Eden Regulatory News (EDEN)

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

Eden Research Plc

("Eden" or "Company")

Financial Results for Year Ended 31 December 2019

Eden Research plc (AIM: EDEN), the AIM-quoted company focused on sustainable biopesticides for use in global crop protection, animal health and consumer products industries, announces its preliminary results for the year ended 31 December 2019.

Financial highlights

· Revenue of £2.0m (2018: £2.8m)

· Operating loss of £1.4m (2018: £0.5m)

· Loss before tax of £1.5m (2018: £0.5m)

· Loss per share of 0.54p (2018: 0.16p)

· Net cash of £0.5m (2018: £2.5m); net cash of £9.3m as at 4 May 2020

· Product sales increased 3% to £1.7m (2018: £1.6m)

· Upfront and milestone payments of £0.4m (2018: £1.2m)

Commercial and operational highlights:

· Eden's post-planting nematicide product, Cedroz™, received zonal authorisation under the EU process for the registration of plant protection products in April 2019. Malta, acting as zonal Rapporteur Member State, granted its authorisation at the zonal level covering both the Southern EU zone and the indoor zone, which is pan-European. This is the first stage in receiving full authorisations by the relevant member states.

· Sales of Cedroz commenced in Italy following the grant of emergency use authorisation in April 2019. In Italy, Cedroz™ is being used primarily on bell peppers, tomatoes, and melons to reduce gall damage caused by root knot nematodes and has increased total crop yield for farmers in the region. Emergency authorisation allows Eastman to launch Cedroz into the important Italian market and gain commercial-use experience with the product supporting accelerated sales development following the receipt of full authorisation.

· In October 2019, Eastman Chemical Company received full authorisation for Cedroz™ from the Belgian Ministry of Agriculture to be used on a wide range of crops including cucumbers, courgettes, melons, aubergine, peppers, tomatoes and strawberries.

· Cedrozä gained entry into the important US agricultural import market as a result of the first marketing authorisation for the product in Mexico. Initial approvals cover a wide range of crops, including tomatoes, potatoes, peppers, eggplants, melons, chili peppers, pepinos and squash.

· Exclusive distribution agreement signed in December 2019 with SumiAgro Europe for Eden's first product, Mevaloneä, in five new markets across central Europe, including Germany and Poland, for use as a fungicide on grapes as well as a treatment to prevent storage diseases on apples.

· Exclusive distribution agreement signed in December 2019 with Sipcam Oxon for Mevalone in Portugal and Benelux for use as a fungicide on grapes and several minor crops. Marketing authorisation has been received in Portugal for Mevalone to be used during the 2020 growing season.

· Eden made progress towards its plans for building a high-calibre team around the core functions within the business with the appointment of a Commerical Director and Product & Market Manager during the period

Post period end

· A significant opportunity was grasped through Eden's exclusive evaluation agreement with Corteva Agriscience in January 2020, which moves the business into a key, new area of seed treatments, presenting significant revenue potential. 

· Eden successfully completed a £10.4m (gross) fundraise in March 2020 which puts the Company in a good position to capitalise on the work it has done to date and to move forward expeditiously with its new, effective insecticide products and pursue other key opportunities in its pipeline.

· Appointment of Dr. Michael Carroll as Director of Regulatory Affairs in April 2020.

Current trading and COVID-19 update

Our overriding objective in the current crisis has been to ensure the safety of our employees. Following the governmental advice, the team has been working remotely and delivering largely uninterrupted services to customers. The Group already has a lean cost base with a number of its activities outsourced and has therefore made no material cost cutting to date but will keep this under review. The Group's cash position remains strong with £9.3m of cash available.

In the first part of the year, the Company has continued to trade in line with the management's expectations, although it should be noted that this is not the key growing season for its products. However, management has also started to see some disruption during this period from COVID-19; in particular there have been some issues with the export of product and it is clear that some regulatory authorities are working at reduced capacity. The latter has the potential to impact the Group's on-going product approvals with regulators around the world, which are required for it to sell its products in a broader range of markets to generate new revenues.

Thus far, the Company has not seen a significant change on its toll manufacturing operations. In addition, at this point in time our existing customers are not seeing a significant impact on sales of agrochemicals. However, and for example, social distancing and other travel restrictions will undoubtedly impact the ability of our distributors to interact with customers, and growers' reduced ability to harvest crops due to the lack of appropriate labour may impact on their investment in agrochemicals.

Given the uncertainty regarding the level and duration of any disruption in each of the markets in which the Group operates or plans to operate, it is difficult at this stage to assess what, if any, commercial and financial impact there may be. We will continue to provide updates as appropriate.

Lykele van der Broek, Chairman commented: "2019 was a pleasing year as we made progress in many areas of the business and gained multiple first registrations and sales of our sustainable post-planting nematicide product, Cedroz™.

We signed exciting new agreements with partners such as Sumi-Agro Europe which opened our business up to new and important markets. The solid year of development has set us up for the current period in which we have already achieved some important milestones and gained further momentum in our growth plans.

Eden is poised to capitalise on new product and market opportunities in 2020 as the future of sustainable agriculture continues to align with the technology and innovation that Eden can offer growers around the world."

For further information contact:

Notes:

Eden Research is an AIM-quoted company that develops and supplies breakthrough biopesticide products and natural microencapsulation technologies to the global crop protection, animal health and consumer products industries.

Eden's Sustaineä encapsulation technology harnesses the biocidal efficacy of naturally occurring chemicals produced by plants (terpenes) and can be used with both natural and synthetic compounds to enhance their performance and ease-of-use.

Sustaine microcapsules are naturally derived, plastic-free, biodegradable micro-spheres derived from yeast extract. They produce stabilised aqueous suspensions which are easy to mix and apply, have phased release patterns, are safer for the environment and the crops themselves.

The European Chemicals Agency (ECHA) has proposed an EU-wide restriction on the placing on the market or use of "intentionally-added" microplastic particles. The proposed restriction includes the use of microplastics for agricultural and horticultural purposes, including polymers utilized for controlled-release fertilizers, encapsulated plant protection products (PPP's), seed coatings, and biocides.

By 2025 in the EU, pesticides containing synthetic polymer microplastics are likely to be banned or removed from the market. The only acceptable alternative is the substitution with biodegradable formulations. Reformulated products will need to be evaluated and registered within the five-year transition period.

Sustaine is one of the only viable, proven and immediately registerable solutions to the microplastics problem in formulations requiring encapsulation.

Historically, terpenes have had limited commercial use in the agrochemical sector due to their volatility, phytotoxicity and poor solubility. Sustaine provides a unique, environmentally friendly solution to these problems and enables terpenes to be used as effective, low-risk agrochemicals.

Eden is developing these technologies through innovative research and a series of commercial production, marketing and distribution partnerships.

The Company has a number of patents and a pipeline of products at differing stages of development targeting specific areas of the global agrochemicals industry. To date, the Company has invested in the region of £14m in developing and protecting its intellectual property and seeking regulatory approval for products that rely upon the Company's technologies. Revenues earned by the Company have been modest whilst the Company has concentrated on securing patent protection for its intellectual property, gaining regulatory approvals, identifying suitable industrial partners, and entering into commercial agreements. 

In May 2013, the three actives that comprise Eden's first commercial product, Mevalone, were approved as new ingredients for use in plant protection products by the European Commission ("EC"). This represented a major milestone in the commercialisation of Eden's technology and is a significant accomplishment for any company. To illustrate this point, one should note that in 2013, Eden's approvals represented 3 of only 10 new active ingredients approved by the EC.

Mevaloneä is a foliar fungicide which has been authorised for sale in Kenya, Malta, Greece, Bulgaria, Spain, Italy, France, Cyprus, Albania, Portugal and Macedonia.

Cedroz™ä is a nematicide which has been authorised for sale in Malta, Belgium and Mexico.

Eden was admitted to trading on AIM on 11 May 2012 and trades under the symbol EDEN.

For more information about Eden, please visit: www.edenresearch.com.

Chairman's Statement

Introduction

It has been another pleasing year for Eden characterised by product development and pursuit of new opportunities. We find ourselves in an energised crop protection industry which is undergoing significant changes through fast-paced innovation. This is driven by macro-economic factors including an increasing global population and demand for food, set against a backdrop of increasing regulatory scrutiny of long-established pest and disease control solutions. Current regulatory pressures stem from empowered global consumers who are increasingly concerned and vocal about the pesticide residues in their food, associated health concerns, and demand to live in a more sustainable society. Most recently, agriculture has been identified as a key global industry during the Coronavirus COVID-19 pandemic. All together these factors favour Eden's business proposition.

Market opportunity

It is evident that the agriculture industry has been forced to shift to new, sustainable solutions including the new products and technologies that Eden offers.

Eden is a pioneer in an industry where being able to react and respond to fast changing dynamics is a clear strength and one that Eden possesses. The biopesticides sector of the crop protection market is currently enjoying a 15% compound annual growth rate and is expected to have a market value of over $10 billion by 2025. This is a significant leap for a market that barely existed twenty years ago.

In anticipation of the market opportunity that Eden's management has identified, it has developed, registered and built an ever-expanding portfolio of sustainable, biopesticide products based on the three active ingredients that are registered in Europe. Eden's first two products, Mevalone™ and Cedroz®, have been proven to have high efficacy and the added benefits of maximum residue level exemption, short pre-harvest intervals, competitive pricing, and strong alignment with current regulatory developments.

Eden's SustaineTM microencapsulation system is also receiving inbound interest from external parties. Sustaine can add value to other products by offering an effective encapsulation system, with high loading capacity, versatility, stability and sustained delivery. Eden had already identified that third party active ingredients could also benefit from using Sustaine for a variety of reasons such as dose reduction, resistance management and patent protection expansion. One key application for Sustaine, which has evolved in tune with the changing market dynamics, is its role in helping to solve the microplastics issue.

Microplastics have been well-publicised as causing problems for the environment and the European Union recently announced its intention to publish new regulations which could ban the use of polymers in certain industries, including crop protection, where polymers are widely used to formulate active ingredients. Such bans could come into force within five years which, in crop protection terms, is rapid change. Since this announcement, Eden has seen a significant increase in the number of enquiries from some of the major players in the crop protection industry looking for more sustainable solutions for their existing (and often largest selling) products.

Recent product expansion

In January 2020, Eden announced that it had partnered with Corteva Agriscience, the fourth largest agriculture input company in the world, to develop a product for a specific use in the seed treatment market which has, as yet, been a known, yet untapped opportunity for Eden. If successful, the product could generate revenues for the Company of up to c.€40m. There are many additional opportunities in seed treatments, and we are actively pursuing these both alone, and in partnership.

Eden's successful fundraise of £10.4m (gross) in March 2020 will allow it to bolster its existing product offering, with part of the proceeds to be used for the development of its first insecticide product. Eden's effective bio-insecticide targeting a range of key insect pests across numerous crops, is in the early stages of being registered and commercialised on a global basis, allowing Eden to enter into a significant new market. This is an opportunity where the addressable market in the EU and US alone is over €850 million.

Looking ahead

While the COVID-19 pandemic has introduced uncertainty in a number of areas, in particular the timing of approvals, the team at Eden has worked hard to ensure that it is well placed to capitalise on the opportunities that exist for the Company across what we acknowledge is a fast growing and dynamic industry.

Eden has a wealth of relevant experience; disruptive, innovative platform technologies; a strong patent portfolio; a strong balance sheet; a diverse and growing portfolio of efficacious, sustainable products; and an expanding, capable, enthusiastic team.

For the benefit of all our stakeholders, we shall continue to focus on delivering sustainable performance and long-term value, which are the primary areas of focus for the Board and executive leadership team.

Lykele van der Broek

Non-Executive Chairman

6 May 2020

Chief Executive Officer's Review

"We are determined to build a company that will prosper in the long term. After a successful capital raise in March 2020, it is clear our shareholders (existing and new) agree that now is the right time to invest in and capitalise on the opportunities in our pipeline. We have a clear ambition to be a global leader in sustainable chemistry, and we are poised to enter new and significant markets from a position of strength." Sean Smith, Chief Executive

Throughout the year, we have made consistent commercial progress and significantly advanced our position in the rapidly growing biopesticides market. The wheels are in motion across many areas of our business to expand our footprint, both geographically and through new product development, which should in turn generate growing future revenue from product sales. I am very proud of the company we are building and our contribution to more sustainable agriculture practices around the world where we make and sell our products.

Creating value

The global economy is facing a time of extreme volatility following the outbreak of the COVID-19 pandemic, with significant challenges to international trade and the institutions that have underpinned prosperity for many decades. Our business will not be immune to the disruption, but the strength and relevance of our current portfolio of products and projects, as well as the vital role of agriculture at this time, gives us confidence in our resilience as we support our partners and farmers across the world.

Eden is currently the only UK-quoted company focused on biopesticides for sustainable agriculture, and we are well-positioned to capitalise on this rapidly growing biopesticides market, which is projected to be worth over £10 billion by 2025.

Our strategy remains unchanged. Our near-term focus is to maximize the opportunity for sales of our two approved products, Mevalone and Cedroz, further the use of Sustaine with third party active ingredients, develop seed treatment opportunities with Corteva Agriscience (and others) and advance development of our first insecticide products. The Company continues to explore additional business line diversification including ongoing work with Bayer Animal Health, as well as the potential for consumer product launches. In addition, the Company will seek to expand the crops, diseases and pests treated by its products and will look to undertake further geographic diversification which will ultimately help to minimise the effect of regional weather, pest and disease pressure variations.

We have continued to improve the quality and pace of execution in every part of our business. The successful capital raise in March 2020 has placed us well to deliver increased value for our shareholders.

Performance

Fiscal year 2019 has been another year of pleasing performance, and the Company is well funded. Eden remains debt-free and has a strengthened balance sheet allowing us to pursue our exciting plans. Our outsourced manufacturing model means that we retain maximum flexibility over our choice of manufacturing locations with a low fixed cost base.

· Operating loss for the year of £1.4m is in line with market expectations

· The majority of the £2.0m of revenue was derived from product sales of £1.7m (2018: £1.6m), achieved despite unfavourable growing conditions in the Southern EU, with milestone and upfront payments making up the balance

· First marketing authorisations received for Cedroz, the Company's second commercial product which is being marketed by Eastman Chemical

· Cedrozä gained entry into the important US agricultural import market as a result of the first marketing authorisation for the product in Mexico.

· Exclusive distribution agreement signed with SumiAgro Europe for Mevaloneä in five new markets across central Europe, including Germany and Poland, for use as a fungicide on grapes as well as treatment to prevent storage diseases on apples.

· One-year exclusive Evaluation Agreement signed with Corteva (NYSE: CTVA), the fourth largest agriculture input company in the world, covering seed treatments (post year-end)

· Attainment of organic status for our three active ingredients in Europe with subsequent organic product status certificates in key countries (post year-end)

· Successful fund-raise of £10.4m (gross) from a combination of a placing, open offer and subscription. Key current shareholders Sipcam Oxon SpA, Gresham House and others participated, and we welcome 12 new institutional shareholders to the register, including the Business Growth Fund (BGF), Canaccord Genuity, Amati, and Rathbones (post year-end).

In 2020, the Company expects to build on the sales achieved in the territories where it received approvals during 2019 and early 2020, including the acceptance of Mevalone for organic agriculture in key countries. Moreover, the Company expects to see sales arising from new approvals for Cedroz in Spain, Italy, France, Belgium, the Netherlands and the United Kingdom where the applications for registrations have now been outstanding from the early part of 2019 and the constituent active ingredients are already approved.

With the recent appointment of an experienced Director of Regulatory Affairs, we are better placed than ever to expand our regulatory and commercial footprints (and consequently, our addressable market) with increasing speed, however, we do expect that the current COVID-19 pandemic will slow the progress of many regulatory agencies, and we are keeping a careful eye on developments in this area to help ensure we are able to accurately forecast developing sales in new territories. As normal, the pace of regulatory clearances controls the commencement of new revenues in this highly regulated industry. With the current restrictions on travel, there may be an impact on face to face sales meetings which could also impact revenue.

The Company continues to expect the US EPA to approve the sale of Mevalone and Cedroz in the United States during 2020. However, there is little doubt that the current situation with COVID-19 and the consequential shut-down of certain services coupled with a fundamentally changed working dynamic, will have an impact on operations at EPA and, subsequently, the pace of approvals. Although the Company might expect to see some level of channel stocking, the overall levels of sales in 2020 will depend largely upon the timing of approvals relative to the growing season.

Making an impact

"Plant protection products play a fundamental role in agricultural production. The biopesticides market outlook remains undoubtedly positive, with a clear demand from consumers for sustainably grown produce and in response, a notable shift towards more sustainable farming practices. As we step into the 'new normal' post the COVID-19 pandemic, consumer demand for a chemical-free supply chain will only be more prevalent."

Our core business proposition is more relevant than ever. The growing demands of consumers are driving increased transparency around agricultural practices, with clear emphasis on improving sustainability from the bottom up. Our current portfolio of products is helping farmers across southern Europe integrate greener processes which not only benefit consumers, but also protect agricultural ecosystems.

As we develop our portfolio by expanding the uses of our products, we will be able to help a broader range of growers in more regions implement more sustainable processes in their production. Additionally, we are particularly excited by the potential of the Company's patented microencapsulation technology, Sustaine™, a naturally sourced, plastic-free, biodegradable formulation technology derived from yeast, which has applications beyond agriculture. We will continue to assess how the technology can be applied to the animal and consumer product sectors to help these industries reduce their use of microplastics.

Financial Review

Revenue for the year decreased to £2.0m (2018: £2.8m) primarily due to the reduction in one-off receipts to £0.4m (2018: £1.2m) following the exercise of an option by Sipcam Oxon SpA in 2018 which was not repeated in 2019.

Going forward, the focus for the business remains to grow revenue through product sales which will ultimately provide a sustainable, consistent source of income for the Company. This was the case in 2019 with product sales increasing to £1.7m (2018: £1.6m).

The cash position at the year-end was £0.5m (2018: £2.5m), though this was significantly increased after the year end following the successful fundraise in March 2020 with gross proceeds of £10.4m.

Administrative expenses in the year were similar to last year at £1.5m (2018: £1.5m) though operating loss increased to £1.4m (2018: £0.5m). Despite the similar overhead cost base and the increase in product sales, the increase in operating loss is due to the aforementioned reduction in one-off receipts, as well as increased share-based payment charges of £0.2m (2018: £0.1m) and amortisation of £0.5m (2018: £0.4m).

Throughout the year, the Company remained debt free with no long-term debt or lending facilities in place or expected to be required.

Following the fundraise in March 2020, the Company is well funded and well placed to execute its business plan which involves investing in product trials and marketing authorisations which are required to increase product sales revenue and the geographical footprint in which Eden can operate, in addition to growing the team which should enable the Company to meet its ambitious growth targets.

BREXIT

The impact of Brexit is still somewhat uncertain for many UK companies and this is now complicated further by what are likely to be delays to key trade negotiations with the EU, in particular due to the COVID-19 pandemic and its impact on Government operations and priorities. However, the Company understands that the ownership of its EU approvals of Mevalone and its constituent active substances should not be impacted by Brexit, since guidance has been published stating that the owner of such approvals can continue to be a UK resident company. However, seeking regulatory approval in the UK for Eden products has become somewhat more challenging, and the Company is now weighing up market opportunities and costs under the various Brexit scenarios. We are now better placed than before to navigate what are likely to be complex regulatory challenges.

From an operational perspective, the Company does not foresee any significant issues with continuing to have toll-manufacturing facilities in mainland Europe, though it is monitoring this situation. The Company also has manufacturing capabilities in the UK as well as the US which provide some flexibility. In addition, it is feasible for Eden to manage some of its operations through its Irish subsidiary, should this be necessary.

Raw materials are currently sourced from outside of the EU and so there is expected to be minimal impact on this part of the supply chain.

COVID-19

During this difficult time, the agriculture industry requires a unified effort from all involved in the provenance of fresh food and produce. Eden is committed to continuing to provide biopesticide products and natural microencapsulation technologies to the global crop protection industry through its network of partners across the world. Whilst trading in the first part of the year have been in line with management's expectations, with low direct operation impact from COVID-19 at this time, there remains significant uncertainties regarding the severity and duration of the pandemic and the measures required to combat it. However, we want to make Eden's current position clear to our stakeholders. 

We Are Funded for Future Growth

In March 2020, we raised £10.4 million (gross) from investors, a feat that the whole team is proud of given the volatility and uncertainty in the markets at the time. The resounding vote of confidence from our shareholders (both existing and new) will help us capitalise on the global shift towards more environmentally friendly methods of crop protection, driving us to become a leading provider of sustainable solutions for global agriculture. Though the coming months will certainly present challenges for the Company, our employees and our partners, Eden remains debt-free and has a strengthened balance sheet allowing us to execute on our exciting plans. Our out-sourced manufacturing model means that we retain maximum flexibility over our choice of manufacturing locations with a low fixed cost base. 

Our Industry Has a Pivotal Role to Play

As demand soars for food supply during the lockdown periods across the UK and beyond, the agriculture industry has a vital role to play in feeding the world through the crisis and minimising the economic fallout.

"Plant protection products play a fundamental role in agricultural production - without them, we would not be able to cope adequately with global emergencies such as COVID-19. The biopesticides market outlook remains undoubtedly positive, with a clear demand from consumers for sustainably grown produce and in response, a notable shift from growers towards greener farming practices. As we step into the 'new normal', consumer demand for a chemical-free supply chain journey will only be more prevalent."

Not only do people need food to survive, they remain conscious of where it comes from and care about the supply chain journey. The choices people are making to put healthy food on the table are driving what farmers grow in their fields and how they grow them with an increasing emphasis on sustainable practices and produce that is free from pesticide residues. This is the future of farming, and Eden is at the forefront of the movement towards sustainable farming practices. 

Supporting Our Employees and Partners

As always, we are working closely with our partners as they continue to maintain their business of supplying our product to growers in an increasing number of countries. Our team is reviewing the situation every day so that we can adapt to any changes that may be experienced by our partners and ensure the health and safety of their workers is paramount. Closer to home, Eden's team are avoiding unnecessary travel and working remotely during the crisis.

I want to thank our partners and, of course, the farmers who cannot carry out their work remotely and who are working hard each day to ensure that we have enough to eat now and in the future. Their work cannot not stop, and we are grateful now more than ever for all that they do to feed us. We hope you stay safe and well.

TerpeneTech (UK)

TerpeneTech secured a CE mark for its head-lice treatment product in European Economic Area ("EEA") in 2018, which is the first step in the marketing and sales of such products. TerpeneTech has also established its first channel distribution partner who will target the UK market. The first product launch in the UK is currently expected to coincide with the back-to-school schedule in the autumn of 2020. Sales will commence in other countries in the EEA once arrangements with additional distribution partners have been finalised.

Dividends

There is no dividend to be paid or proposed in respect of 2019. The Board continues to monitor its dividend policy.

Summary

Today, Eden is a stronger, more established business than it has ever been, and this trend continues as we move ahead with a robust financial position, an expanding regulatory and commercial footprint, a strong and growing network of partners, and a growing product portfolio, all allowing us to significantly increase the size of our addressable market. We have embedded a culture of efficiency and reduced complexity, and we seek continuously to strengthen and improve our operations. We are increasingly able to anticipate and adapt to changing consumer and regulatory trends as well as global economic conditions, and we benefit from the strong alignment of our sustainable business model with ongoing regulatory changes in our industry - an industry in which regulation is creating tremendous disruption and opportunities that we are well-placed to respond to.

Eden remains the UK's only quoted company focussed upon sustainable chemistry for the biopesticides industry, and we are excited to be contributing to the growth of our industry and supporting the all-important work of farmers and our partners.

Sean Smith

Chief Executive Officer

6 May 2020

Strategic Report

Review of business

The review of this year's business activities is as set out in the Chairman's Report and Chief Executive Officer's Report.

An update on TerpeneTech, Eden's associate company, is also included in the Chief Executive Officer's Report.

Key financial performance indicators

The key performance indicators of the business are the development and commercialisation of the Company's products and the management of its cash position.

Revenue derived from product sales, licence fees and milestone payments are all considered to be key financial performance indicators. Maintaining a low overhead base and progress towards profitability are also key indicators.

Revenue in 2019 consisted of upfront and milestone payments in relation to new and existing agreements, royalties and product sales. Revenue in 2019 was £2.0 million in comparison to £2.8 million in 2018. The operating loss for the year was £1.4 million compared to £0.5 million for the previous year. The loss before tax for 2019 was £1.5 million, up from £0.5 million in the previous year.

The loss per share for 2019 was 0.54 pence (2018: 0.16 pence).

Administrative expenses for the year were £1.5 million (2018: £1.5 million).

Intellectual property, including development expenditure, is written off over eleven years in line with the remaining life of the Company's key patents, taking into account additional protection provided by granted Supplementary Protection Certificates.

The Company has capitalised £0.9m (2018: £0.4m) of development expenditure in the year which is a reflection of the continued development of the Company's products.

Cash is safeguarded by close working capital management, including tightly controlling the Company's creditor position. The cash position at the year-end was £0.5m (2018: £2.5m), though this was significantly increased after the year end following the successful fundraise in March 2020 with gross proceeds of £10.4m.

Other key non-financial performance indicators

The regulatory approval of products and milestones related to such processes are deemed to be key non-financial performance indicators.

The progress of the development of the Company's products is measured against internally set timescales as well as against the regulatory process which will result in the registration of products. The Chief Executive Officer's Report contains an update regarding this progress.

The registration of the Company's first product, Mevalone, for use as a pesticide in Europe is not only a key milestone in terms of its commercialisation, but also indicative of future products as the three active substances that are registered in the EU are the basis of Eden's future product portfolio. Thus far, Mevalone has been approved for use in in Kenya, Malta, Greece, Bulgaria, Spain, Italy, France, Cyprus, Albania, Portugal and Macedonia.

Eden's second product, Cedrozä, is a nematicide which has been authorised for sale in Malta, Belgium and Mexico in 2019.

Further commercialisation of Eden's products and Sustaine encapsulation technology through supply, licensing, evaluation and option agreements also serve as a key indicator of the Company's performance.

Successful trial results are also significant in showing the technical and commercial viability of our intellectual property.

Principal risks and uncertainties

The Company's prime risk is the on-going commercialisation of its intellectual property, which involves testing of the Company's products, obtaining regulatory approvals and reaching a commercially beneficial arrangement for each product to be taken to market. This is measured by comparing actual results with forecasts that have been agreed by the Company's Board of Directors.

The Company's credit risk is primarily attributable to its trade receivables. Credit risk is managed by running credit checks on customers and by monitoring payments against contractual agreements.

The Company monitors cash flow as part of its day to day control procedures. The Board considers cash flow projections at its meetings and ensures that the Company has sufficient cash resources to meet its on-going cash flow requirements.

Due to the nature of the business, there is inherent risk of infringement of Eden's intellectual property rights by third parties. The risk of infringement is managed by taking (and acting on) the relevant legal advice as and when required.

There is also inherent uncertainty surrounding the regulatory approval of products in terms of both timing and outcome. This risk is managed by retaining appropriately experienced staff and contracting with expert consultants as needed.

COVID-19

Whilst, to date, the Board has not seen a significant, direct operational impact on the business from COVID-19, clearly the full extent of the effects is not yet known and, as such, there is an inherent risk that the Company is negatively affected.

The Company has not seen a significant change, thus far, on its toll manufacturing operations. In addition, our customers are not expecting any significant impact on sales of agrochemicals.

We have, however, seen regulatory authorities working at reduced capacity, which is expected to impact on-going product approvals that we have around the world, though it is difficult at this stage to assess what, if any, commercial and financial impact there may be.

Employee diversity and inclusion

The Board remains committed to developing further a culture that encourages the inclusion and diversity of all of the Company's employees through respecting and appreciating their differences and promoting the continuous development of employees through skills enhancement and training programmes. The Company's employment policies are designed to attract, retain, train and motivate the very best people, recognising that this can be achieved only through offering equal opportunities regardless of gender, race, religion, age, disability, sexual orientation or any other aspect of diversity. Applications from disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. It is the policy of the Company that the training, career development and promotion of disabled persons (including those who become disabled whilst employees of the Company) should, as far as reasonably possible, be identical to that of other employees.

Indemnity cover

The Company purchases insurance cover for Directors and Officers to offer protection from third party claims.

Environment

The Company has an environment policy and acknowledges that environmental considerations form an integral part of its corporate social responsibility. The Company's environment committee meets to discuss ways in which the business can contribute more to its local environments by getting involved in local initiatives and also to look at ways of promoting environmental wellbeing amongst the staff. Employees are actively encouraged to ensure conservation of energy and resource through awareness campaigns and positive action.

Section 172 statement

The directors are fully aware of their responsibilities to promote the success of the Company in accordance with s172 of the Companies Act and have acted in accordance with these responsibilities during the year. The Board has identified that its key stakeholders are:

• our workforce

• shareholders

• customers

• regulators

Eden's core values, which are professionalism, integrity, effectiveness and dynamism, reflect the company's commitment to do the right thing simply because it is the right thing to do. The requirement to adhere to this principle is embedded within all job descriptions across the group.

Throughout the year, the Board considered the wider impact of strategic and operational decisions on the company's stakeholders.

Our workforce

Our workforce is fundamental to the long-term success of the company. We have various engagement mechanisms many of which have been in place for a number of years. The team at Eden generally meets every Monday morning to review the various on-going projects and plan the week ahead. Annual employee reviews are undertaken and regular communication takes place between management and staff to ensure that any concerns or issues are identified and appropriately addressed. The Company provides training to employees as well as arranging social occasions to promote the well-being and connectivity of the team.

Shareholders

The support and engagement of our shareholders is imperative to the future success of our business. In all of its decision making, the Board ensures that it acts fairly with regard to members of the company. We have productive ongoing dialogue with a number of our investors. We are also in touch with all of our shareholders at least three times per annum with information about shareholder meetings and the company's financial results. We have regular meetings with institutional investors and analysts to understand their views and address any concerns.

Customers

The commercial team at Eden is in regular contact with our customers to ensure that they are satisfied with the products that Eden is selling to them or that any projects that are taking place with them are on track and without issue. Face to face meetings take place, as well as other communication such as emails or video or phone conferences, which allow for an on-going dialogue with the objective of reducing any potential issues or concerns. A project management system is operated by Eden to ensure that all customers are communicated with on a regular basis to keep customers satisfied as much as possible.

Regulators

The regulatory team at Eden, which includes both employees and expert consultants, communicates directly with regulators around the world to allow an efficient and successful process to take place. Clearly, regulation is a key factor in Eden's industries and so it is important for the team at Eden to be in regular contact with regulators to promote the long-term success of the business through the approval of product marketing authorisations. The regulatory team also keeps itself up to date on regulatory matters through training and relevant publications.

On behalf of the board:

Sean Smith

Director

6 May 2020 

Attendance at Board and Committee meetings

Board and Committee meetings are scheduled in advance for each calendar year. Additional meetings are arranged as necessary to review strategic and annual plans.

The scheduled Board and Committee meetings and attendance during the year ended 31 December 2019 were as follows:

Professional development and training

Alex Abrey is a Chartered Certified Accountant. As part of his professional development, he attends relevant courses and maintains his qualification through Continuing Professional Development under the Association of Chartered Certified Accountants.

Robin Cridland is a Chartered Accountant. As part of his professional development, he attends relevant courses and maintains his qualification through Continuing Professional Development under the Institute of Chartered Accountants in England and Wales.

Sean Smith is a member of the Institute of Directors with access to online tools and courses and attends industry conferences including the Association of Biocontrol Industry Manufacturers.

Lykele van der Broek keeps up-to-date by regularly reading economic and management literature, by being briefed by external advisors on matters such as remuneration, corporate governance, and liaising with consultants who inform the board of changes in legislation, best practice or public perception.

External advisors

The Company uses external advisors, where necessary, as follows:

Advisor Role

Nominated Advisor Provides advice on AIM Compliance

Commercial lawyer Provides advice on legal issues such as commercial agreements

Regulatory lawyer Provides advice on regulatory aspects of the business

The Company Secretary is the only internal advisor the Company currently has. The Secretary is responsible for the efficient administration of the company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented.

Corporate Governance Statement - Chairman's Letter

Dear shareholder, 

The Directors have adopted the principles set out in the Quoted Companies Alliance Governance Code. The Directors have applied these principles, as far as practicable and appropriate for a relatively small public company, as follows: The Board currently comprises two Executive Directors and two Non-Executive Directors. The Board meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board meetings. All Directors have access to the advice and services of the Company Secretary and the Chief Financial Officer, who is responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company's expense. The Directors of Eden champion openness and accountability at every level. This involves focusing on how this takes place throughout the company and by those who act on its behalf.The quality of our governance is evident in the way we conduct business and how we treat our workforce, customers and suppliers. The Board sets the framework of values within which the desired corporate culture can evolve and thrive. Ownership of the values is strengthened by a collaborative approach by both the leadership and the workforce being involved in a two-way process to define the company's values. Clear messages are given through decisions, strategies and conduct. Directors reinforce values through their own behaviour and decisions. To increase the effectiveness executive and non-executive directors have increased visibility. The Board demonstrates ethical leadership and displays the behaviours they expect from others and communicate what they consider to be acceptable business practice and they consider chosen behaviours when setting strategy and financial targets. The Company seeks to keep its strategy consistent with its purpose and values and its responsibilities for long-term success and to contribute to wider society. Values are embedded at every level of the organisation and the Board seeks assurance from management that it has effectively embedded the Company's purpose and values in operational policies and practices including aligning incentives, rewards and promotion decisions to values.  

Values and expected behaviours are reinforced through our recruitment, promotion, reward, performance management and policies, processes and practices. Our reward structures produce appropriate incentives to encourage desired behaviours and responsible risk-taking and management consistently communicate values and expected behaviours widely and clearly across the company and ensure that they are understood by the workforce. Management also encourage suppliers to meet the expected standards of behaviour. Values and expected behaviours include:- HonestyOpennessTransparencyRespectAdaptabilityReliability RecognitionAcceptance of challenge AccountabilityA sense of shared purpose The Board is alert to signs of possible cultural problems and recognises that the workforce is a vital source of insight into the culture of the company. Monitoring of effectiveness Monitoring efforts are focused on existing internal capabilities and information:- • Training data • Recruitment, reward and promotion decisions • Use of non-disclosure agreements • Whistleblowing, grievance and 'speak-up' data • Board interaction with senior management and workforce • Health and safety data, including near misses • Promptness of payments to suppliers • Attitudes to regulators, internal audit and employees Areas including human resources, audit & risk and compliance offer an integrated approach to aid understanding of how behaviours and culture impact performance and offer analysis and advice the Board. The Board identifies areas of good practice and excellence that are used to drive up standards across the business which reinforces the value that a healthy culture adds.Lykele van der Broek Non-Executive Chairman

Corporate Governance Statement - Business Model and Strategy

The Company's business model can be found on the Company's website www.edenresearch.com and in the Company Overview section, at the front of the Annual Report.

Key challenges

Our vision is to be the leader in sustainable products enabled or enhanced by our novel Sustaine encapsulation and delivery technology in crop protection, animal health and consumer products.

Corporate Governance Statement - QCA Corporate Governance Code

In accordance with Aim Rule 26 of the AIM rules for companies, the corporate governance code that the board of directors have chosen to apply and benchmark against is The QCA Corporate Governance Code.The QCA Corporate Governance page on the Company's website contains links to the required compliance documents and published disclosures which explain how Eden Research 'complies with or explains against' the code.

Published Disclosures:

Remuneration Policy

Introduction

The Remuneration Policy for Eden Research plc includes the three main elements of remuneration; salary, cash bonus and equity incentive.

The Policy is based on market facing structures, precedented in other AIM listed companies. The policy has been prepared for the Executive Directors, however it is intended that the principles should apply to all staff.

An important principle is that the elements of remuneration should not overlap (to ensure that an Executive is not rewarded more than once for the same achievement).

Salary is a reward for the day to day execution of a role (which is documented in a job description).

The cash bonus is a reward for the achievement of challenging milestones in a year over and above the day to day role and linked to an increase in the value of the business through the achievement of significant commercial progress.

The equity incentive should deliver value to the Executive in the medium to long term, based on a sustainable increase in the share price over the corresponding period of time, and of a magnitude related to the actual increase in share price, in order to align management's incentive with the interests of shareholders.

The Remuneration Committee has absolute discretion in the application of these principles and may make adjustments, where appropriate, and acting reasonably.

Salary

A salary review usually occurs in Q4 each year, to take effect from 1 January in the following year, unless a market adjustment is required at a different time.

Generally, salaries should be benchmarked and comparable to similar positions in similar sized AIM listed companies in similar industry segments.

Cash bonus

Bonuses are paid to the extent their payment does not shorten the funded runway of the business to less than eighteen months, based upon an up-to-date forecast using reasonable assumptions, as agreed by the Board. This figure may be adjusted by the Remuneration Committee.

The Target bonus levels are a percentage of salary.

The Target bonus is generally made up of, and released incrementally by, the achievement of:

· new commercial partnership deals and other commercial milestones (e.g. regulatory approvals)

· the return received on such agreements

· contribution and profit earned.

As the business matures, the balance between deal value, other commercial milestones and contribution / profit is expected to transition in weighting (i.e. from deals through other milestones towards profit).

Bonus payments are calculated prior to completion of (and included in) the annual report and paid out after the Annual Report has been approved by the auditors and the Board.

Equity incentive

Unapproved share option scheme

The Company operated an unapproved share option scheme for executive directors, senior management and certain employees. This scheme was used for any options awarded prior to 28 September 2017.

Long-Term Incentive Plan ("LTIP")

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

Other than in exceptional circumstances, awards have been 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 Remuneration Committee retains the ability to amend the performance conditions for future grants to ensure that such grants achieve the stated purpose.

After the year end, as part of the financing completed in March 2020, the Board reviewed the LTIP with a view to making adjustments to align further the interests of management with shareholders, as summarised below.

Application of the Policy

Emoluments

Details of the remuneration of those who served as directors during the year are set out below.

The Company also operates an annual, discretionary cash bonus scheme.

For 2019, the target bonus levels and actual bonus achieved for Executive Directors on meeting all of these objectives were:

Sean Smith 70% of base salary, achieved 28.88%, (2018: 70% of base salary, achieved 56.7%)

Alex Abrey 70% of base salary, achieved 28.88%, (2018: 70% of base salary, achieved 56.7%)

The Committee considers that the performance metrics underpinning the annual, discretionary cash bonus scheme are in line with shareholders' expectations.

Pensions

For the Executive Directors and certain employees, the Company makes contributions to a defined contribution pension scheme. The Company contributes a maximum of 7% provided that the director makes a minimum 4% contribution. Below this, the Company contributes the same percentage as the director

Share-based payments

The share options granted to individual Directors to date are detailed below and include grants made in prior years.

Non-Executive Directors

Non-Executive Directors receive a fee only with no additional benefits, bonuses or option grants.

Directors' contracts

The Executive Directors have a service contract of indefinite term with a notice period of no more than six months.

Non-Executive Directors have Letters of Appointment which are terminable by the Director or the Company with three months' notice.

Share option scheme grants

In 2017, the Remuneration Committee implemented a Long-Term Incentive Plan ("LTIP"). The awards are in respect of management performance for each financial year ending 31 December.

Further details of the awards are set out in the table below.

All of the following nil-priced options only become exercisable if the following share price performance conditions are met: 50% of the options become exercisable if the weighted average Ordinary Share price in the 45 day period ending on the vesting date is at the minimum price (as shown in the table) or above.

Between the weighted average ordinary share prices of the minimum and maximum prices, vesting shall be pro-rata and on a straight-line basis between 50% and 100%. Below the minimum price, the options are not exercisable and lapse in full.

A Abrey

S Smith

At 31 December 2019, the directors had the following interests in share option schemes:

LTIP option awards in respect of the year ended 31 December 2019 will be made during 2020, as described below.

Following the recent fundraise in March 2020, the Company will implement a new long term incentive plan to award the performance of the executive management team. The new plan will replace the Company's existing LTIP, and is deemed a more appropriate scheme to incentivise management given the Company's stage of development.

Pursuant to the new plan, the Company will grant 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 will vest immediately and will 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 new plan will include a net cashless mechanism whereby a number of shares may be deducted from the participant's option pool upon exercise, equivalent to half the exercise cost based on the prevailing market price of the Company's Ordinary Shares, and provided the remaining exercise cost is paid in cash. The shares arising from exercise of options shall be subject to a one-year lock-in restriction, followed by a one-year orderly market restriction.

Further details of the LTIP will be announced following First Admission and Second Admission once formally implemented.

Lykele van der Broek

Remuneration Committee Chairman

Audit Committee Report

On behalf of the Audit Committee, I am pleased to present this report to shareholders. The purpose of the report is to highlight the areas that the Committee has reviewed and how we have discharged our responsibilities effectively during the year.

Responsibilities

The key responsibility of the Committee is to provide effective governance over the Company's financial reporting to ensure its appropriateness. Under its terms of reference, the Committee is required, amongst other things, to:

• monitor the integrity of the financial statements of the Company including the appropriateness of the accounting policies adopted and whether the Annual Report is fair, balanced and understandable;

• review, understand and evaluate the effectiveness of the Company's internal controls and risk management systems, particularly but not exclusively as they pertain to financial matters;

• appraise the Board on how the Company's prospects are assessed;

• oversee the relationship with the external auditors, making recommendations to the Board in relation to their appointment, remuneration and terms of engagement;

• monitor and review the effectiveness of the external audit including the external auditors' independence, objectivity and effectiveness and to approve the policy on the engagement of the external auditors to supply non-audit services; and

• monitor and review the internal audit activities in the Company.

The Committee's terms of reference can be found on the Company's website www.edenresearch.com.

Composition of Committee and meetings

The Audit Committee comprises the two Non-Executive Directors, Robin Cridland, who is Chairman of the Committee, and Lykele van der Broek. The Chairman of the Committee has recent and relevant financial experience and collectively the members of the Committee have experience of the chemical, agricultural and animal health industries. Details of Committee members' qualifications can be found on the Company's website. The Audit Committee met six times during the year, and has a rolling agenda linked to the Company's financial calendar. It invites the Chief Executive Officer, the Chief Financial Officer and the external auditors to attend its meetings. The Committee met with the external auditors at the conclusion of the audit without the Executive Directors being present. The Committee has met once since the end of the financial year to consider the results and the Annual Report for the year ended 31 December 2019.

Main activities during the year

Set out below is a summary of the key areas considered by the Committee during the year and up to the date of this report.

Financial reporting

During the year, the Audit Committee reviewed reports and information provided by both the Chief Financial Officer and the external auditors in respect of the half year and annual financial report. An important responsibility of the Audit Committee is to review and agree significant estimates and judgements made by management. To satisfy this responsibility, the Committee reviewed a written formal update from the Chief Financial Officer on such issues at the two meetings that reviewed the half year and year end results, as well as reports from the external auditors. The Committee carefully considered the content of these reports in evaluating the significant issues and areas of judgement across the Company.

The key areas of review, including those requiring significant judgements to be made, in the year were as follows:

• Revenue recognition

• Potential impairment of intangible assets including intellectual property and investments

• Management override of controls

Other areas reviewed in the year were as follows:

• Going concern

• Consolidation

• Share based payments

• Accruals and provisions

• Related party transactions

Since the year end, the Audit Committee has considered the impact of COVID-19 on areas such as going concern in particular.

Internal control and risk management

During the year the Committee continued to review the effectiveness of the Company's internal control and risk management systems. The Committee reported to the Board that it had reviewed, and was satisfied with, the effectiveness of these systems.

External audit

KPMG LLP has been the external auditor for the Company since 2017. The Audit Committee annually assesses the qualification, expertise and independence of the auditors and the effectiveness of the audit process. KPMG's current engagement partner is Andrew Campbell-Orde, and he has been in place since being appointed for the Company's 2017 year end.

Following approval by shareholders to re-appoint KPMG at last year's AGM, the Audit Committee reviewed and approved the terms of engagement and remuneration of the external auditors for the 2019 financial year.

Audit and Committee effectiveness

The effectiveness of the external audit process is dependent on appropriate audit risk identification at the start of the audit cycle. KPMG present their detailed audit plan to the Audit Committee each year, identifying their assessment of these key risks. The Committee's assessment of the effectiveness and quality of the external audit process and addressing these key risks is informed by, amongst other things, the reporting from the auditors. In addition, each year, the Audit Committee's performance and the effectiveness of the external auditor is assessed through discussions between the Audit Committee members, the Board, the external auditor and members of the Company's senior finance team (in particular the Chief Financial Officer). In respect of 2019, the Board was satisfied with the review process, the performance of the Committee and the effectiveness of the external auditor.

Auditor independence

The Company meets its obligations for maintaining an appropriate relationship with the external auditors through the Audit Committee, whose terms of reference include an obligation to consider and keep under review the degree of work undertaken by the external auditor other than the statutory audit, to ensure the auditor's objectivity and independence is safeguarded.

In accordance with the Auditing Practices Board Ethical Standards, the Company's external auditor must implement rules and requirements which include that none of their employees working on our audit can hold any shares in Eden.

The external auditor is also required to tell the Company about any significant facts and matters that may reasonably be thought to bear on their independence or on the objectivity of the lead partner and the audit team. The lead partner in the audit team must change every five years.

The Audit Committee reviewed and approved the non-audit services policy, the objective of which is to ensure that the provision of such services does not impair, or is not perceived to impair, the external auditors' independence or objectivity. The policy imposes guidance on the areas of work that the external auditors may be asked to undertake and those assignments where the external auditors should not be involved. There is a further category of services for which a case-by-case decision is necessary. The policy can be viewed on the Company's website www.edenresearch.com. In order to ensure that the policy is effective and the level of non-audit fees is kept under review, major work to be awarded to the audit firm must be agreed in advance by the Audit Committee Chairman. For the 2019 financial year end, there was no non-audit work undertaken by the Company's auditors, who continue to be considered independent.

Internal audit

Due to the size of the business, the Company does not currently have a separate internal audit function. The Company's Risk Management Team takes this into account when deciding how to mitigate risks associated with not having an internal audit function and manages the situation accordingly. Every year the Audit Committee reviews the appropriateness of this arrangement and specifically whether an internal audit function is necessary, including requesting input from the external auditor. At the date of this report the Audit Committee does not recommend that an internal audit function is required.

Other activities

The Committee also reviewed its terms of reference, the Company's policies on whistleblowing, business ethics and on the prevention of bribery and modern slavery.

Robin Cridland

Audit Committee Chairman

Directors' Report

The directors present their report with the financial statements of the Company for the year ended 31 December 2019.

Dividends

The loss for the year after taxation amounted to £1,132,337 (2018: £334,951). The directors are unable to recommend any dividend (2018: £nil).

Research and development

An indication of research and development activities is included within the Chief Executive Officer's Report.

Future Developments

An indication of future developments is included within the Chief Executive Officer's Report.

Directors

The directors during the year under review were:

A J Abrey

R J S Cridland

S M Smith

L J van der Broek

Details of the directors who had interests in share option schemes can be found in the Remuneration Report.

Corporate Governance

In accordance with Aim Rule 26 of the AIM rules for companies, the corporate governance code that the board of directors have chosen to apply and benchmark against is The QCA Corporate Governance Code. The directors have applied the principles as far as practicable and appropriate for a relatively small public company as follows:

The Board currently comprises two executive directors and two non-executive directors. The Board meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board to discharge its duties, all directors receive appropriate and timely information. Briefing papers are distributed to all directors in advance of Board meetings. All directors have access to the advice and services of the Company Secretary and the Chief Financial Officer, who is responsible for ensuring that the Board procedures are followed and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company's expense.

The directors have established Audit, Nominations, Remuneration and AIM Compliance Committees.

The Audit Committee has Robin Cridland as Chairman and has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Company is properly measured and reported on and reviewing reports from the Company's auditors relating to the Company's accounting and internal controls, in all cases having due regard to the interests of shareholders. The Audit Committee meets at least twice a year. Lykele van der Broek was the other member of the Audit Committee during the year.

The Nominations Committee had Lykele van der Broek as Chairman during the year and identifies and nominates for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Nominations Committee meets at least twice a year. Robin Cridland was the other member of the Nominations Committee during the year.

The Remuneration Committee had Lykele van der Broek as Chairman during the year and reviews the performance of the executive directors and determines their terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of shareholders. The Remuneration Committee meets at least twice a year. Robin Cridland was the other member of the Remuneration Committee during the year.

The AIM Compliance Committee had Lykele van der Broek as Chairman during the year and meets twice a year with the NOMAD to discuss AIM compliance and related issues. The other member of the committee is Robin Cridland. The directors comply with Rule 21 of the AIM Rules relating to directors' dealings and there are procedures in place to ensure compliance by the Company's applicable employees. The Company has adopted a share dealing code which is appropriate for an AIM quoted company.

The shareholdings of the directors of the Company are as follows:

The Company has been notified that the following are substantial shareholders of Eden, each holding more than 3% of the Company's issued share capital, as at 31 December 2019:

Suppliers

The Company agrees terms and conditions for business transactions with its suppliers. Payment is then made on these terms, subject to the terms and conditions being met by the supplier.

Statement of Directors' Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, they have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law.

Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of its profit or loss for that period. In preparing these financial statements, the directors are required to:

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and a Directors' Report that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement as to disclose of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are 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 company's auditors are aware of that information.

Auditor

In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company is to be proposed at the forthcoming Annual General Meeting.

Post balance sheet events

In January 2020, the Company signed a one year, exclusive Evaluation Agreement with Corteva Agriscience.

The agreement allows Corteva time to evaluate Eden's Sustaineä encapsulation technology and several formulations in specific biological seed treatment applications in certain major territories and, if successful, will lead to Corteva being granted exclusive distribution rights.

In March 2020, the Company concluded a successful fund-raise raising a total of approximately £10.4 million (before expenses) through the Placing, Subscription and Open Offer through the issue and allotment of 173,150,892 new Ordinary Shares, bringing on board new institutional shareholders, as well as providing existing shareholders with the ability to partake in the same funding round. In considering going concern, as discussed in note 1.3, the directors have taken into account this post balance sheet fund-raise.

On behalf of the board:

S M Smith - Director

6 May 2020

6 Priory Court

Priory Court Business Park

Poulton

Cirencester

Gloucestershire

GL7 5JB

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF EDEN RESEARCH PLC

1 Our opinion is unmodified

We have audited the financial statements of Eden Research plc ("the Company") for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cashflows, company statement of cashflows, and the related notes, including the accounting policies in note 1.

In our opinion:

· the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2019 and of the Group's loss for the year then ended; 

· the group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU); 

· the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provision of the Companies Act 2006; and 

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

2 Key audit matters: including our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2018), in arriving at our audit opinion above. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The impact of uncertainties due to the UK exiting the European Union on our audit

Refer to Chief Executive Officer's report

The risk - Unprecedented levels of uncertainty

All audits assess and challenge the reasonableness of estimates, in particular as described in the recoverability of intangible assets below, and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements (see below). All of these depend on assessments of the future economic environment and the Group's future prospects and performance. 

Brexit is one of the most significant economic events for the UK and its effects are subject to unprecedented levels of uncertainty of consequences, with the full range of possible effects unknown.

Our response

We developed a standardised firm-wide approach to the consideration of the uncertainties arising from Brexit in planning and performing our audits. Our procedures included:

· Our Brexit knowledge: We considered the directors' assessment of Brexit-related sources of risk for the Group's business and financial resources compared with our own understanding of the risks. We considered the directors' plans to take action to mitigate the risks.

· Sensitivity analysis: When addressing the recoverability of intangible assets, going concern and other areas that depend on forecasts, we compared the directors' analysis to our assessment of the full range of reasonably possible scenarios resulting from Brexit uncertainty and, where forecast cash flows are required to be discounted, considered adjustments to discount rates for the level of remaining uncertainty.

· Assessing transparency: As well as assessing individual disclosures as part of our procedures on intangible assets and going concern we considered all of the Brexit related disclosures together, including those in the strategic report, comparing the overall picture against our understanding of the risks.

However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.

Going concern

Refer to Audit Committee report and note 1.3 (accounting policy)

The risk - Disclosure quality

The financial statements explain how the Board has formed a judgement that it is appropriate to adopt the going concern basis of preparation for the Group and the parent Company.

That judgement is based on an evaluation of the inherent risks to the Group's and the parent Company's business model and how those risks might affect the Group's and the parent Company's financial resources or ability to continue operations over a period of at least a year from the date of approval of the financial statements.

The risks most likely to adversely affect the Group and the parent Company's available financial resources over this period are the impact of Brexit on the Group's and parent Company's supply chain and any unforeseen reductions in revenue or increases in cost resulting from the 2019 coronavirus disease (COVID-19) pandemic.

There are also less predictable but realistic second order impacts, such as the impact of Brexit on the industry specific regulations underlying the Group and the parent Company's and its suppliers operations, or the wider economic impacts of the COVID-19 pandemic which could result in a rapid reduction of available financial resources.

The risk for our audit was whether or not those risks were such that they amounted to a material uncertainty that may have cast significant doubt about the ability to continue as a going concern. Had they been such, then that fact would have been required to have been disclosed.

Clear and full disclosure of the assessment undertaken by the directors and the rationale for the use of the going concern assumption, represents a key financial statement disclosure requirement.

There is a risk that insufficient details are disclosed to allow a full understanding of the assessment undertaken by the directors.

Our response

Our procedures included:

· Historical comparisons: We compared previously forecast cash flows against actual cash flows to assess the historical accuracy of forecasting;

· Sensitivity analysis: We considered sensitivities over the level of available financial resources indicated by the Group's financial forecasts, taking account of reasonably possible (but not unrealistic) adverse effects that could arise if the Group's forecast future sales do not materialise;

· Evaluating directors' intent: We evaluated the achievability of the actions the directors consider they would take to improve the position should the identified risks to the Group materialise; and

· Assessing transparency: We assessed the completeness and accuracy of the matters covered in the going concern disclosure by comparing it to our knowledge and understanding of the business and the industry in which it operates.

Recoverability of intangible assets

(Group £5,581,005, 2018: £5,016,508 and parent Company £5,448,262, 2018: £5,016,508)

Refer to notes 1.5 and 1.6 (accounting policy) and note 12 (financial disclosures)

The risk - Forecast-based valuation

All intangible assets, including development costs, are reviewed annually for indicators of impairment.

The assessment of impairment indicators includes forecasting and discounting future cash flows (based on assumptions such as discount rates and rates of growth in revenue), which are inherently highly judgemental. In particular, due to uncertainty over the size of the potential market for the Group's products, there is a risk that the recoverable amount forecast for the intangible assets may not be supported by potential future sales. The effect of these matters is that, as part of our risk assessment, we determined that recoverable amounts estimated the for the Group's intangible assets has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. The financial statements (note 12) disclose the sensitivity estimated by the Group.

Our response

Our procedures included:

· Our sector experience: we challenged the Group's and the parent Company's selection of discount rates and rates of growth by using our own judgement and experience to determine an appropriate range and comparing the actual rate used to that range;

· Assessing forecasts: we assessed whether the cash flow forecasts are consistent with current business strategies in place;

· Comparing valuations: we compared the market capitalisation of the Group to the carrying value of the net assets to assess whether this provides an indicator of possible impairment of the intangible assets;

· Historical comparisons: we compared the previously forecast cash flows to actuals to assess the historical accuracy of forecasting;

· Sensitivity analysis: we performed breakeven analysis to assess the sensitivity of the impairment reviews to changes in the key assumptions noted above; and

· Assessing transparency: we assessed whether the Group's disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in the recoverable amount forecast for intangible assets.  

Revenue

Group (£2,048,075, 2017: £2,774,272)

Refer to Chief Executive Officer's Report, note 1.4 (accounting policy) and note 4 (financial disclosures)

The risk - Revenue recognition

The Group's and the parent Company's agreements with its customers are often bespoke and vary from customer to customer in terms of ongoing performance obligations, timing, quantities and payment profiles. The directors are required to make judgements about the nature of these agreements to determine the appropriate timing of revenue recognition. The current focus of the Group and the Company is on sales growth, and the directors are incentivised on performance through a share option scheme. This and the lack of segregation of duty gives rise to the risk that revenue recognised in the year may be recognised in an inappropriate financial year. In light of this, revenue is susceptible to financial reporting being manipulated.

Our response

Our procedures included: 

Test of details:

· for a sample of revenue transactions recognised in the current financial year, we agreed the amounts to bank statements (when already received) and (where relevant) to the underlying sale agreements to determine whether revenue arose and was recognised in the appropriate period;

· for a sample of product sales invoices raised either side of the balance sheet date, we inspected the documentation supporting the dispatch of goods to determine whether revenue was recognised in the appropriate financial year; and

· we obtained 100% of the journals posted in respect of revenue and analysed these to identify and investigate any entries which appeared unusual based upon the specific characteristics of the journal, considering in particular whether the non-revenue side of the journal entry was as expected, based on our business understanding.

3 Our application of materiality and an overview of the scope of our audit

Materiality for the Group financial statements as a whole was set at £62,500 (2018: £73,000), determined with reference to a benchmark of total assets of £8,864,769 (2018: £9,220,169), of which it represents 0.71% (2018: 0.8%). We consider a benchmark of total assets to be appropriate as the Group is in the early stages of development.

Materiality for the parent Company financial statements as a whole was set at £62,000 (2018: £73,000), determined with reference to a benchmark of total parent Company assets of £8,732,026 (2018: £9,220,169), of which it represents 0.71% (2018: 0.8%). We consider a benchmark of total assets to be appropriate as the parent Company is in the early stages of development.

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £3,000 (2018: £3,650), in addition to other identified misstatements that warranted reporting on qualitative grounds.

We subject all of the Group's three (2018: one) components to full scope audits for group purposes. The Group audit team performed work on all the components.

4 We have nothing to report on going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the parent Company or the Group or to cease their operations, and as they have concluded that the parent Company's and the Group's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period").

Our responsibility is to conclude on the appropriateness of the directors' conclusions and, had there been a material uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the Group or the parent Company will continue in operation.

We identified going concern as a key audit matter (see section 2 of this report). Based on the work described in our response to that key audit matter, we are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements.

We have nothing to report in these respects.

5 We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Strategic report and directors' report

Based solely on our work on the other information:

· we have not identified material misstatements in the strategic report and the directors' report;

· in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

· in our opinion those reports have been prepared in accordance with the Companies Act 2006.

6 We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent Company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

7 Respective responsibilities

Directors' responsibilities

As explained more fully in their statement, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

8 The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor's 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.

Andrew Campbell-Orde (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

66 Queen Square

Bristol

BS1 4BE

Date:  6 May 2020

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity