Eden Research PLC (LON:EDEN) has reported a jump in full-year revenues as its product sales increased by 112% helping the biopesticides group swing to an adjusted operating profit.
For the year ended 31 December 2018, the AIM-listed group saw its revenue rise to £2.8mln, up from £1.9mln a year earlier, as product sales increased to £1.6mln from £0.8mln in 2017.
READ: Eden Research says commercial partner gets EU product authorisation from Malta for its biopesticide Cedroz
The company posted a full-year operating profit (before non-cash items - share-based payment charge and amortisation - and one-time items - licence renewal fee and royalties refund) of £0.02mln, after a loss of £0.4mln in 2017.
During the year, Eden Research signed multiple distribution agreements with Sipcam SpA for fungicide product Mevalone in ten new territories, for which a fee of €0.9mln (£0.8mln) was paid to the group.
It said that the successful positioning of Mevalone as an early-season treatment contributed to the strong product sales growth.
The company also highlighted an exclusive distribution agreement signed with Sipcam for its fungicide product Novellus to be sold in Australia and New Zealand and said a healthy pipeline of collaborations are progressing with majors in its distributor network.
At the year-end, the group had net cash of £2.5mln, down from £3.7mln at the same stage a year earlier.
Further commercial progress seen in 2019
Lykele van der Broek, Eden Research’s chairman commented: "We have undergone a year of significant growth at Eden in 2018, with a boost to revenue from product sales and the contribution of Sipcam SpA exercising its option for new distribution agreements in ten additional territories.”
He added: "Behind the scenes, significant regulatory activity has been progressing with promising potential to unlock future product sales expansion for the business. The Board is currently prioritising the long-term viability and growth potential of the Company and is looking forward to making further commercial progress in 2019."
Talking to Proactive Investors after the results release, Eden Research’s chief financial officer, Alex Abrey pointed out that, in terms of agrichem, with traditional chemicals being banned or restricted all over the place on a very regular basis, there is a drive towards biopesticides, like the group’s, to be used more and more, with market growth forecast at around 17% on an annual basis through to 2022.
“So all of these external factors means we are in the right place, at the right time, and again specific to us we are seeing that growth in getting more and more agreements in place with good, robust partners, so everything is heading in the right direction and looking good,” Abrey concluded.
“Eden can drive value creation”
In a note to clients, analysts at ‘house’ broker Share Capital said: “We believe Eden has delivered another year of progress in FY2018A and the business is entering FY2019F with solid momentum and a strong balance sheet.
“With regards to Brexit, Eden is confident that the ownership of its EU approvals of Mevalone and its active substances should not be impacted by the situation as published guidance states that the owner of such approvals can continue to be a U.K. resident company.
“However, commercialising products in the UK (i.e. seeking regulatory approval) has become more challenging, thus the company is assessing its opportunities and costs under various Brexit scenarios.”
The analysts concluded: “The conventional global pesticides market has an overall value of over $57bn per year, thus with higher barriers to entry, we believe Eden can drive value creation, which in turn should be reflected in the Company’s share price.”
In afternoon trading, shares in Eden Research were changing hands at 9.55p each, down 4.50% in Monday’s close.
-- Adds CFO comment, share price, analyst comment --