Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
@blaster89 I'm not suggesting that is an acquisition on the horizon, I'm suggesting that is the long term strategy based on what the company has actually said, rather than just guessing that there's a takeover on the horizon. Several of EVE's competitors have withdrawn from the market completely, and most bricks and mortar retailers will be losing money hand over fist for the foreseeable future - I think most will be focused on survival rather than M&A.
I agree that the available relief may have been kind to EVE, but the announcement does say that sales have risen by 25% in Q2 so that must have had an effect. With regards to cash in the bank if EVE continues to turn around at the speed it has, the cash position will improve rapidly.
I could be wrong, just my 2 cents......
From reading the RNS repeatedly..........does anyone have any more detailed thoughts on the cash position?
We were losing 100k a month average up until April and then all of a sudden the cash pile grows by 1.1 million in May and June. 500k of this was government hand outs due to COVID, but the remaining 600k is from growing sales (effectively 600k in 2 months). I'm guessing it improved between May and June rather than being flat, meaning we are circa 300-400k cash positive per month now?
Obviously we expect further gains in sales in the second half due to growth, but also the fact those months tend to be busier anyway..........
People talking of a buy out here, but if memory serves me the Simba deal was actually Eve looking to takeout Simba. Statement below:
''If it goes ahead, the potential deal - which would see Eve buy Simba - could constitute a reverse takeover under AIM rules, Eve said.''
When they pulled the deal they also stated that.....
"The board will continue to seek further acquisitive growth opportunities, in addition to its focus on driving organic growth, in order to support its focus on a path to profitability,"
Although early days Eve is now on a sound footing, and it doesn't sound as though 'grooming' themselves for a takeover is their strategy. Quite the reverse in fact, anyone else got any thoughts on this?
Hi Lemming, agreed very interesting. I think Eve seems to be turning a corner so quickly it’s hard to make sense of the numbers to a degree. I’m sure you’ll do a great job or crunching them as you’ve been proven right so far!
Anyone know where Samkk has gone?
I received a fair amount of flak on here a few months back when I stated I was a long term holder, and my target could be as high as £1 in the years to come.
Q2 sales grew by 25% and the business is effectively profitable. Long way to go but things just got interesting. Any sales growth should just go on the bottom line from here.
Anyone got any interesting thoughts on the long term future for the business?
I have what is admittedly a hunch that things are about to improve here.
The last update stated that the average cash burn was 100k. They specifically stated AVERAGE and said that there had been initial disruption due to COVID. If there has been disruption and the average cash burn is 100k with 'good' trading in May then that's a pretty strong hint that the recent months have been better than the 100k cash burn. How much by is debatable and obviously I could be wrong.
I just feel that CC's strategy is to under promise and over deliver, the previous management team clearly did the reverse hence why it's taking so long for confidence in the business to come back.
I never said it wasn't but you've lost me slightly - The point is that is people stop going to physical shops they will cease to exist, and then where do they buy their mattresses? If a large part of the industry moves online specifically to businesses like EVE I fail to see how they don't have a viable business model, as they will effectively gain sales from nowhere with existing marketing spend the same?
Different industry but interesting none the less.
https://www.bbc.co.uk/news/business-53402767
I'm on the fence with this reading previous posts, I can't help but feel this is a make or break RNS for Eve as they need to showcase further progress. I can't help but feel though that there must be SOMETHING in the RNS that wasn't in the previous one (whether good or bed) to make it worth another announcement?
Agreed - and following this RNS any acquisition will be way above current levels as they have 7.5 million in cash and the potential to turn a profit this year/next.
Would need to be a chunky offer to make management go for it......
@D-Geeman - I agree and think that's all the update will be.
I think looking at the cash burn pre corona of 100k, it's clear the retail partnerships had driven a substantial increase in sales at that point. This will obviously have dropped off with store closures etc during lockdown, but online sales will have risen, and marketing will have reached a mass audience through TV advertising etc.
I think we are at a stage where we are hoping that online traffic has risen during lockdown, and are simply waiting for stores to re-open. Hopefully over the coming 12 months these two factors will come together to drive sales up a long way.
@TradinAccountant
Hi, I understand the market dynamics, and take your point re price. What I'm saying is I think these circumstances are different. Eve has turned the corner in terms of its actual intrinsic performance, and we have seen how quickly online businesses can grow (Asos, Boohoo etc).
From this position I don't see why you raise money at both a £1 and 10p, wait until the business has turned around, and then hand all the profits over to someone else?
When it comes to hassle they've done most of the hard work. It might happen, I just don't think it makes sense under the circumstances.
Hey, if there's a takeover at 25p we'll all be pretty pleased! :)
I keep seeing posts relating to takeovers on the cheap....
Most major shareholders bought into the company at prices well in excess of 20p (listed at £1 in 2017). In fact Paul Pindar bought 900k worth of stock at 10p (part of their fundraiser). I don't see why these investors would be tempted to sell their stake in a business that is clearly turning around at a very substantial loss?
Am I missing something? by all means enlighten me if I have!
@ woodfromthetrees - You can post as many falsehoods as you like most of the investors here know the numbers by now. Loses have fallen to 100k per month now, and the cash position is at 7.8M not 7M. The markets are generally subdued across the board, and most stocks are down on their position 3 months ago, with the odd exception (pharma, supermarkets etc). This stock is undervalued as are most at the moment, once lockdown is eased confidence will return, and this will head north along with others.
Without sounding like a smug t*** I did post a few weeks back regarding the impact I felt Covid-19 could have on EVE's competition. They are still pursuing the 'sales at all costs' approach and in this economic climate that must be destroying their accounts.
The interesting thing here is the choice to 'purse profitability', to me this is confirmation that EVE have the smartest strategy and others in the market think so too.
Oh hi Samkk!
I wondered where you had got to!
Mattress store busy?
I'm a holder rather than a trader, and so I'd be happy to hold this stock for the next 5 years+. As such I'm not that focused on what the stock does short term and I'm looking at it's long term potential. I think this could be a £1 over that kind of time horizon provided the rebuild continues in the vein it has. They have costs under control, meaning any substantial sales growth will translate to the bottom line, which is more important than sales.
Like I say no body know what will happen with COVID-19
I just look at the competition's marketing spend, and wonder what's going to happen to them when people stop buying their mattresses - we'll see.
RE - cityal
To be fair the current cash balance is actually 7.8 million (end of Feb). It was 8 million at the 31st of December meaning cash burn is now 100k per month (as per statement below).
'I am delighted that in the six months to 29 February 2020 eve has improved marketing efficiency 7 and reduced central overheads and is on course to deliver a significant EBITDA improvement in 2020. While there remains considerable wider market uncertainty over the rest of the financial year, we have a healthy net cash position of £7.8m as at 29 February 2020, no debt and a rebuild strategy that is delivering."
Since Sturrock came in (roughly 18 months ago) Eve has moved from losing 20 million a year to virtually break even. One figure that nobody seems to mention is the customer repeat rate, which has risen to 16% UK, and 17% France, so they are clearly gaining some traction within their customer base which the other mattress focused peers probably wont gain due to the nature of the purchase.
Whilst I agree that we don't know what the fall out will be from COVID-19, the other mattress sellers seem to still be operating the 'sales at all costs' approach, and what happens when people stop buying on mass? EVE is building a brand and sales based on people coming back to buy a variety of products not just mattresses. People may stop buying mattresses but they'll still need pillows and bed sheets.
I'm rambling slightly, but I suspect in the months to come we might discover that COVID-19 has a much bigger affect on the competition than it does on EVE.
Not really difficult to see is it mate.
If you actually read the announcement it says they have already broken even in the final quarter of the year. Not only this they have established further operational costs in the final quarter. which will carry over into next years figures. Annual sales decreased by 5.5m but this isn't actually that bad when you consider they were effectively 'buying customers' before that, and have withdrawn from other markets.
If you do some background research you can see they have been incredibly busy in January. Their products have won awards (which) etc, and they have widened their product range further. They now have a management team with experience and a track record of building businesses online, with a clear strategy for future growth. In the past 12 months the directors have thrown 1.1m of their own money into the business.
Sometimes it's common sense mate.