Notes to the Preliminary Results for the year ended 31 December 2021

 

Accounting policies

 

1 Company information

 

Eden Research plc is a public company limited by shares incorporated in England and Wales. The registered office is 67C Innovation Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The Company's principal activities and nature of its operations are disclosed in the Directors' report.

 

The group consists of Eden Research plc, its subsidiaries, TerpeneTech Limited (Ireland), Eden Research Europe Limited (Ireland) and its associate company, TerpeneTech Limited (UK).

 

1.1 Accounting convention

 

The Group financial statements have been prepared in accordance with UK-adopted international accounting standards.  The Company financial statements have been prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006.

 

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

 

They have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.

 

Associates

 

Associates are those entities in which the Company has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity, or where the Company has a lower interest but the right to appoint a Director. The Company acquired 29.9% of TerpeneTech Limited ("TerpeneTech (UK)") during 2015; TerpeneTech (UK) is an associated undertaking.

 

Application of the equity method to associates

 

The investment in TerpeneTech (UK) is accounted for using the equity method.  The investment was initially recognised at cost.  The Company's investment includes goodwill identified on acquisition, net of any accumulated impairment losses and any separable intangible assets.  The financial statements include the Company's share of the total comprehensive income and equity movements of TerpeneTech (UK), from the date that significant influence commenced.

 

Eden Research plc is a public company limited by shares incorporated in England and Wales. The registered office is 67C Innovation Drive, Milton Park, Abingdon, Oxfordshire, OX14 4RQ. The company's principal activities and nature of its operations are disclosed in the directors' report.

 

The group consists of Eden Research plc, its subsidiaries, TerpeneTech Limited (Ireland), Eden Research Europe Limited (Ireland) and its associate company, TerpeneTech Limited (UK).

 

Changes in presentation of the financial statements

 

The Directors continue to assess the clarity of the financial statements and the need for changes in presentation to enable and assist understanding of users of the accounts as the operations of the Group continue to evolve.

 

Following this consideration, however, there have been no changes made in the current year, including changes in comparative figures, to enhance presentation.

 

1.2 Basis of consolidation

 

The consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings up to 31 December 2021. The profits and losses of the Company and its subsidiary are consolidated from the date from which control is achieved. All members of the group have the same reporting period.

 

Subsidiary undertakings are entities controlled by the Company. The Company controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

 

1.3 Going concern

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the group has adequate resources to continue in operational existence for at least 12 months from the approval of the financial statements. Thus, the financial statements have been prepared on a going concern basis which contemplates the realisation of assets and the settlement of liabilities in the ordinary course of business.

 

The Group has reported a loss for the year after taxation of £2,777,543 (2020: £2,263,024). Net current assets at that date amounted to £4,329,110 (2020: £7,653,036). Cash at that date amounted to £3,829,369 (2020: £7,286,503). As at 30 April 2022, the cash balance has reduced further to £2,451,971. The group is reliant on its existing cash balance to fund its working capital.

 

The Directors have prepared budgets and projected cash flow forecasts, based on forecast sales provided by Eden's distributors where available, for a period of at least 12 months from the date of approval of the financial statements and they consider that the Company will be able to operate with the cash resources that are available to it for this period. 

 

The forecasts adopted include revenue derived from existing contracts as well as expected new contracts in respect of products not yet available for use.

 

The impact of COVID has been considered in the forecasts. The Group has not been significantly impacted by the pandemic although it has led to some delays in regulatory approvals, product development process and limited promotional activity. The forecasts reflect this with the development expenditure timing based on the latest experience with regulatory authorities and sales volumes on the latest distributors' information which reflects their post-COVID demand.

 

In addition, the Group has relatively low fixed running costs and the Directors have previously demonstrated ability and willingness to delay certain costs, such as research and development expenditure, where required and are willing and able to delay costs in the forecast period should the need arise. A positive cash balance is forecast to be maintained in this base scenario throughout the entire forecast period.

 

In addition, the Directors have also considered a downside scenario which includes reductions to revenue derived from existing contracts as well as elimination of revenue from products not yet available for use offset by mitigations around research and development expenditure as well as some reductions in expansionary overheads. Under this scenario, a positive cash balance would be maintained over the forecast period.

 

Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

 

The Group's achievement of long-term positive cash generation is reliant on the completion of ongoing product development and successful initial approval and registration of these products with various regulatory bodies, as well as the registration of existing products in new territories. While the Group is forecast to become cash generative in 2024 under the base budget, the Directors consider it reasonably possible that the Group will require a further fundraise prior to that point but beyond the going concern period. The Directors have assessed the likelihood of obtaining such funding, particularly in the context of the successful raise in March 2020, and would expect to be able to raise such funds as necessary.

 

 

1.4 Revenue

 

Revenue is recognised only when the Company has satisfied a performance obligation by transferring control to a customer.

 

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

 

Sales-based royalty income arising from licences of the Company's intellectual property is recognised in accordance with the terms of the underlying contract and is based on net sales value of product sold by Eden's licensees.  It is recognised when the underlying sales occur.

 

Upfront and annual payments made by customers at commencement and for renewal of distribution and other agreements are recognised in accordance with the terms of the agreement. Where there is no ongoing obligation on the Company under the agreement, the payment is recognised in full in the period in which it is made.  Where there is an ongoing obligation on the Company, the separate performance obligations under the agreement are identified and revenue allocated to each performance obligation.  Revenue is then recognised when a corresponding performance obligation has been met.

 

Each sale of a licence by the Company is assessed to determine whether the licence is distinct from the sale of other goods and services, and whether the licence granted provides use of the Company's intellectual property as it exists at that point in time, with no ongoing obligation on the Company, or alternatively provides access to the intellectual property as it develops over time.  Where the Company has discharged all of its ongoing obligations associated with the licence granted, revenue is recognised on invoicing of the licence fee payment at which point the customer can use and benefit from the licence.  Where there is an ongoing obligation on the Company, revenue is recognised in the periods to which the obligations pertain.

 

Product sales are recorded once the ownership and related rights and responsibilities are passed to the customer and the product is made available to the partner to collect, or, if the Company is responsible for the shipping, the product has been shipped to the customer.

 

The following is a description of the principal activities from which the Company generates its revenue.

 

Licensing fees

 

The Company receives licensing fees from partners who have taken a licence for the right to use Eden's intellectual property, usually defined by field of use and territory. These are identified as the right to use as the Company does not have an obligation to undertake activities that significantly affect the relevant intellectual property.

 

Milestone payments

 

The Company receives milestone payments from other commercial arrangements, including any fees it has charged to partners for rights granted in respect of distribution agreements.

 

These agreements are bespoke and any such revenue is specific to the particular agreement. Consequently, for each such agreement, the nature of the underlying performance obligations is assessed in order to determine whether revenue should be recognised at a point in time or over time.

 

Revenue is then recognised based on the above assessment upon satisfaction of the performance obligation.

 

The Corteva agreement entered into in the current year includes milestone payments with £141,293 received in the current year. These milestone payments have been assessed to relate to a performance obligation in respect of provision of R&D services and a licence to the developed product with the performance obligation being satisfied at a point in time. As at year end, this performance obligation had not been reached and, consequently, the amounts received deferred as contract liability (presented within Accruals and Deferred Income in note 19).

 

Further milestone payments are contractually due in the year ending 31 December 2022. The performance obligation is expected to be met no later than by 31 December 2023.

 

The second performance obligation relates to product sales and will be accounted for in line with the product sales policy disclosed below once the commercial sales have commenced.

 

R&D charges

 

The Company sometimes charges its partners for R&D costs that it has incurred which usually relate to specific projects and which it has incurred through a third party.

 

Upon agreement with a partner, or if some specific milestone is met, then Eden will raise an invoice which is usually payable between 30 and 120 days. Revenue is recognised upon satisfaction of the underlying performance obligation.

 

Royalties

 

The Company receives royalties from partners who have entered into a licence arrangement with Eden to use its intellectual property and who have sold products, which then gives rise to an obligation to pay Eden a royalty on those sales.

 

Generally, royalties relate to specific time periods, such as quarterly or annual dates, in which product sales have been made. Revenue is recognised in line with when these sales occur.

 

Once an invoice is raised by Eden, following the period to which the royalties relate, payment is due to the Company is 30 to 60 days.

 

Product sales

 

Generally, where the Company has entered into a distribution agreement with a partner, Eden is responsible for supplying product to that partner once a sales order has been signed.

 

At that point, Eden has the product manufactured through a third-party, toll manufacturer.  At the point at which the product is finished and is made available to the partner to collect, or, if the Company is responsible for the shipping, the product has been shipped, the partner is liable for the product and obliged to pay Eden.  Normal terms for product sales are 90 to 120 days.  Returns are not accepted and refunds are only made when product supplied is notified as defective within 60 days.

 

The Group does not have any contract assets or liabilities other than the liability in respect of the Corteva milestone payments noted in the milestone section (2020: none).

 

1.5 Intangible assets other than goodwill 

 

Intellectual property, including development costs, is capitalised and amortised on a straight-line basis over its remaining estimated useful economic life of 9 years in line with the remaining life of the Company's master patent, which was originally 20 years, with additional Supplementary Protection Certificates having been granted in the majority of the countries in the EU in which Eden is selling Mevalone®.  The useful economic lie of intangible assets is reviewed on an annual basis.

 

           

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

 

·          the project is technically and commercially feasible;

·          an asset is created that can be identified;

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

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

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

·          there are sufficient resources available to complete the project.

 

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

 

1.6 Property, plant and equipment

 

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

 

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

 

Leasehold land and buildings	Over the term of the lease
Fixtures and fittings	5 years straight line
Motor vehicles	Over the term of the lease

 

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

 

 

1.7 Impairment of tangible and intangible assets

 

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

 

1.8 Inventories          

 

Inventories are stated at the lower of cost and estimated selling price, less costs to complete and sell. Cost is based on the first-in-first-out principle.  Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.

 

1.8       Inventories    

 

Inventories are stated at the lower of cost and estimated selling price, less costs to complete and sell. Cost is based on the first-in-first-out principle.  Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.

 

(i) Recognition and initial measurement

 

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a part to the contractual provisions of the instrument.

 

A financial asset (unless it is a trade receivable with a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss ("FVTPL"), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

 

(ii) Classification and subsequent measurement

 

Financial assets

 

(a) Classification

 

On initial recognition, a financial asset is classified as measured at amortised cost or FVTPL.

 

Financial assets are not reclassified subsequently to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

 

A financial asset is measured at amortised cost if it meets both of the following conditions:

 

·    It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

·    Its contractual terms give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Investments in associates accounted for using the equity method and subsidiaries are carried at cost less impairment.

 

(b) Subsequent measurement and gains and losses

 

Financial assets at amortised cost - These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

 

Financial liabilities and equity

 

Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:

 

(a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company; and

 

(b) where the instrument will or may be settled in the Company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments or is a derivative that will be settled by the Company's exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

 

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

 

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

 

Where a financial instrument that contains both equity and financial liability components exists these components are separated and accounted for individually under the above policy.

 

(iii) Impairment

 

The Group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost.

 

The Group measures loss allowances at an amount equal to lifetime ECL, except for other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition, which are measured as 12-month ECL.

 

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

 

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward-looking information.

 

The Group considers a financial asset to be in default when:

 

·    the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or

·    the financial asset is more than 120 days past due.

 

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

 

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

 

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

 

Measurement of ECLs

 

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

 

Credit-impaired financial assets

 

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

 

Write-offs

 

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.

 

1.10     Taxation

 

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

 

Current tax

 

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

 

R&D tax credits are accounted for by reference to IAS 12.

 

Deferred tax

 

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

 

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

 

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

 

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

 

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

 

1.11 Employee benefits

 

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

 

Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

 

1.12 Retirement benefits

 

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

 

1.13 Share-based payments

 

The Company has applied the requirements of IFRS 2 Share-Based Payments.

 

Unapproved share option scheme

 

The Company operated an unapproved share option scheme for executive directors, senior management and certain employees up to September 2017.

 

Long-Term Incentive Plan ('LTIP')

 

In 2017, the Company established a LTIP to incentivise the Executives to deliver long-term value creation for shareholders and ensure alignment with shareholder interest.  Awards were made annually and were subject to continued service and challenging performance conditions usually over a three year period.  The performance conditions were reviewed on an annual basis to ensure they remained appropriate and were based on increasing shareholder value.  Awards were generally structured as nil cost options with a seven year lift after vesting.

 

Other than in exceptional circumstances, awards were up to 100% of salary in any one year and granted subject to achieving challenging performance conditions set at the date of the grant.  A percentage of the award vests for 'Threshold' performance with full vesting taking place for equalling or exceeding the performance 'Target'.  In between the Threshold and Target there may be pro rata vesting. 

 

The LTIP was adopted by the Board of Directors of Eden on 28 September 2017.

 

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

 

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

 

In June 2021, the Company made changes to the LTIP. Details can be found in the Remuneration Report.

 

The changes to the LTIP have been treated as a modification of the existing plan for financial reporting purposes which means that the Fair Value of previous awards has been recognised over their remaining term and the incremental Fair Value of the new options granted has been recognised separately over their own vesting period.

 

The Company issued further options under the modified LTIP, in excess of the replacement awards, details of which can be found on note 22. These include graded vesting.

 

Share options which vest in instalments over a specified vesting period (graded vesting) where the only vesting condition is service from grant date to vesting date of each instalment are accounted for as separate share-based payments. Each instalment's fair value is assessed separately based on its term and the resulting charge recognised over each instalment's vesting period.

 

Other share options

 

In addition to the LTIP grants, the Company awarded certain employees approved options. Details of these options can be found in note 22. The accounting treatment for these options is consistent with that indicated under the LTIP section at the start of this page.

 

1.14 Leases

 

At inception, the Group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

 

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at, or before, the commencement date, plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

 

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the Group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

 

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the Group's estimate of the amount expected to be payable under a residual value guarantee; or the Group's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

 

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

 

1.15 Grants

 

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

1.16 Foreign exchange

 

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.

 

Whilst the majority of the Company's revenue is in Euros, the Company also incurs a significant level of expenditure in that currency.  As such, the Company does not currently use any hedging facilities and instead chooses to keep some of its cash at the bank in Euros.

 

1.17 Research and development

 

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

 

1.18 Defined contribution plan

 

A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.

 

1.19 Financial risk management

 

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

 

2 Adoption of new and revised standards and changes in accounting policies

 

(a)        New standards, amendments and interpretations

 

There has been one newly effective amendment to standards during the year.

 

•     Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement', IFRS 7 'Financial Instruments: Disclosures, IFRS 4 'Insurance Contracts', IFRS 16 'Leases' related to interest rate benchmark reform (phase two) and the issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one.

 

(b) New standards, amendments and interpretations issued but not effective and not adopted early

 

A number of new standards, amendments to standards and interpretations which are set out below are effective for annual periods beginning after 1 January 2022 and have not been applied in preparing these consolidated financial statements.

 

•     Amendment to IFRS 3 'Business combinations' to update references to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.

 

•     Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement', IFRS 7 'Financial Instruments: Disclosures, IFRS 4 'Insurance Contracts', IFRS 16 'Leases' related to interest rate benchmark reform (phase two) and the issues that arise from the implementation of the reforms, including the replacement of one benchmark with an alternative one.

 

•     Amendment to IFRS 16 'Leases' which provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification.

 

•     IFRS 17 'Insurance contracts' which establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 'Insurance Contracts'

 

•     Amendments to IAS 1 'Presentation of financial statements' on classification of liabilities which is intended to clarify that liabilities are classified as either current or non-current depending upon the rights that exist at the end of the reporting period.

 

•     Amendments to IAS 16 'Property, plant and equipment' to prohibit the deduction from cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use with any such sales and related cost recognised in profit or loss.

 

•     Amendments to IAS 37 'Provisions, contingent liabilities and contingent assets' to specify which costs a company includes when assessing whether a contract will be loss making.

 

•     Annual improvements to make minor amendments to IFRS 1 'First-time adoption of IFRS', IFRS 9 'Financial Instruments', IAS 41 'Agriculture' and amendments to the illustrative examples accompanying IFRS 16 'Leases'.

 

The Directors anticipate that at the time of this report none of the new standards, amendments to standards and interpretations are expected to have a material effect on the financial statements of the Group or parent Company.

 

3 Critical accounting estimates and judgements

 

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

 

Going concern

 

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

 

The ability of the Company to continue as a going concern is ultimately dependent upon the amount and timing of cash flows arising from the exploitation of the Company's intellectual property and the availability of existing and/or additional funding to meet the short term needs of the business until the commercialisation of the Company's portfolio is reached.  The Directors consider it is appropriate for the financial statements to be prepared on a going concern basis based on the estimates they have made.

 

Associate

 

A judgement has been made that Eden exerts significant influence on TerpeneTech (UK) such that it is an associate company and, as such, adoption of equity accounting is appropriate.

 

COVID-19

 

The Company has made accounting judgements and estimates based on there being minimal impact of COVID-19 on the business in the long term. This is impacting, in particular, the forecasts used as the basis for intangibles impairment review, investment impairment review and going concern. Clearly, this is still a degree of uncertainty as to exactly how and if the business could be impacted and the Directors will continue to monitor the situation closely.

 

Other accounting judgements

 

In addition to the above, the Company has made other judgements which are considered of lesser significance.

 

Capitalised development costs and Intellectual property

The Directors have exercised a judgement that the development costs incurred meet the criteria in IAS 38 Intangible Assets for capitalisation. In making this judgement, the Directors considered the following key factors:

 

•     The availability of the necessary financial resources and hence the ability of the Company to continue as a going concern.

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

•     The successful conclusion of commercial arrangements, which serves as an indicator as to the likely success of the projects and, as such, any need to potential impairment.

 

Significant judgement had to be exercised in respect of £nil costs capitalised in the current year (2020: £59,222) and therefore the Directors do not consider this to represent a critical judgment. There has been no research and development expenditure recognised as an expense in the current year in the P&L in excess of the amortisation of intangible assets as disclosed in note 12 (2020: £nil).

 

4 Revenue and Segmental Information

 

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

 

The Executive Directors monitor and then assess the performance of segments based on product type and geographical area using a measure of adjusted EBITDA. This is the result of the segment after excluding the share-based payment charges, other operating income and the amortisation of intangibles. These items, together with interest income and expense are allocated to Agrochemicals, being the Company's primary focus.

 

The segment information for the year ended 31 December 2021 is as follows:

 

	Agrochemicals	Consumer products	Animal health	Total
Revenue	£	£	£	£
Milestone payments	5,250	-	-	5,250
R & D charges	-	7,760	-	7,760
Royalties	57,170	36,131	-	93,301
Product sales	1,122,269	-	-	1,122,269
Total revenue	1,184,689	43,891	-	1,228,580
Adjusted EBITDA	(2,021,602)	43,891	-	(1,977,711)
Share Based Payments	(640,597)	-	-	(640,597)
EBITDA	(2,662,199)	43,891	-	(2,618,308)
Amortisation	(421,358)	(13,272)	-	(434,630)
Depreciation	(155,342)	-	-	(155,342)
Finance costs, foreign exchange and investment revenues	(129,223)	-	-	(129,223)
Impairment of investment in associate	-	-	-	-
Income Tax	618,137	-	-	618,137
Share of Associate's loss	-	(58,177)	-	(58,177)
(Loss)/Profit for the Year	(2,749,985)	(27,558)	-	(2,777,543)
Total Assets	15,004,888	22,197	-	15,027,085
Total assets includes:
Additions to Non-Current Assets	1,802,660	-	-	1,802,660
Total Liabilities	2,153,649	43,961	-	2,197,610

 

Please note the Consumer products segment was previously referred to as Human health and biocides.

 

The segment information for the year ended 31 December 2020 is as follows:

 

	Agrochemicals	Consumer products	Animal health	Total
Revenue	£	£	£	£
Milestone payments	27,523	-	-	27,523
R & D charges	7,660	8,551	-	16,211
Royalties	180,801	27,919	-	208,720
Product sales	1,116,534	-	-	1,116,534
Total revenue	1,332,518	36,470	-	1,368,988
Adjusted EBITDA	(1,528,934)	36,470	-	(1,492,464)
Share Based Payments	(120,380)	-	-	(120,380)
EBITDA	(1,649,314)	36,470	-	(1,612,844)
Amortisation	(539,535)	(13,274)	-	(552,809)
Depreciation	(70,039)	-	-	(70,039)
Finance costs, foreign exchange and investment revenues	17,433	-	-	17,433
Impairment of investment in associate	(299,521)	-	-	(299,521)
Income Tax	285,108	-	-	285,108
Share of Associate's loss	(30,352)	-	-	(30,352)
(Loss)/Profit for the Year	(2,286,220)	23,196	-	(2,263,024)
Total Assets	16,804,893	119,471	-	16,924,364
Total assets includes:
Additions to Non-Current Assets	2,319,566	-	-	2,319,566
Total Liabilities	1,915,322	80,093	-	1,995,415

 

		2021		2020
		£		£
	Revenue analysed by geographical market
	UK	83,891		16,211
	Europe	1,144,689		1,352,777
		1,228,580		1,368,988

 

The above analysis represents sales to the Group's direct customers who further distribute these products to their end markets.

 

Revenues of approximately £1,036,156 (2020: £1,297,922) are derived from three customers who each account for greater than 10% of the Group's total revenues:

 

 

Customer	2021 £	2021 %	2020 £	2020 %
A	900,364	73.3	741,609	54.2
B	134,192	10.9	230,412	16.8
C	1,600	0.1	325,901	23.8

 

 

5 Operating loss

 

		2021			2020
		£			£
	Operating loss for the year is stated after charging/(crediting):
	Government grants		-		(7,601)
	Fees payable to the Company's auditor for the audit of the Company's financial statements	55,000			40,000
	Depreciation of right-of-use assets (included within administrative expenses)	98,287			57,346
	Impairment of investment in associate	-			299,521
	Amortisation of intangible assets	434,630			552,809
	Share-based payments	640,597			120,380

 

Government grants related to amounts received in respect of the Coronavirus Job Retention Scheme.

 

6 Employees

 

The average monthly number of persons (including directors) employed by the group during the year was:

 

		2021		2020
		Number		Number
	Management	4		4
	Operational	12		7
		16		11
	Their aggregate remuneration comprised:
		2021		2020
		£		£
	Wages and salaries	1,422,841		1,104,400
	Social security costs	172,142		131,158
	Pension costs	53,836		51,056
	Benefits in kind	5,826		5,562
	Share based payment charge	678,069		94,176
		2,332,714		1,386,352

 

7 Directors' remuneration

 

		2021		2020
		£		£
	Remuneration for qualifying services	656,194		618,350
	Company pension contributions to defined contribution schemes	31,009		28,990
	Non-executive Directors' fees	85,000		78,333
	Benefits in kind	5,826		5,562
	Share based payment charge relating to all Directors	632,836		94,176
		1,410,865		825,411

 

The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 2).

 

The number of Directors who are entitled to receive shares under long term incentive schemes during the year is 2 (2020 - 2).

 

Remuneration disclosed above includes the following amounts paid to the highest paid Director:

 

		2021		2020
		£		£
	Remuneration for qualifying services	376,972		366,602

 

The Executive Directors are considered to also be the key management personnel of the Company and Group. Details of Directors' share options can be found in the Remuneration report.

 

2021	Salary		Bonus	Fees	Pension	Share Based Payments	Total
	£		£	£	£	£	£
A Abrey	190,000		79,800	-	13,297	271,256	554,353
S Smith	253,000		106,260	-	17,712	361,580	738,552
R Cridland	-		-	40,000	-	-	40,000
L van der Broek		-	-	45,000	-	-	45,000
	443,000		186,060	85,000	31,009	632,836	1,377,905
2020	Salary		Bonus	Fees	Pension	Share Based Payments	Total
	£		£	£	£	£	£
A Abrey	180,000		88,200	-	12,538	39,872	320,610
S Smith	235,000		115,150	-	16,452	54,304	420,906
R Cridland	-		-	36,666	-	-	36,666
L van der Broek	-		-	41,667	-	-	41,667
	415,000		203,350	78,333	28,990	94,176	819,849

 

8 Investment income

 

		2021		2020
		£		£
	Interest income
	Bank deposits	98		5,725

 

Total interest income for financial assets that are not held at fair value through profit or loss is £98 (2020: £5,725).

 

9 Finance costs and foreign exchange (gains)/losses

 

		2021				2020
		£				£
	Interest on lease liabilities		32,074			23,550
	Interest on bank overdrafts and loans	-				450
Finance costs			32,074			24,000
	Exchange differences on working capital		75,254			(39,498)
	Effect of exchange rate fluctuations on cash	21,993				3,792
Exchange losses and (gains)			97,247			(35,706)

 

10 Income tax income

 

		2021		2020
		£		£
	Current tax
	UK corporation tax on profits for the current period	(572,585)			(285,108)
	Adjustments in respect of prior periods	(45,552)			-
	Total UK current tax	(618,137)			(285,108)

 

The charge for the year can be reconciled to the loss per the income statement as follows:

 

		2021			2020
		£			£
	Loss		(3,395,680)			(2,548,132)
	Expected tax credit based on a corporation tax rate of 19% (2019: 19.00%)	(645,179)				(484,145)
	Ineligible fixed asset differences	11,639			32,067
	Expenses not deductible for tax purposes	129,845			88,498
	Additional deduction for R&D expenditure	(424,074)				(211,159)
	Surrender of tax losses for R&D tax credit refund	177,699			88,481
	Adjustment in respect of prior years	(45,552)				-
	Deferred tax not recognised	177,485				201,150
	Taxation credit for the year	(618,137)				(285,108)

 

The March 2020 Budget announced that a corporation tax rate of 19% would continue to apply with effect from 1 April 2020, and this change was substantively enacted on 17 March 2020. The March 2021 Budget announced that a corporation tax rate of 25% would apply with effect from 1 April 2023. This was substantively enacted on 24 May 2021. As this change was not substantively enacted at the balance sheet date, it has not been reflected in the measurement of deferred tax balances at the period end.

 

The taxation credit for the year represents the research and development credit for the year ended 31 December 2021.

 

The current tax recoverable as at 31 December 2021 represents R&D tax credits and is made up as follows:

 

		2021		2020
		£		£
	Current tax
	R & D cash tax credit for the current period	(572,585)			(285,108)
	R & D cash tax credit for the prior period	(330,660)			-
	Total UK current tax recoverable	(903,245)			(285,108)

 

Deferred Tax

 

In the year, a deferred tax liability in respect of fixed asset temporary differences of £1,237,820 has been recognised. This has been offset fully by partial recognition of deferred tax asset from trading losses brought forward, resulting in a £nil deferred tax balance in the Statement of Financial Position.

 

The losses carried forward, after the above offset, for which no deferred tax asset has been recognised, amount to approximately £21,214,533 (2020: £22,379,505).

 

The unprovided deferred tax asset of £4,030,761 (2020: £4,265,891) arises principally in respect of trading losses. It has been calculated at 19% (2020: 19%) and has not been recognised due to the uncertainty of timing of future profits against which it may be realised.

 

11 Earnings per share

 

		2021	2020
		£	£
	Weighted average number of ordinary shares for basic and diluted earnings per share	380,340,229		344,629,577
	Earnings (all attributable to equity shareholders of the Company)
	Loss for the period	(2,777,543)		(2,270,347)
	Basic earnings per share	(0.73p)	(0.66p)
	Diluted earnings per share	(0.73p)	(0.66p)

 

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

 

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

 

There were 11,018,738 (2020: nil) potential ordinary shares at the year end which were not included in the calculation of the diluted EPS because they were antidilutive for the period presented.

 

12 Intangible assets

 

	Group
		Licences and trademarks		Development costs		Intellectual property		Total
		£		£		£		£
	Cost
	At 1 January 2020	447,351		5,059,621		9,181,324		14,688,296
	Additions	1,545		1,564,785		134,957		1,701,287
	At 31 December 2020	448,896		6,624,406		9,316,281		16,389,583
	Additions	7,788		1,525,734		91,405		1,624,927
	At 31 December 2021	456,684		8,150,140		9,407,686		18,014,510
	Amortisation and impairment
	At 1 January 2020	437,751		2,179,331		6,490,209		9,107,291
	Charge for the year	11,145		315,192		226,472		552,809
	At 31 December 2020	448,896		2,494,523		6,716,681		9,660,100
	Charge for the year	-		214,682		219,948		434,630
	At 31 December 2021	448,896		2,709,205		6,936,629		10,094,730
	Carrying amount
	At 31 December 2021	7,788		5,440,935		2,471,057		7,919,780
	At 31 December 2020	-		4,129,883		2,599,600		6,729,483

 

	Company
		Licences and trademarks		Development costs		Intellectual property		Total
		£		£		£		£
	Cost
	At 1 January 2020	447,351		5,059,621		9,048,581		14,555,553
	Additions	1,545		1,564,785		134,957		1,701,287
	At 31 December 2020	448,896		6,624,406		9,183,538		16,256,840
	Additions	7,788		1,525,734		91,405		1,624,927
	At 31 December 2021	456,684		8,150,140		9,274,943		17,881,767
	Amortisation and impairment
	At 1 January 2020	437,751		2,179,331		6,490,209		9,107,291
	Charge for the year	11,145		315,192		213,198		539,535
	At 31 December 2020	448,896		2,494,523		6,703,407		9,646,826
	Charge for the year	-		214,682		206,676		421,358
	At 31 December 2021	448,896		2,709,205		6,910,083		10,068,184
	Carrying amount
	At 31 December 2021	7,788		5,440,935		2,364,860		7,813,583
	At 31 December 2020	-		4,129,883		2,480,131		6,610,014

 

Intellectual property represents intellectual property in relation to use of encapsulated terpenes in agrochemicals.  The remaining useful economic life of that asset is 9 years.

 

An annual impairment review is undertaken by the Board of Directors.  The Directors have considered the progress of the business in the current year, including a review of the potential market for its products, the progress the Company has made in registering its products and other key commercial factors to inform the review.

 

Of £7,919,780 carrying amount of intangible assets, £7,813,583 has been allocated to the Agrochemicals Cash Generating Unit (CGU). The remaining intangible assets have been allocated to the Consumer products CGU for which no impairment indicators have been identified. The Agrochemicals CGU has been tested for impairment as it is the only CGU with intangible assets not yet available for use.

 

The Directors have prepared a discounted cash-flow forecast, based on product sales forecasts including those provided by the Company's commercial partners, and have taken into account the market potential for Eden's products and technologies using third party market data that Eden has acquired licences to.

 

The forecast covers a period of 9 years, with no terminal value, reflecting the useful economic life of the patent in respect of the underlying technology. Financial forecasts for 2022 are based on the approved annual budget. Financial forecasts for 2023-2028 are based on the approved long-term plan. Financial forecasts for 2029-2030 are extrapolated based on the long-term growth rate of 2%.

 

The estimated recoverable amount of the CGU exceeded its carrying amount by £8.3m and based on the review carried out management is satisfied that intangible assets are not impaired.

 

As set out in the Strategic Report, the business is in a critical phase of its development as the development of products is transitioned to revenue generation. The value of the CGU is supported by forecasts of continued revenue growth of existing products and the successful introduction and growth of sales of products currently under development.

 

The key assumptions of the forecast are the future cash flows, driven primarily by level of sales, and the discount rate. The discount rate is estimated using pre-tax rates that reflect current market assessments of the time value of money and the risk specific to the CGU. The rate used was 12.4% (2020: 10%). The increase in the rate reflects the wider market movements as based on the comparator group as well as increased forecasting risk given the underperformance in the current year. This is offset by a slight reduction in the discount rate in respect of the impact of COVID-19 which has been incorporated into the forecast cash flows given greater clarity since prior year.

 

The impact of increasing the discount rate by 1.6%, which is considered a reasonably possible change, would be a decrease in the recoverable amount by £1.9m. The discount rate would have to increase to 28.9% to reduce the headroom to £nil which is not considered likely.

 

The average annual growth rate has been assumed at 51% (2020: 48%), reflecting the latest forecasts based on information provided by customers and own market analysis. The rate stands at 98% up to 2025, reflecting commercialisation of new products in the period, reducing to 14% from 2026 onwards.

 

A reduction in growth from year 6 onwards to the long-term growth rate for the Insecticides product (the sole product with growth in excess of the long-term growth rate after year 5), which is considered a reasonably possible change, would reduce the recoverable amount by £5.3m.

 

Forecast sales would have to reduce by an average of, approximately, 22% per annum to reduce headroom to £nil, which is not considered likely.

 

13 Property, plant and equipment

 

	Consolidated and Company
						Fixtures and fittings		Total
						£		£
	Cost
	At 1 January 2020					-		-
	Additions - owned					200,758		200,758
	At 31 December 2020					200,758		200,758
	Additions - owned					101,269		101,269
	At 31 December 2021					302,027		302,027
	Accumulated depreciation and impairment
	At 1 January 2020					-		-
	Charge for the year					12,693		12,693
	At 31 December 2020					12,693		12,693
	Charge for the year					57,056		57,056
	At 31 December 2021					69,749		69,749
	Carrying amount
	At 31 December 2021					232,278		232,278
	At 31 December 2020					188,065		188,065

 

14 Right-of-Use Assets

 

Consolidated and Company

 

		Land and buildings	Motor vehicles				Total
		£	£				£
	Cost
	At 1 January 2020	78,668	35,865				114,533
	Additions	417,521	-				417,521
	Disposals	(78,668)		-			(78,668)
	At 31 December 2020	417,521	35,865				453,386
	Additions	26,256	50,208				76,464
	Disposals	-		-			-
	At 31 December 2021	443,777	86,073				529,850
	Accumulated depreciation and impairment
	At 1 January 2020	39,334	13,449				52,783
	Charge for the year	48,380	8,966				57,346
	Eliminated on disposal	(51,353)		-			(51,353)
	At 31 December 2020	36,361	22,415				58,776
	Charge for the year	83,504		14,783			98,287
	At 31 December 2021	119,865	37,198				157,063
	Carrying amount
	At 31 December 2021	323,912	48,875				372,787
	At 31 December 2020	381,160	13,450				394,610

 

15 Investments in associates

 

		Current				Non-current
		2021		2020		2021		2020
		£		£		£		£
	Investments in associates	-		-		361,688		419,865

 

Details of the Group's associates at 31 December 2021 are as follows:

 

Name of undertaking	Registered office	Principal activities	Class of shares held	% held
				Direct	Voting
TerpeneTech (UK)	United Kingdom	Research and experimental development on biotechnology	Ordinary	29.90	29.90

 

	2021		2020
	£		£
Non-current assets	440,601		502,954
Current assets	287,576		237,697
Non-current liabilities	(98,806)		(98,806)
Current liabilities	(269,026)		(213,670)
Net assets (100%)	360,345		428,175
Company's share of net assets	107,743		151,352
Separable intangible assets	140,817		155,385
Goodwill	412,649		412,649
Impairment of investment in associate	(299,521)		(299,521)
Carrying value of interest in associate	361,688		419,865
Revenue	361,307		279,185
100% of loss after tax	(145,849)		(52,790)
29.9% of loss after tax	(43,609)		(15,784)
Amortisation of separable intangible	(14,568)		(14,568)
Company's share of loss including amortisation of separable intangible asset	(58,177)		(30,352)

 

The associate is included in the Consumer Products operating segment.

 

TerpeneTech Limited's ("TerpeneTech (UK)") registered office is Kemp House, 152 City Road, London, EC1V 2NX and its principal place of business is 3 rue de Commandant Charcot, 22410, St Quay Portrieux, France.

 

The Directors have considered the progress of the business in the current year, including a review of the potential market for its products, the progress TerpeneTech (UK) has made in registering its products and other key commercial factors to determine whether any indicators of impairment exist. As a result of identification of indicators of impairment, an impairment review of the investment in TerpeneTech (UK) was undertaken by the Board of Directors.

 

The Directors have used discounted cash-flow forecasts, based on product sales forecasts provided by TerpeneTech (UK), and have taken into account the market potential for those products. These forecasts cover a 9-year period, with no terminal value, in line with the patent of the underlying technology.

 

The key assumptions of the forecast are the growth rate and the discount rate. The discount rate is estimated using pre-tax rates that reflect current market assessments of the time value of money and the risk specific to the asset. The rate used was 15% (2020: 15%). The use of the same discount rate reflects, in addition to the wider market movements, a reduction in uncertainty in the head-lice sales, reflecting conclusion of negotiations with a distributor as well as in geraniol sales, following another year of double digit growth, offset by increased forecasting risk as the company failed to fully meet the forecast performance for another year.

 

Based on the review the Directors carried out, it was determined that the Investment was not impaired and, as such, no impairment charge (2020: £299,521) was recognised.

 

The impairment in 2020 was primarily due to the impact of COVID-19 which resulted in a delay in the launch of the head-lice product and which significantly impacted the head-lice product market and, consequently, the forecast level of sales. This impact is exacerbated by the limited forecast period.

 

An increase in the discount rate of 1.9% would result in an increase in impairment of £27,890.

 

The growth rates are derived from discussions with the Company's commercial partner, TerpeneTech (UK), as described above.

 

The average annual growth rate has been assumed at 21% (2020: 32%). The majority of this growth arises in the first 3 years of the forecast, reflecting primarily the initial commercialisation of the head-lice product, resulting in the average growth rate over that period of 46%, reducing to 9% for the remainder of the forecast period. The average annual growth rate of existing business stands at 13% (2020: 4%).

 

An annual reduction of 20% in the forecast head-lice product sales over the entire forecast period would result in impairment of £7,101.

 

A reduction to growth rate of the existing business in the first 5 years of the forecast to the growth observed in the prior year would result in impairment of £91,563.

 

The Directors have also considered whether any reasonable change in assumptions would lead to a material change in impairment recognised and are satisfied that this is not the case.

 

16 Subsidiaries

 

Details of the Company's subsidiaries at 31 December 2021 are as follows:

 

Name of undertaking		Registered office		Principal activities		Class of	% Held
					shares held		Direct	Voting
TerpeneTech Limited		Republic of Ireland		Sale of biocide products		Ordinary	50.00	50.00

 

TerpeneTech Limited ("TerpeneTech (Ireland)"), whose registered office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland, was incorporated on 15 January 2019 and is jointly owned by both Eden Research plc and TerpeneTech (UK), the Company's associate.

 

Eden has the right to appoint a director as chairperson who will have a casting vote, enabling the Group to exercise control over the Board of Directors in the absence of an equivalent right for TerpeneTech (UK). Eden owns 500 ordinary shares in TerpeneTech (Ireland).

 

Eden Research Europe Limited, whose registered office is 108 Q House, Furze Road, Sandyford, Dublin, Ireland, was incorporated on 18 November 2020 and is wholly owned by both Eden Research plc.

 

Non-controlling interests

 

The following table summarises the information relating to the Group's subsidiary with material non-controlling interest, before intra-group eliminations:

 

	2021		2020
	£		£
NCI percentage	50%		50%
Non-current assets	106,199		119,471
Current assets	-		-
Non-current liabilities	-		-
Current liabilities	(43,962)		(80,093)
Net (liabilities)/assets (100%)	62,237		39,378
Carrying amount of NCI
Revenue	36,131		27,919
Profit after tax	22,859		14,647
OCI	-		-
Total comprehensive income	22,859		14,647
Cash flows from operating activities	-		-
Cashflows form investing activities	-		-
Cashflows from financing activities	-		-
Net increase / (decrease) in cash and cash equivalents	-		-
Dividends paid to non-controlling interests	-		-

 

17 Inventories

 

		Group and Company
		2021		2020
		£		£
	Finished goods	521,351		224,422

 

18 Trade and other receivables

 

		Group				Company
		2021		2020		2021		2020
		£		£		£		£
	Trade receivables	693,948		909,452		693,948		909,452
	VAT recoverable	104,760		242,187		104,760		242,187
	Other receivables	65,957		57,619		149,957		57,619
	Prepayments and accrued income	21,922		187,050		21,922		235,050
		886,587		1,396,308		970,587		1,444,308

 

Trade receivables disclosed above are measured at amortised cost. The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

 

19 Trade and other payables

 

		Group			Company
		2021	2020		2021		2020
		£	£		£		£
	Current
	Trade payables	1,147,823	794,439		1,147,823		794,439
	Accruals and deferred income	440,416	250,017		440,416		250,017
	Social security and other taxation	45,495	43,186		45,495		43,186
	Other payables	77,784	367,313		33,823		287,220
		1,711,518	1,454,955		1,667,557		1,374,862
	Non-current
	Other payables (note 22, 'Xinova liability')	87,740	125,212		87,740		125,212
		87,740	125,212		87,740		125,212

 

20 Lease liabilities

 

		2021			2020
	Maturity analysis	£			£
	Within one year	128,553			117,204
	In two to five years	307,275			385,388
	Total undiscounted liabilities	435,828			502,592
	Future finance charges and other adjustments		(37,476)		(87,344)
	Lease liabilities in the financial statements	398,352			415,248

 

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

 

			2021		2020
			£		£
	Current liabilities		99,924		84,350
	Non-current liabilities		298,428		330,898
			398,352		415,248
			2021		2020
	Amounts recognised in profit or loss include the following:		£		£
	Interest on lease liabilities		32,074		23,550

 

21 Retirement benefit schemes

 

Defined contribution schemes

 

The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

 

The total costs charged to income in respect of defined contribution plans is £53,836 (2020 - £51,056).

 

22 Share-based payment transactions

 

Long-Term Incentive Plan ("LTIP")

 

Since September 2017 Eden has operated an option scheme for executive directors, senior management and certain employees under an LTIP which allows for certain qualifying grants to be HMRC approved. Further details can be found in the Remuneration Report.

 

2019 Award

 

On 28 June 2019, 5,891,111 shares were awarded under the LTIP scheme to the Chief Executive Officer and the Chief Financial Officer ("2019 Award").

 

The share-based payment charge for the 2019 Award is set out as follows:

 

Financial year ended 31 December	Share based payment charge  £
2017	27,210
2018	85,372
2019	110,743
2020	94,176
2021	51,909
2022	16,959
386,369

 

The following information is relevant in the determination of the fair value of options granted under the 2019 Award.

 

	2017 Award	2018 Award
Grant date	28/06/2019	28/06/2019
Number of awards	2,868,889	3,022,222
Share price	0.115	0.115
Exercise price	£nil	£nil
Expected dividend yield	-%	-%
Expected volatility	50.82%	50.82%
Risk free rate	0.614% 80	0.614% 80
Vesting period	2 years	3 years
Expected Life (from date of grant)	2 years	3 years

 

LTIP Replacement Award

 

In 2021, the Company made changes to the LTIP in line with the requirements of a fundraise completed in 2020. The new plan was deemed a more appropriate scheme to incentivise management given the Company's stage of development and replaced the 2019 Award, which lapsed in its entirety.

 

Pursuant to the updated plan, in 2021 the Company granted options over 10.5 million new Ordinary Shares, at a strike price of 6p each, in the amounts of 6 million awarded to Sean Smith and 4.5 million awarded to Alex Abrey. The options vested immediately and lapse in three equal tranches in June 2022, June 2023 and June 2024. For the first five years following grant, no shares arising from the exercise of these options may be sold unless the Company's prevailing share price is equal to, or in excess of, 10p.

 

The shares arising from exercise of options are subject to a one-year lock-in restriction, followed by a one-year orderly market restriction.

 

For accounting purposes, the options granted under the LTIP Replacement Award have been treated as a modification of the 2019 Award as per IFRS 2.

 

Where awards previously granted have been deemed to be modified, IFRS 2 requires the share-based payment charge to comprise the original fair value of the awards, together with an incremental fair value.

 

A summary of the number of awards modified in the year ended 31 December 2021 and their fair values  is set out in the table below:

 

Fair Value of Awards at 31 December 2021	Incremental Fair Value £	Incremental Fair Value per Award £
2017 Awards	231,846	0.048
2018 Awards	229,998	0.046
Total	461,844

 

Share-based payment charge

 

The total share-based payment charge to be recognised by Eden in respect of the LTIP Replacement Award in the year ended 31 December 2021 and subsequent periods are as follows:

 

	2017 Awards		2018 Awards		Total
Charge for grants during the period	Original Annual £	Replacement Annual £	Original Annual £	Replacement Annual £	Annual £
31 Dec 21	17,735	231,846	34,174	229,998	513,753
31 Dec 22	-	-	16,959	-	16,959

 

The following information is relevant in the determination of the fair value of options granted under the LTIP Replacement Award.

 

	Replacement Awards
Grant date	30/06/2021
Number of awards	10,500,000
Share price	£0.10
Exercise price	£0.06
Expected dividend yield	-%
Expected volatility	70%/59%/67%
Risk free rate	0.02%/0.02%/0.05% 80
Vesting period	Nil
Expected Life (from date of grant)	0.5/1/1.5 years

 

As the options have been issued at a significant discount to the share price, the expected exercise has been assumed to equal the midpoint between the vest and lapse date.

 

2021 Award

 

Also in 2021, the Company made a further grant of options in order to ensure continuity of long term incentive of options over 7,183,784 new Ordinary Shares in Eden, at a strike price of 10.37p each, in the amounts of 4,102,703 awarded to Sean Smith and 3,081,081 awarded to Alex Abrey.

 

These grants expire on 31 July 2025 and vest as follows:

 

1/3 upon grant

1/3 12 months from the date of grant

1/3 24 months from the date of grant

 

The share-based payment charge for the year ended 31 December 2021 in respect of the above 2021 LTIP awards was £119,083.

 

In addition to the options granted under the LTIP, certain employees were awarded approved options over a total of 996,220 shares. These have been issued at a strike price of 10-10.37p with expiry date between 30 June 2022 and 30 June 2024. 640,664 of these vested immediately with the remainder vesting over a 3-year period. The share-based payments charge in respect of all these options for the year ended 31 December 2021 was £45,233.

 

A summary of all the above options is set out in the table below.

 

Options awards
		Number of share options				Weighted average exercise price (pence)
		2021		2020		2021		2020
	Outstanding at 1 January		5,891,111		5,891,111		-		-
	Granted during the year		18,680,004		-		7		-
	Exercised during the year		-		-		-		-
	Lapsed during the year		(5,891,111)		-		-		-
	Exercisable at 31 December		18,680,004		5,891,111		7		-

 

The exercise price of options outstanding at the end of the year ranged between 1p and 10p (2020: £nil) and their weighted average contractual life was 2.4 years (2020: 1.4 years.) 

 

The share-based payment charge for the year, in respect of options, was £678,069 (2020: £nil).

 

At the year end, of the options granted 13,680,006 were unapproved (2020: nil) and 4,999,998 were approved (2020: 5,891,111).

 

Options granted prior to the 2017 LTIP

 

Prior to the implementation of the LTIP in 2017, Eden had granted options to its Executive Directors, senior management and certain employees, as follows:

 

		Number of share options				Weighted average exercise price (pence)
		2021		2020		2021		2020
	Outstanding at 1 January	1,050,000		1,050,000		13		13
	Granted during the year	-		-		-		-
	Exercised during the year	-		-		-		-
	Lapsed during the year	(1,050,000)		-		13		-
	Exercisable at 31 December	-		1,050,000		-		13

 

For those options and warrants which were not granted under the Company's LTIP, fair value is measured using the Black-Scholes model.  The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural conditions.

 

For those options which were granted under the Company's LTIP, Monte Carlo techniques were used to simulate future share price movements of the Company to assess the likelihood of the performance criteria being met and the fair value of the awards upon vesting.  The modelling calculates many scenarios in order to estimate the overall fair value based on the average value where awards vest.

 

Warrants
		Number of share options				Weighted average exercise price (pence)
		2021		2020		2021			2020
	Outstanding at 1 January		2,989,865		2,989,865		19		19
	Granted during the year		-		-		-		-
	Exercised during the year		-		-		-		-
	Lapsed during the year		-		-		-		-
	Exercisable at 31 December		2,989,865		2,989,865		19		19

 

The exercise price of warrants outstanding at the end of the year ranged between 12p and 30p (2020: 12p and 30p) and their weighted average contractual life was 0.4 years (2020: 1.4 years.)  None of the warrants have vesting conditions.

 

The share-based payment charge for the year, in respect of warrants, was £nil (2020: £nil).  The weighted average fair value of each warrant granted during the year was £nil (2020

 

Xinova liability

 

In September 2015, the Company entered into a Collaboration and Licence agreement with Invention Development Management Company LLC (part of Intellectual Ventures, now called Xinova LLC).  As part of this agreement, upon successful completion of a number of different tasks, Xinova will be entitled to a payment which is calculated using a percentage (initially 3.17%, reduced to 1.6% following the fundraise in March 2020) of the fully diluted equity value, reduced by cash and cash equivalents, of the Company on the date on which payment becomes due which is expected to be 30 September 2025.  This has been accounted for as a cash-settled share-based payment under IFRS 2.

 

An amount of £67,462, being the estimated fair value of the liability due to Xinova, was recognised during 2016 and included as a non-current liability, as disclosed in note 19 to the accounts.  It is not believed that the value of the services provided by Xinova can be reliably measured, and so this amount was calculated based on the Company's market capitalisation at 31 December 2016, adjusted to reflect the percentage of work completed by Xinova at that date based on a pre-determined schedule of tasks.

 

A reduction of £37,472 was made in the year (2020: charge of £26,204), reflecting a reduction in the share price at the year end, compared to the previous year.

 

At the year end, an amount of £87,704 (2020: £125,212) was owed to Xinova and is shown in note 19 as non-current other liabilities.

 

Please see note 34, Post Balance Sheet Events, for further information

 

23 Share capital

 

		2021		2020		2021		2020
	Ordinary share capital	Number		Number		£		£
	Issued and fully paid
	Ordinary shares of 1p each		380,340,229		380,240,229		3,803,402		3,803,402

 

On 18 March 2020, the Company issued 86,182,500 ordinary shares at 6p each for a total consideration of £5,170,950 before directly attributable costs.

 

On 19 March 2020, the Company issued 86,968,392 ordinary shares at 6p each for a total consideration of £5,218,104 before directly attributable costs.

 

Share issue costs of £nil (2020: £638,931) were incurred and have been charged to the share premium account.

 

24 Share premium account

 

		2021		2020
		£		£
	At the beginning of the year	39,308,529		31,289,915
	Issue of new shares	-		8,018,614
	At the end of the year	39,308,529		39,308,529

 

25 Warrant reserve

 

		£
	Balance at 1 January 2021		429,915
	Share-based payment expense in respect of options granted		678,069
	Share-based payment expense in respect of options lapsed		(170,479)
	Balance at 31 December 2021		937,505

 

The warrant reserve represents the fair value of share options and warrants grants, and not exercised or lapsed, in accordance with the requirements of IFRS 2 Share Based Payments.

 

26 Merger reserve

 

			2021		2020
			£		£
		At the beginning and end of the year	10,209,673		10,209,673

 

The merger reserve arose on historical acquisitions of subsidiary undertakings for which merger relief was permitted under the Companies Act 2006.

 

27 Non-controlling interest

 

	2021		2020
	£		£
Non-controlling interest	31,119		19,689

 

The non-controlling interest arose from Eden Research plc's 50% share in TerpeneTech (Ireland) Limited.

 

28 Other interest-bearing loans and borrowings - Group and Company

 

Changes in liabilities, arising from financing activities are presented below:

 

		2021		2020
		£		£
	Balance as at 1 January	415,248		69,499
	Changes from financing cashflows
	Payment of lease liabilities		(90,388)		(44,457)
	Total changes from financing cashflows		(90,388)			(44,457)
	Other changes
	New leases Inter	50,209		417,521
	Adjustment to Right of Use Assets Inter	23,283		-
	Surrender of lease		-			(27,315)
	Total other changes		73,492			390,206
	Balance as at 31 December		398,352			415,248

 

29 Other leasing information

 

Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:

 

		2021		2020
		£		£
	Expense relating to leases of low-value assets	740		334

 

Set out below are the future cash outflows to which the lessee is exposed to that are reflected in the measurement of lease liabilities:

 

			2021		2020
	Land and buildings		£		£
	Within one year		92,143		74,783
	Between two and five years		256,935		325,794
			349,078		400,577

 

			2021			2020
Leases apart from land and buildings		£			£
Within one year		18,361			9,567
Between two and five years		30,914			5,104
			49,275			14,671

 

The Group holds five leases, for two properties and three vehicles. All leases have fixed lease repayments and remaining terms of 3.5 years for the properties and 2.2 years for the vehicles.

 

The incremental borrowing rate applied to lease liabilities recognised in the statement of financial position at the date of initial application of IFRS 16 was 4.75%.

 

Information relating to lease liabilities is included in note 20.

 

30 Capital risk management

 

The Group is not subject to any externally imposed capital requirements.

 

31 Related party transactions

 

Remuneration of key management personnel

 

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

 

Group

 

During the year, Eden invoiced its associate, TerpeneTech (UK), £7,760 for R&D charges (2020: £8,551) and accrued income of £40,000 (2020: £nil) for minimum royalties due under the headlice agreement.

 

Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf of TerpeneTech (UK).

 

At the year end, a net amount of £165,644 was due from TerpeneTech (UK) (2020: £128,983) to Eden. This amount is included within Trade and Other Receivables.

 

At the year end, a net amount of £43,962 (2020: £80,093) was due from TerpeneTech (Ireland) to TerpeneTech (UK). It represents the amount due in respect of the intangible asset above, reduced by fees receivable in respect of sales. This amount is included within Trade and Other Payables.

 

Company

 

During the year, Eden invoiced its associate, TerpeneTech (UK), £7,760 for R&D charges (2020: £8,551) and accrued income of £40,000 (2020: £nil) for minimum royalties due under the headlice agreement.

 

Also, during the year Eden paid £8,787 (2020: £6,362) for expenses on behalf of TerpeneTech (UK).

 

Further, at year end, £36,000 has been accrued in respect of management recharges from Eden to TerpeneTech (Ireland) (2020: £48,000). An amount of £84,000 (2020: £48,000) is included within the Company Trade and Other Receivables.

 

At the year end, a net amount of £165,644 was due from TerpeneTech (UK) (2020: £128,983). This amount is included within Trade and Other Receivables.

 

32 Financial risk management

 

Credit risk
	2021		2020
	£		£
Cash and cash equivalents	3,829,369		7,286,503
Trade receivables	886,587		1,396,308
	4,715,956		8,682,811

 

The average credit period for sales of goods and services is 206 days (2020: 242). No interest is charged on overdue trade receivables. At 31 December 2021, trade receivables of £272,912 (2020: £200,840) were past due.  During the year the Company wrote off bad debts in the amount of £nil (2020: £nil).

 

Trade receivables of £563,273 (2020: £791,581) at the reporting date were held in Euros and £104,866 (2020: £104,265) were held in USD.

 

The Company's policy is to recognise loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost. The Group measures loss allowances for trade receivables at an amount equal to lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considered reasonable and supportable information that is relevant and available without undue cost of effect. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and information credit assessment and including forward-looking information.

 

The largest trade debtor at the year end is a well-established, profitable business and long-term customer of the Company with whom Eden has had no issue of collecting debts due before and does not expect to have any going forward. In addition, TerpeneTech (UK), Eden's associate company, owed gross £170,279 (2020: £174,952) to Eden at the year-end.

 

TerpeneTech (UK), is a cash-positive business, albeit in its infancy, with good shareholder support and, again, Eden has had no issue of collecting debtors due from TerpeneTech (UK) before and does not expect to have any going forward.

 

Considering these factors, the Directors consider the ECL to be immaterial.

 

Credit risk
	2021		2020
	£		£
Trade payables	1,147,823		794,439
Other payables	77,784		367,313
Other taxes and social security	45,495		43,186
Accruals and deferred income	440,416		250,017
	1,711,518		1,454,955

 

The carrying amount of trade payables approximates their fair value.

 

The average credit period on purchases of goods is 123 days. No interest is charged on trade payables. The Company has policies in place to ensure that trade payables are paid within the credit timeframe or as otherwise agreed.

 

Maturity of financial liabilities (excluding lease liabilities)
The maturity profile of the group's financial liabilities at 31 December 2021 was as follows:
	2021		2020
	£		£
In one year or less, or on demand	1,711,518		1,454,955
Over one year	87,740		125,212
	1,799,258		1,580,167

 

Liquidity risk is managed by regular monitoring of the Company's level of cash and cash equivalents, debtor and creditor management and expected future cash flows. See note 1 for further details on the going concern position of the Company. For details of lease liabilities, see notes 20 and 29.

 

Market price risk

 

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

 

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

 

Capital risk management

 

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

 

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

 

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

 

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

 

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2021 and 31 December 2020.

 

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.  The Company's policy is to keep the gearing ratio below 10% (2020: below 10%).  The Company includes within net debt, any interest bearing loans and borrowings (none in current or prior year), any loans from a venture partner (none in the current or prior year), trade and other payables, less cash and cash equivalents.

 

33 Cash absorbed by operations

 

Consolidated

 

		2021			2020
		£			£
	Loss for the year after tax		(2,777,543)			(2,263,024)
	Adjustments for:
	Taxation charged/(credited)	(618,137)				(285,108)
	Finance costs		122,311			24,000
	Investment income		(98)			(5,725)
	Foreign exchange currency losses		21,993			3,792
	Amortisation and impairment of intangible assets	434,630			552,809
	Impairment of investment in associate	-			299,521
	Depreciation and impairment of property, plant and equipment and right-of-use assets	155,341			70,039
	Share of associate's loss	58,177			30,352
	Share-based payment expense	640,597			120,380
	Movements in working capital:
	Increase in inventories		(296,929)            (155,998)			(155,999)
	Decrease/(increase) in trade and other receivables	509,721				236,784
	(Decrease)/increase in trade and other payables	163,355				106,367
	Cash absorbed by operations		(1,586,582)			(1,265,812)

Company

 

		2021			2020
		£			£
	Loss for the year after tax		(2,764,402)			(2,229,669)
	Adjustments for:
	Taxation charged/(credited)	(618,137)				(285,108)
	Finance costs		122,311			24,000
	Investment income		(98)			(5,725)
	Foreign exchange currency losses		21,993			3,792
	Amortisation and impairment of intangible assets	421,358			539,535
	Impairment of investment in associate	-			299,521
	Depreciation and impairment of property, plant and equipment and right-of-use assets	155,341			70,039
	Share of associate's loss	58,177			30,352
	Share-based payment expense	640,597			120,380
	Movements in working capital:
	Increase in inventories		(296,929)            (155,998)			(155,999)
	Decrease/(increase) in trade and other receivables	473,721				188,784
	(Decrease)/increase in trade and other payables	199,486				134,286
	Cash absorbed by operations		(1,586,582)			(1,265,812)

 

34 Post balance sheet events

 

Xinova

 

After the year end, Eden was informed that Xinova had begun to wind down its operations.

 

As a consequence, Eden began communications with an agent acting on behalf of Xinova to effect the wind down in respect of the liability owed to Xinova by Eden.

 

On 22 April 2022, Eden signed a 'full and final' settlement agreement with Xinova which resulted in Eden paying an amount of £43,870, which represented a 50% discount to the liability of £87,740 as at 31 December 2021, in line with the then existing contract.