Date:
21 February 2024
Contact:
Charles
Jillings
ICM Investment Management
Limited
01372 271
486
UIL LIMITED
UNAUDITED HALF-YEARLY
FINANCIAL REPORT
FOR THE SIX MONTHS TO 31
DECEMBER 2023
UIL Limited ("UIL" or the "Company")
today announced its unaudited financial results for the six months
to 31 December 2023.
FINANCIAL HIGHLIGHTS
·
Revenue return per ordinary share 0.02p
(7.70p)
·
Dividends per ordinary share 4.00p
(4.00p)
·
Net asset value ("NAV") total return per ordinary
share* of 4.2% (-6.5%)
·
Share price total return per ordinary share* of
-9.5% (-12.6%)
·
NAV discount* as at 31 December 2023 of 37.8%
(33.3%)
·
Gearing* 71.3% (73.4%)
Figures in brackets are 31 December
2022
* See Alternate Performance Measures
in the Half-yearly financial report for 31 December
2023
The half-yearly report for the six months
to 31 December 2023 will be posted to
shareholders in early March 2024. 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/9880D_1-2024-2-21.pdf
UNAUDITED GROUP PERFORMANCE SUMMARY
|
Half year
31 Dec
2023
|
Half
year
31
Dec
2022
|
Annual
30
Jun
2023
|
%
change
Jun-Dec
2023
|
NAV total return per ordinary
share
(for the period)1 (%)
|
4.2
|
(6.5)
|
(20.6)
|
n/a
|
Share price total return per
ordinary share
(for the period)1 (%)
|
(9.5)
|
(12.6)
|
(18.5)
|
n/a
|
Annual compound NAV total
return1
(since inception2) (%)
|
7.8
|
8.9
|
7.8
|
n/a
|
NAV per ordinary share
1 (pence)
|
204.04
|
240.02
|
199.87
|
2.1
|
Ordinary share price
(pence)
|
127.00
|
160.00
|
145.00
|
(12.4)
|
Discount1 (%)
|
37.8
|
33.3
|
27.5
|
n/a
|
Returns and dividends (pence)
|
|
|
|
|
Revenue return per ordinary
share
|
0.02
|
7.70
|
6.68
|
(99.7)3
|
Capital return per ordinary
share
|
8.15
|
(24.58)
|
(59.70)
|
133.23
|
Total return per ordinary
share
|
8.17
|
(16.88)
|
(53.02)
|
148.43
|
Dividends per ordinary
share
|
4.004
|
4.00
|
8.00
|
0.03
|
FTSE All-Share total return
Index
|
9,056
|
8,392
|
8,611
|
5.2
|
Equity holders' funds (£m)
|
|
|
|
|
Gross assets1
|
283.2
|
343.3
|
304.9
|
(7.1)
|
Loans
|
15.0
|
50.0
|
42.7
|
(64.9)
|
ZDP shares
|
97.2
|
92.1
|
94.6
|
2.7
|
Equity holders' funds
|
171.1
|
201.2
|
167.6
|
2.1
|
Revenue account (£m)
|
|
|
|
|
Income
|
2.3
|
8.5
|
10.2
|
(72.9)3
|
Costs (management and other
expenses)
|
0.7
|
0.9
|
1.7
|
(22.2)3
|
Finance costs
|
1.5
|
1.1
|
2.9
|
36.43
|
Net income
|
0.0
|
6.5
|
5.6
|
(99.7)3
|
Financial ratios of the Group (%)
|
|
|
|
|
Ongoing charges
figure1
|
3.05
|
2.95
|
2.8
|
n/a
|
Gearing1
|
71.3
|
73.4
|
83.5
|
n/a
|
(1) See Alternative
Performance Measures in the Half-yearly financial report for 31
December 2023
(2) All performance data
relating to periods prior to 20 June 2007 are in respect of Utilico
Investment Trust plc, UIL's predecessor
(3) Percentage change based on
comparative six month period to 31 December 2022
(4) The second quarterly
dividend of 2.00p has not been included as a liability in the
accounts
(5) For comparative purposes
the figures have been annualised
CHAIRMAN'S STATEMENT
The half year to 31 December 2023
has continued to be challenging on both the economic and,
especially so, the 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 improved with
its NAV total return up by 4.2% for the
half year which is broadly in line with the wider markets. The FTSE
All Share total return Index was up 5.1% for the six months to 31
December 2023. UIL's annual compound NAV total return since
inception in 2003 was unchanged over the half year at
7.8%.
Shareholders' funds rose 2.1% in the
six months to 31 December 2023. This is pleasing given the
continued realisation of assets in weak markets and paydown of
UIL's bank debt. Over the half year, borrowings from the Bank of
Nova Scotia, London Branch ("Bank of Nova Scotia") reduced by
£22.5m from £37.5m to £15.0m. As a result, total debt including the
ZDP shares reduced from £139.9m to £121.9m over the half year
period and gearing reduced from 83.5% to 71.3%. Since June 2022 UIL
has repaid over £35.0m in bank debt and £52.3m in ZDP shares. UIL
is set to repay a further £15.0m in bank debt by the end of March
2024. This is a substantial achievement in these volatile
markets.
There has been one change in the top
ten of UIL's portfolio during the half year to 31 December 2023.
UIL sold its direct holding in Littlepay Mobility Limited
("Littlepay") to Somers Limited ("Somers"). Somers ultimately owns
the majority holding in Littlepay and UIL will benefit from UIL's
40.4% holding in Somers. Replacing Littlepay is Carebook
Technologies Inc ("Carebook"), which is listed on the TSX Venture
Exchange, and is a leading Canadian provider of innovative digital
health solutions.
The Board is disappointed to see the
ordinary shares' discount to NAV end the year at 37.8%. Given the
focus on the continued reduction in the bank facility, no buybacks
were undertaken in the half year ended 31 December 2023.
As at 31 December 2023, UIL's
average blended rate of funding costs, including bank debt,
remained unchanged at 5.7%. UIL's longer dated 2024, 2026 and 2028
ZDP shares are trading at high gross redemption yields being 10.8%,
12.5% and 11.6% respectively.
The 2024 ZDP shares amounting to
£39.8m as at 31 December 2023, are redeemable in October this year.
As such they have been moved to current liabilities and the
Investment Managers have started to take steps to fund the
redemption payment.
Total revenue income for the half
year to 31 December 2023 was £2.3m, a decrease of 72.9% from £8.5m
in the prior half year. UIL has reduced a number of holdings and
did not receive a distribution from Somers during the half year,
significantly decreasing its income. On the back of higher interest
rates, finance costs increased for the half year to 31 December
2023 to £1.5m, up 36.4% from the prior half year at £1.1m. The
above resulted in revenue return profits decreasing to £19,000 (31
December 2022: £6.5m) for the half year and revenue return earnings
per share ("EPS") of 0.02p, well below 31 December 2022 figure of
7.00p.
The capital return gains for the
year ended 31 December 2023 of £6.8m is a small
positive.
DIVIDENDS
The Board has declared an unchanged
second quarterly dividend of 2.00p per ordinary share in respect of
the year ending 30 June 2024. In light of UIL's current focus
on the repayment of its bank facility in
March and the timing of expected cash receipts from certain
portfolio transactions, the date of payment of this dividend will
be later than usual, with the payment due to be made in June
2024.
BANK FACILITY
UIL has agreed with the Bank of Nova
Scotia to repay its committed senior secured multi-currency
facility at its maturity on 19 March 2024. Over the six months UIL
repaid £22.5m and as at 31 December 2023 the facility stood at
£15.0m. £5.0m has recently been repaid and the remaining £10.0m will be repaid on 19 March 2024.
GLOBAL EVENTS
Market volatility has been driven by
significant uncertainties in both the economy and social and geopolitical considerations.
The key economic driver of markets
has been the outlook for inflation in the developed world and the
central banks' focus on reducing it through higher central bank
interest rates. While inflation is now on a lower trend, the
remarkable outcome in many economies is that unemployment has
remained well below trends and many economies have beaten
expectations on GDP. However, in the last quarter the market firmly
shifted its views on central bank interest rate reductions from if
it will happen to when, especially in the USA. Many central banks
take their lead from the US Federal Reserve. The upshot has been
strong gains for most markets. Going forward we think most central banks have the opportunity to
reduce rates.
The war in Ukraine has gone on
longer than expected and today there continues to be no clear way
forward. The outlook is grim as both sides are unable to gain
ground.
The brutal conflict that has erupted
in the Middle East is more concerning. These are deep seated
politically ideological differences between many parties in the
Middle East established over many years. The concern must be that
this escalates into a much wider conflict.
The ongoing friction between the USA
and China continues to deepen, and given these 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.
Overlayed on all this is the USA
election. The direction the USA takes matters and its position and
influence in the above mentioned conflicts is itself very
uncertain.
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 the holdings in our
portfolio.
There is a very perceptible shift to
embrace Artificial Intelligence ("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.
BOARD
Having been appointed Chairman of
the Board in 2015 I believe it is an appropriate time for me to
step down and therefore I will retire from the Board on 31 March
2024. I would like to thank my fellow Board members for all their
support over the years. I am delighted that the Board has decided
that Stuart Bridges, the current Chairman of the Audit & Risk
Committee, will replace me as Chairman. In addition, I am pleased
to report that Peter Durhager has agreed to join the Board on 31
March 2024. Peter has over twenty five years of experience in
financial, telecommunications and energy sectors. He is currently
Chairman of Somers, one of UIL's platform investments and, in
advance of his appointment to the UIL Board, he will be retiring
from the Somers board following its annual general meeting next
month.
OUTLOOK
The economic outlook remains
positively balanced with inflation and employment expected to
weaken and faced with this we expect central banks will lower
interest rates. This Goldilocks scenario is finely balanced between
those expecting a recession and those expecting a soft landing. The
bigger concern is the direction of travel for most countries
politically. There is an ever growing trend of protectionist views
which can quickly grow into real economic headwinds. Add to this
the geopolitical tensions and the downside risks are elevated. We
remain cautiously optimistic about the outlook for UIL's
portfolio.
Peter Burrows AO
Chairman
21 February 2024
INVESTMENT MANAGERS' REPORT
The half year to 31 December 2023
has continued to be difficult to navigate for investors,
particularly in light of the significant increase in political
risks in the Middle East. The need to reduce debt and realise
assets to do so has certainly challenged UIL. It is therefore
pleasing the net assets rose as markets recovered in the closing
quarter of 2023.
UIL's profit for the half year to 31
December 2023 of £6.8m and total return of 4.2% has seen UIL's
annual compound NAV total return since inception in 2003 unchanged
at 7.8% over the half year.
PORTFOLIO
Over the half year there was more
stability within the top ten holdings. Four holdings increased in
value, four reduced in value, one remained unchanged and one
reduced as a result of distributions to shareholders. Overall, the
increases outweighed the decreases by some £11.6m. However, top ten
portfolio net realisations of £20.7m led to a reduction in the top
ten portfolio of £9.0m and a reduction of liabilities as
well.
UEM's and Zeta's share price
discounts to NAV have contributed a £13.5m reduction to the
underlying valuations.
Somers' valuation increased by 15.5%
in the half year to 31 December 2023. This was largely driven by
Resimac whose share price recovered 18.2%. Resimac's resilience in
the face of reduced mortgage volumes and compressed net interest
margins is pleasing. It is also good to see Resimac continuing to
buy back shares at these current levels. It should be noted that
UIL holds a direct investment in Resimac as well, being UIL's
fourth largest investment.
Waverton Investment Management Ltd
("Waverton"), Somers' largest investment continued its solid
investment performance which has assisted in driving new assets
against a macroeconomic environment which has not been strong for
risk assets. In its year to 31 December 2023 Waverton saw AUM
increase to over £10.0bn, with strong revenue growth.
Zeta's NAV per share decreased by
18.5% over the half year, primarily as a result of Zeta's exposure
to nickel, which was down 19.5% over the six months to 31 December
2023, and the resultant voluntary administration of Panoramic
Resources, one of Zeta's significant assets. Zeta's share price
decreased by 9.8% and as a result the discount narrowed to 13.7%.
Over the half year Zeta exited from Hudbay Minerals into a rising
market. Zeta used the proceeds to buy back shares on the market.
UIL reduced its shareholding in Zeta by 8.2% through selling into
the buy back.
UEM has again been a relative
standout performer over the half year to 31 December 2023 with a
NAV total return of 4.7% compared to the MSCI Emerging Markets
total return Index (GBP adjusted) ("MSCI") of 4.3% over the same
period. UEM continues to see strong results reported by its
investee companies with most continuing to grow revenues. While
margins are under pressure EBITDA in many cases has expanded and
delivered EPS growth. This is a credit to the investee management
teams who continue to deliver excellent operational performance in
volatile times. UEM is also significantly ahead of the MSCI since
its inception in 2005.
As with most emerging markets funds,
UEM's discount has widened and it stood at 14.7% as at 31 December
2023. UIL has taken the opportunity of share price outperformance
to reduce its shareholding and realising 18.4% of its holding in
UEM, receiving £7.4m during the half year.
Allectus Capital Limited ("Allectus
Capital") saw its valuation weaken in line with the wider markets.
Pre revenue, pre profitability investment valuations have been
marked down substantially. The Allectus Capital valuation declined
9.5% over the half year. UIL contributed an additional £0.5m of
capital to Allectus Capital during the half year.
Allectus Quantum Holdings Limited's
("Allectus Quantum") valuation was unchanged over the six months to
31 December 2023 and since the half year end it has made
significant progress towards closing its current fund raising
round. Its sole investment is Diraq Pty Ltd ("Diraq"), a next
generation quantum computing company, which continues to make
progress.
The Market Limited's share price was
down 20.7% over the half year to 31 December 2023. While changes to
the board of directors have been welcomed by the market, the soon
to be released financial results are anticipated with interest and
will provide information to gauge progress.
West Hamilton, a listed Bermuda
property developer, sold two of its three major assets in Bermuda
and made a capital and revenue distribution to all its
shareholders. UIL received £9.0m, or USD 6.75 per share in the half
year. The carrying value therefore reduced 55.9%, reflecting this
distribution.
Arria NLG Limited's ("Arria") value
was marked down in the half year by 20.2% reflecting weaker
valuations over the six months. Whilst AI and the opportunity for
machine learning are a positive for Arria, we are cautious on its
outlook. Carebook's share price rose 7.1% over the six months to 31
December 2023. UIL contributed £1.2m in support of Carebook's
growth strategy.
COMMODITIES
Commodities were more stable over
the half year and most ended up during the period with gold rising
7.5%, copper up 4.0% and oil up 2.9%. The exception was nickel
which fell 19.5% over the six months to 31 December 2023. The
oversupply of nickel does look to be a true headwind, especially
the supply of cheap nickel from Indonesia.
PORTFOLIO ACTIVITY
During the half year to 31 December
2023, UIL invested £9.4m and realised £34.2m.
PLATFORM INVESTMENTS
UIL currently has four platform
investments, Somers, Zeta, UEM and Allectus Capital in its top ten
holdings. These investments account for 74.8% of the total
portfolio as at 31 December 2023 (30 June 2023: 71.8%). During the
half year to 31 December 2023, net withdrawals from these platforms
amounted to £13.5m (30 June 2023: £61.5m). Within the top ten
holdings, UEM's investment was reduced by 18.4%, realising £7.4m
and 8.2% of Zeta's shareholding was tendered into Zeta's buyback
for £4.7m by UIL.
DIRECT INVESTMENTS
UIL has six direct investments in
its top ten holdings, Resimac, Allectus Quantum, The Market
Limited, West Hamilton, Arria and Carebook. All are listed except
for Allectus Quantum and Arria. During the half year to 31 December
2023, net realisations from these direct investments amounted to
£7.1m (30 June 2023: net investments of £51.8m). West Hamilton
returned £8.3m to UIL following the realisation of its main
property in Bermuda. £1.2m was invested into Carebook.
GEOGRAPHIC REVIEW
The geographical split of the
portfolio, on a look through basis, shows Australia and New Zealand
remaining UIL's top exposure at 41.6% of UIL's total investments
(30 June 2023: 40.1%) and the UK is still UIL's second largest
exposure at 20.6% (30 June 2023: 19.2%).
SECTOR REVIEW
Financial Services - 49.2% (30 June 2023:
40.6%)
Somers is UIL's largest investment
and accounts for 41.6% of UIL's total investments as at 31 December
2023 (30 June 2023: 34.9%). Most gains came from Resimac, whose
share price was up 18.2% and is held both within Somers and
directly in UIL's portfolio.
Technology - 20.7% (30 June 2023: 23.6%)
UIL holds a number of early-stage
investments in the technology sector, both indirectly through
Allectus Capital (UIL's fifth largest investment), and directly.
Most carrying values were down due to weaker market valuations for
early stage investments.
Resources (excl. gold mining) - 11.5% (30 June 2023:
14.4%)
UIL's largest investment in
resources is Zeta, which accounted for 15.9% of the total portfolio
as at 31 December 2023 (30 June 2023: 17.9%). Zeta's share price
weakened over the half year declining by 9.8% and the Zeta buyback
reduced UIL's investment further.
Infrastructure Investments - 10.5% (30 June 2022:
11.6%)
This consists of Telecommunications,
Infrastructure, Electricity, Ports, Road & Rail, Oil & Gas,
Renewables, Water & Waste and Airports. UIL's infrastructure
exposure is largely through UEM. While UEM's NAV rose, this was
more than offset by UIL selling 18.4% of its holding in UEM thus
reducing the sector percentage to 10.5%.
LEVEL 3 INVESTMENTS
As a result of selling down listed
positions to generate cash to reduce bank debt, UIL's holdings of
level 3 companies increased to 59.0% of the total portfolio from
56.0% as at 30 June 2023. The level 3 investments are formally
revalued twice a year and where there is a material event that
impacts an investment, it is revalued at that time, thereby keeping
the level 3 valuations current.
GEARING
As a result of the decrease in bank
debt and modest improvement in portfolio valuations, gearing has
decreased significantly to 71.3% as at 31 December 2023 from 83.5%
as at 30 June 2023 and this remains well inside UIL's target
gearing of under 100.0%.
The blended costs of borrowing
remained unchanged over the half year at 5.7%.
ZDP
SHARES
On a consolidated basis the ZDP
shares increased from £94.6m as at 30 June 2023 to £97.2m as at 31
December 2023, up 2.7% as a result of the capital growth of their
redemption value. UIL continues to hold 2.3m 2026 ZDP shares and
0.6m 2028 ZDP shares as at 31 December 2023. With three ZDP issues,
UIL has spread the redemption liability over five years.
DEBT
Bank and other loans decreased to
£15.0m as at 31 December 2023 from £42.7m as at 30 June 2023. The
Bank of Nova Scotia's remaining debt under the senior secured
multi-currency revolving facility is due to be repaid by 19 March
2024.
Net bank overdraft increased to
£9.8m compared to £2.6m as at 30 June 2023.
REVENUE RETURNS
Revenue income for the half year
decreased by 72.9% to £2.3m from £8.5m in the six months to 31
December 2022. Much of the focus of UIL and the wider group is on
cash generation and debt reduction.
Management and administration fees
and other expenses were down at £0.7m from £0.9m in the comparable
six month period. Finance costs were up by £0.4m as at 31 December
2023 from £1.1m as at 31 December 2022, reflecting lower usage of
bank debt, but at higher interest rates.
Revenue profit decreased during the
six months to 31 December 2023 and EPS decreased by 99.7% to 0.02p
from 7.70p as at 31 December 2022.
CAPITAL RETURNS
Capital total income was £9.4m (31
December 2022: loss of £17.0m).
Finance costs decreased by 27.8% to
£2.6m (31 December 2022: £3.6m) largely reflecting the lower number
of ZDP shares in issue following the 2022 ZDP shares redemption in
October 2022.
The resultant profit for the half
year to 31 December 2023 on the capital return was £6.8m (31
December 2022: loss of £20.6m) and EPS was 8.15p (31 December 2022:
loss of 24.58p).
EXPENSE RATIO
The ongoing charges figure,
including fees paid in UIL's platform companies and excluding
performance fees, was 3.0% as at 31 December 2023 (31 December
2022: 2.9%). No performance fee was earned at the UIL level or
within the platform companies.
All expenses are borne by the
ordinary shareholders.
Charles Jillings
ICM Investment Management Limited
and ICM Limited
21 February 2024
HALF-YEARLY FINANCIAL REPORT AND RESPONSIBILITY
STATEMENT
The Chairman's Statement and the
Investment Managers' Report give details of the important events
which have occurred during the period and their impact on the
financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
Most of UIL's principal risks and
uncertainties are market related and are similar to those of other
investment companies investing mainly in listed equities in
developed countries.
The principal risks and
uncertainties were described in more detail under the heading
"Principal Risks and Risk Mitigation" within the Strategic Report
section of the annual report and accounts for the year ended 30
June 2023 and have not changed materially since the date of that
document.
The principal risks faced by UIL
include not achieving long-term total returns for its shareholders,
adverse market conditions leading to a fall in NAV, loss of key
management, its shares trading at a discount to NAV, losses due to
inadequate controls of third-party service providers, gearing risk
and regulatory risk. In addition, the Board continues to monitor a
number of emerging risks that could potentially impact the Company,
the principal ones being geopolitical risk and climate change
risk.
The annual report and accounts is
available on the Company's website, www.uil.limited
RELATED PARTY TRANSACTIONS
Details of related party
transactions in the six months to 31 December 2023 are set out in
note 11 to the accounts.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with Chapter 4 of the
Disclosure Guidance and Transparency Rules, the Directors confirm
that to the best of their knowledge:
• The condensed set of financial
statements contained within the report for the six months to 31
December 2023 has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" and gives a
true and fair view of the assets, liabilities, financial position
and return of the Group;
• The half-yearly financial report,
together with the Chairman's Statement and Investment Managers'
Report, includes a fair review of the important events that have
occurred during the first six months of the financial year and
their impact on the financial statements as required by DTR
4.2.7R;
• The Directors' statement of
principal risks and uncertainties above is a fair review of the
principal risks and uncertainties for the remainder of the year as
required by DTR 4.2.7R; and
• The half-yearly report includes a
fair review of the related party transactions that have taken place
in the first six months of the financial year as required by DTR
4.2.8R.
On behalf of the Board
Peter Burrows
Chairman
21 February 2024
CONDENSED GROUP INCOME STATEMENT (UNAUDITED)
Notes
|
|
|
|
|
|
|
for
the six months to 31 December
|
|
|
2023
|
|
|
2022
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
return
|
return
|
return
|
return
|
return
|
return
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
|
|
|
|
|
|
|
|
|
Profits/(losses) on
investments
|
-
|
9,549
|
9,549
|
-
|
(13,471)
|
(13,471)
|
|
Losses on derivative financial
instruments
|
-
|
(35)
|
(35)
|
-
|
(2,099)
|
(2,099)
|
|
Foreign exchange losses
|
-
|
(110)
|
(110)
|
-
|
(1,460)
|
(1,460)
|
|
Investment and other
income
|
2,278
|
-
|
2,278
|
8,532
|
-
|
8,532
|
|
Total income/(loss)
|
2,278
|
9,404
|
11,682
|
8,532
|
(17,030)
|
(8,498)
|
2
|
Management and administration
fees
|
(310)
|
-
|
(310)
|
(434)
|
-
|
(434)
|
|
Other expenses
|
(422)
|
(1)
|
(423)
|
(500)
|
(3)
|
(503)
|
|
Profit/(loss) before finance costs
and taxation
|
1,546
|
9,403
|
10,949
|
7,598
|
(17,033)
|
(9,435)
|
|
Finance costs
|
(1,527)
|
(2,574)
|
(4,101)
|
(1,144)
|
(3,571)
|
(4,715)
|
|
Profit/(loss) before taxation
|
19
|
6,829
|
6,848
|
6,454
|
(20,604)
|
(14,150)
|
3
|
Taxation
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Profit/(loss) for the period
|
19
|
6,829
|
6,848
|
6,454
|
(20,604)
|
(14,150)
|
|
|
|
|
|
|
|
|
4
|
Earnings per ordinary share - pence
|
0.02
|
8.15
|
8.17
|
7.70
|
(24.58)
|
(16.88)
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group does not have any income
or expense that is not included in the profit/(loss) for the
period, and therefore the profit/(loss) for the period is also the
total comprehensive income/(loss) for the period, 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.
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
Notes
|
for
the six months to 31 December 2023
|
|
|
|
|
|
Ordinary
|
Share
|
|
|
|
|
|
share
|
premium
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
account
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
|
Balance as at 30 June
2023
|
8,384
|
37,874
|
233,866
|
(124,278)
|
11,735
|
167,581
|
|
Profit for the period
|
-
|
-
|
-
|
6,829
|
19
|
6,848
|
5
|
Ordinary dividends paid
|
-
|
-
|
-
|
-
|
(3,354)
|
(3,354)
|
|
Balance as at 31 December 2023
|
8,384
|
37,874
|
233,866
|
(117,449)
|
8,400
|
171,075
|
Notes
|
for the six months to 31 December
2022
|
|
|
|
|
|
Ordinary
|
Share
|
|
|
|
|
|
share
|
premium
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
account
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
|
Balance as at 30 June
2022
|
8,384
|
37,874
|
233,866
|
(74,230)
|
12,846
|
218,740
|
|
(Loss)/profit for the
period
|
-
|
-
|
-
|
(20,604)
|
6,454
|
(14,150)
|
5
|
Ordinary dividends paid
|
-
|
-
|
-
|
-
|
(3,354)
|
(3,354)
|
|
Balance as at 31 December
2022
|
8,384
|
37,874
|
233,866
|
(94,834)
|
15,946
|
201,236
|
Notes
|
for the year to 30 June
2023
|
|
|
|
|
|
Ordinary
|
Share
|
|
|
|
|
|
share
|
premium
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
account
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'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)
|
5
|
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
|
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
Notes
|
|
|
|
|
As
at
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
|
£'000s
|
£'000s
|
£'000s
|
|
Non-current assets
|
|
|
|
6
|
Investments
|
293,126
|
349,472
|
308,347
|
|
Current assets
|
|
|
|
|
Other receivables
|
212
|
209
|
62
|
6
|
Derivative financial
instruments
|
-
|
78
|
110
|
|
Cash and cash equivalents
|
-
|
111
|
5,234
|
|
|
212
|
398
|
5,406
|
|
Current liabilities
|
|
|
|
7
|
Loans
|
(15,000)
|
(50,000)
|
(42,691)
|
|
Other payables
|
(10,100)
|
(6,533)
|
(8,892)
|
|
Zero dividend preference
shares
|
(39,764)
|
-
|
-
|
|
|
(64,864)
|
(56,533)
|
(51,583)
|
|
Net
current liabilities
|
(64,652)
|
(56,135)
|
(46,177)
|
|
Total assets less current liabilities
|
228,474
|
293,337
|
262,170
|
|
Non-current liabilities
|
|
|
|
|
Zero dividend preference
shares
|
(57,399)
|
(92,101)
|
(94,589)
|
|
Net
assets
|
171,075
|
201,236
|
167,581
|
|
|
|
|
|
|
Equity attributable to equity holders
|
|
|
|
8
|
Ordinary share capital
|
8,384
|
8,384
|
8,384
|
|
Share premium account
|
37,874
|
37,874
|
37,874
|
|
Special reserve
|
233,866
|
233,866
|
233,866
|
|
Capital reserves
|
(117,449)
|
(94,834)
|
(124,278)
|
|
Revenue reserve
|
8,400
|
15,946
|
11,735
|
|
Total attributable to equity holders
|
171,075
|
201,236
|
167,581
|
|
|
|
|
|
9
|
Net
asset value per ordinary share -pence
|
|
|
|
|
Basic - pence
|
204.04
|
240.02
|
199.87
|
|
|
|
|
|
CONDENSED GROUP STATEMENT OF CASH FLOWS
(UNAUDITED)
|
Six months
to
|
Six months
to
|
Year
to
|
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
|
£'000s
|
£'000s
|
£'000s
|
Operating activities:
|
|
|
|
Profit/(loss) before
taxation
|
6,848
|
(14,150)
|
(44,451)
|
Deduct investment income -
dividends
|
(2,150)
|
(8,286)
|
(9,904)
|
Deduct investment income -
interest
|
(126)
|
(243)
|
(320)
|
Deduct bank interest
|
(2)
|
(3)
|
(5)
|
Add back bank interest
charged
|
1,527
|
1,144
|
2,897
|
Add back (gains)/losses on
investments
|
(9,549)
|
13,471
|
40,342
|
Add back losses on derivative
financial instruments
|
35
|
2,099
|
2,038
|
Add back foreign exchange
losses
|
110
|
1,460
|
1,604
|
Increase in other debtors
|
(53)
|
(45)
|
(10)
|
(Decrease)/increase in
creditors
|
(92)
|
280
|
(60)
|
Deduct ZDP shares finance
costs
|
2,574
|
3,571
|
6,059
|
Net
cash outflow from operating activities
before dividends and interest
|
(878)
|
(702)
|
(1,810)
|
Dividends received
|
2,150
|
1,962
|
3,580
|
Investment income - interest
received
|
29
|
91
|
166
|
Bank interest received
|
2
|
3
|
5
|
Interest paid
|
(2,122)
|
(1,144)
|
(2,375)
|
Cash flows from operating activities
|
(819)
|
210
|
(434)
|
Investing activities:
|
|
|
|
Purchases of investments
|
(9,405)
|
(10,003)
|
(17,588)
|
Sales of investments
|
30,802
|
70,333
|
92,285
|
Settlement of derivatives
|
75
|
(4,119)
|
(4,090)
|
Cash flows from investing activities
|
21,472
|
56,211
|
70,607
|
Financing activities:
|
|
|
|
Equity dividends paid
|
(3,354)
|
(3,354)
|
(6,708)
|
Drawdowns of loans
|
6,964
|
50,000
|
55,231
|
Repayment of loans
|
(31,336)
|
(53,572)
|
(66,070)
|
Cash flows from redemption of ZDP
shares
|
-
|
(52,283)
|
(52,283)
|
Cash flows from financing activities
|
(27,726)
|
(59,209)
|
(69,830)
|
|
|
|
|
Net (decrease)/increase in cash and
cash equivalents
|
(7,073)
|
(2,788)
|
343
|
Cash and cash equivalents at the
beginning
of the period
|
(2,638)
|
(3,827)
|
(3,827)
|
Effect of movement in foreign
exchange
|
(56)
|
1,032
|
846
|
Cash and cash equivalents at the end of the
period
|
(9,767)
|
(5,583)
|
(2,638)
|
|
|
|
|
Comprised of:
|
|
|
|
Cash
|
-
|
111
|
5,234
|
Bank overdraft
|
(9,767)
|
(5,694)
|
(7,872)
|
Total
|
(9,767)
|
(5,583)
|
(2,638)
|
NOTES TO THE ACCOUNTS (UNAUDITED)
1.
SIGNIFICANT ACCOUNTING POLICIES
The Company is an investment company
incorporated in Bermuda, with its ordinary shares traded on the
Specialist Fund Segment of the Main Market of the London Stock
Exchange and listed on the Bermuda Stock Exchange.
The Group accounts comprise the
results of the Company and UIL Finance Limited.
This condensed set of financial
statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted for use in the UK.
The annual financial statements of
the Group for the year ended 30 June 2024 will be prepared in
accordance with UK-adopted international accounting standards which
comprise standards and interpretations approved by the IASB, and
International Accounting Standards and Standing Interpretations
Committee interpretations approved by the IASC that remain in
effect. As required by the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority, the condensed set of
financial statements has been prepared applying the accounting
policies and presentation that were applied in the preparation of
the Group's published consolidated financial statements for the
year ended 30 June 2023.
The preparation of interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. The significant
judgements made by the Directors in applying the Group's accounting
policies and key sources of uncertainty were the same as those
applied to the consolidated financial statements as at and for the
year ended 30 June 2023.
The unaudited condensed Group
accounts do not include all of the information required for full
annual accounts and should be read in conjunction with the
consolidated accounts of the Group for the year ended 30 June 2023,
which were prepared under full IFRS requirements.
2.
MANAGEMENT AND ADMINISTRATION FEES
The Company has appointed ICM
Investment Management Limited ("ICMIM") as its Alternative
Investment Fund Manager and joint portfolio manager with ICM
Limited ("ICM"), for which they are entitled to a management fee
and a performance fee. The aggregate fees payable by the Company
are apportioned between the joint portfolio managers as agreed by
them.
The relationship between ICMIM and
ICM is compliant with the requirements of the UK version of the EU
Alternative Investment Fund Managers Directive as it forms part of
UK domestic law by virtue of the European Union (withdrawal) Act
2018, as amended and also such other requirements applicable to
ICMIM by virtue of its regulation by the Financial Conduct
Authority.
The annual management fee is 0.5% per
annum based on total assets less current liabilities (excluding
borrowings and excluding the value of all holdings in companies
managed or advised by the Investment Managers or any of their
subsidiaries from which they receives a management fee), calculated
and payable quarterly in arrears. The agreement with ICM and ICMIM
may be terminated upon one year's notice given by the Company or by
ICM and ICMIM, acting together.
In addition, the Investment Managers
are entitled to a capped performance fee payable in respect of each
financial period, equal to 15% of the amount by which the Company's
NAV attributable to holders of ordinary shares outperforms the
higher of (i) 5.0%, and (ii) the post-tax yield on the FTSE
Actuaries Government Securities UK Gilts 5 to 10 years' index, plus
inflation (on the RPIX basis) (the "Reference Rate"). The opening
equity funds for calculation of the performance fee are the higher
of (i) the equity funds on the last day of a calculation period in
respect of which a performance fee was last paid, adjusted for
capital events and dividends paid since that date (the "high
watermark"); and (ii) the equity funds on the last day of the
previous calculation period increased by the Reference Rate during
the calculation period and adjusted for capital events and
dividends paid since the previous calculation date. In a period
where the Investment Managers or any of their associates receive a
performance fee from any ICM managed investment in which UIL is an
investor, the performance fee payable by UIL will be reduced by a
proportion corresponding to UIL's percentage holding in that
investment applied to the underlying investment performance fee,
subject to the provision that the UIL performance fee cannot be a
negative figure. In calculating any performance fee payable, a cap
of 2.5% of closing NAV (adjusted for capital events and dividends
paid) will be applied following any of the above adjustments and
any excess over this cap shall be written off. A performance fee
was last paid in respect of the year to 30 June 2019. As at that
date the equity shareholders' funds were £326.3m. As at 30 June
2021, the attributable shareholders' funds were above the high
watermark. However, after adjusting for the allocated share of
performance fees (paid and accrued) from ICM managed investments in
which UIL is an investor, no performance fee was
accrued.
In the period to 31 December 2023,
UIL's NAV return is below the required hurdle calculated at 9.9%
return to entitle the Investment Managers to a performance fee and
therefore no performance fee has been accrued. The final amount
payable is dependent upon the performance of the Company, adjusted
for the allocated share of any performance fees from ICM managed
investments in which UIL is an investor, in the year to 30 June
2024.
ICM also provides company secretarial
services to the Company, with the Company paying 45% of the
incurred costs associated with this post.
JP Morgan Chase Bank N.A. - London
Branch has been appointed Administrator and ICMIM has appointed
Waverton Investment Management Limited to provide certain support
services (including middle office, market dealing and information
technology support services). The Company or the Administrator may
terminate the agreement with the Administrator upon six months'
notice in writing.
3.
TAXATION
Profits of the Company and
subsidiaries for the period are not subject to any taxation within
their countries of residence.
4.
EARNINGS PER ORDINARY SHARE
The calculation of earnings per
ordinary share from continuing operations is based on the following
data:
|
Six months
to
|
Six months
to
|
Year
to
|
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
|
£'000s
|
£'000s
|
£'000s
|
Revenue
|
19
|
6,454
|
5,597
|
Capital
|
6,829
|
(20,604)
|
(50,048)
|
Total
|
6,848
|
(14,150)
|
(44,451)
|
|
|
|
|
|
Number
|
Number
|
Number
|
Weighted average number of shares in
issue during the
period for earnings per share
calculations
|
83,842,918
|
83,842,918
|
83,842,918
|
|
|
|
|
|
pence
|
pence
|
pence
|
Revenue return per ordinary
share
|
0.02
|
7.70
|
6.68
|
Capital return per ordinary
share
|
8.15
|
(24.58)
|
(59.70)
|
Total return per ordinary share
|
8.17
|
(16.88)
|
(53.02)
|
5.
DIVIDENDS
|
|
|
Six months
to
|
Six months
to
|
Year
to
|
|
Record
|
Payment
|
31 Dec 2023
|
31 Dec
2022
|
30 Jun
2023
|
|
date
|
date
|
£'000s
|
£'000s
|
£'000s
|
2022 Fourth quarterly interim of
2.00p
|
02-Sep-22
|
30-Sep-22
|
-
|
1,677
|
1,677
|
2023 First quarterly interim of
2.00p
|
02-Dec-22
|
22-Dec-22
|
-
|
1,677
|
1,677
|
2023 Second quarterly interim of
2.00p
|
03-Mar-23
|
31-Mar-23
|
-
|
-
|
1,677
|
2023 Third quarterly interim of
2.00p
|
02-Jun-23
|
26-Jun-23
|
-
|
-
|
1,677
|
2023 Fourth quarterly interim of
2.00p
|
29-Sep-23
|
13-Oct-23
|
1,677
|
-
|
-
|
2024 First quarterly interim of
2.00p
|
01-Dec-23
|
21-Dec-23
|
1,677
|
-
|
-
|
|
|
|
3,354
|
3,354
|
6,708
|
The Directors have declared a second
quarterly dividend in respect of the year ending 30 June 2024 of
2.00p per ordinary share payable on 4 June 2024 to
shareholders on the register at close of business on 10 May 2024.
The total cost of this dividend, which has not been accrued in the
results for the six months to 31 December 2023, is £1,677,000 based
on 83,842,918 ordinary shares in issue as at the date of this
half-yearly report.
6.
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
The tables below set out the fair
value measurements hierarchy at the relevant period end.
These fair value measurements are
categorised into a hierarchy consisting of the following three
levels:
Level 1 - valued using unadjusted
quoted prices in active markets for identical assets and
liabilities.
Level 2 - valued by reference to
valuation techniques using other observable inputs not included
within level 1.
Level 3 - valued by reference to
valuation techniques using unobservable inputs.
|
|
|
31 Dec 2023
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
Financial assets held at fair value through profit or
loss
|
|
|
|
|
Investments
|
58,548
|
61,494
|
173,084
|
293,126
|
Derivative financial instruments -
foreign currency options
|
-
|
-
|
-
|
-
|
During the period, holdings of value
£3,369,000 were transferred from level 2 to level 1 due to the
investee company shares resuming regular trading. The book cost and
fair values were transferred using the 30 June 2023
balances.
|
|
|
31 Dec
2022
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
Financial assets held at fair value
through profit or loss
|
|
|
|
|
Investments
|
104,880
|
59,378
|
185,214
|
349,472
|
Derivative financial instruments -
foreign currency options
|
-
|
78
|
-
|
78
|
During the period, holdings of value
£65,586,000 were transferred from level 1 to level 2 due to the
investee company shares having irregular trading in the period and
a holding of value £3,511,000 was transferred from level 2 to level
1 due to the investee company shares resuming regular trading. The
book cost and fair values were transferred using the 30 June 2022
balances.
|
|
|
30 Jun
2023
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
Financial assets held at fair value
through profit or loss
|
|
|
|
|
Investments
|
63,115
|
72,580
|
172,652
|
308,347
|
Derivative financial instruments -
foreign currency options
|
-
|
110
|
-
|
110
|
During the year, three holdings with
a value of £70.0m were transferred from level 1 to level 2 due to
the investee companies shares trading irregularly in the year and
one holding with a value of £3.5m was transferred from level 2 to
level 1 due to the investee company shares resuming regular
trading. The book cost and fair value were transferred using the 30
June 2022 balances
A reconciliation of fair value
measurements in level 3 is set out in the following
table:
|
Six months
to
31 Dec 2023
|
Six months
to
31 Dec
2022
|
Year
to
30 Jun
2023
|
|
£'000s
|
£'000s
|
£'000s
|
Investments brought
forward
|
|
|
|
Cost
|
168,186
|
199,073
|
199,073
|
Gains
|
4,466
|
39,848
|
39,848
|
Valuation
|
172,652
|
238,921
|
238,921
|
Purchases
|
8,881
|
59,035
|
67,701
|
Sales
|
(16,651)
|
(120,175)
|
(125,307)
|
Gains/(losses) on
investments
|
8,202
|
7,433
|
(8,663)
|
Valuation carried forward
|
173,084
|
185,214
|
172,652
|
|
|
|
|
Analysed
|
|
|
|
Cost
|
159,268
|
164,642
|
168,186
|
Gains
|
13,816
|
20,572
|
4,466
|
Valuation carried forward
|
173,084
|
185,214
|
172,652
|
7.
LOANS
As at 30 June 2023, the Company had a
£37.5m multicurrency loan facility with Bank of Nova Scotia
expiring on 19 September 2023. The Company extended the facility
until 19 March 2024, the facility reduced to £25.0m on 19 September
2023, £20.0m on 31 October 2023 and £15.0m on 31 December 2023. The
facility reduced to £10.0m on 19 February 2024 and will be fully
repaid by 19 March 2024. Commissions are charged on any undrawn
amounts at commercial rates. The terms of the loan facility,
including those related to accelerated repayment and costs of
repayment and the loan covenants, are typical of those normally
found in facilities of this nature. Scotiabank has a floating
charge over the assets of the Company in respect of amounts owing
under the loan facility. As at 31 December 2023 £15.0m (31 December
2022: £50.0m and 30 June 2023: £37.5m) was drawn down.
As at 30 June 2023, Union Mutual
Pension Fund Limited had loaned USD 6.6m (31 December 2022: nil) to
UIL. The loan was repaid in full in August 2023 and incurred
interest at 8% per annum.
During the period, Zeta Energy
Limited loaned AUD 13.5m to UIL. This loan was fully repaid in
October 2023 and incurred interest at 8.3% per annum.
8.
ORDINARY SHARE CAPITAL
Equity share capital:
|
Number
|
£'000s
|
Ordinary shares of 10p each with
voting rights
|
|
|
Authorised
|
250,000,000
|
25,000
|
|
|
|
|
Total
shares
in issue
Number
|
Total
shares
in issue
£'000s
|
Balance as at 31 December 2023, 30
June 2023 and 31 December 2022
|
83,842,918
|
8,384
|
No ordinary shares have been
purchased for cancellation since the period end.
9.
NET ASSET VALUE PER SHARE
Net asset value per ordinary share is
based on net assets as at the period end of £171,075,000 (31
December 2022: £201,236,000 and 30 June 2023: £167,581,000) and on
83,842,918 ordinary shares in issue as at the period end (31
December 2022 and 30 June 2023: 83,842,918).
10.
OPERATING SEGMENTS
The Directors are of the opinion that
the Group's activities comprise a single operating segment, namely
that of investing in equity, debt and derivative securities to
maximise shareholder returns.
11.
RELATED PARTY TRANSACTIONS
The following transactions were
carried out during the half year to 31 December 2023 between the
Company and its related parties:
Subsidiaries of UIL:
Carebook Technologies Inc ("Carebook")
-. Pursuant
to a convertible loan agreement dated 5 December 2023, under which
UIL has agreed to loan monies to Carebook, UIL advanced to Carebook
a loan of CAD 2.0m. As at 31 December 2023, the balance of the loan
and interest outstanding was CAD 2.0m. Pursuant to a loan
agreement dated 28 September 2022, the balance of the loan and
interest outstanding as at 31 December 2023 was CAD 1.0m (30 June
2023: CAD 1.0m). UIL received interest of CAD 0.1m in the period.
Pursuant to a loan agreement dated 15 December 2022, the balance of
the loan and interest outstanding as at 31 December 2023 was
CAD 1.4m (30 June 2023: CAD 1.3m). All the loans bear interest at
an annual rate of the Canadian variable rate +10.0% and are
repayable by 22 December 2026.
Newtel Holdings Limited ("Newtel") -
Pursuant to a loan agreement dated 1 July 2023,
under which UIL agreed to loan monies to Newtel, UIL advanced to
Newtel £0.1m. The loan does not bear interest. As at 31 December
2023, the balance of the loan was £0.1m.
Northbrook Resources Limited ("Northbrook") -
Pursuant to a loan agreement dated 1 January 2019
under which UIL agreed to loan monies to Northbrook, the
outstanding loan balance of £1.6m was re-assigned to SKAC Ltd at
nil proceeds, as part of an ongoing process to liquidate
Northbrook. Interest was charged on the loan at 6% per annum. UIL
paid fees of £33k incurred by Northbrook as part of the liquidation
process.
West
Hamilton Holdings Limited ("West Hamilton") -
West Hamilton made a capital distribution of £8.3m
and a dividend distribution of £0.7m to UIL during the
period.
Zeta
Resources Limited ("Zeta") - Pursuant to a loan agreement dated 28 July 2023, under which
Zeta Energy Pte Ltd (a 100% subsidiary of Zeta) agreed to loan
monies to UIL, Zeta Energy Pte Ltd advanced to UIL AUD 13.5m in the
period. UIL repaid the AUD 13.5m in the period and as at 31
December 2023 the balance was £nil. The loan bears interest at an
annual rate of 8.3% and UIL paid interest of AUD 136k to Zeta
Energy Pte Ltd during the period.
During the period, Zeta bought back
28,132,739 Zeta shares from UIL as part of the Zeta's buy back
plan. UIL received AUD 9.0m.
Joint ventures
Allectus Capital Limited ("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 0.6m. The balance of
the loan as at 31 December 2023 was USD 2.7m (30 June 2023: USD
2.1m). The loan does not bear interest.
Allectus Quantum Holdings Limited ("Allectus Quantum")
- UIL paid fees of £26k incurred by
Allectus Quantum.
Associated undertakings:
Somers Limited ("Somers") - Pursuant to loan agreements dated 1 September 2016 (USD loan),
5 September 2019 (AUD loan) and 22 June 2018 (GBP loan), under
which UIL agreed to loan monies to Somers, UIL advanced to Somers
loans of USD 5.0m, AUD 1.2m and £1.9m, UIL received interest of USD
14k, AUD 4k and £8k and received from Somers repayments of USD
4.8m, AUD 1.2m and £0.6m. As at 31 December 2023, the balance of
the loans outstanding were USD 0.2m and £1.3m. The loans bear
interest at an annual rate of 6.0% and are repayable on not less
than 12 months' notice.
In October 2023, UIL purchased 149
shares in Permanent Investment Limited ("PIL") for $1 from Prime
Life Common Fund Limited, holding 100% of the shares. The holding
of Littlepay was gifted into PIL. Subsequently Somers purchased
UIL's holding in PIL at fair value for £4.7m.
Key
management entities and persons:
ICM and ICMIM are joint portfolio
managers of UIL. Other than investment management fees and company
secretarial costs as set out in note 2, and reimbursed expenses of
£7,000, there were no other transactions with ICM or ICMIM or ICM
Corporate Services (Pty) Ltd. As at 31 December 2023, £102,000
remained outstanding to ICM and ICMIM in respect of management and
company secretarial fees and £nil in respect of performance
fees.
Mr Jillings received dividends from
UIL of £22,000. There were no other transactions during the six
months with Alasdair Younie, Charles Jillings, Duncan Saville and
Sandra Pope and UIL.
The
Board:
The fees paid to Directors for the
six months to 31 December 2023: Chairman £26,250; Chairman of Audit
& Risk Committee £25,075; Directors £19,425. The Board received
aggregate remuneration of £90,175 for services as Directors. As at
31 December 2023, £nil remained outstanding to the Directors. In
addition to their fees, the Directors received dividends totalling
£56,000. There were no other transactions during the six months
with the Board and UIL.
Companies controlled by key management
persons:
Union Mutual Pension Fund Limited ("UMPF") -
As at 30 June 2023, UMPF had loaned USD 6.6m to
UIL. In August 2023, UIL sold 302,000 Somers shares at fair value
for USD 4.3m and paid USD 2.3m in cash to UMPF to repay the loan.
The loan bears interest at an annual rate of 8.0% and UIL paid
interest of USD 63k to UMPF during the period.
General Provincial Life Pension Fund Limited
received dividends of £2.2m from UIL, Union Mutual
Pension Fund Limited received dividends of £0.3m from UIL and Mitre
Investments Limited received dividends of £0.1m from UIL. There
were no other transactions between companies controlled by key
management and UIL during the six months to 31 December
2023.
12.
FINANCIAL RISK MANAGEMENT - LEVEL 3 FINANCIAL
INSTRUMENTS
Valuation methodology
The objective of using valuation
techniques is to arrive at a fair value measurement that reflects
the price that would be received to sell the asset or paid to
transfer the liability in an orderly transaction between market
participants at the measurement date. The Company uses proprietary
valuation models, which are compliant with IPEV guidelines and IFRS
13 and which are usually developed from recognised valuation
techniques.
The Directors have satisfied
themselves as to the methodology used, the discount rates and key
assumptions applied, and the valuations. The methodologies used to
determine fair value are described in the 2023 annual report. The
level 3 assets comprise of a number of unlisted investments at
various stages of development and each has been assessed based on
its industry, location and business cycle. The valuation
methodologies include net assets, discounted cash flows, cost of
recent investment or last funding round, listed peer comparison or
peer group multiple or dividend yield, as appropriate. Where
applicable, the Directors have considered observable data and
events to underpin the valuations. A discount has been applied,
where appropriate, to reflect both the unlisted nature of the
investments and business risks.
UIL currently has investments in a
number of level 3 closed-end investment companies including
Allectus Capital, Allectus Quantum and Somers. These companies are
valued on a net assets basis, estimated based on the managers'
NAVs. Managers' NAVs use recognised valuation techniques consistent
with IFRS and are normally subject to audit. The fund valuations
included in these financial statements were based principally on
the 31 December 2023 managers' NAVs and these NAVs have been
reviewed to ensure that the economic impact of higher interest
rates, inflation, and the Ukraine and Middle East conflicts have
been considered.
Sensitivity of level 3 financial investments measured at fair
value to changes in key assumptions.
Level 3 inputs are sensitive to
assumptions made when ascertaining fair value. While the Directors
believe that the estimates of fair value are appropriate, the use
of different methodologies or assumptions could lead to different
measurements of fair value. The sensitivities shown in the table
below give an indication of the effect of applying reasonable and
possible alternative assumptions.
In assessing the level of reasonably
possible outcomes consideration was also given to the impact on
valuations of the elevated level of volatility in equity markets
during the year, principally reflecting concerns about high rates
of inflation, tightening energy supplies, higher interest rates and
the Ukraine and Middle East conflicts. The valuations of fund
interests are based on the managers' NAVs and the managers have
advised that they have taken into account these economic and market
concerns. The impact on the valuations has been varied and largely
linked to their relevant sectors and this has been reflected in the
level of sensitivities applied.
The following table shows the
sensitivity of the fair value of level 3 financial investments to
changes in key assumptions:
As
at 31 December 2023
|
|
|
|
|
|
Investment
|
Investment
type
|
Valuation
methodology
|
Risk
weighting
|
Sensitivity
+/-
|
Carrying
amount
£'000s
|
Sensitivity
£'000s
|
Somers
|
Equity
|
NAV
|
Medium
|
20%
|
121,808
|
24,362
|
Allectus Capital
|
Equity
|
NAV
|
Medium
|
20%
|
16,719
|
3,344
|
Allectus Quantum
|
Equity
|
NAV
|
Medium
|
20%
|
14,666
|
2,933
|
West Hamilton
|
Equity
|
Fair value
of assets
|
Low
|
10%
|
6,638
|
664
|
Arria NLG Limited
("Arria")*
|
Equity
|
Last fund
raising
|
High
|
40%
|
5,428
|
2,171
|
Other Investments
|
Equity
|
Various
|
Medium
|
20%
|
4,672
|
934
|
Other Investments
|
Loans
|
Various
|
Low
|
10%
|
3,153
|
315
|
Total
|
|
|
|
|
173,084
|
34,723
|
* Valuation of investment in
Arria
UIL holds 6.6m ordinary shares in
Arria which it valued at £5.4m as at 31 December 2023. Arria has
been valued based on recent equity fundraising events. Arria's
revenues are growing strongly, however it remains materially loss
making and cash flow negative and it may have insufficient cash
reserves if future capital raise activities do not proceed as
planned. Accordingly, Arria's fair value has been given a
sensitivity of 40% to reflect a higher level of uncertainty over
the future position of the company.
As at 31 December 2022
|
|
|
|
|
|
Investment
|
Investment
type
|
Valuation
methodology
|
Risk
weighting
|
Sensitivity
+/-
|
Carrying
amount
£'000s
|
Sensitivity
£'000s
|
Somers
|
Equity
|
NAV
|
Low
|
10%
|
127,989
|
12,799
|
Allectus Capital
|
Equity
|
NAV
|
Medium
|
20%
|
24,378
|
4,876
|
West Hamilton
|
Equity
|
Fair value
of assets
|
Medium
|
20%
|
15,585
|
3,117
|
Littlepay Mobility Ltd
|
Equity
|
Peer
multiples
|
Medium
|
20%
|
5,663
|
1,133
|
Allectus Quantum
|
Equity
|
Price of
recent
investment
|
High
|
30%
|
4,659
|
1,398
|
Arria
|
Equity
|
Peer
multiples
|
High
|
400%
|
1,188
|
4,751
|
Other Investments
|
Equity
|
Various
|
Medium
|
20%
|
4,372
|
874
|
Other Investments
|
Loans
|
Various
|
Low
|
10%
|
1,380
|
138
|
Total
|
|
|
|
|
185,214
|
29,086
|
As at 30 June 2023
|
|
|
|
|
|
Investment
|
Investment
type
|
Valuation
methodology
|
Risk
weighting
|
Sensitivity
+/-
|
Carrying
amount
£'000s
|
Sensitivity
£'000s
|
Somers
|
Equity
|
NAV
|
Low
|
20%
|
107,688
|
21,538
|
Allectus Capital
|
Equity
|
NAV
|
Medium
|
20%
|
17,821
|
3,564
|
Allectus Quantum
|
Equity
|
NAV
|
Medium
|
20%
|
14,666
|
2,933
|
West Hamilton
|
Equity
|
Fair value
of assets
|
Low
|
10%
|
15,087
|
1,509
|
Arria
|
Equity
|
Last fund
raising
|
Medium
|
20%
|
6,602
|
1,320
|
Other Investments
|
Equity
|
Various
|
Medium
|
20%
|
9,451
|
1,890
|
Other Investments
|
Loans
|
Various
|
Low
|
10%
|
1,337
|
134
|
Total
|
|
|
|
|
172,652
|
32,888
|
13.
GOING CONCERN
Notwithstanding that the Group has
reported net current liabilities of £64,652,000 as at 31 December
2023 (31 December 2022: £56,135,000 and 30 June 2023: £46,177,000),
the financial statements have been prepared on a going concern
basis which the Directors consider to be appropriate for the
following reasons.
The Board's going concern assessment
has focused on the forecast liquidity of the Group for 12 months
from the date of approval of the financial statements. This
analysis assumes that the Company will meet some of its short term
obligations through the sale of level 1 securities, which
represented 20.0% of the Company's total portfolio as at 31
December 2023. As part of this assessment the Board has considered
a severe but plausible downside that reflects the impact of the key
risks set out in the Strategic Report of the Annual Report and an
assessment of the 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 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
£15,000,000, the bank overdraft of £9,767,000 and the repayment to
the 2024 ZDP shareholders of £41,505,000. The Board is confident
that the reduction in asset values implied by the reverse stress
test is not plausible even in the current volatile
environment.
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.
14.
RESULTS
The condensed set of financial
statements, forming the half year accounts, has been neither
audited nor reviewed by the Company's auditors. The latest
published accounts are for the year ended 30 June 2023; the report
of the auditors thereon was unqualified. The condensed financial
statements shown above for the year ended 30 June 2023 are an
extract from those accounts.
Legal Entity Identifier:
213800CTZ7TEIE7YM468