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RNS Number : 4324N
UIL Limited
22 September 2023
Date: 22 September 2023
Contact: Charles Jillings
ICM Investment Management Limited
01372 271 486
UIL LIMITED
ANNUAL FINANCIAL REPORT
for the year to 30 June 2023
UIL Limited ("UIL" or the "Company") today announced its audited
financial results for the year to 30 June 2023.
FINANCIAL HIGHLIGHTS
-- Revenue earnings per ordinary share of 6.68p (2022: 8.35p)
-- Dividends per ordinary share of 8.00p (2022: 8.00p)
-- Net asset value ("NAV") total return per ordinary share* of -20.6% (2022: -38.1%)
-- Share price total return per ordinary share* of -18.5% (2022: -27.6%)
-- NAV discount as at 30 June 2023* of 27.5% (2022: 28.1%)
-- Gearing* 83.5% (2022: 89.5%)
*See Alternate Performance Measures on pages 109 and 111 of the
Report and Accounts
The Report & Accounts for the year ended 30 June 2023 will
be posted to shareholders in early October 2023. A copy will
shortly be available to view and download from the Company's
website at www.uil.limited and the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . Please
click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/4324N_1-2023-9-22.pdf
GROUP PERFORMANCE SUMMARY
30 June 30 June % change
2023 2022 2023/22
-------------------------------------------------------------------- ---------- ----------- -----------
NAV total return per ordinary share 1 (for the year) (%) (20.6) (38.1) n/a
Share price total return per ordinary share 1 (for the year) (%) (18.5) (27.6) n/a
Annual compound NAV total return 1 (since inception 2 ) (%) 7.8 9.5 n/a
-------------------------------------------------------------------- ---------- ----------- -----------
NAV per ordinary share 1 (pence) 199.87 260.89 (23.4)
Ordinary share price (pence) 145.00 187.50 (22.7)
Discount 1 (%) 27.5 28.1 n/a
Returns and dividends (pence)
Revenue return per ordinary share 6.68 8.35 (20.0)
Capital return per ordinary share (59.70) (171.68) (65.2)
Total return per ordinary share (53.02) (163.33) (67.5)
Dividends per ordinary share 8.00 3 8.00 0.0
FTSE All-Share total return Index 8,611 7,981 7.9
Equity holders' funds (GBPm)
Gross assets 4 304.9 410.6 (25.7)
Loans 42.7 51.1 (16.4)
ZDP shares 94.6 140.8 (32.8)
Equity holders' funds 167.6 218.7 (23.4)
-------------------------------------------------------------------- ---------- ----------- -----------
Revenue account (GBPm)
Income 10.2 9.9 3.0
Costs (management and other expenses) 1.7 1.7 0.0
Finance costs 2.9 1.1 163.6
Net income 5.6 7.0 (20.0)
-------------------------------------------------------------------- ---------- ----------- -----------
Financial ratios of the Group (%)
Ongoing charges figure excluding performance fees 1 2.8 2.2 n/a
Ongoing charges figure including performance fees 1 2.8 2.2 n/a
Gearing 1 83.5 89.5 n/a
-------------------------------------------------------------------- ---------- ----------- -----------
(1) See Alternate Performance Measures on pages 109 and 111 of
the Report and Accounts
(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
CHAIRMAN'S STATEMENT
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 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
GBP139.9m from GBP195.7m 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%).
Since inception in August 2003, UIL has distributed GBP94.6m in
dividends, invested GBP36.9m in ordinary share buybacks and made
net gains of GBP209.0m 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 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 GBP10.2m,
an increase of 3.0% from GBP9.9m 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 GBP2.9m, up
163.6% from the prior year at GBP1.1m. 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 GBP11.7m as at 30 June
2023 from GBP12.8m as at 30 June 2022.
The capital return loss for the year ended 30 June 2023 of
GBP50.0m 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 GBP37.5m to GBP25.0m 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 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.
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
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 GBP12.5m. This
created pressure on the portfolio given the need for substantial
realisations in difficult markets.
UIL's loss for the year to 30 June 2023 was GBP44.5m 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
GBP55.8m.
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
GBP108.2m.
It should also be noted that UEM and Zeta's share price
discounts to NAV represent a GBP22.2m 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 GBP9.1bn,
revenues increase by 9.1% to GBP54.9m and profits before tax
remained unchanged at GBP12.0m. 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 GBP25.5m 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 GBP3.6m. 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 GBP120.6m and
realised GBP188.4m, 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 GBP61.5m (30 June 2022:
GBP37.4m).
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 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%)
UIL's largest investment in resources is Zeta which represents
17.9% of UIL's total portfolio.
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
GBP238.9m as at 30 June 2022 to GBP172.7m 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 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 GBP3.2m
swing in valuation for Somers and GBP1.4m for UIL. Further details
on AKJ can be found on their website and note 29 to the
accounts.
GEARING
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
GBP195.7m to GBP139.9m 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 GBP140.8m to GBP94.6m, 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 GBP42.7m as at 30 June 2023
(30 June 2022: GBP51.1m). Scotiabank Europe plc's GBP50.0m
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 GBP12.5m on 30 March 2023, and
consequently the outstanding amount as at 30 June 2023 under this
facility was GBP37.5m. In September 2023, the facility was extended
to 19 March 2024, reducing to GBP25.0m 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
GBP10.2m from GBP9.9m, an increase of 3.0%.
Management and administration fees and other expenses were
largely flat at GBP1.7m (30 June 2022: GBP1.7m). Finance costs were
significantly higher at GBP2.9m for the year to 30 June 2023 from
GBP1.1m 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 GBP5.6m (30 June 2022:
GBP7.0m) 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 GBP44.0m (30 June 2022:
loss of GBP136.3m) which was driven mainly by the GBP40.3m loss on
investments.
Finance costs reduced by 21.8% to GBP6.1m (30 June 2022:
GBP7.8m) 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 GBP50.0m (30 June 2022: loss of GBP144.1m) 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.
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
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.
INVESTMENT RISK: The risk that the investment strategy does not
achieve long-term positive total returns for the Company's
shareholders.
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.
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 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: 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.
DISCOUNT RISK: The Company's shares may trade at a discount to
their NAV and a widening discount may undermine investor confidence
in the Company.
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.
OPERATIONAL 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.
The Company's main service providers are listed on page 108 of
the Report and Accounts. The Audit & Risk Committee monitors
the performance and controls (including business continuity
procedures) of the service providers at regular intervals.
Most of UIL's investments are held in custody for the Company by
JPMorgan Chase Bank N.A., Jersey. JPMEL, the Company's depositary
services provider, also monitors the movement of cash and assets
across the Company's accounts. The Audit & Risk Committee
reviews the JP Morgan SOC1 reports, which are reported on by
Independent Service Auditors, in relation to its administration,
custodial and information technology services.
The Board reviews the overall performance of the Investment
Managers and all the other service providers on a regular basis.
The risk of cyber-crime is high, as it is with most organisations,
but the Board regularly seeks assurances from the Investment
Managers and other key service providers on the preventative steps
that they are taking to reduce this risk.
GEARING RISK: 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.
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.
REGULATORY RISK: 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.
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.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
in respect of the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report
and the Group and parent Company Accounts in accordance with
applicable law and regulations.
The Directors are required to prepare Group and parent Company
financial statements for each financial year. They have elected to
prepare the Group financial statements in accordance with UK
adopted International Accounting Standards and applicable law and
have elected to prepare the parent Company financial statements on
the same basis.
The Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and parent Company and of their profit or
loss for that period. In preparing each of the Group and parent
Company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with UK
adopted International Accounting Standards;
-- assess the Group and parent Company's ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern; and
-- use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 1981 of Bermuda. They are responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors have decided to prepare voluntarily a Directors'
Remuneration Report in accordance with Schedule 8 to The Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 made under the UK Companies Act 2006, as if those
requirements applied to the Company. The Directors have also
decided to prepare voluntarily a Corporate Governance Statement
under the UK Corporate Governance Code as if the Company were
required to comply with the Listing Rules of the Financial Conduct
Authority applicable to UK premium listed companies.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the financial statements will form part of the annual
financial report prepared using the single electronic reporting
format under the TD ESEF Regulation. The auditor's report on these
financial statements provides no assurance over the ESEF
format.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK and Bermuda governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the Strategic Report and Directors' Report include a fair
review of the development and performance of the business and the
position of the Company, and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
Approved by the Board on 22 September 2023 and signed on its
behalf by:
Peter Burrows
Chairman
GROUP INCOME STATEMENT
for the year to 30 June 2023 2022
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Revenue Capital Total Revenue Capital Total
return return return return return return
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Losses on investments - (40,342) (40,342) - (120,524) (120,524)
Losses on derivative financial instruments - (2,038) (2,038) - (10,532) (10,532)
Foreign exchange losses - (1,604) (1,604) - (5,264) (5,264)
Investment and other income 10,229 - 10,229 9,879 - 9,879
Total income/(loss) 10,229 (43,984) (33,755) 9,879 (136,320) (126,441)
Management and administration fees (758) - (758) (852) - (852)
Other expenses (977) (5) (982) (819) (3) (822)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Profit/(loss) before finance costs and taxation 8,494 (43,989) (35,495) 8,208 (136,323) (128,115)
Finance costs (2,897) (6,059) (8,956) (1,132) (7,790) (8,922)
Profit/(loss) before taxation 5,597 (50,048) (44,451) 7,076 (144,113) (137,037)
Taxation - - - (63) - (63)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Profit/(loss) for the year 5,597 (50,048) (44,451) 7,013 (144,113) (137,100)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Earnings per ordinary share - pence 6.68 (59.70) (53.02) 8.35 (171.68) (163.33)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
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.
COMPANY INCOME STATEMENT
for the year to 30 June 2023 2022
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Revenue Capital Total Revenue Capital Total
return return return return return return
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Losses on investments - (40,411) (40,411) - (120,529) (120,529)
Losses on derivative financial instruments - (2,038) (2,038) - (10,532) (10,532)
Foreign exchange losses - (1,604) (1,604) - (5,264) (5,264)
Investment and other income 10,229 - 10,229 9,879 - 9,879
Total income/(loss) 10,229 (44,053) (33,824) 9,879 (136,325) (126,446)
Management and administration fees (758) - (758) (852) - (852)
Other expenses (977) (5) (982) (819) (3) (822)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Profit/(loss) before finance costs and taxation 8,494 (44,058) (35,564) 8,208 (136,328) (128,120)
Finance costs (2,897) (6,260) (9,157) (1,132) (7,988) (9,120)
Profit/(loss) before taxation 5,597 (50,318) (44,721) 7,076 (144,316) (137,240)
Taxation - - - (63) - (63)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Profit/(loss) for the year 5,597 (50,318) (44,721) 7,013 (144,316) (137,303)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
Earnings per ordinary share - pence 6.68 (60.02) (53.34) 8.35 (171.92) (163.57)
------------------------------------------------- --------- --------- --------- --------- ---------- ----------
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.
GROUP STATEMENT OF CHANGES IN EQUITY
for the year to 30 June 2023
--------------------------------------- --------- --------- ---------- --------- ---------
Ordinary Share
share premium Special Capital Revenue
capital account reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- --------- --------- ---------- --------- ---------
Balance as at 30 June 2022 8,384 37,874 233,866 (74,230) 12,846 218,740
(Loss)/profit for the year - - - (50,048) 5,597 (44,451)
Ordinary dividends paid - - - - (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
--------------------------------------------------- --------- -------------- ---------- --------- ----------
Ordinary Share Non-
share premium Special distributable Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- ---------- --------- -------------- ---------- --------- ----------
Balance as at 30 June 2021 8,430 6,986 233,866 32,069 69,883 12,547 363,781
Transfer of reserves - 32,069 - (32,069) - - -
(Loss)/profit for the year - - - - (144,113) 7,013 (137,100)
Ordinary dividends paid - - - - - (6,714) (6,714)
Shares purchased by the
Company (46) (1,181) - - - - (1,227)
Balance as at 30 June 2022 8,384 37,874 233,866 - (74,230) 12,846 218,740
---------------------------- --------- ---------- --------- -------------- ---------- --------- ----------
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year to 30 June 2023
--------------------------------------- --------- --------- ---------- --------- ---------
Ordinary Share
share premium Special Capital Revenue
capital account reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- --------- --------- ---------- --------- ---------
Balance as at 30 June 2022 8,384 37,874 233,866 (74,463) 12,846 218,507
(Loss)/profit for the year - - - (50,318) 5,597 (44,721)
Ordinary dividends paid - - - - (6,708) (6,708)
Balance as at 30 June 2023 8,384 37,874 233,866 (124,781) 11,735 167,078
---------------------------- --------- --------- --------- ---------- --------- ---------
for the year to 30 June 2022
--------------------------------------------------- --------- -------------- ---------- --------- ----------
Ordinary Share Non-
share premium Special distributable Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------- --------- ---------- --------- -------------- ---------- --------- ----------
Balance as at 30 June 2021 8,430 6,986 233,866 32,069 69,853 12,547 363,751
Transfer of reserves - 32,069 - (32,069) - - -
(Loss)/profit for the year - - - - (144,316) 7,013 (137,303)
Ordinary dividends paid - - - - - (6,714) (6,714)
Shares purchased by the
Company (46) (1,181) - - - - (1,227)
----------------------------
Balance as at
30 June 2022 8,384 37,874 233,866 - (74,463) 12,846 218,507
---------------------------- --------- ---------- --------- -------------- ---------- --------- ----------
STATEMENTS OF FINANCIAL POSITION
Group Company
-------------------------------------------- ---------- ---------- ---------- ----------
as at 30 June 2023 2022 2023 2022
GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------- ---------- ---------- ---------- ----------
Non-current assets
Investments 308,347 416,516 311,477 419,715
-------------------------------------------- ---------- ---------- ---------- ----------
Current assets
Other receivables 62 444 62 444
Derivative financial instruments 110 620 110 620
Cash and cash equivalents 5,234 8 5,234 8
-------------------------------------------- ---------- ---------- ---------- ----------
5,406 1,072 5,406 1,072
-------------------------------------------- ---------- ---------- ---------- ----------
Current liabilities
Loans (42,691) (51,080) (42,691) (51,080)
Other payables (8,892) (4,393) (8,892) (55,559)
Derivative financial instruments - (2,562) - (2,562)
Zero dividend preference shares - (51,166) - -
(51,583) (109,201) (51,583) (109,201)
-------------------------------------------- ---------- ---------- ---------- ----------
Net current liabilities (46,177) (108,129) (46,177) (108,129)
-------------------------------------------- ---------- ---------- ---------- ----------
Total assets less current liabilities 262,170 308,387 265,300 311,586
Non-current liabilities
Other payables - - - (93,079)
Zero dividend preference shares (94,589) (89,647) (98,222) -
Net assets 167,581 218,740 167,078 218,507
-------------------------------------------- ---------- ---------- ---------- ----------
Equity attributable to equity holders
Ordinary share capital 8,384 8,384 8,384 8,384
Share premium account 37,874 37,874 37,874 37,874
Special reserve 233,866 233,866 233,866 233,866
Capital reserves (124,278) (74,230) (124,781) (74,463)
Revenue reserve 11,735 12,846 11,735 12,846
-------------------------------------------- ---------- ---------- ---------- ----------
Total attributable to equity holders 167,581 218,740 167,078 218,507
-------------------------------------------- ---------- ---------- ---------- ----------
Net asset value per ordinary share - pence 199.87 260.89 199.27 260.61
-------------------------------------------- ---------- ---------- ---------- ----------
STATEMENTS OF CASH FLOWS
Group Company
---------------------------------------------------------- ---------- ---------- ---------- ----------
for the year to 30 June 2023 2022 2023 2022
GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------------------------------- ---------- ---------- ---------- ----------
Loss before taxation (44,451) (137,037) (44,721) (137,240)
Deduct investment income - dividends (9,904) (7,539) (9,904) (7,539)
Deduct investment income - interest (320) (2,338) (320) (2,338)
Deduct bank interest (5) (2) (5) (2)
Add back bank interest charged 2,897 1,132 2,897 1,132
Add back losses on investments 40,342 120,524 40,411 120,529
Add back losses on derivative financial instruments 2,038 10,532 2,038 10,532
Add back foreign exchange losses 1,604 5,264 1,604 5,264
Increase in other debtors (10) (4) (10) (4)
(Decrease)/increase in creditors (60) 10 (60) 10
Add back ZDP shares finance costs 6,059 7,790 - -
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 3,580 3,039 3,580 3,039
Investment income - interest received 166 369 166 369
Bank interest received 5 2 5 2
Interest paid (2,375) (1,141) (2,375) (1,141)
Taxation paid - (63) - (63)
Cash flows from operating activities (434) 538 (434) 538
---------------------------------------------------------- ---------- ---------- ---------- ----------
Investing activities:
Purchases of investments (17,588) (40,733) (17,588) (40,733)
Sales of investments 92,285 51,150 92,285 52,100
Net settlement of derivatives (4,090) (8,170) (4,090) (8,170)
Cash flows from investing activities 70,607 2,247 70,607 3,197
---------------------------------------------------------- ---------- ---------- ---------- ----------
Financing activities:
Equity dividends paid (6,708) (6,714) (6,708) (6,714)
Drawdowns of bank loans 55,231 1,894 55,231 1,894
Repayment of bank loans (66,070) (3,147) (66,070) (3,147)
Cash flows from issue of ZDP shares - 950 - -
Cash flows from redemption of ZDP shares (52,283) - - -
Cash flows from repayment of intra-group loan account - - (52,283) -
Cash paid for ordinary shares purchased for cancellation - (1,227) - (1,227)
Cash flows from financing activities (69,830) (8,244) (69,830) (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 (3,827) 3,111 (3,827) 3,111
Effect of movement in foreign exchange 846 (1,479) 846 (1,479)
---------------------------------------------------------- ---------- ---------- ---------- ----------
Cash and cash equivalents at the end of the year (2,638) (3,827) (2,638) (3,827)
---------------------------------------------------------- ---------- ---------- ---------- ----------
Comprised of:
Cash 5,234 8 5,234 8
Bank overdraft (7,872) (3,835) (7,872) (3,835)
---------------- -------- -------- -------- --------
Total (2,638) (3,827) (2,638) (3,827)
---------------- -------- -------- -------- --------
NOTES
1. DIVIDS
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 GBP1,677,000 based on 83,842,918 ordinary shares in
issue.
2. 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 Somers Isles Private Trust
Company Limited as referred to in note 25 in the Report and
Accounts.
Subsidiaries of UIL:
Carebook Technologies Inc ("Carebook"), Coldharbour Technology
Limited ("Coldharbour"), Energy Holdings Ltd, Newtel Holdings
Limited ("Newtel"), Northbrook Resources Limited (formerly Elevate
Platform Limited), West Hamilton and Zeta. On consolidation,
transactions between the Company and UIL Finance have been
eliminated. Snapper Services (UK) Limited ("Snapper"), a subsidiary
at 30 June 2022 was sold in the year.
Joint ventures of UIL
Allectus Capital Limited ("Allectus Capital") and Allectus
Quantum Holdings Limited ("Allectus Quantum").
Associated undertakings:
DTI Group Ltd ("DTI"), Littlepay Mobility Ltd ("Littlepay"),
Novareum Blockchain Asset Fund Ltd ("Novareum"), Orbital
Corporation Limited ("Orbital"), Resimac Group Limited ("Resimac"),
Serkel Solutions Pty Ltd ("Serkel"), Smilestyler Solutions Pty Ltd
("Smilestyler"), Somers Limited ("Somers"), SportEngaged Ltd and
The Market Herald Limited ("TMH").
Subsidiaries of the above subsidiaries 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 Investment Management Limited .
Zeta: Horizon Gold Limited, Kumarina Resources Pty Ltd, Zeta
Energy Pte Ltd, Zeta Investments Limited and Zeta Minerals Ltd.
Key management entities and persons:
ICM and ICMIM and the board of directors of ICM, Alasdair
Younie, Charles Jillings, Duncan Saville and of ICMIM, Charles
Jillings and Sandra Pope. ICM Corporate Services (Pty) Ltd is a
wholly owned subsidiary of ICM.
Persons exercising control of UIL:
The Board of UIL.
Company controlled by key management persons:
Mitre Investments Limited 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 GBP144.2m as at 30 June 2022
decreased by GBP46.0m, to GBP98.2m as at 30 June 2023. The loans
are
repayable on any ZDP share repayment date.
Subsidiaries of UIL
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 GBP5.5m 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 GBP1.6m. 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 GBPnil (2022: GBPnil).
Snapper: On 11 October 2022, Somers acquired UIL's holding in
Snapper, see transactions of Somers below.
West Hamilton: See transaction details of Somers below.
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.
Joint Ventures of UIL
Allectus Capital: 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.
Allectus Quantum: Pursuant to a loan agreement dated 20 April
2022 under which UIL has agreed to loan monies to Allectus Quantum,
UIL advanced to Allectus Quantum a loan of GBP3.7m. The loan is
interest free and is converted into equity on a semi-annual basis.
The loan of GBP3.7m 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
DTI: There were no transactions during the year
ICM Mobility: 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 GBP0.6m and received from ICM
Mobility GBP0.1m. In October 2022, UIL sold its loan to ICM
Mobility (GBP0.5m) to Somers as part of the transaction where UIL
sold its stake in ICM Mobility to Somers.
Littlepay: There were no transactions during the year.
Novareum: There were no transactions during the year.
Orbital: 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.
Resimac: See transaction details of Somers below. UIL received
dividends of GBP1.7m from Resimac.
Serkel: There were no transactions during the year.
SmileStyler: There were no transactions during the year.
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 GBP1.0m 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 GBP45.6m. 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
(GBP22.3m) 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 GBP23.2m (including the GBP22.3m from the 11 October 2022
transaction above) and Somers repaid loans of GBP23.2m. UIL
received interest of GBP39k. As at 30 June 2023, the balance of the
loans and interest outstanding was GBPnil. 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.
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 GBP12,000, there
were no other transactions with ICM or ICMIM or ICM Corporate
Services (Pty) Ltd. At the period-end GBP108,000 remained
outstanding to ICM and ICMIM in respect of management and company
secretarial fees and GBPnil 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 GBP35,000. 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 GBP50,000 per annum;
Chairman of Audit & Risk Committee GBP47,750 per annum and
Directors GBP37,000 per annum. The Board received aggregate
remuneration of GBP206,000 for services as Directors. As at 30 June
2022, GBPnil remained outstanding to the Directors. In addition to
their fees, the Directors received dividends totalling GBP120,000
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 GBP5,292,000 from UIL, UMPF received
dividends of GBP620,000 from UIL, Mitre Investments Limited
received dividends of GBP206,000 from UIL and Permanent Mutual
Limited received dividends of GBP2,000 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.
3. RESULTS
This statement was approved by the Board on 22 September 2023.
The financial information set out above does not constitute the
Group's or Company's statutory accounts for the years ended 30 June
2023 or 2022 but is derived from those accounts. The auditor has
reported on those accounts; their reports were (i) unqualified and
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report.
Annual General Meeting Arrangements
The Annual General Meeting ("AGM") of the Company will be held
at its registered office, Clarendon House, 2 Church Street,
Hamilton HM 11, Bermuda on Thursday, 9 November 2023 at 5.00pm
(local time) and notice is set out at the end of the Report &
Accounts.
Legal Entity Identifier: 213800CTZ7TEIE7YM468
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END
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(END) Dow Jones Newswires
September 25, 2023 02:00 ET (06:00 GMT)
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