TIDMEDEN
RNS Number : 0565Z
Eden Research plc
24 May 2016
EDEN RESEARCH PLC
("Eden" or the "Company")
Final results
Eden Research plc (AIM: EDEN), the AIM-listed company that
provides breakthrough natural microencapsulation technologies to
the global agrochemicals, animal health and consumer products
industries, announces its preliminary results for the year ended 31
December 2015.
Financial highlights
-- Revenue of GBP0.9m (2014: GBP0.1m)
-- Operating loss of GBP1.1m (2014: GBP1.7m)
-- Operating loss (excl. share based payment charge and
amortisation) of GBP0.2m (2014: GBP0.9m)
-- Loss before tax of GBP1.2m (2014: GBP3.0m)
-- Loss per share of 0.68p (2014: 2.36p)
-- Debt free, and cash in bank of GBP0.15m (2014: GBP0.41m)
Operational highlights
-- First EU approval of 3AEY in Malta, followed by further
approvals in Greece and Bulgaria and first commercial product
launches
-- Approval and first commercial scale order of 3AEY in Kenya
-- Agreement with Taminco to exclusively test nematicide product for one year
-- Maximum Residue Limit exemption for Eden's active substances
-- Acquired a 29.9% stake in TerpeneTech Limited
-- New evaluation agreement with Sipcam Italia and Sipcam Iberia to evaluate 2EY
-- Collaboration and licence agreement with Intellectual Ventures
Post Period end
-- Successful placing of GBP2.6m in March 2016
-- First commercial scale order of 3AEY from, and subsequent delivery to, Redestos Group
-- Further approvals for 3AEY for Spain and Italy - Portugal and France to follow
-- Application made in early 2016 for regulatory clearance in Switzerland
Board changes
-- Robin Cridland appointed to the Board as Non-Executive Director
Commenting on outlook, Tom Lupton, Chairman said: "2015 saw a
number of breakthrough moments for the Company focused around the
financial, commercial and regulatory aspects of the business. Eden
is well placed to exploit its patents, know-how, technologies and
products and drive commercialisation on apace. It is satisfying to
know that in 2016 Eden products are being used around the world,
though we are really only at the start of this journey with further
exciting product and market opportunities to come."
With effect from 23 May 2016, the Company has changed its
Registered Office to Suite 3, 15 Gosditch Street, Cirencester,
Gloucestershire, GL7 2AG.
Eden Research plc www.edenresearch.com
Sean Smith, Chief Executive Officer Tel: 01285 359 555
Alex Abrey, Chief Financial Officer
Shore Capital and Corporate Limited www.shorecap.com
Stephane Auton/Patrick Castle Tel: 020 7408 4090
Walbrook PR Ltd Tel: 020 7933 8780 or eden@walbrookpr.com
Paul McManus Mob: 07980 541 893
Notes:
Eden is an early stage revenue company with intellectual
property and expertise in encapsulation, terpenes and
environmentally friendly technologies to provide naturally
occurring solutions to the global agrochemicals industry, the
animal health industry, and consumer products.
Eden's encapsulation technology harnesses the biocidal efficacy
of naturally occurring chemicals produced by plants (terpenes) and
can also be used with both natural and synthetic hydrophobic
compounds. The technology uses yeast cells that are a by-product of
numerous commercial production processes to deliver a slow release
of natural compounds for agricultural and non-agricultural uses.
Terpenes are already widely used in the food flavouring, cosmetic
and pharmaceutical industries.
Historically, terpenes have had limited commercial use in the
agrochemical sector due to their volatility, phytotoxicity and poor
solubility. Eden's platform encapsulation technology provides a
unique, environmentally friendly solution to these problems and
enables terpenes to be used as effective, low-risk
agrochemicals.
With leading consultants in their respective fields, the Company
is developing these technologies through innovative research and a
series of commercial production, marketing and distribution
partnerships.
The Company has a number of patents and a pipeline of products
at differing stages of development targeting specific areas of the
global agrochemicals industry. To date, the Company has invested in
the region of GBP12m in developing and protecting its intellectual
property and seeking regulatory approval for products that rely
upon the Company's technologies. Revenues earned by the Company
have been modest whilst the Company has concentrated on securing
patent protection for its intellectual property, gaining regulatory
approvals, identifying suitable industrial partners, and entering
into licence agreements.
In May 2013, the three actives that comprise Eden's first
commercial product, 3AEY, were approved as new ingredients for use
in plant protection products. This represents a major milestone in
the commercialisation of Eden's technology and is a significant
accomplishment for any company. To illustrate this point, one
should note that in all of 2013, Eden's approvals represented 3 of
only 10 new active ingredients approved by the EC.
3AEY has been authorised for sale in Kenya, Malta, Greece,
Bulgaria, Spain and Italy.
Eden was admitted to trading on AIM on 11 May 2012 and trades
under the symbol EDEN.
For more information about Eden, please visit:
www.edenresearch.com
CHAIRMAN'S REPORT
Introduction
I am pleased to report that the Company has made significant
progress in 2015 in financial, commercial and regulatory terms. Our
Chief Executive Officer, Sean Smith, will provide more detail in
his Report, but first, I will give an overview of this
progress.
Commercial Development
The first EU approval for Eden's product, 3AEY (a fungicidal
agrochemical product), came in May 2015 in Malta and was
subsequently followed by approvals in Kenya, Greece, Bulgaria
(2015), and Spain and Italy (2016).
This is the culmination of a number of years' work and
investment and allows our commercial partners (Sipcam Italia,
Sipcam Iberia, Lachlan and Redestos) to sell 3AEY in their licensed
territories from the 2016 growing season onwards. Approvals are
also expected to come from France and Portugal in 2016.
An exclusive option agreement signed in April 2015 provided
Taminco (now a subsidiary of Eastman Chemical Company) with the
right to test Eden's nematicide product for one year. The results
from the trials have been encouraging, and the Company is now in
advanced negotiations to agree commercial terms.
Revenue increased substantially in 2015 to GBP0.9m from GBP0.1m
in the previous year resulting in a reduced operating loss
(excluding Share Based Payment Charge of GBP0.25m and Amortisation
of GBP0.66m) of GBP0.2m in 2015, from GBP0.9m in 2014. Operating
loss reduced to GBP1.1m in 2015, from GBP1.7m in 2014. This is a
reflection of the progress that has been made and highlights 2015
as being the year Eden moved from its development phase to a truly
commercial entity.
Corporate Governance
In May 2015, we welcomed to the Board a new Non-Executive
Director, Robin Cridland. Robin currently serves as Chief Financial
Officer and Company Secretary of Revolymer plc and has been
centrally involved in the listing of businesses and in a number of
significant licences and other product commercialisation deals. I
believe that his wealth of relevant work experience will prove to
be valuable to Eden, not least in his roles on the Audit and
Remuneration Committees.
Outlook
Now that the Company has received funding to accelerate its
growth and development, as well as key EU approvals for 3AEY, Eden
is well placed to exploit its patents, know-how, technologies and
products and drive commercialisation on apace. It is satisfying to
know that in 2016 Eden products are being used around the world,
though we are really only at the start of this journey with further
exciting product and market opportunities to come.
T G Lupton
Chairman
23 May 2016
CHIEF EXECUTIVE OFFICER'S REPORT
I am pleased to provide shareholders with my first Chief
Executive's Report since joining the Company in September 2014.
During 2015 Eden made excellent headway in a number of key areas
and these are summarised below.
Financial results
In terms of financial performance, we have delivered results
that show good progression: increased revenues; our first revenues
from commercial sales; and overall significantly reduced
losses.
Revenue for the year ended 31 December 2015 totalled GBP0.9m up
from GBP0.1m in the previous year. The majority of this revenue
(GBP0.74m) came from fees associated with licensing our technology.
In addition, we received a number of milestone payments (GBP0.06m)
and evaluation fees (GBP0.05m) during the year. Whilst these
revenues are largely made up of one-off payments it is encouraging
to see our first, if modest, revenues received from commercial
sales, both from direct product sales and royalty revenues, which
generated GBP0.04m in revenue.
Operating loss reduced to GBP1.1m in 2015, from GBP1.7m in 2014.
Operating loss excluding Share Based Payment Charge of GBP0.25m and
Amortisation of GBP0.66m reduced to GBP0.2m in 2015, from GBP0.9m
in 2014. Loss for the year reduced significantly to GBP1.06m (2014:
GBP2.97m). Loss per share (both basic and diluted) reduced to 0.68p
from 2.36p.
Whilst cash at the year-end was GBP0.15m (2014: GBP0.41m), the
Company subsequently raised GBP2.6m through a placing with new and
existing institutional shareholders. The business is now well
funded although my colleagues and I still remain highly focussed on
managing costs.
Regulatory milestones
The year 2015 saw a number of breakthrough moments for the
Company with the receipt of product approvals that are essential
for the commercial launch of our plant protection product 3AEY for
the prevention and treatment of botrytis (commonly known as bunch
rot in viticulture) in table and wine grapes. In May 2015, we
received authorisation from the Regulatory Affairs Directorate in
Malta which was acting as the zonal rapporteur Member State for the
Southern EU zone. I am pleased to say that we have also
subsequently received approvals from Greece, Bulgaria, Spain and
Italy.
We are working closely with our partners in the remaining
jurisdictions to gain the necessary authorisations as soon as
possible. We expect to receive approval from Portugal next, and the
approval process in France is ongoing with current indications that
this will come through later this year. France is well-known for
its considered approach to new product approvals, and the climactic
peculiarities of France mean that efficacy trials are often
required for both the Southern and Maritime zones (rather than the
Southern zone alone, as is the case with the other countries within
the Southern zone). This has been the case in the French
regulator's consideration of our application, and Eden's French
partner, Sumi Agro France, has now submitted the results for
consideration by the French authorities.
Following on from the first EU approvals, the regulatory
authorities in Kenya granted approval for commercial sales of 3AEY
which in turn triggered our first commercial-scale order from
Lachlan Kenya Limited, our sales partner in Kenya. Lachlan will
initially target the treatment of vegetables before expanding into
the cut flower market, both of which are major markets for export
into the European Union. In Kenya, 3AEY will be sold as "Hawk" and
has been granted clearance for label claims covering both botrytis
and powdery mildew, thereby presenting a larger overall market.
It is worth noting that in June 2015, we also gained Maximum
Residue Limit ("MRL") exemption for our active substances. This is
a major differentiator for Eden's products which can be used
without concern for residues and which allow growers to protect
their crops with Eden products right up to the point of harvest.
Indeed, it is residue levels that are of major concern for food
retailers across Europe, and with this exemption from MRLs, we
expect strong retailer "pull". We intend to encourage this activity
through direct engagement with retailers.
Application was made in early 2016 for regulatory clearance in
Switzerland through our newly-appointed Swiss distributor, Stähler
Suisse, and we expect to achieve this in 2018. Eden will supply
Stähler directly with products produced by one of our approved toll
manufacturing partners. Though a smaller market than some, Eden's
go-to-market strategy in Switzerland will drive maximum returns to
Eden by simplifying the supply chain.
Looking forward, we are also planning to expand the registration
of 3AEY in a number of the Baltic states and as soon as the data
requirements are satisfied, we also expect to make registration
applications for 3AEY to be used as an indoor product in the EU
thereby opening up the very large high-value greenhouse crops
markets along with ornamentals. We are also in the early stages of
preparing an application for product registration in the US, and we
are engaged in active dialogue with the US EPA alongside US
regulatory specialists. Finally, we are also in the process of
seeking regulatory approval for a nematicide product that utilises
our active ingredients across a number of territories, and we
expect to be able to update on progress throughout 2016.
Commercial progress
I. Plant protection
Although our technology has multiple end-market applications,
one of the key early markets for us has been in the area of plant
protection. Our lead agricultural product 3AEY, for the prevention
and treatment of botrytis, has now been launched commercially in
Greece, Spain, Italy and Kenya, with product shipped to our
partners in these regions or produced locally by authorised
licensees. We expect to see a growing contribution from product
sales and royalties as our products gain traction in these
countries and as more territories approve its use.
Our products are typically aimed for sale into larger commercial
vineyards, and not as a retail product for home use or smaller
agricultural ventures. 3AEY has a strong scientific rationale which
demonstrates its effectiveness and a number of clear commercial
advantages over existing traditional chemical alternatives - most
notably that 3AEY is formulated with compounds that are
naturally-occurring and can be used right up to the point of
harvest.
Our commercial strategy has been to develop strategic corporate
partnerships with established organisations with experience in
marketing and distribution into our target end markets. In the
pursuit of this strategy we have a number of evaluation agreements
underway, which attract initial upfront fees and that we hope to
develop into full commercial agreements through 2016 and
beyond.
In May last year we announced a new Evaluation Agreement with
Sipcam Italia S.p.A. and Sipcam Iberia (collectively referred to as
"Sipcam") to evaluate 2EY, our product that targets powdery mildew,
a widespread fungal pathogen which affects flowers and fruit. As
you will recall, Sipcam is an existing partner, and we are pleased
with the expansion of this relationship. Furthermore, we see scope
for further expansion into both new product areas and
territories.
In April 2015 we extended our agreement with Taminco BVBA's crop
protection division (a subsidiary of Eastman Chemical Company) to
further evaluate our nematicide product, B2Y. This exclusive
agreement came to an end on 31 March 2016, and we are encouraged by
the outcome of the trials. Eden is now in negotiations to secure
global arrangements for the commercialisation of this product. We
will update the market on this emerging area when discussions are
concluded.
Additional evaluation agreements are underway for 3AEY in new
territories, including the key North American, South American and
Australian markets, as well as further evaluations underway for 2EY
for the treatment of powdery mildew and G3Y for the treatment of
molluscs.
The potential for sales of 3AEY through our existing licensees
(Sumi-Agro France, Sipcam and Redestos) is significant in Europe
alone, but the opportunity is even more valuable when markets
outside of the EU, such as the US and South America, are considered
and we are making progress in arranging commercial terms with new
licensees in these regions. I look forward to updating you on our
progress with these important activities in due course.
II. Animal health
We continue to work closely with our licensee in the animal
health sector, Bayer Animal Health. Bayer are now in the final
stages of development of several products that contain our active
ingredients and use our GO-E(TM) encapsulation system and we expect
these to be launched in 2017. We are confident in the work that
Bayer has been doing and anticipate that the products that emerge
using Eden's technology will establish themselves as
high-performing sector leaders in the North American market and
potentially beyond.
Pet odour control products sold through TerpeneTech should
benefit from the appointment of a new channel partner, and we
expect 2016 will see a return to sales growth for these
products.
III. Human health
In August we signed an exclusive licence agreement with
TerpeneTech Limited granting them the right to use our technologies
and intellectual property for the development of 'over the counter'
head lice treatments for an upfront fee of GBP0.6m. This fee
contributed to our licensing revenues. TerpeneTech are currently
undertaking human clinical trials and this is proceeding as
expected. Additional work is ongoing with respect to the
appointment of product development and launch partners, and much of
this work will be informed by upcoming decisions about the
regulatory paths to pursue in key markets. Head lice treatment
products can be approached differently (from a regulatory
standpoint) in most of the world's largest markets, and TerpeneTech
is taking care to ensure that the product registration strategy is
sound and balances speed to market with product value and
competitive differentiation.
Intellectual Property ("IP")
As an IP-led business it is essential that we continue to
enhance and extend our core intellectual property portfolio and
expand our technology base into new commercial markets. To this end
we signed a collaboration and licence agreement with Intellectual
Ventures ("IV") in September 2015. This agreement provides Eden
with access to IV's world-leading IP-related services and global
network of licensing and business development professionals and
will add value to our IP portfolio and presence particularly in
Asia, North America, and South America where we have had little
reach to date.
IV is currently deploying a significant amount in the further
protection and development of Eden's patent portfolio and expects
to make a return on its investment through royalties on future Eden
net sales of relevant products, and a deferred payment, based on
the growth of Eden's enterprise value over time.
Strategy
Eden has spent years developing its intellectual property,
product development capabilities, supply chain partnerships, toll
manufacturing network, and contract research and commercialisation
partnerships. These capabilities were developed in support of a
technology licensing model centered around an "asset-light"
approach. In short, Eden had to develop its products, prove they
work, prove that they can be produced and then used effectively,
and then hand them over to willing partners.
However, inherent in the licensing business model is the fact
that the majority of a product's gross margins go to the licensing
partner, the licensee. In cases where the full product, regulatory,
and commercial risks are borne primarily by the licensee, this is a
reasonable apportionment of value, giving the licensee a fair
return for its investment in all of the other aspects of product
commercialisation above and beyond the value of know-how and
patents relating to the products. In Eden's case, apart from direct
market access and local presence, Eden is in control of the full
package for the commercialisation of the products it has
developed.
I am pleased to say that over the past twelve months we have
refined our commercialisation strategy and associated business
model in order to derive more value from the products and
technology that we have developed. Eden will consider both the
licensing and product sale models when entering new product areas
and markets, with product sales supported by appropriate contract
manufacting and distribution arrangements. Indeed, we have already
agreed to act as a product supplier to several existing licensees,
and we have established a new direct distributor in Switzerland.
This model will be increasingly utilised in new territories and for
new products as we go forward in order to ensure revenue and profit
maximisation. In the long term, this approach will help us to build
brand value by establishing greater visibility in our end-use
markets, and it will allow us to gain greater control over our
supply chain.
This change is designed to help to ensure a fair return to Eden
and its shareholders for the products that we have developed and
supported over the years, and we anticipate that revenue and profit
lines will grow at a higher rate than when compared with a pure
licensing model.
Finally, this year Eden will focus some of its efforts on
further developing and exploiting its brand. I have already
mentioned the appeal of our product offerings (with their
exemptions from maximum residue levels in Europe) to major European
retailers, but we also plan to take this opportunity to
better-develop our branding strategy in order to fully leverage our
profile as a supplier of natural solutions. This will result in
some changes to our product and technology naming conventions as
well as some strengthening of our positioning with retailers, brand
owners and major producers, all with the intended effect of greater
market pull and influence.
Corporate Investment
During the year Eden acquired a 29.9% stake in TerpeneTech
Limited for GBP0.92m, through the issue of 4,615,385 new Eden
shares at 20p per share. TerpeneTech, an Eden licensee, has
developed a number of products using our GO-E(TM) encapsulation
system and IP. The decision to take a strategic stake in
TerpeneTech was driven by the progress they have made and the
opportunity to take a bigger share of the potential future value
that will be derived from this relationship.
Post year end events
As mentioned above we were pleased to announce the receipt of
regulatory approvals from Italy, Spain and Bulgaria following the
year end. This year we were also able to announce our first
commercial scale order and subsequent delivery of 3AEY from
Redestos Group, Eden's partner in Greece and the Balkans, which
will contribute to product sales and royalties in the 2016
financial year.
Most significantly, we were pleased to announce at the end of
March 2016 a successful placing which raised GBP2.6m from new and
existing institutional investors. Whilst the placing enables the
Company to accelerate the execution of its strategy, we are also
pleased to welcome a major new shareholder in Livingbridge VC LLP
which invested GBP2m to obtain a 10.6% stake in the business and
has the right to appoint a Director to the Board.
The additional funding with allow us to register new products
and increase the global reach of our existing products. It will
also allow us to start new trials in both plant protection products
and personal care applications as well as pursue the
commercialisation of animal health products outside of the United
States.
Outlook
The outlook for the Company is better than it has been at any
point in the past, and I remain confident that we are
well-positioned to benefit from a growing number of commercial
agreements as well as the increasing interest in our technology
beyond the end-uses and geographies that we currently target. Our
commercial pipeline has never been better, and we are aiming to
enhance our capabilities for further commercial activity in the
coming year. We recently announced the appointment of a seasoned
industry veteran to advise on commercial strategy within the plant
protection sector, and we are already benefiting from his years of
experience and insights gained whilst working for major industry
leaders.
In the short-term we expect to receive confirmation of product
registrations for 3AEY in Portugal and France and we will further
advance our application for product registration to combat powdery
mildew, nematodes and molluscs, to name a few areas. In particular,
we believe that we are close to concluding a commercial agreement
for our nematicide product B2Y, and we look forward to updating
shareholders in due course. We also expect to see a number of
evaluations successfully concluded during the year.
We expect to see our global reach and IP portfolio expand during
2016 through our relationship with IV and will be targeting product
sales partnerships in North America, South America and, likely,
Australia. Eden is in the early stages of collaborations with
multiple major generic and proprietary active ingredient suppliers
to evaluate its encapsulation technology, both alone, and in
synergistic combinations with terpenes. These collaborations should
be formalised during the course of 2016 with both new and current
partners.
Whilst we anticipate 2016 revenues to be made up of one time
fees and milestone payments from licence agreements, we expect to
see over time steady growth in product sales and royalties as more
of our commercialisation partners launch products using our
technology and as these products begin to get market traction.
We are well positioned for further growth in 2016 and beyond:
the business is debt-free, well-funded and with a light overhead
structure we expect that further revenue growth will move the
business towards profitability.
I look forward to updating you as we reach key milestones
throughout the year and at the half-year reporting, and in the
meantime, I thank you for your confidence and support.
S M Smith
Chief Executive Officer
23 May 2016
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For The Year Ended 31 December 2015
2015 2014
Notes GBP GBP
CONTINUING OPERATIONS
Revenue 2 883,312 99,855
Cost of sales (98,708) -
-------------- --------------
GROSS PROFIT 784,604 99,855
Amortisation of intangible
assets (655,304) (635,035)
Other administrative expenses (1,019,957) (1,022,836)
Share based payments (247,973) (187,621)
-------------- --------------
OPERATING LOSS (1,138,630) (1,745,637)
Finance costs 4 (20,486) (1,252,295)
Finance income 4 247 117
-------------- --------------
LOSS BEFORE INCOME TAX 5 (1,158,869) (2,997,815)
Income tax 6 101,260 28,347
-------------- --------------
LOSS FOR THE YEAR (1,057,609) (2,969,468)
OTHER COMPREHENSIVE INCOME - -
-------------- --------------
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR (1,057,609) (2,969,468)
============== ==============
Earnings per share expressed
in pence per share: 7
Basic -0.68 -2.36
Diluted -0.68 -2.36
============== ==============
STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
2015 2014
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Intangible assets 8 5,543,092 5,923,740
Investments 9 923,077 -
------------- -------------
6,466,169 5,923,740
------------- -------------
CURRENT ASSETS
Trade and other receivables 10 164,416 62,535
Cash and cash equivalents 11 148,360 414,980
------------- -------------
312,776 477,515
------------- -------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12 752,552 458,303
------------- -------------
NET CURRENT (LIABILITIES)/ASSETS (439,776) 19,212
------------- -------------
NET ASSETS 6,026,393 5,942,952
============= =============
SHAREHOLDERS' EQUITY
Called up share capital 15 1,587,583 1,541,429
Share premium 16 26,860,972 26,014,049
Merger reserve 16 10,209,673 10,209,673
Warrant reserve 16 735,453 524,154
Retained earnings 16 (33,367,288) (32,346,353)
------------- -------------
TOTAL EQUITY 6,026,393 5,942,952
============= =============
STATEMENT OF CHANGES IN EQUITY
For The Year Ended 31 December 2015
Called Share premium Merger Warrant Retained Total
up share reserve reserve earnings
capital
GBP GBP GBP GBP GBP GBP
Balance at 1 January
2014 1,232,776 23,277,511 10,209,673 779,485 (29,819,837) 5,679,608
Loss and total
comprehensive
income - - - - (2,969,468) (2,969,468)
Transactions with
owners
- Issue of shares 308,653 2,736,538 - - - 3,045,191
- Options granted - - - 187,621 - 187,621
- Options exercised/lapsed - - - (442,952) 442,952 -
------------- -------------- ----------- ---------- -------------- --------------
Transactions with
owners 308,653 2,736,538 - (255,331) 442,952 3,232,812
------------- -------------- ----------- ---------- -------------- --------------
Balance at 31
December 2014 1,541,429 26,014,049 10,209,673 524,154 (32,346,353) 5,942,952
------------- -------------- ----------- ---------- -------------- --------------
Balance at 1 January
2015 1,541,429 26,014,049 10,209,673 524,154 (32,346,353) 5,942,952
Loss and total
comprehensive
income - - - - (1,057,609) (1,057,609)
Transactions with
owners
- Issue of shares 46,154 846,923 - - - 893,077
- Options granted - - - 247,973 - 247,973
- Options exercised/lapsed - - - (36,674) 36,674 -
------------- -------------- ----------- ---------- -------------- --------------
Transactions with
owners 46,154 846,923 - 211,299 36,674 1,141,050
------------- -------------- ----------- ---------- -------------- --------------
Balance at 31
December 2015 1,587,583 26,860,972 10,209,673 735,453 (33,367,288) 6,026,393
============= ============== =========== ========== ============== ==============
STATEMENT OF CASH FLOWS
For The Year Ended 31 December 2015
2015 2014
GBP GBP
Cash flows from operating activities
Cash generated from operations 1 (185,635) (848,939)
Finance costs paid (20,486) (109,703)
Tax received 101,260 28,347
---------- ----------
Net cash from operating activities (104,861) (930,295)
---------- ----------
Cash flows from investing activities
Capitalisation of development expenditure (132,006) (466,189)
Interest received 247 117
---------- ----------
Net cash from investing activities (131,759) (466,072)
---------- ----------
Cash flows from financing activities
Issue of equity shares - 750,000
Share issue costs (30,000) -
Loans - 750,000
---------- ----------
Net cash from financing activities (30,000) 1,500,000
---------- ----------
(Decrease)/increase in cash and
cash equivalents (266,620) 103,633
Cash and cash equivalents at beginning
of year 2 414,980 311,347
---------- ----------
Cash and cash equivalents at end
of year 2 148,360 414,980
========== ==========
NOTES TO THE STATEMENT OF CASH FLOWS
For The Year Ended 31 December 2015
1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
2015 2014
GBP GBP
Loss before income tax (1,158,869) (2,997,815)
Amortisation charges 655,304 635,035
Share based payment charge 247,973 187,621
Finance costs 20,486 1,252,295
Finance income (247) (117)
-------------------------------- -------------------------------
(235,353) (922,981)
(Increase)/decrease in trade and other
receivables (244,532) 67,233
Increase in trade and other payables 294,250 6,809
-------------------------------- -------------------------------
Cash generated from operations (185,635) (848,939)
================================ ===============================
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect
of cash and cash equivalents are in respect of these Statement of
Financial Position amounts:
Year ended 31 December 2015
31.12.15 1.1.15
GBP GBP
Cash and cash equivalents 148,360 414,980
========= ========
Year ended 31 December 2014
31.12.14 1.1.14
GBP GBP
Cash and cash equivalents 414,980 311,347
========= ========
3. NON-CASH TRANSACTIONS
During the year ended 31 December 2015, the Company acquired
29.9% of the share capital of TerpeneTech Limited for GBP923,077.
The consideration was paid via the issue of shares as disclosed in
note 15 and was a major non-cash transaction. Share issue costs of
GBP30,000 were incurred.
During the year ended 31 December 2014 debt, including finance
charges, totalling GBP2,295,192 was converted into 20,865,382
shares.
NOTES TO THE FINANCIAL STATEMENTS
For The Year Ended 31 December 2015
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost
convention.
General information
Eden Research Plc is a company incorporated and domiciled in the
United Kingdom under the Companies Act 2006. The address of the
registered office is Suite 3, 15 Gosditch Street, Cirencester,
Gloucestershire, GL7 2AG.. The nature of the Company's operations
and its principal activities are set out in the Chairman's Report
and the Chief Executive's Report. The Company is quoted on the AiM
Market in London.
These financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Company operates.
The Company has adopted the following revisions and amendments
to IFRS issued by the International Accounting Standards Board,
which are relevant to and effective for the Company's financial
statements for the year beginning 1 January 2015.
IFRS 10, IFRS 12 and IAS 27 Investment Entities - Amendments to
IFRS 10, IFRS 12 and IAS 27
IAS 32 Offsetting Financial Assets and Financial Liabilities -
Amendments to IAS 32
IAS 36 Recoverable Amount Disclosures for Non-Financial Assets -
Amendments to IAS 36
IAS 39 Novation of Derivatives and Continuation of Hedge
Accounting - Amendments to IAS 39
IFRIC 21 Levies
IAS 19 Defined Benefit Plans: Employee Contributions -
Amendments to IAS 19
The directors have assessed that the adoption of these revisions
and amendments did not have an impact on the financial position or
performance of the Company.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:-
Effective 1 January 2016
IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the
Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS
28
IFRS 10 and IAS 28 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture - Amendments to IFRS
10
and IAS 28
IFRS 11 Accounting for Acquisitions of Interests in Joint
Operations - Amendments to IFRS 11
IFRS 14 Regulatory Deferral Accounts
IAS 1 Disclosure Initiative - Amendments to IAS 1
IAS 16 and IAS 38 - Clarification of Acceptable Methods of
Depreciation and Amortisation - Amendments to IAS 16 and IAS 38
Effective 1 January 2018
IFRS 15 Revenue from Contracts with Customers
IFRS 9 Financial Instruments
The directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the financial statements of the Company.
Going Concern
The financial statements have been prepared on a going concern
basis which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business.
The Company has reported a loss for the year after taxation of
GBP1,057,609 (2014: GBP2,969,468). Net current liabilities at that
date amounted to GBP439,776 (2014: GBP19,213 net current
assets).
The directors have prepared budgets and projected cash flow
forecasts for a period of two years from 31 December 2015 and they
consider that the Company will be able to operate within the cash
facilities that are available to it for this period. The ability of
the Company to continue as a going concern is ultimately dependent
upon the amounts and timing of cash flows from the exploitation of
the Company's intellectual property and the availability of
additional funding to meet the short term needs of the business
until the commercialisation of the Company's portfolio is
reached.
The forecasts adopted only include revenue derived from existing
contracts and, while there is a risk these payments might be
delayed if milestones are not reached, there is the significant
potential upside from on-going discussions and negotiations with
other parties as well as other "blue sky" opportunities.
In addition, the Company has relatively low fixed running costs
and has a demonstrable ability to delay certain other costs, such
as the forecast Research and Development expenditure, in the event
of unforeseen cash restraints.
The directors are closely monitoring performance against cash
flow projections that have been prepared for the period to 31
December 2016 and beyond and are confident that the Company will be
able to generate the necessary cash resources over and above those
referred to above.
On this basis the directors consider it appropriate to prepare
the financial statements on a going concern basis. The financial
statements do not include any adjustments that would result from a
failure by the Company to meet these forecasts.
Revenue recognition
Revenue is recognised only when it is probable that the economic
benefits associated with the transaction will flow to the Company
and the amount of revenue can be reliably estimated.
Revenue represents amounts receivable by the Company in respect
of services rendered during the year in accordance with the
underlying contract or licence, stated net of value added tax.
Royalty income and upfront payments are recognised as the
royalties accrue in accordance with the terms of the underlying
contract.
Amounts receivable under milestone agreements are recognised in
accordance with the terms of the underlying agreement and are
typically recognised upon the completion of the significant acts
within the agreements. Revenue is specifically only recognised when
the terms of any milestone are reasonably expected to be met and
the relevant act has been completed as the Company has no
contractual rights to the revenue until this point.
Licence fee revenue is recognised up-front as a sale of the
Company if the Company has discharged all of its on-going
obligations.
Intangible assets
Intellectual property, including development costs, is
capitalised and amortised on a straight line basis over its
estimated useful economic life of 9 years in line with the
remaining life of the Company's master patent, which was originally
20 years. The useful economic life of intangible assets is reviewed
on an annual basis.
Impairment of non-financial assets
The directors regularly review the intangible assets for
impairment and provision is made if necessary. Assets that are
subject to amortisation are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date.
Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally generated intangible asset arising from the
Company's development activities is recognised only if all the
following conditions are met:
- the project is technically and commercially feasible;
- an asset is created that can be identified;
- the Company intends to complete the asset and use or sell it
and has the ability to do so;
- it is probable that the asset created will generate future
economic benefits;
- the development cost of the asset can be measured reliably;
and
- there are sufficient resources available to complete the
project.
Internally-generated intangible assets are amortised on a
straight line basis over their useful lives. Where no
internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period
in which it is incurred.
Financial instruments
The Company uses certain financial instruments in its operating
and investing activities that are deemed appropriate for its
strategy and circumstances.
Financial assets and liabilities are recognised on the Statement
of Financial Position when the Company has become a party to the
contractual provisions of the instrument.
Financial instruments recognised on the Statement of Financial
Position include cash and cash equivalents, trade receivables,
trade payables and borrowings and fixed interest convertible
debt.
Cash and cash equivalents comprise cash on hand and on demand
deposits, and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Interest bearing loans and overdrafts are recorded at the fair
value received less any transaction costs. Subsequent to initial
recognition such instruments are measured at amortised cost, using
the effective interest method.
Financial assets
Trade receivables, loans and other receivables that have fixed
or determinable payments are classified as "Loans and receivables"
and are measured initially at fair value plus transaction costs and
subsequently at amortised cost using the effective interest method
less impairment. Interest is recognised by applying the effective
interest rate, except for short term receivables when the
recognition of interest would be immaterial.
Financial assets are assessed for impairment at each reporting
date by considering the recoverable amount of the asset in
comparison to its carrying value and any impairment recognised in
the Statement of Comprehensive Income. Trade receivables are
assessed for collectability and where appropriate the carrying
amount is reduced through the use of an allowance account. When a
trade receivable is uncollectible it is written off against the
allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account and changes
in the carrying amount of the allowance account are recognised in
the profit or loss in the Statement of Comprehensive Income.
Debt and equity instruments issued by the Company
Loan notes
Where loans that were previously convertible have been converted
to equity in accordance with the original terms of the contract as
a result of an agreement between the note holder and the Company,
the value of the loan and any associated accrued interest is
transferred to equity at nil gain, nil loss.
The Company also enters into agreements to convert loans and
creditors into equity which were not convertible under the original
terms of the agreement. Where this is the case the Company applies
the requirements of IFRIC 19 and recognises the issue of equity at
the fair value of the instruments issues. Any profit or loss
arising on the extinguishment of the liability is taken to profit
or loss.
Convertible loans
Due to the nature of the arrangements management are required to
make significant judgments in order to determine whether the
conversion of loans has taken place in accordance with the original
terms of the underlying agreement. Each conversion is considered
individually. During the previous year all conversions were deemed
to have been made in accordance with the original terms of the
agreements. There were no conversions made in 2015.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities such as trade payables and loans are
classified as "Other financial liabilities" and are measured
initially at fair value less transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, except for short term payables when the
recognition of interest would be immaterial.
Non-executory contracts are recognised when all obligations due
to the Company under the terms of the contract have been met, but
the Company retains a financial liability. This financial liability
is measured in accordance with the Company's accounting policy for
the measurement of financial liabilities.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the Company. All other leases are classified as
operating leases.
Rentals payable under operating leases are charged to income on
a straight-line basis over the term of the relevant lease. Benefits
received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease
term.
Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at
the rate of exchange ruling at the date of transaction. Exchange
differences are taken into account in arriving at the operating
result.
Share-based payments
The Company has applied the requirements of IFRS2 Share-Based
Payments.
The Company operates an unapproved share option scheme for
executive directors, senior management and certain employees.
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the Statement of
Comprehensive Income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each reporting date so that
ultimately the cumulative amount recognised over the vesting period
is based on the number of options that eventually vest. Market
vesting conditions are factored into the fair value of the options
granted, as long as other vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market
vesting condition.
Where the terms and conditions of options are modified before
they vest, the increase in fair value of the options, measured
immediately before and after the modification is also charged to
the Statement of Comprehensive Income over the remaining vesting
period.
Fair value is measured using the Black-Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural conditions.
Financial risk management
The Company's activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risks), credit risk and liquidity risk. Risk management focuses on
minimising any potential adverse effect on the Company's financial
performance and is carried out under policies approved by the Board
of Directors. Further detail is given in note 21 to the financial
statements.
Current and deferred income tax
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interest in joint ventures, except where the Company is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realized based on the tax rates that have been enacted or
substantively enacted by the end of the reporting period. Deferred
tax is charged or credited to profit or loss, except when it
relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
Critical accounting estimates and areas of judgement
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Capitalised development costs
The directors have considered the recoverability of the
internally generated intangible asset which has a carrying value of
GBP1.9m. The projects continue to progress in a satisfactory manner
and the directors are confident that the carrying amount of the
asset will be recovered in full. This situation will be closely
monitored and adjustments made in future periods if future market
activity indicates that such adjustments are appropriate.
The key factors which could impact upon whether it remains
appropriate to continue to capitalise intangible assets or on the
impairment considerations include:
- The availability of the necessary finance and hence the
ability of the Company to continue as a going concern.
- The assumptions surrounding the perceived market sizes for the
products and the achievable market share for the Company.
- The successful conclusion of licensing arrangements will serve
as an indicator as to the likely success of the projects and, as
such, any need for potential impairment.
- The level of upfront, milestone and royalty receipts will also
serve as a guide as to the net present value of the assets and
whether any impairment is required.
Impairment of assets
The directors have considered the progress of the business in
the current year, including a review of the potential market for
its products, the progress the Company has made in registering its
products and other key commercial factors to determine whether any
indicators of impairment exist. Based upon the review management
have carried out they are satisfied that no such factors exist and
therefore a full impairment review on the Company's intangible
assets has not been carried out.
Going concern
The directors have considered the ability of the Company to
continue as a going concern and this is considered to be the most
significant estimate made by the directors in preparing the
financial statements.
The ability of the Company to continue as a going concern is
ultimately dependent upon the amount and timing of cash flows
arising from the capitalisation of the Company's intellectual
property. The directors consider it is appropriate for the
financial statements to be prepared on a going concern basis based
on the estimates they have made, which are summarised above.
Convertible loans
Due to the nature of the arrangements management are required to
make significant judgements in order to determine whether
conversion of loans has taken place in accordance with the original
terms of the underlying agreement.
2. SEGMENTAL REPORTING
IFRS 8 requires operating segments to be reported in a manner
consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who
is responsible for the resource allocation and assessing
performance of the operating segments, has been identified as the
Board of Directors as it is primarily responsible for the
allocation of the resources to segments and the assessment of
performance of the segments.
The Board of Directors monitor and then assess the performance
of segments based on product type and geographical area using a
measure of adjusted EBITDA. This is the result of the segment after
excluding the share based payment charges, other operating income
and the amortisation of intangibles. These items, together with
interest income and expense are not allocated to a specific
segment.
The segmental information for the year ended 31 December 2015 is
as follows:
Licensing Milestone Evaluation Royalties Grant Product
fees payments fees funding sales
--------------- ---------- ----------------- ----------- ----------------- -------- -------- ------------ ------------
GBP GBP GBP GBP GBP GBP GBP GBP GBP Total
Europe Africa Europe Africa Africa Unallocated GBP
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Biocides - 12,346 - - 3,031 - - - - 15,377
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Human
health 600,000 - - - - - - - - 600,000
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Agrochemicals 138,068 - 50,676 45,214 - 3,345 531 30,101 - 267,935
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
TOTAL 738,068 12,346 50,676 45,214 3,031 3,345 531 30,101 - 883,312
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Adjusted
EBITDA - - - - - - - - (235,353) (235,353)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Amortisation - - - - - - - - (655,304) (655,304)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Depreciation - - - - - - - - - -
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Share
based
payments - - - - - - - - (247,973) (247,973)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Other - - - - - - - - - -
operating
income
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Net Finance
costs - - - - - - - - (20,239) (20,239)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Income
tax - - - - - - - - 101,260 101,260
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Loss
for the
year - - - - - - - - (1,057,609) (1,057,609)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Total
assets - - - - - - - - 6,778,945 6,778,945
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Total - - - - - - - - -
assets
includes:
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Additions
to
non-current
assets - - - - - - - - 274,656 274,656
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
Total
liabilities - - - - - - - - (752,552) (752,552)
--------------- ---------- ------- -------- ----------- ------- -------- -------- -------- ------------ ------------
The segmental information for the year ended 31 December 2014 is
as follows:
Data-Sharing 3AEY Biocides Encapsulation
------------------- ------------- --------------------- --------- --------------- ------------
Europe Europe Unallocated Europe Europe Total
GBP GBP GBP GBP GBP GBP
------------------- ------------- ------- ------------ --------- --------------- ------------
Total segment
revenue 16,935 63,493 1,339 12,888 5,200 99,855
------------------- ------------- ------- ------------ --------- --------------- ------------
Inter segment - - - - - -
revenue
------------------- ------------- ------- ------------ --------- --------------- ------------
Revenue
from external
customers 16,935 63,493 1,339 12,888 5,200 99,855
------------------- ------------- ------- ------------ --------- --------------- ------------
Adjusted
EBITDA - - (922,981) - - (922,981)
------------------- ------------- ------- ------------ --------- --------------- ------------
Amortisation - - (635,035) - - (635,035)
------------------- ------------- ------- ------------ --------- --------------- ------------
Depreciation - - - - - -
------------------- ------------- ------- ------------ --------- --------------- ------------
Share based
payments - - (187,621) - - (187,621)
------------------- ------------- ------- ------------ --------- --------------- ------------
Other operating - - - - - -
income
------------------- ------------- ------- ------------ --------- --------------- ------------
Net Finance
costs - - (1,252,178) - - (1,252,178)
------------------- ------------- ------- ------------ --------- --------------- ------------
Income tax - - 28,347 - - 28,347
------------------- ------------- ------- ------------ --------- --------------- ------------
Loss for
the year - - (2,969,468) - - (2,969,468)
------------------- ------------- ------- ------------ --------- --------------- ------------
Total assets - - 6,401,255 - - 6,401,255
------------------- ------------- ------- ------------ --------- --------------- ------------
Total assets
includes:
------------------- ------------- ------- ------------ --------- --------------- ------------
Additions
to non-current
assets - - 466,189 - - 466,189
------------------- ------------- ------- ------------ --------- --------------- ------------
Total liabilities - - 458,303 - - 458,303
------------------- ------------- ------- ------------ --------- --------------- ------------
3. EMPLOYEES AND DIRECTORS
2015 2014
GBP GBP
Wages and salaries 385,471 259,333
Social security costs 33,074 22,541
-------- --------
418,545 281,874
======== ========
The average monthly number of employees during the year was as
follows:
2015 2014
Management 5 6
===== =====
Staff costs, including executive directors' remuneration, are
included within administrative expenditure in the Statement of
Comprehensive Income. The executive directors are considered to
also be the key management personnel of the Company.
2015 2014
GBP GBP
Director's remuneration 308,616 216,833
-------- --------
308,616 216,833
Non-executive directors' fees 76,855 42,500
-------- --------
Total directors' emoluments 385,471 259,333
======== ========
Share based payment charge relating
to all directors 142,959 58,610
======== ========
During the year the remuneration of the highest paid director
was GBP317,526 (2014: GBP105,083).
2015 Share based
Salary Bonus Fees payments Total
GBP GBP GBP GBP GBP
A Abrey 86,250 31,050 - 4,884 122,184
K Brooks 7,500 - 22,500 - 30,000
C Newitt 4,365 - - - 4,365
T Lupton - - 35,000 - 35,000
S Smith 137,335 42,116 - 138,075 317,526
R Cridland - - 19,355 - 19,355
========= ======== ======= ============ ========
235,450 73,166 76,855 142,959 528,430
========= ======== ======= ============ ========
2014 Share based
Salary Bonus Fees payments Total
GBP GBP GBP GBP GBP
A Abrey 75,000 12,500 - 17,583 105,083
K Brooks 30,000 - 30,000 35,166 95,166
C Newitt 33,333 - - 5,861 39,194
B Gill - - 12,500 - 12,500
T Lupton 30,000 - - - 30,000
S Smith 36,000 - - - 36,000
========= ======== ======= ============ ========
204,333 12,500 42,500 58,610 317,943
========= ======== ======= ============ ========
4. NET FINANCE COSTS
2015 2014
GBP GBP
Finance income:
Deposit account interest 247 117
======= ==========
Finance costs:
Bank interest -
Exchange variances 20,064 6,457
Finance fees 422 1,245,838
20,486 1,252,295
======= ==========
Net finance costs 20,239 1,252,178
======= ==========
5. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
2015 2014
GBP GBP
Licences and trademarks amortisation 15,723 15,723
Development costs amortisation 200,093 179,824
Intellectual property amortisation 439,488 439,488
Auditors' remuneration 16,000 16,000
Equity share based payments 247,973 187,621
Foreign exchange differences 20,064 6,457
======== ========
6. INCOME TAX
Analysis of tax income
2015 2014
GBP GBP
Current tax:
Tax (101,260) (28,347)
------------ -----------
Total tax income in statement of profit
or loss and other comprehensive income (101,260) (28,347)
============ ===========
Corporation tax
No tax charge arises on the results for the year (2014: GBPnil).
Tax losses carried forward amount to approximately GBP21,864,657
(2014: GBP20,807,048). The tax credit represents the research and
development tax credit receivable for the year ended 31 December
2015.
Factors affecting the tax charge
The UK standard rate of corporation tax is 20.25% (2014:
21.49%). Current tax assessed for the financial year as a
percentage of the loss before taxation is nil (2014: nil)
The differences are explained below:
2015 2015 2014 2014
GBP % GBP %
Standard rate of corporation
tax in the UK (20.25) (21.49)
Loss before tax at standard
rate of tax (214,166) (644,230)
Effects of Losses carried
forward 200,104 20.0 603,711 20.0
Other expenses not deductible
for tax purposes 14,062 1.0 40,519 1.0
Research and development
tax relief (101,260) 10 (28,347) (1.0)
----------- ---------- ----------- ----------
Total current tax credit
and tax rate % (101,260) (10) (28,347) (1.0)
=========== ========== =========== ==========
Deferred tax
Unprovided deferred
tax asset 4,376,441 4,178,347
=========== ===========
The unprovided deferred tax asset arises principally in respect
of trading losses, together with other minor timing differences at
20% (2014: 21%) and has not been recognised due to the uncertainty
of timing of future profits against which it may be realised.
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares.
Reconciliations are set out below:
2015
Weighted
average number Per-share
Earnings of shares amount pence
GBP
Basic EPS
Earnings attributable to
ordinary shareholders (1,057,609) 155,685,557 -0.68
Effect of dilutive securities - - -
------------ ---------------- ---------------
Diluted EPS
Adjusted earnings (1,057,609) 155,685,557 -0.68
============ ================ ===============
2014
Weighted
average number Per-share
Earnings of shares amount pence
GBP
Basic EPS
Earnings attributable to
ordinary shareholders (2,969,468) 125,752,471 -2.36
Effect of dilutive securities - - -
------------ ---------------- ---------------
Diluted EPS
Adjusted earnings (2,969,468) 125,752,471 -2.36
============ ================ ===============
Due to the loss for the year there is no dilution of the loss
per share arising from options in existence.
8. INTANGIBLE ASSETS
Licences Development Intellectual
and trademarks costs property Totals
GBP GBP GBP GBP
COST
At 1 January 2015 447,351 2,979,440 8,591,774 12,018,565
Additions - 209,058 65,598 274,656
----------------- -------------- --------------- -----------
At 31 December 2015 447,351 3,188,498 8,657,372 12,293,221
----------------- -------------- --------------- -----------
AMORTISATION
At 1 January 2015 352,867 1,049,726 4,692,232 6,094,825
Amortisation for year 15,723 200,093 439,488 655,304
----------------- -------------- --------------- -----------
At 31 December 2015 368,590 1,249,819 5,131,720 6,750,129
----------------- -------------- --------------- -----------
NET BOOK VALUE
At 31 December 2015 78,761 1,938,679 3,525,652 5,543,092
================= ============== =============== ===========
Licences Development Intellectual
and trademarks costs property Totals
GBP GBP GBP GBP
COST
At 1 January 2014 447,351 2,513,251 8,591,774 11,552,376
Additions - 466,189 - 466,189
----------------- -------------- --------------- -----------
At 31 December 2014 447,351 2,979,440 8,591,774 12,018,565
----------------- -------------- --------------- -----------
AMORTISATION
At 1 January 2014 337,144 869,902 4,252,744 5,459,790
Amortisation for year 15,723 179,824 439,488 635,035
----------------- -------------- --------------- -----------
At 31 December 2014 352,867 1,049,726 4,692,232 6,094,825
----------------- -------------- --------------- -----------
NET BOOK VALUE
At 31 December 2014 94,484 1,929,714 3,899,542 5,923,740
================= ============== =============== ===========
The amortisation charge is included within overhead expenses.
Intellectual property represents intellectual property in relation
to use of encapsulated terpenes in agrochemicals. The remaining
useful economic life of that asset is nine years.
An annual impairment review is undertaken by the Board of
Directors only where there are indicators that an impairment may
exist. The directors have considered the progress of the business
in the current year, including a review of the potential market for
its products, the progress the Company has made in registering its
products and other key commercial factors to determine whether any
indicators of impairment exist. Based on the review management have
carried out they are satisfied that no such factors exist and as
such a full impairment review on the Company's intangible assets
has not been carried out.
An independent valuation was undertaken by PharmaVentures
Limited in 2010 on a number of the Company's product programmes and
the estimated future value exceeds the current carrying value.
The valuers used an industry-standard methodology that combines
discounted cash flow projections with decision tree analysis to
allow explicitly for development risk. For each programme an
expected net present value was derived, which provides a measure of
the programme's current economic value.
The valuation was carried out on Eden's botrytis, powdery mildew
and nematode products using third party information on the market
sizes and based on assumptions with regard to the potential market
share achievable.
The Estimated Net Present Value of 3AEY, Eden's lead botryticide
product, alone exceeded the current carrying value of the Company's
intellectual property.
The key assumptions used in completion of the valuation
included:
- The projected market sizes for the key products which the
Company is developing. These include a projected market of $214m
for 3AEY, $100m for Powdery Mildew, and $296m for nematodes.
- The projected market share attainable by the Company. In
preparing the valuation, a base projected market share growing to
5% of the relevant markets has been assumed.
- As the nature of the Company's revenue streams are a mixture
of milestone payments, licence income and royalties, there are no
specific projected growth rates used - the timing of the attainment
of the milestones which are attainable on project by project basis
is a key assumption in the forecasts.
- The discounted cash flows have assumed a discount factor of
9%.
All revenues have been projected to come from the cash
generating units identified in the segmental reporting and
Chairman's review, namely the key product lines of the Company.
9. INVESTMENTS
Interest
in other
participating
interests
GBP
COST
Additions 923,077
---------------
As at 31 December 2015 923,077
---------------
NET BOOK VALUE
As at 31 December 2015 923,077
===============
During the year the Company acquired 29.9% of the share capital
of TerpeneTech Limited for GBP923,077. The consideration was paid
via the issue of shares as disclosed per note 15. A report by an
independent valuer for the purposes of section 593 of the Companies
Act 2006 was prepared for the Board in respect of this
transaction.
10. TRADE AND OTHER RECEIVABLES
2015 2014
GBP GBP
Current:
Trade and other receivables 144,997 34,393
VAT recoverable 19,419 28,142
---------- ---------
164,416 62,535
========== =========
The directors consider that the carrying value of trade and
other receivables approximates to the fair value. Trade receivables
are included net of a provision of GBPnil (2014: GBP35,821).
Details of debts past due but not impaired are given in note
21.
11. CASH AND CASH EQUIVALENTS
2015 2014
GBP GBP
Short term bank deposits 148,360 414,980
========== ==========
The carrying amount of these short term bank deposits
approximates to the fair value.
12. TRADE AND OTHER PAYABLES
2015 2014
GBP GBP
Current:
Trade payables 326,940 291,687
Other payables 25,668 22,377
Accruals and deferred income 399,944 144,239
-------- --------
752,552 458,303
======== ========
The directors consider that the carrying value of trade and
other payables approximates to their fair value. See note 21 for
disclosure of the amount of trade payables denominated in foreign
currency. See Directors' Report for disclosure of the average
credit period taken.
13. LEASING AGREEMENTS
Minimum lease payments under non-cancellable operating leases
fall due as follows:
2015 2014
GBP GBP
Between one and five years 11,958 -
------- -----
11,958 -
======= =====
14. FINANCIAL ASSETS AND LIABILITIES
Note 2015 2014
GBP GBP
Financial assets at amortised
cost
Other receivables 10 164,416 62,535
Cash and cash equivalents 11 148,360 414,980
-------- --------
312,776 477,515
======== ========
Financial liabilities measured at amortised 2015 2014
cost
Current: GBP GBP
Trade and other payables 12 752,552 458,303
-------- --------
752,552 458,303
======== ========
15. CALLED UP SHARE CAPITAL
Number: Class: Nominal 2015 2014
value: GBP GBP
158,758,265 Ordinary 0.01 1,587,583 1,541,429
Alloted, issued
and fully paid
Number: Class: Nominal 2015 2014
value: GBP GBP
158,758,265 Ordinary 0.01 1,587,583 1,541,429
(2014: 154,142,880)
During the year the Company issued 4,615,385 ordinary shares at
20p each. Total consideration was GBP923,077. The shares were
issued in exchange for an investment in TerpeneTech Limited. Share
issue costs of GBP30,000 were incurred and have been charged to the
share premium account as detailed in note 16.
The number of GBP0.01 ordinary shares issued in the year
totalled 4,615,385 (2014: 30,865,382).
Date Number of Aggregate Issue Price Premium on Total share
ordinary nominal value issue premium
shares
GBP GBP GBP GBP
28/08/2015 4,615,385 46,154 0.01 0.19 876,923
--------------- ------------
46,154 876,923
=============== ============
16. RESERVES
Retained Share Merger Warrant
earnings premium reserve reserve Totals
GBP GBP GBP GBP GBP
At 1 January 2015 (32,346,353) 26,014,049 10,209,673 524,154 4,401,523
Deficit for the year (1,057,609) - - - (1,057,609)
Share issued - 876,923 - - 876,923
Share issue costs - (30,000) - - (30,000)
Options granted - - - 247,973 247,973
Options exercised/lapsed 36,674 - - (36,674) -
At 31 December 2015 (33,367,288) 26,860,972 10,209,673 735,453 4,438,810
============= =========== =========== ========= ============
The merger reserve arose on the acquisition of a subsidiary
undertaking in a prior year for which merger relief was permitted
under the Companies Act 2006. The warrant reserve represents the
fair value of share options and warrants granted, and not exercised
or lapsed, in accordance with the requirements of IFRS 2 Share
Based Payment.
17. CAPITAL COMMITMENTS
The Company had no capital commitments at 31 December 2015
(2014: GBPnil).
18. CONTINGENT LIABILITY
In September 2015, the Company entered into a Collaboration and
Licence agreement with Intellectual Ventures. As part of this
agreement, upon successful completion of a number of different
tasks, Intellectual Ventures will be entitled to a payment which is
calculated using the value of the Company at a future date. As at
31 December 2015, no contingent liability had been realised.
19. RELATED PARTY DISCLOSURES
Disclosures required in respect of IAS 24 regarding remuneration
of key management personnel are covered by the disclosure of
directors' remuneration included within note 3.
Transactions with other related parties are set out below:
During the year, the Company traded with A H Brooks, of which K
W Brooks, a former director of the Company until 10 June 2015, is a
partner. The transactions in aggregate were as follows:-
2015 2014
GBP GBP
Rent 5,000 30,000
Provision of consulting services 4,167 25,000
Trade payables due at the year end - 8,500
During the year, the Company traded with Ricewood Limited, of
which A Abrey, a director, is a director and shareholder, in
respect of consultancy services, as follows:-
2015 2014
GBP GBP
Provision of consultancy services 15,000 20,000
Trade payables due at the year end - 2,416
The directors regard all the transactions disclosed above as
being in the normal course of business and the transactions were
enacted at arms' length.
20. SHARE-BASED PAYMENT TRANSACTIONS
Share Options
Eden Research Plc operates an unapproved option scheme for
executive directors, senior management and certain employees.
2015 2014
Weighted Weighted
average average
exercise Number exercise Number
price (pence) price (pence)
Outstanding at the beginning
of the year 12 4,650,000 19 6,350,000
Granted during the year 18 1,625,000 8 1,500,000
Lapsed during the year 18 (200,000) 12 (3,200,000)
--------------- ---------- --------------- ------------
11 6,075,000 12 4,650,000
--------------- ---------- --------------- ------------
The exercise price of options outstanding at the end of the year
ranged between 8p and 18p (2014: 10p and 18p) and their weighted
average contractual life was 1.5 years (2014: 2.1 years). None of
the options have vesting conditions.
The share based payment charge for the year was GBP142,959
(2014: GBP58,610). The weighted average fair value of each options
granted during 2015 was 9p (2014: 4p).
The following information is relevant in the determination of
the fair value of options granted during the year under the
unapproved options scheme operated by Eden Research Plc.
Equity-settled
Option price model used Black Scholes
Weighted average share price at grant date
(pence) 12
Exercise price (pence) 15
Weighted average contractual life (days) 1,093
Expected volatility 64.4%
Expected dividend growth rate -
Risk-free interest rate 0.95%
Expected volatility is calculated based on historic share price
movements.
Warrants
2015 2014
Weighted
Weighted average
average exercise exercise
price (pence) Number price (pence) Number
Outstanding at the beginning
of the year 13 3,340,000 14 1,231,875
Granted during the year 15 2,337,867 10 2,760,000
Lapsed during the year - - 18 (651,875)
------------------- ---------- --------------- ----------
14 5,677,867 13 3,340,000
------------------- ---------- --------------- ----------
The exercise price of warrants outstanding at the end of the
year ranged between 11p and 30p (2014: 11p and 30p) and their
weighted average contractual life was 3 years (2014: 4.5 years).
None of the warrants have vesting conditions.
The share based payment charge for the year was GBP105,014
(2014: GBP129,011). The weighted average fair value of each warrant
granted during the year was 5p (2014: 5p).
21. FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
Credit risk
2015 2014
GBP GBP
Cash and cash equivalents 148,360 414,980
Trade receivables 144,997 34,393
-------- --------
293,357 449,373
======== ========
The average credit period for sales of goods and services is 30
days. No interest is charged on overdue trade receivables. At 31
December 2015 trade receivables of GBP28,899 (2014: GBP34,393) were
past due. The Company has provided for GBPnil (2014: GBP35,821) of
trade receivables.
Trade receivables of GBP28,900 (2014: GBP34,393) at the
reporting date are held in Euros (2014: Sterling) and GBP84,122
(2014: GBPnil) were held in USD.
The Company's policy is to provide for doubtful debts based on
estimated irrecoverable amounts determined by reference to specific
circumstances and past default experience. At the balance sheet
date, the directors consider that no provision for doubtful debts
is required and that there is no further credit risk.
2015 2014
GBP GBP
Trade payables 326,940 291,687
Other payables 25,668 22,377
Accruals and deferred income 399,944 144,239
752,552 458,303
======== ========
The carrying amount of trade payables approximates to fair
value.
The average credit period on purchases of goods is 30 days. No
interest is charged on trade payables. The Company has policies in
place to ensure that trade payables are paid within the credit
timeframe or as otherwise agreed.
Credit risk
As explained above, the directors consider there is no material
exposure to credit risk at the reporting date.
Currency risk
The Company publishes its financial statements in pounds
sterling and conducts some of its business in US dollars and Euros.
As a result, it is subject to foreign currency exchange risk due to
exchange movements, which will affect the Company's transaction
costs and translation of the results. No financial instruments are
utilised to manage risk and currency gains, and losses are charged
to the Statement of Comprehensive Income as incurred. At the year
end, the Company had the following net foreign currency balances in
liabilities.
2015 2014
GBP GBP
US dollars 137,572 94,811
Euro 12,117 89,273
-------- --------
149,689 184,084
======== ========
Liquidity risk
Short-term flexibility is achieved by shareholder loans. The
interest rate profile and maturity profile of financial liabilities
is set out below:-
The interest rate profile of the Company's financial liabilities
at 31 December 2015 was:-
Financial
Fixed rate liabilities
financial on which
Total liabilities no interest
is paid
GBP GBP GBP
Sterling
2015 602,863 - 602,863
2014 274,219 - 274,219
Euro
2015 12,117 - 12,117
2014 89,273 - 89,273
US Dollars
2015 137,572 - 137,572
2014 94,811 - 94,811
Weighted average Weighted average
Weighted average period for period until
interest rate which rate maturity
is fixed
% Years Years
Sterling
2015 - - -
2014 7.5 1.0 1.0
All the Euro and US Dollar liabilities are held within trade
creditors and are non-interest bearing.
Maturity of financial liabilities
The maturity profile of the Company's financial liabilities at
31 December was as follows:-
2015 2014
GBP GBP
In one year or less, or on demand 752,552 458,303
-------- --------
752,552 458,303
======== ========
Liquidity risk is managed by regular monitoring of the Company's
undrawn borrowing facilities, levels of cash and cash equivalents,
and expected future cash flows, and availability of loans from
shareholders. See note 1 for further details on the going concern
position of the Company.
Market price risk
The Company's exposure to market price risk comprises interest
rate and currency risk exposures. It monitors these exposures
primarily through a process known as sensitivity analysis. This
involves estimating the effect on results before tax over various
periods of a range of possible changes in interest rates and
exchange rates. The sensitivity analysis model used for this
purpose makes no assumptions about any interrelationships between
such rates or about the way in which such changes may affect the
economies involved. As a consequence, figures derived from the
Company's sensitivity analysis model should be used in conjunction
with other information about the Company's risk profile.
The Company's policy towards currency risk is to eliminate all
exposures that will impact on reported results as soon as they
arise. This is reflected in the sensitivity analysis, which
estimates that five and ten percentage point increases in the value
of sterling against all other currencies would have had minimal
impact on results before tax.
On the other hand, the Company's policy is to accept a degree of
interest rate risk as long as the effects of various changes in
rates remain within certain prescribed ranges. On the basis of the
Company's analysis, the only financial liabilities held by the
Company are loans which are subject to a fixed rate of interest. As
such it is considered that any increases in interest rates would
not have had an impact on the Company's loss before tax for the
year.
Capital risk management
The primary objective of the Company's capital management is to
ensure that it maintains healthy capital ratios in order to support
its business and maximise shareholder value.
The Company seeks to enhance shareholder value by capturing
business opportunities as they develop. To achieve this goal, the
Company maintains sufficient capital to support its business.
The Company manages its capital structure and makes adjustments
to it in light of changes in economic conditions.
The Company looks to maintain a reasonable debt position by
repaying debt or issuing equity, as and when it is deemed to be
required.
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 December 2015 and 31
December 2014.
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% (2014: below 10%).The
Company includes within net debt, interest bearing loans and
borrowings, a loan from a venture partner, trade and other
payables, less cash and cash equivalents.
2015 2014
GBP GBP
Borrowings - -
Less: Cash and cash equivalents (148,360) (414,980)
---------- ----------
Net debt (148,360) (414,980)
Total equity 6,026,393 5,942,952
---------- ----------
Total capital 5,878,033 5,527,972
Gearing ratio 0% 0%
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AJMFTMBMTBIF
(END) Dow Jones Newswires
May 24, 2016 02:00 ET (06:00 GMT)
Eden Research (LSE:EDEN)
Historical Stock Chart
From Apr 2024 to May 2024
Eden Research (LSE:EDEN)
Historical Stock Chart
From May 2023 to May 2024