REG - Eden Research plc - Preliminary results for the year ended 31 Dec 2023
07/05/2024 07:15
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240507:nRSG2717Na&default-theme=true
RNS Number : 2717N Eden Research plc 07 May 2024
7 May 2024
Eden Research
("Eden" or "the Company")
Preliminary results for the year ended 31 December 2023
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 2023.
Commercial and operational highlights
· Significant milestone achieved with launch of seed treatment
innovation, EcovelexÔ, and the granting of a temporary approval in Italy for
use in the 2024 growing season
· Expansion of regulatory approvals in the US for flagship
biopesticides, Mevalone® and CedrozÔ, including national level EPA
endorsements, leading to approvals in 17 states, including Florida and
California
· Expansion of approvals of Mevalone in New Zealand, Italy, Colombia
and Poland, the latter a significant milestone for accessing Central European
markets
· Progress on insecticide formulation, with promising field trials
completed and ongoing discussions to select a commercial partner
· Proceeds of £9.9m (gross) fundraising being utilised to accelerate
product development, registration and commercialisation workstreams, ensuring
Eden can continue its path of growth, and fully exploit opportunities
available.
Financial highlights
· Revenue for the year was £3.2 million (2022: £1.8 million)
· Operating loss for the year was £1.9 million (2022: £2.6 million)
· Cash position at the year-end was £7.4 million (2022: £2.0 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:
"Eden made substantial progress against its strategic goals in 2023, with
numerous product approvals across key markets, including the US, and the
launch of our innovative seed treatment product, Ecovelex. Developed in less
than four years, this is a groundbreaking moment for the business and a
testament to the strength of Eden's capabilities and commercial relationships.
It has contributed to our revenue growth over the year, which we look forward
to building on in the future as we focus on expanding regulatory approvals and
authorisations in our target geographies, and the development of other product
lines, including our bio-insecticide product."
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
Cavendish Capital Markets Limited (Nominated advisor and broker)
Giles Balleny / George Lawson (corporate finance) 020 7220 0500
Charlie Combe (corporate broking)
Michael Johnson (sales)
Hawthorn Advisors (Financial PR)
Victoria Ainsworth 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 three 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 seed treatment product, Ecovelex™ was developed to safely tackle
crop destruction caused by birds - a major cause of losses in maize and other
crops. Ecovelex works by creating an unpleasant taste or odour that repels
birds, leaving the seeds safely intact and the birds unaffected and free to
find alternative food sources. The product is based on Eden's plant-derived
chemistry, registered in the EU, U.S. and elsewhere, and formulated using
Eden's Sustaine® microencapsulation system.
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
2023 has been a very fruitful year for Eden.
We have received numerous product approvals in key markets such as Poland, New
Zealand and California, which directly and significantly increase our
addressable markets and, therefore, revenue opportunities.
We have seen revenue grow by 78% which is due, in part, to the introduction of
EcovelexÔ into the market in December 2023 following the grant of a temporary
approval in Italy for its use as a bird repellent seed treatment in
corn for the 2024 growing season.
In 2020, just four years ago, Ecovelex was only an idea; a concept which was
discussed at a meeting with Corteva Agriscience International Sàrl
("Corteva"), Eden's commercial partner. Corteva had foreseen that an
opportunity existed for a new bird repellent seed treatment product to come
into the market to replace the existing chemistry that had known issues, and
was looking to Eden to provide a solution.
What followed, in relatively short order, was initial formulation work
undertaken by Eden's newly created lab team in Oxfordshire, then field trials
in numerous countries to determine the efficacy of the newly developed
product.
Following those initial field trials, it became clear that the product was
efficacious, and so further development continued apace.
Since that time, both Corteva and Eden have worked hard, through a
collaborative approach, to take Ecovelex to a point where an EU regulatory
submission could be made to the Austrian authorities in May 2023. At around
the same time, growers, who were in need of a new solution for bird
repellency, were sufficiently confident in the product to apply for a
temporary approval in Italy.
This approval was granted in December 2023, and led to Eden selling a
significant amount of Ecovelex to Corteva for seeds to be treated in time for
the 2024 growing season.
From my years of experience in the crop protection industry, I can assure you
that taking a product from an idea into the market in under four years is
quite exceptional.
It is a testament to not only the teams at Eden and Corteva working very hard
and well together, but also to the diversity that Eden's technologies bring.
And this is just one example of the numerous opportunities that the team at
Eden is busy developing.
A number of potential commercial partners for Eden's insecticide formulation
have been testing the product in field trials throughout 2023, with promising
results seen.
We are now at the stage of commercial negotiations to determine with whom we
move that product forward.
As time goes on, we aim to continue to build on the firm foundations that we
have created, adding to the revenue streams we are currently receiving from
our first three products (Mevalone, Cedroz and Ecovelex) and developing more
products to address growers' needs, driven by the ever-changing regulatory
landscape.
The successful fundraise that we completed in October 2023, at a time when the
stock markets were very challenging, has put us in a position of financial
strength and will enable us to continue on this path and to fully exploit the
opportunities that lie before us.
I remain very optimistic about Eden's future prospects and it becoming a
leader in biological crop protection products and solutions.
I would like to thank Eden's shareholders for their ongoing and much
appreciated support.
Lykele van der Broek
Non-Executive Chairman
2 May 2024
Chief Executive Officer's Review for the year ended 31 December 2023
Section one: Introduction
Eden's mission is to meet the needs of global farmers by developing,
registering and supplying sustainable solutions in support of crop health and
productivity. In 2023 Eden demonstrated strong progress towards this goal as
we launched a brand new product and product category, expanded our existing
labels and continued to develop innovative solutions for farmers. The
long-term strategy that we have set in place is beginning to bear fruit,
evidenced by our strong year-on-year sales growth. Our focus over the medium
term will be bringing the business to profitability, balanced with meeting our
new investment plans to accelerate our research, development, registration and
commercialisation workstreams as set out at our last fundraise in the second
half of 2023.
Macroeconomic context
The importance of food availability, cost and quality is perhaps as relevant
today as it has ever been, given the high level of uncertainty with global
inflation, unpredictable weather patterns, and, unfortunately, an increasing
level of armed conflict in some regions of the world. Farmers across the world
have not hesitated in letting their respective governments know about the
difficulties that they face - particularly with respect to
difficult-to-navigate regulations, lack of government support and subsidies,
and strained finances driven by constrained margins and ever-increasing costs.
These issues may appear much larger than agricultural pest and disease
control, but they all contribute to increasing strain on our food systems.
While the crop protection industry aims to bounce back to its previous
heights, the seed market is experiencing its renaissance moment, driven in
large part by new genetics and seed treatment technologies. Not only do we
find ourselves in the right place at the right time with our new seed
treatment Ecovelex, but we have also built a more diversified platform from
which to grow our business.
In this era where food supply is at a critical point, we remain absolutely
committed to empowering farmers to use sustainable tools to grow more
high-quality crops with the same or less land, with no compromise when it
comes to soil health, the wider environment and cost-effective production.
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, slower and more costly.
As the only UK-quoted company developing plant-derived biopesticide
formulations and plastic free formulation 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 capabilities 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
Upon reviewing our targets, it's evident that we've achieved notable
advancements in the expansion of our current product portfolio, whilst
actively seeking and capitalising on fresh opportunities via the development
of new products such as our insecticide and even new, second generation
fungicides.
New market opportunities: the launch of Ecovelex
The unveiling of Ecovelex, our first seed treatment innovation, stands as a
significant milestone for the first half of the year. Developed over the
course of less than four years, in collaboration with Corteva Agriscience,
Ecovelex has initially been designed as a seed treatment for maize, offering
protection against bird predation and thereby increasing crop yields from the
outset of the growth cycle.
This product emerges as a pioneering alternative to existing bird repellent
seed treatments, which rely on conventional synthetic active ingredients
facing market withdrawal in the EU and elsewhere. With no immediate
replacements available, Ecovelex not only offers a viable solution but also
aligns with sustainable agricultural practices by utilising naturally derived
compounds without an adverse impact on soil or avian health. Comparative field
trials have underscored its efficacy, matching or exceeding that of the
current market leaders.
In May, we communicated to stakeholders our submission of a regulatory dossier
to the Austrian authorities, who serve as the interzonal rapporteur for
EU-wide approval. This step is crucial for market access across the European
Union, with the process subject to individual state reviews for local
authorizations. A parallel application was submitted to the UK's Chemicals
Regulation Division, marking our intent for domestic market approval. The
review process by these regulatory bodies is anticipated to span 18 to 24
months, though timelines are dependent upon the regulatory authorities'
capacities, workload and other factors generally beyond Eden's control.
Our management and regulatory teams are proactively engaging with these
authorities to facilitate the regulatory authorisation of Ecovelex. In
December 2023, we were pleased to announce that Ecovelex had received its
first authorisation in the form of a temporary approval in Italy, under EU
regulation 1107/2009. This temporary licence will permit the treatment's use
as a bird repellent in maize seeds over a 120-day period. Since this licence
approval, we have subsequently supplied commercial quantities of Ecovelex for
use during the allowed regulatory window.
Building on this short-term success, the company is working tirelessly to
ensure its commercial success through various regulatory approval channels
(both on a full authorisation basis and emergency authorisation basis), as
well as its potential development across new crops and targets.
Geographic label expansion: Mevalone and Cedroz
Our recent commercial achievements are attributed to the strategic market
expansion of our flagship biopesticides, Mevalone and Cedroz. Focused on
broadening their addressable market and expanding their approved uses, we've
made notable progress, particularly following the pivotal EPA authorisations
received in the United States.
In the past year, national-level EPA endorsements for both Mevalone and Cedroz
set the stage for subsequent state-level approvals in 17 states, including key
agricultural markets such as Florida and California. These states are crucial
due to their high-value crop production and a pronounced preference for
natural over conventional agricultural inputs. Just after the year-end,
Californian authorities granted approval for Mevalone. This led to a sizeable
order fulfilment for Eden's US distribution partner, Sipcam Agro USA, setting
the stage for significantly more sales of Mevalone to come in the US in 2024.
In Europe, the approval of Mevalone in Poland marks a strategic entry into the
EU's largest apple production market and opens doors to Central Europe - a
highly significant milestone for accessing markets in Austria, Hungary, and
Germany, known for their apple and wine production. Our regulatory team is
actively working towards gaining approval in these jurisdictions to further
the growth of our addressable market.
In the Southern Hemisphere, we've secured regulatory approval for Mevalone
(marketed as Novellus) in New Zealand, capitalising on the region's
susceptibility to Botrytis due to its damp, variable climate. This approval
complements our existing presence in Australia's wine regions, with
significant demand for our products anticipated.
Our expansion into South America through a partnership with Anasac for the
distribution of Mevalone in Colombia represents our first strategic move in
the region. Targeting the ornamental crops sector, notably cut flowers, our
approach aligns with Colombia's status as a major exporter to the US, which
imports over $1.35 billion in cut flowers annually. This move, coupled with
our established presence in Mexico, underscores our strategic intent to
broaden our presence and commercial activity across Latin America.
Closer to home, Mevalone was granted its first regulatory approval for
non-professional use in Italy. By extending the availability of sustainable
biopesticides to home gardeners, we're not only broadening our market but also
contributing to the wider adoption of biocontrol solutions against common
plant pathogens like Botrytis cinerea and powdery mildew.
In summary, our strategic expansions supported by regulatory approvals across
key markets reflect our commitment to broadening the accessibility and
application of our biopesticide portfolio, aligning with our growth objectives
and reinforcing our position in the global biopesticide market.
Section three: Financial review
Revenue for the year was £3.2 million which marked a 78% increase on the
previous year (2022: £1.8m). This reflects a significant increase in product
sales which were £2.6m, a 63% rise on last year's product sales (2022:
£1.6m).
Our operating loss also improved. In 2023, we recorded a reduced operating
loss of £1.9m which compared favourably to the previous year's performance
(2022: £2.6 million loss).
Administrative expenses increased in line with expansion of the development
and commercialisation team to £3.0 million (2022: £2.7 million), while
additions to intangible assets, including development costs, increased to
£1.7 million from £1.0 million in 2022.
While the loss before taxation increased to £6.9m loss (2022: £2.6m loss),
this was after a significant non-cash impairment of intangible assets of
£5.0m (2022: nil) - see note 12 to the financial statements.
Our cash balance at year-end was £7.4 million (2022: £2.0 million).
In Q3 2023, Eden concluded a successful fundraise of £9.9 million (before
expenses), which will allow the Company to expedite the development of its new
and existing products and expand into new geographies. It also serves to
strengthen our balance sheet and provide greater flexibility during this
high-growth period.
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: 2024 outlook
As we look to continue our positive momentum from 2023, Eden expects to see a
healthy increase in existing product sales throughout 2024, driven by new
regulatory approvals and label extensions in key geographies and supported by
our key partnerships with industry-leading partners.
Accelerating development and commercial growth
Following the completion of the £9.9 million fundraise in Q3 2023, the use of
net proceeds of £1.3m raised from the firm placing and retail offer has, in
part, been allocated towards the funding of materials to build up stocks for
our new seed treatment. We also intend to grow the Ecovelex label through
further development work and field trials. Further, we plan to expand our
activities in new regions such as Latin America and South-East Asia. Lastly,
we intend to strengthen our commercial team with the appointment of a new
commercial lead and a market development and product manager.
Additionally, a significant proportion of the net proceeds from the
conditional capital raise of £7.7m will be dedicated towards the development
efforts for our bio-insecticide, a project initiated with the capital raised
three years prior. This product is designed to target critical agricultural
pests including spider mites, whiteflies, aphids, and thrips. Through
extensive greenhouse and field trials conducted by Eden and its partners over
the past two years, we have observed promising efficacy and consistency in
combating these pests. Eden is now in the midst of discussions with various
potential partners in order to finalise our commercial partnership strategy.
Our strategic plan also includes submitting regulatory applications as soon as
practicable, aiming for a market launch initially in the US and ultimately in
the EU and elsewhere, conditional on favourable regulatory review and trial
outcomes.
Elsewhere, we are actively evaluating the potential of our biopesticide
portfolio against a broader spectrum of crops and pests, such as cannabis,
black sigatoka, potato blight, and wireworm, with initial assessments yielding
optimistic results.
Finally, we have allocated funds to establish a US-based team to help support
the Company's growth across the Americas in the coming two years.
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 feed a growing population while also protecting our
planet and complying with increasingly stringent regulations. Our growing
portfolio of products helps farmers to protect natural 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 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 applications in the UK, we continue to review
the associated opportunities and risks. Moving forward, we look forward to
working with our distribution partners 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.
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.
Section six: Summary
In reviewing the past year, it's evident that our financial and operational
strategy has yielded positive outcomes, particularly in sales, market
position, regulatory advancements, and our product development pipeline, which
contains opportunities that will fuel future growth. Despite the challenges
that our industry has faced over the past year, we have successfully brought
one new product, Ecovelex, to the start of commercial use within an extremely
short timeframe. Additionally, we have also witnessed a notable increase in
sales growth across our flagship biopesticides - Mevalone and Cedroz. This
growth is a testament to the commitment and support that our team and
shareholders have provided towards our long-term objectives and reflects the
level of ambition of our management team and Board of Directors in building
the company's business and market presence in the rapidly-growing
bio-pesticides industry.
As we deploy our company's resources through 2024 and beyond, we are dedicated
to continuing our trajectory of growth and green innovation. I am very proud
of the team that we have built in only the last four years, and I look forward
continuing the expansion of our mission-critical capabilities and capacity,
all in support of our objective to become a leader in sustainable crop
protection solutions. It is only with the support of our shareholders that
we have been able to evolve Eden into the company that it is today, with far
greater capabilities and an expanding platform for future growth. On behalf
of the Board of Directors and the Management Team, I'd like to express our
gratitude to our staff, industry partners, and shareholders for their
continued support and contribution.
Sean Smith
Chief Executive Officer
2 May 2024
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 2022
Notes £ £
Revenue 4 3,192,027 1,827,171
Cost of sales (1,426,547) (997,011)
Gross profit 1,765,480 830,160
Other operating income 20,689 -
Amortisation of intangible assets 12 (418,651) (495,818)
Administrative expenses (2,997,633) (2,749,240)
Share-based payments 22 (236,576) (152,135)
Operating loss 5 (1,866,691) (2,567,033)
Interest income 8 34,014 192
Finance costs 9 (17,207) (22,046)
Foreign exchange (losses)/gains 9 (68,802) 52,736
Impairment of intangible assets 12 (4,968,529) -
Share of loss of equity accounted Investee, net of tax 15 (33,047) (31,444)
Loss before taxation (6,920,262) (2,567,595)
Income tax credit 10 428,326 323,716
Loss and total comprehensive loss for the year (6,491,936) (2,243,879)
Total comprehensive loss for the year is attributable to:
- Owners of the Parent Company (6,494,249) (2,237,262)
- Non-controlling interests 2,313 (6,617)
(6,491,936) (2,243,879)
Loss per share 11
Basic (1.54p) (0.59p)
Diluted (1.54p) (0.59p)
The income statement has been prepared on the basis that all operations are
continuing operations.
Consolidated statement of financial position as at 31 December 2023
2023 2022
Notes £ £
Non-current assets
Intangible assets 12 4,710,511 8,447,226
Property, plant and equipment 13 230,091 198,786
Right-of-use assets 14 212,437 332,814
Investments 15 297,197 330,244
5,450,236 9,309,070
Current assets
Inventories 17 964,552 625,458
Trade and other receivables 18 2,449,623 658,866
Current tax recoverable 10 317,201 323,716
Cash and cash equivalents 7,413,107 1,994,472
11,144,483 3,602,512
Current liabilities
Trade and other payables 19 2,819,153 1,813,341
Lease liabilities 20 142,849 139,547
2,962,002 1,952,888
Net current assets 8,182,481 1,649,624
Non-current liabilities
Lease liabilities 20 86,920 215,776
86,920 215,776
Net assets 13,545,797 10,742,918
2023 2022
Notes £ £
Equity
Called up share capital 23 5,333,529 3,808,589
Share premium account 24 6,413,652 39,308,529
Warrant reserve 25 758,234 701,065
Merger reserve 26 - 10,209,673
Retained earnings 1,013,567 (43,309,440)
Non-controlling interest 27 26,815 24,502
Total equity 13,545,797 10,742,918
The financial statements were approved by the Board of Directors and
authorised for issue on 2 May 2024 and are signed on its behalf by:
Sean Smith
Director
Company statement of financial position as at 31 December 2023
2023 2022
Notes £ £
Non-current assets
Intangible assets 12 4,630,856 8,354,299
Property, plant and equipment 13 230,091 198,786
Right-of-use assets 14 212,437 332,814
Investments 15 297,197 330,244
5,370,581 9,216,143
Current assets
Inventories 17 964,552 625,458
Trade and other receivables 18 2,559,651 786,791
Current tax recoverable 10 317,201 323,716
Cash and cash equivalents 7,413,107 1,994,472
11,254,511 3,730,437
Current liabilities
Trade and other payables 19 2,819,153 1,813,341
Lease liabilities 20 142,849 139,547
2,962,002 1,952,888
Net current assets 8,292,509 1,777,549
Non-current liabilities
Lease liabilities 20 86,920 215,776
86,920 215,776
Net assets 13,576,170 10,777,916
2023 2022
Notes £ £
Equity
Called up share capital 23 5,333,529 3,808,589
Share premium account 24 6,413,652 39,308,529
Warrant reserve 25 758,234 701,065
Merger reserve 26 - 10,209,673
Retained earnings 1,070,755 (43,249,940)
Total equity 13,576,170 10,777,916
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
£6,496,561 (2022: £2,230,645).
The financial statements were approved by the Board of Directors and
authorised for issue on 2 May 2024 and are signed on its behalf by:
Sean Smith
Director
Company Registration No. 03071324
Consolidated statement of changes in equity as at 31 December 2023
Share Capital Share premium account Merger reserve Warrant reserve Retained earnings Total Non-controlling interest Total
Notes £ £ £ £ £ £ £ £
Balance at 1 January 2022 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 loss - - - - (2,237,262) (2,237,262) (6,617) (2,243,879)
Transactions with owners in their capacity as owners:
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
Company statement of changes in equity as at 31 December 2023
Share Capital Share premium account Merger reserve Warrant reserve Retained earnings Total Non-controlling interest Total
Notes £ £ £ £ £ £ £ £
Balance at 1 January 2023 3,808,589 39,308,529 10,209,673 701,065 (43,309,440) 10,718,416 24,502 10,742,918
Year ended 31 December 2023:
Loss and total comprehensive loss - - - - (6,494,249) (6,494,249) 2,313 (6,491,936)
Transactions with owners in their capacity as owners:
Issue of share capital - net of costs 23/24 1,524,940 7,533,299 - - - 9,058,239 - 9,058,239
Capital reduction 24 - (40,428,176) - - 40,428,176 - - -
Transfer of merger reserve 26 - - (10,209,673) - 10,209,673 - - -
Options granted 22 - - - 236,576 - 236,576 - 236,576
Options lapsed 22 - - - (179,407) 179,407 - - -
Balance at 31 December 2023 5,333,529 6,413,652 - 758,234 1,013,567 13,560,982 26,815 13,545,797
Company statement of changes in equity as at 31 December 2023
Share Capital Share premium account Merger reserve Warrant reserve Retained earnings Total
Notes £ £ £ £ £ £
Balance at 1 January 2022 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 loss - - - - (2,230,645) (2,230,645)
Transactions with owners in their capacity as owners:
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 Share premium account Merger reserve Warrant reserve Retained earnings Total
Notes £ £ £ £ £ £
Balance at 1 January 2023 3,808,589 39,308,529 10,209,673 701,065 (43,249,940) 10,777,916
Year ended 31 December 2023:
Loss and total comprehensive loss - - - - (6,496,561) (6,496,561)
Transactions with owners in their capacity as owners:
Issue of share capital - net of costs 23/24 1,524,940 7,533,299 - - - 9,058,239
Capital reduction 24 - (40,428,176) - - 40,428,176 -
Transfer of merger reserve 26 - - (10,209,673) - 10,209,673 -
Options granted 22 - - - 236,576 - 236,576
Options lapsed 22 - - - (179,407) 179,407 -
Balance at 31 December 2023 5,333,529 6,413,652 - 758,234 1,070,755 13,576,170
Consolidated statement of cash flows for the year ended 31 December 2023
2023 2022
Notes £ £ £ £
Cash flow from operating activities
Cash absorbed by operations 31 (2,130,252) (1,586,531)
R&D tax credit received 434,841 903,244
Net cash outflow from operating activities (1,695,411) (683,287)
Investing activities
Development of intangible assets 12 (1,650,465) (1,023,262)
Purchase of property, plant and equipment 13 (102,391) (30,929)
Interest received 8 34,014 192
Net cash used in investing activities (1,718,842) (1,053,999)
Financing activities
Issue of share capital - net of costs 23 9,058,239 -
Payment of lease liabilities 20 (139,539) (128,301)
Interest on lease liabilities 20 (17,009) (22,046)
Net cash generated from/(used in) financing activities 8,901,690 (150,347)
Net increase/(decrease) in cash and cash equivalents 5,487,437 (1,887,633)
Cash and cash equivalents at beginning of year 1,994,472 3,829,369
Effect of foreign exchange rates (68,802) 52,736
Cash and cash equivalents at end of year 7,413,107 1,994,472
Relating to:
Bank balances 7,413,107 1,994,472
Non-cash movement on account of financing activities:
Note
14 Right of use asset additions of £14,963 (2022:
£87,228).
22 Share-based payment charge of £236,576 (2022:
£152,135).
23 Issue of shares of £nil (2022: £5,187) where proceeds
remain unpaid at the year end.
Company statement of cash flows for the year ended 31 December 2023
2023 2022
Notes £ £ £ £
Cash flow from operating activities
Cash absorbed by operations 31 (2,130,252) (1,586,531)
R&D tax credit received 434,841 903,244
Net cash outflow from operating activities (1,695,411) (683,287)
Investing activities
Development of intangible assets 12 (1,650,465) (1,023,262)
Purchase of property, plant and equipment 13 (102,391) (30,929)
Interest received 8 34,014 192
Net cash used in investing activities (1,718,842) (1,053,999)
Financing activities
Issue of share capital - net of costs 23 9,058,239 -
Payment of lease liabilities 20 (139,539) (128,301)
Interest on lease liabilities 20 (17,009) (22,046)
Net cash generated from/(used in) financing activities 8,901,690 (150,347)
Net increase/(decrease) in cash and cash equivalents 5,487,437 (1,887,633)
Cash and cash equivalents at beginning of year 1,994,472 3,829,369
Effect of foreign exchange rates (68,802) 52,736
Cash and cash equivalents at end of year 7,413,107 1,994,472
Relating to:
Bank balances 7,413,107 1,994,472
.
Non-cash movement on account of financing activities:
Note
14 Right of use additions of £14,963 (2022: £87,228).
22 Share-based payment charge of £236,576 (2022:
£152,135).
23 Issue of shares of £nil (2022: £5,187) where proceeds
remain unpaid at the year end.
Notes to the Group financial statements for the year ended 31 December 2023
1 Accounting policies
Company information
Eden Research plc (the "Company") 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 Group is defined as, and 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).
The Group and Company's principal activities and nature of its operations are
disclosed in the Directors' report.
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 and Company. Monetary amounts in these
financial statements are rounded to the nearest £.
They have been prepared on the historical cost basis, except for the
re-measurement of certain financial instruments that are measured at fair
value at the end of each reporting period. The principal accounting policies
adopted are set out below.
The Company applies accounting policies consistent with those applied by the
Group except where specified within the accounting policies disclosed below.
See note 2 for further information on changes to standards adopted during the
year and standards that have been issued but are not yet effective at the year
end.
The preparation of the Group and Company financial statements involves making
accounting estimates and assumptions concerning the future. The critical
accounting estimates and assumptions that have a significant risk to the
carrying amounts of assets and liabilities within the next financial year are
discussed in note 3.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of
the Company and its subsidiary undertakings up to 31 December each year. The
profits and losses of the Company and its subsidiary undertakings 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.
Merger accounting
The merger reserve detailed in note 26 arose on historical acquisitions of
subsidiary undertakings for which merger relief was permitted under the
Companies Act 2006.
During the year, the carrying value of the intellectual property which had
arisen from an acquisition in 2003 had been reduced to £nil. As such, under
the Companies Act 2006, the full balance of the merger reserve of £10,209,673
was transferred to retained earnings.
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 £6,491,936
(2022: £2,243,879). Net current assets at that date amounted to £8,182,481
(2022: £1,649,624). Cash at that date amounted to £7,413,107 (2022:
£1,994,472).
The Company has reported a loss for the year after taxation of £6,496,561
(2022: £2,230,645). Net current assets at that date amounted to £8,292,509
(2022: £1,777,549). Cash at that date amounted to £7,413,107 (2022:
£1,994,472).
Net cash outflow from operating activities for the Group was £1,695,411
(2022: £683,287) and net cash used in investing activities was £1,718,842
(2022: £1,053,999).
The Directors have prepared budgets and projected cash flow forecasts, based
on forecast sales provided by the Group'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 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.
In 2023, the Company raised £9.9m (gross) through a placing of its shares. As
such, the Directors believe that the Group is currently sufficiently funded to
take it through to cash generation.
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 the Company 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:
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 included milestone payments of
£141,293 received in 2021, a further £164,148 in 2022 and £195,884 in 2023.
These milestone payments were assessed to relate to a performance obligation
being satisfied at a point in time.
By the year end, this first performance obligation had been reached and,
consequently, the amounts received have been recorded as revenue in the year.
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 a specific milestone is met, then the
Group 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 the Group to use its intellectual property and who have sold
products, which then gives rise to an obligation to pay the Group 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 the Group, following the period to which the
royalties relate, payment is due to the Company in 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 the Group'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, the Group is responsible for supplying product to that partner once a
sales order has been signed.
At that point, the Group 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 delivered to the partner, the partner is liable
for the product and obliged to pay the Group. 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 (2022: 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 delivered to the customer.
No warranty provision is required as products are sold on the basis of meeting
an agreed specification, confirmation of which is provided by way of a
certificate of analysis.
Segmental information
The Group reports on operating segments in a manner consistent with the
internal reporting provided to the chief operating decision-maker in
accordance with IFRS 8. Please see note 4 for further details.
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 7 years (2022: 8 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 the
Group 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 Group 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
straight-line basis:
Leasehold land and buildings Over the term of the lease
Fixtures and fittings 5 years
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. See note 12 for further details in the intangible asset
impairment review completed in the year.
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 (including trade payables) 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.
(a) Subsequent measurement and gains and losses
Financial assets at amortised cost 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.
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.
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.
Financial liabilities and equity
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to deliver cash
or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group; and
(b) where the instrument will or may be settled in the Group's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Group's own equity instruments or is a
derivative that will be settled by the Group's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
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 £nil (2022: £107,188) 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 on an accruals basis 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.
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.
1.12 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 the Company on 28 September
2017.
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the Statement of 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. Details can be found on
pages 39 to 40.
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 in 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 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.
1.16 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 UK. For each entity, the Group determines the functional
currency, and items included in the financial statements 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.
1.17 Research and development
Expenditure on research activities is recognised as an expense in the period
in which it is incurred.
1.18 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 30 for further
information.
1.19 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.
1.20 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.
1.21 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 over nominal value in
share premium. Share premium represents the proceeds from shares, less the
nominal value and directly attributable costs.
1.22 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 effects 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.
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 2023
The following standards and interpretations apply for the first time to
financial reporting periods commencing on or after 1 January 2023:
Standard or Amendment Material impact on financial statements
IFRS 17 - Insurance Contracts No
Amendments to IAS 1 - Presentation of Financial Statements and IFRS Practice No
Statement 2 - Making Materiality Judgements: Disclosure of material accounting
policies
Amendment to IAS 8 - Accounting Policies, Changes in Accounting Estimates and No
Errors: Definition of accounting estimates
Amendment to IAS 12 - Income Taxes: Deferred tax assets and liabilities No
arising from a single transaction
Amendment to IAS 12 - Income Taxes: International tax reform and temporary No
exception for deferred tax assets and liabilities related to the OECD pillar
two income taxes
ii) Forthcoming requirements
As at 31 December 2023, the following standards and interpretations had been
issued but were not mandatory for annual reporting periods commencing on or
after 1 January 2024:
Standard or Amendment Effective for accounting periods beginning on or after Expected Impact
Amendment to IFRS 16 - Leases: Leases on sale and leaseback 1 January 2024 None
Amendment to IAS 1 - Presentation of Financial Statements: Non-current 1 January 2024 None
liabilities with covenants
Amendments to IAS 7 - Statement of Cash Flows and IFRS 7 - Financial 1 January 2024 None
Instruments: Supplier finance
Amendments to IAS 21 - The Effects of Changes in Foreign Exchange Rates: Lack 1 January 2025 None
of exchangeability
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 the Group exerts significant influence on
TerpeneTech (UK) such that it is an associate company and, as such, adoption
of equity accounting is appropriate. See note 1.2 for further information of
assumptions made.
Impairment assessment of intangibles and investments
The Group and Company have made estimates of 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 and Company have estimated the useful life of intangible assets by
considering intellectual property protection that it owns, such as patents
which have a known expiry date. See note 12 for further information on
assumptions and estimates made.
Share-based payments
The Group and Company have 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 and Company have 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 and Company.
· The successful conclusion of commercial arrangements, which
serves as an indicator as to the likely success of the projects and, as such,
any need to potential impairment.
£37,627 of research expenditure, not including R & D payroll costs, 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 (2022:
£64,273).
Revenue - Performance obligations
The Directors exercised a judgement that the performance obligations set out
in a contract with a customer had not yet been met and, as such, did not
recognise revenue which had been invoiced and paid at the prior year end. See
note 1.4 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 of 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 Group
and Company's primary focus.
The segment information for the year ended 31 December 2023 is as follows:
Agrochemicals Consumer products Total
£ £ £
Revenue
R & D charges 501,324 9,133 510,457
Royalties 17,391 50,811 68,202
Product sales 2,613,368 - 2,613,368
Total revenue 3,132,083 59,944 3,192,027
Adjusted EBITDA((1)) (1,064,982) 59,944 (1,005,038)
Share Based Payment charge (236,576) - (236,576)
EBITDA (1,301,558) 59,944 (1,241,614)
Amortisation of intangible assets (405,379) (13,272) (418,651)
Depreciation of plant, property and equipment and right-of-use assets (206,426) - (206,426)
Finance costs, foreign exchange and investment revenues (51,995) - (51,995)
Impairment of intangible assets (4,968,529) - (4,968,529)
Income Tax 428,326 - 428,326
Share of Associate's loss - (33,047) (33,047)
(Loss)/Profit for the Year (6,505,561) 13,625 (6,491,936)
Total Assets 16,458,177 136,542 16,594,719
Total assets includes:
Additions to Non-Current Assets 1,730,280 37,539 1,767,819
Total Liabilities 3,048,922 - 3,048,922
(1) Adjusted EBITDA is adjusted to remove the effect of the non-cash share
based payment charge only.
The segment information for the year ended 31 December 2022 is as follows:
Agrochemicals Consumer products Total
Revenue £ £ £
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 of intangible assets (482,546) (13,272) (495,818)
Depreciation of plant, property and equipment and right-of-use assets (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
2023 2022
£ £
Revenue analysed by geographical market
UK 59,944 114,347
Europe 3,132,083 1,712,824
3,192,027 1,827,171
The above analysis represents sales to the Group's direct customers who
further distribute these products to their end markets.
Revenues of approximately £2,464,372 (2022: £1,655,329) are derived from two
customers who each account for greater than 10% of the Group's total revenues:
2023 2023 2022 2022
Customer £ % £ %
A 1,594,410 49.9% - -
B 869,962 27.3% 1,450,518 79.4
C - - 204,811 11.2
100% of the revenue generated in the year (2022: 100%) was recognised at a
point in time.
5 Operating loss
2023 2022
£ £
Operating loss for the year is stated after charging:
Fees payable to the Company's auditor for the audit of the Company's financial 78,000 67,000
statements*
Fees payable to the Company's auditor for interim review of half-yearly 8,000 3,500
results
Depreciation of right-of-use assets (note 14) 135,340 127,201
Depreciation on property, plant and equipment (note 13) 71,086 64,421
Amortisation of intangible assets (note 12) 418,651 495,818
Provision for doubtful debts - 107,188
Research expenses 37,627 64,273
Share-based payment charge (note 22) 236,576 152,135
*Included in the fees payable to the Company's auditor for the audit of the
Company's financial statements are overruns from the prior year audit of
£10,000 (2022: £nil).
6 Employees
The average monthly number of persons (including Directors) employed by the
Group and Company during the year was:
2023 2022
Number Number
Management 5 4
Operational 14 13
19 17
Their aggregate remuneration (including Directors) comprised:
2023 2022
£ £
Wages and salaries 1,569,096 1,205,424
Social security costs 154,538 145,871
Pension costs 54,991 47,964
Benefits in kind 7,186 6,486
Share-based payment charge 236,576 152,135
2,022,387 1,557,880
7 Directors' remuneration
2023 2022
£ £
Remuneration for qualifying services 780,706 478,440
Company pension contributions to defined contribution schemes 31,010 33,491
Non-executive Directors' fees 120,000 96,667
Share-based payment charge relating to all Directors 198,749 119,083
1,130,465 727,681
Benefits in kind 7,186 6,486
Social security costs 77,384 71,708
1,215,035 805,875
The number of Directors for whom retirement benefits are accruing under
defined contribution schemes amounted to 2 (2022: 2).
The number of Directors who are entitled to receive shares under long term
incentive schemes during the year is 2 (2022: 2).
Remuneration disclosed above includes the following amounts paid to the
highest paid Director:
2023 2022
£ £
Remuneration for qualifying services (including pension and excluding 463,539 292,367
share-based payment charge)
The Executive Directors are considered to also be the key management personnel
of the Company and Group. Details of Directors' share options can be found on
page 39 in the Remuneration report.
2023 Salary Bonus Fees Pension Share-based Payments Total
£ £ £ £ £ £
A Abrey 217,100 117,777 - 13,300 85,242 433,419
S Smith 289,030 156,799 - 17,710 113,507 577,046
R Cridland - - 40,000 - - 40,000
L van der Broek - - 45,000 - - 45,000
R Horsman - - 35,000 - - 35,000
506,130 274,576 120,000 31,010 198,749 1,130,465
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
Benefit in kind relates to cumulative life insurance charge and cannot be
allocatted to individual directors.
8 Interest income
2023 2022
£ £
Interest income
Bank Deposits 34,014 192
Total interest income for financial assets that are not held at fair value
through profit or loss is £34,014 (2022: £192).
9 Finance costs and foreign exchange differences
2023 2022
£ £
Interest on lease liabilities 17,009 22,046
Credit charges 198 -
Finance costs 17,207 22,046
Foreign exchange (losses)/gains (68,802) 52,736
10 Income tax credit
2023 2022
£ £
Current tax
UK corporation tax on loss for the current year (317,201) (323,716)
Adjustments in respect of prior years (111,125) -
Total UK current tax income (428,326) (323,716)
The credit for the year can be reconciled to the loss per the income statement
as follows:
2023 2022
£ £
Loss before tax (6,920,262) (2,567,595)
Expected tax credit based on a corporation tax rate of 23.52% (2022: 19.00%) (1,627,683) (487,843)
Ineligible fixed asset differences 138,762 9,489
Expenses not deductible for tax purposes 72,069 75,663
Additional deduction for R&D expenditure (324,836) (239,754)
R&D claim (317,201) (323,716)
Surrender of tax losses for R&D tax credit refund 660,006 424,180
Adjustment in respect of prior years (111,125) -
Deferred tax not recognised 1,081,682 218,265
Taxation credit for the year (428,326) (323,716)
The rate of UK Corporation tax increased from 19% to 25% on 6 April 2023.
There are no future factors at the reporting date that are expected to impact
the Group's future tax charge. The Group is not within the scope of the OECD
Pillar Two model rules.
The taxation credit for the year represents the research and development
credit for the year ended 31 December 2023.
The current tax recoverable as at 31 December 2023 represents R&D tax
credits and is made up as follows:
2023 2022
£ £
Current tax
R & D cash tax credit for the current year (317,201) (323,716)
Total UK current tax recoverable (317,201) (323,716)
Deferred Tax
The losses carried forward, after the above offset, for which no deferred tax
asset has been recognised, amount to approximately £29,635,304 (2022:
£29,199,472).
The unprovided deferred tax asset of £7,408,826 (2022: £7,299,868) arises
principally in respect of trading losses. It has been calculated at 25% (2022:
25%) 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
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 the loss incurred
and therefore are not considered for computing diluted EPS.
2023 2022
£ £
Weighted average number of ordinary shares for basic and diluted earnings per 420,921,123 380,549,418
share
Earnings (all attributable to equity shareholders of the Company)
Loss for the period (6,494,249) (2,243,879)
Basic earnings per share (1.54p) (0.59p)
Diluted earnings per share (1.54p) (0.59p)
12 Intangible assets
Group
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2022 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
Additions - 1,605,299 45,166 1,650,465
At 31 December 2023 456,684 10,679,330 9,552,223 20,688,237
Amortisation and impairment
At 1 January 2022 448,896 2,709,205 6,936,627 10,094,728
Amortisation 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
Impairment charge for the year 2,545 3,260,862 1,705,122 4,968,529
Amortisation charge for the year 1,388 253,811 163,452 418,651
At 31 December 2023 454,125 6,508,052 9,015,549 15,977,726
Carrying amount
At 31 December 2023 2,559 4,171,278 536,674 4,710,511
At 31 December 2022 6,492 6,080,652 2,360,082 8,447,226
Company
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2022 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
Additions - 1,605,299 45,166 1,650,465
At 31 December 2023 456,684 10,679,329 9,419,480 20,555,493
Amortisation and impairment
At 1 January 2022 448,896 2,709,205 6,910,083 10,068,184
Amortisation 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
Impairment charge for the year 2,545 3,260,862 1,705,122 4,968,529
Amortisation charge for the year 1,388 253,811 150,180 405,379
At 31 December 2023 454,125 6,508,052 8,962,460 15,924,637
Carrying amount
At 31 December 2023 2,559 4,171,277 457,020 4,630,856
At 31 December 2022 6,492 6,080,651 2,267,156 8,354,299
Intellectual property represents intellectual property in relation to use of
encapsulated terpenes in agrochemicals in the form of licences, patents and
development costs. Intellectual property includes patents and know-how
acquired by the Group. The remaining useful economic life of these assets is 7
years (2022: 8 years) to 31 December 2030.
Licences and trademarks include 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 the Group and Company.
£ 1,096,545 (2022: £3,799,161) of development costs relate to assets under
development for which no amortisation has been charged in 2023 or 2022. The
decrease of £1.6m in such development costs in the year is due to the impact
of the impairment review at 30 June 2023 as discussed below.
Impairment review at 30 June 2023
The impairment review that was undertaken as part of the Group's 2022 accounts
preparation resulted in headroom over the carrying value of only £0.9m (down
from £8.3m in 2021), a small margin given intangible assets amounted to
£8.4m at that time.
Given the marginal headroom and general downward trend, the management team
and Audit Committee agreed it was appropriate to undertake a further
impairment review of the Group's intangible assets, as part of the preparation
of the Group's 2023 Interim reporting.
The need for an interim impairment review was also driven by external factors
such as continuing high interest rates and inflation which it was felt might
impact the discount rate used in the Cash Generating Unit (CGU) calculations.
The Board agreed to appoint an independent advisor to undertake an impairment
review, based on the current position of the Group and Company, and the
current financial environment.
The total carrying value of the intangible assets was allocated to the
Agrochemicals CGU as the largest CGU in which cash inflows are generated. The
recoverable amounts of the intangible assets were determined based on value in
use calculations based on the Agrochemicals CGU.
The Directors prepared a discounted cash-flow forecast, based on product sales
forecasts including those provided by the Group's commercial partners, and
have taken into account the market potential for the Group's products and
technologies using third party market data that the Group 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 covered a period of 7.5 years to 31 December 2030, with no
terminal value, reflecting the useful economic life of the patent in respect
of the underlying technology. Financial forecasts were based on the approved
budget. Financial forecasts were used on the approved long-term plan.
The discount rate was derived from the Group's weighted average cost of
capital, taking into account the cost of equity and debt, to which specific
market-related premium and company-related premium adjustments were made. The
discount rate used was 16.36%.
Tax rate was assumed at 25% which is in line with the rate in the years the
Group have earnings, however the current losses brought forward as at 30 June
2023 exceed £30m so not tax charge was included in the forecasted years where
the Group is profitable.
Based on the above assumptions, the value in use of the intangible assets was
£4,968,529 lower than the carrying value of the intangible assets indicating
that an impairment of intangible assets is required at 30 June 2023. The
impairment charge of £4,968,529 was charged immediately to the statement of
comprehensive income.
Impairment review at 31 December 2023
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
Group and Company have made in registering its products and other key
commercial factors to perform the review.
As with the interim review at 30 June 2023, the Board agreed to appoint an
independent advisor to undertake an impairment review, based on the current
position of the Group and Company, and the current financial environment.
The total carrying value of the intangible assets was allocated to the
Agrochemicals CGU as the largest CGU in which cash inflows are generated. The
recoverable amounts of the intangible assets were determined based on value in
use calculations based on the Agrochemicals CGU.
The Directors prepared a discounted cash-flow forecast, based on product sales
forecasts including those provided by the Group's commercial partners, and
have taken into account the market potential for the Group's products and
technologies using third party market data that the Group 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 2024.
The forecast covered a period of 7 years to 31 December 2030, with no terminal
value, reflecting the useful economic life of the patent in respect of the
underlying technology. Financial forecasts were based on the approved budget.
Financial forecasts for 2024-2028 were used on the approved long-term plan.
Financial forecasts for 2029-2030 were extrapolated based on a long-term
growth rate of 3.93%.
The discount rate was derived from the Group's weighted average cost of
capital, taking into account the cost of equity and debt, to which specific
market-related premium and company-related premium adjustments were made. The
discount rate used was 16.62%.
Tax rate was assumed at 25% which is in line with the rate in the years the
Group have earnings, however the current losses brought forward as at 31
December 2023 exceed £30m so not tax charge was included in the forecasted
years where the Group is profitable.
The estimated recoverable amount of the CGU exceeded its carrying amount by
£1.25m and based on the review carried out, the Board is satisfied that
intangible assets are not impaired further.
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 16.62%
(2022: 13.5%). The increase in the rate reflects wider market movements as
well as increased forecasting risk given high, current inflation rates.
As part of the advisor's impairment review, a sensitivity analysis was
conducted to stress test the impairment review. The assumed sensitivities
included increasing the discount rate by 1%, increasing the working capital
investment as a percentage of revenue growth by 1% and reducing the growth
rate in which YE2029 and YE2030 are projected on by 1%. On a sensitised
scenario, the headroom calculated is £0.4m with no impairment required.
The Board is therefore satisfied that reasonable changes in assumptions have
been considered and no further impairments have been identified at 31 December
2023.
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 forecasts are highly
sensitive to the revenue growth assumptions and are reliant on the Group
meeting the forecast sales, with small deviations from this leading to
impairment indicators. The Board has determined to not reverse the impairment
charge recognised at 30 June 2023 given the results of the sensitivity
analysis to allow for further review of the CGU's performance in 2024.
13 Property, plant and equipment
Group and Company
Fixtures and Fittings Total
£
£
Cost
At 1 January 2022 302,027 302,027
Additions - owned 30,929 30,929
At 31 December 2022 332,956 332,956
Additions - owned 102,391 102,391
At 31 December 2023 435,347 435,347
Accumulated depreciation and impairment
At 1 January 2022 69,749 69,749
Charge for the year 64,421 64,421
At 31 December 2022 134,170 134,170
Charge for the year 71,086 71,086
At 31 December 2023 205,256 205,256
Carrying amount
At 31 December 2023 230,091 230,091
At 31 December 2022 198,786 198,786
14 Right-of-use assets
Group and Company
Leasehold premises Motor vehicles Total
£ £
£
Cost
At 1 January 2022 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
Additions - 14,963 14,963
Disposals - (22,282) (22,282)
At 31 December 2023 443,777 130,117 573,894
Accumulated depreciation and impairment
At 1 January 2022 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
Charge for the year 90,876 44,464 135,340
Eliminated on disposals - (22,282) (22,282)
At 31 December 2023 301,617 59,840 361,457
Carrying amount
At 31 December 2023 142,160 70,277 212,437
At 31 December 2022 233,036 99,778 332,814
15 Investments
Current Non-current
Group and Company 2023 2022 2023 2022
£ £ £ £
Investment in associates - - 297,197 330,244
Details of the Group's associates at 31 December 2023 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
2023 2022
£ £
Non-current assets 315,918 378,271
Current assets 311,599 382,753
Non-current liabilities (23,819) (92,341)
Current liabilities (309,349) (340,419)
Net assets (100%) 294,349 328,264
Company's share of net assets 88,010 98,151
Separable intangible assets 96,059 118,965
Goodwill 412,649 412,649
Impairment of investment in associate (299,521) (299,521)
Carrying value of interest in associate 297,197 330,244
Revenue 515,647 497,292
100% of loss after tax (61,802) (56,440)
29.9% of loss after tax (18,479) (16,876)
Amortisation of separable intangible (14,568) (14,568)
Company's share of loss including amortisation of separable intangible asset (33,047) (31,444)
The separable intangible assets relate to the biocide registration for
geraniol which TerpeneTech (UK) 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 a 7-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 16.62% (2022: 13.5%). 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.
Based on the review the Directors carried out, it was determined that the
Investment was not impaired and, as such, no impairment charge (2022: £nil)
was recognised.
An increase in the discount rate of 0.21% would 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 20% (2022: 15%) and is
based on the sales of geraniol only.
With no growth in the forecast geraniol sales from 2024 over the entire
forecast period, there would be an impairment of £181,117.
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 2023 are as follows:
Name of undertaking Registered office Principal activities Class of shares held % 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 the Company and TerpeneTech (UK),
the Company's associate.
The Company 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). The
Company 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 the Company.
Non-controlling interests
The following table summarises the information relating to the Group's
subsidiary with material non-controlling interest, before intra-Group
eliminations:
2023 2022
Non-controlling interest (NCI) percentage 50% 50%
£ £
Non-current assets 79,655 92,927
Current assets 56,887 6,076
Non-current liabilities - -
Current liabilities (166,914) (134,000)
Net liabilities (100%) (30,372) (34,997)
Carrying amount of NCI (50% of net liabilities) (15,186) (17,499)
Revenue 50,811 50,038
Profit/(loss) after tax 4,625 (13,234)
Other comprehensive income - -
Total comprehensive loss 4,625 (13,234)
Share of NCI (50% of total comprehensive profit/(loss)) 2,313 (6,617)
Cash flows from operating activities - -
Cash flows from investing activities - -
Cash flows from financing activities - -
Net increase / (decrease) in cash and cash equivalents - -
Dividends paid to non-controlling interests - -
17 Inventories
Group and Company
2023 2022
£ £
Raw materials 149,644 115,929
Goods in transit 27,736 411,181
Finished goods 787,172 98,348
964,552 625,458
Inventory above is shown net of a provision of:
Provision for obsolete inventory - 76,250
- 76,250
Raw materials of £1,276,677 (2022: £580,851) were consumed during the year.
This has been recognised within cost of sales in the Consolidated statement of
comprehensive income.
18 Trade and other receivables
Group Company
2023 2022 2023 2022
£ £ £ £
Trade receivables 1,788,151 322,489 1,788,151 322,489
VAT recoverable 386,684 179,214 386,684 179,214
Other receivables 112,375 67,410 222,403 195,335
Prepayments and accrued income 162,413 89,753 162,413 89,753
2,449,623 658,866 2,559,651 786,791
Group and Company
2023 2022
£ £
Trade receivables above are shown net of a provision for doubtful 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.
Trade receivables of £1,355,690 (2022: £184,746) at the reporting date were
held in Euros and £111,654 (2022: £117,229) were held in USD, with the
remainder being in GBP. Please see note 30 for further details.
19 Trade and other payables
Group Company
2023 2022 2023 2022
£ £ £ £
Current
Trade payables 1,925,559 1,150,873 1,925,559 1,150,873
Accruals and deferred income 640,342 515,860 640,342 515,860
Social security and other taxation 56,841 52,849 56,841 52,849
Other payables 196,411 93,759 196,411 93,759
2,819,153 1,813,341 2,819,153 1,813,341
Trade payables of £597,876 (2022: £233,410) at the reporting date were held
in Euros and £382,852 (2022: £460,470) were held in USD, with the remainder
being in GBP. Please see note 30 for further details.
20 Lease liabilities
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:
Group and Company
2023 2022
£ £
Current liabilities 142,849 139,547
Non-current liabilities 86,920 215,776
229,769 355,323
Group and Company
2023 2022
Maturity analysis - total future payments due under leases: £ £
Within one year 152,694 156,548
In two to five years 89,285 226,541
Total undiscounted liabilities 241,979 383,089
Future finance charges and other adjustments (12,210) (27,766)
Lease liabilities in the financial statements 229,769 355,323
Set out below are the future undiscounted cash outflows to which the lessee is
exposed to that are reflected in the measurement of lease liabilities,
categorised by type of leased item:
2023 2022
Land and buildings £ £
Within one year 106,735 106,735
Between two and five years 59,949 166,684
166,684 273,419
2023 2022
Motor vehicles £ £
Within one year 45,959 49,813
Between two and five years 29,336 59,857
75,295 109,670
Cash paid in respect of lease liabilities in the year was £156,548 (2022:
£128,301) excluding interest and expenses relating to leases of low-value
assets.
The Group holds eight leases, for two properties and six vehicles. All leases
have fixed lease repayments and average remaining terms of 1.6 years (2022:
2.6 years) for the properties and 1.7 years (2022: 2.3 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.
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 £54,991 (2022: £47,964).
22 Share-based payment transactions
Long-Term Incentive Plan ("LTIP")
Since September 2017 the Group 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. Further details can be
found on page 38 of the Remuneration Report.
LTIP Replacement Award
In 2021, the Company made changes to the LTIP in line with the requirements of
a fundraise completed in 2020. The new plan was deemed a more appropriate
scheme to incentivise management given the Company's stage of development and
replaced the 2019 Award, which lapsed in its entirety in 2021.
Pursuant to the updated plan, in 2021 the Company granted options over 10.5
million new Ordinary Shares, at a strike price of 6p each, in the amounts of 6
million awarded to Sean Smith and 4.5 million awarded to Alex Abrey. The
options vested immediately and lapse in three equal tranches in June 2022,
June 2023 and June 2024. For the first five years following grant, no shares
arising from the exercise of these options may be sold unless the Company's
prevailing share price is equal to, or in excess of, 10p.
The shares arising from exercise of options are subject to a one-year lock-in
restriction, followed by a one-year orderly market restriction.
For accounting purposes, the options granted under the LTIP Replacement Award
have been treated as a modification of the 2019 Award as per IFRS 2. Where
awards previously granted have been deemed to be modified, IFRS 2 requires the
share-based payment charge to comprise the original fair value of the awards,
together with an incremental fair value.
2023 2022
Amounts recognised in profit or loss include the following: £ £
Interest on lease liabilities 17,009 22,046
Expense relating to leases of low-value assets 740 740
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 (2022: 3,500,000) of the above options lapsed and
£171,251 (2022: £171,251) was transferred from the warrant reserve to
retained earnings.
At 31 December 2023, there were 3,500,000 (2022: 7,000,000) options still in
issue. The share-based payment charge for the year ended 31 December 2023 in
respect of the above LTIP Replacement Awards was £nil (2022: £nil).
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 the Company, 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; and
· 1/3 24 months from the date of grant.
The share-based payment charge for the year ended 31 December 2023 in respect
of the above 2022 LTIP awards was £119,083 (2022: £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 in 2021. 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 2023 was £nil (2022: £nil). During the year, none
(2022: 518,738) of these options were exercised and none (2022: 355,556)
lapsed and £nil (2022: £63,498) was transferred from the warrant reserve to
retained earnings.
2022 Award
In 2022, 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.
The following information is relevant in the determination of the fair value
of options granted under the 2022 Award.
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 payments charge in respect of all these options for the year
ended 31 December 2023 was £nil (2022: £33,052). During the year, 250,000
(2022: none) of these options were exercised and none (2022: none) lapsed and
£8,156 (2022: £nil) was transferred from the warrant reserve to retained
earnings.
2023 Award to Directors
The Company made a further grant of options in order to ensure continuity of
long-term incentive of options over 8,698,909 new Ordinary Shares in the
Company, at a strike price of 5.1p each, in the amounts of 4,968,000 awarded
to Sean Smith and 3,730,909 awarded to Alex Abrey.
The Options expire on 31 August 2027 and vest as follows:
· 1/3 upon grant;
· 1/3 12 months from the date of grant; and
· 1/3 24 months from the date of grant.
The following information is relevant in the determination of the fair value
of options granted under the 2023 Award to Directors.
Grant date 30/8/23
Number of awards 8,698,909
Share price £0.06
Exercise price £0.05
Expected dividend yield -
Expected volatility 65.6%
Risk free rate 5.4%
Vesting period 2 years
Expected Life (from date of grant) 3 years
The share-based payments charge in respect of all these options for the year
ended 31 December 2023 was £79,666. During the year, none of these options
were exercised and none lapsed and £nil was transferred from the warrant
reserve to retained earnings.
2023 Award to Employees
In addition to the above options granted to Directors, the Company granted
employees a total of 2,224,976 options at an average exercise price of 6p.
The Options expire on 30 June 2026 and vest as follows:
· 1/2 upon grant; and
· 1/2 12 months from the date of grant.
The following information is relevant in the determination of the fair value
of options granted under the 2023 Award to Employees.
Grant date 18/12/23
Number of awards 2,224,976
Share price £0.04
Exercise price £0.05
Expected dividend yield -
Expected volatility 65.4%
Risk free rate 5.4%
Vesting period 2 years
Expected Life (from date of grant) 3 years
The share-based payments charge in respect of all these options for the year
ended 31 December 2023 was £37,827 (2022: £nil). During the year, none
(2022: none) of these options were exercised and none (2022: none) lapsed and
£nil (2022: £nil) was transferred from the warrant reserve to retained
earnings.
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)
2023 2022 2023 2022
Outstanding at 1 January 16,312,649 18,680,004 8 7
Granted during the year 10,923,885 2,006,939 5 5
Exercised during the year (250,000) (518,738) 1 1
Lapsed during the year (3,500,000) (3,855,556) 6 6
Exercisable at 31 December 23,486,534 16,312,649 7 8
The exercise price of options outstanding at the end of the year ranged
between 5p and 10p (2022: 6p and 10p) and their weighted average contractual
life was 2.2 years (2022: 1.9 years.)
The share-based payment charge for the year, in respect of options, was
£236,576 (2022: £152,135).
A total of £179,407 (2022: £234,749) was transferred from the warrant
reserve to retained earnings in relation to share options that lapsed in the
year.
Warrants
Number of warrants Weighted average exercise price (pence)
2023 2022 2023 2022
Outstanding at 1 January - 2,989,865 - 19
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year - (2,989,865) - 19
Exercisable at 31 December - - - - -
The exercise price of warrants outstanding at the end of the year was nil p
(2022: nil p) and their weighted average contractual life was nil years (2022:
nil years.)
The share-based payment charge for the year, in respect of warrants, was £nil
(2022: £nil).
During the prior year, 2,989,865 of these warrants lapsed and £153,826 was
transferred from the warrant reserve to retained earnings, resulting in a
total transfer of £388,575 from the warrant reserve to retained earnings in
the prior year including the lapsed share options and warrants.
For all 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.
23 Share capital
Ordinary share 2023 2022 2023 2022
Number Number £ £
Issued and fully paid
At the beginning of the year 380,858,607 380,240,229 3,808,589 3,803,402
Issue of shares 152,493,916 618,378 1,524,940 5,187
At the end of the year 533,352,523 380,858,607 5,333,529 3,808,589
Each ordinary share of £0.01 has voting and dividend rights attached to them.
Shares issued in the year
17 May 2023 - Exercise of Options
On 17 May 2023, the Company issued 250,000 ordinary shares of 1 pence each in
the Company following the exercise of 250,000 options with an exercise price
of 1 pence per share under the Company's share option scheme.
This share issue has been recognised as £2,500 in share capital.
Net proceeds of £2,500 have been recognised in the statement of cash flows.
3 August 2023 - Placing, Subscription and Retail Offer
Following the closing of the Retail Offer on the BookBuild Platform on 2
August 2023, 6,090,070 ordinary shares were issued on 3 August 2023 at a price
of 6.5 pence per Retail Offer Share in connection with the Retail Offer.
In addition, 13,945,076 "Firm Placing" ordinary shares and 2,978,001 "Firm
Subscription" ordinary shares were issued at a price of 6.5 pence per ordinary
share, resulting in a total of 23,013,147 new ordinary shares in relation to
the Placing, Subscription and Retail Offer. This raised total gross proceeds
of £1,495,855. Issue costs of £146,076 were incurred and have been deducted
from the share premium account on recognition.
This share issue has been recognised as £230,131 in share capital and
£1,119,648 in share premium.
Net proceeds of £1,349,779 have been recognised in the statement of cash
flows.
6 October 2023 - Conditional Placing
On 6 October 2023, 129,230,769 ordinary shares were issued via the Conditional
Placing, raising gross proceeds of £8,400,000. Issue costs of £694,040
were incurred and have been deducted from the share premium account on
recognition.
This share issue has been recognised as £1,292,309 in share capital and
£6,413,651 in share premium.
Net proceeds of £7,705,960 have been recognised in the statement of cash
flows.
Total net proceeds after deduction of issue costs for all new ordinary shares
recognised in the statement of cash flows are £9,058,239.
All new ordinary shares rank, pari passu, with the existing ordinary shares in
issue.
24 Share premium account
Group and Company
2023 2022
£ £
At the beginning of the year 39,308,529 39,308,529
Issue of shares 8,373,415 -
Share issue costs (840,116) -
Capital reduction (40,428,176) -
At the end of the year 6,413,652 39,308,529
Please see note 23 for information on the issue of shares and resulting
£7,533,299 increase in share premium, being the excess of proceeds over par
value less issue cost, in the year.
Capital reduction
The Company had accumulated losses of £43,309,440, largely offset by the
credit of its share premium account shown by its audited accounts for the
period to 31 December 2022.
During the year, and pursuant to a Court order, the Company cancelled
£40,428,176 of its share premium account which had the effect of leaving it
with distributable reserves of £1,033,568 at 31 December 2023.
Whilst the Board and management remain focussed on the continued execution of
the Company's stated growth strategy as the primary means of delivering
shareholder value in the near term and has no current intention of declaring
dividends, the Capital Reduction provides greater scope to do so in the future
if the Board determined that the declaration of dividends were appropriate.
In addition, the Capital Reduction provides the Board with the option, should
it so wish, and should it be appropriate to do so, of purchasing the Company's
own Ordinary Shares pursuant to the power granted at the Company's annual
general meeting on 29 June 2023, which requires sufficient distributable
reserves to do so.
25 Warrant reserve
Group and company
£
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 1 January 2023 701,065
Share-based payment expense in respect of options granted 236,576
Share-based payment expense in respect of options/ warrants lapsed/ exercised (179,407)
Balance at 31 December 2023 758,234
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
2023 2022
£ £
At the beginning of the year 10,209,673 10,209,673
Transfer of merger reserve (10,209,673) -
At the end of the year - 10,209,673
The merger reserve arose on historical acquisitions of subsidiary undertakings
for which merger relief was permitted under the Companies Act 2006.
During the year, the carrying value of the intellectual property which had
arisen from an acquisition in 2003 had been reduced to zero. As such, under
the Companies Act 2006, the full balance of the merger reserve of £10,209,673
was transferred to retained earnings.
27 Non-controlling interest
Group
2023 2022
£ £
At the beginning of the year 24,502 31,119
Share of total comprehensive profit/(loss) for the year 2,313 (6,617)
At the end of the year 26,815 24,502
The non-controlling interest arose from the Company's 50% share in TerpeneTech
(Ireland) Limited. See note 16 for further information.
28 Other interest-bearing loans and borrowings - Group and Company
Change in liabilities, arising from financing activities are presented below:
2023 2022
£ £
Balance at 1 January 355,323 398,352
Changes from financing cashflows
Payment of lease liabilities* (139,539) (128,301)
Total changes from financing cashflows (139,539) (128,301)
Other changes
New leases 14,963 87,228
Adjustment to Right of Use Assets (978) 33,909
Surrender of lease - (35,865)
Total other changes 13,985 85,272
Balance as at 31 December 229,769 355,323
29 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, the Group invoiced its associate, TerpeneTech (UK), £9,133
for administration charges (2022: £7,212) and invoiced income of £nil (2022:
£50,000) for minimum royalties due under the head-lice agreement.
Also, during the year the Group recharged £7,054 (2022: £7,096) of expenses
to TerpeneTech (UK) and incurred consultancy charges of £13,274 (2022:
£nil).
At the year end, an amount of £233,686 was due from TerpeneTech (UK) (2022:
£238,375) to the Company. This amount is included within Trade Receivables.
At the year end, an amount of £99,820 was due to TerpeneTech (UK) (2022:
£93,759) from the Company. This amount is included within Other Payables.
At the year end, a net amount of £56,887 was due to TerpeneTech (Ireland)
from TerpeneTech (UK) (2022: £6,076 due to TerpeneTech (Ireland) from
TerpeneTech (UK)). It represents the amount due in respect of the intangible
asset reduced by fees receivable in respect of sales which amounted to
£50,811 (2022: £50,038). This amount is included within Other Receivables.
Company
During the year, the Company invoiced its associate, TerpeneTech (UK), £9,133
for administration charges (2022: £7,212) and invoiced income of £nil (2022:
£50,000) for minimum royalties due under the head-lice agreement.
Also, during the year the Company recharged £7,054 (2022: £7,096) of
expenses to TerpeneTech (UK) and incurred consultancy charges of £13,274
(2022: £nil).
Further, at year end, £10,000 has been accrued in respect of management
recharges from the Company to TerpeneTech (Ireland) (2022: £50,000) and
£22,914 has been recharged for audit fees (2022: £nil). An amount of
£166,914 (2022: £134,000) is included within the Other Receivables.
At the year end, an amount of £233,686 was due from TerpeneTech (UK) (2022:
£238,375). This amount is included within Trade Receivables.
At the year end, an amount of £99,820 was due to TerpeneTech (UK) (2022:
£93,759). This amount is included within Other Payables.
*excluding lease interest of £17,009 (2022: £22,047)
30 Financial risk management
Credit risk
Group Company
2023 2022 2023 2022
£ £ £ £
Cash and cash equivalents 7,413,107 1,994,472 7,413,107 1,994,472
Trade receivables* 1,788,151 322,489 1,788,151 322,489
VAT recoverable* 386,684 179,214 386,684 179,214
Other receivables* 112,375 67,410 222,403 195,335
9,700,317 2,563,585 9,810,345 2,691,510
*See note 18
The average credit period for sales of goods and services is 204 days (2022:
64). No interest is charged on overdue trade receivables. At 31 December 2023,
trade receivables of £262,322 (2022: £219,727) were past due. During the
year the Group and Company provided for doubtful debts in the amount of £nil
(2022: £107,188).
Trade receivables of £1,355,690 (2022: £184,746) at the reporting date were
held in Euros and £111,654 (2022: £117,229) were held in USD.
Cash at bank of £48,515 (2022: £1,824,866) at the reporting date were held
in Euros and £28,510 (2022: £10,829) were held in USD.
The Group'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 Corteva, which owed gross £1,339,072
to the Group at the year-end (2022: TerpeneTech (UK), the Group's associate
company, which owed gross £238,375).
The Group has had no issue of collecting debtors due from Corteva or
TerpeneTech (UK) before and does not expect to have any going forward.
Considering these factors, the Directors consider the ECL to be immaterial.
30 Financial risk management (continued)
Liquidity risk (excluding lease liabilities)
Group and Company
2023 2022
Notes £ £
Trade payables 19 1,925,559 1,150,873
Other payables 19 196,411 93,759
Social security and other taxation 19 56,841 52,849
2,178,811 1,297,481
The carrying amount of trade and other payables approximates their fair value.
The average credit period on purchases of goods is 117 days (2022: 141 days).
No interest is charged on trade payables. The Group has policies in place to
ensure that trade payables are paid within the credit timeframe or as
otherwise agreed.
Trade payables of £597,876 (2022: £233,410) at the reporting date were held
in Euros and £382,852 (2022: £460,470) were held in USD.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the Group's financial liabilities at 31 December 2023
was as follows:
2023 2022
£ £
In one year or less, or on demand 2,178,811 1,297,481
Over one year - -
2,178,811 1,297,481
Liquidity risk is managed by regular monitoring of the Group'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
Group and Company. For details of lease liabilities, see note 20.
Market price risk
The Group'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 Group's sensitivity analysis model should be used in conjunction with
other information about the Group's risk profile.
The Group's policy towards currency risk is to eliminate all exposures that
will impact on reported results as soon as they arise. Based on the foreign
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 Group's capital management is to ensure that it
maintains healthy capital ratios in order to support its business and maximise
shareholder value.
The Group seeks to enhance shareholder value by capturing business
opportunities as they develop. To achieve this goal, the Group maintains
sufficient capital to support its business.
The Group manages its capital structure and makes adjustments to it in light
of changes in economic conditions.
The Group 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 2023 and 31 December 2022.
The Group monitors capital using a gearing ratio, which is net debt divided by
total capital plus net debt. The Group's policy is to keep the gearing ratio
below 10% (2022: below 10%). The Group includes within net debt, any
interest-bearing loans and borrowings (none in the 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.
The Group is not subject to any externally imposed capital requirements.
31 Cash absorbed by operations
Consolidated
2023 2022
£ £
Loss for the year after tax (6,491,936) (2,243,879)
Adjustments for:
Taxation credited (428,326) (323,716)
Finance costs 17,009 22,046
Interest income (34,014) (192)
Foreign exchange currency (gains)/losses 68,802 (74,782)
Amortisation and impairment of intangible assets 5,387,180 495,818
Xinova liability written off - 43,855
Depreciation and property, plant and equipment and right-of-use assets 206,426 191,622
Share of associate's loss 33,047 31,444
Share-based payment expense 236,576 152,135
Inventory provision - 76,250
Doubtful debt provision - 107,188
Movements in working capital:
Increase in inventories (339,094) (180,357)
(Increase)/decrease in trade and other receivables (1,790,757) 125,720
Increase/(decrease) in trade and other payables 1,004,833 (9,683)
Cash absorbed by operations (2,130,252) (1,586,531)
Company
2023 2022
£ £
Loss for the year after tax (6,496,561) (2,230,645)
Adjustments for:
Taxation credited (428,326) (323,716)
Finance costs 17,009 22,046
Interest income (34,014) (192)
Foreign exchange currency (gains)/losses 68,802 (74,782)
Amortisation and impairment of intangible assets 5,373,908 482,546
Xinova liability written off - 43,855
Depreciation and property, plant and equipment and right-of-use assets 206,426 191,622
Share of associate's loss 33,047 31,444
Share-based payment expense 236,576 152,135
Inventory provision - 76,250
Doubtful debt provision - 107,188
Movements in working capital:
Increase in inventories (339,094) (180,357)
(Increase)/decrease in trade and other receivables (1,772,860) 75,720
Increase in trade and other payables 1,004,833 40,355
Cash absorbed by operations (2,130,252) (1,586,531)
32 Capital commitments
As at 31 December 2023, an amount of £481,557 (2022: £102,109) had been
committed to by the Group and Company, for work not yet completed, or
invoiced. In the prior year, the work related to on-going field trials and
other regulatory studies and was invoiced during 2024.
33 Contingent liabilities
The Company provides a two-year warranty for one of its products which solely
relates to the product not being defective.
Given the quality control processes that are in place, the Company is
satisfied that no provision is required in this respect.
34 Post balance sheet events
There were no adjusting or significant non-adjusting events between 31
December 2023 and the approval of the financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR ZZGGKNDNGDZMRecent news on Eden Research
See all newsREG - Eden Research plc - Thymol Supply Agreement For Bee Health
AnnouncementREG - Eden Research plc - Director/PDMR Shareholdings
AnnouncementREG - Eden Research plc - Appointment of Distribution Partner in Kenya
AnnouncementREG - Eden Research plc - Appointment of Joint Broker
AnnouncementREG - Eden Research plc - Director/PDMR Shareholding
Announcement