Latest Results
Preliminary Results for the year ended 31 December 2008
Eden Research plc (PLUSMARKETS:EDE), a leading UK agrochemical development company, today announces its preliminary results for the year ended 31 December 2008. Eden's strategy is focused on the development and commercialization of terpene-based technology for agricultural use.
Chairman's Review
Overview
2008 saw Eden's promising technology progressing steadily to commercialisation. Emphasis was put on the following activities:
- completing the key European regulatory process required to allow commencement of initial sales of our lead fungicide (3AEY), for control of botrytis;
- further developing our products for the control of nematodes with a number of development trials in high value vegetable crops in Southern Europe;
- continuing work to exploit the potential of our products for control of spider mites and whitefly in vegetable crops;
- developing new formulation technology to utilise the properties of terpenes to improve ease of use to the grower through granule formulation and increased product loading which will allow the same amount of actives to be applied at a lower field use rate;
- identifying potential to control post harvest soft rot diseases for high value and highly perishable fruit and vegetables;
- identifying further insect pest applications for our terpene products in a range of uses both in agriculture/horticulture and household and personal care markets;
- strengthening our relationships with our existing commercial partners to ensure the opportunities for our products in the major agricultural chemical markets are fully exploited; and
- identifying further relationships with potential commercial partners, especially for new fungicidal uses of our products.
Bringing 3AEY to Market
In 2008 our efforts concentrated on regulatory matters relating to our lead product 3AEY. Following the submission of the regulatory dossier, 2008 has been a period when the regulatory authorities reviewed the submitted data and made their conclusions leading to their interim summary being published in early 2009. In mid 2008, Eden was informed of a significant milestone in that the dossiers had passed the regulatory authority completeness check and the reviews had begun.
By achieving approval for each of the active ingredients in 3AEY, this will lead to significant cost saving in terms of both R&D regulatory costs and timelines for new products based around these active ingredients.
Our partners in Europe - Redestos and Cheminova - have also been active in increasing the fund of efficacy data, with ongoing regulatory testing programmes on grapes in France and Germany, which were additional countries to those originally adopted. These will be repeated and expanded in 2009, with further regulatory efficacy testing on crops such as strawberries and tomatoes.
This work alongside Eden's own efficacy testing on grapes has continued to reveal that 3AEY performs as well as the standard conventional chemistry at controlling grape botrytis.
Nematodes
Following the screening work in previous years, Eden concentrated in 2008 on testing the three most promising products in development field trials in Europe.
The development work, which will be the first step towards a regulatory dossier, examined efficacy against a number of nematode species attacking crops including tomato, peppers, cucurbits, beans and carrots. All of these crops suffer damage usually resulting in high yield losses to the growers from nematodes and/or are affected by diseases spread by a variety of nematode species. Results from these trials are due mid 2009 as the main yield loss/damage is only visible at the end of the growing season, but early indications on crop growth is already showing positive benefits for the Eden treatments under investigation, where the crops are looking more healthy than the untreated plants.
Conventional nematode products are formulated from highly toxic insecticides, and several of these products will be banned from use in the near future in Europe. There is significant interest on bringing a low risk terpene product into this well established commercial market. Eden therefore plans to place emphasis on finalising the best terpene combinations, rates and formulations in 2009, and begin registration trials leading to regulatory submission in the near future.
Discussions with a number of suitable commercial partners are therefore ongoing that are expected to lead to joint venture (JV) development of this strand of our technology in 2009.
Spider Mites and Whitefly
Following the successful screening trials of several Eden terpene products in early 2008 on common horticultural glasshouse pests e.g. spider mite and whitefly, a number of lead candidate Eden terpene products were sent for field testing in key glasshouse crops such as tomato, pepper and beans in Southern Europe. As well as showing excellent pest control in the screening, these products also showed no or very little activity on a number of key beneficial insects used in glasshouse crops as part of IPM (Integrated Pest Management) strategies. Conventional insecticides tend to be very broad-spectrum and will kill the beneficials as well as the target pests.
The first data at the end of 2008 confirmed the screening results with excellent control of whitefly from two Eden terpene products which was superior to the standard registered bio-pesticide used as a comparison in the field trials. The remaining spider mite trials will not be completed until early 2009 and further trials are planned for 2009 as part of the first stage of the registration process.
Other activities
In addition to our main emphasis on fungicides, acaricide and nematode control products we have continued to identify the potential of encapsulated terpenes by:
- Developing new granule formulations to further expand product usage once commercialised;
- Identifying further insect pest applications for our terpene products in a range of uses both in agriculture/horticulture and household and personal care markets; and
- Identifying potential use of Eden's terpene products for controlling diseases in fruit and vegetables post harvest. Loss of potentially valuable crops from soft rot diseases after harvest is a major issue to growers worldwide.
Commercial Prospects
As alluded to already, since concluding the commercial agreement with Cheminova in the first half of 2007 they, as part of the agreement, have been progressing efficacy trials that will maximise the potential for usage of 3AEY in their territories. Field testing in France and Germany is already part completed and seven additional territories were added for development in 2009 onwards.
A licensing agreement was signed by Lachlan Kenya Limited for Kenya, Uganda, Burundi, Malawi, Ethiopia, Zimbabwe, Tanzania and Rwanda for use in Food Crop Production and Floriculture. Lachlan are exclusive marketing and distribution agents in East Africa for a number of international principals.
The licence agreement provides for Lachlan to pay initial and milestone payments totalling USD$250,000 plus royalty payments once marketing of the products begin.
Lachlan and Eden will work in partnership together to bring a range of products to the food crop production and floriculture markets in these territories. Following Eden's licensing model, Lachlan will undertake the cost to obtain registration of the products in each country which will be greatly supported from work done to date on Eden's lead product 3AEY.
Lachlan's position as a market leader in distribution of agricultural products in East and Southern Africa will help Eden's products penetrate existing markets.
Interest in and support for our technology from distributors, growers and regulators continues. During the period, Eden has progressed a number of potential partnerships of its technology for plant protection and also further uses of the IP in new areas such as animal health.
Outlook
Eden's team has, as highlighted, new project areas for initial testing of both existing and new combination terpene products in 2009 leading to continued development and registration of the terpene products in global agriculture and horticulture.
The future of a wide range of traditional chemicals is under threat from the regulators especially in the EU with a large number coming up for review between 2012 and 2020 and many expected to be banned. This opens up a huge potential for a wide range of uses for Eden's low risk products and the continued success of Eden Research plc in developing and registering a wide range of products into the global market.
Ken Brooks
Chairman
16 March 2009
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2008
The directors present their report with the financial statements of the company and the group for the year ended 31 December 2008.
PRINCIPAL ACTIVITY
The principal activity of the Group in the year under review was the development and marketing of intellectual property, particularly in the area of terpenes and other health-related projects.
DIVIDENDS
The loss for the year after taxation amounted to £2,101,237 (2007 : £2,463,869). The directors are unable to recommend any dividend.
REVIEW OF BUSINESS
The review of this year's business activities is as set out in the Chairman's Review.
The key performance indicators of the business are that of the development of the Group's products and the management of its cash position.
The Group has capitalised £0.6m of development expenditure in the year which is a reflection of the continued development of the Group's products. In addition to this, £0.3m of patent fees have been incurred to protect the Group's biggest asset; its intellectual property.
The increase in the shareholder loans during the year reflects the on-going management of the Group's cash position.
The progress of the development of the Group's products is measured against internally set timescales as well as against the regulatory process which will result in the registration of products.
The Chairman's Review contains an update regarding this progress.
Cash is managed by tightly controlling the Group's creditor position and through the provision of convertible shareholder loans.
Results
Revenue in 2008 was £0.1 million, down from £0.4 million in 2007. Operating loss for the year was £2.0 million compared to £2.5 million for the previous year. Loss before tax was £2.1 million, down from £2.6 million in 2007.
The loss per share was 3.86 pence compared to 5.13 pence in 2007.
Trading
Revenue in 2008 consisted of a milestone payment received from Cheminova AS, as part of the consideration of the license agreement signed in May 2007. Further payments of €1.6 million are to be paid in due course, under the same licensing agreement, in line with specific milestones.
Administrative expenses, (excluding the amortisation of intangible assets and share based payments charge) were £1.3 million. This reflects IAS 38 which has resulted in the capitalisation of £0.6 million of development expenditure in the year (2007 : £0.6m), but, also shows the consistent policy of keeping a low head count in order to maintain a low level of overheads.
Intellectual property, including development expenditure, is written off over sixteen years in line with the remaining life of the Group's master patent.
Financing
During the year, the Group received £0.8 million from the issue of equity shares from the exercise of options and warrants.
Also during the year, the Group received loans from shareholders of £0.9 million. In addition, £0.4 million of debt was either converted into equity or repaid. The holders of the convertible loans have confirmed their on-going commitment and support to the Group for the foreseeable future, a period of at least one year from the date of approval of these financial statements.
With this on-going support and the receipt of milestone payments and royalty revenues in the near future, the Group has sufficient funds to reach commercialisation and be cash generative.
The on-going financial support by shareholders has, up until now, been the main source of finance to the Group. This has primarily been by way of convertible loans which, the Directors believe, provide fair, cost effective financing. With this continued support, along with milestone payments that are due from existing licensing agreements as well as expected further licensing agreements, it is expected that the requirement for this type of financing will gradually diminish in the foreseeable future.
RESEARCH AND DEVELOPMENT
An indication of research and development activities is included within the Chairman's Review.
FUTURE DEVELOPMENTS
An indication of future developments is included within the Chairman's Review.
DIRECTORS
The directors during the year under review were:
K W Brooks
T Griffiths
A J Abrey
C Newitt
A B N Gill
S R O'Brien
PAYMENT OF CREDITORS
It is the Group's and the Company's policy to pay suppliers within an acceptable period of allowed creditor days in accordance with the agreed terms. The Group and the Company acted in accordance with this policy throughout the year. The Group and the Company had 158 days purchases outstanding at 31 December 2008 (2007: 293 days) based on the average daily amount invoiced by suppliers during the year ended 31 December 2008.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's credit risk is primarily attributable to its trade receivables. Credit risk is managed by running credit checks on customers and by monitoring payments against contractual agreements.
The Group monitors cash flow as part of its day to day control procedures. The board considers cash flow projections at its meetings and ensures that appropriate facilities are available to be drawn down upon as necessary.
Interest rate risk is controlled by the use of fixed rate convertible loans.
The Group's prime risk is the on-going commercialisation of the Group's intellectual property, which involves testing of the Group's products, obtaining regulatory approval and reaching a commercially beneficial agreement for each product to be taken to market.
Exchange rate risk is reduced, where practical, by entering into forward foreign exchange contracts with financial institutions.
INDEMNITY COVER
The Company purchases Directors and Officers insurance cover to protect the Directors from third party claims.
FINANCIAL INSTRUMENTS
Details of the use of financial instruments by the Group are contained in note 23 to the financial statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
UK Company law requires the directors to prepare Group and Company Financial Statements for each financial year. Under that law the directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.
The group financial statements are required by law and IFRS adopted by the EU to present fairly the financial position and performance of the group; the Companies Act 1985 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.
The company financial statements are required by law to give a true and fair view of the state of affairs of the company.
In preparing each of the group and company financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs adopted by the EU; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are also responsible for the maintenance and integrity of the Eden Research plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
So far as the directors are aware, there is no relevant audit information (as defined by Section 234ZA of the Companies Act 1985) of which the group's auditor is unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditor is aware of that information.
AUDITOR
The auditor, Baker Tilly UK Audit LLP, will be proposed for re-appointment in accordance with Section 385 of the Companies Act 1985.
ON BEHALF OF THE BOARD:
A J Abrey
Director
16 March 2009
We have audited the financial statements of Eden Research plc for the year ended 31 December 2008 on pages fourteen to forty eight. These financial statements have been prepared under the accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards as adopted for use in the European Union are set out on page ten.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether, in our opinion, the information given in the Report of the Directors is consistent with the financial statements. The information given in the Directors' Report includes that specific information presented in the Chairman's review that is cross referenced from the Review of Business, Research and Development and Future Developments sections in the Directors' Report.
In addition we also report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited parent company financial statements. The other information comprises only the Chairman's Review and the Directors' Report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistency with the parent company financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:-
- the group financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union, of the state of the group's affairs as at 31 December 2008 and of the loss of the group for the year then ended;
- the parent company financial statements give a true and fair view, in accordance with International Financial Reporting Standards as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the parent company's affairs as at 31 December 2008 ;
- the financial statements have been properly prepared in accordance with the Companies Act 1985; and
- the information given in the Report of the Directors is consistent with the financial statements.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the Group's ability to continue as a going concern. The Group incurred a loss of £2,101,237 for the year ended 31 December 2008 and had net current liabilities of £3,119,083. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements have been prepared on a going concern basis, the validity of which depends upon the continued support of the shareholders and the Group's products achieving commercial viability. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
Baker Tilly UK Audit LLP
Chartered Accountants and Registered Auditor
Hartwell House
55-61 Victoria Street
Bristol
BS1 6AD
16 March 2009
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| 2008 | 2007 | |||
| Notes | £ | £ | ||
| CONTINUING OPERATIONS | ||||
| Revenue | 84,003 | 360,788 | ||
| Cost of sales | - |
(5,706) |
||
GROSS PROFIT |
84,003 | 355,082 | ||
| Administrative expenses | ||||
| - normal | (1,334,116) | (1,033,910) | ||
| - amortisation of intangible assets | (604,340) | (455,543) | ||
| - share based payments | (173,729) |
(1,361,248) |
||
Total administrative expenses |
(2,112,185) | (2,850,701) | ||
| OPERATING LOSS | 5 | (2,028,182) | (2,495,619) | |
| Finance costs | 4 | (123,438) | (129,814) | |
| Finance income | 4 | 3,148 | 3,919 | |
LOSS BEFORE TAX |
(2,148,472) | (2,621,514) | ||
| Tax | 6 | 47,235 |
157,645 |
|
| LOSS FOR THE YEAR attributable to equity shareholders of the parent | (2,101,237) | (2,463,869) | ||
| LOSS PER SHARE (PENCE) - basic and diluted |
8 | (3.86)p | (5.13)p |
STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2008
| 2008 | 2007 | ||
| £ | £ | ||
| LOSS FOR THE FINANCIAL YEAR | (2,101,237) | (2,463,869) | |
| TOTAL RECOGNISED EXPENSE FOR THE YEAR ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE PARENT | (2,101,237) | (2,463,869) |
COMPANY STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER 2008
| 2008 | 2007 | ||
| £ | £ | ||
| LOSS FOR THE FINANCIAL YEAR | (2,101,237) | (2,463,869) | |
| TOTAL RECOGNISED EXPENSE FOR THE YEAR ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE PARENT | (2,101,237) | (2,463,869) |
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2008
| 2008 | 2007 | |||
| Note | £ | £ | ||
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Intangible assets | 9 | 8,365,870 | 8,149,403 | |
| Property, plant and equipment | 10 | 6,926 |
3,556 |
|
| 8,372,796 | 8,152,959 | |||
| CURRENT ASSETS | ||||
| Trade and other receivables | 12 | 177,791 | 106,569 | |
| Cash and cash equivalents | 13 | 13,065 |
663,022 |
|
| 190,856 | 769,591 | |||
TOTAL ASSETS |
8,563,652 | 8,922,550 | ||
| LIABILITIES | ||||
| CURRENT LIABILITIES | ||||
| Trade and other payables | 14 | 1,038,253 | 933,191 | |
| Financial liabilities - borrowings | ||||
| - Convertible loan notes | 15 | 2,271,686 |
1,829,081 |
|
| TOTAL CURRENT LIABILITIES AND TOTAL LIABILITIES | 3,309,939 |
2,762,272 |
||
| EQUITY | ||||
| Called up share capital | 17 | 563,133 | 529,158 | |
| Share premium account | 18 | 13,116,119 | 12,387,217 | |
| Merger reserve | 19 | 10,209,673 | 10,209,673 | |
| Warrant reserve | 19 | 2,120,637 | 2,441,708 | |
| Retained earnings | 20 | (20,755,849) |
(19,407,478) |
|
| TOTAL EQUITY attributable to equity Shareholders of the parent | 5,253,713 | 6,160,278 | ||
| TOTAL EQUITY AND LIABILITIES | 8,563,652 |
8,922,550 |
The financial statements were approved by the Board of Directors and authorised for issue
on 16 March 2009 and were signed on its behalf by:
K W Brooks
Director
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2008
| 2008 | 2007 | |||
| Note | £ | £ | ||
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Intangible assets | 9 | 8,365,870 | 8,149,403 | |
| Property, plant and equipment | 10 | 6,926 | 3,556 | |
| Investments | 11 | 100 |
100 |
|
| 8,372,896 | 8,153,059 | |||
| CURRENT ASSETS | ||||
| Trade and other receivables | 12 | 177,791 | 106,569 | |
| Cash and cash equivalents | 13 | 13,065 |
663,022 |
|
| 190,856 | 769,591 | |||
TOTAL ASSETS |
8,563,752 | 8,922,650 | ||
LIABILITIES |
||||
| CURRENT LIABILITIES | ||||
| Trade and other payables | 14 | 1,038,353 | 933,291 | |
| Financial liabilities - borrowings - Convertible loan notes |
15 | 2,271,686 | 1,829,081 | |
| TOTAL CURRENT LIABILITIES AND TOTAL LIABILITIES | 3,310,039 |
2,762,372 |
||
| EQUITY | ||||
| Called up share capital | 17 | 563,133 | 529,158 | |
| Share premium account | 18 | 13,116,119 | 12,387,217 | |
| Merger reserve | 19 | 10,209,673 | 10,209,673 | |
| Warrant reserve | 19 | 2,120,637 | 2,441,708 | |
| Retained earnings | 20 | (20,755,849) |
(19,407,478) |
|
| TOTAL EQUITY attributable to equity Shareholders of the parent | 5,253,713 | 6,160,278 | ||
| TOTAL EQUITY AND LIABILITIESS | 8,563,752 |
8,922,650 |
The financial statements were approved by the Board of Directors and authorised for issue
on 16 March 2009 and were signed on its behalf by:
K W Brooks
Director
CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| 2008 | 2007 | |||
| Note | £ | £ | ||
| Cash flows from operating activities | ||||
| Cash outflow from operations | 1 | (1,207,811) | (260,335) | |
| Finance costs | (123,438) | (129,814) | ||
| Tax credit received | 47,235 |
157,645 |
||
Net cash used in operating activities |
(1,284,014) | (232,504) | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant & equipment | (8,089) | - | ||
| Capitalisation of development expenditure | (562,741) | (591,141) | ||
| Finance income | 3,148 |
3,919 |
||
Net cash used in investing activities |
(567,682) | (587,222) | ||
Cash flows from financing activities |
||||
| Shareholders' loan - repayment | (418,617) | (1,327,406) | ||
| Shareholders' loan - drawdown | 857,479 | 501,173 | ||
| Issue of equity shares | 762,877 |
2,304,203 |
||
Net cash from financing activities |
1,201,739 | 1,477,970 | ||
| (Decrease)/increase in cash and cash equivalents | (649,957) | 658,244 | ||
| Cash and cash equivalents at beginning of year | 663,022 |
4,778 |
||
| Cash and cash equivalents at end of year | 13,065 | 663,022 |
Cash and cash equivalents comprises bank account balances.
Notes
The full results are available to download in PDF format.