FY24 Results

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."

Nick Cowles, Louisa Waddell, John Moran (Investment Banking) Ben Robertson (Corporate Broking)

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

Issued capital and reserves attributable to owners of the parent

Notes to the Financial Statements

For the year ended 31 December 2024

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.

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.

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.

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

• 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.

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

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.

• New standards, interpretations and amendments not yet effective

The following standards and interpretations to published standards are not yet effective:

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.

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.

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.

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:

• 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.

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.

Changes in the Group's ownership interests in existing subsidiaries

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.

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 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.

Accounting estimates and judgements

5.1 Judgement

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

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.

Revenue

The following is an analysis of the Group's revenue for the year from continuing operations:

Auditors' remuneration

During the year, the Group obtained the following services from the Group's auditor and its associates:

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.

Changes in tax rates and factors affecting the future tax charges

There were no factors that may affect future tax charges.

• Earnings per share
• Basic earnings per share

• Reconciliation of earnings used in calculating earnings per share

(Loss)/profit attributable to the ordinary equity holders of the Company used in calculating basic earnings per share:

(Loss)/profit from continuing operations attributed to the ordinary equity holders of the Company:

Weighted average number of shared used as the denominator

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.

Other non-current investments

Company

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.

Trade and other receivables

Group

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.

Notes supporting statement of cash flows

Group

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

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

Non-controlling interests

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.

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.

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. The directors received compensation under the MIP but no remuneration during the year.

Control

There is no controlling party but the Group.

Deferred tax

Events after the reporting date

During April 2025, the outstanding loan and contract for difference were settled in full.