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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
(http://www.uil.limited) and the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(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
(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 share1 (for the year) (%) (20.6) (38.1) n/a
Share price total return per ordinary share1 (for the year) (%) (18.5) (27.6) n/a
Annual compound NAV total return1 (since inception2) (%) 7.8 9.5 n/a
NAV per ordinary share1 (pence) 199.87 260.89 (23.4)
Ordinary share price (pence) 145.00 187.50 (22.7)
Discount1 (%) 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 8.003 8.00 0.0
FTSE All-Share total return Index 8,611 7,981 7.9
Equity holders' funds (£m)
Gross assets4 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 (£m)
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 fees1 2.8 2.2 n/a
Ongoing charges figure including performance fees1 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 £139.9m from
£195.7m as at 30 June 2022, has seen UIL's gearing decline. As at 30 June
2023 UIL's gearing stood at 83.5% (30 June 2022: 89.5%).
Since inception in August 2003, UIL has distributed £94.6m in dividends,
invested £36.9m in ordinary share buybacks and made net gains of £209.0m for
a total return of 344.2% (adjusted for the exercise of warrants and
convertibles). Shareholders should note that the Board and the Investment
Managers focus on longer term market indices, whilst including short term
comparisons for reference.
There have been a number of changes in the portfolio during the year to 30
June 2023. UIL sold its largest unlisted company, ICM Mobility Group Limited
("ICM Mobility"), to Somers Limited ("Somers") and bought a number of listed
holdings as UIL sought to reduce its unlisted investments and increase its
listed positions. Furthermore, as a result of share price weakness, a number
of positions fell out of the top ten. This is covered in more detail in the
Investment Managers' report.
The Board is pleased to see the ordinary shares discount to NAV end the year
under 30.0%, standing at 27.5% as at 30 June 2023 (30 June 2022: 28.1%). Given
the focus of applying cash resources to the redemption of the 2022 ZDP shares
and the reduction in the bank facility, no buybacks were undertaken in the
year ended 30 June 2023.
Consistent with the wider debt markets, UIL's longer dated 2024, 2026 and 2028
ZDP shares are trading at significantly higher gross redemption yields
compared to those as at 30 June 2022, being 8.9%, 8.8% and 8.9% respectively.
The market prices of the ZDP shares were impacted by interest rate rises by
most central banks as inflation increased sharply. As at 30 June 2023, UIL's
average blended rate of funding costs, including bank debt, increased from
4.7% to 5.7%, mainly as a result of higher bank borrowing costs.
Total revenue income for the year to 30 June 2023 was £10.2m, an increase of
3.0% from £9.9m in the prior year, a good outcome given the reduced level of
investments. However, the finance costs increased significantly for the year
to 30 June 2023 to £2.9m, up 163.6% from the prior year at £1.1m. This
resulted in the revenue return earnings per share ("EPS") of 6.68p,
representing a decrease of 20.0% from 30 June 2022 of 8.35p.
The Board declared an unchanged fourth quarterly dividend of 2.00p per
ordinary share which maintains the total for the year at 8.00p, and a yield on
the closing share price of 5.5%. Although the dividend is not fully covered by
earnings in the year, given the significant revenue reserves brought forward
of 15.32p per share, the Board is comfortable with maintaining the payout at
8.00p. The revenue reserves carried forward reduced to £11.7m as at 30 June
2023 from £12.8m as at 30 June 2022.
The capital return loss for the year ended 30 June 2023 of £50.0m is
disappointing to report to shareholders.
BANK facility
UIL has agreed with the Bank of Nova Scotia, London Branch ("Bank of Nova
Scotia") to extend its committed senior secured multi-currency facility to 19
March 2024. The facility has been reduced from £37.5m to £25.0m and will
step down in stages over the next six months prior to a final repayment by 19
March 2024.
GLOBAL EVENTS
Several themes continue to dominate global events: heightened geopolitical
tensions, the outlook for inflation and interest rates, climate change,
technology and Artificial Intelligence ("AI").
As anticipated at the time of announcing UIL's half-year report, Covid-19 has
receded and we do not expect it to be an issue going forward. China's reversal
of its zero tolerance policy earlier this year was a positive. However, weak
Chinese consumer confidence is a headwind to a full recovery by China.
The war in Ukraine has gone on longer than expected and today there continues
to be no clear way forward. Both sides have been drawn in further, but once
they reach a neutral position, a negotiated outcome would be expected.
The ongoing friction between the USA and China continues to deepen and it is
now difficult to see how this reverses direction. Given the USA and China
are the two largest economies globally this must pose significant risks at
some point in the future, especially for technology businesses on each side of
the Pacific Ocean.
Inflation moved markedly for most economies over the year. Nearly all central
banks responded with significantly higher interest rates. We now see major
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 £12.5m. 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 £44.5m resulting in NAV per share
of 199.87p, a decline of 23.4%. This has dragged UIL's annual compound NAV
total return since inception in 2003 down to 7.8%. However, positively, total
net debt reduced by £55.8m.
PORTFOLIO
There was significant volatility over the year and within the top ten
holdings. Three holdings increased in value, three holdings were sold, five
reduced in value and two new investments were made. Overall, the decreases
significantly outweighed the increases, which led to an overall reduction in
the portfolio of £108.2m.
It should also be noted that UEM and Zeta's share price discounts to NAV
represent a £22.2m reduction to the underlying valuations.
Somers' valuation reduced by 24.2% in the year to 30 June 2023. This was
largely driven by Somers' dividend distribution and Resimac's share price
declining by 23.5%. Resimac continues to deliver good operational performance
in the face of material economic and competitive headwinds. In August 2023,
Resimac published its annual results for the year to 30 June 2023 and its
valuation is modest at a historic price earnings ratio of 4.8x and a dividend
yield of 8.7%. It is good to see Resimac continuing to buy back shares at
these current levels. It should be noted that UIL also holds a direct
investment in Resimac, which is UIL's fifth largest investment.
As noted last year, UIL bought a number of listed investments from Somers at
fair value and sold ICM Mobility to Somers at fair value. Taken together, this
increased UIL's listed portfolio and reduced its unlisted portfolio and
thereby improved UIL's bank covenant ratios. We are pleased to be direct
shareholders in West Hamilton Holdings Limited ("West Hamilton") and The
Market Herald Limited ("TMH"), both acquired shortly after UIL's 2022 year
end.
Waverton, Somers' largest position at 38.7% of its gross assets, continues to
build on its positive momentum. In its year to 31 December 2022 Waverton saw
AUM increase by 5.8% to £9.1bn, revenues increase by 9.1% to £54.9m and
profits before tax remained unchanged at £12.0m. Waverton has an enviable
investment performance record, is driven in adding clients and has recently
successfully outsourced its back office to SEI, a platform which can be
leveraged to everybody's benefit. This success has carried over into the
current year to December 2023.
Zeta's NAV per share increased by 1.0% over the year, a good outcome given
Zeta's exposure to aluminium and nickel which were both down significantly
over the year to 30 June 2023. Aluminium was down 12.8% and nickel was down by
10.0%. Zeta's share price declined by 7.6% and as a result the discount
widened to 22.0%.
Zeta's largest investment at the start of the year, Copper Mountain Mining
Corporation ("Copper Mountain"), was successfully acquired by Hudbay Minerals
Inc ("Hudbay") in an all-paper offer. Zeta has reduced its holding in Hudbay
as the share price has firmed. In market capitalisation terms, Hudbay is
approximately four times the size of Copper Mountain and the investment is
more liquid as a result.
The proceeds of UIL's sale of ICM Mobility to Somers and Panoramic Resources
Limited ("Panoramic") back to Zeta at market price was used to repay the 2022
ZDP shares. UIL will capture much of the movement in valuation of these
holdings through its shareholding in Somers and Zeta of 41.7% and 61.2%
respectively.
UEM has again been a relative standout performer over the year to 30 June 2023
with a NAV total return of 12.1% compared to the MSCI emerging markets total
return Index (GBP adjusted) ("MSCI") loss of 2.6% over the same period. UEM
continues to see strong results reported by its investee companies with most
growing revenues. While margins are under pressure their EBITDAs have mostly
expanded too. This is a credit to the investee management teams who continue
to deliver excellent operational performance in volatile times. UEM is ahead
of the MSCI since inception. As with most emerging market funds, UEM's
discount has widened to 14.0% as at 30 June 2023. This remains a frustration,
but UIL has taken the opportunity of this share price outperformance to reduce
its holding and realise £25.5m during the year.
Allectus Capital Limited ("Allectus Capital") successfully sold its stake in
Cohort Go, one of its largest investments. The sale to Flywire culminated
after a significant period of ownership as the largest shareholder and
delivered excellent financial results. The decrease in Allectus Capital's
overall valuation was in part due to this sale, as well as broader technology
market challenges, with software multiples significantly decreasing across the
market. During the year Allectus Capital has remained highly selective on its
mandate and will continue to capitalise on high conviction sectors like AI or
distressed sectors like fintech.
West Hamilton, a listed Bermuda property developer, has sold its major asset
in Bermuda and is in the process of completing this transaction. West Hamilton
expects to return over 90.0% of its value to shareholders shortly.
UIL exited Resolute Mining Limited ("Resolute") in March 2023. This was a
long-standing investment but, for the most part, has been a significant
challenge for UIL and has failed to deliver long term returns. Given poor
operational performance and the added rising risks in Mali, UIL took the
painful decision to exit and realised its investment over the year.
Allectus Quantum Holdings Limited's ("Allectus Quantum") valuation has
increased over the year following both additional investments by UIL and an
increase in the fair value of Diraq Pty Ltd ("Diraq"), a next generation
quantum computing company. Diraq is Allectus Quantum's sole investment and its
outlook remains positive.
Littlepay Mobility Limited ("Littlepay") has performed ahead of expectations,
but values have decreased in line with markets resulting in the carrying value
reducing by 14.1%. Starpharma Holdings Limited ("Starpharma") and AssetCo plc
remain investments, but the poor execution of both their strategies has seen
their valuations decline, resulting in both investments falling out of UIL's
top ten holdings.
In line with many AI related investments Arria NLG Limited ("Arria") has risen
in value. Whilst this has been positive for Arria, we are cautious on its
outlook.
FOREIGN EXCHANGE
As at 30 June 2023 UIL held no forward FX derivative positions. As noted in
the half year report to 31 December 2022 UIL took the decision to close out
its positions in full, in light of sheer volatility in the FX markets. In the
year ended 30 June 2023, forward contract FX and currency losses amounted to
£3.6m. UIL is less vulnerable to the volatility in the FX markets for the
coming year.
COMMODITIES
Commodities were volatile during the year to 30 June 2023 with oil down 34.8%.
Copper was less volatile up 0.7%. Nickel was extremely volatile, at one point
seeing a high of 38.1% and a low of 14.7%, ending the year down by 10.0%.
PORTFOLIO ACTIVITY
During the year to 30 June 2023, UIL invested £120.6m and realised £188.4m,
including loans repaid by Somers and Zeta. Purchases included investments in
Resimac, West Hamilton and TMH. UIL bought these holdings from Somers to
increase the listed holdings of UIL and as a result improve UIL's covenant
cover on its bank facility.
PLATFORM INVESTMENTS
UIL currently has four platform investments, Somers, Zeta, UEM and Allectus
Capital in its top ten holdings. These investments account for 71.8% of the
total portfolio as at 30 June 2023 (30 June 2022: 73.0%). During the year to
30 June 2023, net withdrawals from these platforms amounted to £61.5m (30
June 2022: £37.4m).
DIRECT INVESTMENTS
UIL has six direct investments in its top ten holdings, Resimac, West Hamilton
(which replaced ICM Mobility), Allectus Quantum (which replaced Resolute), TMH
(which replaced Panoramic), Arria (which replaced Starpharma) and Littlepay
(which replaced AssetCo plc).
GEOGRAPHIC REVIEW
The geographical split of the portfolio, on a look through basis, shows
Australia and New Zealand remaining as UIL's largest exposure, increasing by
2.9% to 40.1% of UIL's total investments (30 June 2022: 37.2%); UK remained
second at 19.2%, up 5.4% and Bermuda 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 £238.9m as at 30 June 2022 to
£172.7m as at 30 June 2023, mainly as a result of a decrease in Somers'
valuation. The level 3 investments which are unlisted are formally revalued
twice a year. It is worth highlighting that where there is a material event
that impacts an unlisted investment, it is revalued at the time, thereby
keeping the unlisted valuations current.
Shareholders should be aware that within the portfolio in Somers is an
investment in AK Jensen Group ("AKJ") which comprises a platform for both
traditional hedge funds and hedge funds trading digital assets. In addition,
AKJ has issued AKJ tokens, a crypto currency which have been sold to investors
and hedge fund managers in the AKJ Crypto platform. Valuing the token is
difficult as few metrics allow comparability, and the industry has not settled
on a methodology we can readily adopt. Somers' view on valuation is EUR 0.088
to EUR 0.185 per token, driven by an analysis of milestones met and yet to be
achieved as well as wider market considerations. While hedge fund managers are
buying AKJ tokens at some EUR 0.37 the volume held by Somers would likely see
a discount driven by lower liquidity opportunities and reduced fee discount
benefits held by these hedge fund managers. Somers holds 75.0m AKJ tokens and
carries them at EUR 0.10. Each EUR 0.05 represents £3.2m swing in valuation
for Somers and £1.4m for UIL. Further details on AKJ can be found on their
website and note 29 to the accounts.
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
£195.7m to £139.9m as at 30 June 2023.
The blended costs of borrowing rose from 4.7% to 5.7% as a result of rising
finance costs on UIL's bank facilities.
ZDP SHARES
On a consolidated basis the ZDP shares decreased significantly from £140.8m
to £94.6m, down 32.8% mainly as a result of the repayment of the 2022 ZDP
shares which were redeemed in October 2022. UIL continues to hold 2.3m 2026
ZDP shares and 0.6m 2028 ZDP shares as at 30 June 2023. With three ZDP issues,
UIL has spread the redemption liability over five years.
BANK and other DEBT
Bank and other loans decreased to £42.7m as at 30 June 2023 (30 June 2022:
£51.1m). Scotiabank Europe plc's £50.0m committed senior secured
multi-currency revolving facility was extended in September 2022 to 19
September 2023 and novated to the Bank of Nova Scotia, London Branch. The
extension provided a reduction in the facility of £12.5m on 30 March 2023,
and consequently the outstanding amount as at 30 June 2023 under this facility
was £37.5m. In September 2023, the facility was extended to 19 March 2024,
reducing to £25.0m and it will step down in stages over the following six
months prior to a final repayment by 19 March 2024.
On 29 June 2023, Union Mutual Pension Fund Limited loaned USD 6.6m to UIL.
This loan is repayable on 30 September 2023.
REVENUE RETURNS
Revenue income for the year to 30 June 2023 increased to £10.2m from £9.9m,
an increase of 3.0%.
Management and administration fees and other expenses were largely flat at
£1.7m (30 June 2022: £1.7m). Finance costs were significantly higher at
£2.9m for the year to 30 June 2023 from £1.1m in the prior year, mainly as a
result of higher finance costs feeding through into the cost of funding.
Revenue profit decreased by 20.0% to £5.6m (30 June 2022: £7.0m) and EPS
decreased by 20.0% to 6.68p (30 June 2022: 8.35p) driven mainly by higher
financing costs.
CAPITAL RETURNS
Capital total income reported a loss of £44.0m (30 June 2022: loss of
£136.3m) which was driven mainly by the £40.3m loss on investments.
Finance costs reduced by 21.8% to £6.1m (30 June 2022: £7.8m) largely
reflecting the lower number of ZDP shares in issue following the redemption of
the 2022 ZDP shares in October 2022.
The resultant capital return loss for the year to 30 June 2023 was £50.0m (30
June 2022: loss of £144.1m) and EPS loss was 59.70p per ordinary share (30
June 2022: loss of 171.68p).
EXPENSE RATIO
The ongoing charges figure, including and excluding performance fees, was 2.8%
for the year ended 30 June 2023 (30 June 2022: 2.2%). No performance fee was
earned at the UIL level or the platform companies.
All expenses are borne by the ordinary shareholders.
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
£'000s £'000s £'000s £'000s £'000s £'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
£'000s £'000s £'000s £'000s £'000s £'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
£'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)
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
£'000s £'000s £'000s £'000s £'000s £'000s £'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
£'000s £'000s £'000s £'000s £'000s £'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
£'000s £'000s £'000s £'000s £'000s £'000s £'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 8,384 37,874 233,866 - (74,463) 12,846 218,507
30 June 2022
STATEMENTS OF FINANCIAL POSITION
Group Company
as at 30 June 2023 2022 2023 2022
£'000s £'000s £'000s £'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
£'000s £'000s £'000s £'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. DIVIDENDS
The Directors declared a fourth quarterly dividend in respect of the year
ended 30 June 2023 of 2.00p per share payable on 13 October 2023 to all
ordinary shareholders on the register at close of business on 29 September
2023. The total cost of the dividend, which has not been accrued in the
results for the year to 30 June 2023, is £1,677,000 based on 83,842,918
ordinary shares in issue.
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 £144.2m as at 30 June 2022 decreased by
£46.0m, to £98.2m as at 30 June 2023. The loans are
repayable on any ZDP share repayment date.
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 £5.5m loan balance brought forward as at 30 June
2022 was converted into equity, UIL received 7,338,037 Newtel ordinary shares.
Northbrook Resources Ltd: Pursuant to a loan agreement dated 1 January 2019
under which UIL agreed to loan monies to Northbrook Resources Limited, no
further funds were advanced to Northbrook Resources Ltd during the year. As at
30 June 2023, the balance of the loan was £1.6m. The loan bears interest at
6% per annum and is repayable on 31 December 2023. As at 30 June 2023 the fair
value of the loan was £nil (2022: £nil).
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 £3.7m. The loan is interest free and is converted into
equity on a semi-annual basis. The loan of £3.7m was converted to equity in
the year, increasing the number of ordinary shares held by 2. As at 30 June
2023 the loan balance was nil.
Associated undertakings
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 £0.6m and received from ICM Mobility £0.1m. In October 2022, UIL sold its
loan to ICM Mobility (£0.5m) to Somers as part of the transaction where UIL
sold its stake in ICM Mobility to Somers.
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
£1.7m 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
£1.0m and 2,691,811 MJ Hudson Group plc shares for GBP 1.0m.
On 5 August 2022 Somers paid a distribution of USD 4.55 per share. In
settlement, UIL received at fair values 38,451,000 Resimac Group Limited
shares for AUD 50.4m and 42,183,103 TMH shares for AUD 16.0m. The distribution
has been recognised as a return of capital of USD 38.7m and a revenue dividend
of USD 7.6m. At the same time, Somers issued 5,412,314 warrants pro-rata to
all of its shareholders on a one for four basis (the "Warrants"). The exercise
price of the Warrants is USD 18.92 per share and can be converted at any time
until maturity on 30 September 2023. These were issued for no consideration
and UIL received and continues to hold as at 30 June 2023 2,542,233 warrants.
On 8 August 2022, as part of a group restructure, UIL sold to Somers at fair
value, 16,472,685 Resimac shares for AUD 21.6m and in exchange UIL advanced
loans to Zeta for AUD 2.2m and CAD 17.5m.
On 11 October 2022, Somers acquired UIL's holding in ICM Mobility and Snapper
for £45.6m. In exchange Somers sold to UIL its holding in West Hamilton
Holdings Limited ("West Hamilton") for USD 19.7m, WT Financial Group Limited
for AUD 5.7m and BNK Banking Corp Ltd for AUD 3.9m. Somers funded the balance
of the transaction (£22.3m) via the loan account.
Pursuant to a loan agreement dated 22 June 2018 under which UIL has agreed to
loan monies to Somers, UIL advanced to Somers loans of £23.2m (including the
£22.3m from the 11 October 2022 transaction above) and Somers repaid loans of
£23.2m. UIL received interest of £39k. As at 30 June 2023, the balance of
the loans and interest outstanding was £nil. The loan bears interest at an
annual rate of 6.0% and is repayable on not less than 12 months' notice.
SportEngaged Ltd: There were no transactions during the year.
TMH: See transaction details of Somers above.
On 30 August 2022, UIL received 16,873,241 rights through a 2 for 5 rights
issue at AUD 0.34. UIL sold 1,150,000 rights in the market and
oversubscribing, received a further 5,000,000 rights. On 15 September 2022 UIL
exercised the rights, receiving 20,723,241 shares at a cost of AUD 7.0m. On 27
January 2023, UIL received 10,484,390 rights through a 1 for 6 rights issue at
AUD 0.34. On 13 February UIL exercised these rights, receiving 10,484,390
shares at a cost of AUD 3.6m. On 6 February 2023, UIL purchased 2,215,000
ordinary shares in the market.
Subsidiaries of the above subsidiaries and associated undertakings
There were no transactions during the year to 30 June 2023 with any of the
subsidiaries of the above subsidiaries and associated undertakings.
Key management entities and persons
ICM and ICMIM are joint portfolio managers of UIL. Other than investment
management fees, secretarial costs and performance fees as set out in note 3,
and reimbursed expenses of £12,000, there were no other transactions with ICM
or ICMIM or ICM Corporate Services (Pty) Ltd. At the period-end £108,000
remained outstanding to ICM and ICMIM in respect of management and company
secretarial fees and £nil in respect of performance fees.
Mr Younie is a director of PIL, PML, Somers and West Hamilton. Mr Jillings is
a director of Allectus Capital, PIL, PML, Somers and
Waverton.
Mr Jillings received dividends from UIL of £35,000. Mr Saville is a director
of Allectus Capital, GPLPF, Newtel, PIL, PML, Resimac, QICM Technology
Investments Ltd (formerly Vix Technology Limited), West Hamilton and Zeta
Energy Pte Ltd. There were no other transactions in the year with Alasdair
Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL
The Board
Fees paid to Directors were: Chairman £50,000 per annum; Chairman of Audit
& Risk Committee £47,750 per annum and Directors £37,000 per annum. The
Board received aggregate remuneration of £206,000 for services as Directors.
As at 30 June 2022, £nil remained outstanding to the Directors. In addition
to their fees, the Directors received dividends totalling £120,000 during the
year. There were no other transactions in the year with the Board and UIL.
Companies controlled by key management persons
GPLPF received dividends of £5,292,000 from UIL, UMPF received dividends of
£620,000 from UIL, Mitre Investments Limited
received dividends of £206,000 from UIL and Permanent Mutual Limited received
dividends of £2,000 from UIL. UMPF provided a USD 6.6m loan facility to UIL,
see note 13 for details. There were no
other transactions between companies controlled by key management and UIL
during the year to 30 June 2023.
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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