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no probs Wyn - have a good weekend
For what it's worth I don't want the business to go down the plan B route. Not sure how much value you could attribute to a small player, not growing, generating maybe 0.5m profit per annum. I doubt it would be much more than the current market cap. My preference is that they sell the business and in the right hands see the ambition realised. This is where I believe they will end up. I'm purely saying that a plan B option (in my opinion) is possible and will be being explored if a bidder doesn't come forward.
it will Aim, and I take your point about my assumption. (in my defence I tend, based on past experience, to think Bod's play down bad news (ie I think sales are worse then they are letting on, and all the flowery ambiguous stuff is not to be listened to.)
Good luck
Wyn - I read it as 'in order to fulfill the ambition of being a global sleep wellness retailer they need more investment' - scaling the operation right back in order to eke out a small profit isn't the ambition but in my opinion could be doable as a plan B option. This is another example of how you make an assumption based on what you've read (fine - we all do) but then goes after anyone who has made a different assumption. Time will tell how this plays out.
Considering the March presentation— was EVE not progressing along nicely to the breakeven/profitability goal before the American Investor approached EVE as per extract:-
‘. Recent inbound investor interest has led the Board to conclude that the optimum way to build shareholder value and realise the opportunity in sleep wellness is to launch a strategic review to secure either a new owner or a major strategic investment partner.”
Suddenly EVE maybe sees how a lot more cash inject can steam then along so they can meet the boards ambition to realise the opportunity to become the worlds 1st digital sleep wellness business— I expect all the new digital equipment needed and expert computer staff would not come cheap?
Would we not be able to continue on the going concern path without these expansion plans having to be implemented ASAP? We simply have not been told enough to know - but it seems things were ok given the March presentation by CC & Tim P.
There is risk. Risk of a zero but not this early in the process imo. The board were right to go early with the open to offers route.
Compare the Match presentation ( the only info we have from EVE prior to the RNS)??????
Fair post Wyn.
A lot hinges on Octopus running with a modest recommeded offer in my view. 3.5-4 would be a right result
Note CC does say it’s the ‘optimum way’ not the only way!
And that is to ‘realise the opportunity’ — in the EVE expansion plans? Why can’t things be taken a bit slower and at a pace EVE as it is now can afford?
Aim,
My assumptions are based on this from CC:
However, in order to fully achieve this long term potential, particularly in the face of weakening consumer confidence, there is a need for additional investment. Recent inbound investor interest has led the Board to conclude that the optimum way to build shareholder value and realise the opportunity in sleep wellness is to launch a strategic review to secure either a new owner or a major strategic investment partner.”
There is a "need for additional investment." What do you think that meant?
Did you conclude from that, that with less marketing and therefore less sales that there would not then be any need for extra funds?
Look, I don't know whats going to happen. All i have posted that it (The rns) was not good news and that the market by halving the SP saw it the same way and to be wary of putting more money into it because of the lack of any info to build a bull case for it.
Maybe there is value in buying it out as is. I don't see it as a given and explained my reasoning as to why.
Having read the opposite views, they seem to be based on wishful thinking and not on what little we do know. Maybe you will be right. I hope so i really do. I wish you all luck.
Ignore the naysayers.
This is a very decent bet at this price.
But if people who are invested like to read wyn's thoughts, to agree with them or debate against, or if wyn might buy back if the chart looks fab, why shouldn't wyn say what he thinks? I don't get that at all.
It seems EVE with a bit of tweaking could be running profitable but they still refuse not to so the can chase expansion but they maybe realise they can’t afford the amount of expansion they have in mind without an inject of capital. Why can’t they run profitable for a year or so to build up cash reserves ( I mentioned the same point when they published 8.3 million in bank up from 6.9 million was it? as for July and August 21 they were showing monthly profits and adding cash to the back balance) .
With CC persuasive way of taking EVE up ( I think she could sell sand to the Arabs) can she not consider approaching a bank for the minimal loan necessary ( if it’s even needed) to get us running profitable.
I worked in a steady little business years ago which had a nice steady turnover and profit from week to week and obviously increased prices for inflation when needed and still happily trades and is profitable today! EVE can in my opinion turn easily to a business generating monies to increase the bank balance!
But why is Wyn continuing to post here as he has no shares at prefect? Still find this odd and never get a satisfactory answer when asked?
Thanks everyone for being a bit more optimistic here today.
In reality we know nothing and won’t until there is some official news from EVE.
Wyn - I won't go through your previous comments to pick out the numerous examples of assumptions not based on an RNS. There have been many but I don't have the time. re your question - genuinely no I don't believe they would have triggered plan B at this stage (scaling the operation right back) as the ambition is to try and create something meaningful with scale. If they don't get investment then this is what I believe they'll do. re some of your other questions around 1. organic google rankings (this depends on the site SEO not £ spent), 2. how quickly will sales slide (any sales from paid for advertising will fall to zero but the organic sales would remain) and 3. team size (there will be opportunities to scale back. As a starting point you won't need a team running paid for ads).
So you can make assumptions on what the Board will and wont have done but no one else can?
Thats how it is!
Why would yo already expect EVE to have run certain scenarios and spreadsheets on cutting costs and seeking profitability over the short term? Do you have any evidence?
Every communication they have issued and it continues up until now is that it is their intention to continue to grow and expand the business. There is nothing that says they seek to go profitable and simply maintain or reduce their turnover with a smaller team. While tout for further investment they wont be looking at cost cutting. However, if the dont get any additional financial input you would think they may start considering how profitability could be hit short term by reducing further costs potentially.
I have a few EVE shares and keep tabs on this chat from time to time.
Further Aim,
I have enough confidence in the EVE board that every scenario had been thought through that actions taken now would most likely lead to profitability.
Had that been the case there would have been a different RNS, along the lines of, that due to the slowdown certain cost saving measures were being put in place that would result in lower sales but with an improvement in gross margins allowing for profitability to be reached this year.
Wouldn't they?
Aim, my assumptions are based on the latest RNS.
Do you have any idea how expensive it is to get on page 1 of Google?
Do you know how quickly sales slide when no marketing is done?
Do you know how lean the staff numbers are presently? (or what fat can be trimmed that has not already been done?)
Do you know what the current cash burn is?
I don't mind (why would I), differing opinions but the assumptions have to have some semblance of basis to start with to make the leap that the assumption makes.
Do you really think that EVE could become profitable by simply drastically reducing the marketing spend? (I ask because I would expect EVE to have already played around with various spread sheet business models prior to the profits warning.)
Wyn you're continuously making assumptions in your posts but are then quick to pickup on others for doing the same just because is a contrary view. let it go. I for one also believe that the business could be made profitable by switching off the marketing taps and reducing the team size. It wouldn't be a business with scale/probably wouldn't be growing but would be generating cash. Just look at the % of website traffic that's organic. From this you can feel for what sales might be if you switched the marketing off. You'd already be close to breakeven at this point and that's before reducing other costs like team size/office etc. I'm not saying this is the answer / ambition - it's not!! But it's very possible to do.
Who says it can be quickly made profitable? Where did you read that? Do you know what the cash burn is?
For a business that could be quickly made profitable? Grossly undervalued.