TIDMEDEN
RNS Number : 5003Y
Eden Research plc
05 May 2023
5 May 2023
Eden Research
("Eden" or "the Company")
Preliminary results for the year ended 31 December 2022
Eden Research (AIM: EDEN), the AIM-quoted company focused on
sustainable biopesticides and plastic-free formulation technology
for use in the global crop protection, animal health and consumer
products industries, announces its preliminary results for the year
ended 31 December 2022.
Commercial and operational highlights
-- Regulatory approval granted by the United States
Environmental Protection Agency (EPA) in September 2022 for all six
petitions submitted, covering the Company's three active
ingredients (eugenol, geraniol and thymol), two formulated products
(Mevalone(R) and Cedroz(TM)) and formulation technology
(Sustaine(R))
-- Certification received in November 2022 for use in organic
farming in Greece for both of Mevalone(R) and Cedroz(TM)
products
-- Agreement signed with Corteva France in December 2022 which
allows Corteva to market, distribute and sell Eden's fungicide
product, Mevalone(R), in France on an exclusive basis.
-- New insecticide product advancing towards commercialisation
with extensive registration and commercial evaluation field
trials
-- Commercialisation of seed treatment product, in partnership
with Corteva, progressing towards commercial launch potentially in
time for the 2024 growing season
-- Richard Horsman appointed as Non-Executive Director, with effect from 1 September 2022
-- New Development Team Lead and Formulation Team members recruited
Post period events
-- First regulatory approval for the home garden market
following clearance for Mevalone(R) in Italy
-- Regulatory approval across a number of US states for Mevalone(R) and Cedroz(TM)
-- Regulatory approval in Poland for use of Mevalone(R) on
grapes and post-harvest storage diseased in apples
Financial highlights
-- Revenue for the year was GBP1.8 million (2021: GBP1.2
million), with a loss before tax of GBP2.6 million (2021: GBP3.4
million) and statutory operating loss of GBP2.6 million (2021:
GBP3.2 million)
-- Adjusted EBITDA was GBP1.7 million loss (2021: GBP2.0 million loss)
-- Cash position at the year-end was GBP2.0 million (2021: GBP3.9 million)
The Group's full Financial Statements are available at:
www.edenresearch.com .
Lykele van der Broek, Chairman of Eden Research plc,
commented:
"2022 was a positive year for Eden with a return to strong sales
growth and approval for Eden's two commercial products, Mevalone(R)
and Cedroz ä , and three active ingredients granted approval in the
US. 2023 looks set to provide a number of significant opportunities
including further territorial expansion and targeted diseases,
increased products sales, and the continued development of other
product lines such as our seed treatment and insecticide
projects."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information, contact:
Eden Research plc www.edenresearch.com
Sean Smith
Alex Abrey 01285 359 555
Cenkos Securities plc (Nominated advisor
and broker)
Giles Balleny / Max Gould (corporate finance)
Michael Johnson (sales) 020 7397 8900
Hawthorn Advisors (Financial PR)
Felix Meston eden@hawthornadvisors.com
Simon Woods
Notes to Editors:
Eden Research is the only UK-listed company focused on
biopesticides for sustainable agriculture. It develops and supplies
innovative biopesticide products and natural microencapsulation
technologies to the global crop protection, animal health and
consumer products industries.
Eden's products are formulated with terpene active ingredients,
based on natural plant defence metabolites. To date, they have been
primarily used on high-value fruits and vegetables, improving crop
yields and marketability, with equal or better performance when
compared with conventional pesticides. Eden has two products
currently on the market:
Based on plant-derived active ingredients, Mevalone (R) is a
foliar biofungicide which initially targets a key disease affecting
grapes and other high-value fruit and vegetable crops. It is a
useful tool in crop defence programmes and is aligned with the
requirements of integrated pest management programmes. It is
approved for sale in a number of key countries whilst Eden and its
partners pursue regulatory clearance in new territories thereby
growing Eden's addressable market globally.
Cedroz (TM) 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 (R) encapsulation technology is used to harness
the biocidal efficacy of naturally occurring chemicals produced by
plants (terpenes) and can also be used with both natural and
synthetic compounds to enhance their performance and ease-of-use.
Sustaine microcapsules are naturally-derived, plastic-free,
biodegradable micro-spheres derived from yeast. It is one of the
only viable, proven and immediately registerable solutions to the
microplastics problem in formulations requiring encapsulation.
Eden 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 .
Chairman's Statement
2022 has been a positive year for Eden with a return to strong
sales growth and approval for Eden's two commercial products,
Mevalone(R) and Cedroz ä , and three active ingredients granted in
the US. 2023 looks set to provide a number of significant
opportunities including further territorial expansion and targeted
diseases, increased products sales, and the continued development
of other product lines such as our seed treatment and insecticide
projects.
The wine grape market in Europe has recovered well, meaning that
farmers have been returning to pre-pandemic levels of pesticide
applications, with further increase in demand expected in 2023 as
the industry returns to normal.
This trend, in conjunction with regulatory approvals and label
extensions granted for Mevalone in recent years in countries such
as Australia and Spain has resulted in strong product sales growth
in 2022 of around 45%, a trend which we expect to continue in
2023.
With time, we expect that the US market will provide Eden with a
market opportunity which could rival that of Southern Europe, which
has provided the vast majority of Eden's product sales revenue to
date.
Our distribution partner for Mevalone in the US, Sipcam Agro
USA, is well prepared for commercial launch in 2023. It has already
ordered its first batch of product for this coming growing
season.
Good progress has also been made with Corteva Agriscience, our
partner for our seed treatment product. A significant effort has
been made by both parties in developing the product in readiness
for launch in the 2024 growing season, subject to the necessary
regulatory approvals.
Towards the end of 2022, Eden expanded its relationship with
Corteva by entering into an exclusive distribution agreement for
Mevalone in France, a key market for that product. This new
distribution agreement, in conjunction with our development
projects, reflects the growing influence that Eden is building
across the agrochemicals sector, particularly amongst the
industry's major international corporations.
Work is well advanced to expand Mevalone's label into additional
disease targets. It is expected that this will significantly
increase the addressable market for Mevalone in France.
Over the past three years, Eden's team has expanded across
research and development, sales and distribution, product
management, and regulatory affairs functions. This increased
capacity means that we are able to undertake an unprecedented level
of development activity for current and new products.
To that end, Eden's insecticide product has been formulated and
samples provided to multiple interested parties who are undertaking
their own trial work, further to Eden running its own field trials
in 2021 and 2022 which produced encouraging results.
In the background, we continue to work with several partners
with our polymer-free Sustaine microencapsulation technology which
enables Eden to provide a solution to incumbent products which
currently use microplastics in their formulations as encapsulation
systems.
Eden has never been short of opportunities, and this continues
to be the case. The market drivers which underpin Eden's investment
case continue to increase with growing regulatory pressure on older
agrochemicals and a shift in business and consumer preferences to
use sustainable, low residue alternatives.
Clearly, the key to Eden's success is converting this
opportunity into commercial success through sustained, strong
product sales growth. I believe that we have seen the start of that
growth in 2022.
Whilst Eden may not have the level of resources that some of its
much larger competitors may have, we do have a valuable, diverse
product and technology portfolio coupled with a creative, focussed
team that can deliver success using the advantages we have of
nimbleness, low bureaucracy, free thinking, and individuals who
know that their contribution will make a difference.
As ever, I would like to thank Eden's shareholders for their
ongoing and much appreciated support.
Lykele van der Broek
Non-Executive Chairman
4 May 2023
Chief Executive Officer's Review for the year ended 31 December
2022
Section one: Introduction
2022 saw an immense effort by the whole Eden team to achieve a
number of significant landmarks which has built the foundations for
significant growth in 2023 and beyond.
In 2022, we observed some of the hottest temperatures recorded
across the globe which led to dry growing conditions across Europe,
high food prices, and reduced supply. Furthermore, the war in
Ukraine has required companies to navigate difficult supply chain
issues while also managing high energy costs against the background
of a global energy crisis. This has had an adverse effect on the
demand for pesticide products driven by a reduction of fungal
disease and a generally reduced demand for pesticides in many major
categories.
Despite this, Eden has successfully executed several key label
extensions across new crop types and target diseases, as well as
authorisations in new territories. We have not only beaten last
year's sales performance, but we have also outperformed market
expectations in terms of both volume and value.
Most notably, the Company gained US Environmental Protection
Agency (EPA) approval, granting us access to the US market, paving
the way for a very significant market entry. This has been the
result of the regulatory team's tireless efforts over the past four
years, working with the EPA to ensure Eden met its extensive list
of strict requirements. At the state level we have currently
received regulatory approval in 17 US states for Mevalone(R), and 8
US states for Cedroz(TM). We continue to work to gain approvals
from the other states, including key states such as California.
Section two: Delivering on our strategy
By 2027, it is estimated that the global biopesticide market
will be worth more than $11 billion, growing at a CAGR of 15% per
annum. On average, the time it takes to bring new conventional
agricultural products to the market is estimated at around 10 to 12
years at a cost of $300 million. With that as the backdrop, it is
important to note that Eden's leverage of its three registered
active ingredients and formulation delivery system, Sustaine(R),
allows us to move relatively quickly to formulate new products and
introduce new solutions to the increasing challenges facing
growers, particularly as regulatory compliance becomes more
demanding.
As the only UK-quoted company developing plant-derived
biopesticide formulations and plastic free encapsulation
technology, we believe that Eden is uniquely positioned to offer
investors exposure to a compelling segment of the sustainable
agricultural market.
The Company strategy is built on four key objectives:
a) Business line diversification
- Pursuit of opportunities in seed treatments
- Development of insecticides
- Expand crops and diseases treated, increasing the addressable market for existing products
- Geographic diversification
b) Research, development, and operations
- Supply chain optimisation
- Expansion of in-house screening and field trials capability
- Accelerate commercialisation of Sustaine(R) for conventional actives
- Increase self-reliance in R&D
- Reduce time to market
c) Commercial growth
- Regulatory clearance in new countries, crops, and diseases
- Accelerate Sustaine(R) development
- Partnerships for Mevalone(R) in new territories
- Pursue collaboration with majors and select national partners
- Route to market optimisation
d) Strengthening and growing the team
- Added capacity in R&D, including microbiology, plant
biology, agronomy, and analytical chemistry
- Robust approach to data quality
- Expand commercial team
- Addition of in-house regulatory expertise - accelerating time
to market and reducing regulatory costs
Reflecting on these objectives, I believe that we have made
significant progress with expanding the growth of our existing
products while also continuing to pursue new opportunities through
new product development. Eden has been delivering against these
objectives in the following ways:
a) Widening our global market opportunities
USA EPA Approval
In September 2022, Eden was granted regulatory approval from the
United States EPA for all five petitions submitted, covering the
Company's three active ingredients (eugenol, geraniol and thymol),
formulation technology (Sustaine(R)) and two formulated products
(Mevalone(R) and Cedroz(TM)). It is worth noting that regulatory
clearance on a federal level of our active ingredients will allow
for easier and faster registration for all future formulations
based on these ingredients.
Eden stands amongst very few British crop protection companies
to obtain approvals for multiple biopesticides in the US. The
market potential in the US for Mevalone(R) and Cedroz(TM) alone
stands at approximately EUR94 million and EUR189 million per annum,
respectively. This excludes the opportunities for bioinsecticides
which are estimated to be worth an additional EUR237 million. With
increasing regulatory pressure on conventional pesticide products
across the country and a general steer towards sustainably grown
produce, the market opportunities are only likely to expand.
Since receiving EPA approval at federal level, Eden has also
obtained a number of important state authorisation such as Florida,
Washington, Oregon, and New York. With these individual approvals
now in place, our distribution partner, Sipcam Agro USA, can start
to sell Mevalone(R) in the 2023 growing season. In December 2022,
Eden fulfilled its first order for the US market.
Mevalone(R)
Over the course of the year, Eden received various label
extensions for Mevalone(R), including in Italy where Eden and
Sipcam are now allowed to target two new fungal pathogens and a
wide range of new crop types with an expanded Mevalone(R) label
(sold in Italy under the brand name 3logy(R) by Sipcam). We
estimate that this expansion of the label for 3logy(R) adds
thousands of hectares of high-value crops to our addressable
market.
We are currently hard at work to further optimise our
distribution network, and we anticipate announcing new partnerships
in the coming months; all aimed at adding new territories or
expanding our use case in existing countries. An outstanding
example of such optimisation is the appointment of Corteva France
as our exclusive distribution partner in France in December of
2022, replacing the incumbent distributor. Corteva's assessment of
the French market is that new opportunities have emerged as the
consequence of the removal of key conventional pesticides.
Working with Corteva, Eden is pursuing the significant expansion
of the label for Mevalone in France, targeting both downy mildew
and powdery mildew and resulting in an up to ten-fold expansion of
the addressable market in France. Preparation of the necessary
regulatory submissions is well under way with the efficacy trials
data required to support these submissions now complete.
Post period end, we were pleased to secure our first regulatory
approval for the consumer market with clearance for Mevalone(R) in
Italy for home garden use. This will allow Italian gardeners the
same access as commercial farmers to a sustainable fungicide to
protect their plants and crops from destructive fungal
pathogens.
Organic certification
In November 2022, it was announced that Mevalone(R) and
Cedroz(TM) received certification for organic farming in Greece.
The certification, received by Eden's regional partner, K&N
Efthymiadis (K&NE), follows the authorisation of Eden's three
EU-registered active ingredients for use in organic farming in
2020.
b) Expanding our product line and applicable uses
Insecticide
Field trials in 2021 and 2022 have produced encouraging results
for our insecticide candidates. The Company is pleased to be in
position where it has now agreed on a final formulation, entered
into testing agreements and sent trial-scale samples to multiple
interested parties who are undertaking their own trial work. Eden
has started to see results from its potential partners come in and
we are pleased to say that they are, thus far, in line with our own
results. The Company expects there to be a high level of interest
for this product, particularly in the key markets of Europe and the
US.
Seed treatment
We continue to make steady progress with the development of our
seed treatment product, in partnership with Corteva Agriscience.
During the last two years, the companies have worked closely
together to undertake field trials and other development work. The
field trials conducted during this time yielded positive results
with efficacy that is comparable to, or better than, the incumbent
product that is being removed from the market. We are now in the
final stages of collating the information that is required to make
a full submission for authorisation of the product in the EU and
selected additional territories. It is expected that launch of the
product in the EU will occur in time for the 2024 growing season,
although both companies acknowledge that this is an estimate and is
subject to revision, dependent on development and product
registration milestones being achieved as anticipated and the pace
of regulatory action by the authorities.
Eden is also pursuing further opportunities in seed treatments,
including fungicidal and nematicidal applications.
Sustaine(R)
Over the course of Sustaine's existence, Eden has received
numerous enquiries about using the technology with third party
active ingredients which also require an alternative solution to
plastic. Field trials are currently underway with multiple partners
to fully exploit its capability and decisions regarding future
evaluations based on current trials are expected in due course.
c) New team additions to drive next phase of growth
Our recent growth is largely attributable to the core skills and
strengths of the team that drives Eden. Over the course of the
year, we have hired new staff across vital divisions of our
business from regulatory affairs to research and development. The
Eden team now has the necessary capabilities to formulate, develop,
test and register products that it has created. Our headcount by
year end stood at 19, which we view as the optimum level at this
time to continue to progress along our high growth trajectory at a
faster pace than possible in the past.
In September 2022, we welcomed Richard Horsman as a
Non-Executive Director to the Company. Richard possesses an
abundance of industry, commercial and corporate acumen and
expertise which will help drive Eden through our next phase of
growth. This not only applies to maximising the potential of our
existing opportunities, but also driving new opportunities that
share synergies with our core business.
Section three: Financial review
Revenue for the year was GBP1.8 million which marked a 50%
increase on the previous year (FY21: GBP1.2m). This reflects a
significant increase in product sales which were GBP1.6m, a 45%
rise on last year's products sales (FY21: GBP1.1m).
Our earnings before tax have also improved. In 2022, we recorded
a reduced loss of GBP2.6m which compared favourably to the previous
year's performance (FY21: GBP3.4m loss).
Administrative expenses remained flat at GBP2.7m (2021:
GBP2.7m), while additions to intangible assets, including
development costs, reduced to GBP1.0m from GBP1.6m in 2021.
Our cash balance at year-end was GBP2.0m (2021: GBP3.8m).
At present, there is currently no near-term plan to pay a
dividend. However, the Board continues to review the Company's
dividend policy.
Section four: 2023 outlook
With the groundwork having been laid throughout the course 2022,
our strategy for 2023 is to maximise the sales potential of our
current products in existing markets, continue to expand our
geographic reach and target disease portfolio, and accelerate the
development of new products and formulations based upon our
terpene-based active ingredients and yeast-derived, plastic-free
formulation technology.
Continuing our progress in the US market in 2022 (where in
September we received authorisation for our portfolio of three
active ingredients formulation system and two formulated products,
Mevalone(R) and Cedroz(TM), from the US EPA), subsequently Eden
applied for state-level authorisations in multiple states,
including Florida, Washington, Oregon and California. A number of
states - including New York State - have already granted their
authorisations with more due in 2023, including the largest US
market for Eden: California.
Eden is also targeting regulatory approval in the United Kingdom
where we have submitted an application for authorisation for
Mevalone(R). While the addressable market potential in the United
Kingdom is not as significant as it is elsewhere, the opportunity
as a British-based business to provide our products to the British
market is exciting. Furthermore, despite its size, the market for
botryticides in the UK is growing rapidly as the number of hectares
dedicated to wine production increases. We are looking forward to
forming close partnerships locally and being part of the UK's
efforts to meet its sustainable agricultural goals.
Elsewhere, we continue to pursue other territories across the
globe and have numerous applications for regulatory approvals of
Mevalone(R) and Cedroz(TM) pending. This includes Germany, Poland,
New Zealand, Morocco and Tunisia.
Eden is also exploring the suitability for Mevalone(R)
application on cannabis in the US and Canada. The market potential
for Eden in cannabis production could be significant considering
recent legislation changes in the US and the significant need for
pesticides on this crop. Furthermore, cannabis has multiple crop
cycles per year which require year-round application of crop
protection products. Field trials commenced in 2022 and we continue
to assess the effectiveness of Mevalone(R) against several diseases
including botrytis.
Evaluations in additional areas of significant commercial
potential include black sigatoka (banana), potato blight and potato
cyst nematodes. In each case, the initial evaluations have produced
encouraging results.
Following our first regulatory approval for consumer home and
garden use in Italy, we look forward to continuing this momentum as
we look at accessing other territories worldwide so the home
gardener can also benefit from the safety and efficacy that
Mevalone(R) provides. Our breakthrough in one consumer market is
the beginning and the ability to offer home gardeners the same
tools serves as another demonstration of the versatility of our
sustainable products and technology.
Finally, we are working hard to move forward with new products
including insecticides, seed treatments, and optimised fungicides.
Subject to regulatory authorisation, we expect to see the first
sales of our seed treatments developed with Corteva in 2024 and the
first sales of our insecticides in the US in 2024/2025 and in the
EU in 2025/2026. Ongoing EU regulatory developments around the use
of intentionally added microplastics in agricultural products
should also prompt accelerated development and deployment of our
propriety Sustaine(R) microencapsulation technology across a number
of active ingredients in addition to our own.
Section five: Driving positive impact
Sustainability lies at the heart of what we do at Eden. We are
focused on providing innovative and sustainable solutions to the
global agriculture industry and beyond. It is with this philosophy
that we aim to perform a fundamental role for farmers looking to
adopt sustainable farming practices without adversely impacting
their output or bottom line.
Sustainability can often pose a systematic challenge for the
agricultural industry as it looks to contend with feeding a growing
population while also protecting our planet. Our growing portfolio
of products helps farmers to protect natural biological ecosystems,
as well as their high value crops, meeting the growing demands of
both consumers and regulators. The ingredients we use to formulate
our products; geraniol, eugenol and thymol, are naturally-occurring
materials used by plants themselves as a part of their own defence
systems.
Moreover, our products have been certified as organic in the EU.
This is a valuable classification for Eden as we are seeing rising
demand for organic produce amongst consumers and growers, a trend
also reinforced by regulation. Under its Farm to Fork strategy, the
EU has proposed that at least 25% of the EU's agricultural land
should be farmed organically by 2030, and the action plan
supporting this change has now reached the public consultation
phase.
Increasingly, regulatory restrictions over crop protection
product usage and a drive towards organic farming is apparent right
across the globe and demonstrated quite clearly in the UK with the
introduction of the Department of Environment, Food, and Rural
Affairs' new Environmental Land Management Schemes (ELMS). Under
ELMS, farmers in England will be entitled to a Sustainable Farming
Incentive payment which focuses on soil health and reducing the use
of damaging inputs such as fertilisers and insecticides. In the
context of our regulatory application in the UK, we continue to
review the associated opportunities and risks. Moving forward, we
look forward to working with our distribution partner and local
farmers as these regulations evolve in a post-Brexit
environment.
TerpeneTech (UK)
Sales of geraniol into the biocide sector have continued to
increase year on year and TerpeneTech (UK) is investigating the
potential to register additional active ingredients under the EU's
Biocide Directive.
Sales of the head-lice treatment product have still not started
outside of the U.K. as had been expected. Eden is in discussion
with TerpeneTech (UK) to determine the best way forward with this
product.
TerpeneTech (Ireland)
TerpeneTech (Ireland) was established in 2019 to hold the
registration of geraniol under the EU's Biocidal Products
Regulation, due to changes brought about by Brexit. As such,
TerpeneTech (Ireland) receives royalty income from TerpeneTech (UK)
on the sales of geraniol but is otherwise non-operational.
Ukraine
Eden does not currently have any business activities in Russia
or Ukraine and, as such, has not seen any direct impact on its
business.
The knock-on effect of the conflict on other countries also
appears to be minimal and so we do not envisage significant
disruption to the current business in the short term.
Section six: Summary
Eden has pivoted from being a small agrochemical development and
licensing company to an operating business with meaningful and
growing product sales and a strong development pipeline. This is
reflected in our 2022 results which show that we have beaten last
year's sales performance and outperformed market expectations in
terms of volume and value. With each milestone that we pass, Eden
remains ambitious in our plans to continue expanding our regulatory
and commercial footprint, growing our network of partners, and
increasing the size our addressable markets. We also remain
risk-aware to changing consumer and regulatory trends as well as
global climatic and economic conditions, and I can confidently say
that our business model has so far proven to be resilient to all
these factors and we will continue to ensure Eden remains firmly
grounded.
I am proud of the role Eden is playing in helping create more
sustainable agricultural practices as the only UK-quoted company
focused on sustainable chemistry for the biopesticide industry.
Today we are viewed by our peers as the biocontrol standard for
biofungicides. I would like to take this opportunity to thank our
team which has played a significant role in delivering the results
for 2022, and to our shareholders who have backed us throughout the
year.
Sean Smith
Chief Executive Officer
4 May 2023
Consolidated statement of comprehensive income f or the year
ended 31 December 2022
2022 2021
Notes GBP GBP
Revenue 4 1,827,171 1,228,580
Cost of sales (997,011) (667,343)
Gross profit 830,160 561,237
Amortisation of intangible
assets (495,818) (434,630)
Administrative expenses (2,749,240) (2,694,290)
Share based payments (152,135) (640,597)
Operating loss 5 (2,567,033) (3,208,280)
Interest income 8 192 98
Finance costs 9 (22,046) (32,074)
Foreign exchange gains/(losses) 9 52,736 (97,247)
Share of loss of equity accounted
Investee, net of tax 15 (31,444) (58,177)
Loss before taxation (2,567,595) (3,395,680)
Income tax income 10 323,716 618,137
Loss and total comprehensive
income for the year (2,243,879) (2,777,543)
Total comprehensive income for the
year is attributable to:
- Owners of the parent Company (2,237,262) (2,788,973)
- Non-controlling interests (6,617) 11,430
(2,243,879) (2,777,543)
Earnings per share 11
Basic (0.59p) (0.73p)
Diluted (0.59p) (0.73p)
Consolidated statement of financial position a s at 31 December
2022
2022 2021
Notes GBP GBP
Non-current assets
Intangible assets 12 8,447,226 7,919,780
Property, plant and equipment 13 198,786 232,278
Right-of-Use assets 14 332,814 372,787
Investments 15 330,244 361,688
9,309,070 8,886,533
Current assets
Inventories 17 625,458 521,351
Trade and other receivables 18 658,866 886,587
Current tax recoverable 10 323,716 903,245
Cash and cash equivalents 1,994,472 3,829,369
3,602,512 6,140,552
Current liabilities
Trade and other payables 19 1,813,341 1,711,518
Lease liabilities 20 139,547 99,924
1,952,888 1,811,442
Net current assets 1,649,624 4,329,110
Non-current liabilities
Trade and other payables 19 - 87,740
Lease liabilities 20 215,776 298,428
215,776 386,168
Net assets 10,742,918 12,829,475
2022 2021
Notes GBP GBP
Equity
Called up share capital 23 3,808,589 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 701,065 937,505
Merger reserve 26 10,209,673 10,209,673
Retained earnings (43,309,440) (41,460,753)
Non-controlling interest 27 24,502 31,119
Total equity 10,742,918 12,829,475
The financial statements were approved by the Board of Directors
and authorised for issue on 4 May 2023 and are signed on its behalf
by:
Sean Smith
Director
Company statement of financial position as at 31 December
2022
2022 2021
Notes GBP GBP
Non-current assets
Intangible assets 12 8,354,299 7,813,583
Property, plant and equipment 13 198,786 232,278
Right-of-Use Assets 14 332,814 372,787
Investments 15 330,244 361,688
9,216,143 8,780,336
Current assets
Inventories 17 625,458 521,351
Trade and other receivables 18 786,791 970,587
Current tax recoverable 10 323,716 903,245
Cash and cash equivalents 1,994,472 3,829,369
3,730,437 6,224,552
Current liabilities
Trade and other payables 19 1,813,341 1,667,557
Lease liabilities 20 139,547 99,924
1,952,888 1,767,481
Net current assets 1,777,549 4,457,071
Non-current liabilities
Trade and other payables 19 - 87,740
Lease liabilities 20 215,776 298,428
215,776 386,168
Net assets 10,777,916 12,851,239
Equity
Called up share capital 23 3,808,589 3,803,402
Share premium account 24 39,308,529 39,308,529
Warrant reserve 25 701,065 937,505
Merger reserve 26 10,209,673 10,209,673
Retained earnings (43,249,940) (41,407,870)
Total equity 10,777,916 12,851,239
As permitted by s408 Companies Act 2006, the Company has not presented
its own income statement and related notes. The Company's loss for
the year was GBP2,230,645 (2021 - GBP2,764,403).
The financial statements were approved by the Board of Directors
and authorised for issue on 4 May 2023 and are signed on its behalf
by:
Sean Smith
Director
Company Registration No. 03071324
Consolidated statement of changes in equity f or the year ended
31 December 2022
Share Share Merger Warrant Retained earnings Total Non-controlling Total
capital premium reserve reserve interest
account
Notes GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January 2021 3,803,402 39,308,529 10,209,673 429,915 (38,842,259) 14,909,260 19,689 14,928,949
Year ended 31
December 2021:
Loss and total
comprehensive
income for
the
year - - - - (2,788,973) (2,788,973) 11,430 (2,777,543)
Issue of share
capital 23/24 - - - - - - - -
Options
granted 22 - - - 678,069 - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 - - -
Balance at 31
December
2021 3,803,402 39,308,529 10,209,673 937,505 (41,460,753) 12,798,356 31,119 12,829,475
Year ended 31
December 2022:
Loss and total
comprehensive
income for
the
year - - - - (2,237,262) (2,237,262) (6,617) (2,243,879)
Issue of share
capital 23/24 5,187 - - - - 5,187 - 5,187
Options
granted 22 - - - 152,135 - 152,135 - 152,135
Options lapsed 22 - - - (388,575) 388,575 - - -
Balance at 31
December
2022 3,808,589 39,308,529 10,209,673 701,065 (43,309,440) 10,718,416 24,502 10,742,918
Share capital is the number of shares issued in the Company at
their nominal value. The share premium account represents the gross
proceeds from issue of shares, less their nominal value.
Company statement of changes in equity f or the year ended 31
December 2022
Share Share Merger Warrant Retained Total
capital premium reserve reserve earnings
account
Notes GBP GBP GBP GBP GBP GBP
Balance at 1
January 2021 3,803,402 39,308,529 10,209,673 429,915 (38,813,946) 14,937,573
Year ended 31
December 2021:
Loss and total
comprehensive
income for
the year - - - - (2,764,403) (2,764,403)
Issue of share
capital 23/24 - - - - - -
Options
granted 22 - - - 678,069 - 678,069
Options lapsed 22 - - - (170,479) 170,479 -
Balance at 31
December 2021 3,803,402 39,308,529 10,209,673 937,505 (41,407,870) 12,851,239
Year ended 31
December 2022:
Loss and total
comprehensive
income for
the year - - - - (2,230,645) (2,230,645)
Issue of share
capital 23/24 5,187 - - - - 5,187
Options
granted 22 - - - 152,135 - 152,135
Options lapsed 22 - - - (388,575) 388,575 -
Balance at 31
December 2022 3,808,589 39,308,529 10,209,673 701,065 (43,249,940) 10,777,916
Share capital is the number of shares issued in the Company at
their nominal value. The share premium account represents the gross
proceeds from issue of shares, less their nominal value.
2022 2021
Notes GBP GBP GBP GBP
Cash flows from
operating activities
Cash absorbed by (1, 586,531
operations 33 ) (1,586,582)
R&D tax credit
received 903,244 -
Net cash outflow from
operating activities (683,287) (1,586,582)
Investing activities
Development of
intangible assets (1,023,262) (1,624,927)
Purchase of property,
plant and equipment (30,929) (101,269)
Interest received 192 98
Net cash used
in investing
activities (1,053,999) (1,726,098)
Financing activities
Payment of lease
liabilities (128,301) (90,387)
Interest on lease
liabilities (22,046) (32,074)
Net cash generated
from/(used in)
financing activities (150,347) (122,461)
Net
increase/(decrease)
in cash and cash
equivalents (1,887,633) (3,435,141)
Cash and cash
equivalents
at beginning of
year 3,829,369 7,286,503
Effect of foreign
exchange rates 52,736 (21,993)
Cash and cash equivalents
at end of year 1,994,472 3,829,369
Relating to:
Bank balances 1,994,472 3,829,369
Non-cash movement on account of financing activities:
Note
14 Lease liability additions GBP87,228 (2021: GBP76,464)
22 Share based payment charge GBP152,135 (2021: GBP640,957)
23 Issue of shares GBP5,187 (2021: GBPnil) where proceeds remain unpaid at the year end.
Company statement of cash flows for the year ended 31 December
2022
2022 2021
Notes GBP GBP GBP GBP
Cash flows from
operating activities
Cash absorbed (1, 586,531
by operations 33 ) (1,586,582)
R&D tax credit
received 903,244 -
Net cash outflow from
operating activities (683,287) (1,586,582)
Investing activities
Development of
intangible assets (1,023,262) (1,624,927)
Purchase of property,
plant and equipment (30,929) (101,269)
Interest received 192 98
Net cash used
in investing
activities (1,053,999) (1,726,098)
Financing activities
Payment of lease
liabilities (128,301) (90,387)
Interest on lease
liabilities (22,046) (32,074)
Net cash generated
from/(used in)
financing activities (150,347) (122,461)
Net increase/(decrease)
in cash and cash
equivalents (1,887,633) (3,435,141)
Cash and cash
equivalents at
beginning of
year 3,829,369 7,286,503
Effect of
foreign exchange
rates 52,736 ( 21,993 )
Cash and
cash equivalents
at end of
year 1,994,472 3,829,369
Relating
to:
Bank balances 1,994,472 3,829,369
Non-cash movement on account of financing activities:
Note
14 Lease liability additions GBP87,228 (2021: GBP76,464)
22 Share based payment charge GBP152,135 (2021: GBP640,957)
23 Issue of shares GBP5,187 (2021: GBPnil) where the proceeds remain unpaid
Notes to the Group financial statements f or the year ended 31
December 2022
1 Accounting policies
Company information
Eden Research plc is a public company limited by shares incorporated
in England and Wales. The registered office is 67C Innovation
Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The
Company's principal activities and nature of its operations
are disclosed in the Directors' report.
The Group consists of Eden Research plc, its subsidiaries,
TerpeneTech Limited (Ireland), Eden Research Europe Limited
(Ireland) (see note 16) and its associate company, TerpeneTech
Limited (UK) (see note 15).
1.1 Accounting convention
The Group and Company financial statements have been prepared
in accordance with UK-adopted international accounting standards
and as applied in accordance with the provisions of the Companies
Act 2006.
The financial statements are prepared in pound sterling,
which is the functional currency of the Group. Monetary amounts
in these financial statements are rounded to the nearest
GBP.
They have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
See note 2 for further information on changes to standards
adopted or in issue during the year end.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial
statements of the Company and its subsidiary undertakings
up to 31 December 2022. The profits and losses of the Company
and its subsidiary are consolidated from the date from which
control is achieved. All members of the Group have the same
reporting period.
Subsidiary undertakings are entities controlled by the Company.
The Company controls an entity when it is exposed to, or
has the right to, variable returns from its involvement with
the entity and has the ability to affect those returns through
its power over the entity.
Associates
Associates are those entities in which the Company has significant
influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when
the Company holds between 20 and 50 percent of the voting
power of another entity, or where the Company has a lower
interest but the right to appoint a Director. The Company
acquired 29.9% of TerpeneTech Limited ("TerpeneTech (UK)")
during 2015; TerpeneTech (UK) is an associated undertaking.
Application of the equity method to associates
The investment in TerpeneTech (UK) is accounted for using
the equity method. The investment was initially recognised
at cost. The Company's investment includes goodwill identified
on acquisition, net of any accumulated impairment losses
and any separable intangible assets. The financial statements
include the Company's share of the total comprehensive income
and equity movements of TerpeneTech (UK), from the date that
significant influence commenced.
1.3 Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence
for at least 12 months from the approval of the financial
statements. Thus, the financial statements have been prepared
on a going concern basis which contemplates the realisation
of assets and the settlement of liabilities in the ordinary
course of business.
The Group has reported a loss for the year after taxation
of GBP2,243,879 (2021: GBP2,777,543). Net current assets
at that date amounted to GBP1,649,624 (2021: GBP4,329,110).
Cash at that date amounted to GBP1,994,472 (2021: GBP3,829,369).
The Company has reported a loss for the year after taxation
of GBP2,230,645 (2021 - GBP2,764,403). Net current assets
at that date amounted to GBP 1,777,549 (2021: GBP4,457,071).
Cash at that date amounted to GBP1,994,472 (2021: GBP3,829,369).
The Directors have prepared budgets and projected cash flow
forecasts, based on forecast sales provided by Eden's distributors
where available, for a period of at least 12 months from
the date of approval of the financial statements and they
consider that the Group and Company will be able to operate
with the cash resources that are available to it for this
period.
The forecasts adopted include revenue derived from existing
contracts as well as expected new contracts in respect of
products not yet available for use.
The impact of COVID has been considered in the forecasts.
The Group has been impacted by the pandemic as it has led
to some delays in regulatory approvals, product development
process and limited promotional activity, which resulted
in lower than forecast sales in 2020 and 2021. The forecasts
reflect this with the development expenditure timing based
on the latest experience with regulatory authorities and
sales volumes on the latest distributors' information which
reflects their post-COVID demand.
In addition, the Group has relatively low fixed running costs,
as production is undertaken through toll manufacturers, and
the Directors have previously demonstrated ability and willingness
to delay certain costs, such as research and development
expenditure, where required and are willing and able to delay
costs in the forecast period should the need arise. A positive
cash balance is forecasted to be maintained in this base
scenario throughout the entire forecast period.
The Directors have also considered a downside scenario which
includes reductions to revenue derived from existing contracts
as well as elimination of revenue from products not yet available
for use offset by mitigations around research and development
expenditure as well as some reductions in expansionary overheads.
Under this scenario, a positive cash balance would be maintained
over the forecast period.
Consequently, the Directors are confident that the Group
and Company will have sufficient funds to continue to meet
their liabilities as they fall due for at least 12 months
from the date of approval of the financial statements and
therefore have prepared the financial statements on a going
concern basis.
The Group's achievement of long-term positive cash generation is
reliant on the completion of ongoing product development and
successful initial approval and registration of these products with
various regulatory bodies, as well as the registration of existing
products in new territories. While the Group is forecasted to
become cash generative in 2024 under the base budget, the Directors
consider it reasonably possible that the Group may seek further
funding prior to that point.
The Group has planned its cashflows taking into account its
current cash availability and is satisfied that it can continue for
the foreseeable future, albeit with careful management of the
levels of investment in the short term, depending on the positive
outcome and/or timing of certain commercial and regulatory
events.
However, given the plethora of opportunities and strong interest
that the Group is presented with, the Board of Eden may seek to
invest to a greater extent than it is currently able to and to
expedite the commercialisation of its product portfolio. To that
end, the Board continues to assess all funding and commercial
opportunities, taking into account commercial and market
conditions.
1.4 Revenue
Revenue received by the Group is recognised net of any
taxes and in accordance with IFRS 15. Policies for each
significant revenue stream are as follows:
Licensing fees
The Group receives licensing fees from partners who have
taken a licence for the right to use Eden's intellectual
property, usually defined by field of use and territory.
These are identified as the right to use as the Group does
not have an obligation to undertake activities that significantly
affect the relevant intellectual property.
Each sale of a licence by the Group is assessed to determine
whether the licence is distinct from the sale of other goods
and services, and whether the licence granted provides use
of the Group's intellectual property as it exists at that
point in time, with no ongoing obligation on the Group, or
alternatively provides access to the intellectual property
as it develops over time. Where the Group has discharged
all of its ongoing obligations associated with the licence
granted, revenue is recognised on invoicing of the licence
fee payment at which point the customer can use and benefit
from the licence. Where there is an ongoing obligation on
the Group, revenue is recognised in the periods to which
the obligations pertain.
Milestone payments
The Group receives milestone payments from other commercial
arrangements, including any fees it has charged to partners
for rights granted in respect of distribution agreements.
These agreements are bespoke and any such revenue is specific
to the particular agreement. Consequently, for each such
agreement, the nature of the underlying performance obligations
is assessed in order to determine whether revenue should
be recognised at a point in time or over time.
Revenue is then recognised based on the above assessment
upon satisfaction of the performance obligation.
The Corteva agreement entered into in 2021 includes milestone
payments of GBP141,293 received in 2021 and a further GBP164,148
in 2022. These milestone payments have been assessed to relate
to a performance obligation being satisfied at a point in
time. As at year end, this performance obligation had not
been reached and, consequently, the amounts received deferred
(presented within Accruals and Deferred Income in note 19).
Further milestone payments are contractually due in the year
ending 31 December 2023. The performance obligation is expected
to be met no later than by 31 December 2023.
The second performance obligation relates to product sales
and will be accounted for in line with the product sales
policy disclosed below once the commercial sales have commenced.
Upfront and annual payments made by customers at commencement
and for renewal of distribution and other agreements are
recognised in accordance with the terms of the agreement.
Where there is no ongoing obligation on the Group under the
agreement, the payment is recognised in full in the period
in which it is made. Where there is an ongoing obligation
on the Group, the separate performance obligations under
the agreement are identified and revenue allocated to each
performance obligation. Revenue is then recognised when a
corresponding performance obligation has been met.
R & D charges
The Group sometimes charges its partners for R&D costs that
it has incurred which usually relate to specific projects
and which it has incurred through a third party.
Upon agreement with a partner, or if some specific milestone
is met, then Eden will raise an invoice which is usually payable
between 30 and 120 days. Revenue is recognised upon satisfaction
of the underlying performance obligation.
Royalties
The Group receives royalties from partners who have entered
into a licence arrangement with Eden to use its intellectual
property and who have sold products, which then gives rise
to an obligation to pay Eden a royalty on those sales.
Generally, royalties relate to specific time periods, such
as quarterly or annual dates, in which product sales have
been made. Revenue is recognised in line with when these sales
occur.
Once an invoice is raised by Eden, following the period to
which the royalties relate, payment is due to the Company
is 30 to 60 days.
Sales-based royalty income arising from licences of the Group's
intellectual property is recognised in accordance with the
terms of the underlying contract and is based on net sales
value of product sold by Eden's licensees. It is recognised
when the underlying sales occur.
Product sales
Generally, where the Group has entered into a distribution
agreement with a partner, Eden is responsible for supplying
product to that partner once a sales order has been signed.
At that point, Eden has the product manufactured through a
third-party, toll manufacturer. At the point at which the product
is finished and is made available to the partner to collect,
or, if the Group is responsible for the shipping, the product
has been shipped, the partner is liable for the product and
obliged to pay Eden. Normal terms for product sales are 90
to 120 days. Returns are accepted and refunds are only made
when product supplied is notified as defective within 60 days.
The Group does not have any contract assets or liabilities
other than the liability in respect of the Corteva milestone
payments noted in the milestone section (2021: none, other
than the Corteva milestone payment).
Product sales are recorded once the ownership and related rights
and responsibilities are passed to the customer and the product
is made available to the partner to collect, or, if the Group
is responsible for the shipping, the product has been shipped
to the customer.
1.5 Intangible assets other than goodwill
Intellectual property, which is made up of patent costs,
trademarks and development costs, is capitalised and amortised
on a straight-line basis over its remaining estimated useful
economic life of 8 years (2021: 9 years) in line with the
remaining life of the Group's master patent, which was originally
20 years, with additional Supplementary Protection Certificates
having been granted in the majority of the countries in the
EU in which Eden is selling Mevalone (R) and Cedroz Ô
. The useful economic life of intangible assets is reviewed
on an annual basis.
An internally generated intangible asset arising from the
Group's development activities is recognised only if all
the following conditions are met:
* the project is technically and commercially feasible;
* an asset is created that can be identified;
* the Company intends to complete the asset and use or
sell it and has the ability to do so;
* it is probable that the asset created will generate
future economic benefits;
* the development cost of the asset can be measured
reliably; and
* there are sufficient resources available to complete
the project.
Internally-generated intangible assets are amortised on a
straight-line basis over their useful lives from the date
they are available for use. Where no internally-generated
intangible asset can be recognised, development expenditure
is recognised as an expense in the period in which it is
incurred.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost
and subsequently measured at cost, net of depreciation and
any impairment losses.
Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their
useful lives on the following bases:
Leasehold land and buildings Over the term of the lease
Fixtures and fittings 5 years straight line
Motor vehicles Over the term of the lease
The gain or loss arising on the disposal of an asset is determined
as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the income statement.
1.7 Impairment of tangible and intangible
assets
The Directors regularly review the intangible assets for
impairment and provision is made if necessary. Assets that
are subject to amortisation and those that are under development
are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's
fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
1.8 Inventories
Inventories are stated at the lower of cost and estimated
selling price, less costs to complete and sell. Cost is based
on the first-in-first-out principle. Cost comprises direct
materials and, where applicable, direct labour costs and
those overheads that have been incurred in bringing the inventories
to their present location and condition.
1.9 Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are
originated. All other financial assets and financial liabilities
are initially recognised when the Group becomes a part to
the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable with a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at
fair value through profit or loss ("FVTPL"), transaction
costs that are directly attributable to its acquisition or
issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as
measured at amortised cost or FVTPL.
Financial assets are not reclassified subsequently to their
initial recognition unless the Group changes its business
model for managing financial assets in which case all affected
financial assets are reclassified on the first day of the
first reporting period following the change in the business
model.
A financial asset is measured at amortised cost if it meets
both of the following conditions:
* It is held within a business model whose objective is
to hold assets to collect contractual cash flows; and
* Its contractual terms give rise on specific dates to
cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Investments in associates accounted for using the equity
method and subsidiaries are carried at cost less impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and
form an integral part of the Group's cash management are
included as a component of cash and cash equivalents for
the purpose only of the cash flow statement.
(b) Subsequent measurement and gains and losses
Financial assets at amortised cost - These assets are subsequently
measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on derecognition
is recognised in profit or loss.
To the extent that this definition is not met, the proceeds
of issue are classified as a financial liability. Where the
instrument so classified takes the legal form of the Group
's own shares, the amounts presented in these financial statements
for called up share capital and share premium account exclude
amounts in relation to those shares.
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held-for-trading, it is a derivative
or it is designated as such on initial recognition. Financial
liabilities at FVTPL are measured at fair value and net gains
and losses, including any interest expense, are recognised
in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition
is also recognised in profit or loss.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
(iii) Impairment
The Group recognises loss allowances for expected credit
losses (ECLs) on financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to
lifetime ECL, except for other debt securities and bank balances
for which credit risk (i.e. the risk of default occurring
over the expected life of the financial instrument) has not
increased significantly since initial recognition, which
are measured as 12-month ECL.
Loss allowances for trade receivables and contract assets
are always measured at an amount equal to lifetime ECL. During
the year, an expected credit loss provision of GBP107,188
(2021:GBPNil) has been recognised on trade receivables over
12 months old, on which payment is uncertain.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and
when estimating ECL, the Group considers reasonable and supportable
information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Company's historical
experience and informed credit assessment and including forward-looking
information.
The Group considers a financial asset to be in default when:
* the borrower is unlikely to pay its credit
obligations to the Company in full, without recourse
by the Company to actions such as realising security
(if any is held); or
* the financial asset is more than 120 days past due.
Lifetime ECLs are the ECLs that result from all possible
default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default
events that are possible within the 12 months after the reporting
date (or a shorter period if the expected life of the instrument
is less than 12 months).
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed
to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash
flows that the Group expects to receive). ECLs are discounted
at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have
a detrimental impact on the estimated future cash flows of
the financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there
is no realistic prospect of recovery.
1.10 Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for
the year. Taxable profit differs from net profit as reported
in the income statement because it excludes items of income
or expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible.
The Group 's liability for current tax is calculated using
tax rates that have been enacted or substantively enacted
by the reporting end date. The current tax charge includes
any research and development tax credits claimed by the Group
.
R&D tax credits are accounted for by reference to IAS 12
and are calculated based on development costs incurred by
the Group through third party contractors, as well as members
of staff who are involved in research and development of
the Group's products.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from
goodwill or from the initial recognition of other assets
and liabilities in a transaction that affects neither the
tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Group is
able to control the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each reporting end date and reduced to the extent that it
is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the
asset is realised based on the tax rates that have been enacted
or substantively enacted by the end of the reporting period.
Deferred tax is charged or credited to profit or loss, except
when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities
on a net basis.
1.11 Employee benefits
The costs of short-term employee benefits are recognised
as a liability and an expense, unless those costs are required
to be recognised as part of the cost of inventories or non-current
assets.
The cost of any unused holiday entitlement is recognised
in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the Group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes
are charged as an expense as they fall due.
1.13 Share-based payments
The Company has applied the requirements of IFRS 2 Share-Based
Payments.
Unapproved share option scheme
The Company operated an unapproved share option scheme for
executive directors, senior management and certain employees
up to September 2017.
Long-Term Incentive Plan ('LTIP')
In 2017, the Company established a LTIP to incentivise the
Executives to deliver long-term value creation for shareholders
and ensure alignment with shareholder interest. Awards were
made annually and were subject to continued service and challenging
performance conditions usually over a three year period.
The performance conditions were reviewed on an annual basis
to ensure they remained appropriate and were based on increasing
shareholder value. Awards were structured as nil cost options
with a seven year lift after vesting.
Other than in exceptional circumstances, awards were up to
100% of salary in any one year and granted subject to achieving
challenging performance conditions set at the date of the
grant. A percentage of the award vested for 'Threshold' performance
with full vesting taking place for equalling or exceeding
the performance 'Target'. In between the Threshold and Target
there was pro rata vesting.
The LTIP was adopted by the Board of Directors of Eden on
28 September 2017.
Long-Term Incentive Plan ('LTIP') (continued)
Where share options are awarded to employees, the fair value
of the options at the date of grant is charged to the Statement
of Profit or Loss and Other Comprehensive Income over the
vesting period. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected
to vest at each reporting date so that ultimately the cumulative
amount recognised over the vesting period is based on the
number of options that eventually vest. Market vesting conditions
are factored into the fair value of the options granted,
as long as other vesting conditions are satisfied. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Where the terms and conditions of options are modified before
they vest, the increase in fair value of the options, measured
immediately before and after the modification is also charged
to the Statement of Profit or Loss and Other Comprehensive
Income over the remaining vesting period.
In June 2021, the Company made changes to the LTIP.
The changes to the LTIP have been treated as a modification
of the existing plan for financial reporting purposes which
means that the Fair Value of previous awards has been recognised
over their remaining term and the incremental Fair Value
of the new options granted has been recognised separately
over their own vesting period.
The Company issued options under the modified LTIP, details
of which can be found on note 22. These include graded vesting.
Share options which vest in instalments over a specified
vesting period (graded vesting) where the only vesting condition
is service from grant date to vesting date of each instalment
are accounted for as separate share-based payments. Each
instalment's fair value is assessed separately based on its
term and the resulting charge recognised over each instalment's
vesting period.
Other share options
In addition to the LTIP grants, the Company awarded certain
employees approved options. Details of these options can
be found in note 22. The accounting treatment for these options
is consistent with that indicated under the LTIP section
at the start of this page.
1.14 Leases
At inception, the Group assesses whether a contract is, or
contains, a lease within the scope of IFRS 16. A contract
is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration. Where a tangible asset
is acquired through a lease, the Group recognises a right-of-use
asset and a lease liability at the lease commencement date.
Right-of-use assets are included within property, plant and
equipment, apart from those that meet the definition of investment
property.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted
for any lease payments made at, or before, the commencement
date, plus any initial direct costs and an estimate of the
cost of obligations to dismantle, remove, refurbish or restore
the underlying asset and the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same basis
as those of other property, plant and equipment. The right-of-use
asset is periodically reduced by impairment losses, if any,
and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are unpaid at the commencement
date, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. Lease payments included
in the measurement of the lease liability comprise fixed
payments, variable lease payments that depend on an index
or a rate, amounts expected to be payable under a residual
value guarantee, and the cost of any options that the Group
is reasonably certain to exercise, such as the exercise price
under a purchase option, lease payments in an optional renewal
period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is
a change in: future lease payments arising from a change
in an index or rate; the Group's estimate of the amount expected
to be payable under a residual value guarantee; or the Group's
assessment of whether it will exercise a purchase, extension
or termination option. When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit
or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The Group has elected not to recognise right-of-use assets
and lease liabilities for short-term leases of machinery
that have a lease term of 12 months or less, or for leases
of low-value assets including IT equipment. The payments
associated with these leases are recognised in profit or
loss on a straight-line basis over the lease term.
1.15 Grants
Government grants are recognised when there is reasonable
assurance that the grant conditions will be met and the grants
will be received.
1.16 Foreign exchange
Transactions in currencies other than pounds sterling are
recorded at the rates of exchange prevailing at the dates
of the transactions. At each reporting end date, monetary
assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the reporting
end date. Gains and losses arising on translation are included
in the income statement for the period.
Whilst the majority of the Group 's revenue is in Euros,
the Company also incurs a significant level of expenditure
in that currency. As such, the Company does not currently
use any hedging facilities and instead chooses to keep some
of its cash at the bank in Euros.
1.17 Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
1.18 Defined contribution plan
A defined contribution plan is a post-employment benefit
plan under which the Group pays fixed contributions into
a separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an
expense in the income statement in the periods during which
services are rendered by employees.
1.19 Financial risk management
The Group 's activities expose it to a variety of financial
risks: market risks (including currency risk and interest
rate risks), credit risk and liquidity risk. Risk management
focuses on minimising any potential adverse effect on the
Company's financial performance and is carried out under
policies approved by the Board of Directors. See note 32
for further information.
1.20 Functional and presentation currency
The Group's consolidated financial statements are presented
in pound sterling, which is the Group's functional currency
due to its own operations and assets being based in the U.K..
For each entity, the Group determines the functional currency,
and items included in the financials tatements of each entity
are measured using that functional currency.The Company's
financial statements are prepared and presented in sterling,
which is its functional currency.
1.21 Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation (where items are remeasured). Monetary
assets and liabilities denominated in foreign currencies are
translated at the functional currency spot rates of exchange at the
reporting date. Foreign exchange gains and losses resulting from
the settlement of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement. All
foreign exchange gains and losses are presented in the income
statement within administrative expenses.
Translation differences related to items classified through
other comprehensive income are recognised in other comprehensive
income (OCI), while remaining translation differences are
recognised in the income
statement.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The
gain or loss arising on translation of non-monetary items measured
at fair value is treated in line with the recognition of the gain
or loss on the change in fair value of the item (i.e. translation
differences on items whose fair value gain or loss is recognised in
OCI or profit or loss are also recognised in OCI or profit or loss
respectively).
In determining the spot exchange rate to use on initial
recognition of the related asset, expense or income (or part of it)
or the derecognition of a non-monetary asset or non-monetary
liability relating to advance consideration, the date of the
transaction is the date on which the Group initially recognises the
non-monetary asset or non-monetary liability arising from the
advance consideration. If there are multiple payments or receipts
in advance, the Group determines the transaction date for each
payment or receipt of advance consideration.
1.22 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term
highly liquid investments with an original maturity of three months
or less, that are readily convertible to a known amount of cash and
subject to an insignificant risk of changes in value.
1.23 Current versus non-current classification
The Group classifies assets and liabilities in the statement of
financial position as either current or non-current.
An asset is classified as current when it is:
-- Expected to be realised or intended to be sold or consumed in the normal operating cycle
-- Held primarily for the purpose of trading
-- Expected to be realised within twelve months after the reporting period; or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when it is:
Expected to be settled in the normal operating cycle
Held primarily for the purpose of trading
Due to be settled within twelve months after the reporting
period ; or
There is no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting
period.
The terms of the liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
The Group classifies all other liabilities as non-current.
1.24 Equity and reserves
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds shown in share premium. Share premium represents the
proceeds from shares, less the nominal value and directly
attributable costs.
1.25 Earnings per share
Basic earnings per share is calculated by dividing:
-- the profit or loss attributable to owners of the Company,
excluding any costs of servicing equity other than ordinary
shares;
-- by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year and excluding treasury shares.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
-- the after-income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares; and
-- the weighted average number of additional ordinary shares
that would have been outstanding, assuming the conversion of all
dilutive potential ordinary shares.
2 New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the
following standards and interpretations with an effective date of
implementation for accounting periods beginning after the date on
which the Group's financial statements for the current year
commenced.
i) New standards and amendments - applicable 1 January 2022
The following standards and interpretations apply for the first
time to financial reporting periods commencing on or after 1
January 2022:
Effective
for accounting
periods beginning
on or after Impact
------------------------------------------------------- ------------------ -------
Property, Plant and Equipment: Proceeds before intended 1 January
use - Amendments to IAS 16 2022 None
Reference to the Conceptual Framework - Amendments 1 January
to IFRS 3 2022 None
Onerous Contracts: Cost of Fulfilling a Contract - 1 January
Amendments to IAS 37 2022 None
------------------------------------------------------- ------------------ -------
1 January
Annual Improvements to IFRS Standards 2018-2020 2022 None
------------------------------------------------------- ------------------ -------
ii) Forthcoming requirements
As at 31 December 2022, the following standards and
interpretations had been issued but were not mandatory for annual
reporting periods commencing on or after 1 January 2023.
Effective for
accounting periods
beginning on Expected
or after Impact
----------------------------------------------- ------------------------------------------ ---------------------
IFRS 17 Insurance Contracts 1 January 2023 None
Amendments to IAS 1: Classification of
Liabilities
as Current or Non-current 1 January 2023 None
Definition of Accounting Estimates - Amendments
to IAS 8 1 January 2023 None
Disclosure of Accounting Policies - Amendments
to IAS 1 and IFRS Practice Statement 2 1 January 2023 None
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction - Amendments
to IAS 12 1 January 2023 None
3 Critical accounting estimates and judgements
The Group and Company make estimates and assumptions concerning
the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions
that have a significant risk to the carrying amounts of assets
and liabilities within the next financial year are discussed
below:
Going concern
The Directors have considered the ability of the Group and the
Company to continue as a going concern and this is considered
to be a significant judgement made by the Directors in preparing
the financial statements.
The ability of the Group and Company to continue as a going concern
is ultimately dependent upon the amount and timing of cash flows
arising from the exploitation of the Group and Company's intellectual
property and the availability of existing and/or additional funding
to meet the short term needs of the business until the commercialisation
of the Group and Company's portfolio is reached. The Directors
consider it is appropriate for the financial statements to be
prepared on a going concern basis based on the estimates they
have made. See note 1 for further information.
Associate
A judgement has been made that Eden exerts significant influence
on TerpeneTech (UK) such that it is an associate company and,
as such, adoption of equity accounting is appropriate.
COVID-19
The Group has made accounting judgements and estimates based
on there being minimal impact of COVID-19 on the business in
the long term. This is impacting, in particular, the forecasts
used as the basis for intangibles impairment review, investment
impairment review and going concern. Clearly, this is still a
degree of uncertainty as to exactly how and if the business could
be impacted and the Directors will continue to monitor the situation
closely.
The Group and Company make estimates and assumptions concerning
the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions
that have a significant risk to the carrying amounts of assets
and liabilities within the next financial year are discussed
below:
Going concern
The Directors have considered the ability of the Group and the
Company to continue as a going concern and this is considered
to be a significant judgement made by the Directors in preparing
the financial statements.
The ability of the Group and Company to continue as a going
concern is ultimately dependent upon the amount and timing of
cash flows arising from the exploitation of the Group and Company's
intellectual property and the availability of existing and/or
additional funding to meet the short term needs of the business
until the commercialisation of the Group and Company's portfolio
is reached. The Directors consider it is appropriate for the
financial statements to be prepared on a going concern basis
based on the estimates they have made. See note 1 for further
information.
Associate
A judgement has been made that Eden exerts significant influence
on TerpeneTech (UK) such that it is an associate company and,
as such, adoption of equity accounting is appropriate.
COVID-19
The Group has made accounting judgements and estimates based
on there being minimal impact of COVID-19 on the business in
the long term. This is impacting, in particular, the forecasts
used as the basis for intangibles impairment review, investment
impairment review and going concern. Clearly, this is still
a degree of uncertainty as to exactly how and if the business
could be impacted and the Directors will continue to monitor
the situation closely
Impairment assessment of intangibles and investments
The Group has made estimates future revenues that are likely
to be derived from the business when considering the carrying
value of intangible assets owned by the Group. Assumptions have
been made the products will be successfully developed, registered
and commercialised in reasonable timescales and at reasonable
cost. Estimates have also been made for weighted average cost
of capital and profit margins. See note 12 and note 15 for further
information of assumptions and estimates made.
Assessment of useful life of intangible assets
The Group has estimated the useful life of intangible assets
by considering intellectual property protection that it owns,
such a patents which have a known expiry date. See note 12 and
note 15 for further information of assumptions and estimates
made.
Share based payments
The Group has used appropriate models to value share options
granted by the Company. Please refer to note 22 for information
on estimates and judgements used.
Impairment assessment of intangibles and investments
The Group has made estimates future revenues that are likely to
be derived from the business when considering the carrying value of
intangible assets owned by the Group. Assumptions have been made
the products will be successfully developed, registered and
commercialised in reasonable timescales and at reasonable cost.
Estimates have also been made for weighted average cost of capital
and profit margins. See note 12 and note 15 for further information
of assumptions and estimates made.
Assessment of useful life of intangible assets
The Group has estimated the useful life of intangible assets by
considering intellectual property protection that it owns, such a
patents which have a known expiry date. See note 12 and note 15 for
further information of assumptions and estimates made.
Share based payments
The Group has used appropriate models to value share options
granted by the Company. Please refer to note 22 for information on
estimates and judgements used.
Other accounting judgements
In addition to the above, the Group has made other judgements
which are considered of lesser significance.
Capitalised development costs and Intellectual property
The Directors have exercised a judgement that the development
costs incurred meet the criteria in IAS 38 Intangible Assets for
capitalisation. In making this judgement, the Directors considered
the following key factors:
-- The availability of the necessary financial resources and
hence the ability of the Group and Company to continue as a going
concern.
-- The assumptions surrounding the perceived market sizes for
the products and the achievable market share for the Group .
-- The successful conclusion of commercial arrangements, which
serves as an indicator as to the likely success of the projects
and, as such, any need to potential impairment.
GBP64,273 of research expenditure has been recognised as an
expense in the current year in the P&L in excess of the
amortisation of intangible assets as disclosed in note 12 (2021:
GBP11,215).
Revenue - Performance obligations
The Directors have exercised a judgement that the performance
obligations set out in a contract with a customer have note yet
been met and, as such, have not recognised revenue which has been
invoiced and paid. See note 1 for further information on policies
applied.
Revenue and Segmental Information
4
IFRS 8 requires operating segments to be reported in a manner
consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker,
who is responsible for the resource allocation and assessing
performance of the operating segments has been identified as
the Executive Directors as they are primarily responsible for
the allocation of the resources to segments and the assessment
of performance of the segments.
The Executive Directors monitor and then assess the performance
of segments based on product type and geographical area using
a measure of adjusted EBITDA. This is the operating loss of
the segment after excluding the share based payment charge,
a mortisation on intangible and Right of Use assets and d epreciation
of plant, property and equipment . These items, together with
interest income and expense are allocated to Agrochemicals,
being the Company's primary focus.
The segment information for the year ended 31 December 2022 is
as follows:
Agrochemicals Consumer Animal Total
products health
-------------- ---------- -------- ------------
Revenue GBP GBP GBP GBP
-------------- ---------- -------- ------------
Milestone payments - - -
-------------- ---------- -------- ------------
R & D charges 75,334 14,309 - 89,643
-------------- ---------- -------- ------------
Royalties 17,694 100,038 - 117,732
-------------- ---------- -------- ------------
Product sales 1,619,796 - - 1,619,796
-------------- ---------- -------- ------------
Total revenue 1,712,824 114,347 - 1,827,171
-------------- ---------- -------- ------------
Adjusted EBITDA (1,841,805) 114,347 - (1,727,458)
-------------- ---------- -------- ------------
Share Based Payment charge (152,135) - - (152,135)
-------------- ---------- -------- ------------
EBITDA (1,993,940) 114,347 - (1,879,593)
-------------- ---------- -------- ------------
Amortisation on intangible ( 495,818
and Right of Use assets (482,546) (13,272) - )
-------------- ---------- -------- ------------
Depreciation of plant, property
and equipment (191,622) - - (191,622)
-------------- ---------- -------- ------------
Finance costs, foreign exchange
and investment revenues 30,882 - - 30,882
-------------- ---------- -------- ------------
Income Tax 323,716 - - 323,716
-------------- ---------- -------- ------------
Share of Associate's loss - (31,444) - (31,444)
-------------- ---------- -------- ------------
(Loss)/Profit for the Year (2,313,510) 69,631 - (2,243,879)
-------------- ---------- -------- ------------
Total Assets 12,812,579 99,003 - 12,911,582
-------------- ---------- -------- ------------
Total assets includes:
-------------- ---------- -------- ------------
Additions to Non-Current
Assets 1,141,418 - - 1,141,418
-------------- ---------- -------- ------------
Total Liabilities 2,168,664 - - 2,168,664
-------------- ---------- -------- ------------
The segment information for the year ended 31 December 2021 is
as follows:
Agrochemicals Consumer Animal Total
products health
-------------- ---------- -------- ------------
Revenue GBP GBP GBP GBP
-------------- ---------- -------- ------------
Milestone payments 5,250 - - 5,250
-------------- ---------- -------- ------------
R & D charges - 7,760 - 7,760
-------------- ---------- -------- ------------
Royalties 57,170 36,131 - 93,301
-------------- ---------- -------- ------------
Product sales 1,122,269 - - 1,122,269
-------------- ---------- -------- ------------
Total revenue 1,184,689 43,891 - 1,228,580
-------------- ---------- -------- ------------
Adjusted EBITDA (2,021,602) 43,891 - (1,977,711)
-------------- ---------- -------- ------------
Share Based Payment charge (640,597) - - (640,597)
-------------- ---------- -------- ------------
EBITDA (2,662,199) 43,891 - (2,618,308)
-------------- ---------- -------- ------------
Amortisation on intangible ( 434,630
and Right of Use assets (421,358) (13,272) - )
-------------- ---------- -------- ------------
Depreciation of plant, property
and equipment (155,342) - - (155,342)
-------------- ---------- -------- ------------
Finance costs, foreign exchange
and investment revenues (129,223) - - (129,223)
-------------- ---------- -------- ------------
Impairment of investment - - - -
in associate
-------------- ---------- -------- ------------
Income Tax 618,137 - - 618,137
-------------- ---------- -------- ------------
Share of Associate's loss - (58,177) - (58,177)
-------------- ---------- -------- ------------
(Loss)/Profit for the Year (2,749,985) (27,558) - (2,777,543)
-------------- ---------- -------- ------------
Total Assets 15,004,888 22,197 - 15,027,085
-------------- ---------- -------- ------------
Total assets includes:
-------------- ---------- -------- ------------
Additions to Non-Current
Assets 1,802,660 - - 1,802,660
-------------- ---------- -------- ------------
Total Liabilities 2,153,649 43,961 - 2,197,610
-------------- ---------- -------- ------------
2022 2021
GBP GBP
Revenue analysed by geographical market
UK 114,347 83,891
Europe 1,712,824 1,144,689
1,827,171 1,228,580
The above analysis represents sales to the Group's direct
customers who further distribute these products to their end
markets.
Revenues of approximately GBP1,655,329 (2021: GBP1,036,156) are
derived from two customers who each account for greater than 10% of
the Group's total revenues:
2022 2022 2021 2021
Customer GBP % GBP %
A 1,450,518 75.4 900,364 73.3
---------- ------ -------- ------
B 204,811 10.6 134,192 10.9
---------- ------ -------- ------
100% of the revenue generated in the year (2021: 100%) was
recognised at a point in time.
5 Operating loss
2022 2021
GBP GBP
Operating loss for the year is stated after charging/(crediting):
Fees payable to the Company's auditor
for the audit of the Company's financial
statements 67,000 55,000
Fees payable to the Company's auditor
for interim review of half-yearly results 3,500 -
Depreciation of right-of-use assets (included
within administrative expenses) 127,200 98,287
Depreciation on property, plant and equipment 191,622 155,343
Amortisation of intangible assets 495,818 434,630
Provision for doubtful debts 107,188 -
Research expenses 64,273 11,215
Share-based payments 152,135 640,597
6 Employees
The average monthly number of persons (including directors) employed
by the Group during the year was:
2022 2021
Number Number
Management 4 4
Operational 13 12
17 16
Their aggregate remuneration comprised:
2022 2021
GBP GBP
Wages and salaries 1,205,424 1,422,841
Social security costs 145,871 172,142
Pension costs 47,964 53,836
Benefits in kind 6,486 5,826
Share based payment charge 152,135 678,069
1,557,880 2,332,714
7 Directors' remuneration
2022 2021
GBP GBP
Remuneration for qualifying services 478,440 629,060
Company pension contributions to defined
contribution schemes 33,491 31,009
Non-executive Directors' fees 96,667 85,000
Share based payment charge relating
to all Directors 119,083 632,836
727,681 1,377,905
Benefits in kind 6,486 5,826
Social security costs 71,708 91,901
805,875 1,475,632
The number of Directors for whom retirement benefits are accruing
under defined contribution schemes amounted to 2 (2021 - 2).
The number of Directors who are entitled to receive shares under
long term incentive schemes during the year is 2 (2021 - 2).
Remuneration disclosed above includes the following amounts paid
to the highest paid Director:
2022 2021
GBP GBP
Remuneration for qualifying services
including pension 292,367 376,972
The Executive Directors are considered to also be the key management
personnel of the Company and Group.
2022 Salary Bonus Fees Pension Share Based Total
Payments
GBP GBP GBP GBP GBP GBP
A Abrey 205,200 - - 14,364 51,074 270,638
S Smith 273,240 - - 19,127 68,009 360,376
R Cridland - - 40,000 - - 40,000
L van der
Broek - - 45,000 - - 45,000
R Horsman - - 11,667 - - 11,667
478,440 - 96,667 33,491 119,083 727,681
=========== =========== ============ ============ ============ ==========
2021 Salary Bonus Fees Pension Share Based Total
Payments
GBP GBP GBP GBP GBP GBP
A Abrey 190,000 79,800 - 13,297 271,256 554,353
S Smith 253,000 106,260 - 17,712 361,580 738,552
R Cridland - - 40,000 - - 40,000
L van der
Broek - - 45,000 - - 45,000
----------- ----------- ------------ ------------ ------------ ----------
443,000 186,060 85,000 31,009 632,836 1,377,905
=========== =========== ============ ============ ============ ==========
8 Interest income
2022 2021
GBP GBP
Interest income
Bank deposits 192 98
Total interest income for financial assets that are not held
at fair value through profit or loss is GBP192 (2021: GBP98).
9 Finance costs and foreign exchange (gains)/losses
2022 2021
GBP GBP
Interest on lease liabilities 22,046 32,074
Finance costs 22,046 32,074
Exchange differences on working capital (2,825) 75,254
Effect of exchange rate fluctuations on cash (49,911) 21,993
Exchange losses and (gains) (52,736) 97,247
10 Income tax income
2022 2021
GBP GBP
Current tax
UK corporation tax on profit or loss
for the current period (323,716) (572,585)
Adjustments in respect of prior periods - (45,552)
Total UK current tax income (323,716) (618,137)
The credit for the year can be reconciled to the loss per the
income statement as follows:
2022 2021
GBP GBP
Loss (2,567,595) (3,395,680)
Expected tax credit based on a corporation
tax rate of 19% (2021: 19.00%) (487,843) (645,179)
Ineligible fixed asset differences 9,489 11,639
Expenses not deductible for tax purposes 75,663 129,845
Additional deduction for R&D expenditure (239,754) (424,074)
R&D claim (323,716) (572,585)
Surrender of tax losses for R&D tax
credit refund 424,180 750,284
Adjustment in respect of prior years - (45,552)
Deferred tax not recognised 218,265 177,485
Taxation credit for the year (323,716) (618,137)
On 10 June 2021, the Finance Act 2021 received Royal Assent,
confirming that the UK rate of corporation tax will increase from
19% to 25% from 1 April 2023.
The taxation credit for the year represents the research and
development credit for the year ended 31 December 2022.
The current tax recoverable as at 31 December 2022 represents
R&D tax credits and is made up as follows:
2022 2021
GBP GBP
Current tax
R & D cash tax credit for the current
period (323,716) (572,585)
R & D cash tax credit for the prior period - (330,660)
Total UK current tax recoverable (323,716) (903,245)
Deferred Tax
The losses carried forward, after the above offset, for which no
deferred tax asset has been recognised, amount to approximately
GBP29,199,472 (2021: GBP27,548,529).
The unprovided deferred tax asset of GBP7,299,868 (2021:
GBP5,234,221) arises principally in respect of trading losses. It
has been calculated at 25% (2021: 19%) and has not been recognised
due to the uncertainty of timing of future profits against which it
may be realised.
Only U.K. tax is considered as most of the operations are in the
U.K. and Ireland is immaterial in terms of operations.
11 Earnings per share
2022 2021
GBP GBP
Weighted average number of ordinary shares
for basic and diluted earnings per share 380,549,418 380,340,229
============== ===========
Earnings (all attributable to equity shareholders of the Company)
Loss for the period (2,243,879) (2,777,543)
============== ===========
Basic earnings per share (0.59p) (0.73p)
Diluted earnings per share (0.59p) (0.73p)
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
Share options outstanding are anti dilutive in nature due to loss
incurred and therefore not considered for computing diluted EPS
12 Intangible assets
Group
Licences Development Intellectual Total
and trademarks costs property
GBP GBP GBP GBP
Cost
At 1 January 2021 448,896 6,624,406 9,316,281 16,389,583
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,407,686 18,014,510
Additions - 923,891 99,371 1,023,262
At 31 December 2022 456,684 9,074,031 9,507,057 19,037,772
Amortisation and impairment
At 1 January 2021 448,896 2,494,523 6,716,681 9,660,100
Charge for the year - 214,682 219,948 434,630
At 31 December 2021 448,896 2,709,205 6,936,627 10,094,728
Charge for the year 1,296 284,174 210,348 495,818
At 31 December 2022 450,192 2,993,379 7,146,975 10,590,546
Carrying amount
At 31 December 2022 6,492 6,080,652 2,360,082 8,447,226
At 31 December 2021 7,788 5,440,935 2,471,057 7,919,780
Company
Licences Development Intellectual Total
and trademarks costs property
GBP GBP GBP GBP
Cost
At 1 January 2021 448,896 6,624,406 9,183,538 16,256,840
Additions 7,788 1,525,734 91,405 1,624,927
At 31 December 2021 456,684 8,150,140 9,274,943 17,881,767
Additions - 923,890 99,371 1,023,261
At 31 December 2022 456,684 9,074,030 9,374,314 18,905,028
Amortisation and impairment
At 1 January 2021 448,896 2,494,523 6,703,407 9,646,826
Charge for the year - 214,682 206,676 421,358
At 31 December 2021 448,896 2,709,205 6,910,083 10,068,184
Charge for the year 1,296 284,174 197,075 482,545
At 31 December 2022 450,192 2,993,379 7,107,158 10,550,729
Carrying amount
At 31 December 2022 6,492 6,080,651 2,267,156 8,354,299
At 31 December 2021 7,788 5,440,935 2,364,860 7,813,583
Intellectual property represents intellectual property in relation
to use of encapsulated terpenes in agrochemicals in the form
of licences, patents and development costs. The remaining useful
economic life of these asset is 8 years (2021: 9 years).
Licences and trademarks includes an inward licence in respect
of a patented technology.
Development costs includes trials and study costs relating to
products that have been, or are being developed by Eden.
Intellectual property includes patents and know-how acquired
by Eden.
GBP3,799,161 (2021: GBP2,985,482) of development costs relate
to assets under development for which no amortisation has been
charged in 2022 or 2021.
An annual impairment review is undertaken by the Board of Directors.
The Directors have considered the progress of the business in
the current year, including a review of the potential market
for its products, the progress the Company has made in registering
its products and other key commercial factors to perform the
review.
Of GBP8,447,226 carrying amount of intangible assets, GBP3,799,161
are under development and GBP4,555,138 have been allocated to
the Agrochemicals Cash Generating Unit (CGU). The remaining intangible
assets, GBP92,927, have been allocated to the Consumer products
CGU. For impairment assessment we have allocated asset under
development to the agrochemical CGU as all the assest under delvelopment
relates to the agrochemical industry.
The Directors have prepared a discounted cash-flow forecast,
based on product sales forecasts including those provided by
the Company's commercial partners, and have taken into account
the market potential for Eden's products and technologies using
third party market data that Eden has acquired licences to. The
discounted cash-flow forecast is limited to those products which
are already being sold, or are expected to be sold in 2023, or
early 2024.
The forecast covers a period of 8 years, with no terminal value,
reflecting the useful economic life of the patent in respect
of the underlying technology. Financial forecasts for 2023 are
based on the approved annual budget. Financial forecasts for
2024-2025 are based on the approved long-term plan. Financial
forecasts for 2026-2030 are extrapolated based on the long-term
growth rate average of 25%.
The estimated recoverable amount of the CGU exceeded its carrying
amount by GBP0.9m and based on the review carried out management
is satisfied that intangible assets are not impaired.
As set out in the Strategic Report, the business is in a critical
phase of its development as the development of products is transitioned
to revenue generation. The value of the CGU is supported by forecasts
of continued revenue growth of existing products and the successful
introduction and growth of sales of products currently under
development.
The key assumptions of the forecast are the future cash flows,
driven primarily by level of sales, and the discount rate. The
discount rate is estimated using pre-tax rates that reflect current
market assessments of the time value of money and the risk specific
to the CGU. The rate used was 13.5% (2021: 12.4%). The increase
in the rate reflects the wider market movements as based on the
comparable group as well as increased forecasting risk given
high, current inflation rates.
The impact of increasing the discount rate by 1%, which is considered
a reasonably possible change, would be a decrease in the recoverable
amount to GBP0.4m. The discount rate would have to increase to
over 15% to reduce the headroom to GBPnil.
The average annual growth rate has been assumed at 45% (2021:
51%), reflecting the latest forecasts based on information provided
by customers and own market analysis. The rate stands at 79%
up to 2025, reflecting commercialisation of new products in the
period, reducing to 25% from 2026 onwards.
Forecast sales would have to reduce by an average of, approximately,
15% per annum to reduce headroom to GBPnil, which is not considered
likely.
13 Property, plant and equipment
Consolidated and Company
Fixtures Total
and fittings
GBP GBP
Cost
At 1 January 2021 200,758 200,758
Additions - owned 101,269 101,269
At 31 December 2021 302,027 302,027
Additions - owned 30,929 30,929
At 31 December 2022 332,956 332,956
Accumulated depreciation and
impairment
At 1 January 2021 12,693 12,693
Charge for the year 57,056 57,056
At 31 December 2021 69,749 69,749
Charge for the year 64,421 64,421
At 31 December 2022 134,170 134,170
Carrying amount
At 31 December 2022 198,786 198,786
At 31 December 2021 232,278 232,278
14 Right-of-Use Assets
Consolidated and Company
Leasehold Motor vehicles Total
premises
GBP GBP GBP
Cost
At 1 January 2021 417,521 35,865 453,386
Additions 26,256 50,208 76,464
Disposals - - -
--------- -------------- --------
At 31 December 2021 443,777 86,073 529,850
Additions - 87,228 87,228
Disposals - (35,865) (35,865)
--------- -------------- --------
At 31 December 2022 443,777 137,436 581,213
Accumulated depreciation and
impairment
At 1 January 2021 36,361 22,415 58,776
Charge for the year 83,504 14,783 98,287
--------- -------------- --------
At 31 December 2021 119,865 37,198 157,063
Charge for the year 90,876 36,325 127,201
Eliminated on disposals - (35,865) (35,865)
--------- -------------- --------
At 31 December 2022 210,741 37,658 248,399
Carrying amount
At 31 December 2022 233,036 99,778 332,814
At 31 December 2021 323,912 48,875 372,787
15 Investments
Current Non-current
2022 2021 2022 2021
GBP GBP GBP GBP
Investments in associates - - 330,244 361,688
Details of the Group's associates at 31 December
2022 are as follows:
Name of Registered Principal Class % held
undertaking office activities of shares Direct Voting
held
Research and
experimental
TerpeneTech United development
Limited (UK) Kingdom on biotechnology Ordinary 29.90 29.90
2022 2021
GBP GBP
Non-current assets 378,271 440,601
Current assets 382,753 287,576
Non-current liabilities (92,341) (98,806)
Current liabilities (340,419) (269,026)
--------------- ----------
Net assets (100%) 328,264 360,345
Company's share of net assets 98,151 107,743
Separable intangible assets 126,249 140,817
Goodwill 412,649 412,649
Impairment of investment in associate (299,521) (299,521)
--------------- ----------
Carrying value of interest in associate 337,528 361,688
Revenue 497,292 361,307
100% of loss after tax (56,440) (145,849)
29.9% of loss after tax (16,876) (43,609)
Amortisation of separable intangible (14,568) (14,568)
Company's share of loss including amortisation
of separable intangible asset (31,444) (58,177)
The separable intangible assets relate to the biocide registration for
geraniol which TerpeneTech co-owns which was originally valued using discounted
cashflows.
The associate is included in the Consumer Products operating segment.
TerpeneTech Limited's ("TerpeneTech (UK)") registered office is
Kemp House, 152 City Road, London, EC1V 2NX and its principal place
of business is 3 rue de Commandant Charcot, 22410, St Quay Portrieux,
France.
The Directors have considered the progress of the business in the
current year, including a review of the potential market for its
products, the progress TerpeneTech (UK) has made in registering
its products and other key commercial factors to determine whether
any indicators of impairment exist. As a result of identification
of indicators of impairment, an impairment review of the investment
in TerpeneTech (UK) was undertaken by the Board of Directors.
The Directors have used discounted cash-flow forecasts, based on
product sales forecasts provided by TerpeneTech (UK), and have
taken into account the market potential for those products. These
forecasts cover an 8-year period, with no terminal value, in line
with the patent of the underlying technology.
The key assumptions of the forecast are the growth rate and the
discount rate. The discount rate is estimated using pre-tax rates
that reflect current market assessments of the time value of money
and the risk specific to the asset. The rate used was 13.5% (2021:
15%). The use of a reduced discount rate reflects a reduction in
uncertainty in geraniol sales, following another year of double
digit growth, offset by increased inflation rates globally.
Based on the review the Directors carried out, it was determined
that the Investment was not impaired and, as such, no impairment
charge (2021: GBPnil) was recognised.
An increase in the discount rate has to be substantial to result
in an impairment.
The growth rates are derived from discussions with the Company's
commercial partner, TerpeneTech (UK), as described above.
The average annual growth rate has been assumed at 15% (2021: 21%)
and is based on the sales of geraniol only.
Even with no growth in the forecast geraniol sales over the entire
forecast period there would be no impairment.
The Directors have also considered whether any reasonable change
in assumptions would lead to a material change in impairment recognised
and are satisfied that this is not the case.
16 Subsidiaries
Details of the Company's subsidiaries at 31 December 2022 are as
follows:
Name of undertaking Registered office Principal Class of % Held
activities
shares held Direct Voting
TerpeneTech Sale of biocide
Limited Republic of Ireland products Ordinary 50.00 50.00
Eden Research
Europe Limited Republic of Ireland Dormant Ordinary 100.00 100.00
TerpeneTech Limited ("TerpeneTech (Ireland)"), whose registered
office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland,
was incorporated on 15 January 2019 and is jointly owned by both
Eden Research plc and TerpeneTech (UK), the Company's associate.
Eden has the right to appoint a director as chairperson who will
have a casting vote, enabling the Group to exercise control over
the Board of Directors in the absence of an equivalent right for
TerpeneTech (UK). Eden owns 500 ordinary shares in TerpeneTech
(Ireland).
Eden Research Europe Limited, whose registered office is 108 Q
House, Furze Road, Sandyford, Dublin, Ireland, was incorporated
on 18 November 2020 and is wholly owned by both Eden Research plc.
Non-controlling interests
The following table summarises the information relating to the Group's
subsidiary with material non-controlling interest, before intra-Group
eliminations:
2022 2021
GBP GBP
NCI percentage 50% 50%
Non-current assets 92,927 106,199
Current assets 6,076 -
Non-current liabilities - -
Current liabilities (50,000) (43,962)
Net liabilities (100%) 49,003 62,237
Carrying amount of NCI (50% of net liabilities) 24,502 31,119
Revenue 50,038 36,131
Loss after tax (13,234) 22,859
OCI - -
Total comprehensive income (13,234) 22,859
Share of NCI (50% of net Total comprehensive
income) (6,617) 11,430
Cash flows from operating activities - -
Cashflows form investing activities - -
Cashflows from financing activities - -
Net increase / (decrease) in cash and cash equivalents - -
Dividends paid to non-controlling interests - -
17 Inventories
Group and Company
2022 2021
GBP GBP
Raw materials 115,929 75,677
Goods in transit 411,181 424,025
Finished goods 98,348 21,649
625,458 521,351
Inventory above is shown net of a provision of:
Provision for obsolete inventory 76,250 -
76,250 -
Raw materials of GBP580,851 (2021:GBP646,786) were consumed during
the year.
18 Trade and other receivables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Trade receivables 322,489 693,948 322,489 693,948
VAT recoverable 179,214 104,760 179,214 104,760
Other receivables 67,410 65,957 195,335 149,957
Prepayments 89,753 21,922 89,753 21,922
658,866 886,587 786,791 970,587
Group and Company
2022 2021
GBP GBP
Trade receivables above are shown net of a provision for doubtul
debt of:
Provision for doubtful
debts 107,188 -
107,188 -
Trade receivables disclosed above are measured at amortised cost. The Directors
consider that
the carrying amount of trade and other receivables approximates their fair value.
19 Trade and other payables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Current
Trade payables 1,150,873 1,147,823 1,150,873 1,147,823
Accruals and deferred income 515,860 440,416 515,860 440,416
Social security and other
taxation 52,849 45,495 52,849 45,495
Other payables 93,759 77,784 93,759 33,823
1,813,341 1,711,518 1,813,341 1,667,557
Non-current
Other payables (note 22,
'Xinova liability') - 87,740 - 87,740
- 87,740 - 87,740
20 Lease liabilities
Group and Company
2022 2021
Maturity analysis - total payments due under GBP GBP
leases:
Within one year 156,548 128,553
In two to five years 226,541 307,275
Total undiscounted liabilities 383,089 435,828
Future finance charges and other adjustments (27,766) (37,476)
Lease liabilities in the financial statements 355,323 398,352
Lease liabilities are classified based on the amounts that are
expected to be settled within the next 12 months and after more
than 12 months from the reporting date, as follows:
2022 2021
GBP GBP
Current liabilities 139,547 99,924
Non-current liabilities 215,776 298,428
355,323 398,352
2022 2021
Amounts recognised in profit or loss include GBP GBP
the following:
Interest on lease liabilities 22,046 32,074
Other leasing information is included in note 29.
21 Retirement benefit schemes
Defined contribution schemes
The Group operates a defined contribution pension scheme for
all qualifying employees. The assets of the scheme are held separately
from those of the Group in an independently administered fund.
The total costs charged to the income statement in respect of
defined contribution plans is GBP47,964 (2021: GBP53,836).
22 Share-based payment transactions
Long-Term Incentive Plan ("LTIP")
Since September 2017 Eden has operated an option scheme for
executive directors, senior management and certain employees
under an LTIP which allows for certain qualifying grants to
be HMRC approved.
2019 Award
On 28 June 2019, 5,891,111 shares were awarded under the LTIP
scheme to the Chief Executive Officer and the Chief Financial
Officer ("2019 Award").
The share-based payment charge for the 2019 Award is set out
as follows:
Financial year Share based
ended payment charge
31 December GBP
2017 27,210
2018 85,372
2019 110,743
2020 94,176
2021 51,909
2022 16,959*
386,369
* As these options lapsed in 2021, the charge of GBP16,959
was not made in 2022.
The following information is relevant in the determination of
the fair value of options granted under the 2019 Award.
2017 Award 2018 Award
Grant date 28/06/2019 28/06/2019
Number of awards 2,868,889 3,022,222
Share price 0.115 0.115
Exercise price GBPnil GBPnil
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 2 years 3 years
of grant)
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 Incremental Fair Incremental Fair
at 31 December 2021 Value GBP Value per Award GBP
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 Original Replacement Original Replacement Annual
for grants Annual Annual Annual Annual GBP
during the GBP GBP GBP GBP
period
31 Dec 21 17,735 231,846 34,174 229,998 513,753
31 Dec 22 - - 16,959* - 16,959
* As these options lapsed in 2021, the charge of GBP16,959 was
not made in 2022.
The following information is relevant in the determination of
the fair value of options granted under the LTIP Replacement
Award.
Replacement
Awards
Grant date 30/06/2021
Number of awards 10,500,000
Share price GBP0.10
Exercise price GBP0.06
Expected dividend yield -%
Expected volatility 55%
Risk free rate 0.03%
80
Vesting period Nil
Expected Life (from date 0.5/1/1.5 years
of grant)
As the options have been issued at a significant discount to the
share price, the expected exercise has been assumed to equal the
midpoint between the vest and lapse date.
During the year, 3,500,000 of the above options lapsed and
GBP171,251 (2021: GBPnil) was transferred from the warrant reserve
to retained earnings.
2021 Award
Also in 2021, the Company made a further grant of options in
order to ensure continuity of long term incentive of options over
7,183,784 new Ordinary Shares in Eden, at a strike price of 10.37p
each, in the amounts of 4,102,703 awarded to Sean Smith and
3,081,081 awarded to Alex Abrey.
These grants expire on 31 July 2025 and vest as follows:
1/3 upon grant
1/3 12 months from the date of grant
1/3 24 months from the date of grant
The share-based payment charge for the year ended 31 December
2022 in respect of the above 2021 LTIP awards was GBP119,083 (2021:
GBP119,083).
Other share options
2021 Award
In addition to the options granted under the LTIP, certain
employees were awarded approved options over a total of 996,220
shares. These have been issued at a strike price of 10-10.37p with
expiry date between 30 June 2022 and 30 June 2024. 640,664 of these
vested immediately with the remainder vesting over a 3-year period.
The share-based payments charge in respect of all these options for
the year ended 31 December 2022 was GBPnil (2021: GBP45,233).
During the year, 518,738 of these options were exercised and
355,556 lapsed and GBP63,498 (2021: GBPnil) was transferred from
the warrant reserve to retained earnings.
2022 Award
During the year, the Company granted to employees a total of
2,006,939 options at an average exercise price of 6p. No awards
were made to directors in 2022.
50% of the options vest immediately, with the remaining 50%
vesting after one year.
Grant date 30/6/22
Number of awards 2,006,939
Share price GBP0.04
Exercise price GBP0.06
Expected dividend yield -
Expected volatility 63%
Risk free rate 0.95%
Vesting period 1 year
Expected Life (from date of grant) 3 years
The share-based payment charge for the year ended 31 December
2022 was GBP33,052
A summary of all the above options is set out in the table
below.
Options awards
Number of share Weighted average
options exercise price (pence)
2022 2021 2022 2021
Outstanding at 1 January 18,680,004 5,891,111 7 -
Granted during the year 2,006,939 18,680,004 5 7
Exercised during the year (518,738) - 1 -
Lapsed during the year (3,855,556) (5,891,111) 6 -
Exercisable at 31 December 16,312,649 18,680,004 8 7
The exercise price of options outstanding at the end of the
year ranged between 6p and 10p (2021: 1p and 10p) and their
weighted average contractual life was 1.9 years (2021: 2.4 years.)
The share-based payment charge for the year, in respect of options,
was GBP152,135 (2021: GBP678,069).
Options granted prior to the 2017 LTIP
Prior to the implementation of the LTIP in 2017, Eden had granted
options to its Executive Directors, senior management and certain
employees, as follows:
Number of share options Weighted average
exercise price (pence)
2022 2021 2022 2021
Outstanding
at 1
January - 1,050,000 - 13
Granted
during the
year - - - -
Exercised
during the
year - - - -
Lapsed
during the
year - (1,050,000) - 13
Exercisable
at 31
December - - - -
Warrants
Number of warrants Weighted average
exercise price (pence)
2022 2021 2022 2021
Outstanding
at 1
January 2,989,865 2,989,865 19 19
Granted - - - -
during the
year
Exercised - - - -
during the
year
Lapsed
during the
year (2,989,865) - 19 -
Exercisable
at 31
December - 2,989,865 - 19
The exercise price of warrants outstanding at the end of the
year was nil p (2021: 12p and 30p) and their weighted average
contractual life was nil years (2021: 0.4 years.)
The share-based payment charge for the year, in respect of warrants,
was GBPnil (2021: GBPnil).
During the year, 2,989,865 of these options lapsed and GBP153,826
(2021: GBPnil) was transferred from the warrant reserve to retained
earnings.
For those options which were granted under the Company's LTIP,
except for the 2021 Award, Monte Carlo techniques were used
to simulate future share price movements of the Company to assess
the likelihood of the performance criteria being met and the
fair value of the awards upon vesting. The modelling calculates
many scenarios in order to estimate the overall fair value based
on the average value where awards vest.
All other options and warrants, fair value is measured using
the Black-Scholes model. The expected life used in the model
has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions and
behavioural conditions.
Xinova liability
In September 2015, the Company entered into a Collaboration and
Licence agreement with Invention Development Management Company
LLC (part of Intellectual Ventures, now called Xinova LLC) ("Xinova").
As part of this agreement, upon successful completion of a number
of different tasks, Xinova will be entitled to a payment which
is calculated using a percentage (initially 3.17%, reduced to
1.6% following the fundraise in March 2020) of the fully diluted
equity value, reduced by cash and cash equivalents, of the Company
on the date on which payment becomes due which is expected to
be 30 September 2025. This has been accounted for as a cash-settled
share-based payment under IFRS 2.
An amount of GBP67,462, being the estimated fair value of the
liability due to Xinova, was recognised during 2016 and included
as a non-current liability, as disclosed in note 19 to the accounts.
It was not believed that the value of the services provided by
Xinova can be reliably measured, and so this amount was calculated
based on the Company's market capitalisation at 31 December 2016,
adjusted to reflect the percentage of work completed by Xinova
at that date based on a pre-determined schedule of tasks.
During the year, Eden was informed that Xinova had begun to wind
down its operations.
As a consequence, Eden began communications with an agent acting
on behalf of Xinova to effect the wind down in respect of the
liability owed to Xinova by Eden.
On 22 April 2022, Eden signed a 'full and final' settlement agreement
with Xinova which resulted in Eden paying an amount of GBP43,870,
which represented a 50% discount to the liability of GBP87,740
as at 31 December 2021, in line with the then existing contract.
At the year end, an amount of GBPnil (2021: GBP87,740) was owed
to Xinova and is shown in note 19 as non-current other liabilities.
Share capital
23
2022 2021 2022 2021
Ordinary share Number Number GBP GBP
capital
Issued and
fully paid
Ordinary
shares
of 1p each 380,858,607 380,240,229 3,808,589 3,803,402
Each ordinary share of GBP0.01 has voting and dividend rights attached
to them.
Share premium account
24
Group and Company
2022 2021
GBP GBP
At the beginning of the year 39,308,529 39,308,529
Issue of new shares - -
At the end of the year 39,308,529 39,308,529
Warrant reserve
25
Group and Company
GBP
Balance at 1 January 2021 429,915
Share-based payment expense in respect of options
granted 678,069
Share-based payment expense in respect of options
lapsed (170,479)
Balance at 1 January 2022 937,505
Share-based payment expense in respect of options
granted 152,135
Share-based payment expense in respect of options/
warrants lapsed/ exercised (388,575)
Balance at 31 December 2022 701,065
The warrant reserve represents the fair value of share options and
warrants grants, and not exercised or lapsed, in accordance with
the requirements of IFRS 2 Share Based Payments.
26 Merger reserve
Group and Company
2022 2021
GBP GBP
At the beginning and end of the year 10,209,673 10,209,673
The merger reserve arose on historical acquisitions of subsidiary
undertakings for which merger relief was permitted under the
Companies Act 2006.
27 Non-controlling interest
Group
2022 2021
GBP GBP
Non-controlling interest 24,502 31,119
The non-controlling interest arose from Eden Research plc's 50%
share in TerpeneTech (Ireland) Limited. See note 16 for further
information.
28 Other interest-bearing loans and borrowings - Group and Company
Changes in liabilities, arising from financing activities are presented
below:
2022 2021
GBP GBP
Balance as at 1 January 398,352 415,248
Changes from financing cashflows
Payment of lease liabilities* (128,301) (90,388)
Total changes from financing cashflows (128,301) (90,388)
Other changes
New leases
Inter 87,228 50,209
Adjustment to Right of Use Assets
Inter 33,909 23,283
Surrender of lease (35,865) -
Total other changes 85,272 73,492
Balance as at 31 December 355,323 398,352
*excluding lease interest of GBP22,047 (2021: GBP32,074)
29 Other leasing information
Amounts recognised in profit or loss as an expense during the
period in respect of lease arrangements are as follows:
2022 2021
GBP GBP
Expense relating to leases of low-value assets 740 740
Set out below are the future cash outflows to which the lessee
is exposed to that are reflected in the measurement of lease
liabilities:
2022 2021
Land and buildings GBP GBP
Within one year 106,735 92,143
Between two and five years 166,684 256,935
273,419 349,078
2022 2021
Motor vehicles GBP GBP
Within one year 49,813 18,361
Between two and five years 59,857 30,914
109,670 49,275
Cash paid in respect of lease liabilities in the year was GBP128,301.
The Group holds eight leases, for two properties and six vehicles.
All leases have fixed lease repayments and average remaining
terms of 2.6 years (2021: 3.5 years) for the properties and 2.3
years (2021: 2.2 years) for the vehicles.
The incremental borrowing rates applied to lease liabilities
recognised in the statement of financial position at the date
of initial application of IFRS 16 were 4.75% for land and buildings
and 8.71% for other assets.
Information relating to lease liabilities is included in note
20.
30 Capital risk management
The Group is not subject to any externally imposed capital requirements.
31 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including directors,
is set out in note 7 in aggregate for each of the categories specified
in IAS 24 Related Party Disclosures.
Group
During the year, Eden invoiced its associate, TerpeneTech (UK),
GBP7,212 for R&D charges (2021: GBP7,760) and accrued income of
GBP50,000 (2021: GBP40,000) for minimum royalties due under the
head-lice agreement.
Also, during the year Eden paid GBP7,096 (2021: GBP8,787) for
expenses on behalf of TerpeneTech (UK).
At the year end, an amount of GBP238,375 was due from TerpeneTech
(UK) (2021: GBP165,644) to Eden. This amount is included within
Trade Receivables.
At the year end, an amount of GBP93,759 was due to TerpeneTech
(UK) (2021: GBP5,085) from Eden. This amount is included within
Other Payables. The movement in the year is due to the reallocation
to Eden of royalties paid by TerpeneTech (UK) to Eden instead
of TerpeneTech (Ireland) of GBP88,780 (2021: GBPnil).
At the year end, a net amount of GBP6,076 was due to TerpeneTech
(Ireland) from TerpeneTech (UK) (2021: GBP43,962 due from TerpeneTech
(Ireland) to TerpeneTech (UK)). It represents the amount due in
respect of the intangible asset reduced by fees receivable in
respect of sales which amounted to GBP50,038 (2021: GBP36,131).
This amount is included within Other Receivables.
Company
During the year, Eden invoiced its associate, TerpeneTech (UK),
GBP7,212 for R&D charges (2021: GBP7,760) and accrued income of
GBP50,000 (2021: GBP40,000) for minimum royalties due under the
head-lice agreement.
Also, during the year Eden paid GBP7,096 (2021: GBP8,787) for
expenses on behalf of TerpeneTech (UK).
Further, at year end, GBP50,000 has been accrued in respect of
management recharges from Eden to TerpeneTech (Ireland) (2021:
GBP36,000). An amount of GBP134,000 (2021: GBP84,000) is included
within the Other Receivables.
At the year end, an amount of GBP238,375 was due from TerpeneTech
(UK) (2021: GBP165,644). This amount is included within Trade
Receivables.
At the year end, an amount of GBP93,759 was due to TerpeneTech
(UK) (2021: GBP5,085) from Eden. This amount is included within
Other Payables. The movement in the year is due to the reallocation
to Eden of royalties paid by TerpeneTech (UK) to Eden instead
of TerpeneTech (Ireland) of GBP88,780 (2021: GBPnil).
32 Financial risk management
Credit risk
Group and Company
2022 2021
GBP GBP
Cash and cash equivalents 1,994,472 3,829,369
Trade receivables (net of provision) 322,489 693,948
2,316,961 4,523,317
The average credit period for sales of goods and services is 64
days (2021: 206). No interest is charged on overdue trade receivables.
At 31 December 2022, trade receivables of GBP219,727 (2021: GBP272,912)
were past due. During the year the Company provided for doubtful
debts in the amount of GBP107,188 (2021: GBPnil).
Trade receivables of GBP184,746 (2021: GBP563,273) at the reporting
date were held in Euros and GBP117,229 (2021: GBP104,866) were
held in USD.
Cash at bank of GBP1,824,866 (2021: GBP1,171,856) at the reporting
date were held in Euros and GBP10,829 (2021: GBP1,044) were held
in USD.
The Company's policy is to recognise loss allowances for expected
credit losses (ECLs) on financial assets measured at amortised
cost. The Group measures loss allowances for trade receivables
at an amount equal to lifetime ECL. When determining whether the
credit risk of a financial asset has increased significantly since
initial recognition and when estimating ECL, the Group considered
reasonable and supportable information that is relevant and available
without undue cost of effect. This includes both quantitative
and qualitative information and analysis, based on the Group's
historical experience and information credit assessment and including
forward-looking information.
The largest trade debtor at the year is TerpeneTech (UK), Eden's
associate company, which owed gross GBP238,375 (2021: GBP170,279)
to Eden at the year-end.
TerpeneTech (UK), is a cash-positive business, albeit in its infancy,
with good shareholder support and, again, Eden has had no issue
of collecting debtors due from TerpeneTech (UK) before and does
not expect to have any going forward.
Considering these factors, the Directors consider the ECL to be
immaterial.
Liquidity risk Group and Company
2022 2021
GBP GBP
Trade payables 1,150,873 1,147,823
Other payables 93,759 77,784
Accruals 210,419 299,123
1,455,051 1,524,730
The carrying amount of trade and other payables approximates their
fair value.
The average credit period on purchases of goods is 141 days (2021:
95 days). No interest is charged on trade payables. The Company
has policies in place to ensure that trade payables are paid within
the credit timeframe or as otherwise agreed.
Trade payables of GBP233,410 (2021: GBP273,211) at the reporting
date were held in Euros and GBP460,470 (2021: GBP528,552) were
held in USD.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the Group's financial liabilities at 31
December 2022 was as follows:
2022 2021
GBP GBP
In one year or less, or on demand 1,813,341 1,711,518
Over one year - 87,740
1,813,341 1,799,258
Liquidity risk is managed by regular monitoring of the Company's
level of cash and cash equivalents, debtor and creditor management
and expected future cash flows. See note 1 for further details
on the going concern position of the Company. For details of lease
liabilities, see notes 20 and 29.
Market price risk
The company's exposure to market price risk comprises currency
risk exposure. It monitors this exposure primarily through a process
known as sensitivity analysis. This involves estimating the effect
on results before tax over various periods of a range of possible
changes in exchange rates. The sensitivity analysis model used
for this purpose makes no assumptions about any interrelationships
between such rates or about the way in which such changes may
affect the economies involved. As a consequence, figures derived
from the Company's sensitivity analysis model should be used in
conjunction with other information about the Company's risk profile.
The Company's policy towards currency risk is to eliminate all exposures
that will impact on reported results as soon as they arise. Based
on the forign currency break down provided under credit risk and
liquidity risk, the impact of 5%-10% movement in foreign exchange
will not have material effect.
Capital risk management
The primary objective of the Company's capital management is
to ensure that it maintains healthy capital ratios in order to
support its business and maximise shareholder value.
The Company seeks to enhance shareholder value by capturing business
opportunities as they develop. To achieve this goal, the Company
maintains sufficient capital to support its business.
The Company manages its capital structure and makes adjustments
to it in light of changes in economic conditions.
The Company looks to maintain a reasonable debt position by repaying
debt or issuing equity, as and when it is deemed to be required.
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 December 2022
and 31 December 2021.
The Company monitors capital using a gearing ratio, which is
net debt divided by total capital plus net debt. The Company's
policy is to keep the gearing ratio below 10% (2021: below 10%).
The Company includes within net debt, any interest bearing loans
and borrowings (none in current or prior year), any loans from
a venture partner (none in the current or prior year), trade
and other payables, less cash and cash equivalents.
33 Cash absorbed by operations
Consolidated
2022 2021
GBP GBP
Loss for the year after tax (2,243,879) (2,777,543)
Adjustments for:
Taxation charged/(credited) (323,716) (618,137)
Finance costs 22,046 122,311
Interest income (192) (98)
Foreign exchange currency (gains)/losses (74,782) 21,993
Amortisation and impairment of intangible
assets 495,818 434,630
Xinova liability written off 43,855 -
Depreciation and property, plant and
equipment and right-of-use assets 191,622 155,341
Share of associate's loss 31,444 58,177
Share-based payment expense 152,135 640,597
Inventory provision 76,250 -
Doubtful debt provision 107,188 -
Movements in working capital:
Increase in inventories (180,357) (296,929)
Decrease in trade and other receivables 125,720 509,721
(Decrease)/Increase in trade and other
payables (9,683) 163,355
Cash absorbed by operations (1,586,531) (1,586,582)
33 Cash absorbed by operations
Company
2022 2021
GBP GBP
Loss for the year after tax (2,230,645) (2,764,402)
Adjustments for:
Taxation charged/(credited) (323,716) (618,137)
Finance costs 22,046 122,311
Interest income (192) (98)
Foreign exchange currency (gains)/losses (74,782) 21,993
Amortisation and impairment of intangible
assets 482,546 421,358
Xinova liability written off 43,855 -
Depreciation and impairment of property,
plant and equipment and right-of-use
assets 191,622 155,341
Share of associate's loss 31,444 58,177
Share-based payment expense 152,135 640,597
Inventory provision 76,250 -
Doubtful debt provision 107,188 -
Movements in working capital:
Increase in inventories (180,357) (296,929)
Decrease in trade and other receivables 75,720 473,721
Increase in trade and other payables 40,355 199,486
Cash absorbed by operations (1,586,531) (1,586,582)
34 Capital commitments
As at 31 December 2022, an amount of GBP102,109 (2021: GBP54,831)
had been committed to by Eden, but the work not yet completed,
or invoiced. The work relates on-going field trials and other
regulatory studies and is expected to be invoiced during 2023.
35 Post balance sheet events
Since the year end, the Group has received regulatory authorisation
in Poland. The certification will allow farmers to apply Mevalone
to their wine and table grapes to protect and treat outbreaks of
Botrytis cinerea as well as on apples to prevent post-harvest storage
diseases thereby helping to reduce food waste in the supply chain.
Poland represents a significant new market for Eden and the commercialisation
of Mevalone, given it is the EU's largest producer of apples, producing
almost 2.5 million tons annually. Eden expects to receive additional
regulatory approvals in due course in additional Central European
member states such as Germany, Austria, and Hungary, where high levels
of wine production are found. Central Europe is a strategic target
market for Eden with the ultimate addressable market for Eden's products
being comparable in value to that of Southern Europe and potential
sales of Mevalone estimated to peak at EUR3.2m.
Also since the year end, Eden announced that it has to date received
regulatory approval in 17 US states for its formulated product Mevalone(R)
, and 8 US states for its formulated product Cedroz(TM).
These approvals follow regulatory authorisation from the United States
Environmental Protection Agency (EPA) in September 2022 for all six
petitions submitted by Eden (three active ingredients, two formulated
products and Eden's Sustaine(R) polymer-free encapsulation technology;
making up the building blocks of current and future products), opening
up significant revenue opportunities for the Company with a market
potential in the United States of approximately EUR94 million for
Mevalone and EUR189 million for Cedroz.
Mevalone has been approved for use on botrytis on table and wine
grapes in the following states: Alabama, Arizona, Florida, Georgia,
Idaho, Illinois, Michigan, Mississippi, Missouri, New York, North
Carolina, Oregon, Pennsylvania, Texas, Virginia, Washington, and
West Virginia.
Eden has also received approval for its second commercial product,
Cedroz, which can now be applied to fruits and vegetables to defend
against destructive parasitic nematodes that affect crops grown both
indoors and outdoors. Cedroz approvals have been granted for a wide
range of crops, including eggplant, peppers, tomatoes, cantaloupes,
cucumbers, pumpkins, squash, zucchini, carrots, strawberries, and
grapes; in the following states: Florida, Georgia, Michigan, New
York, Oregon, Texas, Washington, and Wisconsin.
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FR FZGGKLDZGFZM
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May 05, 2023 02:00 ET (06:00 GMT)
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