interim results - amazon s3...financial data has been rounded for presentation purposes. as a result...

Interim Results2018

1

INTERIM RESULTS SEPTEMBER 2018 H1 EVE SLEEP

Paul PindarChairman

2

INTERIM RESULTS SEPTEMBER — 2018 H1 EVE SLEEP

H1 2018 Highlights

1. 200 bps higher than guided in the trading update on 2nd July 2. Populus Omnibus June 2018 (August 2018: 11.2%)

193 Stores

24 Stores

GROUPREVENUE

+63%(1)

GROSS MARGIN

54%

GROUP NON MATTRESS

REVENUE

+168%REPEAT

PURCHASES

13%

RETURN RATES

11%

BRAND AWARENESS

7.6%(2)

(UK un-prompted)

3


Rationale for refocusing on UK&I and France

+ UK&I and France make

up approximately 50% of

the European mattress

market

+ Despite growth of 95%

across the rest of Europe

(H1 2017: £2.2m), the

negative contribution

before overhead of

£2.4m (the same as UK&I

and France combined)

was disproportionate

UK&I

£10.3m

(£0.7m)

£3.9m

(£1.7m)

£4.3m

(£2.4m)

Revenue

Contribution after marketing, before overhead

France

Rest of Europe

UK, £2.1bn

FR, £0.8bnDE, £1.4bn

Rest of Europe, £2.0bn

31%

22% 13%

34%

Mattress Market (1) Revenue & Contribution(2)

1. Source: Euromonitor, eve estimates

2. for the period H1-2018. Excludes RoW revenue

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financial reviewCFO - Abid Ismail

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1. Adjusted EBITDA is before accounting for IPO related expenditure (H12017: £2.1m, H12018: £0.0m) and share based payment charges (H12017: £0.0m, H12018: £0.1m)2. Financial data has been rounded for presentation purposes. As a result of this rounding the totals, comparatives and calculations presented in this document may vary slightly from the arithmetic totals or calculations using such data.

+ Top line growth of 63% YoY

+ Gross margin diluted via

non mattress products and

omni channel

+ 450 bps improvement in

marketing efficiency

+ Closing cash of £16.7m

H12018

H12017 Mvt

Revenue (£m) 18.8 11.5 63%

Gross profit (£m) 10.2 7.0 47%

Gross margin (%) 54.4% 60.4% (600bps)

Marketing (£m) (12.3) (8.0) (52%)

Marketing / Revenue (%) (65.2%) (69.7%) 450bps

Contribution before overheads (£m) (4.8) (2.7) (78%)

Contribution before overheads (%) (25.3%) (23.2%) (210bps)

Adjusted EBITDA(1)

(£m) (11.9) (6.9) (5.0)

Adjusted EBITDA (%) (63.4%) (60.2%) (320bps)

Reported Profit (12.0) (9.1) (2.9)

Closing Cash 16.7 37.2 (20.5)

Financial summary

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Revenue H1 2018 +63%

Group Total Revenue

Segmental Revenue + UK&I broadly in line with

expected growth.

+ Over 75% of group revenue

generated in the UK&I

and France.

+ Direct to consumer (D2C)

remains the focus and

represented 85% of revenue,

however omni-channel

(OMNI) has demonstrated

good growth.

£18.8m

£11.5m

89%D2C

85%D2C

11%OMNI

15%OMNI

+63%

H1 2017 H1 2018

£10.3m

£2.5m

£3.9m+53%

UK&I FRANCE RoW

£6.3m

+64%

£2.2m

£4.3m+95%

£0.5m £0.4m(26%)

RoE

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1. Group revenue split based on total revenue attributable to mattress vs non-mattress products, and does not represent split of quantity of orders

Non-Mattress Revenue

+ Non mattress revenue

has grown YoY in line with

product expansion

(10 to 15)

+ Revenue from non mattress

products makes up 17% of

group revenue

(H1 2017: 10%)

£18.8m

£11.5m

H1 2018H1 2017

17%Non Mat

10%Non Mat

83%Mattress

90%Mattress

Group revenue(1)

Increase in non-mattress revenue

from £1.2m to £3.2m

+168%

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Return rates Stable in UK&I, improving in France

11% 11%

13%

11%12%

Group UK&I France

H1 2017 H1 2018

13%

15%

Other

1. Return rates % is based on returns value as a % of total sales recognised before returns. The figures contain an element of provision in line with the group accounting policies which can be referenced in the 2017 annual report.

+ Return rates across the

group have continued to

fall but are expected to

stabilise at current levels.

6%

9


51.00%

52.00%

53.00%

54.00%

55.00%

56.00%

57.00%

58.00%

59.00%

60.00%

61.00%

Gross margin bridge

+ Gross margins remain

strong with the net

260bps reduction driven

predominantly by the

increase in non mattress

sales

H1-17 Reported

gross margin

Adjust for: non underlying

items(1)

H1-17 Underlying

gross margin

Return rate movement

Non mattress mix

Revenue mix - Increased B2B

H1-18 gross margin

60.4%

(3.40%)

57.0%

1.40%

(3.60%)

(0.40%)

54.4%

1. Relates to release of provision in H1 2017.

10


Marketing - Building a strong base United Kingdom

H1-18 H1-17 Movement

Revenue £10.3m £6.3m +64%

Marketing % 52.0% 64.1% (1210 BPS)

CPA(1) £154 £210 (27%)

Unprompted Brand Awareness(2) 11.2% 5.4% 2x

Contribution after marketing before overheads (£0.7m) (£0.7m) -

+ Investment in the eve brand

has shown strong progress

with unprompted brand

awareness up 2x

+ Efficiency coming through

- CPA down from £210

to £154

+ Impact on gross margin of

non mattress mix & omni

resulted in a broadly flat

contribution after marketing,

before overheads

1. Defined as total marketing spend divided by total orders in the period through all channels

2. Source: Populus Omnibus August 2017, August 2018. (June 2018: 7.6%, June 2017: 4.1%)

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Revenue £3.9m £2.5m +53%

Marketing % 78.7% 68.0% (1070 BPS)

CPA (1) £255 £243 (5%)

Unprompted Brand Awareness (2) 5% 3% 1.6x

Contribution after marketing before overheads (£1.7m) (£0.7m) (£1.0m)

Marketing - Earlier investment stage than UK France

+ Significant increase in

brand awareness with a

1.6x increase.

+ Marketing % and CPA

trends highlight the earlier

investment stage of France

compared to the UK

1. Defined as total marketing spend divided by total orders in the period through all channels

2. Source: YouGov brand tracker August 17, August 18 (February 2018: 4%)

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Cash

+ UK&I approached break

even contribution after

accounting for marketing

but before overheads.

+ France contributed less

than targeted owing to

less efficient marketing

in H1.

+ Other European

contributions were

significantly more negative

than targeted.

+ Non-current asset

expenditure reflects

investment in IT and

lease deposits.

£m

26.9

16.7

0.71.7

2.4

7.1

2.3 0.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Openingbalance Jan18

UK&IContribution

FranceContribution

Other territoriesContribution

Overheads WorkingCapital

Adjustment &Non Cash Items

Non-currentasset

expenditure

Closingbalance Jun18

13


refocused strategyCEO - James Sturrock

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Positioning Build on our No.1(1) online mattress

position in the United Kingdom

& France

eve strategycore focus

ProductIncrease focus on the successful

investment in mattress and non

mattress ranges

Experience Use online position and offline

expansion to further invest in

customer experience

+ +

1. Source: google trends index, 1st Jan 2018 - 30th June 2018

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Building on strong base in UK & FRPosition - Brand awareness

• Most well known bed in a box brand• 5th most well known mattress brand

(7th in August 2017)

• Most well known bed in a box brand• 8th most well known mattress brand

(9th in August 2017)

UK - Unprompted awareness France - Unprompted awareness

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

Bruno

Casper

Simba

DODO

Emma

Tediber

eve Matelas

Tempur

Treca

Mérinos

Simmons

Bultex

Epeda

Dunlopillo

Source: Populus Omnibus August 2017, August 2018: Source: YouGov brand tracker August 17, August 18

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% 50.00%

Bensons for Beds

Simba

Ikea mattresses

Sleepeezee

Sealy

eve

Slumberland

Tempur

Dreams

Silent Night

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Most searched bed in a box brand Most searched bed in a box brand

Building on strong base in UK & FRPosition - Google Trends

39

35

21

97

evemattress

Simba mattress

Casper mattress

Leesa mattress

Ottymattress

24

21

11

96

evematelas

Emmamatelas

Simba matelas

Tediber matelas

Caspermatelas

United Kingdom - H1 2018 France - H1 2018Source: Google Trends Index, 1st Jan - 30th June Source: Google Trends Index, 1st Jan - 30th June 2018

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Building on strong base in UK & FRPosition - Branded Traffic

H1 2018H1 2017 H1 2018H1 2017

58%67%79%

62%

42%33%21%

38%

Brand Traffic %

Other Traffic %

United Kingdom France

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Building on strong base in UK & FRProducts - Traction on product extensions

Increase in non-mattress revenue


+170%

Hybrid MattressLaunched May18

of total mattress sales1

25%Increase in

non-mattress revenue


+160%

Mattress orders

with a bed frame2

8%

1. Based on July Trading via UK website, quantity of mattresses sold2. Based on H1 2018 trading via France website


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Building on strong base in UK & FRExperience - Partnerships

9 Stores

10 Stores

56 Stores

193 Stores

24 of 330 Stores

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+ 360 Campaign Aug18Core message:

“Great sleep, delivered in a box… Dreams do come true”

+ ITV & Channel 4 prime time coverage

+ Online competition on both eve & Dreams websites

Building on strong base in UK & FReve X Dreams - Launched July 2018

X

great sleep delivered

eve mattresses now available to try and buy in over 195 Dreams stores nationwide

dreams.co.uk/about-eve

do come truein a box

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Based on orders in a period from previous customers as a % of total orders via websites

3.3%

9.6%

13.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

H1-16 H1-17 H1-18

Building on strong base in UK & FRExperience - Repeat purchases

2.3%

9.0%

11.9%

13.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

H1-15 H1-16 H1-17 H1-18


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Building on strong base in UK & FRExperience - Customer advocacy


23


Progress in July and August

+ Refocused geographically

to focus on UK&I and France

in H2-2018.

+ Cost savings plan initiated

– Planned marketing spend

in H2 to be reduced,

remaining spend re-focused,

headcount reduced by

c20%, and other overheads

rationalised

+ Restructuring costs

estimated at approximately

£0.8m for the year

+ New CEO appointed

James Sturrock

Restructure

+ July & August combined

have delivered YoY revenue

growth of c40% across UK&I

and France

+ The eve/Dreams August

campaign was very

successful and the

partnership is currently

trading ahead of initial

expectations

Trading

+ New TV creative and

combined offline and

online campaign targeted

for late October

+ Aspirational campaign

which will build on the

successful learnings from

the sleep rich TV creative

New TV creative

+ Launch of expanded

mattress and bed frame

range planned for Q4

Product launches

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H1 2018 Summary

+ Market opportunity remains undiminished

+ Shift to online is continuing

+ eve is the most well known bed in a box brand in the UK and France

+ Operating metrics in the UK are improving, confident in France

+ Restructuring has been swift and effective

+ Renewed focus on core markets

+ Confident in long term prospects

25


Appendix2018

26


Income Statement

1. Financial data has been rounded for presentation purposes. As a result of this rounding the totals, comparatives and calculations presented in this document may vary slightly from the arithmetic totals or calculations using such data2. Adjusted EBITDA is before accounting for IPO related expenditure (H12017: £2.1m, H12018: £0.0m) and share based payment charges (H12017: £0.0m, H12018: £0.1m)


Revenue (£m) 18.8 11.5 +63%

Gross margin (£m) 10.2 7.0 +47%

% of revenue 54% 60% +600bps

Distribution costs (£m) (2.3) (1.3) (75%)

% of revenue (12%) (11%) (100bps)

Marketing (12.3) (8.0) (52%)

% of revenue (65%) (70%) +500bps

Wages & salaries (2.8) (2.0) (44%)

% of revenue (15%) (17%) +200bps

Other admin expenses (4.8) (2.5) (87%)

% of revenue (25%) (22%) (300bps)

Administrative expenses (£m) (19.9) (12.6) (58%)

% of revenue (105%) (109%) +400bps

Adjusted EBITDA (11.9) (6.9) (73%)

% of revenue (63%) (60%) (300bps)

Loss for the period (12.0) (9.1) (32%)

+ Adjusted EBITDA for the

period was £11.9m loss

Loss for the period

27


Balance sheet

+ Inventories remain at low

levels despite growth

+ Capital expenditure

requirements remain

low due to the group’s

outsourced business model

+ Closing cash of £16.7m at

30 June 2018

Jun-18 Dec-17 Jun-17Non Current Assets - £m

Property, Plant and equipment 0.0 0.0 0.0

Intangibles 0.6 0.4 0.0

Other non-current assets 0.4 -

Current Assets - £m

Inventories 1.0 0.7 0.5

Trade and Other Receivables 2.8 4.2 1.5

Cash and Cash Equivalents 16.7 26.9 37.2

Total Assets - £m 21.5 32.2 39.1

Current Liabilities - £m

Trade and other payables 5.6 4.5 3.4

Provisions for liabilities and charges 1.0 0.8 0.8

Total Liabilities - £m 6.6 5.4 4.2

Net Assets - £m 14.9 26.8 35.0

Equity attributable to equity holders of the parent

Share Capital 0.1 0.1 0.1

Share premium 36.7 36.7 36.7

Share based payments reserve 0.1 0.1 -

Retained Earnings (22.1) (10.2) (1.9)

Total equity - £m 14.9 26.8 35.0

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H1-18 H1-17 FY-17

Operating Loss (£m) (12.0) (9.1) (19.0)

IPO related expenditure (£m) - 2.1 2.1

Operating loss before IPO related expenditure (£m) (12.0) (6.9) (16.9)

Depreciation & amortisation (£m) 0.1 0.0 0.0

Share based payment charge (£m) 0.1 - 1.8

Working capital movement (£m) 2.1 (1.3) (3.0)

Net cash outflow from operations (£m) (9.7) (8.2) (18.1)

Net cash outflow from investing activities (£m) (0.6) (0.0) (0.4)

Net cash inflow from financing activities (£m) 0.0 40.8 40.8

Net increase/(decrease) in cash for the period (£m) (10.3) 32.6 22.3

Opening cash for the period (£m) 26.9 4.6 4.6

Closing cash (£m) 16.7 37.2 26.9

Cash flow

+ Closing cash of £16.7m

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interim results - amazon s3...financial data has been rounded for presentation purposes. as a result...

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