ANNUAL REPO RT & ACCOUNTS 20 14
Inside Cover IDEAS_Aug10:Inside Cover IDEAS 14/9/10 18:26 Page 4
R E S E AR C H P L C
T H E NA T U R A L S O L U T I ON
CONTENTS
Company Information
Chairman’s Report
Report of the Directors
Strategic Report
Report of the Independent Auditors
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Statement of Cash Flows
Notes to the Financial Statements
Page
2
3 - 5
6 - 8
9 - 10
11
12
13
14
15
16
17 - 42
ANNUAL REPOR T & ACCOUNTS 2010
ANNUAL REPORT & ACCOUNTS 2014
1
FINANCIAL STATEMENTS 2014
COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2014
DIRECTORS:
A J Abrey
K W Brooks
T G Lupton
S M Smith
SECRETARY:
Oxford Corporate Services Limited
REGISTERED OFFICE:
The Hawk Creative Business Park
The Hawkhills Estate
Easingwold
York
North Yorkshire
YO61 3FE
REGISTERED NUMBER:
03071324 (England and Wales)
INDEPENDENT AUDITORS: UHY Hacker Young
BANKERS:
SOLICITORS:
130 Aztec
Aztec West
Bristol
BS32 4UB
The Royal Bank of Scotland Plc
Southern Corporate Office
P O Box 391
40 Islington High Street
London
N1 8JX
Gowlings (UK) LLP
15th Floor
125 Old Broad Street
London
EC2N 1AR
CORPORATE ADVISORS: WH Ireland
24 Martin Lane
London
EC4R 0DR
2
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
CHAIRMAN’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
Introduction
EU approval process
In May 2013 the three active substances used in the
Company’s lead product, 3AEY, were approved for use in
plant protection products by the European Commission
under Regulation (EC) No. 1107/2009 within the EU and
this approval came into effect on 1st December 2013.
Whilst the EU granted approval for Eden’s three active
substances, certain additional confirmatory data were
requested to be submitted and this work is on-going
and is due to be completed by 30th November 2015.
Separate to this, Eden applied in October 2013 to have
3AEY approved in the southern EU zone. In November
2014, Eden received the first draft of the review of that
application from the authorities in Malta. It is expected
that the approval of 3AEY will be granted imminently
in Malta, which will then provide the other southern
EU zone member states 120 days within which to grant
their approvals.
Clearly these approvals are very significant to Eden as it
will be the culmination of a number of years’ work and
will allow our licensees Sumi-Agro France, Sipcam and
Lachlan (once the Kenyan authorities have granted their
approval following the approval in Malta) the ability to
sell 3AEY to their customers.
2014 was another eventful year at Eden. It started
positively with the announcement of a licensing
agreement with Daymsa of Spain whereby Eden has
granted access to its active substance dossiers to enable
them to register their own insecticidal products. This is
the first data sharing agreement that Eden has entered
into which allows a third party to create products using
the valuable data that we have generated in order
to register our first agrochemical product, 3AEY, a
Botryticide formulation. We believe that this agreement
is the first of many which will provide a useful revenue
stream and gives an indication of the inherent value of
this data not only to us, but to others too.
Springtime saw the launch of the first products using
Eden’s GO-E micro-encapsulation technology in the
biocides sector with our licensee, TerpeneTech, selling
odour neutraliser and pet products into the personal use
sector.
In May we said goodbye to my predecessor, Sir Ben Gill,
who sadly passed away following a battle with cancer.
In August, Eden signed an evaluation agreement for
its nematicide product with (now) Eastman Chemicals
(formerly Taminco). Eastman is a significant entity and
it is pleasing to see that Eden has caught the attention
and imagination of such a well-known company.
The year ended in a flurry of activity, following the
appointment of Sean Smith as Chief Executive Officer,
with two exclusive licensing agreements being signed
with Sumi-Agro France and Sipcam Italia/Iberia for 3AEY.
Again, it is quite an accomplishment for a company of
Eden’s size to be taken seriously by companies that are
part of the Sumitomo Corporation, a business which
turns over $3 billion.
In addition, the Company successfully completed a fund-
raising and debt conversion which has resulted in Eden
being debt free and with money in the bank.
I shall now provide you with a brief update on Eden’s
various commercial activities.
3
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014 Biocides
In 2014, TerpeneTech announced that it had successfully
launched its first product, an odour neutraliser
initially into the French market. TerpeneTech has
made significant advances in the development and
commercialisation of GO-E products since it signed its
licence agreement with Eden and by the end of 2014
had launched a number of other products this year into
the market.
The product sales by TerpeneTech have given rise to the
first royalty payments to Eden, which were received in
early 2015. Clearly this is a key milestone for a licensing
company.
Human health
Work is on-going to further develop and commercialise
the Eden head-lice product. Other human health
opportunities are being explored with potential licensing
partners.
CHAIRMAN’S REPORT
(continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
3AEY
3AEY, Eden’s lead product; a terpene based fungicide,
has been out-licensed to a number of parties for a
variety of applications throughout the world.
The rights to 3AEY have been licensed, on an exclusive
basis, to Sumi-Agro France (France) and Sipcam (Italy
and Spain). As has previously been announced, other
Sumitomo group companies have also shown an interest
in taking rights to 3AEY for certain territories and it is
expected that further announcements will be made
during the current year.
Once Malta has given its approval of 3AEY, Lachlan will
be in a position to receive approval from the Kenyan
authorities. This will allow sales there, primarily in the
cut flower industry.
Nematodes
Eden is currently in negotiations with a number of
interested parties who are looking to take the rights
to Eden’s nematicide product. The lead candidate is
Eastman, with whom Eden is discussing terms for an
agreement. It is expected that we will soon be able to
update shareholders.
Earlier stage Products
Eden is working with several potential partners to
exploit early stage leads identified for the control of
insect pests, such as Whitefly and Spider mites together
with fungicidal applications to minimise post-harvest
losses from spoilage organisms. Since the approval of its
core three active substances, there have been renewed
discussions with various parties to license these rights.
Animal Health – Bayer
Eden continues to work closely with Bayer Animal Health
to complete the development of GO-E, terpene-based
products for the American pet care market. As reported
last year, it is expected that these products will be
available for sale in 2015 and we are pleased to report
good progress has been made in achieving this target.
4
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014 Ken Brooks has given notice of his intention to retire
from the Board at this years’ AGM. We will have
the opportunity at the AGM to thank Ken for his
contribution to the Company over the last nineteen
years.
Outlook
This year has already seen further changes at Eden. First,
we were surprised and saddened by the untimely death
of Clive Newitt who passed away on 16th February
2015. Clive was a key member of the Eden team and
had been involved with us since 2005, before becoming
a director in 2007. It is of great regret that he didn’t get
to see the conclusion of the regulatory approval and
subsequent sales of 3AEY for which he worked so hard
to help us achieve. He will be greatly missed by us all at
Eden.
Moving forward, Eden has its new CEO, Sean Smith,
who comes with a wealth of experience in both IP and
the chemicals industry and who, I’m sure, will steer Eden
to commercial success. Already, Sean has successfully
overseen the conclusion of two important license
agreements with Sumi-Agro France and Sipcam and the
fund-raising and conversion of debt at the end of 2014
and he continues to bring opportunities to Eden which I
believe will help to make 2015 a very successful year for
your Company.
I wish him and all of his team at Eden every success and
am confident that he will enable Eden to meet the high
expectations that have been set.
T G Lupton
Chairman
26th March 2015
CHAIRMAN’S REPORT
(continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
Encapsulation
GO-E continues to draw interest from a number of
different market sectors and we are currently exploring
a number of those opportunities. The likely benefits
that GO-E brings to existing products in terms of patent
protection, resistance management and sustained
delivery of active substances are clear to see, which is
why the Eden Intellectual Property (IP) base is inherently
very valuable.
Intellectual Property (“IP”)
A further four patents were granted in 2014 in Norway,
South Korea, Canada and Mexico, which further
strengthens our IP portfolio.
Eden also filed two new patents in 2014. The first is
for the use of terpenes as preservatives and the second
is for a sugar bait/terpene composition for use against
mosquitos.
We are keen not only to maintain and exploit fully
our existing IP portfolio, but, also to expand it where
opportunities arise.
The Senior Management
During 2014 the management committee comprised:
Sir Ben Gill - Non-Executive Chairman (deceased 8th
May 2014)
Tom Lupton - Non-Executive Director (Chairman with
effect from 9th May 2014)
Ken Brooks - Executive Deputy Chairman (Non-Executive
Director with effect from 1st September 2014)
Sean Smith – Chief Executive Officer (Appointed 1st
September 2014)
Clive Newitt – Managing Director (Business Development
Director with effect from 1st September 2014, deceased
16th February 2015)
Alex Abrey - Chief Financial Officer
5
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014 REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2014
DIVIDENDS
The loss for the year after taxation amounted to £2,969,468 (2013: £1,587,909). The directors are unable to
recommend any dividend (2013: £nil).
RESEARCH AND DEVELOPMENT
An indication of research and development activities is included within the Chairman’s Review.
FUTURE DEVELOPMENTS
An indication of future developments is included within the Chairman’s Review.
DIRECTORS
The directors during the year under review were:
K W Brooks
A J Abrey
C Newitt (Deceased 16th February 2015)
A B N Gill (Until his death on 8th May 2014)
T G Lupton
S M Smith (Appointed 1st September 2014)
At 31 December 2014 the directors had the following interests in share option schemes:
Date of
grant
Expiry date
Exercise
price
£
Number at
1 January
2014
Granted in
year
Exercised in
year
Lapsed in
year
Number at
31 December
2014
KW Brooks
19/05/2009
19/05/2014
17/01/2011
16/01/2016
14/08/2014
19/05/2019
A J Abrey
19/05/2009
19/05/2014
17/01/2011
16/01/2016
14/08/2014
19/05/2019
C Newitt
19/05/2009
19/05/2014
17/01/2011
16/01/2016
14/08/2014
19/05/2019
A B N Gill
19/05/2009
19/05/2014
17/01/2011
16/01/2016
6
0.26
0.13
0.12
900,000
1,100,000
-
-
-
900,000
2,000,000
900,000
0.26
0.13
0.12
450,000
1,050,000
-
-
-
450,000
1,500,000
450,000
0.26
0.13
0.12
0.26
0.13
150,000
450,000
-
-
-
150,000
600,000
150,000
100,000
500,000
600,000
-
---
-
-
-
-
-
-
-
-
-
-
-
(900,000)
-
-
-
1,100,000
900,000
(900,000)
2,000,000
(450,000)
-
-
1,050,000
450,000
(450,000)
1,500,000
(150,000)
-
-
(150,000)
-
450,000
150,000
600,000
-
--
-
(100,000)
(500,000)
(600,000)
-
-
-
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014 REPORT OF THE DIRECTORS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
CORPORATE GOVERNANCE
The directors acknowledge the importance of the principles set out in the Corporate Governance Code. Although
the Corporate Governance Code is not compulsory for AIM quoted companies, the directors have applied the
principles as far as practicable and appropriate for a relatively small public company as follows:
The Board currently comprises two executive directors and two non-executive directors. The Board meets regularly to
consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties,
all directors receive appropriate and timely information. Briefing papers are distributed to all directors in advance
of Board meetings. All directors have access to the advice and services of the Company Secretary and the Chief
Financial Officer, who are responsible for ensuring that the Board procedures are followed and that applicable rules
and regulations are complied with. In addition, procedures are in place to enable the directors to obtain independent
professional advice in the furtherance of their duties, if necessary, at the Company’s expense.
The directors have established Audit, Nomination, Remuneration and AIM Compliance Committees; the Audit
Committee has Tom Lupton as Chairman who has primary responsibility for monitoring the quality of internal
controls ensuring that the financial performance of the Company is properly measured and reported on and
reviewing reports from the Company’s auditors relating to the Company’s accounting and internal controls, in all
cases having due regard to the interests of Shareholders. The Audit Committee meets at least twice a year. Ken
Brooks is the other member of the Audit Committee; the Nomination Committee has Tom Lupton as Chairman will
identify and nominate for the approval of the Board, candidates to fill board vacancies as and when they arise.
The Nomination Committee meets at least twice a year. Ken Brooks is the other member of the Nomination
Committee; the Remuneration Committee has Tom Lupton as Chairman will review the performance of the
executive directors and determine their terms and conditions of service, including their remuneration and the grant
of options, having due regard to the interests of Shareholders. The Remuneration Committee meets at least twice
a year. Ken Brooks is the other member of the Remuneration Committee; the AIM Compliance Committee has
Tom Lupton as Chairman and has been formed pending Admission and will meet twice a year with the NOMAD
to discuss AIM compliance and related issues. The other member of the committee is Alex Abrey; and the directors
comply with Rule 21 of the AIM Rules relating to directors’ dealings and there are procedures in place to ensure
compliance by the Company’s applicable employees. The Company has adopted a share dealing code which is
appropriate for an AIM quoted company.
Revised Total Holdings
% of Enlarged Share Capital
Ken Brooks
Clive Newitt
Alex Abrey
Tom Lupton
2,319,269
323,947
528,160
403,333
1.50%
0.21%
0.34%
0.26%
7
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
REPORT OF THE DIRECTORS
(continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law
the directors have elected to prepare the financial
statements in accordance with International Financial
Reporting Standards as adopted by the European Union.
Under company law the directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for
that period. In preparing these financial statements, the
directors are required to:
STATEMENT AS TO DISCLOSURE OF
INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant
audit information (as defined by Section 418 of the
Companies Act 2006) of which the company’s auditors
are unaware, and each director has taken all the steps
that he ought to have taken as a director in order to
make himself aware of any relevant audit information
and to establish that the company’s auditors are aware
of that information.
AUDITORS
A resolution to reappoint UHY Hacker Young will be
proposed at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
-
select suitable accounting policies and then apply
them consistently;
A J Abrey - Director
26th March 2015
- make judgements and accounting estimates that
are reasonable and prudent;
-
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the company and enable them to ensure that the
financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
8
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2014
REVIEW OF BUSINESS
The review of this year’s business activities is as set out in
the Chairman’s Report.
The key performance indicators of the business are that
of the development of the Company’s products and the
management of its cash position.
The registration of the Company’s first product, 3AEY,
for use as a pesticide in Europe will not only be a key
milestone in terms of its commercialisation but also of
future products as the three active substances that are
being registered are the basis of Eden’s future product
portfolio.
Further commercialisation of Eden’s products and
encapsulation technologies through licensing and
option agreements also serve as a key indicator to the
Company’s performance.
Successful trial results are also significant in the showing
the commerciality of the intellectual property.
The Company has capitalised £0.5m (2013: £0.2m)
of development expenditure in the year which is
a reflection of the continued development of the
Company’s products.
Cash is managed by tightly controlling the Company’s
creditor position and through the provision of
convertible shareholder loans.
The decrease in the shareholder loans during the year
reflects the on-going management of the Company’s
cash position.
The progress of the development of the Company’s
products is measured against internally set timescales as
well as against the regulatory process which will result
in the registration of products. The Chairman’s Review
contains an update regarding this progress.
KEY FINANCIAL PERFORMANCE INDICATORS
Revenue in 2014 consisted of charges made for samples
and consultancy to other existing and potential licenses.
Revenue in 2014 was £0.10 million in comparison to
£0.08 million in 2013. The operating loss for the year
was £1.7 million compared to £1.6 million for the
previous year. The loss before tax for 2014 was £3.0
million, an increase from £1.6 million in the previous
year (as restated) due mainly to an increase in finance
costs to £1.3m (2013: £0.4m).
The loss per share for 2014 was 2.36 pence compared
to 1.30 pence in 2013 (as restated).
Administrative expenses for the year (excluding the
amortisation of intangible assets and share based
payments charge) were £1.0 million (2013: £1.0
million). Aside from additional costs relating to external
consultants, the Company maintains a policy of keeping
a low head count in order to maintain a low level of
overheads.
Intellectual property, including development expenditure,
is written off over eleven years in line with the remaining
life of the Company’s master patent.
FINANCING
During the year, the Company received a further loan
from shareholders of £0.75m (2013: £0.36 million). The
debt, including finance charges, totalling £2.3m (2013:
£nil) was converted into equity.
OTHER KEY FINANCIAL PERFORMANCE
INDICATORS
The company does not currently monitor any non-
financial performance indicators.
9
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014 STRATEGIC REPORT
(continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
of disabled persons (including those who become
disabled whilst employees of the Company) should, as
far as reasonably possible, be identical to that of other
employees.
PRINCIPAL RISKS AND UNCERTAINTIES
INDEMNITY COVER
The Company purchases insurance cover for Directors
and Officers to protect the directors from third party
claims.
ENVIRONMENT
The Company has an environment policy and
acknowledges that environmental considerations form
an integral part of its corporate social responsibility. The
Company wide environment committee meets to discuss
ways in which the business can contribute more to their
local environments by getting involved in local initiatives
and also to look at ways of promoting environmental
well-being amongst the staff. Employees are actively
encouraged to ensure conservation of energy and
resource through awareness campaigns and positive
action.
ON BEHALF OF THE BOARD:
A J Abrey - Director
26th March 2015
The Company’s prime risk is the on-going
commercialisation of the Company’s intellectual
property, which involves testing of the Company’s
products, obtaining regulatory approval and reaching
a commercially beneficial agreement for each product
to be taken to market. This is measured by comparing
actual results with forecasts that have been agreed by
the Company’s Board of directors.
The Company’s credit risk is primarily attributable to
its trade receivables. Credit risk is managed by running
credit checks on customers and by monitoring payments
against contractual agreements.
The Company monitors cash flow as part of its day to
day control procedures. The Board considers cash flow
projections at its meetings and ensures that appropriate
facilities are available to be drawn down upon as
necessary.
Due to the nature of the business, there is inherent risk
of infringement of Eden’s intellectual property rights by
third parties. The risk of infringement is managed by
taking the relevant legal advice as and when required.
EMPLOYEE DIVERSITY AND INCLUSION
The Board remains committed to developing further a
culture that encourages the inclusion and diversity of
all of the Company’s employees through respecting and
appreciating their differences and to promoting the
continuous development of employees through skills
enhancement and training programmes. The Company’s
employment policies are designed to attract, retain,
train and motivate the very best people, recognising
that this can be achieved only through offering equal
opportunities regardless of gender, race, religion, age,
disability, sexual orientation or any other aspect of
diversity. Applications from disabled persons are always
fully considered, bearing in mind the aptitudes of the
applicant concerned. It is the policy of the Company
that the training, career development and promotion
10
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS
OF EDEN RESEARCH PLC
We have audited the financial statements of Eden Research Plc for the year ended 31 December 2014 on pages
twelve to forty two. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on pages eight and nine, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/
apb/scope/UKP.cfm.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the Company’s affairs as at 31 December 2014 and of its loss for the year
then ended;
- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the Directors and the Strategic Report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
-
-
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
John Griffiths FCA (Senior Statutory Auditor)
for and on behalf of UHY Hacker Young
Statutory Auditor, Chartered Accountants
Bristol
27th March 2015
11
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
CONTINUING OPERATIONS
Revenue
Amortisation of intangible assets
Other administrative expenses
Share based payments
OPERATING LOSS
Finance costs
Finance income
LOSS BEFORE INCOME TAX
Income Tax
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Prior year adjustment
TOTAL COMPREHENSIVE INCOME
SINCE LAST ANNUAL REPORT
Earnings per share expressed in pence per share:
Basic
Diluted
Note
2014
£
2013
£
2
4
4
5
6
8
7
99,855
80,223
(635,035)
(1,022,836)
(187,621)
(630,269)
(1,034,878)
-
(1,745,637)
(1,584,924)
(1,252,295)
117
(43,590)
316
(2,997,815)
(1,628,198)
28,347
40,289
(2,969,468)
(1,587,909)
-
-
(2,969,468)
(1,587,909)
-
712,044
(875,865)
-2.36
-2.36
-1.30
-1.30
12
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
ASSETS
NON-CURRENT ASSETS
Intangible assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Financial liabilities - borrowings
Interest bearing loans and
borrowings
NET CURRENT LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium
Merger reserve
Warrant reserve
Retained earnings
TOTAL EQUITY
2014
2013
Note
£
£
9
10
11
12
13
5,923,740
6,092,586
62,535
414,980
477,515
129,768
311,347
441,115
458,302
451,493
-
458,302
402,600
854,093
19,213
(412,978)
5,942,953
5,679,608
15
16
16
16
16
1,541,430
26,014,049
10,209,673
524,154
(32,346,353)
1,232,776
23,277,511
10,209,673
779,485
(29,819,837)
5,942,953
5,679,608
The financial statements were approved by the Board of Directors on 26th March 2015 and were signed on its
behalf by:
S Smith - Director
13
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Called up
Share
share capital premium
Merger Warrant
reserve
reserve
Retained
earnings
Total
£
£
£
£
£
£
Balance at 1 January 2013
1,110,442 22,352,394 10,209,673 1,434,506 (28,885,949) 6,220,066
Loss and total comprehensive income
-
-
Transactions with owners
- Issue of shares
- Options granted
- Options exercised/lapsed
122,334
-
925,117
-
-
-
Transactions with owners
122,334
925,117
-
-
-
-
-
-
(1,587,909) (1,587,909)
-
-
- 1,047,451
-
-
(654,021)
654,021
-
(654,021)
654,021 1,047451
Balance at 31 December 2013
(as restated)
1,232,776 23,277,511 10,209,673
779,485 (29,819,837) 5,679,608
Balance at 1 January 2014
1,232,776 23,277,511 10,209,673
779,485 (29,819,837) 5,679,608
Loss and total comprehensive income
-
-
Transactions with owners
- Issue of shares
-Options granted
- Options exercised/lapsed
308,654 2,736,538
-
-
-
-
Transactions with owners
308,654 2,736,538
-
-
-
-
-
-
(2,969,468) (2,969,468)
187,621
(442,952)
- 3,045,192
187,621
-
442,952
(255,331)
442,952 3,232,813
Balance at 31 December 2014
1,541,430 26,014,049 10,209,673
54,154 (32,346,353) 5,942,953
14
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
FINANCIAL STATEMENTS 2014
STATEMENT OF CASH FLOWS
AS AT 31 DECEMBER 2014
Note
1
Cash flows from operating activities
Cash generated from operations
Finance costs paid
Tax credit received
Net cash from operating activities
Cash flows from investing activities
Capitalisation of development expenditure
Interest received
Net cash from investing activities
Cash flows from financing activities
Shareholders’ loan - drawdown
Issue of equity shares
Loans
2014
£
2013
£
(848,939)
(109,703)
28,347
(1,285,277)
(989)
40,289
(930,295)
(1,245,977)
(466,189)
117
(190,719)
316
(466,072)
(190,403)
-
750,000
750,000
360,000
1,047,451
-
Net cash from financing activities
1,500,000
1,407,450
Increase in cash and cash equivalents
103,633
(28,930)
Cash and cash equivalents at
beginning of year
Cash and cash equivalents at
end of year
2
2
311,347
340,277
414,980
311,347
ANNUAL REPORT & ACCOUNTS 2014
15
NOTES TO THE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
Loss before income tax
Amortisation charges
Equity share based payment charge
Finance costs
Finance income
Decrease / Increase in trade and other receivables
Decrease/ Increase in trade and other payables
2014
2013
£
£
(2,997,815)
635,035
187,621
1,252,295
(117)
(1,628,198)
630,269
-
43,590
(316)
(922,981)
(954,655)
67,233
(69,436)
6,809
(261,186)
Cash generated from operations
(848,939)
(1,285,277)
2.
CASH AND CASH EQUIVALENTS
The amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in
respect of these statement of financial position amounts:
Year ended 31 December 2014
Cash and cash equivalents
Year ended 31 December 2013
Cash and cash equivalents
3.
NON-CASH TRANSACTIONS
31.12.14
£
414,980
1.1.14
£
311,347
31.12.13
1.1.13
£
311,347
£
340,277.
During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382
shares. Full details are included in Note 13 and 15.
16
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES
Basis of preparation
These financial statements have been
prepared in accordance with International
Financial Reporting Standards and IFRIC
interpretations and with those parts of the
Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements
have been prepared under the historical cost
convention.
General information
Eden Research Plc is a company incorporated
and domiciled in the United Kingdom under
the Companies Act 2006. The address of
the registered office is given on page 1.
The nature of the Company’s operations
and its principal activities are set out in the
Chairman’s Review on page 3. The Company
is quoted on the AIM Market in London.
These financial statements are presented in
pounds sterling because that is the currency
of the primary economic environment in
which the Company operates.
The Company has adopted the following
revisions and amendments to IFRS issued by
the International Accounting Standards Board,
which are relevant to and effective for the
Company’s financial statements for the year
beginning 1 January 2014.
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 19 (Revised) Employee Benefits
IAS 27 (Revised) Separate Financial Statements
IAS 28 (Revised) Investments in Associates and
Joint Ventures.
IAS 32 Offsetting Financial Assets and
Financial Liabilities
IAS 36 Recoverable Amount Disclosures for
Non-Financial Assets
IAS 39 Novation of Derivatives and
Continuation of Hedge Accounting
Investment Entities - Amendments to IFRS 10,
IFRS 12 and IAS 27
Presentation of Items of Other Comprehensive
Income - Amendments to IAS 1
Disclosures - Offsetting Financial Assets and
Financial Liabilities - Amendments to IFRS 7
Annual Improvements to IFRSs 2009-2011
Cycle
The directors have assessed that the adoption
of these revisions and amendments did not
have an impact on the financial position or
performance of the Company.
At the date of authorisation of these financial
statements, the following Standards and
Interpretations which have not been applied
in these financial statements were in issue but
not yet effective:-
IFRS 9 Financial Instruments (effective 1
January 2017)
IFRS 14 Regulatory Deferral Accounts
(effective 1 January 2016)
IFRS 15 Revenue from Contracts with
Customers (effective 1 January 2017)
The directors anticipate that the adoption of
these Standards and Interpretations in future
periods will have no material impact on the
financial statements of the Company..
Going Concern
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 Company has reported a loss for the
year after taxation of £2,969,468 (2013:
£1,587,909). Net current assets as at that
date amounted to £19,213 (2013: £412,978
net current liabilities).
17
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
The directors have prepared budgets and projected cash flow forecasts for a period of two years from
31 December 2014 and they consider that the Company will be able to operate within the cash facilities
that are available to it for this period. The ability of the Company to continue as a going concern is
ultimately dependent upon the amounts and timing of cash flows from the exploitation of the Company’s
intellectual property and the availability of additional funding to meet the short term needs of the business
until the commercialisation of the Company’s portfolio is reached.
The forecasts adopted only include revenue derived from existing contracts and, while there is a risk these
payments might be delayed if milestones are not reached, there is the significant potential upside from
on-going discussions and negotiations with other parties as well as other opportunities.
In addition, the Company has relatively low fixed running costs and has a demonstrable ability to
delay certain other costs, such as the forecast Research and Development expenditure, in the event of
unforeseen cash restraints.
The directors are closely monitoring performance against cash flow projections that have been prepared
for the period to 31 December 2016 and beyond and are confident that the Company will be able to
generate the necessary cash resources over and above those referred to above.
On this basis the directors consider it appropriate to prepare the financial statements on the going
concern basis. The financial statements do not include any adjustments that would result from a failure by
the Company to meet these forecasts.
Revenue recognition
Revenue is recognised only when it is probable that the economic benefits associated with the transaction
will flow to the Company and the amount of revenue can be reliably estimated.
Revenue represents amounts receivable by the Company in respect of services rendered during the year in
accordance with the underlying contract or licence, stated net of value added tax.
Royalty income and upfront payments are recognised as the royalties accrue in accordance with the terms
of the underlying contract.
Amounts receivable under milestone agreements are recognised in accordance with the terms of the
underlying agreement and are typically recognised upon the completion of the significant acts within
the agreements. Revenue is specifically only recognised when the terms of any milestone are reasonably
expected to be met and the relevant act has been completed as the Company has no contractual rights to
the revenue until this point.
Licence fee revenue is recognised up-front as a sale of the Company if the Company has discharged all of
its on-going obligations.
Intangible assets
Intellectual property, including development costs, is capitalised and amortised on a straight line basis
over its estimated useful economic life of 10 years in line with the remaining life of the Company’s master
patent, which was originally 20 years. The useful economic life of intangible assets is reviewed on an
annual basis.
18
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
Impairment of non-financial assets
The directors regularly review the intangible assets for impairment and provision is made if necessary.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment
are reviewed for possible reversal of the impairment at each reporting date.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally generated intangible asset arising from the Company’s development activities is recognised
only if all the following conditions are met:
- the project is technically and commercially feasible;
- an asset is created that can be identified;
- the Company intends to complete the asset and use or sell it and has the ability to do so;
- it is probable that the asset created will generate future economic benefits;
- the development cost of the asset can be measured reliably; and
- there are sufficient resources available to complete the project.
Internally-generated intangible assets are amortised on a straight line basis over their useful lives. Where
no internally-generated intangible asset can be recognised, development expenditure is recognised as an
expense in the period in which it is incurred.
Financial instruments
The Company uses certain financial instruments in its operating and investing activities that are deemed
appropriate for its strategy and circumstances.
Financial assets and liabilities are recognised on the Statement of Financial Position when the Company
has become a party to the contractual provisions of the instrument.
Financial instruments recognised on the Statement of Financial Position include cash and cash equivalents,
trade receivables, trade payables and borrowings and fixed interest convertible debt.
Cash and cash equivalents comprise cash on hand and on demand deposits, and other short term
highly liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Interest bearing loans and overdrafts are recorded at the fair value received less any transaction costs.
Subsequent to initial recognition such instruments are measured at amortised cost, using the effective
interest method.
19
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
Financial assets
Trade receivables, loans and other receivables that have fixed or determinable payments are classified as
“Loans and receivables” and are measured initially at fair value plus transaction costs and subsequently
at amortised cost using the effective interest method less impairment. Interest is recognised by applying
the effective interest rate, except for short term receivables when the recognition of interest would be
immaterial.
Financial assets are assessed for impairment at each reporting date by considering the recoverable
amount of the asset in comparison to its carrying value and any impairment recognised in the Statement
of Comprehensive Income. Trade receivables are assessed for collectability and where appropriate
the carrying amount is reduced through the use of an allowance account. When a trade receivable is
uncollectible it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account and changes in the carrying amount of the
allowance account are recognised in the profit or loss in the Statement of Comprehensive Income.
Debt and equity instruments issued by the Company
Loan notes
Where loans that were previously convertible have been converted to equity in accordance with the
original terms of the contract as a result of an agreement between the note holder and the Company, the
value of the loan and any associated accrued interest is transferred to equity at nil gain, nil loss.
The Company also enters into agreements to convert loans and creditors into equity which were not
convertible under the original terms of the agreement. Where this is the case the Company applies the
requirements of IFRIC 19 and recognises the issue of equity at the fair value of the instruments issued. Any
profit or loss arising on the extinguishment of the liability is taken to profit or loss.
Convertible loans
Due to the nature of the arrangements management are required to make significant judgments in order
to determine whether the conversion of loans has taken place in accordance with the original terms of the
underlying agreement. Each conversion is considered individually. During the current year all conversions
were deemed to have been made in accordance with the original terms of the agreements.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
20
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
Financial liabilities
Financial liabilities such as trade payables and loans are classified as “Other financial liabilities” and are
measured initially at fair value less transaction costs. Other financial liabilities are subsequently measured
at amortised cost using the effective interest method, except for short term payables when the recognition
of interest would be immaterial.
Non-executory contracts are recognised when all obligations due to the Company under the terms of the
contract have been met, but the Company retains a financial liability. This financial liability is measured in
accordance with the Company’s accounting policy for the measurement of financial liabilities.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the Company. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the
relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also
spread on a straight-line basis over the lease term.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating
result.
Share-based payments
The Company has applied the requirements of IFRS2 Share-Based Payments.
The Company operates an unapproved share option scheme for executive directors, senior management
and certain employees.
Where share options are awarded to employees, the fair value of the options at the date of grant
is charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity instruments expected to vest at each
reporting date so that ultimately the cumulative amount recognised over the vesting period is based on
the number of options that eventually vest. Market vesting conditions are factored into the fair value
of the options granted, as long as other vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in fair value of
the options, measured immediately before and after the modification is also charged to the Statement of
Comprehensive Income over the remaining vesting period.
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.
Financial risk management
The Company’s activities expose it to a variety of financial risks: market risk (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. Further detail is given in note 20 to the financial statements.
21
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
Current and deferred income tax
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
reported in the Statement of Comprehensive Income because it excludes items of income or expense that
are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the reporting date.
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 the initial recognition of goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor
the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interest in joint ventures, except where the Company is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting 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 there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.
22
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
1.
ACCOUNTING POLICIES (continued)
Critical accounting estimates and areas of judgement
The Company makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:
Capitalised development costs
The directors have considered the recoverability of the internally generated intangible asset which has
a carrying value of £1.9m. The projects continue to progress in a satisfactory manner and the directors
are confident that the carrying amount of the asset will be recovered in full. This situation will be
closely monitored and adjustments made in future periods if future market activity indicates that such
adjustments are appropriate.
The key factors which could impact upon whether it remains appropriate to continue to capitalise
intangible assets or on the impairment considerations include:
•
•
•
•
The availability of the necessary finance and hence the ability of the Company to continue as a
going concern.
The assumptions surrounding the perceived market sizes for the products and the achievable
market share for the Company.
The successful conclusion of licensing arrangements will serve as an indicator as to the likely
success of the projects and, as such, any need for potential impairment.
The level of upfront, milestone and royalty receipts will also serve as a guide as to the net present
value of the assets and whether any impairment is required.
Impairment of assets
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 determine whether any indicators of impairment exist. Based upon the
review management have carried out they are satisfied that no such factors exist and therefore a full
impairment review on the Company’s intangible assets has not been carried out.
Going concern
The directors have considered the ability of the Company to continue as a going concern and this is
considered to be the most significant estimate made by the directors in preparing the financial statements.
The ability of the Company to continue as a going concern is ultimately dependent upon the amount and
timing of cash flows arising from the capitalisation of the Company’s intellectual property. 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, which are summarised on pages 17 and 18.
Convertible loans
Due to the nature of the arrangements management are required to make significant judgements in order
to determine whether conversion of loans has taken place in accordance with the original terms of the
underlying agreement.
23
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
2.
SEGMENTAL REPORTING
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
Board of Executive Directors as it is primarily responsible for the allocation of the resources to segments
and the assessment of performance of the segments.
The Board of Directors monitor and then assess the performance of segments based on product type and
geographical area using a measure of adjusted EBITDA. This is the result of the segment after excluding
the share based payment charges, other operating income and the amortisation of intangibles. These
items, together with interest income and expense are not allocated to a specific segment.
The segmental information for the year ended 31 December 2014 is as follows:
Data-sharing
3AEY
Biocides
Encapsulation
Europe
£
Europe
£
Unallocated
£
Europe
£
Europe
£
Total
£
Total segment revenue
16,935
63,493
1,339
12,888
5,200
99,855
Inter segment revenue
-
-
-
-
-
-
Revenue from
external customers
Adjusted EBITDA
Amortisation
Depreciation
Share based payments
Other operating income
Net Finance costs
Income tax
Loss for the year
Total assets
Total assets includes:
Additions to
non-current assets
Total liabilities
16,935
63,493
1,339
12,888
5,200
99,855
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(992,981)
(635,035)
-
(187,621)
-
(1,252,295)
28,347
(2,969,468)
6,401,255
466,189
458,302
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(992,981)
(635,035)
-
(187,621)
-
(1,252,295)
28,347
(2,969,468)
6,401,255
466,189
458,302
24
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
2.
SEGMENTAL REPORTING
The segmental information for the year ended 31 December 2013 (as restated) is as follows:
Nematodes
3AEY
Biocides
Data-sharing
USA
£
Europe
£
Unallocated
£
Europe
£
Europe
£
Total
£
Total segment revenue
5,927
54,274
1,248
14,124
4,650
80,223
Inter segment revenue
--
-
-
-
-
-
Revenue from
external customers
Adjusted EBITDA
Amortisation
Depreciation
Share based payments
Other operating income
Net Finance costs
Income tax
Loss for the year
Total assets
Total assets includes:
Additions to
non-current assets
Total liabilities
5,927
54,274
1,248
14,124
4,650
80,223
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(954,655)
(630,269)
-
-
-
(43,274)
40,289
(1,587,909)
6,533,701
190,719
854,093
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(954,655)
(630,269)
-
-
-
(43,274)
40,289
(1,587,909)
6,533,701
190,719
854,093
Revenues of £63,493 (2013: £54,274) are derived from multiple external customers, £7,937 Sipcam Iberia, £7,937
Sipcam Italia and £47,619 Sumi Agro. In the prior year revenue was derived from a single customer EcoStyle, from
within the 3AEY segment.
Revenues of £12,888 (2013: £14,124) are derived from a single external customer, TerpeneTech, from within the
Biocides segment. In the prior year the revenue was derived from the same customer.
Revenues of £16,935 (2013: £nil) are derived from a single external customer, Daymsa, from within the Data Sharing
segment. In the prior year there was no revenue generated from the Data Sharing segment.
Revenues of £5,200 (2013: £4,650) are derived from a single external customer, Gowan, from within the
Encapsulation segment. In the prior year the revenue was derived from Certis, a single external customer.
Revenues of £5,927 in 2013 were derived from a single external customer, FMC, from within the Nematodes
segment.
Revenues of £16,935 (2013: £nil) are derived from a single external customer, Daymsa, from within the Data-sharing
segment.
The Company’s platform technology, yeast glucan encapsulation, is another business segment for which the
Company is currently negotiating with a number of potential licensing partners.
25
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
3.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
2014
2013
£
£
259,333
22,541
283,333
27,310
281,874
310,643
The average monthly number of employees during the year was as follows:
Management
2014
6
2013
5
Staff costs, including executive directors’ remuneration, are included within administrative expenditure
in the Statement of Comprehensive Income. The executive directors are considered to also be the key
management personnel of the Company.
Directors’ remuneration
Non-executive directors’ fees
Total directors’ emoluments
2014
£
2013
£
219,750
233,333
219,750
39,583
233,333
50,000
259,333
283,333
Share based payment charge relating to all directors
58,610
-
During the year the remuneration of the highest paid director was £105,083 (2013: £95,000).
2014
Salary
Bonus
Fees
Share based
payments
Total
A Abrey
K Brooks
C Newitt
B Gill
T Lupton
S Smith
2013
as restated
A Abrey
K Brooks
C Newitt
B Gill
T Lupton
£
75,000
30,000
33,333
-
30,000
36,000
£
12,500
-
-
-
-
£
-
30,000
-
12,500
-
£
17,583
35,166
5,861
-
-
105,083
95,166
39,194
12,500
30,000
36,000
204,333
12,500
12,500
58,610
317,943
Salary
Bonus
Fees
Share based
payments
Total
£
75,000
60,000
33,333
-
25,000
193,333
£
20,000
10,000
10,000
-
-
£
-
-
-
50,000
-
40,000
50,000
£
-
-
-
-
-
-
95,000
70,000
43,333
50,000
25,000
283,333
26
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
4.
NET FINANCE COSTS
Finance income:
Deposit account interest
Finance costs:
Bank interest
Exchange variances
Finance fees
Net finance costs
5.
LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
Licences and trademarks amortisation
Development costs amortisation
Intellectual property amortisation
Auditors’ remuneration
Directors’ emoluments
Foreign exchange differences
Equity share based payments
6.
INCOME TAX
Analysis of tax income
Current tax:
Tax
Total tax income in statement of profit or loss and other
comprehensive income
2014
£
2013
£
117
316
-
6,457
1,245,838
24
966
42,600
1,252,178
43,274
2014
2013
£
£
15,723
179,824
439,488
16,000
264,733
6,457
187,621
36,273
154,511
439,485
28,881
283,333
966
-
2014
2013
£
£
(28,347)
(40,289)
(28,347)
(40,289)
27
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
6.
INCOME TAX (continued)
Corporation tax
No tax charge arises on the results for the year (2013: £nil). Tax losses carried forward amount to
approximately £20,807,048 (2013: £18,612,249). The tax credit represents the research and development
tax credit receivable for the year ended 31 December 2014.
Factors affecting the tax charge
The UK standard rate of corporation tax is 21.49% (2013: 23.25%). Current tax assessed for the financial
year as a percentage of the loss before taxation is nil (2013: nil)
The differences are explained below:
Standard rate of corporation tax in the UK
2014
£
2014
%
(21.49)
2013
£
2013
%
(23.25)
Loss before tax at standard rate of tax
(644,230)
(378,556)
Effects of Losses carried forward
Other expenses not deductible for tax
purposes
Research and development tax relief
603,711
40,519
(28,347)
20.0
1.0
(1.0)
342,291
36,265
(40,289)
Total current tax credit and tax rate %
(28,347)
(1.0)
(40,289)
22.0
2.0
(2.0)
(2.0)
Deferred tax
Unprovided deferred tax asset
4,178,347
3,739,438
The unprovided deferred tax asset arises principally in respect of trading losses, together with other minor
timing differences at 21% (2013: 23%) and has not been recognised due to the uncertainty of timing of
future profits against which it may be realised.
28
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
7.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume
the conversion of all dilutive potential ordinary shares.
Reconciliations are set out below.
Earnings
£
2014
Weighted
average
number of
shares
Per-share
amount
pence
Basic EPS
Earnings attributable to ordinary shareholders
(2,969,468)
125,752,471
-2.36
Effect of dilutive securities
-
-
-
Diluted EPS
Adjusted earnings
Basic EPS
(2,969,468)
125,752,471
-2.36
Earnings
£
2013
Weighted
average
number of
shares
Per-share
amount
pence
Earnings attributable to ordinary shareholders
(1,587,909)
121,970,374
-1.30
Effect of dilutive securities
-
-
-
Diluted EPS
Adjusted earnings
(1,587,909)
121,970,374
-1.30
Due to the loss for the year there is no dilution of the loss per share arising from options in existence.
29
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
8.
PRIOR YEAR ADJUSTMENT IN RELATION TO 2013
Following the acquisition of the Company’s master patent, the Board, acting on advice, had reconsidered
the substance of the arrangement and had formed the view that the obligation to pay future liabilities was
an executory contract. This judgement arose from an obligation for the significant on-going involvement
of the vendor, through to commercialisation of the product.
In prior years the arrangement was considered to be non-executory and accounted for in line with the
Company’s accounting policy. At the time of the acquisition the Board estimated the present value of all
future payments under the agreement and included this value in the acquisition cost of the asset. The
liability was then subsequently remeasured at each reporting date to its present value, with movements
included in finance expense for the period.
The impact of the change was that the estimated future liability in respect of this contract was not
recognised either as a liability or in the cost of the underlying asset. The only amounts included in the cost
of the asset relate to the initial consideration paid on acquisition of the asset. When the contract ceased
to be executory the liability and the related expense will be recognised in the financial statements.
The result of this was a reduction in other payables, the cost of the related intangible assets, the annual
amortisation charge arose on those assets and the annual finance charge in relation to the unwinding
of the other payables. This resulted in increases in the Retained Earnings at 31 December 2013 and 31
December 2012 of £767,871 and £712,044 respectively.
9.
INTANGIBLE ASSETS
COST
At 1 January 2014
Additions
Licences and
trademarks
£
Development Intellectual
costs
£
property
£
Total
£
447,351
-
2,513,251
466,189
8,591,774
-
11,552,376
466,189
At 31 December 2014
447,351
2,979,440
8,591,774 12,018,565
AMORTISATION
At 1 January 2014
Amortisation for year
337,144
15,723
869,902
179,824
4,252,744
439,488
5,459,790
633,035
At 31 December 2014
352,867
1,049,726
4,692,232
6,094,825
NET BOOK VALUE
At 31 December 2014
94,484
1,929,714
3,899,542
5,923,740
30
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
9.
INTANGIBLE ASSETS - Continued
COST
At 1 January 2013
Additions
Licences and
trademarks
£
Development Intellectual
costs
£
property
£
Total
£
447,351
-
2,322,532
190,719
8,591,774 11,361,657
190,719
-
At 31 December 2013
447,351
2,513,251
8,591,774 11,552,376
AMORTISATION
At 1 January 2013
Amortisation for year
300,871
36,273
715,391
154,511
3,813,259
439,485
4,829,521
663,269
At 31 December 2013
337,144
869,902
4,252,744
5,459,790
NET BOOK VALUE
At 31 December 2013
110,207
1,643,349
4,339,030
6,092,586
31
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
9.
INTANGIBLE ASSETS (continued)
The amortisation charge is included within administration expenses. Intellectual property represents
intellectual property in relation to use of encapsulated terpenes in agrochemicals. The remaining useful
economic life of that asset is ten years.
An annual impairment review is undertaken by the Board of Directors only where there are indicators
that an impairment may exist. 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 determine whether any indicators of
impairment exist. Based on the review management have carried out they are satisfied that no such
factors exist and as such a full impairment review on the Company’s intangible assets has not been carried
out.
A full impairment review was carried out using discounted cashflow forecasts. The result of this review
was that the conclusion that the Intellectual Property is not impaired in respect of its carrying value.
An independent valuation was undertaken by PharmaVentures Limited in 2010 on a number of the
Company’s product programmes and the estimated future value exceeds the current carrying value.
The valuers used an industry-standard methodology that combines discounted cash flow projections
with decision tree analysis to allow explicitly for development risk. For each programme an expected net
present value was derived, which provides a measure of the programme’s current economic value.
The valuation was carried out on Eden’s botrytis, powdery mildew and nematode products using third
party information on the market sizes and based on assumptions with regard to the potential market
share achievable.
The Estimated Net Present Value of 3AEY, Eden’s lead botryticide product, alone exceeded the current
carrying value of the Company’s intellectual property.
The key assumptions used in completion of the valuation included:
•
•
•
The projected market sizes for the key products which the Company is developing. These include a
projected market of $214m for 3AEY, $100m for Powdery Mildew, and $296m for nematodes.
The projected market share attainable by the Company. In preparing the valuation, a base
projected market share growing to 5% of the relevant markets has been assumed.
As the nature of the Company’s revenue streams are a mixture of milestone payments, licence
income and royalties, there are no specific projected growth rates used - the timing of the
attainment of the milestones which are attainable on project by project basis is a key assumption
in the forecasts.
•
The discounted cash flows have assumed a discount factor of 9%.
All revenues have been projected to come from the cash generating units identified in the segmental
reporting and Chairman’s review, namely the key product lines of the Company.
During the current year the Company entered into an agreement to acquire an updated version of
the Company’s core underlying technology under similar terms to the existing agreement. Whilst the
technology and liability are legally distinct from the superseded versions, management are of the opinion
that in substance they are the same.
32
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
10.
TRADE AND OTHER RECEIVABLES
Current:
Trade and other receivables
VAT recoverable
2014
2013
£
£
34,393
28,142
117,474
12,294
62,535
129,768
The directors consider that the carrying value of trade and other receivables approximates to the fair value.
There are no debts impaired at 31 December 2014 or 2013. Details of debts past due but not impaired are
given in note 20.
11.
CASH AND CASH EQUIVALENTS
Short term bank deposits
2014
2013
£
£
414,980
311,347
The carrying amount of these short term bank deposits approximates to the fair value.
12.
TRADE AND OTHER PAYABLES
Current:
Trade payables
Other payables
Accruals and deferred income
2014
2013
£
£
291,687
22,376
144,239
291,190
5,779
154,524
458,302
451,493
The directors consider that the carrying value of trade and other payables approximates to their fair
value. See note 20 for disclosure of the amount of trade payables denominated in foreign currency. See
Directors’ Report for disclosure of the average credit period taken.
13.
FINANCIAL LIABILITIES - BORROWINGS
Current:
Loan notes
2014
£
-
2013
as restated
£
402,600
During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382
shares. Full details are included in Note 15.
33
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
14.
FINANCIAL ASSETS AND LIABILITIES
Note
2014
2013
Financial assets at amortised cost
Other receivables
Cash and cash equivalents
10
11
Financial liabilities measured at amortised cost
Other loan
Trade and other payables
13
12
£
£
62,535
414,980
129,768
311,347
477,515
441,115
-
458,302
402,600
451,493
458,302
854,093
Other loans are non-interest bearing and there are no fixed terms for repayment.
The loan balances were secured by a fixed and floating charge over the Company’s assets. More details in
relation to this charge are included within note 20.
Other loans
Loan balance as at 1 January 2013
Loan issued in the year
Interest charged in the year
Loan notes repaid in the year
Loan notes converted in the year
Loan balance as at 31 December 2013
New loans issued in the year
Finance costs and interest charges in the year
Loan notes repaid in the year
Loan notes converted in the year
Loan balance as at 31 December 2014
£
-
360,000
42,600
-
-
402,600
750,00
1,142,592
-
(2,295,192)
-
The loans converted during the year were converted into 20,865,382 ordinary shares. The fair value of the
shares was deemed to be 11p; finance costs of £1,142,592 were recognised on conversion in accordance
with IFRIC 19, being the difference between the carrying value of the debt and the fair value of the equity
issued to extinguish it.
34
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
15.
CALLED UP SHARE CAPITAL
Number:
Class:
154,142,880
Ordinary
Alloted,issued and fully paid
Number:
Class:
154,142,880
Ordinary
(2013: 123,277,880)
Nominal
value:
0.01
Nominal
value:
0.01
2014
£
2013
£
1,541,430 1,232,776
2014
£
2014
£
1,541,430 1,232,776
During the year the Company issued a total of 30,865,382 £0.01 ordinary shares for a total consideration
of £3,045,192.
On 27 November 2014 Company issued 10,000,000 £0.01 ordinary shares for a consideration of £0.075
per share, giving a total consideration of £750,000.
On 4 December 2014 a long term loan of £2,295,192 was converted into 20,865,382 shares at a price of
11p per share.
The number of £0.01 ordinary shares issued in the year totalled 30,865,382 (2013: 12,233,337).
Number of
ordinary
shares
£
Aggregate
nominal
value
£
Date
Issue Price
£
Premium on
issue
£
Total share
premium
£
27.11.2014
10,000,000
100,000
04.12.2014
20,865,382
208,654
0.075
0.110
0.065
650,000
0.100
2,086,538
308,654
2,736,538
Totals
£
4,446,832
(2,969,468)
16.
RESERVES
Retained
earnings
£
(29,819,837)
Share
premium
£
23,277,511
Merger
reserve
£
10,209,673
Warrant
reserve
£
779,485
At 1 January 2014
Deficit for the year
(2,969,468)
Share issue
-
2,736,538
Options exercised/lapsed
442,952
Share based payments
-
-
-
-
-
-
-
2,736,538
(442,952)
-
187,621
187,621
At 31 December 2014
(32,346,353)
26,014,049
10,209,673
524,154
4,401,523
The merger reserve arose on the acquisition of a subsidiary undertaking in a prior year for which merger
relief was permitted under the Companies Act 2006. The warrant reserve represents the fair value of share
options and warrants granted, and not exercised or lapsed, in accordance with the requirements of IFRS 2
Share Based Payment.
17.
CAPITAL COMMITMENTS
The Company had no capital commitments at 31 December 2014 (2013: £nil).
35
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
18.
RELATED PARTY DISCLOSURES
Disclosures required in respect of IAS 24 regarding remuneration of key management personnel are covered
by the disclosure of directors’ remuneration included within note 3.
Transactions with other related parties are set out below:
During the year, the Company traded with A H Brooks, of which K W Brooks, a director, is a partner. The
transactions in aggregate were as follows:-
Rent
Provision of consulting services
Trade payables due at the year end
2014
£
30,000
25,000
8,500
2013
£
30,000
25,000
8,588
During the year, the Company traded with Ricewood Limited, of which A Abrey, a director, is a director and
shareholder, in respect of consultancy services, as follows:-
Provision of consultancy services
Trade payables due at the year end
2014
£
20,000
2,416
2013
£
18,333
2,590
During the year, the Company traded with Hawkhills Consultancy Limited, of which B Gill, who was at the
time was a director and shareholder, in respect of director’s fees, as follows:-
Director’s fees
Trade payables due at the year end
2014
£
12,500
-
2013
£
50,000
15,000
The directors regard all the transactions disclosed above as being in the normal course of business and the
transactions were enacted at arms length.
Liabilities include the following loans advanced by the shareholders of the Company:-
Oxford Capital Limited
2014
£
-
-
2013
£
402,600
402,600
During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382
shares. Full details are included in Note 13 and 15.
The Company was party to a guarantee and debenture entered into on 29 December 2008 whereby all
sums due to Oxford Capital Limited were secured by a first fixed and floating charge over the assets of the
Company.
36
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
19.
SHARE-BASED PAYMENT TRANSACTIONS
Share Options
Eden Research Plc operates an unapproved option scheme for executive directors, senior management and
certain employees.
Outstanding at the beginning of
the year
Granted during the year
Lapsed during the year
2014
Weighted
average
exercise price
(pence)
19
8
12
12
Number
6,350,000
1,500,000
(3,200,000)
4,650,000
2013
Weighted
average
exercise price
(pence)
19
-
58
19
Number
6,770,000
-
(420,000)
6,350,000
The exercise price of options outstanding at the end of the year ranged between 10p and 18p (2013: 10p
and 26p) and their weighted average contractual life was 2.1 years (2013: 1.8 years). None of the options
have vesting conditions.
The share based payment charge for the year was £187,621 (2013: £nil). The weighted average fair value
of each option granted during 2014 was 4p.
The following information is relevant in the determination of the fair value of options granted during the
year under the unapproved options scheme operated by Eden Research Plc.
Equity-settled
Option price model used
Weighted average share price at grant date (pence)
Exercise price (pence)
Weighted average contractual life (days)
Expected volatility
Expected dividend growth rate
Risk-free interest rate
Expected volatility is calculated based on historic share price movements.
Black Scholes
8
12
668
64.4%
-
0.95%
37
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
19.
SHARE-BASED PAYMENT TRANSACTIONS (continued)
Warrants
Outstanding at the beginning of
the year
Granted during the year
Lapsed during the year
2014
Weighted
average
exercise price
(pence)
14
10
18
13
Number
6,681,875
2,760,000
(651,875)
3,340,000
2013
Weighted
average
exercise price
(pence)
14
-
-
14
Number
6,096,875
-
(5,450,000)
1,231,875
The exercise price of warrants outstanding at the end of the year ranged between 1p and 30p (2013:13p
and 30p) and their weighted average contractual life was 4.5 years (2013: 0.1 years). None of the
warrants have vesting conditions.
The weighted average fair value of each warrant granted during the year was 5p (2013: £nil).
38
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
20.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
Credit Risk
Cash and cash equivalents
Trade receivables
2014
2013
£
£
414,980 311,347
50,107
34,393
449,373 361,454
The average credit period for sales of goods and services is 30 days. No interest is charged on overdue
trade receivables. At 31 December 2014 trade receivables of £34,393 (31 December 2013: £50,107) were
past due but are considered by the directors to be recoverable in full.
Trade receivables of £34,393 (2013: £50,107) at the reporting date are held in Euro (2013: Sterling)
The Company’s policy is to provide for doubtful debts based on estimated irrecoverable amounts
determined by reference to specific circumstances and past default experience. At the balance sheet date
the directors consider that no provision for doubtful debts is required and that there is no further credit
risk.
Financial liabilities
Trade payables
Other payables
Accruals and defferred income
Other loans
2014
2013
£
£
22,376
291,687 291,190
5,779
144,239 154,524
- 402,600
458,302 854,093
The carrying amount of trade payables approximates to fair value.
The average credit period on purchases of goods is 30 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.
Details of the loans are disclosed in note 14 to the financial statements. The Company currently finances
their operations partly through these borrowings. The Company borrows in pounds sterling generally at
fixed interest rates.
Credit risk
As explained above, the directors consider there is no material exposure to credit risk at the reporting
date.
39
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
20.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES (continued)
Currency risk
The Company publishes its financial statements in pounds sterling and conducts some of its business in US
dollars and Euros. As a result, it is subject to foreign currency exchange risk due to exchange movements,
which will affect the Company’s transaction costs and translation of the results. No financial instruments
are utilised to manage risk and currency gains, and losses are charged to the Statement of Comprehensive
Income as incurred. At the year end, the Company had the following net foreign currency balances in
liabilities.
US dollars
Euro
Liquidity risk
2014
£
94,811
89,273
2013
£
61,937
6,139
184,084
68,076
Short-term flexibility is achieved by shareholder loans. The interest rate profile and maturity profile of
financial liabilities is set out below:-
The interest rate profile of the Company’s financial liabilities at 31 December 2014 was:-
Fixed rate
financial
liabilities
£
Financial
liabilities on
which no
interest is paid
£
-
-
-
-
-
-
274,218
786,017
89,273
6,139
94,811
61,937
Total
£
274,218
786,017
89,273
6,139
94,811
61,937
Weighted average
interest rate
%
Weighted average
period for which
rate is fixed
Years
Weighted average
period until
maturity
Years
7.5
7.5
1.0
1.0
1.0
1.0
Sterling
2014
2013
Euro
2014
2013 as restated
US Dollars
2014
2013
Sterling
2014
2013
All the Euro and US Dollar liabilities are held within trade creditors and are non interest bearing.
40
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
20.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES (continued)
Maturity of financial liabilities
The maturity profile of the Company’s financial liabilities at 31 December was as follows:-
In one year or less, or on demand
2014
2013
£
458,302
458,302
£
854,093
854,093
Liquidity risk is managed by regular monitoring of the Company’s undrawn borrowing facilities, levels of
cash and cash equivalents, and expected future cash flows, and availability of loans from shareholders. See
note 1 for further details on the going concern position of the Company.
Market price risk
The Company’s exposure to market price risk comprises interest rate and currency risk exposures. It
monitors these exposures 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 interest rates and
exchange rates. The sensitivity analysis model used for this purpose makes no assumptions about any
interrelationships between such rates or about the way in which such changes may affect the economies
involved. As a consequence, figures derived from the Company’s sensitivity analysis model should be used
in conjunction with other information about the Company’s risk profile.
The Company’s policy towards currency risk is to eliminate all exposures that will impact on reported
results as soon as they arise. This is reflected in the sensitivity analysis, which estimates that five and ten
percentage point increases in the value of sterling against all other currencies would have had minimal
impact on results before tax.
On the other hand, the Company’s policy is to accept a degree of interest rate risk as long as the effects of
various changes in rates remain within certain prescribed ranges. On the basis of the Company’s analysis,
the only financial liabilities held by the Company are loans which are subject to a fixed rate of interest. As
such it is considered that any increases in interest rates would not have had an impact on the Company’s
loss before tax for the year.
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 2014 and 31 December 2013.
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% (2013: below 10%).The Company
includes within net debt, interest bearing loans and borrowings, a loan from a venture partner, trade and
other payables, less cash and cash equivalents.
41
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2014
20.
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES (continued)
Borrowings
Less : Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
2014
£
2013
£
-
402,600
(414,980)
(311,347)
(414,980)
91,253
5,942,953
5,679,608
5,527,973
5,770,861
0%
-2%
42
REGISTERED NUMBER: 3071324 (England and Wales)FINANCIAL STATEMENTS 2014
43
ANNUAL REPORT & ACCOUNTS 2014FINANCIAL STATEMENTS 2014 ANNUAL REPO RT & ACCOUNTS 20 14