REG - Kooth PLC - Half Year Results
17/09/2024 07:00
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RNS Number : 3867E Kooth PLC 17 September 2024
17 September 2024
Kooth Plc
("Kooth", the "Company" or the "Group")
Half Year Results
Record revenue of £32.5m driven by strong US growth
Adjusted EBITDA of £7.8m
Kooth (AIM: KOO), a global leader in youth digital mental well-being,
announces unaudited results for the six months ended 30 June 2024. All figures
relate to this period unless otherwise stated.
Strategic and post-period end highlights
● Significant progress in key US market, which has grown over two
years to approximately 70% of total Annual Recurring Revenues
○ Delivering behavioural health care in California, accessible to
the State's population of 13-25 year-olds, with sign-ups in every one of
California's 58 counties following service launch in January 2024
○ First US private sector partnership with Aetna Better Health® of
Illinois to support youth in low-income families
○ Continued service delivery in Pennsylvania, with 88% of students
reporting they received the support they needed and an initial tranche of new
funding recently awarded
● Ongoing investment in product development highlighted by Soluna
platform expansion with new video coaching and care navigation capabilities
● Maintained position as NHS England's largest single access
provider for mental health support for under 18s despite ongoing
macro-economic conditions and broader NHS backdrop
Financial Highlights
● Revenues up 179% to £32.5m (2023: £11.7m), driven by US
expansion
● Annual Recurring Revenue (ARR) up 181% to £60.0m (2023: £21.4m)
● Gross margin up 15.6ppt to 82.4% (2023: 66.8%)
● Adjusted EBITDA to £7.8m (2023: £0.0m)
● Profit after tax of £3.9m (2023: £0.5m loss)
● Robust balance sheet; net cash of £14.9m (2023: £5.9m) supports
investment for long-term growth
Outlook
● US market:
o Significant opportunity driven by the continued need from both State
Governments and private-sector healthcare service providers to invest further
in youth mental health services
o Further two pilot contracts expected to be signed in the current financial
year
● UK market:
o The new Government has highlighted its commitment to improving mental
health services and invest more in prevention and digital, however headwinds
remain with NHS financial pressures driving short-term focus
o Kooth to continue demonstrating the long-term impact and savings that it
generates where it is commissioned and focus on advocacy to help inform future
policy
o Investing in bringing Soluna to the UK in Q2 2025 to grow impact and
expand uptake
● The Group expects to deliver strong adjusted EBITDA and margin for
the full year
● Robust balance sheet to enable long-term investment to meet
increasing demand for Kooth's services
Tim Barker, Chief Executive Officer of Kooth, said:
"We have delivered excellent financial results in the first six months of 2024
but, more importantly, we have significantly expanded our operations and are
now delivering our services to more children and young people than ever
before. This growth has been led primarily by the US market, which now
accounts for approximately 70% of our business.
In the UK we continue to demonstrate the long-term impact and savings that
Kooth delivers where it is commissioned and are working to bring our
market-leading Soluna product to the UK in Q2 2025 to ensure that we continue
to differentiate Kooth and grow our reach and impact. We believe that the new
Government is committed to improving mental health provision, and eagerly
await the revised 10-year NHS strategy due in spring as a catalyst for change,
but expect financial pressures to remain in the short-term.
As a Company we are focused on delivering early-intervention mental health
support for children and young people which has proven to offer significant
financial benefit to global healthcare systems and economies, both through our
own studies and those carried out by third parties. Mental health and health
inequality are two of the major crises facing people today, and we are proud
that our services are firmly targeted at meeting both of these challenges."
Financial headlines
Six months ended 30 June 2024 Six months ended 30 June 2023 Change
£'000 £'000
Revenue
Total revenue 32,494 11,660 +178.7%
Annual Recurring Revenue 60,040 21,376 +180.9%
Gross profit 26,767 7,788 +243.7%
Gross margin 82.4% 66.8% +15.6ppt
Adjusted EBITDA 7,841 9 n/m
Profit/(Loss) after tax for the period 3,920 (525) +846.6%
Cash generation 3,936 (2,642) +249.0%
Cash position 14,940 5,850 +155.4%
Basic earnings per share (£) 0.11 (0.02) +775.5%
Diluted earnings per share (£) 0.10 (0.02) +740.9%
Enquiries
Kooth plc investorrelations@kooth.com
Tim Barker, CEO
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 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.
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.
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/)
.
Chief Executive's Review
Strong US momentum and expansion
We have delivered record results across our financial metrics during the first
half of 2024, with revenue increasing 179% and ARR by 181% when compared to
2023. We have also seen significant momentum for Kooth in the US, highlighted
by the successful launch of Soluna on 1 January in California, a key
foundational pillar in the state's masterplan to transform youth mental
healthcare. When combined with our robust balance sheet, we are well placed to
continue investing in our services to improve the mental health of the
population and deliver health economic outcomes to save healthcare systems
money.
The benefit of this investment can be seen in Soluna, which is already making
an impact with young people from all 58 counties in California, with 53% of
users coming from communities disproportionately affected by health and
economic inequities. The significant uptake among young people impacted by
inequality underscores the importance of our role in addressing health
inequities in the US. We continue to see encouraging data which demonstrate
the benefits of the platform. For example, among those engaging with mental
health coaches, 70% report positive outcomes from single-session therapy, and
95% would recommend Soluna to a friend.
Since launching Soluna we have also enhanced its capabilities. In the first
half of the year, we introduced video-based 1-2-1 coaching to complement
existing chat and phone options. We also launched care navigation support,
making Soluna a digital front door for mental healthcare and welfare services
across California. This allows us to quickly connect young people needing more
acute or specialised care with appropriate local services. Looking ahead, we
anticipate that these advancements will not only help establish Soluna as a
strategic platform for transforming mental healthcare in California, but also
serve as a strong foundation for broader US and UK expansion.
We continued to make progress in the US with our first private sector
engagement, an initial one-year Medicaid partnership with Aetna Better
Health® of Illinois. Medicaid - the state- and federally-funded insurance
programme for low-income families - represents a $30.1 billion annual cost 1
(#_ftn1) for youth behavioural health, with around 40 million children and
young people across the US covered by Medicaid. Partnering with Medicaid
providers like Aetna offers a differentiated route to market for Kooth and
gives us the opportunity to deliver our services directly to millions of
children and young people who may otherwise not be covered by State-led
programmes. Given the growing demand and cost of behavioural healthcare, our
partnership with Aetna aims to provide early intervention support to young
people, reducing the need for more intensive and expensive downstream care.
The service in Illinois launched in August, with our ambition to demonstrate
our initial impact in Chicago before expanding across the state and
potentially into the 15 other states where Aetna Better Health® operates.
Finally, in Pennsylvania, we continue to provide support to the student
population as we finalise our commercial agreements with the state. While we
saw a successful pilot of the service with one-in-ten of the eligible
population using Kooth in its first year, the complexities of negotiating
bipartisan agreements in the state have been a key learning for us as we look
to future contracts elsewhere. Post-period end, an extended contract covering
a period till mid-2025 has been agreed with the Department of Human Services,
supported by an initial tranche of funding. Kooth is continuing to negotiate
with relevant parties within Pennsylvania to finalise the total contract award
and will update the market in due course.
Navigating the UK market
We have been pleased to see the positive indications from the new Government
on the critical importance of improving access and investing in preventative
mental health services, however the systemic challenges within the NHS, and
the number of competing priorities faced in the short-term, suggest that
substantial change will likely take some time. To ensure that our voice
continues to be heard, we have bolstered our advocacy efforts as a champion
and pioneer in digital mental health. For example, in June we hosted our first
UK-US knowledge exchange event, bringing together stakeholders from
California's mental health ecosystem with UK policy influencers and
third-sector leaders. The events focused on the shared ambition and learnings
in building a healthcare ecosystem focused on prevention, designing services
'with and for' young people, and improving access. We also intend to
demonstrate our commitment to innovation by launching Soluna in the UK,
expected in Q2 2025, which we believe will help grow usage and impact of the
service.
More broadly, our strategic focus has been on delivering value and impact
within our existing contracts and demonstrating the clinical benefits and
cost-effectiveness of early digital intervention. We believe that if Kooth can
continue to demonstrate its potential to have a positive impact on both youth
mental health and healthcare system savings, we will play a crucial role in
the future of the NHS.
Current trading and outlook
Looking ahead, our focus remains on driving innovation and scaling our
technology platform and organisation to meet the growing demand for our
services. In the US, we see significant opportunities as State Governments and
Medicaid payors continue to invest in improving youth mental health provision.
Given this investment, and recognition of the severe unmet need, we are
optimistic about expanding our presence and demonstrating the value of Kooth's
solutions in additional markets. This is supported by a strong pipeline of new
business in the US, where we anticipate two new pilot contracts being signed
later this year.
In the UK, our commitment to delivering impactful mental health support and
advocating for digital transformation remains our key priority. We will
continue to invest in our technology, systems and talent to support this
mission, leveraging our experience and success in the US to inform and
advocate for transformative change.
We remain confident in our ability to deliver strong results for the full
year. Kooth is well-positioned to address the global challenge of youth mental
health, and we will continue to focus on scaling our impact, enhancing our
services and fulfilling our mission to provide accessible mental health
support to those who need it most.
Tim Barker
Chief Executive
Chief Financial Officer's review
Kooth delivered a strong performance in the period, supported by record
increases across revenue and annual recurring revenue, a strong gross margin
as well as significant investment in our platform and the business for the
half year ended 30 June 2024 as compared to the six months ended 30 June 2023.
Key Performance Indicators
Total Revenue
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
£5.9m £8.0m £9.0m £11.7m £32.5m
Revenue is a KPI which reflects the work we are doing and the fees received
over a period of time for that work. It has been driven by US growth, fee
uplifts within 'Children and Young People' offset by churn in our UK revenue
lines.
Annual Recurring Revenue
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
£13.1m £16.6m £18.5m £21.4m £60.0m
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. Our growth in the period is
predominantly driven by US expansion in California.
Gross Margin
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
69.6% 69.4% 68.4% 66.8% 82.4%
Gross margin is gross profit expressed as a percentage of revenue. Direct
costs are the costs of our practitioners directly involved in the delivery of
our services. We have seen an increase in gross margin driven by the US with
the roll out of the Soluna app where we are initially seeing lower
practitioner costs as contract usage ramps up and a greater use of the
community and self guided tools. Gross margin has further benefitted from
California revenues including a contribution to platform development, the cost
of which is either included in overheads or capitalised and amortised.
Adjusted EBITDA
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
£0.5m £1.1m £0.5m £0.0m £7.8m
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. Growth
has been driven by revenue from our California contract and a strong gross
margin.
Net Cash
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
£0.6m £8.8m £8.3m £5.9m £14.9m
Net Cash is a key metric as it provides assurance on our ability to invest to
grow the business, as well as provide comfort to customers from a vendor risk
perspective. The increase in the period derives from working capital
management as well as cash generated from operations offset by investment in
our platforms.
Population coverage
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
5.9m 9.5m 15.1m 16.7m 19.9m
The total number of people who have access to the Kooth service is a good
indicator of our accessibility. The H1 2024 figure represents the additional
population added in California less churn within our UK adult contracts.
Service user logins
H1 2020 H1 2021 H1 2022 H1 2023 H1 2024
1.0m 1.2m 1.4m 1.4m 1.4m
The number of logins to Kooth from users over the last twelve months (LTM),
demonstrating usage of our service.
Revenue
Revenue increased by 179% to £32.5m (2023 H1: £11.7m), Annual Recurring
Revenue (ARR) grew by 181% to £60.0m (2023 H1: £21.4m), driven by the
California contract win in H2 2023.
US Revenue in H1 2024 was £23.3m (2023 H1: £1.8m) 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 £9.2m (2023 H1: £9.8m) reflecting an increase
in churn in our English contracts being a combination of funding unavailable
to continue pilot contracts, reductions as contracts consolidated and a single
competitive loss. Overall, UK churn for the previous 12 months was 13%
(£2.4m) 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 2024 of 92%.
This has decreased from 100% recorded in H1 2023.
Gross Profit
Gross Profit increased 244% from £7.8m to £26.8m, with gross margin
increasing to 82.4% (2023 H1: 66.8%). Direct costs are the costs of the
practitioners directly involved in the delivery of our services, a total of
303 at the period-end (2023 H1: 251 heads). Gross margin benefitted from the
contribution within US revenues to the development of the Soluna platform
where costs are either capitalised and amortised or included in overheads as
well as lower practitioner costs as contract usage ramps up and a greater use
of the community and self guided tools in the platform. We also saw
productivity improvements and the churn of lower margin contracts in the UK
leading to a small increase in UK gross margins.
Foreign currency impact
The US Dollar/GBP exchange rate was relatively stable during the period under
review during which the Group had approximately 72% 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 £0.1m (2023 H1:
nil). Post period end we have seen sterling strengthen against the US dollar
which is expected to impact revenue in the second half. This is not
anticipated to have a significant influence on margin or profitability.
Adjusted EBITDA
Adjusted EBITDA in the period increased from £0.0m to £7.8m, with the
£19.0m increase in gross profit outweighing a £11.2m increase in
administrative expenses (excluding amortisation, depreciation and share based
payments). Whilst UK costs increased in line with salary inflation, the
majority of the increase related to the first full period of costs following
the build out of the US teams supporting our California contract alongside
significant promotion and marketing costs in support of raising user awareness
and engagement including hard to reach communities. 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.
The total charge for share based payments in the period was £0.5m (2023 H1:
£0.4m) with the rise reflecting a higher number of participants as we
increased our headcount. Within administrative expenses, depreciation and
amortisation increased to £2.6m (2023 H1 £1.5m) as capital expenditure
increased for the US platform build following the California contract win.
Adjusted EBITDA for the full year is expected to be comfortably in line with
market expectations, taking account of the fact that certain costs are skewed
to the second half.
Taxation
The overall tax charge for the period was £1.1m (2023 H1: £1.2m credit) due
predominantly to taxable profits accumulated in the US. This is partly offset
by expected Research and Development expenditure credits in the UK. The prior
period credit related to Research and Development expenditure credits and
taxable losses.
Profit after tax
The Group profit after tax for the period was £3.9m (2023 H1: £0.5m loss).
Basic earnings per share were 11p (2023 H1: 2p loss). Diluted earnings per
share were 10p (2023 H1: 2p loss).
Balance Sheet
The strength of the Group's balance sheet with net assets of £25.3m (2023 H1:
£10.6m), 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 inflow during the six months was £3.9m (2023 H1: £2.6m outflow). The
focus on US platform investment gave rise to capital expenditure of £3.9m
(2023 H1: £3.5m), offset by cash inflows from operating activities of £7.7m
giving a net cash position at 30 June 2024 of £14.9m (2023 H1: £5.9m). The
Group remains debt free and maintains an undrawn $9.5m working capital credit
facility.
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 2024
(2023: £nil) 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 2024
Note Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 8 32,494 11,660 33,337
Cost of sales 9 (5,727) (3,872) (7,480)
Gross profit 26,767 7,788 25,857
Administrative expenses 9 (22,078) (9,606) (28,119)
Operating Profit/(Loss) 4,689 (1,818) (2,262)
Analysed as:
Adjusted EBITDA 7,841 9 2,257
Depreciation & amortisation 12 (2,607) (1,451) (3,775)
Share based payment expense (545) (376) (744)
Operating Profit/(Loss) 4,689 (1,818) (2,262)
Interest income 301 91 298
Profit/(Loss) before tax 4,990 (1,727) (1,964)
Tax 10 (1,070) 1,202 1,795
Profit/(Loss) after tax 3,920 (525) (169)
Other comprehensive income/(expense)
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences 72 - (161)
Total comprehensive Profit/(loss) for the period 3,992 (525) (330)
Profit/(Loss) per share - basic (£) 11 0.11 (0.02) (0.00)
Profit/(Loss) per share - diluted (£) 11 0.10 (0.02) (0.00)
Condensed Consolidated Balance Sheet
As at 30 June 2024
Note 30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 511 511 511
Development costs 12 10,179 5,794 8,750
Right of use asset 31 53 42
Property, plant and equipment 302 150 304
Deferred tax asset 1,537 1,626 2,649
Total non-current assets 12,560 8,134 12,256
Current assets
Trade and other receivables 13 6,234 2,355 7,174
Contract assets 2,157 180 251
Cash and cash equivalents 14,940 5,850 11,004
Total current assets 23,331 8,385 18,429
Total assets 35,891 16,519 30,685
Liabilities
Current liabilities
Trade payables (1,001) (1,047) (1,555)
Contract liabilities (5,738) (3,096) (5,156)
Lease liability (34) (54) (44)
Accruals and other creditors (3,551) (913) (2,521)
Tax liabilities (312) (769) (651)
Total current liabilities (10,636) (5,879) (9,927)
Net current assets 12,694 2,506 8,502
Net assets 25,255 10,640 20,758
Equity
Share capital 1,831 1,653 1,825
Share premium account 23,444 14,229 23,444
Retained earnings 1,627 (3,120) (2,503)
Share-based payment reserve 2,431 1,867 2,142
Capital redemption reserve 115 115 115
Merger reserve (4,104) (4,104) (4,104)
Translation reserve (89) - (161)
Total equity 25,255 10,640 20,758
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
Share capital Share premium Share Based Payment reserve Retained earnings 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
Share based payments - - 646 - - - - 646
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
Balance at 1 July 2023 1,653 14,229 1,867 (3,120) 115 (4,104) - 10,640
Comprehensive income for the period - - - 356 - - - 356
Other comprehensive income - - - - - - (161) (161)
Total comprehensive income 1,653 14,229 1,867 (2,764) 115 (4,104) (161) 10,835
Transactions with owners:
Share options exercised 7 - (261) 261 - - - 7
Share based payments - - 120 - - - - 120
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
Comprehensive income for the period - - - 3,920 - - - 3,920
Other comprehensive income - - - - - - 72 72
Total comprehensive income 1,825 23,444 2,142 1,417 115 (4,104) (89) 24,750
Transactions with owners:
Share options exercised 6 - (210) 210 - - - 6
Share based payments - - 499 - - - - 499
As at 30 June 2024 1,831 23,444 2,431 1,627 115 (4,104) (89) 25,255
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Profit/(Loss) for the period 3,920 (525) (169)
Adjusted for:
Depreciation & amortisation 2,607 1,451 3,775
Income tax (paid)/received (456) 569 569
Share based payment expense 545 376 744
Tax expense/(income) recognised 1,070 (1,202) (1,795)
Interest income (301) (91) (298)
Movements in working capital:
(Increase)/decrease in trade and other receivables (966) 651 (4,158)
Increase / (decrease) in trade and other payables 1,240 (384) 3,199
Net cashflow from operating activities 7,659 845 1,867
Cash flows from investing activities
Purchase of property, plant and equipment (77) (70) (291)
Additions to intangible assets (3,947) (3,508) (8,713)
Interest income 301 91 298
Net cash used in investing activities (3,723) (3,487) (8,706)
Cash flows from financing activities
Proceeds from issue of share capital - - 9,923
Costs incurred from the issue of share capital - - (536)
Net cash from financing activities - - 9,387
Net increase / (decrease) in cash and cash equivalents 3,936 (2,642) 2,548
Exchange adjustments - - (36)
Cash and cash equivalents at the beginning of the period 11,004 8,492 8,492
Cash and cash equivalents at the end of the period 14,940 5,850 11,004
Notes to the half year financial statements
1. General information
The unaudited interim consolidated financial statements for the six months
ended 30 June 2024 and the six months ended 30 June 2023 do not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2023 were approved by
the Board of Directors on 25 March 2024 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 16 September 2024.
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 2023.
Trading for the half year ended 30 June 2024 is aligned with the Board's
expectations, and management expectations for the full year remain unchanged.
Further details are given in the CEO's overview, the operational review and
the financial review.
During the period the Group has generated a profit of £3.9m (2023 H1: loss of
£0.5m) and is in a net asset position of £25.3m as at 30 June 2024 (2023 H1:
net assets of £10.6m). 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 2023.
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 2023 Group Annual Report.
5. Principal risks and uncertainties
The 2023 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, changes in laws and
regulations and cyber security and data protection, our people and the
economic environment. 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, foreign
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 2023
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 (CODM). 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. Accordingly, the CODM
determines the Group currently operates under one reporting segment.
8. Revenue analysis
The total turnover of Kooth plc has been derived from its principal activity
undertaken in the UK and the US. A geographical analysis of revenue by
customer location is provided below:
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Provision of online counselling contracts - UK 9,243 9,817 19,143
Provision of online counselling contracts - US - 1,466 1,466
Platform build and behavioural support services contracts - US 23,251 377 12,728
32,494 11,660 33,337
9. Operating profit/(loss)
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Labour costs 5,600 3,821 7,354
Share based payment expense 122 35 100
Travel and subsistence 5 16 26
Total cost of sales 5,727 3,872 7,480
Labour costs 14,115 5,583 15,855
Rent and rates 308 260 492
IT hosting and software 1,200 692 1,450
Professional fees 1,645 948 3,948
Marketing 1,626 286 1,650
Depreciation and amortisation 2,607 1,451 3,775
Share based payment expense 424 341 644
Other costs 154 45 305
Total administrative expenses 22,078 9,606 28,119
Total cost of sales and administrative expenses 27,805 13,478 35,599
Cost of sales represent the costs of our service user facing employees
including external contractors.
10. Taxation
The income tax charge recognised £1.1m (2023 H1: £1.2m credit) reflects
management's estimate of the tax charge for the current period. This
calculation takes into consideration the estimated taxable profit incurred
from operational activities during the period, as well as relief earned under
the UK R&D scheme. The assessment utilises the 25% average UK corporation
tax rate (2023: 23.5%), the 21% average US federal tax rate (2023: 21%) and
8.8% average California state tax rate (2023: 8.8%) for the current financial
year.
11. 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 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Earnings used in calculation of earnings per share
Profit/(Loss) for the purposes of basic and diluted loss per share being net 3,920 (525) (169)
profit/(loss) attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 36,537,329 33,055,776 34,768,325
per share
Weighted average number of ordinary shares for the purposes of diluted 38,505,149 34,999,176 38,819,890
earnings per share
Profit/(Loss) per share - basic (£) 0.11 (0.02) (0.00)
Profit/(Loss) per share - diluted (£) 0.10 (0.02) (0.00)
12. Development costs
£'000
Cost
At 1 January 2023 10,315
Additions 3,508
At 30 June 2023 13,823
Additions 5,205
At 31 December 2023 19,028
Additions 3,947
At 30 June 2024 22,975
Amortisation
At 1 January 2023 (6,634)
Amortisation (1,395)
At 30 June 2023 (8,029)
Amortisation (2,249)
At 31 December 2023 (10,278)
Amortisation (2,518)
At 30 June 2024 (12,796)
Carrying amount
At 1 January 2023 3,681
At 30 June 2023 5,794
At 31 December 2023 8,750
At 30 June 2024 10,179
13. Trade and other receivables
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Trade receivables 5,128 1,767 5,801
Prepayments and other receivables 1,106 588 1,373
6,234 2,355 7,174
All amounts shown above are short term. The net carrying value of trade
receivables is considered a reasonable approximation of fair value.
14. Post balance sheet events
No significant events have taken place after the period end date.
1 (#_ftnref1)
https://www.chcs.org/resource/faces-medicaid-childrens-behavioral-health-care-utilization-costs
(https://www.chcs.org/resource/faces-medicaid-childrens-behavioral-health-care-utilization-costs)
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