sitkow.yeungSYSTEM30 May 2008
Eden Research Plc ("Eden" or "the Company")
Preliminary Results for the year ended 31 December 2007
Highlights
* Eden's lead fungicide for control of botrytis (3AEY) is near completion of the key European
regulatory process required to facilitate sale of product
* Licence agreement signed with Cheminova for 3AEY's terpene based botrytis treatment for Europe
and US - later extended to additional territories of Australia, New Zealand and South Africa
* Strengthened relationships with existing commercial partners and currently identifying and
developing new relationships with commercial partners, particularly in Asia
* Revenue in 2007 was �0.4 million, up from �0.1 million in 2006. Operating loss for the year
was �2.5 million compared to �3.5 million (restated) for the previous year. Loss before tax was �2.5
million (restated), down from �3.7 million in 2006
* Board significantly strengthened through the appointments of Clive Newitt and Alex Abrey to
the Executive Board, and Sir Ben Gill and Stephen O'Brien, MP appointed as non-executive Directors
Tim Griffiths, Chief Executive said:
"We are pleased with the progress made over this past year which is taking us closer towards
commercialisation. To have taken our patented crop protection technologies from early concept to the
worldwide market this year is a major achievement".
"Eden's first crop protection product will shortly be available to the world's farmers and growers to
help meet the growing demand for high quality low risk food. With a strengthened team, at both Board
and operational level, we are confident that the safe and broad nature of our product portfolio will
enable us to focus on delivering commercialisation of our products for our shareholders."
Ends
Tim Griffiths, Chief Executive, Eden Research plc
T: 01993 868844
Matthew Robinson, FinnCap
T : 020 7600 1658
Jonathon Brill/Caroline Stewart, Financial Dynamics
T: 020 7831 3113
Chairman's Review
Overview
The Company made good progress on delivering its core strategy of commercialising its technology during 2007.
During the period, we focussed on achieving the following:
* completing the key European regulatory process required to facilitate sale of our lead fungicide
(3AEY) for control of botrytis;
* further developing our products for the control of nematodes;
* developing co-encapsulation technology to utilise the properties of terpenes to complement
conventional crop protection products;
* identifying further plant fungal disease applications for our terpene products;
* continuing work to exploit the potential of our products for control of plant bacterial diseases;
* strengthening our relationships with our existing commercial partners to ensure the opportunities for
our products in the major agri-chemical markets are fully exploited; and
* identifying and developing new relationships with commercial partners, particularly in Asia.
Business Review
Progression of 3AEY to Market
In the period we concentrated on achieving regulatory approval for our lead product 3AEY. We are therefore
pleased to report that the safety testing and dossier preparation programme agreed with the UK regulatory
authorities has been completed. With the safe nature of the ingredients in 3AEY confirmed in this testing
programme, we are confident that approval for use of the formulation in the 27 countries of the EU will follow
rapidly. This will allow our commercial partners in the region, Redestos and Cheminova, to begin test
marketing, which we expect will lead to the inflow of royalties.
The collection of regulatory data for the European regulatory approved process has two further advantages:
1. It will assist our commercial partner Cheminova to acquire approval for use of 3AEY in the US and
other important wine botryticide markets such as Australia, New Zealand, Chile and South Africa, assuming they
exercise their option agreements; and
2. By achieving separate regulatory approval for the general use of each of 3AEY's active ingredients,
Eden will be able to both accelerate and economise on regulatory requirements for any new products containing
the same active substances.
Our partners have also been actively increasing the fund of efficacy data, with further comprehensive testing
programmes undertaken on grapes in France, Germany and Italy during 2007. These will be repeated and expanded
in 2008, with the inclusion of regulatory efficacy testing on new crops such as strawberries, oil seed rape,
and soybean.
This work, coupled with Eden's own efficacy testing on grapes, has revealed that 3AEY performs as well as all
of its main rivals worldwide at controlling grape botrytis, especially under high disease pressure conditions.
Significantly, comparative grape quality seems to be significantly enhanced by our product, with premium
quality fruit numbers being increased at grading, and the proportion of poor quality grades being reduced.
Nematocide
After successful screening work conducted in the USA, South Africa, Belgium and Greece during 2005-2006, Eden
concentrated in 2007 on testing the most promising terpene based products in cropped situations for the first
time.
The work examined efficacy against a number of nematode types attacking crops including papaya, tomato,
lettuce, grapes, stone fruit and carrots. All of these crops suffer direct economic damage from nematodes
and/or are affected by diseases spread by a variety of nematode species. Results from these trials have
confirmed that several of the encapsulated terpene combinations tested showed good levels of efficacy in
reducing nematode counts and enhancing yields. Efficacy achieved was comparable to or better than commercial
standard products, including Nemacur � (fenamiphos) and Vydate � (oxamyl).
Conventional nematode products are formulated from highly toxic insecticides, and there is now intense pressure
from regulators, on environmental grounds, to move away from their use in soils. Therefore, significant
commercial opportunities exist for the use of low risk products in this market. Eden therefore plans to place
emphasis on finalising the best terpene combinations, rates and formulations in 2008, so that commercial
treatment regimes can be established in this valuable market sector.
Considerable interest has been shown in the results from the programme to date by a number of suitable
potential commercial partners.
Additional Fungicide products
In early 2007 the Company set up a series of trials with research institutions in the UK to broaden its
pipeline of new fungicidal and bactericidal products. These organisations include Rothamsted Research, The
Sports Turf Research Institute, ADAS, and SAC. The projects include:
* Investigating the use of new encapsulated terpene combinations for the routine control of the complex
of fungal diseases that affect wheat and oil seed rape, North West Europe's two most important crops;
* Developing products that co-encapsulate terpenes with the commonly used triazole fungicides, a process
that could dramatically extend the commercial life of established active substances affected by the build-up of
resistance from the diseases they control; and
* Investigating the potential use of 3AEY for the control of diseases in the lucrative sports turf
market;
Results from the Wheat and Oil Seed Rape field trials will not be available until the third quarter of 2008,
however triazole co-encapsulation technology and sports turf disease control have been proven in vitro, and
this has led to testing under more commercial conditions on relevant crops.
Other developments
In addition to our main emphasis on fungicides and nematode control products we have continued to identify the
bactericidal and acaricidal potential of encapsulated terpenes by:
* Confirming the potential use of Eden's products for control of plant bacterial diseases;
* Development of the spider mite control potential of terpenes; and
* Examining the potential to exploit the bactericidal properties of Eden's encapsulated terpene products
for the prevention of bovine mastitis.
Testing of products for control of mites planned for Kenya has been delayed after disruption related to the
civil unrest in the country. Agreements to progress this work by moving the trials to the United States are
now in place.
Commercial progress
During the period our commercial partner Cheminova, under the terms of their agreement, have been progressing
efficacy trials that will maximise the potential for usage of 3AEY in their territories. Elsewhere, our SE
Asian partners Zagro have continued to make progress, however this has been slowed by regulatory restrictions.
In the period the Company developed co-operations, under Material Testing Agreements, with two major crop
protection companies in the important Japanese market. In addition, discussions with a major domestic player in
India have commenced. We expect to report positive commercial partnerships in these significant markets in the
next year.
This expanded interest in our technology from distributors, growers and regulators confirms the growing value
of Eden's IP.
Management Changes
Our Board and technical and commercial management team were strengthened during the period by a number of
personnel changes:
* John Edmonds previously Global and European product development manager for a range of fungicides with
Dow, Rohm & Haas and Cyanamid joined as our new R & D projects manager. John has over 15 years experience in
the development of herbicide, fungicide and insecticide products used in Cereals, Oilseed Rape and various
Horticultural crops. John takes over as Projects Manager from Steve Vaux, who continues with us in a part time
role.
* Having been the marketing director of our subsidiary Eden Research Europe Ltd, Clive Newitt joined
the board of Eden Research plc as our Business Development Director in mid 2007; Clive has a wealth of
experience in the global 'agri chem' business and has proved invaluable in the exploitation of our technologies
in the 'agri chem' field.
* Alex Abrey joined the board of Eden Research plc in the role of Finance Director after several years
as our Chief Accountant and we feel that his in depth knowledge of the business compliments his financial and
accounting skills.
* Following the sudden and untimely death of Craig Herron, we have appointed two new Non-Executive
Directors - Sir Ben Gill and Hon Stephen O'Brien MP. Sir Ben is well known in the agricultural field with great
experience in the European arena whilst Stephen brings a wealth of business acumen together with his knowledge
of the political world and a wealth of overseas connections. Both Sir Ben and Stephen have already
demonstrated their worth and we are very glad they agreed to join us.
Outlook
Eden's management team can be proud of the progress made in the last few years. To take our patented crop
protection technologies from early concept to the worldwide market this year is a major achievement.
We expect Eden's first crop protection product will shortly be available to the world's farmers and growers to
help meet the growing demand for high quality low risk food. The safe and broad nature of our product
portfolio makes us confident in Eden's future.
Ken Brooks
Chairman
Financial Review
Results
Revenue in 2007 was �0.4 million, up from �0.1 million in 2006. Operating loss for the year was �2.5 million
compared to �3.5 million (restated) for the previous year. Loss before tax was �2.5 million (restated), down
from �3.7 million in 2006.
IFRS
The Company has adopted International Financial Reporting Standards (IFRS) as adopted in the EU for the first
time this year. The Board decided that it would be prudent to go through this transition now, in preparation
for any potential move to a new or secondary trading market.
Dividends and loss per share
No dividend payment is proposed. It is the intention of the Board to pay dividends as soon as the Company is in
a position to do so. The Board is reviewing the present Balance Sheet Reserve position with a view to
facilitating a dividend payment policy in due course.
The loss per share was 5.13 pence compared to 8.04 pence (restated) in 2006.
Trading
Revenue in 2007 consisted of an upfront payment received from Cheminova AS, as part of the consideration of the
license agreement signed in May 2007. Further payments of �1.7 million are to be paid in due course, under the
same licensing agreement, in line with specific milestones.
Administrative expenses were �1.0 million, similar to 2006 (restated). This reflects the Company's adoption of
IFRS 1 and IAS 38 which has resulted in the capitalisation of �0.6 million of development expenditure in the
year (2006 : �0.4m), but, also shows the consistent policy of keeping a low head count in order to maintain a
low level of overheads.
The Board has decided that it is an appropriate time, following the commercialisation of its lead product,
3AEY, to review and amend the Company's policy of amortising its Intellectual Property. Accordingly,
amortisation is now to be written off over seventeen years (An increase from the ten years adopted in 2004), in
line with the remaining life of the Company's master patent; the effect of this being to reduce the annual
amortisation charge from �1.1 million to �0.5 million.
Financing
During the year, the Company received �2.3 million from the issue of equity shares from the exercise of options
and warrants.
Also during the year, the Company received loans from shareholders of �0.5 million and repaid �1.3 million of
the convertible debt. In addition, �0.9 million of debt was converted into equity. The shareholders of the
convertible loans have confirmed their on-going commitment and support to the Company for the foreseeable
future.
With this on-going support and the receipt of milestone payments and royalty revenues in the near future, the
Company has sufficient funds to reach commercialisation and be cash generative.
Alex Abrey
Finance Director
2007 2006
� �
Unaudited Unaudited
(restated)
CONTINUING OPERATIONS
Revenue 360,788 102,559
Cost of sales ( 5,706) -
__________ __________
GROSS PROFIT 355,082 102,559
Administrative expenses
- normal (1,033,910) (1,006,616)
- amortisation of intangible assets ( 455,543) ( 1,111,804)
- share based payments (1,361,248) (1,504,843)
__________ __________
TOTAL OPERATING COSTS (2,850,701) (3,623,263)
__________ __________
OPERATING LOSS (2,495,619) (3,520,704)
Finance costs ( 129,814) ( 163,067)
Finance income 3,919 1,795
__________ __________
LOSS BEFORE TAX (2,621,514) (3,681,976)
Tax 157,645 -
__________ __________
LOSS FOR THE YEAR �(2,463,869) �(3,681,976)
__________ __________
LOSS PER SHARE (PENCE)
- normal and diluted (5.13)p (8.04)p
__________ __________
2007 2006
� �
Unaudited Unaudited
(restated)
ASSETS
NON-CURRENT ASSETS
Intangible assets 8,149,403 8,013,805
Property, plant and equipment 3,556 8,464
__________ __________
8,152,959 8,022,269
__________ __________
CURRENT ASSETS
Trade and other receivables 106,569 156,443
Cash and cash equivalents 663,022 4,778
__________ __________
769,591 161,221
__________ __________
TOTAL ASSETS 8,922,550 8,183,490
LIABILITIES
CURRENT LIABILITIES
Trade and other payables ( 933,191) ( 569,480)
Financial liabilities - borrowings
- Interest bearing loans and borrowings (1,829,081) (2,655,314)
__________ __________
(2,762,272) (3,224,794)
__________ __________
2007 2006
� �
Unaudited Unaudited
(restated)
EQUITY
Called up share capital 529,158 465,210
Share premium account 12,387,217 10,146,962
Merger reserve 10,209,673 10,209,673
Warrant reserve 2,441,708 1,504,843
Retained earnings (19,407,478) (17,367,992)
__________ __________
TOTAL EQUITY � 6,160,278 � 4,958,696
__________ __________
TOTAL EQUITY AND LIABILITIES 8,922,550 8,183,490
__________ __________
1.1
2007 2006
Note � �
Unaudited Unaudited
(restated)
Cash flows from operating activities
Cash generated from operations 1 ( 260,335) ( 853,820)
Interest paid ( 129,814) ( 172)
Tax credit received 157,645 -
__________ __________
Net cash from operating activities ( 232,504) ( 853,992)
__________ __________
Cash flows from investing activities
Purchase of intangible fixed assets - -
Purchase of property, plant & equipment - ( 4,311)
Capitalisation of development expenditure ( 591,141) ( 410,356)
Interest received 3,919 1,795
__________ __________
Net cash from investing activities ( 587,222) ( 412,872)
__________ __________
Cash flows from financing activities
Shareholders loan - repayment (1,327,406) -
Shareholders loan - drawdown 501,173 730,269
Issue of equity shares 2,304,203 549,999
__________ __________
Net cash from financing activities 1,477,970 1,280,268
__________ __________
Increase in cash and cash equivalents 658,244 13,404
Cash and cash equivalents at
beginning of year 2 4,778 ( 8,626)
__________ __________
Cash and cash equivalents at
end of year 2 � 663,022 � 4,778
__________ __________
1. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2007 2006
� �
Unaudited Unaudited
(restated)
Loss before tax (2,621,514) (3,681,976)
Finance costs 129,814 163,067
Finance income (3,919) (1,795)
Depreciation charges 4,908 4,276
Decrease/(increase) in trade and other receivables 49,874 ( 88,499)
Increase in trade and other payables 363,711 134,460
Equity share based payment charge 1,361,248 1,504,843
Amortisation of trademarks and intellectual property 455,543 1,111,804
__________ __________
Net cash outflow from operating activities �( 260,335) �( 853,820)
__________ __________
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the cash flow statement in respect of cash and cash equivalents are in
respect of these balance sheet amounts:
Year ended 31 December 2007
31 December 1 January
2007 2007
� �
Unaudited Unaudited
(restated)
Cash and cash equivalents 663,022 4,778
Bank overdrafts - -
___________ ___________
� 663,022 � 4,778
___________ ___________
Effect of
UK transition
GAAP to IFRSs IFRSs
� � �
Audited Unaudited Unaudited
ASSETS
NON-CURRENT ASSETS
Goodwill - - -
Intangible assets (note i) 8,527,349 187,904 8,715,253
Property, plant and equipment 8,429 - 8,429
Deferred tax - - -
___________ ___________ ___________
8,535,778 187,904 8,723,682
___________ ___________ ___________
CURRENT ASSETS
Trade and other receivables 67,944 - 67,944
Cash and cash equivalents 3,073 - 3,073
___________ ___________ ___________
71,017 - 71,017
___________ ___________ ___________
LIABILITIES
CURRENT LIABILITIES
Trade and other payables ( 435,020) - ( 435,020)
Financial liabilities - borrowings
Bank overdrafts ( 11,699) - ( 11,699)
Interest bearing loans and borrowings (1,762,150) - (1,762,150)
Tax payable - - -
___________ ___________ ___________
(2,208,869) - (2,208,869)
___________ ___________ ___________
NET CURRENT LIABILITIES (2,137,852) - (2,137,852)
___________ ___________ ___________
NON-CURRENT LIABILITIES
Trade and other payables - - -
Financial liabilities - borrowings - - -
Interest bearing loans and borrowings - - -
___________ ___________ ___________
- - -
___________ ___________ ___________
NET ASSETS �6,397,926 � 187,904 �6,585,830
___________ ___________ ___________
Effect of
UK transition
GAAP to IFRSs IFRSs
� � �
Audited Unaudited Unaudited
SHAREHOLDERS' EQUITY
Called up share capital 447,073 - 447,073
Share premium account 9,615,100 - 9,615,100
Merger reserve 10,209,673 - 10,209,673
Warrant reserve - - -
Profit and loss account (note i) (13,873,920) 187,904 (13,686,016)
___________ ___________ ___________
TOTAL EQUITY AND SHAREHOLDERS FUNDS �6,397,926 � 187,904 �6,585,830
___________ ___________ ___________
Effect of transition to IFRS
�
Note i Capitalisation of development costs
in accordance with IAS 38 �187,904
________
Effect of
UK transition
GAAP to IFRSs IFRSs
� � �
Audited Unaudited Unaudited
ASSETS
NON-CURRENT ASSETS
Goodwill -
Intangible assets (note ii) 7,415,545 598,260 8,013,805
Property, plant and equipment 8,464 - 8,464
Deferred tax - - -
___________ ___________ ___________
7,424,009 598,260 8,022,269
___________ ___________ ___________
CURRENT ASSETS
Trade and other receivables 156,443 - 156,443
Cash and cash equivalents 4,778 - 4,778
___________ ___________ ___________
161,221 - 161,221
___________ ___________ ___________
LIABILITIES - CURRENT LIABILITIES
Trade and other payables ( 569,480) - ( 569,480)
Financial liabilities - borrowings
Bank overdrafts - - -
Interest bearing loans and borrowings (2,655,314) - (2,655,314)
Tax payable - - -
___________ ___________ ___________
(3,224,794) - (3,224,794)
___________ ___________ ___________
NET CURRENT LIABILITIES (3,063,573) - (3,063,573)
___________ ___________ ___________
NON-CURRENT LIABILITIES
Trade and other payables - - -
Financial liabilities - borrowings
Interest bearing loans and borrowings - - -
Deferred tax - - -
___________ ___________ ___________
- - -
___________ ___________ ___________
NET ASSETS �4,360,436 � 598,260 �4,958,696
___________ ___________ ___________
Effect of
UK transition
GAAP to IFRSs IFRSs
� � �
Audited Unaudited Unaudited
SHAREHOLDERS' EQUITY
Called up share capital 465,210 - 465,210
Share premium account 10,146,962 - 10,146,962
Merger reserve 10,209,673 - 10,209,673
Warrant reserve 1,504,843 - 1,504,843
Profit and loss account (note ii) (17,966,252) 598,260 (17,367,992)
___________ ___________ ___________
TOTAL EQUITY AND SHAREHOLDERS FUNDS �4,360,436 �598,260 �4,958,696
___________ ___________ ___________
Effect of transition to IFRS
�
Note ii Capitalisation of development costs
in accordance with IAS 38
- at transition 187,904
- costs incurred in 2006 410,356
________
598,260
________
Effect of
UK transition
GAAP to IFRSs IFRSs
� � �
Audited Unaudited Unaudited
Revenue 102,559 - 102,559
Cost of sales - - -
___________ ___________ ___________
GROSS PROFIT 102,559 - 102,559
Other operating income - - -
Administrative expenses
- normal (1,416,972) 410,356 (1,006,616)
- amortisation of intangible assets (1,111,804) - ( 1,111,804)
- share based payments (1,504,843) - (1,504,843)
Finance costs ( 163,067) - ( 163,067)
Finance income 1,795 - 1,795
___________ ___________ ___________
LOSS BEFORE TAX (4,092,332) 410,356 (3,681,976)
Tax - - -
___________ ___________ ___________
LOSS FOR THE YEAR �(4,092,332) �410,356 �(3,681,976)
___________ ___________ ___________
1
1 BASIS OF PREPARATION
1. The figures for the year ended 31 December 2007 and 2006 do not constitute statutory accounts
within the meaning of S.240 of the Companies Act 1985. The figures for the year ended 31 December 2007
have been extracted from the statutory accounts for that year which have yet to be delivered to the
Registrar of Companies and on which the auditor has yet to issue an opinion. The figures for the year
ended 31 December 2006 have been extracted from the statutory accounts for that year which have been
delivered to the Registrar of Companies and on which the auditor has issued an unqualified audit
report, modified to include an emphasis of matter with regard to going concern, having been restated
under International Financial Reporting Standards. The auditor has indicated that a similar modified
audit report will be included in the 31 December 2007 audited accounts. No statement has been made by
the auditor under Section 237(2) or (3) of the Companies Act 1985 in respect of either of these sets
of accounts. This announcement was approved by the board of directors on 30 May 2008.
2. The consolidated financial statements have, for the first time, been prepared in accordance
with International Financial Reporting Standards adopted by the International Accounting Standards
Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations
Committee of the IASB (together 'IFRS') as endorsed by the European Union. The information in this
preliminary statement has been extracted from the unaudited financial statements for the year ended 31
December 2007 and as such, does not contain all the information required to be disclosed in the
financial statements prepared in accordance with the International Financial Reporting Standards
('IFRS').
The Group has applied consistent accounting policies in preparing the preliminary financial statements
for the year ended 31 December 2007, the comparative information for the year ended 31 December 2006,
and the preparation of the opening IFRS balance sheet at 1 January 2006, the date of transition.
The preliminary financial information in this report has neither been audited nor reviewed by the
Company's auditors.
2 COMPARATIVE YEAR
The corresponding amounts in the prior year ended 31 December 2006 have been reviewed for the
effects of changes to accounting policies on transition to IFRS.
As a result of the transition to IFRS development expenditure that was previously written off under
U.K. GAAP has been capitalised in accordance with IFRS 1 and IAS 38. Development expenditure of
�187,904 has been capitalised at transition and �410,356 for the year ended 31 December 2006.
The deemed cost of the intangible assets at transition has been taken as the amortised cost under U.K.
GAAP at 31 December 2005 of �8,527,349. The directors have reviewed the useful
life of the Group's intellectual property and consider it is appropriate to amortise this over its
expected useful life of 17 years from 1 January 2007.
In accordance with IFRS 1 the Group has elected not to apply IFRS 3 Business Combinations
retrospectively. Goodwill of �1,790,742 arising on acquisitions before transition date was fully
amortised at transition date.
3 The directors do not recommend the payment of a final dividend (2006: �nil).
4. These financial statements are presented in sterling as that is the currency of the primary economic
environment in which the Group operates.
5. Copies of the 2007 Annual Report and Accounts will be posted to shareholders in June. Further
copies may be obtained by contacting the Company Secretary at the registered office.
About Eden Research plc
Eden Research plc is a UK publicly listed company on the PLUS Market, specialising in the development
of agrochemical products and intellectual property through licensing and marketing agreements.
Eden is focused on developing products for the agricultural sector through the application of terpene
chemistry and other patented environmentally friendly technologies. Eden is currently working
alongside universities and partner companies in developing its product portfolio towards
commercialisation.
For further information please visit www.edenresearch.com.
Eden Research plc
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