REG - Eden Research plc - Preliminary results for the year ended 31 Dec 2022
05/05/2023 07:00
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RNS Number : 5003Y Eden Research plc 05 May 2023
5 May 2023
Eden Research
("Eden" or "the Company")
Preliminary results for the year ended 31 December 2022
Eden Research (AIM: EDEN), the AIM-quoted company focused on sustainable
biopesticides and plastic-free formulation technology for use in the global
crop protection, animal health and consumer products industries, announces its
preliminary results for the year ended 31 December 2022.
Commercial and operational highlights
· Regulatory approval granted by the United States Environmental
Protection Agency (EPA) in September 2022 for all six petitions submitted,
covering the Company's three active ingredients (eugenol, geraniol and
thymol), two formulated products (Mevalone® and Cedroz™) and formulation
technology (Sustaine®)
· Certification received in November 2022 for use in organic farming in
Greece for both of Mevalone® and Cedroz™ products
· Agreement signed with Corteva France in December 2022 which allows
Corteva to market, distribute and sell Eden's fungicide product, Mevalone®,
in France on an exclusive basis.
· New insecticide product advancing towards commercialisation with
extensive registration and commercial evaluation field trials
· Commercialisation of seed treatment product, in partnership with
Corteva, progressing towards commercial launch potentially in time for the
2024 growing season
· Richard Horsman appointed as Non-Executive Director, with effect from
1 September 2022
· New Development Team Lead and Formulation Team members recruited
Post period events
· First regulatory approval for the home garden market following
clearance for Mevalone® in Italy
· Regulatory approval across a number of US states for Mevalone® and
Cedroz™
· Regulatory approval in Poland for use of Mevalone® on grapes and
post-harvest storage diseased in apples
Financial highlights
· Revenue for the year was £1.8 million (2021: £1.2 million), with a
loss before tax of £2.6 million (2021: £3.4 million) and statutory operating
loss of £2.6 million (2021: £3.2 million)
· Adjusted EBITDA was £1.7 million loss (2021: £2.0 million loss)
· Cash position at the year-end was £2.0 million (2021: £3.9 million)
The Group's full Financial Statements are available at: www.edenresearch.com
(http://www.edenresearch.com) .
Lykele van der Broek, Chairman of Eden Research plc, commented:
"2022 was a positive year for Eden with a return to strong sales growth and
approval for Eden's two commercial products, Mevalone® and Cedrozä, and
three active ingredients granted approval in the US. 2023 looks set to provide
a number of significant opportunities including further territorial expansion
and targeted diseases, increased products sales, and the continued development
of other product lines such as our seed treatment and insecticide projects."
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information, contact:
Eden Research plc www.edenresearch.com (http://www.edenresearch.com/)
Sean Smith 01285 359 555
Alex Abrey
Cenkos Securities plc (Nominated advisor and broker)
Giles Balleny / Max Gould (corporate finance) 020 7397 8900
Michael Johnson (sales)
Hawthorn Advisors (Financial PR)
Felix Meston eden@hawthornadvisors.com (mailto:eden@hawthornadvisors.com)
Simon Woods
Notes to Editors:
Eden Research is the only UK-listed company focused on biopesticides for
sustainable agriculture. It develops and supplies innovative biopesticide
products and natural microencapsulation technologies to the global crop
protection, animal health and consumer products industries.
Eden's products are formulated with terpene active ingredients, based on
natural plant defence metabolites. To date, they have been primarily used on
high-value fruits and vegetables, improving crop yields and marketability,
with equal or better performance when compared with conventional pesticides.
Eden has two products currently on the market:
Based on plant-derived active ingredients, Mevalone(®) is a foliar
biofungicide which initially targets a key disease affecting grapes and other
high-value fruit and vegetable crops. It is a useful tool in crop defence
programmes and is aligned with the requirements of integrated pest management
programmes. It is approved for sale in a number of key countries whilst Eden
and its partners pursue regulatory clearance in new territories thereby
growing Eden's addressable market globally.
Cedroz™( )is a bionematicide that targets free living nematodes which are
parasitic worms that affect a wide range of high-value fruit and vegetable
crops globally. Cedroz is registered for sale on two continents and Eden's
commercial collaborator, Eastman Chemical, is pursuing registration and
commercialisation of this important new product in numerous countries
globally.
Eden's Sustaine(®)( )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 was admitted to trading on AIM on 11 May 2012 and trades under the
symbol EDEN. It was awarded the London Stock Exchange Green Economy
Mark in January 2021, which recognises London-listed companies that derive
over 50% of their total annual revenue from products and services that
contribute to the global green economy. Eden derives 100% of its total annual
revenues from sustainable products and services.
For more information about Eden, please visit: www.edenresearch.com
(http://www.edenresearch.com/) .
Chairman's Statement
2022 has been a positive year for Eden with a return to strong sales growth
and approval for Eden's two commercial products, Mevalone® and Cedrozä, and
three active ingredients granted in the US. 2023 looks set to provide a number
of significant opportunities including further territorial expansion and
targeted diseases, increased products sales, and the continued development of
other product lines such as our seed treatment and insecticide projects.
The wine grape market in Europe has recovered well, meaning that farmers have
been returning to pre-pandemic levels of pesticide applications, with further
increase in demand expected in 2023 as the industry returns to normal.
This trend, in conjunction with regulatory approvals and label extensions
granted for Mevalone in recent years in countries such as Australia and Spain
has resulted in strong product sales growth in 2022 of around 45%, a trend
which we expect to continue in 2023.
With time, we expect that the US market will provide Eden with a market
opportunity which could rival that of Southern Europe, which has provided the
vast majority of Eden's product sales revenue to date.
Our distribution partner for Mevalone in the US, Sipcam Agro USA, is well
prepared for commercial launch in 2023. It has already ordered its first batch
of product for this coming growing season.
Good progress has also been made with Corteva Agriscience, our partner for our
seed treatment product. A significant effort has been made by both parties in
developing the product in readiness for launch in the 2024 growing season,
subject to the necessary regulatory approvals.
Towards the end of 2022, Eden expanded its relationship with Corteva by
entering into an exclusive distribution agreement for Mevalone in France, a
key market for that product. This new distribution agreement, in conjunction
with our development projects, reflects the growing influence that Eden is
building across the agrochemicals sector, particularly amongst the industry's
major international corporations.
Work is well advanced to expand Mevalone's label into additional disease
targets. It is expected that this will significantly increase the addressable
market for Mevalone in France.
Over the past three years, Eden's team has expanded across research and
development, sales and distribution, product management, and regulatory
affairs functions. This increased capacity means that we are able to undertake
an unprecedented level of development activity for current and new products.
To that end, Eden's insecticide product has been formulated and samples
provided to multiple interested parties who are undertaking their own trial
work, further to Eden running its own field trials in 2021 and 2022 which
produced encouraging results.
In the background, we continue to work with several partners with our
polymer-free Sustaine microencapsulation technology which enables Eden to
provide a solution to incumbent products which currently use microplastics in
their formulations as encapsulation systems.
Eden has never been short of opportunities, and this continues to be the case.
The market drivers which underpin Eden's investment case continue to increase
with growing regulatory pressure on older agrochemicals and a shift in
business and consumer preferences to use sustainable, low residue
alternatives.
Clearly, the key to Eden's success is converting this opportunity into
commercial success through sustained, strong product sales growth. I believe
that we have seen the start of that growth in 2022.
Whilst Eden may not have the level of resources that some of its much larger
competitors may have, we do have a valuable, diverse product and technology
portfolio coupled with a creative, focussed team that can deliver success
using the advantages we have of nimbleness, low bureaucracy, free thinking,
and individuals who know that their contribution will make a difference.
As ever, I would like to thank Eden's shareholders for their ongoing and much
appreciated support.
Lykele van der Broek
Non-Executive Chairman
4 May 2023
Chief Executive Officer's Review for the year ended 31 December 2022
Section one: Introduction
2022 saw an immense effort by the whole Eden team to achieve a number of
significant landmarks which has built the foundations for significant growth
in 2023 and beyond.
In 2022, we observed some of the hottest temperatures recorded across the
globe which led to dry growing conditions across Europe, high food prices, and
reduced supply. Furthermore, the war in Ukraine has required companies to
navigate difficult supply chain issues while also managing high energy costs
against the background of a global energy crisis. This has had an adverse
effect on the demand for pesticide products driven by a reduction of fungal
disease and a generally reduced demand for pesticides in many major
categories.
Despite this, Eden has successfully executed several key label extensions
across new crop types and target diseases, as well as authorisations in new
territories. We have not only beaten last year's sales performance, but we
have also outperformed market expectations in terms of both volume and value.
Most notably, the Company gained US Environmental Protection Agency (EPA)
approval, granting us access to the US market, paving the way for a very
significant market entry. This has been the result of the regulatory team's
tireless efforts over the past four years, working with the EPA to ensure Eden
met its extensive list of strict requirements. At the state level we have
currently received regulatory approval in 17 US states for Mevalone®, and 8
US states for Cedroz™. We continue to work to gain approvals from the other
states, including key states such as California.
Section two: Delivering on our strategy
By 2027, it is estimated that the global biopesticide market will be worth
more than $11 billion, growing at a CAGR of 15% per annum. On average, the
time it takes to bring new conventional agricultural products to the market is
estimated at around 10 to 12 years at a cost of $300 million. With that as the
backdrop, it is important to note that Eden's leverage of its three registered
active ingredients and formulation delivery system, Sustaine®, allows us to
move relatively quickly to formulate new products and introduce new solutions
to the increasing challenges facing growers, particularly as regulatory
compliance becomes more demanding.
As the only UK-quoted company developing plant-derived biopesticide
formulations and plastic free encapsulation technology, we believe that Eden
is uniquely positioned to offer investors exposure to a compelling segment of
the sustainable agricultural market.
The Company strategy is built on four key objectives:
a) Business line diversification
- Pursuit of opportunities in seed treatments
- Development of insecticides
- Expand crops and diseases treated, increasing the addressable market
for existing products
- Geographic diversification
b) Research, development, and operations
- Supply chain optimisation
- Expansion of in-house screening and field trials capability
- Accelerate commercialisation of Sustaine® for conventional actives
- Increase self-reliance in R&D
- Reduce time to market
c) Commercial growth
- Regulatory clearance in new countries, crops, and diseases
- Accelerate Sustaine® development
- Partnerships for Mevalone® in new territories
- Pursue collaboration with majors and select national partners
- Route to market optimisation
d) Strengthening and growing the team
- Added capacity in R&D, including microbiology, plant biology,
agronomy, and analytical chemistry
- Robust approach to data quality
- Expand commercial team
- Addition of in-house regulatory expertise - accelerating time to
market and reducing regulatory costs
Reflecting on these objectives, I believe that we have made significant
progress with expanding the growth of our existing products while also
continuing to pursue new opportunities through new product development. Eden
has been delivering against these objectives in the following ways:
a) Widening our global market opportunities
USA EPA Approval
In September 2022, Eden was granted regulatory approval from the United States
EPA for all five petitions submitted, covering the Company's three active
ingredients (eugenol, geraniol and thymol), formulation technology
(Sustaine®) and two formulated products (Mevalone® and Cedroz™). It is
worth noting that regulatory clearance on a federal level of our active
ingredients will allow for easier and faster registration for all future
formulations based on these ingredients.
Eden stands amongst very few British crop protection companies to obtain
approvals for multiple biopesticides in the US. The market potential in the US
for Mevalone® and Cedroz™ alone stands at approximately €94 million and
€189 million per annum, respectively. This excludes the opportunities for
bioinsecticides which are estimated to be worth an additional €237 million.
With increasing regulatory pressure on conventional pesticide products across
the country and a general steer towards sustainably grown produce, the market
opportunities are only likely to expand.
Since receiving EPA approval at federal level, Eden has also obtained a number
of important state authorisation such as Florida, Washington, Oregon, and New
York. With these individual approvals now in place, our distribution partner,
Sipcam Agro USA, can start to sell Mevalone® in the 2023 growing season. In
December 2022, Eden fulfilled its first order for the US market.
Mevalone®
Over the course of the year, Eden received various label extensions for
Mevalone®, including in Italy where Eden and Sipcam are now allowed to target
two new fungal pathogens and a wide range of new crop types with an expanded
Mevalone® label (sold in Italy under the brand name 3logy® by Sipcam). We
estimate that this expansion of the label for 3logy® adds thousands of
hectares of high-value crops to our addressable market.
We are currently hard at work to further optimise our distribution network,
and we anticipate announcing new partnerships in the coming months; all aimed
at adding new territories or expanding our use case in existing countries.
An outstanding example of such optimisation is the appointment of Corteva
France as our exclusive distribution partner in France in December of 2022,
replacing the incumbent distributor. Corteva's assessment of the French
market is that new opportunities have emerged as the consequence of the
removal of key conventional pesticides.
Working with Corteva, Eden is pursuing the significant expansion of the label
for Mevalone in France, targeting both downy mildew and powdery mildew and
resulting in an up to ten-fold expansion of the addressable market in
France. Preparation of the necessary regulatory submissions is well under
way with the efficacy trials data required to support these submissions now
complete.
Post period end, we were pleased to secure our first regulatory approval for
the consumer market with clearance for Mevalone® in Italy for home garden
use. This will allow Italian gardeners the same access as commercial farmers
to a sustainable fungicide to protect their plants and crops from destructive
fungal pathogens.
Organic certification
In November 2022, it was announced that Mevalone® and Cedroz™ received
certification for organic farming in Greece. The certification, received by
Eden's regional partner, K&N Efthymiadis (K&NE), follows the
authorisation of Eden's three EU-registered active ingredients for use in
organic farming in 2020.
b) Expanding our product line and applicable uses
Insecticide
Field trials in 2021 and 2022 have produced encouraging results for our
insecticide candidates. The Company is pleased to be in position where it has
now agreed on a final formulation, entered into testing agreements and sent
trial-scale samples to multiple interested parties who are undertaking their
own trial work. Eden has started to see results from its potential partners
come in and we are pleased to say that they are, thus far, in line with our
own results. The Company expects there to be a high level of interest for this
product, particularly in the key markets of Europe and the US.
Seed treatment
We continue to make steady progress with the development of our seed treatment
product, in partnership with Corteva Agriscience. During the last two years,
the companies have worked closely together to undertake field trials and other
development work. The field trials conducted during this time yielded positive
results with efficacy that is comparable to, or better than, the incumbent
product that is being removed from the market. We are now in the final stages
of collating the information that is required to make a full submission for
authorisation of the product in the EU and selected additional territories. It
is expected that launch of the product in the EU will occur in time for the
2024 growing season, although both companies acknowledge that this is an
estimate and is subject to revision, dependent on development and product
registration milestones being achieved as anticipated and the pace of
regulatory action by the authorities.
Eden is also pursuing further opportunities in seed treatments, including
fungicidal and nematicidal applications.
Sustaine®
Over the course of Sustaine's existence, Eden has received numerous enquiries
about using the technology with third party active ingredients which also
require an alternative solution to plastic. Field trials are currently
underway with multiple partners to fully exploit its capability and decisions
regarding future evaluations based on current trials are expected in due
course.
c) New team additions to drive next phase of growth
Our recent growth is largely attributable to the core skills and strengths of
the team that drives Eden. Over the course of the year, we have hired new
staff across vital divisions of our business from regulatory affairs to
research and development. The Eden team now has the necessary capabilities to
formulate, develop, test and register products that it has created. Our
headcount by year end stood at 19, which we view as the optimum level at this
time to continue to progress along our high growth trajectory at a faster pace
than possible in the past.
In September 2022, we welcomed Richard Horsman as a Non-Executive Director to
the Company. Richard possesses an abundance of industry, commercial and
corporate acumen and expertise which will help drive Eden through our next
phase of growth. This not only applies to maximising the potential of our
existing opportunities, but also driving new opportunities that share
synergies with our core business.
Section three: Financial review
Revenue for the year was £1.8 million which marked a 50% increase on the
previous year (FY21: £1.2m). This reflects a significant increase in product
sales which were £1.6m, a 45% rise on last year's products sales (FY21:
£1.1m).
Our earnings before tax have also improved. In 2022, we recorded a reduced
loss of £2.6m which compared favourably to the previous year's performance
(FY21: £3.4m loss).
Administrative expenses remained flat at £2.7m (2021: £2.7m), while
additions to intangible assets, including development costs, reduced to £1.0m
from £1.6m in 2021.
Our cash balance at year-end was £2.0m (2021: £3.8m).
At present, there is currently no near-term plan to pay a dividend. However,
the Board continues to review the Company's dividend policy.
Section four: 2023 outlook
With the groundwork having been laid throughout the course 2022, our strategy
for 2023 is to maximise the sales potential of our current products in
existing markets, continue to expand our geographic reach and target disease
portfolio, and accelerate the development of new products and formulations
based upon our terpene-based active ingredients and yeast-derived,
plastic-free formulation technology.
Continuing our progress in the US market in 2022 (where in September we
received authorisation for our portfolio of three active ingredients
formulation system and two formulated products, Mevalone® and Cedroz™, from
the US EPA), subsequently Eden applied for state-level authorisations in
multiple states, including Florida, Washington, Oregon and California. A
number of states - including New York State - have already granted their
authorisations with more due in 2023, including the largest US market for
Eden: California.
Eden is also targeting regulatory approval in the United Kingdom where we have
submitted an application for authorisation for Mevalone®. While the
addressable market potential in the United Kingdom is not as significant as it
is elsewhere, the opportunity as a British-based business to provide our
products to the British market is exciting. Furthermore, despite its size, the
market for botryticides in the UK is growing rapidly as the number of hectares
dedicated to wine production increases. We are looking forward to forming
close partnerships locally and being part of the UK's efforts to meet its
sustainable agricultural goals.
Elsewhere, we continue to pursue other territories across the globe and have
numerous applications for regulatory approvals of Mevalone® and Cedroz™
pending. This includes Germany, Poland, New Zealand, Morocco and Tunisia.
Eden is also exploring the suitability for Mevalone® application on cannabis
in the US and Canada. The market potential for Eden in cannabis production
could be significant considering recent legislation changes in the US and the
significant need for pesticides on this crop. Furthermore, cannabis has
multiple crop cycles per year which require year-round application of crop
protection products. Field trials commenced in 2022 and we continue to assess
the effectiveness of Mevalone® against several diseases including botrytis.
Evaluations in additional areas of significant commercial potential include
black sigatoka (banana), potato blight and potato cyst nematodes. In each
case, the initial evaluations have produced encouraging results.
Following our first regulatory approval for consumer home and garden use in
Italy, we look forward to continuing this momentum as we look at accessing
other territories worldwide so the home gardener can also benefit from the
safety and efficacy that Mevalone® provides. Our breakthrough in one consumer
market is the beginning and the ability to offer home gardeners the same tools
serves as another demonstration of the versatility of our sustainable products
and technology.
Finally, we are working hard to move forward with new products including
insecticides, seed treatments, and optimised fungicides. Subject to regulatory
authorisation, we expect to see the first sales of our seed treatments
developed with Corteva in 2024 and the first sales of our insecticides in the
US in 2024/2025 and in the EU in 2025/2026. Ongoing EU regulatory developments
around the use of intentionally added microplastics in agricultural products
should also prompt accelerated development and deployment of our propriety
Sustaine® microencapsulation technology across a number of active ingredients
in addition to our own.
Section five: Driving positive impact
Sustainability lies at the heart of what we do at Eden. We are focused on
providing innovative and sustainable solutions to the global agriculture
industry and beyond. It is with this philosophy that we aim to perform a
fundamental role for farmers looking to adopt sustainable farming practices
without adversely impacting their output or bottom line.
Sustainability can often pose a systematic challenge for the agricultural
industry as it looks to contend with feeding a growing population while also
protecting our planet. Our growing portfolio of products helps farmers to
protect natural biological ecosystems, as well as their high value crops,
meeting the growing demands of both consumers and regulators. The ingredients
we use to formulate our products; geraniol, eugenol and thymol, are
naturally-occurring materials used by plants themselves as a part of their own
defence systems.
Moreover, our products have been certified as organic in the EU. This is a
valuable classification for Eden as we are seeing rising demand for organic
produce amongst consumers and growers, a trend also reinforced by regulation.
Under its Farm to Fork strategy, the EU has proposed that at least 25% of the
EU's agricultural land should be farmed organically by 2030, and the action
plan supporting this change has now reached the public consultation phase.
Increasingly, regulatory restrictions over crop protection product usage and a
drive towards organic farming is apparent right across the globe and
demonstrated quite clearly in the UK with the introduction of the Department
of Environment, Food, and Rural Affairs' new Environmental Land Management
Schemes (ELMS). Under ELMS, farmers in England will be entitled to a
Sustainable Farming Incentive payment which focuses on soil health and
reducing the use of damaging inputs such as fertilisers and insecticides. In
the context of our regulatory application in the UK, we continue to review the
associated opportunities and risks. Moving forward, we look forward to working
with our distribution partner and local farmers as these regulations evolve in
a post-Brexit environment.
TerpeneTech (UK)
Sales of geraniol into the biocide sector have continued to increase year on
year and TerpeneTech (UK) is investigating the potential to register
additional active ingredients under the EU's Biocide Directive.
Sales of the head-lice treatment product have still not started outside of the
U.K. as had been expected. Eden is in discussion with TerpeneTech (UK) to
determine the best way forward with this product.
TerpeneTech (Ireland)
TerpeneTech (Ireland) was established in 2019 to hold the registration of
geraniol under the EU's Biocidal Products Regulation, due to changes brought
about by Brexit. As such, TerpeneTech (Ireland) receives royalty income from
TerpeneTech (UK) on the sales of geraniol but is otherwise non-operational.
Ukraine
Eden does not currently have any business activities in Russia or Ukraine and,
as such, has not seen any direct impact on its business.
The knock-on effect of the conflict on other countries also appears to be
minimal and so we do not envisage significant disruption to the current
business in the short term.
Section six: Summary
Eden has pivoted from being a small agrochemical development and licensing
company to an operating business with meaningful and growing product sales and
a strong development pipeline. This is reflected in our 2022 results which
show that we have beaten last year's sales performance and outperformed market
expectations in terms of volume and value. With each milestone that we pass,
Eden remains ambitious in our plans to continue expanding our regulatory and
commercial footprint, growing our network of partners, and increasing the size
our addressable markets. We also remain risk-aware to changing consumer and
regulatory trends as well as global climatic and economic conditions, and I
can confidently say that our business model has so far proven to be resilient
to all these factors and we will continue to ensure Eden remains firmly
grounded.
I am proud of the role Eden is playing in helping create more sustainable
agricultural practices as the only UK-quoted company focused on sustainable
chemistry for the biopesticide industry. Today we are viewed by our peers as
the biocontrol standard for biofungicides. I would like to take this
opportunity to thank our team which has played a significant role in
delivering the results for 2022, and to our shareholders who have backed us
throughout the year.
Sean Smith
Chief Executive Officer
4 May 2023
Consolidated statement of comprehensive income for the year ended 31 December
2022
2022 2021
Notes £ £
Revenue 4 1,827,171 1,228,580
Cost of sales (997,011) (667,343)
Gross profit 830,160 561,237
Amortisation of intangible assets (495,818) (434,630)
Administrative expenses (2,749,240) (2,694,290)
Share based payments (152,135) (640,597)
Operating loss 5 (2,567,033) (3,208,280)
Interest income 8 192 98
Finance costs 9 (22,046) (32,074)
Foreign exchange gains/(losses) 9 52,736 (97,247)
Share of loss of equity accounted Investee, net of tax (31,444) (58,177)
15
Loss before taxation (2,567,595) (3,395,680)
Income tax income 10 323,716 618,137
Loss and total comprehensive income for the year (2,243,879) (2,777,543)
Total comprehensive income for the year is attributable to:
- Owners of the parent Company (2,237,262) (2,788,973)
- Non-controlling interests (6,617) 11,430
(2,243,879) (2,777,543)
Earnings per share 11
Basic (0.59p) (0.73p)
Diluted (0.59p) (0.73p)
Consolidated statement of financial position as at 31 December 2022
2022 2021
Notes £ £
Non-current assets
Intangible assets 12 8,447,226 7,919,780
Property, plant and equipment 13 198,786 232,278
Right-of-Use assets 14 332,814 372,787
Investments 15 330,244 361,688
9,309,070 8,886,533
Current assets
Inventories 17 625,458 521,351
Trade and other receivables 18 658,866 886,587
Current tax recoverable 10 323,716 903,245
Cash and cash equivalents 1,994,472 3,829,369
3,602,512 6,140,552
Current liabilities
Trade and other payables 19 1,813,341 1,711,518
Lease liabilities 20 139,547 99,924
1,952,888 1,811,442
Net current assets 1,649,624 4,329,110
Non-current liabilities
Trade and other payables 19 - 87,740
Lease liabilities 20 215,776 298,428
215,776 386,168
Net assets 10,742,918 12,829,475
2022 2021
Notes £ £
Equity
Called up share capital 23 3,808,589 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 701,065 937,505
Merger reserve 26 10,209,673 10,209,673
Retained earnings (43,309,440) (41,460,753)
Non-controlling interest 27 24,502 31,119
Total equity 10,742,918 12,829,475
The financial statements were approved by the Board of Directors and
authorised for issue on 4 May 2023 and are signed on its behalf by:
Sean Smith
Director
Company statement of financial position
as at 31 December 2022
2022 2021
Notes £ £
Non-current assets
Intangible assets 12 8,354,299 7,813,583
Property, plant and equipment 13 198,786 232,278
Right-of-Use Assets 14 332,814 372,787
Investments 15 330,244 361,688
9,216,143 8,780,336
Current assets
Inventories 17 625,458 521,351
Trade and other receivables 18 786,791 970,587
Current tax recoverable 10 323,716 903,245
Cash and cash equivalents 1,994,472 3,829,369
3,730,437 6,224,552
Current liabilities
Trade and other payables 19 1,813,341 1,667,557
Lease liabilities 20 139,547 99,924
1,952,888 1,767,481
Net current assets 1,777,549 4,457,071
Non-current liabilities
Trade and other payables 19 - 87,740
Lease liabilities 20 215,776 298,428
215,776 386,168
Net assets 10,777,916 12,851,239
Equity
Called up share capital 23 3,808,589 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 701,065 937,505
Merger reserve 26 10,209,673 10,209,673
Retained earnings (43,249,940) (41,407,870)
Total equity 10,777,916 12,851,239
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
£2,230,645 (2021 - £2,764,403).
The financial statements were approved by the Board of Directors and
authorised for issue on 4 May 2023 and are signed on its behalf by:
Sean Smith
Director
Company Registration No. 03071324
Consolidated statement of changes in
equity for the year ended 31 December 2022
Share capital Share premium account Merger reserve Warrant reserve Retained earnings Total Non-controlling interest Total
Notes £ £ £ £ £ £ £ £
Balance at 1 January 2021 3,803,402 39,308,529 10,209,673 429,915 (38,842,259) 14,909,260 19,689 14,928,949
Year ended 31 December 2021:
Loss and total comprehensive income for the year - - - - (2,788,973) (2,788,973) 11,430 (2,777,543)
Issue of share capital 23/24 - - - - - - - -
Options granted 22 - - - 678,069 - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 - - -
Balance at 31 December 2021 3,803,402 39,308,529 10,209,673 937,505 (41,460,753) 12,798,356 31,119 12,829,475
Year ended 31 December 2022:
Loss and total comprehensive income for the year - - - - (2,237,262) (2,237,262) (6,617) (2,243,879)
Issue of share capital 23/24 5,187 - - - - 5,187 - 5,187
Options granted 22 - - - 152,135 - 152,135 - 152,135
Options lapsed 22 - - - (388,575) 388,575 - - -
Balance at 31 December 2022 3,808,589 39,308,529 10,209,673 701,065 (43,309,440) 10,718,416 24,502 10,742,918
Share capital is the number of shares issued in the Company at their nominal
value. The share premium account represents the gross proceeds from issue
of shares, less their nominal value.
Company statement of changes in equity
for the year ended 31 December 2022
Share capital Share premium account Merger reserve Warrant reserve Retained earnings Total
Notes £ £ £ £ £ £
Balance at 1 January 2021 3,803,402 39,308,529 10,209,673 429,915 (38,813,946) 14,937,573
Year ended 31 December 2021:
Loss and total comprehensive income for the year - - - - (2,764,403) (2,764,403)
Issue of share capital 23/24 - - - - - -
Options granted 22 - - - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 -
Balance at 31 December 2021 3,803,402 39,308,529 10,209,673 937,505 (41,407,870) 12,851,239
Year ended 31 December 2022:
Loss and total comprehensive income for the year - - - - (2,230,645) (2,230,645)
Issue of share capital 23/24 5,187 - - - - 5,187
Options granted 22 - - - 152,135 - 152,135
Options lapsed 22 - - - (388,575) 388,575 -
Balance at 31 December 2022 3,808,589 39,308,529 10,209,673 701,065 (43,249,940) 10,777,916
Share capital is the number of shares issued in the Company at their nominal
value. The share premium account represents the gross proceeds from issue
of shares, less their nominal value.
2022 2021
Notes £ £ £ £
Cash flows from operating activities
Cash absorbed by operations 33 (1,586,531) (1,586,582)
R&D tax credit received 903,244 -
Net cash outflow from operating activities (683,287) (1,586,582)
Investing activities
Development of intangible assets (1,023,262) (1,624,927)
Purchase of property, plant and equipment (30,929) (101,269)
Interest received 192 98
Net cash used in investing activities (1,053,999) (1,726,098)
Financing activities
Payment of lease liabilities (128,301) (90,387)
Interest on lease liabilities (22,046) (32,074)
Net cash generated from/(used in) financing activities (150,347) (122,461)
Net increase/(decrease) in cash and cash equivalents (1,887,633) (3,435,141)
Cash and cash equivalents at beginning of year 3,829,369 7,286,503
Effect of foreign exchange rates 52,736 (21,993)
Cash and cash equivalents at end of year 1,994,472 3,829,369
3,829,369
Relating to: 1,994,472
Bank balances
Non-cash movement on account of financing activities:
Note
14 Lease liability additions £87,228 (2021: £76,464)
22 Share based payment charge £152,135 (2021: £640,957)
23 Issue of shares £5,187 (2021: £nil) where proceeds
remain unpaid at the year end.
Company statement of cash flows for the year ended 31 December 2022
2022 2021
Notes £ £ £ £
Cash flows from operating activities
Cash absorbed by operations 33 (1,586,531) (1,586,582)
R&D tax credit received 903,244 -
Net cash outflow from operating activities (683,287) (1,586,582)
Investing activities
Development of intangible assets (1,023,262) (1,624,927)
Purchase of property, plant and equipment (30,929) (101,269)
Interest received 192 98
Net cash used in investing activities (1,053,999) (1,726,098)
Financing activities
Payment of lease liabilities (128,301) (90,387)
Interest on lease liabilities (22,046) (32,074)
Net cash generated from/(used in) financing activities (150,347) (122,461)
Net increase/(decrease) in cash and cash equivalents (1,887,633) (3,435,141)
Cash and cash equivalents at beginning of year 3,829,369 7,286,503
Effect of foreign exchange rates 52,736 (21,993)
Cash and cash equivalents at end of year 1,994,472 3,829,369
Relating to:
3,829,369
1,994,472
Bank balances
Non-cash movement on account of financing activities:
Note
14 Lease liability additions £87,228 (2021: £76,464)
22 Share based payment charge £152,135 (2021: £640,957)
23 Issue of shares £5,187 (2021: £nil) where the
proceeds remain unpaid
Notes to the Group financial statements for the year ended 31 December 2022
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, its subsidiaries, TerpeneTech Limited
(Ireland), Eden Research Europe Limited (Ireland) (see note 16) and its
associate company, TerpeneTech Limited (UK) (see note 15).
1.1 Accounting convention
The Group and Company financial statements have been prepared in accordance
with UK-adopted international accounting standards and as applied in
accordance with the provisions of the Companies Act 2006.
The financial statements are prepared in pound sterling, which is the
functional currency of the Group. Monetary amounts in these financial
statements are rounded to the nearest £.
They have been prepared on the historical cost basis. The principal accounting
policies adopted are set out below.
See note 2 for further information on changes to standards adopted or in issue
during the year end.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of
the Company and its subsidiary undertakings up to 31 December 2022. 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.
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.
1.3 Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Group and Company have 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 £2,243,879
(2021: £2,777,543). Net current assets at that date amounted to £1,649,624
(2021: £4,329,110). Cash at that date amounted to £1,994,472 (2021:
£3,829,369).
The Company has reported a loss for the year after taxation of £2,230,645
(2021 - £2,764,403). Net current assets at that date amounted to £1,777,549
(2021: £4,457,071). Cash at that date amounted to £1,994,472 (2021:
£3,829,369).
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 Group and Company will be able to
operate with the cash resources that are available to it for this period.
The forecasts adopted include revenue derived from existing contracts as well
as expected new contracts in respect of products not yet available for use.
The impact of COVID has been considered in the forecasts. The Group has been
impacted by the pandemic as it has led to some delays in regulatory approvals,
product development process and limited promotional activity, which resulted
in lower than forecast sales in 2020 and 2021. 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, as production
is undertaken through toll manufacturers, and the Directors have previously
demonstrated ability and willingness to delay certain costs, such as research
and development expenditure, where required and are willing and able to delay
costs in the forecast period should the need arise. A positive cash balance is
forecasted to be maintained in this base scenario throughout the entire
forecast period.
The Directors have also considered a downside scenario which includes
reductions to revenue derived from existing contracts as well as elimination
of revenue from products not yet available for use offset by mitigations
around research and development expenditure as well as some reductions in
expansionary overheads. Under this scenario, a positive cash balance would be
maintained over the forecast period.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet their 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.
The Group's achievement of long-term positive cash generation is reliant on
the completion of ongoing product development and successful initial approval
and registration of these products with various regulatory bodies, as well as
the registration of existing products in new territories. While the Group is
forecasted to become cash generative in 2024 under the base budget, the
Directors consider it reasonably possible that the Group may seek further
funding prior to that point.
The Group has planned its cashflows taking into account its current cash
availability and is satisfied that it can continue for the foreseeable future,
albeit with careful management of the levels of investment in the short
term, depending on the positive outcome and/or timing of certain commercial
and regulatory events.
However, given the plethora of opportunities and strong interest that the
Group is presented with, the Board of Eden may seek to invest to a greater
extent than it is currently able to and to expedite the commercialisation of
its product portfolio. To that end, the Board continues to assess
all funding and commercial opportunities, taking into account commercial
and market conditions.
1.4 Revenue
Revenue received by the Group is recognised net of any taxes and in accordance
with IFRS 15. Policies for each significant revenue stream are as follows:
Licensing fees
The Group 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 the right to use as the Group does not
have an obligation to undertake activities that significantly affect the
relevant intellectual property.
Each sale of a licence by the Group 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 Group's intellectual property as it exists
at that point in time, with no ongoing obligation on the Group, or
alternatively provides access to the intellectual property as it develops over
time. Where the Group 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 Group, revenue is
recognised in the periods to which the obligations pertain.
Milestone payments
The Group receives milestone payments from other commercial arrangements,
including any fees it has charged to partners for rights granted in respect of
distribution agreements.
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.
The Corteva agreement entered into in 2021 includes milestone payments of
£141,293 received in 2021 and a further £164,148 in 2022. These milestone
payments have been assessed to relate to a performance obligation being
satisfied at a point in time. As at year end, this performance obligation had
not been reached and, consequently, the amounts received deferred (presented
within Accruals and Deferred Income in note 19).
Further milestone payments are contractually due in the year ending 31
December 2023. The performance obligation is expected to be met no later than
by 31 December 2023.
The second performance obligation relates to product sales and will be
accounted for in line with the product sales policy disclosed below once the
commercial sales have commenced.
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 Group
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 Group, 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.
R & D charges
The Group 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 Group 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.
Sales-based royalty income arising from licences of the Group'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.
Product sales
Generally, where the Group 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 Group 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 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 other than the
liability in respect of the Corteva milestone payments noted in the milestone
section (2021: none, other than the Corteva milestone payment).
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 Group is responsible for the shipping,
the product has been shipped to the customer.
1.5 Intangible assets other than goodwill
Intellectual property, which is made up of patent costs, trademarks and
development costs, is capitalised and amortised on a straight-line basis over
its remaining estimated useful economic life of 8 years (2021: 9 years) in
line with the remaining life of the Group'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® and CedrozÔ. The useful economic life of intangible
assets is reviewed on an annual basis.
An internally generated intangible asset arising from the Group's development
activities is recognised only if 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 from the date they are available for use. Where no
internally-generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.
1.6 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 and
those that are under development 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 an 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.
1.9 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
Group 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 Group changes its business model for managing financial
assets in which case all affected 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.
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
Group'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.
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 Group '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. During the year, an expected credit loss
provision of £107,188 (2021:£Nil) has been recognised on trade receivables
over 12 months old, on which payment is uncertain.
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.
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.
1.10 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
Group'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 Group.
R&D tax credits are accounted for by reference to IAS 12 and are
calculated based on development costs incurred by the Group through third
party contractors, as well as members of staff who are involved in research
and development of the Group's products.
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 Group 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 Group 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 Group intends to settle its current tax assets and liabilities on a net
basis.
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 operated an unapproved share option scheme for executive
directors, senior management and certain employees up to September 2017.
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 were made annually and were subject to
continued service and challenging performance conditions usually over a three
year period. The performance conditions were reviewed on an annual basis to
ensure they remained appropriate and were based on increasing shareholder
value. Awards were structured as nil cost options with a seven year lift
after vesting.
Other than in exceptional circumstances, awards were up to 100% of salary in
any one year and granted subject to achieving challenging performance
conditions set at the date of the grant. A percentage of the award vested
for 'Threshold' performance with full vesting taking place for equalling or
exceeding the performance 'Target'. In between the Threshold and Target there
was pro rata vesting.
The LTIP was adopted by the Board of Directors of Eden on 28 September 2017.
Long-Term Incentive Plan ('LTIP') (continued)
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 June 2021, the Company made changes to the LTIP.
The changes to the LTIP have been treated as a modification of the existing
plan for financial reporting purposes which means that the Fair Value of
previous awards has been recognised over their remaining term and the
incremental Fair Value of the new options granted has been recognised
separately over their own vesting period.
The Company issued options under the modified LTIP, details of which can be
found on note 22. These include graded vesting.
Share options which vest in instalments over a specified vesting period
(graded vesting) where the only vesting condition is service from grant date
to vesting date of each instalment are accounted for as separate share-based
payments. Each instalment's fair value is assessed separately based on its
term and the resulting charge recognised over each instalment's vesting
period.
Other share options
In addition to the LTIP grants, the Company awarded certain employees approved
options. Details of these options can be found in note 22. The accounting
treatment for these options is consistent with that indicated under the LTIP
section at the start of this page.
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.
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 Group '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.
1.17 Research and development
Expenditure on research activities 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
Group 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 Group '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. See note 32 for further
information.
1.20 Functional and presentation currency
The Group's consolidated financial statements are presented in pound sterling,
which is the Group's functional currency due to its own operations and assets
being based in the U.K.. For each entity, the Group determines the functional
currency, and items included in the financials tatements of each entity are
measured using that functional currency.The Company's financial statements are
prepared and presented in sterling, which is its functional currency.
1.21 Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation (where items are remeasured). Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency
spot rates of exchange at the reporting date. Foreign exchange gains and
losses resulting from the settlement of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement. All
foreign exchange gains and losses are presented in the income statement within
administrative expenses.
Translation differences related to items classified through other
comprehensive income are recognised in other comprehensive income (OCI), while
remaining translation differences are recognised in the income
statement.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of the gain or
loss on the change in fair value of the item (i.e. translation differences on
items whose fair value gain or loss is recognised in OCI or profit or loss are
also recognised in OCI or profit or loss respectively).
In determining the spot exchange rate to use on initial recognition of the
related asset, expense or income (or part of it) or the derecognition of a
non-monetary asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on which the Group
initially recognises the non-monetary asset or non-monetary liability arising
from the advance consideration. If there are multiple payments or receipts in
advance, the Group determines the transaction date for each payment or receipt
of advance consideration.
1.22 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term highly liquid
investments with an original maturity of three months or less, that are
readily convertible to a known amount of cash and subject to an insignificant
risk of changes in value.
1.23 Current versus non-current classification
The Group classifies assets and liabilities in the statement of financial
position as either current or non-current.
An asset is classified as current when it is:
· Expected to be realised or intended to be sold or consumed in the
normal operating cycle
· Held primarily for the purpose of trading
· Expected to be realised within twelve months after the reporting
period; or
· Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is classified as current when it is:
Expected to be settled in the normal operating cycle
Held primarily for the purpose of trading
Due to be settled within twelve months after the reporting period ; or
There is no unconditional right to defer the settlement of the liability for
at least twelve months after the reporting period.
The terms of the liability that could, at the option of the counterparty,
result in its settlement by the issue of equity instruments do not affect its
classification.
The Group classifies all other liabilities as non-current.
1.24 Equity and reserves
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or options are shown in
equity as a deduction, net of tax, from the proceeds shown in share premium.
Share premium represents the proceeds from shares, less the nominal value and
directly attributable costs.
1.25 Earnings per share
Basic earnings per share is calculated by dividing:
· the profit or loss attributable to owners of the Company, excluding any
costs of servicing equity other than ordinary shares;
· by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued
during the year and excluding treasury shares.
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account:
· the after-income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares; and
· the weighted average number of additional ordinary shares that would
have been outstanding, assuming the conversion of all dilutive potential
ordinary shares.
2 New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the following
standards and interpretations with an effective date of implementation for
accounting periods beginning after the date on which the Group's financial
statements for the current year commenced.
i) New standards and amendments - applicable 1 January 2022
The following standards and interpretations apply for the first time to
financial reporting periods commencing on or after 1 January 2022:
Effective for accounting periods beginning on or after Impact
Property, Plant and Equipment: Proceeds before intended use - Amendments to 1 January 2022 None
IAS 16
Reference to the Conceptual Framework - Amendments to IFRS 3 1 January 2022 None
Onerous Contracts: Cost of Fulfilling a Contract - Amendments to IAS 37 1 January 2022 None
Annual Improvements to IFRS Standards 2018-2020 1 January 2022 None
ii) Forthcoming requirements
As at 31 December 2022, the following standards and interpretations had been
issued but were not mandatory for annual reporting periods commencing on or
after 1 January 2023.
Effective for accounting periods beginning on or after Expected Impact
IFRS 17 Insurance Contracts 1 January 2023 None
Amendments to IAS 1: Classification of Liabilities as Current or Non-current 1 January 2023 None
Definition of Accounting Estimates - Amendments to IAS 8 1 January 2023 None
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice 1 January 2023 None
Statement 2
Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023 None
Transaction - Amendments to IAS 12
3 Critical accounting estimates and judgements
The Group and Company make 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:
Going concern
The Directors have considered the ability of the Group and 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 Group and Company to continue as a going concern is
ultimately dependent upon the amount and timing of cash flows arising from the
exploitation of the Group and 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 Group and 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. See note 1 for further information.
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 Group has made accounting judgements and estimates based on there being
minimal impact of COVID-19 on the business in the long term. This is
impacting, in particular, the forecasts used as the basis for intangibles
impairment review, investment impairment review and going concern. 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.
The Group and Company make 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:
Going concern
The Directors have considered the ability of the Group and 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 Group and Company to continue as a going concern is
ultimately dependent upon the amount and timing of cash flows arising from the
exploitation of the Group and 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 Group and 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. See note 1 for further information.
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 Group has made accounting judgements and estimates based on there being
minimal impact of COVID-19 on the business in the long term. This is
impacting, in particular, the forecasts used as the basis for intangibles
impairment review, investment impairment review and going concern. 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
Impairment assessment of intangibles and investments
The Group has made estimates future revenues that are likely to be derived
from the business when considering the carrying value of intangible assets
owned by the Group. Assumptions have been made the products will be
successfully developed, registered and commercialised in reasonable timescales
and at reasonable cost. Estimates have also been made for weighted average
cost of capital and profit margins. See note 12 and note 15 for further
information of assumptions and estimates made.
Assessment of useful life of intangible assets
The Group has estimated the useful life of intangible assets by considering
intellectual property protection that it owns, such a patents which have a
known expiry date. See note 12 and note 15 for further information of
assumptions and estimates made.
Share based payments
The Group has used appropriate models to value share options granted by the
Company. Please refer to note 22 for information on estimates and judgements
used.
Impairment assessment of intangibles and investments
The Group has made estimates future revenues that are likely to be derived
from the business when considering the carrying value of intangible assets
owned by the Group. Assumptions have been made the products will be
successfully developed, registered and commercialised in reasonable timescales
and at reasonable cost. Estimates have also been made for weighted average
cost of capital and profit margins. See note 12 and note 15 for further
information of assumptions and estimates made.
Assessment of useful life of intangible assets
The Group has estimated the useful life of intangible assets by considering
intellectual property protection that it owns, such a patents which have a
known expiry date. See note 12 and note 15 for further information of
assumptions and estimates made.
Share based payments
The Group has used appropriate models to value share options granted by the
Company. Please refer to note 22 for information on estimates and judgements
used.
Other accounting judgements
In addition to the above, the Group has made other judgements which are
considered of lesser significance.
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 Group and Company to continue as a going concern.
· The assumptions surrounding the perceived market sizes for the
products and the achievable market share for the Group.
· 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.
£64,273 of research expenditure has been recognised as an expense in the
current year in the P&L in excess of the amortisation of intangible assets
as disclosed in note 12 (2021: £11,215).
Revenue - Performance obligations
The Directors have exercised a judgement that the performance obligations set
out in a contract with a customer have note yet been met and, as such, have
not recognised revenue which has been invoiced and paid. See note 1 for
further information on policies applied.
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 operating loss of the segment after excluding the share
based payment charge, amortisation on intangible and Right of Use assets and
depreciation of plant, property and equipment. These items, together with
interest income and expense are allocated to Agrochemicals, being the
Company's primary focus.
The segment information for the year ended 31 December 2022 is as follows:
Agrochemicals Consumer products Animal health Total
Revenue £ £ £ £
Milestone payments - - -
R & D charges 75,334 14,309 - 89,643
Royalties 17,694 100,038 - 117,732
Product sales 1,619,796 - - 1,619,796
Total revenue 1,712,824 114,347 - 1,827,171
Adjusted EBITDA (1,841,805) 114,347 - (1,727,458)
Share Based Payment charge (152,135) - - (152,135)
EBITDA (1,993,940) 114,347 - (1,879,593)
Amortisation on intangible and Right of Use assets (482,546) (13,272) - (495,818)
Depreciation of plant, property and equipment (191,622) - - (191,622)
Finance costs, foreign exchange and investment revenues 30,882 - - 30,882
Income Tax 323,716 - - 323,716
Share of Associate's loss - (31,444) - (31,444)
(Loss)/Profit for the Year (2,313,510) 69,631 - (2,243,879)
Total Assets 12,812,579 99,003 - 12,911,582
Total assets includes:
Additions to Non-Current Assets 1,141,418 - - 1,141,418
Total Liabilities 2,168,664 - - 2,168,664
The segment information for the year ended 31 December 2021 is as follows:
Agrochemicals Consumer products Animal health Total
Revenue £ £ £ £
Milestone payments 5,250 - - 5,250
R & D charges - 7,760 - 7,760
Royalties 57,170 36,131 - 93,301
Product sales 1,122,269 - - 1,122,269
Total revenue 1,184,689 43,891 - 1,228,580
Adjusted EBITDA (2,021,602) 43,891 - (1,977,711)
Share Based Payment charge (640,597) - - (640,597)
EBITDA (2,662,199) 43,891 - (2,618,308)
Amortisation on intangible and Right of Use assets (421,358) (13,272) - (434,630)
Depreciation of plant, property and equipment (155,342) - - (155,342)
Finance costs, foreign exchange and investment revenues (129,223) - - (129,223)
Impairment of investment in associate - - - -
Income Tax 618,137 - - 618,137
Share of Associate's loss - (58,177) - (58,177)
(Loss)/Profit for the Year (2,749,985) (27,558) - (2,777,543)
Total Assets 15,004,888 22,197 - 15,027,085
Total assets includes:
Additions to Non-Current Assets 1,802,660 - - 1,802,660
Total Liabilities 2,153,649 43,961 - 2,197,610
2022 2021
£ £
Revenue analysed by geographical market
UK 114,347 83,891
Europe 1,712,824 1,144,689
1,827,171 1,228,580
The above analysis represents sales to the Group's direct customers who
further distribute these products to their end markets.
Revenues of approximately £1,655,329 (2021: £1,036,156) are derived from two
customers who each account for greater than 10% of the Group's total revenues:
2022 2022 2021 2021
Customer £ % £ %
A 1,450,518 75.4 900,364 73.3
B 204,811 10.6 134,192 10.9
100% of the revenue generated in the year (2021: 100%) was recognised at a
point in time.
5 Operating loss
2022 2021
£ £
Operating loss for the year is stated after charging/(crediting):
Fees payable to the Company's auditor for the audit of the Company's financial 67,000 55,000
statements
Fees payable to the Company's auditor for interim review of half-yearly 3,500 -
results
Depreciation of right-of-use assets (included within administrative expenses) 127,200 98,287
Depreciation on property, plant and equipment 191,622 155,343
Amortisation of intangible assets 495,818 434,630
Provision for doubtful debts 107,188 -
Research expenses 64,273 11,215
Share-based payments 152,135 640,597
6 Employees
The average monthly number of persons (including directors) employed by the
Group during the year was:
2022 2021
Number Number
Management 4 4
Operational 13 12
17 16
Their aggregate remuneration comprised:
2022 2021
£ £
Wages and salaries 1,205,424 1,422,841
Social security costs 145,871 172,142
Pension costs 47,964 53,836
Benefits in kind 6,486 5,826
Share based payment charge 152,135 678,069
1,557,880 2,332,714
7 Directors' remuneration
2022 2021
£ £
Remuneration for qualifying services 478,440 629,060
Company pension contributions to defined contribution schemes 33,491 31,009
Non-executive Directors' fees 96,667 85,000
Share based payment charge relating to all Directors 119,083 632,836
727,681 1,377,905
Benefits in kind 6,486 5,826
Social security costs 71,708 91,901
805,875 1,475,632
The number of Directors for whom retirement benefits are accruing under
defined contribution schemes amounted to 2 (2021 - 2).
The number of Directors who are entitled to receive shares under long term
incentive schemes during the year is 2 (2021 - 2).
Remuneration disclosed above includes the following amounts paid to the
highest paid Director:
2022 2021
£ £
Remuneration for qualifying services including pension 292,367 376,972
The Executive Directors are considered to also be the key management personnel
of the Company and Group.
2022 Salary Bonus Fees Pension Share Based Payments Total
£ £ £ £ £ £
A Abrey 205,200 - - 14,364 51,074 270,638
S Smith 273,240 - - 19,127 68,009 360,376
R Cridland - - 40,000 - - 40,000
L van der Broek - - 45,000 - - 45,000
R Horsman - - 11,667 - - 11,667
478,440 - 96,667 33,491 119,083 727,681
2021 Salary Bonus Fees Pension Share Based Payments Total
£ £ £ £ £ £
A Abrey 190,000 79,800 - 13,297 271,256 554,353
S Smith 253,000 106,260 - 17,712 361,580 738,552
R Cridland - - 40,000 - - 40,000
L van der Broek - - 45,000 - - 45,000
443,000 186,060 85,000 31,009 632,836 1,377,905
8 Interest income
2022 2021
£ £
Interest income
Bank deposits 192 98
Total interest income for financial assets that are not held at fair value
through profit or loss is £192 (2021: £98).
9 Finance costs and foreign exchange (gains)/losses
2022 2021
£ £
Interest on lease liabilities 22,046 32,074
Finance costs 22,046 32,074
Exchange differences on working capital (2,825) 75,254
Effect of exchange rate fluctuations on cash (49,911) 21,993
Exchange losses and (gains) (52,736) 97,247
10 Income tax income
2022 2021
£ £
Current tax
UK corporation tax on profit or loss for the current period (323,716) (572,585)
Adjustments in respect of prior periods - (45,552)
Total UK current tax income (323,716) (618,137)
The credit for the year can be reconciled to the loss per the income statement
as follows:
2022 2021
£ £
Loss (2,567,595) (3,395,680)
Expected tax credit based on a corporation tax rate of 19% (2021: 19.00%) (487,843) (645,179)
Ineligible fixed asset differences 9,489 11,639
Expenses not deductible for tax purposes 75,663 129,845
Additional deduction for R&D expenditure (239,754) (424,074)
R&D claim (323,716) (572,585)
Surrender of tax losses for R&D tax credit refund 424,180 750,284
Adjustment in respect of prior years - (45,552)
Deferred tax not recognised 218,265 177,485
Taxation credit for the year (323,716) (618,137)
On 10 June 2021, the Finance Act 2021 received Royal Assent, confirming that
the UK rate of corporation tax will increase from 19% to 25% from 1 April
2023.
The taxation credit for the year represents the research and development
credit for the year ended 31 December 2022.
The current tax recoverable as at 31 December 2022 represents R&D tax
credits and is made up as follows:
2022 2021
£ £
Current tax
R & D cash tax credit for the current period (323,716) (572,585)
R & D cash tax credit for the prior period - (330,660)
Total UK current tax recoverable (323,716) (903,245)
Deferred Tax
The losses carried forward, after the above offset, for which no deferred tax
asset has been recognised, amount to approximately £29,199,472 (2021:
£27,548,529).
The unprovided deferred tax asset of £7,299,868 (2021: £5,234,221) arises
principally in respect of trading losses. It has been calculated at 25% (2021:
19%) and has not been recognised due to the uncertainty of timing of future
profits against which it may be realised.
Only U.K. tax is considered as most of the operations are in the U.K. and
Ireland is immaterial in terms of operations.
11 Earnings per share
2022 2021
£ £
Weighted average number of ordinary shares for basic and diluted earnings per 380,549,418 380,340,229
share
Earnings (all attributable to equity shareholders of the Company)
Loss for the period (2,243,879) (2,777,543)
Basic earnings per share (0.59p) (0.73p)
Diluted earnings per share (0.59p) (0.73p)
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.
Share options outstanding are anti dilutive in nature due to loss incurred and
therefore not considered for computing diluted EPS
12 Intangible assets
Group
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2021 448,896 6,624,406 9,316,281 16,389,583
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,407,686 18,014,510
Additions - 923,891 99,371 1,023,262
At 31 December 2022 456,684 9,074,031 9,507,057 19,037,772
Amortisation and impairment
At 1 January 2021 448,896 2,494,523 6,716,681 9,660,100
Charge for the year - 214,682 219,948 434,630
At 31 December 2021 448,896 2,709,205 6,936,627 10,094,728
Charge for the year 1,296 284,174 210,348 495,818
At 31 December 2022 450,192 2,993,379 7,146,975 10,590,546
Carrying amount
At 31 December 2022 6,492 6,080,652 2,360,082 8,447,226
At 31 December 2021 7,788 5,440,935 2,471,057 7,919,780
Company
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2021 448,896 6,624,406 9,183,538 16,256,840
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,274,943 17,881,767
Additions - 923,890 99,371 1,023,261
At 31 December 2022 456,684 9,074,030 9,374,314 18,905,028
Amortisation and impairment
At 1 January 2021 448,896 2,494,523 6,703,407 9,646,826
Charge for the year - 214,682 206,676 421,358
At 31 December 2021 448,896 2,709,205 6,910,083 10,068,184
Charge for the year 1,296 284,174 197,075 482,545
At 31 December 2022 450,192 2,993,379 7,107,158 10,550,729
Carrying amount
At 31 December 2022 6,492 6,080,651 2,267,156 8,354,299
At 31 December 2021 7,788 5,440,935 2,364,860 7,813,583
Intellectual property represents intellectual property in relation to use of
encapsulated terpenes in agrochemicals in the form of licences, patents and
development costs. The remaining useful economic life of these asset is 8
years (2021: 9 years).
Licences and trademarks includes an inward licence in respect of a patented
technology.
Development costs includes trials and study costs relating to products that
have been, or are being developed by Eden.
Intellectual property includes patents and know-how acquired by Eden.
£3,799,161 (2021: £2,985,482) of development costs relate to assets under
development for which no amortisation has been charged in 2022 or 2021.
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 perform the review.
Of £8,447,226 carrying amount of intangible assets, £3,799,161 are under
development and £4,555,138 have been allocated to the Agrochemicals Cash
Generating Unit (CGU). The remaining intangible assets, £92,927, have been
allocated to the Consumer products CGU. For impairment assessment we have
allocated asset under development to the agrochemical CGU as all the assest
under delvelopment relates to the agrochemical industry.
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 discounted cash-flow forecast is limited to those products which are
already being sold, or are expected to be sold in 2023, or early 2024.
The forecast covers a period of 8 years, with no terminal value, reflecting
the useful economic life of the patent in respect of the underlying
technology. Financial forecasts for 2023 are based on the approved annual
budget. Financial forecasts for 2024-2025 are based on the approved long-term
plan. Financial forecasts for 2026-2030 are extrapolated based on the
long-term growth rate average of 25%.
The estimated recoverable amount of the CGU exceeded its carrying amount by
£0.9m 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 13.5%
(2021: 12.4%). The increase in the rate reflects the wider market movements as
based on the comparable group as well as increased forecasting risk given
high, current inflation rates.
The impact of increasing the discount rate by 1%, which is considered a
reasonably possible change, would be a decrease in the recoverable amount to
£0.4m. The discount rate would have to increase to over 15% to reduce the
headroom to £nil.
The average annual growth rate has been assumed at 45% (2021: 51%), reflecting
the latest forecasts based on information provided by customers and own market
analysis. The rate stands at 79% up to 2025, reflecting commercialisation of
new products in the period, reducing to 25% from 2026 onwards.
Forecast sales would have to reduce by an average of, approximately, 15% per
annum to reduce headroom to £nil, which is not considered likely.
13 Property, plant and equipment
Consolidated and Company
Fixtures and fittings Total
£ £
Cost
At 1 January 2021 200,758 200,758
Additions - owned 101,269 101,269
At 31 December 2021 302,027 302,027
Additions - owned 30,929 30,929
At 31 December 2022 332,956 332,956
Accumulated depreciation and impairment
At 1 January 2021 12,693 12,693
Charge for the year 57,056 57,056
At 31 December 2021 69,749 69,749
Charge for the year 64,421 64,421
At 31 December 2022 134,170 134,170
Carrying amount
At 31 December 2022 198,786 198,786
At 31 December 2021 232,278 232,278
14 Right-of-Use Assets
Consolidated and Company
Leasehold premises Motor vehicles Total
£ £ £
Cost
At 1 January 2021 417,521 35,865 453,386
Additions 26,256 50,208 76,464
Disposals - - -
At 31 December 2021 443,777 86,073 529,850
Additions - 87,228 87,228
Disposals - (35,865) (35,865)
At 31 December 2022 443,777 137,436 581,213
Accumulated depreciation and impairment
At 1 January 2021 36,361 22,415 58,776
Charge for the year 83,504 14,783 98,287
At 31 December 2021 119,865 37,198 157,063
Charge for the year 90,876 36,325 127,201
Eliminated on disposals - (35,865) (35,865)
At 31 December 2022 210,741 37,658 248,399
Carrying amount
At 31 December 2022 233,036 99,778 332,814
At 31 December 2021 323,912 48,875 372,787
15 Investments
Current Non-current
2022 2021 2022 2021
£ £ £ £
Investments in associates - - 330,244 361,688
Details of the Group's associates at 31 December 2022 are as follows:
Name of undertaking Registered office Principal activities Class of shares % held
held Direct Voting
TerpeneTech Limited (UK) United Kingdom Research and experimental development on biotechnology Ordinary 29.90 29.90
2022 2021
£ £
Non-current assets 378,271 440,601
Current assets 382,753 287,576
Non-current liabilities (92,341) (98,806)
Current liabilities (340,419) (269,026)
Net assets (100%) 328,264 360,345
Company's share of net assets 98,151 107,743
Separable intangible assets 126,249 140,817
Goodwill 412,649 412,649
Impairment of investment in associate (299,521) (299,521)
Carrying value of interest in associate 337,528 361,688
Revenue 497,292 361,307
100% of loss after tax (56,440) (145,849)
29.9% of loss after tax (16,876) (43,609)
Amortisation of separable intangible (14,568) (14,568)
Company's share of loss including amortisation
of separable intangible asset (31,444) (58,177)
The separable intangible assets relate to the biocide registration for
geraniol which TerpeneTech co-owns which was originally valued using
discounted cashflows.
The associate is included in the Consumer Products operating segment.
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 an 8-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 13.5% (2021: 15%). The use of a reduced discount rate reflects a
reduction in uncertainty in geraniol sales, following another year of double
digit growth, offset by increased inflation rates globally.
Based on the review the Directors carried out, it was determined that the
Investment was not impaired and, as such, no impairment charge (2021: £nil)
was recognised.
An increase in the discount rate has to be substantial to result in an
impairment.
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 15% (2021: 21%) and is
based on the sales of geraniol only.
Even with no growth in the forecast geraniol sales over the entire forecast
period there would be no impairment.
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.
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 an 8-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 13.5% (2021: 15%). The use of a reduced discount rate reflects a
reduction in uncertainty in geraniol sales, following another year of double
digit growth, offset by increased inflation rates globally.
Based on the review the Directors carried out, it was determined that the
Investment was not impaired and, as such, no impairment charge (2021: £nil)
was recognised.
An increase in the discount rate has to be substantial to result in an
impairment.
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 15% (2021: 21%) and is
based on the sales of geraniol only.
Even with no growth in the forecast geraniol sales over the entire forecast
period there would be no impairment.
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.
16 Subsidiaries
Details of the Company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking Registered office Principal activities Class of % Held
shares held Direct Voting
TerpeneTech Limited Republic of Ireland Sale of biocide products Ordinary 50.00 50.00
Eden Research Europe Limited Republic of Ireland Dormant Ordinary 100.00 100.00
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).
Eden Research Europe Limited, whose registered office is 108 Q House, Furze
Road, Sandyford, Dublin, Ireland, was incorporated on 18 November 2020 and is
wholly owned by both Eden Research plc.
Non-controlling interests
The following table summarises the information relating to the Group's
subsidiary with material non-controlling interest, before intra-Group
eliminations:
2022 2021
£ £
NCI percentage 50% 50%
Non-current assets 92,927 106,199
Current assets 6,076 -
Non-current liabilities - -
Current liabilities (50,000) (43,962)
Net liabilities (100%) 49,003 62,237
Carrying amount of NCI (50% of net liabilities) 24,502 31,119
Revenue 50,038 36,131
Loss after tax (13,234) 22,859
OCI - -
Total comprehensive income (13,234) 22,859
Share of NCI (50% of net Total comprehensive income) (6,617) 11,430
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 - -
17 Inventories
Group and Company
2022 2021
£ £
Raw materials 115,929 75,677
Goods in transit 411,181 424,025
Finished goods 98,348 21,649
625,458 521,351
Inventory above is shown net of a provision of:
Provision for obsolete inventory 76,250 -
76,250 -
Raw materials of £580,851 (2021:£646,786) were consumed during the year.
18 Trade and other receivables
Group Company
2022 2021 2022 2021
£ £ £ £
Trade receivables 322,489 693,948 322,489 693,948
VAT recoverable 179,214 104,760 179,214 104,760
Other receivables 67,410 65,957 195,335 149,957
Prepayments 89,753 21,922 89,753 21,922
658,866 886,587 786,791 970,587
Group and Company
2022 2021
£ £
Trade receivables above are shown net of a provision for doubtul debt of:
Provision for doubtful debts 107,188 -
107,188 -
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
2022 2021 2022 2021
£ £ £ £
Current
Trade payables 1,150,873 1,147,823 1,150,873 1,147,823
Accruals and deferred income 515,860 440,416 515,860 440,416
Social security and other taxation 52,849 45,495 52,849 45,495
Other payables 93,759 77,784 93,759 33,823
1,813,341 1,711,518 1,813,341 1,667,557
Non-current
Other payables (note 22, 'Xinova liability') - 87,740 - 87,740
- 87,740 - 87,740
20 Lease liabilities
Group and Company
2022 2021
Maturity analysis - total payments due under leases: £ £
Within one year 156,548 128,553
In two to five years 226,541 307,275
Total undiscounted liabilities 383,089 435,828
Future finance charges and other adjustments (27,766) (37,476)
Lease liabilities in the financial statements 355,323 398,352
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:
2022 2021
£ £
Current liabilities 139,547 99,924
Non-current liabilities 215,776 298,428
355,323 398,352
2022 2021
Amounts recognised in profit or loss include the following: £ £
Interest on lease liabilities 22,046 32,074
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 the income statement in respect of defined
contribution plans is £47,964 (2021: £53,836).
22 Share-based payment transactions
Long-Term Incentive Plan ("LTIP")
Since September 2017 Eden has operated an option scheme for executive
directors, senior management and certain employees under an LTIP which allows
for certain qualifying grants to be HMRC approved.
2019 Award
On 28 June 2019, 5,891,111 shares were awarded under the LTIP scheme to the
Chief Executive Officer and the Chief Financial Officer ("2019 Award").
The share-based payment charge for the 2019 Award is set out as follows:
Financial year Share based
ended payment charge
31 December £
2017 27,210
2018 85,372
2019 110,743
2020 94,176
2021 51,909
2022 16,959*
386,369
* As these options lapsed in 2021, the charge of £16,959 was not made in
2022.
The following information is relevant in the determination of the fair value
of options granted under the 2019 Award.
2017 Award 2018 Award
Grant date 28/06/2019 28/06/2019
Number of awards 2,868,889 3,022,222
Share price 0.115 0.115
Exercise price £nil £nil
Expected dividend yield -% -%
Expected volatility 50.82% 50.82%
Risk free rate 0.614% 0.614%
80 80
Vesting period 2 years 3 years
Expected Life (from date of grant) 2 years 3 years
A summary of the number of awards modified in the year ended 31 December 2021
and their fair values is set out in the table below:
Fair Value of Awards at 31 December 2021 Incremental Fair Value £ Incremental Fair Value per Award £
2017 Awards 231,846 0.048
2018 Awards 229,998 0.046
Total 461,844
Share-based payment charge
The total share-based payment charge to be recognised by Eden in respect of
the LTIP Replacement Award in the year ended 31 December 2021 and subsequent
periods are as follows:
2017 Awards 2018 Awards Total
Charge for grants during the period Original Annual Replacement Annual Original Annual Replacement Annual Annual
£ £ £ £ £
31 Dec 21 17,735 231,846 34,174 229,998 513,753
31 Dec 22 - - 16,959* - 16,959
* As these options lapsed in 2021, the charge of £16,959 was not made in
2022.
The following information is relevant in the determination of the fair value
of options granted under the LTIP Replacement Award.
Share-based payment charge
The total share-based payment charge to be recognised by Eden in respect of
the LTIP Replacement Award in the year ended 31 December 2021 and subsequent
periods are as follows:
2017 Awards 2018 Awards Total
Charge for grants during the period Original Annual Replacement Annual Original Annual Replacement Annual Annual
£ £ £ £ £
31 Dec 21 17,735 231,846 34,174 229,998 513,753
31 Dec 22 - - 16,959* - 16,959
* As these options lapsed in 2021, the charge of £16,959 was not made in
2022.
The following information is relevant in the determination of the fair value
of options granted under the LTIP Replacement Award.
Replacement Awards
Grant date 30/06/2021
Number of awards 10,500,000
Share price £0.10
Exercise price £0.06
Expected dividend yield -%
Expected volatility 55%
Risk free rate 0.03%
80
Vesting period Nil
Expected Life (from date of grant) 0.5/1/1.5 years
As the options have been issued at a significant discount to the share price,
the expected exercise has been assumed to equal the midpoint between the vest
and lapse date.
During the year, 3,500,000 of the above options lapsed and £171,251 (2021:
£nil) was transferred from the warrant reserve to retained earnings.
2021 Award
Also in 2021, the Company made a further grant of options in order to ensure
continuity of long term incentive of options over 7,183,784 new Ordinary
Shares in Eden, at a strike price of 10.37p each, in the amounts of 4,102,703
awarded to Sean Smith and 3,081,081 awarded to Alex Abrey.
These grants expire on 31 July 2025 and vest as follows:
1/3 upon grant
1/3 12 months from the date of grant
1/3 24 months from the date of grant
The share-based payment charge for the year ended 31 December 2022 in respect
of the above 2021 LTIP awards was £119,083 (2021: £119,083).
Other share options
2021 Award
In addition to the options granted under the LTIP, certain employees were
awarded approved options over a total of 996,220 shares. These have been
issued at a strike price of 10-10.37p with expiry date between 30 June 2022
and 30 June 2024. 640,664 of these vested immediately with the remainder
vesting over a 3-year period. The share-based payments charge in respect of
all these options for the year ended 31 December 2022 was £nil (2021:
£45,233). During the year, 518,738 of these options were exercised and
355,556 lapsed and £63,498 (2021: £nil) was transferred from the warrant
reserve to retained earnings.
2022 Award
During the year, the Company granted to employees a total of 2,006,939
options at an average exercise price of 6p. No awards were made to directors
in 2022.
50% of the options vest immediately, with the remaining 50% vesting after one
year.
Grant date 30/6/22
Number of awards 2,006,939
Share price £0.04
Exercise price £0.06
Expected dividend yield -
Expected volatility 63%
Risk free rate 0.95%
Vesting period 1 year
Expected Life (from date of grant) 3 years
The share-based payment charge for the year ended 31 December 2022 was
£33,052
A summary of all the above options is set out in the table below.
Options awards
Number of share options Weighted average exercise price (pence)
2022 2021 2022 2021
Outstanding at 1 January 18,680,004 5,891,111 7 -
Granted during the year 2,006,939 18,680,004 5 7
Exercised during the year (518,738) - 1 -
Lapsed during the year (3,855,556) (5,891,111) 6 -
Exercisable at 31 December 16,312,649 18,680,004 8 7
The exercise price of options outstanding at the end of the year ranged
between 6p and 10p (2021: 1p and 10p) and their weighted average contractual
life was 1.9 years (2021: 2.4 years.)
The share-based payment charge for the year, in respect of options, was
£152,135 (2021: £678,069).
Options granted prior to the 2017 LTIP
Prior to the implementation of the LTIP in 2017, Eden had granted options to
its Executive Directors, senior management and certain employees, as follows:
Number of share options Weighted average exercise price (pence)
2022 2021 2022 2021
Outstanding at 1 January - 1,050,000 - 13
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year - (1,050,000) - 13
Exercisable at 31 December - - - -
Warrants
Number of warrants Weighted average exercise price (pence)
2022 2021 2022 2021
Outstanding at 1 January 2,989,865 2,989,865 19 19
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year (2,989,865) - 19 -
Exercisable at 31 December - 2,989,865 - 19
The exercise price of warrants outstanding at the end of the year was nil p
(2021: 12p and 30p) and their weighted average contractual life was nil years
(2021: 0.4 years.)
The share-based payment charge for the year, in respect of warrants, was £nil
(2021: £nil).
During the year, 2,989,865 of these options lapsed and £153,826 (2021: £nil)
was transferred from the warrant reserve to retained earnings.
For those options which were granted under the Company's LTIP, except for the
2021 Award, 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.
All other options and warrants, 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.
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) ("Xinova"). 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%, reduced to 1.6% following the fundraise in March 2020) 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 £67,462, 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 was 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.
During the year, Eden was informed that Xinova had begun to wind down its
operations.
As a consequence, Eden began communications with an agent acting on behalf of
Xinova to effect the wind down in respect of the liability owed to Xinova by
Eden.
On 22 April 2022, Eden signed a 'full and final' settlement agreement with
Xinova which resulted in Eden paying an amount of £43,870, which represented
a 50% discount to the liability of £87,740 as at 31 December 2021, in line
with the then existing contract.
At the year end, an amount of £nil (2021: £87,740) was owed to Xinova and is
shown in note 19 as non-current other liabilities.
23 Share capital
2022 2021 2022 2021
Ordinary share capital Number Number £ £
Issued and fully paid
Ordinary shares of 1p each 380,858,607 380,240,229 3,808,589 3,803,402
Each ordinary share of £0.01 has voting and dividend rights attached to them.
24 Share premium account
Group and Company
2022 2021
£ £
At the beginning of the year 39,308,529 39,308,529
Issue of new shares - -
At the end of the year 39,308,529 39,308,529
25 Warrant reserve
Group and Company
£
Balance at 1 January 2021 429,915
Share-based payment expense in respect of options granted 678,069
Share-based payment expense in respect of options lapsed (170,479)
Balance at 1 January 2022 937,505
Share-based payment expense in respect of options granted 152,135
Share-based payment expense in respect of options/ warrants lapsed/ exercised (388,575)
Balance at 31 December 2022 701,065
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
Group and Company
2022 2021
£ £
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
Group
2022 2021
£ £
Non-controlling interest 24,502 31,119
The non-controlling interest arose from Eden Research plc's 50% share in
TerpeneTech (Ireland) Limited. See note 16 for further information.
28 Other interest-bearing loans and borrowings - Group and Company
Changes in liabilities, arising from financing
activities are presented below:
2022 2021
£ £
Balance as at 1 January 398,352 415,248
Changes from financing cashflows
Payment of lease liabilities* (128,301) (90,388)
Total changes from financing cashflows (128,301) (90,388)
Other changes
New leases 87,228 50,209
Inter
Adjustment to Right of Use Assets 33,909 23,283
Inter
Surrender of lease (35,865) -
Total other changes 85,272 73,492
Balance as at 31 December 355,323 398,352
*excluding lease interest of £22,047 (2021: £32,074)
29 Other leasing information
Amounts recognised in profit or loss as an expense during the period in
respect of lease arrangements are as follows:
2022 2021
£ £
Expense relating to leases of low-value assets 740 740
Set out below are the future cash outflows to which the lessee is exposed to
that are reflected in the measurement of lease liabilities:
2022 2021
Land and buildings £ £
Within one year 106,735 92,143
Between two and five years 166,684 256,935
273,419 349,078
2022 2021
Motor vehicles £ £
Within one year 49,813 18,361
Between two and five years 59,857 30,914
109,670 49,275
Cash paid in respect of lease liabilities in the year was £128,301. The Group
holds eight leases, for two properties and six vehicles. All leases have fixed
lease repayments and average remaining terms of 2.6 years (2021: 3.5 years)
for the properties and 2.3 years (2021: 2.2 years) for the vehicles.
The incremental borrowing rates applied to lease liabilities recognised in the
statement of financial position at the date of initial application of IFRS 16
were 4.75% for land and buildings and 8.71% for other assets.
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
in note 7 in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures.
Group
During the year, Eden invoiced its associate, TerpeneTech (UK), £7,212 for
R&D charges (2021: £7,760) and accrued income of £50,000 (2021:
£40,000) for minimum royalties due under the head-lice agreement.
Also, during the year Eden paid £7,096 (2021: £8,787) for expenses on behalf
of TerpeneTech (UK).
At the year end, an amount of £238,375 was due from TerpeneTech (UK) (2021:
£165,644) to Eden. This amount is included within Trade Receivables.
At the year end, an amount of £93,759 was due to TerpeneTech (UK) (2021:
£5,085) from Eden. This amount is included within Other Payables. The
movement in the year is due to the reallocation to Eden of royalties paid by
TerpeneTech (UK) to Eden instead of TerpeneTech (Ireland) of £88,780 (2021:
£nil).
At the year end, a net amount of £6,076 was due to TerpeneTech (Ireland) from
TerpeneTech (UK) (2021: £43,962 due from TerpeneTech (Ireland) to TerpeneTech
(UK)). It represents the amount due in respect of the intangible asset reduced
by fees receivable in respect of sales which amounted to £50,038 (2021:
£36,131). This amount is included within Other Receivables.
Company
During the year, Eden invoiced its associate, TerpeneTech (UK), £7,212 for
R&D charges (2021: £7,760) and accrued income of £50,000 (2021:
£40,000) for minimum royalties due under the head-lice agreement.
Also, during the year Eden paid £7,096 (2021: £8,787) for expenses on behalf
of TerpeneTech (UK).
Further, at year end, £50,000 has been accrued in respect of management
recharges from Eden to TerpeneTech (Ireland) (2021: £36,000). An amount of
£134,000 (2021: £84,000) is included within the Other Receivables.
At the year end, an amount of £238,375 was due from TerpeneTech (UK) (2021:
£165,644). This amount is included within Trade Receivables.
At the year end, an amount of £93,759 was due to TerpeneTech (UK) (2021:
£5,085) from Eden. This amount is included within Other Payables. The
movement in the year is due to the reallocation to Eden of royalties paid by
TerpeneTech (UK) to Eden instead of TerpeneTech (Ireland) of £88,780 (2021:
£nil).
32 Financial risk management
Credit risk
Group and Company
2022 2021
£ £
Cash and cash equivalents 1,994,472 3,829,369
Trade receivables (net of provision) 322,489 693,948
2,316,961 4,523,317
The average credit period for sales of goods and services is 64 days (2021:
206). No interest is charged on overdue trade receivables. At 31 December
2022, trade receivables of £219,727 (2021: £272,912) were past due. During
the year the Company provided for doubtful debts in the amount of £107,188
(2021: £nil).
Trade receivables of £184,746 (2021: £563,273) at the reporting date were
held in Euros and £117,229 (2021: £104,866) were held in USD.
Cash at bank of £1,824,866 (2021: £1,171,856) at the reporting date were
held in Euros and £10,829 (2021: £1,044) 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 is TerpeneTech (UK), Eden's associate
company, which owed gross £238,375 (2021: £170,279) 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.
Liquidity
risk
Group and Company
2022 2021
£ £
Trade payables 1,150,873 1,147,823
Other payables 93,759 77,784
Accruals 210,419 299,123
1,455,051 1,524,730
The carrying amount of trade and other payables approximates their fair value.
The average credit period on purchases of goods is 141 days (2021: 95 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.
Trade payables of £233,410 (2021: £273,211) at the reporting date were held
in Euros and £460,470 (2021: £528,552) were held in USD.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the Group's financial liabilities at 31 December 2022
was as follows:
2022 2021
£ £
In one year or less, or on demand 1,813,341 1,711,518
Over one year - 87,740
1,813,341 1,799,258
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. Based on the forign
currency break down provided under credit risk and liquidity risk, the impact
of 5%-10% movement in foreign exchange will not have material effect.
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 2022 and 31 December 2021.
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% (2021: 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
2022 2021
£ £
Loss for the year after tax (2,243,879) (2,777,543)
Adjustments for:
Taxation charged/(credited) (323,716) (618,137)
Finance costs 22,046 122,311
Interest income (192) (98)
Foreign exchange currency (gains)/losses (74,782) 21,993
Amortisation and impairment of intangible assets 495,818 434,630
Xinova liability written off 43,855 -
Depreciation and property, plant and equipment and right-of-use assets 191,622 155,341
Share of associate's loss 31,444 58,177
Share-based payment expense 152,135 640,597
Inventory provision 76,250 -
Doubtful debt provision 107,188 -
Movements in working capital:
Increase in inventories (180,357) (296,929)
Decrease in trade and other receivables 125,720 509,721
(Decrease)/Increase in trade and other payables (9,683) 163,355
Cash absorbed by operations (1,586,531) (1,586,582)
33 Cash absorbed by operations
Company
2022 2021
£ £
Loss for the year after tax (2,230,645) (2,764,402)
Adjustments for:
Taxation charged/(credited) (323,716) (618,137)
Finance costs 22,046 122,311
Interest income (192) (98)
Foreign exchange currency (gains)/losses (74,782) 21,993
Amortisation and impairment of intangible assets 482,546 421,358
Xinova liability written off 43,855 -
Depreciation and impairment of property, plant and equipment and right-of-use 191,622 155,341
assets
Share of associate's loss 31,444 58,177
Share-based payment expense 152,135 640,597
Inventory provision 76,250 -
Doubtful debt provision 107,188 -
Movements in working capital:
Increase in inventories (180,357) (296,929)
Decrease in trade and other receivables 75,720 473,721
Increase in trade and other payables 40,355 199,486
Cash absorbed by operations (1,586,531) (1,586,582)
34 Capital commitments
As at 31 December 2022, an amount of £102,109 (2021: £54,831) had been
committed to by Eden, but the work not yet completed, or invoiced. The work
relates on-going field trials and other regulatory studies and is expected to
be invoiced during 2023.
35 Post balance sheet events
Since the year end, the Group has received regulatory authorisation
in Poland. The certification will allow farmers to apply Mevalone to their
wine and table grapes to protect and treat outbreaks of Botrytis cinerea as
well as on apples to prevent post-harvest storage diseases thereby helping to
reduce food waste in the supply chain.
Poland represents a significant new market for Eden and the commercialisation
of Mevalone, given it is the EU's largest producer of apples, producing almost
2.5 million tons annually. Eden expects to receive additional regulatory
approvals in due course in additional Central European member states such
as Germany, Austria, and Hungary, where high levels of wine production are
found. Central Europe is a strategic target market for Eden with the
ultimate addressable market for Eden's products being comparable in value to
that of Southern Europe and potential sales of Mevalone estimated to peak
at €3.2m.
Also since the year end, Eden announced that it has to date received
regulatory approval in 17 US states for its formulated product Mevalone(®),
and 8 US states for its formulated product Cedroz™.
These approvals follow regulatory authorisation from the United States
Environmental Protection Agency (EPA) in September 2022 for all six
petitions submitted by Eden (three active ingredients, two formulated products
and Eden's Sustaine(®) polymer-free encapsulation technology; making up the
building blocks of current and future products), opening up significant
revenue opportunities for the Company with a market potential in the United
States of approximately €94 million for Mevalone and €189 million for
Cedroz.
Mevalone has been approved for use on botrytis on table and wine grapes in
the following
states: Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Michigan, Mississippi, Missouri,
New York, North Carolina, Oregon,
Pennsylvania, Texas, Virginia, Washington, and West Virginia.
Eden has also received approval for its second commercial product, Cedroz,
which can now be applied to fruits and vegetables to defend against
destructive parasitic nematodes that affect crops grown both indoors and
outdoors. Cedroz approvals have been granted for a wide range of crops,
including eggplant, peppers, tomatoes, cantaloupes, cucumbers, pumpkins,
squash, zucchini, carrots, strawberries, and grapes; in the following
states: Florida, Georgia, Michigan, New
York, Oregon, Texas, Washington, and Wisconsin.
Since the year end, the Group has received regulatory authorisation
in Poland. The certification will allow farmers to apply Mevalone to their
wine and table grapes to protect and treat outbreaks of Botrytis cinerea as
well as on apples to prevent post-harvest storage diseases thereby helping to
reduce food waste in the supply chain.
Poland represents a significant new market for Eden and the commercialisation
of Mevalone, given it is the EU's largest producer of apples, producing almost
2.5 million tons annually. Eden expects to receive additional regulatory
approvals in due course in additional Central European member states such
as Germany, Austria, and Hungary, where high levels of wine production are
found. Central Europe is a strategic target market for Eden with the
ultimate addressable market for Eden's products being comparable in value to
that of Southern Europe and potential sales of Mevalone estimated to peak
at €3.2m.
Also since the year end, Eden announced that it has to date received
regulatory approval in 17 US states for its formulated product Mevalone(®),
and 8 US states for its formulated product Cedroz™.
These approvals follow regulatory authorisation from the United States
Environmental Protection Agency (EPA) in September 2022 for all six
petitions submitted by Eden (three active ingredients, two formulated products
and Eden's Sustaine(®) polymer-free encapsulation technology; making up the
building blocks of current and future products), opening up significant
revenue opportunities for the Company with a market potential in the United
States of approximately €94 million for Mevalone and €189 million for
Cedroz.
Mevalone has been approved for use on botrytis on table and wine grapes in
the following
states: Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Michigan, Mississippi, Missouri,
New York, North Carolina, Oregon,
Pennsylvania, Texas, Virginia, Washington, and West Virginia.
Eden has also received approval for its second commercial product, Cedroz,
which can now be applied to fruits and vegetables to defend against
destructive parasitic nematodes that affect crops grown both indoors and
outdoors. Cedroz approvals have been granted for a wide range of crops,
including eggplant, peppers, tomatoes, cantaloupes, cucumbers, pumpkins,
squash, zucchini, carrots, strawberries, and grapes; in the following
states: Florida, Georgia, Michigan, New
York, Oregon, Texas, Washington, and Wisconsin.
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