Eve Sleep plc

("eve" or the "Company")

Cessation of merger talks, trading update and lifting of share suspension

eve Sleep, a direct to consumer sleep wellness brand operating in the UK, Ireland (together the 'UK&I') and France announces that the early stage merger talks with Simba Sleep Ltd ("Simba"), first announced on 12 August following media speculation, have ended. The board of eve has decided that now is not the right time to pursue the potential merger and that it is more appropriate to focus on the eve rebuild plan, as previously communicated to investors in the Company's 2018 results announcement on 12 March 2019. 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.

 

Given the cessation of discussions with Simba, the Company has requested that the suspension of trading in its shares be lifted and consequently trading in the Company's shares will resume with effect from 8.00 a.m. on 20 September 2019. 

 

Trading update

eve has focused its efforts in recent months on its new marketing strategy, with the aim of boosting brand awareness and thus driving revenue growth. The board is pleased to a report a 50 per cent. improvement in brand awareness from 10 per cent. at the start of the year. On-going new product extensions, such as the premium hybrid mattress launch, is going well in the UK and initiatives such as the implementation of an ERP system has led to an improved operational effectiveness for the Company. However overall trading has been more challenging than previously anticipated owing to the uncertain economic outlook and continuing low levels of consumer confidence. This economic backdrop combined with heavy discounting and promotional activity from our competitors has led the board to conclude that 2019 revenues are now likely to be in the range of £25m-£27m.

 

Management's focus on optimising overheads and operational costs has supported a stronger EBITDA performance, with first half losses 50% lower year-on-year. It is anticipated that the reduction in revenue expectations will have some flow throw to the EBITDA loss, though a substantial reduction year-on-year in H2 and for the full year is still expected. 

 

eve will be publishing its full unaudited interim results on 26 September 2019.

 

 

James Sturrock, CEO of eve Sleep commented:

 

"We have continued to make progress with our rebuild strategy and have taken action to reduce our cost base, including a significant reduction in administrative expenses compared to 2018 along with a refocused and reduced marketing investment strategy removing inefficient activity. As detailed above, we anticipate a significant reduction in losses in 2019."

 "The opportunity to create a leading sleep wellness brand remains undiminished and I am confident that eve's rebuild strategy, centred around a differentiated brand positioning, expanded product range, lower friction customer experience, combined with increasing brand awareness sets out a clear path to building a profitable business, which delivers for shareholders. We will continue to examine ways of accelerating eve's rebuild strategy and the move to profitability, through organic and inorganic growth."

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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