REG - Kooth PLC - Full Year Results
15/04/2025 07:02
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RNS Number : 9903E Kooth PLC 15 April 2025
15 April 2025
Kooth Plc
("Kooth", the "Company" or the "Group")
Full Year Results
2024 revenues up 100% to £66.7 million
Soluna has reached 75,000 youth and young adults in California by the end of
February 2025 across all 58 counties, with Q1 2025 daily run rate quadruple
that of 2024
Kooth (AIM: KOO), a global leader in youth digital mental health, announces
unaudited results for the twelve months ended 31 December 2024. All figures
relate to this period unless otherwise stated.
Strategic and post-period end highlights
· Soluna has demonstrated impact in California, reaching 75,000 youth
and young adults by the end of February 2025 across all 58 counties, with Q1
2025 daily run rate quadruple that of 2024
· Further expansion of US services with a new pilot contract in New
Jersey and launch of Medicaid pilot with Aetna Better Health in Illinois
· Continued investment in the US with further business development
opportunities in the pipeline
· Resilient performance in the UK, demonstrated by maintaining our
position as NHS England's largest single access provider for mental health
support for under 18s, including the renewal of contracts in Cornwall and the
Isle of Man, despite the persisting challenge of ongoing macro-economic
conditions
· Kate Newhouse will succeed Tim Barker as Chief Executive Officer
following the conclusion of the 2025 Annual General Meeting; Tim and Kate
serving as Co-CEOs until that point
Financial highlights
· Exceptional revenue growth with 2024 revenues of £66.7 million, a
100% increase from 2023 (£33.3 million), primarily driven by contracts with
the State of California and supplemented by Aetna Illinois
· £66.4 million Annual Recurring Revenue, 100% of total revenues in
2024
· Group net revenue retention increased to 100% (2023: 85%)
· 598% increase in adjusted EBITDA 1 (#_ftn1) to £15.8 million,
driven by the ramp up of Soluna usage and lower practitioner costs.
Significant investment and projected growth throughout 2025 will see EBITDA
margins return to more typical mid teen levels going forward
· £21.8 million net cash at year end, compared to £11.0 million in
2023, attributable to increased adjusted EBITDA and strong cash management
· Completion of the £1.5 million share buyback programme post year end
Outlook
· Continued growth within the US, notably in California with increasing
reach amongst the young population; ongoing business development activities to
secure further contract wins with State governments and Medicaid payers
· The UK environment remains complex given ongoing policy changes.
Kooth continues to showcase the evidence of its impact, and remains focused on
delivering high quality services
· Increased investment into Kooth's proprietary technologies, with
ongoing work to bring Soluna to the UK
· The strength of Kooth's strategy and service delivery model means
that the Company is well placed to meet the increasing international demand
for digital mental health services in 2025, building upon the foundations of
Kooth's successful entry into the US, strong recurring revenue and cash
position
Kate Newhouse, Co-Chief Executive of Kooth, commented:
As we reflect on 2024, we can be clear that Kooth has had an exceptional year.
This has been achieved with a particular focus on delivering, building,
launching and growing services for people across the UK and US, founded on our
key purpose of building mentally healthier populations, leaving no one behind.
Following the launch of Soluna in California we have made great strides,
reaching 75,000 young people across all 58 counties by the end of February
2025. In the UK, despite the persistent macro-economic headwinds, we have
successfully retained the majority of our contracts, grown several services
and demonstrated our credibility as a leader in clinical efficacy and safety.
Kooth delivered a set of clearly strong financials in 2024, with a 100%
increase in revenues year on year to £66.7 million, group net Annual
Recurring Revenues at 100% of the company's revenues, and a 598% increase in
adjusted EBITDA, attributable to the onboarding and ramp up of services in
California. As 2025 progresses, we expect that EBITDA margins will return to
more typical levels as we invest in and expand our practitioner network.
The strength of Kooth's strategy and service delivery model have created the
strong foundations which stand us in good stead to meet the increasing
international demand for digital mental health services. On a personal note, I
am honoured to have joined Tim Barker as Co-Chief Executive Officer, who I
have worked alongside as Chief Operating Officer for the past five years, and
I am excited to continue working with the team to deliver vital digital mental
health services to those who need it most throughout 2025.
Enquiries
Kooth plc investorrelations@kooth.com
Kate Newhouse, Co-Chief Executive
Tim Barker, Co-Chief Executive
Sanjay Jawa, CFO
Stifel, Nominated Advisor & Sole Broker +44 (0) 20 7710 7600
Ben Maddison, Nick Harland, Erik Anderson, Ben Good
FTI Consulting, Financial PR kooth@fticonsulting.com
Ben Atwell, Alex Shaw
About Kooth
Kooth (AIM:KOO) is a global leader in youth digital mental health. 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.
Kooth is a fully safeguarded and pre-moderated community with a library of
peer and professional created content, alongside access to experienced online
coaches and counsellors. There are no thresholds for support and no waiting
lists.
Kooth is the longest standing digital mental health provider to hold a UK-wide
accreditation from the British Association of Counselling and Psychotherapy
(BACP) and according to NHS England data for 2022/23 is now the largest single
access provider for mental health support for under 18s.
In 2021, Kooth began executing on its international expansion strategy, with
an initial focus on the US market. This focus is due to the growing
recognition of the importance of improving youth mental health in this key
global healthcare market, with 1-in-6 people aged 6-17 experiencing a mental
health disorder each year.
For more information, please visit www.koothplc.com (http://www.koothplc.com/)
.
Chair's statement
After a period of exponential growth and headline announcements, 2024 has been
a year in which delivery took centre stage at Kooth. In the US, the launch of
Soluna in California - with youth involvement at every step of the journey --
has marked the next evolution of our growth, and enabled us to reach 75,000
young people across all 58 counties in the State by the end of February 2025.
In the UK, our services reached over 200,000 people in 2024, with each and
every person able to access support when they needed it, in a way that suited
them.
This has been a huge endeavour, with everyone in the over 500 strong team
playing their part. The breadth of the work our team conducts is vast, from
delivering services to those who need it most, to ensuring those who use our
services are safe, as well as the behind-the-scenes work to ensure our staff
and partners can thrive in their roles - to every one of them, thank you.
This ramp-up of activity has been matched by an equivalent scale-up of Kooth's
clinical and quality governance processes, ensuring that our services remain
evidence-based, high-quality, safe, effective and aligned to relevant
regulatory frameworks.
As we enter the second year of our four-year contract in California, our
revenues grew in 2024 to £66.7 million, a 100% increase over 2023 revenues of
£33.3 million, and an increase in adjusted EBITDA from £2.3 million to
£15.8 million. 2024 was a unique year for us with the onboarding of the
California contract, and as we progress through 2025 we expect EBITDA to
return to more typical levels. In the US, our investment in the team has
enabled us to secure pilot contracts with the State of New Jersey, announced
in December 2024, and with Aetna Better Health, Kooth's first US
private-sector partnership. Looking ahead, we can see other opportunities in
the pipeline, both State-funded and via Medicaid and health plans.
In the UK, the new Government has stated it intends to address mental health
needs, though we have experienced an inevitable lag in the translation of
these intentions into concrete initiatives and funding. This, combined with
sustained pressure on public finances in general, has led to a further
challenging year in the UK. As a result, churn in the UK has been £2.0
million (2023: £2.3 million) though we have successfully retained existing
contracts for the longer-term with some services now contracted for five years
or more, and secured new opportunities by partnering with new types of
funders.
That said, the stability afforded by a new Government, alongside clear
recognition of the growing impact that poor mental health has not just on
individuals and their families, but on economic growth, is likely to drive
increased appetite for innovation. Our focus on sustaining our solid
foundations in 2024 ensures that we can be front-footed in working with our
partners across the sector to accelerate our reach and identify new
opportunities.
We were very fortunate to have Sherry B. Husa join the Board in 2024. Sherry
brings over 35 years' experience of the US healthcare sector, providing us
with crucial insights as we accelerate our growth in the US.
Having generated an operating profit of £9.2 million in 2024, we enter 2025
with a proven business model, £21.8 million in cash, no debt and an undrawn
$9.5 million working capital credit facility. Despite a complex environment,
we see significant potential ahead as we strengthen our foothold and build on
our experience in the UK and US.
We know that stakeholders in a company like Kooth also care about more than
just our financial projections. To that end, our 2024 annual report provides a
deeper insight into the impact our services have, the behind-the-scenes work
that keeps our users safe, and lays out our strong social purpose.
Peter Whiting
Non-Executive Chair
15 April 2025
Co-Chief Executive's Review
In 2020, I joined Kooth as Chief Operating Officer, working closely alongside
Tim Barker and at every step of our journey together he has been an exemplary
Chief Executive Officer. Five years down the line, I am honoured to join Tim
as Co-CEO until he moves on to his next challenge in June 2025 leaving behind
an incredible legacy of growth and a mentally healthier future across the
populations we serve.
This time spent working together has provided an opportunity to take stock of
what we've achieved and what the future might hold.
Over the past five years, we've grown a phenomenal team to achieve incredible
things
Kooth remains the largest digital mental health provider in the UK, with over
65% of the youth population having free access via the NHS and local
authorities.
We took Kooth public on the AIM segment of the London Stock Exchange in 2020,
raising capital to invest in the long-term growth of our people and technology
platform, as well as giving every employee at Kooth the opportunity to be a
shareholder in the business.
We expanded into the US, which now represents over 70% of our business, and
worked with young people to develop Soluna, Kooth's enhanced platform and
service. We've launched and grown a unique, world-first programme in
California, enabling universal access to support for all 13-25 year olds
across the state, working within and alongside healthcare, education systems
and communities to provide a joined up approach.
This rapid scaling has driven a five-fold growth in the business since our IPO
enabling us to build our team of healthcare professionals and practitioners,
moderators, developers and data scientists, content creators, safeguarding
specialists, and the hundreds of other staff members across the UK and US that
keep our services running safely and smoothly.
Underpinning these headlines are over 20 years of know-how, which have shaped
the building blocks of our services: our people and processes that keep our
users safe and staff well-supported; the technology that enables us to widen
access to care at scale and continuously monitor and improve the quality of
our services; and our commitment to research, evidence and clinical best
practice. Our experience goes beyond building effective digital mental health
support, extending to our users, communities, and system partners to have a
positive impact.
A backdrop of political uncertainty through 2024 offers a timely reminder of
the importance of showcasing the strong foundations that have enabled our
success. As we move into 2025, these foundations will come to the fore as we
shift from transformation to consolidation.
We are an international company, powered by technology, but with real-world
outcomes at the core of our mission.
At Kooth we're driven by our purpose, to build mentally healthier populations
to enable a more sustainable, resilient and productive future, leaving no one
behind. In 2024, and as we move into 2025, it is clear that this is becoming
ever more important. Too many people cannot access support for their mental
health when they need it, in a way that suits them, before things get worse
and hold them back from living more fulfilling and productive lives.
At Kooth, we provide high-quality, effective support that meets people where
they are; that can support them in the moment and connect them to further
help, if needed.
Mental health needs look different for everyone, and we are there all day,
every day, supporting people to develop the skills they need to feel better
and achieve their goals whether that's managing exam stress, handling
difficult relationships, getting up for the day or maintaining the balance
required to be their best at work. Importantly, we're there to support whether
an individual has a diagnosed mental health condition or not, because the
tools and strategies that support improved outcomes should be available to
everyone.
The evidence tells us that this approach works, equipping people to manage
psychological distress, in all its forms, reduces the need for further and
more costly interventions later down the line. In 2024, this understanding
began to permeate beyond the mental health sector, with increased recognition
of the inextricable link between poor mental health and risks to fiscal growth
and resilience. Psychological distress is now recognised as a key barrier to
cognitive skills development, educational attainment, workplace satisfaction
and engagement, and economic productivity.
At Kooth, we have been advocating for greater understanding of the 'ripple
effect' of poor mental health since inception. Our focus on this topic and
sharing our learning has dovetailed with an uptick in global acknowledgement
of the importance of population mental health.
With this in mind, as we reflect on 2024 and look to the future, it is our
solid foundations and legacy of innovation that will form the bedrock of
extending our reach going forward.
This means a continuous and relentless focus on the safety, effectiveness, and
accessibility of our services. It means reaching into communities otherwise
underserved by traditional models of care and ensuring that our users are
protected from harm, on and offline. We need to harness technology to drive
engagement, improve user experience, and more effectively connect users to the
high-quality support they need; and be robust in our approach to measuring
service outcomes, both in real-time and longitudinally.
We will continue to invest time and care into local partnerships and system
integration to ensure that we support and enhance the help offered across
local ecosystems, whether in schools, workplaces, healthcare or
community-based organisations.
We will also take seriously our responsibility to advocate on behalf of the
populations we serve, using our experience, data and insights to secure
mentally healthier populations, leaving no-one behind.
Last but not least, we will retain our pioneering spirit, being agile and
entrepreneurial in harnessing our know-how to reach into new populations that
need our support.
These foundations underpin our strategic priorities for 2025
In the US, our landmark service in California will continue to be a major
priority, reflecting the significant investment and ambition of the State in
addressing the youth mental health crisis. We have made great strides,
reaching 75,000 young people across all 58 counties by the end of February
2025 alongside the youth-informed evolution of our product. The outbreak of
wildfires across California in January 2025 brought a stark reminder of the
importance of the support we provide, as demand for coaching and care
navigation surged. Growing advocacy, awareness, usage, and impact are
critical, recognising the importance of demonstrable and sustainable success
in California to inform and secure further growth of Soluna across our
services in New Jersey, Illinois, the US, and beyond.
In the UK, whilst the environment remained complex as the general election and
funding pressure continued to put pressure on local decision-making, we were
able to draw on our evidence of impact to successfully retain the majority of
our contracts.
We have commenced work on migrating Soluna to the UK and secured new services
through collaborating with other partners, which will form a key strand of
focus in 2025 as we do more to extend our reach beyond our core services for
children and young people and NHS funding. Government plans to transform the
healthcare system and address broader social challenges offer a key
opportunity to build on our existing relationships and evidence base to
address these priorities across sectors, offering opportunities for growth to
mitigate risks associated with plans to reorganise the NHS. The UK's
increasingly robust regulatory environment for digital mental health
technologies and online services also provides us with an opportunity for
external assurance and scrutiny of our safety and efficacy. To this end, we
are grateful that Dame Sue Bailey OBE DBE sits on our Board. Her extensive
clinical, research, education and policy background helps ensure that the
Board can provide effective scrutiny and challenge in areas related to
safeguarding and clinical efficacy.
Outlook
Our successful entry into the US market, strong recurring revenue and cash
position give us a great platform as we enter 2025. We are confident that our
strong foundations, grounded in our strategy and service delivery model, as
well as the increasing demand for accessible, digital mental health services,
will enable us to continue our progress in the year ahead.
Kate Newhouse
Co-Chief Executive
15 April 2025
Chief Financial Officer's review
A record year
Kooth delivered a strong performance in the year supported by record increases
across revenue and adjusted EBITDA, a continuing strong gross margin as well
as significant investment in our platform and the business essential for
ensuring the continued safety and effectiveness of our services and the
wellbeing of our team.
Revenue
I am pleased to report that Group revenue has grown significantly over the
past year, doubling to £66.7 million (2023: £33.3 million), compared to a
66% increase from 2022. As previously reported, this exceptional growth has
primarily been driven by our contract with the State of California and has
been supplemented by our contract win with Aetna Illinois.
US revenue increased to £48.7 million (2023: £14.2 million) all of which was
recurring revenue (comprising income invoiced for services that are
repeatable, consumed and delivered on a monthly basis over the term of a
customer contract).
UK revenue decreased by 6% to £18.0 million (2023: £19.1 million). While
contract expansion upon renewal rose to 45% (2023: 41%) these gains were
offset by £2.0 million of churn primarily due to:
· Lack of funding to continue pilot contracts, mainly in Adult early
intervention
· Contract reductions following consolidations
· One competitive contract loss
Annual Recurring Revenue (ARR) of £66.4 million 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 key metric is used by
management to monitor the long-term revenue growth of the business, and in
2024 increased to 100% of total revenues (2023: 98%).
Group net revenue retention, which is a measure of the depth and longevity of
our client relationships, increased to 100% (2023: 85%), within the UK, there
was a decrease to 92% (2023: 98%) reflecting churn in both our adult and CYP
contracts. 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 increased by 101% to £52.0 million (2023: £25.9 million) with
the gross margin rising to 77.9% (2023: 77.6%). This reflects the
transformational nature of 2024, in which usage of Soluna has gradually ramped
up, giving lower practitioner costs offset by direct marketing to drive
engagement with service users. As usage continues to grow we have invested
significantly in marketing and engagement, whilst practitioner costs are
expected to increase accordingly.
Gross margin saw a benefit from California revenues that included a
contribution to platform development. These platform costs are capitalised in
the Statement of financial position and amortised within the Statement of
profit and loss and other comprehensive income.
Direct costs are both the costs of the practitioners directly involved in the
delivery of our services, a total of 268 at the year-end (2023: 304 heads)
with reductions reflecting UK churn and the commencement of promotion and
marketing costs in California in support of raising user awareness and
engagement, including hard to reach communities which were £3.9m.
The UK gross margin saw a slight increase, driven by a shift toward greater
usage of self-help tools in place of direct practitioner support.
Foreign currency impact
The US Dollar/GBP exchange rate was relatively stable during the year under
review during which the Group had approximately 73% of revenues and 47% of
expenses denominated in US Dollars. The Group's focus on management of foreign
currency risk resulted in a small foreign currency gain of £0.2 million
(2023: loss £0.2 million).
Operating profit
The Group's operating profit for the year was £9.2 million (2023: loss of
£2.3 million). This was driven by growth in the US business, predominantly
the full launch of our California service from 1 January 2024.
Administrative expenses
Excluding depreciation, amortisation and share based payments administrative
expenses grew by £12.6 million in the year, a 53.5% increase year on year,
which is below the growth in revenue across the same period. Whilst costs of
the UK business increased broadly in line with inflation, Group costs grew
closer in line with revenue and the majority of the increase related to the
first full year of costs following the build out of the US teams supporting
our California contract. Finally, we saw increased costs as we strengthened
our business development efforts in the US, as indicated at the time of our
equity fundraise in July 2023.
Adjusted EBITDA
Adjusted EBITDA grew by 598% to £15.8 million (2023: £2.3 million) in the
year, with increases in revenue and gross profit offset by our investment in
the US and higher administrative expenses as outlined above. 2024 was a unique
year for Kooth, with the onboarding of the California contract, and as we
progress through 2025 we expect that EBITDA growth will return to more typical
levels
Adjusted results are prepared to provide a more comparable indication of the
Group's core business performance by removing the impact of non-trading items
that are reported separately.
Adjusted results exclude items as set out in the consolidated statement of
profit and loss and below. In addition, the Group also measures and presents
performance in relation to various other non-GAAP measures, such as 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.
£'m 2024 2023
Operating Profit/(Loss) 9.2 (2.3)
Add Back:
Depreciation and Amortisation 5.4 3.8
Share based payment expense 1.2 0.7
Adjusted EBITDA 15.8 2.3
Share-based payments are adjusted to reflect the underlying performance of the
group as the fair value is impacted by market volatility that does not
correlate directly to trading performance. The total charge for share-based
payments in the year was £1.2 million (2023: £0.7 million). The additional
cost reflects the increase in staff awards across the business in 2023 and
2024 and a credit in 2023 following a reassessment of those grants subject to
performance criteria.
Taxation
There has been a corporation tax charge of £1.8 million (2023: £1.8 million
credit) recognised in the year mainly arising from taxable profits generated
in the US. For the first time this year there is a small corporation tax
charge in the UK due to a cap on accumulated losses available to be utilised
against taxable profits.
The tax credit for the year ended 31 December 2023 related to Research and
Development expenditure credits which had been further enhanced due to the
carrying forward of prior Research and Development claims at a higher
effective tax rate rather than taking this as a cash credit resulting in a
prior year adjustment. The Research and Development expenditure credits in
2024 were more than offset by the taxable profits generated within the year.
Cash
The Group has had good cash management in the year with net cash generated
from operating activities of £17.1 million (2023: £1.9 million). Free cash
flow, after taking account of capital expenditure was a net inflow of £10.2
million in 2024 (2023: £6.8 million outflow).
Overall, the Group had net cash inflow of £10.8 million driven by increased
EBITDA and efficient cash management. The net cash at year end was £21.8
million (2023: £11.0 million). Post period end approximately £1.5 million of
this was utilised for a share buyback.
In early 2024 we entered into a working capital credit facility with Citibank
of $9.5 million that remains undrawn at this time. The Group remains debt
free.
Capitalised development costs
The Group continued its investment in product and platform development in 2024
to support the full launch of our service in California, further expansion in
the US as well as development of the platform in the UK. 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 IAS 38, Intangible Assets, are capitalised in
the statement of financial position and amortised over three years. During the
year the Group capitalised £6.9 million in respect of software development
(2023: £8.7 million) with an amortisation charge of £5.2 million (2023:
£3.6 million), in addition there was an impairment charge of £0.3 million in
relation to the previous US Klassic platform, generated upon the end of the
Pennsylvania contract.
Investment in product and development continues to be significant to the Group
and we anticipate capitalising software costs at a slightly lower rate over
the next year as we continue to invest in the Soluna platform in both the US
and UK but see an increase in ongoing maintenance.
Capital expenditure
Software and product development costs aside, the Group's ongoing capital
expenditure requirements remain modest at £0.1 million (2023: £0.3 million).
Capital and reserves
The strength of the Group's balance sheet with net assets of £29.8 million
(2023: £20.8 million), high levels of recurring revenue and strong cash
generation from operating activities provide the Group with financial strength
with which to execute on its investment strategy which continues to focus on
US expansion and platform investment essential for ensuring the continued
safety and effectiveness of our services, and the wellbeing of our teams.
Dividend policy
As outlined in previous reports, 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
2024 (2023: Nil) but may do so in future years.
Sanjay Jawa
Chief Financial Officer
15 April 2025
Consolidated statement of profit and loss and other comprehensive income
For the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Revenue 4 66,744 33,337
Cost of sales 5 (14,757) (7,480)
Gross profit 51,987 25,857
Administrative expenses 5 (42,831) (28,119)
Operating profit/(loss) 9,156 (2,262)
Analysed as:
Adjusted EBITDA 15,754 2,257
Depreciation & amortisation 11, 12, 13 (5,376) (3,775)
Share based payment expense 6 (1,222) (744)
Operating profit/(loss) 9,156 (2,262)
Interest income 7 702 298
Profit/(loss) before tax 9,858 (1,964)
Tax 8 (1,824) 1,795
Profit/(loss) after tax 8,034 (169)
Other comprehensive income/(expense)
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences 244 (161)
Total comprehensive income/(loss) for the year 8,278 (330)
Profit per share - basic (£) 9 0.22 (0.00)
Profit per share - diluted (£) 9 0.21 (0.00)
Consolidated statement of financial position
As at 31 December 2024
Note 31 December 2024 31 December 2023
£'000 £'000
Assets
Non-current assets
Goodwill 10 511 511
Development costs 11 10,124 8,750
Right of use asset 12 20 42
Property, plant and equipment 13 266 304
Deferred tax 14 1,244 2,649
Total non-current assets 12,165 12,256
Current assets
Trade and other receivables 15 8,733 7,174
Contract assets 16 292 251
Cash and cash equivalents 17 21,841 11,004
Total current assets 30,866 18,429
Total assets 43,031 30,685
Liabilities
Current liabilities
Trade payables 18 (2,683) (1,555)
Contract liabilities 19 (3,781) (5,156)
Lease liability 12 (23) (44)
Accruals and other creditors 18 (5,264) (2,521)
Tax liabilities 18 (1,526) (651)
Total current liabilities (13,277) (9,927)
Net current assets 17,589 8,502
Net assets 29,754 20,758
Equity
Share capital 20 1,834 1,825
Treasury shares 20 (17) -
Share premium account 20 23,444 23,444
P&L reserve 20 5,955 (2,503)
Share-based payment reserve 20 2,444 2,142
Capital redemption reserve 20 115 115
Merger reserve 20 (4,104) (4,104)
Translation reserve 20 83 (161)
Total equity 29,754 20,758
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share capital Treasury shares Share premium Share based payment reserve P&L reserve Capital redemption reserve Merger reserve Translation reserve Total Equity
Balance at 1 January 2023 1,653 - 14,229 1,221 (2,595) 115 (4,104) - 10,519
Loss for the year - - - - (169) - - - (169)
Other comprehensive income - - - - - - - (161) (161)
Total comprehensive income 1,653 - 14,229 1,221 (2,764) 115 (4,104) (161) 10,189
Transactions with owners:
Share options exercised 7 - - (261) 261 - - - 7
Share based payment charge - - - 766 - - - - 766
Shares issued 165 - 9,215 - - - - - 9,380
Deferred tax - - - 416 - - - - 416
As at 31 December 2023 1,825 - 23,444 2,142 (2,503) 115 (4,104) (161) 20,758
Balance at 1 January 2024 1,825 - 23,444 2,142 (2,503) 115 (4,104) (161) 20,758
Profit for the year - - - - 8,034 - - - 8,034
Other comprehensive income - - - - - - - 244 244
Total comprehensive income 1,825 - 23,444 2,142 5,531 115 (4,104) 83 29,036
Transactions with owners:
Share options exercised 9 - - (424) 424 - - - 9
Share based payment charge - - - 1,142 - - - - 1,142
Treasury shares purchased - (17) - - - - - - (17)
Deferred tax - - - (416) - - - - (416)
As at 31 December 2024 1,834 (17) 23,444 2,444 5,955 115 (4,104) 83 29,754
The accompanying notes form part of the financial statements.
Consolidated cash flow statement
For the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Cash flows from operating activities
Profit/(loss) for the year 8,034 (169)
Adjustments:
Depreciation, amortisation and impairment 11, 12, 13 5,692 3,775
Income tax (paid)/received (624) 569
Share based payment expense 6 1,222 744
Income tax recognised 8 1,824 (1,795)
Interest income 7 (702) (298)
15,446 2,826
Movements in working capital
Increase in trade and other receivables 15 (1,600) (4,158)
Increase in trade and other payables 18, 19 3,241 3,199
Net cashflow from operating activity 17,087 1,867
Cash flows from investing activities
Purchase of property, plant and equipment 13 (120) (291)
Additions to intangible assets 11 (6,887) (8,713)
Interest income 7 702 298
Net cash used in investing activities (6,305) (8,706)
Cash flows from financing activities
Proceeds from issue of share capital 20 - 9,923
Costs incurred from the issue of share capital 20 - (536)
Net cash from financing activities - 9,387
Net increase in cash and cash equivalents 10,782 2,548
Exchange adjustments 55 (36)
Cash and cash equivalents at the beginning of the year 17 11,004 8,492
Cash and cash equivalents at the end of the year 17 21,841 11,004
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 preliminary results for the year ended 31 December 2024 are an abridged
statement of the full Annual Report which was approved by the Board of
Directors on 14 April 2025. The consolidated financial statements in the full
Annual Report are prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006. The
auditor's report on those consolidated financial statements were unqualified,
did not draw attention to any matters by way of emphasis without qualifying
their report and did not contain statements under section 498(2) or 498(3) of
the Companies Act 2006. The preliminary results do not comprise statutory
accounts within the meaning of section 434(3) of the Companies Act 2006. The
Annual Report for the year ended 31 December 2024 will be delivered to the
Registrar of Companies following the Company's Annual General Meeting. The
financial information included in this preliminary announcement does not
itself contain sufficient information to comply with UK-adopted
International Accounting Standards. The Annual Report and audited financial
statements for the year ended 31 December 2024 will be made available on the
Company's website in April 2025.
Measurement convention
The financial statements are prepared on the historical cost basis. 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 9 to 29. In addition, note 22 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 2024 financial year the Group generated a profit of £8.0 million
(2023: £0.2 million loss). Adjusted EBITDA was £15.8 million (2023: £2.3
million). The Group is in a net asset position of £29.8 million (2023: £20.8
million).
Management has performed a going concern assessment for a period of 12 months
from signing, which indicates that the Group will have sufficient funds to
trade and settle its liabilities as they fall due. This assessment considers 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 2024 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.
Management deemed the combination of factors occurring as set out in the
default model to be implausible.
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.
2.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries as at 31 December 2024, with the comparatives
presented for the previous 12 months being the Group's combined activities for
the 12 months ended 31 December 2023.
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. 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 (CODM), who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the
Executive Directors that make strategic decisions. Accordingly, the CODM
determines the Group currently operates under two reporting segments being the
UK and US. The measure of performance of those segments that is reported to
the CODM is revenue and EBITDA, as shown below in note 4.
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 recognition
The Group applies IFRS 15 "Revenue from Contracts with Customers". 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 as/when performance obligation(s) are satisfied.
Provision of online counselling contracts
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 the population covered and an
expected number of hours of counselling provided.
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, which reflects the
continuous transfer of the service to the customer throughout the contracted
service period.
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.
Platform build and behavioural support services contracts
Revenue from the California contract arises from the provision of a digital
mental health platform alongside supporting behavioural healthcare services,
promotional campaigns, reporting and analysis and technical support. The
contracts have fixed and variable pricing elements which depend on platform
utilisation, with a service period of more than one year. Contracts with
customers take the form of signed agreements from customers.
The contracts include an enforceable right by either party to terminate the
contract without penalty with a fixed notice period. The contract term is
therefore limited up to the end of the notice period. The transaction price is
determined as all consideration due within the contract period. The contract
term is modified each month if the termination clause is not enacted with the
modification being treated on a prospective basis as the incremental
transaction price does not reflect the standalone selling price for the
additional distinct services.
Under IFRS 15, five distinct performance obligations have been identified for
these contracts:
· Providing access to a digital mental health platform.
· Customer contact services to resolve technical issues.
· Collection and analysis of data and reporting.
· Providing on-platform behavioural healthcare services.
· Conducting promotional campaigns to spread awareness.
Revenue from the first three performance obligations is recognised evenly over
time using the output method. This is to reflect the continuous consumption of
the service by the customer over the contracted service period. For the last
two performance obligations revenue is recognised using the input method. This
is to reflect how much of the service the customer has used by comparing the
actual costs incurred to the total projected costs that are expected to be
incurred in delivering the service. These costs include directly attributable
labour and external marketing and promotion costs.
The allocation of the transaction price between the five performance
obligations included in the contract is based on an expected cost plus margin
approach as the standalone selling price is not observable.
The transaction price is determined at contract inception as being the most
likely amount of consideration in which the Group is entitled to, including
any variable consideration. This has been determined through an expected value
calculation modelling various utilisation rate projections against their
likely achievement. The variable consideration has been appropriately
constrained as the Group has limited historical experience to ensure it can be
virtually certain there will be no material reversal of revenue.
The Group typically receives cash from customers 38 days after invoicing a
customer.
Revenue to come from contracts entered into with performance obligations not
fulfilled or only partially fulfilled amounted to £27.1m as at 31 December
2024 (2023: £35.5m), all of which is expected to be recognised within one
year.
Contract assets and liabilities
The Group recognises contract assets in the form of accrued revenue when the
value of satisfied or part satisfied performance obligations is in excess of
the payment due to the Group, and contract liabilities in the form of deferred
revenue when the amount of unconditional consideration is in excess of the
value of satisfied or part satisfied performance obligations. Once a right to
receive consideration is unconditional, that amount is presented as a trade
receivable.
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 statement of
profit and loss and other comprehensive income.
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:
Computer and office
equipment 33.33%
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.
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 within administrative expenses.
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 administrative
expenses within the statement of profit and loss and other comprehensive
income.
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 three years.
Expenditure on research activities as defined in IFRS is recognised in the
statement of profit and loss and other comprehensive income as an expense.
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 applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from the initial recognition of the
receivable. To measure expected credit losses, trade receivables are analysed
based on their credit risk characteristics to determine a suitable historic
loss rate. The historical loss rates are adjusted to reflect current and
forward looking information on macroeconomic factors that the Group considers
could affect the ability of its customers to settle the receivables.
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 three months
or less from the date of acquisition, 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 statement of profit
and loss and other comprehensive income 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 statement of profit and loss and other comprehensive
income 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.
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.
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. No significant estimates have been identified.
Judgements
The areas of judgement which have the most significant impact on the amounts
recognised in the financial statements are as follows:
Revenue recognition
Judgements have been taken in the application of IFRS 15 "Revenue from
Contracts with Customer". The determination of the transaction price included
judgement as to how much variable consideration was expected to be received
across the contract and how much those considerations should be constrained
based on projected contract performance. There was judgement taken in
allocating the transaction price to the identified performance obligations
based on the relative stand-alone selling price (SSP) of each distinct service
or item within the contract. An observable SSP was not available, therefore
judgement was used to estimate the SSP considering all reasonably available
information using an expected cost-plus margin approach.
Deferred tax
In assessing the requirement to recognise a deferred tax asset, management
carried out a forecasting exercise in order to assess whether the Group and
Company will have sufficient future taxable profits on which the deferred tax
asset can be utilised. This forecast required management's judgement as to the
future performance of the Group.
Capitalisation of development costs
The Group capitalises costs associated with the development of the Kooth
platforms. These costs are assessed against IAS 38 Intangible Assets to ensure
they meet the criteria for capitalisation. 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 11.
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 and whether that time
meets the IAS 38 criteria for capitalisation. Capitalised development
expenditure is reviewed at the end of each accounting period for indicators of
impairment.
4. Revenue and segmental analysis
In accordance with IFRS 8, the Group requires consideration of the Chief
Operating Decision Maker ("CODM") within the Group. In line with the Group's
internal reporting framework and management structure, the key strategic and
operating decisions are made by the Executive Directors, who review internal
monthly management reports, budgets and forecast information as part of this.
Accordingly, the Executive Directors are deemed to be the CODM.
Accordingly, the CODM determines the Group currently operates under two
reporting segments being the UK and US. The measure of performance of those
segments that is reported to the CODM is revenue and adjusted EBITDA, as shown
below. In the prior year the Group operated under one segment only. The roll
out of the California contract across 2024 and development of further US
contracts has led the Group to diversify its global operations across two
regional leadership teams who monitor their cashflows separately.
Segment assets and segment liabilities are reviewed by the CODM in a
consolidated statement of financial position. Accordingly, this information is
replicated in the Group consolidated statement of financial position. As no
measure of assets or liabilities for individual segments is reviewed regularly
by the CODM, no disclosure of total assets or liabilities has been made, in
accordance with the amendment to paragraph 23 of IFRS 8.
2024 2024 2024 2023 2023 2023
£'000 £'000 £'000 £'000 £'000 £'000
US UK Total US UK Total
Provision of online counselling contracts 101 18,047 18,148 1,466 19,143 20,609
Platform build and behavioural support services contracts 48,596 - 48,596 12,728 - 12,728
Total revenue 48,697 18,047 66,744 14,194 19,143 33,337
Adjusted EBITDA 2,466 13,288 15,754 153 2,104 2,257
Non current assets 175 10,747 10,922 231 9,376 9,607
The geographical revenue information above is based on the location of the
customer.
The group had one customer (2023: one) that accounted for more than 10% of
total revenue in 2024. This customer accounted for 73% of group revenue (2023:
38%)
Non-current assets for this purpose consist of goodwill, intangible assets,
right of use assets and property, plant and equipment and excludes deferred
tax assets.
5. Operating profit
2024 2023
£'000 £'000
Labour costs 10,550 7,354
Direct marketing 3,935 -
Share based payment expense 261 100
Travel and subsistence 11 26
Total cost of sales 14,757 7,480
Employee costs 27,285 15,855
Rent and rates 666 492
IT hosting and software 2,505 1,450
Professional fees 4,201 3,948
Marketing 1,325 1,650
Depreciation & amortisation 5,376 3,775
Share based payment expense 961 644
Other costs 512 305
Total administrative expenses 42,831 28,119
Total cost of sales and administrative expenses 57,588 35,599
Cost of sales represent the costs of our service user facing employees
including external contractors and direct service user marketing expenditure.
6. Employee remuneration
2024 2023
£'000 £'000
Salaries 33,748 20,669
Pensions 773 529
Social security costs 3,036 2,325
Other staff benefits 1,452 479
Share based payments 1,222 744
40,231 24,746
Employee remuneration is presented in the financial statements in the
following locations:
2024 2023
£'000 £'000
Cost of sales 10,606 6,837
Administrative expenses 26,213 14,988
Statement of financial position 3,412 2,921
40,231 24,746
The employee remuneration present in the statement of financial position are
the capitalised development costs in accordance with IAS 38.
Employee numbers 2024 2023
Direct 251 259
Indirect 294 183
Developers 48 36
593 478
Employee numbers disclosed represent the average number of employees,
including directors, for the year.
The Directors' remuneration and share options are detailed within the Report
of the Remuneration Committee on pages 105 to 107. This includes details of
the total Directors' remuneration, including bonuses and pension contributions
and remuneration of the highest paid Director. No directors exercised share
options in the year.
The Executive Directors of the Company control 4.8% of the voting shares of
the Company (2023: 4.7%).
Share based payment 2024 2023
£'000 £'000
Long term incentive awards 1,222 744
Long term incentive awards
Long term incentive awards have been issued to all staff. Performance
conditions are attached to the incentive awards of Executives, with 50% linked
to adjusted EBITDA growth (ARR growth for grants prior to 2023) and 50% linked
to comparative total shareholder return (TSR). Vesting conditions require that
all staff remain employed by the business for three years. The shares vest
over a three year period with a maximum term of 10 years.
Number of Options Weighted average exercise price Number of Options Weighted average exercise price
2024 2024 2023 2023
Outstanding at the beginning of the year 2,339,017 £0.05 1,873,356 £0.05
Granted 602,218 £0.05 882,989 £0.05
Forfeited (456,517) £0.05 (311,520) £0.05
Exercised (210,759) £0.05 (105,808) £0.05
Outstanding at the end of the year 2,273,959 £0.05 2,339,017 £0.05
The share options outstanding at the end of the year have a weighted average
remaining contractual life of 8.4 years (2023: 8.6 years).
Fair value of options granted:
The fair value of the awards has been calculated using the Black Scholes
option pricing model and using a Stochastic simulation model for options with
TSR performance conditions. The following assumptions were used on options
granted in the year:
Options granted on 31/01/2024 16/05/2024 02/09/2024 12/09/2024 12/12/2024
Share price at date of grant 284.0p 302.0p 320.0p 317.0p 168.0p
Exercise price 5.0p 5.0p 5.0p 5.0p 5.0p
Vesting period (years) 2.6 2.7 3 2.7 2.6
Expected volatility 60.0% 60.0% 60.0% 60.0% 60.0%
Option life (years) 10 10 10 10 10
Expected life (years) 10 10 10 10 10
Risk-free rate 1.0% 1.0% 1.0% 1.0% 1.0%
Expected dividends expressed as a dividend yield 0.00% 0.00% 0.00% 0.00% 0.00%
Fair value of options granted 230.2p 245.1p 315.2p 257.5p 134.6p
The expected volatility is based on the historical volatility of the Company's
share price. An assessment of the likelihood of market conditions being
achieved is made at the time that the options are granted.
7. Interest
2024 2023
£'000 £'000
Interest income on cash deposits 702 298
8. Taxation
2024 2023
£'000 £'000
Current tax
UK corporation tax 49 -
Foreign tax 764 336
Adjustments in respect of prior years 22 451
835 787
Deferred tax
Current year 1,019 (1,756)
Adjustments in respect of prior years (30) (826)
989 (2,582)
Tax charge/(credit) 1,824 (1,795)
2024 2024 2023 2023
£'000 % £'000 %
Profit/(loss) before tax for the year 9,858 (1,964)
Tax charge/(credit) at standard rate of 25% (2023: 23.5%) 2,465 25.0 (462) 23.5
Effects of:
Permanent items / additional relief under R&D scheme (547) (5.5) (782) 39.8
Difference between UK CT & DT rates (26) (0.3) (160) 8.2
Income not taxable for tax purposes (40) (0.4) - 0.0
Prior year adjustments (8) (0.1) (375) 19.1
Other differences (20) (0.2) (16) 0.8
Tax charge/(credit) for the year 1,824 18.5 (1,795) 91.4
9. Earnings per share
2024 2023
£'000 £'000
Earnings used in calculation of earnings per share:
On total profits attributable to equity holders of the parent 8,034 (169)
2024 2023
Weighted average no. of shares (Basic) 36,574,695 34,768,325
Weighted average no. of shares (Diluted) 38,995,084 36,874,511
Shares in issue
Ordinary shares in issue 36,677,766 36,480,873
Treasury shares acquired (9,250) -
Loss per share on total losses attributable to equity holders of the parent
Basic, £ 0.22 (0.00)
Diluted, £ 0.21 (0.00)
10. Goodwill
2024 2023
£'000 £'000
Goodwill as at 1 January and 31 December 511 511
Management has established there are two CGUs in the group being the UK and US
operations which aligns to the group's reporting segments. Goodwill is
allocated across the two CGUs .
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%
Forecasts are based on past experience and take into account current and
future market conditions and opportunities. Using alternative discount
(increase to 10%) and growth rates (decrease to nil) 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. The forecasts extended for a period of 12 months from the date of signing.
There were no impairments in the years ended 31 December 2024 and 31 December
2023.
11. Development costs
2024 2023
£'000 £'000
Cost
Balance as at 1 January 19,028 10,315
Additions 6,887 8,713
Balance as at 31 December 25,915 19,028
Amortisation
Balance as at 1 January (10,278) (6,634)
Amortisation (5,197) (3,644)
Impairment (316) -
Balance as at 31 December (15,791) (10,278)
Carrying amount 31 December 10,124 8,750
The US Soluna platform has a carrying value of £8.2m and a remaining
amortisation period of between 1 and 3 years. The UK platform has a carrying
value of £1.9m and a remaining amortisation period of between 1 and 3 years.
The US Klassic platform was fully impaired in 2024 leading to a charge within
administrative expenses of £0.3m.
12. Leases
2024 2023
£'000 £'000
Right of use asset
As at 1 January 42 68
Depreciation (22) (22)
Currency revaluation - (4)
As at 31 December 20 42
Lease liability
As at 1 January 44 68
Interest charge 4 5
Cash payment (25) (25)
Currency revaluation - (4)
As at 31 December 23 44
13. Property, plant and equipment
2024 2023
£'000 £'000
Cost
Balance as at 1 January 842 551
Additions 120 291
Disposals (462) -
Balance as at 31 December 500 842
Depreciation
Balance as at 1 January (538) (429)
Depreciation (158) (109)
Disposals 462 -
Balance as at 31 December (234) (538)
Carrying amount 31 December 266 304
Property, plant and equipment refers to computer and office equipment. During
the year the Group disposed of equipment that had nil book value.
14. Deferred tax assets and liabilities
Fixed asset temporary differences Other temporary differences Tax losses Total
At 1 January 2023 - asset / (liability) (577) 225 4 (348)
Movement - (charge) / credit (643) 503 2,721 2,581
Amounts recognised in equity - 416 - 416
At 1 January 2024 - asset / (liability) (1,220) 1,144 2,725 2,649
Movement - (charge) / credit (62) 344 (1,271) (989)
Amounts recognised in equity - (416) - (416)
At 31 December 2024 - asset / (liability) (1,282) 1,072 1,454 1,244
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.
15. Trade and other receivables
2024 2023
£'000 £'000
Trade receivables 7,409 5,801
Prepayments 1,289 1,084
Other receivables 35 289
8,733 7,174
All amounts shown above are short term. The net carrying value of trade
receivables is considered a reasonable approximation of fair value.
16. Contract assets
2024 2023
£'000 £'000
Accrued income 292 251
17. Cash and cash equivalents
2024 2023
£'000 £'000
Cash and cash equivalents 21,841 11,004
18. Trade and other payables
2024 2023
£'000 £'000
Trade payables 2,683 1,555
Accruals and other creditors 5,264 2,521
Tax liabilities 1,526 651
9,473 4,727
The Group recognises a provision for an obligation when there is a probable
outflow of resources and an amount can be reliably estimated. This includes
legal disputes the estimated costs of which are provided for in other
creditors. Disclosure of the exact details of these claims could prejudice the
financial position of the Group and accordingly further information is not
disclosed in this report.
19. Contract liabilities
2024 2023
£'000 £'000
Contract liabilities - current 3,781 5,156
Revenue recognised in the reporting period that was included in the contract
liability balance at the beginning of the year totalled £5.2m (2023: £2.5m).
The following table shows the movement in contract liabilities:
2024 2023
£'000 £'000
Contract liabilities recognised at start of the year 5,156 2,583
Amounts invoiced in prior year recognised as revenue in the current year (5,156) (2,525)
Amounts invoiced in the current year which will be recognised as revenue in 3,781 5,098
the later years
Balance at the end of the year 3,781 5,156
20. Equity
2024 2023
£'000 £'000
Ordinary A shares 1,834 1,825
Number of Shares 2024 2023
Ordinary A shares 36,677,766 36,480,873
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.
The following share transactions have taken place during the year ended 31
December 2024:
2024 2023
Number Number
At the start of the year 36,480,873 33,055,776
Share placement - 3,305,577
Exercise of share options 196,893 119,520
At the end of the year 36,677,766 36,480,873
Share capital increased from the prior year following the exercise of staff
share options.
2024 2023
£'000 £'000
Treasury shares (17) -
During the reporting period the company purchased 9,250 ordinary shares to
hold in treasury.
2024 2023
£'000 £'000
Share Premium 23,444 23,444
Share premium represents the funds received in exchange for shares over and
above the nominal value.
2024 2023
£'000 £'000
Share based payment reserve 2,444 2,142
The share-based payment reserve represents amounts accrued for equity settled
share options granted.
2024 2023
£'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.
2024 2023
£'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.
2024 2023
£'000 £'000
Translation reserve (83) 161
The translation reserve represents differences on translation of balances in
Kooth USA LLC which has a functional currency of USD.
21. Auditor's remuneration
2024 2023
£'000 £'000
Fees payable to the auditor for the audit of the Company and Consolidated 145 130
financial statements
Fees payable to the auditor and its associates for other services:
Other audit related services 6 5
22. Financial assets and liabilities
2024 2023
£'000 £'000
Financial assets
Trade receivables 7,409 5,801
Cash and cash equivalents 21,841 11,004
Financial liabilities
Trade and other payables 7,970 4,120
The carrying amount of trade receivables are denominated in the following
currencies:
2024 2023
£'000 £'000
GBP 2,638 931
USD 4,771 4,870
Total 7,409 5,801
The carrying amount of cash and cash equivalents are denominated in the
following currencies:
2024 2023
£'000 £'000
GBP 8,696 6,463
USD 12,997 4,508
EUR 148 33
Total 21,841 11,004
The carrying amount of trade and other payables are denominated in the
following currencies:
2024 2023
£'000 £'000
GBP 3,578 1,579
USD 4,392 2,541
Total 7,970 4,120
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.
The Group's principal financial liabilities comprise trade and other payables.
The Group has an undrawn debt facility as at 31 December 2024 (2023: £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
only undrawn debt facilities in place at the year ended 31 December 2024
(2023: £nil) that would cause interest rate 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 State
governments. 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 2024 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.
Foreign currency risk
The Group is exposed to the US Dollar through the US subsidiary, Kooth USA
LLC, which raises its sales invoices to customers in US Dollars and incurs
costs in US Dollars.
With the Group reporting in Sterling, any change to the GBP/USD exchange rate
could increase the Group's foreign currency risk. The Group deems the UK and
US to be stable economies, thereby significantly reducing foreign currency
risk.
If the exchange rate between sterling and the US dollar had been 10%
higher/lower at the reporting date, the effect on profit would have been
approximately (£1,096,000)/£1,340,000 respectively (2023:
(£635,000)/£780,000). If the exchange rate between sterling and euro had
been 10% higher/lower at the reporting date the effect on profit would have
been approximately (£13,000)/£16,000 respectively (2023: (£3,000)/£4,000).
23. Related party transactions
Note 25 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.
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.
2024 2023
£'000 £'000
Salaries and bonuses 1,920 1,919
Pension costs 29 25
Share based payment charges 249 227
2,198 2,171
The following table provides the total amount of transactions that have been
entered into with related parties for the relevant financial year.
2024 2023
£'000 £'000
Monitoring fees - ScaleUp Capital Limited 65 58
24. 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 only undrawn debt facilities in place as at 31 December 2024
(2023: £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:
2024 2023
£'000 £'000
Total equity 29,754 20,758
Cash and cash equivalents 21,841 11,004
Capital 51,595 31,762
Total equity 29,754 20,758
Lease liability (23) (44)
Financing 29,731 20,714
25. 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 services to children, young people and adults in the UK 5 Merchant Square, London, England, W2 1AY
Kooth USA LLC US 100% Provision of online services to children, young people in the US 167 North Green Street, Chicago, IL, 60607, USA
26. 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.
27. Ultimate controlling party
No shareholder owns a majority of shares. The directors do not consider that
there is one ultimate controlling party.
28. Events after the reporting date
In January and February 2025, the Group purchased a further 881,468 ordinary
shares to hold in treasury. This completed the share purchase programme
announced in December 2024 totalling £1.5 million.
29. Capital commitments
The Group's capital commitments at 31 December 2024 are £nil (FY23: £nil).
1 (#_ftnref1) Earnings before interest, tax, depreciation and amortisation,
adjusted for share-based payments and exceptional costs
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