REG - Kooth PLC - Half Year Results
27/09/2022 07:16
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RNS Number : 7190A Kooth PLC 27 September 2022
27 September 2022
Kooth Plc
("Kooth" or the "Company" or the "Group")
Half year results
Strategic momentum and demand; underlined by revenue growth of 13%
Continued expansion of Kooth Adult with 63% ARR growth
First major contract win in the US
Kooth (AIM: KOO), the UK's leading digital mental health platform, announces
unaudited half year results for the six months ended 30 June 2022. All
figures relate to this period unless otherwise stated.
Strategic Highlights
· Number one provider of mental health access for children and
young people (CYP) to
NHS England
· Kooth Adult contract wins increase access to 7.2 million people
(2021: 3.0 million)
· Kooth Work momentum with new contracts, focusing on frontline and
key workers
· Ongoing investment in business development, platform investment
and US expansion
Financial Highlights
· Revenues up 13% to £9.0m (2021: £8.0m)
· Annual Recurring Revenue (ARR) up 11% to £18.5m (2021: £16.6m)
· Strong gross margin of 68.4% (2021: 69.4%)
· Adjusted EBITDA of £0.5m (2021: £1.1m) reflecting US setup and
business development investment
· Recurring Revenue 95% (2021: 94%)
· Net Revenue Retention 107% (2021: 116%)
· Robust balance sheet; net cash of £8.3m supports investment for
long-term growth
Post-period end Highlights
· Significant, strategic pilot contract (expected to be formalised in
the coming days) awarded by the State of Pennsylvania, USA for $3 million,
supported by new, in-market hires including counsellors, technology
specialists and business development personnel
Financial headlines
Six months ended 30 June 2022 Six months ended 30 June 2021 Change
£'000 £'000
Total revenue 9,022 7,964 +13.3%
Recurring revenue 18,483 16,617 +11.2%
Gross profit 6,170 5,527 +11.6%
Gross margin 68.4% 69.4% -1.0ppt
Adjusted EBITDA 539 1,130 -52.3%
Profit/(Loss) after tax for the period (342) 38 -1,000%
Cash generation 1,231 976 +26.1%
Cash position 8,310 8,799 -5.6%
Earnings per share (diluted - £) (0.01) 0.00
Tim Barker, Chief Executive of Kooth said:
"Kooth has strong momentum for its mission to make effective, personalised
mental health care accessible to all. Our platform is now freely available to
more than 15 million people in the UK providing early intervention support for
adults and making us the largest single access provider for mental health
support for under 18s. This is a testament to the reach of our partnership
with the NHS. In the US, post period end, we have won our first major
contract, a significant milestone within a year of establishing Kooth North
America, as well as a growing pipeline of opportunities with State Governments
and Medicaid providers in a market that has already announced in the year to
date $6 billion of additional youth mental health funding.
Our pipeline and strong retention rates support our confidence that Group
revenue for the full year will be in line with the range of market
expectations. In the long-term, we anticipate that our robust balance sheet
will continue to enable us to invest to meet increasing demand for Kooth's
platform. We expect to continue our investment in talent and technology to
scale up and help tackle the global issue of mental health, which remains one
of the world's biggest challenges."
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 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via a Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain. The person
responsible for this announcement is Sanjay Jawa, CFO.
Enquiries:
Kooth plc 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, James Sinclair-Ford
Corporate Broking:
Erik Anderson
Stifel, Joint Broker +44 (0) 20 7710 7600
Ben Maddison, Nick Adams, Nicholas Harland, Richard Short
FTI Consulting, Financial PR kooth@fticonsulting.com
Jamie Ricketts, Alex Shaw, Usama Ali
About Kooth plc:
Kooth (AIM:KOO) is the UK's leading digital mental health platform. Our
mission is to make effective, personalised mental health care accessible to
all. 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 three services are:
· Kooth: for children and young people
· 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'.
Chief Executive's Review
Delivering against our mission
Kooth continues to make strong progress in delivering our mission to make
effective, personalised, mental health care accessible to all: growing our
leadership position in supporting children and young people via the NHS,
expanding our service to Adults, entering the US market to help tackle their
youth mental health crisis, and helping build mentally healthy workplaces.
This is reflected in our revenue growth of 13% along with an increase in
Annual Recurring Revenue of 11% to £18.5 million.
As a recurring revenue business, 95% of Kooth's contracts are for 12 months or
more (2021: 94%). We continue to expand contracts with existing commissioners
as we grow within a region, delivering a net revenue retention of 107%. As we
saw a small number of COVID-19 projects come to a close and a resizing of some
pilot contracts to better reflect demand in specific regions, contract
retention reduced to 89% in the first half of the year.
Expanding access to Kooth across the UK is a key strategic priority. In the
last six months we have grown the number of people that can freely access
Kooth's services by 39%, to 15.1 million people (excluding Kooth Work).
Our adult, workforce, and international businesses continue to gain momentum
as we leverage our 20 years of operating experience into new markets, notably
in the US where we have been awarded our first major contract.
Strategy
Kooth has a clear four-pillar growth strategy to support the increasing demand
for mental health services in the public and private sectors, all underpinned
by investments in our technology platform and clinical operating model:
1. Continue to scale Kooth to support young people in the UK
2. Replicate our success into the adult public sector market
3. Expand into international markets, with an immediate focus on the US.
4. Build mentally healthy workplaces
Children and Young People
Kooth continues to meet increasing demand from children and young people for
fast and effective access to mental health support. NHS England data for
2021/22 shows that Kooth has now become the largest single access provider for
mental health support for under 18s, a testament to the trust and reach that
we have achieved in our partnership with the NHS.
62% (7.9 million) of the UK's 10-25 year olds now have access to Kooth, with
1-in-33 of that population using Kooth in the previous year. As we continue to
work with stakeholders to raise awareness for Kooth within communities, our
highest performing contract is now reaching 1-in-7 of the local population. We
intend to replicate this across other areas of the UK.
In addition to the therapeutic outcome measures that Kooth has developed over
recent years, the York Health Economics Consortium (YHEC) conducted an
independent study of Kooth, showing a projected 3.16x direct cost saving when
using Kooth.
Finally, following the reorganisation of NHS England from 135 Clinical
Commissioning Groups (CCGs), to 42 Integrated Care Systems (ICS), we aligned
our commercial and engagement teams to the new ICS model, organising into four
regional teams with local leadership to better support our stakeholders and
service users and to maximise our strategic impact.
Adults
Momentum for Kooth Adult (also known as Qwell) continues, with five new whole
population contracts in the first half of the year, growing ARR in adults by
63% to £2.7 million.
7.2 million adults now have access to Kooth Adult in the UK, a 140% increase
from the 3 million at the start of the year, with new 'whole population'
contracts in Devon, Greater Manchester, Norfolk, Northumberland, and
Warwickshire.
A key focus in ensuring the success and growth of contracts is to work both
locally and digitally to raise awareness for Kooth Adult with stakeholders and
potential service users. Our recent focus on reaching and educating GPs has
made good progress, with 19.7% of service users telling us they heard about
Qwell from their GP. In addition, our focus on optimising for Google means
14.8% of service users find us via search, up from 7.9% in 2021.
Finally, a key priority for us in supporting whole population health is to
ensure that we are delivering on our purpose to be an inclusive and welcoming
service for all. We have made good progress in our Participation work this
year to understand and support the needs of men from ethnic minority
backgrounds, working in partnership with community groups to co-produce the
'future of Kooth'.
US
Within a year of establishing Kooth in the US, the credibility that we've
earned in the UK is already opening doors for us, with the award of a pilot
project by the State of Pennsylvania.
This $3 million pilot contract (awarded in September 2022 and to be formalised
in the coming days) will make Kooth available to a school population of
150,000 students across 30 school districts in Pennsylvania State. The
contract will run initially for the academic year and, if the pilot is
successful, could be extended to include more of the State's 500 school
districts.
The contract received bipartisan support in the State legislature, with the
objective of expanding access to youth mental health care. As part of the
pilot, Kooth will report on both the therapeutic and economic impact of its
digital platform in providing early intervention and responsive support to the
school population.
In addition, we secured our first project to support University students,
working with the University of Pikeville, Kentucky.
Looking forward, we have a growing pipeline of opportunities with State
Governments and Medicaid providers, which are indicative of the imperative,
and investments being made at both a Federal and State level to tackle the
youth mental health crisis.
For market context, more than $6 billion of youth mental health funding has
been announced so far this year, including:
● $300 million will be invested this year to expand access to mental
health services in schools, as part of a comprehensive national strategy to
tackle the youth mental health crisis.
● An additional $1 billion will be invested over the next 5 years as
part of a Bipartisan Communities Act.
● The State of California has budgeted $4.7 billion to deliver the
"Master Plan for Kids' mental health", including the planned provision of
state-wide youth digital mental health services.
Workforce
Kooth Work is our platform for employers and employees to help build mentally
healthy workplaces. Given the broad range of solutions available to companies
- from meditation apps to medical insurance - we have narrowed our focus to
frontline/key workers (33% of the UK workforce) to support employees working
in high stress, stretched, and sometimes traumatic occupations.
With the recent launch of the Education staff wellbeing charter, and news that
Ofsted inspections will include staff wellbeing, we are building momentum in
selling to Academy Trusts to help support staff wellbeing. In addition, our
recently launched 'Flourishing Assessment' enables us to benchmark the mental
health of an organisation and measure improvements over time.
Our people
The Board wishes to thank its employees for the excellent support and
commitment they are providing to our service users, customers and company.
In May 2022, Angela Kravets joined the Group as Chief People Officer, bringing
new approaches and initiatives to our People strategy as we continue to focus
on attracting, developing and retaining the most talented of individuals.
Kooth continues to progress its approach to diversity and inclusion with its
established advocacy group with representation from across our organisation.
The business is committed to creating a working environment that recognises
diversity, supporting everyone to thrive.
Like many organisations, we saw a more challenging market in the first half of
the year in recruiting and retaining talent across the business. In response,
in the short term, we've grown our use of contract staff in both product/tech
and practitioners. Post period end, the Group is over 400 employees, versus
376 at end of June 2022 (31 December 2021: 406, 30 June 2021: 352).
Investing for long-term growth
Kooth is investing in its talent and technology platform to drive its growth
strategy and meet increasing demand for digital mental health support. This is
intended to capture the long-term market opportunity available both in the UK
and internationally.
Key progress in H1 2022 included:
· Technical operations work to operate Kooth's technology in
international data centres, with our first deployment in the US.
· Development of artificial intelligence technology to assist in the
moderation of user generated content, surfacing risk faster, and reducing the
cost and time to review content.
· The development of our next-generation practitioner system to
codifying clinical best practice into the platform, and enabling skill-based
matching of practitioners with those requiring support.
· To address the challenges of hiring software engineers, Kooth has
partnered with a nearshore engineering company to augment our UK-based
engineering team.
Current trading and outlook
Kooth expects to continue to invest in its technology platform, systems and
talent in the second half of 2022. This is part of Kooth's strategy to meet
long-term demand for digital mental health services.
With the pipeline of contracts which are expected to be signed in the second
half of this year, including the State of Pennsylvania contract, and with
strong retention rates of existing business the Group remains confident of
delivering revenue for the full year within market expectations.
We anticipate our robust balance sheet will enable us to continue to invest to
meet long-term, increasing demand for Kooth's services. We will continue this
investment in our talent and technology to enable us to scale up to tackle
what is one of the world's biggest challenges.
Tim Barker
Chief Executive
Chief Financial Officer's review
Kooth delivered a solid performance in the period supported by an increase
across revenue and annual recurring revenue as well as a continuing strong
gross margin for the Group for the half year ended 30 June 2022 in comparison
to the six months ended 30 June 2021.
Key Performance Indicators
Total Revenue
£9.0m £8.0m £5.9m
H1 2022 H1 2021 H1 2020
As we continue to invest in and grow our business, revenue growth demonstrates
the progress we are making.
Annual Recurring Revenue
£18.5m £16.6m £13.1m
H1 2022 H1 2021 H1 2020
Annual Recurring Revenue (ARR) is the annualised revenue of customers engaged
or closed as at the period end 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.
Gross Margin
68.4% 69.4% 69.6%
H1 2022 H1 2021 H1 2020
Gross Profit as a percentage of revenue. Direct costs are the costs of our
practitioners directly involved in the delivery of our services.
Adjusted EBITDA
£0.5m £1.1m £0.5m
H1 2022 H1 2021 H1 2020
Earnings before interest, tax, depreciation and amortisation in the period,
adjusted for share based payments and exceptional costs. This metric provides
a more comparable indication of the Group's core business performance by
removing the impact of non-trading items that are reported separately.
Number of customers
141 142 104
H1 2022 H1 2021 H1 2020
The total number of live contracts with customers. In 2021/22, as the NHS
consolidates from 135 Clinical Commissioning Groups to 42 Integrated Care
Systems, we are seeing a shift to larger contracts spanning the whole
population within an ICS region We have subsequently seen the consolidation of
existing contracts including North Central London and Humber Coast and Vale
with the trend expected to continue across the NHS customer base.
Service user logins
1.4m 1.2m 1.0m
H1 2022 H1 2021 H1 2020
The number of logins to Kooth from users, demonstrating uptake of our service.
Revenue
Revenue increased by 13% to £9.0 million (2021 H1: £8.0 million), Annual
Recurring Revenue grew by 11% to £18.5 million (2021 H1: £16.6 million),
with 22 new contracts obtained in the first half of 2022 across all service
lines in addition to a number of contract uplifts.
Churn for the period was 11% giving net revenue retention (measured by the
total value of on-going ARR at the period-end from clients in place 12 months
earlier as a percentage of the opening ARR from those clients) for the period
to 30 June 2022 of 107%. This has decreased from 116% recorded in H1 2021 as a
result of an increase in churn as certain annual contracts won in H1 2021 have
been resized on renewal to reflect demand in specific regions and contracts,
the ending of some COVID-19 related contracts and partly by a slow down in
uplifts as the NHS consolidates from a Clinical Commissioning Group (CCG) to
Integrated Care System (ICS) structure.
Gross Profit
Gross Profit increased 13% from £5.5m to £6.2m but as a percentage of
turnover decreased during the period by one percentage point to 68.4% as we
see some of the savings during lockdown such as travel and in person training
start to reverse.
Adjusted EBITDA
Adjusted EBITDA in the period decreased from £1.1m to £0.5m with increased
gross profit offset by higher administrative expenses. This included the costs
of establishing a team in the US, increased investment in business
development, platform consulting and additional marketing costs due to
targeted engagement spend on new adult contracts. This is in line with Board
expectations.
The total charge for share based payments in the period was £0.02m (2021 H1:
£0.3m). The decrease reflects grants forfeited by leavers and a reassessment
of those grants subject to performance criteria.
Taxation
The overall tax credit for the six months ended 30 June 2022 and 2021 relate
to Research and Development expenditure credits in addition to the movement in
the deferred tax asset.
Profit/Loss after tax
The Group loss after tax for the period was £0.3 million (2021 H1: £0.04
million profit).
Balance Sheet
The strength of the Group's balance sheet with net assets of £10.6m (30 June
2021: £11.2m), 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 business
development, platform investment and US expansion.
Cash flow and financing
Cash generation during the six months was £1.2 million (2021 H1: £1.0
million), which benefited from good working capital management predominantly
an increased number of customers paying in advance as well as receipt of an
R&D government tax credit of £0.3m giving a net cash position at 30 June
2022 of £8.3m (2021 H1: £8.8m).
The focus on platform investment gave capital expenditure of £1.3 million
(2021 H1: £1.5 million), with the reduction in the six months to 30 June 2022
relating to an external project incurred in the prior year and offset by
increased capitalised investment by our Product and Technology teams.
Sanjay Jawa
Chief Financial Officer
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2022
Note Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 10 9,022 7,964 16,682
Cost of sales (2,852) (2,437) (5,097)
Gross profit 6,170 5,527 11,585
Administrative expenses (6,758) (5,672) (12,318)
Operating Loss (588) (145) (733)
Analysed as:
Adjusted EBITDA 539 1,130 2,082
Depreciation & amortisation 14 (1,109) (970) (2,384)
Share based payment expense (18) (305) (431)
Operating Loss (588) (145) (733)
Interest income 17 - 13
Loss before tax (571) (145) (720)
Tax 229 183 410
Total comprehensive profit/(loss) for the period (342) 38 (310)
Profit/(Loss) per share - basic (£) 12 (0.01) 0.00 (0.01)
(0.01) 0.00 (0.01)
Profit/(Loss) per share - diluted (£)
Condensed Consolidated Balance Sheet
As at 30 June 2022
Note 30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 511 511 511
Development costs 14 3,075 3,131 2,867
Right of use asset - 10 -
Property, plant and equipment 96 139 116
Deferred tax asset 420 156 435
Total non-current assets 4,102 3,947 3,929
Current assets
Trade and other receivables 2,632 2,083 2,370
Contract assets 426 190 406
Cash and cash equivalents 8,310 8,799 7,079
Total current assets 11,368 11,072 9,855
Total assets 15,470 15,019 13,784
Liabilities
Current liabilities
Trade payables (331) (327) (417)
Contract liabilities (2,797) (1,838) (797)
Lease liability - (10) -
Accruals and other creditors (737) (808) (649)
Tax liabilities (956) (859) (948)
Total current liabilities (4,821) (3,842) (2,811)
Net current assets 6,547 7,230 7,043
Net assets 10,649 11,177 10,973
(Continued)
Equity
Share capital 1,653 1,653 1,653
Share premium account 14,229 14,229 14,229
Retained earnings (2,221) (1,531) (1,879)
Share-based payment reserve 977 815 959
Capital redemption reserve 115 115 115
Merger reserve (4,104) (4,104) (4,104)
Total equity 10,649 11,177 10,973
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2022
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Profit/(Loss) for the period (342) 38 (310)
Adjusted for:
Depreciation & amortisation 1,109 970 2,384
Income tax received 330 - -
Share based payment expense 18 305 520
Tax income recognised (229) (183) (410)
Movements in working capital:
(Increase)/decrease in trade and other receivables (369) 69 (574)
Increase/(decrease) in trade and other payables 2,009 1,245 244
Net cashflow from operating activity 2,527 2,444 1,854
Cash flows from investing activities
Purchase of property, plant and equipment (28) (34) (63)
Additions to intangible assets (1,268) (1,430) (2,535)
Net cash used in investing activities (1,296) (1,464) (2,598)
Cash flows from financing activities
Lease payments - (4) -
Net cash from financing activities - (4) -
Net increase/(decrease) in cash and cash equivalents 1,231 976 (744)
Cash and cash equivalents at the beginning of the period 7,079 7,823 7,823
Cash and cash equivalents at the end of the period 8,310 8,799 7,079
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2022
Share Capital Share Premium Share Based Payment Reserve Retained earnings Capital Redemption Reserve Merger reserve Total Equity
Balance at 1 January 2021 1,653 14,229 529 (1,569) 115 (4,104) 10,853
Share based payments - - 286 - - - 286
Total comprehensive income for the period - - - 38 - - 38
As at 30 June 2021 1,653 14,229 815 (1,531) 115 (4,104) 11,177
Balance at 1 July 2021 1,653 14,229 815 (1,531) 115 (4,104) 11,177
Share based payments - - 144 - - - 144
Total comprehensive income for the period - - - (348) - - (348)
As at 31 December 2021 1,653 14,229 959 (1,879) 115 (4,104) 10,973
Balance at 1 January 2022 1,653 14,229 959 (1,879) 115 (4,104) 10,973
Share based payments - - 18 - - - 18
Total comprehensive income for the period - - - (342) - - (342)
As at 30 June 2022 1,653 14,229 977 (2,221) 115 (4,104) 10,649
Notes to the half year financial statements
1. General information
The unaudited interim consolidated financial statements for the six months
ended 30 June 2022 and the six months ended 30 June 2021 do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2021 were approved by
the Board of Directors on 28 March 2022 and delivered to the Registrar of
Companies. The auditor's report on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any statement
under Section 498 (2) or (3) of the Companies Act 2006.
These condensed half year financial statements were approved for issue by the
Board of Directors on 27 September 2022
2. Basis of preparation
The interim condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the Group's annual consolidated financial
statements prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 for the year ended
31 December 2021.
Trading for the half year ended 30 June 2022 is aligned with the Board's
expectations and further details are given in the Chief Executive and CFO's
overview.
The Group is in a net asset position of £10.6 million as at 30 June 2022
(2021: net assets of £11.2 million) and has no debt facilities in place.
Management have prepared forecasts up until 12 months from the date of
approval of these financial statements which have been approved by the Board,
and after enquiry and review of these forecasts and other available financial
information, the Directors have formed the conclusion that the Group has
adequate resources to continue to operate for the foreseeable future and that
it is therefore appropriate to continue to adopt the going concern basis of
accounting in the preparation of these interim condensed consolidated half
year financial statements.
The financial information is presented in sterling, which is the functional
currency of Kooth plc. All financial information presented has been rounded to
the nearest thousand.
3. Accounting policies
The accounting policies applied in these interim financial statements are the
same as those applied in the Group's annual report and accounts for the year
ended 31 December 2021. Current taxes on income in the half year period are
accrued using the tax rates that would be applicable to expected total annual
profits. Deferred taxes on income are calculated based on the standard rates
that are enacted as at the balance sheet date.
4. Critical accounting judgements and key sources of estimation uncertainty
Any critical accounting judgements and key sources of estimation uncertainty
that carry a significant risk of material change to the carrying value of
assets and liabilities within the next year are the same as those applied in
the 2021 Group Annual Report.
5. Principal risks and uncertainties
The 2021 Group annual report and accounts describes the principal risks and
uncertainties that could impact the Group's performance. These risks primarily
relate to cyber security and clinical safety, with any risks relating to
COVID-19 deemed to be not material given the industry in which the Group
operates and the Group's business model. These remain unchanged since the
annual report was published and are not expected to change for the remaining
six months of the financial year.
The Group actively manages these risks through risk management procedures and
actions are taken to mitigate risk wherever possible.
6. Financial risk management
The Group is exposed to financial risks including market risk, credit risk
& liquidity risk.
These interim condensed consolidated financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements and therefore should be read in conjunction with the 2021
Group annual report and accounts.
7. Forward-looking statements
Certain statements in this half year report are forward looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
8. 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. Kooth plc opened its first
international subsidiary in the USA at the start of 2022. The Group continues
to work on establishing its capability in the USA and has recently won its
first pilot contracts in the region, which will go live in H2 2022. Segmental
reporting of the USA operation is not deemed appropriate at this stage as no
revenue has been generated for the six months ended 30 June 2022.
9. 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
on an ongoing basis. 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 for the
six months ended 30 June 2021 has also been reclassified so that comparability
is not impaired.
The impact to the half year 2021 accounts as a result of the classification is
demonstrated below. The amount relating to promotion spend included in the six
months ended 30 June 2021 administrative expenses line is £0.5 million
2021
£'000
Revenue 7,964
Cost of Sales (2,925)
Gross Profit (before reclassification) 5,039
Gross Margin 63.3%
Promotion Costs
Staff Costs 488
Gross Profit (after reclassification) 5,527
Gross Margin 69.4%
10. Revenue analysis
Revenue has been derived from its principal activity wholly undertaken in the
United Kingdom and relates to the provision of online counselling services.
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue generated from counselling platform 9,022 7,964 16,682
11. Income tax expense
The income tax expense recognised reflects management estimates of the tax
charge for the period and has been calculated using the estimated average tax
rate of UK corporate tax for the financial year of 19% (2021: 19%).
12. Earnings per share (EPS)
The calculation of basic and diluted EPS is based on the following earnings
and number of shares:
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
Basic £'000 £'000 £'000
Earnings used in calculation of earnings per share:
On total losses attributable to equity holders of the parent (342) 38 (310)
Weighted average no. of shares (Basic) 33,055,776 33,055,776 33,055,776
Weighted average no. of shares (Diluted) 34,067,643 34,023,265 34,082,252
Shares in issue
Ordinary shares in issue 33,055,776 33,055,776 33,055,776
Share options 1,011,867 967,489 1,080,066
Loss per share (basic, £)
On total profits attributable to equity holders of the parent (0.01) 0.00 (0.01)
Loss per share (diluted, £)
On total profits attributable to equity holders of the parent (0.01) 0.00 (0.01)
13. Dividends
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 an interim dividend payment in respect of the six months ended 30 June 2022 (2021: £nil) and does not anticipate recommending a dividend within the next year but may do so in future years.
14. Development Costs
Development costs
£'000
Cost
At 1 January 2021 4,827
Additions 1,430
At 30 June 2021 6,257
Additions 1,106
At 31 December 2021 7,363
Additions 1,268
At 30 June 2022 8,631
Amortisation
At 1 January 2021 (2,213)
Amortisation (913)
At 30 June 2021 (3,126)
Amortisation (1,370)
At 31 December 2021 (4,496)
Amortisation (1,060)
At 30 June 2022 (5,556)
Carrying amount
At 1 January 2021 2,614
At 30 June 2021 3,131
At 31 December 2021 2,867
At 30 June 2022 3,075
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