TIDMEDEN
RNS Number : 5625D
Eden Research plc
30 June 2021
This announcement contains information which, prior to its
disclosure, was considered inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014 (MAR).
30 June 2021
Eden Research Plc
("Eden" or "Company")
Preliminary Results for Year Ended 31 December 2020
Eden Research plc (AIM: EDEN), the AIM-quoted company focused on
sustainable biopesticides for use in global crop protection, animal
health and consumer products industries, announces its preliminary
results for the year ended 31 December 2020.
Commercial and operational highlights:
-- A one-year exclusive evaluation agreement signed with Corteva
Agriscience (" Corteva ") in January 2020 to evaluate seed
treatment applications of Eden's products and Sustaine(R)
technology. Corteva is the world's largest "pure-play" agricultural
company
-- First sales of bionematicide, Cedroz(TM), in Mexico during
2020 and new regulatory approvals received for Mevalone(R)
(biofungicide) and Cedroz
-- Approval of Mevalone in Australia in August 2020, the first
approval for Eden's products in the Southern Hemisphere
-- Organic approval in the European Union (" EU ") received for
all three of Eden's terpene active ingredients thymol, eugenol and
geraniol. Organic product certification of Mevalone and Cedroz in a
number of EU territories, including key countries France and
Spain
-- Relocation of offices and the opening of Eden's formulation,
analytical and biology laboratories at Milton Park, Oxfordshire
-- Continued expansion of the team and in-house technical
expertise with the appointment of a Regulatory Director and Global
Head of Biology
Financial highlights
-- Revenue of GBP1.4m (2019: GBP1.8m*)
-- Operating loss of GBP2.2m (2019: GBP1.4m)
-- Loss before tax of GBP2.5m (2019: GBP1.5m)
-- Loss per share of 0.66p (2019: 0.55p)
-- Net cash of GBP7.3m (2019: GBP0.5m)
-- Product sales of GBP1.1m (2019: GBP1.4m*)
*See "Prior year Adjustment" note below
Post period end:
-- Eden received London Stock Exchange's Green Economy Mark in January 2021
-- Sipcam Oxon, Eden's commercial partner, received
authorisation for the sale of Eden's biofungicide in Spain in March
2021
-- An exclusive commercialisation, supply and distribution
agreement was signed with Corteva for Eden's seed treatment product
based on Eden's active ingredients and Sustaine
-- Eastman Chemical Company, Eden's commercial collaborator,
received authorisation for the sale of Cedroz in Italy in May
2021
The Group's full Report and Accounts are available at
www.edenresearch.com
Lykele van der Broek, Chairman commented: "It goes without
saying that 2020 was an unusual and challenging year for everyone
in different ways. Clearly, the global COVID-19 pandemic has caused
complex and unforeseen issues for people and businesses across the
globe. Challenges have arisen which have required us all to adapt
and adopt new ways of working, enabling life and work to continue
as close to normal as possible.
Eden has not been immune to the challenges from the global
COVID-19 pandemic. For example, we have seen a number of
limitations with our field trials and some short-term delays in the
regulatory process and product approvals globally as a result of
logistical issues associated with various lockdowns and other
restrictions worldwide.
However, we are proud of the fact that Eden has made significant
strides forward in the past year, despite the unprecedented
backdrop we have all faced. Indeed, we have seen the continued
commercialisation of our products, the building of our financial
resilience, the development of our operations and the strengthening
of our reputation as a growing and innovative company aligned with
the transition to a more sustainable world.
We have also seen 2021 start as we mean to go on, by signing a
landmark distribution agreement for our Sustaine (R) technology
with Corteva Agriscience, and receiving the London Stock Exchange's
Green Economy Mark in recognition of our contribution to the global
green economy. This focus on Eden's sustainable credentials will
continue to be a focus throughout 2021 and beyond, as investors are
increasingly aware of the environmental impact of their investment
decisions."
Current trading and COVID-19 update
Our overriding objective in the current crisis has been to
ensure the safety of our employees. Following governmental advice,
the team has been working remotely, where practicable, and
delivering largely uninterrupted services to customers. The Group
already has a lean cost base with a number of its activities
outsourced and has therefore made no material cost cutting to date
but will keep this under review. The Group's cash position remains
strong with GBP6.0m of cash available as at 31 May 2021.
Trading in the first part of 2021 has largely been in line with
management expectations, based on the current geographical
footprint which drives product sales revenue and is intrinsicly
linked to regulatory approvals. Some delays have been experienced
with shipping of raw materials, due to the on-going, global
shortage of sea containers and other supply chain-related matters,
the effect of which may have an impact upon revenue this year.
We are still seeing some delays with regulatory authorities, not
least in the US, where we are awaiting approval of our three active
ingredients, as well as our first two agrochemical products,
Mevalone and Cedroz, though we still expect to see those come
through in 2021, in time for the 2022 growing season.
The on-going social distancing and other travel restrictions
globally are likely to continue to impact the ability of our
distributors to interact with customers, and growers' reduced
ability to harvest crops, due to the lack of appropriate labour,
may impact on their investment in agrochemicals.
Given the uncertainty regarding the level and duration of any
disruption in each of the markets in which the Group operates or
plans to operate, it continues to be difficult to assess what, if
any, commercial and financial impact there may be in 2021 and
beyond. We will update the market with financial guidance as soon
as practicable, and at a time when we can do so with a reasonable
degree of certainty.
Financial Reporting Council ("FRC") Enquiries
In March 2021, the Company received a request for information
from the Corporate Reporting Review team at the Financial Reporting
Council regarding a number of transactions and disclosures relating
to TerpeneTech (UK) and TerpeneTech (Ireland), as reported in the
2019 Report and Accounts.
As a result of this review, a prior year adjustment to revenue
and cost of sales was identified (see Prior Year Adjustment note
below). There was no impact on the reported net loss for the prior
year and no impact on the prior year Balance Sheet or Cashflow
Statement. In addition, the Directors have provided enhanced
disclosures in the notes to the accounts.
When reviewing the Company's 2019 Annual Report and Accounts,
the FRC has made clear to us the limitations of its review as
follows:
-- its review is based on the 2019 Annual Report and Accounts
only and does not benefit from a detailed knowledge of the Group's
business or an understanding of the underlying transactions entered
into;
-- communications from the FRC provide no assurance that the
Company's 2019 Annual Report and Accounts are correct in all
material respects and are made on the basis that the FRC (and its
officers, employees and agents) accepts no liability for reliance
on them by the Company or any third party, including but not
limited to investors and shareholders; and
-- the FRC's role is not to verify information provided but to
consider compliance with reporting requirements.
The Committee reviewed the disclosures and amendments proposed
by management and concluded that they are appropriate.
The following paragraphs are based on FRC's 'Summary of
Findings', which shall be published by FRC later in the year, as
part of their normal operating procedures:
Transactions with associate
FRC asked for more information about the Group's sale of
geraniol to its associate, TerpeneTech (UK), and the Group's
acquisition of an intangible asset from the associate. FRC also
queried the existence of, and accounting for, any unrealised gain
or loss (in applying the equity method) arising from such
transactions.
The Company explained that it had reconsidered the guidance in
IFRS 15 'Revenue from Contracts with Customers' in relation to its
arrangement with the associate for the sale of geraniol. As a
result, the Company acknowledged that the Group accounts (in
addition to recognising the Group's share of the result of the
associate through the normal equity accounting) should have
recognised revenue based upon the margin it was entitled to receive
from the associate's sale of geraniol instead of on a gross basis.
Consequently, the Company agreed to restate comparative amounts in
the following year's income statement accordingly (See "Prior Year
Adjustment' note below). As the change affected a primary
statement, FRC asked the company to disclose the fact that the
matter had come to its attention as result of FRC's enquiry.
The Company provided a satisfactory explanation in respect of
the purchase of the intangible asset. The Company also acknowledged
that there was a gain on the sale of the intangible asset by the
associate for which its share had not been eliminated when
preparing the Group accounts, but explained that the adjustment was
considered immaterial.
Impairment review of investment in associate
FRC requested information about the impairment review performed
for the Company's investment in its associate, Terpene Tech (UK).
The Company provided a satisfactory analysis of the assessment
performed. The Company agreed to enhance the disclosure in respect
of the impairment review in future annual accounts, including an
improved analysis of the key assumptions made.
Investment in subsidiary
FRC asked the company to clarify its judgement made in
determining that the Company controls TerpeneTech (Ireland). The
Company provided a satisfactory explanation and agreed to improve
the disclosure in future annual accounts to more clearly explain
the basis for its conclusion.
FRC closed its enquiries in June 2021.
Prior Year Adjustment
Following the incorporation of Terpene Tech (Ireland) in 2019,
the Group is reorganising the roles of TerpeneTech (Ireland) and
TerpeneTech (UK) in the sale of geraniol and certain other
products.
Following communications with the Financial Reporting Council,
the Directors have reconsidered the arrangements that were in place
in the prior year (and which remained in place in the current year)
in regard to sales made by TerpeneTech (Ireland).
The Directors have concluded that TerpeneTech (Ireland) was
acting as an agent in these transactions and should have recognised
sales of GBP24,730 being the 10% margin on the sales of geraniol
rather than recognising gross sales and cost of sales. As such,
they have restated the Group's revenue and cost of sales in the
prior year.
As a consequence of this restatement, revenue has been reduced
by GBP222,574 and cost of sales have been reduced by GBP222,574 in
the Income Statement for the year ending 31 December 2019. There
was no impact on loss before or after taxation or net assets and no
impact on any opening balances.
As the arrangements change going forward, the Directors will
reconsider the revenue recognition.
For further information contact:
Eden Research plc www.edenresearch.com
Sean Smith
Alex Abrey 01285 359 555
Cenkos Securities plc (Nominated advisor
and broker)
Giles Balleny / Camilla Hume/ Mark Connelly
(corporate finance)
Michael Johnson (sales) 020 7397 8900
Hawthorn Advisors (Financial PR)
Lorna Cobbett / Victoria Ainsworth eden@hawthornadvisors.com
Notes to Editors:
Eden Research is an AIM quoted company that develops and
supplies breakthrough biopesticide products and natural,
plastic-free microencapsulation technologies to the global crop
protection, animal health and consumer products industries.
Eden's Sustaine(R) encapsulation technology is used to harness
the biocidal efficacy of naturally occurring chemicals produced by
plants (terpenes) and can also be used with both natural and
synthetic compounds to enhance their performance and ease-of-use.
Sustaine microcapsules are naturally-derived, plastic-free,
biodegradable micro-spheres derived from yeast. It is one of the
only viable, proven and immediately registerable solutions to the
microplastics problem in formulations requiring encapsulation.
Eden has numerous patents and a pipeline of products at
differing stages of development targeting specific areas of the
global agrochemicals industry. Eden was admitted to trading on AIM
in May 2012.
For more information about Eden, please visit:
www.edenresearch.com .
Eden Research plc
Chairman's Statement
For the year ended 31 December 2020
Introduction
It goes without saying that 2020 was an unusual and challenging
year for everyone in different ways. Clearly, the global COVID-19
pandemic has caused complex and unforeseen issues for people and
businesses across the globe. Challenges have arisen which have
required us all to adapt and adopt new ways of working, enabling
life and work to continue as close to normal as possible.
Eden has not been immune to the challenges from the global
COVID-19 pandemic. For example, we have seen a number of
limitations with our field trials and some short-term delays in the
regulatory process and product approvals globally as a result of
logistical issues associated with various lockdowns and other
restrictions worldwide.
However, we are proud of the fact that Eden has made significant
strides forward in the past year, despite the unprecedented
backdrop we have all faced. Indeed, we have seen the continued
commercialisation of our products, the building of our financial
resilience, the development of our operations and the strengthening
of our reputation as a growing and innovative company aligned with
the transition to a more sustainable world.
We have also seen 2021 start as we mean to go on, by signing a
landmark distribution agreement for our Sustaine (R) technology
with Corteva Agriscience, and receiving the London Stock Exchange's
Green Economy Mark in recognition of our contribution to the global
green economy. This focus on Eden's sustainable credentials will
continue to be a focus throughout 2021 and beyond, as investors are
increasingly aware of the environmental impact of their investment
decisions.
Products and technology
Our development work has managed to continue largely as hoped
during 2020, including Eden's insecticide and seed treatment
products, as well as third party active ingredients which use
Eden's proprietary Sustaine (R) technology. We look forward to
sharing the results of our work here during 2021 and beyond.
We have continued to expand our global product footprint with
authorisation of Eden's bio-fungicide Mevalone (R) in Australia,
for use on both wine and table grapes under the trade name
"Novellus"(TM), and of Cedroz(TM) in Spain and France. Closer to
home, we announced a partnership with M H Poskitt, a leading
producer of root vegetables in the UK, to develop and trial a new
bio-fungicide product. These agreements are important steps in the
expansion and commercialisation of Eden's product base.
We have also been delighted to sign our first commercial
agreement for seed treatment applications, which grants exclusive
distribution rights of our proprietary product incorporating our
Sustaine(R) technology to Corteva Sciences, the fourth largest
agriculture company in the world. We have high hopes for the
commercial potential for this product area.
Funding
In March 2020, Eden concluded a fundraise of GBP10.4 million
(before expenses), which saw several new institutional investors
joining the share register. This funding provides Eden with the
financial resource to invest in the development of its insecticide
and seed treatment products. It also represented a significant
achievement for Eden, as the successful fundraise came just as the
effects of the global pandemic were starting to be felt in the
financial markets. This demonstrated the strength of Eden as an
investment prospect.
Operations
Marking the beginning of a new chapter in Eden's growth story,
2020 has seen the investment in our own laboratory facilities
alongside a new office. Relocating to the new site at Milton Park
in Oxfordshire, one of Europe's leading science and technology
communities, means that we are able to undertake development work
in-house for the first time, which allows increased flexibility and
efficiency.
As well as moving to new laboratory facilities, we have seen the
expansion of the Eden team in 2020. Despite the unique challenges
of recruiting and onboarding new members during a pandemic, our new
team members are already making valuable contributions to the
expansion of Eden's capabilities and providing support to its
existing and potential customers.
Market opportunity
Against a backdrop of seismic changes across the global
landscape, many trends have remained consistent in 2020. Driven by
changing consumer habits and growing investor awareness of
environmental factors, the agricultural industry has continued to
adapt and find new ways of growing food to feed larger populations
more sustainably.
Eden is well positioned to capitalise on this trend as its
products and technologies align closely with global demand for
plastic-free and sustainable crops. As well as being first movers
in the space, Eden maintains an innovative and nimble approach to
its product and technological developments which helps us foresee
and respond to fast changing dynamics.
From a standing start approximately twenty years ago, the
biopesticides portion of the crop protection market currently has a
15% compound annual growth rate and is forecast to have a market
value of over $11 billion by 2027. Recognising this considerable
and growing market, Eden has positioned itself to develop, register
and market sustainable biopesticide products based around its three
Europe-registered active ingredients.
Mevalone (R) and Cedroz รค , Eden's first two products, boast
high efficacy and the added benefits of maximum residue level
exemption, short pre-harvest intervals, competitive pricing, and
close alignment with the direction of regulatory changes. Eden's
Sustaine (R) microencapsulation technology offers an effective
solution to consumer concerns around microplastics and consequently
has received considerable interest from external parties, most
recently demonstrated through our landmark agreement with Corteva,
which is a significant achievement for the company.
Microplastics have been a well-publicised environmental cause
for campaigners in recent years. Public pressure has led to policy
changes and the European Union has announced its intention to
publish new regulations which could see a ban on the use of
polymers in certain industries, including crop protection, where
polymers are widely used to formulate active ingredients.
With global regulatory changes highly likely, the crop
protection industry will need to adapt its practices quickly, but
has a history of being slow to implement new processes. Following
an increase in the number of enquiries from major players in the
crop protection industry in 2020, Eden has seen first-hand evidence
of the industry's focus on adapting new practices swiftly.
Looking ahead
Having dealt with the unique circumstances 2020 has presented us
with, Eden has moved into fiscal 2021 well-funded and well
positioned to achieve its mission to become a leader in
biopesticide products and natural, plastic-free microencapsulation
technologies to the global crop protection, animal health and
consumer products industries.
We have managed to manoeuvre our way through the global pandemic
relatively unscathed and the future for Eden looks promising, with
exciting developments in the pipeline.
The recently announced agreement with Corteva is, of course,
significant to Eden and the seed treatment product area is an
exciting addition to the already valuable, diverse portfolio of
products and applications that the business has generated over the
years.
The London Stock Exchange Green Economy Mark demonstrates the
strength of Eden's position as a sustainable company at a time when
demonstrating environmental credentials is a key priority and
distinction for any company.
I would like to thank our shareholders for their on-going
support and convey to you my confidence in the Eden team and the
success they are working towards for the business. There is still
much more to come which we look forward to sharing with you in due
course.
Lykele van der Broek
Non-Executive Chairman
29 June 2021
Eden Research plc
Chief Executive Officer's Review
For the year ended 31 December 2020
Introduction
It has been an unprecedented year for businesses across the
globe and Eden has not been immune to the disruption caused by the
COVID-19 pandemic. However, we are extremely proud of the
resilience we have demonstrated against this exceptional backdrop
and the continued progress we have made in advancing our strategy
and positioning in the rapidly growing biopesticides market.
The financial year has seen us expand our footprint, both
geographically and through new product development, supported by
the successful fund raise delivered in March 2020. We are also
delighted to have signed a key distribution agreement with Corteva
Agriscience in May 2021 for our first seed treatment product which
uses Eden's Sustaine(R) technology combined with our plant-derived
active ingredients, which creates a solid commercial foundation for
our future work in the new area of seed treatments. We are also
actively pursuing additional opportunities in seed treatments.
We were also pleased to receive the London Stock Exchange's
Green Economy Mark in January 2021, which recognises the role we
are playing in supporting the transition to a sustainable world and
highlights our credentials as a sustainable investment opportunity
on the London market.
Section two: Delivering on our strategy
Eden continues to be the only UK-quoted company focused on
biopesticides for sustainable agriculture and we are well
positioned to capitalise on this rapidly growing market, which is
anticipated to be worth over $11 billion by 2027.
Our vision remains the same: To be a global leader in
sustainable crop protection through the development of bioactive
products enabled or enhanced by our novel encapsulation and
delivery technologies, making the most of the significant market
opportunity available.
In the near term, our strategic focus is on:
- Registering and commercialising our two approved products,
Mevalone (R) and Cedroz(TM) in new territories and for new
applications
- Developing the use of our microencapsulation technology,
Sustaine(R) , with new active ingredients, including conventional
agrochemicals
- Building on existing opportunities with Corteva Agrisciences, Sipcam and other collaborators
- Advancing the development of our first insecticide products
We continue to make significant progress on these goals,
supported by our financial resources, which puts Eden in a good
position to capitalise on the work we have done to date and move
forward with new commercial growth opportunities.
Notable commercial and operational highlights from 2020
include:
-- Inclusion of Eden's three active ingredients, geraniol,
eugenol and thymol , in the EU's Organic Production Regulation ,
opening the door for the use of Eden's formulated product in
organic agriculture in the EU
-- Commencement of an evaluation agreement with Corteva
Agriscience in the new area of seed treatments
-- New authorisations for the use of Mevalone(R) in a range of new uses.
-- Authorisation of Eden's nematicide formulation, Cedroz(TM) ,
in Greece, Spain, France, Italy and the Netherlands.
-- The granting of patents for our Sustaine (R) encapsulation
technology and compositions for insecticide products, in both the
US and Australia
-- The new authorisation of our bio-fungicide, marketed as Novellus, in Australia
-- The announcement of a partnership with M H Poskitt, to
develop and trial a new bio-fungicide product derived from a common
weed and designed to protect and improve the quality of
vegetables
-- The opening up of Eden's new laboratory facilities in Milton
Park, Oxfordshire, allowing Eden to undertake more in-house
development work, including new product formulation,
microbiological screening, plant and seed evaluations and
analytical work.
-- The expansion of our team, through the appointment of Dr.
Michael Carroll as Director of Regulatory Affairs in April 2020 and
Dr. Aoife Dillon to the role of Head of Biology in July 2020.
In May 2021, we were delighted to sign an exclusive
commercialisation, supply and distribution agreement with Corteva
Agriscience, the fourth largest agriculture inputs company in the
world. This agreement provides Corteva with exclusive distribution
rights for Eden's seed treatment product based on Eden's active
ingredients and Sustaine(R) encapsulation technology in Europe,
Serbia and the United Kingdom and follows an evaluation in select
seed treatment applications. Over the coming two years, Corteva and
Eden will work collaboratively to register, commercialise and
ultimately distribute new seed treatments for at least one major
crop, and it is anticipated that this may be expanded following
initial success.
This agreement represents a major commercial milestone for Eden
as it is intended to be the first revenue generating use of Eden's
Sustaine (R) containing products in the treatment of seeds and
provides us with the opportunity to capture a significant share of
this market.
Section three: Financial Review
Revenue for the year decreased to GBP1.4m (2019 [restated]:
GBP1.8m) primarily due to the reduction in one-off receipts to
GBPnil (2019: GBP0.3m).
The focus for the business remains to grow revenue through
product sales which will ultimately provide a sustainable,
consistent source of income for the Company. This was not the case
in 2020 with product sales decreasing to GBP1.1m (2019 [restated]:
GBP1.4m) due to impact of the global pandemic on wine grape
production.
The cash position at the year-end was GBP7.3m (2019: GBP0.5m),
following the successful fundraise in March 2020 with gross
proceeds of GBP10.4m.
Administrative expenses in the year increased to GBP2.2m (2019:
GBP2.0m) with the introduction of new team members and additional
costs in respect of the new office and laboratory facilities.
Consequently, operating loss increased to GBP2.2m (2019: GBP1.4m).
The increase in operating loss is due to the aforementioned
reduction in one-off receipts, increased staff costs, as well as
amortisation of GBP0.6m (2019: GBP0.5m) and depreciation of GBP0.1m
(2019: GBPnil).
Following a review of the carrying value of the investment in
TerpeneTech (UK), Eden's associate company, an impairment of
GBP0.3m has been made (2019: GBPnil). For more details, please see
note 15 to the financial statements.
Throughout the year, the Company remained debt free with no
long-term debt or lending facilities in place or expected to be
required. Following the fundraise in March 2020, the Company is
well funded and placed to execute its business plan which involves
investing in product trials and marketing authorisations which are
required to increase product sales revenue and the geographical
footprint in which Eden can operate, in addition to growing the
team which should enable the Company to meet its ambitious growth
targets.
Section four: 2021 outlook
The global pandemic continues to unfold with some promising
developments relating to the vaccination of large numbers across
the developed world, but the full impact on sales development
cannot be assessed reliably at this time. We anticipate the
potential for a negative impact on demand for high-value crop
inputs, such as Eden's products, to persist through 2021. With the
on-going restrictions on travel, there may be an impact on face to
face business meetings which could also impact revenue. The
COVID-19 pandemic will also continue to slow the work rate of many
regulatory agencies which ultimately control the commencement of
new revenues in this highly regulated industry. As in previous
years, the growth of the addressable market for our products is
inextricably linked to new regulatory authorisations, and therefore
Covid-related impacts on regulatory approval processes will
continue to adversely affect Eden's sales growth until this
situation is resolved.
However, in 2021 the Company expects to build on the sales
achieved in the territories where it received approvals in 2020,
such as Mevalone (R) in Australia, Cedroz รค in Greece and Mexico as
well as the acceptance of Mevalone (R) and Cedroz รค for organic
agriculture in key countries.
The rollout of Cedroz รค in multiple new territories continues as
a priority, which will increase the geographical footprint of
product sales.
The Company currently anticipates that the US EPA will approve
the sale of Mevalone (R) and Cedroz รค in the United States during
2021. However, there is little doubt that the current situation
with COVID-19 and the consequential shut-down of certain government
services, coupled with a fundamentally changed working dynamic,
will have an adverse impact on operations at EPA and, subsequently,
the pace of approvals. Although the Company might expect to see
some level of channel stocking, the overall levels of sales in 2021
will depend largely upon the timing of approvals relative to the
growing season.
Section five: Driving positive impact
Eden received the London Stock Exchange Green Economy Mark in
January 2021, highlighting our credentials as a business that is
focused on driving the transition to a sustainable world. This
accolade is given to London-listed companies that derive over 50%
of their total annual revenue from products and services that
contribute to the global green economy. It is a significant
accreditation for Eden and a formal acknowledgement of our focus on
providing sustainable solutions to the global agriculture
industry.
Our portfolio of products helps farmers to integrate greener
practices for the benefit of both consumers and the wider
agricultural ecosystem. Our goal is to expand both our product and
geographical offering to support growers in more regions through
the implementation of sustainable processes in their
production.
In addition, our patented microencapsulation technology,
Sustaine(R), provides an exciting opportunity to address the rising
presence of microplastics across the globe, including soil, water
and plant and animal tissues.
Sustaine(R) microcapsules are naturally sourced, plastic-free,
biodegradable micro-spheres derived from yeast extract, which
enables farmers to deliver a wide range of crop protection
products, without releasing microplastics into the environment.
This technology has potential application beyond agriculture and
we are continuing to assess how Sustaine (R) can be applied to the
animal and consumer product sector to help these industries reduce
their use of microplastics.
Brexit
The impact of Brexit is still being understood by many UK
companies, including Eden.
The Company's ownership of its EU approvals of Mevalone (R) and
its constituent active substances appears to be unaffected by
Brexit, since guidance was published stating that the owner of such
approvals can continue to be a UK resident company.
We know that seeking regulatory approval in the UK for Eden
products has become somewhat more challenging, and the Company is
weighing up market opportunities and costs post-Brexit. We are now
well-placed to navigate what are likely to be dynamic and complex
regulatory challenges. From an operational perspective, the Company
has not seen any significant issues with the Company benefitting
from having toll-manufacturing facilities in mainland Europe,
though it continues to monitor this situation.
The Company also has manufacturing capabilities in the UK as
well as the US which provide some flexibility. Raw materials are
currently sourced from outside of the EU and there has been minimal
impact on this part of the supply chain.
COVID-19
This has been an exceptionally challenging time for the
agriculture industry, and a united effort is required to ensure
that the provision of fresh food and produce is not disrupted,
whilst the COVID-19 pandemic continues.
Eden is committed to continuing to provide its products and
technologies to the global crop production industry through its
global partnership network.
At the onset of the pandemic in March 2020, there was no direct
operational impact for Eden, and our stakeholders were reassured by
our strengthened balance sheet, following our March 2020
fundraising.
Mild levels of disruption were experienced as the pandemic
unfolded, including import and export activities, limitation on
field trial capacity due to reduced workforces, and limited
promotional activity. Some regulatory authorities were working at
reduced capacity and we experienced delayed product approvals as a
result. However, we continued to make progress with new
authorisations from late May 2020 onwards. We have also been able
to execute on some key operational plans such as opening our new
facilities in Oxfordshire and making key hires.
Our position on the Covid-19 pandemic remains as follows:
1 We Are Funded for Future Growth
In March 2020, we raised GBP10.4 million (gross) from investors,
a feat that the whole team is proud of given the volatility and
uncertainty in the markets at the time. This "vote of confidence"
from our shareholders (both existing and new) will help us
capitalise on the global shift towards more environmentally
friendly methods of crop protection, driving us towards becoming a
leading provider of sustainable solutions for global agriculture.
Though the coming months will continue to present challenges for
the Company, our employees and our partners, Eden remains debt-free
and has a strengthened balance sheet allowing us to execute on our
exciting plans. Our outsourced manufacturing model means that we
retain maximum flexibility over our choice of manufacturing
locations with a low fixed cost base.
2 Our Industry Has a Pivotal Role to Play
As demand soared for food supply during the lockdown periods
across the UK and beyond, the agriculture industry has played a
vital role in feeding the world through the crisis and minimising
the economic fallout. Plant protection products play a fundamental
role in agricultural production - without them, we would not be
able to cope adequately with global emergencies such as COVID-19.
The biopesticides market outlook remains undoubtedly positive, with
a clear demand from consumers for sustainably grown produce and in
response, a notable shift from growers towards greener farming
practices. As we step into the 'new normal', consumer demand for a
chemical-free supply chain journey will only be more prevalent. Not
only do people need food to survive, they remain conscious of where
it comes from and care about the supply chain journey. The choices
people are making to put healthy food on the table are driving what
farmers grow in their fields and how they grow them with an
increasing emphasis on sustainable practices and produce that is
free from pesticide residues. This is the future of farming, and
Eden seeks to position itself at the forefront of the movement
towards sustainable farming practices.
3 Supporting Our Employees and Partners
As always, we are working closely with our partners as they
continue their business of supplying our products to growers in an
increasing number of countries. Our team is reviewing the situation
every day so that we can adapt to any changes that may be
experienced by our partners and ensure the health and safety of
their workers is paramount. Closer to home, Eden's team are
avoiding unnecessary travel and working remotely during the crisis,
where practicable. I want to thank our partners and, of course, the
farmers who cannot carry out their work remotely and who are
working hard each day to ensure that we have enough to eat now and
in the future. Their work cannot stop, and we are grateful now more
than ever for all that they do to feed us.
TerpeneTech (UK)
TerpeneTech (UK) secured a CE mark for its head-lice treatment
product in European Economic Area ("EEA") in 2018, which is the
first step in the marketing and sales of such products. TerpeneTech
(UK) has also established its first channel distribution partner
who will target the UK market. The first product launch in the UK
is currently expected to coincide with the back-to-school schedule
in the autumn of 2021, having been delayed by the global pandemic
with school children having been absent from school and demand for
head-lice treatment products reduced accordingly.
Sales of the head-lice treatment product are expected to
commence in other countries around the world in 2021 with
TerpeneTech (UK) expected to sign an agreement with a new
distribution partner later this year.
Sales of geraniol into the biocide sector have continued to
increase year on year and TerpeneTech (UK) is now investigating the
potential to register additional active ingredients under the EU's
biocide directive.
TerpeneTech (Ireland)
In 2019, TerpeneTech (Ireland) was established in order to own
the registration of geraniol under the EU's Biocidal Products
Registration regulation, due to changes brought about by Brexit.
The intention was for TerpeneTech (Ireland) to become the principal
party, with TerpeneTech (UK) acting as its agent in the geraniol
product sale business. This transition has not yet occurred and, as
such, TerpeneTech (Ireland) remains, for the time being, as
registration owner, but agent to TerpeneTech (UK) who still acts as
the principal in the business of the TerpeneTech companies.
Further details can be found in note 35.
Dividends
There is no dividend to be paid or proposed in respect of 2020.
The Board continues to monitor its dividend policy.
Section six: Summary
Eden continues to deliver on its strategic objectives against an
uncertain global economic backdrop. We are pleased with the
progress we have made this last year and are moving ahead with a
growing product portfolio and partnership network, and an expanding
regulatory and commercial footprint. Through challenging times, we
have built a team that I am most proud of and a set of in-house
capabilities that the Company has lacked previously.
In the year ahead, we will look to build on these firm new
foundations through gaining additional product approvals in key
territories, increasing sales of our existing products and
continuing development work apace in new areas of application,
working in partnership with an expanded range of collaboration
partners, including some of the world's leading agricultural input
companies.
I remain extremely proud of the work Eden is doing in
contributing to more sustainable agricultural practices globally
and I would like to take this opportunity to say thank you to the
team for the incredible things they have achieved this year,
against an unprecedented backdrop. As we look to fiscal 2021 and
beyond, we remain focused on building a strong and sustainable
future for our business, our products, and all our stakeholders,
including our shareholders.
Sean Smith, Chief Executive Officer
Eden Research plc
Consolidated statement of comprehensive income
For the year ended 31 December 2020
2020 2019
(Restated - see
note 35)
Notes GBP GBP
Revenue 4 1,368,988 1,825,501
Cost of sales (736,509) (941,640)
Gross profit 632,479 883,861
Other operating income 7,601 -
Amortisation of intangible
assets (552,809) (496,732)
Administrative expenses (2,202,581) (2,032,182)
Share based payments (120,380) (209,295)
Operating loss 5 (2,235,690) (1,357,616)
Investment revenues 8 5,725 807
Finance costs 9 (24,000) (8,397)
Foreign exchange gains/(losses) 9 35,706 (73,166)
Impairment of investment in
associate 15 (299,521) -
Share of loss of equity accounted
Investee, net of tax 15 (30,352) (41,001)
Loss before taxation (2,548,132) (1,479,373)
Income tax income 10 285,108 347,036
Loss and total comprehensive
income for the year (2,263,024) (1,132,337)
Total comprehensive income for the
year is attributable to:
- Owners of the parent company (2,270,347) (1,144,703)
- Non-controlling interests 7,323 12,366
(2,263,024) (1,132,337)
Earnings per share 11
Basic (0.66p) (0.55p)
Diluted (0.66p) (0.55p)
The income statement has been prepared on the basis that all operations
are continuing operations.
Eden Research plc
Consolidated statement of financial position
As at 31 December 2020
2020 2019
(restated - see note
1.1)
Notes GBP GBP
Non-current assets
Intangible assets 12 6,729,483 5,581,005
Property, plant and equipment 13 188,065 -
Right-of-Use assets 14 394,610 61,750
Investments 15 419,865 749,738
7,732,023 6,392,493
Current assets
Inventories 17 224,422 68,423
Trade and other receivables 18 1,396,308 1,633,092
Current tax recoverable 285,108 268,777
Cash and cash equivalents 7,286,503 501,984
9,192,341 2,472,276
Current liabilities
Trade and other payables 19 1,454,955 1,348,588
Lease liabilities 20 84,350 22,812
1,539,305 1,371,400
Net current assets 7,653,036 1,100,876
Non-current liabilities
Trade and other payables 19 125,212 99,008
Lease liabilities 20 330,898 46,687
456,110 145,695
Net assets 14,928,949 7,347,674
Eden Research plc
Consolidated statement of financial position (continued)
As at 31 December 2020
2020 2019
Notes GBP GBP
Equity
Called up share capital 23 3,803,402 2,071,893
Share premium account 24 39,308,529 31,289,915
Warrant reserve 25 429,915 335,739
Merger reserve 26 10,209,673 10,209,673
Retained earnings (38,842,259) (36,571,912)
Non-controlling interest 27 19,689 12,366
Total equity 14,928,949 7,347,674
The financial statements were approved by the board of directors
and authorised for issue on 29 June 2021 and are signed on its behalf
by:
S Smith
Director
Eden Research plc
Company statement of financial position
As at 31 December 2020
2020 2019
(restated - see note
1.1)
Notes GBP GBP
Non-current assets
Intangible assets 12 6,610,014 5,448,262
Property, plant and equipment 13 188,065 -
Right-of-Use Assets 14 394,610 61,750
Investments 15 419,865 749,738
7,612,554 6,259,750
Current assets
Inventories 17 224,422 68,423
Trade and other receivables 18 1,444,308 1,633,092
Current tax recoverable 285,108 268,777
Cash and cash equivalents 7,286,503 501,984
9,240,341 2,472,276
Current liabilities
Trade and other payables 19 1,374,862 1,240,576
Lease liabilities 20 84,350 22,812
1,459,212 1,263,388
Net current assets 7,781,129 1,208,888
Non-current liabilities
Trade and other payables 19 125,212 99,008
Lease liabilities 20 330,898 46,687
456,110 145,695
Net assets 14,937,573 7,322,943
Equity
Called up share capital 23 3,803,402 2,071,893
Share premium account 24 39,308,529 31,289,915
Warrant reserve 25 429,915 335,739
Merger reserve 26 10,209,673 10,209,673
Retained earnings (38,813,946) (36,584,277)
Total equity 14,937,573 7,322,943
As permitted by s408 Companies Act 2006, the company has not presented
its own income statement and related notes. The company's loss for
the year was GBP2,229,669 (2019 - GBP1,157,068 loss).
The financial statements were approved by the board of directors
and authorised for issue on 29 June 2021 and are signed on its behalf
by:
S Smith
Director
Company Registration No. 03071324
Eden Research plc
Consolidated statement of changes in equity
For the year ended 31 December 2020
Share Share Merger Warrant Retained earnings Total Non-controlling Total
capital premium reserve reserve interest
account
Notes GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January
2019 2,071,893 31,289,915 10,209,673 653,446 (35,954,211) 8,270,716 - 8,270,716
Year ended 31
December
2019:
Loss and total
comprehensive
income for
the year - - - - (1,144,703) (1,144,703) 12,366 (1,132,337)
Options
granted - - - 209,295 - 209,295 - 209,295
Options lapsed - - - (527,002) 527,002 - - -
Balance at 31
December
2019 2,071,893 31,289,915 10,209,673 335,739 (36,571,912) 7,335,308 12,366 7,347,674
Year ended 31
December
2020:
Loss and total
comprehensive
income for
the year - - - - (2,270,347) (2,270,347) 7,323 (2,263,024)
Issue of share
capital 23/24 1,731,509 8,018,614 - - - 9,750,123 - 9,750,123
Options
granted 22 - - - 94,176 - 94,176 - 94,176
Balance at 31
December
2020 3,803,402 39,308,529 10,209,673 429,915 (38,842,259) 14,909,260 19,689 14,928,949
Eden Research plc
Company statement of changes in equity
For the year ended 31 December 2020
Share Share Equity Other Retained Total
capital premium reserve reserves earnings
account
Notes GBP GBP GBP GBP GBP GBP
Balance at 1
January 2019 2,071,893 31,289,915 10,209,673 653,446 (35,954,211) 8,270,716
Year ended 31
December 2019:
Loss and total
comprehensive
income for
the year - - - - (1,157,068) (1,157,068)
Options
granted - - - 209,295 - 209,295
Options lapsed - - - (527,002) 527,002 -
Balance at 31
December 2019 2,071,893 31,289,915 10,209,673 335,739 (36,584,277) 7,322,943
Year ended 31
December 2020:
Loss and total
comprehensive
income for
the year - - - - (2,229,669) (2,229,669)
Issue of share
capital 23/24 1,731,509 8,018,614 - - - 9,750,123
Options
granted 22 - - - 94,176 - 94,176
Balance at 31
December 2020 3,803,402 39,308,529 10,209,673 429,915 (38,813,946) 14,937,573
Eden Research plc
Consolidated statement of cash flows
For the year ended 31 December 2020
2020 2019
(restated - see
note 1.1)
Notes GBP GBP GBP GBP
Cash flows from operating
activities
Cash absorbed by operations 33 (1,265,812) (1,278,429)
Interest paid (450) (1,344)
Interest on lease liabilities (23,550) (7,053)
Tax refunded 268,777 272,720
Net cash outflow from operating
activities (1,021,035) (1,014,106)
Investing activities
Purchase of intangible
assets (1,701,287) (835,896)
Purchase of property, plant
and equipment (200,758) (77,954)
Interest received 5,725 807
Net cash used in investing
activities (1,896,320) (913,043)
Financing activities
Gross proceeds from
issue of shares 10,389,053 -
Expenses incurred from
issue of shares (638,930) -
Payment of lease liabilities (44,457) (20,916)
Net cash generated from/(used
in) financing activities 9,705,666 (20,916)
Net increase/(decrease)
in cash and cash equivalents 6,788,311 (1,948,065)
Cash and cash equivalents
at beginning of year 501,984 2,478,740
Effect of foreign exchange
rates (3,792) (28,691)
Cash and cash equivalents
at end of year 7,286,503 501,984
Relating to:
Bank balances and short-term
deposits 7,286,503 501,984
Eden Research plc
Company statement of cash flows
For the year ended 31 December 2020
2020 2019
(restated - see
note 1.1)
Notes GBP GBP GBP GBP
Cash flows from operating activities
Cash absorbed by operations 33 (1,265,812) (1,278,429)
Interest paid (450) (1,344)
Interest on lease liabilities (23,550) (7,053)
Tax refunded 268,777 272,720
Net cash outflow from operating
activities (1,021,035) (1,014,106)
Investing activities
Purchase of intangible
assets (1,701,287) (835,896)
Purchase of property, plant
and equipment (200,758) (77,954)
Interest received 5,725 807
Net cash used in investing activities (1,896,320) (913,043)
Financing activities
Gross proceeds from issue
of shares 10,389,053 -
Expenses incurred from
issue of shares (638,930) -
Payment of lease liabilities (44,457) (20,916)
Net cash generated from/(used
in) financing activities 9,705,666 (20,916)
Net increase/(decrease) in cash
and cash equivalents 6,788,311 (1,948,065)
Cash and cash equivalents at
beginning of year 501,984 2,478,740
Effect of foreign exchange
rates (3,792) (28,691)
Cash and cash equivalents
at end of year 7,286,503 501,984
Relating to:
Bank balances and short-term
deposits 7,286,503 501,984
Eden Research plc
Notes to the group financial statements
For the year ended 31 December 2020
1 Accounting policies
Company information
Eden Research plc is a public company limited by shares incorporated
in England and Wales. The registered office is 67C Innovation
Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The company's
principal activities and nature of its operations are disclosed
in the directors' report.
The group consists of Eden Research plc and all of its subsidiaries.
1.1 Accounting convention
Group and parent company financial statements have been prepared
in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, except as otherwise
stated.
The financial statements are prepared in sterling, which is the
functional currency of the group. Monetary amounts in these financial
statements are rounded to the nearest GBP.
They have been prepared on the historical cost basis. The principal
accounting policies adopted are set out below.
Associates
Associates are those entities in which the Company has significant
influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Company holds
between 20 and 50 percent of the voting power of another entity,
or where the Company has a lower interest but the right to appoint
a Director. The company acquired 29.9% of TerpeneTech Limited
("TerpeneTech (UK") during 2015; TerpeneTech (UK) is an associated
undertaking.
Application of the equity method to associates
The investment in TerpeneTech (UK) is accounted for using the
equity method. The investment was initially recognised at cost.
The company's investment includes goodwill identified on acquisition,
net of any accumulated impairment losses and any separable intangible
assets. The financial statements include the Company's share of
the total comprehensive income and equity movements of TerpeneTech
(UK), from the date that significant influence commenced.
Changes in presentation of the financial statements
Directors continue to assess the clarity of the financial statements
and the need for changes in presentation to enable and assist
understanding of users of the accounts as the operations of the
Group continue to evolve.
1 Accounting policies (continued)
1.1 Accounting convention (continued)
Following this consideration, the following changes have been
made in the current year, including changes in comparative figures,
to enhance presentation:
* Right-of-use Assets have been presented on the face
of the balance sheet (2019: as part of Property,
plant and equipment). This reflects the increased
quantum of this balance, following the move to the
new office
* Finance costs have been presented separately from the
foreign exchange gains/losses in the consolidated
income statement, consolidated and company cash flow
statements and note 35, reflecting the increase in
interest payable, coming chiefly as a result of the
new leases.
* Exchange differences on working capital balances have
been removed as an adjustment to profit in arriving
at Cash absorbed by operations in note 33 and removed
as an adjustment to Cash absorbed by operations in
arriving at Net cash outflow from operating
activities on the face of the consolidated and
company cash flow statements. There is no impact on
Net cash outflow from operating activities. This is a
best practice improvement, considered by the
Directors to result in a more appropriate
presentation.
* Change in the EPS calculation to only include
profit/loss attributable to the shareholders (which
represents a correction of a trivial error in the
prior year).
The above changes have had the following effect on the comparative
figures, which are considered to be immaterial:
* Right-of-use Assets of GBP61,750 have been separately
presented on the face of the consolidated and company
balance sheet.
* Finance costs of GBP8,397 have been presented
separately from the foreign exchange losses of
GBP73,166.
* Exchange differences on working capital balances of
GBP44,475 have been removed as an equal and opposite
adjusting item in arriving at Net cash outflow from
operating activities.
* EPS has been restated from (0.54p) to (0.55p) for the
year ended 31 December 2019.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial
statements of the company and its subsidiary undertaking up to
31 December 2020. The profits and losses of the company and its
subsidiary are consolidated from the date from which control
is achieved. All members of the group have the same reporting
period.
Subsidiary undertakings are entities controlled by the Company.
The Company controls an entity when it is exposed to, or has
the right to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity.
1 Accounting policies (continued)
1.3 Going concern
The directors have, at the time of approving the financial statements,
a reasonable expectation that the group has adequate resources
to continue in operational existence for at least 12 months from
the approval of the financial statements. Thus, the financial
statements have been prepared on a going concern basis which
contemplates the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Group has reported a loss for the year after taxation of
GBP2,263,024 (2019: GBP1,132,337). Net current assets at that
date amounted to GBP7,653,036 (2019: GBP1,100,876). Cash at that
date amounted to GBP7,286,503 (2019: GBP501,984). As at 31 May
2021, the cash balance has reduced to GBP6,000,724, which is
ahead of the current year budget. The group is reliant on its
existing cash balance to fund its working capital.
The Directors have prepared budgets and projected cash flow forecasts,
based on forecast sales provided by Eden's distributors where
available, for a period of at least 12 months from the date of
approval of the financial statements and they consider that the
Company will be able to operate with the cash resources that
are available to it for this period.
The forecasts adopted include only revenue derived from existing
contracts. They do not include potential upside from on-going
discussions and negotiations with other parties not yet contracted,
as well as other 'blue sky' opportunities.
The impact of COVID has been considered in the forecasts. The
Group has not been significantly impacted by the pandemic although
it has led to some delays in product development process and
limited promotional activity. The forecasts reflect this with
the development expenditure timing based on the latest experience
with regulatory authorities and sales volumes on the latest distributors'
information which reflects their post-COVID demand.
In addition, the Group has relatively low fixed running costs
and, while mitigating actions are not forecast to be required
to support the going concern basis, the Directors have previously
demonstrated its ability to delay certain other costs, such as
Research and Development expenditure, in the event of unforeseen
cash constraints and are willing and able to delay costs in the
forecast period should the need arise.
The Directors have also considered a scenario whereby the Company
receives no revenue during the forecast period. Under this scenario,
a positive cash balance would be maintained over that period.
Consequently, the directors are confident that the company will
have sufficient funds to continue to meet its liabilities as
they fall due for at least 12 months from the date of approval
of the financial statements and therefore have prepared the financial
statements on a going concern basis.
1 Accounting policies (continued)
1.4 Revenue
Revenue is recognised only when the Company has satisfied a performance
obligation by transferring control to a customer.
Revenue represents amounts receivable by the Company in respect
of services rendered during the year in accordance with the underlying
contract of licence, stated net of value added tax.
Sales-based royalty income arising from licences of the Company's
intellectual property is recognised in accordance with the terms
of the underlying contract and is based on net sales value of
product sold by Eden's licensees. It is recognised when the underlying
sales occur.
Upfront and annual payments made by customers at commencement
and for renewal of distribution and other agreements are recognised
in accordance with the terms of the agreement. Where there is
no ongoing obligation on the Company under the agreement, the
payment is recognised in full in the period in which it is made.
Where there is an ongoing obligation on the Company, the separate
performance obligations under the agreement are identified and
revenue allocated to each performance obligation. Revenue is
then recognised when a corresponding performance obligation has
been met.
Each sale of a licence by the Company is assessed to determine
whether the licence is distinct from the sale of other goods
and services, and whether the licence granted provides use of
the Company's intellectual property as it exists at that point
in time, with no ongoing obligation on the Company, or alternatively
provides access to the intellectual property as it develops over
time. Where the Company has discharged all of its ongoing obligations
associated with the licence granted, revenue is recognised on
invoicing of the licence fee payment at which point the customer
can use and benefit from the licence. Where there is an ongoing
obligation on the Company, revenue is recognised in the periods
to which the obligations pertain.
Product sales are recorded once the ownership and related rights
and responsibilities are passed to the customer and the product
is made available to the partner to collect, or, if the Company
is responsible for the shipping, the product has been shipped
to the customer.
The following is a description of the principal activities from
which the Company generates its revenue.
Licensing fees
The Company receives licensing fees from partners who have taken
a licence for the right to use Eden's intellectual property,
usually defined by field of use and territory. These are identified
as right to use as the Company does not have an obligation to
undertake activities that significantly affect the relevant intellectual
property.
Milestone payments
The Company receives milestone payments from other commercial
arrangements, including any fees it has charged to partners for
rights granted in respect of distribution agreements.
1 Accounting policies (continued)
1.4 Revenue (continued)
Milestone payments (continued)
These agreements are bespoke and any such revenue is specific
to the particular agreement. Consequently, for each such agreement,
the nature of the underlying performance obligations is assessed
in order to determine whether revenue should be recognised at
a point in time or over time.
Revenue is then recognised based on the above assessment upon
satisfaction of the performance obligation.
R&D charges
The Company sometimes charges its partners for R&D costs that
it has incurred which usually relate to specific projects and
which it has incurred through a third party.
Upon agreement with a partner, or if some specific milestone
is met, then Eden will raise an invoice which is usually payable
between 30 and 120 days. Revenue is recognised upon satisfaction
of the underlying performance obligation.
Royalties
The Company receives royalties from partners who have entered
into a licence arrangement with Eden to use its intellectual
property and who have sold products, which then gives rise to
an obligation to pay Eden a royalty on those sales.
Generally, royalties relate to specific time periods, such as
quarterly or annual dates, in which product sales have been made.
Revenue is recognised in line with when these sales occur.
Once an invoice is raised by Eden, following the period to which
the royalties relate, payment is due to the Company is 30 to
60 days.
Product sales
Generally, where the company has entered into a distribution
agreement with a partner, Eden is responsible for supplying product
to that partner once a sales order has been signed.
At that point, Eden has the product manufactured through a third-party,
toll manufacturer. At the point at which the product is finished
and is made available to the partner to collect, or, if the Company
is responsible for the shipping, the product has been shipped,
the partner is liable for the product and obliged to pay Eden.
Normal terms for product sales are 90 to 120 days. Returns are
not accepted and refunds are only made when product supplied
is notified as defective within 60 days.
The Group does not have any contract assets or liabilities.
1 Accounting policies (continued)
1.5 Intangible assets other than goodwill
Intellectual property, including development costs, is capitalised
and amortised on a straight-line basis over its remaining estimated
useful economic life of 10 years in line with the remaining life
of the Company's master patent, which was originally 20 years,
with additional Supplementary Protection Certificates having
been granted in the majority of the countries in the EU in which
Eden is selling Mevalone (R) . The useful economic lie of intangible
assets is reviewed on an annual basis.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost
and subsequently measured at cost, net of depreciation and any
impairment losses.
Depreciation is recognised so as to write off the cost or valuation
of assets less their residual values over their useful lives
on the following bases:
Leasehold land and buildings Over the term of the lease
Fixtures and fittings 5 years straight line
Motor vehicles Over the term of the lease
The gain or loss arising on the disposal of an asset is determined
as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the income statement.
1.7 Impairment of tangible and intangible
assets
The Directors regularly review the intangible assets for impairment
and provision is made if necessary. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of as asset's fair
value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the impairment
at each reporting date.
1.8 Inventories
Inventories are stated at the lower of cost and estimated selling
price less costs to complete and sell. Cost is based on the first-in-first-out
principle. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred
in bringing the inventories to their present location and condition.
1 Accounting policies (continued)
1.9 Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated.
All other financial assets and financial liabilities are initially
recognised when the Company becomes a part to the contractual
provisions of the instrument.
A financial asset (unless it is a trade receivable with a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at
fair value through profit or loss ("FVTPL"), transaction costs
that are directly attributable to its acquisition or issue.
A trade receivable without a significant financing component
is initially measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as
measured at: amortised cost or FVTPL.
Financial assets are not reclassified subsequently to their
initial recognition unless the Company changes its business
model for managing financial assets in which case all affect
financial assets are reclassified on the first day of the
first reporting period following the change in the business
model.
A financial asset is measured at amortised cost if it meets
both of the following conditions:
* It is held within a business model whose objective is
to hold assets to collect contractual cash flows; and
* Its contractual terms give rise on specific dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Investments in associates accounted for using the equity method
and subsidiaries are carried at cost less impairment.
1 Accounting policies (continued)
1.9 Financial instruments (continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and
form an integral part of the Company's cash management are
included as a component of cash and cash equivalents for the
purpose only of the cash flow statement.
(b) Subsequent measurement and gains and losses
Financial assets at amortised cost - These assets are subsequently
measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are
recognised in profit or loss. Any gain or loss on derecognition
is recognised in profit or loss.
Financial liabilities and equity
Financial instruments issued by the Company are treated as
equity only to the extent that they meet the following two
conditions:
(a) they include no contractual obligations upon the Company
to deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the company; and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the
Company's own equity instruments or is a derivative that will
be settled by the Company's exchanging a fixed amount of cash
or other financial assets for a fixed number of its own equity
instruments.
1 Accounting policies (continued)
1.9 Financial instruments (continued)
To the extent that this definition is not met, the proceeds
of issue are classified as a financial liability. Where the
instrument so classified takes the legal form of the Company's
own shares, the amounts presented in these financial statements
for called up share capital and share premium account exclude
amounts in relation to those shares.
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held-for-trading, it is a derivative
or it is designated as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised
in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition
is also recognised in profit or loss.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above policy.
(iii) Impairment
The Group recognises loss allowances for expected credit losses
(ECLs) on financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime
ECL, except for other debt securities and bank balances for
which credit risk (i.e. the risk of default occurring over
the expected life of the financial instrument) has not increased
significantly since initial recognition, which are measured
as 12-month ECL.
Loss allowances for trade receivables and contract assets
are always measured at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and
when estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative
information and analysis, based on the company's historical
experience and informed credit assessment and including forward-looking
information.
1 Accounting policies (continued)
1.9 Financial instruments (continued)
The Group considers a financial asset to be in default when:
* the borrower is unlikely to pay its credit
obligations to the Company in full, without recourse
by the Company to actions such as realising security
(if any is held); or
* the financial asset is more than 120 days past due.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default
events that are possible within the 12 months after the reporting
date (or a shorter period if the expected life of the instrument
is less than 12 months).
The maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit
risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit
losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity
in accordance with the contract and the cash flows that the Group
expects to receive). ECLs are discounted at the effective interest
rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have
a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery.
1 Accounting policies (continued)
1.10 Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The company's
liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the reporting end
date. The current tax charge includes any research and development
tax credits claimed by the Company.
R&D tax credits are accounted for by reference to IAS 12.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it
is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition of other
assets and liabilities in a transaction that affects neither
the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Company is able
to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
is realised based on the tax rates that have been enacted or
substantively enacted by the end of the reporting period. Deferred
tax is charged or credited to profit or loss, except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the company
has a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Company intends
to settle its current tax assets and liabilities on a net basis.
1 Accounting policies (continued)
1.11 Employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense, unless those costs are required to
be recognised as part of the cost of inventories or non-current
assets.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the group is demonstrably committed to terminate the employment
of an employee or to provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.13 Share-based payments
The Company has applied the requirements of IFRS 2 Share-Based
Payments.
Unapproved share option scheme
The Company has operated an unapproved share option scheme for
executive Directors, senior management and certain employees.
This scheme was used for any options awarded prior to 28 September
2017.
1 Accounting policies (continued)
Long-Term Incentive Plan ('LTIP')
In 2017, the Company established a LTIP to incentivise the Executives
to deliver long-term value creation for shareholders and ensure
alignment with shareholder interest. Awards are made annually
and are subject to continued service and challenging performance
conditions usually over a three year period. The performance
conditions are reviewed on an annual basis to ensure they remain
appropriate and are currently based on increasing shareholder
value. Awards are generally structured as nil cost options with
a seven year lift after vesting.
Other than in exceptional circumstances, an award to an Executive
would be up to 100% of salary in any one year and would be granted
subject to achieving challenging performance conditions set at
the date of the grant. A percentage of the award will vest for
'Threshold' performance with full vesting taking place for equalling
or exceeding the performance 'Target'. In between the Threshold
and Target there may be pro rata vesting. The Remuneration Committee
retains the ability to amend the performance conditions for future
grants to ensure that such grants achieve the stated purpose.
The LTIP was adopted by the Board of Directors of Eden on 28
September 2017.
Where share options are awarded to employees, the fair value
of the options at the date of grant is charged to the Statement
of Profit or Loss and Other Comprehensive Income over the vesting
period. Non-market vesting conditions are taken into account
by adjusting the number of equity instruments expected to vest
at each reporting date so that ultimately the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest. Market vesting conditions are factored
into the fair value of the options granted, as long as other
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before
they vest, the increase in fair value of the options, measured
immediately before and after the modification is also charged
to the Statement of Profit or Loss and Other Comprehensive Income
over the remaining vesting period.
In April 2021, the Company adopted a new LTIP which replaced
the once described above. Details of the new LTIP can be found
in the Remuneration Committee Report.
1.14 Leases
At inception, the group assesses whether a contract is, or contains,
a lease within the scope of IFRS 16. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration.
Where a tangible asset is acquired through a lease, the group
recognises a right-of-use asset and a lease liability at the
lease commencement date. Right-of-use assets are included within
property, plant and equipment, apart from those that meet the
definition of investment property.
1 Accounting policies (continued)
The right-of-use asset is initially measured at cost, which comprises
the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date plus any initial
direct costs and an estimate of the cost of obligations to dismantle,
remove, refurbish or restore the underlying asset and the site
on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the
end of the lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of other property,
plant and equipment. The right-of-use asset is periodically reduced
by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the group's incremental
borrowing rate. Lease payments included in the measurement of
the lease liability comprise fixed payments, variable lease payments
that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options
that the group is reasonably certain to exercise, such as the
exercise price under a purchase option, lease payments in an
optional renewal period, or penalties for early termination of
a lease.
The lease liability is measured at amortised cost using the effective
interest method. It is remeasured when there is a change in:
future lease payments arising from a change in an index or rate;
the group's estimate of the amount expected to be payable under
a residual value guarantee; or the group's assessment of whether
it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use
asset, or is recorded in profit or loss if the carrying amount
of the right-of-use asset has been reduced to zero.
The group has elected not to recognise right-of-use assets and
lease liabilities for short-term leases of machinery that have
a lease term of 12 months or less, or for leases of low-value
assets including IT equipment. The payments associated with these
leases are recognised in profit or loss on a straight-line basis
over the lease term.
1.15 Grants
Government grants are recognised when there is reasonable assurance
that the grant conditions will be met and the grants will be
received.
1.16 Foreign exchange
Transactions in currencies other than pounds sterling are recorded
at the rates of exchange prevailing at the dates of the transactions.
At each reporting end date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the
rates prevailing on the reporting end date. Gains and losses
arising on translation are included in the income statement for
the period.
Whilst the majority of the Company's revenue is in Euros, the
Company also incurs a significant level of expenditure in that
currency. As such, the Company does not currently use any hedging
facilities and instead chooses to keep some of its cash at the
bank in Euros.
1 Accounting policies (continued)
1.17 Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally generated intangible asset arising from the Company's
development activities is recognised only is all the following
conditions are met:
* the project is technically and commercially feasible;
* an asset is created that can be identified;
* the Company intends to complete the asset and use or
sell it and has the ability to do so;
* it is probable that the asset created will generate
future economic benefits;
* the development cost of the asset can be measured
reliably; and
* there are sufficient resources available to complete
the project.
Internally-generated intangible assets are amortised on a straight-line
basis over their useful lives. Where no internally-generated
intangible asset can be recognised, development expenditure is
recognised as an expense in the period in which it is incurred.
1.18 Defined contribution plan
A defined contribution plan is a post-employment benefit plan
under which the company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined contribution
pension plans are recognised as an expense in the income statement
in the periods during which services are rendered by employees.
1.19 Financial risk management
The Company's activities expose it to a variety of financial
risks: market risks (including currency risk and interest rate
risks), credit risk and liquidity risk. Risk management focuses
on minimising any potential adverse effect on the Company's financial
performance and is carried out under policies approved by the
Board of Directors.
2 Adoption of new and revised standards and changes in accounting
policies
(a) New standards, amendments and interpretations
The following new standards, amendments and interpretations have
been adopted by the Group for the first time for the financial year
beginning on 1 January 2020:
-- Amendments to IFRS 9 'Financial Instruments', IAS 39
'Financial Instruments: Recognition and Measurement' and IFRS 7
'Financial Instruments.
-- Amendments to IAS 1 'Presentation of financial statements'
and IAS 8 'Accounting policies, changes in accounting estimates and
errors' which are intended to make the definition of material
easier to understand.
-- Amendments to references to the 'Conceptual framework' in IFRS standards.
The adoption of these standards, amendments and interpretations
has not had a material impact on the financial statements of the
Group or parent company.
2 Adoption of new and revised standards and changes in accounting
policies (continued)
(b) New standards, amendments and interpretations issued but not
effective and not adopted early
A number of new standards, amendments to standards and
interpretations which are set out below are effective for annual
periods beginning after 1 January 2020 and have not been applied in
preparing these consolidated financial statements.
-- Amendment to IFRS 3 'Business combinations' to update
references to the Conceptual Framework for Financial Reporting
without changing the accounting requirements for business
combinations.
-- Amendments to IFRS 9 'Financial Instruments', IAS 39
'Financial Instruments: Recognition and Measurement', IFRS 7
'Financial Instruments: Disclosures, IFRS 4 'Insurance Contracts',
IFRS 16 'Leases' related to interest rate benchmark reform (phase
two) and the issues that arise from the implementation of the
reforms, including the replacement of one benchmark with an
alternative one.
-- Amendment to IFRS 16 'Leases' which provides an optional
practical expedient for lessees from assessing whether a rent
concession related to COVID-19 is a lease modification.
-- IFRS 17 'Insurance contracts' which establishes the
principles for the recognition, measurement, presentation and
disclosure of insurance contracts and supersedes IFRS 4 'Insurance
Contracts'
-- Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities which is intended to clarify that
liabilities are classified as either current or non-current
depending upon the rights that exist at the end of the reporting
period.
-- Amendments to IAS 16 'Property, plant and equipment' to
prohibit the deduction from cost of property, plant and equipment
amounts received from selling items produced while preparing the
asset for its intended use with any such sales and related cost
recognised in profit or loss.
-- Amendments to IAS 37 'Provisions, contingent liabilities and
contingent assets' to specify which costs a company includes when
assessing whether a contract will be loss making.
-- Annual improvements to make minor amendments to IFRS 1
'First-time adoption of IFRS', IFRS 9 'Financial Instruments', IAS
41 'Agriculture' and amendments to the illustrative examples
accompanying IFRS 16 'Leases'.
The Directors anticipate that at the time of this report none of
the new standards, amendments to standards and interpretations are
expected to have a material effect on the financial statements of
the Group or parent company.
3 Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk to the carrying amounts of assets
and liabilities within the next financial year are discussed
below:
Capitalised development costs and Intellectual property
The Directors have exercised a judgement that the development
costs incurred meet the criteria in IAS 38 Intangible Assets
for capitalisation. In making this judgement, the directors
considered the following key factors:
* The availability of the necessary financial resources
and hence the ability of the Company to continue as a
going concern.
* The assumptions surrounding the perceived market
sizes for the products and the achievable market
share for the Company.
* The successful conclusion of commercial arrangements,
which serves as an indicator as to the likely success
of the projects and, as such, any need to potential
impairment.
* The level of upfront, milestone and royalty receipts,
which also serves as a guide to the net present value
of the assets and whether any impairment is required.
Going concern
The Directors have considered the ability of the Company to
continue as a going concern and this is considered to be a significant
judgement made by the Directors in preparing the financial statements.
The ability of the Company to continue as a going concern is
ultimately dependent upon the amount and timing of cash flows
arising from the exploitation of the Company's intellectual
property and the availability of existing and/or additional
funding to meet the short term needs of the business until the
commercialisation of the Company's portfolio is reached. The
Directors consider it is appropriate for the financial statements
to be prepared on a going concern basis based on the estimates
they have made.
Associate
A judgement has been made that Eden exerts significant influence
on TerpeneTech (UK) such that it is an associate company and,
as such, adoption of equity accounting is appropriate.
COVID-19
The Company has made accounting judgements and estimates based
on there being minimal impact of COVID-19 on the business in
the long term. Clearly, this is still a degree of uncertainty
as to exactly how and if the business could be impacted and
the Directors will continue to monitor the situation closely.
4 Revenue and Segmental Information
IFRS 8 requires operating segments to be reported in a
manner
consistent with the internal reporting provided to the
chief operating
decision-maker. The chief operating decision-maker, who is
responsible
for the resource allocation and assessing performance of
the operating
segments has been identified as the Executive Directors as
they
are primarily responsible for the allocation of the
resources
to segments and the assessment of performance of the
segments.
The Executive Directors monitor and then assess the
performance
of segments based on product type and geographical area
using
a measure of adjusted EBITDA. This is the result of the
segment
after excluding the share-based payment charges, other
operating
income and the amortisation of intangibles. These items,
together
with interest income and expense are not allocated to a
specific
segment.
The segment information for the year ended 31 December 2020
is
as follows:
Agrochemicals Consumer Animal Total
products health
-------------- ---------- -------- ------------
Revenue GBP GBP GBP GBP
-------------- ---------- -------- ------------
Milestone payments 27,523 - - 27,523
-------------- ---------- -------- ------------
R & D charges 7,660 8,551 - 16,211
-------------- ---------- -------- ------------
Royalties 180,801 27,919 - 208,720
-------------- ---------- -------- ------------
Product sales 1,116,534 - - 1,116,534
-------------- ---------- -------- ------------
Total revenue 1,332,518 36,470 - 1,368,988
-------------- ---------- -------- ------------
EBITDA (1,528,934) 36,470 - (1,492,464)
-------------- ---------- -------- ------------
Share Based Payments (120,380) - - (120,380)
-------------- ---------- -------- ------------
Adjusted EBITDA (1,649,314) 36,470 - (1,612,844)
-------------- ---------- -------- ------------
Amortisation (539,535) (13,274) - (552,809)
-------------- ---------- -------- ------------
Depreciation (70,039) - - (70,039)
-------------- ---------- -------- ------------
Finance costs, foreign exchange
and investment revenues 17,433 - - 17,433
-------------- ---------- -------- ------------
Impairment of investment
in associate (299,521) - - (299,521)
-------------- ---------- -------- ------------
Income Tax 285,108 - - 285,108
-------------- ---------- -------- ------------
Share of Associate's loss (30,352) - - (30,352)
-------------- ---------- -------- ------------
(Loss)/Profit for the Year (2,286,220) 23,196 - (2,263,024)
-------------- ---------- -------- ------------
Total Assets 16,804,893 119,471 - 16,924,364
-------------- ---------- -------- ------------
Total assets includes:
-------------- ---------- -------- ------------
Additions to Non-Current
Assets 2,319,566 - - 2,319,566
-------------- ---------- -------- ------------
Total Liabilities 1,915,322 80,093 - 1,995,415
-------------- ---------- -------- ------------
Please note the Consumer products segment was previously
referred to as Human health and biocides.
4 Revenue and Segmental Information
The segment information for the year ended 31 December 2019
(restated - see note 35) is as follows:
Agrochemicals Consumer Animal Total
products health
-------------- ---------- -------- ------------
Revenue GBP GBP GBP GBP
-------------- ---------- -------- ------------
Milestone payments 348,260 - - 348,260
-------------- ---------- -------- ------------
R & D charges - 6,089 - 6,089
-------------- ---------- -------- ------------
Royalties 17,241 24,730 41,971
-------------- ---------- -------- ------------
Product sales 1,429,181 - - 1,429,181
-------------- ---------- -------- ------------
Total revenue 1,794,682 30,819 - 1,825,501
-------------- ---------- -------- ------------
EBITDA (660,331) 30,819 - (629,512)
-------------- ---------- -------- ------------
Share Based Payments (209,295) - - (209,295)
-------------- ---------- -------- ------------
Adjusted EBITDA (869,626) 30,819 (838,807)
-------------- ---------- -------- ------------
Amortisation (496,732) - - (496,732)
-------------- ---------- -------- ------------
Depreciation (22,077) - - (22,077)
-------------- ---------- -------- ------------
Finance costs, foreign exchange
and investment revenues (80,756) - - (80,756)
-------------- ---------- -------- ------------
Income Tax 347,036 - - 347,036
-------------- ---------- -------- ------------
Share of Associate's loss (41,001) - - (41,001)
-------------- ---------- -------- ------------
(Loss)/Profit for the Year (1,163,156) 30,819 - (1,132,337)
-------------- ---------- -------- ------------
Total Assets 8,732,026 132,743 - 8,864,769
-------------- ---------- -------- ------------
Total assets includes:
-------------- ---------- -------- ------------
Additions to Non-Current
Assets 1,122,979 - - 1,122,979
-------------- ---------- -------- ------------
Total Liabilities 1,409,083 108,012 - 1,517,095
-------------- ---------- -------- ------------
2020 2019 (restated)
GBP GBP
Revenue analysed by geographical market
UK 16,211 6,089
Europe 1,352,777 1,819,412
1,368,988 1,825,501
For details of the restatement of 2019 figures, please refer to
note 35.
5 Operating profit
2020 2019
GBP GBP
Operating loss for the year is stated after charging/(crediting):
Government grants (7,601) -
Fees payable to the company's auditor for
the audit of the company's financial statements 40,000 28,976
Depreciation of right-of-use assets (included
within administrative expenses) 57,346 22,077
Impairment of investment in associate 299,521 -
Amortisation of intangible assets 552,809 496,732
Share-based payments 120,380 209,295
Government grants related to amounts received in respect of the Coronavirus
Job Retention Scheme.
6 Employees
The average monthly number of persons (including directors) employed
by the group during the year was:
2020 2019
Number Number
Management 4 4
Operational 7 3
11 7
Their aggregate remuneration comprised:
2020 2019
GBP GBP
Wages and salaries 1,104,400 969,487
Social security costs 131,158 68,994
Pension costs 80,452 27,151
Share based payment charge 94,176 110,743
1,410,186 1,176,375
7 Directors' remuneration
2020 2019
GBP GBP
Remuneration for qualifying services 618,350 485,215
Company pension contributions to defined
contribution
schemes 28,990 26,355
Non-executive Directors' fees 78,333 75,000
Share based payment charge relating to all
Directors 94,176 110,743
819,849 697,313
The number of directors for whom retirement benefits are accruing
under defined contribution schemes amounted to 2 (2019 - 2).
The number of directors who are entitled to receive shares under
long term incentive schemes during the year is 2 (2019 - 2).
Remuneration disclosed above includes the following amounts paid
to the highest paid director:
2020 2019
GBP GBP
Remuneration for qualifying services 366,602 287,376
The Executive Directors are considered to also be the key management
personnel of the company and group. Details of directors' share
options can be found in the Remuneration Committee Report.
2020 Salary Bonus Fees Pension Share Based Total
Payments
GBP GBP GBP GBP GBP GBP
A Abrey 180,000 88,200 - 12,538 39,872 320,610
S Smith 235,000 115,150 - 16,452 54,304 420,906
R Cridland - - 36,665 - - 36,665
L van der
Broek - - 41,667 - - 41,667
415,000 203,350 78,332 28,990 94,176 819,848
2019 Salary Bonus Fees Pension Share Based Total
Payments
GBP GBP GBP GBP GBP GBP
A Abrey 165,000 47,644 - 11,550 48,751 272,945
S Smith 211,500 61,071 - 14,805 61,992 349,368
R Cridland - - 35,000 - - 35,000
L van der
Broek - - 40,000 - - 40,000
376,500 108,715 75,000 26,355 110,743 697,313
0 Income tax income
2020 2019
GBP GBP
Current tax
UK corporation tax on profits for the current
period (285,108) (268,777)
Adjustments in respect of prior periods - (78,259)
Total UK current tax (285,108) (347,036)
8 Investment income
2020 2019
GBP GBP
Interest income
Bank deposits 5,725 807
Total interest income for financial assets that are not held
at fair value through profit or loss is GBP5,725 (2019: GBP807).
9 Finance costs and foreign exchange
(gains)/losses
2020 2019
GBP GBP
Interest on lease liabilities 23,550 7,053
Interest on bank overdrafts and loans 450 1,344
Finance costs 24,000 8,397
Exchange differences on working capital (39,498) 44,475
Effect of exchange rate fluctuations on
cash 3,792 28,691
Exchange gains and losses (35,706) 73,166
10 Income tax income (continued)
The charge for the year can be reconciled to the loss per the
income statement as follows:
2020 2019
GBP GBP
Loss (2,548,132) (1,479,373)
Expected tax credit based on a corporation
tax rate of 19% (2019: 19.00%) (484,145) (281,081)
Expenses not deductible for tax purposes 88,498 55,868
Surrender of tax losses for R&D tax credit
refund 88,481 83,414
Adjustment in respect of prior years - (78,259)
Ineligible fixed asset differences 32,067 83,217
Additional deduction for R&D expenditure (211,159) (199,065)
Deferred tax not recognised 201,150 (11,130)
Taxation credit for the year (285,108) (347,036)
The March 2020 Budget announced that a corporation tax rate of
19% would continue to apply with effect from 1 April 2020, and
this change was substantively enacted on 17 March 2020. The March
2021 Budget announced that a corporation tax rate of 25% would
apply with effect from 1 April 2023. This was substantively enacted
on 24 May 2021. As this change was not substantively enacted
at the balance sheet date, it has not been reflected in the measurement
of deferred tax balances at the period end.
The taxation credit for the year represents the research and
development credit for the year ended 31 December 2020.
Deferred Tax
In the year, a deferred tax liability in respect of fixed asset
temporary differences of GBP803,322 has been recognised. This
has been offset fully by release of deferred tax asset from trading
losses brought forward, resulting in a GBPnil deferred tax balance
in the Statement of Financial Position.
The losses carried forward, after the above offset, for which
no deferred tax asset has been recognised, amount to approximately
GBP22,379,505 (2019: GBP23,088,756).
The unprovided deferred tax asset of GBP4,265,891 (2019: GBP3,408,686)
arises principally in respect of trading losses. It has been
calculated at 19% (2019: 17%) and has not been recognised due
to the uncertainty of timing of future profits against which
it may be realised.
11 Earnings per share
2020 2019
(restated)
GBP GBP
Weighted average number of ordinary shares
for diluted earnings per share 344,629,577 208,244,667
Earnings (all attributable to equity shareholders of the company)
Loss for the period (2,270,347) (1,144,703)
Basic earnings per share (0.66p) (0.55p)
Diluted earnings per share (0.66p) (0.55p)
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
There were no dilutive potential ordinary shares at the year end.
For details of the restatement, please refer to note 1.1.
12 Intangible assets
Group
Licences Development Intellectual Total
and trademarks costs property
GBP GBP GBP GBP
Cost
At 1 January 2019 447,351 4,209,089 8,970,627 13,627,067
Additions - 850,532 210,697 1,061,229
At 31 December 2019 447,351 5,059,621 9,181,324 14,688,296
Additions 1,545 1,564,785 134,957 1,701,287
At 31 December 2020 448,896 6,624,406 9,316,281 16,389,583
Amortisation and impairment
At 1 January 2019 411,855 1,948,254 6,250,450 8,610,559
Charge for the year 25,896 231,077 239,759 496,732
At 31 December 2019 437,751 2,179,331 6,490,209 9,107,291
Charge for the year 11,145 315,192 226,472 552,809
At 31 December 2020 448,896 2,494,523 6,716,681 9,660,100
Carrying amount
At 31 December 2020 - 4,129,883 2,599,600 6,729,483
At 31 December 2019 9,600 2,880,290 2,691,115 5,581,005
12 Intangible assets
Company
Licences Development Intellectual Total
and trademarks costs property
GBP GBP GBP GBP
Cost
At 1 January 2019 447,351 4,209,089 8,970,627 13,627,067
Additions - 850,532 77,954 928,486
At 31 December 2019 447,351 5,059,621 9,048,581 14,555,553
Additions 1,545 1,564,785 134,957 1,701,287
At 31 December 2020 448,896 6,624,406 9,183,538 16,256,840
Amortisation and impairment
At 1 January 2019 411,855 1,948,254 6,250,450 8,610,559
Charge for the year 25,896 231,077 239,759 496,732
At 31 December 2019 437,751 2,179,331 6,490,209 9,107,291
Charge for the year 11,145 315,192 213,198 539,535
At 31 December 2020 448,896 2,494,523 6,703,407 9,646,826
Carrying amount
At 31 December 2020 - 4,129,883 2,480,131 6,610,014
At 31 December 2019 9,600 2,880,290 2,558,372 5,448,262
Intellectual property represents intellectual property in relation
to use of encapsulated terpenes in agrochemicals. The remaining
useful economic life of that asset is 10 years.
An annual impairment review is undertaken by the Board of Directors.
The Directors have considered the progress of the business in
the current year, including a review of the potential market
for its products, the progress the Company has made in registering
its products and other key commercial factors to inform the review.
12 Intangible assets (continued)
Of GBP6,610,014 carrying amount of intangible assets, GBP6,490,543
has been allocated to the Agrochemicals CGU. The remaining intangible
assets have been allocated to the Consumer products CGU for which
no impairment indicators have been identified. The Agrochemicals
CGU has been tested for impairment as it is the only CGU with
intangible assets not yet available for use.
The Directors have prepared a discounted cash-flow forecast,
based on product sales forecasts including those provided by
the Company's commercial partners, and have taken into account
the market potential for Eden's products and technologies using
third party market data that Eden has acquired licences to.
The forecast covers a period of 10 years, with no terminal value,
reflecting the useful economic life of the patent in respect
of the underlying technology. Financial forecasts for 2021 are
based on the approved annual budget. Financial forecasts for
2022-2028 are based on the approved long-term plan. Financial
forecasts for 2029-2030 are extrapolated based on the long-term
growth rate.
The estimated recoverable amount of the CGU exceeded its carrying
amount by GBP22.1m and based on the review carried out management
is satisfied that intangible assets are not impaired.
As set out in the Strategic Report, the business is in a critical
phase of its development as the development of products is transitioned
to revenue generation. The value of the CGU is supported by forecasts
of continued revenue growth of existing products and the successful
introduction and growth of sales of products currently under
development.
The key assumptions of the forecast are the future cash flows,
driven primarily by level of sales, and the discount rate. The
discount rate is estimated using pre-tax rates that reflect current
market assessments of the time value of money and the risk specific
to the CGU. The rate used was 10% (2019: 10%).
The impact of increasing the discount rate by 3.5%, which is
considered a reasonably possible change, would be a decrease
in the recoverable amount by GBP6.8m. The discount rate would
have to increase to 28.7% to reduce the headroom to GBPnil which
is not considered reasonably possible.
The average annual growth rate has been assumed at 48% (2019:
64%), reflecting the latest forecasts based on information provided
by customers and own market analysis. The rate stands at 84%
up to 2025, reflecting commercialisation of new products in the
period, reducing to 11% from 2026 onwards.
A reduction in growth from year 6 onwards to the long-term growth
rate, which is considered a reasonably possible change, would
reduce the recoverable amount by GBP10.5m.
The same level of reduction in recoverable amount would be observed
if revenue generation was delayed by 1 year for each product
currently under development.
Sales would have to reduce by over 42% to reduce headroom to
GBPnil which is not considered reasonably possible.
13 Property, plant and equipment
Consolidated and Company
Fixtures Total
and fittings
GBP GBP
Cost
At 1 January 2019 - -
At 31 December 2019 (restated
- see note 1.1) - -
Additions - owned 200,758 200,758
At 31 December 2020 200,758 200,758
Accumulated depreciation and impairment
At 1 January 2019 - -
At 31 December 2019 (restated
- see note 1.1) - -
Charge for the year 12,693 12,693
At 31 December 2020 12,693 12,693
At 31 December 2020 188,065 188,065
At 31 December 2019 (restated
- see note 1.1) - -
14 Right-of-Use Assets
Consolidated and Company
Land and Motor vehicles Total
buildings
GBP GBP GBP
Cost
At 1 January 2019 - - -
Recognition of right-of-use asset
on initial application of IFRS
16 78,668 35,865 114,533
At 31 December 2019 (restated -
see note 1.1) 78,668 35,865 114,533
Additions 417,521 - 417,521
Disposals (78,668) - (78,668)
At 31 December 2020 417,521 35,865 453,386
Accumulated depreciation and impairment
At 1 January 2019 - - -
Foreign currency adjustments 26,223 4,483 30,706
Charge for the year 13,111 8,966 22,077
At 31 December 2019 (restated -
see note 1.1) 39,334 13,449 52,783
Charge for the year 48,380 8,966 57,346
Eliminated on disposal (51,353) - (51,353)
At 31 December 2020 36,361 22,415 58,776
Carrying amount
At 31 December 2020 381,160 13,450 394,610
At 31 December 2019 (restated -
see note 1.1) 39,334 22,416 61,750
15 Investments in associates
Current Non-current
2020 2019 2020 2019
GBP GBP GBP GBP
Investments in associates - - 419,865 749,738
Details of the group's associates at 31 December
2020 are as follows:
Name of Registered Principal Class of % Held
undertaking office activities
shares Direct Voting
held
Research and
experimental
development
TerpeneTech United on
(UK) Kingdom biotechnology Ordinary 29.90 29.90
2020 2019
(restate
(Restated)
GBP GBP
Non-current assets 502,954 565,306
Current assets 237,697 209,880
Non-current liabilities (98,806) (98,806)
Current liabilities (213,670) (195,415)
------------------- ------------
Net assets (100%) 428,175 480,965
Company's share of net assets 151,352 167,136
Separable intangible assets 155,385 169,953
Goodwill 412,649 412,649
Impairment of investment in associate (299,521) -
------------------- ------------
Carrying value of interest in associate 419,865 749,738
Revenue 279,185 247,304
100% of loss after tax (52,790) (88,404)
29.9% of loss after tax (15,784) (26,433)
Amortisation of separable intangible (14,568) (14,568)
------------------- ------------
Company's share of loss including amortisation
of separable intangible asset (30,352) (41,001)
For details of the restatement of 2019 figures,
please refer to note 35.
The associate is included in the Agrochemicals
operating segment.
15 Investments in associates (continued)
TerpeneTech Limited's ("TerpeneTech (UK)") registered office is
Kemp House, 152 City Road, London, EC1V 2NX and its principal
place of business is 3 rue de Commandant Charcot, 22410, St Quay
Portrieux, France.
The Directors have considered the progress of the business in
the current year, including a review of the potential market for
its products, the progress TerpeneTech (UK) has made in registering
its products and other key commercial factors to determine whether
any indicators of impairment exist. As a result of identification
of indicators of impairment, an impairment review of the investment
in TerpeneTech (UK) was undertaken by the Board of Directors.
The Directors have used discounted cash-flow forecasts, based
on product sales forecasts provided by TerpeneTech (UK), and have
taken into account the market potential for those products. These
forecasts cover a 10-year period, with no terminal value, in line
with the patent of the underlying technology.
The key assumptions of the forecast are the growth rate and the
discount rate. The discount rate is estimated using pre-tax rates
that reflect current market assessments of the time value of money
and the risk specific to the asset. The rate used was 15% (2019:
20%). The reduction in the discount rate reflects the reduction
in uncertainty as compared to the year ended 31 December 2019
as there is greater clarity over impacts of COVID-19 and one of
the products has significantly progressed towards commercialisation.
Based on the review the Directors have carried out, it has been
determined that the Investment is impaired and, as such, an impairment
charge of GBP299,521 has been recognised.
The impairment is primarily due to the impact of COVID-19 which
resulted in a delay in the launch of the head-lice product and
which significantly impacted the head-lice product market and,
consequently, the forecast level of sales. This impact is exacerbated
by the limited forecast period.
An increase in the discount rate of 2.5% would result in an increase
in impairment of GBP50,000.
The growth rates are derived from discussions with the Company's
commercial partner, TerpeneTech (UK), as described above.
The average annual growth rate has been assumed at 32% (2019:
37%). The majority of this growth relates to the head-lice product
and arises in the first 5 years of the forecast as the market
position is built up, following the launch. The average annual
growth rate of existing business stands at only 4% (2019: 4%).
Only inflationary growth has been assumed across the entire forecast
after year 5.
An annual reduction of 20% in head-lice product sales over the
forecast period would increase impairment by GBP80,000.
The Directors have also considered whether any reasonable change
in assumptions would lead to a material change in impairment recognised
and are satisfied that this is not the case.
As investing in companies, such as TerpeneTech (UK) , is not representative
of Eden's normal operating activities, the impairment charge has
been shown on the Consolidated Income Statement after Operating
Loss.
16 Subsidiaries
Details of the company's subsidiaries at 31 December 2020 are as
follows:
Name of undertaking Registered office Principal activities Class of % Held
shares held Direct Voting
TerpeneTech
(Ireland) Sale of biocide
Limited Republic of Ireland products Ordinary 50.00 50.00
TerpeneTech Limited ("TerpeneTech (Ireland)", whose registered
office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland,
was incorporated on 15 January 2019 and is jointly owned by both
Eden Research Plc and TerpeneTech (UK), the company's associate.
Eden has the right to appoint a director as chairperson who will
have a casting vote, enabling the Group to exercise control over
the Board of Directors in the absence of an equivalent right for
TerpeneTech (UK). Eden owns 500 ordinary shares in TerpeneTech
(Ireland).
Non-controlling interests
The following table summarises the information relating to the Group's
subsidiary with material non-controlling interest, before intra-group
eliminations:
2020 2019
(Restated)
GBP GBP
NCI percentage 50% 50%
Non-current assets 119,471 132,743
Current assets - -
Non-current liabilities - -
Current liabilities (80,093) (108,013)
----------- --------------
Net assets (100%) 39,378 24,730
Carrying amount of NCI
Revenue 27,919 24,730
Profit after tax 14,647 24,730
OCI - -
----------- --------------
Total comprehensive income 14,647 24,730
Cash flows from operating activities - -
Cashflows form investing activities - -
Cashflows from financing activities - -
----------- --------------
Net increase / (decrease) in cash and cash equivalents - -
----------- --------------
Dividends paid to non-controlling interests - -
----------- --------------
For details of the restatement of 2019 figures,
please refer to note 35.
17 Inventories
Group and company
2020 2019
GBP GBP
Finished goods 224,422 68,423
18 Trade and other receivables
Group Company
2020 2019 2020 2019
GBP GBP GBP GBP
Trade receivables 909,452 1,345,648 909,452 1,345,648
VAT recoverable 242,187 127,089 242,187 127,089
Other receivables 57,619 4,694 57,619 4,694
Prepayments and accrued income 187,050 155,661 235,050 155,661
1,396,308 1,633,092 1,444,308 1,633,092
Trade receivables disclosed above are measured at amortised cost.
The directors consider that the carrying amount of trade and
other receivables approximates their fair value.
19 Trade and other payables
Group Company
2020 2019 (restated) 2020 2019
GBP GBP GBP GBP
Current
Trade payables 794,439 870,563 794,439 870,563
Accruals 250,017 283,380 250,017 283,380
Social security and other
taxation 43,186 26,399 43,186 26,399
Other payables 367,313 168,246 287,220 60,234
1,454,955 1,348,588 1,374,862 1,240,576
Non-current
Other payables (note 22, 'Xinova
liability') 125,212 99,008 125,212 99,088
125,212 99,008 125,212 99,008
20 Lease liabilities
2020 2019
Maturity analysis GBP GBP
Within one year 117,204 27,097
In two to five years 385,388 51,919
Total undiscounted liabilities 502,592 79,016
Future finance charges and other adjustments (87,344) (9,517)
Lease liabilities in the financial statements 415,248 69,499
20 Lease liabilities (continued)
Lease liabilities are classified based on the amounts that are
expected to be settled within the next 12 months and after more
than 12 months from the reporting date, as follows:
2020 2019
GBP GBP
Current liabilities 84,350 22,812
Non-current liabilities 330,898 46,687
415,248 69,499
2020 2019
Amounts recognised in profit or loss include GBP GBP
the following:
Interest on lease liabilities 23,550 7,053
Other leasing information is included in note 29.
21 Retirement benefit schemes
Defined contribution schemes
The group operates a defined contribution pension scheme for
all qualifying employees. The assets of the scheme are held separately
from those of the group in an independently administered fund.
The total costs charged to income in respect of defined contribution
plans is GBP61,799 (2019 - GBP27,151).
22 Share-based payment transactions
Unapproved option scheme
Eden Research Plc operates an unapproved option scheme for executive
directors, senior management and certain employees.
Number of share options Weighted average
exercise price (pence)
2020 2019 2020 2019
Outstanding at 1 January 1,050,000 3,400,000 13 11
Granted during the year - - - -
Exercised during the
year - - - -
Lapsed during the year - (2,350,000) - 13
Exercisable at 31 December 1,050,000 1,050,000 13 13
The options outstanding at 31 December 2020 had an exercise
price of 13p (2019: 13p) and their weighted average contractual
life was 0.1 years (2019: 1.6 years). None of the options have
vesting conditions.
The share-based payment charge in respect of the unapproved
option scheme for the year was GBPnil (2019: GBPnil). The weighted
average fair value of each option granted during 2020 was GBPnil
(2019: GBPnil).
22 Share-based payment transactions (continued)
Long-Term Incentive Plan ("LTIP")
Eden Research Plc operates an option scheme for executive directors,
senior management and certain employees under a LTIP which it
adopted in 2017. On 28 June 2019, 5,891,111 shares under the
LTIP scheme were awarded to the Chief Executive Officer and
the Chief Financial Officer.
Details of the existing LTIP can be found in the Remuneration
Committee Report . A new LTIP scheme has been put in place in
April 2021, of which further details can also be found in the
Remuneration Committee Report .
The share-based payment charge for the year ended 31 December
2017 and subsequent years is set out as follows:
Financial year ended 31 December Share based payment charge GBP
2017 27,210
2018 85,372
2019 110,743
2020 94,176
2021 51,909
2022 16,959
386,369
The following information is relevant in the determination of
the fair value of options granted under the LTIP operated by
Eden Research Plc, representing a mix of approved and unapproved
issues.
2016 Award 2017 Award 2018 Award
Grant date 28/09/2017 28/06/2019 28/06/2019
Number of awards 2,108,000 2,868,889 3,022,222
Share price 0.125 0.115 0.115
Exercise price GBPnil GBPnil GBPnil
Expected dividend yield -% -% -%
Expected volatility 73.20% 50.82% 50.82%
Risk free rate 0.80% 0.614% 0.614%
80 80 80
Vesting period 3 years 2 years 3 years
Expected Life (from date 10 years 2 years 3 years
of grant)
For those options and warrants which were not granted under
the Company's LTIP, fair value is measured using the Black-Scholes
model. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural conditions.
For those options which were granted under the Company's LTIP,
Monte Carlo techniques were used to simulate future share price
movements of the Company to assess the likelihood of the performance
criteria being met and the fair value of the awards upon vesting.
The modelling calculates many scenarios in order to estimate
the overall fair value based on the average value where awards
vest.
22 Share-based payment transactions (continued)
Warrants
Number of share options Weighted average
exercise price (pence)
2020 2019 2020 2019
Outstanding at 1 January 2,989,865 2,400,000 19 20
Granted during the year - 2,589,865 - 18
Exercised during the year - - - -
Lapsed during the year - (2,000,000) - 11
Exercisable at 31 December 2,989,865 2,989,865 19 19
The exercise price of warrants outstanding at the end of the
year ranged between 12p and 30p (2019: 12p and 30p) and their
weighted average contractual life was 1.4 years (2019: 2.5 years.)
None of the warrants have vesting conditions.
The share-based payment charge for the year was GBPnil (2019:
GBP98,553). The weighted average fair value of each warrant
granted during the year was GBPnil (2019: 18p).
Xinova liability
In September 2015, the Company entered into a Collaboration
and licence agreement with Invention Development Management
Company LLC (part of Intellectual Ventures, now called Xinova
LLC). As part of this agreement, upon successful completion
of a number of different tasks, Xinova will be entitled to a
payment which is calculated using a percentage (initially 3.17%)
of the fully diluted equity value, reduced by cash and cash
equivalents, of the Company on the date on which payment becomes
due which is expected to be 30 September 2025. This has been
accounted for as a cash-settled share-based payment under IFRS
2.
An amount of GBP67,462, being the estimated fair value of the
liability due to Xinova, was recognised during 2016 and included
as a non-current liability, as disclosed in note 19 to the accounts.
It is not believed that the value of the services provided by
Xinova can be reliably measured, and so this amount was calculated
based on the Company's market capitalisation at 31 December
2016, adjusted to reflect the percentage of work completed by
Xinova at that date based on a pre-determined schedule of tasks.
A further charge of GBP26,204 was made in the year (2019: GBP31,546),
reflecting the increase in work delivered by Xinova and in the
equity value, partially offset by reduction in the applicable
payment % as a result of the additional equity financing raised
At the year end, an amount of GBP125,212 (2019: GBP99,008) was
owed to Xinova and is shown in note 18 as non-current other
liabilities.
23 Share capital
2020 2019 2020 2019
Ordinary share capital Number Number GBP GBP
Issued and fully paid
Ordinary shares of 1p each 380,340,229 207,189,337 3,803,402 2,071,893
On 18 March 2020, the Company issued 86,182,500 ordinary shares
at 6p each for a total consideration of GBP5,170,950 before directly
attributable costs.
On 19 March 2020, the Company issued 86,968,392 ordinary shares
at 6p each for a total consideration of GBP5,218,104 before directly
attributable costs.
Share issue costs of GBP638,931 were incurred and have been charged
to the share premium account.
24 Share premium account
2020 2019
GBP GBP
At the beginning of the year 31,289,915 31,289,915
Issue of new shares 8,018,614 -
At the end of the year 39,308,529 31,289,915
25 Warrant reserve
GBP
Balance at 1 January 2020 335,739
Share-based payment expense in respect of options granted
in prior years 94,176
Balance at 31 December 2020 429,915
The warrant reserve represents the fair value of share options and
warrants grants, and not exercised or lapsed, in accordance with
the requirements of IFRS 2 Share Based Payments.
26 Merger reserve
2020 2019
GBP GBP
At the beginning and end of the year 10,209,673 10,209,673
The merger reserve arose on historical acquisitions of subsidiary
undertakings for which merger relief was permitted under the
Companies Act 2006.
27 Non-controlling interest
2020 2019
GBP GBP
Non-controlling interest 19,689 12,366
The non-controlling interest arose from Eden Research Plc's 50%
share in TerpeneTech (Ireland) Limited.
28 Other interest-bearing loans and borrowings - Group and Company
Changes in liabilities, arising from financing activities are presented
below:
2020 2019
GBP GBP
Balance as at 1 January 69,499 -
Recognised on implementation of IFRS 16 - 90,414
Changes from financing cashflows
Payment of lease liabilities (44,457) (20,916)
Total changes from financing cashflows (44,457) (20,916)
Other changes
New leases
Inter 417,521 -
Surrender of lease (27,315) -
Total other changes 390,206 -
Balance as at 31 December 415,248 69,499
29 Other leasing information
Amounts recognised in profit or loss as an expense during the
period in respect of lease arrangements are as follows:
2020 2019
GBP GBP
Expense relating to leases of low-value assets 334 19,516
Set out below are the future cash outflows to which the lessee
is exposed to that are reflected in the measurement of lease
liabilities:
2020 2019
Land and buildings GBP GBP
Within one year 74,783 14,040
Between two and five years 325,794 32,015
400,577 46,055
2020 2019
Leases apart from land and GBP GBP
buildings
Within one year 9,567 8,772
Between two and five years 5,104 14,671
14,671 23,443
The Group holds three leases, for two properties and a vehicle.
All leases have fixed lease repayments and remaining terms of
4.5 years for the properties and 1.5 years for the vehicle.
The incremental borrowing rate applied to lease liabilities recognised
in the statement of financial position at the date of initial
application of IFRS 16 was 8.71%.
Information relating to lease liabilities is included in note
20.
30 Capital risk management
The group is not subject to any externally imposed capital requirements.
31 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including directors,
is set out below in aggregate for each of the categories specified
in IAS 24 Related Party Disclosures.
Group
During the year, Eden invoiced its associate, TerpeneTech (UK),
GBP8,551 for R&D charges (2019: GBP6,089).
Also, during the year Eden paid GBP6,362 to TerpeneTech (UK) (2019:
received GBP12,731) for monies received by Eden on behalf of TerpeneTech
(UK) from one of TerpeneTech (UK)'s customers.
At the year end, a net amount of GBP128,983 was due from TerpeneTech
(UK) (2019: GBP122,661) to Eden. This amount is included within
Trade and Other Receivables.
In 2019, TerpeneTech (UK) sold an intangible asset to TerpeneTech
(Ireland) for GBP132,743.
At the year end, a net amount of GBP80,093 (2019: GBP108,012)
was due from TerpeneTech (Ireland) to TerpeneTech (UK). It represents
the amount due in respect of the intangible asset above, reduced
by fees receivable in respect of sales. This amount is included
within Trade and Other Payables.
Company
During the year, Eden invoiced its associate, TerpeneTech (UK),
GBP8,551 for R&D charges (2019: GBP6,089).
Also, during the year Eden paid GBP6,362 to TerpeneTech (UK) (2019:
received GBP12,731) for monies received by Eden on behalf of TerpeneTech
(UK) from one of TerpeneTech (UK)'s customers.
Further, at year end, GBP48,000 has been accrued in respect of
management recharges from Eden to TerpeneTech (Ireland) (2019:
GBPnil). This amount is included within the Company Trade and
Other Receivables.
At the year end, a net amount of GBP128,983 was due from TerpeneTech
(UK) (2019: GBP122,661). This amount is included within Trade
and Other Receivables.
32 Financial risk management
Credit risk
2020 2019
GBP GBP
Cash and cash equivalents 7,286,503 501,984
Trade receivables 1,396,308 1,345,648
8,682,811 1,847,632
The average credit period for sales of goods and services is 242
days (2019 [restated]: 269). No interest is charged on overdue
trade receivables. At 31 December 2020, trade receivables of GBP200,840
(2019: GBP523,967) were past due. During the year the Company
wrote off bad debts in the amount of GBPnil (2019: GBPnil).
Trade receivables of GBP791,581 (2019: GBP1,002,763) at the reporting
date were held in Euros and GBP104,265 (2019: GBP112,540) were
held in USD.
The Company's policy is to recognise loss allowances for expected
credit losses (ECLs) on financial assets measured at amortised
cost. The Group measures loss allowances for trade receivables
at an amount equal to lifetime ECL. When determining whether the
credit risk of a financial asset has increased significantly since
initial recognition and when estimating ECL, the Group considered
reasonable and supportable information that is relevant and available
without undue cost of effect. This includes both quantitative
and qualitative information and analysis, based on the Group's
historical experience and information credit assessment and including
forward-looking information.
The largest trade debtor at the year end is a well-established,
profitable business and long-term customer of the Company with
whom Eden has had no issue of collecting debts due before and
does not expect to have any going forward. In addition, TerpeneTech
(UK), Eden's associate company, owed gross GBP174,952 (2019: GBP182,984)
to Eden at the year-end.
TerpeneTech (UK), is a cash-positive business, albeit in its infancy,
with good shareholder support and, again, Eden has had no issue
of collecting debtors due from TerpeneTech (UK) before and does
not expect to have any going forward.
Considering these factors, the directors' consider the ECL to
be immaterial.
32 Financial risk management (continued)
Credit risk
2020 2019
GBP GBP
Trade payables 794,439 870,563
Other payables 367,313 168,246
Other taxes and social security 43,186 26,399
Accruals and deferred income 250,017 283,380
1,454,955 1,348,588
The carrying amount of trade payables approximates their fair
value.
The average credit period on purchases of goods is 85 days. No
interest is charged on trade payables. The Company has policies
in place to ensure that trade payables are paid within the credit
timeframe or as otherwise agreed.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the group's financial liabilities at 31
December 2020 was as follows:
2020 2019
GBP GBP
In one year or less, or on demand 1,454,955 1,348,588
Over one year 125,212 99,008
1,580,167 1,447,596
Liquidity risk is managed by regular monitoring of the Company's
level of cash and cash equivalents, debtor and creditor management
and expected future cash flows. See note 1 for further details
on the going concern position of the Company. For details of lease
liabilities, see notes 20 and 29.
Market price risk
The company's exposure to market price risk comprises currency
risk exposure. It monitors this exposure primarily through a process
known as sensitivity analysis. This involves estimating the effect
on results before tax over various periods of a range of possible
changes in exchange rates. The sensitivity analysis model used
for this purpose makes no assumptions about any interrelationships
between such rates or about the way in which such changes may
affect the economies involved. As a consequence, figures derived
from the Company's sensitivity analysis model should be used in
conjunction with other information about the Company's risk profile.
The Company's policy towards currency risk is to eliminate all exposures
that will impact on reported results as soon as they arise. This
is reflected in the sensitivity analysis, which estimates that five
and ten percentage point increases in the value of sterling against
all other currencies would have had minimal impact on results before
tax .
32 Financial risk management (continued)
Capital risk management
The primary objective of the Company's capital management is
to ensure that it maintains healthy capital ratios in order to
support its business and maximise shareholder value.
The Company seeks to enhance shareholder value by capturing business
opportunities as they develop. To achieve this goal, the Company
maintains sufficient capital to support its business.
The Company manages its capital structure and makes adjustments
to it in light of changes in economic conditions.
The Company looks to maintain a reasonable debt position by repaying
debt or issuing equity, as and when it is deemed to be required.
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 December 2020
and 31 December 2019.
The Company monitors capital using a gearing ratio, which is
net debt divided by total capital plus net debt. The Company's
policy is to keep the gearing ratio below 10% (2019: below 10%).
The Company includes within net debt, any interest bearing loans
and borrowings (none in current or prior year), any loans from
a venture partner (none in the current or prior year), trade
and other payables, less cash and cash equivalents.
33 Cash absorbed by operations
Consolidated
2020 2019
(restated)
GBP GBP
Loss for the year after tax (2,263,024) (1,132,337)
Adjustments for:
Taxation charged/(credited) (285,108) (347,036)
Finance costs 24,000 8,397
Investment income (5,725) (807)
Foreign exchange currency losses 3,792 28,631
Amortisation and impairment of intangible
assets 552,809 496,732
Impairment of investment in associate 299,521 -
Depreciation and impairment of property,
plant and equipment and right-of-use assets 70,039 22,078
Share of associate's loss 30,352 41,001
Share-based payment expense 120,380 209,295
Movements in working capital:
Increase in inventories (155,999) (53,767)
Decrease/(increase) in trade and other
receivables 236,784 (908,027)
(Decrease)/increase in trade and other
payables 106,367 357,351
Cash absorbed by operations (1,265,812) (1,278,429)
For details of the above restatement, please refer to note
1.1.
33 Cash absorbed by operations (continued)
Company
2020 2019
(restated)
GBP GBP
Loss for the year after tax (2,229,669) (1,157,068)
Adjustments for:
Taxation charged/(credited) (285,108) (347,036)
Finance costs 24,000 8,397
Investment income (5,725) (807)
Foreign exchange currency losses 3,792 28,631
Amortisation of intangible assets 539,535 496,732
Impairment of investment in associate 299,521 -
Depreciation and impairment of property, plant
and equipment and right-of-use assets 70,039 22,078
Share of associate's loss 30,352 41,001
Share-based payment expense 120,380 209,295
Movements in working capital:
(155,999)
Increase in inventories (155,99 (53,767)
Decrease/(increase) in trade and other receivables 188,784 (908,027)
(Decrease)/increase in trade and other payables 134,286 382,082
Cash absorbed by operations (1,265,812) (1,233,954)
For details of the above restatement, please refer to note
1.1.
34 Post balance sheet events
Long-Term Incentive Plan
In April 2021, the Company replaced its existing LTIP with a
new one, details of which can be found in the Remuneration Committee
Report.
Corteva Agriscience agreement
In May 2021, the Company signed an exclusive commercialisation,
supply and distribution agreement with Corteva Agriscience,
the fourth largest agriculture inputs company in the world.
Further details of this agreement can be found in the Chief
Executive Officer's Review.
35 Prior Year Adjustment
Following the incorporation of TerpeneTech (Ireland) in 2019
the group is reorganising the roles of TerpeneTech (Ireland)
and TerpeneTech (UK) in the sale of geraniol and certain other
products.
Following communications with the FRC (refer to the Audit Committee
Report), the Directors have reconsidered the arrangements that
were in place in the prior year (and which remained in place
in the current year) in regard to sales made by TerpeneTech (Ireland).
The Directors have concluded that TerpeneTech (Ireland) was acting
as an agent in these transactions and should have recognised
sales of GBP24,730 being the 10% margin on the sales of geraniol
rather than recognising gross sales and cost of sales. As such,
they have restated the Group's revenue and cost of sales in the
prior year.
As a consequence of this restatement, revenue has been reduced
by GBP222,574 and cost of sales have been reduced by GBP222,574
in the Income Statement for the year ending 31 December 2019.
There was no impact on loss before or after taxation or net assets
and no impact on any opening balances.
As the arrangements change going forward, the Directors will
reconsider the revenue recognition.
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