26
March 2024
Kooth Plc
("Kooth", the
"Company" or the
"Group")
Full Year
Results
2023 revenues up 66% to
£33.3 million
Significant US growth and
investment in in-market capabilities to expand into additional
States
Kooth (AIM: KOO), a global leader in
youth digital mental well-being, announces audited results for the
12 months ended 31 December 2023. All figures relate to this
period unless otherwise stated.
Strategic and post-period end highlights
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Successful launch of contract with
California Department of Health Care Services (DHCS) to deliver
behavioural health care to the State's population of 13-25 year
olds, representing an expected $188 million, four-year opportunity
with possible revenue upside based on usage levels and product
development
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Development and launch of Soluna,
Kooth's next-generation platform to help build mental health
skills-for-life, access peer-support and professional
help
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First US Medicaid strategic
partnership with Aetna Better Health Illinois to support youth in
low-income families
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Strong uptake in Pennsylvania pilot,
with 1-in-10 high school students accessing Kooth
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Accelerated investment in US
Government sales to expand into additional States
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UK CYP services stable despite NHS
headwinds with short-term funding pressures
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Financial Highlights
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2023 revenues of £33.3 million,
increasing 66% year-on-year, driven by US growth and continuing
adoption of digital-first healthcare
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£64.6 million year end Annual
Recurring Revenue, representing growth of 206% compared to prior
year
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98% of revenue derived from
contracts of 12+ months
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98% UK Net Revenue Retention (2022:
107%)
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8.7 percentage point gross margin
increase, driven by increased US revenue mix and contribution to
product development
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£11.0 million net cash compared to
£8.6 million prior year
Strong, debt-free balance sheet with
net cash generated from operations of £1.9 million, bolstered by
net proceeds of £9.4 million from Kooth's successful equity
fundraise in July 2023
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Current trading and outlook
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Opportunity for Kooth in the US
remains unchanged, driven by the continued need from both US State
governments and Medicaid payers to invest further in youth mental
health
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UK headwinds remain, given NHS
short-term financial pressures to address the 2023/24 budget
deficit. Kooth's focus remains on continuing to demonstrate the
impact and savings that it generates when commissioned in a
region
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Robust balance sheet enabling Kooth
to invest to meet long-term, increasing demand for its
services
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Kooth's proven track record, strong
recurring revenue and net cash position give it an excellent
platform for profitable growth as it enters 2024 with the
expectation of gross margins of >70%, an EBITDA margin in the
mid-teens and rising thereafter
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The strength of Kooth's model,
strategy and market position - allied to long-term demand for
digital mental health services in the UK and US - support the
Company's confidence of further progress in the year
ahead
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·
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Revenue and EBITDA expected to be in
line with 2024 market expectations
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Tim
Barker, Chief Executive of Kooth, commented:
"In 2023 Kooth significantly
expanded its services and capabilities. We won the most significant
contract in our history in California to deliver behavioural health
care to the State's population of 13-25 year olds, representing a
$188 million, four-year opportunity. To support this contract, we
developed Soluna, our next-generation platform to help build mental
health skills-for-life, access peer-support and professional
help.
"We have delivered record financials
in 2023, with revenue increasing by 66% year on year to £33.3
million, and adjusted EBITDA growing to £2.3 million, an increase
of 40%. To support this growth, we have grown our headcount to end
2023 with 585 employees, of which over 200 are based in the US.
This means we are well placed to support and expand our services,
reflecting the continued need from both US State governments and
Medicaid payers to invest further in youth mental health. This need
was highlighted when, post-period end, we agreed a partnership with
Aetna Better, representing Kooth's first private-sector contract in
the US. In Pennsylvania, we were delighted that within a year of
launching Kooth over 1-in-10 high school students were accessing
Kooth, demonstrating strong uptake during the pilot phase of this
contract. Our UK offering remains stable in the face of ongoing
headwinds following the shift to the ICS structure and short-term
funding pressures, which we anticipate lasting until after 2024's
anticipated general election. Kooth remains well placed in the UK,
and the experience and data we will generate in the US from our
significant new contracts will allow us insights which will
differentiate us further from our competition, coupled with the
launch of Soluna in the UK which we anticipate will occur within
the next 12 months.
"This growth, coupled with our
strong balance sheet, ensures we are very well placed to take the
available opportunities to continue growing our business. I look
forward to working alongside our team to build on our successes in
2023 into 2024 and beyond as we seek to help ever more people in
the face of this growing, global crisis."
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Enquiries:
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Kooth plc
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investorrelations@kooth.com
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Tim Barker, CEO
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Sanjay Jawa, CFO
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Stifel, Nominated Adviser & Sole
Broker
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+44 (0) 20 7710 7600
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Ben Maddison, Nick Adams,
Nicholas Harland, Erik Anderson
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FTI Consulting
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kooth@fticonsulting.com
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Jamie Ricketts, Alex Shaw,
Usama Ali
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About Kooth plc:
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.
Chair's Statement
Without doubt, 2023 has been a
transformational year for Kooth, with significant growth and
progress towards our vision to build mentally healthier populations
by providing everyone with access to effective digital support from
their first moment of need. I want to thank all members of the team
in both the UK and US for their incredible hard work in delivering
on the opportunities that have presented themselves to us. In
addition, I want to record my appreciation to our customers who
entrust us as custodians for the mental health of their
populations.
Reflecting on the progress we have
made in the US since late 2021 - first in Pennsylvania, and then in
California - we are grateful for the endorsement of our innovation,
clinical efficacy, and scale. The rapid progress we are making in
the US would not be possible without the proof points we have
developed over decades in the UK.
As a result of our $188m expected
value, four-year contract win in California, we upgraded our growth
outlook, and I am pleased to report 2023 Group revenues of £33.3
million, a 66% increase over 2022 revenues of £20.1 million, and
over 40% increase in EBITDA to £2.3 million.
Given our rapid progress in
California in particular, we successfully raised £10m of equity in
July, primarily to invest in accelerating our US growth. I'm
pleased to report that this has enabled us to expand our Sales and
Research efforts, with discussions underway in a number of States,
and a partnership with Aetna to pilot Kooth in Illinois to support
youth in low-income families that qualify for Medicaid. The latter
represents a potentially significant expansion of our modes of
funding, and in turn a reinforcement of our market
position.
Turning to the UK, 2023 has been a
challenging year given the short-term financial and political
pressures to reduce spending to pre-pandemic levels, whilst
tackling the elective care waiting lists. Given the estimated £7
billion budget deficit at the start of 2023, NHS commissioners have
been faced with difficult decisions to scale back services to
balance budgets. As a result, churn in the UK has increased to
£2.3m, up from £2.0m in 2022, with Kooth Adult pilot contracts
being disproportionately impacted.
However, given the unsustainable,
continued double-digit increase in demand for mental healthcare,
and the political imperative to transform services for the benefit
of society, NHS productivity, and the economy, we anticipate an
improvement in the UK following the general election as NHS
priorities and funding solidify.
Despite these short-term headwinds,
Kooth's recurring revenue business model, with 98% of Kooth's
contracts having a duration of 12 months or more, gives us strong
forward revenue visibility, ending 2023 with £64.6m Annual
Recurring Revenue (ARR), up from £21.1m a year ago.
We enter 2024 with significant
growth opportunities, a solid financial position - £11.0m in cash,
no debt, and an undrawn $9.5m working capital credit facility - a
proven business model, and a strong social purpose.
Peter Whiting
Non-Executive Chair
25 March 2024
Chief Executive Officer's
statement
Delivering positive social impact,
cost effectively and at scale
What drew me to Kooth in 2020, in
addition to its strong social purpose, was the thoughtfulness with
which the team approached tackling the ever-growing demand for
mental healthcare. In many ways, it was contrary to the thinking at
the time:
● Building a tech-enabled service supported by professionals,
when everyone was trying to build apps that can scale without human
involvement.
● Growing
awareness and usage of the service by embedding engagement leads
within local communities, where others focused solely on digital
promotion.
● Developing a service that could support a whole population,
with the goal of reducing demand for acute mental health care,
where others were building networks of therapists solely to service
the demand for acute care.
A key reason why Kooth chose this
path was because the company is ultimately focused on what is going
to turn the tide on the growing crisis in mental health: we need to
build a mentally healthier population, leaving no-one
behind.
Over the four years that I have been
at Kooth, from the pandemic to today, every year has seen its own
opportunities and challenges. 2023 brought significant
opportunities in the US - and challenges in the UK given the
political and financial backdrop in the NHS. However, there are
clear moments in one's career that can be seen as pivotal to the
transformation of a business and its prospects. Based on strategic
progress in 2023, I believe this was such a year.
Executing on Kooth's strategy to expand in US
States
As is well documented in this year's
Annual Report, Kooth is significantly ahead of schedule on its US
expansion strategy. Firstly with Pennsylvania, and then with
California, it's clear that there was a growing imperative and
investment case for addressing youth mental health. Kooth's
transformational contract and partnership with California put the
company in the spotlight to execute and demonstrate its impact. In
discussions with many investors, execution risk was often cited as
the key area of concern given the size and scale of the contract.
Seeing the hard work that so many people did to launch Soluna (the
name of the platform and app in the US) initially in September 2023
and fully on 1st January 2024, I couldn't have wished to work with
a more engaged, passionate and expert team. As CEO, given the
opportunity that California has entrusted to Kooth, this will
remain mine and the team's number one priority throughout 2024 to
ensure the company is building a strong foundation for the future.
In addition, the £10m fundraise in July 2023 enabled Kooth to
engage with a growing pipeline of States to bring its services to
their population, and invest in research studies with US academic
partners to demonstrate Kooth's impact. I'm optimistic that Kooth
will expand into further States in 2024.
Executing on Kooth's strategy to support youth through
Medicaid managed care providers
More than 29 million under 18s -
almost 40% of the US youth population - are covered by Medicaid,
the Federal and State funded insurance programme for low-income
families; Annual Medicaid spending on youth behavioural health care
exceeds $30.2 billion. A key challenge for Medicaid programmes is
providing access to mental health support given the shortage and
cost of therapists. Through an innovative partnership and pilot
programme with Aetna Better Health of Illinois, agreed post-period
end, Kooth aims to demonstrate the impact the company can make in
building mentally healthier populations. This is a key pillar to
Kooth's US strategy.
Continuing to innovate in technology
to transform mental health care, Kooth's partnership and contract
with California significantly accelerated the development of the
company's product roadmap. It enabled us to build this
next-generation platform, incorporating everything Kooth has learnt
over time - co-produced with input from over 200 young people to
help build 'their dream mental health app'. Soluna will be the
platform and brand the company expands into other States, with
minimal capital expenditure required to do so. In addition, Kooth
will bring its enhanced platform to the UK in the next 12 months to
deliver a platform specifically designed for youth that is both
engaging and clinically effective.
Focusing on UK renewals and retention given NHS
headwinds
2023 was a more challenging year in
the UK for Kooth and the many organisations that serve the NHS.
With the reorganisation of NHS England from 135 Clinical
Commissioning Groups to 42 Integrated Care Systems finalised, their
challenge now is to balance the budgets to pre-pandemic levels and
address the forecast £7 billion budget deficit. While Kooth's team
worked continually to demonstrate its value in each region it
serves, the company at times saw highly successful services
decommissioned in response to these financial pressures. In a small
number of cases, a cheaper substitute - providing an informational
portal or peer-support only option - replaced Kooth. The UK is
Kooth's home market, and the company will continue to prioritise
and focus on its current customers. Post-election, Kooth
anticipates priorities and funding to become clearer.
Our
people
When I joined Kooth in early 2020,
the company had around 130 employees. Kooth ended 2023 with 585
employees across the US and UK, with staff in 26 States and all
corners of the UK. 2023 was a year where everyone at Kooth had to
step-up; to deliver on US opportunities, tackle UK headwinds and to
provide mental health support to people where the company continued
to see a long term increase in acuity, suicidal ideation and
self-harm. I couldn't be prouder of the attitude and achievements
of the team during these rapidly-changing times.
Outlook
Our proven track record, excellent
recurring revenue and net cash position give us a great platform as
we enter 2024. The strength of our model, strategy and market
position - allied to long-term demand for digital mental health
services in the UK and US - support our confidence of further
progress in the year ahead.
Tim
Barker
Chief Executive Officer
25 March 2024
Chief Financial Officer's statement
Significant growth
The results reflect a
transformational year for the business as we executed on our
strategic plans, delivering significant growth in the US, and built
solid foundations to support future growth in the UK and
internationally.
Revenue
I am pleased to report Group revenue
grew strongly during the year by a record 66% (2022: 21%) to £33.3
million (2022: £20.1 million). As previously reported, this has
been driven primarily by our US growth, predominantly our contracts
during the year in California and Pennsylvania, which delivered
£14.2 million (2022: £1.5 million) with UK revenue up 3% despite
headwinds (2022: 12%)
Recurring revenue comprises income
invoiced for services that are repeatable, consumed and delivered
on a monthly basis over the term of a customer contract. Annual
Recurring Revenue (ARR) of £64.6 million is the annualised revenue
of customers engaged or closed at that date (31 December) and is an
indication of the upcoming annual value of the recurring revenue.
This is used by management to monitor the long term revenue growth
of the business and has increased to 98% of total revenues (2022:
95%).
While we have seen an increase in
contracts that expand upon renewal to 41% (2022: 38%), gains were
offset by £2.3 million of churn, a combination of funding
unavailable to continue pilot contracts, reductions as contracts
consolidated and a small number of competitive losses. In addition
we have excluded £2.6 million from ARR as we continue to negotiate
an extension to our contract in Pennsylvania.
Net revenue retention, which is a
measure of the depth and longevity of our client relationships,
although still strong, fell to 98% in the UK (2022: 107%). This is
measured by the total value of ongoing ARR at the year end from
customers in place at the start of the year as a percentage of the
opening ARR from those clients.
Gross profit
Gross profit grew by 86.6% to £25.9
million (2022: £13.9 million) with gross margin up to 77.6% (2022:
68.9%). Direct costs are the costs of the practitioners directly
involved in the delivery of our services, a total of 304 at the
year-end (2022: 267 heads). Gross margin benefitted from the
contribution within US revenues to product development where costs
are either capitalised or included in overheads. This was offset by
a small fall in UK gross margin as direct costs continued to see
the impact of salary and cost inflation.
Foreign currency impact
Whilst foreign currency markets were
not as volatile as the previous year our increasing presence in the
US impacted the Group which had around 43% of revenues in US
Dollars, and 26% of Group expenses. The Group's focus on management
of foreign currency risk resulted in a small foreign currency loss
of £0.2 million (2022: loss £0.1 million).
Operating loss
The Group's operating loss for the
year was £2.3 million (2022: loss of £0.9 million). This was driven
by the scaling up of activities in the US as mentioned in the
section below.
Administrative expenses
Excluding depreciation,
amortisation, share based payments and exceptional costs,
administrative expenses grew by £11.4 million in the year, an 92.8%
increase year on year, which whilst well ahead of revenue growth,
remains in line with our strategic investment plans. The real (i.e.
non inflationary) increase in costs was almost entirely focused on
the US where, in addition to increased commissions and bonuses, we
strengthened the business development, clinical and customer
engagement teams as well as seeing increases in non-staff costs,
including legal and consulting expenses.
Adjusted EBITDA
Adjusted EBITDA grew by 40% to £2.3
million (2022: £1.6 million) in the year, with increases in revenue
and gross profit offset by our investment in the US and higher
administrative expenses as outlined above.
Adjusted results are prepared to
provide a more comparable indication of the Group's core business
performance by removing the impact of certain items including
exceptional items (material and non-recurring), and other,
non-trading, items that are reported separately.
Adjusted results exclude items as
set out in the consolidated statement of profit and loss and below,
with further details given in Notes 2, 3, 4, 5, 6, 11, 12 & 13
to the financial statements. In addition, the Group also measures
and presents performance in relation to various other non GAAP
measures, such as annual recurring revenue and revenue
growth.
Adjusted results are not intended to
replace statutory results. These have been presented to provide
users with additional information and analysis of the Group's
performance, consistent with how the Board monitors
results.
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£'m
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2023
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2022
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Operating Loss
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(2.3)
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(0.9)
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Add Back:
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Depreciation and
Amortisation
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3.8
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2.2
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Share based payment
expense
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0.7
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0.3
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Adjusted
EBITDA
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2.3
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1.6
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Share-based payments are adjusted to
reflect the underlying performance of the group as the fair value
is impacted by market volatility that does not correlate directly
to trading performance. The total charge for share based payments
in the year was £0.7 million (2022: £0.3 million). The increase
reflects the annual issue of three year grants to staff and a
credit in 2022 following a reassessment of those grants subject to
performance criteria.
Taxation
There has been a corporation tax
charge of £0.3 million (2022: £nil) recognised in the year due to
taxable profits accumulated in the US. There continues to be no
corporation tax charge in the UK due to accumulated losses combined
with the overall current year position (2022: £nil).
The tax credit for the year ended 31
December 2023 and 2022 relates to Research and Development
expenditure credits. This has been enhanced in 2023 as the Research
and Development claim for 2022 was subsequently carried forward at
a higher effective tax rate rather than taking this as a cash
credit resulting in a prior year adjustment.
Cash
The Group has had good cash
management in the year with net cash generated from operating
activities of £1.9 million (2022: £4.4 million). Free cash flow,
after taking account of capital expenditure was a net outflow of
£6.8 million in 2023 compared to an inflow of £1.3 million in 2022
as we invested significantly in the Soluna platform.
Overall the Group has net cash inflow
due to the net proceeds from financing activities following a
successful placing, which resulted in the raise of a net £9.4m. The
net cash at year end was £11.0 million (2022: £8.5 million). In
addition we recently entered into a working capital credit facility
with Citibank of $9.5 million that remains undrawn at this time.
The Group continues to be debt free.
Capitalised development costs
The Group significantly increased
investment in product and platform development in 2023 to support
the launch of our service in California and this is expected to be
ongoing in 2024. Costs are a combination of internal and external
spend. Where such work is expected to result in future revenue,
costs incurred that meet the definition of software development in
accordance with IAS38, Intangible Assets, are capitalised in the
statement of financial position. During the year the Group
capitalised £8.7 million in respect of software development (2022:
£3.0 million) with an amortisation charge of £3.6 million (2022:
£2.1 million).
Investment in product and development
continues to be significant to the Group and we anticipate
capitalising software costs at a higher rate over the next year as
we continue to invest in the Soluna platform.
Capital expenditure
Software and product development
costs aside, the Group's ongoing capital expenditure requirements
remain modest at £0.3 million (2022: £0.1 million).
Capital and reserves
The strength of the Group's balance
sheet with net assets of £20.8 million (2022: £10.5 million), high
levels of recurring revenue and strong cash generation from
operating activities provide the Group with financial strength with
which to execute on its investment strategy which continues to
focus on US expansion and platform investment.
Dividend policy
As outlined at the time of the IPO
and previous reports, the Group's intention in the short to medium
term is to invest in order to deliver capital growth for
shareholders. The Board has not recommended a dividend in respect
of the year ended 31 December 2023 (2022: Nil) but may do so in
future years.
Sanjay Jawa
Chief Financial Officer
25 March 2024
Consolidated statement of profit and loss and other
comprehensive loss
For the year ended 31 December
2023
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Note
|
2023
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2022
|
|
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|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
Revenue
|
4
|
33,337
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|
20,120
|
|
Cost of sales
|
5
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(7,480)
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|
(6,265)
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|
|
|
|
|
|
|
Gross profit
|
|
25,857
|
|
13,855
|
|
|
|
|
|
|
|
Administrative expenses
|
5
|
(28,119)
|
|
(14,767)
|
|
|
|
|
|
|
|
Operating loss
|
|
(2,262)
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|
(912)
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
Adjusted EBITDA
|
|
2,257
|
|
1,612
|
|
Depreciation &
amortisation
|
11, 12, 13
|
(3,775)
|
|
(2,232)
|
|
Share based payment
expense
|
6
|
(744)
|
|
(292)
|
|
|
|
|
|
|
|
Operating loss
|
|
(2,262)
|
|
(912)
|
|
|
|
|
|
|
|
Interest income
|
7
|
298
|
|
81
|
|
|
|
|
|
|
|
Loss
before tax
|
|
(1,964)
|
|
(831)
|
|
|
|
|
|
|
|
Tax
|
8
|
1,795
|
|
115
|
|
|
|
|
|
|
|
Loss
after tax
|
|
(169)
|
|
(716)
|
|
|
|
|
|
|
|
Other comprehensive (expense) / income
|
|
|
|
|
|
Items that are or may be reclassified
subsequently to profit or loss:
|
|
|
|
|
|
Foreign currency translation
differences
|
|
(161)
|
|
-
|
|
|
|
|
|
|
|
Total comprehensive loss for the year
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|
(330)
|
|
(716)
|
|
|
|
|
|
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Loss
per share - basic and diluted (£)
|
9
|
(0.00)
|
|
(0.02)
|
Consolidated statement of financial position
As at 31 December 2023
|
|
Note
|
31 December
2023
|
|
31 December
2022
|
|
|
|
£'000
|
|
£'000
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Goodwill
|
10
|
511
|
|
511
|
|
Development costs
|
11
|
8,750
|
|
3,681
|
|
Right of use asset
|
12
|
42
|
|
68
|
|
Property, plant and
equipment
|
13
|
304
|
|
122
|
|
Deferred tax
|
14
|
2,649
|
|
-
|
|
|
|
|
|
|
|
Total non-current assets
|
|
12,256
|
|
4,382
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Trade and other
receivables
|
15
|
7,174
|
|
2,618
|
|
Contract assets
|
16
|
251
|
|
649
|
|
Cash and cash equivalents
|
17
|
11,004
|
|
8,492
|
|
|
|
|
|
|
|
Total current assets
|
|
18,429
|
|
11,759
|
|
|
|
|
|
|
|
Total assets
|
|
30,685
|
|
16,141
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade payables
|
18
|
(1,555)
|
|
(680)
|
|
Contract liabilities
|
19
|
(5,156)
|
|
(2,583)
|
|
Lease liability
|
12
|
(44)
|
|
(68)
|
|
Accruals and other
creditors
|
18
|
(2,521)
|
|
(977)
|
|
Tax liabilities
|
18
|
(651)
|
|
(967)
|
|
Deferred tax
|
14
|
-
|
|
(348)
|
|
|
|
|
|
|
|
Total current liabilities
|
|
(9,927)
|
|
(5,623)
|
|
|
|
|
|
|
|
Net
current assets
|
|
8,502
|
|
6,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets
|
|
20,758
|
|
10,518
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
20
|
1,825
|
|
1,653
|
|
Share premium account
|
20
|
23,444
|
|
14,229
|
|
P&L reserve
|
20
|
(2,503)
|
|
(2,595)
|
|
Share-based payment
reserve
|
20
|
2,142
|
|
1,221
|
|
Capital redemption reserve
|
20
|
115
|
|
115
|
|
Merger reserve
|
20
|
(4,104)
|
|
(4,104)
|
|
Translation reserve
|
20
|
(161)
|
|
-
|
|
|
|
|
|
|
|
Total equity
|
|
20,758
|
|
10,518
|
The financial statements of Kooth plc
(Company registration number 12526594) were approved by the Board
of Directors and authorised for issue on 26 March 2024. They were
signed on its behalf by:
Sanjay Jawa
Chief Financial Officer
25 March 2024
Consolidated statement of changes in equity
For the year ended 31 December
2023
|
|
Share
capital
|
Share
premium
|
Share based payment
reserve
|
P&L
reserve
|
Capital redemption
reserve
|
Merger
reserve
|
Translation
reserve
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
1,653
|
14,229
|
959
|
(1,879)
|
115
|
(4,104)
|
-
|
10,973
|
|
Loss for the year
|
-
|
-
|
-
|
(716)
|
-
|
-
|
-
|
(716)
|
|
Total comprehensive income
|
1,653
|
14,229
|
959
|
(2,595)
|
115
|
(4,104)
|
-
|
10,257
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
|
Share based payments
|
-
|
-
|
262
|
-
|
-
|
-
|
-
|
262
|
|
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
|
|
Loss for the year
|
-
|
-
|
-
|
(169)
|
-
|
-
|
-
|
(169)
|
|
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
(161)
|
(161)
|
|
Total comprehensive income
|
1,653
|
14,229
|
1,221
|
(2,764)
|
115
|
(4,104)
|
(161)
|
10,189
|
|
Transactions with owners:
|
|
|
|
|
|
|
|
|
|
Share options exercised
|
7
|
-
|
(261)
|
261
|
-
|
-
|
-
|
7
|
|
Share based payment charge
|
-
|
-
|
766
|
-
|
-
|
-
|
-
|
766
|
|
Shares issued
|
165
|
9,215
|
-
|
-
|
-
|
-
|
-
|
9,380
|
|
Deferred tax
|
-
|
-
|
416
|
-
|
-
|
-
|
-
|
416
|
|
As
at 31 December 2023
|
1,825
|
23,444
|
2,142
|
(2,503)
|
115
|
(4,104)
|
(161)
|
20,758
|
The accompanying notes form part of
the financial statements.
Consolidated cash flow statement
For the year ended 31 December
2023
|
|
Note
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the year
|
|
(169)
|
|
(716)
|
|
Adjustments:
|
|
|
|
|
|
Depreciation &
amortisation
|
11, 12, 13
|
3,775
|
|
2,232
|
|
Income tax received
|
8
|
569
|
|
330
|
|
Share based payment
expense
|
6
|
744
|
|
292
|
|
Income tax recognised
|
8
|
(1,795)
|
|
(115)
|
|
Interest income
|
7
|
(298)
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in working capital
|
|
|
|
|
|
(Increase) / decrease in trade and
other receivables
|
15
|
(4,158)
|
|
78
|
|
Increase in trade and other
payables
|
18, 19
|
3,199
|
|
2,408
|
|
Net
cashflow from operating activity
|
|
1,867
|
|
4,428
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
13
|
(291)
|
|
(100)
|
|
Additions to intangible
assets
|
11
|
(8,713)
|
|
(2,952)
|
|
Interest income
|
7
|
298
|
|
81
|
|
Net
cash used in investing activities
|
|
(8,706)
|
|
(2,971)
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
Proceeds from issue of share
capital
|
20
|
9,923
|
|
-
|
|
Costs incurred from the issue of
share capital
|
20
|
(536)
|
|
-
|
|
Net
cash from financing activities
|
|
9,387
|
|
-
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
2,548
|
|
1,457
|
|
Exchange adjustments
|
|
(36)
|
|
(44)
|
|
Cash and cash equivalents at the
beginning of the year
|
17
|
8,492
|
|
7,079
|
|
Cash and cash equivalents at the end
of the year
|
17
|
11,004
|
|
8,492
|
Notes to the financial
statements
1.
Corporate
Information
Kooth plc is a company incorporated
in England and Wales. The address of the registered office is 5
Merchant Square, London, England, W2 1AY.
2.
Significant accounting policies
2.1
Basis of preparation
The preliminary results for the year
ended 31 December 2023 are an abridged statement of the full Annual
Report which was approved by the Board of Directors on 25 March
2024. The consolidated financial statements in the full Annual
Report are prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006. The auditor's report on those consolidated financial
statements were unqualified, did not draw attention to any matters
by way of emphasis without qualifying their report and did not
contain statements under section 498(2) or 498(3) of the Companies
Act 2006. The preliminary results do not comprise statutory
accounts within the meaning of section 434(3) of the Companies Act
2006. The Annual Report for the year ended 31 December 2023 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The financial information included in this
preliminary announcement does not itself contain sufficient
information to comply with UK-adopted International Accounting
Standards. The Annual Report and audited financial statements for
the year ended 31 December 2023 will be made available on the
Company's website in April 2024.
Measurement convention
The financial statements are prepared
on the historical cost basis. These policies have been consistently
applied to all years presented unless otherwise stated. All values
are presented in Sterling and rounded to the nearest thousand
pounds (£'000) except when otherwise indicated.
Going concern
The Directors have a reasonable
expectation that the Group as a whole has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, the going concern basis continues to be adopted in the
accounts.
The company's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Strategic Report on
pages 8 to 25 of the 2023 Annual Report. In addition, note 22 to
the financial statements include the company's objectives, policies
and processes for managing its capital; its financial risk
management objectives; and its exposures to credit risk and
liquidity risk.
During the 2023 financial year the
Group generated a loss of £0.2 million (2022: £0.7 million).
Adjusted EBITDA is £2.3 million (2022: £1.6 million). The Group is
in a net asset position of £20.8 million (2022: £10.5
million).
Management has performed a going
concern assessment for a period of 12 months from signing, which
indicates that the Group will have sufficient funds to trade and
settle its liabilities as they fall due. This assessment takes into
account a number of sensitivities, including a downside scenario
and a reverse stress test, which models the scenarios that would
lead to a default by the Group. Both the downside scenario and
reverse stress test reflect lower activity levels than both the
Group forecast and 2023 actual results. The key assumption used in
the assessment is revenue and Management has analysed the impact of
reduced revenue on the Group's performance.
Whilst Management has concluded that
the possibility of the downside scenario occurring is remote, the
Group would still have adequate resources to be able to trade and
settle its liabilities as they fall due in this scenario.
Management deemed the combination of factors occurring as set out
in the default model to be implausible.
The Directors have, at the time of
approving the financial statements, a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future and as such continue to adopt
the going concern basis of accounting in preparing the financial
statements.
2.2
Basis of consolidation
The consolidated financial statements
comprise the financial statements of the Company and its
subsidiaries as at 31 December 2023, with the comparatives
presented for the previous 12 months being the Group's combined
activities for the 12 months ended 31 December 2022.
Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power over the investee.
Specifically, the Group controls an
investee if, and only if, the Group has:
● Power over
the investee (i.e., existing rights that give it the current
ability to direct the relevant activities of the
investee).
● Exposure,
or rights, to variable returns from its involvement with the
investee.
● The
ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights
results in control. To support this presumption and when the Group
has less than a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and circumstances
in assessing whether it has power over an investee,
including:
○ The
contractual arrangement(s) with the other vote holders of the
investee
○ Rights
arising from other contractual arrangements
○ The
Group's voting rights and potential voting rights
The Group re-assesses whether or not
it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Profit or loss and each component of
other comprehensive income (OCI) are attributed to the equity
holders of the parent of the Group. When necessary, adjustments are
made to the financial statements of subsidiaries to bring their
accounting policies in line with the Group's accounting policies.
All intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of
a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary,
it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of
equity, while any resultant gain or loss is recognised in profit or
loss. Any investment retained is recognised at fair
value.
Segmental reporting
Operating segments are reported in a
manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, 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's operations
take place in the UK and the US.
2.3
Summary of significant accounting policies
The following are the significant
accounting policies applied by the Group in preparing its
consolidated financial statements:
Revenue recognition
The Group applies IFRS 15 "Revenue
from Contracts with Customers". To determine whether to recognise
revenue, the Group follows the five step process as set out within
IFRS 15.
1) Identifying the
contract with a customer.
2) Identifying the
performance obligations.
3) Determining the
transaction price.
4) Allocating the
transaction price to the performance obligations.
5) Recognising
revenue as/when performance obligation(s) are satisfied.
Provision of online counselling
contracts
Revenue arises from the provision of
counselling services and mental health support services under fixed
price contracts. Contracts are typically for a 12 month period and
are fixed price based on the population covered and an expected
number of hours of counselling provided.
Contracts with customers take the
form of signed agreements from customers. There is one distinct
performance obligation, being the provision of counselling
services, to which all the transaction price is allocated. Revenue
from counselling services is recognised in the accounting period in
which the services are rendered. The contracts are satisfied
monthly over the contract term for an agreed level of support
hours. Revenue is recognised over-time, on a systematic basis over
the period of the contract, which reflects the continuous transfer
of the service to the customer throughout the contracted service
period.
In certain circumstances the number
of hours of counselling provided may surpass the expected number of
hours within the contract. In this circumstance, Management does
not recognise additional revenue during the period, as
contractually the Group has no right to demand payment for
additional hours. In some instances, the Group has recovered
additional fees post year end for the additional hours incurred;
this additional revenue is recognised at a point in time when the
Group has agreed an additional fee and has a right to invoice. At
each reporting date there was no significant overprovision of hours
noted.
In instances where the number of
counselling hours provided is less than the contracted number of
hours, the full fixed fee is still payable by the
customer.
Platform build and behavioural
support services contracts
Revenue arises from the provision of
a digital mental health platform alongside supporting behavioural
healthcare services, promotional campaigns, reporting and analysis
and technical support. The contracts have fixed and variable
pricing elements which depend on platform utilisation, with a
service period of more than one year. Contracts with customers take
the form of signed agreements from customers.
The contracts include an enforceable
right by either party to terminate the contract without penalty
with a fixed notice period. The contract term is therefore limited
up to the end of the notice period. The transaction price is
determined as all consideration due within the contract period. The
contract term is modified each month if the termination clause is
not enacted with the modification being treated on a prospective
basis as the incremental transaction price does not reflect the
standalone selling price for the additional distinct
services.
Under IFRS 15, five distinct
performance obligations have been identified for these
contracts:
● Providing
access to a digital mental health platform.
● Customer
contact services to resolve technical issues.
● Collection
and analysis of data and reporting.
● Providing
on-platform behavioural healthcare services.
● Conducting
promotional campaigns to spread awareness.
Revenue from the first three
performance obligations is recognised evenly over time using the
output method. This is to reflect the continuous consumption
of the service by the customer over the contracted service period.
For the last two performance obligations revenue is recognised
using the input method. This is to reflect how much of the service
the customer has used by comparing the actual costs incurred to the
total projected costs that are expected to be incurred in
delivering the service. These costs include directly attributable
labour and external marketing and promotion costs.
The allocation of the transaction
price between the five performance obligations included in the
contract is based on an expected cost plus margin approach as the
standalone selling price is not observable.
The transaction price is determined
at contract inception as being the most likely amount of
consideration in which the Group is entitled to, including any
variable consideration. This has been determined through an
expected value calculation modelling various utilisation rate
projections against their likely achievement. The variable
consideration has been appropriately constrained as the Group has
limited historical experience to ensure it can be virtually certain
there will be no material reversal of revenue.
The Group typically receives cash
from customers 38 days after invoicing a customer.
Revenue to come from contracts
entered into with performance obligations not fulfilled or only
partially fulfilled amounted to £35.5m as at 31 December 2023, all
of which is expected to be recognised within one year.
Contract assets and
liabilities
The Group recognises contract assets
in the form of accrued revenue when the value of satisfied or part
satisfied performance obligations is in excess of the payment due
to the Group, and contract liabilities in the form of deferred
revenue when the amount of unconditional consideration is in excess
of the value of satisfied or part satisfied performance
obligations. Once a right to receive consideration is
unconditional, that amount is presented as a trade
receivable.
Tax
Current tax
Current tax assets and liabilities
are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted at the reporting date in the countries where the Group
operates and generates taxable income.
Current tax relating to items
recognised directly in equity is recognised in equity and not in
the statement of profit or loss. Management periodically evaluates
positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the
liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred tax liabilities
are recognised for all taxable temporary differences,
except:
● When the
deferred tax liability arises from the initial recognition of
goodwill or an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or
loss.
● In respect
of taxable temporary differences associated with investments in
subsidiaries, associates and interests in joint arrangements, when
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax assets are recognised
for deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable profit
will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused
tax losses can be utilised, except:
● When the
deferred tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable
profit or loss.
● In respect
of deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint arrangements,
deferred tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available, against
which the temporary differences can be utilised.
The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities
are measured at the tax rates that are expected to apply in the
year when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date. Deferred tax relating to items
recognised outside profit or loss is recognised outside profit or
loss. Deferred tax items are recognised in correlation to the
underlying transaction either in OCI or directly in
equity.
Tax benefits acquired as part of a
business combination, but not satisfying the criteria for separate
recognition at that date, are recognised subsequently if new
information about facts and circumstances change. The adjustment is
either treated as a reduction in goodwill (as long as it does not
exceed goodwill) if it was incurred during the measurement period
or recognised in profit or loss.
The Group offsets deferred tax assets
and deferred tax liabilities if and only if it has a legally
enforceable right to set off current tax assets and current tax
liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable
entities which intend either to settle current tax liabilities and
assets on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which
significant amounts of deferred tax liabilities or assets are
expected to be settled or recovered.
Sales tax
Expenses and assets are recognised
net of the amount of sales tax, except:
● When the
sales tax incurred on a purchase of assets or services is not
recoverable from the taxation authority, in which case, the sales
tax is recognised as part of the cost of acquisition of the asset
or as part of the expense item, as applicable
● When
receivables and payables are stated with the amount of sales tax
included
The net amount of sales tax
recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the statement of financial
position.
Research and Development tax
claims
Where Kooth plc has made Research and
Development tax claims under the Small and Medium Enterprise scheme
and tax losses have been surrendered for a repayable tax credit, a
current tax credit is reflected in the income statement.
Property, plant and
equipment
Property, plant and equipment is
stated in the statement of financial position at cost, less any
subsequent accumulated depreciation and subsequent accumulated
impairment losses.
The cost of property, plant and
equipment includes directly attributable incremental costs incurred
in its acquisition and installation.
Depreciation is charged so as to
write off the cost of assets over their estimated useful lives, as
follows:
Computer and office
equipment
33.33% straight line
Goodwill and
intangibles
Goodwill
Goodwill is initially measured at
cost (being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests
and any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net
assets acquired is in excess of the aggregate consideration
transferred, the Group re-assesses whether it has correctly
identified all of the assets acquired and all of the liabilities
assumed and reviews the procedures used to measure the amounts to
be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over
the aggregate consideration transferred, then the gain is
recognised in profit or loss.
After initial recognition, goodwill
is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the
Group's cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of
the acquiree are assigned to those units.
Intangible assets
Intangible assets acquired separately
are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value at
the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangibles,
excluding capitalised development costs, are not capitalised and
the related expenditure is reflected in profit or loss in the
period in which the expenditure is incurred.
The useful lives of intangible assets
are assessed as either finite or indefinite.
Intangible assets with finite lives
are amortised over the useful economic life and assessed for
impairment whenever there is an indication that the intangible
asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period. Changes in
the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are
treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in the
statement of profit or loss within administrative
expenses.
An intangible asset is derecognised
upon disposal (i.e., at the date the recipient obtains control) or
when no future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition of the asset
(calculated as the difference between the net disposal proceeds and
the carrying amount of the asset) is included in the statement of
profit or loss.
Expenditure on internally developed
software products and substantial enhancements to existing software
product is recognised as intangible assets only when the following
criteria are met:
● The
technical feasibility of completing the intangible asset so that
the asset will be available for use or sale.
● Its
intention to complete and its ability and intention to use or sell
the asset.
● How the
asset will generate future economic benefits.
● The
availability of resources to complete the asset.
● The
ability to measure reliably the expenditure during
development.
Following initial recognition of the
development expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over
the period of expected future benefit. Amortisation is recorded in
the Statement of Profit and Loss.
During the period of development, the
asset is assessed for impairment annually.
Amortisation is charged on a straight
line basis over the estimated useful life of three
years.
Expenditure on research activities as
defined in IFRS is recognised in the income statement as an
expense.
Impairment testing of intangible
assets and property, plant and equipment
For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately independent cash inflows (CGU). Those intangible
assets including goodwill and those under development are tested
for impairment at least annually. All other individual assets or
CGUs are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable.
An impairment charge is recognised
for the amount by which the asset or CGUs carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of
fair value, reflecting market conditions less costs to sell, and
value in use. All assets, with the exception of goodwill, are
subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist.
Financial instruments
The Group classifies financial
instruments, or their component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in
accordance with the substance of the underlying contractual
arrangement. Financial instruments are recognised on the date when
the Group becomes a party to the contractual provisions of the
instrument. Financial instruments are initially recognised at fair
value except for trade receivables which are initially accounted
for at the transaction price. Financial instruments cease to be
recognised at the date when the Group ceases to be party to the
contractual provisions of the instrument.
Financial assets are included on the
balance sheet as trade and other receivables or cash and cash
equivalents.
Trade receivables
Trade receivables are amounts due
from customers for services performed in the ordinary course of
business. They are generally due for settlement within 30 days and
are therefore all classified as current. Trade receivables are
recognised initially at the transaction price. The Group holds the
trade receivables with the objective of collecting the contractual
cash flows and therefore measures them subsequently at amortised
cost using the effective interest method.
The Group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from the initial recognition of the
receivable. To measure expected credit losses, trade receivables
are analysed based on their credit risk characteristics to
determine a suitable historic loss rate. The historical loss rates
are adjusted to reflect current and forward looking information on
macroeconomic factors that the Group considers could affect the
ability of its customers to settle the receivables.
Trade payables
Trade payables are obligations to pay
for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified
as current liabilities if the company does not have an
unconditional right, at the end of the reporting period, to defer
settlement of the creditor for at least twelve months after the
reporting date. If there is an unconditional right to defer
settlement for at least twelve months after the reporting date,
they are presented as non-current liabilities. Trade payables are
recognised initially at fair value and all are repayable within one
year and hence are included at the undiscounted amount of cash
expected to be paid.
Cash and cash
equivalents
Cash and cash equivalents comprise
cash on hand and call deposits, and other short-term highly liquid
investments that have a maturity date of three months or less from
the date of acquisition, are readily convertible to a known amount
of cash and are subject to an insignificant risk of change in
value.
Leases
Short term leases or leases of low
value are recognised as an expense on a straight-line basis over
the term of the lease.
The Group recognises right-of-use
assets under lease agreements in which it is the lessee. The
underlying assets mainly include property and office equipment and
are used in the normal course of business. The right-of-use assets
comprise the initial measurement of the corresponding lease
liability payments made at or before the commencement day as well
as any initial direct costs and an estimate of costs to be incurred
in dismantling the asset. Lease incentives are deducted from the
cost of the right-of-use asset. The corresponding lease liability
is included in the consolidated statement of financial position as
a lease liability.
The right-of-use asset is depreciated
over the lease-term and if necessary impaired in accordance with
applicable standards. The lease liability shall initially be
measured at the present value of the lease payments that are not
paid at that date, discounted using the rate implicit in the lease.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability
(application of the effective interest method) and by reducing the
carrying amount to reflect the lease payments made. No lease
modification or reassessment changes have been made during the
reporting period from changes in any lease terms or rent
charges.
Employee benefit plans
Defined contribution
plans
The Group operates a defined
contribution pension plan. Payments to defined contribution pension
plans are recognised as an expense when employees have rendered
services entitling them to the contributions.
Share-based payment
Benefits to employees are provided in
the form of share-based payment transactions, whereby employees
render services in exchange for shares or rights over shares
('equity settled transactions'). The fair value of the employee
services rendered is measured by reference to the fair value of the
shares awarded or rights granted, which takes into account market
conditions and non-vesting conditions. This cost is charged to the
income statement over the vesting period, with a corresponding
increase in the share based payment reserve.
The cumulative expense recognised at
each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the company's best
estimate of the number of shares that will ultimately vest. The
charge or credit to the income statement for a period represents
the movement in the cumulative expense recognised at the beginning
and end of that period and is recognised in share based payment
expense.
Alternative performance
measures
Adjusted results are prepared to
provide a more comparable indication of the Group's core business
performance by removing the impact of certain items including
exceptional items, and other, non- trading, items that are reported
separately.
The Group believes that EBITDA before
separately disclosed items ("adjusted EBITDA") is the most
significant indicator of operating performance and allows a better
understanding of the underlying profitability of the Group. The
Group defines adjusted EBITDA as operating profit/loss before
interest, tax, depreciation, amortisation, exceptional items and
share based payments.
The Group also measures and presents
performance in relation to various other non-GAAP measures, such as
gross margin, annual recurring revenue and revenue
growth.
Adjusted results are not intended to
replace statutory results. These have been presented to provide
users with additional information and analysis of the Group's
performance, consistent with how the Board monitors
results.
3.
Significant accounting judgements, estimates and
assumptions
In the application of the Group's
accounting policies, management is required to make judgements,
estimates and assumptions about the carrying value of assets and
liabilities that are not readily apparent from other
sources.
Estimates and
assumptions
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of revision and future periods if the revision affects
both current and future periods. No significant estimates have been
identified.
Judgements
The areas of judgement which have the
most significant impact on the amounts recognised in the financial
statements are as follows:
Revenue recognition
Judgements have been taken in the
application of IFRS 15 "Revenue from Contracts with Customer". The
determination of the transaction price included judgement as to how
much variable consideration was expected to be received across the
contract and how much those considerations should be constrained
based on projected contract performance. There was judgement taken
in allocating the transaction price to the identified performance
obligations based on the relative stand-alone selling price (SSP)
of each distinct service or item within the contract. An observable
SSP was not available, therefore judgement was used to estimate the
SSP considering all reasonably available information using an
expected cost-plus margin approach.
Deferred tax
In assessing the requirement to
recognise a deferred tax asset, management carried out a
forecasting exercise in order to assess whether the Group and
Company will have sufficient future taxable profits on which the
deferred tax asset can be utilised. This forecast required
management's judgement as to the future performance of the Group
and Company.
Capitalisation of development
costs
The Group capitalises costs
associated with the development of the Kooth platform. These costs
are assessed against IAS 38 Intangible Assets to ensure they meet
the criteria for capitalisation. After capitalisation, management
monitors whether the recognition requirements continue to be met
and whether there are any indicators that capitalised costs may be
impaired. Capitalised development expenditure is analysed further
in note 11.
Development costs largely relate to
amounts paid to external developers, consultancy costs and the
direct payroll costs of the internal development teams. Any
internal time capitalised is the result of careful judgement of the
proportion of time spent on developing the platform. Capitalised
development expenditure is reviewed at the end of each accounting
period for indicators of impairment.
4.
Revenue and segmental analysis
In accordance with IFRS 8 "Operating
Segments", the Group requires consideration of the Chief Operating
Decision Maker ("CODM") within the Group. In line with the Group's
internal reporting framework and management structure, the key
strategic and operating decisions are made by the Executive
Directors, who review internal monthly management reports, budgets
and forecast information as part of this. Accordingly, the
Executive Directors are deemed to be the CODM.
Accordingly, the CODM determines the
Group currently operates under one reporting segment. There are no
individual groups of assets generating distinct and separately
identifiable cashflows.
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:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Provision of online counselling
contracts - UK
|
|
19,143
|
|
18,648
|
|
Provision of online counselling
contracts - US
|
|
1,466
|
|
1,472
|
|
Platform build and behavioural
support services contracts - US
|
|
12,728
|
|
-
|
|
|
|
33,337
|
|
20,120
|
The group had one customer (2022:
none) that accounted for more than 10% of total revenue in 2023.
This customer accounted for 38% of group revenue (2022:
0%)
Segmental reporting of assets and
liabilities has not been provided as the information is not
available, and the cost to develop it would be
excessive.
5. Operating
loss
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Labour costs
|
|
7,354
|
|
6,150
|
|
Share based payment
expense
|
|
100
|
|
65
|
|
Travel and subsistence
|
|
26
|
|
50
|
|
Total cost of sales
|
|
7,480
|
|
6,265
|
|
|
|
|
|
|
|
Employee costs
|
|
15,855
|
|
8,701
|
|
Rent and rates
|
|
492
|
|
316
|
|
IT hosting and software
|
|
1,450
|
|
963
|
|
Professional fees
|
|
3,948
|
|
1,307
|
|
Marketing
|
|
1,650
|
|
490
|
|
Depreciation &
amortisation
|
|
3,775
|
|
2,236
|
|
Share based payment
expense
|
|
644
|
|
292
|
|
Other costs
|
|
305
|
|
462
|
|
Total administrative expenses
|
|
28,119
|
|
14,767
|
|
|
|
|
|
|
|
Total cost of sales and administrative
expenses
|
|
35,599
|
|
21,032
|
Cost of sales represent the costs of
our service user facing employees including external
contractors.
6. Employee
remuneration
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Salaries
|
|
20,669
|
|
12,033
|
|
Pensions
|
|
529
|
|
317
|
|
Social security costs
|
|
2,325
|
|
1,189
|
|
Other staff benefits
|
|
479
|
|
207
|
|
Share based payments
|
|
744
|
|
304
|
|
|
|
24,746
|
|
14,050
|
Employee remuneration is presented in
the financial statements in the following locations:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Cost of sales
|
|
6,837
|
|
4,763
|
|
Administrative expenses
|
|
14,988
|
|
8,539
|
|
Statement of financial
position
|
|
2,921
|
|
748
|
|
|
|
24,746
|
|
14,050
|
|
Employee numbers
|
|
2023
|
|
2022
|
|
Direct
|
|
259
|
|
234
|
|
Indirect
|
|
183
|
|
139
|
|
Developers
|
|
36
|
|
33
|
|
|
|
478
|
|
406
|
Employee numbers disclosed represent
the average number of employees, including directors, for the
year.
The Directors' remuneration and share
options are detailed within the Report of the Remuneration
Committee within the 2023 Annual Report (pages 85 to 90). This
includes detail of the total Directors' remuneration, including
bonuses and pension contributions and remuneration of the highest
paid Director. No directors exercised share options in the
year.
The Executive Directors of the
Company control 4.7% of the voting shares of the Company (2022:
4.8%).
|
Share based payment
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Long term incentive awards
|
|
744
|
|
304
|
An element of long term incentive
awards are capitalised accounting for the difference in long term
incentive awards shown in this note compared to the amount
disclosed as an expense in the Statement of Profit and
Loss.
Long term incentive
awards
Long term incentive awards have been
issued to all staff. Performance conditions are attached to the
incentive awards of Executives, with 50% linked to adjusted EBITDA
growth (ARR growth for grants prior to 2023) and 50% linked to
comparative total shareholder return (TSR). Vesting conditions
require that all staff remain employed by the business for three
years. The shares vest over a three year period with a maximum term
of 10 years.
|
|
Number of
Options
|
Weighted average exercise
price
|
Number of
Options
|
Weighted average exercise
price
|
|
|
2023
|
2023
|
2022
|
2022
|
|
Outstanding at the beginning of the year
|
1,873,356
|
£0.05
|
1,080,066
|
£0.05
|
|
Granted
|
882,989
|
£0.05
|
1,096,464
|
£0.05
|
|
Forfeited
|
(311,520)
|
£0.05
|
(303,174)
|
£0.05
|
|
Exercised
|
(105,808)
|
£0.05
|
-
|
£0.05
|
|
Outstanding at the end of the year
|
2,339,017
|
£0.05
|
1,873,356
|
£0.05
|
The share options outstanding at the
end of the year have a weighted average remaining contractual life
of 8.6 years (2022: 9.0 years).
Fair
value of options granted:
The fair value of the awards has been
calculated using the Black Scholes option pricing model and using a
Stochastic simulation model for options with TSR performance
conditions. The following assumptions were used on options granted
in the year:
|
Options granted on
|
15/03/2023
|
24/05/2023
|
02/09/2023
|
14/09/2023
|
27/10/2023
|
16/11/2023
|
|
Share price at date of
grant
|
171.5p
|
247.0p
|
329.0p
|
323.0p
|
300.0p
|
301.0p
|
|
Exercise price
|
5.0p
|
5.0p
|
5.0p
|
5.0p
|
5.0p
|
5.0p
|
|
Vesting period (years)
|
2.8
|
2.6
|
3
|
2.4
|
2.9
|
2.7
|
|
Expected volatility
|
38.50%
|
38.50%
|
38.50%
|
38.50%
|
38.50%
|
38.90%
|
|
Option life (years)
|
10
|
10
|
10
|
10
|
10
|
10
|
|
Expected life (years)
|
10
|
10
|
10
|
10
|
10
|
10
|
|
Risk-free rate
|
4.40%
|
4.40%
|
4.40%
|
4.40%
|
4.40%
|
4.50%
|
|
Expected dividends expressed as a
dividend yield
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
|
Fair value of options
granted
|
137.5p
|
199.7p
|
318.1p
|
262.6p
|
234.4p
|
241.5p
|
The expected volatility is based on
the historical volatility of the Company's share price. An
assessment of the likelihood of market conditions being achieved is
made at the time that the options are granted.
7. Interest
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Interest income on cash
deposits
|
|
298
|
|
81
|
8. Taxation
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Current tax
|
|
|
|
|
|
UK corporation tax
|
|
-
|
|
(438)
|
|
Foreign tax
|
|
336
|
|
-
|
|
Adjustments in respect of prior
years
|
|
451
|
|
(308)
|
|
|
|
787
|
|
(746)
|
|
Deferred tax
|
|
|
|
|
|
Current year
|
|
(1,756)
|
|
9
|
|
Adjustments in respect of prior
years
|
|
(826)
|
|
622
|
|
|
|
(2,582)
|
|
631
|
|
|
|
|
|
|
|
Tax
credit on losses
|
|
(1,795)
|
|
(115)
|
|
|
|
2023
|
2023
|
2022
|
2022
|
|
|
|
£'000
|
%
|
£'000
|
%
|
|
Profit/(loss) before tax for the period
|
|
(1,964)
|
|
(831)
|
|
|
Tax charge/(credit) at standard rate
of 23.5% (2022: 19%)
|
|
(462)
|
23.5
|
(158)
|
19.0
|
|
Effects of:
|
|
|
|
|
|
|
Permanent items / additional relief
under R&D scheme
|
|
(782)
|
39.8
|
(398)
|
47.9
|
|
Difference between UK CT & DT
rates
|
|
(160)
|
8.2
|
3
|
(0.4)
|
|
Losses surrendered at 14.5% under SME
tax relief scheme
|
|
-
|
0.0
|
137
|
(16.5)
|
|
Prior year adjustments
|
|
(375)
|
19.1
|
313
|
(37.7)
|
|
Other differences
|
|
(16)
|
0.8
|
(12)
|
1.4
|
|
Tax
credit for the year
|
|
(1,795)
|
91.4
|
(115)
|
13.8
|
Tax
rate
An increase in the UK corporation
rate from 19% to 25% (effective 1 April 2023) was substantively
enacted on 24 May 2021. This increases the Group's current tax
charge accordingly to a weighted average standard tax rate of
23.5%
Prior year adjustment
The prior year adjustment reflects a
decision that was made subsequent to the finalisation of the 2022
Annual Report not to surrender losses and claim an R&D tax
credit and instead carry forward those losses to be offset against
expected future taxable profits. The net impact of the rate used in
calculating the deferred tax balance on carried forward losses of
25% (opposed to the tax credit at 14.5%) has resulted in this
difference.
9. Earnings per share
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Earnings used in calculation of
earnings per share:
|
|
|
|
|
|
On total losses attributable to
equity holders of the parent
|
|
(169)
|
|
(716)
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Weighted average no. of shares
(Basic)
|
|
34,768,325
|
|
33,055,776
|
|
|
|
|
|
|
|
Shares in issue
|
|
|
|
|
|
Ordinary shares in issue
|
|
36,480,873
|
|
33,055,776
|
|
|
|
|
|
|
|
Loss
per share (basic and diluted, £)
|
|
|
|
|
|
On total losses attributable to
equity holders of the parent
|
|
(0.00)
|
|
(0.02)
|
While there are options and
potentially dilutable instruments, they have not been included due
to a loss in the year making them anti-dilutive. The earnings per
share figures above are therefore both basic and
diluted.
10.
Goodwill
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Goodwill as at 1 January and 31
December
|
|
511
|
|
511
|
Management has established
counselling services as the one CGU during the relevant periods.
All goodwill is attributable to this CGU.
The Group tests annually for
impairment or more frequently if there are indications that it
might be impaired. There were no indicators of impairment noted
during the periods presented.
The Group tests goodwill for
impairment by reviewing the carrying amount against the recoverable
amount of the investment. Management has calculated the value in
use using the following assumptions:
Discount rate
8%
Growth
rate 2%
Forecasts are based on past
experience and take into account current and future market
conditions and opportunities. Using alternative discount (increase
to 10%) and growth rates (decrease to nil) as sensitised
assumptions does not result in any impairment.
The Group prepares forecasts based on
the most recent financial budgets approved by the Board. The
forecasts have been used in the value in use calculation along with
the assumptions stated above. The forecasts used are consistent
with those used in the going concern review and discussed in note
2. The forecasts extended for a period of 12 months from the date
of signing.
There were no impairments in the
years ended 31 December 2023 and 31 December 2022.
11.
Development costs
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Cost
|
|
|
|
|
|
Balance as at 1 January
|
|
10,315
|
|
7,363
|
|
Additions
|
|
8,713
|
|
2,952
|
|
Balance as at 31 December
|
|
19,028
|
|
10,315
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
Balance as at 1 January
|
|
(6,634)
|
|
(4,496)
|
|
Amortisation
|
|
(3,644)
|
|
(2,138)
|
|
Balance as at 31 December
|
|
(10,278)
|
|
(6,634)
|
|
|
|
|
|
|
|
Carrying amount 31 December
|
|
8,750
|
|
3,681
|
The US Soluna platform has a carrying
value of £5.4m and a remaining amortisation period of between 2 and
3 years. The UK platform has a carrying value of £2.8m and a
remaining amortisation period of between 1 and 3 years. The US
Klassic platform has a carrying value of £0.6m and remaining
amortisation period of between 1 and 2 years.
12.
Leases
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Right of use asset
|
|
|
|
|
|
As
at 1 January
|
|
68
|
|
-
|
|
Additions
|
|
-
|
|
68
|
|
Depreciation
|
|
(22)
|
|
-
|
|
Disposal
|
|
-
|
|
-
|
|
Currency revaluation
|
|
(4)
|
|
-
|
|
As
at 31 December
|
|
42
|
|
68
|
|
|
|
|
|
|
|
Lease liability
|
|
|
|
|
|
As
at 1 January
|
|
68
|
|
-
|
|
Additions
|
|
-
|
|
68
|
|
Interest charge
|
|
5
|
|
-
|
|
Cash payment
|
|
(25)
|
|
-
|
|
Disposal
|
|
-
|
|
-
|
|
Currency revaluation
|
|
(4)
|
|
-
|
|
As
at 31 December
|
|
44
|
|
68
|
13. Property, plant and
equipment
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Cost
|
|
|
|
|
|
Balance as at 1 January
|
|
551
|
|
451
|
|
Additions
|
|
291
|
|
100
|
|
Balance as at 31 December
|
|
842
|
|
551
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
Balance as at 1 January
|
|
(429)
|
|
(335)
|
|
Depreciation
|
|
(109)
|
|
(94)
|
|
Balance as at 31 December
|
|
(538)
|
|
(429)
|
|
|
|
|
|
|
|
Carrying amount 31 December
|
|
304
|
|
122
|
Property, plant and equipment refers
to computer and office equipment.
14. Deferred tax assets and
liabilities
|
|
|
Fixed asset temporary
differences
|
Other temporary
differences
|
Tax losses
|
Total
|
|
At 1
January 2022 - asset / (liability)
|
|
(458)
|
323
|
570
|
435
|
|
Movement - (charge) /
credit
|
|
(119)
|
(98)
|
(566)
|
(783)
|
|
|
|
|
|
|
|
|
At 1
January 2023 - asset / (liability)
|
|
(577)
|
225
|
4
|
(348)
|
|
Movement - (charge) /
credit
|
|
(643)
|
503
|
2,721
|
2,581
|
|
Amounts recognised in
equity
|
|
-
|
416
|
-
|
416
|
|
At
31 December 2023 - asset / (liability)
|
|
(1,220)
|
1,144
|
2,725
|
2,649
|
Deferred tax assets are recognised to
the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences can be
utilised.
15. Trade and other
receivables
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Trade receivables
|
|
5,801
|
|
1,110
|
|
Prepayments
|
|
1,084
|
|
504
|
|
Other receivables
|
|
289
|
|
1,004
|
|
|
|
7,174
|
|
2,618
|
All amounts shown above are short
term. The net carrying value of trade receivables is considered a
reasonable approximation of fair value.
Included within prepayments are £0.3m
of contract costs related to the California contract which will be
amortised in line with revenue recognition to be released in
2024.
16. Contract assets
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Accrued income
|
|
251
|
|
649
|
17. Cash and cash equivalents
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Cash and cash equivalents
|
|
11,004
|
|
8,492
|
18. Trade and other payable
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Trade payables
|
|
1,555
|
|
680
|
|
Accruals and other
creditors
|
|
2,521
|
|
977
|
|
Tax liabilities
|
|
651
|
|
967
|
|
|
|
4,727
|
|
2,624
|
The Group recognises a provision for
an obligation when there is a probable outflow of resources and an
amount can be reliably estimated. This includes legal disputes the
estimated costs of which are provided for in other creditors.
Disclosure of the exact details of these claims could prejudice the
financial position of the Group and accordingly further information
is not disclosed in this report.
19. Contract liabilities
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Contract liabilities -
current
|
|
5,156
|
|
2,583
|
Revenue recognised in the reporting
period that was included in the contract liability balance at the
beginning of the year totalled £2.5m (2022: £0.8m).
The following table shows the
movement in contract liabilities:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Contract liabilities recognised at
start of the year
|
|
2,583
|
|
797
|
|
Amounts invoiced in prior year
recognised as revenue in the current year
|
|
(2,525)
|
|
(754)
|
|
Amounts invoiced in the current year
which will be recognised as revenue in the later years
|
|
5,098
|
|
2,540
|
|
Balance at the end of the year
|
|
5,156
|
|
2,583
|
20. Equity
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Ordinary A shares
|
|
1,825
|
|
1,653
|
|
|
|
|
|
|
|
Number of Shares
|
|
2023
|
|
2022
|
|
Ordinary A shares
|
|
36,480,873
|
|
33,055,776
|
The share capital of Kooth plc
consists of fully paid ordinary shares with a nominal value of
£0.05 per share.
The A ordinary shares have attached
to them full voting, dividend and capital distribution rights
(including on winding up). They do not confer any right of
redemption.
The following share transactions have
taken place during the year ended 31 December 2023:
|
|
|
2023
|
|
2022
|
|
|
|
Number
|
|
Number
|
|
At the start of the year
|
|
33,055,776
|
|
33,055,776
|
|
Share placement
|
|
3,305,577
|
|
-
|
|
Exercise of share options
|
|
119,520
|
|
-
|
|
At the end of the year
|
|
36,480,873
|
|
33,055,776
|
Share capital increased from the
prior year following the successful share placement in July 2023
and the exercise of staff share options.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Share Premium
|
|
23,444
|
|
14,229
|
Share premium represents the funds
received in exchange for shares over and above the nominal value.
Share premium increased from the prior year following the
successful share placement in July 2023. The movement in the
reserve represents the amounts received from the placement less the
costs incurred.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Share based payment
reserve
|
|
2,142
|
|
1,221
|
The share based payment reserve
represents amounts accrued for equity settled share options
granted.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Merger reserve
|
|
(4,104)
|
|
(4,104)
|
The merger reserve was created as a
result of the share for share exchange during the year ended 31
December 2020.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Capital redemption reserve
|
|
115
|
|
115
|
The capital redemption reserve was
established as a result of the deferred share buyback during the
year ended 31 December 2020.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Translation reserve
|
|
161
|
|
-
|
The translation reserve represents
differences on translation of balances in Kooth USA LLC which has a
functional currency of USD.
21. Auditor's remuneration
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Fees payable to the auditor for the
audit of the Company and Consolidated financial
statements
|
|
130
|
|
85
|
|
|
|
|
|
|
|
Fees payable to the auditor and its
associates for other services:
|
|
|
|
|
|
Other audit related
services
|
|
5
|
|
5
|
22. Financial assets and
liabilities
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Financial assets
|
|
|
|
|
|
Trade receivables
|
|
5,801
|
|
1,110
|
|
Cash and cash equivalents
|
|
11,004
|
|
8,492
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
Trade and other payables
|
|
4,120
|
|
1,725
|
The carrying amount of trade
receivables are denominated in the following currencies:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
GBP
|
|
931
|
|
1,100
|
|
USD
|
|
4,870
|
|
10
|
|
Total
|
|
5,801
|
|
1,110
|
The carrying amount of cash and cash
equivalents are denominated in the following currencies:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
GBP
|
|
6,463
|
|
6,916
|
|
USD
|
|
4,508
|
|
1,576
|
|
EUR
|
|
33
|
|
-
|
|
Total
|
|
11,004
|
|
8,492
|
The carrying amount of trade and
other payables are denominated in the following
currencies:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
GBP
|
|
1,579
|
|
857
|
|
USD
|
|
2,541
|
|
868
|
|
Total
|
|
4,120
|
|
1,725
|
Management has assessed that the fair
values of cash, trade receivables, trade payables, and other
current liabilities approximate their carrying amounts largely due
to the short-term maturities of these instruments.
The Group's principal financial
liabilities comprise trade and other payables. The Group has no
debt facility as at 31 December 2023 (2022: £nil). The main purpose
of these financial liabilities is to finance the Group's
operations. The Group's principal financial assets include trade
receivables and cash that derive directly from its
operations.
The Group is exposed to market risk,
credit risk and liquidity risk. The Group's senior management
oversees the management of these risks. The Group's senior
management is supported by the Board of Directors who advise on
financial risks and the appropriate financial risk governance
framework for the Group. The Board provides assurance to the
Group's senior management that the Group's financial risk
activities are governed by appropriate policies and procedures and
that financial risks are identified, measured and managed in
accordance with the Group's policies and risk
objectives.
The Board of Directors reviews and
agrees policies for managing each of these risks, which are
summarised below.
Market risk
Market risk is the risk that the fair
value or future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risk comprises three
types of risk: interest rate risk, currency risk and other price
risk, such as equity price risk and commodity risk.
Market risk is deemed to be
immaterial to the Group given that the Group has no debt facilities
in place at the year ended 31 December 2023 (2022: £nil) that would
cause interest rate risk.
Credit risk
The Group's principal financial
assets are cash and trade receivables. The credit risk associated
with cash is limited, as the counterparties have high credit
ratings assigned by international credit-rating agencies. The
credit risk associated with trade receivables is also limited as
customers are primarily government backed organisations such as the
NHS or State governments. Credit losses historically incurred have
been negligible.
Liquidity risk
The Group seeks to manage financial
risk by ensuring sufficient liquidity is available to meet
foreseeable needs by closely managing its cash balance.
As at the year ended 31 December 2023
the Group is solely funded by equity and as a result liquidity risk
is deemed to be immaterial. The Group monitors its risk of a
shortage of funds through both review and forecasting
procedures.
Foreign currency risk
The Group is exposed to the US Dollar
through the US subsidiary, Kooth USA LLC, which raises its sales
invoices to customers in US Dollars and incurs costs in US
Dollars.
With the Group reporting in Sterling,
any change to the GBP/USD exchange rate could increase the Group's
foreign currency risk. The Group deems the UK and US to be stable
economies, thereby significantly reducing foreign currency
risk.
If the exchange rate between sterling
and the US dollar had been 10% higher/lower at the reporting date,
the effect on profit would have been approximately
(£635,000)/£780,000 respectively (2022:(£65,000)/80,000). If the
exchange rate between sterling and euro had been 10% higher/lower
at the reporting date the effect on profit would have been
approximately (£3,000)/£4,000 respectively (2022:
(£0)/£0).
23.
Related party transactions
Note 25 provides information about
the Group's structure, including details of the subsidiaries and
the holding company. The Group has taken advantage of the exemption
available under IAS 24 Related Party Disclosures not to disclose
transactions between Group undertakings which are eliminated on
consolidation.
Key management personnel are the
executive members of the Board of Directors. Remuneration
applicable to the Company is disclosed below, with further
information disclosed in the Remuneration Committee
report.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Salaries and bonuses
|
|
1,919
|
|
709
|
|
Pension costs
|
|
25
|
|
21
|
|
Share based payment
charges
|
|
227
|
|
147
|
|
|
|
2,171
|
|
877
|
The following table provides the
total amount of transactions that have been entered into with
related parties for the relevant financial year.
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Monitoring fees - ScaleUp Capital
Limited
|
|
58
|
|
50
|
24.
Capital management policies and procedures
The Group's capital management
objectives are:
● To ensure
the Group's ability to continue as a going concern.
● To provide
an adequate return to shareholders by pricing products and services
in a way that reflects the level of risk involved in providing
those goods and services.
The Group monitors capital on the
basis of the carrying amount of equity, less cash and cash
equivalents as presented in the statement of financial
position.
The Group has no debt facilities in
place as at 31 December 2023 (2022: £nil).
Management assesses the Group's
capital requirements in order to maintain an efficient overall
financing structure while avoiding excessive leverage. The Group
manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk
characteristics of the underlying assets. The amounts managed as
capital by the Group for the reporting periods under review are
summarised as follows:
|
|
|
2023
|
|
2022
|
|
|
|
£'000
|
|
£'000
|
|
Total equity
|
|
20,758
|
|
10,518
|
|
Cash and cash equivalents
|
|
11,004
|
|
8,492
|
|
Capital
|
|
31,762
|
|
19,010
|
|
|
|
|
|
|
|
Total equity
|
|
20,758
|
|
10,518
|
|
Lease liability
|
|
(44)
|
|
(68)
|
|
Financing
|
|
20,714
|
|
10,450
|
25. Subsidiaries and associated
companies
|
Name
|
Country of
Incorporation
|
Proportion
Held
|
Activity
|
Registered
Address
|
|
Kooth
Group Limited
|
UK
|
100%
|
Platform
development
|
5
Merchant Square, London, England, W2 1AY
|
|
Kooth
Digital Health Limited
|
UK
|
100%
|
Provision
of online services to children, young people and adults in the
UK
|
5
Merchant Square, London, England, W2 1AY
|
|
Kooth USA
LLC
|
US
|
100%
|
Provision
of online services to children, young people in the US
|
167 North
Green Street, Chicago, IL, 60607
|
26.
Standards issued but not yet effective
At the date of authorisation of these
consolidated financial statements, several new, but not yet
effective, Standards and amendments to existing Standards, and
Interpretations have been published by the IASB. None of these
Standards or amendments to existing Standards have been adopted
early by the Group.
Management anticipates that all
relevant pronouncements will be adopted for the first period
beginning on or after the effective date of the pronouncement. New
Standards, amendments and Interpretations not adopted in the
current year have not been disclosed as they are not expected to
have a material impact on the Group's consolidated financial
statements.
27.
Ultimate controlling party
No shareholder owns a majority of
shares. The directors do not consider that there is one ultimate
controlling party.
28.
Events after the reporting date
In January 2024, the Group entered
into a working capital credit facility with Citibank of $9.5
million that remains undrawn at the time of issuing this
report.
29.
Capital commitments
The Group's capital commitments at 31
December 2023 are £nil (FY22: £nil).