Kooth plc
Annual Report 2020
koothplc.com
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Strategic ReportKooth plc Annual Report 2020 Strategic report
Mental health is a defining global challenge of our time
Our purpose
Chair’s statement
Chief Executive Officer’s statement
Kooth plc business model
Market review
Strategy
Key performance indicators
Chief Financial Officer’s review
Section 172 statement
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We create a welcoming space for
effective personalised digital
mental health care. Available to all.
Strategic report
Mental health is a defining global challenge of our time
Our purpose
Chair’s statement
Chief Executive Officer’s statement
Kooth plc business model
Market review
Strategy
Key performance indicators
Chief Financial Officer’s review
Section 172 statement
Corporate governance
Chair’s introduction to governance
Report of the Audit Committee
Report of the Remuneration Committee
Directors’ report
Statement of Directors’ responsibilities
Financial statements
Independent auditor’s report
Consolidated financial statements
Notes to the consolidated financial statements
Company financial statements
Notes to the Company financial statements
Company Information
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Strategic ReportKooth plc Annual Report 2020
Mental health is a defining global
challenge of our time
The imperative for governments and
corporations to act is becoming clear. NHS
funding for mental health increased 4% to
£13.1 billion in 2019/20, with an additional
£2.3 billion committed by 2023/24. In
business, research from the Chartered
Management Institute (CMI) found that 72%
of employees have named wellbeing as a top
priority for managers in 2021.
Kooth was founded with the mission to
tackle this global challenge by democratising
access to effective digital mental health care,
making it available to all.
The World Health Organisation forecasts
that by 2030 poor mental health will be
the number one cause of mortality and
morbidity globally. The United Nations cites
mental health within their 17 Sustainable
Development Goals as a global call to action
to achieve a better and sustainable future
for all.
In addition, while the long-term impact of
COVID-19 is hard to predict, an estimated 10
million people in England will need new or
additional mental health support as a direct
consequence of the pandemic according to
the Centre for Mental Health.
Health, the economy, and employment
are all connected. Stress, depression, and
anxiety accounted for almost half of the
38.8 million lost working days in the UK in
2019/20. The overall cost to the UK economy
is estimated at £45 billion per annum.
Our purpose
We create a welcoming space for effective
personalised digital mental health care.
Available to all.
As a pioneer and innovator in digital mental
health care, Kooth’s technology platform and
clinical operating model have been developed
over 15 years to deliver an integrated,
personalised approach to mental health support,
providing individuals with access to self-help
tools, community-powered peer support, and
text-based professional counselling.
Our strategy and business model is to make
digital mental healthcare universally available
to all, through sales into the public sector,
corporations, and international partnerships.
Safety, Anonymity,
Accessibility
Community
Peer Support
Self-Help
Counselling
Outcomes, Insights
Headline Statistics
Adults
Corporates
International
Children &
Young People
Public Sector
Kooth Digital Platform & Clinical Operating Model
25%
Adults who experience
mental illness per year
Kooth at a glance
20%
Children who experience
mental illness each year
72%
Employees surveyed by
CMI who rank wellbeing as
top priority for managers
in 2021
• Trusted partner and position within
the NHS and public sector markets
- with excellent potential to expand in
response to ever growing demand.
• Data advantage - more than a decade
of anonymised mental health data gives
clients unique insights into emerging
trends.
• Proprietary Technology - Kooth’s
integrated and intelligent platform has
been built with safety, anonymity, and
accessibility at its heart.
• Clinical Operating Model - a wide
range of support in one platform stands
Kooth apart from competitors. Offering
choice and a range of services as and
when is needed.
• Consistently high Recurring Revenue
- contracted revenue of 12 months
or more represents more than 90%
of revenue at an average three year
growth rate of 36%+ per annum.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020
Chair’s statement
Dear Shareholders,
“
In an unprecedented
year, Kooth has risen
to the challenge.
Peter Whiting
Non-Executive Chair, Kooth plc
I am delighted to present Kooth plc’s maiden full year results as a public company following our
successful listing on AIM in September 2020. It is also my first as Chair since joining Kooth last
May.
Our IPO has already begun to deliver a number of strategic benefits to the Company, supporting
our investment in product development, our clinical operating model, and expanding our team
to pursue new market opportunities. We begin life as a public company in a position of financial
strength, with a robust balance sheet and a net cash position. As a listed company we now
operate with a high level of transparency that we know our customers, partners, and service
users’ value.
Key achievements
People and culture
At a time of exceptional uncertainty, Kooth
stepped up to support our customers and
partners, scaling our service to meet demand
and delivering strong revenue growth ahead
of our expectations. Our progress reflects
Kooth’s leading position supporting children
and young people via the NHS, and early
success with our expansion to support the
NHS Adult and Corporate markets.
We continued to see strong organic growth
in our existing contract base with expansions
in service usage and the age ranges
supported. Our Children and Young People’s
service (CYP) expanded to cover 85% of
English Clinical Commissioning Groups
(CCGs) and continued to expand into Wales.
Our Public Sector Adult Services are now
available to 1.5 million adults and we began
to make inroads in the nascent corporate
market. Kooth’s platform is now available to
more than 7.8 million people across the UK.
2020 was a year for ensuring solid
foundations for future growth at Kooth, with
our culture, values, purpose, and people a
key focus for us. The journey ahead will be to
continue to embed our values into business-
as-usual, as described in the CEO’s statement.
I am pleased to confirm that we continue
to retain and attract talent based on these
values. Our teams include colleagues with a
wide variety of skills - clinical, technical and
finance - all brought together by a common
drive to grow their areas of the business and
deliver on our purpose to make effective,
personalised digital mental health care
available to everyone.
Diversity and inclusion are essential to
Kooth’s core purpose. In July 2020 we
appointed Steve Gilbert, OBE to chair our
Diversity and Inclusion Council and we also
established an Employee Voices Group so
that we can better understand and embrace
diversity across the organisation.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Board changes
Our Executive Board was strengthened in
2020 by the appointment of Tim Barker
as CEO and Sanjay Jawa as CFO. Tim
brings with him a wealth of experience
from his career in the technology industry
including leadership positions at DataSift
and Salesforce. Prior to his appointment
Sanjay had been a Non-Executive
Director since 2018 through his role as an
operating partner at ScaleUp Capital. He
previously held senior finance positions at
a combination of public and private equity-
backed technology and services businesses
including Qualitest, Barclays and FTI
Consulting.
As a clinical-first organisation I am very
pleased to be joined by Professor Dame Sue
Bailey as a Non-Executive Director. Sue is
a qualified psychiatrist and academic who
specialises in the field of Children and Young
People’s mental health, underlined by her
positions as Vice President of the British
Association of Counselling and Psychotherapy
and Chair of the Centre for Mental Health. Sue
has extensive experience across Government,
the NHS and charitable organisations, and in
2013 was made a Dame for services to mental
health.
Corporate governance
Summary
The Board is fully committed to its
obligation individually and collectively to
act in good faith to seek to promote the
success of the company for the benefit
of its shareholders as a whole and the
interests of other stakeholders. Further
details of our approach are set out in
pages 34 to 52.
Independent Advisory Board
In addition to our plc Board, we
established an independent advisory board
to provide guidance and strategic advice
on the ever evolving landscape of mental
health. Chaired by Sir Norman Lamb,
our advisory board has proved a valuable
partner in helping guide our strategic
direction and deepen our partnerships
within the NHS, commercial, and charity
sectors.
Kooth begins 2021 with excellent momentum
and a clear strategy for growth, after strong
revenue growth and gross margin improvement
in 2020.
In 2021, innovating and investing in our
proprietary technology platform, data science,
and a continued focus on our clinical delivery
model are key to our future success. Kooth’s
strategy is strongly aligned to NHS and
other Government policy which we expect
to continue to drive growth in our core
Government markets. In 2021 we aim to
continue growing substantially in the public
sector adult market and begin to drive growth
in the corporate market.
The Board believes that we are well positioned
for future success.
Peter Whiting
Non-Executive Chair
13th April 2021
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 “
We’re proud that in
2020, Kooth stepped
up and continued to
scale up to support the
mental health of our
nation.
Tim Barker
Chief Executive Officer
Chief Executive Officer’s statement
A landmark year for Kooth
2020 was a year where remote-first
technologies came to the foreground,
with many industries accelerating their
transformation to digital-first delivery
models.
As a mental health care business that was
‘born digital’, this was a re-enforcement of
the benefits of the digital operating model
that Kooth has pioneered in partnership
with the NHS over many years. We worked
with NHS commissioners to expand access
to Kooth into more regions within the UK,
supported more people than ever before,
and provided a safe, welcoming space for
individuals in need.
This was reflected in positive revenue
growth of 50%, adjusted EBITDA growth
from £0.1 million to £0.9 million, and an
improved adjusted EBITDA margin to 7.2%.
(2019: 1.6%)
Transition to life as a PLC
In September 2020, we successfully floated
on AIM. The move has bought many positive
changes to Kooth. Our customers value the
greater scrutiny and transparency that comes
with life as a public company. We invested
in our systems to simplify and streamline
reporting ahead of our IPO - meaning we
operate our business with greater rigour than
ever.
Following the IPO, new investment in
our technology, data science, and clinical
product development will enable us
to continue to deliver on our vision of
personalised mental health care.
We’ve seen further contract expansion
and high customer retention across the
business, retaining 95% of our customers
and delivering a net revenue retention of
105%. In the Children and Young Persons
market we now cover 85% of Clinical
Commissioning Groups (CCGs) in England
and have had our first commission from the
Welsh Health Boards. Our Adult platform
has seen considerable growth with 18
additional contracts coming on board in
2020. We now support more than 1.5
million adults across the UK.
Ongoing investment in clinical safety and
outcomes has led us to maintain a strong
clinical performance in supporting our
service users.
The £16 million raised has allowed us to
pay down all debt and create an investment
plan to extend our technology, data science,
clinical, and research functions to serve more
users more effectively.
Lastly, the IPO has enabled us to create
a better relationship with our customers
through increased transparency, and with
our employees through our ability to offer our
staff long term incentives to reward their hard
work, passion and impressive results.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Our customers
COVID-19
2020 has been a year in which the NHS
has needed support like never before. I have
been exceptionally proud of how Kooth
has collaboratively worked with the NHS
and the country through the pandemic. As
a remote-first organisation we have been
able to support the NHS by continuing to
expand our coverage for Children and Young
People, increasing coverage of existing
contracts to meet increased demand and a
rapid scale up of our adult services to provide
complementary online alternatives to IAPT
(the NHS program to Improve Access to
Psychological Therapies) and traditional face
to face counselling services.
We have worked collaboratively with the UK
Government, providing our national data and
insights to help gain a better picture of the
impact of the pandemic on the nation’s mental
health.
We are well-placed to meet the coming demand
and structural changes in the NHS. As the
market leaders we have exceptional local
relationships across primary care, NHS providers
and NHS commissioning systems. These
relationships allow us to understand the value
Kooth can continue to add to help reduce cost
and improve outcomes across the mental health
pathway.
Innovation
2020 was pivotal for us to innovate in two
key areas of our business: data and self-
help. Data collection, security and usage is
a critical part of our service, enabling us to
better support our users, customers, and
prove the effectiveness of our interventions.
By introducing a self-assessment (known as
a ‘measure of need’) for users we can now
clinically measure the level of mental health
support that individuals need, and track
changes over time. In addition, our data science
and research team continued to collaborate
with academia and industry partners to prove
the effectiveness of Kooth’s service built on our
‘Theory of Change’ model.
2020 also saw the addition of new self-help
tools, with the introduction of the activity-
centre, providing a range of self-guided
activities and a peer-support community to help
individuals manage their own mental health.
Talent
Kooth is all about its people. Employees at
Kooth provide the most important support
behind the platform to some of the country’s
most vulnerable people. Our employees have
been exceptional in 2020, juggling caring,
health and childcare needs with the drive
and determination to make sure all our
service users are supported.
us with a wealth of leadership experience in
the digital health space. Kate was previously
CEO of Doctor Care Anywhere and CEO of
Blenheim Chalcot.
In 2020 we grew to 306 employees, the
majority of whom joined our product
development and clinical delivery teams.
We continue to retain and attract key
talent and I am especially delighted that we
welcomed our new Chief Operating Officer,
Kate Newhouse, in May 2020 who joins
Following our IPO in September we launched
our first staff long term share incentive
scheme (as outlined in the IPO admission
document).
Kooth has provided vital support to UK
citizens throughout the pandemic. Our
remote delivery model has enabled us to
scale up quickly and effectively to support
our NHS colleagues in handling increased
demands and shifting from traditional face to
face services to digital support. We have been
swift in moving to a greater focus on online
promotion and using social media and our links
with schools, GPs and social work to mobilise
digital campaigns.
Outlook
Kooth has a robust business model with 95%
recurring revenue and is well positioned to
help deliver effective and scalable services
to deal with the aftermath of COVID-19 and
the burgeoning mental health needs of the
nation.
As a resilient and dynamic business we
have a strong focus on delivering our 2021
strategy and utilising the funds from the
IPO to deliver on our purpose to make digital
mental health care available to all, driving
our expansion and growth.
Longer term, we are fully aligned with NHS
policy and the transition to Integrated Care
Systems and Primary Care Networks. We
are well placed to continue to build our
adult services into adjacent areas such as
supporting employers, the unemployed,
universities and victims of crime.
Tim Barker
Chief Executive Officer
13th April 2021
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Kooth plc business model
Kooth provides an integrated platform to meet the majority of mental health needs without
waiting lists.
Inputs
• Proprietary technology that meets NHS
data protection and security standards
• Highly skilled counsellors who provide a
wide range of therapeutic interventions
• The only UK-wide digital service
accredited by the British Association of
Counselling and Psychotherapy
• Strong relationships with our
stakeholders and communities we serve
• Culture of care and support for our
service users
• Excellent revenue visibility
How we generate revenue
Kooth operates a subscription-based
business model, with customers paying
an annual fee based on expected
platform usage (for public sector
contracts), or a per-employee fee (for
corporate customers).
The platform is free at the point of
access for eligible users. Contracts
are promoted via local promotion and
digital and social marketing campaigns.
Contracts expand due to increased usage
and expansion across a population.
Kooth has a very high percentage of
recurring revenue.
Our values
Our values have been built by our service users and our employees and underpin
everything that we do.
Our channels
Commissioned by the
NHS. Freely available
to 7.8 million Children
and Adults
Corporates
Supporting every
employee to
thrive.
International
Partnership and direct
expansion into new
geographies
Our platform: an anonymous, safe space
Community
Self-help
Peer Support Network
Content & Activities
Live Chat
Immediate Support
Wellbeing Practitioners
Counsellors
Alongside you
Flexible
We are alongside you,
warm, welcoming and
companionable.
We offer choice because
you are in control of what
you need.
Compassionate
We don’t judge. We
listen, counsel and
support.
Committed
No matter what
support you need,
we’re here to help.
Safe
We are a safe space for
users and we are serious
about safeguarding.
Benefits
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Personalised mental
health care
Clinical outcomes
Mental health trends
and insights
Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 How we add value
Who?
What we do
How this helps
NHS Customers
UK Public
We provide the NHS
with a safe, effective
and scalable solution for
mental health services
across the country that
reduces demand on the
system and saves money
We provide anonymous,
safe and easily acces-
sible mental health
support to improve the
country’s well-being
85% of Clinical
Commissioning Groups
commission Kooth
7.8m people across the
UK now have access to
Kooth
Shareholders
We deliver long-term
shareholder value
50% revenue growth in
2020
Corporates
Employees
We engage with
employers to provide
anonymous support to
their staff
Over 30,000 employees
now covered by Kooth
in 2020
We invest in
technology
development, data
science and
engineering to
accelerate service
efficacy
We doubled our
engineering team in
2020 and invested over
£1.5 million in tech and
research and
development
Market review
Mental health has emerged as a defining
global challenge of our time. Research
shows 1 in 4 adults and 1 in 5 children
in the UK experience a mental illness in
any given year. Untreated mental health
problems account for 13 per cent of the
total global burden of disease.
It is projected that, by 2030, mental
health problems will be the leading cause
of mortality and morbidity globally. In
addition to the direct costs associated with
mental health illnesses for individuals
and their loved ones, the economic cost to
businesses is substantial. It is estimated
that mental illness costs UK employers
up to £45 billion per annum through lost
productivity, employee turnover, and
absenteeism.
In the last few years, the NHS has become
increasingly aware of the growing need
to invest in mental health services and
treatment. In 2019-2020, the NHS budget
for mental health totalled around £13.1
billion. This was an increase of 4% on the
previous year.
As part of the 2019 NHS Long Term
plan, a further £2.3 billion is committed
to mental health funding by 2023/24.
Yet despite this increased spending,
expenditure on mental health has not kept
pace with demand.
The COVID-19 pandemic has also had a
marked effect on mental health globally.
Measures taken by national governments,
including social distancing and mandatory
working from home, have been viewed
as essential in decreasing the rate of the
virus spreading. These same measures,
however, contribute to a severe negative
effect on populations’ wellbeing: a lack
of social interactions; restricted access to
open spaces; confined living conditions
with young children and elderly relatives;
and anxiety associated with working
from home, being furloughed or made
redundant are all proven to be detrimental
to mental wellbeing. Given the growing
demand for mental health services this is
an area where digital platforms can play
a significant role in expanding access to
mental health support, providing access
to high quality professional counselling
and self-help tools, delivering early
intervention, prevention and ongoing
support for individuals with mental health
problems.
The need for Kooth in
numbers
62%
22%
increase in demand (logins)
for Kooth in 2020
increase in suicidal ideation
and self-ham vs 2019
9%
increase in eating
difficulties
21%
increase in concerns
about parenting / family
relationships
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 “
Digital delivery of quality mental
health service is the only way to
meet demand. Never before has early
intervention, prevention and fast
access to quality support been more
important.
The growing need for effective mental
health services is putting a huge strain
on the NHS, communities and having
a broader socioeconomic impact. We
know that the faster someone accesses
support, when and how they need it,
the more likely they are to engage in
treatment and recover.
That is why at Kooth we continue to
provide a highly accessible service
that provides a variety of therapeutic
interventions and offers choice to our
service users. 94% of our service users
would recommend Kooth to a friend or
family which is a statistic we can all be
really proud of.
Dr Lynne Green
Chief Clinical Officer
Gathering momentum
Kooth continues to gather momentum in our chosen UK markets and sees continued growth
in these areas for 2021:
• Corporate Expansion: A potential
market opportunity in excess of £150
million to expand into the UK corporate
market to support employee mental
health initiatives.
•
International Markets: A large market
opportunity exists to take Kooth’s
innovative technology and clinical
operating model into new markets
through local partnerships and direct
expansion into the US market.
• NHS Children and Young People
Growth: Continued growth of Kooth for
children and young people to serve the
growing demand for mental health care
services. A potential market opportunity of
up to £85 million to expand to nationwide
support for 10-25 year olds and expanded
usage by the population.
• NHS Adult Growth: NHS spending
on Adult mental health was estimated
at £11 billion for 2019/20. A potential
opportunity of £300 million to provide
early intervention and ongoing support
into NHS CCGs, Local Authorities, and
Public Sector organisations to provide help
for adults, either as public health services
within a region, or focused on specific
groups such as new parents, victims of
crime, or frontline workers.
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Strategy
Kooth has a clear 4-pillar growth strategy to support the increasing demand for mental health
services in the public and private sector, both in the UK and internationally, all underpinned by
our proprietary technology platform and clinical operating model.
NHS CYP
Growth
Continue to scale
Kooth to support
children and young
people.
International
Growth
Grow Kooth into
international
markets.
Kooth Platform
& Clinical
Delivery Model
Safe, Effective, Personalised.
NHS Adult
Growth
Replicate our success
in the adult public
sector market.
Corporate
Expansion
Bring the benefits
of Kooth to every
workplace.
Continue to scale Kooth to support young people
As the UK’s largest digital provider to the
NHS for Children and Young People, we
intend to continue to invest, grow and scale
in this important market to meet the growing
demand for mental health support across the
UK. We aim to achieve this by:
• Selling to Commissioners yet to partner
with Kooth in England and devolved
nations to continue to expand the
availability of Kooth across the UK
• Focusing on digital and in-person
promotion of Kooth within schools, GPs,
and with other key stakeholders to raise
awareness and educate potential users on
how to access support via Kooth
• Expanding our current contracts as we
grow usage, supported by a dedicated
account management team to ensure
commissioner’s objectives are met; and
• Growing our Service Delivery team to
support the growing demand
Replicate our success in the
adult public sector market
Bring the benefits of Kooth
to every workplace
In (pre-pandemic) 2019/20, the NHS spent
approximately £11 billion a year on Adult
Mental Health. The Directors believe that
there is a significant need and opportunity
for Kooth’s digital services within the Adult
population, working in partnership with the
public sector.
2020 has proved to be a foundational year
for establishing Kooth Adult within the
market, adding 18 new customers and £0.9
million ARR. We intend to continue to focus
on expanding this business, providing easy
access to effective, professional mental
health care.
Deloitte’s 2020 report (Mental Health
and Employers) estimates that poor
mental health costs UK employers up
to £45 billion a year. More recently, the
Chartered Management Institute (CMI)
reported that 72% of employees have
named wellbeing as a top priority for
managers in 2021, a trend that has been
accelerated by the pandemic.
The Directors believe there is a large,
untapped market opportunity to
support employers and employees.
While a nascent market today, Kooth’s
expertise and track record gives us a
strong proposition to bring to businesses,
especially as organisations adapt to a
‘new normal’ of remote working, digital
transformation, and an imperative to
support the wellbeing of the workforce.
Expand Kooth proprietary technology platform & clinical delivery model
A key area of focus for 2021 will be to
continue to invest in our proprietary
technology and clinical operating model
that underpins our service, with three key
focus areas:
Safe: As a service that supports vulnerable
individuals, safeguarding is at the heart
of everything we do at Kooth. We will
continue to invest in our safeguarding
processes, people, and training for our
practitioners.
Effective: Measurement of outcomes
is a key area of focus for Kooth and our
customers. In 2021 we will continue to
partner with academia and the NHS to
prove the effectiveness of digital mental
health, both in its therapeutic and
economic impact.
Personalised: Our bespoke approach to
mental health helps address the challenge
that “no one size fits all” in mental health.
Our strategy is to use the collective data
from our service to personalise our service
to the wants and needs of individuals.
This helps improve outcomes, service
effectiveness, and provides insights
that we can use for future service
improvement.
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Key performance indicators
Total revenue
Annual Recurring Revenue (ARR)
Number of customers
Population coverage
£13.0m
2020
£8.7m
2019
£14.1m
2020
£10.6m
2019
132
2020
81
2019
7.8m
2020
5.9m
2019
As we continue to invest in and
grow our business, revenue growth
demonstrates the progress we are
making.
Annual Recurring Revenue (ARR) is
the annualised revenue of customers
engaged or closed at the year end
date (31 December 2020) and is an
indication of the upcoming annual
value of the recurring revenue. This is
used by management to monitor long
term revenue growth of the business.
The total number of live contracts
with customers. This demonstrates
the progress the business has made
within the market and subsequently
drives not only existing revenues but
also the potential for future growth
and uplifts.
The total number of people who have
access to the Kooth service and is a
clear indicator of our accessibility.
Gross margin
Adjusted EBITDA
Service User logins
60.9%
2020
51.5%
2019
£0.9m
2020
£0.1m
2019
Direct costs include the cost of our
practitioners, clinical staff directly
involved in the delivery of our
services and our engagement team
who are responsible for promoting
Kooth within a region.
Earnings before interest, tax,
depreciation and amortisation in the
financial year, adjusted for share
based payments and exceptional
costs. This metric provides a more
comparable indication of the Group’s
core business performance by
removing the impact of non-trading
items that are reported separately.
1,100,000
2020
682,000
2019
The number of logins to Kooth from
users, more than 62% growth since
2019.
7.8m
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 “
We have laid a strong
foundation for the
future through significant
growth and investment
in 2020.
Sanjay Jawa
Chief Financial Officer
Chief Financial Officer’s statement
Significant growth
IPO outcome
This is the first annual report and accounts
issued by Kooth plc following a corporate
reorganisation implemented shortly prior
to the Admission to trading on AIM on 2
September 2020 (the “IPO”).
The fundraising undertaken by Kooth plc
as part of the IPO was highly successful,
raising £16 million for the Company (prior
to expenses of £1.8 million), reflecting the
strength of institutional investor demand for
Kooth. This allowed Kooth to repay in full
all debt and leaves us with a healthy cash
position.
Incorporation, Group reorganisation & scope of financial results
The Company was incorporated as Hamsard
3564 Limited on 19 March 2020 as a private
limited company.
On 6 August 2020, the Company acquired
all the issued share capital of Kooth Group
Limited (formerly Xenzone Group Limited),
by way of a share for share exchange with
the shareholders of Kooth Group Limited at
that time. On 24 August 2020, by a special
resolution of the Company, the Company was
re-registered as a public company limited by
shares and the name of the Company was
Revenue
Group total revenue grew by 50% to £13.0
million in the year, driven primarily by fee
uplifts from existing NHS clients and new
business in Adult and CYP as well as a small
number of one-off COVID-19 related projects.
Recurring revenue comprises income invoiced
for services that are repeatable and consumed
and delivered on a monthly basis over the
term of a customer contract. Annual Recurring
Revenue (ARR) is the annualised revenue of
changed to Kooth plc. This was undertaken in
anticipation of the IPO.
The financial results included in this annual
report cover the Group’s combined activities
for the 12 months ended 31 December 2020
with the comparatives for the previous 12
months being those of Kooth Group Limited
and its subsidiaries (prepared in accordance
with applicable International Financial
Reporting Standards).
customers engaged or closed at that date
(31 December 2020) and is an indication of
the upcoming annual value of the recurring
revenue. This is used by management to
monitor long term revenue growth of the
business.
ARR grew by 33% driven by fee uplifts from
existing clients and new business in Adult and
CYP.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Gross margins
Statutory loss after tax year
Gross margin grew from 51.5% to 60.9%
in the year. Direct costs include the
cost of our practitioners, clinical staff
directly involved in the delivery of our
services and our engagement team who
have responsibility for promoting Kooth
to potential users in a region.
With the start of the UK national
lockdown in March 2020 there was
a significant reduction in our physical
engagement team activity with most
engagement meetings conducted
virtually. This led to a reduction in travel
and subsistence costs as well as allowing
the team to reach more users, driving an
increase in gross margin.
This was partially offset by an increase
in overall marketing and social media
costs within administrative expenses.
Gross margin also benefited from
shorter go-live periods between closing
a contract and commencement of
services and revenue as clients looked to
accelerate the implementation of Kooth
particularly during the lockdown closure
of schools.
The costs we incurred in achieving
the IPO and the share based payment
expense incurred as a result of
accounting for the fair value of
shares acquired by employees pre IPO
contributed to the Group loss after tax
for the year of £1.5 million (2019: loss of
£1.1 million).
Administrative expenses
Excluding depreciation, exceptional and
other non-trading items, administrative
expenses grew by £2.8 million in the
year, a 61.2% increase year on year, in line
with our strategic investment plan. This
was primarily driven by increases in staff
costs resulting from increases in overall
headcount across the support teams, the
strengthening of the senior management
team that took place during 2020 and
costs associated with being a listed
company. In addition, the Group increased
marketing expenditure significantly in
2020 over relatively modest expenditure
in 2019 to offset the reduction in direct
engagement by the Kooth Engagement
teams.
Adjusted EBITDA
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 6, 7, 8, 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 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.
Taxation
There was no current year corporation tax
charge due to accumulated losses combined
with the overall current year. The tax credit
in 2020 and 2019 both related to Research
and Development expenditure credits.
Cash
Net cash at year end was £7.8 million
(2019: net debt of £5.2 million) following
the receipt of the proceeds of the IPO and
the repayment of all shareholder debt.
The Group’s current cash reserves provide
sufficient capital to fund current planned
product and software development, any
international expansion and working
capital as the business continues to grow.
Adjusted EBITDA (being EBITDA
prior to exceptional costs) is
calculated as follows:
£’m
2020
2019
Operating Loss
1.6
0.9
Add back:
Depreciation &
Amortisation
1.5
1.0
Share based
Payment expense
IPO and other
exceptional items
0.5
0.6
-
-
Adjusted
EBITDA
0.9
0.1
Capital expenditure
Software and product development
costs aside, the Group’s ongoing capital
expenditure requirements are expected
to be modest and focused on headcount
growth.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Capitalised development costs
The Group continues to invest in product and
platform development resulting in ongoing
improvements in its delivery platform. 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 £1.5 million in respect of software
development (2019: £0.9 million).
In implementing its product development
strategy following the IPO the Group
anticipates capitalising software costs at a
higher rate over the next few years during a
period of accelerated product investment.
Capital and Reserves
Total equity for the year increased by £13.7
million to £10.9 million (2019: £(2.8) million),
reflecting the issue of shares in September
2020, partly offset by the loss for the year.
IFRS 16 adoption & right of use assets
As a result of the transition to IFRS, the Group
has adopted IFRS 16 from 1 January 2019. This
has altered the treatment of the following
elements of the Group’s operations, the future
value of which are capitalised as Right of Use
Assets and the annual costs of which are now
treated as depreciation and interest:
Costs associated with the leases of the Group’s
offices in the UK which were previously
included within administrative expenses
under UK GAAP.
Dividend policy
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 2020 and does not
anticipate recommending a dividend within
the next year but may do so in future years.
Safeguarding incidents
The Group is not a crisis service; however,
given the nature of the Group’s activities,
it is necessary to have significant
procedures in place to mitigate potential
reputational damage in the event of a
serious safeguarding incident.
COVID-19:
The full scale of potential impact of
the pandemic is still unknown and is
dependent on the course of the disease.
During 2020 and throughout the
pandemic to date Kooth has provided vital
support to UK citizens and our remote
delivery model has enabled us to scale up
to support the NHS.
As the Group provides essential mental
health services across the UK, the
Directors remain confident that the Group
will continue to operate and be successful
in the new environment.
Principal risks and uncertainties
The Group is exposed to a variety of risks
and actively manages them through risk
management procedures. While risk cannot
be eliminated altogether, actions are taken to
mitigate risk wherever possible.
Details of the Group’s financial risk
management objectives and policies of the
Group and exposure to foreign exchange risk,
market risk, credit risk and liquidity risk are
given in note 15 to the consolidated financial
statements.
The material business and operational risks
that the Directors consider the Group to be
exposed to include, but are not limited to, the
following:
Cyber security
As a business that holds Service User
data maintaining controls over this risk is
imperative. The Group ensures all data and
communication are encrypted and personal
data is stored securely, and has considerable
data breach policies in place.
System outages
The Group requires stable and robust systems
and hosting services to enable the service to
function. Any disruption to this could result
in compromised Service User experience and/
or reputational damage. To prevent this the
Group has regular testing on its systems in
addition to active monitoring and a specific
recovery plan.
Sanjay Jawa
Chief Financial Officer
13th April 2021
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020
Section 172 Statement
Stakeholder
Engagement
The Board understands the views of the Group’s other key stakeholders and their interests,
and the matters set out in Section 172 of the Company’s Act 2006 have been considered in
board discussions and decision-making.
The Directors must consider the following in meeting the requirements of Section 172 (1) of
the Companies Act 2006:
• The likely consequences of any decision in the long term
• The interests of the company’s employees
• The need to foster the company’s business relationships with suppliers, customers and
others,
• The impact of the company’s operations on the community and the environment,
• The desirability of the company maintaining a reputation for high standards of business
conduct
• The need to act fairly as between members of the company.
We have identified our key stakeholders as follows:
Employees
We understand that our
employees are at the core of
everything we do and
maintain a focus on their
interests and wellbeing.
We appointed Steve Gilbert
OBE to chair our Diversity
and Inclusion council during
2020, and also established
an Employee Voices Group
to better understand and
embrace diversity across the
organisation. We now run an
Employee Engagement Survey
three times a year. The results
are reviewed at the senior
management level and feedback
is used to inform employee
development and policies.
Following our IPO we were able to
award long term incentive share
options to all our employees. We
also formed a rapid response to
the COVID-19 pandemic to ensure
the wellbeing of our employees
was implemented.
Customers
Communication with our
customers is fundamental
to understanding how we
can continue to add value
through our digital mental
health services.
Our Admission to AIM has
benefitted our customers
through greater transparency
facilitated by the increased
scrutiny that comes with
being a public company.
During the year we have
continued to support the NHS
by increasing coverage of our
existing Children and Young
People contracts to meet
increased demand, whilst also
scaling up our other services.
Investors
The Board maintains strong
relationships with investors
and supports open channels
of communication.
Regular meetings are held
between the Chief Executive
Officer, Chief Financial
Officer and institutional
investors and analysts to
ensure that the Company’s
strategy, financials and
business developments are
communicated effectively.
The Group’s investor
relations website is updated
on a regular and timely
basis. More information on
the Board’s relationships
with investors is provided
in the next section of the
report.
Communities
The Group is committed to
providing an accessible and
diverse service to all.
The Group is committed
to providing an accessible
and diverse service to all,
including working with
leading LGBTQ+ and Black
and non-white influencers
to provide appropriate
content to our communities.
By nature of being a digital
service provider, the Group’s
operations are deemed to
have low environmental
impact.
Suppliers
The relationship we
have with our suppliers
is crucial to ensuring
the smooth-running
of our business and its
operations.
The relationship we have
with our suppliers is
crucial to ensuring the
smooth-running of our
business and its operations.
We encourage an honest
dialogue with all suppliers.
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Strategic ReportStrategic ReportKooth plc Annual Report 2020Kooth plc Annual Report 2020 Corporate governance
Chair’s introduction to governance
Report of the Audit Committee
Report of the Remuneration Committee
Directors’ report
Statement of Directors’ responsibilities
34
41
44
48
52
32
33
Strategic ReportKooth plc Annual Report 2020Corporate GovernanceKooth plc Annual Report 2020
Chair’s introduction to governance
Dear shareholder,
I am pleased to present the Corporate
Governance Statement as Chair of the Board
of Directors of Kooth plc (Kooth, or the
Company/Group as the context requires). As
Chair, it is my responsibility to ensure that
Kooth has both sound corporate governance
and an effective Board. Since the Company
listed on AIM during the year, it has chosen
to adopt the Quoted Companies Alliance’s
Corporate Governance Code for Small and
Mid-Size Quoted Companies (the “QCA Code”),
to the extent it is appropriate having regard to
the Company’s size, Board structure, stage of
development and resources.
The Board
The Directors of Kooth recognise the value
of good corporate governance in every part
of the business. The Board considers that
compliance with the QCA Code will enable
us to serve the interests of all our key
stakeholders, including our shareholders, and
will promote the maintenance and creation
of long-term value in the Company. This
report describes our approach to governance,
including information on relevant policies,
practices and the operation of the Board and
its Committees.
The Board comprises the Independent
Non-Executive Chair, two Non-Executive
Directors and two Executive Directors. Short
biographical details are set out on page 35.
In carrying out its governance role, the main
task of the Board is to drive the performance
of the Group. The Board must also ensure that
the Group complies with all its contractual,
statutory and any other legal obligations, as
well as the requirements of any regulatory
body. The Board has the final responsibility
for the successful operations of the Group,
and meets monthly to set the overall
direction and strategy of the Group, and such
other times as necessary.
Peter Whiting
Independent
Chair
Joined May 2020
Twenty-five years’ experience as an investment
analyst in equity markets, and experience over
the past nine years as a non-executive director
on the board of several public and private
companies (currently including FDM Group
plc, Aptitude Software plc and D4t4 Solutions
plc). Peter has experience in a broad range of
sectors, but focused particularly on technology,
including software and engineering.
Sue Bailey
Independent Non-
Executive Director
Joined August 2020
Non-Executive Director at Manchester
University NHS Foundation Trust and thirty
years’ experience as a Child and Adolescent
Psychiatrist.
Simon Philips
Non-Executive
Director
Joined October 2015
Managing Partner of ScaleUp Capital with
experience of providing growth capital and
expertise to businesses in the technology,
digital, business services and information
sectors.
Tim Barker
Executive Director /
Chief Executive Officer
Joined January 2020
Former CEO of DataSift, with over 30 years
experience in technology and SaaS startups
and scale-ups, including successful exits to
Meltwater and Salesforce.
Sanjay Jawa
Executive Director /
Chief Financial Officer
Joined March 2020
Former Operating Partner and CFO at
ScaleUp Capital, along with senior financial
positions at a combination of public and
private equity backed technology and services
businesses including Qualitest, Barclays
and FTI Consulting. Chartered Accountant
and previously an audit manager at Price
Waterhouse.
34
34
35
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020 Board meetings
The Board meets on a regular basis throughout
the financial year and as required on an ad
hoc basis with a mandate to consider strategy,
operational and financial performance and
internal controls. In advance of each meeting,
the Chair of the Board sets the agenda, with
the assistance of the Company Secretary.
Directors are provided with appropriate and
timely information, including board papers
distributed in advance of the meetings. Those
papers include reports from the executive
Board and committee attendance
team and other operational heads.
Richard Almond of Almond + Co is the
Company Secretary and attends all Board
meetings as well as advising on corporate
governance matters. The Company Secretary
produces full minutes of each meeting,
including a log of actions to be taken. The
Chair of the Board then follows up on each
action at the next meeting, or before if
appropriate.
From the period since admission of the Company to AIM on 2 September 2020 to the year-end
date of 31 December 2020, the attendance of the Board and the Committees is as follows:
Matters reserved for the board
Matters reserved for the decision of the Board include, but not limited to:
• Approving the Group’s strategic aims and objectives;
• Reviewing performance against the Group’s strategic aims, objectives and business plans;
• Overseeing the Group’s operations;
• Approving changes to the Group’s capital, corporate, management or control structures;
• Approving results announcements and the annual report and financial statements;
• Approving the dividend policy;
• Declaring the interim dividend and recommending the final dividend and any special dividend;
• Approving any significant changes in accounting policies;
• Approving the treasury policy;
• Approving the Group’s risk appetite and principal risk statements;
• Reviewing the effectiveness of the Group’s risk and control processes;
• Approving major capital projects and material contracts or arrangements;
• Approving all circulars, prospectuses and admission documents;
• Ensuring a satisfactory dialogue with shareholders;
• Establishing Board committees and approving their terms of reference;
• Approving delegated levels of authority;
• Approving changes to the Board and its committees;
Board attendance
Director
Postition
Max Possible
Attendance
Meetings
Attended
• Determining the remuneration policy for the Directors and other senior executives;
• Providing a robust review of the Group’s corporate governance arrangements; and
Peter Whiting
Dame Sue Bailey
Simon Philips
Tim Barker
Sanjay Jawa
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Chief Financial Officer
3
3
3
3
3
3
3
3
3
3
Committee attendance
Director
Audit
Remuneration
Independence
Peter Whiting
Dame Sue Bailey
Simon Philips
1
1
1
1
1
1
✓
✓
-
• Approving all Board mandated policies.
Audit Committee
The Audit Committee comprises three
Non-Executive Directors, two of whom
are independent, namely; Peter Whiting
(Committee Chair), Sue Bailey (INED) and
Simon Philips (NED). The CFO may be invited
to attend meetings of the Audit Committee at
the discretion of the Committee Chair.
The Audit Committee is responsible for the
annual and half-yearly reports to shareholders,
other public announcements of a financial
nature, review of the likelihood of any fraud
risks, review of the effectiveness of the
Groups internal control and risk management
system and overseeing the relationship with
the external auditors. The Audit Committee
will also review the appointment of the
external auditor, their independence, the
audit fee, and any questions of resignation or
dismissal.
The Audit Committee will meet at least three
times per annum.
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Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020 Remuneration Committee
The Remuneration Committee comprises
Simon Philips (Chair), Sue Bailey and Peter
Whiting. Only members of the committee
have the right to attend meetings, however
other individuals such as the CEO, the Head
of Human Resources and external advisors
may be invited to attend. No individual will
be present for any discussion on their own
remuneration.
The role of the Remuneration Committee
includes responsibility for all aspects of the
remuneration of Executive Directors, including
salary, annual bonus (where appropriate) and
share-based payments and an awareness of
remuneration within the wider workforce
and the administration of all share-based
remuneration plans within the organisation.
The Remuneration Committee will meet at
least three times per annum.
Election and re-election of the
Directors
In accordance with the Company’s Articles
of Association, each of the directors will
retire and stand for re-election at the
forthcoming AGM.
Board Evaluation
Since the Company’s admission to AIM
on 2 September 2020, the Board is newly
established comprising of two Executive
Directors and three Non-Executive Directors,
one of whom is the Non-Executive Chair.
The Board has not yet conducted a formal
evaluation of its operations and practices,
whether by a formal internal process or with
the support of external advisers due to the
busy board calendar and short time since
admission but will seek to conduct such
evaluation in the current financial year.
Relationships with stakeholders
The Board is committed to open and
ongoing engagement with the Company’s
Shareholders. The Board will communicate
with Shareholders through:
• The annual report and accounts;
• The interim and full-year results
announcements
• Trading updates (where required or
appropriate)
• The annual general meetings
• The Company’s investor relations website
(in particular, the “RNS News” and “AIM
Rule 26” pages)
The Chief Financial Officer is the primary
contact for Shareholders and there is a
dedicated email address
(investorrelations@kooth.com) for
shareholder questions and comments.
Regular meetings are held between the Chief
Executive Officer, Chief Financial Officer and
institutional investors and analysts to ensure
that the Company’s strategy, financials and
business developments are communicated
effectively. The Board intends to engage with
Shareholders who do not vote in favour of
resolutions at annual general meetings to
understand their motivation.
Risk management and internal controls
The Board acknowledges its responsibility
for establishing and maintaining the Group’s
system of internal controls and will continue
to ensure that management keeps these
processes under regular review and improves
them where appropriate.
The Board’s financial risk management
objectives involve safeguarding the Group’s
Social responsibilities
The Group takes its corporate social
responsibilities very seriously and is focused
on maintaining effective working relationships
across a wide range of stakeholders including
employees, existing and new customers, and
most importantly, our service users.
Our core purpose is to provide a welcoming
service. By that we mean to build and deliver
a product that preserves anonymity and
removes the barrier of stigma and access.
Accessibility is at the heart of our product
design and clinical delivery. To provide an
effective and personalised service maintaining
the trust of service users and the market
by ensuring outcomes and evidence for our
interventions and to provide a service that
can be commissioned for all. We build a
service that puts diversity and inclusion at its
heart - ensuring that we remove barriers to
Culture
assets by identifying, managing, monitoring
and reporting the critical risks across
the business. As part of the admission to
AIM, the Group has set up a risk register
which includes identifying, monitoring and
reporting the critical risks of the business.
The risk register covers commercial,
financial, operational, competitive, IT/
technology and other risks, and the Board
commits to continually review the risks and
ensure that they are being addressed.
great mental health services for all people
regardless of race, age, gender, sexuality or
socioeconomic situation.
By nature, the Group’s regular operations are
judged to have a low environmental impact
and are not expected to give rise to any
significant inherent environmental risks over
the next 12 months.
In line with our values and governance
arrangements, we ensure we comply with
laws and standards in relation to labour
practices and human rights, including
slavery and human trafficking legislation. We
expect everyone at Kooth to understand and
display our values to the highest standards.
We continuously assess the risk of modern
slavery occurring in our organisation, our
service users and with our suppliers.
The Group promotes a culture of integrity,
honesty, trust and respect and all employees
of the Group are expected to operate in an
ethical manner in all of their internal and
external dealings. In 2020 we launched our
new company values across the organisation
and these are embedded at the heart of
everything we do. The staff handbook and
policies promote this culture and include
such matters as whistleblowing, social media,
anti-bribery and corruption, communication
and general conduct of employees. The Board
takes responsibility for the promotion of
ethical values and behaviours throughout the
Group, and for ensuring that such values and
behaviours guide the objectives and strategy
of the Company.
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Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020 Diversity and inclusion
Kooth provides a service that puts diversity
and inclusion at its heart - ensuring that
we remove barriers to great mental health
services for all people regardless of race,
age, gender, sexuality or socioeconomic
situation. Traditionally both digital health
and mental health services have struggled
to provide truly inclusive services and Kooth
sees our platform as a key differentiator in
the market.
Diversity and inclusion
in our products
We design and build our platform to
meet the Web Accessibility Guidelines
(WCAG) 2.1 level AA. Being careful not
to exclude people takes diligence, and
some specialised knowledge. Every
new feature we’ve built in the last
few months meets the WCAG 2.1 AA
standard. Our participation team works
with service users and potential service
users of all backgrounds to ensure input
into our design process.
Diversity and inclusion
in our marketing & promotion
We are committed to a diverse
marketing and promotion plan that
links in with faith, political and racial
groups on the ground to promote
Kooth’s services. We work with leading
LGBTQ+ and Black and non-white
influencers to promote appropriate
content to our communities.
Diversity and inclusion
in our leadership
We established the Kooth Diversity and
Inclusion Council in June 2020 and
appointed Steve Gilbert OBE to chair the
council. The purpose is to ensure we continue
to do everything we can to reach Black and
minority ethnic communities and to expand
our Black and non-white workforce.
Diversity Statistics
27%
Of our users come from
a Black or non-white
background.
4%
Of our users identify
as ‘gender-fluid’ or
‘agender’
Report of the Audit Committee
Committee Chair’s introduction
As the recently appointed Chair of the Audit Committee of the Group (Committee), I present
my first Committee Report for the year ended 31 December 2020, which has been prepared
by the Committee and approved by the Board.
Committee meetings and attendance
The three members of the Committee are
Dame Sue Bailey, Simon Philips and me.
The Board considers that I have sufficient,
relevant financial experience to chair the
Committee given that I have over 25 years’
experience as an investment analyst and
currently hold a number of other listed
company Board and Audit Committee
positions.
From the period since admission of the
Company to AIM on 2 September 2020 to
the year-end date of 31 December 2020,
the Committee met once and all members
attended. The Committee is required by its
Terms of Reference to meet as frequently
as the Committee Chair shall require, and
also at regular intervals to deal with routine
matters and, in any event, at least three
times in each financial year.
Committee activities
The Committee is responsible for
reviewing and reporting to the Board on
the Company’s financial performance,
monitoring the integrity of the Company’s
financial statements (including Annual
and Interim Accounts and results
announcements), reviewing internal
control and risk management, and
reviewing/monitoring the performance,
independence and effectiveness of the
Company’s external auditors. Since
the Company’s admission to AIM in
September 2020, the Committee’s primary
activities comprised meeting with the external
auditors, considering the audit approach, scope
and timetable, and reviewing the key audit
matters for the FY 2020 audit. In addition,
the Committee reviewed the audit provided
by Grant Thornton LLP, the Group’s external
auditors. The Committee concluded that Grant
Thornton LLP is delivering the necessary
audit scrutiny. Accordingly, the Committee
recommended to the Board that Grant Thornton
LLP be re-appointed for the next financial year.
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Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020 Financial reporting
At request of the Board, the Committee
concluded that the Annual Report and
Financial Statements, taken as whole,
were fair, balanced and understandable
and provided the information necessary
for shareholders to assess the Group’s
business model, strategy and performance.
The Committee considered the budget for 2021
and concluded that the going concern basis is
appropriate. The Committee also reviewed the
Strategic Report and concluded that it presented
a useful and fair, balanced and understandable
review of the business.
Peter Whiting
Non-Executive Chair
13th April 2021
As part of the year end audit, the
Committee:
• Met with the external auditors to
review and approve the annual audit
plan and receive their findings and
report on the annual audit
• Considered the integrity of the
published financial information and
whether the Annual Report and
Accounts taken as a whole are fair,
balanced and understandable and
provide the information necessary
to assess the Group’s position and
performance, business model and
strategy
• Considered significant issues and areas
of judgement with the potential to
have a material impact on the financial
statements
• Reviewed and approved the year end
results and accounts
In the coming year, in addition to the
Committee’s ongoing duties, the Committee
will:
• Consider significant issues and areas
of judgement with the potential to
have a material impact on the financial
statements
• Keep the need for an internal audit
function under review, having regard
to the Company’s size, complexity,
strategy and resources
Committee objectives and responsibilities
The Committee’s main responsibilities can
be summarised as follows:
• To report on and review the Company’s
financial performance
• To monitor the integrity of the
Company’s financial statements and any
formal announcements relating to the
Group’s financial performance
• To review the Company’s internal
financial controls and risk management
systems
• To review any changes to accounting
policies
• To make recommendations to the Board
in relation to the appointment of the
external auditors
• To make recommendations to the
Board concerning the approval of the
remuneration and terms of engagement
of the external auditors
• To review and monitor the external
auditors’ independence and objectivity
• To consider any matter specifically
referred to the Committee by the Board
The Terms of Reference are reviewed
annually and are available on the Company’s
website.
42
43
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020
Report of the Remuneration Committee
Committee objectives and responsibilities
Committee Chair’s introduction
As the Chair of the Remuneration Committee of the Company (Committee), I present my
first Remuneration Committee Report for the year ended 31 December 2020, which has been
prepared by the Committee and approved by the Board.
Committee meetings and attendance
The three members of the Committee are
Simon Philips as Chair, Dame Sue Bailey
and Peter Whiting. The Board considers
that I have sufficient relevant experience
to chair the Committee, given the
numerous Board level positions currently
(including the Remuneration Committee
Chair of another listed company) and
previously held.
In the period from admission of the Company
to AIM on 2 September 2020 to the year
end on 31 December 2020 the inaugural
meeting of the Committee took place and
was attended by all Committee members,
Tim Barker, Chief Executive and Sanjay Jawa,
Chief Financial Officer. The Committee is
required by its Terms of Reference to meet
as frequently as the Committee Chair shall
require and also at regular intervals to deal
with routine matters and, in any event, at
least three times in each financial year.
Remuneration policy for the year ended 31 December 2020
Remuneration policy for the year ended 31
December 2020
The Remuneration Committee determines
the Company’s policy on the structure
of Executive Directors’ and if required,
senior management’s remuneration. The
objectives of this policy are to:
• Reward Executive Directors and senior
management in a manner that ensures
that they are properly incentivised
and motivated to perform in the best
interests of shareholders
• Provide a level of remuneration
required to attract and motivate high-
calibre Executive Directors and senior
management of appropriate calibre
• Encourage value creation through
consistent and transparent alignment of
incentive arrangements with the agreed
company strategy over the long term
• Ensure the total remuneration packages
awarded to Executive Directors,
comprising both performance-related and
non-performance-related remuneration, is
designed to motivate the individual, align
interests with shareholders and comply
with corporate governance best practice
44
The Committee’s main responsibilities can
be summarised as follows:
• To determine the framework or broad
policy for the remuneration of the Chair,
the Executive Directors, and such other
senior executives as it is requested by
the Board to consider. The remuneration
of Non-Executive Directors shall be a
matter for the Chair and the Executive
Directors of the Board. No Director shall
be involved in any decisions as to their
own remuneration
• To determine such remuneration policy,
taking into account all factors which
it deems necessary (including relevant
legal and regulatory requirements)
• To review the ongoing appropriateness
and relevance of the remuneration
policy, including policy comparisons
Director’s remuneration: salary
Salaries are normally reviewed annually
with effect from 1 January taking
into account inflation, salaries paid to
directors of comparable companies, Group
and personal performance. Salaries of
Executive Directors are determined by the
Remuneration Committee. The Board as
a whole decides the remuneration of the
Chair and Non-Executive Directors.
Salaries and fees for directors effective
from 1 January 2021 are as follows:
with market competitors
• To design and determine targets for
any performance related pay schemes
operated by the Company and approving
any annual payments made under such
schemes
• To review the design of, and any changes
to, all share incentive plans
• To review the structure, size and
composition of the Board, including the
skills, knowledge and experience
• To give consideration to succession
planning
• To recommend new Board appointments
• To consider any matter specifically
referred to the Committee by the Board
Salaries
Name
Dame Sue Bailey
Tim Barker
Sanjay Jawa
Simon Philips
Peter Whiting
£’000
35
250
175
50
80
45
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020
Director’s remuneration: long term incentives (audited)
Director’s remuneration: current year
Shortly after the IPO, the Company
adopted both a Long Term Incentive Plan
with all employees of the Group eligible
to receive awards under the share plans.
The Company granted a total of 1,012,770
share options to Executive Directors, senior
management and employees under the
share plans.
In line with the terms of the scheme, the
awards granted to Directors are subject
to performance criteria, with 50% being
linked to ARR growth and 50% linked to
comparative total shareholder return with
both elements being measured over a three
year period. The Remuneration Committee
considers that the targets are appropriate
and are aligned with shareholder interests.
basis over the vesting period. The total
amount to be expensed is determined by
reference to the fair value of the options
or shares determined at the date of grant.
The fair value of the awards was the
market value at the date of grant. Non-
market based vesting conditions are
included in assumptions about the
number of options that are expected to
become exercisable or the number of
shares that the employee will ultimately
receive. This estimate is revised at each
balance sheet date to allow for options
that are not expected to vest and the
difference is credited to the Consolidated
Statement of Comprehensive Income with
a corresponding adjustment to reserves.
The fair value of the employee services
received in exchange for these grants is
recognised as an expense on a straight-line
A breakdown of the Directors’ current
interests in the long term incentives
awards is set out below.
Director’s remuneration: interests
Committee effectiveness
According to the register of Directors’
interests maintained under the Companies
Act, the following interests in shares
of Group companies were held by the
Directors in office at the year end:
The Committee is due to
perform a self-assessment of its
effectiveness during 2021.
Name
No. of shares
Dame Sue Bailey
-
Long term incentives
Name
No. of options Exercise price (p)
Tim Barker
Sanjay Jawa
801,603
320,648
Tim Barker
100,000
Sanjay Jawa
75,000
5p
5p
Simon Philips*
16,609,873
Peter Whiting
40,000
* Simon Philips is one of the beneficial
owners of the shares held by Root
Capital Fund II.
46
Director remuneration for the years ended 31 December 2020 and 31 December 2019 was as
follows. The gain on exercise of share options relate to the realisation of the Growth shares
upon IPO.
2020:
Name
Tim Barker
Sanjay Jawa
Total
2019:
Name
Zoe Blake
Judy Happe
Total
Base salary
and fees
Pension
Gain on exercise
of share options
Total
000’s
000’s
000’s
000’s
234
159
393
6
3
9
94
38
132
377
217
534
Base salary
and fees
Pension
Gain on exercise
of share options
Total
000’s
000’s
000’s
000’s
139
161
300
3
-
3
-
-
-
142
161
303
Remuneration policy for
Non-Executive Directors
Dame Sue Bailey, Peter Whiting and I each receive
a fee for our services as Directors, which is approved
by the Board, mindful of the time commitment
and responsibilities of our roles and of current
market rates for comparable organisations and
appointments. Non-Executive Director fees for the
year commencing 1 January 2021 are noted above.
Simon Philips
Chair of the
Remuneration Committee
13th April 2021
47
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020
Directors’ report
The Directors present their report and the audited financial statements of Kooth plc for the
year ended 31 December 2020.
The principal activity of the Group is the provision of online counselling and support
to children, young people, and adults in need. A description and review of the Group’s
performance during the financial year and indications of future development are set out
within the strategic report, and this also incorporates the requirements of the Companies
Act 2006.
Comparatives
Directors
The 2019 comparatives shown cover the year
ended 31 December 2019 and have been
restated in order to comply International
Accounting Standards in conformity with the
requirements of the Companies Act 2006
requirements. Refer to note 29 to the financial
statements for more information.
Dividends
The Directors do not recommend the payment
of a dividend (2019: £nil).
The directors who held office during the
year were as follows:
• Sue Bailey, Non-executive director
(appointed August 2020)
• Tim Barker, Chief Executive
(appointed January 2020)
• Sanjay Jawa, Chief Financial Officer
• Simon Philips, Non-executive director
• Peter Whiting, Chair and
Non-executive director
(appointed March 2020)
Disabled employees
Political contributions
Applications for employment by disabled
persons are always fully considered, bearing in
mind the abilities of the applicant concerned.
In the event of members of staff becoming
disabled every effort is made to ensure that
their employment with the Group continues
and that appropriate training is arranged. It
is the policy of the Group and the Company
that the training, career development and
promotion of disabled people should, as far
as possible, be identical to that of other
employees.
The Group made no political donations or
incurred any political expenditure during
the year.
Directors’ insurance
The Group maintains appropriate
insurance cover in respect of any legal
action against its directors including in
respect of the prospectus issued for the
initial public offering.
Research and Development
Anti-bribery
During the year the Group invested
over £1.5 million in Research and
Development. More information on this
is provided in the Strategic Report and
the notes to the financial statements.
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 4 to 31. In addition, note 15 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 2020 financial year the Group
generated a loss of £1.5 million (2019: £1.1
million). Adjusted EBITDA is £0.9 million
(2019: £0.1 million). The Group is in a net
asset position of £10.9 million (2019: (£2.8
million)).
The Group raised £16 million of funds
through the IPO in September 2020
resulting in a positive cash position.
Additionally, the Group has no debt
facilities in place as at 31 December 2020
after repaying all debt in full during the
year.
Management has performed a going
concern assessment for a period up to 30
June 2022, which indicates that the Group
will have sufficient funds to trade and
settle its liabilities as they fall due. This
It is our policy to conduct all our
business in an honest and ethical
manner. We take a zero-tolerance
approach to bribery and corruption and
are committed to acting professionally,
fairly and with integrity in all our
business dealings and relationships.
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 2020
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. As a result Management also deems
the likelihood of the scenarios in the default
model occurring to be remote.
The Directors have considered the impact of
COVID-19 and do not expect the pandemic
to have a material adverse impact on the
Group. Consequently, the directors believe
that the company is well placed to manage
its business risks successfully despite the
current uncertain economic outlook.
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.
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49
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020 Employee involvement
The Group continues to attract and retain key
talent and places considerable value on the
involvement of employees. Employees are
regularly consulted regarding matters affecting
them through channels such as company-wide
briefings and email announcements, and their
interests are taken into account in making
decisions that are likely to affect their interests.
The Group is committed to providing equality
of opportunity to all existing and prospective
employees without discrimination through
channels such as our Diversity and Inclusion
Council (established in July 2020) and our
Employee Voices Group.
As a result of the IPO we are able to offer
our staff long term incentives to reward
their hard work, passion and impressive
results.
Capital structure
The Company was incorporated in England and Wales on 19 March 2020 as a private company
limited by shares under the Companies Act with the name Hamsard 3564 Limited and with
registered number 12526594.
On 24 August 2020, by a special resolution of the Company, the Company was re-registered as
a public company limited by shares and the name of the Company was changed to Kooth plc.
Kooth plc became the parent company of the Group via a share for share exchange agreement
entered into between the Company and the shareholders of Kooth Group Limited (formerly
Xenzone Group Limited). On completion of the reorganisation, the issued share capital comprised
25,055,776 ordinary shares of £0.05 each.
Following Admission and the issue of 8 million shares, the Company’s issued share capital
comprises 33,055,776 ordinary shares of £0.05 each as at 31 December 2020.
Notice of Annual General Meeting
Significant events after year end
Disclosure of information to auditor
Auditor
Grant Thornton UK LLP was appointed
as auditor in the year. A resolution to
re-appoint Grant Thornton UK LLP as
auditor and to authorise the directors
to determine their remuneration will be
proposed at the forthcoming AGM.
Details of business to be conducted at this
year’s AGM are contained in the Notice of
the Annual General Meeting which will be
communicated to shareholders separately.
It is the opinion of the Directors that the
passing of these resolutions are in the best
interest of the shareholders.
There have been no significant events
after year end.
Significant shareholders
Name
% of Issued Share Capital
The Group has been notified
of the following interests
in 3% or more of the issued
ordinary share capital of
the Company. This is the
position as at 31 December
2020.
Root Capital Fund II LP
Cannacord Genuity Group Inc
50.2%
8.5%
LF Gresham House UK Micro Cap
7.9%
Stancroft Trust Limited
Premier Miton Investors
6.1%
4.9%
Each of the persons who are Directors at
the time when this Directors’ Report was
approved has confirmed that:
• So far as that each Director is aware,
there is no relevant audit information
of which the Company and the Group’s
auditor is unaware
• That director has taken all the steps that
ought to have been taken as a director
in order to be aware of any relevant
audit information and to establish that
the Company and Group’s auditor is
aware of that information. The auditor,
Grant Thornton LLP, will be proposed
for reappointment in accordance with
section 487 of the Companies Act 2006.
Sanjay Jawa
Chief Financial Officer
13th April 2021
50
51
Corporate GovernanceCorporate GovernanceKooth plc Annual Report 2020Kooth plc Annual Report 2020
Financial statements
Independent auditor’s report
Consolidated financial statements
Notes to the consolidated financial statements
Company financial statements
Notes to the Company financial statements
55
68
73
105
107
Statement of Directors’ responsibilities
In respect of the Annual Report and the financial statements
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group’s transactions
and disclose with reasonable accuracy at any
time the financial position of the Group and
the Company, and which enable them to
ensure that the financial statements and the
Directors’ remuneration report comply with
the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS
Regulation.
They also have general responsibility for taking
such steps as are reasonably open to them
to safeguard the assets of the Group and the
Company, and to prevent and detect fraud and
other irregularities.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
The Directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
laws and regulations.
Under that law, the Directors are required
to prepare the Group financial statements
in accordance with International
Accounting Standards in conformity with
the requirements of the Companies Act
2006 and have elected to prepare the
Parent Company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice, including FRS
101 ‘Reduced Disclosure Framework’ (UK
Accounting Standards and applicable law).
In preparing these financial statements, the
Directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and accounting
estimates that are reasonable and
prudent;
• State whether International Accounting
Standards in conformity with the
requirements of the Companies Act
2006 have been followed, subject
to any material departures disclosed
and explained in the Group and
Parent Company financial statements
respectively;
• Prepare the financial statements on
the going concern basis, unless it is
inappropriate to presume that the Group
and the Company will continue in
business.
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Strategic ReportKooth plc Annual Report 2020Corporate GovernanceKooth plc Annual Report 2020
Independent auditor’s report
Our opinion on the financial statements is unmodified.
We have audited the financial statements of Kooth plc (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended 31 December 2020 which
comprise the Consolidated Statement of Profit and Loss and Other Comprehensive
Loss, the Consolidated and Parent Company Statement of Financial Position,
the Consolidated and Parent Company Statement of Changes in Equity, the
Consolidated Cash Flow Statement and notes to the financial statements, including
a summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial statements is
applicable law and International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The financial reporting framework that
has been applied in the preparation of the parent company financial statements
is applicable law and United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and
of the parent company’s affairs as at 31 December 2020 and of the group’s loss
for the year then ended;
the group financial statements have been properly prepared in accordance with
International Accounting Standards in conformity with the requirements of the
Companies Act 2006;
the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Independent auditor’s report to the
members of Kooth plc
13th April 2021
54
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 Independent auditor’s report
Independent auditor’s report
Independent auditor’s report
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in the
‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are
independent of the group and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the group’s
and the parent company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion.
Our conclusions are based on the audit evidence obtained up to the date of our report. However,
future events or conditions may cause the group or the parent company to cease to continue as a
going concern.
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability
to continue to adopt the going concern basis of accounting included challenging the key
assumptions used within the cash flow scenarios modelled and the available sources of liquidity.
We critically assessed both the impact of reverse stress testing and the availability of controllable
mitigating future actions on the going concern assessment. We have also reviewed the
disclosures contained within the Annual Report and consolidated financial statements in relation
to the going concern basis of accounting and consider them to describe adequately the impact of
Covid-19 on the group as at 31 December 2020.
In our evaluation of the directors’ conclusions, we considered the inherent risks associated
with the group’s and the parent company’s business model including effects arising from
macro-economic uncertainties such as Brexit and Covid-19, we assessed and challenged the
reasonableness of estimates made by the directors and the related disclosures and analysed how
those risks might affect the group’s and the parent company’s financial resources or ability to
continue operations over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the group’s
and the parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the
‘Responsibilities of directors for the financial statements’ section of this report.
Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £130,000, which represents approximately
1% of the group’s revenues.
Parent company: £119,000, which represents
approximately 1% of the parent company’s net
assets, at the planning stage of the audit.
Key audit matters were identified as revenue
recognition, accounting for the IPO transaction
and related costs, and accounting for capitalised
internal development costs.
We performed audits of the financial statements
of the significant group components Kooth plc,
Kooth Group Limited and Kooth Digital Health
Limited using component materiality (full scope
audits. We performed analytical procedures at
group level on the financial information of all
other components.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had
the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement
team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Independent auditor’s report
Independent auditor’s report
Independent auditor’s report
Key Audit Matter - Group
How our scope addressed the
matter - Group
Relevant disclosures in the Annual
Report and Accounts 2020
Our results
The group’s accounting policy for
revenue recognition is shown in note 2.3
to the consolidated financial statements
and related disclosures are included in
note 4.
Based on procedures performed, we did
not identify any evidence of material
misstatement in the revenue recognised in
the year.
Accounting for the IPO transaction
and related costs
In responding to the key audit matter, our
work included but was not restricted to:
We identified the IPO transaction as one
of the most significant assessed risks of
material misstatement due to error.
Kooth plc, previously Hamsard 3564
Limited was incorporated on 19 March
2020 and on 6 August 2020, it acquired
the issued share capital of Kooth Group
Limited, by way of a share for share
exchange.
On 2 September 2020, Kooth plc was
admitted to AIM.
The company incurred significant costs
in relation to the IPO.
There is a risk of error in the accounting
for this one off transaction due to
the level of judgement involved. This
includes:
• The accounting treatment adopted
for the insertion of Kooth plc as the
new parent company for the group
through the share for share exchange.
• The treatment of costs incurred in
relation to the IPO and how they
are split between Income Statement
expenses and a reduction in Share
Premium
• Evaluating management’s assessment
of the applicability of IFRS 3 Business
Combinations to the transaction as well
as its selection of an accounting policy
and disclosure for the insertion of the
new parent company.
• Confirming that the difference between
the cost of investment and the nominal
value of the share capital issued has been
correctly recognised within reserves.
• Performing a test of details of costs
incurred as part of the IPO by agreeing
the share issue costs of £1.4 million to
relevant supporting documentation to
ensure that the costs have been correctly
deducted against share premium and
should not be expensed through the
Consolidated statement of profit and loss
and other comprehensive loss.
• Performing a test of details of other IPO
related costs (£0.4 million) to confirm
that they had been correctly expensed.
Key Audit Matter - Group
How our scope addressed the
matter - Group
Revenue recognition
We identified revenue recognition as
one of the most significant assessed
risks of material misstatement due
to fraud risk as revenue forms the
basis for certain of the group’s key
performance indicators, both in
external communications and for
management incentives.
We identified the specific risk of fraud
and error in respect of inappropriate
timing of revenue recognition,
including completeness of deferred
revenues given the nature of the
group’s services.
In responding to the key audit matter, our work
included but was not restricted to:
• Evaluating management’s determination of
whether the nature of the group’s services
results in the provision of a service at a
point in time or over a contractual term, by
checking a sample of customer contracts
against the requirements of IFRS 15 Revenue
from Contracts with Customers. This
included the assessment of new or one-off
transactions, by comparing the accounting
treatment adopted by management to the
group accounting policy and IFRS 15.
• Assessing the design effectiveness of controls
through walkthrough procedures in respect
of revenue recognition and checks performed
to ensure revenue is recognised correctly in
line with IFRS 15.
• Utilising data analytics techniques to identify
revenue postings to unusual account codes
and investigating those transactions.
• Testing a sample of transactions to determine
that the amount of revenue recognised in the
year and the amount deferred at the balance
sheet date were accurately calculated based
on progress of the contract.
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Independent auditor’s report
Independent auditor’s report
Independent auditor’s report
Relevant disclosures in the Annual Report
and Accounts 2020
Our results
The Group’s basis of consolidation is
detailed in note 2.2. The Group’s significant
accounting judgements, estimates and
assumptions for accounting for the IPO
transaction and related costs is shown
in note 3 to the consolidated financial
statements, and related disclosures are
included in note 21.
Our testing did not identify any material
misstatements in the accounting for the IPO
transaction and related costs.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and
in evaluating the effect of identified misstatements on the audit and of uncorrected
misstatements, if any, on the financial statements and in forming the opinion in the auditor’s
report.
Materiality was determined as follows:
Accounting for capitalised internal
development costs
In responding to the key audit matter, our
work included but was not restricted to:
Materiality measure
Group
Parent company
We identified accounting for capitalised
internal development costs as one of
the most significant assessed risks of
material misstatement due to the risk of
error.
The group capitalises costs associated
with development of their online
platform which is being developed
internally. The costs associated with the
time spent on this development of the
online platform are capitalised onto the
Statement of financial position at the
year end and represent the time spent
by the dedicated team who work on the
development of the online platform.
Costs must be capitalised when
they meet the requirements of IAS
38 Intangible Assets. This includes
management judgement in determining
the distinction between research and
development costs.
• Assessing the accounting policy and
disclosure for compliance with IAS 38.
• Assessing the design effectiveness of
controls through walkthrough procedures
in respect of accounting for these
transactions and checks performed to
ensure the correct costs are capitalised.
• Obtaining and assessing management’s
judgement on the level of employee costs
to be capitalised across the year.
• Performing a test of details on these
costs, agreeing amounts to underlying
support.
• For a sample of capitalised costs,
making enquiries with employees
in the development team to gain an
understanding of the nature of the
work they had performed which had
been capitalised. This included assessing
whether the nature of the costs
capitalised met the criteria as set out in
IAS 38.
Relevant disclosures in the Annual Report
and Accounts 2020
Our results
The group’s accounting policy for accounting
for capitalised internal development costs
and significant accounting judgement is
shown in note 2.3 and note 3, respectively
to the consolidated financial statements and
related disclosures are included in note 12.
60
Our testing did not identify any material
misstatements in the accounting for the
capitalised internal development costs.
Materiality for financial
statements as a whole
We define materiality as the magnitude of misstatement in the
financial statements that, individually or in the aggregate, could
reasonably be expected to influence the economic decisions of
the users of these financial statements. We use materiality in
determining the nature, timing and extent of our audit work.
Materiality threshold
£130,000 which is approximately 1% of
revenue.
£119,000 which is
approximately 1% of net
assets, at the planning
stage of the audit.
Significant judgements
made by auditor in
determining the
materiality
In arriving at this judgement, we
considered the financial measures
which we believed to be most relevant
to the shareholders in assessing the
performance of the group. Profit before
tax is a generally accepted benchmark
for a profit-orientated business.
However, due to substantial IPO costs
incurred in the year, there has been a
degree of volatility in this measure. We
concluded that, in isolation, this metric
did not appropriately reflect the scale
of the group’s ongoing operations or its
underlying performance. As a result,
revenue was considered the most
appropriate metric.
1% of revenues has been selected as
it is in the middle of our acceptable
range to reflect that this is our first year
as auditors of the group and parent
company.
1% of net assets has
been selected as it is
in the middle of our
acceptable range to
reflect that this is our
first year as auditors of
the group and parent
company.
Continued overleaf
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Independent auditor’s report
Independent auditor’s report
Independent auditor’s report
Materiality measure
Group
Parent company
Performance materiality
used to drive the extent
of our testing
We set performance materiality at an amount less than
materiality for the financial statements as a whole to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
Performance materiality
threshold
£91,000 which is 70% of financial
statement materiality.
£83,600 which is 70%
of financial statement
materiality.
Significant judgements
made by auditor in
determining the
performance materiality
In determining performance materiality, we made the following
significant judgements:
• Whether there were changes to the business in their operations
and in their business strategy
• Whether there were any changes in senior management during
the period
• Whether there were changes to our risk assessment, including
our assessment of the group and parent company’s overall
control environment
We concluded that an amount at the upper end of our normal
range was appropriate.
Communication of
misstatements to the
audit committee
We determine a threshold for reporting unadjusted differences to
the audit committee.
Threshold for
communication
£6,500 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£6,000 and
misstatements below
that threshold that,
in our view, warrant
reporting on qualitative
grounds.
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the
group’s business, its environment and risk profile and in particular included:
Evaluation by the group audit team of identified components to assess the significance
of that component and to determine the planned audit response based on a measure of
materiality, considering the relative size of each component as a percentage of total group
revenues, net assets, and losses before tax. Kooth plc, Kooth Group Limited and Kooth
Digital Health Limited were significant components for which we performed full scope
audit procedures using the respective entity materiality.
For significant components requiring a full scope approach, we evaluated the design and
implementation of controls over the financial reporting systems identified as part of our
risk assessment and addressed critical accounting matters such as those related to the key
audit matter as identified above. With respect to revenue recognition, we evaluated the
design effectiveness of controls and performed data analytics and substantive procedures.
A fully substantive approach was used for all other areas.
For smaller components of the group, Beam ABA Services Limited and Xenzone Alliance
CIC, we performed analytical procedures.
62
63
Full-scope audit
Analytical procedures
3
2
98%
2%
100%
-%
100%
-%
Performance of our audit
Audit approach
No. of
components revenue
%coverage %coverage %coverage
total assets
LBT
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Independent auditor’s report
Independent auditor’s report
Other information
The directors are responsible for the other information. The other information comprises
the information included in the annual report, other than the financial statements and our
auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is
unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the
financial year for which the financial statements are prepared is consistent with
the financial statements; and
the strategic report and the directors’ report have been prepared in accordance
with applicable legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company
and its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting
records and returns; or
•
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. Owing to the inherent
limitations of an audit, there is an unavoidable risk that material misstatements in the
financial statements may not be detected, even though the audit is properly planned and
performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud
is detailed below:
• We obtained an understanding of the legal and regulatory frameworks applicable to
the parent company, the group and industry in which they operate. We determined
that the following laws and regulations were most significant: International Accounting
Standards, United Kingdom Generally Accepted Accounting Practice, Companies Act
2006, Quoted Companies Alliance’s Corporate Governance Code for Small and Mid-
Size Quoted Companies and UK tax compliance regulations which is the principal
jurisdiction in which the group operates. In addition, we concluded that there are
64
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 Independent auditor’s report
Independent auditor’s report
certain significant laws and regulations that may have an effect on the determination of
the amounts and disclosures in the financial statements and those laws and regulations
relate to employee matters;
• We understood how the parent company and the group is complying with applicable
laws and regulations through discussions with the Audit Committee and performed audit
procedures on these areas as considered necessary. We corroborated our understanding
through our review of board minutes, and papers provided to the Audit Committee;
• We assessed the susceptibility of the parent company’s and group’s financial statements
to material misstatement, including how fraud might occur. Audit procedures performed
by the group engagement team included:
–
considering performance targets and their potential influence on revenue
recognition;
–
identifying and assessing the design effectiveness of controls management has in
place to prevent and detect fraud;
•
In assessing the potential risks of material misstatement, we obtained an understanding of:
–
the parent company’s and the group’s operations, including the nature of its revenue
sources, products and services and of its objectives and strategies to understand the
classes of transactions, account balances, expected financial statement disclosures
–
–
and business risks that may result in risks of material misstatement; and
the parent company’s and the group’s control environment, including:
the policies and procedures implemented to comply with financial reporting
requirements, including the adequacy of the training to inform staff of financial
reporting changes; and
–
the adequacy of procedures for authorisation of transactions and internal review
procedures over the parent company and the group’s transactions.
–
assessing whether assumptions and judgements in making its significant
Use of our report
accounting estimates are indicative of a potential bias;
–
identifying and testing journal entries, in particular any journal entries posted
with unusual account combinations; and
–
assessing the extent of compliance with the relevant laws and regulations as part
of our procedures on the related financial statement item.
• These audit procedures were designed to provide reasonable assurance that the financial
statements were free from fraud or error. However, detecting irregularities that result
from fraud is inherently more difficult than detecting those that result from error, as
those irregularities that result from fraud may involve collusion, deliberate concealment,
forgery or intentional misrepresentations.
• The assessment of the appropriateness of the collective competence and capabilities of
the engagement team included consideration of the engagement team’s:
– understanding of, and practical experience with, audit engagements of a similar
nature and complexity through appropriate training and participation; and
– knowledge of the industry in which the client operates.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Anthony Thomas
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London, UK
• The engagement team collectively had the appropriate competence and capabilities to
identify or recognise non-compliance with laws and regulations .
13th April 2021
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 Consolidated financial statements
Consolidated statement of profit and loss and
other comprehensive income
For the year ended 31 December 2020
Note
4
5
25
2020
£'000
13,012
(5,091)
2019
£'000
8,659
(4,197)
7,921
4,462
(10,049)
497
(5,683)
319
(1,631)
(902)
12, 13, 14
8
6
20
934
(1,498)
(580)
(507)
20
(1,631)
7
(314)
137
(1,039)
-
-
-
(902)
(387)
(1,945)
(1,289)
24
467
(1,478)
1
369
(920)
(161)
(1,477)
(1,081)
(0.06)
(0.06)
0.00
(0.06)
(0.06)
0.00
(0.05)
(0.05)
(0.01)
(0.05)
(0.04)
(0.01)
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating loss
Analysed as:
Adjusted EBITDA
Depreciation & amortisation
Exceptional items
Share based payment expense
Gain on disposal of subsidiary
Operating Loss
Interest paid
Loss before tax
Tax
20
10
Loss after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Total comprehensive loss for the year
Loss per share - basic (£)
On continuing operations
On discontinued operations
Loss per share - diluted (£)
On continuing operations
On discontinued operations
68
Consolidated statement of financial position
As at 31 December 2020
31 December
31 December
01 January
Assets
Non-current assets
Goodwill
Development costs
Right of use asset
Property, plant and equipment
Deferred tax
Total non-current assets
Current assets
Trade & other receivables
Contract assets
Cash & cash equivalents
Assets of disposal group classified as held for sale
11
12
14
13
17
18
19
Note
2020
£'000
511
2,615
14
157
133
2019
£'000
511
2,402
98
146
-
2019
£'000
511
2,342
60
82
-
3,430
3,157
2,995
2,097
107
7,823
-
1,922
106
154
292
1,039
136
389
274
Total current assets
10,027
2,474
1,838
Total assets
Liabilities
Current liabilities
Trade payables
Contract liabilities
Government grants
Borrowings
Lease liability
Accruals and other creditors
Deferred tax
Tax liabilities
Liabilities of disposal group classified as held for sale
Total current liabilities
Net current assets
Net Assets / (Liabilities)
Equity
Share capital
Share premium Account
P&L reserve
Share-based payment reserve
Capital redemption reserve
Merger reserve
Total equity
13,457
5,631
4,833
22
23
25
16, 22
14
22
17
22
(275)
(619)
-
-
(17)
(866)
-
(827)
-
(433)
(603)
(257)
(5,379)
(95)
(996)
(31)
(546)
(127)
(373)
(257)
-
(4,496)
(60)
(789)
(136)
(350)
(129)
(2,604)
(8,467)
(6,590)
7,423
(5,993)
(4,752)
10,853
(2,836)
(1,757)
21
21
21
21
21
21
1,653
14,229
(1,569)
529
115
(4,104)
-
2
(2,838)
-
-
-
-
-
(1,757)
-
-
-
10,853
(2,836)
(1,757)
69
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
The financial statements of Kooth plc (Company registration number 12526594) were approved by the Board of
Directors and authorised for issue on 13 April 2021. They were signed on its behalf by:
Consolidated statement of changes in equity
For the year ended 31 December 2020
Share
Based
Capital
Share
Share
Payment
P&L Redemption Merger
Total
Capital
Premium
Reserve
Reserve
Reserve Reserve Equity
Sanjay Jawa
Chief Financial Officer
13 April 2021
The notes on pages 73 to 104 form part of the financial statements.
Balance at 1 January 2019
Issue of share capital
Total comprehensive income for the year
As at 31 December 2019
Balance at 1 January 2020
Issue of share capital
Share for share exchange
Capital reduction
Share based payments
Deferred tax
Total comprehensive income for the year
-
-
-
-
-
-
-
2
-
2
2
400
3,989
(2,736)
-
-
-
14,227
-
-
-
-
-
-
-
-
-
-
-
-
-
529
-
-
(1,757)
-
(1,081)
(2,838)
(2,838)
-
-
2,736
-
10
(1,477)
-
-
-
-
(1,757)
2
(1,081)
(2,836)
-
(2,836)
-
-
-
-
-
-
115
(4,104)
-
-
-
-
-
-
-
-
14,627
-
-
529
10
(1,477)
As at 31 December 2020
1,653
14,229
529
(1,569)
115
(4,104)
10,853
The notes on pages 73 to 104 form part of the financial statements.
70
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Consolidated cashflow statement
For the year ended 31 December 2020
Notes to the consolidated financial statements
Cash flows from operating activities
Loss for the year from continuing operations
Profit/(Loss) for the year from discontinued operations
20
Note
2020
£'000
(1,478)
1
Adjustments:
Depreciation & amortisation
Loss on disposal of property, plant and equipment
Income tax received
Share based payment expense
Interest expense
Tax income recognised
Gain on disposal
Movements in working capital:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cashflow from operating activity
Cash flows from investing activities
Purchase of property, plant and equipment
Disposal of property, plant and equipment
Additions to intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of capital
Cost incurred on issue of capital
Receipt/(Repayment) of borrowings
Interest paid
Lease payments
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
12, 13, 14
1,498
13
6
7
20
18
22
13
13
12
21
21
16
16
14
19
19
-
268
507
314
(466)
(20)
132
(396)
360
(107)
-
(1,505)
(1,612)
16,000
(1,378)
(4,249)
(1,444)
(81)
8,848
7,596
227
7,823
The notes on pages 73 to 104 form part of the financial statements.
2019
£'000
(920)
(161)
1,026
15
354
-
387
(369)
-
(891)
919
360
(153)
29
(874)
(998)
-
500
-
(151)
349
(289)
516
227
1) Corporate information
Kooth plc is a company incorporated in England and Wales. The address of the registered office is The Epworth, 25
City Road, London, England, EC1Y 1AA.
2) Significant accounting policies
2.1 Basis of preparation
The consolidated financial statements of Kooth plc and its subsidiaries (collectively, the Group) for the year ended
31 December 2020 have been prepared and approved by the directors in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act 2006.
Transition to adopted IFRS
The Group is preparing its financial statements in accordance with adopted IFRS for the first time and consequently
has applied IFRS 1. See note 29.
Measurement convention
The financial statements are prepared on the historical cost basis with the exception of certain items which are
measured at fair value as disclosed in the accounting policies set out below. 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 4 to 31. In addition, note 15 to the financial statements include the
Group’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 2020 financial year the Group generated a loss of £1.5 million (2019: £1.1 million). Adjusted EBITDA is £0.9
million (2019: £0.1 million). The Group is in a net asset position of £10.9 million (2019: £(2.8 million)).
The Group raised £16m of funds through the IPO in September 2020 resulting in a positive cash position. Additionally,
the Group has no debt facilities in place as at 31 December 2020 after repaying all debt in full during the year.
Management has performed a going concern assessment for a period up to 30 June 2022, 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 2020 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. As a result
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Management also deems the likelihood of the scenarios in the default model occurring to be remote.
2.3) Summary of significant accounting policies
The Directors have considered the impact of COVID-19 and do not expect the pandemic to have a material adverse
impact on the Group. Consequently, the directors believe that the company is well placed to manage its business risks
successfully despite the current uncertain economic outlook.
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 2020, with the comparatives presented for the previous 12 months being the Group’s combined activities for
the 12 months ended 31 December 2019.
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 and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. 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.
As Kooth plc’s operations are all in one location within the United Kingdom, the Directors are of the opinion that the
Group has only one reportable operating segment, this is in line with internal reporting provided to the executive
directors.
The following are the significant accounting policies applied by the Group in preparing its consolidated financial
statements:
Revenue from contracts with customers
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 an expected number of hours of
counselling provided.
To determine whether to recognise revenue, the Group follows the 5 step process as set out within IFRS 15.
Identifying the contract with a customer
Identifying the performance obligations
1.
2.
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
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, as this best represents the stage of completion.
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.
The Group typically receives cash from customers 42 days after invoicing a customer.
Contract assets
Contract assets are recognised for revenue earned not yet invoiced, for customers who are invoiced on a quarterly
basis. Upon invoicing, the amount recognised as a contract asset is reclassified to trade receivables. The Group have
reviewed the expected credit losses for the year and note no material expected credit losses.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer
before the Group transfers the related services. Contract liabilities are recognised as revenue when the Group
performs under the contract (i.e., transfers control of the related services to the customer).
Other operating income - government grants
Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity
recognises as expenses the related costs for which grants are intended to compensate. Grants are classified as relating
either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the
related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where
part of a grant relating to an asset is deferred, it is recognised as deferred income.
74
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 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:
Leasehold improvements
Fixtures, fittings and equipment
33.33% straight line
33.33% – 50% 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.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is
disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation
when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the
relative values of the disposed operation and the portion of the cash-generating unit retained.
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
76
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
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.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine
whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made
on a prospective basis.
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 3 years.
Expenditure on research activities as defined in IFRS is recognised in the income statement as an expense is incurred.
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 carrying amounts of the trade receivables include receivables which are subject to an invoice discounting
arrangement. Under this arrangement, the Group has transferred the relevant receivables to the factor in exchange
for cash and is prevented from selling or pledging the receivables. However, the Group has retained late payment and
credit risk. The Group therefore continues to recognise the transferred assets in their entirety in its balance sheet.
The amount repayable under the invoice discounting agreement is presented as accruals and other creditors. The
Group considers that the held to collect business model remains appropriate for these receivables and hence continues
measuring them at amortised cost.
The Group assess each receivable on a customer by customer basis for the expected lifetime credit loss, which is based
on an unbiased weighted average probability of default both at initial recognition and subsequent reporting dates.
Where an expected credit loss is identified a provision is made against the receivable. Significant financial difficulties of
the customer, probability that the customer will enter bankruptcy or financial reorganisation default or delinquency in
payments, and the unavailability of credit insurance at commercial rates are considered indicators that the receivable
may be impaired. When these factors are confirmed for a trade receivable it is considered uncollectible and a default
event is triggered. At this point it is written off against the credit loss provision account. Subsequent recoveries of
amounts previously written off are credited against administrative expenses in the income statement.
Loans
Loans are measured initially at fair value, net of transaction cost and are measured subsequently at amortised cost
using the effective interest method, other than those categorised as fair value through profit or loss.
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.
Impairment testing of intangible assets and property, plant and equipment
Cash and cash equivalents
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
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments
that have a maturity date of 3 months or less, 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.
78
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 Employee benefit plans
Exceptional items
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.
Assets and liabilities classified as held for sale and discontinued operations
Assets classified as held for sale are presented separately and measured at the lower of their carrying amounts
immediately prior to their classification as held for sale and their fair value less costs to sell. However, some held for
sale assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group’s
relevant accounting policy for those assets. Once classified as held for sale, the assets are not subject to depreciation or
amortisation. Financial liabilities continue to be measured in accordance with the Group’s relevant accounting policy
for those items.
Any profit or loss arising from the sale or remeasurement of discontinued operations is presented as part of a single
line item. Assets and liabilities of disposal groups are presented separately in the statement of financial position.
Discontinued operations
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of,
or is classified as held for sale, and:
• Represents a separate major line of business or geographical area of operations
•
Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations
Is a subsidiary acquired exclusively with a view to resale
•
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount
as profit or loss after tax from discontinued operations in the statement of profit or loss. Additional disclosures are
provided in Note 20. All other notes to the financial statements include amounts for continuing operations, unless
indicated otherwise.
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.
Exceptional items are analysed as costs that are not in the ordinary operating costs of the Group.
Group restructure
The Company was incorporated as Hamsard 3564 Limited on 19 March 2020 as a private limited company. The Group
developed an appropriate accounting policy to restructure in line with IAS 8 as follows.
On 6 August 2020, the Company acquired all of the issued share capital of Kooth Group Limited (formerly Xenzone
Group Limited), by way of a share for share exchange with the shareholders of Kooth Group Limited. On 24 August
2020, by a special resolution of the Company, the Company was re-registered as a public company limited by shares
and the name of the Company was changed to Kooth plc. This was undertaken in anticipation of the IPO to establish
Kooth plc as the parent company of the Group. The structure of the Group by nature remains the same as prior to the
restructure and as such the transaction falls out of the scope of IFRS 3
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.
The estimates which have the most significant impact on the amounts recognised in the financial statements are as
follows:
Useful economic lives of development costs and property, plant and equipment
Property, plant and equipment is depreciated over the economic useful lives of the assets. Useful lives are based
on management’s estimates of the period that the assets will generate revenue, which are reviewed annually for
continued appropriateness. The useful economic lives applied are set out in the accounting policies. Development costs
are amortised on a straight-line basis over the useful life of the related asset which management estimate to be three
years, which is industry standard.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life of the share option or appreciation right, volatility
and dividend yield and making assumptions about them. The basis for these key inputs and assumptions are described
in Note 6.
Judgements
The areas of judgement which have the most significant impact on the amounts recognised in the financial statements
are as follows:
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.
Impairment of intangible assets (including goodwill) and property, plant and equipment
The Group tests goodwill at least annually for impairment, and whenever there is an indication that the asset may be
impaired. All other intangible assets and property, plant and equipment are tested for impairment when indicators of
impairment exist.
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.
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.
80
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 The total turnover of Kooth plc has been derived from its principal activity wholly undertaken in the United Kingdom.
Deferred tax
4) Revenue
The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future
taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can
be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or
uncertainties.
Capitalisation of development costs
Distinguishing the research and development phases of a new customised project and determining whether the
recognition requirements for the capitalisation of development costs are met requires judgement. 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 12.
Provision of online counselling
Development costs largely relate to amounts paid to external developers, consultancy costs and the direct payroll costs
of the internal development teams. Capitalised development expenditure is reviewed at the end of each accounting
period for indicators of impairment.
5) Administrative expenses
Treatment of costs incurred on the equity raise
The decision of how to split the costs incurred on an equity raise via IPO requires judgement given that, whilst costs
incurred on an equity raise should be recognised against equity in share premium, costs that relate to a stock market
listing should be recognised as an expense in the Statement of Comprehensive Income. Costs incurred on Admission
were split as follows:
Share premium
Exceptionals
Group reorganisation
£'000
1,378
391
1,769
Employee costs
Rent and rates
IT hosting and software
Professional fees
Marketing
Depreciation & amortisation
Exceptional items
Share based payment expense
Other overheads
Total administrative expenses
There is judgement on the changes made to the Group structure prior to the insertion of Kooth plc as the new parent
company, specifically on the share for share exchange transactions. See Accounting Policies for disclosure.
6) Employee remuneration
Salaries
Pensions
Social security & other staff benefits
Share based payment expense
Government grant
Total
82
2020
£'000
13,012
2019
£'000
8,659
2020
£'000
4,710
347
756
498
611
1,498
580
507
542
10,049
2020
£'000
7,811
213
728
507
148
9,407
2019
£'000
2,924
86
506
244
289
1,039
-
-
595
5,683
2019
£'000
5,429
131
416
-
82
6,058
83
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Employee numbers
Employee numbers
Direct
Direct
Indirect
Indirect
Developers
Developers
2020
2020
203
203
57
57
20
20
280
280
Employee numbers disclosed represents the average monthly number of employees for the year.
Long term incentive awards
Growth shares
2020
£'000
191
316
507
2019
2019
160
160
36
36
10
10
206
206
2019
£'000
-
-
-
Long Term Incentive Awards
Long term incentive awards have been issued to all staff. The fair value of the awards has been calculated at £2 which
is equal to the market price of the underlying shares on the date of grant. Performance conditions are attached to
the incentive awards of Executives, with 50% linked to ARR growth and 50% linked to comparative total shareholder
return. Vesting conditions require that all staff remain employed by the business for 3 years. The shares vest over a 3
year period with a maximum term of 10 years.
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Outstanding at the end of the year
Exercise
Exercise
Number of
price per
Number of
price per
Options
2020
-
1,012,770
(13,089)
-
999,681
share
2020
£0.05
£0.05
£0.05
Options
2019
share
2019
-
-
-
-
-
-
-
-
-
-
Growth Shares
Growth shares were issued to Executive team members during 2019 and 2020. The fair value of growth shares was
calculated using the Black Scholes Model at the grant date. The key assumptions used in the calculation were:
Risk free rate
Annualised volatility
1%
60%
All shares were realised and equity-settled upon Admission during the year ended 31 December 2020. The weighted
average share prices of options exercised in the year was £2.
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Outstanding at the end of the year
7) Interest
Interest on loans
Interest on lease liability
Exercise
Exercise
Number of
price per
Number of
price per
Options
2020
65,604
203,153
-
(268,757)
-
share
2020
£0.01
£0.01
£0.01
Options
2019
-
164,776
(99,172)
-
65,604
share
2019
£0.01
£0.01
£0.01
2020
£'000
312
2
314
2019
£'000
383
4
387
Interest on loans relates to the loan with Root Capital that was repaid in full during the year ended 31 December
2020.
84
8) Exceptional items
IPO fees
Other exceptional items
2020
£'000
391
189
580
2019
£'000
-
-
-
85
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
9) Auditor remuneration
11) Goodwill
Fees payable to the auditor for the audit of the Company and
Consolidated financial statements
Fees payable to the auditor and its associates for other services:
Other audit related services
2020
£'000
50
139
2019
£'000
-
-
In 2019, the Group’s auditor was Hazlewoods LLP. Audit fees of £25,000 and tax fees of £4,000 were paid to
Hazlewoods LLP in 2019.
10) Earnings per share
Earnings used in calculation of earnings per share:
On total losses attributable to equity holders of the parent
On continuing operations
On discontinued operations
Weighted average no. of shares (Basic)
Weighted average no. of shares (Diluted)
Shares in issue
B shares in issue
Ordinary shares in issue
Share options
Loss per share (basic, £)
On total profits attributable to equity holders of the parent
On continuing operations
On discontinued operations
Loss per share (diluted, £)
On total profits attributable to equity holders of the parent
On continuing operations
On discontinued operations
86
2020
£'000
(1,477)
(1,478)
1
2020
24,351,925
24,685,152
-
33,055,776
999,681
(0.06)
(0.06)
0.00
(0.06)
(0.06)
0.00
2019
£'000
(1,081)
(920)
(161)
2019
22,229,026
-
2,674,831
20,000,000
(0.05)
(0.05)
(0.01)
(0.05)
(0.04)
(0.01)
Goodwill as at 1 January
Movement during the year
Goodwill as at 31 December
2020
£'000
511
-
511
2019
£'000
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
Growth rate
8%
2%
Using alternative discount and growth rates 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. There were no impairments in the
years ended 31 December 2020 and 31 December 2019.
12) Development costs
Cost
Balance as at 1 January
Additions
Balance as at 31 December
Amortisation
Balance as at 1 January
Amortisation
Balance as at 31 December
Carrying amount 31 December
2020
£'000
3,297
1,531
4,828
(895)
(1,318)
(2,213)
2,615
2019
£'000
2,423
874
3,297
(81)
(814)
(895)
2,402
87
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
13) Property, plant and equipment
The consolidated statement of cash flows includes the following amounts relating to leases within scope of
IFRS 16:
Cost
Balance as at 1 January
Additions
Disposals
Balance as at 31 December
Depreciation
Balance as at 1 January
Depreciation
Disposals
Balance as at 31 December
Carrying amount 31 December
2020
£'000
281
107
-
388
(135)
(96)
-
(231)
157
Property, plant and equipment refers to computer and office equipment.
14) Leases
Kooth plc leases properties. With the exception of short-term leases and leases of low value underlying assets,
each lease is reflected on the balance sheet as a right-of-use asset and a lease liability.
Amounts recognised in the Consolidated Statement of Financial Position relating to leases are:
2020
£'000
98
-
(84)
14
95
-
2
(80)
17
Right of use asset
As at 1 January
Additions
Depreciation
As at 31 December
Lease liability
As at 1 January
Additions
Interest charge
Cash payment
As at 31 December
88
2019
£'000
165
145
(29)
281
(83)
(67)
15
(135)
146
2019
£'000
60
183
(145)
98
60
183
4
(152)
95
Cash outflows
2020
£'000
81
2019
£'000
151
Total cash outflows for both short term leases and those within scope of IFRS 16 was £427k (2019: £380k).
All lease contracts relate to the lease of office buildings. As at 31 December 2020 all remaining lease liabilities are
short term and due within one year.
An incremental borrowing rate of 5% has been used to calculate the present value of the remaining lease
payments.
15) Financial assets and liabilities
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
2020
£'000
1,782
7,823
2019
£'000
1,654
154
1,985
7,450
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.
15.1) Financial instruments risk management objectives and policies
The Group’s principal financial liabilities comprise trade and other payables. The Group has no debt facility as
at 31 December 2020 (2019: £5,379k). 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.
89
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
17) Deferred tax assets and liabilities
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.
Fixed asset
Fixed asset
Other
Other
temporary
temporary
temporary
temporary
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 2020 (£2019: £5,379k) that would
cause interest rate risk, and
the Group’s activities are solely domestic therefore eliminating foreign currency 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 local councils. 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 2020 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.
At 1 January 2019 - asset/(liability)
Movement - (charge)/credit
At 1 January 2020 - asset/(liability)
Movement - (charge)/credit
(364)
(24)
(388)
(93)
(364)
124
(24)
69
124
104
69
60
(388)
193
(93)
(114)
193
164
(114)
371
104
(136)
60
105
164
(31)
371
164
differences
differences
differences
differences
Tax losses
Tax losses
Total
Total
(136)
105
(31)
164
At 31 December 2020 - asset/(liability)
(481)
(481)
79
79
535
535
133
133
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.
18) Trade and other receivables
Trade receivables
Prepayments and other receivables
Total trade and other receivables
2020
£'000
1,430
667
2,097
2019
£'000
1,403
519
1,922
16) Borrowings
Borrowings
2020
£'000
-
2019
£'000
5,379
All amounts shown above are short term. The net carrying value of trade receivables is considered a reasonable
approximation of fair value.
All debt was repaid during the year ended 31 December 2020. Borrowings in place at the year ended 31 December
2019 was a loan from Root Capital LLP, denominated in GBP with an interest rate of 8% per annum. The loan
was secured by a fixed charge over all properties acquired, all present and future licenses, intellectual property,
investments, book debts, bank balances and other unsecured assets, and was repayable upon demand.
In 2019, trade receivables were pledged as security for invoice discounting facility advances of £816,599. The
Group retained the credit risk in respect of all receivables discounted under the facility. In 2020, the invoice
discounting facility was closed with the balance now nil.
90
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
19) Cash and cash equivalents
20) Disposal groups classified as discontinued operations
Cash and cash equivalents
2020
£'000
7,823
2019
£'000
154
In December 2017, the directors announced that the Group intended to dispose of Beam ABA Services Limited.
The disposal was expected to be completed within 12 months, but no proceedable offers were received until April
2019.
Beam ABA Services Limited represents a separate line of business and there was a single co-ordinated plan to
dispose of this area. It was therefore treated as held for sale from December 2017 until the point at which it was
sold. Revenue and expenses, gains and losses relating to the discontinuation of this subgroup have been eliminated
from profit or loss from the Group’s continuing operations and are shown as a single line item in the statement of
profit or loss.
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December
2020 and 31 December 2019 and 1 January 2019:
On the 3rd of April 2020, Beam ABA Services Limited was sold to Root Capital LLP for £1.
31 December 2020
31 December 2020
31 December 2020
31 December 2020
31 December 2019
31 December 2019
31 December 2019
31 December 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
Cash at banks
Cash at banks
Cash at banks
Cash at banks
Cash at banks recognised within assets held for sale
Cash at banks recognised within assets held for sale
Cash at banks recognised within assets held for sale
Cash at banks recognised within assets held for sale
£'000
£'000
£'000
7,823
7,823
7,823
-
-
-
7,823
7,823
7,823
£'000
£'000
£'000
£'000
7,823
154
154
154
-
73
73
73
7,823
227
227
227
£'000
£'000
£'000
£'000
£'000
154
389
389
389
127
73
127
127
227
516
516
516
Revenue
389
Expenses
127
Profit/(Loss) after tax from discontinued operations
516
The discontinued operations results contributed the following to the cash flow:
Net cash inflows /(outflows) from operating activities
Net cash inflows/(outflows) from investing activities
Net cash inflows/(outflows) from financing activities
Net cash inflows/(outflows) arising on disposal
Reconciliation of disposal
Cash consideration received
Carrying amount of net assets sold
Gain on disposal
The carrying amounts of assets and liabilities as at the date of sale (3 April 2020) were:
Tangible assets
Trade and other receivables
Cash and cash equivalents
Total assets classified as held for sale
Trade and other payables
Total liabilities classified as held for sale
Net liabilities of disposal group
92
2020
£'000
273
(272)
1
2020
£'000
27
-
-
27
-
(20)
20
8
225
103
336
(356)
(356)
(20)
2019
£'000
1,070
(1,231)
(161)
2019
£'000
(43)
(8)
-
(51)
-
-
-
93
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
21) Equity
Share Capital
Ordinary A shares
Ordinary B shares
2020
£'000
1,653
-
1,653
2019
£'000
-
-
-
The 2019 comparatives are not presented due to rounding.
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. B ordinary shares have attached to them no voting,
dividend or capital distribution rights (including on winding up). They do not confer any rights of redemption.
Number of Shares
Number of shares
Ordinary A Shares
Ordinary B Shares
2020
33,055,776
-
2019
1,000,000
164,776
During the year ended 31 December 2020, 203,152 £0.0001 B shares in Kooth Group Limited (formerly Xenzone
Group Limited) were issued to Executive team members bringing the total number of B shares to 367,928. These
shares were accounted for as a share based payment transaction under IFRS 2, with the nominal value of these
shares held in share capital and the fair value expense recognised in the share based payment reserve. See note 6.
Upon incorporation of Kooth plc, the Company entered into a share for share exchange agreement whereby
1,000,000 A ordinary and 367,928 B ordinary £3 shares were issued in the capital of Kooth plc.
The Company then undertook a reduction of capital whereby the total aggregate nominal amount of share capital
was reduced from £4,104,000 to £1,368,000 by reducing the nominal value of each share from £3 to £1.
Subsequent to this, and prior to the listing on AIM, the Company undertook a reorganisation whereby 1,000,000
A ordinary shares and 367,928 B ordinary shares £1 shares were sub-divided into 20,000,000 A ordinary shares
and 7,358,560 B ordinary shares of £0.05. These shares were reclassified into 25,055,776 ordinary shares and
2,302,784 deferred shares of £0.05. The deferred shares were subsequently bought back and cancelled by the
Company.
On 2 September 2020, Kooth plc issued 8 million new ordinary A shares of 200p each via an Initial Public
Offering and admission to AIM. This brought the total shares in issues to 33,055,776.
Upon Admission, the B shares converted into Ordinary A shares.
Share Premium
2020
£'000
14,229
2019
£'000
2
Share premium represents the funds received in exchange for shares over and above the nominal value, offset by
£1,378k of costs incurred on the raise of equity.
Share based payment reserve
2020
£'000
529
The share based payment reserve represents amounts accruing for equity settled share options granted plus the
fair value of Executive growth shares realised upon IPO.
Merger reserve
Capital redemption reserve
2020
2020
£'000
£'000
(4,104)
115
2019
£'000
-
2019
2019
£'000
£'000
-
The merger reserve was created a result of the share for share exchange. The accounting policy developed in
line with IAS 8 was that the assets and liabilities of the subsidiaries were consolidated at book value in the
Group financial statements and the consolidated reserves of the Group were adjusted to reflect the statutory
share capital, share premium and other reserves of the Company as if it had always existed, with the difference
presented as the merger reserve.
Capital redemption reserve
2020
£'000
115
2019
£'000
-
The capital redemption reserve was established as a result of the deferred share buyback.
94
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
22) Trade and other payables
24) Tax expense
Trade payables
Accruals and other creditors
Tax liabilities
Borrowings
Total
2020
£'000
275
866
827
-
1,968
2019
£'000
433
996
546
5,379
7,354
Borrowings relates to a loan advanced from Root Capital Fund II LP, which is denominated in GBP and bears
interest at a rate of 8% per annum. The loan is repayable upon demand and has been disclosed within creditors
falling due within one year. The capital along with the interest on the loan was fully repaid in 2020.
Included within accruals and other creditors in 2019 is £816,599 in relation to an invoice discounting facility.
This balance was secured by way of a fixed and floating charge of the assets of the group. In 2020, the invoice
discounting facility was closed with the balance now nil.
Current tax
UK corporation tax
Total current tax charge/(credit)
Deferred tax (P&L)
Origination and reversal of timing differences
Effect of tax rate change on opening balance
Total deferred tax charge / (credit) (P&L)
Tax charge / (credit) on profit on ordinary activities
Reconciliation of tax charge
2020
£'000
(315)
(315)
(156)
4
(152)
(467)
2019
£'000
(263)
(263)
(106)
-
(106)
(369)
Profit /(loss) on ordinary activities before tax
(1,945)
(1,289)
23) Contract liabilities
Contract liabilities - current
2020
£'000
619
2019
£'000
603
Expected tax charge on profit on ordinary activities at standard CT rate
Effects of:
Expenses not deductible for tax purposes
Effect of tax rate changing on opening balance
Income not taxable
R&D additional deduction
Group relief
Surrender of tax losses for R&D tax credit refund
R&D expenditure credits
25) Other operating income
At 1 January
Received during the year
Released to the statement of profit and loss
At 31 December
(370)
632
3
(487)
(348)
-
98
5
(467)
2020
£'000
257
240
(497)
-
Government grants have been received from the Small Business Research Initiative for a project to add
functionality to the Kooth platform to explore how users could benefit from peer-to-peer support. There are no
fulfilled conditions or contingencies attached to these grants.
96
(245)
20
11
-
(195)
(42)
82
-
(369)
2019
£'000
-
576
(319)
257
97
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
26) Related party transactions
27) Capital management policies and procedures
Note 28 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.
The following table provides the total amount of transactions that have been entered into with related parties for
the relevant financial year.
Loans from related parties - Root Capital Fund II LP
Rent - Root Capital LLP
Monitoring fees - Root Capital LLP
2020
£'000
-
-
91
91
2019
£'000
5,379
45
225
5,649
Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related
parties:
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 2020 (2019: £5,379,000).
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:
Total equity
Cash and cash equivalents
Capital
Total equity
Lease liability
Financing
2020
£'000
10,853
7,823
18,676
10,853
17
10,870
2019
£'000
(2,836)
154
(2,682)
(2,836)
95
(2,741)
Current payables
Root Capital LLP
2020
£'000
-
2019
£'000
26
28) Subsidiaries and associated companies
On the 3rd of April 2020, Beam ABA Services Limited was sold to Root Capital LLP for £1.
Key management personnel are the executive members of the Board of Directors of the Group and their
remuneration is disclosed below and in the Remuneration Committee report. During the year ended 31 December
2019, 99,172 B shares were repurchased from key management personnel who left their positions.
Base salary and fees
Pension
Gain on exercise of share options
Total
98
2020
£'000
393
9
132
534
2019
£'000
300
3
-
303
Name
Country of
Incorporation
Proportion
Held
Activity
Registered
Address
Kooth Group
Limited
UK
100%
Platform development
The Epworth 25
City Road 2nd Floor,
London, England,
EC1Y 1AA
Kooth Digital
Health Limited
UK
100%
Provision of online
counselling and support
to children, young people
and adults in need.
The Epworth 25
City Road 2nd Floor,
London, England,
EC1Y 1AA
XenZone
Alliance CIC
UK
100%
Dormant
The Epworth 25
City Road 2nd Floor,
London, England,
EC1Y 1AA
99
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
29) First time adoption of IFRS
Group reconciliation of equity as at 31 December 2019
These financial statements, for the year ended 31 December 2020, are the first the Group has prepared in
accordance with IFRS. For periods up to and including the year ended 31 December 2019, the Group prepared its
financial statements in accordance with local generally accepted accounting principles (FRS 102).
Accordingly, the Group has prepared financial statements that comply with IFRS applicable as at 31 December
2020, together with the comparative period data for the year ended 31 December 2019, as described in the
summary of significant accounting policies. In preparing the financial statements, the Group’s opening statement
of financial position was prepared as at 1 January 2019, the Group’s date of transition to IFRS. This note explains
the principal adjustments made by the Group in restating its FRS 102 financial statements, including the
statement of financial position as at 1 January 2019 and the financial statements as of, and for, the year ended 31
December 2019.
Group reconciliation of equity as at 1 January 2019 (date of transition to IFRS)
FRS 102 as at 1
Reclassification &
IFRS as at 1
January 2019
Remeasurements
January 2019
£'000
£'000
£'000
Non current assets
Goodwill
Intangible assets
Right of use asset
Property, plant and equipment
Current assets
Trade & other receivables
Contract assets
Cash & cash equivalents
Held for sale assets
Total assets
Liabilities
Current liabilities
Trade payables
Contract liabilities
Government grants
Borrowings
Lease liability
Accruals and other creditors
Deferred tax
Tax liabilities
Held for sale liabilities
Total current liabilities
Net Assets / (Liabilities)
Equity
Share capital
Share premium account
P&L reserve
Share-based payment reserve
Capital redemption Reserve
Merger reserve
Total equity
100
511
2,358
-
86
1,166
136
516
-
4,773
(502)
(257)
-
(4,496)
-
(789)
(136)
(350)
-
(6,530)
(1,757)
-
-
(1,757)
-
-
-
(1,757)
-
(15)
60
(4)
(128)
-
(127)
274
60
129
-
-
-
(60)
-
-
-
(129)
(60)
-
-
-
-
-
-
-
-
511
2,343
60
82
1,038
136
389
274
4,833
(373)
(257)
-
(4,496)
(60)
(789)
(136)
(350)
(129)
(6,590)
(1,757)
-
-
(1,757)
-
-
-
(1,757)
Non current assets
Goodwill
Intangible assets
Right of use asset
Property, plant and equipment
Current assets
Trade & other receivables
Contract assets
Cash & cash equivalents
Held for sale assets
Total assets
Liabilities
Current liabilities
Trade payables
Contract liabilities
Government grants
Borrowings
Lease liability
Accruals and other creditors
Deferred tax
Tax liabilities
Held for sale liabilities
Total current liabilities
Net Assets / (Liabilities)
Equity
Share capital
Share premium account
P&L reserve
Share-based payment reserve
Capital redemption Reserve
Merger reserve
Total equity
FRS 102 as at 31
Reclassification and
IFRS as at 31
December 2019
Remeasurements
December 2019
£'000
219
2,402
-
155
2,129
106
230
-
5,241
(559)
(603)
(257)
(5,379)
-
(996)
(31)
(546)
-
(8,371)
(3,130)
-
2
(3,132)
-
-
-
(3,130)
£'000
292
-
98
(9)
(208)
-
(76)
292
389
127
-
-
-
(95)
-
-
-
(127)
(95)
294
-
-
294
-
-
-
294
£'000
511
2,402
98
146
1,922
106
154
292
5,631
(433)
(603)
(257)
(5,379)
(95)
(996)
(31)
(546)
(127)
(8,467)
(2,836)
-
2
(2,838)
-
-
-
(2,836)
101
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Group Reconciliation of Total Comprehensive Income for the year ended 31 December 2019
FRS 102 as at 31
Reclassification and
IFRS as at 31
December 2019
Remeasurements
December 2019
Revenue
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
Tax
Loss after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Total comprehensive loss for the year
Loss per share - basic (£)
On continuing operations
On discontinued operations
Loss per share - diluted (£)
On continuing operations
On discontinued operations
£'000
9,729
(5,079)
4,650
(6,713)
319
(1,744)
369
(1,375)
-
(1,375)
(0.05)
(0.05)
(0.01)
(0.05)
(0.04)
(0.01)
£'000
(1,070)
882
(188)
643
-
455
-
455
(161)
294
£'000
8,659
(4,197)
4,462
(6,070)
319
(1,289)
369
(920)
(161)
(1,081)
(0.05)
(0.05)
(0.01)
(0.05)
(0.04)
(0.01)
date of transition to IFRS. Right-of-use assets were measured at the amount equal to the lease liabilities adjusted
by the amount of any prepaid or accrued lease payments.
The transition to IFRS resulted in an adjustment to the Right of Use asset and lease liability opening balances at
1 January 2019 of £60k. The net impact to retained earnings for 2019 was £3k. The resulting adjustments to the
Right of Use asset and lease liability as at 31 December 2019 was £98k and £95k respectively.
b) Assets held for sale
Under FRS 102 there is no separate classification for assets held for sale and as such balances are consolidated in
the statement of financial position. IFRS requires separate presentation of disposal groups and so, upon transition
to IFRS, the Group has reclassified net assets attributable to Beam ABA Services Limited as assets held for sale.
The decision was made to put the Company up for sale in December 2017, and the directors announced their
intention to sell. As a result the reclassification of net assets as held for sale has been applied to all prior periods
presented.
Under FRS 102 discontinued operations are only presented upon sale. As a result items of revenue and costs have
been reclassified to loss from discontinued operations for 2019 at a net impact of £161k.
c) Goodwill
IFRS 1 requires that the FRS 102 carrying amount of goodwill must be used in the opening IFRS statement of
financial position. The impact on the accounts is to reverse the annual amortisation recognised under FRS 102 of
£292k in 2019.
d) Cash flows
There have been no material adjustments made to the statement of cash flows as a result of the transition to IFRS.
30) Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of
issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these new and
amended standards and interpretations, if applicable, when they become effective.
Amendments to IFRS 3: Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations
to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the
minimum requirements for a business, remove the assessment of whether market participants are capable of
replacing any missing elements, add guidance to help entities assess whether an acquired process is substantive,
narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. New
illustrative examples were provided along with the amendments.
Notes to the reconciliation of equity as at 1 January 2019 and 31 December 2019 and total com-
prehensive income for the year ended 31 December 2019.
Since the amendments apply prospectively to transactions or other events that occur on or after the date of first
application, the Group will not be affected by these amendments on the date of transition.
a) Leases
Under FRS 102, a lease is classified as a finance lease or an operating lease. Operating lease payments are
recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.
Under IFRS, a lessee applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets and recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
At the date of transition to IFRS, the Group applied the transitional provision and measured lease liabilities at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the
Amendments to IAS 1 and IAS 8: Definition of Material
In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the
standards and to clarify certain aspects of the definition. The new definition states that, ’Information is material
if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users
of general purpose financial statements make on the basis of those financial statements, which provide financial
information about a specific reporting entity.’
102
103
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020 The amendments to the definition of material are not expected to have a significant impact on the Group’s
consolidated financial statements.
The new standards, amendments to standards or interpretations are mandatory for the first time for the financial year
beginning 1 January 2020, and which have a minimal impact on the financial statements are:
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
IFRIC 23 Uncertainty over Income Tax Treatments
•
•
•
• Annual Improvements to IFRS 2015–2017 Cycle (Amendments to IAS 12, IAS 23, IFRS 3 and IFRS 11)
•
Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)
31) Ultimate controlling party
Kooth plc is controlled by Root Capital LLP trading as ScaleUp Capital, incorporated in the United Kingdom.
32) Events after the reporting date
There have been no material events.
33) Capital commitments
The Group’s capital commitments at 31 December 2020 are £nil (FY19: £nil).
Company financial statements
Parent company statement of financial position
Note
31 December 2020
Assets
Non-current assets
Investments
Current assets
Trade & other receivables
Deferred tax
Intercompany receivables
Cash & cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade payables
Intercompany payables
Total current liabilities
Net current assets
Non-current liabilities
Net Assets / (Liabilities)
Equity
Share capital
Share premium account
P&L reserve
Share-based payment reserve
Capital redemption reserve
Merger reserve
Total equity
34
38
39
35
36
40
35
41
41
41
41
41
£'000
4,414
114
15
6,734
6,674
13,537
17,951
(23)
(2,891)
(2,914)
10,623
-
15,037
1,653
14,222
2,622
529
115
(4,104)
15,037
The notes on pages 107 to 110 form part of the financial statements.
As permitted by section 408 of the
Companies Act 2006, the income
statement of the parent company is
not presented as part of the financial
statements. The parent company’s loss
for the financial period was £115,067.
The financial statements of Kooth plc
(Company registration number 12526594)
were approved by the Board of Directors
and authorised for issue on 13 April 2021.
They were signed on its behalf by:
Sanjay Jawa
Chief Financial Officer
13th April 2021
104
105
Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Parent company statement of changes in equity
Notes to the Company financial statements
Share
Based
Capital
Share
Share
Payment
P&L Redemption
Merger
Total
Capital
Premium
Reserve
Reserve
Reserve
Reserve
Equity
Basis of Preparation
Balance at 19 March 2020
-
-
Issue of share capital
Share for share exchange
Capital reduction
Share based payments
Total comprehensive income for the year
As at 31 December 2020
400
3,989
(2,736)
-
-
14,222
-
-
-
-
1,653
14,222
-
-
-
-
529
-
529
-
-
-
2,736
-
(114)
2,622
-
-
-
-
14,622
115
(4,104)
-
-
-
-
-
-
-
-
529
(114)
115
(4,104)
15,037
The notes on pages 107 to 110 form part of the financial statements.
106
The financial statements are presented for the first time since incorporation.
The Financial Statements are presented in pound sterling, rounded to the nearest thousand, unless otherwise stated.
They are prepared under the historical cost basis, except that derivative financial instruments are stated at their fair
value, and in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and the
Companies Act 2006.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that
standard in relation to share-based payments, financial instruments, capital management, presentation of comparative
information in respect of certain assets, presentation of a cash flow statement, standards not yet effective, impairment
of assets and certain related party transactions. Where required, equivalent disclosures are given in the Consolidated
Financial Statements.
As permitted by section 408(4) of the Companies Act 2006, a separate income statement and statement of
comprehensive income for the Company has not been included in these Financial Statements. The principal accounting
policies adopted are described below. They have all been applied consistently to all years presented.
Amounts receivable by the Company’s auditor and its associates in respect of services to the Company and its
associates, other than the audit of the Company’s Financial Statements, have not been disclosed as the information is
required instead to be disclosed on a consolidated basis in the Consolidated Financial Statements.
The following are key accounting policies for the Company:
• Basis of Preparation
• Going concern
•
•
Trade receivables and payables
Cash and cash equivalents
These policies of the company are consistent with those adopted by the Group and disclosed in note 2 to the
consolidated financial statements. The following are additional accounting policies that relate to the Company.
Investments
Investments are stated at their cost less impairment losses.
Intercompany
Intercompany balances are intercompany loans, and comprise of amounts owed to/owing from subsidiaries. IFRS 9
expected credit losses have been assessed as immaterial in relation to these balances.
Any key judgements or estimates are consistent with those adopted by the Group.
34) Investments
Investment in subsidiary
2020
£'000
4,414
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
35) Intercompany
39) Deferred tax assets
Intercompany receivable balances
Kooth Group Limited
Intercompany payable balances
Kooth Digital Health Limited
36) Cash and cash equivalents
Cash and cash equivalents
37) Related parties
2020
£'000
6,734
(2,891)
2020
£'000
6,674
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.
Salaries
Social security costs
Pension costs
Total remuneration
38) Trade Receivables
Prepayments and other receivables
VAT receivable
2020
£'000
157
21
3
181
2020
£'000
38
76
114
At 1 January 2020 - asset/(liability)
Movement - (charge)/credit
At 31 December 2020 - asset/(liability)
40) Trade payables
Trade payables
41) Equity
Ordinary A shares
Ordinary B shares
Number of shares
Ordinary A Shares
Tax losses
-
15
15
2020
£'000
23
2020
£'000
1,653
-
1,653
2020
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. B ordinary shares have attached to them no voting, dividend or capital
distribution rights (including on winding up). They do not confer any rights of redemption.
Upon incorporation of Kooth plc, the Company entered into a share for share exchange agreement whereby
1,000,000 A ordinary and 367,928 B ordinary £3 shares were issued in the capital of Kooth plc.
The Company then undertook a reduction of capital whereby the total aggregate nominal amount of share capital was
reduced from £4,104,000 to £1,368,000 by reducing the nominal value of each share from £3 to £1.
Subsequent to this, and prior to the listing on AIM, the Company undertook a reorganisation whereby 1,000,000 A
ordinary shares and 367,928 B ordinary shares £1 shares were sub-divided into 20,000,000 A ordinary shares and
7,358,560 B ordinary shares of £0.05.
108
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
These shares were reclassified into 25,055,776 ordinary A shares and 2,302,784 deferred shares of £0.05. The deferred
shares were subsequently bought back and cancelled by the Company.
On 2 September 2020, Kooth plc issued 8m new ordinary A shares of 200p each via an Initial Public Offering and
admission to AIM. This brought the total shares in issues to 33,055,776.
Upon Admission, the B shares converted into Ordinary A shares.
Share Premium
2020
£'000
14,222
Share premium represents the funds received in exchange for shares over and above the nominal value, offset by
£1,378k of costs incurred on the raise of equity.
Share based payment reserve
2020
£'000
529
The share based payment reserve represents amounts accruing for equity settled share options granted plus the fair
value of Executive growth shares realised upon IPO.
Merger reserve
2020
£'000
(4,104)
The merger reserve was created a result of the share for share exchange. The accounting policy developed in line with
IAS 8 was that the assets and liabilities of the subsidiaries were consolidated at book value in the Group financial
statements and the consolidated reserves of the Group were adjusted to reflect the statutory share capital, share
premium and other reserves of the Company as if it had always existed, with the difference presented as the merger
reserve.
Capital redemption reserve
2020
£'000
115
The capital redemption reserve was established as a result of the deferred share buyback.
Nominated Adviser
and Broker
Auditors
PR Advisers to the
Company
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Grant Thornton (UK) LLP
30 Finsbury Square
London
EC2A 1AG
FTI Consulting LLP
200 Aldersgate, Aldersgate Street
London
EC1A 4HD
Registrars
Equiniti Limited
Aspect House, Spencer Road
Lancing, West Sussex
BN99 6DA
Company Secretary
Richard Almond
The Epworth, 25 City Road
London
EC1Y 1AA
Legal Advisers
Square Patton Boggs (UK) LLP
7 Devonshire Square
London
EC2M 4YH
110
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Financial StatementsFinancial StatementsKooth plc Annual Report 2020Kooth plc Annual Report 2020
Company Registered Office
Kooth plc
The Epworth
25 City Road,
London
EC1Y 1AA
investors.kooth.com
112
investorrelations@kooth.com
Financial StatementsKooth plc Annual Report 2020