Eve Sleep plc: Proposed Placing and Approval of a waiver of Rule 9 of the Takeover Code

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Eve Sleep plc (EVE)

23-Jan-2019 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

 

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, ANY PROVINCE OF CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

 

Terms used in this announcement have been defined in Appendix III or in the text below

 

 

eve Sleep plc

('eve', the 'Company' or the 'Group')

 

Proposed Placing of 120,317,323 Ordinary Shares at 10 pence per new Ordinary Share to

raise approximately £12.0 million (before expenses)

Approval of a waiver of Rule 9 of the Takeover Code

and

£0.9 million media for equity arrangement

 

 

Introduction

 

eve Sleep plc (AIM: EVE), a sleep brand focussed on UK&I and France, today announces a conditional placing of 120,317,323 new ordinary shares of 0.1 pence each ('Ordinary Shares') in the share capital of the Company (the 'Placing Shares') at a price of 10 pence per Placing Share (the 'Placing Price') to raise approximately £12.0 million before expenses (the 'Placing') from existing and new investors. In addition Channel Four, which provides advertising services to the Company and is an existing Shareholder, has agreed that £0.9 million of future advertising spend by the Company with Channel Four will, when payable, be satisfied by the issue of new Ordinary Shares at the Placing Price over a period of up to twenty four months from Admission. The Placing is conditional upon the passing of the Resolutions set out in the Notice of General Meeting included in the Circular to be distributed to Shareholders on or around the date of this Announcement. 

 

The Placing Shares represent approximately 86.1 per cent. of the existing share capital of the Company. Following the Placing, the Company's enlarged share capital will be 260,052,484 Ordinary Shares ('Enlarged Share Capital'). The Placing Shares represent approximately 46.3 per cent. of the Enlarged Share Capital. The Placing Price represents a discount of 3.6 per cent. to the closing mid-market price of 10.375 pence per existing Ordinary Share on 22 January 2019, being the latest practicable date prior to the publication of this Announcement. The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and will rank for all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares. 

 

Woodford, which is a key investor in the Placing, is deemed to be acting in concert with any investment funds discretionary managed by it (including each of the Woodford Funds). As such Woodford is deemed to be interested in the aggregate shares in the Company held by the Woodford Funds for the purposes of the Takeover Code.  Woodford (and any person acting in concert with it) is currently a beneficial holder of approximately 29.90 per cent. of the Company's current issued share capital. Woodford, in its capacity as discretionary investment manager, acting on behalf of certain of its investment fund clients, has agreed to subscribe for 80,000,000 Placing Shares, being an amount that would increase the percentage holding of the Company of Woodford (and those persons acting in concert with it) immediately following completion of the Placing to 46.83 per cent. of the Company's Enlarged Share Capital.  The Panel has agreed to a waiver of the obligations under Rule 9 of the Takeover Code (commonly referred to as a 'Whitewash'), subject to the Whitewash Resolution being approved on a poll at the General Meeting by Independent Shareholders who hold, in aggregate, a simple majority of the votes cast on the Independent Shares.  Without such waiver, Woodford (and any persons acting in concert with it) would be obliged to make a general offer to Shareholders under Rule 9 of the Takeover Code.  The Placing is conditional on the Whitewash Resolution being passed by the relevant majority of Independent Shareholders.

 

The VCT Placing Shares will be allotted and unconditionally issued before the other Placing Shares (the latter being allotted and issued conditionally on Admission) to allow the VCT Placee to benefit from any potential tax advantages that may be applicable pursuant to the rules of the VCT Scheme. The VCT Placee has obtained its own independent advice in this regard and the Company has obtained no assurance from HMRC or any other person that any VCT relief may be, is or will continue to be available to the VCT Placee or any other person and the Company disclaims any and all liability in this regard.

 

eve will shortly send a circular to Shareholders in connection with the Placing ('Circular'). The Circular will contain a Notice of a General Meeting, to be held at 10 a.m. on 11 February 2019, at the offices of Peel Hunt LLP, Moor House, 120 London Wall, EC2Y 5ET, to approve certain Resolutions necessary to implement the proposed Placing.

 

 

Background to and reasons for the Placing

 

On 15 November 2018, the Company announced the results of its business review and a trading update, as well as stating its intention to raise new equity. The Company provided an update in respect of the planned fundraising on 6 December 2018.

 

The net proceeds of the Placing (approximately £11.7 million) and the proposed Channel Four future advertising spend of £0.9 million (as described in the paragraph entitled Future issues of Ordinary Shares for media spend) will, in conjunction with existing cash resources (of approximately £6 million as at 31 December 2018[1]), be utilised by the Company to implement its updated strategy as described in more detail below as well as for general working capital purposes.

 

 

Updated strategy

 

The purpose of the Placing is to enable the Company to implement its updated strategy as announced on 15 November 2018.

 

From 10 September 2018, following the appointment of James Sturrock as Chief Executive Officer, the Board carried out a detailed review of the Company's business. The Company's updated strategy, which has been formulated in light of this review, is to refocus on the core sleep markets of the UK&I and France, which collectively are estimated to be worth approximately £6 billion per annum[2]. 

 

The rationale for this re-focus is twofold.  First, the UK&I and France are among the biggest sleep markets in Europe.[3]  Second, despite the Company achieving growth across the rest of Europe in the first half of the year, the negative profit contribution from the Company trading in this region was considered to be too great to justify continued investment.

 

Within the core markets of UK&I and France, the Board's revised strategy is to transform eve from being a single product focused business to a repeat purchase, multi-product sleep specialist, building on the Company's growing share of the mattress market. The Board believes that this updated strategy, together with the funds raised in the Placing, will help drive continued revenue growth and increase conversion.  It is also expected that eve's updated, more targeted marketing strategy will help lead to significant improvements in unit economics. Such results are expected to be facilitated by the estimated c.40 per cent. increase in online market penetration of the UK bedroom furniture market between 2018 and 2023.[4]   

 

Accordingly, the Company's updated strategy will focus on three core pillars with the intention that the Company will further grow its share of the £6 billion bedroom market in UK&I and France resulting in revenue growth for the Company.  The three core pillars are aimed at creating a clearer position for the Company in the wider sleep market with a wider bedroom product range and an increased ability for cross-selling, by investing in technology and digital teams to improve conversion and the Company's repeat purchase metrics, and by continued investment in a more effective return on marketing spend. The three core pillars of the Company's strategy are:

  • differentiated brand positioning - broadening the Company's current position to become a trusted destination for a wider range of bedroom products;

 

  • expanded product range - focussing on carefully curated, design-led ranges that will increase cross-selling and repeat purchases, whilst continuing to deliver excellent product quality in the Company's mattress range; and

 

  • lower friction customer experience - building consumer trust in the Company's products and services with a view to improving the conversion rate.

The three pillars are described in more detail below.

 

The Company, with an estimated compound quarterly revenue growth rate of c.17 per cent. between Q1 2016 and Q3 2018, aims to achieve further growth.  The Directors believe this revised strategy will drive improved customer life time value and, as such, offer the potential to deliver medium-term profitability of approximately high single digit EBITDA margins.[5]

 

The Directors believe that an increase in current market share could have a significant impact on revenues and cost ratios.  By way of illustration, overheads and marketing as a percentage of revenue have the potential to decrease to under 30 per cent. based on a mattress market share of c.5 per cent. in the targeted markets.[6]            

 

Differentiated brand positioning

 

In the UK the Company's marketing strategy has been effective in driving growth in its brand awareness and, at the same time, improving its marketing efficiency, with unprompted brand awareness growing from 1.4 per cent. in December 2016 to 11.2 per cent. in August 2018 and, across UK&I, marketing as a percentage of revenue falling from approximately 60 per cent. in Q1 2017 to approximately 36 per cent. in October 2018 and remaining at below 50 per cent. for the rest of the year.[7] 

 

eve is currently the fifth most well-known mattress brand in the UK[8] and eighth most well-known mattress brand in France[9] and is the most searched for mattress in a box brand in the UK and second most searched for mattress in a box brand in France[10].

 

The Company plans to continue to build brand awareness in its core markets through:

  • optimised marketing, focusing on improving efficiency through different media channel weightings throughout next year; and
  • enhanced targeting, customer engagement and increased awareness through:
    • efficient investment in paid media;
    • growing its owned media to improve customer content; and
    • further building credibility and awareness through its commercial retail partnership channels and through brand partnership endorsements. 

Expanded product range

 

Product range expansion has driven growth in non-mattress revenue and also repeat ordering with online sales of non-mattress products in UK&I growing from approximately £0.3 million in Q1 2017 to approximately £1.1 million in Q3 2018.[11] In addition, online repeat orders in the UK have grown from approximately 8 per cent. in Q1 2016 to approximately 12 per cent. in Q3 2018.[12] 

 

As such, the Company plans to expand more aggressively its depth and range of products.  The Company's new mattress range is performing well and the Company has recently launched its premium mattress.  The Company also plans to offer a more extensive, but carefully curated, bedframe product offering, an extended textiles range, lighting, furniture and accessories and plans to launch new products in Q1 2019, including a full baby bed and sleep range in collaboration with the design collective Nous Vous.  The Company plans to more than double the range of products from around 22 in Q3 2018 to around 60 products by the end of 2019, with further range expansions planned beyond that period.      

 

The Board believes that this will help lead to increased cross-selling opportunities and repeat purchases, thereby growing sales and reducing customer acquisition costs and, as a result, significantly improving the Company's unit economics.

 

Lower friction customer experience

 

The Company has recently made improvements to its customer experience which has shown a noticeable improvement in UK conversion rates.  The Directors believe that further increasing conversion rates will have a positive effect on marketing effectiveness and will improve the key metric of marketing as a percentage of revenue.  

The Company's plans to enhance the customer experience include:

  • improving the omni-channel presence, increasing brand awareness and credibility at the same time as allowing customers to experience the product before making purchases;

 

  • focussing on the online purchasing experience including improving the search, discovery and checkout processes on the website; and

 

  • enhancing delivery options for customers and improving post-sales customer relationship marketing. 

The Directors believe that the above enhancements to customer experience will be a key component in driving long-term, sustainable growth.   

 

The Company is currently reviewing its retail and partnership strategy and, as part of that, Dreams has engaged with the Company to re-negotiate certain commercial terms in connection with their partnership with eve. The Company's objective is that these negotiations are resolved satisfactorily, however discussions are ongoing.

 

 

Use of proceeds

 

The net proceeds of the Placing (estimated to be £11.7 million) and the proposed Channel Four future advertising spend of £0.9 million (as described in the section entitled Future issues of Ordinary Shares for media spend below) will be used to support the strategy outlined in the section entitled 'Background to and reasons for the Placing' above. Within those preceding amounts, the Directors envisage that the principal individual areas of expenditure, and the approximate breakdown between them, will be as follows:

  • to reduce cost per customer acquisition through building a differentiated and trusted brand (which, including the proposed Channel Four future advertising spend of £0.9 million, is currently expected to be approximately between £4 and 4.5 million);
  • to enhance the customer experience to drive conversion rate improvement (currently expected to be approximately between £1.5 and 2 million);
  • to broaden the product portfolio by deploying resources and working capital, to build a defensible position in the sleep market and drive increased cross-selling and repeat purchasing (currently expected to be approximately between £2.5 and 3 million);
  • to invest in internal systems to support the Company's growth, including investing in stock management, website infrastructure, logistics and warehouse technology (currently expected to be approximately between £2 and 2.5 million); and
  • to augment existing net cash resources and to provide general working capital for the business.   

In applying the above amounts, the Directors will have regard to any material changing trading patterns or conditions in the markets in which the Group operates and its requirements and the precise actual allocation between the above elements may be subject to appropriate adjustment up or down.

 

The Company previously announced that it required £15 million of new equity (assumed to be £14.5 million net of expenses) to fund the Company's updated strategy. This £14.5 million would have provided the Company with cash headroom on both its base case and downside case business plans looking out to December 2020. The aggregate net proceeds of the Placing, in conjunction with the Channel Four media for equity arrangement, amount to c.£12.6 million. This amount also provides the Company with headroom on its base case business plan, and headroom on its downside case business plan when taking into account certain mitigating actions that would, in those circumstances, be required to be taken by the Company in Q4 2020.

 

 

Current trading and prospects[13]

 

In the unaudited 12 month period to 31 December 2018, the Group's revenue was ahead of analyst expectations at c34.5 million, helped by a successfully traded Black Friday period and early signs of conversion improvements supported by an enhanced user experience in the fourth quarter.  UK&I revenue increased to c22.6 million and France revenue increased to c.£6.8 million in the period, representing an increase of c.40 per cent. and c.22 per cent. respectively when compared to their respective annual revenues in 2017.

 

In the unaudited 10 month period to 31 October 2018, contribution after marketing before overheads was a loss of c1.1 million in the UK&I and a loss of c.£3.0 million in France over the same period.  Gross margins over this period were 53 per cent. in UK&I and 52 per cent. in France[14] whilst return rates in the UK&I have been broadly stable at about 10 per cent. and in France have improved from about 10 per cent. to 6.5 per cent.[15]

 

As part of the business review set out above, and as outlined in the announcement made on 15 November 2018, the Company has re-evaluated its 2019 financial year priorities and expectations based on the updated strategy.  In the current year, the Company is focused on building capabilities in customer experience and product range and optimising marketing investment. Following a successful start to the winter sales period in the UK, unaudited trading results for the first week of 2019 were in line with the Company's revised expectations.

 

 

New Option Grants

 

Conditionally upon, and following, the implementation of the Placing, the Company intends that all options over Ordinary Shares granted under the Share Option Plan at the time of the Company's initial public offering in May 2017 will be cancelled and new options over Ordinary Shares will be granted to certain members of management and employees of the Company under the Share Option Plan with an exercise price equal to the nominal value of the Ordinary Shares and with a vesting period of three years.

 

The cancellation of options and the granting of new options, including the number of individual grants, will be determined by the remuneration committee of the Board conditional on and following the completion of the Placing.  Such grants shall be made in accordance with, and subject to, the Share Option Plan, but it is expected that options over up to 10 per cent. of the Enlarged Share Capital following the Placing will be granted (the New Option Grants).  It is currently intended that options over up to 16.9 per cent. of the New Option Grants will be granted to James Sturrock, Chief Executive Officer, and options over up to 8.5 per cent. of the New Option Grants will be granted to Abid Ismail, Chief Financial Officer. The precise timing of the cancellation and granting of options will be dependent on the determination of the Company's remuneration committee following completion of the Placing and completion of the necessary contractual documentation related to the cancellation and grants.  A further announcement will be made in due course.

 

 

Future issues of Ordinary Shares for media spend

 

Channel Four, which provides advertising services to the Company and is an existing Shareholder, has agreed with the Company that on a periodic basis within a twenty four month period following the Placing, sums payable by the Company in respect of media spend by it with Channel Four will be reinvested in the Company through the issue of new Ordinary Shares at a price equal to the Placing Price up to an aggregate amount of £0.9 million.

 

 

Details of the Placing

 

The Company has entered into the Placing Agreement with Peel Hunt on customary terms and conditions pursuant to which, subject to the conditions set out in the Placing Agreement, Peel Hunt has agreed to use its reasonable endeavours (as agent for the Company) to procure placees for 120,317,323 new Ordinary Shares at the Placing Price.  The Company has received firm commitments from Placees for all of the Placing Shares in the Placing which will raise approximately £12.0 million (before expenses).

The obligations of Peel Hunt under the Placing Agreement are conditional upon, inter alia, the Resolutions being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 12 February 2019 (or such later time and date as the Company and Peel Hunt shall agree, not being later than 8.30 a.m. on 26 February 2019).

 

The Placing Agreement contains provisions entitling Peel Hunt to terminate the Placing Agreement at any time prior to Admission in certain circumstances.  If this right is exercised or if the conditionality in the Placing Agreement is not satisfied, the Placing will not proceed.

The Company has agreed to pay Peel Hunt a placing commission together with reimbursement of certain costs and expenses incurred in connection with the Placing.

 

The VCT Placing Shares will be allotted and unconditionally issued before the other Placing Shares (the latter being allotted and issued conditionally on Admission) to allow the VCT Placee to benefit from any tax advantages that may be available pursuant to the rules of the VCT Scheme. For more detail see the paragraph entitled VCT investors below.

Application will be made for the Placing Shares to be admitted to trading on AIM.  Subject to the Resolutions being passed at the General Meeting, it is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares at 8.00 a.m. on 12 February 2019.

 

 

Related party transactions

 

Following Admission, Woodford, being a substantial shareholder in the Company as defined in the AIM Rules, will have a shareholding of 121,774,848 Ordinary Shares representing 46.83 per cent. of the Enlarged Share Capital.  The participation of Woodford (or its associates) in the Placing will be a related party transaction for the purpose of Rule 13 of the AIM Rules (the Woodford Related Party Transaction).  The Directors, having consulted with Peel Hunt as the Company's nominated adviser, consider that the terms of the Woodford Related Party Transaction are fair and reasonable insofar as the Shareholders are concerned. 

 

Following Admission, the VCT Placee, being a substantial shareholder in the Company as defined in the AIM Rules, will have a shareholding of 38,461,295 Ordinary Shares representing 14.8 per cent. of the Enlarged Share Capital.  The participation of the VCT Placee (or its associates) in the Placing will be a related party transaction for the purpose of Rule 13 of the AIM Rules (the VCT Placee Related Party Transaction).  The Directors, having consulted with Peel Hunt as the Company's nominated adviser, consider that the terms of the VCT Placee Related Party Transaction are fair and reasonable insofar as the Shareholders are concerned.

 

Paul Pindar and James Sturrock, being directors of the Company and therefore related parties to the Company as defined in the AIM Rules, have conditionally agreed to subscribe for an aggregate of 10,200,000 Placing Shares in the Placing as detailed below:

Name

Role

Number of Placing Shares

Number of Ordinary Shares held following Admission

Percentage of the Enlarged Share Capital

Paul Pindar[16]

Non-executive Chairman

10,000,000

16,527,126

6.4%

James Sturrock

CEO

200,000

252,750

0.1%

 

The participation of the Directors (or their associates) in the Placing will be a related party transaction for the purpose of Rule 13 of the AIM Rules (the Director Related Party Transaction).  The Independent Directors, having consulted with Peel Hunt as the Company's nominated adviser, consider that the terms of the Director Related Party Transaction are fair and reasonable insofar as the Shareholders are concerned. 

 

 

The Takeover Code

 

The Placing gives rise to certain considerations under the Takeover Code and Shareholders are entitled to the protections afforded under the Takeover Code.  The Takeover Code is issued and administered by the Panel.  The Takeover Code applies to, inter alia, a company which has its registered office in the United Kingdom and is admitted to trading on AIM.

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer to all the holders of any class of equity share capital and to the holders of any other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

 

Rule 9 of the Takeover Code also provides, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. but does not hold shares carrying more than 50 per cent. of the voting rights of a company which is subject to the Takeover Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then that person is normally required to make a general offer to all the holders of any class of equity share capital and to the holders of any other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

 

An offer under Rule 9 of the Takeover Code must be in cash (or be accompanied by a cash alternative) at not less than the highest price paid by the person required to make the offer or any person acting in concert with him for any interest in shares in the company during the 12 month period prior to the announcement of the offer. 

 

For the purposes of the Takeover Code, persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), cooperate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company.  A person and each of its affiliated persons will be deemed to be acting in concert all with each other.  Certain categories of person are presumed to be acting in concert under the Takeover Code unless the contrary is established. 

 

Immediately following Admission, Woodford (including the Woodford Funds and any other party deemed acting in concert with it) will have acquired interests in the Ordinary Shares carrying in aggregate 46.83 per cent. of the voting rights of the Company which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Woodford (and any party deemed to be acting in concert with it) to make a general offer to Shareholders under Rule 9 of the Takeover Code.

Woodford is an investment fund manager.  In pursuance of their client's investment objectives, Woodford actively invests in companies as agent for its clients.  Accordingly, Woodford will subscribe for its Placing Shares using its clients' available cash resources.

 

 

Rule 9 Waiver

 

The Company has applied to the Panel for a waiver of Rule 9 of the Takeover Code in order to permit the Placing to proceed without triggering an obligation on the part of Woodford to make a general offer to all of the other Shareholders. 

 

Under Note 1 on the Notes on the Dispensations from Rule 9 of the Takeover Code, the Panel will normally waive the requirement for a general offer to Shareholders under Rule 9 of the Takeover Code if, among other things, there has been a vote of independent shareholders.  Accordingly, the Panel has agreed to grant a waiver of Rule 9 of the Takeover Code subject to the Independent Shareholders approving the Whitewash Resolution on a poll at the General Meeting. To be passed, the Whitewash Resolution will require a simple majority of the votes cast on a poll by the Independent Shareholders.

 

Independent Shareholders should note that, following completion of the Placing, Woodford (and those parties deemed to be acting in concert with it) will not be entitled to increase its interest in the voting rights of the Company without incurring a further obligation under Rule 9 of the Takeover Code to make a general offer (unless a dispensation from this requirement has been obtained from the Panel in advance).

 

If the Whitewash Resolution is passed by the Independent Shareholders at the General Meeting, Woodford will not be restricted from making an offer for the Company.

 

Independent Shareholders should also note that, following completion of the Placing, Woodford (by the fact that it is deemed interested, for Takeover Code purposes, in the aggregate shares held by its discretionary managed investment fund clients (including the Woodford Funds and any other party deemed acting in concert with it) will control, in aggregate, approximately 46.83 per cent. of the voting rights of the Company and that this will increase the percentage of the Ordinary Shares that are not in public hands (as defined in the AIM Rules). This may in turn have the effect of reducing the liquidity of trading in the Ordinary Shares on AIM. Woodford's stake in the voting rights of the Company will also mean that Woodford will be able, if it so wishes, to block any special resolutions proposed at future general meetings of the Company and requisition a general meeting to present for vote resolutions proposed by it.  Although it is not the current intention of Woodford to seek a resolution at a general meeting of the Company to de-list the Ordinary Shares from AIM, Woodford could, if it so wishes in the future, propose such a resolution.

 

 

Independent advice provided to the Board

 

The Takeover Code requires the Board to obtain competent independent advice regarding the merits of the transaction which is the subject of the Whitewash Resolution, the controlling position which it will create, and the effect which it will have on the Shareholders generally.

 

Accordingly, Peel Hunt, as the Company's nominated adviser, has provided formal advice to the Board regarding the Placing and the Whitewash. Peel Hunt confirms that it is independent of Woodford.

 

 

VCT investors

 

No assurance has been obtained from HMRC or any other person that a subscription for Ordinary Shares in the Company is a 'qualifying holding' for the purpose of investment by VCTs. 

 

The status of the Ordinary Shares as a qualifying holding for VCT purposes will be dependent on a number of factors, including that the Ordinary Shares are 'eligible shares' and a 'qualifying holding' for VCT purposes.

 

None of the Company nor any of the Directors nor any of the Company's officers, employees, agents or advisers gives any warranty, representation or undertaking that any VCT investment in the Company is a qualifying holding (or, in the event that it is deemed to be a qualifying holding as at the Last Practicable Date, that it will remain so). The Company does not give any guarantee, undertaking or other assurance that it conducts or will conduct its business in a way which ensures that the Company will meet the requirements of a VCT Scheme.  The Company has obtained no assurance from HMRC or any other person that any VCT relief may be, is or will continue to be available to the VCT Placee or any other person and any and all liability in this regard is disclaimed in respect of the Directors, the Company and its officers, employees, agents and advisers.   

 

VCTs considering making a qualifying VCT investment are required to seek their own professional advice in order that they may fully understand how the relief legislation may apply in their individual circumstances.

 

 

Enquiries:

eve Sleep plc

via M7 Communications Ltd

James Sturrock, Chief Executive Officer

 

Abid Ismail, Chief Financial Officer

 

 

 

 

 

Peel Hunt LLP (NOMAD and broker)

+44 (0) 20 7418 8900

Dan Webster

 

George Sellar

 

Guy Pengelley

 

 

 

 

 

M7 Communications Ltd

+44 (0) 7903 089 543

Mark Reed

 

 

The person arranging release of this Announcement on behalf of the Company is Abid Ismail, Chief Financial Officer.

 

 

Important information

 

This Announcement is for information purposes only and does not itself constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities in the Company and does not constitute investment advice.  Each Placee should consult with its own advisers as to legal, tax, business and related aspects in relation to any acquisition of Placing Shares. The price of the shares in the Company and the income from them (if any) may go down as well as up and investors may not get back the full amount invested on disposal of shares.

 

Neither this Announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, into the United States of America, any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand or to any persons in any of those jurisdictions or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities laws. The distribution of this Announcement in other jurisdictions may be restricted by law and persons into whose possession this Announcement comes should inform themselves about, and observe any such restrictions.

 

This Announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities in the United States (including its territories and possessions, any state of the United States and the District of Colombia (the United States or US)), any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The Placing and the distribution of this Announcement and other information in connection with the Placing in certain jurisdictions may be restricted by law and persons into whose possession this Announcement, any document or other information referred to herein, comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither this Announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

 

In particular, the securities of the Company (including the Placing Shares) have not been and will not be registered under the US Securities Act of 1933, as amended (the Securities Act), or under the securities laws or with any securities regulatory authority of any state or other jurisdiction of the United States, and accordingly the Placing Shares may not be offered, sold, pledged or transferred, directly or indirectly, in, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any relevant state or jurisdiction of the United States.  Any securities referred to herein may be offered and sold only in 'offshore transactions' as defined in and pursuant to Regulation S under the US Securities Act or otherwise in private placement transactions that are exempt from the registration requirements under the US Securities Act. There is no intention to register any portion of the offering in the United States or to conduct a public offering of securities in the United States.

 

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States.

 

Peel Hunt LLP (Peel Hunt) is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA) and is acting as nominated adviser and broker to the Company in respect of the Placing.  Peel Hunt is acting for the Company and for no-one else in connection with the Placing, and will not be treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protections afforded to its customers nor for providing advice in connection with the Placing or any other matters referred to herein and apart from the responsibilities and liabilities (if any) imposed on Peel Hunt by Financial Services and Markets Act 2000 (as amended) (FSMA), any liability therefor is expressly disclaimed. Any other person in receipt of this Announcement should seek their own independent legal, investment and tax advice as they see fit.

 

Forward-looking statements

 

Certain information contained in this Announcement constitutes forward-looking information. This information relates to future events or occurrences or the Company's future performance. All information other than information of historical fact is forward-looking information. The use of any of the words 'anticipate', 'plan', 'continue', 'estimate', 'expect', 'may', 'will', 'project', 'should', 'believe', 'predict' and 'potential' and similar expressions are intended to identify forward-looking information. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given that this information will prove to be correct and such forward-looking information included in this Announcement should not be relied upon. Forward-looking information speaks only as of the date of this Announcement.  The forward-looking information included in this Announcement is expressly qualified by this cautionary statement and is made as of the date of this Announcement. Neither the Company, nor Peel Hunt undertake any obligation to publicly update or revise any forward-looking information except as required by applicable securities laws.

 

 

Appendix I - Risk Factors

An investment in new Ordinary Shares is subject to a number of risks. Before making an investment decision with respect to new Ordinary Shares, prospective investors should carefully consider the risks associated with an investment in the Company, the Company's business and the industry in which the Company operates, in addition to all of the other information set out in this Announcement and the Circular and, in particular, those risks described below.

If any of the circumstances identified in the risk factors were to materialise, the Company's business, financial condition, results of operations and future prospects could be adversely affected and investors may lose all or part of their investment. Certain risks of which the Directors are aware at the date of this Announcement and the Circular and which they consider material to prospective investors are set out in the risk factors below. Additional risk factors which the Directors consider may be relevant to the Company's business can be found in the Company's Admission Document dated 15 May 2017. Copies of the Admission Document can be obtained on the Company's website at https://investor.evemattress.co.uk/aim-rule. However, further risks and uncertainties relating to the Company which are not currently known to the Directors, or that the Directors do not currently deem material, may also have an adverse effect on the Company's business, financial condition, results of operations and future prospects. If this occurs, the price of the Ordinary Shares may decline and investors may lose all or part of their investment.

An investment in the Company may not be suitable for all potential investors. Potential investors are therefore strongly recommended to consult an independent financial adviser, authorised under FSMA, who specialises in advising upon the acquisition of shares and other securities before making a decision to invest.

Risks relating to the Company's business and its industry

The Company may not be successful in implementing its updated strategy

There is no guarantee that the Company will be successful in implementing its updated strategy to focus on UK&I and France.  The Company's future business and results of operation will depend on the successful implementation of this strategy and, in particular, upon the impact of the measures which the Company proposes to take to increase its brand awareness, expand its product range and improve the experience of its customers.

The Company's ability to generate sales growth is dependent upon a number of factors, including its ability to: increase penetration through effective marketing strategies, stronger product recognition and greater brand awareness; successfully design, launch and develop future products to extend its product range; provide a satisfactory customer experience; and secure and maintain relationships with key partners in its core markets.

Implementation of the Company's strategy may place significant demands on its management, administrative, operational, IT, financial, personnel and other resources. The Company will need to continue to maintain, develop and integrate its management, administrative, operational, financial and accounting systems, internal controls and supervisory procedures. As the Company's operations continue to expand, it may also be required to incur further expenditure and effort to invest in its IT systems and infrastructure and to recruit additional personnel. The Company may experience constraints in its ability to expand, such as being required to comply with additional legal or regulatory restrictions in its existing and target markets. There is no assurance that the Company will be successful in implementing its updated strategy, a lack of market acceptance of such efforts or the Company's inability to generate satisfactory revenue to offset its expansion costs could have a material adverse effect on its business, financial condition, results of operations and future prospects.

The Company operates in the highly competitive mattress and wider sleep market and may not be able to grow, or maintain, its existing market share

Participants in the sleep products market compete on price, quality, brand recognition, product availability and product performance. The highly competitive nature of this market means that the Company is continually subject to the risk of (a) loss of, or failure to increase, market share, (b) reductions in margins and (c) the inability to secure new customers.

The Company faces competition from other parties including those parties with greater capacity and scale than the Company and those who have a more established presence and/or reputation in the sleep market, as well as from new market entrants. The Company's business model relies on marketing and having sufficient resources to market its products. Competitors who have greater resources than the Company may be more successful in marketing their products, which may impact on the Company's ability to create, maintain or grow a market share.

A number of competitors offer sleep products that compete directly with the Company's products.  The Company may not achieve the goals of its updated strategy and as a result may fail to sufficiently differentiate itself from both traditional and mattress in a box competitors.  Competition from established or new market entrants (particularly those who have an online direct-to consumer model for mattresses) may impact the Company's sales of its products and damage the Company's reputation and brand awareness, any of which may have a material adverse effect on the Company's business, financial condition, results of operations and future prospects and inhibit the successful implementation of its updated strategy.

The Company is reliant on the success of its brand and may be subject to reputational harm that could damage its brand

The Company's success relies significantly on the strength of its brand. There can be no assurance that the Company will be able to continue to develop its brand awareness in order to increase its market share, nor maintain current levels of brand awareness. 

The Company could be damaged by reputational harm if it fails to address actual or perceived issues with its product (including product quality, value for money, comfort, safety, aesthetics and environmental concerns), its website, the effectiveness of its logistics operations and customer service. In addition, the Company is exposed to risks which could undermine the strength of the Company's brand and its reputation and goodwill, such as negative news coverage, customer ratings and reviews (including adverse social media commentary), poor quality control, operational failures and customer service.

The Company may be subject to litigation, disputes, claims and complaints, including adversarial actions, by customers, employees, suppliers, competitors, insurers and others in the ordinary course of business.  Significant claims or a substantial number of small claims may be expensive to defend, may divert the time and focus of management away from the Company's operations and may result in the Company having to pay monetary judgments, any of which could have a material adverse effect on the Company's results of operations and financial condition. In addition, adverse publicity or a substantial judgment against the Company related to litigation could negatively impact its reputation, even if the Company is not found liable. An inability to manage risks relating to its brand for any reason could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

Advertising expenditure may not generate the anticipated sales volume and brand awareness improvements

A significant component of the Company's marketing strategy involves the use of direct marketing to generate brand awareness and sales. Further growth and profitability depends upon the Company increasing brand awareness in order to generate the required level of interest in the Company's product range whilst balancing the cost of running advertising campaigns. The Company intends to continue investing in marketing and partnership channels to grow its business. Successful growth may require the establishment of additional sales and marketing channels. In addition, the return on these investments may be lower or develop more slowly than expected and there can be no guarantee that the Company will be able to deliver anticipated sales or market share, which in turn could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects. 

Investment in infrastructure and new product development may not result in improved website conversion rates or generate anticipated sales volume

A significant component of the Company's technology and new product development strategy involves investment in customer-centric platform optimisation, operational technology infrastructure and an expanded product range in order to facilitate improved conversion rates on website traffic. Further growth and profitability rely on improved conversion rates achieved via repeat purchase, purchase from a broadened customer base or purchases achieved as a result of platform optimisation. Whilst the expectation is that resources invested will result in improved website conversion, the outcome may not result in increased sales or generate the anticipated sales volumes. There is a risk that sales attributable to this planned investment are lower or develop more slowly than expected and there can be no guarantee that the Company will be able to increase its sales and market share, which in turn could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects 

The Company's collaboration with partners in core markets may not achieve expected results and the Company's reputation may be adversely impacted

The Company currently has partnerships with Debenhams, Fenwick, Dreams and Next in the UK and But in France as well as online partnerships with Amazon, ShopDirect and Wayfair.  There is no guarantee that the Company will be able to maintain a cost-effective relationship with its partners or that the partnerships will deliver the anticipated sales growth. The Company is currently reviewing its retail and partnership strategy and, as part of that, Dreams has engaged with the Company to re-negotiate certain commercial terms in connection with their partnership with eve. The Company's objective is that these negotiations are resolved satisfactorily, however discussions are ongoing. The Company's partners could terminate their relationship with the Company and could also enter into agreements with the Company's competitors, which may have a material adverse effect on the Company's reputation, business, financial condition, results of operations and future prospects.

The Company's market share and business position may be adversely affected by economic, political and market factors beyond the Company's control

The markets in which the Company operates are directly affected by many national and international factors that are beyond the Company's control. Any of the following factors, among others, may cause a substantial decline in the markets in which the Company offers its services and an impact on future demand for the Company's products: economic, stock market and political conditions, including uncertainty in the UK and European economy in part related to the uncertainty around the terms on which the United Kingdom will leave the European Union; the level and volatility of the UK consumer goods market; the cost of materials; concerns about inflation; consumer confidence; unemployment levels; decreased demand; a reduction in the disposable income of customers; consolidation in the sleep sector; order volumes, delays, cancellations and return rates; inability for the Company and suppliers to accurately forecast future product demand trends; and legislative and regulatory changes. In recent years, markets have been affected by the global financial crisis. Worsening or volatile economic conditions could impact consumer confidence and the demand for the Company's services.

Uncertain economic prospects or a decline in the financial and/or consumer goods market in any of the countries where the Company operates could:

(a) adversely affect the performance of the Company and its reputation;

(b) result in a deterioration of the Company's competitive position and a reduction in the overall level of its business; and

(c) lead to a failure to win new business.

Accordingly, any of these factors could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

The Company operates in a rapidly changing industry and may fail to adapt to changes in the industry

The e-commerce and m-commerce industries are characterised by rapidly changing technology, evolving laws, regulations, rules and industry and other applicable standards and codes of conduct, new service and product introductions and changing customer demands.

An inability of the Company to respond to technological advances on a cost-effective and timely basis, may impede its ability to establish or maintain a competitive advantage. There are constant developments in internet searching, online marketing, communications, social networking and other services to enhance the online experience of the consumer and the devices on which that online experience is available. Significant investment in infrastructure, research and development and other areas is required in order to enhance the Company's platform technology. Technological advances may require the Company to re-evaluate its business model and adopt significant changes to its strategy and business plan. Failure to innovate and adapt to changes in the online market may have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

The Company is heavily reliant upon its technology systems and, like other ecommerce companies handling consumer data, is vulnerable to hacking and other cyberattacks. The Company takes both preventative and detective actions to identify such attacks, but the risk remains that data loss may lead to increased business costs in the form of fines or compensations as well as reduced anticipated sales. All of which may have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

The application or modification of existing laws or regulations, or adoption of new laws and regulations (including those relating to the internet, e-commerce, online operations and protection of consumers online) could adversely affect the manner in which the Company currently conducts its business. The growth and development of the market for online retail may lead to more stringent customer protection laws which may impose additional burdens on the Company and increase its business costs, all of which may have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

The Company is, or will be, subject to laws and regulation and supervision by regulators in a number of countries. Regulators can typically conduct industry-wide investigations into the business of firms supervised by that regulator. Such investigations can follow adverse publicity in respect of another participant in the same industry as the Company and might not necessarily result from any action or omission by the Company. A regulator may determine that the Company has failed to comply with applicable laws, regulations, rules and industry and other applicable standards and codes of conduct or that it has applied such laws, regulations, rules and industry and other applicable standards and codes of conduct to its business model in a manner with which a regulator disagrees. The impact of the Company being found to be non-compliant in any such inquiry and/or investigation is difficult to assess or quantify and would depend on which regulatory regime was involved and the disciplinary/enforcement powers of the regulator responsible for the supervision of that particular business. Such inquiries or investigations could result in adverse publicity for, or negative perceptions being created regarding, the Company and affect the Company's relationships with regulators and its reputation with customers and suppliers, as well as diverting management's attention. Such action could also subject the Company to additional remediation costs to redress non-compliance, which in turn could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

The Company relies on manufacturers and third-party delivery companies

The supply of product to customers in a timely manner is critical to the success of the Company.  There can be no assurance that manufacturers and delivery companies will be able to meet the Company's requirements on a timely or cost-effective basis.

The Company is reliant on third party manufacturers for the production of all of its products. In order to manage its quality control standards, the Company and the Company's warehouse partners perform spot checks on the products that its manufacturers produce prior to the products leaving the depot. However, there is an inherent risk that such procedures will not pick up all manufacturing defects in every product which in turn could have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

In the event of a particularly high demand for the Company's products or an issue with a manufacturer (whether due to a disagreement between the Company and the manufacturer, a problem with the manufacturer's ability to supply products or otherwise), the Company would need to engage one or more alternative suppliers, which it may be unable to do on similar terms, if at all. Further, the alternative supplier may be unable to satisfy the full amount on the Company's demand on short notice, which in turn may impact on the Company's ability to satisfy its orders from customers and may damage the Company's reputation as well as its profitability.

Interruptions to or failures in the logistics platform or delivery services may be due to events that are beyond the control of the Company, the manufacturers and delivery companies (for example, natural disasters, transportation disruptions or labour unrest). Sourcing alternative logistics and delivery companies may not be possible or may result in delays and a poor customer service experience. The Company's products are also at risk of being damaged during transit. Such logistical delays or failures in the delivery process may have a material adverse effect on the Company's business, financial condition, results of operations and future prospects.

In addition, some of the Company's products are (and others may be) manufactured in markets outside the United Kingdom. There are a variety of risks generally associated with doing business in foreign markets, including risks relating to labour practices, heightened anti-bribery and corruption concerns, quality assurance concerns, environmental risks, risks of transportation of product by sea and imposition of taxes. Any of these risks could restrict the availability of product and/or increase the costs of the Company's products and/or change consumers' perceptions about the quality of its product and could have a material and adverse effect on the Company's business, financial condition, results of operations and future prospects.

The Company is subject to the risk relating to the withdrawal of the UK from membership of the EU

The UK held a referendum on its continued membership of the EU on 23 June 2016, the result of which was a majority vote for the UK to leave the EU. The UK government formally served notice of the UK's intention to leave the EU on 29 March 2017 in accordance with Article 50(2) of the Treaty on European Union, marking the start of the process of the UK's withdrawal from the EU. The political, economic, legal and social consequences of the UK's exit from the EU and the ultimate outcome of the negotiations between the UK and the European Commission are uncertain at the current time and may remain uncertain for some time to come. Such potentially prolonged political and economic uncertainty and the potential negative economic trends that may follow could have a material adverse effect on the Company's business, financial position and/or results of operations. Therefore, there can be no certainty at present on the severity or complexity of any negative trends affecting the Company's business and ability to sustain and grow its European markets following the result of the UK referendum. A further consequence of the UK leaving the EU may be that the Company's ability to offer Ordinary Shares to EU residents is affected by potential new EU securities laws. The potential significance is such that all of the information in Part II of the Circular should be read in conjunction with the statement set out above, as negative outcomes arising from the UK referendum result could exacerbate the effect on the Company of all or any of the risk factors its business would otherwise face.

The Company relies on the retention of key management personnel

The Company depends on the services of its key management personnel and, in particular, on the services of the senior management team. The loss of the services of any of these persons could have a material adverse effect on the Company's business, financial condition, results of operations or future prospects. In addition, as the Company's business expands, it may need to add new personnel to service the Company's increased level of business. The Company's success is also highly dependent on its continuing ability to identify, hire, train, motivate and retain key management. Competition for such personnel in the sector can be intense and the Company's personnel are frequently targeted by other companies for recruitment, and the Company cannot give assurances that it will be able to attract or retain such personnel in the future. The Company's inability to attract and retain the necessary management may adversely affect its future growth and profitability.

It may also be necessary for the Company to increase the level of remuneration paid to existing or new employees to such a degree that its operating expenses could be materially increased.

Risks Relating to the Ordinary Shares

Investment in AIM securities

An investment in shares traded on AIM is perceived to involve a higher degree of risk and to be less liquid than investment in companies whose shares are listed on the Official List and traded on the London Stock Exchange's main market for listed securities. An investment in Ordinary Shares may be difficult to realise. Prospective investors should be aware that the value of Ordinary Shares may go down as well as up and that the market price of the Ordinary Shares may not reflect the underlying value of the Company. Investors may, therefore, realise less than, or lose all of, their investment.

Potentially volatile share price and liquidity

The Placing Price may not be indicative of the market price for the Placing Shares following Admission. The share price of quoted emerging companies can be highly volatile and shareholdings illiquid. The price at which the Ordinary Shares are quoted and the price which investors may realise for their Ordinary Shares may be influenced by a significant number of factors, some specific to the Company and its operations and some which affect quoted companies generally. These factors could include the performance of the Company, large purchases or sales of Ordinary Shares, legislative changes and general, economic, political or regulatory conditions.

Share price effect of sales of Ordinary Shares

There can be no assurance that certain Directors or other Shareholders will not elect to sell their Ordinary Shares.  The market price of Ordinary Shares could decline as a result of any such sales of Ordinary Shares or as a result of the perception that these sales may occur.  In addition, if these or any other sales were to occur, the Company may in the future have difficulty in offering Ordinary Shares at a time or at a price it deems appropriate.

The Company's ability to pay dividends in the future depends, amongst other things, on the Company's financial performance and capital requirements and is therefore not guaranteed

The Company's ability to pay dividends in the future depends, amongst other things, on the Company's financial performance and capital requirements and is therefore not guaranteed. Under English law, a company can only pay cash dividends to the extent that it has distributable reserves and cash available for this purpose. In addition, the Company may not pay dividends if the Directors believe this would cause the Company to be inadequately capitalised (or if, for any other reason, the Directors conclude it would not be in the best interests of the Company). Any of the foregoing could limit the payment of dividends to Shareholders or, if the Company does pay dividends, the amount of such dividends.

Issuance of additional Ordinary Shares

Although the Company's business plan does not currently involve the issuance of Ordinary Shares other than in connection with the Placing and to Channel Four as described in Part I of the Circular, it is possible that the Company may decide to issue, pursuant to a public offer or otherwise, additional Ordinary Shares in the future at a price or prices higher or lower than the Placing Price.  An additional issue of Ordinary Shares by the Company, or the public perception that an issue may occur, could have an adverse effect on the market price of Ordinary Shares and could dilute the proportionate ownership interest, and hence the proportionate voting interest, of Shareholders if, and to the extent that, such an issue of Ordinary Shares is not effected on a pre-emptive basis or Shareholders do not take up their rights to subscribe for further Ordinary Shares as a pre-emptive offer.

The Placing may not complete

Completion of the Placing is subject to satisfaction (or, where possible, waiver) of a number of conditions (including the approval of the Whitewash Resolution) which are normal for a transaction of this nature. There is no guarantee that these conditions will be satisfied (or waived), in which case the Placing will not complete.

The issue of the VCT Placing Shares is not conditional on the allotment and issue of the other Placing Shares. There is a risk that the issue of the VCT Placing Shares completes (at 7.30 a.m. on 12 February 2019) and matters subsequently arise which mean that the Placing Agreement does not complete as anticipated at 8.00 a.m. on 12 February 2019 and consequently the remaining New Ordinary Shares are not issued.

Shareholding of Woodford

Should the Whitewash Resolution be approved by the Independent Shareholders (and the other Resolutions be approved by Shareholders), following completion of the Placing, over 30 per cent. of the voting rights of the Company will be controlled by Woodford.  This will increase the percentage of the Ordinary Shares that are not in public hands (as defined in the AIM Rules) and may in turn have the effect of reducing the liquidity of trading in the Ordinary Shares on AIM.  In addition, Woodford's stake in the voting rights of the Company will mean that Woodford will be able, if it so wishes, to block special resolutions proposed at future general meetings of the Company or otherwise requisition a general meeting to present for vote resolutions proposed by it.  Although it is not the current intention of Woodford to seek a resolution at a general meeting of the Company to de-list the Ordinary Shares from AIM, Woodford could, if it so wishes in the future, propose such a resolution.

VCT

The Company has not obtained any assurance from HMRC or any other person that a subscription for shares in the Company is a 'qualifying holding' for the purpose of investment by VCTs.  The qualifying status for VCT purposes will be contingent upon certain conditions being met by both the Company and the relevant VCT investor.  None of the Company, any of the Directors nor any of the Company's advisers give any warranties, undertakings or other assurances that VCT qualifying status is or will be available or that such status (if applicable) will not be subsequently withdrawn.

In addition, should the law regarding the VCT Scheme change then any qualifying status previously obtained may be lost.  There may be circumstances where the business has operated or will operate in a way that precludes VCT qualifying status or where the Directors have decided or will decide that the interests of the Company are not best served by acting in a way that ensures VCT qualifying status. Therefore, the Company gives no undertaking or other assurance that it has conducted or will conduct its activities in a way designed to secure or preserve any such status claimed by any Shareholder.

If the Company does not employ the proceeds of a VCT's share subscription for qualifying purposes within twenty-four months, the funds invested by the VCT would be apportioned pro rata and its qualifying holding would be equal to the VCT's funds that had been employed for qualifying trading purposes within the above time limits. Any remaining element of the VCT's investment would comprise part of its non-qualifying holdings.

The information in this Announcement and the Circular is based upon current tax law and practice and other legislation and any changes in the legislation or in the levels and bases of, and reliefs from, taxation may affect the value of an investment in the Company. If the Company or any qualifying subsidiary ceases to carry on the business outlined in the Announcement or the Circular or acquires or commences a business which is not insubstantial to the Company's activities and which is a non-qualifying trade for VCT Scheme purposes, this could prejudice the qualifying status of the Company (as referred to above) under the VCT Scheme at any time that a VCT is an investor in the Company.

Appendix II - TERMS AND CONDITIONS OF THE PLACING

For invited Placees only - Important Information

The information contained in this Announcement is restricted and is not for publication, release or distribution, in whole or in part, directly or indirectly, in, into or from the United States, any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand or any other jurisdiction in which such publication, release or distribution would be unlawful.  This Announcement has not been approved by the London Stock Exchange, nor is it intended that it will be so approved. 

Each Placee should consult with its own advisers as to legal, tax, business and related aspects in relation to any acquisition of Placing Shares. The price of the shares in the Company and the income from them (if any) may go down as well as up and investors may not get back the full amount invested on disposal of shares.

 

eve Sleep PLC

Proposed Placing of Placing Shares at the Placing Price of 10 pence per Placing Share

This Announcement (including these Terms and Conditions) does not constitute an offer or invitation to acquire, underwrite or dispose of, or any solicitation of any offer or invitation to acquire, underwrite or dispose of, any Ordinary Shares or other securities of the Company to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation in such jurisdiction.  Persons into whose possession this Announcement (or any part of it) or any information contained in it comes and/or who seek to participate in the Placing must inform themselves about and observe any such restrictions and must be persons who are able to lawfully receive this Announcement in their jurisdiction. In particular, neither this Announcement nor these Terms and Conditions constitutes an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Ordinary Shares or other securities of the Company in the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand, or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful.

Members of the public are not eligible to take part in the Placing. Prospective investors must inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares. This Announcement (including these Terms and Conditions) does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Ordinary Shares in any jurisdiction where such offer or solicitation is unlawful or would impose any registration, qualification, publication or approval requirements on the Company or Peel Hunt. The offer and sale of Ordinary Shares has not been and will not be registered under the applicable securities laws of Canada, Australia, Japan, New Zealand or the Republic of South Africa. Subject to certain exemptions, the Ordinary Shares may not be offered to or sold within Canada, Australia, Japan, the Republic of South Africa or New Zealand or to any national, resident or citizen of Canada, Australia, Japan, the Republic of South Africa or New Zealand.

The Ordinary Shares have not been, and will not be, registered with the US Securities and Exchange Commission under the US Securities Act, or the securities laws of any other jurisdiction of the United States. The Ordinary Shares may not be offered or sold, directly or indirectly, in or into the United States (except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the US Securities Act). No public offering of the Ordinary Shares is being made in the United States. The Ordinary Shares are being offered and sold only outside the United States in 'offshore transactions' within the meaning of, and in reliance on, Regulation S of the US Securities Act. The Ordinary Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed on or endorsed the merits of the Placing or the accuracy or adequacy of the information contained in this Announcement (including these Terms and Conditions). Any representation to the contrary is a criminal offence in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this Announcement, or any announcement made by the Company, will not be accepted.

In the United Kingdom this Announcement (including these Terms and Conditions) is being distributed to, and is directed only at: (a)(i) persons having professional experience in matters relating to investments who fall within the definition of 'investment professionals' in Article 19(5) of the Order; or (ii) high net worth companies, unincorporated associations and other bodies within the meaning of Article 49(2)(a) to (d) of the Order; and (b) 'qualified investors' within the meaning of Article 2(1)(e) of the Prospectus Directive; or (c) persons to whom it is otherwise lawful to distribute it (all such persons together being referred to as Relevant Persons). It is not directed at and may not be acted or relied on by anyone other than a Relevant Person. Persons who do not fall within the definition of 'Relevant Persons' above should not rely on this Announcement, nor take any action upon it. By receiving this Announcement you are deemed to warrant to the Company and Peel Hunt that you are a Relevant Person and agree to and will comply with the contents of these Terms and Conditions.

In relation to each Relevant Member State, no Ordinary Shares have been offered, or will be offered, pursuant to the Placing to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Ordinary Shares which has been approved by the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that offers of Ordinary Shares to the public may be made at any time under the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:

1          to any legal entity which is a 'qualified investor' as defined in the Prospectus Directive;

2          to fewer than 150, or, if the Relevant Member State has not implemented the relevant provision of the Prospectus Directive, 100 natural or legal persons (other than 'qualified investors' as defined in the Prospectus Directive) in such Relevant Member State; or

3          in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Ordinary Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State and each person who initially acquires any Ordinary Shares or to whom any offer is made under the Placing will be deemed to have represented, acknowledged and agreed that it is a 'qualified investor' within the meaning of Article 2(1)(e) of the Prospectus Directive. For the purposes of this provision, the expression 'an offer to the public' in relation to any offer of Ordinary Shares in any Relevant Member State means a communication in any form and by any means presenting sufficient information on the terms of the offer and any Ordinary Shares to be offered so as to enable an investor to decide to subscribe for the Ordinary Shares, as   the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression the 'Prospectus Directive' means the Prospectus Directive, to the extent implemented in the Relevant Member State and includes any relevant implementing measure in each Relevant Member State.

These Terms and Conditions apply to each Placee. Each Placee hereby agrees with Peel Hunt and the Company to be legally and irrevocably bound by these Terms and Conditions which will be the terms and conditions on which the Placing Shares will be acquired in the Placing.

The Terms and Conditions must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which the Terms and Conditions set out herein relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Acceptance of any offer incorporating the Terms and Conditions (whether orally or in writing or evidenced by way of a contract note) will constitute a binding irrevocable commitment by a Placee, subject to the Terms and Conditions set out below, to subscribe and pay for the relevant number of Placing Shares (the Placing Participation). Such commitment is not capable of termination or rescission by the Placee in any circumstances except fraud. All such obligations are entered into by the Placee with Peel Hunt in its capacity as agent for the Company and are therefore directly enforceable by the Company.

In the event that Peel Hunt has procured acceptances from Placees in connection with the Placing prior to the date of the publication of this Announcement to a Placee, Peel Hunt will, prior to Admission, request confirmation from any such Placee that its Placing Participation as agreed in any earlier commitment remains firm and binding upon the Terms and Conditions of this Announcement and referable to the contents of this Announcement of which these terms form part. Upon such confirmation being given (whether orally, in writing or by conduct (including without limitation by receipt of the relevant placing proceeds by Peel Hunt)) any agreement made in respect of the Placing Shares shall be varied, amended and/or ratified in accordance with these Terms and Conditions and based upon this Announcement and no reliance may be placed by a Placee on any earlier version of this Announcement.

Application for admission to trading

Application will be made to the London Stock Exchange for Admission. Subject to, amongst other things, the Resolutions being passed by the requisite majority at the General Meeting, it is anticipated that dealings in the Placing Shares will commence on AIM at 8.00 a.m. on 12 February 2019 for normal account settlement and that Admission will become effective on that date. The Placing Shares will not be admitted to trading on any stock exchange other than AIM.

 

Participation in and principal terms of the Placing

1          Each Placee will be deemed to have read this Announcement (including these Terms and Conditions) in their entirety.  Each Placee should read and understand the information provided in the 'Important Information' section of this Announcement.  

2          Peel Hunt is acting for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of these Terms and Conditions) as a client in relation to the Placing and to the fullest extent permitted by law and applicable Financial Conduct Authority rules, neither Peel Hunt nor any of its affiliates will have any liability to Placees or to any person other than the Company in respect of the Placing.

3          The Placing Shares, when issued, will be subject to the articles of association of the Company and will rank equally in all respects with the existing Ordinary Shares on Admission, including the right to receive dividends or other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue of the Placing Shares, if any.

4          Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Peel Hunt. Peel Hunt and its affiliates may participate in the Placing as principal.

5          The Placing Price will be a fixed price of 10 pence per Placing Share.

6          An offer to acquire Placing Shares, which has been communicated by a prospective Placee to Peel Hunt which has not been withdrawn or revoked prior to publication of this Announcement, shall not be capable of withdrawal or revocation immediately following the publication of this Announcement without the consent of Peel Hunt.

7          Each Placee's allocation will be confirmed to Placees orally by Peel Hunt, and evidenced by a trade confirmation or contract note which will be dispatched as soon as practicable thereafter. The terms of this Appendix will be deemed incorporated by reference therein. The oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of Peel Hunt and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association. Except as required by law or regulation, no press release or other announcement will be made by Peel Hunt or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.

8          Each Placee will have an immediate, separate, irrevocable and binding obligation, owed Peel Hunt (as agent for the Company), to pay in cleared funds immediately on the settlement date, in accordance with the registration and settlement requirements set out below, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to take up and that the Company has agreed to allot and issue to that Placee. Peel Hunt will procure the allotment of the Placing Shares to each Placee following each Placee's payment to Peel Hunt of such amount. 

9          Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the times and on the basis explained below under 'Registration and Settlement'.

10      By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

11      To the fullest extent permissible by law and applicable FCA rules, none of the Company, Peel Hunt nor any of their  respective affiliates, directors or employees shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise) under these Terms and Conditions. In particular, none of the Company, Peel Hunt or any of their respective affiliates shall have any liability (including to the fullest extent permissible by law and applicable FCA rules, any fiduciary duties) in respect of Peel Hunt's or the Company's conduct of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and Peel Hunt shall have no liability to the Placees for the failure of the Company to fulfil that obligation.

 

Conditions

Each Placee's Placing Participation is in all respects conditional upon:

1          the Takeover Panel having confirmed to Peel Hunt, the grant of the Rule 9 Waiver (subject to shareholder approval of the Rule 9 Waiver Resolution) and its approval of the Circular for the purpose of Appendix 1 of the Takeover Code;

2          the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms;

3          the passing of the Resolutions at the General Meeting, without amendment (save as may be approved by Peel Hunt);

4          in the case of the VCT Placing only, the VCT Shares having been allotted and issued unconditionally to the VCT Placee in accordance with the Placing Agreement;

5          in the case of the Non-VCT Placing only, the Company allotting, subject only to Admission, the Non-VCT Shares in accordance with the Placing Agreement;

6          in the case of the Non-VCT Placing only, Admission having become effective,

in each case by 8.00 a.m. on 12 February 2019 or such later time and/or date as the Company and Peel Hunt agree, but in any event being no later than 8.30 a.m. on 26 February 2019.

Pursuant to the Placing Agreement, Peel Hunt has agreed on behalf of and as agent for the Company, to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price.

The Placing Agreement contains certain warranties and indemnities from the Company for the benefit Peel Hunt. Peel Hunt may, in its absolute discretion (acting in good faith), terminate the Placing Agreement if, prior to Admission, inter alia, a force majeure event occurs, the warranties are not true and accurate in any material respect or have become misleading in a way that is material in the context of the Placing and Admission, the Company fails to comply with certain of its obligations under the Placing Agreement to the extent that the same shall be performed prior to Admission or the Resolutions (without any amendment that is not approved by Peel Hunt) are not passed at the General Meeting.  The exercise by Peel Hunt of any right of termination or any right of waiver exercisable by Peel Hunt contained in the Placing Agreement or under the Terms and Conditions set out herein is within the absolute discretion of Peel Hunt and neither Peel Hunt nor the Company will have any liability to any Placee whatsoever in connection with any decision to exercise or not exercise any such rights.

If (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived by Peel Hunt) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will not proceed and all funds delivered by Placees to Peel Hunt will be returned to them at their risk without interest, and their rights and obligations hereunder shall cease and determine at such time and no claim shall be made by them in respect thereof.

None of the Company, the Directors or Peel Hunt owes any fiduciary duty to any Placee in respect of the warranties, undertakings or indemnities in the Placing Agreement.

Peel Hunt does not make any representation in respect of the eligibility of the VCT Shares under the Income Tax Act 2007 (as amended).

 

Right to terminate under the Placing Agreement

Peel Hunt is entitled in its absolute discretion, at any time before Admission and after such consultation with the Company as the circumstances allow, to terminate the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:

1.        in the opinion of Peel Hunt (acting in good faith), the warranties given by the Company to Peel Hunt are not true and accurate or have become misleading (or would not be true and accurate or would be misleading if they were repeated at any time before Admission) by reference to the facts subsisting at the time when the notice referred to above is given, in each case in a way that is material in the context of the Proposals; or

2.        in the opinion of Peel Hunt (acting in good faith), the Company fails to comply with any of its obligations under the Placing Agreement and that failure is material in the context of the Proposals; or

3.        in the opinion of Peel Hunt (acting in good faith), there has been a development or event (or any development or event involving a prospective change of which the Company is, or might reasonably be expected to be, aware) which will or is likely to have a material adverse effect on the operations, condition (financial, operational, legal or otherwise), prospects, management, results of operations, financial position, business or general affairs of the Company or the Group respectively, whether or not foreseeable and whether or not arising in the ordinary course of business; or

4.        a matter arising between the publication of the Circular and the General Meeting which may be required to be disclosed to Shareholders under Appendix 1 of the Takeover Code and Peel Hunt considers to be material and adverse in the context of the Rule 9 Waiver; or

5.        there has been a change in national or international financial, political, economic or stock market conditions (primary or secondary); an incident of terrorism, outbreak or escalation of hostilities, war, declaration of martial law or any other calamity or crisis; a suspension or material limitation in trading of securities generally on any stock exchange; any change in currency exchange rates or exchange controls or a disruption of settlement systems or a material disruption in commercial banking, in each case as would be likely in the opinion of Peel Hunt (acting in good faith) to prejudice the success of the Placing.

The rights and obligations of the Placees shall terminate only in the circumstances described in these Terms and Conditions and in the Placing Agreement and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, each Placee agrees with the Company and Peel Hunt that the exercise by Peel Hunt or the Company of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Company or Peel Hunt, and that neither the Company nor Peel Hunt need make any reference to any Placee and that none of them nor any of their respective affiliates, directors or employees shall have any liability to Placees whatsoever in connection with any such exercise or decision not to exercise.  Placees will have no rights against Peel Hunt, the Company, or any of their respective affiliates, directors or employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).

Following the allotment and unconditional issue of the VCT Shares, the Placing Agreement is not capable of termination to the extent that it relates to the VCT Placing.

 

No admission document or prospectus

The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require an admission document or prospectus in the United Kingdom or in any other jurisdiction. No offering document, admission document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing, and Placees' commitments will be made solely on the basis of the information contained in the Announcement (including this Appendix) and the Exchange Information (as defined further below).  Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than this Announcement and the Exchange Information), representation, warranty, or statement made by or on behalf of the Company, Peel Hunt or any other person and none of Peel Hunt, the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by Peel Hunt, the Company, or their respective officers, directors, employees or agents. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Neither the Company nor Peel Hunt are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

 

Registration and settlement

Settlement of transactions in the: (i) VCT Shares (ISIN: GB00BYWMFT51) following their allotment and issue in accordance with the Placing Agreement; and (ii) the Non-VCT Shares (ISIN: GB00BYWMFT51) following Admission, in each case will  take place within the CREST system provided that, subject to certain exceptions, Peel Hunt reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Peel Hunt (as agent for the Company) and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the CREST or certificated settlement instructions that it has in place with Peel Hunt.

It is expected that settlement in respect of the VCT Shares will be at 7:30 a.m on 12 February 2019 on a T+14 basis in accordance with the instructions set out in the trade confirmation. Settlement in respect of the Non-VCT Shares is expected to occur at 8:00 a.m. on 12 February 2019 on a T+14 basis in accordance with the instructions set out in the trade confirmation.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by Peel Hunt.

Each Placee is deemed to agree that, if it does not comply with these obligations, Peel Hunt may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Peel Hunt's account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable and shall indemnify Peel Hunt (as agent for the Company) on demand for any shortfall below the aggregate amount owed to it by the Placee and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares to Peel Hunt, each Placee confers on Peel Hunt all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Peel Hunt lawfully takes or causes to be lawfully taken in pursuance of such sale.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note is copied and delivered immediately to the relevant person within that organisation.

Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 

Further Terms, Confirmations and Warranties

In accepting the Placing Participation, each Placee (and any person acting on such Placee's behalf) makes the following confirmations, acknowledgements, warranties and/or undertakings to Peel Hunt and the Company, namely that each Placee (and any person acting on such Placee's behalf):

1.        represents and warrants that it has read this Announcement (including these Terms and Conditions) in its entirety and acknowledges that its participation in the Placing will be governed by the Company's articles of association and the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings of these Terms and Conditions;

2.        acknowledges that no offering document, admission document or prospectus has been prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus, admission document or other offering document in connection therewith

3.        acknowledges that the Ordinary Shares are (and the Placing shares will be) admitted to trading on AIM and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules (collectively Exchange Information), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that the Placee is able to obtain or access such information or comparable information concerning any other publicly traded company without undue difficulty;

4.        acknowledges and agrees that its acceptance of its Placing Participation on the terms set out in this Announcement and these Terms and Conditions is legally binding, irrevocable and is not capable of termination or rescission by it in any circumstances and that it has the funds available to pay the Placing Price in respect of the Placing Shares for which it has given a commitment under the Placing and it acknowledges, agrees and undertakes that it will pay the total Placing Price in respect of its participation in the Placing;

5.        acknowledges that the content of this Announcement is exclusively the responsibility of the Company, and that none of Peel Hunt, its affiliates or any person acting on its or their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or concurrently published by or on behalf of the Company, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire the Placing Shares is contained in this Announcement and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by Peel Hunt, the Company or any of their respective directors, officers or employees or any person acting on behalf of any of them, or, if received, it has not relied upon any such information, representations, warranties or statements (including any management presentation that may have been received by any prospective Placee or any material prepared by the Research Department of Peel Hunt (the views of such Research Departments not representing and being independent from those of the Company and the Corporate Finance Department of Peel Hunt and not being attributable to the same), and neither Peel Hunt nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it may not place the same degree of reliance on this Announcement as it may otherwise place on a prospectus or admission document. Each Placee further acknowledges and agrees that it has relied solely on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and it will not rely on any investigation that f Peel Hunt, its affiliates or any other person acting on its or their behalf has or may have conducted;

6.        confirms, represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting this invitation to participate in the Placing;

7.        confirms, represents and warrants that it is sufficiently knowledgeable to understand and be  aware of the risks associated with, and other characteristics of, the Placing Shares and, among others, of the fact that it may not be able to resell the Placing Shares except in accordance with certain limited exemptions under applicable securities legislation and regulatory  instruments;

8.        confirms, represents and warrants, if a company, that it is a valid and subsisting company and   has all the necessary corporate capacity and authority to execute its obligations in connection  with its Placing Participation and that the Placee's exercise of its rights and/or performance under, or compliance with its obligations under the Placing, does not and will not violate: (a) its constitutive documents; or (b) any agreement to which the Placee is a party or which is binding on the Placee or its assets;

9.        the Placee agrees to accept the Placing Shares subject to, and to comply with, the articles of association of the Company;

10.    acknowledges that neither Peel Hunt nor any of its affiliates or any person acting on behalf of them has or shall have any liability for the Exchange Information, any publicly available or filed information or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

11.    agrees that the exercise by Peel Hunt or the Company of any right of termination or any right of waiver exercisable by Peel Hunt contained in the Placing Agreement or the exercise by Peel Hunt or the Company of any discretion thereunder is within the absolute discretion of Peel Hunt or the Company (as the case may be) and neither Peel Hunt nor the Company will have any liability to any person whatsoever in connection with any decision to exercise or not exercise any such  rights. Each Placee acknowledges that if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and its rights and obligations hereunder shall cease and determine at such time and no claim shall be made by it in respect thereof;

12.    accepts that if the Placing does not proceed or such Placing Shares are not admitted to trading   on AIM for any reason whatsoever, then neither Peel Hunt nor the Company nor any of their respective affiliates, nor persons controlling, controlled by or under common control with any of them nor any of their respective employees, agents, officers, members, stockholders, partners or representatives, shall have any liability whatsoever to it or any other person;

13.    acknowledges and agrees that Peel Hunt is not acting for it, and that it does not expect Peel Hunt to have any duties or responsibilities towards it for providing protections afforded to its customers or clients under the Financial Conduct Authority Conduct of Business Source Book or advising it with regard to its Placing Participation and that it is not, and will not be, a customer or client of Peel Hunt as defined by the Financial Conduct Authority Conduct of Business Source Book. Likewise, Peel Hunt will not treat any payment by it pursuant to these Terms and Conditions as client money governed by the Financial Conduct Authority Conduct of Business Source Book;

14.    confirms, represents and warrants that it may lawfully acquire the Placing Shares comprising its Placing Participation and that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United  Kingdom;

15.    acknowledges and agrees that its agreement with Peel Hunt to acquire Placing Shares, whether by telephone or otherwise is a legally binding contract and the Terms and Conditions of each Placee's Placing Participation and any non-contractual obligation therefrom will be governed by and construed in accordance with the laws of England and Wales to the exclusive jurisdiction of whose courts it irrevocably agree to  submit;

16.    acknowledges and agrees that time shall be of the essence as regards obligations pursuant to these Terms  and Conditions;

17.    acknowledges and agrees that it is the responsibility of any person outside of the United Kingdom wishing to subscribe for Placing Shares to satisfy itself that, in doing so, it complies with the laws of any relevant territory in connection with such subscription or purchase and that it obtains any requisite governmental or other consents and observes any other applicable formalities;

18.    confirms, represents and warrants that neither it nor the beneficial owner of such Placing Shares will be a resident of Canada, Australia, Japan, the Republic of South Africa or New Zealand;

19.    acknowledges and agrees that the Placing Shares have not been and will not be registered under the laws, or with any securities regulatory authority, of any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand and, subject to limited exceptions, the Placing Shares may not be offered, sold, transferred or delivered, directly or indirectly into any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand or their respective territories and possessions;

20.    warrants that it has complied with all relevant laws of all relevant territories, obtained all requisite governmental or other consents which may be required in connection with its Placing  Participation, complied with all requisite formalities and that it has not taken any action or omitted to take any action which will or may result in Peel Hunt, the Company or any of their respective directors, officers, agents, employees, affiliates or advisers acting in breach of the legal or regulatory requirements of any territory in connection with the Placing or its application;

21.    acknowledges and agrees that its acquisition of Placing Shares does not trigger, in the jurisdiction in which it is resident or located: (i) any obligation to prepare or file a prospectus or similar document or any other report with respect to such subscription; (ii) any disclosure or reporting obligation of the Company; or (iii) any registration or other obligation on the part of the Company;

22.    warrants that in accepting its Placing Participation it is not applying for registration as, or as a nominee or agent for, a person who is or may be a person mentioned in sections 67 to 72 inclusive and sections 93 to 97 inclusive of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system.

23.    represents and warrants that: (i) it has complied with its obligations under the Criminal Justice Act 1993 and the Market Abuse Regulation; (ii) in connection with money laundering and terrorist financing, it has complied with its obligations under the Proceeds of Crime Act 2002 (as  amended), the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017; and (iii) it is not a person: (a) with whom transactions  are  prohibited under the Foreign Corrupt Practices Act of 1977 or any economic  sanction  programmes administered by, or regulations promulgated by, the Office of  Foreign  Assets  Control of the U.S. Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the Regulations); and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and it has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such subscription and payment, and it will provide promptly to Peel Hunt such evidence, if any, as to the identity or location or legal status of any person which Peel Hunt may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by Peel Hunt on the basis that any failure by it to do so may result in the number of Placing Shares that are to be subscribed by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as Peel Hunt may decide in their sole discretion;

24.    if the Placee is a resident in the European Economic Area, it is a qualified investor within the meaning of the law in the Relevant Member State implementing Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive (Directive 2003/71/EC);

25.    if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that the Placing Shares subscribed by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than a 'qualified investor' (as defined in the Prospectus Directive), or in circumstances in which the prior consent of Peel Hunt has been given to the offer or  resale;

26.    represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing  measure in any member  state);

27.    represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

28.    where it is acquiring Placing Shares for one or more managed accounts, represents and warrants that it is authorised in writing by each managed account: (a) to acquire the Placing Shares for  each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in these Terms and Conditions and the Announcement of which it forms part; and (c) to receive on its behalf any trade confirmation or contract note relating to the Placing in the form provided to it by Peel Hunt;

29.    undertakes that it (and any person acting on its behalf) will make payment to Peel Hunt for the Placing Shares allocated to it in accordance with these Terms and Conditions on the due time  and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Peel Hunt may in its sole discretion determine and without liability to it and  it will remain liable and will indemnify Peel Hunt or the Company (as the case may be) on  demand for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to or referred to in these Terms and Conditions) which may arise upon the placing or sale of its Placing Shares on its behalf;

30.    acknowledges and agrees that all times and dates in this Announcement and these Terms and Conditions may be subject to amendment and Peel Hunt shall notify it of any such amendments;

31.    acknowledges and agrees that its commitment to subscribe for Placing Shares on the terms set out herein and in the trade confirmation or contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the  Placing;

32.    acknowledges that any document that is to be sent to it in connection with the Placing will be sent at its own risk and may be sent to it at any address provided by it to Peel Hunt;

33.    acknowledges that any of its monies held or received by Peel Hunt will not be subject to the protections conferred by the Financial Conduct Authority's Client Money Rules;

34.    acknowledges and agrees that the Placing Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States, and are being offered and sold only outside the United States in 'offshore transactions' (as defined in Regulation S). Accordingly, the Placing Shares may not be offered, sold, transferred or delivered directly or indirectly in or into the United States, except pursuant to an effective registration statement under the US Securities Act or an exemption from the registration requirements of the US Securities Act, and, in connection with any such transfer, the Company will have the right to obtain, as a condition to transfer, a legal opinion of counsel, in a form and by counsel reasonably satisfactory to the Company, that no such US Securities Act registration is or will be required along with appropriate certifications by the transferee as to appropriate matters. No representation has been made as to the availability of any exemption under the US Securities Act for the reoffer, resale, transfer or delivery of the Placing Shares;

35.    agrees, represents and warrants as follows:

35.1     it is acquiring the Placing Shares in an 'offshore transaction' (as defined in Regulation S);

35.2     it will not offer or sell the Placing Shares in the United States absent registration or an exemption from registration under the US Securities   Act;

35.3     it is not acquiring the Placing Shares as a result of any form of 'directed selling efforts' (as defined in Rule 902 under the US Securities Act);    and

35.4     if it is in the United Kingdom, it is a person falling within the exemption contained in    section 86(1)(a) of FSMA or falling within one or more of the categories of persons set out  in Article 19 (Investment Professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the  Order;

36.    in making an investment decision with respect to the Placing Shares, for itself and on behalf of  any person for whose account it is acquiring the Placing Shares, it represents and warrants that    it has:

36.1     not relied on any representation, warranty or statement made by the Company, Peel Hunt or any of their respective affiliates, directors or employees;

36.2     the ability to bear the economic risk of its investment in the Placing Shares and have no need for liquidity with respect to its investment in the Placing Shares;

36.3     such knowledge and experience in financial and business matters that it is capable of evaluating the merits, risks and suitability of investing in the Placing Shares, and is able to sustain a complete loss of any investment in the Placing Shares;

36.4     had access to such financial and other information concerning the Company and the Placing Shares as it deems necessary in connection with its decision to purchase the Placing Shares; and

36.5     investigated independently and made its own assessment and satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in the Placing Shares, including any federal, state and local tax consequences, affecting it in connection with its purchase and any subsequent disposal of the Placing Shares;

37.    represents and warrants that, if a pension fund or investment company, the purchase of Placing Shares is in full compliance with all applicable laws and regulation;

38.    unless otherwise notified by the Placee to Peel Hunt, the Placee is not a venture capital trust (as defined in Part 6 of the Income Tax Act 2007 ('ITA') nor has it claimed, or is intending to claim, tax relief on its investment in the Company under the Seed Enterprise Investment Scheme (under Part 5A of ITA) or the Enterprise Investment Scheme (under Part 5 of ITA) or Social Investment Tax Relief (Part 5B of ITA); and

39.    unless otherwise notified by the Placee to Peel Hunt, the Placee's participation in the Placing shall not constitute any aid which is received by the Company pursuant to a measure approved by the European Commission as compatible with Article 107 of the Treaty on the Functioning of the European Union in accordance with the principles laid down in the European Commission's Guidelines on State aid to promote risk finance investments (as those guidelines may be amended or replaced from time to time).

Each Placee acknowledges that the Company, Peel Hunt, any transfer agent, any distributors or dealers and their respective affiliates and others will rely on the truth and accuracy of the foregoing warranties, acknowledgements, representations, undertakings and agreements, and it agrees to indemnify on an after-tax basis and hold harmless the Company, Peel Hunt and their respective affiliates, officers, directors, agents, employees or advisers (the Indemnified Persons) from and against any and all costs, claims losses, damages, liabilities or expenses, including legal fees and expenses (including any VAT thereon), which an Indemnified Person may incur by reason of, or in connection with, any representation, warranty, acknowledgement, agreement or undertaking made herein not having been true when made, any breach thereof or any misrepresentation.

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

If Peel Hunt or the Company or any of their respective agents request any information about a Placee's agreement to acquire Placing Shares, such Placee must promptly disclose it to them and ensure that such information is complete and accurate in all respects.

The rights and remedies of Peel Hunt and the Company under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.

In the case of a joint agreement to acquire Placing Shares, references to a ''Placee'' in these terms and conditions are to each of such Placees and such joint Placees' liability is joint and several.

References to time in this Announcement are to London time, unless otherwise stated.

Each Placee further agrees that these Terms and Conditions shall survive after completion of the Placing.

No statement in this Announcement is intended to be a profit forecast.  Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

 

 

Appendix III - Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:

Admission

the admission of all the Placing Shares to trading on AIM becoming affective in accordance with the AIM Rules

AIM

the market of that name operated by the London Stock Exchange

AIM Rules

the provisions of the London Stock Exchange's AIM Rules for Companies as amended from time to time governing, inter alia, admission to AIM and the continuing obligations of AIM companies

Announcement or Announcement of the Placing

this announcement (including the Appendix to this announcement) relating to the Placing

Channel Four

Channel Four Television Corporation, 4 Ventures Limited or any of their affiliates (as the case may be)

Company or eve

eve Sleep plc (incorporated in England and Wales under company registration number 09261636)

CREST

the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the CREST Regulations)

CREST Regulations

the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time

Directors or Board

the directors of the Company as at the date of this Announcement

Director Related Party Transaction

the proposed placing of Non-VCT Shares with Paul Pindar and James Sturrock as more particularly described in this Announcement

Enlarged Share Capital

the Ordinary Shares in issue immediately following Admission assuming the issue of the Placing Shares as outlined in this Announcement

EU

the European Union

Existing Ordinary Shares

the 139,735,161 Ordinary Shares in issue as at the date of this Announcement

FCA

the Financial Conduct Authority of the United Kingdom

FSMA

the Financial Services and Markets Act 2000 (as amended)

Form of Proxy

the form of proxy for use in connection with the General Meeting which will accompany the Circular

FP Omnis Portfolio Investments ICVC

a company incorporated in England and Wales with registered number IC000982

General Meeting

the general meeting of the Company to be convened at 10 a.m. on 11 February 2019 (or any adjournment of that meeting)

Group

the Company, its subsidiaries and its subsidiary undertakings

HMRC

Her Majesty's Revenue & Customs

Independent Directors

Abid Ismail, Thomas Enraght-Moony and Nikki Crumpton

Independent Shareholders

all Shareholders other than Woodford (and anyone acting in concert with Woodford) and the Placees

Independent Shares

the Ordinary Shares held by Independent Shareholders

Last Practicable Date

22 January 2019 (being the last practicable date prior to the publication of this Announcement)

LF Woodford Investment Fund

a company incorporated in England and Wales with registered number IC001010

London Stock Exchange

London Stock Exchange plc

Non-VCT Placee

a Placee who is not the VCT Placee

Non-VCT Placing

the placing of the Non-VCT Shares with the Non-VCT Placees on the terms set out in the Placing Agreement

Non-VCT Shares

up to 100,400,000 Ordinary Shares proposed to be allotted and issued by the Company to the Non-VCT Placees pursuant to the Non-VCT Placing

Notice of General Meeting

the notice convening the General Meeting which will be set out in the Circular

Official List

the Official List of the UK Listing Authority

OI&G

Omnis Income and Growth Fund, being a sub fund of FP Omnis Portfolio Investments ICVC

Ordinary Shares

ordinary shares of 0.1 pence each in the capital of the Company

Panel

UK Panel on Takeovers and Mergers

Peel Hunt

Peel Hunt LLP (incorporated and registered in England and Wales under registration number OC357088) the registered office of which is at Moor House, 120 London Wall, London EC2Y 5ET

Placee or Placees

any person (including individuals, funds or otherwise) who are to subscribe for Placing Shares pursuant to the Placing

Placing

the proposed conditional placing of the Placing Shares by Peel Hunt, on behalf of the Company, with Placees pursuant to the Placing Agreement

Placing Agreement

the placing agreement dated 23 January 2019 between the Company and Peel Hunt in respect of the Placing

Placing Price

10 pence per Placing Share

Placing Shares

the 120,317,323 New Ordinary Shares proposed to be issued under the Placing (including the VCT Placing Shares)

Placing T&Cs

the terms and conditions of the Placing as appended to the Announcement of the Placing

Proposals

the Rule 9 Waiver, the Director Related Party Transaction, the Placing and/or Admission

Prospectus Directive

the Directive of the European Parliament and of the Council of the European Union 2003/71/EC

Quilter Investors UKEI2

Quilter Investors UK Equity Income II Fund, being a sub-fund of Quilter Investors Trust

Quilter Investors Trust

an authorised unit trust established in England and Wales and authorised by the FCA with product reference number 200108

Preferred A Shares

the preferred A shares of 0.01 pence each in the Company in issue prior to the share capital reorganisation which was effected in connection with the IPO

Regulation S

Regulation S promulgated under the US Securities Act

Regulations

the Uncertificated Securities Regulations 2001, as amended from time to time

Regulatory Information Service

has the meaning given to it in the AIM Rules

Relevant Member State

a member of the European Economic Area which has implemented the Prospectus Directive Regulations

Resolutions

the resolutions to be set out in the Notice of General Meeting

Rule 9 Waiver

the conditional waiver by the Takeover Panel of the obligations that would otherwise arise following the issue of the Placing Shares to make a general offer to all other Shareholders pursuant to Rule 9 of the Takeover Code

Rule 9 Waiver Resolution

the ordinary resolution approving the grant by the Takeover Panel of the Rule 9 Waiver as will be set out in the Notice of General Meeting

Shareholders

holders of Ordinary Shares

Share Option Plan

the Company's share option plan adopted on 12 May 2017 for the purpose of incentivising (inter alia) certain of the Company's employees and directors 

Takeover Code

The City Code on Takeovers and Mergers

Takeover Panel

the UK Panel on Takeovers and Mergers

UK or United Kingdom

the United Kingdom of Great Britain and Northern Ireland

UK&I

the UK and the Republic of Ireland

US or United States

the United States of America, its territories and possessions

US Securities Act

the US Securities Act of 1933, as amended

VCT

a venture capital trust as defined in Part 6 of the Income Tax Act 2007

VCT Placee

collectively, Octopus Titan VCT plc, Octopus Investments Nominees

Limited and Octopus Apollo VCT plc

VCT Placing

the placing of the VCT Shares with the VCT Placee(s) on the terms set out in this Announcement and the Placing Agreement

VCT Placing Shares or VCT Shares

up to 19,917,323 new Ordinary Shares proposed to be allotted and issued by the Company to the VCT Placee pursuant to the VCT Placing

VCT Scheme

Venture Capital Trust Scheme under the provisions of Part 6 of the Income Tax Act 2007

Whitewash Resolution

the ordinary resolution to approve the Panel's waiver of Woodford's obligation to make an offer under Rule 9 of the Takeover Code on completion of the Placing, which will be set out in Resolution 3 of the Notice of General Meeting, and is required to be passed on a poll at the General Meeting by the Independent Shareholders

WEIF

the LF Woodford Equity Income Fund, being a sub fund of LF Woodford Investment Fund

Woodford

Woodford Investment Management Ltd incorporated in England and Wales with company number 10118169, in its capacity as discretionary investment manager, acting on behalf of the Woodford Funds

Woodford Funds

together WEIF, OI&G and Quilter Investors UKEI2 (each being a fund managed by Woodford)

 


[1] This figure is unaudited.

[2] Based on Euromonitor data (passport 2019) market sizes excluding VAT. Retail value RSP market sizes (inclusive of VAT) UK mattress £2.2bn, FR mattress £0.8bn, UK bedroom £2.9bn, FR bedroom £1.1bn.  'Sleep' includes mattresses, beds and bed textiles.  

[3] The estimated market share is based on Euromonitor estimates and the Company's own estimates.  'Bedroom' includes beds and bed textiles. 

[4] Source: GlobalData - Bedroom furniture, September 2018.

[5] This is not a profit forecast.  Actual results may differ and there is no guarantee that the Company will achieve any such targeted EBITDA margin. 

[6] This is not a profit forecast.  This is based on based on Euromonitor estimates and the Company's own estimates and is not an indication that such market shares, revenues or cost ratios are achievable and should not be taken as an indication of any expected, targeted or actual future results and no reliance should be placed on the same.  This is based on a c2.5 billion mattress market size.        

[7] Figures for 2018 are unaudited.   

[8] Source: Populus Omnibus August 2018.

[9] Source: YouGov brand tracker August 2018.

[10] Source: Google Trends Index, 1 January to 31 October 2018, extracted on 20 November 2018.

[11] Non-mattress revenue does not represent split of quantity of orders/items and is the value of revenue attributable to non-mattress products. 

[12] Repeat orders are based on orders in a period from previous customers as a percentage of total orders via the UK website (excluding Ireland) in that period.

[13] Financial results presented for 2018 are unaudited and have not been reviewed by the Company's auditors.  2018 annual results once audited may differ. 

[14] Reported gross margins Oct17 YTD - UK 60 per cent., France 55 per cent.  Adjustment to underlying relates to provision release in H1 2017.

[15] Returns rate reflects values in the management accounts which are produced in line with accounting policies and include provisions.  On a Cohort analysis basis the values for France are 2017 (9 per cent.) and Oct-18 YTD (7 per cent.). 

[16] Includes connected persons




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