learn their craft on a live 'eve' brief to further develop our products and brand. Our business wide investment in learning was recently recognised by the Campaign for Learning for its impact.

Retaining and motivating our key talent whilst engaging the whole eve business with the challenges at hand has been top of our mind. To this end we have this year redesigned our rewards and benefits scheme, awarding our extended leadership team share options so they can share in the success they bring to the business. At the same time we have moved to a flat bonus structure, meaning everyone in the business, regardless of salary, tenure or experience receives the same cash reward at year end, should we achieve our aims. This further fosters our culture of transparency, equality and openness, whilst showing real respect for the efforts each and every one of the team put in to help us achieve our mission of sleep wellness.

Our focus on diversity has just begun in earnest with two key initiatives. Firstly an evolution to our approach to recruitment to ensure we recruit purely on capability and blind to background, through the introduction of the 'applied' blind recruitment software. And secondly, in November we took on our first apprentice in the marketing department, in partnership with the Marketing Academy.

eve is pleased to present the following metrics relating to gender balance as at 31 December 2020. The following breakdown shows the number of persons of each sex who were:

(i) directors of the company;

(ii) senior managers of the company (other than those falling within category (i)); and

(iii) employees of the company.

                 Male Female 
Directors        4    1 
Senior managers  3    2 
Employees        15   36 

the next two years

With the restructuring of the business now largely complete and the technology, logistics and operations placed on a more stable and efficient platform, the time is right to update the strategy for the next two years. The Group's focus will be on accelerating the business through the three pillars of Growth, Customer Obsession and Resilience. Growth, as defined in terms of profitable revenues, will be the primary objective and will be achieved from new and existing markets as well as a continued focus on product development, with Customer Obsession and Resilience the key enablers. Customer obsession will focus on developing products and services that help people sleep so well, and a customer experience so seamless that they become vocal advocates for the brand. Resilience for eve can be defined as having a strong and stable tech, team and operational capability that can adapt quickly to changing market conditions in existing markets and expand into new territories at minimal cost, whilst enjoying robust margins.

The UK is eve's largest market and has been the engine of growth in 2020, benefitting from not only the strong external tailwinds but also the significant improvement in marketing efficiency and the addition of the new TV led campaign from November 2020. We will continue to invest in the UK market over 2021, including the running of our weekly TV campaign until the spring, to maintain sales momentum and leverage our position as having the two best mattresses in the UK according to consumer champion Which?.

To build a stronger, broader and larger, profitable business we must look beyond the UK market for balanced growth. Our near term focus is on the French market, where we have traded since 2016. Like the UK, our French business has been restructured as part of the rebuild strategy, including a re-platforming of the website to Shopify which completed shortly after the period end, but unlike the UK it has not received significant marketing investment in recent years. 2021 will see a substantial increase in marketing investment in France, targeted on a new marketing campaign, including TV, which is expected to launch in the spring. There will also be an increased focus on retail partnerships, including but not limited to an expansion of the successful relationship with homewares retailer Olivier Desforges.

The Irish market received some increased focus and investment in the fourth quarter of 2020 and this will continue through 2021. As the strategy develops and progress is achieved in France and Ireland we will look at entering new European markets. Expansion will be executed in a controlled and disciplined way, leveraging existing infrastructure and product assets in order to keep a tight control of costs.

The investment in growth is expected to increase costs in the current year. The strategy does not represent a return to the past, but a well thought out and costed strategy to accelerate to a sustainable, profitable and balanced business. The investment required to finance the growth will come from the Group's existing cash resources.

Cheryl Calverley

Chief Executive Officer

17 March 2021

key performance indicators

In 2020, the key performance indicators (KPIs) used to evaluate and monitor the performance of the business were as follows and are designed to support the three core pillars of the rebuild strategy (differentiated brand positioning, extended product range and lower friction customer experience). There are three financial KPIs and five operational KPIs.

Financial KPIs: ? Overall revenue growth; ? Marketing efficiency; ? Underlying EBITDA[2].

Operational KPIs: ? UK brand awareness; ? Product return rates; ? eve website conversion rate; ? eve customer sleep wellness score; ? Non-mattress revenue growth.

Operational KPIs relate to group performance across all three markets unless otherwise stated.

As can be seen in the data provided below, all financial KPIs improved significantly in the period, along with four of the five operational KPIs. Importantly, for the first time eve has generated revenue growth, whilst also improving the bottom line performance of the business, with an 83% reduction year-on-year in Underlying EBITDA losses.

The 200bps growth in unprompted brand awareness probably understates the full improvement given that the survey was undertaken before the benefits of the latest UK TV led marketing campaign and the Boots UK licensing deal. The conversion rate has now improved for the last three years, which not only underpins improved marketing efficiency but also testifies to the continued improvements that have been made to the third pillar of lower friction customer experience.

Financial KPIs ? Group revenue increased by 6% to GBP25.2m (2019: GBP23.9m); ? Improvement in Group marketing efficiency by 2634bps to 24.2% (2019: 50.5%); ? Group underlying EBITDA losses reduced by 81% to GBP2.0m loss (2019: GBP10.7m loss).

Operational KPIs ? Unprompted UK brand awareness: 200bps increase in unprompted UK brand awareness to 17.0% at August 2020 (August

2019: 15.0%) ? 120 bps year-on-year improvement in the returns rate to 7.8% (2019: 9.0% restated) ? 60 bps year-on-year improvement in the eve websites conversion rate ? eve customer sleep wellness score: 8/10 (2019: 8/10) ? Decrease in non-mattress sales as a proportion of total sales by 480bps to 20.8% (2019: 25.6%)

Update to KPIs for 2021

To reflect the updated strategy which will focus on the new three pillars of Growth, Customer Obsession and Resilience, eve will be updating one of the KPIs. From 2021 onwards rather than reporting the increase in non-mattress sales as a proportion of total sales, by way of a proxy for repeat business, the Group will report the percentage of customers who have actually made a second purchase within two years of the initial order. This new operational KPI: 'Repeat Customers', more accurately measures the focus on growth through customer obsession and establishing eve as the go to place for all sleep wellness needs. For the base year 2020 the percentage of customers making a repeat purchase within two years was 13.2%.


Definitions of Financial and Operational KPIs:

Overall revenue growth - % change in value of reported revenue for the specified segment of the latest period vs the previous period.

Marketing efficiency - total reported marketing cost divided by the reported revenue for the specified segment, thus as the reported percentage falls marketing efficiency improves.

Underlying EBITDA - earnings before interest, tax, depreciation, amortisation and impairment, share-based payment charges connected with employee remuneration (2020 and 2019), fundraise-related expenditure (2019 only), adding back IFRS16 adjustments to office lease costs. Underlying EBITDA reflects what management believe to best demonstrate the underlying performance of the business in a given year.

Non-mattress sales as a proportion of total sales - % of reported sales attributable to non-mattress products for the specified financial period. The Group track this Operational KPI in addition to the Financial KPI of overall revenue growth as returns and deferrals are not tracked in isolation for non-mattress sales. Total sales represents all sales after discounts and VAT and before deferred revenue, refunds processed and the refunds provision. Non-mattress sales represents the value of sales from non-mattress products.

UK Brand awareness - when asked question "What mattress brands can you think of?" the % of total respondents that answer eve (externally assessed using industry polling agencies).

Product return rates - return rate % is calculated by dividing the total value of sales returns by the value of net sales of goods including freight (all excluding VAT).

eve website conversion rate - the percentage of website traffic in a specific period that complete a purchase. Calculated by dividing the number of completed sales orders by the total website traffic. This figure is compared on a bps movement between periods.

eve customer sleep wellness score - the average number of customers out of every ten customers that report improved sleep as a result of purchasing an eve mattress (internally assessed using post-purchase email campaigns, sent to all customers who have purchased a mattress in the period). financial review

"eve achieved 6% growth in group revenue and at the same time double the marketing efficiency and reduced underlying EBITDA losses by more than 80%." - Tim Parfitt

group financial performance

GBPm                                                                          2020  2019   Movement 
Group revenue                                                               25.2  23.9   +6% 
Gross profit                                                                14.4  12.7   +14% 
Distribution expenses                                                       (3.5) (2.7)  +28% 
Profit after distribution expenses                                          10.9  10.0   +10% 
Payment fees                                                                (0.5) (0.4)  +25% 
Marketing costs                                                             (6.1) (12.1) (49%) 
Profit/(Loss) after distribution expenses, payment fees and marketing costs 4.3   (2.5)  (269%) 
Wages & Salaries (excluding share-based payment charges)                    (3.3) (4.4)  (24%) 
Other administrative expenses                                               (3.2) (5.0)  (37%) 
Share-based payment charges connected to employee remuneration              (0.2) (0.5)  (57%) 
Operating loss                                                              (2.4) (12.5) (80%) 
Net finance income                                                          -     - 
Loss before tax                                                             (2.4) (12.5) (80%) 
Taxation                                                                    0.4   0.4    +18% 
Loss after tax                                                              (2.0) (12.1) (83%) 
Reconciliation to underlying EBITDA: 
Taxation                                                                    (0.4) (0.4) 
Net finance income                                                          -     - 
Fundraise-related expenditure                                               -     0.2 
Share-based payment charges connected to employee remuneration              0.2   0.5 
Depreciation and amortisation                                               0.7   0.5 
Impairment                                                                  -     0.6 
Underlying EBITDA (as stated in 2019)                                       (1.5) (10.7) (85%) 
Application of IFRS 16 to lease for serviced office                         (0.5) (0.2) 
Underlying EBITDA (restated)                                                (2.0) (10.9) (81%) 

group financial performance as a % of revenue

% of Revenue                                                                                  2020    2019    Movement 
Gross Profit                                                                                  57.3%   53.1%   +418bps 
Distribution                                                                                  (13.9%) (11.4%) +244bps 
Profit after distribution                                                                     43.4%   41.7%   +174bps 
Marketing                                                                                     (24.2%) (50.5%) (2634bps) 
Administrative expenses excluding marketing                                                   (28.0%) (41.4%) (1335bps) 
Administrative expenses excluding marketing, fundraise-related expenditure, depreciation,     (25.5%) (35.9%) (1044bps) 
amortisation and impairment expenditure 
Wages & Salaries (excluding share-based payment charges)                                      (13.2%) (18.4%) (515bps) 

UK&I financial performance

GBPm                                                    2020    2019    Movement 
Revenue                                               20.5    18.5    +11% 
Gross Profit                                          11.8    10.2    +16% 
Distribution                                          (2.7)   (1.8)   +47% 
Profit after distribution                             9.1     8.4     +10% 
Payment fees                                          (0.5)   (0.4)   +31% 
Marketing                                             (5.0)   (9.7)   (47%) 
Profit after distribution, payment fees and marketing 3.6     (1.7)   +308% 
Marketing costs as % of revenue                       (25.1%) (52.3%) (2725bps) 

France financial performance

GBPm                                                    2020    2019    Movement 
Revenue                                               4.6     5.3     (14%) 
Gross Profit                                          2.5     2.6     (3%) 
Distribution                                          (0.8)   (1.0)   (17%) 
Profit after distribution                             1.7     1.6     +6% 
Payment fees                                          (0.1)   (0.1)   (22%) 
Marketing                                             (1.0)   (2.4)   (59%) 
Profit after distribution, payment fees and marketing 0.6     (0.9)   +173% 
Marketing costs as % of revenue                       (21.0%) (44.1%) (2308bps) 

Other financial performance

GBPm                                                    2020  2019  Movement 
Revenue                                               0.1   (0.0) +424% 
Gross Profit                                          0.1   (0.1) +263% 
Distribution                                          0.0   0.1   (100%) 
Profit after distribution                             0.1   0.0   +750% 
Payment fees                                          (0.0) 0.0   (378%) 
Marketing                                             0.0   0.0   (75%) 
Profit after distribution, payment fees and marketing 0.1   0.0 


Revenue increased by 6% to GBP25.2m (2019: GBP23.9m). The growth was driven by UK&I which lifted 11% to GBP20.5m (2019: GBP18.5m), with the direct-to-consumer channel performing exceptionally well. France revenue declined by 14% to GBP4.6m (2019: GBP5.3m) following a large reduction in marketing investment.

gross margins

Gross margins for the Group improved by 418bps to 57.3% (2019: 53.1%). This was a result of the more profitable direct-to-consumer business growing as proportion of total sales and also from a rigorous focus on margin and the decision to exit unprofitable retail partnerships when appropriate.

distribution costs

Distribution costs as a percentage of revenue increased by 244bps to 13.9% in 2020 (2019: 11.4%). The mattress sales mix shifted from the previous year to more premium products which are heavier and therefore more expensive to deliver. The relative increase in direct-to-consumer revenue also added to the higher costs as a smaller proportion of orders were shipped in bulk to retail partners. In the final quarter this increase was partially offset by consolidating customer deliveries where possible. Previously customers could receive multiple deliveries for a single order. This has become possible following the UK implementation of Shopify.

marketing investment

The Group marketing investment was reduced by 49% to GBP6.1m in 2020 (2019: GBP12.1m). As a key performance indicator, the marketing efficiency, defined as marketing costs as a percentage of revenues, is closely monitored and investment targeted to achieve the best possible outcome.

As a result of this focus, the Group successfully more than doubled the efficiency to 24.2% (2019: 50.5%) an improvement of 2634bps. UK&I improved by 2725bps to 25.1% (2019: 52.3%) and France improved by 2308bps to 21.0% (2019: 44.1%).

profit after distribution, payment fees and marketing

Both core markets of UK&I and France achieved profits after distribution, payment fees and marketing. UK&I delivered a GBP5.3m improvement to GBP3.6m (2019: GBP1.7m loss) and France delivered a GBP1.5m improvement to GBP0.6m (2019: GBP0.9m loss).

administrative expenses

(excluding marketing)

Wages & Salaries (excluding share-based payment charges connected with employee remuneration) reduced by GBP1.1m to GBP3.3m in 2020 (2019: GBP4.4m) following reductions in headcount made at the end of 2019. This represents a decrease from 18.4% to 13.2% of Group revenue.

Other administrative costs reduced by GBP1.8m to GBP3.2m (2019: GBP5.0m).

The application of IFRS 16 to the office lease costs has resulted in a depreciation charge of GBP0.5m (2019: GBP0.2m). The adoption was applied from August 2019 onwards, when the Group moved to its existing premises. Included in Other Administrative Costs for 2020 is a charge of rent and rates of GBPnil (2019: GBP0.5m).

There were further reductions to administrative costs with GBPnil impairment charge (2019: GBP0.6m), GBPnil fund raising expenses (2019: GBP0.2m) and GBP0.2m share based payment charges relating to employee remuneration (2019: GBP0.5m).

underlying EBITDA loss

(Defined as: earnings before interest, tax, depreciation, amortisation, impairment charges, share-based payment charges relating to employee remuneration, fundraise-related expenditure in 2019, adding back IFRS16 adjustments to office lease costs)

The Directors consider that they are best able to monitor Group financial performance via underlying EBITDA by removing fundraise-related expenditure, share-based payment charges relating to employee remuneration and adding back the office lease costs which represent a material monthly cash outflow. This has been restated from 2019 as the office lease costs were previously shown for only part of the year, and the new lease effective from August 2019 was presented under IFRS 16.

The application of IFRS 16 has resulted in a depreciation charge recognised in 2020 of GBP0.5m (2019: GBP0.2m). Under IAS 17, expenditure relating to operating lease rentals would have been included within administrative expenses and hence EBITDA.

The underlying Group EBITDA loss decreased by GBP8.9m to GBP2.0m loss in 2020 (2019: GBP10.9m loss). The 81% reduction in the loss reflects the increased focus on profitable sales, greater efficiency in marketing investment and substantial overhead reductions.

share-based payment

In accordance with IFRS, a share-based payment charge for 2020 has been calculated and charged to the statement of profit and loss. The fair value of options granted is recognised as an expense over the vesting period with a corresponding credit being recognised in equity. The charge for 2020 was GBP0.5m (2019: GBP1.1m) of which GBP0.3 (2019: GBP0.6m) related to equity issued in exchange for marketing services and GBP0.2m (2019: GBP0.5m) relating to employee remuneration.

loss after tax

The loss after tax improved by GBP10.1m to GBP2.0m loss (2019: GBP12.1m loss).

capital expenditure

Due to the Group's outsourced business model, capital expenditure requirements remain low. The main area of capital expenditure in 2020 related to ecommerce and ERP systems infrastructure. Total capital expenditure in 2020 in the form of intangible software assets totalled GBP0.3m (2019: GBP0.5m).

working capital

Inventories reduced by 64% to GBP0.6m (2019: GBP1.6m) through better management of stock and realisations from obsolete inventory. Trade and Other Receivables reduced by 30% to GBP1.9m (2019: GBP2.7m) largely following the return of a rent deposit on the Group's previous registered office, vacated in 2019.

cash position

The Group had cash and cash equivalents of GBP8.4m at the year-end (2019: GBP8.0m).

Tim Parfitt

Chief Financial Officer

17 March 2021 Principal risks and uncertainties

Risk management is an important part of the management process for the Group. Regular reviews are undertaken to assess the nature of risks faced, the magnitude of the risk presented to business performance and the manner in which the risk may be mitigated. Where controls are in place, their adequacy is regularly monitored.

The risks considered to be particularly important at the current time are set out below.


Marketing is an important investment area for the Group and there is a risk that this expenditure may not result in the targeted increase in sales or brand awareness levels.

eve monitors and analyses the effectiveness of marketing spend on a daily basis and adjusts accordingly. The Group has built a deep understanding of the most appropriate marketing strategies and also supplements this with third party media and marketing agencies to monitor and advise on the effective implementation and roll out of marketing and advertising campaigns to meet targeted outcomes.


The Group is responsible for the design of eve products and could face exposure to product liability claims or claims against health and safety procedures or practices in different territories. The Group has a robust product and supplier onboarding process to ensure new products and suppliers are of the highest standards. The Group also retains insurance brokers to ensure sufficient insurance coverage for product liability and associated losses.

The Group is subject to fluctuations in the cost of materials which may adversely impact on the Group's profit margins. The price of many components is impacted by global events such as the demand for key chemicals used in the manufacture of foam.

The Group primarily manufactures its French sold mattresses in the EU and its UK&I sold mattresses in the UK, creating a natural hedge against currency movement for its key products. For other products and markets the Group looks to agree prices for a period of time with manufacturers where possible to provide a degree of certainty over currency fluctuations.


The Group relies on outsourced partners for manufacturing and logistics who are typically able to scale their operations to meet increased demand. However, the Group may be exposed to disruption at these suppliers.

Close working relationships are maintained with outsourced partners. The Group regularly reviews and communicates forecasts to ensure capacity constraints are managed.

eve seeks to offer exceptional customer service and facilitate smooth returns which could result in high return rates under the 100-night trial offered on mattresses. Reverse logistics is an area of focus and the Group works with third parties to ensure an efficient collection and recycling process to recover costs. Return reasons is a key metric which is monitored closely and fed back into product development.


The Group operates in the highly competitive mattress and pillow industries and may not be able to grow, or maintain, its existing market share.

The Group constantly reviews and analyses its performance against its business plan and against market competitors. The Group has both internal talent and external advisors who can advise on and respond to any changes in the competitive environment.


The Group took steps in 2019 and 2020 to mitigate the effect of Brexit by aligning manufacturing geographically so that mattresses are manufactured close to the customers. This minimises the transit of products between the UK and EU. Close attention has been paid to export requirements, particularly shipping to customers in Northern Ireland and Ireland. Investments have been made in the Group's technology platforms to develop processes to minimise disruption.

covid-19 virus

During 2020 the restrictions placed on movement for the UK population resulted in increased demand from consumers for the Group's products. Covid has driven a significant shift from physical retail to ecommerce and whilst that may re-balance somewhat, it is expected that consumers will continue to shop online more than they did pre-pandemic.

In the near-term, a relaxing of travel restrictions may see consumer spending move away from homewares onto leisure and travel. This could have an adverse impact on revenues.

Furthermore, forecasting revenues in 2021 is made more difficult given that it's not possible to determine the level of incremental sales generated in 2020 as a result of physical retail competitors being closed.

Tim Parfitt

Chief Financial Officer

17 March 2021

consolidated statement of profit and loss and other comprehensive income

for the year ended 31 December 2020

                                                Note  2020         2019 
                                                      GBP            GBP 
Revenue                                         3     25,218,550   23,852,931 
Cost of sales                                   3     (10,763,508) (11,176,905) 
Gross Profit                                          14,455,042   12,676,026 
Distribution expenses                           3     (3,500,916)  (2,729,317) 
Administrative expenses                         3     (13,394,391) (22,453,901) 
Operating Loss                                        (2,440,265)  (12,507,192) 
Net finance income                                    1,641        18,022 
Loss before tax                                       (2,438,624)  (12,489,170) 
Taxation                                              414,541      352,240 
Loss for the year                                     (2,024,083)  (12,136,930) 
Other comprehensive income 
Foreign currency differences from overseas operations 35,822       17,310 
Total comprehensive loss for the year                 (1,988,261)  (12,119,620) 
Basic and diluted loss per share                4     (0.75p)      (4.92p) 

consolidated statement of financial position

at 31 December 2020

                                                    Note 2020         2019 
                                                         GBP            GBP 
Non-current assets 
Property, plant and equipment                            273,496      518,575 
Intangible assets                                        466,330      344,456 
                                                         739,826      863,031 
Current assets 
Inventories                                              559,915      1,574,648 
Trade and other receivables                         7    1,880,188    2,637,650 
Cash and cash equivalents                                8,438,453    7,988,769 
Current tax receivable                                   414,542      354,466 
                                                         11,293,098   12,555,533 
                                                         12,032,924   13,418,564 
Total assets 
Non-current liabilities 
Lease liabilities                                        -            40,000 
Current liabilities 
Trade and other payables                            8    4,024,210    3,983,174 
Provisions                                          9    1,041,236    768,965 
Lease liabilities                                        273,857      470,391 
                                                         5,339,303    5,222,530 
Total Liabilities                                        5,339,303    5,262,530 
Net Assets                                               6,693,621    8,156,034 
Equity attributable to equity holders of the parent 
Share capital                                       5    272,570      263,445 
Share premium                                            49,421,049   48,887,392 
Share-based payment reserve                         6    766,749      998,495 
Retained earnings                                        (43,918,599) (42,109,328) 
Foreign currency translation reserve                     151,852      116,030 
Total equity                                             6,693,621    8,156,034 

consolidated statement of changes in equity

for the year ended 31 December 2020

                                 Share    Share      Share-based       Retained     Foreign currency        Total 
                                 capital  premium    payment reserve   earnings     translation reserve     equity 
Balance at 1 January 2020        263,445  48,887,392 998,495           (42,109,328) 116,030                 8,156,034 
Exercise of employee share       3,734    -          -                 -            -                       3,734 
Share-based payment charge       -        -          220,084           -            -                       220,084 
Transfer on exercise of employee -        -          (214,812)         214,812      -                       - 
share options 
Transfer on issue of equity for  5,391    533,657    (237,018)         -            -                       302,030 
marketing purposes 
Total transactions with owners   9,125    533,657    (231,746)         214,812      -                       525,848 
Loss for the period              -        -          -                 (2,024,083)  -                       (2,024,083) 
Other comprehensive income for   -        -          -                 -            35,822                  35,822 
the period 
Balance at 31 December 2020      272,570  49,421,049 766,749           (43,918,599) 151,852                 6,693,621 

for the year ended 31 December 2019

                                Share    Share      Share-based       Retained     Foreign currency        Total equity 
                                capital  premium    payment reserve   earnings     translation reserve 
Balance at 1 January 2019       139,735  36,716,372 250,073           (30,073,145) 98,720                  7,131,755 
Issue of shares                 120,317  11,911,415 -                 -            -                       12,031,732 
Exercise of employee share      770      -          -                 -            -                       770 
Share-based payment charge      -        -          1,111,396         -            -                       1,111,396 
Transfer on exercise of         -        -          (100,747)         100,747      -                       - 
employee share options 
Transfer on issue of equity for 2,623    259,605    (262,228)         -            -                       - 
marketing purposes 
Total transactions with owners  123,710  12,171,020 748,421           100,747      -                       13,143,898 
Loss for the year               -        -          -                 (12,136,930) -                       (12,136,930) 
Other comprehensive income for  -        -          -                 -            17,310                  17,310 
the period 
Balance at 31 December 2019     263,445  48,887,392 998,495           (42,109,328) 116,030                 8,156,034 

consolidated statement of cash flows

for the year ended 31 December 2020

                                                      Note 2020        2019 
                                                           GBP           GBP 
Cash flows from operating activities 
Loss for the year                                          (2,024,083) (12,136,930) 
Adjustments for: 
Depreciation                                               470,211     198,048 
Amortisation                                               169,192     263,046 
Impairment                                                 -           594,724 
Decrease in inventories                                    1,014,733   (446,772) 
(Increase)/decrease in trade and other receivables    7    697,384     1,827,827 
Increase/(decrease) in trade and other payables       8    41,036      (578,619) 
Increase/(decrease) in provisions                     9    272,271     (186,984) 
Share-based payment charge                                 522,116     1,111,396 
Net cash flow from operating activities                    1,162,860   (9,344,264) 
Cash flows from investing activities 
Additions to intangible assets                             (291,066)   (532,484) 
Right of use asset initial direct costs                    -           (15,375) 
Net cash flow from investing activities                    (291,066)   (547,859) 
Cash flows from financing activities 
Interest Payable                                           18,334      9,144 
Proceeds from the issue of share capital                   3,734       12,032,502 
Repayment of capital element of finance lease rentals      (480,000)   (200,000) 
Net cash inflows from financing activities                 (457,932)   11,841,646 
Net cash inflow/(outflow)                                  413,862     1,939,523 
Cash at beginning of year                                  7,988,769   6,031,936 
Movement in cash                                           413,862     1,939,523 
Effect of exchange rate fluctuations on cash held          35,822      17,310 
Cash at end of year                                        8,438,453          7,988,769 

notes to the accounts

1. Reporting Entity

eve sleep PLC (the "Company") is a public company, domiciled and registered in England in the United Kingdom and its shares are listed on the London Stock Exchange AIM market. eve sleep PLC is a company limited by shares. The registered number is 09261636 and the registered address at 31st December 2020 was 29A Kentish Town Road, London, England, NW1 8NL. Prior to 5th August 2019 the registered address of the Company was 128 Albert Street, London, England, NW1 7NE.

2. Accounting Policies

2.1 Basis of preparation

The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group").

The Group financial statements have been prepared and approved by the directors in accordance with international accounting standards in conformity with the Companies Act 2006 ("Adopted IFRSs"). The Company has elected to prepare its parent company financial statements in accordance with adopted IFRS.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the Group financial statements.

This preliminary announcement is simultaneous with signed financial statements on which the audit report is unqualified and unmodified.

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2020 or 2019 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) in 2019 only did include a reference to which the auditor drew attention without qualifying their report in respect of going concern and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 2. Changes in accounting policy a. New and amended Standards and Interpretations adopted by the Group and Company

There are no changes to accounting policies adopted by the Group in the year ended 31 December 2020. b. New and amended Standards and Interpretations mandatory for the first time for the financial year beginning 1

January 2020 but not currently relevant to the Group or Company.

Amendments to IFRS 16 addressing Covid-19 related rent concessions became effective for annual reporting periods beginning on or after 1 June 2020. As neither the Group not Company has received such concessions, this is not relevant. c. New and amended Standards and Interpretations mandatory for periods beginning on or after 1 January 2021

These may have a significant impact in future years: ? Amendment to IFRS 9: "Financial Instruments" ? Amendment to IAS 39: "Recognition and Measurement" ? Amendment to IFRS 7: "Financial Disclosures"

2.3 Measurement Convention

The financial statements are prepared under the historical cost convention.

2.4 Going Concern

The financial statements are prepared on a going concern basis notwithstanding that the Group is still generating losses.

The Group has reported an underlying EBITDA[3] of GBP2.0m loss (2019: GBP10.7m loss) with an operating cash inflow of GBP1.2m (2019: outflow of GBP9.3m). The closing cash balance at 31 December 2020 was GBP8.4m (2019: GBP8.0m) with GBP0.3m VAT deferred from Q1 2020 under the UK Government Coronavirus support measures and due for payment in April 2021

The directors have prepared a business plan and financial model including cashflow forecasts covering a period of more than 12 months from the date of approval of the Group financial statements.

The business plan makes the following key assumptions: ? Revenue growth in the French and Irish markets driven by further marketing investment in these territories having

underinvested in 2020. The directors understand that the impact of Covid-19 on French consumer behaviour has been

less extreme that the UK and thus investment in these markets will reduce the reliance on UK consumers to drive

revenue growth in the Group. ? Minimal growth in the UK direct-to-consumer market due to uncertainties around the impact of Covid-19 on consumer

behaviour and spending capacity. When travel and leisure restrictions are eased in the UK, consumers may divert

spending away from homewares to these areas. However, the shift from physical retail to ecommerce spending is

likely to be permanent and the business is extremely well placed to capitalize on this. ? Marketing efficiencies throughout all territories broadly in line with 2020, measured as % of revenue. Having

doubled marketing efficiency from 2019 to 2020, the directors are confident that a similar return on investment can

be made in the foreseeable future. ? Short-term investment in people and technology to deliver improvements in the efficiency and resilience of the

business. This will generate an increase in some discretionary costs in 2021 but these can be reduced if required. ? There will be minimal disruption from Brexit given the changes made in 2020 to the location of mattress


These forecasts in the base case indicate that the group will have sufficient funds to meet its liabilities as they fall due until such point that it achieves sustainable profitability and cash generation. The delivery of the strategic plan is subject to uncertainty and these have been modelled through sensitivity analysis to revenue and costs.

Where sensitivity analysis indicates the possibility of a material impact to the ability of the group to meet liabilities as they fall due, the directors have considered what mitigating actions would be required and the timeframe within which those actions are needed. The key mitigating factors are centred around further reductions in controllable spend, including further marketing cost appraisal and reductions in other categories of discretionary spend. The directors also consider that it would be reasonable to target working capital improvements such as reducing debtor days through facilities such as debt factoring as the group does not presently have any debt (excluding the lease liability arising under IFRS 16).

The directors consider that given the strong opening cash position relative to the 2020 underlying EBITDA loss, the expected performance over the next 12-18 months and the level of fixed and non-discretionary costs, that the Group will be able to continue realising its assets and discharging its liabilities in the normal course of business and it is therefore appropriate to prepare the financial statements on a going concern basis.

3. Segmental analysis

IFRS 8, "Operating Segments", requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker (the Board). The Chief Operating Decision Maker has been determined to be the executive board and the primary segmental reporting format of the Group is geographical by customer location, based on the Group's management and internal reporting structure.

The board assesses the performance of each segment based on revenue, gross profit and profit after distribution expenses, payment fees and marketing expenses. Payment fees and marketing expenses are presented within administrative expenses on the statement of profit and loss and other comprehensive income.

For the year ended 31 December 2020

                                                          UK&I        France      Rest of     Rest of      Total 
                                                                                  Europe      World 
Revenue                                                   20,501,151  4,586,988   130,411     -            25,218,550 
Cost of Sales                                             (8,692,158) (2,071,350) -           -            (10,763,508) 
Gross Profit                                              11,808,993  2,515,638   130,411     -            14,455,042 
Distribution expenses                                     (2,658,227) (842,746)   57          -            (3,500,916) 
Payment fees                                              (461,143)   (70,214)    (15,760)    -            (547,117) 
Marketing expenses                                        (5,138,937) (964,248)   806         -            (6,102,379) 
Segment Results                                           3,550,686   638,430     115,514     -            4,304,630 
Administrative Expenses (excluding payment fees and                                                        (6,744,895) 
marketing expenses) 
Net Finance Income/(Expense)                                                                               1,641 
Taxation                                                                                                   414,541 
Total                                                                                                      (2,024,083) 

For the year ended 31 December 2019

                                                          UK&I        France      Rest of     Rest of      Total 
                                                                                  Europe      World 
Revenue                                                   18,548,073  5,345,076   (45,141)    4,923        23,852,931 
Cost of Sales                                             (8,385,865) (2,751,453) -           (39,587)     (11,176,905) 
Gross Profit                                              10,162,208  2,593,623   (45,141)    (34,664)     12,676,026 
Distribution Expenses                                     (1,809,692) (1,014,775) 94,185      964          (2,729,317) 
Payment fees                                              (352,702)   (90,180)    5,418       245          (437,219) 
Marketing Expenses                                        (9,703,321) (2,357,403) 6,346       -            (12,054,377) 
Segment Results                                           (1,703,507) (868,734)   60,808      (33,454)     (2,544,887) 
Administrative Expenses (excluding payment fees and                                                        (9,962,304) 
marketing expenses) 
Net Finance Income/(Expense)                                                                               18,022 
Taxation                                                                                                   352,239 
Total                                                                                                      (12,136,930) 

4. Earnings per share

The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year.

                                                      2020        2019 
Weighted average shares in issue                      269,819,716 246,739,240 
Loss attributable to the owners of the parent company (2,024,083) (12,136,930) 
Basic loss per share (pence)                          (0.75)      (4.92) 
Diluted loss per share (pence)                        (0.75)      (4.92) 

For the periods presented, the weighted average number of shares used for calculating the diluted loss per share are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per share and would not be dilutive under IAS 33.

At 31 December 2020, options outstanding amounted to 15,803,099. Given the loss for the year of GBP2,024,083 (2019 loss: GBP12,136,930) these options are anti-dilutive.

5. Share Capital

Allotted, issued and fully paid:

                            Nominal Value 31 December 2020 31 December 2019 
                            GBP             GBP                GBP 
Ordinary Shares 272,569,414 GBP0.001        272,569          263,445 
Total                                     272,569          263,445 

The table below summarises the movements in number of shares at the beginning and end of the period:

                                                Ordinary Shares 
Share capital 31 December 2019                  263,444,823 
Nominal Value GBP                                 GBP0.001 
Value of Share capital GBP                        GBP263,445 
Summary of Movements 
Issue of shares                                 5,390,479 
Exercise of share options over ordinary shares  3,734,112 
Share capital 31 December 2020                  272,569,414 
Nominal Value GBP                                 GBP0.001 
Value of Share capital GBP                        GBP272,569 

The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

During 2020, 5,390,479 shares were issued and 3,734,112 share options were exercised bringing the total share capital of the Company to 272,569,414 at 31 December 2020.

6. Share based payments

The Group recognised a charge of GBP0.5m (2019: GBP1.1m) related to share-based payments during the year to 31 December 2020, all of which relates to equity-settled schemes and are presented within administrative expenses.

The charge is made up of two components: share-based payment charges connected with employee remuneration totalling GBP0.2m and share-based payment charges relating to the equity settlement of liabilities due to Channel 4 totalling GBP0.3m, of which GBP0.2m were satisfied with the issue of share capital during the period.

The Company issues equity-settled share-based payments to certain employees, whereby employees render services in exchange for shares or rights over shares of the parent company. Equity-settled awards are measured at fair value at the date of grant. The fair value is calculated using an appropriate option pricing model and is expensed to the consolidated statement of profit and loss on a straight-line basis over the vesting period after allowing for an estimate of shares that will ultimately vest.

The Company operates an HMRC approved executive management incentive plan (EMI). Under length of service criteria, options typically vest over a 3 year period in equal monthly amounts. For those options with performance based condition, the options will vest when the conditions are met. All options are equity settled.

The terms and conditions of the grants are as follows:

              Number of                   Exercise 
Grant Date              Number of Options          Performance Conditions Expiry Date 
              Contracts                   Price 
10/04/2017    1         251,000           GBP0.001   Length of service      10/04/2027 
01/04/2019    7         6,679,364         GBP0.001   Length of service      01/04/2029 
17/12/2019    4         6,850,000         GBP0.001   Length of service      17/12/2019 
17/02/2020    2         550,000           GBP0.001   Length of service      17/02/2030 
01/06/2020    3         1,750,000         GBP0.001   Length of service      01/06/2030 
01/06/2020    2         2,650,000         GBP0.001   Performance Based      01/06/2030 

The Company operates an unapproved executive incentive plan. The vesting conditions for grants made on 26 January 2016 and 1 April 2019 are based on length of service with 100% of the options vesting on 36-month anniversary of the grant date. All options are equity settled.

The terms and conditions of the grants are as follows:

              Number of                   Exercise 
Grant Date              Number of Options          Performance Conditions Expiry Date 
              Contracts                   Price 
26/01/2016    1         12,550            GBP0.001   Length of service      26/01/2026 
01/04/2019    1         150,000           GBP0.001   Length of service      01/04/2029 

The number and weighted average exercise prices of share options are as follows:

                                   Weighted Average Exercise Price GBP Number of Options 
Outstanding at beginning of year   GBP0.001                            17,030,913 
Granted during the year            GBP0.001                            4,950,000 
Forfeited during the year          GBP0.001                            (1,960,642) 
Exercised during the year          GBP0.001                            (3,734,112) 
Lapsed during the year             GBP0.001                            (483,060) 
Cancelled during the year                                            - 
Outstanding at the end of the year GBP0.001                            15,803,099 
Exercisable at the end of the year GBP0.001                            4,670,603 

All options exercised during the year were options over Ordinary shares.

The weighted average share price at the date of exercise of share options exercised during the year was 0.1p (2019: 6.37p)

The options outstanding at the end of the year have an exercise price of GBP0.001 and a weighted average contractual life of 10 years.

The fair value of employee share options is measured using a Black-Scholes model. Measurement inputs and assumptions for those share options granted during 2020 are as follows:

                         Award      Award 
                         17/02/2020 01/06/2020 
                         GBP          GBP 
Share class              Ord        Ord 
Fair Value               GBP0.011     GBP0.012 
Exercise Price           GBP0.001     GBP0.001 
Expected volatility      84%        104% 
Option Life              10yrs      10yrs 
Risk free interest rate  1.000%     1.000% 

7. Trade and other receivables

                      2020      2019 
                      GBP         GBP 
Trade Receivables     656,032   676,537 
Other receivables     221,030   447,051 
Prepayments           883,126   784,083 
Other current assets  120,000   729,979 
                      1,880,188 2,637,650 

The average credit period offered on sales of goods during 2020 was 32 days (2019: 32 days). The average days sales outstanding ("DSO") in 2020 was 38 days (2019: 38 days). At 31 December 2020, trade receivables at a nominal value of GBPnil (2019: GBP3,481) were impaired and fully provided for.

All trade and other receivables are short-term. The directors consider that the carrying amount of trade receivables approximates to their fair value. All trade and other receivables have been reviewed for indications of impairment.

Trade receivables represent amounts due from wholesale and retail customers.

The Group has not charged interest for late payment of invoices in the current year or prior period.

Allowances against doubtful debts are estimated by reference to expected credit losses based on the probability of default (using past default experience with that customer and alongside analysis of the counterparty's current financial position where specific credit risk is known), risk exposure (being the value of receivables outstanding with that customer) and finally a percentage representative of the loss due to default.

Before accepting any significant new customer, the Group uses a variety of credit scoring systems to assess the potential customer's credit quality and to define credit limits for each customer. Limits and scoring attributed to customers are reviewed regularly.

Four major retail customers each accounted for more than 10% of the total balance of trade receivables on 31 December 2020, identical to 2019 where four major retail customers each accounted for more than 10% of the total balance of trade receivables on 31 December 2019.

                            2020                    2019 
                            GBP                       GBP 
Not overdue                               289,305   277,934 
Overdue between 0-30 days                 142,721   21,493 
Overdue between 31-60 days                113,216   245,198 
Overdue between 61-90 days                   72,200 131,912 
Overdue over 90 days                         38,590 - 
                            656,032                 676,537 

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the relevant year-end. Aside from the major retail customers accounting for the year-end trade receivable balance mentioned above, the concentration of credit risk is limited due to the customer base being large and diverse.

8. Trade and other payables

                                         2020      2019 
                                         GBP         GBP 
Trade payables                           1,183,802 2,430,596 
Non trade-payables and accrued expenses  1,027,043 649,995 
Deferred revenue                         949,411   573,082 
Taxes and social security payable        863,954   329,501 
                                         4,024,210 3,983,174 

All trade and other payables are short-term. The directors consider that the carrying amount of trade and other payables approximates to their fair value. Deferred revenue represents contractual liabilities to deliver goods to customers where consideration has been received prior to the year-end date. The opening balance of deferred revenue was fully recognised during the 2020 financial year.

The Company took advantage of the UK Government Coronavirus support measures in the year, to defer VAT due in April 2020 until April 2021. The amount deferred is included in the above taxes and social security payable.

9. Provisions

                                                     Refunds     Warranty Total 
                                                     GBP           GBP        GBP 
Balance at 1 January 2019                            792,117     163,832  955,949 
Provisions made during the year                      7,869,078   73,574   7,942,652 
Provisions used during the year                      (8,116,237) (36,127) (8,152,364) 
Prior year under/(over) provision recognised in year 22,728      -        22,728 
Balance at 31 December 2019                          567,686     201,279  768,965 
Provisions made during the year                      3,735,217   106,000  3,841,217 
Provisions used during the year                      (3,437,640) (65,221) (3,502,861) 
Prior year under/(over) provision recognised in year (66,085)    -        (66,085) 
Balance at 31 December 2020                          799,178     242,058  1,041,236 

A refund provision is required as the Group provides certain products to customers under a 100-day trial period.

During this period the customer is entitled to return goods for a full refund. The provision is calculated by reference to the rate of returns experienced by the Group in preceding periods and the level of sales subject to the relevant trial periods of each product at the year end. An analysis of the rate of return over historical periods does not indicate a significant variation in the rate of refunds provided to customers and accordingly, whilst there is a degree of estimation in the calculation of this provision, any reasonable sensitivity analysis in the rate applied to sales at the year-end would not result in a material impact.

A warranty provision is required as the Group provides certain products to customers with 2, 3, 5 and 10-year warranty periods.

During these periods the customer is entitled to claim under warranty a replacement product. The provision is calculated by reference to the rate of successful claims experienced by the Group in preceding periods and applying a projected distribution of the claims across the 10-year warranty period. A 10% sensitivity applied to the estimated rate for warranty claims would result in the warranty charge increasing or decreasing by around GBP20,000.

10. Subsequent events

There have been no significant events since the year end. -----------------------------------------------------------------------------------------------------------------------

[1] Underlying EBITDA is defined as earnings before interest, tax, depreciation, amortisation and impairment, share-based payment charges connected with employee remuneration (2020 and 2019), fundraise-related expenditure (2019 only), adding back IFRS16 adjustments to office lease costs. Underlying EBITDA reflects what management believe to best demonstrate the underlying performance of the business in a given year.

[2] Underlying EBITDA is defined in the Glossary

[3] Underlying EBITDA loss defined as earnings before interest, tax, depreciation, amortisation and impairment, share-based payment charges connected with employee remuneration (2020 and 2019), fundraise-related expenditure (2019 only), adding back IFRS16 adjustments to office lease costs. Underlying EBITDA reflects what management believe to best demonstrate the underlying performance of the business in a given year. -----------------------------------------------------------------------------------------------------------------------

ISIN:          GB00BYWMFT51 
Category Code: FR 
TIDM:          EVE 
LEI Code:      2138007BAC29AUXWQE6 
Sequence No.:  95780 
EQS News ID:   1176516 
End of Announcement  EQS News Service 

(END) Dow Jones Newswires

March 18, 2021 03:00 ET (07:00 GMT)

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