Member Info for wyndrum

Hi D, it sure is a game.

I think it highlights the risks in investing in loss making companies for the long term.

Its always going to be a gamble that any of them turn the corner into profit. If they do of course, the gains tend to be above average, but its a much bigger risk.

I find the whole concept of long term much riskier than short term but that could just be my lack investment skill over the years.

What does tend to come through is that all the old cliches tend to be proven right: Don't over commit: have a wide diverse portfolio etc etc.

I have thought for a long time its hard to get rich quick, but not so hard slowly.

DGU,

I think the RNS was indicating that EVE are no longer in control of their own destiny.

I might be wrong but I read it as a profit warning and therefore asking for a buyer to come forward as an option suggests that without that, they are going to run out of money.

All the other bits are window dressing to show the potential of the brand to entice some interest.

I am presuming you don't see it that way?

Am i right in thinking that you think if they stop spending in France and Belgium and stop discounting, cut staff pay or make some redundant they would run at a profit and there would have been no need for the RNS?

I am not a Tax expert but I assume the £17.5m offset is against profits?

So the "new" EVE would not pay any CT until a total of £17.5m profit had been generated.
Again I am not sure of Corporation tax rates on large profits, or what constitutes large profits, but its about to be 25% on "small" companies so if the actual benefit of the £17.5m tax break is 25%, then that would be £4.375m?

Any corporate accountants with us?

Digital businesses come with their own overheads.

The old retail shop had bricks and mortar overheads and limited footfall to the town they were in.

Digital can go national or even global in terms of market reach but now have to advertise "everywhere" and most search engines and platforms are very expensive and change the format of how you get to page one constantly.

You then have to employ specialised high tech/expensive employee's to constantly monitor and update websites etc etc. (rather than lower paid shop workers).

And now you are competing against every other Mattress maker in the world.

Thats why it comes down to price unless you have a USP.

This is a "pile them high, sell them cheap" product (Mattresses) . EVE have attempted to build a USP suggesting their mattresses and associated products, rather than any other, will make you a healthier person (Sleep Wellness) if you use their products.

So far it has not worked as the level of competitive pricing pressure continues.

I'm still to be convinced why a competitor would want to buy them while they are still trading. (or at all)

Difficult to see why an outsider would come in with money and bail them out given they are loss making in the market they inhabit and have been for so long. (The acid test is, could they get abetter return on their money somewhere else for less risk).

Which leaves the DFS-type option. A company takes on EVE to add to its portfolio and can reduce the present overheads.

Again I am not convinced why they would do this while EVE is still listed. I am of the opinion that whatever happens, to reduce costs, EVE will be de-listed and taken private. which by my logic, why pay 2p-4p? for a business that you then have more costs to remove them form the market when all you have to do is wait a few months?

The alternative is that someone can see a profit potential in their market that an injection of substantial funds will realise, but as I have said, EVE have tried that when the were originally listed and went into europe and spent a lot of money on brand awareness, yet we have still ended up here.

Still, we will see.

It looks as though the market has been spooked by the interview.

His reluctance to put a return on share holders investment has clearly gone down like a cup of cold sick and I have to say I have reduced my holding over the last few trading sessions to at first bank the profit and then, rather than fight the market, go with it.

Given it has taken so long to get here it was a strange attitude to put across on such a positive outcome.

Anyway, I have kept a few in case it was just a poor choice of words on the day.

That might be solution Aim but I think the problem with that scenario from a shareholder pov, is that part of the cost cutting would likely be to take the company private to save costs of a PLC listing?

Aim, each to his own I just find a lot of DGU's reasoning flawed or based on unverified assumptions, so we exchange views.

Plus I only invest what I can comfortably afford to lose, but DGU said he could not afford to sell at 1p but has today bought more. That to me , just my opinion, does not seem rational, on any level.

DGU... (sorry me again),...."They want more money initially to satisfy the directors wish to expand quickly into the ‘opportunity’ of digital sleep wellness!
They can continue on presently if needed but I still think they need to tweak their plans to run profitable even if the expansion plans need to wait!"

Do you really think they would put the business up for sale just because they want to expand the business? If they sell the business almost certainly the current BOD will be replaced.

Do you really think, just for 1 second, that if they curtailed their expansion plans all would be well?

The RNS was a profit warning!!!!!!!!

Following on from a year where they spent £3m odd of their reserves!

This company is currently going bust.

There may well be a buyer out there that thinks they can make money out of the Brand and will pay a premium.

However this is high risk and nothing can be taken for granted or assumed.

For instance how can anyone know the current bank balance? £3m or £4m? what if its just £500k? Would that change your perception of the risk?

The facts are they are losing money at such a rate that a solution could be a buyer for the business. That at least to me highlights the high level of risk now. (DYOR etc etc)

I assume SP, you are deliberately winding me up? :0))

Until we actually discover commercial Helium then everything else (Helium related) has nothing to do or any influence on HE1

Everyone knows that helium is a rare and valuable commodity... So what?

We still have not confirmed a drill program for this year.... think about that.... half way through the year and we have not even got a drill organised to even see if its a goer.....

Anyway.... the chart looks promising so thats fine for me.

DD, I will wait see the close today for confirmation as there have been many false break outs.

However, I have increased my holding this week in anticipation of further moves up based on the previous/current momentum.

Starting to get into breakout territory now.

Fingers crossed this early momentum holds.

This is the key bit though isn't it?:

However, eve is, like all direct to consumer businesses, exposed to ongoing weaknesses in the economy, declining consumer confidence and rising inflation, both in the wider consumer landscape and in input prices. These headwinds are slowing eve’s progress toward its strategic and financial goals. Based on the first five months of trading, and its expectation that the cost of living crisis is set to continue for some time, the Board does not now expect to meet its previous revenue expectations for the current year, with additional promotional activity also having an impact on gross margins. This will have a consequential impact on the Company's anticipated cash balances as the year progresses.

That's the ball game. Last year they went through roughly half the bank deposits, this year costs are up and sales are down.

You don't put the business up for sale publicly like they did, unless its serious.

Greg , that's some comparison....
What do you think is EVE's USP? What is that they do that nobody else can? What barrier of entry does their business have?

Although to be fair ShearClass, he did make the point repeatedly on the high margins and that if AGL choose to, could be cash generative if not all is put into R&D.

I took away from this that the potential is big enough for him to want to leave AGL as a standalone successful company, rather than sell up in a couple of years and let that major development be done by someone else.

Whatever he thinks on time frames there will be big enough investors making sure that having waited over 6 years, that they do start to get a return now a major hurdle has been overcome so I think a balance will be struck as he intimated in cash generation and R&D. (I hope so anyway!)

Hi D: the analogy is not brilliant I agree however the reason (in my car brand example) is that to make it work VW simply use the same chassis for all the same sized cars, so as to cut costs. So if you want an Audi A3 get the Seat version because its basically the same car at a much lower price.

I imagine if f another mattress maker bought EVE, they would use their own tech/resources/materials to cut costs and save money, so an EVE mattress would just be an expensive version of a Simba or Emma or whatever.

Still what do I know ,there could be a bid in at 5p tomorrow!!!! (I hope so anyway) :0))

Greg, its not a successful Brand!

Its never made a penny in 5 years of being listed on the market. It has spent millions and millions and millions on marketing and brand awareness and the SP is now 1p and the company is still losing money.

Look: say you are VW and you buy Seat and Skoda and Audi. If someone is in the market for a Golf but buys the Seat version instead, how does that help the parent company? Or to put it another way: Say BMW was in financial peril. Do VW buy it and then the Golf (or Audi A3) now has to compete with the BMW 1 Series, or would VW prefer BMW to go bust and vacate the market?

For goodness sake DGU, EVE have NEVER run at a profit EVER!

Here is some basic info for you.

People buy stuff if they think its good value.

EVE discount because at full price, relative to the competition, they are not seen as good value.

There is nothing EVE can do about this. CC has tried to differentiate EVE as a "Brand" involved with Sleep Wellness" to be able to charge more but as I have thought and posted, that always seemed to me a bit BS. (It's just a bloody Mattress for goodness sake!)

Look at supermarkets and the offers they get sucked into when one of them breaks ranks to increase Sales. "Look at us, we match Lidle/Aldi/Tesco" etc etc

It's basic, basic stuff.

At 26m per annum turnover they are at (lets be generous) breakeven. If they charged full price as you seem so desperate they do, they may end up selling no beds at all and that £1m per month overhead would bankrupt the company in a matter of weeks.

They may well get a bidder, but they might not.

I see no USP in EVE and that, to me has always been the problem

DGU, I know we don't see eye to eye on EVE's prospects but the RNS was stating that the company has no long term future unless either more funding is arranged. The fact that they have put themselves up for sale also indicates that future funding is likely to be problematic.

All the fluffy stuff about expansion and better times ahead can and is being ignored as just an attempt to portray the company with prospects to an potential buyer.

(Think how estate agents but describe a poor property.)

The market had already factored in most of the current problems but the SP fell further due to the unexpected acceleration of outgoings.

It is not (imo) "expansion" that is the problem. The way I see it (and indeed posted at the time), was that the renewed expansion into France last year was forced on EVE because of insufficient growth in the UK market. They dressed it up saying "we didn't have to take this step" but as I keep telling anyone who will listen, you can't trust what they say as they are deliberately and always painting a picture through rose tinted glasses.

I always assume any negative statement means its a lot worse in reality and any fluffy throw away remarks are almost certainly bogus.

Anyway. events will unfold as they will, irrespective of our views here.

Thats fair Aim, but I think trading conditions will continue to deteriorate through the year and beyond.

The historical reference highlights the amount spent on developing the Brand and that when this has been scaled back so sales have fallen. Nothing so far suggests this relationship will not continue.

And genuinely I hope a bid does come in around 4p plus, but personally i don't see the rationale, but as ever, we will see

(Sorry about the formatting. I did lay it out in a readable fashion but it obviously did not survive the "send" button)