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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The historical reference highlights the amount spent on developing the Brand and that when this has been scaled back so sales have fallen.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)

Income Statement: 31/12/2021 31/12/2020 31/12/2019 31 /12/2018 31/12/2017
£ (Millions) £ (Millions) £ (Millions £ (Millions) £ (Millions)
Revenue: 26.59 25.22 23.85 34.82 27.74
Operating Profit / (Loss): (3.40) (2.44) (12.51) (20.34) (19.00)

If sales are down 15% then we could project turn over of about £22.5m, less than pre-pandemic. losses might be somewhere between £5-£7m?

On the basis of all the money that has been thrown at this over many years I am not sure the "brand" is quite as valuable as some here think.

I mentioned this years ago from my friend who rand an internet mattress delivery company that you got extra sales from advertising but had to run at a loss, and as soon as you stopped advertising sales fell alarmingly. A real Catch 22 situ.

He had to slash costs to balance the books but it ends up as a high turnover/very small profit business and is therefore particularly susceptible to changes in the market.

EVE does have brand awareness and that was always CC's objective, to increase this awareness, but I am not convinced it has worked sufficiently for EVE to stand on its own two feet unless still supported by heavy amounts of advertising that spend all the profits and more.

the other alternative (if no buyer is found), is to borrow but with interest rates rising thats probably a non-starter which leaves a RI.

That would hurt too but may end up the only option?

Ok, that makes sense, but its the numbers:

Say DFS offer £1m for EVE, they have to make all the staff redundant and spend to cancel whatever legal contracts EVE currently have including the office etc . Or... wait for them to go into Administration.

It boils down to the EVE brand (as previously pointed out) being worth something. And again DFS/Argos/NEXT, already have other suppliers of beds & mattresses, I don't see from their pov "losing " EVE is such a big deal worth spending millions to rectify.

But like I have previously said, where is the USP of EVE?

Hi D, I don't know how this will pan out but competitors could just let the company go bust and see them go out of the market increasing the overall market place for themselves at no cost at all.

The value if bought out, is the "extra" sales it generates, but if another competitor bought them and sell an EVE bed instead of "their" bed then where is the overall gain for them?

DFS makes some sort of sense assuming they don't already own a bed /mattress making company, but I can't see right now, why they would rush to buy "Eve" just for the name. (If they do cease to exist, then thats it... people soon forget and as we know there is plenty of choice out there).

A buy out (whenever it may take place), only makes sense if the people who buy it think they can make money out of it.

EVE can't, and the assumption here by some that it is poor management, but what if EVE have done as well as they have, BECAUSE of management? CC and the BoD's know their market inside out and have been very innovative but still potentially, failed. Its not a given that a new owner will be better.

So, given the current climate that is likely to persist now, its not the best time to try and flog a failing business.

I heard a depressing fact on the radio and it was that "don't worry about the 10% inflation this year, it is expected to fall to 4% next year." But as the interviewee pointed out... that's a 4% increase on the 10% already factored in.

These new prices are basically with us now more or less forever I think. It will take a while for wages to catch up.

But its just my opinion, and I have no insight into this more than anyone else.

Not sure D:

If a buyer is found now then it has to be put to shareholders to agree to. That would then give time for any other buyer to counterbid.

So I can't see much if any advantage in bidding now, rather than wait.

Once its in admin I'm not sure any shareholder will get back much if anything, as by then the bank money will be gone and I imagine stock run down.

Right now buying a loss making company that is valued only on its daily shrinking bank balance will need someone with a vision that EVE have not been able to capitalise on.

The outcome is very uncertain now and I can imagine fairly large swings on the SP on rumour and counter rumour

DGU, how much money do you expect EVE to save if they cut all salaries by 10%?
Do you think given the current state of employment in the UK and London in particular, how many staff would stay if offered a 10% reduction in pay?
Do you really think that a PLC that has never made a profit, is not aware of its costs and overheads?
I ask you again, as you seem to think the answer is not to discount, why do you think EVE discount their products?

They were turning over £26m and losing £3.5m. Wages were £3.2m so a 10% reduction would be £300k. It won't make the difference.

Hi Yanis,

I like all of us have no idea, but my guess is, that to issue the RNS suggests that money is coming out of the bank account quite quickly and that makes sense as it was leaving the account at about £300k plus per month but with a slump in sales, the overheads suddenly accelerate the outgoings, particularly with increased costs of transportation and all the other problems business has just now of increasing overheads.

I think it is somewhere between 3-8 months

DGU: Your posts suggest to me (and have always done), that you seem to be unaware of how business runs:

Let me ask you this: Given the struggle EVE have had to breakeven/profitability, why would they discount if they did not have to?
Why would they keep more staff than they needed if they could work on less? (remember the spate of terrible reviews a few months ago?)

Bear in mind you thought the solution was for EVE to buy its own stock and simply could not seem to grasp the dire straights they were in.

I'm sorry to see this RNS for the Share holders here.

This is a flag that the business is unsustainable in its current form.

There might be a game of chicken but I would have thought, given according to the RNS, all mattress/bed makers sales are suffering quite badly suggests that demand to buy a loss making company won't be high on their list.

It would seem to make more sense for it to go into administration and then bid for it through that channel.

But D is quite right, if more than one company want it then they might try and move quickly and it could flush out others.

However if the company was in admin then the new company I think, would not inherit the warranty on old mattresses .

On balance, this looks done to me. :0((

Been away on my hols when the news broke but from a TA pov the rise on FDA -day sent the the RSI indicator to 79.8. which I use as a pretty reliable guide to see where a share price is most likely to go.

Most TA books will say anything above 70 on the rsi scale indicates a stock is over bought and a fall is therefore likely.

(Personally through experience I like to see 80 or above before acting)

Anyway, 79.8 is close enough so I was not tempted to buy. Now after 3 days of falls, the RSI is 65.06 so plenty of room for future upward movement.

I think the fall has finished because there is a resistance SP level at 134-136p . During wed the SP fell to 136 on several occasions and bounced off each time.

So, given the SP always has 2 choices (either up or down) my interpretation is that the retrace needed from being in "overbought" territory has sufficiently unwound with the support of the resistance price of 136p holding indicates the next move is more likely up than down.

I will be adding on Monday. (Just my opinion, DYOR etc etc).

Thanks Violet for your frankness.

Here's a thing: Given your reasoning (punt, FOMO feeling etc) it sounds as though this is a straight forward gamble.

What are the odds of success, 10 maybe 20-1? (100p to 200p per share?)

Now.how much have you put down: £1000? less, more?

Would you back a £1000 to win in a horse race on a 20-1 outsider on a "feeling"?

viloet, i know I have said it before but, this is all or nothing.

Unless and until HE1 "discover commercial Helium this is going nowhere. (you might be able to trade some spikes if you are lucky et c etc.

The "real" money will wait for developments.

Thats why talk of the geo political current sentiment is of absolute irrelevance.

The delay in any news simply re-enforces the risk profile of this particular stock. and right now the market is not expecting any good news soon, as expressed in the SP.

As I say the fact is the first step is to actually tell the market that there is a drill program booked (for whatever year!).

Its understandable but this BB is so many steps ahead of what is actually taking place as to be potentially dangerous to new investors investing more than they can comfortably afford to lose.

This is not to say an RNS won't drop tomorrow and the SP doubles but, until then, this is very very high risk.

The market does not like uncertainty and this has it bucket loads. (imo DYOR etc etc)

I think Doc, from a market pov, commercialisation has been put back...again. and with it covid is receding all the time in terms of overall harm.
(The excess death rate is I think i read is 1 in a100,000 and the vast majority were in the last 10 years of their life. This is not to diminish this on an individual basis but most pandemics attack all age groups making this one particularly and dramatically less potent to the global population.)

SNG may well have a new therapy aimed at a number of ailments but its a while away yet. (or so it seems)

just my opinion dyor etc

Violet, what has that got to do with anything?

the news cycle is 24 hours at best. it will have no affect on HE1's SP if a positive RNS came out. Even if it came out on a market down day then it would simply go up a bit more over the following few days as everyone scrambles to get into a "sure"thing.

In fact a very big upday would be the most likely to constrain the SP rise, but then it would still find its level over the next few days.

Hi SD, where are you hearing the rumour? Cheers

Doc, day trading is harder than trading and I'm not sure any Trader worth his salt would day trade individual stocks.

Cheers

The point of charts Doc is that the FA news is irrelevant. Past history of individually who sold what when is an unknown assumption on your part.

How many have hung on through the crash and just want to get out on the back of some good news? How many of the buyers at 23p are in for the long haul and have no interest in selling at this price? who knows?

So no definites, just odds, and the odds (to me) look good for gains from this price.

WD: that "fatigue" you refer to is your expectation of buyer/selling psychology, which is exactly what TA is. :0)

TT: Well the chart is what the chart is. As a risk reward (for example) you would buy at 40p with a25p stop (15p per share loss) with a target of 171p (131p per share profit), giving a lovely near 9-1 risk reward ratio!!

Its quite the motivator to buy at these levels. (just my opinion etc etc))