---

Kelso Group Holdings PLC, an acquisition vehicle aimed at unlocking trapped value in UK listed companies, reported a notable financial turnaround in FY23. The company’s profit before tax reached £2.0 million, a significant improvement from a loss of £290k in FY22. This was driven by an impressive IRR of 55% and an investment gain of £2.6 million. The company’s strategic investments and management’s active engagement have positioned it well for sustainable growth.

---

Kelso’s FY23 financial results reflect a remarkable year, with a total revenue of approximately £2.6 million, primarily from investment gains. The strategic acquisition of stakes in companies like THG Plc and NCC Group Plc has resulted in substantial unrealized gains, contributing to an overall net asset value increase. The financial strategy focused on targeted investments and operational efficiency has paid off, turning last year’s loss into this year’s profit.

Profitability and Revenue Growth

The group’s shift from a financial loss in FY22 to a profit in FY23 underscores effective cost management and profitable investments. The strategic choices in acquisitions and the management’s approach to unlocking value in underperforming stocks have resulted in a revenue solely from investments, highlighting the company’s operational focus and efficiency.

Cost Management

Despite the increase in activity, Kelso maintained low overhead costs, with no director salaries drawn during the year and minimal property costs. The primary expenditures were related to fundraising, listing fees, and professional services, indicating a lean operational model that maximizes profit margins.

Risk Factors

Kelso’s business model, centered around investments in publicly listed companies, inherently carries market-related risks, including market volatility and liquidity risks. The concentration of investments in a limited number of companies could also pose significant concentration risks if any of these holdings fail to perform as expected.

CEO John Goold highlighted the successful implementation of Kelso’s strategic vision, emphasizing the active approach in managing portfolio companies and enhancing their market value. The forward-looking statements suggest a continuing strategy of engagement and potential strategic transactions that could unlock further value.

Investment Highlights

Kelso’s investment in THG Plc stands out, representing over 52.5% of the portfolio. The investment has seen significant unrealized gains, reflecting Kelso’s ability to identify undervalued opportunities. Similarly, investments in NCC Group and Angling Direct have shown promising developments, potentially leading to substantial future gains.

Historical Performance Review

Comparing the past two fiscal years, Kelso has demonstrated a significant turnaround, pivoting from operational losses to robust profitability. This rapid improvement has been driven by a strategic reorientation towards unlocking shareholder value through active investment management.

Liquidity and Capital Resources

Kelso’s liquidity position is solid, with significant cash on hand and investments. The management has prudently managed capital, ensuring sufficient liquidity to cover operational needs and seize new investment opportunities without requiring substantial external financing.

Significant Events and Milestones

This year, Kelso’s strategic investments in THG and other companies have been pivotal, potentially setting the stage for substantial future growth. The success of these investments is integral to Kelso’s strategy of proving the concept of its business model.

Outlook and Future Projections

Kelso is optimistic about the future, expecting continued growth in asset value and profitability. The proactive management approach and strategic investments are likely to propel further growth, although market volatility remains a significant risk.

Key Takeaways for Investors

Investors should note Kelso’s successful strategic shift and significant improvement in financial performance. However, the high concentration of investments and inherent market risks require careful consideration. The potential for substantial returns exists, but it comes with corresponding risks associated with Kelso’s investment model.