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ANNUAL
REPORT
2019
PROVIDING SUSTAINABLE
SOLUTIONS FOR CROP
PROTECTION, ANIMAL HEALTH
AND CONSUMER PRODUCTS.
Eden develops and supplies breakthrough biopesticide
products and natural microencapsulation technologies
to the global crop protection, animal health and
consumer products industries.
Crop
Protection
Animal
Health
Consumer
Products
Find out more about our products on pages VI and VII
ANNUAL REPORT
STATEMENTS
GOVERNANCE
FINANCIAL
STATEMENTS
COMPANY OVERVIEW
2019 HIGHLIGHTS
£2.0m
Revenue
£1.7m
Product sales
£1.4m
Operating Loss
£0.3m
Upfront and milestone payments
Eden’s post-planting nematicide
product, Cedroz™, commenced
sales in Italy, following the receipt
of emergency use authorisation.
Exclusive distribution agreement
signed with SumiAgro Europe
for Eden’s fungicide product,
Mevalone, in five new markets
across central Europe, including
Germany and Poland, for use on
apples and grapes.
Exclusive distribution agreement
signed with Sipcam Oxon
for Eden’s fungicide product,
Mevalone, in Portugal and Benelux
for use as a fungicide for grapes
and minor crops. Marketing
authorisation has been received
in Portugal for Mevalone.
Eastman Chemical Company
received full authorisation for
Eden’s nematicide product,
Cedroz™, from the Belgian Ministry
of Agriculture to be used on a
wide range of crops including
cucumbers, courgettes, melons,
aubergine, peppers, tomatoes
and strawberries.
Cedroz gained entry into the
all-important US produce import
market as a result of the first
marketing authorisation for the
product in Mexico.
Eden made progress with its plans
for building a high-calibre team
around the core functions within
the business with the appointment
of a Commercial Director and
Product & Market Manager during
the period.
I
CONTENTS
COMPANY OVERVIEW
2019 Highlights
At a Glance
Investment Case
Our Products
Our Markets
Our Business Model
Our Strategy
ANNUAL REPORT STATEMENTS
Chairman’s Statement
Chief Executive Officer’s Review
Strategic Report
Section 172 Statement
GOVERNANCE
Board of Directors
Chairman’s Letter
The QCA Corporate
Governance Code
Remuneration Policy
Audit Committee Report
Directors’ Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Company Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Company Statement
of Changes in Equity
I
II
IV
VI
VIII
X
XII
02
04
10
14
18
22
24
28
32
35
40
47
48
49
50
51
Consolidated Statement of Cashflows 52
Company Statement of Cashflows
Notes to the Financial Statements
Company Information
53
54
83
See our website for the latest
information: www.edenresearch.com
Eden Research plc Company Overview 2019
AT A GLANCE
EDEN IS THE ONLY UK QUOTED
(AIM: EDEN) COMPANY
FOCUSED ON BIOPESTICIDES
FOR SUSTAINABLE
AGRICULTURE WITH PROVEN
PRODUCTS, MULTIPLE
REGULATORY CLEARANCES,
KEY COMMERCIAL
AND DEVELOPMENT
PARTNERSHIPS AND
NOW TWO PRODUCTS
COMMERCIALLY AVAILABLE.
II
Our vision is to be the leader in
sustainable bioactive products enabled
or enhanced by our novel encapsulation
and delivery technologies.
Our products are based upon natural
chemistries but deliver performance,
ease of use, and cost on par with
conventional alternatives.
Eden is the only UK quoted
company focused on biopesticides
for sustainable agriculture.
Proven products, multiple regulatory
clearances, strategic partnerships,
with two products now commercially
available.
Eden’s focus is on protecting
high-value crops, improving
crop yields and marketability.
Eden has commercialised its first
product, Mevalone, a bio-fungicide,
in 10 countries in Southern Europe
and Kenya including the top 3 wine
producing countries worldwide.
Eden has partnered with Eastman
Chemical for the commercialisation
of its second product, Cedroz,
a nematicide, in 29 countries.
£14m
Invested in IP and registration
13
Countries have granted
product authorisation
110
Granted and pending patents
19
New local distributorships since
2018 including USA, Brazil, China
and Japan
55+
Countries with IP protection
COMPANY OVERVIEW
Products sold in the
Trials on-going in
Product authorisation granted in
top 3
6
wine producing countries
continents
13
countries
OUR GEOGRAPHIC AND REGULATORY FOOTPRINT
We now have commercial partners in place across six continents and product registration
activities in over 29 countries. We are well-positioned to leverage our commercial partnerships
as and when regulatory clearance is granted by the relevant regulators around the world.
III
Commercial
partnerships and
regulatory activity
Eden has secured
regulatory clearance
for its second product
in 2019.
Where we are now
Product sales have
commenced in key
markets where we have
authorisation to market
and sell our first product,
Mevalone.
For more information see pages VIII and IX
OUR COMMERCIAL PARTNERS
ANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Company Overview 2019
INVESTMENT
CASE
THE BIOPESTICIDES
MARKET IS PROJECTED
TO BE WORTH MORE
THAN $10 BILLION
BY 2025 WITH AN
ANTICIPATED ANNUAL
GROWTH RATE OF 15%
PER YEAR.
The crop protection industry is undergoing
significant disruption triggered by
regulatory changes which are, in turn, driven
by consumer concerns over pesticides.
IV
Significant
market potential
Unique
technology
Clear commercial
progress
Skilled and
experienced
professionals
Trajectory of
financial growth
Growing market for biopesticides and an
increasingly rigorous regulatory environment
that favours sustainable products with
proven efficacy whilst large numbers
of products based upon conventional
chemistry are forced off the market in
many countries
Ability to compete with synthetic pesticides
on performance, ease of use and cost
For more information
See pages VIII and IX
Ownership of the patents behind the
Sustaine™ encapsulation technology
Scope to exploit the core technologies
beyond existing markets and products
Significant investment in patent protection
Proven efficacy with strong commercial
validation by farmers and our partners
For more information
See pages VI and VII
Product sales continue to progress
well with expansion into new markets
Commercial and development collaborations
with multiple industry leaders
V
Solid commercial pipeline
Regulatory clearance for product
sales across multiple countries
with further applications pending
Significant investment in
commercialisation by key partners
Further strengthening of the team
during the year
Wealth of complementary experience
in the agriculture, consumer products
and animal health sectors globally
Outsourcing of some specialist functions,
such as development trials and certain
regulatory expertise, maintaining a low
overhead base
Increased revenue generation
from product sales
Additional significant strategic investment
from one of our commercial partners
A strong balance sheet following
a successful fundraise of £10.4m,
before expenses, in March 2020
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Company Overview 2019
OUR
PRODUCTS
INDUSTRY APPLICATIONS
We work globally through multi-national and local partnerships to
develop and launch solutions for challenges facing three key industries.
Crop Protection
Animal Health
Foliar disease
& insect control
Open field &
greenhouses
Soil pests
Post harvest
shelf-life extension
Seed treatments
VI
Shampoos
Conditioners
Skin disease control
OTIC flush treatment
Flea & tick control
Consumer
Products
Head-lice treatments
Deodorants
Odour neutralisers
Fragrances
Biocide Active
ingredients
Eden’s products serve as sustainable alternatives to conventional chemicals without
limitations such as residue limits, disease and pest resistance, pre-harvest intervals,
long field re-entry periods, microplastics or increasing restrictions on use.
WE HAVE DEVELOPED A NATURAL, PLASTIC-FREE
FORMULATION TECHNOLOGY, SUSTAINE
Particles are derived from natural yeast cells. SustaineTM encapsulates active
ingredients and provides for the sustained release of these ingredients enabling
their safe, more efficient use.
Unique
Technology
Active ingredient
Encapsulated Payload
Stabilised Aqueous Emulsion
Payload release
on contact with water
As particle dries pores
close and trap remaining
active ingredient
USEFUL ACROSS
A WIDE RANGE
OF ACTIVE
INGREDIENTS
VERSATILE
AND ROBUST
NATURAL,
SUSTAINABLE
AND PLASTIC-FREE
COST EFFECTIVE
SIMPLY
PROCESSED
AND USED WITH
STANDARD
EQUIPMENT
ANNUAL REPORT
STATEMENTS
GOVERNANCE
GOVERNANCE
FINANCIAL
FINANCIAL
STATEMENTS
STATEMENTS
COMPANY OVERVIEW
OUR PRODUCT FOCUS
Our focus is on crop protection, developing
products based on sustainable chemistries to
protect high-value crops from pests and disease,
with equal or better performance when compared
with conventional pesticides.
Critically, our products are plastic free, exempt
from pesticide residue limits, and can be used up
to the point of harvest giving growers reduced risk,
maximum flexibility and security. Organic status
has been granted in some countries.
PRODUCTS INCLUDE:
Fungicides
Botrytis, powdery
mildew, downy mildew
Nematicides
Root knot nematodes
Insecticides
Mites and white flies
Molluscicides
Slug and snail control
VII
Residue-free crops command a
higher value and have a significant
commercial advantage in the
valuable export markets.
Our products harness the biocidal activity of naturally occurring
molecules produced by plants as part of their defence systems.
These active ingredients are known as terpenes.
OWNERSHIP of the
patents behind the Sustaine
encapsulation technology
SIGNIFICANT INVESTMENT
in patent protection and the
registration of new actives
PROVEN EFFICACY with
strong commercial validation
by farmers and our partners
SCOPE to exploit the core
technologies beyond existing
markets and products
Our biopesticides, formulated
with Sustaine, add value compared
to conventional pesticides by:
Enabling sustained
delivery, increasing
residual efficacy and
reducing use rates
Tackling resistance
build-up
Protecting plants
from potentially
damaging chemicals
Allowing plastic and
solvent-free, stable
formulations with high
loadings of active
ingredients
Naturally binding to plant
and animal surfaces
improving efficacy
and retention
Providing flexible
formulation options
Exemption from
maximum residue levels
Low or no pre-harvest
intervals giving growers
maximum flexibility,
security and control
Eden Research plc Company Overview 2019
OUR MARKETS
Significant
Market Potential
VIII
A GROWING
GLOBAL
MARKET FOR
SUSTAINABLE
PRODUCTS
The global biopesticides market is
projected to be worth more than
$10bn
by 2025
The biopesticides market is growing
at a CAGR of approximately
15%
per annum
Increasing time and cost of bringing
new agrochemical products to market:
10-12yrs
$300m
and around
Conventional crop
protection products
formulated with
Sustaine and Eden’s
active ingredients
can help address
many of these issues:
Consumer concerns
over food safety
Increasingly challenging
regulatory requirements
Farmers seeking
effective alternatives
CROP PROTECTION
MARKET
The dominant molluscicide approved
for use in the EU is metaldehyde.
The UK banned metaldehyde in 2018.
AHDB estimates that a lack of
slug control products will cost UK
agriculture £100 million per year!
The re-registration of copper-based
products as fungicides was approved
in the EU but a 33% reduction in use
limit was imposed.
New EU rules have prohibited any
substance identified as an Endocrine
Disruptor from being used in plant
protection products. The new rules
will have an impact upon the availability
of insecticides and fungicides.
PRODUCT
COMMERCIALISATION
We now have commercial
partners in place across
six continents.
Product sales have commenced in key markets where we have
authorisation to market and sell our first product, Mevalone.
y Strong intellectual
property portfolio
y Numerous commercial
partnerships
y A demonstrated platform for
future product development
y Active engagement
with new partners
y Regulatory approvals in a
growing list of key markets
y Growing market share
y Investment in research
and development
Eden Research has new product registration applications
in-process in multiple new countries with initial approval
received for its second product in 2019.
IX
Market Size
€0.6bn €0.5bn €1.9bn €45bn
Significant Market
opportunities
High demand for sustainable products
that can compete with conventional
products on ease-of-use, efficacy,
safety, cost and reliability.
The Company has built a strong portfolio of IP rights
and know-how as well as a growing register of national
product authorisations granting access to key markets
globally for its customers and partners. Sustainability
drives all that we do in the development of our products,
business, partnerships and team.
Trials
Regulatory process
Product sales
Mevalone
Cedroz
Insecticide
Sustaine
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS
Eden Research plc Company Overview 2019
OUR BUSINESS MODEL
WHAT WE DO AND HOW WE DO IT
Developing our
product pipeline
We have a pipeline of products at
differing stages of development
targeting specific opportunities
across our key markets.
These include new fungicides,
insecticides and bactericides as
well as new solutions for animal
health and consumer products.
Gaining regulatory
approval
We seek regulatory
authorisation for our products
on a country-by-country or
regional basis, with approvals
already granted in a number
of European countries and
Kenya. We are in the process of
extending product registration
into new territories.
Signing commercial
agreements
We work with our
sector-leading partners
to commercialise products
through a series of
commercial production,
marketing and distribution
agreements.
X
X
Eden provides sustainable solutions
for crop protection, animal health
and consumer products.
Identifying suitable
industrial partners
We partner with global
and regional industry
leaders who have existing
distribution channels, local
experience and knowledge
to maximise sales of our
products. We also add value
to our partners’ products
using Sustaine to extend IP
protection, ease regulatory
burdens and enhance
performance.
Securing patent
protection for
intellectual property
Our Sustaine encapsulation
technology is patent protected
throughout the world.
Investment in research
and development
We are executing a significant
research and development
programme which will
move forward multiple
pipeline products towards
commercialisation.
Generating revenue
Revenue is generated through:
y Product sales
y Licence-based royalties
y Up-front or milestone
payments from legacy
agreements
ANNUAL REPORT
STATEMENTS
GOVERNANCE
FINANCIAL
STATEMENTS
COMPANY OVERVIEW
THE VALUE THIS CREATES
Eden is leveraging two
technology platforms in
order to provide sustainable
solutions to challenges in
crop protection, animal health
and consumer products.
The Company has built a strong portfolio
of IP rights and know-how as well as
a growing register of national product
authorisations granting access to key
markets globally for its customers and
partners. Sustainability drives all that we
do in the development of our products,
business, partnerships and team.
XI
For customers
We provide customers
in the crop protection,
animal health and
consumer products
sectors with sustainable,
cost-efficient and
effective alternatives to
conventional products.
For shareholders
We are well funded and
positioned to deliver
long-term shareholder
value through further
commercialisation and
sales of our products.
For partners
We give our partners
market access to
sustainable, efficient
and effective alternatives
to conventional
chemical products.
For the environment
We use natural
chemistries to create
environmentally friendly
products which support
sustainable agriculture.
For Employees
We promote the
development of our
employees through
skills enhancement and
training programmes.
Eden Research plc Company Overview 2019
OUR STRATEGY
OUR VISION IS TO
BE THE LEADER
IN SUSTAINABLE
PRODUCTS ENABLED
OR ENHANCED BY
OUR NOVEL SUSTAINE
ENCAPSULATION AND
DELIVERY TECHNOLOGY
IN CROP PROTECTION,
ANIMAL HEALTH AND
CONSUMER PRODUCTS.
XII
Commercial Growth
Research, Development
and Operations
Business Line
Diversification
Strengthening and
Growing the Team
WE WILL ADDRESS THESE BY:
KEY ACHIEVEMENTS IN 2019
Regulatory clearance in new
countries, crops and diseases
Accelerate Sustaine business
development
Partnerships for Mevalone in
new territories
Pursue collaboration with majors
Sipcam appointed as commercial
partner in Portugal and Benelux
SumiAgro Europe appointed
as commercial partner in 5 key
central European countries
Supply chain optimisation
Expansion of screening
and field trials
Accelerate commercialisation of
Sustaine for conventional actives
Cedroz granted EU authorisation
in the Southern EU and for
greenhouse use
Cedroz granted authorisation
in Mexico
XIII
Ongoing work with Bayer Animal
Health to launch four new products
Seed treatment work is initiated
in the field
Consumer product launches
Pursuing opportunities in
the seed treatments market
Expand crops and diseases treated
Geographic diversification
(seasonal and climatic variation)
Commercial, product management
and technical roles
Further insecticide trials with
encouraging results
Mevalone granted emergency
use authorisation on apples in
France - a completely new use
Key appointments made in product
and market management as well as
the appointment of an experienced
commercial Director
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Annual Report Statements 2019
ANNUAL REPORT
STATEMENTS
Chairman’s Statement
02
Chief Executive Officer’s Review 04
10
Strategic Report
14
Section 172 Statement
XIV
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
SIGNIFICANT
MARKET
POTENTIAL
GROWING MARKET
FOR BIOPESTICIDES
And an increasingly rigorous regulatory
environment that favours sustainable
products with proven efficacy whilst
large numbers of products based upon
conventional chemistry are forced off the
market in many countries
Ability to compete with synthetic pesticides
on performance, ease of use and cost
UNIQUE
TECHNOLOGY
SIGNIFICANT
INVESTMENT IN
PATENT PROTECTION
Ownership of the patents behind the
Sustaine™ encapsulation technology
Scope to exploit the core technologies
beyond existing markets and products
Proven efficacy with strong commercial
validation by farmers and our partners
01
For more information see pages VIII and IX
For more information see pages VI and VII
Eden Research plc Annual Report Statements 2019
CHAIRMAN’S
STATEMENT
“ IT HAS BEEN ANOTHER
PLEASING YEAR FOR
EDEN CHARACTERISED
BY PRODUCT
DEVELOPMENT AND
PURSUIT OF NEW
OPPORTUNITIES.”
Lykele van der Broek – Non-Executive Chairman
02
$58bn
Global Crop Protection Market
$33bn
Global animal health market
$50+bn
Global Crop Protection Market
INTRODUCTION
It has been another pleasing year for Eden characterised by product development
and pursuit of new opportunities. We find ourselves in an energised crop protection
industry which is undergoing significant changes through fast-paced innovation.
This is driven by macro-economic factors including an increasing global population
and demand for food, set against a backdrop of increasing regulatory scrutiny of
long-established pest and disease control solutions. Current regulatory pressures
stem from empowered global consumers who are increasingly concerned and vocal
about the pesticide residues in their food, associated health concerns, and demand
to live in a more sustainable society. Most recently, agriculture has been identified
as a key global industry during the Coronavirus COVID-19 pandemic. All together
these factors favour Eden’s business proposition.
COMPANY OVERVIEW
GOVERNANCE
GOVERNANCE
FINANCIAL
FINANCIAL
STATEMENTS
STATEMENTS
ANNUAL REPORT
STATEMENTS
MARKET OPPORTUNITY
It is evident that the agriculture industry
has been forced to shift to new,
sustainable solutions including the
new products and technologies that
Eden offers.
for a variety of reasons such as dose
reduction, resistance management
and patent protection expansion. One
key application for Sustaine, which
has evolved in tune with the changing
market dynamics, is its role in helping
to solve the microplastics issue.
Eden is a pioneer in an industry where
being able to react and respond to
fast changing dynamics is a clear
strength and one that Eden possesses.
The biopesticides sector of the crop
protection market is currently enjoying
a 15% compound annual growth rate
and is expected to have a market value
of over $10 billion by 2025. This is a
significant leap for a market that barely
existed twenty years ago.
In anticipation of the market
opportunity that Eden’s management
has identified, it has developed,
registered and built an ever-expanding
portfolio of sustainable, biopesticide
products based on the three active
ingredients that are registered in
Europe. Eden’s first two products,
Mevalone™ and Cedroz®, have been
proven to have high efficacy and
the added benefits of maximum
residue level exemption, short pre-
harvest intervals, competitive pricing,
and strong alignment with current
regulatory developments.
Eden’s Sustaine™ microencapsulation
system is also receiving inbound
interest from external parties. Sustaine
can add value to other products by
offering an effective encapsulation
system, with high loading capacity,
versatility, stability and sustained
delivery. Eden had already identified
that third party active ingredients
could also benefit from using Sustaine
Microplastics have been well-
publicised as causing problems for the
environment and the European Union
recently announced its intention to
publish new regulations which could
ban the use of polymers in certain
industries, including crop protection,
where polymers are widely used to
formulate active ingredients. Such bans
could come into force within five years
which, in crop protection terms, is rapid
change. Since this announcement, Eden
has seen a significant increase in the
number of enquiries from some of the
major players in the crop protection
industry looking for more sustainable
solutions for their existing (and often
largest selling) products.
RECENT PRODUCT
EXPANSION
In January 2020, Eden announced
that it had partnered with Corteva
Agriscience, the fourth largest
agriculture input company in the world,
to develop a product for a specific use
in the seed treatment market which
has, as yet, been a known, yet untapped
opportunity for Eden. If successful, the
product could generate revenues for
the Company of up to c.€40m. There
are many additional opportunities in
seed treatments, and we are actively
pursuing these both alone, and in
partnership.
Eden’s successful fundraise of £10.4m
(gross) in March 2020 will allow it to
bolster its existing product offering,
with part of the proceeds to be
used for the development of its first
insecticide product. Eden’s effective
bio-insecticide targeting a range of key
insect pests across numerous crops, is
in the early stages of being registered
and commercialised on a global basis,
allowing Eden to enter into a significant
new market. This is an opportunity
where the addressable market in the EU
and US alone is over €850 million.
LOOKING AHEAD
While the COVID-19 pandemic has
introduced uncertainty in a number
of areas, in particular the timing of
approvals, the team at Eden has worked
hard to ensure that it is well placed to
capitalise on the opportunities that
exist for the Company across what we
acknowledge is a fast growing
and dynamic industry.
Eden has a wealth of relevant
experience; disruptive, innovative
platform technologies; a strong
patent portfolio; a strong balance
sheet; a diverse and growing
portfolio of efficacious, sustainable
products; and an expanding, capable,
enthusiastic team.
For the benefit of all our stakeholders,
we shall continue to focus on delivering
sustainable performance and long-
term value, which are the primary areas
of focus for the Board and Executive
leadership team.
Lykele van der Broek
Non-Executive Chairman
6 May 2020
03
Eden Research plc Annual Report Statements 2019
CHIEF EXECUTIVE
OFFICER’S REVIEW
“ WE ARE DETERMINED TO BUILD A
COMPANY THAT WILL PROSPER IN THE
LONG TERM. AFTER A SUCCESSFUL
CAPITAL RAISE IN MARCH 2020, IT IS
CLEAR OUR SHAREHOLDERS (EXISTING
AND NEW) AGREE THAT NOW IS
THE RIGHT TIME TO INVEST IN AND
CAPITALISE ON THE OPPORTUNITIES
IN OUR PIPELINE. WE HAVE A CLEAR
AMBITION TO BE A GLOBAL LEADER
IN SUSTAINABLE CHEMISTRY,
AND WE ARE POISED TO ENTER NEW
AND SIGNIFICANT MARKETS FROM
A POSITION OF STRENGTH.”
Sean Smith – Chief Executive Officer
04
Throughout the year, we have made
consistent commercial progress and
significantly advanced our position in
the rapidly growing biopesticides market.
The wheels are in motion across many
areas of our business to expand our
footprint, both geographically and
through new product development,
which should in turn generate growing
future revenue from product sales.
I am very proud of the Company we
are building and our contribution to
more sustainable agriculture practices
around the world where we make and
sell our products.
CREATING VALUE
The global economy is facing a time
of extreme volatility following the
outbreak of the COVID-19 pandemic,
with significant challenges to
international trade and the institutions
that have underpinned prosperity for
many decades. Our business will not
be immune to the disruption, but the
strength and relevance of our current
portfolio of products and projects, as
well as the vital role of agriculture at
this time, gives us confidence in our
resilience as we support our partners
and farmers across the world.
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
Eden is currently the only UK-quoted
company focused on biopesticides for
sustainable agriculture, and we are well-
positioned to capitalise on this rapidly
growing biopesticides market, which
is projected to be worth over
£10 billion by 2025.
Our strategy remains unchanged.
Our near-term focus is to maximize
the opportunity for sales of our two
approved products, Mevalone and
Cedroz, further the use of Sustaine
with third party active ingredients,
develop seed treatment opportunities
with Corteva Agriscience (and others)
and advance development of our first
insecticide products. The Company
continues to explore additional
business line diversification including
ongoing work with Bayer Animal Health,
as well as the potential for consumer
product launches. In addition, the
Company will seek to expand the
crops, diseases and pests treated by
its products and will look to undertake
further geographic diversification
which will ultimately help to minimise
the effect of regional weather, pest
and disease pressure variations.
We have continued to improve the
quality and pace of execution in every
part of our business. The successful
capital raise in March 2020 has placed
us well to deliver increased value for
our shareholders.
PERFORMANCE
Fiscal year 2019 has been another
year of pleasing performance, and the
Company is well funded. Eden remains
debt-free and has a strengthened
balance sheet allowing us to pursue
our exciting plans. Our outsourced
manufacturing model means that we
retain maximum flexibility over our
choice of manufacturing locations
with a low fixed cost base.
y Operating loss for the year of £1.4m
is in line with market expectations
y The majority of the £2.0m of revenue
was derived from product sales
of £1.7m (2018: £1.6m), achieved
despite unfavourable growing
conditions in the Southern EU, with
milestone and upfront payments
making up the balance
y First marketing authorisations
received for Cedroz, the Company’s
second commercial product which is
being marketed by Eastman Chemical
In 2020, the Company expects to build
on the sales achieved in the territories
where it received approvals during
2019 and early 2020, including the
acceptance of Mevalone for organic
agriculture in key countries. Moreover,
the Company expects to see sales
arising from new approvals for Cedroz
in Spain, Italy, France, Belgium, the
Netherlands and the United Kingdom
where the applications for registrations
have now been outstanding from the
early part of 2019 and the constituent
active ingredients are already approved.
y Cedroz™ gained entry into the
important US agricultural import
market as a result of the first
marketing authorisation for the
product in Mexico
y Exclusive distribution agreement
signed with SumiAgro Europe for
Mevalone™ in five new markets
across central Europe, including
Germany and Poland, for use as
a fungicide on grapes as well
as treatment to prevent storage
diseases on apples
y One-year exclusive Evaluation
Agreement signed with Corteva
(NYSE: CTVA), the fourth largest
agriculture input company in the
world, covering seed treatments
(post year-end)
y Attainment of organic status for our
three active ingredients in Europe
with subsequent organic product
status certificates in key countries
(post year-end)
y Successful fund-raise of £10.4m
(gross) from a combination of a
placing, open offer and subscription.
Key current shareholders Sipcam
Oxon SpA, Gresham House and
others participated, and we welcome
12 new institutional shareholders to
the register, including the Business
Growth Fund (BGF), Canaccord
Genuity, Amati, and Rathbones
(post year-end)
With the recent appointment of an
experienced Director of Regulatory
Affairs, we are better placed than ever to
expand our regulatory and commercial
footprints (and consequently, our
addressable market) with increasing
speed, however, we do expect that the
current COVID-19 pandemic will slow the
progress of many regulatory agencies,
and we are keeping a careful eye on
developments in this area to help ensure
we are able to accurately forecast
developing sales in new territories.
As normal, the pace of regulatory
clearances controls the commencement
of new revenues in this highly regulated
industry. With the current restrictions on
travel, there may be an impact on face
to face sales meetings which could also
impact revenue.
The Company continues to expect the
US EPA to approve the sale of Mevalone
and Cedroz in the United States during
2020. However, there is little doubt that
the current situation with COVID-19 and
the consequential shut-down of certain
services coupled with a fundamentally
changed working dynamic, will have
an impact on operations at EPA and,
subsequently, the pace of approvals.
Although the Company might expect
to see some level of channel stocking,
the overall levels of sales in 2020 will
depend largely upon the timing of
approvals relative to the growing season.
05
Eden Research plc Annual Report Statements 2019
CHIEF EXECUTIVE
OFFICER’S REVIEW CONTINUED
“ PLANT PROTECTION PRODUCTS
PLAY A FUNDAMENTAL ROLE IN
AGRICULTURAL PRODUCTION. WITHOUT
THEM, WE WOULD NOT BE ABLE TO
COPE ADEQUATELY WITH GLOBAL
EMERGENCIES SUCH AS COVID-19. THE
BIOPESTICIDES MARKET OUTLOOK
REMAINS UNDOUBTEDLY POSITIVE, WITH
A CLEAR DEMAND FROM CONSUMERS
FOR SUSTAINABLY GROWN PRODUCE
AND IN RESPONSE, A NOTABLE SHIFT
TOWARDS MORE SUSTAINABLE FARMING
PRACTICES. AS WE STEP INTO THE ‘NEW
NORMAL’, CONSUMER DEMAND FOR A
CHEMICAL-FREE SUPPLY CHAIN JOURNEY
WILL ONLY BE MORE PREVALENT...”
Sean Smith – Chief Executive Officer
06
06
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
MAKING AN IMPACT
Our core business proposition is
more relevant than ever. The growing
demands of consumers are driving
increased transparency around
agricultural practices, with clear
emphasis on improving sustainability
from the bottom up. Our current
portfolio of products is helping farmers
across southern Europe integrate
greener processes which not only
benefit consumers, but also protect
agricultural ecosystems.
As we develop our portfolio by
expanding the uses of our products,
we will be able to help a broader
range of growers in more regions
implement more sustainable processes
in their production. Additionally,
we are particularly excited by the
potential of the Company’s patented
microencapsulation technology,
Sustaine™, a naturally sourced, plastic-
free, biodegradable formulation
technology derived from yeast, which
has applications beyond agriculture.
We will continue to assess how the
technology can be applied to the animal
and consumer product sectors to help
these industries reduce their use of
microplastics.
FINANCIAL REVIEW
Revenue for the year decreased to
£2.0m (2018: £2.8m) primarily due
to the reduction in one-off receipts
to £0.4m (2018: £1.2m) following the
exercise of an option by Sipcam Oxon
SpA in 2018 which was not repeated
in 2019.
Going forward, the focus for the
business remains to grow revenue
through product sales which will
ultimately provide a sustainable,
consistent source of income for
the Company. This was the case in
2019 with product sales increasing
to £1.7m (2018: £1.6m).
The cash position at the year-end was
£0.5m (2018: £2.5m), though this was
significantly increased after the year
end following the successful fundraise
in March 2020 with gross proceeds
of £10.4m.
Administrative expenses in the year
were similar to last year at £1.5m
(2018: £1.5m) though operating loss
increased to £1.4m (2018: £0.5m).
Despite the similar overhead cost base
and the increase in product sales, the
increase in operating loss is due to the
aforementioned reduction in one-off
receipts, as well as increased share-
based payment charges of £0.2m
(2018: £0.1m) and amortisation of
£0.5m (2018: £0.4m).
Throughout the year, the Company
remained debt free with no long-term
debt or lending facilities in place or
expected to be required.
Following the fundraise in March 2020,
the Company is well funded and well
placed to execute its business plan
which involves investing in product
trials and marketing authorisations
which are required to increase product
sales revenue and the geographical
footprint in which Eden can operate,
in addition to growing the team which
should enable the Company to meet its
ambitious growth targets.
BREXIT
The impact of Brexit is still somewhat
uncertain for many UK companies
and this is now complicated further by
what are likely to be delays to key trade
negotiations with the EU, in particular
due to the COVID-19 pandemic and
its impact on Government operations
and priorities. However, the Company
understands that the ownership of
its EU approvals of Mevalone and its
constituent active substances should
not be impacted by Brexit, since
guidance has been published stating
that the owner of such approvals can
continue to be a UK resident company.
However, seeking regulatory approval in
the UK for Eden products has become
somewhat more challenging, and the
Company is now weighing up market
opportunities and costs under the
various Brexit scenarios. We are now
better placed than before to navigate
what are likely to be complex regulatory
challenges.
From an operational perspective,
the Company does not foresee any
significant issues with continuing
to have toll-manufacturing facilities
in mainland Europe, though it is
monitoring this situation. The Company
also has manufacturing capabilities
in the UK as well as the US which
provide some flexibility. In addition, it
is feasible for Eden to manage some
of its operations through its Irish
subsidiary, should this be necessary.
Raw materials are currently sourced
from outside of the EU and so there
is expected to be minimal impact on
this part of the supply chain.
07
07
Eden Research plc Annual Report Statements 2019
CHIEF EXECUTIVE
OFFICER’S REVIEW CONTINUED
08
COVID-19
During this difficult time, the
agriculture industry requires a
unified effort from all involved in the
provenance of fresh food and produce.
Eden is committed to continuing
to provide biopesticide products
and natural microencapsulation
technologies to the global crop
protection industry through its network
of partners across the world. Whilst
trading in the first part of the year
have been in line with management’s
expectations, with low direct operation
impact from COVID-19 at this time,
there remains significant uncertainties
regarding the severity and duration
of the pandemic and the measures
required to combat it. However, we
want to make Eden’s current position
clear to our stakeholders.
1 We Are Funded for
Future Growth
In March 2020, we raised £10.4 million
(gross) from investors, a feat that
the whole team is proud of given the
volatility and uncertainty in the markets
at the time. The resounding vote of
confidence from our shareholders
(both existing and new) will help us
capitalise on the global shift towards
more environmentally friendly methods
of crop protection, driving us to become
a leading provider of sustainable
solutions for global agriculture. Though
the coming months will certainly
present challenges for the Company,
our employees and our partners,
Eden remains debt-free and has a
strengthened balance sheet allowing us
to execute on our exciting plans. Our out-
sourced manufacturing model means
that we retain maximum flexibility over
our choice of manufacturing locations
with a low fixed cost base.
2 Our Industry Has a
Pivotal Role to Play
As demand soars for food supply during
the lockdown periods across the UK
and beyond, the agriculture industry has
a vital role to play in feeding the world
through the crisis and minimising the
economic fallout.
“Plant protection products play a
fundamental role in agricultural
production - without them, we would
not be able to cope adequately with
global emergencies such as COVID-19.
The biopesticides market outlook
remains undoubtedly positive, with
a clear demand from consumers for
sustainably grown produce and in
response, a notable shift from growers
towards greener farming practices.
As we step into the ‘new normal’,
consumer demand for a chemical-
free supply chain journey will only be
more prevalent.”
Not only do people need food to survive,
they remain conscious of where it
comes from and care about the supply
chain journey. The choices people are
making to put healthy food on the table
are driving what farmers grow in their
fields and how they grow them with an
increasing emphasis on sustainable
practices and produce that is free from
pesticide residues. This is the future
of farming, and Eden is at the forefront
of the movement towards sustainable
farming practices.
3 Supporting Our
Employees and Partners
As always, we are working closely
with our partners as they continue to
maintain their business of supplying
our product to growers in an increasing
number of countries. Our team is
reviewing the situation every day so
that we can adapt to any changes that
may be experienced by our partners
and ensure the health and safety of
their workers is paramount. Closer
to home, Eden’s team are avoiding
unnecessary travel and working
remotely during the crisis.
I want to thank our partners and, of
course, the farmers who cannot carry
out their work remotely and who are
working hard each day to ensure that
we have enough to eat now and in the
future. Their work cannot not stop, and
we are grateful now more than ever for
all that they do to feed us. We hope you
stay safe and well.
TERPENETECH (UK)
TerpeneTech secured a CE mark for
its head-lice treatment product in
European Economic Area (“EEA”) in
2018, which is the first step in the
marketing and sales of such products.
TerpeneTech has also established its
first channel distribution partner who
will target the UK market. The first
product launch in the UK is currently
expected to coincide with the back-to-
school schedule in the autumn of 2020.
Sales will commence in other countries
in the EEA once arrangements with
additional distribution partners have
been finalised.
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
DIVIDENDS
There is no dividend to be paid or
proposed in respect of 2019. The Board
continues to monitor its dividend policy.
SUMMARY
Today, Eden is a stronger, more
established business than it has ever
been, and this trend continues as we
move ahead with a robust financial
position, an expanding regulatory and
commercial footprint, a strong and
growing network of partners, and a
growing product portfolio, all allowing
us to significantly increase the size
of our addressable market. We have
embedded a culture of efficiency and
reduced complexity, and we seek
continuously to strengthen and improve
our operations. We are increasingly able
to anticipate and adapt to changing
consumer and regulatory trends as well
as global economic conditions, and
we benefit from the strong alignment
of our sustainable business model
with ongoing regulatory changes in
our industry – an industry in which
regulation is creating tremendous
disruption and opportunities that we
are well-placed to respond to.
Eden remains the UK’s only quoted
company focussed upon sustainable
chemistry for the biopesticides industry,
and we are excited to be contributing
to the growth of our industry and
supporting the all-important work
of farmers and our partners.
Sean Smith
Chief Executive Officer
6 May 2020
09
Eden Research plc Annual Report Statements 2019
STRATEGIC REPORT
AS WE DEVELOP
OUR PORTFOLIO BY
EXPANDING THE USES
OF OUR PRODUCTS, WE
WILL BE ABLE TO HELP
A BROADER RANGE OF
GROWERS IN MORE
REGIONS IMPLEMENT
MORE SUSTAINABLE
PROCESSES IN THEIR
PRODUCTION.
10
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
REVIEW OF BUSINESS
The review of this year’s business
activities is as set out in the
Chairman’s Report and Chief
Executive Officer’s Report.
An update on TerpeneTech, Eden’s
associate company, is also included
in the Chief Executive Officer’s Report.
KEY FINANCIAL
PERFORMANCE
INDICATORS
The key performance indicators of
the business are the development and
commercialisation of the Company’s
products and the management of its
cash position.
Revenue derived from product sales,
licence fees and milestone payments
are all considered to be key financial
performance indicators. Maintaining
a low overhead base and progress
towards profitability are also key
indicators.
Revenue in 2019 consisted of upfront
and milestone payments in relation to
new and existing agreements, royalties
and product sales. Revenue in 2019
was £2.0 million in comparison to
£2.8 million in 2018. The operating
loss for the year was £1.4 million
compared to £0.5 million for the
previous year. The loss before tax
for 2019 was £1.5 million, up from
£0.5 million in the previous year.
The loss per share for 2019 was 0.54
pence (2018: 0.16 pence).
Administrative expenses for the year
were £1.5 million (2018: £1.5 million).
Intellectual property, including
development expenditure, is written
off over eleven years in line with the
remaining life of the Company’s key
patents, taking into account additional
protection provided by granted
Supplementary Protection Certificates.
The Company has capitalised £0.9m
(2018: £0.4m) of development
expenditure in the year which is a
reflection of the continued development
of the Company’s products.
Cash is safeguarded by close working
capital management, including tightly
controlling the Company’s creditor
position. The cash position at the year-
end was £0.5m (2018: £2.5m), though
this was significantly increased after
the year end following the successful
fundraise in March 2020 with gross
proceeds of £10.4m.
OTHER KEY NON-
FINANCIAL PERFORMANCE
INDICATORS
The regulatory approval of products and
milestones related to such processes
are deemed to be key non-financial
performance indicators.
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 Chief Executive Officer’s
Report contains an update regarding
this progress.
The registration of the Company’s
first product, Mevalone, for use as
a pesticide in Europe is not only
a key milestone in terms of its
commercialisation, but also indicative
of future products as the three active
substances that are registered in
the EU are the basis of Eden’s future
product portfolio. Thus far, Mevalone
has been approved for use in Kenya,
Malta, Greece, Bulgaria, Spain, Italy,
France, Cyprus, Albania, Portugal
and Macedonia.
Eden’s second product, Cedroz™, is a
nematicide which has been authorised
for sale in Malta, Belgium and Mexico
in 2019.
Further commercialisation of Eden’s
products and Sustaine encapsulation
technology through supply, licensing,
evaluation and option agreements
also serve as a key indicator of the
Company’s performance.
Successful trial results are also
significant in showing the technical
and commercial viability of our
intellectual property.
PRINCIPAL RISKS
AND UNCERTAINTIES
The Company’s prime risk is the
on-going commercialisation of its
intellectual property, which involves
testing of the Company’s products,
obtaining regulatory approvals and
reaching a commercially beneficial
arrangement 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.
11
Eden Research plc Annual Report Statements 2019
STRATEGIC REPORT CONTINUED
INDEMNITY COVER
The Company purchases insurance
cover for Directors and Officers to
offer protection 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’s
environment committee meets to
discuss ways in which the business
can contribute more to its local
environments by getting involved in
local initiatives and also to look at
ways of promoting environmental
wellbeing 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:
Sean Smith
Director
6 May 2020
12
We have, however, seen regulatory
authorities working at reduced
capacity, which is expected to impact
on-going product approvals that we
have around the world, though it is
difficult at this stage to assess what,
if any, commercial and financial impact
there may be.
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 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 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.
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 the Company has
sufficient cash resources to meet its
on-going cash flow requirements.
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 (and acting on)
the relevant legal advice as and when
required.
There is also inherent uncertainty
surrounding the regulatory approval
of products in terms of both timing
and outcome. This risk is managed
by retaining appropriately experienced
staff and contracting with expert
consultants as needed.
COVID-19
Whilst, to date, the Board has not
seen a significant, direct operational
impact on the business from COVID-19,
clearly the full extent of the effects is
not yet known and, as such, there is
an inherent risk that the Company is
negatively affected.
The Company has not seen a
significant change, thus far, on its toll
manufacturing operations. In addition,
our customers are not expecting
any significant impact on sales of
agrochemicals.
COMPANY OVERVIEW
GOVERNANCE
FINANCIAL
STATEMENTS
ANNUAL REPORT
STATEMENTS
13
Eden Research plc Annual Report Statements 2019
SECTION 172
STATEMENT
THE DIRECTORS ARE FULLY AWARE OF THEIR
RESPONSIBILITIES TO PROMOTE THE SUCCESS OF
THE COMPANY IN ACCORDANCE WITH S172 OF THE
COMPANIES ACT AND HAVE ACTED IN ACCORDANCE
WITH THESE RESPONSIBILITIES DURING THE YEAR.
The Board has identified that its key stakeholders are:
y our workforce
y shareholders
y customers
y regulators
14
EDEN’S CORE
VALUES, WHICH ARE
PROFESSIONALISM,
INTEGRITY,
EFFECTIVENESS AND
DYNAMIC, REFLECT
THE COMPANY’S
COMMITMENT TO
DO THE RIGHT THING.
COMPANY OVERVIEW
GOVERNANCE
GOVERNANCE
FINANCIAL
FINANCIAL
STATEMENTS
STATEMENTS
ANNUAL REPORT
STATEMENTS
Eden’s core values, which are professionalism, integrity, effectiveness
and dynamic, reflect the Company’s commitment to do the right thing
simply because it is the right thing to do. The requirement to adhere to
this principle is embedded within all job descriptions across the group.
Throughout the year the Board considered the wider impact of strategic
and operational decisions on the Company’s stakeholders.
15
OUR WORKFORCE
Our workforce is
fundamental to the long-term
success of the Company. We
have various engagement
mechanisms many of which
have been in place for a
number of years. The team
at Eden generally meets
every Monday morning to
provide a status update on
various on-going projects
and plan the week ahead.
Annual employee reviews
are undertaken and regular
communication takes place
between management and
staff to ensure that any
concerns or issues are
identified and appropriately
addressed. The Company
provides training to
employees as well as social
occasions to promote the
well-being and connectivity
of the team.
SHAREHOLDERS
The support and
engagement of our
shareholders is imperative
to the future success of our
business. In all of its decision
making, the Board ensured
that it acted fairly with regard
to members of the Company.
We have productive ongoing
dialogue with a number of
our investors. We are in touch
with all of our shareholders
at least three times per
annum with information
about shareholder meetings
and the Company’s financial
results. We have regular
meetings with institutional
investors and analysts to
understand their views and
address any concerns.
CUSTOMERS
The commercial team at
Eden is in regular contact
with our customer’s key
people to ensure that
they are satisfied with the
products that Eden is selling
to them or that any projects
that are taking place with
them are on track and
without issue. Face to face
meetings take place, as well
as other communication
such as email or video or
phone conferences which
allows for an on-going
dialogue with an aim to
reducing any potential
issues or concerns. A project
management system which
has been adopted by Eden
ensures that all customers
are listed and communicated
with on a regular basis to
keep customers satisfied
as much as possible.
REGULATORS
The regulatory team at
Eden, which includes both
employees and expert
consultants, communicates
directly with regulators
around the world to allow
an efficient and successful
process to take place.
Clearly, regulation is a key
factor in Eden’s industries
and so it is important for the
team at Eden to be in regular
contact with regulators to
ensure long-term success
of the business through
the approval of product
marketing authorisations.
The regulatory team also
is encouraged and assisted
in keeping itself up to date
on regulatory matters
through training and
relevant publications.
Eden Research plc Governance 2019
GOVERNANCE
18
Board of Directors
Chairman's Letter
22
The QCA Corporate Governance Code 24
28
Remuneration Policy
32
Audit Committee Report
35
Directors' Report
16
COMPANY OVERVIEW
ANNUAL REPORT
STATEMENTS
FINANCIAL
STATEMENTS
GOVERNANCE
SKILLED AND
EXPERIENCED
PROFESSIONALS
STRONG BOARD AND
MANAGEMENT TEAM
Wealth of experience in the
agriculture, consumer products
and animal health sectors globally
Outsourcing of some functions to
maintain a flexible, low overheard base
Expansion of the core team in 2019
TRAJECTORY
OF FINANCIAL
GROWTH
STRENGTHENING OUR
FINANCIAL POSITION
Increased revenue generation from
product sales
Significant investment by key partners
17
Robust balance sheet and cash position
For more information see pages 18–19
For more information see pages 04–09
Eden Research plc Governance 2019
BOARD OF DIRECTORS
Lykele van der Broek
Non-Executive Chairman
Sean Smith
Chief Executive Officer
Appointed
October 2017 (Board)
January 2018 (Chairman)
Appointed
September 2014
Independent
Full Time or Part Time
Independent
Full Time or Part Time
Yes
PT – 10 days per year
No
Full Time
18
Background and experience
Background and experience
Lykele retired as a Member of the Board of
Management of Bayer CropScience, a division of
Bayer AG, in 2014, having been responsible for
the commercialisation of innovative agricultural
products and services globally. Prior to this,
he held senior international roles including the
Head of Bayer CropScience’s BioScience division
and President of the Bayer HealthCare Animal
Health division.
Sean has a bachelors degree in microbiology
and over 25 years of experience in the speciality
chemicals and industrial biotechnology industries.
He has held senior commercial leadership roles
ranging from sales and marketing to business
management and intellectual property licensing in
blue chip companies such as Ciba (now BASF) and
Honeywell. In recent years, Sean has focussed on
technology commercialization through licensing
and company formation working with Intellectual
Ventures and several start-ups.
Committee membership
Committee membership
AIM Compliance Committee (Chairman)
None
Nominations Committee (Chairman)
Remuneration Committee (Chairman)
Audit Committee
External appointments
External appointments
Genus plc (Non-Executive Director)
None
COMPANY OVERVIEW
ANNUAL REPORT
STATEMENTS
FINANCIAL
STATEMENTS
GOVERNANCE
19
Alex Abrey
Chief Financial Officer
Robin Cridland
Non-Executive Director
Appointed
September 2007
Appointed
May 2015
Independent
Full Time or Part Time
Independent
Full Time or Part Time
No
Full Time
Yes
PT – 10 days per year
Background and experience
Background and experience
Alex, a Chartered Certified Accountant, joined
the Board in September 2007, having been Chief
Accountant to Eden for the previous four years.
He has acted as Financial Director to a diverse
range of businesses including a financial and
management consultancy business based in
Oxfordshire, a medical waste management
company and an intellectual property licensee
involved in plastics manufacturing. Alex has
eighteen years’ experience in both practice
and industry.
Rob served as Chief Financial Officer and
Company Secretary of Itaconix plc until
September 2018. He joined Itaconix in September
2008 from Renovo Group plc where he spent
seven years as Executive Director of Finance and
Business Development. He began his career at
Coopers & Lybrand Deloitte, before moving on to
senior transactional roles at Enskilda Securities
and senior finance and transactional roles at
GlaxoWellcome and GlaxoSmithKline. He was
also a Governor and a Non-Executive Director
of Cheadle Hulme School, Cheshire.
Committee membership
None
Committee membership
Audit Committee (Chairman)
Nominations Committee
AIM Compliance Committee
Remuneration Committee
External appointments
Ricewood Ltd (Director)
External appointments
None
Eden Research plc Governance 2019
BOARD OF DIRECTORS CONTINUED
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Board and Committee meetings are scheduled in advance for each calendar year. Additional meetings are arranged as
necessary to review strategic and annual plans.
The scheduled Board and Committee meetings and attendance during the year ended 31 December 2019 were as follows:
Director
Role
A Abrey
Chief Financial Officer
R Cridland
Non-Executive Director
L van der Broek
Chairman
S Smith
Chief Executive Officer
20
Board
(6 meetings)
AIM Compliance
(1 meeting)
Remuneration
& Nominations
(10 meetings)
Audit
(6 meetings)
–
–
–
–
PROFESSIONAL DEVELOPMENT AND TRAINING
Alex Abrey is a Chartered Certified Accountant. As part of his professional development, he attends relevant courses
and maintains his qualification through Continuing Professional Development under the Association of Chartered
Certified Accountants.
Robin Cridland is a Chartered Accountant. As part of his professional development, he attends relevant courses and
maintains his qualification through Continuing Professional Development under the Institute of Chartered Accountants
in England and Wales.
Sean Smith is a member of the Institute of Directors with access to online tools and courses and attends industry
conferences including the Association of Biocontrol Industry Manufacturers.
Lykele van der Broek keeps up-to-date by regularly reading economic and management literature, by being briefed by
external advisors on matters such as remuneration, corporate governance, and liaising with consultants who inform
the Board of changes in legislation, best practice or public perception.
COMPANY OVERVIEW
ANNUAL REPORT
STATEMENTS
FINANCIAL
STATEMENTS
GOVERNANCE
EXTERNAL ADVISORS
The Company uses external advisors, where necessary, as follows:
Advisor
Role
Nominated Advisor
Provides advice on AIM Compliance
Commercial lawyer
Provides advice on legal issues such as commercial agreements
Regulatory lawyer
Provides advice on regulatory aspects of the business
The Company Secretary is the only internal advisor the Company currently has. The Secretary is
responsible for the efficient administration of the Company, particularly with regard to ensuring
compliance with statutory and regulatory requirements and for ensuring that decisions of the Board
of Directors are implemented.
21
Eden Research plc Governance 2019
CHAIRMAN'S LETTER
DEAR SHAREHOLDER,
The Directors have adopted the
principles set out in the Quoted
Companies Alliance Governance
Code. The Directors have applied
these 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
is responsible for ensuring that the
Board procedures are followed, and
that applicable rules and regulations
are complied with.
22
" THE QUALITY OF
OUR GOVERNANCE IS
EVIDENT IN THE WAY
WE CONDUCT BUSINESS
AND HOW WE TREAT
OUR WORKFORCE,
CUSTOMERS AND
SUPPLIERS."
Lykele van der Broek – Non-Executive Chairman
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 of Eden champion
openness and accountability at every
level. This involves focusing on how this
takes place throughout the Company
and by those who act on its behalf.
The quality of our governance is evident
in the way we conduct business and
how we treat our workforce, customers
and suppliers.
The Board sets the framework of values
within which the desired corporate
culture can evolve and thrive.
Ownership of the values is strengthened
by a collaborative approach by both
the leadership and the workforce being
involved in a two-way process to define
the Company’s values.
Clear messages are given through
decisions, strategies and conduct.
Directors reinforce values through
their own behaviour and decisions.
To increase the effectiveness
Executive and Non-Executive
Directors have increased visibility.
The Board demonstrates ethical
leadership and displays the
behaviours they expect from others
and communicate what they consider
to be acceptable business practice
and they consider chosen behaviours
when setting strategy and financial
targets.
The Company seeks to keep its
strategy consistent with its purpose
and values and its responsibilities for
long-term success and to contribute
to wider society.
Values are embedded at every level of
the organisation and the Board seeks
assurance from management that it has
effectively embedded the Company’s
purpose and values in operational
policies and practices including aligning
incentives, rewards and promotion
decisions to values.
Values and expected behaviours are
reinforced through our recruitment,
promotion, reward, performance
management and policies, processes
and practices.
Our reward structures produce
appropriate incentives to encourage
desired behaviours and responsible
risk-taking and management
consistently communicate values and
expected behaviours widely and clearly
across the Company and ensure that
they are understood by the workforce.
Management also encourage
suppliers to meet the expected
standards of behaviour.
Values and expected
behaviours include:-
Honesty
Openness
Transparency
Respect
Adaptability
Reliability
Recognition
Acceptance of challenge
Accountability
A sense of shared purpose
The Board is alert to signs of possible
cultural problems and recognises that
the workforce is a vital source of insight
into the culture of the Company.
MONITORING OF
EFFECTIVENESS
Monitoring efforts are focused on
existing internal capabilities and
information:
Training data
Recruitment, reward and promotion
decisions
Use of non-disclosure agreements
Whistleblowing, grievance and
‘speak-up’ data
Board interaction with senior
management and workforce
Health and safety data, including
near misses
Promptness of payments to
suppliers
Attitudes to regulators, internal
audit and employees
Areas including human resources,
audit & risk and compliance offer
an integrated approach to aid
understanding of how behaviours
and culture impact performance and
offer analysis and advice the Board.
The Board identifies areas of good
practice and excellence that are
used to drive up standards across
the business which reinforces the
value that a healthy culture adds.
Lykele van der Broek
Non-Executive Chairman
23
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
THE QCA CORPORATE
GOVERNANCE CODE
In accordance with Aim Rule 26 of the AIM rules for
companies, the corporate governance code that the
Board of Directors have chosen to apply and benchmark
against is The QCA Corporate Governance Code.
The QCA Corporate Governance page on the Company’s
website contains links to the required compliance
documents and published disclosures which explain
how Eden Research ‘complies with or explains against’
the code.
24
and values and its responsibilities for
long-term success and to contribute
to wider society.
analysts, including at our half yearly
results roadshows. The full Board
is available at the Annual General
Meeting (AGM) to communicate with
shareholders.
might be affected by decisions and
developments in the business.
We constantly strive to enhance our
environmental and social credentials.
In order to obtain feedback from
stakeholders, management meets
regularly with them. The Company’s
website, email footers and business
cards all provide contact details of the
relevant person at the Company that they
can use, should they need to get in touch.
threats and the processes to mitigate
and contain them.
Whilst the Board is responsible for
risk, our culture seeks to encourage all
colleagues to manage risk effectively.
1
2
3
4
5
6
PUBLISHED DISCLOSURES:
Principle
Establish a strategy and
business model which
promote long-term
value for shareholders
Seek to understand and
meet shareholder needs
and expectations
Location of
disclosure
ANNUAL REPORT
& ACCOUNTS
See page X
WEBSITE
ANNUAL REPORT
& ACCOUNTS
WEBSITE
Disclosure Detail Required
DISCLOSURE: Explain the Company’s business
model and strategy, including key challenges in
their execution (and how those will be addressed).
Disclosure
status
Explanation
Link
The Company seeks to keep its
Business model
Compliant
strategy consistent with its purpose
and strategy
DISCLOSURE: Explain the ways in which the Company seeks
The CEO + CFO communicate regularly
to engage with shareholders and how successful this has been.
Compliant
with shareholders, investors and
Shareholder
engagement
This should include information on those responsible for
shareholder liaison or specification of the point of contact
for such matters.
WEBSITE
Take into account wider
stakeholder and social
responsibilities and
their implications for
long-term success
DISCLOSURE: Explain how the business model identifies the
The Board has identified the main
key resources and relationships on which the business relies.
Compliant
stakeholders in the business and
Stakeholder
engagement
Explain how the Company obtains feedback from stakeholders
and the actions that have been generated as a result of this
feedback (e.g. changes to inputs or improvements in products).
regularly discusses how its workforce,
and social
customers, shareholders and others
responsibility
Embed effective risk
management, considering
both opportunities and
threats, throughout
the organisation
ANNUAL REPORT
& ACCOUNTS
See page 33
WEBSITE
Maintain the Board as a
well-functioning, balanced
team led by the Chair
ANNUAL REPORT
& ACCOUNTS
See pages 18–21
WEBSITE
Ensure that between
them the Directors have
the necessary up-to-date
experience, skills and
capabilities
ANNUAL REPORT
& ACCOUNTS
See pages 18–21
WEBSITE
DISCLOSURE: Describe how the Board has embedded effective
Both the Board and Audit Committee
risk management in order to execute and deliver strategy.
Compliant
regularly review risks, including new
Effective risk
management
This should include a description of what the Board does to identify,
assess and manage risk and how it gets assurance that the risk
management and related control systems in place are effective.
DISCLOSURE: Identify those Directors who are considered to be
The Board works well together as a team.
Board
independent; where there are grounds to question the independence
Compliant
of a Director, through length of service or otherwise, this must
be explained.
Meetings are characterised by lively
discussion and active idea generation
and management are rigorously
challenged and held to account.
composition,
Board culture,
dynamics and
contribution
We assess adequacy of the Boards
Compliant
collective skills and experience and
Directors’ individual development
needs are discussed annually with
the Chairman.
Professional
development
and training
Describe the time commitment required from Directors (including
non- Executive Directors as well as part-time Executive Directors).
Include the number of meetings of the Board (and any
committees) during the year, together with the attendance record
of each Director.
DISCLOSURE: Identify each Director.
Describe the relevant experience, skills and personal qualities
and capabilities that each Director brings to the Board (a simple
list of current and past roles is insufficient); the statement
should demonstrate how the Board as a whole contains (or will
contain) the necessary mix of experience, skills, personal qualities
(including gender balance) and capabilities to deliver the strategy
of the Company for the benefit of the shareholders over the
medium to long-term.
Explain how each Director keeps his/her skillset up-to-date.
Where the Board or any committee has sought external advice
on a significant matter, this must be described and explained.
Where external advisers to the Board or any of its committees
have been engaged, explain their role.
Describe any internal advisory responsibilities, such as the roles
performed by the Company Secretary and the senior independent
Director, in advising and supporting the Board.
Principle
1
Establish a strategy and
ANNUAL REPORT
business model which
promote long-term
value for shareholders
Location of
disclosure
& ACCOUNTS
See page X
WEBSITE
2
Seek to understand and
ANNUAL REPORT
meet shareholder needs
& ACCOUNTS
and expectations
WEBSITE
3
Take into account wider
WEBSITE
stakeholder and social
responsibilities and
their implications for
long-term success
Disclosure Detail Required
DISCLOSURE: Explain the Company’s business
model and strategy, including key challenges in
their execution (and how those will be addressed).
Disclosure
status
Compliant
DISCLOSURE: Explain the ways in which the Company seeks
to engage with shareholders and how successful this has been.
Compliant
This should include information on those responsible for
shareholder liaison or specification of the point of contact
for such matters.
DISCLOSURE: Explain how the business model identifies the
key resources and relationships on which the business relies.
Compliant
Explain how the Company obtains feedback from stakeholders
and the actions that have been generated as a result of this
feedback (e.g. changes to inputs or improvements in products).
4
Embed effective risk
ANNUAL REPORT
management, considering
& ACCOUNTS
both opportunities and
threats, throughout
the organisation
See page 33
WEBSITE
DISCLOSURE: Describe how the Board has embedded effective
risk management in order to execute and deliver strategy.
Compliant
This should include a description of what the Board does to identify,
assess and manage risk and how it gets assurance that the risk
management and related control systems in place are effective.
DISCLOSURE: Identify those Directors who are considered to be
independent; where there are grounds to question the independence
of a Director, through length of service or otherwise, this must
be explained.
Compliant
Link
Business model
and strategy
Shareholder
engagement
Stakeholder
engagement
and social
responsibility
25
Effective risk
management
Explanation
The Company seeks to keep its
strategy consistent with its purpose
and values and its responsibilities for
long-term success and to contribute
to wider society.
The CEO + CFO communicate regularly
with shareholders, investors and
analysts, including at our half yearly
results roadshows. The full Board
is available at the Annual General
Meeting (AGM) to communicate with
shareholders.
The Board has identified the main
stakeholders in the business and
regularly discusses how its workforce,
customers, shareholders and others
might be affected by decisions and
developments in the business.
We constantly strive to enhance our
environmental and social credentials.
In order to obtain feedback from
stakeholders, management meets
regularly with them. The Company’s
website, email footers and business
cards all provide contact details of the
relevant person at the Company that they
can use, should they need to get in touch.
Both the Board and Audit Committee
regularly review risks, including new
threats and the processes to mitigate
and contain them.
Whilst the Board is responsible for
risk, our culture seeks to encourage all
colleagues to manage risk effectively.
The Board works well together as a team.
Meetings are characterised by lively
discussion and active idea generation
and management are rigorously
challenged and held to account.
Board
composition,
Board culture,
dynamics and
contribution
Compliant
We assess adequacy of the Boards
collective skills and experience and
Directors’ individual development
needs are discussed annually with
the Chairman.
Professional
development
and training
Describe the time commitment required from Directors (including
non- Executive Directors as well as part-time Executive Directors).
Include the number of meetings of the Board (and any
committees) during the year, together with the attendance record
of each Director.
DISCLOSURE: Identify each Director.
Describe the relevant experience, skills and personal qualities
and capabilities that each Director brings to the Board (a simple
list of current and past roles is insufficient); the statement
should demonstrate how the Board as a whole contains (or will
contain) the necessary mix of experience, skills, personal qualities
(including gender balance) and capabilities to deliver the strategy
of the Company for the benefit of the shareholders over the
medium to long-term.
Explain how each Director keeps his/her skillset up-to-date.
Where the Board or any committee has sought external advice
on a significant matter, this must be described and explained.
Where external advisers to the Board or any of its committees
have been engaged, explain their role.
Describe any internal advisory responsibilities, such as the roles
performed by the Company Secretary and the senior independent
Director, in advising and supporting the Board.
5
Maintain the Board as a
ANNUAL REPORT
well-functioning, balanced
& ACCOUNTS
team led by the Chair
See pages 18–21
WEBSITE
6
Ensure that between
ANNUAL REPORT
them the Directors have
& ACCOUNTS
the necessary up-to-date
experience, skills and
capabilities
See pages 18–21
WEBSITE
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
THE QCA CORPORATE
GOVERNANCE CODE CONTINUED
Principle
7
Evaluate Board performance
based on clear and relevant
objectives, seeking continuous
improvement
Location of
disclosure
Disclosure Detail
Required
Disclosure
status
Explanation
Link
WEBSITE
DISCLOSURE: Include a high-level explanation of the Board performance
effectiveness process.
The Board regularly considers the effectiveness
Board performance
Compliant
and relevance of its contributions. Any learning
8
9
26
Promote a corporate culture
that is based on ethical values
and behaviours
Maintain governance structures
and processes that are fit for
purpose and support good
decision-making by the Board
ANNUAL REPORT
& ACCOUNTS
See Chairman’s
Letter on pages
22 and 23
WEBSITE
WEBSITE
Where a Board performance evaluation has taken place in the year, provide a
brief overview of it, how it was conducted and its results and recommendations.
Progress against previous recommendations should also be addressed.
DISCLOSURE: Include a more detailed description of the Board performance
evaluation process/cycle adopted by the Company. This should include a summary of:
The criteria against which Board, committee, and individual effectiveness is
considered;
How evaluation procedures have evolved from previous years, the results of the
evaluation process and action taken or planned as a result; and how often Board
evaluations take place.
Explain how the Company approaches succession planning and the processes by
which it determines Board and other senior management appointments, including
any links to the Board evaluation process.
DISCLOSURE: Include in the Chair’s corporate governance statement how the culture
is consistent with the Company’s objectives, strategy and business model in the
strategic report and with the description of principal risks and uncertainties.
The statement should explain what the Board does to monitor and promote a healthy
corporate culture and how the Board assesses the state of the culture at present.
DISCLOSURE: Explain how the Board ensures that the Company has the means
to determine that ethical values and behaviours are recognised and respected.
DISCLOSURE: In addition to the high level explanation of the application of the QCA
Code set out in the Chair’s corporate governance statement:
Describe the roles and responsibilities of the Chair, Chief Executive and
any other Directors who have specific individual responsibilities or remits
(e.g. for engagement with shareholders or other stakeholder groups).
Describe the roles of any committees (e.g. audit, remuneration and nomination
committees) setting out any terms of reference and matters reserved by the Board
for its consideration.
Describe which matters are reserved for the Board.
Describe any plans for evolution of the governance framework in line with the
Company’s plans for growth.
and development needs are reviewed and continual
improvement implemented.
The Board sets the framework of values within which
Corporate culture
Compliant
the desired corporate culture can evolve and thrive.
Ownership of the values is strengthened by a
collaborative approach by both the leadership and
the workforce being involved in a two-way process
to define the Company’s values.
Compliant
The Board is responsible for the Company’s overall
Corporate governance
Compliant
strategic direction and management and for the
structure
establishment and maintenance of a framework
of delegated authorities and controls to ensure
the efficient and effective management of the
Company’s operations.
10 Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
ANNUAL REPORT
& ACCOUNTS
DISCLOSURE: Describe the work of any Board committees undertaken during the year.
The Investors section of our website includes our
Audit committee terms
Include an audit committee report (or equivalent report if such committee is not
in place).
Include a remuneration committee report (or equivalent report if such committee
is not in place).
If the Company has not published one or more of the disclosures set out under
Principles 1–9, the omitted disclosures must be identified and the reason for their
omission explained
Compliant
results, presentations and communications to
of reference
shareholders. We release the results of general
meetings through a regulatory news services and
also on the Regulatory News Section of our website.
WEBSITE
WEBSITE DISCLOSURE: Disclose the outcomes of all votes in a clear and
transparent manner.
Compliant
Where a significant proportion of votes (e.g. 20% of independent votes) have been
cast against a resolution at any general meeting, the Company should include, on
a timely basis, an explanation of what actions it intends to take to understand the
reasons behind that vote result, and, where appropriate, any different action it has
taken, or will take, as a result of the vote.
Include historical annual reports and other governance-related material, including
notices of all general meetings over the last five years.
Audit committee report
Remuneration committee
report
Remuneration committee
terms of reference
AGM Voting outcomes
Annual reports
Notices of general
meetings
Principle
Location of
disclosure
Disclosure Detail
Required
7
Evaluate Board performance
WEBSITE
DISCLOSURE: Include a high-level explanation of the Board performance
based on clear and relevant
objectives, seeking continuous
improvement
Disclosure
status
Compliant
Explanation
The Board regularly considers the effectiveness
and relevance of its contributions. Any learning
and development needs are reviewed and continual
improvement implemented.
Link
Board performance
FINANCIAL
STATEMENTS
8
Promote a corporate culture
ANNUAL REPORT
DISCLOSURE: Include in the Chair’s corporate governance statement how the culture
that is based on ethical values
& ACCOUNTS
is consistent with the Company’s objectives, strategy and business model in the
and behaviours
strategic report and with the description of principal risks and uncertainties.
See Chairman’s
Letter on pages
The statement should explain what the Board does to monitor and promote a healthy
22 and 23
corporate culture and how the Board assesses the state of the culture at present.
WEBSITE
DISCLOSURE: Explain how the Board ensures that the Company has the means
to determine that ethical values and behaviours are recognised and respected.
9
Maintain governance structures
WEBSITE
DISCLOSURE: In addition to the high level explanation of the application of the QCA
and processes that are fit for
purpose and support good
decision-making by the Board
Compliant
The Board sets the framework of values within which
the desired corporate culture can evolve and thrive.
Corporate culture
Compliant
Compliant
Ownership of the values is strengthened by a
collaborative approach by both the leadership and
the workforce being involved in a two-way process
to define the Company’s values.
The Board is responsible for the Company’s overall
strategic direction and management and for the
establishment and maintenance of a framework
of delegated authorities and controls to ensure
the efficient and effective management of the
Company’s operations.
Corporate governance
structure
27
10 Communicate how the Company
ANNUAL REPORT
DISCLOSURE: Describe the work of any Board committees undertaken during the year.
is governed and is performing
& ACCOUNTS
Include an audit committee report (or equivalent report if such committee is not
by maintaining a dialogue with
shareholders and other relevant
stakeholders
Compliant
The Investors section of our website includes our
results, presentations and communications to
shareholders. We release the results of general
meetings through a regulatory news services and
also on the Regulatory News Section of our website.
WEBSITE
WEBSITE DISCLOSURE: Disclose the outcomes of all votes in a clear and
Compliant
Audit committee terms
of reference
Audit committee report
Remuneration committee
report
Remuneration committee
terms of reference
AGM Voting outcomes
Annual reports
Notices of general
meetings
effectiveness process.
Where a Board performance evaluation has taken place in the year, provide a
brief overview of it, how it was conducted and its results and recommendations.
Progress against previous recommendations should also be addressed.
DISCLOSURE: Include a more detailed description of the Board performance
evaluation process/cycle adopted by the Company. This should include a summary of:
The criteria against which Board, committee, and individual effectiveness is
How evaluation procedures have evolved from previous years, the results of the
evaluation process and action taken or planned as a result; and how often Board
considered;
evaluations take place.
Explain how the Company approaches succession planning and the processes by
which it determines Board and other senior management appointments, including
any links to the Board evaluation process.
Code set out in the Chair’s corporate governance statement:
Describe the roles and responsibilities of the Chair, Chief Executive and
any other Directors who have specific individual responsibilities or remits
(e.g. for engagement with shareholders or other stakeholder groups).
Describe the roles of any committees (e.g. audit, remuneration and nomination
committees) setting out any terms of reference and matters reserved by the Board
for its consideration.
Describe which matters are reserved for the Board.
Describe any plans for evolution of the governance framework in line with the
Company’s plans for growth.
Include a remuneration committee report (or equivalent report if such committee
If the Company has not published one or more of the disclosures set out under
Principles 1–9, the omitted disclosures must be identified and the reason for their
in place).
is not in place).
omission explained
transparent manner.
Where a significant proportion of votes (e.g. 20% of independent votes) have been
cast against a resolution at any general meeting, the Company should include, on
a timely basis, an explanation of what actions it intends to take to understand the
reasons behind that vote result, and, where appropriate, any different action it has
taken, or will take, as a result of the vote.
Include historical annual reports and other governance-related material, including
notices of all general meetings over the last five years.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCE Eden Research plc Governance 2019
REMUNERATION
POLICY
INTRODUCTION
The Remuneration Policy for Eden Research plc includes the
three main elements of remuneration; salary, cash bonus and
equity incentive.
The Policy is based on market facing structures, precedented
in other AIM listed companies. The policy has been prepared
for the Executive Directors, however it is intended that the
principles should apply to all staff.
An important principle is that the elements of remuneration
should not overlap (to ensure that an Executive is not
rewarded more than once for the same achievement).
Salary is a reward for the day to day execution of a role
(which is documented in a job description).
The Target bonus is generally made up of, and released
incrementally by, the achievement of:
new commercial partnership deals and other commercial
milestones (e.g. regulatory approvals)
the return received on such agreements
contribution and profit earned.
As the business matures, the balance between deal value,
other commercial milestones and contribution / profit is
expected to transition in weighting (i.e. from deals through
other milestones towards profit).
Bonus payments are calculated prior to completion of (and
included in) the annual report and paid out after the Annual
Report has been approved by the auditors and the Board.
28
The cash bonus is a reward for the achievement of
challenging milestones in a year over and above the day to
day role and linked to an increase in the value of the business
through the achievement of significant commercial progress.
The equity incentive should deliver value to the Executive
in the medium to long term, based on a sustainable increase
in the share price over the corresponding period of time, and
of a magnitude related to the actual increase in share price,
in order to align management’s incentive with the interests
of shareholders.
The Remuneration Committee has absolute discretion in the
application of these principles and may make adjustments,
where appropriate, and acting reasonably.
SALARY
A salary review usually occurs in Q4 each year, to take
effect from 1 January in the following year, unless a market
adjustment is required at a different time.
Generally, salaries should be benchmarked and comparable
to similar positions in similar sized AIM listed companies in
similar industry segments.
CASH BONUS
Bonuses are paid to the extent their payment does not
shorten the funded runway of the business to less than
eighteen months, based upon an up-to-date forecast using
reasonable assumptions, as agreed by the Board. This
figure may be adjusted by the Remuneration Committee.
The Target bonus levels are a percentage of salary.
EQUITY INCENTIVE
Unapproved share option scheme
The Company operated an unapproved share option scheme
for Executive Directors, senior management and certain
employees. This scheme was used for any options awarded
prior to 28 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
interests. Awards have been made annually and are
subject to continued service and challenging performance
conditions over a three year period. The performance
conditions have been reviewed on an annual basis to
ensure they remain appropriate and are based on increasing
shareholder value. Awards have been structured as nil
cost options with a seven year life after vesting.
Other than in exceptional circumstances, awards have been
up to 100% of salary in any one year and granted subject
to achieving challenging performance conditions set at
the date of the grant. A percentage of the award vests for
"Threshold" performance with full vesting taking place for
equalling or exceeding the performance "Target". In between
the Threshold and Target there may be pro rata vesting. The
Remuneration Committee retains the ability to amend the
performance conditions for future grants to ensure that such
grants achieve the stated purpose.
After the year end, as part of the financing completed
in March 2020, the Board reviewed the LTIP with a view
to making adjustments to align further the interests of
management with shareholders, as summarised below.
APPLICATION OF THE POLICY
Emoluments
Details of the remuneration of those who served as
Directors during the year are set out below.
Executive Directors
S Smith
A Abrey
Non-Executive Directors
L van der Broek
R Cridland
Base salary
2019
£
2018
£
211,500
190,000
165,000
150,000
40,000
35,000
40,000
35,000
The Company also operates an annual, discretionary cash
bonus scheme.
For 2019, the target bonus levels and actual bonus
achieved for Executive Directors on meeting all of these
objectives were:
Sean Smith
70% of base salary, achieved 28.88%,
(2018: 70% of base salary, achieved 56.7%)
Alex Abrey
70% of base salary, achieved 28.88%,
(2018: 70% of base salary, achieved 56.7%)
The Committee considers that the performance metrics
underpinning the annual, discretionary cash bonus scheme
are in line with shareholders’ expectations.
Pensions
For the Executive Directors and certain employees, the
Company makes contributions to a defined contribution
pension scheme. The Company contributes a maximum
of 7% provided that the Director makes a minimum 4%
contribution. Below this, the Company contributes the
same percentage as the Director.
Share-based payments
The share options granted to individual Directors to date
are detailed below and include grants made in prior years.
Non-Executive Directors
Non-Executive Directors receive a fee only with no additional
benefits, bonuses or option grants.
Directors’ contracts
The Executive Directors have a service contract of indefinite
term with a notice period of no more than six months.
29
Non-Executive Directors have Letters of Appointment which
are terminable by the Director or the Company with three
months’ notice.
Share option scheme grants
In 2017, the Remuneration Committee implemented a Long-
Term Incentive Plan (“LTIP”). The awards are in respect of
management performance for each financial year ending
31 December.
Further details of the awards are set out in the table overleaf.
All of the following nil-priced options only become
exercisable if the following share price performance
conditions are met: 50% of the options become exercisable
if the weighted average Ordinary Share price in the 45 day
period ending on the vesting date is at the minimum price
(as shown in the table) or above.
Between the weighted average ordinary share prices of the
minimum and maximum prices, vesting shall be pro-rata
and on a straight-line basis between 50% and 100%. Below
the minimum price, the options are not exercisable and lapse
in full.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
REMUNERATION
POLICY CONTINUED
A Abrey
Year
2015
2016
2017
2018
S Smith
Year
2015
2016
2017
2018
30
Number of shares
under option
810,000
960,000
1,093,333
1,333,333
Vesting date
30/9/2019
30/9/2020
30/6/2021
30/6/2022
Minimum
weighted average
share price
(p)
Maximum
weighted average
share price
(p)
20
24
23
25
50
36
34.5
37.5
Number of shares
under option
1,098,680
1,148,000
1,775,556
1,688,889
Vesting date
30/9/2019
30/9/2020
30/6/2021
30/6/2022
Minimum
weighted average
share price
(p)
Maximum
weighted average
share price
(p)
20
24
23
25
50
36
34.5
37.5
At 31 December 2019, the Directors had the following interests in share option schemes:
Date from which
exercisable
Expiry Date
Exercise
price £
Number at
1 January
2019
Granted in
year
Exercised
in year
Lapsed in
year
Number
at 31
December
2019
A J Abrey
14/08/2014
17/01/2016
30/09/2019
30/09/2020
30/06/2021
30/06/2022
S M Smith
01/09/2016
30/09/2019
30/09/2020
30/06/2021
30/06/2022
19/05/2019
16/01/2021
29/09/2027
29/09/2027
29/06/2029
29/06/2029
31/08/2019
29/09/2027
29/09/2027
29/06/2029
29/06/2029
–
–
–
–
–
–
–
0.10
0.13
450,000
1,050,000
810,000
960,000
–
–
1,093,333
1,333,333
3,270,000
2,426,666
0.16
1,000,000
1,098,680
1,148,000
–
–
1,775,556
1,688,889
3,246,680
3,464,445
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
–
–
–
–
–
–
–
–
–
–
–
–
–
450,000
–
–
1,050,000
810,000
–
–
–
–
960,000
1,093,333
1,333,333
1,260,000
4,436,666
1,000,000
1,098,680
–
–
–
–
–
1,148,000
1,775,556
1,688,889
2,098,680
4,612,445
LTIP option awards in respect of the year ended 31 December
2019 will be made during 2020, as described below.
Following the recent fundraise in March 2020, the Company
will implement a new long term incentive plan to award the
performance of the Executive management team. The new
plan will replace the Company’s existing LTIP, and is deemed
a more appropriate scheme to incentivise management given
the Company’s stage of development.
Pursuant to the new plan, the Company will grant options
over 10.5 million new Ordinary Shares, at a strike price of
6p each, in the amounts of 6 million awarded to Sean Smith
and 4.5 million awarded to Alex Abrey. The options will vest
immediately and will lapse in three equal tranches in June
2022, June 2023 and June 2024. For the first five years
following grant, no shares arising from the exercise of these
options may be sold unless the Company’s prevailing share
price is equal to or in excess of 10p.
The new plan will include a net cashless mechanism whereby
a number of shares may be deducted from the participant’s
option pool upon exercise, equivalent to half the exercise
cost based on the prevailing market price of the Company’s
Ordinary Shares, and provided the remaining exercise cost
is paid in cash. The shares arising from exercise of options
shall be subject to a one-year lock-in restriction, followed by
a one-year orderly market restriction.
Further details of the LTIP will be announced following
First Admission and Second Admission once formally
implemented.
Lykele van der Broek
Remuneration Committee Chairman
31
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
AUDIT COMMITTEE
REPORT
On behalf of the Audit Committee, I am pleased to present
this report to shareholders. The purpose of the report is to
highlight the areas that the Committee has reviewed and
how we have discharged our responsibilities effectively
during the year.
RESPONSIBILITIES
The key responsibility of the Committee is to provide
effective governance over the Company’s financial reporting
to ensure its appropriateness. Under its terms of reference,
the Committee is required, amongst other things, to:
monitor the integrity of the financial statements of the
Company including the appropriateness of the accounting
policies adopted and whether the Annual Report is fair,
balanced and understandable;
32
review, understand and evaluate the effectiveness of
the Company’s internal controls and risk management
systems, particularly but not exclusively as they pertain
to financial matters;
appraise the Board on how the Company’s prospects
are assessed;
oversee the relationship with the external auditors,
making recommendations to the Board in relation to their
appointment, remuneration and terms of engagement;
monitor and review the effectiveness of the external audit
including the external auditors’ independence, objectivity
and effectiveness and to approve the policy on the
engagement of the external auditors to supply non-audit
services; and
monitor and review the internal audit activities in the
Company.
The Committee’s terms of reference can be found on the
Company’s website www.edenresearch.com.
COMPOSITION OF COMMITTEE
AND MEETINGS
The Audit Committee comprises the two Non-Executive
Directors, Robin Cridland, who is Chairman of the Committee,
and Lykele van der Broek. The Chairman of the Committee
has recent and relevant financial experience and collectively
the members of the Committee have experience of the
chemical, agricultural and animal health industries. Details
of Committee members’ qualifications can be found on
the Company’s website. The Audit Committee met six
times during the year, and has a rolling agenda linked to the
Company’s financial calendar. It invites the Chief Executive
Officer, the Chief Financial Officer and the external auditors
to attend its meetings. The Committee met with the external
auditors at the conclusion of the audit without the Executive
Directors being present. The Committee has met once since
the end of the financial year to consider the results and the
Annual Report for the year ended 31 December 2019.
MAIN ACTIVITIES DURING THE YEAR
Set out below is a summary of the key areas considered by
the Committee during the year and up to the date of
this report.
Financial reporting
During the year, the Audit Committee reviewed reports and
information provided by both the Chief Financial Officer and
the external auditors in respect of the half year and annual
financial report. An important responsibility of the Audit
Committee is to review and agree significant estimates
and judgements made by management. To satisfy this
responsibility, the Committee reviewed a written formal
update from the Chief Financial Officer on such issues at
the two meetings that reviewed the half year and year end
results, as well as reports from the external auditors. The
Committee carefully considered the content of these reports
in evaluating the significant issues and areas of judgement
across the Company.
The key areas of review, including those requiring significant
judgements to be made, in the year were as follows:
Revenue recognition
Potential impairment of intangible assets including
intellectual property and investments
Management override of controls
Other areas reviewed in the year were as follows:
Going concern
Consolidation
Share based payments
Accruals and provisions
Related party transactions
Since the year end, the Audit Committee has considered the
impact of COVID-19 on areas such as going concern
in particular.
Internal control and risk management
During the year the Committee continued to review the
effectiveness of the Company’s internal control and risk
management systems. The Committee reported to the Board
that it had reviewed, and was satisfied with, the effectiveness
of these systems.
External audit
KPMG LLP has been the external auditor for the Company
since 2017. The Audit Committee annually assesses the
qualification, expertise and independence of the auditors
and the effectiveness of the audit process. KPMG’s current
engagement partner is Andrew Campbell-Orde, and he has
been in place since being appointed for the Company’s 2017
year end.
Following approval by shareholders to re-appoint KPMG at
last year’s AGM, the Audit Committee reviewed and approved
the terms of engagement and remuneration of the external
auditors for the 2019 financial year.
AUDIT AND COMMITTEE
EFFECTIVENESS
The effectiveness of the external audit process is dependent
on appropriate audit risk identification at the start of the
audit cycle. KPMG present their detailed audit plan to the
Audit Committee each year, identifying their assessment
of these key risks. The Committee’s assessment of the
effectiveness and quality of the external audit process and
addressing these key risks is informed by, amongst other
things, the reporting from the auditors. In addition, each
year, the Audit Committee’s performance and the
effectiveness of the external auditor is assessed through
discussions between the Audit Committee members, the
Board, the external auditor and members of the Company’s
senior finance team (in particular the Chief Financial
Officer). In respect of 2019, the Board was satisfied with
the review process, the performance of the Committee
and the effectiveness of the external auditor.
AUDITOR INDEPENDENCE
The Company meets its obligations for maintaining an
appropriate relationship with the external auditors through
the Audit Committee, whose terms of reference include an
obligation to consider and keep under review the degree
of work undertaken by the external auditor other than the
statutory audit, to ensure the auditor’s objectivity and
independence is safeguarded.
In accordance with the Auditing Practices Board Ethical
Standards, the Company’s external auditor must implement
rules and requirements which include that none of their
employees working on our audit can hold any shares in Eden.
The external auditor is also required to tell the Company
about any significant facts and matters that may reasonably
be thought to bear on their independence or on the
objectivity of the lead partner and the audit team. The lead
partner in the audit team must change every five years.
33
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
AUDIT COMMITTEE
REPORT CONTINUED
34
The Audit Committee reviewed and approved the non-audit
services policy, the objective of which is to ensure that the
provision of such services does not impair, or is not perceived
to impair, the external auditors’ independence or objectivity.
The policy imposes guidance on the areas of work that the
external auditors may be asked to undertake and those
assignments where the external auditors should not be
involved. There is a further category of services for which a
case-by-case decision is necessary. The policy can be viewed
on the Company’s website www.edenresearch.com. In order
to ensure that the policy is effective and the level of non-audit
fees is kept under review, major work to be awarded to the
audit firm must be agreed in advance by the Audit Committee
Chairman. For the 2019 financial year end, there was no
non-audit work undertaken by the Company’s auditors, who
continue to be considered independent.
INTERNAL AUDIT
Due to the size of the business, the Company does not
currently have a separate internal audit function. The
Company’s Risk Management Team takes this into account
when deciding how to mitigate risks associated with not
having an internal audit function and manages the situation
accordingly. Every year the Audit Committee reviews the
appropriateness of this arrangement and specifically whether
an internal audit function is necessary, including requesting
input from the external auditor. At the date of this report the
Audit Committee does not recommend that an internal audit
function is required.
OTHER ACTIVITIES
The Committee also reviewed its terms of reference, the
Company’s policies on whistleblowing, business ethics
and on the prevention of bribery and modern slavery.
Robin Cridland
Audit Committee Chairman
DIRECTORS’
REPORT
The Directors present their report with the financial
statements of the Company for the year ended
31 December 2019.
DIVIDENDS
The loss for the year after taxation amounted to £1,132,337
(2018: £334,951). The Directors are unable to recommend
any dividend (2018: £nil).
RESEARCH AND DEVELOPMENT
An indication of research and development activities is
included within the Chief Executive Officer's Report.
FUTURE DEVELOPMENTS
An indication of future developments is included within the
Chief Executive Officer's Report.
DIRECTORS
The Directors during the year under review were:
A J Abrey
R J S Cridland
S M Smith
L J van der Broek
Details of the Directors who had interests in share option
schemes can be found in the Remuneration Report.
CORPORATE GOVERNANCE
In accordance with Aim Rule 26 of the AIM rules for
companies, the corporate governance code that the Board
of Directors have chosen to apply and benchmark against is
The QCA Corporate Governance Code. 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 is 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, Nominations,
Remuneration and AIM Compliance Committees.
The Audit Committee has Robin Cridland as Chairman and
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. Lykele van der
Broek was the other member of the Audit Committee during
the year.
The Nominations Committee had Lykele van der Broek as
Chairman during the year and identifies and nominates for
the approval of the Board, candidates to fill Board vacancies
as and when they arise. The Nominations Committee meets
at least twice a year. Robin Cridland was the other member of
the Nominations Committee during the year.
The Remuneration Committee had Lykele van der Broek
as Chairman during the year and reviews the performance
of the Executive Directors and determines 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. Robin Cridland was the other member of the
Remuneration Committee during the year.
The AIM Compliance Committee had Lykele van der Broek
as Chairman during the year and meets twice a year with
the NOMAD to discuss AIM compliance and related issues.
The other member of the committee is Robin Cridland. 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.
35
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Governance 2019
DIRECTORS’
REPORT CONTINUED
The shareholdings of the Directors of the Company are as follows:
Alex Abrey
Lykele van der Broek
Sean Smith
Robin Cridland
Total Holdings % of share capital
1,302,824
929,500
731,039
130,167
0.34%
0.24%
0.19%
0.03%
The Company has been notified that the following are substantial shareholders of Eden, each holding more than 3% of the
Company’s issued share capital, as at 31 December 2019:
Entity
Sipcam SpA
Livingbridge VC LLP
HSBC Nominees
JM Finn & Co
36
Artemis Investment Management
Hargreaves Lansdown Asset Management
Barclays Personal Investment Management
Bank of New York (Nominees)
Interactive Investor Services
Total Holdings % of Share Capital
20,494,330
19,512,195
14,007,734
12,332,961
9,645,000
7,816,905
7,485,329
6,972,500
6,824,382
9.89%
9.42%
6.76%
5.95%
4.66%
3.77%
3.61%
3.37%
3.29%
SUPPLIERS
The Company agrees terms and conditions for business
transactions with its suppliers. Payment is then made on
these terms, subject to the terms and conditions being met
by the supplier.
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, they have
elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted
by the European Union (IFRSs as adopted by the EU) and
applicable law.
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 its profit or loss for that period. In preparing these
financial statements, the Directors are required to:
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable,
relevant and reliable;
state whether they have been prepared in accordance
with IFRSs as adopted by the EU;
assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern; and
use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
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 responsible
for such internal control as they determine is necessary
to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud
or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the Company and to prevent and detect fraud
and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report and a Directors’
Report that complies with that law and those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The agreement allows Corteva time to evaluate Eden's
Sustaine™ encapsulation technology and several formulations
in specific biological seed treatment applications in certain
major territories and, if successful, will lead to Corteva being
granted exclusive distribution rights.
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.
AUDITOR
In accordance with Section 489 of the Companies Act 2006,
a resolution for the re-appointment of KPMG LLP as auditor
of the Company is to be proposed at the forthcoming Annual
General Meeting.
POST BALANCE SHEET EVENTS
In January 2020, the Company signed a one year, exclusive
Evaluation Agreement with Corteva Agriscience.
In March 2020, the Company concluded a successful fund-
raise raising a total of approximately £10.4 million (before
expenses) through the Placing, Subscription and Open Offer
through the issue and allotment of 173,150,892 new Ordinary
Shares, bringing on board new institutional shareholders,
as well as providing existing shareholders with the ability
to partake in the same funding round. In considering going
concern, as discussed in note 1.3, the Directors have taken
into account this post balance sheet fund-raise.
On behalf of the Board:
S M Smith
Director
6 May 2020
6 Priory Court
Priory Court Business Park
Poulton
Cirencester
Gloucestershire
GL7 5JB
37
BUSINESS MODEL AND STRATEGY
The Company’s business model can be found on the Company’s website www.edenresearch.com
and in the Company Overview section, at the front of the Annual Report.
KEY CHALLENGES
Our vision is to be the leader in sustainable products enabled or enhanced by our novel Sustaine encapsulation and
delivery technology in crop protection, animal health and consumer products.
Key challenges
We will address these by:
Stable financial base
and revenue growth
Continuing to evolve our business model to focus primarily on product sales
Signing further agreements with industry partners to commercialise products
Ensuring a well-funded balance sheet
Product development
Further development of the encapsulation technology for new applications
Growing a diverse product
development pipeline
Investing in patents for new market opportunities
Building our internal technical resources in terms of capability and capacity
Geographic expansion
Extending registrations for product authorisation into new territories
Targeting new geographies where there
is a demand for sustainable solutions
Investing in patent protection for our intellectual property in new territories
Identifying suitable industrial partners with access to new geographies and customers
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
FINANCIAL
STATEMENTS
Independent Auditor’s Report
40
Consolidated Statement of Comprehensive Income 47
48
Consolidated Statement of Financial Position
49
Company Statement of Financial Position
50
Consolidated Statement of Changes in Equity
51
Company Statement of Changes in Equity
52
Consolidated Statement of Cashflows
53
Company Statement of Cashflows
54
Notes to the Financial Statements
83
Company Information
38
COMPANY OVERVIEW
ANNUAL REPORT
STATEMENTS
GOVERNANCE
FINANCIAL
STATEMENTS
CLEAR
COMMERCIAL
PROGRESS
TRAJECTORY
OF FINANCIAL
GROWTH
PRODUCT SALES
CONTINUE TO PROGRESS
Solid commercial pipeline
Regulatory clearance for product sales across
multiple countries with further applications pending
Commercial and development collaborations
with multiple industry leaders
Significant investment in
commercialisation by key partners
STRENGTHENING OUR
FINANCIAL POSITION
Increased revenue generation from
product sales
Debt free and low overhead base
39
Significant investment by key partners
Robust balance sheet and cash position
For more information see pages 04–09
For more information see pages 04–09
Eden Research plc Financials 2019
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF EDEN RESEARCH PLC
1 OUR OPINION IS UNMODIFIED
We have audited the financial statements of Eden Research plc (“the Company”) for the year ended 31 December 2019
which comprise the consolidated statement of comprehensive income, consolidated statement of financial position,
company statement of financial position, consolidated statement of changes in equity, company statement of changes
in equity, consolidated statement of cashflows, company statement of cashflows, and the related notes, including the
accounting policies in note 1.
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 December 2019 and of the Group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU);
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU
and as applied in accordance with the provision of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of
the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities.
We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Overview
40
Materiality: Group financial statements as a whole
Key audit matters
Recurring risks for the Group and the Parent Company
The impact of uncertainties due to the UK exiting the Europe Union on our audit
Going concern
Recoverability of intangible assets
Revenue
£62,500 (2018: £73,000)
0.71% (2018: 0.8%) of Group total assets
Vs 2018
2 KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT OF RISKS OF MATERIAL
MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2018),
in arriving at our audit opinion above. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The impact of uncertainties due to the UK exiting the European Union on our audit
Refer to page 7 (Chief Executive Officer’s report)
The risk – Unprecedented levels of uncertainty
All audits assess and challenge the reasonableness of estimates, in particular as described in the recoverability of intangible
assets below, and related disclosures and the appropriateness of the going concern basis of preparation of the financial
statements (see below). All of these depend on assessments of the future economic environment and the Group’s future
prospects and performance.
Brexit is one of the most significant economic events for the UK and its effects are subject to unprecedented levels of
uncertainty of consequences, with the full range of possible effects unknown.
Our response
We developed a standardised firm-wide approach to the consideration of the uncertainties arising from Brexit in planning
and performing our audits. Our procedures included:
Our Brexit knowledge: We considered the Directors’ assessment of Brexit-related sources of risk for the Group’s business
and financial resources compared with our own understanding of the risks. We considered the Directors’ plans to take
action to mitigate the risks.
Sensitivity analysis: When addressing the recoverability of intangible assets, going concern and other areas that depend
on forecasts, we compared the Directors’ analysis to our assessment of the full range of reasonably possible scenarios
resulting from Brexit uncertainty and, where forecast cash flows are required to be discounted, considered adjustments
to discount rates for the level of remaining uncertainty.
Assessing transparency: As well as assessing individual disclosures as part of our procedures on intangible assets
and going concern we considered all of the Brexit related disclosures together, including those in the strategic report,
comparing the overall picture against our understanding of the risks.
41
However, no audit should be expected to predict the unknowable factors or all possible future implications for a company
and this is particularly the case in relation to Brexit.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF EDEN RESEARCH PLC
2 KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT OF RISKS OF MATERIAL
MISSTATEMENT CONTINUED
Going concern
Refer to page 36 (Audit Committee report) and note 1.3 on page 54 (accounting policy)
The risk – Disclosure quality
The financial statements explain how the Board has formed a judgement that it is appropriate to adopt the going concern
basis of preparation for the Group and the Parent Company.
That judgement is based on an evaluation of the inherent risks to the Group’s and the Parent Company’s business model and
how those risks might affect the Group’s and the Parent Company’s financial resources or ability to continue operations over
a period of at least a year from the date of approval of the financial statements.
The risks most likely to adversely affect the Group and the Parent Company’s available financial resources over this period
are the impact of Brexit on the Group’s and Parent Company’s supply chain and any unforeseen reductions in revenue or
increases in cost resulting from the 2019 coronavirus disease (COVID-19) pandemic.
There are also less predictable but realistic second order impacts, such as the impact of Brexit on the industry specific
regulations underlying the Group and the Parent Company’s and its suppliers operations, or the wider economic impacts
of the COVID-19 pandemic which could result in a rapid reduction of available financial resources.
The risk for our audit was whether or not those risks were such that they amounted to a material uncertainty that may have
cast significant doubt about the ability to continue as a going concern. Had they been such, then that fact would have been
required to have been disclosed.
42
Clear and full disclosure of the assessment undertaken by the Directors and the rationale for the use of the going concern
assumption, represents a key financial statement disclosure requirement.
There is a risk that insufficient details are disclosed to allow a full understanding of the assessment undertaken by the
Directors.
Our response
Our procedures included:
Historical comparisons: We compared previously forecast cash flows against actual cash flows to assess the historical
accuracy of forecasting;
Sensitivity analysis: We considered sensitivities over the level of available financial resources indicated by the Group’s
financial forecasts, taking account of reasonably possible (but not unrealistic) adverse effects that could arise if the
Group’s forecast future sales do not materialise;
Evaluating Directors’ intent: We evaluated the achievability of the actions the Directors consider they would take to
improve the position should the identified risks to the Group materialise; and
Assessing transparency: We assessed the completeness and accuracy of the matters covered in the going concern
disclosure by comparing it to our knowledge and understanding of the business and the industry in which it operates.
Recoverability of intangible assets
(Group £5,581,005, 2018: £5,016,508 and Parent Company £5,448,262, 2018: £5,016,508)
Refer to notes 1.5 and 1.6 on pages 56 and 57 (accounting policy) and note 12 on pages 70 and 71 (financial disclosures)
The risk – Forecast-based valuation
All intangible assets, including development costs, are reviewed annually for indicators of impairment.
The assessment of impairment indicators includes forecasting and discounting future cash flows (based on assumptions
such as discount rates and rates of growth in revenue), which are inherently highly judgemental. In particular, due to
uncertainty over the size of the potential market for the Group’s products, there is a risk that the recoverable amount forecast
for the intangible assets may not be supported by potential future sales. The effect of these matters is that, as part of
our risk assessment, we determined that recoverable amounts estimated the for the Group’s intangible assets has a high
degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial
statements as a whole, and possibly many times that amount. The financial statements (note 12) disclose the sensitivity
estimated by the Group.
Our response
Our procedures included:
Our sector experience: we challenged the Group’s and the Parent Company’s selection of discount rates and rates of
growth by using our own judgement and experience to determine an appropriate range and comparing the actual rate
used to that range;
Assessing forecasts: we assessed whether the cash flow forecasts are consistent with current business strategies in place;
Comparing valuations: we compared the market capitalisation of the Group to the carrying value of the net assets to
assess whether this provides an indicator of possible impairment of the intangible assets;
43
Historical comparisons: we compared the previously forecast cash flows to actuals to assess the historical accuracy
of forecasting;
Sensitivity analysis: we performed breakeven analysis to assess the sensitivity of the impairment reviews to changes in
the key assumptions noted above; and
Assessing transparency: we assessed whether the Group’s disclosures about the sensitivity of the outcome of the
impairment assessment to changes in key assumptions reflected the risks inherent in the recoverable amount forecast
for intangible assets.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF EDEN RESEARCH PLC
2 KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT OF
RISKS OF MATERIAL MISSTATEMENT CONTINUED
Revenue
Group (£2,048,075, 2017: £2,774,272)
Refer to page 5 (Chief Executive Officer’s Report), note 1.4 on pages 55 and 56 (accounting policy) and note 4 on page 65
(financial disclosures)
The risk – Revenue recognition
The Group’s and the Parent Company’s agreements with its customers are often bespoke and vary from customer to customer
in terms of ongoing performance obligations, timing, quantities and payment profiles. The Directors are required to make
judgements about the nature of these agreements to determine the appropriate timing of revenue recognition. The current
focus of the Group and the Company is on sales growth, and the Directors are incentivised on performance through a share
option scheme. This and the lack of segregation of duty gives rise to the risk that revenue recognised in the year may be
recognised in an inappropriate financial year. In light of this, revenue is susceptible to financial reporting being manipulated.
Our response
Our procedures included:
Test of details:
for a sample of revenue transactions recognised in the current financial year, we agreed the amounts to bank statements
(when already received) and (where relevant) to the underlying sale agreements to determine whether revenue arose and
was recognised in the appropriate period;
for a sample of product sales invoices raised either side of the balance sheet date, we inspected the documentation
44
supporting the dispatch of goods to determine whether revenue was recognised in the appropriate financial year; and
we obtained 100% of the journals posted in respect of revenue and analysed these to identify and investigate any entries
which appeared unusual based upon the specific characteristics of the journal, considering in particular whether the non-
revenue side of the journal entry was as expected, based on our business understanding.
3 OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF
THE SCOPE OF OUR AUDIT
Materiality for the Group financial statements as a whole was set at £62,500 (2018: £73,000), determined with reference
to a benchmark of total assets of £8,864,769 (2018: £9,220,169), of which it represents 0.71% (2018: 0.8%). We consider
a benchmark of total assets to be appropriate as the Group is in the early stages of development.
Materiality for the Parent Company financial statements as a whole was set at £62,000 (2018: £73,000), determined
with reference to a benchmark of total Parent Company assets of £8,732,026 (2018: £9,220,169), of which it represents
0.71% (2018: 0.8%). We consider a benchmark of total assets to be appropriate as the Parent Company is in the early
stages of development.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £3,000
(2018: £3,650), in addition to other identified misstatements that warranted reporting on qualitative grounds.
We subject all of the Group’s three (2018: one) components to full scope audits for group purposes. The Group audit team
performed work on all the components.
4 WE HAVE NOTHING TO REPORT ON GOING CONCERN
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Parent
Company or the Group or to cease their operations, and as they have concluded that the Parent Company’s and the Group’s
financial position means that this is realistic. They have also concluded that there are no material uncertainties that could
have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the
financial statements (“the going concern period”).
Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future
events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a
guarantee that the Group or the Parent Company will continue in operation.
We identified going concern as a key audit matter (see section 2 of this report). Based on the work described in our response
to that key audit matter, we are required to report to you if we have concluded that the use of the going concern basis of
accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of
that basis for a period of at least a year from the date of approval of the financial statements.
We have nothing to report in these respects.
5 WE HAVE NOTHING TO REPORT ON THE OTHER INFORMATION IN THE ANNUAL
REPORT
The Directors are responsible for the other information presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
45
Strategic report and Directors’ report
Based solely on our work on the other information:
we have not identified material misstatements in the strategic report and the Directors’ report;
in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
6 WE HAVE NOTHING TO REPORT ON THE OTHER MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
Under the Companies Act 2006, we are required to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Parent Company 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.
We have nothing to report in these respects.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF EDEN RESEARCH PLC
7 RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page 36, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or
the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a
high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
8 THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR
RESPONSIBILITIES
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 an auditor’s report 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.
46
Andrew Campbell-Orde (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
6 May 2020
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue
Cost of sales
Gross profit
Amortisation of intangible assets
Other administrative expenses
Share based payments
Operating loss
Investment revenues
Finance costs
Share of profit/(loss) of equity accounted Investee, net of tax
Loss before taxation
Income tax (expense)/income
Loss and total comprehensive income for the year
Attributable to:
Equity holder of the company
Non-controlling interest
Loss and total comprehensive income for the year
Earnings per share
Basic
Diluted
Notes
4
5
8
9
13
10
11
2019
£
2,048,075
(1,164,214)
883,861
(496,732)
(1,535,450)
(209,295)
(1,357,616)
807
(81,563)
(41,001)
(1,479,373)
347,036
(1,132,337)
2018
£
2,774,272
(1,237,151)
1,537,121
(429,871)
(1,518,914)
(85,372)
(497,036)
1,684
(23,581)
(14,137)
(533,070)
198,119
(334,951)
(1,144,703)
(334,951)
12,366
–
47
(1,132,337)
(334,951)
(0.54)
(0.54)
(0.16)
(0.16)
The income statement has been prepared on the basis that all operations are continuing operations.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Non-current assets
Intangible assets
Investments
Property, plant & equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Warrant reserve
Merger reserve
Retained earnings
Non-controlling interest
Total equity
48
Notes
2019
£
2018
£
12
13
26
15
16
17
17
20
21
22
23
24
5,581,005
749,738
61,750
5,016,508
790,739
–
6,392,493
5,807,247
68,423
1,901,869
501,984
2,472,276
8,864,769
14,656
919,526
2,478,740
3,412,922
9,220,169
1,371,400
1,100,876
875,404
2,537,518
145,695
1,517,095
7,347,674
2,071,893
31,289,915
335,739
67,462
942,866
8,277,303
2,071,893
31,289,915
653,446
10,209,673
10,209,673
(36,571,912)
(35,947,624)
12,366
7,347,674
–
8,277,303
The financial statements were approved by the Board of Directors and authorised for issue on 6 May 2020 and are signed on
its behalf by:
S Smith
Director
Company Registration No. 03071324
COMPANY STATEMENT
OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Non-current assets
Intangible assets
Investments
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Net current assets
Non-current liabilities
Trade and other payables
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Warrant reserves
Merger reserve
Retained earnings
Total equity
Notes
12
13
26
15
16
17
17
20
21
22
23
2019
£
5,448,262
749,738
61,750
2018
£
5,016,508
790,739
–
6,259,750
5,807,247
68,423
1,901,869
501,984
2,472,276
8,732,026
14,656
919,526
2,478,740
3,412,922
9,220,169
1,263,388
1,208,888
875,404
2,537,518
49
145,695
1,409,083
7,322,943
2,071,893
31,289,915
335,739
67,462
942,866
8,277,303
2,071,893
31,289,915
653,446
10,209,673
10,209,673
(36,584,277)
(35,947,624)
7,322,943
8,277,303
The Company has taken advantage of the exemption contained in S408 of the Companies Act 2006 and has not presented
a separate income statement for the Company. The Company recorded a loss of £1,157,068 (2018: £334,951) for the year
ended 31 December 2019.
The financial statements were approved by the Board of Directors and authorised for issue on 6 May 2020 and are signed on
its behalf by:
S Smith
Director
Company Registration No. 03071324
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Share
capital
£
Share
premium
account
£
Notes
Merger
reserve
£
Warrant
reserve
£
Retained
earnings
£
Non-
controlling
interest
£
Total
£
Balance at 1 January 2018
2,070 ,643
31,278,196 10,209,673
592,495 (35,637,092)
–
8,513,915
Year ended 31 December 2018:
Loss and total comprehensive
income for the year
–
–
Issue of share capital
20
1,250
11,719
Options granted
Options exercised/lapsed
–
–
–
–
–
–
–
–
–
–
85,370
(334,951)
–
–
(24,419)
24,419
–
–
–
(334,951)
12,969
85,370
–
Balances at 31 December 2018
2,071,893
31,289,915 10,209,673
653,446
(35,947,624)
– 8,277,303
Year ended 31 December 2019:
Adjustment on initial application
of IFRS 16 (net of tax)
Adjusted balances at
31 December 2018
Loss and total comprehensive
income for the year
Options granted
Options lapsed
–
–
–
–
(6,587)
–
(6,587)
2,071,893
31,289,915 10,209,673
653,446
(35,954,211)
– 8,270,716
–
–
–
–
–
–
–
–
–
–
(1,144,703)
12,366 (1,132,337)
209,295
–
(527,002)
527,002
–
–
209,295
–
Balances at 31 December 2019
2,071,893
31,289,915 10,209,673
335,739
(36,571,912)
12,366
7,347,674
50
COMPANY STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Share
capital
£
Share
premium
account
£
Notes
Merger
reserve
£
Warrant
reserve
£
Retained
earnings
£
Total
£
Balance at 1 January 2018
2,070,643
31,278,196
10,209,673
592,495 (35,637,092) 8,513,915
Year ended 31 December 2018:
Loss and total comprehensive
income for the year
Issue of share capital
Options granted
Options exercised/lapsed
–
–
20
1,250
11,719
–
–
–
–
–
–
–
–
–
–
85,370
(334,951)
(334,951)
–
–
12,969
85,370
–
(24,419)
24,419
Balances at 31 December 2018
2,071,893
31,289,915
10,209,673
653,446
(35,947,624) 8,277,303
Year ended 31 December 2019:
Adjustment on initial application of
IFRS 16 (net of tax)
Adjusted balances at
31 December 2018
Loss and total comprehensive
income for the year
Options granted
Options lapsed
–
–
–
–
(6,587)
(6,587)
2,071,893
31,289,915
10,209,673
653,446
(35,954,211) (8,270,716)
–
–
–
–
–
–
–
(1,157,068)
(1,157,068)
209,295
–
209,295
(527,002)
527,002
–
22
Balances at 31 December 2019
2,071,893
31,289,915
10,209,673
335,739 (36,584,277) 7,322,943
51
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
CONSOLIDATED STATEMENT
OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Cash (used by)/from operations
Finance costs paid
Payment of interest element of lease liabilities
Foreign exchange losses
Tax refunded
Net cash outflow from operating activities
Investing activities
Capitalisation of development expenditure
and intellectual property costs
Capitalisation of patents
Interest received
Notes
29
2019
£
£
2018
£
£
(1,233,954)
(1,344)
(7,053)
(44,475)
272,720
(1,014,106)
(797,608)
(551)
–
(23,030)
119,511
(701,678)
(835,896)
(77,954)
807
(429,736)
(82,882)
1,684
Net cash used in investing activities
(913,043)
(510,934)
Financing activities
Proceeds from issue of shares
Payment of principal element of lease liabilities
–
(20,916)
12,969
–
52
Net cash (used in)/generated from financing activities
(20,916)
12,969
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year
(1,948,065)
2,478,740
(28,691)
501,984
(1,199,643)
3,678,383
–
2,478,740
COMPANY STATEMENT
OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Cash (used by)/from operations
Finance costs paid
Payment of interest element of lease liabilities
Foreign exchange losses
Tax refunded
Net cash outflow from operating activities
Investing activities
Capitalisation of development expenditure
and intellectual property costs
Capitalisation of patents
Interest received
Notes
29
2019
£
£
2018
£
£
(1,233,954)
(1,344)
(7,053)
(44,475)
272,720
(1,014,106)
(797,608)
(551)
–
(23,030)
119,511
(701,678)
(835,896)
(77,954)
807
(429,736)
(82,882)
1,684
Net cash used in investing activities
(913,043)
(510,934)
Financing activities
Proceeds from issue of shares
Payment of principal element of lease liabilities
Net cash (used in)/generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of year
–
(20,916)
12,969
–
(20,916)
(1,948,065)
2,478,740
(28,691)
501,984
12,969
53
(1,199,643)
3,678,383
–
2,478,740
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1 ACCOUNTING POLICIES
Company information
Eden Research plc is a public company limited by shares registered, incorporated and domiciled in England and Wales.
The registered office is 6 Priory Court, Priory Court Business Park, Poulton, Cirencester, Gloucestershire, GL7 5JB.
1.1 Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS, (except as otherwise stated).
The financial statements are prepared in sterling, which is the functional currency of the Company. Monetary amounts in
these financial statements are rounded to the nearest £1.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are
set out below.
Associates
Associates are those entities in which the Company has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the
voting power of another entity, or where the Company has a lower interest but the right to appoint a Director. The Company
acquired 29.9% of TerpeneTech Limited ('TerpeneTech') during 2015; TerpeneTech is an associated undertaking.
Application of the equity method to associates
54
The investment in TerpeneTech 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, from the date that significant influence commenced.
1.2 Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings up to
31 December 2019. The profits and losses of the Company and its subsidiaries are consolidated from the date from which
control is achieved. All members of the group have the same reporting period.
Subsidiaries are entities controlled by the Company. The Group controls an entity when it is exposed to, or has right to,
variable returned from its involvement with the entity and has the ability to affect those returned through its power over
the entity.
1.3 Going concern
The financial statements have been prepared on a going concern basis.
The Group has reported a loss for the year after taxation of £1,132,337 (2018: £334,951). Net current assets at that date
amounted to £1,100,876 (2018: £2,537,518).
The Directors have prepared budgets and projected cash flow forecasts, based in part on forecasts provided by Eden's
commercial partners, for a period of two years from 31 December 2019 and they consider that the Company will be able
to operate with the cash resources 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 existing and/or additional funding to meet the short term needs of the business
until the commercialisation of the Company's portfolio is reached.
The forecasts adopted include only revenue derived from existing contracts and, while there is a risk these payments might
be delayed if milestones are not reached, there is potential upside from on-going discussions and negotiations with other
parties not yet contracted, as well as other 'blue sky' opportunities.
In addition, the Company has relatively low fixed running costs and has a demonstrable ability to delay certain other costs,
such as Research and Development expenditure, in the event of unforeseen cash constraints.
The Directors have also considered a scenario whereby the Company receives no revenue from the date of this Report.
On this basis, the Directors believe that the Company has sufficient cash to cover a period of at least 12 months from the
date of this Report.
The Directors are closely monitoring performance against cash flow projections that have been prepared for the period to
31 December 2020 and beyond, and reasonably believe that the Company will deliver cash flows at least in line with these.
In March 2020, the Company concluded a successful fund-raise raising a total of approximately £10.4 million (before expenses)
through the Placing, Subscription and Open Offer through the issue and allotment of 173,150,892 new Ordinary Shares.
The impact of COVID-19 has been reviewed as part of the going concern assessment and on the basis that the Company is
well funded and our industry has a pivotal role to play in supporting agriculture, which is a basic requirement, the Board is
satisfied that there is not a significant impact on going concern.
Taking all these factors into consideration, 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.
1.4 Revenue
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.
55
Revenue represents amounts receivable by the Company in respect of services rendered during the year in accordance with
the underlying contract of licence, stated net of value added tax.
Sales-based royalty income arising from licences of the Company's intellectual property is recognised in accordance with
the terms of the underlying contract and is based on net sales value of product sold by Eden's licensees. It is recognised
when the subsequent sales occur.
Upfront and annual payments made by customers at commencement and for renewal of distribution and other agreements
are recognised in accordance with the terms of the agreement. Where there is no ongoing obligation on the Company under
the agreement, the payment is recognised in full in the period is which it is made. Where there is an ongoing obligation
on the Company, the separate performance obligations under the agreement are identified and revenue allocated to each
performance obligation. Revenue is then recognised when a corresponding performance obligation has been met.
Each sale of a licence by the Company is assessed to determine whether the licence is distinct from the sale of other goods
and services, and whether the licence granted provides use of the Company's intellectual property as it exists at that point in
time, with no ongoing obligation on the Company, or alternatively provides access to the intellectual property as it develops
over time. Where the Company has discharged all of its ongoing obligations associated with the licence granted, revenue
is recognised on receipt of the licence fee payment. Where there is an ongoing obligation on the Company, revenue is
recognised in the periods to which the obligations pertain. In addition, the Company considers whether a licence is a "right to
use" or a "right to access" the underlying intellectual property, the former being where the licensee for the most part acts as
if it is the owner of the intellectual property of the rights granted.
Product sales are recorded once product is made available to the partner to collect, or, if the Company is responsible for the
shipping, the product has been shipped to the customer, at which point the ownership and related rights are responsibilities
pass to the customer.
The following is a description of the principal activities from which the Company generates its revenue.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
1 ACCOUNTING POLICIES CONTINUED
1.4 Revenue continued
Licensing fees
The Company receives licensing fees from partners who have taken a licence to use Eden's intellectual property, usually
defined by field of use and territory.
When a licence agreement is signed with a partner, the rights conferred are immediately passed on from Eden and an invoice
is raised, which is generally payable immediately.
Milestone payments
The Company receives milestone payments from other commercial arrangements, including any fees it has charged to
partners for rights granted in respect of distribution agreements.
When such an agreement is signed with a partner, the rights conferred are immediately passed on from Eden and an invoice
is raised, which is generally payable immediately.
Also, in some cases, there are certain commercial or other milestones which are to be met by a commercial partner which,
once met, give rise to a responsibility by that partner to pay a fee to Eden, which is generally payable immediately.
R&D charges
The Company sometimes charges its partners for R&D costs that it has incurred which usually relate to specific projects and
which it has incurred through a third party.
Upon agreement with a partner, or if some specific milestone is met, then Eden will raise an invoice which is usually payable
between 30 and 120 days.
56
Royalties
The Company receives royalties from partners who have entered into a licence arrangement with Eden to use its intellectual
property and who have sold products, which then gives rise to an obligation to pay Eden a royalty on those sales.
Generally, royalties relate to specific time periods, such as quarterly or annual dates, in which product sales have been made.
Once an invoice is raised by Eden, following the period to which the royalties relate, payment is due to the Company is 30 to
60 days.
Product sales
Generally, where the Company has entered into a distribution agreement with a partner, Eden is responsible for supplying
product to that partner once a sales order has been signed.
At that point, Eden has the product manufactured through a third-party, toll manufacturer. At the point at which the product
is finished and is made available to the partner to collect, or, if the Company is responsible for the shipping, the product has
been shipped, the partner is liable for the product and obliged to pay Eden. Normal terms for product sales are 90 to 120
days. Returns are not accepted and refunds are only made when product supplied is notified as defective within 60 days.
1.5 Intangible assets other than goodwill
Intellectual property, including development costs, is capitalised and amortised on a straight-line basis over its remaining
estimated useful economic life of 11 years in line with the remaining life of the Company's master patent, which was
originally 20 years, with additional Supplementary Protection Certificates having been granted in the majority of the
countries in the EU in which Eden is selling Mevalone. The useful economic life of intangible assets is reviewed on an
annual basis.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 1.6 Impairment of tangible and intangible assets
The Directors regularly review the intangible assets for impairment and provision is made if necessary. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of as 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.
1.7 Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is based on the
first-in-first-out principle. Cost comprises direct materials and, where applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to their present location and condition.
1.8 Financial instruments
(i) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets
and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the
instrument.
A financial asset (unless it is a trade receivable without 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; FVOCI – debt investment; FVOCI –
equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model
for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions:
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.
This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset
that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise.
Investments in associates accounted for using the equity method and subsidiaries are carried at cost less impairment.
57
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
1 ACCOUNTING POLICIES CONTINUED
1.8 Financial instruments continued
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 Company’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 FVTPL - these assets (other than derivatives designated as hedging instruments) are subsequently
measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
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.
Debt investments at FVOCI - these assets are subsequently measured at fair value. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains
and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI - these assets are subsequently measured at fair value. Dividends are recognised as income
in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and
losses are recognised in OCI and are never reclassified to profit or loss.
Financial liabilities and equity
58
Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two
conditions:
(a)
(b)
they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the
company; and
where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will
be settled by the Company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own
equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for
called up share capital and share premium account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense
and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised
in profit or loss.
Where a financial instrument that contains both equity and financial liability components exists these components are
separated and accounted for individually under the above policy.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 Intra-group financial instruments
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within
its group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the
Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company
will be required to make a payment under the guarantee.
(iii) Impairment
The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost,
debt investments measured at FVOCI and contract assets (as defined in IFRS 15).
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. Trade
receivables and contract assets with significant financing component are measured using the general model described above.
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 assumes that the credit risk on a financial asset has increased significantly if it is more than 60 days past due.
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
59
such as realising security (if any is held); or
the financial asset is more than 120 days past due.
The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood
definition of ‘investment grade’.
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 and debt securities at FVOCI
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.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
1 ACCOUNTING POLICIES CONTINUED
1.9 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the reporting end date. The current tax charge includes any research and
development tax credits claimed by the Company.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction
that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interest in joint ventures, except where the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
60
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on the tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred
tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
1.10 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.
A termination benefit liability is recognised at the earlier of when the entity can no longer withdraw the offer of the
termination benefit and when the entity recognises any related restructuring costs.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 1.11 Share-based payments
The Company has applied the requirements of IFRS 2 Share-Based Payments.
Unapproved share option scheme
The Company has operated an unapproved share option scheme for Executive Directors, senior management and certain
employees. This scheme was used for any options awarded prior to 28 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 are made annually and are subject to continued service and
challenging performance conditions usually over a three year period. The performance conditions are reviewed on an annual
basis to ensure they remain appropriate and are currently based on increasing shareholder value. Awards are generally
structured as nil cost options with a seven year lift after vesting.
Other than in exceptional circumstances, an award to an Executive would be up to 100% of salary in any one year and would
be granted subject to achieving challenging performance conditions set at the date of the grant. A percentage of the award
will vest for 'Threshold' performance with full vesting taking place for equalling or exceeding the performance 'Target'. In
between the Threshold and Target there may be pro rata vesting. The Remuneration Committee retains the ability to amend
the performance conditions for future grants to ensure that such grants achieve the stated purpose.
The LTIP was adopted by the Board of Directors of Eden on 28 September 2017.
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Statement
of Profit or Loss and Other Comprehensive Income over the vesting period. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected to vest at each reporting date so that ultimately the
cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the options granted, as long as other vesting conditions are satisfied.
The cumulative expense is not adjusted for failure to achieve a market vesting condition.
61
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.
1.12 Leases (policy applicable from 1 January 2019)
At inception, the Company 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 Company 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. Right-of-use assets are depreciated
over the term of the lease.
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 company's
incremental borrowing rate.
The Company 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.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
1 ACCOUNTING POLICIES CONTINUED
1.13 Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the
income statement for the period.
Whilst the majority of the Company's revenue is in Euros, the Company also incurs a significant level of expenditure in that
currency. As such, the Company does not currently use any hedging facilities and instead chooses to keep some of its cash
at the bank in Euros.
1.14 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 is 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.
62
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.
1.15 Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution pension plans are recognised as an expense in the income statement in the periods during which
services are rendered by employees.
1.16 Financial risk management
The Company's activities expose it to a variety of financial risks: market risks (including currency risk and interest rate
risks), credit risk and liquidity risk. Risk management focuses on minimising any potential adverse effect on the Company's
financial performance and is carried out under policies approved by the Board of Directors.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 2 ADOPTION OF NEW AND REVISED STANDARDS AND
CHANGES IN ACCOUNTING POLICIES
In the current year, the following new and revised Standards and Interpretations have been adopted by the Company
and have an effect on the current period or a prior period or may have an effect on future periods:
IFRS 16 Leases
Establishes principles for the recognition, measurement, presentation and
disclosure of leases for leasees.
IFRIC Interpretation 23 Uncertainty
over Income Tax Treatments
Clarifies how to apply the recognition and measurement requirements in IAS 12
when there is uncertainty over income tax requirements.
Amendments to IFRS 9 – Prepayment
features with Negative Compensation
Clarifies that prepayment features which give rise to negative compensation do
not necessarily prevent a financial asset from being measured at amortised cost.
Amendments to IAS 28 – Long-term
Interest in Associates and Joint Ventures
Clarifies how IAS 28 interacts with IFRS 9 when the investor applies
equity accounting.
Annual Improvements to IFRS Standards
2015-201 Cycle
Minor amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23.
Amendments to IAS 19 – Plan Amendment,
Curtailment or Settlement
Clarifies that updated actuarial assumptions must be used for the remainder
of the reporting period after a plan amendment, curtailment or settlement.
With the exception of IFRS 16, adoption of the above standards has not impacted either the reported position or performance
of the group or Company.
63
The group adopted IFRS 16 Leases in accordance with the modified retrospective approach. This does not restate prior year
figures, instead recognising the impact of transition in equity. The accounting policy adopted is outlined in note 1 of the
financial statements.
The opening balance of lease liabilities as at 1 January 2019 can be reconciled to the lease obligations note as at
31 December 2018 as follows:
Operating lease obligation at 31 December 2018
Effect of discounting
Lease liabilities at 1 January 2019
£
106,642
(16,228)
90,414
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
2 ADOPTION OF NEW AND REVISED STANDARDS AND
CHANGES IN ACCOUNTING POLICIES CONTINUED
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet
been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted
by the EU). These new standards are not anticipated to have a material impact on the financial statements.
IFRS 3 Amendments to definition of a business
IAS 1 and IAS 8 Amendments to definition of material
Conceptual Framework (Revised) and amendments to related references in IFRS Standards
All of the above are effective from periods commencing 1 January 2020. None are expected to have a material effect on the
financial position or performance of the group.
3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk to the carrying
amounts of assets and liabilities within the next financial year are discussed below:
Capitalisation of development costs
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:
64
The availability of the necessary financial resources and hence the ability of the Company to continue as a going concern.
The assumptions surrounding the perceived market sizes for the products and the achievable market share for the
Company.
The successful conclusion of commercial arrangements, which serves as an indicator as to the likely success of the
projects and, as such, any need to potential impairment.
The level of upfront, milestone and royalty receipts, which also serves as a guide to the net present value of the assets
and whether any impairment is required.
Impairment of intangible 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.
Further details on impairment review can be found in note 12 and 13 to the accounts.
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 judgement made by the Directors in preparing the financial statements.
The ability of the Company to continue as a going concern is ultimately dependent upon the amount and timing of cash
flows arising from the exploitation of the Company's intellectual property and the availability of existing and/or additional
funding to meet the short term needs of the business until the commercialisation of the Company's portfolio is reached.
The Directors consider it is appropriate for the financial statements to be prepared on a going concern basis based on the
estimates they have made.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 Subsidiary and 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. A judgement has also been made that Eden controls
TerpeneTech (Ireland) and that it is, therefore, appropriate for it to be consolidated as a subsidiary. For further information,
see notes 13 and 14.
COVID-19
The Company has made accounting judgements and estimates based on there being minimal impact of COVID-19 on the
business in the long term. 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.
4 REVENUE
IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for the resource allocation and assessing
performance of the operating segments has been identified as the Executive Directors as they are primarily responsible for
the allocation of the resources to segments and the assessment of performance of the segments.
The Executive Directors monitor and then assess the performance of segments based on product type and geographical
area using a measure of adjusted EBITDA. This is the result of the segment after excluding the share-based payment
charges, other operating income and the amortisation of intangibles. These items, together with interest income and
expense are not allocated to a specific segment.
The segment information for the year ended 31 December 2019 is as follows:
Human health and biocides
Animal health
Agrochemicals
Total
Milestone
Payments
£
–
–
348,260
348,260
R&D Charges
£
Royalties
£
Product Sales
£
Total
£
65
6,089
–
–
6,089
–
–
17,241
17,241
247,304
253,393
–
1,429,181
1,676,485
–
1,794,682
2,048,075
The segment information for the year ended 31 December 2018 is as follows:
Human health and biocides
Animal health
Agrochemicals
Total
Milestone
Payments
£
–
–
956,123
956,123
Revenue analysed by geographical market
UK
Europe
R&D Charges
£
Royalties
£
Product Sales
£
–
–
112,540
112,540
48,113
–
36,193
84,306
Total
£
48,113
–
–
–
1,621,303
1,621,303
2,726,159
2,774,272
2019
£
2018
£
6,089
2,041,986
2,048,075
160,653
2,613,619
2,774,272
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
5 OPERATING LOSS
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
Fees payable to the company's auditor for the audit of the
subsidiary’s financial statements
Licences and trademarks amortisation
Development costs amortisation
Intellectual property amortisation
Depreciation of right-of-use assets
Equity based share-based payment charge
2019
£
2018
£
28,976
27,000
–
25,896
231,077
239,759
22,077
209,295
–
7,099
183,018
239,754
–
85,370
2018
Number
5
2018
£
631,183
89,595
15,618
736,396
6 EMPLOYEES
The average monthly number of persons (including Directors) employed by the Company during the year was:
Management
66
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs
2019
Number
7
2019
£
969,487
68,994
27,151
1,065,632
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 7 DIRECTORS' REMUNERATION
The Executive Directors are considered to also be the key management personnel of the company and group.
Details of Directors’ share options can be found on page 30 of the Remuneration Report.
On 7 May 2018, A Abrey exercised an option over 125,000 shares at 10.375p. The share price at the time of exercise was
15.75p, providing a gain of 5.375p per share, or £6,719 in total.
Directors' remuneration
Company pension contributions to defined contribution schemes
Non-Executive Directors' fees
Share based payment charge relating to all Directors
Remuneration disclosed above include the following amounts
paid to the highest paid Director:
2019
£
485,215
26,355
75,000
110,743
697,313
2018
£
532,784
13,600
75,000
85,372
706,756
Remuneration for qualifying services
287,376
305,334
2019
A Abrey
S Smith
R Cridland
L van Der Broek
2018
A Abrey
S Smith
R Cridland
L van Der Broek
67
Salary
£
165,000
211,500
–
–
Bonus
£
47,644
61,071
–
–
376,500
108,715
Salary
£
150,000
190,000
–
–
Bonus
£
85,050
107,734
–
–
340,000
192,784
Fees
£
–
–
35,000
40,000
75,000
Fees
£
–
–
35,000
40,000
75,000
Pension
£
11,550
14,805
–
–
Share Based
Payments
£
48,751
61,992
–
–
Total
£
272,945
349,368
35,000
40,000
26,355
110,743
697,313
Pension
£
6,000
7,600
–
–
Share Based
Payments
£
37,620
47,752
–
–
Total
£
278,670
353,086
35,000
40,000
13,600
85,372
706,756
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
8 INVESTMENT INCOME
Interest income
Bank deposits
2019
£
807
Total interest income for financial assets that are not held at fair value through profit or loss is £807 (2018: £1,684).
9 FINANCE COSTS
Interest on bank overdrafts and loans
Exchange differences on financing transactions
Effect of exchange rate fluctuations on cash
Interest on lease liabilities
10 INCOME TAX EXPENSE
68
Current tax
UK corporation tax on profits for the current period
Adjustments in respect of prior periods
Total UK current tax
2019
£
1,344
44,475
28,691
7,053
81,563
2019
£
(268,777)
(78,259)
(347,036)
2018
£
1,684
2018
£
551
23,030
–
–
23,581
2018
£
(156,865)
(41,254)
(198,119)
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss before taxation
2019
£
2018
£
(1,479,373)
(533,070)
Expected tax credit based on a corporation tax rate of 19.00%
(281,081)
(101,283)
Effect of expenses not deductible in determining taxable profit
Unutilised tax losses carried forward
Adjustment in respect of prior years
Adjustments in respect of financial assets
Research and development tax credit
Deferred tax not recognised
Taxation credit for the year
55,868
83,414
(78,259)
83,217
(199,065)
(11,130)
(347,036)
19,836
48,682
(41,254)
71,071
(116,179)
(78,992)
(198,119)
Tax charged in the financial statements
(347,036)
(198,119)
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 A reduction in the UK corporation tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on 6
September 2016. The March 2020 Budget announced that a rate of 19% would continue to apply with effect from 1 April
2020, and this change was substantively enacted on 17 March 2020.
This will increase the company's future current tax charge accordingly.
The tax credit represents the research and development tax credit for the year ended 31 December 2019.
Tax losses carried forward, for which no deferred tax asset has been recognised, amount to approximately £23,088,756
(2018: £22,291,281).
The unprovided deferred tax asset arises principally in respect of trading losses, together with other minor temporary
differences at 17% (2018:17%) and has not been recognised due to the uncertainty of timing of future profits against which it
may be realised.
11 EARNINGS PER SHARE
Number of shares
2019
£
2018
£
Weighted average number of ordinary shares for basic earnings per share
208,244,677
208,244,677
Effect of dilutive securities
–
–
Weighted average number of ordinary shares for diluted earnings per share
208,244,677
208,244,677
Earnings
Loss for the period
Earnings for basic and diluted earnings per share being net profit
attributable to equity shareholders of the Company
Earnings per share
Basic earnings per share
Diluted earnings per share
(1,132,337)
(334,951)
69
(1,132,337)
(334,951)
(0.54)
(0.54)
(0.16)
(0.16)
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the number of
ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the current number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
70
12 INTANGIBLE ASSETS
Consolidated
Cost
At 1 January 2018
Additions
At 31 December 2018
Additions – purchased
At 31 December 2019
Amortisation and impairment
At 1 January 2018
Charge for the year
At 31 December 2018
Charge for the year
At 31 December 2019
Carrying amount
At 31 December 2019
At 31 December 2018
Company
Cost
At 1 January 2018
Additions
At 31 December 2018
Additions – purchased
At 31 December 2019
Amortisation and impairment
At 1 January 2018
Charge for the year
At 31 December 2018
Charge for the year
At 31 December 2019
Carrying amount
At 31 December 2019
At 31 December 2018
Licences and
trademarks
£
Development
costs
£
Intellectual
property
£
447,351
–
447,351
–
447,351
404,756
7,099
411,855
25,896
437,751
3,779,353
429,736
4,209,089
850,532
5,059,621
1,765,236
183,018
1,948,254
231,077
2,179,331
8,887,745
82,882
8,970,627
210,697
9,181,324
6,010,696
239,754
6,250,450
239,759
6,490,209
Total
£
13,114,449
512,618
13,627,067
1,061,229
14,688,296
8,180,688
429,871
8,610,559
496,732
9,107,291
9,600
35,496
2,880,290
2,260,835
2,691,115
2,720,177
5,581,005
5,016,508
Licences and
trademarks
£
Development
costs
£
Intellectual
property
£
447,351
–
447,351
–
447,351
404,756
7,099
411,855
25,896
437,751
3,779,353
429,736
4,209,089
850,532
5,059,621
1,765,236
183,018
1,948,254
231,077
2,179,331
Total
£
13,114,449
512,618
13,627,067
928,486
8,887,745
82,882
8,970,627
77,954
9,048,581
14,555,553
6,010,696
239,754
6,250,450
239,759
6,490,209
8,180,688
429,871
8,610,559
496,732
9,107,291
9,600
35,496
2,880,290
2,260,835
2,558,372
2,720,177
5,448,262
5,016,508
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 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 11 years.
An annual impairment review is undertaken by the Board of Directors. The Directors have considered the progress of the
business in the current year, including a review of the potential market for its products, the progress the Company has made
in registering its products and other key commercial factors to determine whether any indicators of impairment exist. No
adjustment has been made in respect of the potential impact of COVID-19 as the current expectation is that the impact to the
business will not be significant in the long term.
The Directors have used discounted cash-flow forecasts, 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 discount rate had the forecast cash-flows are two key assumptions used. 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 10% (2018: 10%)
The forecast cash-flows are derived from discussions with the Company's commercial partners, as described below.
Based on the review management has carried out, it is satisfied that the Intangible Assets are not impaired in respect of their
carrying value.
As set out in the Strategic Report the business is in a critical phase of its development as the research and development of
products is transitioned to revenue generation. The value of the intangible assets is supported by management's forecasts
of continued revenue growth of existing products and the successful growth of future product sales. Management has
used cash-flow forecasts for the next six years, which coincides with the expiration of the Group’s core patents, not taking
into account additional patent protection which is afforded through supplementary protection certificates. Management’s
forecasts include growth rates ranging from 101% in year one to 21% in year six, with an average annual growth rate of 64%.
This is considered to be reasonable based on information from and discussion with strategic partners and the stage in
growth that the Company is at, with a number of new products being introduced over the coming years, as well as significant
new geographical markets being entered into or the first time.
71
However, there is a risk that if those forecasts are not achieved then the associated intangible assets could be impaired.
Average annual growth in revenue would need to fall below 15% for this to be the case. In the event that there was no further
growth over and above the revenue achieved in the year to December 2019, there would be an impairment of intangible
assets of approximately £1.5m.
All revenues have been projected to come from the cash generating units identified in the segmental reporting and
Chairman's Report, namely the key product lines of the Company.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
13 INVESTMENTS IN ASSOCIATES
Investments in associates
Current
2019
£
–
2018
£
–
Non-current
2019
£
749,738
2018
£
790,739
Details of the company's associates at 31 December 2019 are as follows:
Name of undertaking
Country of
incorporation
Ownership
interest (%)
Voting power
held (%) Nature of business
TerpeneTech Limited
United Kingdom
29.90
29.90
Research and experimental
development on biotechnology
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets (100%)
72
Company’s share of net assets
Separable intangible assets
Goodwill
Carrying value of interest in associate
Revenue
100% of (loss)/profit after tax
29.9% of (loss)/profit after tax
Amortisation of separable intangible
Company’s share of profit/(loss) including amortisation of separable intangible asset
2019
£
565,306
209,880
(98,806)
(195,415)
480,965
167,136
169,953
412,649
749,738
130,521
(88,404)
(26,433)
(14,568)
(41,001)
2018
£
627,232
222,572
(100,397)
(182,953)
566,454
193,569
184,521
412,649
790,739
308,864
1,441
431
(14,568)
(14,137)
The company has not designated any financial assets that are not classified as held for trading as financial assets at fair
value through profit or loss.
TerpeneTech's 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.
An impairment review of the investment in TerpeneTech was 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 TerpeneTech has made in registering its products and other key commercial factors to determine whether any
indicators of impairment exist.
The Directors have used discounted cash-flow forecasts, based on product sales forecasts provided by TerpeneTech, and
have taken into account the market potential for those products.
The discount rate and the expected growth rate are two key assumptions used. 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 20% (2018: 20%). The growth rates are derived from discussions with the Company's commercial partner, TerpeneTech,
as described above.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 Based on the review management has carried out, it is satisfied that the Investment is not impaired in respect of its
carrying value.
The Directors have also considered whether any reasonable change in assumptions would lead to an impairment and are
satisfied that this is not the case.
Fair value of financial assets carried at amortised cost
The Directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements
approximate to their fair values.
14 SUBSIDIARIES
Details of the company's subsidiaries at 31 December 2019 are as follows:
Name of undertaking
Country of
incorporation
Ownership
interest (%)
Voting power
held (%) Nature of business
TerpeneTech Limited
Republic of Ireland
50.00
50.00 Sale of biocide products
TerpeneTech Limited (Ireland), whose registered office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland was
incorporated on 15 January 2019 and was jointly owned by both Eden Research Plc and TerpeneTech Limited (UK), the
company's associate.
The Company has effective control over the entity through the significant influence it exerts over the other shareholder,
TerpeneTech Limited (UK).
Eden owns 500 ordinary shares in TerpeneTech Limited (Ireland).
73
Non-controlling interests
The following table summarises the information relating to the Group’s subsidiary with material non-controlling interest,
before intra-group eliminations:
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Carrying amount of NCI
Revenue
Profit/(loss)
OCI
Total comprehensive income
Profit/(loss) allocated to NCI
OCI allocated to NCI
Cash flows from operating activities
Cash flows from investment activities
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Dividends paid to non-controlling interests
2019
£
50%
132,743
–
–
(108,012)
24,731
–
247,304
24,731
–
24,731
24,731
24,731
–
–
–
–
–
2018
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
15 INVENTORIES
Finished goods
16 TRADE AND OTHER RECEIVABLES
Group and company
2019
£
68,423
2018
£
14,656
Trade receivables
Other receivables
Corporation tax receivable
VAT recoverable
Prepayments
Group
2019
£
2018
£
Company
2019
£
1,345,648
515,279
1,345,648
4,694
268,777
127,089
155,661
1,901,869
–
194,461
133,722
76,064
919,526
4,694
268,777
127,089
155,661
1,901,869
2018
£
515,279
–
194,461
133,722
76,064
919,526
Trade and other receivables disclosed above are classified as measured at amortised cost. The Directors consider that the
carrying amount of trade and other receivables approximate their fair value.
74
17 TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Social security and other taxation
Lease liabilities (note 26)
Other payables
Non-current
Provisions (note 25)
Lease liabilities (note 26)
Group
2019
£
870,563
283,380
26,399
22,812
168,246
1,371,400
99,008
46,687
145,695
2018
£
499,186
313,427
15,085
–
47,706
875,404
67,462
–
67,462
Company
2019
£
2018
£
870,563
283,380
26,399
22,812
60,234
1,263,388
99,008
46,687
145,695
499,186
313,427
15,085
–
47,706
875,404
67,462
–
67,462
Trade and other payables disclosed above are classified as measured at amortised cost. The Directors consider that the
carrying amount of trade and other payables approximate their fair value.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 18 RETIREMENT BENEFIT SCHEMES
Defined contribution schemes
The Company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are
held separately from those of the Company in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is £27,151 (2018: £15,618).
19 SHARE-BASED PAYMENT TRANSACTIONS
Unapproved option scheme
Eden Research Plc operates an unapproved option scheme for Executive Directors, senior management and certain
employees.
Number of share options
Weighted average
exercise price (pence)
2019
2018
2019
2018
Outstanding at 1 January 2019
3,400,000
5,025,000
Granted during the year
Exercised during the year
Lapsed during the year
–
–
–
(125,000)
(2,350,000)
(1,500,000)
Exercisable at 31 December 2019
1,050,000
3,400,000
11
–
–
13
13
11
–
10
8
11
The options outstanding at 31 December 2019 had an exercise price of 13p (2018: ranging from 10p and 16p) and
their weighted average contractual life was 1.6 years (2018: 0.9 years). None of the options have vesting conditions.
75
The share-based payment charge in respect of the unapproved option scheme for the year was £nil (2018: £nil).
The weighted average fair value of each option granted during 2019 was £nil (2018: £nil).
Long-Term Incentive Plan (“LTIP”)
Eden Research Plc operates an unapproved option scheme for Executive Directors, senior management and certain
employees under a LTIP which it adopted in 2017. On 28 June 2019, 5,891,111 shares under the LTIP scheme were
awarded to the Chief Executive Officer and the Chief Financial Officer.
Details of the existing LTIP can be found on pages 29 and 30. A new LTIP scheme is expected to be put in place in 2020
of which further details can also be found on page 31.
The share-based payment charge for the year ended 31 December 2017 and subsequent years is set out as follows:
Financial year
ended 31 December
Share based
payment charge
£
2017
2018
2019
2020
2021
2022
27,210
85,370
110,743
94,176
51,909
16,959
386,367
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
19 SHARE-BASED PAYMENT TRANSACTIONS CONTINUED
The following information is relevant in the determination of the fair value of options granted during the year under the
unapproved options scheme under the LTIP operated by Eden Research Plc.
Grant date
Number of awards
Share price
Exercise price
Expected dividend yield
Expected volatility
Risk free rate
Vesting period
Expected Life (from date of grant)
2015 Award
28/09/2017
1,908,680
2016 Award
28/09/2017
2,108,000
2017 Award
28/06/2019
2,868,889
2018 Award
28/06/2019
3,022,222
0.125
£nil
–%
73.20%
0.80%
2 years
10 years
0.125
£nil
–%
73.20%
0.80%
3 years
10 years
0.115
£nil
–%
50.82%
0.614%
2 years
2 years
0.115
£nil
–%
50.82%
0.614%
3 years
3 years
For those options and warrants which were not granted under the Company’s LTIP, fair value is measured using the Black-
Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the
effects of non-transferability, exercise restrictions and behavioural conditions.
For those options which were granted under the Company’s LTIP, Monte Carlo techniques were used to simulate future
share price movements of the Company to assess the likelihood of the performance criteria being met and the fair value of
the awards upon vesting. The modelling calculates many scenarios in order to estimate the overall fair value based on the
average value where awards vest.
76
Warrants
Outstanding at 1 January 2019
Granted during the year
Exercised during the year
Lapsed during the year
Number of warrants
2019
2,400,000
2,589,865
–
(2,000,000)
2,989,865
2018
3,350,000
–
–
(950,000)
2,400,000
Weighted average
exercise price (pence)
2019
2018
20
18
–
11
19
14
–
–
16
20
The exercise price of warrants outstanding at the end of the year ranged between 12p and 30p (2018: 11p and 30p) and their
weighted average contractual life was 2.5 years (2018: 2.6 years.) None of the warrants have vesting conditions.
The share based payment charge for the year, in respect of warrants, was £98,553 (2018: £nil). The weighted average fair
value of each warrant granted during the year was 18p (2018: £nil).
20 SHARE CAPITAL
Ordinary share capital
Issued and fully paid
207,189,337 Ordinary shares of 1p each
2019
£
2018
£
2,071,893
2,071,893
2,071,893
2,071,893
On 4 May 2018, the Company issued 125,000 ordinary shares at 10.375p each for a total consideration of £12,969.
The number of £0.01 ordinary shares issued in the year totalled nil (2018: 125,000).
In March 2020, the Company issued 173,150,892 ordinary shares at 6p each for a total consideration of £10,389,054.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019
21 SHARE PREMIUM ACCOUNT
At beginning and end of year
22 WARRANT RESERVES
Balance at 1 January 2018
Options lapsed
Options granted
Balance at 31 December 2019
2019
£
2018
£
31,289,915
31,289,915
£
653,446
(527,002)
209,295
335,739
The warrant reserve represents the fair value if share options and warrants granted, and not exercised or lapsed, in
accordance with the requirements of IFRS 2 Share Based Payments.
23 MERGER RESERVE
At beginning and end of year
2019
£
2018
£
10,209,673
10,209,673
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.
77
24 NON-CONTROLLING INTEREST
Non-controlling interest
2019
£
12,366
2018
£
–
The non-controlling interest arose from Eden Research Plc’s 50% share in TerpeneTech Limited (Ireland).
25 CONTINGENT LIABILITIES
In September 2015, the Company entered into a Collaboration and licence agreement with Invention Development
Management Company LLC (part of Intellectual Ventures, now called Xinova LLC). As part of this agreement, upon
successful completion of a number of different tasks, Xinova will be entitled to a payment which is calculated using
a percentage (3.17%) of the value of the Company at a future date. This has been accounted for as a cash-settled share-
based payment under IFRS 2.
An amount of £67,462, being the estimated fair value of the liability due to Xinova, was recognised during 2016 and included
as a non-current liability, as disclosed in note 18 to the accounts. It is not believed that the value of the services provided
by Xinova can be reliably measured, and so this amount was calculated based on the Company's market capitalisation at
31 December 2016, adjusted to reflect the percentage of work completed by Xinova at that date (10% of the 3.17%) based on
a pre-determined schedule of tasks.
No further charge was made during the year, or since 2016, in respect of services rendered by Xinova which would give rise
to a further payment becoming due.
The fair value of the liability has been reviewed at the balance sheet date and given the change in the Company's market
capitalisation, it is deemed that a further provision of £31,546 was required, bringing the overall liability to £99,008.
There is a possibility of further amounts being owed by the Company, the amounts of which are currently uncertain, and
therefore this matter is disclosed as a contingent liability.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
26 PROPERTY, PLANT & EQUIPMENT
Group and company
Cost
At 1 January and 31 December 2018
Recognition of right-of-use asset on initial application of IFRS 16
At 31 December 2019
Accumulated depreciation
At 1 January and 31 December 2018
Recognition of right-of-use asset on initial application of IFRS 16
Charge for the year
At 31 December 2019
Net book value
At 1 January and 31 December 2018
78
At 31 December 2019
Land and
buildings
£
Vehicles
£
–
78,668
78,668
–
26,223
13,111
39,334
Land and
buildings
£
–
39,334
–
35,865
35,865
–
4,483
8,966
13,449
Vehicles
£
–
22,416
At 31 December 2019, all property, plant & equipment was represented solely by right-of-use assets recognised in
accordance with the requirements of IFRS 16.
Leases – amounts recognised in profit or loss
The following amounts have been recognised in profit or loss for leases in which the Group is a lessee:
Interest on lease liabilities under IFRS 16
Operating lease expense under IAS 17
2019
£
7,053
–
7,053
Total
£
–
114,533
114,533
–
30,706
22,077
52,783
Total
£
–
61,750
2018
£
–
26,363
26,363
The group holds two leases, for a property and a vehicle. Both leases have fixed lease repayments and remaining terms of
3 years and 2 years respectively.
The incremental borrowing rate applied to lease liabilities recognised in the statement of financial position at the date of
initial application of IFRS 16 was 8.71%.
27 CAPITAL RISK MANAGEMENT
The Company is not subject to any externally imposed capital requirements.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 28 RELATED PARTY TRANSACTIONS
Disclosures required in respect of IAS 24 regarding remuneration of key management personnel are covered by the
disclosure of Directors' remuneration included within note 7.
Transactions with other related parties are set out below:
Group
During the year, Eden invoiced its associate, TerpeneTech (UK), £6,089 for R&D charges (2018: £112,540) and £nil for
royalties due (2018: £48,113).
Also, during the year Eden received £12,731 from TerpeneTech (UK) (2018: paid £11,440).
At the year end, a net amount of £122,661 was due from TerpeneTech (UK) (2018: £135,392). This amount is included within
Trade and Other Receivables.
During the year, TerpeneTech (UK) sold an intangible asset to TerpeneTech (Ireland) for £132,743.
Also, during the year, TerpeneTech (Ireland) invoiced TerpeneTech (UK) £247,304 (2018: £nil) for sales of geraniol and
incurred costs of £222,574 from TerpeneTech (UK) (2018: £nil).
At the year end, a net amount of £108,012 (2018: £nil) was due from TerpeneTech (Ireland) to TerpeneTech (UK).
Company
During the year, Eden invoiced its associate, TerpeneTech (UK), £6,089 for R&D charges (2018: £112,540) and £nil for
royalties due (2018: £48,113).
Also, during the year Eden received £12,731 from TerpeneTech (UK) (2018: paid £11,440).
79
At the year end, a net amount of £122,661 was due from TerpeneTech (UK) (2018: £135,392). This amount is included within
Trade and Other Receivables.
29 CASH FLOWS FROM OPERATING ACTIVITIES
Group
Loss for the year after tax
Adjustments for:
Taxation credited
Finance costs
Investment income
Depreciation of right-of-use assets
Amortisation and impairment of intangible assets
Share of associate’s losses
Equity settled share based payment expense
Movements in working capital:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash used by operations
2019
£
2018
£
(1,132,337)
(334,951)
(347,036)
81,563
(807)
22,078
496,732
41,001
209,295
(53,767)
(908,027)
357,351
(1,233,954)
(198,119)
23,581
(1,684)
–
429,871
14,137
85,372
192,158
149,114
(1,157,087)
(797,608)
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
29 CASH FLOWS FROM OPERATING ACTIVITIES CONTINUED
Company
Loss for the year after tax
Adjustments for:
Taxation credited
Finance costs
Investment income
Amortisation and impairment of intangible assets
Depreciation of right-of-use assets
Share of associates losses
Equity settled share based payment expense
Movements in working capital:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash used by operations
80
30 FINANCIAL RISK MANAGEMENT
Credit risk
Cash and cash equivalents
Trade receivables
2019
£
2018
£
(1,157,068)
(334,951)
(347,036)
81,563
(807)
496,732
22,078
41,001
209,295
(53,767)
(908,027)
382,082
(1,233,954)
2019
£
501,984
1,345,648
1,847,632
(198,119)
23,581
(1,684)
429,871
–
14,137
85,372
192,158
149,114
(1,157,087)
(797,608)
2018
£
2,478,740
515,279
2,994,019
The average credit period for sales of goods and services is 240 days. No interest is charged on overdue trade receivables.
At 31 December 2019 trade receivables of £523,967 (2018: £56,706) were past due. During the year the Company wrote off
bad debts in the amount of £nil (2018: £47,984).
Trade receivables of £1,002,763 (2018: £398,447) at the reporting date are held in Euros and £112,540 (2018: £112,656) were
held in USD.
The Group's policy is to recognise loss allowances for expected credit losses (ECLs) on financial assets measured at
amortised cost. The Group measures loss allowances for trade receivables at an amount equal to lifetime ECL. When
determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
estimating ECL, the Group 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 Group’s historical
experience and informed credit assessment and including forward-looking information.
The largest trade debtor at the year end is a well-established, profitable business and long-term customer of the Company
with whom Eden has had no issue of collecting debts due before and does not expect to have any going forward. In addition,
TerpeneTech (UK), Eden’s associate company, owed £122,761 net 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 debts 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.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 Financial liabilities
Trade payables
Other payables
Other taxes and social security
Lease liabilities
Accruals and deferred income
2019
£
870,563
168,246
26,399
22,812
283,380
1,371,400
2018
£
499,186
115,168
15,085
–
313,427
942,866
The carrying amount of trade payables approximates to fair value.
The average credit period on purchases of goods is 67 days. No interest is charged on trade payables. The Company has
policies in place to ensure that trade payables are paid within the credit timeframe or as otherwise agreed.
Maturity of financial liabilities
The maturity profile of the group’s financial liabilities at 31 December 2019 was as follows:-
In one year or less, or on demand
Over one year
2019
1,348,588
145,695
1,494,283
2018
875,404
67,462
942,866
81
Liquidity risk is managed by regular monitoring of the Company’s levels 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.
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. This is primarily due to the fact
that the majority of the Company’s income and cost of goods sold is in the same currency.
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 the Company does not rely on interest received from loans
or investments and does not have any borrowings, it is considered that any increase in interest rates would not have had an
impact on the Company’s loss before tax for the year.
COMPANY OVERVIEWANNUAL REPORT STATEMENTSGOVERNANCEFINANCIAL STATEMENTS Eden Research plc Financials 2019
30 FINANCIAL RISK MANAGEMENT CONTINUED
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
2019 and 31 December 2018.
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% (2018: 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.
31 POST BALANCE SHEET EVENTS
In January 2020, the Company signed a one year, exclusive Evaluation Agreement with Corteva Agriscience.
The agreement allows Corteva time to evaluate Eden's Sustaine™ encapsulation technology and several formulations in
specific biological seed treatment applications in certain major territories and, if successful, will lead to Corteva being
granted exclusive distribution rights.
82
In March 2020, the Company concluded a successful fund-raise raising a total of approximately £10.4 million (before
expenses) through the Placing, Subscription and Open Offer through the issue and allotment of 173,150,892 new Ordinary
Shares, bringing on Board new institutional shareholders, as well as providing existing shareholders with the ability to
partake in the same funding round.
COVID-19 has also occurred since the balance sheet date, though this is deemed to be a non-adjusting event.
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2019 COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS
A J Abrey
R J S Cridland
S M Smith
L J van der Broek
SECRETARY
A J Abrey
REGISTERED OFFICE
6 Priory Court
Priory Court Business Park
Poulton
Cirencester
Gloucestershire
GL7 5JB
REGISTERED NUMBER
03071324 (England and Wales)
INDEPENDENT AUDITOR
KPMG LLP
66 Queen Square
Bristol
BS1 4BE
BANKERS
The Royal Bank of Scotland Plc
Southern Corporate Office
P O Box 391
40 Islington High Street
London
N1 8JX
SOLICITORS
DAC Beachcroft LLP
100 Fetter Lane
London
EC4A 1BN
NOMAD AND STOCKBROKER
Cenkos Securities plc
6-8 Tokenhouse Yard
London
EC2R 7AS
83FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW E
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Eden Research plc
6 Priory Court
Priory Court Business Park
Poulton
Cirencester
Gloucestershire
GL7 5JB
www.edenresearch.com