Kelso : Information Incorporated by Reference into Registration Document - Annual Report

Registered number: 11504186

KELSO GROUP HOLDINGS PLC

(FORMERLY INSIGHT BUSINESS SUPPORT PLC)

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

KELSO GROUP HOLDINGS PLC
COMPANY INFORMATION
Directors	J. P. Pither (resigned 24 January 2023)
	G. A. Harvey (resigned 29 March 2023)
	A. C. Rhodes (resigned 29 January 2023)
	J. Brooke (appointed 23 November 2022)
	J. H. Goold (appointed 25 March 2022)
	M. A. Kirkland (appointed 23 November 2022)
	Sir N. Knowles (appointed 29 January 2023)
	D. Charters (appointed 29 March 2023)
Company secretary	MSP Corporate Services Limited
Registered number	11504186
Registered office	Eastcastle House
	27-28 Eastcastle Street
	London
	United Kingdom
	W1W 8DH
Independent auditor	Royce Peeling Green Limited
	Chartered Accountants & Statutory Auditors
	The Copper Room
	Deva City Office Park
	Trinity Way
	Manchester
	M3 7BG

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KELSO GROUP HOLDINGS PLC

CONTENTS

	Page
Chairman's report	3	- 4
Strategic report	5	- 6
Directors' report	7	- 9
Independent auditor's report	10	- 14
Statement of profit or loss	15
Statement of financial position	16
Statement of cash flows	17
Statement of changes in equity	18	- 19
Notes to the financial statements	20	- 27

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KELSO GROUP HOLDINGS PLC

CHAIRMAN'S REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

I have the pleasure in presenting the financial statements of Kelso Group Holdings PLC for the year ended 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.

Kelso Group Holdings plc ("Kelso", formerly Insight Business Support Plc) made significant progress during the latter part of 2022 and post year end.

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, having joined the board as a non-executive director on 25 March 2022, subsequently became the CEO in November 2022. Mark Kirkland and Jamie Brooke joined the board as executive directors in November 2022. It was announced on 30 January 2023 that I became chairman and in January 2023 David Charters joined as a non-executive director. The board are thankful to the previous directors, who stepped down in the year, for their contribution.

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 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.

In respect of the year to 31 December 2022, the only material costs of the business were in relation to raising funds, the write off of directors' loan accounts, and some limited due diligence on a historic, potential reverse IPO candidate prior to the new strategy and change of board.

As highlighted in the 2 November 2022 announcement, the board intended to establish a management incentive plan ("MIP") which will be put in place post year end with shares to be issued shortly to participants. None of the directors draw fees or salaries and costs are kept to a minimum. 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 Kelso Group Holdings Plc. 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

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KELSO GROUP HOLDINGS PLC

CHAIRMAN'S REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

• • 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 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

The executive team are excited about the prospects in the UK listed market for generating value for shareholders. They believe that the UK stock market currently looks attractive and are dedicated to Kelso's strategy for identifying, engaging with and unlocking trapped value in UK listed companies. Kelso also aims to work with investee companies, and respective stakeholders, to effect change where existing shareholders are often unable or unwilling to do so themselves.

Sir N. Knowles

Chairman

26 April 2023

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