REGISTERED NUMBER:
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FOR THE YEAR ENDED
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EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CONTENTS OF THE FINANCIAL STATEMENTS |
For The Year Ended 31 December 2018 |
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Company Information |
1 |
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Chairman's Report |
2 |
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Chief Executive Officer's Report |
4 |
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Strategic Report |
8 |
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Corporate Governance Report |
10 |
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Remuneration Report |
25 |
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Audit Committee Report |
29 |
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Report of the Directors |
32 |
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Report of the Independent Auditor |
35 |
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Statement of Profit or Loss and Other Comprehensive Income |
40 |
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Statement of Financial Position |
41 |
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Statement of Changes in Equity |
42 |
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Statement of Cash Flows |
43 |
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Notes to the Financial Statements |
44 |
EDEN RESEARCH PLC |
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COMPANY INFORMATION |
For The Year Ended 31 December 2018 |
DIRECTORS: |
A J Abrey |
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SECRETARY: |
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REGISTERED OFFICE: |
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REGISTERED NUMBER: |
03071324 (England and Wales) |
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INDEPENDENT AUDITOR: |
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66 Queen Square |
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BS1 4BE |
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BANKERS: |
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Southern Corporate Office |
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P O Box 391 |
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40 Islington High Street |
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London |
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N1 8JX |
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SOLICITORS: |
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100 Fetter Lane |
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London |
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EC4A 1BN |
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NOMAD AND STOCKBROKER: |
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Bond House, 14 Clifford Street |
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London |
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WS1 4JU |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHAIRMAN'S REPORT |
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For The Year Ended 31 December 2018 |
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Introduction |
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I'm pleased to report that 2018 has been a year of further growth for Eden, building on the firm foundations laid by the Company over a number of years. Overall revenue and, importantly, product sales have seen significant growth and, in the background, regulatory activity, which is key to future product sales expansion, has also increased. |
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Whilst the financial results for 2018 are again pleasing, there is a lot of upside potential which the Company aims to realise. There are a number of products, in addition to Mevalone and Cedroz which Eden is in the advanced stages of developing. The new products in the Company's pipeline aim to address markets which are potentially bigger than those already covered by its existing products and are creating a healthy pipeline of growth opportunties for Eden. |
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There is potential for an even greater opportunity around the use of Eden's proprietary, natural micro-encapsulation technology, SustaineTM , which is being tested by a number of third parties, including some of the major agchem companies. |
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All of these opportunities are being progressed as quickly as possible and are, as a whole, showing promising potential. |
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Commercial |
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Board composition |
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During the year, the Board of Directors comprised: |
Alex Abrey - Chief Financial Officer |
Robin Cridland - Non-executive Director |
Sean Smith - Chief Executive Officer |
Lykele van der Broek - Non-executive Chairman |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHAIRMAN'S REPORT |
For The Year Ended 31 December 2018 |
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Outlook |
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From my time at Bayer CropScience, I know that the development of new chemistries and products takes time. |
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Not only do you have to ensure the formulations are the best they can be, having spent years identifying possible active ingredients, you then have to confirm the expected activity of those formulations through laboratory, greenhouse and then field trials to ensure that the efficacy is satisfactory. If this is so, you can then move onto the regulatory approval process and, finally, the production and commercialisation stage, assuming approval has been granted. |
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This is a simplistic overview of what is, in reality, a very complex, detailed and, at times, challenging process that agchem companies have to go through all of the time. |
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Although the same is true for Eden, I can assure our shareholders that we are a long way down that path with a number of new, competitive bio-pesticide products in a market which is growing considerably, year-on-year. |
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Due to the positive safety profiles of the active ingredients we use, with Maximum Residue Level ("MRL") exemption status for all three of our active ingredients in the European Union and our natural Sustaine technology, we are able to move relatively quickly to commercialisation based on the significant amount of work that has been done thus far. |
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Expediting the commercialisation of our products and those which will benefit from Sustaine is now our main priority. |
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In line with the current commercial and regulatory status of the business, we aim to ensure the long-term viability and growth of the Company is duly achieved. I personally believe that Eden will continue to grow as a leader in its fields and will become a global success story in the industry. |
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L J van der Broek |
Chairman |
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1 April 2019 |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHIEF EXECUTIVE OFFICER'S REPORT |
For The Year Ended 31 December 2018 |
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Financial Results |
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Revenue for the year was £2.8m compared to £1.9m in 2017 with product sales increasing by 112% to £1.6m from £0.8m in 2017. |
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Overheads were £1.5m, compared to £1.4m in 2017 and Operating Loss was £0.5m compared to £0.8m in 2017. As a result of a change agreed with our auditors in the amortisation schedule for intellectual property from 6 years to 12 years, loss before tax and operating loss have both been reduced by c.£0.5m from the previously announced figure. |
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Overview |
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Eden continues to make good progress in both the development of product sales and overall revenue growth. Product sales more than doubled in the period, whilst overall revenue grew by nearly 50%. Product sales growth was driven by increases in market share as well as improvements to product positioning in key countries. This was achieved despite the fact that 2018 was not a year that favoured the use of fungicides across Southern Europe due to the dry weather conditions. |
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In 2018, the Company realised the benefits of a number of collaborations initiated over the past four years, with the highlight being Sipcam's election to exercise its full rights to Mevalone under the 2017 Evaluation and Option Agreement. Progress with Eden's second product, Cedroz, which will be marketed by Eastman in nearly 30 countries globally, continues apace, as exemplified by the Company's recent announcement that this important new product has cleared its first meaningful regulatory hurdle. |
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In 2019, growth is expected to continue from our existing commercial and regulatory platform, whilst we anticipate that new territories will be added to the list of countries in which Eden products are authorised for sale and use. Furthermore, we expect the further growth of our distributor network and increasing collaboration around the use of Sustaine, Eden's patented micro-encapsulation system to continue. |
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Sales and Market Development |
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In 2018, Eden saw strong growth of its first product, Mevalone, across Southern Europe where the product is authorised for marketing and use on grapes and a list of other high value fruits and vegetables. Mevalone was initially developed for use on table and wine grapes for the treatment of botrytis, a fungal disease which can have devasting effects on crop production and quality, and in recent years our partners have been working to broaden the number of crops on which Mevalone can be used. Year-on-year sales growth was strong despite growing conditions during the season not favouring the use of fungicides. This growth, in part, reflected an optimisation of product positioning by our partners in several countries. |
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The early part of the growing season is important in establishing the potential for botrytis to develop during the peak risk period (typically in September) when cooler and wetter weather is prevalent. However, until this year, and since the first launch of Mevalone in late 2016, Mevalone has been positioned mainly as a late season botryticide based upon its favourable risk profile, performance, exemption from maximum residue levels and low pre-harvest intervals. This means that, unless there is an outbreak of this disease late in the season, sales are likely to be modest as growers are reluctant to apply products that they perceive as unnecessary (as would be the case in the absence of disease). However, in conjunction with our partners, we are pleased with our first efforts to position Mevalone in the early part of the season this year as a treatment that is effective in reducing the potential for the later stage development of botrytis. |
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Early season applications act as an insurance policy for growers and provide for more predictable sales for Eden and our partners. This positioning is backed by data which has been developed by our partners working with leading academic experts in the field of plant pathology. This has been translated into strong early season sales in the territories in which this positioning was initiated in 2018. We anticipate a broadening of this product positioning in 2019 and beyond, as we are able to support early season applications with territory specific performance data. |
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Mevalone is also approved for use in Kenya, where it is marketed as "Hawk" for the treatment of botrytis on flowers and a number of additional crops. Market conditions in Kenya remain challenging, but there is an opportunity to improve our market share in the country and to explore how we might grow our business in the region. Furthermore, we believe that there is also the opportunity to commercialise Eden's nematicide in Kenya, and efforts are underway to realise this potential. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHIEF EXECUTIVE OFFICER'S REPORT |
For The Year Ended 31 December 2018 |
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Given the current footprint of approvals for Eden's products, which is currently limited to the treatment of botrytis on grapes and a variety of additional crops in the EU's Southern Zone and in Kenya, sales progress has met our expectations during the year. We expect to see an increase in product sales volumes in the years to come as our market share grows and changes in product positioning ensures more frequent treatments using Mevalone. The full extent of this increase will be closely linked to the end-of-season weather patterns and their impact on the emergence of botrytis in the late pre-harvest period. |
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As authorisations in new territories are granted, we expect a further strengthening of Mevalone sales and a reduced dependency upon regional weather patterns and the seasonality associated with sales being limited to the northern hemisphere. Similarly, further sales gains are expected as we expand the "label" for Mevalone to include major new disease and crop targets. Applications for authorisation and use are pending in an increasing number of countries with notable applications submitted in the United States of America and Australia during the course of 2018. |
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Commercial Partnerships |
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Eastman |
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In partnership with Eastman, we have been busy preparing for the commercial launch of our second product, a nematicide for use in open field and greenhouse agriculture across a range of fruit and vegetable crops. This product will be marketed by Eastman as "Cedroz" in 29 countries, including the US and multiple European countries. As recently announced, Eastman has now received authorisation for Cedroz from the Regulatory Affairs Directorate in Malta. Malta is acting as the zonal rapporteur Member State ("zRMS") for the Southern EU agricultural zone and on behalf of a number of additional EU countries for indoor uses. This represents the successful completion of the first stage in the authorisation process in the EU. |
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Following the authorisation by Malta, the concerned Member States ("cMS") are allocated time to grant authorisation for the sale and use of Cedroz within their jurisdictions. Once ratified by each cMS, the approvals are expected to cover Spain, Italy, Portugal and Greece for outdoor uses and, in addition to these Member States, France, Belgium, the Netherlands and the United Kingdom for professional greenhouse uses. |
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In addition to these important new territories for Eden's products, Malta has authorised the use of Cedroz on a wide range of crops, including cucumbers, courgettes, melons, aubergine, peppers, tomatoes and strawberries. Nematodes are known to cause severe damage to crops globally for both open field and greenhouse growers resulting in yield losses and driving up costs. The market is eagerly awaiting the arrival of Cedroz as a sustainable solution for nematode control. It is now expected that the cMS will grant authorisation for use with no pre-harvest interval and with an exemption from maximum residue levels providing reduced risks for growers and the food chain, alike. |
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Sipcam-Oxon |
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In December, the Company's commercial partner, Sipcam Oxon SpA ("Sipcam"), exercised its option over the exclusive distribution rights in ten new countries covered under the 2017 Evaluation and Option Agreement, for which a fee of €0.9m (£0.8m) was paid to Eden. As a result, Sipcam will be the exclusive distributor of Eden's fungicide product, known as Mevalone, in twelve countries including Italy, Spain, USA, China, Brazil and Japan. It is important to note that this means that Sipcam has elected to take up their complete set of rights for the distribution of Mevalone. This adds ten new countries to Eden's "commercial footprint", including major grape producers such as China, the US, Argentina, Australia, New Zealand and South Africa. |
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TerpeneTech |
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TerpeneTech secured a CE mark for its head-lice treatment product in European Economic Area ("EEA") in 2018. This is the first step in the marketing and sales of such products. TerpeneTech has also established its first channel distribution partner who will target the U.K. market. The first product launch in the U.K. is expected to coincide with the back-to-school schedule in the autumn of 2019. Sales will commence in other countries in the EEA once arrangements with additional distribution partners have been finalised. This is expected to take place during 2019. |
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Eden plans to supply a concentrate of encapsulated active ingredients (based upon Eden's microencapsulation technology) to TerpeneTech who will then formulate the finished product, which will initially be sold by its distribution partner into the discount retail market in the U.K. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHIEF EXECUTIVE OFFICER'S REPORT |
For The Year Ended 31 December 2018 |
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The development, efficacy testing, and Medical Device regulatory dossier of this head-lice treatment product has been in drafting for approximately three years, and it should be noted that the launch of any consumer product into a regulated market, such as the head-lice treatment products market, is significantly more complicated, time consuming and costly than launching products into unregulated markets. |
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Bayer Animal Health |
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As previously announced, the launch of animal health products in the USA by Eden's partner, Bayer Animal Health ("Bayer"), has been delayed. This is due to the need for additional formulation work on one of the three initial products Bayer has developed. It is now anticipated that the launch of these products will take place in 2019, subject to successful completion of the additional formulation work. Bayer and Eden are working closely together to expedite matters, and both partners consider the launch of these products to be of high priority. |
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Investing in Regulatory Approvals |
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As announced on 14 June 2018, Eden has submitted an application for the authorisation of its three active ingredients and first two products, Mevalone and Cedroz, in the United States. The US Environmental Protection Agency (EPA) has confirmed the initiation of its technical review. Upon approval, these authorisations will give Eden and our partners the ability to sell Mevalone and Cedroz in the US and also ease the way for the approval of future products based upon any of the same three active ingredients. We anticipate that authorisation will be granted in time for the 2020 growing season. However, we caution that the precise timelines for authorisation are controlled by various regulatory agencies and therefore subject to change. |
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We are currently pursuing registrations in a number of additional key territories for Mevalone, and we are supporting Eastman in seeking authorisation in nearly 30 territories for Cedroz. Further announcements on regulatory progress will be made as and when appropriate. |
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Brexit |
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The impact of Brexit is still largely uncertain for many UK companies, which is the case with Eden. However, the Company understands that the ownership of its EU approvals of Mevalone and its constituent active substances should not be impacted by Brexit as guidance has been published stating that the owner of such approvals can continue to be a UK resident company. However, seeking regulatory approval in the U.K. for Eden products has become somewhat more challenging, and the Company is now weighing up market opportunities and costs under the various Brexit scenarios. |
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It should be noted that TerpeneTech has taken steps through the establishment of an Irish subsidiary to ensure that it can remain a notified supplier of geraniol in the EU after Brexit, as the guidance for authorisation holders under the Biocidal Products Regulation requires holders to be based in the EU. |
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Dividend |
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There was no dividend paid or proposed in respect of 2018. The Board continues to monitor its dividend policy. |
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Outlook |
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Overall, we are pleased with the sales, market, regulatory and product-related developments over the past year. It is particularly satisfying to see, despite the 2018 growing season's weather-related challenges, strong sales growth for Mevalone which reflects increases in market share and improved product positioning. With an expanding footprint of regulatory approvals for Mevalone and the anticipated entry of Eden's second product onto the market, we believe this will drive ongoing sales growth through ongoing market share gains and an expanding list of countries in which we are authorised to sell Eden's products. |
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Our Research and Development efforts are showing real promise for the development and registration of new product categories. Assuming continued success, we believe we will be in a position to submit applications for regulatory approval for a new class of product in the during the next few years. Also, SustaineTM, Eden's patented, natural micro-encapsulation technology, is being evaluated by an increasing number of parties, including Sipcam, on a large and growing number of active ingredients used in crop protection. This technology represents significant medium-term potential for the Company, and we are pleased with the attention it is receiving in the hands of current and new collaborators. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CHIEF EXECUTIVE OFFICER'S REPORT |
For The Year Ended 31 December 2018 |
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Finally, in 2019 we will increase our focus on the growth of in-house capabilities. Eden has long relied upon out-sourced expertise for a variety of functions, and our management team has been stretched and largely focused on nearer-term objectives. In 2019, we aim to add in-house capabilities with a view to accelerating our growth and capitalising upon existing and new opportunities. |
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I look forward to working with the Board, our team and our partners to fully realise our ambitions in 2019 and in the future. |
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S M Smith |
Chief Executive Officer |
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1 April 2019 |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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STRATEGIC REPORT |
For The Year Ended 31 December 2018 |
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REVIEW OF BUSINESS |
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The review of this year's business activities is as set out in the Chairman's Report and Chief Executive Officer's Report. The key performance indicators of the business are that of the development and commercialisation of the Company's products and the management of its cash position. |
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The registration of the Company's first product, Mevalone, for use as a pesticide in Europe is not only a key milestone in terms of its commercialisation, but also indicative of future products as the three active substances that are registered in the EU are the basis of Eden's future product portfolio. Thus far, Mevalone has been approved for use in France, Spain, Italy, Greece, Portugal, Cyprus, FYROM, Albania, Bulgaria, Kenya and Malta. |
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Further commercialisation of Eden's products and Sustaine encapsulation technology through supply, licensing, evaluation and option agreements also serve as a key indicator to the Company's performance. |
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Successful trial results are also significant in showing the technical and commercial viability of the intellectual property. |
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The Company has capitalised £0.4m (2017: £0.3m) of development expenditure in the year which is a reflection of the continued development of the Company's products. |
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Cash is safeguarded by close working capital management, including tightly controlling the Company's creditor position. |
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The progress of the development of the Company's products is measured against internally set timescales as well as against the regulatory process which will result in the registration of products. The Chief Executive Officer's Report contains an update regarding this progress. |
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An update on TerpeneTech, Eden's associate company, is also included in the Chief Executive Officer's Report. |
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KEY FINANCIAL PERFORMANCE INDICATORS |
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Revenue derived from product sales, licence fees and milestone payments are all considered to be key financial performance indicators. Maintaining a low overhead base and progress towards profitability are also key indicators. |
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Revenue in 2018 consisted of upfront and milestone payments in relation to new and existing agreements, royalties and product sales. Revenue in 2018 was £2.8 million in comparison to £1.9 million in 2017. The operating loss for the year was £0.5 million compared to £0.8 million for the previous year. The loss before tax for 2018 was £0.5 million, slightly down from £0.8 million in the previous year. |
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The loss per share for 2018 was 0.16 pence (2017: 0.33 pence). |
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Administrative expenses for the year were £1.5 million (2017: £1.4 million). Aside from additional costs relating to external consultants, the Company maintains a policy of keeping a low head count in order to maintain a low level of overheads. |
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Intellectual property, including development expenditure, is written off over twelve years in line with the remaining life of the Company's key patents, taking into account additional protection provided by granted Supplementary Protection Certificates. |
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OTHER KEY NON-FINANCIAL PERFORMANCE INDICATORS |
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The regulatory approval of products and milestones related to such processes are deemed to be key non-financial performance indicators. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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STRATEGIC REPORT |
For The Year Ended 31 December 2018 |
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PRINCIPAL RISKS AND UNCERTAINTIES |
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The Company's prime risk is the on-going commercialisation of its intellectual property, which involves testing of the Company's products, obtaining regulatory approval and reaching a commercially beneficial agreement for each product to be taken to market. This is measured by comparing actual results with forecasts that have been agreed by the Company's Board of Directors. |
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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. |
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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. |
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Due to the nature of the business, there is inherent risk of infringement of Eden's intellectual property rights by third parties. The risk of infringement is managed by taking the relevant legal advice as and when required. |
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There is also inherent uncertainty surrounding the regulatory approval of products in terms of timing and success. This risk is managed by contracting with expert consultants who are well experienced in this regard. |
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EMPLOYEE DIVERSITY AND INCLUSION |
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INDEMNITY COVER |
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ENVIRONMENT |
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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 their local environments by getting involved in local initiatives and also to look at ways of promoting environmental wellbeing amongst the staff. Employees are actively encouraged to ensure conservation of energy and resource through awareness campaigns and positive action. |
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ON BEHALF OF THE BOARD: |
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S M Smith - Director |
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1 April 2019 |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CORPORATE GOVERNANCE REPORT |
For The Year Ended 31 December 2018 |
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Letter from the Chairman |
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Dear shareholder, |
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The Directors have adopted the principles set out in the Quoted Companies Alliance Corporate Governance Code. The Directors have applied these principles, as far as practicable and appropriate for a relatively small public company, as follows: |
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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. |
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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. |
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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. |
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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. |
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The Directors of Eden champion openness and accountability at every level. This involves focusing on how this takes place throughout the company and by those who act on its behalf. |
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The quality of our governance is evident in the way we conduct business and how we treat our workforce, customers and suppliers. |
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The Board sets the framework of values within which the desired corporate culture can evolve and thrive. |
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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. |
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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. |
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The Board demonstrates ethical leadership and displays the behaviours they expect from others and communicate what they consider to be acceptable business practice and they consider chosen behaviours when setting strategy and financial targets. |
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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. |
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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. |
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Values and expected behaviours are reinforced through our recruitment, promotion, reward, performance management and policies, processes and practices. |
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Our reward structures produce appropriate incentives to encourage desired behaviours and responsible risk-taking and management consistently communicate values and expected behaviours widely and clearly across the company and ensure that they are understood by the workforce. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
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Management also encourage suppliers to meet the expected standards of behaviour. |
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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. |
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Monitoring of effectiveness |
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Monitoring efforts are focused on existing internal capabilities and information:- |
• Training data |
• Recruitment, reward and promotion decisions |
• Use of non-disclosure agreements |
• Whistleblowing, grievance and 'speak-up' data |
• Board interaction with senior management and workforce |
• Health and safety data, including near misses |
• Promptness of payments to suppliers |
• Attitudes to regulators, internal audit and employees |
Areas including human resources, audit & risk and compliance offer an integrated approach to aid understanding of how behaviours and culture impact performance and offer analysis and advice the Board. |
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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. |
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Lykele van der Broek |
Non-Executive Chairman |
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1 April 2019 |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
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QCA principle 1 - Strategy and business model |
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Business model and strategy |
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The Company's business model can be found on the Company's website www.edenresearch.com and in the Company Overview section, at the front of the Annual Report. |
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Key challenges |
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Our vision is to be the leader in sustainable products enabled or enhanced by our novel Sustaine encapsulation and delivery technology in crop protection, animal health and consumer products. |
Key challenges |
We will address these by: |
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Stable financial base and revenue growth |
• Continuing to evolve our business model to focus primarily on product sales |
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• Signing further agreements with industry partners to commercialise products |
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• Ensuring a well-funded balance sheet |
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Product development |
• Further development of the encapsulation technology for new applications |
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Growing a diverse product development pipeline |
• Investing in patents for new market opportunities |
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• Building our internal technical resources in terms of capability and capacity |
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Geographic expansion |
• Extending registrations for product authorisation into new territories |
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Targeting new geographies where there is a demand for sustainable solutions |
• Investing in patent protection for_our intellectual property in new territories |
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• Identifying suitable industrial partners with access to new geographies and customers |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
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CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
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QCA principle 2 - Shareholder engagement |
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Investor Relations Calendar (typical, rolling) |
Date |
Type of communication |
Location |
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January |
Trading update |
London |
March |
Preliminary results announcement and presentation |
London |
March/April |
Preliminary results roadshow |
London |
May/June |
AGM |
London |
September |
Interim results announcement and presentation |
London |
September |
Interim results roadshow |
London |
Calls |
Investor calls |
Europe |
Interaction with shareholders |
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The Board recognises the need for a programme of engagement which offers all shareholders opportunities to receive information directly and enable them to share their views with the Board. |
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Communications with shareholders are considered important by the Directors. The Chief Executive is responsible for maintaining communication with all shareholders who are not directors. |
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The company maintains a website on which all material news is displayed. Any significant technical and operating information is posted in accordance with AIM regulations. In the 90 days to 28 August 2018, there were over 11,000 visits to individual pages on our website which shows that shareholder engagement has been successful. |
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The company works with its Nominated Advisor and Broker to communicate with institutional and private shareholders via road shows and one-to-one meetings, as appropriate. Contact is maintained with other stockbroker analysts to maximise awareness of the company's activities amongst the investment community. |
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A comprehensive annual report containing statutory financial information and operating activities is prepared and published after the end of each financial year. The Board takes note of the disclosure guidance provided by the Combined Code in the preparation of the report. |
|
The company encourages shareholders to attend the AGM to facilitate the widest possible contact with all members of the board. |
|
Investor relations and contact |
|
During the course of the year, our Chief Executive and Financial Officers meet with institutional investors to discuss our strategy and progress and to understand how investors view our business. It is their responsibility to manage and develop the company's external relationships with shareholders, potential investors and analysts. Shareholder communications take place through a combination of briefings to analysts and institutional investors, individual discussions with shareholders and potential investors, regulatory announcements, press releases and updates on the company's website. |
|
Shareholder and potential shareholder meetings usually take place after we release our interim and preliminary results. |
|
Our financial PR company liaises with shareholders on a regular basis and endeavours to answer questions that are raised, where possible. |
|
Often, the Company will receive emails directly from shareholders which are either answered directly, where possible, or forwarded to the financial PR company to handle. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
During the year, our investor relations programme included meetings in the locations set out in our investor relations calendar above, and these focused on the company's corporate governance arrangements. The meetings were structured to allow for a successful, open dialogue and discussion on the matters of importance to our shareholders including strategy, Board composition and succession. |
|
The Board sets time aside during its meetings to discuss feedback from shareholder meetings, including relevant feedback obtained by independent brokers and our advisers. This allows all Directors to successfully understand major shareholders' views, significant market developments, share price performance and changes in the shareholder base. |
|
The Company's Annual General Meeting is generally well attended and gives the Board an opportunity to communicate with both private and institutional investors, and we welcome their involvement. |
|
All of our Board members will be available to answer questions at the AGM on 14 May 2019. |
|
Points of contact |
Eden Research plc |
www.edenresearch.com |
Sean Smith |
01285 359 555 |
Alex Abrey |
|
|
|
Powerscourt (Financial PR) |
020 7250 1446 |
Nick Dibden |
|
Jana Tsiligannis |
|
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA principle 3 - Stakeholder Responsibilities |
Key resources |
|
The business plan that Eden updates and approves on an annual basis, and which is based on the business model, includes cash-flow projections and commentary which help the Board to identify the key resources required to execute the plan, as follows: |
1. |
Cash-flow - the cash required for the period covered by the plan (usually two years) |
2. |
Personnel - The number of people needed, with the right skills and expertise |
3. |
Cap Ex - Any capital expenditure required (equipment, premises etc) |
Key relationships |
|
As a business, Eden is reliant on a number of key relationships: |
1. |
Customers - Licensees, distribution partners |
2. |
Suppliers - Raw materials, operational expenses, toll manufacturers |
3. |
Regulatory - Regulatory consultants, legal regulatory advisors |
4. |
Intellectual property ("IP") - patent agents, collaboration partners |
5. |
Research and development ("R & D") - third party contractors, research centres |
6. |
Advisors and consultants - industry specific commercial consultants, lawyers, Nominated |
Advisor, Broker |
|
The above key relationships are identified through the Risk Management process which is undertaken by the Risk Management Team. |
|
In addition, commercial, regulatory, R & D, AIM and IP updates are provided at each Board meeting which form the basis of discussions which help the Board to assess and identify the key relationships on which the business relies. |
|
Stakeholder feedback |
|
In order to obtain feedback from stakeholders, the Management regularly meets with them, where possible, in person, or holds conference calls online or by phone. |
|
Management travels, as necessary, to ensure that the Company has a good understanding of what, if any, issues its key stakeholders have by meeting with them in person and seeing, first-hand, the work that they are doing for or on behalf of Eden. |
|
The Company's website, email footers and business cards all provide contact information which provide stakeholders with contact details of the relevant person at the Company that they can use, should they need to get in touch. |
|
The Company has identified from various stakeholders that 'nature-identical', biological products, such as Eden's, are being increasingly demanded by end-users. To this end, the Company has developed such products to meet this demand. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA Principle 4 - Risk Management |
Risk Management Team Purpose |
|
To identify, assess and manage uncertainty and, as a result, improve the ability of Eden Research to succeed in its business model. |
|
Process |
|
Summary - We manage a process in which all business functions are represented in a Risk Management Team (RMT) which meets on a regular basis to follow a defined Board approved procedure to identify, assess and prioritise business risks, followed by the implementation of agreed mitigating actions in order to reduce unacceptable risk. Regular RMT meetings will allow for ongoing review, analysis and decision making, with the outputs recorded in a dynamic (i.e. real time) risk register. The process should be cyclical and continual so that changes in risks (as a result of mitigation or otherwise), including the detection of new risks, are monitored and learnings and feedback can be incorporated. |
|
Identification - The RMT systematically considers and documents the risks affecting the business. |
|
Assessment - Each risk is described, including its cause and effect, and any current mitigating controls and processes are identified. Each risk is scored for: |
· |
impact on the business if risk occurs (1 low, 2 medium, 3 high), |
· |
probability of risk occurring (1 low, 2 medium, 3 high) and |
The scores for both parameters are multiplied together to give an overall Risk Priority Number (RPN) which allows all identified risks to be ranked for priority to the business. |
|
Control - Taking into account the prioritisation, a systematic review is conducted risk by risk in which further mitigating actions over and above existing measures are identified for any portion of that risk that remains unacceptable. Each action is allocated an owner and a target implementation date. On action completion each risk is reassessed to determine if the RPN has reduced to an acceptable level - if so it is recorded that the risk is now considered acceptable, if not further actions are identified and the process repeated. It should be noted that some risks may have a high RPN but be considered acceptable as no mitigating actions can be identified, e.g. an inherent business risk outside of the company's control. |
|
Responsibilities - It is the responsibility of the Board to determine the business's appetite for the risks facing it and approve the overall management process. It is the responsibility of management (e.g. delegated to the RMT) to execute the approved process and regularly make status reports to the Board. |
|
Team - The RMT is: |
· |
Sean Smith - CEO |
· |
Alex Abrey - CFO |
· |
Robin Cridland - Non-Executive |
The RMT is responsible for compilation and annual review of an overview risk register, including prioritisation, for Board review, amendment and approval. The prioritisation would then inform a cycle of risk review programmes to be scheduled. |
|
An important principle is that appropriate resource is deployed to risk management, considering the inherent riskiness of the business and the resources available, whilst still permitting the execution of Eden Research's business plan. Risk management is in support of the business plan rather than competing with it for resources. |
|
Assurance |
|
The review of reports produced by the RMT by both the Board and the Company's external auditor provides assurance that the risk management and related control systems in place are effective. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA Principle 5 - Board composition |
|
Directors' independence and time commitment |
|
The directors of Eden hold the following roles and their independence and length of service are shown in the table below: |
|
|
|
Length of |
Full (FT) or part- |
Director |
Role |
Independent |
service |
time (PT) |
|
|
|
|
|
A Abrey |
Chief Financial Officer |
No |
11 years |
FT |
R Cridland |
Non-Executive Director |
Yes |
3 years |
PT - 10 days per year |
S Smith |
Chief Executive Officer |
No |
4 years |
FT |
L van der Broek |
Chairman |
Yes |
1 year |
PT - 10 days per year |
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 2018 were as follows: |
|
|
|
AIM |
Remuneration & |
|
|
|
Board |
Compliance |
Nominations |
Audit |
Director |
Role |
(6 meetings) |
(1 meeting) |
(10 meetings) |
(6 meetings) |
|
|
|
|
|
|
A Abrey |
Chief Financial Officer |
•••••• |
· |
- |
- |
R Cridland |
Non-Executive Director |
•••••• |
· |
•••••••••• |
•••••• |
L van der Broek |
Chairman |
•••••• |
· |
•••••••••• |
•••••• |
S Smith |
Chief Executive Officer |
•••••• |
· |
- |
- |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA Principle 6 - Board experience |
|
Board of Directors |
|
Lykele van der Broek, Non-Executive Chairman Appointed |
|
October 2017 (Board) |
January 2018 (Chairman) |
|
Background and experience |
|
Lykele retired as a Member of the Board of Management of Bayer CropScience, a division of Bayer AG, in 2014, being responsible for the commercialisation of innovative agricultural products and services globally. Prior to this, he held senior international roles including the Head of Bayer CropScience's BioScience division and President of the Bayer HealthCare Animal Health division. |
|
Committee membership |
|
AIM Compliance Committee (Chairman) |
Nominations Committee (Chairman) |
Remuneration Committee (Chairman) |
Audit Committee |
|
External appointments |
Genus plc (Non-Executive Director) |
|
Sean Smith, Chief Executive Officer Appointed |
|
September 2014 |
|
Background and experience |
|
Sean has a bachelors degree in microbiology and over 25 years of experience in the speciality chemicals and industrial biotechnology industries. He has held senior commercial leadership roles ranging from sales and marketing to business management and intellectual property licensing in blue chip companies such as Ciba (now BASF) and Honeywell. In recent years, Sean has focussed on technology commercialization through licensing and company formation working with Intellectual Ventures and several start-ups. |
|
Committee membership |
|
None |
|
External appointments |
|
None |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
Alex Abrey, Chief Financial Officer |
|
Appointed |
|
September 2007 |
|
Background and experience |
|
Alex, a Chartered Certified Accountant, joined the Board in September 2007, having been Chief Accountant to Eden for the previous four years. He has acted as Financial Director to a diverse range of businesses including a financial and management consultancy business based in Oxfordshire, a medical waste management company and an intellectual property licensee involved in plastics manufacturing. Alex has eighteen years' experience in both practice and industry. |
|
Committee membership |
|
AIM Compliance Committee |
|
External appointments |
|
Ricewood Ltd (Director) |
|
Robin Cridland, Non-Executive Director |
|
Appointed |
|
May 2015 |
|
Background and experience |
|
Rob served as Chief Financial Officer and Company Secretary of Itaconix plc until July 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 currently a Governor and a Non-Executive Director of Cheadle Hulme School, Cheshire. |
|
Committee membership |
|
Audit Committee (Chairman) |
Nominations Committee |
AIM Compliance Committee |
Remuneration Committee |
|
External appointments |
|
None |
|
Alex Abrey is a Chartered Certified Accountant. As part of his professional development, he attends relevant courses and maintains his qualification through Continuing Professional Development under the Association of Certified Chartered Accountants. |
|
Robin Cridland is a Chartered Accountant. As part of his professional development, he attends relevant courses and maintains his qualification through Continuing Professional Development under the Association of Chartered Accountants. |
|
Sean Smith is a member of the institute of Directors with access to online tools and courses and attends industry conferences including the Association of Biocontrol Industry Manufacturers. |
|
Lykele van der Broek keeps up-to-date by regularly reading economic and management literature, by being briefed by external advisors on matters such as remuneration, corporate governance, and liaising with consultants who inform the board of changes in legislation, best practice or public perception. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
Board skill-set |
|
Product supply |
|
|
|
Other public |
|
|
chain and |
Intellectual |
Chemicals |
General |
company |
|
Director |
management |
Property |
Industry |
management |
(Board level) |
Funding |
|
|
|
|
|
|
|
A Abrey |
✓ |
✓ |
|
✓ |
✓ |
✓ |
R Cridland |
✓ |
✓ |
✓ |
✓ |
✓ |
✓ |
S Smith |
✓ |
✓ |
✓ |
✓ |
|
✓ |
L van der Broek |
✓ |
|
✓ |
✓ |
✓ |
|
External advisors |
|
The Company uses external advisors, where necessary, as follows: |
Advisor |
Role |
|
|
Nominated Advisor |
Provides advice on AIM Compliance |
Commercial lawyer |
Provides advice on legal issues such as commercial agreements |
Auditor |
Audits the Report and Accounts of the Company |
Regulatory lawyer |
Provides advice on regulatory aspects of the business |
The Board's Role |
|
The Board, under the Chairman's leadership, is responsible for ensuring our long-term success. |
|
It informs and approves our strategy and corporate goals and monitors our performance against them. It determines that we have the necessary resources, systems and controls to achieve our objectives, and assesses the culture and standards of behaviour throughout Eden. |
|
The Board is also responsible for other critical decisions, including approving the corporate budget; ensuring we have the right funding; approving material contracts; 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 Company currently has, to be addressed. |
|
Internal advisors |
|
The Company Secretary is the only internal advisor that the Company currently has. |
|
The Company Secretary is responsible for the efficient administration of Eden, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
Principle 7 - Board performance |
|
Effectiveness |
|
The Nominations Committee understands that the effectiveness of Eden's Board depends on the appointment of directors who are able to make a positive contribution and therefore it strives to secure the right skillsets and breadth of perspectives within the Boardroom to ensure that good decisions are made and opportunities are maximised for the Company's success. |
|
The Nominations Committee ensures that Eden attracts non-executive directors that possess a range of critical skills of value to the Board and relevant to the challenges and opportunities facing Eden. These values and attributes include:- |
· |
Critical assessment and judgement |
· |
Courage |
· |
Openness |
· |
Honesty |
· |
Tact |
· |
Ability to listen |
· |
Ability to forge relationships |
· |
Ability to develop trust |
· |
Strength of character |
Diversity in the Boardroom is an important aspect of the Nomination Committee's discussions. Developing a more diverse executive pipeline together with Improving diversity at each level of the Company is important to Eden, particularly as the company grows. |
|
When recruiting members to the Board, the nominations committee considers the skillset that is required for the Board and its committees, it continually reviews the make-up of the Board as a result of emerging trends and it takes into account the technical skills and knowledge required by the committees. |
|
The Nominations Committee ensures that Board appointments are made on merit against objective criteria by evaluating the skills, experience and knowledge on the Board, and the future challenges affecting the business. A description of the role and capabilities required for a particular appointment is then drawn up. Values and expected behavior play a large part in the recruitment process. |
|
When evaluating roles and succession planning Eden considers the existing skillset against those required to execute strategy and meet future challenges. |
|
The Nominations Committee ensures that Directors undertake that they will have sufficient time to meet what is expected of them particularly regarding other appointments outside of the Company. |
|
The Nominations Committee succession plans cover:- |
|
contingency planning - for sudden and unforeseen departures; |
|
medium-term planning - the orderly replacement of current Board members and senior executives (e.g. retirement); and |
|
long-term planning - the relationship between the delivery of the company strategy and objectives to the skills needed on the Board now and in the future. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
Board performance evaluation |
|
This year, Eden intends to adopt a formal process of Board evaluation which will include sending to each director a standardised questionnaire. |
|
This questionnaire will cover aspects of Board performance and help the Nominations Committee and the Board to understand and evaluate the effectiveness of the Board. |
|
In addition, the Board will consider the feasibility of using external advisors to assist with evaluating Board effectiveness. Given the size of the Company, this will clearly depend on its viability. |
|
In any event, the Board will look to adopt an evaluation cycle which will provide a framework for the on-going evaluation process. |
|
Succession Planning |
|
The role of the Nominations Committee is fundamental to succession planning at Eden and is responsible for Board recruitment. |
|
This Committee conducts a continuous and proactive process of planning and assessment, taking into account Eden's strategic priorities and the main trends and factors affecting the long-term success and future viability of the company. |
|
The Chair's vision for achieving the optimal Board composition helps the Nominations Committee review the skills required, identify the gaps, develop transparent appointment criteria and inform succession planning. |
|
The Nominations Committee assesses periodically whether the desired outcome has been achieved, and proposes changes to the process, as necessary. |
|
QCA Principle 8 - Healthy Corporate Culture |
|
Please see the Chairman's Letter on page 10. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA Principle 9 - Governance structure |
|
Board roles and responsibilities |
|
The directors of Eden hold the following roles and responsibilities: |
Director |
Role |
Responsibilities |
|
|
|
A Abrey |
Chief Financial Officer |
Alex is responsible for supporting the Chief Executive in devising |
and implementing the strategy and managing the Group's financial and operational performance. |
A Abrey |
Company Secretary |
In his role as Company Secretary, Alex 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. |
R Cridland |
Non-Executive Director |
Rob's role is to constructively challenge and provide oversight and |
assistance in the progression of our execution of strategy, management of the Company and management of our governance structures, within the risk and control framework set by the Board. |
S Smith |
Chief Executive Officer |
Sean is responsible for devising and implementing our strategy and |
managing our day-to-day operations. He is accountable to the Board for the Company's development, in line with its strategy, and taking into account the risks, objectives and policies set out by the Board and its Committees. Sean is also responsible for engagement with shareholders or other stakeholder groups |
L van der Broek |
Chairman |
Lykele's primary responsibility is to lead the Board and ensure it |
operates effectively. He achieves this in part through promoting an open culture, which gives people the courage to challenge the status quo, and holding meetings with the NED without the Executives present. |
Roles of the Committees AIM Compliance Committee |
|
Responsible for ensuring that the Company has in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules for Companies and the AIM Rules for Nominated Advisers. |
|
Audit Committee |
|
Ensures the integrity of our financial reporting, evaluates our risk management and internal control system, and oversees the internal and external auditor. |
|
Nominations Committee |
|
Reviews the Board's structure, size and composition and proposes candidates for appointment to the Board. |
|
Remuneration Committee |
|
Determines remuneration for our Executive Directors, to support our growth strategy and deliver value for stakeholders. |
|
The Terms of Reference for each of the above Committees can be found on the Company's website www.edenresearch.com. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
CORPORATE GOVERNANCE REPORT - continued |
For The Year Ended 31 December 2018 |
|
QCA Principle 10 - Shareholder dialogue |
|
Work undertaken by the Company's Committees during 2018 |
|
Audit Committee |
· |
Reviewed the Company's 2017 Report and Accounts and recommended their approval by the Board |
· |
Recommending to the Board the re-appointment of KPMG as auditor |
· |
Reviewed the Company's 2018 Interims and recommended their approval by the Board |
· |
Liaised with the Company's auditors throughout the year for audit planning and finalisation |
· |
Review of rolling Audit Committee agenda |
AIM Compliance Committee |
· |
Liaised with the Company's Nominated Advisor over any AIM issues |
· |
Reviewed updates on AIM Compliance and made recommendations to the Board, as necessary |
· |
Reviewed AIM Rule 26 disclosures |
Nominations Committee |
· |
Managed the recruitment process throughout the year |
· |
Reviewed the structure, size and composition of the Board and made recommendations to the Board with regard to any changes |
· |
Gave consideration to succession planning for directors |
Remuneration Committee |
· |
Managed the bonus scheme for directors |
· |
Set remuneration for all directors |
· |
Managed the Long-Term Incentive Plan for executive directors |
Voting |
|
At the Company's last Annual General Meeting which was held on 21 June 2018, all resolutions were passed with the following outcomes, based on proxy votes received: |
Resolution |
% in favour |
|
|
1 |
99.6 |
2 |
99.6 |
3 |
99.6 |
4 |
99.3 |
5 |
99.6 |
6 |
99.6 |
For details of each of the above resolutions, please see the 2018 Notice of AGM. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REMUNERATION REPORT |
For The Year Ended 31 December 2018 |
|
REMUNERATION POLICY |
|
INTRODUCTION |
|
The Remuneration Policy for Eden Research plc includes the three main elements of remuneration; salary, cash bonus and equity incentive. |
|
The Policy is based on market facing structures, precedented in other AIM listed companies. The policy has been prepared for the Executive Directors, however it is intended that the principles should apply to all staff. |
|
An important principle is that the elements of remuneration should not overlap (to ensure that an Executive is not rewarded more than once for the same achievement). |
|
Salary is a reward for the day to day execution of a role (which is documented in a job description). |
|
The cash bonus is a reward for the achievement of challenging milestones in a year over and above the day to day role and linked to an increase in the value of the business through the achievement of significant commercial progress. |
|
The equity incentive should deliver value to the Executive in the medium to long term, based on a sustainable increase in the share price over the corresponding period of time, and of a magnitude related to the actual increase in share price, in order to align management's incentive with the interests of shareholders. |
|
The Remuneration Committee has absolute discretion in the application of these principles and may make adjustments, where appropriate, and acting reasonably. |
|
SALARY |
|
A salary review usually occurs in Q4 each year, to take effect from 1 January in the following year, unless a market adjustment is required at a different time. |
|
Generally, salaries should be benchmarked and comparable to similar positions in similar sized AIM listed companies in similar industry segments. |
|
CASH BONUS |
|
Bonuses are paid to the extent their payment does not shorten the funded runway of the business to less than eighteen months, based upon an up-to-date forecast using reasonable assumptions, as agreed by the Board. This figure may be adjusted by the Remuneration Committee. |
|
Target |
|
The Target bonus levels are a percentage of salary. |
|
The Target are generally made up of, and released incrementally by, the achievement of: |
|
· |
new commercial partnership deals and other commercial milestones (e.g. regulatory approvals) |
|
· |
the return received on such agreements |
|
· |
contribution and profit earned. |
As the business matures, the balance between deal value, other commercial milestones and contribution / profit is expected to transition in weighting (i.e. from deals through other milestones towards profit). |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REMUNERATION REPORT |
For The Year Ended 31 December 2018 |
|
Bonus payments are calculated prior to completion of (and included in) the annual report and paid out after the Annual Report has been approved by the auditors and the Board. |
|
EQUITY INCENTIVE |
|
Unapproved share option scheme |
|
The Company operated an unapproved share option scheme for executive directors, senior management and certain employees. This scheme was used for any options awarded prior to 28 September 2017. |
|
Long-Term Incentive Plan ("LTIP") |
|
In September 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 will be made annually and will be subject to continued service and challenging performance conditions over a three year period. The performance conditions are reviewed on an annual basis to ensure they remain appropriate and are currently based on increasing shareholder value. Awards are structured as nil cost options with a seven year life after vesting. |
|
Other than in exceptional circumstances, an award would be up to 100% of salary in any one year and would be granted subject to achieving challenging performance conditions set at the date of the grant. A percentage of the award will vest for "Threshold" performance with full vesting taking place for equalling or exceeding the performance "Target". In between the Threshold and Target there may be pro rata vesting. The Remuneration Committee retains the ability to amend the performance conditions for future grants to ensure that such grants achieve the stated purpose. |
|
Application of the Policy |
|
Emoluments |
|
Details of the remuneration of those who served as directors during the year are set out below. |
|
Base salary |
Base salary |
|
2018 |
2017 |
|
£ |
£ |
Executive Directors |
|
|
|
|
|
S Smith |
|
|
A Abrey |
|
|
|
|
|
Non-Executive Directors |
|
|
|
|
|
|
- |
|
L van der Broek (appointed 1 October 2017) |
|
|
R Cridland |
|
|
The Company also operates an annual, discretionary cash bonus scheme. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REMUNERATION REPORT |
For The Year Ended 31 December 2018 |
|
For 2018, the target bonus levels and actual bonus achieved for Executive Directors on meeting all of these objectives were: |
Sean Smith |
70% of base salary, achieved 56.7%, (2017: 70% of base salary, achieved 61.67%) |
Alex Abrey |
70% of base salary, achieved 56.7%, (2017: 70% of base salary, achieved 61.67%) |
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 only, the Company makes contributions to a defined contribution pension scheme. The Company contributes a maximum of 4% provided that the director makes a minimum 4% contribution. Below this, the Company contributes the same percentage as the director. |
|
Share-based payments |
|
The share options granted to individual Directors to date are shown below and include grants made in prior years. |
|
Non-Executive Directors |
|
Non-Executive Directors receive a fee only with no additional benefits, bonuses or option grants. |
|
Directors' contracts |
|
The Executive Directors have a service contract of indefinite term with a notice period of no more than six months. |
|
Non-Executive Directors have Letters of Appointment which are terminable by the Director or the Company with three months' notice. |
|
Share option schemes |
|
During 2017, the Remuneration Committee approved the award of options over 4,016,680 ordinary shares of 1 pence each in the Company ("Ordinary Shares") under a Long-Term Incentive Plan ("LTIP"). The awards were in respect of management performance in the financial years ending 31 December 2016 and 31 December 2015, the latter being a "catch up" award following the later than planned implementation of the LTIP. Further details of the awards are set out below. In respect of 2015: |
• |
To the CEO Sean Smith nil cost options over 1,098,680 ordinary shares. |
• |
To the CFO Alex Abrey nil cost options over 810,000 ordinary shares. |
The vesting date of the options is 30 September 2019, and they only become exercisable if the following share price performance conditions are met: 50% of the options become exercisable if the weighted average Ordinary Share price in the 45 day period ending on the vesting date is £0.20 or above. Between weighted average ordinary share prices of £0.20 and £0.30, vesting shall be pro-rata and on a straight-line basis between 50% and 100%. Below £0.20 the options are not exercisable and lapse in full. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REMUNERATION REPORT |
For The Year Ended 31 December 2018 |
|
In respect of 2016: |
· |
To the CEO Sean Smith nil cost options over 1,148,000 ordinary shares. |
· |
To the CFO Alex Abrey nil cost options over 960,000 ordinary shares. |
The vesting date of the options is 30 September 2020, and they only become exercisable if the following share price performance conditions are met: 50% of the options become exercisable if the weighted average Ordinary Share price in the 45 day period ending on the vesting date is £0.24 or above. Between weighted average Ordinary Share prices of £0.24 and £0.36, vesting shall be pro-rata and on a straight-line basis between 50% and 100%. Below £0.24 the options are not exercisable and lapse in full. |
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EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
AUDIT COMMITTEE REPORT |
For The Year Ended 31 December 2018 |
|
INTRODUCTION |
|
On behalf of the Audit Committee, I am pleased to present this report to shareholders. The purpose of the report is to highlight the areas that the Committee has reviewed and how we have discharged our responsibilities effectively during the year. |
|
RESPONSIBILITIES |
|
The key responsibility of the Committee is to provide effective governance over the Company's financial reporting to ensure its appropriateness. Under its terms of reference, the Committee is required, amongst other things, to: |
· |
monitor the integrity of the financial statements of the Company including the appropriateness of the accounting policies adopted and whether the Annual Report is fair, balanced and understandable; |
· |
review, understand and evaluate the effectiveness of the Company's internal controls and risk management systems, particularly but not exclusively as they pertain to financial matters; |
· |
appraise the Board on how the Company's prospects are assessed; |
· |
oversee the relationship with the external auditors, making recommendations to the Board in relation to their appointment, remuneration and terms of engagement; |
· |
monitor and review the effectiveness of the external audit including the external auditors' independence, objectivity and effectiveness and to approve the policy on the engagement of the external auditors to supply non-audit services; and |
· |
monitor and review the internal audit activities in the Company. |
The Committee's terms of reference can be found on the Company's website www.edenresearch.com. |
|
COMPOSITION OF COMMITTEE AND MEETINGS |
|
The Audit Committee comprises the two Non-Executive Directors, Robin Cridland, who is Chairman of the Committee, and Lykele van der Broek. The Chairman of the Committee has recent and relevant financial experience and collectively the members of the Committee have experience of the chemical, agricultural and animal health industries. Details of Committee members' qualifications can be found on pages 18-19. The Audit Committee met five times during the year, and has a rolling agenda linked to the Company's financial calendar. It invites the Chief Executive Officer, the Chief Financial Officer and the external auditors to attend its meetings. The Committee met with the external auditors at the conclusion of the audit without the Executive Directors being present. The Committee has met once since the end of the financial year to consider the results and the Annual Report for the year ended 31 December 2018. |
|
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. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
AUDIT COMMITTEE REPORT |
For The Year Ended 31 December 2018 |
|
FINANCIAL REPORTING |
|
During the year, the Audit Committee reviewed reports and information provided by both the Chief Financial Officer and the external auditors in respect of the half year and annual financial report. An important responsibility of the Audit Committee is to review and agree significant estimates and judgements made by management. To satisfy this responsibility, the Committee reviewed a written formal update from the Chief Financial Officer on such issues at the two meetings that reviewed the half year and year end results, as well as reports from the external auditors. The Committee carefully considered the content of these reports in evaluating the significant issues and areas of judgement across the Company. The key areas of review, including those requiring significant judgements to be made, in the year were as follows: |
• Revenue recognition |
• Potential impairment of intangible assets including intellectual property and investments |
• Management override of controls |
|
Other areas reviewed in the year were as follows: |
• Going concern |
• Consolidation |
• Share based payments |
• Accruals and provisions |
• Related party transactions |
INTERNAL CONTROL AND RISK MANAGEMENT |
|
During the year the Committee continued to review the effectiveness of the Company's internal control and risk management systems. The Committee reported to the Board that it had reviewed, and was satisfied with, the effectiveness of these systems. |
|
EXTERNAL AUDIT |
|
KPMG LLP has been the external auditor for the Company since 2017. The Audit Committee annually assesses the qualification, expertise and independence of the auditors and the effectiveness of the audit process. KPMG's current engagement partner is Andrew Campbell-Orde, and he has been in place since being appointed for the Company's 2017 year end. |
|
Following approval by shareholders to re-appoint KPMG at last year's AGM, the Audit Committee reviewed and approved the terms of engagement and remuneration of the external auditors for the 2018 financial year. |
|
AUDIT EFFECTIVENESS |
|
The effectiveness of the external audit process is dependent on appropriate audit risk identification at the start of the audit cycle. KPMG present their detailed audit plan to the Audit Committee each year identifying their assessment of these key risks. Its 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 through a questionnaire completed by Audit Committee members and members of the Company's senior finance team. The output of that review was considered in detail, discussed by the Audit Committee and discussed with the external auditors. The Committee was satisfied with the review process, the performance of the Committee and the effectiveness of the external audit. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
AUDIT COMMITTEE REPORT |
For The Year Ended 31 December 2018 |
|
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. |
|
The Audit Committee reviewed and approved the non-audit services policy, the objective of which is to ensure that the provision of such services does not impair, or is not perceived to impair, the external auditors' independence or objectivity. The policy imposes guidance on the areas of work that the external auditors may be asked to undertake and those assignments where the external auditors should not be involved. There is a further category of services for which a case-by-case decision is necessary. The policy can be viewed on the Company's website www.edenresearch.com. In order to ensure that the policy is effective and the level of non-audit fees is kept under review, major work to be awarded to the audit firm must be agreed in advance by the Audit Committee Chairman. For the 2018 financial year end, there was no non-audit work undertaken by the Company's auditors. |
|
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 |
|
The Committee also reviewed its terms of reference, its effectiveness, the Company's policies on whistleblowing, business ethics and on the prevention of bribery and modern slavery. As Chairman of the Committee, I will be available at the Annual General Meeting to respond to any shareholder questions that might be raised on the Committee's activities. |
|
|
|
Robin Cridland |
Audit Committee Chairman |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REPORT OF THE DIRECTORS |
For The Year Ended 31 December 2018 |
|
The directors present their report with the financial statements of the Company for the year ended 31 December 2018. |
|
DIVIDENDS |
|
The loss for the year after taxation amounted to £334,951 (2017: £639,093). The directors are unable to recommend any dividend (2017: £nil). |
|
RESEARCH AND DEVELOPMENT |
|
An indication of research and development activities is included within the Chief Executive Officer's Report. |
|
FUTURE DEVELOPMENTS |
|
An indication of future developments is included within the Chief Executive Officer's Report. |
|
DIRECTORS |
|
The directors during the year under review were: |
|
A J Abrey |
R J S Cridland |
S M Smith |
L J van der Broek |
|
Details of the directors who had interests in share option schemes can be found in the Remuneration Report. |
|
CORPORATE GOVERNANCE |
|
The directors acknowledge the importance of the principles set out in the Corporate Governance Code. Although the Corporate Governance Code is not compulsory for AIM quoted companies, the directors have applied the principles as far as practicable and appropriate for a relatively small public company as follows: |
|
The Board currently comprises two executive directors and two non-executive directors. The Board meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all directors receive appropriate and timely information. Briefing papers are distributed to all directors in advance of Board meetings. All directors have access to the advice and services of the Company Secretary and the Chief Financial Officer, who is responsible for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company's expense. |
|
The directors have established Audit, Nominations, Remuneration and AIM Compliance Committees. |
|
The Audit Committee has Robin Cridland as Chairman and has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Company is properly measured and reported on and reviewing reports from the Company's auditors relating to the Company's accounting and internal controls, in all cases having due regard to the interests of shareholders. The Audit Committee meets at least twice a year. Lykele van der Broek was the other member of the Audit Committee during the year. |
|
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. |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
REPORT OF THE DIRECTORS |
For The Year Ended 31 December 2018 |
|
The Remuneration Committee had Lykele van der Broek as Chairman during the year and reviews the performance of the executive directors and determines their terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of shareholders. The Remuneration Committee meets at least twice a year. Robin Cridland was the other member of the Remuneration Committee during the year. |
|
The AIM Compliance Committee had Lykele van der Broek as Chairman during the year and meets twice a year with the NOMAD to discuss AIM compliance and related issues. The other member of the committee is Robin Cridland. The directors comply with Rule 21 of the AIM Rules relating to directors' dealings and there are procedures in place to ensure compliance by the Company's applicable employees. The Company has adopted a share dealing code which is appropriate for an AIM quoted company. The shareholdings of the directors of the Company are as follows: |
|
Total Holdings |
% of Share Capital |
Alex Abrey |
1,102,824 |
0.53% |
Sean Smith |
306,769 |
0.15% |
Robin Cridland |
47,000 |
0.02% |
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 2018: |
Entity |
Total Holdings |
% of Share Capital |
|
|
|
Sipcam SpA |
20,494,330 |
9.89% |
Livingbridge VC LLP |
19,512,195 |
9.42% |
HSBC Nominees |
14,007,734 |
6.76% |
JM Finn & Co |
12,332,961 |
5.95% |
Artemis Investment Management |
9,645,000 |
4.66% |
Hargreaves Lansdown Asset Management |
7,816,905 |
3.77% |
Barclays Personal Investment Management |
7,485,329 |
3.61% |
Bank of New York (Nominees) |
6,972,500 |
3.37% |
Interactive Investor Services |
6,824,382 |
3.29% |
SUPPLIERS |
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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. |
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STATEMENT OF DIRECTORS' RESPONSIBILITIES |
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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. |
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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. |
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STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
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AUDITOR |
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|
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In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company is to be proposed at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
|
|
|
S M Smith - Director |
|
Date:
|
|
6 Priory Court |
Priory Court Business Park |
Poulton |
Cirencester |
Gloucestershire |
GL7 5JB |
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC |
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1 Our opinion is unmodified |
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|
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We have audited the financial statements of Eden Research plc ("the Company") for the year ended 31 December 2018 which comprise the Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, and the related notes, including the accounting policies in note 1. |
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|
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 Company 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: company financial statements as a whole |
0.8% (2017: 0.65%) |
|
|
of total assets |
Key audit matters |
|
Vs 2017 |
Recurring risks for the Company |
|
|
|
Intangible assets |
←→ |
|
Revenue |
←→ |
New risks for the Company |
|
|
The impact of uncertainties due to the UK exiting the Europe Union on our audit |
|
↑ |
|
Going concern |
↑ |
2 Key audit matters: including our assessment of risks of material misstatement |
|
Key audit matters are those matters that, in our professional judgment, 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 were as follows: |
|
The impact of uncertainties due to the UK exiting the European Union on our audit |
Refer to page 6 (Chief Executive Officer's report) |
|
The risk - Unprecedented levels of uncertainty |
|
All audits assess and challenge the reasonableness of estimates, in particular as described in 'Intangible assets' below, and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements (see below). All of these depend on assessments of the future economic environment and the Company's future prospects and performance. |
|
Brexit is one of the most significant economic events for the UK and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. |
|
Our response |
|
We developed a standardised firm-wide approach to the consideration of the uncertainties arising from Brexit in planning and performing our audits. Our procedures included: |
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC (continued) |
· |
Our Brexit knowledge: We considered the directors' assessment of Brexit-related sources of risk for the Company's business and financial resources compared with our own understanding of the risks. We considered the directors' plans to take action to mitigate the risks. |
· |
Sensitivity analysis: When addressing intangible assets and other areas that depend on forecasts, we compared the directors' analysis to our assessment of the full range of reasonably possible scenarios resulting from Brexit uncertainty and, where forecast cash flows are required to be discounted, considered adjustments to discount rates for the level of remaining uncertainty. |
· |
Assessing transparency: As well as assessing individual disclosures as part of our procedures on intangible assets we considered all of the Brexit related disclosures together, including those in the strategic report, comparing the overall picture against our understanding of the risks. |
However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit. |
|
Going concern |
Refer to page 30 (Audit Committee report) and page 47 (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 Company. |
|
That judgement is based on an evaluation of the inherent risks to the Company's business model and how those risks might affect the Company's financial resources or ability to continue operations over a period of at least a year from the date of approval of the financial statements. |
|
The risks most likely to adversely affect the Company's available financial resources over this period is the impact of Brexit on the Company's supply chain. |
|
There are also less predictable but realistic second order impacts, such as the impact of Brexit on the industry specific regulations underlying the Company's and its suppliers' operations 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 procedures included: |
|
· |
Historical comparisons: we compared previously forecasted cash flows against actual cash flows to assess the historical accuracy of forecasting. |
|
· |
Sensitivity analysis: Considering sensitivities over the level of available financial resources indicated by the Company's financial forecasts, taking account of reasonably possible (but not unrealistic) adverse effects that could arise if the Company's forecast future sales do not materialise. |
|
· |
Evaluating directors' intent: Evaluating the achievability of the proposed actions the Directors consider they would take to improve the position should the identified risks associated with Brexit materialise. |
|
· |
Assessing transparency: Assessing the completeness and accuracy of the matters covered in the going concern disclosure by comparing it to our knowledge and understanding of the business and the industry in which it operates. |
Intangible assets ( £5,016,508; 2017: £4,933,761) |
Refer to page 48 (accounting policy) and page 59 (financial disclosures) |
|
The risk - Forecast-based valuation |
|
All intangible assets, including development costs, are reviewed annually for indicators of impairment. The assessment of impairment indicators includes forecasting and discounting future cash flows (based on assumptions such as discount rates and rates of growth in revenue), which are inherently highly judgemental. In particular, due to uncertainty over the size of the potential market for the Company's products, there is a risk that the valuation of intangible assets may not be supported by potential future sales. The effect of these matters is that, as part of our risk assessment, we determined that valuation of the Company's intangible |
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC (continued) |
|
assets has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 8) disclose the sensitivity estimated by the Company. |
|
Our procedures included: |
|
· |
Our sector experience: challenging the 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 forecast: assessing whether the cash flow forecasts are consistent with current business strategies in place; |
|
· |
Comparing valuations: comparing the market capitalisation of the Company to the carrying value of the net assets to assess whether this provides an indicator of possible impairment of the intangible assets; |
|
· |
Historical comparisons: comparing the previously forecast cash flows to actuals to assess the historical accuracy of forecasting; |
|
· |
Sensitivity analysis: performing breakeven analysis to assess the sensitivity of the impairment reviews to changes in the key assumptions noted above; and |
|
· |
Assessing transparency: assessing whether the Company's disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in the intangible valuation. |
Revenue (£2,774,272; 2017: £1,877,187) |
|
Refer to page 4 (Chief Executive Officer's Report), page 48 (accounting policy) and page 53 (financial disclosures) |
|
The risk - Revenue recognition |
|
The Company's agreements with its customers are often bespoke and vary from customer to customer in terms of ongoing performance obligations, timing, quantities and payment profiles. The directors are required to make judgements about the nature of these agreements to determine the appropriate timing of revenue recognition. The current focus of the Company is on sales growth, and the directors are incentivised on performance through a share option scheme. This and the lack of segregation of duty gives rise to the risk that revenue recognised in the year may be recognised in the wrong period. In light of this, revenue is susceptible to fraudulent financial reporting. |
|
Our procedures included: |
|
Test of details: |
|
· |
for a sample of revenue transactions recognised in the period, agreeing the amounts to bank statements and the underlying agreements to determine whether revenue arose and was recognised in the appropriate period; |
|
· |
reviewing a sample of contracts with customers entered into in previous years to determine the appropriateness of the directors' assertion that adoption of IFRS 15 Revenue from Contracts with Customers does not give rise to adjustments to revenue recognised since the transition date; |
|
· |
for a sample of revenue transactions in respect of product sales checking that a sale had been made by agreeing the amounts recognised to sales invoices and bank statements; |
|
· |
for a sample of product sales invoices raised either side of the balance sheet date, inspecting the documentation supporting the dispatch of goods to determine whether revenue was recognised in the correct period; and |
|
· |
obtaining 100% of the journals posted in respect of revenue and analysing 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. |
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC (continued) |
|
3 Our application of materiality and an overview of the scope of our audit |
|
Materiality for the financial statements as a whole was set at £73,000 (2017: £70,000), determined with reference to a benchmark of total assets, of which it represents 0.8% (2017: 0.65%). We consider a benchmark of total assets to be appropriate as the Company is in the early stages of development. |
|
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £3,650, in addition to other identified misstatements that warranted reporting on qualitative grounds. |
|
Our audit of the Company was undertaken to the materiality level specified above and was all performed at the Company's head office in Cirencester. |
|
4 We have nothing to report on going concern |
|
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that 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 its ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period"). |
|
Our responsibility is to conclude on the appropriateness of the Directors' conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Company will continue in operation. |
|
We identified going concern as a key audit matter (see section 2 of this report). Based on the work described in our response to that key audit matter, we are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. |
|
We have nothing to report in these respects. |
|
5 We have nothing to report on the other information in the Annual Report |
|
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. |
|
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. |
|
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. |
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC (continued) |
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6 We have nothing to report on the other matters on which we are required to report by exception |
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7 Respective responsibilities |
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Directors' responsibilities |
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8 The purpose of our audit work and to whom we owe our responsibilities |
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for and on behalf of KPMG LLP, Statutory Auditor |
Chartered Accountants |
66 Queen Square |
Bristol |
BS1 4BE |
|
Date:
|
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME |
For The Year Ended 31 December 2018 |
|
|
2018 |
2017 |
|
|
|
|
|
Notes |
£ |
£ |
|
|
|
|
Revenue |
2 |
|
|
|
|
|
|
Cost of sales |
|
(
|
(
|
|
|
|
|
GROSS PROFIT |
|
|
|
|
|
|
|
Amortisation of intangible assets |
|
(
|
(
|
Other administrative expenses |
|
(
|
(
|
Exceptional Royalties Refund |
12 |
- |
|
Licence Amendment Fee |
12 |
- |
(
|
Share based payments |
21 |
(
|
(
|
|
|
|
|
OPERATING LOSS |
|
(
|
(
|
|
|
|
|
Finance costs |
4 |
(
|
(
|
Finance income |
4 |
|
|
|
|
|
|
Share of profit/(loss) of equity accounted investee, net of tax |
|
(
|
(
|
|
|
|
|
LOSS BEFORE INCOME TAX |
5 |
(
|
(
|
|
|
|
|
Income tax |
6 |
|
|
|
|
|
|
LOSS FOR THE YEAR |
|
(
|
(
|
OTHER COMPREHENSIVE INCOME |
|
- |
- |
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
|
(
|
(
|
|
|
|
|
Earnings per share expressed |
|
|
|
in pence per share: |
7 |
|
|
Basic |
|
(
|
(
|
Diluted |
|
(
|
(
|
|
|
|
|
The notes form part of these financial statements |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
STATEMENT OF FINANCIAL POSITION |
|
|
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
Notes |
£ |
£ |
ASSETS |
|
|
|
NON-CURRENT ASSETS |
|
|
|
Intangible assets |
8 |
|
|
Investments in equity-accounted investee |
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
Stock |
|
|
|
Trade and other receivables |
10 |
|
|
Cash and cash equivalents |
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
CURRENT LIABILITIES |
|
|
|
Trade and other payables |
12 |
|
|
|
|
|
|
NET CURRENT ASSETS |
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES |
|
|
|
Trade and other payables |
12 |
|
|
|
|
|
|
NET ASSETS |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
Called up share capital |
15 |
|
|
Share premium |
16 |
|
|
Merger reserve |
16 |
|
|
Warrant reserve |
16 |
|
|
Retained loss |
16 |
(
|
(
|
|
|
|
|
TOTAL EQUITY |
|
|
|
The financial statements were approved by the
|
|
|
|
S M Smith - Director |
|
The notes form part of these financial statements |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
STATEMENT OF CHANGES IN EQUITY |
For The Year Ended 31 December 2018 |
|
Called up |
|
|
|
share |
Retained |
Share |
|
capital |
loss |
premium |
|
|
|
|
|
£ |
£ |
£ |
|
|
|
|
Balance at 1 January 2017 |
|
(
|
|
|
|
|
|
Changes in equity |
|
|
|
Issue of share capital |
|
- |
|
Total comprehensive income |
- |
(
|
- |
Options exercised/lapsed |
- |
|
- |
|
|
|
|
Balance at 31 December 2017 |
|
(
|
|
|
|
|
|
Changes in equity |
|
|
|
Issue of share capital |
|
- |
|
Total comprehensive income |
- |
(
|
- |
Options exercised/lapsed |
- |
|
- |
|
|
|
|
Balance at 31 December 2018 |
|
(
|
|
|
Merger |
Warrant |
Total |
|
reserve |
reserve |
equity |
|
|
|
|
|
£ |
£ |
£ |
|
|
|
|
Balance at 1 January 2017 |
|
|
|
|
|
|
|
Changes in equity |
|
|
|
Issue of share capital |
- |
- |
|
Total comprehensive income |
- |
- |
(
|
Options granted |
- |
|
|
Options exercised/lapsed |
- |
(
|
- |
|
|
|
|
Balance at 31 December 2017 |
|
|
|
|
|
|
|
Changes in equity |
|
|
|
Issue of share capital |
- |
- |
|
Total comprehensive income |
- |
- |
(
|
Options granted |
- |
|
|
Options exercised/lapsed |
- |
- |
|
|
|
|
|
Balance at 31 December 2018 |
|
|
|
The notes form part of these financial statements |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
STATEMENT OF CASH FLOWS |
For The Year Ended 31 December 2018 |
|
|
2018 |
2017 |
|
|
£ |
£ |
Cash flows from operating activities |
|
|
|
Cash (used by)/from operations |
17 |
(
|
|
Finance costs paid |
|
(
|
(
|
Foreign exchange losses |
|
(
|
- |
Tax credit received |
|
|
|
|
|
|
|
Net cash (used by)/from operating activities |
|
(
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Capitalisation of licensing and trademarks |
|
- |
- |
Capitalisation of development expenditure and intellectual property costs |
|
(
|
(
|
Capitalisation of patents |
|
(
|
(
|
Finance income |
|
|
|
Foreign exchange gains |
|
- |
|
|
|
|
|
Net cash used by investing activities |
|
(
|
(
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Issue of equity shares |
|
|
|
Share issue costs |
|
- |
(
|
|
|
|
|
Net cash from financing activities |
|
|
|
|
|
|
|
(Decrease)/Increase in cash and cash equivalents |
|
(
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
|
The notes form part of these financial statements |
|
continued… |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES |
|
|
|
General information |
|
Eden Research Plc is a public company limited by shares registered, incorporated and domiciled in England in the United Kingdom under the Companies Act 2006. The address of the registered office is given on page 1. The nature of the Company's operations and its principal activities are set out in the Chairman's Report on page 2. The Company is quoted on the AIM Market in London.
|
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|
Basis of preparation |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
The notes form part of these financial statements |
|
|
|
continued… |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Standards, amendments and interpretations adopted in the current financial year ended 31 December 2018 |
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The notes form part of these financial statements |
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|
|
continued… |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Standards, amendments and interpretations in issue but not yet effective |
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The notes form part of these financial statements |
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continued… |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Going Concern |
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|
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. |
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|
The Company has reported a loss for the year after taxation of £
|
||||||||||||||||||||||||||||||||||
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|
||||||||||||||||||||||||||||||||||
|
The directors have prepared budgets and projected cash flow forecasts, based in part on forecasts provided by Eden's commercial partners, for a period of two years from 31 December 2018 and they consider that the Company will be able to operate with the cash resources that are available to it for this period. The ability of the Company to continue as a going concern is ultimately dependent upon the amounts and timing of cash flows from the exploitation of the Company's intellectual property and the availability of existing and/or additional funding to meet the short term needs of the business until the commercialisation of the Company's portfolio is reached. |
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|
The forecasts adopted include only revenue derived from existing contracts and, while there is a risk these payments might be delayed if milestones are not reached, there is potential upside from on-going discussions and negotiations with other parties not yet contracted, as well as other "blue sky" opportunities. |
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In addition, the Company has relatively low fixed running costs and has a demonstrable ability to delay certain other costs, such as Research and Development expenditure, in the event of unforeseen cash constraints. |
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|
The directors have also considered a scenario whereby the Company receives no revenue from the date of this Report. On this basis, the directors believe that the Company has sufficient cash to cover a period of at least 12 months from the date of this Report. |
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The directors are closely monitoring performance against cash flow projections that have been prepared for the period to 31 December 2019 and beyond, and reasonably believe that the Company will deliver cash flows at least in line with these. |
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Taking all these factors into consideration, the directors consider it appropriate to prepare the financial statements on the going concern basis. The financial statements do not include any adjustments that would result from a failure by the Company to meet these forecasts. |
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Revenue recognition |
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Intangible assets |
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Impairment of non-financial assets |
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Research and development |
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continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Financial instruments |
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Stock |
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continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Leasing |
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Foreign currencies |
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Share-based payments |
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|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Defined contribution plan |
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Financial risk management |
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|
Current and deferred income tax |
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|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
1. |
ACCOUNTING POLICIES - continued |
|
Critical accounting estimates and areas of judgement |
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|
Capitalised development costs and intellectual property |
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|
Impairment of assets |
||||||||||||||||
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|
Going concern |
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|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
2. |
SEGMENTAL REPORTING AND REVENUE |
|
IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for the resource allocation and assessing performance of the operating segments has been identified as the Executive Directors as they are primarily responsible for the allocation of the resources to segments and the assessment of performance of the segments. |
|
|
|
The Executive Directors monitor and then assess the performance of segments based on product type and geographical area using a measure of adjusted EBITDA. This is the result of the segment after excluding the share-based payment charges, other operating income and the amortisation of intangibles. These items, together with interest income and expense are not allocated to a specific segment. |
|
|
|
The segmental information for the year ended 31 December 2018 is as follows: |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
|
|
|
Human health and biocides |
- |
- |
- |
|
- |
- |
- |
|
|
Animal health |
- |
- |
- |
- |
- |
- |
- |
- |
|
Agrochemicals |
- |
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
- |
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted |
- |
- |
- |
- |
- |
- |
18,207 |
18,207 |
|
EBITDA |
|
|
|
|
|
|
|
|
|
Amortisation |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Depreciation |
- |
- |
- |
- |
- |
- |
- |
- |
|
Share Based Payments |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Net Finance Costs |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Income Tax |
- |
- |
- |
- |
- |
- |
|
|
|
Share of Associate's loss |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Loss for the Year |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets includes: |
- |
- |
- |
- |
- |
- |
- |
- |
|
Additions to Non-Current Assets |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
- |
- |
- |
- |
- |
- |
(
|
(
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2017 |
2. |
SEGMENTAL REPORTING AND REVENUE - continued |
|
The segmental information for the year ended 31 December 2017 is as follows: |
|
|
Licensing |
Milestone |
Evaluation |
Royalties |
Grant |
Product |
Un-allocated |
Total |
|
|
Fees |
Payments |
Fees |
|
Funding |
Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
|
|
|
Human health and biocides |
|
- |
- |
|
- |
- |
- |
|
|
Animal health |
- |
- |
- |
- |
- |
- |
- |
- |
|
Agrochemicals |
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
- |
- |
- |
- |
- |
- |
(3,418) |
(3,418) |
|
Amortisation |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Depreciation |
- |
- |
- |
- |
- |
- |
- |
- |
|
Share Based Payments |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Net Finance Costs |
- |
- |
- |
- |
- |
- |
|
|
|
Income Tax |
- |
- |
- |
- |
- |
- |
|
|
|
Share of Associate's loss |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
Loss for the Year |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets includes: |
|
|
|
|
|
|
|
|
|
Additions to Non-Current Assets |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
- |
- |
- |
- |
- |
- |
(
|
(
|
|
GEOGRAPHICAL REPORTING |
|
|
2018 |
2017 |
|
|
£ |
|
|
|
|
|
|
UK |
|
|
|
Europe |
2 ,613,619 |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
3. |
EMPLOYEES AND DIRECTORS |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Wages and salaries |
|
|
|
Pension costs |
|
|
|
Social security costs |
|
|
|
|
|
|
|
|
|
|
|
The average monthly number of employees, including directors, was as follows: |
|
|
2018 |
2017 |
|
|
|
|
|
Management |
|
|
|
Staff costs, including executive directors' remuneration, are included within administrative expenditure in the Statement of Profit or Loss and Other Comprehensive Income. The Executive Directors are considered to also be the key management personnel of the Company. |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
|
|
|
|
Directors' remuneration |
|
|
|
Company contributions to defined contribution pension schemes |
|
|
|
|
|
|
|
|
|
|
|
Non-executive directors' fees |
|
|
|
|
|
|
|
Total directors' emoluments |
|
|
|
|
|
|
|
Share based payment charge relating to all directors |
|
|
|
During the year the remuneration of the highest paid director was £
|
|
|
|
|
|
|
Share |
|
|
2018 |
|
|
|
|
based |
|
|
|
Salary |
Bonus |
Fees |
Pension |
payments |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
|
A Abrey |
|
|
- |
|
|
|
|
S Smith |
|
|
- |
|
|
|
|
R Cridland |
- |
- |
|
- |
- |
|
|
L van Der Broek |
- |
- |
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
2017 |
|
|
|
|
based |
|
|
|
Salary |
Bonus |
Fees |
Pension |
payments |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
|
A Abrey |
|
|
- |
|
|
|
|
S Smith |
|
|
- |
|
|
|
|
T Lupton |
- |
- |
|
- |
- |
|
|
R Cridland |
- |
- |
|
- |
- |
|
|
L van Der Broek |
- |
- |
|
- |
- |
|
|
|
|
|
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
4. |
NET FINANCE COSTS |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Finance income: |
|
|
|
Foreign exchange gains |
- |
|
|
Deposit account interest |
|
|
|
|
|
|
|
|
|
|
|
Finance costs: |
|
|
|
Foreign exchange losses |
|
- |
|
Finance fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance costs |
(
|
(
|
5. |
LOSS BEFORE INCOME TAX |
|
The loss before income tax is stated after charging/(crediting): |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Licences and trademarks amortisation |
|
|
|
Development costs amortisation |
|
|
|
Intellectual property amortisation |
|
|
|
Auditor's remuneration: |
|
|
|
- Audit of these financial statements |
|
|
|
- All other services |
- |
|
|
Equity share based payment charge |
|
|
|
Foreign exchange differences |
|
(
|
6. |
INCOME TAX |
|
Analysis of tax income |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Current tax credit: |
|
|
|
Current year |
|
|
|
Adjustments in respect of prior periods |
|
|
|
|
|
|
|
Total tax income in statement of profit or loss and other comprehensive income |
|
|
|
Corporation tax |
|
|
|
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
6. |
INCOME TAX - continued Factors affecting the tax charge |
|
The UK standard rate of corporation tax is 19% (2017: 19.25%). Current tax assessed for the financial year as a percentage of the loss before taxation is (37.2)% (2017: (16.2)%) |
|
|
|
The differences are explained below: |
|
|
2018 |
2018 |
2017 |
2017 |
|
|
£ |
% |
£ |
% |
|
Standard rate of corporation tax in the UK |
|
(
|
|
(
|
|
|
|
|
|
|
|
Loss before tax at standard rate of tax |
(
|
|
(
|
|
|
|
|
|
|
|
|
Effects of |
|
|
|
|
|
Fixed asset differences |
|
|
|
|
|
Losses carried forward/surrendered |
|
|
- |
- |
|
Difference in effective tax rate of equity accounted associate |
- |
- |
|
|
|
Other expenses not deductible for tax purposes |
|
|
|
|
|
Research and development tax relief |
(
|
(
|
(
|
(
|
|
Adjustment to prior year tax charge |
(
|
(
|
(
|
(
|
|
Temporary differences not recognised in the computation |
|
|
- |
- |
|
Adjust closing deferred tax to average rate of 19.00% |
(
|
(
|
- |
- |
|
Deferred tax not recognised To be analysed |
- |
- |
|
|
|
|
|
|
|
|
|
Total current tax credit and tax rate % |
(
|
(37.2) |
(
|
(16.2) |
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
Un-provided deferred tax liability |
(513,138) |
|
(237,330) |
|
|
Un-provided deferred tax asset |
|
|
|
|
|
|
|
|
|
|
|
Net un-provided deferred tax asset |
3,276,380 |
|
3,544,747 |
|
|
|||||||
|
|
||||||
|
|
||||||
|
|
||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
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: |
|
|
|
2018 |
|
|
|
|
Weighted |
|
|
|
|
average |
|
|
|
|
number |
Per-share |
|
|
Earnings |
of |
amount |
|
|
£ |
shares |
pence |
|
Basic EPS |
|
|
|
|
Earnings attributable to ordinary shareholders |
(
|
207,115,707 |
(
|
|
Effect of dilutive securities |
- |
160,422 |
- |
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
Adjusted earnings |
(
|
207,276,129 |
(
|
|
|
|
2017 |
|
|
|
|
Weighted |
|
|
|
|
average |
Per-share |
|
|
Earnings |
number |
amount |
|
|
|
of |
pence |
|
|
£ |
shares |
|
|
Basic EPS |
|
|
|
|
Earnings attributable to ordinary shareholders |
(
|
195,705,733 |
(
|
|
Effect of dilutive securities |
- |
(5,019,101) |
- |
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
Adjusted earnings |
(
|
190,686,632 |
(
|
|
Due to the loss for the year there is no dilution of the loss per share arising from options in existence. |
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
8. |
INTANGIBLE ASSETS |
|
|
Licences |
|
|
|
|
|
and |
Development |
Intellectual |
|
|
|
trademarks |
costs |
property |
Totals |
|
|
£ |
£ |
£ |
£ |
|
COST |
|
|
|
|
|
At 1 January 2018 |
|
|
|
|
|
Additions |
- |
|
|
|
|
|
|
|
|
|
|
At 31 December 2018 |
|
|
|
|
|
|
|
|
|
|
|
AMORTISATION |
|
|
|
|
|
At 1 January 2018 |
|
|
|
|
|
Amortisation for year |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2018 |
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
At 31 December 2018 |
|
|
|
|
|
|
Licences |
|
|
|
|
|
and |
Development |
Intellectual |
|
|
|
trademarks |
costs |
property |
Totals |
|
|
£ |
£ |
£ |
£ |
|
COST |
|
|
|
|
|
At 1 January 2017 |
|
|
|
|
|
Additions |
- |
|
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
|
|
|
|
|
|
|
|
|
|
|
AMORTISATION |
|
|
|
|
|
At 1 January 2017 |
|
|
|
|
|
Amortisation for year |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2017 |
|
|
|
|
|
|
|
|
|
|
|
NET BOOK VALUE |
|
|
|
|
|
At 31 December 2017 |
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
8. |
INTANGIBLE ASSETS - continued |
|
|||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
9. |
INVESTMENTS IN ASSOCIATES |
|
|
2018 |
2017 |
|
|
|
|
|
Percentage ownership interest and proportion of voting rights |
29.9% |
29.9% |
|
|
|
|
|
|
£ |
£ |
|
|
|
|
|
Non-current assets |
|
|
|
Current assets |
|
|
|
Non-current liabilities |
(
|
(
|
|
Current liabilities |
(
|
(
|
|
|
|
|
|
Net assets (100%) |
|
|
|
Company's share of net assets |
193,569 |
193,138 |
|
Separable intangible assets |
184,521 |
199,089 |
|
Goodwill |
412,649 |
412,649 |
|
|
|
|
|
Carrying amount of interest in associate |
|
|
|
|
|
|
|
Revenue |
|
|
|
Profit from continuing operations |
|
|
|
100% of total post-tax profits |
1,441 |
27,687 |
|
29.9% of total post-tax profits |
431 |
8,278 |
|
|
|
|
|
Amortisation of separable intangible assets |
(
|
(
|
|
|
|
|
|
Company's share of profit/(loss) including amortisation of separable intangible assets |
(
|
(
|
|
|
|
|
|
Other comprehensive income |
- |
- |
|
100% |
- |
- |
|
29.9% |
|
|
|
|
|
|
|
Company's share of other comprehensive income |
- |
- |
|
|
|
|
|
Total comprehensive income (100%) |
|
|
|
|
|
|
|
Company's share of total comprehensive income including amortisation of separable intangible asset |
(
|
(
|
|
|
|
|
|
Dividends received by the Company |
- |
- |
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
9. |
INVESTMENTS IN ASSOCIATES - continued |
|
|||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
10. |
TRADE AND OTHER RECEIVABLES |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Current: |
|
|
|
Trade and other receivables |
|
|
|
Prepayments and accrued income |
|
|
|
Other debtors |
- |
|
|
Other taxes and social security |
|
|
|
VAT recoverable |
|
|
|
|
|
|
|
|
|
|
|
|
11. |
CASH AND CASH EQUIVALENTS |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Short term bank deposits |
|
|
|
The carrying amount of these short-term bank deposits approximates to their fair value. |
|
|
12. |
TRADE AND OTHER PAYABLES |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Current: |
|
|
|
Trade payables |
|
|
|
Other payables |
|
|
|
Other taxes and social security |
|
|
|
Accruals and deferred income |
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Non-current: |
|
|
|
Other creditors |
|
|
|
|
|
|
|
Aggregate amounts |
|
|
|
|||||||
|
|
||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
13. |
LEASING AGREEMENTS |
|
|
|
Minimum lease payments under non-cancellable operating leases fall due as follows: |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Between one and five years |
|
|
|
|
|
|
|
|
|
|
14. |
FINANCIAL ASSETS AND LIABILITIES |
|
|
Note |
2018 |
2017 |
|
|
|
|
|
|
|
|
£ |
£ |
|
Financial assets at amortised cost |
|
|
|
|
Other receivables |
10 |
|
|
|
Cash and cash equivalents |
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost |
|
Current: |
|
|
|
|
|
|
|
|
|
Trade and other payables |
12 |
|
|
|
|
|
|
|
|
|
|
|
|
15. |
CALLED UP SHARE CAPITAL |
|
Number: |
Class: |
Nominal |
2018 |
2017 |
|
|
|
value: |
£ |
£ |
|
|
Ordinary |
0.01 |
2,071,893 |
2,070,643 |
|
(2017:
|
|
|
|
|
|
|
|
|
|
|
|
Alloted, issued and fully paid |
|
|
|
|
|
Number: |
Class: |
Nominal |
2018 |
2017 |
|
|
|
value: |
£ |
£ |
|
|
|
|
|
|
|
(2017:
|
|
|
|
|
|
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
15. |
CALLED UP SHARE CAPITAL - continued |
|
|
|
The number of £
|
|
|
Number of ordinary |
Aggregate |
|
Premium on |
Total share |
|
Date |
shares |
nominal value |
Issue Price |
issue |
premium |
|
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
|
|
|
0.10375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,719 |
16. |
RESERVES |
|
|
losses |
Share |
Merger |
Warrant |
|
|
|
|
premium |
reserve |
reserve |
Totals |
|
|
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
At 1 January 2018 |
(
|
|
|
|
|
|
Deficit for the year |
(
|
- |
- |
- |
(
|
|
Cash share issue |
- |
|
- |
- |
|
|
Share issue costs |
- |
- |
- |
- |
- |
|
Transfer to other reserves |
- |
- |
- |
- |
- |
|
Options granted |
- |
- |
- |
|
|
|
Options exercised/lapsed |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
At 31 December 2018 |
(
|
|
|
|
|
|
|
17. |
RECONCILIATION OF LOSS FOR THE YEAR TO CASH FROM/USED BY OPERATIONS |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Loss for the year |
(
|
(
|
|
Share of associate's losses |
|
|
|
Depreciation charges |
|
|
|
Share based payment charge |
|
|
|
Finance costs |
|
|
|
Finance income |
(
|
(
|
|
Tax credit |
(
|
(
|
|
|
|
|
|
|
|
(
|
|
Increase in trade and other receivables |
|
(
|
|
(Decrease)/increase in trade and other payables |
(
|
|
|
Decrease/(increase) in stock |
|
(
|
|
|
|
|
|
Cash from/(used by) operations |
(
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
18. |
CAPITAL COMMITMENTS |
|
|
|
|
19. |
CONTINGENT LIABILITY |
|
20. |
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, Eden invoiced its associate, TerpeneTech, £nil for licence fees (2017: £
|
|
|
|
Also, during the year Eden made net payments to TerpeneTech totalling £
|
|
|
|
At the year end, a net amount of £
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
21. |
SHARE-BASED PAYMENT TRANSACTIONS |
|
|
|
|
|
|
|
Unapproved option scheme |
|
|
|
Eden Research Plc operates an unapproved option scheme for executive directors, senior management and certain employees. |
|
|
2018 |
|
|
|
|
|
Weighted |
|
2017 |
|
|
|
average |
|
Weighted |
|
|
|
exercise |
|
average |
|
|
|
price |
|
exercise price |
|
|
|
(pence) |
Number |
(pence) |
Number |
|
Outstanding at the |
|
|
|
|
|
beginning of the year |
|
|
|
|
|
Granted during the year |
- |
- |
- |
- |
|
Exercised during the year |
|
(
|
- |
- |
|
Lapsed during the year |
|
(
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
The exercise price of options outstanding at the end of the year ranged between 10p and 16p (2017: 8p and 16p) and their weighted average contractual life was
|
|
|
|
The share-based payment charge in respect of the unapproved option scheme for the year was £nil (2017: £nil). The weighted average fair value of each option granted during 2018 was £nil (2017: £nil). |
|
|
|
|
|
|
|
Eden Research Plc operates an unapproved option scheme for executive directors, senior management and certain employees under a LTIP which it adopted in 2017. |
|
|
|
During the prior year, the following options were granted under the LTIP: |
|
|
|
Number of |
Fair value |
Total fair |
|
Description |
Date of grant |
awards granted |
per award £ |
value £ |
|
|
|
|
|
|
|
2015 awards |
|
|
0.0601 |
114,712 |
|
2016 awards |
|
|
0.0461 |
97,179 |
|
|
|
|
|
|
|
|
|
|
|
211,891 |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
2018 |
|
2017 |
|
|
|
Weighted |
|
Weighted |
|
|
|
average |
|
average |
|
|
|
exercise |
|
exercise |
|
|
|
price |
|
price |
|
|
|
(pence) |
Number |
(pence) |
Number |
|
Outstanding at the |
|
|
|
|
|
beginning of the year |
|
|
|
|
|
Granted during the year |
- |
- |
- |
- |
|
Exercised during the year |
- |
- |
- |
- |
|
Lapsed during the year |
|
(
|
- |
(
|
|
|
|
|
|
|
|
|
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
21. |
SHARE-BASED PAYMENT TRANSACTIONS - continued |
|
The exercise price of warrants outstanding at the end of the year ranged between 11p and 30p (2017: 11p and 30p) and their weighted average contractual life was
|
|
|
|
The share based payment charge for the year was £nil (2017: £nil). The weighted average fair value of each warrant granted during the year was £nil (2017: £nil). |
22. |
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES |
|
Credit risk |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Cash and cash equivalents |
|
|
|
Trade receivables |
|
|
|
|
|
|
|
|
|
|
|
The average credit period for sales of goods and services is 36 days. No interest is charged on overdue trade receivables. At 31 December 2018 trade receivables of £
|
|
|
|
Trade receivables of £
|
|
|
|
The Company's policy is to provide for doubtful debts based on estimated irrecoverable amounts determined by reference to specific circumstances and past default experience. At the balance sheet date the directors consider that no provision for doubtful debts is required and that there is no further credit risk. |
|
|
|
Financial liabilities |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
Trade payables |
|
|
|
Other payables |
|
|
|
Other taxes and social security |
|
|
|
Accruals and deferred income |
|
|
|
|
|
|
|
|
|
|
|
The carrying amount of trade payables approximates to fair value. |
|
|
|
The average credit period on purchases of goods is 59 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 |
|
|
|
|
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
22. |
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES - continued |
|
|
|
Currency risk |
|
|
|
|
|
|
2018 |
2017 |
|
|
£ |
£ |
|
US dollars |
|
|
|
Euros |
|
|
|
Australian Dollars |
|
- |
|
|
|
|
|
|
|
|
|
Liquidity risk |
|
|
|
The interest rate profile of the Company's financial liabilities at 31 December 2018 was:- |
|
|
|
|
Financial liabilities on |
|
|
|
Fixed rate financial |
which no interest is |
|
|
Total |
liabilities |
paid |
|
|
£ |
£ |
£ |
|
Sterling |
|
|
|
|
2018 |
|
- |
|
|
2017 |
|
- |
|
|
|
|
|
|
|
Euro |
|
|
|
|
2018 |
|
- |
|
|
2017 |
|
- |
|
|
|
|
|
|
|
US Dollar |
|
|
|
|
2018 |
|
- |
|
|
2017 |
|
- |
|
|
|
|
|
|
|
Austrlaian Dollar |
|
|
|
|
2018 |
|
- |
|
|
2017 |
- |
- |
- |
|
All the Euro, Australian Dollar and US Dollar liabilities are held within trade creditors and are non-interest bearing. |
|
|
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
22. |
FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES - continued |
|
|
|
Maturity of financial liabilities |
|
|
|
The maturity profile of the Company's financial liabilities at 31 December 2018 was as follows:- |
|
|
2018 |
2017 |
|
|
£ |
£ |
|
In one year or less, or on demand |
|
|
|
Over one year |
|
|
|
|
|
|
|
|
|
2,071,963 |
|
|
||||||||||||||||||||||
|
|
||||||||||||||||||||||
|
Market price risk |
||||||||||||||||||||||
|
|
||||||||||||||||||||||
|
|||||||||||||||||||||||
|
|
||||||||||||||||||||||
|
Capital risk management |
||||||||||||||||||||||
|
|
||||||||||||||||||||||
|
|||||||||||||||||||||||
|
|
||||||||||||||||||||||
|
continued... |
EDEN RESEARCH PLC (REGISTERED NUMBER: 03071324) |
|
NOTES TO THE FINANCIAL STATEMENTS - continued |
For The Year Ended 31 December 2018 |
23. |
DEFINED CONTRIBUTION PLANS |
|
|
|
The Company operates a
|
|
|
|
The total expense relating to these plans in the current year was £
|