REG - Eden Research plc - Preliminary results
31/05/2022 07:00
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RNS Number : 3162N Eden Research plc 31 May 2022
31 May 2022
Eden Research
("Eden" or "the Company")
Preliminary Results for Year Ended 31 December 2021
Eden Research plc (AIM: EDEN), the AIM-quoted company focused on sustainable
biopesticides and plastic-free formulation technology for use in global crop
protection, animal health and consumer products industries, announces its
preliminary results for the year ended 31 December 2021.
Commercial and operational highlights
· Sales of agrochemical products, Cedroz and Mevalone, increased
overall by approximately 4% in volume.
· Product sales remained flat in GBP terms at approximately £1.1m
(2020: £1.1m), due to adverse foreign currency exchange rates.
· Exclusive Commercialisation, Supply and Distribution Agreement signed
with Corteva Agriscience, the fourth largest agriculture input company in the
world
· Significantly increased the Company's addressable market during the
year with the addition of new countries, diseases and crop targets for
Mevalone and Cedroz.
Financial highlights
· Revenue for the year was £1.2m* (2020: £1.4m) with a loss before
tax of £3.4m (2020: £2.5m) and statutory operating loss of £3.2m (2020:
£2.2m).
· Adjusted EBITDA (excluding share-based payments - see note 4) was
£2.0m (loss) (2020: £1.5m loss).
· Cash position at the year-end was £3.9m, in-line with management
expectations (2020: £7.3m).
*£0.14m of upfront payments due in the year (and paid after the year-end)
has, following the audit process, been designated as deferred income and,
accordingly, will only be recognised in the Group income statement following
completion of the relevant performance milestones, as required under IFRS15.
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 has continued to make positive strides in 2021, despite the ongoing
challenges many of us have faced. 2021 has seen us lay down the foundations
for considerable revenue growth by expanding our regulatory footprint for our
flagship biopesticide products in multiple jurisdictions and across various
crop types. We are particularly excited by the prospect of making an entrance
to the US market, with our impending EPA approval, and to capitalise on the
opportunity presented by being embedded in one of the largest agricultural
markets in the world. This expansion comes alongside our recent OTC listing,
where we hope to expand and diversify our shareholder base, offering US
investors the opportunity to participate in the promising future of
sustainable agriculture.
In the mid-term, we hope to further leverage our close partnership with
Corteva, which has now entered its third year, to bring to market our
innovative seed treatment product which uses Eden's proprietary, plastic-free
Sustaine® encapsulation technology.
As we aim to become a central part of a more sustainable agricultural future,
driven by our highly motivated and skilled team of experts, we look forward to
delivering on our milestones this coming year and materialising the true value
of Eden's proposition for all our stakeholders."
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information contact:
Eden Research plc www.edenresearch.com (http://www.edenresearch.com/)
Sean Smith 01285 359 555
Alex Abrey
Cenkos Securities plc (Nominated advisor and broker)
Giles Balleny / Max Gould (corporate finance) 020 7397 8900
Michael Johnson (sales)
Hawthorn Advisors (Financial PR)
Stephen Atkinson eden@hawthornadvisors.com (mailto:eden@hawthornadvisors.com)
Victoria Ainsworth
Notes to Editors:
Eden Research is the only UK-listed company focused on biopesticides for
sustainable agriculture. It develops and supplies innovative biopesticide
products and natural microencapsulation technologies to the global crop
protection, animal health and consumer products industries.
Eden's products are formulated with terpene active ingredients, based on
natural plant defence metabolites. To date, they have been primarily used on
high-value fruits and vegetables, improving crop yields and marketability,
with equal or better performance when compared with conventional pesticides.
Eden has two products currently on the market:
Mevalone® is a foliar biofungicide which initially targets a key disease
affecting grapes and other high-value fruit and vegetable crops. It is
approved for sale in a number of key countries whilst Eden and its partners
pursue regulatory clearance in new territories thereby growing Eden's
addressable market globally.
Cedroz™( )is a bionematicide that targets free living nematodes which are
parasitic worms that affect a wide range of high-value fruit and vegetable
crops globally. Cedroz is registered for sale on two continents and Eden's
commercial collaborator, Eastman Chemical, is pursuing registration and
commercialisation of this important new product in numerous countries
globally.
Eden's Sustaine®( )encapsulation technology is used to harness the biocidal
efficacy of naturally occurring chemicals produced by plants (terpenes) and
can also be used with both natural and synthetic compounds to enhance their
performance and ease-of-use. Sustaine microcapsules are naturally-derived,
plastic-free, biodegradable micro-spheres derived from yeast. It is one of the
only viable, proven and immediately registerable solutions to the
microplastics problem in formulations requiring encapsulation.
Eden was admitted to trading on AIM on 11 May 2012 and trades under the
symbol EDEN. It was awarded the London Stock Exchange Green Economy
Mark in January 2021, which recognises London-listed companies that derive
over 50% of their total annual revenue from products and services that
contribute to the global green economy. Eden derives 100% of its total annual
revenues from sustainable products and services.
For more information about Eden, please visit: www.edenresearch.com
(http://www.edenresearch.com/) .
Chairman's Statement
Over the past two years, Eden has continued to steadily progress its
development plans and has made strides on several fronts.
March 2020's successful fundraise provided Eden with a firm platform to invest
in the development of the Company's product portfolio and broaden its
technical capabilities with the opening of a laboratory facility. Not only has
Eden been able to move forward apace in new product areas such as seed
treatment and insecticides, but product regulatory approvals have also come to
fruition which have provided opportunities for sales growth.
Nevertheless, the pace with which we had initially hoped to accelerate our
development was hampered by the COVID-19 pandemic which brought a high degree
of uncertainty globally. This was particularly challenging for growth
companies like Eden, having hired a new team as well as opening a new
laboratory facility during lockdown. In 2021, the effects of
government-imposed restrictions were still being felt as travel and leisure
activities along with wine consumption continued to be significantly lower
than in 2019.
The other, and arguably more important, unfortunate consequence of the
pandemic has been the slowing down of the regulatory approval process which
has particularly affected Eden in the US. Additionally, the Environmental
Protection Agency (EPA) suffered resource deficiencies as a consequence of
underfunding during the previous Presidential administration which has further
compounded the effects of the pandemic.
The knock-on effects from regulatory delays have been particularly impactful
as the US represents a significant market opportunity for Eden with growers
and consumers there becoming ever more concerned about the use of traditional
chemical pesticides and seeking to replace them with effective, lower risk
alternatives, such as Eden's.
The seed treatment project, for which Eden has partnered with Corteva
Agriscience, has moved into its third year of development and progresses ever
closer to commercialisation which is expected in time for the 2024 season.
Field trials of our insecticide formulations have shown consistently good
efficacy results; comparable to the traditional chemical products and superior
to that of one of the leading biopesticide alternatives.
We should soon be at the stage where we are able to hand over to a long list
of interested parties our product for their own testing with a view to
entering into what is expected to be a number of commercial agreements for
those distribution rights.
In conjunction with its commercial partners, Eden has been able to expand the
label of existing products which results in a larger addressable market, which
should directly lead to product sales growth, the first results of which we
expect to see in a meaningful way in 2022.
New disease targets for existing products have been identified and trials work
undertaken in order to verify that these opportunities are viable and
commercial success achievable.
The technical capabilities of Eden have increased dramatically, with our
ability to develop products, undertake screening and formulation work all now
in-house at our laboratory facility in Oxfordshire.
All of this has been achieved during a very challenging period which has
hampered supply chains, caused staffing issues and backlogged administrative
processes, affecting the team at Eden, the Company itself and the rest of the
world. Despite the challenging environment, we remain focused upon the
opportunities that exist in our growing industry and we look forward to
embracing these in 2022 and beyond. This should begin by leveraging our US OTC
listing on receipt of our expected EPA approval for our core products to
expand our presence in a significant market. Advancements to also grow our
product range represent another exciting avenue for the Company, bringing the
potential to broaden our product reach into the consumer products industry.
Finally, our recently obtained approvals across a number of geographies will
allow Eden to materially grow its revenues in the 2023 growing season and
beyond.
I would like to thank our staff for all their hard work and the shareholders
for their on-going support. I would like to convey to you all my sincerely
held confidence in Eden's future success.
Lykele van der Broek
Non-Executive Chairman
30 May 2022
Chief Executive Officer's Review
Section one: Introduction
Despite the ongoing, exceptional circumstances and the disruption to the
global business landscape, agriculture and regulatory processes, Eden has
continued to demonstrate resilience and make tangible progress in advancing
our business strategy, capitalising on the rapidly growing global
biopesticides market and growing demand for plastic free crop protection
solutions.
Eden continued to expand its commercial and regulatory footprint by moving
into new geographies, increasing our product offerings and forging milestone
partnerships, including a landmark agreement with global major, Corteva
Agriscience, for our first seed treatment product which uses our Sustaine®
encapsulation technology and sustainable active ingredients.
Alongside these advances across the business, we have also focused on
bolstering our credentials as a business and investment opportunity with
sustainability at its core, building on the award of the London Stock
Exchange's Green Economy Mark which we received at the beginning of 2021 in
recognition of the role we are playing in supporting the transition to
sustainability.
We believe that by expanding our global footprint, we are playing a key role
in this transition. Consumers, farmers and regulators are demanding more
sustainable and plastic-free agricultural solutions and Eden's products meet
this demand.
Section two: Delivering on our strategy
Eden is the only UK-quoted company focused on biopesticides for sustainable
agriculture. We are operating in a constantly expanding market, providing
sustainable solutions to farmers globally. The biopesticides market is
anticipated to be worth over £11 billion by 2027 and Eden is a true innovator
in the space.
Our strategic goals remain the same. We are focused on being the leading
deliverer of sustainable crop protection solutions through the development and
distribution of our two approved products, Mevalone and Cedroz, and
furthering the use of Sustaine with third party active ingredients.
Eden's products are capitalising on a global market for solutions that protect
high-value crops, whilst improving yields and marketability, without damaging
local biodiversity and environmental systems.
In the near term, our strategic focus is on:
- Expanding our commercial growth by:
o Receiving regulatory clearance for applications already made in new
countries, crops and diseases
o Accelerating the development of our Sustaine® technology
o Securing new partnerships for Mevalone® in new territories
o Pursuing further collaborations with majors and selected national partners
o Optimising our route to market
- Diversifying our business line by:
o Expanding the crops and diseases our products can be applied to through
new regulatory applications
o Securing new regulatory approval and distribution agreements in new
geographies and climates for products under development
o Pursuing new opportunities in the seed treatment space
o Advancing the development of our first insecticide products
o Launching new products in the consumer products and animal health markets
- Expanding our research and development operations by:
o Optimising our supply chain
o Expanding our in-house screening and field trials capability
o Accelerating the commercialisation of Sustaine® for conventional actives
o Increasing self-reliance for R&D and reducing time to market
- Strengthening and growing our team by:
o Adding to our R&D capacity, including in microbiology, plant biology,
agronomy, and analytical chemistry
o Expanding our commercial team
o Building our in-house regulatory expertise in order to accelerate time to
market and reducing regulatory costs
We continue to make consistent progress across these areas, to build on what
we have achieved to date and develop new commercial growth opportunities.
Notable commercial and operational highlights from 2021 include:
· Development of Eden's foliar biofungicide product, Mevalone®, with
the expanded authorisation of its use on a variety of key crops including:
o Pome fruits (such as apples and pears) in France
o Strawberries, raspberries, blueberries, cranberries, kiwi, aubergines and
peppers in Portugal
o Wine and table grapes in Romania and
o Strawberries, peppers, courgettes, aubergine, tomatoes, lettuce,
brassicas, and raspberries in Spain
· Authorisation of the use of Eden's nematicide formulation, Cedroz(TM)
for:
o Tomatoes and cucumbers in Morocco and
o Tomato, eggplant, pepper, chili, pepino, cucumber, melon, courgette,
pumpkin, and strawberries in Italy
· The signing of an exclusive Commercialisation, Supply and
Distribution Agreement with Corteva Agriscience, for Eden's first seed
treatment product
· The signing of an exclusive agreement with Sipcam for the marketing,
distribution and selling rights of Mevalone® (marketed as Araw®) in four
North African countries: Egypt, Morocco, Algeria and Tunisia.
Corteva
In May 2021, we were delighted to sign an exclusive Commercialisation, Supply
and Distribution Agreement with Corteva Agriscience, the fourth largest
agriculture company in the world, for Eden's first seed treatment product
which uses Eden's proprietary, plastic-free Sustaine® encapsulation
technology. This built on a one-year evaluation agreement with Corteva signed
in 2020 and successful evaluations of Eden's products and technology by
Corteva for select seed treatment applications since late 2019.
The deal is a significant corporate milestone for Eden marking our first foray
into the use of our active ingredients and Sustaine® technology in seed
treatments and the first use of our products and technology on broad acre
crops, which represents significant future revenue potential.
US investor market
In October 2021, Eden announced that its shares will be traded on the U.S.
OTCQB market allowing US investors to trade Eden's shares for the first time.
This move allows us to diversify our shareholder base in one of the world's
biggest agricultural markets. Currently, farmers in the US spend billions of
dollars every year on products that help them protect their crops and keep up
with food demand.
This move is also in anticipation of expanding our commercial footprint in the
US following the regulatory approval for our products, which is expected in
2022. The US has a fast growing, organic, 'green' and eco-label food market
and is accelerating regulations against the use of harmful pesticides,
mirroring the global drive to reduce, or eliminate, the use of potentially
harmful pesticides. Eden's sustainable biopesticides are well placed to
capitalise on this significant opportunity, once we have received the
anticipated Environmental Protection Agency (EPA) approval.
Section three: Financial review
Revenue for the year was £1.2m (2020: £1.4m).
Our objective is to grow revenue primarily through product sales which will
ultimately provide a sustainable, consistent source of income for the Company.
In 2021, despite adverse market conditions in many territories, sales of
Cedroz and Mevalone increased overall, in volume, by approximately 4% and by
6% on a constant currency basis (using the current year average foreign
exchange rate for both current and prior year sales). However, due to adverse
foreign currency exchange rates, this growth hasn't translated into an
increase in product sales revenue, which remained flat at £1.1m (2020:
£1.1m).
Following the successful fundraise in March 2020, the cash position at the
year-end has reduced to £3.9m (2020: £7.3m). However, the Company remains
sufficiently funded and well placed to implement its ambitious growth
strategy, including investing in product trials, pursuing product
authorisations and continuing to grow its team of experts.
Administrative expenses in the year increased to £2.6m (2020: £2.2m) with
the introduction of new team members. Operating loss increased to £3.2m
(2020: £2.2m). The increase in operating loss is due to increased staff
costs, as well as share-based payment charges of £0.6m (2020: £0.1m).
Throughout the year, the Company remained debt free with no long-term debt or
lending facilities in place, or expected to be required.
Section four: 2022 outlook
In 2022, our ambition is to build on the new approvals (and the expanded
addressable market that they represent) and partnerships achieved in 2021.
Examples include new crop and pest uses for Mevalone® in Spain and Portugal,
the use of Cedroz™ in Italy and Morocco, as well as working with our
partners such as Sipcam to expand the sales of our products across key
countries in North Africa.
The seed treatment project with Corteva continues this year with further field
trials taking place which should ultimately be used in the application for
regulatory authorisation in the EU.
Eden is awaiting approval of its active ingredients, as well as its products,
Cedroz and Mevalone, in the US from the EPA. Expansion into the US will be a
major milestone for Eden given the size of the US agricultural market; the
world's second largest. Due to the nature of the process and a schedule
heavily impacted by the COVID pandemic, it is hard to predict exactly when new
approvals will be achieved. However, we are in continual contact with
regulators to progress the process as quickly as possible, and we expect to be
able to update shareholders with updates on EPA approval in the coming months.
In addition, now that Eden's shares can be traded in the US via the OTC
market, we will be focusing our efforts on increasing visibility to US
investors and audiences during the remainder of 2022. Our hope is that there
will be increased demand for Eden shares once we achieve the anticipated US
EPA approvals.
Section five: Driving positive impact
As a company which works closely with farmers and custodians of nature, we are
acutely aware of both the immense power and fragility of the environment and
its systems. The deepening impact of climate change and human activity affects
farmers globally; from changes in temperature and destruction of critical
biodiversity to adverse weather events. We believe that Eden has an important
part to play in protecting and helping farmers to work with nature to find
sustainable solutions, without adversely impacting their bottom line.
Eden is a company with sustainability at the core of its operations and
products. We believe that the most significant way that Eden can make a
positive impact on the planet is to grow our business rapidly, bringing our
core products and technologies to the mainstream market, and displacing
unsustainable alternatives.
We are dedicated to achieving this aim in a sustainable and responsible
manner, by ensuring our operations and processes are shaped with the
environmental impact in mind at every step.
Our portfolio of products helps farmers to protect natural biological
ecosystems, as well as their high value crops, meeting the growing demands of
both consumers and regulators. The ingredients we use to formulate our
products; geraniol, eugenol and thymol, are naturally occurring and have all
been allowed for use in organic agriculture in the European Union.
Our goal is to expand the reach and applications of our products, so more
farmers in more markets globally can strike this balance of high crop yield
and sustainable production.
In addition to our biopesticide products and ingredients, our patented
microencapsulation technology, Sustaine®, directly addresses the growing
issue of intentionally-added microplastics use in agriculture which leads to
pollution in the soil, water and plant and animal tissues. Sustaine®
microcapsules are naturally sourced, plastic-free, biodegradable micro-spheres
derived from yeast extract, which enable farmers to deliver crop protection
products without releasing microplastics into the environment.
This technology has significant potential to be applied beyond its use in
biopesticides and crop protection products and we are exploring a range of
applications across the animal and consumer product sectors, where producers
are under pressure from consumers and regulators to reduce plastic use.
Brexit
The impact of Brexit is starting to be understood by many UK companies,
including Eden.
The Company's ownership of its EU approvals of Mevalone® and its constituent
active substances has been unaffected by Brexit, based on guidance that was
published stating that the owner of such approvals can continue to be a UK
resident company.
We know that seeking regulatory approval in the UK for Eden products has
become somewhat more challenging, and the Company continues to weigh up market
opportunities and costs post Brexit. We are well placed to navigate what are
likely to be dynamic and complex regulatory challenges. From an operational
perspective, the Company has not seen any significant issues, rather it has
benefited from having toll manufacturing facilities in mainland Europe, though
it continues to monitor this situation.
The Company has toll manufacturing capabilities in the UK and the US, which
provide some operational flexibility. Raw materials are currently sourced from
outside of the EU and there has been manageable impact on this part of the
supply chain.
COVID-19
The fallout from the COVID-19 pandemic has continued to represent an
unprecedented challenge for the agricultural industry, with global food
systems and supply chains put under extreme pressure. Throughout the pandemic,
Eden's priority has been to continue developing and supplying its products and
technologies for the crop production industry through its global partnership
network.
Most significantly, regulatory processes globally have remained behind
schedule due to severe backlogs from 2020. This resulted in delays to key
regulatory approvals that we were expecting in 2021.
Our position on how we are addressing the COVID-19 pandemic remains as
follows:
1 Growth funded
In March 2020, we raised £10.4 million (gross) from investors, a feat that
the whole team is proud of given the volatility and uncertainty in the markets
at the time. This vote of confidence from our shareholders (both existing and
new) helped us capitalise on the global shift towards more environmentally
friendly methods of crop protection, driving us to become a leading provider
of sustainable solutions for global agriculture. Though the period since has
presented challenges for the Company, our employees and our partners, Eden
remains debt-free and has carefully managed its cash resources allowing us to
continue to execute on our exciting plans. Our outsourced manufacturing model
means that we continue to retain maximum flexibility over our choice of
manufacturing locations with a relatively low fixed cost base.
2 Our industry has a pivotal role to play
As demand soared for food supply during the lockdown periods across the UK and
beyond, the agriculture industry had a vital role to play in feeding the world
through the crisis and minimising the economic fallout. Plant protection
products play a fundamental role in agricultural production; without them, we
would not be able to cope adequately with global emergencies such as COVID-19.
The biopesticides market outlook remains undoubtedly positive, with a clear
demand from consumers for sustainably grown produce and in response, a notable
shift from growers towards greener farming practices. As we step into the 'new
normal', consumer demand for a chemical-free supply chain journey will only be
more prevalent. Not only do people need food to survive, they are
increasingly conscious of where it comes from and concerned about the supply
chain journey. The choices people are making to put healthy food on the table
are driving what farmers grow in their fields and how they grow them with an
increasing emphasis on sustainable practices and produce that is free from
pesticide residues. This is the future of farming, and Eden is at the
forefront of the movement towards sustainable farming practices.
3 Supporting our employees and partners
We continue to work closely with our partners as they maintain their business
of supplying our product to growers in an increasing number of countries. Our
team continues to regularly review the situation so that we can adapt to any
changes that may be experienced by our partners, and ensure the health and
safety of their workers is paramount. Closer to home, Eden's team are resuming
travel, though we continue to work remotely part-time. I want to thank our
partners and, of course, the farmers who cannot carry out their work remotely
and who are working hard each day to ensure that we have enough to eat now and
in the future. Their work cannot stop, and we are grateful now more than ever
for all that they do to feed us.
TerpeneTech (UK)
TerpeneTech (UK) secured a CE mark for its head-lice treatment product in
European Economic Area ("EEA") in 2018, which is the first step in the
marketing and sales of such products. The launch of the head-lice product
has been delayed by the COVID-19 pandemic, with the closure of schools
particularly impacting its potential market. Since schools have re-opened, the
UK distributor has not met expectations and, as such, a new partner for the UK
market is being sought.
Sales of the head-lice treatment product are expected to commence in other
countries around the world in 2022 with TerpeneTech (UK) expected to sign an
agreement with a new distribution partner in due course.
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 in order to own the registration
of geraniol under the EU's Biocidal Products Registration regulation, due to
changes brought about by Brexit. As such, TerpeneTech (Ireland) receives
royalty income from TerpeneTech (UK) on the sales of geraniol, but is
otherwise non-operational.
Ukraine
Eden does not currently have any business activities in Russia or Ukraine and,
as such, does not expect any immediate, direct impact on its business.
The knock-on effect of the conflict on other countries is yet to be
understood, though we do not envisage significant disruption to the current
business in the short term.
Dividends
There is no dividend to be paid or proposed in 2021. The Board continues to
monitor its dividend policy.
Section six: Summary
Despite the ongoing, uncertain backdrop, I am pleased that Eden has made
progressive strides in 2021, underpinned by a belief that we are best placed
to meet global demands for sustainable and plastic-free agricultural solutions
and have a long term positive impact on the health of the planet.
As we move through 2022, I am excited about the commercial opportunities
ahead, including the potential expansion into the US market, subject to EPA
approval, and the development of our first seed treatment product with
Corteva, as well as continuing to grow our regulatory footprint and
addressable markets in new territories and on new crops. We look forward to
sharing updates on these, and more, positive developments with all our
stakeholders.
I would like to take this opportunity to say thank you to Eden's team for the
exceptional ingenuity and resilience they have shown this year, in sometimes
challenging circumstances.
I remain proud of the work Eden is doing in contributing to more
environmentally friendly agricultural practices globally and building a
strong, visionary and innovative business with sustainability at its core.
Sean Smith,
Chief Executive Officer
Consolidated statement of comprehensive income for the year ended 31 December
2021
2021 2020
Notes £ £
Revenue 4 1,228,580 1,368,988
Cost of sales (667,343) (736,509)
Gross profit 561,237 632,479
Other operating income - 7,601
Amortisation of intangible assets (434,630) (552,809)
Administrative expenses (2,694,290) (2,202,581)
Share based payments (640,597) (120,380)
Operating loss 5 (3,208,280) (2,235,690)
Investment revenues 8 98 5,725
Finance costs 9 (32,074) (24,000)
Foreign exchange gains/(losses) 9 (97,247) 35,706
Impairment of investment in associate 15 - (299,521)
Share of loss of equity accounted Investee, net of tax (58,177) (30,352)
15
Loss before taxation (3,395,680) (2,548,132)
Income tax income 10 618,137 285,108
Loss and total comprehensive income for the year (2,777,543) (2,263,024)
Total comprehensive income for the year is attributable to:
- Owners of the parent Company (2,788,973) (2,270,347)
- Non-controlling interests 11,430 7,323
(2,777,543) (2,263,024)
Earnings per share 11
Basic (0.73p) (0.66p)
Diluted (0.73p) (0.66p)
The income statement has been prepared on the basis that all operations are
continuing operations.
Consolidated statement of financial position as at 31 December 2021
2021 2020
Notes £ £
Non-current assets
Intangible assets 12 7,919,780 6,729,483
Property, plant and equipment 13 232,278 188,065
Right-of-Use assets 14 372,787 394,610
Investments 15 361,688 419,865
8,886,533 7,732,023
Current assets
Inventories 17 521,351 224,422
Trade and other receivables 18 886,587 1,396,308
Current tax recoverable 10 903,245 285,108
Cash and cash equivalents 3,829,369 7,286,503
6,140,552 9,192,341
Current liabilities
Trade and other payables 19 1,711,518 1,454,955
Lease liabilities 20 99,924 84,350
1
1,811,442 1,539,305
Net current assets 4,329,110 7,653,036
Non-current liabilities
Trade and other payables 19 87,740 125,212
Lease liabilities 20 298,428 330,898
386,168 456,110
Net assets 12,829,475 14,928,949
Equity
Called up share capital 23 3,803,402 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 937,505 429,915
Merger reserve 26 10,209,673 10,209,673
Retained earnings (41,460,753) (38,842,259)
Non-controlling interest 27 31,119 19,689
Total equity 12,829,475 14,928,949
The financial statements were approved by the Board of Directors and
authorised for issue on 30 May 2022 and are signed on its behalf by:
..............................
Sean Smith
Director
Company statement of financial position as at 31 December 2021
2021 2020
Notes £ £
Non-current assets
Intangible assets 12 7,813,583 6,610,014
Property, plant and equipment 13 232,278 188,065
Right-of-Use Assets 14 372,787 394,610
Investments 15 361,688 419,865
8,780,336 7,612,554
Current assets
Inventories 17 521,351 224,422
Trade and other receivables 18 970,587 1,444,308
Current tax recoverable 10 903,245 285,108
Cash and cash equivalents 3,829,369 7,286,503
6,224,552 9,240,341
Current liabilities
Trade and other payables 19 1,667,557 1,374,862
Lease liabilities 20 99,924 84,350
1,767,481 1,459,212
Net current assets 4,457,071 7,781,129
Non-current liabilities
Trade and other payables 19 87,740 125,212
Lease liabilities 20 298,428 330,898
386,168 456,110
Net assets 12,851,239 14,937,573
Equity
Called up share capital 23 3,803,402 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 937,505 429,915
Merger reserve 26 10,209,673 10,209,673
Retained earnings (41,407,870) (38,813,946)
Total equity 12,851,239 14,937,573
As permitted by s408 Companies Act 2006, the company has not presented its own
income statement and related notes. The company's loss for the year was
£2,764,403 (2020 - £2,229,669).
The financial statements were approved by the board of directors and
authorised for issue on 30 May 2022 and are signed on its behalf by:
..............................
Sean Smith
Director
Company Registration No. 03071324
Consolidated statement of changes in equity for the year ended 31 December
2021
Share capital Share premium account Merger reserve Warrant reserve Retained earnings Total Non-controlling interest Total
Notes £ £ £ £ £ £ £ £
Balance at 1 January 2020 2,071,893 31,289,915 10,209,673 335,739 (36,571,912) 7,335,308 12,366 7,347,674
Year ended 31 December 2019:
Loss and total comprehensive income for the year - - - - (2,270,347) (2,270,347) 7,323 (2,263,024)
Issue of share capital 1,731,509 8,018,614 - - - 9,750,123 - 9,750,123
Options granted - - - 94,176 - 94,176 - 94,176
Balance at 31 December 2020 3,803,402 39,308,529 10,209,673 429,915 (38,842,259) 14,909,260 19,689 14,928,949
Year ended 31 December 2021:
Loss and total comprehensive income for the year - - - - (2,788,973) (2,788,973) 11,430 (2,777,543)
Issue of share capital 23/24 - - - - - - - -
Options granted 22 - - - 678,069 - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 - - -
Balance at 31 December 2021 3,803,402 39,308,529 10,209,673 937,505 (41,460,753) 12,798,356 31,119 12,829,475
Company statement of changes in equity for the year ended 31 December 2021
Share capital Share premium account Merger reserve Warrant reserve Retained earnings Total
Notes £ £ £ £ £ £
Balance at 1 January 2020 2,071,893 31,289,915 10,209,673 335,739 (36,584,277) 7,322,943
Year ended 31 December 2020:
Loss and total comprehensive income for the year - - - - (2,229,669) (2,229,669)
Issue of share capital 1,731,509 8,018,614 - - - 9,750,123
Options granted - - - 94,176 - 94,176
Balance at 31 December 2020 3,803,402 39,308,529 10,209,673 429,915 (38,813,946) 14,937,573
Year ended 31 December 2021:
Loss and total comprehensive income for the year - - - - (2,764,403) (2,764,403)
Issue of share capital 23/24 - - - - - -
Options granted 22 - - - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 -
Balance at 31 December 2021 3,803,402 39,308,529 10,209,673 937,505 (41,407,870) 12,851,239
Consolidated statement of cash flows for the year ended 31 December 2021
2021 2020
Notes £ £ £ £
Cash flows from operating activities
Cash absorbed by operations 33 (1,586,582) (1,265,812)
Interest paid - (450)
Interest on lease liabilities (32,074) (23,550)
Tax refunded - 268,777
Net cash outflow from operating activities (1,618,656) (1,021,035)
Investing activities
Purchase of intangible assets (1,624,927) (1,701,287)
Purchase of property, plant and equipment (101,269) (200,758)
Interest received 98 5,725
Net cash used in investing activities (1,726,098) (1,896,320)
Financing activities
Gross proceeds from issue of shares - 10,389,053
Expenses from issue of shares - (638,930)
Payment of lease liabilities (90,387) (44,457)
Net cash generated from/(used in) financing activities (90,387) 9,705,666
Net increase/(decrease) in cash and cash equivalents (3,435,141) 6,788,311
Cash and cash equivalents at beginning of year 7,286,503 501,984
Effect of foreign exchange rates (21,993) (3,792)
Cash and cash equivalents at end of year 3,829,369 7,286,503
Relating to:
Bank balances and short-term deposits 7,286,503
3,829,369
Company statement of cash flows for the year ended 31 December 2021
2021 2020
Notes £ £ £ £
Cash flows from operating activities
Cash absorbed by operations 33 (1,586,582) (1,265,812)
Interest paid - (450)
Interest on lease liabilities (32,074) (23,550)
Tax refunded - 268,777
Net cash outflow from operating activities (1,618,656) (1,021,035)
Investing activities
Purchase of intangible assets (1,624,927) (1,701,287)
Purchase of property, plant and equipment (101,269) (200,758)
Interest received 98 5,725
Net cash used in investing activities (1,726,098) (1,896,320)
Financing activities
Gross proceeds from issue of shares - 10,389,053
Expenses from issue of shares - (638,930)
Payment of lease liabilities (90,387) (44,457)
Net cash generated from/(used in) financing activities (90,387) 9,705,666
Net increase/(decrease) in cash and cash equivalents 3,435,141 6,788,311
Cash and cash equivalents at beginning of year 7,286,503 501,984
Effect of foreign exchange rates (21,993) (3,792)
Cash and cash equivalents at end of year 3,829,369 7,286,503
Relating to:
Bank balances and short-term deposits 7,286,503
3,829,369
Notes to the Preliminary Results for the year ended 31 December 2021
Accounting policies
1 Company information
Eden Research plc is a public company limited by shares incorporated in
England and Wales. The registered office is 67C Innovation Drive, Milton Park,
Abingdon, Oxfordshire, OX14 4RQ. The Company's principal activities and nature
of its operations are disclosed in the Directors' report.
The group consists of Eden Research plc, its subsidiaries, TerpeneTech Limited
(Ireland), Eden Research Europe Limited (Ireland) and its associate company,
TerpeneTech Limited (UK).
1.1 Accounting convention
The Group financial statements have been prepared in accordance with
UK-adopted international accounting standards. The 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 sterling, which is the functional
currency of the group. Monetary amounts in these financial statements are
rounded to the nearest £.
They have been prepared on the historical cost basis. The principal accounting
policies adopted are set out below.
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.
Eden Research plc is a public company limited by shares incorporated in
England and Wales. The registered office is 67C Innovation Drive, Milton Park,
Abingdon, Oxfordshire, OX14 4RQ. The company's principal activities and nature
of its operations are disclosed in the directors' report.
The group consists of Eden Research plc, its subsidiaries, TerpeneTech Limited
(Ireland), Eden Research Europe Limited (Ireland) and its associate company,
TerpeneTech Limited (UK).
Changes in presentation of the financial statements
The Directors continue to assess the clarity of the financial statements and
the need for changes in presentation to enable and assist understanding of
users of the accounts as the operations of the Group continue to evolve.
Following this consideration, however, there have been no changes made in the
current year, including changes in comparative figures, to enhance
presentation.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of
the Company and its subsidiary undertakings up to 31 December 2021. The
profits and losses of the Company and its subsidiary are consolidated from the
date from which control is achieved. All members of the group have the same
reporting period.
Subsidiary undertakings are entities controlled by the Company. The Company
controls an entity when it is exposed to, or has the right to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
1.3 Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the group has adequate resources to continue in
operational existence for at least 12 months from the approval of the
financial statements. Thus, the financial statements have been prepared on a
going concern basis which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business.
The Group has reported a loss for the year after taxation of £2,777,543
(2020: £2,263,024). Net current assets at that date amounted to £4,329,110
(2020: £7,653,036). Cash at that date amounted to £3,829,369 (2020:
£7,286,503). As at 30 April 2022, the cash balance has reduced further to
£2,451,971. The group is reliant on its existing cash balance to fund its
working capital.
The Directors have prepared budgets and projected cash flow forecasts, based
on forecast sales provided by Eden's distributors where available, for a
period of at least 12 months from the date of approval of the financial
statements and they consider that the Company will be able to operate with the
cash resources that are available to it for this period.
The forecasts adopted include revenue derived from existing contracts as well
as expected new contracts in respect of products not yet available for use.
The impact of COVID has been considered in the forecasts. The Group has not
been significantly impacted by the pandemic although it has led to some delays
in regulatory approvals, product development process and limited promotional
activity. The forecasts reflect this with the development expenditure timing
based on the latest experience with regulatory authorities and sales volumes
on the latest distributors' information which reflects their post-COVID
demand.
In addition, the Group has relatively low fixed running costs and 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 forecast to be maintained in this base
scenario throughout the entire forecast period.
In addition, the Directors have also considered a downside scenario which
includes reductions to revenue derived from existing contracts as well as
elimination of revenue from products not yet available for use offset by
mitigations around research and development expenditure as well as some
reductions in expansionary overheads. Under this scenario, a positive cash
balance would be maintained over the forecast period.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet their liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern basis.
The Group's achievement of long-term positive cash generation is reliant on
the completion of ongoing product development and successful initial approval
and registration of these products with various regulatory bodies, as well as
the registration of existing products in new territories. While the Group is
forecast to become cash generative in 2024 under the base budget, the
Directors consider it reasonably possible that the Group will require a
further fundraise prior to that point but beyond the going concern period. The
Directors have assessed the likelihood of obtaining such funding, particularly
in the context of the successful raise in March 2020, and would expect to be
able to raise such funds as necessary.
1.4 Revenue
Revenue is recognised only when the Company has satisfied a performance
obligation by transferring control to a customer.
Revenue represents amounts receivable by the Company in respect of services
rendered during the year in accordance with the underlying contract of
licence, stated net of value added tax.
Sales-based royalty income arising from licences of the Company's intellectual
property is recognised in accordance with the terms of the underlying contract
and is based on net sales value of product sold by Eden's licensees. It is
recognised when the underlying sales occur.
Upfront and annual payments made by customers at commencement and for renewal
of distribution and other agreements are recognised in accordance with the
terms of the agreement. Where there is no ongoing obligation on the Company
under the agreement, the payment is recognised in full in the period in which
it is made. Where there is an ongoing obligation on the Company, the
separate performance obligations under the agreement are identified and
revenue allocated to each performance obligation. Revenue is then recognised
when a corresponding performance obligation has been met.
Each sale of a licence by the Company is assessed to determine whether the
licence is distinct from the sale of other goods and services, and whether the
licence granted provides use of the Company's intellectual property as it
exists at that point in time, with no ongoing obligation on the Company, or
alternatively provides access to the intellectual property as it develops over
time. Where the Company has discharged all of its ongoing obligations
associated with the licence granted, revenue is recognised on invoicing of the
licence fee payment at which point the customer can use and benefit from the
licence. Where there is an ongoing obligation on the Company, revenue is
recognised in the periods to which the obligations pertain.
Product sales are recorded once the ownership and related rights and
responsibilities are passed to the customer and the product is made available
to the partner to collect, or, if the Company is responsible for the shipping,
the product has been shipped to the customer.
The following is a description of the principal activities from which the
Company generates its revenue.
Licensing fees
The Company receives licensing fees from partners who have taken a licence for
the right to use Eden's intellectual property, usually defined by field of use
and territory. These are identified as the right to use as the Company does
not have an obligation to undertake activities that significantly affect the
relevant intellectual property.
Milestone payments
The Company receives milestone payments from other commercial arrangements,
including any fees it has charged to partners for rights granted in respect of
distribution agreements.
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 the current year includes milestone
payments with £141,293 received in the current year. These milestone payments
have been assessed to relate to a performance obligation in respect of
provision of R&D services and a licence to the developed product with the
performance obligation being satisfied at a point in time. As at year end,
this performance obligation had not been reached and, consequently, the
amounts received deferred as contract liability (presented within Accruals and
Deferred Income in note 19).
Further milestone payments are contractually due in the year ending 31
December 2022. The performance obligation is expected to be met no later than
by 31 December 2023.
The second performance obligation relates to product sales and will be
accounted for in line with the product sales policy disclosed below once the
commercial sales have commenced.
R&D charges
The Company sometimes charges its partners for R&D costs that it has
incurred which usually relate to specific projects and which it has incurred
through a third party.
Upon agreement with a partner, or if some specific milestone is met, then Eden
will raise an invoice which is usually payable between 30 and 120 days.
Revenue is recognised upon satisfaction of the underlying performance
obligation.
Royalties
The Company receives royalties from partners who have entered into a licence
arrangement with Eden to use its intellectual property and who have sold
products, which then gives rise to an obligation to pay Eden a royalty on
those sales.
Generally, royalties relate to specific time periods, such as quarterly or
annual dates, in which product sales have been made. Revenue is recognised in
line with when these sales occur.
Once an invoice is raised by Eden, following the period to which the royalties
relate, payment is due to the Company is 30 to 60 days.
Product sales
Generally, where the Company has entered into a distribution agreement with a
partner, Eden is responsible for supplying product to that partner once a
sales order has been signed.
At that point, Eden has the product manufactured through a third-party, toll
manufacturer. At the point at which the product is finished and is made
available to the partner to collect, or, if the Company is responsible for the
shipping, the product has been shipped, the partner is liable for the product
and obliged to pay Eden. Normal terms for product sales are 90 to 120
days. Returns are not accepted and refunds are only made when product
supplied is notified as defective within 60 days.
The Group does not have any contract assets or liabilities other than the
liability in respect of the Corteva milestone payments noted in the milestone
section (2020: none).
1.5 Intangible assets other than goodwill
Intellectual property, including development costs, is capitalised and
amortised on a straight-line basis over its remaining estimated useful
economic life of 9 years in line with the remaining life of the Company's
master patent, which was originally 20 years, with additional Supplementary
Protection Certificates having been granted in the majority of the countries
in the EU in which Eden is selling Mevalone®. The useful economic lie of
intangible assets is reviewed on an annual basis.
An internally generated intangible asset arising from the Company's
development activities is recognised only if all the following conditions are
met:
· the project is technically and commercially feasible;
· an asset is created that can be identified;
· the Company intends to complete the asset and use or sell
it and has the ability to do so;
· it is probable that the asset created will generate
future economic benefits;
· the development cost of the asset can be measured
reliably; and
· there are sufficient resources available to complete the
project.
Internally-generated intangible assets are amortised on a straight-line basis
over their useful lives from the date they are available for use. Where no
internally-generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently
measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets
less their residual values over their useful lives on the following bases:
Leasehold land and buildings Over the term of the lease
Fixtures and fittings 5 years straight line
Motor vehicles Over the term of the lease
The gain or loss arising on the disposal of an asset is determined as the
difference between the sale proceeds and the carrying value of the asset, and
is recognised in the income statement.
1.7 Impairment of tangible and intangible assets
The Directors regularly review the intangible assets for impairment and
provision is made if necessary. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial
assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at each reporting date.
1.8 Inventories
Inventories are stated at the lower of cost and estimated selling price, less
costs to complete and sell. Cost is based on the first-in-first-out
principle. Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition.
1.8 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.
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other
financial assets and financial liabilities are initially recognised when the
Company becomes a part to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable with a significant
financing component) or financial liability is initially measured at fair
value plus, for an item not at fair value through profit or loss ("FVTPL"),
transaction costs that are directly attributable to its acquisition or issue.
A trade receivable without a significant financing component is initially
measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as measured at
amortised cost or FVTPL.
Financial assets are not reclassified subsequently to their initial
recognition unless the Company changes its business model for managing
financial assets in which case all 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.
(b) Subsequent measurement and gains and losses
Financial assets at amortised cost - These assets are subsequently measured at
amortised cost using the effective interest method. The amortised cost is
reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial liabilities and equity
Financial instruments issued by the Company are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Company to deliver cash
or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Company; and
(b) where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or
loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
Where a financial instrument that contains both equity and financial liability
components exists these components are separated and accounted for
individually under the above policy.
(iii) Impairment
The Group recognises loss allowances for expected credit losses (ECLs) on
financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECL, except
for other debt securities and bank balances for which credit risk (i.e. the
risk of default occurring over the expected life of the financial instrument)
has not increased significantly since initial recognition, which are measured
as 12-month ECL.
Loss allowances for trade receivables and contract assets are always measured
at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECL, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Company's historical
experience and informed credit assessment and including forward-looking
information.
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
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the reporting end date. The current
tax charge includes any research and development tax credits claimed by the
Company.
R&D tax credits are accounted for by reference to IAS 12.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interest in joint
ventures, except where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on the tax
rates that have been enacted or substantively enacted by the end of the
reporting period. Deferred tax is charged or credited to profit or loss,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the Company has a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net
basis.
1.11 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an
expense, unless those costs are required to be recognised as part of the cost
of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in
which the employee's services are received.
Termination benefits are recognised immediately as an expense when the group
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
1.13 Share-based payments
The Company has applied the requirements of IFRS 2 Share-Based Payments.
Unapproved share option scheme
The Company operated an unapproved share option scheme for executive
directors, senior management and certain employees up to September 2017.
Long-Term Incentive Plan ('LTIP')
In 2017, the Company established a LTIP to incentivise the Executives to
deliver long-term value creation for shareholders and ensure alignment with
shareholder interest. Awards were made annually and were subject to
continued service and challenging performance conditions usually over a three
year period. The performance conditions were reviewed on an annual basis to
ensure they remained appropriate and were based on increasing shareholder
value. Awards were generally 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 vests for
'Threshold' performance with full vesting taking place for equalling or
exceeding the performance 'Target'. In between the Threshold and Target
there may be pro rata vesting.
The LTIP was adopted by the Board of Directors of Eden on 28 September 2017.
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the Statement of Profit or Loss and Other
Comprehensive Income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that ultimately the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair value
of the options granted, as long as other vesting conditions are satisfied.
The cumulative expense is not adjusted for failure to achieve a market vesting
condition.
Where the terms and conditions of options are modified before they vest, the
increase in fair value of the options, measured immediately before and after
the modification is also charged to the Statement of Profit or Loss and Other
Comprehensive Income over the remaining vesting period.
In June 2021, the Company made changes to the LTIP. Details can be found in
the Remuneration Report.
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 further options under the modified LTIP, in excess of the
replacement awards, details of which can be found on note 22. These include
graded vesting.
Share options which vest in instalments over a specified vesting period
(graded vesting) where the only vesting condition is service from grant date
to vesting date of each instalment are accounted for as separate share-based
payments. Each instalment's fair value is assessed separately based on its
term and the resulting charge recognised over each instalment's vesting
period.
Other share options
In addition to the LTIP grants, the Company awarded certain employees approved
options. Details of these options can be found in note 22. The accounting
treatment for these options is consistent with that indicated under the LTIP
section at the start of this page.
1.14 Leases
At inception, the Group assesses whether a contract is, or contains, a lease
within the scope of IFRS 16. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. Where a tangible asset is
acquired through a lease, the group recognises a right-of-use asset and a
lease liability at the lease commencement date. Right-of-use assets are
included within property, plant and equipment, apart from those that meet the
definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease payments made at,
or before, the commencement date, plus any initial direct costs and an
estimate of the cost of obligations to dismantle, remove, refurbish or restore
the underlying asset and the site on which it is located, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis as those of
other property, plant and equipment. The right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are unpaid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Lease payments included in
the measurement of the lease liability comprise fixed payments, variable lease
payments that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that the Group
is reasonably certain to exercise, such as the exercise price under a purchase
option, lease payments in an optional renewal period, or penalties for early
termination of a lease.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in: future lease payments
arising from a change in an index or rate; the Group's estimate of the amount
expected to be payable under a residual value guarantee; or the Group's
assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases of machinery that have a lease term of 12
months or less, or for leases of low-value assets including IT equipment. The
payments associated with these leases are recognised in profit or loss on a
straight-line basis over the lease term.
1.15 Grants
Government grants are recognised when there is reasonable assurance that the
grant conditions will be met and the grants will be received.
1.16 Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the
rates of exchange prevailing at the dates of the transactions. At each
reporting end date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the reporting
end date. Gains and losses arising on translation are included in the income
statement for the period.
Whilst the majority of the Company's revenue is in Euros, the Company also
incurs a significant level of expenditure in that currency. As such, the
Company does not currently use any hedging facilities and instead chooses to
keep some of its cash at the bank in Euros.
1.17 Research and development
Expenditure on research activities is recognised as an expense in the period
in which it is incurred.
1.18 Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which the
Company pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
expense in the income statement in the periods during which services are
rendered by employees.
1.19 Financial risk management
The Company's activities expose it to a variety of financial risks: market
risks (including currency risk and interest rate risks), credit risk and
liquidity risk. Risk management focuses on minimising any potential adverse
effect on the Company's financial performance and is carried out under
policies approved by the Board of Directors.
2 Adoption of new and revised standards and changes in accounting policies
(a) New standards, amendments and interpretations
There has been one newly effective amendment to standards during the year.
• Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial
Instruments: Recognition and Measurement', IFRS 7 'Financial Instruments:
Disclosures, IFRS 4 'Insurance Contracts', IFRS 16 'Leases' related to
interest rate benchmark reform (phase two) and the issues that arise from the
implementation of the reforms, including the replacement of one benchmark with
an alternative one.
(b) New standards, amendments and interpretations issued but not effective and
not adopted early
A number of new standards, amendments to standards and interpretations which
are set out below are effective for annual periods beginning after 1 January
2022 and have not been applied in preparing these consolidated financial
statements.
• Amendment to IFRS 3 'Business combinations' to update references
to the Conceptual Framework for Financial Reporting without changing the
accounting requirements for business combinations.
• Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial
Instruments: Recognition and Measurement', IFRS 7 'Financial Instruments:
Disclosures, IFRS 4 'Insurance Contracts', IFRS 16 'Leases' related to
interest rate benchmark reform (phase two) and the issues that arise from the
implementation of the reforms, including the replacement of one benchmark with
an alternative one.
• Amendment to IFRS 16 'Leases' which provides an optional practical
expedient for lessees from assessing whether a rent concession related to
COVID-19 is a lease modification.
• IFRS 17 'Insurance contracts' which establishes the principles for
the recognition, measurement, presentation and disclosure of insurance
contracts and supersedes IFRS 4 'Insurance Contracts'
• Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities which is intended to clarify that liabilities
are classified as either current or non-current depending upon the rights that
exist at the end of the reporting period.
• Amendments to IAS 16 'Property, plant and equipment' to prohibit
the deduction from cost of property, plant and equipment amounts received from
selling items produced while preparing the asset for its intended use with any
such sales and related cost recognised in profit or loss.
• Amendments to IAS 37 'Provisions, contingent liabilities and
contingent assets' to specify which costs a company includes when assessing
whether a contract will be loss making.
• Annual improvements to make minor amendments to IFRS 1 'First-time
adoption of IFRS', IFRS 9 'Financial Instruments', IAS 41 'Agriculture' and
amendments to the illustrative examples accompanying IFRS 16 'Leases'.
The Directors anticipate that at the time of this report none of the new
standards, amendments to standards and interpretations are expected to have a
material effect on the financial statements of the Group or parent Company.
3 Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk
to the carrying amounts of assets and liabilities within the next financial
year are discussed below:
Going concern
The Directors have considered the ability of the Company to continue as a
going concern and this is considered to be a significant judgement made by the
Directors in preparing the financial statements.
The ability of the Company to continue as a going concern is ultimately
dependent upon the amount and timing of cash flows arising from the
exploitation of the Company's intellectual property and the availability of
existing and/or additional funding to meet the short term needs of the
business until the commercialisation of the Company's portfolio is reached.
The Directors consider it is appropriate for the financial statements to be
prepared on a going concern basis based on the estimates they have made.
Associate
A judgement has been made that Eden exerts significant influence on
TerpeneTech (UK) such that it is an associate company and, as such, adoption
of equity accounting is appropriate.
COVID-19
The Company has made accounting judgements and estimates based on there being
minimal impact of COVID-19 on the business in the long term. This is
impacting, in particular, the forecasts used as the basis for intangibles
impairment review, investment impairment review and going concern. Clearly,
this is still a degree of uncertainty as to exactly how and if the business
could be impacted and the Directors will continue to monitor the situation
closely.
Other accounting judgements
In addition to the above, the Company has made other judgements which are
considered of lesser significance.
Capitalised development costs and Intellectual property
The Directors have exercised a judgement that the development costs incurred
meet the criteria in IAS 38 Intangible Assets for capitalisation. In making
this judgement, the Directors considered the following key factors:
• The availability of the necessary financial resources and hence
the ability of the Company to continue as a going concern.
• The assumptions surrounding the perceived market sizes for the
products and the achievable market share for the Company.
• The successful conclusion of commercial arrangements, which serves
as an indicator as to the likely success of the projects and, as such, any
need to potential impairment.
Significant judgement had to be exercised in respect of £nil costs
capitalised in the current year (2020: £59,222) and therefore the Directors
do not consider this to represent a critical judgment. There has been no
research and development expenditure 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 (2020: £nil).
4 Revenue and Segmental Information
IFRS 8 requires operating segments to be reported in a manner consistent with
the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker, who is responsible for the resource allocation
and assessing performance of the operating segments has been identified as the
Executive Directors as they are primarily responsible for the allocation of
the resources to segments and the assessment of performance of the segments.
The Executive Directors monitor and then assess the performance of segments
based on product type and geographical area using a measure of adjusted
EBITDA. This is the result of the segment after excluding the share-based
payment charges, other operating income and the amortisation of intangibles.
These items, together with interest income and expense are allocated to
Agrochemicals, being the Company's primary focus.
The segment information for the year ended 31 December 2021 is as follows:
Agrochemicals Consumer products Animal health Total
Revenue £ £ £ £
Milestone payments 5,250 - - 5,250
R & D charges - 7,760 - 7,760
Royalties 57,170 36,131 - 93,301
Product sales 1,122,269 - - 1,122,269
Total revenue 1,184,689 43,891 - 1,228,580
Adjusted EBITDA (2,021,602) 43,891 - (1,977,711)
Share Based Payments (640,597) - - (640,597)
EBITDA (2,662,199) 43,891 - (2,618,308)
Amortisation (421,358) (13,272) - (434,630)
Depreciation (155,342) - - (155,342)
Finance costs, foreign exchange and investment revenues (129,223) - - (129,223)
Impairment of investment in associate - - - -
Income Tax 618,137 - - 618,137
Share of Associate's loss - (58,177) - (58,177)
(Loss)/Profit for the Year (2,749,985) (27,558) - (2,777,543)
Total Assets 15,004,888 22,197 - 15,027,085
Total assets includes:
Additions to Non-Current Assets 1,802,660 - - 1,802,660
Total Liabilities 2,153,649 43,961 - 2,197,610
Please note the Consumer products segment was previously referred to as Human
health and biocides.
The segment information for the year ended 31 December 2020 is as follows:
Agrochemicals Consumer products Animal health Total
Revenue £ £ £ £
Milestone payments 27,523 - - 27,523
R & D charges 7,660 8,551 - 16,211
Royalties 180,801 27,919 - 208,720
Product sales 1,116,534 - - 1,116,534
Total revenue 1,332,518 36,470 - 1,368,988
Adjusted EBITDA (1,528,934) 36,470 - (1,492,464)
Share Based Payments (120,380) - - (120,380)
EBITDA (1,649,314) 36,470 - (1,612,844)
Amortisation (539,535) (13,274) - (552,809)
Depreciation (70,039) - - (70,039)
Finance costs, foreign exchange and investment revenues 17,433 - - 17,433
Impairment of investment in associate (299,521) - - (299,521)
Income Tax 285,108 - - 285,108
Share of Associate's loss (30,352) - - (30,352)
(Loss)/Profit for the Year (2,286,220) 23,196 - (2,263,024)
Total Assets 16,804,893 119,471 - 16,924,364
Total assets includes:
Additions to Non-Current Assets 2,319,566 - - 2,319,566
Total Liabilities 1,915,322 80,093 - 1,995,415
2021 2020
£ £
Revenue analysed by geographical market
UK 83,891 16,211
Europe 1,144,689 1,352,777
1,228,580 1,368,988
The above analysis represents sales to the Group's direct customers who
further distribute these products to their end markets.
Revenues of approximately £1,036,156 (2020: £1,297,922) are derived from
three customers who each account for greater than 10% of the Group's total
revenues:
2021 2021 2020 2020
Customer £ % £ %
A 900,364 73.3 741,609 54.2
B 134,192 10.9 230,412 16.8
C 1,600 0.1 325,901 23.8
5 Operating loss
2021 2020
£ £
Operating loss for the year is stated after charging/(crediting):
Government grants - (7,601)
Fees payable to the Company's auditor for the audit of the Company's financial 55,000 40,000
statements
Depreciation of right-of-use assets (included within administrative expenses) 98,287 57,346
Impairment of investment in associate - 299,521
Amortisation of intangible assets 434,630 552,809
Share-based payments 640,597 120,380
Government grants related to amounts received in respect of the Coronavirus
Job Retention Scheme.
6 Employees
The average monthly number of persons (including directors) employed by the
group during the year was:
2021 2020
Number Number
Management 4 4
Operational 12 7
16 11
Their aggregate remuneration comprised:
2021 2020
£ £
Wages and salaries 1,422,841 1,104,400
Social security costs 172,142 131,158
Pension costs 53,836 51,056
Benefits in kind 5,826 5,562
Share based payment charge 678,069 94,176
2,332,714 1,386,352
7 Directors' remuneration
2021 2020
£ £
Remuneration for qualifying services 656,194 618,350
Company pension contributions to defined contribution schemes 31,009 28,990
Non-executive Directors' fees 85,000 78,333
Benefits in kind 5,826 5,562
Share based payment charge relating to all Directors 632,836 94,176
1,410,865 825,411
The number of Directors for whom retirement benefits are accruing under
defined contribution schemes amounted to 2 (2020 - 2).
The number of Directors who are entitled to receive shares under long term
incentive schemes during the year is 2 (2020 - 2).
Remuneration disclosed above includes the following amounts paid to the
highest paid Director:
2021 2020
£ £
Remuneration for qualifying services 376,972 366,602
The Executive Directors are considered to also be the key management personnel
of the Company and Group. Details of Directors' share options can be found in
the Remuneration report.
2021 Salary Bonus Fees Pension Share Based Payments Total
£ £ £ £ £ £
A Abrey 190,000 79,800 - 13,297 271,256 554,353
S Smith 253,000 106,260 - 17,712 361,580 738,552
R Cridland - - 40,000 - - 40,000
L van der Broek - - 45,000 - - 45,000
443,000 186,060 85,000 31,009 632,836 1,377,905
2020 Salary Bonus Fees Pension Share Based Payments Total
£ £ £ £ £ £
A Abrey 180,000 88,200 - 12,538 39,872 320,610
S Smith 235,000 115,150 - 16,452 54,304 420,906
R Cridland - - 36,666 - - 36,666
L van der Broek - - 41,667 - - 41,667
415,000 203,350 78,333 28,990 94,176 819,849
8 Investment income
2021 2020
£ £
Interest income
Bank deposits 98 5,725
Total interest income for financial assets that are not held at fair value
through profit or loss is £98 (2020: £5,725).
9 Finance costs and foreign exchange (gains)/losses
2021 2020
£ £
Interest on lease liabilities 32,074 23,550
Interest on bank overdrafts and loans - 450
Finance costs 32,074 24,000
Exchange differences on working capital 75,254 (39,498)
Effect of exchange rate fluctuations on cash 21,993 3,792
Exchange losses and (gains) 97,247 (35,706)
10 Income tax income
2021 2020
£ £
Current tax
UK corporation tax on profits for the current period (572,585) (285,108)
Adjustments in respect of prior periods (45,552) -
Total UK current tax (618,137) (285,108)
The charge for the year can be reconciled to the loss per the income statement
as follows:
2021 2020
£ £
Loss (3,395,680) (2,548,132)
Expected tax credit based on a corporation tax rate of 19% (2019: 19.00%) (645,179) (484,145)
Ineligible fixed asset differences 11,639 32,067
Expenses not deductible for tax purposes 129,845 88,498
Additional deduction for R&D expenditure (424,074) (211,159)
Surrender of tax losses for R&D tax credit refund 177,699 88,481
Adjustment in respect of prior years (45,552) -
Deferred tax not recognised 177,485 201,150
Taxation credit for the year (618,137) (285,108)
The March 2020 Budget announced that a corporation tax rate of 19% would
continue to apply with effect from 1 April 2020, and this change was
substantively enacted on 17 March 2020. The March 2021 Budget announced that a
corporation tax rate of 25% would apply with effect from 1 April 2023. This
was substantively enacted on 24 May 2021. As this change was not substantively
enacted at the balance sheet date, it has not been reflected in the
measurement of deferred tax balances at the period end.
The taxation credit for the year represents the research and development
credit for the year ended 31 December 2021.
The current tax recoverable as at 31 December 2021 represents R&D tax
credits and is made up as follows:
2021 2020
£ £
Current tax
R & D cash tax credit for the current period (572,585) (285,108)
R & D cash tax credit for the prior period (330,660) -
Total UK current tax recoverable (903,245) (285,108)
Deferred Tax
In the year, a deferred tax liability in respect of fixed asset temporary
differences of £1,237,820 has been recognised. This has been offset fully by
partial recognition of deferred tax asset from trading losses brought forward,
resulting in a £nil deferred tax balance in the Statement of Financial
Position.
The losses carried forward, after the above offset, for which no deferred tax
asset has been recognised, amount to approximately £21,214,533 (2020:
£22,379,505).
The unprovided deferred tax asset of £4,030,761 (2020: £4,265,891) arises
principally in respect of trading losses. It has been calculated at 19% (2020:
19%) and has not been recognised due to the uncertainty of timing of future
profits against which it may be realised.
11 Earnings per share
2021 2020
£ £
Weighted average number of ordinary shares for basic and diluted earnings per 380,340,229 344,629,577
share
Earnings (all attributable to equity shareholders of the Company)
Loss for the period (2,777,543) (2,270,347)
Basic earnings per share (0.73p) (0.66p)
Diluted earnings per share (0.73p) (0.66p)
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
There were 11,018,738 (2020: nil) potential ordinary shares at the year end
which were not included in the calculation of the diluted EPS because they
were antidilutive for the period presented.
12 Intangible assets
Group
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2020 447,351 5,059,621 9,181,324 14,688,296
Additions 1,545 1,564,785 134,957 1,701,287
At 31 December 2020 448,896 6,624,406 9,316,281 16,389,583
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,407,686 18,014,510
Amortisation and impairment
At 1 January 2020 437,751 2,179,331 6,490,209 9,107,291
Charge for the year 11,145 315,192 226,472 552,809
At 31 December 2020 448,896 2,494,523 6,716,681 9,660,100
Charge for the year - 214,682 219,948 434,630
At 31 December 2021 448,896 2,709,205 6,936,629 10,094,730
Carrying amount
At 31 December 2021 7,788 5,440,935 2,471,057 7,919,780
At 31 December 2020 - 4,129,883 2,599,600 6,729,483
Company
Licences and trademarks Development costs Intellectual property Total
£ £ £ £
Cost
At 1 January 2020 447,351 5,059,621 9,048,581 14,555,553
Additions 1,545 1,564,785 134,957 1,701,287
At 31 December 2020 448,896 6,624,406 9,183,538 16,256,840
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,274,943 17,881,767
Amortisation and impairment
At 1 January 2020 437,751 2,179,331 6,490,209 9,107,291
Charge for the year 11,145 315,192 213,198 539,535
At 31 December 2020 448,896 2,494,523 6,703,407 9,646,826
Charge for the year - 214,682 206,676 421,358
At 31 December 2021 448,896 2,709,205 6,910,083 10,068,184
Carrying amount
At 31 December 2021 7,788 5,440,935 2,364,860 7,813,583
At 31 December 2020 - 4,129,883 2,480,131 6,610,014
Intellectual property represents intellectual property in relation to use of
encapsulated terpenes in agrochemicals. The remaining useful economic life
of that asset is 9 years.
An annual impairment review is undertaken by the Board of Directors. The
Directors have considered the progress of the business in the current year,
including a review of the potential market for its products, the progress the
Company has made in registering its products and other key commercial factors
to inform the review.
Of £7,919,780 carrying amount of intangible assets, £7,813,583 has been
allocated to the Agrochemicals Cash Generating Unit (CGU). The remaining
intangible assets have been allocated to the Consumer products CGU for which
no impairment indicators have been identified. The Agrochemicals CGU has been
tested for impairment as it is the only CGU with intangible assets not yet
available for use.
The Directors have prepared a discounted cash-flow forecast, based on product
sales forecasts including those provided by the Company's commercial partners,
and have taken into account the market potential for Eden's products and
technologies using third party market data that Eden has acquired licences to.
The forecast covers a period of 9 years, with no terminal value, reflecting
the useful economic life of the patent in respect of the underlying
technology. Financial forecasts for 2022 are based on the approved annual
budget. Financial forecasts for 2023-2028 are based on the approved long-term
plan. Financial forecasts for 2029-2030 are extrapolated based on the
long-term growth rate of 2%.
The estimated recoverable amount of the CGU exceeded its carrying amount by
£8.3m and based on the review carried out management is satisfied that
intangible assets are not impaired.
As set out in the Strategic Report, the business is in a critical phase of its
development as the development of products is transitioned to revenue
generation. The value of the CGU is supported by forecasts of continued
revenue growth of existing products and the successful introduction and growth
of sales of products currently under development.
The key assumptions of the forecast are the future cash flows, driven
primarily by level of sales, and the discount rate. The discount rate is
estimated using pre-tax rates that reflect current market assessments of the
time value of money and the risk specific to the CGU. The rate used was 12.4%
(2020: 10%). The increase in the rate reflects the wider market movements as
based on the comparator group as well as increased forecasting risk given the
underperformance in the current year. This is offset by a slight reduction in
the discount rate in respect of the impact of COVID-19 which has been
incorporated into the forecast cash flows given greater clarity since prior
year.
The impact of increasing the discount rate by 1.6%, which is considered a
reasonably possible change, would be a decrease in the recoverable amount by
£1.9m. The discount rate would have to increase to 28.9% to reduce the
headroom to £nil which is not considered likely.
The average annual growth rate has been assumed at 51% (2020: 48%), reflecting
the latest forecasts based on information provided by customers and own market
analysis. The rate stands at 98% up to 2025, reflecting commercialisation of
new products in the period, reducing to 14% from 2026 onwards.
A reduction in growth from year 6 onwards to the long-term growth rate for the
Insecticides product (the sole product with growth in excess of the long-term
growth rate after year 5), which is considered a reasonably possible change,
would reduce the recoverable amount by £5.3m.
Forecast sales would have to reduce by an average of, approximately, 22% per
annum to reduce headroom to £nil, which is not considered likely.
13 Property, plant and equipment
Consolidated and Company
Fixtures and fittings Total
£ £
Cost
At 1 January 2020 - -
Additions - owned 200,758 200,758
At 31 December 2020 200,758 200,758
Additions - owned 101,269 101,269
At 31 December 2021 302,027 302,027
Accumulated depreciation and impairment
At 1 January 2020 - -
Charge for the year 12,693 12,693
At 31 December 2020 12,693 12,693
Charge for the year 57,056 57,056
At 31 December 2021 69,749 69,749
Carrying amount
At 31 December 2021 232,278 232,278
At 31 December 2020 188,065 188,065
14 Right-of-Use Assets
Consolidated and Company
Land and buildings Motor vehicles Total
£ £ £
Cost
At 1 January 2020 78,668 35,865 114,533
Additions 417,521 - 417,521
Disposals (78,668) - (78,668)
At 31 December 2020 417,521 35,865 453,386
Additions 26,256 50,208 76,464
Disposals - - -
At 31 December 2021 443,777 86,073 529,850
Accumulated depreciation and impairment
At 1 January 2020 39,334 13,449 52,783
Charge for the year 48,380 8,966 57,346
Eliminated on disposal (51,353) - (51,353)
At 31 December 2020 36,361 22,415 58,776
Charge for the year 83,504 14,783 98,287
At 31 December 2021 119,865 37,198 157,063
Carrying amount
At 31 December 2021 323,912 48,875 372,787
At 31 December 2020 381,160 13,450 394,610
15 Investments in associates
Current Non-current
2021 2020 2021 2020
£ £ £ £
Investments in associates - - 361,688 419,865
Details of the Group's associates at 31 December 2021 are as follows:
Name of undertaking Registered office Principal activities Class of shares % held
held
Direct Voting
TerpeneTech (UK) United Kingdom Research and experimental development on biotechnology Ordinary 29.90 29.90
2021 2020
£ £
Non-current assets 440,601 502,954
Current assets 287,576 237,697
Non-current liabilities (98,806) (98,806)
Current liabilities (269,026) (213,670)
Net assets (100%) 360,345 428,175
Company's share of net assets 107,743 151,352
Separable intangible assets 140,817 155,385
Goodwill 412,649 412,649
Impairment of investment in associate (299,521) (299,521)
Carrying value of interest in associate 361,688 419,865
Revenue 361,307 279,185
100% of loss after tax (145,849) (52,790)
29.9% of loss after tax (43,609) (15,784)
Amortisation of separable intangible (14,568) (14,568)
Company's share of loss including amortisation
of separable intangible asset (58,177) (30,352)
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 9-year period, with no
terminal value, in line with the patent of the underlying technology.
The key assumptions of the forecast are the growth rate and the discount rate.
The discount rate is estimated using pre-tax rates that reflect current market
assessments of the time value of money and the risk specific to the asset. The
rate used was 15% (2020: 15%). The use of the same discount rate reflects, in
addition to the wider market movements, a reduction in uncertainty in the
head-lice sales, reflecting conclusion of negotiations with a distributor as
well as in geraniol sales, following another year of double digit growth,
offset by increased forecasting risk as the company failed to fully meet the
forecast performance for another year.
Based on the review the Directors carried out, it was determined that the
Investment was not impaired and, as such, no impairment charge (2020:
£299,521) was recognised.
The impairment in 2020 was primarily due to the impact of COVID-19 which
resulted in a delay in the launch of the head-lice product and which
significantly impacted the head-lice product market and, consequently, the
forecast level of sales. This impact is exacerbated by the limited forecast
period.
An increase in the discount rate of 1.9% would result in an increase in
impairment of £27,890.
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 21% (2020: 32%). The
majority of this growth arises in the first 3 years of the forecast,
reflecting primarily the initial commercialisation of the head-lice product,
resulting in the average growth rate over that period of 46%, reducing to 9%
for the remainder of the forecast period. The average annual growth rate of
existing business stands at 13% (2020: 4%).
An annual reduction of 20% in the forecast head-lice product sales over the
entire forecast period would result in impairment of £7,101.
A reduction to growth rate of the existing business in the first 5 years of
the forecast to the growth observed in the prior year would result in
impairment of £91,563.
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 2021 are as follows:
Name of undertaking Registered office Principal activities Class of % Held
shares held Direct Voting
TerpeneTech Limited Republic of Ireland Sale of biocide products Ordinary 50.00 50.00
TerpeneTech Limited ("TerpeneTech (Ireland)"), whose registered office is 108
Q House, Furze Road, Sandyford, Dublin, Ireland, was incorporated on 15
January 2019 and is jointly owned by both Eden Research plc and TerpeneTech
(UK), the Company's associate.
Eden has the right to appoint a director as chairperson who will have a
casting vote, enabling the Group to exercise control over the Board of
Directors in the absence of an equivalent right for TerpeneTech (UK). Eden
owns 500 ordinary shares in TerpeneTech (Ireland).
Eden Research Europe Limited, whose registered office is 108 Q House, Furze
Road, Sandyford, Dublin, Ireland, was incorporated on 18 November 2020 and is
wholly owned by both Eden Research plc.
Non-controlling interests
The following table summarises the information relating to the Group's
subsidiary with material non-controlling interest, before intra-group
eliminations:
2021 2020
£ £
NCI percentage 50% 50%
Non-current assets 106,199 119,471
Current assets - -
Non-current liabilities - -
Current liabilities (43,962) (80,093)
Net (liabilities)/assets (100%) 62,237 39,378
Carrying amount of NCI
Revenue 36,131 27,919
Profit after tax 22,859 14,647
OCI - -
Total comprehensive income 22,859 14,647
Cash flows from operating activities - -
Cashflows form investing activities - -
Cashflows from financing activities - -
Net increase / (decrease) in cash and cash equivalents - -
Dividends paid to non-controlling interests - -
17 Inventories
Group and Company
2021 2020
£ £
Finished goods 521,351 224,422
18 Trade and other receivables
Group Company
2021 2020 2021 2020
£ £ £ £
Trade receivables 693,948 909,452 693,948 909,452
VAT recoverable 104,760 242,187 104,760 242,187
Other receivables 65,957 57,619 149,957 57,619
Prepayments and accrued income 21,922 187,050 21,922 235,050
886,587 1,396,308 970,587 1,444,308
Trade receivables disclosed above are measured at amortised cost. The
Directors consider that the carrying amount of trade and other receivables
approximates their fair value.
19 Trade and other payables
Group Company
2021 2020 2021 2020
£ £ £ £
Current
Trade payables 1,147,823 794,439 1,147,823 794,439
Accruals and deferred income 440,416 250,017 440,416 250,017
Social security and other taxation 45,495 43,186 45,495 43,186
Other payables 77,784 367,313 33,823 287,220
1,711,518 1,454,955 1,667,557 1,374,862
Non-current
Other payables (note 22, 'Xinova liability') 87,740 125,212 87,740 125,212
87,740 125,212 87,740 125,212
20 Lease liabilities
2021 2020
Maturity analysis £ £
Within one year 128,553 117,204
In two to five years 307,275 385,388
Total undiscounted liabilities 435,828 502,592
Future finance charges and other adjustments (37,476) (87,344)
Lease liabilities in the financial statements 398,352 415,248
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:
2021 2020
£ £
Current liabilities 99,924 84,350
Non-current liabilities 298,428 330,898
398,352 415,248
2021 2020
Amounts recognised in profit or loss include the following: £ £
Interest on lease liabilities 32,074 23,550
21 Retirement benefit schemes
Defined contribution schemes
The Group operates a defined contribution pension scheme for all qualifying
employees. The assets of the scheme are held separately from those of the
group in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is
£53,836 (2020 - £51,056).
22 Share-based payment transactions
Long-Term Incentive Plan ("LTIP")
Since September 2017 Eden has operated an option scheme for executive
directors, senior management and certain employees under an LTIP which allows
for certain qualifying grants to be HMRC approved. Further details can be
found in the Remuneration Report.
2019 Award
On 28 June 2019, 5,891,111 shares were awarded under the LTIP scheme to the
Chief Executive Officer and the Chief Financial Officer ("2019 Award").
The share-based payment charge for the 2019 Award is set out as follows:
Financial year Share based
ended payment charge
31 December £
2017 27,210
2018 85,372
2019 110,743
2020 94,176
2021 51,909
2022 16,959
386,369
The following information is relevant in the determination of the fair value
of options granted under the 2019 Award.
2017 Award 2018 Award
Grant date 28/06/2019 28/06/2019
Number of awards 2,868,889 3,022,222
Share price 0.115 0.115
Exercise price £nil £nil
Expected dividend yield -% -%
Expected volatility 50.82% 50.82%
Risk free rate 0.614% 0.614%
80 80
Vesting period 2 years 3 years
Expected Life (from date of grant) 2 years 3 years
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.
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.
A summary of the number of awards modified in the year ended 31 December 2021
and their fair values is set out in the table below:
Fair Value of Awards at 31 December 2021 Incremental Fair Value £ Incremental Fair Value per Award £
2017 Awards 231,846 0.048
2018 Awards 229,998 0.046
Total 461,844
Share-based payment charge
The total share-based payment charge to be recognised by Eden in respect of
the LTIP Replacement Award in the year ended 31 December 2021 and subsequent
periods are as follows:
2017 Awards 2018 Awards Total
Charge for grants during the period Original Annual Replacement Annual Original Annual Replacement Annual Annual
£ £ £ £ £
31 Dec 21 17,735 231,846 34,174 229,998 513,753
31 Dec 22 - - 16,959 - 16,959
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 70%/59%/67%
Risk free rate 0.02%/0.02%/0.05%
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.
2021 Award
Also in 2021, the Company made a further grant of options in order to ensure
continuity of long term incentive of options over 7,183,784 new Ordinary
Shares in Eden, at a strike price of 10.37p each, in the amounts of 4,102,703
awarded to Sean Smith and 3,081,081 awarded to Alex Abrey.
These grants expire on 31 July 2025 and vest as follows:
1/3 upon grant
1/3 12 months from the date of grant
1/3 24 months from the date of grant
The share-based payment charge for the year ended 31 December 2021 in respect
of the above 2021 LTIP awards was £119,083.
In addition to the options granted under the LTIP, certain employees were
awarded approved options over a total of 996,220 shares. These have been
issued at a strike price of 10-10.37p with expiry date between 30 June 2022
and 30 June 2024. 640,664 of these vested immediately with the remainder
vesting over a 3-year period. The share-based payments charge in respect of
all these options for the year ended 31 December 2021 was £45,233.
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)
2021 2020 2021 2020
Outstanding at 1 January 5,891,111 5,891,111 - -
Granted during the year 18,680,004 - 7 -
Exercised during the year - - - -
Lapsed during the year (5,891,111) - - -
Exercisable at 31 December 18,680,004 5,891,111 7 -
The exercise price of options outstanding at the end of the year ranged
between 1p and 10p (2020: £nil) and their weighted average contractual life
was 2.4 years (2020: 1.4 years.)
The share-based payment charge for the year, in respect of options, was
£678,069 (2020: £nil).
At the year end, of the options granted 13,680,006 were unapproved (2020: nil)
and 4,999,998 were approved (2020: 5,891,111).
Options granted prior to the 2017 LTIP
Prior to the implementation of the LTIP in 2017, Eden had granted options to
its Executive Directors, senior management and certain employees, as follows:
Number of share options Weighted average exercise price (pence)
2021 2020 2021 2020
Outstanding at 1 January 1,050,000 1,050,000 13 13
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year (1,050,000) - 13 -
Exercisable at 31 December - 1,050,000 - 13
For those options and warrants which were not granted under the Company's
LTIP, fair value is measured using the Black-Scholes model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural
conditions.
For those options which were granted under the Company's LTIP, Monte Carlo
techniques were used to simulate future share price movements of the Company
to assess the likelihood of the performance criteria being met and the fair
value of the awards upon vesting. The modelling calculates many scenarios in
order to estimate the overall fair value based on the average value where
awards vest.
Warrants
Number of share options Weighted average exercise price (pence)
2021 2020 2021 2020
Outstanding at 1 January 2,989,865 2,989,865 19 19
Granted during the year - - - -
Exercised during the year - - - -
Lapsed during the year - - - -
Exercisable at 31 December 2,989,865 2,989,865 19 19
The exercise price of warrants outstanding at the end of the year ranged
between 12p and 30p (2020: 12p and 30p) and their weighted average contractual
life was 0.4 years (2020: 1.4 years.) None of the warrants have vesting
conditions.
The share-based payment charge for the year, in respect of warrants, was £nil
(2020: £nil). The weighted average fair value of each warrant granted
during the year was £nil (2020
Xinova liability
In September 2015, the Company entered into a Collaboration and Licence
agreement with Invention Development Management Company LLC (part of
Intellectual Ventures, now called Xinova LLC). As part of this agreement,
upon successful completion of a number of different tasks, Xinova will be
entitled to a payment which is calculated using a percentage (initially 3.17%,
reduced to 1.6% following the fundraise in March 2020) of the fully diluted
equity value, reduced by cash and cash equivalents, of the Company on the date
on which payment becomes due which is expected to be 30 September 2025. This
has been accounted for as a cash-settled share-based payment under IFRS 2.
An amount of £67,462, being the estimated fair value of the liability due to
Xinova, was recognised during 2016 and included as a non-current liability, as
disclosed in note 19 to the accounts. It is not believed that the value of
the services provided by Xinova can be reliably measured, and so this amount
was calculated based on the Company's market capitalisation at 31 December
2016, adjusted to reflect the percentage of work completed by Xinova at that
date based on a pre-determined schedule of tasks.
A reduction of £37,472 was made in the year (2020: charge of £26,204),
reflecting a reduction in the share price at the year end, compared to the
previous year.
At the year end, an amount of £87,704 (2020: £125,212) was owed to Xinova
and is shown in note 19 as non-current other liabilities.
Please see note 34, Post Balance Sheet Events, for further information
23 Share capital
2021 2020 2021 2020
Ordinary share capital Number Number £ £
Issued and fully paid
Ordinary shares of 1p each 380,340,229 380,240,229 3,803,402 3,803,402
On 18 March 2020, the Company issued 86,182,500 ordinary shares at 6p each for
a total consideration of £5,170,950 before directly attributable costs.
On 19 March 2020, the Company issued 86,968,392 ordinary shares at 6p each for
a total consideration of £5,218,104 before directly attributable costs.
Share issue costs of £nil (2020: £638,931) were incurred and have been
charged to the share premium account.
24 Share premium account
2021 2020
£ £
At the beginning of the year 39,308,529 31,289,915
Issue of new shares - 8,018,614
At the end of the year 39,308,529 39,308,529
25 Warrant reserve
£
Balance at 1 January 2021 429,915
Share-based payment expense in respect of options granted 678,069
Share-based payment expense in respect of options lapsed (170,479)
Balance at 31 December 2021 937,505
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
2021 2020
£ £
At the beginning and end of the year 10,209,673 10,209,673
The merger reserve arose on historical acquisitions of subsidiary undertakings
for which merger relief was permitted under the Companies Act 2006.
27 Non-controlling interest
2021 2020
£ £
Non-controlling interest 31,119 19,689
The non-controlling interest arose from Eden Research plc's 50% share in
TerpeneTech (Ireland) Limited.
28 Other interest-bearing loans and borrowings - Group and Company
Changes in liabilities, arising from financing activities are presented below:
2021 2020
£ £
Balance as at 1 January 415,248 69,499
Changes from financing cashflows
Payment of lease liabilities (90,388) (44,457)
Total changes from financing cashflows (90,388) (44,457)
Other changes
New leases 50,209 417,521
Inter
Adjustment to Right of Use Assets 23,283 -
Inter
Surrender of lease - (27,315)
Total other changes 73,492 390,206
Balance as at 31 December 398,352 415,248
29 Other leasing information
Amounts recognised in profit or loss as an expense during the period in
respect of lease arrangements are as follows:
2021 2020
£ £
Expense relating to leases of low-value assets 740 334
Set out below are the future cash outflows to which the lessee is exposed to
that are reflected in the measurement of lease liabilities:
2021 2020
Land and buildings £ £
Within one year 92,143 74,783
Between two and five years 256,935 325,794
349,078 400,577
2021 2020
Leases apart from land and buildings £ £
Within one year 18,361 9,567
Between two and five years 30,914 5,104
49,275 14,671
The Group holds five leases, for two properties and three vehicles. All leases
have fixed lease repayments and remaining terms of 3.5 years for the
properties and 2.2 years for the vehicles.
The incremental borrowing rate applied to lease liabilities recognised in the
statement of financial position at the date of initial application of IFRS 16
was 4.75%.
Information relating to lease liabilities is included in note 20.
30 Capital risk management
The Group is not subject to any externally imposed capital requirements.
31 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including directors, is set out
below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures.
Group
During the year, Eden invoiced its associate, TerpeneTech (UK), £7,760 for
R&D charges (2020: £8,551) and accrued income of £40,000 (2020: £nil)
for minimum royalties due under the headlice agreement.
Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf
of TerpeneTech (UK).
At the year end, a net amount of £165,644 was due from TerpeneTech (UK)
(2020: £128,983) to Eden. This amount is included within Trade and Other
Receivables.
At the year end, a net amount of £43,962 (2020: £80,093) was due from
TerpeneTech (Ireland) to TerpeneTech (UK). It represents the amount due in
respect of the intangible asset above, reduced by fees receivable in respect
of sales. This amount is included within Trade and Other Payables.
Company
During the year, Eden invoiced its associate, TerpeneTech (UK), £7,760 for
R&D charges (2020: £8,551) and accrued income of £40,000 (2020: £nil)
for minimum royalties due under the headlice agreement.
Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf
of TerpeneTech (UK).
Further, at year end, £36,000 has been accrued in respect of management
recharges from Eden to TerpeneTech (Ireland) (2020: £48,000). An amount of
£84,000 (2020: £48,000) is included within the Company Trade and Other
Receivables.
At the year end, a net amount of £165,644 was due from TerpeneTech (UK)
(2020: £128,983). This amount is included within Trade and Other Receivables.
32 Financial risk management
Credit risk
2021 2020
£ £
Cash and cash equivalents 3,829,369 7,286,503
Trade receivables 886,587 1,396,308
4,715,956 8,682,811
The average credit period for sales of goods and services is 206 days (2020:
242). No interest is charged on overdue trade receivables. At 31 December
2021, trade receivables of £272,912 (2020: £200,840) were past due. During
the year the Company wrote off bad debts in the amount of £nil (2020: £nil).
Trade receivables of £563,273 (2020: £791,581) at the reporting date were
held in Euros and £104,866 (2020: £104,265) were held in USD.
The Company's policy is to recognise loss allowances for expected credit
losses (ECLs) on financial assets measured at amortised cost. The Group
measures loss allowances for trade receivables at an amount equal to lifetime
ECL. When determining whether the credit risk of a financial asset has
increased significantly since initial recognition and when estimating ECL, the
Group considered reasonable and supportable information that is relevant and
available without undue cost of effect. This includes both quantitative and
qualitative information and analysis, based on the Group's historical
experience and information credit assessment and including forward-looking
information.
The largest trade debtor at the year end is a well-established, profitable
business and long-term customer of the Company with whom Eden has had no issue
of collecting debts due before and does not expect to have any going forward.
In addition, TerpeneTech (UK), Eden's associate company, owed gross £170,279
(2020: £174,952) to Eden at the year-end.
TerpeneTech (UK), is a cash-positive business, albeit in its infancy, with
good shareholder support and, again, Eden has had no issue of collecting
debtors due from TerpeneTech (UK) before and does not expect to have any going
forward.
Considering these factors, the Directors consider the ECL to be immaterial.
Credit risk
2021 2020
£ £
Trade payables 1,147,823 794,439
Other payables 77,784 367,313
Other taxes and social security 45,495 43,186
Accruals and deferred income 440,416 250,017
1,711,518 1,454,955
The carrying amount of trade payables approximates their fair value.
The average credit period on purchases of goods is 123 days. No interest is
charged on trade payables. The Company has policies in place to ensure that
trade payables are paid within the credit timeframe or as otherwise agreed.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the group's financial liabilities at 31 December 2021
was as follows:
2021 2020
£ £
In one year or less, or on demand 1,711,518 1,454,955
Over one year 87,740 125,212
1,799,258 1,580,167
Liquidity risk is managed by regular monitoring of the Company's level of cash
and cash equivalents, debtor and creditor management and expected future cash
flows. See note 1 for further details on the going concern position of the
Company. For details of lease liabilities, see notes 20 and 29.
Market price risk
The company's exposure to market price risk comprises currency risk
exposure. It monitors this exposure primarily through a process known as
sensitivity analysis. This involves estimating the effect on results before
tax over various periods of a range of possible changes in exchange rates.
The sensitivity analysis model used for this purpose makes no assumptions
about any interrelationships between such rates or about the way in which such
changes may affect the economies involved. As a consequence, figures derived
from the Company's sensitivity analysis model should be used in conjunction
with other information about the Company's risk profile.
The Company's policy towards currency risk is to eliminate all exposures that
will impact on reported results as soon as they arise. This is reflected in
the sensitivity analysis, which estimates that five and ten percentage point
increases in the value of sterling against all other currencies would have had
minimal impact on results before tax.
Capital risk management
The primary objective of the Company's capital management is to ensure that it
maintains healthy capital ratios in order to support its business and maximise
shareholder value.
The Company seeks to enhance shareholder value by capturing business
opportunities as they develop. To achieve this goal, the Company maintains
sufficient capital to support its business.
The Company manages its capital structure and makes adjustments to it in light
of changes in economic conditions.
The Company looks to maintain a reasonable debt position by repaying debt or
issuing equity, as and when it is deemed to be required.
No changes were made in the objectives, policies or processes for managing
capital during the years ended 31 December 2021 and 31 December 2020.
The Company monitors capital using a gearing ratio, which is net debt divided
by total capital plus net debt. The Company's policy is to keep the gearing
ratio below 10% (2020: below 10%). The Company includes within net debt, any
interest bearing loans and borrowings (none in current or prior year), any
loans from a venture partner (none in the current or prior year), trade and
other payables, less cash and cash equivalents.
33 Cash absorbed by operations
Consolidated
2021 2020
£ £
Loss for the year after tax (2,777,543) (2,263,024)
Adjustments for:
Taxation charged/(credited) (618,137) (285,108)
Finance costs 122,311 24,000
Investment income (98) (5,725)
Foreign exchange currency losses 21,993 3,792
Amortisation and impairment of intangible assets 434,630 552,809
Impairment of investment in associate - 299,521
Depreciation and impairment of property, plant and equipment and right-of-use 155,341 70,039
assets
Share of associate's loss 58,177 30,352
Share-based payment expense 640,597 120,380
Movements in working capital:
Increase in inventories (296,929) (155,998) (155,999)
Decrease/(increase) in trade and other receivables 509,721 236,784
(Decrease)/increase in trade and other payables 163,355 106,367
Cash absorbed by operations (1,586,582) (1,265,812)
Company
2021 2020
£ £
Loss for the year after tax (2,764,402) (2,229,669)
Adjustments for:
Taxation charged/(credited) (618,137) (285,108)
Finance costs 122,311 24,000
Investment income (98) (5,725)
Foreign exchange currency losses 21,993 3,792
Amortisation and impairment of intangible assets 421,358 539,535
Impairment of investment in associate - 299,521
Depreciation and impairment of property, plant and equipment and right-of-use 155,341 70,039
assets
Share of associate's loss 58,177 30,352
Share-based payment expense 640,597 120,380
Movements in working capital:
Increase in inventories (296,929) (155,998) (155,999)
Decrease/(increase) in trade and other receivables 473,721 188,784
(Decrease)/increase in trade and other payables 199,486 134,286
Cash absorbed by operations (1,586,582) (1,265,812)
34 Post balance sheet events
Xinova
After the year end, Eden was informed that Xinova had begun to wind down its
operations.
As a consequence, Eden began communications with an agent acting on behalf of
Xinova to effect the wind down in respect of the liability owed to Xinova by
Eden.
On 22 April 2022, Eden signed a 'full and final' settlement agreement with
Xinova which resulted in Eden paying an amount of £43,870, which represented
a 50% discount to the liability of £87,740 as at 31 December 2021, in line
with the then existing contract.
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