2022
REPORT AND ACCOUNTS
A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR
WHY UIL LIMITED?
UIL Limited’s (“UIL” or the “Company”) 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 2022
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
8.35p
(2021: 9.98p)
8.00p
(2021: 8.00p)
* See Alternative Performance Measures on pages 108 and 109
NET ASSET VALUE
(“NAV”) TOTAL
RETURN PER
ORDINARY SHARE*
-38.1%
(2021: 50.9%)
SHARE PRICE
TOTAL RETURN PER
ORDINARY SHARE*
-27.6%
(2021: 57.0%)
Stock selection remains our focus and ICM Limited’s
(“ICM”) proven bottom-up long-term approach
should benefit UIL in changing times.
UIL OFFERS ORDINARY SHAREHOLDERS:
UIL’S INVESTMENT MANAGER
• A high conviction portfolio
• Diversified mix of investments
• Opportunity to currently buy UIL shares
on the market at a significant discount to NAV
• Attractive quarterly dividends
UIL OFFERS ZERO DIVIDEND PREFERENCE (“ZDP”)
SHAREHOLDERS:
• Attractive capital growth
• Attractive asset, sector and geographical cover
• ICM has been UIL’s investment manager since
inception+ 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% of UIL held by
investors associated with ICM
• ICM offers significant sector expertise
PORTFOLIO STRENGTHS
• Financial Services
• Structured as four ZDP classes – mitigating
• Utilities and Infrastructure
redemption risk
+ Inception: (14 August 2003)
• Technology
• Mining and Resources
1
Report and Accounts for the year to 30 June 2022 CONTENTS
PERFORMANCE
3 Current Year Performance
4 Group Performance Summary
5 Chairman’s Statement
8 Performance Since Inception (14 August 2003)
STRATEGIC REPORT AND INVESTMENTS
10
Investment Managers’ Report
15 Top Ten Companies as at 30 June 2022
16 Macro Trends Affecting Our Portfolio
18 Our Investment Approach
20 ESG Spotlight
21 Geographical Investment Exposure
22 Ten Largest Holdings
28 ZDP Shares
30 Strategic Report
40
Investment Managers and Team
GOVERNANCE
43 Directors
44 Directors’ Report
50 Corporate Governance Statement
55 Capital Structure
57 Directors’ Remuneration Report
60 Audit & Risk Committee Report
63 Statement of Directors’ Responsibilities
AUDIT
64
Independent Auditor’s Report
FINANCIAL STATEMENTS
71 Accounts
77 Notes to the Accounts
ADDITIONAL INFORMATION
105 Notice of Annual General Meeting
107 Company Information
108 Alternative Performance Measures
110 Historical Performance
The business of UIL 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, together referred to
as the “Investment Managers”.
FINANCIAL CALENDAR
Year End
30 June
Annual General Meeting (“AGM”)
10 November 2022
Half Year
31 December
Dividends Payable
September, December, March
and June
CURRENT YEAR PERFORMANCE
NAV TOTAL RETURN
PER ORDINARY SHARE*
SHARE PRICE TOTAL
RETURN PER ORDINARY
SHARE*
NAV DISCOUNT AS AT
30 JUNE 2022*
GEARING*
-38.1%
(2021: 50.9%)
-27.6%
(2021: 57.0%)
28.1%
(2021: 37.9%)
89.5%
(2021: 48.8%)
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
REVENUE YIELD*
DIVIDEND YIELD*
8.35p
(2021: 9.98p)
8.00p
(2021: 8.00p)
2.0%
(2021: 2.3%)
4.3%
(2021: 3.0%)
ORDINARY SHARES
BOUGHT BACK
AVERAGE PRICE OF
SHARES BOUGHT BACK
ONGOING CHARGES
EXCLUDING
PERFORMANCE FEES*
ONGOING CHARGES
INCLUDING
PERFORMANCE FEES*
0.5m
(2021: 1.6m)
266.30p
(2021: 221.29p)
2.2%
(2021: 2.3%)
2.2%
(2021: 4.6%)
* See Alternative Performance Measures on pages 108 and 109
TOTAL RETURN COMPARATIVE PERFORMANCE † (pence)
from 30 June 2021 to 30 June 2022
110
105
100
95
90
85
80
75
70
65
60
Jun 21
Jul 21
Aug 21
Sep 21
Oct 21
Nov 21
Dec 21
Jan 22
Feb 22
Mar 22
Apr 22
May 22
Jun 22
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 2021
Source: ICM and Bloomberg
2
3
UIL LimitedReport and Accounts for the year to 30 June 2022
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 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
2022
30 June
2021
% change
2022/21
(38.1)
(27.6)
9.5
260.89
187.50
28.1
8.35
(171.68)
(163.33)
8.00(3)
7,981
410.6
51.1
140.8
218.7
9.9
1.7
1.1
7.0
2.2
2.2
89.5
50.9
57.0
13.1
431.51
268.00
37.9
9.98
133.81
143.79
8.00
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
n/a
n/a
n/a
(39.5)
(30.0)
n/a
(16.3)
(228.3)
(213.6)
0.0
1.6
(24.6)
5.4
6.6
(39.9)
(14.7)
(19.0)
10.0
(17.6)
n/a
n/a
n/a
(1) See Alternative Performance Measures on pages 108 and 109
(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 suffered within underlying funds
The year to 30 June 2022 was
very challenging for investors.
UIL gave up all the gains of the
prior year, ending the year with
NAV per share of 260.89p, a
decline of 39.5%. UIL’s NAV total
return was negative 38.1%.
This has dragged UIL’s annual
compound NAV total return
since inception in 2003 down
to 9.5%.
Much of this reflects a strong
PETER BURROWS
Chairman
reset by the markets in the face of rising inflation
(especially energy and food prices), increasing interest
rates by central banks, rising climate change concerns
and all exacerbated by the Ukraine war and China’s
zero Covid policy. UIL’s gross assets declined by
24.6% and UIL’s gearing has magnified the impact on
shareholders.
Since inception in August 2003, UIL has distributed
£87.9m in dividends, invested £36.9m in ordinary share
buybacks and made net gains of some £239.0m for
a total return of 459.6% (adjusted for the exercise of
warrants and convertibles). Shareholders should note
that the Board and the Investment Managers focus on
longer term market indices, whilst including short term
comparisons for reference.
As shareholders are aware, UIL values Utilico Emerging
Markets Trust plc (“UEM”) and Zeta Resources Limited
(“Zeta”) based on their market bid prices. As at 30
June 2022, discounts to published NAVs widened to
COMMODITIES MOVEMENTS
from 30 June 2021 to 30 June 2022
13.9% for UEM (some £10.1m) and narrowed marginally
to 15.4% for Zeta (some £11.7m). Together these
discounts amount to £21.8m attributable to UIL.
Adding these back would see UIL’s adjusted NAV per
share increase by 10.0% to 286.89p (30 June 2021:
473.14p) and UIL’s implied discount widen to 34.6%.
Most investments have been marked down in the
year to 30 June 2022 in the face of significant market
weakness. Eight of the top ten holdings by UIL had
some significant declines in value. Resimac Group
Limited’s (“Resimac”) share price fell 53.3% during the
year. Given Resimac is now held directly by UIL and is
39.9% of Somers Limited’s (“Somers”) portfolio and
Somers is 35.7% of UIL’s portfolio, Resimac’s weakness
has in turn accounted for 56.8% of UIL’s portfolio
losses of £120.5m over the year. As at 30 June 2022,
Resimac shares traded at an annualised historic price
earnings ratio of 4.6x and a dividend yield of 7.0%. It is
pleasing to see Resimac continuing to buy back its own
shares on the market, while operating results have
been good.
Resolute Mining Limited (“Resolute”) has been a
perennial underperformer. Resolute’s share price
was down 55.4% on the back of lacklustre operational
performance and continued concerns over the political
outlook in Mali. The Resolute board rightly appointed
a new CEO in May 2022. Early signs are that under new
leadership Resolute is making good progress.
The Board is pleased to see the ordinary shares
discount narrow to under 30.0%, standing at 28.1%
as at 30 June 2022. In 2019, the Board determined,
280
240
200
160
120
80
Jun 21
Aug 21
Oct 21
Dec 21
Feb 22
Apr 22
Jun 22
Oil
Copper
Nickel
Gold
Rebased to 100 as at 30 June 2021
Source: Bloomberg
4
5
UIL LimitedReport and Accounts for the year to 30 June 2022 CHAIRMAN’S STATEMENT (continued)
CURRENCY MOVEMENTS vs STERLING
from 30 June 2021 to 30 June 2022
105
100
95
90
85
Jun 21
Aug 21
Oct 21
US Dollar
Dec 21
Euro
Feb 22
Apr 22
Jun 22
Australian Dollar
Rebased to 100 as at 30 June 2021
Source: Bloomberg
in agreement with the Investment Managers and the
major shareholder, to target a lower discount level of
20.0% in the medium term. This was communicated to
the market with UIL continuing to buy back ordinary
shares at high discount levels.
During the year to 30 June 2022, the Company bought
back 0.5m ordinary shares (0.5% of opening shares in
issue) at an average price of 266.30p.
Consistent with the wider debt markets, UIL’s longer
dated 2024, 2026 and 2028 ZDP shares are trading
at higher gross redemption yields compared to
those as at 30 June 2021, being 5.3%, 6.5% and 7.0%
respectively. The market prices of the ZDP shares were
impacted by interest rate rises by most central banks
as inflation increased sharply. UIL’s 2022 ZDP shares
will be redeemed on 31 October 2022. As at 30 June
2022, UIL’s average blended rate of funding costs,
including bank debt, increased slightly from 4.5% to
4.7%.
Total revenue income for the year to 30 June 2022 was
£9.9m, a decrease of 14.7% from £11.6m in the prior
year. This reflects in part the loss of earnings from
the Zeta and Somers loans which were significantly
reduced in the year, resulting in interest income
reducing from £4.8m over the prior year to £2.3m. The
revenue return earnings per share (“EPS”) of 8.35p
represents a decrease of 16.3% over the prior year of
9.98p.
The Board has declared an unchanged fourth quarter
dividend of 2.00p per ordinary share which maintains
the total for the year at 8.00p, and a yield on the
closing share price of 4.3%. The dividend was covered
by earnings in the year and undistributed revenue
reserves carried forward increased from £12.5m to
£12.8m, equal to 15.32p per share. In the absence
of unforeseen circumstances, the Board intends to
pay further quarterly dividends of 2.00p per ordinary
share.
Following the capital return profit of £114.1m last year,
there was a capital return loss for the year ended
30 June 2022 of £144.1m. The majority of this was
due to unrealised losses on investments and foreign
exchange of £136.3m (prior year: gains of £122.7m).
The capital losses has resulted in UIL's gearing rising
to 89.5%. This is a disappointing outcome but remains
within the 100% gearing target level set some years
ago. The 2022 ZDP shares amounting to £51.2m as at
30 June 2022, are redeemable in October this year.
As such they are moved to current liabilities and the
Investment Managers have taken steps to fund the
redemption payment.
GLOBAL EVENTS
Three themes continue to dominate global events:
Covid-19, heightened geopolitical tensions and the
outlook for inflation and interest rates.
While Covid-19 continues to disrupt, the impact on
most economies is very reduced. We now expect it
to recede and not be an issue going forward. But the
exception is China. As we noted before, their zero
policy to Covid-19 sets them apart from every other
significant economy, and nearly every country in the
world. The economic damage being inflicted on the
Chinese economy as a result of this approach is very
significant and sad to see. The Chinese consumer
confidence has deteriorated to the point where
housing is facing very severe challenges. Given that
China is the world’s second biggest economy, and
that housing is some 35% of economic activity this is a
significant headwind and of deep concern. It is hard to
judge when this dogmatic policy changes.
In the half-yearly report, we referred to heightened
geopolitical events and risk of war with devastating
consequences for its global economy. Clearly Russia
going to war reflects the worst outcome and the
question now is what is next. Our view is that it will
take time for both sides to exhaust their ambitions,
but once they reach a neutral position a negotiated
outcome would be expected. Russia’s maximum
leverage is likely to be early next year, at which point
Europe will be facing the worst of the energy crisis they
now certainly face.
We also noted at the interim stage the ongoing
friction between China and the USA is again a clash
of ideologies and will likely lead to ongoing resistance
between the two nations and their allies. The tensions
over Taiwan are symptomatic of two ideologies facing
each other across the economic, political and social
divide. This is concerning over the longer term.
Inflation moved markedly higher follow the Russian
invasion of the Ukraine. Coupled with surprising
INDICES MOVEMENTS
from 30 June 2021 to 30 June 2022
low unemployment globally this has driven inflation
markedly higher. Central Banks have had to respond
much more firmly in combating the very high inflation
expectations. This in turn is slowing economic growth.
We see this headwind continuing for the rest of the
year. However, once the Russian/Ukraine conflict is
resolved we expect inflation to subside.
The one unknown in our view is the response of the
labour force. The labour market remains tight and the
number of unemployed are at record lows in many
economies. If this continues, then the shortage of
the work force will drive up wages and in turn feed
inflation.
OUTLOOK
The outlook for global economies is inextricably
linked to Covid-19 in China, to resolving geopolitical
differences and to central banks navigating inflation
and interest rate responses. We remain optimistic that
solutions can be found and that policy makers can
navigate through the challenges. We expect inflation
to be elevated for much of 2022, assets valuations to
increase, technology to continue to gain market share
and commodities to rise in value. Most of our portfolio
companies are doing very well in this challenging
environment and we expect this to continue.
Peter Burrows AO
Chairman
21 September 2022
125
115
105
95
85
75
Jun 21
Aug 21
Oct 21
Dec 21
FTSE All-Share
Australian Securities Exchange ("ASX")
Feb 22
S&P 500
Apr 22
Jun 22
MSCI All Countries World Index
Rebased to 100 as at 30 June 2021
Source: Bloomberg
6
7
UIL LimitedReport and Accounts for the year to 30 June 2022 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*
9.5%
459.6%
9.7%
473.5%
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
DIVIDENDS PAID
OUT
REVENUE RESERVES
PER ORDINARY SHARE
CARRIED FORWARD*
124.46p
98.83p
£87.9m
15.32p
* See Alternative Performance Measures on pages 108 and 109
ORDINARY SHARES
BOUGHT BACK
VALUE OF ORDINARY
SHARES BOUGHT BACK
ZDP SHARES
ISSUED
ZDP SHARES
REDEEMED
29.6m
£36.9m
£379.5m
£414.2m
DIVIDENDS PER ORDINARY SHARE (pence)
from 30 June 2004 to 30 June 2022
ALLOCATION OF GROSS ASSETS (£m)
from 14 August 2003 to 30 June 2022
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2004
2006
2010
2012
2014
2016
2018
2020
2022
Dividend per share – ordinary
Dividend per share – special
No dividends were paid between 2007 and 2010
2010 refers to a cash distribution
Source: ICM
600
500
400
300
200
100
0
A ug 03
Ju n 05
Ju n 07
Ju n 09
Ju n 11
Ju n 13
Ju n 15
Ju n 17
Ju n 19
Ju n 21
Ju n 22
Ordinary shares
ZDP shares
Bank loans
Source: ICM
HISTORIC TOTAL RETURN PERFORMANCE † (pence)
since inception to 30 June 2022
CUMULATIVE TOTAL RETURN COMPARATIVE PERFORMANCE (pence)
from 14 August 2003 to 30 June 2022 (Rebased to 100 as at 14 August 2003*)
950
850
750
650
550
450
350
250
150
50
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
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 14 August 2003
** Adjusted for the exercise of warrants and convertibles
Source: ICM
1,000
800
600
400
200
0
NAV total
return of
459.6%
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
Jun
22
NAV total return per ordinary share**
FTSE All-Share total return Index
MSCI All Countries World total return Index (GBP adjusted)
*Inception of Utilico Investment Trust PLC
**Adjusted for the exercise of warrants and convertibles
Source: ICM
8
9
UIL LimitedReport and Accounts for the year to 30 June 2022
INVESTMENT MANAGERS’ REPORT
The year to 30 June 2022 was
a very difficult period and
unprecedented for investors,
and, as anticipated, volatility
remained elevated.
UIL reversed the gains of the
prior year, ending the year to
30 June 2022 with NAV per share
of 260.89p, a decline of 39.5%.
This has dragged UIL’s annual
compound NAV total return since
inception in 2003 down to 9.5%.
CHARLES JILLINGS
Investment Manager
The added headwind of the Ukraine war exacerbated
the already challenging environment of rising inflation,
increasing interest rates, Covid relapses (in particular
China’s zero Covid policy), climate change and
escalating China versus US tensions. Equity markets
understandably retreated faced with the deluge of
material uncertainties.
PORTFOLIO
There was significant volatility over the year, and within
the top ten holdings, two holdings increased in value, six
declined and two new investments were made. Overall,
the decreases significantly outweighed the increases,
which led to an overall reduction in the portfolio of
£120.5m.
As noted in the Chairman’s Statement, UEM and Zeta’s
share price discounts to NAVs represent a £21.8m
reduction to UIL's valuation.
Somers’ valuation reduced 43.4% in the year to 30 June
2022, giving back most of its 109.2% gain in the year
to 30 June 2021. This was largely driven by Resimac’s
share price declining by 53.3%, compared to its 143.6%
gain in the year to 30 June 2021. Resimac continues
to deliver strong operational performance and while
some of the valuation tailwinds have reversed over
recent months, such as interest rate expectations, we
believe the market is undervaluing Resimac’s long-term
opportunity. Resimac published its annual results for
the year to 30 June 2022 and its valuation is modest at a
historic price earnings ratio of 4.6x and a dividend yield
of 7.0%. It is very pleasing to see Resimac continuing to
buy back shares at these current levels.
During the year UIL bought a number of listed
investments from Somers at fair value which increased
UIL’s listed portfolio and thereby improved UIL’s
bank covenant ratios. We are pleased to be a direct
shareholder in Resimac with its strong market outlook
over the medium term.
After the year-end, UIL together with its associates
bought out the minority shares in Somers at USD 21.00
per share. Following this transaction, Somers distributed
a number of investments to the new shareholders. UIL
received further shares in Resimac and a holding in The
Market Herald, an ASX listed financial news service.
Zeta’s share price weakened by 10.8% in the year to 30
June 2022, returning part of the share price increase
of 117.6% during the year to 30 June 2021. In the main,
this reflected a weakening of the wider resources sector
in the face of lower demand from China and a slowing
of global GDP feeding through to softer commodity
prices. We continue to expect copper prices to remain
elevated over the medium to longer term in the face of
accelerated demand from the green energy transition
by global economies and falling production, as the
recent underinvestment in mining leads to supply
constraints. Copper Mountain Mining Corporation
(“Copper Mountain”) is Zeta’s largest investment, which
has seen its share price reduce by 53.7% in the year
to 30 June 2022, but it must be put in context of the
gains of 477.8% during the year to 30 June 2021. Copper
Mountain reported weaker than expected results in its
two most recent quarters due to a confluence of factors,
including damage to its secondary crusher in December
2021 (repaired in April 2022), the mining of a lower
grade section of the pit, and lower copper prices.
A number of UIL investments have had good
operational performance in the year and that was
pleasing to see.
UIL bought Panoramic Resources Limited (“Panoramic”)
shares from Zeta at market price and Zeta used the
proceeds to reduce its loan with UIL. The Nickel price
was up 24.3% in the year and Panoramic benefitted
with a share price rise of 30.0% during the period as
it resumed operations. It has been pleasing to see
the growing confidence in the management team at
Panoramic as it ramps up operations and delivers on its
exploration endeavours.
Over the years, Resolute has failed to deliver
shareholder value and frustratingly in the year to 30
June 2022 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 ensuring better focus on its
mining operations. We are starting to see improved
performance under the new management team and
expect to see improving metrics, stronger cash flows
and reduced debt. It has not helped that Mali, where its
Syama mine is based, witnessed another military coup
during the year and Covid-19 has hampered operations.
Resolute’s share price fell by 55.4% in the year, in
addition to the 55.1% loss during the year to 30 June
2021.
UEM has been a relative standout performer over the
year to 30 June 2022 with a total NAV return of negative
1.6% compared to the MSCI emerging markets total
return Index (GBP adjusted) (“MSCI”) loss of 15.3% over
the same period. UEM continues to see strong reporting
results from its investee companies with most growing
revenues and expanding margins. This is a credit to the
investee management teams who continue to deliver in
volatile times. UEM is ahead of the MSCI since inception.
As with most emerging market funds, UEM's discount
has widened to 13.9% as at 30 June 2022. This remains
a frustration, but UIL has taken the opportunity of this
share price outperformance to reduce its holding and
realise some £12.0m during the year.
The ten largest holdings section starting on page 22
provides more information on UIL’s key investments,
including new additions to the portfolio. We are excited
about our new investments and expect them to deliver
strong operational outperformance which, combined
with improving valuations, should deliver long term value
to UIL’s shareholders.
FOREIGN EXCHANGE & COMMODITIES
As a global investor, UIL faces both exposure and
opportunities from foreign exchange (“FX”) movements.
To mitigate this risk UIL hedges its ZDP repayment
liability to Sterling. As can be seen, the impact on UIL
from FX in the year was a significant loss of £10.5m
(30 June 2021: gain of £6.3m). This reflects a general
weakness in Sterling and we were taken by surprise at
the speed and weakness of the currency. We would
note that in the face of continued global headwinds we
have reduced the FX positions markedly, from a net of
£102.0m as at 30 June 2022 to £55.0m as at 31 July 2022.
However, the FX losses are more than offset by gains in
the portfolio.
Commodities were volatile during the year. Oil reached
a year high of up 70.3% and a year low of down 13.2%,
ending the year up 52.8%. Copper’s volatility increased,
with a high/low spread of 28.3%, ending the year at its
low point down 13.5%. Nickel was extremely volatile, at
one point seeing an outsized options mismatch by one
large trader, driving the price up by 164.7%. Nickel ended
the year up by 24.3%.
PORTFOLIO ACTIVITY
During the year to 30 June 2022, UIL invested £89.8m
and realised £92.8m, including loans repaid by Somers
and Zeta. Purchases included investments in Resimac
and Panoramic. UIL bought Resimac and Panoramic
from Somers and Zeta respectively, to increase the listed
holdings of UIL and as a result improve UIL’s covenant
cover on its bank facility. Somers and Zeta used the
proceeds to reduce their debt with UIL.
PLATFORM INVESTMENTS
UIL currently has four platform investments, Somers,
Zeta, UEM and Allectus Capital Limited (“Allectus”) in its
top ten holdings. These investments account for 73.0%
of the total portfolio as at 30 June 2022 (30 June 2021:
78.7%). During the year to 30 June 2022, net withdrawals
from these platforms amounted to £37.4m (30 June
2021: £16.8m).
DIRECT INVESTMENTS
UIL has six direct investments in its top ten holdings,
ICM Mobility Group Limited (“ICM Mobility”), Resimac
(which replaced Orbital Corporation Limited (“Orbital”)),
Resolute, Panoramic (which replaced Sindoh),
Starpharma Holdings Limited (“Starpharma”), and
10
11
UIL LimitedReport and Accounts for the year to 30 June 2022 INVESTMENT MANAGERS’ REPORT (continued)
IN THE YEAR TO 30 JUNE 2022
AUSTRALIA & NEW ZEALAND
REMAINS UIL’S LARGEST EXPOSURE
AT 37.2%
UK IS UIL’S SECOND LARGEST
COUNTRY EXPOSURE AT 13.8%
ASIA IS UIL’S THIRD LARGEST
EXPOSURE AT 10.5%
0.4%
4.8%
0.1%
EUROPE IS UIL’S FOURTH
LARGEST EXPOSURE
AT 7.9%
5.1%
AFRICA IS UIL’S FIFTH
LARGEST EXPOSURE
AT 7.2%
2.2%
CANADA IS UIL’S SIXTH
LARGEST COUNTRY EXPOSURE
AT 5.3%
2.5%
Note: decreases/increases refer to the movement in the portfolio percentage of the relevant exposure. See page 21 for the full geographical exposure.
SECTOR SPLIT OF INVESTMENTS
Financial Services
38.5%
(2021: 42.7%)
Infrastructure
Investments
12.7%
(2021: 12.7%)
IN THE YEAR TO 30 JUNE 2022
Technology
25.8%
(2021: 17.0%)
Resources
15.4%
(2021: 15.3%)
Gold Mining
4.0%
(2021: 6.5%)
Other
3.6%
(2021: 5.8%)
INVESTED*
REALISED*
TOTAL REVENUE INCOME
£89.8m
(2021: £144.8m)
LEVEL 1 & 2
INVESTMENTS*
£177.6m
(2021: £217.2m)
* See note 9 to the accounts
12
£92.8m
(2021: £206.2m)
£9.9m
(2021: £11.6m)
LEVEL 3
INVESTMENTS*
LEVEL 3
% OF TOTAL PORTFOLIO
£238.9m
(2021: £322.9m)
57.4%
(2021: £59.8%)
Source: ICM
AssetCo plc (“AssetCo”). Orbital’s share price fell by
72.9% resulting in it falling outside the top ten. UIL
exited Sindoh for a gain on investment of 8.9%.
GEOGRAPHIC REVIEW
The geographical split of the portfolio, on a look through
basis, shows Australia and New Zealand remaining as
UIL’s largest exposure, decreasing slightly by 0.4% to
37.2% of UIL’s total investments (30 June 2021: 37.6%);
UK remained second at 13.8%, down 4.8% and Asia
remained almost unchanged at 10.5%, up 0.1%. Europe
increased by 5.1% to 7.9% of the total portfolio.
SECTOR REVIEWS
Financial Services – 38.5% (30 June 2021: 42.7%)
Somers is UIL’s largest investment and accounted for
35.7% of UIL’s total investments as at 30 June 2022 (30
June 2021: 42.7%). As already noted, the decrease in
Resimac’s share price has driven Somers’ NAV weakness.
Technology – 25.8% (30 June 2021: 17.0%)
UIL holds a number of early-stage investments in
the technology and the pharmaceutical sector, both
directly and through ICM Mobility (UIL’s fourth largest
investment), Allectus (UIL’s fifth largest investment), and
Starpharma (UIL’s ninth largest investment).
Resources (excl. gold mining) – 15.4% (30 June 2021:
15.3%)
UIL’s largest investment in resources is Zeta, and UIL
now holds Panoramic directly after buying its shares
from Zeta.
Infrastructure Investments – 12.7% (30 June 2021:
12.7%)
This consists of Telecommunications, Infrastructure,
Electricity, Ports, Road & Rail, Oil & Gas, Renewables,
Water & Waste and Airports. UIL’s infrastructure
exposure is largely through UEM.
Gold Mining – 4.0% (30 June 2021: 6.5%)
UIL’s largest investment in gold mining is Resolute, which
is held both directly by UIL (3.6% of the total portfolio)
and indirectly through Zeta. In addition, Zeta holds
72.0% of Horizon Gold Limited (“Horizon”), an Australian
gold mining exploration company. Resolute’s share price
weakness has been partly offset by Horizon’s share
price gains.
LEVEL 3 INVESTMENTS
UIL’s investment in level 3 companies was 57.4%
(30 June 2021: 59.8%) of the total portfolio. There was a
reduction from £322.9m as at 30 June 2021 to £238.9m
as at 30 June 2022, mainly as a result of a decrease in
Somers valuation. The level 3 investments which are
unlisted are formally revalued twice a year. It is worth
noting that where there is a material event that impacts
an unlisted investment, it is revalued at the time, thus
keeping the unlisted valuations current.
COVID-19
In June 2022, the Board met in person for the first time
in over two years. The Board meets formally three times
a year and these Board meetings are interspersed with
regular investment updates by Teams to brief the Board
on portfolio developments.
GEARING
As a result of the significant pull back in portfolio
valuations during the year, gearing increased to 89.5%
(30 June 2021: 48.8%), although this remains well inside
UIL’s target gearing of under 100.0%. At an absolute
level UIL’s debt increased over the year from £180.8m to
£195.7m as at 30 June 2022.
Borrowing costs rose marginally to 4.7% from 4.5%.
Following the redemption of the 2022 ZDP shares on
31 October 2022 and based on June valuations, gearing
would fall back to 65.6% and the cost of borrowings
would fall to 4.2%.
ZDP SHARES
On a consolidated basis the ZDP shares increased from
£132.1m to £140.8m, up 6.6% mainly as a result of the
capitalised interest return in the year. 0.8m 2026 ZDP
shares were placed out in the year, leaving UIL holding
2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at
30 June 2022. With four ZDP issues, UIL has spread the
redemptions liability over six years.
The 2022 ZDP shares will be redeemed on 31 October
2022.
BANK DEBT
Bank debt increased to £51.1m as at 30 June 2022
(30 June 2021: £48.5m). This was drawn in Australian
Dollars, Euros and US Dollars. Scotiabank Europe PLC’s
(“Scotiabank”) £50.0m committed senior secured
13
UIL LimitedReport and Accounts for the year to 30 June 2022
INVESTMENT MANAGERS’ REPORT (continued)
TOP TEN COMPANIES AS AT 30 JUNE 2022
multi-currency revolving facility has been extended
INVESTMENT APPROACH
to 19 September 2023 and novated to the Bank of
Nova Scotia, London Branch. The extension requires a
reduction in the facility of £12.5m by 30 March 2023.
REVENUE RETURNS
Revenue income for the year to 30 June 2022 reduced
to £9.9m from £11.6m, a reduction of 14.7%. This largely
reflects the decrease in loans to Somers and Zeta as
these were repaid or converted into equity, which in
turn contributed to the reduction of interest income
from £4.8m to £2.3m.
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
Management and administration fees and other
support and financial backing.
expenses were down by 19.0% at £1.7m (30 June 2021:
£2.1m). Finance costs were up at £1.1m as at 30 June
2022 from £1.0m as at 30 June 2021.
Revenue profit decreased by 17.6% to £7.0m (30 June
2021: £8.5m) and EPS decreased by 16.3% to 8.35p (30
June 2021: 9.98p) driven mainly by the lower revenue
income.
CAPITAL RETURNS
Capital total income was at a loss of £136.3m (30 June
2021: gain of £122.7m).
Finance costs reduced by 9.4% to £7.8m (30 June 2021:
£8.6m) largely reflecting the lower number of ZDP
shares in issue following the 2020 ZDP redemption in
October 2020.
The resultant loss for the year to 30 June 2022 on
the capital return was £144.1m (30 June 2021: gain of
£114.1m) and EPS loss was 171.68p per ordinary share
(30 June 2022: gain of 133.81p).
EXPENSE RATIO
The ongoing charges figure, excluding performance
fees, was 2.2% as at 30 June 2022 (30 June 2021: 2.3%)
and the ongoing charges figure, including performance
fees paid in UIL’s platform companies, was 2.2%
(30 June 2021: 4.6%). No performance fee was earned at
the UIL level.
All expenses are borne by the ordinary shareholders.
• 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 continues to be 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 embrace their
opportunities and the consequent journey. UIL is seeking
investments that are capital light, have high barriers to
entry and business models that are scalable.
Charles Jillings
ICM Investment Management Limited and ICM Limited
21 September 2022
1
2
3
4
5
35.7%
15.5%
15.0%
12.3%
6.8%
Somers Limited
Zeta Resources
Limited
Utilico Emerging
Markets Trust plc
ICM Mobility Group
Limited
Allectus Capital
Limited
Financial Services
Resources
Investment Fund
Technology
Technology
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
sector.
An investment
platform with a
value-focused
portfolio of
technology
companies.
148,786
Fair value £’000s
64,385
Fair value £’000s
62,469
Fair value £’000s
51,009
Fair value £’000s
28,408
Fair value £’000s
6
7
8
9
10
2.7%
2.3%
1.7%
1.1%
Resimac Group
Limited
Resolute Mining
Limited
Panoramic
Resources Limited
Starpharma
Holdings Limited
1.1%
AssetCo plc
Financial Services
Gold Mining
Resources
Pharmaceuticals
Financial Services
A lender for
residential
mortgages and asset
finance in Australia
and New Zealand.
A gold mining and
exploration company
with two operating
mines in Africa.
A nickel mining
company
headquartered
in Perth, Western
Australia.
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.
11,153
Fair value £’000s
9,609
Fair value £’000s
6,861
Fair value £’000s
4,760
Fair value £’000s
4,722
Fair value £’000s
Note: % relates to % of total investments
14
15
UIL LimitedReport and Accounts for the year to 30 June 2022
MACRO TRENDS AFFECTING OUR PORTFOLIO
GEOPOLITICS AND GLOBALISATION
GOVERNANCE AND TRANSPARENCY
RESOURCES
DIGITALISATION
FINANCIALS
• Increased political tensions and populism are leading to a rising level of nationalism and
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.
• 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 under previous policy of negative
interest rates has led to significant inflation, driving gold investment as protection from
fiat money debasement.
• Underinvestment in new oil and gas fields combined with sanctions on Russian energy
exports leading to supply constraints and significant energy price inflation.
• Heightened risk to global economy, and thus demand for industrial commodities, due to
increased government, corporate and consumer debt levels and the global pandemic.
• 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.
• 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.
• 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.
• Reputational risk becoming as important as financial risk in an era of increased
transparency and decreased trust.
• 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.
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.
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.
COVID-19 DISRUPTION
• Ongoing disruptions to both production and demand causing supply chain issues.
• Most countries now operating with Covid endemic to the population, outlier remains
China which continues with its zero Covid policy with ongoing lockdowns and resultant
supply chain disruption.
• Roll out of vaccination programs have helped countries to ‘manage’ living with the coronavirus.
• Labour shortages in the aftermath of the pandemic are an increasing risk for companies
in terms of hiring talent and expertise.
16
17
UIL LimitedReport and Accounts for the year to 30 June 2022 OUR INVESTMENT APPROACH
ICM is a long-term investor and typically 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 2.1bn of assets directly under
management and is responsible indirectly for a further
USD 22.1bn 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.
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:
01
02
UNDERSTANDING
INTEGRATION
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.
Incorporate the output of the
‘Understanding’ component into the
full company analysis to ensure a clear
and complete picture of the investment
opportunity is obtained.
03
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.
We seek out and make compelling investments
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
I
N
D
E
P
E
N
D
E
N
C
E
&
I
N
T
E
G
R
I
T
Y
K
R
O
W
E
M
A
R
F
E
V
I
T
R
O
P
P
U
S
&
E
L
B
A
T
S
18
VALUES
ICM’s origins date back to 1988 and our organisation has evolved with
offices now spanning the globe. We are focused on our values of:
• Independence and Integrity
• Creativity and Innovation
• Excellence
• Accountability
TEAM
We are proud of our diverse and inclusive environment for
our teams to work in, which reflects the diversity of our
communities.
ICM works to create
value by harnessing
our experience and
expertise to generate
and grow strong
relationships with
our stakeholders
We are focused
on creating
sustainable
long-term
value for our
shareholders,
team, and
the broader
community
through our:
INVESTMENT PRACTICES
Our deep and extensive research and
understanding of the companies, sectors and
markets we invest in moderates our risk, and
creates value for our investors. Our status as
a signatory of the United Nations-supported
Principles of Responsible Investment emphasises
our commitment to integrating ESG factors into
our investment decision making process.
FINANCIAL
Strong balance sheet and disciplined
capital allocation to drive sustainable
growth and shareholder value.
PLATFORMS
Technology, and digital and analytics enable our
investment platforms to deliver growth for our
shareholders.
COMMUNITIES
ICM supports the ICM Foundation, which has identified
sustainable, effective and focused education where
the biggest impact can be made on individuals and in
communities. Over the past decade ICM and its stakeholders
have contributed over USD 15.0m to not-for-profit and
community organisations.
19
UIL LimitedReport and Accounts for the year to 30 June 2022
ESG SPOTLIGHT
GEOGRAPHICAL INVESTMENT EXPOSURE
(% of total investments on a look-through basis)
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. Where companies
in the portfolio are assessed as having a relatively low ESG score, ICM’s approach is to engage, where possible with
the companies directly with the objective of seeing improvements over time. Details of how ESG forms part of the
integrated research analysis, decision-making and ongoing monitoring are set out on page 38. Set out below are
examples of the approach taken with two of UIL’s investments.
UK &
Channel Islands
13.8%
(18.6%)
Europe
(excluding UK)
7.9%
(2.8%)
Canada
5.3%
(7.8%)
Bermuda
4.8%
(5.1%)
USA
5.1%
(2.0%)
Asia
10.5%
(10.4%)
A leading Australian non-bank
lender, with a mortgage book of
over AUD 15.0bn.
Owner and operator of the
Savannah nickel mine in Western
Australia.
Latin
America
4.2%
(4.2%)
ESG ANALYSIS:
ESG ANALYSIS:
Africa
7.2%
(5.0%)
Gold Mining
4.0%
(6.5%)
Australia &
New Zealand
37.2%
(37.6%)
Resimac helps aspiring homeowners who fall outside
the scope of mainstream lenders, for example, the self-
employed or individuals with imperfect credit history.
In the first half of the full year to 30 June 2022, Resimac
provided AUD 2.1bn of specialist mortgage loans,
accounting for 60% of total lending.
Resimac plants one Mallee tree for every loan
settled; with over 46,000 trees planted to-date,
which will offset nearly 6Mkg of carbon. In addition,
it works closely with local communities, for example,
supporting Food Ladder, a non-for-profit organisation
which promotes self-sustaining agricultural practices in
Australia, as well as India and Uganda.
ICM ESG CONCLUSION:
ICM continues to actively engage with Resimac on
ESG issues, both at board level and throughout the
organisation.
Panoramic has implemented transparent ESG
reporting, releasing an annual sustainability report
delivering ESG performance metrics in alignment with
the Global Reporting Initiative framework, although
it has not defined target improvements. Panoramic
is currently in a transitionary period as it ramps up
operations at its Savannah Nickel mine and intends
for the sustainability report to become increasingly
comprehensive as operations mature.
Panoramic continued contributions to local community
and social development initiatives during Savannah
Nickel’s care and maintenance, however, it is unclear
if engagement will increase concurrent with full
commercial production.
ICM ESG CONCLUSION:
Continued focus on defining emissions and social policy
targets will be paramount to Panoramic’s ESG journey.
With production having resumed in late 2021, the 2022
and 2023 sustainability reports will provide insight into
the success of Panoramic’s initiatives.
20
We are excited about our new investments
and expect them to deliver strong operational
outperformance which, combined with
improving valuations, should deliver long term
value to UIL’s shareholders.
Figures in brackets as at 30 June 2021
Source: ICM
21
UIL LimitedReport and Accounts for the year to 30 June 2022 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
94.2%
2.1%
(2021: 97.6%) OF THE
GROUP’S TOTAL INVESTMENTS
(2021: 6.7%) OF THE GROUP’S
PORTFOLIO
33
(2021: 26 COMPANIES)
1
2
VALUATION
43.4%
Sector
Fair Value
£’000s
Financial
Services
148,786
% of total
investments
35.7%
SHARE PRICE
10.8%
Sector
Resources
Fair Value
£’000s
64,385
% of total
investments
15.5%
Somers is a financial services investment holding company, whose
shares are listed on the Mezzanine of the Bermuda Stock Exchange
(“BSX”). Somers is managed by ICM.
Somers shareholders’ equity was USD 404.1m as at 30 June 2022 (30 June
2021: USD 679.4m) and Somers’ NAV per share of USD 17.77 was down 43.0%
for the year. The NAV decrease resulted principally from a decrease in the value
of Somers’ largest investment, Resimac, whose share price decreased 53.3%
during the year despite continuing to report strong underlying performance.
Somers declared dividends of USD 0.86 in the year to 30 June 2022 up from
USD 0.55 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 2022, Somers’ three largest investments, which make up 78.4%
of its portfolio, were a 58.4% holding in Resimac, a leading non-bank Australian
financial institution, with AUD 16.9bn assets under management (“AUM”), a
61.8% holding in Waverton Investment Management Limited (a UK wealth
manager with over £12.2bn funds under management and administration), and
a 48.4% holding in Thorn Group, an Australian financial services organisation.
Somers’ gearing ratio was 17.0% up from 13.6% in the previous year. Resimac
reported profit after tax for the year to 30 June 2022 of AUD 102.1m (prior year:
AUD 107.6m). In July 2022, Somers announced that shareholders, including UIL,
representing approximately 95% of Somers’ issued share capital had acquired
the remaining Somers’ issued shares from unconnected shareholders for USD
21.00 per share.
In the year to 30 June 2022, UIL’s shareholding in Somers increased by 4.9%.
Zeta is a resource-focused investment company, which is listed on the
ASX. Zeta is managed by ICM.
In the year ended 30 June 2022, Zeta’s NAV per share fell by 22.8%. Zeta’s
share price closed at a discount of 18.1% (30 June 2021: 20.3%) to NAV per
share. It was a volatile year for commodity prices, with most commodity prices
peaking in March 2022. In the year to 30 June 2022, nickel was up 24.3%, gold
was up 10.9% and oil was up 52.8%, whilst copper was down by 13.5%. Zeta’s
nickel focused investments were its strongest performers during the period
under review, with Panoramic and GME Resources up 30.0% and 97.9%,
respectively, while Copper Mountain’s share price fell 53.7%. As a leveraged
commodity investment 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. Zeta has a concentrated
portfolio, having built up cornerstone shareholdings in copper, bauxite, gold
and nickel companies.
In the year to 30 June 2022, UIL’s shareholding in Zeta was unchanged.
22
23
UIL LimitedReport and Accounts for the year to 30 June 2022 TEN LARGEST HOLDINGS (continued)
3
4
SHARE PRICE
8.0%
Sector
Investment
Fund
Fair Value
£’000s
62,469
% of total
investments
15.0%
VALUATION
17.6%
Sector
Technology
Fair Value
£’000s
51,009*
% of total
investments
12.3%
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 2022, UEM’s NAV total return was down by 1.6%, which
was significantly ahead of the MSCI Emerging Markets total return Index
(GBP adjusted) which was down by 15.3% during the same period. This
outperformance reflects the resilient cash generative, operational assets in
which UEM invests within the utilities, infrastructure and telecommunication
sectors.
Despite the challenging macro environment, UEM’s investee companies
have continued to announce strong financial results and ongoing dividend
payments. In the year to 30 June 2022, UEM’s share price decreased by 8.0%,
with the discount to NAV widening from 10.8% to 13.9%. Dividends per share
increased to 8.00p from 7.78p.
UIL’s shareholding in UEM decreased by 15.8% 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 and government entities
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 2022, 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);
Kuba (a modern and efficient and scalable ticketing solution provider offering
Unwire, a Kuba subsidiary, a ticketing service which can be customised to any
transportation system); Snapper Services (provides mobile service based
solutions designed to improve the customer experience and flexibility of
transport ticketing systems) and Littlepay (offers a mass transit transaction
payment solution for transit operators, authorities and agencies).
* Includes direct holdings in Littlepay Mobility Ltd and Snapper Services (UK) Limited
5
6
VALUATION
5.8%
Sector
Technology
Fair Value
£’000s
28,408
% of total
investments
6.8%
SHARE PRICE
53.3%
Sector
Financial
Services
Fair Value
£’000s
11,153
% of total
investments
2.7%
Allectus is an unlisted investment company with a value focused
portfolio of technology businesses and managed by ICM.
Allectus invests in growth-stage companies developing potentially disruptive
technologies. Its key verticals comprise fintech, AI, digital health and deep
tech. Allectus maintains a selective approach to high conviction opportunities
in technology companies, which leverage its global relationships and synergies
with other portfolio companies in the ICM Group.
Allectus made several new investments during the year to 30 June 2022, which
included Bobidi (US company helping build and refine AI models), AsiaVerify
(Singapore company focused on business verification) and Envision (Australian
oncology diagnostics company developing novel biomarkers and tests for
cancer). In November 2021 one of Allectus’ investee companies, Hoolah, was
acquired for shares by Shopback (Singapore company offering a cashback
and reward program across Asia and Australia). This transaction saw Allectus'
equity position converted into Shopback equity and the repayment of the
Allectus debt position in Hoolah. In April 2022, Allectus increased its stake in
Patchd (US company predicting the onset of sepsis in high-risk patients). In
June 2022, Allectus became an investor in Nautilus (US company developing
high performance, water-cooled data centres).
Resimac is an ASX listed residential mortgage lender and multichannel
distribution business specialising in prime and specialist mortgage
lending.
Resimac’s share price decreased 53.3% in the twelve months to 30 June 2022
despite continuing to report strong underlying operational performance.
Resimac’s price reduction was consistent with the share price decreases seen
across the wider listed alternate banking sector in Australia.
Resimac is one of Australia and New Zealand’s premier non-bank lenders and
was recognised as Non-Bank of the Year at the 2020 Australian Mortgage
Awards. It operates in targeted market segments and asset classes in Australia
and New Zealand. Its primary activities are as a mortgage manager and in
originating, servicing and securitising mortgage assets. Resimac has seen
record settlements and AUM growth across home loans and asset finance
during the year. As at 30 June 2022, principally funded loans and advances to
customers increased by 12.6% to AUD 15.7bn with total AUM of AUD 16.9bn.
Net profit after tax was AUD 102.1m and these solid results were recorded
despite the continued industry pressure on net interest margin, driven by
the aggressive pricing strategies of the large Australian banks. Against this
competitive environment, Resimac is looking to offer additional products such
as asset finance through its new Resimac Asset Finance division. During the
year, Resimac issued AUD 5.8bn of Australian and New Zealand Prime and
Specialist RMBS.
24
UIL Limited
Report and Accounts for the year to 30 June 2022
25
TEN LARGEST HOLDINGS (continued)
7
8
SHARE PRICE
55.4%
Sector
Gold Mining
Fair Value
£’000s
9,609
% of total
investments
2.3%
SHARE PRICE
30.0%
Sector
Resources
Fair Value
£’000s
6,861
% of total
investments 1.7%
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 2022 fell 55.4%
despite the gold price improving. During the year under review, Resolute
encountered several setbacks. Production in the financial year to
31 December 2021 of 319,271oz gold at all-in sustaining cost (“AISC”) of USD
1,370 per ounce underperformed initial guidance of 350,000oz – 375,000oz
at AISC USD 1,200 - 1,275 per ounce, as lower grades and power supply
disruptions impacted production. The average gold price realised during
the year was below spot prices due to hedging requirements. In addition,
political issues in Mali resulted in economic and financial sanctions being
imposed on Mali by the Economic Community of West Africa on 9 January
2022, which remained in effect until 3 July 2022. The management team at
Resolute has changed for the second year in a row, with the COO replacing
the CEO hired in the previous year. Guidance for Resolute’s operations for
the year ending 31 December 2022 has been maintained in the first half
of the year at 345,000 ounces at an AISC of USD 1,425 per ounce, despite
AISC of USD 1,540 per ounce in the latest quarter due to higher fuel and
consumables costs. As at 30 June 2022, Resolute had cash and bullion on
hand of USD 81.8m (30 June 2021: USD 88.8m) and total borrowings of USD
264.6m (30 June 2021: USD 308.6m).
UIL’s shareholding in Resolute decreased 19.8% in the period under review.
Panoramic is an Australian domiciled nickel mining company, listed on
the ASX which owns 100% of the Savannah underground nickel sulphide
mine, located in the East Kimberley region of Western Australia.
Panoramic’s share price in the twelve months to 30 June 2022 increased 30.0%
on account of nickel price improvement and project progression. During the
year, Panoramic commenced underground development, with ore production
at Savannah restarting in July 2021. Panoramic completed its first shipment of
nickel-copper-cobalt concentrate from Savannah on 26 December 2021 and
has since completed three further shipments in the first half of 2022. Its fifth
shipment was delayed in June largely due to power interruptions in April and
planned shutdowns that temporarily reduced throughput. The mine’s ramp-up
continues and is expected to reach full steady state production by 2024. The
mine has twelve years of mine life remaining and has 101,800 tonnes of nickel,
48,500 tonnes of copper and 7,000 tonnes of cobalt in proven and probable
reserves. In addition, Panoramic has an active exploration drilling program at
Savannah underway. As at 30 June 2022, Panoramic had cash on hand of
AUD 22.0m (30 June 2021: AUD 24.5m).
9
10
SHARE PRICE
54.2%
Sector
Pharmaceuticals
Fair Value
£’000s
% of total
investments
4,760
1.1%
SHARE PRICE
57.4%
Sector
Financial
Services
Fair Value
£’000s
% of total
investments
4,722
1.1%
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, delta and omicron
variants. Viraleze is registered in more than 30 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 internally and through partnered programs, with an emphasis on
anti-cancer therapies. Internally developed DEP therapies are in clinical trials
as follows: DEP Docetaxel in Phase 2, DEP Cabazitaxel in Phase 2 and DEP
Irinotecan in Phase 2. Furthermore, DEP-gemcitabine product manufacture
is complete and ready to commence Phase 1/2 trial in the UK and Australia.
Partnered drugs include AZD0466 with AstraZeneca, which is being trialled in
several haematologic cancers such NHL and leukaemia and in solid tumours,
DEP-antibody drug conjugates (ADC) research partnership with Merck and
Genentech for cancer therapy and DEP-anti infectives with Chase Sun.
In the year ended 30 June 2022, Starpharma reported revenues of AUD 4.8m,
effectively doubling last year’s revenues of AUD 2.4m. Much of the increase in
revenues was driven by Viraleze sales in Vietnam. Starpharma’s cash balance
as at 30 June 2022 was AUD 49.9m. The net cash burn for the financial year
was AUD 13.0m (FY21: AUD 16.5m).
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.
In January 2021, AssetCo announced that Martin Gilbert and 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.
Martin Gilbert has subsequently become Chairman with Campbell Fleming,
formerly of Standard Life Aberdeen, as Chief Executive. The AssetCo
strategy is principally to focus on making strategic acquisitions and building
organic activities in areas of the asset and wealth management sector
where structural shifts have the potential to deliver exceptional growth
opportunities. This could include acquisitions of undervalued asset and
wealth management businesses which have core capabilities that play to these
structural shifts, and where active management can unlock value.
AssetCo has made a number of acquisitions in the last twelve months
including River & Mercantile, an AIM listed fund manager with £4.2bn AUM,
SVM Asset Management, a FCA regulated fund management business with
over £500m of AUM and Revera Asset Management, a small Edinburgh based
active fund manager.
26
UIL Limited
Report and Accounts for the year to 30 June 2022
27
30 June
2022
30 June
2021
% change
2022/21
TOTAL BORROWINGS
ZDP SHARES
ZDP SHARES(1)
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 55 and 56
GEARING/NAV TOTAL RETURN
from 30 June 2015 to 30 June 2022
143.98
144.00
124.14
122.50
122.62
115.50
106.87
99.00
135.56
139.50
118.51
120.50
116.78
116.00
101.06
100.00
6.2
3.2
4.8
1.7
5.0
(0.4)
5.7
(1.0)
1,000
(
p
e
n
c
e
)
900
800
700
600
500
400
300
200
100
0
)
%
(
140
120
100
80
60
40
20
0
Jun 15
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
Jun 22
Gearing
NAV total return*
*Rebased to 100 as at 14 August 2003
Source: ICM
TOTAL ZDP SHARES ISSUED
SINCE INCEPTION
TOTAL ZDP SHARES REDEEMED
SINCE INCEPTION
£379.5m
£414.2m
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
Total
Bank debt
Total debt
Jun 2015
£’000s
Jun 2016
£’000s
Jun 2017
£’000s
Jun 2018
£’000s
Jun 2019
£’000s
Jun 2020
£’000s
Jun 2021
£’000s
Jun 2022
£’000s
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
51,166
36,833
27,589
25,225
172,441
197,361
173,778
199,354
159,942
180,535
132,073
140,813
34,362
24,987
47,846
28,495
50,971
54,660
48,761
54,915
206,803
222,348
221,624
227,849
210,913
235,195
180,834
195,728
Blended interest rate %
6.5
6.5
6.2
6.1
5.5
5.2
4.5
4.7
Source: ICM
ZDP SHARES – TIMES COVERED BY UIL’S GROSS ASSETS*
Jun
2015
Jun
2016
Jun
2017
Jun
2018
Jun
2019
Jun
2020
Jun
2021
Jun
2022
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
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
3.89
2.80
2.23
1.85
* 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 DEBT AS AT 30
JUNE 2022
GEARING AS AT
30 JUNE 2022
TOTAL DEBT INCREASE
DURING THE YEAR
AVERAGE COST OF
DEBT FUNDING
£195.7m
89.5%+
£14.9m
4.7%
+ See Alternative Performance Measures on pages 108 and 109
28
28
UIL Limited
Report and Accounts for the year to 30 June 2022
29
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.
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 committed senior secured
multicurrency revolving facility with Scotiabank which
has been extended and novated to the Bank of Nova
Scotia, London Branch and expires on 19 September
2023; as at 30 June 2022 the facility was fully drawn.
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 2022 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
30
30
UIL Limited
Report and Accounts for the year to 30 June 2022
31
UIL Limited STRATEGIC REPORT (continued)
While some elements of performance against KPIs are
beyond management control, they provide measures
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 108 and 109.
30 June
NAV total return (%)
2022
(38.1)
2021
50.9
FTSE All-Share total return Index (%)
1.6
21.5
Share price (pence)
187.50
268.00
Discount to NAV (%)
28.1
37.9
Percentage of issued shares bought
back during the year (based on opening
share capital) (%)
Revenue EPS (pence)
Ongoing charges figure – excluding
performance fees (%)
0.5
8.35
1.9
9.98
2.2
2.3
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 110
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 18.6%
to 39.4% and an average discount of 32.2%. 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 460,365 ordinary shares were
bought back and cancelled during the year, representing
0.5% 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 2022. The
fourth quarterly dividend will be paid on 30 September
2022 to shareholders on the register as at 2 September
2022. The total dividend for the year was 8.00p per
share (2021: 8.00p 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
2022, 57.4% 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
32
UIL Limited
Report and Accounts for the year to 30 June 2022
33
STRATEGIC REPORT (continued)
company specific factors including size, product offering
and growth rates.
Discounted Cash Flow
This methodology may be used for valuing investments
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.
PRINCIPAL RISKS AND RISK MITIGATION
During the year ended 30 June 2022, 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.
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. 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.
During the year the Audit & Risk Committee also
discussed and monitored a number of emerging risks
that could potentially impact the Company, the principal
ones being geopolitical risk and climate change risk. The
Audit & Risk Committee has determined that they are
not currently sufficiently material to be categorised as
separate key risks and are considered within investment
risk and market risk below. The Covid-19 pandemic,
which emerged in 2020, gave rise to significant
challenges for businesses worldwide and this was also
taken into account as part of the 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 most investments having sound balance
sheets, good cash flows, the ability to pay and sustain dividends, good asset bases
as well as market conditions. In addition, ESG factors are also 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.
34
UIL Limited
Report and Accounts for the year to 30 June 2022
35
STRATEGIC REPORT (continued)
The Company’s main service providers are listed on page 107. 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. 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 cyber-crime 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 2022, gearing on net assets, including bank loans, any overdrafts and ZDP
shares, was 89.5% (30 June 2021: 48.8%). 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 £131.7m ultimate liability in respect of the 2022,
2024 and 2026 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.
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 key
risks set out in this Strategic Report, the controls and
actions to mitigate these risks and the prospects for the
Company’s portfolio holdings and has concluded that
they are 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. The first
stress test considered a fall in the market of 40% in the
first year with recovery of 10% per annum thereafter. A
second test considered a fall in the markets of 20% and
adverse sterling movement, the Company’s reporting
currency, of 10% in the first year with a further fall in
markets of 20% in the second year and no movement
thereafter. 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.
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, including lenders. 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 provider is
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. 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.
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 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 50 to 54. The Chairman is available to meet
with shareholders as appropriate and the Investment
Managers meet regularly with shareholders and their
36
UIL Limited
Report and Accounts for the year to 30 June 2022
37
37
Report and Accounts for the year to 30 June 2022 STRATEGIC REPORT (continued)
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 2022 ZDP shares;
• the recommendation that shareholders vote in favour
of the Company’s dividend policy at the forthcoming
AGM; and
• the recommendation that shareholders vote in
favour of the renewal of the buyback and allotment
authorities as set out in the notice of AGM.
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 concept of responsible investing has always been
a core component of the investment process and the
Investment Managers 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, populating an internally built
ESG framework due to lack of appropriate coverage
from external providers. 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 Investment Managers believe that “G” is the
core foundation on which all else is built, as strong
governance within a company ensures that minority
shareholder interests are aligned with other
shareholders, management and stakeholders. The
Investment Managers’ “G” assessment therefore
includes questions covering shareholders’ rights,
transparency and related parties, as well as audit and
accounting, board composition and effectiveness,
executive oversight and compensation. Each area is
assessed and weighted, and the Investment Managers
then apply an aggregated weighting towards “G” in
line with the strong empirical evidence linking robust
corporate governance and performance.
The “E” and “S” are also focal points for the Investment
Managers, as assessing key environmental and social
risks are essential to a long-term sustainable business
model. The Investment Managers identify the most
material “E” and “S” risks that are believed to affect
each sector and companies are then assessed against
each risk. The results from this analysis feed into an
“E” and “S” score for each company reflecting, for each
material risk, whether suitable/sustainable plans are in
place, how clear the company has been in disclosing its
approach and how well it is doing against its objective to
manage such risk.
Where a portfolio company is assessed as having a
relatively low “E”, “S” and/or “G” score, ICM’s approach is
to engage with the company to seek improvements over
time. ESG considerations provide a way to identify and
review the long-term drivers of an investment that are
not found within the financial accounts, thereby enabling
the Investment Managers to fully question a company’s
investment potential from a number of perspectives.
Examples of ESG progress on two portfolio companies
are set out on page 20.
Where possible, the Investment Managers aim to
visit companies 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 an investee
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 (including against resolutions) to drive positive
change. As referred to above, the Investment Managers
believe that governance factors are fundamental to an
investment.
ICM is 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
its philosophy to protect and increase the value of its
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 53.
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 38.
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 21 September 2022.
By order of the Board
ICM Limited
Company Secretary
21 September 2022
38
UIL Limited
Report and Accounts for the year to 30 June 2022
39
INVESTMENT MANAGERS AND TEAM
ICMIM, a company authorised and regulated by
the FCA, was the Company’s AIFM during the year
ended 30 June 2022 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.
ICM MANAGES OVER
£1.7bn
IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER £18.2BN OF ASSETS IN SUBSIDIARY
INVESTMENTS. ICM HAS OVER 80 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, H.R.L Morrison & Co 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, and Allectus Capital Limited.
Core teams assisting them at a senior level, including consultants, are:
UTILITIES & INFRASTRUCTURE
Jacqueline Broers, deputy portfolio manager of UEM, 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.
Jonathan Groocock, deputy portfolio manager of UEM, 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. Mr Groocock qualified as a CFA charterholder
in 2005 and is a non executive director of Petalite Limited.
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
40
UIL Limited
Report and Accounts for the year to 30 June 2022
41
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 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 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
42
UIL Limited
Report and Accounts for the year to 30 June 2022
43
43
Report and Accounts for the year to 30 June 2022 DIRECTORS’ REPORT
The Directors present the Annual Report and Accounts
of the Company for the year ended 30 June 2022.
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 Investment
Management Limited (“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
considers the ongoing administrative requirements of
the Company and assesses the services provided.
SAFE CUSTODY OF ASSETS
During the year ended 30 June 2022, most of UIL’s
investments were held in custody for the Company by
JPMorgan Chase Bank N.A., Jersey (the “Custodian”).
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
Dividends of 2.00p per share were paid on 23
December 2021, 31 March 2022 and 30 June 2022.
A dividend of 2.00p per share was declared on
23 August 2022 for payment on 30 September 2022 to
shareholders on the register as at 2 September 2022.
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.
40.5% of the total portfolio as at 30 June 2022 is in
level 1 investments which, in most circumstances,
could likely be sold to meet funding requirements,
if necessary. The Board has 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.
DIRECTORS
UIL has a Board of five non-executive Directors who
oversee and monitor the activities of the Investment
44
44
UIL Limited
Report and Accounts for the year to 30 June 2022
45
UIL Limited DIRECTORS’ REPORT (continued)
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 50 to 54, 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 43. 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.
DIRECTORS’ INTERESTS
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 2022 the issued ordinary share capital
of the Company and the total voting rights were
83,842,918 ordinary shares. As at the date of this
report the issued share capital and total voting
rights were 83,842,918 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 2022 the Company purchased 460,365
ordinary shares for cancellation. The current authority
to repurchase shares was granted to Directors on
10 November 2021 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 62,618,221 ordinary shares (74.7%
of UIL’s issued share capital) which included the
holding of General Provincial Life Pension Fund Limited
(54,851,533 ordinary shares (65.4%)).
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 2022.
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
refrain from authorising any further interim dividends
until such time as the Company’s dividend policy is
approved by its shareholders.
46
UIL Limited
Report and Accounts for the year to 30 June 2022
47
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
21 September 2022
DIRECTORS’ REPORT (continued)
Ordinary Resolutions 4 to 8 (inclusive) – Re-election
of Directors
The biographies of the Directors are set out on page
43 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 Christopher 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 12,560,000 ordinary shares (representing
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 2023.
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 4,192,000
ordinary shares (representing approximately 5% of the
issued ordinary shares 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 2023 unless renewed prior to
that date at an earlier general meeting.
48
UIL Limited
Report and Accounts for the year to 30 June 2022
49
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 2022, 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. 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
Company’s expense, having first consulted with the
Chairman.
50
51
UIL LimitedReport and Accounts for the year to 30 June 2022 CORPORATE GOVERNANCE STATEMENT (continued)
During the year, none of the Directors took on any
significant new commitments or appointments. All of
the Directors consider that they have sufficient time to
discharge their duties.
There were three Board meetings, three 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
3
3
3
3
3
3
3
3
3
3
3
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 60.
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 2022, 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 57.
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 2022 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.
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
52
53
UIL LimitedReport and Accounts for the year to 30 June 2022 CORPORATE GOVERNANCE STATEMENT (continued)
CAPITAL STRUCTURE
as an appropriate process is in place; this will, however,
be kept under review.
annual financial reports, factsheets and regulatory
announcements.
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
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
21 September 2022
Since inception, UIL has created a NAV total return
for shareholders of 459.6%
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 2022 was 83,842,918 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 2022. 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 2022. 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 2022, of which 2,309,620 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 2022, 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 2022, UIL had a £50.0m multi-currency
loan facility provided by Scotiabank, secured against
the Company’s assets by way of a debenture, which
was fully drawn.
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 2022, the ordinary shares could
be said to be interested in £53.26 of those assets after
deducting the prior claims as above. This makes the
54
55
UIL LimitedReport and Accounts for the year to 30 June 2022 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 1.9%.
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 74.3%, equivalent
to an annual fall of 44.1%, 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 4.7% as at 30 June 2022.
Based on their final entitlement of 146.99p per share,
the final entitlement of the 2022 ZDP shares was
covered 3.89 times by gross assets as at 30 June
2022. Should the gross assets fall by 74.3% 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 86.9%, 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 2.80 times by gross assets as at 30 June
2022. Should the gross assets fall by 64.3% 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 2.23 times by gross assets as at 30 June
2022. Should the gross assets fall by 55.2% 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 64.3%, equivalent to an
annual fall of 21.1%, 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 1.85 times by gross assets as at 30 June
2022. Should the gross assets fall by 46.0% 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 55.2%, equivalent to an
annual fall of 11.9%, the 2028 ZDP shares would receive
no payment at the end of their life.
The Board presents the report on Directors’
remuneration for the year ended 30 June 2022. 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 64.
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. The review in respect of the
year ending 30 June 2023 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
* Actual
2023
£’000s
2022*
£’000s
50.0
37.0
47.8
47.6
35.2
45.5
SPLIT OF GROSS ASSETS
as at 30 June 2022
CONSOLIDATED FUNDING COST STRUCTURE
as at 30 June 2022
DIRECTORS’ REMUNERATION POLICY
VOTING AT ANNUAL GENERAL MEETING
by value
by percentage
5.75%
6.25%
5.00%
4.75%
4.74%
£218.7m
Ordinary shares
53.26%
£25.2m
£27.6m
£36.8m
2028 ZDP shares
2026 ZDP shares
2024 ZDP shares
6.14%
6.72%
8.96%
£51.2m
2022 ZDP shares
12.47%
£51.1m
Bank loans
12.45%
2.59%
Bank
loans
2022
ZDP
shares
2024
ZDP
shares
2026
ZDP
shares
2028
ZDP
shares
Blended
cost of
prior
charges
to
ordinary
shares
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.
A resolution to approve the Remuneration Report was
put to shareholders at the AGM of the Company held
on 10 November 2021. 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.
56
UIL Limited
Report and Accounts for the year to 30 June 2022
57
57
Report and Accounts for the year to 30 June 2022 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 2022.
Year ended
30 June
Peter Burrows
Stuart Bridges
Alison Hill
Christopher Samuel
David Shillson
Total
2022
£
2021
£
47,600
46,000
45,500
44,000
35,200
34,000
35,200
34,000
35,200
34,000
198,700
192,000
ANNUAL PERCENTAGE CHANGE IN DIRECTORS’
REMUNERATION
The following table sets out the annual percentage
change in Directors’ remuneration compared to the
previous year.
Year ended
30 June
Peter Burrows(1)
Stuart Bridges
Alison Hill
Christopher Samuel
David Shillson
2022
%
2021
%
2020
%
3.5
3.4
3.5
3.5
3.5
100.0
(48.9)
0.0
0.0
0.0
0.0
2.3
2.3
2.3
2.3
(1) Mr Burrows waived 50% of his fee entitlement during the year ended
30 June 2020.
RELATIVE IMPORTANCE OF SPEND ON PAY
COMPANY PERFORMANCE
The following table compares the remuneration
paid to the Directors with aggregate distributions
paid to shareholders relating to the year to 30 June
2022 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
2022
£’000s
2021
£’000s
CHANGE
£’000s
199
6,714
1,227
192
6,813
3,623
7
(99)
(2,396)
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
Alison Hill
Christopher Samuel
David Shillson
2022
2021
909,617
909,617
159,736
136,937
99,254
81,619
219,998
212,991
141,812
123,109
(1) Since the year end, no Director has acquired or sold any ordinary
shares
The graph below compares, for the ten years ended 30 June 2022, the ordinary share price total return (see
page 108) to the FTSE All-Share total return Index. The FTSE All-Share total return Index has been chosen since it
represents a comparable broad equity market index and it is used by the Company to compare its performance
against over the long term.
SHARE PRICE TOTAL RETURN (pence)
from 30 June 2012 to 30 June 2022 (rebased to 100 as at 30 June 2012)
350
300
250
200
150
100
50
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
UIL ordinary share price total return
FTSE All-Share total return Index
Source: ICM
On behalf of the Board
Peter Burrows
Chairman
21 September 2022
58
UIL Limited
Report and Accounts for the year to 30 June 2022
59
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 2022.
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 review the half yearly and
annual results. Representatives of the Investment
Managers attend all meetings.
COMPOSITION
During the year ended 30 June 2022, 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 in
2020. 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 £12,000 for the year ended 30 June 2022
(2021: £10,000) and related to the agreed procedures
on the half yearly accounts. The Committee has
considered the threats to independence from the
provision of this service and concluded that since
appropriate safeguards exist 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 2022 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 2022 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.
60
UIL Limited
Report and Accounts for the year to 30 June 2022
61
AUDIT & RISK COMMITTEE REPORT (continued)
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the Annual Report and Financial Statements
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
21 September 2022
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 2022, 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 UK adopted International Accounting
Standards 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 UK adopted International Accounting Standards;
• 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.
In accordance with Disclosure Guidance and Transparency
Rule 4.1.14R, the financial statements will form part of the
annual financial report prepared using the single electronic
reporting format under the TD ESEF Regulation. The
auditor’s report on these financial statements provides no
assurance over the ESEF format.
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
21 September 2022
62
UIL Limited
Report and Accounts for the year to 30 June 2022
63
63
Report and Accounts for the year to 30 June 2022 2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (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
engagement team. We summarise below the key audit matter, in arriving at our audit opinion above, together with our key audit
procedures to address this matter, and as required for public interest entities, our results from those procedures. This matter 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
statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a
separate opinion on this matter.
Valuation of certain Level 3
investments – Group and Company
key audit matter
(Certain specific investments within
the total of level 3 investment of
£238.9 m; 2021: £322.9 m)
Refer to page 61 (Audit & Risk
Committee Report), pages 77 and 78
(accounting policy) and pages 83,84
and 101 to 103 (financial disclosures).
The risk
Subjective valuation:
Valuation of unlisted investments is an
inherently judgemental area, and we have
assessed that certain of the unlisted
investments are subject to significant risk
over the judgements and estimates inherent
in the valuations. The quantum of the
investments subject to the significant risk is
£221.1m out of a total unlisted investment
balance of £238.9m (4 of 23 investments).
The factors considered in assessing which
unlisted investments were subject to
significant risk included the quantum of the
individual investment, performance of the
investment, nature of the asset held as well
as the estimation uncertainty of the
methodology and inputs used.
Unlisted investments are measured at fair
value, which is established in accordance
with the International Private Equity and
Venture Capital Valuation Guidelines, by
using measurements of value such as
discounted cashflows, prices of recent
orderly transactions, earnings multiples, and
net assets.
The financial statements note 29 discloses
the range/sensitivity estimated by the
Group.
Our response
We performed the tests below rather than seeking
to rely on any of the Company’s controls, because
the nature of the balance is such that we would
expect to obtain audit evidence primarily through
the detailed procedures described below:
Our procedures included:
Historical comparisons: We assessed investment
realisations in the period where relevant,
comparing: (i) repayments of debt investments to
repayment timeline expectations previously
communicated by management; and (ii) current
year fair values to management narrative of
expectations communicated in previous periods, to
understand the reasons for significant variances and
to determine whether they were indicative of bias
or error in the approach to valuations. A
retrospective review of prior period audited
accounts, in comparison to prior period
management accounts included as key inputs to
valuations was also undertaken to assess the
accuracy of management information 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.
Independent
auditor’s report
Overview
Materiality:
group financial
statements as a whole
£4.1m (2021:£5.4m)
1% (2021: 1%) of group total
assets
Coverage
100% (2021:100%) of group total
assets
Key audit matters
Recurring risks
Valuation of certain
specific level 3
investments
vs 2021
◄►
to the members of UIL Limited
1. Our opinion is unmodified
We have audited the financial statements of UIL Limited
(“the Company”) for the year ended 30 June 2022 which
comprise the Group and Company Income Statements,
Group and Company Statements of Changes in Equity,
Group and Company Statements of Financial Position,
Group and Company Statements 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 Company’s affairs as at 30 June
2022 and of the Group’s and Parent Company’s loss
for the year then ended; and
— have been properly prepared in accordance with UK-
adopted international accounting standards.
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 Committee.
We were first appointed by the Shareholders as auditor
for the year ended 30 June 2013. The period of total
uninterrupted engagement is for the ten financial years
ended 30 June 2022. We have fulfilled our ethical
responsibilities under, and are independent of the
Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to other
listed entities.
64
65
2. Key audit matters: our assessment of risks of material misstatement (cont.)
The risk
Our response
Our valuation experience: We challenged the
investment manager on key judgements affecting
investee company valuations, such as discount factors
and the choice of benchmark for earnings multiples. We
compared key underlying financial data inputs to external
sources, investee company audited accounts and
management information as applicable. We challenged
the assumptions around sustainability of earnings based
on the plans of the investee companies and whether
these are achievable and we obtained an understanding
of existing and prospective investee company cashflows
to understand whether borrowings can be serviced or
whether refinancing may be required. Our work included
consideration of events which occurred subsequent to
the year end up until the date of this audit report.
Comparing valuations: Where a recent transaction has
been used to value a holding, we obtained an
understanding of the circumstances surrounding the
transaction and whether it was considered to be on an
arms-length basis and suitable as an input into a
valuation. We also assessed whether subsequent changes
post sale or events such as market or entity specific
factors would imply a change in value. For the valuation
of fund interests and other investment companies where
share of NAV is the practical expedient, we obtained and
agreed the latest reported net asset values from the fund
managers; and
Assessing transparency: We considered the
appropriateness, in accordance with relevant accounting
standards, of the disclosures in respect of level 3
investments and the effect of changing one or more
inputs to reasonably possible alternative valuation
assumptions.
Our results:
We found the Group’s and Company’s valuation of
certain specific Level 3 investments to be acceptable
(2021: acceptable).
3. Our application of materiality and an overview of
the scope of our audit
Total Assets
£417.5m (2021: £545.8m)
Group materiality
£4.1m (2021: £ 5.4m)
£ 4.1m
Whole financial
statements materiality (2021:
£5.4m)
£2.66 million
Whole financial
statements performance
materiality (2021: £3.5m)
£0.35 million
Investment and other income
materiality (2021 : 0.42m)
£0.21m
Misstatements reported to the
Audit & Risk Committee (2021:
£0.27 million)
Total assets
Group materiality
Materiality for the Group financial statements as a
whole was set at £4.1m (2021: £5.4m), determined
with reference to a benchmark of total assets of which
it represents 1% (2021: 1%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were
performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the
risk that individually immaterial misstatements in
individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 65% (2021: 65%) of
materiality for the financial statements as a whole,
which equates to £2.66m (2021 : £3.5m). We applied
this percentage in our determination of performance
materiality based on the level of identified
misstatements during the prior year audit.
In addition, we applied materiality of £0.35m (2021:
£0.42 million) and performance materiality of £0.26m
(2021: £0.32m) to Investment and other income for
which we believe misstatements of lesser amounts
than materiality for the financial statements as a whole
could be reasonably be expected to influence the
Company's members' assessment of the financial
performance of the Group.
Materiality for the parent company financial
statements as a whole was set at £4m (2021: £5.3 m).
This is lower than the materiality we would otherwise
have determined with reference to Parent Company’s
total assets, of which it represents 0.95% of the Parent
Company’s total assets (2021: 0.97%). Performance
materiality was set at 65% (2021 : 65%) of materiality
for the financial statements as a whole, which equates
to £2.6m (2021 : £3.4m) for the parent company. We
applied this percentage in our determination of
performance materiality based on the level of
identified misstatements during the prior year audit.
We agreed to report to the Audit & Risk Committee
any corrected or uncorrected identified misstatements
exceeding £0.21m (2021: £0.27m) for the Group,
£0.20m (2021: £0.25 million) for the Company, or
£0.02m in relation to Investment and other income
(2021: £ 0.02m), in addition to other identified
misstatements that warranted reporting on qualitative
grounds.
Of the group’s 2 (2021: 2) reporting components, we
subjected 2 (2021: 2) to full scope audits for group
purposes. The audit was performed using the
materiality and performance materiality level set out
above
The scope of the audit work performed was fully
substantive as we did not rely upon the Group's
internal control over financial reporting.
66
67
4. Going concern
5. Fraud and breaches of laws and regulations – ability to detect
5. Fraud and breaches of laws and regulations – ability to detect
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group and the Company’s financial position
means that this is realistic. They have also concluded that there
are no material 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 statements (“the
going concern period”).
We used our knowledge of the Group and the Company, its
industry, and the general economic environment to identify the
inherent risks to its business model and analysed how those risks
might affect the Group’s and Company’s financial resources or
ability to continue operations over the going concern period. The
risks that we considered most likely to adversely affect the
Group’s and Company’s available financial resources and its
ability operate over this period were;
— The impact of a significant reduction in the valuation of
investments and the implications for the Group and
Company’s debt covenants;
— The liquidity of the investment portfolio and its ability to
meet the liabilities of the Group and Company 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 assumption that, individually and collectively, could
result in a liquidity issue, taking into account the Group and
Company’s liquid investment position (and the results of their
reverse stress testing).
We considered whether the going concern disclosure in notes 1
and 28 to the financial statements give a full and accurate
description of
the Directors’ assessment 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 statements is
appropriate;
— we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period; and
— we have nothing material to add or draw attention to in
relation to the Directors’ statement in notes 1 and 28 to the
financial statements on the use of the going concern basis of
accounting with no material uncertainties that may cast
significant doubt over the Group and Company’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 may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee that
the Group or the Company will continue in operation.
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
— Enquiring of Directors as to the Group and Company’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 Administrator and the Group and Company’s
Investment Manager; and
— Reading Board and Audit and Risk Committee minutes.
We communicated identified fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit.
evaluated
investments. We
As required by auditing standards, we perform procedures to
in
address the risk of management override of controls,
particular the risk that management may be in a position to make
inappropriate accounting entries and the risk of bias
in
accounting estimates and judgments such as the valuation of
unlisted
and
implementation of the controls over journal entries and other
adjustments and made inquiries of the Administrator about
inappropriate or unusual activity relating to the processing of
journal entries and other adjustments. We substantively tested
all material post closing entries and, based on the results of our
risk assessment procedures and understanding of the process,
including the segregation of duties between the Directors and
the Administrator, no further high-risk journal entries or other
adjustments were identified.
design
the
On this audit we have rebutted the fraud risk related to revenue
recognition because the revenue is non judgemental and
straightforward, with limited opportunity for manipulation. We
did not identify any significant unusual transaction or additional
fraud risks.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the Directors, the Investment Manager and the
Administrator (as required by auditing standards), and discussed
regarding
with the directors the policies and procedures
As the Company is
compliance with laws and regulations.
regulated, our assessment of
involved gaining an
risks
understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout
our
to any indications of non-
team and remained alert
compliance throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably
the financial
Firstly, the Company is subject to laws and regulations that
directly affect
including financial
reporting legislation (including related companies legislation) and
listing regulations, and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the
related financial statement items.
statements
(continued)
Secondly, the Company is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: : money laundering, data protection,
bribery and corruption legislation, and certain aspects of
company legislation recognising the financial and regulated
nature of the Group’s activities and its legal form.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of
the Directors and the Administrator 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.
Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
6. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information 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 information and, in doing
so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Directors’ remuneration report
In addition to our audit of the financial statements, the directors
have engaged us to audit the information in the Directors’
Remuneration Report that is described as having been audited,
which the directors have decided to prepare as if the Company
were required to comply with the requirements of Schedule 8 to
The Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 (SI 2008 No. 410) made under the
UK Companies Act 2006.
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006, as if those requirements applied to the
Company.
Disclosures of emerging and principal risks and longer-term
viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
— the Directors’ confirmation within Principal Risks and Risk
Mitigation on pages 34 to 36 that they have carried out a
robust assessment of the emerging and principal risks facing
the Group, including those that would threaten its business
model, future performance, solvency and liquidity;
— the Principal Risks and Risk Mitigation disclosures describing
these risks and how emerging risks are identified, and
explaining how they are being managed and mitigated; and
— the Directors’ explanation in the viability statement 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 statement as to whether
they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is
not a guarantee as to the Group’s and Company’s longer-term
viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements
and our audit knowledge:
— the Directors’ statement that they consider that the annual
report and financial statements 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;
— the section of the annual report describing the work of the
Audit Committee does not appropriately address matters
communicated by us to the Audit Committee, and how these
issues were addressed; and
— the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and
internal control systems.
In addition to our audit of the financial statements, the Directors
have engaged us to review their Corporate Governance
Statement as if the Company were required to comply with the
Listing Rules and the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority in relation to those
matters. Under the terms of our engagement we are required to
review the part of the Corporate Governance Statement relating
to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review.
We have nothing to report in this respect.
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69
8. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with in accordance with section 90 (2) of the
Companies Act 1981 of Bermuda and the terms of our
engagement by the Company. Our audit work has been
undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s
report, and the further matters we are required to state to them
in accordance with the terms agreed with the Company, and for
no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
John Waterson
for and on behalf of KPMG LLP
Chartered Accountants
20 Castle Terrace Edinburgh
EH1 2EG
21 September 2022
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 63,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; 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; assessing
the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and using 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.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, 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
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the financial statements will form part of the annual
financial report prepared using the single electronic reporting
format under the TD ESEF Regulation. The auditor's report on
these financial statements provides no assurance over the ESEF
format.
GROUP INCOME STATEMENT
for the year to 30 June
Notes
Revenue
return
£’000s
Capital
return
£’000s
2022
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2021
Total
return
£’000s
9 (Losses)/gains on investments
–
(120,524)
(120,524)
12 (Losses)/gains on derivative financial
instruments
Foreign exchange (losses)/gains
–
–
(10,532)
(10,532)
(5,264)
(5,264)
2 Investment and other income
9,879
–
9,879
Total income/(loss)
9,879
(136,320)
(126,441)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
5 Finance costs
(852)
(819)
–
(3)
(852)
(822)
8,208
(136,323)
(128,115)
(1,132)
(7,790)
(8,922)
Profit/(loss) before taxation
7,076
(144,113)
(137,037)
6 Taxation
(63)
–
(63)
–
–
–
11,555
11,555
(982)
(1,069)
9,504
(994)
8,510
–
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)
114,082
122,592
–
–
Profit/(loss) for the year
7,013
(144,113)
(137,100)
8,510
114,082
122,592
7 Earnings per ordinary share – pence
8.35
(171.68)
(163.33)
9.98
133.81
143.79
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 77 to 103 form part of these financial statements.
7070
Report and Accounts for the year to 30 June 2022
71
COMPANY INCOME STATEMENT
GROUP STATEMENT OF CHANGES IN EQUITY
for the year to 30 June
Notes
Revenue
return
£’000s
Capital
return
£’000s
2022
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2021
Total
return
£’000s
9 (Losses)/gains on investments
–
(120,529)
(120,529)
12 (Losses)/gains on derivative financial
instruments
Foreign exchange (losses)/gains
–
–
(10,532)
(10,532)
(5,264)
(5,264)
2 Investment and other income
9,879
–
9,879
Total income/(loss)
9,879
(136,325)
(126,446)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
5 Finance costs
(852)
(819)
–
(3)
(852)
(822)
8,208
(136,328)
(128,120)
(1,132)
(7,988)
(9,120)
Profit/(loss) before taxation
7,076
(144,316)
(137,240)
6 Taxation
(63)
–
(63)
–
–
–
11,555
11,555
(982)
(1,069)
9,504
(994)
8,510
–
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)
114,442
122,952
–
–
Profit/(loss) for the year
7,013
(144,316)
(137,303)
8,510
114,442
122,952
7 Earnings per ordinary share – pence
8.35
(171.92)
(163.57)
9.98
134.24
144.22
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 77 to 103 form part of these financial statements.
for the year to 30 June 2022
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 2021
8,430
6,986
233,866
32,069
69,883
12,547
363,781
20 Transfer of reserves
(Loss)/profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
–
–
–
32,069
–
–
(46)
(1,181)
–
–
–
–
Balance at 30 June 2022
8,384
37,874
233,866
(32,069)
–
–
–
–
–
–
–
(144,113)
7,013
(137,100)
–
(6,714)
(6,714)
–
–
(1,227)
(74,230)
12,846
218,740
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
(44,199)
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
The notes on pages 77 to 103 form part of these financial statements.
72
UIL Limited
Report and Accounts for the year to 30 June 2022
73
COMPANY STATEMENT OF CHANGES IN EQUITY
STATEMENTS OF FINANCIAL POSITION
for the year to 30 June 2022
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 2021
8,430
6,986
233,866
32,069
69,853
12,547
363,751
20 Transfer of reserves
(Loss)/profit for the year
8 Ordinary dividends paid
17 Shares purchased by the
Company
Balance at 30 June 2022
–
–
–
(46)
8,384
32,069
–
–
(1,181)
–
–
–
–
37,874
233,866
(32,069)
–
–
–
–
–
–
–
(144,316)
7,013
(137,303)
–
–
(6,714)
(6,714)
–
(1,227)
(74,463)
12,846
218,507
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
The notes on pages 77 to 103 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
2022
£’000s
Group
2021
£’000s
Company
2022
£’000s
2021
£’000s
416,516
540,074
419,715
544,228
444
620
8
1,072
1,411
1,047
3,324
5,782
444
620
8
1,072
1,411
1,047
3,324
5,782
(51,080)
(48,548)
(51,080)
(48,548)
(4,393)
(2,562)
(51,166)
(827)
(627)
–
(55,559)
(2,562)
–
(827)
(627)
–
(109,201)
(50,002)
(109,201)
(50,002)
(108,129)
(44,220)
(108,129)
(44,220)
Total assets less current liabilities
308,387
495,854
311,586
500,008
Non-current liabilities
16 Other payables
15 Zero dividend preference shares
Net assets
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
–
–
(93,079)
(136,257)
(89,647)
(132,073)
–
–
218,740
363,781
218,507
363,751
8,384
37,874
8,430
6,986
8,384
37,874
8,430
6,986
233,866
233,866
233,866
233,866
–
(74,230)
12,846
32,069
69,883
12,547
–
(74,463)
12,846
32,069
69,853
12,547
Total attributable to equity holders
218,740
363,781
218,507
363,751
23 Net asset value per ordinary share – pence
260.89
431.51
260.61
431.48
The notes on pages 77 to 103 form part of these financial statements.
Approved by the Board on 21 September 2022 and signed on its behalf by
Peter Burrows
Chairman
74
UIL Limited
Report and Accounts for the year to 30 June 2022
75
STATEMENTS OF CASH FLOWS
NOTES TO THE ACCOUNTS
for the year to 30 June
(Loss)/profit before taxation
Deduct investment income - dividends*
Deduct investment income - interest*
Deduct bank interest
Add back bank interest charged
Group
2021
£’000s
Company
2022
£’000s
2021
£’000s
2022
£’000s
(137,037)
122,592
(137,240)
122,952
(7,539)
(2,338)
(2)
1,132
–
–
–
–
(7,539)
(2,338)
(2)
1,132
–
–
–
–
Add back losses/(gains) on investments
120,524
(112,465)
120,529
(112,986)
Add back losses/(gains) on derivative financial instruments
10,532
(6,319)
10,532
(6,319)
Add back foreign exchange losses/(gains)
5,264
(3,904)
5,264
(3,904)
Deduct non-cash flows on income
Decrease in accrued income
(Increase)/decrease in other debtors
Increase/(decrease) in creditors
Deduct ZDP shares finance costs
–
–
(4)
10
7,790
(8,167)
526
2,134
(177)
8,601
-
-
(4)
10
-
Deduct intra-group loan account finance costs
–
–
7,988
Net cash outflow from operating activities before dividends and interest
(1,668)
2,821
(1,668)
(8,167)
526
2,134
(177)
–
8,762
2,821
–
–
–
–
–
2,821
3,039
369
2
(1,141)
(63)
538
–
–
–
–
–
2,821
3,039
369
2
(1,141)
(63)
538
(40,733)
(52,154)
(40,733)
(52,920)
51,150
121,274
52,100
121,274
(8,170)
619
(8,170)
619
2,247
69,739
3,197
68,973
(6,714)
(6,813)
(6,714)
(6,813)
1,894
(3,147)
–
1,894
–
(606)**
(3,147)
(606)**
950
4,114
–
(61,177)
–
–
4,114
(60,411)
Dividends received*
Investment income - interest received*
Bank interest received
Interest paid
Taxation paid
Cash flows from operating activities
Investing activities:
Purchases of investments
Sales of investments
Net settlement of derivatives
Cash flows from investing activities
Financing activities:
Equity dividends paid
Drawdowns of bank loans
Repayment of bank loans
Cash flows from issue of ZDP shares
Cash flows from redemption of ZDP shares
Cash paid for ordinary shares purchased for cancellation
(1,227)
(3,623)
(1,227)
(3,623)
Cash flows from financing activities
(8,244)
(68,105)
(9,194)
(67,339)
Net (decrease)/increase in cash and cash equivalents
(5,459)
4,455
(5,459)
4,455
Cash and cash equivalents at the beginning of the year
3,111
(3,256)
3,111
(3,256)
Effect of movement in foreign exchange
Cash and cash equivalents at the end of the year
(1,479)
(3,827)
1,912
3,111
(1,479)
(3,827)
1,912
3,111
Comprised of:
Cash
Bank overdraft
Total
* Disclosed under "Non-cash flows on income" in 2021
** Disclosed as "Movement on loans" in 2021
The notes on pages 77 to 103 form part of these financial statements.
76
UIL Limited
8
(3,835)
(3,827)
3,324
(213)
3,111
8
(3,835)
(3,827)
3,324
(213)
3,111
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 UK adopted international
accounting standards (2021: EU adopted international
accounting standards), 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.
There have been no significant changes to the accounting
policies during the year to 30 June 2022.
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 April 2021, 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.
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.
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.
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.
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.
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
Report and Accounts for the year to 30 June 2022
77
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 101 to 103).
(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 a dividend unless, after
payment, the realisable value of its assets will not be less
than the aggregate of its liabilities and it 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
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 57.4% of total investments
as at 30 June 2022 (2021: 59.8%).
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.
2.
INVESTMENT AND OTHER INCOME
Group and Company
Investment income:
Dividends*
Interest*
Other income:
Interest on cash and short-term deposits
Total income
Revenue
£’000s
Capital
£’000s
7,539
2,338
9,877
2
9,879
–
–
–
–
–
* Includes scrip income (dividends and capitalised interest) of £6,822,000 (2021: £8,025,000)
2022
Total
£’000s
7,539
2,338
9,877
6,781
4,774
11,555
2
–
9,879
11,555
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
6,781
4,774
11,555
–
11,555
–
–
–
–
–
78
UIL Limited
Report and Accounts for the year to 30 June 2022
79
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
576
276
852
–
–
–
2022
Total
£’000s
576
276
852
Revenue
£’000s
Capital
£’000s
726
256
982
–
–
–
2021
Total
£’000s
726
256
982
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 UK version of the EU Alternative
Investment Fund Managers Directive as it forms part of UK
domestic law by virtue of the European Union (Withdrawal)
Act 2018, as amended 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 their
subsidiaries from which they receive 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 was accrued.
In the year to 30 June 2022, UIL’s NAV return is below the
required hurdle calculated at 8.5% return to entitle the
Investment Managers to a performance fee and therefore 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 (“Waverton”) 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.
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
57 to 59)
Travel expenses
Professional and legal fees
Sundry expenses
Revenue
£’000s
Capital
£’000s
155
42
24
199
43
71
285
819
–
–
–
–
–
–
3
3
2022
Total
£’000s
155
42
24
199
43
71
288
822
Revenue
£’000s
Capital
£’000s
180
40
45
192
2
330
280
1,069
–
–
–
–
–
–
5
5
2021
Total
£’000s
180
40
45
192
2
330
285
1,074
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 prior year
Other non-audit services – agreed procedures on 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
(1,132)
–
(1,132)
Revenue
£’000s
(1,132)
–
(1,132)
Capital
£’000s
–
(7,790)
(7,790)
Capital
£’000s
–
(7,988)
(7,988)
2022
Total
£’000s
(1,132)
(7,790)
(8,922)
2022
Total
£’000s
(1,132)
(7,988)
(9,120)
Revenue
£’000s
994
–
994
Revenue
£’000s
994
–
994
2022
£’000s
2021
£’000s
123
20
12
155
Capital
£’000s
–
8,601
8,601
Capital
£’000s
–
8,762
8,762
110
60
10
180
2021
Total
£’000s
994
8,601
9,595
2021
Total
£’000s
994
8,762
9,756
80
UIL Limited
Report and Accounts for the year to 30 June 2022
81
NOTES TO THE ACCOUNTS
(continued)
6.
TAXATION
Group and Company
Overseas taxation
Revenue
£’000s
(63)
Capital
£’000s
–
2022
Total
£’000s
(63)
Revenue
£’000s
–
Capital
£’000s
–
2021
Total
£’000s
–
Except as stated above, profits of the Company and subsidiaries for the year are not subject to any taxation within their countries
of residence (2021: 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
2022
£’000s
7,013
Group
2021
£’000s
8,510
Company
2021
£’000s
8,510
2022
£’000s
7,013
(144,113)
114,082
(144,316)
114,442
(137,100)
122,592
(137,303)
122,952
Number
Number
Number
Number
Weighted average number of shares in issue during the year for earnings
per share calculations
83,942,540
85,255,099
83,942,540
85,255,099
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
2022
£’000s
04-Sep-20
25-Sep-20
04-Dec-20
21-Dec-20
05-Mar-21
31-Mar-21
04-Jun-21
28-Jun-21
03-Sep-21
30-Sep-21
03-Dec-21
23-Dec-21
04-Mar-22
31-Mar-22
06-Jun-22
30-Jun-22
–
–
–
–
1,680
1,680
1,677
1,677
6,714
2021
£’000s
1,719
1,719
1,689
1,686
–
–
–
–
6,813
The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2022 of 2.00p per share payable on
30 September 2022 to all ordinary shareholders on the register at close of business on 2 September 2022. The total cost of the
dividend, which has not been accrued in the results for the year to 30 June 2022, is £1,677,000 based on 83,842,918 ordinary
shares in issue.
9.
INVESTMENTS
Group
Investments brought forward
Cost
Gains/(losses)
Valuation
Movements in the year:
Transfer between levels*
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2022
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2021
Total
£’000s
205,741
11,469
217,210
–
–
–
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
(11,723)
11,723
–
–
19,719 (134,348)
114,629
–
Purchases at cost
35,319
1,082
53,378
89,779
36,883
–
107,934
144,817
Sales
proceeds
(21,364)
–
(71,449)
(92,813)
(16,607)
(25,521)
(164,077)
(206,205)
(losses)/gains on investments
(46,236)
(8,416)
(65,872)
(120,524)
25,810
(66)
86,721
112,465
Valuation at 30 June
Analysed at 30 June
Cost
(Losses)/gains
Valuation
173,206
4,389
238,921
416,516
217,210
207,332
11,365
199,073
417,770
205,741
(34,126)
(6,976)
39,848
(1,254)
11,469
173,206
4,389
238,921
416,516
217,210
–
–
–
–
322,864
540,074
219,605
425,346
103,259
114,728
322,864
540,074
* Transfers due to the changes in liquidity (2021: transfers due to the changes in liquidity, availability of observable market data and delisting of
investee companies. Transfers in level 1 includes a £1.1m transfer to level 3). The book cost and fair value were transferred using the 30 June 2021
balances (2021: 30 June 2020 balances)
The Group received £92,813,000 (2021: £206,205,000) from investments sold in the year. The book cost of these investments when they were
purchased was £97,355,000 (2021: £220,591,000). 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 £58.7m related to repayment of capital and £2.4m of capital distribution (2021: £100.1m related to
repayment of capital and £11.7m 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
82
UIL Limited
Report and Accounts for the year to 30 June 2022
83
NOTES TO THE ACCOUNTS
(continued)
Company
Investments brought forward
Cost
Gains/(losses)
Movements in the year:
Transfer between levels*
Purchases at cost
Sales
proceeds
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2022
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2021
Total
£’000s
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
(8,725)
35,319
8,725
1,082
–
–
19,719 (134,348)
114,629
–
53,378
89,779
37,467
766
107,934
146,167
(22,314)
–
(71,449)
(93,763)
(16,607)
(25,521)
(164,077)
(206,205)
(losses)/gains on investments
(46,229)
(8,428)
(65,872)
(120,529)
25,804
461
86,721
112,986
Valuation at 30 June
Analysed at 30 June
Cost
(Losses)/gains
Valuation
175,839
4,955
238,921
419,715
217,788
3,576
322,864
544,228
209,685
11,949
199,073
420,707
206,325
3,169
219,605
429,099
(33,846)
(6,994)
39,848
(992)
11,463
407
103,259
115,129
175,839
4,955
238,921
419,715
217,788
3,576
322,864
544,228
* Transfers due to the changes to liquidity (2021: transfers due to the changes to liquidity, availability of observable market data and delisting of
investee companies. Transfers in level 1 includes a £1.1m transfer to level 3). The book cost and fair value were transferred using the 30 June 2021
balances (2021: 30 June 2020 balances)
The Company received £93,763,000 (2021: £206,205,000) from investments sold in the year. The book cost of these investments when they were
purchased was £98,171,000 (2021: £220,591,000). 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 £58.7m related to repayment of capital and £2.4m of capital distribution (2021: £100.1m related to
repayment of capital and £11.7m 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
(Losses)/gains on investments held at fair value
Losses on investments sold
(Losses)/gains on investments held
Total (losses)/gains on investments
Group and Company
In the year the following material level 3 holdings were sold:
Nautilus Data Technologies Inc Convertible Bond
Novareum Blockchain Asset Fund Limited (“Novareum”)
+Purchased in the year
Group
2021
£’000s
Company
2022
£’000s
2021
£’000s
2022
£’000s
(4,542)
(14,386)
(4,408)
(14,386)
(115,982)
126,851 (116,121)
127,372
(120,524)
112,465 (120,529)
112,986
Proceeds
£’000s
8,124
2,770
Carrying value at the
end of the previous
accounting period
£’000s
n/a+
n/a+
Cost
£’000s
7,239
1,967
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:
Country of
registration and
incorporation
Number of
ordinary shares
held
2022
2021
% of ordinary
shares held
% of ordinary
shares held
Carebook Technologies Inc (“Carebook”)
DTI Group Ltd (“DTI”)
Canada
Australia
36,046,167
103,193,989
ICM Mobility Group Limited (“ICM Mobility”)
United Kingdom
93,166,922
Littlepay Mobility Ltd (“Littlepay”)
United Kingdom
Orbital Corporation Limited (“Orbital”)
Resimac Group Limited (“Resimac”)
Serkel Solutions Pty Ltd (“Serkel”)
SmileStyler Solutions Pty Ltd (“SmileStyler”)
Somers Limited (“Somers”)
SportEngaged Ltd
Australia
Australia
Australia
Australia
4,257,079 *
27,565,888
123,342,981 **
10,510
1,151,434
Bermuda
10,168,462
UK
25
46.5
23.0
39.8
49.2
30.3
29.6
33.3
24.0
44.7
20.0
–
30.9
39.8
49.3
30.4
26.6
33.3
24.0
44.5
20.0
* Shares held directly 1,445,000 and indirectly through ICM Mobility 2,812,079.
** Shares held directly 17,127,747 and indirectly through Somers 106,215,234.
Transactions in the year to 30 June 2022 with associated undertakings
Transactions with associated undertakings
Carebook
DTI
ICM Mobility
Littlepay
Orbital
Resimac
Serkel
Pursuant to a loan agreement dated 22 December 2021 under which UIL has agreed to loan monies
to Carebook, UIL advanced to Carebook a loan of CAD 0.5m. As at 30 June 2022, the balance of
the loan and interest outstanding was CAD 0.5m. The loan bears interest at an annual rate of the
Canadian variable bank rate + 10% and is repayable on 21 December 2026.
On 3 August 2021, UIL participated in a private placement to buy 11m Carebook shares for a total
consideration of CAD 11.0m. UIL also received 5.5m Warrants (exercisable at CAD 1.47 until 5
August 2023) on a free of charge basis.
In May 2022, UIL underwrote a Carebook rights issue at CAD 0.15 per share. UIL exercised its
allocated 8,933,716 shares under the offer and additionally purchased the shortfall of 12,892,251
shares for a total CAD 3.3m. UIL also received 193,383 Warrants (exercisable at CAD 0.16 until 17
May 2024) on a free of charge basis.
There were no transactions during the year.
Pursuant to a loan agreement dated 1 June 2021 under which UIL has agreed to loan monies to ICM
Mobility, UIL advanced to ICM Mobility £2.2m and ICM Mobility repaid £34k. On 23 December 2021,
agreement was made to increase the loan by £0.3m and in exchange UIL reduced its investment in
Littlepay's equity by £0.3m. On 28 April 2022 the loan was increased by £0.4m and UIL's equity in
ICM Mobility was decreased by £0.4m. UIL capitalised £1.6m of the loan on 31 December 2021 and
a further £1.3m of the loan on the 24 June 2022. As at 30 June 2022, the loan balance was nil. The
loan is interest free and is converted into equity on a bi-annual basis.
Distributed to UIL AUD 0.4m in the year. On 23 December 2021 the equity in Littlepay was reduced
by AUD 0.3m (see ICM Mobility above).
In October 2021, Orbital undertook a pro-rata renounceable rights issue at AUD 0.50 per share on
the basis on one new share for every six existing shares. UIL took up its allocated 3,937,984 rights
under the offer at cost of AUD 2.0m.
There were no transactions during the year.
There were no transactions during the year.
84
UIL Limited
Report and Accounts for the year to 30 June 2022
85
NOTES TO THE ACCOUNTS
(continued)
SmileStyler
Somers
There were no transactions during the year.
Somers paid dividends of USD 8.5m to UIL and UIL received 477,882 ordinary shares as part of
a dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD
loan), 22 June 2018 (£ loan) and 5 September 2019 (AUD loan), under which UIL has agreed to loan
monies to Somers, UIL advanced to Somers loans of USD 1.5m and AUD 5.8m, Somers repaid USD
10.5m (part paid via the transfer of 208,190 AssetCo shares for fair value of £2.7m to UIL), £2.2m
and AUD 9.0m and UIL received interest of USD 357k, £55k and AUD 83k. As at 30 June 2022, the
balance of the loans and interest outstanding was USD nil, £ nil and AUD nil. The loans bear interest
at an annual rate of 6.0% and are repayable on not less than 12 months’ notice. Also see Zeta
Resources Limited (“Zeta”) disclosures on page 87.
SportEngaged Ltd
There were no transactions during the year.
Significant interests
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:
Undertaking
Resolute Mining Limited
Starpharma Holdings Limited
Country of registration
and incorporation
Class of
instrument held
Australia
Ordinary Shares
Australia
Ordinary Shares
Utilico Emerging Markets Trust plc
United Kingdom
Ordinary Shares
2022
% of class of
instrument
held
2021
% of class of
instrument
held
6.8
3.0
14.4
8.5
3.0
16.3
10. SUBSIDIARY UNDERTAKINGS
The following was a subsidiary undertaking of the Company at 30 June 2022 and 30 June 2021.
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.
2022
2021
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 (“Allectus Capital”)
Bermuda
Allectus Quantum Holdings Limited (“Allectus
Quantum”)
Bermuda First Investment Company Limited
(“BFIC”)
UK
Bermuda
100
501
–
50.0
50.0
100
–
50.0
–
–
1,891,195
94.2
Coldharbour Technology Limited
(“Coldharbour”)
Elevate Platform Limited (“Elevate”)
Energy Holdings Ltd
Newtel Holdings Limited (“Newtel”)
Novareum
Snapper Services (UK) Limited
UIL Holdings Pte Ltd
Zeta
United Kingdom 29,660,694
United Kingdom 44,348,478 *
Bermuda
100
Jersey
115,920
Cayman Islands
United Kingdom
28,361
5,014,238**
Singapore
–
96.5
51.0
100.0
100.0
57.5
50.0
–
29,660,694
44,348,478*
100
115,920
–
5,014,238**
100
Bermuda
344,573,832
61.0 344,573,832
96.5
51.0
100.0
100.0
–
50.0
100.0
60.9
* Preference shares
** Shares held directly 1,703,400 and indirectly through ICM Mobility 3,310,838.
Transactions in the year to 30 June 2022 with subsidiaries held as investments
Allectus Capital
Allectus Quantum
BFIC
Coldharbour
Elevate
Pursuant to a loan agreement dated 1 September 2016 under which UIL has agreed to loan monies
to Allectus Capital, UIL advanced to Allectus Capital USD 7.0m and Allectus Capital repaid USD 6.7m.
As part of a share purchase agreement (“SPA”), UIL transferred to Allectus Capital, Nautilus Data
Tech Inc convertible notes for USD 10.7m and in exchange received listed holdings with fair values
of £2.9m and the loan was increased by USD 7.1m. UIL also received a bond in Invigor Group for fair
value of AUD 1.2m and in exchange reduced the loan by USD 0.8m. On 30 June 2022, the balance of
the loan was USD 6.6m. The loan is interest free and is converted into equity on an annual basis.
UIL paid £0.2m for the 50% equity holding of Allectus Quantum. Pursuant to a loan agreement
dated 20 April 2022 under which UIL has agreed to loan monies to Allectus Quantum, UIL advanced
to Allectus Quantum a loan of £2.3m. The loan is interest free and is converted into equity on an
annual basis. On 28 June 2022 the full loan of £2.3m was capitalised.
BFIC was dissolved on 7 December 2021. There were no transactions during the period.
Coldharbour appointed liquidators in January 2022. To effect a solvent liquidation process, UIL
signed a deed of release which forgave the loan in its entirety (GBP 1.1m) with zero value from
principal or interest recovered.
Pursuant to a loan agreement dated 1 January 2019 under which UIL has agreed to loan monies
to Elevate, UIL advanced to Elevate £0.4m. As at 30 June 2022, the balance of the loan and interest
outstanding was £1.6m. 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.
Newtel
UIL advanced £0.2m to Newtel as part of its working capital loan to Newtel. As at 30 June 2022 the
loan balance was £5.5m and is repayable on demand.
Novareum
UIL invested USD5.0m and redeemed USD2.9m in the year.
Snapper Services (UK)
Limited
Snapper Services (UK) Limited changed its name from ICM Mobility International Ltd in the year.
There were no transactions during the year.
86
UIL Limited
Report and Accounts for the year to 30 June 2022
87
NOTES TO THE ACCOUNTS
(continued)
UIL Holdings Pte Ltd
UIL Holdings Pte Ltd was dissolved on 8 November 2021. There were no transactions during the
period.
Zeta
Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan),
under which UIL has agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 7.2m and
CAD 0.4m and received from Zeta repayments of AUD 32.0m (AUD 16.0m being settled via the
transfer of Panoramic Resources shares to UIL, AUD 2.2m being settled by the transfer of Resimac
shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of AUD
13.8m being settled via cash) and CAD 19.9m (CAD 17.1m being settled by the transfer of Resimac
shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of CAD 2.8m
being settled via cash) and capitalisation of interest of AUD 1.1m and CAD 0.9m. As at 30 June 2022,
the balance of the loans and interest outstanding was AUD nil and CAD nil. 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
Securities sold for future settlement
Accrued income
Prepayments and other debtors
12. DERIVATIVE FINANCIAL INSTRUMENTS
Group and Company
2022
£’000s
419
9
16
444
2021
£’000s
492
907
12
1,411
Current
assets
£’000s
Current
liabilities
£’000s
2022
Net current
assets/
(liabilities)
£’000s
Current
assets
£’000s
Current
liabilities
£’000s
2021
Net current
assets/
(liabilities)
£’000s
Forward foreign exchange contracts
620
(2,562)
(1,942)
1,047
(627)
420
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:
Group and Company
Valuation brought forward
Net settlements
(Losses)/gains
Valuation carried forward
2022
£’000s
420
8,170
(10,532)
(1,942)
2021
£’000s
(5,280)
(619)
6,319
420
13. LOANS – CURRENT LIABILITY
Group and Company
Bank Loans
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
AUD 12.5m rolled to September 2022
AUD 12.3m rolled to September 2022
AUD 8.7m rolled to September 2022
EUR 5.0m rolled to September 2022
EUR 5.4m rolled to September 2022
USD 20.9m rolled over July 2022 to September 2022
USD 7.1m rolled to September 2022
2022
£’000s
2021
£’000s
–
–
–
–
–
–
–
7,078
6,961
4,954
4,304
4,690
17,235
5,858
51,080
6,793
7,000
4,891
4,292
4,786
15,744
5,042
–
–
–
–
–
–
–
48,548
The Company has a committed loan facility of £50,000,000 from Scotiabank Europe PLC (“Scotiabank”) and was fully drawn as
at 30 June 2022. The facility was extended in September 2022 to 19 September 2023 and novated to the Bank of Nova Scotia,
London Branch, reducing to £37.5m on 30 March 2023. 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. Bank of Nova Scotia, London Branch has a floating charge over the
assets of the Company in respect of amounts owing under the loan facility.
14. OTHER PAYABLES
Securities purchased for future settlement
Bank overdraft
Intra-group loans
Accrued finance costs
Accrued expenses
2022
£’000s
–
3,835
–
111
447
4,393
Group
2021
£’000s
57
213
2022
£’000s
–
3,835
–
51,166
120
437
827
111
447
55,559
Company
2021
£’000s
57
213
–
120
437
827
The Directors consider that the carrying values of other payables are equivalent to their fair value.
88
UIL Limited
Report and Accounts for the year to 30 June 2022
89
NOTES TO THE ACCOUNTS
(continued)
15. ZDP SHARES
ZDP shares – current liabilities
2022 ZDP shares
ZDP Shares – non-current liabilities
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
2022
£’000s
51,166
–
36,833
27,589
25,225
89,647
Group
2021
£’000s
–
48,052
34,996
25,299
23,726
132,073
Total ZDP shares liabilities
140,813
132,073
Authorised ZDP shares at 30 June 2022 and 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
The Company held 3,109,620 2026 ZDP shares as at 30 June
2021. In the year, the Company sold 800,000 2026 ZDP shares
in the open market, receiving £0.95m. The Company held
2,309,620 2026 ZDP shares as at 30 June 2022.
The Company held 583,735 2028 ZDP shares as at 30 June
2021 and 30 June 2022.
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 2022 was 143.98p (2021: 135.56p).
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 2022 was 124.14p (2021: 118.51p).
2022
Number
£’000s Number
£’000s Number
2022
2024
2026
£’000s
Number
2028
£’000s
Total
£’000s
2026 ZDP shares
Balance at 30 June 2021
35,569,069 48,052 30,000,000 34,996 21,890,380 25,299 24,416,265 23,726 132,073
Issue of ZDP shares
Finance costs (see note 5)
–
–
– 3,114
–
–
800,000
950*
– 1,837
– 1,340
–
–
–
950
1,499
7,790
Balance at 30 June 2022
35,569,069 51,166 30,000,000 36,833 22,690,380 27,589
24,416,265 25,225 140,813
* Sold by the Company in the market, an issue of ZDP shares for Group accounting
2021
Number
2020
£’000s
Number
2022
£’000s
Number
2024
£’000s
Number
2026
£’000s
Number
2028
£’000s
Total
£’000s
39,000,000 59,087 50,000,000 63,407 30,000,000 33,250 22,596,706 24,791
–
– 180,535
–
–
–
–
–
–
–
–
Redemption
of ZDP shares (39,000,000) (60,411)
(14,430,931)
(19,338)
–
–
–
–
–
–
–
–
–
– 24,416,265 24,417
24,417
–
–
–
(964)
(964)
–
–
(79,749)
Balance as at
30 June 2020
Issue of ZDP
shares
Issue costs of
ZDP shares
ZDP shares
purchased by
the Company
Finance costs
(see note 5)
Balance as at
30 June 2021
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 2022 was 122.62p (2021: 116.78p).
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 2022 was 106.87p (2021: 101.06p).
The ZDP shares are traded on the London Stock Exchange
and are stated at amortised cost using the effective interest
16. OTHER PAYABLES - NON-CURRENT LIABILITY
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 meeting's 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.
2022
£’000s
93,079
2021
£’000s
136,257
–
–
–
–
–
–
(706,326)
(767)
–
1,324
–
3,983
–
1,746
–
1,275
–
–
–
(767)
273
8,601
Company
Intra-group loans
–
– 35,569,069 48,052 30,000,000 34,996 21,890,380 25,299 24,416,265 23,726 132,073
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 2022 is a current liability of £51,166,000 and a non-current liability of £93,079,000 (2021: non-current liability of
£136,257,000) 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.
90
UIL Limited
Report and Accounts for the year to 30 June 2022
91
NOTES TO THE ACCOUNTS
(continued)
17. ORDINARY SHARE CAPITAL
Equity share capital:
Ordinary shares of 10p each with voting rights
Authorised
2022
Balance at 30 June 2021
Purchased for cancellation
Balance at 30 June 2022
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
84,303,283
(460,365)
83,842,918
Total shares
in issue
Number
85,939,314
(1,636,031)
84,303,283
Total shares
in issue
£’000s
8,430
(46)
8,384
Total shares
in issue
£’000s
8,594
(164)
8,430
During the year the Company bought back for cancellation 460,365 (2021: 1,636,031) ordinary shares at a total cost of £1,227,000
(2021: £3,623,000). No further ordinary shares have been purchased for cancellation 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
Transfer from Non-distributable Reserve (see note 20)
Balance carried forward
19. SPECIAL RESERVE
Group and Company
Balance brought forward and carried forward
2022
£’000s
6,986
(1,181)
32,069
37,874
2021
£’000s
10,445
(3,459)
–
6,986
2022
£’000s
2021
£’000s
233,866
233,866
The reserve will not constitute winding up revenue profits in the event of the Company’s liquidation.
20. NON-DISTRIBUTABLE RESERVE
Group and Company
Balance brought forward
Transfer to Share Premium Account
Balance carried forward
2022
£’000s
32,069
(32,069)
2021
£’000s
32,069
–
–
32,069
The Non-distributable Reserve was created when the warrants issued in 2007 were exercised, following the recommendation
by the SORP in issue at that time. The current SORP no longer requires this accounting treatment and the reserve has therefore
been transferred back to the Share Premium Account. There is no impact to distributable reserves under Bermuda Law as a
result of this transfer.
21. CAPITAL RESERVES
Capital reserves comprise:
Arising on investments sold
Arising on revaluation of investments held
Balance as at 30 June
2022
£’000s
(72,976)
(1,254)
(74,230)
Group
2021
£’000s
(44,845)
114,728
69,883
2022
£’000s
(73,471)
(992)
(74,463)
Company
2021
£’000s
(45,276)
115,129
69,853
Included within the Capital Reserve movement for the year is £2,444,000 (2021: £11,735,000) of capital distributions, £3,000
(2021: £20,000) of transaction costs on purchases of investments and £27,000 (2021 £16,000) of transaction costs on sales of
investments.
22. REVENUE RESERVE
Balance brought forward
Amount transferred to revenue reserve
Dividends paid in the year
Balance as at 30 June
2022
£’000s
12,547
7,013
(6,714)
12,846
Group
2021
£’000s
10,850
8,510
(6,813)
12,547
2022
£’000s
12,547
7,013
(6,714)
12,846
Company
2021
£’000s
10,850
8,510
(6,813)
12,547
Under Bermuda Law, a company cannot declare or pay a dividend, or make a distribution out of contributed surplus, unless there
are reasonable grounds for believing that: the company is and will after the payment be able to meet its liabilities as they become
due; and the realisable value of the company's assets will not thereby be less than the aggregate of its liabilities. The net assets of
the Company as at 30 June 2022 was £218.7m (2021: £363.8m).
23. NET ASSET VALUE PER ORDINARY SHARE
NAV per ordinary share is based on net assets at the year end of £218,740,000 for the Group and £218,507,000 for the Company
(2021: £363,781,000 for the Group and £363,751,000 for the Company) and on 83,842,918 ordinary shares in issue at the year
end (2021: 84,303,283).
92
UIL Limited
Report and Accounts for the year to 30 June 2022
93
NOTES TO THE ACCOUNTS
(continued)
24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Group
2022
Bank loans
ZDP shares
Dividends paid
Repurchase of shares for cancellation
2021
Bank loans
Coldharbour loan
ZDP shares
Dividends paid
Repurchase of shares for cancellation
Company
2022
Bank loans
Intra-group loans
Dividends paid
Repurchase of shares for cancellation
2021
Bank loans
Coldharbour loan
Intra-group loans
Dividends paid
Repurchase of shares for cancellation
Balance at
30 June
2021
£’000s
Transactions
in the year
£’000s
48,548
132,073
–
–
180,621
Balance
at 30 June
2020
£’000s
50,646
500
180,535
–
–
–
–
6,714
1,227
7,941
Transactions
in the year
£’000s
–
–
–
6,813
3,623
Non-cash flow
changes
Foreign
exchange
movement
£’000s
Finance
costs
£’000s
Balance
at 30 June
2022
£’000s
3,785
–
51,080
–
–
–
7,790
140,813
–
–
–
–
3,785
7,790
191,893
Non-cash flow
changes
Foreign
exchange
movement
£’000s
(1,992)
–
–
–
–
Finance
costs
£’000s
–
–
Balance
at 30 June
2021
£’000s
48,548
–
8,601
132,073
–
–
–
–
Cash
flows
£’000s
(1,253)
950
(6,714)
(1,227)
(8,244)
Cash
flows
£’000s
(106)
(500)
(57,063)
(6,813)
(3,623)
231,681
10,436
(68,105)
(1,992)
8,601
180,621
Non-cash flow
changes
Balance
at 30 June
2021
£’000s
48,548
136,257
–
–
184,805
Transactions
in the year
£’000s
–
–
6,714
1,227
7,941
Cash
flows
£’000s
(1,253)
–
(6,714)
(1,227)
(9,194)
Foreign
exchange
movement
£’000s
Finance
costs
£’000s
Balance
at 30 June
2022
£’000s
3,785
–
51,080
–
–
–
7,988
144,245
–
–
–
–
3,785
7,988
195,325
Non-cash flow
changes
Balance
at 30 June
2020
£’000s
50,646
500
183,208
Transactions
in the year
£’000s
–
–
–
Cash
flows
£’000s
(106)
(500)
(56,297)
–
–
6,813
(6,813)
3,623
(3,623)
Foreign
exchange
movement
£’000s
(1,992)
–
–
–
–
Finance
costs
£’000s
Issue of ZDP
shares
£’000s
–
–
Balance
at 30 June
2021
£’000s
48,548
–
8,762
584
136,257
–
–
–
–
–
–
234,354
10,436
(67,339)
(1,992)
8,762
584
184,805
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
The following are considered related parties of UIL:
Ultimate parent undertaking:
UIL’s majority shareholder General Provincial Life Pension
Fund Limited (“GPLPF”) holds 65.4% of UIL’s shares. Union
Mutual Pension Fund Limited (“UMPF”) holds 9.1% of UIL’s
shares. The ultimate parent undertaking of GPLPF and UMPF
is SIPTCL as referred to in note 25.
Subsidiaries of UIL:
Allectus Capital, Allectus Quantum, BFIC, Coldharbour,
Elevate, Energy Holdings Ltd, Newtel, Novareum, Snapper
Services (UK) Limited, UIL Holdings Pte Ltd and Zeta. On
consolidation, transactions between the Company and UIL
Finance have been eliminated. BFIC and UIL Holdings Pte Ltd
were dissolved and struck off during the year.
Associated undertakings:
Carebook, DTI, ICM Mobility, Littlepay, Orbital, Resimac,
Serkel, Smilestyler, Somers and SportEngaged Ltd.
Subsidiaries of the above subsidiaries and associated
undertakings:
Allectus Capital: Own Solutions AC Limited, Own Solutions
Financial Services Limited, Aplauz CH GmbH, Aplauz NL B.V.,
Stiching Aplauz Foundation. Global Equity Risk Protection
Limited (“GERP-ACL”) was sold by Allectus Capital during the
year ended 30 June 2022.
Zeta: Horizon Gold Limited, Kumarina Resources Pty Ltd,
Zeta Energy Pte Ltd, Zeta Investments Limited and Zeta
Minerals Ltd.
Key management entities and persons:
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 2022 between the Company and its related
parties above:
UIL Finance
Loans from UIL Finance to UIL of £136.3m as at 30 June 2021
increased by £7.9m, to £144.2m as at 30 June 2022. 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:
There were no transactions during the year to 30 June 2022
with any of the subsidiaries of the above subsidiaries and
associated undertakings.
Allectus Quantum: Allectus Quantum Ltd and Diraq Pty Ltd.
Key management entities and persons:
ICM Mobility: Kuba Group Limited, Vix AFC Limited, Vix
Holdings Ltd, Vix Tech Pte Ltd and Vix Technology Limited.
Littlepay: Littlepay Limited, Littlepay Pty Ltd, Littlepay Inc.
Resimac: Access Home Loans Pty Ltd, Access Network
Management Pty Ltd, Auspak Financial Services Pty Ltd, FAI
First Mortgage Pty Ltd, Independent Mortgage Corporation
Pty Ltd, Resimac Est Pty Ltd and Resimac Limited.
Snapper Services (UK) Limited: Snapper App Co 1 Limited,
Snapper App Co 2 Limited, Snapper Platform Co Limited and
Snapper Services Ltd.
Somers: AssetCo plc, PCF Group plc, Somers Pte Ltd, Somers
Treasury Pty Ltd, Somers UK (Holdings) Limited, Waverton
and West Hamilton Holdings Limited.
ICM and ICMIM are joint portfolio managers of UIL. Other
than investment management fees, secretarial costs and
performance fees as set out in note 3, and reimbursed
expenses of £1,000, there were no other transactions with
ICM or ICMIM or ICM Corporate Services (Pty) Ltd. At the
period-end £192,000 remained outstanding to ICM and
ICMIM in respect of management and company secretarial
fees and £ nil in respect of performance fees.
Mr Younie is a director of BCB, BFIC, GERP, PIL, PML, Somers
and West Hamilton Holdings Limited. Mr Jillings is a director
of Allectus Capital, GERP, PIL, PML, Somers and Waverton.
Mr Jillings received dividends from UIL of £28,000. Mr Saville
is a director of Allectus Capital, BFIC, GPLPF, GERP, Newtel,
PIL, PML, Resimac, VixTech, West Hamilton Holdings Limited
and Zeta Energy Pte Ltd. There were no other transactions in
94
UIL Limited
Report and Accounts for the year to 30 June 2022
95
NOTES TO THE ACCOUNTS
(continued)
the year with Alasdair Younie, Charles Jillings, Duncan Saville
and Sandra Pope and UIL.
The Board:
Fees paid to Directors were: Chairman £47,600 per annum;
Chairman of Audit & Risk Committee £45,500 per annum and
Directors £35,200 per annum. The Board received aggregate
remuneration of £198,700 for services as Directors. As at
30 June 2022, £nil remained outstanding to the Directors.
In addition to their fees, the Directors received dividends
totalling £119,543 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 £602,999 from UIL and Mitre
Investments Limited received dividends of £216,607 from
UIL. There were no other transactions between companies
controlled by key management and UIL during the year to 30
June 2022.
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 £108,129,000 as at 30 June 2022 (2021:
£44,220,000), 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
41.6% of the Company’s total portfolio as at 30 June 2022. As
part of this assessment the Board has considered a severe
but plausible downside that reflects the impact of the key
risks set out in the Strategic Report and an assessment of
the Company’s ability to meet its liabilities as they fall due
(including the loan liabilities in note 13 and the 2022 ZDP
shares liabilities in note 15), 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 £51,080,000 and the repayment to the 2022
ZDP share holders of £52,283,000. 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.
Subsequent to the year end, UIL entered into an amendment
agreement, novated from Scotiabank to the Bank of Nova
Scotia, London Branch, inter alia, extending the expiry date to
19 September 2023, with the facility reducing to £37.5m on 30
March 2023. Post 19 September 2023, 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, Canadian Dollar, Euro and US
Dollar (2021: Australian 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:
2022
Other receivables
AUD
£’000s
8
CAD
£’000s
–
Derivative financial instruments – assets
16,969
2,553
Cash and cash equivalents
–
8
Derivative financial instruments – liabilities
(38,777)
(30,805)
EUR
£’000s
–
–
–
(7,749)
(8,994)
USD
£’000s
–
7,199
–
(43,728)
(23,093)
Other
£’000s
–
–
–
–
–
–
Total
£’000s
8
26,721
8
(121,059)
(51,080)
(145,402)
(18,993)
–
(40,793)
(28,244)
(16,743)
(59,622)
146,224
105,431
22,068
(6,176)
32,982
16,239
21,087
136,909
359,270
(38,535)
136,909
213,868
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)
–
(9,544)
19,505
9,961
(48,548)
(120,888)
385,470
264,582
Short-term borrowings
Net monetary liabilities
Investments
Net financial assets
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
96
UIL Limited
Report and Accounts for the year to 30 June 2022
97
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
CAD
£’000s
EUR
£’000s
2022
USD
£’000s
AUD
£’000s
EUR
£’000s
81
11,715
11,796
2
(686)
(684)
–
61
1,804
1,804
(1,614)
(1,553)
127
6,405
6,532
–
(974)
(974)
AUD
£’000s
CAD
£’000s
EUR
£’000s
2022
USD
£’000s
AUD
£’000s
EUR
£’000s
2021
USD
£’000s
–
22,783
22,783
2021
USD
£’000s
(81)
(11,715)
(11,796)
(2)
686
684
–
(1,804)
(1,804)
(61)
1,614
1,553
(127)
(6,405)
(6,532)
–
974
974
–
(22,783)
(22,783)
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:
Exposure to floating rates
Cash and margin account
Bank overdraft
Borrowings
Exposure to fixed rates
ZDP shares
Net exposures
At year end
Maximum in year
Minimum in year
2022
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
8
(3,835)
(51,080)
(54,907)
8
(3,835)
(51,080)
(54,907)
–
–
–
–
Total
£’000s
3,324
(213)
(48,548)
(45,437)
Within
one year
£’000s
3,324
(213)
(48,548)
(45,437)
2021
More than
one year
£’000s
–
–
–
–
(140,813)
(51,166)
(89,647)
(132,073)
–
(132,073)
(195,720)
(106,073)
(89,647)
(177,510)
(45,437)
(132,073)
(199,716)
(112,232)
(87,484)
(238,270)
(115,657)
(122,613)
(177,510)
(45,437)
(132,073)
(166,819)
(42,048)
(124,771)
Exposure to
floating
interest
rates
£’000s
Exposure
to fixed
interest
rates
£’000s
Total
£’000s
Exposure to
floating
interest rates
£’000s
Exposure to
fixed interest
rates
£’000s
Total
£’000s
Maximum in year
Minimum in year
(199,716)
(61,715)
(138,001)
(238,270)
(55,928)
(182,342)
(177,510)
(45,437)
(132,073)
(166,819)
(42,048)
(124,771)
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 (2021: 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.
Revenue profit for the year
Capital profit for the year
Total profit for the year
Other market risk exposures
Increase
in rate
£’000s
(1,098)
–
(1,098)
2022
Decrease
in rate
£’000s
1,098
–
1,098
Increase
in rate
£’000s
(909)
–
(909)
2021
Decrease
in rate
£’000s
909
–
909
The portfolio of investments, valued at £416,516,000 as at 30 June 2022 (2021: £540,074,000) 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 21 and 12 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 2022, 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:
2022
2021
Increase
in value
Decrease
in value
Increase
in value
Decrease
in value
Income Statement capital profit for the year (£’000s)
83,303
(83,303)
108,846
(108,846)
(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, 19 as at 30 June 2022 (18 as at 30 June 2021); the liquid nature of
the portfolio of investments; the geographical and sector diversity of the portfolio (see pages 21 and 12 respectively); and the
existence of an on-going loan facility agreement. Cash balances are held with reputable banks with high quality external credit
ratings.
98
UIL Limited
Report and Accounts for the year to 30 June 2022
99
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 £140.8m 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
–
3,835
447
99,750
51,564
–
155,596
Securities
purchased for
future settlement
Bank overdraft
Other creditors
Derivative financial
instruments
Loans
ZDP shares
–
–
–
40,497
–
52,283
92,780
2022
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
Total
£’000s
Three
months
or less
£’000s
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
–
–
–
–
–
–
57
3,835
447
213
437
140,247
139,451
–
–
–
–
51,564
37,172
11,714
–
–
–
–
–
113,064
165,347
–
–
132,073
132,073
113,064
361,440
177,330
11,714
132,073
321,117
2021
Total
£’000s
57
213
437
139,451
48,886
(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
2022
Maximum
exposure
in the year
£’000s
4,496
–
30 June
£’000s
8
–
2021
Maximum
exposure
in the year
£’000s
55,841
2,104
30 June
£’000s
3,324
–
8,672
39,138
36,089
79,499
Derivatives (forward foreign exchange contracts)
138,305
168,050
139,871
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.
(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:
2022 ZDP shares
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
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
2022
£’000s
51,219
36,750
26,207
24,172
2021
£’000s
49,619
36,150
25,393
24,416
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 a number of level 3 closed-
end investment companies including Allectus Capital, ICM
Mobility and Somers. These closed-end 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 2022
managers’ NAVs and these NAVs have been reviewed to
ensure that the economic impact of the rising interest rate
environment, inflation, the Ukraine war, and Covid-19 have
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 on valuations
of the increased level of volatility in equity markets during
the first half of 2022, principally reflecting concerns about
100
UIL Limited
Report and Accounts for the year to 30 June 2022
101
NOTES TO THE ACCOUNTS
(continued)
increasing rates of inflation, tightening energy supplies,
rising interest rates and the Ukraine war. The valuations of
fund interests are based on the managers’ NAVs and these
managers have advised that they have taken into account
these economic and market concerns. 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.
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 Capital Bermuda incorporated
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used the portfolio’s NAV
and carried its investment at £22.9m (2021: £21.4m) and
loans at £5.5m (2021: £nil). The cost of these investments
was £23.9m (2021: £18.5m). The financial results of Allectus
Capital are not publically available. Allectus Capital’s 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 the increased volatility in technology equity markets
and the increased level of unlisted investments within
Allectus Capital’s portfolio and assessed that the valuation
uncertainty had increased over the year. Accordingly, Allectus
Capital’s fair value has been given a sensitivity of 20%
(2021: 10%) to reflect a higher level of uncertainty over the
managers valuations of Allectus Capital’s portfolio.
Sensitivities: Should the value of holdings in Allectus Capital
move by 20% the gain or loss would be £5.7m.
ICM Mobility (including direct holdings in Littlepay and
Snapper Services (UK) Limited) UK incorporated
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used ICM Mobility’s and
Snapper Services (UK) Limited portfolio NAVs and its direct
investment in Littlepay has been valued using earnings
and revenue peer multiples. UIL values the investments at
£51.0m (2021: £41.9m). The cost of these investments was
£32.4m (£30.5m). For the year to 30 June 2022, ICM Mobility’s
turnover was £12.6m and pre tax profits were £12.4m and as
at 30 June 2022 the net assets were £110.2m. For the year
to 30 June 2021, the latest publicly available information,
Littlepay's turnover was £nil and pre tax loss was £59k, and
as at 30 June 2021 the net assets were £5.9m. ICM Mobility’s
portfolio is focused in the transit payments sector and its
NAV was valued using valuation techniques consistent with
IFRS and was subject to audit. The Directors considered
ICM Mobility’s sector and current market turbulence, in
ICM Mobility’s portfolio valuations and assessed that the
valuation uncertainty was at a medium level.
As at 30 June 2022 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. Earnings
and revenue were considered over historic, current and
forecast periods. 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’s fair value has been given a sensitivity of 20%
(2021: 20%) to reflect a higher level of uncertainty over the
managers valuations of ICM Mobility’s portfolio.
Sensitivities: Should the value of ICM Mobility move by 20%
the gain or loss would be £10.2m.
Somers Bermuda incorporated
Somers is UIL’s largest investment with a value of £148.8m
as at 30 June 2022 (2021: £220.1m) and accounts for
35.7% (2021: 42.7%) of UIL’s total portfolio. The cost of this
investment was £89.4m (£84.9m).
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL values its holding of Somers
shares based on estimated NAV per share. The Directors
believe this is the most appropriate basis for valuing the
investment in Somers. Somers shares are listed on the
BSX. As at 30 June 2022, the Somers shares were deemed
not to trade in an active market and as at the 30 June 2022
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 2021, Somers recorded total income
of USD 218.0m, net income before tax of USD 197.8m and
net assets of USD 617.8m. As at 30 June 2022, Somers’ three
largest investments, which make up 78.4% of its portfolio,
were a 58.4% holding in Resimac, a non-bank Australian
financial institution, a 61.8% holding in Waverton, a UK wealth
(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.
31. COMMITMENTS
UIL has made a £1m convertible loan note facility available to
Coda Cloud Limited. This facility has not been drawn nor is it
expected to be drawn for the next six months.
manager, and a 48.4% holding in Thorn Group, an Australian
diversified financial services organisation.
As at 30 June 2022 28% of Somers’ investment portfolio was
valued using valuation techniques and these investments
have been given a sensitivity of 10% (2021: 5%) to reflect a
degree of uncertainty over the managers valuations. The
remaining 72% 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 18.1m (£14.9m).
Arria NLG Limited (“Arria”) New Zealand incorporated
UIL hold 6.6m ordinary shares in Arria which it valued at
£1.2m as at 30 June 2022. The cost of this investment was
£0.7m. In arriving at its valuation, UIL applied a peer revenue
multiple to estimated recurring revenue. According to its
most recent published accounts, Arria was materially loss
making, cash flow negative, and they may have insufficient
cash reserves if their expected capital raise activities do
not proceed as planned. Against this, their revenues have
recently gained traction and appear to be growing very
strongly. Arria has also had historic success in raising funds.
In arriving at their valuation, the Directors considered Arria’s
historic financial track record, their recent uplift in revenues
and Arria’s reliance on successful future capital raising. The
Directors assessed that while the valuation uncertainty
over Arria was high, should Arria’s recent growth trajectory
continue and should they have success in raising capital
this would be expected to contribute to a valuation uplift.
Accordingly, Arria’s fair value has been given a sensitivity of
400% to reflect the high level of uncertainty over the future
position of Arria.
Sensitivities: Should the value of UIL’s holding in Arria
increase by 400% the gain or loss would be £4.6m.
Other unlisted companies
Valuation methodology: UIL has a further 19 (2021: 13)
unlisted holdings valued below £2.5m (2021: £2.5m) each.
These holdings were valued using a variety of methods,
including; listed peer comparison or peer group multiple,
discounted cash flow, net assets, dividend yields, and cost
of recent investments adjusted for events subsequent to
acquisition that impact fair value. The total value of these 19
holdings was £9.6m as at 30 June 2022 (2021: £6.0m).
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 £1.0m or 0.2%. A 20.0% change
would have an impact on the investment portfolio value of
£1.9m or 0.5%.
102
UIL Limited
Report and Accounts for the year to 30 June 2022
103
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%
236%
2022
Commitment
method
425%
236%
Gross
method
425%
251%
2021
Commitment
method
425%
251%
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 Thursday, 10 November 2022
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 2022, together with the report of the auditor
thereon.
To approve the Directors’ Remuneration Report for the
year ended 30 June 2022.
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 2023 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 4,192,000
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 2023 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 12,560,000 (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
21 September 2022
(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:
104
UIL Limited
Report and Accounts for the year to 30 June 2022
105
105
Report and Accounts for the year to 30 June 2022
NOTICE OF ANNUAL GENERAL MEETING (continued)
COMPANY INFORMATION
NOTES
1. Only the holders of ordinary shares registered on the register of
members of the Company at close of business on 8 November 2022
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 2022 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 2022.
Alternatively, shareholders can vote or appoint a proxy electronically
by visiting www.eproxyappointment.com/login. 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 2022. 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 The Depositary, Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY not later than 5:00
pm (GMT) on 7 November 2022 or give an instruction via the CREST
system as detailed under note 7. Please note only depositary interest
holders registered on the depositary interest register at close of
business on 7 November 2022 shall be entitled to attend and vote
or to be represented at the meeting. Changes to entries on the
depositary interest register after close of business on 7 November
2022 shall be disregarded in determining the rights of any person to
attend and vote at the meeting.
7. Depositary interest holders who are CREST members and who
wish to issue an instruction through the CREST electronic voting
appointment service may do so by using the procedures described
in the CREST manual (available from www.euroclear.com). 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 services provider(s),
who will be able to take the appropriate action on their behalf.
In order for instructions made using the CREST service to be valid,
the appropriate CREST message (a “CREST Voting Instruction”) must
be properly authenticated in accordance with the specifications
of Euroclear UK & International Limited (“EUI”) and must contain
the information required for such instructions, as described in the
CREST Manual (available from www.euroclear.com). The message,
regardless of whether it relates to the voting instruction or to an
amendment to the instruction given to the Depositary must, in
order to be valid, be transmitted so as to be received by the issuer’s
agent (ID 3RA50) no later than 5:00 pm, (GMT) on 7 November
2022. For this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the CREST Voting
Instruction by the CREST applications host) from which the issuer’s
agent is able to retrieve the CREST Voting Instruction by enquiry to
CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsors
or voting service providers should note that EUI does not make
available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in
relation to the transmission of CREST Voting 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(s), to procure that the
CREST sponsor or voting service provider(s) take(s)) such action
as shall be necessary to ensure that a CREST Voting Instruction is
transmitted by means of the CREST service by any particular time. In
this connection, CREST members and, where applicable, their CREST
sponsors or voting service 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 Voting 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 83,842,918
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 83,842,918.
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
The Bank of Nova Scotia, London Branch
201 Bishopsgate, 6th Floor, London EC2M 3NS
United Kingdom
106
UIL Limited
Report and Accounts for the year to 30 June 2022
107
107
Report and Accounts for the year to 30 June 2022
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 2022 the ordinary share price was 187.50p (2021:
268.00p) and the NAV per ordinary share was 260.89p
(2021: 431.51p), the discount was therefore 28.1%
(2021: 37.9%).
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
ZDP shares
Total debt
Net assets attributable
to equity holders
Gearing
page
89
75
75
90
75
4
2022
£’000s
3,835
(8)
51,080
140,813
195,720
2021
£’000s
213
(3,324)
48,548
132,073
177,510
218,740
363,781
89.5%
48.8%
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
2022
Dividend rate
(pence)
NAV
(pence)
Share price
(pence)
30-Jun-21
30-Sep-21
23-Dec-21
31-Mar-22
30-Jun-22
30-Jun-22
Total return
n/a
431.51
2.000
2.000
2.000
2.000
387.13
372.95
370.02
260.69
n/a
260.69
268.00
267.00
245.00
240.00
187.50
187.50
(38.1%)
(27.6%)
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
2.000
2.000
2.000
2.000
n/a
292.79
295.59
325.51
331.07
395.11
431.51
50.9%
177.50
160.00
191.50
228.00
257.00
268.00
57.0%
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.
2022
Share
price
(pence)
NAV
(pence)
2021
Share
price
(pence)
NAV
(pence)
99.47
85.67
99.47
85.67
2.1336
2.6203
2.0840
2.5314
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.
page
71
2022
£’000s
2021
£’000s
9,879
11,555
491,667
499,467
2.0%
2.3%
2022
Share
price
NAV
2021
Share
price
NAV
Income
Average Gross assets
Revenue yield
Annual compound
NAV total return
since inception
9.5%
9.7%
13.1%
12.3%
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)
2022
£’000s
2021
£’000s
page
Dividends per ordinary
shares
Ordinary share price
Dividend yield
page
4
4
2022
pence
2021
pence
8.00
8.00
187.50
268.00
4.3%
3.0%
Revenue reserves per ordinary share carried
forward – the value of the Group’s revenue reserves
divided by the number of ordinary shares in issue.
Management and administration
fees
Other expenses
Expenses suffered within
underlying funds
Total expenses for ongoing
charges calculation
71
71
852
819
982
830
5,221
4,784
6,892
6,596
Revenue reserves (£'000s)
Number of ordinary shares
in issue at 30 June
Revenue reserves per
ordinary share carried
forward (pence)
page
75
2022
2021
12,846
12,547
92 83,842,918 84,303,283
15.32
14.88
Average weekly NAV of the Group
306,929 282,613
Ongoing Charges
4
2.2%
2.3%
Ongoing charges calculation
(including performance fees)
2022
£’000s
2021
£’000s
page
Management and administration
fees
Other expenses
Expenses suffered within
underlying funds
Total expenses for ongoing
charges calculation
71
71
852
819
982
830
5,221
11,184
6,892
12,996
Average weekly NAV of the Group
306,929 282,613
260.69
187.5
431.51
268.00
Ongoing Charges
4
2.2%
4.6%
556.63
491.30
899.25
678.42
459.6% 473.5% 804.0% 691.9%
108
108
UIL Limited
Report and Accounts for the year to 30 June 2022
109
UIL Limited
HISTORICAL PERFORMANCE
at 30 June
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013(1)
NAV per ordinary share (pence)
260.89 431.51 292.79
369.57 291.79 252.86 241.12 169.00 165.84
148.33
Ordinary share price (pence)
187.50 268.00 177.50
199.00 174.50 164.00 130.75 117.00 128.00
130.00
Discount (%)
28.1
37.9
39.4
46.2
40.2
35.1
45.8
30.8
22.8
12.4
Returns and dividends (pence)
Revenue return per ordinary share
8.35
9.98
9.77
7.63
6.67
6.38
6.23
Capital return per ordinary share
(171.68) 133.81 (81.30)
75.34
38.96
12.46
68.45
7.84
2.47
7.03
12.06
19.85
(63.65)
Total return per ordinary share
(163.33) 143.79 (71.53)
82.97
45.63
18.84
74.68
10.31
26.88
(51.59)
Dividend per ordinary share
8.000(2) 8.000
7.875
7.500
7.500
7.500
7.500
7.500
7.500 10.000(3)
FTSE All-Share total return Index
7,981
7,852
6,465
7,431
7,389
6,777
5,737
5,614
5,471
4,837
ZDP shares(4) (pence)
2022 ZDP shares
Capital entitlement(5) per ZDP share
143.98 135.56 127.59
120.03 113.01 106.37 100.12
ZDP share price
2024 ZDP shares
144.00 139.50 126.50
132.00 124.50 119.50 104.50
Capital entitlement(5) per ZDP share
124.14 118.51 113.13
107.97 103.10
ZDP share price
2026 ZDP shares
122.50 120.50 105.50
114.00 107.50
Capital entitlement(5) per ZDP share
122.62 116.78 111.21
105.89 100.87
ZDP share price
2028 ZDP shares
115.50 116.00
92.25
107.50 102.25
Capital entitlement(5) per ZDP share
106.87 101.60
ZDP share price
99.00 100.00
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
Equity holders' funds (£m)
Gross assets(6)
Bank debt
ZDP shares
Other debt
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)
410.6
544.4
483.3
537.2
488.3
449.7
440.7
373.4
399.1
383.0
51.1
48.5
50.6
51.0
27.8
47.8
24.7
34.4
22.2
42.5
140.8
132.1
180.5
159.9
199.4
173.8
197.4
172.4
212.5
193.4
–
–
0.5
–
–
–
–
–
–
–
218.7
363.8
251.6
326.3
261.1
228.1
218.6
166.6
164.4
147.1
9.9
1.7
1.1
11.6
12.7
11.2
10.6
10.7
10.5
11.2
10.4
16.2
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
2.2
89.5
2.3
48.8
2.1
93.4
2.1
63.7
2.2
87.3
2.1
3.3
2.0
2.2
1.8
97.2
101.6
124.1
144.4
160.4
(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 55 and 56
(6) Gross assets less current liabilities excluding loans
(7) See Alternative Performance Measures on pages 108 and 109
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111
UIL LimitedReport and Accounts for the year to 30 June 2022 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