Final Results

RNS Number : 7587I
Eden Research plc
30 March 2015
 

 

EDEN RESEARCH PLC

("Eden" or the "Company")

 

Preliminary results

 

Eden Research plc (AIM: EDEN), the AIM listed natural micro-encapsulation company, announces its unaudited preliminary results for the year ended 31 December 2014. The Company continues to meet key milestones as part of its evolution from a research and development company to a commercial business.

 

·     Revenue of £0.1m (2013: £0.08m)

·     Operating loss of £1.75m (2013: £1.58m)

·     Loss before tax of £3.00m (2013: £1.63m)

·     Loss per share of 2.36p (2013: 1.30p loss)

·     Debt free and cash in bank of £0.41m (2013: £0.31m)

 

Operational highlights

·     3AEY approval for southern EU zone progressing well with Malta expected to give approval soon

·     Final approval from other southern will allow 3AEY sales to commence

·     Licensing agreements for 3AEY from Sumi-Agro (France) and Sipcam (Italy & Spain)

·     First products using Eden's GO-E™ micro-encapsulating technology launched in France

·     Agreement with Eastman to license Eden's nematicide product is expected shortly

·     Agreement with Bayer Animal Health for US pet care products will see these launched this year

·     Data sharing agreement with Daymsa to monetise the value of data generated in registering 3AEY

·     Other opportunities in insecticidal and fungicidal applications as well as human health applications

 

Board changes

·     Sean Smith appointed as CEO and Tom Lupton appointed as Non-Executive Chairman

·     Sir Ben Gill and Clive Newitt sadly passed away during the year

 

Commenting on outlook, Tom Lupton, Chairman said: "2014 was another eventful year at Eden and we have made good progress in our ambitions to gain product approval for the sale of our terpene based fungicide 3AEY, and the commercial sale of a wide range of products using our technology and active ingredients. It is expected that the approval of 3AEY will be granted imminently in Malta, which gives the other southern EU zone member states 120 days to add their approvals. The proximity of this key milestone, as well as the other advances we've made with our licensees during the year gives us the confidence to believe that 2015 will be a very successful year for your Company."

 

Copies of the full audited financial statements are available at www.edenresearch.com.

 

Eden Research plc          

www.edenresearch.com

Sean Smith, Chief Executive Officer

Tel: 01993 862 761

Alex Abrey, Chief Financial Officer

 

 

 

W H Ireland Limited      

Tel: 0117 945 3471

John Wakefield / Ed Allsopp

 

 

 

Walbrook PR Ltd

Tel: 020 7933 8780 or eden@walbrookpr.com

Paul McManus

Mob: 07980 541 893

Lianne Cawthorne

Mob: 07584 391 303

 

 

CHAIRMAN'S REPORT

                                                                                                                          

Introduction

 

2014 was another eventful year at Eden. It started positively with the announcement of a licensing agreement with Daymsa of Spain whereby Eden has granted access to its active substance dossiers to enable them to register their own insecticidal products. This is the first data sharing agreement that Eden has entered into which allows a third party to create products using the valuable data that we have generated in order to register our first agrochemical product, 3AEY, a Botryticide formulation. We believe that this agreement is the first of many which will provide a useful revenue stream and gives an indication of the inherent value of this data not only to us, but to others too.

 

Springtime saw the launch of the first products using Eden's GO-E micro-encapsulation technology in the biocides sector with our licensee, TerpeneTech, selling odour neutraliser and pet products into the personal use sector.

 

In May we said goodbye to my predecessor, Sir Ben Gill, who sadly passed away following a battle with cancer.

 

In August, Eden signed an evaluation agreement for its nematicide product with (now) Eastman Chemicals (formerly Taminco). Eastman is a significant entity and it is pleasing to see that Eden has caught the attention and imagination of such a well-known company.

 

The year ended in a flurry of activity, following the appointment of Sean Smith as Chief Executive Officer, with two exclusive licensing agreements being signed with Sumi-Agro France and Sipcam Italia/Iberia for 3AEY. Again, it is quite an accomplishment for a company of Eden's size to be taken seriously by companies that are part of the Sumitomo Corporation, a business which turns over $3 billion.

 

In addition, the Company successfully completed a fund-raising and debt conversion which has resulted in Eden being debt free and with money in the bank.

 

I shall now provide you with a brief update on Eden's various commercial activities.

 

EU approval process

 

In May 2013 the three active substances used in the Company's lead product, 3AEY, were approved for use in plant protection products by the European Commission under Regulation (EC) No. 1107/2009 within the EU and this approval came into effect on 1st December 2013.

 

Whilst the EU granted approval for Eden's three active substances, certain additional confirmatory data were requested to be submitted and this work is on-going and is due to be completed by 30th November 2015.

 

Separate to this, Eden applied in October 2013 to have 3AEY approved in the southern EU zone. In November 2014, Eden received the first draft of the review of that application from the authorities in Malta. It is expected that the approval of 3AEY will be granted imminently in Malta, which will then provide the other southern EU zone member states 120 days within which to grant their approvals.

 

Clearly these approvals are very significant to Eden as it will be the culmination of a number of years' work and will allow our licensees Sumi-Agro France, Sipcam and Lachlan (once the Kenyan authorities have granted their approval following the approval in Malta) the ability to sell 3AEY to their customers.

 

3AEY

 

3AEY, Eden's lead product; a terpene based fungicide, has been out-licensed to a number of parties for a variety of applications throughout the world.

 

The rights to 3AEY have been licensed, on an exclusive basis, to Sumi-Agro France (France) and Sipcam (Italy and Spain). As has previously been announced, other Sumitomo group companies have also shown an interest in taking rights to 3AEY for certain territories and it is expected that further announcements will be made during the current year.

 

Once Malta has given its approval of 3AEY, Lachlan will be in a position to receive approval from the Kenyan authorities. This will allow sales there, primarily in the cut flower industry.

 

Nematodes

 

Eden is currently in negotiations with a number of interested parties who are looking to take the rights to Eden's nematicide product. The lead candidate is Eastman, with whom Eden is discussing terms for an agreement. It is expected that we will soon be able to update shareholders.

 

Earlier stage products

 

Eden is working with several potential partners to exploit early stage leads identified for the control of insect pests, such as Whitefly and Spider mites together with fungicidal applications to minimise post-harvest losses from spoilage organisms. Since the approval of its core three active substances, there have been renewed discussions with various parties to license these rights.

 

Animal Health - Bayer

 

Eden continues to work closely with Bayer Animal Health to complete the development of GO-E, terpene-based products for the American pet care market. As reported last year, it is expected that these products will be available for sale in 2015 and we are pleased to report good progress has been made in achieving this target.

 

Biocides

 

In 2014, TerpeneTech announced that it had successfully launched its first product, an odour neutraliser initially into the French market. TerpeneTech has made significant advances in the development and commercialisation of GO-E products since it signed its licence agreement with Eden and by the end of 2014 had launched a number of other products this year into the market.

 

The product sales by TerpeneTech have given rise to the first royalty payments to Eden, which were received in early 2015. Clearly this is a key milestone for a licensing company.

 

Human health

 

Work is on-going to further develop and commercialise the Eden head-lice product. Other human health opportunities are being explored with potential licensing partners.

 

Encapsulation

 

GO-E continues to draw interest from a number of different market sectors and we are currently exploring a number of those opportunities. The likely benefits that GO-E brings to existing products in terms of patent protection, resistance management and sustained delivery of active substances are clear to see, which is why the Eden Intellectual Property (IP) base is inherently very valuable.

 

Intellectual Property

 

A further four patents were granted in 2014 in Norway, South Korea, Canada and Mexico, which further strengthens our IP portfolio.

 

Eden also filed two new patents in 2014. The first is for the use of terpenes as preservatives and the second is for a sugar bait/terpene composition for use against mosquitos.

 

We are keen not only to maintain and exploit fully our existing IP portfolio, but, also to expand it where opportunities arise.

 

The Senior Management

 

During 2014, the management committee comprised:

 

Sir Ben Gill - Non-Executive Chairman (deceased 8th May 2014)

Tom Lupton - Non-Executive Director (Chairman with effect from 9th May 2014)

Ken Brooks - Executive Deputy Chairman (Non-Executive Director with effect from 1st September 2014)

Sean Smith - Chief Executive Officer (Appointed 1st September 2014)

Clive Newitt - Managing Director (Business Development Director with effect from 1st September 2014, deceased 16th February 2015)

Alex Abrey - Chief Financial Officer

 

Ken Brooks has given notice of his intention to retire from the Board at this year's AGM. We will have the opportunity at the AGM to thank Ken for his contribution to the Company over the last nineteen years.

 

Outlook

 

This year has already seen further changes at Eden. First, we were surprised and saddened by the untimely death of Clive Newitt who passed away on 16th February 2015. Clive was a key member of the Eden team and had been involved with us since 2005, before becoming a director in 2007. It is of great regret that he didn't get to see the conclusion of the regulatory approval and subsequent sales of 3AEY for which he worked so hard to achieve. He will be greatly missed by us all at Eden.

 

Moving forward, Eden has its new CEO, Sean Smith, who comes with a wealth of experience in both IP and the chemicals industry and who, I'm sure, will steer Eden to commercial success. Already, Sean has successfully overseen the conclusion of two important license agreements with Sumi-Agro France and Sipcam and the fund-raising and conversion of debt at the end of 2014 and he continues to bring opportunities to Eden which I believe will help to make 2015 a very successful year for your Company.

 

I wish him and all of his team at Eden every success and am confident that he will enable Eden to meet the high expectations that have been set.

 

 

 

T G Lupton

Chairman

27 March 2015

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For The Year Ended 31 December 2014

 

 

 

2014

2013

 

 

 

 

 

Notes

£

£

CONTINUING OPERATIONS

 

 

 

Revenue

2

99,855

80,223

Amortisation of intangible

assets

 

 

(635,035)

 

(630,269)

Other administrative expenses

 

(1,022,836)

(1,034,878)

Share based payments

 

(187,621)

-

 

 

 

 

OPERATING LOSS

 

(1,745,637)

(1,584,924)

Finance costs

4

(1,252,295)

(43,590)

Finance income

4

117

316

 

LOSS BEFORE INCOME TAX

 

5

 

(2,997,815)

 

(1,628,198)

Income tax

6

28,347

40,289

 

LOSS FOR THE YEAR

 

 

(2,969,468)

 

(1,587,909)

 

OTHER COMPREHENSIVE INCOME

 

 

-

 

-

 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

 

 

 

(2,969,468)

 

 

(1,587,909)

 

Prior year adjustment

 

 

 

 

 

712,044

 

TOTAL COMPREHENSIVE INCOME SINCE LAST ANNUAL REPORT

 

 

 

 

 

 

(875,865)

 

Earnings per share expressed

in pence per share:

 

 

7

 

 

Basic

 

-2.36

-1.30

Diluted

 

-2.36

-1.30

 

 

 

 

 

 

STATEMENT OF FINANCIAL POSITION

31 December 2014

 

 

 

2014

2013

 

 

 

 

 

Notes

£

£

ASSETS

 

 

 

NON-CURRENT ASSETS

 

 

 

Intangible assets

9

5,923,740

6,092,586

 

 

 

 

CURRENT ASSETS

 

 

 

Trade and other receivables

10

62,535

129,768

Cash and cash equivalents

11

414,980

311,347

 

 

477,515

441,115

LIABILITIES

 

 

 

CURRENT LIABILITIES

 

 

 

Trade and other payables

12

458,302

451,493

Financial liabilities - borrowings

 

 

 

Interest bearing loans and borrowings

13

-

402,600

 

 

458,302

854,093

NET CURRENT LIABILITIES

 

19,213

(412,978)

 

 

 

 

NET ASSETS

 

5,942,953

5,679,608

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Called up share capital

15

1,541,430

1,232,776

Share premium

16

26,014,049

23,277,511

Merger reserve

16

10,209,673

10,209,673

Warrant reserve

16

524,154

779,485

Retained earnings

16

(32,346,353)

(29,819,837)

 

 

 

 

TOTAL EQUITY

 

5,942,953

5,679,608

 

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

For The Year Ended 31 December 2014

 

 

Called up share capital

Share premium

Merger reserve

Warrant reserve

Retained earnings

Total

 

£

£

£

£

£

£

 

 

 

 

 

 

 

Balance at 1 January 2013

1,110,442

22,352,394

10,209,673

1,433,506

(28,885,949)

6,220,066

 

 

 

 

 

 

 

Loss and total comprehensive income

 

-

 

-

 

-

 

-

 

(1,587,909)

 

(1,587,909)

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

-  Issue of shares

122,334

925,117

-

-

-

1,047,451

-  Options granted

-

-

-

-

-

-

-  Options exercised/lapsed

-

-

-

(654,021)

654,021

-

 

 

 

 

 

 

 

Transactions with owners

122,334

925,117

-

(654,021)

654,021

1,047,451

 

 

 

 

 

 

 

Balance at 31 December 2013

1,232,776

23,277,511

10,209,673

779,485

(29,819,837)

5,679,608

 

 

 

 

 

 

 

Balance at 1 January 2014

1,232,776

23,277,511

10,209,673

779,485

(29,819,837)

5,679,608

 

 

 

 

 

 

 

Loss and total comprehensive income

 

-

 

-

 

-

 

-

 

(2,969,468)

 

(2,969,468)

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

-  Issue of shares

308,654

2,736,538

-

-

-

3,045,192

-  Options granted

-

-

-

187,621

-

187,621

-  Options exercised/lapsed

-

-

-

(442,952)

442,952

-

 

 

 

 

 

 

 

Transactions with owners

308,654

2,736,538

-

(255,331)

442,952

3,232,813

 

 

 

 

 

 

 

Balance at 31 December 2014

1,541,430

26,014,049

10,209,673

524,154

(32,346,353)

5,942,953

 

 

 

 

 

 

 

 

 

 

 

STATEMENT OF CASH FLOWS

For The Year Ended 31 December 2014

 

 

 

2014

2013

 

 

 

 

 

 

£

£

Cash flows from operating activities

 

 

 

Cash generated from operations

1

(848,939)

(1,285,277)

Finance costs paid

 

(109,703)

(989)

Tax credit received

 

28,347

40,289

 

 

 

 

Net cash from operating activities

 

(930,295)

(1,245,977)

 

 

 

 

Cash flows from investing activities

 

 

 

Capitalisation of development expenditure

 

(466,189)

(190,719)

Interest received

 

117

316

 

 

 

 

Net cash from investing activities

 

(466,072)

(190,403)

 

 

 

 

Cash flows from financing activities

 

 

 

Shareholders' loan - drawdown

 

-

360,000

Issue of equity shares

 

750,000

1,047,450

Loans

 

750,000

-

 

 

 

 

Net cash from financing activities

 

1,500,000

1,407,450

 

 

 

 

 

 

 

 

 

 

 

 

Increase/(decrease) in cash and cash equivalents

 

103,633

(28,930)

Cash and cash equivalents at beginning of year

2

311,347

340,277

 

 

 

 

Cash and cash equivalents at end of year

2

414,980

311,347

 

 

  

 

 

NOTES TO THE STATEMENT OF CASH FLOWS

For The Year Ended 31 December 2014

 

1.

RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

 

 

2014

2013

 

 

 

 

 

 

£

£

 

Loss before income tax

(2,997,815)

(1,628,198)

 

Amortisation charges

635,035

630,269

 

Equity share based payment charge

187,621

-

 

Finance costs

1,252,295

43,590

 

Finance income

(117)

(316)

 

 

 

 

 

 

(922,981)

(954,655)

 

Decrease/(increase) in trade and other receivables

67,233

(69,435)

 

Increase/(decrease) in trade and other payables

6,809

(261,187)

 

 

 

 

 

Cash generated from operations

(848,939)

(1,285,277)

 

         

 

 

2.

CASH AND CASH EQUIVALENTS

 

The amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect of these statement of financial position amounts:

 

Year ended 31 December 2014

 

 

 

31.12.14

1.1.14

 

£

£

Cash and cash equivalents

414,980

311,347

 

 

 

Year ended 31 December 2013

 

 

 

31.12.13

1.1.13

 

 

 

 

£

£

Cash and cash equivalents

311,347

340,277

 

 

3.

NON-CASH TRANSACTIONS

 

During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382 shares. Full details are included in Note 13 and 15.

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

For The Year Ended 31 December 2014

 

1. ACCOUNTING POLICIES

 

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

 

General information

Eden Research Plc is a company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The nature of the Company's operations and its principal activities are set out in the Chairman's Review above. The Company is quoted on the AIM Market in London.

 

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Company operates.

 

The Company has adopted the following revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Company's financial statements for the year beginning 1 January 2014.

 

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IFRS 13 Fair Value Measurement

IAS 19 (Revised) Employee Benefits

IAS 27 (Revised) Separate Financial Statements

IAS 28 (Revised) Investments in Associates and Joint Ventures.

IAS 32 Offsetting Financial Assets and Financial Liabilities

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting

Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27

Presentation of Items of Other Comprehensive Income - Amendments to IAS 1

Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7

Annual Improvements to IFRSs 2009-2011 Cycle

 

The directors have assessed that the adoption of these revisions and amendments did not have an impact on the financial position or performance of the Company.

 

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:-

 

IFRS 9 Financial Instruments (effective 1 January 2017)

IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)

 

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Company.

 

Going Concern

The financial statements have been prepared on a going concern basis which contemplates the realisation of assets and the settlement of liabilities in the ordinary course of business.

 

The Company has reported a loss for the year after taxation of £2,969,468 (2013: £1,587,909). Net current assets as at that date amounted to £19,213 (2013: £412,978 net current liabilities).

 

The directors have prepared budgets and projected cash flow forecasts for a period of two years from 31 December 2014 and they consider that the Company will be able to operate within the cash facilities that are available to it for this period. The ability of the Company to continue as a going concern is ultimately dependent upon the amounts and timing of cash flows from the exploitation of the Company's intellectual property and the availability of additional funding to meet the short term needs of the business until the commercialisation of the Company's portfolio is reached.

 

The forecasts adopted only include revenue derived from existing contracts and, while there is a risk these payments might be delayed if milestones are not reached, there is the significant potential upside from on-going discussions and negotiations with other parties as well as other opportunities.

 

In addition, the Company has relatively low fixed running costs and has a demonstrable ability to delay certain other costs, such as the forecast Research and Development expenditure, in the event of unforeseen cash restraints.

 

The directors are closely monitoring performance against cash flow projections that have been prepared for the period to 31 December 2014 and beyond and are confident that the Company will be able to generate the necessary cash resources over and above those referred to above.

 

On this basis the directors consider it appropriate to prepare the financial statements on 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.

 

Revenue recognition

Revenue is recognised only when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of revenue can be reliably estimated.

 

Revenue represents amounts receivable by the Company in respect of services rendered during the year in accordance with the underlying contract or licence, stated net of value added tax.

 

Royalty income and upfront payments are recognised as the royalties accrue in accordance with the terms of the underlying contract.

 

Amounts receivable under milestone agreements are recognised in accordance with the terms of the underlying agreement and are typically recognised upon the completion of the significant acts within the agreements. Revenue is specifically only recognised when the terms of any milestone are reasonably expected to be met and the relevant act has been completed as the Company has no contractual rights to the revenue until this point.

 

Licence fee revenue is recognised up-front as a sale of the Company if the Company has discharged all of its on-going obligations.

 

Intangible assets

Intellectual property, including development costs, is capitalised and amortised on a straight line basis over its estimated useful economic life of 10 years in line with the remaining life of the Company's master patent, which was originally 20 years. The useful economic life of intangible assets is reviewed on an annual basis.

 

Impairment of non-financial assets

The directors regularly review the intangible assets for impairment and provision is made if necessary. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

 

Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

 

An internally generated intangible asset arising from the Company's development activities is recognised only if all the following conditions are met:

 

- the project is technically and commercially feasible;

- an asset is created that can be identified;

- the Company intends to complete the asset and use or sell it and has the ability to do so;

- it is probable that the asset created will generate future economic benefits;

- the development cost of the asset can be measured reliably; and

- there are sufficient resources available to complete the project.

 

Internally-generated intangible assets are amortised on a straight line basis over their useful lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

 

Financial instruments

The Company uses certain financial instruments in its operating and investing activities that are deemed appropriate for its strategy and circumstances.

 

Financial assets and liabilities are recognised on the Statement of Financial Position when the Company has become a party to the contractual provisions of the instrument.

 

Financial instruments recognised on the Statement of Financial Position include cash and cash equivalents, trade receivables, trade payables and borrowings and fixed interest convertible debt.

 

Cash and cash equivalents comprise cash on hand and on demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

 

Interest bearing loans and overdrafts are recorded at the fair value received less any transaction costs. Subsequent to initial recognition such instruments are measured at amortised cost, using the effective interest method.

 

Financial assets

Trade receivables, loans and other receivables that have fixed or determinable payments are classified as "Loans and receivables" and are measured initially at fair value plus transaction costs and subsequently at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate, except for short term receivables when the recognition of interest would be immaterial.

 

Financial assets are assessed for impairment at each reporting date by considering the recoverable amount of the asset in comparison to its carrying value and any impairment recognised in the Statement of Comprehensive Income. Trade receivables are assessed for collectability and where appropriate the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account and changes in the carrying amount of the allowance account are recognised in the profit or loss in the Statement of Comprehensive Income.

 

Debt and equity instruments issued by the company

 

Loan notes

Where loans that were previously convertible have been converted to equity in accordance with the original terms of the contract as a result of an agreement between the note holder and the Company, the value of the loan and any associated accrued interest is transferred to equity at nil gain, nil loss.

 

The Company also enters into agreements to convert loans and creditors into equity which were not convertible under the original terms of the agreement. Where this is the case the Company applies the requirements of IFRIC 19 and recognises the issue of equity at the fair value of the instruments issued. Any profit or loss arising on the extinguishment of the liability is taken to profit or loss.

 

Convertible loans

Due to the nature of the arrangements management are required to make significant judgments in order to determine whether the conversion of loans has taken place in accordance with the original terms of the underlying agreement. Each conversion is considered individually. During the current year all conversions were deemed to have been made in accordance with the original terms of the agreements.

 

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

 

Financial liabilities

Financial liabilities such as trade payables and loans are classified as "Other financial liabilities" and are measured initially at fair value less transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, except for short term payables when the recognition of interest would be immaterial.

 

Non-executory contracts are recognised when all obligations due to the Company under the terms of the contract have been met, but the Company retains a financial liability. This financial liability is measured in accordance with the Company's accounting policy for the measurement of financial liabilities.

 

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the Company. All other leases are classified as operating leases.

 

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

 

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date.  Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

 

Share-based payments

The Company has applied the requirements of IFRS2 Share-Based Payments.

 

The Company operates an unapproved share option scheme for executive directors, senior management and certain employees.

 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that ultimately the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted, as long as other vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

Where the terms and conditions of options are modified before they vest, the increase in fair value of the options, measured immediately before and after the modification is also charged to the Statement of Comprehensive Income over the remaining vesting period.

 

Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural conditions.

 

Financial risk management

The Company's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risks), credit risk and liquidity risk. Risk management focuses on minimising any potential adverse effect on the Company's financial performance and is carried out under policies approved by the Board of Directors. Further detail is given in note 20 to the financial statements.

 

Current and deferred income tax

The tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

Critical accounting estimates and areas of judgement

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

 

Capitalised development costs

The directors have considered the recoverability of the internally generated intangible asset which has a carrying value of £1.9m. The projects continue to progress in a satisfactory manner and the directors are confident that the carrying amount of the asset will be recovered in full. This situation will be closely monitored and adjustments made in future periods if future market activity indicates that such adjustments are appropriate.

 

The key factors which could impact upon whether it remains appropriate to continue to capitalise intangible assets or on the impairment considerations include:

 

- The availability of the necessary finance and hence the ability of the Company to continue as a going concern.

- The assumptions surrounding the perceived market sizes for the products and the achievable market share for the Company.

- The successful conclusion of licensing arrangements will serve as an indicator as to the likely success of the projects and, as such, any need for potential impairment.

- The level of upfront, milestone and royalty receipts will also serve as a guide as to the net present value of the assets and whether any impairment is required.

 

Impairment of assets

The directors have considered the progress of the business in the current year, including a review of the potential market for its products, the progress the Company has made in registering its products and other key commercial factors to determine whether any indicators of impairment exist. Based upon the review management have carried out they are satisfied that no such factors exist and therefore a full impairment review on the Company's intangible assets has not been carried out.

 

Going concern

The directors have considered the ability of the Company to continue as a going concern and this is considered to be the most significant estimate made by the directors in preparing the financial statements.

 

The ability of the Company to continue as a going concern is ultimately dependent upon the amount and timing of cash flows arising from the capitalisation of the Company's intellectual property. The directors consider it is appropriate for the financial statements to be prepared on a going concern basis based on the estimates they have made, which are summarised further above in this announcement.

 

Convertible loans

Due to the nature of the arrangements management are required to make significant judgements in order to determine whether conversion of loans has taken place in accordance with the original terms of the underlying agreement.

 

2. SEGMENTAL REPORTING

 

IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for the resource allocation and assessing performance of the operating segments has been identified as the Board of Executive Directors as it is primarily responsible for the allocation of the resources to segments and the assessment of performance of the segments.

 

The Board of Directors monitor and then assess the performance of segments based on product type and geographical area using a measure of adjusted EBITDA. This is the result of the segment after excluding the share based payment charges, other operating income and the amortisation of intangibles. These items, together with interest income and expense are not allocated to a specific segment.

 

The segmental information for the year ended 31 December 2014 is as follows:

 

 

Data-Sharing

3AEY

Biocides

 Encapsulation

 

 

Europe

£

Europe

£

Unallocated

£

Europe

£

Europe

£

Total

£

Total segment revenue

16,935

63,493

1,339

12,888

5,200

99,855

Inter segment revenue

-

-

-

-

-

-

Revenue from external customers

16,935

63,493

1,339

12,888

5,200

99,855

Adjusted EBITDA

-

-

(992,981)

-

-

(992,981)

Amortisation

-

-

(635,035)

-

-

(635,035)

Depreciation

-

-

-

-

-

-

Share based payments

-

-

(187,621)

-

-

(187,621)

Other operating income

-

-

-

-

-

-

Net Finance costs

-

-

(1,252,295)

-

-

(1,252,295)

Income tax

-

-

28,347

-

-

28,347

Loss for the year

-

-

(2,969,468)

-

-

(2,969,468)

Total assets

-

-

6,401,255

-

-

6,401,255

Total assets includes:

 

 

 

 

 

 

Additions to non-current assets

-

-

466,189

-

-

466,189

Total liabilities

-

-

458,302

-

-

458,302

 

 

 

The segmental information for the year ended 31 December 2013 (as restated) is as follows:

 

 

Nematodes

3AEY

Biocides

 Encapsulation

 

 

USA

£

Europe

£

Unallocated

£

Europe

£

Europe

£

Total

£

Total segment revenue

5,927

54,274

1,248

14,124

4,650

80,223

Inter segment revenue

-

-

-

-

-

-

Revenue from external customers

5,927

54,274

1,248

14,124

4,650

80,223

Adjusted EBITDA

-

-

(954,655)

-

-

(954,655)

Amortisation

-

-

(630,269)

-

-

(630,269)

Depreciation

-

-

-

-

-

-

Share based payments

-

-

-

-

-

-

Other operating income

-

-

-

-

-

-

Net Finance costs

-

-

(43,274)

-

-

(43,274)

Income tax

-

-

40,289

-

-

40,289

Loss for the year

-

-

(1,587,909)

-

-

(1,587,909)

Total assets

-

-

6,533,701

-

-

6,533,701

Total assets includes:

 

 

 

 

 

 

Additions to non-current assets

-

-

190,719

-

-

190,719

Total liabilities

-

-

854,093

-

-

854,093

 

Revenues of £63,493 (2013: £54,274) are derived from multiple external customers, £7,937 Sipcam Iberia, £7,937 Sipcam Italia and £47,619 Sumi Agro. In the prior year revenue was derived from a single customer EcoStyle, from within the 3AEY segment.

 

Revenues of £12,888 (2013: £14,124) are derived from a single external customer, TerpeneTech, from within the Biocides segment. In the prior year the revenue was derived from the same customer.

 

Revenues of £16,935 (2013: £nil) are derived from a single external customer, Daymsa, from within the Data Sharing segment. In the prior year there was no revenue generated from the Data Sharing segment.

 

Revenues of £5,200 (2013: £4,650) are derived from a single external customer, Gowan, from within the Encapsulation segment. In the prior year the revenue was derived from Certis, a single external customer.

 

Revenues of £5,927 in 2013 were derived from a single external customer, FMC, from within the Nematodes segment.

 

Revenues of £16,935 (2013: £nil) are derived from a single external customer, Daymsa, from within the Data-sharing segment.

 

The Company's platform technology, yeast glucan encapsulation, is another business segment for which the Company is currently negotiating with a number of potential licensing partners.

 

 

3. EMPLOYEES AND DIRECTORS

 

2014

2013

 

£

£

Wages and salaries

259,333

283,333

Social security costs

22,541

27,310

 

 

 

 

281,874

310,643

 

The average monthly number of employees during the year was as follows:

 

 

2014

2013

 

 

 

Management

6

6

 

 

Staff costs, including executive directors' remuneration, are included within administrative expenditure in the Statement of Comprehensive Income.  The executive directors are considered to also be the key management personnel of the Company.

 

 

2014

2013

 

£

£

Director's remuneration

219,750

233,333

 

 

 

 

219,750

233,333

Non-executive directors' fees

39,583

50,000

 

 

 

Total directors' emoluments

259,333

283,333

 

 

 

Share based payment charge relating to all directors

58,610

-

 

 

 

 

           

During the year the remuneration of the highest paid director was £105,083 (2013: £95,000).

 

2014

 

Salary

 

Bonus

 

Fees

Share based payments

 

Total

 

£

£

£

£

£

A Abrey

75,000

12,500

-

17,583

105,083

K Brooks

30,000

-

30,000

35,166

95,166

C Newitt

33,333

-

-

5,861

39,194

B Gill

-

-

12,500

-

12,500

T Lupton

30,000

-

-

-

30,000

S Smith

36,000

-

-

-

36,000

 

 

 

 

 

 

 

204,333

12,500

50,000

58,610

317,943

 

 

2013

 

Salary

 

Bonus

 

Fees

Share based payments

 

Total

 

£

£

£

£

£

A Abrey

75,000

20,000

-

-

95,000

K Brooks

60,000

10,000

-

-

70,000

C Newitt

33,333

10,000

-

-

43,333

B Gill

-

-

50,000

-

50,000

T Lupton

25,000

-

-

-

25,000

 

 

 

 

 

 

 

193,333

40,000

50,000

-

283,333

4. NET FINANCE COSTS

 

 

2014

2013

 

 

 

 

£

£

Finance income:

 

 

Deposit account interest

117

316

 

 

 

Finance costs:

 

 

Bank interest

-

24

Exchange variances

6,457

966

Finance fees

1,245,838

42,600

 

 

 

 

1,252,295

43,590

 

 

 

Net finance costs

1,252,178

43,274

 

5. LOSS BEFORE INCOME TAX

 

The loss before income tax is stated after charging:

 

 

2013

2013

 

 

 

 

£

£

Licences and trademarks amortisation

36,276

36,273

Development costs amortisation

179,824

154,511

Intellectual property amortisation

439,488

439,485

Auditors' remuneration

16,000

22,631

Directors' emoluments  

264,733

283,333

Foreign exchange differences  

6,457

966

Equity share based payments

187,621

-

 

6. INCOME TAX

 

Analysis of tax income

 

 

2014

2013

 

 

 

 

£

£

Current tax:

 

 

Tax

(28,347)

(40,289)

 

 

 

Total tax income in statement of profit or loss and other comprehensive income

 

(28,347)

 

(40,289)

 

Corporation tax

 

No tax charge arises on the results for the year (2013: £nil). Tax losses carried forward amount to approximately £20,807,048 (2013: £18,612,249). The tax credit represents the research and development tax credit receivable for the year ended 31 December 2014.

 

Factors affecting the tax charge

 

The UK standard rate of corporation tax is 21.49% (2013: 23.25%).  Current tax assessed for the financial year as a percentage of the loss before taxation is nil (2013: nil)

 

The differences are explained below:

 

 

2014

2014

2013

2013

 

£

%

£

%

Standard rate of corporation tax in the UK

 

 

(21.49)

 

 

(23.25)

Loss before tax at standard rate of tax

(644,230)

 

(378,556)

 

 

 

 

 

 

Effects of Losses carried forward

 603,711

20.0

342,291

22.0

Other expenses not deductible for tax purposes

 

40,519

 

1.0

 

36,265

 

2.0

Research and development tax relief


(28,347)

 

(1.0)

 

(40,289)

 

(2.0)

 

 

 

 

 

Total current tax credit and tax rate %


(28,347)

 

(1.0)

 

(40,289)

 

(2.0)

 

 

 

 

 

Deferred tax

 

 

 

 

Unprovided deferred tax asset

4,178,347

 

3,739,438

 

 

The unprovided deferred tax asset arises principally in respect of trading losses, together with other minor timing differences at 21% (2013: 23%) and has not been recognised due to the uncertainty of timing of future profits against which it may be realised.

 

7. EARNINGS PER SHARE

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

 

Reconciliations are set out below:

 

 

 

 

Earnings

£

2014

Weighted average number of shares

 

 

Per-share amount pence

Basic EPS

 

 

 

Earnings attributable to ordinary shareholders

(2,969,468)

125,752,471

-2.36

Effect of dilutive securities

-

-

-

 

 

 

 

Diluted EPS

 

 

 

Adjusted earnings

(2,969,468)

125,752,471

-2.36

 

 

 

 

 

 

 

 

Earnings

£

2013

as restated

Weighted average number of shares

 

 

Per-share amount pence

Basic EPS

 

 

 

Earnings attributable to ordinary shareholders

(1,587,909)

121,970,374

-1.30

Effect of dilutive securities

-

-

-

 

 

 

 

Diluted EPS

 

 

 

Adjusted earnings

(1,587,909)

121,970,374

-1.30

 

Due to the loss for the year there is no dilution of the loss per share arising from options in existence.

 

8. PRIOR YEAR ADJUSTMENT IN RELATION TO 2013

 

Following the acquisition of the Company's master patent, the Board, acting on advice, had reconsidered the substance of the arrangement and had formed the view that the obligation to pay future liabilities was an executory contract. This judgement arose from an obligation for the significant on-going involvement of the vendor, through to commercialisation of the product.

 

In prior years the arrangement was considered to be non-executory and accounted for in line with the Company's accounting policy. At the time of the acquisition the Board estimated the present value of all future payments under the agreement and included this value in the acquisition cost of the asset. The liability was then subsequently remeasured at each reporting date to its present value, with movements included in finance expense for the period.

 

The impact of the change was that the estimated future liability in respect of this contract was not recognised either as a liability or in the cost of the underlying asset. The only amounts included in the cost of the asset relate to the initial consideration paid on acquisition of the asset. When the contract ceased to be executory the liability and the related expense will be recognised in the financial statements.

 

The result of this was a reduction in other payables, the cost of the related intangible assets, the annual amortisation charge arose on those assets and the annual finance charge in relation to the unwinding of the other payables. This resulted in increases in the Retained Earnings at 31 December 2013 and 31 December 2012 of £767,871 and £712,044 respectively.

  

9. INTANGIBLE ASSETS

 

 

 

Licences and trademarks

 

Development costs

 

Intellectual property

 

 

Totals

 

£

£

£

£

COST

 

 

 

 

At 1 January 2014

447,351

2,513,251

8,591,774

11,552,376

Additions

-

466,189

-

466,189

 

 

 

 

 

At 31 December 2014

447,351

2,979,440

8,591,774

12,018,565

 

 

 

 

 

AMORTISATION

 

 

 

 

At 1 January 2014

337,144

869,902

4,252,744

5,459,790

Amortisation for year

15,723

179,824

439,488

633,035

 

 

 

 

 

At 31 December 2014

352,867

1,049,726

4,692,232

6,094,825

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

At 31 December 2014

94,484

1,929,714

3,899,542

5,923,740

 

 

 

 

Licences and trademarks

 

Development costs

 

Intellectual property

 

 

Totals

 

£

£

£

£

COST

 

 

 

 

At 1 January 2013

447,351

2,322,532

8,591,774

11,361,657

Additions

-

190,719

-

190,719

 

 

 

 

 

At 31 December 2013

447,351

2,513,251

8,591,774

11,552,376

 

 

 

 

 

AMORTISATION

 

 

 

 

At 1 January 2013

300,871

715,391

3,813,259

4,829,521

Amortisation for year

36,273

154,511

439,485

630,269

 

 

 

 

 

At 31 December 2013

337,144

869,902

4,252,744

5,459,790

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

At 31 December 2013

110,207

1,643,349

4,339,030

6,092,586

 

 

The amortisation charge is included within administration expenses. Intellectual property represents intellectual property in relation to use of encapsulated terpenes in agrochemicals. The remaining useful economic life of that asset is fourteen years.

 

An annual impairment review is undertaken by the Board of Directors only where there are indicators that an impairment may exist. The directors have considered the progress of the business in the current year, including a review of the potential market for its products, the progress the Company has made in registering its products and other key commercial factors to determine whether any indicators of impairment exist. Based on the review management have carried out they are satisfied that no such factors exist and as such a full impairment review on the Company's intangible assets has not been carried out.

 

A full impairment review was carried out using discounted cashflow forecasts.  The result of this review was that the conclusion that the Intellectual Property is not impaired in respect of its carrying value.

 

An independent valuation was undertaken by PharmaVentures Limited in 2010 on a number of the Company's product programmes and the estimated future value exceeds the current carrying value.

 

The valuers used an industry-standard methodology that combines discounted cash flow projections with decision tree analysis to allow explicitly for development risk.  For each programme an expected net present value was derived, which provides a measure of the programme's current economic value.

 

The valuation was carried out on Eden's botrytis, powdery mildew and nematode products using third party information on the market sizes and based on assumptions with regard to the potential market share achievable.

 

The Estimated Net Present Value of 3AEY, Eden's lead botryticide product, alone exceeded the current carrying value of the Company's intellectual property.

 

The key assumptions used in completion of the valuation included:

 

-  The projected market sizes for the key products which the Company is developing. These include a   projected market of $214m for 3AEY, $100m for Powdery Mildew, and $296m for nematodes.

-  The projected market share attainable by the Company. In preparing the valuation, a base projected market share growing to 5% of the relevant markets has been assumed.

-  As the nature of the Company's revenue streams are a mixture of milestone payments, licence         income and royalties, there are no specific projected growth rates used - the timing of the attainment of the milestones which are attainable on project by project basis is a key assumption in the forecasts.

-  The discounted cash flows have assumed a discount factor of 9%.

 

All revenues have been projected to come from the cash generating units identified in the segmental reporting and Chairman's review, namely the key product lines of the Company.

 

During the current year the Company entered into an agreement to acquire an updated version of the Company's core underlying technology under similar terms to the existing agreement. Whilst the technology and liability are legally distinct from the superseded versions, management are of the opinion that in substance they are the same.

 

10. TRADE AND OTHER RECEIVABLES

 

2014

2013

 

£

£

Current:

 

 

Trade and other receivables

34,393

117, 474

VAT recoverable

28,142

12,294

 

 

62,535

 

129,768

 

The directors consider that the carrying value of trade and other receivables approximates to the fair value.  There are no debts impaired at 31 December 2014 or 2013. Details of debts past due but not impaired are given in note 20.

 

11. CASH AND CASH EQUIVALENTS

 

2013

2013

 

£

£

 

Short term bank deposits

 

414,980

 

311,347

 

The carrying amount of these short term bank deposits approximates to the fair value.

 

12. TRADE AND OTHER PAYABLES

 

 

2014

2013

 

£

£

Current:

 

 

Trade payables

291,687

291,190

Other payables

22,376

5,779

Accruals and deferred income

154,524

 

 

 

 

458,302

451,493

 

 

The directors consider that the carrying value of trade and other payables approximates to their fair value. See note 20 for disclosure of the amount of trade payables denominated in foreign currency. See Directors' Report for disclosure of the average credit period taken.

 

13. FINANCIAL LIABILITIES - BORROWINGS

 

 

 

 

 

2013

2013

 

£

£

Current:

 

 

Other loans

-

402,600

 

During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382 shares. Full details are included in Note 15.

 

 

14. FINANCIAL ASSETS AND LIABILITIES

 

 

 

 

 

 

Note

2014

2013

 

 

£

£

Financial assets at amortised cost

 

 

 

Other receivables

10

62,535

129,768

Cash and cash equivalents

11

414,980

311,347

 

 

 

 

 

 

477,515

441,115

 

Financial liabilities measured at amortised cost

 

 

Note

2014

2013

Current:

 

 

£

£

Other loans

13

-

402,600

Trade and other payables

12

458,302

451,493

 

 

 

 

 

 

458,302

854,093

 

 

Other loans are non-interest bearing and there are no fixed terms for repayment.

 

The loan balances were secured by a fixed and floating charge over the Company's assets. More details in relation to this charge are included within note 20.

 

Other loans

£

Loan balance as at 1 January 2013

-

Loans issued in the year

360,000

Interest charged in the year

42,600

Loan notes repaid in the year

-

Loan notes converted in the year

-

 

 

Loan balance as at 31 December 2013

402,600

 

 

New loans issued in the year

750,000

Finance costs and interest charges in the year

1,142,592

Loan notes repaid in the year

-

Loan notes converted in the year

(2,295,192)

 

 

Loan balance as at 31 December 2014

-

 

The loans converted during the year were converted into 20,865,382 ordinary shares. The fair value of the shares was deemed to be 11p; finance costs of £1,142,592 were recognised on conversion in accordance with IFRIC 19, being the difference between the carrying value of the debt and the fair value of the equity issued to extinguish it.

 

15. CALLED UP SHARE CAPITAL

 

 

 

 

 

 

 

 

 

 

 

Number:

 

Class:

 

Nominal

 

2014

 

 

2013

 

 

value:

 

£

 

 

£

 

154,142,959

 

Ordinary

 

0.01

 

1,541,430

 

1,232,776

 

 

 

 

 

 

 

Alloted, issued and fully paid

 


 

Number:

 

Class:

 

Nominal

 

2014

 

 

2012

 

 

value:

 

£

 

 

£

 

154,142,959

 

Ordinary

 

0.01

 

1,541,430

 

1,232,776

(2013: 123,277,577)

 

 

 

 

 

 

 

 

During the year the Company issued a total of 30,865,382 £0.01 ordinary shares for a total consideration of £3,045,192.

 

On 27 November 2014 Company issued 10,000,000 £0.01 ordinary shares for a consideration of £0.075 per share, giving a total consideration of £750,000.

 

On 4 December 2014 a long term loan of £2,295,192 was converted into 20,865,382 shares at a price of 11p per share.

 

The number of £0.01 ordinary shares issued in the year totalled 30,865,382 (2013: 12,233,337).

 

Date

Number of ordinary shares

Aggregate nominal value

Issue Price

Premium on issue

Total share premium

 

 

£

£

£

£

27/11/2014

10,000,000

100,000

0.075

0.065

650,000

04/12/2014

20,865,382

208,654

0.110

0.100

2,086,538

 

 

 

 

 

 

 

 

308,654

 

 

2,736,538

16. RESERVES

 

 

Retained earnings

Share premium

Merger reserve

Warrant reserve

 

Totals

 

£

£

£

£

£

At 1 January 2014

(29,819,837)

23,277,511

10,209,673

779,485

4,446,832

Deficit for the year

(2,969,468)

-

-

-

(2,969,468)

Share issue

-

2,736,538

-

-

2,736,538

Options exercised/lapsed

442,952

-

-

(442,952)

-

 

-

-

-

187,621

187,621

 

 

 

 

 

 

At 31 December 2014

(32,346,353)

26,014,049

10,209,673

524,154

4,401,523

 

The merger reserve arose on the acquisition of a subsidiary undertaking in a prior year for which merger relief was permitted under the Companies Act 2006. The warrant reserve represents the fair value of share options and warrants granted, and not exercised or lapsed, in accordance with the requirements of IFRS 2 Share Based Payment.

 

17. CAPITAL COMMITMENTS

 

The Company had no capital commitments at 31 December 2014 (2013: £nil).

 

18. RELATED PARTY DISCLOSURES

 

Disclosures required in respect of IAS 24 regarding remuneration of key management personnel are covered by the disclosure of directors' remuneration included within note 3.

 

Transactions with other related parties are set out below:

 

During the year, the Company traded with A H Brooks, of which K W Brooks, a director, is a partner. The transactions in aggregate were as follows:-

 

2014

 

2012

 

£

 

 

£

 

Rent 

 

30,000

 

30,000

Provision of consulting services

 

25,000

 

25,000

Trade payables due at the year end

 

8,500

 

8,588

             

 

During the year, the Company traded with Ricewood Limited, of which A Abrey, a director, is a director and shareholder, in respect of consultancy services, as follows:-

 

2014

 

2013

 

£

 

 

£

 

Provision of consultancy services

 

20,000

 

18,333

Trade payables due at the year end

 

2,416

 

2,590

             

 

During the year, the Company traded with Hawkhills Consultancy Limited, of which B Gill, a director, was a director and shareholder, in respect of director's fees, as follows:-

 

2014

 

2013

 

£

 

 

£

 

Director's fees

 

12,500

 

50,000

Trade payables due at the year end

 

-

 

30,000

             

 

The directors regard all the transactions disclosed above as being in the normal course of business and the transactions were enacted at arms' length.

 

Liabilities include the following loans advanced by the shareholders of the Company:-

 

 

2014

 

2013

 

£

 

£

Oxford Capital Limited

-

 

402,600

 

 

 

 

 

-

 

402,600

 

During the year debt, including finance charges, totalling £2,295,192 was converted into 20,865,382 shares. Full details are included in Note 13 and 15.

 

The Company was party to a guarantee and debenture entered into on 29 December 2008 whereby all sums due to Oxford Capital Limited were secured by a first fixed and floating charge over the assets of the Company.

 

19. SHARE-BASED PAYMENT TRANSACTIONS

 

Share Options

 

Eden Research Plc operates an unapproved option scheme for executive directors, senior management and certain employees.

 

2013

 

2013

 

 

Weighted average exercise price (pence)

 

 

Number

Weighted average exercise price (pence)

 

 

Number

Outstanding at the beginning of the year

 

19


6,350,000

 

19

 

6,770,000

Granted during the year

8

1,500,000

-

-

Lapsed during the year

12

(3,200,000)

58

(420,000)

 

 

 

 

 

 

12

4,650,000

17

6,350,000

 

The exercise price of options outstanding at the end of the year ranged between 10p and 18p (2013: 10p and 26p) and their weighted average contractual life was 2.1 years (2013: 1.8 years). None of the options have vesting conditions.

 

The share based payment charge for the year was £187,621 (2013: £nil). The weighted average fair value of each option granted during 2014 was 4p.

 

The following information is relevant in the determination of the fair value of options granted during the year under the unapproved options scheme operated by Eden Research Plc.

 

Equity-settled

 

Option price model used  

Black Scholes

Weighted average share price at grant date (pence)

8

Exercise price (pence)

12

Weighted average contractual life (days)

668

 

 

Expected volatility

64.4%

Expected dividend growth rate

-

Risk-free interest rate   

0.95%

 

Expected volatility is calculated based on historic share price movements.

 

 

Warrants

 

 

2014

 

2013

 

 

 

Weighted average exercise price (pence)

 

 

 

Number

Weighted average exercise price (pence)

 

 

 

Number

 

 

 

 

 

Outstanding at the beginning of the year

14

6,681,875

14

6,096,875

Granted during the year

10

2,760,000

-

-

Lapsed during the year

18

(651,875)

-

(5,450,000)

 

 

 

 

 

 

-

3,340,000

-

1,231,875

 

 

The exercise price of warrants outstanding at the end of the year ranged between 1p and 30p (2013:13p and 30p) and their weighted average contractual life was 4.5 years (2013: 0.1 years). None of the warrants have vesting conditions.

 

The weighted average fair value of each warrant granted during the year was 5p (2013: £nil).

 

20. FINANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES

 

Credit risk

 

 

2014

£

2013

£

Cash and cash equivalents

414,980

311,347

Trade receivables

34,393

50,107

 

449,373

361,454

 

The average credit period for sales of goods and services is 30 days. No interest is charged on overdue trade receivables. At 31 December 2014 trade receivables of £34,393 (31 December 2013: £50,107) were past due but are considered by the directors to be recoverable in full.

 

Trade receivables of £34,393 (2013: £50,107) at the reporting date are held in Euro (2013: Sterling)

 

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.

 

 

2014

£

2013

£

Trade payables

291,687

291,190

Other payables

22,376

5,779

Accruals and deferred income

144,239

154,524

Other loans

-

402,600

 

458,302

854,093

 

The carrying amount of trade payables approximates to fair value.

 

The average credit period on purchases of goods is 30 days. No interest is charged on trade payables. The Company has policies in place to ensure that trade payables are paid within the credit timeframe or as otherwise agreed.

 

Details of the loans are disclosed in note 14 to the financial statements. The Company currently finances their operations partly through these borrowings. The Company borrows in pounds sterling generally at fixed interest rates.

 

Credit risk

As explained above, the directors consider there is no material exposure to credit risk at the reporting date.

 

Currency risk

The Company publishes its financial statements in pounds sterling and conducts some of its business in US dollars and Euros. As a result, it is subject to foreign currency exchange risk due to exchange movements, which will affect the Company's transaction costs and translation of the results. No financial instruments are utilised to manage risk and currency gains, and losses are charged to the Statement of Comprehensive Income as incurred. At the year end, the Company had the following net foreign currency balances in liabilities.

 

 

2014

2013

 

£

£

US dollars

94,811

61,937

Euro

89,273

6,139

 

 

 

 

184,084

68,076

 

 

Liquidity risk

 

Short-term flexibility is achieved by shareholder loans. The interest rate profile and maturity profile of financial liabilities is set out below:-

 

The interest rate profile of the Company's financial liabilities at 31 December 2014 was:-

 

 

 

 

 

Total

 

Fixed rate financial liabilities

Financial liabilities on which no interest is paid

 

£

£

£

Sterling

 

 

 

2014

274,218

-

274,218

2013

786,017

-

786,017

 

 

 

 

Euro

 

 

 

2014

89,273

-

89,273

2013

6,139

-

6,139

 

 

 

 

US Dollars

 

 

 

2014

94,811

-

94,811

2013

61,937

-

61,937

 

 

 

 

Weighted average interest rate

Weighted average period for which rate is fixed

Weighted average period until maturity

 

%

Years

Years

Sterling

 

 

 

2014

7.5

1.0

1.0

2013

7.5

1.0

1.0

 

All the Euro and US Dollar liabilities are held within trade creditors and are non interest bearing.

 

 

 

Maturity of financial liabilities

The maturity profile of the Company's financial liabilities at 31 December was as follows:-

 

 

2014

2013

 

£

£

In one year or less, or on demand

458,302

854,093

 

 

 

 

458,302

854,093

 

Liquidity risk is managed by regular monitoring of the Company's undrawn borrowing facilities, levels of cash and cash equivalents, and expected future cash flows, and availability of loans from shareholders. See note 1 for further details on the going concern position of the Company.

 

Market price risk

The Company's exposure to market price risk comprises interest rate and currency risk exposures. It monitors these exposures primarily through a process known as sensitivity analysis. This involves estimating the effect on results before tax over various periods of a range of possible changes in interest rates and exchange rates. The sensitivity analysis model used for this purpose makes no assumptions about any interrelationships between such rates or about the way in which such changes may affect the economies involved. As a consequence, figures derived from the Company's sensitivity analysis model should be used in conjunction with other information about the Company's risk profile.

 

The Company's policy towards currency risk is to eliminate all exposures that will impact on reported results as soon as they arise. This is reflected in the sensitivity analysis, which estimates that five and ten percentage point increases in the value of sterling against all other currencies would have had minimal impact on results before tax.

 

On the other hand, the Company's policy is to accept a degree of interest rate risk as long as the effects of various changes in rates remain within certain prescribed ranges. On the basis of the Company's analysis, the only financial liabilities held by the Company are loans which are subject to a fixed rate of interest. As such it is considered that any increases in interest rates would not have had an impact on the Company's loss before tax for the year.

 

Capital risk management

The primary objective of the Company's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholder value.

 

The Company seeks to enhance shareholder value by capturing business opportunities as they develop. To achieve this goal, the Company maintains sufficient capital to support its business.

 

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions.

 

The Company looks to maintain a reasonable debt position by repaying debt or issuing equity, as and when it is deemed to be required.

 

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2014 and 31 December 2013.

 

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company's policy is to keep the gearing ratio below 10% (2013: below 10%).The Company includes within net debt, interest bearing loans and borrowings, a loan from a venture partner, trade and other payables, less cash and cash equivalents.

 

2014

2013

 

£

£

Borrowings

-

402,600

Less: Cash and cash equivalents

(414,980)

(311,347)

 

 

 

Net debt

(414,980)

91,253

Total equity

5,942,953

5,679,608

 

 

 

Total capital

5,527,973

5,770,861

 

 

 

Gearing ratio

0%

-2%

 


This information is provided by RNS
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