EDEN RESEARCH PLC
ANNUAL REPORT 2020
SUSTAINABLE SOLUTIONS
FOR CROP PROTECTION,
ANIMAL HEALTH AND
CONSUMER PRODUCTS
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EDEN RESEARCH PLC IS AN AIM-QUOTED
COMPANY FOCUSED ON SUSTAINABLE
BIOPESTICIDES AND PLASTIC-FREE
ENCAPSULATION TECHNOLOGY FOR
USE IN GLOBAL CROP PROTECTION,
ANIMAL HEALTH AND CONSUMER
PRODUCTS INDUSTRIES.
Consumer
Products
Crop
Protection
Animal
Health
Find out more about our products on pages VI–IX
CONTENTS
Investment Case
COMPANY OVERVIEW
I
2020 Highlights
II At a Glance
IV
VI Our Products
X Our Markets
XII Our Business Model
XIV Our Strategy
Eden Research plc
Company Overview 2020
ANNUAL REPORT STATEMENTS
02 Chairman’s Statement
04 Chief Executive Officer’s Review
08 Strategic Report
GOVERNANCE
14 Board of Directors
18 Chairman’s Letter
20 Business Model and Strategy
22 The QCA Corporate Governance Code
28 Remuneration Report
32 Audit Committee Report
34 Directors’ Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
FINANCIAL STATEMENTS
40
46
47 Consolidated Statement of Financial Position
48 Company Statement of Financial Position
49 Consolidated Statement of Changes in Equity
50 Company Statement of Changes in Equity
51 Consolidated Statement of Cashflows
52 Company Statement of Cashflows
53 Notes to the Group Financial Statements
86 Company Information
See our website for the latest
information: www.edenresearch.com
I
2020 HIGHLIGHTS
£10.4m
Completion of a successful
fundraise of £10.4million
(gross) in March 2020
Relocation
of offices
and the opening of Eden’s
formulation, analytical and
biology laboratories at
Milton Park, Oxfordshire
Expansion
of the team
and in-house technical
expertise with the appointment
of a Regulatory Director and
Global Head of Biology
Revenue
£1.4m
-25%
Operating Loss
£2.2m
+65%
Product Sales
£1.1m
-22%
A one-year exclusive evaluation agreement was
signed with Corteva Agriscience – the world’s
largest “pure-play” agricultural company – to
evaluate seed treatment applications of Eden’s
Sustaine® technology treatments.
Organic approval in the EU for all three of Eden’s
terpene active ingredients thymol, eugenol
and geraniol.
First sales of bio-nematicide, Cedroz™,
in Mexico during 2020 and new regulatory
approvals for both Mevalone® (bio-fungicide)
and Cedroz™. The approval of Mevalone®
in Australia representing the first approval for
Eden’s products in the Southern Hemisphere.
Organic product certification of Mevalone® and
Cedroz™ in a number of EU territories, including
key countries France and Spain.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW II
AT A GLANCE
OUR VISION
TO BE THE LEADER IN
SUSTAINABLE BIOACTIVE
PRODUCTS ENABLED OR
ENHANCED BY OUR NOVEL
ENCAPSULATION AND
DELIVERY TECHNOLOGIES.
Eden is the only UK quoted company focused on
biopesticides for sustainable agriculture. We have two
proven products with multiple regulatory clearances
and strategic partnerships, Mevalone® and Cedroz™,
now commercially available.
Eden’s focus is on protecting high-value crops, improving
crop yields and marketability.
Our products are based upon natural chemistries and
deliver performance, ease of use, and cost on par with
conventional alternatives. Additionally, they have the added
benefit of being approved for use as organic inputs.
Eden has commercialised its first bio-fungicide product,
Mevalone®, on three continents and its first bio-nematicide
product, Cedroz™, on two continents.
Eden has partnered with Eastman Chemical for the
commercialisation of Cedroz™ in 29 countries.
OUR GEOGRAPHIC AND
REGULATORY FOOTPRINT
We now have commercial partners
in place across six continents and
product registration activities in around
30 countries. We are well-positioned to
leverage our commercial partnerships
as and when regulatory clearance is
granted by the relevant regulators
around the world.
For more information see pages X and XI
Our products are sold
in the top 3 wine
producing countries
16
Countries have granted
product authorisation
44
Crop use approvals for
Eden’s biopesticides
£14m
Invested in IP
and registration
110
Granted and
pending patents
6
Pests and disease targets
addressed with Eden’s
registered products
Eden Research plc
Company Overview 2020
III
WHERE WE ARE NOW
Product sales have commenced in key
markets where we have authorisation
to market and sell our first product,
Mevalone® and our second commercial
product, CedrozTM.
COMMERCIAL PARTNERSHIPS
AND REGULATORY ACTIVITY
Eden secured regulatory clearance for
its second product Cedroz™ in 2019.
We have trials on-going
in 6 continents. Both Mevalone®
and Cedroz™ are approved in
Spain – which produces 24% of
the EU’s fruit and vegetables
Product authorisation
have been granted in
16 countries
We are expanding and
developing our base of
commercial clients
and partners
Growing and
nurturing our
base of commercial
and development
partners
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW IV
INVESTMENT CASE
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
COMMERCIAL
DEVELOPMENT
Eden is now
resourced to support
accelerated new
product development
and growth
TECHNOLOGY
EXPLOITATION
Eden is poised for
exploitation of its core
technologies beyond
biopesticides and
crop protection
FOCUS ON
BIOLOGICAL
SOLUTIONS
Eden is the only UK
quoted company
with a focus on
biopesticides for the
crop protection market
REGULATORY
DRIVERS FOR
SUSTAINABLE
SOLUTIONS
Regulatory changes
are creating significant
growth opportunities
for Eden’s products
and technology
The EU Green Deal
has a target of 25%
organic agriculture
and 50% reduction in
chemical pesticides
Eden Research plc
Company Overview 2020
V
INCREASED
NUMBER OF
COMMERCIAL
PARTNERS
Eden is expanding
existing commercial
relationships and
is focused on the
establishment of
new partnerships
GROWING
PATENT
PORTFOLIO
110 patents enable
strong technological
defensibility. Two new
patents were granted
in the US during H1
and one in Australia,
post-period end
REVENUE
GROWTH
Eden has the
potential to generate
significant additional
revenue in the
medium term as new
authorisations are
received and existing
and new commercial
partnerships are
‘activated’ following
approvals
CORTEVA
AGREEMENT
This deal presents
new product
opportunities in the
seed treatment market
in a number of global
territories. Overall,
the seed treatment
sector is worth
$6.7billion globally
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW
VI
OUR PRODUCTS
INDUSTRY APPLICATIONS
We work globally through multi-national and local partnerships to develop and launch solutions for challenges facing three
key industries.
Consumer
products
Head-lice treatment
Deodorants
Odour neutralisers
Crop
Protection
Foliar disease & insect control
Animal
Health
Shampoos/Conditioners
Open field & greenhouses
Skin disease control
Soil pests
Otic flush
Fragrances
Post-harvest shelf-life extension
Flea & tick control
Seed treatments
$50+bn*
$33bn*
$51bn*
*Estimated addressable market size
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.
Sustaine® is a novel
microencapsulation solution
patented by Eden, suitable for
applications in a wide range of
agricultural, animal health and
consumer products
1
2
Cost effective, useful for
a wide range of active
ingredients, plastic-free, high
capacity, robust, sustainable
Sustaine® encapsulates
active ingredients and
provides for the sustained
release of these ingredients
enabling their safe, more
efficient use
3
Sustaine® particles are
derived from natural yeast
cells with the system
originally developed for use
in human health applications
Eden Research plc
Company Overview 2020
WE HAVE DEVELOPED A NATURAL,
PLASTIC-FREE FORMULATION
TECHNOLOGY – SUSTAINE®
Sustaine
microencapsulation
technology is derived
from yeast. Multiple active
ingredients can be loaded
into the core.
Active ingredients
are released while the
pores remain open in the
presence of water.
When diluted in water,
pores in the walls of
the capsule open.
If the capsules dry, the pores
will close again, locking in the
active ingredient until the next
re-wetting event, when further
release occurs.
VII
OUR PRODUCT FOCUS
Our focus is on 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.
OUR PRODUCTS
Our products give growers reduced risk, increased flexibility and security.
Exempt from
pesticide residue
limits
Allowed in EU
organic agriculture
Can be used up to
the point of harvest
Equally effective
vs conventional
chemistry
Organic crops command a higher value and have a significant commercial advantage in the valuable
export markets.
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
APPLICATIONS
FUNGICIDES
NEMATICIDES
INSECTICIDES
SEED TREATMENT
Botrytis, powdery mildew,
downy mildew
Root knot nematodes
Mites and whiteflies
Under Development
Under Development
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.
PRODUCT CHARACTERISTICS
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
Solvent-free, stable
formulations with
high loadings of
active ingredients
Protecting plants
from potentially
damaging chemicals
Polymer-free
formulation
technology
Low or no preharvest
intervals giving
growers flexibility,
security and control
‘Residue
free’
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW VIII
PRODUCTS IN ACTION
SUSTAINABLE CONTROL
Mevalone® is used as a preventative and
curative solution for Botrytis cinerea.
Terpene active ingredients, derived from
nature, mean the product has a favourable
environmental profile.
The multi-site mode of action means risk
of resistance is minimised.
Free from residue limits and with short
pre-harvest intervals, it provides growers
with maximum flexibility.
8%
The cost of control of Botrytis and
related species accounts for about 8 per
cent of the fungicide market worldwide.
FOOD WASTE SPOTLIGHT
Mevalone® is proven to be efficacious
against a number of other crop diseases,
including post-harvest storage diseases
on apples.
Used as a foliar spray in the weeks leading
up to harvest, it ensures that apples
enter storage free from pathogens,
which extends their shelf life and reduces
food waste.
Mevalone® previously received emergency
use authorisaton for use on apples in
France and now awaits full authorisation.
“THIS EMERGENCY USE IS ANOTHER
IMPORTANT OPPORTUNITY TO PROMOTE
MEVALONE® TO GROWERS AND TO
BETTER SERVE A MODERN AND EVOLVING
AGRICULTURE RESPONDING FULLY TO THE
NEEDS OF SOCIETY.”
Antoine Meyer – President of Sumi Agro
Eden Research plc
Company Overview 2020
Botrytis cinerea is one of
the most extensively studied
fungal pathogens and causes
“grey mold” rot in more than
500 plant species
$10-100
Billion
The annual economic
losses due to B. cinerea
28%
Estimated post-
harvest apple losses
caused by B. cinerea
50%
Potential B. cinerea
yield losses in
grape vines
TOP 3 EU APPLE PRODUCERS
22.9%
17.6%
17.0%
France
Poland
Italy
FRENCH EXPORTS
$433.6
Million
Of apples each year are
exported by France
EXPORT REGIONS
Normandy
Brittany
PACA Region
CURRENT GLOBAL FOOD WASTE
1.3bn
tonnes
Food wasted
around the
world
3,000
tonnes
Food wasted
every minute
globally
£19
billion
Value of edible
food wasted in
the UK every year
There is increasing consumer and regulatory pressure to cut out
the use of plastic in supply chains. Food production has faced
significant scrutiny due to its widespread use of plastics, from
farming to packaging.
In farming, microplastics are used for encapsulation or as
seed coatings to boost the performance of agricultural inputs,
including crop protection products. The direct application of
these products to the environment causes agriculture to be a
major contributor to microplastics pollution.
Sustaine® is one of the
only viable alternatives to
microplastics used in
these agricultural
products.
The majority of crops in Europe are grown in
open field, however, there is an increasing level
of investment in greenhouse and glasshouse
farming, especially for salad vegetables.
The use of greenhouses will help to reduce
emissions from the agriculture sector
which is considered a “hard to treat” area
of the carbon-cutting agenda. In addition,
the use of greenhouses cuts down on
the agricultural sector’s land use.
Being able to control conditions indoors
has proven to more than double yields in
some cases, reducing the consumption of
resources required to grow crops.
1
2
3
2
1
2
3
1
IX
SUSTAINABLE CONTROL
Sustaine® microcapsules are naturally
derived, biodegradable micro-spheres
produced from yeast extract.
The technology produces stabilised
aqueous emulsions which are easy to mix
and apply and have phased release patterns.
Sustaine® is used to encapsulate active
ingredients in Cedroz™ and Mevalone®
and is effective with other natural and
synthetic compounds.
Eden is engaged in a number of projects
around the world to test the compatibility
of Sustaine® with third party active
ingredients.
CHANGING REGULATION
Pressure is building to cut out the use of
microplastics in agriculture. A landmark
proposal from the European Chemicals Agency
(ECHA) will restrict the use of microplastics in
agricultural products as part of a wider ban on
the intentional use of plastics.
SCIENCE SPOTLIGHT
Cedroz™ is a water-based formulation which
utilizes Eden’s terpene technology to naturally
fight nematodes, a pest known to cause
severe damage to crops globally in both open
fields and greenhouses.
In line with consumer and regulatory
drivers for safer products, Cedroz™ is an
attractive alternative for farmers looking
to fight nematodes in an environmentally
friendly way.
Cedroz™ can be used on a wide range of
crops including tomatoes, strawberries,
cucumbers, courgettes, peppers, aubergines
and melons.
“IN CEDROZ™, WE HAVE DEVELOPED
A BIOPESTICIDE THAT MEETS THE
DEMANDS OF MODERN-DAY FARMING,
WHETHER THAT IS IN AN OPEN FIELD
OR GREENHOUSE ENVIRONMENT.”
Sean Smith – CEO of Eden
3
1
3
2
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW X
OUR MARKETS
SIGNIFICANT MARKET POTENTIAL
A GROWING GLOBAL MARKET
FOR SUSTAINABLE PRODUCTS.
Crop protection products formulated with
Sustaine® and Eden’s active ingredients
can help address many of these issues:
Consumer concerns
over food safety
EU restrictions on intentionally
added microplastics
Increasingly challenging
regulatory requirements
Farmers seeking
effective alternatives
Eden Research plc
Company Overview 2020
$11bn
The global biopesticides
market is projected to
be worth more than
$11billion by 2027
30%
of active ingredients in the
EU are at medium to high risk
of non-regulatory renewal
15%
The biopesticides market
is growing at a Compound
Annual Growth Rate (CAGR) of
approximately 15% per annum
$300m
Increasing time and cost
of bringing a single new
agrochemical product to
market: 10 to 12 years and
around $300 million
XI
CROP PROTECTION MARKET
The growth of biopesticides is
projected to outpace the demand
for synthetic chemical pesticides
in the coming years.
North America and the EU are
the two largest biopesticide
markets at this point in time.
Currently, 30% of all pesticide
sales in the EU are biopesticides
or biologicals.
The seed treatment market is
forecast to grow from USD 6.1
billion in 2016 to USD 11.3 billion
by 2022, a CAGR of 10.8% during
the forecast period.
PRODUCT COMMERCIALISATION
Product sales have commenced in key markets where we have
authorisation to market and sell our first two commercial products,
Mevalone® and Cedroz™.
Strong intellectual
property portfolio
Active engagement
with new partners
A demonstrated platform for
future product development
Growing market share
Regulatory approvals in a
growing list of key markets
Investment in research
and development
Numerous commercial
partnerships
Eden Research has new product registration applications in-process
in multiple new countries with initial approval received for its second
product, Cedroz™, in 2019.
SIGNIFICANT MARKET
OPPORTUNITIES
There is 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.
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€5.2bn
€1.9bn
€0.5bn
€0.6bn
Seed
Treatment
Insecticide
Cedroz™
Mevalone®
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW
XII
OUR BUSINESS MODEL
WHAT WE DO AND HOW WE DO IT
Developing our
product pipeline
Gaining regulatory
approval
Signing commercial
agreements
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.
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,
Kenya, Mexico and Australia.
We are in the process of
extending product registration
into new territories.
We work with our sector-leading
partners to commercialise
products through a range
of commercial production,
marketing and distribution
agreements.
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:
Product sales
Licence-based royalties
Up-front or milestone
payments from legacy
agreements
Eden Research plc
Company Overview 2020
XIII
THE VALUE THIS CREATES
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 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.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW XIV
OUR STRATEGY
We will address this by:
Pursuit of opportunities in the seed treatments market
Development of insecticides
Ongoing work with Elanco Animal Health to launch four new products
BUSINESS LINE
DIVERSIFICATION
Expand crops and diseases treated
Geographic diversification (seasonal and climate variation)
RESEARCH,
DEVELOPMENT
AND OPERATIONS
Supply chain optimisation
Expansion of in-house screening and field trials capability
Accelerate commercialization of Sustaine® for conventional actives
Regulatory clearance in new countries, crops and diseases
Accelerate Sustaine® business development
Partnerships for Mevalone® in new territories
COMMERCIAL GROWTH
Pursue collaboration with majors
STRENGTHENING AND
GROWING THE TEAM
Analytical & Formulation Chemistry Expertise
Regulatory Expertise
Biology Expertise
Eden Research plc
Company Overview 2020
XV
Key achievements in 2020:
New crops and diseases added to the Mevalone® label
Regulatory approval of Mevalone® in Australia
Crop trials ongoing for insecticides and seed treatments
Opening of biological, analytical and formulation laboratories
Expansion of in-house technical expertise
First sales of Cedroz™ in Mexico, Spain and Greece
Progression of seed treatment work. Further field trials and initial
regulatory steps
Successful field trials of third-party actives, encapsulated in
Sustaine® technology
Regulatory Director Appointed
Lab team strengthened – formulation, analytical and biology expertise
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW XVI
Eden Research plc
Annual Report Statements 2020
01
ANNUAL REPORT
STATEMENTS
02 Chairman’s Statement
04 Chief Executive Officer’s Review
08 Strategic Report
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 02
CHAIRMAN’S STATEMENT
“ IT GOES WITHOUT SAYING
THAT 2020 WAS AN UNUSUAL
AND CHALLENGING YEAR FOR
EVERYONE IN DIFFERENT WAYS.”
Lykele van der Broek – Non-Executive Chairman
INTRODUCTION
Clearly, the global COVID-19
pandemic has caused complex
and unforeseen issues for people
and businesses across the globe.
Challenges have arisen which have
required us all to adapt and adopt
new ways of working, enabling life
and work to continue as close to
normal as possible.
Eden has not been immune to the
challenges from the global COVID-19
pandemic. For example, we have seen
a number of limitations with our field
trials and some short-term delays in the
regulatory process and product approvals
globally as a result of logistical issues
associated with various lockdowns and
other restrictions worldwide.
However, we are proud of the fact that
Eden has made significant strides
forward in the past year, despite the
unprecedented backdrop we have
all faced. Indeed, we have seen the
continued commercialisation of our
products, the building of our financial
resilience, the development of our
operations and the strengthening of our
reputation as a growing and innovative
company aligned with the transition to a
more sustainable world.
We have also seen 2021 start as we mean
to go on, by signing a landmark distribution
agreement for our Sustaine® technology
with Corteva Agriscience, and receiving the
London Stock Exchange’s Green Economy
Mark in recognition of our contribution
to the global green economy. This focus
on Eden’s sustainable credentials will
continue throughout 2021 and beyond,
as investors are increasingly aware of
the environmental impact of their
investment decisions.
PRODUCTS AND TECHNOLOGY
Our development work has managed to
continue largely as hoped during 2020,
including Eden’s insecticide and seed
treatment products, as well as third party
active ingredients which use Eden’s
proprietary Sustaine® technology. We
look forward to sharing the results of our
work here during 2021 and beyond.
We have continued to expand our
global product footprint with
authorisation of Eden's bio-fungicide
Mevalone® in Australia, for use on both
wine and table grapes under the trade
name "Novellus"™, and of Cedroz™ in
Spain and France. Closer to home,
we announced a partnership with M
H Poskitt, a leading producer of root
vegetables in the UK, to develop and
trial a new bio-fungicide product. These
agreements are important steps in the
expansion and commercialisation of
Eden’s product base.
We have also been delighted to sign
our first commercial agreement for
seed treatment applications, which
grants exclusive distribution rights of
our proprietary product incorporating
our Sustaine® technology to Corteva
Sciences, the fourth largest agriculture
company in the world. We have high
hopes for the commercial potential for
this product area.
FUNDING
In March 2020, Eden concluded a
fundraise of £10.4 million (before
expenses), which saw several new
institutional investors joining the share
register. This funding provides Eden with
the financial resource to invest in the
development of its insecticide and seed
treatment products. It also represented
a significant achievement for Eden,
Eden Research plc
Annual Report Statements 2020
as the successful fundraise came just
as the effects of the global pandemic
were starting to be felt in the financial
markets. This demonstrated the strength
of Eden as an investment prospect.
OPERATIONS
Marking the beginning of a new chapter
in Eden’s growth story, 2020 has seen the
investment in our own laboratory facilities
alongside a new office. Relocating to the
new site at Milton Park in Oxfordshire,
one of Europe's leading science and
technology communities, means that we
are able to undertake development work
in-house for the first time, which allows
increased flexibility and efficiency.
As well as moving to new laboratory
facilities, we have seen the expansion
of the Eden team in 2020. Despite the
unique challenges of recruiting and
onboarding new members during a
pandemic, our new team members are
already making valuable contributions
to the expansion of Eden’s capabilities
and providing support to its existing and
potential customers.
MARKET OPPORTUNITY
Against a backdrop of seismic changes
across the global landscape, many
trends have remained consistent in
2020. Driven by changing consumer
habits and growing investor awareness
of environmental factors, the agricultural
industry has continued to adapt and find
new ways of growing food to feed larger
populations more sustainably.
03
30%
Crop protection products
sold in the EU are biopesticides
and biologicals
$11bn
The projected worth
of biopesticides market
by 2027
1/3
of all food grown is
either lost to pest and
disease or wasted
Eden is well positioned to capitalise on
this trend as its products and technologies
align closely with global demand for
plastic-free and sustainable crops. As
well as being first movers in the space,
Eden maintains an innovative and nimble
approach to its product and technological
developments which helps us foresee and
respond to fast changing dynamics.
From a standing start approximately
twenty years ago, the biopesticides portion
of the crop protection market currently
has a 15% compound annual growth rate
and is forecast to have a market value of
over $11 billion by 2027. Recognising this
considerable and growing market, Eden
has positioned itself to develop, register
and market sustainable, biopesticide
products based around its three Europe-
registered active ingredients.
Mevalone® and Cedroz™, Eden’s first
two products, boast high efficacy and
the added benefits of maximum residue
level exemption, short pre-harvest
intervals, competitive pricing, and
close alignment with the direction of
regulatory changes. Eden’s Sustaine®
microencapsulation technology offers an
effective solution to consumer concerns
around microplastics and consequently
has received considerable interest
from external parties, most recently
demonstrated through our landmark
agreement with Corteva, which is a
significant achievement for the company.
Microplastics have been a well-
publicised environmental cause for
campaigners in recent years. Public
pressure has led to policy changes and
the European Union has announced
its intention to publish new regulations
which could see a ban on the use of
polymers in certain industries, including
crop protection, where polymers
are widely used to formulate active
ingredients.
With global regulatory changes highly
likely, the crop protection industry will
need to adapt its practices quickly, but
has a history of being slow to implement
new processes. Following an increase
in the number of enquiries from major
players in the crop protection industry in
2020, Eden has seen first-hand evidence
of the industry’s focus on adapting new
practices swiftly.
LOOKING AHEAD
Having dealt with the unique
circumstances 2020 has presented
us with, Eden has moved into fiscal
2021 well-funded and well positioned
to achieve its mission to become a
leader in biopesticide products and
natural, plastic-free microencapsulation
technologies to the global crop
protection, animal health and consumer
products industries.
We have managed to manoeuvre our
way through the global pandemic
relatively unscathed and the future for
Eden looks promising, with exciting
developments in the pipeline.
The recently announced agreement
with Corteva is, of course, significant to
Eden and the seed treatment product
area is an exciting addition to the already
valuable, diverse portfolio of products
and applications that the business has
generated over the years.
The London Stock Exchange Green
Economy Mark demonstrates the
strength of Eden’s position as a
sustainable company at a time
when demonstrating environmental
credentials is a key priority and
distinction for any company.
I would like to thank our shareholders for
their on-going support and convey to you
my confidence in the Eden team and the
success they are working towards for
the business. There is still much more to
come which we look forward to sharing
with you in due course.
Lykele van der Broek
Non-Executive Chairman
29 June 2021
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 04
CHIEF EXECUTIVE OFFICER’S REVIEW
“ IT HAS BEEN AN UNPRECEDENTED
YEAR FOR BUSINESSES ACROSS THE
GLOBE AND EDEN HAS NOT BEEN
IMMUNE TO THE DISRUPTION CAUSED
BY THE COVID-19 PANDEMIC.”
Sean Smith – Chief Executive Officer
SECTION ONE: INTRODUCTION
However, we are extremely
proud of the resilience we have
demonstrated against this
exceptional backdrop and the
continued progress we have made
in advancing our strategy and
positioning in the rapidly growing
biopesticides market.
The financial year has seen us expand
our footprint, both geographically and
through new product development,
supported by the successful fund
raise delivered in March 2020. We are
also delighted to have signed a key
distribution agreement with Corteva
Agriscience in May 2021 for our first
seed treatment product which uses
Eden’s Sustaine® technology combined
with our plant-derived active ingredients,
which creates a solid commercial
foundation for our future work in the
new area of seed treatments. We
are also actively pursuing additional
opportunities in seed treatments.
We were also pleased to receive the
London Stock Exchange’s Green
Economy Mark in January 2021, which
recognises the role we are playing in
supporting the transition to a sustainable
world and highlights our credentials as a
sustainable investment opportunity on
the London market.
SECTION TWO:
DELIVERING ON OUR STRATEGY
Eden continues to be the only UK-quoted
company focused on biopesticides for
sustainable agriculture and we are well
positioned to capitalise on this rapidly
growing market, which is anticipated to
be worth $11 billion by 2027.
Our vision remains the same: To be
a global leader in sustainable crop
protection through the development of
bioactive products enabled or enhanced
by our novel encapsulation and delivery
technologies, making the most of the
significant market opportunity available.
In the near term, our strategic focus is on:
Registering and commercialising our
two approved products, Mevalone®
and Cedroz™ in new territories and for
new applications
Developing the use of our
microencapsulation technology,
Sustaine®, with new active
ingredients, including conventional
agrochemicals
Building on existing opportunities
with Corteva Agrisciences, Sipcam
and other collaborators
Advancing the development of our
first insecticide products
We continue to make significant
progress on these goals, supported by
our financial resources, which puts Eden
in a good position to capitalise on the
work we have done to date and move
forward with new commercial growth
opportunities.
Notable commercial and operational
highlights from 2020 include:
Inclusion of Eden’s three active
ingredients, geraniol, eugenol
and thymol, in the EU’s Organic
Production Regulation, opening the
door for the use of Eden’s formulated
product in organic agriculture in the EU.
Commencement of an evaluation
agreement with Corteva Agriscience
in the new area of seed treatments.
New authorisations for the use of
Mevalone® in a range of new uses.
Authorisation of Eden’s nematicide
formulation, Cedroz™, in Greece,
Spain, France, Italy and the
Netherlands.
The granting of patents for our
Sustaine® encapsulation technology
and compositions for insecticide
products, in both the US and Australia.
The new authorisation of our bio-
fungicide, marketed as Novellus,
in Australia.
The announcement of a partnership
with M H Poskitt, to develop and trial
a new bio-fungicide product derived
from a common weed and designed
to protect and improve the quality
of vegetables.
The opening up of Eden’s new
laboratory facilities in Milton
Park, Oxfordshire, allowing Eden
to undertake more in-house
development work, including new
product formulation, microbiological
screening, plant and seed evaluations
and analytical work.
The expansion of our team, through
the appointment of Dr. Michael
Carroll as Director of Regulatory
Affairs in April 2020 and Dr. Aoife
Dillon to the role of Head of Biology
in July 2020.
Eden Research plc
Annual Report Statements 2020
05
In May 2021, we were delighted to
sign an exclusive commercialisation,
supply and distribution agreement
with Corteva Agriscience, the fourth
largest agriculture inputs company in
the world. This agreement provides
Corteva with exclusive distribution
rights for Eden’s seed treatment product
based on Eden’s active ingredients and
Sustaine® encapsulation technology in
Europe, Serbia and the United Kingdom
and follows an evaluation in select seed
treatment applications. Over the coming
two years, Corteva and Eden will work
collaboratively to register, commercialise
and ultimately distribute new seed
treatments for at least one major crop,
and it is anticipated that this may be
expanded following initial success.
This agreement represents a major
commercial milestone for Eden as
it is intended to be the first revenue
generating use of Eden’s Sustaine®
containing products in the treatment
of seeds and provides us with the
opportunity to capture a significant
share of this market.
SECTION THREE:
FINANCIAL REVIEW
Revenue for the year decreased to £1.4m
(2019 restated: £1.8m) primarily due to
the reduction in one-off receipts to £nil
(2019: £0.3m).
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 not the case
in 2020 with product sales decreasing
to £1.1m (2019 restated: £1.4m) due to
impact of the global pandemic on wine
grape production.
The cash position at the year-end was
£7.3m (2019: £0.5m), following the
successful fundraise in March 2020 with
gross proceeds of £10.4m.
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 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.
Administrative expenses in the year
increased to £2.2m (2019: £1.5m)
with the introduction of new team
members and additional costs in
respect of the new office and laboratory
facilities. Consequently, operating loss
increased to £2.2m (2019: £1.4m). The
increase in operating loss is due to the
aforementioned reduction in one-off
receipts, increased staff costs, as well as
amortisation of £0.6m (2019: £0.5m) and
depreciation of £0.1m (2019: £nil).
Following a review of the carrying
value of the investment in TerpeneTech
(UK), Eden’s associate company, an
impairment of £0.3m has been made
(2019: £nil). For more details, please see
note 15 to the financial statements.
SECTION FOUR: 2021 OUTLOOK
The global pandemic continues to unfold
with some promising developments
relating to the vaccination of large
numbers across the developed world,
but the full impact on sales development
cannot be assessed reliably at this time.
We anticipate the potential for a negative
impact on demand for high-value crop
inputs, such as Eden’s products, to
persist through 2021. With the on-going
restrictions on travel, there may be an
impact on face to face business meetings
which could also impact revenue.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 06
CHIEF EXECUTIVE OFFICER’S REVIEW
CONTINUED
The COVID-19 pandemic will also
continue to slow the work rate of many
regulatory agencies which ultimately
control the commencement of new
revenues in this highly regulated
industry. As in previous years, the
growth of the addressable market for
our products is inextricably linked to new
regulatory authorisations, and therefore
COVID-related impacts on regulatory
approval processes will continue to
adversely affect Eden’s sales growth
until this situation is resolved.
However, in 2021 the Company expects
to build on the sales achieved in the
territories where it received approvals in
2020, such as Mevalone® in Australia,
Cedroz™ in Greece and Mexico as well as
the acceptance of Mevalone® and Cedroz™
for organic agriculture in key countries.
The rollout of Cedroz™ in multiple new
territories continues as a priority, which
will increase the geographical footprint
of product sales.
The Company currently anticipates
that the US EPA will approve the sale of
Mevalone® and Cedroz™ in the United
States during 2021. However, there is
little doubt that the current situation with
COVID-19 and the consequential shut-
down of certain government services,
coupled with a fundamentally changed
working dynamic, will have an adverse
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 2021 will depend
largely upon the timing of approvals
relative to the growing season.
SECTION FIVE:
DRIVING POSITIVE IMPACT
Eden received the London Stock Exchange
Green Economy Mark in January 2021,
highlighting our credentials as a business
that is focused on driving the transition
to a sustainable world. This accolade is
given to London-listed companies that
derive over 50% of their total annual
revenue from products and services that
contribute to the global green economy. It
is a significant accreditation for Eden and
a formal acknowledgement of our focus
on providing sustainable solutions to the
global agriculture industry.
Our portfolio of products helps farmers
to integrate greener practices for the
benefit of both consumers and the
wider agricultural ecosystem. Our
goal is to expand both our product
and geographical offering to support
growers in more regions through
the implementation of sustainable
processes in their production.
In addition, our patented
microencapsulation technology,
Sustaine®, provides an exciting
opportunity to address the rising
presence of microplastics across the
globe, including soil, water and plant
and animal tissues.
Sustaine® microcapsules are naturally
sourced, plastic-free, biodegradable
micro-spheres derived from yeast
extract, which enables farmers to deliver
a wide range of crop protection products,
without releasing microplastics into
the environment.
This technology has potential application
beyond agriculture and we are continuing
to assess how Sustaine® can be applied
to the animal and consumer product
sector to help these industries reduce
their use of microplastics.
BREXIT
The impact of Brexit is still being
understood by many UK companies,
including Eden.
The Company’s ownership of its
EU approvals of Mevalone® and its
constituent active substances appears
to be unaffected by Brexit, since
guidance was published stating that the
owner of such approvals can continue to
be a UK resident company.
We know that seeking regulatory approval
in the UK for Eden products has become
somewhat more challenging, and the
Company is weighing up market
opportunities and costs post-Brexit. We
are now well-placed to navigate what are
likely to be dynamic and complex
regulatory challenges. From an operational
perspective, the Company has not seen
any significant issues with the Company
benefitting from having toll-manufacturing
facilities in mainland Europe, though it
continues to monitor this situation.
The Company also has manufacturing
capabilities in the UK as well as the
US which provide some flexibility. Raw
materials are currently sourced from
outside of the EU and there has been
minimal impact on this part of the
supply chain.
COVID-19
This has been an exceptionally
challenging time for the agriculture
industry, and a united effort is required
to ensure that the provision of fresh food
and produce is not disrupted, whilst the
COVID-19 pandemic continues.
Eden is committed to continuing to
provide its products and technologies
to the global crop production industry
through its global partnership network.
At the onset of the pandemic in March
2020, there was no direct operational
impact for Eden, and our stakeholders
were reassured by our strengthened
balance sheet, following our March
2020 fundraising.
Mild levels of disruption were
experienced as the pandemic unfolded,
including import and export activities,
limitation on field trial capacity due
to reduced workforces, and limited
promotional activity. Some regulatory
authorities were working at reduced
capacity and we experienced delayed
product approvals as a result. However,
we continued to make progress with
new authorisations from late May 2020
onwards. We have also been able to
execute on some key operational plans
such as opening our new facilities in
Oxfordshire and making key hires.
Our position on the COVID-19 pandemic
remains as follows:
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. This “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 towards becoming a leading
provider of sustainable solutions
for global agriculture. Though the
Eden Research plc
Annual Report Statements 2020
07
coming months will continue to
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
outsourced 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 soared for food supply
during the lockdown periods across the
UK and beyond, the agriculture industry
has played a vital role 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 seeks to position
itself 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 their
business of supplying our products
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, where
practicable. I want to thank our partners
and, of course, the farmers who cannot
carry out their work remotely and who
are working hard each day to ensure that
we have enough to eat now and in the
future. Their work cannot stop, and we
are grateful now more than ever for all
that they do to feed us.
TerpeneTech (Ireland) remains, for the
time being, as registration owner, but
agent to TerpeneTech (UK) who still acts
as the principal in the business of the
TerpeneTech companies.
Further details can be found in note 35.
DIVIDENDS
There is no dividend to be paid or
proposed in respect of 2020. The Board
continues to monitor its dividend policy.
TERPENETECH (UK)
TerpeneTech (UK) secured a CE mark
for its head-lice treatment product
in European Economic Area ("EEA")
in 2018, which is the first step in the
marketing and sales of such products.
TerpeneTech (UK) 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
2021, having been delayed by the global
pandemic with school children having
been absent from school and demand
for head-lice treatment products
reduced accordingly.
Sales of the head-lice treatment product
are expected to commence in other
countries around the world in 2021 with
TerpeneTech (UK) expected to sign
an agreement with a new distribution
partner later this year.
Sales of geraniol into the biocide sector
have continued to increase year on
year and TerpeneTech (UK) is now
investigating the potential to register
additional active ingredients under the
EU’s biocide directive.
TERPENETECH (IRELAND)
In 2019, TerpeneTech (Ireland) was
established in order to own the
registration of geraniol under the
EU’s Biocidal Products Registration
regulation, due to changes brought
about by Brexit. The intention was
for TerpeneTech (Ireland) to become
the principal party, with TerpeneTech
(UK) acting as its agent in the geraniol
product sale business. This transition
has not yet occurred and, as such,
SECTION SIX: SUMMARY
Eden continues to deliver on its strategic
objectives against an uncertain global
economic backdrop. We are pleased with
the progress we have made this last year
and are moving ahead with a growing
product portfolio and partnership
network, and an expanding regulatory
and commercial footprint. Through
challenging times, we have built a team
that I am most proud of and a set of in-
house capabilities that the Company has
lacked previously.
In the year ahead, we will look to build
on these firm new foundations through
gaining additional product approvals
in key territories, increasing sales of
our existing products and continuing
development work apace in new areas
of application, working in partnership
with an expanded range of collaboration
partners, including some of the world’s
leading agricultural input companies.
I remain extremely proud of the work
Eden is doing in contributing to more
sustainable agricultural practices
globally and I would like to take this
opportunity to say thank you to the
team for the incredible things they
have achieved this year, against an
unprecedented backdrop. As we look
to fiscal 2021 and beyond, we remain
focused on building a strong and
sustainable future for our business,
our products, and all our stakeholders,
including our shareholders.
Sean Smith
Chief Executive Officer
29 June 2021
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 08
STRATEGIC REPORT
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 (UK),
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 2020 consisted of royalties
and product sales. Revenue in 2020 was
£1.4 million in comparison to £1.8 million
in 2019 (restated). The operating loss
for the year was £2.2 million compared
to £1.4 million for the previous year. The
loss before tax for 2020 was £2.5 million,
up from £1.5 million in the previous year.
More information on the drivers behind
the performance is included in the Chief
Executive Officer’s Report.
The loss per share for 2020 was
0.66 pence (2019 (restated): 0.55 pence).
Administrative expenses for the year
were £2.2 million (2019: £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 £1.6m
(2019: £0.9m) of development
expenditure in the year which is a
reflection of the continued development
of the Company's products.
An impairment review of Eden’s
investment in its associate company,
TerpeneTech (UK), has led to an
amount of £0.3m being written off in
the year. Further details of this review
can be found in note 15 to the financial
statements.
Cash is safeguarded by close working
capital management, including tightly
controlling the Company's creditor
position. The cash position at the year-
end was £7.3m (2019: £0.5m) 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 on-going registrations of the
Company's first product, Mevalone®,
for use as a pesticide 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 a number of key
countries whilst Eden and its partners
pursue regulatory clearance in new
territories, thereby seeking to grow
Eden's addressable market globally.
Eden’s second product, Cedroz™, is
a nematicide which is registered for
sale on two continents and Eden's
commercial collaborator, Eastman
Chemical, is pursuing registration and
commercialisation of this important new
product in numerous countries globally.
Eden Research plc
Annual Report Statements 2020
09
Revenue in 2020
£1.4m
(2019: £1.8m – restated)
Operating loss for 2020
Loss before tax for 2020
£2.2m
(2019: £1.4m)
£2.5m
(2019: £1.5m)
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.
Regulatory authorities are working at
reduced capacity, which is expected
to impact on-going product approval
applications 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.
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.
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
The Board has seen some impact on
the operations of the business with the
restrictions on employees’ ability to work
at the Company’s offices and laboratory
facilities in addition to the restrictions
on travel which make logistics in terms
of conducting field trials and attending
marketing events problematic.
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.
Commercially, there has been some
negative impact on the sales of our
products due to the reduction in demand
for wine grapes, a knock-on effect of the
substantive closure of the hospitality
industry.
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.
The Company has not seen a
significant change, thus far, on its toll
manufacturing operations.
The Company has been careful to
manage its cost-base and cash
position given the general uncertainties
that currently exist due to the global
COVID-19 pandemic.
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.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 10
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 environment by getting involved
in local initiatives and also looks 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.
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:
workforce
shareholders
customers
regulators
Eden’s core values, which are
professionalism, integrity, effectiveness
and dynamism, 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.
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 review the 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 arranging social
occasions to promote the well-being and
connectivity of the team.
Eden Research plc
Annual Report Statements 2020
11
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 ensures that
it acts fairly with regard to members
of the company. We have productive
ongoing dialogue with a number of our
investors. We are also 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 and
other investors, research analysts,
market commentators and advisors
to understand shareholder views and
address any concerns.
CUSTOMERS
The commercial team at Eden is in
regular contact with our customers 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
emails or video or phone conferences,
which allow for an on-going dialogue
with the objective of reducing any
potential issues or concerns. A project
management system is operated by
Eden to ensure that all customers are
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 promote
an efficient and successful relationship.
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 promote
the long-term success of the business
through the approval of product
marketing authorisations. The regulatory
team also keeps itself up to date on
regulatory matters through training
and relevant publications.
On behalf of the board:
Sean Smith
Director
29 June 2021
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 12
Eden Research plc
Governance 2020
New image to be placed
New image to be placed
13
GOVERNANCE
14 Board of Directors
18 Chairman’s Letter
20 Business Model and Strategy
22 The QCA Corporate Governance Code
28 Remuneration Report
32 Audit Committee Report
34 Directors’ Report
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 14
BOARD OF DIRECTORS
LEADING THE WAY,
IN ACHIEVING
SUCCESSFUL
BUSINESS GROWTH.
Eden Research plc
Governance 2020
Lykele van der Broek
Non-Executive Chairman
Appointed
October 2017 (Board)
January 2018 (Chairman)
Independent
Yes
Full-time (FT) or part-time (PT)
PT – 10 days per year
Background and experience
Lykele retired as a Member of the Board
of Management of Bayer CropScience,
a division of Bayer AG, in 2014, being
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.
Committee membership
AIM Compliance Committee
(Chairman)
Nominations Committee (Chairman)
Remuneration Committee (Chairman)
Audit Committee
External appointments
Genus plc (Non-Executive Director)
15
Sean Smith
Chief Executive Officer
Alex Abrey
Chief Financial Officer
Robin Cridland
Non-Executive Director
Appointed
September 2014
Independent
No
Appointed
September 2007
Independent
No
Appointed
May 2015
Independent
Yes
Full-time (FT) or part-time (PT)
Full-time (FT) or part-time (PT)
Full-time (FT) or part-time (PT)
FT
FT
PT – 10 days per year
Background and experience
Background and experience
Background and experience
Sean has a bachelor’s 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 commercialisation through
licensing and company formation
working with Intellectual Ventures and
several start-ups.
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
nineteen years’ experience in both
practice and industry.
Rob served as Chief Financial Officer
and Company Secretary of Itaconix plc
until the end of August 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
Committee membership
Committee membership
None
None
Audit Committee (Chairman)
Nominations Committee
AIM Compliance Committee
Remuneration Committee
External appointments
None
External appointments
Ricewood Ltd (Director)
External appointments
None
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 16
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 financial plans.
The scheduled Board and Committee meetings and attendance during the year ended 31 December 2020 were as follows:
Director
Role
A Abrey
Chief Financial Officer
R Cridland
Non-Executive Director
S Smith
Chief Executive Officer
L van der Broek
Non-Executive Chairman
Board
(10 meetings)
AIM
Compliance
(1 meeting)
Remuneration
& Nominations
(3 meetings)
Audit
(4 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 Certified
Chartered 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 Association of Chartered Accountants.
Sean Smith has 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.
BOARD SKILL-SET
Product supply
chain and
management
Intellectual
Property
Chemicals
Industry
General
management
Other public
Company
(Board level)
Funding
Director
A Abrey
R Cridland
S Smith
L van der Broek
Eden Research plc
Governance 2020
17
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
Auditor
Audits the Report and Accounts of the Company
Regulatory lawyer
Provides advice on regulatory aspects of the business
THE BOARD’S ROLE
The Board, under the Chairman’s leadership, is responsible for ensuring our long-term success.
It informs and approves our strategy and corporate goals and monitors our performance against them. It determines that we
have the necessary resources, systems and controls to achieve our objectives, and assesses the culture and standards of
behaviour throughout Eden.
The Board is also responsible for other critical decisions, including approving strategy, medium term plans and corporate
budgets; ensuring we have the right funding; approving material contracts and other third party arrangements; and reporting to
shareholders.
The Directors believe that the Board, taken as a whole, has sufficient expertise and a variety of complementary skills for the
Company to operate and develop its business satisfactorily for the benefit of the shareholders over the medium to long-term.
As the Company grows, the Board will inevitably grow, which will provide an opportunity for the gender imbalance that the Board
currently has, to be addressed.
INTERNAL ADVISORS
The Company Secretary is the only internal advisor that the Company currently has.
The Company Secretary is responsible for the efficient administration of Eden, particularly with regard to ensuring compliance
with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 18
CHAIRMAN’S LETTER
“ 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
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.
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
on 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.
Eden Research plc
Governance 2020
19
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
The Board demonstrates ethical
leadership and displays the behaviours it
expects from others and communicates
what it considers to be acceptable
business practice, and it considers
appropriate behaviours when setting
strategy and financial targets.
expected behaviours widely and clearly
across the company and ensures that
they are understood by the workforce.
Management also encourages suppliers
to meet the expected standards of
behaviour.
Values and expected
behaviours include:-
Honesty
Openness
Transparency
Respect
Adaptability
Reliability
Recognition
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 and
appropriate risk-taking and management
consistently communicates values and
Acceptance of challenge
(if applicable) and employees
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.
Areas including human resources,
audit and 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
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 20
BUSINESS MODEL AND STRATEGY
The Company’s business model can be found on the Company’s website www.edenresearch.com and on page XII of the
Company Overview section, at the front of the Annual Report.
KEY CHALLENGES
Our vision is to be the leader in sustainable bioactive products enabled or enhanced by our novel encapsulation and delivery
technologies, 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 expand commercialisation
of our 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
Eden Research plc
Governance 2020
21
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 22
THE QCA CORPORATE GOVERNANCE CODE
1
2
3
4
5
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.
This page contains links to the required compliance
documents and published disclosures which explain how
Eden Research ‘complies with or explains against’ the code.
This information is reviewed annually: Last review date
29 June 2021.
Eden Research plc
Governance 2020
PUBLISHED DISCLOSURES:
Principle
No.
Principle
Establish a strategy
and business model
which promote
long-term value for
shareholders
Location of
disclosure
ANNUAL
REPORT
& ACCOUNTS
See page XII
WEBSITE
Disclosure Detail Required
Disclosure
status
Explanation
Link
DISCLOSURE: Explain the company’s business model
The Company seeks to keep its
Business
and strategy, including key challenges in their execution
Compliant
strategy consistent with its purpose
model and
(and how those will be addressed).
and values and its responsibilities
strategy
for long-term success and to
contribute to wider society.
Seek to understand
and meet shareholder
needs and
expectations
ANNUAL
REPORT
& ACCOUNTS
WEBSITE
DISCLOSURE: Explain the ways in which the company
The CEO + CFO communicate
seeks to engage with shareholders and how successful
Compliant
regularly with shareholders,
Shareholder
engagement
this has been.
This should include information on those responsible for
shareholder liaison or specification of the point of contact
for such matters.
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.
WEBSITE
DISCLOSURE: Explain how the business model
The Board has identified the main
Stakeholder
identifies the key resources and relationships on which
Compliant
stakeholders in the business and
engagement
Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
the business relies.
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 employees,
and social
suppliers and customers and others
responsibility
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.
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
ANNUAL
REPORT &
ACCOUNTS
See page 9
WEBSITE
Maintain the board
as a well-functioning,
balanced team led by
the chair
ANNUAL
REPORT &
ACCOUNTS
See pages
14–17
WEBSITE
DISCLOSURE: Describe how the board has embedded
Both the Board and Audit Committee
Effective risk
effective risk management in order to execute and
Compliant
regularly review risks, including new
management
deliver strategy.
This should include a description of what the board does to
identify, assess and manage risk and how it gets assurance
Whilst the Board is responsible
that the risk management and related control systems in
place are effective.
threats and the processes to mitigate
and contain them.
for risk, our culture seeks to
encourage all colleagues to
manage risk effectively.
DISCLOSURE: Identify those directors who are considered
The Board works well together as
Board
to be independent; where there are grounds to question the
Compliant
a team.
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
independence of a director, through length of service or
otherwise, this must be explained.
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.
PUBLISHED DISCLOSURES:
Principle
No.
1
Principle
Establish a strategy
and business model
which promote
long-term value for
shareholders
Location of
disclosure
ANNUAL
REPORT
& ACCOUNTS
See page XII
WEBSITE
2
Seek to understand
ANNUAL
and meet shareholder
REPORT
needs and
expectations
& ACCOUNTS
WEBSITE
3
Take into account
WEBSITE
wider stakeholder and
social responsibilities
and their implications
for long-term success
4
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
ANNUAL
REPORT &
ACCOUNTS
See page 9
WEBSITE
5
Maintain the board
as a well-functioning,
balanced team led by
the chair
ANNUAL
REPORT &
ACCOUNTS
See pages
14–17
WEBSITE
23
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
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.
Link
Business
model and
strategy
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).
DISCLOSURE: Describe how the board has embedded
effective risk management in order to execute and
deliver strategy.
Compliant
Shareholder
engagement
Stakeholder
engagement
and social
responsibility
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 employees,
suppliers and customers 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.
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 independent; where there are grounds to question the
independence of a director, through length of service or
otherwise, this must be explained.
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.
Whilst the Board is responsible
for risk, our culture seeks to
encourage all colleagues to
manage risk effectively.
Compliant
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
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 24
THE QCA CORPORATE GOVERNANCE CODE
CONTINUED
Principle
No.
Principle
Ensure that between
them the directors
have the necessary
up-to-date experience,
skills and capabilities
Evaluate board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
6
7
8
Location of
disclosure
ANNUAL
REPORT &
ACCOUNTS
See pages
14–17
WEBSITE
Disclosure Detail Required
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.
Disclosure
status
Explanation
Link
We assess adequacy of the Boards
Professional
Compliant
collective skills and experience and
development and
Directors individual development
training
needs are discussed annually with
the Chairman.
WEBSITE
DISCLOSURE: Include a high-level explanation of the board performance
effectiveness process.
The Board regularly considers the
Board performance
Compliant
effectiveness and relevance of its
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.
contributions. Any learning and
development needs are reviewed
and continual improvement
implemented.
Promote a corporate
culture that is based
on ethical values and
behaviours
ANNUAL
REPORT &
ACCOUNTS
See
Chairman’s
Letter on
pages 18
and 19
WEBSITE
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.
The Board sets the framework of
Corporate culture
Compliant
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.
Eden Research plc
Governance 2020
25
Principle
Disclosure Detail Required
Principle
No.
6
Ensure that between
them the directors
have the necessary
up-to-date experience,
skills and capabilities
Location of
disclosure
ANNUAL
REPORT &
ACCOUNTS
See pages
14–17
WEBSITE
Disclosure
status
Compliant
Explanation
Link
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
7
WEBSITE
DISCLOSURE: Include a high-level explanation of the board performance
Evaluate board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
Compliant
The Board regularly considers the
effectiveness and relevance of its
contributions. Any learning and
development needs are reviewed
and continual improvement
implemented.
Board performance
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.
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 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.
8
Promote a corporate
ANNUAL
DISCLOSURE: Include in the chair’s corporate governance statement how the
culture that is based
REPORT &
culture is consistent with the company’s objectives, strategy and business
on ethical values and
ACCOUNTS
model in the strategic report and with the description of principal risks and
behaviours
uncertainties.
Chairman’s
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
See
Letter on
pages 18
and 19
at present.
DISCLOSURE: Explain how the board ensures that the company has the means
WEBSITE
to determine that ethical values and behaviours are recognised and respected.
Corporate culture
Compliant
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.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 26
THE QCA CORPORATE GOVERNANCE CODE
CONTINUED
Principle
No.
Principle
Location of
disclosure
WEBSITE
Maintain governance
structures and
processes that
are fit for purpose
and support good
decision-making by
the board
9
10
Communicate how the
company is governed
and is performing by
maintaining a dialogue
with shareholders
and other relevant
stakeholders
ANNUAL
REPORT &
ACCOUNTS
WEBSITE
Disclosure Detail Required
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.
DISCLOSURE: Describe the work of any board committees undertaken
during the year.
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
WEBSITE DISCLOSURE: Disclose the outcomes of all votes in a clear and
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.
Disclosure
status
Explanation
Link
The Board is responsible for
Corporate governance
Compliant
the companies overall strategic
structure
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 companies
operations.
The Investors section of our
Compliant
website includes our results,
presentations and communications
to shareholders. We release the
results of general meetings through
Audit committee
terms of reference
Audit committee
report
a regulatory news services and also
Remuneration
on the Regulatory News Section of
committee report
our website.
Remuneration
committee terms of
reference
AGM Voting outcomes
Annual reports
Notices of general
meetings
Eden Research plc
Governance 2020
27
Principle
Disclosure Detail Required
Location of
disclosure
Principle
No.
9
Maintain governance
WEBSITE
DISCLOSURE: In addition to the high level explanation of the application of
structures and
processes that
are fit for purpose
and support good
decision-making by
the board
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.
10
Communicate how the
ANNUAL
DISCLOSURE: Describe the work of any board committees undertaken
company is governed
REPORT &
during the year.
and is performing by
ACCOUNTS
maintaining a dialogue
with shareholders
and other relevant
stakeholders
Include an audit committee report (or equivalent report if such committee is
WEBSITE
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
WEBSITE DISCLOSURE: Disclose the outcomes of all votes in a clear and
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.
Disclosure
status
Compliant
Explanation
Link
Corporate governance
structure
The Board is responsible for
the companies 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 companies
operations.
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.
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
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 28
REMUNERATION REPORT
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 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.
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 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.
The Target bonus levels are a percentage
of salary.
The Target 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
revenue, contribution and profit
earned.
As the business matures, the balance
between deal value, other commercial
milestones and revenue / contribution
/ profit is expected to transition in
weighting (i.e. from deals through other
milestones towards profit).
Eden Research plc
Governance 2020
29
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.
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 were
made annually subject to continued
service and challenging performance
conditions over a three year period. The
performance conditions were reviewed
on an annual basis to ensure they
remain appropriate and were based on
increasing shareholder value. Awards
were 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
conditions 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
2020
£
2019
£
235,000
211,500
180,000
165,000
41,667
36,665
40,000
35,000
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 30
REMUNERATION REPORT CONTINUED
The Company also operates an annual,
discretionary cash bonus scheme for the
Executive Directors only.
For 2020, the target bonus levels and
actual bonus achieved for Executive
Directors were:
Sean Smith
Alex Abrey
70% of base salary,
achieved 49.0%, (2019:
70% of base salary,
achieved 28.9%)
70% of base salary,
achieved 49.0%, (2019:
70% of base salary,
achieved 28.9%)
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, 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 shown 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.
Non-Executive Directors have Letters of
Appointment which are terminable by
the Director or the Company with three
months’ notice.
Share option scheme grants
LTIP awards are in respect of
management performance for each
financial year ending 31 December.
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.
Eden Research plc
Governance 2020
31
A Abrey
Year
2016
2017
2018
S Smith
Year
2016
2017
2018
Number of shares
under option
960,000
1,093,333
1,333,333
Vesting date
30/9/2020
30/6/2021
30/6/2022
Minimum
weighted average
share price (p)
Maximum
weighted average
share price (p)
24
23
25
36
34.5
37.5
Number of shares
under option
1,148,000
1,775,556
1,688,889
Vesting date
30/9/2020
30/6/2021
30/6/2022
Minimum
weighted average
share price (p)
Maximum
weighted average
share price (p)
24
23
25
36
34.5
37.5
At 31 December 2020, the directors had the following interests in share option schemes:
Date from which
exercisable
Expiry Date
Exercise
price £
Number at
1 January
2020
Granted in
year
Exercised in
year
Lapsed in
year
A J Abrey
17/01/2016
16/01/2021
0.13
1,050,000
30/09/2020
29/09/2027
30/06/2021
29/06/2029
30/06/2022
29/06/2029
S M Smith
30/09/2020
29/09/2027
30/06/2021
29/06/2029
30/06/2022
29/06/2029
Nil
Nil
Nil
Nil
Nil
Nil
960,000
1,093,333
1,333,333
4,436,666
1,148,000
1,775,556
1,688,889
4,612,445
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number
at 31
December
2020
1,050,000
960,000
1,093,333
1,333,333
4,436,666
1,148,000
1,775,556
1,688,889
4,612,445
LTIP option awards in respect of the
years ended 31 December 2019 and
31 December 2020 were made in
April 2021, linked to the fundraise in
March 2020. At this time, the Company
implemented a new long term incentive
plan to award the performance of the
executive management team. The
new plan has replaced the Company’s
previous 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 has granted options over
10.5 million new Ordinary Shares, at a
strike price of 6p each, in the amounts
of 6 million awarded to Sean Smith
and 4.5 million awarded to Alex Abrey.
The options 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 shares arising from exercise of
options are subject to a one-year lock-
in restriction, followed by a one-year
orderly market restriction.
Lykele van der Broek
Remuneration Committee Chairman
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 32
AUDIT COMMITTEE REPORT
INTRODUCTION
On behalf of the Audit Committee,
I 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;
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 requirement
for and activities of (as applicable)
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
pages 14 and 15. The Audit Committee
met four 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 2020.
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
Going Concern
Potential impairment of intangible
assets including intellectual property
and investments
Management override of controls
Other areas reviewed in the year were
as follows:
Consolidation
Share based payments
Accruals and provisions
Related party transactions
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.
External audit
KPMG LLP has been the external
auditor for the Company since 2018.
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 2020 financial year.
AUDITOR 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 Audit Committee’s
assessment of the effectiveness
and quality of the audit process and
addressing these key risks is formed
by, amongst other things, the reporting
Eden Research plc
Governance 2020
33
As a result of this review a prior year
adjustment to revenue and cost of sales
was identified (see note 35). There was
no impact on the reported net loss for
the prior year and no impact on the
prior year Balance Sheet or Cashflow
Statement. In addition, the Directors
have provided enhanced disclosures in
the notes to the accounts.
When reviewing the Company’s 2019
Annual Report and Accounts, the FRC
has made clear to us the limitations of
its review as follows:
its review is based on the 2019
Annual Report and Accounts only
and does not benefit from a detailed
knowledge of the Group’s business
or an understanding of the underlying
transactions entered into;
communications from the FRC
provide no assurance that the
Company’s 2019 Annual Report and
Accounts are correct in all material
respects and are made on the
basis that the FRC (and its officers,
employees and agents) accepts no
liability for reliance on them by the
Company or any third party, including
but not limited to investors and
shareholders; and
the FRC’s role is not to verify
information provided but to
consider compliance with reporting
requirements.
The Committee reviewed the disclosures
and amendments proposed by
management and concluded that they
are appropriate.
Robin Cridland
Audit Committee Chairman
from the auditors. In addition, each
year, the Audit Committee assesses its
performance and the effectiveness of
the external auditor in liaison with the
Chief Financial Officer. The Committee
was satisfied with the review process,
the performance of the Committee and
the effectiveness of the external audit.
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.
OTHER ACTIVITIES
In respect of 2020, and as part of a
continuous process, the Committee
assessed the clarity of the financial
statements and the need for changes
in presentation to enable and assist
understanding of users of the accounts
as the operations of the Group continue
to evolve. Following this consideration,
certain changes have been made in
the current year, including changes
in comparative figures, to enhance
presentation, as further explained in the
financial statements (see note 1.1).
During the year, the Committee also
worked to its rolling agenda, reviewing
areas such as Treasury policy, Directors’
expenses, Disclosures Report, Review
of Significant Transactions and Financial
Reporting Manual and also undertook
a review of the Company’s insurance
policies, ensuring relevant, adequate
coverage of various risks was in place. It
also updated its non-audit services policy
with respect to the external auditor.
ENVIRONMENTAL IMPACT
The Company is currently reviewing
its Environmental, Sustainable and
Corporate Governance (“ESG”)
credentials with external advisors.
In part, the aim of the review is to better
understand the impact that Eden,
including its supply chain partners, has
on the environment.
For the 2020 financial year end, there
was no non-audit work undertaken by
the Company’s auditors.
It is expected that this review and its
findings will be completed by the end
of 2021.
INTERNAL AUDIT
Due to the size of the business, the
Company does not 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.
FINANCIAL REPORTING
COUNCIL (“FRC”) REVIEW
In March 2021, the Company received
a request for information from the
Corporate Reporting Review team at the
Financial Reporting Council regarding a
number of transactions and disclosures
relating to TerpeneTech (UK)
and TerpeneTech (Ireland), as reported in
the 2019 Report and Accounts.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 34
DIRECTORS’ REPORT
The directors present their annual report and financial statements for the year ended 31 December 2020.
RESULTS AND DIVIDENDS
The loss for the year after taxation amounted to £2,263,024 (2019: £1,132,337). The directors are unable to recommend
any dividend.
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 who held office during the year and up to the date of signature of the financial statements were as follows:
A Abrey
R Cridland
S Smith
L Van der Broek
CORPORATE GOVERNANCE
The directors acknowledge the importance of the principles set out in the Corporate Governance Code. Although the Corporate
Governance Code is not compulsory for AIM quoted companies, the directors have applied the principles as far as practicable
and appropriate for a relatively small public company as follows:
The Board currently comprises two executive directors and two non-executive directors. The Board meets regularly to consider
strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all directors receive
appropriate and timely information. Briefing papers are distributed to all directors in advance of Board meetings. All directors
have access to the advice and services of the Company Secretary and the Chief Financial Officer, who 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.
Eden Research plc
Governance 2020
35
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.
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 2020:
Entity
BGF Investment Management
Sipcam Oxon SpA
Hargreaves Lansdown
Gresham House Asset Management
Cannacord Genuity Group
JM Finn & Co
Amati AIM VCT
Rathbone Nominees
HSBC Global Custody Nominee (UK)
Interactive Investor Services
Total Holdings % of Share Capital
58,333,000
37,614,830
30,276,493
27,845,445
22,684,000
21,774,435
16,937,750
16,246,373
14,007,734
12,992,073
15.34%
9.89%
7.96%
7.32%
5.94%
5.72%
4.45%
4.27%
3.68%
3.42%
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 36
DIRECTORS’ REPORT CONTINUED
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.
DIRECTORS’ RESPONSIBILITY STATEMENT
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 the AIM Rules of the London
Stock Exchange they are required to prepare the Group financial statements in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and applicable law and they have elected to prepare
the parent Company financial statements on the same basis.
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 Group and parent Company and of the Group’s profit or loss for that period.
In preparing each of the Group and parent Company 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 international accounting standards in conformity with the
requirements of the Companies Act 2006;
assess the Group and parent 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 Group or the parent 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 parent
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent Company
and enable them to ensure that its 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 Group and to prevent and detect fraud and other irregularities.
Eden Research plc
Governance 2020
37
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.
STATEMENT AS TO DISCLOSURE INFORMATION TO AUDITORS
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of
any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies
Act 2006.
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.
On behalf of the board
S Smith
Director
29 June 2021
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 38
Eden Research plc
Financial Statements 2020
39
FINANCIAL
STATEMENTS
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
40
46
47 Consolidated Statement of Financial Position
48 Company Statement of Financial Position
49 Consolidated Statement of Changes in Equity
50 Company Statement of Changes in Equity
51 Consolidated Statement of Cashflows
52 Company Statement of Cashflows
53 Notes to the Group Financial Statements
86 Company Information
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 40
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 2020 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 cash flows, company statement of cash flows, 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 2020 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
the parent Company financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of, and as applied in accordance with the provisions 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
Materiality: Group financial statements as a whole
Key audit matters
Recurring risks
Recoverability of intangible assets relating to Agrochemicals CGU
(Group and company)
Revenue
£100,000 (2019: £62,500)
0.59% (2019: 0.71%) of Group total assets
Vs 2019
2 KEY AUDIT MATTERS: 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. 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. In
arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Recoverability of intangible assets relating to Agrochemicals CGU
(Group £6,610,014, 2019: £5,448,262 and parent company £6,610,014, 2019: £5,448,262)
Refer to notes 1.5 and 1.7 on page 56 (accounting policy) and note 12 on pages 69 to 71 (financial disclosures)
The risk – Forecast-based assessment
The carrying amount of intangible assets relating to Agrochemicals CGU, including development costs, is reviewed annually for
impairment given that it holds intangibles not yet available for use.
This assessment includes forecasting and discounting future cash flows (based on the key assumption of future level of sales
as well as other assumptions, including discount rate) which are inherently judgemental.
Eden Research plc
Financial Statements 2020
41
In particular, due to uncertainty over the size of the potential market for the Group’s and parent company’s products, and the
level of growth, there is a risk that the carrying amount of the CGU may not be supported by potential future sales.
The significance of intangible assets to the business and the subjective nature of the assessment also give rise to opportunity
and incentive to manipulate the assessment.
The effect of these matters is that, as part of our risk assessment for audit planning purposes, we determined that the value
in use of the CGU had a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our
materiality for the financial statements as a whole. In conducting our final audit work, we concluded that reasonably possible
changes to the value in use of the CGU would not be expected to result in material impairment.
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 evaluated 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 CGU to assess
whether this provides an indicator of possible impairment;
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 critically assessed whether the Group’s and parent company’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.
We performed the detailed tests above rather than seeking to rely on any of the group’s controls because our knowledge of the
design of these controls indicated that we would not be able to obtain the required evidence to support reliance on controls.
Revenue
Group (£1,368,988, 2019 [restated]: £1,825,501)
Refer to page 4 (Chief Executive Officer’s Report), note 1.4 on pages 55 and 56 (accounting policy) and note 4 on pages
64 and 65 (financial disclosures)
The risk – Revenue recognition
Professional standards require us to make a rebuttable presumption that the fraud risk from revenue recognition is a
significant risk.
The current focus of the Group and the Company is on growth and the directors are incentivised on performance through a
share option scheme and there is lack of segregation of duties over the recording of revenue.
Additionally, a large proportion of revenue arises around the year-end date which increases the risk around appropriate timing
of recognition.
The element of the risk around timing of revenue recognition on bespoke contracts noted in the prior year is not considered
applicable this year as there have been no such contracts entered into in the current year.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 42
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Eden Research plc
2 KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT CONTINUED
Our response
Our procedures included:
Test of details:
for a sample of product sales invoices raised either side of the balance sheet date, we inspected the documentation
supporting the date on which the revenue was earned 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.
We performed the tests above rather than seeking to rely on any of the group’s controls because the small number of
transactions meant that detailed testing is inherently the most effective means of obtaining audit evidence.
Going Concern
We continue to perform procedures over Going Concern. However, following a fund raise during the year, we have not
assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year.
The impact of uncertainties due to the UK exiting the European Union on our audit
In the prior year we reported a key audit matter in respect of the impact of uncertainties due to the UK exiting the European
Union. Following the trade agreement between the UK and the EU, and the end of the EU-exit implementation period, the
nature of these uncertainties has changed. We continue to perform procedures over material assumptions in forward looking
assessments such as going concern and impairment tests however we no longer consider the effect of the UK’s departure from
the EU to be a separate key audit matter.
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 £100,000 (2019: £62,500), determined with reference
to a benchmark of total assets of £16,924,364 (2019: £8,864,769), of which it represents 0.59% (2019: 0.71%). 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 £99,000 (2019: £62,000), determined with
reference to a benchmark of total parent Company assets of £16,852,895 (2019: £8,732,026), of which it represents 0.59%
(2019: 0.71%). We consider a benchmark of total assets to be appropriate as the parent Company is in the early stages of
development.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in
individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2019: 75%) of materiality for the financial statements as a whole, which equates to
£75,000 (2019: £46,500) for the group and £74,250 (2019: £46,000) for the parent company.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £5,000 (2019:
£3,000), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the Group’s 3 (2019: 3) reporting components, we subjected 2 (2019: 3) to full scope audits for group purposes. The
components within the scope of our work accounted for the following percentages of the Group’s total assets, revenue and
profit before tax:
Total assets
Revenue
Loss before tax:
100% (2019: 100%)
100% (2019: 100%)
98.8% (2019: 100%)
For the residual component, we performed analysis at the group level to re-examine our assessment that there were no
significant risks of material misstatement within it.
The Group audit team performed work on the two audited components, including the audit of the parent company. Their
component materialities ranged from £45,000 to £99,000, having regard to the mix of size and risk profile of the Group across
the components.
Eden Research plc
Financial Statements 2020
43
4 GOING CONCERN
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or
the Company or to cease their operations, and as they have concluded that the Group’s and the Company’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 their 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”).
We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the Group’s and Company’s financial resources or ability to
continue operations over the going concern period. The risks that we considered most likely to adversely affect the Group’s and
Company’s available financial resources over this period were:
Delays in product development and commercialisation activities; and,
A reduction in the forecast revenue streams and uncertainty over the timing of those revenue streams.
We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks individually and collectively against the level of available financial
resources indicated by the Group’s financial forecasts.
We assessed the completeness of the going concern disclosure.
Our conclusions based on this work:
we consider that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements
is appropriate;
we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events
or conditions that, individually or collectively, may cast significant doubt on the Group’s or Company’s ability to continue as a
going concern for the going concern period; and
we found the going concern disclosure in note 1 to be acceptable;
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 above conclusions are not a guarantee that
the Group or the Company will continue in operation.
5 FRAUD AND BREACHES OF LAWS AND REGULATIONS – ABILITY TO DETECT
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
Enquiring of directors as to the Group’s high-level policies and procedures to prevent and detect fraud, as well as whether
they have knowledge of any actual, suspected or alleged fraud.
Reading Board, Audit committee and Remuneration committee minutes.
Considering remuneration incentive schemes and performance targets for management and directors, including the Long-
Term Incentive Plan and Bonus targets;
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout
the audit.
As required by auditing standards, and taking into account the possible pressures to meet remuneration policy targets and
market expectations, we perform procedures to address the risk of management override of controls and the risk of fraudulent
revenue recognition, in particular the risk that revenue is recorded in the wrong period and the risk that Group management may
be in a position to make inappropriate accounting entries.
We also identified a fraud risk related to the recoverability of intangible assets.
Further detail in respect of the above areas is set out in the key audit matter disclosures in section 2 of this report.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 44
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Eden Research plc
5 FRAUD AND BREACHES OF LAWS AND REGULATIONS – ABILITY TO DETECT CONTINUED
We also performed procedures including:
Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation.
These included revenue journals posted to unrelated accounts.
Assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our general commercial and sector experience and through discussion with the directors (as required by
auditing standards), and discussed with the directors the policies and procedures regarding compliance with laws
and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-
compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation (including related companies legislation), distributable profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or
litigation or the loss of the Group’s patents. We identified the following area as those most likely to have such an effect: plant
protection regulations, recognising the nature of the Group’s activities. Auditing standards limit the required audit procedures
to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and
legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
6 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.
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.
Eden Research plc
Financial Statements 2020
45
7 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.
8 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.
9 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.
Andrew Campbell-Orde (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
Date 30 June 2021
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 46
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
Revenue
Cost of sales
Gross profit
Other operating income
Amortisation of intangible assets
Administrative expenses
Share based payments
Operating loss
Investment revenues
Finance costs
Foreign exchange gains/(losses)
Impairment of investment in associate
Share of loss of equity accounted Investee, net of tax
Loss before taxation
Income tax income
Loss and total comprehensive income for the year
Total comprehensive income for the year is attributable to:
– Owners of the parent company
– Non-controlling interests
Earnings per share
Basic
Diluted
Notes
2020
£
2019
(Restated –
see note 35)
£
4
1,368,988
1,825,501
(736,509)
(941,640)
632,479
7,601
883,861
–
(552,809)
(496,732)
(2,202,581)
(1,535,450)
(120,380)
(209,295)
(2,235,690)
(1,357,616)
5,725
(24,000)
35,706
(299,521)
(30,352)
807
(8,397)
(73,166)
–
(41,001)
(2,548,132)
(1,479,373)
285,108
347,036
(2,263,024)
(1,132,337)
(2,270,347)
(1,144,703)
7,323
12,366
(2,263,024)
(1,132,337)
(0.66p)
(0.66p)
(0.55p)
(0.55p)
5
8
9
9
15
15
10
11
The income statement has been prepared on the basis that all operations are continuing operations.
Eden Research plc
Financial Statements 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
47
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-Use Assets
Investments
Current assets
Inventories
Trade and other receivables
Current tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Net current assets
Non-current liabilities
Trade and other payables
Lease liabilities
Net assets
Equity
Called up share capital
Share premium account
Warrant reserve
Merger reserve
Retained earnings
Non-controlling interest
Total equity
Notes
2020
£
2019
(restated –
see note 1.1)
£
12
13
14
15
17
18
19
20
19
20
23
24
25
26
27
6,729,483
5,581,005
188,065
394,610
419,865
–
61,750
749,738
7,732,023
6,392,493
224,422
68,423
1,396,308
1,633,092
285,108
7,286,503
9,192,341
268,777
501,984
2,472,276
1,454,955
1,348,588
84,350
1,539,305
7,653,036
125,212
330,898
456,110
14,928,949
22,812
1,371,400
1,100,876
99,008
46,687
145,695
7,347,674
3,803,402
2,071,893
39,308,529
31,289,915
429,915
335,739
10,209,673
10,209,673
(38,842,259)
(36,571,912)
19,689
14,928,949
12,366
7,347,674
The financial statements were approved by the board of directors and authorised for issue on 29 June 2021 and are signed on
its behalf by:
S Smith
Director
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 48
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-Use Assets
Investments
Current assets
Inventories
Trade and other receivables
Current tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables
Lease liabilities
Net current assets
Non-current liabilities
Trade and other payables
Lease liabilities
Net assets
Equity
Called up share capital
Share premium account
Warrant reserve
Merger reserve
Retained earnings
Total equity
Notes
2020
£
2019
(restated –
see note 1.1)
£
12
13
14
15
17
18
19
20
19
20
23
24
25
26
6,610,014
5,448,262
188,065
394,610
419,865
–
61,750
749,738
7,612,554
6,259,750
224,422
68,423
1,444,308
1,633,092
285,108
7,286,503
9,240,341
268,777
501,984
2,472,276
1,374,862
1,240,576
84,350
1,459,212
7,781,129
125,212
330,898
456,110
22,812
1,263,388
1,208,888
99,008
46,687
145,695
14,937,573
7,322,943
3,803,402
2,071,893
39,308,529
31,289,915
429,915
335,739
10,209,673
10,209,673
(38,813,946)
(36,584,277)
14,937,573
7,322,943
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The
company’s loss for the year was £2,229,669 (2019 – £1,157,068 loss).
The financial statements were approved by the board of directors and authorised for issue on 29 June 2021 and are signed on
its behalf by:
S Smith
Director
Company Registration No. 03071324
Eden Research plc
Financial Statements 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
49
Share
capital
£
Share
premium
account
£
Notes
Merger
reserve
£
Warrant
reserve
£
Retained
earnings
£
Non-
controlling
interest
£
Total
£
Total
£
Balance at 1 January 2019
2,071,893
31,289,915 10,209,673
653,446
(35,954,211)
8,270,716
–
8,270,716
Year ended
31 December 2019:
Loss and total
comprehensive income
for the year
Options granted
Options lapsed
Balance at
31 December 2019
Year ended
31 December 2020:
Loss and total
comprehensive income
for the year
–
–
–
–
–
–
–
–
–
–
(1,144,703)
(1,144,703)
12,366
(1,132,337)
209,295
–
209,295
(527,002)
527,002
–
–
–
209,295
–
2,071,893
31,289,915 10,209,673
335,739
(36,571,912)
7,335,308
12,366
7,347,674
Issue of share capital
23/24 1,731,509
8,018,614
Options granted
22
–
–
–
–
–
–
–
–
–
94,176
(2,270,347)
(2,270,347)
7,323
(2,263,024)
–
–
9,750,123
94,176
–
–
9,750,123
94,176
Balance at
31 December 2020
3,803,402 39,308,529 10,209,673
429,915 (38,842,259) 14,909,260
19,689 14,928,949
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 50
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Share
capital
£
Share
premium
account
£
Notes
Equity
reserve
£
Other
reserves
£
Retained
earnings
£
Total
£
Balance at 1 January 2019
2,071,893 31,289,915 10,209,673
653,446
(35,954,211) 8,270,716
Year ended 31 December 2019:
Loss and total comprehensive income
for the year
Options granted
Options lapsed
–
–
–
–
–
–
–
–
–
–
(1,157,068)
(1,157,068)
209,295
–
209,295
(527,002)
527,002
–
Balance at 31 December 2019
2,071,893 31,289,915 10,209,673
335,739 (36,584,277) 7,322,943
Year ended 31 December 2020:
Loss and total comprehensive income
for the year
Issue of share capital
Options granted
–
–
23/24
1,731,509
8,018,614
22
–
–
–
–
–
–
–
(2,229,669) (2,229,669)
–
9,750,123
94,176
–
94,176
Balance at 31 December 2020
3,803,402 39,308,529 10,209,673
429,915 (38,813,946) 14,937,573
Eden Research plc
Financial Statements 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
51
Cash flows from operating activities
Cash absorbed by operations
Interest paid
Interest on lease liabilities
Tax refunded
Net cash outflow from operating activities
Investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Gross proceeds from issue of shares
Expenses incurred from issue of shares
Payment of lease liabilities
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rates
Cash and cash equivalents at end of year
Relating to:
Notes
33
2020
£
2019
(restated – see note 1.1)
£
£
£
(1,265,812)
(450)
(23,550)
268,777
(1,021,035)
(1,278,429)
(1,344)
(7,053)
272,720
(1,014,106)
(1,701,287)
(200,758)
5,725
10,389,053
(638,930)
(44,457)
(835,896)
(77,954)
807
(1,896,320)
(913,043)
–
–
(20,916)
9,705,666
6,788,311
501,984
(3,792)
7,286,503
(20,916)
(1,948,065)
2,478,740
(28,691)
501,984
Bank balances and short-term deposits
7,286,503
501,984
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 52
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
Cash flows from operating activities
Cash absorbed by operations
Interest paid
Interest on lease liabilities
Tax refunded
Net cash outflow from operating activities
Investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Gross proceeds from issue of shares
Expenses incurred from issue of shares
Payment of lease liabilities
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rates
Cash and cash equivalents at end of year
Relating to:
Notes
33
2020
£
2019
(restated – see note 1.1)
£
£
£
(1,265,812)
(450)
(23,550)
268,777
(1,021,035)
(1,278,429)
(1,344)
(7,053)
272,720
(1,014,106)
(1,701,287)
(200,758)
5,725
10,389,053
(638,930)
(44,457)
(835,896)
(77,954)
807
(1,896,320)
(913,043)
–
–
(20,916)
9,705,666
6,788,311
501,984
(3,792)
7,286,503
(20,916)
(1,948,065)
2,478,740
(28,691)
501,984
Bank balances and short-term deposits
7,286,503
501,984
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS
For the year ended 31 December 2020
53
1 ACCOUNTING POLICIES
Company information
Eden Research plc is a public company limited by shares incorporated in England and Wales. The registered office is 67C
Innovation Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The company's principal activities and nature of its operations
are disclosed in the directors' report.
The group consists of Eden Research plc and its subsidiary.
1.1 Accounting convention
Group and parent company financial statements have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006, except as otherwise stated.
The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these
financial statements are rounded to the nearest £.
They have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.
Associates
Associates are those entities in which the Company has significant influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of
another entity, or where the Company has a lower interest but the right to appoint a Director. The company acquired 29.9% of
TerpeneTech Limited (“TerpeneTech (UK”) during 2015; TerpeneTech (UK) is an associated undertaking.
Application of the equity method to associates
The investment in TerpeneTech (UK) is accounted for using the equity method. The investment was initially recognised at cost.
The company's investment includes goodwill identified on acquisition, net of any accumulated impairment losses and any
separable intangible assets. The financial statements include the Company's share of the total comprehensive income and
equity movements of TerpeneTech (UK), from the date that significant influence commenced.
Changes in presentation of the financial statements
Directors continue to assess the clarity of the financial statements and the need for changes in presentation to enable and
assist understanding of users of the accounts as the operations of the Group continue to evolve.
Following this consideration, the following changes have been made in the current year, including changes in comparative
figures, to enhance presentation:
Right-of-use Assets have been presented on the face of the balance sheet (2019: as part of Property, plant and equipment).
This reflects the increased quantum of this balance, following the move to the new office.
Finance costs have been presented separately from the foreign exchange gains/losses in the consolidated income
statement, consolidated and company cash flow statements and note 33, reflecting the increase in interest payable, coming
chiefly as a result of the new leases.
Exchange differences on working capital balances have been removed as an adjustment to profit in arriving at Cash
absorbed by operations in note 33 and removed as an adjustment to Cash absorbed by operations in arriving at Net cash
outflow from operating activities on the face of the consolidated and company cash flow statements. There is no impact on
Net cash outflow from operating activities. This is a best practice improvement, considered by the Directors to result in a
more appropriate presentation.
Change in the EPS calculation to only include profit/loss attributable to the shareholders (which represents a correction of a
trivial error in the prior year).
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 54
1 ACCOUNTING POLICIES CONTINUED
1.1 Accounting convention continued
The above changes have had the following effect on the comparative figures, which are considered to be immaterial:
Right-of-use Assets of £61,750 have been separately presented on the face of the consolidated and company balance sheet.
Finance costs of £8,397 have been presented separately from the foreign exchange losses of £73,166.
Exchange differences on working capital balances of £44,475 have been removed as an equal and opposite adjusting item in
arriving at Net cash outflow from operating activities.
EPS has been restated from (0.54p) to (0.55p) for the year ended 31 December 2019.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertaking up to
31 December 2020. The profits and losses of the company and its subsidiary are consolidated from the date from which control
is achieved. All members of the group have the same reporting period.
Subsidiary undertakings are entities controlled by the Company. The Company controls an entity when it is exposed to, or has
the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity.
1.3 Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the group has adequate
resources to continue in operational existence for at least 12 months from the approval of the financial statements. Thus,
the financial statements have been prepared on a going concern basis which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business.
The Group has reported a loss for the year after taxation of £2,263,024 (2019: £1,132,337). Net current assets at that date
amounted to £7,653,036 (2019: £1,100,876). Cash at that date amounted to £7,286,503 (2019: £501,984). As at 31 May 2021,
the cash balance has reduced to £6,000,724, which is ahead of the current year budget. The group is reliant on its existing cash
balance to fund its working capital.
The Directors have prepared budgets and projected cash flow forecasts, based on forecast sales provided by Eden’s distributors
where available, for a period of at least 12 months from the date of approval of the financial statements and they consider that
the Company will be able to operate with the cash resources that are available to it for this period.
The forecasts adopted include only revenue derived from existing contracts. They do not include potential upside from on-going
discussions and negotiations with other parties not yet contracted, as well as other 'blue sky' opportunities.
The impact of COVID has been considered in the forecasts. The Group has not been significantly impacted by the pandemic
although it has led to some delays in product development process and limited promotional activity. The forecasts reflect this
with the development expenditure timing based on the latest experience with regulatory authorities and sales volumes on the
latest distributors’ information which reflects their post-COVID demand.
In addition, the Group has relatively low fixed running costs and, while mitigating actions are not forecast to be required to
support the going concern basis, the Directors have previously demonstrated its ability to delay certain other costs, such as
Research and Development expenditure, in the event of unforeseen cash constraints and are willing and able to delay costs in
the forecast period should the need arise.
The Directors have also considered a scenario whereby the Company receives no revenue during the forecast period. Under this
scenario, a positive cash balance would be maintained over that period.
Consequently, the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial
statements on a going concern basis.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 55
1.4 Revenue
Revenue is recognised only when the Company has satisfied a performance obligation by transferring control to a customer.
Revenue represents amounts receivable by the Company in respect of services rendered during the year in accordance with the
underlying contract of licence, stated net of value added tax.
Sales-based royalty income arising from licences of the Company's intellectual property is recognised in accordance with the
terms of the underlying contract and is based on net sales value of product sold by Eden's licensees. It is recognised when the
underlying sales occur.
Upfront and annual payments made by customers at commencement and for renewal of distribution and other agreements
are recognised in accordance with the terms of the agreement. Where there is no ongoing obligation on the Company under
the agreement, the payment is recognised in full in the period in which it is made. Where there is an ongoing obligation on the
Company, the separate performance obligations under the agreement are identified and revenue allocated to each performance
obligation. Revenue is then recognised when a corresponding performance obligation has been met.
Each sale of a licence by the Company is assessed to determine whether the licence is distinct from the sale of other goods and
services, and whether the licence granted provides use of the Company's intellectual property as it exists at that point in time,
with no ongoing obligation on the Company, or alternatively provides access to the intellectual property as it develops over time.
Where the Company has discharged all of its ongoing obligations associated with the licence granted, revenue is recognised
on invoicing of the licence fee payment at which point the customer can use and benefit from the licence. Where there is an
ongoing obligation on the Company, revenue is recognised in the periods to which the obligations pertain.
Product sales are recorded once the ownership and related rights and responsibilities are passed to the customer and the
product is made available to the partner to collect, or, if the Company is responsible for the shipping, the product has been
shipped to the customer.
The following is a description of the principal activities from which the Company generates its revenue.
Licensing fees
The Company receives licensing fees from partners who have taken a licence for the right to use Eden's intellectual property,
usually defined by field of use and territory. These are identified as right to use as the Company does not have an obligation to
undertake activities that significantly affect the relevant intellectual property.
Milestone payments
The Company receives milestone payments from other commercial arrangements, including any fees it has charged to partners
for rights granted in respect of distribution agreements.
These agreements are bespoke and any such revenue is specific to the particular agreement. Consequently, for each such
agreement, the nature of the underlying performance obligations is assessed in order to determine whether revenue should be
recognised at a point in time or over time.
Revenue is then recognised based on the above assessment upon satisfaction of the performance obligation.
R&D charges
The Company sometimes charges its partners for R&D costs that it has incurred which usually relate to specific projects and
which it has incurred through a third party.
Upon agreement with a partner, or if some specific milestone is met, then Eden will raise an invoice which is usually payable
between 30 and 120 days. Revenue is recognised upon satisfaction of the underlying performance obligation.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 56
1 ACCOUNTING POLICIES CONTINUED
1.4 Revenue continued
Royalties
The Company receives royalties from partners who have entered into a licence arrangement with Eden to use its intellectual
property and who have sold products, which then gives rise to an obligation to pay Eden a royalty on those sales.
Generally, royalties relate to specific time periods, such as quarterly or annual dates, in which product sales have been made.
Revenue is recognised in line with when these sales occur.
Once an invoice is raised by Eden, following the period to which the royalties relate, payment is due to the Company is
30 to 60 days.
Product sales
Generally, where the company has entered into a distribution agreement with a partner, Eden is responsible for supplying
product to that partner once a sales order has been signed.
At that point, Eden has the product manufactured through a third-party, toll manufacturer. At the point at which the product
is finished and is made available to the partner to collect, or, if the Company is responsible for the shipping, the product has
been shipped, the partner is liable for the product and obliged to pay Eden. Normal terms for product sales are 90 to 120 days.
Returns are not accepted and refunds are only made when product supplied is notified as defective within 60 days.
The Group does not have any contract assets or liabilities.
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 10 years in line with the remaining life of the Company's master patent, which was originally
20 years, with additional Supplementary Protection Certificates having been granted in the majority of the countries in the EU in
which Eden is selling Mevalone®. The useful economic lie of intangible assets is reviewed on an annual basis.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any
impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on
the following bases:
Leasehold land and buildings
Over the term of the lease
Fixtures and fittings
5 years straight line
Motor vehicles
Over the term of the lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the income statement.
1.7 Impairment of tangible and intangible assets
The Directors regularly review the intangible assets for impairment and provision is made if necessary. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of 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.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020
57
1.8 Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is based on the first-
in-first-out principle. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have
been incurred in bringing the inventories to their present location and condition.
1.9 Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially
recognised when the Company becomes a part to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable with a significant financing component) or financial liability is initially measured
at fair value plus, for an item not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.
(ii) Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as measured at: amortised cost or FVTPL.
Financial assets are not reclassified subsequently to their initial recognition unless the Company changes its business model
for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions:
It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
Its contractual terms give rise on specific dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Investments in associates accounted for using the equity method and subsidiaries are carried at cost less impairment.
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 amortised cost – These assets are subsequently measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Financial liabilities and equity
Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two
conditions:
(a)
(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.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 58
1 ACCOUNTING POLICIES CONTINUED
1.9 Financial instruments continued
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so
classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up
share capital and share premium account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign
exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Where a financial instrument that contains both equity and financial liability components exists these components are
separated and accounted for individually under the above policy.
(iii) Impairment
The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECL, except for other debt securities and bank balances
for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased
significantly since initial recognition, which are measured as 12-month ECL.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when
estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost
or effort. This includes both quantitative and qualitative information and analysis, based on the company’s historical experience
and informed credit assessment and including forward-looking information.
The Group considers a financial asset to be in default when:
the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such
as realising security (if any is held); or
the financial asset is more than 120 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting
date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to
credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls
(i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group
expects to receive). ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial
asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic
prospect of recovery.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 59
1.10 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting end date. The current tax charge includes any research and development tax
credits claimed by the Company.
R&D tax credits are accounted for by reference to IAS 12.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither
the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on the tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax
is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
1.11 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be
recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the
employment of an employee or to provide termination benefits.
1.12 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13 Share-based payments
The Company has applied the requirements of IFRS 2 Share-Based Payments.
Unapproved share option scheme
The Company 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.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 60
1 ACCOUNTING POLICIES CONTINUED
1.13 Share-based payments continued
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.
Where the terms and conditions of options are modified before they vest, the increase in fair value of the options, measured
immediately before and after the modification is also charged to the Statement of Profit or Loss and Other Comprehensive
Income over the remaining vesting period.
In April 2021, the Company adopted a new LTIP which replaced the once described above. Details of the new LTIP can be found
on page 31.
1.14 Leases
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability
at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that
meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations
to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives
received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental
borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease
payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of
any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments
in an optional renewal period, or penalties for early termination of a lease.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 61
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change
in: future lease payments arising from a change in an index or rate; the group's estimate of the amount expected to be payable
under a residual value guarantee; or the group's assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a
lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these
leases are recognised in profit or loss on a straight-line basis over the lease term.
1.15 Grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will
be received.
1.16 Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the
transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income
statement for the period.
Whilst the majority of the Company's revenue is in Euros, the Company also incurs a significant level of expenditure in that
currency. As such, the Company does not currently use any hedging facilities and instead chooses to keep some of its cash at
the bank in Euros.
1.17 Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
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.
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.
1.18 Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the income statement in the periods during which services are
rendered by employees.
1.19 Financial risk management
The Company's activities expose it to a variety of financial risks: market risks (including currency risk and interest rate risks),
credit risk and liquidity risk. Risk management focuses on minimising any potential adverse effect on the Company's financial
performance and is carried out under policies approved by the Board of Directors.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 62
2 ADOPTION OF NEW AND REVISED STANDARDS AND CHANGES IN ACCOUNTING POLICIES
(a) New standards, amendments and interpretations
The following new standards, amendments and interpretations have been adopted by the Group for the first time for the
financial year beginning on 1 January 2020:
Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 7
‘Financial Instruments.
Amendments to IAS 1 ‘Presentation of financial statements’ and IAS 8 ‘Accounting policies, changes in accounting estimates
and errors’ which are intended to make the definition of material easier to understand.
Amendments to references to the ‘Conceptual framework’ in IFRS standards.
The adoption of these standards, amendments and interpretations has not had a material impact on the financial statements of
the Group or parent company.
(b) New standards, amendments and interpretations issued but not effective and not adopted early
A number of new standards, amendments to standards and interpretations which are set out below are effective for annual
periods beginning after 1 January 2020 and have not been applied in preparing these consolidated financial statements.
Amendment to IFRS 3 ‘Business combinations’ to update references to the Conceptual Framework for Financial Reporting
without changing the accounting requirements for business combinations.
Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and Measurement’, IFRS 7
‘Financial Instruments: Disclosures, IFRS 4 ‘Insurance Contracts’, IFRS 16 ‘Leases’ related to interest rate benchmark reform
(phase two) and the issues that arise from the implementation of the reforms, including the replacement of one benchmark
with an alternative one.
Amendment to IFRS 16 ‘Leases’ which provides an optional practical expedient for lessees from assessing whether a rent
concession related to COVID-19 is a lease modification.
IFRS 17 ‘Insurance contracts’ which establishes the principles for the recognition, measurement, presentation and disclosure
of insurance contracts and supersedes IFRS 4 ‘Insurance Contracts’.
Amendments to IAS 1 ‘Presentation of financial statements’ on classification of liabilities which is intended to clarify that
liabilities are classified as either current or non-current depending upon the rights that exist at the end of the reporting
period.
Amendments to IAS 16 ‘Property, plant and equipment’ to prohibit the deduction from cost of property, plant and equipment
amounts received from selling items produced while preparing the asset for its intended use with any such sales and related
cost recognised in profit or loss.
Amendments to IAS 37 ‘Provisions, contingent liabilities and contingent assets’ to specify which costs a company includes
when assessing whether a contract will be loss making.
Annual improvements to make minor amendments to IFRS 1 ‘First-time adoption of IFRS’, IFRS 9 ‘Financial Instruments’,
IAS 41 ‘Agriculture’ and amendments to the illustrative examples accompanying IFRS 16 ‘Leases’.
The Directors anticipate that at the time of this report none of the new standards, amendments to standards and interpretations
are expected to have a material effect on the financial statements of the Group or parent company.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 63
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk to the carrying amounts of
assets and liabilities within the next financial year are discussed below:
Capitalised development costs and Intellectual property
The Directors have exercised a judgement that the development costs incurred meet the criteria in IAS 38 Intangible Assets for
capitalisation. In making this judgement, the directors considered the following key factors:
The availability of the necessary financial resources and hence the ability of the Company to continue as a going concern.
The assumptions surrounding the perceived market sizes for the products and the achievable market share for the Company.
The successful conclusion of commercial arrangements, which serves as an indicator as to the likely success of the projects
and, as such, any need to potential impairment.
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.
Going concern
The Directors have considered the ability of the Company to continue as a going concern and this is considered to be a
significant judgement made by the Directors in preparing the financial statements.
The ability of the Company to continue as a going concern is ultimately dependent upon the amount and timing of cash flows
arising from the exploitation of the Company's intellectual property and the availability of existing and/or additional funding to
meet the short term needs of the business until the commercialisation of the Company's portfolio is reached. The Directors
consider it is appropriate for the financial statements to be prepared on a going concern basis based on the estimates they
have made.
Associate
A judgement has been made that Eden exerts significant influence on TerpeneTech (UK) such that it is an associate company
and, as such, adoption of equity accounting is appropriate.
COVID-19
The Company has made accounting judgements and estimates based on there being minimal impact of COVID-19 on the
business in the long term. 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 AND SEGMENTAL INFORMATION
IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for the resource allocation and assessing
performance of the operating segments has been identified as the Executive Directors as they are primarily responsible for the
allocation of the resources to segments and the assessment of performance of the segments.
The Executive Directors monitor and then assess the performance of segments based on product type and geographical area
using a measure of adjusted EBITDA. This is the result of the segment after excluding the share-based payment charges, other
operating income and the amortisation of intangibles. These items, together with interest income and expense are not allocated
to a specific segment.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 64
4 REVENUE AND SEGMENTAL INFORMATION CONTINUED
The segment information for the year ended 31 December 2020 is as follows:
Revenue
Milestone payments
R & D charges
Royalties
Product sales
Total revenue
EBITDA
Share Based Payments
Adjusted EBITDA
Amortisation
Depreciation
Finance costs, foreign exchange and investment revenues
Impairment of investment in associate
Income Tax
Share of Associate’s loss
(Loss)/Profit for the Year
Total Assets
Total assets includes:
Additions to Non-Current Assets
Total Liabilities
Agrochemicals
£
Consumer
products
£
Animal
health
£
27,523
7,660
180,801
1,116,534
1,332,518
–
8,551
27,919
–
36,470
(1,528,934)
36,470
(120,380)
–
(1,649,314)
36,470
(539,535)
(13,274)
(70,039)
17,433
(299,521)
285,108
(30,352)
–
–
–
–
–
(2,286,220)
16,804,893
23,196
119,471
2,319,566
1,915,322
–
80,093
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£
27,523
16,211
208,720
1,116,534
1,368,988
(1,492,464)
(120,380)
(1,612,844)
(552,809)
(70,039)
17,433
(299,521)
285,108
(30,352)
(2,263,024)
16,924,364
2,319,566
1,995,415
Please note the Consumer products segment was previously referred to as Human health and biocides.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 65
The segment information for the year ended 31 December 2019 (restated – see note 35) is as follows:
Agrochemicals
£
Consumer
products
£
Animal
health
£
Total
£
Revenue
Milestone payments
R & D charges
Royalties
Product sales
Total revenue
EBITDA
Share Based Payments
Adjusted EBITDA
Amortisation
Depreciation
Finance costs, foreign exchange and investment revenues
Income Tax
Share of Associate’s loss
(Loss)/Profit for the Year
Total Assets
Total assets includes:
Additions to Non-Current Assets
Total Liabilities
Revenue analysed by geographical market
UK
Europe
For details of the restatement of 2019 figures, please refer to note 35.
348,260
–
17,241
1,429,181
1,794,682
(660,331)
(209,295)
(869,626)
(496,732)
(22,077)
(80,756)
347,036
(41,001)
–
6,089
24,730
–
30,819
30,819
–
30,819
–
–
–
–
–
(1,163,156)
8,732,026
30,819
132,743
1,122,979
–
1,409,083
108,012
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
348,260
6,089
41,971
1,429,181
1,825,501
(629,512)
(209,295)
(838,807)
(496,732)
(22,077)
(80,756)
347,036
(41,001)
(1,132,337)
8,864,769
1,122,979
1,517,095
2020
£
2019
(restated)
£
16,211
6,089
1,352,777
1,819,412
1,368,988
1,825,501
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 66
5 OPERATING PROFIT
Operating loss for the year is stated after charging/(crediting):
Government grants
Fees payable to the company's auditor for the audit of the company's financial statements
Depreciation of right-of-use assets (included within administrative expenses)
Impairment of investment in associate
Amortisation of intangible assets
Share-based payments
2020
£
2019
£
(7,601)
40,000
57,346
299,521
552,809
120,380
–
28,976
22,077
–
496,732
209,295
Government grants related to amounts received in respect of the Coronavirus Job Retention Scheme.
6 EMPLOYEES
The average monthly number of persons (including directors) employed by the group during the year was:
Management
Operational
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs
Share based payment charge
7 DIRECTORS' REMUNERATION
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
Non-executive Directors' fees
Share based payment charge relating to all Directors
2020
Number
2019
Number
4
7
11
4
3
7
2020
£
2019
£
1,104,400
969,487
131,158
80,452
94,176
68,994
27,151
110,743
1,410,186
1,176,375
2020
£
2019
£
618,350
485,215
28,990
78,333
94,176
819,849
26,355
75,000
110,743
697,313
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to
2 (2019 – 2).
The number of directors who are entitled to receive shares under long term incentive schemes during the year is 2 (2019 – 2).
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 67
Remuneration disclosed above includes the following amounts paid to the highest paid director:
Remuneration for qualifying services
2020
£
2019
£
366,602
287,376
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 31 of the Remuneration report.
Salary
180,000
235,000
–
–
Bonus
88,200
115,150
–
–
415,000
203,350
Salary
165,000
211,500
–
–
Bonus
47,644
61,071
–
–
376,500
108,715
2020
A Abrey
S Smith
R Cridland
L van der Broek
2019
A Abrey
S Smith
R Cridland
L van der Broek
8 INVESTMENT INCOME
Interest income
Bank deposits
28,990
94,176
819,848
Fees
Pension
Share Based
Payments
12,538
16,452
–
–
39,872
54,304
–
–
Fees
Pension
Share Based
Payments
11,550
14,805
–
–
48,751
61,992
–
–
–
–
36,665
41,667
78,332
–
–
35,000
40,000
75,000
Total
320,610
420,906
36,665
41,667
Total
272,945
349,368
35,000
40,000
26,355
110,743
697,313
2020
£
2019
£
5,725
807
Total interest income for financial assets that are not held at fair value through profit or loss is £5,725 (2019: £807).
9 FINANCE COSTS AND FOREIGN EXCHANGE (GAINS)/LOSSES
Interest on lease liabilities
Interest on bank overdrafts and loans
Finance costs
Exchange differences on working capital
Effect of exchange rate fluctuations on cash
Exchange gains and losses
2020
£
23,550
450
24,000
(39,498)
3,792
(35,706)
2019
£
7,053
1,344
8,397
44,475
28,691
73,166
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 68
10 INCOME TAX INCOME
Current tax
UK corporation tax on profits for the current period
Adjustments in respect of prior periods
Total UK current tax
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss
Expected tax credit based on a corporation tax rate of 19% (2019: 19.00%)
Expenses not deductible for tax purposes
Surrender of tax losses for R&D tax credit refund
Adjustment in respect of prior years
Ineligible fixed asset differences
Additional deduction for R&D expenditure
Deferred tax not recognised
Taxation credit for the year
2020
£
2019
£
(285,108)
(268,777)
–
(78,259)
(285,108)
(347,036)
2020
£
2019
£
(2,548,132)
(1,479,373)
(484,145)
(281,081)
88,498
88,481
55,868
83,414
–
(78,259)
32,067
83,217
(211,159)
(199,065)
201,150
(11,130)
(285,108)
(347,036)
The March 2020 Budget announced that a corporation tax rate of 19% would continue to apply with effect from 1 April 2020,
and this change was substantively enacted on 17 March 2020. The March 2021 Budget announced that a corporation tax rate
of 25% would apply with effect from 1 April 2023. This was substantively enacted on 24 May 2021. As this change was not
substantively enacted at the balance sheet date, it has not been reflected in the measurement of deferred tax balances at the
period end.
The taxation credit for the year represents the research and development credit for the year ended 31 December 2020.
Deferred Tax
In the year, a deferred tax liability in respect of fixed asset temporary differences of £803,322 has been recognised. This has
been offset fully by release of deferred tax asset from trading losses brought forward, resulting in a £nil deferred tax balance in
the Statement of Financial Position.
The losses carried forward, after the above offset, for which no deferred tax asset has been recognised, amount to
approximately £22,379,505 (2019: £23,088,756).
The unprovided deferred tax asset of £4,265,891 (2019: £3,408,686) arises principally in respect of trading losses. It has been
calculated at 19% (2019: 17%) and has not been recognised due to the uncertainty of timing of future profits against which it
may be realised.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 11 EARNINGS PER SHARE
69
2020
£
2019
(restated)
£
Weighted average number of ordinary shares for diluted earnings per share
344,629,577
208,244,667
Earnings (all attributable to equity shareholders of the company)
Loss for the period
Basic earnings per share
Diluted earnings per share
(2,270,347)
(1,144,703)
(0.66p)
(0.66p)
(0.55p)
(0.55p)
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares.
There were no dilutive potential ordinary shares at the year end.
For details of the restatement, please refer to note 1.1.
12 INTANGIBLE ASSETS
Group
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Amortisation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
Licences and
trademarks
£
Development
costs
£
Intellectual
property
£
Total
£
447,351
4,209,089
8,970,627
13,627,067
–
850,532
210,697
1,061,229
447,351
5,059,621
9,181,324
14,688,296
1,545
1,564,785
134,957
1,701,287
448,896
6,624,406
9,316,281
16,389,583
411,855
25,896
437,751
11,145
1,948,254
6,250,450
8,610,559
231,077
239,759
496,732
2,179,331
6,490,209
9,107,291
315,192
226,472
552,809
448,896
2,494,523
6,716,681
9,660,100
–
4,129,883
2,599,600
6,729,483
9,600
2,880,290
2,691,115
5,581,005
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 70
12 INTANGIBLE ASSETS CONTINUED
Group
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Amortisation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019
Licences and
trademarks
£
Development
costs
£
Intellectual
property
£
Total
£
447,351
4,209,089
8,970,627
13,627,067
–
850,532
77,954
928,486
447,351
5,059,621
9,048,581
14,555,553
1,545
1,564,785
134,957
1,701,287
448,896
6,624,406
9,183,538
16,256,840
411,855
25,896
437,751
11,145
1,948,254
6,250,450
8,610,559
231,077
239,759
496,732
2,179,331
6,490,209
9,107,291
315,192
213,198
539,535
448,896
2,494,523
6,703,407
9,646,826
–
4,129,883
2,480,131
6,610,014
9,600
2,880,290
2,558,372
5,448,262
Intellectual property represents intellectual property in relation to use of encapsulated terpenes in agrochemicals. The
remaining useful economic life of that asset is 10 years.
An annual impairment review is undertaken by the Board of Directors. The Directors have considered the progress of the
business in the current year, including a review of the potential market for its products, the progress the Company has made in
registering its products and other key commercial factors to inform the review.
Of £6,729,483 carrying amount of intangible assets, £6,610,014 has been allocated to the Agrochemicals CGU. The remaining
intangible assets have been allocated to the Consumer products CGU for which no impairment indicators have been identified.
The Agrochemicals CGU has been tested for impairment as it is the only CGU with intangible assets not yet available for use.
The Directors have prepared a discounted cash-flow forecast, based on product sales forecasts including those provided by the
Company's commercial partners, and have taken into account the market potential for Eden's products and technologies using
third party market data that Eden has acquired licences to.
The forecast covers a period of 10 years, with no terminal value, reflecting the useful economic life of the patent in respect of
the underlying technology. Financial forecasts for 2021 are based on the approved annual budget. Financial forecasts for 2022-
2028 are based on the approved long-term plan. Financial forecasts for 2029-2030 are extrapolated based on the long-term
growth rate.
The estimated recoverable amount of the CGU exceeded its carrying amount by £22.1m and based on the review carried out
management is satisfied that intangible assets are not impaired.
As set out in the Strategic Report, the business is in a critical phase of its development as the development of products is
transitioned to revenue generation. The value of the CGU is supported by forecasts of continued revenue growth of existing
products and the successful introduction and growth of sales of products currently under development.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 71
The key assumptions of the forecast are the future cash flows, driven primarily by level of sales, and the discount rate. The
discount rate is estimated using pre-tax rates that reflect current market assessments of the time value of money and the risk
specific to the CGU. The rate used was 10% (2019: 10%).
The impact of increasing the discount rate by 3.5%, which is considered a reasonably possible change, would be a decrease in
the recoverable amount by £6.8m. The discount rate would have to increase to 28.7% to reduce the headroom to £nil which is
not considered reasonably possible.
The average annual growth rate has been assumed at 48% (2019: 64%), reflecting the latest forecasts based on information
provided by customers and own market analysis. The rate stands at 84% up to 2025, reflecting commercialisation of new
products in the period, reducing to 11% from 2026 onwards.
A reduction in growth from year 6 onwards to the long-term growth rate, which is considered a reasonably possible change,
would reduce the recoverable amount by £10.5m.
The same level of reduction in recoverable amount would be observed if revenue generation was delayed by 1 year for each
product currently under development.
Sales would have to reduce by over 42% to reduce headroom to £nil which is not considered reasonably possible.
13 PROPERTY, PLANT AND EQUIPMENT
Consolidated and Company
Cost
At 1 January 2019
At 31 December 2019 (restated – see note 1.1)
Additions – owned
At 31 December 2020
Accumulated depreciation and impairment
At 1 January 2019
At 31 December 2019 (restated – see note 1.1)
Charge for the year
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019 (restated – see note 1.1)
Fixtures and
fittings
£
–
–
Total
£
–
–
200,758
200,758
200,758
200,758
–
–
12,693
12,693
–
–
12,693
12,693
188,065
188,065
–
–
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 72
14 RIGHT-OF-USE ASSETS
Consolidated and Company
Cost
At 1 January 2019
Recognition of right-of-use asset on initial application of IFRS 16
At 31 December 2019 (restated – see note 1.1)
Additions
Disposals
At 31 December 2020
Accumulated depreciation and impairment
At 1 January 2019
Recognition of right-of-use asset on initial application of IFRS 16
Charge for the year
At 31 December 2019 (restated – see note 1.1)
Charge for the year
Eliminated on disposal
At 31 December 2020
Carrying amount
At 31 December 2020
At 31 December 2019 (restated – see note 1.1)
15 INVESTMENTS IN ASSOCIATES
Investments in associates
Details of the group's associates at 31 December 2020 are as follows:
Land and
buildings
£
Motor
vehicles
£
Total
£
–
114,533
114,533
417,521
(78,668)
–
35,865
35,865
–
–
35,865
453,386
–
4,483
8,966
13,449
8,966
–
22,415
–
30,706
22,077
52,783
57,346
(51,353)
58,776
–
78,668
78,668
417,521
(78,668)
417,521
–
26,223
13,111
39,334
48,380
(51,353)
36,361
381,160
39,334
13,450
22,416
394,610
61,750
Current
Non-current
2020
£
–
2019
£
2020
£
2019
£
–
419,865
749,738
Name of undertaking
Registered office
Principal activities
Class of
shares held
TerpeneTech (UK)
United Kingdom
Research and experimental
development on biotechnology Ordinary
% Held
Direct
Voting
29.90
29.90
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 73
2020
£
502,954
237,697
2019
(restated)
£
565,306
209,880
(98,806)
(98,806)
(213,670)
(195,415)
428,175
480,965
151,352
155,385
412,649
(299,521)
167,136
169,953
412,649
–
419,865
749,738
279,185
247,304
(52,790)
(15,784)
(14,568)
(30,352)
(88,404)
(26,433)
(14,568)
(41,001)
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets (100%)
Company’s share of net assets
Separable intangible assets
Goodwill
Impairment of investment in associate
Carrying value of interest in associate
Revenue
100% of loss after tax
29.9% of loss after tax
Amortisation of separable intangible
Company’s share of loss including amortisation of separable intangible asset
For details of the restatement of 2019 figures, please refer to note 35.
The associate is included in the Agrochemicals operating segment.
TerpeneTech Limited's (“TerpeneTech (UK)”) registered office is Kemp House, 152 City Road, London, EC1V 2NX and its principal
place of business is 3 rue de Commandant Charcot, 22410, St Quay Portrieux, France.
The Directors have considered the progress of the business in the current year, including a review of the potential market for its
products, the progress TerpeneTech (UK) has made in registering its products and other key commercial factors to determine
whether any indicators of impairment exist. As a result of identification of indicators of impairment, an impairment review of the
investment in TerpeneTech (UK) was undertaken by the Board of Directors.
The Directors have used discounted cash-flow forecasts, based on product sales forecasts provided by TerpeneTech (UK), and
have taken into account the market potential for those products. These forecasts cover a 10-year period, with no terminal value,
in line with the patent of the underlying technology.
The key assumptions of the forecast are the growth rate and the discount rate. The discount rate is estimated using pre-tax
rates that reflect current market assessments of the time value of money and the risk specific to the asset. The rate used
was 15% (2019: 20%). The reduction in the discount rate reflects the reduction in uncertainty as compared to the year ended
31 December 2019 as there is greater clarity over impacts of COVID-19 and one of the products has significantly progressed
towards commercialisation.
Based on the review the Directors have carried out, it has been determined that the Investment is impaired and, as such,
an impairment charge of £299,521 has been recognised.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 74
15 INVESTMENTS IN ASSOCIATES CONTINUED
The impairment is primarily due to the impact of COVID-19 which resulted in a delay in the launch of the head-lice product
and which significantly impacted the head-lice product market and, consequently, the forecast level of sales. This impact is
exacerbated by the limited forecast period.
An increase in the discount rate of 2.5% would result in an increase in impairment of £50,000.
The growth rates are derived from discussions with the Company's commercial partner, TerpeneTech (UK), as described above.
The average annual growth rate has been assumed at 32% (2019: 37%). The majority of this growth relates to the head-lice
product and arises in the first 5 years of the forecast as the market position is built up, following the launch. The average annual
growth rate of existing business stands at only 4% (2019: 4%). Only inflationary growth has been assumed across the entire
forecast after year 5.
An annual reduction of 20% in head-lice product sales over the forecast period would increase impairment by £80,000.
The Directors have also considered whether any reasonable change in assumptions would lead to a material change in
impairment recognised and are satisfied that this is not the case.
As investing in companies, such as TerpeneTech (UK), is not representative of Eden’s normal operating activities, the impairment
charge has been shown on the Consolidated Income Statement after Operating Loss.
16 SUBSIDIARIES
Details of the company's subsidiaries at 31 December 2020 are as follows:
Name of undertaking
Registered office
Principal activities
% Held
Class of
shares held
Direct
Voting
TerpeneTech (Ireland)
Limited
Republic of Ireland
Sale of biocide products
Ordinary
50.00
50.00
TerpeneTech Limited (“TerpeneTech (Ireland))”, whose registered office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland,
was incorporated on 15 January 2019 and is jointly owned by both Eden Research Plc and TerpeneTech (UK), the company's
associate.
Eden has the right to appoint a director as chairperson who will have a casting vote, enabling the Group to exercise control
over the Board of Directors in the absence of an equivalent right for TerpeneTech (UK). Eden owns 500 ordinary shares in
TerpeneTech (Ireland).
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 75
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 (100%)
Carrying amount of NCI
Revenue
Profit after tax
OCI
Total comprehensive income
Cash flows from operating activities
Cashflows form investing activities
Cashflows from financing activities
Net increase / (decrease) in cash and cash equivalents
Dividends paid to non-controlling interests
For details of the restatement of 2019 figures, please refer to note 35.
17 INVENTORIES
Finished goods
18 TRADE AND OTHER RECEIVABLES
2020
£
50%
2019
(restated)
£
50%
119,471
132,743
–
–
–
–
(80,093)
(108,013)
39,378
24,730
27,919
14,647
–
24,730
24,730
–
14,647
24,730
–
–
–
–
–
–
–
–
–
–
Group and company
2020
£
2019
£
224,422
68,423
Trade receivables
VAT recoverable
Other receivables
Group
2020
£
Company
2019
£
2020
£
2019
£
909,452
1,345,648
909,452
1,345,648
242,187
57,619
127,089
4,694
242,187
57,619
127,089
4,694
Prepayments and accrued income
187,050
155,661
235,050
155,661
1,396,308
1,633,092
1,444,308
1,633,092
Trade receivables disclosed above are measured at amortised cost. The directors consider that the carrying amount of trade
and other receivables approximates their fair value.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 76
19 TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Social security and other taxation
Other payables
Non-current
Other payables (note 22, ‘Xinova liability’)
20 LEASE LIABILITIES
Maturity analysis
Within one year
In two to five years
Total undiscounted liabilities
Future finance charges and other adjustments
Lease liabilities in the financial statements
Group
2020
£
Company
2019
£
2020
£
2019
£
794,439
250,017
43,186
367,313
870,563
283,380
26,399
794,439
250,017
43,186
168,246
287,220
870,563
283,380
26,399
60,234
1,454,955
1,348,588
1,374,862
1,240,576
125,212
125,212
99,008
99,008
125,212
125,212
99,088
99,008
2020
£
117,204
385,388
502,592
(87,344)
415,248
2019
£
27,097
51,919
79,016
(9,517)
69,499
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more
than 12 months from the reporting date, as follows:
2020
£
84,350
330,898
415,248
2019
£
22,812
46,687
69,499
2020
£
23,550
2019
£
7,053
Current liabilities
Non-current liabilities
Amounts recognised in profit or loss include the following:
Interest on lease liabilities
Other leasing information is included in note 29.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 77
21 RETIREMENT BENEFIT SCHEMES
Defined contribution schemes
The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held
separately from those of the group in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is £61,799 (2019 – £27,151).
22 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)
2020
2019
2020
2019
Outstanding at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
1,050,000
3,400,000
–
–
–
–
–
(2,350,000)
Exercisable at 31 December
1,050,000
1,050,000
13
–
–
–
13
11
–
–
13
13
The options outstanding at 31 December 2020 had an exercise price of 13p (2019: 13p) and their weighted average contractual
life was 0.1 years (2019: 1.6 years). None of the options have vesting conditions.
The share-based payment charge in respect of the unapproved option scheme for the year was £nil (2019: £nil). The weighted
average fair value of each option granted during 2020 was £nil (2019: £nil).
Long-Term Incentive Plan (“LTIP”)
Eden Research Plc operates an 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 30 and 31. A new LTIP scheme has been put in place in April 2021, 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
2017
2018
2019
2020
2021
2022
Share based
payment charge
£
27,210
85,372
110,743
94,176
51,909
16,959
386,369
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 78
22 SHARE-BASED PAYMENT TRANSACTIONS CONTINUED
The following information is relevant in the determination of the fair value of options granted under the LTIP operated by Eden
Research Plc, representing a mix of approved and unapproved issues.
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)
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%
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.
Warrants
Outstanding at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
Number of share options
2020
2,989,865
–
–
–
2019
2,400,000
2,589,865
–
(2,000,000)
Exercisable at 31 December
2,989,865
2,989,865
Weighted average exercise price
(pence)
2020
2019
19
–
–
–
19
20
18
–
11
19
The exercise price of warrants outstanding at the end of the year ranged between 12p and 30p (2019: 12p and 30p) and their
weighted average contractual life was 1.4 years (2019: 2.5 years.) None of the warrants have vesting conditions.
The share-based payment charge for the year was £nil (2019: £98,553). The weighted average fair value of each warrant granted
during the year was £nil (2019: 18p).
Xinova liability
In September 2015, the Company entered into a Collaboration and licence agreement with Invention Development Management
Company LLC (part of Intellectual Ventures, now called Xinova LLC). As part of this agreement, upon successful completion of a
number of different tasks, Xinova will be entitled to a payment which is calculated using a percentage (initially 3.17%) of the fully
diluted equity value, reduced by cash and cash equivalents, of the Company on the date on which payment becomes due which is
expected to be 30 September 2025. This has been accounted for as a cash-settled share-based payment under IFRS 2.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 79
An amount of £67,462, being the estimated fair value of the liability due to Xinova, was recognised during 2016 and included as
a non-current liability, as disclosed in note 19 to the accounts. It is not believed that the value of the services provided by Xinova
can be reliably measured, and so this amount was calculated based on the Company's market capitalisation at 31 December
2016, adjusted to reflect the percentage of work completed by Xinova at that date based on a pre-determined schedule of tasks.
A further charge of £26,204 was made in the year (2019: £31,546), reflecting the increase in work delivered by Xinova and in the
equity value, partially offset by reduction in the applicable payment % as a result of the additional equity financing raised.
At the year end, an amount of £125,212 (2019: £99,008) was owed to Xinova and is shown in note 18 as non-current other
liabilities.
23 SHARE CAPITAL
Ordinary share capital
Issued and fully paid
2020
Number
2019
Number
2020
£
2019
£
Ordinary shares of 1p each
380,340,229
207,189,337
3,803,402
2,071,893
On 18 March 2020, the Company issued 86,182,500 ordinary shares at 6p each for a total consideration of £5,170,950 before
directly attributable costs.
On 19 March 2020, the Company issued 86,968,392 ordinary shares at 6p each for a total consideration of £5,218,104 before
directly attributable costs.
Share issue costs of £638,931 were incurred and have been charged to the share premium account.
24 SHARE PREMIUM ACCOUNT
At the beginning of the year
Issue of new shares
At the end of the year
25 WARRANT RESERVE
Balance at 1 January 2020
Share-based payment expense in respect of options granted in prior years
Balance at 31 December 2020
2020
£
2019
£
31,289,915
31,289,915
8,018,614
–
39,308,529
31,289,915
£
335,739
94,176
429,915
The warrant reserve represents the fair value of share options and warrants grants, and not exercised or lapsed, in accordance
with the requirements of IFRS 2 Share Based Payments.
26 MERGER RESERVE
At the beginning and end of the year
2020
£
2019
£
10,209,673
10,209,673
The merger reserve arose on historical acquisitions of subsidiary undertakings for which merger relief was permitted under the
Companies Act 2006.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 80
27 NON-CONTROLLING INTEREST
Non-controlling interest
2020
£
19,689
2019
£
12,366
The non-controlling interest arose from Eden Research Plc’s 50% share in TerpeneTech (Ireland) Limited.
28 OTHER INTEREST-BEARING LOANS AND BORROWINGS – GROUP AND COMPANY
Changes in liabilities, arising from financing activities are presented below:
Balance as at 1 January
Recognised on implementation of IFRS 16
Changes from financing cashflows
Payment of lease liabilities
Total changes from financing cashflows
Other changes
New leases
Surrender of lease
Total other changes
Balance as at 31 December
2020
£
69,499
2019
£
–
–
90,415
(44,457)
(44,457)
(20,916)
(20,916)
417,521
(27,315)
390,206
415,248
–
–
–
69,499
29 OTHER LEASING INFORMATION
Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:
Expense relating to leases of low-value assets
2020
£
334
2019
£
19,516
Set out below are the future cash outflows to which the lessee is exposed to that are reflected in the measurement of
lease liabilities:
2020
£
2019
£
74,783
325,794
400,577
14,040
32,015
46,055
Land and buildings
Within one year
Between two and five years
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 Leases apart from land and buildings
Within one year
Between two and five years
81
2020
£
9,567
5,104
14,671
2019
£
8,772
14,671
23,443
The Group holds three leases, for two properties and a vehicle. All leases have fixed lease repayments and remaining terms of
4.5 years for the properties and 1.5 years for the vehicle.
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%.
Information relating to lease liabilities is included in note 20.
30 CAPITAL RISK MANAGEMENT
The group is not subject to any externally imposed capital requirements.
31 RELATED PARTY TRANSACTIONS
Remuneration of key management personnel
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
Group
During the year, Eden invoiced its associate, TerpeneTech (UK), £8,551 for R&D charges (2019: £6,089).
Also, during the year Eden paid £6,362 to TerpeneTech (UK) (2019: received £12,731) for monies received by Eden on behalf of
TerpeneTech (UK) from one of TerpeneTech (UK)’s customers.
At the year end, a net amount of £128,983 was due from TerpeneTech (UK) (2019: £122,661) to Eden. This amount is included
within Trade and Other Receivables.
In 2019, TerpeneTech (UK) sold an intangible asset to TerpeneTech (Ireland) for £132,743.
At the year end, a net amount of £80,093 (2019: £108,012) was due from TerpeneTech (Ireland) to TerpeneTech (UK).
It represents the amount due in respect of the intangible asset above, reduced by fees receivable in respect of sales.
This amount is included within Trade and Other Payables.
Company
During the year, Eden invoiced its associate, TerpeneTech (UK), £8,551 for R&D charges (2019: £6,089).
Also, during the year Eden paid £6,362 to TerpeneTech (UK) (2019: received £12,731) for monies received by Eden on behalf of
TerpeneTech (UK) from one of TerpeneTech (UK)’s customers.
Further, at year end, £48,000 has been accrued in respect of management recharges from Eden to TerpeneTech (Ireland)
(2019: £nil). This amount is included within the Company Trade and Other Receivables.
At the year end, a net amount of £128,983 was due from TerpeneTech (UK) (2019: £122,661). This amount is included within
Trade and Other Receivables.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 82
32 FINANCIAL RISK MANAGEMENT
Credit risk
Cash and cash equivalents
Trade receivables
2020
£
2019
£
7,286,503
501,984
1,396,308
1,345,648
8,682,811
1,847,632
The average credit period for sales of goods and services is 242 days (2019 restated: 269). No interest is charged on overdue
trade receivables. At 31 December 2020, trade receivables of £200,840 (2019: £523,967) were past due. During the year the
Company wrote off bad debts in the amount of £nil (2019: £nil).
Trade receivables of £791,581 (2019: £1,002,763) at the reporting date were held in Euros and £104,265 (2019: £112,540) were
held in USD.
The Company's policy is to recognise loss allowances for expected credit losses (ECLs) on financial assets measured
at amortised cost. The Group measures loss allowances for trade receivables at an amount equal to lifetime ECL. When
determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating
ECL, the Group considered reasonable and supportable information that is relevant and available without undue cost of effect.
This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and
information credit assessment and including forward-looking information.
The largest trade debtor at the year end is a well-established, profitable business and long-term customer of the Company
with whom Eden has had no issue of collecting debts due before and does not expect to have any going forward. In addition,
TerpeneTech (UK), Eden's associate company, owed gross £174,952 (2019: £182,984) to Eden at the year-end.
TerpeneTech (UK), is a cash-positive business, albeit in its infancy, with good shareholder support and, again, Eden has had no
issue of collecting debtors due from TerpeneTech (UK) before and does not expect to have any going forward.
Considering these factors, the directors' consider the ECL to be immaterial.
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
2020
£
794,439
367,313
43,186
2019
£
870,563
168,246
26,399
250,017
283,380
1,454,955
1,348,588
The carrying amount of trade payables approximates their fair value.
The average credit period on purchases of goods is 85 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.
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the group’s financial liabilities at 31 December 2020 was as follows:
In one year or less, or on demand
Over one year
83
2020
£
2019
£
1,454,955
1,348,588
125,212
99,008
1,580,167
1,447,596
Liquidity risk is managed by regular monitoring of the Company’s level of cash and cash equivalents, debtor and creditor
management and expected future cash flows. See note 1 for further details on the going concern position of the Company.
For details of lease liabilities, see notes 20 and 29.
Market price risk
The company’s exposure to market price risk comprises currency risk exposure. It monitors this exposure primarily through
a process known as sensitivity analysis. This involves estimating the effect on results before tax over various periods of a
range of possible changes in exchange rates. The sensitivity analysis model used for this purpose makes no assumptions
about any interrelationships between such rates or about the way in which such changes may affect the economies involved.
As a consequence, figures derived from the Company’s sensitivity analysis model should be used in conjunction with other
information about the Company’s risk profile.
The Company’s policy towards currency risk is to eliminate all exposures that will impact on reported results as soon as they
arise. This is reflected in the sensitivity analysis, which estimates that five and ten percentage point increases in the value of
sterling against all other currencies would have had minimal impact on results before tax.
Capital risk management
The primary objective of the Company’s capital management is to ensure that it maintains healthy capital ratios in order to
support its business and maximise shareholder value.
The Company seeks to enhance shareholder value by capturing business opportunities as they develop. To achieve this goal,
the Company maintains sufficient capital to support its business.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions.
The Company looks to maintain a reasonable debt position by repaying debt or issuing equity, as and when it is deemed to
be required.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2020
and 31 December 2019.
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% (2019: below 10%). The Company includes within net debt, any interest bearing
loans and borrowings (none in current or prior year), any loans from a venture partner (none in the current or prior year),
trade and other payables, less cash and cash equivalents.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 84
33 CASH ABSORBED BY OPERATIONS
Consolidated
Loss for the year after tax
Adjustments for:
Taxation charged/(credited)
Finance costs
Investment income
Foreign exchange currency losses
Amortisation and impairment of intangible assets
Impairment of investment in associate
Depreciation and impairment of property, plant and equipment and right-of-use assets
Share of associate's loss
Share-based payment expense
Movements in working capital:
Increase in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash absorbed by operations
For details of the above restatement, please refer to note 1.1.
2020
£
2019
(restated)
£
(2,263,024)
(1,132,337)
(285,108)
(347,036)
24,000
(5,725)
3,792
552,809
299,521
70,039
30,352
8,397
(807)
28,691
496,732
–
22,078
41,001
120,380
209,295
(155,999)
(53,767)
236,784
(908,027)
106,367
357,351
(1,265,812)
(1,278,429)
Eden Research plc
Financial Statements 2020
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 31 DECEMBER 2020 85
2020
£
2019
(restated)
£
(2,229,669)
(1,157,068)
(285,108)
(347,036)
24,000
(5,725)
3,792
539,535
299,521
70,039
30,352
8,397
(807)
28,691
496,732
–
22,078
41,001
120,380
209,295
(155,999)
(53,767)
188,784
(908,027)
134,286
382,082
(1,265,812)
(1,278,429)
33 CASH ABSORBED BY OPERATIONS CONTINUED
Company
Loss for the year after tax
Adjustments for:
Taxation charged/(credited)
Finance costs
Investment income
Foreign exchange currency losses
Amortisation of intangible assets
Impairment of investment in associate
Depreciation and impairment of property, plant and equipment and right-of-use assets
Share of associate's loss
Share-based payment expense
Movements in working capital:
Increase in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash absorbed by operations
For details of the above restatement, please refer to note 1.1.
34 POST BALANCE SHEET EVENTS
Long-Term Incentive Plan
In April 2021, the Company replaced its existing LTIP with a new one, details of which can be found on page 31.
Corteva Agriscience agreement
In May 2021, the Company signed an exclusive commercialisation, supply and distribution agreement with Corteva Agriscience,
the fourth largest agriculture inputs company in the world. Further details of this agreement can be found in the Chief Executive
Officer’s Review.
35 PRIOR YEAR ADJUSTMENT
Following the incorporation of TerpeneTech (Ireland) in 2019 the group is reorganising the roles of TerpeneTech (Ireland) and
TerpeneTech (UK) in the sale of geraniol and certain other products.
Following communications with the FRC (refer to the Audit Committee Report on page 33), the Directors have reconsidered the
arrangements that were in place in the prior year (and which remained in place in the current year) in regard to sales made by
TerpeneTech (Ireland).
The Directors have concluded that TerpeneTech (Ireland) was acting as an agent in these transactions and should have
recognised sales of £24,730 being the 10% margin on the sales of geraniol rather than recognising gross sales and cost of
sales. As such, they have restated the Group’s revenue and cost of sales in the prior year.
As a consequence of this restatement, revenue has been reduced by £222,574 and cost of sales have been reduced by
£222,574 in the Income Statement for the year ending 31 December 2019. There was no impact on loss before or after taxation
or net assets and no impact on any opening balances.
As the arrangements change going forward, the Directors will reconsider the revenue recognition.
FINANCIAL STATEMENTSGOVERNANCEANNUAL REPORT STATEMENTSCOMPANY OVERVIEW 86
COMPANY INFORMATION
DIRECTORS
A Abrey
R Cridland
S Smith
L Van der Broek
SECRETARY
A Abrey
COMPANY NUMBER
03071324
REGISTERED OFFICE
67c Innovation Drive
Milton Park
Abingdon
Oxfordshire
England
OX14 4RQ
INDEPENDENT AUDITOR
KPMG LLP
66 Queen Square
Bristol
BS1 4BE
Eden Research plc
Financial Statements 2020
FOR THE YEAR ENDED 31 DECEMBER 2020 E
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EDEN RESEARCH PLC
67C INNOVATION DRIVE
MILTON PARK
ABINGDON
OXFORDSHIRE
ENGLAND
OX14 4RQ
WWW.EDENRESEARCH.COM