TIDMDNL
RNS Number : 2788M
Diurnal Group PLC
12 October 2016
12 October 2016
Diurnal Group plc
("Diurnal" or the "Company")
Results for the year ended 30 June 2016
Significant progress towards becoming a revenue generating
endocrinology specialty pharmaceutical company
Diurnal Group plc (AIM: DNL), the specialty pharmaceutical
company targeting patient needs in chronic endocrine (hormonal)
diseases, announces its results for the year ended 30 June
2016.
Operational highlights
-- Primary endpoint met in European pivotal study of Infacort(R)
in paediatric Adrenal Insufficiency; regulatory filing anticipated
by the end of 2016.
-- First patient treated in the Group's European Phase III trial
of Chronocort(R) in Congenital Adrenal Hyperplasia.
-- First patient treated in the Group's European open-label
safety extension studies of Infacort(R) in paediatric Adrenal
Insufficiency and Chronocort(R) in Congenital Adrenal
Hyperplasia.
-- Initial Public Offering on the Alternative Investment Market
("AIM") of the London Stock Exchange in December 2015, raising
GBP30m before expenses.
-- Strengthening of the Board with the appointment of Peter
Allen as Non-executive Chairman and John Goddard as Non-executive
Director.
Financial overview
-- Operating loss of GBP7.0m (2015 13 months: GBP3.0m)
reflecting investment in increased clinical and development
activities together with investment in overheads to support the
anticipated growth and development of the business and including
GBP1.5m of one-off, share option related and non-cash expenses.
-- Held to maturity financial assets, cash and cash equivalents
at 30 June 2016 of GBP30.1m (2015: GBP6.1m) following the
successful AIM IPO and fundraising.
-- Net assets of GBP25.9m (2015: GBP6.0m).
-- Net cash used in operating activities was GBP5.1m (2015 13 months: GBP2.9m).
Martin Whitaker, PhD, Chief Executive Officer of Diurnal,
commented:
"This financial year has been transformational as we executed
our Initial Public Offering on AIM, providing the Group with the
capital to accelerate product development to bring our novel
products to market. Despite the distraction of the IPO, the Group's
late-stage products, Infacort(R) and Chronocort(R) , continue to
progress according to plan in Europe and we are working with the US
Food and Drug Administration to design the optimal clinical pathway
towards regulatory approval in the US. Diurnal expects to receive
its first market authorisation in late 2017 and is well positioned
to initiate commercialisation activities towards building a
proprietary endocrinology franchise."
In the Results for the year ended 30 June 2016:
-- "bn", "m" and "k" represent billion, million and thousand respectively
-- "Group" is the Company and its subsidiary undertaking, Diurnal Limited
For further information, please visit www.diurnal.co.uk
or contact:
+44 (0)20 3727
Diurnal Group plc 1000
Martin Whitaker, CEO
Ian Ardill, CFO
Numis Securities Ltd (Nominated +44 (0)20 7260
Adviser) 1000
Nominated Adviser: Michael Meade,
Freddie Barnfield, Paul Gillam
Corporate Broking: James Black
+44 (0)20 3727
FTI Consulting 1000
Simon Conway
Victoria Foster Mitchell
Notes to Editors
About Diurnal
Diurnal is a clinical stage specialty pharmaceutical company
targeting patient needs in chronic endocrine (hormonal) diseases
which the Company believes are currently not satisfactorily met by
existing treatments. It has identified a number of specialist
endocrinology market opportunities in Europe and the US that are
together estimated to be worth more than $11bn per annum.
On its admission to AIM in December 2015, the Company raised
GBP30 million by way of a placing of new ordinary shares and a
convertible loan. The new funds will accelerate the development of
two leading product candidates which are in, or expected to
commence shortly, Phase III clinical trials, targeting diseases of
cortisol deficiency; Chronocort(R) , to be used for Congenital
Adrenal Hyperplasia ("CAH") in adults, and Infacort(R) , to be used
for Adrenal Insufficiency ("AI"), including CAH in children. The
lead product candidate, Infacort(R) , is anticipated to receive its
first regulatory approval in Europe towards the end of 2017.
For further information about Diurnal, please visit
www.diurnal.co.uk
Forward looking statements
Certain information contained in this announcement, including
any information as to the Group's strategy, plans or future
financial or operating performance, constitutes "forward-looking
statements". These forward-looking statements may be identified by
the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "projects", "expects",
"intends", "aims", "plans", "predicts", "may", "will", "seeks"
"could" "targets" "assumes" "positioned" or "should" or, in each
case, their negative or other variations or comparable terminology,
or by discussions of strategy, plans, objectives, goals, future
events or intentions. These forward-looking statements include all
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the intentions, beliefs or current expectations of the
Directors concerning, among other things, the Group's results of
operations, financial condition, prospects, growth, strategies and
the industries in which the Group operates. The directors of the
Company believe that the expectations reflected in these statements
are reasonable, but may be affected by a number of variables which
could cause actual results or trends to differ materially. Each
forward-looking statement speaks only as of the date of the
particular statement.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future or are beyond
the Group's control. Forward-looking statements are not guarantees
of future performance. Even if the Group's actual results of
operations, financial condition and the development of the
industries in which the Group operates are consistent with the
forward-looking statements contained in this document, those
results or developments may not be indicative of results or
developments in subsequent periods.
Chairman's Statement
I am pleased to provide my inaugural Chairman's statement and
the first for Diurnal Group plc as a public company. This financial
year has been transformational as we executed our Initial Public
Offering (IPO), providing the Group with the capital to accelerate
product development to bring our novel products to market. I am
excited to be part of Diurnal with its entrepreneurial and
patient-centric approach, combined with its international network
of experts, which have enabled the development of a balanced
late-stage portfolio of prospects and provide a solid platform from
which we can confidently build a proprietary endocrinology
franchise.
Diurnal aims to develop and commercialise products to address
unmet patient needs in chronic endocrine (hormonal) diseases,
typically where there is either no licensed medicine or where
current treatment does not sufficiently improve the patients'
health. Diurnal has identified a number of such needs within the
field of endocrinology, which the Group believes represent a
multi-billion dollar combined market opportunity. The Group intends
to address these market opportunities through the development of
its late-stage pipeline, by finalising its commercialisation plans
in Europe, to be followed by the US, through development of its
early-stage pipeline and, longer-term, through in-licensing and
acquisitions.
In December 2015, Diurnal successfully completed an IPO on AIM,
raising GBP30m from new and existing long-term investors. These
monies enable the Group to continue to pursue its vision of
becoming a world-leading endocrinology speciality pharmaceutical
group.
In the near term, funding from the IPO allows Diurnal to
maintain the momentum behind its late-stage development programmes
for treatments targeting indications of cortisol deficiency.
Cortisol is an essential hormone for health in regulating
metabolism, growth, fertility and the response to stress. It is
Diurnal's ambition to develop a product franchise that can treat
patients with all forms of cortisol deficiency. Diurnal anticipates
its first market authorisation in Europe towards the end of
2017.
I am pleased with the significant clinical development progress
in the Group's late-stage pipeline products during the year, with
Chronocort(R) commencing a pivotal Phase III clinical trial in
Europe and Infacort(R) reporting positive headline data from a
pivotal Phase III clinical trial also in Europe. Infacort(R) has
the potential to be the first licensed treatment in Europe for
Adrenal Insufficiency (AI) (including Congenital Adrenal Hypoplasia
(CAH)) specifically designed for use in children under six years of
age. Chronocort(R) has the potential to be the first product
candidate for adults with CAH to mimic the natural cortisol
circadian rhythm, therefore improving disease control. In the US,
Infacort(R) and Chronocort(R) are expected to commence Phase III
clinical development in 2017.
During the period, Diurnal enhanced its Board with the
appointment of John Goddard as Non-executive Director and Chairman
of the Audit Committee. John's extensive financial, accounting,
strategic planning and business development experience in the
global pharmaceuticals industry will be invaluable as we embark on
our next stage of growth.
Diurnal also continues to develop its earlier-stage pipeline,
with the Group obtaining the rights to the orphan drug designation
for an oligonucleotide therapy for the potential treatment of
Cushing's Disease (cortisol excess) in May 2016. In addition,
Diurnal's oral native testosterone product is scheduled to enter
human clinical trials imminently.
The Board will continue to monitor the potential effects of the
23 June 2016 UK referendum result on the Group's business and, in
particular, any impact on the regulatory framework for
pharmaceutical product development, approval and
commercialisation.
I would like to thank our employees for their continued support
and hard work in driving the Company's progress towards
commercialising the Group's first products. Despite the distraction
of the IPO, the Group's late-stage products, Infacort(R) and
Chronocort(R) , continue to progress according to plan in Europe
and we are working with the US Food and Drug Administration (FDA)
to design the optimal clinical pathway towards regulatory approval
in the US. I would also like to thank my fellow Board members for
the progress made this year in formulating the foundations of a
strategy that will ensure continued and sustainable growth from our
pipeline. Finally, I would like to thank our shareholders for their
continued support as Diurnal aims to make a real difference to
patients currently without effective treatment options for chronic
endocrine diseases.
Operational Review
The financial year to June 2016 has seen significant
transformation in our aspiration to become a revenue generating
endocrinology specialty pharmaceutical company. We successfully
completed a GBP30m Initial Public Offering (IPO) on AIM in December
2015, providing the Group with the resources to develop our novel,
high quality, patent protected products by focussing on completing
the development of Infacort(R) in Europe and the US; obtaining
market authorisation in Europe for Infacort(R) and generating first
revenues; completing the development of Chronocort(R) in Europe and
commencing development in the US; and commencing the construction
of Diurnal's commercial capability in Europe.
As a quoted company, the IPO on AIM also provides additional
currency for future development by providing potential access to
development capital to progress its current and future pipeline and
enabling it to expand within its chosen specialist endocrine
therapy areas.
Significant clinical progress towards building a proprietary
endocrinology franchise
Infacort(R)
Infacort(R) is Diurnal's most clinically advanced product and is
the first preparation of hydrocortisone (the synthetic version of
cortisol) specifically designed for use in children suffering from
adrenal insufficiency (AI), including the related disease,
Congenital Adrenal Hyperplasia (CAH). Currently there is no
licensed hydrocortisone preparation in Europe or the US
specifically designed to treat these young patients. Infacort(R) is
on target to be the first pharmaceutically defined dose and
consistent formulation of hydrocortisone designed specifically for
children. The patented, immediate-release oral product has been
designed to meet the dosing needs of children and is manufactured
using commercially proven technology in paediatric acceptable doses
in order to give maximum flexibility to clinicians in tailoring
treatment to children as they develop and grow. Currently,
pharmacists often compound (grind) hydrocortisone tablets to a fine
powder and reconstitute it in individual capsules or sachets to
achieve the lower doses required for children. Compounding is not a
licensed method of producing medicines; it can be highly variable
and may result in inaccurate dosing to patients.
Post year and ahead of schedule in July 2016, Diurnal announced
positive headline data from the pivotal Phase III clinical trial
for Infacort(R) in Europe for paediatric AI. AI (and CAH) is
identified as a rare disease in Europe where there are estimated to
be approximately 4,000 sufferers younger than the age of six. Left
untreated, the disease is associated with significant
morbidity.
The Phase III study was designed in agreement with the European
Medicines Agency (EMA) and conducted in a total of 24 subjects
before their sixth birthday, requiring replacement therapy for AI
due to CAH, primary adrenal failure or hypopituitarism.
Comprehensive analysis of the results confirms that the study met
its primary endpoint, demonstrating a statistically significant
(p<0.0001) increase in cortisol values following administration
of Infacort(R) compared to the pre-dose values. No serious adverse
events were reported.
In March 2016, the first patient was treated in the Group's
European open-label safety extension trial of long term safety and
biochemical disease control of Infacort(R) in neonates, infants and
children with CAH and AI, previously enrolled in the Group's
pivotal Infacort(R) Phase III registration trial.
Chronocort(R)
Diurnal announced that the first patient was dosed with its
second late-stage product, Chronocort(R) , in the pivotal Phase III
clinical trial in Europe for adults with CAH in February 2016.
Chronocort provides a drug release profile that the Group believes
mimics the body's natural cortisol circadian rhythm, which current
therapy is unable to replicate, and will improve disease control
for adults with CAH. Clinical data have shown that approximately
two thirds of CAH patients are estimated to have poor disease
control. CAH sufferers, even if treated, remain at risk of death
through an adrenal crisis, suffer from high morbidity and a poor
quality of life. The condition is estimated to affect approximately
51,000 patients in Europe and 20,000 patients in the US, with
approximately 405,000 patients in the rest of the world.
The Phase III trial is designed to study up to 110 patients in
an open-label six month protocol. Enrolled patients currently
treated with a single or combination of generic steroids
(standard-of-care) will be randomised to Chronocort(R) on a twice
daily "toothbrush" regimen or will continue on their
standard-of-care regimen. Following discussions with the EMA, the
primary endpoint of the trial is the control of androgens (sex
hormones) on the same or lower total daily dose of steroid when
treated with Chronocort(R) compared to standard-of-care treatment.
This primary endpoint is identical to the previous successful Phase
II clinical trial for Chronocort(R) for which data were released in
2014. Secondary endpoints will include an assessment of fatigue
levels and the relative effect of Chronocort(R) on body mass index
and bone turnover, all of which are indicative of clinical
benefits. The trial is scheduled to complete in early 2018,
implying a potential market authorisation in Europe could be
forthcoming around the end of 2018.
In August 2016, the first patient was treated in the Group's
European open-label safety extension trial of long term safety,
efficacy and tolerability of Chronocort(R) in patients with CAH,
previously enrolled in the Group's pivotal Chronocort(R) Phase III
registration trial.
During the period, Diurnal extended its existing Cooperative
Research and Development Agreement (CRADA) with the National
Institutes of Health (NIH), Maryland, US until June 2021. The
extension will support the Phase III clinical trial of
Chronocort(R) for the treatment of CAH in both the US and Europe.
Diurnal successfully collaborated with the NIH to complete the
Phase II clinical trial of Chronocort(R) .
Prelaunch activities
The EMA has already approved a Paediatric Investigation Plan
(PIP) for Infacort(R) , setting out the regulatory pathway to
market authorisation via the Paediatric Use Marketing Authorisation
(PUMA) route, affording 10 years data exclusivity from the date of
market authorisation. Diurnal is on track to submit this regulatory
dossier to the EMA around the end of 2016. If approved, Infacort(R)
has the potential to be the first licensed treatment in Europe for
AI (including CAH) specifically designed for use in children.
Diurnal anticipates market authorisation in late 2017 and is
developing launch plans to ensure a prompt market introduction in
the event that the product receives approval.
Extensive patent protection
Diurnal continues to protect its product candidates through an
extensive patent portfolio, benefitting from a number of granted or
pending patents in key jurisdictions. During the period,
Chronocort(R) was granted orphan drug designation in the treatment
of AI by the US Food and Drug Administration (FDA) in September
2015. This is further to Chronocort(R) 's orphan drug designation
for the treatment of CAH, granted by the FDA in March 2015 and
Infacort(R) 's orphan drug designation in the treatment of
paediatric AI, granted by the FDA in May 2015. These orphan drug
designations, together with the PUMA, mean Infacort(R) and
Chronocort(R) have the potential to be granted market and data
exclusivity for 10 years in Europe and seven years in the US post
market authorisation.
Early-stage pipeline
Diurnal plans to use its cortisol replacement offering to build
a strong platform in underserved diseases of cortisol deficiency
and then expand into endocrine disease areas such as those
associated with the thyroid, gonads and pituitary. Continued
product development is expected to come from Chronocort(R) line
extensions aiming to address additional cortisol deficiency
indication(s) and from the Group's earlier-stage pipeline of
endocrinology product candidates. These earlier-stage candidates
currently include a native oral testosterone for the treatment of
male hypogonadism; and Tri4Combi(TM), a novel formulation to treat
hypothyroidism. Diurnal has successfully completed in vivo
pre-clinical studies of its native oral testosterone replacement
and expects to initiate a proof-of-concept study in human
hypogonadal patients imminently.
Diurnal demonstrated its ability to identify potential endocrine
therapies with one such pipeline acquisition during the period with
the Group obtaining the rights, from the University of Sheffield
(UK), to the orphan drug designation for an oligonucleotide therapy
for the potential treatment of Cushing's Disease (cortisol excess).
Cushing's Disease is often treated by the same clinicians that
treat diseases of cortisol deficiency, thereby leveraging Diurnal's
network in line with the Group's commercialisation strategy.
Outlook
Diurnal is well positioned to develop its late-stage pipeline to
market authorisation and initiate commercialisation activities
towards building a proprietary endocrinology franchise.
In Europe, Infacort(R) has the potential to be the first
licensed treatment for AI (including CAH) specifically designed for
use in children under six years of age. Following a full evaluation
of the Phase III data, Diurnal is on track to submit a regulatory
dossier to the EMA around the end of 2016 and is optimistic that it
may receive market authorisation in late 2017. Prelaunch planning
is underway to effect a rapid transition to a commercial
organisation. In the US, following FDA feedback, Diurnal will be
commencing the US registration programme for Infacort(R) in 2017
and anticipates market authorisation in the US in 2019 (previously
the end of 2018).
Chronocort(R) has the potential to be the first product
candidate for adults with CAH to mimic the natural cortisol
circadian rhythm, therefore improving disease control. In Europe,
Diurnal expects to report headline data from the Phase III clinical
trial in Europe for adults with CAH in early 2018, implying a
potential market authorisation in Europe could be forthcoming
around the end of 2018. In the US, the Group continues its dialogue
with the FDA on the Phase III clinical trial design and expects to
have an update in early 2017, with the intention to commence the
study later that year and anticipates market authorisation in the
US in 2021 (previously the end of 2020).
Financial Review
Operating income and expenses
Operating expenses are in a growth phase, reflecting the
increased clinical and development activities together with
investment in overheads including headcount and business
infrastructure to support the anticipated growth and development of
the business in the coming periods.
Research and development expenditure for the year was GBP3.9m
(13 months 2015: GBP2.2m). Of this GBP1.7m increase in expenditure,
GBP0.2m was as a result of the first time accounting for share
options and a further GBP0.3m was as a result of the creation of a
national insurance accrual for historical share option awards.
Expenditure on product development and clinical costs increased in
the period as the Group's Chronocort(R) product entered a Phase III
clinical trial in Europe and prepared for a US trial and its native
oral testosterone product prepared to commence its human
proof-of-concept trial in hypogonadal patients. Staff related
expenditure also increased as a result of the implementation of a
new remuneration policy.
Administrative expenses for the year were GBP3.1m (13 months
2015: GBP1.0m). Of this GBP2.1m increase in expenditure, GBP0.6m
was the one-off IPO costs, GBP0.3m was as a result of the first
time accounting for share options and a further GBP0.1m was as a
result of the creation of a national insurance accrual for
historical share option awards. The remaining increase resulted
from the appointment of new staff, the implementation of a new
remuneration policy and public company costs. In addition to the
IPO costs of GBP0.6m (13 months 2015: GBPnil), a further GBP0.8m
(13 months 2015: GBPnil) of fees paid in connection with the
fundraising are shown as a deduction from share premium and GBP59k
and GBP28k have been charged against the convertible loan liability
and its equity component respectively.
Operating income in the prior period represents funds receivable
from a European Commission grant supporting the European
development of the Group's Infacort(R) product.
Operating loss
Operating loss for the period increased to GBP7.0m (13 months
2015: GBP3.0m).
Financial income and expense
Financial income in the period was GBP63k (13 months 2015:
GBP8k), due to the higher average cash balances during the year,
after the IPO fundraising and convertible loan financing. Financial
expense for the period was GBP133k (13 months 2015: GBP41k), being
the financial expense of the convertible loan. No interest is
payable in cash on this loan, the financial expense representing
the effective interest required under accounting standards to
charge the transaction costs and equity element of the loan to the
income statement over the term of the loan. The Group had interest
bearing convertible loans outstanding for two months of the
comparative period, before they were converted into equity, whilst
the new convertible loan was outstanding for over six months of the
2015/16 financial year.
Loss on ordinary activities before tax
Loss before tax for the period was GBP7.1m (13 months 2015:
GBP3.0m).
Tax
The Group has not recognised any deferred tax assets in respect
of trading losses arising in either the current financial period or
accumulated losses in previous financial years. The tax credits
recognised in the financial periods ended 30 June 2016 and 2015
represent the receipt of Research & Development tax credits
relating to their respective prior periods' activities.
Earnings per share
Loss per share was 15.0 pence (13 months 2015: 8.5 pence). Loss
per share has increased due to the higher operating costs explained
above.
Cash flow
Net cash used in operating activities was GBP5.1m (13 months
2015: GBP2.9m), driven by the increased loss for the period. Net
cash used in investing activities was GBP14.0m (13 months 2015:
GBPnil) being the investment of funds into one year cash deposits.
Net cash generated by financing was GBP29.1m (13 months 2015:
GBP8.0m) reflecting the net proceeds of the issue of shares in the
IPO of GBP24.5m (13 months 2015: GBP8.0m from a private
fundraising) together with GBP4.6m (13 months 2015: GBPnil) of
funds received from the convertible loan.
Balance sheet
Total assets increased to GBP30.7m (2015: GBP6.5m), reflecting
the increase in cash and cash equivalents arising from the issue of
ordinary shares and the convertible loan, offset by the operating
cash outflow for the period. Held to maturity financial assets were
GBP14.0m (2015: GBPnil) and cash and cash equivalents were GBP16.1m
(2015: GBP6.1m). Total liabilities increased to GBP4.7m (2015:
GBP0.4m), reflecting the GBP3.2m liability component of the
convertible loan (2015: GBP24k of other loans), together with trade
and other payables of GBP1.5m (2015: GBP0.4m), which increased due
to accruals for clinical costs, bonuses and employer's national
insurance on non-tax beneficial share options. Net assets were
GBP25.9m (2015: GBP6.0m).
Comparative information
The Group has applied the principles of reverse acquisition
accounting under IFRS 3 'Business Combinations' in the presentation
of consolidated shareholders' equity for comparative periods. These
comparative periods show the results of the accounting acquirer
(Diurnal Limited) along with the share capital structure of the
parent company (Diurnal Group plc). As a result, the consolidated
share capital and share premium presented for comparative periods
is that which was in existence immediately following the share for
share exchange which occurred on 1 December 2015, and which is
explained further in note 2 to the financial statements.
Consolidated income statement
for the year ended 30 June 2016
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
Note GBP000 GBP000
Research and development
expenditure 4 (3,886) (2,227)
Administrative expenses 4 (3,106) (1,000)
Other operating income - 241
Operating loss (6,992) (2,986)
Financial income 5 63 8
Financial expense 6 (133) (41)
Loss before tax (7,062) (3,019)
Taxation 7 491 81
Loss for the period (6,571) (2,938)
---------- ----------
Basic and diluted loss
per share (pence per share) 8 (15.0) (8.5)
---------- ----------
All activities relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 30 June 2016
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
Loss for the period (6,571) (2,938)
---------- ----------
Consolidated balance sheet
as at 30 June 2016
2016 2015
Note GBP000 GBP000
Non-current assets
Intangible assets 6 10
Property, plant and equipment 3 5
9 15
-------- --------
Current assets
Trade and other receivables 530 376
Held to maturity financial
assets 9 14,000 -
Cash and cash equivalents 10 16,114 6,073
30,644 6,449
-------- --------
Total assets 30,653 6,464
-------- --------
Current liabilities
Loans and borrowings 11 - (24)
Trade and other payables (1,480) (399)
(1,480) (423)
-------- --------
Non-current liabilities
Loans and borrowings 11 (3,239) -
(3,239) -
-------- --------
Total liabilities (4,719) (423)
-------- --------
Net assets 25,934 6,041
-------- --------
Equity
Share capital 12 2,610 15,351
Share premium 23,632 -
Consolidation reserve (2,943) (2,943)
Other reserve 1,458 -
Retained earnings 1,177 (6,367)
Total equity 25,934 6,041
-------- --------
Consolidated statement of changes in equity
for the year ended 30 June 2016
Share Share Consolidation Other Retained
Capital Premium Reserve Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
27 May 2014 15,351 - (11,824) - (3,849) (322)
Loss for the
period and
total comprehensive
loss for the
period - - - - (2,938) (2,938)
--------- --------- -------------- --------- ---------- --------
Equity settled
share based
payment transactions - - - - 20 20
Reduction
of Capital - - - - 400 400
Contributions
by owners - - 8,881 - - 8,881
Total transactions
with owners
recorded directly
in equity - - 8,881 - 420 9,301
--------- --------- -------------- --------- ---------- --------
Balance at
30 June 2015 15,351 - (2,943) - (6,367) 6,041
Loss for the
period and
total comprehensive
loss for the
period - - - - (6,571) (6,571)
--------- --------- -------------- --------- ---------- --------
Equity settled
share based
payment transactions - - - - 490 490
Reduction
of Capital (12,107) - - - 12,107 -
Issue of shares
for cash 884 24,465 - - - 25,349
Costs charged
against share
premium - (833) - - - (833)
Equity component
of convertible
loan - - - 1,486 - 1,486
Issue expenses
of convertible
loan - - - (28) - (28)
Repurchase
of deferred
shares (1,518) - - - 1,518 -
Total transactions
with owners
recorded directly
in equity (12,741) 23,632 - 1,458 14,115 26,464
--------- --------- -------------- --------- ---------- --------
Balance at
30 June 2016 2,610 23,632 (2,943) 1,458 1,177 25,934
--------- --------- -------------- --------- ---------- --------
Loss for the period is the only constituent of total
comprehensive loss for each period so the period amounts are shown
in the same line in the consolidated statement of changes in
equity.
Consolidated cash flow statement
for the year ended 30 June 2016
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
Note GBP000 GBP000
Cash flows from operating
activities
Loss for the period (6,571) (2,938)
Adjustments for :
Depreciation, amortisation
and impairment 6 7
Share-based payment 490 20
Financial income 5 (63) (8)
Finance expenses 6 133 41
Taxation 7 (491) (81)
Increase in trade and other
receivables (135) (261)
Increase in trade and other
payables 1,081 284
Cash flow used in operations (5,550) (2,936)
Interest paid - (1)
Tax received 7 491 81
Net cash used in operating
activities (5,059) (2,856)
---------- ----------
Cash flows from investing
activities
Additions of property, plant
and equipment - (5)
Purchases of held to maturity
financial assets (14,000) -
Interest received 44 8
Net cash (used in)/from
investing activities (13,956) 3
---------- ----------
Cash flows from financing
activities
Net proceeds from issue
of share capital 24,516 8,000
Repayment of borrowings (24) (25)
Net proceeds from issue
of borrowings 4,564 -
Net cash generated by financing
activities 29,056 7,975
---------- ----------
Net increase in cash and
cash equivalents 10,041 5,122
Cash and cash equivalents
at the start of the period 6,073 951
Cash and cash equivalents
at the end of the period 16,114 6,073
---------- ----------
Notes to the consolidated financial statements
1 General information
Diurnal Group plc ('the Company') and its subsidiary (together
'the Group') are a clinical stage specialty pharmaceutical business
targeting patient needs in chronic endocrine (hormonal) diseases
which the Company believes are currently not met satisfactorily by
existing treatments. It has identified a number of specialist
endocrinology market opportunities in Europe and the US that are
together estimated to be worth more than $11bn per annum.
The Company is a public limited company incorporated and
domiciled in the UK. Its registered number is 09846650. The address
of its registered office is Cardiff Medicentre, Heath Park,
Cardiff, CF14 4UJ and its primary and sole listing is on the
Alternative Investments Market (AIM). The Company was incorporated
as Project Dime Limited on 28 October 2015 and reregistered as a
public company and changed its name to Diurnal Group plc on 4
December 2015.
On 21 December 2015 the Company published its AIM Admission
Document following its successful GBP30m fundraising. Its ordinary
shares of 5 pence each were admitted to trading on the AIM market
on 24 December 2015.
The Company issued 17,603,759 shares at a price of GBP1.44 per
share to raise GBP25.3m before expenses and received GBP4.7m before
expenses under a convertible loan from IP2IPO Limited, one of its
shareholders. Total expenses of the IPO and fundraising were
GBP1.5m, of which GBP0.8m were directly attributable to the issue
of the new shares and have been charged to the Share Premium
account. GBP59k and GBP28k have been charged against the
convertible loan liability and its equity component respectively.
The balance of GBP0.6m has been charged to the Consolidated Income
Statement and included within administrative expenses in the period
ended 30 June 2016.
To facilitate the IPO, the Company was incorporated on 28
October 2015 and acquired the entire issued share capital of
Diurnal Limited under a share for share exchange on 1 December
2015. The Company has applied the principles of reverse acquisition
accounting in the preparation of the consolidated financial
information.
2 Basis of preparation
2.1 Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for the years ended 30 June 2016 or
2015 but is derived from those accounts. Statutory accounts for
2015 have been delivered to the registrar of companies (being those
of Diurnal Limited prior to the incorporation of Diurnal Group
plc), and those for 2016 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union, IFRIC interpretations and the Companies Act
2006. The financial information contained in these financial
statements have been prepared under the historical cost convention,
and on a going concern basis.
The accounting policies used in the financial information are
consistent with those set out in the AIM Admission document dated
21 December 2015. The following Adopted IFRSs have been issued but
have not been applied by the Group in these financial statements.
Their adoption is not expected to have a material effect on the
financial statements unless otherwise indicated:
-- IFRS 9 Financial Instruments (effective date to be confirmed).
-- IFRS 14 Regulatory Deferral Accounts (effective date to be confirmed).
-- IFRS 15 Revenue from Contract with Customers (effective date to be confirmed).
-- Clarification of Acceptable Methods of Depreciation and
Amortisation - Amendments to IAS 16 and IAS 38 (effective date to
be confirmed).
-- Equity Method in Separate Financial Statements - Amendments
to IAS 27 (effective date to be confirmed).
-- Annual Improvements to IFRSs - 2012-2014 Cycle (effective date to be confirmed).
-- Disclosure Initiative - Amendments to IAS 1 (effective date to be confirmed).
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual events ultimately may differ from those
estimates.
2.2 Summary of impact of Group restructure and Initial Public Offering
On 24 December 2015, the Company listed its shares on AIM. In
preparation for this Initial Public Offering ('IPO') the Group was
restructured. The restructure has impacted a number of the current
year and comparative primary financial statements and notes.
For the consolidated financial statements of the Group, prepared
under IFRS, the principles of reverse acquisition accounting under
IFRS 3 'Business Combinations' have been applied. The steps to
restructure the Group had the effect of Diurnal Group plc being
inserted above Diurnal Limited as the holder of the Diurnal Limited
share capital.
By applying the principles of reverse acquisition accounting,
the Group is presented as if Diurnal Group plc has always owned
Diurnal Limited. The comparative Income Statement and Balance Sheet
are presented in line with the previously presented Diurnal Limited
position. The comparative and current year consolidated reserves of
the Group are adjusted to reflect the statutory share capital and
share premium of Diurnal Group plc as if it had always existed,
adjusted for movements in the underlying Diurnal Limited share
capital and reserves until the share for share exchange.
The steps taken to restructure the Group are explained in more
detail in the Group Reorganisation section below. The impact on the
primary consolidated financial statements is as follows:
-- Equity reflects the capital structure of Diurnal Group plc.
As part of the restructuring of the Group and the IPO, a number of
shares in Diurnal Group plc were issued in exchange for cash. The
premium arising on the issue of shares is allocated to share
premium.
-- A consolidation reserve was created and reflects the
difference between the Diurnal Group plc reserves at the balance
sheet date as reflected in the opening reserves at the start of the
comparative period (28 May 2014) and the equity of Diurnal Limited
at the same date.
Fees associated with the IPO are allocated to share premium and
the Consolidated Income Statement depending on the nature of the
costs.
Group reorganisation
Prior to IPO the Group undertook a reorganisation in preparation
for the transaction.
The effect of this reorganisation was to insert a new ultimate
parent company, Diurnal Group plc, into the Group. This company
acquired the entire issued share capital of Diurnal Limited, as
summarised below.
Diurnal Group plc became the ultimate parent company of the
Group by acquiring Diurnal Limited in exchange for the issue of new
shares.
The key steps of the process were as follows:
-- On incorporation on 28 October 2015, 1 Ordinary share of GBP1 was allotted and issued.
-- On 1 December 2015, a number of further changes to the share capital occurred:
- a share subdivision whereby the ordinary share of GBP1 each
was subdivided into 2 Ordinary shares of 50 pence each;
- in accordance with the terms of a share for share exchange
agreement, the allotment and issue of 30,267,498 ordinary shares of
50 pence each and 4,395,000 B shares of 5 pence each in
consideration for the entire issued share capital of Diurnal
Limited. Following the conclusion of this share for share exchange,
which involved nil cash consideration, Diurnal Limited became a
wholly owned subsidiary undertaking of the Company;
- the nominal value of the 30,267,498 ordinary shares of 50 pence were reduced to 10 pence.
-- On 23 December 2015, 83,038 ordinary shares of 10 pence each
were allotted and issued to the Enterprise Investment Scheme
investors participating in the IPO placing of shares.
-- On 24 December, 30,350,538 ordinary shares of 10 pence each
were subdivided and reclassified into 30,350,538 ordinary shares of
5 pence each and 30,350,538 deferred share of 5 pence each.
Thereafter, a number of further changes to the share capital
occurred, which were conditional upon and immediately prior to
admission of the Company's shares to trading on AIM and
simultaneous with each other:
- the conversion of 4,339,500 B shares of 5 pence each into
4,339,500 ordinary shares of 5 pence each;
- the reduction of the Company's share capital by
GBP1,517,526.90 representing the aggregate nominal value of the
30,350,538 deferred share of 5 pence each, as a result of the
transfer of the deferred shares to the Company for nil
consideration and their subsequent cancellation;
- the allotment and issue of 17,520,721 ordinary shares of 5
pence each to investors participating in the IPO placing of
shares.
3 Segmental information
The Board regularly reviews the Company's performance and
balance sheet position for its operations and receives financial
information for the group as a whole. As a consequence the Group
has one reportable segment, which is Clinical Development.
Segmental profit is measured at operating loss level, as shown on
the face of the Income Statement. As there is only one reportable
segment whose losses, expenses, assets, liabilities and cash flows
are measured and reported on a basis consistent with the financial
statements, no additional numerical disclosures are necessary.
4 One-off, share option related and non-cash items
A number of one-off, share option related and non-cash items,
totalling GBP1.5m, are analysed in the following table:
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
Research and development expenditure
IFRS2 equity settled share based
payment transactions - non-cash 188 -
Employer NIC provision on unapproved
share options - initial recognition
of historical liability 258 -
446 -
---------- ----------
Administrative expenses
Expenses of the initial public
offering - one-off 623 -
IFRS2 equity settled share based
payment transactions - non-cash 302 20
Employer NIC provision on unapproved
share options - initial recognition
of historical liability 119 -
1,044 20
---------- ----------
5 Finance income
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
Interest receivable on cash
and cash equivalents and term
deposits 63 8
Total finance income 63 8
---------- ----------
6 Finance expenses
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
Total interest payable on loans 133 1
Total interest expenses on financial
liabilities measured at amortised
cost - 34
Total fair value losses on derivative
financial liabilities - 6
Total finance expense 133 41
---------- ----------
7 Taxation
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
Current tax
- current year (491) (81)
Tax credit charge for the period (491) (81)
---------- ----------
The tax credits assessed for the periods ended 30 June 2015 and
2016 relate entirely to R&D tax credit relief.
Reconciliation of total tax expense:
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
GBP000 GBP000
The tax assessed for the year
varies from the small company
rate of corporation tax as explained
below
Loss on ordinary activities
before tax (7,062) (3,019)
---------- ----------
Tax at the standard rate of
UK corporation tax rate of 20%
(2014/15: 20%) (1,412) (604)
Research and development tax
credit (491) (81)
Non-deductible expenses 104 41
Current year losses for which
no deferred tax asset was recognised 1,308 563
Tax credit for the period (491) (81)
---------- ----------
The company has approximately GBP11.8m of trading losses carried
forward at 30 June 2016 (2015: approximately GBP5.3m) for which no
deferred tax asset has been recognised due to the uncertainty of
availability of future taxable profits. The estimated value of the
deferred tax asset not recognised, measured at a standard tax rate
of 20% is GBP2.4m (2015: GBP1.1m at 20%).
A reduction in the UK corporation tax rate from 21% to 20%
(effective from 1 April 2015) was substantively enacted on 2 July
2013. Further reductions from 20% to 19% from 1 April 2017 and 18%
from 1 April 2020 were substantively enacted on 26 October
2015.
8 Loss per share
12 months 13 months
ended ended
30 Jun 30 Jun
2016 2015
Loss for the period (GBP000) (6,571) (2,938)
Weighted average number of shares
(000) 43,746 34,607
Basic and diluted loss per share
(pence per share) (15.0) (8.5)
---------- ----------
The diluted loss per share is identical to the basic loss per
share in all periods, as potentially dilutive shares are not
treated as such since they would reduce the loss per share.
9 Held to maturity financial assets
2016 2015
GBP000 GBP000
Bank term deposits 14,000 -
------- -------
The effective interest rate on bank deposits was 1.05% and these
deposits had a weighted average maturity of 11 months. The Group's
treasury policy requires that deposits are held with financial
institutions having a minimum credit rating of A- (from Moody's
S&P or Fitch), that individual counterparty exposure is no more
than GBP8m and that the maximum term is 12 months. The Group's
deposits are in line with this policy.
10 Cash and cash equivalents
2016 2015
GBP000 GBP000
Cash at bank and on hand 16,114 6,073
------- -------
The Group holds its cash and cash equivalents with its clearing
bank and in a AAA rated Liquidity fund providing same day access to
its cash. The Group's treasury policy is summarised in Note 19.
Although the Liquidity fund balance exceeds the GBP8m counterparty
limit, the Board is satisfied that the individual counterparty risk
within the fund is significantly below this amount.
11 Loans and borrowings
2016 2015
GBP000 GBP000
Current loans and borrowings
Other current loans - 24
------- -------
Non-current loans and borrowings
Convertible Loans 3,239 -
------- -------
Total loans and borrowings 3,239 24
------- -------
IP Group convertible loan
On 24 December 2015 the Company received GBP4.7m from IP2IPO
Limited, a wholly owned subsidiary of IP Group plc under a
convertible loan agreement. The convertible loan facility is
interest-free and unsecured with a maturity date of 24 December
2020 (or such other date as the parties may agree) at which point
the Company may either repay the principal amount outstanding in
full or convert such amount into non-voting shares at a lower
nominal value to that of the Ordinary Shares to ensure that IP2IPO
Limited did not have control of the Company. IP2IPO Limited may
convert the principal outstanding in whole or in parts exceeding
GBP0.1m into ordinary shares calculated at the IPO share price of
GBP1.44 per share conditional on it not having control of the
Company resulting from the conversion.
The convertible loan note is a compound financial instrument
containing a host financial liability and an equity component as
there is a contractual obligation to deliver a fixed number of
shares at the IPO price if the loan note is converted.
At 30 June 2016, the amount outstanding comprised:
2016 2015
GBP000 GBP000
Face value of convertible loan
issued on 24 December 2015 4,651 -
Equity Component (1,486) -
Issue costs relating to the
liability element (59) -
Liability component on initial
recognition at 31 December 2015 3,106 -
Accrued interest 133 -
Liability component at 31 December
2015 3,239 -
Less amount included in current
liabilities - -
Included in non-current liabilities 3,239 -
-------- -------
12 Share capital
2016 2015
GBP000 GBP000
52,210,759 ordinary shares of
GBP0.05 each 2,610 -
30,267,498 ordinary shares of
GBP0.50 each - 15,134
4,339,500 B shares of GBP0.05
each - 217
2,610 15,351
------- -------
The Group has applied the principles of reverse acquisition
accounting under IFRS 3 'Business Combinations' in the presentation
of consolidated shareholders' equity for comparative periods. These
comparative periods show the results of the accounting acquirer
(Diurnal Limited) along with the share capital structure of the
parent company (Diurnal Group plc). As a result, the consolidated
share capital and share premium presented for comparative periods
is that which was in existence immediately following the share for
share exchange which occurred on 1 December 2015, and which is
explained further in note 2.
Number Number Number
of Ordinary of B of Deferred Total
Shares Shares Shares GBP000
At 28 October 2015
on incorporation 1 - - -
Share subdivision
on 1 December 2015 1 - - -
Issued on 1 December
2015 30,267,498 4,339,500 - 15,351
Share capital reduction
on 1 December 2015 - - - (12,107)
Issued on 23 December
2015 83,038 - - 8
Share split on 24
December 2015 - - 30,350,538 -
Conversion of B
shares on 24 December
2015 4,339,500 (4,339,500) - -
Cancellation of
Deferred shares
on 24 December 2015 - - (30,350,538) (1,518)
Issued on 24 December
2015 17,520,721 - - 876
At 31 December 2015:
Ordinary shares
of 5 pence each 52,210,759 - - 2,610
------------- ------------ ------------- ---------
The changes in the share capital are described in Note 2.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MBBRTMBMBBFF
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