REG - Kelso Group Holdings - FY22 Results and New Management Incentive Plan
27/04/2023 07:15
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RNS Number : 6185X Kelso Group Holdings PLC 27 April 2023
Kelso Group Holdings Plc ("Kelso" or the "Company")
FY22 Preliminary Results and New Management Incentive Plan
Kelso, the main market listed investment company, announces the publication of
its preliminary financial results for the year ended 31 December 2022 ("FY22")
and a new Management Incentive Plan ("MIP"). These results relate to the
period prior to the £3.0 million fundraise in January 2023 as well as the
changes in strategy and board of directors (the "Board").
During the period, under the leadership of the previous Board, the Company
reported a net loss before taxation of £289,324. There was no revenue in the
period. The loss reflects the costs associated with the scoping of a potential
acquisition, listed company fees and other operating costs.
As at 31 December 2022, the Company had cash at bank of £332,971.
During the period, the Company was re-established as Kelso. Under the new
Board, the Company's strategy changed to identifying, engaging and unlocking
trapped value in UK listed companies across any sector. Through active
engagement and alignment via taking stakes directly, Kelso aims to effect
change where existing shareholders are often unable or unwilling to do so
themselves. As part of this change, a new Board and management team has been
appointed, including John Goold, who joined as a Non-Executive Director in
March 2022 and was subsequently appointed as CEO in November 2022; Mark
Kirkland and Jamie Brooke joined as Executive Directors in November 2022; Sir
Nigel Knowles was appointed as Chairman in January 2023; and finally, David
Charters joined as a Non-Executive Director in March 2023.
In January 2023, the Company raised £3.0 million from a share issue at a
share price of 2.0p. On 31 January 2023, Kelso announced its first investment
of £2.75 million into THG plc ("THG") through the purchase of 5.0 million
shares at 54.5p. The background and reasons for this investment of shares in
THG were set out in the announcement dated 31 January 2023. On 30 March 2023,
Kelso announced a second net purchase of a beneficial interest in an
additional 2.4 million shares in THG and also gave a further update as to its
investment into THG. On 21 April 2023, Kelso announced a third net purchase of
a beneficial interest in an additional 0.6 million shares in THG, which takes
Kelso's total beneficial interest, consisting of ordinary shares and Contracts
for Difference ("CFDs"), in THG to 8.0 million shares. On 30 March 2023 Kelso
announced an intention to raise up to a further £3.0 million new money at
2.5p.
As highlighted in the 2 November 2022 announcement, the Board intended to
establish a MIP which has since been put in place post year end with shares to
be issued shortly to participants. None of Kelso's Directors currently draw
fees or salaries. The current Directors own 19.37% of shares in Kelso. The MIP
is focussed 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) over the long term
· Participants of the MIP will hold shares in Kelso Limited, a newly
incorporated subsidiary of the Company. Kelso Limited will have the right to
convert to shares in the Company, the value to be calculated as follows:
o Subject to achieving a return hurdle for the Company shareholders of 8%
p.a., an entitlement to 15% of the value created
o Subject to achieving a return hurdle for the Company shareholders of 15%
p.a., an entitlement of 20% of the value created
o For returns between these hurdle rates, an entitlement of between 15% and
20% of value created and calculated on a straight line basis
· Standard good/bad leaver provisions
· 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
John Goold, CEO of Kelso, said:
"These results reflect the period before the change of name, strategy and new
management taking over the reins. I am very excited about the long-term future
of Kelso and helping UK listed companies unlock their true value."
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, Matt Hogg (Investment Banking)
Ben Robertson (Corporate Broking)
About Kelso
Kelso was established in 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 look for situations where it believes the
sum of the parts of a business is greater than the current value. The Company
completed a fundraising of £3.0 million in January 2023. Kelso believes that
the current market conditions are such that there are situations where UK
listed companies' valuations are not appropriately matched to their underlying
intrinsic value. There may be instances where Kelso itself could be used as a
vehicle by an undervalued company to spin off a subsidiary into its own
listing. Such a transaction would undoubtedly constitute a reverse takeover
for Kelso.
Financial Statements for the year ended 31 December 2022
The Board presents the financial statements of Kelso for the year end 31
December 2022.
During the period the Company reported a net loss before taxation of
£289,324. There was no revenue in the period. The loss reflects the costs
associated with the scoping of a potential acquisition, listed company fees
and other operating costs.
As at 31 December 2022, the Company had cash at bank of £332,971.
Statement of Profit or Loss
For the year ended 31 December 2022
2022 2021
Note £ £
Administrative expenses (287,857) (131,682)
Loss from operations (287,857) (131,682)
Finance expense (1,467) -
Loss before tax (289,324) (131,682)
Tax expense 7 - -
Loss for the year (289,324) (131,682)
2022 2021
Pence Pence
Earnings per share attributable to the ordinary equity holders of the parent
Profit or loss
Basic 8 (0.61) (0.47)
Diluted 8 (0.61) (0.47)
Profit or loss from continuing operations
Basic 8 (0.61) (0.47)
Diluted 8 (0.61) (0.47)
There was no other comprehensive Income during the year (2021: £nil).
Statement of Financial Position
as at 31 December 2022
2022 2021
Note £ £
Assets
Current assets
Trade and other receivables 9 9,006 47,589
Cash and cash equivalents 332,971 576,022
Total assets 341,977 623,611
Liabilities
Current liabilities
Trade and other liabilities 10 (44,198) (36,508)
Net assets 297,779 587,103
Issued capital and reserves
Share capital 11 475,250 475,250
Share premium reserve 12 320,150 320,150
Retained earnings 12 (497,621) (208,297)
TOTAL EQUITY 297,779 587,103
Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
Note £ £
Cash flows from operating activities
Loss for the year (289,324) (131,682)
Finance expense 1,467 -
(287,857) (131,682)
Movements in working capital:
Decrease/(increase) in trade and other receivables 38,583 (46,089)
Increase in trade and other payables 7,690 33,308
Cash generated from operations (241,584) (144,463)
Net cash used in operating activities (241,584) (144,463)
Financing activities
Issue of ordinary shares - 780,500
Costs of share issue - (70,100)
Finance costs (1,467) -
Net cash used in financing activities (1,467) 710,400
Net cash (decrease)/increase in cash and cash equivalents (243,051) 565,937
Cash and cash equivalents at the beginning of year 576,022 10,085
Cash and cash equivalents at the end of the year 332,971 576,022
Statement of Changes in Equity
For the year ended 31 December 2022
Share capital Share premium Retained earnings Total equity
£ £ £ £
At 1 January 2022 475,250 320,150 208,297 587,103
Comprehensive income for the year
Loss for the year - - (289,324) (289,324)
Total comprehensive income for the year - - (289,324) (289,324)
Contributions by and distributions to owners
At 31 December 2022 475,250 320,150 (497,621) 297,779
Statement of Changes in Equity
For the year ended 31 December 2021
Share capital Share premium Retained earnings Total equity
£ £ £ £
At 1 January 2021 85,000 - (76,615) 8,385
Comprehensive income for the year
Loss for the year - - (131,682) (131,682)
Total comprehensive income for the year - - (131,682) (131,682)
Contributions by and distributions to owners
Issue of share capital 390,250 390,250 - 780,500
Other movements - (70,100) - (70,100)
Total contributions by and distributions to owners 390,250 320,150 - 710,400
At 31 December 2021 475,250 320,150 (208,297) 587,103
Notes to the Financial Statements
For the year ended 31 December 2022
1. Reporting entity
Kelso Group Holdings Plc (the "Company") is a public limited company, limited
by shares, incorporated in the United Kingdom and registered in England and
Wales. The Company's registered office is at Eastcastle House, 27‑28
Eastcastle Street, London, United Kingdom, W1W 8DH. The Company's principal
activity is that of investment.
2. Basis of preparation
The 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 19 April 2023.
Details of the Company's accounting policies, including changes during the
year, are included in note 4.
In preparing these financial statements, management has made judgements,
estimates and assumptions that affect the application of the Company
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.
There are no judgements that are considered to have a significant effect on
the amounts recognised in the financial statements.
There are no key assumptions concerning the future or other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
2.1 Basis of measurement
The financial statements have been prepared on the historical cost basis.
2.2 Changes in accounting policies
i) New standards, interpretations and amendments effective from 1 January 2022
There are no new standards which have had a material impact in the annual
financial statements for the year ended 31 December 2022.
ii) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Company has decided not to adopt early. 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 financial statements are presented in pound sterling, which is the
Company's functional currency. All amounts have been rounded to the nearest
pound, unless otherwise indicated.
4. 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 Financial instruments
Financial assets and financial liabilities are recognised when an 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.
5. Auditor's remuneration
During the year, the Company obtained the following services from the
Company's auditor:
2022 2021
£ £
Fees payable for the audit of the Company's financial statements 10,000 4,200
Due diligence services - 19,000
Tax compliance - 315
6. Directors and employees
The Directors received no remuneration during the year (2021: £nil).
The Company has no employees (2021: None).
7. Tax expense
7.1 Income tax recognised in profit or loss
Current tax
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 losses
for the year are as follows:
2022 2021
£ £
Loss for the year (289,324) (131,682)
Loss before income taxes (289,324) (131,682)
Tax at 19% (2021: 19%) (54,972) (25,020)
Expenses not deductible for tax purposes 16,720 -
Unrelieved tax losses carried forward 38,252 25,020
Total tax expense - -
Changes in tax rates and factors affecting the future tax charges
At the year end the company had tax losses carried forward of approximately
£284,000 (2021: £83,000) which can be utilised against future profits. No
deferred tax asset has been recognised in respect of these losses due to
uncertainty of recoverability.
8. Earnings per share
(i) Basic and diluted earnings per share
2022 2021
Pence Pence
From continuing operations attributable to the ordinary equity holders of the (0.61) (0.47)
Company
(ii) Reconciliation of earnings used in calculating earnings per share
2022 2021
£ £
Loss attributable to the ordinary equity holders of the Company used in
calculating basic earnings per share:
From continuing operations (289,324) (131,682)
Used in calculating basic earnings per share (289,324) (131,682)
(iii) Weighted average number of shares used as the denominator
2022 2021
Number Number
Weighted average number of ordinary shares used as the denominator in 47,525,000 28,279,795
calculating basic earnings per share
9. Trade and other receivables
2022 2021
£ £
Prepayments and accrued income 5,697 -
Other receivables 3,309 47,589
Total trade and other receivables 9,006 47,589
Other receivables include loans to Directors of £nil (2021: £36,000). No
interest is charged on these loans and they are repayable on demand.
10. Trade and other payables
2022 2021
£ £
Other payables 9,173 -
Accruals 22,282 36,508
Social security and other taxes 12,743 -
Total trade and other payables 44,198 36,508
Other payables incudes loans from Directors of £9,173 (2021: £nil). Interest
was charged at a rate of 10% and amounted to £1,467 (2021: £nil) during the
year. Loans are repayable on demand.
11. Share capital
Authorised
2022 2022 2021 2021
Number £ Number £
Shares treated as equity
Ordinary shares of £0.01 each 150,000,000 1,500,000 150,000,000 1,500,000
150,000,000 1,500,000 150,000,000 1,500,000
Issued and fully paid
2022 2022 2021 2021
Number £ Number £
Ordinary shares of £0.01 each
At 1 January and 31 December 47,525,000 475,250 47,525,000 475,250
Ordinary shares carry full voting rights along with rights to payment of
dividends and distributions.
12. Reserves
Share premium
This reserve records the amount above the nominal value received for shares
sold, less transaction costs.
Retained earnings
This balance represents the cumulative profit and loss made by the Company net
of distributions to owners.
13. Financial instruments ‑ fair values and risk management
13.1 Financial risk management objectives
The Company only deals in basic financial instruments. In the current period
the Company'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 Company does not use
financial instruments for speculative purposes.
Financial Risk Factors
The Company's activities expose it to mainly liquidity risk. The Company'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 Company 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 Company has no borrowing facilities that require repayment and therefore
has no interest rate risk exposure.
Capital Management Risk
The capital structure of the Company 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 Company 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.
14. Related party transactions
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 who received no remuneration during the year. Loans to and from
Directors in the year were as follows:
Loans to Directors Loans from Directors
£ £
Balance at 1 January 2021 - -
Movement in the year 36,000 -
Balance at 31 December 2021 36,000 -
Movement in the year 52,000 (8,000)
Loans written off (88,000) -
Interest payable - (1,173)
Balance at 31 December 2022 - (9,173)
The loans to the Directors were interest free and the loans from the Directors
bears interest at 10% p.a. The Company has repaid £8,000 of the Directors
loans after the year end.
During the year J C Green, a shareholder, charged the Company £49,000 (2021:
£29,000) for consultancy and fundraising services. The balance owed by the
company at the year-end was £nil (2021: £nil).
15. Control
There is no controlling party but the Company has been notified of the
following interest of 3 per cent or more in its issued share capital as at 31
December 2022:
Shareholding %
Hargreaves Lansdown (Nominees) Limited 9,368,095 19.71
Jim Nominees Limited 7,500,000 15.78
Barnard Nominees Ltd 7,500,000 15.78
J H Goold 3,750,000 7.89
The Bank of New York (Nominees) Limited 3,750,000 7.89
Vidacos Nominees Limited 3,750,000 7.89
D A King 1,875,000 3.95
Lawshare Nominees Limited 1,504,925 3.17
J P Pither 1,500,000 3.16
A C Rhodes 1,500,000 3.16
J C Green 1,500,000 3.16
Pitchcroft Capital Limited 1,500,000 3.16
Events after the reporting date
16.
As mentioned in the Chairman's report, the Company completed a fundraise of
£3.0 million from an issue of ordinary shares and made its first investment
in a trading company in January 2023.
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