REG - Kooth PLC - Final Results
29/03/2022 07:00
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RNS Number : 3118G Kooth PLC 29 March 2022
Kooth plc
("Kooth" or the "Company" or the "Group")
Final results
Delivery against strategic aims and growth plans for key future markets
identified
Kooth (AIM: KOO), a leading digital mental health platform, announces audited
final results for the financial year ended 31 December 2021.
Strategic highlights
· Increased reach and uptake of Kooth's services in key markets
― Children and Young People (CYP): 7.1 million are able to access
Kooth's products (2020: 6.2 million), with an uptake of 1-in-33 of that
population using Kooth (2020: 1-in-36)
― Adult: 3.8 million people now have access (2020: 1.5 million), with
eight new whole population contracts signed during the period (2020: five)
· Ongoing growth in Kooth's offering for employees, Kooth Work
― Launched first benchmark to measure mental health of a business
― Strategic focus on frontline and key workers delivered contract wins
· International has seen continued focus, with the US highlighted as a
key market to enter in 2022
― US leader onboarded and go-to-market strategy outlined
· Continued recruitment of new employees, with 406 at year end (2020:
306), of which 252 are clinical and practitioners
Financial highlights
· 28% revenue growth in line with expectations, continuing adoption of
digital-first healthcare
· >90% of revenue from contracts of 12+ months
· 109% Net Revenue Retention (2020: 107%)
· 89% ARR growth to £1.7m for Kooth Adult
· Gross margin 0.3ppt down with benefit from covid in 2020 due to quicker
go live periods and flattening of demand curve offset by improving operational
efficiency in 2021
· Strong balance sheet with £7.1m net cash at 31 December 2021, with
net cash generated from operations of £1.9m offset by capitalised development
costs of £2.5m during the year
Current trading and outlook
The new financial year has started in line with expectations, giving a current
ARR of £18 million. Kooth has signed a number of new contracts in 2022,
including continued momentum for Kooth Adult with new commissions in Greater
Manchester, Norfolk, Warwickshire, and the Wirral. Finally, we are starting to
see a positive response to our early steps in the US market.
Tim Barker, Chief Executive Officer of Kooth said:
"Following Kooth's entry to AIM in 2020, we have grown from strength to
strength. In 2021, working in partnership with the NHS, over 200,000 people
across the UK used Kooth. We have begun to grow in new corporate markets and
have embarked on our strategy to establish Kooth in the US. We have achieved
this because our mission of making effective, personalised digital mental
health care accessible to all is more important now than it's ever been.
"We look to the future with confidence, as underlined by the contracts already
signed in 2022. At a time when the NHS is under extreme pressure, our approach
to providing free mental health support without barriers or waiting lists has
never been more pertinent. With Dr Tim Budden joining as Chief Technology
Officer, and Kevin Winter as our North American General Manager, we are well
positioned to continue to focus and deliver to help tackle the global crisis
in mental health. "
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 ('MAR') (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018).
- Ends -
Kooth plc investorrelations@kooth.com (mailto:investorrelations@kooth.com)
Tim Barker, CEO
Sanjay Jawa, CFO
Panmure Gordon, Nominated Adviser and Joint Broker
Corporate Finance: +44 (0) 20 7886 2500
Dominic Morley, Ailsa MacMaster
Corporate Broking:
Erik Anderson
Stifel, Joint Broker +44 (0) 20 7710 7600
Ben Maddison, Nick Adams, Nicholas Harland
FTI Consulting kooth@fticonsulting.com (mailto:kooth@fticonsulting.com)
Jamie Ricketts, Alex Shaw, Usama Ali
Notes to Editors
About Kooth
Kooth (AIM:KOO) is the UK's leading digital mental health platform. Our
mission is to provide accessible and safe spaces for everyone to achieve
better mental health. Our platform is clinically robust and accredited to
provide a range of therapeutic support and interventions. All our services are
predicated on easy access to make early intervention and prevention a reality.
Our four services are:
· Kooth: for children and young persons
· Kooth Student: for university and higher-education students
· Kooth: for Adults
· Kooth Work: for employees
Kooth is a fully safeguarded and pre-moderated community with a library of
peer and professional created content, alongside access to experienced online
counsellors. There are no thresholds for support and no waiting lists.
Currently, Kooth sees over 4,000 logins a day.
For adults, Kooth operates across distinct locations and serves specific
cohorts, including parents, teachers, victims of crime, and those who have
suffered from or continue to experience domestic violence. It is also offered
as a benefit by a number of corporate organisations delivering anonymous
digital mental health support services to employees.
Kooth is the only digital mental health provider to hold a UK-wide
accreditation from the British Association of Counselling and Psychotherapy
(BACP).
In 2021, Kooth was named 'Best Newcomer' at the European Mediscience Awards,
winner in the category of 'Tech for Good' at the UK Tech Awards and recognised
as the 'HealthTech Pioneer of the Year' at the UK Business Tech Awards for its
role in 'Supporting the Nation's Mental Health'.
Chair's statement
After a year in which our priority was the support of a nation in need, I
would first like to thank our employees who are the most important foundation
for our success.
Our staff have shown their resilience, flexibility, and professionalism in
dealing with the challenges and changes that we have all experienced in the
last two years. We are proud of the support we have provided, and of our close
partnership with the NHS that aims to reduce the strain on stretched mental
health services by providing a digital-first approach to reach people in need
of support.
In 2021, we not only saw the continued expansion of Kooth with 1.3 million
logins (18% YoY growth). We also saw an increase in the severity of need from
people that came to Kooth, with more than 60% of people visiting Kooth
measuring as 'severe' on a scale of acuity. Our teams of practitioners,
clinical psychologists, moderators, and safeguarding experts have adjusted to
this emerging 'new normal' with professionalism and compassion.
I am pleased to report that our financial performance has been in line with
market expectations, with revenue up 28% to £16.7million, adjusted EBITDA
growth from £0.9 million to £2.1 million and an improved adjusted EBITDA
margin to 12.5% (2020: 7.2%).
We have seen continued growth and expansion in our service for children and
young people, with 90% of Commissioners in England choosing Kooth as their
digital mental health platform. This includes all 32 boroughs in London, plus
a clear expansion into Scotland and Wales. In total 7.1 million children and
young people have access to Kooth across the UK today, with 1 in 33 of these
having accessed Kooth in 2021. We continue to see a growing demand in the
public sector for our Kooth Adult service. In 2021 we added 14 new contracts
to our roster, with 3.8 million adults now having free access to Kooth
nationwide.
ARR grew by 20% to £16.9 million (2020: £14.1 million) which included an 89%
increase in Adult ARR to £1.7 million (2020: £0.9 million). Over 90% of
Kooth's revenue comes from recurring annual contracts of 12 months or longer.
Given the nature of our subscription based business model, this provides
strong forward revenue visibility giving us confidence to invest in the growth
of our platform and people.
In terms of outlook, the business has continued to thrive over the last year
as evidenced by our financial and operational performance, demonstrating that
our growth strategy continues to deliver. Our high level of customer
retention, and strong recurring revenue visibility position the Group well. We
enter FY22 in a solid financial position, with revenue growth, a good cash
position with no debt and a proven business model. Trading during the new
financial year has been broadly in line with the Board's expectations with
strong levels of existing and new client activity.
Looking further ahead, we continue to see a significant potential opportunity
in supporting businesses to improve the mental wellbeing of their workforce,
and to expand Kooth into international markets including the USA, where, as
previously announced, we have hired a General Manager to develop that business
during 2022. Since our IPO in September 2020, our focus has been to invest to
support the long-term growth of our technology platform. These newer, nascent
growth initiatives have made encouraging progress in 2021 setting them up for
a successful year ahead.
Peter Whiting
Non-Executive Chair
28 March 2022
Chief Executive Officer's statement
Delivering measurable impact at scale
As an organisation with 20 years of experience in digital-first mental health
care, we have seen a surge of interest in how digital can play a role in the
long-term future of healthcare in the last two years.
For digital truly to embed itself into healthcare systems, there are three
questions that every healthtech company in the mental health sector, including
Kooth, must answer:
1. Can clinical and economic outcomes be evidenced?
2. Can the approach address the growing, global shortage
of practitioners?
3. Can it be delivered efficiently, at scale?
The long term sustainability of every provider in the healthtech ecosystem,
and the growth of the ecosystem itself, depends on satisfactorily answering
these three questions.
1. Clinical and economic outcomes
Underpinned by a decade of applied research, Kooth is a trailblazer in
research, development and outcome measures to evidence the therapeutic,
social, and economic impact of our platform. This has led to the development
of new therapies, many of which are only possible through a digital delivery
model. We've made substantial progress in 2021 in continuing to innovate and
evidence our impact:
Responsive ("drop-in") chat: We have a high proportion of individuals that we
may engage with only once, or on an ad-hoc basis in what we call a 'responsive
chat'. By developing a new outcome measure, and validating it independently
with CORC (Child Outcomes Research Consortium), we can evidence that 72% of
users achieve their wants and needs. This is an impressive outcome in an
environment where typically 50% is considered a good level of efficacy.
Community support and self-therapy: The London School of Economics undertook a
study to evaluate the clinical impact of Kooth's community and self-therapy
activities. 75% of individuals find these beneficial to their mental health.
In addition, 50% of people that engage with the community go on to help
someone else.
Economic impact: In 2021 we initiated a project with YHEC (York Health
Economics Consortium) to deliver what will be one of the first ever
assessments of the economic benefit of early intervention support for young
people. This will be published in 2022 and demonstrates our commitment to
deliver a clinically and economically effective service.
Innovating in digital therapies: In 2021 we delivered a 'collections'
programme, a first step in providing individuals with personalised, guided
help through a challenge or change in their lives. We intend to build on this
to provide self-guided programmes that provide both self-guided and
professional support.
2. Addressing the growing, global shortage of therapists
Globally, there are not enough health care professionals to meet the level of
demand. In Europe there are 15 therapists per 100,000 of population. In the
USA, 1-in-3 of the population lives in a designated health professional
shortage area.
Our approach in addressing this is twofold:
Innovating in self-therapy and community support
Today, only c.40% of people who use Kooth engage with a practitioner to get
the support they need, and/or through messaging and responsive (drop-in) chat.
Around 60% get the help they need through the community, therapeutic content,
and self-therapy activities we provide. We are making good progress on
delivering an integrated range of support options to meet the wants and needs
of each individual. This has been demonstrated by the progress that has been
made in our outcome measures.
Hiring and building the careers of our practitioners
Kooth hires practitioners and develops their careers. This has been an
increased area of focus over the last 18 months. We map career development and
progression pathways, providing additional training and development
opportunities (e.g. trauma informed therapy, management development
programmes). We have expanded our team of Emotional Wellbeing Practitioners to
bring people with experience from social work, teaching, or other related
professions into Kooth. As a result, over 2021 we grew the size of our
practitioner and clinical team from 183 to 252.
3. Efficiency at scale
As Kooth grows, delivering a high quality service, efficiently, at scale, is
paramount. Data and insights play an important role in measuring the quality
and predictability of our service.
In 2021 we established targets in collaboration with practitioners to define
what 'good' looks like in terms of operational efficiency. In addition,
Kooth's clinical team audits each practitioner quarterly to help ensure a
consistently high quality of support. We also continue to invest in our
technology platform to help improve the experience, efficiency, and
effectiveness of Kooth.
As a result, our platform and team of 252 practitioners and clinicians
supported over 200,000 people in 2021, delivering a gross margin of 69.5% to
reinvest back into the business.
Foundations for long term growth and impact
By investing in these areas, we not only strengthen our foundations for future
growth, but are able to reach and positively impact the lives of more people
in need of help. This is why we are here.
4. #StandWithUkraine: Impact of the war in Ukraine
Finally, while Kooth does not have any customers or assets in Ukraine or
Russia, all of us at Kooth are devastated as we watch the war unfold in
Ukraine. In the first two weeks of the war, our data showed an increase in
depression, suicidal thoughts, and lack of motivation from individuals coming
to Kooth. To assist, we've issued guidance from our expert psychologists on
how to discuss the war with young children, and will continue to identify ways
to support those directly and indirectly impacted by this trauma.
Tim Barker
Chief Executive Officer
28 March 2022
Market review
Undoubtedly, the pandemic has been a catalyst for change in the mental health
ecosystem. It has helped de-stigmatise the topic in mainstream media and
businesses and has raised awareness of the barriers in accessing help. In
addition, it has spurred investment by technology companies to rise to the
global challenge of supporting individuals with their mental health and
wellbeing.
A growing number of people unable to access support
Given that demand for mental health support outstrips available resources in
the NHS, there is a growing challenge of dealing with waiting lists. This has
been exacerbated by COVID-19.
In addition to the 1.4m that are on mental health waiting lists (mental health
trusts & NHS providers) an additional eight million people are unable to
get professional support based on the threshold levels that dictate who gets
access to treatment.
Kooth's focus is on supporting this 'sub-threshold' population to help them
build their resilience and recovery.
A growing 'call to action' to invest in early intervention support
Given the increased prevalence of mental health problems in the population,
there is a growing recognition and 'call to action' for a focus and investment
in early intervention and prevention support.
In England, The Health and Social Care Committee report on 'Children and young
people's mental health' published a set of recommendations in November 2021,
including:
"The Department of Health and Social Care-in partnership with the Department
for Education and all other relevant Government departments-must take radical
steps to shift the focus in mental health provision towards early intervention
and prevention."
Likewise, in the US, the imperative for early intervention is clear, based on
the call to action published by the US Surgeon General in the 'Protecting
Youth Mental Health' report.
The reorganisation of NHS England into Integrated Care Systems (ICS)
During 2022, NHS England will be reorganised into 42 regional Integrated Care
Systems. ICSs bring together NHS, local authority and third party sector
bodies to take on responsibility for the resources and health of an area or
'system'. Their aim is to deliver better, more integrated care for patients.
Currently, Kooth is commissioned by Clinical Commissioning Groups, of which
there are 135 across England. We believe the shift to ICSs will simplify the
commissioning structure and approach, by:
· Bringing public health and a focus on preventative support into the
remit of ICSs, whereas before it was the responsibility of local authorities.
· Enabling Kooth to work strategically with ICSs to support their whole
population. For example, today we may be commissioned in one district of a
city for 11-18 year olds, but 10-25 year olds for its neighbouring district.
By working with an ICS we can 'level-up' support for Kooth across a whole
region and age-range.
Prioritising wellbeing in your workforce
In addition to partnering with healthcare providers, Kooth engages with
businesses who are committed to building a mentally healthy and resilient
workplace.
There is a growing acceptance in businesses of all sizes, and across all
sectors, of the important role they play in supporting the mental health and
wellbeing of employees. According to Bupa Global's Executive wellbeing index
2021 almost three in ten business leaders are making employee mental health
their number one priority. As a result, they will be increasing their
investment in employee mental health and wellbeing by 18% in 2022.
Strategy
Kooth has a pragmatic four pillar growth strategy to meet the global demand
for clinically and cost effective mental health care. This is powered by
Kooth's proprietary, integrated technology platform and clinical operating
model.
1. Expanding Kooth to support children and young people across the UK
As of the end of 2021 Kooth is contracted by 90% of England commissioners. As
we progress to near-nationwide coverage, our key priorities are:
Expansion into devolved nations: We see the opportunity to expand further into
Scotland, Wales, and Northern Ireland. In 2021 we won our first 4 contracts in
Scotland, and continue to expand in Wales, where we are contracted by over 60%
of commissioners.
Focus on expansion within existing contracts through over-performance and
age-range expansion: As awareness and usage grows within the regions, we aim
to over-perform on the agreed contract, thereby building the business case for
expansion. In addition, currently 44% of our contracts span the full age range
of up to age 25.
Continuous incremental improvement in Quality (experience, effectiveness,
efficiency): As a proven, established service, our focus is on continuous
improvement of experience, effectiveness, and efficiency.
2. Early intervention support for adults via the NHS
The NHS spends over £11 billion a year on adult mental health, the majority
of this being invested in acute care services. Kooth Adult (known as Qwell)
provides early intervention and prevention support for NHS commissioners,
taking the strain off other NHS services, and stemming the demand for acute
support. Our strategy is to replicate the success we have had supporting young
people with a focus on three key areas:
Building the business case and momentum for Kooth Adult: Kooth Adult is the
number one priority for our new business team. We are seeing a growing
recognition that more needs to be done to support 'sub threshold' individuals
who do not qualify for a referral into NHS services. This growing awareness is
reflected in the strong growth in go-lives in 2021 where we added 14 new
commissions including Bolton, Newcastle and Gateshead, South East London,
Humber, Coast and Vale.
Promoting Kooth Adult by working in partnership with stakeholders: Healthcare
professionals (such as GPs), welfare organisations (such as food banks), and
educational organisations (such as colleges and universities) all have a key
role to play in promoting Kooth's free service to their population. In
addition to working with stakeholders, we are focused on digital, social, and
content marketing to reach individuals seeking support.
Platform and service innovation: We are focused on ensuring that our platform
can meet the needs of a diverse population. In doing so, our research,
participation, and product teams are focused on ensuring that we are
developing and delivering a service that matches the population's needs.
3. Supporting the mental health of employees
The market for employee mental wellbeing support is nascent, but growing.
Given the spectrum of providers entering the market, from meditation apps to
companies building a marketplace of business coaches, it is key for Kooth to
pick a niche it can compete and win in repeatedly and economically.
Predominantly, we are focusing on supporting key/frontline workers in
industries such as healthcare, social care, education, public services, retail
and transport. This 'niche', according to ONS figures, represents 33% of the
UK workforce and builds on the success we have had supporting emergency
services, retail workforces and school staff.
4. Expanding into the USA
In October 2021 we appointed Kevin Winters as General Manager, America to
establish Kooth in the US market, with a strategic focus on bringing our
service for children and young people to market. The focus for 2022 will be to
build the foundations for our go-to-market by building the team, establishing
pilot projects to prove Kooth locally, and identifying potential partners in
Healthcare and Education markets.
5. Kooth Platform and Clinical Delivery Model
Kooth's proprietary technology platform underpins everything we do at Kooth. A
key reason for our AIM listing was to enable us to invest in our technology to
support the long term growth of Kooth. Our investment strategy in technology
is focused on three key areas:
Delivering a welcoming and engaging space: Reaching out to ask for help can be
hard. For Kooth to succeed, we must offer a stigma-free, safe space where
people feel welcome and empowered to get support that they want and need. We
continue to invest in user-research, participation, and experience-design to
deliver on this.
Delivering clinically and cost effective access to mental health support:
Kooth is a trailblazer in research, development and outcome measures to
evidence the therapeutic, social, and economic impact of our platform. This
has led to the development of new therapies, many of which are only possible
through a digital delivery model. We see huge potential to continue to
innovate and deliver in new support models spanning self-therapy, community
and peer support, and professional support.
Applying AI to improve the experience, efficiency, and effectiveness: Over
Kooth's lifetime, we have delivered over 930,000 hours of professional
support, all via text and chat based interactions. Collectively, this
represents one of the world's largest anonymous mental health data sets. The
opportunity now is to safely leverage this data using machine learning and
artificial intelligence for the benefit of practitioners and service users.
This is an exciting, long term strategic imperative, led by Dr Tim Budden, our
recently appointed Chief Technology Officer who brings deep domain experience
in AI, machine learning, and natural language processing.
6. Digital clinical delivery model: i-RESPOND
Safety and Clinical Effectiveness
Fortunately, the shift that many traditional services have had to make to
adapt to the use of technology to support clinical practice has been less of a
challenge for us at Kooth. We have a wealth of experience in this area.
However, ensuring that the services we provide are safe and effective has
always been a number one priority and we are constantly reviewing and
improving our systems and practices to support this.
Kooth's i-RESPOND clinical framework underpins our approach: integrative,
responsive, evidence based, safe, person centred, outcomes focused,
non-judgemental and data informed.
As part of Kooth's focus on ensuring its work is safe and evidence-based, we
introduced a system of improved reporting and root cause analysis. This helps
the team to identify earlier on any opportunities for improvement, and
learning.
2021 also saw Kooth's i-RESPOND framework being fully embedded into our audit
process - offering all practitioners the opportunity for individual
professional development as well as important learning for the wider clinical
team. Both of these improvements have led to additions to our in-house
training programmes as well as an enhanced offering for clinical supervision
and support.
A much discussed topic within the Kooth Advisory Board and Leadership team is
ensuring that our service and practitioners are responsive to the changing
mental health needs of the population. In 2021, working with external experts
we have focused on embedding trauma informed approaches into our service.
A crucial part of this evidence based intervention is ensuring that there
continues to be an assessment of suicidal thoughts. Kooth's own data supports
a wider consensus that this has increased significantly over the pandemic
period, hence the need to introduce this approach alongside careful
consideration of our risk management processes as part of our specific focus
on the SAFE element of our framework. We will continue to test and refine this
model in the year ahead.
Over the last 12 months, Kooth has continued in our ambition to be at the
centre of driving evidenced based approaches within digital mental health
services. This included an invitation to give evidence at the UK government's
Health and Social Care Select Committee and being referenced in the final
report as an example of good practice.
Participation: ensuring Kooth meets the needs of diverse communities
To deliver on our purpose to be 'accessible to all', we need to ensure that
Kooth meets the needs of diverse communities, especially those that may be
less likely to use established NHS services such a Black, Asian, non-white, or
LGBTQIA+ communities.
In 2021, we made substantial progress in our participation approach, forming
partnerships with a number of groups across the country. These are providing
invaluable support in helping us understand why certain adult cohorts do not
typically access mental health services, and how we can improve this via our
digital 'ecosystem of support'.
Through these reciprocal relationships, we will improve access to
evidence-based interventions for marginalised groups. In addition, it will
enable us to play a leading role in contributing to the evidence base in this
area and demonstrate how to deliver safe and clinically effective care
digitally
Chief Financial Officer's statement
Significant growth
This is the second set of full year financial statements issued by Kooth plc
following its admission to trading on AIM on 2 September 2020 and represents
the first full year of the Group being quoted on AIM.
Revenue
I am pleased to report Group total revenue grew, in line with market
expectations, by 28% to £16.7 million in the year, driven primarily by fee
uplifts from existing public sector clients and new business in Adult and CYP
as well as the tail of a small number of one-off COVID-19 related projects
that started in 2020. Adults represented approximately 10% of revenue in 2021.
Recurring revenue comprises income invoiced for services that are repeatable
and consumed and delivered on a monthly basis over the term of a customer
contract.
Annual Recurring Revenue (ARR) is the annualised revenue of customers engaged
or closed at that date (31 December) and is an indication of the upcoming
annual value of the recurring revenue. This is used by management to monitor
the long term revenue growth of the business.
Highlighting the depth and longevity of our customer relationships, net
revenue retention was 109% (2020: 107%). This is measured by the total value
of ongoing ARR at the year end from customers in place at the start of the
year as a percentage of the opening ARR from those clients.
Gross Profit
Gross profit grew by 27.5% to £11.6 million (2020: £9.1 million) with gross
margin remaining flat at 69.5% (2020: 69.8%). Direct costs previously included
the cost of our practitioners and our engagement team who are responsible for
promoting Kooth to potential users in a corporate or region. We have taken the
decision to reclassify those engagement costs as administrative expenses,
given they are closer in nature to sales and marketing expenditure. The
comparative numbers have also been reclassified and full details are set out
in note 2.3.
Gross margin was slightly lower, mainly because a one-off benefit in 2020
relating to COVID-19 did not repeat in 2021. This one-off benefit in 2020 was
from shorter go-live periods between closing a contract and the commencement
of services and revenue as clients looked to accelerate the implementation of
Kooth, particularly during the national lockdown-enforced closure of schools.
Statutory loss after tax
The Group loss after tax for the year was £0.3million (2020: loss of £1.5
million) with 2020 impacted by the costs incurred for the IPO and the share
based payment expense incurred as a result of accounting for the fair value of
shares acquired by employees prior to the IPO.
Administrative expenses
Excluding depreciation, amortisation and share based payments, administrative
expenses grew by £0.8 million in the year, a 9% increase year on year, which
remains in line with our strategic investment plan and comfortably below
revenue growth. This was primarily driven by increases in staff costs as we
strengthened our business development and account management teams, salary
increases as well as an upgrade to our finance, people and rota systems and a
full year of the costs associated with being a listed company.
Adjusted EBITDA
Adjusted EBITDA grew by £1.1 million (123%) to £2.1 million in the year due
to the gross profit increase, offset partially by higher administrative
expenses as outlined above.
Adjusted results are prepared to provide a more comparable indication of the
Group's core business performance by removing the impact of certain items
including exceptional items (material and non- recurring), and other,
non-trading, items that are reported separately. Adjusted results exclude
items as set out in the consolidated statement of profit and loss and below,
with further details given in Notes 2, 5, 7, 8, 9, 14 & 16 to the
financial statements. In addition, the Group also measures and presents
performance in relation to various other non GAAP measures, such as gross
margin, annual recurring revenue and revenue growth.
Adjusted results are not intended to replace statutory results. These have
been presented to provide users with additional information and analysis of
the Group's performance, consistent with how the Board monitors results.
Adjusted EBITDA (being EBITDA prior to exceptional costs) is calculated as
follows:
£'m 2021 2020
Operating Loss 0.7 1.6
Add back:
Depreciation & Amortisation 2.4 1.5
Share based Payment expense 0.4 0.5
IPO and other exceptional items - 0.6
Adjusted EBITDA 2.1 0.9
Taxation
There has been no corporation tax charge recognised in the year due to
accumulated losses combined with the overall current year position (2020:
£nil). The tax credit for the year ended 31 December 2021 and 2020 relate to
Research and Development expenditure credits in addition to the movement in
the deferred tax asset.
Cash
The Group had good cash management in the year with net cash generated from
operating activities of £1.9 million (2020: £0.4 million), broadly in line
with adjusted EBITDA. The net cash at year end was £7.1 million (2020: £7.8
million). The Group continues to be debt free and maintains a robust financial
position following a full year of the global pandemic and with no recourse to
any government support schemes. Trade receivables have grown by 13% in the
year to £1.6 million (2020: £1.4 million), below the rate of revenue growth.
The Group's cash collection disciplines remain strong with debtor days at 31
December 2021 of 33 days (2020: 35)
Capital expenditure
Software and product development costs aside, the Group's ongoing capital
expenditure requirements remain modest at £0.1million (2020: £0.1million).
Capitalised development costs
The Group continues to invest in product and platform development resulting in
ongoing improvements in its delivery platform. Costs are a combination of
internal and external spend. Where such work is expected to result in future
revenue, costs incurred that meet the definition of software development in
accordance with IAS38, Intangible Assets, are capitalised in the statement of
financial position. During the year the Group capitalised £2.5 million in
respect of software development (2020: £1.5 million) with an amortisation
charge of £2.3 million.
Investment in product and development continues to be significant to the Group
and we anticipate capitalising software costs at a higher rate over the next
few years during a period of accelerated product investment.
Capital and Reserves
The Group continues to maintain a strong balance sheet with total equity at 31
December 2021 of £11.0 million (2020: £10.9 million).
Dividend policy
As outlined at the time of the IPO the Group's intention in the short to
medium term is to invest in order to deliver capital growth for shareholders.
The Board has not recommended a dividend in respect of the year ended 31
December 2021 and does not anticipate recommending a dividend within the next
year but may do so in future years.
Sanjay Jawa
Chief Financial Officer
28 March 2022
Financial statements
Consolidated statement of profit and loss and other comprehensive loss
For the year ended 31 December 2021
Note 2021 2020
Continuing operations £'000 £'000
Revenue 4 16,682 13,012
Cost of sales (5,097) (3,924)
Gross profit 11,585 9,088
Administrative expenses 5 (12,318) (11,216)
Other operating income 6 - 497
Operating Loss (733) (1,631)
Analysed as:
Adjusted EBITDA 2,082 934
Depreciation & amortisation 14, 16 (2,384) (1,498)
Exceptional items 7 - (580)
Share based payment expense 8 (431) (507)
Gain on disposal of subsidiary 9 - 20
Operating loss (733) (1,631)
Interest expense 10 - (314)
Interest income 10 13 -
Loss before tax (720) (1,945)
Tax 11 410 467
Loss after tax from continuing operations (310) (1,478)
Profit/(Loss) after tax from discontinued operations 9 - 1
Total comprehensive loss for the year (310) (1,477)
Loss per share - basic (£) 12 (0.01) (0.06)
On continuing operations (0.01) (0.06)
On discontinued operations - 0.00
Loss per share - diluted (£) (0.01) (0.06)
On continuing operations (0.01) (0.06)
On discontinued operations - 0.00
Consolidated statement of financial position
As at 31 December 2021
Note 31 December 2021 31 December 2020
£'000 £'000
Assets
Non-current assets
Goodwill 13 511 511
Development costs 14 2,867 2,615
Right of use asset 15 - 14
Property, plant and equipment 16 116 157
Deferred tax 17 435 133
Total non-current assets 3,929 3,430
Current assets
Trade & other receivables 18 2,370 2,097
Contract assets 19 406 107
Cash & cash equivalents 20 7,079 7,823
Total current assets 9,855 10,027
Total assets 13,784 13,457
Liabilities
Current liabilities
Trade payables 21 (417) (275)
Contract liabilities 22 (797) (619)
Lease liability 15 - (17)
Accruals and other creditors 21 (649) (866)
Deferred tax 17 - -
Tax liabilities 21 (948) (827)
Total current liabilities (2,811) (2,604)
Net current assets 7,043 7,423
Net Assets / (Liabilities) 10,973 10,853
Equity
Share capital 23 1,653 1,653
Share premium account 23 14,229 14,229
P&L reserve 23 (1,879) (1,569)
Share-based payment reserve 23 959 529
Capital redemption reserve 23 115 115
Merger reserve 23 (4,104) (4,104)
Total equity 10,973 10,853
The accompanying notes form part of the financial statements.
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share capital Share premium Share based payment reserve P&L reserve Capital redemption reserve Merger reserve Total equity
Balance at 1 January 2020 - 2 - (2,838) - - (2,836)
Issue of share capital 400 14,227 - - - 14,627
Share for share exchange 3,989 - - - 115 (4,104) -
Capital reduction (2,736) - - 2,736 - - -
Share based payments - - 529 - - - 529
Deferred tax - - - 10 - - 10
Total comprehensive income for the year - - - (1,477) - - (1,477)
As at 31 December 2020 1,653 14,229 529 (1,569) 115 (4,104) 10,853
Balance at 1 January 2021 1,653 14,229 529 (1,569) 115 (4,104) 10,853
Issue of share capital - - - - - - -
Share based payments - - 430 - - - 430
Total comprehensive income for the year - - - (310) - - (310)
As at 31 December 2021 1,653 14,229 959 (1,879) 115 (4,104) 10,973
The accompanying notes form part of the financial statements.
Consolidated Cashflow Statement
For the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Cash flows from operating activities
Loss for the year from continuing operations (310) (1,478)
Profit/(Loss) for the year from discontinued operations 9 - 1
Adjustments:
Depreciation & amortisation 14, 15, 16 2,384 1,498
Income tax received - 268
Share based payment expense 8 520 507
Interest expense 10 - 314
Tax income recognised (410) (466)
Gain on disposal 9 - (20)
Movements in working capital:
(Increase)/decrease in trade and other receivables 18 (574) 132
Increase/(decrease) in trade and other payables 21 244 (396)
Net cashflow from operating activity 1,854 360
Cash flows from investing activities
Purchase of property, plant and equipment 16 (63) (107)
Additions to intangible assets 14 (2,535) (1,505)
Net cash used in investing activities (2,598) (1,612)
Cash flows from financing activities
Proceeds from issue of capital - 16,000
Cost incurred on issue of capital - (1,378)
Receipt/(Repayment) of borrowings - (4,249)
Interest paid - (1,444)
Lease payments - (81)
Net cash from financing activities - 8,848
Net increase/(decrease) in cash and cash equivalents (744) 7,596
Cash and cash equivalents at the beginning of the year 20 7,823 227
Cash and cash equivalents at the end of the year 20 7,079 7,823
The accompanying notes form part of the financial statements.
Notes to the Financial Statements
1. Corporate Information
Kooth plc is a company incorporated in England and Wales. The address of the
registered office is 5 Merchant Square, London, England, W2 1AY.
2. Significant Accounting Policies
2.1) Basis of Preparation
The consolidated financial statements of Kooth plc and its subsidiaries
(collectively, the Group) for the year ended 31 December 2021 have been
prepared and approved by the directors in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act
2006.
Measurement Convention
The financial statements are prepared on the historical cost basis with the
exception of certain items which are measured at fair value as disclosed in
the accounting policies set out below. These policies have been consistently
applied to all years presented unless otherwise stated. All values are
presented in Sterling and rounded to the nearest thousand pounds (£'000)
except when otherwise indicated.
Going Concern
The Directors have a reasonable expectation that the Group as a whole has
adequate resources to continue in operational existence for the foreseeable
future. For this reason, the going concern basis continues to be adopted in
the accounts.
The company's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
report on pages 4 to 60 of the annual report. In addition, note 25 to the
financial statements include the company's objectives, policies and processes
for managing its capital; its financial risk management objectives; and its
exposures to credit risk and liquidity risk.
During the 2021 financial year the Group generated a loss of £0.3 million
(2020: £1.5 million). Adjusted EBITDA is £2.1 million (2020: £0.9 million).
The Group is in a net asset position of £11.0 million (2019: £10.9 million).
Management has performed a going concern assessment for a period up to 31
March 2023, which indicates that the Group will have sufficient funds to trade
and settle its liabilities as they fall due. This assessment takes into
account a number of sensitivities, including a downside scenario and a reverse
stress test, which models the scenarios that would lead to a default by the
Group. Both the downside scenario and reverse stress test reflect lower
activity levels than both the Group forecast and 2021 actual results. The key
assumption used in the assessment is revenue and Management has analysed the
impact of reduced revenue on the Group's performance.
Whilst Management has concluded that the possibility of the downside scenario
occurring is remote, the Group would still have adequate resources to be able
to trade and settle its liabilities as they fall due in this scenario. As a
result Management also deems the likelihood of the scenarios in the default
model occurring to be remote.
The Directors have considered the impact of COVID-19 and do not expect the
pandemic to have a material adverse impact on the Group. Consequently, the
directors believe that the company is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and as such continue to adopt
the going concern basis of accounting in preparing the financial statements.
This financial information does not amount to full financial statements within
the meaning of Section 434 of Companies Act 2006. The financial information
has been extracted from the Group's Annual Report and Financial Statements for
the year ended 31 December 2021 on which an unqualified report has been made
by the Company's auditors. Financial statements for the year ended 31 December
2020 have been delivered to the Registrar of Companies. The 2021 statutory
accounts will be delivered in due course; the report of the auditors on those
accounts was unqualified and did not contain a statement under Section 498 of
the Companies Act 2006. Copies of the Annual Report and Financial Statements
will be made available to shareholders shortly and printed copies will be
available from the Company's registered office at 5 Merchant Square, London W2
1AY.
2.2) Basis of Consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 December 2021, with the comparatives
presented for the previous 12 months being the Group's combined activities for
the 12 months ended 31 December 2020.
Control is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group
controls an investee if, and only if, the Group has:
● Power over the investee (i.e., existing rights that give it the
current ability to direct the relevant activities of the investee)
● Exposure, or rights, to variable returns from its involvement with
the investee
● The ability to use its power over the investee to affect its
returns Generally, there is a presumption that a majority of voting rights
results in control. To support this presumption and when the Group has less
than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has
power over an investee, including:
● The contractual arrangement(s) with the other vote holders of the
investee
● Rights arising from other contractual arrangements
● The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are
attributed to the equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies in
line with the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control,
is accounted for as an equity transaction. If the Group loses control over a
subsidiary, it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of equity, while
any resultant gain or loss is recognised in profit or loss. Any investment
retained is recognised at fair value.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
directors that make strategic decisions. As Kooth plc's operations are all in
one location within the United Kingdom, the Directors are of the opinion that
the Group has only one reportable operating segment, this is in line with
internal reporting provided to the executive directors.
2.3) Summary of Significant Accounting Policies
The following are the significant accounting policies applied by the Group in
preparing its consolidated financial statements:
Revenue from Contracts with Customers
Revenue arises from the provision of counselling services and mental health
support services under fixed price contracts. Contracts are typically for a 12
month period and are fixed price based on an expected number of hours of
counselling provided.
To determine whether to recognise revenue, the Group follows the five step
process as set out within IFRS 15.
1) Identifying the contract with a customer
2) Identifying the performance obligations
3) Determining the transaction price
4) Allocating the transaction price to the performance obligations
5) Recognising revenue when/as performance obligation(s) are satisfied.
Contracts with customers take the form of signed agreements from customers.
There is one distinct performance obligation, being the provision of
counselling services, to which all the transaction price is allocated. Revenue
from counselling services is recognised in the accounting period in which the
services are rendered. The contracts are satisfied monthly over the contract
term for an agreed level of support hours. Revenue is recognised over-time, on
a systematic basis over the period of the contract, as this best represents
the stage of completion.
In certain circumstances the number of hours of counselling provided may
surpass the expected number of hours within the contract. In this
circumstance, Management does not recognise additional revenue during the
period, as contractually the Group has no right to demand payment for
additional hours. In some instances, the Group has recovered additional fees
post year end for the additional hours incurred; this additional revenue is
recognised at a point in time when the Group has agreed an additional fee and
has a right to invoice. At each reporting date there was no significant
overprovision of hours noted.
In instances where the number of counselling hours provided is less than the
contracted number of hours, the full fixed fee is still payable by the
customer.
The Group typically receives cash from customers 29 days after invoicing a
customer.
Contract Assets
Contract assets are recognised for revenue earned not yet invoiced, for
customers who are invoiced on a quarterly basis. Upon invoicing, the amount
recognised as a contract asset is reclassified to trade receivables. The Group
have reviewed the expected credit losses for the year and note no material
expected credit losses.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is
due (whichever is earlier) from a customer before the Group transfers the
related services. Contract liabilities are recognised as revenue when the
Group performs under the contract (i.e., transfers control of the related
services to the customer).
Other operating income - government grants
Government grants are recognised in profit or loss on a systematic basis over
the periods in which the entity recognises as expenses the related costs for
which grants are intended to compensate. Grants are classified as relating
either to revenue or to assets. Grants relating to revenue are recognised in
income over the period in which the related costs are recognised. Grants
relating to assets are recognised over the expected useful life of the asset.
Where part of a grant relating to an asset is deferred, it is recognised as
deferred income.
Tax
Current tax
Current tax assets and liabilities are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted
at the reporting date in the countries where the Group operates and generates
taxable income.
Current tax relating to items recognised directly in equity is recognised in
equity and not in the statement of profit or loss. Management periodically
evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred tax liabilities
are recognised for all taxable temporary differences, except:
● When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss
● In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint arrangements,
when the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences, the
carry forward of unused tax credits and any unused tax losses. Deferred tax
assets are recognised to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, and the
carry forward of unused tax credits and unused tax losses can be utilised,
except:
● When the deferred tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss
● In respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint arrangements,
deferred tax assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable
profit will be available, against which the temporary differences can be
utilised
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred tax relating to items
recognised outside profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying transaction
either in OCI or directly in equity.
Tax benefits acquired as part of a business combination, but not satisfying
the criteria for separate recognition at that date, are recognised
subsequently if new information about facts and circumstances change. The
adjustment is either treated as a reduction in goodwill (as long as it does
not exceed goodwill) if it was incurred during the measurement period or
recognised in profit or loss.
The Group offsets deferred tax assets and deferred tax liabilities if and only
if it has a legally enforceable right to set off current tax assets and
current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
Sales tax
Expenses and assets are recognised net of the amount of sales tax, except:
● When the sales tax incurred on a purchase of assets or services is
not recoverable from the taxation authority, in which case, the sales tax is
recognised as part of the cost of acquisition of the asset or as part of the
expense item, as applicable
● When receivables and payables are stated with the amount of sales
tax included
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
Research and Development tax claims
Where Kooth plc has made Research and Development tax claims under the Small
and Medium Enterprise scheme and tax losses have been surrendered for a
repayable tax credit, a current tax credit is reflected in the income
statement.
Property, Plant and Equipment
Property, plant and equipment is stated in the statement of financial position
at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses.
The cost of property, plant and equipment includes directly attributable
incremental costs incurred in its acquisition and installation.
Depreciation is charged so as to write off the cost of assets over their
estimated useful lives, as follows:
Leasehold improvements 33.33% straight line
Fixtures, fittings and equipment 33.33% – 50% straight line
Goodwill and Intangibles
Goodwill
Goodwill is initially measured at cost (being the excess of the aggregate of
the consideration transferred and the amount recognised for non-controlling
interests and any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group
re-assesses whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or
loss.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in
a business combination is, from the acquisition date, allocated to each of the
Group's cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of
the operation within that unit is disposed of, the goodwill associated with
the disposed operation is included in the carrying amount of the operation
when determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposed
operation and the portion of the cash-generating unit retained.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at
cost. The cost of intangible assets acquired in a business combination is
their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure
is reflected in profit or loss in the period in which the expenditure is
incurred.
The useful lives of intangible assets are assessed as either finite or
indefinite.
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least
at the end of each reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in
the statement of profit or loss.
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis.
An intangible asset is derecognised upon disposal (i.e., at the date the
recipient obtains control) or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising upon derecognition of the
asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit or loss.
Expenditure on internally developed software products and substantial
enhancements to existing software product is recognised as intangible assets
only when the following criteria are met:
● The technical feasibility of completing the intangible asset so
that the asset will be available for use or sale
● Its intention to complete and its ability and intention to use or
sell the asset
● How the asset will generate future economic benefits
● The availability of resources to complete the asset
● The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over the period
of expected future benefit. Amortisation is recorded in the Statement of
Profit and Loss. During the period of development, the asset is assessed for
impairment annually.
Amortisation is charged on a straight line basis over the estimated useful
life of 3 years.
Expenditure on research activities as defined in IFRS is recognised in the
income statement as an expense is incurred.
Impairment testing of intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately independent cash inflows (CGU). Those
intangible assets including goodwill and those under development are tested
for impairment at least annually. All other individual assets or CGUs are
tested for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment charge is recognised for the amount by which the asset or CGUs
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less costs to sell, and
value in use. All assets, with the exception of goodwill, are subsequently
reassessed for indications that an impairment loss previously recognised may
no longer exist.
Financial instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the underlying contractual
arrangement. Financial instruments are recognised on the date when the Group
becomes a party to the contractual provisions of the instrument. Financial
instruments are initially recognised at fair value except for trade
receivables which are initially accounted for at the transaction price.
Financial instruments cease to be recognised at the date when the Group ceases
to be party to the contractual provisions of the instrument.
Financial assets are included on the balance sheet as trade and other
receivables or cash and cash equivalents.
Trade receivables
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. They are generally due for settlement within 30
days and are therefore all classified as current. Trade receivables are
recognised initially at the transaction price. The Group holds the trade
receivables with the objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective
interest method.
The Group assess each receivable on a customer by customer basis for the
expected lifetime credit loss, which is based on an unbiased weighted average
probability of default both at initial recognition and subsequent reporting
dates. Where an expected credit loss is identified a provision is made against
the receivable. Significant financial difficulties of the customer,
probability that the customer will enter bankruptcy or financial
reorganisation default or delinquency in payments, and the unavailability of
credit insurance at commercial rates are considered indicators that the
receivable may be impaired. When these factors are confirmed for a trade
receivable it is considered uncollectible and a default event is triggered. At
this point it is written off against the credit loss provision account.
Subsequent recoveries of amounts previously written off are credited against
administrative expenses in the income statement.
Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if the company does not have an
unconditional right, at the end of the reporting period, to defer settlement
of the creditor for at least twelve months after the reporting date. If there
is an unconditional right to defer settlement for at least twelve months after
the reporting date, they are presented as non-current liabilities. Trade
payables are recognised initially at fair value and all are repayable within
one year and hence are included at the undiscounted amount of cash expected to
be paid.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other
short-term highly liquid investments that have a maturity date of 3 months or
less, are readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
Leases
Short term leases or leases of low value are recognised as an expense on a
straight-line basis over the term of the lease.
The Group recognises right-of-use assets under lease agreements in which it is
the lessee. The underlying assets mainly include property and office equipment
and are used in the normal course of business. The right-of-use assets
comprise the initial measurement of the corresponding lease liability payments
made at or before the commencement day as well as any initial direct costs and
an estimate of costs to be incurred in dismantling the asset. Lease incentives
are deducted from the cost of the right-of-use asset. The corresponding lease
liability is included in the consolidated statement of financial position as a
lease liability.
The right-of-use asset is depreciated over the lease-term and if necessary
impaired in accordance with applicable standards. The lease liability shall
initially be measured at the present value of the lease payments that are not
paid at that date, discounted using the rate implicit in the lease. The lease
liability is subsequently measured by increasing the carrying amount to
reflect interest on the lease liability (application of the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made. No lease modification or reassessment changes have been made during the
reporting period from changes in any lease terms or rent charges.
Employee Benefit plans
Defined Contribution Plans
The Group operates a defined contribution pension plan. Payments to defined
contribution pension plans are recognised as an expense when employees have
rendered services entitling them to the contributions.
Share-based payment
Benefits to employees are provided in the form of share-based payment
transactions, whereby employees render services in exchange for shares or
rights over shares ('equity settled transactions'). The fair value of the
employee services rendered is measured by reference to the fair value of the
shares awarded or rights granted, which takes into account market conditions
and non-vesting conditions. This cost is charged to the income statement over
the vesting period, with a corresponding increase in the share based payment
reserve.
The cumulative expense recognised at each reporting date until the vesting
date reflects the extent to which the vesting period has expired and the
company's best estimate of the number of shares that will ultimately vest. The
charge or credit to the income statement for a period represents the movement
in the cumulative expense recognised at the beginning and end of that period
and is recognised in share based payment expense.
Assets and liabilities classified as held for sale and discontinued operations
Assets classified as held for sale are presented separately and measured at
the lower of their carrying amounts immediately prior to their classification
as held for sale and their fair value less costs to sell. However, some held
for sale assets such as financial assets or deferred tax assets, continue to
be measured in accordance with the Group's relevant accounting policy for
those assets. Once classified as held for sale, the assets are not subject to
depreciation or amortisation. Financial liabilities continue to be measured in
accordance with the Group's relevant accounting policy for those items.
Any profit or loss arising from the sale or remeasurement of discontinued
operations is presented as part of a single line item. Assets and liabilities
of disposal groups are presented separately in the statement of financial
position.
Discontinued operations
A disposal group qualifies as discontinued operation if it is a component of
an entity that either has been disposed of, or is classified as held for sale,
and:
● Represents a separate major line of business or geographical area
of operations
● Is part of a single co-ordinated plan to dispose of a separate
major line of business or geographical area of operations
● Is a subsidiary acquired exclusively with a view to resale
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as profit or loss after tax from
discontinued operations in the statement of profit or loss. Additional
disclosures are provided in Note 9. All other notes to the financial
statements include amounts for continuing operations, unless indicated
otherwise.
Alternative Performance Measures
Adjusted results are prepared to provide a more comparable indication of the
Group's core business performance by removing the impact of certain items
including exceptional items, and other, non-trading, items that are reported
separately.
The Group believes that EBITDA before separately disclosed items ("adjusted
EBITDA") is the most significant indicator of operating performance and allows
a better understanding of the underlying profitability of the Group. The Group
defines adjusted EBITDA as operating profit/loss before interest, tax,
depreciation, amortisation, exceptional items and share based payments.
The Group also measures and presents performance in relation to various other
non-GAAP measures, such as gross margin, annual recurring revenue and revenue
growth.
Adjusted results are not intended to replace statutory results. These have
been presented to provide users with additional information and analysis of
the Group's performance, consistent with how the Board monitors results.
Reclassification of Promotional Costs
During the year ended 31 December 2021 the Group made the decision to
reclassify its promotional costs from cost of sales to administrative
expenses. This gives a more appropriate view of the financial statements, with
regard to the criteria for the selection and application of the Group's
accounting policies. As a result the comparative period has also been
reclassified so that comparability is not impaired.
The impact to the 2020 accounts as a result of the classification is
demonstrated below. The amount relating to promotion spend included in the
2021 administrative expenses line is £0.95 million.
2020
£'000
Revenue 13,012
Direct Costs (5,091)
Gross Profit (before reclassification) 7,921
Gross Margin 60.9%
Promotion Costs
Staff Costs 1,146
Travel 22
1,168
Gross Profit (after reclassification) 9,089
Gross Margin 69.8%
Exceptional Items
Exceptional items are analysed as costs that are not in the ordinary operating
costs of the Group.
Group Restructure
The Company was incorporated as Hamsard 3564 Limited on 19 March 2020 as a
private limited company. The Group developed an appropriate accounting policy
to restructure in line with IAS 8 as follows.
On 6 August 2020, the Company acquired all of the issued share capital of
Kooth Group Limited (formerly Xenzone Group Limited), by way of a share for
share exchange with the shareholders of Kooth Group Limited. On 24 August
2020, by a special resolution of the Company, the Company was re-registered as
a public company limited by shares and the name of the Company was changed to
Kooth plc. This was undertaken in anticipation of the IPO to establish Kooth
plc as the parent company of the Group. The structure of the Group by nature
remains the same as prior to the restructure and as such the transaction falls
out of the scope of IFRS 3.
3. Significant Accounting Judgements, Estimates and Assumptions
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying value of
assets and liabilities that are not readily apparent from other sources.
Estimates and Assumptions
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future periods if the revision affects both current and future
periods.
The estimates which have the most significant impact on the amounts recognised
in the financial statements are as follows:
Useful economic lives of development costs and property, plant and equipment
Property, plant and equipment is depreciated over the economic useful lives of
the assets. Useful lives are based on management's estimates of the period
that the assets will generate revenue, which are reviewed annually for
continued appropriateness. The useful economic lives applied are set out in
the accounting policies. Development costs are amortised on a straight-line
basis over the useful life of the related asset which management estimate to
be three years, which is industry standard.
Share-based payments
Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the expected
life of the share option or appreciation right, volatility and dividend yield
and making assumptions about them. The basis for these key inputs and
assumptions are described in note 8.
Judgements
The areas of judgement which have the most significant impact on the amounts
recognised in the financial statements are as follows:
Impairment of intangible assets (including goodwill) and property, plant and
equipment
The Group tests goodwill at least annually for impairment, and whenever there
is an indication that the asset may be impaired. All other intangible assets
and property, plant and equipment are tested for impairment when indicators of
impairment exist.
An impairment charge is recognised for the amount by which the asset or CGUs
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less costs to sell, and
value in use. All assets, with the exception of goodwill, are subsequently
reassessed for indications that an impairment loss previously recognised may
no longer exist.
Deferred tax
The extent to which deferred tax assets can be recognised is based on an
assessment of the probability that future taxable income will be available
against which the deductible temporary differences and tax loss carry-forwards
can be utilised. In addition, significant judgement is required in assessing
the impact of any legal or economic limits or uncertainties.
Capitalisation of Development Costs
Distinguishing the research and development phases of a new customised project
and determining whether the recognition requirements for the capitalisation of
development costs are met requires judgement. After capitalisation, management
monitors whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired. Capitalised
development expenditure is analysed further in note 14.
Development costs largely relate to amounts paid to external developers,
consultancy costs and the direct payroll costs of the internal development
teams. Any internal time capitalised is the result of careful judgement of
the proportion of time spent on developing the platform.
Capitalised development expenditure is reviewed at the end of each accounting
period for indicators of impairment.
4. Revenue
The total turnover of Kooth plc has been derived from its principal activity
wholly undertaken in the United Kingdom.
2021 2020
£'000 £'000
Provision of online counselling 16,682 13,012
5. Administrative expenses
2021 2020
£'000 £'000
Employee costs 6,876 5,958
Rent and rates 212 347
IT hosting and software 882 756
Professional fees 680 498
Marketing 494 611
Depreciation & amortisation 2,384 1,498
Exceptional items - 580
Share based payment expense 431 507
Other overheads 359 461
Total administrative expenses 12,318 11,216
6. Other operating income
2021 2020
£'000 £'000
At 1 January - 257
Received during the year - 240
Released to the statement of profit and loss - (497)
At 31 December - -
Government grants have been received from the Small Business Research
Initiative for a project to add functionality to the Kooth platform to explore
how users could benefit from peer-to-peer support. There are no fulfilled
conditions or contingencies attached to these grants.
7. Exceptional items
2021 2020
£'000 £'000
IPO fees - 391
Other exceptional items - 189
- 580
8. Employee remuneration
2021 2020
£'000 £'000
Salaries 11,543 9,217
Pensions 286 255
Social security & other staff benefits 1,203 911
Share based payment expense 520 507
Government grant - 148
Total 13,552 11,038
Employee numbers 2021 2020
Direct 204 171
Indirect 126 89
Developers 32 20
362 280
Employee numbers disclosed represents the average number of employees for the
year.
Share based payment 2021 2020
£'000 £'000
Long term incentive awards 520 191
Growth shares - 316
520 507
Long Term Incentive Awards
Long term incentive awards have been issued to all staff. The fair value of
the awards has been calculated using the Black Scholes model, based on the
market price of the underlying shares on the date of grant. Performance
conditions are attached to the incentive awards of Executives, with 50% linked
to ARR growth and 50% linked to comparative total shareholder return. Vesting
conditions require that all staff remain employed by the business for 3 years.
The shares vest over a 3 year period with a maximum term of 10 years.
Number of Options Exercise price per share Number of Options Exercise price per share
2021 2021 2020 2020
Outstanding at the beginning of the year 999,681 - -
Granted 367,173 £0.05 1,012,770 £0.05
Forfeited (286,788) £0.05 (13,089) £0.05
Exercised - £0.05 - £0.05
Outstanding at the end of the year 1,080,066 999,681
Growth Shares
Growth shares were issued to Executive team members during 2019 and 2020. The
fair value of growth shares was calculated using the Black Scholes Model at
the grant date. The key assumptions used in the calculation were:
Risk free rate 1%
Annualised volatility 60%
All shares were realised and equity-settled upon Admission during the year
ended 31 December 2020. The weighted average share prices of options exercised
in the year was £2.
Number of Options Exercise price per share Number of Options Exercise price per share
2021 2021 2020 2020
Outstanding at the beginning of the year - 65,604
Granted - £0.01 203,153 £0.01
Forfeited - £0.01 - £0.01
Exercised - £0.01 (268,757) £0.01
Outstanding at the end of the year - -
9. Disposal groups classified as discontinued operations
In December 2017, the directors announced that the Group intended to dispose
of Beam ABA Services Limited. The disposal was expected to be completed within
12 months, but no proceedable offers were received until April 2019.
Beam ABA Services Limited represents a separate line of business and there was
a single co-ordinated plan to dispose of this area. It was therefore treated
as held for sale from December 2017 until the point at which it was sold.
Revenue and expenses, gains and losses relating to the discontinuation of this
subgroup have been eliminated from profit or loss from the Group's continuing
operations and are shown as a single line item in the statement of profit or
loss.
On the 3rd of April 2020, Beam ABA Services Limited was sold to Root Capital
LLP for £1.
2021 2020
£'000 £'000
Revenue - 273
Expenses - (272)
Profit/(Loss) after tax from discontinued operations - 1
The discontinued operations results contributed the following to the cash 2021 2020
flow:
£'000 £'000
Net cash inflows /(outflows) from operating activities - 27
Net cash inflows/(outflows) from investing activities - -
Net cash inflows/(outflows) from financing activities - -
Net cash inflows/(outflows) arising on disposal - 27
Reconciliation of disposal
Cash consideration received - -
Carrying amount of net assets sold - (20)
Gain on disposal - 20
10. Interest
2021 2020
£'000 £'000
Interest on loans - (312)
Interest on lease liability - (2)
Interest income on cash deposits 14 -
14 (314)
Interest on loans relates to the loan with Root Capital that was repaid in
full during the year ended 31 December 2020.
11. Taxation
2021 2020
£'000 £'000
Current tax
UK corporation tax (252) (315)
Total current tax charge/(credit) (252) (315)
Deferred tax (P&L)
Origination and reversal of timing differences (158) (156)
Effect of tax rate change on opening balance - 4
Total deferred tax charge / (credit) (P&L) (158) (152)
Tax charge / (credit) on profit on ordinary activities (410) (467)
Reconciliation of tax charge
Profit /(loss) on ordinary activities before tax (720) (1,945)
Expected tax charge on profit on ordinary activities at standard CT rate (137) (370)
Effects of:
Expenses not deductible for tax purposes - 632
Effect of tax rate changing on opening balance (93) 3
Income not taxable - (487)
R&D additional deduction (430) (348)
Difference between UK CT & DT rates (33) -
Surrender of tax losses for R&D tax credit refund 80 98
R&D expenditure credits - 5
Prior year adjustment 203 -
(410) (467)
12. Earnings per share
2021 2020
£'000 £'000
Earnings used in calculation of earnings per share:
On total losses attributable to equity holders of the parent (310) (1,477)
On continuing operations (310) (1,478)
On discontinued operations - 1
2021 2020
Weighted average no. of shares (Basic) 33,055,776 24,351,925
Weighted average no. of shares (Diluted) 34,082,252 24,685,152
Shares in issue
B shares in issue - -
Ordinary shares in issue 33,055,776 33,055,776
Share options 1,080,066 999,681
Loss per share (basic, £)
On total profits attributable to equity holders of the parent (0.01) (0.06)
On continuing operations (0.01) (0.06)
On discontinued operations 0.00 0.00
Loss per share (diluted, £)
On total profits attributable to equity holders of the parent (0.01) (0.06)
On continuing operations (0.01) (0.06)
On discontinued operations 0.00 0.00
13. Goodwill
2021 2020
£'000 £'000
Goodwill as at 1 January and 31 December 511 511
Management has established counselling services as the one CGU during the
relevant periods. All goodwill is attributable to this CGU.
The Group tests annually for impairment or more frequently if there are
indications that it might be impaired. There were no indicators of impairment
noted during the periods presented.
The Group tests goodwill for impairment by reviewing the carrying amount
against the recoverable amount of the investment. Management has calculated
the value in use using the following assumptions:
Discount rate 8%
Growth rate 2%
Using alternative discount and growth rates as sensitised assumptions does not
result in any impairment.
The Group prepares forecasts based on the most recent financial budgets
approved by the Board. The forecasts have been used in the value in use
calculation along with the assumptions stated above. The forecasts used are
consistent with those used in the going concern review and discussed in note
2. There were no impairments in the years ended 31 December 2021 and 31
December 2020.
14. Development costs
2021 2020
£'000 £'000
Cost
Balance as at 1 January 4,828 3,297
Additions 2,535 1,531
Balance as at 31 December 7,363 4,828
Amortisation
Balance as at 1 January (2,213) (895)
Amortisation (2,283) (1,318)
Balance as at 31 December (4,496) (2,213)
Carrying amount 31 December 2,867 2,615
The 2021 amortisation charge includes £0.2m in respect of accelerated
amortisation on a project where the useful economic life was reduced from its
initial three years.
15. Leases
During the year ended 31 December 2021, the value of all leases recognised
under IFRS 16 were reduced to nil. All remaining leases are either short-term
leases or leases of low value underlying assets.
2021 2020
£'000 £'000
Right of use asset
As at 1 January 14 98
Additions - -
Depreciation - (84)
Disposal (14) -
As at 31 December - 14
Lease liability
As at 1 January 17 95
Additions - -
Interest charge - 2
Cash payment - (80)
Disposal (17) -
As at 31 December - 17
The consolidated statement of cash flows includes the following amounts
relating to leases within scope of IFRS 16:
2021 2020
£'000 £'000
Cash outflows - 81
16. Property, plant and equipment
2021 2020
£'000 £'000
Cost
Balance as at 1 January 388 281
Additions 63 107
Balance as at 31 December 451 388
Depreciation
Balance as at 1 January (231) (135)
Depreciation (104) (96)
Balance as at 31 December (335) (231)
Carrying amount 31 December 116 157
Property, plant and equipment refers to computer and office equipment.
17. Deferred tax assets and liabilities
Fixed asset temporary differences Other temporary differences Tax losses Total
At 1 January 2020 - asset/(liability) (388) 193 164 (31)
Movement - (charge)/credit (93) (114) 371 164
At 1 January 2021 - asset/(liability) (481) 79 535 133
Movement - (charge)/credit 23 244 35 302
At 31 December 2021 - asset/(liability) (458) 323 570 435
Deferred tax assets are recognised to the extent that it is probable that
future taxable profit will be available against which the deductible temporary
differences can be utilised.
18. Trade and other receivables
2021 2020
£'000 £'000
Trade receivables 1,609 1,430
Prepayments and other receivables 761 667
Total trade and other receivables 2,370 2,097
All amounts shown above are short term. The net carrying value of trade
receivables is considered a reasonable approximation of fair value.
19. Contract assets
2021 2020
£'000 £'000
Accrued income 406 107
20. Cash and cash equivalents
2021 2020
£'000 £'000
Cash and cash equivalents 7,079 7,823
21. Trade and other payables
2021 2020
£'000 £'000
Trade payables 417 275
Accruals and other creditors 649 866
Tax liabilities 948 827
Total 2,014 1,967
22. Contract liabilities
2021 2020
£'000 £'000
Contract liabilities - current 797 619
23. Equity
Share Capital
2021 2020
£'000 £'000
Ordinary A shares 1,653 1,653
The share capital of Kooth plc consists of fully paid ordinary shares with a
nominal value of £0.05 per share.
The A ordinary shares have attached to them full voting, dividend and capital
distribution rights (including on winding up). They do not confer any right of
redemption. B ordinary shares have attached to them no voting, dividend or
capital distribution rights (including on winding up). They do not confer any
rights of redemption.
Number of Shares
Number of Shares 2021 2020
Ordinary A shares 33,055,776 33,055,776
During the year ended 31 December 2020, 203,152 £0.0001 B shares in Kooth
Group Limited (formerly Xenzone Group Limited) were issued to Executive team
members bringing the total number of B shares to 367,928. These shares were
accounted for as a share based payment transaction under IFRS 2, with the
nominal value of these shares held in share capital and the fair value expense
recognised in the share based payment reserve. See note 6.
Upon incorporation of Kooth plc in September 2020, the Company entered into a
share for share exchange agreement whereby 1,000,000 A ordinary and 367,928 B
ordinary £3 shares were issued in the capital of Kooth plc.
The Company then undertook a reduction of capital whereby the total aggregate
nominal amount of share capital was reduced from £4,104,000 to £1,368,000 by
reducing the nominal value of each share from £3 to £1.
Subsequent to this, and prior to the listing on AIM, the Company undertook a
reorganisation whereby 1,000,000 A ordinary shares and 367,928 B ordinary
shares £1 shares were sub-divided into 20,000,000 A ordinary shares and
7,358,560 B ordinary shares of £0.05. These shares were reclassified into
25,055,776 ordinary shares and 2,302,784 deferred shares of £0.05. The
deferred shares were subsequently bought back and cancelled by the Company.
On 2 September 2020, Kooth plc issued 8 million new ordinary A shares of 200p
each via an Initial Public Offering and admission to AIM. This brought the
total shares in issue to 33,055,776.
Upon Admission, the B shares converted into Ordinary A shares.
2021 2020
£'000 £'000
Share Premium 14,229 14,229
Share premium represents the funds received in exchange for shares over and
above the nominal value.
2021 2020
£'000 £'000
Share based payment reserve 959 529
The share based payment reserve represents amounts accruing for equity settled
share options granted plus the fair value of growth shares realised upon IPO.
2021 2020
£'000 £'000
Merger reserve (4,104) (4,104)
The merger reserve was created as a result of the share for share exchange
during the year ended 31 December 2020.
2021 2020
£'000 £'000
Capital redemption reserve 115 115
The capital redemption reserve was established as a result of the deferred
share buyback during the year ended 31 December 2020.
24. Auditors remuneration
2021 2020
£'000 £'000
Fees payable to the auditor for the audit of the Company and Consolidated 75 50
financial statements
Fees payable to the auditor and its associates for other services:
Other audit related services 5 139
25. Financial assets and liabilities
2021 2020
£'000 £'000
Financial assets
Trade and other receivables 2,370 1,782
Cash and cash equivalents 7,079 7,823
Financial liabilities
Trade and other payables 2,015 1,985
Management has assessed that the fair values of cash, trade receivables, trade
payables, and other current liabilities approximate their carrying amounts
largely due to the short-term maturities of these instruments.
25.1) Financial instruments risk management objectives and policies
The Group's principal financial liabilities comprise trade and other payables.
The Group has no debt facility as at 31 December 2021 (2020: £nil). The main
purpose of these financial liabilities is to finance the Group's operations.
The Group's principal financial assets include trade receivables and cash that
derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The
Group's senior management oversees the management of these risks. The Group's
senior management is supported by the Board of Directors who advise on
financial risks and the appropriate financial risk governance framework for
the Group. The Board provides assurance to the Group's senior management that
the Group's financial risk activities are governed by appropriate policies and
procedures and that financial risks are identified, measured and managed in
accordance with the Group's policies and risk objectives.
The Board of Directors reviews and agrees policies for managing each of these
risks, which are summarised below.
Market risk
Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, currency risk
and other price risk, such as equity price risk and commodity risk.
Market risk is deemed to be immaterial to the Group given that:
● the Group has no debt facilities in place at the year ended 31
December 2021 (£2020: £nil) that would cause interest rate risk, and
● the Group's activities are solely domestic therefore eliminating
foreign currency risk.
Credit risk
The Group's principal financial assets are cash and trade receivables. The
credit risk associated with cash is limited, as the counterparties have high
credit ratings assigned by international credit-rating agencies. The credit
risk associated with trade receivables is also limited as customers are
primarily government backed organisations such as the NHS or local councils.
Credit losses historically incurred have been negligible.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs by closely managing its cash balance.
As at the year ended 31 December 2021 the Group is solely funded by equity and
as a result liquidity risk is deemed to be immaterial. The Group monitors its
risk of a shortage of funds through both review and forecasting procedures.
26. Related party transactions
Note 28 provides information about the Group's structure, including details of
the subsidiaries and the holding company. The Group has taken advantage of the
exemption available under IAS 24 Related Party Disclosures not to disclose
transactions between Group undertakings which are eliminated on consolidation.
The following table provides the total amount of transactions that have been
entered into with related parties for the relevant financial year.
2021 2020
£'000 £'000
Monitoring fees - ScaleUp Capital Limited 50 91
50 91
Key management personnel are the executive members of the Board of Directors
of the Group and their remuneration is disclosed below and in the Remuneration
Committee report.
2021 2020
£'000 £'000
Base salary and fees 430 393
Pension 8 9
Gain on exercise of share options - 132
Total 438 534
27. Capital management policies and procedures
The Group's capital management objectives are:
● to ensure the Group's ability to continue as a going concern
● to provide an adequate return to shareholders by pricing products
and services in a way that reflects the level of risk involved in providing
those goods and services.
The Group monitors capital on the basis of the carrying amount of equity, less
cash and cash equivalents as presented in the statement of financial position.
The Group has no debt facilities in place as at 31 December 2021 (2020:
£nil).
Management assesses the Group's capital requirements in order to maintain an
efficient overall financing structure while avoiding excessive leverage. The
Group manages the capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the
underlying assets.
The amounts managed as capital by the Group for the reporting periods under
review are summarised as follows:
2021 2020
£'000 £'000
Total equity 10,973 10,853
Cash and cash equivalents 7,079 7,823
Capital 18,052 18,676
Total equity 10,973 10,853
Lease liability - 17
Financing 10,973 10,870
28. Subsidiaries and associated companies
Name Country of Incorporation Proportion Held Activity Registered Address
Kooth Group Limited UK 100% Platform development 5 Merchant Square, London, England, W2 1AY
Kooth Digital Health Limited UK 100% Provision of online counselling and support to children, young people and 5 Merchant Square, London, England, W2 1AY
adults in need
Xenzone Alliance CIC UK 100% Dormant 5 Merchant Square, London, England, W2 1AY
29. Standards issued but not yet effective
At the date of authorisation of these consolidated financial statements,
several new, but not yet effective, Standards and amendments to existing
Standards, and Interpretations have been published by the IASB. None of these
Standards or amendments to existing Standards have been adopted early by the
Group.
Management anticipates that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of the
pronouncement. New Standards, amendments and Interpretations not adopted in
the current year have not been disclosed as they are not expected to have a
material impact on the Group's consolidated financial statements.
30. Ultimate Controlling Party
No shareholder owns a majority of shares. The directors do not consider that
there is one ultimate controlling party.
31. Events after the reporting date
There have been no material events.
32. Capital commitments
The Group's capital commitments at 31 December 2021 are £nil (FY20: £nil).
33. Parent Company Statement of Financial Position
Note 31 December 2021 31 December 2020
£'000 £'000
Assets
Non-current assets
Investments 34 4,414 4,414
Current assets
Trade & other receivables 38 50 114
Deferred tax 39 52 15
Intercompany receivables 35 6,707 6,734
Cash & cash equivalents 36 6,533 6,674
Total current assets 13,342 13,537
Total assets 17,756 17,951
Liabilities
Current liabilities
Trade payables 40 (64) (23)
Intercompany payables 35 (2,616) (2,891)
Total current liabilities (2,680) (2,914)
Net current assets 10,662 10,623
Non-current liabilities - -
Net assets 15,076 15,037
Equity
Share capital 41 1,653 1,653
Share premium account 41 14,222 14,222
P&L reserve 41 2,231 2,622
Share-based payment reserve 41 959 529
Capital redemption reserve 41 115 115
Merger reserve 41 (4,104) (4,104)
Total equity 15,076 15,037
As permitted by section 408 of the Companies Act 2006, the income statement of
the parent company is not presented as part of the financial statements. The
parent company's loss for the financial period was £391k (2020: £115k).
The accompanying notes form part of the financial statements.
Parent Company Statement of Changes in Equity
Share capital Share premium Share based payment reserve P&L reserve Capital redemption reserve Merger reserve Total equity
Balance at 19 March 2020 - - - - - -
Issue of share capital 400 14,222 - - - - 14,622
Share for share exchange 3,989 - - - 115 (4,104) -
Capital reduction (2,736) - - 2,736 - - -
Share based payments - - 529 - - - 529
Total comprehensive loss for the year - - - (114) - - (114)
As at 31 December 2020 1,653 14,222 529 2,622 115 (4,104) 15,037
Balance at 1 January 2021 1,653 14,222 529 2,622 115 (4,104) 15,037
Share based payments - - 430 - - - 430
Total comprehensive loss for the year - - - (391) - - (391)
As at 31 December 2021 1,653 14,222 959 2,231 115 (4,104) 15,076
The accompanying notes form part of the financial statements.
Notes to the Parent Company Financial Statements
Basis of Preparation
The Financial Statements are presented in pound sterling, rounded to the
nearest thousand, unless otherwise stated. They are prepared under the
historical cost basis, except that derivative financial instruments are stated
at their fair value, and in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework (FRS 101) and the Companies Act 2006.
As permitted by FRS 101, the Company has taken advantage of the disclosure
exemptions available under that standard in relation to share-based payments,
financial instruments, capital management, presentation of comparative
information in respect of certain assets, presentation of a cash flow
statement, standards not yet effective, impairment of assets and certain
related party transactions. Where required, equivalent disclosures are given
in the Consolidated Financial Statements.
As permitted by section 408(4) of the Companies Act 2006, a separate income
statement and statement of comprehensive income for the Company has not been
included in these Financial Statements. The principal accounting policies
adopted are described below. They have all been applied consistently to all
years presented.
Amounts receivable by the Company's auditor and its associates in respect of
services to the Company and its associates, other than the audit of the
Company's Financial Statements, have not been disclosed as the information is
required instead to be disclosed on a consolidated basis in the Consolidated
Financial Statements.
The following are key accounting policies for the Company:
- Basis of Preparation
- Going concern
- Trade receivables and payables
- Cash and cash equivalents
These policies of the company are consistent with those adopted by the Group
and disclosed in note 2 to the consolidated financial statements. The
following are additional accounting policies that relate to the Company.
Investments
Investments are stated at their cost less impairment losses.
Intercompany
Intercompany balances are intercompany loans, and comprise of amounts owed
to/owing from subsidiaries. IFRS 9 expected credit losses have been assessed
as immaterial in relation to these balances.
Any key judgements or estimates are consistent with those adopted by the
Group.
34. Investments
2021 2020
£'000 £'000
Investment in subsidiaries 4,414 4,414
35. Intercompany
2021 2020
Intercompany receivable balances £'000 £'000
Kooth Group Limited 6,708 6,734
Intercompany payable balances
Kooth Digital Health Limited (2,616) (2,891)
36. Cash and cash equivalents
2021 2020
£'000 £'000
Cash and cash equivalents 6,533 6,674
37. Related parties
Key management personnel are the executive members of the Board of Directors.
Remuneration applicable to the Company is disclosed below, with further
information disclosed in the Remuneration Committee report.
2021 2020
£'000 £'000
Salaries 430 157
Social security costs 57 21
Pension costs 8 3
Total remuneration 495 181
38. Trade Receivables
2021 2020
£'000 £'000
Prepayments and other receivables 50 38
VAT receivable - 76
50 114
39. Deferred tax assets
Tax losses
At 1 January 2020 - asset/(liability) -
Movement - (charge)/credit 15
At 31 December 2020 - asset/(liability) 15
At 1 January 2021 - asset/(liability) 15
Movement - (charge)/credit 37
At 31 December 2021 - asset/(liability) 52
40. Trade Payables
2021 2020
£'000 £'000
Trade payables 35 23
VAT payable 29 -
64 23
41. Equity
2021 2020
£'000 £'000
Ordinary A shares 1,653
1,653
Number of shares 2021 2020
Ordinary A shares 33,055,776 33,055,776
The share capital of Kooth plc consists of fully paid ordinary shares with a
nominal value of £0.05 per share.
The A ordinary shares have attached to them full voting, dividend and capital
distribution rights (including on winding up). They do not confer any right of
redemption. B ordinary shares have attached to them no voting, dividend or
capital distribution rights (including on winding up). They do not confer any
rights of redemption.
Upon incorporation of Kooth plc, the Company entered into a share for share
exchange agreement whereby 1,000,000 A ordinary and 367,928 B ordinary £3
shares were issued in the capital of Kooth plc.
The Company then undertook a reduction of capital whereby the total aggregate
nominal amount of share capital was reduced from £4,104,000 to £1,368,000 by
reducing the nominal value of each share from £3 to £1.
Subsequent to this, and prior to the listing on AIM, the Company undertook a
reorganisation whereby 1,000,000 A ordinary shares and 367,928 B ordinary
shares £1 shares were sub-divided into 20,000,000 A ordinary shares and
7,358,560 B ordinary shares of £0.05. These shares were reclassified into
25,055,776 ordinary A shares and 2,302,784 deferred shares of £0.05. The
deferred shares were subsequently bought back and cancelled by the Company.
On 2 September 2020, Kooth plc issued 8 million new ordinary A shares of 200p
each via an Initial Public Offering and admission to AIM. This brought the
total shares in issue to 33,055,776.
Upon Admission, the B shares converted into Ordinary A shares.
2021 2020
£'000 £'000
Share Premium 14,222 14,222
Share premium represents the funds received in exchange for shares over and
above the nominal value.
2021 2020
£'000 £'000
Share based payment reserve 959 529
The share based payment reserve represents amounts accruing for equity settled
share options granted plus the fair value of growth shares realised upon IPO.
2021 2020
£'000 £'000
Merger reserve (4,104) (4,104)
The merger reserve was created as a result of the share for share exchange
during the year ended 31 December 2020.
2021 2020
£'000 £'000
Capital redemption reserve 115 115
The capital redemption reserve was established as a result of the deferred
share buyback during the year ended 31 December 2020.
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