Eden Research plc
Annual Report 2021
Sustainable Solutions
for Crop Protection,
Animal Health and
Consumer Products
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Eden Research plc is the only
UK-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
2021 Highlights
II At a Glance
IV
VI Our products
VIII Products in action
X Our Markets
XII Our Business model
XIV Our Strategy
Annual Report Statements
02 Chairman’s Statement
04 Chief Executive Officer’s Review
10 Strategic Report
14 ESG Report
Governance
22 Board of Directors
26 Chairman’s letter
28 Business model and strategy
30 The QCA Corporate Governance Code
36 Remuneration Report
40 Audit Committee Report
42 Directors’ Report
43 Directors’ Responsibilities Statement
Financial Statements
46
Independent Auditor’s Report to the members of
Eden Research plc
52 Consolidated statement of comprehensive income
53 Consolidated statement of financial position
54 Company statement of financial position
55 Consolidated statement of changes in equity
56 Company statement of changes in equity
57 Consolidated statement of cash flows
58 Company statement of cash flows
59 Notes to the group financial statements
See our website for the latest
information: www.edenresearch.com
I
2021 Highlights
Return to
product
sales growth
Market conditions improve
resulting in a 4% increase in
product sales, by volume
Significant
expansion of
addressable
market
New major and minor uses
allowed thereby increasing the
size of Eden’s addressable
market in key territories with
more to follow
Commercial
agreement
with Corteva
Advancing development of a new
product category with industry-
leading partner, Corteva
Revenue
£1.2m
2020: £1.4m
Operating Loss
£3.2m
2020: £2.2m loss
Product Sales
£1.1m
2020: £1.1m
• Sales of agrochemical products Cedroz™ and
• Exclusive Commercialisation, Supply and
Mevalone® increased overall by approximately
4% in volume.
• Product sales remained flat in GBP terms at
approximately £1.1m (2020: £1.1m), due to
adverse foreign currency exchange rates.
• Revenue for the year was £1.2m (2020: £1.4m)
with a loss before tax of £3.4m (2020: £2.5m) and
statutory operating loss of £3.2m (2020: £2.2m).
• Adjusted EBITDA (excluding share based
payments – see note 4) was £2.0m (loss) (2020:
£1.5m loss).
• Cash position at the year-end was £3.9m, in-line
with management expectations (2020: £7.3m).
Distribution Agreement signed with Corteva
Agriscience, the fourth largest agriculture input
company in the world. The agreement covers
Eden’s first seed treatment product which
uses Eden’s patented, plastic-free Sustaine®
encapsulation technology and registered
active ingredients.
• Significant expansion of the Company’s
addressable market was achieved as the labels
for both Mevalone® and Cedroz™ were expanded
with the addition of new countries, diseases and
crop targets.
Eden Research plc
Annual Report 2021
Company OverviewFinancial StatementsGovernanceAnnual Report Statements 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
benefit of being approved for use as organic inputs in
multiple territories.
• Eden has commercialised its first biofungicide 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.
18 (2020: 16)
Countries have granted
product authorisation
46 (2020: 44)
Crop use approvals for
Eden’s biopesticides
£15m (2020: £14m)
Invested in IP and registration
110 (2020: 110)
Granted and pending patents
10 (2020: 4)
Pests and disease targets
addressed with Eden’s
registered products
Eden Research plc
Annual Report 2021
III
Global Reach
Where are we now
Commercial Partnerships
and Regulatory Activity
Our Geographic And
Regulatory Footprint
For our developed products, we 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.
Commercial Partnerships and Regulatory Activity
Our products are
sold in the top 3
wine producing
countries.
We have trials
and registration
work on-going in
6 continents.
Both Mevalone®
and Cedroz™
are approved in
Spain – which
produces 24% of
the EU’s fruit and
vegetables.
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 product, Cedroz™.
Product authorisations
have been granted in
18 countries.
We are expanding and developing
our base of commercial clients
and partners.
Growing and nurturing our base of commercial and development partners
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsGovernanceFinancial Statements IV
Investment case
UNITED NATIONS Sustainable Development Goals
Technology
Exploitation
Eden is poised to
exploit its core
technologies beyond
biopesticides and
crop protection.
Commercial
Development
Eden is resourced to
support accelerated
new product
development
and growth.
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 technologies.
The EU Green Deal has
a target of 25% organic
agriculture and 50%
reduction in chemical
pesticides.
Eden Research plc
Annual Report 2021
V
Increased
Number of
Commercial
Partners
Eden is expanding
existing commercial
relationships and
is focused on the
establishment of new
partnerships.
Strong
Patent Portfolio
110 patents enable
strong technological
defensibility.
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 $6.5 billion
globally.
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.
Eden Research plc
Annual Report 2021
Company OverviewFinancial StatementsGovernanceAnnual Report Statements 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
Crop Protection
Animal Health
Head-lice treatment
Foliar disease & insect control
Companion animal
Deodorants
Odour neutralisers
Fragrances
Open field & greenhouses
Soil pests
Post-harvest shelf-life extension
Seed treatments
Bio-control
Parasite treatments
Insect sprays
$50+bn*
$51bn*
$33bn*
*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
Sustaine® is cost effective,
useful for a wide range of
active ingredients, plastic-
free, high capacity, robust,
and 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 originally developed
for use in human health
applications.
Eden Research plc
Annual Report 2021
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. We look for opportunites to replace conventional
pesticides where regulatory action is removing these products from the market or severely limiting their use.
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
Botrytis, powdery mildew,
downy mildew
Root knot nematodes
INSECTICIDES
Mites, whitefly,
aphids, thrips
SEED TREATMENT
Multiple uses
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’
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsGovernanceFinancial Statements VIII
Products in action
Sustainable Control
Mevalone® is used as a preventative and
curative solution for Botrytis cinerea.
Mevalone® is now authorised on an
expanded number of crops against
diseases such as powdery mildew
and sclerotinia.
Mevalone® has recently been authorised in
France for use on apples against storage-
related diseases, thereby helping to reduce
food waste in the supply chain.
The terpene active ingredients are derived
from nature which means 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 controlling Botrytis
and related species accounts
for about 8 per cent of the
fungicide market worldwide.
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
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® has received full authorisaton
for use on apples in France.
22.9%
17.6%
17.0%
France
Poland
Italy
French exports
$433.6
Million
Of apples each year are
exported by France
Export regions
THIS (AUTHORISATION) 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
Annual Report 2021
Normandy
Brittany
PACA Region
Current global food waste
1.3bn
tonnes
Food wasted
around the world
every year
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 to boost
the performance of agricultural inputs, including crop protection
products. The intentional 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
for encapsulation of
active ingredients in these
agricultural products.
IX
Sustainable Control
Sustaine® microcapsules are naturally
derived, biodegradable micro-spheres
produced from yeast extract.
The technology produces stabilised aqueous
suspensions which are easy to mix and apply
and have phased release patterns.
Sustaine® is used to encapsulate the active
ingredients in Cedroz™ and Mevalone®
and is also 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.
1
3
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.
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 by
increasing the yield of a given crop per hectare.
Being able to control conditions indoors
has been proven to more than double yields
in some cases, reducing the consumption
of resources required to grow crops.
3
2
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
Eden Research plc
Annual Report 2021
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3
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Company OverviewAnnual Report StatementsGovernanceFinancial Statements 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 to conventional
pesticides
Eden Research plc
Annual Report 2021
$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
failing to receive renewal of their
regulatory authorisations
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™.
Eden has new product registration
applications in-process in multiple
new countries.
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
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.
Numerous successful
commercial partnerships
€5.2bn
€1.9bn
€0.5bn
€0.6bn
Seed
Treatment
Insecticide
Cedroz™
Mevalone®
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsGovernanceFinancial Statements 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, including the US.
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
Eden Research plc
Annual Report 2021
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.
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 positioned
to deliver long-term
shareholder value through
further commercialisation
and sales of our products.
For partners
We give our partners
market access to
sustainable, efficient and
effective alternatives to
conventional chemical
products.
For the environment
We use natural
chemistries to create
environmentally friendly
products which support
sustainable agriculture.
For employees
We promote the
development of our
employees through
skills enhancement and
training programmes.
Eden Research plc
Annual Report 2021
Company OverviewFinancial StatementsGovernanceAnnual Report Statements XIV
Our Strategy
Business Line
Diversification
Research,
Development
and Operations
We will address this by:
Pursuing opportunities in the seed treatments market
We will address this through:
Supply chain optimisation
Developing insecticide products
Expansion of in-house screening and field
Expanding crops and diseases treated with
existing products
Geographical diversification (seasonal and
climate variation)
trials capability
Accelerate commercialization of Sustaine®
for conventional actives
Key achievements in 2021:
New crops and diseases added to the Mevalone®
label in Spain and Portugal
Key achievements in 2021:
Increased capability of biological, analytical
and formulation laboratories
Mevalone® authorised for use on apples in France
Expansion of in-house technical expertise
Regulatory approval of Cedroz™ in Italy
Crop trials ongoing for insecticides and seed
treatments
Distributions agreements signed with Sipcam
covering key N. African countries
Commercialisation, Supply and Distribution
Agreement signed with Corteva
Eden Research plc
Annual Report 2021
XV
Commercial
Growth
Strengthening and
Growing the Team
We will address this through:
Gaining regulatory clearance in new countries,
We will address this through:
Analytical & Formulation Chemistry Expertise
crops and diseases
Accelerate Sustaine® business development
Partnerships for Mevalone® in new territories
Pursue collaboration with majors
Regulatory Expertise
Biology Expertise
Key achievements in 2021:
First sales of Cedroz™ in Spain and Greece
Key achievements in 2021:
Screening and pot trials capabilities increased
Progression of seed treatment work. Further field
Lab team strengthened – formulation, analytical
trials and initial regulatory steps
and biology expertise
Successful field trials of third-party actives,
encapsulated in Sustaine® technology
Eden Research plc
Annual Report 2021
Company OverviewFinancial StatementsGovernanceAnnual Report Statements XVI
Not only has Eden been able
to move forward apace in new
product areas such as seed
treatment and insecticides,
but product regulatory
approvals have also come
to fruition which have
provided opportunities
for sales growth.
Eden Research plc
Annual Report 2021
01
Annual Report
Statements
02 Chairman’s Statement
04 Chief Executive Officer’s Review
10 Strategic Report
14 ESG Report
Eden Research plc
Annual Report 2021
Annual Report StatementsGovernanceCompany OverviewFinancial Statements 02
Chairman’s Statement
“ Despite the challenging environment,
we remain focused upon the
opportunities that exist in our
growing industry”
Lykele van der Broek – Non-Executive Chairman
Over the past two years, Eden has
continued to steadily progress its
development plans and has made
strides on several fronts.
March 2020’s successful fundraise
provided Eden with a firm platform
to invest in the development of the
Company’s product portfolio and broaden
its technical capabilities with the opening
of a laboratory facility. Not only has Eden
been able to move forward apace in new
product areas such as seed treatment
and insecticides, but product regulatory
approvals have also come to fruition
which have provided opportunities for
sales growth.
Nevertheless, the pace with which we
had initially hoped to accelerate our
development was hampered by the
COVID-19 pandemic which brought
a high degree of uncertainty globally.
This was particularly challenging for
growth companies like Eden, having
hired a new team as well as opening a
new laboratory facility during lockdown.
In 2021, the effects of government-
imposed restrictions were still being
felt as travel and leisure activities along
with wine consumption continued to be
significantly lower than in 2019.
The other, and arguably more important,
unfortunate consequence of the
pandemic has been the slowing down
of the regulatory approval process
which has particularly affected Eden in
the US. Additionally, the Environmental
Protection Agency (EPA) suffered
resource deficiencies as a consequence
of underfunding during the previous
Presidential administration which has
further compounded the effects of
the pandemic.
The knock-on effects from regulatory
delays have been particularly impactful
as the US represents a significant market
opportunity for Eden with growers and
consumers there becoming ever more
concerned about the use of traditional
chemical pesticides and seeking to
replace them with effective, lower risk
alternatives, such as Eden’s.
The seed treatment project, for which
Eden has partnered with Corteva
Agriscience, has moved into its third year
of development and progresses ever
closer to commercialisation which is
expected in time for the 2024 season.
Field trials of our insecticide formulations
have shown consistently good efficacy
results; comparable to the traditional
chemical products and superior to
that of one of the leading biopesticide
alternatives.
We should soon be at the stage where
we are able to hand over to a long list
of interested parties our product for
their own testing with a view to entering
into what is expected to be a number
of commercial agreements for those
distribution rights.
In conjunction with its commercial
partners, Eden has been able to expand
the label of existing products which
results in a larger addressable market,
which should directly lead to product
sales growth, the first results of which
we expect to see in a meaningful way
in 2022.
New disease targets for existing products
have been identified and trials work
undertaken in order to verify that these
opportunities are viable and commercial
success achievable.
The technical capabilities of Eden have
increased dramatically, with our ability to
develop products, undertake screening
and formulation work all now in-house at
our laboratory facility in Oxfordshire.
Eden Research plc
Annual Report 2021
All of this has been achieved during
a very challenging period which has
hampered supply chains, caused staffing
issues and backlogged administrative
processes, affecting the team at Eden,
the Company itself and the rest of
the world. Despite the challenging
environment, we remain focused upon
the opportunities that exist in our
growing industry and we look forward
to embracing these in 2022 and beyond.
This should begin by leveraging our US
OTC listing on receipt of our expected
EPA approval for our core products to
expand our presence in a significant
market. Advancements to also grow our
product range represent another exciting
avenue for the Company, bringing the
potential to broaden our product reach
into the consumer products industry.
Finally, our recently obtained approvals
across a number of geographies
will allow Eden to materially grow its
revenues in the 2023 growing season
and beyond.
I would like to thank our staff for all their
hard work and the shareholders for their
on-going support. I would like to convey
to you all my sincerely held confidence in
Eden’s future success.
Lykele van der Broek
Non-Executive Chairman
30 May 2022
03
Eden Research plc
Annual Report 2021
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 04
Chief Executive Officer’s Review
“ Eden continued to expand its
commercial and regulatory footprint
by moving into new geographies,
increasing our product offerings and
forging milestone partnerships”
Sean Smith – Chief Executive Officer
Section two:
Delivering on our strategy
Eden is the only UK-quoted company
focused on biopesticides for sustainable
agriculture. We are operating in a
constantly expanding market, providing
sustainable solutions to farmers globally.
The biopesticides market is anticipated
to be worth over £11 billion by 2027 and
Eden is a true innovator in the space.
Our strategic goals remain the same.
We are focused on being the leading
deliverer of sustainable crop protection
solutions through the development
and distribution of our two approved
products, Mevalone® and Cedroz™, and
furthering the use of Sustaine® with
third party active ingredients.
Eden’s products are capitalising on a
global market for solutions that protect
high-value crops, whilst improving yields
and marketability, without damaging local
biodiversity and environmental systems.
In the near term, our strategic focus is on:
Expanding our commercial growth by:
Receiving regulatory clearance for
applications already made in new
countries, crops and diseases
Accelerating the development of
our Sustaine® technology
Securing new partnerships for
Mevalone® in new territories
Pursuing further collaborations
with majors and selected national
partners
Optimising our route to market
Diversifying our business line by:
Expanding the crops and diseases
our products can be applied
to through new regulatory
applications
Securing new regulatory approval
and distribution agreements in
new geographies and climates for
products under development
Pursuing new opportunities in the
seed treatment space
Advancing the development of our
first insecticide products
Launching new products in the
consumer products and animal
health markets
Expanding our research and
development operations by:
Optimising our supply chain
Expanding our in-house screening
and field trials capability
Accelerating the commercialisation
of Sustaine® for conventional
actives
Increasing self-reliance for R&D
and reducing time to market
Strengthening and growing our team
by:
Adding to our R&D capacity,
including in microbiology, plant
biology, agronomy, and analytical
chemistry
Expanding our commercial team
Building our in-house regulatory
expertise in order to accelerate
time to market and reducing
regulatory costs
Section one: Introduction
Despite the ongoing, exceptional
circumstances and the disruption
to the global business landscape,
agriculture and regulatory
processes, Eden has continued
to demonstrate resilience and
make tangible progress in
advancing our business strategy,
capitalising on the rapidly
growing global biopesticides
market and growing demand
for plastic free crop protection
solutions.
Eden continued to expand its commercial
and regulatory footprint by moving
into new geographies, increasing our
product offerings and forging milestone
partnerships, including a landmark
agreement with global major, Corteva
Agriscience for our first seed treatment
product which uses our Sustaine®
encapsulation technology and
sustainable active ingredients.
Alongside these advances across the
business, we have also focused on
bolstering our credentials as a business
and investment opportunity with
sustainability at its core, building on the
award of the London Stock Exchange’s
Green Economy Mark which we received
at the beginning of 2021 in recognition of
the role we are playing in supporting the
transition to sustainability.
We believe that by expanding our global
footprint, we are playing a key role in
this transition. Consumers, farmers
and regulators are demanding more
sustainable and plastic-free agricultural
solutions and Eden’s products meet
this demand.
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05
This move is also in anticipation of
expanding our commercial footprint in
the US following the regulatory approval
for our products, which is expected in
2022. The US has a fast growing, organic,
‘green’ and eco-label food market and
is accelerating regulations against the
use of harmful pesticides, mirroring the
global drive to reduce, or eliminate, the
use of potentially harmful pesticides.
Eden’s sustainable biopesticides are well
placed to capitalise on this significant
opportunity, once we have received the
anticipated Environmental Protection
Agency (EPA) approval.
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Annual Report 2021
Corteva
In May 2021, we were delighted to sign
an exclusive Commercialisation, Supply
and Distribution Agreement with Corteva
Agriscience, the fourth largest agriculture
company in the world, for Eden’s first
seed treatment product which uses
Eden’s proprietary, plastic-free Sustaine®
encapsulation technology. This built on
a one-year evaluation agreement with
Corteva signed in 2020 and successful
evaluations of Eden’s products and
technology by Corteva for select seed
treatment applications since late 2019.
The deal is a significant corporate
milestone for Eden marking our first foray
into the use of our active ingredients and
Sustaine® technology in seed treatments
and the first use of our products and
technology on broad acre crops, which
represents significant future revenue
potential.
US investor market
In October 2021, Eden announced that
its shares will be traded on the U.S.
OTCQB market allowing US investors
to trade Eden’s shares for the first time.
This move allows us to diversify our
shareholder base in one of the world’s
biggest agricultural markets. Currently,
farmers in the US spend billions of dollars
every year on products that help them
protect their crops and keep up with
food demand.
We continue to make consistent progress
across these areas, to build on what we
have achieved to date and develop new
commercial growth opportunities.
Notable commercial and operational
highlights from 2020 include:
Development of Eden’s foliar
biofungicide product, Mevalone®, with
the expanded authorisation of its use
on a variety of key crops including:
Pome fruits (such as apples and
pears) in France
Strawberries, raspberries,
blueberries, cranberries, kiwi,
aubergines and peppers in Portugal
Wine and table grapes in Romania
and
Strawberries, peppers, courgettes,
aubergine, tomatoes, lettuce,
brassicas, and raspberries in Spain
Authorisation of the use of Eden’s
nematicide formulation, Cedroz™ for:
Tomatoes and cucumbers in
Morocco and
Tomato, eggplant, pepper,
chili, pepino, cucumber, melon,
courgette, pumpkin, and
strawberries in Italy
The signing of an exclusive
Commercialisation, Supply and
Distribution Agreement with Corteva
Agriscience, for Eden’s first seed
treatment product
The signing of an exclusive agreement
with Sipcam for the marketing,
distribution and selling rights of
Mevalone® (marketed as Araw®) in
four North African countries: Egypt,
Morocco, Algeria and Tunisia.
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 06
Chief Executive Officer’s Review continued
“ Expansion into the
US will be a major
milestone for Eden
given the size of
the US agricultural
market; the world’s
second largest.”
In addition, now that Eden’s shares can
be traded in the US via the OTC market,
we will be focusing our efforts on
increasing visibility to US investors and
audiences during the remainder of 2022.
Our hope is that there will be increased
demand for Eden shares once we achieve
the anticipated US EPA approvals.
Section five:
Driving positive impact
As a company which works closely with
farmers and custodians of nature, we
are acutely aware of both the immense
power and fragility of the environment
and its systems. The deepening impact
of climate change and human activity
affects farmers globally; from changes
in temperature and destruction of critical
biodiversity to adverse weather events.
We believe that Eden has an important
part to play in protecting and helping
farmers to work with nature to find
sustainable solutions, without adversely
impacting their bottom line.
Administrative expenses in the year
increased to £2.6m (2020: £2.2m) with
the introduction of new team members.
Operating loss increased to £3.2m (2020:
£2.2m). The increase in operating loss is
due to increased staff costs, as well as
share-based payment charges of £0.6m
(2020: £0.1m). Throughout the year, the
Company remained debt free with no
long-term debt or lending facilities in
place, or expected to be required.
Section four: 2022 outlook
In 2022, our ambition is to build on
the new approvals (and the expanded
addressable market that they represent)
and partnerships achieved in 2021.
Examples include new crop and pest
uses for Mevalone® in Spain and
Portugal, the use of Cedroz™ in Italy
and Morocco, as well as working with
our partners such as Sipcam to expand
the sales of our products across key
countries in North Africa.
The seed treatment project with Corteva
continues this year with further field trials
taking place which should ultimately be
used in the application for regulatory
authorisation in the EU.
Eden is awaiting approval of its active
ingredients, as well as its products,
Cedroz™ and Mevalone®, in the US from
the EPA. Expansion into the US will be a
major milestone for Eden given the size
of the US agricultural market; the world’s
second largest. Due to the nature of the
process and a schedule heavily impacted
by the COVID-19 pandemic, it is hard to
predict exactly when new approvals will
be achieved. However, we are in continual
contact with regulators to progress the
process as quickly as possible, and we
expect to be able to update shareholders
with updates on EPA approval in the
coming months.
Section three: Financial review
Revenue for the year was £1.2m (2020:
£1.4m).
Our objective is to grow revenue
primarily through product sales which
will ultimately provide a sustainable,
consistent source of income for the
Company. In 2021, despite adverse
market conditions in many territories,
sales of Cedroz™ and Mevalone®
increased overall, in volume, by
approximately 4% and by 6% on a
constant currency basis (using the
current year average foreign exchange
rate for both current and prior year sales).
However, due to adverse foreign currency
exchange rates, this growth hasn’t
translated into an increase in product
sales revenue, which remained flat at
£1.1m (2020: £1.1m).
Following the successful fundraise in
March 2020, the cash position at the
year-end has reduced to £3.9m (2020:
£7.3m). However, the Company remains
sufficiently funded and well placed to
implement its ambitious growth strategy,
including investing in product trials,
pursuing product authorisations and
continuing to grow its team of experts.
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07
This technology has significant potential to
be applied beyond its use in biopesticides
and crop protection products and we are
exploring a range of applications across
the animal and consumer product sectors,
where producers are under pressure from
consumers and regulators to reduce
plastic use.
The Company has toll manufacturing
capabilities in the UK and the US, which
provide some operational flexibility. Raw
materials are currently sourced from
outside of the EU and there has been
manageable impact on this part of the
supply chain.
COVID-19
The fallout from the COVID-19
pandemic has continued to represent
an unprecedented challenge for the
agricultural industry, with global food
systems and supply chains put under
extreme pressure. Throughout the
pandemic, Eden’s priority has been to
continue developing and supplying its
products and technologies for the crop
production industry through its global
partnership network.
Most significantly, regulatory processes
globally have remained behind schedule
due to severe backlogs from 2020.
This resulted in delays to key regulatory
approvals that we were expecting in 2021.
Our position on how we are addressing
the COVID-19 pandemic remains as
follows:
Brexit
The impact of Brexit is starting to be
understood by many UK companies,
including Eden.
The Company’s ownership of its
EU approvals of Mevalone® and its
constituent active substances has been
unaffected by Brexit, based on guidance
that 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 continues to weigh up market
opportunities and costs post Brexit. We
are 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, rather it has
benefited from having toll manufacturing
facilities in mainland Europe, though it
continues to monitor this situation.
Eden is a company with sustainability at
the core of its operations and products.
We believe that the most significant way
that Eden can make a positive impact
on the planet is to grow our business
rapidly, bringing our core products
and technologies to the mainstream
market, and displacing unsustainable
alternatives.
We are dedicated to achieving this aim in
a sustainable and responsible manner, by
ensuring our operations and processes
are shaped with the environmental
impact in mind at every step.
Our portfolio of products helps farmers
to protect natural biological ecosystems,
as well as their high value crops, meeting
the growing demands of both consumers
and regulators. The ingredients we use to
formulate our products; geraniol, eugenol
and thymol, are naturally occurring and
have all been allowed for use in organic
agriculture in the European Union.
Our goal is to expand the reach and
applications of our products, so more
farmers in more markets globally can
strike this balance of high crop yield and
sustainable production.
In addition to our biopesticide
products and ingredients, our patented
microencapsulation technology,
Sustaine®, directly addresses the growing
issue of intentionally-added microplastics
use in agriculture which leads to pollution
in the soil, water and plant and animal
tissues. Sustaine® microcapsules
are naturally sourced, plastic-free,
biodegradable micro-spheres derived
from yeast extract, which enable farmers
to deliver crop protection products
without releasing microplastics into
the environment.
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Annual Report StatementsGovernanceCompany OverviewFinancial Statements 08
Chief Executive Officer’s Review continued
“ Despite the ongoing,
uncertain backdrop,
I am pleased that
Eden has made
progressive
strides in 2021,
underpinned by a
belief that we are
best placed to meet
global demands
for sustainable
and plastic-free
agricultural solutions”
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
are increasingly conscious of where it
comes from and concerned about the
supply chain journey. The choices people
are making to put healthy food on the
table are driving what farmers grow in
their fields and how they grow them with
an increasing emphasis on sustainable
practices and produce that is free from
pesticide residues. This is the future of
farming, and Eden is at the forefront
of the movement towards sustainable
farming practices.
3. Supporting our
employees and partners
We continue to work closely with our
partners as they maintain their business
of supplying our product to growers in an
increasing number of countries. Our team
continues to regularly review the situation
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 resuming travel,
though we continue to work remotely
part-time. 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.
1. Growth funded
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) helped us capitalise on the global
shift towards more environmentally
friendly methods of crop protection,
driving us to become a leading provider
of sustainable solutions for global
agriculture. Though the period since has
presented challenges for the Company,
our employees and our partners, Eden
remains debt-free and has carefully
managed its cash resources allowing us
to continue to execute on our exciting
plans. Our outsourced manufacturing
model means that we continue to retain
maximum flexibility over our choice of
manufacturing locations with a relatively
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
had a vital role to play in feeding the
world through the crisis and minimising
the economic fallout. Plant protection
products play a fundamental role in
agricultural production; without them,
we would not be able to cope adequately
with global emergencies such as
COVID-19. The biopesticides market
outlook remains undoubtedly positive,
with a clear demand from consumers
for sustainably grown produce and in
response, a notable shift from growers
towards greener farming practices. As
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09
Ukraine
Eden does not currently have any
business activities in Russia or Ukraine
and, as such, does not expect any
immediate, direct impact on its business.
The knock-on effect of the conflict on
other countries is yet to be understood,
though we do not envisage significant
disruption to the current business in the
short term.
Dividends
There is no dividend to be paid or
proposed in 2021. The Board continues
to monitor its dividend policy.
Section six: Summary
Despite the ongoing, uncertain backdrop,
I am pleased that Eden has made
progressive strides in 2021, underpinned
by a belief that we are best placed to
meet global demands for sustainable
and plastic-free agricultural solutions and
have a long term positive impact on the
health of the planet.
As we move through 2022, I am excited
about the commercial opportunities
ahead, including the potential expansion
into the US market, subject to EPA
approval, and the development of our first
seed treatment product with Corteva, as
well as continuing to grow our regulatory
footprint and addressable markets in new
territories and on new crops. We look
forward to sharing updates on these, and
more, positive developments with all our
stakeholders.
I would like to take this opportunity to
say thank you to Eden’s team for the
exceptional ingenuity and resilience they
have shown this year, in sometimes
challenging circumstances.
I remain proud of the work Eden is doing
in contributing to more environmentally
friendly agricultural practices globally
and building a strong, visionary and
innovative business with sustainability at
its core.
Sean Smith
Chief Executive Officer
30 May 2022
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. The launch
of the head-lice product has been delayed
by the COVID-19 pandemic, with the
closure of schools particularly impacting
its potential market. Since schools have
re-opened, the UK distributor has not met
expectations and, as such, a new partner
for the UK market is being sought.
Sales of the head-lice treatment product
are expected to commence in other
countries around the world in 2022 with
TerpeneTech (UK) expected to sign
an agreement with a new distribution
partner in due course.
Sales of geraniol into the biocide sector
have continued to increase year on year
and TerpeneTech (UK) is investigating
the potential to register additional
active ingredients under the EU’s
biocide directive.
TerpeneTech (Ireland)
TerpeneTech (Ireland) was established
in 2019 in order to own the registration
of geraniol under the EU’s Biocidal
Products Registration regulation, due
to changes brought about by Brexit. As
such, TerpeneTech (Ireland) receives
royalty income from TerpeneTech (UK)
on the sales of geraniol, but is otherwise
non-operational.
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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, and TerpeneTech (Ireland), Eden’s
subsidiary, is also included in the Chief Executive
Officer’s Report.
Cash is safeguarded by close working capital management,
including tightly controlling the Company’s creditor position.
The cash position at the year-end was £3.9m (2020: £7.3m).
This is in line with management’s expectations which have
previously been communicated to shareholders.
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 and milestone payments
are considered to be key financial performance indicators.
Maintaining a low overhead base, progress towards profitability
and regulatory approvals are also key indicators.
Revenue in 2021 consisted of royalties and product sales
and was £1.2 million compared to £1.4 million in 2020. The
operating loss for the year was £3.2 million compared to a
loss of £2.2 million for the previous year. The loss before tax
for 2021 was £3.4 million, up from a loss of £2.5 million in
the previous year. More information on the drivers behind the
performance is included in the Chief Executive Officer’s Report.
The basic loss per share for 2021 was 0.73 pence (2020: a loss
of 0.66 pence).
Administrative expenses for the year were £2.6 million (2020:
£2.2 million), which is line with maintaining a modest overhead
base, whilst ensuring the Company has the necessary skillset
to drive growth.
Intellectual property, including development expenditure, is
written off over nine 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 £1.5m (2020: £1.6m) of
development expenditure in the year, which is a reflection of
the continued development of the Company’s products. A
significant proportion of this expenditure relates to regulatory
approvals which strengthens the Company’s competitive
advantage, ultimately supporting sales growth.
An impairment review of Eden’s investment in its associate
company, TerpeneTech (UK), led to no charge in the year (2020:
£0.3m write down). Further details of this review can be found
in note 15 to the financial statements.
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.
At the end of 2021, 18 (2020: 16) countries had granted product
authorisation with 46 (2020: 44) crop use approvals for Eden’s
biopesticides and 10 (2020: 4) pests and disease targets
addressed with Eden’s registered products, which shows
positive progress in this KPI and translates into an increased
addressable market from a product sales perspective.
The progress of the development of the Company’s products is
measured against internally set timescales as well as against
the regulatory process, which are expected to 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 is 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, Cedrozä™, 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 product in numerous
countries globally.
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.
Finally, successful trial results help
demonstrate the technical and
commercial viability of our
intellectual property.
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11
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.
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.
Principal risks and uncertainties
The Company’s prime risk is associated with the on-going
commercialisation of its intellectual property, which involves
testing of the Company’s products, obtaining regulatory
approvals, which are required for commercialisation, 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.
The Company’s credit risk is primarily attributable to its trade
receivables. Credit risk is managed by running credit checks on
customers and by monitoring payments against contractual
agreements.
The Company monitors cash flow as part of its day to day
control procedures. The Board considers cash flow projections
at its meetings and ensures that the Company has sufficient
cash resources to meet its on-going cash flow requirements.
Due to the nature of the business, there is inherent risk of
infringement of Eden’s intellectual property rights by third
parties. The risk of infringement is managed by taking (and
acting on) the relevant legal advice as and when required.
There is also inherent uncertainty surrounding the regulatory
approval of products in terms of both timing and outcome. This
risk is managed by retaining appropriately experienced staff
and contracting with expert consultants as needed.
COVID-19
The Board has continued to see some impact on the operations
of the business with the restrictions at the beginning and end
of 2021 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.
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 substantial closure of the
hospitality industry.
The Company has not seen a significant change on its toll
manufacturing operations.
Regulatory authorities have been working at reduced capacity,
which has impacted product approval applications that we
have around the world, and has led to previously forecast
revenues being deferred.
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GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 12
Strategic Report continued
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 its:
• 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.
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 a year 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.
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Annual Report 2021
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
30 May 2022
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 14
ESG Report
Introducing Our ESG Strategy
The Transition to Sustainable Agriculture
Shapes Market Needs
In agriculture there is an urgent need to move to
a safe, equitable and sustainable food system.
Our food system accounts for over
a third of global CO2 emissions and
is a key driver of accelerating biodiversity loss.
Our innovative products are positioned to
serve growing markets with more sustainable
solutions. They reduce on-farm impacts on
nature, food waste and the risks to human safety
and health from conventional agrochemicals.
Eden’s products provide effective crop protection
resulting in improved crop yields and produce
quality, enhancing the financial sustainability of
farming businesses whilst reducing the risk to
the environment.
About our ESG Strategy
Developed with input from ESG experts to ensure
that it reflects best-practice.
Informed by a materiality analysis to identify and
prioritise the ESG issues that matter most to the
business and are to be addressed.
Describes our ESG focus areas and sets clear
standards that we integrate into our business
strategy and management approach.
Our ESG Strategy
We deliver bio-innovation to support sustainable
agriculture supported by a resilient and efficient
supply chain and our sustainable operations.
We integrate Environmental, Social and Governance
(ESG) issues into our business strategy and
management approach.
Supporting the UN Sustainable
Development Goals (SDGs)
The SDGs are a call to action to end poverty, protect
the planet and ensure peace and prosperity for all.
They define a framework for action for governments
and business. Through our products, innovation
expertise and sustainable operations we believe we
can make a powerful contribution to support the
SDGs. We particularly contribute to:
Eden Research plc
Annual Report 2021
Integrating ESG
Into All that We Do
Sustainability lies at the heart of what we do at Eden. We are
focused on providing innovative and sustainable solutions to
the global agriculture industry and beyond.
We want to ensure that this mission extends to, and is
reflected in, our reporting, and we believe that setting high
ESG standards means that we can deliver more value to our
stakeholders and accelerate the contribution we make to
sustainability.
It also means that we can demonstrate high standards
of transparency and accountability, helping our investors
understand the contribution that we are making to
sustainability outcomes and evaluate our performance.
We recognise that integrating ESG is a journey and, as for
all businesses, this is just the start and we have a lot to
accomplish.
However, I am confident that our committed team and strong
processes, coupled with our sustainable innovation platforms
will deliver value for our investors and partners.
Sean Smith
Chief Executive Officer
Reducing food waste
Protecting soil
and ecosystems
15
We are committed to
delivering high standards
of Environmental, Social
and Governance (ESG)
performance across our
business. Our ESG Strategy
is designed to integrate
ESG into all that we do.
Eden Research plc
Annual Report 2021
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 16
ESG Report continued
A Resilient and Efficient Supply Chain
Working with leading suppliers
of raw materials and high-quality
manufacturers. We work with our
partners to manage ESG issues
across our supply chain.
Our Ingredients
Applying high standards to ensure the quality and sustainability
of the ingredients used for the manufacture of our innovative
products, including yeast extract – a key building block of our
Sustaine® microcapsules, and terpenes – the nature identical
active substances in our products.
Our Manufacturing
Working with leading manufacturers who apply robust
sustainability standards to reduce environmental impacts
and ensure safety in the manufacture of our products.
Our Priorities:
Manufacturing
Safely
Ensuring high health and safety
standards are applied in the
manufacture of our products.
Protecting the
environment and climate
Reducing greenhouse gas
emissions, improving resource
efficiency, supporting the circular
economy and reducing air pollution.
Protecting
Human Rights
Protecting human rights and
managing risks associated
with modern slavery across
our supply chain.
Case Study:
Sipcam
Manufacturing Excellence
We work with partners, such as Sipcam-Oxon, to
manufacture a number of our key products.
Our products are manufactured at Sipcam’s
facility near Milan, Italy.
Sipcam is a specialist in the manufacture
and marketing of agrochemicals. Sipcam is
a Responsible Care® company, the chemical
industry’s environmental, health and safety
initiative to drive continuous improvement
in performance. Its sites are also certified to
the ISO14001 environmental management
system standard.
Eden Research plc
Annual Report 2021
17
Delivering our ESG
standards at our laboratory
Our new laboratory facility in Oxfordshire has
allowed us to establish high ESG standards in
research and testing. We follow best practice
standards to manage risks, including to
safety, the environment and to ensure high
quality standards.
Eden’s laboratory also has sophisticated
equipment to analyse a wide range of
compounds from a chemical and physical
standpoint and the ability to perform lab scale
formulation development and stability testing
(rheometry, homogenization, particle size
analysis, etc).
Our in-house capabilities will speed the
commercialization and deployment of new
sustainable products.
Sustainable
Operations
We apply high standards in
our own operations.
Our operations are centred
around the Company’s
laboratory and office facilities
in Milton Park, Oxfordshire.
Eden Research’s team brings
deep experience in bio-
innovation for sustainable
agriculture.
Our Priorities:
Acting Safely
Protecting our team by
applying the highest standards
of health and safety in our
own operations.
Reducing Our
Environmental Impacts
Minimising our operational
impact by reducing
greenhouse gas emissions
and reducing waste.
Acting Ethically
Applying best practices in
business ethics, including in
the prevention of bribery and
corruption, fraud and ensuring
legal compliance.
Developing a
Diverse Team
Building a diverse, engaged and
highly skilled team through the
attraction, development and
retention of the best talent.
Eden Research plc
Annual Report 2021
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 18
ESG Report continued
Bio-Innovation for Sustainable Agriculture
Leading innovation in sustainable biopesticides and
plastic-free encapsulation to deliver products that
improve agricultural sustainability. Our innovative
products are derived from natural plant chemistry
and used on high-value fruits and vegetables to
improve crop yields and marketability. They address
key sustainable agriculture drivers including:
Consumer demand for
residue-free produce
Protecting soil health
and reducing impact
on biodiversity
Our Priorities:
Safe products
Ensuring our products are safe
for people and the environment
including in use and disposal.
Reducing food waste
and toxic residues
Reducing food waste by improving
produce treatment and processing
and reducing toxic residues.
Protecting soil and water
Reducing the application and
release of toxic, bio-accumulative
or persistent chemicals and plastic
pollution to soil and water.
Eden Research plc
Annual Report 2021
Case Study:
Our Impact on
Food Waste
Eden’s product, Mevalone®, can be used to extend
the shelf-life of produce. Approved for use on grapes,
apples, kiwis, aubergines, pomegranates, spring onions
and more, Mevalone® is exempt from pesticide residue
limits due to its favourable safety profile. In contrast
to many conventional chemistries, it can be applied up
to the point of harvest giving flexibility to growers and
allowing treatment to extend shelf life.
Extending shelf life can dramatically reduce food waste
in the supply chain and consumer homes. Globally, 25-
30% of all food produced is wasted. Not only does this
have a significant financial impact on the food industry
and in homes, but it also has a significant impact on
our climate with food waste accounting for up to 10%
of global CO2 emissions. Tackling food waste also
means we can protect nature by limiting the need for
agricultural land.
25-30%
of food is wasted globally
How we will deliver on ESG
Integrated into the business: We integrate ESG into
our business strategy and management practices
and consider the implications of key business
decisions on our ESG performance.
Integrating ESG into innovation is a key focus:
As an innovation led business our innovation
strategy and pipeline are key opportunities to deliver
improved ESG outcomes. We actively consider ESG
opportunities and risks in our innovation strategy.
Integrating into governance: We integrate ESG
considerations into roles and responsibilities of
key leaders.
• Delivery of our ESG plan is the responsibility
of the Eden Research CEO.
• Our ESG Steering Committee coordinates
and drives our ESG actions.
• We report our performance regularly to
the Board.
Our future plans
Our next steps on ESG are to:
01
02
03
Identify and address gaps in our
ESG management.
Establish specific ESG targets,
including KPI’s and metrics.
Define reporting output.
19
ESG Drives our Future Growth
The sustainability challenge
Our agricultural system faces the dual challenge of safely
feeding a growing population while decarbonizing and
protecting human health and the natural environment.
Leadership in bio-innovation positions Eden Research
for growth
Our unique technologies provide important solutions to some
of the most pressing sustainable agriculture challenges. As
the world transitions towards a sustainable agri-food system,
products that can deliver more sustainable outcomes are set
for significant growth.
Our ESG approach will drive impact
Our sustainable agriculture solutions, delivered through our
integrated ESG platform make Eden Research an exciting
opportunity for ESG investors.
Eden’s formulations are well
suited for a wide range of
crop protection applications.
The fact that our Sustaine®
encapsulation technology
is completely free from
microplastics is just one of
the elements that makes
them stand out in this rapidly
evolving market.
Sean Smith
Chief Executive Officer
Eden Research plc
Annual Report 2021
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 20
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.
Eden Research plc
Annual Report 2021
21
Governance
22 Board of Directors
26 Chairman’s letter
28 Business model and strategy
30 The QCA Corporate Governance Code
36 Remuneration Report
40 Audit Committee Report
42 Directors’ Report
43 Directors’ Responsibilities Statement
Eden Research plc
Annual Report 2021
GovernanceFinancial StatementsCompany OverviewAnnual Report Statements 22
Board of Directors
Leading the way, in
achieving successful
business growth.
Eden Research plc
Annual Report 2021
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, having been
responsible for the commercialisation
of innovative agricultural products and
services globally. Prior to this, he held
senior international roles including the
Head of Bayer CropScience’s BioScience
division and President of the Bayer
HealthCare Animal Health division.
Committee membership
AIM Compliance Committee
(Chairman)
Nominations Committee (Chairman)
Remuneration Committee (Chairman)
Audit Committee
External appointments
Genus plc (Non-Executive Director)
23
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 focused 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 over
twenty 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
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 24
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 2021 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
(12 meetings)
AIM
Compliance
(1 meeting)
Remuneration
& Nominations
(9 meetings)
Audit
(7 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 and Fellow of the
Institute of Chartered Accountants in England and Wales (ICAEW).
As part of his professional development, he attends relevant
courses and maintains his qualification through Continuing
Professional Development under the ICAEW requirements.
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.
Product supply
chain and
management
Intellectual
Property
Chemicals
Industry
General
management
Other public
Company
(Board level)
Funding
Board skill-set
Director
A Abrey
R Cridland
S Smith
L van der Broek
Eden Research plc
Annual Report 2021
25
External advisors
The Company uses external advisors, where necessary, as follows:
Advisor
Role
Nominated Advisor
Provides advice on AIM Compliance
Commercial lawyer
Provides advice on legal issues such as commercial agreements
Regulatory lawyer
Provides advice on regulatory aspects of the business
The Board’s Role
The Board, under the Chairman’s leadership, is responsible for
ensuring our long-term success.
Internal advisors
The Company Secretary is the only internal advisor that the
Company currently has.
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 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.
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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 26
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.
Eden Research plc
Annual Report 2021
27
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
(if applicable) and employees
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
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.
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.
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
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
Acceptance of challenge
Accountability
A sense of shared purpose
The Board is alert to signs of possible
cultural problems and recognises that the
workforce is a vital source of insight into
the culture of the company.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 28
Business model and strategy
The Company’s business model can
be found on the Company’s website
www.edenresearch.com.
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
• Furthering 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
Annual Report 2021
29
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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 30
The QCA Corporate Governance Code
1
2
3
4
5
Published Disclosures:
Principle
No.
Principle
Location of
disclosure
ANNUAL
REPORT &
ACCOUNTS
See page XII.
WEBSITE
ANNUAL
REPORT
& ACCOUNTS
WEBSITE
WEBSITE
Establish a strategy
and business model
which promote
long-term value for
shareholders
Seek to understand
and meet shareholder
needs and
expectations
Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
Embed effective
risk management,
considering both
opportunities and
threats, throughout the
organisation
ANNUAL
REPORT &
ACCOUNTS
See page 11
WEBSITE
Maintain the board
as a well-functioning,
balanced team led by
the chair
ANNUAL
REPORT &
ACCOUNTS
See pages
22 - 23
WEBSITE
In accordance with Aim Rule 26
of the AIM rules for companies,
the corporate governance code
that the Board of Directors has
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 9 March 2022.
Eden Research plc
Annual Report 2021
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 for
strategy
long-term success and to contribute
to wider society.
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.
DISCLOSURE: Explain how the business model identifies
The Board has identified the main
the key resources and relationships on which the
Compliant
stakeholders in the business and
Stakeholder
engagement
regularly discusses how employees,
and social
suppliers and customers and others
responsibility
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).
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.
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 that the risk management and related control
systems in place are effective.
threats and the processes to mitigate
and contain them.
Whilst the Board is responsible for
risk, our culture seeks to encourage all
colleagues to manage risk effectively.
DISCLOSURE: Identify those directors who are considered
The Board works well together as
Board
to be independent; where there are grounds to question
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
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.
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
Seek to understand
and meet shareholder
ANNUAL
REPORT
needs and
expectations
& ACCOUNTS
WEBSITE
Take into account
WEBSITE
wider stakeholder and
social responsibilities
and their implications
for long-term success
Embed effective
risk management,
considering both
opportunities and
threats, throughout the
organisation
ANNUAL
REPORT &
ACCOUNTS
See page 11
WEBSITE
Maintain the board
ANNUAL
as a well-functioning,
REPORT &
balanced team led by
the chair
ACCOUNTS
See pages
22 - 23
WEBSITE
2
3
4
5
31
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
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.
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.
Whilst the Board is responsible for
risk, our culture seeks to encourage all
colleagues to manage risk effectively.
Shareholder
engagement
Stakeholder
engagement
and social
responsibility
Effective risk
management
Board
composition,
Board culture,
dynamics and
contribution
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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements Disclosure
status
Explanation
Link
We assess the adequacy of the
Compliant
Board’s collective skills and
Professional
development
experience and Directors’ individual
and training
development needs are discussed
annually with the Chairman.
contributions. Any learning and
development needs are reviewed and
continual improvement implemented.
32
The QCA Corporate Governance Code continued
Principle
No.
6
Principle
Ensure that between
them the directors
have the necessary
up-to-date experience,
skills and capabilities
Location of
disclosure
ANNUAL
REPORT &
ACCOUNTS
See pages
22 - 23
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.
7
8
Evaluate board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
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.
Promote a corporate
culture that is based
on ethical values and
behaviours
ANNUAL
REPORT &
ACCOUNTS
See
Chairman’s
Letter on
pages
26 - 27
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
Annual Report 2021
Principle
No.
6
Principle
Ensure that between
them the directors
have the necessary
Location of
disclosure
ANNUAL
REPORT &
ACCOUNTS
up-to-date experience,
See pages
skills and capabilities
22 - 23
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
WEBSITE
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.
7
8
be addressed.
summary of:
considered;
DISCLOSURE: Include a more detailed description of the board performance
evaluation process/cycle adopted by the company. This should include a
• The criteria against which board, committee, and individual effectiveness is
• How evaluation procedures have evolved from previous years, the results of
the evaluation process and action taken or planned as a result; and
• How often board evaluations take place.
Explain how the company approaches succession planning and the
processes by which it determines board and other senior management
appointments, including any links to the board evaluation process.
DISCLOSURE: Include in the chair’s corporate governance statement how the
culture is consistent with the company’s objectives, strategy and business model
in the strategic report and with the description of principal risks and uncertainties.
The statement should explain what the board does to monitor and promote a
healthy corporate culture and how the board assesses the state of the culture
DISCLOSURE: Explain how the board ensures that the company has the
means to determine that ethical values and behaviours are recognised
Promote a corporate
culture that is based
ANNUAL
REPORT &
on ethical values and
ACCOUNTS
behaviours
See
Chairman’s
Letter on
pages
26 - 27
WEBSITE
at present.
and respected.
33
Disclosure
status
Compliant
Explanation
We assess the adequacy of the
Board’s collective skills and
experience and Directors’ individual
development needs are discussed
annually with the Chairman.
Link
Professional
development
and training
Evaluate board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
WEBSITE
DISCLOSURE: Include a high-level explanation of the board performance
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
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
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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 34
The QCA Corporate Governance Code continued
Location of
disclosure
WEBSITE
Principle
No.
9
Principle
Maintain governance
structures and
processes that are
fit for purpose and
support good decision-
making by the board
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.
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: 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 the
Corporate governance
Compliant
Company’s overall strategic direction
structure
and management and for the
establishment and maintenance of a
framework of delegated authorities
and controls to ensure the efficient
and effective management of the
Company’s operations.
The Investors section of our
Audit committee terms
Compliant
website includes our results,
of reference
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 report
Remuneration
committee report
Remuneration
committee terms of
reference
AGM Voting outcomes
Annual reports
Notices of general
meetings
Eden Research plc
Annual Report 2021
Principle
No.
9
Principle
Disclosure Detail Required
Location of
disclosure
Maintain governance
WEBSITE
DISCLOSURE: In addition to the high level explanation of the application of the
structures and
processes that are
fit for purpose and
support good decision-
making by the board
10
Communicate how the
ANNUAL
DISCLOSURE: Describe the work of any board committees undertaken during
company is governed
and is performing by
REPORT &
ACCOUNTS
the year.
WEBSITE
not in place).
maintaining a dialogue
with shareholders
and other relevant
stakeholders
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.
Include an audit committee report (or equivalent report if such committee is
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
Company’s overall strategic direction
and management and for the
establishment and maintenance of a
framework of delegated authorities
and controls to ensure the efficient
and effective management of the
Company’s operations.
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
35
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 36
Remuneration Report
The equity incentive should deliver value to the Executive in
the medium to long term, based on a sustainable increase in
the share price over the corresponding period of time, and of
a magnitude related to the actual increase in share price, in
order to align management’s incentive with the interests of
shareholders.
The Remuneration Committee has absolute discretion in the
application of these principles and may make adjustments,
where appropriate, and acting reasonably.
Salary
A salary review usually occurs in Q4 each year, to take
effect from 1 January in the following year, unless a market
adjustment is required at a different time.
Generally, salaries should be benchmarked and comparable
to similar positions in similar sized AIM listed companies in
similar industry segments.
Cash Bonus
Bonuses are paid to the extent their payment does not shorten
the funded runway of the business to less than eighteen
months, based upon an up-to-date forecast using reasonable
assumptions, as agreed by the Board. This figure may be
adjusted by the Remuneration Committee.
The Target bonus levels are a percentage of salary.
The Target is generally made up of, and released incrementally by:
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, such as exceeding revenue and EBITDA
targets, or signing new distribution agreements over a
certain value, over and above the day to day role and linked to
significant commercial progress.
•
the achievement of new commercial partnership deals and
other commercial milestones (e.g. regulatory approvals)
•
the return received on such agreements
• meeting or exceeding revenue and EBITDA targets
Eden Research plc
Annual Report 2021
37
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).
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 Board and the auditors.
Equity Incentive
Unapproved share option scheme
The Company operated an unapproved share option scheme
for Executive Directors, senior management and certain
employees up to 28 September 2017.
Long-Term Incentive Plan (“LTIP”)
Since September 2017 Eden has operated an option scheme
for Executive Directors, senior management and certain
employees under a LTIP which allows for certain qualifying
grants to be HMRC approved.
In 2021, certain changes were made to the LTIP in connection
with a financing round completed in 2020, further details of
which can be found below.
Application of the Policy
Emoluments
Details of the remuneration of those who served as Directors
during the year are set out below.
For 2021, the target bonus levels and actual bonus achieved for
Executive Directors were:
Sean Smith
Alex Abrey
70% of base salary, achieved 42%,
(2020: 70% of base salary, achieved 49%)
70% of base salary, achieved 42%,
(2020: 70% of base salary, achieved 49%)
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.
Base salary
2021
£
2020
£
Non-Executive Directors have Letters of Appointment which are
terminable by the Director or the Company with three months’
notice.
Executive Directors
S Smith
A Abrey
Non-Executive Directors
L van der Broek
R Cridland
253,000
190,000
235,000
180,000
45,000
40,000
41,667
36,665
The Company operates an annual, discretionary cash bonus
scheme for the Executive Directors only.
Share option scheme grants
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 remained 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 were up to
100% of salary in any one year and granted subject to achieving
challenging performance conditions set at the date of the grant.
A percentage of the award 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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 38
Remuneration Report continued
Application of the Policy continued
2019 Award
On 28 June 2019, 5,891,111 shares were awarded under the LTIP scheme to the Chief Executive Officer and the Chief Financial
Officer (the “2019 Award”), details of which are in the table below.
A Abrey
Year
2017
2018
S Smith
Year
2017
2018
Number of shares
under option
1,093,333
1,333,333
Vesting date
30/6/2021
30/6/2022
Minimum weighted
average share
price (p)
Maximum
weighted average
share price (p)
23
25
34.5
37.5
Number of shares
under option
1,775,556
1,688,889
Vesting date
30/6/2021
30/6/2022
Minimum weighted
average share
price (p)
Maximum
weighted average
share price (p)
23
25
34.5
37.5
The shares arising from exercise of options are subject to
a one-year lock-in restriction, followed by a one-year orderly
market restriction.
Further details of the LTIP Replacement Award can be found in
note 22.
2021 Award
Also in 2021, the Company made a further grant of options
in order to ensure continuity of long term incentive of options
over 7,183,784 new Ordinary Shares in Eden, at a strike price
of 10.37p each, in the amounts of 4,102,703 awarded to Sean
Smith and 3,081,081 awarded to Alex Abrey.
These grants expire on 31 July 2025 and vest as follows:
1/3 upon grant
1/3 12 months from the date of grant
1/3 24 months from the date of grant
All of the above nil-priced options only became exercisable if
the following share price performance conditions were met:
50% of the options became exercisable if the weighted average
Ordinary Share price in the 45 day period ending on the vesting
date was 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 was pro-rata and on a
straight-line basis between 50% and 100%. Below the minimum
price, the options were not exercisable and lapsed in full.
LTIP Replacement Award
In 2021, the Company made changes to the LTIP in line with
the requirements of a fundraise completed in 2020. The new
plan was deemed a more appropriate scheme to incentivise
management given the Company’s stage of development and
replaced the 2019 Award, which lapsed in its entirety.
Pursuant to the updated plan, in 2021 the Company 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 vested
immediately and 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.
Eden Research plc
Annual Report 2021
39
Accordingly, at 31 December 2021, the Directors had the following interests in share option schemes:
Date from which
exercisable
Expiry Date
Exercise
price £
Number at
1 January
2021
Granted in
year
Exercised in
year
Lapsed in
year
Number at
31 December
2021
0.13
Nil
Nil
Nil
0.06
0.06
0.06
0.10
0.10
0.10
Nil
Nil
Nil
0.06
0.06
0.06
0.10
0.10
0.10
1,050,000
960,000
1,093,333
1,333,333
–
–
–
–
–
–
–
–
–
–
1,500,000
1,500,000
1,500,000
1,027,027
1,027,027
1,027,027
4,436,666
7,581,081
1,148,000
1,775,556
1,688,889
–
–
–
–
–
–
–
–
–
2,000,000
2,000,000
2,000,000
1,367,567
1,367,568
1,367,568
4,612,445
10,102,703
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,050,000
960,000
1,093,333
1,333,333
–
–
–
–
–
–
–
–
–
–
1,500,000
1,500,000
1,500,000
1,027,027
1,027,027
1,027,027
4,436,666
7,581,081
1,148,000
1,775,556
1,688,889
–
–
–
–
–
–
–
–
–
2,000,000
2,000,000
2,000,000
1,367,567
1,367,568
1,367,568
4,612,445
10,102,703
A J Abrey
17/01/2016
30/09/2020
30/06/2021
30/06/2021
30/06/2021
30/06/2021
30/06/2021
22/07/2021
22/07/2022
22/07/2023
S M Smith
30/09/2020
30/06/2021
30/06/2022
30/06/2021
30/06/2021
30/06/2021
22/07/2021
22/07/2022
22/07/2023
16/01/2021
29/09/2027
29/06/2029
29/06/2029
30/06/2022
30/06/2023
30/06/2024
31/07/2025
31/07/2025
31/07/2025
29/09/2027
29/06/2029
29/06/2029
30/06/2022
30/06/2023
30/06/2024
31/07/2025
31/07/2025
31/07/2025
Lykele van der Broek
Remuneration Committee Chairman
30 May 2022
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 40
Audit Committee Report
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 22 and 23.
The Audit Committee met seven 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 Chairman met with the external auditors at the
conclusion of the audit without the Executive Directors being
present. The Committee has met since the end of the financial
year to consider the results and the Annual Report for the
year ended 31 December 2021.
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 the Chief Financial Officer in respect
of the half year and by both the Chief Financial Officer and the
external auditors in respect of the 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 in respect of the year end results. 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
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.
intellectual property and investments
• Management override of controls
The Committee’s terms of reference can be found on the
Company’s website www.edenresearch.com.
Other areas reviewed in the year were as follows:
• Consolidation
• Share based payments
• Accruals and provisions
• Related party transactions
Eden Research plc
Annual Report 2021
41
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.
Other activities
In respect of 2021, 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.
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.
It is expected that this review and its findings will be completed
by the end of 2022.
Robin Cridland
Audit Committee Chairman
30 May 2022
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 2021 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 presents its 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 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.
For the 2021 financial year end, there was no non-audit work
undertaken by the Company’s auditors.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 42
Directors’ Report
The Directors present their annual report and financial
statements for the year ended 31 December 2021.
Results and dividends
The loss for the year after taxation amounted to £2,777,543
(2020: £2,263,024). 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.
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 at least once 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:
Total
Holdings
% of share
capital
1,302,824
929,500
731,039
130,167
0.34%
0.24%
0.19%
0.03%
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:
Alex Abrey
Lykele van der Broek
Sean Smith
Robin Cridland
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 2021:
Entity
Total
Holdings
% of Share
Capital
54,933,000
BGF Investment Management
Sipcam Oxon SpA
37,614,830
Gresham House Asset Management 27,845,445
25,725,500
Hargreaves Lansdown
22,584,000
Cannacord Genuity Group
20,386,275
JM Finn & Co
20,001,808
Interactive Investor Services
17,350,145
Atul Unadkat
16,095,276
Rathbone Nominees
Amati AIM VCT
14,282,652
HSBC Global Custody Nominee (UK) 13,270,588
14.44%
9.89%
7.32%
6.76%
5.94%
5.36%
5.26%
4.56%
4.23%
3.76%
3.68%
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
Annual Report 2021
43
Directors’ Responsibilities Statement
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 UK-adopted
international accounting standards. The Company financial
statements have been prepared in accordance with UK-
adopted international accounting standards and as applied in
accordance with the provisions of the Companies Act 2006.
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
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.
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 of disclosure to auditor
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
• 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.
Sean Smith
Director
30 May 2022
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.
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewGovernanceAnnual Report Statements 44
Our objective is to grow
revenue primarily through
product sales which
will ultimately provide a
sustainable, consistent
source of income for
the Company.
Eden Research plc
Annual Report 2021
45
Financial Statements
Independent Auditor’s Report
46
52 Consolidated statement of comprehensive
income
53 Consolidated statement of financial position
54 Company statement of financial position
55 Consolidated statement of changes in equity
56 Company statement of changes in equity
57 Consolidated statement of cash flows
58 Company statement of cash flows
59 Notes to the group financial statements
Eden Research plc
Annual Report 2021
Financial StatementsCompany OverviewAnnual Report StatementsGovernance 46
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 2021 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 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
the parent Company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards 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
Revenue
New risks
Going concern
£100,000 (2020: £100,000)
0.70% (2020: 0.59%) of Group total assets
Vs 2020
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 £7,749,910, 2020: £6,610,014 and parent Company £7,749,910, 2020: £6,610,014)
Refer to notes 1.5 and 1.6 on page 62 (accounting policy) and note 12 on pages 75 and 76 (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 (in addition to intangible assets which are 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.
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.
Eden Research plc
Annual Report 2021
47
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, we determined that recoverable amounts estimated for the
Agrochemicals CGU has a high degree of estimation uncertainty with a potential range of reasonable outcomes greater than
our materiality for the financial statements as a whole. The financial statements (note 12) disclose the sensitivity estimated by
the Group.
Our response
Our procedures included:
Our sector experience: we challenged the Group’s and the parent Company’s selection of discount rates and rates of
growth by using our own judgement and experience to determine an appropriate range and comparing the actual rate used
to that range;
Assessing forecasts: we 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 (£1,228,580, 2020: £1,368,988)
Refer to page 6 (Chief Executive Officer’s Review), note 1.4 on pages 60 and 61 (accounting policy) and note 4 on pages 69 and 70
(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.
The Group’s agreements with customers are often bespoke and require the Directors to make judgements in identifying the
relevant performance obligations and determining the appropriate timing of revenue recognition.
Additionally, a large proportion of revenue arises around the year-end date which increases the risk around appropriate timing
of recognition.
The risk is considered to have increased because the Company entered into a new bespoke customer contract in the year where
there were no such new contracts in the prior year.
Our response
Our procedures included:
Test of details:
for the entire population of product sales in the year, we inspected the documentation supporting the date on which the
revenue was earned;
for a sample of product sales invoices raised in the month after 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;
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 48
Independent Auditor’s Report continued
to the members of Eden Research plc
2 Key audit matters: our assessment of risks of material misstatement continued
for the single new bespoke contract, we evaluated the terms and conditions of the contract to assess the identification of
performance obligations and the resulting timing of revenue recognition; 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
Refer to page 40 (Audit Committee report) and note 1.3 on pages 59 and 60 (accounting policy)
The risk – Disclosure quality
The financial statements explain how the Board has formed a judgement that it is appropriate to adopt the going concern basis of
preparation for the Group and the parent Company.
That judgement is based on an evaluation of the inherent risks to the Group’s and the parent Company’s business model and
how those risks might affect the Group’s and the parent Company’s financial resources or ability to continue operations over a
period of at least 12 months from the date of approval of the financial statements and is intrinsically linked to the valuation of the
Group’s intangible assets.
The risk most likely to adversely affect the Group’s and Company’s available financial resources over this period is the potential
delay to regulatory approvals for new territories and/or products which would delay the forecast revenue and potentially require a
further fundraise to maintain positive cash balances.
There are also less predictable but realistic second order impacts, such as the impact of Brexit and COVID-19 imposed
restrictions, the erosion of customer demand, and the erosion of supplier confidence, which could result in a rapid reduction of
available financial resources.
The risk for our audit was whether or not those risks were such that they amounted to a material uncertainty that may have cast
significant doubt about the ability to continue as a going concern. Had they been such, then that fact would have been required to
have been disclosed.
Our response
Our procedures included:
Our sector experience: We evaluated the Directors’ going concern assessment, including the reasonableness of the key
assumptions used in the cash flow forecasts and the level of downside sensitivities applied;
Historical comparisons: We compared previously forecast cash flows against actual cash flows to assess the historical
accuracy of forecasting;
Sensitivity analysis: We considered sensitivities over the level of available financial resources indicated by the Group’s financial
forecasts, taking account of reasonably possible (but not unrealistic) adverse effects that could arise if the Group’s forecast
future sales do not materialise;
Evaluating directors’ intent: We evaluated the achievability of the actions the Directors consider they would take to improve the
position should the risks materialise, which included reductions in research and development expenditure, bonuses as well as
expansionary overheads, taking into account the extent to which the Directors can control the timing and outcome of these.
We critically assessed whether the underlying forecast in each scenario was achievable without these costs;
Assessing transparency: We considered whether the going concern disclosure in note 1 to the financial statements gives a full
and accurate description of the Directors’ assessment of going concern, including the identified risks.
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 (2020: £100,000), determined with reference to
a benchmark of total assets of £14,289,223 (2020: £16,924,364), of which it represents 0.70% (2020: 0.59%). 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 (2020: £99,000), determined with
reference to a benchmark of total parent Company assets of £14,289,223 (2020: £16,852,895), of which it represents 0.70%
(2020: 0.59%). We consider a benchmark of total assets to be appropriate as the parent Company is in the early stages of
development.
Eden Research plc
Annual Report 2021
49
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 65% (2020: 75%) of materiality for the financial statements as a whole, which equates to
£65,000 (2020: £75,000) for the Group and £64,350 (2020: £74,250) for the parent Company.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £5,000 (2020:
£5,000), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the Group’s 3 (2020: 3) reporting components, we subjected 1 (2020: 2) 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
99.8% (2020: 100%)
Revenue
99.9% (2020: 100%)
Loss before tax
98.6% (2020: 98.8%)
For the residual components, we performed analysis at the Group level to re-examine our assessment that there were no
significant risks of material misstatement within it.
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”).
An explanation of how we evaluated management’s assessment of going concern is set out in the related key audit matter in
section 2 of this report.
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.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 50
Independent Auditor’s Report continued
to the members of Eden Research plc
5 Fraud and breaches of laws and regulations – ability to detect continued
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 given the incentive and opportunity to manipulate
this subjective estimate and the importance of these assets to the users’ assessment of the value of the Group.
Further detail in respect of the above areas is set out in the key audit matter disclosures in respect of revenue recognition and
recoverability of intangible assets relating to Agrochemicals CGU in section 2 of this report.
We also performed procedures including:
Identifying the parent Company’s 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.
Eden Research plc
Annual Report 2021
51
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.
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 43, 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
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
30 May 2022
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 52
Consolidated statement of comprehensive income
For the year ended 31 December 2021
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
4
5
8
9
9
15
15
10
11
2021
£
1,228,580
(667,343)
2020
£
1,368,988
(736,509)
561,237
632,479
–
(434,630)
(2,694,290)
(640,597)
7,601
(552,809)
(2,202,581)
(120,380)
(3,208,280)
(2,235,690)
98
(32,074)
(97,247)
–
(58,177)
(3,395,680)
618,137
5,725
(24,000)
35,706
(299,521)
(30,352)
(2,548,132)
285,108
(2,777,543)
(2,263,024)
(2,788,973)
(2,270,347)
11,430
7,323
(2,777,543)
(2,263,024)
(0.73p)
(0.73p)
(0.66p)
(0.66p)
The income statement has been prepared on the basis that all operations are continuing operations.
Eden Research plc
Annual Report 2021
Consolidated statement of financial position
As at 31 December 2021
53
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
Notes
12
13
14
15
17
18
10
19
20
19
20
2021
£
7,919,780
232,278
372,787
361,688
2020
£
6,729,483
188,065
394,610
419,865
8,886,533
7,732,023
521,351
886,587
903,245
3,829,369
6,140,552
1,711,518
99,924
1,811,442
4,329,110
87,740
298,428
386,168
224,422
1,396,308
285,108
7,286,503
9,192,341
1,454,955
84,350
1,539,305
7,653,036
125,212
330,898
456,110
Net assets
12,829,475
14,928,949
Equity
Called up share capital
Share premium account
Warrant reserve
Merger reserve
Retained earnings
Non-controlling interest
Total equity
Notes
2021
£
2020
£
23
24
25
26
27
3,803,402
39,308,529
937,505
10,209,673
(41,460,753)
31,119
3,803,402
39,308,529
429,915
10,209,673
(38,842,259)
19,689
12,829,475
14,928,949
The financial statements were approved by the Board of Directors and authorised for issue on 30 May 2022 and are signed on its
behalf by:
Sean Smith
Director
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 54
Company statement of financial position
As at 31 December 2021
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
12
13
14
15
17
18
10
19
20
19
20
23
24
25
26
2021
£
7,813,583
232,278
372,787
361,688
8,780,336
521,351
970,587
903,245
3,829,369
6,224,552
1,667,557
99,924
1,767,481
4,457,071
87,740
298,428
386,168
2020
£
6,610,014
188,065
394,610
419,865
7,612,554
224,422
1,444,308
285,108
7,286,503
9,240,341
1,374,862
84,350
1,459,212
7,781,129
125,212
330,898
456,110
12,851,239
14,937,573
3,803,402
39,308,529
937,505
10,209,673
(41,407,870)
3,803,402
39,308,529
429,915
10,209,673
(38,813,946)
12,851,239
14,937,573
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 £2,764,403 (2020: £2,229,669).
The financial statements were approved by the Board of Directors and authorised for issue on 30 May 2022 and are signed on its
behalf by:
Sean Smith
Director
Company Registration No. 03071324
Eden Research plc
Annual Report 2021
55
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share
capital
£
Share
premium
account
£
Notes
Merger
reserve
£
Warrant
reserve
£
Retained
earnings
£
Non-
controlling
interest
£
Total
£
Total
£
Balance at 1 January 2020
Year ended 31 December 2020:
Loss and total
comprehensive income
for the year
Issue of share capital
Options granted
Balance at 31 December
2020
Year ended 31 December
2021:
Loss and total
comprehensive income
for the year
Issue of share capital
23/24
Options granted
Options lapsed
22
22
Balance at 31 December
2021
2,071,893 31,289,915 10,209,673
335,739 (36,571,912) 7,335,308
12,366 7,347,674
–
–
1,731,509 8,018,614
–
–
–
–
–
– (2,270,347) (2,270,347)
7,323 (2,263,024)
–
94,176
– 9,750,123
–
94,176
– 9,750,123
–
94,176
3,803,402 39,308,529 10,209,673
429,915 (38,842,259) 14,909,260
19,689 14,928,949
–
–
–
–
–
–
–
–
–
–
–
–
– (2,788,973) (2,788,973)
11,430 (2,777,543)
–
678,069
–
–
–
678,069
(170,479)
170,479
–
–
–
–
–
678,069
–
3,803,402 39,308,529 10,209,673
937,505 (41,460,753) 12,798,356
31,119 12,829,475
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 56
Company statement of changes in equity
For the year ended 31 December 2021
Balance at 1 January 2020
Year ended 31 December 2020:
Loss and total comprehensive income for
the year
Issue of share capital
Options granted
Share
capital
£
Share
premium
account
£
Notes
Merger
reserve
£
Warrant
reserve
£
Retained
earnings
£
Total
£
2,071,893 31,289,915 10,209,673
335,739 (36,584,277) 7,322,943
–
–
1,731,509
8,018,614
–
–
–
–
–
– (2,229,669) (2,229,669)
–
94,176
–
–
9,750,123
94,176
Balance at 31 December 2020
3,803,402 39,308,529 10,209,673
429,915 (38,813,946) 14,937,573
Year ended 31 December 2021:
Loss and total comprehensive income for
the year
Issue of share capital
Options granted
Options lapsed
23/24
22
22
–
–
–
–
–
–
–
–
–
–
–
–
– (2,764,403) (2,764,403)
–
678,069
–
–
–
678,069
(170,479)
170,479
–
Balance at 31 December 2021
3,803,402 39,308,529 10,209,673
937,505 (41,407,870) 12,851,239
Eden Research plc
Annual Report 2021
57
Consolidated statement of cash flows
For the year ended 31 December 2021
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 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:
Bank balances and short-term deposits
Notes
2021
£
£
2020
£
£
33
(1,586,582)
–
(32,074)
–
(1,618,656)
(1,265,812)
(450)
(23,550)
268,777
(1,021,035)
(1,624,927)
(101,269)
98
–
–
(90,387)
(1,701,287)
(200,758)
5,725
(1,726,098)
(1,896,320)
10,389,053
(638,930)
(44,457)
(90,387)
(3,435,141)
7,286,503
(21,993)
3,829,369
9,705,666
6,788,311
501,984
(3,792)
7,286,503
3,829,369
7,286,503
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 58
Company statement of cash flows
For the year ended 31 December 2021
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 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:
Bank balances and short-term deposits
Notes
2021
£
£
2020
£
£
33
(1,586,582)
–
(32,074)
–
(1,618,656)
(1,265,812)
(450)
(23,550)
268,777
(1,021,035)
(1,624,927)
(101,269)
98
–
–
(90,387)
(1,701,287)
(200,758)
5,725
(1,726,098)
(1,896,320)
10,389,053
(638,930)
(44,457)
(90,387)
3,435,141
7,286,503
(21,993)
3,829,369
9,705,666
6,788,311
501,984
(3,792)
7,286,503
3,829,369
7,286,503
Eden Research plc
Annual Report 2021
59
Notes to the group financial statements
For the year ended 31 December 2021
1 Accounting policies
Company information
Eden Research plc is a public company limited by shares incorporated in England and Wales. The registered office is 67C
Innovation Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The Company's principal activities and nature of its operations
are disclosed in the Directors' report.
The group consists of Eden Research plc, its subsidiaries, TerpeneTech Limited (Ireland), Eden Research Europe Limited (Ireland)
and its associate company, TerpeneTech Limited (UK).
1.1 Accounting convention
The Group financial statements have been prepared in accordance with UK-adopted international accounting standards. The
Company financial statements have been prepared in accordance with UK-adopted international accounting standards and as
applied in accordance with the provisions of the Companies Act 2006.
The financial statements are prepared in 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
The 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, however, there have been no changes made in the current year, including changes in comparative
figures, to enhance presentation.
1.2 Basis of consolidation
The consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings up to
31 December 2021. 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 £2,777,543 (2020: £2,263,024). Net current assets at that date
amounted to £4,329,111 (2020: £7,653,036). Cash at that date amounted to £3,829,369 (2020: £7,286,503). As at 30 April 2022,
the cash balance has reduced further to £2,451,971. 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.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 60
Notes to the group financial statements continued
1 Accounting policies continued
1.3 Going concern continued
The forecasts adopted include revenue derived from existing contracts as well as expected new contracts in respect of products
not yet available for use.
The impact of COVID has been considered in the forecasts. The Group has not been significantly impacted by the pandemic
although it has led to some delays in regulatory approvals, 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 the Directors have previously demonstrated ability and
willingness to delay certain costs, such as research and development expenditure, where required and are willing and able
to delay costs in the forecast period should the need arise. A positive cash balance is forecast to be maintained in this base
scenario throughout the entire forecast period.
In addition, the Directors have also considered a downside scenario which includes reductions to revenue derived from existing
contracts as well as elimination of revenue from products not yet available for use offset by mitigations around research and
development expenditure as well as some reductions in expansionary overheads. Under this scenario, a positive cash balance
would be maintained over the forecast period.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
The Group’s achievement of long-term positive cash generation is reliant on the completion of ongoing product development and
successful initial approval and registration of these products with various regulatory bodies, as well as the registration of existing
products in new territories. While the Group is forecast to become cash generative in 2024 under the base budget, the Directors
consider it reasonably possible that the Group will require a further fundraise prior to that point but beyond the going concern
period. The Directors have assessed the likelihood of obtaining such funding, particularly in the context of the successful raise in
March 2020, and would expect to be able to raise such funds as necessary.
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.
Eden Research plc
Annual Report 2021
61
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 the 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.
The Corteva agreement entered into in the current year includes milestone payments with £141,293 received in the current year.
These milestone payments have been assessed to relate to a performance obligation in respect of provision of R&D services
and a licence to the developed product with the performance obligation being satisfied at a point in time. As at year end, this
performance obligation had not been reached and, consequently, the amounts received deferred as contract liability (presented
within Accruals and Deferred Income in note 19).
Further milestone payments are contractually due in the year ending 31 December 2022. The performance obligation is expected
to be met no later than by 31 December 2023.
The second performance obligation relates to product sales and will be accounted for in line with the product sales policy
disclosed below once the commercial sales have commenced.
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.
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 other than the liability in respect of the Corteva milestone payments
noted in the milestone section (2020: none).
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 62
Notes to the group financial statements continued
1 Accounting policies continued
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 9 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.
An internally generated intangible asset arising from the Company's development activities is recognised only if all the following
conditions are met:
the project is technically and commercially feasible;
an asset is created that can be identified;
the Company intends to complete the asset and use or sell it and has the ability to do so;
it is probable that the asset created will generate future economic benefits;
the development cost of the asset can be measured reliably; and
there are sufficient resources available to complete the project.
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives from the date they are
available for use. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as
an expense in the period in which it is incurred.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any
impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the
following bases:
Leasehold land and buildings
Over the term of the lease
Fixtures and fittings
5 years straight line
Motor vehicles
Over the term of the lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying
value of the asset, and is recognised in the income statement.
1.7 Impairment of tangible and intangible assets
The Directors regularly review the intangible assets for impairment and provision is made if necessary. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at each reporting date.
1.8 Inventories
Inventories are stated at the lower of cost and estimated selling price, less costs to complete and sell. Cost is based on the first-
in-first-out principle. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have
been incurred in bringing the inventories to their present location and condition.
Eden Research plc
Annual Report 2021
63
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) 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
(b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be
settled by the Company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so
classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up
share capital and share premium account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign
exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Where a financial instrument that contains both equity and financial liability components exists these components are separated
and accounted for individually under the above policy.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 64
Notes to the group financial statements continued
1 Accounting policies continued
1.9 Financial instruments continued
(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.
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.
Eden Research plc
Annual Report 2021
65
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 operated an unapproved share option scheme for executive directors, senior management and certain employees
up to September 2017.
Long-Term Incentive Plan ('LTIP')
In 2017, the Company established a LTIP to incentivise the Executives to deliver long-term value creation for shareholders and
ensure alignment with shareholder interest. Awards were made annually and were subject to continued service and challenging
performance conditions usually over a three year period. The performance conditions were reviewed on an annual basis to ensure
they remained appropriate and were based on increasing shareholder value. Awards were structured as nil cost options with a
seven year lift after vesting.
Other than in exceptional circumstances, awards were up to 100% of salary in any one year and granted subject to achieving
challenging performance conditions set at the date of the grant. A percentage of the award 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 LTIP was adopted by the Board of Directors of Eden on 28 September 2017.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 66
Notes to the group financial statements continued
1 Accounting policies continued
1.13 Share-based payments continued
Long-Term Incentive Plan ('LTIP') continued
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Statement of
Profit or Loss and Other Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account
by adjusting the number of equity instruments expected to vest at each reporting date so that ultimately the cumulative amount
recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored
into the fair value of the options granted, as long as other vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the increase in fair value of the options, measured
immediately before and after the modification is also charged to the Statement of Profit or Loss and Other Comprehensive
Income over the remaining vesting period.
In June 2021, the Company made changes to the LTIP. Details can be found on pages 37 to 39.
The changes to the LTIP have been treated as a modification of the existing plan for financial reporting purposes which means
that the Fair Value of previous awards has been recognised over their remaining term and the incremental Fair Value of the new
options granted has been recognised separately over their own vesting period.
The Company issued further options under the modified LTIP, in excess of the replacement awards, details of which can be found
on page 84. These include graded vesting.
Share options which vest in instalments over a specified vesting period (graded vesting) where the only vesting condition
is service from grant date to vesting date of each instalment are accounted for as separate share-based payments. Each
instalment's fair value is assessed separately based on its term and the resulting charge recognised over each instalment's
vesting period.
Other share options
In addition to the LTIP grant, the Company awarded certain employees approved options. Details of these options can be found
on page 84. The accounting treatment for these options is consistent with that indicated under the LTIP section at the start of this
page.
1.14 Leases
At inception, the Group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease
commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the
definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at, or before, the commencement date plus any initial direct costs and an estimate of the cost of obligations to
dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets
are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced
by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental
borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease
payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of
any options that the Group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments
in an optional renewal period, or penalties for early termination of a lease.
Eden Research plc
Annual Report 2021
67
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.
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.
2 Adoption of new and revised standards and changes in accounting policies
(a) New standards, amendments and interpretations
There has been one newly effective amendment to standards during the year.
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.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 68
Notes to the group financial statements continued
2 Adoption of new and revised standards and changes in accounting policies continued
(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 2022 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.
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:
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. This is impacting, in particular, the forecasts used as the basis for intangibles impairment review,
investment impairment review and going concern. Clearly, this is still a degree of uncertainty as to exactly how and if the business
could be impacted and the Directors will continue to monitor the situation closely.
Other accounting judgements
In addition to the above, the Company has made other judgements which are considered of lesser significance.
Eden Research plc
Annual Report 2021
69
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.
Significant judgement had to be exercised in respect of £nil costs capitalised in the current year (2020: £59,222) and therefore
the Directors do not consider this to represent a critical judgement. There has been no research and development expenditure
recognised as an expense in the current year in the P&L in excess of the amortisation of intangible assets as disclosed in note 12
(2020: £nil).
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 allocated to
Agrochemicals, being the Company’s primary focus.
The segment information for the year ended 31 December 2021 is as follows:
Revenue
Milestone payments
R & D charges
Royalties
Product sales
Total revenue
Adjusted EBITDA
Share Based Payments
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
£
5,250
–
57,170
1,122,269
1,184,689
(2,021,602)
(640,597)
(2,662,199)
(421,358)
(155,342)
(129,223)
–
618,137
–
(2,749,985)
15,004,888
1,802,660
2,153,649
–
7,760
36,131
–
43,891
43,891
–
43,891
(13,272)
–
–
–
–
(58,177)
(27,558)
22,197
–
43,961
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£
5,250
7,760
93,301
1,122,269
1,228,580
(1,977,711)
(640,597)
(2,618,308)
(434,630)
(155,342)
(129,223)
–
618,137
(58,177)
(2,777,543)
15,027,085
1,802,660
2,197,610
Please note the Consumer products segment was previously referred to as Human health and biocides.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 70
Notes to the group financial statements continued
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
Adjusted EBITDA
Share Based Payments
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
Revenue analysed by geographical market
UK
Europe
Agrochemicals
£
Consumer
products
£
Animal health
£
27,523
7,660
180,801
1,116,534
1,332,518
(1,528,934)
(120,380)
(1,649,314)
(539,535)
(70,039)
17,433
(299,521)
285,108
(30,352)
(2,286,220)
16,804,893
2,319,566
1,915,322
–
8,551
27,919
–
36,470
36,470
–
36,470
(13,274)
–
–
–
–
–
23,196
119,471
–
80,093
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
£
83,891
1,144,689
1,228,580
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
2020
£
16,211
1,352,777
1,368,988
The above analysis represents sales to the Group’s direct customers who further distribute these products to their end markets.
Revenues of approximately £1,036,156 (2020: £1,297,922) are derived from three customers who each account for greater than
10% of the Group’s total revenues:
Customer
A
B
C
2021
£
900,364
134,192
1,600
2021
%
73.3
10.9
0.1
2020
£
741,609
230,412
325,901
2020
%
54.2
16.8
23.8
Eden Research plc
Annual Report 2021
71
5 Operating loss
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
2021
£
2020
£
–
(7,601)
55,000
98,287
–
434,630
640,597
40,000
57,346
299,521
552,809
120,380
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
Benefits in kind
Share based payment charge
2021
Number
2020
Number
4
12
16
2021
£
1,422,841
172,142
53,836
5,826
678,069
4
7
11
2020
£
1,104,400
131,158
51,056
5,562
94,176
2,332,714
1,386,352
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 72
Notes to the group financial statements continued
7 Directors' remuneration
Remuneration for qualifying services
Company pension contributions to defined contribution schemes
Non-executive Directors' fees
Benefits in kind
Share based payment charge relating to all Directors
2021
£
656,194
31,009
85,000
5,826
632,836
1,410,865
2020
£
618,350
28,990
78,333
5,562
94,176
825,411
The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020: 2).
The number of Directors who are entitled to receive shares under long term incentive schemes during the year is 2 (2020: 2).
Remuneration disclosed above includes the following amounts paid to the highest paid Director:
Remuneration for qualifying services
2021
£
2020
£
376,972
366,602
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 39 in the Remuneration report.
Salary
£
190,000
253,000
–
–
Bonus
£
79,800
106,260
–
–
Fees
£
Pension
£
Share
Based
Payments
£
–
–
40,000
45,000
13,297
17,712
271,256
361,580
–
–
–
–
Total
£
554,353
738,552
40,000
45,000
443,000
186,060
85,000
31,009
632,836
1,377,905
Salary
£
180,000
235,000
–
–
Bonus
£
88,200
115,150
–
–
Fees
£
Pension
£
–
–
36,666
41,667
12,538
16,452
–
–
Share
Based
Payments
£
39,872
54,304
–
–
Total
£
320,610
420,906
36,666
41,667
415,000
203,350
78,333
28,990
94,176
819,849
2021
A Abrey
S Smith
R Cridland
L van der Broek
2020
A Abrey
S Smith
R Cridland
L van der Broek
Eden Research plc
Annual Report 2021
8 Investment income
Interest income
Bank deposits
2021
£
98
Total interest income for financial assets that are not held at fair value through profit or loss is £98 (2020: £5,725).
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 losses and (gains)
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
2021
£
32,074
–
32,074
75,254
21,993
97,247
2021
£
(572,585)
(45,552)
(618,137)
73
2020
£
5,725
2020
£
23,550
450
24,000
(39,498)
3,792
(35,706)
2020
£
(285,108)
–
(285,108)
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss
2021
£
2020
£
(3,395,680)
(2,548,132)
Expected tax credit based on a corporation tax rate of 19% (2019: 19.00%)
(645,179)
(484,145)
Ineligible fixed asset differences
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Surrender of tax losses for R&D tax credit refund
Adjustment in respect of prior years
Deferred tax not recognised
Taxation credit for the year
11,639
129,845
(424,074)
177,699
(45,552)
177,485
(618,137)
32,067
88,498
(211,159)
88,481
–
201,150
(285,108)
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 74
Notes to the group financial statements continued
10 Income tax income continued
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 2021.
The current tax recoverable as at 31 December 2021 represents R&D tax credits and is made up as follows:
Current tax
R & D cash tax credit for the current period
R & D cash tax credit for the prior period
Total UK current tax recoverable
2021
£
(572,585)
(330,660)
(903,245)
2020
£
(285,108)
–
(285,108)
Deferred Tax
In the year, a deferred tax liability in respect of fixed asset temporary differences of £1,237,820 has been recognised. This has
been offset fully by partial recognition 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
£21,214,533 (2020: £22,379,505).
The unprovided deferred tax asset of £4,030,761 (2020: £4,265,891) arises principally in respect of trading losses. It has been
calculated at 19% (2020: 19%) and has not been recognised due to the uncertainty of timing of future profits against which it may
be realised.
11 Earnings per share
2021
£
2020
£
Weighted average number of ordinary shares for basic and diluted earnings per share
380,340,229
344,629,577
Earnings (all attributable to equity shareholders of the Company)
Loss for the period
Basic earnings per share
Diluted earnings per share
(2,777,543)
(2,270,347)
(0.73p)
(0.73p)
(0.66p)
(0.66p)
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 11,018,738 (2020: nil) potential ordinary shares at the year end which were not included in the calculation of the
diluted EPS because they were antidilutive for the period presented.
Eden Research plc
Annual Report 2021
75
Total
£
14,688,296
1,701,287
16,389,583
1,624,927
18,014,510
9,107,291
552,809
9,660,100
434,630
Licences and
trademarks
£
Development
costs
£
Intellectual
property
£
447,351
1,545
448,896
7,788
456,684
437,751
11,145
448,896
–
448,896
7,788
–
5,059,621
1,564,785
6,624,406
1,525,734
8,150,140
2,179,331
315,192
2,494,523
214,682
2,709,205
5,440,935
4,129,883
Licences and
trademarks
£
Development
costs
£
447,351
1,545
448,896
7,788
456,684
437,751
11,145
448,896
–
448,896
7,788
–
5,059,621
1,564,785
6,624,406
1,525,734
8,150,140
2,179,331
315,192
2,494,523
214,682
2,709,205
5,440,935
4,129,883
9,181,324
134,957
9,316,281
91,405
9,407,686
6,490,209
226,472
6,716,681
219,948
6,936,629
10,094,730
2,471,057
2,599,600
Intellectual
property
£
9,048,581
134,957
9,183,538
91,405
7,919,780
6,729,483
Total
£
14,555,553
1,701,287
16,256,840
1,624,927
9,274,943
17,881,767
6,490,209
213,198
6,703,407
206,676
9,107,291
539,535
9,646,826
421,358
6,910,083
10,068,184
2,364,860
2,480,131
7,813,583
6,610,014
12 Intangible assets
Group
Cost
At 1 January 2020
Additions
At 31 December 2020
Additions
At 31 December 2021
Amortisation and impairment
At 1 January 2020
Charge for the year
At 31 December 2020
Charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
Company
Cost
At 1 January 2020
Additions
At 31 December 2020
Additions
At 31 December 2021
Amortisation and impairment
At 1 January 2020
Charge for the year
At 31 December 2020
Charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
Intellectual property represents intellectual property in relation to use of encapsulated terpenes in agrochemicals. The remaining
useful economic life of that asset is 9 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.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 76
Notes to the group financial statements continued
12 Intangible assets continued
Of £7,919,780 carrying amount of intangible assets, £7,813,583 has been allocated to the Agrochemicals Cash Generating Unit
(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 9 years, with no terminal value, reflecting the useful economic life of the patent in respect of the
underlying technology. Financial forecasts for 2022 are based on the approved annual budget. Financial forecasts for 2023-2028
are based on the approved long-term plan. Financial forecasts for 2029-2030 are extrapolated based on the long-term growth
rate of 2%.
The estimated recoverable amount of the CGU exceeded its carrying amount by £8.3m and based on the review carried out
management is satisfied that intangible assets are not impaired.
As set out in the Strategic Report, the business is in a critical phase of its development as the development of products is
transitioned to revenue generation. The value of the CGU is supported by forecasts of continued revenue growth of existing
products and the successful introduction and growth of sales of products currently under development.
The key assumptions of the forecast are the future cash flows, driven primarily by level of sales, and the discount rate. The
discount rate is estimated using pre-tax rates that reflect current market assessments of the time value of money and the
risk specific to the CGU. The rate used was 12.4% (2020: 10%). The increase in the rate reflects the wider market movements
as based on the comparator group as well as increased forecasting risk given the underperformance in the current year. This
is offset by a slight reduction in the discount rate in respect of the impact of COVID-19 which has been incorporated into the
forecast cash flows given greater clarity since prior year.
The impact of increasing the discount rate by 1.6%, which is considered a reasonably possible change, would be a decrease in
the recoverable amount by £1.9m. The discount rate would have to increase to 28.9% to reduce the headroom to £nil which is
not considered likely.
The average annual growth rate has been assumed at 51% (2020: 48%), reflecting the latest forecasts based on information
provided by customers and own market analysis. The rate stands at 98% up to 2025, reflecting commercialisation of new
products in the period, reducing to 14% from 2026 onwards.
A reduction in growth from year 6 onwards to the long-term growth rate for the Insecticides product (the sole product with
growth in excess of the long-term growth rate after year 5), which is considered a reasonably possible change, would reduce the
recoverable amount by £5.3m.
Forecast sales would have to reduce by an average of, approximately, 22% per annum to reduce headroom to £nil, which is not
considered likely.
Eden Research plc
Annual Report 2021
13 Property, plant and equipment
Consolidated and Company
Cost
At 1 January 2020
Additions – owned
At 31 December 2020
Additions – owned
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
At 31 December 2020
Charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
14 Right-of-Use Assets
Consolidated and Company
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Disposals
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
Eliminated on disposal
At 31 December 2020
Charge for the year
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
77
Fixtures and
fittings
£
–
200,758
200,758
101,269
302,027
–
12,693
12,693
57,056
69,749
232,278
188,065
Land and
buildings
£
Motor
vehicles
£
78,668
417,521
(78,668)
417,521
26,256
–
443,777
39,334
48,380
(51,353)
36,361
83,504
119,865
323,912
381,160
35,865
–
–
35,865
50,208
–
86,073
13,449
8,966
–
22,415
14,783
37,198
48,875
13,450
Total
£
–
200,758
200,758
101,269
302,027
–
12,693
12,693
57,056
69,749
232,278
188,065
Total
£
114,533
417,521
(78,668)
453,386
76,464
–
529,850
52,783
57,346
(51,353)
58,776
98,287
157,063
372,787
394,610
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 78
Notes to the group financial statements continued
15 Investments in associates
Investments in associates
Current
2021
£
–
2020
£
–
Non-current
2021
£
2020
£
361,688
419,865
Details of the Group's associates at 31 December 2021 are as follows:
Name of
undertaking
Registered
office
Principal activities
TerpeneTech
(UK)
United
Kingdom
Research and experimental development
on biotechnology
Class of
shares held
Ordinary
% held
Direct
29.90
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
The associate is included in the Consumer Products operating segment.
2021
£
440,601
287,576
(98,806)
(269,026)
360,345
107,743
140,817
412,649
(299,521)
361,688
361,307
(145,849)
(43,609)
(14,568)
(58,177)
Voting
29.90
2020
£
502,954
237,697
(98,806)
(213,670)
428,175
151,352
155,385
412,649
(299,521)
419,865
279,185
(52,790)
(15,784)
(14,568)
(30,352)
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 9-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%
(2020: 15%). The use of the same discount rate reflects, in addition to the wider market movements, a reduction in uncertainty
in the head-lice sales, reflecting conclusion of negotiations with a distributor as well as in geraniol sales, following another year
of double digit growth, offset by increased forecasting risk as the Company failed to fully meet the forecast performance for
another year.
Eden Research plc
Annual Report 2021
79
Based on the review the Directors carried out, it was determined that the Investment was not impaired and, as such, no
impairment charge (2020: £299,521) was recognised.
The impairment in 2020 was 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 1.9% would result in an increase in impairment of £27,890.
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 21% (2020: 32%). The majority of this growth arises in the first 3 years of
the forecast, reflecting primarily the initial commercialisation of the head-lice product, resulting in the average growth rate over
that period of 46%, reducing to 9% for the remainder of the forecast period. The average annual growth rate of existing business
stands at 13% (2020: 4%).
An annual reduction of 20% in the forecast head-lice product sales over the entire forecast period would result in impairment of
£7,101.
A reduction to growth rate of the existing business in the first 5 years of the forecast to the growth observed in the prior year
would result in impairment of £91,563.
The Directors have also considered whether any reasonable change in assumptions would lead to a material change in
impairment recognised and are satisfied that this is not the case.
16 Subsidiaries
Details of the Company's subsidiaries at 31 December 2021 are as follows:
Name of
undertaking
Registered
office
TerpeneTech
Limited
Republic of
Ireland
Eden Research
Europe Limited
Republic of
Ireland
Principal activities
Sale of biocide products
Dormant
Class of
shares held
Ordinary
Ordinary
% Held
Direct
50.00
100.00
Voting
50.00
100.00
TerpeneTech Limited (“TerpeneTech (Ireland)”), whose registered office is 108 Q House, Furze Road, Sandyford, Dublin,
Ireland, was incorporated on 15 January 2019 and is jointly owned by both Eden Research plc and TerpeneTech (UK), the
Company's associate.
Eden has the right to appoint a director as chairperson who will have a casting vote, enabling the Group to exercise control
over the Board of Directors in the absence of an equivalent right for TerpeneTech (UK). Eden owns 500 ordinary shares in
TerpeneTech (Ireland).
Eden Research Europe Limited, whose registered office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland, was incorporated
on 18 November 2020 and is wholly owned by both Eden Research plc.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 80
Notes to the group financial statements continued
16 Subsidiaries continued
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 (liabilities)/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
17 Inventories
Finished goods
18 Trade and other receivables
Trade receivables
VAT recoverable
Other receivables
Prepayments and accrued income
2021
£
50%
2020
£
50%
106,199
119,471
–
–
(43,962)
62,237
36,131
22,859
–
22,859
–
–
–
–
–
–
–
(80,093)
39,378
27,919
14,647
–
14,647
–
–
–
–
–
Group and Company
2021
£
2020
£
521,351
224,422
Group
Company
2021
£
693,948
104,760
65,957
21,922
886,587
2020
£
909,452
242,187
57,619
187,050
1,396,308
2021
£
693,948
104,760
149,957
21,922
970,587
2020
£
909,452
242,187
57,619
235,050
1,444,308
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.
Eden Research plc
Annual Report 2021
81
19 Trade and other payables
Current
Trade payables
Accruals and deferred income
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
2021
£
1,147,823
440,416
45,495
77,784
1,711,518
87,740
87,740
2020
£
794,439
250,017
43,186
367,313
1,454,955
125,212
125,212
Company
2021
£
1,147,823
440,416
45,495
33,823
1,667,557
87,740
87,740
2021
£
128,553
307,275
435,828
(37,476)
398,352
2020
£
794,439
250,017
43,186
287,220
1,374,862
125,212
125,212
2020
£
117,204
385,388
502,592
(87,344)
415,248
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:
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.
2021
£
99,924
298,428
398,352
2021
£
32,074
2020
£
84,350
330,898
415,248
2020
£
23,550
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 82
Notes to the group financial statements continued
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 £53,836 (2020: £51,056).
22 Share-based payment transactions
Long-Term Incentive Plan (“LTIP”)
Since September 2017 Eden has operated an option scheme for executive directors, senior management and certain employees
under an LTIP which allows for certain qualifying grants to be HMRC approved. Further details can be found on page 37 of the
Remuneration Report.
2019 Award
On 28 June 2019, 5,891,111 shares were awarded under the LTIP scheme to the Chief Executive Officer and the Chief Financial
Officer (“2019 Award”).
The share-based payment charge for the 2019 Award is set out as follows:
Financial year 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
The following information is relevant in the determination of the fair value of options granted under the 2019 Award.
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)
2017 Award
2018 Award
28/06/2019
2,868,889
28/06/2019
3,022,222
0.115
£nil
–%
50.82%
0.614%
2 years
2 years
0.115
£nil
–%
50.82%
0.614%
3 years
3 years
LTIP Replacement Award
In 2021, the Company made changes to the LTIP in line with the requirements of a fundraise completed in 2020. The new plan
was deemed a more appropriate scheme to incentivise management given the Company’s stage of development and replaced
the 2019 Award, which lapsed in its entirety.
Pursuant to the updated plan, in 2021 the Company 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 vested immediately
and 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.
Eden Research plc
Annual Report 2021
83
The shares arising from exercise of options are subject to a one-year lock-in restriction, followed by a one-year orderly market
restriction.
For accounting purposes, the options granted under the LTIP Replacement Award have been treated as a modification of the
2019 Award as per IFRS 2.
Where awards previously granted have been deemed to be modified, IFRS 2 requires the share-based payment charge to
comprise the original fair value of the awards, together with an incremental fair value.
A summary of the number of awards modified in the year ended 31 December 2021 and their fair values is set out in the table
below:
Fair Value of Awards at 31 December 2021
2017 Awards
2018 Awards
Total
Incremental Fair
Value
£
Incremental Fair
Value per Award
£
231,846
229,998
461,844
0.048
0.046
Share-based payment charge
The total share-based payment charge to be recognised by Eden in respect of the LTIP Replacement Award in the year ended 31
December 2021 and subsequent periods are as follows:
2017 Awards
2018 Awards
Charge for grants
during the period
Original Annual
£
31 Dec 21
31 Dec 22
17,735
–
Replacement
Annual
£
231,846
–
Original Annual
£
34,174
16,959
Replacement
Annual
£
229,998
–
Total
Annual
£
513,753
16,959
The following information is relevant in the determination of the fair value of options granted under the LTIP Replacement Award.
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)
Replacement
Awards
30/06/2021
10,500,000
£0.10
£0.06
–%
70%/59%/67%
0.02%/0.02%/0.05%
Nil
0.5/1/1.5 years
As the options have been issued at a significant discount to the share price, the expected exercise has been assumed to equal
the midpoint between the vest and lapse date.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 84
Notes to the group financial statements continued
22 Share-based payment transactions continued
2021 Award
Also in 2021, the Company made a further grant of options in order to ensure continuity of long term incentive of options over
7,183,784 new Ordinary Shares in Eden, at a strike price of 10.37p each, in the amounts of 4,102,703 awarded to Sean Smith and
3,081,081 awarded to Alex Abrey.
These grants expire on 31 July 2025 and vest as follows:
1/3 upon grant
1/3 12 months from the date of grant
1/3 24 months from the date of grant
The share-based payment charge for the year ended 31 December 2021 in respect of the above 2021 LTIP awards was £119,083.
In addition to the options granted under the LTIP, certain employees were awarded approved options over a total of 996,220
shares. These have been issued at a strike price of 10-10.37p with expiry date between 30 June 2022 and 30 June 2024. 640,664
of these vested immediately with the remainder vesting over a 3-year period. The share-based payments charge in respect of all
these options for the year ended 31 December 2021 was £45,233.
A summary of all the above options is set out in the table below.
Options awards
Number of share options
Weighted average exercise price (pence)
Outstanding at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
2021
5,891,111
18,680,004
–
(5,891,111)
2020
5,891,111
–
–
–
Exercisable at 31 December
18,680,004
5,891,111
2021
2020
–
7
–
–
7
–
–
–
–
–
The exercise price of options outstanding at the end of the year ranged between 1p and 10p (2020: £nil) and their weighted
average contractual life was 2.4 years (2020: 1.4 years.)
The share-based payment charge for the year, in respect of options, was £678,069 (2020: £nil).
At the year end, of the options granted 13,680,006 were unapproved (2020: nil) and 4,999,998 were approved (2020: 5,891,111).
Options granted prior to the 2017 LTIP
Prior to the implementation of the LTIP in 2017, Eden had granted options to its Executive Directors, senior management and
certain employees, as follows:
Number of share options
Weighted average exercise price (pence)
2021
2020
2021
2020
Outstanding at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
1,050,000
1,050,000
–
–
(1,050,000)
–
–
–
Exercisable at 31 December
–
1,050,000
13
–
–
13
–
13
–
–
–
13
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.
Eden Research plc
Annual Report 2021
85
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
Number of share options
Weighted average exercise price (pence)
2021
2020
2021
2020
Outstanding at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
2,989,865
2,989,865
–
–
–
–
–
–
Exercisable at 31 December
2,989,865
2,989,865
19
–
–
–
19
19
–
–
–
19
The exercise price of warrants outstanding at the end of the year ranged between 12p and 30p (2020: 12p and 30p) and their
weighted average contractual life was 0.4 years (2020: 1.4 years.) None of the warrants have vesting conditions.
The share-based payment charge for the year, in respect of warrants, was £nil (2020: £nil). The weighted average fair value of
each warrant granted during the year was £nil (2020: £nil).
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%, reduced
to 1.6% following the fundraise in March 2020) of the fully diluted equity value, reduced by cash and cash equivalents, of the
Company on the date on which payment becomes due which is expected to be 30 September 2025. This has been accounted for
as a cash-settled share-based payment under IFRS 2.
An amount of £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 reduction of £37,472 was made in the year (2020: charge of £26,204), reflecting a reduction in the share price at the year end,
compared to the previous year.
At the year end, an amount of £87,704 (2020: £125,212) was owed to Xinova and is shown in note 19 as non-current
other liabilities.
Please see note 34, Post Balance Sheet Events, for further information.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 86
Notes to the group financial statements continued
23 Share capital
Ordinary share capital
Issued and fully paid
Ordinary shares of 1p each
2021
Number
2020
Number
2021
£
2020
£
380,340,229
380,240,229
3,803,402
3,803,402
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 £nil (2020: £638,930) 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 2021
Share-based payment expense in respect of options granted
Share-based payment expense in respect of options lapsed
Balance at 31 December 2021
2021
£
39,308,529
–
2020
£
31,289,915
8,018,614
39,308,529
39,308,529
£
429,915
678,069
(170,479)
937,505
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
2021
£
2020
£
10,209,673
10,209,673
The merger reserve arose on historical acquisitions of subsidiary undertakings for which merger relief was permitted under the
Companies Act 2006.
27 Non-controlling interest
Non-controlling interest
2021
£
31,119
2020
£
19,689
The non-controlling interest arose from Eden Research plc’s 50% share in TerpeneTech (Ireland) Limited.
Eden Research plc
Annual Report 2021
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
Changes from financing cashflows
Payment of lease liabilities
Total changes from financing cashflows
Other changes
New leases
Adjustment to Right of Use Assets
Surrender of lease
Total other changes
87
2021
£
415,248
(90,388)
(90,388)
50,209
23,283
–
73,492
2020
£
69,499
(44,457)
(44,457)
417,521
–
(27,315)
390,206
Balance as at 31 December
398,352
415,248
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
2021
£
740
2020
£
334
Set out below are the future cash outflows to which the lessee is exposed to that are reflected in the measurement of lease
liabilities:
Land and buildings
Within one year
Between two and five years
Leases apart from land and buildings
Within one year
Between two and five years
2021
£
92,143
256,935
349,078
2021
£
18,361
30,914
49,275
2020
£
74,783
325,794
400,577
2020
£
9,567
5,104
14,671
The Group holds five leases, for two properties and three vehicles. All leases have fixed lease repayments and remaining terms of
3.5 years for the properties and 2.2 years for the vehicles.
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 4.75%.
Information relating to lease liabilities is included in note 20.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 88
Notes to the group financial statements continued
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), £7,760 for R&D charges (2020: £8,551) and accrued income of
£40,000 (2020: £nil) for minimum royalties due under the head-lice agreement.
Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf of TerpeneTech (UK).
At the year end, a net amount of £165,644 was due from TerpeneTech (UK) (2020: £128,983) to Eden. This amount is included
within Trade and Other Receivables.
At the year end, a net amount of £43,962 (2020: £80,093) 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), £7,760 for R&D charges (2020: £8,551) and accrued income of
£40,000 (2020: £nil) for minimum royalties due under the head-lice agreement.
Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf of TerpeneTech (UK).
Further, at year end, £36,000 has been accrued in respect of management recharges from Eden to TerpeneTech (Ireland) (2020:
£48,000). An amount of £84,000 (2020: £48,000) is included within the Company Trade and Other Receivables.
At the year end, a net amount of £165,644 was due from TerpeneTech (UK) (2020: £128,983). This amount is included within
Trade and Other Receivables.
32 Financial risk management
Credit risk
Cash and cash equivalents
Trade receivables
2021
£
3,829,369
886,587
4,715,956
2020
£
7,286,503
1,396,308
8,682,811
The average credit period for sales of goods and services is 178 days (2020: 242). No interest is charged on overdue trade
receivables. At 31 December 2021, trade receivables of £272,912 (2020: £200,840) were past due. During the year the Company
wrote off bad debts in the amount of £nil (2020: £nil).
Trade receivables of £563,273 (2020: £791,581) at the reporting date were held in Euros and £104,866 (2020: £104,265) 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.
Eden Research plc
Annual Report 2021
89
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 £170,279 (2020: £174,952) 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.
Credit risk
Trade payables
Other payables
Other taxes and social security
Accruals and deferred income
2021
£
1,147,823
77,784
45,495
440,416
1,711,518
2020
£
794,439
367,313
43,186
250,017
1,454,955
The carrying amount of trade payables approximates their fair value.
The average credit period on purchases of goods is 95 days. No interest is charged on trade payables. The Company has policies
in place to ensure that trade payables are paid within the credit timeframe or as otherwise agreed.
Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the group’s financial liabilities at 31 December 2021 was as follows:
In one year or less, or on demand
Over one year
2021
£
1,711,518
87,740
1,799,258
2020
£
1,454,955
125,212
1,580,167
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.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 90
Notes to the group financial statements continued
32 Financial risk management continued
Capital risk management
The primary objective of the Company’s capital management is to ensure that it maintains healthy capital ratios in order to
support its business and maximise shareholder value.
The Company seeks to enhance shareholder value by capturing business opportunities as they develop. To achieve this goal, the
Company maintains sufficient capital to support its business.
The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions.
The Company looks to maintain a reasonable debt position by repaying debt or issuing equity, as and when it is deemed to be
required.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2021
and 31 December 2020.
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% (2020: below 10%). The Company includes within net debt, any interest bearing
loans and borrowings (none in current or prior year), any loans from a venture partner (none in the current or prior year), trade
and other payables, less cash and cash equivalents.
33 Cash absorbed by operations
Consolidated
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
2021
£
2020
£
(2,777,543)
(2,263,024)
(618,137)
122,311
(98)
21,993
434,630
–
155,341
58,177
640,597
(296,929)
509,721
163,355
(285,108)
24,000
(5,725)
3,792
552,809
299,521
70,039
30,352
120,380
(155,999)
236,784
106,367
Cash absorbed by operations
(1,586,582)
(1,265,812)
Eden Research plc
Annual Report 2021
91
Company
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
2021
£
2020
£
(2,764,402)
(2,229,669)
(618,137)
122,311
(98)
21,993
421,358
–
155,341
58,177
640,597
(296,929)
473,721
199,486
(285,108)
24,000
(5,725)
3,792
539,535
299,521
70,039
30,352
120,380
(155,999)
188,784
134,286
Cash absorbed by operations
(1,586,582)
(1,265,812)
34 Post balance sheet events
Xinova
After the year end, Eden was informed that Xinova had begun to wind down its operations.
As a consequence, Eden began communications with an agent acting on behalf of Xinova to effect the wind down in respect
of the liability owed to Xinova by Eden.
On 22 April 2022, Eden signed a ‘full and final’ settlement agreement with Xinova which resulted in Eden paying an amount
of £43,870, which represented a 50% discount to the liability of £87,740 as at 31 December 2021, in line with the then
existing contract.
Eden Research plc
Annual Report 2021
Company OverviewAnnual Report StatementsFinancial StatementsGovernance 92
Company Information
For the year ended 31 December 2021
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
Annual Report 2021
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1
EDEN RESEARCH PLC
67C INNOVATION DRIVE
MILTON PARK
ABINGDON
OXFORDSHIRE
ENGLAND
OX14 4RQ
WWW.EDENRESEARCH.COM