TIDMUTLH TIDMUTL TIDMTTM TIDMUTLG
RNS Number : 4327N
UIL Finance Limited
22 September 2023
UIL Finance Limited
REPORT AND ACCOUNTS
FOR THE YEARED 30 JUNE 2023
UIL Finance Limited
REPORT AND ACCOUNTS
for the year ended 30 June 2023
Contents Page
Company Directory 2
Strategic Report 3
Directors' Report 4
Statement of Directors' Responsibilities 7
Independent Auditor's Report 8
Income Statement 13
Statement of Changes in Equity 13
Statement of Cash Flows 13
Statement of Financial Position 14
Notes to the Accounts 15
UIL Finance Limited
COMPANY DIRECTORY
Registered Office Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Directors Peter Burrows, AO (Chairman)
Stuart Bridges
Alison Hill
David Shillson
Company Number 39479
Legal Entity Identifier 213800JPJWZ5P3QJX538
Auditor KPMG LLP
15 Canada Square
Canary Wharf
London E14 5GL
United Kingdom
Date of Formation 17 January 2007
Nature of Business Closed end investment company
Ordinary Shareholder and Parent
Company UIL Limited
UIL Finance Limited
STRATEGIC REPORT
The Strategic Report is designed to provide shareholders with an
insight into the operations of the Company during the period. In
particular, it gives information on:
-- the Company's objective and investment policy;
-- the regulatory and competitive environment within which the
Company operates;
-- the Board's strategy for achieving its stated objectives;
-- principal risks and risk management; and
-- key performance indicators.
Objective
The Company's investment objective is to finance and fund the
final capital entitlements of the zero dividend preference ("ZDP")
shares.
Investment policy
The Company seeks to fund the final capital entitlements of the
ZDP shares by lending current asset funds to its parent company,
UIL Limited.
Regulatory and competitive environment
The Company is obliged to comply with Bermuda law, the Listing
Rules of the Financial Conduct Authority and United Kingdom adopted
International Financial Reporting Standards ("UK adopted IFRSs").
The Company is exempt from taxation, except insofar as it is
withheld from income received. Under Bermuda law, the Company may
not distribute income by way of a dividend unless, after
distribution of the dividend, the realisable value of the Company's
assets would be greater than the aggregate of its liabilities. ICM
Investment Management Limited ("ICMIM") is the Alternative
Investment Fund Manager of UIL Limited and joint investment manager
with ICM Limited ("ICM"). ICM is the company secretary.
Strategy for achieving objectives
The Company's performance in pursuing its objective is based on
the ability of its parent company to repay the intra-group loan to
the Company. UIL Limited has provided an undertaking to provide
sufficient funds to the Company to meet each redemption as it falls
due.
Principal risks
The principal underlying risk of the Company continues to relate
to its ability to repay the ZDP shares when they fall due. This is
dependent on the asset performance of the parent company. As at 30
June 2023, the parent company had net assets of GBP167,078,000
(2022: GBP218,507,000) after providing for amounts due to ZDP
shareholders. Details of the ZDP shares are set out in note 7 to
the accounts.
A further risk faced by the Company is that of a regulatory
nature. A regulatory or legal breach could lead to financial
penalties or a qualified audit report. The Company uses all
reasonable efforts to ensure that the Company adheres to the
relevant statutory and regulatory requirements.
Key Performance Indicators
The Board assesses the Company's success in pursuing its
objectives in the ability to provide for the amounts due to the ZDP
shareholders which is based on the ability of its parent company to
repay the intra-group loan to the Company. The KPIs for the parent
company can be found in UIL Limited's Annual Report.
This Strategic Report was approved by the Board of Directors on
22 September 2023.
ICM Limited
Company Secretary
22 September 2023
UIL Finance Limited
DIRECTORS' REPORT
The Directors present their report and accounts of the Company
for the year ended 30 June 2023.
Principal activity and status
UIL Finance Limited (the "Company" or "UIL Finance") is a
Bermuda exempted, closed ended investment company with company
registration number 39479. The Company's issued ZDP shares are
listed on the standard segment of the main market of the London
Stock Exchange.
Corporate Governance
Bermuda does not have its own corporate governance code and,
since the Company has a Standard Listing on the Official List of
the Financial Conduct Authority, the Company is not required to
comply or provide an explanation for any non-compliance with the UK
Corporate Governance Code issued by the Financial Reporting
Council.
The Board meets at least twice a year to consider strategic
affairs and to approve the half yearly report and the annual report
and accounts.
In the Directors' opinion, the interests of the Company and its
shareholders are adequately covered by the governance procedures
applicable to its parent company, UIL Limited. For example, UIL
Limited's Audit & Risk Committee considers the financial
reporting procedures and oversees the internal control and risk
management systems for the Group as a whole and the Directors see
no benefit in convening a separate Audit Committee or any other
committee for the Company. An overview of the Group's internal
control and risk management systems are set out in UIL Limited's
report and accounts.
Board Diversity
Listing Rule 14.3.33R 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, the Company's Board consists of three men
and one woman, all of whom are White British or other White, and
UIL Finance 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 Finance is an 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. 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.
Results and Dividends
The results for the year are set out in the attached accounts
which are prepared on a going concern basis and as set out in note
13, the Directors believe that it is appropriate to adopt the going
concern basis in preparing the accounts as the Company can continue
to operate due to the contractual obligation of the parent company
to ensure that UIL Finance is able to redeem the ZDP shares on each
repayment date and the Directors are comfortable that the parent
company has the financial resources to do so.
The Company has not declared a dividend in respect of the year
ended 30 June 2023 (2022: nil).
Directors
The following Directors held office throughout the year, unless
otherwise stated:
Peter Burrows (Chairman)
Stuart Bridges
Alison Hill
David Shillson
Christopher Samuel retired from the Board on 31 May 2023.
Directors' Disclosures
As at 30 June 2023, no Director had any interest in the
Company's shares (2022: none). No Director acquired or disposed of
any interest in the shares in the Company during the year or since
the year end.
Election and re-election of Directors
The Company'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, the directors have
voluntarily agreed to be subject to annual re-election.
Consequently, at the forthcoming AGM Mr Burrows, Mr Bridges, Ms
Hill and Mr Shillson will stand for re-election.
The Board has considered the re-election of all the Directors
individually and has reviewed the composition of the Board as a
whole and borne in mind the need for a proper balance of skills and
experience. Following an appraisal of the performance of each of
the Directors, the Board believes that these Directors make a
valuable contribution based on their individual skills, knowledge
and experience. They have commitment to their roles and the Board
believes that their election and re-election would be in the best
interests of the Company.
Each Director has signed a letter of appointment setting out the
terms of their engagement as a Director, but does not have a
service agreement with the Company.
Board Meetings
The Board meets at least twice a year to consider strategic
affairs and to approve the half yearly report and the annual report
and accounts. In view of the nature of the Company's business the
Board does not consider it necessary to appoint a separate audit
committee or nominations committee.
Directors' Remuneration
No Director received or is entitled to receive any remuneration
from the Company.
Zero dividend preference shares
Full details of the changes to the Company's authorised and
issued zero dividend preference shares during the year can be found
in note 7 to the accounts.
Ordinary Share Capital
Full details of the changes to the Company's authorised and
issued ordinary share capital during the year can be found in note
8 to the accounts.
Ordinary shares of UIL Limited
Ordinary shares of UIL Limited rank behind the ZDP shares on a
winding up of the Company and UIL Limited, together referred to as
the Group (save for any undistributed revenue reserves of UIL
Limited on a winding up).
Auditor
KPMG LLP ("KPMG") was the Company's auditor for the year ended
30 June 2023 and was responsible for the audit of these
accounts.
Audit fees relating to the year amounted to GBP7,500 (2022:
GBP7,500) and were settled by the parent company, UIL Limited.
No fees were paid or payable to KPMG for non-audit work for the
year under review (2022: GBPnil).
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.
By order of the Board
ICM Limited,
Secretary
22 September 2023
UIL Finance Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES
in respect of the Report and Accounts
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and regulations.
The Directors are required to prepare Company financial
statements for each financial year. They have elected to prepare
the financial statements in accordance with UK-adopted
International Accounting Standards and applicable law.
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 Company and of the profit or loss for that
period. In preparing the financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with UK
adopted International Accounting Standards;
-- assess the 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 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 Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
its financial statements comply with the Companies Act 1981 of
Bermuda. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
and Corporate Governance Statement that complies with that law and
those regulations.
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 Strategic Report and Director' Report include a fair
review of the development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
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 Company's position and
performance, business model and strategy.
Approved by the Board on 22 September 2023 and signed on its
behalf by:
Peter Burrows
Chairman
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF UIL Finance
Limited
1 Our opinion is unmodified
We have audited the financial statements of UIL Finance Limited
("the Company") for the year ended 30 June 2023 which comprise the
Income Statement, Statement of Changes in Equity, Statement of Cash
flows, Statement of Financial Position, 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 Company's
affairs as at 30 June 2023 and of its result 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 Company in accordance with, UK ethical
requirements including the FRC Ethical Standard.
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.
The risk Our response
Recoverability of Low risk, high value
loan to Parent Company
The carrying amount of We performed the tests
(GBP98.2 million, 2022: the Loan to parent company below rather than seeking
GBP144.2 million) balance represents 100% to rely on any of the
(2022:100%) of the Company's Company's controls because
Refer to page 16 (accounting total assets. The recoverability the nature of the balance
policy) and page 17 is not at a high risk is such that we would
(financial disclosures) of significant misstatement expect to obtain audit
or subject to significant evidence primarily through
judgement. However, due the detailed procedures
to its materiality in described.
the context of the financial
statements, this is considered Our procedures included:
to be the area that had
the greatest effect on Tests of detail: Assessing
our overall audit. 100% of the debtor to
identify, with reference
to the Parent Company's
financial statements,
whether the Parent Company
has a positive net asset
value and therefore coverage
of the debt owed, as well
as assessing whether the
Parent Company has historically
been profit-making; and
Assessing the Parent
Company audit: Assessing
the work performed by
the Parent Company audit
team, and considering
the results of that work,
on those net assets, including
assessing the liquidity
of the assets and therefore
the ability to fund the
repayment of the receivable.
---------------------------------- ----------------------------------
3 Our application of materiality and an overview of the scope of
our audit
Materiality for the financial statements as a whole was set at
GBP0.98 million (2022: GBP1.4 million), 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 75% (2022: 75%) of materiality for the
financial statements as a whole, which equates to GBP0.73 million
(2022: GBP1.0 million). We applied this percentage in our
determination of performance materiality because we did not
identify any factors indicating an elevated level of risk .
We agreed to report to the Board any corrected or uncorrected
identified misstatements exceeding GBP0.05 million (2022: GBP0.07
million), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Our audit of the company was undertaken to the materiality level
specified above and was performed by a single audit team.
The scope of the audit work performed was fully substantive as
we did not rely upon the Company's internal control over financial
reporting.
4 Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Company
or to cease its operations, and as they have concluded that 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 its 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 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
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 Company's available financial
resources and its ability operate over this period were:
-- Recoverability of the debt due from the Parent Company (UIL
Limited), to meet the Zero Dividend Preference Shares (ZDP shares)
liabilities.
We considered whether this risk could plausibly affect the
liquidity in the going concern period by assessing the degree of
downside assumption that, individually and collectively, could
result in a liquidity issue, taking into account the Parent
Company's liquid investment position (and the results of a reverse
stress test).
We considered whether the going concern disclosure in note 1(a)
and note 13 to the financial statements gives 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 Company's ability to continue as a going
concern for the going concern period; and
-- we found the going concern disclosure in note 1(a) and note 13 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
Company will continue in operation.
5 Fraud and breaches of laws and regulations - ability to
detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud ("fraud
risks") we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
-- Enquiring of Directors as to the 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, and the Company's Investment Manager;
-- Reading Board 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 and taking into our overall
knowledge of the control environment, we perform procedures to
address the risk of management override of controls, in particular
the risk that management may be in a position to make inappropriate
accounting entries. 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 Investment Manager 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.
We did not identify significant unusual transactions or any
additional fraud risks.
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 and the Investment Manager,
(as required by auditing standards), and discussed with the
Directors and the Investment Manager 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.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation) and
financial reporting aspects of 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.
Secondly, the Company is subject to many other laws and
regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: money laundering, data protection, bribery
and corruption legislation, and certain aspects of company
legislation recognising the financial and regulated nature of the
Company'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 Investment Manager 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 fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
6 We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 7,
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
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 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 .
9 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 section 90 (2) of the Companies Act 1981 of
Bermuda. 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 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, Statutory Auditor
Chartered Accountants
20 Castle Terrace
Edinburgh
EH1 2EG
22 September 2023
UIL Finance Limited
INCOME STATEMENT
Year to Year to
30 June 30 June
2023 2022
Note GBP'000s GBP'000s
------------------------------------------ ------- ------------- ---------
Income 2 6,260 7,988
------------------------------------------- ------- ------------- ---------
Total income 6,260 7,988
Other expenses - -
------------------------------------------ ------- ------------- ---------
Profit before finance costs
and taxation 6,260 7,988
Finance costs 3 (6,260) (7,988)
------------------------------------------- ------- ------------- ---------
Result before taxation - -
Taxation - -
------------------------------------------- ------- ------------- ---------
Result for the year - -
------------------------------------------- ------- ------------- ---------
Earnings per share -
pence - -
------------------------------------------- ------- ------------- ---------
The Company does not have any income or expense that is not included
in the result for the year and therefore the result 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 are derived from continuing
operations.
The notes on pages 15 to 23 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
There are no movements in equity.
STATEMENT OF CASH FLOWS
There were no cash flows in the period and therefore a cash flow
statement has not been prepared.
UIL Finance Limited
STATEMENT OF FINANCIAL POSITION
As at 30 June 2023 2022
Note GBP'000s GBP'000s
-------------------------------------------- ------ ---------- ----------
Non-current assets
Other receivables 6 98,222 93,079
-------------------------------------------- ------ ---------- ----------
Current assets
Other receivables 6 - 51,166
-------------------------------------------- ------ ---------- ----------
Current liabilities
Zero dividend preference shares 7 - (51,166)
-------------------------------------------- ------ ---------- ----------
Total assets less current liabilities 98,222 93,079
Non-current liabilities
Zero dividend preference shares 7 (98,222) (93,079)
-------------------------------------------- ------ ---------- ----------
Net assets - -
-------------------------------------------- ------ ---------- ----------
Equity attributable to equity holders
Ordinary share capital 8 - -
-------------------------------------------- ------ ---------- ----------
Approved by the Board on 22 September 2023 and signed on its behalf
by
Peter Burrows
Chairman
The notes on pages 15 to 23 form part of these financial statements.
UIL Finance Limited
NOTES TO THE ACCOUNTS
for the year to 30 June 2023
1. Accounting policies
The Company is an investment company incorporated in Bermuda on
17 January 2007.
(a) Basis of accounting
The financial statements of the Company have been prepared on a
going concern basis (see note 13) in accordance with UK-adopted
international accounting standards, which comprise standards and
interpretations approved by the International Accounting Standards
Board and International Accounting Standards Committee that remain
in effect.
There have been no significant changes to the accounting
policies during the year to 30 June 2023.
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
Company.
(b) Zero dividend preference shares
The ZDP shares, due to be redeemed on 31 October 2024, 2026 and
2028, at a redemption value, including accrued capitalised returns
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 Company 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 the requirements of IFRS 9
"Financial Instruments", even though under Bermuda company law ZDP
shares are required to be recognised as share capital in the
Company.
(c) Cash flow statement
There were no cash flows in the period or in the prior year and
therefore a cash flow statement has not been prepared. All
transaction movements were through the intra-group loan
account.
(d) Foreign currency
The functional and reporting currency is pounds sterling because
the Company's ZDP share capital was raised, and will be repaid, in
pounds sterling, and has been lent to, and will be repaid, by the
parent company, in that currency.
(e) Income
(i) Interest income
Interest on debt is accrued on a time basis using the effective
interest method, calculated by accreting the initial recognition of
the inter-company loan at present value (loan and contribution by
the parent) to the final amount receivable at maturity.
(ii) Other income
The parent's contribution towards the issue costs of the ZDP
shares and redemption proceeds is accrued on a time basis,
calculated by amortising the issue costs over the life of the
loan.
(f) Expenses
The Company incurs no expenses other than finance costs. The
Directors are not entitled to receive any remuneration and all
other expenses relating to the Company are paid in full by the
parent company.
(g) Finance costs
Finance costs are accounted for on an effective interest
method.
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
1. Accounting policies (continued)
(h) Inter company loans
UIL Limited has undertaken (i) to repay any interest free loan,
and (ii) to reimburse the Company (by way of payment in advance, if
required) any and all costs, expenses, fees or interest the Company
incurs or is otherwise liable to pay to the holder of the ZDP
shares so as to enable the Company to pay the final capital
entitlement of each class of ZDP share on their respective
redemption date. The amount owed in the accounts is based on the
entitlements of the ZDP shareholders at the relevant date. The
inter company loans are accordingly accounted for at amortised
cost, using the effective interest method and were assessed for
credit risk under the new IFRS 9 methodology and evaluated as
having no significant credit risk. Therefore, no amounts were
recognised as an impairment provision.
(i) Use of judgements, estimates and assumptions
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 area requiring the most significant judgement
and estimation in the preparation of the financial statements is
the accounting through the Income Statement of the parent
contribution to UIL Finance to enable UIL Finance to repay the ZDP
shareholders on each repayment date. The parent's contribution
towards the issue cost of the ZDP shares and redemption proceeds
has been treated through the Income Statement and recognised over
the life of the loan as UIL Finance provides financing services to
UIL Limited and in return is due to receive reimbursement of any
costs and expense as and when they fall due. The policy for
interest income, including the allocation and recognition of the
parent contributions, is set out in note 1(e) to the accounts.
2. Income
2023 2022
GBP'000s GBP'000s
----------------- --------- ---------
Interest income 5,910 7,595
Other income 350 393
------------------ --------- ---------
6,260 7,988
----------------- --------- ---------
3. Finance costs
2023 2022
GBP'000s GBP'000s
------------ --------- ---------
ZDP shares 6,260 7,988
------------- --------- ---------
4. Earnings per share
The calculation of earnings per share is based on a result after
tax for the period of GBPnil (2022: GBPnil) and a weighted average
number of 10 ordinary shares in issue during the year (2022: 10
ordinary shares in issue during the year).
5. Dividends
There were no dividends paid or declared in respect of the year
(2022: nil).
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
6. Other receivables
2023 2022
GBP'000s GBP'000s
Loan to parent company - UIL Limited
- Receivable within one year - 51,166
- Receivable after more than one year 98,222 93,079
----------------------------------------- --------- ---------
98,222 144,245
---------------------------------------- --------- ---------
The loan is repayable on the date the underlying ZDP shares are
redeemed.
7. Zero dividend preference shares
30 June 30 June
2023 2022
GBP'000s GBP'000s
-------------------------------------- --------- ---------
ZDP shares - current liabilities
2022 ZDP shares - 51,166
--------------------------------------- --------- ---------
ZDP shares - non-current liabilities
2024 ZDP shares 38,765 36,833
2026 ZDP shares 31,979 30,397
2028 ZDP shares 27,478 25,849
--------------------------------------- --------- ---------
98,222 93,079
-------------------------------------- --------- ---------
Total ZDP shares liabilities 98,222 144,245
--------------------------------------- --------- ---------
Authorised ZDP shares of the Company as at 30 June 2023 and 30
June 2022 are as follows:
Number GBP'000s
--------------------------------- ----------- ---------
2022 ZDP shares of 5.3180p each 63,686,754 3,387
2024 ZDP shares of 3.8025p each 76,717,291 2,917
2026 ZDP shares of 10p each 25,000,000 2,500
2028 ZDP shares of 3.8676p each 44,842,717 1,734
---------------------------------- ----------- ---------
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
7. Zero dividend preference shares (continued)
ZDP shares issued by the Company are as follows:
Year to 30 June 2023
Balance Redemption Finance Balance
as at 30 of ZDP shares costs as at
June 2022 30 June
2023
------- ---------- ----------- --------------- -------- -----------
2022 Number 35,569,069 (35,569,069) - -
GBP'000s 51,166 (52,283) 1,117 -
2024 Number 30,000,000 - - 30,000,000
GBP'000s 36,833 - 1,932 38,765
2026 Number 25,000,000 - - 25,000,000
GBP'000s 30,397 - 1,582 31,979
2028 Number 25,000,000 - - 25,000,000
-------
GBP'000s 25,849 - 1,629 27,478
------------- ---- ----------- --------------- -------- -----------
Total GBP'000s 144,245 (52,283) 6,260 98,222
------- ------------- ----------- --------------- -------- -----------
Year to 30 June 2022
Balance Finance Balance
as at 30 costs as at
June 2021 30 June
2022
------- ---------- ----------- -------- -----------
2022 Number 35,569,069 - 35,569,069
GBP'000s 48,052 3,114 51,166
2024 Number 30,000,000 - 30,000,000
GBP'000s 34,996 1,837 36,833
2026 Number 25,000,000 - 25,000,000
GBP'000s 28,893 1,504 30,397
2028 Number 25,000,000 - 25,000,000
-------
GBP'000s 24,316 1,533 25,849
-------------- --- ----------- -------- -----------
Total GBP'000s 136,257 7,988 144,245
------- -------------- ----------- -------- -----------
On 31 October 2022 the 35,569,069 2022 ZDP shares that were in
issue were redeemed at 146.99p per 2022 ZDP share.
UIL Limited held 2,309,620 2026 ZDP shares as at 30 June 2022
and 30 June 2023.
UIL Limited 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).
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
7. Zero dividend preference shares (continued)
2028 ZDP shares
Based on the initial entitlement of a 2028 ZDP share of 100p on
23 April 2021, a 2028 ZDP share will have a final capital
entitlement at the end of its life on 31 October 2028 of 152.29p
equating to a 5.75% per annum gross redemption yield. The capital
entitlement (excluding issue costs) per 2028 ZDP share as at 30
June 2023 was 113.02p (2022: 106.87p).
The ZDP shares are admitted to the standard segment of the
Official List and to trading 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 the Company and UIL Limited but
in priority to the ordinary shares of the Company and UIL Limited
save in respect of certain winding up revenue profits of UIL
Limited.
The growth of each ZDP share accrues daily and is reflected in
the return and net asset value per ZDP share on an effective
interest method. 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 the
separate approval of the ZDP shareholders (treated as a single
class) at a separate meeting. Separate approval of each class of
ZDP shareholders must be obtained in respect of any proposals which
would affect their respective rights, including any resolution to
wind up the Company. In addition the approval of ZDP shareholders
by the passing of a special resolution at separate class meetings
of the ZDP shareholders is required in relation to any proposal to
modify, alter or abrogate the rights attaching to any class of the
ZDP shares and in relation to any proposal by the Company or its
parent company which would reduce the Group's cover of the existing
ZDP shares below 1.35 times.
On a liquidation of UIL Limited and/or the Company, 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.
8. Ordinary share capital
Number GBP
Authorised
Ordinary shares of 10p each 10 1
----------------------------------- ------- ----
Issued and nil paid
Balance as at 30 June 2023 and 30 10 -
June 2022
----------------------------------- ------- ----
In addition to receiving any income distributed by way of
dividend, the ordinary shareholders will be entitled to all surplus
assets after payment of all debts, including ZDP shares.
Net asset value per ordinary share is GBPnil (30 June 2022:
GBPnil) based on 10 shares in issue.
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
9. Parent company
UIL Limited, incorporated in Bermuda, is the parent company of
the Company, holding 100% of the nil paid ordinary shares.
In the opinion of the Directors, the Company's ultimate parent
undertaking is Somers Isles Private Trust Company Limited
("SIPTCL"), a company incorporated in Bermuda and owned by Mr
Duncan Saville.
10. Related party transactions
UIL Limited, SIPTCL, General Provincial Life Pension Fund
Limited which holds 65.4% of UIL Limited shares and ultimately
controlled by SIPTCL and the Board of the Company are considered
related parties. Amounts owing from related parties are disclosed
in the financial statements in note 6, ZDP shares issued to UIL
Limited are disclosed in note 7 and interest from related parties
is disclosed in note 2.
11. Operating Segments
The Directors are of the opinion that the Company's activities
comprise a single business segment of financing the Company's ZDP
shares debt by lending funds to its parent company and therefore no
segmental reporting is provided.
12. Financial Risk Management
The Board of Directors is responsible for the Company's risk
management. The Directors' policies and processes for managing the
financial risks are set out in the interest rate exposure and
credit risk management sections below.
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 to the accounts. The policies
are in compliance with UK adopted IFRSs and best practice and
include the valuation of financial assets at fair value and the ZDP
shares and the inter-company loan at amortised cost.
Interest Rate exposure
The exposure of the financial assets and liabilities to interest
risks is shown below:
Within More than
Total one year one year
30 June 2023 GBP'000s GBP'000s GBP'000s
--------------------------------- --------- --------- ----------
Exposure to fixed rates
Zero dividend preference shares (98,222) - (98,222)
Intra-group loan 98,222 - 98,222
--------------------------------- --------- --------- ----------
Net exposures
At year end - - -
Maximum in year - - -
Minimum in year - - -
--------------------------------- --------- --------- ----------
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
12 Financial Risk Management (continued)
Within More than
Total one year one year
30 June 2022 GBP'000s GBP'000s GBP'000s
--------------------------------- ---------- --------- ----------
Exposure to fixed rates
Zero dividend preference shares (144,245) (51,166) (93,079)
Intra-group loan 144,245 51,166 93,079
--------------------------------- ---------- --------- ----------
Net exposures
At year end - - -
Maximum in year - - -
Minimum in year - - -
--------------------------------- ---------- --------- ----------
Credit Risk exposure
The Company is exposed to potential failure by its parent
company to settle the ZDP share liability on behalf of the Company
on the respective repayment dates. The Board assesses this risk at
each Board meeting.
2024 ZDP shares
Based on their final entitlement of 138.35p per share, the final
entitlement of the 2024 ZDP shares was covered 3.57 times by UIL
Limited's gross assets as at 30 June 2023. Should 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 entitlements 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.
2026 ZDP shares
Based on their final entitlement of 151.50p per share, the final
entitlement of the 2026 ZDP shares was covered 2.49 times by UIL
Limited's gross assets as at 30 June 2023. Should 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 entitlements 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 .
2028 ZDP shares
Based on their final entitlement of 152.29p per share, the final
entitlement of the 2028 ZDP shares was covered 1.90 times by UIL
Limited's gross assets as at 30 June 2023. Should 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 entitlements 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 .
None of the Company's financial assets is past due or
impaired.
UIL Finance Limited
NOTES TO THE ACCOUNTS (CONTINUED)
12. Financial Risk Management (continued)
Fair Values of financial assets and liabilities
The assets and liabilities of the Company are, in the opinion of
the Directors, reflected in the Statement of Financial Position at
fair value except for the ZDP shares and the inter-company loan
which are carried at amortised cost using effective interest method
in accordance with IFRS 9, or at a reasonable approximation
thereof.
The fair values of the ZDP shares based on their quoted market
value as at 30 June were:
2023 2022
GBP'000s GBP'000s
----------------- --------- ---------
2022 ZDP shares - 51,219
2024 ZDP shares 37,050 36,750
2026 ZDP shares 28,625 28,875
2028 ZDP shares 24,125 24,750
----------------- --------- ---------
The fair value of the inter-company loan is GBP89,800,000 (2022:
GBP141,594,000).
Capital risk management
The objective of the Company is to finance and fund the
redemption value of the ZDP shares. The Board has a responsibility
for ensuring the Company's ability to continue as a going concern
and to meet the redemption of the ZDP shares. This is dependent on
the asset performance of the parent company. At 30 June 2023, the
parent company had net assets of GBP167,078,000 (2022:
GBP218,507,000) after providing for amounts due to ZDP
shareholders.
13. Going Concern
The Directors believe that it is appropriate to adopt the going
concern basis in preparing the accounts as the Company can continue
to operate due to the contractual obligation of the parent company
to ensure that UIL Finance is able to redeem the ZDP shares on each
repayment date and the Directors are comfortable that the parent
company has the financial resources to do so.
The Board considered the parent company's going concern
assessment which focussed on the forecast liquidity of the Group
for 12 months from the date of approval of the financial
statements. This analysis assumes that the parent company will meet
some of its short term obligations through the sale of listed
securities, which represented 20.5% of the parent company's total
portfolio as at 30 June 2023. As part of this assessment the board
of the parent Company 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 parent company's ability
to meet its liabilities as they fall due (including the loan
liabilities), 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 parent company 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
GBP37,500,000, net bank overdraft of GBP2.6m and loan from Union
Mutual Pension Fund Limited of GBP5.2m (repaid since the year end).
The parent company 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 parent company had a GBP37.5m
multicurrency loan facility with Bank of Nova Scotia expiring on 19
September 2023. Subsequent to the year end, the parent company has
extended the facility until 19 March 2024, the facility reducing to
GBP25m on 19 September 2023, GBP20m by 31 October 2023, GBP15m by
31 December 2023, GBP10m by 19 February 2024 and fully repaid by 19
March 2024. The outstanding debt will be repaid when due from
portfolio realisations.
The 2024 ZDP shares final liability of GBP41.5m is repayable on
31 October 2024, the parent company 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
ACSPPUUABUPWGMP
(END) Dow Jones Newswires
September 25, 2023 02:00 ET (06:00 GMT)
Grafico Azioni Uil (LSE:UTL)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Uil (LSE:UTL)
Storico
Da Giu 2023 a Giu 2024