TIDMKOO
RNS Number : 3579M
Kooth PLC
21 September 2021
Kooth plc
("Kooth or the "Company" or the "Group")
21 September 2021
Half year results
Momentum and growth; comfortably in line with FY
expectations
Kooth (AIM: KOO), a leading digital mental health platform
provider, announces unaudited half year results for the six months
ended 30 June 2021.
Strategic Highlights
-- Children and Young People: we are contracted by more than 90%
of NHS England CCGs (2020: 85%).
-- Kooth Adult (early intervention for adults, via NHS) 'whole
population' total contracts doubled in H1 vs 2020. Kooth Adult now
represents GBP1.5m ARR.
-- Kooth Work (employee wellbeing) growth into membership-based
businesses included, for example, the Chartered Management
Institute.
-- Ongoing investment in talent, technology, and outcome
measures to deliver personalised, effective care.
Financial Highlights
-- Revenues up 35% to GBP8.0m (H1 2020: GBP5.9m).
-- Robust balance sheet with net cash of GBP8.8m provides capacity for investment.
-- Annual Recurring Revenue (ARR) up 23% to GBP16.6m.
-- Adjusted EBITDA up 135% to GBP1.1m.
-- High quality of earnings:
o More than 90% revenues from contracts of 12 months or
longer.
o More than 95% customer retention by revenue.
Tim Barker, Chief Executive of Kooth said:
"With NHS waiting lists for mental health now totalling 1.8m
people, the imperative and opportunity to provide high quality
support via digital has never been clearer. Kooth's growth and
performance reflects good progress on our mission to make
effective, personalised digital mental health care available to
all. In the last six months, Kooth has further strengthened its
position as the leading digital platform supporting children and
young people via the NHS, and we are delivering on our objectives
to expand support to Adults via the NHS and Corporates.
"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. Looking
to the full year outturn, we expect Group revenue to be comfortably
in line with expectations."
For further information, please contact:
Kooth plc
Tim Barker, Chief Executive investorrelations@kooth.com
Sanjay Jawa, Chief Financial Officer
Panmure Gordon, Nominated Adviser and
Broker
Corporate Finance:
Dominic Morley, Ailsa MacMaster
Corporate Broking:
Erik Anderson +44 (0) 20 7886 2500
FTI Consulting
Jamie Ricketts / Alex Shaw / Usama Ali kooth@fticonsulting.com
Notes to Editors:
About Kooth
Kooth (AIM:KOO) is the UK's leading digital mental health
platform, established to provide accessible and safe spaces for
everyone to achieve better mental health. The Company's online
platform is clinically robust and accredited to provide a range of
therapeutic support and interventions. All services are predicated
on easy access to make early intervention and prevention a
reality.
Kooth offers three services:
-- Kooth is commissioned in over 90% of the NHS's clinical
commissioning group areas across the country. It 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 3,000 logins a day.
-- Kooth Adult 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.
-- Kooth Work is a corporate service, aimed specifically at
employers to support the wellbeing of their employees, providing
confidential and anonymous access to a wellbeing community,
counselling, content and self-help tools. Kooth Work provides
valuable, anonymous insights into the wellbeing of the workforce so
that employers can identify specific areas of improvement for their
wellbeing strategy.
Chief Executive's Review
Momentum and progress
The Group continues to make good progress against its strategic
priorities: growing its leadership position in supporting children
and young people via the NHS, and expanding to support Adults via
the NHS and Corporate market.
This was reflected in revenue growth of 35% and adjusted EBITDA
growth of 135%.
We've seen further contract expansion and high customer
retention across the business, retaining 95% of our customers and
delivering net revenue retention of 116%. In the Children and Young
Persons market we now cover more than 90% of Clinical Commissioning
Groups (CCGs) in England, Our Adult platform via the NHS has seen
good momentum, doubling the total number of 'whole populations'
contracts we operate to 16. In the corporate market, new customer
partnerships with the Chartered Management Institute and Capita
demonstrate the opportunity for innovators to embed employee mental
wellbeing into their business model.
In addition, the London School of Economics published an
independent study which found that Kooth's self-help activities are
beneficial to 96% of users. Kooth's peer support community helps
reduce stigma, with 77% of users more likely to seek support for
their mental health after engaging.
Strategy
Kooth has a clear four-pillar growth strategy to support the
increasing demand for mental health services in the public and
private sector, all underpinned by investments in our technology
platform and clinical operating model:
1. Continue to scale Kooth to support young people
2. Replicate our success into the adult public sector market
3. Bring the benefits of Kooth to every workplace
4. Expand into international markets.
Children and Young People
Kooth is the Group's service for the provision of free at the
point of use services for children and young people (CYP)
Kooth is now contracted by more than 90% of NHS England CCGs to
support the mental health needs of children and young people (FY20:
85%). This includes full coverage across all 32 London boroughs,
seven Welsh Health Boards, and our first two contracts in
Scotland.
Kooth Adult
Kooth Adult provides early intervention support to adults via
the NHS .
The Group's focus on 'whole population' contracts is building
momentum, adding eight commissions in the first half of 2021 to the
five that were contracted in 2020. In addition, we have seen an
increase in average contract size. Adult ARR is now GBP1.5m.
Kooth Work
Kooth Work supports corporates with employee wellbeing
Kooth Work continues to expand to help employees reach their
full potential at work. As announced in April 2021, the Chartered
Management Institute has partnered with Kooth to provide free
mental health support to their UK members. In addition, Kooth has
been commissioned by Capita to provide mental health support to
job-seekers as part of Capita's programme to help those made
unemployed as a result of COVID find work. This demonstrates the
potential to integrate mental health support alongside other
services to reduce stigma, and increase reach and impact.
Investing for long-term growth
Kooth is investing in its talent and technology platforms to
drive its growth strategy and meet increasing demand for digital
mental health support and tools. This is intended to capture the
long-term market opportunity available both in the UK and
internationally.
Key progress in H1 includes:
Evidencing the therapeutic outcomes for Kooth is key in
advancing the business case for digital mental health care.
However, digital isn't just about mirroring traditional
face-to-face support, it enables entirely new care models, such as
a drop-in chat session. To prove the impact of this, Kooth
collaborated with the CORC (Child Outcomes Research Consortium) to
independently validate a new therapeutic measure called SWAN-0M
(Session Wants and Needs Outcome Measure) which shows that 72% of
users achieve a good outcome from a single chat session on
Kooth.
As a first step into supporting international markets, Kooth and
the Department of International Trade have developed and are
delivering a pilot project in South Africa, with support from the
Western Cape Education Department and British Council South Africa
to demonstrate the impact of the Kooth service in supporting Young
People and strengthening educational professionals' confidence in
managing mental health at school.
Current trading and outlook
Kooth will continue to invest in its technology platform,
systems and talent in the second half of 2021. This is part of
Kooth's strategy to meet long-term demand for digital mental health
services.
With closing annual recurring revenue at 30 June 2021 of
GBP16.6m the Board expects Kooth to be comfortably in line with
revenue expectations for the full year. This reflects Kooth's good
progress against its priorities for the first half which included
maintaining its leadership position in supporting children and
young people via the NHS as well as doubling the number of Kooth
Adult 'whole population' contracts.
Tim Barker
Chief Executive
21 September 2021
Chief Financial Officer's review
The Group has had a positive first half of the year and as
reported we expect revenue to be comfortably in line with market
expectations for the full year.
The Group has seen an increase across revenue, annual recurring
revenue, gross margin, EBITDA and operating profit for the half
year ended 30 June 2021 in comparison to the six months ended 30
June 2020.
Revenue
Revenue increased by 35% to GBP8.0 million (2020 H1: GBP5.9
million), Annual Recurring Revenue grew by 23% to GBP16.6 million
(2020 H1: GBP13.5 million), with 22 new contracts obtained in the
first half of 2021 across all service types in addition to a number
of contract uplifts. Churn for the period was less than 5%.
Gross Profit
Gross Profit as a percentage of turnover increased during the
period by 3.6 percentage points from 59.7% to 63.3%. This was
primarily an accounting change (2.5 percentage points)
reclassifying certain clinical costs from direct to indirect costs.
This is an ongoing change. To a lesser extent we continued to see
some lower direct costs as a result of lockdown as most engagement
meetings continued to be conducted virtually. This led to a
reduction in travel and subsistence costs as well as allowing the
team to reach more users.
Adjusted EBITDA
Adjusted EBITDA in the period increased from GBP0.5m to GBP1.1m
with increased gross profit offset by higher administrative
expenses including the costs of being a public company and the
receipt in 2020 of GBP0.5m of other operating income relating to a
government research grant. The total charge for share based
payments in the period was GBP0.3m (2020 H1: GBP0.1m). This
increase reflects the awards made under the senior and all staff
2020 Long Term Incentive Plan following our IPO.
Exceptional items
No exceptional costs were incurred during the period (2020 H1:
GBP0.4m). Prior year costs in the period to 30 June related to pre
IPO related expenses.
Taxation
There has been no corporation tax charge recognised in the six
months to 30 June 2021 due to accumulated losses combined with the
overall current year position (2020 H1: GBPnil). The tax credit for
the six months ended 30 June 2021 and 2020 relate to Research and
Development expenditure credits in addition to the movement in the
deferred tax asset.
Profit after tax
The Group achieved a profit after tax for the period of GBP0.04
million (2020 H1: GBP0.8 million loss).
Headcount
Headcount has increased from the year end by 46 staff members
across the Group to 352, with an investment drive to build out our
Service Delivery and Product and Technology teams as well as
clinical and commercial staff across the wider business to drive
our growth strategies.
Balance Sheet
Kooth has maintained a robust balance sheet following the
successful IPO in September 2020 which raised GBP16m prior to
expenses and repayment of debt, with net cash at 30 June 2021 of
GBP8.8m (2020 H1: GBP0.6m), demonstrating good underlying cash
generation and ensuring capacity to invest in the Group's long-term
growth.
Cash flow and financing
Cash generation during the six months was GBP1.0 million (2020
H1: GBP0.4 million), driven by increased revenues and gross profit
including an increased number of customers paying in advance.
After repaying all debts in the second half of 2020, the Group
is debt free (2020 H1: GBP6.4 million).
The Group is committed to investment following the IPO listing
and as a result capital expenditure increased 96% to GBP1.5 million
(2020 H1: GBP0.8 million), with increases to our Product and
Technology teams and project costs.
Sanjay Jawa
Chief Financial Officer
21 September 2021
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2021
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Note Unaudited Unaudited Audited
Continuing operations GBP'000 GBP'000 GBP'000
Revenue 9 7,964 5,901 13,012
Cost of sales (2,925) (2,380) (5,091)
Gross profit 5,039 3,521 7,921
Administrative expenses (5,184) (4,715) (10,049)
Other operating income - 497 497
Operating Loss (145) (697) (1,631)
Analysed as:
Adjusted EBITDA 1,130 477 934
Depreciation & amortisation 13 (970) (682) (1,498)
Exceptional items - (411) (580)
Share based payment expense (305) (101) (507)
Gain on disposal of subsidiary - 20 20
Operating Loss (145) (697) (1,631)
------------------------------------------- ---- ---------- ---------- ------------
Interest paid - (224) (314)
Loss before tax (145) (921) (1,945)
Tax 183 150 467
Profit/(Loss) after tax from continuing
operations 38 (771) (1,478)
---------- ---------- ------------
Profit/(Loss) after tax from discontinued
operations - 1 1
Total comprehensive profit/(loss)
for the period 38 (770) (1,477)
---------- ---------- ------------
Profit/(Loss) per share - basic
(GBP) 11 0.00 (0.04) (0.06)
On continuing operations 0.00 (0.04) (0.06)
On discontinued operations - 0.00 0.00
Profit/(Loss) per share - diluted
(GBP) 0.00 (0.03) (0.06)
On continuing operations 0.00 (0.03) (0.06)
On discontinued operations - 0.00 0.00
Condensed Consolidated Balance Sheet
As at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 511 511 511
Development costs 13 3,131 2,473 2,615
Right of use asset 10 20 14
Property, plant and
equipment 139 164 157
Deferred tax 156 - 133
Total non-current
assets 3,947 3,168 3,430
Current assets
Trade & other receivables 2,083 3,451 2,097
Contract assets 190 362 107
Cash & cash equivalents 8,799 601 7,823
Total current assets 11,072 4,414 10,027
Total assets 15,019 7,582 13,457
Liabilities
Current liabilities
Trade payables (327) (634) (275)
Contract liabilities (1,838) (723) (619)
Borrowings - (6,402) -
Lease liability (10) (22) (17)
Accruals and other
creditors (808) (1,716) (866)
Deferred tax - (31) -
Tax liabilities (859) (1,556) (827)
Total current liabilities (3,842) (11,084) (2,604)
Net current assets 7,230 (6,670) 7,423
Net Assets / (Liabilities) 11,177 (3,502) 10,853
---------- ---------- -----------
(continued)
Equity
Share capital 1,653 - 1,653
Share premium Account 14,229 4 14,229
P&L reserve (1,531) (3,607) (1,569)
Share-based payment
reserve 815 101 529
Capital redemption
reserve 115 - 115
Merger reserve (4,104) - (4,104)
Total equity 11,177 (3,502) 10,853
------- ------- -------
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2021
Six months Six months Year ended
ended 30 ended 30 June 31 December
June 2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(Loss) for the period
from continuing operations 38 (771) (1,478)
Profit/(Loss) for the period
from discontinued operations - 1 1
Adjustments:
Depreciation & amortisation 970 682 1,498
Income tax received - - 268
Share based payment expense 305 101 507
Interest expense - 224 314
Tax income recognised (183) (150) (466)
Gain on Disposal - (20) (20)
Movements in working capital:
(Increase)/decrease in trade
and other receivables 69 (1,530) 132
Increase/(decrease) in trade
and other payables 1,245 1,557 (396)
---------- -------------- ------------
Net cashflow from operating activity 2,444 94 360
Cash flows from investing activities
Purchase of property, plant and
equipment (34) (68) (107)
Additions to intangible assets (1,430) (684) (1,505)
---------- -------------- ------------
Net cash used in investing activities (1,464) (752) (1,612)
Cash flows from financing activities
Proceeds from issue of capital - 2 16,000
Cost incurred on issue of capital - - (1,378)
Receipt/(Repayment) of borrowings - 1,044 (4,249)
Interest paid - - (1,444)
Lease payments (4) (16) (81)
---------- -------------- ------------
Net cash from financing activities (4) 1,030 8,848
Net increase/(decrease) in cash
and cash equivalents 976 372 7,596
Cash and cash equivalents at
the beginning of the period 7,823 229 227
---------- -------------- ------------
Cash and cash equivalents at
the end of the period 8,799 601 7,823
---------- -------------- ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2021
Share Capital Share Premium Share Based P&L Reserve Capital Merger reserve Total Equity
Payment Redemption
Reserve Reserve
Balance at 1
January 2020 - 4 - (2,837) - - (2,833)
Share based
payments - - 101 - - - 101
Total
comprehensive
income
for the period - - - (770) - - (770)
------------- ------------- ----------- ----------- ----------- -------------- ------------
As at 30 June
2020 - 4 101 (3,607) - - (3,502)
Balance at 1 July
2020 - 4 101 (3,607) - - (3,502)
Issue of share
capital 400 14,225 - - - 14,625
Share for share
exchange 3,989 - - - 115 (4,104) -
Capital reduction (2,736) - - 2,736 - - -
Share based
payments - - 428 - - - 428
Deferred tax - - - 10 - - 10
Total
comprehensive
income
for the period - - - (708) - - (708)
------------- ------------- ----------- ----------- ----------- -------------- ------------
As at 31 December
2020 1,653 14,229 529 (1,569) 115 (4,104) 10,853
Balance at 1
January 2021 1,653 14,229 529 (1,569) 115 (4,104) 10,853
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
Notes to the half year financial statements
1. General information
The unaudited interim consolidated financial statements for the
six months ended 30 June 2021 and the six months ended 30 June 2020
do not constitute statutory accounts within the meaning of Section
434 of the Companies Act 2006. Statutory accounts for the year
ended 31 December 2020 were approved by the Board of Directors on
13 April 2021 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 2021.
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 2020.
Trading for the half year ended 30 June 2021 was comfortably in
line with the Board's expectations, and this is expected to be the
case for the full year. Further details are given in the Chief
Executive report.
The Group is in a net asset position of GBP11.2 million as at 30
June 2021 (2020: net liabilities of GBP3.5 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 Group. 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 2020.
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 2020 Group annual report.
5. Principal risks and uncertainties
The 2020 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 2020 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.
As Kooth plc's operations are all in one location within the
United Kingdom, the Directors are of the opinion that the Group has
only one reportable operating segment, this is in line with
internal reporting provided to the executive directors.
9. 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 Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue generated from counselling
platform 7,964 5,901 13,012
10. 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% (2020: 19%).
11. Earnings per share (EPS)
The calculation of basic and diluted EPS is based on the
following earnings and number of shares:
Year ended
Six months ended Six months ended 31 December
30 June 2021 30 June 2020 2020
Unaudited Unaudited Audited
Basic GBP'000 GBP'000 GBP'000
Earnings used in calculation
of earnings per share:
On total losses attributable
to equity holders of
the parent 38 (770) (1,477)
On continuing operations 38 (771) (1,478)
On discontinued operations 1 1
Weighted average no.
of shares (basic) 33,055,776 20,000,000 24,351,925
Weighted average no.
of shares (diluted) 34,023,265 23,865,304 24,685,152
Shares in issue 2021 2020 2020
B shares in issue - 5,055,776 -
Ordinary shares in issue 33,055,776 20,000,000 33,055,776
LTIP 967,489 - 999,681
Loss per share - Basic
(GBP)
On total profits attributable
to equity holders of
the parent 0.00 (0.04) (0.06)
On continuing operations 0.00 (0.04) (0.06)
On discontinued operations - 0.00 0.00
Loss per share - Diluted
(GBP)
On total profits attributable
to equity holders of
the parent 0.00 (0.03) (0.06)
On continuing operations 0.00 (0.03) (0.06)
On discontinued operations - 0.00 0.00
12. 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 2021 (2020: GBPnil) and does not anticipate
recommending a dividend within the next year, but may do so in
future years.
13. Development costs
Development
costs
GBP'000
Cost
At 1 January 2020 3,297
Additions 684
At 30 June 2020 3,981
Additions 846
At 31 December 2020 4,827
Additions 1,430
-----------
At 30 June 2021 6,257
Amortisation
At 1 January 2020 (895)
Amortisation (613)
At 30 June 2020 (1,508)
Amortisation (705)
At 31 December 2020 (2,213)
Amortisation (913)
-----------
At 30 June 2021 (3,126)
Carrying amount
At 1 January 2020 2,402
At 30 June 2020 2,473
At 31 December 2020 2,615
-----------
At 30 June 2021 3,131
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IR BSGDCLUDDGBG
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