2021
REPORT AND ACCOUNTS
A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR
WHY UIL LIMITED?
UIL Limited’s objective is to maximise shareholder
returns by identifying and investing in compelling
long-term investments worldwide, where the
underlying value is not reflected in the market
share price.
IN THE YEAR TO 30 JUNE 2021
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
9.98p
(2020: 9.77p)
8.00p
(2020: 7.875p)
* See Alternative Performance Measures on pages 110 and 111
NET ASSET VALUE
(“NAV”) TOTAL
RETURN PER
ORDINARY SHARE*
50.9%
(2020: (18.7%))
SHARE PRICE
TOTAL RETURN PER
ORDINARY SHARE*
57.0%
(2020: (7.1%))
Stock selection remains our focus and ICM Limited’s
proven bottom-up long-term approach should
benefit UIL Limited in changing times.
UIL LIMITED OFFERS ORDINARY SHAREHOLDERS:
UIL LIMITED’S INVESTMENT MANAGER
• A high conviction portfolio
• Delivery of above average returns
• Diversified mix of investments
• Opportunity to currently buy UIL Limited shares
on the market at a significant discount to NAV
• Attractive quarterly dividends
UIL LIMITED OFFERS ZERO DIVIDEND PREFERENCE
(“ZDP”) SHAREHOLDERS:
• ICM Limited has been UIL Limited’s investment
manager since inception (14 August 2003) and
prides itself in identifying compelling investment
opportunities and working pro-actively with investee
companies to improve the economic value for
shareholders
• Aligned interest with over 70.0% held by investors
associated with ICM Limited
• ICM Limited offers significant sector expertise
• Attractive capital growth – driving increased
PORTFOLIO STRENGTHS
ZDP cover
• Attractive asset, sector and geographical cover
• Structured as four ZDP classes – mitigating
redemption risk
• Financial Services
• Technology
• Utilities and
Infrastructure
• Unlisted investments
• Mining and Resources
1
Report and Accounts for the year to 30 June 2021
CONTENTS
PERFORMANCE
3
Current Year Performance
4 Group Performance Summary
5
Chairman’s Statement
10 Top Ten Companies as at 30 June 2021
11 Geographical Investment Exposure
12 Performance Since Inception (14 August 2003)
STRATEGIC REPORT AND INVESTMENTS
14
Investment Managers’ Report
21 Our Investment Approach
22 Macro Trends Affecting Our Portfolio
24 Ten Largest Holdings
30 ZDP Shares
32 Strategic Report
42
Investment Managers and Team
GOVERNANCE
45 Directors
46 Directors’ Report
52 Corporate Governance Statement
57 Capital Structure
59 Directors’ Remuneration Report
62 Audit & Risk Committee Report
65 Statement of Directors’ Responsibilities
AUDIT
66
Independent Auditor’s Report
FINANCIAL STATEMENTS
73 Accounts
79 Notes to the Accounts
ADDITIONAL INFORMATION
107 Notice of Annual General Meeting
109 Company Information
110 Alternative Performance Measures
112 Historical Performance
The business of UIL Limited (“UIL”
or the “Company”) consists of
investing the pooled funds of its
shareholders in accordance with
its investment objective and policy,
generating a return for shareholders
and spreading the investment risk.
UIL has borrowings and gearing is
also provided by ZDP shares, issued
by its wholly owned subsidiary UIL
Finance Limited (“UIL Finance”).
The joint portfolio managers of UIL
are ICM Investment Management
Limited (“ICMIM”) and ICM Limited
(“ICM”), together referred to as the
“Investment Managers”.
FINANCIAL CALENDAR
Year End
30 June
Annual General Meeting (“AGM”)
10 November 2021
Half Year
31 December
Dividends Payable
September, December, March
and June
Utilico Emerging Markets Trust plc – Baltic
Container Terminal – Poland
CURRENT YEAR PERFORMANCE
NAV TOTAL RETURN
PER ORDINARY SHARE*
SHARE PRICE TOTAL
RETURN PER ORDINARY
SHARE*
NAV DISCOUNT AS AT
30 JUNE 2020*
GEARING*
50.9%
(2020: (18.7%))
57.0%
(2020: (7.1%))
37.9%
(2020: 39.4%)
48.8%
(2020: 93.4%)
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
REVENUE YIELD*
DIVIDEND YIELD*
9.98p
(2020: 9.77p)
8.00p
(2020: 7.875p)
2.3%
(2020: 2.5%)
3.0%
(2020: 4.4%)
ORDINARY SHARES
BOUGHT BACK
AVERAGE PRICE OF
SHARES BOUGHT BACK
ONGOING CHARGES
EXCLUDING
PERFORMANCE FEES*
ONGOING CHARGES
INCLUDING
PERFORMANCE FEES*
1.6m
(2020: 2.3m)
221.29p
(2020: 251.25p)
2.3%
(2020: 2.1%)
4.6%
(2020: 2.1%)
*See Alternative Performance Measures on pages 110 and 111
TOTAL RETURN COMPARATIVE PERFORMANCE † (pence)
from 30 June 2020 to 30 June 2021
160
150
140
130
120
110
100
90
80
Jun 20
Jul 20
Aug 20
Sep 20
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
Apr 21
May 21
Jun 21
NAV total return
per ordinary share
Ordinary share price
total return
FTSE All-Share
total return Index
MSCI All Countries World total
return Index (GBP Adjusted)
† Rebased to 100 as at 30 June 2020
Source: ICM and Bloomberg
2
3
UIL LimitedReport and Accounts for the year to 30 June 2021
GROUP PERFORMANCE SUMMARY
CHAIRMAN’S STATEMENT
NAV total return per ordinary share (1) (for the year) (%)
Share price total return per ordinary share (1) (for the year) (%)
Annual compound NAV total return (1) (since inception (2) ) (%)
NAV per ordinary share (1) (pence)
Ordinary share price (pence)
Discount (1) (%)
Returns and dividends (pence)
Revenue return per ordinary share
Capital return per ordinary share
Total return per ordinary share
Dividends per ordinary share
FTSE All-Share total return Index
Equity holders' funds (£m)
Gross assets (4)
Bank and other loans
ZDP shares
Equity holders' funds
Revenue account (£m)
Income
Costs (management and other expenses)
Finance costs
Net income
Financial ratios of the Group (%)
Ongoing charges figure excluding performance fees (1)
Ongoing charges figure including performance fees (1)
Gearing (1)
30 June
2021
30 June
2020
% change
2021/20
50.9
57.0
13.1
431.51
268.00
37.9
9.98
133.81
143.79
8.00 (3)
7,852
544.4
48.5
132.1
363.8
11.6
2.1
1.0
8.5
2.3
4.6 (5)
48.8
(18.7)
(7.1)
11.2
292.79
177.50
39.4
9.77
(81.30)
(71.53)
7.875
6,465
483.3
51.2
180.5
251.6
12.7
2.6
1.6
8.5
2.1
2.1
93.4
n/a
n/a
n/a
47.4
51.0
n/a
2.1
264.6
301.0
1.6
21.5
12.6
(5.2)
(26.8)
44.6
(8.7)
(19.2)
(37.5)
0.0
n/a
n/a
n/a
(1) See Alternative Performance Measures on pages 110 to 111
(2) All performance data relating to periods prior to 20 June 2007 are in respect of Utilico Investment Trust plc, UIL’s predecessor
(3) The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts
(4) Gross assets less current liabilities excluding loans and ZDP shares
(5) Performance fees for the year ended 30 June 2021 are only suffered within underlying funds
It is pleasing to report a strong
year of NAV performance to 30
June 2021 with UIL’s NAV total
return of 50.9%, significantly
outperforming the FTSE
All-Share total return Index
which was up by 21.5% over
the same period. UIL’s NAV of
431.51p as at 30 June 2021 is
an all-time high. This lifted the
annual compound NAV total
return since inception in 2003
PETER BURROWS
Chairman
to 13.1%. As an absolute return fund with a bottom-
up selection to investments these results are very
pleasing, especially as total debt was reduced in the
year as well.
Since inception in August 2003, UIL has distributed
£81.2m in dividends, invested £35.6m in ordinary
share buybacks and made net gains of some
£376.1m for a total return of 804.0% (adjusted for
in March 2021 UIL offered 2022 ZDP shareholders the
option to roll over into a new class of 2028 ZDP shares.
Of the 25.0m 2028 ZDP shares offered, some 19.8m
shares were issued to 2022 ZDP shareholders electing
to roll over, 4.6m were subscribed by institutional and
other investors and 0.6m were acquired by UIL and
held as an investment. Together, these all helped to
deliver a step change in reducing UIL’s gearing, leading
to a sharp improvement over the year, almost halving
from 93.4% as at 30 June 2020 to 48.8% as at 30 June
2021. Total debt including bank loans and ZDP shares
reduced from £231.7m to £180.6m, a reduction of
£51.1m in absolute terms.
It is worth drawing shareholders’ attention to the fact
that in June 2021 UIL moved to valuing Somers Limited
(“Somers”) at its daily NAV. Prior to this, Somers was
valued at a discount of 15% to NAV. This uplift together
with a stellar performance by Somers added £102.4m
to UIL’s reported NAV over the year to 30 June 2021.
Utilico Emerging Markets Trust plc (“UEM”) and Zeta
We remain bottom-up investors looking for
compelling value. Since inception in August 2003,
UIL has a total return of 804.0%.
the exercise of warrants and convertibles). This is
significantly higher than the FTSE All-Share average
annual compound total return for the same period
of 7.5%. Shareholders should note that the Board
and the Investment Managers do not focus on short
term movements in the market indices, but they are
included as shareholders may be interested to see the
comparators.
Resources Limited (“Zeta”) continue to be valued
based on their market bid prices. As at 30 June 2021,
discounts to published NAVs amounted to 10.8% for
UEM (some £9.8m) and 26.7% for Zeta (some £25.3m).
Together these discounts amount to some £35.1m
attributable to UIL. Adding these discounts back would
see UIL’s adjusted NAV per share increase by 9.6% to
473.14p and UIL’s implied discount widen to 43.4%.
UIL has emerged in a much stronger position following
a seminal shift in the twelve months to 30 June 2021.
Its asset values recovered sharply with shareholders’
funds up £112.2m, an increase of 44.6% to £363.8m.
Within the portfolio three significant corporate sale
transactions were completed and one renegotiated,
facilitating UIL’s funding of the full £60.4m 2020 ZDP
redemption payment in October 2020. Subsequently,
It is good to see a number of the portfolio investments
performing well at an operating level and being
rewarded by strong market gains. In particular Resimac
Group Limited (“Resimac”) and Copper Mountain
Mining Corporation (“Copper Mountain”) which are
indirectly held, being the largest investments in
Somers’ and Zeta’s portfolios respectively, delivered
very strong share price increases over the year.
4
5
UIL LimitedReport and Accounts for the year to 30 June 2021 CHAIRMAN’S STATEMENT (continued)
COMMODITIES MOVEMENTS
from 30 June 2020 to 30 June 2021
shares in issue) at an average price of 221.29p, which
represented a discount of 48.7% to the closing NAV.
The capital gain for the year ended 30 June 2021 was
£122.7m, reflecting strong portfolio performance.
200
180
160
140
120
100
80
Jun 20
Aug 20
Oct 20
Dec 20
Feb 21
Apr 21
Jun 21
Oil
Copper
Nickel
Gold
Rebased to 100 as at 30 June 2020
Source: Bloomberg
Resimac, a non-bank Australian financial institution
which is listed on the Australian Securities Exchange
(“ASX”), is Somers’ largest investment and is capitalised
at AUD 1.0bn. Resimac has increased its mortgage
book, expanded its net interest margin and doubled
its profitability. Resimac was awarded the Non-Bank
of the Year at the 2020 Australian Mortgage Awards.
The market has rightly rewarded Resimac and its share
price has risen 143.6% in the year to 30 June 2021.
Copper Mountain’s Q2 results to 30 June 2021
reported strong year-on-year gains, with copper
production up 41.0%, revenue up 29.4% and cashflow
from operations up over 500% at CAD 94.6m. Copper
Mountain is listed on both the Toronto Stock Exchange
and the ASX and its share price rose from CAD 0.63 to
CAD 3.64 in the year to 30 June 2021, a gain of 477.8%.
As you would expect, all of the above has seen
the shape of UIL’s asset and liability profile shift
significantly. Shareholders should note that Somers
now accounts for 42.7% of the total portfolio. Resimac,
Somers’ largest investment accounted for 25.3% of
UIL’s look-through portfolio as at 30 June 2021. The
Board of UIL appreciates the support from ordinary
and ZDP shareholders in April 2021 in approving
amendments to UIL’s investment policy so that any
platform investment may represent up to 50.0% of the
portfolio, provided that no single investment held by
such platform exceeds 30.0% on a look-through basis.
A point to emphasise for shareholders is the shift in
UIL’s portfolio focus. Over the past three years UIL
has increasingly invested in disruptive technology
companies. This has increased UIL’s exposure to high
growth, deep value investments. Such companies
include Starpharma Holdings Limited (“Starpharma”)
and its nanotechnology solution for the global
pharmaceutical companies, through to Littlepay (one of
ICM Mobility Group’s (“ICM Mobility”) core investments)
with its best-in-class ticketless transit systems which
already underpin a number of UK bus companies.
The Board remains disappointed to see the ordinary
shares trade at a discount of 37.9% as at 30 June
2021. In part this reflects a widening in discount in
the second half of June 2021 following the step up
in NAV on the elimination of the Somers discount.
Following the strong NAV gains, reduction in absolute
debt, significantly lower gearing, and attractive
dividend payments, the discount is frustrating to see.
In 2019, the Board determined, in agreement with the
Investment Managers and the major shareholder, to
target a lower discount level of 20.0% in the medium
term and this was firmly communicated to the market
with the Company continuing to buy back ordinary
shares at these low levels. It was understandable
that discounts were high through much of last year’s
uncertainties but given UIL’s significantly improved
profile and performance as noted above, the hope is
that the discount will again narrow. As at 31 August
2021 it was good to see the discount at 33.1%.
During the year to 30 June 2021 the Company
bought back 1.6m ordinary shares (1.9% of opening
The 2022, 2024 and 2026 ZDP shares are trading
at much tighter gross redemption yields compared
to those as at 30 June 2020. As a result of UIL’s
investment performance and the redemption in 2020,
the cover for the ZDP shares has again improved
considerably over the year and, as at 30 June 2021,
the cover for the 2028 ZDP shares was 2.5 times,
the highest cover ever of UIL’s longest dated issues.
Furthermore, the Company’s average blended rate of
funding costs, including bank debt, as at 30 June 2021
reduced further to 4.5%.
Total revenue income for the year to 30 June 2021
was £11.6m, a decrease of 8.9% from the prior year’s
£12.7m. This reflects in part the loss of earnings
from Ascendant Group Limited (“Ascendant”), One
Communications Limited (“One Communications”)
and Optal Limited (“Optal”). The costs were lower and
the group revenue return earnings per share (“EPS”)
of 9.98p represents an increase of 2.1% over the prior
year of 9.77p.
The Board declared an unchanged fourth quarter
dividend of 2.00p per ordinary share in August 2021
which brings the total for the year to June 2021 to
8.00p, representing an uplift of 1.6% over the prior
year and a yield on the closing share price of 3.0%. The
dividend was covered 1.2 times by earnings in the year
and undistributed revenue reserves carried forward
increased from £10.9m to £12.5m equal to 14.88p per
share.
INDICES MOVEMENTS
from 30 June 2020 to 30 June 2021
Given the economic turmoil and fundamental
uncertainties faced over the year with Covid-19, US
elections, Brexit and US/China trade frictions, the
above is a pleasing and commendable performance.
The Board wishes to thank the Investment Managers
for delivering a result well above expectations and in
these challenging conditions.
GLOBAL EVENTS
Covid-19 continues to be the dominant consideration
for all aspects of life. From government policy through
to business practices and economic activity. It has
impacted every continent and every community and
this cannot be over emphasised. It has exposed the
stresses and weaknesses in our economies, politics
and social fabric; from disrupted health services,
education, business and social activities. Governments
continue to struggle to keep up with a rapidly changing
situation and deciding on the optimal medical,
economic and social solutions to tackle the pandemic.
The vulnerable have borne and continue to bear the
greatest burden directly and indirectly from Covid-19.
However, it does feel as though we are approaching
a possible escape in Western Europe and North
America where the health services seem to be coping
with the current pressures arising from the Delta
variant infections. We expect that the current pause
in economic activity globally in response to the rising
Delta variant will give way to rising gross domestic
150
140
130
120
110
100
90
80
70
Jun 20
Aug 20
Oct 20
Dec 20
FTSE All-Share
Australian Securities Exchange ("ASX")
Feb 21
S&P 500
Apr 21
Jun 21
MSCI All Countries World Index
Rebased to 100 as at 30 June 2020
Source: Bloomberg
6
7
UIL LimitedReport and Accounts for the year to 30 June 2021 CHAIRMAN’S STATEMENT (continued)
product (“GDP”) again. Markets remain vulnerable
to future waves of infection and their impact on
employment and economic activity.
While the West is successfully vaccinating its way
out of Covid lockdowns it remains a fact that newer
variants are proving more difficult to contain as they
emerge. With the majority of the world’s population
unvaccinated it is almost certain that further new
variants will continue to appear. Hopefully, all new
variants are contained by the current vaccine array.
We are of the view that vaccinations reduce the impact
of the virus, but not the transmission. So, we expect
that everybody will contract Covid at some point. The
unvaccinated and vulnerable will continue to see the
worst outcomes.
The pandemic has seen both an immediate demand
and supply shock which has impacted most
stakeholders in all economies. As we move through the
policy responses, we are seeing ongoing “aftershocks”,
especially in supply chains. We expect this to continue.
Economic and stock market volatility is expected to
remain high.
The policy response has been to seek to break
community transmission of Covid-19, ranging
from lockdowns, to testing, through to vaccination
programmes. Economically there have been two
parts to the Covid-19 response: central banks have
dramatically increased the supply of capital while
reducing the cost of capital; and governments have
introduced significant support schemes for businesses
especially around continued employment and social
welfare support. These are truly unprecedented steps
which have come at a very high economic cost.
At the same time there is also an accelerating
expectation that businesses address questions
around their approach to Environmental, Social
and Governance (“ESG”) outcomes. The concept
of responsible investing has always been a core
component to UIL’s investment process. UIL’s
Investment Managers have a good record on
governance, given their active approach to investee
companies and they have taken steps to continue to
strengthen their ESG approach to investing. ICM has
recently become a signatory to the United Nations
supported Principles for Responsible Investment
(“PRI”), a code of best practice for incorporating ESG
issues. UIL is therefore able to meet the expectations
Starpharma Holdings Limited
and requirements of that framework. ESG continues to
be a focus for UIL, and we believe this offers significant
opportunities for the Company over the long-term.
Today the world is largely over leveraged, under
employed and certain sectors remain significantly
underutilised, transport and leisure especially so. The
next significant policy steps we expect are under the
broad policy banners of “build your way out of the
pandemic” and the “green agenda”. These will add to
demand and, we believe, will see strong inflationary
pressures continue to rise, especially where supply is
disrupted. While the policy initiatives may well reduce
unemployment, they will add significantly to the
already unprecedented debt levels. Over the year, the
individual markets have seen strong divergences in
market indices and currencies as country-by-country
responses have varied, and the impact of Covid-19 has
differed in its timing and its severity. But a common
theme within markets has been the acceleration of
disruptive or enabling digital businesses, which have
thrived with the shift to working from home. We
expect this trend to continue and even accelerate
further. There are significant technology disruption
opportunities from finance to health and from
businesses through to government.
The ongoing risk from cyber-attacks on businesses and
governments is a deep concern to all. While we can
be prepared, we can’t avoid the targeted impacts of
such cyber actions. We remain vigilant. As is the rising
instability in the Middle East and the aftershocks we
can expect from the re-emergence of the Taliban in
Afghanistan. We now have a number of failed states
from Venezuela in Latin America to Libya in Africa, to
Yemen in the Middle East and now Afghanistan in Asia.
These unstable nations are a deep concern as they
add to poverty and result in economic immigration and
export instability to their immediate neighbours and
regions.
It is also worth noting that as economies reopen,
demand for goods and services is likely to accelerate
above normal trend lines as supply chains and
inventory are rebuilt. Coupled with the cost savings
implemented by many businesses in the face of huge
economic uncertainties from the pandemic fallout,
reported margins by many corporates are actually
widening. We expect this to continue for much of this
year.
OUTLOOK
The outlook for global economies is inextricably
linked to Covid-19 and the central banks’ quantitative
easing monetary policies in response to the global
economic damage caused by the pandemic. At the
time of writing, the world is starting to reverse the
recent surge in infections driven in large part by virus
mutations. The vaccination program is gaining ground
numerically on cases too, while our understanding
and treatment of Covid-19 is becoming increasingly
effective. The challenge now is to navigate the
aftershocks and further waves of infection. There
remains a high risk of setbacks. To counter this, we
anticipate that government and central bank policies
will remain supportive. We expect inflation to be
benign for much of 2021, assets valuations to increase,
technology to continue to gain market share and
commodities to rise in value. Above all, we expect
volatility to remain high as differentiated recoveries
become clearer. Most of our portfolio companies are
doing very well in this environment and we expect this
to continue.
Peter Burrows AO
Chairman
22 September 2021
UIL has emerged in a much stronger position
following a seminal shift in the twelve months to
30 June 2021. Its asset values recovered sharply
with shareholders’ funds up £112.2m, an increase
of 44.6%.
8
9
UIL LimitedReport and Accounts for the year to 30 June 2021 TOP TEN COMPANIES AS AT 30 JUNE 2021
GEOGRAPHICAL INVESTMENT EXPOSURE
(% of total investments on a look through basis)
NORTH AMERICA
UK AND CHANNEL ISLANDS
EUROPE (EXCLUDING UK)
ASIA
June 2021
June 2020
9.8%
4.0%
June 2021
June 2020
18.6%
10.4%
June 2021
June 2020
2.8%
8.1%
June 2021
June 2020
10.4%
8.7%
42.7%
17.1%
14.9%
7.8%
4.8%
Somers Limited
Zeta Resources
Limited
Utilico Emerging
Markets Trust plc
ICM Mobility Group
Resolute Mining
Limited
Financial Services
Resources
Investment Fund
Technology
Gold Mining
A financial services
investment platform,
which primarily
invests in the
banking, wealth
management and
asset financing
sectors.
A resources-focused
investment platform,
which invests in a
range of resource
entities and base
metals exploration
and production
companies.
A UK closed-end
investment trust
dedicated to
investments in
infrastructure, utility
and related sectors
including technology
infrastructure in the
emerging markets.
A UK holding
company focused on
the mobility sector
for private and
public transport and
invests in businesses
shaping the digital
transformation of the
mobility sector.
A gold mining and
exploration company
with operating mines
in Africa.
4.0%
2.0%
1.8%
1.3%
1.2%
Allectus Capital
Limited
Orbital Corporation
Limited
Starpharma
Holdings Limited
AssetCo plc
Sindoh Co Limited
Technology
Technology
Pharmaceuticals
Financial Services
Manufacturing
A technology
investment platform
with a value-focused
portfolio of listed and
unlisted technology
companies.
A manufacturer of
integral propulsion
systems for tactical
unmanned aerial
vehicles for military
application.
A global
biopharmaceutical
company, specialising
in research,
development and
commercialisation of
dendrimer products
for pharmaceutical
applications
worldwide.
Primarily involved in
acquiring, managing
and operating
asset and wealth
management
activities and
interests, together
with other related
services.
A South Korean
company producing
multi-function
printers, fax
machines, thermal
paper and 3D
printers.
BERMUDA
June 2021
June 2020
5.1%
16.4%
AFRICA
June 2021
June 2020
AUSTRALIA & NEW ZEALAND
5.0%
6.9%
June 2021
June 2020
37.6%
25.6%
LATIN AMERICA
June 2021
June 2020
4.2%
4.6%
GOLD MINING
June 2021
June 2020
6.5%
15.3%
Note: % of total investments
10
Source: ICM
11
UIL LimitedReport and Accounts for the year to 30 June 2021
PERFORMANCE SINCE INCEPTION (14 AUGUST 2003)
ANNUAL COMPOUND
NAV TOTAL RETURN *
NAV TOTAL RETURN
PER ORDINARY SHARE *
ANNUAL COMPOUND
SHARE PRICE TOTAL
RETURN *
SHARE PRICE TOTAL
RETURN PER ORDINARY
SHARE *
13.1%
804.0%
12.3%
691.9%
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
COVER *
REVENUE RESERVES
PER ORDINARY SHARE
CARRIED FORWARD *
116.11p
90.83p
1.9x
14.88p
*See Alternative Performance Measures on pages 110 to 111
DIVIDENDS PAID
OUT
VALUE OF ORDINARY
SHARES BOUGHT BACK
ZDP SHARES
ISSUED
ZDP SHARES
REDEEMED
£81.2m
£35.6m
£378.5m
£414.2m
DIVIDENDS PER ORDINARY SHARE (pence)
from 30 June 2004 to 30 June 2021
ALLOCATION OF GROSS ASSETS (£m)
from 14 August 2003 to 30 June 2021
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2004
2005
2006
2007
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
600
500
400
300
200
100
0
A ug 03
Ju n 04
Ju n 05
Ju n 06
Ju n 07
Ju n 08
Ju n 09
Ju n 10
Ju n 11
Ju n 12
Ju n 13
Ju n 14
Ju n 15
Ju n 16
Ju n 17
Ju n 18
Ju n 19
Ju n 20
Ju n 21
Dividend per share – ordinary
Dividend per share – special
Ordinary shares
ZDP shares
Bank loans
No dividends were paid between 2007 and 2010
2010 refers to a cash distribution
Source: ICM
Source: ICM
HISTORIC TOTAL RETURN PERFORMANCE † (pence)
since inception to 30 June 2021
CUMULATIVE TOTAL RETURN COMPARATIVE PERFORMANCE (pence)
from 14 August 2003 to 30 June 2021 (Rebased to 100 as at 14 August 2003*)
1,000
900
800
700
600
500
400
300
200
100
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
NAV total return per
ordinary share **
Ordinary share price
total return **
FTSE All-Share
total return Index
MSCI All Countries World
total return Index (GBP Adjusted)
1,000
800
600
400
200
0
NAV total
return of
804.0%
Aug 03
Jun 04
Jun 05
Jun 06
Jun 07
Jun 08
Jun 09
Jun 10
Jun 11
Jun 12
Jun 13
Jun 14
Jun 15
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
NAV total return per ordinary share**
FTSE All-Share total return Index
† Rebased to 100 as at 14 August 2003
** Adjusted for the exercise of warrants and convertibles
Source: ICM and Bloomberg
*Inception of Utilico Investment Trust PLC
**Adjusted for the exercise of warrants and convertibles
12
Source: ICM
13
UIL LimitedReport and Accounts for the year to 30 June 2021
INVESTMENT MANAGERS’ REPORT
The year to 30 June 2021
delivered a strong and broad
economic recovery from
the lows in March 2020.
Pleasingly, a number of UIL’s
investments thrived and
delivered outstanding returns,
contributing to UIL’s NAV total
return for the year of 50.9%.
CHARLES JILLINGS
Investment Manager
As noted in the Chairman’s
Statement, UEM and Zeta, two
of UIL’s platform investments,
trade at NAV discounts. If UEM and Zeta were valued
at their NAV, then UIL’s NAV as at 30 June 2021 would
increase by 9.6% to 473.14p and many of UIL’s metrics
would improve further as a result.
GLOBAL OUTLOOK
The Covid-19 pandemic has impacted everyone and
continues to dominate every aspect of life. There are few
places, if any, that are unaffected by restrictions dictated
by Covid-19. We now know how to address surges
and new variants and we know the pharmaceutical
companies can produce extremely effective vaccines.
However, significant challenges remain. If this pandemic
is left unhindered it will escalate quickly and mutations
are a major concern. India, Latin America and Africa
remain mostly unvaccinated and serve as a petri dish
from which variants can emerge. Significant concerns
remain around a new variant being outside the vaccine
capability.
Covid-19 has caused unprecedented challenges for
investors. Add this pandemic to a growing list of
significant and current concerns, which include central
bank intervention, extreme debt levels, historic low
and even negative interest rates, populism, US/China
frictions, Brexit, Black Lives Matter, climate change and
it is obvious that investors have been besieged by a
dynamic and challenging environment. Furthermore,
with the unstable rogue states across the regions from
Venezuela to Yemen, we can now add in Afghanistan.
On top of this, we have seen political instability in West
Africa with repeated coups in Mali and the challenges
for all are therefore likely to rise.
When the world’s largest corporates struggle to
project their next quarter’s revenues, it is difficult to
be confident about the direction and resilience of the
global economy. ICM has continued to be focused on
the economic value of its preferred investments and
the delivery of its long-term financial performance. It
has made sure that these investments have the right
approach to risk, while still seeking opportunities
that will thrive in this current and then post Covid-19
environment.
ICM is strongly of the view that due to Covid-19, the shift
to working from home and e-commerce has accelerated
the digitalisation of governments, businesses and
individuals. This shift ranges from doctors’ surgeries
going online, restaurants setting up internet delivery
options and farmers offering produce direct to
consumers online. This dramatic shift will offer new
investment opportunities. Businesses without internet
reach or capability will face a challenging outlook. Many
businesses have been agile and shifted to e-commerce,
which has created opportunities and generated a
positive outlook for investors. We emphasise to our
investee companies that disruption is coming to
everybody and they need to be taking advantage of it
by adapting their business models and embracing these
challenges.
There are two strong trends worth emphasising. First,
as individual markets recover, pent-up demands have
driven above trend activity in the last two quarters.
Second, most investee companies responded to the
pandemic by holding or reducing costs. As recovery has
The Investment Managers are relentless bottom-
up investors, drawing on in-depth knowledge and
capability.
commenced, this cautious approach has seen margins
expand, delivering some impressive results.
We have remained confident in the portfolio’s ability to
deliver growth and earnings. Today, our view is that the
portfolio remains compelling value.
We have also sought out scalable businesses with good
assets and strong management teams who can unlock
value. This is particularly the case in Allectus Capital
Limited (“Allectus”). We have also sought to capture the
digital opportunity in all investments, including digital
infrastructure in emerging markets through UEM.
INVESTMENT APPROACH
UIL continues to develop its core platform investments,
which offer the following benefits:
• Focused strategy. Each platform has a dedicated
mandate and as such is driven by the objective of
finding and making attractive investments within its
mandate.
• Dedicated research analysts. The research
analysts for each platform are focused on both
understanding the existing portfolio businesses and
identifying compelling new investments.
• Financial support. Ability to draw on UIL’s analytical
support and financial backing.
• Deep knowledge. Utilising the Investment
Managers’ knowledge across many jurisdictions to
optimise investment opportunities and undertake
corporate finance led transactions.
A key driver in shaping the current portfolio is the
Investment Managers’ three medium-term core
views. First, that the world’s financial markets are over
indebted; second, that technological change offers
strong investment upside; and third, that emerging
markets offer better GDP growth opportunities than
developed markets.
UIL’s Investment Managers’ emphasis is on individual
stock selection, remaining fully invested and focusing
on identifying investments whose valuations do not
reflect their true long-term value, while at the same time
being a supportive shareholder of investee companies.
The Investment Managers are relentless bottom-
up investors, drawing on in-depth knowledge and
capability.
DISRUPTION
There is a significant disruption to business models
from blockchain to artificial intelligence through to
nanotechnology and financial technology. These
disruptions are shortening the product life cycle and
enabling rapid change to products and processes. ICM
is encouraging its investee companies to go on that
journey. UIL are seeking investments that are capital
light, have high barriers to entry and business models
that are scalable.
PORTFOLIO
The recovery in UIL’s portfolio was broad based with
most of the top ten holdings values moving higher.
Notably, Somers was up 109.2%, Zeta’s share price was
up 117.6%, UEM’s share price was up 26.4%, Starpharma
up 32.6%, and Sindoh Co Limited (“Sindoh”) up 40.9%.
These reflect strong operating performances combined
with rising valuations. The breadth of the rise is pleasing
to see and overall, the portfolio gained some £112.5m.
At the same time, UIL sold Ascendant, One
Communications and Optal in the year to 30 June
2021 and reduced its shareholding in Afterpay Limited
(“Afterpay”). Post year-end Somers completed the sale
of Bermuda Commercial Bank Limited (“BCB”) following
regulatory approval in Bermuda in July 2021. As a result
of the sales of Ascendant, One Communications and
BCB, UIL has seen its country exposure to Bermuda
reduce by some two thirds from 16.4% as at 30 June
2020 to 5.1% as at 30 June 2021, and to 1.4% of the total
portfolio as at 31 July 2021.
We are excited about a number of new investments and
expect them to offer a mix of deep value operational
performance opportunities, which combined with
improving valuations to deliver long term value to UIL
shareholders.
Somers’ valuation increase of 109.2% in the year to
30 June 2021 was largely driven by the very strong
performance of Resimac. Resimac’s business has
accelerated over the past twelve months. The market
has rewarded Resimac with a stronger share price,
which was up 143.6% over the year. The strength
of the Australian Dollar has also contributed to this
performance. Looking forward the tailwinds driving
much of Resimac’s performance remain in place and
we are optimistic that Resimac’s share valuation can
14
15
UIL LimitedReport and Accounts for the year to 30 June 2021 INVESTMENT MANAGERS’ REPORT (continued)
IN THE YEAR TO 30 JUNE 2021
AUSTRALIA & NEW ZEALAND
REMAINS UIL’S LARGEST EXPOSURE
AT 37.6%
UK IS UIL’S SECOND LARGEST
COUNTRY EXPOSURE AT 18.6%
ASIA IS UIL’S THIRD LARGEST
EXPOSURE AT 10.4%
12.0%
8.2%
1.7%
NORTH AMERICA IS UIL’S
FOURTH LARGEST EXPOSURE
AT 9.8%
GOLD IS UIL’S FIFTH LARGEST
EXPOSURE AT 6.5%
BERMUDA IS UIL’S SIXTH
LARGEST COUNTRY EXPOSURE
AT 5.1%
5.8%
8.8%
11.3%
Note: decreases/increases refer to the movement in the portolio percentage of the relevant exposure
SECTOR SPLIT OF INVESTMENTS
Financial Services
42.7%
(2020: 26.9%)
Technology
17.0%
(2020: 18.0%)
Resources
15.3%
(2020: 11.9%)
Infrastructure
Investments
12.7%
(2020: 23.0%)
Gold Mining
Other
6.5%
(2020: 15.3%)
5.8%
(2020: 4.9%)
IN THE YEAR TO 30 JUNE 2021
INVESTED
REALISED
TOTAL REVENUE INCOME
£144.8m
£206.2m
£11.6m
LEVEL 1 & 2
INVESTMENTS*
LEVEL 3
INVESTMENTS*
LEVEL 3
% OF TOTAL PORTFOLIO
£217.2m
£322.9m
59.8%
* See note 9 to the accounts
Source: ICM
continue to re-rate as the business model delivers
strong growth.
Zeta’s share price rise of 117.6% during the period
reflected the strength in the wider resources sector. As
economies in Asia have returned to near normal, their
economic growth has accelerated and in turn driven
prices for commodities higher. In particular, copper has
risen 58.3% during the year to 30 June 2021. Copper
Mountain, Zeta’s largest investment, has seen its share
price accelerate as it benefits from the price increase
and improves its operating output. Its share price was
up 477.8% during the year to 30 June 2021. Again, we are
optimistic that Copper Mountain will deliver improving
results and a rising share price.
Allectus’ value, adjusting for Littlepay which was
transferred to ICM Mobility, was down 6.2% in the year
to 30 June 2021 and largely continues to comprise
a collection of compelling early-stage technology
investments. It is worth noting that Allectus has made
a number of investments over the year as it rebuilds its
investment portfolio.
The perennial under performer has been Resolute
Mining Limited (“Resolute”). Over the years, Resolute
has failed to deliver shareholder value and frustratingly
in the year to 30 June 2021 delivered further
disappointment given our positive outlook on gold. The
board of Resolute took decisive action during the year
making management changes with a view to better
focus on its mining operations. We are clear that we
expect to see improving metrics, stronger cash flows
and reduced debt. It has not helped that Mali, where
its Syama mine is based, witnessed a further military
coup and Covid-19 has hampered operations. Resolute’s
share price fell by 55.1% during the year to 30 June 2021,
reflecting these events.
UIL successfully exited Optal in December 2020,
although this was at around one-third of the price that
had been previously agreed with WEX Inc and around
half of UIL’s carrying valuation as at 30 June 2020, when
there was a strong chance that the original contract
would be binding. Following legal proceedings, WEX Inc
renegotiated the transaction, citing material changes to
the travel industry due to Covid-19, and paid
USD 577.5m cash for Optal and its associated company
eNett (34.0% of the value of their original cash and
shares offer of USD 1.7bn made in January 2020). UIL
received £12.8m from the sale of its Optal shares
compared to the carrying valuation as at 30 June 2020
of £24.4m.
UIL’s investments as at 30 June 2021 are all reviewed in
the ten largest holdings section starting on page 24.
It should be noted that Sterling was generally stronger
over the year and therefore held back valuation gains on
translation.
PORTFOLIO ACTIVITY
During the year to 30 June 2021, UIL invested £144.8m,
including exercising options in Zeta amounting to
£23.6m. UIL realised £206.2m, including loans repaid
by Zeta of £48.3m, sales of £25.5m from Ascendant,
£18.4m from One Communications and £12.8m from
Optal.
UIL supported and participated in the formation of
a new investment vehicle, ICM Mobility, into which
Littlepay and Snapper (both held by Allectus) and Vix
Tech Pte Limited (“VixTech”) and Kuba Pte Limited
(“Kuba”) (both partially held by UIL) were transferred.
This has resulted in UIL’s interests in transport ticketing
system companies now being held in one operating
vehicle which provides scale, enhanced focus on the
opportunities in the global transport sector and an
independent chairman.
PLATFORM INVESTMENTS
UIL currently has four platform investments, Somers,
Zeta, UEM and Allectus in its top ten holdings. These
investments account for 78.7% of the total portfolio as
at 30 June 2021 (30 June 2020: 77.4%). During the year
to 30 June 2021, net withdrawals from these platforms
amounted to £16.8m (30 June 2020: net investments
of £28.8m). Each platform is reviewed under the ten
largest holdings section starting on page 24.
DIRECT INVESTMENTS
UIL has six direct investments in its top ten holdings,
ICM Mobility, Resolute, Orbital Corporation Limited
(“Orbital”), Starpharma, AssetCo plc (“AssetCo”) and
Sindoh. Starpharma, AssetCo and Sindoh are new to
the top ten holdings replacing Ascendant and Optal,
both sold, and VixTech which was transferred into ICM
Mobility. All are reviewed in the ten largest holdings
section starting on page 24.
16
17
UIL LimitedReport and Accounts for the year to 30 June 2021
INVESTMENT MANAGERS’ REPORT (continued)
GEOGRAPHIC REVIEW
The geographical split of the portfolio, on a look-through
basis, shows Australia and New Zealand increasing to
37.6% of UIL’s total investments (30 June 2020: 25.6%);
Bermuda reduced by 11.3% from 16.4% as at 30 June
2020 to 5.1% as at 30 June 2021; Europe reduced by
5.3% from 8.1% to 2.8% of the total portfolio. The UK
and North America nearly doubled to 18.6% and 9.8%
as at 30 June 2021 from 10.4% and 4.0% respectively.
The increase in Australia reflects the rise in value of
Resimac held through Somers. Exposure to Bermuda
reduced following the sale of Ascendant and One
Communications. Europe halved following the sale of
Optal, while North America reflected the impressive
share price increase from the Canadian copper
investment, Copper Mountain.
SECTOR REVIEWS
Financial Services – 42.7% (30 June 2020: 26.9%)
Somers is UIL’s largest investment and accounted for
42.7% of UIL’s total investments as at 30 June 2021 (30
June 2020: 26.8%). As already noted, the increase in
Resimac’s valuation has driven Somers’ NAV gains.
Technology – 17.0% (30 June 2020: 18.0%)
UIL holds a number of early-stage investments in the
technology and pharmaceutical sector, both directly
and through Allectus (its sixth largest investment), ICM
Mobility (fourth largest holding) and Starpharma (UIL’s
eighth largest investment). However, UIL’s technology
exposure reduced in absolute amount during the
year following the sale of Optal and continued sales in
Afterpay.
Resources (excl. gold mining) – 15.3% (30 June 2020:
11.9%)
UIL’s largest investment in resources is Zeta, which
accounted for 17.1% of the total portfolio as at 30 June
2021 (30 June 2020: 14.5%). Zeta has seen a strong run
in its copper investment, Copper Mountain, which is
benefiting from both improved operating performance,
rising copper prices and therefore operational gearing.
Infrastructure Investments – 12.7% (30 June 2020:
23.0%)
UIL has amalgamated the infrastructure and
utility sectors into one and this now consists of
Telecommunications, Infrastructure, Electricity, Ports,
Road & Rail, Oil & Gas, Renewables, Water & Waste
and Airports. This sector reduced as a result of selling
Ascendant and One Communications. Today UIL’s
infrastructure exposure is largely through UEM.
Gold Mining – 6.5% (30 June 2020: 15.3%)
UIL’s largest investment in gold mining is in Resolute,
which is held both directly by UIL (4.8% of the total
portfolio) and indirectly through Zeta. In addition, Zeta
holds 69.5% of Horizon Gold Limited, an Australian gold
mining exploration company.
LEVEL 3 INVESTMENTS
UIL’s investments in level 3 companies nearly doubled in
the year to 30 June 2021 from 36.3% as at 30 June 2020
to 59.8%, mainly as a result of Somers being reclassified
as level 3. While Somers remains listed on the Bermuda
Stock Exchange (“BSX”), in view of the low level of
transactional volume in Somers shares, UIL moved this
asset from level 2 to level 3. See notes 9 and 29 to the
accounts for further information.
COVID-19
The Board has suspended all travel and physical
meetings and moved to holding Board and Committee
meetings by video conference; this looks likely to
continue into 2022.
Currently, the Investment Managers have a work from
home policy in place across its offices and a “ban” on
corporate travel. While it is hoped this will change in
the future, ICM is prepared for ongoing restrictions as
required. ICM offices are therefore largely closed. ICM
has benefited from having offices in the key time zones
of Asia, Europe and the Americas, and from its existing
cloud-based infrastructure platform. ICM has developed
a process and approach to ensure information is
gathered and acted upon in an efficient and timely
manner.
GEARING
As a result of the strong portfolio performance and
the redemption of the 2020 ZDP shares, gearing nearly
halved to 48.8% as at 30 June 2021 from 93.4% as at
30 June 2020. This is well inside UIL’s target gearing of
under 100.0%. At an absolute level UIL’s debt reduced to
£180.6m from £231.7m as at 30 June 2020, a reduction
of £51.1m.
DEBT
Bank debt of £51.2m as at 30 June 2020 reduced to
£48.5m as at 30 June 2021. This was drawn in Australian
Dollars, Euros and US Dollars. Scotiabank’s £50.0m
committed senior secured multi-currency revolving
matures on 30 September 2022.
REVENUE RETURNS
Group revenue income reduced to £11.6m from £12.7m,
a reduction of 8.9%. This largely reflects the sale of
Ascendant, One Communications and Optal in the year.
Management and administration fees and other
expenses were down by 21.4% at £2.1m (30 June 2020:
£2.6m). Finance costs reduced significantly by 38.0%
to £1.0m (30 June 2021: £1.6m) reflecting lower average
borrowing costs.
Revenue profit was unchanged at £8.5m (30 June 2020:
£8.5m) while EPS increased 2.1% to 9.98p (30 June 2020:
9.77p) driven mainly by a lower average weighted
number of ordinary shares following share buybacks.
CAPITAL RETURNS
Capital total income was positive at £122.7m (30 June
2020: loss of £60.2m).
There was no performance fee accrued in the year to 30
June 2021.
The continuing reduction of financing costs, with the
blended interest rate of debt reducing from 6.3% in June
2013 to 4.5% as at 30 June 2021, is pleasing. In the year
to 30 June 2021 the finance costs were £9.6m, down
19.5% on the prior year’s £11.9m. This should continue
next year owing to lower average interest costs and
lower debt levels.
ZDP SHARES
On a consolidated basis the ZDP shares decreased
from £180.5m to £132.1m, mainly as a result of the
£60.4m redemption of the 2020 ZDP shares in October
2020. This is a significant step for UIL as it reduced the
absolute level of debt, resulting in lower gearing and
helping to reduce the blended cost of funding to 4.5%
per annum.
UIL extended its ZDP maturity by establishing a
new class of 25.0m 2028 ZDP shares. The 2022 ZDP
shareholders were offered the opportunity to roll over
into the 2028 ZDP shares and the balance was offered
to external investors. The 2022 ZDP shareholders
elected to roll into 19.8m 2028 ZDP shares, 4.6m was
placed with institutional and other investors and 0.6m
was subscribed for by UIL. With four issues, UIL has
successfully spread the redemptions over seven years
and reduced the 2022 ZDP redemption to £52.3m.
UIL held 2.4m 2026 ZDP shares at market value as at
30 June 2020 and this increased to 3.1m shares held as
at 30 June 2021.
CURRENCY MOVEMENTS vs STERLING
from 30 June 2020 to 30 June 2021
115
110
105
100
95
Jun 20
Aug 20
Oct 20
US Dollar
Dec 20
Euro
Feb 21
Apr 21
Jun 21
Australian Dollar
Rebased to 100 as at 30 June 2020
Source: Bloomberg
18
19
UIL LimitedReport and Accounts for the year to 30 June 2021 INVESTMENT MANAGERS’ REPORT (continued)
OUR INVESTMENT APPROACH
Finance costs reduced by 16.6% to £8.6m (30 June 2021:
£10.3m) reflecting the lower number of ZDP shares in
issue and lower average borrowing costs.
The resultant gain for the year to 30 June 2021 on
the capital return was £114.1m (30 June 2020: loss of
£70.5m) and EPS gain was 133.81p (30 June 2020: loss of
81.30p).
EXPENSE RATIO
The ongoing charges figure, excluding performance
fees, was 2.3% as at 30 June 2021 and the ongoing
charges figure, including performance fees paid in UIL’s
platform companies, was 4.6%. No performance fee was
earned at UIL level.
All expenses are borne by the ordinary shareholders.
Charles Jillings
ICM Investment Management Limited and ICM Limited
22 September 2021
ICM is a long-term investor and generally operates
focused portfolios with narrow investment remits.
ICM has several dedicated research teams who have
deep knowledge and understanding in their specific
sectors, which improves the ability to source and
make compelling investments. ICM has approximately
USD 2.9bn of assets directly under management and
is responsible indirectly for a further USD 23.2bn of
assets in subsidiary investments.
ICM looks to exploit market and pricing opportunities
and concentrates on absolute performance. The
investments are not market index driven and the
investment portfolio comprises a series of bottom-up
decisions. ICM typically does not participate in either
an IPO or an auction unless there is compelling value.
ICM also looks for disruption and the opportunities it
can unlock in both existing and new business models
in areas such as block chain through to digital finance
and through technological shifts in all business
sectors.
UIL seeks to leverage ICM’s investment abilities to
both identify and make investments across a range of
industries. New investments usually offer an attractive
valuation with strong risk/return expectations at the
time of investment.
When reviewing investment opportunities, as part of
the investment process ICM will look to understand
the material ESG factors. ICM incorporates ESG factors
into the investment process in three key ways.
• Understanding: in-depth analysis of the key issues
that face potential and current holdings, as well as
a deep understanding of the industry in which they
operate.
• Integration: incorporate the output of the
‘Understanding’ component detailed above into the
full company analysis to ensure a clear and complete
picture of the investment opportunity is obtained.
• Engagement: engage with investee companies on
the key issues on a regular basis, both virtually and
on location, where possible, to discuss and identify
any gaps in their ESG policy to further develop and
improve their ESG disclosure and implementation.
S
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SUPERIOR, CONSISTENT PERFORMANCE
Long Term
Deep Value
Cash
Generative
Bottom-Up
Approach
Active Investors
Investee
Relationships
Detailed
Company
Knowledge
Extensive
Industry
Experience
Sector Focused
DEEP SECTOR KNOWLEDGE
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UIL LimitedReport and Accounts for the year to 30 June 2021
MACRO TRENDS AFFECTING OUR PORTFOLIO
COVID-19 DISRUPTION
RESOURCES
• Disruptions to both production and demand causing increased volatility.
• Countries having to learn to operate with additional or extended shutdowns from
subsequent “waves” in Covid-19 cases.
• Roll out of vaccination programs helping countries to ‘manage’ living with the
coronavirus.
ENVIRONMENTAL POLICY
• Climate change is now an accepted reality with significant direct and indirect effects on
humankind and the global economy.
• Governments and intergovernmental organisations have initiatives in place targeting
reductions in the impact of man-made emissions on climate change.
• Major emissions contributors such as the power and transport sectors are seeing a
radical shift away from the most polluting technologies.
• Renewables, battery storage, electric vehicles and waste treatment are key areas of
development and are increasingly commercial without subsidies.
• Impact of urbanisation growth increases problems such as air and water pollution in
cities, leading to related health and economic risks.
FINANCIALS
GEOPOLITICS AND GLOBALISATION
• Increased political tensions and populism are leading to a rising level of nationalism and
DIGITALISATION
protectionism, unwinding several decades of global supply chain integration.
• Protectionism is resulting in higher tariffs and barriers to trade, negatively impacting
global GDP and increasing non-productive friction in economies.
• Trade flows and external deficits or surpluses are being rebalanced in many countries,
with commensurate effects on foreign exchange and local economies.
• The changing dynamics of trading bloc relationships are resulting in significant shifts in
transport and logistics value chains, and associated infrastructure.
GOVERNANCE AND TRANSPARENCY
• Effective governance remains fundamental to long-term investment performance.
Corporates with strong governance are consistently demonstrating their ability to
navigate economic uncertainty.
• Economies with robust political and institutional structures are inherently more
attractive for investment and constant monitoring for any changes to these is necessary.
• The rise of social media and information exchange have elevated the importance of
transparency. Opaque business practices face growing scrutiny.
• Sophistication and frequency of cyber-attacks in the spotlight, increase in enforcement
of material financial and civil penalties related to cyber-crime and inadequate protection
of consumer data, additional concerns over voice, facial and other biometric protocols.
• Rise of electric vehicles and renewables expected to increase long term demand for
several commodities, including nickel, copper, lithium and graphite.
• Unprecedented increase in global government debt, low/negative interest rates, and
record government spending driving gold investment as protection from flat money
inflation.
• Reopening of economies following increased vaccination rates and removal of lockdown
restrictions has seen short-term oil demand move higher, with limited recent investment
in new oil field developments likely to sustain pricing in the long term.
• Heightened risk to global economy, and thus demand for industrial commodities, due to
increased government, corporate and consumer debt levels and global pandemic.
• Changing demographics and improved financial sophistication of individuals are altering
the demand for traditional financial services products, whilst providing a fertile ground
for innovation, e.g. Buy-Now, Pay-Later and e-commerce.
• Emphasis on individual responsibility for savings and investments, particularly due to
the inability of government and companies to support pension provision schemes.
• Digitalisation means greater use of big data and artificial intelligence (AI),
e.g. introduction of open banking will improve financial product efficiency.
• Digitalisation has accelerated from disruption of business processes and procedures.
• 5G mobile and fibre broadband rollout presents opportunities for businesses and
benefits to people driven by enhanced applications in sectors including e-commerce,
e-government, online education, telemedicine, communications and media.
• Innovative solutions in fintech disintermediating traditional financial sector business
models to offer more efficient and secure solutions for payments, credit, investment, tax
collection and insurance.
• The increased use of connected sensors, cloud storage and data processing with
machine learning techniques will drive new applications to optimise and further
automate manufacturing, healthcare, security and transport infrastructure.
EMERGING MARKETS – URBANISATION AND GROWING MIDDLE CLASS
• Trend in emerging markets shows migration to cities, seeking a higher standard of living
and higher income opportunities. This requires significant investment in supporting
infrastructure, such as roads, metros, railway, electricity networks and sanitation.
• Rising income and social characteristics of emerging middle-class populations result in
higher overall consumption and greater propensity to purchase durable goods.
• Emerging middle class increasingly demand a higher degree of public services and a
greater focus on quality of life, including education, environmental conditions, tourism
and accountability from governmental institutions.
22
23
UIL LimitedReport and Accounts for the year to 30 June 2021 TEN LARGEST HOLDINGS
THE VALUE OF THE TEN LARGEST
HOLDINGS REPRESENTS
THE VALUE OF FIXED INCOME
SECURITIES REPRESENTS
THE TOTAL NUMBER
OF COMPANIES INCLUDED IN THE
PORTFOLIO IS
97.6%
6.7%
26
(2020: 93.8%) OF THE
GROUP’S TOTAL INVESTMENTS
(2020: 15.0%) OF THE GROUP’S
PORTFOLIO
(2020: 40 COMPANIES)
Somers is a financial services investment holding company, whose
shares are listed on the BSX. Somers is managed by ICM.
Somers shareholders’ equity was USD 679.4m as at 30 June 2021 (30 June
2020: USD 371.0m) and Somers’ NAV per share of USD 31.18 was up 77.1% for
the year. Somers declared dividends of 55.0c up from 51.0c in the prior year.
Somers is classified as an investment company under IFRS 10 and, accordingly,
values its underlying investments at fair value. As at 30 June 2021, Somers’ four
largest investments, which make up 86.1% of its portfolio, were a 62.3% holding
in Resimac, a leading non-bank Australian financial institution, with AUD 15.8bn
assets under management (“AUM”), a 100% shareholding in BCB (one of the
four licensed banks in Bermuda), a 64.4% shareholding in PCF Group plc, a UK
specialist bank, and a 62.3% holding in Waverton Investment Management
Limited (a UK wealth manager with over £11.5bn assets under influence).
Somers’ largest investment, Resimac, reported AUM of AUD 15.8bn, and
announced profit after tax for the year of AUD 107.6m (prior year: AUD 56.0m).
In July 2021, Somers announced that it had completed the sale of BCB and that
Somers will use the consideration received on completion to reduce its debt
and for investment purposes. In the year to 30 June 2021, UIL’s shareholding in
Somers increased by 3.6%.
Zeta is a resource-focused investment company, which is listed on the
ASX. Zeta is managed by ICM.
In the year ended 30 June 2021, Zeta’s net assets per share rose by 97.8%.
Zeta’s share price closed the year at a discount of 14.8% (prior year: 6.4%
premium) to net tangible assets per share. Apart from gold, the commodity
prices of Zeta’s major underlying investments rose strongly, with copper
up 58.3%, aluminium up 57.1%, gold down 0.6%, and nickel up 42.8%. The
standout performer was Copper Mountain, whose share price rose over
400% during the year. The price of copper rose strongly with a recovery in
demand after the initial shock of the Covid-19 pandemic, while operational
improvements at Copper Mountain’s mine in British Columbia resulted in
strong production and cash flows. As a leveraged commodity company,
the value of Zeta’s net assets typically rises more when commodity prices
rise, while falling more when commodity prices fall as the impact on mining
companies is magnified. In September 2020 Zeta issued new options on a
one-for-one basis with an exercise price of AUD 0.25 and an expiry date of 15
June 2021. Almost 97.0% of the options were exercised (including those owned
by UIL), with the majority of the proceeds being used to reduce debt. Zeta has
a concentrated portfolio, having built up cornerstone shareholdings in copper,
bauxite, gold and nickel companies.
In the year to 30 June 2021, UIL’s shareholding in Zeta doubled due to the
options being exercised.
1
2
VALUATION
109.2%
Sector
Fair Value
£’000s
Financial
Services
230,661*
% of total
investments
42.7%
SHARE PRICE
117.6%
Sector
Resources
Fair Value
£’000s
92,160*
% of total
investments
17.1%
* includes equity and debt
24
25
UIL LimitedReport and Accounts for the year to 30 June 2021 TEN LARGEST HOLDINGS (continued)
3
4
SHARE PRICE
26.4%
Sector
Investment
Fund
Fair Value
£’000s
80,648
% of total
investments
14.9%
SHAREHOLDING
39.8%
Sector
Technology
Fair Value
£’000s
41,904
% of total
investments
7.8%
UEM is a closed-end investment trust, whose ordinary shares are listed
on the premium segment of the Official List of the Financial Conduct
Authority and are traded on the Main Market of the London Stock
Exchange (“LSE”).
UEM is managed by ICM and ICMIM and invests predominantly in emerging
markets with a focus on infrastructure and utility assets. In the twelve months
to 30 June 2021, UEM’s NAV total return increased by 23.9%, modestly behind
the MSCI Emerging Markets Total Return Index (Sterling adjusted) which was
up 26.4% during the same period. This performance reflects the recovery
of sentiment towards emerging markets economies from the pandemic-
induced nadir of 2020. The relative underperformance of UEM versus the
MSCI Emerging Markets Index mostly reflects the heavy weighting of the latter
towards technology companies, in which UEM has limited exposure, which
performed very strongly in the first six months of the year. The gap in relative
performance narrowed significantly in the latter half of the year.
It was pleasing to see that, notwithstanding the economic impact of Covid-19,
UEM’s investee companies have delivered resilient earnings and continued
dividend payments, with UEM’s dividend fully covered by income. In the year
to June 2021, UEM’s share price increased by 26.4%, with the discount to NAV
narrowing from 15.6% to 10.8%. Dividends per share increased to 7.775p from
7.575p. UIL’s shareholding in UEM decreased by 2.1% during the year under
review.
ICM Mobility is an unlisted investment company focused on the
mobility sector, covering private and public transport.
ICM Mobility invests in and partners with companies shaping the digital
transformation of the mobility sector, from planning journeys and issuing smart
tickets to streamlining electronic payments and providing insights.
As at 30 June 2021, ICM Mobility had a number of investments including
VixTech (an innovative, multi-modal automated fare collection platform that
unifies account-based, closed loop and open payments into a single solution
that is easy to deploy, operate and manage); Kuba (a modern and efficient and
scalable ticketing solution provider offering a ticketing service which can be
customised to any transportation system); Snapper Services (provides service
based solutions designed to improve the customer experience and flexibility
of transport ticketing systems), Littlepay (offers a mass transit transaction
payment solution for transit operators, authorities and agencies) and Unwire
(aggregates transit services and enables users to seamlessly plan, book and
pay for their multimodal journeys).
5
6
SHARE PRICE
55.1%
Sector
Gold Mining
Fair Value
£’000s
25,841
% of total
investments
4.8%
VALUATION
6.2%
Sector
Technology
Fair Value
£’000s
21,412
% of total
investments
4.0%
Resolute is an Australian domiciled gold mining company, listed on both
the ASX and the LSE and has two operating mines: the Syama mine in
southern Mali; and the Mako mine in Senegal.
Resolute’s share price in the twelve months to 30 June 2021 fell 55.1% despite
the gold price being almost unchanged. During the year, Resolute encountered
a number of setbacks. Political issues in Mali manifested in industrial action
at Resolute’s Syama mine and a VAT dispute with the government remains
unresolved. In Ghana, the government stepped in to prevent the sale of
Resolute’s Bibiani mine to a Chinese firm and Resolute ended up selling Bibiani
to a Canadian company for USD 15.0m less than the sale price agreed with
the Chinese company. Meanwhile, operating results failed to meet guidance
with lower grades resulting in lower volumes and higher unit costs. Production
in the financial year to 31 December 2020 of c. 395,000oz gold was well
below initial guidance of 500,000oz. The average gold price realised during
the year was below spot prices due to hedges contracted earlier, at the time
of a new debt facility. The management team at Resolute has been changed
substantially, with a new CEO, COO and CFO all appointed in the last three
months. Guidance for Resolute’s operations for the year ending 31 December
2021 has recently been revised down to 315,000 ounces at an all-in sustaining
cost of between USD 1,290 and USD 1,365 per ounce. As at 30 June 2021,
Resolute had cash and bullion on hand of USD 88.8m (prior year: USD 87.5m),
and total borrowings of USD 308.6m (prior year: USD 307.0m).
UIL’s shareholding in Resolute decreased 6.1% in the period under review.
Allectus is managed by ICM and is an unlisted investment company with
a growth focused portfolio of technology businesses in the Asia Pacific,
US and UK.
Allectus mainly invests in growth stage companies involved in potentially
disruptive technologies. Its key industry verticals comprise fintech, AI, digital
health and deep tech. Allectus also maintains a selective approach to high
conviction opportunities in early-stage technology, which leverage its global
relationships and synergies with other portfolio companies in the ICM Group.
In the half-year to 30 June 2021, Allectus made follow on commitments to
support and grow existing investees including The Clinician (New Zealand
headquartered, patient health reporting platform), Own Solutions (EU based
payment services and digital cash provider) and Hoolah (Singapore based
buy now, pay later provider). New investments included funding of GeoX
Innovations (Israeli based company leveraging geospatial imagery for the
insurance market), LifeQ Global (US based, health-tech provider of biometrics
and health information) and Patch’d (US based deep tech company predicting
the onset of sepsis).
Allectus is currently focused on expanding its deep tech and digital health
mandates, which it believes is of growing importance in a post pandemic world.
Growing competition and expanding valuations in the fintech and AI sectors
seen in 2021, suggest that the identification of undervalued companies with
product-market fit, and strong go-to-market strategy will be key going forward.
26
UIL Limited
Report and Accounts for the year to 30 June 2021
27
TEN LARGEST HOLDINGS (continued)
7
8
SHARE PRICE
15.3%
Sector
Technology
Fair Value
£’000s
10,658
% of total
investments
2.0%
SHARE PRICE
32.6%
Sector
Pharmaceuticals
Fair Value
£’000s
9,979
% of total
investments 1.8%
Orbital is a Perth, Australia based manufacturer of propulsion systems
for unmanned aerial vehicles which are used for military surveillance
purposes.
Orbital’s engines contain a unique fuel injection system for heavy fuels. This
gives them a strong advantage over competitive technologies which require
more specialist fuels, more regular servicing and which typically have lower
performance. Orbital sells its products to defence contractors, such as
Insitu, a subsidiary of Boeing and Northrup Grumman.
Orbital deepened its relationship with Lycoming Engines, signing a new
development and supply agreement and delivering a prototype engine.
Orbital also delivered a prototype engine to a Singapore based defence
contractor for evaluation. However, orders from its core customer, Insitu
were below expectations at the beginning of the year and revenues for the
full year to 30 June 2021 came in at the low end of revised management
guidance and 7.7% lower than the prior year. Orbital expects to generate
similar revenues in the full year to 30 June 2022.
UIL’s shareholding in Orbital was unchanged in the year to 30 June 2021.
Starpharma is a global biopharmaceutical company, specialising in the
research, development and commercialisation of dendrimer products
for pharmaceutical applications worldwide.
Starpharma has two main areas of focus: Antiviral and Dendrimer Drug
Delivery (“DEP”). The antiviral portfolio consists of SPL7013, which is used in
Vivagel, a treatment of bacterial vaginosis; and Viraleze, a nasal spray which
has demonstrated significant antiviral activity against SARS-CoV-2 with 99.9%
effectiveness in laboratory studies against the alpha, beta, gamma and
delta variants. In addition, a clinical safety study with 40 healthy volunteers
showed that the nasal spray was safe and well tolerated. Viraleze is registered
for sale in Europe and India while Vivagel is registered in over 45 countries.
Starpharma’s portfolio of DEP therapies is being used to improve current
pharmaceuticals, by reducing toxicities and enhancing their performance. DEP
drugs are being developed both internally and through partnered programs,
with an emphasis on anti-cancer therapies. Internally developed DEP therapies
are now in clinical trials as follows: DEP Docetaxel in phase 2, DEP Cabazitaxel
in phase 2 and DEP Irinotecan in phase 2. Partnered drugs include AZD0466
with AstraZeneca, which is being trialled in several haematologic cancers
and solid tumours, and partnership with Merck using its DEP technology for
dendrimer-based antibody drug conjugates for cancer therapy.
In its year ending 30 June 2021, Starpharma reported revenues of AUD 3.6m,
47.0% lower than the previous year. Revenues were higher last year due
to the inclusion of a AUD 3.0m payment from AstraZeneca. Starpharma’s
cash balance as at 30 June 2021 was AUD 60.5m. The net cash-burn for the
financial year was AUD 16.5m (30 June 2020: AUD 11.2m) excluding the AUD
46.9m of equity raising net proceeds. During the period, UIL’s shareholding in
Starpharma increased 11.2%.
SHARE PRICE
493.8%
Sector
Financial
Services
Fair Value
£’000s
7,120
% of total
investments
1.3%
9
10
SHARE PRICE
40.9%
Sector
Manufacturing
Fair Value
£’000s
6,704
% of total
investments
1.2%
AssetCo is a UK listed company which is focused on acquiring, managing
and operating asset and wealth management activities
and interests, together with other related services.
AssetCo was previously involved in the provision of management and
resources to the fire and emergency services in the Middle East. In late 2020,
AssetCo was paid approximately £28.6m following the conclusion of a court
case with Grant Thornton. Following the settlement of this case, AssetCo
completed a tender offer and UIL tendered 0.7m shares at £4.11 per share.
In January 2021, AssetCo announced that Martin Gilbert, Peter McKellar,
various associates, and funds managed by Toscafund Asset Management,
a multi asset fund manager, had acquired a minority holding of 29.8% in
AssetCo, and it was to change its strategy and become an asset and wealth
management business.
In February 2021 AssetCo increased its holding in River & Mercantile
to 5.9% and subsequently has made further acquisitions including: the
acquisition of Saracen Fund Management, an independent, FCA regulated,
fund management business based in Edinburgh. Post the year end, AssetCo
acquired a 30% equity interest in Parmenion Capital Partners LLP a FCA
registered, B2B fund investment and advisory platform for the wealth
and IFA sector, and a 63.0% equity interest in Rize ETF Ltd, Europe’s first
specialist thematic Exchange Traded Fund (“ETF”) issuer and one of the
fastest growing providers of ETFs in the rapidly growing thematic ETF
segment of the asset management industry.
Sindoh is listed on the Korea Stock Exchange and is a manufacturer of
multifunction printers and 3D printers based in Korea.
Sindoh is a leading original design manufacturer of multifunction printers
where it designs and manufactures products for global printing companies
including Ricoh, Konica Minolta and Xerox. Sindoh also manufactures and
sells its own branded 3D printers, multifunction printers and printing
supplies. Sindoh has three manufacturing facilities located in Korea, China
and Vietnam.
Sindoh has undertaken substantial restructuring over the past year, allowing
Sindoh to maintain its cost-competitiveness in an industry facing headwinds
from a shift towards digital documentation. Sindoh is beginning to see the
benefits of the restructure with a return to profit in the first quarter of 2021.
Sindoh is now turning its focus to growth with the launch of its first
industrial-sized 3D printer early this year. Sindoh’s research and
development team are focused on developing metal-based industrial-
sized 3D printers with a target date for launch in three years which Sindoh
believes will revolutionise the manufacturing sector.
Sindoh’s share price responded positively, increasing 40.9% in the twelve
months to 30 June 2021.
28
UIL Limited
Report and Accounts for the year to 30 June 2021
29
ZDP SHARES
ZDP SHARES(1)
2020 ZDP shares (pence)
Capital entitlement (2) per ZDP share
ZDP share price
2022 ZDP shares (pence)
Capital entitlement (2) per ZDP share
ZDP share price
2024 ZDP shares (pence)
Capital entitlement (2) per ZDP share
ZDP share price
2026 ZDP shares (pence)
Capital entitlement (2) per ZDP share
ZDP share price
2028 ZDP shares (pence)
Capital entitlement (2) per ZDP share
ZDP share price
(1) Issued by UIL Finance, a wholly owned subsidiary of UIL
(2) See pages 57 and 58
GEARING/NAV TOTAL RETURN
from 30 June 2014 to 30 June 2021
n/a
n/a
135.56
139.50
118.51
120.50
116.78
116.00
101.06
100.00
151.23
152.00
127.59
126.50
113.13
105.50
111.21
92.25
n/a
n/a
n/a
n/a
6.2
10.3
4.8
14.2
5.0
25.7
n/a
n/a
1,000
(
p
e
n
c
e
)
900
800
700
600
500
400
300
200
100
0
)
%
(
160
140
120
100
80
60
40
20
0
Jun 14
Jun 15
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
Gearing
NAV total return*
*Rebased to 100 as at 14 August 2003
Source: ICM
TOTAL ZDP SHARES
ISSUED
TOTAL ZDP SHARES
REDEEMED
£378.5m
£414.2m
30 June
2021
30 June
2020
% change
2021/20
TOTAL BORROWINGS
Jun 2014
£’000s
Jun 2015
£’000s
Jun 2016
£’000s
Jun 2017
£’000s
Jun 2018
£’000s
Jun 2019
£’000s
Jun 2020
£’000s
Jun 2021
£’000s
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
Total
76,138
77,928
58,427
83,493
62,816
26,132
61,327
67,548
28,134
40,352
72,622
48,704
52,452
50,858
51,940
55,873
29,408
11,275
55,387
59,499
31,582
13,474
59,087
63,407
33,250
24,791
48,052
34,996
25,299
23,726
212,493
172,441
197,361
173,778
199,354
159,942
180,535
132,073
Bank and other debt
25,649
34,362
24,987
47,846
28,495
50,971
54,660
48,761
Total debt
238,142
206,803
222,348
221,624
227,849
210,913
235,195
180,834
Blended interest rate %
6.8
6.5
6.5
6.2
6.1
5.5
5.2
4.5
Source: ICM
ZDP SHARES – TIMES COVERED BY UIL’S GROSS ASSETS*
Jun
2014
3.96
2.08
1.47
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
Jun
2015
Jun
2016
Jun
2017
Jun
2018
Jun
2019
Jun
2020
Jun
2021
2.95
1.80
1.52
5.13
2.68
2.18
1.60
3.51
2.38
1.72
6.50
3.71
2.44
1.84
1.63
4.92
2.97
2.42
2.08
4.23
2.58
2.11
1.81
5.41
3.83
3.03
2.50
* Gross assets divided by the aggregate redemption liabilities of the ZDP shares and any bank debt or other borrowings ranking in priority to the ZDP
shares.
Source: ICM
TOTAL ZDP AND
BANK AND OTHER DEBT
AS AT 30 JUNE 2021
GEARING AS AT
30 JUNE 2021
TOTAL DEBT
REDUCTION DURING
THE YEAR
AVERAGE COST OF
DEBT FUNDING
£180.6m
48.8%
£54.4m
4.5%
30
30
UIL Limited
Report and Accounts for the year to 30 June 2021
31
UIL Limited
STRATEGIC REPORT
PRINCIPAL ACTIVITY
UIL carries on business as an investment company and
its principal activity is portfolio investment.
INVESTMENT OBJECTIVE
UIL’s investment objective is to maximise shareholder
returns by identifying and investing in investments
worldwide where the underlying value is not reflected in
the market price.
STRATEGY AND BUSINESS MODEL
UIL invests in accordance with the objective set
out above. The Board is collectively responsible to
shareholders for the long-term success of the Company.
Since the Company has no employees, it outsources
its activities to third party service providers, including
the appointment of external investment managers to
deliver investment performance. The Board oversees
and monitors the activities of the service providers with
the Board setting investment policy and risk guidelines,
together with investment limits.
ICMIM, an English incorporated company authorised
and regulated by the Financial Conduct Authority (“FCA”)
as an alternative investment fund manager (“AIFM”)
pursuant to the AIFM Regulations, is the Company’s
AIFM and joint portfolio manager alongside ICM. The
investment team responsible for the management of the
portfolio is headed by Duncan Saville and Charles Jillings.
ICMIM and ICM, operating under guidelines determined
by the Board, have direct responsibility for the decisions
relating to the day to day running of the Company
and are accountable to the Board for the investment,
financial and operating performance of the Company.
Other service providers include JP Morgan Chase Bank
N.A. – London Branch which provides administration
services, JPMorgan Chase Bank N.A. – Jersey which
provides custodial services, J.P. Morgan Europe Limited
(“JPMEL”) which acts as the Company’s Depositary under
the AIFM Directive and Computershare Investor Services
which acts as registrar. ICM has also been appointed
Company Secretary.
INVESTMENT POLICY
UIL’s investment policy is to identify and invest
in opportunities where the underlying value is
not reflected in the market price. This perceived
undervaluation may arise from factors such as
technological change, market motivation, prospective
financial engineering opportunities, competition,
underperforming management or shareholder apathy.
UIL aims to maximise value for shareholders through
a relatively concentrated portfolio of investments
including separate closed end investment companies
(“Platforms”) which have been or will be established to
focus on investments in dedicated market sectors.
UIL has the flexibility to invest in shares, bonds,
convertibles, and other types of securities, including
non-investment grade bonds and to invest in unlisted
securities. UIL may also invest in other investment
companies or vehicles, including any managed by the
Investment Managers, where such investment would be
complementary to UIL’s investment objective and policy.
UIL may also use derivative instruments such as
American Depositary Receipts, promissory notes,
foreign currency hedges, interest rate hedges, contracts
for difference, financial futures, call and put options
and warrants and similar instruments for investment
purposes and efficient portfolio management, including
protecting UIL’s portfolio and balance sheet from major
corrections and reducing, transferring, or eliminating
investment risks in its investments. These investments
will be long term in nature.
UIL has the flexibility to invest in markets worldwide
although investments in the utilities and infrastructure
sectors are principally made in the developed markets
of Australasia, Western Europe, and North America, as
UIL’s exposure to the emerging markets infrastructure
and utility sectors is primarily through its holding in
UEM. UIL has the flexibility to invest directly in these
sectors in emerging markets with the prior agreement
of UEM.
UIL believes it is appropriate to support investee
companies with their capital requirements whilst at
the same time maintaining an active and constructive
shareholder approach through encouraging a review
of the capital structure and business efficiencies. The
Investment Managers’ team maintains regular contact
with investee companies and UIL may often be among
the largest shareholders. There are no limits on the
proportion of an investee company that UIL may hold
and UIL may take legal or management control of a
company from time to time.
32
32
UIL Limited
There will be no material change to the investment
policy (including the investment limits and the borrowing
limits) without the prior approval of shareholders. Any
such change would also require the approval of the ZDP
shareholders.
INVESTMENT LIMITS
The Board has prescribed the following limits on
the investment policy, all of which are at the time of
investment unless otherwise stated.
There are no fixed limits on the allocation of investments
between sectors and markets, however the following
investment limits apply:
• investments in unlisted companies will, in aggregate,
not exceed 25% of gross assets at the time that any
new unlisted investment is made. This restriction does
not apply to loans to Platforms;
• no single investment will exceed 30% of gross assets
at the time such investment is made, save that this
limit shall not prevent the exercise of warrants,
options or similar convertible instruments acquired
prior to the relevant investment reaching the 30%
limit. This restriction does not apply to investments in
any Platform; and
• no single investment in a Platform will exceed 50 per
cent. of gross assets at the time such investment
is made, save that this limit shall not prevent the
exercise of warrants, options or similar convertible
instruments acquired prior to the relevant investment
reaching the 50 per cent. limit and provided that no
single investment held by such Platform will exceed
30 per cent. of the gross assets at the time such
investment is made on a look-through basis.
None of the above restrictions will require the realisation
of any of UIL’s assets where any restriction is breached
as a result of an event outside of the control of the
Investment Managers which occurs after the investment
is made, but no further relevant assets may be acquired,
or loans made by UIL until the relevant restriction can
again be complied with.
BORROWING LIMITS
Under UIL’s Bye-laws, the Group is permitted to borrow
(excluding the gearing provided through the Group’s
capital structure) an aggregate amount equal to 100% of
its gross assets. Borrowings may be drawn down in any
currency appropriate for the portfolio.
However, the Board has set a current limit on gearing
(being total borrowings excluding ZDP shares measured
against gross assets) not exceeding 33.3% at the time
of draw down. Borrowings may be drawn down in
Sterling, US Dollars, or any currency for which there are
corresponding assets within the portfolio (at the time of
draw down, the value drawn must not exceed the value
of the relevant assets in the portfolio).
The Company has a £50.0m committed senior secured
multicurrency revolving facility with Scotiabank which
expires on 30 September 2022; as at 30 June 2021
£48.5m was drawn under this facility. Further details are
included in note 13 to the accounts.
DIVIDEND POLICY
The Board’s objective is to maintain or increase the
total annual dividend. Dividends are expected to be
paid quarterly each year in December, March, June
and September. In determining dividend payments,
the Board will take account of factors such as income
forecasts, retained revenue reserves, the Company’s
dividend payment record and Bermuda law. The Board
also has the flexibility to pay dividends from capital
reserves.
RESULTS AND DIVIDENDS
Details of the Company’s performance are set out in
the Investment Managers’ Report. The results for the
year ended 30 June 2021 are set out in the attached
accounts. The dividends in respect of the year, which
total 8.00p, have been declared by way of four interim
dividends.
KEY PERFORMANCE INDICATORS
Delivery of shareholder value is achieved through the
increase in capital value of the Company’s shares and by
its income return. The Board reviews performance by
reference to a number of Key Performance Indicators
(“KPIs”) that include the following:
• NAV total return relative to the FTSE All-Share Index
• Share price
• Share price discount to NAV
• Revenue earnings
• Ongoing charges figure
While some elements of performance against KPIs are
beyond management control, they provide measures
Report and Accounts for the year to 30 June 2021
33
UIL Limited STRATEGIC REPORT (continued)
of the Group’s absolute and relative performance and
are therefore monitored by the Board on a regular
basis. These KPIs fall within the definition of Alternative
Performance Measures under guidance issued by
the European Securities and Markets Authority and
additional information explaining how these are
calculated is set out on pages 110 and 111.
30 June
NAV total return (%)
2021
50.9
2020
(18.7)
FTSE All-Share total return Index (%)
21.5
(13.0)
Share price (pence)
268.00
177.50
Discount to NAV (%)
37.9
39.4
Percentage of issued shares bought
back during the year (based on opening
share capital) (%)
Revenue EPS (pence)
Ongoing charges figure – excluding
performance fees (%)
1.9
9.98
2.7
9.77
2.3
2.1
A graph showing the NAV total return performance
compared to the FTSE All-Share total return Index can
be found on page 3. The ten year record on page 112
shows historic data for the Company.
Discount to NAV: The Board monitors the premium/
discount at which the Company’s shares trade in relation
to the assets. During the year the Company’s shares
traded at a discount relative to NAV in a range of 23.3%
to 47.8% and an average discount of 38.7%. The Board
and the Investment Managers closely monitor both
movements in the Company’s share price and significant
dealings in the shares. On 26 July 2019, UIL announced
that the Board intends to focus on reducing the discount
of the ordinary shares, targeting a discount to NAV of
approximately 20% over the medium term. In order to
avoid substantial overhangs or shortages of shares in
the market the Board asks shareholders to approve
resolutions which allow for the buyback of shares and
their issuance which can assist in the management of
the discount. A total of 1,636,031 ordinary shares were
bought back and cancelled during the year, representing
1.9% of the Company’s opening issued share capital.
Earnings and dividends per share: As referred to
in “Dividend Policy” above, the Board’s objective is to
maintain or increase the total annual dividend. The
Board and the Investment Managers attach great
importance to maintaining dividends per share since
dividends form a key component of the total return to
shareholders.
The Board declared four quarterly dividends of 2.00p
per share in respect of the year ended 30 June 2021. The
fourth quarterly dividend will be paid on 30 September
2021 to shareholders on the register as at 3 September
2021. The total dividend for the year was 8.00p per
share (2020: 7.875p per share).
Ongoing charges: These are calculated in accordance
with the industry measure of costs as a percentage
of NAV. The expenses of the Company are reviewed
at every Board meeting, with the aim of managing
costs incurred and their impact on performance. The
ongoing charges figure appears high when compared
to other investment companies as the expenses are
expressed as a percentage of average net assets (after
the deduction of the ZDP shares) and comprises all
operational, recurring costs that are payable by the
Company or incurred within underlying investee funds.
This ratio is sensitive to the size of the Company as well
as the level of costs.
OVERVIEW OF THE INVESTMENT VALUATION PROCESS
In preparing UIL’s half-yearly and annual financial
accounts, the most important accounting judgements
and estimates relate to the carrying value of the unlisted
investments which are stated at fair value. As at 30 June
2021, 59.8% of UIL’s investment portfolio consisted of
level 3 investments that were valued using inputs that
were not based on observable market data. Given the
importance of this area to the integrity of the financial
reporting, the Board and the Investment Managers
carefully review the valuation policies and processes and
the individual valuation methodologies at each reporting
date. However, the valuation of unlisted securities
is inherently subjective, as it is made on the basis of
assumptions which may not prove to be accurate. As
detailed in note 29 to the accounts, small changes to
inputs may result in material changes to the carrying
value of the investments.
VALUATION PROCESS
UIL’s valuation policy is the responsibility of the Board,
with additional oversight and annual review from the
Audit & Risk Committee. The policy is reviewed at least
annually.
The valuation of the unlisted investments is the
responsibility of the Board, with valuation support and
analysis provided by the Investment Managers’ valuation
team. The investment portfolio is valued at fair value
and this is achieved by valuing each investment using
an appropriate valuation technique and applying a
consistent valuation approach for all investments.
The concept of fair value is key to the valuation process
and is defined as “the price that would be received to
sell an asset in an orderly transaction between market
participants at the measurement date” (International
Private Equity and Venture Capital (“IPEV”) guidelines,
December 2018).
Maximum use is made of market-based information and
the valuation methodologies used are those generally
used by market participants. Valuations are compliant
with IFRS fair value guidelines and guidelines issued by
the IPEV valuation board, which set out recommended
practice for fair valuing of unlisted investments
within the IFRS framework. The valuation of unlisted
investments requires the exercise of judgment, and
every effort is made to ensure that this judgment is
applied objectively and is not used to overstate or
understate the valuation result.
The Board reviews the unlisted valuations at each
meeting and in conjunction with UIL’s external financial
reporting process. The Board receives a detailed
report from the Investment Managers’ valuation
team recommending a proposed valuation for each
of UIL’s investments. The report includes details of
all material valuations, explanations for movements
and confirmation of the valuation process adopted.
Representatives of the Investment Managers are in
attendance at these meetings to answer any questions
the Board may have on the valuation process and the
choice of valuation techniques and inputs. The Board
reviews and challenges the assumptions behind the
unlisted asset valuations.
VALUATION METHODOLOGIES
The valuation of unlisted investments is normally
determined by using one of the following valuation
methodologies and, depending on the investment and
relevance of the approach, any or all of these valuation
methods could be used.
Earnings Multiples
This valuation methodology is used where the
investment is profitable and where a set of comparable
listed companies with similar characteristics to its
holding can be determined. As several investments are
not traded on an active market, the valuations are then
adjusted by a liquidity discount with the discount varying
depending on the nature of the underlying investment
entity and its sector and whether restrictions exist
on UIL’s ability to sell the asset in an orderly fashion.
In certain instances, UIL may use a revenue multiple
approach if this is deemed more appropriate.
It is UIL’s policy to use reported earnings adjusted for
non-recurring items, which are typically sourced from
the investee companies’ management accounts or
audited financial reports. In certain cases, current or
projected maintainable earnings provide a more reliable
indicator of the company’s performance and in these
instances an estimate of maintainable earnings is used
in the valuation calculation.
Multiples are derived from comparable listed companies
in the same business sector. Adjustments are made for
relative performance versus the comparables and other
company specific factors including size, product offering
and growth rates.
Discounted Cash Flow
This methodology may be used for valuing investments
34
UIL Limited
Report and Accounts for the year to 30 June 2021
35
STRATEGIC REPORT (continued)
with long term stable cash flows and uses maintainable
earnings discounted at appropriate rates to reflect the
value of the business. Generally, the latest historical
accounts are used unless reliable forecast results for the
current year are available. Earnings are adjusted where
appropriate for exceptional or non-recurring items.
Net Assets
This valuation technique derives the value of an
investment by reference to the value of its net assets.
This is used for investments whose value derives mainly
from the underlying fair value of their assets rather
than their earnings, such as unlisted fund investments,
property holding companies and other investment
businesses. In addition, this valuation approach may
also be used for investments that are not making an
adequate return on assets and for which a greater value
can be realised by liquidating the business and selling its
assets.
For unlisted investment companies and limited
partnerships, the fair value estimate is based on a
summation of the estimated fair value of the underlying
investments attributable to the investor. This fund NAV
approach may be used where there is evidence that the
valuation is derived using fair value principles and the
most recent available fund NAV may be adjusted to take
account of changes or events to UIL’s reporting date.
Recent Investments
For an initial or recent transaction, UIL may value its
investment using the recent transaction price for a
limited period following the transaction, where the
transaction price continues to be representative of fair
value.
Imminent Investment Realisation
Where realisation of an investment or a flotation of an
investment is imminent and the pricing of the relevant
transaction has been substantially agreed, a discount
to the expected realisation proceeds or flotation value
valuation technique is used. Judgement is applied as
to the likely eventual exit proceeds and certainty of
completion. This technique is only utilised where a sale
or flotation process is materially complete, and the
remaining risks are estimated to be small.
Note 29 to the accounts sets out more details on UIL’s
unlisted investments and the valuation methodologies
adopted.
VALUATION IMPACT OF COVID-19
The approach to valuations as at 30 June 2021 was
substantially consistent with UIL’s normal process and
valuation policy and the investment portfolio was valued
on a fair value basis, in line with IPEV guidance. However,
the Covid-19 pandemic has created a significant degree
of uncertainty and the valuation methodology for
unlisted investments has been enhanced to address
this issue. A broader range of inputs and approaches
to determine fair value was considered and, where
appropriate, adjustments have been made to valuations
based on the anticipated severity of the Covid-19 impact
on the individual business. It needs to be emphasised
that this is a very unusual event, which is still evolving,
and therefore there remains an elevated degree of
uncertainty in the valuations generated as at 30 June
2021. UIL’s valuation approach is consistent with the
IPEV special valuation guidance, issued in March 2020,
addressing the valuation approach during the Covid-19
pandemic.
PRINCIPAL RISKS AND RISK MITIGATION
During the year ended 30 June 2021, ICMIM was the
Company’s AIFM and had sole responsibility for risk
management subject to the overall policies, supervision,
review and control of the Board.
The Board considers carefully the Company’s principal
and emerging risks and uncertainties. It seeks to
mitigate these risks through regular review by the
Audit & Risk Committee of the Company’s risk register
which identifies the risks facing the Company and the
likelihood and potential impact of each risk, together
with the controls established for mitigation. Emerging
risks are considered at each Audit & Risk Committee
meeting. As required by the Association of Investment
Companies (“AIC”) Code of Corporate Governance,
the Board has undertaken a robust assessment of
the principal risks facing the Company. The Covid-19
pandemic, which emerged towards the end of the
Company’s previous financial year, gave rise to significant
challenges for businesses worldwide and the Board took
these into account as part of its assessment of risks to
the Company.
The principal risks and uncertainties currently faced by the Company and the controls and actions to mitigate those
risks, are described below. There have been no significant changes to the principal risks during the year.
KEY RISK FACTORS
INVESTMENT
RISK:
The risk that the
investment strategy
does not achieve
long-term positive
total returns for
the Company’s
shareholders.
MARKET RISK:
Adverse market
movements in the
prices of equity
and fixed interest
securities, interest
rates and foreign
currency exchange
rates and adverse
liquidity could lead to
a fall in NAV.
The Board monitors the performance of the Company and has established
guidelines to ensure that the approved investment policy is pursued by the
Investment Managers. The Board regularly reviews strategy in relation to a range of
issues including the balance between quoted and unquoted stocks, the allocation
of assets between geographic regions and sectors and gearing.
The investment process employed by the Investment Managers combines
assessment of economic and market conditions in the relevant countries with stock
selection. Fundamental analysis forms the basis of the Company’s stock selection
process, with an emphasis on sound balance sheets, good cash flows, the ability
to pay and sustain dividends, good asset bases and market conditions. In addition,
ESG factors are considered when selecting and retaining investments and political
risks associated with investing in specific countries are also assessed. Overall,
the investment process aims to achieve absolute returns through an active fund
management approach and the Board monitors the implementation and results of
the investment process with the Investment Managers.
The Company’s portfolio is exposed to equity market risk, interest rate risk, foreign
currency risk and liquidity risk. Adverse market conditions may result from factors
such as economic conditions, political change, climate change, natural disasters
and health epidemics. At each Board meeting the Board reviews the composition
of the portfolio, asset allocation, stock selection, unquoted investments and levels
of gearing and has set investment restrictions and guidelines which are monitored
and reported on by the Investment Managers.
The Company’s results are reported in Sterling, although the majority of its assets
are priced in foreign currencies and therefore any rise or fall in Sterling will lead,
respectively, to a fall or rise in the Company’s reported NAV. Such factors are
out of the control of the Board and the Investment Managers and may give rise
to distortions in the reported returns to shareholders. It can be difficult and
expensive to hedge some currencies.
KEY STAFF RISK:
DISCOUNT RISK:
Loss by the
Investment Managers
of key staff could
affect investment
returns.
The quality of the investment management team is a crucial factor in delivering
good performance. There are training and development programs in place for
employees and the remuneration packages have been developed in order to
retain key staff. Any material changes to the management team are considered by
the Board at its next meeting; the Board discusses succession planning with the
Investment Managers at regular intervals.
The Board monitors the price of the Company’s shares in relation to their NAV and
is focussed on reducing the discount at which they trade. The Board may agree to
buy back shares if there is a significant overhang of stock in the market; it targets a
discount to NAV of approximately 20% over the medium term.
The Company’s
shares may trade at
a discount to their
NAV and a widening
discount may
undermine investor
confidence in the
Company.
36
UIL Limited
Report and Accounts for the year to 30 June 2021
37
STRATEGIC REPORT (continued)
The Company’s main service providers are listed on page 109. The Audit & Risk
Committee monitors the performance and controls (including business continuity
procedures) of the service providers at regular intervals.
Most of UIL’s investments are held in custody for the Company by JPMorgan Chase
Bank N.A., Jersey with title documents for a small number of investments also being
held securely by Waverton Investment Management Limited (“Waverton”). JPMEL,
the Company’s depositary services provider, also monitors the movement of cash
and assets across the Company’s accounts.
The Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are
reported on by Independent Service Auditors, in relation to its administration,
custodial and information technology services.
The Board reviews the overall performance of the Investment Managers and all
the other service providers on a regular basis. The risk of cybercrime is high, as
it is with most organisations, but the Board regularly seeks assurances from the
Investment Managers and other service providers on the preventative steps that
they are taking to reduce this risk.
The ordinary shares rank behind bank debt and ZDP shares, making them a geared
instrument.
The gearing level is high due to the capital structure of the balance sheet. As at
30 June 2021, gearing on net assets, including bank loans, any overdrafts and ZDP
shares, was 48.8% (30 June 2020: 93.4%). The Board reviews the level of gearing at
each Board meeting.
ICMIM monitors compliance with the banking covenants when each drawdown
is made and at the end of each month. The Board reviews compliance with the
banking covenants at each Board meeting.
The Investment Managers and the Company’s professional advisers monitor
developments in relevant laws and regulations and provide regular reports to the
Board in respect of the Company’s compliance.
OPERATIONAL
RISK:
GEARING RISK:
REGULATORY
RISK:
Failure by any service
provider to carry
out its obligations
to the Company in
accordance with
the terms of its
appointment could
have a materially
detrimental impact
on the operation
of the Company
and could affect
the ability of
the Company to
successfully pursue
its investment policy.
Whilst the use of
borrowings should
enhance total return
where the return
on the Company’s
underlying securities
is rising and exceeds
the cost of borrowing,
it will have the
opposite effect where
the underlying return
is falling.
Failure to comply
with applicable
legal and regulatory
requirements could
lead to suspension of
the Company’s Stock
Exchange listings,
financial penalties, a
qualified audit report
or the Company
being subject to tax
on capital gains.
VIABILITY STATEMENT
The Board makes an assessment of the longer-term
prospects of the Company beyond the timeframe
envisaged under the going concern basis of accounting,
having regard to the Company’s current position and
the principal risks it faces. The Company is a long-term
investment vehicle and the Board believes that it is
appropriate to assess the Company’s viability over a
long-term horizon. For the purposes of assessing the
Company’s prospects in accordance with provision
31 of the UK Corporate Governance Code, the Board
considers that assessing the Company’s prospects
over a period of five years is appropriate given the
nature of the Company and its investment objective
and appropriately reflects the long-term strategy of the
Company.
In its assessment of the viability of the Company, the
Board has considered each of the Company’s principal
risks and uncertainties detailed above, as well as the
impact of a significant fall in world equity and foreign
exchange markets on the value of the Company’s
investment portfolio and the Company’s ability to repay
the £142.3m ultimate liability in respect of the 2022 and
2024 ZDP share issues and its bank debt. The Board is
satisfied that it operates an effective risk management
process and has concluded a robust assessment of
the principal risks facing the Company, including the
impact of Covid-19. The Board has also considered the
Company’s income and expenditure projections and the
fact that the Company’s operating expenses comprise
a very small percentage of net assets while a significant
proportion of the Company’s investments comprise
listed securities which could likely be sold to meet
funding requirements, if necessary. The Board continues
to consider the uncertainty surrounding the potential
duration of the Covid-19 pandemic, its impact on the
global economy and the prospects for the Company’s
portfolio holdings and has concluded that it is unlikely
to affect the going concern status or viability of the
Company.
As part of this assessment the Board considered a
number of stress tests, including short term reverse
stress testing, and scenarios which considered the
impact of severe stock market and currency volatility
on shareholders’ funds over a five-year period. Initially,
the Company’s projections were adjusted to reflect a
material reduction in the value of its investments in
line with that experienced during the emergence of
the Covid-19 pandemic in the first quarter of 2020. This
was then flexed to include two further scenarios; first a
material weakening in Sterling, the Company’s reporting
currency, and then a scenario which provided for a
further fall in the market values of its investments. The
assumptions also included a reduced level of portfolio
realisations when compared with previous years. The
results demonstrated the impact on the Company’s
NAV, its expenses, and its ability to meet its liabilities
over that period. As a result of this analysis, the Board
has concluded that there is a reasonable expectation
that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next five
years.
PROMOTING THE SUCCESS OF THE COMPANY
Although the Company is domiciled in Bermuda, the
Board has considered the guidance set out in the AIC
Code of Corporate Governance in relation to Section
172 of the Companies Act 2006 in the UK. This requires
the Directors to have a duty to promote the success of
the Company for the benefit of its members as a whole
and includes having regard (amongst other matters) to
fostering relationships with the Company’s stakeholders
and maintaining a reputation for high standards of
business conduct.
As an externally managed investment company, UIL
has no employees, customers, operations or premises.
Therefore, the Company’s key stakeholders (other
than its shareholders) are considered to be its service
providers. The need to promote business relationships
with the service providers and maintain a reputation
for high standards of business conduct is central to the
Directors’ decision-making. The Directors believe that
fostering constructive and collaborative relationships
with the Company’s service providers will assist in their
promotion of the success of the Company for the benefit
of all shareholders and their performance is monitored
by the Board and its committees. The principal service
providers are the Investment Managers, who are
responsible for managing the Company’s assets in order
to achieve its stated investment objective, and the Board
maintains a good working relationship with them. Whilst
strong long term investment performance is essential,
the Board recognises that to provide an investment
vehicle that is sustainable over the long term, both it
and the Investment Managers must have regard to
ethical and environmental issues that impact society.
38
UIL Limited
Report and Accounts for the year to 30 June 2021
39
39
Report and Accounts for the year to 30 June 2021 STRATEGIC REPORT (continued)
Accordingly, ESG considerations are an important part
of the Investment Managers’ investment process as
explained more fully below.
The Board seeks to engage with its Investment
Managers and other service providers in a collaborative
and collegiate manner, whilst also ensuring that
appropriate and regular challenge is brought, and
evaluation conducted. The aim of this approach is to
enhance service levels and strengthen relationships
with a view to ensuring the interests of the Company’s
shareholders are best served by keeping cost levels
proportionate and competitive, and by maintaining the
highest standards of business conduct.
The Directors aim to act fairly as between the Company’s
shareholders and the approach to shareholder relations
is summarised in the Corporate Governance Statement
on pages 52 to 56. The Chairman is available to meet
with shareholders as appropriate and the Investment
Managers meet regularly with shareholders and their
respective representatives, reporting back on views
to the Board. Shareholders may also communicate
with the Company at any time by writing to the Board
at the Company’s registered office or contacting the
Company’s broker. These communication opportunities
help inform the Board when considering how best to
promote the success of the Company for the benefit of
all shareholders over the long term.
In addition to ensuring that the Company’s stated
investment objective was being pursued, the Directors
confirm that they have considered promoting the
success of the Company when making decisions,
including in relation to:
• The realisation of investments in advance of the
redemption of the 2020 ZDP shares;
• The offer to 2022 ZDP shareholders to rollover 2022
ZDP shares into 2028 ZDP Shares together with the
placing, intermediaries offer and offer for subscription
of 2028 ZDP shares; and
• The amendment to UIL’s investment policy so as to
permit investment of up to 50% of gross assets in any
single Platform.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY
The Board believes that it is in the shareholders’
interests to consider ESG factors when selecting and
retaining investments and has asked the Investment
Managers to take these into account when investing. The
Investment Mangers employ a disciplined investment
process that seeks to both uncover opportunities
and evaluate potential risks, while striving for the
best possible return outcomes. When reviewing any
investment opportunity, the Investment Managers look
to understand the relevant ESG issues in conjunction
with the financial, macro and political drivers as part
of its investment process. Relevant and material
ESG opportunities and risks can meaningfully affect
investment performance, therefore the consideration
of ESG issues forms part of the integrated research
analysis, decision-making and ongoing monitoring.
The concept of responsible investing is a core
component of the investment process, therefore taking
into consideration ESG risks and opportunities is not a
new phenomenon for the Investment Managers. The
Investment Managers look to determine conclusions
based on objective, ascertainable facts and do not
consider sentiments or interest groups. Each investment
is considered on its own merits, and intention and
actions are important considerations.
ESG factors help to enhance the Investment Managers’
understanding of a company, as these factors affect the
company’s business model and its long-term ability to
generate sustainable returns, and consequently they are
able to fully question a company’s investment potential
from a number of perspectives. ESG considerations
provide a way to identify and review the long-term
drivers of an investment that are not found within the
financial accounts.
Investments are regularly reviewed, and the Investment
Managers meet to discuss key issues, ranging from high
level macro developments to detailed company specific
points, to ensure a high awareness of how the current
portfolio and potential new investments are performing.
Where possible the Investment Managers aim to visit
investment opportunities to access an in-person
opportunity to ask management teams what they
perceive to be the key operational, social, and
environmental issues, as well as a chance to see assets
operating first-hand. ESG disclosures are not always
easy to understand given they may not be openly
reported or consistently disclosed. The Investment
Managers believe that engaging with companies directly
is the best first step. Where necessary, the Investment
Managers will question and challenge a portfolio
company’s management team directly to ensure a full
understanding of any challenges and opportunities.
Given the Investment Managers are long term investors,
engagement with management teams is and will remain
paramount to the investment approach. On behalf of
UIL as shareholder, the Investment Managers work
actively with investee companies to incorporate stronger
ESG principles and vote in a considered manner to drive
positive change. In particular, the Investment Managers
recognise that governance factors are fundamental to
an investment.
ICM has recently become a signatory to the United
Nations-supported Principles for Responsible
Investment, which is an international network of
investors working together to implement its six
aspirational principles; and is a member of the Asian
Corporate Governance Association which is focused on
the implementation of effective corporate governance
in Asia. The Investment Managers believe that good
stewardship is essential and the principles these various
bodies espouse align with their philosophy to protect
and increase the value of UIL’s investments.
MODERN SLAVERY ACT
Due to the nature of the Company’s business, being
a company that does not offer goods and services to
customers, the Board considers that it is not within the
scope of the Modern Slavery Act 2015 because it has
no turnover. The Company is therefore not required
to make a slavery and human trafficking statement. In
any event, the Board considers the Company’s supply
chains, dealing predominantly with professional advisers
and service providers in the financial services industry,
to be low risk in relation to this matter.
GENDER DIVERSITY
The Board consists of four male directors and one
female director. The Company has no employees
and therefore there is nothing further to report in
respect of gender representation within the Company.
The Company’s policy on diversity is detailed in the
Corporate Governance Statement on page 55.
GREENHOUSE GAS EMISSIONS AND STREAMLINED
ENERGY AND CARBON REPORTING (“SECR”)
All the Company’s activities are outsourced to third
parties. The Company therefore has no greenhouse gas
emissions to report from its operations. In addition, the
Company considers itself to be a low energy user under
the SECR regulations and therefore is not required to
disclose energy and carbon information.
BRIBERY ACT
The Company has a zero tolerance policy towards
bribery and is committed to carrying out business fairly,
honestly and openly. The Investment Managers also
adopt a zero tolerance approach and have policies and
procedures in place to prevent bribery.
CRIMINAL FINANCE ACT
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
SOCIAL, HUMAN RIGHTS AND COMMUNITY MATTERS
As an externally-managed investment company, the
Company does not have any employees or maintain any
premises. It therefore has no material, direct impact
on the environment or any particular community and
the Company itself has no environmental, human
rights, social or community policies. The Board notes
the Investment Managers’ policy statement in respect
of Environmental, Social and Governance issues, as
outlined on page 40.
OUTLOOK
The Board’s main focus is on the achievement of the
Company’s objective of delivering a long-term total
return and the future of the Company is dependent
upon the success of its investment strategy. The
outlook for the Company is discussed in the Chairman’s
Statement and the main trends and factors likely to
affect the future development, performance and
position of the Company’s business can be found in the
Investment Managers’ Report.
This Strategic Report was approved by the Board of
Directors on 22 September 2021.
By order of the Board
ICM Limited
Company Secretary
22 September 2021
40
UIL Limited
Report and Accounts for the year to 30 June 2021
41
INVESTMENT MANAGERS AND TEAM
ICMIM, a company authorised and regulated by
the FCA, was the Company’s AIFM during the year
ended 30 June 2021 with sole responsibility for
risk management, subject to the overall policies,
supervision, review and control of the Board and is
joint portfolio manager of the Company, alongside ICM.
The Investment Managers are focused on finding
investments at valuations that do not reflect their true
long term value. Their investment approach is to have
a deep understanding of the business fundamentals
of each investment and its environment versus its
intrinsic value. The Investment Managers are long term
investors.
Core teams assisting them at a senior level, including consultants, are:
UTILITIES & INFRASTRUCTURE
Jacqueline Broers, has been involved in the running of UIL and UEM since September 2010.
Mrs Broers is focused on the transport sector worldwide with particular emphasis on emerging
markets. Prior to joining the investment team, Mrs Broers worked in the corporate finance team at
Lehman Brothers and Nomura. Mrs Broers is a qualified chartered accountant.
ICM MANAGES OVER
£2.9bn
IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER £23.2BN OF ASSETS IN SUBSIDIARY
INVESTMENTS. ICM HAS OVER 70 STAFF BASED IN OFFICES IN BERMUDA, CAPE TOWN, DUBLIN, LONDON, SEOUL,
SINGAPORE, SYDNEY, VANCOUVER AND WELLINGTON.
UIL HAS A BROAD INVESTMENT MANDATE. TO BETTER EXECUTE THE MANDATE UIL HAS SET UP A NUMBER
OF PLATFORMS TO FOCUS THE INVESTMENT PROCESS AND DECISIONS. THE INVESTMENT MANAGERS HAVE
MIRRORED THESE PLATFORMS IN ESTABLISHING INVESTMENT TEAMS DEDICATED TO EACH.
The investment teams are led by Duncan Saville and Charles Jillings.
DUNCAN SAVILLE
Duncan Saville, a director of ICM, is a chartered accountant with experience in
corporate finance and asset management. He was formerly a non-executive director
of Special Utilities Investment Trust PLC and Utilico Investment Trust plc and is an
experienced non-executive director having been a director in multiple companies in
the financial services, utility, mining and technology sectors. He is currently a non-
executive director of ASX listed Resimac Group Limited and Allectus Capital Limited.
CHARLES JILLINGS
Charles Jillings, a director of ICM and chief executive of ICMIM, is responsible
for the day-to-day running of UIL and the investment portfolio. He qualified as
a chartered accountant and has extensive experience in corporate finance and
asset management. He is an experienced director having previously been a non-
executive director of Special Utilities Investment Trust PLC and other companies in
the financial services, water and waste sectors. He is currently a director of Somers
Limited, Waverton Investment Management Limited, ICM Mobility Limited and
Allectus Capital Limited.
Jonathan Groocock, has been involved in the running of UIL and UEM since February 2011.
Mr Groocock is focused on the utilities sector worldwide with particular emphasis on emerging
markets. Prior to joining the investment team Mr Groocock had nine years of experience in sell side
equity research, covering telecoms stocks at ABN AMRO, Oriel Securities and Investec. Mr Groocock
qualified as a CFA charterholder in 2005.
Mark Lebbell, has been involved in the running of UIL and UEM since their inception and before
that was involved with Utilico Investment Trust plc and The Special Utilities Investment Trust PLC
since 2000. Mr Lebbell is focused on the communications sector worldwide with particular emphasis
on emerging markets. Mr Lebbell is an associate member of the Institute of Engineering and
Technology.
Gavin Blessing, joined ICM in 2012. He has over twenty years of experience, mostly in the
corporate fixed income markets, both investment grade and high yield. He worked as a credit
research analyst and portfolio manager at Goldman Sachs Asset Management in London for 10
years and subsequently as head of credit origination at ISTC in Dublin, Ireland. Prior to joining ICM
he was head of bond credit research at Canaccord Genuity in Dublin. Mr Blessing is a qualified
chartered accountant and CFA charterholder.
Dugald Morrison, is responsible for Australasia and in addition, is focused on the resources sector
worldwide. He is an experienced investment analyst, having worked in stockbroking, investment
banking and investment management firms in New Zealand, the United Kingdom and the United
States since 1987. Mr Morrison is a member of the New Zealand Institute of Directors.
Jason Cheong, heads up ICM’s technology investing activities. He is the portfolio manager for
Allectus Capital Limited, having worked in private equity, investment banking and corporate law in
Australia and the United Kingdom. Prior to joining ICM, he was an investment manager at Brookfield
Asset Management. Mr Cheong is a qualified solicitor, admitted to practice in Australia.
FIXED INCOME
RESOURCES
TECHNOLOGY
42
UIL Limited
Report and Accounts for the year to 30 June 2021
43
INVESTMENT MANAGERS AND TEAM (continued)
DIRECTORS
FINANCIAL SERVICES
Alasdair Younie is a director of ICM. Mr Younie is responsible for the day to day running of the
Somers Group. Mr Younie has extensive experience in financial markets and corporate finance. He
worked for six years within the corporate finance department of Arbuthnot Securities Limited in
London. He is a director of Allectus Capital Limited, Somers Limited and West Hamilton Holdings
Limited. Mr Younie is a member of the Institute of Chartered Accountants in England and Wales.
CORPORATE FINANCE
Sandra Pope is a director of ICMIM. She has over thirty years’ experience in corporate finance,
having previously worked in corporate finance at Deloitte Haskins & Sells, Hill Samuel Bank and
Close Brothers for ten years and has worked for the ICM Group since 1999. Mrs Pope is a qualified
chartered accountant and is a director of a number of private companies.
OPERATIONS
ACCOUNTING
Brad Goddard has over thirty years’ experience in international markets and finance and their
related operations with the ICM Group. He has been involved with UIL since its inception and prior
to that, he was involved with The Special Utilities Investment Trust plc. Mr Goddard is currently
working closely with Somers’ investee companies to achieve greater operational synergies across
the Somers Group.
Werner Van Kets has managed various operational and financial aspects of ICM Corporate
Services (Pty) Ltd since its inception, which provides accounting and other corporate support
services to the ICM group. His previous experience includes Deloitte (South Africa) and Credit
Suisse in London. Mr Van Kets is a qualified chartered accountant.
COMPANY SECRETARY, ICM LIMITED
Alastair Moreton, a chartered accountant, joined the ICM team in 2017 to provide company
secretarial services to the Company and to UEM. He has over thirty years’ experience in corporate
finance with Samuel Montagu, HSBC, Arbuthnot Securities and, prior to joining ICM, Stockdale
Securities, where he was responsible for the company’s closed-end fund corporate clients.
PETER BURROWS AO* (CHAIRMAN)
Peter Burrows AO (Chairman) was appointed a Director in September 2011 and Chairman in
November 2015. Mr Burrows is an experienced stockbroker and founded his own independent
specialist private client stock broking firm, Burrows Limited, in 1986. Mr Burrows was previously
the chairman and director of a number of listed and unlisted companies. Mr Burrows was made
an officer in the Order of Australia (AO) for his services to medical research, tertiary education
and finance.
STUART BRIDGES*
Stuart Bridges (Chairman of Audit & Risk and Management Engagement Committees) was
appointed a Director in October 2019. He is Chief Financial Officer of Inigo Limited, a nonlife
insurance group operating out of Lloyds of London and a non-executive director and chairman
of the audit committee of Caledonia Investments plc. He is a chartered accountant and his
previous roles included chief financial officer of Control Risks Group, Nex Group plc (formerly
ICAP plc) and Hiscox plc. Prior to Hiscox, he held various senior positions in a number of financial
services companies in the United Kingdom and United States including Henderson Global
Investors.
ALISON HILL*
Alison Hill, FCMA, CGMA, was appointed a Director in November 2015 and is an executive
director and chief executive officer of The Argus Group in Bermuda, which provides insurance,
retirement and financial services. Ms Hill has over twenty five years’ experience in global
corporations in the financial services sector. Ms Hill is a trustee and a member of committees
of a number of non-corporate organisations in Bermuda. Ms Hill is a Fellow of the Chartered
Institute of Management Accountants and a Chartered Global Management Accountant.
CHRISTOPHER SAMUEL*
Christopher Samuel was appointed a Director in November 2015 and was previously Chief
Executive of Ignis Asset Management until mid-2014, when it was taken over by Standard Life. He
has over twenty five years of board level experience in the investment management sector. He is
currently chairman of Blackrock Throgmorton Trust plc, JP Morgan Japanese Investment Trust plc
and Quilter Financial Planning Limited as well as a non-executive director of Alliance Trust PLC
and Quilter plc. Mr Samuel is a Chartered Accountant.
DAVID SHILLSON
David Shillson, LLM (Hons), who was appointed a Director in November 2015, is an experienced
corporate and commercial lawyer and a senior partner of Dentons Kensington Swan, the New
Zealand member of Dentons, the global law firm. He has acted for a variety of clients, particularly in
acquisitions and investment structuring, advising on transactional and governance matters across
the utilities, transport, energy, technology and finance sectors. Mr Shillson is a member of the New
Zealand Law Society and the New Zealand Institute of Directors.
* Independent Director and member of the Audit & Risk Committee and Management Engagement Committee
44
UIL Limited
Report and Accounts for the year to 30 June 2021
45
45
Report and Accounts for the year to 30 June 2021 DIRECTORS’ REPORT
The Directors present the Annual Report and Accounts
of the Company for the year ended 30 June 2021.
STATUS OF THE COMPANY
UIL is a Bermuda exempted closed-end investment
company with registration number 39480. The
Company’s ordinary shares are admitted to trading
on the Specialist Fund Segment of the Main Market
of the London Stock Exchange and have a secondary
listing on the Bermuda Stock Exchange. UIL Finance’s
ZDP shares are listed on the Standard Segment of the
Official List of the Financial Conduct Authority and
are traded on the Main Market of the London Stock
Exchange. UIL is a member of the AIC in the UK.
The Company’s subsidiary undertaking, UIL Finance,
carries on business as an investment company.
THE ALTERNATIVE INVESTMENT FUND MANAGERS
DIRECTIVE (“AIFMD”)
The Company is a non-EU Alternative Investment Fund
(“AIF”) for the purposes of the AIFMD. The Company
has appointed ICMIM, an English incorporated
company which is regulated by the FCA, as its AIFM,
with sole responsibility for risk management and ICM
and ICMIM jointly to provide portfolio management
services.
The AIFMD requires certain information to be made
available to investors in AIFs before they invest and
requires that material changes to this information be
disclosed in the annual report of each AIF. An Investor
Disclosure Document, which sets out information
on the Company’s investment strategy and policies,
leverage, risk, liquidity, administration, management,
fees, conflicts of interest and other shareholder
information, is available on the Company’s website at
www.uil.limited.
UIL has also appointed JPMEL as its depositary
services provider. JPMEL’s responsibilities include
general oversight over the issue and cancellation of
the Company’s shares, the calculation of the NAV, cash
monitoring and asset verification and record keeping.
JPMEL receives a fee of 2.2bps on UIL’s NAV for its
services, subject to a minimum fee of £25,000 per
annum, payable monthly in arrears.
FUND MANAGEMENT ARRANGEMENTS
The aggregate fees payable by the Company to
ICMIM and ICM under the Investment Management
Agreement (“IMA”) are 0.5% per annum of gross assets
after deducting current liabilities (excluding borrowings
incurred for investment purposes), payable quarterly
in arrears, with such fees to be apportioned between
ICMIM and ICM as agreed by them. The Investment
Managers may also become entitled to a performance-
related fee. The IMA may be terminated on one year’s
notice in writing and further details of the management
and performance fees are disclosed in note 3 to the
accounts.
Under the IMA, ICM has been appointed as Company
Secretary.
The Board continually reviews the policies and
performance of the Investment Managers. The Board’s
philosophy and the Investment Managers’ approach
are that the portfolio should consist of shares thought
attractive irrespective of their inclusion or weighting
in any index. Over the long term, the Board expects
the combination of the Company’s and Investment
Managers’ approach to generate a positive return for
shareholders. The Board continues to believe that the
appointment of ICMIM and ICM on the terms agreed is
in the interests of shareholders as a whole.
ADMINISTRATION
The provision of accounting and administration
services has been outsourced to JPMorgan Chase
Bank N.A. – London Branch (the “Administrator”).
The Administrator provides financial and general
administrative services to the Company for an annual
fee based on the Company’s month end NAV (5 bps
on the first £100m NAV, 3bps on the next £150m
NAV, 2bps on the next £250m NAV and 1.5bps on the
next £500m NAV). The Administrator and any of its
delegates are also entitled to reimbursement of certain
expenses incurred by it in connection with its duties.
In addition, ICMIM has appointed Waverton to provide
certain support services (including middle office,
market dealing and information technology support
services). Waverton is entitled to receive an annual
fee of 3bps of the Company’s gross assets and the
Company reimburses ICMIM for its costs and expenses
incurred in relation to this agreement.
Annually, the Management Engagement Committee
also considers the ongoing administrative
requirements of the Company and assesses the
services provided.
SAFE CUSTODY OF ASSETS
During the year ended 30 June 2021, most of UIL’s
investments were held in custody for the Company by
JPMorgan Chase Bank N.A., Jersey (the “Custodian”)
with title documents for a small number of investments
also being held securely by Waverton. Operational
matters with the Custodian are carried out on the
Company’s behalf by ICMIM and the Administrator
in accordance with the IMA and the Administration
Agreement. The Custodian is paid a variable fee
dependent on the number of trades transacted and
the location of the securities held.
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise its
investment portfolio, cash balances, bank borrowings
and debtors and creditors which arise directly from
its operations such as sales and purchases awaiting
settlement, and accrued income. The financial risk
management objectives and policies arising from
its financial instruments and the exposure of the
Company to risk are disclosed in note 29 to the
accounts.
DIVIDENDS
Dividend of 2.00p per share were paid on 21
December 2020, 31 March 2021 and 28 June 2021.
A dividend of 2.00p per share was declared on
23 August 2021 and will be paid on 30 September 2021
to shareholders on the register as at 3 September
2021. In aggregate, the four interim dividends in
respect of the year amount to 8.00p per ordinary
share.
ISA AND NMPI
The ordinary shares and the ZDP shares remain
qualifying investments under the Individual Savings
Account (“ISA”) regulations and it is the intention of
the Board to continue to satisfy these regulations.
Furthermore, the Company currently conducts its
affairs so that its shares can be recommended by
IFAs to ordinary retail investors in accordance with
the FCA’s rules in relation to non-mainstream pooled
investments and intends to continue to do so for the
foreseeable future.
GOING CONCERN
The Board has reviewed the going concern basis of
accounting for the Company. A significant proportion of
the Company’s investments comprise listed securities.
40.0% of the total portfolio as at 30 June 2021 is in
level 1 investments which, in most circumstances,
could likely be sold to meet funding requirements,
if necessary. The Board has considered the impact
of Covid-19 and performed a detailed assessment
of the Company’s operational risk and resources
including its ability to meet its liabilities as they fall
due, by conducting stress tests and scenarios which
considered the impact of severe stock market and
currency volatility. This is set out in note 28 to the
accounts. In light of this work and there being no
material uncertainties related to events or conditions
that may cast significant doubt about the ability of the
Company to continue as a going concern, the Board
has a reasonable expectation that the Company
has adequate resources to continue in operational
existence for a period of at least the next twelve
months from the date of approval of these financial
statements. Accordingly, the Board considers it
appropriate to continue to adopt the going concern
basis in preparing the accounts.
46
46
UIL Limited
Report and Accounts for the year to 30 June 2021
47
UIL Limited DIRECTORS’ REPORT (continued)
DIRECTORS
DIRECTORS’ INTERESTS
UIL has a Board of five non-executive Directors who
oversee and monitor the activities of the Investment
Managers and other service providers and ensure that
the Company’s investment policy is adhered to. The
Board is supported by an Audit & Risk Committee and
a Management Engagement Committee, which deal
with specific aspects of the Company’s affairs. The
Corporate Governance Statement, which is set out on
pages 52 to 56, forms part of this Directors’ Report.
The Directors have a range of business, financial and
asset management skills as well as experience relevant
to the direction and control of the Company. Brief
biographical details of the members of the Board are
shown on page 45. All the Directors are independent
other than Mr Shillson, who is a partner of Dentons
Kensington Swan, a New Zealand law firm which has
acted for members of the UIL and ICM groups.
UIL’s Bye-laws require that a Director shall retire
and be subject to re-election at the first AGM after
appointment and at least every three years thereafter.
However, in accordance with the AIC Code of Corporate
Governance, all the directors are subject to annual
re-election.
The nature of an investment company and the
relationship between the Board and the Investment
Managers are such that it is considered unnecessary
to identify a senior independent director. Any of the
Directors is available to shareholders if they have
concerns which have not been resolved through the
normal channels of contact with the Chairman or the
Investment Managers, or for which such channels are
inappropriate.
DIRECTORS’ INDEMNITY AND INSURANCE
As permitted by the Company’s Bye-laws, the Directors
have the benefit of an indemnity under which the
Company has agreed to indemnify each Director, to the
extent permitted by law, in respect of certain liabilities
incurred as a result of carrying out his/her role as a
Director of the Company. The indemnity was in place
during the year and as at the date of this report.
UIL also maintains Directors’ and Officers’ liability
insurance which provides appropriate cover for any
legal action brought against the Directors.
The Directors’ interests in the ordinary share capital
of the Company are disclosed in the Directors’
Remuneration Report.
No Director was a party to, or had any interests in,
any contract or arrangement with the Company at any
time during the year or at the year end. There are no
agreements between the Company and its Directors
concerning compensation for loss of office.
A Director must avoid a situation where he/she has,
or can have, a direct or indirect interest that conflicts,
or possibly may conflict, with the Company’s interests.
The Directors have declared any potential conflicts of
interest to the Company which are reviewed regularly
by the Board. The Directors have undertaken to advise
the Company Secretary and/or Chairman as soon
as they become aware of any potential conflicts of
interest.
SHARE CAPITAL
As at 30 June 2021 the issued ordinary share capital
of the Company and the total voting rights were
84,303,283 ordinary shares. As at the date of this
report the issued share capital and total voting
rights were 84,014,018 ordinary shares. There are
no restrictions on the transfer of securities in the
Company and there are no special rights attached to
any of the shares.
SHARE ISSUES AND REPURCHASES
UIL has the authority to purchase shares in the market
and to issue new shares for cash. During the year
ended 30 June 2021 the Company purchased 1,636,031
ordinary shares for cancellation. The current authority
to repurchase shares was granted to Directors on
8 December 2020 and expires at the conclusion of
the next AGM. The Directors are proposing that their
authority to buy back up to 14.99% of the Company’s
shares and to issue new shares up to 5% of the
Company’s issued ordinary share capital be renewed
at the forthcoming AGM.
SUBSTANTIAL SHARE INTERESTS
As at the date of this report, the Company had
received notification from Mr Duncan Saville that he
had an interest in 62,435,821 ordinary shares (74.3%
of UIL’s issued share capital) which included the
holding of General Provincial Life Pension Fund Limited
(54,851,533 ordinary shares (65.3%)).
THE COMMON REPORTING STANDARD
Tax legislation under The OECD (Organisation for
Economic Co-operation and Development) Common
Reporting Standard for Automatic Exchange of
Financial Account Information (the “Common Reporting
Standard”) was introduced on 1 January 2016. The
legislation requires UIL, as an investment company,
to provide personal information on shareholders to
the Company’s local tax authority in Bermuda. The
Bermuda tax authority may in turn exchange the
information with the tax authorities of another country
or countries in which the shareholder may be tax
resident, where those countries (or tax authorities
in those countries) have entered into agreements
to exchange financial account information. The
Company’s registrars have been engaged to collate
such information and file reports on behalf of the
Company.
All new shareholders, excluding those whose shares
are held as depositary interests, who are entered on
the share register will be sent a certification form for
the purposes of collecting this information.
AUDIT INFORMATION AND AUDITOR
The Directors who held office at the date of approval
of this Directors’ Report confirm that, so far as they are
aware, there is no relevant audit information of which
the Company’s auditor is unaware; and each Director
has taken all the steps that they ought to have taken as
a Director to make themselves aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.
LISTING RULE 9.8.4R
The ordinary shares of UIL are admitted to the
Specialist Fund Segment and therefore the Listing
Rules do not technically apply to it. However it
has agreed to comply voluntarily with certain key
provisions of the Listing Rules, including Listing
Rule 9.8, and confirms that there are no instances
where the Company is required to make disclosures
in respect of Listing Rule 9.8.4R (information to be
included in annual report and accounts).
ANNUAL GENERAL MEETING
The following information to be discussed at the
forthcoming AGM is important and requires your
immediate attention. If you are in any doubt about the
action you should take, you should seek advice from
your stockbroker, bank manager, solicitor, accountant
or other financial adviser authorised under the
Financial Services and Markets Act 2000 (as amended).
If you have sold or transferred all of your shares in the
Company, you should pass this document, together
with any other accompanying documents including the
form of proxy, at once to the purchaser or transferee,
or to the stockbroker, bank or other agent through
whom the sale or transfer was effected, for onward
transmission to the purchaser or transferee.
The business of the AGM consists of 12 resolutions.
Resolutions 1 to 11 (inclusive) will be proposed
as ordinary resolutions and resolution 12 will be
proposed as a special resolution.
Ordinary Resolution 1 – Annual Report and Financial
Statements
This resolution seeks shareholder approval to receive
the Directors’ Report, the Independent Auditor’s
Report and the Financial Statements for the year
ended 30 June 2021.
Ordinary Resolution 2 – Approval of the Directors’
Remuneration Report
This resolution is an advisory vote on the Directors’
Remuneration Report.
Ordinary Resolution 3 – Approval of the Company’s
dividend policy
This resolution seeks shareholder approval of the
Company’s dividend policy to pay four interim
dividends per year. Under the Company’s Bye-laws, the
Board is authorised to approve the payment of interim
dividends without the need for the prior approval of
the Company’s shareholders.
Having regard to corporate governance best practice
relating to the payment of interim dividends without
the approval of a final dividend by a company’s
shareholders, the Board has decided to seek express
approval from shareholders of its dividend policy to
pay four interim dividends per year. If this resolution
is not passed, it is the intention of the Board to
48
UIL Limited
Report and Accounts for the year to 30 June 2021
49
DIRECTORS’ REPORT (continued)
refrain from authorising any further interim dividends
until such time as the Company’s dividend policy is
approved by its shareholders.
Ordinary Resolutions 4 to 8 (inclusive) – Re-election
of Directors
The biographies of the Directors are set out on page
45 and are incorporated into this report by reference.
Resolution 4 relates to the re-election of Mr Peter
Burrows who was appointed Chairman on 16
November 2015, having joined the Board on 16
September 2011. Mr Burrows’ leadership of the Board
as Chairman draws on his long and varied experience
on the boards of many listed and unlisted companies.
His focus is on long-term strategic issues, which are
key topics of Board discussion.
Resolution 5 relates to the re-election of Mr Stuart
Bridges who was appointed on 2 October 2019. Mr
Bridges is a chartered accountant with many years of
experience both as a chief financial officer and as chair
of audit and risk committees in the financial services
sector. He therefore brings this strong background
and skills to his role as the Company’s Audit & Risk
Committee Chairman.
Resolution 6 relates to the re-election of Ms Alison
Hill who was appointed on 16 November 2015. Ms
Hill is based in Bermuda and is an executive director
and chief executive officer of the financial services
company, The Argus Group. She therefore brings
extensive financial services experience and knowledge
of Bermuda to her role on the Board.
Resolution 7 relates to the re-election of Mr Chris
Samuel who was appointed on 16 November 2015.
Mr Samuel’s extensive experience in the investment
management industry and as chairman of other
investment companies means that he brings in-depth
knowledge and expertise in investment matters to his
role on the Board.
Resolution 8 relates to the re-election of Mr David
Shillson who was appointed on 16 November 2015. Mr
Shillson brings significant legal experience to his role
on the Board which draws on a track record of advising
on acquisitions and investment structuring in many of
the sectors in which the Company invests.
Ordinary Resolutions 9 and 10 – Appointment of the
external Auditor and the Auditor’s Remuneration
These resolutions relate to the appointment and
remuneration of the Company’s auditor. The Company,
through its Audit & Risk Committee, has considered
the independence and objectivity of the external
auditor and is satisfied that the proposed Auditor is
independent. Further information in relation to the
assessment of the existing Auditor’s independence can
be found in the report of the Audit & Risk Committee.
Resolutions relating to the following items of special
business will be proposed at the forthcoming AGM:
Ordinary Resolution 11 – Authority to buy back
shares
This resolution seeks to renew the authority granted
to Directors enabling the Company to purchase its
own shares. The Directors will consider repurchasing
shares in the market if they believe it to be in
shareholders’ interests and as a means of correcting
any imbalance between supply and demand for the
Company’s shares. Any shares purchased pursuant to
this resolution shall be cancelled immediately upon
completion of the purchase or held, sold, transferred
or otherwise dealt with as treasury shares.
The Directors are seeking authority to purchase in the
market up to 12,590,000 ordinary shares (equivalent to
approximately 14.99% of the issued ordinary shares as
at the date of the Notice of AGM). This authority, unless
renewed at an earlier general meeting, will expire at
the conclusion of the next AGM of the Company to be
held in 2022.
Special Resolution 12 – Authority to disapply pre-
emption rights
The Company’s Bye-laws provide that, unless
otherwise determined by a special resolution, the
Company is not able to allot ordinary shares for cash
without offering them to existing shareholders first in
proportion to their shareholdings. This resolution will
grant the Company authority to dis-apply these pre-
emption rights in respect of up to £420,000 of relevant
securities (equivalent to 4,200,000 ordinary shares
of 10p each, representing approximately 5% of its
ordinary shares in issue as at the date of the Notice of
AGM). Any such sale of shares would only be made at
prices greater than NAV and would therefore increase
the assets underlying each share. This resolution
will expire at the conclusion of the next AGM of the
Company to be held in 2022 unless renewed prior to
that date at an earlier general meeting.
Resolution 12 is a special resolution and will require
the approval of a 75% majority of votes cast in respect
of it.
RECOMMENDATION
The Board considers that each of the resolutions to be
proposed at the AGM is likely to promote the success
of the Company for the benefit of its members as a
whole and are in the best interests of the Company
and its shareholders as a whole. The Directors
unanimously recommend that shareholders vote in
favour of these resolutions as they intend to do in
respect of their own beneficial holdings.
By order of the Board
ICM Limited
Secretary
22 September 2021
50
UIL Limited
Report and Accounts for the year to 30 June 2021
51
CORPORATE GOVERNANCE STATEMENT
THE COMPANY‘S CORPORATE GOVERNANCE FRAMEWORK
Corporate Governance is the process by which the board of directors of a company protects shareholders’
interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible for the
stewardship of a company’s affairs, delegating authority and responsibility to the directors to manage the company
on their behalf and holding them accountable for its performance. Responsibility for good governance lies with
the Board. The Board considers the practice of good governance to be an integral part of the way it manages
the Company and is committed to maintaining high standards of financial reporting, transparency and business
integrity.
The governance framework of the Company reflects the fact that, as an investment company, it has no full-time
employees and outsources its activities to third party service providers.
THE BOARD
Five non-executive directors (NEDs)
CHAIRMAN:
Peter Burrows
KEY OBJECTIVES:
• to provide leadership within
a framework of prudent and
effective controls which enable
risks to be assessed and
managed; and
• to constructively challenge
and scrutinise performance
of all outsourced activities.
• to set strategy, values and
standards;
AUDIT & RISK
COMMITTEE
MANAGEMENT
ENGAGEMENT
COMMITTEE
All the independent
Directors
All the independent
Directors
CHAIRMAN:
Stuart Bridges
CHAIRMAN:
Stuart Bridges
NOMINATION
COMMITTEE
FUNCTION
The Board as a
whole performs
this function
REMUNERATION
COMMITTEE
FUNCTION
The Board as a
whole performs
this function
KEY OBJECTIVE:
KEY OBJECTIVES:
KEY OBJECTIVES:
KEY OBJECTIVE:
• to oversee the
• to review the
• to regularly review
• to set the
financial reporting
and control
environment.
performance of
the Investment
Managers and the
Administrator; and
the Board’s structure
and composition;
and
remuneration policy
for the Directors of
the Company.
• to consider any new
• to review the
appointments.
performance of
other service
providers.
THE AIC CODE OF CORPORATE GOVERNANCE
The Board’s principal governance reporting obligation
is in relation to the UK Corporate Governance Code
(the “UK Code”) issued by the Financial Reporting
Council (“FRC”) in July 2018. However, it is recognised
that investment companies have special circumstances
which have an impact on their governance
arrangements. An investment company typically has
no employees and the roles of portfolio manager,
administration, accounting and company secretarial
tend to be outsourced to a third party. The AIC has
therefore drawn up its own set of guidelines known as
the AIC Code of Corporate Governance (the “AIC Code”)
issued in February 2019, which recognises the nature
of investment companies by focusing on matters such
as board independence and the review of management
and other third party contracts. The FRC has endorsed
the AIC Code and confirmed that companies which
report against the AIC Code will be meeting their
obligations in relation to the UK Code and paragraph
LR 9.8.6 of the FCA’s Listing Rules. The Board
believes that reporting against the principles and
recommendations of the AIC Code will provide better
information to shareholders.
The UK Code is available from the FRC’s website at
www.frc.org.uk. The AIC Code is available from the
Association of Investment Companies’ website at www.
theaic.co.uk.
COMPLIANCE WITH THE AIC CODE
During the year ended 30 June 2021, the Company
complied with the recommendations of the AIC Code
and the relevant provisions of the UK Code, except
those relating to:
• the role of the chief executive;
• executive directors’ remuneration;
• the need for an internal audit function;
• nomination of a senior independent director; and
• membership of the Audit & Risk Committee by the
Chairman of the Board.
For the reasons set out in the AIC Code and as
explained in the UK Code, the Board considers these
provisions are not relevant to the position of UIL, being
an externally managed investment company. The Board
is composed entirely of non-executive directors and
therefore the Board does not believe it is necessary to
nominate a senior independent director. In addition,
as explained in the Audit & Risk Committee Report, the
Chairman of the Board is also a member of the Audit &
Risk Committee, as permitted by the AIC Code.
Information on how the Company has applied the
principles of the AIC Code and the UK Code is set out
below.
THE BOARD
The Board is responsible to shareholders for the overall
stewardship of the Company. A formal schedule of
matters reserved for the decision of the Board has been
adopted. Investment policy and strategy are determined
by the Board and it is also responsible for the gearing
policy, dividend policy, public documents, such as the
Annual Report and Financial Statements, the buy-back
policy and corporate governance matters. In order to
enable the Directors to discharge their responsibilities
effectively the Board has full and timely access to
relevant information.
The Board meets at least three times a year, with
additional Board and Committee meetings being held
on an ad hoc basis to consider investment performance
and particular issues as they arise. Key representatives
of the Investment Managers attend each meeting and
between these meetings there is regular contact with
the Investment Managers. Although the Board has
currently suspended all travel and physical meetings,
Board meetings may often be held in countries where
the Company holds investments and the Board will
meet with investee companies and local experts.
The Board has direct access to the advice and services
of the Company Secretary, who is an employee of
ICM. The Company Secretary, with advice from the
Company’s lawyers and financial advisers, is responsible
for ensuring that the Board and Committee procedures
are followed and that applicable rules and regulations
are complied with. The Company Secretary is also
responsible to the Board for ensuring timely delivery
of information and reports and that the statutory
obligations of the Company are met. The Company
Secretary is responsible for advising the Board, through
the Chairman, on all governance matters.
There is an agreed procedure for Directors, in the
furtherance of their duties, to take legal advice at the
52
53
UIL LimitedReport and Accounts for the year to 30 June 2021 CORPORATE GOVERNANCE STATEMENT (continued)
Company’s expense, having first consulted with the
Chairman.
During the year, none of the Directors took on any
significant new commitments or appointments other
than Mr Bridges who was appointed Chief Financial
Officer of Inigo Limited. All of the Directors consider that
they have sufficient time to discharge their duties.
There were five Board meetings, four Audit &
Risk Committee meetings and one Management
Engagement Committee meeting held during the year
and the attendance by the Directors was as follows:
Board
Audit & Risk
Committee
Management
Engagement
Committee
Number of scheduled
meetings held during
the year
Peter Burrows
Stuart Bridges
Alison Hill
Christopher Samuel
David Shillson
5
5
5
5
5
5
4
4
4
4
4
1
1
1
1
1
n/a
n/a
Apart from the meetings detailed above, there were a
number of meetings held by committees of the Board
to discuss investment performance, approve the
declaration of quarterly dividends and other ad hoc
items.
AUDIT & RISK COMMITTEE
The Audit & Risk Committee comprises all the
independent Directors of the Company and is chaired
by Mr Bridges. Further details of the Audit & Risk
Committee are provided in its report starting on
page 62.
MANAGEMENT ENGAGEMENT COMMITTEE
The Management Engagement Committee, which is
currently chaired by Mr Bridges, comprises all the
independent Directors of the Company and meets at
least once a year.
The Investment Managers’ performance is considered
by the Board at every meeting, with a formal evaluation
by the Management Engagement Committee annually.
The Board received detailed reports and views from
the Investment Managers on investment policy, asset
allocation, gearing and risk at each Board meeting
in the year ended 30 June 2021, with ad hoc market/
company updates if there were significant movements
in the intervening period.
The Management Engagement Committee also
considers the effectiveness of the administration
services provided by the Investment Managers and
Administrator and the performance of other third
party service providers. In this regard the Committee
assessed the services provided by the Investment
Managers, the Administrator and the other service
providers to be good.
REMUNERATION COMMITTEE
The Board as a whole undertakes the work which
would otherwise be undertaken by a Remuneration
Committee. Further details are provided in the
Directors’ Remuneration Report starting on page 59.
INTERNAL CONTROLS
The Directors acknowledge that they are responsible
for ensuring that the Company maintains a sound
system of internal financial and non-financial controls
(“internal controls”) to safeguard shareholders’
investments and the Company’s assets.
The Company’s system of internal control is designed
to manage rather than eliminate risk of failure to
achieve the Company’s investment objective and/
or adhere to the Company’s investment policy and/
or investment limits. The system can therefore only
provide reasonable and not absolute assurance
against material misstatement or loss.
The Investment Managers, Administrator and
Custodian maintain their own systems of internal
controls and the Board and the Audit & Risk
Committee receive regular reports from these service
providers.
The Board meets regularly, at least three times a year.
It reviews financial reports and performance against
relevant stock market criteria and the Company’s peer
group, amongst other things. The effectiveness of
the Company’s system of internal controls, including
financial, operational and compliance and risk
management systems is reviewed at least bi-annually
against risk parameters approved by the Board. The
Board confirms that the necessary actions are taken to
remedy any significant failings or weaknesses identified
from its review. No significant failings or weaknesses
occurred during the year ended 30 June 2021 or
subsequently up to the date of this report.
BOARD DIVERSITY, APPOINTMENT, RE-ELECTION
AND TENURE
The Board as a whole undertakes the responsibilities
which would otherwise be assumed by a nomination
committee since the Board is composed solely of
non-executive Directors. It considers the size and
structure of the Board, including the balance of
expertise and skills brought by individual Directors. It
has regard to board diversity and recognises the value
of progressive refreshing of and succession planning
for, company boards and such matters are discussed
by the Board as a whole at least annually. The Board
also seeks to have Directors in different jurisdictions
who understand the key influences on businesses
in their area, whether they are economic, political,
regulatory or other issues. The Board’s policy on
diversity, including gender, is to take this into account
during the recruitment process. Any new appointment
is considered on the basis of the skills and experience
that the individual would bring to the Board, regardless
of gender or other forms of diversity, and therefore no
targets have been set against which to report. As at
the date of this report, the Board consists of four men
and one woman.
The Board is of the view that length of service does
not necessarily compromise the independence or
contribution of directors of an investment company,
where continuity and experience can add significantly
to the strength of the Board. This is supported by the
views on independence expressed in the AIC Code.
No limit on the overall length of service of any of the
Company’s Directors, including the Chairman, has
been imposed. All Directors are subject to annual re-
election.
The Board reviews succession planning at least
annually. Appointments of new Directors will be made
on a formalised basis with the Chairman agreeing, in
conjunction with his colleagues, a job specification
and other relevant selection criteria and the methods
of recruitment (where appropriate using an external
recruitment agency), selection and appointment. The
potential Director would meet with Board members
prior to formal appointment. An induction process
will be undertaken, with new appointees to the
Board being given a full briefing on the workings and
processes of the Company and the management of the
Company by the Chairman, the Investment Managers,
the Company Secretary and other appropriate
persons. All appointments are subject to subsequent
confirmation by shareholders in general meeting.
BOARD, COMMITTEE AND DIRECTORS’
PERFORMANCE APPRAISAL
The Directors recognise the importance of the AIC
Code’s recommendations in respect of evaluating
the performance of the Board, the Committees
and individual Directors. This encompasses both
quantitative and qualitative measures of performance
including:
• attendance at meetings;
• the independence of individual Directors;
• the ability of Directors to make an effective
contribution to the Board and Committees through
the range and diversity of skills and experience each
Director brings to their role; and
• the Board’s ability to challenge the Investment
Managers’ recommendations, suggest areas of
debate and set the future strategy of the Company.
The Board opted to conduct performance evaluation
through questionnaires and discussion between
the Directors, the Chairman and the chairmen
of the Committees. This process is conducted by
the Chairman reviewing individually with each of
the Directors their performance, contribution and
commitment to the Company and the possible further
development of skills. In addition, the Chair of the
Audit & Risk Committee reviews the performance of
the Chairman with the other Directors, taking into
account the views of the Investment Managers. The
relevant points arising from these meetings are then
reported to, and discussed by, the Board as a whole.
This process has been carried out in respect of the
year under review and will be conducted on an annual
basis. The result of this year’s performance evaluation
process was that the Board, the Committees of the
Board and the Directors individually were all assessed
to have performed satisfactorily. No follow-up actions
were required.
54
55
UIL LimitedReport and Accounts for the year to 30 June 2021 CORPORATE GOVERNANCE STATEMENT (continued)
CAPITAL STRUCTURE
It is not felt appropriate currently to employ the
services of, or to incur the additional expense of, an
external third party to conduct the evaluation process
as an appropriate process is in place; this will, however,
be kept under review.
RELATIONS WITH SHAREHOLDERS
UIL welcomes the views of shareholders and
places great importance on communication with
shareholders.
The prime medium by which the Company
communicates with shareholders is through the
half-yearly and annual financial reports, which aim to
provide shareholders with a full understanding of the
Company’s activities and its results. This information
is supplemented by the calculation and publication,
via a Regulatory Information Service, of the NAV of the
Company’s shares and by monthly fact sheets produced
by the Investment Managers. Shareholders can visit the
Company’s website: www.uil.limited in order to access
copies of half-yearly and annual financial reports,
factsheets and regulatory announcements.
The Investment Managers hold meetings with the
Company’s largest shareholders and report back
to the Board on these meetings. The Chairman and
other Directors are available to discuss any concerns
with shareholders, if required and shareholders may
communicate with the Company at any time by writing
to the Board at the Company’s registered office or
contacting the Company’s broker.
By order of the Board
ICM Limited
Company Secretary
22 September 2021
Since inception, UIL has created a NAV total return
for shareholders of 804.0%
UIL has a leveraged balance sheet structure, with
the ordinary shares leveraged by the ZDP shares
and bank debt.
ORDINARY SHARES
The number of ordinary shares in issue, and the voting
rights, as at 30 June 2021 was 84,303,283 shares. The
ordinary shares are entitled to all the revenue profits
of the Company available for distribution and resolved
to be distributed by the Directors by way of a dividend.
The Directors consider the payment of dividends on a
quarterly basis.
On a winding up, holders of ordinary shares will be
entitled, after payment of all debts and the satisfaction
of all liabilities of the Company, to the winding up
revenue profits of the Company and thereafter, after
paying to UIL Finance for its ZDP shareholders their
accrued capital entitlement, to all the remaining assets
of the Company.
ZDP SHARES
The ZDP shares are issued by UIL Finance, a wholly-
owned subsidiary of UIL. The ZDP shares carry no
entitlement to income and the whole of any return will
take the form of capital.
2022 ZDP SHARES
35,569,069 2022 ZDP shares were in issue as at
30 June 2021. The 2022 ZDP shares rank for payment
in priority to the ordinary shares (save for any
undistributed revenue profit on winding up) and the
2024, 2026 and 2028 ZDP shares but rank behind the
bank debt for capital repayment of 146.99p per 2022
ZDP share on 31 October 2022. The capital repayment
is equivalent to a redemption yield of 6.25% per annum
based on the initial capital entitlement of 100.00p.
2024 ZDP SHARES
30,000,000 2024 ZDP shares were in issue as at 30
June 2021. The 2024 ZDP shares rank for payment
in priority to the ordinary shares (save for any
undistributed revenue profit on winding up) and the
2026 and 2028 ZDP shares but rank behind the bank
debt and the 2022 ZDP shares for capital repayment
of 138.35p per 2024 ZDP share on 31 October 2024.
The capital repayment is equivalent to a redemption
yield of 4.75% per annum based on the initial capital
entitlement of 100.00p.
2026 ZDP SHARES
25,000,000 2026 ZDP shares were in issue as at
30 June 2021, of which 3,109,620 were held by UIL. The
2026 ZDP shares rank for payment in priority to the
ordinary shares (save for any undistributed revenue
profit on winding up) and the 2028 ZDP shares but rank
behind the bank debt, and the 2022 and 2024 ZDP
shares for capital repayment of 151.50p per 2026 ZDP
share on 31 October 2026. The capital repayment is
equivalent to a redemption yield of 5.00% per annum
based on the initial capital entitlement of 100.00p.
2028 ZDP SHARES
25,000,000 2028 ZDP shares were in issue as at
30 June 2021, of which 583,735 were held by UIL. The
2028 ZDP shares rank for payment in priority to the
ordinary shares (save for any undistributed revenue
profit on winding up) but rank behind the bank debt,
and the 2022, 2024 and 2026 ZDP shares for capital
repayment of 152.29p per 2028 ZDP share on
31 October 2028. The capital repayment is equivalent
to a redemption yield of 5.75% per annum based on
the initial capital entitlement of 100.00p.
BANK DEBT
As at 30 June 2021, UIL had a £50.0m multi-currency
loan facility provided by Scotiabank, secured against
the Company’s assets by way of a debenture, and
£48.5m was drawn under this facility.
SENSITIVITY OF RETURNS AND RISK PROFILES
Ordinary shares rank behind the ZDP shares (save
for any undistributed revenue profit on a winding
up) and bank debt such that they represent a geared
instrument. For every £100 of gross assets of the
Company as at 30 June 2021, the ordinary shares could
be said to be interested in £67.82 of those assets after
deducting the prior claims as above. This makes the
56
57
UIL LimitedReport and Accounts for the year to 30 June 2021 CAPITAL STRUCTURE (continued)
DIRECTORS’ REMUNERATION REPORT
ordinary shares more sensitive to movements in gross
assets. Based on these amounts, a 1.0% movement
in gross assets would change the NAV attributable to
ordinary shares by 1.5%.
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 81.5%, equivalent
to an annual fall of 39.7%, the 2024 ZDP shares would
receive no payment at the end of their life.
The interest cost of UIL’s bank debt, combined with the
annual accruals in respect of ZDP shares, represents a
blended rate of 4.5% as at 30 June 2021.
Based on their final entitlement of 146.99p per
share, the final entitlement of the 2022 ZDP shares
was covered 5.41 times by gross assets as at 30 June
2021. Should the gross assets fall by 81.5% over the
remaining life of the 2022 ZDP shares, then the 2022
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 91.1%, equivalent to
an annual fall of 83.6%, the 2022 ZDP shares would
receive no payment at the end of their life.
Based on their final entitlement of 138.35p per share,
the final entitlement of the 2024 ZDP shares was
covered 3.83 times by gross assets as at 30 June
2021. Should the gross assets fall by 73.9% over the
remaining life of the 2024 ZDP shares, then the 2024
Based on their final entitlement of 151.50p per share,
the final entitlement of the 2026 ZDP shares was
covered 3.03 times by gross assets as at 30 June
2021. Should the gross assets fall by 66.9% over the
remaining life of the 2026 ZDP shares, then the 2026
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 73.9%, equivalent
to an annual fall of 22.2%, the 2026 ZDP shares would
receive no payment at the end of their life.
Based on their final entitlement of 152.29p per share,
the final entitlement of the 2028 ZDP shares was
covered 2.50 times by gross assets as at 30 June
2021. Should the gross assets fall by 60.0% over the
remaining life of the 2028 ZDP shares, then the 2028
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 66.9%, equivalent
to an annual fall of 14.0%, the 2028 ZDP shares would
receive no payment at the end of their life.
SPLIT OF GROSS ASSETS
as at 30 June 2021
CONSOLIDATED FUNDING COST STRUCTURE
as at 30 June 2021
by value
by percentage
£363.8m
Ordinary shares
66.82%
6.25%
5.75%
4.48%
5.00%
4.75%
£23.7m
£25.3m
£35.0m
£48.1m
£48.5m
2028 ZDP shares
2026 ZDP shares
2024 ZDP shares
2022 ZDP shares
Bank loans
4.35%
4.65%
6.43%
8.84%
8.91%
2022
ZDP
shares
2024
ZDP
shares
2026
ZDP
shares
2028
ZDP
shares
Blended
cost of
prior
charges
to
ordinary
shares
1.66%
Bank
loans
The Board presents the report on Directors’
remuneration for the year ended 30 June 2021. The
report comprises a remuneration policy, which is
subject to a triennial binding shareholder vote, or
sooner if an alteration to the policy is proposed, and a
report on remuneration, which is subject to an annual
advisory vote. An ordinary resolution for the approval
of this report will be put to shareholders at the
Company’s forthcoming AGM. Where certain parts of
the disclosures provided have been audited, they are
indicated as such. The auditor’s opinion is included in
their report starting on page 66.
The Board’s policy on remuneration is set out below.
A key element is that fees payable to Directors should
reflect the time spent by them on the Company’s
affairs and should be sufficient to attract and retain
individuals with suitable knowledge and experience
to promote the long term success of the Company
whilst also reflecting the time commitment and
responsibilities of the role. There were no changes to
the policy during the year.
The Board is composed solely of non-executive
Directors, none of whom has a service contract
with the Company and therefore no remuneration
committee has been appointed. The Board as a whole
undertakes the responsibilities which would otherwise
be assumed by a remuneration committee.
The fees are fixed and are payable in cash, quarterly
in arrears. Directors are entitled to be reimbursed for
any reasonable expenses properly incurred by them
in connection with the performance of their duties
and attendance at Board and general meetings and
Committee meetings. Directors are not eligible for
bonuses, pension benefits, share options, long-term
incentive schemes or other benefits.
Directors are provided with a letter of appointment
when they join the Board. There is no provision for
compensation upon early termination of appointment.
The letters of appointment are available on request at
the Company’s registered office during business hours.
DIRECTORS’ REMUNERATION
The Board reviews the fees payable to the Chairman
and Directors annually. Following no increases to the
fees for the year ended 30 June 2021 over the previous
year, the review in respect of the year ending 30 June
2022 has resulted in the increases being applied to the
annual fees as detailed in the table below.
Year ending 30 June
Chairman
Directors
Chairman of Audit & Risk
Committee
2022
£’000s
2021*
£’000s
2020*
£’000s
47.6
35.2
46.0
34.0
46.0
34.0
45.5
44.0
44.0
DIRECTORS’ REMUNERATION POLICY
*Actual
The Board considers the level of the Directors fees
at least annually. The Board determines the level of
Directors’ fees within the limit currently set by the
Company’s Bye-laws, which limit the aggregate fees
payable to the Directors to a total of £250,000 per
annum.
The Board’s policy is to set Directors’ remuneration at
a level commensurate with the skills and experience
necessary for the effective stewardship of the
Company and the expected contribution of the Board
as a whole in continuing to achieve the investment
objective. Time committed to the Company’s business
and the specific responsibilities of the Chairman,
Directors and the chairman of the Audit & Risk
Committee are taken into account. The policy aims
to be fair and reasonable in relation to comparable
investment companies.
VOTING AT ANNUAL GENERAL MEETING
A resolution to approve the Remuneration Report was
put to shareholders at the AGM of the Company held
on 8 December 2020. Of the votes cast, 99.99% were
in favour and 0.01% were against; this resolution will
be put to shareholders again this year. The Company
seeks shareholder approval for its remuneration policy
on a triennial basis and a binding resolution was last
put to shareholders at the AGM held on 8 December
2020. Of the votes cast, 99.98% were in favour and
0.02% were against. A resolution to approve the
remuneration policy will be put to shareholders at the
AGM to be held in 2023.
58
UIL Limited
Report and Accounts for the year to 30 June 2021
59
59
Report and Accounts for the year to 30 June 2021 DIRECTORS’ REMUNERATION REPORT
(continued)
DIRECTORS’ ANNUAL REPORT ON REMUNERATION
(AUDITED)
A single figure for the total remuneration of each
Director is set out in the table below for the year
ended 30 June 2021.
Director(1)
Peter Burrows(2)
Stuart Bridges (appointed 2 October
2019)
Alison Hill
Warren McLeland (retired 30
September 2019)
Christopher Samuel
David Shillson
Eric Stobart (retired 30 September
2019)
2021
£
2020
£
46,000
23,000
44,000
33,000
34,000
34,000
–
8,500
34,000
34,000
34,000
34,000
–
11,000
Total
192,000
177,500
(1) The Directors’ entitlement to fees is calculated in arrears
(2) Peter Burrows waived £23,000 of his £46,000 entitlement for the
year ended 30 June 2020
The annual percentage change in each Directors’
remuneration for the past year is 0.0% (2020: 2.3%),
other than for Mr Burrows, which is 100% (2020:
(48.9)%) as a result of him waiving 50% of his fee
entitlement during the year ended 30 June 2020.
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table compares the remuneration
paid to the Directors with aggregate distributions
paid to shareholders relating to the year to 30 June
2021 and the prior year. Although this disclosure is
a statutory requirement, the Directors consider that
comparison of Directors’ remuneration with annual
dividends and share buybacks does not provide a
meaningful measure relative to the Company’s overall
performance as an investment company with an
objective of providing shareholders with long-term
total return.
Year ended
30 June
Aggregate Directors’
emoluments
Aggregate dividends
Aggregate share buybacks
2021
£’000s
2020
£’000s
CHANGE
£’000s
192
6,813
3,623
178
6,711
5,892
14
102
(2,269)
DIRECTORS’ BENEFICIAL SHARE INTERESTS
(AUDITED)
The Directors’ (and any connected persons) holdings of
ordinary shares are detailed below:
As at 30 June
Peter Burrows
Stuart Bridges(1)
Alison Hill(1)
Christopher Samuel
David Shillson(1)
2021
2020
909,617
799,617
136,937
11,896
81,619
63,815
212,991
205,045
123,109
105,305
(1) Since the year end, Mr Bridges, Ms Hill and Mr Shillson have each
acquired, respectively, a further 4,023, 3,109 and 3,109 ordinary
shares
COMPANY PERFORMANCE
The graph below compares, for the ten years ended 30 June 2021, the ordinary share price total return (see page
110) to the FTSE All-Share total return Index (Sterling adjusted).
SHARE PRICE TOTAL RETURN (pence)
from 30 June 2011 to 30 June 2021 (rebased to 100 as at 30 June 2011)
350
300
250
200
150
100
50
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
UIL ordinary share price total return
FTSE All-Share total return Index
Source: ICM
On behalf of the Board
Peter Burrows
Chairman
22 September 2021
60
UIL Limited
Report and Accounts for the year to 30 June 2021
61
AUDIT & RISK COMMITTEE REPORT
As chairman of the Audit &
Risk Committee, I am pleased
to present the Committee’s
report to shareholders for the
year ended 30 June 2021.
ROLE AND RESPONSIBILITIES
UIL has established a
separately chaired Audit &
Risk Committee whose duties
include considering and
recommending to the Board
for approval the contents of
STUART BRIDGES
Chairman of the Audit
& Risk Committee
the half yearly and annual financial statements and
providing an opinion as to whether the annual report
and accounts, taken as a whole, are fair, balanced
and understandable and provide the information
necessary for shareholders to assess the Company’s
performance, business model and strategy. The
Committee also reviews the external Auditors’
report on the annual financial statements and is
responsible for reviewing and forming an opinion
on the effectiveness of the external audit process
and audit quality. Other duties include reviewing the
appropriateness of the Company’s accounting policies
and ensuring the adequacy of the internal control
systems and standards.
The Audit & Risk Committee meets at least three times
a year. Two of the planned meetings are held prior to
the Board meetings to approve the half yearly and
annual results. Representatives of the Investment
Managers attend all meetings.
COMPOSITION
During the year ended 30 June 2021, the Audit & Risk
Committee consisted of all the independent Directors
of the Company. It is considered that there is a range of
recent and relevant financial experience amongst the
members of the Audit & Risk Committee together with
experience of the investment trust sector. In light of
the Chairman of the Board’s relevant financial services
experience, his continued independence and his
valued contributions in Committee meetings, the Audit
& Risk Committee considers it appropriate that he is a
member.
RESPONSIBILITIES AND REVIEW OF THE EXTERNAL
AUDIT
During the year the principal activities of the Audit &
Risk Committee included:
• considering and recommending to the Board for
approval the contents of the half yearly and annual
financial statements and reviewing the external
auditor’s report;
• management of the relationship with the external
auditor, including its appointment and the
evaluation of scope, execution, cost effectiveness,
independence and objectivity;
• reviewing and approving the external auditors’
plan for the financial year, with a focus on the
identification of areas of audit risk, and consideration
of the appropriateness of the level of audit
materiality adopted;
• reviewing and recommending to the Board for
approval the audit and non-audit fees payable to the
external auditor and the terms of its engagement;
• evaluation of reports received from the external
auditor with respect to the annual financial
statements and its review of the half-yearly report;
• reviewing the efficacy of the external audit process
and making a recommendation to the Board with
respect to the reappointment of the external
auditors;
• evaluation of the effectiveness of the internal
control and risk management systems including
reports received on the operational controls of the
Company’s service providers and reports from the
Company’s depositary;
• reviewing the appropriateness of the Company’s
accounting policies; and
• monitoring developments in accounting and
reporting requirements that impact on the
Company’s compliance with relevant statutory and
listing requirements.
AUDITOR AND AUDIT TENURE
KPMG LLP (“KPMG”) has been the auditor of the
Company since 2012, following a competitive tender
process. The Audit & Risk Committee decides when it
is appropriate to put the role of auditor out to tender.
The audit partner has rotated regularly. Mr John
Waterson was appointed the lead audit partner last
year. The Audit & Risk Committee has considered the
independence of the auditor and the objectivity of the
audit process and is satisfied that KPMG has fulfilled its
obligations to shareholders as independent auditor to
the Company.
It is the Company’s policy not to seek substantial non-
audit services from its auditor unless they relate to a
review of the half yearly report as the Board considers
the auditor is best placed to provide this work. If the
provision of significant non-audit services were to
be considered, the Committee would procure such
services from an accountancy firm other than the
auditor. Non-audit fees paid to KPMG by the Company
amounted to £10,000 for the year ended 30 June
2021 (2019: £7,500) and related to the review of the
half yearly accounts. The Committee has considered
the threats to independence from the provision of
this service and concluded that since appropriate
safeguards exists there is no impact to auditor
independence.
The partner and manager of the audit team at
KPMG presented their audit plan to the Audit & Risk
Committee in advance of the financial year end. Items
of audit focus were discussed, agreed and given
particular attention during the audit process. KPMG
reported to the Audit & Risk Committee on these
items, their independence and other matters. This
report was considered by the Audit & Risk Committee
and discussed with KPMG and the Investment
Managers prior to approval of the annual financial
report.
Members of the Audit & Risk Committee meet in
camera with the external auditor at least annually.
ACCOUNTING MATTERS AND SIGNIFICANT AREAS
For the year ended 30 June 2021 the accounting
matters that were subject to specific consideration
by the Audit & Risk Committee and consultation with
KPMG where necessary were as follows:
SIGNIFICANT AREA
HOW ADDRESSED
Value of level 3
investments
Investments that are classified as level 3 are valued using a variety of techniques to
determine a fair value, as set out in note 1(d) to the accounts. All such valuations are
carefully reviewed by the Audit & Risk Committee with the Investment Managers.
The Audit & Risk Committee receives detailed information on all level 3 investments and
it discusses and challenges the valuations with the Investment Managers. It considers
market comparables and discusses any proposed revaluations with the Investment
Managers.
The Audit & Risk Committee reviewed the external
audit plan at an early stage and concluded that the
appropriate areas of audit risk relevant to the Company
had been identified and that suitable audit procedures
had been put in place to obtain reasonable assurance
that the financial statements as a whole would be free
of material misstatements.
As a result, and following a thorough review process,
the Audit & Risk Committee advised the Board that
it is satisfied that, taken as a whole, the annual
financial report for the year ended 30 June 2021 is
fair, balanced, and understandable and provides the
information necessary for shareholders to assess the
Company’s performance, business model and strategy.
In reaching this conclusion, the Audit & Risk Committee
has assumed that the reader of the report would have
a reasonable level of knowledge of investments.
EXTERNAL AUDIT, REVIEW OF ITS EFFECTIVENESS AND
AUDITOR REAPPOINTMENT
The Audit & Risk Committee advises the Board on the
appointment of the external auditor, its remuneration
for audit and non-audit work and its cost effectiveness,
independence, and objectivity.
62
UIL Limited
Report and Accounts for the year to 30 June 2021
63
AUDIT & RISK COMMITTEE REPORT (continued)
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the Report and Accounts
As part of the review of the effectiveness of the audit
process, a formal evaluation process incorporating
views from the members of the Audit & Risk
Committee and relevant personnel at the Investment
Managers is followed and feedback is provided to
KPMG. Areas covered by this review include:
• the calibre of the audit firm, including reputation and
industry presence;
management, which continue to serve as an effective
tool to highlight and monitor the principal risks, details
of which are provided in the Strategic Report. It also
received and considered, together with representatives
of the Investment Managers, reports in relation to
the operational controls of the Investment Managers,
Administrator and Custodian. These reviews identified
no issues of significance.
• the extent of quality controls including review
WHISTLEBLOWING POLICY
processes, second director oversight and annual
reports from its regulator;
• the performance of the audit team, including
skills of individuals, specialist knowledge, partner
involvement, team member continuity and quality
and timeliness of audit planning and execution;
The Committee has also reviewed and accepted the
‘whistleblowing’ policy that has been put in place by
the Investment Managers under which their staff,
in confidence, can raise concerns about possible
improprieties in matters of financial reporting or other
matters, in so far as they affect the Company.
• audit communication including planning, relevant
INTERNAL AUDIT
Due to the nature of the Company, being an externally
managed investment company with no executive
employees, the Company does not have its own
internal audit function. The Committee and the Board
have concluded that there is no current need for such
a function, based on the satisfactory operation of
controls within the Company’s service providers.
Stuart Bridges
Chairman of the Audit & Risk Committee
22 September 2021
accounting and regulatory developments, approach
to significant accounting risks, communication of
audit results and recommendations on corporate
reporting;
• ethical standards including independence and
integrity of the audit team, lines of communication
to the Audit & Risk Committee and partner rotation;
and
• reasonableness of the audit fees.
For the year ended 30 June 2021, the Audit & Risk
Committee is satisfied that the audit process was
effective.
Resolutions proposing the reappointment of KPMG as
the Company’s auditor and authorising the Directors
to determine its remuneration will be put to the
shareholders at the forthcoming AGM.
INTERNAL CONTROLS AND RISK MANAGEMENT
UIL’s risk assessment focus and the way in which
significant risks are managed is a key area of focus
for the Audit & Risk Committee. Work here was
driven by the Audit & Risk Committee’s assessment
of the risks arising in the Company’s operations and
identification of the controls exercised by the Board
and its delegates, the Investment Managers, the
Administrator and other service providers. These
are recorded in risk matrices prepared by ICMIM
as the Company’s AIFM with responsibility for risk
The Directors are responsible for preparing the Annual
Report and the Group and parent Company Accounts in
accordance with applicable law and regulations.
The Directors are required to prepare Group and
parent Company financial statements for each financial
year. They have elected to prepare the Group financial
statements in accordance with International Financial
Reporting Standards as adopted by the European Union
(IFRSs as adopted by the EU) and applicable law and
have elected to prepare the parent Company financial
statements on the same basis.
The Directors must not approve the financial statements
unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent
Company and of their profit or loss for that period.
In preparing each of the Group and parent Company
financial statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable,
relevant and reliable;
• state whether they have been prepared in
accordance with IFRSs as adopted by the EU;
• assess the Group and parent Company’s ability
to continue as a going concern, disclosing, as
applicable, matters related to going concern; and
• use the going concern basis of accounting unless
they either intend to liquidate the Group or the
parent Company or to cease operations or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the parent Company and enable them to
ensure that its financial statements comply with the
Companies Act 1981 of Bermuda. They are responsible
for such internal control as they determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud
and other irregularities.
The Directors have decided to prepare voluntarily a
Directors’ Remuneration Report in accordance with
Schedule 8 to The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008
made under the UK Companies Act 2006, as if those
requirements applied to the Company. The Directors
have also decided to prepare voluntarily a Corporate
Governance Statement under the UK Corporate
Governance Code as if the Company were required to
comply with the Listing Rules of the Financial Conduct
Authority applicable to UK premium listed companies.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in
the UK and Bermuda governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN
RESPECT OF THE ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance
with the applicable set of accounting standards, give
a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the
undertakings included in the consolidation taken as
a whole; and
• the Strategic Report and Directors’ Report include
a fair review of the development and performance
of the business and the position of the Company,
and the undertakings included in the consolidation
taken as a whole, together with a description of the
principal risks and uncertainties that they face.
We consider the annual report and accounts, taken
as a whole, is fair, balanced, and understandable and
provides the information necessary for shareholders to
assess the Group’s position and performance, business
model and strategy.
Approved by the Board and signed on its behalf by:
Peter Burrows
Chairman
22 September 2021
64
UIL Limited
Report and Accounts for the year to 30 June 2021
65
65
Report and Accounts for the year to 30 June 2021 2. Key audit matters: our assessment of risks of material misstatement
Key audit m atters are those m atters that, in our professional judgem ent, were of m ost significance in the audit of the financial
statem ents and include the m ost significant assessed risks of m aterial m isstatem ent (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagem ent team . We sum m arise below the key audit m atter, in arriving at our audit opinion
above, together with our key audit procedures to address this m atter, and as required for public interest entities, our results
from those procedures. This m atter was addressed, and our results are based on procedures undertaken, in the context of and
solely for the purpose of, our audit of the financial statem ents as a whole, and in form ing our opinion thereon, and
consequently are incidental to that opinion, and we do not provide a separate opinion on this m atter.
Valuation of Level 3
investments (including Somers
Limited) – Group and Comp any
key audit matter*
(£322.8 m illion; 2020: £291.1
m illion)
Refer to page 63 (Audit & Risk
Com m ittee Report), page 80
(accounting policy) and pages
85,86 and 103-105 (financial
disclosures).
* Som ers is classified as a level 3
in 2021, as disclosed in Note 29.
The risk
Our resp onse
Sub jective valuation:
As at 30 June 2021, 59.1% (2020:
59.0%) of the Group’s total assets (by
value) is held in level 3 investm ents
where no quoted m arket price is
available. Unlisted investm ents are
m easured at fair value, which is
established in accordance with the
International Private Equity and Venture
Capital Valuation Guidelines, by using
m easurem ents of value such as prices
of recent orderly transactions,
discounted cash flows, earnings
m ultiples, and net assets.
The effect of these m atters is that, as
part of our risk assessm ent, we
determ ined that the valuation of Level 3
investm ents has a high degree of
estim ation uncertainty, with a potential
range of reasonable outcom es greater
than our m ateriality for the financial
statem ents as a whole. The financial
statem ents note 29 discloses the
range/sensitivity estim ated by the
Group.
We perform ed the detailed tests below rather
than seeking to rely on controls, because the
nature of the balance is such that we would
expect
to obtain audit evidence prim arily
through the detailed procedures described:
Our procedures included:
Historical comp arisons: Assessm ent of
investm ent realisations in the period where
relevant, com paring; (i) actual sales proceeds to
prior year end valuations; (ii) repaym ents of debt
investm ents to repaym ent tim eline
expectations previously com m unicated by
m anagem ent; (iii) current year fair values to
m anagem ent narrative of expectations
com m unicated in previous periods, to
understand the reasons for significant variances
and determ ine whether they are indicative of
bias or error in the Group’s approach to
valuations. A retrospective review of prior
period audited accounts, in com parison to prior
period m anagem ent accounts included as key
inputs to valuations, is also undertaken to
assess the accuracy of m anagem ent
inform ation provided.
Methodology choice: In the context of
observed industry best practice and the
provisions of the International Private Equity
and Venture Capital Valuation Guidelines, we
challenged the appropriateness of the valuation
basis selected for the Group’s investm ents in
Level 3 securities.
Independent
auditor’s report
to the members of UIL Limited
Overview
Materiality:
group financial
statem ents as a
whole
Coverage
£5.4m (2020: £4.9m )
1% (2020: 1%) of group total
assets
100% (2020:100%) of group total
assets
Key audit matters vs 2020
Recurring risks
Valuation of level 3
investm ents (including
Som ers Lim ited)
◄►
1. Our opinion is unmodified
We have audited the financial statem ents of UIL
Lim ited (“the Com pany”) for the year ended 30
June 2021 which com prise the Group and
Com pany Incom e Statem ents, Group and Com pany
Statem ents of Changes in Equity, Group and
Com pany Statem ents of Financial Position, Group
and Com pany Statem ents of Cash Flows, and the
related notes, including the accounting policies in
note 1.
In our opinion the financial statements:
— give a true and fair view of the state of the
Group’s and of the parent Com pany’s affairs as
at 30 June 2021 and of the Group’s and parent
Com pany’s profit for the year then ended; and
— have been properly prepared in accordance with
International Financial Reporting Standards as
adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit
evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion
is consistent with our report to the Audit and Risk
Com m ittee.
We were first appointed by the Shareholders as
auditor for the year ended 30 June 2013. The
period of total uninterrupted engagem ent is for the
nine financial years ended 30 June 2021. We have
fulfilled our ethical responsibilities under, and are
independent of the Group in accordance with, UK
ethical requirem ents including the FRC Ethical
Standard as applied to other listed entities.
66
67
2. Key audit matters: our assessment of risks of material misstatement (cont.)
The risk
Our resp onse
Our valuation exp erience: Challenging the
investm ent m anager on key judgem ents affecting
investee com pany valuations, such as discount
factors and the choice of benchm ark for earnings
m ultiples. We com pared key underlying financial
data inputs to external sources, investee com pany
audited accounts and m anagem ent inform ation as
applicable. We challenged the assum ptions around
sustainability of earnings based on the plans of the
investee com panies and whether these are
achievable and we obtained an understanding of
existing and prospective investee com pany
cashflows to understand whether borrowings can be
serviced or whether refinancing m ay be required.
Our work included consideration of events which
occurred subsequent to the year end up until the
date of this audit report.
Comp aring valuations: Where a recent transaction
has been used to value a holding, we obtained an
understanding of the circum stances surrounding the
transaction and vouched the price to supporting
docum entation. We also assessed whether
subsequent changes or events such as m arket or
entity specific factors would im ply a change in value.
For the valuation of fund interests, we obtained and
agreed the latest reported net asset values from the
fund m anagers; and
Assessing transp arency: Consideration of the
appropriateness, in accordance with relevant
accounting standards, of the disclosures in respect
of level 3 investm ents and the effect of changing
one or m ore inputs to reasonably possible
alternative valuation assum ptions.
Our results:
We found the Group’s and Com pany’s valuation of
Level 3 investm ents to be acceptable (2020:
acceptable).
We continue to perform procedures over Going concern. However, following the repaym ent of 2020 Zero dividend preference shares
in the year the quantum of current liabilities has reduced significantly as of year end. Consequently we have not assessed it as a
significant risk in our current year audit and, therefore, it is not separately identified in our report this year.
Total Assets
£545.8 million (2020: £492.9
million)
Total assets
Group materiality
Group materiality
£5.4 million (2020: £4.9 million)
£5.4 million
Whole financial
statements materiality (2020:
£4.9 million)
£3.5 million
Whole financial
statements performance
materiality (2020: £3 .7 million)
£0.4 million
Investment and other income
materiality (2020: £0.4 million)
£0.27 million
Misstatements reported to the
Audit & Risk Committee (2020:
£0.24 million)
3. Our application of materiality and an
overview of the scope of our audit
Materiality for the Group financial statem ents as a
whole was set at £5.4 m illion (2020: £4.9 m illion),
determ ined with reference to a benchm ark of total
assets, of which it represents 1% (2020: 1%).
In line with our audit m ethodology, our procedures
on individual account balances and disclosures
were perform ed to a lower threshold, perform ance
m ateriality, so as to reduce to an acceptable level
the risk that individually im m aterial m isstatem ents
in individual account balances add up to a m aterial
am ount across the financial statem ents as a whole.
Perform ance m ateriality was set at 65% (2020:
75%) of m ateriality for the financial statem ents as a
whole, which equates to £3.5 m illion (2020:
£3.7m illion). We applied this percentage in our
determ ination of perform ance m ateriality based on
the level of identified m isstatem ents during the
prior year audit.
In addition, we applied m ateriality of £0.4 m illion
(2020: £0.4 m illion) and perform ance m ateriality of
£0.3 m illion (2020: 0.3 m illion) to Investm ent and
other incom e for which we believe m isstatem ents
of lesser am ounts than m ateriality for the financial
statem ents as a whole could reasonably be
expected to influence the Com pany’s m em bers’
assessm ent of the financial perform ance of the
Group.
Materiality for the Parent Com pany financial
statem ents as a whole was set at £5.3 m illion
(2020: £4.9 m illion). This is lower than the
m ateriality we would otherwise have determ ined
by reference to total assets, and represents 0.97%
of the Parent Com pany’s total assets (2020:
0.99%). Perform ance m ateriality was set at 65%
(2020: 75%) of m ateriality for the financial
statem ents as a whole, which equates to £3.4
m illion (2020: £3.6 m illion). We applied this
percentage in our determ ination of perform ance
m ateriality based on the level of identified
m isstatem ents during the prior year audit.
We agreed to report to the Audit & Risk Com m ittee
any corrected or uncorrected identified
m isstatem ents exceeding £0.27 m illion (2020:
£0.24 m illion) for the Group, £0.25 m illion (2020:
£0.24 m illion) for the Com pany, or £0.02 m illion in
relation to Investm ent and other incom e (2020:
£0.02 m illion), in addition to other identified
m isstatem ents that warranted reporting on
qualitative grounds.
The Group team perform ed the audit of the Group
as if it was a single aggregated set of financial
inform ation. The audit was undertaken to the
m ateriality level specified above and was
perform ed by a single audit team .
68
69
4. Going concern
The Directors have prepared the financial statem ents on the
going concern basis as they do not intend to liquidate the
Group or the Com pany or to cease their operations, and as
they have concluded that the Group’s and the Com pany’s
financial position m eans that this is realistic. They have also
concluded that there are no m aterial uncertainties that
could have cast significant doubt over their ability to
continue as a going concern for at least a year from the
date of approval of the financial statem ents (“the going
concern period”).
We used our knowledge of the Group and the Com pany, its
industry, and the general econom ic environm ent to identify
the inherent risks to its business m odel and analysed how
those risks m ight affect the Group and Com pany’s financial
resources or ability to continue operations over the going
concern period. The risks that we considered m ost likely to
adversely affect the Group and Com pany’s available
financial resources and its ability to operate over this period
were:
— The im pact of a significant reduction in the valuation of
investm ents and the im plications for the Group and
Com pany’s debt covenants;
— The liquidity of the investm ent portfolio and its ability to
m eet the liabilities of the Group and Com pany as and
when they fall due; and
— The operational resilience of key service organisations.
We considered whether these risks could plausibly affect
the liquidity in the going concern period by assessing the
degree of downside assum ption that, individually and
collectively, could result in a liquidity issue, taking into
account the Group and Com pany’s liquid investm ent
position (and the results of their reverse stress testing).
We considered whether the going concern disclosure in
notes 1 and 28 to the financial statem ents gives a full and
accurate description of the Directors’ assessm ent of going
concern, including the identified risks and related
sensitivities.
Our conclusions based on this work:
— we consider that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statem ents is appropriate;
— we have not identified, and concur with the Directors’
assessm ent that there is not, a m aterial uncertainty
related to events or conditions that, individually or
collectively, m ay cast significant doubt on the Group’s or
Com pany's ability to continue as a going concern for the
going concern period; and
— we have nothing m aterial to add or draw attention to in
relation to the Directors’ statem ent in notes 1 and 28 to
the financial statem ents on the use of the going concern
basis of accounting with no m aterial uncertainties that
m ay cast significant doubt over the Group and
Com pany’s use of that basis for the going concern
period, and we found the going concern disclosure in
notes 1 and 28 to be acceptable.
However, as we cannot predict all future events or
conditions and as subsequent events m ay result in
outcom es that are inconsistent with judgem ents that were
reasonable at the tim e they were m ade, the above
conclusions are not a guarantee that the Group or the
Com pany will continue in operation.
5. Fraud and breaches of laws and regulations – ability
to detect
Iden tifying an d responding to risks of m aterial
m isstatement due to fraud
To identify risks of m aterial m isstatem ent due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to com m it fraud or provide
an opportunity to com m it fraud. Our risk assessm ent
procedures included:
— Enquiring of Directors as to the Group and Com pany’s
high-level policies and procedures to prevent and
detect fraud, as well as whether they have knowledge
of any actual, suspected or alleged fraud;
— Assessing the segregation of duties in place between
the Directors, the Adm inistrator and the Group and
Com pany’s Investm ent Manager; and
— Reading Board and Audit and Risk Com m ittee m inutes.
As required by auditing standards, we perform procedures
to address the risk of m anagem ent override of controls, in
particular to the risk that m anagem ent m ay be in a position
to m ake inappropriate accounting entries. We evaluated the
design and im plem entation of the controls over journal
entries and other adjustm ents and m ade inquiries of the
Adm inistrator about inappropriate or unusual activity relating
to the processing of journal entries and other
adjustm ents. We substantively tested all m aterial post-
closing entries and, based on the results of our risk
assessm ent procedures and understanding of the process,
including the segregation of duties between the Directors
and the Adm inistrator, no further high-risk journal entries or
other adjustm ents were identified.
On this audit we have rebutted the fraud risk related to
revenue recognition because the revenue is non-
judgem ental and straightforward, with lim ited opportunity
for m anipulation. We did not identify any significant unusual
transactions or additional fraud risks.
Iden tifying an d responding to risks of m aterial
m isstatement due to n on-compliance with laws an d
regulations
We identified areas of laws and regulations that could
reasonably be expected to have a m aterial effect on the
financial statem ents from our general com m ercial and
sector experience and through discussion with the
Directors, the Investm ent Manager and the Adm inistrator
(as required by auditing standards) and discussed with the
Directors the policies and procedures regarding com pliance
with laws and regulations. As the Com pany is regulated, our
assessm ent of risks involved gaining an understanding of
the control environm ent including the entity’s procedures
for com plying with regulatory requirem ents.
The potential effect of these laws and regulations on the
financial statem ents varies considerably.
5. Fraud and breaches of laws and regulations – ability
6. We have nothing to report on the other information
to detect (continued)
in the Annual Report
Iden tifying an d responding to risks of m aterial
m isstatement due to n on-compliance with laws an d
regulations (continued)
Firstly, the Group is subject to laws and regulations that
directly affect the financial statem ents including financial
reporting legislation (including related com panies legislation)
and listing regulations, and we assessed the extent of
com pliance with these laws and regulations as part of our
procedures on the related financial statem ent item s.
Secondly, the Group is subject to m any other laws and
regulations where the consequences of non-com pliance
could have a m aterial effect on am ounts or disclosures in
the financial statem ents, for instance through the
im position of fines or litigation. We identified the following
areas as those m ost likely to have such an effect: m oney
laundering, data protection, bribery and corruption
legislation, and certain aspects of com pany legislation
recognising the financial and regulated nature of the
Group’s activities and its legal form . Auditing standards lim it
the required audit procedures to identify non-com pliance
with these laws and regulations to enquiry of the Directors
and the Adm inistrator and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Con text of th e ability of th e audit to detect fraud or
breach es of law or regulation
Owing to the inherent lim itations of an audit, there is an
unavoidable risk that we m ay not have detected som e
m aterial m isstatem ents in the financial statem ents, even
though we have properly planned and perform ed our audit
in accordance with auditing standards. For exam ple, the
further rem oved non-com pliance with laws and regulations
is from the events and transactions reflected in the financial
statem ents, the less likely the inherently lim ited procedures
required by auditing standards would identify it.
In addition, as with any audit, there rem ained a higher risk
of non-detection of fraud, as these m ay involve collusion,
forgery, intentional om issions, m isrepresentations, or the
override of internal controls. Our audit procedures are
designed to detect m aterial m isstatem ent. We are not
responsible for preventing non-com pliance or fraud and
cannot be expected to detect non-com pliance with all laws
and regulations.
The Directors are responsible for the other inform ation
presented in the Annual Report together with the financial
statem ents. Our opinion on the financial statem ents does
not cover the other inform ation and, accordingly, we do not
express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other inform ation and, in
doing so, consider whether, based on our financial
statem ents audit work, the inform ation therein is m aterially
m isstated or inconsistent with the financial statem ents or
our audit knowledge. Based solely on that work we have
not identified m aterial m isstatem ents in the other
inform ation.
Directors’ rem uneration report
In addition to our audit of the financial statem ents, the
Directors have engaged us to audit the inform ation in the
Directors’ Rem uneration Report that is described as having
been audited, which the Directors have decided to prepare
as if the Com pany were required to com ply with the
requirem ents of Schedule 8 to The Large and Medium -sized
Com panies and Groups (Accounts and Reports) Regulations
2008 (SI 2008 No. 410) m ade under the UK Com panies Act
2006.
In our opinion the part of the Directors’ Rem uneration
Report to be audited has been properly prepared in
accordance with the Com panies Act 2006, as if those
requirem ents applied to the Com pany.
Disclosures of em erging and prin cipal risks an d longer-
term viability
We are required to perform procedures to identify whether
there is a m aterial inconsistency between the Directors’
disclosures in respect of em erging and principal risks and
the viability statem ent, and the financial statem ents and
our audit knowledge.
Based on those procedures, we have nothing m aterial to
add or draw attention to in relation to:
— the Directors’ confirm ation within the Principal Risks
and Risk Mitigation on pages 36 to 38 that they have
carried out a robust assessm ent of the em erging and
principal risks facing the Group, including those that
would threaten its business m odel, future perform ance,
solvency and liquidity;
— the Principal Risks and Risk Mitigation disclosures
describing these risks and how em erging risks are
identified, and explaining how they are being m anaged
and m itigated; and
— the Directors’ explanation in the Viability Statem ent of
how they have assessed the prospects of the Group,
over what period they have done so and why they
considered that period to be appropriate, and their
statem ent as to whether they have a reasonable
expectation that the Group will be able to continue in
operation and m eet its liabilities as they fall due over the
period of their assessm ent, including any related
disclosures drawing attention to any necessary
qualifications or assum ptions.
70
71
GROUP INCOME STATEMENT
for the year to 30 June
Notes
9 Gains/(losses) on investments
12 Gains on derivative financial instruments
Foreign exchange gains/(losses)
2 Investment and other income
Total income/(loss)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
5 Finance costs
Profit/(loss) before taxation
6 Taxation
Profit/(loss) for the year
7 Earnings per ordinary share – pence
Revenue
return
£’000s
Capital
return
£’000s
2021
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2020
Total
return
£’000s
–
–
–
11,555
11,555
(982)
(1,069)
9,504
(994)
8,510
–
8,510
9.98
112,465
112,465
6,319
3,904
6,319
3,904
–
11,555
122,688
134,243
–
(5)
(982)
(1,074)
122,683
132,187
(8,601)
(9,595)
–
–
–
12,684
12,684
(1,426)
(1,184)
10,074
(1,602)
(60,006)
(60,006)
3,286
(3,469)
–
3,286
(3,469)
12,684
(60,189)
(47,505)
–
(10)
(1,426)
(1,194)
(60,199)
(50,125)
(10,312)
(11,914)
114,082
122,592
8,472
(70,511)
(62,039)
–
–
114,082
122,592
133.81
143.79
(1)
8,471
9.77
–
(1)
(70,511)
(62,040)
(81.30)
(71.53)
The Group does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is also
the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised).
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of the Company. There are no minority interests.
The notes on pages 79 to 105 form part of these financial statements.
6. We have nothing to report on the other information
7. Respective responsibilities
in the Annual Report (continued)
Disclosures of em erging and prin cipal risks an d longer-
term viability (con tinued)
Our work is lim ited to assessing these m atters in the
context of only the knowledge acquired during our financial
statem ents audit. As we cannot predict all future events or
conditions and as subsequent events m ay result in
outcom es that are inconsistent with judgem ents that were
reasonable at the tim e they were m ade, the absence of
anything to report on these statem ents is not a guarantee
as to the Group’s and Com pany’s longer-term viability.
Corporate govern ance disclosures
We are required to perform procedures to identify whether
there is a m aterial inconsistency between the Directors’
corporate governance disclosures and the financial
statem ents and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is m aterially consistent with the financial
statem ents and our audit knowledge:
— the Directors’ statem ent that they consider that the
annual report and financial statem ents taken as a whole
is fair, balanced and understandable, and provides the
inform ation necessary for shareholders to assess the
Group’s position and perform ance, business m odel and
strategy; and
— the section of the annual report describing the work of
the Audit & Risk Com m ittee, including the significant
issues that the Audit & Risk Com m ittee considered in
relation to the financial statem ents, and how these
issues were addressed.
— the section of the annual report that describes the
review of the effectiveness of the Group’s risk
m anagem ent and internal control system s.
In addition to our audit of the financial statem ents, the
Directors have engaged us to review their Corporate
Governance Statem ent as if the Com pany were required to
com ply with the Listing Rules and the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority
in relation to those m atters. Under the term s of our
engagem ent we are required to review the part of the
Corporate Governance Statem ent relating to the
Com pany’s com pliance with the provisions of the UK
Corporate Governance Code specified for our review.
We have nothing to report in this respect.
Directors’ respon sibilities
As explained m ore fully in their statem ent set out on page
65, the Directors are responsible for: the preparation of the
financial statem ents including being satisfied that they give
a true and fair view; such internal control as they determ ine
is necessary to enable the preparation of financial
statem ents that are free from m aterial m isstatem ent,
whether due to fraud or error; assessing the Group and
parent Com pany’s ability to continue as a going concern,
disclosing, as applicable, m atters related to going concern;
and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Com pany or to cease operations, or have no realistic
alternative but to do so.
Auditor’s respon sibilities
Our objectives are to obtain reasonable assurance about
whether the financial statem ents as a whole are free from
m aterial m isstatem ent, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a m aterial m isstatem ent when it
exists. Misstatem ents can arise from fraud or error and are
considered m aterial if, individually or in aggregate, they
could reasonably be expected to influence the econom ic
decisions of users taken on the basis of the financial
statem ents.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities
8 . The purpose of our audit work and to whom we owe
our responsibilities
This report is m ade solely to the Com pany’s m em bers, as a
body, in accordance with section 90 (2) of the Com panies
Act 1981 of Berm uda and the term s of our engagem ent by
the Com pany. Our audit work has been undertaken so that
we m ight state to the Com pany’s m em bers those m atters
we are required to state to them in an auditor’s report, and
the further m atters we are required to state to them in
accordance with the term s agreed with the Com pany, and
for no other purpose. To the fullest extent perm itted by
law, we do not accept or assum e responsibility to anyone
other than the Com pany and the Com pany’s m em bers, as a
body, for our audit work, for this report, or for the opinions
we have form ed.
John Waterson
for and on b ehalf of KPMG LLP
Chartered Accountants
20 Castle Terrace Edinburgh
EH1 2EG
22 Septem ber 2021
72
72
UIL Limited
Report and Accounts for the year to 30 June 2021
73
COMPANY INCOME STATEMENT
GROUP STATEMENT OF CHANGES IN EQUITY
for the year to 30 June
Notes
Revenue
return
£’000s
Capital
return
£’000s
2021
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2020
Total
return
£’000s
for the year to 30 June 2021
Notes
9 Gains/(losses) on investments
12 Gains on derivative financial instruments
Foreign exchange gains/(losses)
2 Investment and other income
Total income/(loss)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
5 Finance costs
Profit/(loss) before taxation
6 Taxation
Profit/(loss) for the year
7 Earnings per ordinary share – pence
–
–
–
11,555
11,555
(982)
(1,069)
9,504
(994)
8,510
–
8,510
9.98
112,986
112,986
6,319
3,904
6,319
3,904
–
11,555
123,209
134,764
–
(5)
(982)
(1,074)
123,204
132,708
(8,762)
(9,756)
–
–
–
12,684
12,684
(1,426)
(1,184)
10,074
(1,602)
(60,078)
(60,078)
3,286
(3,469)
–
3,286
(3,469)
12,684
(60,261)
(47,577)
–
(10)
(1,426)
(1,194)
(60,271)
(50,197)
(10,643)
(12,245)
–
–
114,442
122,952
134.24
144.22
(1)
8,471
9.77
–
(1)
(70,914)
(62,443)
(81.76)
(71.99)
The Company does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is
also the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised).
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of the Company.
The notes on pages 79 to 105 form part of these financial statements.
114,442
122,952
8,472
(70,914)
(62,442)
Notes
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Non-
distributable
reserve
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Total
£’000s
Balance as at 30 June 2020
8,594
10,445
233,866
32,069
(44,199)
10,850
251,625
Profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
Balance at 30 June 2021
–
–
(164)
8,430
–
–
(3,459)
–
–
–
–
–
–
114,082
8,510
122,592
–
(6,813)
(6,813)
–
–
(3,623)
6,986
233,866
32,069
69,883
12,547
363,781
for the year to 30 June 2020
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Non-
distributable
reserve
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Total
£’000s
Balance as at 30 June 2019
8,828
16,103
233,866
32,069
26,312
9,090
326,268
(Loss)/profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
Balance as at 30 June 2020
–
–
(234)
8,594
–
–
(5,658)
–
–
–
–
–
–
(70,511)
8,471
(62,040)
–
–
(6,711)
(6,711)
–
(5,892)
10,445
233,866
32,069
(44,199)
10,850
251,625
The notes on pages 79 to 105 form part of these financial statements.
74
UIL Limited
Report and Accounts for the year to 30 June 2021
75
COMPANY STATEMENT OF CHANGES IN EQUITY
STATEMENTS OF FINANCIAL POSITION
for the year to 30 June 2021
Notes
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Non-
distributable
reserve
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Total
£’000s
Balance as at 30 June 2020
8,594
10,445
233,866
32,069
(44,589)
10,850
251,235
Profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
Balance at 30 June 2021
–
–
(164)
8,430
–
–
(3,459)
–
–
–
–
–
–
114,442
8,510
122,952
–
–
(6,813)
(6,813)
–
(3,623)
6,986
233,866
32,069
69,853
12,547
363,751
for the year to 30 June 2020
Notes
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Non-
distributable
reserve
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Total
£’000s
Balance as at 30 June 2019
8,828
16,103
233,866
32,069
26,325
9,090
326,281
(Loss)/profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
Balance as at 30 June 2020
–
–
–
–
(234)
8,594
(5,658)
10,445
–
–
–
–
–
–
(70,914)
8,471
(62,443)
–
–
(6,711)
(6,711)
–
(5,892)
233,866
32,069
(44,589)
10,850
251,235
The notes on pages 79 to 105 form part of these financial statements.
Notes as at 30 June
Non-current assets
9 Investments
Current assets
11 Other receivables
12 Derivative financial instruments
Cash and cash equivalents
Current liabilities
13 Loans
14 Other payables
12 Derivative financial instruments
15 Zero dividend preference shares
Net current liabilities
2021
£’000s
Group
2020
£’000s
Company
2021
£’000s
2020
£’000s
540,074
488,997
544,228
491,280
1,411
1,047
3,324
5,782
3,579
111
258
3,948
1,411
1,047
3,324
5,782
3,579
111
258
3,948
(48,548)
(51,146)
(48,548)
(51,146)
(827)
(627)
(4,248)
(5,391)
–
(59,087)
(827)
(627)
–
(63,335)
(5,391)
–
(50,002)
(119,872)
(50,002)
(119,872)
(44,220)
(115,924)
(44,220)
(115,924)
Total assets less current liabilities
495,854
373,073
500,008
375,356
Non-current liabilities
16 Other payables
–
–
(136,257)
(124,121)
15 Zero dividend preference shares
(132,073)
(121,448)
–
–
Net assets
363,781
251,625
363,751
251,235
Equity attributable to equity holders
17 Ordinary share capital
18 Share premium account
19 Special reserve
20 Non-distributable reserve
21 Capital reserves
22 Revenue reserve
8,430
6,986
8,594
10,445
8,430
6,986
8,594
10,445
233,866
233,866
233,866
233,866
32,069
69,883
12,547
32,069
(44,199)
10,850
32,069
69,853
12,547
32,069
(44,589)
10,850
Total attributable to equity holders
363,781
251,625
363,751
251,235
23 Net asset value per ordinary share – pence
431.51
292.79
431.48
292.34
The notes on pages 79 to 105 form part of these financial statements.
Approved by the Board on 22 September 2021 and signed on its behalf by
Peter Burrows
Chairman
76
UIL Limited
Report and Accounts for the year to 30 June 2021
77
STATEMENTS OF CASH FLOWS
NOTES TO THE ACCOUNTS
for the year to 30 June
Profit/(loss) before taxation
Adjust for non-cash flow items:
(Gains)/losses on investments
Gains on derivative financial instruments
Foreign exchange (gains)/losses
Non-cash flows on income
Decrease/(increase) in accrued income
Decrease/(increase) in other debtors
Decrease in creditors
ZDP shares finance costs
Intra-group loan account finance costs
Tax on overseas income
Cash flows from operating activities
Investing activities:
Purchases of investments
Sales of investments
Sales of derivatives
Cash flows from investing activities
Cash flows before financing activities
Financing activities:
Equity dividends paid
Movements on loans
Cash flows from issue of ZDP shares
Cash flows from redemption of ZDP shares
Cash paid for ordinary shares purchased for cancellation
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of movement in foreign exchange
Cash and cash equivalents at the end of the year
Comprised of:
Cash
Bank overdraft
Total
The notes on pages 79 to 105 form part of these financial statements.
60,078
(3,286)
3,469
(6,323)
(709)
(2,122)
(8,757)
–
93,093
7,519
18,914
9,464
(6,711)
(2,137)
–
–
2021
£’000s
Group
2020
£’000s
Company
2021
£’000s
2020
£’000s
122,592
(62,039)
122,952
(62,442)
(112,465)
60,006
(112,986)
(6,319)
(3,904)
(8,167)
526
2,134
(177)
8,601
–
–
(3,286)
3,469
(6,323)
(709)
(2,122)
(8,757)
10,312
–
(1)
(6,319)
(3,904)
(8,167)
526
2,134
(177)
–
8,762
10,643
–
(1)
2,821
(9,450)
2,821
(9,450)
(52,154)
(81,698)
(52,920)
(81,698)
121,274
82,812
121,274
619
69,739
72,560
(6,813)
(606)
4,114
(61,177)
(3,623)
(68,105)
4,455
(3,256)
1,912
3,111
3,324
(213)
3,111
7,519
8,633
(817)
(6,711)
(2,137)
10,281
619
68,973
71,794
(6,813)
(606)
4,114
–
(60,411)
(5,892)
(4,459)
(5,276)
3,177
(1,157)
(3,256)
258
(3,514)
(3,256)
(3,623)
(5,892)
(67,339)
(14,740)
4,455
(3,256)
1,912
3,111
3,324
(213)
3,111
(5,276)
3,177
(1,157)
(3,256)
258
(3,514)
(3,256)
1. ACCOUNTING POLICIES
The Company, UIL Limited, is an investment company
incorporated in Bermuda and traded on the Specialist Fund
Segment of the Main Market of the London Stock Exchange.
The Company commenced trading on 20 June 2007.
The Group Accounts comprise the results of the Company
and UIL Finance Limited (“UIL Finance”).
The Group is engaged in a single segment of business,
focusing on maximising shareholder returns by identifying
and investing in investments where the underlying value is
not reflected in the market price.
(a) Basis of accounting
The Accounts have been prepared on a going concern
basis (see note 28) in accordance with IFRS, which comprise
standards and interpretations approved by the IASB,
and International Accounting Standards and Standing
Interpretations Committee interpretations approved by the
IASC that remain in effect and to the extent that they have
been adopted by the European Union.
There have been no significant changes to the accounting
policies during the year to 30 June 2021.
The Board has determined by having regard to the currency
of the Company’s share capital, the predominant currency
in which its shareholders operate and the currency in which
dividends are paid by the Company, that Sterling is the
functional and reporting currency.
Where presentational recommendations set out in the
revised Statement of Recommended Practice “Financial
Statements of Investment Trust Companies and Venture
Capital Trusts” (“SORP”), issued in the UK by the Association
of Investment Companies (“AIC”) in October 2019, do not
conflict with the requirements of IFRS, the Directors have
prepared the Accounts on a basis consistent with the
recommendations of the SORP, in the belief that this will aid
comparison with similar investment companies incorporated
and listed in the United Kingdom.
In accordance with the SORP, the Income Statement has been
analysed between a revenue return (dealing with items of a
revenue nature) and a capital return (relating to items of a
capital nature). Revenue returns include, but are not limited
to, dividend income, operating expenses, finance costs
and taxation (insofar as they are not allocated to capital, as
described in notes 1(j) and 1(k)). Net revenue returns are
allocated via the revenue return to the revenue reserve.
Capital returns include, but are not limited to, profits and
losses on the disposal and the valuation of non-current
investments, derivative instruments and on cash and
borrowings. Net capital returns are allocated via the capital
return to capital reserves.
Dividends on ordinary shares may be paid out of the special
reserve, revenue reserve and the capital reserves.
A number of new standards and amendments to standards
and interpretations, which have not been applied in
preparing these accounts, were in issue but not effective.
None of these are expected to have a material effect on the
accounts of the Group.
The key assumptions concerning the future and other key
sources of estimation uncertainty that have a significant risk
of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year relate to
the valuation of unlisted investments, details of which are set
out in accounting policy 1(d).
(b) Basis of consolidation
The consolidated Accounts include the Accounts of the
Company and its operating subsidiary, UIL Finance. All intra
group transactions, balances, income and expenses are
eliminated on consolidation. Other subsidiaries and associate
undertakings held as part of the investment portfolio (see
note 1(d) below) are not accounted for in the Group Accounts,
but are carried at fair value through profit or loss.
(c) Financial instruments
Financial instruments include non-current assets, derivative
assets and liabilities and long-term debt instruments. For
those financial instruments carried at fair value, accounting
standards recognise a hierarchy of fair value measurements
for financial instruments which gives the highest priority
to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). The classification of
instruments depends on the lowest significant applicable
input, as follows:
Level 1 – Unadjusted, fully accessible and current quoted
prices in active markets for identical assets or liabilities.
Included within this category are investments listed on any
recognised stock exchange or quoted on any secondary
market.
Level 2 – Quoted prices for similar assets or liabilities, or
other directly or indirectly observable inputs which exist for
the duration of the period of investment. Examples of such
instruments would be convertible loans in listed investee
companies, securities for which the quoted price has been
recently suspended, securities for which an offer price has
been announced in the market, forward exchange contracts
and certain other derivative instruments.
Level 3 – External inputs are unobservable. Value is the
Directors’ best estimate of fair value, based on advice from
relevant knowledgeable experts, use of recognised valuation
techniques and on assumptions as to what inputs other
market participants would apply in pricing the same or similar
78
UIL Limited
Report and Accounts for the year to 30 June 2021
79
NOTES TO THE ACCOUNTS
(continued)
instruments. Included in level 3 are investments in private
companies or securities, whether invested in directly, via
loans or through pooled private equity vehicles.
(d) Valuation of investments and derivative financial
instruments held at fair value through profit or loss
Investment purchases and sales are accounted for on the
trade date, inclusive of transaction costs. Investments,
including both equity and loans, used for efficient portfolio
management are classified as being at fair value through
profit or loss. As the Company’s business is investing in
financial assets with a view to profiting from their total
return in the form of dividends, interest or increases in fair
value, its investments (including those ordinarily classified
as subsidiaries under IFRS 10 but exempted by that financial
reporting standard from the requirement to be consolidated)
are designated as being at fair value through profit or loss
on initial recognition. Derivatives including forward foreign
exchange contracts and options are accounted for as a
financial asset/liability at fair value through profit or loss.
The Company manages and evaluates the performance of
these investments and derivatives on a fair value basis in
accordance with its investment strategy and information
about the Company is provided internally on this basis to the
Company’s Directors and key management personnel. Gains
and losses on investments and on derivatives are analysed
within the Income Statement as capital returns. Quoted
investments are shown at fair value using market bid prices.
The fair value of unquoted investments is determined by the
Board in accordance with the International Private Equity
and Venture Capital Valuation guidelines. In exercising its
judgement over the value of these investments, the Board
uses valuation techniques which take into account, where
appropriate, latest dealing prices, valuations from reliable
sources, net asset values, earnings multiples, recent orderly
transactions in similar securities, time to expected repayment
and other relevant factors (see key valuations techniques on
pages 103 to 105).
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances. Bank
overdrafts are included as a component of cash and cash
equivalents for the purpose of the cash flow statement only.
(f) Bank borrowings
Interest-bearing bank loans and overdrafts are initially
measured at fair value and subsequently measured at
amortised cost using the effective interest method. No
debt instruments held during the year required hierarchical
classification. Finance charges, including interest, are accrued
using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are
not settled in the year. See note 1(k) below for allocation of
finance costs between revenue and capital return within the
Income Statement.
(g) ZDP shares
The ZDP shares, due to be redeemed on 31 October 2022,
2024, 2026 and 2028 at a redemption value, including accrued
capitalised returns (see note 15) of 146.99 pence per share,
138.35 pence per share, 151.50 pence per share and 152.29
pence per share respectively, have been classified as liabilities,
as they represent an obligation on behalf of the Group to
deliver to their holders a fixed and determinable amount at
the redemption date. They are accordingly accounted for at
amortised cost, using the effective interest method as per IFRS
9 “Financial Instruments”. ZDP shares held by the Company
are deemed cancelled for Group purposes. The Company
has undertaken (i) to repay any interest free loan, and (ii)
to reimburse UIL Finance (by way of payment in advance, if
required) any and all costs, expenses, fees or interest UIL
Finance incurs or is otherwise liable to pay to the holder of the
ZDP Shares so as to enable UIL Finance to pay the final capital
entitlement of each class of ZDP Share on their respective
redemption date. The intra group loans are accordingly
accounted for at amortised cost, using the effective interest
method.
(h) Foreign currency
Foreign currency assets and liabilities are expressed in
Sterling at rates of exchange ruling at the statement of
financial position date. Foreign currency transactions are
translated at the rates of exchange ruling at the dates of
those transactions. Exchange profits and losses on currency
balances are credited or charged to the Income Statement
and analysed as capital or revenue as appropriate. Forward
foreign exchange contracts are valued in accordance with
quoted market rates.
(i) Investment and other income
Dividends receivable are brought into the Income Statement
and analysed as revenue return (except where, in the opinion
of the Directors, their nature indicates they should be
recognised as capital) on the ex-dividend date or, where no
ex-dividend date is quoted, when the Group’s right to receive
payment is established. Where the Group or the Company
has elected to receive its dividends in the form of additional
shares rather than in cash, the amount of the cash dividend
foregone is recognised as revenue return. Any excess in the
value of the shares received over the amount of the cash
dividend foregone is recognised as capital return. Interest on
debt securities is accrued on a time basis using the effective
interest method. Bank and short-term deposit interest is
recognised on an accruals basis. These are brought into the
Income Statement and analysed as revenue returns.
(j) Expenses
• expenses allocated in accordance with notes 1(j) and 1(k)
All expenses are accounted for on an accruals basis.
Expenses are charged through the Income Statement and
analysed under revenue return except for those expenses
incidental to the acquisition or disposal of investments and
performance related fees (calculated under the terms of
the management agreement), which are analysed under the
capital return, as the Directors believe such fees arise from
capital performance.
(k) Finance costs
Finance costs are accounted for using the effective interest
method, recognised through the Income Statement and
analysed under the revenue return except those finance
costs of the ZDP shares and intra group loans which are
analysed under the capital return.
(l) Dividends payable
Dividends paid by the Company are accounted for in the year
in which the Company is liable to pay them and are reflected
in the Statement of Changes in Equity. Under Bermuda law,
the Company is unable to pay dividends unless it has revenue
and other reserves (excluding share capital and share
premium) which together have a positive value exceeding the
cost of the dividend and is able to pay its liabilities as they fall
due.
(m) Capital reserves
The following items are accounted for through the Income
Statement as capital returns and transferred to capital
reserves:
Capital reserve – arising on investments sold
• gains and losses on the disposal of investments and
derivative instruments
• exchange differences of a capital nature
2.
INVESTMENT AND OTHER INCOME
Capital reserve – arising on investments held
• increases and decreases in the valuation of investments
and derivative instruments held at the year end.
(n) Use of estimates and judgements
The presentation of the financial statements in conformity
with IFRS requires management to make judgements,
estimates and assumptions that affect the application
of accounting policies and reported amounts of assets,
liabilities, income and expenses. Estimates and judgements
are continually evaluated and are based on perceived risks,
historical experience, expectations of plausible future events
and other factors. Actual results may differ from these
estimates.
The areas requiring the most significant judgement and
estimation in the preparation of the financial statements are:
accounting for the value of unquoted investments; and the
classification of the subsidiaries as investment entities.
The policy for valuation of unquoted securities is set out in
note 1(d) and further information on Board procedures is
contained in the Audit & Risk Committee Report and note
29(d). The fair value of unquoted (level 3) investments, as
disclosed in note 9, represented 59.8% of total investments
as at 30 June 2021 (2020: 36.3%).
Details of the subsidiaries are set out in note 10. The Board
has reviewed the classification and characteristics of the
subsidiaries and except for UIL Finance determined that
where the subsidiaries carry on business as investment
companies they do not fall under s32 of IFRS 10 as providing
services that relate to UIL’s investment activities. UIL has
therefore not consolidated these subsidiaries and measures
them at fair value through profit and loss in accordance with
IFRS 9.1
Group and Company
Investment income:
Dividends*
Interest*
Other income:
Underwriting commission
Interest on cash and short-term deposits
Total income
Revenue
£’000s
Capital
£’000s
6,781
4,774
11,555
–
–
11,555
–
–
–
–
–
–
*Includes scrip income (dividends and capitalised interest) of £8,025,000 (2020: £6,827,000)
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
6,781
4,774
8,209
4,463
11,555
12,672
–
–
8
4
11,555
12,684
2020
Total
£’000s
8,209
4,463
12,672
8
4
12,684
–
–
–
–
–
–
80
UIL Limited
Report and Accounts for the year to 30 June 2021
81
NOTES TO THE ACCOUNTS
(continued)
3. MANAGEMENT AND ADMINISTRATION FEES
4. OTHER EXPENSES
Group and Company
Payable to:
ICM/ICMIM – management fee and secretarial fees
Administration fees
Revenue
£’000s
Capital
£’000s
726
256
982
–
–
–
2021
Total
£’000s
726
256
982
Revenue
£’000s
Capital
£’000s
1,152
274
1,426
–
–
–
2020
Total
£’000s
1,152
274
1,426
The Company has appointed ICM Investment Management
Limited (“ICMIM”) as its Alternative Investment Fund
Manager and joint portfolio manager with ICM Limited
(“ICM”), for which they are entitled to a management fee
and a performance fee. The aggregate fees payable by
the Company are apportioned between the joint portfolio
managers as agreed by them.
The relationship between ICMIM and ICM is compliant with
the requirements of the EU Alternative Investment Fund
Managers Directive and also such other requirements
applicable to ICMIM by virtue of its regulation by the Financial
Conduct Authority.
The annual management fee is 0.5% per annum based on
total assets less current liabilities (excluding borrowings and
excluding the value of all holdings in companies managed or
advised by the Investment Managers or any of its subsidiaries
from which it receives a management fee), calculated and
payable quarterly in arrears. The agreement with ICM and
ICMIM may be terminated upon one year’s notice given by the
Company or by ICM and ICMIM, acting together.
In addition, the Investment Managers are entitled to a
capped performance fee payable in respect of each financial
period, equal to 15% of the amount by which the Company’s
NAV attributable to holders of ordinary shares outperforms
the higher of (i) 5.0%, and (ii) the post-tax yield on the FTSE
Actuaries Government Securities UK Gilts 5 to 10 years’
index, plus inflation (on the RPIX basis) (the “Reference Rate”).
The opening equity funds for calculation of the performance
fee are the higher of (i) the equity funds on the last day of a
calculation period in respect of which a performance fee was
last paid, adjusted for capital events and dividends paid since
that date (the “high watermark”); and (ii) the equity funds
on the last day of the previous calculation period increased
by the Reference Rate during the calculation period and
adjusted for capital events and dividends paid since the
previous calculation date. In a period where the Investment
Managers or any of their associates receive a performance
fee from any ICM managed investment in which UIL is an
investor, the performance fee payable by UIL will be reduced
by a proportion corresponding to UIL’s percentage holding
in that investment applied to the underlying investment
performance fee, subject to the provision that the UIL
performance fee cannot be a negative figure. In calculating
any performance fee payable, a cap of 2.5% of closing NAV
(adjusted for capital events and dividends paid) will be
applied following any of the above adjustments and any
excess over this cap shall be written off. A performance fee
was last paid in respect of the year to 30 June 2019. As at
that date the equity shareholders’ funds were £326.3m. As
at 30 June 2021, the attributable shareholders’ funds were
above the high watermark however, after adjusting for the
allocated share of performance fees (paid and accrued) from
ICM managed investments in which UIL is an investor, no
performance fee has been accrued.
ICM also provides company secretarial services to the
Company with the Company paying 45% of the incurred costs
associated with this post.
JP Morgan Chase Bank N.A. – London Branch has been
appointed Administrator and ICMIM has appointed Waverton
Investment Management Limited to provide certain support
services (including middle office, market dealing and
information technology support services). The Company or
the Administrator may terminate the agreement with the
Administrator upon six months’ notice in writing.
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
180
40
45
192
2
330
–
285
88
49
65
178
77
179
232
316
1,074
1,184
Group and Company
Auditor’s remuneration (see note 4A)
Broker and consultancy fees
Custody fees
Directors’ fees for services to the Company
(see Directors’ Remuneration Report on pages
59 to 61)
Travel expenses
Professional and legal fees
Migration costs to Specialist Fund Segment
Sundry expenses
Revenue
£’000s
Capital
£’000s
180
40
45
192
2
330
–
280
1,069
–
–
–
–
–
–
–
5
5
4A. AUDITOR’S REMUNERATION
Fees paid to the Group’s auditor are summarised below:
Group Auditor – KPMG LLP
Group and Company Annual Audit Fees
Audit of the Group and Company’s annual financial statements
Additional audit costs for the year to 30 June 2020
Other non-audit services – review of interim financial statements
Total auditor’s remuneration for the year
5. FINANCE COSTS
Group
Loans and bank overdrafts
ZDP shares
Company
Loans and bank overdrafts
Intra-group loan account
Revenue
£’000s
Capital
£’000s
994
–
994
–
8,601
8,601
Revenue
£’000s
Capital
£’000s
994
–
994
–
8,762
8,762
2021
Total
£’000s
994
8,601
9,595
2021
Total
£’000s
994
8,762
9,756
Revenue
£’000s
1,602
–
1,602
Revenue
£’000s
1,602
–
1,602
2020
Total
£’000s
88
49
65
178
77
179
232
326
1,194
–
–
–
–
–
–
–
10
10
2021
£’000s
2020
£’000s
110
60
10
180
Capital
£’000s
–
10,312
10,312
Capital
£’000s
–
10,643
10,643
80
–
8
88
2020
Total
£’000s
1,602
10,312
11,914
2020
Total
£’000s
1,602
10,643
12,245
82
UIL Limited
Report and Accounts for the year to 30 June 2021
83
NOTES TO THE ACCOUNTS
(continued)
6.
TAXATION
Group and Company
Overseas taxation
Revenue
£’000s
–
Capital
£’000s
–
2021
Total
£’000s
–
Revenue
£’000s
1
Capital
£’000s
–
2020
Total
£’000s
1
Except as stated above, profits of the Company and subsidiaries for the year are not subject to any taxation within their countries
of residence (2020: same).
7. EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share from continuing operations is based on the following data:
Revenue
Capital
Total
2021
£’000s
8,510
Group
2020
£’000s
8,471
Company
2020
£’000s
8,471
2021
£’000s
8,510
114,082
(70,511)
114,442
(70,914)
122,592
(62,040)
122,952
(62,443)
Number
Number
Number
Number
Weighted average number of shares in issue during the year for earnings
per share calculations
85,255,099
86,733,371
85,255,099
86,733,371
8. DIVIDENDS
Group and Company
2019 Fourth quarterly of 1.875p
2020 First quarterly of 1.875p
2020 Second quarterly of 2.000p
2020 Third quarterly of 2.000p
2020 Fourth quarterly of 2.000p
2021 First quarterly of 2.000p
2021 Second quarterly of 2.000p
2021 Third quarterly of 2.000p
Record
date
Payment
date
2021
£’000s
06-Sep-19
27-Sep-19
06-Dec-19
20-Dec-19
06-Mar-20
27-Mar-20
05-Jun-20
26-Jun-20
04-Sep-20
25-Sep-20
04-Dec-20
21-Dec-20
05-Mar-21
31-Mar-21
04-Jun-21
28-Jun-21
–
–
–
–
1,719
1,719
1,689
1,686
6,813
2020
£’000s
1,655
1,618
1,719
1,719
–
–
–
–
6,711
The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2021 of 2.00p per share payable on
30 September 2021 to all ordinary shareholders on the register at close of business on 3 September 2021. The total cost of the
dividend, which has not been accrued in the results for the year to 30 June 2021, is £1,680,000 based on 84,014,018 ordinary
shares in issue.
9.
INVESTMENTS
Group
Investments brought forward
Cost
Gains/(losses)
Valuation
Movements in the year:
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2021
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2020
Total
£’000s
127,930
156,666
216,524
501,120
116,607
154,152
197,982
468,741
23,475
3,269
(38,867)
(12,123)
88,614
48
(13,609)
75,053
151,405
159,935
177,657
488,997
205,221
154,200
184,373
543,794
Transfer between levels*
19,719 (134,348)
114,629
–
1,044
(2,643)
1,599
–
Purchases at cost
36,883
–
107,934
144,817
15,956
24,547
67,938
108,441
Sales
proceeds
(16,607)
(25,521)
(164,077)
(206,205)
(54,013)
(433)
(48,786)
(103,232)
gains/(losses) on investments
25,810
(66)
86,721
112,465
(16,803)
(15,736)
(27,467)
(60,006)
Valuation at 30 June
Analysed at 30 June
Cost
Gains/(losses)
Valuation
217,210
205,741
11,469
217,210
–
–
–
–
322,864
540,074
151,405
159,935
177,657
488,997
219,605
425,346
127,930
156,666
216,524
501,120
103,259
114,728
23,475
3,269
(38,867)
(12,123)
322,864
540,074
151,405
159,935
177,657
488,997
*Transfers due to the changes in liquidity, availability of observable market data and delisting of investee companies (2020: transfers due to the
changes in liquidity and delisting of investee companies). The book cost and fair value were transferred using the 30 June 2020 balances (2020: 30 June
2019 balances). In the year to 30 June 2021, transfers in level 1 includes a £1.1m transfer to level 3.
The Group received £201,205,000 (2020: £103,232,000) from investments sold in the year. The book cost of these investments when they were
purchased was £215,591,000 (2020: £76,062,000). These investments have been revalued over time and until they were sold any unrealised gains/
losses were included in the fair value of the investments
Disposals in level 3 investments includes £100.1m related to repayment of capital and £11.7m of capital distribution (2020: £22.4m related to
repayment of capital and £20.4m of capital distribution)
Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market
Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded
Level 3 includes investments in private companies and other unquoted securities
84
UIL Limited
Report and Accounts for the year to 30 June 2021
85
NOTES TO THE ACCOUNTS
(continued)
Company
Investments brought forward
Cost
Gains/(losses)
Movements in the year:
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2021
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2020
Total
£’000s
127,930
159,069
216,524
503,523
116,607
166,073
197,982
480,662
23,475
3,149
(38,867)
(12,243)
88,614
763
(13,609)
75,768
151,405
162,218
177,657
491,280
205,221
166,836
184,373
556,430
Transfer between levels*
19,719 (134,348)
114,629
–
1,044
(2,643)
1,599
–
Purchases at cost
37,467
766
107,934
146,167
15,956
24,547
67,938
108,441
Sales
proceeds
(16,607)
(25,521)
(164,077)
(206,205)
(54,013)
(10,714)
(48,786)
(113,513)
gains/(losses) on investments
25,804
461
86,721
112,986
(16,803)
(15,808)
(27,467)
(60,078)
Valuation at 30 June
Analysed at 30 June
Cost
Gains/(losses)
Valuation
217,788
3,576
322,864
544,228
151,405
162,218
177,657
491,280
206,325
3,169
219,605
429,099
127,930
159,069
216,524
503,523
11,463
407
103,259
115,129
23,475
3,149
(38,867)
(12,243)
217,788
3,576
322,864
544,228
151,405
162,218
177,657
491,280
*Transfers due to the changes to liquidity, availability of observable market data and delisting of investee companies (2020: transfers due to the
changes to liquidity and delisting of investee companies). The book cost and fair value were transferred using the 30 June 2020 balances (2020:
30 June 2019 balances). In the year to 30 June 2021, transfers in level 1 includes a £1.1m transfer to level 3.
The Company received £201,205,000 (2020: £113,513,000) from investments sold in the year. The book cost of these investments when they were
purchased was £215,591,000 (2020: £85,580,000). These investments have been revalued over time and until they were sold any unrealised gains/
losses were included in the fair value of the investments
Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market
Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded
Level 3 includes investments in private companies and other unquoted securities
Gains/(losses) on investments held at fair value
(Losses)/profits on investments sold
Gains/(losses) on investments held
Total gains/(losses) on investments
Group and Company
In the year the following material level 3 holdings were sold:
One Communications Limited (“One Communications”)
Optal Limited
Vix Tech Pte Limited (“VixTech”)
Proceeds
£’000s
18,364
12,834
18,294
Carrying value at the
end of the previous
accounting period
£’000s
20,667
24,387
22,803
Cost
£’000s
21,431
13,751
28,146
Group
2020
£’000s
Company
2021
£’000s
2020
£’000s
2021
£’000s
(14,386)
27,170
(14,386)
27,933
126,851
(87,176)
127,372
(88,011)
112,465
(60,006)
112,986
(60,078)
Littlepay
Orbital
Serkel
SmileStyler
Somers
Associated undertakings
Under IFRS10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following associate
undertakings are held as part of the investment portfolio and consequently are accounted for as investments at fair value
through profit and loss:
DTI Group Ltd ("DTI")
ICM Mobility Group Limited
Littlepay Mobility Ltd (“Littlepay”)
Orbital Corporation Limited
Serkel Solutions Pty Ltd ("Serkel")
SmileStyler Solutions Pty Ltd ("SmileStyler")
Somers Limited (“Somers”)
VixTech
Country of
registration and
incorporation
Number of
ordinary shares
held
Australia
103,193,989
United Kingdom
United Kingdom
Australia
Australia
Australia
Bermuda
Singapore
89,299,016
4,257,577*
23,627,904
10,510
1,151,434
9,690,580
n/a
2021
2020
% of ordinary
shares held
% of ordinary
shares held
30.9
39.8
49.3
30.4
33.3
24.0
44.5
n/a
30.8
n/a
n/a
30.5
33.3
24.0
44.4
39.8
*Shares held directly 1,445,000 and indirectly through ICM Mobility Group Limited 2,812,577.
Transactions in the year to 30 June 2021 with associated undertakings
DTI
There were no transactions during the year.
ICM Mobility Group Limited On 6 December 2020 UIL received 3,981 ICM Mobility Group Limited shares at nominal value of 1p
per share. On 30 April 2021 as part of a restructure the equity holdings in VixTech and Kuba Pte
Ltd were transferred at a value of GBP 16.5m to ICM Mobility Group Limited and in exchange UIL
received 82.7m ordinary shares in ICM Mobility Group Limited. Due to the restructure, the loan to
Vix Technology Limited of USD 4.2m was also transferred to ICM Mobility Group Limited. Further
loans of USD 2.3m were advanced in May 2021. The USD 6.5m loan was converted into GBP 4.7m
in June 2021. Further loans of GBP 0.4m were advanced in June 2021. The GBP 5.1m loan was
capitalised into equity on 29 June 2021, UIL receiving 3,981 shares. As part of a further restructure,
on 11 June 2021 UIL exchanged 3.3m shares in ICM Mobility Ltd for the same number of shares
in ICM Mobility Group Limited at a value of £1.8m. On 29 June 2021, UIL received 3.3m shares in
ICM Mobility Group Limited at a value of £3.2m being the settlement of a capital distribution from
Allectus.
On 1 March 2021 UIL received 1.4m shares at a value of £0.9m in Littlepay being part settlement of
the capital distribution from Allectus.
There were no transactions during the year.
There were no transactions during the year.
There were no transactions during the year.
Somers paid dividends of USD 5.2m to UIL and UIL received 338,928 ordinary shares as part of a
dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD loan),
22 June 2018 (GBP loan), 5 September 2019 (AUD loan) and 4 December 2019 (CAD loan), under
which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of USD 8.8m, GBP
0.2m and AUD 0.5m, Somers repaid loans of USD 4.1m, GBP 6.4m, AUD 4.8m and CAD 2.3m. UIL
received interest of USD 235k, GBP 280k, AUD 261k and CAD 50k. As at 30 June 2021, the balance
of the loans and interest outstanding was USD 9.0m, GBP 2.2m, AUD 3.2m and CAD nil. With the
exception of the CAD loan, which had an annual interest rate of 10.0%, the loans bear interest at an
annual rate of 6.0% and are repayable on not less than 12 months’ notice.
VixTech
As part of a restructure the equity holdings in VixTech were transferred to ICM Mobility Group
Limited and in exchange UIL received ordinary shares in ICM Mobility Group Limited.
In the year ICM Mobility Ltd was also held as an associate undertaking. On 1 March 2021, UIL received 3.3m shares in ICM Mobility
Ltd being part settlement of the capital distribution from Allectus. As part of a restructure, on 11 June 2021 UIL exchanged the 3.3m
shares in ICM Mobility Ltd for the same number of shares in ICM Mobility Group Limited at a value of £1.8m.
86
UIL Limited
Report and Accounts for the year to 30 June 2021
87
NOTES TO THE ACCOUNTS
(continued)
Significant interests
Transactions in the year to 30 June 2021 with subsidiaries held as investments
In addition to the above, the Group and Company have a holding of 3% or more of any class of share capital of the following
investments, which are material in the context of the Accounts:
Company
Country of registration
and incorporation
Class of
instrument held
Ascendant Group Limited (“Ascendant”)
Bermuda
Ordinary Shares
AssetCo plc
One Communications
Optal Limited
Resolute Mining Limited
Sindoh Co Limited
Starpharma Holdings Limited
United Kingdom
Ordinary Shares
Bermuda
Ordinary Shares
United Kingdom
Ordinary Shares
Australia
Ordinary Shares
South Korea
Ordinary Shares
Australia
Ordinary Shares
2021
% of class of
instrument
held
2020
% of class of
instrument
held
–
5.7
–
–
8.5
3.0
3.0
8.8
11.5
13.1
5.3
9.1
n/a
3.0
Utilico Emerging Markets Trust plc
United Kingdom
Ordinary Shares
16.3
16.3
10. SUBSIDIARY UNDERTAKINGS
The following was a subsidiary undertakings of the Company at 30 June 2021 and 30 June 2020.
Country of operation,
registration and
incorporation
Number and class of shares held
Holding and
voting
rights %
UIL Finance Limited
Bermuda
10 ordinary shares of 10p nil paid share
100
The subsidiary was incorporated, and commenced trading, on 17 January 2007 to carry on business as an investment company.
Under IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following are
subsidiaries of the Company, held as part of the investment portfolio, and are accounted for as investments at fair value through
profit and loss.
2021
2020
Country of
registration
and
incorporation
Number of
ordinary
shares held
Holding and
voting rights
%
Number of
ordinary
shares held
Holding and
voting rights
%
Allectus Capital Limited
Bermuda
100
50.0
100
Bermuda First Investment Company
Limited*
Bermuda
1,891,195
Coldharbour Technology Limited
United Kingdom
Elevate Platform Limited
United Kingdom
Energy Holdings Ltd
Bermuda
ICM Mobility International Ltd
United Kingdom
29,660,694
44,348,478†
100
5,014,238††
Newtel Holdings Limited ("Newtel")
Jersey
115,920
UIL Holdings Pte Ltd
Singapore
100
94.2
96.5
51.0
100.0
50.0
100.0
100.0
1,891,195
29,660,694
812,766
100
n/a
115,920
100
Zeta Resources Limited (“Zeta”)
Bermuda
344,573,832
60.9
172,286,916
50.0
94.2
96.5
31.0**
100.0
n/a
100.0
100.0
60.0
*The Board of the Company has applied to Register of Companies in Bermuda for the company to be dissolved.
** An associated undertaking as at 30 June 2020.
† Preference shares
† † Shares held directly 1,703,400 and indirectly through ICM Mobility Group Limited 3,310,838.
Allectus
BFIC
Coldharbour
Elevate
Allectus paid capital dividend distributions of USD 12.9m to UIL. Pursuant to a loan agreement dated
1 September 2016 under which UIL agreed to loan monies to Allectus, UIL advanced to Allectus
a loan of USD 7.6m and Allectus repaid USD 1.0m. The remaining loan balance of USD 6.6m was
converted to equity on 30 June 2021. The loan was interest free and is converted into equity on an
annual basis at 30 June each year.
BFIC paid a capital dividend of USD 3.1m to UIL (UIL received in specie 647,970 One
Communications shares at USD 4.75 per share in settlement of the dividend). Pursuant to a loan
agreement dated 3 July 2017 under which UIL agreed to loan monies to BFIC, UIL advanced to
BFIC USD 0.1m and the following share purchases and share sales occurred via the loan account:
BFIC sold 10,900 One Communications shares to UIL at USD 4.75 per share; BFIC bought 924,424
Ascendant shares from UIL at USD 36.00 per share; BFIC bought 1,001,519 One Communications
shares from UIL at USD 4.75 per share. BFIC repaid USD 39.0m and capitalised loan interest of USD
65k. As at 30 June 2021, the balance of the loan was USD nil. The annual interest rate of the loan
was 6.0%.
Pursuant to a loan agreement dated 19 August 2020 under which UIL agreed to loan monies to
Coldharbour, UIL advanced to Coldharbour a loan of GBP 1.1m. As at 30 June 2021, the balance of
the loan was GBP 1.1m. The loan bears interest at 10% per annum and matures on 31 December
2021.
Due to a restructure, Elevate purchased all of its ordinary shares and issued UIL with 42,700,769
preference shares. As at 30 June 2021 UIL held 44,348,478 preference shares (2020: 1,647,709).
Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to
Elevate. UIL advanced to Elevate GBP 0.5m. As at 30 June 2021, the balance of the loan and interest
outstanding was GBP 2.0m. The loan bears interest at an annual rate of 6.0% and is repayable on 31
December 2023.
Energy Holdings Ltd
There were no transactions during the year.
ICM Mobility International
Ltd
On 11 May 2021 UIL received 1,700 ICM Mobility International Ltd shares at nominal value of 1p
per share. On 29 June 2021, UIL received 1.7m shares in ICM Mobility International Ltd at a value of
£1.6m, being the settlement of a capital distribution from Allectus. UIL advanced loans of USD 1.0m
in May 2021. In June 2021, the USD 1.0m loan was converted to GBP 0.7m. A further loan of GBP
0.1m was advanced in June 2021. On 29 June 2021 UIL received 1,700 shares on capitalisation of
the £0.8m loan.
Newtel
UIL advanced GBP 0.1m to Newtel as part of its working capital loan to Newtel. As at 30 June 2021
the loan balance was GBP 5.3m and is repayable on demand.
UIL Holdings Pte Ltd
There were no transactions during the year.
Zeta
Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan),
under which UIL agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 22.9m and CAD
2.0m and received from Zeta repayments of AUD 27.8m and CAD 16.5m, and capitalised interest of
AUD 5.4m and CAD 2.2m. UIL exercised 172.3m Zeta options at AUD 0.25 per share which resulted
in a loan settlement of AUD 43.1m. As at 30 June 2021, the balance of the loans and interest
outstanding was AUD 22.2m and CAD 18.2m. The AUD loan bears interest at an annual rate of 7.5%
and the CAD loan bears interest at an annual rate of 7.25%. The loans are repayable on not less
than 12 months’ notice.
11. OTHER RECEIVABLES – CURRENT ASSETS
Group and Company
Margin account
Securities sold for future settlement
Accrued income
Prepayments and other debtors
2021
£’000s
–
492
907
12
1,411
2020
£’000s
2,104
–
1,433
42
3,579
88
UIL Limited
Report and Accounts for the year to 30 June 2021
89
NOTES TO THE ACCOUNTS
(continued)
12. DERIVATIVE FINANCIAL INSTRUMENTS
14. OTHER PAYABLES
Group and Company
Current
assets
£’000s
Current
liabilities
£’000s
2021
Net current
assets/
(liabilities)
£’000s
Current
assets
£’000s
Current
liabilities
£’000s
2020
Net current
assets/
(liabilities)
£’000s
Forward foreign exchange contracts
1,047
(627)
420
111
(5,391)
(5,280)
The above derivatives are classified as level 2 as defined in note 1(c).
Changes in derivatives
Changes in total net current derivative financial instruments are as follows:
Securities purchased for future settlement
Bank overdraft
Intra-group loans
Accrued finance costs
Accrued expenses
2021
£’000s
57
213
–
120
437
827
Group
2020
£’000s
–
3,514
–
63
671
4,248
Company
2020
£’000s
–
3,514
59,087
63
671
63,335
2021
£’000s
57
213
–
120
437
827
Group and Company
Valuation brought forward
Net settlements
Gains
Valuation carried forward
13. LOANS – CURRENT LIABILITY
Group and Company
Bank Loans
AUD 12.9m rolled over August 2020
AUD 12.9m rolled over October 2020
AUD 11.0m repayable December 2020
EUR 5.6m rolled over August 2020
EUR 5.6m rolled over October 2020
EUR 5.6m repayable December 2020
GBP 5.0m rolled over August 2020
GBP 5.0m rolled over October 2020
GBP 5.1m repayable December 2020
AUD 12.5m rolled over July 2021
AUD 12.9m rolled over July 2021
AUD 9.0m rolled over August 2021
EUR 5.0m rolled over July 2021
EUR 5.6m rolled over September 2021
USD 21.8m rolled over July 2021
USD 7.0m rolled over September 2021
Loan from Coldharbour repaid July 2020
2021
£’000s
(5,280)
(619)
6,319
420
2020
£’000s
(1,047)
(7,519)
3,286
(5,280)
2021
£’000s
2020
£’000s
–
–
–
–
–
–
–
–
–
6,793
7,000
4,891
4,292
4,786
15,744
5,042
7,177
7,177
6,151
5,068
5,068
5,068
5,000
5,000
4,937
–
–
–
–
–
–
–
–
500
48,548
51,146
The Company has a committed loan facility of £50,000,000 from Scotiabank expiring on 30 September 2022. Commissions are
charged on any undrawn amounts at commercial rates. The terms of the loan facility, including those related to accelerated
repayment and costs of repayment and the loan covenants, are typical of those normally found in facilities of this nature.
Scotiabank has a floating charge over the assets of the Company in respect of amounts owing under the loan facility.
The loan from Coldharbour had an interest rate of 4%.
90
UIL Limited
The Directors consider that the carrying values of other payables are equivalent to their fair value.
15. ZDP SHARES
ZDP shares – current liabilities
2020 ZDP shares
ZDP Shares – non-current liabilities
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
Total ZDP shares liabilities
2021
£’000s
2020
£’000s
–
59,087
48,052
34,996
25,298
23,726
63,407
33,250
24,791
–
132,072
121,448
132,072
180,535
Authorised ZDP shares of the Company at 30 June 2021 are as follows:
Number
£’000s
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
63,686,754
76,717,291
25,000,000
44,842,717
3,387
2,917
2,500
1,734
Authorised ZDP shares of the Company at 30 June 2020 are as follows:
Number
£’000s
2018 ZDP shares
2020 ZDP shares
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
53,072,561
50,000,000
78,117,685
76,717,291
25,000,000
3,148
3,026
4,154
2,917
2,500
On 17 September 2020, by written resolution, UIL Finance diminished its existing authorised share capital from £15,745,385.76
to £12,597,174.51 by the cancellation of all of the 2018 ZDP Shares comprised in its authorised but unissued share capital. On
18 March 2021, by written resolution, UIL Finance further diminished its existing authorised share capital to £9,571,474.52 by
the cancellation of all of the 2020 ZDP Shares comprised in its authorised but unissued share capital and then increased its
authorised share capital from £9,571,474.52 to £10,538,374.52 by the creation of 25,000,000 2028 ZDP Shares. In relation to the
conversion on 23 April 2021 of the 2022 ZDP shares into 2028 ZDP shares (see below), the 2022 ZDP authorised share capital
reduced by £767,437 and the 2028 ZDP authorised share capital increased by an identical amount.
Report and Accounts for the year to 30 June 2021
91
NOTES TO THE ACCOUNTS
(continued)
2021
Number
2020
£’000s
2022
2024
2026
Number
£’000s Number
£’000s Number
£’000s Number
2028
£’000s
Total
£’000s
Balance at
30 June 2020
Issue of ZDP
shares
Issue costs of
ZDP shares
Redemption
of ZDP shares
ZDP shares
purchased by
the Company
Finance costs
(see note 5)
Balance at
30 June 2021
39,000,000 59,087 50,000,000 63,407 30,000,000 33,250 22,596,706 24,791
–
– 180,535
–
–
–
–
–
–
–
–
(39,000,000) (60,411)(14,430,931) (19,338)
–
–
–
–
–
–
–
–
–
– 24,416,265 24,417
24,417
–
–
–
(964)
(964)
–
– (79,749)
–
–
–
–
–
–
(706,326)
(767)
–
–
(767)
– 1,324
– 3,983
– 1,746
– 1,275
–
273
8,601
–
– 35,569,069 48,052 30,000,000 34,996 21,890,380 25,299 24,416,265 23,726 132,073
2020
Number
2020
£’000s
Number
2022
£’000s
Number
2024
£’000s
Number
2026
£’000s
Total
£’000s
39,000,000
55,387 50,000,000
59,499 30,000,000
31,582 13,079,465
13,474
159,942
Balance as at
30 June 2019
Issue of ZDP
shares
Finance costs
(see note 5)
Balance as at
30 June 2020
39,000,000
59,087 50,000,000
63,407 30,000,000
33,250 22,596,706
24,791
180,535
On 31 October 2020 the 39,000,000 2020 ZDP shares that
were in issue were redeemed at 154.90p per 2020 ZDP share.
On 18 March 2021, UIL Finance announced plans for a
rollover offer of 2022 ZDP shares into 2028 ZDP shares (the
“Rollover Offer”) and a placing of up to 25,000,000 2028
ZDP shares (less the number of 2028 ZDP shares arising on
the conversion of 2022 ZDP shares pursuant to the Rollover
Offer). Holders of 14,430,931 2022 ZDP shares elected to roll
over into the new 2028 ZDP shares and 19,842,502 new 2028
ZDP shares were issued on the basis of each 2022 ZDP share
converting into 1.375 2028 ZDP shares. UIL Finance placed
4,573,763 new 2028 ZDP shares at 100 pence per share
with certain institutional and other investors, raising gross
proceeds of £4.6m and issued 583,735 2028 ZDP shares to
the Company. The 25,000,000 new 2028 ZDP shares were
admitted to the standard segment of the Official List and to
trading on the London Stock Exchange on 23 April 2021. UIL
Limited held 583,735 2028 ZDP shares as at 30 June 2021.
The Company held 2,403,294 2026 ZDP shares as at 30 June
2020. In the year, the Company purchased 706,326 2026 ZDP
shares in the open market, paying £0.8m. The Company held
3,109,620 2026 ZDP shares as at 30 June 2021.
2022 ZDP shares
Based on the initial entitlement of a 2022 ZDP share of 100p
on 23 June 2016, a 2022 ZDP share will have a final capital
entitlement at the end of its life on 31 October 2022 of
146.99p equating to a 6.25% per annum gross redemption
yield. The capital entitlement (excluding issue costs) per 2022
ZDP share as at 30 June 2021 was 136.56p (2020: 127.59p).
2024 ZDP shares
Based on the initial entitlement of a 2024 ZDP share of 100p
on 2 November 2018, a 2024 ZDP share will have a final
capital entitlement at the end of its life on 31 October 2024
of 138.35p equating to a 4.75% per annum gross redemption
yield. The capital entitlement (excluding issue costs) per 2024
ZDP share as at 30 June 2021 was 118.51p (2020: 113.13p).
2026 ZDP shares
Based on the initial entitlement of a 2026 ZDP share of 100p
on 26 April 2018, a 2026 ZDP share will have a final capital
entitlement at the end of its life on 31 October 2026 of
151.50p equating to a 5.00% per annum gross redemption
yield. The capital entitlement (excluding issue costs) per 2026
ZDP share as at 30 June 2021 was 116.78p (2020: 111.21p).
2028 ZDP shares
Based on the initial entitlement of a 2028 ZDP share of 100p
on 23 April 2021, a 2028 ZDP share will have a final capital
entitlement at the end of its life on 31 October 2028 of
152.29p equating to a 5.75% per annum gross redemption
yield. The capital entitlement (excluding issue costs) per 2028
ZDP share as at 30 June 2021 was 101.06p (2020: n/a).
The ZDP shares are traded on the London Stock Exchange
and are stated at amortised cost using the effective interest
method. The ZDP shares carry no entitlement to income
however they have a pre-determined final capital entitlement
which ranks behind all other liabilities and creditors of UIL
Finance and UIL but in priority to the ordinary shares of
the Company save in respect of certain winding up revenue
profits.
The growth of each ZDP accrues daily and is reflected in the
capital return and NAV per ZDP share on an effective interest
rate basis. The ZDP shares do not carry any voting rights at
general meetings of the Company. However the Company
will not be able to carry out certain corporate actions unless
it obtains at separate meetings approval of each class of
ZDP shareholders. Separate approval of each class of ZDP
shareholders must be obtained in respect of any proposals
which would affect their respective rights, including any
resolution to wind up the Company. In addition the approval
of ZDP shareholders by the passing of a special resolution at
separate class meetings of the ZDP shareholders is required
in relation to any proposal to modify, alter or abrogate the
rights attaching to any class of the ZDP shares and in relation
to any proposal by the Company or its parent company which
would reduce the Group’s cover of the existing ZDP shares
below 1.35 times.
On a liquidation of UIL and/or UIL Finance, to the extent that
the relevant classes of ZDP shares have not already been
redeemed, the shares shall rank in the following order of
priority in relation to the repayment of their accrued capital
entitlement as at the date of liquidation:
i.
ii.
the 2022 ZDP shares shall rank in priority to the 2024 ZDP
shares, the 2026 ZDP shares and the 2028 ZDP shares;
the 2024 ZDP shares shall rank in priority to the 2026 ZDP
shares and the 2028 ZDP shares; and
iii. the 2026 ZDP shares shall rank in priority to the 2028 ZDP
shares.
The entitlement of ZDP shareholders of a particular class
shall be determined in proportion to their holdings of ZDP
shares of that class.
Company
Intra-group loans
2021
£’000s
136,257
2020
£’000s
124,121
In consideration for UIL Finance agreeing to transfer to the Company certain assets, the Company has undertaken (i) to repay
any interest free loan, and (ii) to reimburse UIL Finance (by way of payment in advance, if required) any and all costs, expenses,
fees or interest UIL Finance incurs or is otherwise liable to pay to the holder of the ZDP shares so as to enable UIL Finance to pay
the final capital entitlement of each class of ZDP share on their respective redemption date. The amount owed in the accounts
as at 30 June 2021 is £136,257,000 (2020: current liability: £59,087,000 and non-current liability: £124,121,000) is based on the
entitlements of the ZDP shareholders at the relevant date. The loan is repayable on the date when the underlying ZDP shares are
redeemed.
17. ORDINARY SHARE CAPITAL
Equity share capital:
Ordinary shares of 10p each with voting rights
Authorised
2021
Balance at 30 June 2020
Purchased for cancellation
Balance at 30 June 2021
Number
£’000s
250,000,000
25,000
Total shares
in issue
Number
Total shares
in issue
£’000s
85,939,314
(1,636,031)
84,303,283
8,594
(164)
8,430
–
–
–
3,700
–
–
–
3,908
–
–
–
9,517,241
10,281
10,281
1,668
–
1,036
10,312
16. OTHER PAYABLES - NON-CURRENT LIABILITY
92
UIL Limited
Report and Accounts for the year to 30 June 2021
93
NOTES TO THE ACCOUNTS
(continued)
2020
Balance at 30 June 2019
Purchased for cancellation
Balance at 30 June 2020
Total shares
in issue
Number
88,283,389
(2,344,075)
85,939,314
Total shares
in issue
£’000s
8,828
(234)
8,594
During the year the Company bought back for cancellation 1,636,031 (2020: 2,344,075) ordinary shares at a total cost of
£3,623,000 (2020: £5,892,000). A further 289,265 ordinary shares have been purchased for cancellation at a cost of £800,000
since the year end.
In addition to receiving the income distributed by way of dividend, the ordinary shareholders will be entitled to any balances
on the revenue reserve at the winding up date, together with the assets of the Company remaining after payment of the ZDP
shareholders’ entitlement. The ordinary shareholders participate in all general meetings of the Company on the basis of one vote
for each share held.
18. SHARE PREMIUM ACCOUNT
Group and Company
Balance brought forward
Purchase of ordinary shares
Balance carried forward
This is a non-distributable reserve arising on the issue of share capital.
19. SPECIAL RESERVE
Group and Company
Balance brought forward and carried forward
2021
£’000s
10,445
(3,459)
6,986
2020
£’000s
16,103
(5,658)
10,445
2021
£’000s
2020
£’000s
233,866
233,866
The special reserve can be used to purchase the Company’s own shares in accordance with Bermuda law. The reserve will not
constitute winding up revenue profits in the event of the Company’s liquidation, but it constitutes a reserve under Bermuda law
for assessing the sufficiency of reserves for the purpose of making dividend payments to ordinary shareholders.
20. NON-DISTRIBUTABLE RESERVE
Group and Company
Balance brought forward and carried forward
2021
£’000s
32,069
2020
£’000s
32,069
The non-distributable reserve constitutes a reserve for the purpose of assessing the sufficiency of reserves for the purpose of
making dividend payments to ordinary shareholders.
21. CAPITAL RESERVES
Capital reserves comprise of:
Arising on investments sold
Arising on revaluation of investments held
Balance as at 30 June
2021
£’000s
(44,845)
114,728
69,883
Group
2020
£’000s
(32,076)
(12,123)
(44,199)
2021
£’000s
(45,276)
115,129
69,853
Company
2020
£’000s
(32,466)
(12,123)
(44,589)
Included within the capital reserve movement for the year is £11,735,000 (2020: £515,000) of capital distributions, £20,000
(2020: £27,000) of transaction costs on purchases of investments and £16,000 (2020 £46,000) of transaction costs on sales of
investments.
22. REVENUE RESERVE
Amount transferred to revenue reserve
Dividends paid in the year
Balance brought forward
Balance as at 30 June
2021
£’000s
8,510
(6,813)
10,850
12,547
Group
2020
£’000s
8,471
(6,711)
9,090
10,850
2021
£’000s
8,510
(6,813)
10,850
12,547
Company
2020
£’000s
8,471
(6,711)
9,090
10,850
23. NET ASSET VALUE PER ORDINARY SHARE
NAV per ordinary share is based on net assets at the year end of £363,781,000 for the Group and £363,751,000 for the Company
(2020: £251,625,000 for the Group and £251,235,000 for the Company) and on 84,303,283 ordinary shares in issue at the year
end (2020: 85,939,314).
24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Group
2021
Bank loans
Coldharbour loan
ZDP shares
Dividends paid
Repurchase of shares for cancellation
Non-cash flow
changes
Balance at
30 June
2020
£’000s
Transactions
in the year
£’000s
50,646
500
180,535
–
–
–
–
–
6,813
3,623
Cash
flows
£’000s
(106)
(500)
(57,063)
(6,813)
(3,623)
Foreign
exchange
movement
£’000s
(1,992)
–
–
–
–
Finance
costs
£’000s
–
–
Balance
at 30 June
2021
£’000s
48,548
–
8,601
132,073
–
–
–
–
231,681
10,436
(68,105)
(1,992)
8,601
180,621
94
UIL Limited
Report and Accounts for the year to 30 June 2021
95
NOTES TO THE ACCOUNTS
(continued)
2020
Bank loans
Coldharbour loan
ZDP shares
Dividends paid
Repurchase of shares for cancellation
Company
2021
Bank loans
Coldharbour loan
Intra-group loans
Dividends paid
Repurchase of shares for cancellation
2020
Bank loans
Coldharbour loan
Intra-group loans
Dividends paid
Repurchase of shares for cancellation
Non-cash flow
changes
Cash
flows
£’000s
(2,637)
500
10,281
(6,711)
(5,892)
(4,459)
Foreign
exchange
movement
£’000s
2,312
–
–
–
–
Finance
costs
£’000s
–
–
Balance
at 30 June
2020
£’000s
50,646
500
10,312
180,535
–
–
–
–
2,312
10,312
231,681
Non-cash flow
changes
Finance
costs
£’000s
Issue of
ZDP
shares
Balance
at 30 June
2021
£’000s
–
–
–
–
48,548
–
8,762
584
136,257
–
–
–
–
–
–
Foreign
exchange
movement
£’000s
(1,992)
–
–
–
–
Cash
flows
£’000s
(106)
(500)
–
–
–
(56,297)
6,813
(6,813)
3,623
(3,623)
Balance
at 30 June
2019
£’000s
50,971
–
159,942
–
–
Transactions
in the year
£’000s
–
–
–
6,711
5,892
210,913
12,603
Balance
at 30 June
2020
£’000s
Transactions
in the year
£’000s
50,646
500
183,208
–
–
234,354
10,436
(67,339)
(1,992)
8,762
584
184,805
Non-cash flow
changes
Balance
at 30 June
2019
£’000s
50,971
–
172,565
–
–
Transactions
in the year
£’000s
–
–
–
6,711
5,892
Cash
flows
£’000s
(2,637)
500
–
(6,711)
(5,892)
Foreign
exchange
movement
£’000s
2,312
–
–
–
–
Finance
costs
£’000s
Balance
at 30 June
2020
£’000s
–
–
50,646
500
10,643
183,208
–
–
–
–
223,536
12,603
(14,740)
2,312
10,643
234,354
25. ULTIMATE PARENT UNDERTAKING
In the opinion of the Directors, the Group’s ultimate parent undertaking is Somers Isles Private Trust Company Limited (“SIPTCL”),
a company incorporated in Bermuda and owned by Mr Duncan Saville.
26. RELATED PARTY TRANSACTIONS
Key management entities and persons:
The following are considered related parties of UIL:
Ultimate parent undertaking:
As at 30 June 2021, UIL’s majority shareholder General
Provincial Life Pension Fund Limited (“GPLPF”) held 65.1% of
UIL’s shares. Union Mutual Pension Fund Limited (“UMPF”)
held 8.9% of UIL’s shares and General Provincial Company
Limited (“GPC”) held nil UIL shares, having sold its 3.7%
shareholding in UIL to UMPF during December 2020. The
ultimate parent undertaking of GPLPF, UMPF and GPC is
Somers Isles Private Trust Company Limited (“SIPTCL”) as
trustee of various trusts of which Mr Duncan Saville is a
beneficiary.
Subsidiaries of UIL:
Allectus Capital Limited (“Allectus”), Bermuda First
Investment Company Limited, Coldharbour Technology
Limited (“Coldharbour”), Elevate Platform Limited (“Elevate”),
Energy Holdings Ltd, ICM Mobility International Ltd, Newtel
Holdings Limited (“Newtel”), UIL Holdings Pte Ltd and Zeta.
On consolidation, transactions between the Company and
UIL Finance Limited have been eliminated.
Associated undertakings:
DTI Group Ltd (“DTI”), ICM Mobility Group Limited, ICM
Mobility Ltd, Littlepay Mobility Ltd, Orbital Corporation
Limited (“Orbital”), Serkel Solutions Pty Ltd (“Serkel”),
Smilestyler Solutions Pty Ltd (“Smilestyler”) and Somers.
3DMeditech Pty Ltd’s shareholding was diluted in the
year and is no longer an associated holding. VixTech’s
shareholding was transferred to ICM Mobility Group Limited
in the year (see note 9).
Subsidiaries of the above subsidiaries and associated
undertakings:
Allectus: Global Equity Risk Protection Limited (“GERP”) and
Own Solutions AC Ltd.
CHIPS AG, Metricus Pty Ltd, Trustlink (Pty) Ltd, Unity Holdings
Ltd and Responsible Gaming Monitoring Company Pty Ltd are
all subsidiaries of GERP. VixNet Africa (Pty) Ltd was sold by
Allectus during the year ended 30 June 2021.
ICM Mobility Group Limited: ICM Mobility Ltd, Kuba Group
Ltd, Kuba Pte. Ltd, Littlepay Mobility Ltd, Littlepay Pte Ltd
(Australia), Vix AFC Ltd, Vix Holdings Ltd, VixTech and Vix
Technology Limited.
Zeta: Horizon Gold Limited, Kumarina Resources Limited,
Zeta Energy Pte Ltd and Zeta Investments Limited.
Somers: Bermuda Commercial Bank Ltd (“BCB”), PCF Group
plc, Resimac Group Limited (“Resimac”), Waverton Investment
Management Limited (“Waverton”) and West Hamilton
Holdings Limited.
ICM and ICMIM and the board of directors of ICM, Alasdair
Younie, Charles Jillings, Duncan Saville and of ICMIM, Charles
Jillings and Sandra Pope. ICM Corporate Services (Pty) Ltd is a
wholly owned subsidiary of ICM.
Persons exercising control of UIL:
The Board of UIL.
Company controlled by key management persons:
Mitre Investments Limited.
The following transactions were carried out during the
year to 30 June 2021 between the Company and its related
parties above:
UIL Finance
Loans from UIL Finance to UIL of £183.2m as at 30 June 2020
decreased by £46.9m, to £136.3m as at 30 June 2021. The
loans are repayable on any ZDP share repayment date.
Subsidiaries of UIL
Transactions are disclosed in note 10.
Associated undertakings:
Transactions are disclosed in note 9.
Subsidiaries of the above subsidiaries and associated
undertakings:
Littlepay Mobility Ltd: See note 9, under associated
undertakings.
Littlepay Pte Ltd: UIL advanced loans of AUD 1.2m in March
2021 and Littlepay Pte Ltd thereafter repaid AUD 0.3m. As
at 30 June 2021 the loan balance was AUD 0.9m. The loan is
interest free.
Vix Technology Limited: Pursuant to a loan agreement
dated 1 December 2016 under which UIL has agreed to
loan monies to Vix Technology Limited, UIL advanced to Vix
Technology Limited USD 4.2m. On 30 April 2021 the loan
was transferred to ICM Mobility Group Limited. The loan was
interest free.
Except for the above there were no transactions during the
year to 30 June 2021 with any of the subsidiaries of the above
subsidiaries and associated undertakings.
Key management entities and persons:
ICM and ICMIM are joint portfolio managers of UIL. Other
than investment management fees and secretarial costs
as set out in note 3, and reimbursed expenses of £8,000,
there were no other transactions with ICM or ICMIM or
ICM Corporate Services (Pty) Ltd. At the year-end £149,000
remained outstanding to ICM and ICMIM in respect of
96
UIL Limited
Report and Accounts for the year to 30 June 2021
97
NOTES TO THE ACCOUNTS
(continued)
management and company secretarial fees and £nil in
respect of performance fees.
Mr Younie is a director of BCB, BFIC, GERP, Mitre Investments
Limited, Somers and West Hamilton Holdings Limited. Mr
Jillings is a director of Allectus, GERP, ICM Mobility Group
Limited, Somers and Waverton. Mr Jillings received dividends
from UIL of £28,000. Mr Saville is a director of Allectus, BFIC,
GPLPF, GERP, ICM Mobility Group Limited, Newtel, Resimac,
VixTech, West Hamilton Holdings Limited and Zeta Energy
Pte Ltd. There were no other transactions in the year with
Alasdair Younie, Charles Jillings, Duncan Saville and Sandra
Pope and UIL.
The Board
The fees paid to Directors remained at: Chairman £46,000
per annum; Chairman of Audit & Risk Committee £44,000
per annum and Directors £34,000 per annum. The Board
received aggregate remuneration of £192,000 for services as
Directors. As at 30 June 2021, £nil remained outstanding to
the Directors. In addition to their fees, the Directors received
dividends totalling £108,865 during the year. There were no
other transactions in the year with the Board and UIL.
Companies controlled by key management persons:
GPLPF received dividends of £4,388,123 from UIL, UMPF
received dividends of £468,363 from UIL, GPC received
dividends of £126,000 from UIL and Mitre Investments
Limited received dividends of £215,287 from UIL. There were
no other transactions between companies controlled by key
management and UIL during the year to 30 June 2021.
27. OPERATING SEGMENTS
The Directors are of the opinion that the Company’s activities
comprise a single operating segment, which is investing
in equity, debt and derivative securities to maximise
shareholder returns.
28. GOING CONCERN
Notwithstanding that the Group has reported net current
liabilities of £44,220,000 as at 30 June 2021 (2020:
£115,924,000), the financial statements have been prepared
on a going concern basis which the Directors consider to be
appropriate for the following reasons.
The Board’s going concern assessment has focussed on the
forecast liquidity of the Group for 12 months from the date of
approval of the financial statements. This analysis assumes
that the Company will meet some of its short term obligations
through the sale of level 1 securities, which represented
40.0% of the Company’s total portfolio as at 30 June 2021. As
part of this assessment the Board has considered a severe
but plausible downside that reflects the impact of Covid-19
and an assessment of the Company’s ability to meet its
liabilities as they fall due (including the loan liabilities in note
13), assuming a significant reduction in asset values and
accompanying currency volatility.
The severe but plausible downside assumes a breach of
bank loan covenants leading to the repayment of bank loan
liabilities and a significant reduction in asset values in line
with that experienced during the emergence of the Covid-19
pandemic in the first quarter of 2020. The Board also
considered reverse stress testing to identify the reduction
in the valuation of liquid investments that would cause
the Group to be unable to meet its net current liabilities,
being primarily the bank loan of £48,548,000. The Board is
confident that the reduction in asset values implied by the
reverse stress test is not plausible even in the current volatile
environment.
As at the year end, the Company had a £50m multicurrency
loan facility with Scotiabank expiring on 30 September 2022.
Drawdowns under the facility are detailed in note 13. The
Company will either extend or replace the facility or repay the
outstanding debt when due from portfolio realisations.
Consequently, the Directors are confident that the Company
will have sufficient funds to continue to meet its liabilities as
they fall due for at least 12 months from the date of approval
of the financial statements. Accordingly, the Board considers
it appropriate to continue to adopt the going concern basis in
preparing the accounts.
29. FINANCIAL RISK MANAGEMENT
The Group’s investment objective is to maximise shareholder
returns by identifying and investing in compelling long-term
investments worldwide, where the underlying value is not
reflected in the market share price.
The Group seeks to meet its investment objective by investing
principally in a direct and indirect diversified portfolio of both
listed and unlisted companies. Derivative instruments may
be used for purposes of hedging the underlying portfolio
of investments. The Group has the power to take out both
short and long term borrowings. In pursuing the objective,
the Group is exposed to financial risks which could result in
a reduction of either or both of the value of the net assets
and the profits available for distribution by way of dividend.
These financial risks are principally related to the market
(currency movements, interest rate changes and security price
movements), liquidity and credit and counterparty risk. The
Board of Directors, together with the Investment Managers, is
responsible for the Group’s risk management. The Directors’
policies and processes for managing the financial risks are set
out in (a), (b) and (c) below.
The Company’s risks include the risks within UIL Finance
and therefore only the Group risks are analysed below as
the differences are not considered to be significant. The
accounting policies which govern the reported Statement
of Financial Position carrying values of the underlying
financial assets and liabilities, as well as the related income
and expenditure, are set out in note 1. The policies are in
compliance with IFRS and best practice, and include the
valuation of financial assets and liabilities at fair value except as
noted in (d) below and in note 15 in respect of ZDP shares. The
Group does not make use of hedge accounting rules.
(a) Market risks
The fair value of equity and other financial securities held in
the Group’s portfolio and derivative financial instruments
fluctuates with changes in market prices. Prices are
themselves affected by movements in currencies and
interest rates and by other financial issues, including the
market perception of future risks. The Board sets policies
for managing these risks within the Group’s objective and
meets regularly to review full, timely and relevant information
on investment performance and financial results. The
Investment Managers assess exposure to market risks when
making each investment decision and monitor on-going
market risk within the portfolio. The Group’s other assets
and liabilities may be denominated in currencies other than
Sterling and may also be exposed to interest rate risks. The
Investment Managers and the Board regularly monitor these
risks. The Group does not normally hold significant cash
balances. Borrowings are limited to amounts and currencies
commensurate with the portfolio’s exposure to those
currencies, thereby limiting the Group’s exposure to future
changes in exchange rates.
Gearing may be short- or long-term, in Sterling and foreign
currencies, and enables the Group to take a long-term view
of the countries and markets in which it is invested without
having to be concerned about short-term volatility. Income
earned in foreign currencies is converted to Sterling on
receipt. The Board regularly monitors the effects on net
revenue of interest earned on deposits and paid on gearing.
Currency exposure
The principal currencies to which the Group was exposed
were the Australian Dollar, Euro and US Dollar (2020:
Australian Dollar, Bermuda Dollar, Euro and US Dollar)
The Group’s assets and liabilities as at 30 June (shown at
fair value, except derivatives at gross exposure value), by
currency excluding Sterling based on the country of primary
exposure, are shown below:
2021
Other receivables
Derivative financial instruments – assets
Cash and cash equivalents
Derivative financial instruments – liabilities
Short-term borrowings
Net monetary liabilities
Investments
Net financial assets
2020
Other receivables
Cash and cash equivalents
Derivative financial instruments – liabilities
Short-term borrowings
Net monetary liabilities
Investments
Net financial assets
AUD
£’000s
695
24,843
1,291
(64,799)
(18,684)
(56,654)
114,995
58,341
EUR
£’000s
311
–
–
–
(9,078)
(8,767)
–
(8,767)
USD
£’000s
–
–
2,004
(27,141)
(20,786)
(45,923)
250,970
205,047
Other
£’000s
393
7,732
28
Total
£’000s
1,399
32,575
3,323
(17,697)
(109,637)
–
(48,548)
(9,544)
19,505
9,961
(120,888)
385,470
264,582
AUD
£’000s
10,529
–
(37,353)
(23,084)
(49,908)
97,251
47,343
BMD
£’000s
EUR
£’000s
–
–
–
–
–
–
–
(54,949)
(15,203)
(70,152)
USD
£’000s
27,770
249
Other
£’000s
375
9
Total
£’000s
38,674
258
(51,181)
(31,167)
(174,650)
–
–
(38,287)
(23,162)
(30,783)
(174,005)
46,254
46,254
24,387
171,839
(45,765)
148,677
21,806
(8,977)
361,537
187,532
98
UIL Limited
Report and Accounts for the year to 30 June 2021
99
NOTES TO THE ACCOUNTS
(continued)
Based on the financial assets and liabilities held, and exchange rates applying, as at the Statement of Financial Position date, a
weakening or strengthening of Sterling against each of these currencies by 10% would have had the following approximate effect
on annualised income after tax and on NAV per share:
Weakening of Sterling
Income Statement
Revenue profit for the year
Capital profit/(loss) for the year
Total profit/(loss) for the year
Strengthening of Sterling
Income Statement
Revenue loss for the year
Capital (loss)/profit for the year
Total (loss)/profit for the year
AUD
£’000s
EUR
£’000s
127
6,405
6,532
–
(974)
(974)
AUD
£’000s
EUR
£’000s
2021
USD
£’000s
–
22,783
22,783
2021
USD
£’000s
AUD
£’000s
BMD
£’000s
EUR
£’000s
2020
USD
£’000s
102
5,260
5,362
825
5,139
5,964
(5,085)
(5,085)
–
8
AUD
£’000s
BMD
£’000s
EUR
£’000s
(127)
(6,405)
(6,532)
–
974
974
–
(22,783)
(22,783)
(102)
(5,260)
(5,362)
(825)
(5,139)
(5,964)
–
(8)
5,085
5,085
(16,520)
(16,528)
These analyses are broadly representative of the Group’s activities during the current year as a whole, although the level of the
Group’s exposure to currencies fluctuates in accordance with the investment and risk management processes.
Interest rate exposure
The exposure of the financial assets and liabilities to interest rate risks as at 30 June is shown below:
2021
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
3,324
(213)
(48,548)
(45,437)
3,324
(213)
(48,548)
(45,437)
–
–
–
–
Total
£’000s
2,362
(3,514)
(51,146)
(52,298)
Within
one year
£’000s
2,362
(3,514)
(51,146)
(52,298)
2020
More than
one year
£’000s
–
–
–
–
(132,073)
–
(132,073)
(180,535)
(59,087)
(121,448)
(177,510)
(45,437)
(132,073)
(232,833)
(111,385)
(121,448)
(238,270)
(115,657)
(122,613)
(166,819)
(42,048)
(124,771)
–
–
–
–
–
–
Exposure to
floating
interest
rates
£’000s
Exposure
to fixed
interest
rates
£’000s
Total
£’000s
(238,270)
(55,928)
(182,342)
(166,819)
(42,048)
(124,771)
Exposure to
floating
interest rates
£’000s
Exposure to
fixed interest
rates
£’000s
–
–
–
–
Total
£’000s
–
–
Exposure to floating rates
Cash and margin account
Bank overdraft
Borrowings
Exposure to fixed rates
ZDP shares
Net exposures
As at 30 June
Maximum in year
Minimum in year
Maximum in year
Minimum in year
100
UIL Limited
Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Group arising out of the
investment and risk management processes. Interest received on cash balances or paid on overdrafts is at ruling market rates.
Finance costs on the ZDP shares are fixed (see note 15). Interest paid on borrowings is at ruling market rates (2020: same). The
Group’s total returns and net assets are sensitive to changes in interest rates on cash and borrowings. Based on the financial
assets and liabilities held, and the interest rates pertaining, at each Statement of Financial Position date, a decrease or increase
in interest rates by 2% would have had the following approximate effects on the Group Income Statement revenue and capital
returns after tax and on the NAV per share.
16,520
16,528
2020
USD
£’000s
Revenue profit for the year
Capital profit for the year
Total profit for the year
Other market risk exposures
Increase
in rate
£’000s
(909)
–
(909)
2021
Decrease
in rate
£’000s
909
–
909
Increase
in rate
£’000s
(1,046)
–
(1,046)
2020
Decrease
in rate
£’000s
1,046
–
1,046
The portfolio of investments, valued at £540,074,000 as at 30 June 2021 (2020: £488,997,000) is exposed to market price
changes. The Group enters into currency and index options in managing its exposure to other market risks.
The Investment Managers assess these exposures at the time of making each investment decision. The Board reviews overall
exposures at each meeting against indices and other relevant information. An analysis of the portfolio by country and major
industrial sector are set out on pages 11 and 16 respectively. The Investment Managers operate a strategic market position via
the purchase and sale of equity index put and call options, principally on the S&P500 Index. The level of the position is kept under
constant review, and will depend upon several factors including the relative performance of markets, the price of options as
compared to the market, and the Investment Managers’ view of likely future volatility and market movements. During the year to
30 June 2021, the Group did not purchase or sell any S&P options.
Based on the portfolio of investments at the Statement of Financial Position date, and assuming other factors, including
derivative financial instrument exposure, remain constant, a decrease or increase in the fair values of the portfolio by 20% would
have had the following approximate effects on the Income Statement Capital Return after tax and on the NAV per share:
2021
2020
Increase
in value
Decrease
in value
Increase
in value
Decrease
in value
Income Statement capital profit for the year (£’000s)
108,846
(108,846)
97,799
(97,799)
(b) Liquidity risk exposure
The Group and the Company are required to raise funds to meet commitments associated with financial instruments including
ZDP shares. These funds may be raised either through the realisation of assets or through increased borrowing. The risk of
the Group or the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given: the
number of quoted investments held in the Group’s portfolio, 18 as at 30 June 2021 (18 as at 30 June 2020); the liquid nature of
the portfolio of investments; the geographical and sector diversity of the portfolio (see pages 11 and 16 respectively); and the
existence of an on-going loan facility agreement. Cash balances are held with reputable banks with high quality external credit
ratings.
Report and Accounts for the year to 30 June 2021
101
NOTES TO THE ACCOUNTS
(continued)
The Investment Managers review liquidity at the time of making each investment decision. The Board reviews liquidity exposure
at each meeting. The Group has bank loan facilities of £50.0m as set out in note 13 and ZDP share liabilities of £132.1m as set out
in note 15. The contractual maturities of the financial liabilities, based on the earliest date on which payment can be required,
were as follows:
Three
months
or less
£’000s
57
213
437
139,451
Securities
purchased for
future settlement
Bank overdraft
Other creditors
Derivative financial
instruments
Loans
ZDP shares
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
2021
Total
£’000s
57
Three
months
or less
£’000s
–
213
437
3,514
734
139,451
203,425
48,886
17,765
–
–
–
–
–
–
–
–
–
2020
Total
£’000s
–
3,514
734
203,425
51,209
–
–
–
–
–
–
–
–
–
33,444
60,411
93,855
37,172
11,714
–
–
132,073
132,073
–
177,330
11,714
132,073
321,117
225,438
149,234
209,645
149,234
468,527
(c) Credit risk and counterparty exposure
The Group is exposed to potential failure by counterparties to deliver securities for which the Group has paid, or to pay for
securities which the Group has delivered. The Board approves all counterparties used in such transactions, which must be
settled on a basis of delivery against payment (except where local market conditions do not permit). A list of pre-approved
counterparties is maintained and regularly reviewed by Waverton and the Board. Broker counterparties are selected based
on a combination of criteria, including credit rating, statement of financial position strength and membership of a relevant
regulatory body. Cash and deposits are held with reputable banks. The Group has an on-going contract with its custodians for
the provision of custody services. The contracts are reviewed regularly. Details of securities held in custody on behalf of the
Group are received and reconciled monthly. Prior to making investments in debt instruments, the Investment Managers have in
place a process of review that includes an evaluation of a potential investee company’s ability to service and repay its debt. The
Investment Managers review the financial position of investee companies on a regular basis. To the extent that the Investment
Managers carry out duties (or cause similar duties to be carried out by third parties) on the Group’s behalf, the Group is exposed
to counterparty risk. The Board assesses this risk continuously through regular meetings with management.
In summary, compared to the amounts included in the Statement of Financial Position, the maximum exposure to credit risk was
as follows:
Current assets
Cash at bank
Margin account
Financial assets through profit and loss
Investments in debt instruments
Derivatives (forward foreign exchange contracts)
Derivatives (S&P options)
2021
Maximum
exposure
in the year
£’000s
55,841
2,104
30 June
£’000s
3,324
–
36,089
79,499
139,871
198,145
–
–
2020
Maximum
exposure
in the year
£’000s
5,267
2,104
105,038
198,145
24,270
30 June
£’000s
258
2,104
75,265
198,145
–
None of the Group’s financial assets are past due or impaired. The Group’s principal custodian is JPMorgan Chase Bank N.A.– Jersey
Branch. Waverton acts as custodian for unquoted investments. UIL has an indirect interest in Waverton.
(d) Fair values of financial assets and liabilities
The assets and liabilities of the Group are, in the opinion of the Directors, reflected in the Statement of Financial Position at fair
value except for ZDP shares which are carried at amortised cost using effective interest rate basis (see note 15). Borrowings
under loan facilities do not have a value materially different from their capital repayment amount. Borrowings in foreign
currencies are converted into Sterling at exchanges rates ruling at each valuation date.
The fair values of ZDP shares derived from their quoted market price as at 30 June, were:
2020 ZDP shares
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
2021
£’000s
–
49,619
36,150
25,393
24,416
2020
£’000s
59,280
63,250
31,650
21,523
–
Unquoted investments are valued based on professional
assumptions and advice that is not wholly supported by
prices from current market transactions or by observable
market data. The Directors make use of recognised valuation
techniques and may take account of recent arms’ length
transactions in the same or similar investments.
The Directors regularly review the principles applied by the
Investment Managers to those valuations to ensure they
comply with the Group’s accounting policies and with fair
value principles.
Level 3 financial instruments
Valuation methodology
The objective of using valuation techniques is to arrive at a
fair value measurement that reflects the price that would be
received to sell the asset or paid to transfer the liability in
an orderly transaction between market participants at the
measurement date.
The Company uses proprietary valuation models, which are
compliant with IPEV guidelines and IFRS 13 and which are
usually developed from recognised valuation techniques.
Some or all of the significant inputs into these models may
not be observable in the market and are derived from market
prices or rates or are estimated based on assumptions.
Valuation models that employ significant unobservable inputs
require a higher degree of management judgement and
estimation in the determination of fair value. Management
judgement and estimation are usually required for the
selection of the appropriate valuation model to be used,
determination of expected future cash flows of the financial
instrument being valued, determination of the probability of
counterparty default and prepayments, peer group multiple
and selection of appropriate discount rates.
Fair value estimates obtained from such models are adjusted
for any other factors, such as controlling interest, historical
and projected financial data, entity specific strengths and
weaknesses, or model uncertainties, to the extent that the
Company believes that a third party market participant would
take them into account in pricing a transaction.
The Directors have satisfied themselves as to the
methodology used, the discount rates and key assumptions
applied, and the valuations. The level 3 assets comprise
of a number of unlisted investments at various stages
of development and each has been assessed based on
its industry, location and business cycle. The valuation
methodologies include net assets, discounted cash flows,
cost of recent investment or last funding round, listed peer
comparison or peer group multiple or dividend yield as
appropriate. Where applicable, the Directors have considered
observable data and events to underpin the valuations. A
discount has been applied, where appropriate, to reflect both
the unlisted nature of the investments and business risks.
UIL currently has investments in three close-ended
investment companies, Allectus, ICM Mobility and Somers,
that are valued using valuation techniques. These close-
ended fund interests are valued on a net assets basis,
estimated based on the managers’ NAVs. Managers’ NAVs
use recognised valuation techniques consistent with IFRS and
are normally subject to audit. The fund valuations included
in these financial statements were based principally on the
30 June 2021 managers’ NAVs and these NAVs have been
reviewed to ensure that the economic impact of Covid-19 has
been considered.
Sensitivity of level 3 financial investments measured at fair
value to changes in key assumptions.
Level 3 inputs are sensitive to assumptions made when
ascertaining fair value. The following section details the
sensitivity of valuations to variations in key inputs. The level
of change selected is considered to be reasonable, based
on observation of market conditions and historic trends.
In assessing the level of reasonably possible outcomes
consideration was also given to the impact of Covid-19 on the
valuations. The valuations of fund interests are based on their
102
UIL Limited
Report and Accounts for the year to 30 June 2021
103
NOTES TO THE ACCOUNTS
(continued)
managers’ NAVs and these managers have advised that they
have taken into account the economic impact of Covid-19.
The impact on the valuations has been varied and largely
linked to their relevant sectors and this has been reflected
in the level of sensitivities applied. Covid-19 created a higher
level of uncertainty over the valuation of unlisted investments
and our valuation methodologies were enhanced last year
to address this issue. Since then, the impact of Covid-19 on
the businesses within our investment portfolio has become
considerably clearer and better understood, and this has
enabled us to revert to a more standard valuation approach
at 30 June 2021.
For each unlisted holding valued over £5.0m, the significant
valuation inputs have been sensitised by a percentage
deemed to reflect the relative degree of estimation
uncertainty.
Allectus Bermuda incorporated
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used the portfolio’s NAV
and carried its investment at USD 29.6m (£21.4m). Residual
cost of £18.5m. Allectus’ portfolio is concentrated in the
technology sector and its NAV was valued using valuation
techniques consistent with IFRS and was subject to audit.
The Directors considered together both Allectus’ sector
and the economic impact of Covid-19 up to 30 June 2021 in
Allectus’ portfolio valuations and assessed that the valuation
uncertainty associated with Covid-19 was at the lower end of
the risk spectrum.
Sensitivities: Should the value of Allectus move by 10% the
gain or loss would be USD 3.0m (£2.1m).
ICM Mobility UK incorporated
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used the portfolio’s NAV
and carried its investment at £41.9m. Residual cost of
£30.5m. ICM Mobility’s portfolio is concentrated in the transit
payments sector and its NAV was valued using valuation
techniques consistent with IFRS and was subject to audit.
The Directors considered together both ICM Mobility’s sector
and the economic impact of Covid-19 up to 30 June 2021 in
ICM Mobility’s portfolio valuations and assessed that the
valuation uncertainty associated with Covid-19 was at a
medium level.
As at 30 June 2021 ICM Mobility’s investment portfolio
was heavily concentrated, and all its holdings were valued
using valuation techniques. The valuation methodologies
employed by ICM Mobility consisted predominantly of peer
group earnings and revenue multiples with most of the
entity’s investments valued using these methodologies.
Its portfolio holdings were also heavily weighted towards
the growth stage of their business life cycles resulting in a
higher degree of management judgement and estimation in
the determination of their fair value. ICM Mobility has been
sensitised by 20% to reflect a higher level of uncertainty over
managers’ valuations of these investments which aggregate
to ICM Mobility’s fair value.
Sensitivities: Should the value of ICM Mobility move up by
20% the gain would be £8.4m. Should the value move down
by 10% the loss would be £4.2m.
Somers Bermuda incorporated
Somers is UIL’s largest investment with an equity value of
USD 304.1m (£220.1m) as at 30 June 2021 and including loans
accounts for 42.7% of UIL’s total portfolio. Residual cost of
equity £84.9m
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: Somers shares are listed on the BSX
and during the year, the Company adopted a new valuation
methodology for its holding in Somers equity. As at 30 June
2021, the Somers shares were deemed not to trade in an
active market and the shares have been valued based on
estimated NAV per share. The Directors believe this is the
most appropriate basis for valuing the investment in Somers.
As at 30 June 2020, UIL valued it holding in Somers based
on Somers’ listed share price. This approach had been used
by UIL since its initial investment in Somers as the Directors,
while accepting that the shares were not extensively
traded, considered that the listed share price historically
approximated fair value. As at the 30 June 2021 measurement
date, the Directors consider that the listed share price did not
represent fair value. In making their assessment the Directors
considered the very low level of trading in Somers shares, the
large disconnect between the listed share price and Somers’
NAV, and the absence of movement in Somers’ listed share
price in response to changing financial performance and
other developments at Somers.
Somers is a financial services investment holding company,
listed on the BSX. It is classified as an investment company
under IFRS 10 and, accordingly, values its underlying
investments at fair value. Somers applies valuation
techniques consistent with IFRS and is subject to annual
audit. As an investment company, Somers’ value is based
primarily on the performance and valuation of its portfolio
of investments which are concentrated in the banking,
wealth management and asset financing sectors. For its year
ended 30 September 2020, Somers recorded total income
of USD 80.9m, net income before tax of USD 69.0m and net
assets of USD 422.1m. At 30 June 2021, Somers’ three largest
investments, which make up 81.8% of its portfolio, were a
62.3% holding in Resimac, a non-bank Australian financial
institution, a 100.0% shareholding in BCB, a Bermuda bank,
and a 62.3% holding in Waverton, a UK wealth manager.
Subsequent to the year end, Somers announced the
completion of the sale of BCB at a price closely approximating
Other unlisted companies
Valuation methodology: UIL has a further 13 unlisted
holdings valued below £2.5m each. These holdings were
valued using a variety of methods, including; EV/Revenue
multiple, discounted cash flow, fair value of the underlying
net assets, dividend yields, and cost of recent investments
adjusted for events subsequent to acquisition that impact fair
value. The total value of these 13 holdings was £6.0m as at 30
June 2021.
Sensitivities: If the value of all these lower valued investments
moved by 10.0%, this would have an impact on the
investment portfolio value of £0.6m or 0.1%. A 20.0% change
would have an impact on the investment portfolio value of
£1.2m or 0.2%.
(e) Capital risk management
The objective of the Group is stated as being to maximise
shareholder returns by identifying and investing in
investments where the underlying value is not reflected in
the market price. In pursuing this long term objective, the
Board has a responsibility for ensuring the Group’s ability
to continue as a going concern. It must therefore maintain
its capital structure through varying market conditions. This
involves the ability to: issue and buy back share capital within
limits set by the shareholders in general meeting; borrow
monies in the short and long term; and pay dividends to
shareholders out of current year earnings as well as out of
brought forward reserves. Changes to ordinary share capital
are set out in note 17.
Dividends are set out in note 8. Bank loans are set out in note
13. ZDP shares are set out in note 15.
30. CONTINGENT LIABILITIES
UIL has given a guarantee to Bank of Nova Scotia to settle
derivative transactions traded by Somers. Somers has not and
is not expected to use this facility. It is not expected that UIL
will incur any liability.
its carrying value and the Directors consider this has
improved the estimation uncertainty over Somers.
At 30 June 2021 32% of Somers’ investment portfolio was
valued using valuation techniques and Somers has been
sensitised by 5% to reflect a degree of uncertainty over
managers’ valuations of these investments which contribute
to Somers’ fair value. The remaining 68% of Somers’ portfolio
was valued using their listed share price.
Sensitivities: Should the value of Somers move by 10% the
gain or loss would be USD 30.4m (£22.0m).
UIL has also provided various loans to Somers and, as at 30
June 2021, carried these loans at £10.6m. The loans have a
residual cost of £10.5m.
Valuation inputs: Gross asset to gross debt cover of 8.6 times
and; market interest rates for similar loans.
Valuation methodology: UIL has entered into a number of
loan facilities with Somers. Each of these unsecured facilities
carry a fixed interest rate of 6.0% and are repayable upon UIL
giving Somers not less than twelve months’ notice. At year
end, balances of USD 9.0m, £2.2m and AUD 3.2m were drawn
down on these facilities. UIL utilises a discounted cash flow
valuation technique to estimate the fair value of these loans.
Sensitivities: Somers had gross asset to gross debt cover of
8.6 times as at 30 June 2021. UIL therefore considers that no
reasonably possible change in Somers’ assets would result
in a significant change in the value of UIL’s loans to Somers.
Should the market interest rate for similar loans move by 1%
the gain or loss in valuation for UIL would be £0.2m.
Zeta Bermuda incorporated
UIL has provided various loans to Zeta and, as at 30 June
2021 carried these loans at £22.9m. The loans have a residual
cost of £22.7m.
Valuation inputs: Gross asset to gross debt cover of 6.6 times
and; market interest rates for similar loans.
Valuation methodology: UIL has entered into a number of
loan facilities with Zeta. These unsecured facilities carry fixed
interest rates between 7.3% and 7.5% and are repayable
upon UIL giving Zeta not less than twelve months’ notice. At
year end balances of AUD 22.1m and CAD 18.2m were drawn
down on these facilities. UIL utilises a discounted cash flow
valuation technique to estimate the fair value of these loans.
Sensitivities: Zeta had gross asset to gross debt cover of 6.6
times as at 30 June 2021. UIL therefore considers that no
reasonably possible change in Zeta’s assets would result in a
significant change in the value of UIL’s loans to Zeta. Should
the market interest rate for similar loans move by 1% the gain
or loss in valuation for UIL would be £0.6m.
104
UIL Limited
Report and Accounts for the year to 30 June 2021
105
OTHER FINANCIAL INFORMATION (UNAUDITED)
NOTICE OF ANNUAL GENERAL MEETING
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (“AIMFD”)
In accordance with the AIFMD, information in relation to the Group’s leverage and the remuneration of the Company’s AIFM,
ICMIM, is required to be made available to investors. Detailed regulatory disclosures including those on the AIFM’s remuneration
policy are available on the Company’s website or from ICMIM on request.
The Group’s maximum and actual leverage as at 30 June are shown below:
Leverage exposure
Maximum permitted limit
Actual
Gross
method
425%
251%
2021
Commitment
method
425%
251%
Gross
method
425%
215%
2020
Commitment
method
425%
215%
The leverage limits are set by the AIFM and approved by the Board. The AIFM is also required to comply with the gearing
parameters set by the Board in relation to borrowings.
Notice is hereby given that the Annual General Meeting of
UIL Limited will be held at Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda on Wednesday, 10 November 2021
at 5.00pm (local time) for the purpose of considering and,
if thought fit, passing the following resolutions (which will
be proposed in the case of resolutions 1 to 11, as ordinary
resolutions and, in the case of resolution 12, as a special
resolution).
ORDINARY BUSINESS
1.
2.
3.
To receive and adopt the report of the Directors of the
Company and the financial statements for the year ended
30 June 2021, together with the report of the auditor
thereon.
To approve the Directors’ Remuneration Report for the
year ended 30 June 2021.
To approve the Company’s dividend policy to pay four
interim dividends per year.
4. To re-elect Mr P Burrows as a Director.
5. To re-elect Mr S Bridges as a Director.
6. To re-elect Ms A Hill as a Director.
7. To re-elect Mr C Samuel as a Director.
8. To re-elect Mr D Shillson as a Director.
9.
To re-appoint KPMG LLP as auditor of the Company
to hold office until the conclusion of the next Annual
General Meeting of the Company.
10. To authorise the Directors to determine the auditor’s
remuneration.
SPECIAL BUSINESS
Ordinary resolution
11. That, in substitution for the Company’s existing authority
to make market purchases of ordinary shares of 10p in
the Company (“Ordinary Shares”), the Company be and
it is generally and unconditionally authorised to make
market purchases of Ordinary Shares, provided that:
(i)
105% of the average of the middle market
quotations of the Ordinary Shares for the five
business days prior to the date on which such
shares are contracted to be purchased; and
(ii) the higher of the price of the last independent
trade and the highest current independent bid on
the trading venue where the purchase is carried
out;
(d) such purchases shall be made in accordance with the
Companies Act 1981 of Bermuda; and
(e) unless renewed, the authority hereby conferred
shall expire at the conclusion of the Annual General
Meeting to be held in 2022 save that the Company
may, prior to such expiry, enter into a contract to
purchase Ordinary Shares which will or may be
completed or executed wholly or partly after the
expiration of such authority.
Special resolution
12. That, for the purpose of Bye-law 4A of the Company’s
Bye-laws, the Company may issue Relevant Securities (as
defined in the Bye-laws) representing up to 4,200,000
Ordinary Shares, equivalent to approximately 5% of the
total number of Ordinary Shares in issue as at the date
of this notice otherwise than on a pre-emptive basis,
provided that such disapplication shall expire (unless and
to the extent previously revoked, varied or renewed by
the Company in general meeting by Special Resolution (as
defined in the Bye-laws)) at the earlier of the conclusion
of the Annual General Meeting to be held in 2022 or 18
months from the date of this resolution but so that this
power shall enable the Company to make such offers or
agreements before such expiry which would or might
otherwise require Relevant Securities to be issued
after such expiry and the Directors may issue Relevant
Securities in pursuance of such offer or agreement as if
such expiry had not occurred.
(a) the maximum number of Ordinary Shares hereby
authorised to be purchased is 12,590,000 (being the
equivalent of approximately 14.99% of the issued
Ordinary Shares as at the date of this notice);
By order of the Board
ICM Limited, Secretary
22 September 2021
(b) the minimum price which may be paid for an Ordinary
Share shall be 10p;
(c) the maximum price (exclusive of expenses payable
by the Company) which may be paid for an Ordinary
Share shall be the higher of:
106
UIL Limited
Report and Accounts for the year to 30 June 2021
107
107
Report and Accounts for the year to 30 June 2021
NOTICE OF ANNUAL GENERAL MEETING (continued)
COMPANY INFORMATION
NOTES
7. CREST members who wish to vote through the CREST electronic
1. Only the holders of ordinary shares registered on the register of
members of the Company at close of business on 8 November
2021 shall be entitled to attend and vote or to be represented at
the meeting in respect of the ordinary shares registered in their
name at that time. Changes to entries on the register after close of
business on 8 November 2021 shall be disregarded in determining
the rights of any person to attend and vote at the meeting.
2. A member entitled to attend and vote at the meeting may appoint
one or more proxies to attend and vote instead of him/her. A
proxy need not be a member of the Company.
3.
If the Chairman, as a result of any proxy appointments, is
given discretion as to how the votes are cast and the voting
rights in respect of those discretionary proxies, when added to
the interests in the Company’s securities already held by the
Chairman, result in the Chairman holding such number of voting
rights that he has a notifiable obligation under the Disclosure
Guidance and Transparency Rules, the Chairman will make the
necessary notifications to the Company and the Financial Conduct
Authority. As a result, any person holding 5% or more of the voting
rights in the Company who grants the Chairman a discretionary
proxy in respect of some or all of those voting rights and so would
otherwise have a notification obligation under the Disclosure
Guidance and Transparency Rules need not make a separate
notification to the Company and the Financial Conduct Authority.
4. Any such person holding 5% or more of the voting rights in the
Company who appoints a person other than the Chairman as his
proxy will need to ensure that both he and such person complies
with their respective disclosure obligations under the Disclosure
Guidance and Transparency Rules.
5. A form of proxy is provided with this notice of meeting. The return
of a form of proxy will not preclude a member from attending
the meeting and voting in person if he/she wishes to do so. To
be valid, a form of proxy for use at the meeting and the power of
attorney or other authority (if any) under which it is signed, or a
notarially certified or office copy of such power or authority, must
be deposited with the Company’s registrars, Computershare
Investor Services (Bermuda) Limited, c/o The Pavilions, Bridgwater
Road, Bristol BS99 6ZY not later than 5:00 pm (GMT) on
8 November 2021.
Alternatively, shareholders can vote or appoint a proxy
electronically by visiting www.investorcentre.co.uk/eproxy. You will
be asked to enter the Control Number, the Shareholder Reference
Number and PIN which are printed on the form of proxy. The
latest time for the submission of proxy votes electronically is
5:00 pm (GMT) on 8 November 2021. To appoint more than one
proxy, an additional proxy form(s) may be obtained by contacting
the Registrar’s helpline on 0370 707 1196 or you may photocopy
the form of proxy. Please indicate in the box next to the proxy
holder’s name the number of shares in relation to which they are
authorised to act as your proxy. Please also indicate by marking
the box provided if the proxy instruction is one of multiple
instructions being given. All forms of proxy must be signed and
should be returned together in the same envelope.
6.
Investors holding ordinary shares in the Company through
depository interests should ensure that Forms of Instruction are
returned to Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol, BS99 6ZY not later than 5:00 pm (GMT)
on 5 November 2021 or give an instruction via the CREST system
as detailed below.
proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST personal members or
other CREST sponsored members, and those CREST members
who have appointed a voting service provider(s), should refer to
their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s specifications,
and must contain the information required for such instruction,
as described in the CREST Manual (available via www.euroclear.
com/CREST). The message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the instruction
given to a previously appointed proxy must, in order to be valid,
be transmitted so as to be received by the issuer’s agent (ID
3RA50) by not later than 5:00 pm (GMT) on 5 November 2021.
For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by
the CREST Applications Host) from which the issuer’s agent is
able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time any change of instructions to
proxies appointed through CREST should be communicated to the
appointee through other means.
CREST members and, where applicable, their CREST sponsors,
or voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures in
CREST for any particular messages. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service
provider, to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system
by any particular time. In this connection, CREST members
and, where applicable, their CREST sponsors or voting system
providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST
system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
8. The register of Directors’ holdings is available for inspection at the
registered office of the Company during normal business hours
on any weekday and will be available at the place of the meeting
from 15 minutes prior to the commencement of the meeting until
the conclusion thereof.
9. No service contracts exist between the Company and any
of the Directors, who hold office in accordance with letters
of appointment and the Company’s Bye-laws. The letters of
appointment are available for inspection on request at the
Company’s registered office and at the Annual General Meeting.
10. As at the date of publication of this Notice of Annual General
Meeting, the Company’s issued share capital consisted of
84,014,018 ordinary shares of 10p each. Each ordinary share
carries the right to one vote and therefore the total voting rights
in the Company as at the date of this report are 84,014,018.
DIRECTORS
Peter Burrows, AO (Chairman)
Stuart Bridges
Alison Hill
Christopher Samuel
David Shillson
REGISTERED OFFICE
Clarendon House, 2 Church Street, Hamilton HM 11,
Bermuda
Company Registration Number: 39480
LEI: 213800CTZ7TEIE7YM468
AIFM AND JOINT PORTFOLIO MANAGER
ICM Investment Management Limited
Ridge Court, The Ridge, Epsom, Surrey, KT18 7EP
United Kingdom
Telephone number 01372 271486
Authorised and regulated in the UK by the Financial Conduct Authority
JOINT PORTFOLIO MANAGER AND SECRETARY
ICM Limited
34 Bermudiana Road, Hamilton HM 11, Bermuda
LEGAL ADVISOR TO THE COMPANY
(as to English law)
Norton Rose Fulbright LLP
3 More London Riverside, London SE1 2AQ
United Kingdom
LEGAL ADVISOR TO THE COMPANY
(as to Bermuda law)
Conyers Dill & Pearman Limited
Clarendon House, 2 Church Street, Hamilton HM 11,
Bermuda
AUDITOR
KPMG LLP
15 Canada Square, London E14 5GL, United Kingdom
Member of the Institute of Chartered Accountants in England and
Wales
DEPOSITARY SERVICES PROVIDER
J.P. Morgan Europe Limited
25 Bank Street, Canary Wharf, London E14 5JP
United Kingdom
Authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority
ASSISTANT SECRETARY
Conyers Corporate Services (Bermuda) Limited
Clarendon House, 2 Church Street, Hamilton HM 11,
Bermuda
CUSTODIAN
JPMorgan Chase Bank N.A.
JPMorgan House, Grenville Street, St Helier
Jersey JE4 8QH
ADMINISTRATOR
JP Morgan Chase Bank N.A. – London Branch
25 Bank Street, Canary Wharf, London E14 5JP
United Kingdom
Authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority
REGISTRAR
Computershare Investor Services (Bermuda) Limited
5 Reid Street, Hamilton HM 11, Bermuda
Telephone number 0370 707 1196
BROKER
Shore Capital and Corporate Limited
Cassini House, 57 St James’s Street, London
SW1A 1LD United Kingdom
Authorised and regulated in the UK by the Financial Conduct Authority
REGISTRAR TO THE DEPOSITARY INTERESTS
AND CREST AGENT
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol BS99 6ZY
United Kingdom
COMPANY BANKER
Scotiabank Europe PLC
201 Bishopsgate, 6th Floor, London EC2M 3NS
United Kingdom
108
UIL Limited
Report and Accounts for the year to 30 June 2021
109
109
Report and Accounts for the year to 30 June 2021
ALTERNATIVE PERFORMANCE MEASURES
The European Securities and Markets Authority defines
an Alternative Performance Measure (“APM”) as being
a financial measure of historical or future financial
performance, financial position or cash flow, other
than a financial measure defined or specified in the
applicable accounting framework. The Group uses the
following APMs:
Discount/Premium – if the share price is lower than
the NAV per ordinary share, the shares are trading at
a discount. Shares trading at a price above NAV per
ordinary share are said to be at a premium. As at 30
June 2021 the ordinary share price was 268.00p (2020:
177.50p) and the NAV per ordinary share was 431.51p
(2020: 292.79p), the discount was therefore 37.9%
(2020: 39.4%).
Gearing – represents the ratio of the borrowings less
cash and cash equivalents of the Company to its net
assets.
Bank overdraft
Cash and cash
equivalents
Bank loans
Coldharbour loan
ZDP shares
Total debt
Net assets attributable
to equity holders
Gearing
page
91
77
90
90
91
77
4
2021
£’000s
213
(3,324)
48,548
–
132,073
177,510
2020
£’000s
3,514
(258)
50,646
500
180,535
234,937
363,781
251,625
48.8%
93.4%
NAV per ordinary share – the value of the Group’s
net assets divided by the number of ordinary shares in
issue (see note 23 to the accounts).
NAV/share price total return – the return to
shareholders calculated on a per ordinary share basis
by adding dividends paid in the period to the increase
or decrease in the NAV or share price in the period.
The dividends are assumed to have been re-invested
in the form of net assets or shares, respectively, on the
date on which the dividends were paid.
Year to 30 June
2021
Dividend rate
(pence)
NAV
(pence)
Share price
(pence)
30-Jun-20
25-Sep-20
21-Dec-20
31-Mar-21
28-Jun-21
30-Jun-21
Total return
n/a
292.79
2.000
2.000
2.000
2.000
295.59
325.51
331.07
395.11
n/a
431.51
50.9%
177.50
160.00
191.50
228.00
257.00
268.00
57.0%
Year to 30 June
2020
Dividend rate
(pence)
NAV
(pence)
Share price
(pence)
30-Jun-19
27-Sep-19
20-Dec-19
27-Mar-20
26-Jun-20
30-Jun-20
Total return
n/a
1.875
1.875
2.000
2.000
n/a
369.57
379.77
343.46
257.03
278.36
292.79
(18.7%)
199.00
254.00
247.00
140.00
175.00
177.50
(7.1%)
NAV/share price total return since inception – the
return to shareholders calculated on a per ordinary
share basis by adding dividends paid in the period and
adjusting for the exercise of warrants and Convertible
Unsecured Loan Stock (“CULS”) in the period to the
increase or decrease in the NAV/share price in the
period. The dividends are assumed to have been
reinvested in the form of net assets or shares on the
date on which the dividends were paid. The adjustment
for the exercise of warrants and CULS is made on the
date the warrants and CULS were exercised.
2021
Share
price
(pence)
NAV
(pence)
2020
Share
price
(pence)
NAV
(pence)
99.47
85.67
99.47
85.67
2.0840
2.5314
2.0347
2.4338
431.51
268.00
292.79
177.50
899.25
678.42
595.74
432.00
804.0% 691.9% 498.9% 404.3%
Total return
NAV 14 August 2003
(pence)
Total dividend,
warrants and CULS
adjustment factor
NAV/Share price at
year end (pence)
Adjusted NAV/Share
price at 30 June
(pence)
Total return since
inception
Annual compound NAV/share price total return
since inception – the annual return to shareholders
using the same basis as NAV/share price total return
since inception.
Revenue yield – represents the ratio of total income in
the year over average gross assets in the year.
2021
Share
price
(pence)
NAV
(pence)
NAV
(pence)
2020
Share
price
(pence)
Income
Average Gross assets
Revenue yield
page
73
2021
£’000s
2020
£’000s
11,555
12,684
499,467
514,311
2.3%
2.5%
Annual compound
NAV total return
since inception
13.1%
12.3%
11.2%
10.1%
Dividend yield – represents the ratio of dividends per
ordinary share over closing ordinary share price.
Ongoing charges – all operating costs expected to
be regularly incurred and that are payable by the
Group or suffered within underlying investee funds,
expressed as a proportion of the average weekly NAV
of the Group (valued in accordance with accounting
policies) over the reporting year. The costs of buying
and selling investments and derivatives are excluded,
as are interest costs, taxation, non-recurring costs and
the costs of buying back or issuing ordinary shares.
Ongoing charges calculation
(excluding performance fees)
Management and administration
fees
page
73
Other expenses
Expenses suffered within
underlying funds
Total expenses for ongoing
charges calculation
2021
£’000s
2020
£’000s
982
830
1,426
939
4,784
3,555
6,596
5,920
Dividends per ordinary
shares
Ordinary share price
Dividend yield
page
2021
£’000s
2020
£’000s
4
4
8.000
7.875
268.00
177.50
3.0%
4.4%
Revenue reserves per ordinary share carried
forward – the value of the Group’s revenue reserves
divided by the number of ordinary shares in issue.
Revenue reserves (£'000s)
Number of ordinary shares
in issue at 30 June
Revenue reserves per
ordinary share carried
forward (pence)
page
77
2021
2020
12,547
10,850
93 84,303,283 85,939,314
14.88
12.63
Average weekly NAV of the Group
282,613 287,788
Ongoing Charges
4
2.3%
2.1%
Dividend per ordinary share cover – represents
revenue reserves per ordinary share carried forward
over the dividends per ordinary share.
Ongoing changes calculation
(including performance fees)
Management and administration
fees
page
73
Other expenses
Expenses suffered within
underlying funds
Total expenses for ongoing
charges calculation
2021
£’000s
2020
£’000s
982
830
1,426
939
11,184
3,555
12,996
5,920
Average weekly NAV of the Group
282,613 287,788
Ongoing Charges
4
4.6%
2.1%
Revenue reserves per
ordinary share carried
forward (pence)
Dividends per ordinary
shares
Dividend per ordinary
share cover
page
2021
2020
14.88
12.63
4
8.000
7.875
1.9x
1.6x
110
110
UIL Limited
Report and Accounts for the year to 30 June 2021
111
UIL Limited
HISTORICAL PERFORMANCE
at 30 June
2021
2020
2019
2018
2017
2016
2015
2014
2013(1) 2012
NAV per ordinary share (pence)
431.51 292.79
369.57 291.79 252.86 241.12 169.00 165.84 148.33 209.67
Ordinary share price (pence)
268.00 177.50
199.00 174.50 164.00 130.75 117.00 128.00 130.00 144.00
Discount (%)
37.9
39.4
46.2
40.2
35.1
45.8
30.8
22.8
12.4
31.3
Returns and dividends (pence)
Revenue return per ordinary share
9.98
9.77
7.63
6.67
6.38
6.23
Capital return per ordinary share
133.81 (81.30)
75.34
38.96
12.46
68.45
7.84
2.47
7.03
12.06 11.99
19.85 (63.65)
2.73
Total return per ordinary share
143.79 (71.53)
82.97
45.63
18.84
74.68
10.31
26.88 (51.59) 14.72
Dividend per ordinary share
8.000(2) 7.875(2)
7.500
7.500
7.500
7.500
7.500
7.500 10.000(3) 7.000
FTSE All-Share total return Index
7,852
6,465
7,431
7,389
6,777
5,737
5,614
5,471
4,837 4,101
ZDP shares (4) (pence)
2020 ZDP shares
Capital entitlement (5) per ZDP share
n/a 151.23
141.01 131.52 122.64 114.35 106.61
ZDP share price
2022 ZDP shares
n/a 152.00
149.50 142.50 140.38 130.00 122.38
Capital entitlement (5) per ZDP share
135.56 127.59
120.03 113.01 106.37 100.12
ZDP share price
2024 ZDP shares
139.50 126.50
132.00 124.50 119.50 104.50
Capital entitlement (5) per ZDP share
118.51 113.13
107.97 103.10
ZDP share price
2026 ZDP shares
120.50 105.50
114.00 107.50
Capital entitlement (5) per ZDP share
116.78 111.21
105.89 100.87
ZDP share price
2028 ZDP shares
Capital entitlement (5) per ZDP share
ZDP share price
Equity holders' funds (£m)
116.00
92.25
107.50 102.25
101.60
100.00
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Gross assets (6)
Bank loans
ZDP shares
Other loans
Equity holders' funds
Revenue account (£m)
Income
Costs (management and other expenses)
Finance costs
Financial ratios of the Group (%)
Ongoing charges figure (7)
(excluding performance fee)
Gearing (7)
544.4
483.3
537.2
488.3
449.7
440.7
373.4
399.1
383.0 434.5
48.5
50.6
51.0
27.8
47.8
24.7
34.4
22.2
42.5
0.0
132.1
180.5
159.9
199.4
173.8
197.4
172.4
212.5
193.4 224.4
–
0.5
–
–
–
–
–
–
–
1.2
363.8
251.6
326.3
261.1
228.1
218.6
166.6
164.4
147.1 208.9
11.6
12.7
11.2
10.6
10.7
10.5
11.2
10.4
16.2
15.9
2.1
1.0
2.6
1.6
2.8
1.6
2.8
1.6
2.9
1.8
1.9
1.7
1.8
1.1
2.1
0.9
3.2
0.8
3.0
0.8
2.3
48.8
2.1
93.4
2.1
64.6
2.2
87.3
2.1
3.3
2.0
2.2
1.8
1.7
97.2
101.6
124.1
144.4
160.4 108.0
1. Restated on adoption of IFRS10 Consolidated Financial Statements
2. The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts
3. Includes the special dividend of 2.50p per share
4. Issued by UIL Finance, a wholly owned subsidiary of UIL
5 .See pages 57 and 58
6. Gross assets less current liabilities excluding loans
7. See Alternative Performance Measures on pages 110 to 111
112
UIL Limited A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR
UK CONTACT
PO Box 208
Epsom Surrey
KT18 7YF
Telephone: +44 (0)1372 271486
www.uil.limited
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda