2023
REPORT AND ACCOUNTS
TRENDS DRIVING UIL’S INVESTMENT OPPORTUNITIES
WHY UIL LIMITED?
Changes in
markets and
regulation opening
up business
opportunities
Technology
changes impacting
commodity
demands
Infrastructure and
utilities megatrends
in global emerging
markets
Disruptive
technologies and
business models
UIL's objective is to maximise shareholder returns
by identifying and investing in compelling long-
term investments worldwide, where the underlying
value is not fully recognised.
IN THE YEAR TO 30 JUNE 2023
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
NET ASSET VALUE
TOTAL RETURN PER
ORDINARY SHARE*
SHARE PRICE
TOTAL RETURN PER
ORDINARY SHARE*
6.68p
(2022: 8.35p)
8.00p
(2022: 8.00p)
-20.6%
(2022: -38.1%)
-18.5%
(2022: -27.6%)
* See Alternative Performance Measures on pages 109 to 111
Stock selection remains our focus and ICM’s proven
bottom-up long-term approach aims to 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 ZDP SHAREHOLDERS:
• Attractive capital growth
• ICM has been UIL’s investment manager since
inception (14 August 2003) and prides itself in
identifying compelling investment opportunities and
working pro-actively with investee companies to
improve the economic value for shareholders
• Aligned interest with over 75.0% of UIL held by
investors associated with ICM
• ICM offers significant sector expertise
• Appealing asset, sector and geographical cover
• Structured as three ZDP classes – mitigating
redemption risk
PORTFOLIO STRENGTHS
• Financial Services
• Utilities and Infrastructure
• Technology
• Resources
1
Report and Accounts for the year to 30 June 2023 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 2023
16 Macro Trends Affecting Our Portfolio
18 Our Investment Approach
20 ESG Spotlight
21 Geographical Investment Exposure
22 Ten Largest Holdings
28 Capital Structure
30 ZDP Shares
32 Strategic Report
42
Investment Managers and Team
GOVERNANCE
45 Directors
46 Directors’ Report
52 Corporate Governance Statement
57 Directors’ Remuneration Report
60 Audit & Risk Committee Report
63 Statement of Directors’ Responsibilities
AUDIT
64
Independent Auditor’s Report
FINANCIAL STATEMENTS
70 Accounts
76 Notes to the Accounts
ADDITIONAL INFORMATION
106 Notice of Annual General Meeting
108 Company Information
109 Alternative Performance Measures
112 Historical Performance
The business of UIL Limited (“UIL” or
the Company”) consists of investing
the pooled funds of its shareholders
in accordance with its investment
objective and policy, generating
a return for shareholders and
spreading the investment risk. UIL
has borrowings and gearing is also
provided by zero dividend preference
(“ZDP”) shares, issued by its wholly
owned subsidiary UIL Finance Limited
(“UIL Finance”). The joint portfolio
managers of UIL are ICM Investment
Management Limited (“ICMIM”) and
ICM Limited (“ICM”), together referred
to as the “Investment Managers”.
FINANCIAL CALENDAR
Year End
30 June
Annual General Meeting (“AGM”)
9 November 2023
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 2023*
GEARING*
-20.6%
(2022: -38.1%)
-18.5%
(2022: -27.6%)
27.5%
(2022: 28.1%)
83.5%
(2022: 89.5%)
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
REVENUE YIELD*
DIVIDEND YIELD*
6.68p
(2022: 8.35p)
8.00p
(2022: 8.00p)
2.9%
(2022: 2.0%)
5.5%
(2022: 4.3%)
ONGOING CHARGES
including and excluding performance fees*
2.8%
(2022: 2.2%)
* See Alternative Performance Measures on pages 109 to 111
TOTAL RETURN COMPARATIVE PERFORMANCE † (pence)
from 30 June 2022 to 30 June 2023
115
110
105
100
95
90
85
80
75
70
Jun 22
Jul 22
Aug 22
Sep 22
Oct 22
Nov 22
Dec 22
Jan 23
Feb 23
Mar 23
Apr 23
May 23
Jun 23
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 2022
Source: ICM and Bloomberg
2
3
UIL LimitedReport and Accounts for the year to 30 June 2023
GROUP PERFORMANCE SUMMARY
CHAIRMAN’S STATEMENT
NAV total return per ordinary share1 (for the year) (%)
Share price total return per ordinary share1 (for the year) (%)
Annual compound NAV total return1 (since inception2) (%)
NAV per ordinary share1 (pence)
Ordinary share price (pence)
Discount1 (%)
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 assets4
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 fees1
Ongoing charges figure including performance fees1
Gearing1
30 June
2023
30 June
2022
% change
2023/22
(20.6)
(18.5)
7.8
199.87
145.00
27.5
6.68
(59.70)
(53.02)
8.003
8,611
304.9
42.7
94.6
167.6
10.2
1.7
2.9
5.6
2.8
2.8
83.5
(38.1)
(27.6)
9.5
260.89
187.50
28.1
8.35
(171.68)
(163.33)
8.00
7,981
410.6
51.1
140.8
218.7
9.9
1.7
1.1
7.0
2.2
2.2
89.5
n/a
n/a
n/a
(23.4)
(22.7)
n/a
(20.0)
(65.2)
(67.5)
0.0
7.9
(25.7)
(16.4)
(32.8)
(23.4)
3.0
0.0
163.6
(20.0)
n/a
n/a
n/a
(1) See Alternative Performance Measures on pages 109 to 111
(2) All performance data relating to periods prior to 20 June 2007 are in respect of Utilico Investment Trust plc, UIL's predecessor
(3) The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts
(4) Gross assets less current liabilities excluding loans and ZDP shares
The year to 30 June 2023
has been challenging on the
economic and geopolitical
front. At UIL this has been
compounded given the need
to reduce UIL’s bank debt
significantly at this time. UIL’s
investment performance has
been disappointing with its
NAV total return down by
20.6% for the year and which,
in light of UIL’s ZDP shares and
PETER BURROWS
Chairman
bank debt, is estimated to comprise approximately
-12.0% from the investment portfolio and the balance
primarily due to the effects of gearing. This has
pulled UIL’s annual compound NAV total return since
inception in 2003 down to 7.8%.
Market volatility has been driven by significant
uncertainties 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 war in Ukraine and China’s
transition to no Covid restrictions earlier this year.
There also continues to be a wider reset of economic
and political relationships between the West and the
East.
A small positive is that the reduction in UIL’s net debt
to £139.9m from £195.7m as at 30 June 2022, has seen
UIL’s gearing decline. As at 30 June 2023 UIL’s gearing
stood at 83.5% (30 June 2022: 89.5%).
COMMODITIES MOVEMENTS
from 30 June 2022 to 30 June 2023
Since inception in August 2003, UIL has distributed
£94.6m in dividends, invested £36.9m in ordinary
share buybacks and made net gains of £209.0m for
a total return of 344.2% (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.
There have been a number of changes in the portfolio
during the year to 30 June 2023. UIL sold its largest
unlisted company, ICM Mobility Group Limited ("ICM
Mobility"), to Somers Limited (“Somers”) and bought a
number of listed holdings as UIL sought to reduce its
unlisted investments and increase its listed positions.
Furthermore, as a result of share price weakness,
a number of positions fell out of the top ten. This is
covered in more detail in the Investment Managers’
report.
The Board is pleased to see the ordinary shares
discount to NAV end the year under 30.0%, standing at
27.5% as at 30 June 2023 (30 June 2022: 28.1%). Given
the focus of applying cash resources to the redemption
of the 2022 ZDP shares and the reduction in the bank
facility, no buybacks were undertaken in the year
ended 30 June 2023.
Consistent with the wider debt markets, UIL’s longer
dated 2024, 2026 and 2028 ZDP shares are trading at
significantly higher gross redemption yields compared
to those as at 30 June 2022, being 8.9%, 8.8% and 8.9%
respectively. The market prices of the ZDP shares were
impacted by interest rate rises by most central banks
140
130
120
110
100
90
80
70
60
Jun 22
Aug 22
Oil
Oct 22
Copper
Dec 22
Nickel
Feb 23
Gold
Apr 23
Aluminium
Jun 23
Rebased to 100 as at 30 June 2022
Source: Bloomberg
4
5
UIL LimitedReport and Accounts for the year to 30 June 2023 CHAIRMAN’S STATEMENT (continued)
CURRENCY MOVEMENTS vs STERLING
from 30 June 2022 to 30 June 2023
110
105
100
95
90
85
Jun 22
Aug 22
Oct 22
US Dollar
Dec 22
Euro
Feb 23
Apr 23
Jun 23
Australian Dollar
Rebased to 100 as at 30 June 2022
Source: Bloomberg
as inflation increased sharply. As at 30 June 2023, UIL’s
average blended rate of funding costs, including bank
debt, increased from 4.7% to 5.7%, mainly as a result of
higher bank borrowing costs.
Total revenue income for the year to 30 June 2023
was £10.2m, an increase of 3.0% from £9.9m in the
prior year, a good outcome given the reduced level
of investments. However, the finance costs increased
significantly for the year to 30 June 2023 to £2.9m, up
163.6% from the prior year at £1.1m. This resulted in
the revenue return earnings per share (“EPS”) of 6.68p,
representing a decrease of 20.0% from 30 June 2022 of
8.35p.
The Board declared an unchanged fourth quarterly
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 5.5%. Although the dividend is
not fully covered by earnings in the year, given the
significant revenue reserves brought forward of 15.32p
per share, the Board is comfortable with maintaining
the payout at 8.00p. The revenue reserves carried
forward reduced to £11.7m as at 30 June 2023 from
£12.8m as at 30 June 2022.
The capital return loss for the year ended 30 June 2023
of £50.0m is disappointing to report to shareholders.
BANK FACILITY
UIL has agreed with the Bank of Nova Scotia, London
Branch (“Bank of Nova Scotia”) to extend its committed
senior secured multi-currency facility to 19 March 2024.
The facility has been reduced from £37.5m to £25.0m
and will step down in stages over the next six months
prior to a final repayment by 19 March 2024.
GLOBAL EVENTS
Several themes continue to dominate global events:
heightened geopolitical tensions, the outlook for
inflation and interest rates, climate change, technology
and Artificial Intelligence ("AI").
As anticipated at the time of announcing UIL’s half-year
report, Covid-19 has receded and we do not expect
it to be an issue going forward. China’s reversal of its
zero tolerance policy earlier this year was a positive.
However, weak Chinese consumer confidence is a
headwind to a full recovery by China.
The war in Ukraine has gone on longer than expected
and today there continues to be no clear way forward.
Both sides have been drawn in further, but once they
reach a neutral position, a negotiated outcome would
be expected.
The ongoing friction between the USA and China
continues to deepen and it is now difficult to see how
this reverses direction. Given the USA and China are
the two largest economies globally this must pose
significant risks at some point in the future, especially
for technology businesses on each side of the Pacific
Ocean.
Inflation moved markedly for most economies over
the year. Nearly all central banks responded with
significantly higher interest rates. We now see major
OUTLOOK
The outlook for worldwide economies increasingly
rests with global leadership, both political and central
bankers. The central banks perhaps have the easier
task as inflation looks to be receding in most major
markets. We assume interest rates will stay higher than
expected and we expect this will be a headwind to
economies and commodities are likely to remain soft.
The same cannot be said of geopolitical leadership
which remains challenging. The rising pressure to
meet social expectations and the impact of climate
change, natural disasters and conflict will be difficult
to navigate. We remain focused on reducing risk and
helping investee companies navigate through these
challenges and emerge stronger.
Peter Burrows AO
Chairman
22 September 2023
differences between three key regions: the Western
economies where we expect inflation to reduce
gradually; Asia, where we see China heading for
deflation; and Latin America (“LatAm”), where inflation
has already halved. Against this backdrop we expect
Western economies to hold interest rates higher for
longer, China to reduce rates further while LatAm is
expected to reduce interest rates sharply lower.
The one unknown in our view continues to be the
response of the labour force especially in the West.
Labour markets remain 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.
An ever increasing factor for investors is climate
change. It has clearly had devastating impacts on a
number of communities from wildfires in Hawaii to
floods in Germany. We are seeing whole ecosystems
being impacted from prolonged droughts to record
temperatures. As investors we need to prepare for
these outcomes to continue across our portfolios.
There is a very perceptible shift to embrace AI by
most businesses and as with most technological
developments, those without legacy businesses
benefit the most, but eventually all businesses will
need to adapt or risk failure. This has been our
experience in the Fintech sector. UIL has a number of
investments with significant exposure to AI, Blockchain
and Quantum Computing.
INDICES MOVEMENTS
from 30 June 2022 to 30 June 2023
120
110
100
90
80
70
Jun 22
Aug 22
Oct 22
Dec 22
FTSE All-Share
Australian Securities Exchange ("ASX")
Feb 23
S&P 500
Apr 23
Jun 23
MSCI All Countries World Index
Rebased to 100 as at 30 June 2022
Source: Bloomberg
6
7
UIL LimitedReport and Accounts for the year to 30 June 2023 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*
7.8%
344.2%
8.1%
367.5%
REVENUE EARNINGS
PER ORDINARY SHARE
DIVIDENDS PER
ORDINARY SHARE
DIVIDENDS PAID
OUT
REVENUE RESERVES
PER ORDINARY SHARE
CARRIED FORWARD*
131.14p
106.83p
£94.6m
14.00p
* See Alternative Performance Measures on pages 109 to 111
ORDINARY SHARES
BOUGHT BACK
VALUE OF ORDINARY
SHARES BOUGHT BACK
ZDP SHARES
ISSUED
ZDP SHARES
REDEEMED
29.6m
£36.9m
£379.5m
£466.4m
DIVIDENDS PER ORDINARY SHARE (pence)
from 30 June 2004 to 30 June 2023
ALLOCATION OF GROSS ASSETS (£m)
from 14 August 2003 to 30 June 2023
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
2023
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 23
Ordinary shares
ZDP shares
Bank loans
Source: ICM
HISTORIC TOTAL RETURN PERFORMANCE † (pence)
since inception to 30 June 2023
CUMULATIVE TOTAL RETURN COMPARATIVE PERFORMANCE (pence)
from 14 August 2003 to 30 June 2023 (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
2023
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 and Bloomberg
1,000
800
600
400
200
0
NAV total
return of
344.2%
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
Jun
23
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 and Bloomberg
8
9
UIL LimitedReport and Accounts for the year to 30 June 2023
INVESTMENT MANAGERS’ REPORT
The year to 30 June 2023 has
been difficult to navigate for
investors and especially for
UIL as it needed to redeem
the 2022 ZDP shares as well
as reduce its bank debt by
£12.5m. This created pressure
on the portfolio given the need
for substantial realisations in
difficult markets.
CHARLES JILLINGS
Investment Manager
UIL’s loss for the year to 30 June
2023 was £44.5m resulting in
NAV per share of 199.87p, a decline of 23.4%. This has
dragged UIL’s annual compound NAV total return since
inception in 2003 down to 7.8%. However, positively,
total net debt reduced by £55.8m.
PORTFOLIO
There was significant volatility over the year and within
the top ten holdings. Three holdings increased in value,
three holdings were sold, five reduced in value and two
new investments were made. Overall, the decreases
significantly outweighed the increases, which led to an
overall reduction in the portfolio of £108.2m.
It should also be noted that UEM and Zeta’s share price
discounts to NAV represent a £22.2m reduction to the
underlying valuations.
Somers’ valuation reduced by 24.2% in the year to
30 June 2023. This was largely driven by Somers’
dividend distribution and Resimac’s share price
declining by 23.5%. Resimac continues to deliver
good operational performance in the face of material
economic and competitive headwinds. In August 2023,
Resimac published its annual results for the year to
30 June 2023 and its valuation is modest at a historic
price earnings ratio of 4.8x and a dividend yield of 8.7%.
It is good to see Resimac continuing to buy back shares
at these current levels. It should be noted that UIL also
holds a direct investment in Resimac, which is UIL’s fifth
largest investment.
As noted last year, UIL bought a number of listed
investments from Somers at fair value and sold ICM
Mobility to Somers at fair value. Taken together, this
increased UIL’s listed portfolio and reduced its unlisted
portfolio and thereby improved UIL’s bank covenant
ratios. We are pleased to be direct shareholders in West
Hamilton Holdings Limited ("West Hamilton") and The
Market Herald Limited ("TMH"), both acquired shortly
after UIL’s 2022 year end.
Waverton, Somers' largest position at 38.7% of its gross
assets, continues to build on its positive momentum.
In its year to 31 December 2022 Waverton saw AUM
increase by 5.8% to £9.1bn, revenues increase by 9.1%
to £54.9m and profits before tax remained unchanged
at £12.0m. Waverton has an enviable investment
performance record, is driven in adding clients and has
recently successfully outsourced its back office to SEI, a
platform which can be leveraged to everybody’s benefit.
This success has carried over into the current year to
December 2023.
Zeta’s NAV per share increased by 1.0% over the year, a
good outcome given Zeta’s exposure to aluminium and
nickel which were both down significantly over the year
to 30 June 2023. Aluminium was down 12.8% and nickel
was down by 10.0%. Zeta’s share price declined by 7.6%
and as a result the discount widened to 22.0%.
Zeta’s largest investment at the start of the year, Copper
Mountain Mining Corporation (“Copper Mountain”), was
successfully acquired by Hudbay Minerals Inc (“Hudbay”)
in an all-paper offer. Zeta has reduced its holding
in Hudbay as the share price has firmed. In market
capitalisation terms, Hudbay is approximately four times
the size of Copper Mountain and the investment is more
liquid as a result.
The proceeds of UIL's sale of ICM Mobility to Somers
and Panoramic Resources Limited (“Panoramic”) back
to Zeta at market price was used to repay the 2022
ZDP shares. UIL will capture much of the movement in
valuation of these holdings through its shareholding in
Somers and Zeta of 41.7% and 61.2% respectively.
UEM has again been a relative standout performer
over the year to 30 June 2023 with a NAV total return
of 12.1% compared to the MSCI emerging markets total
return Index (GBP adjusted) (“MSCI”) loss of 2.6% over
the same period. UEM continues to see strong results
reported by its investee companies with most growing
revenues. While margins are under pressure their
EBITDAs have mostly expanded too. This is a credit
to the investee management teams who continue to
deliver excellent operational performance in volatile
times. UEM is ahead of the MSCI since inception. As
with most emerging market funds, UEM's discount has
widened to 14.0% as at 30 June 2023. This remains a
frustration, but UIL has taken the opportunity of this
share price outperformance to reduce its holding and
realise £25.5m during the year.
Allectus Capital Limited ("Allectus Capital")
successfully sold its stake in Cohort Go, one of its
largest investments. The sale to Flywire culminated
after a significant period of ownership as the largest
shareholder and delivered excellent financial results.
The decrease in Allectus Capital’s overall valuation was
in part due to this sale, as well as broader technology
market challenges, with software multiples significantly
decreasing across the market. During the year Allectus
Capital has remained highly selective on its mandate
and will continue to capitalise on high conviction sectors
like AI or distressed sectors like fintech.
West Hamilton, a listed Bermuda property developer,
has sold its major asset in Bermuda and is in the process
of completing this transaction. West Hamilton expects to
return over 90.0% of its value to shareholders shortly.
UIL exited Resolute Mining Limited ("Resolute") in March
2023. This was a long-standing investment but, for
the most part, has been a significant challenge for UIL
and has failed to deliver long term returns. Given poor
operational performance and the added rising risks in
Mali, UIL took the painful decision to exit and realised its
investment over the year.
Allectus Quantum Holdings Limited’s ("Allectus
Quantum") valuation has increased over the year
following both additional investments by UIL and an
increase in the fair value of Diraq Pty Ltd ("Diraq"), a
next generation quantum computing company. Diraq
is Allectus Quantum’s sole investment and its outlook
remains positive.
Littlepay Mobility Limited ("Littlepay") has performed
ahead of expectations, but values have decreased in line
with markets resulting in the carrying value reducing by
14.1%. Starpharma Holdings Limited ("Starpharma") and
AssetCo plc remain investments, but the poor execution
of both their strategies has seen their valuations decline,
resulting in both investments falling out of UIL's top ten
holdings.
In line with many AI related investments Arria NLG
Limited ("Arria") has risen in value. Whilst this has been
positive for Arria, we are cautious on its outlook.
FOREIGN EXCHANGE
As at 30 June 2023 UIL held no forward FX derivative
positions. As noted in the half year report to
31 December 2022 UIL took the decision to close out
its positions in full, in light of sheer volatility in the FX
markets. In the year ended 30 June 2023, forward
contract FX and currency losses amounted to £3.6m. UIL
is less vulnerable to the volatility in the FX markets for
the coming year.
COMMODITIES
Commodities were volatile during the year to 30 June
2023 with oil down 34.8%. Copper was less volatile up
0.7%. Nickel was extremely volatile, at one point seeing a
high of 38.1% and a low of 14.7%, ending the year down
by 10.0%.
PORTFOLIO ACTIVITY
During the year to 30 June 2023, UIL invested £120.6m
and realised £188.4m, including loans repaid by Somers
and Zeta. Purchases included investments in Resimac,
West Hamilton and TMH. UIL bought these holdings from
Somers to increase the listed holdings of UIL and as a
result improve UIL’s covenant cover on its bank facility.
PLATFORM INVESTMENTS
UIL currently has four platform investments, Somers,
Zeta, UEM and Allectus Capital in its top ten holdings.
These investments account for 71.8% of the total
portfolio as at 30 June 2023 (30 June 2022: 73.0%).
During the year to 30 June 2023, net withdrawals from
these platforms amounted to £61.5m (30 June 2022:
£37.4m).
DIRECT INVESTMENTS
UIL has six direct investments in its top ten holdings,
Resimac, West Hamilton (which replaced ICM Mobility),
Allectus Quantum (which replaced Resolute), TMH (which
replaced Panoramic), Arria (which replaced Starpharma)
and Littlepay (which replaced AssetCo plc).
GEOGRAPHIC REVIEW
The geographical split of the portfolio, on a look through
basis, shows Australia and New Zealand remaining
as UIL’s largest exposure, increasing by 2.9% to 40.1%
of UIL’s total investments (30 June 2022: 37.2%); UK
remained second at 19.2%, up 5.4% and Bermuda
10
11
UIL LimitedReport and Accounts for the year to 30 June 2023 INVESTMENT MANAGERS’ REPORT (continued)
IN THE YEAR TO 30 JUNE 2023
AUSTRALIA & NEW ZEALAND
REMAINS UIL’S LARGEST
EXPOSURE AT
UK REMAINS UIL’S SECOND
LARGEST COUNTRY EXPOSURE AT
BERMUDA IS NOW UIL’S THIRD
LARGEST COUNTRY EXPOSURE AT
40.1%
(2022: 37.2%)
19.2%
(2022: 13.8%)
9.5%
(2022: 4.8%)
AFRICA IS UIL’S FOURTH
LARGEST EXPOSURE AT
ASIA IS UIL’S FIFTH
LARGEST EXPOSURE AT
CANADA REMAINS UIL’S SIXTH
LARGEST COUNTRY
EXPOSURE AT
6.9%
(2022: 7.2%)
See page 21 for the full geographic exposure
SECTOR SPLIT OF INVESTMENTS
Financial Services
40.6%
(2022: 38.5%)
Infrastructure
Investments
11.6%
(2022: 12.7%)
IN THE YEAR TO 30 JUNE 2023
6.0%
(2022: 10.5%)
5.7%
(2022: 5.3%)
Technology
23.6%
(2022: 25.8%)
Resources
14.4%
(2022: 15.4%)
Gold Mining
3.4%
(2022: 4.0%)
Other
6.4%
(2022: 3.6%)
INVESTED*
REALISED*
TOTAL REVENUE INCOME
£120.6m
(2022: £89.8m)
LEVEL 1 & 2
INVESTMENTS*
£135.7m
(2022: £177.6m)
* See note 9 to the accounts
12
£188.4m
(2022: £92.8m)
£10.2m
(2022: £9.9m)
LEVEL 3
INVESTMENTS*
£172.7m
(2022: £238.9m)
LEVEL 3
% OF TOTAL PORTFOLIO
56.0%
(2022: 57.4%)
Source: ICM
moved up by 4.7% at 9.5% of UIL’s total investments.
Asia decreased by 4.5% to 6.0% of the total portfolio.
SECTOR REVIEWS
Financial Services – 40.6% (30 June 2022: 38.5%)
Somers is UIL’s largest investment and accounts for
34.9% of UIL’s total investments as at 30 June 2023
(30 June 2022: 35.7%).
Technology – 23.6% (30 June 2022: 25.8%)
UIL holds a number of early-stage investments in the
technology sector, both directly and through Allectus
Capital (UIL’s fourth largest investment) and Littlepay
(UIL’s tenth largest investment).
Resources (excl. gold mining) – 14.4% (30 June 2022:
15.4%)
addition, AKJ has issued AKJ tokens, a crypto currency
which have been sold to investors and hedge fund
managers in the AKJ Crypto platform. Valuing the token
is difficult as few metrics allow comparability, and the
industry has not settled on a methodology we can
readily adopt. Somers’ view on valuation is EUR 0.088 to
EUR 0.185 per token, driven by an analysis of milestones
met and yet to be achieved as well as wider market
considerations. While hedge fund managers are buying
AKJ tokens at some EUR 0.37 the volume held by Somers
would likely see a discount driven by lower liquidity
opportunities and reduced fee discount benefits held
by these hedge fund managers. Somers holds 75.0m
AKJ tokens and carries them at EUR 0.10. Each EUR 0.05
represents £3.2m swing in valuation for Somers and
£1.4m for UIL. Further details on AKJ can be found on
their website and note 29 to the accounts.
UIL’s largest investment in resources is Zeta which
represents 17.9% of UIL’s total portfolio.
GEARING
Infrastructure Investments – 11.6% (30 June 2022:
12.7%)
This consists of Airports, Electricity, Infrastructure,
Oil & Gas, Ports, Renewables, Road & Rail,
Telecommunications and Water & Waste. UIL’s
infrastructure exposure is largely through UEM which is
UIL’s third largest investment.
Gold Mining – 3.4% (30 June 2022: 4.0%)
UIL’s largest investment in gold mining is indirectly
through Zeta, Horizon Gold Limited (“Horizon”), an
Australian gold mining exploration company. UIL exited
Resolute reducing its exposure to the sector.
LEVEL 3 INVESTMENTS
UIL’s investment in level 3 companies was 56.0%
(30 June 2022: 57.4%) of the total portfolio. The total
value reduced from £238.9m as at 30 June 2022 to
£172.7m as at 30 June 2023, 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 highlighting that where there is a material event
that impacts an unlisted investment, it is revalued at the
time, thereby keeping the unlisted valuations current.
Shareholders should be aware that within the portfolio
in Somers is an investment in AK Jensen Group (“AKJ”)
which comprises a platform for both traditional hedge
funds and hedge funds trading digital assets. In
Notwithstanding the significant pull back in portfolio
valuations during the year, this was more than offset
by the reduction in the ZDP shares and bank debt.
As a result, gearing decreased to 83.5% as at 30 June
2023 from 89.5% as at 30 June 2022 and this remains
well inside UIL’s target gearing of under 100.0%. At an
absolute level UIL’s net debt decreased over the year
from £195.7m to £139.9m as at 30 June 2023.
The blended costs of borrowing rose from 4.7% to 5.7%
as a result of rising finance costs on UIL’s bank facilities.
ZDP SHARES
On a consolidated basis the ZDP shares decreased
significantly from £140.8m to £94.6m, down 32.8%
mainly as a result of the repayment of the 2022 ZDP
shares which were redeemed in October 2022. UIL
continues to hold 2.3m 2026 ZDP shares and 0.6m 2028
ZDP shares as at 30 June 2023. With three ZDP issues,
UIL has spread the redemption liability over five years.
BANK AND OTHER DEBT
Bank and other loans decreased to £42.7m as at 30
June 2023 (30 June 2022: £51.1m). Scotiabank Europe
plc’s £50.0m committed senior secured multi-currency
revolving facility was extended in September 2022 to
19 September 2023 and novated to the Bank of Nova
Scotia, London Branch. The extension provided a
reduction in the facility of £12.5m on 30 March 2023,
and consequently the outstanding amount as at 30 June
13
UIL LimitedReport and Accounts for the year to 30 June 2023
INVESTMENT MANAGERS’ REPORT (continued)
TOP TEN COMPANIES AS AT 30 JUNE 2023
DISRUPTION
There continues to be significant disruption to business
models from blockchain to AI 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 these 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
22 September 2023
2023 under this facility was £37.5m. In September 2023,
the facility was extended to 19 March 2024, reducing to
£25.0m and it will step down in stages over the following
six months prior to a final repayment by 19 March 2024.
On 29 June 2023, Union Mutual Pension Fund Limited
loaned USD 6.6m to UIL. This loan is repayable on
30 September 2023.
REVENUE RETURNS
Revenue income for the year to 30 June 2023 increased
to £10.2m from £9.9m, an increase of 3.0%.
Management and administration fees and other
expenses were largely flat at £1.7m (30 June 2022:
£1.7m). Finance costs were significantly higher at £2.9m
for the year to 30 June 2023 from £1.1m in the prior
year, mainly as a result of higher finance costs feeding
through into the cost of funding.
Revenue profit decreased by 20.0% to £5.6m (30 June
2022: £7.0m) and EPS decreased by 20.0% to 6.68p
(30 June 2022: 8.35p) driven mainly by higher financing
costs.
CAPITAL RETURNS
Capital total income reported a loss of £44.0m (30 June
2022: loss of £136.3m) which was driven mainly by the
£40.3m loss on investments.
Finance costs reduced by 21.8% to £6.1m (30 June
2022: £7.8m) largely reflecting the lower number of ZDP
shares in issue following the redemption of the 2022
ZDP shares in October 2022.
The resultant capital return loss for the year to 30 June
2023 was £50.0m (30 June 2022: loss of £144.1m) and
EPS loss was 59.70p per ordinary share (30 June 2022:
loss of 171.68p).
EXPENSE RATIO
The ongoing charges figure, including and excluding
performance fees, was 2.8% for the year ended 30 June
2023 (30 June 2022: 2.2%). No performance fee was
earned at the UIL level or the platform companies.
All expenses are borne by the ordinary shareholders.
1
2
3
4
5
34.9%
17.9%
13.2%
5.8%
5.4%*
Somers Limited
Zeta Resources
Limited
Utilico Emerging
Markets Trust plc
Allectus Capital
Limited
Resimac Group
Limited
Financial Services
Resources
Investment Fund
Technology
Financial Services
A financial services
investment platform,
which primarily
invests in the
banking, wealth
management, fintech
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.
An investment
platform with a
growth-stage
portfolio of
technology
companies.
A lender for
residential mortgages
and asset finance in
Australia and New
Zealand.
107,687
Fair value £’000s
55,025
Fair value £’000s
40,641
Fair value £’000s
17,821
Fair value £’000s
16,657
Fair value £’000s
6
7
8
9
10
4.9%
4.8%
3.7%
2.1%
1.5%
West Hamilton
Holdings Limited
Allectus Quantum
Holdings Limited
The Market Herald
Limited
Arria NLG Limited
Littlepay Mobility
Limited
Investment Fund
Technology
Financial Services
Technology
Technology
A Bermuda
property holding
and management
company.
An investment
holding company
for Australia based
quantum computing
startup Diraq.
A multi-platform
and financial news
business operating in
Australia, Canada and
Germany, and the
owner of a number
of classified online
listing businesses.
An AI natural
language software
company.
A global provider
of payment
infrastructure
for transport and
mobility.
15,087
Fair value £’000s
14,666
Fair value £’000s
11,480
Fair value £’000s
6,602
Fair value £’000s
4,701
Fair value £’000s
Note: % relates to % of total investments
*15.4% on a look-through basis
14
15
UIL LimitedReport and Accounts for the year to 30 June 2023
MACRO TRENDS AFFECTING OUR PORTFOLIO
GEOPOLITICS AND GLOBALISATION
GOVERNANCE AND TRANSPARENCY
• 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, in particular, between
the US and China.
• 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 are expected to increase long term demand for
several commodities, including nickel, copper, lithium and graphite.
• Unprecedented increase in global government debt under the previous policy of
negative interest rates has led to significant inflation, driving gold investment as a
protection from fiat money debasement.
• Underinvestment in new oil and gas fields combined with sanctions on Russian energy
exports is leading to supply constraints and significant energy price inflation.
• Heightened risk to the 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 consumers driven by enhanced applications in sectors including
e-commerce, e-government, online education, telemedicine, communications and
media.
RESOURCES
DIGITALISATION
• 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 factors is
necessary.
• Reputational risk is 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.
• The sophistication and frequency of cyber-attacks are in the spotlight, with an increase
in enforcement of material financial and civil penalties related to cyber-crime and
inadequate protection of consumer data.
• There are also 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.
• Innovative solutions in fintech, which are disintermediating traditional financial sector
EMERGING MARKETS – URBANISATION AND GROWING MIDDLE CLASS
business models, 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.
FINANCIALS AND ARTIFICIAL INTELLIGENCE
• 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 AI, e.g. the introduction of open banking
will improve financial product efficiency.
• 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, railways, 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.
16
17
UIL LimitedReport and Accounts for the year to 30 June 2023 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 1.8bn of assets directly
under management and is responsible indirectly for a
further USD 22.9bn 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 16.5m to not-for-profit and
community organisations.
19
UIL LimitedReport and Accounts for the year to 30 June 2023
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 therefore 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 or where an individual risk has been
identified, 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 40. Set out below are examples of the approach taken with two of UIL’s
investments.
UK &
Channel Islands
19.2%
(13.8%)
Europe
(excluding UK)
5.4%
(7.9%)
Canada
5.7%
(5.3%)
Bermuda
9.5%
(4.8%)
USA
2.5%
(5.1%)
Africa
6.9%
(7.2%)
Latin
America
4.7%
(4.2%)
Gold Mining 0.0% (2022: 4.0%)
Figures in brackets as at 30 June 2022
Asia
6.0%
(10.5%)
Australia &
New Zealand
40.1%
(37.2%)
Source: ICM
A financial services investment
platform, which primarily
invests in the banking, wealth
management, fintech and asset
financing sectors.
A closed-end investment trust
primarily investing in under-
developed and developing
markets, within the energy,
utilities and telecom sectors.
ESG ANALYSIS:
ESG ANALYSIS:
Somers’ investment objective is to provide long-term
total return to its shareholders. To date Somers has
invested in banking, wealth management, fintech and
asset financing, and is focused on developed markets.
Somers generally aims to achieve a controlling position
in companies. By achieving this position, Somers has
a greater understanding of the investees and how
they conduct business. All investees are situated in
developed, well-regulated financial markets, meaning
the risk of sudden political or economic stability is
significantly reduced.
ICM ESG CONCLUSION:
Somers has a robust investment process that
incorporates ESG analysis. In February 2023 the
Somers' board approved a comprehensive Responsible
Investment Policy formalising the management of ESG
risks.
UEM has a sound investment approach which
considers ESG factors when selecting and retaining
investments. UEM looks to understand the relevant
ESG issues in conjunction with the financial, macro
and political drivers as part of its investment process,
populating a bespoke ESG framework. Where investees
are assessed as having a low ESG score, UEM’s
approach is to engage with the companies directly with
the objective of seeing improvements over time.
ICM ESG CONCLUSION:
UEM has embedded ESG into its investment process,
which gives visibility over the non-financial factors that
could affect the value of an investment. This not only
helps identify risks but also opportunities.
20
21
UIL LimitedReport and Accounts for the year to 30 June 2023 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%
0.5%
(2022: 94.2%) OF THE
GROUP’S TOTAL INVESTMENTS
(2022: 2.1%) OF THE GROUP’S
PORTFOLIO
29
(2022: 33)
1
2
VALUATION
24.2%
Sector
Fair Value
£’000s
Financial
Services
107,687
% of total
investments
34.9%
SHARE PRICE
7.6%
Sector
Resources
Fair Value
£’000s
55,025
% of total
investments
17.9%
Somers is a financial services investment holding company, whose
shares are listed on the Mezzanine Market of the Bermuda Stock
Exchange (“BSX”). Somers is managed by ICM.
As at 31 March 2023, Somers’ three largest investments, which make up
86.1% of its portfolio, were a 54.4% holding in Resimac, a leading non-bank
Australian financial institution, with AUD 14.5bn assets under management
(“AUM”), a 61.8% holding in Waverton Investment Management Limited
(a UK wealth manager with over £13.3bn funds under management and
administration), and a 39.8% holding in ICM Mobility, a UK holding company
focused on the mobility sector for private and public transport.
Resimac reported normalised profit after tax of AUD 73.7m for the year
ended 30 June 2023.
Somers shareholders’ equity was £281.7m as at 31 March 2023
(30 September 2022: £303.2m) and Somers’ NAV per share of £11.54 was
down 7.1% since 30 September 2022. Somers’ gearing ratio was 30.5% up
from 24.1% as at 30 September 2022. As at 30 June 2023, Somers’ fair value
had fallen further to £258.2m. The NAV decrease resulted principally from
currency losses and a decrease in the value of Somers’ largest investment,
Resimac, whose share price decreased 9.2% during Somers’ first half despite
continuing to report solid underlying performance. Somers is classified as an
investment company under IFRS 10 and, accordingly, values its underlying
investments at fair value.
Zeta is a resource-focused investment company, which is listed on the
ASX. Zeta is managed by ICM.
In the year ended 30 June 2023, Zeta’s NAV per share grew by 1.0%. Zeta’s
share price closed at a discount of 22.0% (30 June 2022: 18.1%) to NAV
per share. On 21 June 2023, Canadian listed Copper Mountain Mining
Corporation, Zeta’s second largest investment, was acquired by Canadian
listed Hudbay Minerals Inc creating the third largest copper producer in
Canada. Each Copper Mountain share was exchanged for 0.381 Hudbay
shares and remained Zeta’s second largest investment. In the year to
30 June 2023, gold and copper were up 6.2% and 0.7% respectively, whilst
nickel, aluminium and oil were down 10.0%, 12.8%, and 34.8% respectively.
Zeta’s copper and gold focused investments were its strongest performers
during the period under review, with Hudbay Minerals up 43.8% (accounting
for the acquisition), and Horizon Gold up 38.5% on the year. 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
relatively concentrated portfolio, having built up cornerstone shareholdings
in bauxite, nickel, gold and copper companies.
22
23
UIL LimitedReport and Accounts for the year to 30 June 2023 TEN LARGEST HOLDINGS (continued)
3
4
SHARE PRICE
7.7%
Sector
Investment
Fund
Fair Value
£’000s
40,641
% of total
investments
13.2%
VALUATION
26.0%
Sector
Technology
Fair Value
£’000s
17,821
% of total
investments
5.8%
UEM is a closed-end investment trust, whose ordinary shares are listed
on the premium segment of the Official List of the Financial Conduct
Authority and are traded on the Main Market of the London Stock
Exchange. UEM is managed by ICMIM and ICM.
UEM invests predominantly in emerging markets with a focus on
infrastructure and utility megatrends. In the twelve months to 30 June
2023, UEM’s NAV total return was up by 12.1% and again outperformed the
MSCI Emerging Markets total return Index (GBP adjusted) which declined by
2.6% during the same period. There were robust share price performances
at many of UEM’s investee companies within the utilities, infrastructure
and telecommunication sectors, most notably in its Brazilian assets which
benefitted from an improving economic outlook and the impending turn in
the interest rate cycle.
Pleasingly, UEM’s investee companies have continued to deliver resilient
cash flows supporting increased dividend payments. In the year to 30 June
2023, UEM’s share price increased by 7.7%, though disappointingly the
discount to NAV remained stubbornly wide at 14.0% from 13.9% as at
30 June 2022. Dividends per share increased to 8.45p from 8.00p.
UIL’s shareholding in UEM decreased by 39.6% during the year under review.
Allectus Capital is an unlisted investment company with a focused
portfolio of technology businesses and is managed by ICM.
Allectus Capital invests in early and growth-stage companies developing
potentially disruptive technologies. Its key verticals comprise of fintech, AI,
digital health and deep tech. Allectus Capital 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 Capital made several new investments during the year to 30 June
2023, which included MasterRemit (Australian company enabling the secure
cross border transfer of money), Q-CTRL (Australian quantum control
and sensing software platform) and YouPay (Australian gifting payments
provider). In July 2022, CohortGo, an Australian education payments
platform was sold to Flywire for cash consideration, in what represented an
excellent outcome for all shareholders and the business. Allectus Capital
also exited its investment in Limepay in July 2022 via redemption of a
convertible note. Nautilus, being Allectus Capital’s largest investment was
significantly impacted by negative sentiment in global capital markets and
rising interest rates due to its capital-intensive model and has been written
down by approximately 50%.
Allectus Capital continues to expand its deep tech and fintech mandates;
sectors which have currently depressed valuations but overall strong future
potential. Throughout 2023, Allectus Capital saw a significant slowdown on
financing rounds and downward pressure on pricing, hence management
focuses on identifying companies with product-market fit and strong unit
economics which can be sourced at value.
5
6
SHARE PRICE
23.5%
Sector
Financial
Services
Fair Value
£’000s
16,657
% of total
investments
5.4%
NEW ENTRY
Sector
Investment
Fund
Fair Value
£’000s
15,087
% of total
investments
4.9%
Resimac is an ASX listed residential mortgage lender and multichannel
distribution business specialising in prime and specialist mortgage
lending.
Resimac’s share price decreased 23.5% in the twelve months to 30 June 2023
despite continuing to report strong underlying operational performance.
Resimac’s share price reduction was consistent with the share price
decreases seen across the wider listed non-banking sector in Australia as the
market factored in the impact of higher interest rates and mortgage interest
margin pressure from the larger banks.
Resimac is considered one of Australia’s and New Zealand’s premier non-
bank lenders. 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. As at 30 June
2023, Resimac reported a total home loan AUM of AUD 13.1bn, a decrease
year on year of 14.0%. Resimac generated a normalised net profit after tax
for the year ended 30 June 2023 of AUD 73.7m. Net interest income for the
year was AUD 222.5m, a 7.0% decrease from 2022. Total loan settlements
during the year was AUD 4.2bn of which the asset finance division reported
settlements of AUD 482.0m and provisioning loan impairment expense
decreased to AUD 2.2m. During the year, Resimac issued AUD 2.4bn of
Australian and New Zealand Prime and Specialist RMBS.
West Hamilton is a BSX listed investment and management company
with property assets in Bermuda.
West Hamilton’s properties consist of the Belvedere Residences, a 308-space
car park facility and the Belvedere Building. The Belvedere Residences, a
mixed-use building is fully occupied with all commercial space let, seven
apartments let on leases and two apartments sold. The car park facility
is 100% occupied with a significant waiting list. The Belvedere Building
is approximately 80% occupied which in the post Covid-19 commercial
property environment with a great proportion of employees working from
home is positive. In March 2023, West Hamilton announced that it had
entered into an agreement which resulted in the sale of approximately
86% its property assets. Completion of the transaction is subject to several
conditions including Governmental approvals. For the year ended
30 September 2022, West Hamilton reported solid results with revenue of
USD 3.1m (2021: USD 3.1m) and net income for the year of USD 1.1m (2021:
USD 2.0m). Total assets at 30 September 2022 were USD 42.3m (2021: USD
50.4m).
24
UIL Limited
Report and Accounts for the year to 30 June 2023
25
TEN LARGEST HOLDINGS (continued)
7
8
VALUATION
533.6%
Sector
Technology
Fair Value
£’000s
14,666
% of total
investments
4.8%
NEW ENTRY
Sector
Financial
Services
Fair Value
£’000s
11,480
% of total
investments 3.7%
Allectus Quantum is an unlisted investment holding company with an
investment in Sydney-based quantum computing startup Diraq.
Diraq is building a quantum computing platform that leverages the advanced
manufacturing capabilities of the semiconductor industry. Diraq was spun
out of the University of New South Wales in May 2022 and is led by Professor
Andrew Dzurak who has over two decades of experience in the quantum
computing field, having invented Diraq’s approach to quantum computing
in 2004. Diraq has established foundational IP in quantum computing
hardware and is now focused on producing the technology at scale as it
works toward the long-term goal of providing commercial applications of
quantum computing. For the year to 30 June 2023, Diraq has seen technical
progress including publishing a new method to control qubits published in
the prestigious Nature Nanotechnology journal and has won grants worth
over AUD 10.0m. Diraq has increased its patents and patent applications
from 28 to 59 patents across key jurisdictions. In the coming year, Diraq will
continue to work towards its technical milestones as it aims to prove out its
technology at scale.
The valuation of Allectus Quantum has increased due to a rise in the fair
value of Diraq and additional investment by UIL.
TMH is a classified advertising and financial media company, operating
online listing marketplaces, financial news publishing and strategic
consultancy.
The most significant event for TMH during the year was the acquisition of
Adevinta’s Australian classifieds business, comprising Gumtree, Carsguide,
and Autotrader (collectively “GCA”) in October 2022 for AUD 87.0m. These
classified advertising businesses have significant potential to monetise their
customer base. In addition, TMH plans to introduce point-of-sale financing
options from select broker and lender partners. Consideration for the
deal was funded by two shareholder rights issues and a vendor loan note,
subsequently refinanced with Commonwealth Bank of Australia.
TMH recently released its full year to 30 June 2023 financial results, with
revenue AUD 81.6m and EBITDA AUD 12.0m, compared to AUD 25.8m and
AUD -1.9m, respectively, in 2022. Profits were negatively impacted by one-off
expenses associated with the acquisition of GCA, appeal to the Takeover
Panel, and restructuring of the financial news division. The latter is expected
to generate recurring cost-savings, equating to annualised EBITDA AUD 1.4m
in the year to 30 June 2024.
9
10
VALUATION
506.5%
Sector
Technology
Fair Value
£’000s
% of total
investments
6,602
2.1%
VALUATION
14.1%
Sector
Technology
Fair Value
£’000s
% of total
investments
4,701
1.5%
Arria is a Generative AI software provider, operating a mature
technology stack in the AI space for over a decade. Arria brings
language to data analytics, helping to improve understanding and
accelerate the ability to action data insights, in real-time, at scale.
Arria was originally a spin out from the University of Aberdeen, Scotland
in 2012. Now USA-centric in terms of teams and customers it is a provider
of AI technology for the quick service restaurant food sector and financial
services sector. The software converts data such as financial spreadsheets
into text, the primary use being automated financial and management
reporting. Following the acquisition of PING, Arria provides call answering
software that is both voice and text based for Dominos restaurants
across the USA. Arria reported revenues of USD 17.8m in its full year to
30 September 2022, and is forecasting revenues of USD 30.2m for the full
year to 30 September 2023. Arria is loss making and anticipates a negative
EBITDA in the USD 15-20m range for FY 2023. The current valuation of
Arria is derived on a last transaction basis of USD 1.25 per share and Arria
recently confirmed a bond issue, partially taken up, that held that valuation
per share as a minimum value. The AI software sector remains highly volatile
and the pricing of non-listed assets like Arria remains a challenge and may
be subject to change.
Littlepay provides payment services to the public transit sector
through its proprietary API-based modular payments platform.
The platform connects with various Europay, Mastercard and Visa readers,
fare systems and financial institutions, allowing transit operators, authorities
and agencies to implement a seamless multimodal contactless payment
system across a transport network, making fare payments simpler and
boarding faster for public transport users. Littlepay offers a range of
fare management and data analytics products as add-on solutions on
its platform. Littlepay is working with over 250 transit providers globally
and has implemented contactless ticketing systems from small, regional
operators up to multi-modal, city-wide networks and national rollouts.
In FY23, Littlepay has increased payment transactions processed by over
40.0% to more than 200m transactions. This has resulted in revenue
increasing by over 20%, although average transaction value has reduced due
to UK fare-capping policies. Littlepay has a strong pipeline of projects going
live in FY24 which is expected to drive Littlepay’s top-line growth including
Transport for NSW, Tuscany, Bordeaux and Lima adding to its existing base
in the UK, Sweden, Finland and California. Littlepay is investing significantly
in expanding its team to build for scalability and robustness in its operations
as processing volumes continue to grow rapidly, distinguishing itself from
any emerging competitors.
26
UIL Limited
Report and Accounts for the year to 30 June 2023
27
CAPITAL STRUCTURE
UIL has a geared 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 2023 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.
2024 ZDP SHARES
30,000,000 2024 ZDP shares were in issue as at
30 June 2023. 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 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 2023, 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 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 2023, 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 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 AND OTHER LOANS
As at 30 June 2023, UIL had a £37.5m multi-currency
loan facility provided by the Bank of Nova Scotia,
secured against the Company’s assets by way of a
debenture, which was fully drawn. UIL has agreed with
the Bank of Nova Scotia to extend its committed senior
secured multi-currency facility to 19 March 2024. The
facility has been reduced from £37.5m to £25.0m and
will step down in stages over the next six months prior
to a final repayment by 19 March 2024.
On 29 June 2023, Union Mutual Pension Fund Limited
loaned USD 6.6m to UIL. This loan is repayable on
30 September 2023.
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 and other loans such that they represent a
geared instrument. For every £100 of gross assets of
the Company as at 30 June 2023, the ordinary shares
could be said to be interested in £54.97 of those assets
after deducting the prior claims as above. This makes
the 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 1.8%.
The interest cost of UIL’s bank and other loans,
combined with the annual accruals in respect of ZDP
shares, represents a blended rate of 5.7% as at 30 June
2023.
Based on their final entitlement of 138.35p per share,
the final entitlement of the 2024 ZDP shares was
covered 3.57 times by gross assets as at 30 June
2023. Should the gross assets fall by 72.0% over the
remaining life of the 2024 ZDP shares, then the 2024
ZDP shares would not receive their final entitlement
in full. Should gross assets fall by 85.4%, equivalent
to an annual fall of 76.2%, the 2024 ZDP shares would
receive no payment at the end of their life.
Based on their final entitlement of 151.50p per share,
the final entitlement of the 2026 ZDP shares was
covered 2.49 times by gross assets as at 30 June
2023. Should the gross assets fall by 59.8% 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 72.0%, equivalent to an
annual fall of 31.7%, 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 1.90 times by gross assets as at 30 June
2023. Should the gross assets fall by 47.5% 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 59.8%, equivalent
to an annual fall of 15.7%, the 2028 ZDP shares would
receive no payment at the end of their life.
SPLIT OF GROSS ASSETS
as at 30 June 2023
by value
by percentage
CONSOLIDATED FUNDING COST STRUCTURE
as at 30 June 2023
6.84%
£167.6m
Ordinary shares
54.97%
£26.8m
2028 ZDP shares
£29.0m
2026 ZDP shares
8.79%
9.51%
£38.8m
2024 ZDP shares
12.73%
£42.7m
Bank and other loans
14.00%
5.75%
5.65%
5.00%
4.75%
Bank and
other
loans
2024
ZDP
shares
2026
ZDP
shares
2028
ZDP
shares
Blended
cost of
prior
charges
to
ordinary
shares
28
28
UIL Limited
Report and Accounts for the year to 30 June 2023
29
UIL Limited 30 June
2023
30 June
2022
% change
2023/22
TOTAL BORROWINGS
ZDP SHARES
ZDP SHARES1 (pence)
2022 ZDP shares
Capital entitlement2 per ZDP share
ZDP share price
2024 ZDP shares
Capital entitlement2 per ZDP share
ZDP share price
2026 ZDP shares
Capital entitlement2 per ZDP share
ZDP share price
2028 ZDP shares
Capital entitlement2 per ZDP share
ZDP share price
(1) Issued by UIL Finance, a wholly owned subsidiary of UIL
(2) See pages 28 and 29
GEARING/NAV TOTAL RETURN
from 30 June 2016 to 30 June 2023
n/a
n/a
130.04
123.50
128.75
114.50
113.02
96.50
143.98
144.00
124.14
122.50
122.62
115.50
106.87
99.00
n/a
n/a
4.8
0.8
5.0
(0.9)
5.8
(2.5)
1,000
(
p
e
n
c
e
)
900
800
700
600
500
400
300
200
100
0
)
%
(
120
100
80
60
40
20
0
Jun 16
Jun 17
Jun 18
Jun 19
Jun 20
Jun 21
Jun 22
Jun 23
Gearing (%)
NAV total return (pence)*
*Rebased to 100 as at 14 August 2003
Source: ICM
TOTAL ZDP SHARES
ISSUED SINCE INCEPTION
TOTAL ZDP SHARES
REDEEMED SINCE INCEPTION
£379.5m
£466.4m
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
Total
Jun 2016
£’000s
Jun 2017
£’000s
Jun 2018
£’000s
Jun 2019
£’000s
Jun 2020
£’000s
Jun 2021
£’000s
Jun 2022
£’000s
Jun 2023
£’000s
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
197,361
173,778
199,354
159,942
180,535
132,073
140,813
38,765
29,005
26,819
94,589
Bank and other debt*
24,813
47,846
28,495
50,971
54,402
45,437
54,907
45,329
Total debt
222,174
221,624
227,849
210,913
234,937
177,510
195,720
139,918
Blended interest rate %
6.5
6.2
6.1
5.5
5.2
4.5
4.7
5.7
*includes net bank overdrafts
Source: ICM
ZDP SHARES – TIMES COVERED BY UIL’S GROSS ASSETS*
2014 ZDP
2016 ZDP
2018 ZDP
2020 ZDP
2022 ZDP
2024 ZDP
2026 ZDP
2028 ZDP
Jun 2016
Jun 2017
Jun 2018
Jun 2019
Jun 2020
Jun 2021
Jun 2022
Jun 2023
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
3.57
2.49
1.90
* 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, BANK AND
OTHER DEBT AS AT
30 JUNE 2023
GEARING AS AT
30 JUNE 2023
TOTAL NET DEBT
DECREASE DURING THE
YEAR
AVERAGE COST OF
DEBT FUNDING
£139.9m
83.5%+
£55.8m
5.7%
+ See Alternative Performance Measures on pages 109 to 111
30
30
UIL Limited
Report and Accounts for the year to 30 June 2023
31
UIL Limited
STRATEGIC REPORT
PRINCIPAL ACTIVITY
UIL carries on business as an investment company and
its principal activity is portfolio investment.
INVESTMENT OBJECTIVE
UIL’s investment objective is to maximise shareholder
returns by identifying and investing in investments
worldwide where the underlying value is not fully
recognised.
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 Regulations 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
fully recognised. 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%
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% limit and provided that no single
investment held by such Platform will exceed 30%.
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.
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).
As at 30 June 2023 the Company’s £37.5m senior
secured multicurrency revolving facility with the Bank of
Nova Scotia was fully drawn. Further details are included
in note 13 to the accounts. UIL has agreed with the Bank
of Nova Scotia to extend its committed senior secured
multi-currency facility to 19 March 2024. The facility
has been reduced from £37.5m to £25.0m and will step
down in stages over the next six months prior to a final
repayment by 19 March 2024.
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 2023 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
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.
•
•
•
Share price
Share price discount to NAV
Revenue earnings
• Ongoing charges figure
32
32
UIL Limited
Report and Accounts for the year to 30 June 2023
33
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 109 to 111.
30 June
NAV total return (%)
2023
(20.6)
2022
(38.1)
FTSE All-Share total return Index (%)
7.9
1.6
Share price (pence)
145.00
187.50
Discount to NAV (%)
27.5
28.1
Percentage of issued shares bought
back during the year (based on opening
share capital) (%)
Revenue EPS (pence)
Ongoing charges figure – excluding
performance fees (%)
0.0
6.68
0.5
8.35
2.8
2.2
A graph showing the NAV total return performance
compared to the FTSE All-Share total return Index can
be found on page 3. The ten year record on page 112
shows historic data for the Company.
Discount to NAV: The Board monitors the premium/
discount at which the Company’s shares trade in relation
to the assets. During the year the Company’s shares
traded at a discount relative to NAV in a range of 25.1%
to 41.4% 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, although no ordinary shares were bought
back during the year ended 30 June 2023.
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 2023.
The fourth quarterly dividend will be paid on 13 October
2023 to shareholders on the register as at 29 September
2023. The total dividend for the year was 8.00p per
share (2022: 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
2023, 56.0% 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 2022).
Maximum use is made of market-based information and
the valuation methodologies used are those generally
used by market participants. Valuations are compliant
with IFRS fair value guidelines and guidelines issued by
the IPEV valuation board, which set out recommended
practice for fair valuing of unlisted investments
within the IFRS framework. The valuation of unlisted
investments requires the exercise of judgment, and
every effort is made to ensure that this judgment is
applied objectively and is not used to overstate or
understate the valuation result.
The Board reviews the unlisted valuations at each
meeting and in conjunction with UIL’s external financial
reporting process. The Board receives a detailed
report from the Investment Managers’ valuation
team recommending a proposed valuation for each
of UIL’s investments. The report includes details of
all material valuations, explanations for movements
and confirmation of the valuation process adopted.
Representatives of the Investment Managers are in
attendance at these meetings to answer any questions
the Board may have on the valuation process and the
choice of valuation techniques and inputs. The Board
reviews and challenges the assumptions behind the
unlisted asset valuations.
VALUATION METHODOLOGIES
The valuation of unlisted investments is normally
determined by using one of the following valuation
methodologies and, depending on the investment and
relevance of the approach, any or all of these valuation
methods could be used.
Earnings Multiples
This valuation methodology is used where the
investment is profitable and where a set of comparable
listed companies with similar characteristics to its
holding can be determined. As several investments are
not traded on an active market, the valuations are then
adjusted by a liquidity discount with the discount varying
depending on the nature of the underlying investment
entity and its sector and whether restrictions exist
on UIL’s ability to sell the asset in an orderly fashion.
In certain instances, UIL may use a revenue multiple
approach if this is deemed more appropriate.
It is UIL’s policy to use reported earnings adjusted for
non-recurring items, which are typically sourced from
the investee companies’ management accounts or
audited financial reports. In certain cases, current or
projected maintainable earnings provide a more reliable
indicator of the company’s performance and in these
instances an estimate of maintainable earnings is used
in the valuation calculation.
Multiples are derived from comparable listed companies
in the same business sector. Adjustments are made for
relative performance versus the comparables and other
company specific factors including size, product offering
and growth rates.
34
UIL Limited
Report and Accounts for the year to 30 June 2023
35
STRATEGIC REPORT (continued)
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 2023, 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, geo-political confrontations, 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 focused on reducing the discount at which they trade. The Board may agree to
buy back shares if there is a significant overhang of stock in the market; it targets a
discount to NAV of approximately 20% over the medium term.
The Company’s
shares may trade at
a discount to their
NAV and a widening
discount may
undermine investor
confidence in the
Company.
36
UIL Limited
Report and Accounts for the year to 30 June 2023
37
STRATEGIC REPORT (continued)
The Company’s main service providers are listed on page 108. The Audit & Risk
Committee monitors the performance and controls (including business continuity
procedures) of the key 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 key 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 2023, gearing on net assets, including bank loans, any overdrafts and ZDP
shares, was 83.5% (30 June 2022: 89.5%). 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 the Company's prospects and
outlook, 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
£122.1m ultimate liability in respect of the 2024 and
2026 ZDP shares and its bank and other debt. The
Investment Managers remain focused on reducing risk
and helping investee companies navigate through the
current challenging environment and emerge stronger.
The Board is also 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.
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 UK Companies Act 2006. This requires the Directors
to have a duty to promote the success of the Company for
the benefit of its members as a whole and includes having
regard (amongst other matters) to fostering relationships
with the Company’s stakeholders and maintaining a
reputation for high standards of business conduct.
As an externally managed investment company, UIL
has no employees, customers, operations or premises.
Therefore, the Company’s key stakeholders (other than its
shareholders) are considered to be its service providers,
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 the Investment Managers
and its other service providers in a collaborative and
collegiate manner, whilst also ensuring that appropriate
and regular challenge is brought, and evaluation
conducted. The aim of this approach is to enhance
service levels and strengthen relationships with a view
to ensuring the interests of the Company’s shareholders
are best served by keeping cost levels proportionate and
competitive, and by maintaining the highest standards of
business conduct.
The Directors aim to act fairly as between the Company’s
shareholders and the approach to shareholder relations
is summarised in the Corporate Governance Statement
on pages 52 to 56. The Chairman is available to meet
with shareholders as appropriate and the Investment
Managers meet regularly with shareholders and their
respective representatives, reporting back on views to
the Board. Shareholders may also communicate with
the Company at any time by writing to the Board at the
38
UIL Limited
Report and Accounts for the year to 30 June 2023
39
39
Report and Accounts for the year to 30 June 2023 STRATEGIC REPORT (continued)
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 extension of the Company’s senior secured
multicurrency revolving facility with Bank of Nova
Scotia, London Branch in September 2022 for 12
months;
the realisation of investments in advance of the
redemption of the 2022 ZDP shares on 31 October
2022;
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.
RESPONSIBLE INVESTMENT 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 their 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 questions and expectations that
the Investment Managers have of companies stays
consistent. This is regardless of the size of company,
sector or geographical location.
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. Once
identified, many investees 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 strategies are in
place. Where this is data is not disclosed, the Investment
Managers will engage with the investee to ensure that the
correct data is captured. To manage individual ESG risks
the Investment Managers will capture or ask the investee
if not disclosed, how the company is managing the 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 few 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.
Company considers itself to be a low energy user under
the SECR regulations and therefore is not required to
disclose energy and carbon information.
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. Voting
proposals are reviewed carefully with final execution
taking into consideration the analysis and engagement
completed. As referred to previously, the Investment
Managers believe that governance factors are
fundamental to an investment.
ICM is a signatory to the United Nations-supported
Principles of Responsible Investment, which is an
international network of investors working together to
implement its six aspirational principles. The Investment
Managers believe that good stewardship is essential and
these principles align with their philosophy to protect and
increase the value of UIL's investments.
MODERN SLAVERY ACT
Due to the nature of the Company’s business, being
a company that does not offer goods and services to
customers, the Board considers that it is not within the
scope of the Modern Slavery Act 2015 because it has no
turnover. The Company is therefore not required to make
a slavery and human trafficking statement. In any event,
the Board considers the Company’s supply chains, dealing
predominantly with professional advisers and service
providers in the financial services industry, to be low risk
in relation to this matter.
GENDER DIVERSITY
The Board consists of three male directors and one
female director. The Company has no employees and
therefore there is nothing further to report in respect
of gender representation within the Company. The
Company’s policy on diversity is detailed in the Corporate
Governance Statement on page 55.
GREENHOUSE GAS EMISSIONS AND STREAMLINED
ENERGY AND CARBON REPORTING (“SECR”)
All the Company’s activities are outsourced to third
parties. The Company therefore has no greenhouse gas
emissions to report from its operations. In addition, the
BRIBERY ACT
The Company has a zero tolerance policy towards bribery
and is committed to carrying out business fairly, honestly
and openly. The Investment Managers also adopt a zero
tolerance approach and have policies and procedures in
place to prevent bribery.
CRIMINAL FINANCE ACT
The Company has a commitment to zero tolerance
towards the criminal facilitation of tax evasion.
SOCIAL, HUMAN RIGHTS AND COMMUNITY MATTERS
As an externally-managed investment company, the
Company does not have any employees or maintain any
premises. It therefore has no material, direct impact on
the environment or any particular community and the
Company itself has no environmental, human rights,
social or community policies. The Board notes the
Investment Managers’ policy statement in respect of
Environmental, Social and Governance issues, as outlined
on page 40.
OUTLOOK
The Board’s main focus is on the achievement of the
Company’s objective of delivering a long-term total return
and the future of the Company is dependent upon the
success of its investment strategy. The outlook for the
Company is discussed in the Chairman’s Statement
and the main trends and factors likely to affect the
future development, performance and position of the
Company’s business can be found in the Investment
Managers’ Report.
This Strategic Report was approved by the Board of
Directors on 22 September 2023.
By order of the Board
ICM Limited
Company Secretary
22 September 2023
40
UIL Limited
Report and Accounts for the year to 30 June 2023
41
INVESTMENT MANAGERS AND TEAM
ICMIM, a company authorised and regulated by
the FCA, was the Company’s AIFM during the year
ended 30 June 2023 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
£1.8bn
IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER USD 22.9BN 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 and H.R.L Morrison & Co
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-five 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. 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 leads the team responsible for the ICM Mobility
Group. 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.
Tristan Kingcott is responsible for ICM Canada, based in Vancouver. He is the fund manager for
Zeta Resources Limited and is focused on the resources sector worldwide and on the technology
and financial services sectors in North America. He has over twelve years’ experience in financial
and commercial analysis. Mr Kingcott is currently a non-executive director of Terra Firma Capital
Corp, and several unlisted companies. Mr Kingcott is a CFA Charterholder and a Member of the CFA
Society in Vancouver.
FIXED INCOME
ICM MOBILITY
RESOURCES
42
UIL Limited
Report and Accounts for the year to 30 June 2023
43
INVESTMENT MANAGERS AND TEAM (continued)
DIRECTORS
TECHNOLOGY
Jason Cheong leads the investment team at Allectus Capital Limited and holds various technology
portfolio directorships. He has thirteen years’ experience in private markets investing across
venture capital and private equity in Australia and the United Kingdom. Prior to joining ICM, he was
a private equity investor at Brookfield Asset Management and a mergers and acquisitions lawyer at
Baker & McKenzie, LLP. Mr Cheong is a qualified solicitor, admitted to practice in Australia.
Matthew Gould is responsible for ICM's quantum endeavour. He has experience across a range of
emerging technologies including Artificial Intelligence, Virtual Reality, and Fintech. Prior to joining
ICM, he was CEO of Arria NLG Limited, an AI software company. Mr Gould was with Hewlett Packard
("HP") where he led the Emerging Technologies practice, before transferring as the Chief Strategy
Officer for HP’s Professional Services division. He is a registered financial advisor and member of
the Institute of Directors, New Zealand.
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 significant 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.
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. 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.
DAVID SHILLSON
David Shillson, LLM (Hons), who was appointed a Director in November 2015, is an
experienced corporate and commercial lawyer and a senior partner of Dentons
Kensington Swan, the New Zealand member of Dentons, the global law firm. He has
acted for a variety of clients, particularly in acquisitions and investment structuring,
advising on transactional and governance matters across the utilities, transport,
energy, technology and finance sectors. Mr Shillson is a member of the New Zealand
Law Society and the New Zealand Institute of Directors.
* Independent Director and member of the Audit & Risk Committee and Management Engagement Committee
44
UIL Limited
Report and Accounts for the year to 30 June 2023
45
45
Report and Accounts for the year to 30 June 2023 DIRECTORS’ REPORT
The Directors present the Annual Report and Accounts
of the Company for the year ended 30 June 2023.
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 2023, 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
22 December 2022, 31 March 2023 and 26 June 2023.
A dividend of 2.00p per share was declared on
19 September 2023 for payment on 13 October 2023
to shareholders on the register as at 29 September
2023. 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.
20.5% of the total portfolio as at 30 June 2023 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 four non-executive Directors who
oversee and monitor the activities of the Investment
46
46
UIL Limited
Report and Accounts for the year to 30 June 2023
47
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 52 to 56, forms part of this Directors’ Report.
The Directors have a range of business, financial and
asset management skills as well as experience relevant
to the direction and control of the Company. Brief
biographical details of the members of the Board are
shown on page 45. All the Directors are independent
other than Mr Shillson, who is a partner of Dentons
Kensington Swan, a New Zealand law firm which has
acted for members of the UIL and ICM groups.
UIL’s Bye-laws require that a Director shall retire
and be subject to re-election at the first AGM after
appointment and at least every three years thereafter.
However, in accordance with the AIC Code of Corporate
Governance, all the directors are subject to annual
re-election.
The nature of an investment company and the
relationship between the Board and the Investment
Managers are such that it is considered unnecessary
to identify a senior independent director. Any of the
Directors is available to shareholders if they have
concerns which have not been resolved through the
normal channels of contact with the Chairman or the
Investment Managers, or for which such channels are
inappropriate.
The duty to Promote the Success of the Company
section on pages 39 and 40 forms part of this
Directors' Report.
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 2023 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 2023 no ordinary shares were
purchased by the Company. The current authority
to repurchase shares was granted to Directors on
10 November 2022 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 10% 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 63,179,727 ordinary shares (75.4%
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 2023.
Ordinary Resolution 2 – Approval of the Directors’
Remuneration Policy
This resolution is to approve the Directors’
Remuneration Policy which, if passed, will be effective
with immediate effect and will apply until it is next
put to shareholders for approval, which must be at
intervals of not more than three years.
Ordinary Resolution 3 – Approval of the Directors’
Remuneration Report
This resolution is an advisory vote on the Directors’
Remuneration Report.
Ordinary Resolution 4 – 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.
48
UIL Limited
Report and Accounts for the year to 30 June 2023
49
DIRECTORS’ REPORT (continued)
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.
Ordinary Resolutions 5 to 8 (inclusive) – Re-election of
Directors
The biographies of the Directors are set out on page
45 and are incorporated into this report by reference.
Resolution 5 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 6 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 7 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 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 2024.
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 8,384,000 ordinary
shares (representing approximately 10% 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 2024 unless renewed prior to
that date at an earlier general meeting.
Resolution 12 is a special resolution and will require
the approval of a 75% majority of votes cast in respect
of it.
RECOMMENDATION
The Board considers that each of the resolutions to be
proposed at the AGM is likely to promote the success
of the Company for the benefit of its members as a
whole and are in the best interests of the Company
and its shareholders as a whole. The Directors
unanimously recommend that shareholders vote in
favour of these resolutions as they intend to do in
respect of their own beneficial holdings.
By order of the Board
ICM Limited
Secretary
22 September 2023
50
UIL Limited
Report and Accounts for the year to 30 June 2023
51
CORPORATE GOVERNANCE STATEMENT
THE COMPANY‘S CORPORATE GOVERNANCE FRAMEWORK
Corporate Governance is the process by which the board of directors of a company protects shareholders’
interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible for the
stewardship of a company’s affairs, delegating authority and responsibility to the directors to manage the company
on their behalf and holding them accountable for its performance. Responsibility for good governance lies with
the Board. The Board considers the practice of good governance to be an integral part of the way it manages
the Company and is committed to maintaining high standards of financial reporting, transparency and business
integrity.
The governance framework of the Company reflects the fact that, as an investment company, it has no full-time
employees and outsources its activities to third party service providers.
THE BOARD
Four 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 2023, 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 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.
52
53
UIL LimitedReport and Accounts for the year to 30 June 2023 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
2/2
3
3
3
3
3
2/2
n/a
1
1
1
1
1
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
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 2023, 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 2023 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 supports the
principles of boardroom diversity, including gender
and ethnicity, progressive refreshing and succession
planning and such matters are discussed by the Board
as a whole at least annually. The Company’s policy is
that the Board should be comprised of directors with
a diverse range of skills, knowledge and experience
and that any new appointments should be made on
the basis of merit, against objective criteria including
diversity. Listing Rule 9.8.6, against which the Company
has agreed to comply voluntarily, requires companies
to report against the following three diversity targets:
(i) At least 40% of individuals on the board are
women;
(ii) At least one of the senior board positions (defined
in the Listing Rules as the chair, CEO, SID and CFO)
is held by a woman; and
(iii) At least one individual on the board is from a
minority ethnic background.
As at 30 June 2023, UIL’s Board consists of three
men and one woman and UIL does not comply with
targets (i) and (iii). As provided for in the Listing Rules,
investment companies do not need to report against
target (ii) if it is inapplicable. The Board believes
that, since UIL is an externally managed investment
company which does not have executive management
functions, including the roles of CEO or CFO, this target
is not applicable.
The Board has chosen to align its diversity reporting
reference date with the Company’s financial year end.
As required by the Listing Rules, further details in
relation to the three diversity targets are set out in
the tables below. The information was obtained by
asking each of the Directors how they wished to be
categorised for the purposes of these disclosures:
Number
of Board
members
Percentage
of the
Board
Number of senior
positions on
the Board (CEO,
CFO, SID, Chair)
3
1
–
–
75%
25%
–
–
Not applicable*
Number
of Board
members
Percentage
of the
Board
Number of senior
positions on
the Board (CEO,
CFO, SID, Chair)
Not applicable*
4
–
–
–
–
–
100%
–
–
–
–
–
30 June 2023
Men
Women
Other
Not specified/
prefer not to say
30 June 2023
White British
or other White
(including
minority-white
groups)
Mixed/Multiple
Ethnic Groups
Asian/Asian
British
Black/African/
Caribbean/Black
British
Other ethnic
group, including
Arab
Not specified/
prefer not to say
* This column is inapplicable as the company is externally managed
and does not have executive management functions, specifically it
does not have a CEO , CFO.
Whilst the current composition of the Board does not
satisfy targets (i) and (iii), the Board will continue to
have regard to boardroom diversity, including gender
and ethnicity, during its consideration of succession
planning and future Board appointments.
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
54
55
UIL LimitedReport and Accounts for the year to 30 June 2023 CORPORATE GOVERNANCE STATEMENT (continued)
DIRECTORS’ REMUNERATION REPORT
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
as an appropriate process is in place; this will, however,
be kept under review.
RELATIONS WITH SHAREHOLDERS
UIL welcomes the views of shareholders and
places great importance on communication with
shareholders.
The prime medium by which the Company
communicates with shareholders is through the
half-yearly and annual financial reports, which aim to
provide shareholders with a full understanding of the
Company’s activities and its results. This information
is supplemented by the calculation and publication,
via a Regulatory Information Service, of the NAV of the
Company’s shares and by monthly fact sheets produced
by the Investment Managers. Shareholders can visit
the Company’s website: www.uil.limited in order to
access copies of half-yearly and annual financial reports,
factsheets and regulatory announcements.
The Investment Managers hold meetings with the
Company’s largest shareholders and report back
to the Board on these meetings. The Chairman and
other Directors are available to discuss any concerns
with shareholders, if required and shareholders may
communicate with the Company at any time by writing
to the Board at the Company’s registered office or
contacting the Company’s broker.
By order of the Board
ICM Limited
Company Secretary
22 September 2023
The Board presents the report on Directors’
remuneration for the year ended 30 June 2023. 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.
DIRECTORS’ REMUNERATION POLICY
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.
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 2024 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
2024
£’000s
2023*
£’000s
52.5
38.9
50.2
50.0
37.0
47.8
VOTING AT ANNUAL GENERAL MEETING
A resolution to approve the Remuneration Report was
put to shareholders at the AGM of the Company held
on 10 November 2022. Of the votes cast, 99.96% were
in favour and 0.04% 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
forthcoming AGM.
56
57
UIL LimitedReport and Accounts for the year to 30 June 2023 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 2023.
Year ended
30 June
Peter Burrows
Stuart Bridges
Alison Hill
Christopher Samuel1
David Shillson
Total
2023
£
2022
£
50,000
47,600
47,750
45,500
37,000
35,200
33,917
35,200
37,000
35,200
205,667
198,700
(1) Mr Samuel retired from the Board on 31 May 2023
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 Burrows1
Stuart Bridges
Alison Hill
Christopher Samuel
David Shillson
2023
%
2022
%
2021
%
2020
%
5.0
4.9
5.1
5.1
5.1
3.5
3.4
3.5
3.5
3.5
100.0
(48.9)
0.0
0.0
0.0
0.0
n/a
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
2023 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
2023
£’000s
2022
£’000s
CHANGE
£’000s
206
6,708
–
199
6,714
1,227
7
(6)
(1,227)
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 Bridges2
Alison Hill2
Christopher Samuel
David Shillson
2023
2022
909,617
909,617
182,007
159,736
116,511
99,254
228,4191
219,998
159,069
141,812
(1) As at 31 May 2023, the date Mr Samuel retired from the Board
(2) Since the year end, Mr Bridges and Ms Hill have each acquired,
respectively, a further 8,025 and 6,218 ordinary shares
The graph below compares, for the ten years ended 30 June 2023, the ordinary share price total return (see
page 109) 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 2013 to 30 June 2023 (rebased to 100 as at 30 June 2013)
350
300
250
200
150
100
50
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Ordinary share price total return
FTSE All-Share total return Index
Source: ICM
On behalf of the Board
Peter Burrows
Chairman
22 September 2023
58
UIL Limited
Report and Accounts for the year to 30 June 2023
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 2023.
ROLE AND RESPONSIBILITIES
STUART BRIDGES
Chairman of the Audit
& Risk Committee
UIL has established a
separately chaired Audit
& Risk Committee whose
duties include considering
and recommending to the
Board for approval the
contents of 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
auditor’s 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 2023, 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 auditor’s
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
auditor;
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 2023
(2022: £12,000) 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 2023 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 2023 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 2023
61
AUDIT & RISK COMMITTEE REPORT (continued)
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the Annual Report and Financial Statements
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.
WHISTLEBLOWING POLICY
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.
INTERNAL AUDIT
Due to the nature of the Company, being an externally
managed investment company with no executive
employees, the Company does not have its own
internal audit function. The Committee and the Board
have concluded that there is no current need for such
a function, based on the satisfactory operation of
controls within the Company’s service providers.
Stuart Bridges
Chairman of the Audit & Risk Committee
22 September 2023
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;
the extent of quality controls including review
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;
audit communication including planning, relevant
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 2023, 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
management, which continue to serve as an effective
62
UIL Limited
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 have decided to prepare voluntarily a Directors’
Remuneration Report in accordance with Schedule 8 to
The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 made under the
UK Companies Act 2006, as if those requirements applied
to the Company. The Directors have also decided to prepare
voluntarily a Corporate Governance Statement under the UK
Corporate Governance Code as if the Company were required
to comply with the Listing Rules of the Financial Conduct
Authority applicable to UK premium listed companies.
The Directors 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:
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.
•
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 controls 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 are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the UK and Bermuda
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN
RESPECT OF THE ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
•
•
the financial statements, prepared in accordance with
the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
the Strategic Report and Directors’ Report include a
fair review of the development and performance of
the business and the position of the Company, and the
undertakings included in the consolidation taken as a
whole, together with a description of the principal risks
and uncertainties that they face.
We consider the annual report and accounts, taken as a
whole, is fair, balanced, and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Approved by the Board and signed on its behalf by:
Peter Burrows
Chairman
22 September 2023
Report and Accounts for the year to 30 June 2023
63
63
Report and Accounts for the year to 30 June 2023 Independent
auditor’s report
Overview
Materiality:
group financial
statements as a whole
£3.1m (2022:£4.1m)
1% (2022: 1%) of group total
assets
Coverage
100% (2022:100%) of group total
assets
Key audit matter
vs 2022
Recurring risk
Valuation of certain level
3 investments
◄►
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 2023 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
2023 and of the Group’s and Parent Company’s
losses 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.
We have fulfilled our ethical responsibilities under, and
we are independent of the Group in accordance with,
UK ethical requirements including the FRC Ethical
Standard as applied to listed entities.
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 (unchanged from 2022), in arriving at our audit opinion above. This matter
was addressed, in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, 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 investments of
£172.6m; 2022: £238.9m)
Refer to page 61 (Audit & Risk
Committee Report), page 77
(accounting policy) and pages 82,83 &
101 - 104 (financial disclosures).
The risk
Subjective valuation:
Certain of the unlisted investments within
the total unlisted investments balance of
£172.6 million are subject to significant
inherent estimation uncertainty in
determining their valuation.
Unlisted investments are measured at fair
value, which is determined by reference to
the International Private Equity and Venture
Capital Valuation Guidelines by using
measurements of value such as prices of
recent orderly transactions, milestone
analysis, revenue multiples and valuing
interest by reference to their reported Net
Asset Value.
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.
We assessed that there is a significant risk
associated with this matter due to the
quantum of the balance, and the level of
judgement associated with certain
unobservable inputs. Therefore this is one
of the key areas that our audit has focused
on.
The financial statements note 29 discloses
the range/sensitivity estimated by the
Group for all level 3 investments held.
Our response
We performed the tests below rather than seeking
to rely on any of the Group’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:
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;
Our valuation experience: We challenged the
investment manager on key judgements affecting
investee company valuations, such as discount rate
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
pertaining to the external valuation report and
assessed the competence of the surveyor. 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 occur
subsequent to the year end until the date of this
report;
Historical comparisons: We assessed investment
valuations, comparing current period valuations and
movement to prior period valuations in the absence
of any sales or listings, to understand the reasons
for significant variances and determine whether
they are indicative of bias or error in the Company’s
approach to valuations. A retrospective review of
prior period audited accounts, in comparison to
prior period management accounts, is also
undertaken to assess the accuracy of management
information provided.
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;
Our corporate finance expertise: We utilised the
expertise of KPMG Corporate Finance specialists to
assist the audit team in assessing specific areas, such
as evaluating the appropriateness of comparable
companies for a selection of unlisted investments
and the appropriateness of valuation methodology;
and
64
65
2. Key audit matters: our assessment of risks of material misstatement (cont.)
4. Going concern
5. Fraud and breaches of laws and regulations – ability to detect
The risk
Our response
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.
3. Our application of materiality and an overview of the scope of
our audit
Total Assets
£m 313.8 (2022: £417.5m)
Group materiality
£3.1m (2022: £4.1m)
£3.1m
Whole financial
statements materiality (2022:
£4.1m)
£2.0 million
Whole financial
statements performance
materiality (2022: £2.66m)
£0.28million
Investment and other income
materiality (2022: £0.35m)
£0.16m
Misstatements reported to the
Audit & Risk Committee (2022:
£0.21million)
Total assets
Group materiality
Materiality for the Group financial statements as a whole was set
at £3.1m (2022: £4.1m), determined with reference to a
benchmark of total assets of which it represents 1% (2022: 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% (2022: 65%) of materiality
for the financial statements as a whole, which equates to £2.0m
(2022 : £2.6m). 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 £0.28m (2022: £0.35 million)
and performance materiality of £0.18m (2022: £0.26m) 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 £3.0m (2022: £4.0m). 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 (2022: 0.95%). Performance
materiality was set at 65% (2022 : 65%) of materiality for the
financial statements as a whole, which equates to £1.9m (2022 :
£2.6m) 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 £0.16m (2022:
£0.21m) for the Group, £0.15m (2022: £0.20 million) for the
Company, or £0.01m in relation to Investment and other income
(2022: £ 0.02m), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
The Group team determined the remaining component materiality
as £0.98m (2022: £1.4m) having regard to the mix of size and risk
profile of UIL Finance Limited.
Of the group’s 2 (2022: 2) reporting components, we subjected 2
(2022: 2) to full scope audits for group purposes.
The scope of the audit work performed was fully substantive as we
did not rely upon the Group's internal control over financial
reporting.
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 to 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 or covenants compliance 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 and inspection of policy documentation as to
the Group’s 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;
— Reading Board and Audit and Risk Committee minutes; and
— Using analytical procedures to identify any unusual or unexpected
relationships.
We communicated identified fraud risks throughout the audit team and
remained alert to any indications of fraud throughout the audit.
As required by auditing standards, we perform procedures to address
the risk of management override of controls, in particular to the risk
that management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates and
judgements such as the valuation of level 3 investments. On this audit
we do not believe there is a fraud risk related to revenue recognition
because the revenue is non judgemental and straightforward, with
limited opportunity for manipulation.
We performed procedures including:
•
•
•
Evaluating the design and implementation of the controls over
journal entries and other adjustments;
Enquiring of the Administrator about inappropriate or unusual
activity relating to the processing of journal entries and other
adjustments; and
Identifying and testing all material post closing journal entries by
comparing the selected entries to supporting documentation.
Identifying and responding to risks of material misstatement related to
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 with the directors the
policies and procedures
regarding compliance with laws and
regulations. As the Company is regulated, our assessment of risks
involved gaining an understanding of the control environment including
the entity’s procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert
to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
statements
Firstly, the Group is subject to laws and regulations that directly affect
the financial
reporting legislation
(including related companies legislation) and financial reporting aspects
of the relevant 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.
including financial
66
67
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
22 September 2023
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.
The Group will be including these financial statements in an
annual financial report prepared using the single electronic
reporting format specified in the TD ESEF Regulation. This
auditor’s report provides no assurance over whether the annual
financial report has been prepared in accordance with that
format.
5. Fraud and breaches of laws and regulations – ability to detect
(continued)
Secondly, the Group 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.
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 the Principal Risks and Risk
Mitigation on pages 36 to 38 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.
6. We have nothing to report on the other information in the Annual
Report
Corporate governance disclosures
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.
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.
68
69
GROUP INCOME STATEMENT
COMPANY INCOME STATEMENT
for the year to 30 June
Notes
9 Losses on investments
12 Losses on derivative financial instruments
Foreign exchange losses
2 Investment and other income
Total income/(loss)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
Revenue
return
£’000s
Capital
return
£’000s
2023
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2022
Total
return
£’000s
–
–
–
10,229
10,229
(758)
(977)
(40,342)
(40,342)
(2,038)
(1,604)
–
(2,038)
(1,604)
10,229
(43,984)
(33,755)
–
(5)
(758)
(982)
–
–
–
9,879
9,879
(852)
(819)
(120,524)
(120,524)
(10,532)
(10,532)
(5,264)
–
(5,264)
9,879
(136,320)
(126,441)
–
(3)
(852)
(822)
8,494
(43,989)
(35,495)
8,208
(136,323)
(128,115)
for the year to 30 June
Notes
9 Losses on investments
12 Losses on derivative financial instruments
Foreign exchange losses
2 Investment and other income
Total income/(loss)
3 Management and administration fees
4 Other expenses
Profit/(loss) before finance costs and
taxation
Revenue
return
£’000s
Capital
return
£’000s
2023
Total
return
£’000s
Revenue
return
£’000s
Capital
return
£’000s
2022
Total
return
£’000s
–
–
–
10,229
10,229
(758)
(977)
(40,411)
(40,411)
(2,038)
(1,604)
–
(2,038)
(1,604)
10,229
(44,053)
(33,824)
–
(5)
(758)
(982)
–
–
–
9,879
9,879
(852)
(819)
(120,529)
(120,529)
(10,532)
(10,532)
(5,264)
–
(5,264)
9,879
(136,325)
(126,446)
–
(3)
(852)
(822)
8,494
(44,058)
(35,564)
8,208
(136,328)
(128,120)
5 Finance costs
(2,897)
(6,059)
(8,956)
(1,132)
(7,790)
(8,922)
5 Finance costs
(2,897)
(6,260)
(9,157)
(1,132)
(7,988)
(9,120)
Profit/(loss) before taxation
5,597
(50,048)
(44,451)
7,076
(144,113)
(137,037)
Profit/(loss) before taxation
5,597
(50,318)
(44,721)
7,076
(144,316)
(137,240)
6 Taxation
–
–
–
(63)
–
(63)
6 Taxation
–
–
–
(63)
–
(63)
Profit/(loss) for the year
5,597
(50,048)
(44,451)
7,013
(144,113)
(137,100)
Profit/(loss) for the year
5,597
(50,318)
(44,721)
7,013
(144,316)
(137,303)
7 Earnings per ordinary share – pence
6.68
(59.70)
(53.02)
8.35
(171.68)
(163.33)
7 Earnings per ordinary share – pence
6.68
(60.02)
(53.34)
8.35
(171.92)
(163.57)
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 76 to 104 form part of these financial statements.
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 76 to 104 form part of these financial statements.
70
UIL Limited
Report and Accounts for the year to 30 June 2023
71
GROUP STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year to 30 June 2023
Notes
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Capital
reserves
£’000s
Revenue
reserve
£’000s
Total
£’000s
for the year to 30 June 2023
Notes
Ordinary
share
capital
£’000s
Share
premium
account
£’000s
Special
reserve
£’000s
Balance as at 30 June 2022
8,384
37,874
233,866
(74,230)
12,846
218,740
Balance as at 30 June 2022
8,384
37,874
233,866
(Loss)/profit for the year
8 Ordinary dividends paid
–
–
–
–
–
–
(50,048)
5,597
(44,451)
–
(6,708)
(6,708)
Balance as at 30 June 2023
8,384
37,874
233,866
(124,278)
11,735
167,581
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 as at 30 June 2022
8,384
37,874
233,866
The notes on pages 76 to 104 form part of these financial statements.
(32,069)
–
–
–
(144,113)
7,013
(137,100)
–
–
(6,714)
(6,714)
–
(1,227)
–
–
–
–
(Loss)/profit for the year
8 Ordinary dividends paid
–
–
–
–
–
–
Balance as at 30 June 2023
8,384
37,874
233,866
(124,781)
Capital
reserves
£’000s
(74,463)
(50,318)
–
Revenue
reserve
£’000s
12,846
5,597
(6,708)
11,735
Total
£’000s
218,507
(44,721)
(6,708)
167,078
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 as at 30 June 2022
–
–
–
32,069
–
–
(46)
8,384
(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
(74,230)
12,846
218,740
The notes on pages 76 to 104 form part of these financial statements.
72
UIL Limited
Report and Accounts for the year to 30 June 2023
73
STATEMENTS OF FINANCIAL POSITION
STATEMENTS OF CASH FLOWS
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
2023
£’000s
Group
2022
£’000s
Company
2023
£’000s
2022
£’000s
308,347
416,516
311,477
419,715
62
110
5,234
5,406
444
620
8
1,072
62
110
5,234
5,406
444
620
8
1,072
(42,691)
(51,080)
(42,691)
(51,080)
(8,892)
–
–
(4,393)
(2,562)
(51,166)
(8,892)
(55,559)
–
–
(2,562)
–
(51,583)
(109,201)
(51,583)
(109,201)
(46,177)
(108,129)
(46,177)
(108,129)
Total assets less current liabilities
262,170
308,387
265,300
311,586
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
21 Capital reserves
22 Revenue reserve
–
–
(98,222)
(93,079)
(94,589)
(89,647)
–
–
167,581
218,740
167,078
218,507
8,384
37,874
8,384
37,874
8,384
37,874
8,384
37,874
233,866
233,866
233,866
233,866
(124,278)
(74,230)
(124,781)
(74,463)
11,735
12,846
11,735
12,846
Total attributable to equity holders
167,581
218,740
167,078
218,507
23 Net asset value per ordinary share – pence
199.87
260.89
199.27
260.61
The notes on pages 76 to 104 form part of these financial statements.
Approved by the Board on 22 September 2023 and signed on its behalf by
Peter Burrows
Chairman
UIL Limited
Registered in Bermuda, No 39480
74
UIL Limited
for the year to 30 June
Loss before taxation
Deduct investment income - dividends
Deduct investment income - interest
Deduct bank interest
Add back bank interest charged
Add back losses on investments
Add back losses on derivative financial instruments
Add back foreign exchange losses
Increase in other debtors
(Decrease)/increase in creditors
Add back ZDP shares finance costs
(320)
(5)
2,897
2023
£’000s
Group
2022
£’000s
Company
2023
£’000s
2022
£’000s
(44,451)
(137,037)
(44,721)
(137,240)
(9,904)
(7,539)
(9,904)
(2,338)
(2)
(320)
(5)
(7,539)
(2,338)
(2)
1,132
2,897
1,132
40,342
120,524
40,411
120,529
2,038
1,604
(10)
(60)
10,532
5,264
(4)
10
6,059
7,790
2,038
1,604
(10)
(60)
–
10,532
5,264
(4)
10
–
Add back intra-group loan account finance costs
–
–
6,260
7,988
Net cash outflow from operating activities before dividends and interest
(1,810)
(1,668)
(1,810)
(1,668)
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 flows from repayment of intra-group loan account
Cash paid for ordinary shares purchased for cancellation
Cash flows from financing activities
3,580
3,039
3,580
3,039
166
5
369
2
166
5
369
2
(2,375)
(1,141)
(2,375)
(1,141)
–
(434)
(63)
538
–
(434)
(63)
538
(17,588)
(40,733)
(17,588)
(40,733)
92,285
(4,090)
70,607
(6,708)
55,231
51,150
92,285
(8,170)
(4,090)
2,247
70,607
52,100
(8,170)
3,197
(6,714)
(6,708)
(6,714)
1,894
55,231
1,894
(66,070)
(3,147)
(66,070)
(3,147)
–
(52,283)
–
–
950
–
–
–
–
(52,283)
(1,227)
–
(69,830)
(8,244)
(69,830)
–
–
–
(1,227)
(9,194)
Net increase/(decrease) in cash and cash equivalents
343
(5,459)
343
(5,459)
Cash and cash equivalents at the beginning of the year
Effect of movement in foreign exchange
Cash and cash equivalents at the end of the year
(3,827)
3,111
(3,827)
846
(1,479)
846
(2,638)
(3,827)
(2,638)
3,111
(1,479)
(3,827)
Comprised of:
Cash
Bank overdraft
Total
The notes on pages 76 to 104 form part of these financial statements.
5,234
(7,872)
(2,638)
8
5,234
(3,835)
(7,872)
(3,827)
(2,638)
8
(3,835)
(3,827)
Report and Accounts for the year to 30 June 2023
75
NOTES TO THE ACCOUNTS
1. ACCOUNTING POLICIES
The Company, UIL Limited, is an investment company incorporated in Bermuda, with its ordinary shares traded on the Specialist
Fund Segment of the Main Market of the London Stock Exchange and listed on the Bermuda 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, 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 2023.
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 July 2022, do not conflict with the requirements of IFRS, the Directors have prepared the Accounts on a basis consistent
with the recommendations of the SORP, in the belief that this will aid comparison with similar investment companies incorporated
and listed in the United Kingdom.
In accordance with the SORP, the Income Statement has been analysed between a revenue return (dealing with items of a
revenue nature) and a capital return (relating to items of a capital nature). Revenue returns include, but are not limited to,
dividend income, operating expenses, finance costs and taxation (insofar as they are not allocated to capital, as described in
notes 1(j) and 1(k)). Net revenue returns are allocated via the revenue return to the revenue reserve.
Capital returns include, but are not limited to, profits and losses on the disposal and the valuation of non-current investments,
derivative instruments and on cash and borrowings. Net capital returns are allocated via the capital return to capital reserves.
Dividends on ordinary shares may be paid out of the special reserve, revenue reserve and the capital reserves.
A number of new standards and amendments to standards and interpretations, which have not been applied in preparing these
accounts, were in issue but not effective. None of these are expected to have a material effect on the accounts of the Group.
The key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to the valuation of
unlisted investments, details of which are set out in accounting policy 1(d).
(b) Basis of consolidation
The consolidated Accounts include the Accounts of the Company and its operating subsidiary, UIL Finance. All intra group
transactions, balances, income and expenses are eliminated on consolidation. Other subsidiaries, joint ventures 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.
Level 2 – Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration
of the period of investment. Examples of such instruments would be convertible loans in listed investee companies, securities
for which the quoted price has been recently suspended, securities for which an offer price has been announced in the market,
forward exchange contracts and certain other derivative instruments.
Level 3 – External inputs are unobservable. Value is the Directors’ best estimate of fair value, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants
would apply in pricing the same or similar 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 104).
(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 2024, 2026 and 2028 at a redemption value, including accrued capitalised
returns (see note 15) of 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 eliminated on consolidation 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.
76
76
UIL Limited
UIL Limited
Report and Accounts for the year to 30 June 2023
Report and Accounts for the year to 30 June 2023
77
77
NOTES TO THE ACCOUNTS
(continued)
(i) Investment and other income
2.
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 under gains and losses on investments) 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
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
• expenses allocated in accordance with notes 1(j) and 1(k)
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 56.0% of total investments as at 30 June 2023 (2022: 57.4%).
Group and Company
Investment income:
Dividends*
Interest*
Other income:
Interest on cash and short-term deposits
Total income
Revenue
£’000s
Capital
£’000s
9,904
320
10,224
5
10,229
–
–
–
–
–
2023
Total
£’000s
9,904
320
10,224
5
10,229
Revenue
£’000s
Capital
£’000s
7,539
2,338
9,877
2
9,879
–
–
–
–
–
*Includes scrip income (dividends and capitalised interest) of £6,451,224 (2022: £6,822,000)
3. MANAGEMENT AND ADMINISTRATION FEES
Group and Company
Payable to:
ICM/ICMIM – management fee and secretarial fees
Administration fees
Revenue
£’000s
Capital
£’000s
557
201
758
–
–
–
2023
Total
£’000s
557
201
758
Revenue
£’000s
Capital
£’000s
576
276
852
–
–
–
2022
Total
£’000s
7,539
2,338
9,877
2
9,879
2022
Total
£’000s
576
276
852
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.
78
UIL Limited
Report and Accounts for the year to 30 June 2023
79
NOTES TO THE ACCOUNTS
(continued)
In the year to 30 June 2023, UIL’s NAV return is below the required hurdle calculated at 14.8% 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.
4. OTHER EXPENSES
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
182
41
15
206
74
194
265
977
–
–
–
–
–
–
5
5
2023
Total
£’000s
182
41
15
206
74
194
270
982
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
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
6.
TAXATION
Group and Company
Overseas taxation
Revenue
£’000s
Capital
£’000s
2,897
–
2,897
–
6,059
6,059
Revenue
£’000s
Capital
£’000s
2,897
–
2,897
–
6,260
6,260
Revenue
£’000s
Capital
£’000s
–
–
2023
Total
£’000s
2,897
6,059
8,956
2023
Total
£’000s
2,897
6,260
9,157
2023
Total
£’000s
–
Revenue
£’000s
1,132
–
1,132
Revenue
£’000s
1,132
–
1,132
Capital
£’000s
–
7,790
7,790
Capital
£’000s
–
7,988
7,988
Revenue
£’000s
63
Capital
£’000s
–
2022
Total
£’000s
1,132
7,790
8,922
2022
Total
£’000s
1,132
7,988
9,120
2022
Total
£’000s
63
Except as stated above, profits of the Company and UIL Finance for the year are not subject to any taxation within their countries
of residence (2022: same).
7. EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share from continuing operations is based on the following data:
2023
£’000s
2022
£’000s
150
20
12
182
123
20
12
155
Revenue
Capital
Total
2023
£’000s
5,597
Group
2022
£’000s
7,013
Company
2022
£’000s
7,013
2023
£’000s
5,597
(50,048)
(144,113)
(50,318)
(144,316)
(44,451)
(137,100)
(44,721)
(137,303)
Number
Number
Number
Number
Weighted average number of shares in issue during the year for earnings
per share calculations
83,842,918
83,942,540
83,842,918
83,942,540
80
UIL Limited
Report and Accounts for the year to 30 June 2023
81
NOTES TO THE ACCOUNTS
(continued)
8. DIVIDENDS
Group and Company
2021 Fourth quarterly of 2.000p
2022 First quarterly of 2.000p
2022 Second quarterly of 2.000p
2022 Third quarterly of 2.000p
2022 Fourth quarterly of 2.000p
2023 First quarterly of 2.000p
2023 Second quarterly of 2.000p
2023 Third quarterly of 2.000p
Record
date
Payment
date
2023
£’000s
03-Sep-21
30-Sep-21
03-Dec-21
23-Dec-21
04-Mar-22
31-Mar-22
06-Jun-22
30-Jun-22
02-Sep-22
30-Sep-22
02-Dec-22
22-Dec-22
03-Mar-23
31-Mar-23
02-Jun-23
26-Jun-23
–
–
–
–
1,677
1,677
1,677
1,677
6,708
2022
£’000s
1,680
1,680
1,677
1,677
–
–
–
–
6,714
The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2023 of 2.00p per share payable on 13 October
2023 to all ordinary shareholders on the register at close of business on 29 September 2023. The total cost of the dividend, which has not
been accrued in the results for the year to 30 June 2023, is £1,677,000 based on 83,842,918 ordinary shares in issue.
9.
INVESTMENTS
Group
Investments brought forward
Cost
(Losses)/gains
Valuation
Movements in the year:
Transfer between levels*
Purchases at cost
Sale proceeds
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2023
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2022
Total
£’000s
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
–
–
–
219,605
425,346
103,259
114,728
322,864
540,074
Company
Investments brought forward
Cost
(Losses)/gains
Movements in the year:
Transfer between levels*
Purchases at cost
Sale proceeds
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2023
Total
£’000s
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
2022
Total
£’000s
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
(69,129)
69,129
–
–
(8,725)
33,098
19,796
67,701
120,595
35,319
8,725
1,082
–
–
53,378
89,779
(63,074)
(41)
(125,307)
(188,422)
(22,314)
–
(71,449)
(93,763)
Losses on investments
(13,619)
(18,129)
(8,663)
(40,411)
(46,229)
(8,428)
(65,872)
(120,529)
Valuation at 30 June
Analysed at 30 June
Cost
(Losses)/gains
Valuation
63,115
75,710
172,652
311,477
175,839
4,955
238,921
419,715
76,016
113,440
168,186
357,642
209,685
11,949
199,073
420,707
(12,901)
(37,730)
4,466
(46,165)
(33,846)
(6,994)
39,848
(992)
63,115
75,710
172,652
311,477
175,839
4,955
238,921
419,715
* During the year four holdings with a value of £72.6m were transferred from level 1 to level 2 due to the investee companies shares trading irregularly
in the year and one stock with a value of £3.5m was transferred from level 2 to level 1 due to the investee company shares resuming regular trading
(2022: transfers of £8.7m were due to the changes in liquidity). The book cost and fair value were transferred using the 30 June 2022 balances (2022:
30 June 2021 balances)
The Company received £188,422,000 (2022: £93,763,000) from investments sold in the year. The book cost of these investments when they were
purchased was £183,660,000 (2022: £98,171,000). 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
Within purchases and sales non cash settlements amounted to £103.0m and £96.6m respectively (2022: £49.1m and £41.7m respectively)
Disposals in level 3 investments includes £47.3m related to repayment of capital and £32.0m of capital distribution (2022: £58.7m related to
repayment of capital and £2.4m of capital distribution)
Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market
Group
2022
£’000s
Company
2023
£’000s
2022
£’000s
2023
£’000s
4,762
(4,542)
4,762
(4,408)
(45,104)
(115,982)
(45,173)
(116,121)
(40,342)
(120,524)
(40,411)
(120,529)
(66,496)
66,496
–
–
(11,723)
11,723
–
–
Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded
33,098
19,796
67,701
120,595
35,319
1,082
53,378
89,779
(63,074)
(41)
(125,307)
(188,422)
(21,364)
–
(71,449)
(92,813)
Level 3 includes investments in private companies and other unquoted securities
Losses on investments
(13,619)
(18,060)
(8,663)
(40,342)
(46,236)
(8,416)
(65,872)
(120,524)
Valuation at 30 June
Analysed at 30 June
Cost
(Losses)/gains
Valuation
63,115
72,580
172,652
308,347
173,206
4,389
238,921
416,516
(Losses)/gains on investments held at fair value
76,016
110,503
168,186
354,705
207,332
11,365
199,073
417,770
(12,901)
(37,923)
4,466
(46,358)
(34,126)
(6,976)
39,848
(1,254)
63,115
72,580
172,652
308,347
173,206
4,389
238,921
416,516
Gains/(losses) on investments sold
Losses on investments held
Total losses on investments
* During the year three holdings with a value of £70.0m were transferred from level 1 to level 2 due to the investee companies shares trading irregularly in the
year and one stock with a value of £3.5m was transferred from level 2 to level 1 due to the investee company shares resuming regular trading (2022: transfers
of £11.7m were due to the changes in liquidity). The book cost and fair value were transferred using the 30 June 2022 balances (2022: 30 June 2021 balances)
The Group received £188,422,000 (2022: £92,813,000) from investments sold in the year. The book cost of these investments when they were purchased
was £183,660,000 (2022: £97,355,000). 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
Within purchases and sales non cash settlements amounted to £103.0m and £96.6m respectively (2022: £49.1m and £41.7m respectively)
Disposals in level 3 investments includes £47.3m related to repayment of capital and £32.0m of capital distribution (2022: £58.7m related to repayment of
capital and £2.4m of capital distribution)
Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market
Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded
Level 3 includes investments in private companies and other unquoted securities
82
UIL Limited
Report and Accounts for the year to 30 June 2023
83
NOTES TO THE ACCOUNTS
(continued)
Group and Company
In the year the following material level 3 holdings were sold:
2023
ICM Mobility Group Limited ("ICM Mobility")
Snapper Services (UK) Limited
2022
Nautilus Data Technologies Inc Convertible Bond
Novareum Blockchain Asset Fund Limited (“Novareum”)
+Purchased in the year
Joint Ventures
Proceeds
£’000s
43,572
1,542
Proceeds
£’000s
8,124
2,770
Carrying value at the
end of the previous
accounting period
£’000s
43,879
1,656
Carrying value at the
end of the previous
accounting period
£’000s
n/a+
n/a+
Cost
£’000s
29,108
2,393
Cost
£’000s
7,239
1,967
Under IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures, the following joint ventures 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
2023
Holding and
voting rights
%
Allectus Capital Limited (“Allectus Capital”)
Bermuda
Allectus Quantum Holdings Limited
(“Allectus Quantum”)
United Kingdom
100
503
50.0
50.0
* In the prior year classified as a subsidiary
Transactions in the year to 30 June 2023 with joint ventures held as investments:
Number of
ordinary
shares held
100
501
2022
Holding and
voting rights
%
50.0*
50.0*
Allectus Capital
Allectus Quantum
Pursuant to a loan agreement dated 1 September 2016 under which UIL agreed to loan monies to Allectus
Capital, UIL advanced to Allectus Capital a loan of USD 1.7m, transferred a loan of USD 0.7m from the
facility given on 28 April 2023 (see below) and Allectus Capital repaid USD 6.9m. The balance of the loan
as at 30 June 2023 was USD 2.1m (30 June 2022: USD 6.6m). The loan is interest free and is converted to
equity on an annual basis. Pursuant to a loan agreement dated 28 April 2023 under which UIL agreed to
loan monies to Allectus Capital, UIL advanced to Allectus Capital a loan of USD 0.7m. On 27 June 2023, this
loan was transferred to the original loan facility.
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 £3.7m. The loan is interest free and is converted
into equity on a semi-annual basis. The loan of £3.7m was converted to equity in the year, increasing the
number of ordinary shares held by 2. As at 30 June 2023 the loan balance was nil.
Associated undertakings
Under IFRS10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following associate
undertakings are held as part of the investment portfolio and consequently are accounted for as investments at fair value
through profit and loss:
DTI Group Ltd (“DTI”)
ICM Mobility
Country of
registration and
incorporation
Number of
ordinary shares
held
Australia
103,193,989
United Kingdom
–
Littlepay Mobility Ltd (“Littlepay”)
United Kingdom
2,616,083 1
Novareum Blockchain Asset Fund Ltd ("Novareum")
Cayman Islands
28,361
Orbital Corporation Limited (“Orbital”)
Resimac Group Limited (“Resimac”)3
Serkel Solutions Pty Ltd (“Serkel”)
SmileStyler Solutions Pty Ltd (“SmileStyler”)
Somers Limited (“Somers”)
SportEngaged Ltd
Australia
Australia
Australia
Australia
35,056,348
127,157,477 3
10,510
1,151,434
Bermuda
10,168,931
United Kingdom
25
The Market Herald Limited ("TMH")
Australia
75,605,734
(1) Shares held directly 1,445,000 (2022: 1,445,000) and indirectly through Somers 1,171,083 (2022: 2,812,079)
(2) Subsidiary in 2022
(3) Shares held directly 36,152,616 (2022: 17,127,747) and indirectly through Somers 91,004,861 (2022: 106,215,234)
Transactions in the year to 30 June 2023 with associated undertakings:
2023
2022
% of ordinary
shares held
% of ordinary
shares held
23.0
–
30.2
33.4
29.9
31.6
33.3
24.0
41.7
20.0
23.6
23.0
39.8
49.2
57.52
30.3
29.6
33.3
24.0
44.7
20.0
n/a
DTI
ICM Mobility
Littlepay
Novareum
Orbital
Resimac
Serkel
SmileStyler
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 loans of £0.6m and received from ICM Mobility £0.1m. In
October 2022, UIL sold its loan to ICM Mobility (£0.5m) to Somers as part of the transaction where
UIL sold its stake in ICM Mobility to Somers.
There were no transactions during the year.
There were no transactions during the year.
In November 2022, UIL took part in Orbital’s AUD 5m share placement at AUD 0.20 per share,
agreeing to subscribe for 30% of the shares offered. UIL received 7,490,460 shares (cost AUD 1.5m)
and 3,745,230 options on a free of charge basis. The options are exercisable at AUD 0.35 until
February 2026.
See transaction details of Somers below. UIL received dividends of £1.7m from Resimac.
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 2023
85
NOTES TO THE ACCOUNTS
(continued)
Somers
On 12 July 2022 UIL sold to Somers, at fair values, 2,953,446 Resimac shares for AUD 3.5m and
received in exchange 134,153 Assetco plc shares for £1.0m and 2,691,811 MJ Hudson Group plc
shares for GBP 1.0m.
On 5 August 2022 Somers paid a distribution of USD 4.55 per share. In settlement, UIL received at
fair values 38,451,000 Resimac Group Limited shares for AUD 50.4m and 42,183,103 TMH shares
for AUD 16.0m. The distribution has been recognised as a return of capital of USD 38.7m and a
revenue dividend of USD 7.6m. At the same time, Somers issued 5,412,314 warrants pro-rata to
all of its shareholders on a one for four basis (the “Warrants”). The exercise price of the Warrants
is USD 18.92 per share and can be converted at any time until maturity on 30 September 2023.
These were issued for no consideration and UIL received and continues to hold as at 30 June 2023
2,542,233 warrants.
On 8 August 2022, as part of a group restructure, UIL sold to Somers at fair value, 16,472,685
Resimac shares for AUD 21.6m and in exchange UIL advanced loans to Zeta for AUD 2.2m and CAD
17.5m.
On 11 October 2022, Somers acquired UIL’s holding in ICM Mobility and Snapper for £45.6m. In
exchange Somers sold to UIL its holding in West Hamilton Holdings Limited ("West Hamilton") for
USD 19.7m, WT Financial Group Limited for AUD 5.7m and BNK Banking Corp Ltd for AUD 3.9m.
Somers funded the balance of the transaction (£22.3m) via the loan account.
Pursuant to a loan agreement dated 22 June 2018 under which UIL has agreed to loan monies to
Somers, UIL advanced to Somers loans of £23.2m (including the £22.3m from the 11 October 2022
transaction above) and Somers repaid loans of £23.2m. UIL received interest of £39k. As at 30 June
2023, the balance of the loans and interest outstanding was £nil. The loan bears interest at an
annual rate of 6.0% and is repayable on not less than 12 months’ notice.
SportEngaged Ltd
There were no transactions during the year.
TMH
See transaction details of Somers above.
On 30 August 2022, UIL received 16,873,241 rights through a 2 for 5 rights issue at AUD 0.34. UIL
sold 1,150,000 rights in the market and oversubscribing, received a further 5,000,000 rights. On
15 September 2022 UIL exercised the rights, receiving 20,723,241 shares at a cost of AUD 7.0m. On
27 January 2023, UIL received 10,484,390 rights through a 1 for 6 rights issue at AUD 0.34. On
13 February UIL exercised these rights, receiving 10,484,390 shares at a cost of AUD 3.6m. On
6 February 2023, UIL purchased 2,215,000 ordinary shares in the market.
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
Country of
registration
and incorporation
Class of
instrument held
2023
% of class of
instrument
held
2022
% of class of
instrument
held
Utilico Emerging Markets Trust plc
United Kingdom
Ordinary Shares
9.1
14.4
10. SUBSIDIARY UNDERTAKINGS
The following was a subsidiary undertaking of the Company at 30 June 2023 and 30 June 2022.
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.
2023
2022
Country of
registration
and
incorporation
Number of
ordinary
shares held
Holding and
voting rights
%
Number of
ordinary
shares held
Holding and
voting rights
%
Carebook Technologies Inc (“Carebook”)
Canada
48,546,167
Coldharbour Technology Limited (“Coldharbour”)
United Kingdom 29,660,694
Bermuda
100
Jersey
7,453,957
53.8
96.5
100.0
100.0
36,046,167
29,660,694
100
115,920
Energy Holdings Ltd
Newtel Holdings Limited (“Newtel”)
Northbrook Resources Ltd (formerly Elevate
Platform Limited)
United Kingdom 44,348,478
51.0
44,348,4782
Snapper Services (UK) Limited ("Snapper")
United Kingdom
–
–
2,088,8513
West Hamilton
Zeta
Bermuda
1,659,390
57.0
–
Bermuda
344,573,832
61.2 344,573,832
(1) Associate undertaking in 2022
(2) Preference shares
(3) Shares held directly 1,703,400 and indirectly through ICM Mobility 3,310,838
Transactions in the year to 30 June 2023 with subsidiaries held as investments
46.51
96.5
100.0
100.0
51.0
50.0
–
61.0
Carebook
Pursuant to a convertible loan agreement dated 21 December 2021, amended and restated on
28 September 2022, UIL advanced to Carebook an additional loan tranche of CAD 500k. As at 30
June 2023, the balance of the loan and interest outstanding was CAD 1.03m (2022: CAD 0.5m). UIL
received interest of CAD 84k. The loan bears an interest rate of the Canadian Variable Rate plus
10.0% and is repayable by 21 December 2026.
Pursuant to a convertible loan agreement dated 15 December 2022, UIL advanced to Carebook a
loan of CAD 1.25m. As at 30 June 2023, the balance of the loan and interest outstanding was CAD
1.31m (2022: n/a). The loan bears an interest rate of the Canadian Variable Rate plus 10.0% and is
repayable by 22 December 2026.
On 8 March 2023, UIL purchased 12,500,000 restricted ordinary shares at CAD 0.10 per share. The
shares became unrestricted in July 2023. On 8 March 2023, UIL received 187,500 warrants for no
cost, exercisable on any date until 8 March 2025. Each warrant can be exercised for one share at
CAD 0.15 per warrant.
Coldharbour
There were no transactions during the year.
Energy Holdings Ltd
There were no transactions during the year.
Newtel
In October 2022, the £5.5m loan balance brought forward as at 30 June 2022 was converted into
equity, UIL received 7,338,037 Newtel ordinary shares.
Northbrook Resources Ltd
Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to
Northbrook Resources Limited, no further funds were advanced to Northbrook Resources Ltd
during the year. As at 30 June 2023, the balance of the loan was £1.6m. The loan bears interest at
6% per annum and is repayable on 31 December 2023. As at 30 June 2023 the fair value of the loan
was £nil (2022: £nil).
86
UIL Limited
Report and Accounts for the year to 30 June 2023
87
NOTES TO THE ACCOUNTS
(continued)
Snapper
On 11 October 2022, Somers acquired UIL's holding in Snapper, see transactions details of Somers
on page 86.
West Hamilton
See transaction details of Somers on page 86.
Zeta
Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan), under
which UIL agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 0.3m and CAD nil and
capitalised interest of AUD nil and CAD 0.2m. UIL advanced loans of AUD 2.2m and CAD 17.5m as per
the details included in transactions with Somers. UIL received from Zeta repayments of AUD 2.5m
and CAD 17.7m. As at 30 June 2023, 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
Forward foreign exchange contracts
Option contracts
2023
£’000s
2022
£’000s
–
36
26
62
419
9
16
444
Current
assets
£’000s
Current
liabilities
£’000s
2023
Net current
assets/
(liabilities)
£’000s
Current
assets
£’000s
Current
liabilities
£’000s
2022
Net current
assets/
(liabilities)
£’000s
–
110
110
–
–
–
–
110
110
620
–
620
(2,562)
(1,942)
–
–
(2,562)
(1,942)
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
Valuation carried forward
2023
£’000s
(1,942)
4,090
2022
£’000s
420
8,170
(2,038)
(10,532)
110
(1,942)
13. LOANS – CURRENT LIABILITY
Group and Company
Bank Loans
AUD 12.5m repaid October 2022
AUD 12.3m repaid October 2022
AUD 8.7m repaid August 2022
EUR 5.0m repaid October 2022
EUR 5.4m repaid October 2022
USD 20.9m repaid October 2022
USD 7.1m repaid September 2022
GBP 37.5m rolled to September 2023
Union Mutual Pension Fund Limited
USD 6.6m drawn to September 2023
2023
£’000s
2022
£’000s
–
–
–
–
–
–
–
37,500
–
5,191
42,691
7,078
6,961
4,954
4,304
4,690
17,235
5,858
–
–
–
51,080
The Company has a committed loan facility of £37,500,000 (2022: £50,000,000) from Bank of Nova Scotia, London Branch (“Bank
of Novia Scotia”) and was fully drawn as at 30 June 2023. The £50,000,000 facility with Scotiabank Europe PLC 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 has a floating charge over the assets of the Company in respect of amounts owing under the
loan facility. Subsequent to the year end the loan facility was extended to 19 March 2024 (see note 28).
Union Mutual Pension Fund Limited has loaned USD6,600,000 (2022: nil) to UIL. This loan is repayable on 30 September 2023 and
bears interest at 8% per annum.
14. OTHER PAYABLES
Bank overdraft
Intra-group loans
Accrued finance costs
Accrued expenses
2023
£’000s
7,872
–
633
387
Group
2022
£’000s
3,835
–
111
447
Company
2022
£’000s
3,835
51,166
111
447
2023
£’000s
7,872
–
633
387
8,892
4,393
8,892
55,559
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 2023
89
NOTES TO THE ACCOUNTS
(continued)
15. ZDP SHARES
2028 ZDP shares
ZDP shares – current liabilities
2022 ZDP shares
ZDP Shares – non-current liabilities
2024 ZDP shares
2026 ZDP shares
2028 ZDP shares
Total ZDP shares liabilities
2023
£’000s
Group
2022
£’000s
–
51,166
38,765
29,005
26,819
94,589
94,589
36,833
27,589
25,225
89,647
140,813
Authorised ZDP shares at 30 June 2023 and 30 June 2022 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
2023
Number
£’000s Number
£’000s Number
£’000s Number
2022
2024
2026
2028
£’000s
Total
£’000s
Balance as 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
Redemption of ZDP shares
(35,569,069) (52,283)
Finance costs (see note 5)
Balance as at 30 June 2023
–
–
1,117
–
–
– 1,932
–
–
1,416
–
– (52,283)
1,594
6,059
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 2023 was 113.02p (2022: 106.87p).
The ZDP shares are traded on the London Stock Exchange and are stated at amortised cost using the effective interest method.
The ZDP shares carry no entitlement to income however they have a pre-determined final capital entitlement which ranks behind
all other liabilities and creditors of UIL Finance and UIL but in priority to the ordinary shares of the Company save in respect of
certain winding up revenue profits.
The growth of each ZDP accrues daily and is reflected in the capital return and NAV per ZDP share on an effective interest rate
basis. The ZDP shares do not carry any voting rights at general meetings of the Company. However the Company will not be
able to carry out certain corporate actions unless it obtains at separate meetings approval of each class of ZDP shareholders.
Separate approval of each class of ZDP shareholders must be obtained in respect of any proposals which would affect their
respective rights, including any resolution to wind up the Company. In addition the approval of ZDP shareholders by the passing
of a special resolution at separate class meetings of the ZDP shareholders is required in relation to any proposal to modify, alter
or abrogate the rights attaching to any class of the ZDP shares and in relation to any proposal by UIL or UIL Finance 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.
the 2024 ZDP shares shall rank in priority to the 2026 ZDP shares and the 2028 ZDP shares; and
ii.
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.
– 30,000,000 38,765 22,690,380 29,005 24,416,265 26,819
94,589
16. OTHER PAYABLES - NON-CURRENT LIABILITY
2022
Number
2022
£’000s
Number
2024
£’000s
Number
2026
£’000s
Number
2028
£’000s
Total
£’000s
Balance as 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 as 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
On 31 October 2022 the 35,569,069 2022 ZDP shares that were in issue were redeemed at 146.99p per 2022 ZDP share.
The Company held 2,309,620 2026 ZDP shares as at 30 June 2022 and 30 June 2023.
The Company held 583,735 2028 ZDP shares as at 30 June 2022 and 30 June 2023.
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 2023 was 130.04p (2022: 124.14p).
2026 ZDP shares
Based on the initial entitlement of a 2026 ZDP share of 100p on 26 April 2018, a 2026 ZDP share will have a final capital
entitlement at the end of its life on 31 October 2026 of 151.50p equating to a 5.00% per annum gross redemption yield. The
capital entitlement (excluding issue costs) per 2026 ZDP share as at 30 June 2023 was 128.75p (2022: 122.62p).
Company
Intra-group loans
2023
£’000s
98,222
2022
£’000s
93,079
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 2023 is a non-current liability of £98,222,000 (2022: current liability of £51,166,000 and a non-current liability of
£93,079,000) 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.
17. ORDINARY SHARE CAPITAL
Equity share capital:
Ordinary shares of 10p each with voting rights
Authorised
2023
Balance at 30 June 2022 and 30 June 2023
Number
£’000s
250,000,000
25,000
Total shares
in issue
Number
83,842,918
Total shares
in issue
£’000s
8,384
90
UIL Limited
Report and Accounts for the year to 30 June 2023
91
NOTES TO THE ACCOUNTS
(continued)
2022
Balance at 30 June 2021
Purchased for cancellation
Balance at 30 June 2022
Total shares
in issue
Number
84,303,283
(460,365)
83,842,918
Total shares
in issue
£’000s
8,430
(46)
8,384
During the year the Company did not buy back any ordinary shares for cancellation (2022: 460,365 ordinary shares at a total cost of
£1,227,000).
No 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
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
2023
£’000s
37,874
–
–
37,874
2022
£’000s
6,986
(1,181)
32,069
37,874
2023
£’000s
2022
£’000s
233,866
233,866
2023
£’000s
–
–
–
2022
£’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 was therefore 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
2023
£’000s
(77,920)
(46,358)
(124,278)
Group
2022
£’000s
(72,976)
(1,254)
(74,230)
2023
£’000s
(78,616)
(46,165)
Company
2022
£’000s
(73,471)
(992)
(124,781)
(74,463)
Included within the capital reserve movement for the year is £32,043,000 (2022: £2,444,000) of capital distributions, £5,000
(2022: £3,000) of transaction costs on purchases of investments and £21,000 (2022 £27,000) of transaction costs on sales of
investments.
22. REVENUE RESERVE
Group and Company
Balance brought forward
Amount transferred to revenue reserve
Dividends paid in the year
Balance as at 30 June
2023
£’000s
12,846
5,597
(6,708)
11,735
2022
£’000s
12,547
7,013
(6,714)
12,846
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 2023 was £167.1m (2022: £218.5m).
23. NET ASSET VALUE PER ORDINARY SHARE
NAV per ordinary share is based on net assets at the year end of £167,581,000 for the Group and £167,078,000 for the Company
(2022: £218,740,000 for the Group and £218,507,000 for the Company) and on 83,842,918 ordinary shares in issue at the year
end (2022: 83,842,918).
24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Group
2023
Loans
ZDP shares
Dividends paid
Balance at
30 June
2022
£’000s
Transactions
in the year
£’000s
51,080
140,813
–
191,893
–
–
6,708
6,708
Non-cash flow
changes
Foreign
exchange
movement
£’000s
2,450
–
–
Finance
costs
£’000s
–
6,059
–
Balance
at 30 June
2023
£’000s
42,691
94,589
–
Receipts
£’000s
Payments
£’000s
55,231
–
–
(66,070)
(52,283)
(6,708)
55,231
(125,061)
2,450
6,059
137,280
92
UIL Limited
Report and Accounts for the year to 30 June 2023
93
NOTES TO THE ACCOUNTS
(continued)
2022
Bank loans
ZDP shares
Dividends paid
Repurchase of shares
for cancellation
Company
2023
Loans
Intra-group loans
Dividends paid
2022
Bank loans
Intra-group loans
Dividends paid
Repurchase of shares
for cancellation
Balance
at 30 June
2022
£’000s
Transactions
in the year
£’000s
–
–
6,708
6,708
51,080
144,245
–
195,325
Balance
at 30 June
2021
£’000s
48,548
136,257
–
–
184,805
Non-cash flow
changes
Balance
at 30 June
2021
£’000s
48,548
132,073
–
–
Transactions
in the year
£’000s
–
–
6,714
1,227
Receipts
£’000s
Payments
£’000s
Foreign
exchange
movement
£’000s
Finance
costs
£’000s
Balance
at 30 June
2022
£’000s
1,894
950
–
–
(3,147)
3,785
–
51,080
–
(6,714)
(1,227)
–
–
–
7,790
140,813
–
–
–
–
180,621
7,941
2,844
(11,088)
3,785
7,790
191,893
Non-cash flow
changes
Foreign
exchange
movement
£’000s
2,450
–
–
Finance
costs
£’000s
–
6,260
–
Balance
at 30 June
2023
£’000s
42,691
98,222
–
Receipts
£’000s
Payments
£’000s
55,231
–
–
(66,070)
(52,283)
(6,708)
Subsidiaries of UIL:
Carebook, Coldharbour, Energy Holdings Ltd, Newtel, Northbrook Resources Limited, West Hamilton and Zeta. On consolidation,
transactions between the Company and UIL Finance have been eliminated. Snapper, a subsidiary at 30 June 2022 was sold in the
year.
Joint ventures of UIL
Allectus Capital and Allectus Quantum.
Associated undertakings:
DTI, Littlepay, Novareum, Orbital, Resimac, Serkel, Smilestyler, Somers, SportEngaged Ltd and TMH.
Subsidiaries of the above subsidiaries, joint ventures and associated undertakings:
Allectus Capital: Own Solutions AC Limited.
Allectus Quantum: Allectus Quantum Ltd and Diraq Pty Ltd.
Littlepay: Littlepay Limited, Littlepay Pty Ltd, Littlepay Inc.
Newtel: Newtel Limited.
Resimac: 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.
Somers: Dfinitive Capital Limited, PCF Group plc, Snapper, Somers Pte Ltd, Somers Treasury Pty Ltd, Somers UK (Holdings) Limited
and Waverton.
Zeta: Horizon Gold Limited, Kumarina Resources Pty Ltd, Zeta Energy Pte Ltd, Zeta Investments Limited and Zeta Minerals Ltd.
Key management entities and persons:
55,231
(125,061)
2,450
6,260
140,913
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.
Non-cash flow
changes
Transactions
in the year
£’000s
Receipts
£’000s
Payments
£’000s
Foreign
exchange
movement
£’000s
Finance
costs
£’000s
Balance
at 30 June
2022
£’000s
–
–
6,714
1,227
7,941
1,894
(3,147)
3,785
–
51,080
–
–
–
–
(6,714)
(1,227)
–
–
–
7,988
144,245
–
–
–
–
1,894
(11,088)
3,785
7,988
195,325
Persons exercising control of UIL:
The Board of UIL.
Companies controlled by key management persons:
Mitre Investments Limited and Permanent Mutual Limited.
The following transactions were carried out during the year to 30 June 2023 between the Company and its related parties
above:
UIL Finance
Loans from UIL Finance to UIL of £144.2m as at 30 June 2022 decreased by £46.0m, to £98.2m as at 30 June 2023. The loans are
repayable on any ZDP share repayment date.
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 9.7% of UIL’s shares. The ultimate parent undertaking of GPLPF and UMPF is SIPTCL as
referred to in note 25.
Subsidiaries of UIL
Transactions are disclosed in note 10.
Joint ventures of UIL
Transactions are disclosed in note 9.
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 2023 with any of the subsidiaries of the above subsidiaries and associated
undertakings.
Key management entities and persons
ICM and ICMIM are joint portfolio managers of UIL. Other than investment management fees, secretarial costs and performance
fees as set out in note 3, and reimbursed expenses of £12,000, there were no other transactions with ICM or ICMIM or ICM
94
UIL Limited
Report and Accounts for the year to 30 June 2023
95
NOTES TO THE ACCOUNTS
(continued)
Corporate Services (Pty) Ltd. At the period-end £108,000 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 PIL, PML, Somers and West Hamilton. Mr Jillings is a director of Allectus Capital, PIL, PML, Somers and Waverton.
Mr Jillings received dividends from UIL of £35,000. Mr Saville is a director of Allectus Capital, GPLPF, Newtel, PIL, PML, Resimac, QICM
Technology Investments Ltd (formerly Vix Technology Limited), West Hamilton and Zeta Energy Pte Ltd. There were no other transactions
in the year with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL.
The Board
Fees paid to Directors were: Chairman £50,000 per annum; Chairman of Audit & Risk Committee £47,750 per annum and Directors
£37,000 per annum. The Board received aggregate remuneration of £206,000 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 £120,000 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 £5,292,000 from UIL, UMPF received dividends of £620,000 from UIL, Mitre Investments Limited received
dividends of £206,000 from UIL and Permanent Mutual Limited received dividends of £2,000 from UIL. UMPF provided a USD 6.6m loan
facility to UIL, see note 13 for details. There were no other transactions between companies controlled by key management and UIL
during the year to 30 June 2023.
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 £46,177,000 as at 30 June 2023 (2022: £108,129,000), 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 focused on the forecast liquidity of the Group for at least 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 20.5% of the Company’s total portfolio as at 30 June 2023. 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), 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 £37,500,000, net bank overdraft of £2.6m and loan from Union Mutual Pension
Fund Limited of £5.2m (repaid since the year end). 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 £37.5m multicurrency loan facility with Bank of Nova Scotia expiring on 19 September 2023.
Subsequent to the year end, the Company has extended the facility until 19 March 2024, the facility reducing to £25m on
19 September 2023, £20m by 31 October 2023, £15m by 31 December 2023, £10m by 19 February 2024 and fully repaid by 19 March 2024.
The outstanding debt will be repaid when due from portfolio realisations. Drawdowns under the facility are detailed in note 13.
The 2024 ZDP shares final liability of £41.5m is repayable on 31 October 2024, UIL will manage this debt 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 the purposes of hedging the underlying portfolio of investments. The Group
96
UIL Limited
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, Bermuda Dollar, Canadian Dollar and US Dollar
(2022: Australian Dollar, Canadian 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:
2023
Other receivables
Derivative financial instruments – assets
Cash and cash equivalents
Short-term borrowings
Net monetary liabilities
Investments
Net financial assets
2022
Other receivables
Derivative financial instruments – assets
Cash and cash equivalents
Derivative financial instruments – liabilities
Short-term borrowings
Net monetary liabilities
Investments
Net financial assets
AUD
£’000s
BMD
£’000s
CAD
£’000s
USD
£’000s
Other
£’000s
1
–
(1)
–
–
119,932
119,932
AUD
£’000s
8
16,969
–
(38,777)
(18,993)
(40,793)
146,224
105,431
–
–
–
–
–
29,428
29,428
CAD
£’000s
–
2,553
8
36
–
15
–
51
17,550
17,601
EUR
£’000s
–
–
–
(30,805)
–
(7,749)
(8,994)
(28,244)
(16,743)
22,068
(6,176)
32,982
16,239
–
110
5,191
(5,191)
110
7,617
7,727
USD
£’000s
–
7,199
–
(43,728)
(23,093)
(59,622)
2
–
–
–
2
74,414
74,416
Other
£’000s
–
–
–
–
–
–
Total
£’000s
39
110
5,205
(5,191)
163
248,941
249,104
Total
£’000s
8
26,721
8
(121,059)
(51,080)
(145,402)
21,087
136,909
359,270
(38,535)
136,909
213,868
Report and Accounts for the year to 30 June 2023
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
AUD
£’000s
BMD
£’000s
CAD
£’000s
USD
£’000s
AUD
£’000s
CAD
£’000s
EUR
£’000s
USD
£’000s
2023
2022
201
13,326
13,527
710
3,270
3,980
11
1,950
1,961
–
846
846
2023
81
11,715
11,796
2
(686)
(684)
–
61
1,804
(1,614)
1,804
(1,553)
2022
AUD
£’000s
CAD
£’000s
EUR
£’000s
USD
£’000s
AUD
£’000s
CAD
£’000s
EUR
£’000s
USD
£’000s
Revenue loss for the year
(201)
(710)
(11)
–
(81)
Capital (loss)/profit for the year
(13,326)
(3,270)
(1,950)
(846)
(11,715)
Total (loss)/profit for the year
(13,527)
(3,980)
(1,961)
(846)
(11,796)
(2)
686
684
–
(1,804)
(1,804)
(61)
1,614
1,553
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:
2023
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
2022
Within
one year
£’000s
More than
one year
£’000s
Exposure to floating rates
Cash and margin account
Bank overdraft
Borrowings
Exposure to fixed rates
Borrowings
ZDP shares
Net exposures
At year end
Maximum in year
Minimum in year
Maximum in year
Minimum in year
98
UIL Limited
Total
£’000s
8
(3,835)
(51,080)
(54,907)
8
(3,835)
(51,080)
(54,907)
–
–
–
–
–
–
–
5,234
(7,872)
(37,500)
(40,138)
(5,191)
–
–
–
–
–
5,234
(7,872)
(37,500)
(40,138)
(5,191)
(94,589)
(99,780)
–
(94,589)
(140,813)
(51,166)
(89,647)
(5,191)
(94,589)
(140,813)
(51,166)
(89,647)
(139,918)
(45,329)
(195,720)
(106,073)
(94,589)
(89,647)
(195,720)
(106,073)
(89,647)
(199,716)
(112,232)
(87,484)
(139,918)
(45,329)
(94,589)
(177,510)
(45,437)
(132,073)
Exposure to
floating
interest rates
£’000s
Fixed
interest
rates
£’000s
Exposure to
floating
interest rates
£’000s
Total
£’000s
Fixed
interest
rates
£’000s
(54,907)
(140,813)
(199,716)
(61,715)
(138,001)
(40,138)
(99,780)
(177,510)
(45,437)
(132,073)
Total
£’000s
(195,720)
(139,918)
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 bank borrowings is at ruling market rates and on
other loans is fixed (see note 13). 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
(907)
–
(907)
2023
Decrease
in rate
£’000s
907
–
907
Increase
in rate
£’000s
(1,098)
–
(1,098)
2022
Decrease
in rate
£’000s
1,098
–
1,098
The portfolio of investments, valued at £308,347,000 as at 30 June 2023 (2022: £416,516,000) is exposed to market price changes.
The Group enters into 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 2023, the Group's exposure to S&P options was negligible (2022: the Group did not purchase or sell S&P options).
Based on the portfolio of investments at the Statement of Financial Position date, and assuming other factors 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:
2023
2022
Increase
in value
Decrease
in value
Increase
in value
Decrease
in value
Income Statement capital profit for the year (£’000s)
61,689
(61,689)
83,303
(83,303)
(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, 16 as at 30 June 2023 (19 as at 30 June 2022); the liquid nature of
the portfolio of investments; and the geographical and sector diversity of the portfolio (see pages 21 and 12 respectively). Cash
balances are held with reputable banks with high quality external credit ratings.
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 £37.5m and a further loan of £5.2m as set out in note 13 and ZDP share
liabilities of £94.6m 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:
Report and Accounts for the year to 30 June 2023
99
NOTES TO THE ACCOUNTS
(continued)
Three
months
or less
£’000s
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
Bank overdraft
Other creditors
Derivative financial
instruments
Loans
ZDP shares
7,872
387
–
44,612
–
52,871
–
–
–
–
–
–
(c) Credit risk and counterparty exposure
–
–
–
–
2023
Total
£’000s
7,872
387
Three
months
or less
£’000s
3,835
447
More than
three months
but less than
one year
£’000s
More than
one year
£’000s
2022
Total
£’000s
3,835
447
140,247
51,564
–
–
–
–
113,064
165,347
113,064
361,440
–
–
–
52,283
92,780
–
99,750
40,497
44,612
51,564
113,064
113,064
–
113,064
165,935
155,596
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
Financial assets through profit and loss
Investments in debt instruments
Derivatives (forward foreign exchange contracts)
Derivatives (option contracts)
2023
Maximum
exposure
in the year
£’000s
2022
Maximum
exposure
in the year
£’000s
30 June
£’000s
5,234
8
4,496
30 June
£’000s
5,234
2,952
–
110
18,095
138,305
110
8,672
39,138
138,305
168,050
–
–
None of the Group’s financial assets are past due or impaired. The expected credit loss on the cash at bank is not considered
material at 30 June 2023 (2022: not material). 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
2023
£’000s
–
37,050
25,980
23,562
2022
£’000s
51,219
36,750
26,207
24,172
Unquoted investments are valued based on professional assumptions and advice that is not wholly supported by prices from
current market transactions or by observable market data. The Directors make use of recognised valuation techniques and may
take account of recent arms’ length transactions in the same or similar investments.
The Directors regularly review the principles applied by the Investment Managers to those valuations to ensure they comply with
the Group’s accounting policies and with fair value principles.
Level 3 financial instruments
Valuation methodology
The objective of using valuation techniques is to arrive at a fair value measurement that reflects the price that would be received
to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.
The Company uses proprietary valuation models, which are compliant with IPEV guidelines and IFRS 13 and which are usually
developed from recognised valuation techniques. Some or all of the significant inputs into these models may not be observable
in the market and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ
significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair
value. Management judgement and estimation are usually required for the selection of the appropriate valuation model to be
used, determination of expected future cash flows of the financial instrument being valued, determination of the probability of
counterparty default and prepayments, peer group multiple and selection of appropriate discount rates.
Fair value estimates obtained from such models are adjusted for any other factors, such as controlling interest, historical and
projected financial data, entity specific strengths and weaknesses, or model uncertainties, to the extent that the Company
believes that a third party market participant would take them into account in pricing a transaction.
The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the
valuations. The level 3 assets comprise of a number of unlisted investments at various stages of development and each has
been assessed based on its industry, location and business cycle. The valuation methodologies include net assets, discounted
cash flows, cost of recent investment or last funding round, listed peer comparison or peer group multiple or dividend yield as
appropriate. Where applicable, the Directors have considered observable data and events to underpin the valuations. A discount
has been applied, where appropriate, to reflect both the unlisted nature of the investments and business risks. UIL currently has
investments in a number of level 3 closed-end investment companies including Allectus Capital, Allectus Quantum 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 2023 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 elevated level of volatility in equity markets during the year, principally reflecting concerns about
high rates of inflation, tightening energy supplies, higher 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.
100
UIL Limited
Report and Accounts for the year to 30 June 2023
101
NOTES TO THE ACCOUNTS
(continued)
Allectus Capital Bermuda incorporated
UIL holds 50% of the ordinary shares in a joint venture and carried its investment at £16.2m (2022: £22.9m) and loans at £1.6m
(2022: £5.5m). The cost of these investments was £20.1m (2022: £23.9m). The financial results of Allectus Capital are not publicly
available.
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used the portfolio’s NAV. 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 both the
high level of unlisted investments within Allectus Capital’s portfolio and the continued high level of volatility in technology equity
markets and assessed that the valuation uncertainty remained at an elevated level. Accordingly, Allectus Capital’s fair value has
been given a sensitivity of 20% (2022: 20%) reflecting the higher level of uncertainty over the manager’s valuations of Allectus
Capital’s portfolio.
Sensitivities: Should the value of holdings in Allectus Capital move by 20% the gain or loss would be £3.6m (2022: £5.7m).
Allectus Quantum UK incorporated
UIL holds 50% of the ordinary shares in a joint venture and carried its investment at £14.7m. The cost of this investment was
£6.4m (2022: £2.5m). The financial results of Allectus Quantum are not publicly available.
Valuation inputs: Market value for portfolio of investments.
Valuation methodology: UIL has used the portfolio’s NAV. Allectus Quantum is an investment holding company for quantum
technology investments and its NAV was valued using valuation techniques consistent with IFRS. The portfolio, consisting
principally of the unlisted investment Diraq Pty Ltd, was valued at the recent funding round. The Directors considered the
portfolio and assessed the valuation uncertainty at a higher level. Accordingly, Allectus Quantum’s fair value has been given a
sensitivity of 20% reflecting the higher level of uncertainty over the manager’s valuations of Allectus Quantum’s holdings.
Sensitivities: Should the value of holdings in Allectus Quantum move by 20% the gain or loss would be £2.9m (2022: n/a).
Arria NLG Limited (“Arria”) New Zealand incorporated
UIL holds 6.6m ordinary shares in Arria and, as at 30 June 2023, carried this investment at £6.6m (2022: £1.2m). The cost of this
investment was £0.7m (2022: £0.7m). The financial results of Arria are not publicly available. UIL did not receive any income in the
year from Arria.
Valuation inputs: Recent and current fundraise price of USD 1.25 per ordinary share.
Valuation Methodology: Arria has been valued based on recent and current equity fundraising events. Arria operates in the
AI field known as natural language generation. It owns, develops, and licenses its core, patented natural language generation
technologies. Arria’s revenues have gained traction over the last two years and appear to be growing strongly, however against
this, it is materially loss making and cash flow negative. Arria’s recent success in raising capital has removed much of the
uncertainty over its valuation and accordingly, it has been given a lower sensitivity of 20% (2022: 400%).
Sensitivities: Should the value of Arria move by 20% the gain or loss would be £1.3m (2022: a move by 400% the gain or loss
would be £4.6m).
Somers Bermuda incorporated
Somers is UIL’s largest investment with a value of £107.7m as at 30 June 2023 (2022: £148.8m) and accounts for 34.9%
(2022: 35.7%) of UIL’s total portfolio. The cost of this investment was £70.1m (2022: £89.4m).
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 Mezzanine Market of the
Bermuda Stock Exchange. As at 30 June 2023, the Somers shares were deemed not to trade in an active market and as at the
30 June 2023 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. 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 2022, Somers recorded total income of USD 204.5m (2022: USD 218.0m), net loss before tax of USD 210.1m
(2022: net income before tax of USD 197.8m) and net assets of USD 337.4m (2022: USD 617.8m).
As at 31 March 2023, Somers reported the three largest investments, which make up 86.1% of its portfolio, were a 61.8% holding
in Waverton, a UK wealth manager, a 54.4% holding in Resimac, a non-bank Australian financial institution, and a 39.8% holding
in ICM Mobility, a UK holding company focused on the mobility sector for private and public transport. Somers values Waverton
based on comparable quoted companies and in particular a multiple of assets under management. Resimac is valued using
its quoted share price and ICM Mobility’s portfolio investments are predominantly valued using earnings and revenue peer
multiples. Somers also holds 75m AKJ token securities issued by AKJT Holdings Limited and as at 31 March 2023, carried this
investment at EUR 7.5m or EUR 0.10 per token. Somers values these tokens with reference to the funds invested in the token to
date by Somers and other investors and note that a substantial majority of the investment in the token to date occurred at a price
approximating EUR 0.10 per token. Somers note that a smaller number of more recent trades occurred at values above this level.
This, along with the elevated volatility in crypto markets, has increased the sensitivity of these securities to significant valuation
changes. As at 30 June 2023 62% of Somers’ investment portfolio was valued using valuation techniques and these investments
have been given a sensitivity of 20% (2022: 10%) to reflect the higher percentage of unlisted investments within Somers’ portfolio,
the high subjectivity around the AKJ token valuation and a degree of uncertainty over the managers valuations. The remaining
38% of Somers’ portfolio was valued using their listed share price.
Sensitivities: Should the value of Somers move by 20% the gain or loss would be £21.5m (2022: by 10% the gain or loss would be
£14.9m).
West Hamilton Bermuda incorporated
UIL holds a 57.0% equity interest in West Hamilton and, as at 30 June 2023, carried this investment at £15.1m (2022: n/a). The cost
of this investment was £17.8m (2022: n/a).
Key valuation inputs: Fair value of West Hamilton’s identifiable assets and liabilities. Investment yield is 6.25% and rent renewal
rates are assumed to be at the same level as is currently achieved from existing tenants.
Valuation Methodology: Fair value of West Hamilton’s properties held in Hamilton, Bermuda. West Hamilton’s properties at 69
and 71 Pitts Bay Road, representing approximately 86% of their property assets by land area, are currently subject to a sales
process. West Hamilton intend to distribute the net proceeds from this sale to shareholders. For these properties, UIL utilised
the expected sales proceeds for valuing them. In adopting this approach the Directors considered the credibility of the buyer,
the stage of the sales process and the certainty of completion. The Directors also considered the fair value of the properties
should the sale not complete. For the remaining property held outside of the scope of this sales process, consisting of a mixed-
use building located at 71A Pitts Bay Road housing nine executive condominiums, a penthouse office suit and a gymnasium, West
Hamilton appointed an independent professional valuer to perform a property valuation and to provide his opinion as to the fair
value of this property. This valuation was based on an income approach whereby net rental income for the property is capitalised
using an investment yield. Comparable property values and the demand for comparable rental units were also considered in
support of income approach value. The Directors consider Bermuda property values have not moved significantly since the
independent valuation was performed and have utilised the valuation for the purpose of valuing the holding, with adjustments
for known movements to 30 June 2023. West Hamilton’s fair value has been given a sensitivity of 10% to reflect a degree of
uncertainty over the property portfolio valuations.
For its year ended 30 September 2022, West Hamilton recorded total income of USD 3.1m, net loss before tax of USD 5.1m and
net assets of USD 32.4m.
Sensitivities: Should the value of West Hamilton move by 10% the gain or loss would be £1.5m (2022: n/a).
Other unlisted companies
Valuation methodology: UIL has a further 16 (2022: 19) unlisted holdings valued below £5.0m 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 16 holdings was £10.8m as at 30 June 2023 (2022: £9.6m), consisting £9.5m of equities and £1.3m of loans.
If the value of all these lower valued equity investments moved by 20.0%, this would have an impact on the investment portfolio
value of £1.9m or 0.6%. If the value of all these lower valued loans moved by 10.0%, this would have an impact on the investment
portfolio value of £0.1m (2022: a 20% change, £1.9m).
102
UIL Limited
Report and Accounts for the year to 30 June 2023
103
NOTES TO THE ACCOUNTS
(continued)
OTHER FINANCIAL INFORMATION (UNAUDITED)
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%
188%
2023
Commitment
method
425%
188%
Gross
method
425%
236%
2022
Commitment
method
425%
236%
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.
The following table shows the sensitivity of the fair value of level 3 financial investments to changes in key assumptions as at
30 June 2023.
Investment
Somers
Allectus Capital
Allectus Quantum
West Hamilton
Arria
Other investments
Other investments
Total
Investment
type
Valuation
methodology
Risk
weighting
Sensitivity
+/-
Carrying
amount
£’000s
Sensitivity
£’000s
Equity
Equity
Equity
Equity
Equity
Equity
Loans
NAV
NAV
NAV
Low
Medium
Medium
20%
20%
20%
107,688
21,538
17,821
3,564
14,666
2,933
Fair value of
assets
Last fund
raising
Various
Various
Low
10%
15,087
1,509
Medium
Medium
Low
20%
20%
10%
6,602
1,320
9,451
1,890
1,337
134
172,652
32,888
(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. 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. As at 30 June 2023 this facility had not been
drawn, since the year end £500,000 has been drawn by Coda Cloud Limited.
32. POST BALANCE SHEET EVENT
On 28 July 2023, Zeta Energy Ltd, a related party, provided an AUD 11.0m (£5.2m) loan facility to UIL. On 1 August 2023, the AUD 11m
was drawn by UIL. In September 2023, AUD 2.0m (£0.9m) was repaid by UIL. The loan is repayable on 30 September 2023 and bears
interests at 8.3% per annum.
104
UIL Limited
Report and Accounts for the year to 30 June 2023
105
NOTICE OF ANNUAL GENERAL MEETING
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, 9 November 2023 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.
To receive and adopt the report of the Directors of the Company and the financial statements for the year ended
30 June 2023, together with the report of the auditor thereon.
2. To approve the Directors’ Remuneration Policy.
3. To approve the Directors’ Remuneration Report for the year ended 30 June 2023.
4. To approve the Company’s dividend policy to pay four interim dividends per year.
5. To re-elect Mr P Burrows as a Director.
6. To re-elect Mr S Bridges as a Director.
7. To re-elect Ms A Hill 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:
(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);
(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:
(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 2024 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 8,384,000 Ordinary Shares, equivalent to approximately 10% 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 2024 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.
By order of the Board
ICM Limited, Secretary
22 September 2023
106
106
UIL Limited
NOTES
1. Only the holders of ordinary shares registered on the register of
members of the Company at close of business on 7 November 2023
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 7 November 2023 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 7 November 2023.
Alternatively, shareholders can vote or appoint a proxy electronically
by visiting www.investorcentre.co.uk/eproxy. You will be asked to
enter the Control Number, the Shareholder Reference Number
and PIN which are printed on the form of proxy. The latest time for
the submission of proxy votes electronically is 5:00 pm (GMT) on
7 November 2023. 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 6 November 2023 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 6 November 2023 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 6 November
2023 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 6 November
2023. 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 Notice are 83,842,918.
Report and Accounts for the year to 30 June 2023
107
UIL Limited
COMPANY INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
DIRECTORS
Peter Burrows, AO (Chairman)
Stuart Bridges
Alison Hill
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
ASSISTANT SECRETARY
Conyers Corporate Services (Bermuda) Limited
Clarendon House, 2 Church Street, Hamilton HM 11,
Bermuda
ADMINISTRATOR
JP Morgan Chase Bank N.A. – London Branch
25 Bank Street, Canary Wharf, London E14 5JP
United Kingdom
Authorised in the UK by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority
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
COMPANY BANKER
The Bank of Nova Scotia, London Branch
201 Bishopsgate, 6th Floor, London EC2M 3NS
United Kingdom
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 in the UK by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority
CUSTODIAN
JPMorgan Chase Bank N.A. – Jersey Branch
JPMorgan House, Grenville Street, St Helier
Jersey JE4 8QH
Regulated by the Jersey Financial Services Commission
REGISTRAR
Computershare Investor Services (Bermuda) Limited
5 Reid Street, Hamilton HM 11, Bermuda
Telephone number 0370 707 1196
REGISTRAR TO THE DEPOSITARY INTERESTS
AND CREST AGENT
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol BS99 6ZY
United Kingdom
108
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 2023
the ordinary share price was 145.00p (2022: 187.50p) and the NAV per ordinary share was 199.87p (2022: 260.89p),
the discount was therefore 27.5% (2022: 28.1%).
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
Loans
ZDP shares
Total debt
Net assets attributable to equity holders
Gearing
page
89
74
74
90
74
2023
£’000s
7,872
(5,234)
42,691
94,589
139,918
167,581
83.5%
2022
£’000s
3,835
(8)
51,080
140,813
195,720
218,740
89.5%
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 2023
30-Jun-22
30-Sep-22
23-Dec-22
31-Mar-23
26-Jun-23
30-Jun-23
Total return
Year to 30 June 2022
30-Jun-21
30-Sep-21
23-Dec-21
31-Mar-22
30-Jun-22
30-Jun-22
Total return
Dividend rate
(pence)
n/a
2.00
2.00
2.00
2.00
n/a
Dividend rate
(pence)
n/a
2.00
2.00
2.00
2.00
n/a
NAV
(pence)
260.69
258.73
233.15
214.13
201.89
199.87
(20.6%)
NAV
(pence)
431.51
387.13
372.95
370.02
260.69
260.69
(38.1%)
Share price
(pence)
187.50
188.50
155.00
128.50
143.50
145.00
(18.5%)
Share price
(pence)
268.00
267.00
245.00
240.00
187.50
187.50
(27.6%)
109
UIL LimitedReport and Accounts for the year to 30 June 2023 ALTERNATIVE PERFORMANCE MEASURES (continued)
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.
NAV (pence)
2023
Share price
(pence)
NAV (pence)
2022
Share price
(pence)
Dividend yield – represents the ratio of dividends per ordinary share over closing ordinary share price.
Dividends per ordinary shares
Ordinary share price
Dividend yield
page
4
4
2023
pence
8.000
145.00
5.5%
2022
pence
8.000
187.50
4.3%
Total return
NAV 14 August 2003 (pence)
Total dividend, warrants and CULS adjustment factor
NAV/Share price at year end (pence)
Adjusted NAV/Share price at 30 June (pence)
Total return since inception
344.2%
367.5%
99.47
2.2105
199.87
441.81
85.67
2.7620
145.00
400.49
99.47
2.1336
260.69
556.63
459.6%
85.67
2.6203
187.50
491.30
473.5%
Revenue reserves per ordinary share carried forward – the value of the Group’s revenue reserves divided by the
number of ordinary shares in issue.
Revenue reserves (£'000s)
Number of ordinary shares in issue at 30 June
Revenue reserves per ordinary share carried forward (pence)
page
74
91
2023
11,735
2022
12,846
83,842,918
83,842,918
14.00
15.32
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.
Annual compound NAV total return since inception
NAV
7.8%
2023
Share price
8.1%
NAV
9.5%
2022
Share price
9.7%
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 (including and excluding
performance fees)
Management and administration fees
Other expenses
Expenses suffered within underlying funds
Total expenses for ongoing charges calculation
Average weekly NAV of the Group
Ongoing Charges
page
70
70
2023
£’000s
758
977
3,935
5,670
200,431
2.8%
Revenue yield – represents the ratio of total income in the year over average gross assets in the year.
Income
Average Gross assets
Revenue yield
page
70
2023
£’000s
10,229
357,505
2.9%
2022
£’000s
852
819
5,221
6,892
306,929
2.2%
2022
£’000s
9,879
491,667
2.0%
110
UIL Limited
Report and Accounts for the year to 30 June 2023
111
111
Report and Accounts for the year to 30 June 2023
HISTORICAL PERFORMANCE
at 30 June
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
NAV per ordinary share (pence)
199.87
260.89 431.51 292.79 369.57 291.79 252.86 241.12 169.00
165.84
Ordinary share price (pence)
145.00
187.50 268.00 177.50 199.00 174.50 164.00 130.75 117.00
128.00
Discount (%)
27.5
28.1
37.9
39.4
46.2
40.2
35.1
45.8
30.8
22.8
Returns and dividends (pence)
Revenue return per ordinary share
6.68
8.35
9.98
9.77
7.63
6.67
6.38
6.23
Capital return per ordinary share
(59.70)
(171.68) 133.81 (81.30)
75.34
38.96
12.46
68.45
7.84
2.47
7.03
19.85
Total return per ordinary share
(53.02)
(163.33) 143.79 (71.53)
82.97
45.63
18.84
74.68
10.31
26.88
Dividends per ordinary share
8.0001
8.000
8.000
7.875
7.500
7.500
7.500
7.500
7.500
7.500
FTSE All-Share Index total return
8,611
7,981
7,852
6,465
7,431
7,389
6,777
5,737
5,614
5,471
ZDP shares2 (pence)
2022 ZDP shares
Capital entitlement3 per ZDP share
ZDP share price
2024 ZDP shares
n/a
n/a
143.98 135.56 127.59 120.03 113.01 106.37 100.12
144.00 139.50 126.50 132.00 124.50 119.50 104.50
Capital entitlement3 per ZDP share
130.04
124.14 118.51 113.13 107.97 103.10
ZDP share price
2026 ZDP shares
123.50
122.50 120.50 105.50 114.00 107.50
Capital entitlement3 per ZDP share
128.75
122.62 116.78 111.21 105.89 100.87
ZDP share price
2028 ZDP shares
114.50
115.50 116.00
92.25 107.50 102.25
Capital entitlement3 per ZDP share
113.02
106.87 101.60
ZDP share price
96.50
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
Equity holders' funds (£m)
Gross assets4
Loans
ZDP shares
Equity holders' funds
Revenue account (£m)
Income
Costs (management and other expenses)
Finance costs
Financial ratios of the Group (%)
Ongoing charges figure5 (excluding
performance fee)
Gearing5
304.9
410.6
544.4
483.3
537.2
488.3
449.7
440.7
373.4
399.1
42.7
94.6
51.1
48.5
51.1
51.0
27.8
47.8
24.7
34.4
22.2
140.8
132.1
180.5
159.9
199.4
173.8
197.4
172.4
212.5
167.6
218.7
363.8
251.6
326.3
261.1
228.1
218.6
166.6
164.4
10.2
1.7
2.9
9.9
1.7
1.1
11.6
12.7
11.2
10.6
10.7
10.5
11.2
10.4
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
2.8
83.5
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
97.2
101.6
124.1
144.4
(1) The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts
(2) Issued by UIL Finance, a wholly owned subsidiary of UIL
(3) See pages 28 and 29
(4) Gross assets less current liabilities excluding loans
(5) See Alternative Performance Measures on pages 109 to 111
112
UIL Limited A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR
UK CONTACT
PO Box 208
Epsom Surrey
KT18 7YF
Telephone: +44 (0)1372 271486
www.uil.limited
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
UIL News