Eve Sleep plc: Interim Results

Fecha : 26/09/2019 @ 01:00
Fuente : UK Regulatory (RNS & others)
Emisora : Eve Sleep Plc (EVE)
Cotización : 2.35  0.0 (0.00%) @ 02:00
Eve Sleep Cotización de acciones Gráfica

Eve Sleep plc: Interim Results

 
 Eve Sleep plc (EVE) 
Eve Sleep plc: Interim Results 
 
26-Sep-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information according to 
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
eve Sleep plc ("eve" the "Company" or the "Group") 
 
Interim Results 
 
Halving of EBITDA losses, rebuild strategy progressing, new retail partnerships now live 
 
eve Sleep, a direct-to-consumer sleep wellness brand operating in the UK, Ireland 
(together the "UK&I") and France, today issues its results for the six months ended 30 
June 2019 (the "Period"). 
 
Financial Highlights8 
 
                                  2019 H1 GBPm 2018 H1 GBPm Movement 
Revenue (UK&I and France) 1             12.9       14.1      -8% 
Gross profit 2                           6.7        7.8     -13% 
Gross profit margin 2                  52.3%      54.8% -250 bps 
Marketing costs as a % of revenue      51.0%      70.6%    -1960 
2,3                                                          bps 
Marketing contribution 2,3,4           (1.6)      (3.9)   +GBP2.3m 
Underlying EBITDA Loss 5               (5.9)     (11.9)   +GBP6.0m 
Statutory loss before tax 6            (6.7)     (12.0)   +GBP5.3m 
Net Cash 7                              12.5       16.7   -GBP4.2m 
 
Business Highlights 
 
· Sales of non-mattress products now contributing 24% of revenues (H1 2018: 21%) 
 
· Customer repeat rate increased to 19% (H1 2018: 16%) 
 
· Marketing efficiency improved in all markets and whilst revenue was lower the 
marketing contribution has improved by GBP2.3m 
 
· Conversion rate up 20 bps reflecting upgrades to the customer journey 
 
· Raised GBP11.7m net of expenses in new equity and GBP0.9m in advertising credits from 
Channel Four 
 
Post Period End 
 
· Retail partnership with Next Home expanded in August 2019 by 104 stores to cover 158 
sites 
 
· Three new retail partnerships announced in July 2019: Argos now live alongside Dunelm 
with Homebase due to launch imminently 
 
· Unprompted brand awareness in the UK&I grew from 10% in January 2019 to 15% in August 
2019 (ahead of all D2C competitors), with awareness also up in France on the back of a 
new marketing campaign launched in June 2019 
 
· Signed deal with British Rowing to be their official sleep partner 
 
Current trading 
 
As set out in the Company's trading update of 20 September 2019 eve has revised revenue 
  guidance for the current financial year to between GBP25m and GBP27m as a result of the 
worsening macro-economic conditions and near permanent heavy discounting by competitors. 
The revision in revenue expectations is expected to have some flow through to the EBITDA 
loss, though a substantial year-on-year reduction in H2 losses and the full year loss is 
still expected. 
 
James Sturrock, CEO of eve Sleep, commented: 
 
"We are making good progress with our strategic focus to build a sleep wellness brand, as 
a key differentiator to peers and to secure the foundations for a profitable and 
sustainable future for eve. There has been a step-up in the depth and breath of product 
ranges, a 50% increase in brand awareness and improvements to our technology and systems 
to ensure the best experience for customers, all of which have driven a meaningful 
improvement in the customer repeat rate. In tandem, costs and cash are better managed, 
which is evident in the H1 reduction in losses and the cash outflow. 
 
While the headwinds have increased, we have a flexible and adaptable business model, 
alongside a strategy that will clearly differentiate eve in the longer term from peers. 
We will continue to focus on the rebuild strategy through a combination of organic 
improvements and inorganic opportunities as and when they arise." 
 
Footnotes 
 
1 In July 2018, the Board reviewed the number of territories that eve traded from, 
deciding to focus on the Core Markets of the UK&I and France, and withdrawing from the 
other territories. The headline revenues for 2019 and 2018 cover the UK&I and France. In 
the first half of 2018 the total reported revenue for all markets was GBP18.8m. 
 
2 Gross profit, gross profit margin, marketing costs and marketing contribution are all 
shown for the Core Markets of the UK, Ireland and France for the current and prior 
period. 
 
3 Indirect marketing costs, such as the cost of production for TV campaigns, were 
previously included in overheads but are now included within marketing costs. 2018 
marketing costs have been restated to include these indirect costs. 
 
4 Marketing contribution is defined as the profit after marketing expenditure but before 
payroll and overhead costs 
 
5 Underlying EBITDA is defined as earnings before interest, tax, depreciation, 
amortisation, share-based payment charges (2018 and 2019) and fundraise-related 
expenditure (2019 only). 
 
6 Included within the Statutory loss before tax is EBITDA, fund raising expenses, 
interest income, depreciation and amortisation. 
 
  7 In addition to the cash balance of GBP12.5m as at 30 June 2019 eve has GBP0.9m of 
 advertising credits outstanding with Channel 4, following GBP0.9m of credits raised at the 
fund raising in February 2019 
 
8 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, calculations using such data. 
 
For further information, please contact: 
 
eve Sleep plc                 via M7 Communications LTD 
 
James Sturrock, Chief 
Executive Officer 
 
Tim Parfitt, Chief Financial 
Officer 
finnCap Limited (NOMAD and           +44(0)20 7220 0500 
broker) 
 
Matt Goode (Corporate 
Finance) 
 
Hannah Boros (Corporate 
Finance) 
 
Alice Lane (ECM) 
M7 Communications LTD               +44(0) 7903 089 543 
 
Mark Reed 
 
Summary 
 
The focus for the first half of 2019 has been to reset the business, putting eve onto a 
more stable and secure long-term footing, with the intention of targeting sustainable and 
profitable sales growth in the second half of the year. Considerable progress has been 
made in this regard, most notably the successful fund raising in February 2019, which 
  secured fresh equity of GBP11.7m net of expenses and an additional GBP0.9m of advertising 
credits with Channel Four, both of which are being used to fund the rebuild strategy. 
 
Across the business good progress has been made with the rebuild strategy. At the Group 
level, this is most evident in the 50% year-on-year reduction in the underlying EBITDA 
loss. Unprofitable business has been cut and the level of promotional activity is now 
better optimised to drive contribution margin. Media investment was pared back during the 
Period compared to the prior year, while the marketing and brand strategy was being 
rebuilt, resulting in a 34% reduction in spend and a 1960 bps improvement in marketing 
efficiency, defined as marketing costs as a percentage of revenues. In tandem cost 
control has been tightly managed leading to a 22% year-on-year reduction in overheads. 
 
The above improvements have been achieved against a highly challenging retail backdrop 
and an increasingly competitive mattress market, with deep discounts on a near permanent 
basis witnessed since January 2019. 
 
 In the UK&I trading in the period was broadly flat, with revenues of GBP10.2m, down 0.9% 
year-on-year. Sales of non-mattress products increased, contributing 23% of revenues in 
the Period (2018 H1: 20%), helped by a substantial increase in new products and strong 
demand for bedframes. The broader product range has also driven an improvement in the 
customer repeat rate to 19.4% (2018 H1: 16.4%). Marketing investment in the UK&I was 27% 
lower year-on-year. 
 
The French business has required greater management focus to localise and reposition the 
brand. The 29% reduction in French revenues in the Period was predominantly driven by 
management's decision to focus on net contribution margin over sales growth, accompanied 
by a substantial reduction in marketing spend. Despite the large revenue reduction, the 
  French contribution margin improved by GBP0.9m, to a loss of GBP1.2m. A new marketing 
campaign launched in France during the second half of June 2019. 
 
Developments since the period end 
 
Since the period end progress has continued, with major new marketing campaigns having 
been launched in the UK&I. The campaigns are distinct from peers and have been well 
received, driving a substantial uplift in brand awareness. In the UK unprompted brand 
awareness has risen from 10% at the start of the year to 15% in August 2019. 
 
The Company has also signed three new retail partnerships with Argos, Homebase and 
Dunelm, and an extension to the Next Home partnership, with the addition of a further 104 
Next stores. The Argos and Dunelm partnerships have already gone live, with Homebase 
expected to launch imminently. 
 
eve has also signed a partnership agreement with British Rowing, and the sleep wellness 
brand will now be "Official Sleep Partner" to the national governing body for rowing. eve 
will support British Rowing in managing the sleep environment of the GB Rowing Team 
athletes, helping them perform at their best each day. The deal also includes exclusive 
offers for British Rowing club members. 
 
eve has undergone considerable change in the last 12 months. It is pleasing and testament 
to the professionalism and commitment of the team that the quality of the customer 
offering and service levels have remained high, as evidenced by the returns rate, which 
has held steady at c12% and a market leading 4.7 out of 5.0 rating on Trustpilot. 
 
Market overview and the macro backdrop 
 
 The European sleep market is estimated to be worth GBP26bn, with the core markets that eve 
 is now focused on (UK&I and France) being worth GBP6bn. While there are many traditional 
operators, in what is a highly fragmented sleep market across Europe, there are fewer, 
well-branded digital operators of any meaningful size, competing in the wider sleep 
category. As the market continues to shift online, with Euromonitor predicting that the 
online furniture market will be the second fastest growing retail category, with online 
purchase penetration expected to increase by 55% between 2018 and 2023, eve is well 
placed to benefit. 
 
There is also an increasing awareness of the importance of sleep for everyday health and 
wellbeing and the dangers of having insufficient sleep. There is currently no brand in 
Europe that has established itself as a sleep wellness brand. eve's ambition is to 
achieve just this; to be seen as the go-to brand for sleep wellness products. 
 
While eve is insulated from the structural challenges currently facing 'bricks and 
mortar' retailers, the Company is not immune from the cyclical threats of a slowing 
economy and declining consumer confidence. The current level of uncertainty caused in 
part by Brexit is unprecedented and is having a meaningful impact on the housing market 
and 'big ticket' consumer purchases including furniture and bedding. These cyclical 
challenges are being compounded by the particular dynamics of the mattress market. 
 
eve's strategy is to differentiate itself from peers, based on building a brand around 
the wider sleep wellness category. This can be seen in its advertising and eve's focus on 
building out a broader product range than its competitors. 
 
Progressing the rebuild strategy 
 
The progress made on each of the three pillars of the rebuild strategy is set out below: 
 
1) Differentiated brand positioning 
 
Key to creating shareholder value is to provide a differentiated position from peers. To 
achieve this the Company aims to become a trusted destination for a wider range of sleep 
wellness related products, supported by a new marketing strategy, refocused on the 
benefits that eve can provide consumers in sleep wellness. 
 
During the period the company ran existing marketing campaigns whilst testing new 
promotional strategies and channel mix, as well as carrying out econometric analysis and 
modelling. This supported development of the new brand, communications and the creative 
strategy, which launched at the start of H2 2019. 
 
The new UK&I campaign, 'wake up dancing' delivers the eve brand positioning more clearly 
and resonantly with consumers thanks to a distinctive and ownable brand asset (the 
dancing sloth) as well as a distinctive creative. In France, the investment and media 
strategy has been adapted to make better use of the peak sales periods, driving more 
efficient spend with an optimised creative strategy and revitalised positioning. This 
positioning, 'reborn again each morning' (renaissez chaque matin) is designed to elevate 
eve to be the premium brand in the nascent direct-to-consumer mattress category in 
France. 
 
Marketing spend was 34% lower than the comparable period and whilst revenue was slightly 
softer, marketing efficiency improved significantly by 1960bps. 
 
2. Expanded product range 
 
The Company continues to build out a range of sleep wellness products to complement the 
increased range of next generation mattresses which currently include the original, the 
premium, the hybrid (springs and memory foam), the premium hybrid as well as the entry 
level light, in order to cover more price points and consumer preferences. 
 
The rate of new product development stepped up in the period, with the launch of new 
bedframes and expanded ranges of bedding, pillows and the baby category. Sales of 
bedframes, including the new storage bedframe, have performed particularly well. 
 
The benefits to the business of the increased ranges are evident in the Company's KPIs. 
In the UK&I sales of non-mattress products in the period increased to 24% of total 
revenues (H1 2018: 21%). The broader range also drove a 300 bps improvement in the 
customer repeat rate, a good demonstration of increasing brand stickiness. 
 
3) Lower friction customer experience 
 
Enhancing customer experience throughout the online journey and in the service 
proposition to drive stronger site conversion and customer satisfaction metrics is 
central to the rebuild strategy. Improved conversion will not only result in higher 
revenues but also greater marketing efficiency, which is key to achieving profitability. 
 
The entire customer journey prior to purchase has been substantially upgraded, including 
a 50% plus improvement in the speed of loading the website, a redesigned home page with 
more focus on inspiring customers, building out category pages to help users discover 
products within our expanded ranges and new imagery, with copy/zoom functionality. 
Improvements have also been made to how promotions are presented on the website and 
subsequently accessed via digital media searches. 
 
To improve the purchase process the cart and checkout have been rebuilt to make them 
faster and more intuitive, resulting in an improvement in the cart completion rate. The 
delivery proposition has also been improved with a move to a new carrier portfolio and 
warehouse consolidation. In addition to better communications with customers around 
confirmation, delivery tracking and product care guides, customers are now able to select 
a nominated delivery day for larger orders. 
 
The changes made to the website and customer proposition have driven a 20 bps improvement 
in the conversion rate. 
 
Alongside improvements to the website it has always been an important element of the 
strategy to expand the touch points where consumers can experience and purchase the eve 
product range. eve's omni-channel approach continues to be focused on retail 
partnerships. Considerable work was performed during the Period to pave the way for new 
retail partnerships, which were secured in early July with Argos, Dunelm and Homebase. 
 
Consolidated Statement of Profit and Loss and Other Comprehensive Income 
 
                               6 month       6 month    12 month 
                          period ended  period ended      period 
                          30 June 2019  30 June 2018    ended 31 
                                                        December 
                                                            2018 
                    Note   (Unaudited)   (Unaudited)   (Audited) 
                                    GBPm            GBPm          GBPm 
 
Revenue             2             12.9          18.8        34.8 
 
Cost of sales       2            (6.2)         (8.6)      (16.4) 
 
Gross profit                       6.7          10.2        18.4 
 
Distribution        2            (1.2)         (2.3)       (4.1) 
expenses 
Administrative                  (11.5)        (19.9)      (34.4) 
expenses 
Share-based payment 5            (0.4)         (0.1)       (0.3) 
charges 
 
Operating loss                   (6.4)        (12.0)      (20.3) 
before 
fundraise-related 
expenditure 
 
Fundraise-related                (0.3)             -           - 
expenditure 
 
Operating loss                   (6.7)        (12.0)      (20.3) 
 
Net finance income                 0.0           0.0         0.0 
 
Loss before tax                  (6.7)        (12.0)      (20.3) 
 
Taxation                             -             -         0.2 
 
Loss for the period              (6.7)        (12.0)      (20.1) 
 
Other comprehensive 
income 
Foreign currency                   0.1             -         0.1 
differences from 
overseas operations 
 
Total comprehensive              (6.6)        (12.0)      (20.0) 
loss for the period 
 
Basic and diluted   3          (2.88p)       (8.66p)    (14.46p) 
loss per share 
 
Consolidated Statement of financial Position 
 
                     6 month period 6 month period      12 month 
                      ended 30 June  ended 30 June  period ended 
                               2019           2018   31 December 
                                                            2018 
                Note    (Unaudited)    (Unaudited)     (Audited) 
                                 GBPm             GBPm            GBPm 
 
Non-current 
assets 
 
Property, plant                   -            0.0             - 
and equipment 
Intangible                      0.8            0.6           0.7 
assets 
Other                             -            0.4             - 
non-current 
assets 
 
                                0.8            1.0           0.7 
 
Current assets 
 
Inventories                     1.2            1.0           1.1 
Trade and other                 3.3            2.8           4.6 
receivables 
Cash and cash                  12.5           16.7           6.0 
equivalents 
Current tax                       -              -           0.2 
receivable 
 
                               17.0           20.4          12.0 
 
Total assets                   17.9           21.5          12.6 
 
Current 
liabilities 
 
Trade and other                 4.2            5.6           4.6 
payables 
Provisions                      0.7            1.0           1.0 
 
                                4.9            6.6           5.5 
 
Total                           4.9            6.6           5.5 
liabilities 
 
Net assets                     12.9           14.9           7.1 
 
Equity 
attributable to 
the equity 
holders of the 
parent 
 
Share capital   4               0.3            0.1           0.1 
Share premium                  48.6           36.7          36.7 
Share-based     5               0.5            0.1           0.3 
payment reserve 
Retained                     (36.6)         (22.1)        (30.1) 
earnings 
Foreign                         0.2              -           0.1 
currency 
translation 
reserve 
 
Total equity                   12.9           14.9           7.1 
 
Consolidated Statement of Changes in Equity 
 
For the 6 months ended 30 June 2019 
 
                  Share       Share Share-based    Retained     Foreign       Total 
                capital     premium     payment    earnings    currency      equity 
                                        reserve             translation 
                                                                reserve 
            (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
                      GBP           GBP           GBP           GBP           GBP           GBP 
 
Balance at      139,735  36,716,371     250,073 (30,073,145      98,720   7,131,755 
1 January                                                 ) 
2019 
 
Exercise of         683           -           -           -           -         683 
options 
Issue of        120,317  11,911,415           -           -           -  12,031,732 
new share 
capital 
Share-based           -           -     357,591           -           -     357,591 
payment 
charge 
Transfer on           -           -    (93,923)      93,923           -           - 
exercise of 
options 
 
Total           121,000  11,911,415     263,668      93,923           -  12,390,007 
transaction 
s with 
owners 
 
Loss for              -           -           - (6,660,017)           - (6,660,017) 
the period 
Other                 -           -           -           -      54,520      54,520 
comprehensi 
ve income 
for the 
period 
 
Balance at      260,735  48,627,786     513,741 (36,639,238     153,240  12,916,264 
30 June                                                   ) 
2019 
 
For the 6 months ended 30 June 2018 
 
                  Share       Share Share-based    Retained     Foreign       Total 
                capital     premium     payment    earnings    currency      equity 
                                        reserve             translation 
                                                                reserve 
            (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
                      GBP           GBP           GBP           GBP           GBP           GBP 
 
Balance at      138,631  36,716,371     138,794 (10,158,736           -  26,835,060 
1 January                                                 ) 
2018 
 
Exercise of         652           -           -           -           -         652 
options 
Issue of              -           -           -           -           -           - 
new share 
capital 
Share-based           -           -      78,194           -           -      78,194 
payment 
charge 
Transfer on           -           -    (73,991)      73,991           -           - 
exercise of 
options 
 
Total               652           -       4,203      73,991           -      78,846 
transaction 
s with 
owners 
 
Loss for              -           -           - (12,042,802           - (12,042,802 
the period                                                )                       ) 
Other                 -           -           -           -           -           - 
comprehensi 
ve income 
for the 
period 
 
Balance at      139,283  36,716,371     142,997 (22,127,547           -  14,871,104 
30 June                                                   ) 
2018 
 
For the 12 months ended 31 December 2018 
 
                Share     Share Share-based  Retained   Foreign     Total 
              capital   premium     payment  earnings  currency    equity 
                                    reserve           translati 
                                                             on 
                                                        reserve 
            (Audited) (Audited)   (Audited) (Audited) (Audited) (Audited) 
                    GBP         GBP           GBP         GBP         GBP         GBP 
 
Balance at    138,631 36,716,37     138,794 (10,158,7         - 26,835,06 
1 January                     1                   36)                   0 
2018 
 
Exercise of     1,104         -           -         -         -     1,104 
options 
Issue of            -         -           -         -         -         - 
new share 
capital 
Share-based         -         -     303,281         -         -   303,281 
payment 
charge 
Transfer on         -         -   (192,003)   192,003         -         - 
exercise of 
options 
 
Total           1,104         -     111,279   192,003         -   304,385 
transaction 
s with 
owners 
 
Loss for            -         -           - (20,106,4         - (20,106,4 
the period                                        11)                 11) 
Other               -         -           -         -    98,720    98,720 
comprehensi 
ve income 
for the 
period 
 
Balance at    139,735 36,716,37     250,073 (30,073,1    98,720 7,131,755 
31 December                   1                   45) 
2018 
 
Consolidated Statement of Cash Flows 
 
                             6 month 6 month period    12 month 
                        period ended  ended 30 June      period 
                        30 June 2019           2018    ended 31 
                                                       December 
                                                           2018 
                         (Unaudited)    (Unaudited)   (Audited) 
                                  GBPm             GBPm          GBPm 
 
Cash flows from 
operating activities 
 
Loss for the period            (6.7)         (12.0)      (20.1) 
Fundraise-related                0.3              -           - 
expenditure 
Finance income                 (0.0)          (0.0)       (0.0) 
Taxation                           -              -       (0.2) 
Adjustments for: 
Interest paid                    0.0            0.0         0.0 
Amortisation                     0.1            0.1         0.1 
Impairment                         -              -         0.0 
(Increase)/Decrease in         (0.1)          (0.2)       (0.4) 
inventories 
(Increase)/Decrease in           1.5            1.2       (0.4) 
trade and other 
receivables 
Increase/(Decrease) in         (0.3)            1.1         0.0 
trade and other 
payables 
Increase/(Decrease) in         (0.2)            0.1         0.1 
provisions 
Share-based payment              0.4            0.1         0.3 
charge 
Fundraise-related              (0.3)              -           - 
expenditure 
 
Net cash outflows from         (5.4)          (9.7)      (20.6) 
operating activities 
 
Cash flows from 
investing activities 
 
Acquisition of                     -          (0.0)       (0.0) 
property, plant and 
equipment 
Development of                 (0.3)          (0.2)       (0.4) 
intangible assets 
Other non-current                  -          (0.4)           - 
assets 
 
Net cash outflows from         (0.3)          (0.6)       (0.4) 
investing activities 
 
Cash flows from 
financing activities 
 
Proceeds from the               12.0            0.0         0.0 
issue of share capital 
 
Net cash inflow from            12.0            0.0         0.0 
financing activities 
 
Net cash                         6.4         (10.3)      (21.0) 
inflow/(outflow) 
 
Cash at the beginning            6.0           26.9        26.9 
of the period 
Movement in cash                 6.4         (10.3)      (21.0) 
Effect of exchange               0.1              -         0.1 
rate fluctuations on 
cash held 
Cash at the end of the          12.5           16.7         6.0 
period 
 
Notes to the accounts 
 
1. Basis of preparation 
 
The unaudited interim consolidated statements of eve Sleep plc are for the six months 
ended 30 June 2019 and do not comprise statutory accounts within the meaning of S.434 of 
the Companies Act 2006. These consolidated financial statements have been prepared in 
accordance with the recognition and measurement requirements of International Financial 
Reporting Standards, International Accounting Standards and Interpretations (collectively 
IFRSs) as adopted by the EU. They do not include all disclosures that would otherwise be 
required in a complete set of financial statements. The consolidated financial statements 
are presented in Sterling, which is also the Group's functional currency. 
 
Going concern 
 
The financial statements are prepared on a going concern basis notwithstanding that the 
group is competing and disrupting an established market and as is typical for a business 
at this stage of its lifecycle is still generating losses as it uses working capital to 
develop the business model and market share. 
 
 The Group has reported an underlying EBITDA[1] loss of GBP5.9m in the six months ended 30 
  June 2019 (30 June 2018: GBP11.9m loss) and an operating cash outflow of GBP5.4m (30 June 
2018: GBP9.7m outflow). The Group completed a share placing in February 2019 raising GBP11.7m 
 cash net of expenses (the "Placing") from existing and new investors, alongside GBP0.9m of 
future advertising spend credits, which at 30 June 2019 remain fully available for use 
 against future advertising activity. The closing cash balance at 30 June 2019 is GBP12.5m. 
 
The Directors set out the three core pillars of the re-build strategy in the Chief 
Executive's statement to the 2018 Annual Report and have prepared a strategic plan in 
order to grow the business in the refocused markets of UK&I and France. The plan is 
supported by a financial model, underpinned by a number of key business drivers. The 
business plan assumes continuing improvement in 2019 over those observed in 2018 for the 
majority of these drivers. The principle assumptions adopted in the forecast model which 
reflect these improvements are set out below: 
 
· Revenue growth driven primarily by website traffic growth and conversion rate 
improvements; 
 
· Marketing expenditure reduction over the prior year and more targeted spend moving 
forward. 
 
To support the strategic plan the Directors have prepared cash flow forecasts covering a 
period of more than 12 months from the date of the publication of these financial 
statements. 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. However, the delivery of the strategic 
plan is subject to uncertainty and these have been modelled through sensitivity analysis. 
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 days through lower stock levels and 
reducing debtor days through facilities such as debt factoring as the group does not 
presently have any debt. 
 
Uncertainties are such that potential mitigating actions, which would be over and above 
the current strategic plan, may not be sufficient to mitigate all reasonably possible 
downsides in assumptions. In such downsides the Directors would need further funding and 
would consider ways of sourcing this, which could include debt or possible further equity 
funding. The Directors consider that such scenarios are possible, but not the likely 
outcome. 
 
Based on the above, the Directors believe it remains appropriate to prepare the financial 
statements on a going concern basis. However, these circumstances represent a material 
uncertainty that may cast significant doubt upon the company's ability to continue as a 
going concern and, therefore to continue realising its assets and discharging its 
liabilities in the normal course of business. The financial statements do not include any 
adjustments that would result from the basis of preparation being inappropriate. 
 
Changes to accounting standards 
 
The accounts have been prepared in accordance with accounting policies that are 
consistent with the accounts of the year ended 31 December 2018 and that are expected to 
be applied in the Report and Accounts of the year ended 31 December 2019. 
 
The Company has considered the change in accounting policy associated with the 
application of IFRS 16. The Company's lease of 128 Albert Street, London, NW1 7NE 
terminated in line with the agreed upon lease term on 17 August 2019 and therefore the 
Company has taken advantage of the short-term lease exemption for lease assets and lease 
liabilities where a lease term ends within 12 months of the date of initial application 
of IFRS 16. Thus the presentation of this lease as an operating lease for the six months 
ending 30 June 2019 remains consistent with previous periods under IAS 17. 
 
On 1 August 2019 the Company commenced a 24-month lease of 29A Kentish Town Road, London, 
NW1 8NL. The Company has recognised a lease asset and lease liability in relation to this 
lease from the inception of the lease. 
 
2. 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 Chief Operating 
Decision Maker has been determined to be the executive board and has determined that the 
primary segmental reporting format of the Group is geographical by customer location, 
based on the Group's management and internal reporting structure. 
 
The executive board assesses the performance of each segment based on revenue and gross 
profit after distribution expenses, which excludes administrative expenses. 
 
For the period 1 January 2019 - 30 June 2019 
 
(Unaudited) 
 
                         UK&I France   Rest of    Rest of  Total 
                                        Europe      World 
                           GBPm     GBPm        GBPm         GBPm     GBPm 
 
Revenue                  10.2    2.8       0.0        0.0   12.9 
Cost of sales           (4.7)  (1.5)       0.0        0.0  (6.2) 
Gross Profit              5.5    1.2       0.0        0.0    6.7 
Distribution expenses   (0.8)  (0.5)       0.1        0.0  (1.2) 
Segmental results         4.7    0.7       0.1        0.0    5.5 
Administrative expenses                                   (11.5) 
Share-based payment                                        (0.4) 
charge 
Fundraise-related                                          (0.3) 
expenditure 
Net finance income                                           0.0 
Loss before tax                                            (6.7) 
 
For the period 1 January 2018 - 30 June 2018 
 
(Unaudited) 
 
                      UK&I France     Rest of     Rest of  Total 
                                       Europe       World 
                        GBPm     GBPm          GBPm          GBPm     GBPm 
 
Revenue               10.3    3.9         4.3         0.4   18.8 
Cost of sales        (4.6)  (1.9)       (1.9)       (0.2)  (8.6) 
Gross Profit           5.7    2.0         2.4         0.2   10.2 
Distribution         (0.9)  (0.5)       (0.9)       (0.0)  (2.3) 
expenses 
Segmental results      4.8    1.5         1.4         0.1    7.9 
Administrative                                            (19.9) 
expenses 
Share-based payment                                        (0.1) 
charge 
Net finance income                                           0.0 
Loss before tax                                           (12.0) 
 
For the year ended 31 December 2018 
 
(Audited) 
 
                       UK&I France    Rest of     Rest of  Total 
                                       Europe       World 
                         GBPm     GBPm         GBPm          GBPm     GBPm 
 
Revenue                22.5    6.8        4.7         0.7   34.8 
Cost of sales        (10.7)  (3.2)      (2.2)       (0.4) (16.4) 
Gross Profit           11.8    3.7        2.5         0.4   18.4 
Distribution          (1.7)  (1.2)      (1.1)       (0.1)  (4.1) 
expenses 
Segmental results      10.1    2.5        1.5         0.3   14.3 
Administrative                                            (34.4) 
expenses 
Share-based payment                                        (0.3) 
charge 
Net finance income                                           0.0 
Loss before tax                                           (20.3) 
 
No analysis of the assets and liabilities of each operating segment is provided to the 
Chief Operating Decision Maker in the monthly management accounts. Therefore no measure 
of segmental assets or liabilities is disclosed in this note. 
 
Due to the nature of its activities the group is not reliant on any major customers. 
 
3. 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. 
 
                      30 June 2019 30 June 2018 31 December 2018 
 
                                                       (Audited) 
 
                       (Unaudited)  (Unaudited) 
 
Weighted average       231,586,565  139,051,360      139,087,779 
shares in issue 
Loss attributable to   (6,660,017) (12,042,802)     (20,106,411) 
the owners of the 
parent company (GBP) 
Basic earnings/(loss)       (2.88)       (8.66)          (14.46) 
per share (pence) 
Diluted                     (2.88)       (8.66)          (14.46) 
earnings/(loss) per 
share (pence) 
 
EPS and diluted EPS are not calculated for each class of share as the shares carry the 
same right to share in profit or loss for the year. 
 
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 30 June 2019, options outstanding amounted to 12,239,449 (30 June 2018: 4,583,521). 
 Given the loss for the period of (GBP6,660,017) loss (six months to 30 June 2018: loss of 
 (GBP12,042,802)), these options are anti-dilutive. 
 
4. Share Capital 
 
Allotted, issued and fully paid: 
 
                      30 June 2019 30 June 2018 31 December 2018 
 
                                                (Audited) 
 
                       (Unaudited)  (Unaudited) 
 
Number of ordinary     260,735,630  139,283,371      139,735,160 
shares 
Nominal value per          (0.001)      (0.001)          (0.001) 
share (GBP) 
Share Capital              260,736      139,283          139,735 
 
5. Share-based payment charge 
 
 The Group recognised a charge of GBP0.4m related to share-based payments during the six 
 months to 30 June 2019 (six months to 30 June 2018: GBP0.1m), all of which relates to 
 equity-settled schemes. A charge of GBP0.3m was recognised during the year 2018. 
 
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 
Statement of Total Comprehensive Income on a straight-line basis over the vesting period 
after allowing for an estimate of shares that will eventually vest. 
 
On 1 April 2019, those share option awards granted on 12 May 2017 and during 2018 were 
cancelled. In accordance with IFRS 2, at the point of cancellation the Company 
accelerated the vesting period and immediately recognised the remaining share-based 
 payment charge totalling GBP0.2m associated with these share options. 
 
The number and weighted average exercise prices of share options are as follows: 
 
               Weighted   Number of    Weighted   Number of  Weighted Number of 
                average     options     average     options   average   options 
               exercise                exercise              exercise 
                  price                   price                 price 
             To 30 June     30 June  To 30 June     30 June     To 31        31 
                   2019        2019        2018        2018  December  December 
                                                                 2018      2018 
            (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) 
                GBP                       GBP                      GBP 
 
Outstanding       0.613   3,203,153       0.519   5,642,703     0.519 5,642,703 
at the 
beginning 
of the 
period 
 
Granted           0.001  11,936,413           -           -     1.010   242,500 
during the 
period 
Forfeited         0.621   (725,285)       0.485   (419,194)     0.768 (1,577,90 
during the                                                                   9) 
period 
Exercised         0.001   (683,146)       0.001   (639,988)     0.001 (1,104,14 
during the                                                                   1) 
period 
Cancelled         1.012 (1,491,686)           -           -         -         - 
during the 
period 
Lapsed                -           -           -           -         -         - 
during the 
period 
 
Outstanding       0.001  12,239,449       0.595   4,583,521     0.613 3,203,153 
at the end 
of the 
period 
 
Exercisable       0.001     713,697       0.001     837,450     0.001   836,875 
at the end 
of the 
period 
 
The weighted average share price at the date of exercise of share options exercised 
during the period to 30 June 2019 was 6.78p (30 June 2018: 125.03p). 
 
All options outstanding at the period end have an exercise price of GBP0.001 and a weighted 
average contractual life of 10 years. 
 
Awards are categorised with reference to different fair values calculated for each 
agreement. 
 
The fair value of employee share options is measured using a Black-Scholes model. 
Measurement inputs and assumptions are as follows: 
 
              Award 1     Award 2 Award 3  Award Award 5 Award 6 
                                               4 
               16 Jan 16 Jan 2017  23 Jan 25 Jan  26 Jan  20 Feb 
                 2017                2017   2017    2017    2017 
 
Share           Ord C         Ord     Ord    Ord     Ord     Ord 
Class 
Fair Value      GBP0.06       GBP0.10   GBP0.10  GBP0.10   GBP0.10   GBP0.10 
at Grant 
Date 
 
Exercise       GBP0.001      GBP0.001  GBP0.001 GBP0.001  GBP0.001  GBP0.001 
Price 
Expected         103%        103%    103%   103%    103%    102% 
Volatility 
* 
Option       10 years    10 years      10     10      10      10 
Life                                years  years   years   years 
Risk-free      0.200%      0.200%  0.235% 0.276%  0.300%  0.148% 
interest 
rate 
 
                            Award 7     Award 8 
                         1 Apr 2019 23 May 2019 
 
Share Class                     Ord         Ord 
Fair Value at Grant Date      GBP0.07       GBP0.06 
 
Exercise Price               GBP0.001      GBP0.001 
Expected Volatility*            82%         84% 
Option Life                10 years    10 years 
Risk-free interest rate      1.000%      1.000% 
 
*Expected volatility is measured at the standard deviation of expected share price 
movements and based on a review of volatility experienced by listed companies of 
comparable industry sector and years of establishment. 
 
=---------------------------------------------------------------------------------------- 
 
[1] Underlying EBITDA is defined as earnings before interest, tax, depreciation, 
amortisation, share-based payment charges (2018 and 2019) and fundraise-related 
expenditure (2019 only). 
 
ISIN:          GB00BYWMFT51 
Category Code: IR 
TIDM:          EVE 
LEI Code:      2138007BAC29AUXWQE6 
Sequence No.:  21340 
EQS News ID:   880129 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

September 26, 2019 02:00 ET (06:00 GMT)

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