Eden Research plc
LSE : EDE

March 17, 2009 03:00 ET

Final Results

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                                               EDEN RESEARCH PLC ("EDEN")
                                                            
                                      RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2008
         
         
         Eden  Research plc, the leading UK agrochemical development and intellectual property company, today announces
         its annual results for the year ended 31st December 2008.
         
         The information contained in this announcement has been extracted from Eden's audited accounts.
         
         
        Tim Griffiths             CEO                      Eden                 01993 868 844
        Alex Abrey                CFO                                           
                                                                                
        Matthew Robinson                                   FinnCap              020 7600 1658
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                                    CHAIRMAN'S REVIEW
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
          Chairman's Review
          
          Overview
          2008 saw Eden's promising technology progressing steadily to commercialisation.  Emphasis was put
          on the following activities:
          
          *       completing the key European regulatory process required to allow commencement of initial sales of our lead
          fungicide (3AEY), for control of botrytis;
          *       further developing our products for the control of nematodes with a number of development trials in high value
          vegetable crops in Southern Europe;
          *       continuing work to exploit the potential of our products for control of spider mites and whitefly in vegetable
          crops;
          *       developing new formulation technology to utilise the properties of terpenes to improve ease of use to the
          grower through granule formulation and increased product loading which will allow the same amount of actives to be
          applied at a lower field use rate;
*       identifying potential to control post harvest soft rot diseases for high value and highly perishable fruit and
vegetables;
          *       identifying further insect pest applications for our terpene products in a range of uses both in
          agriculture/horticulture and household and personal care markets;
          *       strengthening our relationships with our existing commercial partners to ensure the opportunities for our
          products in the major agricultural chemical markets are fully exploited; and
*       identifying further relationships with potential commercial partners, especially for new fungicidal uses of our
products.
          
          Bringing 3AEY to Market
          In  2008  our  efforts  concentrated on regulatory matters relating to  our  lead  product  3AEY.
          Following  the  submission of the regulatory dossier, 2008 has been a period when the  regulatory
          authorities  reviewed  the  submitted data and made their conclusions leading  to  their  interim
          summary  being published in early 2009. In mid 2008, Eden was informed of a significant milestone
          in  that the dossiers had passed the regulatory authority completeness check and the reviews  had
          begun.
          
          By  achieving approval for each of the active ingredients in 3AEY, this will lead to  significant
          cost  saving  in terms of both R&D regulatory costs and timelines for new products  based  around
          these active ingredients.
          
          Our partners in Europe - Redestos and Cheminova - have also been active in increasing the fund of
          efficacy data, with ongoing regulatory testing programmes on grapes in France and Germany,  which
          were  additional countries to those originally adopted.  These will be repeated and  expanded  in
          2009, with further regulatory efficacy testing on crops such as strawberries and tomatoes.
          
          This  work  alongside  Eden's own efficacy testing on grapes has continued to  reveal  that  3AEY
          performs as well as the standard conventional chemistry at controlling grape botrytis.
          
          
          Nematodes
          Following  the screening work in previous years, Eden concentrated in 2008 on testing  the  three
          most promising products in development field trials in Europe.
          
          The  development  work,  which  will be the first step towards  a  regulatory  dossier,  examined
          efficacy  against  a  number  of  nematode species attacking  crops  including  tomato,  peppers,
          cucurbits,  beans and carrots.  All of these crops suffer damage usually resulting in high  yield
          losses  to  the  growers from nematodes and/or are affected by diseases spread by  a  variety  of
          nematode  species.  Results from these trials are due mid 2009 as the main yield  loss/damage  is
          only  visible at the end of the growing season, but early indications on crop growth  is  already
          showing  positive  benefits  for the Eden treatments under investigation,  where  the  crops  are
          looking more healthy than the untreated plants.
          
          Conventional  nematode  products are formulated from highly toxic insecticides,  and  several  of
          these  products  will  be  banned from use in the near future in  Europe.  There  is  significant
          interest  on  bringing a low risk terpene product into this well established  commercial  market.
          Eden  therefore  plans to place emphasis on finalising the best terpene combinations,  rates  and
          formulations in 2009, and begin registration trials leading to regulatory submission in the  near
          future.
          
          Discussions with a number of suitable commercial partners are therefore ongoing that are expected
          to lead to joint venture (JV) development of this strand of our technology in 2009.
          
          Spider Mites and Whitefly
          Following  the  successful screening trials of several Eden terpene products  in  early  2008  on
          common  horticultural glasshouse pests e.g. spider mite and whitefly, a number of lead  candidate
          Eden  terpene products were sent for field testing in key glasshouse crops such as tomato, pepper
          and  beans in Southern Europe. As well as showing excellent pest control in the screening,  these
          products  also  showed no or very little activity on a number of key beneficial insects  used  in
          glasshouse   crops  as  part  of  IPM  (Integrated  Pest  Management)  strategies.   Conventional
          insecticides tend to be very broad-spectrum and will kill the beneficials as well as  the  target
          pests.
          
          The  first  data  at  the end of 2008 confirmed the screening results with excellent  control  of
          whitefly  from  two  Eden  terpene products which was superior to the  standard  registered  bio-
          pesticide used as a comparison in the field trials. The remaining spider mite trials will not  be
          completed until early 2009 and further trials are planned for 2009 as part of the first stage  of
          the registration process.
          
          Other activities
          In  addition to our main emphasis on fungicides, acaricide and nematode control products we  have
          continued to identify the potential of encapsulated terpenes by:
          *       Developing new granule formulations to further expand product usage once commercialised;
          *       Identifying further insect pest applications for our terpene products in a range of uses both in
          agriculture/horticulture and household and personal care markets; and
          *       Identifying potential use of Eden's terpene products for controlling diseases in fruit and vegetables post
          harvest. Loss of potentially valuable crops from soft rot diseases after harvest is a major issue to growers worldwide.
          
          Commercial Prospects
          
          As alluded to already, since concluding the commercial agreement with Cheminova in the first half
          of  2007 they, as part of the agreement, have been progressing efficacy trials that will maximise
          the  potential  for usage of 3AEY in their territories. Field testing in France  and  Germany  is
          already  part  completed  and seven additional territories were added  for  development  in  2009
          onwards.
          
          A  licensing  agreement was signed by Lachlan Kenya Limited for Kenya, Uganda,  Burundi,  Malawi,
          Ethiopia,  Zimbabwe,  Tanzania  and  Rwanda for use in Food  Crop  Production  and  Floriculture.
            Lachlan  are  exclusive  marketing and distribution agents in  East  Africa  for  a  number  of
          international principals.
          The  licence  agreement  provides  for Lachlan to pay initial and  milestone  payments  totalling
          USD$250,000 plus royalty payments once marketing of the products begin.
          Lachlan and Eden will work in partnership together to bring a range of products to the food  crop
          production  and  floriculture markets in these territories.  Following  Eden's  licensing  model,
          Lachlan will undertake the cost to obtain registration of the products in each country which will
          be greatly supported from work done to date on Eden's lead product 3AEY.
          Lachlan's  position  as  a market leader in distribution of agricultural  products  in  East  and
          Southern Africa will help Eden's products penetrate existing markets.
          Interest  in and support for our technology from distributors, growers and regulators  continues.
          During  the period, Eden has progressed a number of potential partnerships of its technology  for
          plant protection and also further uses of the IP in new areas such as animal health.
          
          Outlook
          Eden's  team has, as highlighted, new project areas for initial testing of both existing and  new
          combination  terpene  products in 2009 leading to continued development and registration  of  the
          terpene products in global agriculture and horticulture.
          The  future  of  a  wide  range  of traditional chemicals is under  threat  from  the  regulators
          especially  in  the EU with a large number coming up for review between 2012 and  2020  and  many
          expected  to  be banned. This opens up a huge potential for a wide range of uses for  Eden's  low
          risk products and the continued success of Eden Research plc in developing and registering a wide
          range of products into the global market.
          
          
          Ken Brooks
          Chairman
          16 March 2009
          
          
          
                                                    EDEN RESEARCH PLC
                                                            
                                                 REPORT OF THE DIRECTORS
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         The directors present their report with the financial statements of the company and the group for the
         year ended 31 December 2008.
         
         PRINCIPAL ACTIVITY
         
         The  principal  activity of the Group in the year under review was the development and  marketing  of
         intellectual property, particularly in the area of terpenes and other health-related projects.
         
         
         DIVIDENDS
         
         The  loss  for the year after taxation amounted to £2,101,237 (2007 : £2,463,869). The directors  are
         unable to recommend any dividend.
         
         
         REVIEW OF BUSINESS
         
         The review of this year's business activities is as set out in the Chairman's Review.
         
         The  key  performance indicators of the business are that of the development of the Group's  products
         and the management of its cash position.
         
         The  Group has capitalised £0.6m of development expenditure in the year which is a reflection of  the
         continued  development of the Group's products. In addition to this, £0.3m of patent fees  have  been
         incurred to protect the Group's biggest asset; its intellectual property.
         
         The increase in the shareholder loans during the year reflects the on-going management of the Group's
         cash position.
         
         The progress of the development of the Group's products is measured against internally set timescales
         as well as against the regulatory process which will result in the registration of products.
         
         The Chairman's Review contains an update regarding this progress.
         
         Cash  is  managed by tightly controlling the Group's creditor position and through the  provision  of
         convertible shareholder loans.
         
          Results
          
          Revenue  in  2008 was £0.1 million, down from £0.4 million in 2007. Operating loss for the  year  was
          £2.0  million compared to £2.5 million for the previous year. Loss before tax was £2.1 million,  down
          from £2.6 million in 2007.
          
          The loss per share was 3.86 pence compared to 5.13 pence in 2007.
          
          Trading
          
          Revenue  in  2008  consisted  of  a milestone payment received from Cheminova  AS,  as  part  of  the
          consideration of the license agreement signed in May 2007. Further payments of €1.6 million are to be
          paid in due course, under the same licensing agreement, in line with specific milestones.
          
          Administrative  expenses, (excluding the amortisation of intangible assets and share  based  payments
          charge)  were  £1.3  million. This reflects IAS 38 which has resulted in the capitalisation  of  £0.6
          million of development expenditure in the year (2007 : £0.6m), but, also shows the consistent  policy
          of keeping a low head count in order to maintain a low level of overheads.
          
          Intellectual property, including development expenditure, is written off over sixteen years  in  line
          with the remaining life of the Group's master patent.
          
          Financing
          
          During the year, the Group received £0.8 million from the issue of equity shares from the exercise of
          options and warrants.
          
          Also  during the year, the Group received loans from shareholders of £0.9 million. In addition,  £0.4
          million of debt was either converted into equity or repaid. The holders of the convertible loans have
          confirmed their on-going commitment and support to the Group for the foreseeable future, a period  of
          at least one year from the date of approval of these financial statements.

          With  this  on-going support and the receipt of milestone payments and royalty revenues in  the  near
          future, the Group has sufficient funds to reach commercialisation and be cash generative.
          
          The on-going financial support by shareholders has, up until now, been the main source of finance to
          the Group. This has primarily been by way of convertible loans which, the Directors believe, provide
          fair, cost effective financing. With this continued support, along with milestone payments that  are
          due  from  existing  licensing agreements as well as expected further licensing  agreements,  it  is
          expected  that the requirement for this type of financing will gradually diminish in the foreseeable
          future.
          
          RESEARCH AND DEVELOPMENT
          
          An indication of research and development activities is included within the Chairman's Review.
          
          FUTURE DEVELOPMENTS
          
          An indication of future developments is included within the Chairman's Review.
          
          DIRECTORS
         
          The directors during the year under review were:
          K W Brooks
          T Griffiths
          A J Abrey
          C Newitt
          A B N Gill
          S R O'Brien
          
          PAYMENT OF CREDITORS
          
          It  is  the Group's and the Company's policy to pay suppliers within an acceptable period of allowed
          creditor  days  in accordance with the agreed terms. The Group and the Company acted  in  accordance
          with  this  policy throughout the year. The Group and the Company had 158 days purchases outstanding
          at  31 December 2008 (2007: 293 days) based on the average daily amount invoiced by suppliers during
          the year ended 31 December 2008.
          
          PRINCIPAL RISKS AND UNCERTAINTIES
          
          The Group's credit risk is primarily attributable to its trade receivables. Credit risk is managed
          by running credit checks on customers and by monitoring payments against contractual agreements.
          
          The  Group monitors cash flow as part of its day to day control procedures. The board considers cash
          flow  projections at its meetings and ensures that appropriate facilities are available to be  drawn
          down upon as necessary.
          
          Interest rate risk is controlled by the use of fixed rate convertible loans.
          
          The Group's prime risk is the on-going commercialisation of the Group's intellectual property, which
          involves  testing of the Group's products, obtaining regulatory approval and reaching a commercially
          beneficial agreement for each product to be taken to market.
          
          Exchange  rate risk is reduced, where practical, by entering into forward foreign exchange contracts
          with financial institutions.
          
          INDEMNITY COVER
          
          The Company purchases Directors and Officers insurance cover to protect the Directors from third
          party claims.
          
          
          FINANCIAL INSTRUMENTS
          
          Details of the use of financial instruments by the Group are contained in note 23 to the financial
          statements.
          
          STATEMENT OF DIRECTORS' RESPONSIBILITIES
          
          The  directors  are  responsible for preparing the Annual Report and the  financial  statements  in
          accordance with applicable law and regulations.

          UK  Company law requires the directors to prepare Group and Company Financial Statements  for  each
          financial  year.   Under  that  law the directors have elected to prepare  the  Group  and  Company
          financial  statements in accordance with International Financial Reporting Standards  ("IFRS")   as
          adopted by the EU.

          The group financial statements are required by law and IFRS adopted by the EU to present fairly the
          financial  position and performance of the group; the Companies Act 1985 provides  in  relation  to
          such  financial statements that references in the relevant part of that Act to financial statements
          giving a true and fair view are references to their achieving a fair presentation.

          The  company financial statements are required by law to give a true and fair view of the state  of
          affairs of the company.

          In preparing each of the group and company financial statements, the directors are required to:

         a.      select suitable accounting policies and then apply them consistently;
          
         b.      make judgements and estimates that are reasonable and prudent;
          
         c.      state whether they have been prepared in accordance with IFRSs adopted by the EU; and
 
                 d.       prepare  the  financial  statements  on  the  going  concern  basis  unless  it  is
                 inappropriate to presume that the group and the company will continue in business.

          The  directors are responsible for keeping proper accounting records which disclose with reasonable
          accuracy  at any time the financial position of the company and to enable them to ensure  that  the
          financial  statements  comply  with the requirements of the Companies  Act  1985.   They  are  also
          responsible for safeguarding the assets of the group and hence for taking reasonable steps for  the
          prevention and detection of fraud and other irregularities.

          The  directors  are  also responsible for the maintenance and integrity of the  Eden  Research  plc
          website.

          Legislation  in  the  United  Kingdom  governing the preparation  and  dissemination  of  financial
          statements may differ from legislation in other jurisdictions.
          
          
          STATEMENT AS TO DISCLOSURE OF INFORMATION TO THE AUDITOR
          
          So  far  as  the directors are aware, there is no relevant audit information (as defined by  Section
          234ZA  of  the  Companies Act 1985) of which the group's auditor is unaware, and each  director  has
          taken all the steps that he ought to have taken as a director in order to make himself aware of  any
          relevant audit information and to establish that the group's auditor is aware of that information.
          
          
          AUDITOR
          
          The  auditor,  Baker  Tilly  UK Audit LLP, will be proposed for re-appointment  in  accordance  with
          Section 385 of the Companies Act 1985.
          
          ON BEHALF OF THE BOARD:
          
          
          A J Abrey
          Director
          16 March 2009
          
          
          
                                   REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF
                                                            
                                                    EDEN RESEARCH PLC
         
         
         We  have audited the financial statements of Eden Research plc for the year ended 31 December 2008 on
         pages  fourteen  to forty eight. These financial statements have been prepared under  the  accounting
         policies set out therein.
         
         This report is made solely to the company's members, as a body, in accordance with Section 235 of the
         Companies  Act  1985.  Our audit work has been undertaken so that we might  state  to  the  company's
         members  those  matters  we are required to state to them in an auditors' report  and  for  no  other
         purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to  anyone
         other  than the company and the company's members as a body, for our audit work, for this report,  or
         for the opinions we have formed.
         
         
         Respective responsibilities of directors and auditors
         
         The  directors' responsibilities for preparing the financial statements in accordance with applicable
         law  and International Financial Reporting Standards as adopted for use in the European Union are set
         out on page ten.
         
         Our  responsibility  is  to  audit the financial statements in accordance  with  relevant  legal  and
         regulatory requirements and International Standards on Auditing (UK and Ireland).
         
         We report to you our opinion as to whether the financial statements give a true and fair view and are
         properly  prepared in accordance with the Companies Act 1985. We also report to you whether,  in  our
         opinion,  the  information  given in the Report of the Directors is  consistent  with  the  financial
         statements.  The  information  given  in the Directors' Report  includes  that  specific  information
         presented in the Chairman's review that is cross referenced from the Review of Business, Research and
         Development and Future Developments sections in the Directors' Report.
         
         In  addition  we  also report to you if, in our opinion, the company has not kept  proper  accounting
         records, if we have not received all the information and explanations we require for our audit, or if
         information  specified  by  law  regarding directors' remuneration  and  other  transactions  is  not
         disclosed.
         
         We  read other information contained in the Annual Report and consider whether it is consistent  with
         the  audited parent company financial statements. The other information comprises only the Chairman's
         Review  and the Directors' Report. We consider the implications for our report if we become aware  of
         any  apparent  misstatements or material inconsistency with the parent company financial  statements.
         Our responsibilities do not extend to any other information.
         
         
         Basis of audit opinion
         
         We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued
         by  the  Auditing  Practices  Board.  An audit includes examination, on a  test  basis,  of  evidence
         relevant  to the amounts and disclosures in the financial statements.  It also includes an assessment
         of the significant estimates and judgements made by the directors in the preparation of the financial
         statements,  and  of whether the accounting policies are appropriate to the company's  circumstances,
         consistently applied and adequately disclosed.
         
         We  planned  and  performed our audit so as to obtain all the information and explanations  which  we
         considered  necessary  in order to provide us with sufficient evidence to give  reasonable  assurance
         that  the financial statements are free from material misstatement, whether caused by fraud or  other
         irregularity  or  error.   In  forming our opinion we also evaluated  the  overall  adequacy  of  the
         presentation of information in the financial statements.
         
         
         Opinion
         
         In our opinion:-
         
         -   the  group  financial statements give a true and fair view, in accordance with International Financial Reporting
            Standards  as adopted by the European Union, of the state of the group's affairs as at 31 December 2008  and  of
            the loss of the group for the year then ended;
            
         -   the  parent  company financial statements give a true and fair view, in accordance with International  Financial
            Reporting  Standards  as  adopted by the European Union as applied in accordance  with  the  provisions  of  the
            Companies Act 1985, of the state of the parent company's affairs as at 31 December 2008 ;
            
         -   the financial statements have been properly prepared in accordance with the Companies Act 1985; and
            
         -   the information given in the Report of the Directors is consistent with the financial statements.
         
         Emphasis of matter - going concern
         
          In  forming  our opinion on the financial statements, which is not qualified, we have considered  the
          adequacy of the disclosure made in note 1 to the financial statements concerning the Group's  ability
          to  continue  as  a  going concern.  The Group incurred a loss of £2,101,237 for the  year  ended  31
          December 2008 and had net current liabilities of £3,119,083.  These conditions indicate the existence
          of a material uncertainty which may cast significant doubt about the Group's ability to continue as a
          going concern.  The financial statements have been prepared on a going concern basis, the validity of
          which  depends  upon  the  continued support of the shareholders and the Group's  products  achieving
          commercial viability.  The financial statements do not include the adjustments that would  result  if
          the Group was unable to continue as a going concern.
         
         
         
         Baker Tilly UK Audit LLP
         Chartered Accountants and Registered Auditor
         Hartwell House
         55-61 Victoria Street
         Bristol
         BS1 6AD
         
         
         16 March 2009
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                              CONSOLIDATED INCOME STATEMENT
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         
                                                                                 2008                          2007
                                                  Notes                           £                             £
         
         CONTINUING OPERATIONS
         Revenue                                                                  84,003                         360,788
         
         Cost of sales                                                                 -                         (5,706)
                                                                              __________                      __________
         
         GROSS PROFIT                                                             84,003                         355,082
         
         Administrative expenses
         - normal                                                            (1,334,116)                     (1,033,910)
         - amortisation of intangible assets                                   (604,340)                       (455,543)
         - share based payments                                                (173,729)                     (1,361,248)
                                                                              __________                      __________
         
         Total administrative expenses                                       (2,112,185)                     (2,850,701)
                                                                              __________                      __________
         
         
         OPERATING LOSS                              5                       (2,028,182)                     (2,495,619)
         
         Finance costs                               4                         (123,438)                       (129,814)
         
         Finance income                              4                             3,148                           3,919
                                                                              __________                      __________
         
         LOSS BEFORE TAX                                                     (2,148,472)                     (2,621,514)
         
         Tax                                         6                            47,235                         157,645
                                                                              __________                      __________
         
         LOSS FOR THE YEAR attributable to
         equity shareholders of the parent                                   (2,101,237)                     (2,463,869)
                                                                              __________                      __________
         
         LOSS PER SHARE (PENCE)
         - basic and diluted                         8                           (3.86)p                         (5.13)p
                                                                              __________                      __________
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         
         
                                                                                 2008                            2007
                                                                                  £                               £
         
         
         LOSS FOR THE FINANCIAL YEAR                                         (2,101,237)                     (2,463,869)
                                                                              __________                      __________
         
         TOTAL RECOGNISED EXPENSE FOR THE YEAR
            ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
            OF THE PARENT                                                    (2,101,237)                     (2,463,869)
                                                                              __________                      __________
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                   COMPANY STATEMENT OF RECOGNISED INCOME AND EXPENSE
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
                                                                                 2008                            2007
                                                                                  £                               £
         
         
         LOSS FOR THE FINANCIAL YEAR                                         (2,101,237)                     (2,463,869)
                                                                              __________                      __________
         
         TOTAL RECOGNISED EXPENSE FOR THE YEAR
            ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS
            OF THE PARENT                                                    (2,101,237)                     (2,463,869)
                                                                              __________                      __________
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                               CONSOLIDATED BALANCE SHEET
                                                            
                                                 AS AT 31 DECEMBER 2008
         
                                                                                 2008                            2007
                                                   Note                           £                               £
         ASSETS
         NON-CURRENT ASSETS
         Intangible assets                           9                         8,365,870                       8,149,403
         Property, plant and equipment              10                             6,926                           3,556
                                                                              __________                      __________
         
                                                                               8,372,796                       8,152,959
                                                                              __________                      __________
         CURRENT ASSETS
         Trade and other receivables                12                           177,791                         106,569
         Cash and cash equivalents                  13                            13,065                         663,022
                                                                              __________                      __________
         
                                                                                 190,856                         769,591
                                                                              __________                      __________
         
         TOTAL ASSETS                                                          8,563,652                       8,922,550
                                                                              __________                      __________
         LIABILITIES
         CURRENT LIABILITIES
         Trade and other payables                   14                         1,038,253                         933,191
         Financial liabilities - borrowings
         - Convertible loan notes                   15                         2,271,686                       1,829,081
                                                                              __________                      __________
         
         TOTAL CURRENT LIABILITIES AND
            TOTAL LIABILITIES                                                  3,309,939                       2,762,272
                                                                              __________                      __________
         
         EQUITY
         Called up share capital                    17                           563,133                         529,158
         Share premium account                      18                        13,116,119                      12,387,217
         Merger reserve                             19                        10,209,673                      10,209,673
         Warrant reserve                            19                         2,120,637                       2,441,708
         Retained earnings                          20                      (20,755,849)                    (19,407,478)
                                                                              __________                      __________
         
         TOTAL EQUITY attributable to equity
         Shareholders of the parent                                            5,253,713                       6,160,278
                                                                              __________                      __________
         
         TOTAL EQUITY AND LIABILITIES                                          8,563,652                       8,922,550
                                                                              __________                      __________
         
         The financial statements were approved by the Board of Directors and authorised for issue
         
         on 16 March 2009 and were signed on its behalf by:
         
         
         
         
         K W Brooks
         Director
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                                  COMPANY BALANCE SHEET
                                                            
                                                 AS AT 31 DECEMBER 2008
         
                                                                                 2008                            2007
                                                   Note                           £                               £
         
         ASSETS
         NON-CURRENT ASSETS
         Intangible assets                           9                         8,365,870                       8,149,403
         Property, plant and equipment              10                             6,926                           3,556
         Investments                                11                               100                             100
                                                                              __________                      __________
         
                                                                               8,372,896                       8,153,059
                                                                              __________                      __________
         CURRENT ASSETS
         Trade and other receivables                12                           177,791                         106,569
         Cash and cash equivalents                  13                            13,065                         663,022
                                                                              __________                      __________
         
                                                                                 190,856                         769,591
                                                                              __________                      __________
         TOTAL ASSETS                                                          8,563,752                       8,922,650
                                                                              __________                      __________
         LIABILITIES
         CURRENT LIABILITIES
         Trade and other payables                   14                         1,038,353                         933,291
         Financial liabilities - borrowings
         - Convertible loan notes                   15                         2,271,686                       1,829,081
                                                                              __________                      __________
         
         TOTAL CURRENT LIABILITIES AND
            TOTAL LIABILITIES                                                  3,310,039                       2,762,372
                                                                              __________                      __________
         
         EQUITY
         Called up share capital                    17                           563,133                         529,158
         Share premium account                      18                        13,116,119                      12,387,217
         Merger reserve                             19                        10,209,673                      10,209,673
         Warrant reserve                            19                         2,120,637                       2,441,708
         Retained earnings                          20                      (20,755,849)                    (19,407,478)
                                                                              __________                      __________
         
         TOTAL EQUITY attributable to equity
         Shareholders of the parent                                            5,253,713                       6,160,278
                                                                              __________                      __________
         
         TOTAL EQUITY AND LIABILITIES                                          8,563,752                       8,922,650
                                                                              __________                      __________
         
         The financial statements were approved by the Board of Directors and authorised for issue
         
         on 16 March 2009 and were signed on its behalf by:
         
         
         
         
         K W Brooks
         Director
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                      CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         
                                                                                 2008                            2007
                                                   Note                           £                               £
         
         
         Cash flows from operating activities
         
         Cash outflow from operations                1                       (1,207,811)                       (260,335)
         Finance costs                                                         (123,438)                       (129,814)
         Tax credit received                                                      47,235                         157,645
                                                                              __________                      __________
         
         Net cash used in operating activities                               (1,284,014)                       (232,504)
                                                                              __________                      __________
         
         
         
         Cash flows from investing activities
         
         Purchase of property, plant & equipment                                 (8,089)                               -
         Capitalisation of development expenditure                             (562,741)                       (591,141)
         Finance income                                                            3,148                           3,919
                                                                              __________                      __________
         
         Net cash used in investing activities                                 (567,682)                       (587,222)
                                                                              __________                      __________
         
         Cash flows from financing activities
         
         Shareholders' loan - repayment                                        (418,617)                     (1,327,406)
         Shareholders' loan - drawdown                                           857,479                         501,173
         Issue of equity shares                                                  762,877                       2,304,203
                                                                              __________                      __________
         
         Net cash from financing activities                                    1,201,739                       1,477,970
                                                                              __________                      __________
         
         (Decrease)/increase in cash and cash equivalents                      (649,957)                         658,244
         
         Cash and cash equivalents at
            beginning of year                                                    663,022                           4,778
                                                                              __________                      __________
         
         Cash and cash equivalents at
            end of year                                                           13,065                         663,022
                                                                              __________                      __________
         
         
         Cash and cash equivalents comprises bank account balances.
         
         
         
                                                    EDEN RESEARCH PLC
                                                            
                                NOTES TO THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENT
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         
         1.     Cash outflow from operations
         
                GROUP AND COMPANY
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Loss before tax                                                               (2,148,472)     (2,621,514)
               Depreciation of property, plant and equipment                                       4,719           4,908
               Equity share based payment charge                                                 173,729       1,361,248
               Amortisation of trademarks and intellectual property                              604,340         455,543
               Finance costs                                                                     123,438         129,814
               Finance income                                                                    (3,148)         (3,919)
                                                                                              __________      __________
         
               Operating cash flows before movement in working capital                       (1,245,394)       (673,920)
         
               (Increase)/decrease in trade and other receivables                               (71,222)          49,874
               Increase in trade and other payables                                              108,805         363,711
                                                                                              __________      __________
         
               Cash outflow from operations                                                  (1,207,811)       (260,335)
                                                                                              __________      __________
         
         
         
                £258,066 of the capitalised Intellectual Property is a non cash transaction and represents
                share option costs incurred and capitalised to acquire the Intellectual Property.
                
                
                
                                                    EDEN RESEARCH PLC
                                                            
                                            NOTES TO THE FINANCIAL STATEMENTS
                                                            
                                           FOR THE YEAR ENDED 31 DECEMBER 2008
         
         
         
         
         1.    ACCOUNTING POLICIES
         
                 General information
         
                Eden  Research  plc  is a company incorporated and domiciled in the United Kingdom  under  the
                 Companies  Act 1985. The address of the registered office is given on page three. The  nature
                 of  the  group's operations and its principal activities are set out in the Chairman's Review
                 on page four. The company is listed on the PLUS Market in London.
         
                These  financial statements are presented in pounds sterling because that is the  currency  of
                 the primary economic environment in which the group operates.
         
                At  the  date  of  authorisation of these financial statements, the  following  Standards  and
                 Interpretations which have not been applied in these financial statements were in  issue  but
                 not yet effective:-
         
                 IFRS 8          Operating Segments
         
                IFRIC 13Customer Loyalty Programmes
                IFRIC 14IAS 19 - The limit on a Defined Benefit Asset
                                Minimum Funding Requirements and their Interaction
                IFRIC 15Agreements for Construction of Real Estate
                IFRIC 16Hedges of a Net Investment in a Foreign Operation
                IFRIC 17Distributions of Non-cash Assets to Owners
                IFRIC 18Transfer of Assets from Customers
         
                Others:
         
                Amendment to IAS23 - Borrowing costs
                Amendment to IAS1 - Presentation of financial statements
                Amendment to IFRS3 / IAS27 - Business combinations project
         
                The  directors anticipate that the adoption of these Standards and Interpretations  in  future
                 periods  will  have no material impact on the financial statements of the Group,  except  for
                 additional disclosures on operating segments when the relevant standard comes into effect for
                 periods commencing on or after 1 January 2009.
         
               Basis of preparation
                
                These  financial  statements  have been prepared in accordance  with  International  Financial
                Reporting Standards and IFRIC interpretations and with those parts of the Companies  Act  1985
                applicable  to  companies reporting under IFRS. The financial statements  have  been  prepared
                under the historical cost convention.
         
         
                                                            
         1.    ACCOUNTING POLICIES (continued)
         
         
                 Basis of consolidation
                
                The  group financial statements combine the financial statements of Eden Research plc and  its
                wholly  owned  subsidiary Eden Research Europe Limited. Subsidiaries  are  all  entities  over
                which  the  Group  has  the  power to govern the financial and  operating  policies  generally
                accompanying  a  shareholding of more than half of the voting rights. Subsidiaries  are  fully
                consolidated  from  the  date  on which control is transferred to  the  Group.  They  are  de-
                consolidated from the date that control ceases.
                
                The  purchase  method of accounting is used to account for the acquisition of subsidiaries  by
                the  Group.   The  cost of an acquisition is measured as the fair value of the  assets  given,
                equity  instruments issued and liabilities incurred or assumed at the date of  exchange,  plus
                costs  directly attributable to the acquisition.  Identifiable assets acquired and liabilities
                and  contingent liabilities assumed in a business combination are initially measured  at  fair
                value at the acquisition date irrespective of the extent of any minority interest.
                
                The  excess  of cost of acquisition over the fair values of the Group's share of  identifiable
                net  assets  acquired  is recognised as goodwill.  Any deficiency of the cost  of  acquisition
                below  the  fair  value of identifiable net assets acquired (i.e. discount on acquisition)  is
                recognised directly in the income statement.
                
                Where  necessary,  adjustments are made to the financial statements of subsidiaries  to  bring
                the accounting policies used into line with those used by other members of the Group.
                
                Inter-company  transactions,  balances  and unrealised  gain  on  transactions  between  group
                companies  are  eliminated. The accounting policies of the subsidiaries  are  consistent  with
                those adopted by the Group.
                
         
                 Going concern
         
                The  financial  statements have been prepared on a going concern basis which contemplates  the
                 realisation of assets and the settlement of liabilities in the ordinary course of business.
         
                The  group  has reported a loss for the year after taxation of £2,101,237 (2007 : £2,463,869).
                 Net
         
         1.    ACCOUNTING POLICIES (continued)
         
                Going concern (continued)
         
                The  ability  of  the  Group to continue as a going concern is ultimately dependent  upon  the
                 amounts  and timing of cash flows from the exploitation of the Group's intellectual property.
                 The Directors consider that it is appropriate that the financial statements be prepared on  a
                 going  concern basis based on the ongoing support of the shareholders, by way of  convertible
                 loans,  the  existence of a committed equity facility, as well as expected further  licensing
                 agreements which provide the Board with confidence that the Group is a going concern for  the
                 foreseeable  future and for a period of at least 12 months from the date of approval  of  the
                 financial statements.
         
                No   adjustments  have  been  made  for  impairment  and  reclassification  of   assets,   and
                 reclassification of liabilities, which would be necessary if the Group were no longer a going
                 concern.
         
               Revenue recognition
                
                Revenue is recognised only when it is probable that the economic benefits associated with  the
                transaction will flow to the company and the amount of revenue can be reliably estimated.
         
                Revenue  represents  amounts receivable by the Group in respect of  goods  sold  and  services
                rendered during the year in accordance with the underlying contract or licence, stated net  of
                value added tax.
         
               Royalty income, milestone and upfront payments are recognised on a receivable basis.
         
               Segment reporting
         
                A  business  segment  is  a group of assets and operations engaged in  providing  products  or
                services  that  are  subject  to  risks and returns that are different  from  those  of  other
                business segments. A geographical segment is engaged in providing products or services  within
                a  particular  economic environment that are subject to risks and returns that  are  different
                from those of segments operating in other economic environments.
         
               Intangible assets
                
                Trademarks, reflected at cost, are capitalised when the costs are incurred and amortised on  a
                straight  line basis over their useful economic lives and the life of the trademark  which  is
                currently deemed to be 10 years.
                
                Intellectual  property,  including  development costs,  is  capitalised  and  amortised  on  a
                straight  line  basis over its estimated useful economic life of 16 years  in  line  with  the
                remaining life of the Group's master patent.
                
                Impairment of non financial assets
                
                The  directors regularly review the intangible assets for impairment and provision is made  if
                necessary.  Assets that have an indefinite useful life, for example goodwill, are not  subject
                to  amortisation  and  are  tested  annually  for  impairment.  Assets  that  are  subject  to
                amortisation are reviewed for impairment whenever events or changes in circumstances  indicate
                that  the  carrying  amount may not be recoverable. An impairment loss is recognised  for  the
                amount  by  which the asset's carrying amount exceeds its recoverable amount. The  recoverable
                amount  is  the higher of an asset's fair value less costs to sell and value in use.  For  the
                purposes of assessing impairment, assets are grouped at the lowest levels for which there  are
                separately  identifiable cash flows (cash-generating units). Non-financial assets  other  than
                goodwill  that suffered an impairment are reviewed for possible reversal of the impairment  at
                each reporting date.
         
         
         
         1.    ACCOUNTING POLICIES (continued)
         
               Research and development
         
                Expenditure on research activities is recognised as an expense in the period in which it is
                incurred.
         
                An internally generated intangible asset arising from the Group's development activities is
                recognised only if all the following conditions are met:-
         
                 *       the project is technically and commercial feasible;
                 *       an asset is created that can be identified;
*       it is probable that the asset created will generate future economic benefits;
                 *       the development cost of the asset can be measured reliably; and
                 *       there are sufficient resources available to complete the project.
         
                Internally-generated intangible assets are amortised on a straight line basis over their
                useful lives. Where no internally-generated intangible asset can be recognised, development
                expenditure is recognised as an expense in the period in which it is incurred.
         
               Property, plant and equipment
                
                Property,  plant  and  equipment is reflected at cost less accumulated  depreciation  and  any
                recognised impairment loss.
         
                Depreciation  is provided at the following annual rates in order to write off the  depreciable
                amount of each asset over its estimated useful life:
         
               Plant and equipment                    - 20% straight line
               Furniture, fixtures and fittings       - 25% straight line
               Computer and office equipment          - 33.3% straight line
         
         
         
               Financial instruments
                
                The  Group  uses certain financial instruments in its operating and investing activities  that
                are deemed appropriate for its strategy and circumstances.
                
                Financial  assets and liabilities are recognised on the Group's balance sheet when  the  Group
                has become a party to the contractual provisions of the instrument.
         
                Financial  instruments  recognised on the balance sheet include  cash  and  cash  equivalents,
                trade receivables, trade payables and borrowings and fixed interest convertible debt.
         
                Cash  and  cash  equivalents comprise cash on hand and demand deposits, and other  short  term
                highly  liquid  investments that are readily convertible to a known amount  of  cash  and  are
                subject to an insignificant risk of changes in value.
                
                Interest  bearing loans and overdrafts are recorded at the proceeds received less  any  direct
                issue  costs.   Finance charges are accounted for on an accruals basis and are  added  to  the
                instrument to the extent that they are not settled in the period in which they arise.
                
         
         
         1.    ACCOUNTING POLICIES (continued)
         
               Financial assets
         
                In  accordance with IFRS 7, trade receivables, loans and other receivables that have fixed  or
                determinable payments are classified as "Loans and receivables" and are measured at  amortised
                cost  using the effective interest method less impairment. Interest is recognised by  applying
                the  effective  interest  rate,  except for short term receivables  when  the  recognition  of
                interest would be immaterial.
         
                Financial  assets  are assessed for impairment at each balance sheet date and  any  impairment
                recognised  in  the  income statement. Trade receivables are assessed for  collectability  and
                where  appropriate  the  carrying amount is reduced through the use of an  allowance  account.
                When  a  trade  receivable is uncollectible it is written off against the  allowance  account.
                Subsequent  recoveries  of amounts previously written off are credited against  the  allowance
                account  and  changes in the carrying amount of the allowance account are  recognised  in  the
                profit or loss in the income statement.
         
                Debt and equity instruments issued by the Group
                
                Convertible loan notes
                
                Instruments  where  the  holder  has the option to redeem for  cash  or  convert  into  a  pre-
                determined  quantity  of  equity  instruments are classified as  compound  instruments  in  the
                balance sheet and presented partly as a liability and partly within equity.
                
                At  the  date  of  issue,  the fair value of the liability component  is  estimated  using  the
                prevailing market interest rate for similar non-convertible instrument. The difference  between
                the  proceeds of issue and the fair value assigned to the liability component, representing the
                embedded option to convert the liability into equity of the Group, is included in equity.
                
                Transaction  costs  are  apportioned  between  the  liability  and  equity  components  of  the
                convertible  loan  notes based on their relative carrying amounts at the date  of  issue.   The
                portion relating to the equity component is charged directly against equity.
                
                The  interest  expense  on  the liability component is calculated by  applying  the  prevailing
                market  interest  rate  for  similar non-convertible debt to  the  instrument.  The  difference
                between  this  amount and the interest paid is added to the carrying value of  the  convertible
                loan note.
         
                Equity instruments
         
                Equity  instruments issued by the company are recorded at the proceeds received, net of  direct
                issue costs.
         
                Financial liabilities
         
                In  accordance  with  IFRS  7  financial liabilities such as  trade  payables  and  loans  are
                classified  as "Other financial liabilities" and are measured initially at fair  value.  Other
                financial  liabilities  are  subsequently measured  at  amortised  cost  using  the  effective
                interest  method,  except for short term payables when the recognition of  interest  would  be
                immaterial.
         
                Leasing
         
                Rentals  payable  under operating leases are charged to income on a straight-line  basis  over
                the term of the relevant lease.
         
                Benefits  received and receivable as an incentive to enter into an operating  lease  are  also
                spread on a straight-line basis over the lease term.
         
         
               1.ACCOUNTING POLICIES (continued)
         
                Current and deferred income tax
         
                The tax expense represents the sum of the tax currently payable and deferred tax.
         
                The  tax  currently  payable is based on taxable profit for the year. Taxable  profit  differs
                from  net  profit as reported in the income statement because it excludes items of  income  or
                expense  that are taxable or deductible in other years and it further excludes items that  are
                never  taxable  or deductible. The group's liability for current tax is calculated  using  tax
                rates that have been enacted or substantively enacted by the balance sheet date.
         
                Deferred  tax  is  the  tax expected to be payable or recoverable on differences  between  the
                carrying  amounts of assets and liabilities in the financial statements and the  corresponding
                tax  bases  used in the computation of taxable profit, and is accounted for using the  balance
                sheet  liability  method. Deferred tax liabilities are generally recognised  for  all  taxable
                temporary  differences  and  deferred tax assets are recognised  to  the  extent  that  it  is
                probable   that  taxable  profits  will  be  available  against  which  deductible   temporary
                differences  can be utilised. Such assets and liabilities are not recognised if the  temporary
                difference  arises  from the initial recognition of goodwill or from the  initial  recognition
                (other  than in a business combination) of other assets and liabilities in a transaction  that
                affects neither the tax profit nor the accounting profit.
         
                Deferred  tax  liabilities  are  recognised  for  taxable  temporary  differences  arising  on
                investments in subsidiaries and associates, and interest in joint ventures, except  where  the
                group is able to control the reversal of the temporary difference and it is probable that  the
                temporary difference will not reverse in the foreseeable future.
         
                The  carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
                to  the extent that it is no longer probable that sufficient taxable profits will be available
                to allow all or part of the asset to be recovered.
         
                Deferred tax is calculated at the tax rates that are expected to apply in the period when  the
                liability  is  settled or the asset is realised. Deferred tax is charged or  credited  in  the
                income  statement, except when it relates to items charged or credited directly to equity,  in
                which case the deferred tax is also dealt with in equity.
         
                Deferred  tax assets and liabilities are offset when there is a legally enforceable  right  to
                set  off  current  tax assets against current tax liabilities and when they relate  to  income
                taxes  levied by the same taxation authority and the group intends to settle its  current  tax
                assets and liabilities on a net basis.
         
         
         
         1.    ACCOUNTING POLICIES (continued)
         
                Foreign currencies
         
                The  individual  financial statements of each group company are presented in the  currency  of
                the  primary  economic  environment in which it operates (its functional  currency).  For  the
                purpose  of the consolidated financial statements, the results and financial position of  each
                group  company are expressed in pounds sterling, which is the functional currency of the Group
                and the presentation currency for the consolidated financial statements.
         
                In  preparing the financial statements of the individual companies, transactions in currencies
                other than the entity's functional currency (foreign currencies) are recorded at the rates  of
                exchange  prevailing  on the dates of the transactions. At each balance sheet  date,  monetary
                assets  and  liabilities that are denominated in foreign currencies are  retranslated  at  the
                rates prevailing on the balance sheet date. Non-monetary items carried at fair value that  are
                denominated in foreign currencies are translated at the rates prevailing at the date when  the
                fair  value  was determined. Non-monetary items that are measured in terms of historical  cost
                in a foreign currency are not retranslated.
         
                Exchange differences arising on the settlement of monetary items, and on the retranslation  of
                monetary items, are included in the income statement for the period.
         
                         For  the  purpose  of presenting consolidated financial statements,  the  assets  and
                liabilities  of the group's foreign operations are translated at exchange rates prevailing  on
                the  balance sheet date. Income and expense items are translated at the average exchange rates
                for  the  period, unless exchange rates fluctuate significantly during that period,  in  which
                case  the  exchange rates at the date of transactions are used. Exchange differences  arising,
                if  any,  are  classified as equity and transferred to the group's translation  reserve.  Such
                translation differences are recognised as income or as an expense in the period in  which  the
                operation is disposed of.
                
                Share based payments
                
                The Group has applied the requirements of IFRS2 Share-Based Payment.
                
                The  Group  operates  an  unapproved  share  option scheme  for  executive  directors,  senior
                management and certain employees.
                
                Where  share  options are awarded to employees, the fair value of the options at the  date  of
                grant  is  charged  to  the  income  statement over the vesting  period.  Non  market  vesting
                conditions  are taken into account by adjusting the number of equity instruments  expected  to
                vest  at each balance sheet date so that ultimately the cumulative amount recognised over  the
                vesting  period  is  based  on  the  number of options that eventually  vest.  Market  vesting
                conditions  are factored into the fair value of the options granted, as long as other  vesting
                conditions  are  satisfied. The cumulative expense is not adjusted for failure  to  achieve  a
                market vesting condition.
                
                Where the terms and conditions of options are modified before they vest, the increase in  fair
                value  of the options, measured immediately before and after the modification is also  charged
                to the income statement over the remaining vesting period.
                
                Fair value is measured using the Black Scholes model. The expected life used in the model  has
                been  adjusted,  based  on management's best estimate, for the effects of non-transferability,
                exercise restrictions and behavioural conditions.
         
         
         1.    ACCOUNTING POLICIES (continued)
         
               Critical accounting estimates and areas of judgement
         
                The  Group  makes  estimates and assumptions concerning the future. The  resulting  accounting
                estimates  will,  by definition, seldom equal the related actual results.  The  estimates  and
                assumptions  that  have a significant risk of causing a material adjustment  to  the  carrying
                amounts of assets and liabilities within the next financial year are discussed below:-
         
                Capitalised development costs
         
                The  Directors have considered the recoverability of the internally generated intangible asset
                which  has  a  carrying value of £1.7m. The project continues to progress  in  a  satisfactory
                manner  and  the  Directors  are confident that the carrying  amount  of  the  asset  will  be
                recovered  in  full. This situation will be closely monitored and adjustments made  in  future
                periods if future market activity indicates that such adjustments are appropriate.
         
                Financial risk management
         
                The  Group's  activities  expose it to a variety of financial risks:  market  risk  (including
                currency  risk  and  interest  rate risks), credit risk and liquidity  risk.  Risk  management
                focuses  on  minimising any potential adverse effect on the Group's financial performance  and
                is  carried out under policies approved by the Board of Directors. Further detail is given  in
                note 23 to the financial statements Financial Instruments.
         
         2.     SEGMENT REPORTING
         
                The  Directors  are of the opinion that the Group's activities at the current time  relate  to
                one business segment.
         
                Revenue  is royalty income attributable to the principal activity of the company.  Revenue  in
                2008  originated in Europe (2007 : originated in Europe) and all the assets of the  Group  are
                situated in the United Kingdom.
         
         

         3.    EMPLOYEES AND DIRECTORS
         
               During the year staff costs, including executive directors amounted to:-
                                                                                                  2008           2007
                                                                                                   £              £
               Wages and salaries                                                                165,282         145,410
               Social security costs                                                              18,324          12,411
                                                                                               _________       _________
         
                                                                                                 183,606         157,821
                                                                                               _________       _________
                
                Staff  costs,  including executive directors' remuneration are included within  administrative
                expenditure on the Income Statement.
                
                The  average monthly number of employees, including executive directors, during the  year  was
                as follows:
                                                                                                  2008           2007
         
               Management                                                                             6              3
               Administration                                                                         1              1
                                                                                                 ______         ______
         
                                                                                                      7              4
                                                                                                 ______         ______
         
                Details of charges incurred with related parties with respect to management services are set
                out in note 22.
         
                                                                                                  2008           2007
                                                                                                   £              £
               Directors' emoluments                                                             182,000         104,629
                                                                                                 _______         _______
         
                None of the directors are accruing benefits under Company pension schemes.
                
                None of the share based payment charge in 2008 or 2007 relates to directors.
         
         

         4.    NET FINANCE COSTS
                                                                                                  2008           2007
               Finance income:                                                                     £              £
               Bank interest received                                                              3,148           3,919
                                                                                                ________        ________
         
                                                                                                   3,148           3,919
                                                                                                ________        ________
                                                            
                                                                                                  2008           2007
               Finance costs:                                                                      £              £
               Bank interest                                                                           -            (39)
               Interest on shareholders loans                                                  (123,438)       (129,775)
                                                                                                ________        ________
         
                                                                                               (123,438)       (129,814)
                                                                                                ________        ________
         
               Net finance costs                                                               (120,290)       (125,895)
                                                                                                ________        ________
         
         5.    OPERATING LOSS
         
               The operating loss is stated after charging/(crediting):
                                                                                                  2008           2007
                                                                                                   £              £
         
               Other operating leases                                                             31,500          31,039
               Depreciation - owned assets                                                         4,719           4,908
               Amortisation of trademarks, intellectual property, and development costs          604,340         455,543
               Auditor's remuneration                                                             21,000          20,500
               Auditor's remuneration for non audit work
               - taxation and corporate finance                                                   10,500          16,900
               Foreign exchange differences                                                        2,226         (4,086)
               Research and development costs                                                     12,291         114,948
               Equity share based payment charge                                                 173,729       1,361,248
                                                                                              __________       _________
         
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Baker Tilly UK Audit LLP and Associates
               Fees in respect of the audit of the parent and consolidated accounts               21,000          20,500
                                                                                              __________      __________
         
               Total audit fees                                                                   21,000          20,500
         
         
               Other services   - tax services                                                     5,500           6,820
                                - corporate finance services                                       5,000          15,000
                                                                                              __________      __________
         
               Total non-audit fees                                                               10,500          21,280
         
         
                                                            
         
         6.    TAX
         
               Analysis of the tax credit
                                                                                                  2008           2007
                                                                                                   £              £
               Current tax:
               Current taxation                                                                        -               -
               Research and development credit                                                    47,235         157,645
                                                                                              __________      __________
         
               Total tax credit in income statement                                               47,235         157,645
                                                                                              __________      __________
         
                 Corporation tax
         
                No  tax  charge  arises  on  the results for the year. Tax losses carried  forward  amount  to
                 approximately  £10,000,000 (2007 : £8,500,000). The tax credit represents  the  research  and
                 development tax credit received for the year ended 31 December 2007.
         
               Factors affecting the tax charge
         
                The UK standard rate of corporation tax is 28% (2007 : 30%).  Current tax assessed for the
                financial year as a percentage of the loss before taxation is nil (2007 : nil)
                
                        The differences are explained below:
                                                                       2008           2008        2007           2007
                                                                        £              %           £              %

               Standard rate of corporation tax in the UK                            (28.0)                     (30.0)
               Loss before tax at standard rate of  tax            (601,572)                    (786,454)
         
               Effects of:
               Losses carried forward                                389,216           18.1       235,936          9.0
               Other expenses not deductible for tax purposes        212,356            9.9       550,518         21.0
               Research and development tax relief                  (47,235)          (2.2)     (157,645)        (6.0)
                                                                     _______        _______       _______      _______
         
               Total current tax charge/(credit) and tax rate %     (47,235)          (2.2)     (157,645)        (6.0)
                                                                     _______        _______       _______      _______
         
               Deferred tax
                  Unprovided deferred tax asset                    2,471,741                    2,420,469
                                                                     _______                      _______
         
                The  company  had  unutilised  tax  losses carried forward at  31  December  of  approximately
                £10,000,000  (2007  :   £8,500,000)  which are available  to  offset  against  future  taxable
                profits.
         
                The  unprovided  deferred tax asset arises principally in respect of trading losses,  together
                with  other  minor timing differences at 28% (2007 : 30%) and has not been recognised  due  to
                the uncertainty of timing of future profits against which it may be realised.
         
         7.    LOSS OF PARENT COMPANY
         
                As  permitted  by Section 230 of the Companies Act 1985, the income statement  of  the  parent
                company  is  not  presented as part of these financial statements.  The parent company's  loss
                for the financial year was £2,101,237 (2007 : £2,463,869).
         
         8.      LOSS PER SHARE
                                                                                                  2008           2007
         
               Loss per ordinary share (pence) - basic and diluted                                 (3.86)         (5.13)
                                                                                                 ________       ________
         
         
                Loss  per share has been calculated on the net basis on the loss after tax of £2,101,237 (2007
                :  loss  £2,463,869)  using  the  weighted average number  of  ordinary  shares  in  issue  of
                54,438,431 (2007 : 48,004,203).
         
                Due  to  the loss for the year there is no dilution of the loss per share arising from options
                in existence.
         
         
         9.    INTANGIBLE ASSETS - GROUP AND COMPANY
                                                                     Licences
                                                Intellectual           and             Development
                                                  property          trademarks            Costs               Total
         
                                                     £                  £                   £                   £
               COST
         
               At 1 January 2007                  8,333,708          290,118             598,260               9,222,086
               Additions                                  -                -             591,141                 591,141
                                                  _________        _________           _________              __________
         
               At 1 January 2008                  8,333,708          290,118           1,189,401               9,813,227
               Additions                            258,066                -             562,741                 820,807
                                                  _________        _________           _________              __________
         
               At 31 December 2008                8,591,774          290,118           1,752,142              10,634,034
                                                  _________        _________           _________              __________
               AMORTISATION
         
               At 1 January 2007                  1,082,747          125,534                   -               1,208,281
               Charge for the year                  426,527           29,016                   -                 455,543
                                                 __________        _________           _________             ___________
         
               At 1 January 2008                  1,509,274          154,550                   -               1,663,824
               Charge for the year                  490,218           29,012              85,110                 604,340
                                                 __________        _________           _________             ___________
         
               At 31 December 2008                1,999,492          183,562              85,110               2,268,164
                                                 __________        _________           _________             ___________
         
               CARRYING AMOUNT
         
               At 31 December 2008                6,592,282          106,556           1,667,032               8,365,870
                                                 __________        _________           _________              __________
         
               At 31 December 2007                6,824,434          135,568           1,189,401               8,149,403
                                                 __________        _________           _________              __________
         
               At 31 December 2006                7,250,961          164,584             598,260               8,013,805
                                                 __________        _________           _________              __________
         
         
               The net carrying value of intangible assets pledged as security for borrowing was £nil (2007 :
         £nil).
         
                         The  amortisation  charge is included within administration  expenses.   Intellectual
                property  represents  intellectual property in relation to use  of  encapsulated  terpenes  in
                agrochemicals.  The remaining amortisation period of that asset is sixteen years.
         
                         An  annual impairment review is undertaken by the Board of Directors using discounted
                cashflow  forecasts.   The  result of this review was that the Intellectual  Property  is  not
                impaired in respect of its carrying value.
         
         
         10.   PROPERTY, PLANT AND EQUIPMENT
         
               GROUP AND COMPANY
                                                                 Plant          Furniture       Computer
                                                                  and            fixtures      and office
                                                               equipment       and fittings    equipment        Total
         
                                                                   £               £               £              £
               COST
               At 1 January 2007                                   2,790          15,123          32,746          50,659
                                                               _________       _________       _________       _________
         
               At 1 January 2008                                   2,790          15,123          32,746          50,659
               Additions                                               -               -           8,089           8,089
                                                               _________       _________       _________       _________
         
               At 31 December 2008                                 2,790          15,123          40,835          58,748
                                                               _________       _________       _________       _________
         
               DEPRECIATION
         
               At 1 January 2007                                   1,214          13,864          27,117          42,195
               Charge for year                                       564             564           3,780           4,908
                                                               _________       _________       _________       _________
         
               At 1 January 2008                                   1,778          14,428          30,897          47,103
               Charge for year                                       564             612           3,543           4,719
                                                               _________       _________       _________       _________
         
               At 31 December 2008                                 2,342          15,040          34,440          51,822
                                                               _________       _________       _________       _________

               CARRYING AMOUNT
         
               At 31 December 2008                                   448              83           6,395           6,926
                                                             ___________     ___________     ___________     ___________
         
               At 31 December 2007                                 1,012             695           1,849           3,556
                                                             ___________     ___________     ___________     ___________
         
               At 31 December 2006                                 1,576           1,259           5,629           8,464
                                                             ___________     ___________     ___________     ___________
         
                The net carrying value of assets pledged on security for borrowings was £ nil (2007 : £ nil).
                
                The depreciation charge is included within administration expenses.
                
                                                            
         
         
         11.   INVESTMENTS
         
               COMPANY
                                                                                                  2008           2007
                                                                                                   £              £
                 CARRYING AMOUNT
         
               At 1 January                                                                         100            100
                                                                                             __________     __________
         
               At 31 December                                                                       100            100
                                                                                             __________     __________
         
         
                The investment in subsidiary companies at book value comprises the following:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
         
                Eden Research Europe Limited                                                       100            100
                                                                                             _________      _________
         
                                                                                                   100            100
                                                                                             _________      _________
         
         
         
                
                The Company's investment in the capital of unlisted subsidiary and associated undertakings  is
                as follows:-
                
                                                        Nature of          Shareholding             Incorporated
                Company                                 business
                                                                                                    
                Subsidiary undertakings                                                             
                 Eden Research Europe Limited           Dormant            100%                     England
                                                                                                    
                Associated undertakings                                                             
                 Bioclinical Services Limited           Dormant            30%                      England
                                                                                                    
                
                
                Bioclinical  Services  Limited is dormant and had no revenue or assets or  liabilities  at  31
                December 2007 or 31 December 2008.





         
         12.   TRADE AND OTHER RECEIVABLES
                                                               Group                                    Company
         
                                                        2008              2007                     2008          2007
                                                         £                 £                        £             £
                Current:
               Other receivables                      135,904             57,521                 135,904          57,521
               VAT recoverable                         41,887             49,048                  41,887          49,048
                                                     ________           ________                 _______         _______
         
                                                      177,791            106,569                 177,791         106,569
                                                     ________           ________                 _______         _______
         
                The Directors consider that the carrying value of trade and other receivables approximates to
                the fair value.
         
               There are no debts impaired, collateral held or debts that were past due at year end but not
         impaired.
         
         13.   CASH AND CASH EQUIVALENTS
                                                                                                   Group and Company
         
                                                                                                   2008          2007
                                                                                                    £             £
         
               Short term bank deposits                                                           13,065         663,022
                                                                                               _________       _________
         
         
         
                 The carrying amount of these short term bank deposits approximates to the fair value.
         
         14.   TRADE AND OTHER PAYABLES
                                                               Group                                    Company
         
                                                        2008              2007                     2008          2007
                                                         £                 £                        £             £
                Current:
               Trade payables                         748,436            829,111                 748,436         829,111
               Other payables                          46,285              6,110                  46,385           6,210
               Accruals and deferred income           243,532             97,970                 243,532          97,970
                                                     ________           ________                 _______         _______
         
                                                    1,038,253            933,191               1,038,353         933,291
                                                     ________           ________                 _______         _______
         
                The Directors consider that the carrying value of trade and other payables approximates to
                the fair value.
         
                See note 23 for  disclosure of amount of trade payables denominated in foreign currency

         
               See Directors' Report for disclosure of average credit period taken.

         
         15.     FINANCIAL LIABILITIES - BORROWINGS
                                                                                                   Group and Company
         
                                                                                                  2008           2007
                                                                                                   £              £
               Current:
                 Convertible debt (note 23)                                                    2,271,686       1,829,081
                                                                                             ___________     ___________
         
                                                                                               2,271,686       1,829,081
                                                                                              ___________     ___________
         
         
               GROUP AND COMPANY
                                                                1 year
                                                                or less         1-2 years       2-5 years       Totals
         
                                                                   £                £               £             £
         
               Convertible debt                                2,271,686               -               -       2,271,686
                                                             ___________     ___________     ___________     ___________
         
                                                               2,271,686               -               -       2,271,686
                                                             ___________     ___________     ___________     ___________
         
        The  convertible  loan notes were issued on 1 January 2006. The notes are convertible  into  ordinary
        shares  of  the Company at any time from the date of issue of the notes but must be by way of  mutual
        agreement by both parties.
        
        The convertible debt carries an interest rate of 7.5% and there are no fixed terms for repayment.
        
        Conversion  is at a discount of 10% on the closing bid price on the date of conversion or  (if  less)
        the  lowest price per share paid in any fundraising, debt conversion or warrant exercise or any other
        form of share allotment in the course of the year.
        
        The net proceeds received from the issue of the convertible loan notes are split between the
        liability element and an equity component, representing the fair value of the embedded option to
        convert the liability into equity of the Group. The convertible loans did not have an equity
        component in 2007 or 2008.
        
        The  convertible  loan  balance includes £1,080,634 (2007 : £nil) which is secured  by  a  fixed  and
        floating  charge  over  the company's assets. More details in relation to this  charge  are  included
        within note 22.
        
        
        
         15.     FINANCIAL LIABILITIES - BORROWINGS (continued)
        
                Convertible Loan Notes                                                                   £             £
                Convertible loan balance as at 1 January 2007 (including £167,895 of                           2,655,314
                interest)
                                                                                                                        
                New convertible loans issued in the year
                 - Nominal value of convertible loan notes issued                                  501,173              
                 - Equity component of convertible loan notes                                            -       501,173
                                                                                                                        
                Loan notes converted in the year                                                               (904,746)
                Loan notes repaid in the year                                                                  (422,660)
                Convertible loan balance as at 31 December 2007                                                1,829,081
                                                                                                                        
                New convertible loans issued in the year                                                                
                 - Nominal value of convertible loan notes issued                                  691,117              
                 - Equity component of convertible loan notes                                            -       691,117
                                                                                                                        
                Interest charged in the year                                                                     123,438
                Interest paid in the year                                                                              -
                Loan notes repaid in the year                                                                  (371,950)
                Loan notes converted in the year                                                                       -
                                                                                                                        
                                                                                                                        
                Convertible loan balance as at 31 December 2008                                                2,271,686
                                                                                                                        
         
         
         16.   LEASING AGREEMENTS
         
               GROUP AND COMPANY
         
               Minimum lease payments under operating leases recognised as an expense in the year:
         
                                                                                                  2008           2007
                                                                                                   £              £
         
                                                                                                  31,500          31,039
                                                                                                 _______         _______
         
                                                            
                                                            
         
         16.   LEASING AGREEMENTS (continued)
         
                At  the  balance  sheet  date the Group had outstanding commitments for future  minimum  lease
                payments under non-cancellable operating leases which fall due as follows:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Within one year                                                                    31,500          31,500
               Between one and five years                                                        118,125         126,000
               In more than five years                                                                 -          23,625
                                                                                               _________       _________
         
                                                                                                 149,625         181,125
                                                                                               _________       _________
         
                Operating lease payments represent rentals payable by the Group for office properties.  Leases
                are  negotiated for an average term of six years and rentals are fixed for an average of three
                years.
         
         17.     CALLED UP SHARE CAPITAL - GROUP AND COMPANY
                                                                                                  2008           2007
                                                                                                   £              £
         
                 Authorised
                  100,000,000 ordinary shares of £0.01 each                                   1,000,000        1,000,000
                                                                                             __________       __________
               Allotted and called up
                  56,313,274 ordinary shares of £0.01 each (2007 : 52,915,829)                  563,133          529,158
                                                                                             __________       __________
         
                        During the year the following ordinary shares were issued by Eden Research plc:
          
                                                      Aggregate                                            Total
                                       Number of        nominal                          Premium           share
                        Date      ordinary shares       value         Issue Price        on issue         premium
                                                          £                £                £                £
                    03.01.08            24,800              248             0.60            0.59           14,752
                    01.05.08            25,000              250             0.19            0.18            4,500
                    01.05.08            25,000              250             0.20            0.19            4,750
                    01.05.08            83,333              833             0.30            0.29           24,167
                    01.05.08           750,000            7,500             0.30            0.29          217,500
                    04.06.08            27,000              270             0.34            0.33            8,910
                    09.07.08         2,239,565           22,396             0.18            0.17          380,726
                    09.07.08            86,085              861             0.30            0.29           24,965
                    09.07.08            50,000              500             0.20            0.19            9,500
                    09.07.08            47,059              471             0.43            0.42           19,529
                    10.07.08        39,603                396               0.51            0.50           19,603
          
                                                        _______                                        __________
                                                         33,975                                           728,902
                                                        _______                                        __________
                    No shares have been issued since the year end.
          
                    The number of £0.01 ordinary shares issued in the year totalled 3,397,445 (2007 : 6,394,844).
         
         18.   SHARE PREMIUM ACCOUNT
         
               GROUP AND COMPANY                                                                  2008           2007
                                                                                                   £              £
         
               At 1 January                                                                  12,387,217       10,146,962
               Premium on shares issued in the year                                             728,902        2,240,255
                                                                                             __________       __________
         
               At 31 December                                                                13,116,119       12,387,217
                                                                                             __________       __________
         
         19.   RESERVES
         
               GROUP AND COMPANY
                                                                                                 Merger        Warrant
                                                                                                reserve        reserve
         
                                                                                                   £              £
         
         
               At 1 January 2007                                                             10,209,673        1,504,843
               Increase
               - warrants/options granted                                                             -        1,361,248
               Transfer to profit and loss reserve
               - warrants exercised or lapsed                                                         -        (424,383)
                                                                                            ___________      ___________
         
               At 1 January 2008                                                             10,209,673        2,441,708
               Increase
               - warrants/options granted                                                             -          431,795
               Transfer to profit and loss reserve
               - warrants exercised or lapsed                                                         -        (752,866)
                                                                                            ___________      ___________
         
               At 31 December 2008                                                           10,209,673        2,120,637
                                                                                            ___________      ___________
         
                The  merger reserve arose on the acquisition of a subsidiary undertaking in a prior  year  for
                which merger accounting was permitted under the Companies Act 1985.
         
                The  warrant reserve represents the fair value of share options and warrants granted, and  not
                exercised or lapsed, in accordance with the requirements of IFRS 2 Share Based Payment
         
         
         20.     RETAINED EARNINGS
                 GROUP AND COMPANY
                                                                                                  2008           2007
                                                                                                   £              £
         
               At 1 January                                                                (19,407,478)     (17,367,992)
               Loss for the year                                                            (2,101,237)      (2,463,869)
               Transfer from warrant reserve (note 19)                                          752,866          424,383
                                                                                             __________       __________
         
               At 31 December                                                              (20,755,849)     (19,407,478)
                                                                                             __________       __________
         
         
         
         21.   CAPITAL COMMITMENTS
         
                The group and company had no capital commitments at 31 December 2008 (2007: £nil).
                
         
         22.   RELATED PARTY DISCLOSURES
                
                Related party transactions
         
                There  were  no transactions between the Company and its subsidiary and associate during  2007
                or 2008.
                
                Disclosures  required  in respect of IAS24 regarding remuneration of key management  personnel
                is covered by the disclosure of directors' remuneration on page 29.
                
                Transactions with other related parties are set out below.
                
                During the year, the Group traded with BrookStreet Des Roches, a firm of solicitors for  which
                K W Brooks acts as a consultant, as follows:-
                                                                                                  2008           2007
                                                                                                   £              £
         
               Provision of legal services                                                          475            2,750
               Trade payables due at the year end                                                   530              969
         
                Also during the year, the Group traded with A H Brooks, of which K W Brooks is a partner.  The
                transactions in aggregate were as follows:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Provision of consulting services                                                  42,518           51,250
               Trade payables due at the year end                                                21,478           78,675
         
         
                During  the  year the Group traded with Insight Medical Writing Limited, a company  controlled
                by T Griffiths and his spouse K Walker. The transactions in aggregate were as follows:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Data writing fees                                                                 64,290           64,200
               Trade payables due at the year end                                                69,479           16,685
         
         
                During  the year, the Group traded with Battlebridge Group Limited, a shareholder, in  respect
                of management consultancy, as follows:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Provision of management services                                                 100,690            6,250
               Trade payables due at the year end                                                17,083            7,344
         
         
         
         22.   RELATED PARTY DISCLOSURES (continued)
         
                During  the  year, the Group traded with Ricewood Limited, of which A Abrey is a Director  and
                shareholder, in respect of consultancy services, as follows:-
                                                                                                  2008           2007
                                                                                                   £              £
         
               Provision of consultancy services                                                 15,000           50,028
               Trade payables due at the year end                                                10,250           58,783
         
                During the year, the Group traded with Agri-Nova Technology Limited, of which C Newitt is a
                Director and shareholder, in respect of marketing consultancy, as follows:-
                                                                                                  2008           2007
                                                                                                   £              £
         
               Provision of marketing consultancy                                                68,884           46,044
               Trade payables due at the year end                                                 7,383            9,048
         
                During the year, the Group traded with Hawkhills Consultancy Limited, of which B Gill is a
                Director and shareholder, in respect of director's fees, as follows:-
                                                                                                  2008           2007
                                                                                                   £              £
         
               Director's fees                                                                   32,786                -
               Trade payables due at the year end                                                 7,619                -
         
                The  directors regard all the transactions disclosed above as being on an arm's  length  basis
                and in the normal course of business.
         
                During  the  year, K Brooks, director, loaned £10,000 (2007: £nil) to the Group.  This  amount
                was  outstanding  at the year end (2007: £nil). The loan is interest free  and  there  are  no
                fixed terms for repayment.
         
                Liabilities  include  the  following convertible loans advanced by  the  shareholders  of  the
                Company:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               Battlebridge Group Limited                                                       404,802          579,959
               Battlebridge Nominees Limited                                                    145,860          276,990
               Oxford Commercial Services Limited                                                 1,254            1,255
               Oxford Equities Limited                                                           43,387           59,223
               Oxford Capital Limited                                                         1,080,634          354,393
               Oxford Business Services Limited                                                  49,510           56,088
               Ricewood Limited                                                                   3,673            1,173
               Efford Nominees Limited                                                          208,296                -
                                                                                             __________       __________
         
                                                                                              1,937,416        1,329,081
                                                                                             __________       __________
         
                The loans carry an interest rate of 7.5% (2007: 7.5%) per annum and there are no fixed terms
                for repayment.
         

                All loans with the exception of the loan received from Oxford Capital Limited are unsecured.

                The  Group is party to a guarantee and debenture entered into on 29 December 2008 whereby  all
                sums  due to Oxford Capital Limited are secured by a first fixed and floating charge over  the
                assets of the Group.
         
         23.     FINANCIAL INSTRUMENTS
         
                 Financial assets
         
                 Group and Company
                                                                                                  2008           2007
               Loans and receivables                                                               £              £
         
               Trade receivables                                                                       -               -
               Allowance for doubtful debts                                                   (        -)    (        -)
                                                                                                   ______         ______
         
                                                                                                       -               -
                                                                                                   ______         ______
         
                Other  financial  assets  comprise bank deposits and an immaterial  amount  of  cash  in  bank
                current accounts.
         
                The  average credit period for sales of goods and services is 30 days. No interest is  charged
                on  overdue  trade  receivables. At 31 December 2008 there were no trade  receivables  and  no
                receivables past due (31 December 2007 no receivables past due).
         
                The  Company's  and  Group's  policy  is to provide for  doubtful  debts  based  on  estimated
                irrecoverable  amounts  determined by reference to specific  circumstances  and  past  default
                experience.  At the balance sheet date the directors consider that no provision  for  doubtful
                debts is required and that there is no further credit risk.
         
                Financial liabilities
         
                Group and Company
                                                                                                  2008           2007
                                                                                                   £              £
         
               Trade payables                                                                   748,436          829,111
               Interest bearing convertible loans                                             2,271,686        1,829,081
                                                                                              _________        _________
         
                                                                                              3,020,122        2,658,192
                                                                                              _________        _________
                The carrying amount of trade payables approximates to fair value.
         
                The  average credit period on purchases of goods is 30 days. No interest is charged  on  trade
                payables. The Company and Group have policies in place to ensure that trade payables are  paid
                within the credit timeframe or as otherwise agreed.
         
                Details  of  the interest bearing loans are disclosed in note 15 to the financial  statements.
                The  Company and Group currently finances its operations partly through these borrowings.  The
                Company and Group borrows in poundssterling generally at fixed interest rates.
         
                Holders  of  the  convertible  loans have a right to convert the  loans  and  any  outstanding
                interest  into shares. The conversion would be at a discount of 10% on the closing  bid  price
                at  the  date of conversion or, if less, the lowest price per share paid on any fund  raising,
                debt conversion or warrant exercise or other share allotment in the course of the year.
         
                Certain of the convertible loans also have share warrants attached.
         
                In  accordance  with the substance of the arrangements the convertible loans are  included  in
                liabilities and it is considered that there is no material equity component.
         
         
         23.     FINANCIAL INSTRUMENTS (continued)
         
                Credit risk
         
                As  explained  above, the directors consider there is no material exposure to credit  risk  at
                the balance sheet date.
         
                Currency risk
         
                The  Group  publishes  its financial statements in pounds sterling and conducts  some  of  its
                 business in US dollars. As a result, it is subject to foreign currency exchange risk  due  to
                 exchange  movements, which will affect the Group's transaction costs and translation  of  the
                 results. No financial instruments are utilised to manage risk and currency gains, and  losses
                 are charged to the income statement as incurred. At the year end, the Group had the following
                 net foreign currency balances in liabilities:
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               US dollars                                                                        36,091           92,141
               Euro                                                                             107,118           20,378
               Norwegian Kroner                                                                  65,279           36,548
         
         
         
                Liquidity risk
         
                Short-term  flexibility  is achieved by overdraft facilities. The interest  rate  profile  and
                maturity profile of financial liabilities is set out below:-
         
                The interest rate profile of the Group's financial liabilities at 31 December 2008 was:-
                                                                                                            Financial
                                                                         Floating rate     Fixed rate     liabilities on
                                                                           financial       financial         which no
                                                            Total         liabilities     liabilities    interest is paid
         
                                                              £                £               £                £
               Sterling
         
               2008                                        3,309,939              -         2,271,686       1,038,253
         
               2007                                        2,658,192              -         1,827,826         830,366
         
         
                                                                                Weighted average         Weighted average
                                                       Weighted average         period for which           period until
                                                        interest rate            rate is fixed               maturity
         
                                                              %                      Years                    Years
               Sterling
         
               2008                                           7.5                      1.0                      1.0
               2007                                           7.5                      1.0                      1.0
         
         
         
         
         23.     FINANCIAL INSTRUMENTS (continued)
         
         
               Maturity of financial liabilities
         
               The maturity profile of the Group's financial liabilities at 31 December  was as follows:-
         
                                                                                                  2008           2007
                                                                                                   £              £
         
               In one year or less, or on demand                                              2,271,686        1,829,081
               In more than one year but not more than two years                                      -                -
               In more than two years but not more than five years                                    -                -
               In more than five years                                                                -                -
                                                                                            ___________      ___________
         
                                                                                              2,271,686        1,829,081
                                                                                            ___________      ___________
         
                The  Group has no undrawn committed borrowing facilities. Liquidity risk is managed by regular
                monitoring  of the Group's undrawn borrowing facilities, levels of cash and cash  equivalents,
                and expected future cash flows, and availability of loans from shareholders.
         
         
               Market price risk
         
                The  Group's  exposure  to  market  price  risk comprises  interest  rate  and  currency  risk
                exposures.  It  monitors  these  exposures primarily through a process  known  as  sensitivity
                analysis. This involves estimating the effect on results before tax over various periods of  a
                range  of  possible  changes in interest rates and exchange rates.  The  sensitivity  analysis
                model  used  for this purpose makes no assumptions about any interrelationships  between  such
                rates  or  about  the  way  in  which such changes may affect the  economies  involved.  As  a
                consequence,  figures derived from the Group's sensitivity analysis model should  be  used  in
                conjunction with other information about the Group's risk profile.
         
                The  Group's  policy towards currency risk is to eliminate all exposures that will  impact  on
                reported  results as soon as they arise. This is reflected in the sensitivity analysis,  which
                estimates  that five and ten percentage point increases in the value of sterling  against  all
                other currencies would have had minimal impact on results before tax.
         
                On  the other hand, the Group's policy is to accept a degree of interest rate risk as long  as
                the  effects of various changes in rates remain within certain prescribed ranges. On the basis
                of  the  Group's analysis, it is estimated that a rise of one percentage point in all interest
                rates  would  have increased 2008 loss before tax by approximately 0.5 per  cent  and  that  a
                three  percentage  point increase would have increased such losses by 1.8 per  cent.  This  is
                well within the ranges that the Group regards as acceptable.
         
         
         
         23.     FINANCIAL INSTRUMENTS (continued)
         
                 Capital risk management
         
                The  group's objectives when managing capital are to safeguard the Group's ability to continue
                 as  a  going  concern  in order, in due course, to provide returns to  shareholders,  and  to
                 maintain an optimal capital structure.
         
                The  Group  monitors capital on the basis of the gearing ratio calculated as net debt  divided
                 by total capital (equity plus net debt).
                                                                                                  2008           2007
                                                                                                   £              £
         
               Borrowings                                                                     2,271,686        1,829,081
         
               Less : Cash and cash equivalents                                                (13,065)        (663,022)
                                                                                              _________        _________
         
               Net debt                                                                       2,258,621        1,166,059
         
               Total equity                                                                   5,512,331        6,160,278
                                                                                              _________        _________
         
               Total capital                                                                  7,254,268        7,326,337
         
               Gearing ratio                                                                        31%              16%
         
                The increase in gearing ratio at 31 December 2008 resulted from the additional borrowings  in
                the year.
         
         24.     SHARE BASED PAYMENT
         
                Eden Research plc operates an unapproved option scheme for executive directors, senior
                 management and certain employees.
                                                                     2008                                  2007
         
                                                         Weighted                              Weighted
                                                      average exercise                     average exercise
                                                       price (pence)        Number          price (pence)        Number
         
                Outstanding at the beginning
                   of the year                                 32        5,318,974                  30        8,615,161
                Granted during the year                        46          950,000                  30          100,000
                Exercised during the year                      23        (127,000)                  23      (3,116,187)
                Lapsed during the year                          -                -                  78        (280,000)
                                                           ______       __________              ______       __________
         
                                                               34        6,141,974                  32        5,318,974
                                                           ______       __________              ______       __________
         
                The exercise price of options outstanding at the end of the year ranged between 9p and 60p
                 (2007 : 9p and 42p) and their weighted average contractual life was 1.6 years (2007 : 2.3
                 years).
         
                The  weighted  average share price (at the date of exercise) of options exercised  during  the
                 year was 23p (2007 : 62p).
         
                The weighted average fair value of each option granted during the year was 40p (2007 : 16p).
         
         
         24.     SHARE BASED PAYMENT (continued)
         
                        The share based payment charge for the year was £173,729 (2007: £1,361,248).
         
                The  following  information  is relevant in the determination of the  fair  value  of  options
                 granted during the year under the unapproved options scheme operated by Eden Research plc.
         
                                                                                                  2008           2007
         
               Equity-settled
         
               Option price model used                                                    Black Scholes    Black Scholes
               Weighted average share price at grant date (pence)                                    68               35
               Exercise price (pence)                                                                46               30
               Weighted average contractual life (days)                                             756              259
         
         
         
               Expected volatility                                                                73.6%            73.6%
               Expected dividend growth rate                                                          -                -
               Risk-free interest rate                                                            4.43%            4.43%
         
                Eden  Research plc issued warrants to third parties for the provision of services rendered and
                 the provision of finance.
         
                                                                            2008                                  2007
         
                                                         Weighted                              Weighted
                                                      average exercise                     average exercise
                                                       price (pence)        Number          price (pence)        Number
         
                Outstanding at the beginning
                   of the year                                 26        8,839,565                  21        5,539,565
         
                Granted during the year                         -                -                  30        4,400,000
         
                Exercised in the year                          21      (3,158,983)                  30      (1,100,000)
                                                           ______       __________              ______       __________

                Outstanding at the end of the year             21        5,680,582                  26        8,839,565
                                                           ______        _________              ______       __________
         
                The  exercise price of warrants outstanding at the end of the year ranged between 10p and  34p
                 (2007  :10p  and 50p) and their weighted average contractual life was 1.1 years (2007  :  2.5
                 years).
         
                The  weighted average share price (at the date of exercise) of warrants exercised  during  the
                 year was 21p (2007 : 63p).
         
                The  weighted  average fair value of each warrant granted during the year was nil  p  (2007  :
                 31p).
         
         
         
         24.     SHARE BASED PAYMENT (continued)
         
                The  following  information is relevant in the determination of the  fair  value  of  warrants
                 granted during the year by Eden Research plc.
         
                                                                                                  2008           2007
         
               Equity-settled
         
               Option price model used                                                    Black Scholes    Black Scholes
               Weighted average share price at grant date (pence)                                     -               49
               Exercise price (pence)                                                                 -               30
               Weighted average contractual life (days)                                               -            1,091
         
         
         
               Expected volatility                                                                73.6%            73.6%
               Expected dividend growth rate                                                          -                -
               Risk-free interest rate                                                            4.43%            4.43%
         
                The  volatility assumption, measured at the standard deviation of expected share price returns
                 is based on a statistical analysis of daily share prices over 4 years.
         
         
         
         25.   RECONCILIATION OF MOVEMENTS IN EQUITY
         
               GROUP
                                                                                                  2008           2007
                                                                                                   £              £
         
               Loss for the financial year                                                   (2,101,237)     (2,463,869)
               Issued share capital                                                               33,975          63,948
               Share premium arising on new share capital subscribed                             728,902       2,240,255
               Increase in Warrant reserve on grants in the year                                 431,795       1,361,248
                                                                                             ___________     ___________
         
               Net (deductions from)/additions to equity                                       (906,568)       1,201,582
               Opening equity                                                                  6,160,278       4,958,696
                                                                                             ___________     ___________
         
               Closing equity                                                                  5,253,710       6,160,278
                                                                                             ___________     ___________
         
               Equity interests                                                                5,253,710       6,160,278
                                                                                             ___________     ___________
         
         
         
         25.   RECONCILIATION OF MOVEMENTS IN EQUITY (continued)
         
               COMPANY
                                                                                                  2008           2007
                                                                                                   £              £
         
               Loss for the financial year                                                   (2,101,237)     (2,463,869)
               Issued share capital                                                               33,975          63,948
               Share premium arising on new share capital subscribed                             728,902       2,240,255
               Increase in Warrant reserve on grants in the year                                 431,795       1,361,248
                                                                                             ___________     ___________
         
               Net (deductions from)/additions to equity                                       (906,568)       1,201,582
               Opening equity                                                                  6,160,278       4,958,696
                                                                                             ___________     ___________
         
               Closing equity                                                                  5,253,710       6,160,278
                                                                                             ___________     ___________
         
               Equity interests                                                                5,253,710       6,160,278
                                                                                             ___________     ___________
         
         
         26.   EVENTS AFTER BALANCE SHEET DATE
         
               There have been no adjusting, or non-adjusting, post balance sheet events.

Contact Information

  • Eden Research plc