Eve Sleep - impact on AIM VCTs

[Vulgaris]

Eve Sleep had its heavily publicised debut on AIM last summer. They make mattresses, which are the sort of things most of us only replace once every decade or more, I guess, so I wasn't overwhelmed with the idea that it'd deliver such fast growth as its promoters suggested. In this, I appear to have, for once, been right.

Floated at just over £1, they rose to £1.30 then, over the past week, have collapsed to 26p, following bad figures. A cynic might suggest that the original backers ramped them with a spurt of PR and advertising, selling out to mugs, who've now lost three quarters of their money.

Be that as it may, what interests me here is that our friends at Wealth Club had a big enthusiastic spread on them at the time of the flotation:

https://www.wealthclub.co.uk/articles/i ... d-company/

This tells us that Octopus Apollo and Titan were among the original pre-IPO backers and poses the question of whether they'd stay in for the ride and whether AIM VCTs would buy in (hopefully they didn't). Perhaps WC could tell us; or does anyone here know?

[Julian]

Eve Sleep ... make mattresses, which are the sort of things most of us only replace once every decade or more, I guess, so I wasn't overwhelmed with the idea that it'd deliver such fast growth as its promoters suggested. In this, I appear to have, for once, been right. ...

And when you do your once-in-a-decade research for what replacement mattress to buy, as I did a few weeks ago, you find that at the moment this mattress-in-a-box market is a very crowded one with new entrants still entering the UK market (e.g. Emma from Germany fairly recently).

I also wonder whether these companies might have some peculiar revenue recognition challenges because I didn't encounter a single one that didn't offer a 100 try-at-home trial so the most conservative accounting practice would presumably be to not recognise the revenue on a new sale until the 100 day trial period has lapsed although maybe it's possible to do partial/staged recognition based on historic return percentages. (I'm not an accountant but as a businessman I have in the past grappled with responsible revenue recognition practices in the IT industry.)

- Julian

[PinkDalek]

As I understand it, AIM Rule 26 requires companies to update the list of significant shareholders every six months. However, https://investor.evemattress.co.uk/aim-rule shows Significant shareholders over 3 per cent (as at 30 June 2017).

One could wade through https://investor.evemattress.co.uk/notification to see the Standard form for notification of major holdings changes since that date but that's not something I've done.

[wealthclub]

http… wealthclub.co.uk/articles/investment-news/first-london-ipo-2017-could-be-vct-backed-company/
This tells us that Octopus Apollo and Titan were among the original pre-IPO backers and poses the question of whether they'd stay in for the ride and whether AIM VCTs would buy in (hopefully they didn't). Perhaps WC could tell us; or does anyone here know?

Hi Vulgaris, it's Mark from Wealth Club who wrote the article you mentioned. I looked into this at the time and as far as we know no AIM VCTs invested in Eve Sleep at the IPO. Hargreave Hale appeared on the Schedule 1 taking a 3% post-IPO stake, however it has not gone into the HH AIM VCT portfolio (or portfolios, as was) and is also not found in Unicorn, Amati or Octopus AIM portfolios. According to the same document, before the float Octopus held a 21.1% stake, this was then diluted to 13.8%. Titan continues to hold Eve as part of its quoted holdings.

[Vulgaris]

Thanks, Mark, that also tallies with what I've since found via https://markets.ft.com/data/equities/te ... ?s=EVE:LSE

Looks to be Neil Woodford's lot who've taken (another) bloodletting.

[UncleEbenezer]

Thanks Vulgaris for raising this. Looks as if all the players in this new business are reporting losses: it'll be sad if none of them succeed, as being able to try before you buy is so important with a mattress!

Any of you folks who take the occasional crowdfunding punt: didn't one of these new mattress companies pop up there a year or two back? My recollection - unless memory is playing tricks - is of seeing it and thinking that there might be far too many players for a new and relatively-niche business. But that sort of insight is where a professional fund manager like Octopus or Woodford should be better-placed to spot potential winners than a mere crowdfunding punter.

[PinkDalek]

Thanks, Mark, that also tallies with what I've since found via https://markets.ft.com/data/equities/te ... ?s=EVE:LSE

Looks to be Neil Woodford's lot who've taken (another) bloodletting.

That page is out of date.

It shows Woodford Investment Management Ltd. as of 29 Nov 2017 28.06%. Whereas this https://www.londonstockexchange.com/exc ... 77366.html dated 22 Mar 2018 shows the holding has been increased to 29.05%.

Not much of a change I know.

[Ramage]

UncleEbenezer » July 7th, 2018, 8:17 am
Thanks Vulgaris for raising this. Looks as if all the players in this new business are reporting losses: it'll be sad if none of them succeed, as being able to try before you buy is so important with a mattress!

Any of you folks who take the occasional crowdfunding punt: didn't one of these new mattress companies pop up there a year or two back? My recollection - unless memory is playing tricks - is of seeing it and thinking that there might be far too many players for a new and relatively-niche business. But that sort of insight is where a professional fund manager like Octopus or Woodford should be better-placed to spot potential winners than a mere crowdfunding punter.

Hi
UncleEbenezer is correct Hugge raised £160K in July 2017. They are still loss making but have a mixture of online and shop presence. I was impressed by the industry credentials of the founder. I am an active crowdfunding punter and this company forms a small part of my Seedrs portfolio.
Ramage.

[UncleEbenezer]

Do we know whether this was in fact VCT-qualifying for investment in the flotation?

I've just looked at the trading update that caused it to crash and the 2017 annual report: trying to figure out if there's value in the falling knife! It seems that Octopus's Luke Hakes served as NED (unpaid) until April 2017, when he resigned and two other NEDs (paid) were appointed. So it appears that Octopus's hands-on involvement was ending at the time of the flotation. I wonder how much Octopus still hold?

[UncleEbenezer]

I wonder how much Octopus still hold?

Still too much, it seems. Apollo https://www.investegate.co.uk/article.a ... 71358H0017 shows a loss over the half year to end-July, of which Eve is the biggest contributor at £1.3m. Hopefully that'll be more dilute (if present) in their Titan and AIM funds.

[sinterklaas]

Titan still holds, AIM doesn’t.
Apollo is smaller of course.
Octopus Ventures generally steps down from board if companies float, they are then subject to the same information as rest of market.
I imagine they plan to exit gradually over the years like they did Zoopla etc.
Plenty of time for Eve to sort itself out under new CEO. Wouldn't be the first AIM float to do a bit of a rollercoaster to begin with… I bought shares myself when they were 80-90p, no change of plans since the trading update.

[Kidman]

Results announced, cessation of merger talks with Simba Sleep and shares trading at about 3p.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14233295.html
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14234514.html
https://www.cityam.com/eve-sleep-cancels-simba-merger-talks-as-it-warns-of-revenue-hit/

[PinkDalek]

Results announced, cessation of merger talks with Simba Sleep and shares trading at about 3p.

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14233295.html
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14234514.html
https://www.cityam.com/eve-sleep-cancels-simba-merger-talks-as-it-warns-of-revenue-hit/

Using [url]and[/url]

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14233295.html
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EVE/14234514.html
https://www.cityam.com/eve-sleep-cancels-simba-merger-talks-as-it-warns-of-revenue-hit/