REG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Half-year Report
21/02/2024 16:30
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RNS Number : 9880D UIL Limited 21 February 2024
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
(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/9880D_1-2024-2-21.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9880D_1-2024-2-21.pdf)
UNAUDITED GROUP PERFORMANCE SUMMARY
Half year Half year Annual % change
31 Dec 31 Dec 30 Jun Jun-Dec
2023 2022 2023 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 Six months to Year to
31 Dec 2023 31 Dec 2022 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 Total shares
in issue in issue
Number £'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 Valuation Risk Sensitivity Carrying Sensitivity
type methodology weighting +/- amount £'000s
Investment £'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 Last fund raising High 40% 5,428 2,171
("Arria")* Equity
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 Valuation Risk Sensitivity Carrying Sensitivity
type methodology weighting +/- amount £'000s
Investment £'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
Price of recent High 30% 4,659 1,398
Allectus Quantum Equity investment
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 Valuation Risk Sensitivity Carrying Sensitivity
type methodology weighting +/- amount £'000s
Investment £'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
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. END IR GZGZZVMLGDZMRecent news on UIL
See all newsREG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Net Asset Value(s)
AnnouncementREG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Net Asset Value(s)
AnnouncementREG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Net Asset Value(s)
AnnouncementREG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Net Asset Value(s)
AnnouncementREG - UIL Limited UIL Finance Ltd Utilico Limited 2014 UIL Finance - UTLG Utilico Finance (D) - Net Asset Value(s)
Announcement