REG - Kelso Group Holdings - FY24 Results
23/04/2025 07:00
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RNS Number : 7535F Kelso Group Holdings PLC 23 April 2025
23 April 2025
Kelso Group Holdings Plc
("Kelso" or the "Company")
Full-year audited results for the twelve months ended 31 December 2024
Kelso, the main market listed acquisition vehicle, is pleased to announce its
full year audited results for the twelve month period ended 31 December 2024
("FY24").
Highlights
· Net assets of £9.0m (FY23: £7.5m), with net assets per share
unchanged at 2.4p
· Partnered with Belerion Capital to create the AIM Investing
Company, Selkirk Group plc, which admitted to trading in November 2024,
raising gross proceeds of £7.5m
· Raised gross proceeds of £1.9m in January 2024 at a price of 3.0
pence per share
· Four of our five investments have net cash with the remaining one
having just completed a long term refinance
· All four active holdings implemented strategic, value-enhancing
changes during the year
John Goold, CEO of Kelso, said:
"Following a successful first full year on market in 2023, 2024 has been more
challenging as global sentiment to equities remains cautious and volatile.
Despite this, we remain confident that the UK small and mid-cap market offers
exceptional value, and that our experienced team is well positioned to
capitalise, and outperform, as market conditions improve. The Board continues
to patiently assess value creation ideas both for Kelso and its investee
companies and would like to thank our shareholders for their continued support
and patience."
For further information please contact:
Kelso Group Holdings plc +44 (0) 75 4033 3933
John Goold, Chief Executive Officer
Mark Kirkland, Chief Financial Officer
Jamie Brooke, Chief Investment Officer
Zeus (Broker) +44 (0) 20 3829 5000
Nick Cowles, Louisa Waddell, John Moran (Investment Banking)
Ben Robertson (Corporate Broking)
Camarco +44 (0) 20 3757 4980
Billy Clegg, Tom Huddart
About Kelso
Kelso was established in November 2022 to identify, engage and unlock trapped
value in the UK stock market. Kelso's strategy is to invest in situations
where there is an anomaly between the intrinsic value and prospects of a
company and its stock market valuation. Kelso will, in particular, look for
situations where it believes the sum of the parts of a business is greater
than the current value.
Chairman's statement
It became clear shortly after Kelso Group Holdings plc was established as a
listed cash shell in July 2021 that the UK small and mid-cap IPO market was
experiencing a significant downturn. The UK stock market has seen a steady
decline in the number of listed companies over the past decade, a trend that
has accelerated in recent years. Between 2021 and 2024 alone, approximately
150 companies have delisted from the LSE and AIM combined, representing a
significant proportion of sub-£1 billion market cap entities.
Recognising this continued and accelerated market direction, in November 2022,
we redefined the strategy to become an activist investor targeting
underperforming UK-listed small and mid-cap companies, rather than pursue a
reverse takeover. This approach aimed to capitalise on the increasing number
of undervalued opportunities. A new board, including myself, was appointed to
steer this direction. Since then, we have completed three fundraising rounds,
raising a total £7.8 million. As at 31 December 2024, net assets were £9.0
million versus £7.5 million the previous year end.
Our board brings extensive public market experience, and our activist approach
is centred on collaborating with companies to implement strategic improvements
that enhance shareholder value. We believe activism is most effective when
institutional shareholders unite to drive necessary changes that drive
shareholder value. In the small-cap segment, few activist investors are
willing to take the lead in engaging directly with boards. Kelso aims to fill
this void, supported by like-minded shareholders, and continue to believe that
an investment strategy centred on activism can ultimately deliver enhanced
long-term shareholder value. This is particularly relevant in today's
environment, where capital constraints and a lack of natural buyers have left
many fundamentally sound businesses undervalued and ignored by the wider
market.
To date, we have made four active investments. Each of the investee companies
have implemented a number of the strategic changes that we advocated. While we
maintain that these investments are significantly undervalued, we acknowledge
that realising their full potential will require time, especially given
current market challenges. Importantly, after assessing potential US tariffs,
we believe that, notwithstanding their potentially damaging impact on global
trade, none of our investments will be directly or materially affected.
Encouragingly, all but one of our core investments hold net cash, the
exception being THG plc which has recently strengthened their balance sheet
through a placing and the arrangement of a new long-term facility.
Our most significant recent event in November 2024 was the launch of Selkirk
plc, a new AIM-listed cash shell, raising £7.5 million before expenses. Kelso
holds an 18% stake, making us the largest shareholder. Selkirk is seeking an
investment in the consumer or technology sectors. Although the initial target
has not yet materialised, we are still working on other opportunities. Selkirk
provides prospective IPO candidates with the advantage of rapid price
discovery and the backing of a cornerstone investor from the outset.
Furthermore, the initial launch attracted a number of high profile
shareholders, including several prominent entrepreneurs, many of whom may
participate further when a suitable deal arises. Selkirk's cash reserves
continue to be protected and are generating interest income that approximately
offsets operational costs.
Our target return since inception has been 25% per annum. We achieved a 55%
gross return on investments in our first year. However, 2024 performance was
broadly flat, reflecting the broader challenges and well documented malaise
facing UK smaller listed companies. One quarter into our third year, we remain
committed to achieving our three-year performance target, acknowledging that
it will require strong performance throughout the remainder of 2025.
The board's ownership of approximately 20% of the company ensures alignment
with our shareholders and we continuously review our strategy to maintain a
focus on long-term value creation. At the next AGM, we will seek shareholder
approval to authorise share buybacks, which we will consider if we believe the
shares are undervalued. Post year-end, we have repaid our outstanding loan,
leaving Kelso debt-free.
Most importantly, I would like to thank our shareholders for their continued
support and patience through what has been a challenging year. We remain
confident that the UK small-cap market offers exceptional value, and our
strategy to identify, engage and unlock trapped value in the UK stock market,
will deliver outperformance. It is my belief that our experienced team is well
positioned to capitalise when conditions improve.
Sir Nigel Knowles
Chairman
CEO's statement
Review of 2024
Following a strong first full year in 2023 during which Kelso delivered a
gross return on investments of 55%, market conditions in 2024 proved more
challenging. 2024 saw a modest investment loss of £97k, equating to an
approximate -1% gross return on investments.
Financial performance
We entered 2024 with net assets of £7.5 million and closed the year at £9.0
million, supported by a £1.9 million fundraise in January. Net asset value
per share was substantially unchanged at 2.41p (2023: 2.40p) reflecting a
broadly flat year after expenses.
The post-tax loss for the year was £388k, of which £98k represented a cash
outflow with the remainder primarily attributable to unrealised investment
losses. Administrative expenses totalled £483k (2023: £460k) and no board
salaries were paid during the year. Kelso remains committed to preserving
capital and maintaining a lean cost base.
In October 2024, Kelso utilised a third-party loan facility of c.£1.0
million. While this remained outstanding at year end, it was fully repaid in
April 2025 and Kelso is now debt free.
Although the share prices of our investee companies have underperformed since
the year end, we retain high conviction in their underlying value. All four
active holdings implemented strategic, value-enhancing changes during the
year. However, due to ongoing softness in small-cap equity markets, these
improvements have yet to be recognised in market valuations. We continue to
believe that the portfolio holds significant latent value and that this will
ultimately be realised over time.
A summary of each investment is provided below as at the close of business on
17 April 2025. As at 31 March 2025 (unaudited), total gross investments were
valued at £8.71 million, and net asset value per share stood at 2.0p.
Investments
NCC Group plc
Kelso holds 1.4 million shares in NCC Group plc ("NCC"), valued at
approximately £1.9 million based on the current share price of c.136p. This
investment represents c.27% of our portfolio.
We believe that the combined value of NCC's two distinct divisions, Cyber
Security and Escode (software escrow), significantly exceeds the company's
current market capitalisation of approximately £425 million.
Escode has demonstrated nearly two decades of consistent revenue and profit
growth, establishing itself as the global leader in software escrow services.
With EBIT margins around 50% and high-quality, long-term contracted earnings,
we estimate that Escode alone could be valued at over £325 million. This
implies that the Cyber Security division with c.£300m revenues is currently
valued at approximately 0.3 times sales, highlighting a potential
undervaluation.
In March 2025, NCC completed the sale of its non-core Fox Crypto business for
c.£65 million, equivalent to 16.5 times EBITDA, resulting in a full pay down
of group debt. This was in addition to NCC's acquisition of Iron Mountain's
intellectual property management business in June 2021, the second largest
global competitor to Escode, for £156 million, further strengthening its
market position.
We are encouraged by NCC's strategic actions and remain confident in the
company's commitment to enhancing shareholder value
THG plc
Kelso holds 6.4 million shares in THG plc ("THG"), valued at approximately
£1.8 million based on the current share price of c.28p. This investment
represents c.25% of our portfolio.
In December 2024, THG completed the demerger of its Ingenuity division,
streamlining its operations to focus on its core, cash-generative Beauty and
Nutrition segments. In our view, this significantly simplifies the investment
analysis and we find the resulting business, with its strong cashflows,
simpler to value and a much more attractive proposition for market investors.
Subsequently, THG completed a debt refinancing, reducing net debt from 3.2x to
2.2x based on FY 2024 adjusted EBITDA of £92 million (excluding Ingenuity).
Alongside this, the company carried out a £90 million equity fundraise, with
CEO Matthew Moulding contributing £60 million, demonstrating his strong
support and confidence in the business. We believe this personal investment is
one of the largest ever on market investments by an individual director into
any UK listed company. We also note that Frasers' has been building a stake
and recently announced an 11% position. The refinancing was possible, in part,
due to THG's localised US manufacturing model, which will largely insulate the
business from the impact of the recently announced US tariffs.
In March 2025, THG was included in the Premium Index of the London Stock
Exchange, resulting in inclusion in the FTSE 250 index. The benefits of this
have not yet been seen in the share price but we believe it will enhance the
company's visibility and attract increased interest from institutional
investors.
Despite recent share price underperformance, we continue to believe that the
value of the remaining divisions, being a world leading Beauty business and
one of the world's largest Nutrition brands, is much greater than the current
market capitalisation of c.£380 million.
The company's Nutrition division, principally the MyProtein brand, is one of
the world's largest in its category and can more easily be benchmarked against
many other global sector transactions. Recent product diversification and
industry partnerships, particularly in offline channels, have yet to be fully
reflected in the market valuation. Kelso believes that, in time, the
brand-driven value of MyProtein will be recognised by the market, with the
division alone comfortably justifying a valuation in excess of THG's current
market capitalization
Despite the recent share price fall, we believe that there will ultimately be
a positive step change to the value of THG. We continue to believe that the
valuation uplift in THG will be more readily realised when the Beauty and
Nutrition businesses become two independent businesses. Such a strategic move
would unlock significant shareholder value
Angling Direct plc
Kelso holds 2.3 million shares in Angling Direct plc ("Angling Direct"),
valued at approximately £0.8 million based on the current share price of
c.35p. This investment represents around 11% of our portfolio.
Angling Direct is the UK's largest fishing tackle retailer, with over 50
stores nationwide and with a strong online presence. In the financial year
ended 31 January 2025, the company reported record revenues of c.£91 million,
a c.12% increase from the previous year. The company is strongly cash
generative and EBITDA for the same period was approximately £3.15 million,
slightly ahead of market expectations.
At the time of our investment, Angling Direct had a net cash position of £17
million against a market capitalisation of £30 million. As at the latest
year-end, the company had a net cash position of £15 million, still
representing more than half of its current market capitalisation of
approximately £26 million but valuing the business at c.4x EV/EBITDA. Over
this period, the company has delivered strong cash generation, achieved a 17%
increase in adjusted EBITDA, and grown revenues by 12% through continued
investment in new store openings.
The company benefits from a strong UK operating team, and we continue to
believe they should focus on scaling their successful domestic business. In
our view, the loss-making European operations (H1 FY25 : £2.4m revenue and
£0.5m EBITDA loss) are subscale and represent an unnecessary distraction from
the core, particularly given the substantial growth potential that remains in
the UK market. Without these losses, Group EBITDA could be c.£1 million
higher at c.£4.15 million which would result in the group trading at c.3x
EV/EBITDA with strong cash conversion, resulting in at least 20% free cashflow
yields prior to new store openings.
During the year, Kelso collaborated with other shareholders and the board to
initiate a £4 million share buyback programme, reflecting our view that the
shares are undervalued. Despite share price stagnation, which may have been
mitigated by the buyback, we believe that Angling Direct's strong market
position, growing revenues, and strategic focus position it for significant
value appreciation.
TheWorks.co.uk plc
Kelso holds 3.85 million shares in TheWorks.co.uk plc ("The Works"), valued at
approximately £0.8 million based on the current share price of c.21p. This
investment represents around 11% of our portfolio.
During 2024, both Mark Kirkland and I joined the board, initiating significant
changes, including the appointment of a new Chair. The company now benefits
from a clearer strategic focus and a strengthened leadership team.
The Works has approximately 500 shops across the UK, generating revenues
c.£280 million in FY24. The company reported a solid trading update achieving
EBITDA of c.£6 million for the same period. At the same time, the board has
outlined a strategy aiming to increase the store estate and improve EBITDA
margins, targeting £8.5 million EBITDA for FY25. The company's current
valuation equates to approximately 1x EV/EBITDA, while its targeted EBITDA
would imply a multiple of c.0.5x, highlighting the potential for re-rating.
Despite this potential growth and these strategic initiatives, the company's
current market capitalisation stands at approximately £12 million, which we
believe undervalues the business. However, in the current stock exchange
climate, this is simply too small for most institutional investors to show
interest, leaving the share price languishing. We are however encouraged by
recent share purchases made by the Employee Benefit Trust and Directors, which
we fully support and signals confidence in the company's prospects as it
approaches its year-end.
Selkirk Group plc
In November 2024, Kelso, in partnership with Belerion Capital, co-founded
Selkirk Group plc, an AIM-listed cash shell. Kelso is Selkirk's largest
shareholder, with an 18% stake, equivalent to 75.4 million shares, currently
valued at 2.4p per share. This equates to a holding of approximately £1.84
million, representing 26% of Kelso's portfolio.
Kelso's executive directors act as advisers to Selkirk and are actively
supporting the board in identifying an exciting value enhancing acquisition in
the consumer or technology sectors. While the first proposed transaction has
not progressed as rapidly as hoped, we are still working on it and
simultaneously developing a number of alternative opportunities.
Selkirk's attraction to these targets is in being a cornerstone with a
well-recognised shareholder base, coupled with the speed upon which it can
transact. As public equity markets continue to offer limited capital-raising
opportunities for smaller businesses, we believe listed cash shells like
Selkirk, supported by experienced boards and aligned shareholders, offer an
increasingly valuable platform for high-quality private companies to access
the public markets efficiently. The lack of IPO activity in recent years
underscores the growing need for innovative investment approaches.
Selkirk's income approximately matches its running costs thus preserving its
cash, which remains at £7.0 million.
Outlook
While global investor sentiment towards equities remains cautious and markets
continue to experience volatility, the board remains patient and focused,
actively pursuing value creation opportunities both for Kelso and its investee
companies. More than ever, listed companies must take proactive steps to
enhance shareholder value, particularly as the public markets continue to
overlook smaller businesses and often fail to reward operational improvements
for some time.
All of our active investments underwent meaningful strategic improvements
during 2024, which, in our view, are not yet reflected in their current share
prices. We anticipate that future share price movements will be driven by step
changes in value, potentially arising from corporate activity or other
catalysts.
In market terms, we believe the portfolio carries a high degree of "alpha",
meaning our performance may be relatively uncorrelated with broader market
movements. Nonetheless, as with many UK small-cap share prices, our portfolio
value has declined since the year-end. Our internal price targets remain
materially above the current market valuations of all four of our active
holdings. On a more positive note, despite wider global economic concerns, we
note that interest rates have begun to fall, potentially easing financial
conditions and improving sentiment towards UK equities over time. If this
marks the start of a shift in market dynamics, now is the time to buy and the
opportunity for long-term value investors in UK small caps could be
significant.
Reassuringly, we do not expect any material direct impact from the potential
introduction of new global tariffs across our portfolio. Furthermore, all four
companies are either in a net cash position or have secured long-term, stable
financing arrangements.
With strategic progress across our investments and a disciplined, value-led
approach, we remain confident in our ability to deliver strong long-term
returns for our shareholders. Our focus remains on identifying undervalued
opportunities, supporting value-creating change, and positioning the portfolio
for re-rating as market conditions improve.
John Goold
CEO
Financial Statements for the year ended 31 December 2024
Statement of Profit or Loss
For the year ended 31 December 2024
Note 2024 2023
£ £
Revenue 6 (97,343) 2,577,401
Gross (loss)/profit (97,343) 2,577,401
Administrative expenses (483,310) (460,430)
(Loss)/profit from operations (580,653) 2,116,971
Finance income 7 2,209 3,714
Finance expense 7 (90,385) (121,217)
Income from fixed assets and dividends 7 115,500 31,500
(Loss)/profit before tax (553,329) 2,030,968
Tax credit/(expense) 11 164,526 (471,436)
(Loss)/profit for the year (388,803) 1,559,532
Total comprehensive income (388,803) 1,559,532
(Loss)/profit for the year attributable to:
Owners of the parent (388,251) 1,534,314
Non-controlling interests (552) 25,218
(388,803) 1,559,532
2024 2023
Earnings per share attributable to the ordinary equity holders of £ £
Profit or loss
Basic 12 (0.10) 0.56
Diluted 12 (0.10) 0.55
Profit or loss from continuing operations
Basic 12 (0.10) 0.56
Diluted 12 (0.10) 0.55
Consolidated Statement of Financial Position
as at 31 December 2024
Assets Note 2024 2023
£ £
Current assets
Trade and other receivables 14 16,179 6,722
Cash and cash equivalents 16 118,369 240,332
Current asset investments 15 10,406,036 7,868,400
Total assets 10,540,584 8,115,454
Liabilities
Non-current liabilities
Deferred tax liability 26 201,473 274,913
201,473 274,913
Current liabilities
Trade and other liabilities 17 307,477 305,527
Loans and borrowings 18 995,001 -
1,302,478 305,527
Total liabilities 1,503,951 580,440
Net assets 9,036,633 7,535,014
Note 2024 2023
£ £
Issued capital and reserves attributable to owners of the parent
Share capital 19 3,755,700 3,129,750
Share premium reserve 20 4,364,753 3,194,577
Capital redemption reserve 20 45,500 45,500
Other reserves 20 201,912 107,616
Retained earnings 20 602,942 991,193
8,970,807 7,468,636
Non-controlling interest 21 65,826 66,378
Total equity 9,036,633 7,535,014
Consolidated Statement of Cash Flows
as at 31 December 2024
Note 2024 2023
£ £
Cash flows from operating activities
(Loss)/profit for the year (388,803) 1,559,532
Adjustments for
Tax charges 11 (164,526) 471,436
Finance income 7 (2,209) (3,714)
Finance expense 7 90,385 121,217
Unrealised loss/(gain) on current assets investments 6 424,502 (1,432,303)
Share-based payment expense 10,23 94,296 107,616
Income tax expense 11 (107,330) -
(53,685) 823,784
Movements in working capital:
(Increase)/decrease in trade and other receivables (7,564) 2,284
Increase in trade and other payables 16,544 64,806
Cash generated from operations (44,705) 890,874
Net cash (used in)/from operating activities (44,705) 890,874
Cash flows from investing activities
Payments to acquire current assets investments 15 (6,310,045) (9,972,293)
Proceeds on sale of current assets investments 15 3,360,406 3,536,196
Net cash used in investing activities (2,949,639) (6,436,097)
Cash flows from financing activities
Issue of ordinary shares 19 1,796,126 5,619,927
Issue of A ordinary shares - 41,160
Purchase of ordinary shares for cancellation - (91,000)
Contract for difference funding 169,430 -
Proceeds from other borrowings 995,001 -
Finance expense 7 (90,385) (121,217)
Finance income 7 2,209 3,714
Net cash from financing activities 2,872,381 5,452,584
Net decrease in cash and cash equivalents (121,963) (92,639)
Cash and cash equivalents at the beginning of year 240,332 332,971
Cash and cash equivalents at the end of the year 16 118,369 240,332
Consolidated Statement of Changes in Equity
as at 31 December 2024
Share capital Share premium Capital redemption reserve Other reserves Retained earnings Total attributable to equity holders of parent Non‑controlling interest Total equity
£ £ £ £ £ £ £ £
3,129,750 3,194,577 45,500 107,616 991,193 7,468,636 66,378 7,535,014
At 1 January 2024
Comprehensive income for the year
Loss for the year - - - - (388,251) (388,251) (552) (388,803)
Total comprehensive income for the year - - - - (388,251) (388,251) (552) (388,803)
Contributions by and distributions to owners
Issue of share capital 625,950 1,170,176 - - - 1,796,126 - 1,796,126
Share based payments - - - 94,296 - 94,296 - 94,296
Total contributions by and distributions to owners 625,950 1,170,176 - 94,296 - 1,890,422 - 1,890,422
At 31 December 2024 3,755,700 4,364,753 45,500 201,912 602,942 8,970,807 65,826 9,036,633
Share capital Share premium Capital redemption reserve Other reserves Retained earnings Total attributable to equity holders of parent Non‑controlling interest Total equity
£ £ £ £ £ £ £ £
475,250 320,150 - - (497,621) 297,779 - 297,779
At 1 January 2023
Comprehensive income for the year
Loss for the year - - - - 1,534,314 1,534,314 25,218 1,559,532
Total comprehensive income for the year - - - - 1,534,314 1,534,314 25,218 1,559,532
Contributions by and distributions to owners
2,700,000 2,919,927 - - - 5,619,927 - 5,619,927
Issue of share capital
- - 45,500 - (45,500) - - -
Shares cancelled during the year
Shares cancelled during the year (45,500) - - - - (45,500) - (45,500)
Share based payments - - - 107,616 - 107,616 - 107,616
Share cancelled during the year - (45,500) - - - (45,500) - (45,500)
Shares issued - - - - - - 41,160 41,160
Total contributions by and distributions to owners 2,654,500 2,874,427 45,500 107,616 (45,500) 5,636,543 41,160 5,677,703
At 31 December 2023 3,129,750 3,194,577 45,500 107,616 991,193 7,468,636 66,378 7,535,014
Share capital Share premium Capital redemption reserve Retained earnings Total equity
£ £ £ £ £
475,250 320,150 - (497,621) 297,779
At 1 January 2023
Comprehensive income for the year
Profit for the year - - - (25,160) (25,160)
Total comprehensive income for the year - - - (25,160) (25,160)
Contributions by and distributions to owners
Issue of share capital 2,700,000 2,919,927 - - 5,619,927
Shares cancelled during the year - - 45,500 (45,500) -
(45,500) - - - (45,500)
Shares cancelled during the year
- (45,500) - - (45,500)
Shares cancelled during the year
2,654,500 2,874,427 45,500 (45,500) 5,528,927
Total contributions by and distributions to owners
At 31 December 2023 3,129,750 3,194,577 45,500 (568,281) 5,801,546
At 1 January 2024 3,129,750 3,194,577 45,500 (568,281) 5,801,546
Comprehensive income for the year
Loss for the year - - - (112,563) (112,563)
Total comprehensive income for the year - - - (112,563) (112,563)
Contributions by and distributions to owners
Issue of share capital 625,950 1,170,176 - - 1,796,126
Total contributions by and distributions to owners 625,950 1,170,176 - - 1,796,126
At 31 December 2024 3,755,700 4,364,753 45,500 (680,844) 7,485,109
Notes to the Financial Statements
For the year ended 31 December 2024
1. Reporting entity
Kelso Group Holdings PLC (the 'Company') is a public limited company incorporated in the United Kingdom. The Company's registered office is at Eastcastle House, 27-28 Eastcastle Street, London, United Kingdom, W1W 8DH. These consolidated financial statements comprise the Company and its subsidiary (collectively the 'Group' and individually 'Group companies'). The principal activity of the parent company is that of a holding company and the principal of Kelso Ltd is that of an investment company.
2. Basis of preparation
The Group's consolidated and the Company's individual financial statements
have been prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations as adopted
by the UK (collectively IFRSs). They were authorised for issue by the
Company's board of directors on 22 April 2025.
Details of the Group's accounting policies, including changes during the year,
are included in note 4.
The Company has taken advantage of the exemption available under section 408
of the Companies Act 2006 and elected not to present its own Statement of
comprehensive income in these financial statements.
In preparing these financial statements, management has made judgements,
estimates and assumptions that affect the application of the Group accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
The areas where judgements and estimates have been made in preparing the
consolidated financial statements and their effects are disclosed in note 5.
2.1 Basis of measurement
The financial statements have been prepared on the historical cost basis
except for the following items, which are measured on an alternative basis on
each reporting date.
Items
Measurement basis
Current assets
investments
Fair value
Level 1 relates to quoted prices in active markets for an identical asset. The
fair value of financial investments traded in active markets is based on
quoted market prices at the balance sheet date. A market is regarded as active
if quoted prices are readily and regularly available. and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held is the
quoted price at the balance sheet date.
Level 2 current assets investments are those valued using inputs other than
quoted prices in active markets, but that are observable. The level 2 current
assets investments relate to trading securities as disclosed in note 4.6 and
are carried at fair value. Fair value has been based on a cost plus changes in
net assets. Where the shares were acquired at par and the company has not
traded since, current assets investments has been valued at cost.
2.2 Changes in IFRSs not yet adopted
i) New standards, interpretations and amendments
effective from 1 January 2024
Amendments to IFRS 16 - Leases on sales and leaseback
The Amendments provide a requirement for the seller-lessee to determine 'lease
payments' or 'revised lease payments' in a way that the seller-lessee would
not recognise any amount of the gain or loss that relates to the right of use
retained by the seller-lessee.
Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants.
The amendments require that an entity's right to defer settlement of a
liability for at least twelve months after the reporting period must have
substance and must exist at the end of the reporting period. Classification of
a liability is unaffected by the likelihood that the entity will exercise its
right to defer settlement for at least twelve months after the reporting
period.
Amendments to IAS 7 and IFRS 7 - Statement of cash flows and IFRS 7 Financial
Instruments: disclosures: Supplier Finance Arrangements
The Amendments require entities to provide certain specific disclosures
(qualitative and quantitative) related to supplier finance arrangements. The
Amendments also provide guidance on characteristics of supplier finance
arrangements.
There are no new standards which have had a material impact in the annual
financial statements for the year ended 31 December 2024.
The following tables summarise the impacts of adopting new accounting
standards on the Company's financial statements.
ii) New standards, interpretations and amendments not yet
effective
The following standards and interpretations to published standards are not yet
effective:
New standard or EU Endorsement status Mandatory effective date
interpretation (period beginning)
Lack of exchangeability - Amendments to IAS 21 Endorsed 1 January 2025
Annual Improvements to IFRS Accounting Standards - Amendments to: Endorsed 1 January 2026
IFRS 1 First-time Adoption of International Financial Reporting Standards; Endorsed 1 January 2026
IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on Endorsed 1 January 2026
implementing IFRS 7;
IFRS 9 Financial Instruments; Endorsed 1 January 2026
IFRS 10 Consolidated Financial Statements; and Endorsed 1 January 2026
IAS 7 Statement of Cash flows Endorsed 1 January 2026
Amendments to IFRS 9 and IFRS 7 - Contracts Referencing Nature- dependent Endorsed 1 January 2026
Electricity
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Endorsed 1 January 2026
Disclosures - Amendments to the Classification and Measurement of Financial
Instruments
Amendments to IAS 28 Investments in Associates and Joint Ventures Exposure draft Exposure draft
IFRS 18 Presentation and Disclosure in Financial Statements Endorsed Effective 1 January 2027
The directors anticipate that the adoption of these Standards in future
periods will not have an impact on the results and net assets of the Company,
however, it is too early to quantify this.
The directors anticipate that the adoption of other Standards and
interpretations that are not yet effective in future periods will only have an
impact on the presentation in the financial statements of the Company.
3. Functional and presentation currency
These consolidated financial statements are presented in British Pound Sterling (GBP), which is the Company's functional currency. All amounts have been rounded to the nearest Pound, unless otherwise indicated.
4. Material accounting policies
4.1 Cash and cash equivalents
Cash comprises cash in hand and deposits with financial institutions repayable
without penalty on notice of not more than 24 hours. Cash equivalents are
highly liquid investments that mature in no more than three months from the
date of acquisition and that are readily convertible to known amounts of cash
with insignificant risk of change in value.
4.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities (including structured entities) controlled by the
Company and its subsidiaries. Control is achieved when the Company:
· has power over the investee;
· is exposed, or has rights, to variable returns from its
involvement with the investee; and
· has the ability to use its power to affect its returns.
The Company reassesses 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 listed above.
When the Company has less than a majority of the voting rights of an investee,
it has power over the investee when the voting rights are sufficient to give
it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in
assessing whether or not the Company's voting rights in an investee are
sufficient to give it power, including:
· the size of the Company's holding of voting rights relative to
the size and dispersion of holdings of the other vote holders;
· potential voting rights held by the Company, other vote holders
or other parties;
· rights arising from other contractual arrangements; and
· any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the relevant
activities at this time that decisions need to be made, including voting
patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss
and other comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
The Group classifies certain subsidiaries as current asset investments where
it holds them exclusively with a view to subsequent disposal in the near term,
or where such subsidiaries do not form part of the Group's long-term strategic
operations. These investments are not eliminated on consolidation based on the
nature and intention of the investment and are carried at fair value through
profit or loss (FVTPL) in accordance with IFRS 9 Financial Instruments.
Changes in fair value are recognised in the profit or loss in the period in
which they arise. Fair value is determined using observable market inputs
where available or internal valuation techniques otherwise, which involve
estimation.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests. Total
comprehensive income of subsidiaries is attributed to the owners of the
Company 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 into line with the Group's
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full
on consolidation.
Changes in the Group's ownership interests in existing subsidiaries
Changes in the Group's ownership interests in subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed
to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in
profit or loss and its calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets
(including goodwill), and liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are accounted for as if
the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to another
category of equity as specified/permitted by applicable IFRSs). The fair value
of any investment retained in the former subsidiary at the date when control
is lost is regarded as the fair value on initial recognition for subsequent
account under IAS 39, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
4.3 Revenue
Revenue consists mainly of gains made on investment in listed companies
shares. Investment income recognised in net income for fair-value investments
consists of realised gains and losses resulting from the disposal of, and
unrealised gains or losses resulting from the holding of trading investments.
Income from current assets investments consists of dividends receivable.
Realised gains and losses are recognised on the disposal of the trading
investments.
Unrealised gains and losses are measured based on the fair value of the
consideration received or receivable. Unrealised gains and losses are
recognised in the statement of profit and loss to the extent that it is
probable that the economic benefits or costs can be reliably measured and will
flow to the Group.
Income from consultancy services are recognised when the service has been
provided.
The Group does not expect to have any contracts where the period between the
transfer of the promised goods or services to the customer and payment by the
customer exceeds one year. As a consequence, the Group does not adjust any of
the transaction prices for the time value of money.
Dividend and interest income
Dividend income from investments is recognised when the shareholder's right to
receive payment has been established (provided that it is probable that the
economic benefits will flow to the Group and the amount of revenue can be
measured reliably).
Interest income form a financial asset is recognised when it is possible that
the economic benefits will flow to the Group and the amount of income can be
measured reliably. Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate applicable, which
is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount on
initial recognition.
4.4 Financial instruments
Financial assets and financial liabilities are recognised when a Group entity
becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
4.5 Financial assets
All regular way purchases or sales of financial assets are recognised and
derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within
the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at
either amortised cost or fair value, depending on the classification of the
financial assets.
4.6 Investments
The Group holds equity investments which are classified as trading, based on
the Group's intent to sell the security at the right price.
Trading securities are those investments which are purchased principally for
the purpose of selling them in the near term. Trading securities are carried
at fair value on the consolidated statements of financial condition with
changes in fair value recorded in the consolidated statements of income during
the period of the change.
The Group classifies certain subsidiaries as current asset investments where
it holds them exclusively with a view to subsequent disposal in the near term,
or where such subsidiaries do not form part of the Group's long-term strategic
operations. These investments are not eliminated on consolidation based on the
nature and intention of the investment and are carried at fair value through
profit or loss (FVTPL) in accordance with IFRS 9 Financial Instruments.
Changes in fair value are recognised in the profit or loss in the period in
which they arise. Fair value is determined using observable market inputs
where available or internal valuation techniques otherwise, which involve
estimation.
4.7 Non-controlling interests
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.
The Group includes one subsidiary, Kelso Ltd, with non-controlling interests
arising in 2023. The non-controlling interests, including the share options
represented 0.2% of the total shareholding. No dividends were paid in the
year.
4.8 Share options
The A Shares issued by Kelso Ltd represent equity-settled share based payment
arrangements under which the Group receives services as a consideration for
the additional rights attached to these equity shares, over and above their
nominal price.
Equity-settled share-based payments to certain of the Directors and others
providing similar services are measured at the fair value of the equity
instruments at the grant date. The fair value is expensed, with a
corresponding increase in equity, on a straight-line basis from the grant date
to the expected exercise date. Where the equity instruments granted are
considered to vest immediately, the services are deemed to have been received
in full, with a corresponding expense and increase in equity recognised at
grant date.
The dilutive effect of outstanding share-based payments is reflected as share
dilution in the computation of diluted Earnings per share.
5. Accounting estimates and judgements
5.1 Judgement
When preparing the Financial Statements, management undertakes a number of
judgements, estimates and assumptions about recognition and measurement of
assets, liabilities, income and expenses. The actual results may differ from
the judgements, estimates and assumptions made by management, and will seldom
equal the estimated results.
Management Incentive Plan
The Group provides for the compensation to management arising from the
Management Incentive Plan as estimated by reference to the share price
performance and dividends in the year. The compensation is attached to rights
Kelso Ltd will have the right to convert the compensation entitlement in Kelso
Ltd A shares into ordinary shares in Kelso Group Holdings Plc at the end of
year 3 and at any time in years 4 and 5. Management has applied judgement in
forecasting the future growth of the Group and its investments.
The directors believe that there were no other significant judgements required
with regard to the application of the Company's accounting policies in
preparing these financial statements.
5.2 Estimates and assumptions
Estimate and assumption
The valuation of the investment portfolio is determined in accordance with the
Group's valuation principles. All listed investments are measured at fair
value and based on active market prices. Unrealised holding gains and losses
are recognised in other comprehensive income. On sale, net gains and losses
previously accumulated in other comprehensive income are transferred to
retained earnings. Deferred tax provision is made on the unrealised gain at
the year end on the assumption that the gain will be realised and the Group
will continue to be profitable.
Estimates included within these financial statements relate to the Management
Incentive Plan (MIP). The directors believe that the non-market performance
conditions of the MIP will be met and a return hurdle between 8% and 15% p.a
will be achieved by year 3. The directors believe that none of these estimates
carry a significant estimation uncertainty, nor do they bear a significant
risk of causing material adjustments to the carrying amounts of assets and
liabilities within the foreseeable future.
6. Revenue
The following is an analysis of the Group's revenue for the year from
continuing operations:
2024 2023
£ £
Realised gains on investments 286,049 1,145,098
Unrealised (loss)/gains on investments (424,502) 1,432,303
Consultancy fees receivable 41,110 -
(97,343) 2,577,401
7. Finance income and expense
Recognised in profit or loss 2024 2023
£ £
Interest on: 1,979 3,714
- Bank deposits
Total interest income arising from financial assets measured at 1,979 3,714
amortised cost or FVOCI
Dividends received - listed investments 115,500 31,500
Other interest receivable 230 -
Total finance income 117,709 35,214
Finance expense
Interest on Contract for Difference 44,038 121,217
Loan interest payable 46,347 -
Total finance expense 90,385 121,217
Net finance income/(expense) recognised in profit or loss 27,324 (86,003)
8. Expenses by nature
2024 2023
£ £
Professional fees 234,198 291,613
Interest on Contract for Difference 44,038 121,217
Share based payments costs 94,296 107,616
9. Auditors' remuneration
During the year, the Group obtained the following services from the Group's
auditor and its associates:
2024 2023
£ £
Fees payable for the audit of the Group's financial statements 26,450 23,500
10. Employee benefit expenses
Group
Employee benefit expenses (including directors) comprise: Management Incentive
Plan
94,296 107,616
Key management personnel compensation
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, including
the directors of the Company listed in the Directors' report.
2024 2023
£ £
Management Incentive plan 94,296 107,616
The monthly average number of persons, including the directors, employed by
the Group during the year was as follows:
2024 2023
No. No.
Directors 6 6
Management Incentive plan 6 6
11. Tax expense
11.1 Income tax recognised in profit or loss
2024 2023
£ £
Current tax
Current tax on (losses)/profits for the year (1,893) 196,523
Adjustments in respect of prior years (89,189) -
Total current tax (91,082) 196,523
Deferred tax expense
Origination and reversal of timing differences (73,444) 274,913
Total deferred tax (73,444) 274,913
Total tax (credit)/charge (164,526) 471,436
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the United Kingdom applied to profits
for the year are as follows:
2024 2023
£ £
(Loss)/profit for the year (388,803) 1,559,532
Income tax expense (164,526) 471,436
(Loss)/profit before income taxes (553,329) 2,030,968
Tax using the Company's domestic tax rate of 25% (2023:25%) (138,332) 507,742
Expenses not deductible for tax purposes, other than goodwill,
amortisation and impairment 8,198 37,454
Non-taxable income less expenses not deductible for tax purposes, other than
goodwill and impairment
- (8,801)
Dividends from UK companies (28,875) -
Unrelieved tax losses carried forward 83,591 (56,259)
Adjustments in respect of previous periods (89,189) -
Marginal relief 81 (8,700)
Total tax expense (164,526) 471,436
Changes in tax rates and factors affecting the future tax charges
There were no factors that may affect future tax charges.
12. Earnings per share
(i) Basic earnings per share
2024 2023
Pence Pence
From continuing operations attributable to the ordinary equity holders of the (0.10) 0.56
Company
Total basic earnings per share attributable to the ordinary equity holders of (0.10) 0.55
the Company
(ii) Diluted earnings per share
2024 2023
Pence Pence
From continuing operations attributable to the ordinary equity holders of the (0.10) 0.55
Company
Total diluted earnings per share attributable to the ordinary equity holders (0.10) 0.55
of the Company
(iii) Reconciliation of earnings used in calculating earnings per share
2024 2023
£ £
(Loss)/profit attributable to the ordinary equity holders of the Company used
in calculating basic earnings per share:
From continuing operations (388,251) 1,534,314
(Loss)/profit from continuing operations attributed to the ordinary equity
holders of the Company:
Used in calculating basic earnings per share (388,251) 1,534,314
Used in calculating diluted earnings per share (388,251) 1,534,314
(Loss)/profit attributed to the ordinary equity holders of the Company used in (388,251) 1,534,314
calculating diluted earnings per share
(iv) Weighted average number of shared used as the denominator
2024 2023
Number Number
Weighted average number of ordinary shares used as the denominator in 370,439,261 280,343,904
calculating basic and diluted earnings per share
The Company has potential ordinary shares in the form of share options
emanating from an equity-settled share-based payment scheme as shown in Note
23.1. These could potentially dilute basic earnings per share in the future
but were not included in the calculation of diluted earnings per share because
they are anti-dilutive for this year. As such, diluted earnings per share are
equal to basic earnings per share.
13. Other non-current investments
Company
2024 2023
£ £
Investments in subsidiary companies 2,974,998 2,974,998
The company holds 99.8% of ordinary shares and voting rights in Kelso Ltd. The
registered office of Kelso Ltd is at Eastcastle House, 27-28 Eastcastle
Street, London, United Kingdom, W1W 8DH. The principal activity of Kelso Ltd
is that of an investment company.
14. Trade and other receivables
Group
2024 2023
£ £
Trade receivables 7,427 -
Prepayments and accrued income 6,859 6,722
Other receivables 1,893 -
Total current portion 16,179 6,722
Company
2024 2023
£ £
Receivables from subsidiaries 5,560,380 2,763,195
Total financial assets other than cash and cash equivalents
classified as loans and receivables 5,560,380 2,763,195
Prepayments and accrued income - 5,754
Total trade and other receivables 5,560,380 2,768,949
15. Current assets investments
Group
2024 2023
£ £
Listed investments 10,393,536 7,868,400
Unlisted investments 12,500 -
Fair value 10,406,036 7,868,400
Listed investments
2024 2023
£ £
Investments b/f 7,868,400 -
Purchases 6,310,045 9,972,293
Sales (3,360,406) (3,536,196)
Fair value (loss)/gain (424,503) 1,432,303
Fair value 10,393,536 7,868,400
Unlisted investments
2024 2023
£ £
Purchases 12,500 -
Fair value 12,500 -
Unlisted investments relate to an investment in a newly formed entity, Berwick
Group Holdings Plc and its subsidiary companies, being Peebles Group Plc,
Hawick Group Holdings Plc and Hawick Subsidiary Limited. Whilst wholly owned
and controlled by Kelso Ltd at the year end, they have been set up for
strategic corporate actions planned in the short-term and are therefore
current investments in substance. On this basis, these have been included in
current asset investments and have not been eliminated on consolidation. There
has been no trade or activity in these entities since incorporation during the
year.
16. Notes supporting statement of cash flows
Group
2024 2023
£ £
Cash at bank available on demand 118,369 240,332
Cash and cash equivalents in the statement of cash flows 118,369 240,332
Company
2024 2023
£ £
Cash at bank available on demand 1,942 15,378
Reconciliation of net debts
1 January 2024 Cash flows Non-cash changes 31 December 2024
£ £ £
New finance leases Changes in market value and exchange rates
£ £
Cash and cash equivalents 240,332 (121,963) - - 118,369
Bank overdrafts - - - - -
240,332 (121,963) - - 118,369
Loans - (995,001) - - (995,001)
Contract for difference - (169,430) - - (169,430)
- (1,164,431) - - (1,164,431)
Net debt 240,332 (1,286,394) - - (1,046,062)
17. Trade and other payables
Group
2024 2023
£ £
Trade payables 21,969 40,678
Other payables - tax and social security payments 12,743 12,743
Other payables 181,930 -
Accruals 90,835 55,583
Total financial liabilities, excluding loans and borrowings, classified as 307,477 109,004
financial liabilities measured at amortised cost
Corporation tax payable - 196,523
Total trade and other payables 307,477 305,527
Company
2024 2023
£ £
Trade payables 7,440 -
Accruals 37,027 1,655
Total financial liabilities, excluding loans and borrowings, classified as 44,467 1,655
financial liabilities measured at amortised cost
Other payables - tax and social security payments 12,743 12,743
Total trade and other receivables 57,210 14,398
18. Loans and borrowings
Group
2024 2023
£ £
Current
Other loans 995,001 -
Total loans and borrowings 995,001 -
19. Share capital
Issued and fully paid
2024 2024 2023 2023
Number £ Number £
Ordinary shares of £0.01 each
At 1 January 312,975,000 3,129,750 47,525,000 475,250
Shares issued 62,594,999 625,950 270,000,000 2,700,000
Shares cancelled - - (4,550,000) (45,500)
At 31 December 375,569,999 3,755,700 312,975,000 3,129,750
On 30 January 2024, Kelso Group Holdings PLC issued 62,594,999 ordinary shares
for cash for a value of £1,877,850. The total number of ordinary shares in
issue at the year end was 375,569,999. All the shares have the same right to
receive dividends and the repayment of capital and represents one vote at the
shareholders' meeting
20. Reserves
Share premium
This reserve records the amount above the nominal value received for shares
sold, net of transaction costs.
Capital redemption reserve
The Capital redemption reserve is a non-distributable reserve which represents
the nominal value of its own shares bought back by the Group.
Other reserves
Other reserves consists of the assessed value of share based payments for
services received which are yet to be converted into class A ordinary shares.
Any amounts in relation to share options that expire or are not exercised will
be transferred to distributable reserves.
Retained earnings
This balance represents the cumulative profit and loss made by the Group, net
of distributions to owners.
21. Non-controlling interests
2024 2023
£ £
Balance at beginning of the year 66,378 -
Share of (loss)/profit for the year (552) 25,218
Non-controlling interests - 41,160
65,826 66,378
22. Financial instruments - fair values and risk management
22.1 Financial instruments management objectives
The Group only deals in basic financial instruments. In the current period the
Group's financial instruments comprise cash and cash equivalents and accruals
which arise directly from its operations. All financial assets and liabilities
are recognised at amortised cost. The Group does not use financial instruments
for speculative purposes.
Portfolio risk
The group invested in listed shares in the period. In doing so, the group's
portfolio of investment is exposed to market fluctuations. Management closely
monitors the market price of their investments to minimise adverse risk and
are monitoring the stock market for opportunities to diversify and reduce the
portfolio risk.
Contract For Differences risk
The group invested in Contract For Differences (CFD) in the period. Management
is experienced in CFD trading and have chosen a highly respected CFD provider
to minimise counterparty risks or delays. All CFDs' were repaid in April 25.
Financial Risk Factors
The Group's activities expose it to mainly liquidity risk. The Group's overall
risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Company's financial
performance.
Liquidity Risk
The Group has to date financed its operations from cash reserves funded from
share issues, Management's objectives are now to manage liquid assets in the
short term through closely monitoring costs and raising funds through the
issue of shares.
The Group has no borrowing facilities that require repayment and therefore has
no interest rate risk exposure.
Capital Management Risk
The capital structure of the Group consists of debt, cash and cash equivalents
and equity attributable to holders of the parent, comprising issued share
capital and retained earnings. Consistent with others in the industry, the
Group reviews the gearing ratio to monitor the capital.
This ratio is calculated as the net debt divided by total capital. Net debt is
calculated as total borrowings less cash and cash equivalents. Total capital
is calculated as equity (including capital, reserves and retained earnings).
This gearing ratio will be considered in the wider macroeconomic environment.
Fair Values
Management have assessed that the fair values of cash and short-term deposits
and accruals approximate to their carrying amounts due to the short-term
maturities of these instruments.
23. Share based payments
23.1 Employee share option plan of the Group
Details of the employee share option of the Group
During the year ended 31 December 2023, the board set up a management
incentive plan ("MIP") in the company's newly formed subsidiary, Kelso Ltd.
The MIP is focused on aligning the participants with shareholders and
investment returns. The principal terms are as follows:
The MIP is linked to total shareholder return (share price performance plus
dividends). Participants of the MIP hold A shares in Kelso Ltd.
Kelso Limited will have the right to convert to shares in Kelso Group Holdings
Plc, the value to be calculated as follows:
· Subject to achieving a return hurdle for Kelso shareholders of 8%
p.a., an entitlement to 15% of the value created
· Subject to achieving a return hurdle for Kelso shareholders of
15% p.a., an entitlement of 20% of the value created
· For returns between these hurdle rates, an entitlement of between
15% and 20% of value created calculated on a straight line basis
· Standard good/bad leaver provision
· MIP shares may vest a third each on the third, fourth and fifth
anniversaries. 50% of MIP shares, once converted into Kelso shares, will be
locked up for one year.
The MIP currently includes 6 participants who are entitled to a share of the
MIP at the end of the third and anytime during 4th and 5th year, based on
growth in net asset value. The exercise period is on the third, fourth and
fifth anniversary.
Employee services are measured indirectly with reference to the fair value of
the equity instruments granted and has been done by applying the modified
grant date method. The grant date fair value of the equity instruments has
been determined at the grant date on 14 April 2023 at 3.00p per share based on
the market value at that date, with no downward adjustment value expected.
The Board has estimated that the non-market performance conditions will be met
with an estimated growth of 9.12% p.a. The participants were entitled to
15.00% of the value created of
£3,426,049 over the vesting period of 5 years. In accordance with the
modified grant date method, this would entitle the participants to 6,739,350
share options at 31 December 2024, at the grant date price of 3.00p with a
value of £201,912. This was recognised in equity reserves in the accounts.
The Board performed sensitivity analyses on the MIP for reasonable changes to
key assumptions as well as a worst-case scenario. Determination of the MIP
value is most sensitive to changes in the growth rate or return hurdle, which
is the non-market performance condition linked to the MIP.
The Board is of the view that the Group will achieve an overall growth rate of
9.12% over the 5-year vesting period, against the 8% target growth rate set in
the MIP, and therefore the performance condition will be met. At a minimum, to
meet the 8% overall growth rate set in the MIP over the 5-year vesting period,
having achieved an effective 13% growth per annum in the period from grant
date of 14 April 2023 to 31 Dec 2024, the Group will need to achieve an
average 6% growth rate per annum in the remaining vesting period of 3 years.
24. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note.
Details of transactions between the Company and its related parties are
disclosed below.
There are no personnel considered to be key management other than the
directors. The directors received compensation under the MIP but no
remuneration during the year.
25. Control
There is no controlling party but the Group.
26. Deferred tax
Group Group Company Company
2024 2023 2024 2023
£ £ £ £
Deferred tax - balance b/fwd (274,913) - 56,259 -
Deferred tax - charge to profit or loss 73,440 (274,913) (56,259) 56,259
At end of year (274,913) - 56,259
(201,473)
Group Group Company Company
2024 2023 2024 2023
£ £ £ £
Tax losses - 56,259 - 56,259
Unrealised investment gains (251,950) (358,076) - -
Management incentive plan 50,477 26,904 - -
(201,473) (274,913) - 56,259
27. Events after the reporting date
During April 2025, the outstanding loan and contract for difference were
settled in full.
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