REG - Kooth PLC - Half-year Results
21/09/2023 07:00
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RNS Number : 1166N Kooth PLC 21 September 2023
21 September 2023
Kooth Plc
("Kooth", the "Company" or the "Group")
Half Year Results
Strategic momentum and revenue growth of 29%
Full year revenue guidance of at least £34m
Kooth (AIM: KOO), a global leader in youth digital mental well-being,
announces unaudited half year results for the six months ended 30 June 2023.
All figures relate to this period unless otherwise stated.
Strategic and post period end highlights
● Transformational US contract win in California, $188m minimum
value
● On track for California go-live in January 2024, notably with the
Kooth mobile app and hires
● Number one provider of mental health access for children and young
people to NHS England
● Significant uptake of Kooth in Pennsylvania pilot, providing
access to c.100,000 school students
● Ongoing investment in business development, platform investment
and US expansion
Financial Highlights
● Revenues up 29% to £11.7m (2022: £9.0m)
● Annual Recurring Revenue (ARR) up 16% to £21.4m (2022: £18.5m)
● Gross margin of 66.8% (2022: 68.4%)
● Adjusted EBITDA of £0.01m (2022: £0.5m) reflecting investment in
US setup and business development
● Recurring Revenue from contracts 12 months or longer 94% (2022:
95%)
● Robust balance sheet; net cash of £5.9m plus successful gross
fundraise of £10m post half-year end supports investment for long-term growth
Outlook
● Significant opportunity for Kooth in the US driven by the
continued need from both US State governments and Medicaid payers to invest
further in youth mental health
● For the UK, we expect the headwinds to remain, reflecting a focus
on NHS cost saving and acute care backlog. Our focus remains on continuing to
demonstrate the impact and savings that Kooth generates when commissioned in a
region
● The Group remains confident of delivering revenue for the full
year in line with our revised market guidance of no less than £34 million
● Our robust balance sheet enables us to invest to meet long-term,
increasing demand for Kooth's services
Tim Barker, Chief Executive Officer of Kooth, said:
The first six months of 2023 have been a period of significant, and positive,
change for Kooth. In March we announced our largest contract to date with the
State of California which was finalised, post-period end, as a four year,
$188m minimum value agreement. This marked Kooth's second major engagement in
the US, alongside Pennsylvania, which was agreed in October 2022. During the
period, and over the last 12 months, we have developed a significant operation
in the United States as we look to capture the opportunity this major
healthcare market brings. We look forward to leveraging our platform to
increase the size of our business further and, more importantly, help improve
mental health provision to as many young people as possible.
In the UK, we are not immune to the broader healthcare and economic
environment, which sees commissioning across the NHS structure under stress as
Integrated Care Systems prioritise a reduction in costs and tackling an acute
mental healthcare backlog. In response, we have taken proactive steps to
position ourselves to best respond to this environment, including developing
new services to help tackle waiting lists.
I would like to thank our team for their work which has delivered
transformational gains during the period and beyond as we look to leverage our
position as a pioneer and innovator in digital mental healthcare to deliver
the care needed to help tackle the growing crisis in global mental health.
Financial headlines
Six months ended 30 June 2023 Six months ended 30 June 2022 Change
£'000 £'000
Revenue
Total revenue 11,660 9,022 +29.2%
Annual Recurring Revenue 21,376 18,483 +15.7%
Gross profit 7,788 6,170 +26.2%
Gross margin 66.8% 68.4% -2.3ppt
Adjusted EBITDA 9 539 -98.3%
Profit/(Loss) after tax for the period (525) (342) -53.5%
Cash generation (2,642) 1,231 -314.6%
Cash position 5,850 8,310 -29.6%
Earnings per share (£) (0.02) (0.01) -58.8%
Enquiries
Kooth plc
Tim Barker, CEO investorrelations@kooth.com
Sanjay Jawa, CFO
Panmure Gordon, Nominated Adviser and Joint Broker +44 (0) 20 7886 2500
Corporate Finance: Dominic Morley, James Sinclair-Ford, Daphne Zhang
Corporate Broking: Rupert Dearden, James Todd
Stifel Nicolaus Europe Limited, Joint Broker +44 (0) 20 7710 7600
Ben Maddison, Nick Adams, Nicholas Harland, Richard Short
FTI Consulting kooth@fticonsulting.com
Jamie Ricketts, Alex Shaw, Usama Ali
About Kooth
Kooth (AIM:KOO) is a global leader in youth digital mental well-being. Our
mission is to provide accessible and safe spaces for everyone to achieve
better mental health. Our platform is clinically robust and accredited to
provide a range of therapeutic support and interventions. All our services are
predicated on easy access to make early intervention and prevention a reality.
Our three services are:
· Kooth: for children and young people
· Kooth: for adults
· Kooth Work: for frontline 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 more than 4,000 logins a day.
Kooth is the only 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 2021/22 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. Kooth's first major pilot contract in the US was
signed in October 2022 with the State of Pennsylvania followed in July 2023 by
a four-year contract to cover all six million 13-25 year-olds in the State of
California.
Chief Executive's Review
Transformational strategic progress
With the award of a $188m four-year state-wide contract with California, the
last six months demonstrate the significant opportunity for Kooth in the US as
federal and state governments invest to transform youth mental health care.
As one of the work streams within the State of California's $4.7 billion youth
masterplan, this investment arguably represents the world's most progressive
initiative to improve youth mental health. This was evident at the September
UN Congress General Assembly meeting, to which Kooth was invited. The key
question is "how" rather than "if" this problem should be addressed. We remain
deeply humbled to be entrusted with the opportunity to be at the forefront of
supporting a landmark programme in the most populous state in the US, in what
we believe will be a template for future governments and health care systems
on how to safeguard the mental health of the next generation.
I have been very proud to see how our whole team has stepped up to the
opportunity in California, with both the work undertaken to win the contract
in March and then subsequently the shift into the delivery phase. This is hard
but purposeful work across 30 workstreams spanning the development of our
next-generation platform, marketing and promotion strategy, as well as
building our workforce and organisational infrastructure.
We are on track for the launch of our contract in California in January 2024,
with all major milestones and deliverables to date met:
- All our US VP-level hires are in place to support go-live, with
talent joining the existing team from organisations including Headspace,
Crisis Text Line and Oracle Cerner. Hiring for other roles is broadly on
track, with Kooth's fiscal rigour, transparency and growth as a public company
adding appeal to candidates, in a market where many VC backed organisations
are shedding staff to reduce cash burn.
- A beta version of Kooth's new mobile app is live in two counties
in California as part of a 'soft launch' test. Over the next few months we
will be adding, iterating, and gathering feedback from young people to help
optimise the app and experience ahead of go-live in January.
Beyond California, our pilot project in Pennsylvania reached a significant
milestone with almost 100,000 students having access to Kooth in the school
year, with 1 in 10 high school students having used the platform, an uptake
which surpassed our expectations based on our UK experience.
In the UK, following on from the reorganisation of NHS England from 135 Care
Commissioning Groups into 42 Integrated Care Systems ("ICSs"), the headwinds
in commissioning remain challenging, as ICSs adapt to a new funding
environment. In 2023/24, ICSs must deliver 6% in real term efficiency savings,
at a time when there is a 16% annual increase in demand for mental health
support.
While Kooth is an advocate for digital transformation to address this
challenge, we have seen Commissioners faced with tough short-term decisions to
divert funds into acute care and reduce investments elsewhere. This is a
challenge being experienced across the industry and is not unique to Kooth.
While we have seen an increase in contracts that expand upon renewal to 52%
(2022: 32%), gains were offset by £2.4m of churn, a combination of funding
unavailable to continue pilot contracts, reductions as contracts consolidated
and increased competition. Overall net revenue retention was 100% (2022:
107%).
In response to the current commissioning environment, we have used our market
leading position to take action and better position ourselves for the future:
● We have restructured our commercial team with a focus on adding
seniority and stakeholder management to engage NHS commissioners and
Integrated Care Boards ("ICBs").
● We have grown and invested further in both our
commissioner-marketing and user-marketing teams.
● We have launched an Integrated Digital Pathway ("IDP") service to
help reduce pressure on CAMHS and IAPT services by providing support to
individuals while on a waiting list, with the goal of discharging individuals
if appropriate, or preventing further deterioration while awaiting
treatment. We are currently piloting this unique service in two regions.
Management believes that these actions will help Kooth respond to the
long-term opportunity that remains in helping ICSs to deliver on their vision
to transform healthcare services, focus on prevention, and support the
population health of their regions.
Kooth Adult (UK)
As a result of the pressures described above, our Kooth Adult services have
been impacted more so than our service for children and young people, with ARR
standing at £2.6m (FY2022: £3.0m). This is primarily due to newer contracts
not being continued after a first year of piloting, as local commissioners
seek to make budget available for acute service delivery.
Kooth Children and Young People (UK)
In contrast to the challenging commissioning environment in England, Kooth
continues to expand in Scotland with new commissions in East Ayrshire,
Inverclyde and North Lanarkshire.
From a product/service perspective, we anticipate strong interest from both
children and young people, and commissioners in learning how our enhanced
platform could better serve their needs. When California is live we intend to
use this showcase to better demonstrate the step change that is possible
through digital transformation in delivering a population-wide mental health
strategy.
Current trading and outlook
Kooth will continue to invest significantly in its technology platform,
systems and talent to deliver on our next generation platform for California.
We will then bring these innovations to all US and UK customers to deliver
enhanced support for all.
We continue to see both US State governments and Medicaid payers recognise the
need to invest further in youth mental health and are optimistic about the
significant opportunity that Kooth has in the US. For the UK, we expect the
current situation to remain for some time, with our focus being on continuing
to demonstrate the impact and savings that result when Kooth is commissioned
in a region.
The Group remains confident of delivering revenue for the full year in line
with our revised market guidance of no less than £34 million.
Our robust balance sheet enables us 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 strong performance in the period supported by an increase
across revenue and annual recurring revenue, a good gross margin as well as
continuing to invest in our platform and the business for the half year ended
30 June 2023 as compared to the six months ended 30 June 2022.
Key Performance Indicators
Total Revenue
£11.7m £9.0m £8.0m £5.9m
H1 2023 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
£21.4m £18.5m £16.6m £13.1m
H1 2023 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
66.8% 68.4% 69.4% 69.6%
H1 2023 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
£0.0m £0.5m £1.1m £0.5m
H1 2023 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
149 141 142 104
H1 2023 H1 2022 H1 2021 H1 2020
The total number of live contracts with customers. As the NHS finalised the
consolidation from 135 Clinical Commissioning Groups to 42 Integrated Care
Systems in the last year, we are seeing a shift to fewer, larger contracts
spanning the whole population within an ICS region.
Service user logins
1.4m 1.4m 1.2m 1.0m
H1 2023 H1 2022 H1 2021 H1 2020
The number of logins to Kooth from users, demonstrating uptake of our
service.
Revenue
Revenue increased by 29% to £11.7m (2022 H1: £9.0m), Annual Recurring
Revenue grew by 16% to £21.4m (2022 H1: £18.5m), with ten new contracts won
in the first half of 2023. The revenue increase is predominantly attributable
to US revenue of £1.8m in H1 2023 (2022 H1: £Nil) where we now have three
contracts and included non-recurring revenue from the state of California for
one-off research and pilot study work. This led to a slight decrease in
recurring revenue (which comprises income invoiced for services that are
repeatable, consumed and delivered on a monthly basis over the term of a
customer contract) as a percentage of overall revenue from 95% to 94%.
Churn was 13% 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
2023 of 100%. This has decreased from 107% recorded in H1 2022 which is a
result of an increase in churn within our English contracts where we are
seeing the impact of funding being redirected to more acute care, a resizing
of pilot adult contracts and a slowdown in uplifts as well as budgetary
pressures as the NHS transitioned from a CCG to ICS structure.
Gross Profit
Gross Profit increased 26% from £6.2m to £7.8m with gross margin slightly
down at 66.8% (2022 H1: 68.4%). Direct costs are the costs of the
practitioners directly involved in the delivery of our services, a total of
251 at the period-end (2022 H1: 213 heads). Gross margin dropped in the UK as
salary increases at the start of 2023 reflected inflationary pressures and we
took a decision to enhance contract performance for the protection of
longer-term growth. These were partially offset by the end of the 1.25% Health
and Social Care Levy and a positive mix impact as our new US contracts ramped
up.
Adjusted EBITDA
Adjusted EBITDA in the period decreased from £0.5m to £0.01m with an
increased gross profit offset by a 38% increase in administrative expenses
(excluding amortisation, depreciation and share based payments). Whilst UK
costs increased in line with salary inflation and revenue growth requiring
increased promotion spend, the majority of the increase related to the build
out of the US teams supporting our Pennsylvania and California contracts.
The total charge for share based payments in the period was £0.4m (2022 H1:
£0.02m). The increase reflects the annual issue of three year grants to all
staff and a credit in 2022 following a reassessment of those grants subject to
performance criteria. Depreciation and amortisation increased to £1.5m (2022
H1 £1.1m) as capital expenditure commenced on the US platform build.
Taxation
The overall tax credit for the six months ended 30 June 2023 (£1.2m) and 2022
(£0.2m) relate to Research and Development expenditure credits in addition to
the movement in the deferred tax asset with the increase reflecting greater
R&D spend and an increase in the effective tax rate on losses.
Loss after tax
The Group loss after tax for the period was £0.5m (2022 H1: £0.3m).
Balance Sheet
The strength of the Group's balance sheet with net assets of £10.6m (30 June
2022: £10.6m), plus a successful gross fundraise of £10m post half year end,
and high levels of recurring revenue provide the Group with financial strength
to execute on its investment strategy which continues to focus on US business
development and platform investment.
Cash flow and financing
Cash outflow during the six months was £2.6m (2022 H1: £1.2m inflow). The
focus on US platform investment gave rise to capital expenditure of £3.5m
(2022 H1: £1.3m), offset by cash inflows from operating activities of £0.8m
including receipt of an R&D government tax credit of £0.6m giving a net
cash position at 30 June 2023 of £5.9m (2022 H1: £8.3m).
The Group remains debt free.
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.
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 2023
(2022: £nil) and does not anticipate recommending a dividend within the next
year but may do so in future years.
Sanjay Jawa
Chief Financial Officer
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2023
Note Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 8 11,660 9,022 20,120
Cost of sales (3,872) (2,852) (6,265)
Gross profit 7,788 6,170 13,855
Administrative expenses (9,606) (6,758) (14,767)
Operating loss (1,818) (588) (912)
Analysed as:
Adjusted EBITDA 9 539 1,612
Depreciation & amortisation 11 (1,451) (1,109) (2,232)
Share based payment expense (376) (18) (292)
Operating loss (1,818) (588) (912)
Interest income 91 17 81
Loss before tax (1,727) (571) (831)
Tax 9 1,202 229 115
Total comprehensive loss for the period (525) (342) (716)
Loss per share - basic (£) 10 (0.02) (0.01) (0.02)
Loss per share - diluted (£) 10 (0.02) (0.01) (0.02)
Condensed Consolidated Balance Sheet
As at 30 June 2023
Note 30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 511 511 511
Development costs 11 5,794 3,075 3,681
Right of use asset 53 - 68
Property, plant and equipment 150 96 122
Deferred tax asset 1,626 420 -
Total non-current assets 8,134 4,102 4,382
Current assets
Trade and other receivables 12 2,355 2,632 2,618
Contract assets 180 426 649
Cash and cash equivalents 5,850 8,310 8,492
Total current assets 8,385 11,368 11,759
Total assets 16,519 15,470 16,141
Liabilities
Current liabilities
Trade payables (1,047) (331) (680)
Contract liabilities (3,096) (2,797) (2,583)
Lease liability (54) - (68)
Accruals and other creditors (913) (737) (977)
Deferred tax liabilities - - (348)
Tax liabilities (769) (956) (967)
Total current liabilities (5,879) (4,821) (5,623)
Net current assets 2,506 6,547 6,136
Net assets 10,640 10,649 10,518
Equity
Share capital 1,653 1,653 1,653
Share premium account 14,229 14,229 14,229
Retained earnings (3,120) (2,221) (2,595)
Share-based payment reserve 1,867 977 1,221
Capital redemption reserve 115 115 115
Merger reserve (4,104) (4,104) (4,104)
Total equity 10,640 10,649 10,518
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Loss for the period (525) (342) (716)
Adjusted for:
Depreciation & amortisation 1,451 1,109 2,232
Income tax received 569 330 330
Share based payment expense 376 18 292
Tax income recognised (1,202) (229) (115)
Interest income (91) - (81)
Movements in working capital:
(Increase) / decrease in trade and other receivables 651 (369) 78
Increase / (decrease) in trade and other payables (384) 2,009 2,364
Net cashflow from operating activities 845 2,527 4,384
Cash flows from investing activities
Purchase of property, plant and equipment (70) (28) (100)
Additions to intangible assets (3,508) (1,268) (2,952)
Net cash used in investing activities (3,578) (1,296) (3,052)
Cash flows from financing activities
Interest income 91 - 81
Net cash from financing activities 91 - 81
Net increase / (decrease) in cash and cash equivalents (2,642) 1,231 1,413
Cash and cash equivalents at the beginning of the period 8,492 7,079 7,079
Cash and cash equivalents at the end of the period 5,850 8,310 8,492
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2023
Share Capital Share Premium Share Based Payment Reserve Retained earnings Capital Redemption Reserve Merger reserve Total Equity
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
Balance at 1 July 2022 1,653 14,229 977 (2,221) 115 (4,104) 10,649
Share based payments - - 244 - - - 244
Total comprehensive income for the period - - - (374) - - (374)
As at 31 December 2022 1,653 14,229 1,221 (2,595) 115 (4,104) 10,519
Balance at 1 January 2023 1,653 14,229 1,221 (2,595) 115 (4,104) 10,519
Share based payments - - 646 - - - 646
Total comprehensive income for the period - - - (525) - - (525)
As at 30 June 2023 1,653 14,229 1,867 (3,120) 115 (4,104) 10,640
Notes to the half year financial statements
1. General information
The unaudited interim consolidated financial statements for the six months
ended 30 June 2023 and the six months ended 30 June 2022 do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2022 were approved by
the Board of Directors on 3 April 2023 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 21 September 2023.
2. Basis of preparation
This unaudited condensed consolidated financial information which incorporate
the financial information of the Group, have been prepared in accordance with
Accounting Standard IAS 34 'Interim Financial Reporting' as contained in UK -
adopted International Accounting Standards and IFRIC interpretations and with
those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
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 2022.
Trading for the half year ended 30 June 2023 is aligned with the Board's
expectations, and expectations for the full year remain unchanged. Further
details are given in the CEO's overview, the operational review and the
financial review.
The Group is in a net asset position of £10.6m as at 30 June 2023 (2022: net
assets of £10.6m) 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 2022.
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 2022 Group Annual Report.
5. Principal risks and uncertainties
The 2022 Group annual report and accounts describes the principal risks and
uncertainties that could impact the Group's performance. These risks primarily
relate to system outages, safeguarding incidents, cyber security and data
protection and clinical safety. 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, currency risk,
credit risk and 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 2022
Group annual report and accounts.
7. 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 won a
contract with Pennsylvania Department of Human Services in September 2022 and
a contract with the Department of Healthcare Services in California which was
finalised in July 2023, and launches at the start of 2024. Segmental reporting
of the USA operation is not deemed appropriate at this stage as operations
remain relatively small in comparison to UK operations. Segmental reporting
may be deemed to be appropriate for the full year 2023 results.
8. Revenue analysis
Revenue relates to the provision of online counselling services.
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Provision of online counselling - UK 9,817 9,022 18,648
Provision of online counselling - US 1,843 - 1,472
11,660 9,022 20,120
9. Taxation
The income tax credit recognised of £1.2m (2022 H1: £0.2m) reflects
management's estimate of the tax credit for the current period. This
calculation takes into consideration the estimated taxable loss incurred from
operational activities during the period, as well as additional relief under
the UK R&D scheme. The assessment utilises the average UK corporation tax
rate for the current financial year of 23.5% (2022: 19%).
10. 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 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Earnings used in calculation of earnings per share
Loss for the purposes of basic and diluted loss per share being net loss (525) (342) (716)
attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic and 33,055,776 33,055,776 33,055,776
diluted earnings per share
Loss per share (£) (0.02) (0.01) (0.02)
The loss per ordinary share and diluted loss per share are equal because share
options are only included in the calculation of diluted earnings per share if
their issue would decrease the net profit per share. The number of potentially
dilutive shares not included in the calculation above due to being
anti-dilutive in the periods presented was 1,943,400 (2022 H1: 1,011,867).
11. Development costs
£'000
Cost
At 1 January 2022 7,363
Additions 1,268
At 30 June 2022 8,631
Additions 1,684
At 31 December 2022 10,315
Additions 3,508
At 30 June 2023 13,823
Amortisation
At 1 January 2022 (4,496)
Amortisation (1,060)
At 30 June 2022 (5,556)
Amortisation (1,078)
At 31 December 2022 (6,634)
Amortisation (1,395)
At 30 June 2023 (8,029)
Carrying amount
At 1 January 2022 2,867
At 30 June 2022 3,075
At 31 December 2022 3,681
At 30 June 2023 5,794
12. Trade and other receivables
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Trade receivables 1,767 1,909 1,110
Prepayments and other receivables 588 723 1,508
2,355 2,632 2,618
All amounts shown above are short term. The net carrying value of trade
receivables is considered a reasonable approximation of fair value.
13. Post balance sheet events
A significant four year US contract was finalised in July 2023 with the
Department of Healthcare Services of California for a minimum net revenue
value of $188m.
In July 2023, the Group completed an equity fundraise with gross proceeds of
£10m to accelerate investment within the business.
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