## 2022 ## REPORT AND ACCOUNTS ### A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR ## UIL Limited’s (“UIL” or the “Company”) objective ## is to maximise shareholder returns by identifying ## and investing in compelling long-term investments ## worldwide, where the underlying value is not ## reflected in the market share price. IN THE YEAR TO 30 JUNE 2022 | REVENUE EARNINGS | DIVIDENDS PER | NET ASSET VALUE | | SHARE PRICE | | | --- | --- | --- | --- | --- | --- | | PER ORDINARY SHARE | ORDINARY SHARE | (“NAV”) TOTAL | | TOTAL RETURN PER | | | | | RETURN PER | | ORDINARY SHARE | * | | | | ORDINARY SHARE | * | | | | 8.35p | 8.00p | -38.1% | | -27.6% | | | (2021: 9.98p) | (2021: 8.00p) | (2021: 50.9%) | | (2021: 57.0%) | | | * See Alternative Performance Measures on pages 108 and 109 | | | | | | ## WHY UIL LIMITED? ## Stock selection remains our focus and ICM Limited’s ## (“ICM”) proven bottom-up long-term approach ## should benefit UIL in changing times. UIL OFFERS ORDINARY SHAREHOLDERS: UIL’S INVESTMENT MANAGER • A high conviction portfolio • ICM has been UIL’s investment manager since + inception and prides itself in identifying compelling • Diversified mix of investments investment opportunities and working pro-actively • Opportunity to currently buy UIL shares with investee companies to improve the economic on the market at a significant discount to NAV value for shareholders • Attractive quarterly dividends • Aligned interest with over 70.0% of UIL held by investors associated with ICM UIL OFFERS ZERO DIVIDEND PREFERENCE (“ZDP”) • ICM offers significant sector expertise SHAREHOLDERS: • Attractive capital growth PORTFOLIO STRENGTHS • Attractive asset, sector and geographical cover • Financial Services • Structured as four ZDP classes – mitigating • Utilities and Infrastructure redemption risk • Technology • Mining and Resources + Inception: (14 August 2003) Report and Accounts for the year to 30 June 2022 1 ## CONTENTS The business of UIL consists of investing the pooled funds of its PERFORMANCE shareholders in accordance with its investment objective and policy, 3 Current Year Performance generating a return for shareholders 4 Group Performance Summary and spreading the investment risk. UIL has borrowings and gearing is 5 Chairman’s Statement also provided by ZDP shares, issued 8 Performance Since Inception (14 August 2003) by its wholly owned subsidiary UIL Finance Limited (“UIL Finance”). The STRATEGIC REPORT AND INVESTMENTS joint portfolio managers of UIL are 10 Investment Managers’ Report ICM Investment Management Limited (“ICMIM”) and ICM, together referred to 15 Top Ten Companies as at 30 June 2022 as the “Investment Managers”. 16 Macro Trends Affecting Our Portfolio 18 Our Investment Approach 20 ESG Spotlight 21 Geographical Investment Exposure 22 Ten Largest Holdings 28 ZDP Shares 30 Strategic Report 40 Investment Managers and Team GOVERNANCE 43 Directors 44 Directors’ Report 50 Corporate Governance Statement 55 Capital Structure FINANCIAL CALENDAR 57 Directors’ Remuneration Report Year End 60 Audit & Risk Committee Report 30 June 63 Statement of Directors’ Responsibilities Annual General Meeting (“AGM”) AUDIT 10 November 2022 64 Independent Auditor’s Report Half Year 31 December FINANCIAL STATEMENTS 71 Accounts Dividends Payable September, December, March 77 Notes to the Accounts and June ADDITIONAL INFORMATION 105 Notice of Annual General Meeting 107 Company Information 108 Alternative Performance Measures 110 Historical Performance 2 UIL Limited ## CURRENT YEAR PERFORMANCE | NAV TOTAL RETURN | | SHARE PRICE TOTAL | | NAV DISCOUNT AS AT | | GEARING | * | | --- | --- | --- | --- | --- | --- | --- | --- | | PER ORDINARY SHARE | * | RETURN PER ORDINARY | | 30 JUNE 2022 | * | | | | | | SHARE | * | | | | | ## -38.1% -27.6% 28.1% 89.5% (2021: 50.9%) (2021: 57.0%) (2021: 37.9%) (2021: 48.8%) REVENUE EARNINGS DIVIDENDS PER REVENUE YIELD * DIVIDEND YIELD * PER ORDINARY SHARE ORDINARY SHARE ## 8.35p 8.00p 2.0% 4.3% (2021: 9.98p) (2021: 8.00p) (2021: 2.3%) (2021: 3.0%) ORDINARY SHARES AVERAGE PRICE OF ONGOING CHARGES ONGOING CHARGES BOUGHT BACK SHARES BOUGHT BACK EXCLUDING INCLUDING PERFORMANCE FEES * PERFORMANCE FEES * | 0.5m | 266.30p | | 2.2% | 2.2% | | --- | --- | --- | --- | --- | | (2021: 1.6m) | (2021: 221.29p) | | (2021: 2.3%) | (2021: 4.6%) | | * See Alternative Performance Measures on pages 108 and 109 | | | | | | TOTAL RETURN COMPARATIVE PERFORMANCE | | † (pence) | | | from 30 June 2021 to 30 June 2022 110 105 100 95 90 85 80 75 70 65 60 Jun 21 Jul 21 Aug 21 Sep 21 Oct 21 Nov 21 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 NAV total return Ordinary share price FTSE All-Share MSCI All Countries World total per ordinary share total return total return Index return Index (GBP adjusted) † Rebased to 100 as at 30 June 2021 Source: ICM and Bloomberg Report and Accounts for the year to 30 June 2022 3 ## GROUP PERFORMANCE SUMMARY 30 June 30 June % change 2022 2021 2022/21 (1) NAV total return per ordinary share (for the year) (%) (38.1) 50.9 n/a (1) | Share price total return per ordinary share | | (for the year) (%) (27.6) 57.0 n/a | | | --- | --- | --- | --- | | | (1) | | (2) | | Annual compound NAV total return | (since inception | | ) (%) 9.5 13.1 n/a | (1) NAV per ordinary share (pence) 260.89 431.51 (39.5) Ordinary share price (pence) 187.50 268.00 (30.0) (1) Discount (%) 28.1 37.9 n/a Returns and dividends (pence) Revenue return per ordinary share 8.35 9.98 (16.3) Capital return per ordinary share (171.68) 133.81 (228.3) Total return per ordinary share (163.33) 143.79 (213.6) (3) Dividends per ordinary share 8.00 8.00 0.0 FTSE All-Share total return Index 7,981 7,852 1.6 Equity holders' funds (£m) (4) Gross assets 410.6 544.4 (24.6) Bank loans 51.1 48.5 5.4 ZDP shares 140.8 132.1 6.6 Equity holders' funds 218.7 363.8 (39.9) Revenue account (£m) Income 9.9 11.6 (14.7) Costs (management and other expenses) 1.7 2.1 (19.0) Finance costs 1.1 1.0 10.0 Net income 7.0 8.5 (17.6) Financial ratios of the Group (%) (1) | Ongoing charges figure excluding performance fees | | 2.2 2.3 n/a | | | | --- | --- | --- | --- | --- | | | (1) | | (5) | | | Ongoing charges figure including performance fees | | 2.2 4.6 | | n/a | (1) Gearing 89.5 48.8 n/a (1) See Alternative Performance Measures on pages 108 and 109 (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 (5) Performance fees suffered within underlying funds 4 UIL Limited CHAIRMAN'S STATEMENT ![img-0.jpeg](img-0.jpeg) **PETER BURROWS** Chairman The year to 30 June 2022 was very challenging for investors. UIL gave up all the gains of the prior year, ending the year with NAV per share of 260.89p, a decline of 39.5%. UIL's NAV total return was negative 38.1%. This has dragged UIL's annual compound NAV total return since inception in 2003 down to 9.5%. Much of this reflects a strong reset by the markets 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 Ukraine war and China's zero Covid policy. UIL's gross assets declined by 24.6% and UIL's gearing has magnified the impact on shareholders. Since inception in August 2003, UIL has distributed £87.9m in dividends, invested £36.9m in ordinary share buybacks and made net gains of some £239.0m for a total return of 459.6% (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. As shareholders are aware, UIL values Utilico Emerging Markets Trust plc ("UEM") and Zeta Resources Limited ("Zeta") based on their market bid prices. As at 30 June 2022, discounts to published NAVs widened to 13.9% for UEM (some £10.1m) and narrowed marginally to 15.4% for Zeta (some £11.7m). Together these discounts amount to £21.8m attributable to UIL. Adding these back would see UIL's adjusted NAV per share increase by 10.0% to 286.89p (30 June 2021: 473.14p) and UIL's implied discount widen to 34.6%. Most investments have been marked down in the year to 30 June 2022 in the face of significant market weakness. Eight of the top ten holdings by UIL had some significant declines in value. Resimac Group Limited's ("Resimac") share price fell 53.3% during the year. Given Resimac is now held directly by UIL and is 39.9% of Somers Limited's ("Somers") portfolio and Somers is 35.7% of UIL's portfolio, Resimac's weakness has in turn accounted for 56.8% of UIL's portfolio losses of £120.5m over the year. As at 30 June 2022, Resimac shares traded at an annualised historic price earnings ratio of 4.6x and a dividend yield of 7.0%. It is pleasing to see Resimac continuing to buy back its own shares on the market, while operating results have been good. Resolute Mining Limited ("Resolute") has been a perennial underperformer. Resolute's share price was down 55.4% on the back of lacklustre operational performance and continued concerns over the political outlook in Mali. The Resolute board rightly appointed a new CEO in May 2022. Early signs are that under new leadership Resolute is making good progress. The Board is pleased to see the ordinary shares discount narrow to under 30.0%, standing at 28.1% as at 30 June 2022. In 2019, the Board determined, # COMMODITIES MOVEMENTS from 30 June 2021 to 30 June 2022 ![img-1.jpeg](img-1.jpeg) Rebased to 100 as at 30 June 2021 Source: Bloomberg Report and Accounts for the year to 30 June 2022 5 ## CHAIRMAN'S STATEMENT (continued) ### CURRENCY MOVEMENTS vs STERLING from 30 June 2021 to 30 June 2022 ![img-2.jpeg](img-2.jpeg) Rebased to 100 as at 30 June 2021 Source: Bloomberg in agreement with the Investment Managers and the major shareholder, to target a lower discount level of 20.0% in the medium term. This was communicated to the market with UIL continuing to buy back ordinary shares at high discount levels. During the year to 30 June 2022, the Company bought back 0.5m ordinary shares (0.5% of opening shares in issue) at an average price of 266.30p. Consistent with the wider debt markets, UIL's longer dated 2024, 2026 and 2028 ZDP shares are trading at higher gross redemption yields compared to those as at 30 June 2021, being 5.3%, 6.5% and 7.0% respectively. The market prices of the ZDP shares were impacted by interest rate rises by most central banks as inflation increased sharply. UIL's 2022 ZDP shares will be redeemed on 31 October 2022. As at 30 June 2022, UIL's average blended rate of funding costs, including bank debt, increased slightly from 4.5% to 4.7%. Total revenue income for the year to 30 June 2022 was £9.9m, a decrease of 14.7% from £11.6m in the prior year. This reflects in part the loss of earnings from the Zeta and Somers loans which were significantly reduced in the year, resulting in interest income reducing from £4.8m over the prior year to £2.3m. The revenue return earnings per share ("EPS") of 8.35p represents a decrease of 16.3% over the prior year of 9.98p. The Board has declared an unchanged fourth quarter 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 4.3%. The dividend was covered by earnings in the year and undistributed revenue reserves carried forward increased from £12.5m to £12.8m, equal to 15.32p per share. In the absence of unforeseen circumstances, the Board intends to pay further quarterly dividends of 2.00p per ordinary share. Following the capital return profit of £114.1m last year, there was a capital return loss for the year ended 30 June 2022 of £144.1m. The majority of this was due to unrealised losses on investments and foreign exchange of £136.3m (prior year: gains of £122.7m). The capital losses has resulted in UIL's gearing rising to 89.5%. This is a disappointing outcome but remains within the 100% gearing target level set some years ago. The 2022 ZDP shares amounting to £51.2m as at 30 June 2022, are redeemable in October this year. As such they are moved to current liabilities and the Investment Managers have taken steps to fund the redemption payment. ### GLOBAL EVENTS Three themes continue to dominate global events: Covid-19, heightened geopolitical tensions and the outlook for inflation and interest rates. While Covid-19 continues to disrupt, the impact on most economies is very reduced. We now expect it to recede and not be an issue going forward. But the exception is China. As we noted before, their zero 6 UIL Limited policy to Covid-19 sets them apart from every other low unemployment globally this has driven inflation significant economy, and nearly every country in the markedly higher. Central Banks have had to respond world. The economic damage being inflicted on the much more firmly in combating the very high inflation Chinese economy as a result of this approach is very expectations. This in turn is slowing economic growth. significant and sad to see. The Chinese consumer We see this headwind continuing for the rest of the confidence has deteriorated to the point where year. However, once the Russian/Ukraine conflict is housing is facing very severe challenges. Given that resolved we expect inflation to subside. China is the world’s second biggest economy, and The one unknown in our view is the response of the that housing is some 35% of economic activity this is a labour force. The labour market remains tight and the significant headwind and of deep concern. It is hard to number of unemployed are at record lows in many judge when this dogmatic policy changes. economies. If this continues, then the shortage of In the half-yearly report, we referred to heightened the work force will drive up wages and in turn feed geopolitical events and risk of war with devastating inflation. consequences for its global economy. Clearly Russia going to war reflects the worst outcome and the OUTLOOK question now is what is next. Our view is that it will The outlook for global economies is inextricably take time for both sides to exhaust their ambitions, linked to Covid-19 in China, to resolving geopolitical but once they reach a neutral position a negotiated differences and to central banks navigating inflation outcome would be expected. Russia’s maximum and interest rate responses. We remain optimistic that leverage is likely to be early next year, at which point solutions can be found and that policy makers can Europe will be facing the worst of the energy crisis they navigate through the challenges. We expect inflation now certainly face. to be elevated for much of 2022, assets valuations to increase, technology to continue to gain market share We also noted at the interim stage the ongoing and commodities to rise in value. Most of our portfolio friction between China and the USA is again a clash companies are doing very well in this challenging of ideologies and will likely lead to ongoing resistance environment and we expect this to continue. between the two nations and their allies. The tensions over Taiwan are symptomatic of two ideologies facing each other across the economic, political and social Peter Burrows AO divide. This is concerning over the longer term. Chairman Inflation moved markedly higher follow the Russian 21 September 2022 invasion of the Ukraine. Coupled with surprising INDICES MOVEMENTS from 30 June 2021 to 30 June 2022 125 115 105 95 85 75 | Jun 21 | | | | Apr 22Feb 22Dec 21Oct 21Aug 21 | | | Jun 22 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FTSE All-Share | Australian Securities Exchange ("ASX") | S&P 500 | MSCI All Countries World Index | Report and Accounts for the year to 30 June 2022 | | | 7 | | Rebased to 100 as at 30 June 2021 | | | | | | Source: Bloomberg | | | ## PERFORMANCE SINCE INCEPTION (14 AUGUST 2003) | ANNUAL COMPOUND | | NAV TOTAL RETURN | | ANNUAL COMPOUND | | SHARE PRICE TOTAL | | | --- | --- | --- | --- | --- | --- | --- | --- | | NAV TOTAL RETURN | * | PER ORDINARY SHARE | * | SHARE PRICE TOTAL | | RETURN PER ORDINARY | | | | | | | RETURN | * | SHARE | * | | 9.5% | | 459.6% | | 9.7% | | 473.5% | | | REVENUE EARNINGS | DIVIDENDS PER | | DIVIDENDS PAID | REVENUE RESERVES | | | --- | --- | --- | --- | --- | --- | | PER ORDINARY SHARE | ORDINARY SHARE | | OUT | PER ORDINARY SHARE | | | | | | | CARRIED FORWARD | * | | 124.46p | 98.83p | | £87.9m | 15.32p | | | * See Alternative Performance Measures on pages 108 and 109 | | | | | | | ORDINARY SHARES | VALUE OF ORDINARY | | ZDP SHARES | ZDP SHARES | | | BOUGHT BACK | SHARES BOUGHT BACK | | ISSUED | REDEEMED | | | 29.6m | £36.9m | | £379.5m | £414.2m | | | HISTORIC TOTAL RETURN PERFORMANCE | | † (pence) | | | | since inception to 30 June 2022 950 850 750 650 550 450 350 250 150 50 | | | 201020092008200620052004 20072003 201820172016201420132012 20152011 20222019 2020 | | | 2021 | | --- | --- | --- | --- | --- | --- | | NAV total return per | Ordinary share price | | FTSE All-Share | MSCI All Countries World | | | ordinary share ** | total return ** | | total return Index | total return Index (GBP adjusted) | | † Rebased to 100 as at 14 August 2003 ** Adjusted for the exercise of warrants and convertibles Source: ICM 8 UIL Limited DIVIDENDS PER ORDINARY SHARE (pence) ALLOCATION OF GROSS ASSETS (£m) from 30 June 2004 to 30 June 2022 from 14 August 2003 to 30 June 2022 14.0 600 12.0 500 10.0 400 8.0 300 6.0 200 4.0 | 2.0 | | | | | | | | | | 100 | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 0.0 | | | | | | | | | | | 0 | | | | | | | | | | | | | 2004 | 2006 | 2010 | 2012 | 2014 | 2016 | 2018 | 2020 | 2022 | | | | | | | | | | | | | | | | | | | | | | | | | Aug 03 | Jun 05 | Jun 07 | Jun 09 | Jun 11 | Jun 13 | Jun 15 | Jun 17 | Jun 19 | Jun 21 | Jun 22 | Dividend per share – specialDividend per share – ordinary Ordinary shares ZDP shares Bank loans No dividends were paid between 2007 and 2010 2010 refers to a cash distribution Source: ICM Source: ICM CUMULATIVE TOTAL RETURN COMPARATIVE PERFORMANCE (pence) from 14 August 2003 to 30 June 2022 (Rebased to 100 as at 14 August 2003 * ) NAV total return of 459.6% 800 600 400 1,000 200 0 | Aug | Jun | Jun | Jun | Jun | Jun | Jun | | Jun | Jun | Jun | Jun | Jun | | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 03 | 04 | 05 | 06 | 07 | 08 | 09 | | 10 | 11 | 12 | 13 | 14 | | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | | | NAV total return per ordinary share** | | | | | | FTSE All-Share total return Index | | | | | | MSCI All Countries World total return Index (GBP adjusted) | | | | | | | | | *Inception of Utilico Investment Trust PLC **Adjusted for the exercise of warrants and convertibles Source: ICM Report and Accounts for the year to 30 June 2022 9 ## INVESTMENT MANAGERS’ REPORT The year to 30 June 2022 was believe the market is undervaluing Resimac’s long-term a very difficult period and opportunity. Resimac published its annual results for unprecedented for investors, the year to 30 June 2022 and its valuation is modest at a and, as anticipated, volatility historic price earnings ratio of 4.6x and a dividend yield remained elevated. of 7.0%. It is very pleasing to see Resimac continuing to buy back shares at these current levels. UIL reversed the gains of the | | prior year, ending the year to | During the year UIL bought a number of listed | | --- | --- | --- | | | 30 June 2022 with NAV per share | investments from Somers at fair value which increased | | | of 260.89p, a decline of 39.5%. | UIL’s listed portfolio and thereby improved UIL’s | | CHARLES JILLINGS | This has dragged UIL’s annual | bank covenant ratios. We are pleased to be a direct | | Investment Manager | | shareholder in Resimac with its strong market outlook | compound NAV total return since inception in 2003 down to 9.5%. over the medium term. The added headwind of the Ukraine war exacerbated After the year-end, UIL together with its associates bought out the minority shares in Somers at USD 21.00 the already challenging environment of rising inflation, per share. Following this transaction, Somers distributed increasing interest rates, Covid relapses (in particular a number of investments to the new shareholders. UIL China’s zero Covid policy), climate change and received further shares in Resimac and a holding in The escalating China versus US tensions. Equity markets Market Herald, an ASX listed financial news service. understandably retreated faced with the deluge of material uncertainties. Zeta’s share price weakened by 10.8% in the year to 30 June 2022, returning part of the share price increase PORTFOLIO of 117.6% during the year to 30 June 2021. In the main, There was significant volatility over the year, and within this reflected a weakening of the wider resources sector the top ten holdings, two holdings increased in value, six in the face of lower demand from China and a slowing declined and two new investments were made. Overall, of global GDP feeding through to softer commodity the decreases significantly outweighed the increases, prices. We continue to expect copper prices to remain which led to an overall reduction in the portfolio of elevated over the medium to longer term in the face of £120.5m. accelerated demand from the green energy transition by global economies and falling production, as the As noted in the Chairman’s Statement, UEM and Zeta’s recent underinvestment in mining leads to supply share price discounts to NAVs represent a £21.8m constraints. Copper Mountain Mining Corporation reduction to UIL's valuation. (“Copper Mountain”) is Zeta’s largest investment, which Somers’ valuation reduced 43.4% in the year to 30 June has seen its share price reduce by 53.7% in the year 2022, giving back most of its 109.2% gain in the year to 30 June 2022, but it must be put in context of the to 30 June 2021. This was largely driven by Resimac’s gains of 477.8% during the year to 30 June 2021. Copper share price declining by 53.3%, compared to its 143.6% Mountain reported weaker than expected results in its gain in the year to 30 June 2021. Resimac continues two most recent quarters due to a confluence of factors, to deliver strong operational performance and while including damage to its secondary crusher in December some of the valuation tailwinds have reversed over 2021 (repaired in April 2022), the mining of a lower recent months, such as interest rate expectations, we grade section of the pit, and lower copper prices. ## A number of UIL investments have had good ## operational performance in the year and that was ## pleasing to see. 10 UIL Limited UIL bought Panoramic Resources Limited (“Panoramic”) shares from Zeta at market price and Zeta used the proceeds to reduce its loan with UIL. The Nickel price was up 24.3% in the year and Panoramic benefited with a share price rise of 30.0% during the period as it resumed operations. It has been pleasing to see the growing confidence in the management team at Panoramic as it ramps up operations and delivers on its exploration endeavours. Over the years, Resolute has failed to deliver shareholder value and frustratingly in the year to 30 June 2022 delivered further disappointment given our positive outlook on gold. The board of Resolute took decisive action during the year, making management changes with a view to ensuring better focus on its mining operations. We are starting to see improved performance under the new management team and expect to see improving metrics, stronger cash flows and reduced debt. It has not helped that Mali, where its Syama mine is based, witnessed another military coup during the year and Covid-19 has hampered operations. Resolute’s share price fell by 55.4% in the year, in addition to the 55.1% loss during the year to 30 June 2021. UEM has been a relative standout performer over the year to 30 June 2022 with a total NAV return of negative 1.6% compared to the MSCI emerging markets total return index (GBP adjusted) (“MSCI”) loss of 15.3% over the same period. UEM continues to see strong reporting results from its investee companies with most growing revenues and expanding margins. This is a credit to the investee management teams who continue to deliver in volatile times. UEM is ahead of the MSCI since inception. As with most emerging market funds, UEM’s discount has widened to 13.9% as at 30 June 2022. This remains a frustration, but UIL has taken the opportunity of this share price outperformance to reduce its holding and realise some £12.0m during the year. The ten largest holdings section starting on page 22 provides more information on UIL’s key investments, including new additions to the portfolio. We are excited about our new investments and expect them to deliver strong operational outperformance which, combined with improving valuations, should deliver long term value to UIL’s shareholders. ## FOREIGN EXCHANGE & COMMODITIES As a global investor, UIL faces both exposure and opportunities from foreign exchange (“FX”) movements. To mitigate this risk UIL hedges its ZDP repayment liability to Sterling. As can be seen, the impact on UIL from FX in the year was a significant loss of £10.5m (30 June 2021: gain of £6.3m). This reflects a general weakness in Sterling and we were taken by surprise at the speed and weakness of the currency. We would note that in the face of continued global headwinds we have reduced the FX positions markedly, from a net of £102.0m as at 30 June 2022 to £55.0m as at 31 July 2022. However, the FX losses are more than offset by gains in the portfolio. Commodities were volatile during the year. Oil reached a year high of up 70.3% and a year low of down 13.2%, ending the year up 52.8%. Copper’s volatility increased, with a high/low spread of 28.3%, ending the year at its low point down 13.5%. Nickel was extremely volatile, at one point seeing an outsized options mismatch by one large trader, driving the price up by 164.7%. Nickel ended the year up by 24.3%. ## PORTFOLIO ACTIVITY During the year to 30 June 2022, UIL invested £89.8m and realised £92.8m, including loans repaid by Somers and Zeta. Purchases included investments in Resimac and Panoramic. UIL bought Resimac and Panoramic from Somers and Zeta respectively, to increase the listed holdings of UIL and as a result improve UIL’s covenant cover on its bank facility. Somers and Zeta used the proceeds to reduce their debt with UIL. ## PLATFORM INVESTMENTS UIL currently has four platform investments, Somers, Zeta, UEM and Affectus Capital Limited (“Affectus”) in its top ten holdings. These investments account for 73.0% of the total portfolio as at 30 June 2022 (30 June 2021: 78.7%). During the year to 30 June 2022, net withdrawals from these platforms amounted to £37.4m (30 June 2021: £16.8m). ## DIRECT INVESTMENTS UIL has six direct investments in its top ten holdings, ICM Mobility Group Limited (“ICM Mobility”), Resimac (which replaced Orbital Corporation Limited (“Orbital”)), Resolute, Panoramic (which replaced Sindoh), Starpharma Holdings Limited (“Starpharma”), and Report and Accounts for the year to 30 June 2022 11 ## INVESTMENT MANAGERS’ REPORT (continued) IN THE YEAR TO 30 JUNE 2022 AUSTRALIA & NEW ZEALAND UK IS UIL’S SECOND LARGEST ASIA IS UIL’S THIRD LARGEST REMAINS UIL’S LARGEST EXPOSURE COUNTRY EXPOSURE AT 13.8% EXPOSURE AT 10.5% AT 37.2% | | 0.4% | | 4.8% | | 0.1% | | --- | --- | --- | --- | --- | --- | | EUROPE IS UIL’S FOURTH | | AFRICA IS UIL’S FIFTH | | CANADA IS UIL’S SIXTH | | | LARGEST EXPOSURE | | LARGEST EXPOSURE | | LARGEST COUNTRY EXPOSURE | | | AT 7.9% | | AT 7.2% | | AT 5.3% | | | | 5.1% | | 2.2% | | 2.5% | Note: decreases/increases refer to the movement in the portfolio percentage of the relevant exposure. See page 21 for the full geographical exposure. SECTOR SPLIT OF INVESTMENTS Financial Services Technology Resources ## 38.5% 25.8% 15.4% (2021: 42.7%) (2021: 17.0%) (2021: 15.3%) Infrastructure Gold Mining Other Investments ## 12.7% 4.0% 3.6% (2021: 12.7%) (2021: 6.5%) (2021: 5.8%) IN THE YEAR TO 30 JUNE 2022 | | INVESTED | * | | REALISED | * | | TOTAL REVENUE INCOME | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | £89.8m | | | £92.8m | | | £9.9m | | | | (2021: £14 4.8m) | | | (2021: £206.2m) | | | (2021: £11.6m) | | | | LEVEL 1 & 2 | | | LEVEL 3 | | | LEVEL 3 | | | | INVESTMENTS | | * | INVESTMENTS | | * | % OF TOTAL PORTFOLIO | | | | £177.6m | | | £238.9m | | | 57.4% | | | | (2021: £217.2m) | | | (2021: £322.9m) | | | (2021: £59.8%) | | | | * See note 9 to the accounts | | | | | | | Source: ICM | | 12 | UIL Limited | | | | | | | | AssetCo plc ("AssetCo"). Orbital's share price fell by 72.9% resulting in it falling outside the top ten. UIL exited Sindoh for a gain on investment of 8.9%. #### GEOGRAPHIC REVIEW The geographical split of the portfolio, on a look through basis, shows Australia and New Zealand remaining as UIL's largest exposure, decreasing slightly by 0.4% to 37.2% of UIL's total investments (30 June 2021: 37.6%); UK remained second at 13.8%, down 4.8% and Asia remained almost unchanged at 10.5%, up 0.1%. Europe increased by 5.1% to 7.9% of the total portfolio. #### SECTOR REVIEWS **Financial Services** – 38.5% (30 June 2021: 42.7%) Somers is UIL's largest investment and accounted for 35.7% of UIL's total investments as at 30 June 2022 (30 June 2021: 42.7%). As already noted, the decrease in Resimac's share price has driven Somers' NAV weakness. **Technology** – 25.8% (30 June 2021: 17.0%) UIL holds a number of early-stage investments in the technology and the pharmaceutical sector, both directly and through ICM Mobility (UIL's fourth largest investment), Affectus (UIL's fifth largest investment), and Starpharma (UIL's ninth largest investment). **Resources (excl. gold mining)** – 15.4% (30 June 2021: 15.3%) UIL's largest investment in resources is Zeta, and UIL now holds Panoramic directly after buying its shares from Zeta. **Infrastructure Investments** – 12.7% (30 June 2021: 12.7%) This consists of Telecommunications, Infrastructure, Electricity, Ports, Road & Rail, Oil & Gas, Renewables, Water & Waste and Airports. UIL's infrastructure exposure is largely through UEM. **Gold Mining** – 4.0% (30 June 2021: 6.5%) UIL's largest investment in gold mining is Resolute, which is held both directly by UIL (3.6% of the total portfolio) and indirectly through Zeta. In addition, Zeta holds 72.0% of Horizon Gold Limited ("Horizon"), an Australian gold mining exploration company. Resolute's share price weakness has been partly offset by Horizon's share price gains. #### LEVEL 3 INVESTMENTS UIL's investment in level 3 companies was 57.4% (30 June 2021: 59.8%) of the total portfolio. There was a reduction from £322.9m as at 30 June 2021 to £238.9m as at 30 June 2022, 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 noting that where there is a material event that impacts an unlisted investment, it is revalued at the time, thus keeping the unlisted valuations current. #### COVID-19 In June 2022, the Board met in person for the first time in over two years. The Board meets formally three times a year and these Board meetings are interspersed with regular investment updates by Teams to brief the Board on portfolio developments. #### GEARING As a result of the significant pull back in portfolio valuations during the year, gearing increased to 89.5% (30 June 2021: 48.8%), although this remains well inside UIL's target gearing of under 100.0%. At an absolute level UIL's debt increased over the year from £180.8m to £195.7m as at 30 June 2022. Borrowing costs rose marginally to 4.7% from 4.5%. Following the redemption of the 2022 ZDP shares on 31 October 2022 and based on June valuations, gearing would fall back to 65.6% and the cost of borrowings would fall to 4.2%. #### ZDP SHARES On a consolidated basis the ZDP shares increased from £132.1m to £140.8m, up 6.6% mainly as a result of the capitalised interest return in the year. 0.8m 2026 ZDP shares were placed out in the year, leaving UIL holding 2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at 30 June 2022. With four ZDP issues, UIL has spread the redemptions liability over six years. The 2022 ZDP shares will be redeemed on 31 October 2022. #### BANK DEBT Bank debt increased to £51.1m as at 30 June 2022 (30 June 2021: £48.5m). This was drawn in Australian Dollars, Euros and US Dollars. Scotiabank Europe PLC's ("Scotiabank") £50.0m committed senior secured Report and Accounts for the year to 30 June 2022 13 ## INVESTMENT MANAGERS' REPORT (continued) multi-currency revolving facility has been extended to 19 September 2023 and novated to the Bank of Nova Scotia, London Branch. The extension requires a reduction in the facility of £12.5m by 30 March 2023. ### REVENUE RETURNS Revenue income for the year to 30 June 2022 reduced to £9.9m from £11.6m, a reduction of 14.7%. This largely reflects the decrease in loans to Somers and Zeta as these were repaid or converted into equity, which in turn contributed to the reduction of interest income from £4.8m to £2.3m. Management and administration fees and other expenses were down by 19.0% at £1.7m (30 June 2021: £2.1m). Finance costs were up at £1.1m as at 30 June 2022 from £1.0m as at 30 June 2021. Revenue profit decreased by 17.6% to £7.0m (30 June 2021: £8.5m) and EPS decreased by 16.3% to 8.35p (30 June 2021: 9.98p) driven mainly by the lower revenue income. ### CAPITAL RETURNS Capital total income was at a loss of £136.3m (30 June 2021: gain of £122.7m). Finance costs reduced by 9.4% to £7.8m (30 June 2021: £8.6m) largely reflecting the lower number of ZDP shares in issue following the 2020 ZDP redemption in October 2020. The resultant loss for the year to 30 June 2022 on the capital return was £144.1m (30 June 2021: gain of £114.1m) and EPS loss was 171.68p per ordinary share (30 June 2022: gain of 133.81p). ### EXPENSE RATIO The ongoing charges figure, excluding performance fees, was 2.2% as at 30 June 2022 (30 June 2021: 2.3%) and the ongoing charges figure, including performance fees paid in UIL's platform companies, was 2.2% (30 June 2021: 4.6%). No performance fee was earned at the UIL level. All expenses are borne by the ordinary shareholders. ### INVESTMENT APPROACH UIL continues to develop its core platform investments, which offer the following benefits: - **Focused strategy.** Each platform has a dedicated mandate and as such is driven by the objective of finding and making attractive investments within its mandate. - **Dedicated research analysts.** The research analysts for each platform are focused on both understanding the existing portfolio businesses and identifying compelling new investments. - **Financial support.** Ability to draw on UIL's analytical support and financial backing. - **Deep knowledge.** Utilising the Investment Managers' knowledge across many jurisdictions to optimise investment opportunities and undertake corporate finance led transactions. A key driver in shaping the current portfolio is the Investment Managers' three medium-term core views. First, that the world's financial markets are over indebted; second, that technological change offers strong investment upside; and third, that emerging markets offer better GDP growth opportunities than developed markets. UIL's Investment Managers' emphasis is on individual stock selection, remaining fully invested and focusing on identifying investments whose valuations do not reflect their true long-term value, while at the same time being a supportive shareholder of investee companies. The Investment Managers are relentless bottom-up investors, drawing on in-depth knowledge and capability. ### DISRUPTION There continues to be significant disruption to business models from blockchain to artificial intelligence 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 their 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 21 September 2022 14 UIL Limited ## TOP TEN COMPANIES AS AT 30 JUNE 2022 ### 1 2 3 4 5 | | 35.7% | | | 15.5% | | | 15.0% | | 12.3% | | | 6.8% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Somers Limited | | | | Zeta Resources | | Utilico Emerging | | ICM Mobility Group | | | Allectus Capital | | | | | | | | Limited | Markets Trust plc | | | | Limited | | Limited | | Financial Services | | | | Resources | | Investment Fund | | | Technology | | | Technology | | A financial services | | | A resources-focused | | | A UK closed-end | | | A UK holding | | An investment | | | investment platform, | | | investment platform, | | | investment trust | | company focused on | | | platform with a | | | which primarily | | | which invests in a | | | | dedicated to | the mobility sector | | | value-focused | | | | invests in the | | range of resource | | | | investments in | | for private and | | | portfolio of | | banking, wealth | | | entities and base | | | infrastructure, utility | | public transport, and | | | | technology | | management and | | | metals exploration | | | and related sectors | | invests in businesses | | | | companies. | | asset financing | | | | and production | | including technology | | shaping the digital | | | | | | | | sectors. | | companies. | | infrastructure in the | | transformation of the | | | | | | | | | | | | emerging markets. | | | | sec tor. | | | ## 148,786 64,385 62,469 51,009 28,408 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s ### 6 7 8 9 10 | | | 2.7% | | 2.3% | | | 1.7% | | 1.1% | | | 1.1% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Resimac Group | | Resolute Mining | | | | Panoramic | | Starpharma | | AssetCo plc | | | | | Limited | | Limited | Resources Limited | | | Holdings Limited | | | | | | Financial Services | | | | Gold Mining | | | Resources | Pharmaceuticals | | Financial Services | | | | | | A lender for | A gold mining and | | | A nickel mining | | | A global | Primarily involved in | | | | | | residential | exploration company | | | | company | biopharmaceutical | | acquiring, managing | | | | mortgages and asset | | | with two operating | | | headquartered | | company specialising | | | and operating | | | finance in Australia | | | mines in Africa. | | | in Perth, Western | | | in research, | asset and wealth | | | | | and New Zealand. | | | | | | Australia. | development and | | | management | | | | | | | | | | | commercialisation of | | | activities and | | | | | | | | | | | dendrimer products | | interests, together | | | | | | | | | | | | for pharmaceutical | | with other related | | | | | | | | | | | | | applications | | | services. | worldwide. ## 11,153 9,609 6,861 4,760 4,722 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Note: % relates to % of total investments Report and Accounts for the year to 30 June 2022 15 ## MACRO TRENDS AFFECTING OUR PORTFOLIO GEOPOLITICS AND GLOBALISATION • Increased political tensions and populism are leading to a rising level of nationalism and protectionism, unwinding several decades of global supply chain integration. • Protectionism is resulting in higher tariffs and barriers to trade, negatively impacting global GDP and increasing non-productive friction in economies. • Trade flows and external deficits or surpluses are being rebalanced in many countries, with commensurate effects on foreign exchange and local economies. • The changing dynamics of trading bloc relationships are resulting in significant shifts in transport and logistics value chains, and associated infrastructure. RESOURCES • Rise of electric vehicles and renewables expected to increase long term demand for several commodities, including nickel, copper, lithium and graphite. • Unprecedented increase in global government debt under previous policy of negative interest rates has led to significant inflation, driving gold investment as protection from fiat money debasement. • Underinvestment in new oil and gas fields combined with sanctions on Russian energy exports leading to supply constraints and significant energy price inflation. • Heightened risk to global economy, and thus demand for industrial commodities, due to increased government, corporate and consumer debt levels and the global pandemic. DIGITALISATION • 5G mobile and fibre broadband rollout presents opportunities for businesses and benefits to people driven by enhanced applications in sectors including e-commerce, e-government, online education, telemedicine, communications and media. • Innovative solutions in fintech disintermediating traditional financial sector business models to offer more efficient and secure solutions for payments, credit, investment, tax collection and insurance. • The increased use of connected sensors, cloud storage and data processing with machine learning techniques will drive new applications to optimise and further automate manufacturing, healthcare, security and transport infrastructure. FINANCIALS • Changing demographics and improved financial sophistication of individuals are altering the demand for traditional financial services products, whilst providing a fertile ground for innovation, e.g. Buy-Now, Pay-Later and e-commerce. • Emphasis on individual responsibility for savings and investments, particularly due to the inability of government and companies to support pension provision schemes. • Digitalisation means greater use of big data and artificial intelligence (AI), e.g. introduction of open banking will improve financial product efficiency. 16 UIL Limited GOVERNANCE AND TRANSPARENCY • Effective governance remains fundamental to long-term investment performance. Corporates with strong governance are consistently demonstrating their ability to navigate economic uncertainty. • Economies with robust political and institutional structures are inherently more attractive for investment and constant monitoring for any changes to these is necessary. • Reputational risk becoming as important as financial risk in an era of increased transparency and decreased trust. • The rise of social media and information exchange have elevated the importance of transparency. Opaque business practices face growing scrutiny. • Sophistication and frequency of cyber-attacks in the spotlight, increase in enforcement of material financial and civil penalties related to cyber-crime and inadequate protection of consumer data, additional concerns over voice, facial and other biometric protocols. ENVIRONMENTAL POLICY • Climate change is now an accepted reality with significant direct and indirect effects on humankind and the global economy. • Governments and intergovernmental organisations have initiatives in place targeting reductions in the impact of man-made emissions on climate change. • Major emissions contributors such as the power and transport sectors are seeing a radical shift away from the most polluting technologies. • Renewables, battery storage, electric vehicles and waste treatment are key areas of development and are increasingly commercial without subsidies. • Impact of urbanisation growth increases problems such as air and water pollution in cities, leading to related health and economic risks. EMERGING MARKETS – URBANISATION AND GROWING MIDDLE CLASS • Trend in emerging markets shows migration to cities, seeking a higher standard of living and higher income opportunities. This requires significant investment in supporting infrastructure, such as roads, metros, railway, electricity networks and sanitation. • Rising income and social characteristics of emerging middle-class populations result in higher overall consumption and greater propensity to purchase durable goods. • Emerging middle class increasingly demand a higher degree of public services and a greater focus on quality of life, including education, environmental conditions, tourism and accountability from governmental institutions. COVID-19 DISRUPTION • Ongoing disruptions to both production and demand causing supply chain issues. • Most countries now operating with Covid endemic to the population, outlier remains China which continues with its zero Covid policy with ongoing lockdowns and resultant supply chain disruption. • Roll out of vaccination programs have helped countries to ‘manage’ living with the coronavirus. • Labour shortages in the aftermath of the pandemic are an increasing risk for companies in terms of hiring talent and expertise. Report and Accounts for the year to 30 June 2022 17 ## OUR INVESTMENT APPROACH ICM is a long-term investor and typically operates focused comprises a series of bottom-up decisions. ICM typically portfolios with narrow investment remits. ICM has several does not participate in either an IPO or an auction unless dedicated research teams who have deep knowledge and there is compelling value. understanding in their specific sectors, which improves UIL seeks to leverage ICM’s investment abilities to the ability to source and make compelling investments. both identify and make investments across a range of ICM has approximately USD 2.1bn of assets directly under industries. New investments usually offer an attractive management and is responsible indirectly for a further valuation with strong risk/return expectations at the time USD 22.1bn of assets in subsidiary investments. of investment. ICM looks to exploit market and pricing opportunities and When reviewing investment opportunities, as part of concentrates on absolute performance. The investments the investment process ICM will look to understand the are not market index driven and the investment portfolio material ESG factors. ### ICM incorporates ESG factors into the investment process in three key ways: | 01 | 02 | 03 | | --- | --- | --- | | UNDERSTANDING | INTEGRATION | ENGAGEMENT | | In-depth analysis of the key issues that | Incorporate the output of the | Engage with investee companies on | | face potential and current holdings, as | ‘Understanding’ component into the | the key issues on a regular basis, | | well as a deep understanding of the | full company analysis to ensure a clear | both virtually and on location, where | | industry in which they operate. | and complete picture of the investment | possible, to discuss and identify any | | | opportunity is obtained. | gaps in their ESG policy to further | develop and improve their ESG disclosure and implementation. ### We seek out and make compelling investments SUPERIOR, CONSISTENT PERFORMANCE Long Term Deep Value Cash Generative INDEPENDENCE & INTEGRITY ACTIVE Bottom Up Approach Investee Relationships INVESTORS Detailed Company Knowledge Sector FocusedExtensive Industry Experience STABLE & SUPPORTIVE FRAMEWORK DEEP SECTOR KNOWLEDGE 18 UIL Limited VALUES ICM’s origins date back to 1988 and our organisation has evolved with offices now spanning the globe. We are focused on our values of: • Independence and Integrity • Excellence • Creativity and Innovation • Accountability TEAM We are proud of our diverse and inclusive environment for our teams to work in, which reflects the diversity of our communities. INVESTMENT PRACTICES Our deep and extensive research and understanding of the companies, sectors and markets we invest in moderates our risk, and creates value for our investors. Our status as ### We are focused a signatory of the United Nations-supported ### on creating Principles of Responsible Investment emphasises ### ICM works to create ### sustainable our commitment to integrating ESG factors into ### value by harnessing ### long-term our investment decision making process. ### our experience and ### value for our ### expertise to generate ### shareholders, ### and grow strong ### team, and FINANCIAL ### relationships with ### the broader Strong balance sheet and disciplined ### our stakeholders ### community capital allocation to drive sustainable growth and shareholder value. ### through our: PLATFORMS Technology, and digital and analytics enable our investment platforms to deliver growth for our shareholders. COMMUNITIES ICM supports the ICM Foundation, which has identified sustainable, effective and focused education where the biggest impact can be made on individuals and in communities. Over the past decade ICM and its stakeholders have contributed over USD 15.0m to not-for-profit and community organisations. Report and Accounts for the year to 30 June 2022 19 ## ESG SPOTLIGHT The Board believes that it is in the shareholders’ interests to consider ESG factors when selecting and retaining investments, and has asked the Investment Managers to take these into account when investing. Where companies in the portfolio are assessed as having a relatively low ESG score, ICM’s approach is to engage, where possible with the companies directly with the objective of seeing improvements over time. Details of how ESG forms part of the integrated research analysis, decision-making and ongoing monitoring are set out on page 38. Set out below are examples of the approach taken with two of UIL’s investments. ### USA ### 5.1% (2.0%) ### A leading Australian non-bank Owner and operator of the ### lender, with a mortgage book of Savannah nickel mine in Western ### over AUD 15.0bn. Australia. ESG ANALYSIS: ESG ANALYSIS: Resimac helps aspiring homeowners who fall outside Panoramic has implemented transparent ESG the scope of mainstream lenders, for example, the self- reporting, releasing an annual sustainability report employed or individuals with imperfect credit history. delivering ESG performance metrics in alignment with In the first half of the full year to 30 June 2022, Resimac the Global Reporting Initiative framework, although provided AUD 2.1bn of specialist mortgage loans, it has not defined target improvements. Panoramic accounting for 60% of total lending. is currently in a transitionary period as it ramps up operations at its Savannah Nickel mine and intends Resimac plants one Mallee tree for every loan for the sustainability report to become increasingly settled; with over 46,000 trees planted to-date, comprehensive as operations mature. which will offset nearly 6Mkg of carbon. In addition, it works closely with local communities, for example, Panoramic continued contributions to local community supporting Food Ladder, a non-for-profit organisation and social development initiatives during Savannah which promotes self-sustaining agricultural practices in Nickel’s care and maintenance, however, it is unclear Australia, as well as India and Uganda. if engagement will increase concurrent with full commercial production. ICM ESG CONCLUSION: ICM ESG CONCLUSION: ICM continues to actively engage with Resimac on ESG issues, both at board level and throughout the Continued focus on defining emissions and social policy organisation. targets will be paramount to Panoramic’s ESG journey. With production having resumed in late 2021, the 2022 and 2023 sustainability reports will provide insight into the success of Panoramic’s initiatives. 20 UIL Limited ## GEOGRAPHICAL INVESTMENT EXPOSURE (% of total investments on a look-through basis) | | UK & | | Europe | | --- | --- | --- | --- | | Channel Islands | | (excluding UK) | | | | 13.8% | | 7.9% | ### Canada (18.6%) (2.8%) ### 5.3% (7. 8%) ### Asia ### Bermuda ### 10.5% ### 4.8% ### USA (10.4%) (5.1%) ### 5.1% (2.0%) ### Africa ### 7.2% ### Latin (5.0%) ### America ### 4.2% ### (4.2%) Gold Mining ### 4.0% Australia & (6.5%) ### New Zealand ### 37. 2% (37.6%) ## We are excited about our new investments ## and expect them to deliver strong operational ## outperformance which, combined with ## improving valuations, should deliver long term ## value to UIL’s shareholders. Figures in brackets as at 30 June 2021 Source: ICM Report and Accounts for the year to 30 June 2022 21 ## TEN LARGEST HOLDINGS THE VALUE OF THE TEN LARGEST THE VALUE OF FIXED INCOME THE TOTAL NUMBER HOLDINGS REPRESENTS SECURITIES REPRESENTS OF COMPANIES INCLUDED IN THE PORTFOLIO IS | 94.2% | 2.1% | 33 | | --- | --- | --- | | (2021: 97.6%) OF THE | (2021: 6.7%) OF THE GROUP’S | (2021: 26 COMPANIES) | | GROUP’S TOTAL INVESTMENTS | PORTFOLIO | | 22 UIL Limited ## 1 SOMERS LIMITED ### VALUATION ↓ 43.4% | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 148,786 | | % of total investments | 35.7% | **Somers is a financial services investment holding company, whose shares are listed on the Mezzanine of the Bermuda Stock Exchange ("BSX"). Somers is managed by ICM.** Somers shareholders' equity was USD 404.1m as at 30 June 2022 (30 June 2021: USD 679.4m) and Somers' NAV per share of USD 17.77 was down 43.0% for the year. The NAV decrease resulted principally from a decrease in the value of Somers' largest investment, Resimac, whose share price decreased 53.3% during the year despite continuing to report strong underlying performance. Somers declared dividends of USD 0.86 in the year to 30 June 2022 up from USD 0.55 in the prior year. Somers is classified as an investment company under IFRS 10 and, accordingly, values its underlying investments at fair value. As at 30 June 2022, Somers' three largest investments, which make up 78.4% of its portfolio, were a 58.4% holding in Resimac, a leading non-bank Australian financial institution, with AUD 16.9bn assets under management ("AUM"), a 61.8% holding in Waverton Investment Management Limited (a UK wealth manager with over £12.2bn funds under management and administration), and a 48.4% holding in Thorn Group, an Australian financial services organisation. Somers' gearing ratio was 17.0% up from 13.6% in the previous year. Resimac reported profit after tax for the year to 30 June 2022 of AUD 102.1m (prior year: AUD 107.6m). In July 2022, Somers announced that shareholders, including UIL, representing approximately 95% of Somers' issued share capital had acquired the remaining Somers' issued shares from unconnected shareholders for USD 21.00 per share. In the year to 30 June 2022, UIL's shareholding in Somers increased by 4.9%. ## 2 ZETA RESOURCES ### SHARE PRICE ↓ 10.8% | Sector | Resources | | --- | --- | | Fair Value £'000s | 64,385 | | % of total investments | 15.5% | **Zeta is a resource-focused investment company, which is listed on the ASX. Zeta is managed by ICM.** In the year ended 30 June 2022, Zeta's NAV per share fell by 22.8%. Zeta's share price closed at a discount of 18.1% (30 June 2021: 20.3%) to NAV per share. It was a volatile year for commodity prices, with most commodity prices peaking in March 2022. In the year to 30 June 2022, nickel was up 24.3%, gold was up 10.9% and oil was up 52.8%, whilst copper was down by 13.5%. Zeta's nickel focused investments were its strongest performers during the period under review, with Panoramic and GME Resources up 30.0% and 97.9%, respectively, while Copper Mountain's share price fell 53.7%. As a leveraged commodity investment company, the value of Zeta's net assets typically rises more when commodity prices rise, while falling more when commodity prices fall as the impact on mining companies is magnified. Zeta has a concentrated portfolio, having built up cornerstone shareholdings in copper, bauxite, gold and nickel companies. In the year to 30 June 2022, UIL's shareholding in Zeta was unchanged. Report and Accounts for the year to 30 June 2022 23 TEN LARGEST HOLDINGS (continued) # 3 UTILICO Emerging Markets Trust plc SHARE PRICE ↓8.0% Sector Investment Fund Fair Value £'000s 62,469 % of total investments 15.0% UEM is a closed-end investment trust, whose ordinary shares are listed on the premium segment of the Official List of the Financial Conduct Authority and are traded on the Main Market of the London Stock Exchange ("LSE"). UEM is managed by ICM and ICMIM, and invests predominantly in emerging markets with a focus on infrastructure and utility assets. In the twelve months to 30 June 2022, UEM's NAV total return was down by 1.6%, which was significantly ahead of the MSCI Emerging Markets total return Index (GBP adjusted) which was down by 15.3% during the same period. This outperformance reflects the resilient cash generative, operational assets in which UEM invests within the utilities, infrastructure and telecommunication sectors. Despite the challenging macro environment, UEM's investee companies have continued to announce strong financial results and ongoing dividend payments. In the year to 30 June 2022, UEM's share price decreased by 8.0%, with the discount to NAV widening from 10.8% to 13.9%. Dividends per share increased to 8.00p from 7.78p. UIL's shareholding in UEM decreased by 15.8% during the year under review. # 4 ICM MOBILITY GROUP VALUATION ↑17.6% Sector Technology Fair Value £'000s 51,009* % of total investments 12.3% ICM Mobility is an unlisted investment company focused on the mobility sector, covering private and public transport. ICM Mobility invests in and partners with companies and government entities shaping the digital transformation of the mobility sector, from planning journeys and issuing smart tickets to streamlining electronic payments and providing insights. As at 30 June 2022, ICM Mobility had a number of investments including VivTech (an innovative, multi-modal automated fare collection platform that unifies account-based, closed loop and open payments into a single solution); Kuba (a modern and efficient and scalable ticketing solution provider offering Unwire, a Kuba subsidiary, a ticketing service which can be customised to any transportation system); Snapper Services (provides mobile service based solutions designed to improve the customer experience and flexibility of transport ticketing systems) and Littlepay (offers a mass transit transaction payment solution for transit operators, authorities and agencies). * Includes direct holdings in Littlepay Mobility Ltd and Snapper Services (UK) Limited 24 UIL Limited ## 5 ALLECTUSCAPITAL ### VALUATION ↓5.8% | Sector | Technology | | --- | --- | | Fair Value £'000s | 28,408 | | % of total investments | 6.8% | ### **Allectus is an unlisted investment company with a value focused portfolio of technology businesses and managed by ICM.** Allectus invests in growth-stage companies developing potentially disruptive technologies. Its key verticals comprise fintech, AI, digital health and deep tech. Allectus maintains a selective approach to high conviction opportunities in technology companies, which leverage its global relationships and synergies with other portfolio companies in the ICM Group. Allectus made several new investments during the year to 30 June 2022, which included Bobidi (US company helping build and refine AI models), AsiaVerify (Singapore company focused on business verification) and Envision (Australian oncology diagnostics company developing novel biomarkers and tests for cancer). In November 2021 one of Allectus' investee companies, Hoolah, was acquired for shares by Shopback (Singapore company offering a cashback and reward program across Asia and Australia). This transaction saw Allectus' equity position converted into Shopback equity and the repayment of the Allectus debt position in Hoolah. In April 2022, Allectus increased its stake in Patchd (US company predicting the onset of sepsis in high-risk patients). In June 2022, Allectus became an investor in Nautilus (US company developing high performance, water-cooled data centres). ## 6 resimac ### SHARE PRICE ↓53.3% | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 11,153 | | % of total investments | 2.7% | ### **Resimac is an ASX listed residential mortgage lender and multichannel distribution business specialising in prime and specialist mortgage lending.** Resimac's share price decreased 53.3% in the twelve months to 30 June 2022 despite continuing to report strong underlying operational performance. Resimac's price reduction was consistent with the share price decreases seen across the wider listed alternate banking sector in Australia. Resimac is one of Australia and New Zealand's premier non-bank lenders and was recognised as Non-Bank of the Year at the 2020 Australian Mortgage Awards. It operates in targeted market segments and asset classes in Australia and New Zealand. Its primary activities are as a mortgage manager and in originating, servicing and securitising mortgage assets. Resimac has seen record settlements and AUM growth across home loans and asset finance during the year. As at 30 June 2022, principally funded loans and advances to customers increased by 12.6% to AUD 15.7bn with total AUM of AUD 16.9bn. Net profit after tax was AUD 102.1m and these solid results were recorded despite the continued industry pressure on net interest margin, driven by the aggressive pricing strategies of the large Australian banks. Against this competitive environment, Resimac is looking to offer additional products such as asset finance through its new Resimac Asset Finance division. During the year, Resimac issued AUD 5.8bn of Australian and New Zealand Prime and Specialist RMBS. Report and Accounts for the year to 30 June 2022 25 TEN LARGEST HOLDINGS (continued) 7 SHARE PRICE ↓ 55.4% | Sector | Gold Mining | | --- | --- | | Fair Value £'000s | 9,609 | | % of total investments | 2.3% | **Resolute is an Australian domiciled gold mining company, listed on both the ASX and the LSE and has two operating mines: the Syama mine in southern Mali; and the Mako mine in Senegal.** Resolute's share price in the twelve months to 30 June 2022 fell 55.4% despite the gold price improving. During the year under review, Resolute encountered several setbacks. Production in the financial year to 31 December 2021 of 319,271oz gold at all-in sustaining cost ("AISC") of USD 1,370 per ounce underperformed initial guidance of 350,000oz – 375,000oz at AISC USD 1,200 – 1,275 per ounce, as lower grades and power supply disruptions impacted production. The average gold price realised during the year was below spot prices due to hedging requirements. In addition, political issues in Mali resulted in economic and financial sanctions being imposed on Mali by the Economic Community of West Africa on 9 January 2022, which remained in effect until 3 July 2022. The management team at Resolute has changed for the second year in a row, with the COO replacing the CEO hired in the previous year. Guidance for Resolute's operations for the year ending 31 December 2022 has been maintained in the first half of the year at 345,000 ounces at an AISC of USD 1,425 per ounce, despite AISC of USD 1,540 per ounce in the latest quarter due to higher fuel and consumables costs. As at 30 June 2022, Resolute had cash and bullion on hand of USD 81.8m (30 June 2021: USD 88.8m) and total borrowings of USD 264.6m (30 June 2021: USD 308.6m). UIL's shareholding in Resolute decreased 19.8% in the period under review. 8 SHARE PRICE ↑ 30.0% | Sector | Resources | | --- | --- | | Fair Value £'000s | 6,861 | | % of total investments | 1.7% | **Panoramic is an Australian domiciled nickel mining company, listed on the ASX which owns 100% of the Savannah underground nickel sulphide mine, located in the East Kimberley region of Western Australia.** Panoramic's share price in the twelve months to 30 June 2022 increased 30.0% on account of nickel price improvement and project progression. During the year, Panoramic commenced underground development, with ore production at Savannah restarting in July 2021. Panoramic completed its first shipment of nickel-copper-cobalt concentrate from Savannah on 26 December 2021 and has since completed three further shipments in the first half of 2022. Its fifth shipment was delayed in June largely due to power interruptions in April and planned shutdowns that temporarily reduced throughput. The mine's ramp-up continues and is expected to reach full steady state production by 2024. The mine has twelve years of mine life remaining and has 101,800 tonnes of nickel, 48,500 tonnes of copper and 7,000 tonnes of cobalt in proven and probable reserves. In addition, Panoramic has an active exploration drilling program at Savannah underway. As at 30 June 2022, Panoramic had cash on hand of AUD 22.0m (30 June 2021: AUD 24.5m). 26 UIL Limited 9 SHARE PRICE ↓54.2% | Sector | Pharmaceuticals | | --- | --- | | Fair Value £'000s | 4,760 | | % of total investments | 1.1% | **Starpharma is a global biopharmaceutical company, specialising in the research, development and commercialisation of dendrimer products for pharmaceutical applications worldwide.** Starpharma has two main areas of focus: Antiviral and Dendrimer Drug Delivery ("DEP"). The antiviral portfolio consists of SPL7013, which is used in Vivagel, a treatment of bacterial vaginosis and Viraleze, a nasal spray which has demonstrated significant antiviral activity against SARS-CoV-2 with 99.9% effectiveness in laboratory studies against the alpha, beta, delta and omicron variants. Viraleze is registered in more than 30 countries. Starpharma's portfolio of DEP therapies is being used to improve current pharmaceuticals, by reducing toxicities and enhancing their performance. DEP drugs are being developed internally and through partnered programs, with an emphasis on anti-cancer therapies. Internally developed DEP therapies are in clinical trials as follows: DEP Docetaxel in Phase 2, DEP Cabazitaxel in Phase 2 and DEP Irinotecan in Phase 2. Furthermore, DEP-gemcitabine product manufacture is complete and ready to commence Phase 1/2 trial in the UK and Australia. Partnered drugs include AZD0466 with AstraZeneca, which is being trialled in several haematologic cancers such NHL and leukaemia and in solid tumours, DEP-antibody drug conjugates (ADC) research partnership with Merck and Genentech for cancer therapy and DEP-anti infectives with Chase Sun. In the year ended 30 June 2022, Starpharma reported revenues of AUD 4.8m, effectively doubling last year's revenues of AUD 2.4m. Much of the increase in revenues was driven by Viraleze sales in Vietnam. Starpharma's cash balance as at 30 June 2022 was AUD 49.9m. The net cash burn for the financial year was AUD 13.0m (FY21: AUD 16.5m). 10 SHARE PRICE ↓57.4% | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 4,722 | | % of total investments | 1.1% | **AssetCo is a UK listed company which is focused on acquiring, managing, and operating asset and wealth management activities and interests, together with other related services.** In January 2021, AssetCo announced that Martin Gilbert and various associates, and funds managed by Toscafund Asset Management, a multi asset fund manager, had acquired a minority holding of 29.8% in AssetCo, and it was to change its strategy and become an asset and wealth management business. Martin Gilbert has subsequently become Chairman with Campbell Fleming, formerly of Standard Life Aberdeen, as Chief Executive. The AssetCo strategy is principally to focus on making strategic acquisitions and building organic activities in areas of the asset and wealth management sector where structural shifts have the potential to deliver exceptional growth opportunities. This could include acquisitions of undervalued asset and wealth management businesses which have core capabilities that play to these structural shifts, and where active management can unlock value. AssetCo has made a number of acquisitions in the last twelve months including River & Mercantile, an AIM listed fund manager with £4.2bn AUM, SVM Asset Management, a FCA regulated fund management business with over £500m of AUM and Revera Asset Management, a small Edinburgh based active fund manager. Report and Accounts for the year to 30 June 2022 27 # ZDP SHARES ## ZDP SHARES$^{11}$ | | 30 June 2022 | 30 June 2021 | % change 2022/21 | | --- | --- | --- | --- | | **2022 ZDP shares (pence)** | | | | | Capital entitlement^{(1)} per ZDP share | 143.98 | 135.56 | 6.2 | | ZDP share price | 144.00 | 139.50 | 3.2 | | **2024 ZDP shares (pence)** | | | | | Capital entitlement^{(1)} per ZDP share | 124.14 | 118.51 | 4.8 | | ZDP share price | 122.50 | 120.50 | 1.7 | | **2026 ZDP shares (pence)** | | | | | Capital entitlement^{(1)} per ZDP share | 122.62 | 116.78 | 5.0 | | ZDP share price | 115.50 | 116.00 | (0.4) | | **2028 ZDP shares (pence)** | | | | | Capital entitlement^{(1)} per ZDP share | 106.87 | 101.06 | 5.7 | | ZDP share price | 99.00 | 100.00 | (1.0) | $^{11}$ Issued by UIL Finance, a wholly owned subsidiary of UIL $^{(1)}$ See pages 55 and 56 ## GEARING/NAV TOTAL RETURN from 30 June 2015 to 30 June 2022 ![img-3.jpeg](img-3.jpeg) *Rebased to 100 as at 14 August 2003 Source: ICM TOTAL ZDP SHARES ISSUED SINCE INCEPTION TOTAL ZDP SHARES REDEEMED SINCE INCEPTION £379.5m £414.2m 28 UIL Limited TOTAL BORROWINGS Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s 2014 ZDP 2016 ZDP 83,493 61,327 2018 ZDP 62,816 67,548 72,622 50,858 2020 ZDP 26,132 28,134 48,704 51,940 55,387 59,087 2022 ZDP 40,352 52,452 55,873 59,499 63,407 48,052 51,166 2024 ZDP 29,408 31,582 33,250 34,996 36,833 2026 ZDP 11,275 13,474 24,791 25,299 27,589 2028 ZDP 23,726 25,225 Total 172,441 197,361 173,778 199,354 159,942 180,535 132,073 140,813 Bank debt 34,362 24,987 47,846 28,495 50,971 54,660 48,761 54,915 Total debt 206,803 222,348 221,624 227,849 210,913 235,195 180,834 195,728 Blended interest rate % 6.5 6.5 6.2 6.1 5.5 5.2 4.5 4.7 Source: ICM | ZDP SHARES – TIMES COVERED BY UIL’S GROSS ASSETS | | | | | | | * | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Jun | | Jun | | Jun | | | Jun | | Jun | | Jun | | Jun | | Jun | | | 2015 | | 2016 | | 2017 | | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2014 ZDP 2016 ZDP 2.95 5.13 2018 ZDP 1.80 2.68 3.51 6.50 2020 ZDP 1.52 2.18 2.38 3.71 4.92 4.23 2022 ZDP 1.60 1.72 2.44 2.97 2.58 5.41 3.89 2024 ZDP 1.84 2.42 2.11 3.83 2.80 2026 ZDP 1.63 2.08 1.81 3.03 2.23 2028 ZDP 2.50 1.85 * Gross assets divided by the aggregate redemption liabilities of the ZDP shares and any bank debt or other borrowings ranking in priority to the ZDP shares. Source: ICM TOTAL ZDP AND GEARING AS AT TOTAL DEBT INCREASE AVERAGE COST OF BANK DEBT AS AT 30 30 JUNE 2022 DURING THE YEAR DEBT FUNDING JUNE 2022 ## + ## £195.7m 89.5% £14.9m 4.7% + See Alternative Performance Measures on pages 108 and 109 28 29 UIL Limited Report and Accounts for the year to 30 June 2022 ## STRATEGIC REPORT PRINCIPAL ACTIVITY market motivation, prospective financial engineering opportunities, competition, underperforming UIL carries on business as an investment company and management or shareholder apathy. its principal activity is portfolio investment. UIL aims to maximise value for shareholders through INVESTMENT OBJECTIVE a relatively concentrated portfolio of investments UIL’s investment objective is to maximise shareholder including separate closed-end investment companies returns by identifying and investing in investments (“Platforms”) which have been or will be established to worldwide where the underlying value is not reflected in focus on investments in dedicated market sectors. the market price. UIL has the flexibility to invest in shares, bonds, convertibles, and other types of securities, including STRATEGY AND BUSINESS MODEL non-investment grade bonds and to invest in unlisted UIL invests in accordance with the objective set securities. UIL may also invest in other investment out above. The Board is collectively responsible to companies or vehicles, including any managed by the shareholders for the long-term success of the Company. Investment Managers, where such investment would be Since the Company has no employees, it outsources complementary to UIL’s investment objective and policy. its activities to third party service providers, including the appointment of external investment managers to UIL may also use derivative instruments such as deliver investment performance. The Board oversees American Depositary Receipts, promissory notes, and monitors the activities of the service providers with foreign currency hedges, interest rate hedges, contracts the Board setting investment policy and risk guidelines, for difference, financial futures, call and put options together with investment limits. and warrants and similar instruments for investment purposes and efficient portfolio management, including ICMIM, an English incorporated company authorised protecting UIL’s portfolio and balance sheet from major and regulated by the Financial Conduct Authority (“FCA”) corrections and reducing, transferring, or eliminating as an alternative investment fund manager (“AIFM”) investment risks in its investments. These investments pursuant to the AIFM Regulations, is the Company’s will be long term in nature. AIFM and joint portfolio manager alongside ICM. The investment team responsible for the management of the UIL has the flexibility to invest in markets worldwide portfolio is headed by Duncan Saville and Charles Jillings. although investments in the utilities and infrastructure sectors are principally made in the developed markets ICMIM and ICM, operating under guidelines determined of Australasia, Western Europe, and North America, as by the Board, have direct responsibility for the decisions UIL’s exposure to the emerging markets infrastructure relating to the day to day running of the Company and utility sectors is primarily through its holding in and are accountable to the Board for the investment, UEM. UIL has the flexibility to invest directly in these financial and operating performance of the Company. sectors in emerging markets with the prior agreement Other service providers include JP Morgan Chase Bank of UEM. N.A. – London Branch which provides administration services, JPMorgan Chase Bank N.A. – Jersey which UIL believes it is appropriate to support investee provides custodial services, J.P. Morgan Europe Limited companies with their capital requirements whilst at (“JPMEL”) which acts as the Company’s Depositary under the same time maintaining an active and constructive the AIFM Directive and Computershare Investor Services shareholder approach through encouraging a review which acts as registrar. ICM has also been appointed of the capital structure and business efficiencies. The Company Secretary. Investment Managers’ team maintains regular contact with investee companies and UIL may often be among INVESTMENT POLICY the largest shareholders. There are no limits on the UIL’s investment policy is to identify and invest in proportion of an investee company that UIL may hold opportunities where the underlying value is not reflected and UIL may take legal or management control of a in the market price. This perceived undervaluation company from time to time. may arise from factors such as technological change, 30 31 30 UIL Limited Report and Accounts for the year to 30 June 2022 UIL Limited There will be no material change to the investment However, the Board has set a current limit on gearing policy (including the investment limits and the borrowing (being total borrowings excluding ZDP shares measured limits) without the prior approval of shareholders. Any against gross assets) not exceeding 33.3% at the time such change would also require the approval of the ZDP of draw down. Borrowings may be drawn down in shareholders. Sterling, US Dollars, or any currency for which there are corresponding assets within the portfolio (at the time of INVESTMENT LIMITS draw down, the value drawn must not exceed the value The Board has prescribed the following limits on of the relevant assets in the portfolio). the investment policy, all of which are at the time of The Company has a committed senior secured investment unless otherwise stated. multicurrency revolving facility with Scotiabank which There are no fixed limits on the allocation of investments has been extended and novated to the Bank of Nova between sectors and markets, however the following Scotia, London Branch and expires on 19 September investment limits apply: 2023; as at 30 June 2022 the facility was fully drawn. Further details are included in note 13 to the accounts. • investments in unlisted companies will, in aggregate, not exceed 25% of gross assets at the time that any DIVIDEND POLICY new unlisted investment is made. This restriction does The Board’s objective is to maintain or increase the not apply to loans to Platforms; total annual dividend. Dividends are expected to be • no single investment will exceed 30% of gross assets paid quarterly each year in December, March, June at the time such investment is made, save that this and September. In determining dividend payments, limit shall not prevent the exercise of warrants, the Board will take account of factors such as income options or similar convertible instruments acquired forecasts, retained revenue reserves, the Company’s prior to the relevant investment reaching the 30% dividend payment record and Bermuda law. The Board limit. This restriction does not apply to investments in also has the flexibility to pay dividends from capital any Platform; and reserves. • no single investment in a Platform will exceed 50 per RESULTS AND DIVIDENDS cent. of gross assets at the time such investment Details of the Company’s performance are set out in is made, save that this limit shall not prevent the the Investment Managers’ Report. The results for the exercise of warrants, options or similar convertible year ended 30 June 2022 are set out in the attached instruments acquired prior to the relevant investment accounts. The dividends in respect of the year, which reaching the 50 per cent. limit and provided that no total 8.00p, have been declared by way of four interim single investment held by such Platform will exceed dividends. 30 per cent. of the gross assets at the time such investment is made on a look-through basis. KEY PERFORMANCE INDICATORS None of the above restrictions will require the realisation Delivery of shareholder value is achieved through the of any of UIL’s assets where any restriction is breached increase in capital value of the Company’s shares and by as a result of an event outside of the control of the its income return. The Board reviews performance by Investment Managers which occurs after the investment reference to a number of Key Performance Indicators is made, but no further relevant assets may be acquired, (“KPIs”) that include the following: or loans made by UIL until the relevant restriction can • NAV total return relative to the FTSE All-Share Index again be complied with. • Share price BORROWING LIMITS • Share price discount to NAV Under UIL’s Bye-laws, the Group is permitted to borrow (excluding the gearing provided through the Group’s • Revenue earnings capital structure) an aggregate amount equal to 100% of • Ongoing charges figure its gross assets. Borrowings may be drawn down in any currency appropriate for the portfolio. 30 31 UIL Limited Report and Accounts for the year to 30 June 2022 ## STRATEGIC REPORT (continued) While some elements of performance against KPIs are beyond management control, they provide measures of the Group's absolute and relative performance and are therefore monitored by the Board on a regular basis. These KPIs fall within the definition of Alternative Performance Measures under guidance issued by the European Securities and Markets Authority and additional information explaining how these are calculated is set out on pages 108 and 109. | 30 June | 2022 | 2021 | | --- | --- | --- | | NAV total return (%) | (38.1) | 50.9 | | FTSE All-Share total return Index (%) | 1.6 | 21.5 | | Share price (pence) | 187.50 | 268.00 | | Discount to NAV (%) | 28.1 | 37.9 | | Percentage of issued shares bought back during the year (based on opening share capital) (%) | 0.5 | 1.9 | | Revenue EPS (pence) | 8.35 | 9.98 | | Ongoing charges figure – excluding performance fees (%) | 2.2 | 2.3 | A graph showing the NAV total return performance compared to the FTSE All-Share total return Index can be found on page 3. The ten year record on page 110 shows historic data for the Company. **Discount to NAV:** The Board monitors the premium/discount at which the Company's shares trade in relation to the assets. During the year the Company's shares traded at a discount relative to NAV in a range of 18.6% to 39.4% and an average discount of 32.2%. The Board and the Investment Managers closely monitor both movements in the Company's share price and significant dealings in the shares. On 26 July 2019, UIL announced that the Board intends to focus on reducing the discount of the ordinary shares, targeting a discount to NAV of approximately 20% over the medium term. In order to avoid substantial overhangs or shortages of shares in the market the Board asks shareholders to approve resolutions which allow for the buyback of shares and their issuance which can assist in the management of the discount. A total of 460,365 ordinary shares were bought back and cancelled during the year, representing 0.5% of the Company's opening issued share capital. **Earnings and dividends per share:** As referred to in "Dividend Policy" above, the Board's objective is to maintain or increase the total annual dividend. The Board and the Investment Managers attach great importance to maintaining dividends per share since dividends form a key component of the total return to shareholders. The Board declared four quarterly dividends of 2.00p per share in respect of the year ended 30 June 2022. The fourth quarterly dividend will be paid on 30 September 2022 to shareholders on the register as at 2 September 2022. The total dividend for the year was 8.00p per share (2021: 8.00p per share). **Ongoing charges:** These are calculated in accordance with the industry measure of costs as a percentage of NAV. The expenses of the Company are reviewed at every Board meeting, with the aim of managing costs incurred and their impact on performance. The ongoing charges figure appears high when compared to other investment companies as the expenses are expressed as a percentage of average net assets (after the deduction of the ZDP shares) and comprises all operational, recurring costs that are payable by the Company or incurred within underlying investee funds. This ratio is sensitive to the size of the Company as well as the level of costs. ### OVERVIEW OF THE INVESTMENT VALUATION PROCESS In preparing UIL's half-yearly and annual financial accounts, the most important accounting judgements and estimates relate to the carrying value of the unlisted investments which are stated at fair value. As at 30 June 2022, 57.4% of UIL's investment portfolio consisted of level 3 investments that were valued using inputs that were not based on observable market data. Given the importance of this area to the integrity of the financial reporting, the Board and the Investment Managers carefully review the valuation policies and processes and the individual valuation methodologies at each reporting date. However, the valuation of unlisted securities is inherently subjective, as it is made on the basis of assumptions which may not prove to be accurate. As detailed in note 29 to the accounts, small changes to inputs may result in material changes to the carrying value of the investments. 32 UIL Limited VALUATION PROCESS UIL’s valuation policy is the responsibility of the Board, with additional oversight and annual review from the Audit & Risk Committee. The policy is reviewed at least annually. The valuation of the unlisted investments is the responsibility of the Board, with valuation support and analysis provided by the Investment Managers’ valuation team. The investment portfolio is valued at fair value and this is achieved by valuing each investment using an appropriate valuation technique and applying a consistent valuation approach for all investments. The concept of fair value is key to the valuation process and is defined as “the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date” (International Private Equity and Venture Capital (“IPEV”) guidelines, December 2018). Maximum use is made of market-based information and the valuation methodologies used are those generally methodologies and, depending on the investment and used by market participants. Valuations are compliant relevance of the approach, any or all of these valuation with IFRS fair value guidelines and guidelines issued by methods could be used. the IPEV valuation board, which set out recommended Earnings Multiples practice for fair valuing of unlisted investments This valuation methodology is used where the within the IFRS framework. The valuation of unlisted investment is profitable and where a set of comparable investments requires the exercise of judgment, and listed companies with similar characteristics to its every effort is made to ensure that this judgment is holding can be determined. As several investments are applied objectively and is not used to overstate or not traded on an active market, the valuations are then understate the valuation result. adjusted by a liquidity discount with the discount varying The Board reviews the unlisted valuations at each depending on the nature of the underlying investment meeting and in conjunction with UIL’s external financial entity and its sector and whether restrictions exist reporting process. The Board receives a detailed on UIL’s ability to sell the asset in an orderly fashion. report from the Investment Managers’ valuation In certain instances, UIL may use a revenue multiple team recommending a proposed valuation for each approach if this is deemed more appropriate. of UIL’s investments. The report includes details of It is UIL’s policy to use reported earnings adjusted for all material valuations, explanations for movements non-recurring items, which are typically sourced from and confirmation of the valuation process adopted. the investee companies’ management accounts or Representatives of the Investment Managers are in audited financial reports. In certain cases, current or attendance at these meetings to answer any questions projected maintainable earnings provide a more reliable the Board may have on the valuation process and the indicator of the company’s performance and in these choice of valuation techniques and inputs. The Board instances an estimate of maintainable earnings is used reviews and challenges the assumptions behind the in the valuation calculation. unlisted asset valuations. Multiples are derived from comparable listed companies VALUATION METHODOLOGIES in the same business sector. Adjustments are made for relative performance versus the comparables and other The valuation of unlisted investments is normally determined by using one of the following valuation 32 33 UIL Limited Report and Accounts for the year to 30 June 2022 ## STRATEGIC REPORT (continued) company specific factors including size, product offering investment is imminent and the pricing of the relevant and growth rates. transaction has been substantially agreed, a discount to the expected realisation proceeds or flotation value Discounted Cash Flow valuation technique is used. Judgement is applied as This methodology may be used for valuing investments to the likely eventual exit proceeds and certainty of with long term stable cash flows and uses maintainable completion. This technique is only utilised where a sale earnings discounted at appropriate rates to reflect the or flotation process is materially complete, and the value of the business. Generally, the latest historical remaining risks are estimated to be small. accounts are used unless reliable forecast results for the current year are available. Earnings are adjusted where Note 29 to the accounts sets out more details on UIL’s appropriate for exceptional or non-recurring items. unlisted investments and the valuation methodologies adopted. Net Assets This valuation technique derives the value of an PRINCIPAL RISKS AND RISK MITIGATION investment by reference to the value of its net assets. During the year ended 30 June 2022, ICMIM was the This is used for investments whose value derives mainly Company’s AIFM and had sole responsibility for risk from the underlying fair value of their assets rather management subject to the overall policies, supervision, than their earnings, such as unlisted fund investments, review and control of the Board. property holding companies and other investment businesses. In addition, this valuation approach may As required by the Association of Investment Companies also be used for investments that are not making an (“AIC”) Code of Corporate Governance, the Board has adequate return on assets and for which a greater value undertaken a robust assessment of the principal risks can be realised by liquidating the business and selling its facing the Company. It seeks to mitigate these risks assets. through regular review by the Audit & Risk Committee of the Company’s risk register which identifies the For unlisted investment companies and limited risks facing the Company and the likelihood and partnerships, the fair value estimate is based on a potential impact of each risk, together with the controls summation of the estimated fair value of the underlying established for mitigation. investments attributable to the investor. This fund NAV approach may be used where there is evidence that the During the year the Audit & Risk Committee also valuation is derived using fair value principles and the discussed and monitored a number of emerging risks most recent available fund NAV may be adjusted to take that could potentially impact the Company, the principal account of changes or events to UIL’s reporting date. ones being geopolitical risk and climate change risk. The Audit & Risk Committee has determined that they are Recent Investments not currently sufficiently material to be categorised as For an initial or recent transaction, UIL may value its separate key risks and are considered within investment investment using the recent transaction price for a risk and market risk below. The Covid-19 pandemic, limited period following the transaction, where the which emerged in 2020, gave rise to significant transaction price continues to be representative of fair challenges for businesses worldwide and this was also value. taken into account as part of the assessment of risks to Imminent Investment Realisation the Company. Where realisation of an investment or a flotation of an 34 35 UIL Limited Report and Accounts for the year to 30 June 2022 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. KEY RISK FACTORS INVESTMENT The risk that the The Board monitors the performance of the Company and has established RISK: investment strategy guidelines to ensure that the approved investment policy is pursued by the does not achieve Investment Managers. The Board regularly reviews strategy in relation to a range of long-term positive issues including the balance between quoted and unquoted stocks, the allocation total returns for of assets between geographic regions and sectors and gearing. the Company’s The investment process employed by the Investment Managers combines shareholders. 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 The Company’s portfolio is exposed to equity market risk, interest rate risk, foreign movements in the currency risk and liquidity risk. Adverse market conditions may result from factors prices of equity such as economic conditions, political change, climate change, natural disasters and fixed interest and health epidemics. At each Board meeting the Board reviews the composition securities, interest of the portfolio, asset allocation, stock selection, unquoted investments and levels rates and foreign of gearing and has set investment restrictions and guidelines which are monitored currency exchange and reported on by the Investment Managers. rates and adverse The Company’s results are reported in Sterling, although the majority of its assets liquidity could lead to are priced in foreign currencies and therefore any rise or fall in Sterling will lead, a fall in NAV. 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 The quality of the investment management team is a crucial factor in delivering Investment Managers good performance. There are training and development programs in place for of key staff could employees and the remuneration packages have been developed in order to affect investment retain key staff. Any material changes to the management team are considered by returns. the Board at its next meeting; the Board discusses succession planning with the Investment Managers at regular intervals. DISCOUNT RISK: The Company’s The Board monitors the price of the Company’s shares in relation to their NAV and shares may trade at is focussed on reducing the discount at which they trade. The Board may agree to a discount to their buy back shares if there is a significant overhang of stock in the market; it targets a NAV and a widening discount to NAV of approximately 20% over the medium term. discount may undermine investor confidence in the Company. 34 35 UIL Limited Report and Accounts for the year to 30 June 2022 ## STRATEGIC REPORT (continued) OPERATIONAL Failure by any service The Company’s main service providers are listed on page 107. The Audit & Risk RISK: provider to carry Committee monitors the performance and controls (including business continuity out its obligations procedures) of the service providers at regular intervals. to the Company in Most of UIL’s investments are held in custody for the Company by JPMorgan Chase accordance with Bank N.A., Jersey. JPMEL, the Company’s depositary services provider, also monitors the terms of its the movement of cash and assets across the Company’s accounts. appointment could The Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are have a materially reported on by Independent Service Auditors, in relation to its administration, detrimental impact custodial and information technology services. on the operation The Board reviews the overall performance of the Investment Managers and all of the Company the other service providers on a regular basis. The risk of cyber-crime is high, as and could affect it is with most organisations, but the Board regularly seeks assurances from the the ability of Investment Managers and other service providers on the preventative steps that the Company to they are taking to reduce this risk. successfully pursue its investment policy. GEARING RISK: Whilst the use of The ordinary shares rank behind bank debt and ZDP shares, making them a geared borrowings should instrument. enhance total return The gearing level is high due to the capital structure of the balance sheet. As at where the return 30 June 2022, gearing on net assets, including bank loans, any overdrafts and ZDP on the Company’s shares, was 89.5% (30 June 2021: 48.8%). The Board reviews the level of gearing at underlying securities each Board meeting. is rising and exceeds ICMIM monitors compliance with the banking covenants when each drawdown the cost of borrowing, is made and at the end of each month. The Board reviews compliance with the it will have the banking covenants at each Board meeting. opposite effect where the underlying return is falling. REGULATORY Failure to comply The Investment Managers and the Company’s professional advisers monitor RISK: with applicable developments in relevant laws and regulations and provide regular reports to the legal and regulatory Board in respect of the Company’s compliance. 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. VIABILITY STATEMENT 31 of the UK Corporate Governance Code, the Board considers that assessing the Company’s prospects The Board makes an assessment of the longer-term over a period of five years is appropriate given the prospects of the Company beyond the timeframe nature of the Company and its investment objective envisaged under the going concern basis of accounting, and appropriately reflects the long-term strategy of the having regard to the Company’s current position and Company. the principal risks it faces. The Company is a long-term investment vehicle and the Board believes that it is In its assessment of the viability of the Company, the appropriate to assess the Company’s viability over a Board has considered each of the Company’s principal long-term horizon. For the purposes of assessing the risks and uncertainties detailed above, as well as the Company’s prospects in accordance with provision impact of a significant fall in world equity and foreign 36 37 UIL Limited Report and Accounts for the year to 30 June 2022 exchange markets on the value of the Company’s the Company for the benefit of its members as a whole investment portfolio and the Company’s ability to repay and includes having regard (amongst other matters) to the £131.7m ultimate liability in respect of the 2022, fostering relationships with the Company’s stakeholders 2024 and 2026 ZDP share issues and its bank debt. and maintaining a reputation for high standards of The Board is satisfied that it operates an effective risk business conduct. management process and has concluded a robust As an externally managed investment company, UIL assessment of the principal risks facing the Company. has no employees, customers, operations or premises. The Board has also considered the Company’s income Therefore, the Company’s key stakeholders (other and expenditure projections and the fact that the than its shareholders) are considered to be its service Company’s operating expenses comprise a very small providers, including lenders. The need to promote percentage of net assets while a significant proportion business relationships with the service providers and of the Company’s investments comprise listed securities maintain a reputation for high standards of business which could likely be sold to meet funding requirements, conduct is central to the Directors’ decision-making. if necessary. The Board continues to consider the key The Directors believe that fostering constructive and risks set out in this Strategic Report, the controls and collaborative relationships with the Company’s service actions to mitigate these risks and the prospects for the providers will assist in their promotion of the success Company’s portfolio holdings and has concluded that of the Company for the benefit of all shareholders they are unlikely to affect the going concern status or and their performance is monitored by the Board viability of the Company. and its committees. The principal service provider is As part of this assessment the Board considered a the Investment Managers, who are responsible for number of stress tests, including short term reverse managing the Company’s assets in order to achieve its stress testing, and scenarios which considered the stated investment objective, and the Board maintains impact of severe stock market and currency volatility a good working relationship with them. Whilst strong on shareholders’ funds over a five-year period. Initially, long term investment performance is essential, the the Company’s projections were adjusted to reflect a Board recognises that to provide an investment vehicle material reduction in the value of its investments in that is sustainable over the long term, both it and the line with that experienced during the emergence of the Investment Managers must have regard to ethical and Covid-19 pandemic in the first quarter of 2020. The first environmental issues that impact society. Accordingly, stress test considered a fall in the market of 40% in the ESG considerations are an important part of the first year with recovery of 10% per annum thereafter. A Investment Managers’ investment process as explained second test considered a fall in the markets of 20% and more fully below. adverse sterling movement, the Company’s reporting The Board seeks to engage with its Investment currency, of 10% in the first year with a further fall in Managers and other service providers in a collaborative markets of 20% in the second year and no movement and collegiate manner, whilst also ensuring that thereafter. The results demonstrated the impact on the appropriate and regular challenge is brought, and Company’s NAV, its expenses, and its ability to meet its evaluation conducted. The aim of this approach is to liabilities over that period. As a result of this analysis, enhance service levels and strengthen relationships the Board has concluded that there is a reasonable with a view to ensuring the interests of the Company’s expectation that the Company will be able to continue in shareholders are best served by keeping cost levels operation and meet its liabilities as they fall due over the proportionate and competitive, and by maintaining the next five years. highest standards of business conduct. PROMOTING THE SUCCESS OF THE COMPANY The Directors aim to act fairly as between the Company’s shareholders and the approach to shareholder relations Although the Company is domiciled in Bermuda, the is summarised in the Corporate Governance Statement Board has considered the guidance set out in the AIC on pages 50 to 54. The Chairman is available to meet Code of Corporate Governance in relation to Section with shareholders as appropriate and the Investment 172 of the Companies Act 2006 in the UK. This requires Managers meet regularly with shareholders and their the Directors to have a duty to promote the success of 36 37 UIL Limited Report and Accounts for the year to 30 June 2022 Report and Accounts for the year to 30 June 2022 37 ## STRATEGIC REPORT (continued) respective representatives, reporting back on views shareholder interests are aligned with other to the Board. Shareholders may also communicate shareholders, management and stakeholders. The with the Company at any time by writing to the Board Investment Managers’ “G” assessment therefore at the Company’s registered office or contacting the includes questions covering shareholders’ rights, Company’s broker. These communication opportunities transparency and related parties, as well as audit and help inform the Board when considering how best to accounting, board composition and effectiveness, promote the success of the Company for the benefit of executive oversight and compensation. Each area is all shareholders over the long term. assessed and weighted, and the Investment Managers then apply an aggregated weighting towards “G” in In addition to ensuring that the Company’s stated line with the strong empirical evidence linking robust investment objective was being pursued, the Directors corporate governance and performance. confirm that they have considered promoting the success of the Company when making decisions, The “E” and “S” are also focal points for the Investment including in relation to: Managers, as assessing key environmental and social risks are essential to a long-term sustainable business • the realisation of investments in advance of the model. The Investment Managers identify the most redemption of the 2022 ZDP shares; material “E” and “S” risks that are believed to affect • the recommendation that shareholders vote in favour each sector and companies are then assessed against of the Company’s dividend policy at the forthcoming each risk. The results from this analysis feed into an AGM; and “E” and “S” score for each company reflecting, for each material risk, whether suitable/sustainable plans are in • the recommendation that shareholders vote in place, how clear the company has been in disclosing its favour of the renewal of the buyback and allotment approach and how well it is doing against its objective to authorities as set out in the notice of AGM. manage such risk. ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY Where a portfolio company is assessed as having a The Board believes that it is in the shareholders’ relatively low “E”, “S” and/or “G” score, ICM’s approach is interests to consider ESG factors when selecting and to engage with the company to seek improvements over retaining investments, and has asked the Investment time. ESG considerations provide a way to identify and Managers to take these into account when investing. review the long-term drivers of an investment that are The concept of responsible investing has always been not found within the financial accounts, thereby enabling a core component of the investment process and the the Investment Managers to fully question a company’s Investment Managers employ a disciplined investment investment potential from a number of perspectives. process that seeks to both uncover opportunities Examples of ESG progress on two portfolio companies and evaluate potential risks, while striving for the are set out on page 20. best possible return outcomes. When reviewing any Where possible, the Investment Managers aim to investment opportunity, the Investment Managers look visit companies to access an in-person opportunity to understand the relevant ESG issues in conjunction to ask management teams what they perceive to with the financial, macro and political drivers as part of be the key operational, social, and environmental its investment process, populating an internally built issues, as well as a chance to see assets operating ESG framework due to lack of appropriate coverage first-hand. ESG disclosures are not always easy to from external providers. Relevant and material ESG understand given they may not be openly reported opportunities and risks can meaningfully affect or consistently disclosed. The Investment Managers investment performance, therefore the consideration believe that engaging with companies directly is the of ESG issues forms part of the integrated research best first step. Where necessary, the Investment analysis, decision-making and ongoing monitoring. Managers will question and challenge an investee The Investment Managers believe that “G” is the company’s management team directly to ensure a full core foundation on which all else is built, as strong understanding of any challenges and opportunities. governance within a company ensures that minority 38 39 UIL Limited Report and Accounts for the year to 30 June 2022 Given the Investment Managers are long term investors, the SECR regulations and therefore is not required to engagement with management teams is and will disclose energy and carbon information. remain paramount to the investment approach. On behalf of UIL as shareholder, the Investment Managers BRIBERY ACT work actively with investee companies to incorporate The Company has a zero tolerance policy towards stronger ESG principles and vote in a considered bribery and is committed to carrying out business fairly, manner (including against resolutions) to drive positive honestly and openly. The Investment Managers also change. As referred to above, the Investment Managers adopt a zero tolerance approach and have policies and believe that governance factors are fundamental to an procedures in place to prevent bribery. investment. CRIMINAL FINANCE ACT ICM is a signatory to the United Nations-supported The Company has a commitment to zero tolerance Principles for Responsible Investment, which is an towards the criminal facilitation of tax evasion. international network of investors working together to implement its six aspirational principles; and is a SOCIAL, HUMAN RIGHTS AND COMMUNITY MATTERS member of the Asian Corporate Governance Association As an externally-managed investment company, the which is focused on the implementation of effective Company does not have any employees or maintain any corporate governance in Asia. The Investment Managers premises. It therefore has no material, direct impact believe that good stewardship is essential and the on the environment or any particular community and principles these various bodies espouse align with the Company itself has no environmental, human its philosophy to protect and increase the value of its rights, social or community policies. The Board notes investments. the Investment Managers’ policy statement in respect MODERN SLAVERY ACT of Environmental, Social and Governance issues, as outlined on page 38. Due to the nature of the Company’s business, being a company that does not offer goods and services to OUTLOOK customers, the Board considers that it is not within the The Board’s main focus is on the achievement of the scope of the Modern Slavery Act 2015 because it has Company’s objective of delivering a long-term total no turnover. The Company is therefore not required return and the future of the Company is dependent to make a slavery and human trafficking statement. In upon the success of its investment strategy. The any event, the Board considers the Company’s supply outlook for the Company is discussed in the Chairman’s chains, dealing predominantly with professional advisers Statement and the main trends and factors likely to and service providers in the financial services industry, affect the future development, performance and to be low risk in relation to this matter. position of the Company’s business can be found in the GENDER DIVERSITY Investment Managers’ Report. The Board consists of four male directors and one This Strategic Report was approved by the Board of female director. The Company has no employees Directors on 21 September 2022. and therefore there is nothing further to report in respect of gender representation within the Company. The Company’s policy on diversity is detailed in the By order of the Board Corporate Governance Statement on page 53. ICM Limited Company Secretary GREENHOUSE GAS EMISSIONS AND STREAMLINED 21 September 2022 ENERGY AND CARBON REPORTING (“SECR”) All the Company’s activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from its operations. In addition, the Company considers itself to be a low energy user under 38 39 UIL Limited Report and Accounts for the year to 30 June 2022 ## INVESTMENT MANAGERS AND TEAM ICMIM, a company authorised and regulated by The Investment Managers are focused on finding the FCA, was the Company’s AIFM during the year investments at valuations that do not reflect their true ended 30 June 2022 with sole responsibility for long term value. Their investment approach is to have risk management, subject to the overall policies, a deep understanding of the business fundamentals supervision, review and control of the Board and is of each investment and its environment versus its joint portfolio manager of the Company, alongside ICM. intrinsic value. The Investment Managers are long term investors. ICM MANAGES OVER ## £1.7bn IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER £18.2BN OF ASSETS IN SUBSIDIARY INVESTMENTS. ICM HAS OVER 80 STAFF BASED IN OFFICES IN BERMUDA, CAPE TOWN, DUBLIN, LONDON, SEOUL, SINGAPORE, SYDNEY, VANCOUVER AND WELLINGTON. UIL HAS A BROAD INVESTMENT MANDATE. TO BETTER EXECUTE THE MANDATE UIL HAS SET UP A NUMBER OF PLATFORMS TO FOCUS THE INVESTMENT PROCESS AND DECISIONS. THE INVESTMENT MANAGERS HAVE MIRRORED THESE PLATFORMS IN ESTABLISHING INVESTMENT TEAMS DEDICATED TO EACH. The investment teams are led by Duncan Saville and Charles Jillings. DUNCAN SAVILLE Duncan Saville, a director of ICM, is a chartered accountant with experience in corporate finance and asset management. He was formerly a non-executive director of Special Utilities Investment Trust PLC and Utilico Investment Trust plc and is an experienced non-executive director having been a director in multiple companies in the financial services, utility, mining and technology sectors. He is currently a non- executive director of ASX listed Resimac Group Limited, H.R.L Morrison & Co Limited and Allectus Capital Limited. CHARLES JILLINGS Charles Jillings, a director of ICM and chief executive of ICMIM, is responsible for the day-to-day running of UIL and the investment portfolio. He qualified as a chartered accountant and has extensive experience in corporate finance and asset management. He is an experienced director having previously been a non- executive director of Special Utilities Investment Trust PLC and other companies in the financial services, water and waste sectors. He is currently a director of Somers Limited, Waverton Investment Management Limited, and Allectus Capital Limited. 40 41 UIL Limited Report and Accounts for the year to 30 June 2022 Core teams assisting them at a senior level, including consultants, are: UTILITIES & INFRASTRUCTURE Jacqueline Broers, deputy portfolio manager of UEM, has been involved in the running of UIL and UEM since September 2010. Mrs Broers is focused on the transport sector worldwide with particular emphasis on emerging markets. Prior to joining the investment team, Mrs Broers worked in the corporate finance team at Lehman Brothers and Nomura. Mrs Broers is a qualified chartered accountant. Jonathan Groocock, deputy portfolio manager of UEM, has been involved in the running of UIL and UEM since February 2011. Mr Groocock is focused on the utilities sector worldwide with particular emphasis on emerging markets. Prior to joining the investment team Mr Groocock had nine years of experience in sell side equity research. Mr Groocock qualified as a CFA charterholder in 2005 and is a non executive director of Petalite Limited. Mark Lebbell, has been involved in the running of UIL and UEM since their inception and before that was involved with Utilico Investment Trust plc and The Special Utilities Investment Trust PLC since 2000. Mr Lebbell is focused on the communications sector worldwide with particular emphasis on emerging markets. Mr Lebbell is an associate member of the Institute of Engineering and Technology. FIXED INCOME Gavin Blessing, joined ICM in 2012. He has over twenty years of experience, mostly in the corporate fixed income markets, both investment grade and high yield. He worked as a credit research analyst and portfolio manager at Goldman Sachs Asset Management in London for 10 years and subsequently as head of credit origination at ISTC in Dublin, Ireland. Prior to joining ICM he was head of bond credit research at Canaccord Genuity in Dublin. Mr Blessing is a qualified chartered accountant and CFA charterholder. RESOURCES Dugald Morrison, is responsible for Australasia and in addition, is focused on the resources sector worldwide. He is an experienced investment analyst, having worked in stockbroking, investment banking and investment management firms in New Zealand, the United Kingdom and the United States since 1987. Mr Morrison is a member of the New Zealand Institute of Directors. TECHNOLOGY Jason Cheong, heads up ICM’s technology investing activities. He is the portfolio manager for Allectus Capital Limited, having worked in private equity, investment banking and corporate law in Australia and the United Kingdom. Prior to joining ICM, he was an investment manager at Brookfield Asset Management. Mr Cheong is a qualified solicitor, admitted to practice in Australia. 40 41 UIL Limited Report and Accounts for the year to 30 June 2022 ## INVESTMENT MANAGERS AND TEAM (continued) FINANCIAL SERVICES Alasdair Younie is a director of ICM. Mr Younie is responsible for the day to day running of the Somers Group. Mr Younie has extensive experience in financial markets and corporate finance. He worked for six years within the corporate finance department of Arbuthnot Securities Limited in London. He is a director of Allectus Capital Limited, Somers Limited and West Hamilton Holdings Limited. Mr Younie is a member of the Institute of Chartered Accountants in England and Wales. CORPORATE FINANCE Sandra Pope is a director of ICMIM. She has over thirty years’ experience in corporate finance, having previously worked in corporate finance at Deloitte Haskins & Sells, Hill Samuel Bank and Close Brothers for ten years and has worked for the ICM Group since 1999. Mrs Pope is a qualified chartered accountant and is a director of a number of private companies. OPERATIONS Brad Goddard has over thirty years’ experience in international markets and finance and their related operations with the ICM Group. He has been involved with UIL since its inception and prior to that, he was involved with The Special Utilities Investment Trust plc. Mr Goddard is currently working closely with Somers’ investee companies to achieve greater operational synergies across the Somers Group. ACCOUNTING Werner Van Kets has managed various operational and financial aspects of ICM Corporate Services (Pty) Ltd since its inception, which provides accounting and other corporate support services to the ICM group. His previous experience includes Deloitte (South Africa) and Credit Suisse in London. Mr Van Kets is a qualified chartered accountant. COMPANY SECRETARY, ICM LIMITED Alastair Moreton, a chartered accountant, joined the ICM team in 2017 to provide company secretarial services to the Company and to UEM. He has over thirty years’ experience in corporate finance with Samuel Montagu, HSBC, Arbuthnot Securities and, prior to joining ICM, Stockdale Securities, where he was responsible for the company’s closed-end fund corporate clients. 42 43 UIL Limited Report and Accounts for the year to 30 June 2022 ## DIRECTORS PETER BURROWS AO * (CHAIRMAN) Peter Burrows AO (Chairman) was appointed a Director in September 2011 and Chairman in November 2015. Mr Burrows is an experienced stockbroker and founded his own independent specialist private client stock broking firm, Burrows Limited, in 1986. Mr Burrows was previously the chairman and director of a number of listed and unlisted companies. Mr Burrows was made an officer in the Order of Australia (AO) for his services to medical research, tertiary education and finance. STUART BRIDGES * Stuart Bridges (Chairman of Audit & Risk and Management Engagement Committees) was appointed a Director in October 2019. He is Chief Financial Officer of Inigo Limited, a nonlife insurance group operating out of Lloyds of London and a non-executive director of Caledonia Investments plc. He is a chartered accountant and his previous roles included chief financial officer of Control Risks Group, Nex Group plc (formerly ICAP plc) and Hiscox plc. Prior to Hiscox, he held various senior positions in a number of financial services companies in the United Kingdom and United States including Henderson Global Investors. ALISON HILL * Alison Hill, FCMA, CGMA, was appointed a Director in November 2015 and is an executive director and chief executive officer of The Argus Group in Bermuda, which provides insurance, retirement and financial services. Ms Hill has over twenty five years’ experience in global corporations in the financial services sector. Ms Hill is a trustee and a member of committees of a number of non-corporate organisations in Bermuda. Ms Hill is a Fellow of the Chartered Institute of Management Accountants and a Chartered Global Management Accountant. CHRISTOPHER SAMUEL * Christopher Samuel was appointed a Director in November 2015 and was previously Chief Executive of Ignis Asset Management until mid-2014, when it was taken over by Standard Life. He has over twenty five years of board level experience in the investment management sector. He is currently chairman of Blackrock Throgmorton Trust plc, JP Morgan Japanese Investment Trust plc and Quilter Financial Planning Limited as well as a non-executive director of Quilter plc. Mr Samuel is a Chartered Accountant. DAVID SHILLSON David Shillson, LLM (Hons), who was appointed a Director in November 2015, is an experienced corporate and commercial lawyer and a senior partner of Dentons Kensington Swan, the New Zealand member of Dentons, the global law firm. He has acted for a variety of clients, particularly in acquisitions and investment structuring, advising on transactional and governance matters across the utilities, transport, energy, technology and finance sectors. Mr Shillson is a member of the New Zealand Law Society and the New Zealand Institute of Directors. * Independent Director and member of the Audit & Risk Committee and Management Engagement Committee 42 43 UIL Limited Report and Accounts for the year to 30 June 2022 Report and Accounts for the year to 30 June 2022 43 ## DIRECTORS’ REPORT The Directors present the Annual Report and Accounts FUND MANAGEMENT ARRANGEMENTS of the Company for the year ended 30 June 2022. The aggregate fees payable by the Company to ICMIM and ICM under the Investment Management STATUS OF THE COMPANY Agreement (“IMA”) are 0.5% per annum of gross assets UIL is a Bermuda exempted closed-end investment after deducting current liabilities (excluding borrowings company with registration number 39480. The incurred for investment purposes), payable quarterly Company’s ordinary shares are admitted to trading in arrears, with such fees to be apportioned between on the Specialist Fund Segment of the Main Market ICMIM and ICM as agreed by them. The Investment of the London Stock Exchange and have a secondary Managers may also become entitled to a performance- listing on the Bermuda Stock Exchange. UIL Finance’s related fee. The IMA may be terminated on one year’s ZDP shares are listed on the Standard Segment of the notice in writing and further details of the management Official List of the Financial Conduct Authority and and performance fees are disclosed in note 3 to the are traded on the Main Market of the London Stock accounts. Exchange. UIL is a member of the AIC in the UK. Under the IMA, ICM has been appointed as Company The Company’s subsidiary undertaking, UIL Finance, Secretary. carries on business as an investment company. The Board continually reviews the policies and performance of the Investment Managers. The Board’s THE ALTERNATIVE INVESTMENT FUND MANAGERS philosophy and the Investment Managers’ approach DIRECTIVE (“AIFMD”) are that the portfolio should consist of shares thought The Company is a non-EU Alternative Investment Fund attractive irrespective of their inclusion or weighting (“AIF”) for the purposes of the AIFMD. The Company in any index. Over the long term, the Board expects has appointed ICMIM, an English incorporated the combination of the Company’s and Investment company which is regulated by the FCA, as its AIFM, Managers’ approach to generate a positive return for with sole responsibility for risk management and ICM shareholders. The Board continues to believe that the and ICMIM jointly to provide portfolio management appointment of ICMIM and ICM on the terms agreed is services. in the interests of shareholders as a whole. The AIFMD requires certain information to be made available to investors in AIFs before they invest and ADMINISTRATION requires that material changes to this information be The provision of accounting and administration disclosed in the annual report of each AIF. An Investor services has been outsourced to JPMorgan Chase Disclosure Document, which sets out information Bank N.A. – London Branch (the “Administrator”). on the Company’s investment strategy and policies, The Administrator provides financial and general leverage, risk, liquidity, administration, management, administrative services to the Company for an annual fees, conflicts of interest and other shareholder fee based on the Company’s month end NAV (5 bps information, is available on the Company’s website at on the first £100m NAV, 3bps on the next £150m www.uil.limited. NAV, 2bps on the next £250m NAV and 1.5bps on the next £500m NAV). The Administrator and any of its UIL has also appointed JPMEL as its depositary delegates are also entitled to reimbursement of certain services provider. JPMEL’s responsibilities include expenses incurred by it in connection with its duties. In general oversight over the issue and cancellation of addition, ICMIM has appointed Waverton Investment the Company’s shares, the calculation of the NAV, cash Management Limited (“Waverton”) to provide certain monitoring and asset verification and record keeping. support services (including middle office, market JPMEL receives a fee of 2.2bps on UIL’s NAV for its dealing and information technology support services). services, subject to a minimum fee of £25,000 per Waverton is entitled to receive an annual fee of 3bps annum, payable monthly in arrears. of the Company’s gross assets and the Company reimburses ICMIM for its costs and expenses incurred in relation to this agreement. 44 45 44 UIL Limited Report and Accounts for the year to 30 June 2022 UIL Limited Annually, the Management Engagement Committee considers the ongoing administrative requirements of the Company and assesses the services provided. #### **SAFE CUSTODY OF ASSETS** During the year ended 30 June 2022, most of UIL's investments were held in custody for the Company by JPMorgan Chase Bank N.A., Jersey (the "Custodian"). Operational matters with the Custodian are carried out on the Company's behalf by ICMIM and the Administrator in accordance with the IMA and the Administration Agreement. The Custodian is paid a variable fee dependent on the number of trades transacted and the location of the securities held. #### **FINANCIAL INSTRUMENTS** The Company's financial instruments comprise its investment portfolio, cash balances, bank borrowings and debtors and creditors which arise directly from its operations such as sales and purchases awaiting settlement, and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 29 to the accounts. #### **DIVIDENDS** Dividends of 2.00p per share were paid on 23 December 2021, 31 March 2022 and 30 June 2022. A dividend of 2.00p per share was declared on 23 August 2022 for payment on 30 September 2022 to shareholders on the register as at 2 September 2022. In aggregate, the four interim dividends in respect of the year amount to 8.00p per ordinary share. #### **ISA AND NMPI** The ordinary shares and the ZDP shares remain qualifying investments under the Individual Savings Account ("ISA") regulations and it is the intention of the Board to continue to satisfy these regulations. Furthermore, the Company currently conducts its affairs so that its shares can be recommended by IFAs to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream pooled investments and intends to continue to do so for the foreseeable future. ![img-4.jpeg](img-4.jpeg) #### **GOING CONCERN** The Board has reviewed the going concern basis of accounting for the Company. A significant proportion of the Company's investments comprise listed securities. 40.5% of the total portfolio as at 30 June 2022 is in level 1 investments which, in most circumstances, could likely be sold to meet funding requirements, if necessary. The Board has performed a detailed assessment of the Company's operational risk and resources including its ability to meet its liabilities as they fall due, by conducting stress tests and scenarios which considered the impact of severe stock market and currency volatility. This is set out in note 28 to the accounts. In light of this work and there being no material uncertainties related to events or conditions that may cast significant doubt about the ability of the Company to continue as a going concern, the Board has a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of at least the next twelve months from the date of approval of these financial statements. Accordingly, the Board considers it appropriate to continue to adopt the going concern basis in preparing the accounts. #### **DIRECTORS** UIL has a Board of five non-executive Directors who oversee and monitor the activities of the Investment Report and Accounts for the year to 30 June 2022 45 ## DIRECTORS' REPORT (continued) Managers and other service providers and ensure that the Company's investment policy is adhered to. The Board is supported by an Audit & Risk Committee and a Management Engagement Committee, which deal with specific aspects of the Company's affairs. The Corporate Governance Statement, which is set out on pages 50 to 54, forms part of this Directors' Report. The Directors have a range of business, financial and asset management skills as well as experience relevant to the direction and control of the Company. Brief biographical details of the members of the Board are shown on page 43. All the Directors are independent other than Mr Shillson, who is a partner of Dentons Kensington Swan, a New Zealand law firm which has acted for members of the UIL and ICM groups. UIL's Bye-laws require that a Director shall retire and be subject to re-election at the first AGM after appointment and at least every three years thereafter. However, in accordance with the AIC Code of Corporate Governance, all the directors are subject to annual re-election. The nature of an investment company and the relationship between the Board and the Investment Managers are such that it is considered unnecessary to identify a senior independent director. Any of the Directors is available to shareholders if they have concerns which have not been resolved through the normal channels of contact with the Chairman or the Investment Managers, or for which such channels are inappropriate. ### DIRECTORS' INDEMNITY AND INSURANCE As permitted by the Company's Bye-laws, the Directors have the benefit of an indemnity under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his/her role as a Director of the Company. The indemnity was in place during the year and as at the date of this report. UIL also maintains Directors' and Officers' liability insurance which provides appropriate cover for any legal action brought against the Directors. ### DIRECTORS' INTERESTS The Directors' interests in the ordinary share capital of the Company are disclosed in the Directors' Remuneration Report. No Director was a party to, or had any interests in, any contract or arrangement with the Company at any time during the year or at the year end. There are no agreements between the Company and its Directors concerning compensation for loss of office. A Director must avoid a situation where he/she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company's interests. The Directors have declared any potential conflicts of interest to the Company which are reviewed regularly by the Board. The Directors have undertaken to advise the Company Secretary and/or Chairman as soon as they become aware of any potential conflicts of interest. ### SHARE CAPITAL As at 30 June 2022 the issued ordinary share capital of the Company and the total voting rights were 83,842,918 ordinary shares. As at the date of this report the issued share capital and total voting rights were 83,842,918 ordinary shares. There are no restrictions on the transfer of securities in the Company and there are no special rights attached to any of the shares. ### SHARE ISSUES AND REPURCHASES UIL has the authority to purchase shares in the market and to issue new shares for cash. During the year ended 30 June 2022 the Company purchased 460,365 ordinary shares for cancellation. The current authority to repurchase shares was granted to Directors on 10 November 2021 and expires at the conclusion of the next AGM. The Directors are proposing that their authority to buy back up to 14.99% of the Company's shares and to issue new shares up to 5% of the Company's issued ordinary share capital be renewed at the forthcoming AGM. ### SUBSTANTIAL SHARE INTERESTS As at the date of this report, the Company had received notification from Mr Duncan Saville that he had an interest in 62,618,221 ordinary shares (74.7% of UIL's issued share capital) which included the holding of General Provincial Life Pension Fund Limited (54,851,533 ordinary shares (65.4%)). 46 UIL Limited THE COMMON REPORTING STANDARD immediate attention. If you are in any doubt about the action you should take, you should seek advice from Tax legislation under The OECD (Organisation for your stockbroker, bank manager, solicitor, accountant Economic Co-operation and Development) Common or other financial adviser authorised under the Reporting Standard for Automatic Exchange of Financial Services and Markets Act 2000 (as amended). Financial Account Information (the “Common Reporting If you have sold or transferred all of your shares in the Standard”) was introduced on 1 January 2016. The Company, you should pass this document, together legislation requires UIL, as an investment company, with any other accompanying documents including the to provide personal information on shareholders to form of proxy, at once to the purchaser or transferee, the Company’s local tax authority in Bermuda. The or to the stockbroker, bank or other agent through Bermuda tax authority may in turn exchange the whom the sale or transfer was effected, for onward information with the tax authorities of another country transmission to the purchaser or transferee. or countries in which the shareholder may be tax resident, where those countries (or tax authorities The business of the AGM consists of 12 resolutions. in those countries) have entered into agreements Resolutions 1 to 11 (inclusive) will be proposed to exchange financial account information. The as ordinary resolutions and resolution 12 will be Company’s registrars have been engaged to collate proposed as a special resolution. such information and file reports on behalf of the Company. Ordinary Resolution 1 – Annual Report and Financial Statements All new shareholders, excluding those whose shares This resolution seeks shareholder approval to receive are held as depositary interests, who are entered on the Directors’ Report, the Independent Auditor’s the share register will be sent a certification form for Report and the Financial Statements for the year the purposes of collecting this information. ended 30 June 2022. AUDIT INFORMATION AND AUDITOR Ordinary Resolution 2 – Approval of the Directors’ The Directors who held office at the date of approval Remuneration Report of this Directors’ Report confirm that, so far as they are This resolution is an advisory vote on the Directors’ aware, there is no relevant audit information of which Remuneration Report. the Company’s auditor is unaware; and each Director has taken all the steps that they ought to have taken as Ordinary Resolution 3 – Approval of the Company’s a Director to make themselves aware of any relevant dividend policy audit information and to establish that the Company’s This resolution seeks shareholder approval of the auditor is aware of that information. Company’s dividend policy to pay four interim dividends per year. Under the Company’s Bye-laws, the LISTING RULE 9.8.4R Board is authorised to approve the payment of interim The ordinary shares of UIL are admitted to the dividends without the need for the prior approval of Specialist Fund Segment and therefore the Listing the Company’s shareholders. Rules do not technically apply to it. However it Having regard to corporate governance best practice has agreed to comply voluntarily with certain key relating to the payment of interim dividends without provisions of the Listing Rules, including Listing the approval of a final dividend by a company’s Rule 9.8, and confirms that there are no instances shareholders, the Board has decided to seek express where the Company is required to make disclosures approval from shareholders of its dividend policy to in respect of Listing Rule 9.8.4R (information to be pay four interim dividends per year. If this resolution included in annual report and accounts). is not passed, it is the intention of the Board to refrain from authorising any further interim dividends ANNUAL GENERAL MEETING until such time as the Company’s dividend policy is The following information to be discussed at the approved by its shareholders. forthcoming AGM is important and requires your 46 47 UIL Limited Report and Accounts for the year to 30 June 2022 ## DIRECTORS' REPORT (continued) ### Ordinary Resolutions 4 to 8 (inclusive) – Re-election of Directors The biographies of the Directors are set out on page 43 and are incorporated into this report by reference. **Resolution 4** relates to the re-election of Mr Peter Burrows who was appointed Chairman on 16 November 2015, having joined the Board on 16 September 2011. Mr Burrows' leadership of the Board as Chairman draws on his long and varied experience on the boards of many listed and unlisted companies. His focus is on long-term strategic issues, which are key topics of Board discussion. **Resolution 5** relates to the re-election of Mr Stuart Bridges who was appointed on 2 October 2019. Mr Bridges is a chartered accountant with many years of experience both as a chief financial officer and as chair of audit and risk committees in the financial services sector. He therefore brings this strong background and skills to his role as the Company's Audit & Risk Committee Chairman. **Resolution 6** relates to the re-election of Ms Alison Hill who was appointed on 16 November 2015. Ms Hill is based in Bermuda and is an executive director and chief executive officer of the financial services company, The Argus Group. She therefore brings extensive financial services experience and knowledge of Bermuda to her role on the Board. **Resolution 7** relates to the re-election of Mr Christopher Samuel who was appointed on 16 November 2015. Mr Samuel's extensive experience in the investment management industry and as chairman of other investment companies means that he brings in-depth knowledge and expertise in investment matters to his role on the Board. **Resolution 8** relates to the re-election of Mr David Shilson who was appointed on 16 November 2015. Mr Shilson brings significant legal experience to his role on the Board which draws on a track record of advising on acquisitions and investment structuring in many of the sectors in which the Company invests. ### Ordinary Resolutions 9 and 10 – Appointment of the external Auditor and the Auditor's Remuneration These resolutions relate to the appointment and remuneration of the Company's auditor. The Company, through its Audit & Risk Committee, has considered the independence and objectivity of the external auditor and is satisfied that the proposed Auditor is independent. Further information in relation to the assessment of the existing Auditor's independence can be found in the report of the Audit & Risk Committee. Resolutions relating to the following items of special business will be proposed at the forthcoming AGM: ### Ordinary Resolution 11 – Authority to buy back shares This resolution seeks to renew the authority granted to Directors enabling the Company to purchase its own shares. The Directors will consider repurchasing shares in the market if they believe it to be in shareholders' interests and as a means of correcting any imbalance between supply and demand for the Company's shares. Any shares purchased pursuant to this resolution shall be cancelled immediately upon completion of the purchase or held, sold, transferred or otherwise dealt with as treasury shares. The Directors are seeking authority to purchase in the market up to 12,560,000 ordinary shares (representing approximately 14.99% of the issued ordinary shares as at the date of the Notice of AGM). This authority, unless renewed at an earlier general meeting, will expire at the conclusion of the next AGM of the Company to be held in 2023. ### Special Resolution 12 – Authority to disapply pre-emption rights The Company's Bye-laws provide that, unless otherwise determined by a special resolution, the Company is not able to allot ordinary shares for cash without offering them to existing shareholders first in proportion to their shareholdings. This resolution will grant the Company authority to dis-apply these pre-emption rights in respect of up to 4,192,000 ordinary shares (representing approximately 5% of the issued ordinary shares as at the date of the Notice of AGM). Any such sale of shares would only be made at prices greater than NAV and would therefore increase the assets underlying each share. This resolution will expire at the conclusion of the next AGM of the Company to be held in 2023 unless renewed prior to that date at an earlier general meeting. 48 UL Limited Resolution 12 is a special resolution and will require the approval of a 75% majority of votes cast in respect of it. RECOMMENDATION The Board considers that each of the resolutions to be proposed at the AGM is likely to promote the success of the Company for the benefit of its members as a whole and are in the best interests of the Company and its shareholders as a whole. The Directors unanimously recommend that shareholders vote in favour of these resolutions as they intend to do in respect of their own beneficial holdings. By order of the Board ICM Limited Secretary 21 September 2022 48 49 UIL Limited Report and Accounts for the year to 30 June 2022 ## CORPORATE GOVERNANCE STATEMENT THE COMPANY‘S CORPORATE GOVERNANCE FRAMEWORK Corporate Governance is the process by which the board of directors of a company protects shareholders’ interests and by which it seeks to enhance shareholder value. Shareholders hold the directors responsible for the stewardship of a company’s affairs, delegating authority and responsibility to the directors to manage the company on their behalf and holding them accountable for its performance. Responsibility for good governance lies with the Board. The Board considers the practice of good governance to be an integral part of the way it manages the Company and is committed to maintaining high standards of financial reporting, transparency and business integrity. The governance framework of the Company reflects the fact that, as an investment company, it has no full-time employees and outsources its activities to third party service providers. ### THE BOARD Five non-executive directors (NEDs) CHAIRMAN: Peter Burrows KEY OBJECTIVES: • to set strategy, values and • to provide leadership within • to constructively challenge standards; a framework of prudent and and scrutinise performance effective controls which enable of all outsourced activities. risks to be assessed and managed; and MANAGEMENT NOMINATION REMUNERATION AUDIT & RISK ENGAGEMENT COMMITTEE COMMITTEE COMMITTEE COMMITTEE FUNCTION FUNCTION All the independent All the independent The Board as a The Board as a Directors Directors whole performs whole performs this function this function CHAIRMAN: CHAIRMAN: Stuart Bridges Stuart Bridges KEY OBJECTIVE: KEY OBJECTIVES: KEY OBJECTIVES: KEY OBJECTIVE: • to oversee the • to review the • to regularly review • to set the financial reporting performance of the Board’s structure remuneration policy and control the Investment and composition; for the Directors of environment. Managers and the and the Company. Administrator; and • to consider any new • to review the appointments. performance of other service providers. 50 UIL Limited THE AIC CODE OF CORPORATE GOVERNANCE therefore the Board does not believe it is necessary to nominate a senior independent director. In addition, The Board’s principal governance reporting obligation as explained in the Audit & Risk Committee Report, the is in relation to the UK Corporate Governance Code Chairman of the Board is also a member of the Audit & (the “UK Code”) issued by the Financial Reporting Risk Committee, as permitted by the AIC Code. Council (“FRC”) in July 2018. However, it is recognised that investment companies have special circumstances Information on how the Company has applied the which have an impact on their governance principles of the AIC Code and the UK Code is set out arrangements. An investment company typically has below. no employees and the roles of portfolio manager, administration, accounting and company secretarial THE BOARD tend to be outsourced to a third party. The AIC has The Board is responsible to shareholders for the overall therefore drawn up its own set of guidelines known as stewardship of the Company. A formal schedule of the AIC Code of Corporate Governance (the “AIC Code”) matters reserved for the decision of the Board has been issued in February 2019, which recognises the nature adopted. Investment policy and strategy are determined of investment companies by focusing on matters such by the Board and it is also responsible for the gearing as board independence and the review of management policy, dividend policy, public documents, such as the and other third party contracts. The FRC has endorsed Annual Report and Financial Statements, the buy-back the AIC Code and confirmed that companies which policy and corporate governance matters. In order to report against the AIC Code will be meeting their enable the Directors to discharge their responsibilities obligations in relation to the UK Code and paragraph LR effectively the Board has full and timely access to 9.8.6 of the FCA’s Listing Rules. The Board believes that relevant information. reporting against the principles and recommendations The Board meets at least three times a year, with of the AIC Code will provide better information to additional Board and Committee meetings being held shareholders. on an ad hoc basis to consider investment performance The UK Code is available from the FRC’s website at and particular issues as they arise. Key representatives www.frc.org.uk. The AIC Code is available from the of the Investment Managers attend each meeting and Association of Investment Companies’ website at between these meetings there is regular contact with www.theaic.co.uk. the Investment Managers. Board meetings may often be held in countries where the Company holds investments COMPLIANCE WITH THE AIC CODE and the Board will meet with investee companies and During the year ended 30 June 2022, the Company local experts. complied with the recommendations of the AIC Code The Board has direct access to the advice and services and the relevant provisions of the UK Code, except of the Company Secretary, who is an employee of those relating to: ICM. The Company Secretary, with advice from the • the role of the chief executive; Company’s lawyers and financial advisers, is responsible for ensuring that the Board and Committee procedures • executive directors’ remuneration; are followed and that applicable rules and regulations • the need for an internal audit function; are complied with. The Company Secretary is also • nomination of a senior independent director; and responsible to the Board for ensuring timely delivery of information and reports and that the statutory • membership of the Audit & Risk Committee by the obligations of the Company are met. The Company Chairman of the Board. Secretary is responsible for advising the Board, through For the reasons set out in the AIC Code and as the Chairman, on all governance matters. explained in the UK Code, the Board considers these There is an agreed procedure for Directors, in the provisions are not relevant to the position of UIL, being furtherance of their duties, to take legal advice at the an externally managed investment company. The Board Company’s expense, having first consulted with the is composed entirely of non-executive directors and Chairman. Report and Accounts for the year to 30 June 2022 51 ## CORPORATE GOVERNANCE STATEMENT (continued) During the year, none of the Directors took on any company updates if there were significant movements significant new commitments or appointments. All of in the intervening period. the Directors consider that they have sufficient time to The Management Engagement Committee also discharge their duties. considers the effectiveness of the administration There were three Board meetings, three Audit & services provided by the Investment Managers and Risk Committee meetings and one Management Administrator and the performance of other third Engagement Committee meeting held during the year party service providers. In this regard the Committee and the attendance by the Directors was as follows: assessed the services provided by the Investment Managers, the Administrator and the other service Management providers to be good. Audit & Risk Engagement Board Committee Committee REMUNERATION COMMITTEE Number of scheduled meetings held during The Board as a whole undertakes the work which the year 3 3 1 would otherwise be undertaken by a Remuneration Peter Burrows 3 3 1 Committee. Further details are provided in the Directors’ Remuneration Report starting on page 57. Stuart Bridges 3 3 1 INTERNAL CONTROLS Alison Hill 3 3 1 The Directors acknowledge that they are responsible Christopher Samuel 3 3 1 for ensuring that the Company maintains a sound system of internal financial and non-financial controls David Shillson 3 n/a n/a (“internal controls”) to safeguard shareholders’ investments and the Company’s assets. Apart from the meetings detailed above, there were a number of meetings held by committees of the Board The Company’s system of internal control is designed to discuss investment performance, approve the to manage rather than eliminate risk of failure to declaration of quarterly dividends and other ad hoc achieve the Company’s investment objective and/ items. or adhere to the Company’s investment policy and/ or investment limits. The system can therefore only AUDIT & RISK COMMITTEE provide reasonable and not absolute assurance The Audit & Risk Committee comprises all the against material misstatement or loss. independent Directors of the Company and is chaired The Investment Managers, Administrator and by Mr Bridges. Further details of the Audit & Risk Custodian maintain their own systems of internal Committee are provided in its report starting on controls and the Board and the Audit & Risk page 60. Committee receive regular reports from these service providers. MANAGEMENT ENGAGEMENT COMMITTEE The Management Engagement Committee, which is The Board meets regularly, at least three times a year. currently chaired by Mr Bridges, comprises all the It reviews financial reports and performance against independent Directors of the Company and meets at relevant stock market criteria and the Company’s peer least once a year. group, amongst other things. The effectiveness of the Company’s system of internal controls, including The Investment Managers’ performance is considered financial, operational and compliance and risk by the Board at every meeting, with a formal evaluation management systems is reviewed at least bi-annually by the Management Engagement Committee annually. against risk parameters approved by the Board. The The Board received detailed reports and views from Board confirms that the necessary actions are taken to the Investment Managers on investment policy, asset remedy any significant failings or weaknesses identified allocation, gearing and risk at each Board meeting in from its review. No significant failings or weaknesses the year ended 30 June 2022, with ad hoc market/ 52 UIL Limited occurred during the year ended 30 June 2022 or processes of the Company and the management of the subsequently up to the date of this report. Company by the Chairman, the Investment Managers, the Company Secretary and other appropriate BOARD DIVERSITY, APPOINTMENT, RE-ELECTION persons. All appointments are subject to subsequent AND TENURE confirmation by shareholders in general meeting. The Board as a whole undertakes the responsibilities BOARD, COMMITTEE AND DIRECTORS’ which would otherwise be assumed by a nomination PERFORMANCE APPRAISAL committee since the Board is composed solely of non-executive Directors. It considers the size and The Directors recognise the importance of the AIC structure of the Board, including the balance of Code’s recommendations in respect of evaluating expertise and skills brought by individual Directors. It the performance of the Board, the Committees has regard to board diversity and recognises the value and individual Directors. This encompasses both of progressive refreshing of and succession planning quantitative and qualitative measures of performance for, company boards and such matters are discussed including: by the Board as a whole at least annually. The Board • attendance at meetings; also seeks to have Directors in different jurisdictions who understand the key influences on businesses • the independence of individual Directors; in their area, whether they are economic, political, • the ability of Directors to make an effective regulatory or other issues. The Board’s policy on contribution to the Board and Committees through diversity, including gender, is to take this into account the range and diversity of skills and experience each during the recruitment process. Any new appointment Director brings to their role; and is considered on the basis of the skills and experience • the Board’s ability to challenge the Investment that the individual would bring to the Board, regardless Managers’ recommendations, suggest areas of of gender or other forms of diversity, and therefore no debate and set the future strategy of the Company. targets have been set against which to report. As at the date of this report, the Board consists of four men The Board opted to conduct performance evaluation and one woman. through questionnaires and discussion between the Directors, the Chairman and the chairmen The Board is of the view that length of service does of the Committees. This process is conducted by not necessarily compromise the independence or the Chairman reviewing individually with each of contribution of directors of an investment company, the Directors their performance, contribution and where continuity and experience can add significantly commitment to the Company and the possible further to the strength of the Board. This is supported by the development of skills. In addition, the Chair of the views on independence expressed in the AIC Code. Audit & Risk Committee reviews the performance of No limit on the overall length of service of any of the the Chairman with the other Directors, taking into Company’s Directors, including the Chairman, has account the views of the Investment Managers. The been imposed. All Directors are subject to annual re- relevant points arising from these meetings are then election. reported to, and discussed by, the Board as a whole. The Board reviews succession planning at least This process has been carried out in respect of the annually. Appointments of new Directors will be made year under review and will be conducted on an annual on a formalised basis with the Chairman agreeing, in basis. The result of this year’s performance evaluation conjunction with his colleagues, a job specification process was that the Board, the Committees of the and other relevant selection criteria and the methods Board and the Directors individually were all assessed of recruitment (where appropriate using an external to have performed satisfactorily. No follow-up actions recruitment agency), selection and appointment. The were required. potential Director would meet with Board members It is not felt appropriate currently to employ the prior to formal appointment. An induction process services of, or to incur the additional expense of, an will be undertaken, with new appointees to the external third party to conduct the evaluation process Board being given a full briefing on the workings and Report and Accounts for the year to 30 June 2022 53 ## CORPORATE GOVERNANCE STATEMENT (continued) as an appropriate process is in place; this will, however, annual financial reports, factsheets and regulatory be kept under review. announcements. The Investment Managers hold meetings with the RELATIONS WITH SHAREHOLDERS Company’s largest shareholders and report back UIL welcomes the views of shareholders and to the Board on these meetings. The Chairman and places great importance on communication with other Directors are available to discuss any concerns shareholders. with shareholders, if required and shareholders may The prime medium by which the Company communicate with the Company at any time by writing communicates with shareholders is through the to the Board at the Company’s registered office or half-yearly and annual financial reports, which aim contacting the Company’s broker. to provide shareholders with a full understanding of the Company’s activities and its results. This information is supplemented by the calculation and publication, via a Regulatory Information Service, of By order of the Board the NAV of the Company’s shares and by monthly ICM Limited fact sheets produced by the Investment Managers. Company Secretary Shareholders can visit the Company’s website: www. 21 September 2022 uil.limited in order to access copies of half-yearly and ## Since inception, UIL has created a NAV total return ## for shareholders of 459.6% 54 UIL Limited CAPITAL STRUCTURE ## UIL has a leveraged balance sheet structure, with the ordinary shares leveraged by the ZDP shares and bank debt. ### ORDINARY SHARES The number of ordinary shares in issue, and the voting rights, as at 30 June 2022 was 83,842,918 shares. The ordinary shares are entitled to all the revenue profits of the Company available for distribution and resolved to be distributed by the Directors by way of a dividend. The Directors consider the payment of dividends on a quarterly basis. On a winding up, holders of ordinary shares will be entitled, after payment of all debts and the satisfaction of all liabilities of the Company, to the winding up revenue profits of the Company and thereafter, after paying to UIL Finance for its ZDP shareholders their accrued capital entitlement, to all the remaining assets of the Company. ### ZDP SHARES The ZDP shares are issued by UIL Finance, a wholly-owned subsidiary of UIL. The ZDP shares carry no entitlement to income and the whole of any return will take the form of capital. ### 2022 ZDP SHARES 35,569,069 2022 ZDP shares were in issue as at 30 June 2022. The 2022 ZDP shares rank for payment in priority to the ordinary shares (save for any undistributed revenue profit on winding up) and the 2024, 2026 and 2028 ZDP shares but rank behind the bank debt for capital repayment of 146.99p per 2022 ZDP share on 31 October 2022. The capital repayment is equivalent to a redemption yield of 6.25% per annum based on the initial capital entitlement of 100.00p. ### 2024 ZDP SHARES 30,000,000 2024 ZDP shares were in issue as at 30 June 2022. The 2024 ZDP shares rank for payment in priority to the ordinary shares (save for any undistributed revenue profit on winding up) and the 2026 and 2028 ZDP shares but rank behind the bank debt and the 2022 ZDP shares for capital repayment of 138.35p per 2024 ZDP share on 31 October 2024. The capital repayment is equivalent to a redemption yield of 4.75% per annum based on the initial capital entitlement of 100.00p. ### 2026 ZDP SHARES 25,000,000 2026 ZDP shares were in issue as at 30 June 2022, of which 2,309,620 were held by UIL. The 2026 ZDP shares rank for payment in priority to the ordinary shares (save for any undistributed revenue profit on winding up) and the 2028 ZDP shares but rank behind the bank debt, and the 2022 and 2024 ZDP shares for capital repayment of 151.50p per 2026 ZDP share on 31 October 2026. The capital repayment is equivalent to a redemption yield of 5.00% per annum based on the initial capital entitlement of 100.00p. ### 2028 ZDP SHARES 25,000,000 2028 ZDP shares were in issue as at 30 June 2022, of which 583,735 were held by UIL. The 2028 ZDP shares rank for payment in priority to the ordinary shares (save for any undistributed revenue profit on winding up) but rank behind the bank debt, and the 2022, 2024 and 2026 ZDP shares for capital repayment of 152.29p per 2028 ZDP share on 31 October 2028. The capital repayment is equivalent to a redemption yield of 5.75% per annum based on the initial capital entitlement of 100.00p. ### BANK DEBT As at 30 June 2022, UIL had a £50.0m multi-currency loan facility provided by Scotiabank, secured against the Company's assets by way of a debenture, which was fully drawn. ### SENSITIVITY OF RETURNS AND RISK PROFILES Ordinary shares rank behind the ZDP shares (save for any undistributed revenue profit on a winding up) and bank debt such that they represent a geared instrument. For every £100 of gross assets of the Company as at 30 June 2022, the ordinary shares could be said to be interested in £53.26 of those assets after deducting the prior claims as above. This makes the Report and Accounts for the year to 30 June 2022 55 ## CAPITAL STRUCTURE (continued) ordinary shares more sensitive to movements in gross ZDP shares would not receive their final entitlement assets. Based on these amounts, a 1.0% movement in full. Should gross assets fall by 74.3%, equivalent in gross assets would change the NAV attributable to to an annual fall of 44.1%, the 2024 ZDP shares would ordinary shares by 1.9%. receive no payment at the end of their life. The interest cost of UIL’s bank debt, combined with the Based on their final entitlement of 151.50p per share, annual accruals in respect of ZDP shares, represents a the final entitlement of the 2026 ZDP shares was blended rate of 4.7% as at 30 June 2022. covered 2.23 times by gross assets as at 30 June 2022. Should the gross assets fall by 55.2% over the Based on their final entitlement of 146.99p per share, remaining life of the 2026 ZDP shares, then the 2026 the final entitlement of the 2022 ZDP shares was ZDP shares would not receive their final entitlement in covered 3.89 times by gross assets as at 30 June full. Should gross assets fall by 64.3%, equivalent to an 2022. Should the gross assets fall by 74.3% over the annual fall of 21.1%, the 2026 ZDP shares would receive remaining life of the 2022 ZDP shares, then the 2022 no payment at the end of their life. ZDP shares would not receive their final entitlement in full. Should gross assets fall by 86.9%, the 2022 ZDP Based on their final entitlement of 152.29p per share, shares would receive no payment at the end of their the final entitlement of the 2028 ZDP shares was life. covered 1.85 times by gross assets as at 30 June 2022. Should the gross assets fall by 46.0% over the Based on their final entitlement of 138.35p per share, remaining life of the 2028 ZDP shares, then the 2028 the final entitlement of the 2024 ZDP shares was ZDP shares would not receive their final entitlement in covered 2.80 times by gross assets as at 30 June full. Should gross assets fall by 55.2%, equivalent to an 2022. Should the gross assets fall by 64.3% over the annual fall of 11.9%, the 2028 ZDP shares would receive remaining life of the 2024 ZDP shares, then the 2024 no payment at the end of their life. SPLIT OF GROSS ASSETS CONSOLIDATED FUNDING COST STRUCTURE as at 30 June 2022 as at 30 June 2022 6.25% by value 5.75% by percentage 5.00% 4.75% 4.74% £218.7m Ordinary shares 53.26% 2.59% | £25.2m | 2028 ZDP shares | 6.14% | 2022 | 2024 | 2026 | 2028 | Blended | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | ZDP | ZDP | ZDP | ZDP | cost of | | £27.6m | 2026 ZDP shares | 6.72% | | | | | | | | | | shares | shares | shares | shares | prior | | £36.8m | 2024 ZDP shares | 8.96% | | | | | charges | to £51.2m 2022 ZDP shares 12.47% ordinary Bank shares loans £51.1m Bank loans 12.45% 56 57 UIL Limited Report and Accounts for the year to 30 June 2022 ## DIRECTORS’ REMUNERATION REPORT The Board presents the report on Directors’ The fees are fixed and are payable in cash, quarterly remuneration for the year ended 30 June 2022. The in arrears. Directors are entitled to be reimbursed for report comprises a remuneration policy, which is any reasonable expenses properly incurred by them subject to a triennial binding shareholder vote, or in connection with the performance of their duties sooner if an alteration to the policy is proposed, and a and attendance at Board and general meetings and report on remuneration, which is subject to an annual Committee meetings. Directors are not eligible for advisory vote. An ordinary resolution for the approval bonuses, pension benefits, share options, long-term of this report will be put to shareholders at the incentive schemes or other benefits. Company’s forthcoming AGM. Where certain parts of Directors are provided with a letter of appointment the disclosures provided have been audited, they are when they join the Board. There is no provision for indicated as such. The auditor’s opinion is included in compensation upon early termination of appointment. their report starting on page 64. The letters of appointment are available on request at The Board’s policy on remuneration is set out below. the Company’s registered office during business hours. A key element is that fees payable to Directors should reflect the time spent by them on the Company’s DIRECTORS’ REMUNERATION affairs and should be sufficient to attract and retain The Board reviews the fees payable to the Chairman individuals with suitable knowledge and experience and Directors annually. The review in respect of the to promote the long term success of the Company year ending 30 June 2023 has resulted in the increases whilst also reflecting the time commitment and being applied to the annual fees as detailed in the responsibilities of the role. There were no changes to table below. the policy during the year. | | | 2023 | 2022 | * | | --- | --- | --- | --- | --- | | The Board is composed solely of non-executive | Year ending 30 June | £’000s | £’000s | | | Directors, none of whom has a service contract | Chairman 50.0 47.6 | | | | with the Company and therefore no remuneration Directors 37.0 35.2 committee has been appointed. The Board as a whole Chairman of Audit & Risk Committee 47.8 45.5 undertakes the responsibilities which would otherwise * Actual be assumed by a remuneration committee. DIRECTORS’ REMUNERATION POLICY VOTING AT ANNUAL GENERAL MEETING The Board considers the level of the Directors fees A resolution to approve the Remuneration Report was at least annually. The Board determines the level of put to shareholders at the AGM of the Company held Directors’ fees within the limit currently set by the on 10 November 2021. Of the votes cast, 99.99% were Company’s Bye-laws, which limit the aggregate fees in favour and 0.01% were against; this resolution will payable to the Directors to a total of £250,000 per be put to shareholders again this year. The Company annum. seeks shareholder approval for its remuneration policy on a triennial basis and a binding resolution was last The Board’s policy is to set Directors’ remuneration at put to shareholders at the AGM held on 8 December a level commensurate with the skills and experience 2020. Of the votes cast, 99.98% were in favour and necessary for the effective stewardship of the 0.02% were against. A resolution to approve the Company and the expected contribution of the Board remuneration policy will be put to shareholders at the as a whole in continuing to achieve the investment AGM to be held in 2023. objective. Time committed to the Company’s business and the specific responsibilities of the Chairman, Directors and the chairman of the Audit & Risk Committee are taken into account. The policy aims to be fair and reasonable in relation to comparable investment companies. 56 57 UIL Limited Report and Accounts for the year to 30 June 2022 Report and Accounts for the year to 30 June 2022 57 ## DIRECTORS’ REMUNERATION REPORT ## (continued) DIRECTORS’ ANNUAL REPORT ON REMUNERATION RELATIVE IMPORTANCE OF SPEND ON PAY (AUDITED) The following table compares the remuneration A single figure for the total remuneration of each paid to the Directors with aggregate distributions Director is set out in the table below for the year paid to shareholders relating to the year to 30 June ended 30 June 2022. 2022 and the prior year. Although this disclosure is a statutory requirement, the Directors consider that Year ended 2022 2021 30 June £ £ comparison of Directors’ remuneration with annual dividends and share buybacks does not provide a Peter Burrows 47,600 46,000 meaningful measure relative to the Company’s overall Stuart Bridges 45,500 44,000 performance as an investment company with an Alison Hill 35,200 34,000 objective of providing shareholders with long-term Christopher Samuel 35,200 34,000 total return. David Shillson 35,200 34,000 Year ended 2022 2021 CHANGE Total 198,700 192,000 30 June £’000s £’000s £’000s Aggregate Directors’ | ANNUAL PERCENTAGE CHANGE IN DIRECTORS’ | emoluments 199 192 7 | | --- | --- | | REMUNERATION | Aggregate dividends 6,714 6,813 (99) | | The following table sets out the annual percentage | Aggregate share buybacks 1,227 3,623 (2,396) | change in Directors’ remuneration compared to the previous year. DIRECTORS’ BENEFICIAL SHARE INTERESTS Year ended 2022 2021 2020 (AUDITED) 30 June % % % The Directors’ (and any connected persons) holdings of (1) Peter Burrows 3.5 100.0 (48.9) ordinary shares are detailed below: Stuart Bridges 3.4 0.0 2.3 Alison Hill 3.5 0.0 2.3 As at 30 June 2022 2021 Christopher Samuel 3.5 0.0 2.3 Peter Burrows 909,617 909,617 David Shillson 3.5 0.0 2.3 Stuart Bridges 159,736 136,937 (1) Alison Hill 99,254 81,619 Mr Burrows waived 50% of his fee entitlement during the year ended 30 June 2020. Christopher Samuel 219,998 212,991 David Shillson 141,812 123,109 (1) Since the year end, no Director has acquired or sold any ordinary shares 58 59 UIL Limited Report and Accounts for the year to 30 June 2022 ## COMPANY PERFORMANCE The graph below compares, for the ten years ended 30 June 2022, the ordinary share price total return (see page 108) to the FTSE All-Share total return Index. The FTSE All-Share total return Index has been chosen since it represents a comparable broad equity market index and it is used by the Company to compare its performance against over the long term. ### SHARE PRICE TOTAL RETURN (pence) from 30 June 2012 to 30 June 2022 (rebased to 100 as at 30 June 2012) ![img-5.jpeg](img-5.jpeg) Source: ICM On behalf of the Board **Peter Burrows** Chairman 21 September 2022 Report and Accounts for the year to 30 June 2022 59 ## AUDIT & RISK COMMITTEE REPORT As chairman of the Audit & RESPONSIBILITIES AND REVIEW OF THE EXTERNAL Risk Committee, I am pleased AUDIT to present the Committee’s During the year the principal activities of the Audit & report to shareholders for the Risk Committee included: year ended 30 June 2022. • considering and recommending to the Board for approval the contents of the half yearly and annual ROLE AND RESPONSIBILITIES financial statements and reviewing the external UIL has established a auditor’s report; separately chaired Audit & Risk Committee whose duties • management of the relationship with the external STUART BRIDGES include considering and auditor, including its appointment and the Chairman of the Audit & Risk Committee recommending to the Board evaluation of scope, execution, cost effectiveness, for approval the contents of independence and objectivity; the half yearly and annual financial statements and • reviewing and approving the external auditors’ providing an opinion as to whether the annual report plan for the financial year, with a focus on the and accounts, taken as a whole, are fair, balanced identification of areas of audit risk, and consideration and understandable and provide the information of the appropriateness of the level of audit necessary for shareholders to assess the Company’s materiality adopted; performance, business model and strategy. The Committee also reviews the external Auditors’ • reviewing and recommending to the Board for report on the annual financial statements and is approval the audit and non-audit fees payable to the responsible for reviewing and forming an opinion external auditor and the terms of its engagement; on the effectiveness of the external audit process • evaluation of reports received from the external and audit quality. Other duties include reviewing the auditor with respect to the annual financial appropriateness of the Company’s accounting policies statements and its review of the half-yearly report; and ensuring the adequacy of the internal control • reviewing the efficacy of the external audit process systems and standards. and making a recommendation to the Board with The Audit & Risk Committee meets at least three times respect to the reappointment of the external a year. Two of the planned meetings are held prior auditors; to the Board meetings to review the half yearly and • evaluation of the effectiveness of the internal annual results. Representatives of the Investment control and risk management systems including Managers attend all meetings. reports received on the operational controls of the COMPOSITION Company’s service providers and reports from the Company’s depositary; During the year ended 30 June 2022, the Audit & Risk Committee consisted of all the independent Directors • reviewing the appropriateness of the Company’s of the Company. It is considered that there is a range of accounting policies; and recent and relevant financial experience amongst the • monitoring developments in accounting and members of the Audit & Risk Committee together with reporting requirements that impact on the experience of the investment trust sector. In light of Company’s compliance with relevant statutory and the Chairman of the Board’s relevant financial services listing requirements. experience, his continued independence and his valued contributions in Committee meetings, the Audit AUDITOR AND AUDIT TENURE & Risk Committee considers it appropriate that he is a KPMG LLP (“KPMG”) has been the auditor of the member. Company since 2012, following a competitive tender process. The Audit & Risk Committee decides when it is appropriate to put the role of auditor out to tender. 60 61 UIL Limited Report and Accounts for the year to 30 June 2022 The audit partner has rotated regularly. Mr John The partner and manager of the audit team at Waterson was appointed the lead audit partner in KPMG presented their audit plan to the Audit & Risk 2020. The Audit & Risk Committee has considered the Committee in advance of the financial year end. Items independence of the auditor and the objectivity of the of audit focus were discussed, agreed and given audit process and is satisfied that KPMG has fulfilled its particular attention during the audit process. KPMG obligations to shareholders as independent auditor to reported to the Audit & Risk Committee on these the Company. items, their independence and other matters. This report was considered by the Audit & Risk Committee It is the Company’s policy not to seek substantial non- and discussed with KPMG and the Investment audit services from its auditor unless they relate to a Managers prior to approval of the annual financial review of the half yearly report as the Board considers report. the auditor is best placed to provide this work. If the provision of significant non-audit services were to Members of the Audit & Risk Committee meet in be considered, the Committee would procure such camera with the external auditor at least annually. services from an accountancy firm other than the auditor. Non-audit fees paid to KPMG by the Company ACCOUNTING MATTERS AND SIGNIFICANT AREAS amounted to £12,000 for the year ended 30 June 2022 For the year ended 30 June 2022 the accounting (2021: £10,000) and related to the agreed procedures matters that were subject to specific consideration on the half yearly accounts. The Committee has by the Audit & Risk Committee and consultation with considered the threats to independence from the KPMG where necessary were as follows: provision of this service and concluded that since appropriate safeguards exist there is no impact to auditor independence. SIGNIFICANT AREA HOW ADDRESSED Value of level 3 Investments that are classified as level 3 are valued using a variety of techniques to investments determine a fair value, as set out in note 1(d) to the accounts. All such valuations are carefully reviewed by the Audit & Risk Committee with the Investment Managers. The Audit & Risk Committee receives detailed information on all level 3 investments and it discusses and challenges the valuations with the Investment Managers. It considers market comparables and discusses any proposed revaluations with the Investment Managers. The Audit & Risk Committee reviewed the external information necessary for shareholders to assess the audit plan at an early stage and concluded that the Company’s performance, business model and strategy. appropriate areas of audit risk relevant to the Company In reaching this conclusion, the Audit & Risk Committee had been identified and that suitable audit procedures has assumed that the reader of the report would have had been put in place to obtain reasonable assurance a reasonable level of knowledge of investments. that the financial statements as a whole would be free of material misstatements. EXTERNAL AUDIT, REVIEW OF ITS EFFECTIVENESS AND AUDITOR REAPPOINTMENT As a result, and following a thorough review process, The Audit & Risk Committee advises the Board on the the Audit & Risk Committee advised the Board that appointment of the external auditor, its remuneration it is satisfied that, taken as a whole, the annual for audit and non-audit work and its cost effectiveness, financial report for the year ended 30 June 2022 is independence, and objectivity. fair, balanced, and understandable and provides the 60 61 UIL Limited Report and Accounts for the year to 30 June 2022 ## AUDIT & RISK COMMITTEE REPORT (continued) As part of the review of the effectiveness of the audit management, which continue to serve as an effective process, a formal evaluation process incorporating tool to highlight and monitor the principal risks, details views from the members of the Audit & Risk of which are provided in the Strategic Report. It also Committee and relevant personnel at the Investment received and considered, together with representatives Managers is followed and feedback is provided to of the Investment Managers, reports in relation to KPMG. Areas covered by this review include: the operational controls of the Investment Managers, Administrator and Custodian. These reviews identified • the calibre of the audit firm, including reputation and no issues of significance. industry presence; • the extent of quality controls including review WHISTLEBLOWING POLICY processes, second director oversight and annual The Committee has also reviewed and accepted the reports from its regulator; ‘whistleblowing’ policy that has been put in place by the Investment Managers under which their staff, • the performance of the audit team, including in confidence, can raise concerns about possible skills of individuals, specialist knowledge, partner improprieties in matters of financial reporting or other involvement, team member continuity and quality matters, in so far as they affect the Company. and timeliness of audit planning and execution; • audit communication including planning, relevant INTERNAL AUDIT accounting and regulatory developments, approach Due to the nature of the Company, being an externally to significant accounting risks, communication of managed investment company with no executive audit results and recommendations on corporate employees, the Company does not have its own reporting; internal audit function. The Committee and the Board • ethical standards including independence and have concluded that there is no current need for such integrity of the audit team, lines of communication a function, based on the satisfactory operation of to the Audit & Risk Committee and partner rotation; controls within the Company’s service providers. and • reasonableness of the audit fees. For the year ended 30 June 2022, the Audit & Risk Stuart Bridges Committee is satisfied that the audit process was Chairman of the Audit & Risk Committee effective. 21 September 2022 Resolutions proposing the reappointment of KPMG as the Company’s auditor and authorising the Directors to determine its remuneration will be put to the shareholders at the forthcoming AGM. INTERNAL CONTROLS AND RISK MANAGEMENT UIL’s risk assessment focus and the way in which significant risks are managed is a key area of focus for the Audit & Risk Committee. Work here was driven by the Audit & Risk Committee’s assessment of the risks arising in the Company’s operations and identification of the controls exercised by the Board and its delegates, the Investment Managers, the Administrator and other service providers. These are recorded in risk matrices prepared by ICMIM as the Company’s AIFM with responsibility for risk 62 63 UIL Limited Report and Accounts for the year to 30 June 2022 ## STATEMENT OF DIRECTORS’ RESPONSIBILITIES ## in respect of the Annual Report and Financial Statements The Directors are responsible for preparing the Annual Groups (Accounts and Reports) Regulations 2008 made Report and the Group and parent Company Accounts in under the UK Companies Act 2006, as if those requirements accordance with applicable law and regulations. applied to the Company. The Directors have also decided to prepare voluntarily a Corporate Governance Statement The Directors are required to prepare Group and parent under the UK Corporate Governance Code as if the Company financial statements for each financial year. They Company were required to comply with the Listing Rules of have elected to prepare the Group financial statements the Financial Conduct Authority applicable to UK premium in accordance with UK adopted International Accounting listed companies. Standards and applicable law and have elected to prepare the parent Company financial statements on the same basis. In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial statements will form part of the The Directors must not approve the financial statements annual financial report prepared using the single electronic unless they are satisfied that they give a true and fair view reporting format under the TD ESEF Regulation. The of the state of affairs of the Group and parent Company and auditor’s report on these financial statements provides no of their profit or loss for that period. In preparing each of assurance over the ESEF format. the Group and parent Company financial statements, the Directors are required to: The Directors are responsible for the maintenance and integrity of the corporate and financial information included • select suitable accounting policies and then apply them on the Company’s website. Legislation in the UK and consistently; Bermuda governing the preparation and dissemination of financial statements may differ from legislation in other • make judgements and estimates that are reasonable, jurisdictions. relevant and reliable; • state whether they have been prepared in accordance RESPONSIBILITY STATEMENT OF THE DIRECTORS IN with UK adopted International Accounting Standards; RESPECT OF THE ANNUAL FINANCIAL REPORT • assess the Group and parent Company’s ability to We confirm that to the best of our knowledge: continue as a going concern, disclosing, as applicable, matters related to going concern; and • the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair • use the going concern basis of accounting unless they view of the assets, liabilities, financial position and profit or either intend to liquidate the Group or the parent loss of the Company and the undertakings included in the Company or to cease operations or have no realistic consolidation taken as a whole; and alternative but to do so. • the Strategic Report and Directors’ Report include a The Directors are responsible for keeping adequate fair review of the development and performance of accounting records that are sufficient to show and explain the business and the position of the Company, and the the parent Company’s transactions and disclose with undertakings included in the consolidation taken as a reasonable accuracy at any time the financial position of whole, together with a description of the principal risks the parent Company and enable them to ensure that its and uncertainties that they face. financial statements comply with the Companies Act 1981 of Bermuda. They are responsible for such internal control We consider the annual report and accounts, taken as a as they determine is necessary to enable the preparation whole, is fair, balanced, and understandable and provides of financial statements that are free from material the information necessary for shareholders to assess the misstatement, whether due to fraud or error, and have Group’s position and performance, business model and general responsibility for taking such steps as are reasonably strategy. open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Approved by the Board and signed on its behalf by: Peter Burrows The Directors have decided to prepare voluntarily a Chairman Directors’ Remuneration Report in accordance with 21 September 2022 Schedule 8 to The Large and Medium-sized Companies and 62 63 UIL Limited Report and Accounts for the year to 30 June 2022 Report and Accounts for the year to 30 June 2022 63 KPMG # Independent auditor's report to the members of UIL Limited 1. Our opinion is unmodified We have audited the financial statements of UIL Limited ("the Company") for the year ended 30 June 2022 which comprise the Group and Company Income Statements, Group and Company Statements of Changes in Equity, Group and Company Statements of Financial Position, Group and Company Statements of Cash Flows, and the related notes, including the accounting policies in note 1. In our opinion the financial statements: - give a true and fair view of the state of the Group's and of the parent Company's affairs as at 30 June 2022 and of the Group's and Parent Company's loss for the year then ended; and - have been properly prepared in accordance with UK-adopted international accounting standards. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee. We were first appointed by the Shareholders as auditor for the year ended 30 June 2013. The period of total uninterrupted engagement is for the ten financial years ended 30 June 2022. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to other listed entities. Overview | **Materiality:** group financial statements as a whole | £4.1m (2021:£5.4m) 1% (2021: 1%) of group total assets | | --- | --- | | **Coverage** | 100% (2021:100%) of group total assets | Key audit matters vs 2021 Recurring risks Valuation of certain specific level 3 investments 64 2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matter, in arriving at our audit opinion above, together with our key audit procedures to address this matter, and as required for public interest entities, our results from those procedures. This matter was addressed, and our results are based on procedures undertaken, in the context of and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter. The risk Our response Valuation of certain Level 3 Subjective valuation: We performed the tests below rather than seeking investments – Group and Company to rely on any of the Company’s controls, because Valuation of unlisted investments is an key audit matter the nature of the balance is such that we would inherently judgemental area, and we have expect to obtain audit evidence primarily through (Certain specific investments within assessed that certain of the unlisted the detailed procedures described below: the total of level 3 investment of investments are subject to significant risk £238.9 m; 2021: £322.9 m) over the judgements and estimates inherent Our procedures included: in the valuations. The quantum of the Historical comparisons: We assessed investment investments subject to the significant risk is Refer to page 61 (Audit & Risk realisations in the period where relevant, £221.1m out of a total unlisted investment Committee Report), pages 77 and 78 comparing: (i) repayments of debt investments to balance of £238.9m (4 of 23 investments). | (accounting policy) and pages 83,84 | | repayment timeline expectations previously | | --- | --- | --- | | and 101 to 103 (financial disclosures). | The factors considered in assessing which | communicated by management; and (ii) current | | | unlisted investments were subject to | year fair values to management narrative of | | | significant risk included the quantum of the | expectations communicated in previous periods, to | | | individual investment, performance of the | understand the reasons for significant variances and | | | investment, nature of the asset held as well | to determine whether they were indicative of bias | | | as the estimation uncertainty of the | or error in the approach to valuations. A | | | methodology and inputs used. | retrospective review of prior period audited | accounts, in comparison to prior period Unlisted investments are measured at fair management accounts included as key inputs to value, which is established in accordance valuations was also undertaken to assess the with the International Private Equity and accuracy of management information provided. Venture Capital Valuation Guidelines, by using measurements of value such as Methodology choice: In the context of observed discounted cashflows, prices of recent industry best practice and the provisions of the orderly transactions, earnings multiples, and International Private Equity and Venture Capital net assets. Valuation Guidelines, we challenged the appropriateness of the valuation basis selected. The financial statements note 29 discloses the range/sensitivity estimated by the Group. 65 2. Key audit matters: our assessment of risks of material misstatement (cont.) The risk Our response **Our valuation experience:** We challenged the investment manager on key judgements affecting investee company valuations, such as discount factors and the choice of benchmark for earnings multiples. We compared key underlying financial data inputs to external sources, investee company audited accounts and management information as applicable. We challenged the assumptions around sustainability of earnings based on the plans of the investee companies and whether these are achievable and we obtained an understanding of existing and prospective investee company cashflows to understand whether borrowings can be serviced or whether refinancing may be required. Our work included consideration of events which occurred subsequent to the year end up until the date of this audit report. **Comparing valuations:** Where a recent transaction has been used to value a holding, we obtained an understanding of the circumstances surrounding the transaction and whether it was considered to be on an arms-length basis and suitable as an input into a valuation. We also assessed whether subsequent changes post sale or events such as market or entity specific factors would imply a change in value. For the valuation of fund interests and other investment companies where share of NAV is the practical expedient, we obtained and agreed the latest reported net asset values from the fund managers; and **Assessing transparency:** We considered the appropriateness, in accordance with relevant accounting standards, of the disclosures in respect of level 3 investments and the effect of changing one or more inputs to reasonably possible alternative valuation assumptions. **Our results:** We found the Group's and Company's valuation of certain specific Level 3 investments to be acceptable (2021: acceptable). 66 ### 3. Our application of materiality and an overview of the scope of our audit Materiality for the Group financial statements as a whole was set at £4.1m (2021: £5.4m), determined with reference to a benchmark of total assets of which it represents 1% (2021: 1%). In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. Performance materiality was set at 65% (2021: 65%) of materiality for the financial statements as a whole, which equates to £2.66m (2021: £3.5m). We applied this percentage in our determination of performance materiality based on the level of identified misstatements during the prior year audit. In addition, we applied materiality of £0.35m (2021: £0.42 million) and performance materiality of £0.26m (2021: £0.32m) to investment and other income for which we believe misstatements of lesser amounts than materiality for the financial statements as a whole could be reasonably be expected to influence the Company's members' assessment of the financial performance of the Group. Materiality for the parent company financial statements as a whole was set at £4m (2021: £5.3 m). This is lower than the materiality we would otherwise have determined with reference to Parent Company's total assets, of which it represents 0.95% of the Parent Company's total assets (2021: 0.97%). Performance materiality was set at 65% (2021: 65%) of materiality for the financial statements as a whole, which equates to £2.6m (2021: £3.4m) for the parent company. We applied this percentage in our determination of performance materiality based on the level of identified misstatements during the prior year audit. We agreed to report to the Audit & Risk Committee any corrected or uncorrected identified misstatements exceeding £0.21m (2021: £0.27m) for the Group, £0.20m (2021: £0.25 million) for the Company, or £0.02m in relation to Investment and other income (2021: £0.02m), in addition to other identified misstatements that warranted reporting on qualitative grounds. Of the group's 2 (2021: 2) reporting components, we subjected 2 (2021: 2) to full scope audits for group purposes. The audit was performed using the materiality and performance materiality level set out above The scope of the audit work performed was fully substantive as we did not rely upon the Group's internal control over financial reporting. Total Assets £417.5m (2021: £545.8m) ![img-6.jpeg](img-6.jpeg) KPMG 67 4. Going concern 5. Fraud and breaches of laws and regulations – ability to detect The Directors have prepared the financial statements on the Identifying and responding to risks of material misstatement due going concern basis as they do not intend to liquidate the Group to fraud or the Company or to cease their operations, and as they have To identify risks of material misstatement due to fraud (“fraud concluded that the Group and the Company’s financial position risks”) we assessed events or conditions that could indicate an means that this is realistic. They have also concluded that there incentive or pressure to commit fraud or provide an opportunity are no material uncertainties that could have cast significant to commit fraud. Our risk assessment procedures included: doubt over their ability to continue as a going concern for at least — Enquiring of Directors as to the Group and Company’s high- a year from the date of approval of the financial statements (“the level policies and procedures to prevent and detect fraud, as going concern period”). well as whether they have knowledge of any actual, suspected or alleged fraud; We used our knowledge of the Group and the Company, its industry, and the general economic environment to identify the — Assessing the segregation of duties in place between the inherent risks to its business model and analysed how those risks Directors, the Administrator and the Group and Company’s might affect the Group’s and Company’s financial resources or Investment Manager; and ability to continue operations over the going concern period. The — Reading Board and Audit and Risk Committee minutes. risks that we considered most likely to adversely affect the We communicated identified fraud risks throughout the audit Group’s and Company’s available financial resources and its team and remained alert to any indications of fraud throughout ability operate over this period were; the audit. — The impact of a significant reduction in the valuation of investments and the implications for the Group and As required by auditing standards, we perform procedures to Company’s debt covenants; address the risk of management override of controls, in — The liquidity of the investment portfolio and its ability to particular the risk that management may be in a position to make meet the liabilities of the Group and Company as and when inappropriate accounting entries and the risk of bias in they fall due; and accounting estimates and judgments such as the valuation of unlisted investments. We evaluated the design and — The operational resilience of key service organisations. implementation of the controls over journal entries and other We considered whether these risks could plausibly affect the adjustments and made inquiries of the Administrator about liquidity in the going concern period by assessing the degree of inappropriate or unusual activity relating to the processing of downside assumption that, individually and collectively, could journal entries and other adjustments. We substantively tested result in a liquidity issue, taking into account the Group and all material post closing entries and, based on the results of our Company’s liquid investment position (and the results of their risk assessment procedures and understanding of the process, reverse stress testing). including the segregation of duties between the Directors and the Administrator, no further high-risk journal entries or other adjustments were identified. We considered whether the going concern disclosure in notes 1 and 28 to the financial statements give a full and accurate description of the Directors’ assessment of going concern, On this audit we have rebutted the fraud risk related to revenue including the identified risks and related sensitivities recognition because the revenue is non judgemental and straightforward, with limited opportunity for manipulation. We Our conclusions based on this work: did not identify any significant unusual transaction or additional — we consider that the Directors’ use of the going concern basis fraud risks. of accounting in the preparation of the financial statements is Identifying and responding to risks of material misstatement due appropriate; to non-compliance with laws and regulations — we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to We identified areas of laws and regulations that could reasonably events or conditions that, individually or collectively, may be expected to have a material effect on the financial statements cast significant doubt on the Group’s or Company's ability to from our general commercial and sector experience, and through continue as a going concern for the going concern period; and discussion with the Directors, the Investment Manager and the — we have nothing material to add or draw attention to in Administrator (as required by auditing standards), and discussed relation to the Directors’ statement in notes 1 and 28 to the with the directors the policies and procedures regarding financial statements on the use of the going concern basis of compliance with laws and regulations. As the Company is accounting with no material uncertainties that may cast regulated, our assessment of risks involved gaining an significant doubt over the Group and Company’s use of that understanding of the control environment including the entity’s basis for the going concern period, and we found the going procedures for complying with regulatory requirements. concern disclosure in notes 1 and 28 to be acceptable. We communicated identified laws and regulations throughout However, as we cannot predict all future events or conditions our team and remained alert to any indications of non- and as subsequent events may result in outcomes that are compliance throughout the audit. inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that The potential effect of these laws and regulations on the financial the Group or the Company will continue in operation. statements varies considerably Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation) and listing regulations, and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. 68 4. Going concern 5. Fraud and breaches of laws and regulations – ability to detect 5. Fraud and breaches of laws and regulations – ability to detect Disclosures of emerging and principal risks and longer-term (continued) viability The Directors have prepared the financial statements on the Identifying and responding to risks of material misstatement due going concern basis as they do not intend to liquidate the Group to fraud We are required to perform procedures to identify whether or the Company or to cease their operations, and as they have Secondly, the Company is subject to many other laws and there is a material inconsistency between the directors’ To identify risks of material misstatement due to fraud (“fraud concluded that the Group and the Company’s financial position regulations where the consequences of non-compliance could disclosures in respect of emerging and principal risks and the risks”) we assessed events or conditions that could indicate an means that this is realistic. They have also concluded that there have a material effect on amounts or disclosures in the financial viability statement, and the financial statements and our audit incentive or pressure to commit fraud or provide an opportunity are no material uncertainties that could have cast significant statements, for instance through the imposition of fines or knowledge. to commit fraud. Our risk assessment procedures included: doubt over their ability to continue as a going concern for at least litigation. We identified the following areas as those most likely Based on those procedures, we have nothing material to add or — Enquiring of Directors as to the Group and Company’s high- a year from the date of approval of the financial statements (“the to have such an effect: : money laundering, data protection, draw attention to in relation to: level policies and procedures to prevent and detect fraud, as going concern period”). bribery and corruption legislation, and certain aspects of well as whether they have knowledge of any actual, — the Directors’ confirmation within Principal Risks and Risk company legislation recognising the financial and regulated suspected or alleged fraud; Mitigation on pages 34 to 36 that they have carried out a We used our knowledge of the Group and the Company, its nature of the Group’s activities and its legal form. robust assessment of the emerging and principal risks facing industry, and the general economic environment to identify the — Assessing the segregation of duties in place between the Auditing standards limit the required audit procedures to identify the Group, including those that would threaten its business inherent risks to its business model and analysed how those risks Directors, the Administrator and the Group and Company’s non-compliance with these laws and regulations to enquiry of model, future performance, solvency and liquidity; might affect the Group’s and Company’s financial resources or Investment Manager; and the Directors and the Administrator and inspection of regulatory ability to continue operations over the going concern period. The — the Principal Risks and Risk Mitigation disclosures describing — Reading Board and Audit and Risk Committee minutes. and legal correspondence, if any. Therefore if a breach of risks that we considered most likely to adversely affect the these risks and how emerging risks are identified, and We communicated identified fraud risks throughout the audit operational regulations is not disclosed to us or evident from Group’s and Company’s available financial resources and its explaining how they are being managed and mitigated; and team and remained alert to any indications of fraud throughout relevant correspondence, an audit will not detect that breach. ability operate over this period were; the audit. Context of the ability of the audit to detect fraud or breaches of — the Directors’ explanation in the viability statement of how — The impact of a significant reduction in the valuation of law or regulation they have assessed the prospects of the Group, over what investments and the implications for the Group and period they have done so and why they considered that As required by auditing standards, we perform procedures to Owing to the inherent limitations of an audit, there is an Company’s debt covenants; period to be appropriate, and their statement as to whether address the risk of management override of controls, in unavoidable risk that we may not have detected some material they have a reasonable expectation that the Group will be — The liquidity of the investment portfolio and its ability to particular the risk that management may be in a position to make misstatements in the financial statements, even though we have able to continue in operation and meet its liabilities as they meet the liabilities of the Group and Company as and when inappropriate accounting entries and the risk of bias in properly planned and performed our audit in accordance with fall due over the period of their assessment, including any they fall due; and accounting estimates and judgments such as the valuation of auditing standards. For example, the further removed non- related disclosures drawing attention to any necessary unlisted investments. We evaluated the design and — The operational resilience of key service organisations. compliance with laws and regulations is from the events and qualifications or assumptions. implementation of the controls over journal entries and other transactions reflected in the financial statements, the less likely We considered whether these risks could plausibly affect the adjustments and made inquiries of the Administrator about the inherently limited procedures required by auditing standards Our work is limited to assessing these matters in the context of liquidity in the going concern period by assessing the degree of inappropriate or unusual activity relating to the processing of would identify it. only the knowledge acquired during our financial statements downside assumption that, individually and collectively, could journal entries and other adjustments. We substantively tested In addition, as with any audit, there remained a higher risk of audit. As we cannot predict all future events or conditions and as result in a liquidity issue, taking into account the Group and all material post closing entries and, based on the results of our non-detection of fraud, as these may involve collusion, forgery, subsequent events may result in outcomes that are inconsistent Company’s liquid investment position (and the results of their risk assessment procedures and understanding of the process, intentional omissions, misrepresentations, or the override of with judgements that were reasonable at the time they were reverse stress testing). including the segregation of duties between the Directors and internal controls. Our audit procedures are designed to detect made, the absence of anything to report on these statements is the Administrator, no further high-risk journal entries or other material misstatement. We are not responsible for preventing not a guarantee as to the Group’s and Company’s longer-term adjustments were identified. We considered whether the going concern disclosure in notes 1 viability. non-compliance or fraud and cannot be expected to detect non- and 28 to the financial statements give a full and accurate compliance with all laws and regulations. Corporate governance disclosures description of the Directors’ assessment of going concern, On this audit we have rebutted the fraud risk related to revenue including the identified risks and related sensitivities recognition because the revenue is non judgemental and 6. We have nothing to report on the other information in the We are required to perform procedures to identify whether straightforward, with limited opportunity for manipulation. We Annual Report there is a material inconsistency between the directors’ Our conclusions based on this work: did not identify any significant unusual transaction or additional corporate governance disclosures and the financial statements The directors are responsible for the other information — we consider that the Directors’ use of the going concern basis fraud risks. and our audit knowledge. presented in the Annual Report together with the financial of accounting in the preparation of the financial statements is Identifying and responding to risks of material misstatement due Based on those procedures, we have concluded that each of the statements. Our opinion on the financial statements does not appropriate; to non-compliance with laws and regulations following is materially consistent with the financial statements cover the other information and, accordingly, we do not express — we have not identified, and concur with the directors’ an audit opinion or, except as explicitly stated below, any form of and our audit knowledge: assessment that there is not, a material uncertainty related to We identified areas of laws and regulations that could reasonably assurance conclusion thereon. — the Directors’ statement that they consider that the annual events or conditions that, individually or collectively, may be expected to have a material effect on the financial statements Our responsibility is to read the other information and, in doing report and financial statements taken as a whole is fair, cast significant doubt on the Group’s or Company's ability to from our general commercial and sector experience, and through so, consider whether, based on our financial statements audit balanced and understandable and provides the information continue as a going concern for the going concern period; and discussion with the Directors, the Investment Manager and the work, the information therein is materially misstated or necessary for shareholders to assess the Group’s position and — we have nothing material to add or draw attention to in Administrator (as required by auditing standards), and discussed inconsistent with the financial statements or our audit performance, business model and strategy; relation to the Directors’ statement in notes 1 and 28 to the with the directors the policies and procedures regarding knowledge. Based solely on that work we have not identified — the section of the annual report describing the work of the financial statements on the use of the going concern basis of compliance with laws and regulations. As the Company is material misstatements in the other information. Audit Committee does not appropriately address matters accounting with no material uncertainties that may cast regulated, our assessment of risks involved gaining an Directors’ remuneration report communicated by us to the Audit Committee, and how these significant doubt over the Group and Company’s use of that understanding of the control environment including the entity’s issues were addressed; and basis for the going concern period, and we found the going procedures for complying with regulatory requirements. In addition to our audit of the financial statements, the directors concern disclosure in notes 1 and 28 to be acceptable. — the section of the annual report that describes the review of have engaged us to audit the information in the Directors’ We communicated identified laws and regulations throughout the effectiveness of the Group’s risk management and However, as we cannot predict all future events or conditions Remuneration Report that is described as having been audited, our team and remained alert to any indications of non- internal control systems. and as subsequent events may result in outcomes that are which the directors have decided to prepare as if the Company compliance throughout the audit. inconsistent with judgements that were reasonable at the time were required to comply with the requirements of Schedule 8 to In addition to our audit of the financial statements, the Directors they were made, the above conclusions are not a guarantee that The Large and Medium-sized Companies and Groups (Accounts have engaged us to review their Corporate Governance The potential effect of these laws and regulations on the financial Statement as if the Company were required to comply with the the Group or the Company will continue in operation. and Reports) Regulations 2008 (SI 2008 No. 410) made under the statements varies considerably Listing Rules and the Disclosure Guidance and Transparency UK Companies Act 2006. Rules of the Financial Conduct Authority in relation to those In our opinion the part of the Directors’ Remuneration Report to Firstly, the Company is subject to laws and regulations that matters. Under the terms of our engagement we are required to be audited has been properly prepared in accordance with the directly affect the financial statements including financial review the part of the Corporate Governance Statement relating Companies Act 2006, as if those requirements applied to the reporting legislation (including related companies legislation) and to the Company’s compliance with the provisions of the UK Company. listing regulations, and we assessed the extent of compliance Corporate Governance Code specified for our review. with these laws and regulations as part of our procedures on the We have nothing to report in this respect. related financial statement items. 69 7. Respective responsibilities 8. The purpose of our audit work and to whom we owe our responsibilities Directors’ responsibilities This report is made solely to the Company’s members, as a body, As explained more fully in their statement set out on page 63, in accordance with in accordance with section 90 (2) of the the directors are responsible for: the preparation of the financial Companies Act 1981 of Bermuda and the terms of our statements including being satisfied that they give a true and fair engagement by the Company. Our audit work has been view; such internal control as they determine is necessary to undertaken so that we might state to the Company’s members enable the preparation of financial statements that are free from those matters we are required to state to them in an auditor’s material misstatement, whether due to fraud or error; assessing report, and the further matters we are required to state to them the Group and parent Company’s ability to continue as a going in accordance with the terms agreed with the Company, and for concern, disclosing, as applicable, matters related to going no other purpose. To the fullest extent permitted by law, we do concern; and using the going concern basis of accounting unless not accept or assume responsibility to anyone other than the they either intend to liquidate the Group or the parent Company Company and the Company’s members, as a body, for our audit or to cease operations, or have no realistic alternative but to do work, for this report, or for the opinions we have formed. so. Auditor’s responsibilities John Waterson Our objectives are to obtain reasonable assurance about whether for and on behalf of KPMG LLP the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our Chartered Accountants opinion in an auditor’s report. Reasonable assurance is a high 20 Castle Terrace Edinburgh level of assurance, but does not guarantee that an audit EH1 2EG conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise 21 September 2022 from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities . 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. 7070 ## GROUP INCOME STATEMENT for the year to 30 June 2022 2021 Notes | | Revenue | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | return | | return | return | return | | | | £’000s | £’000s | £’000s | | £’000s | £’000s | £’000s | | 9 (Losses)/gains on investments – (120,524) (120,524) – 112,465 112,465 | | | | | | | | | | 12 (Losses)/gains on derivative financial | | | | | | | | | instruments – (10,532) (10,532) – 6,319 6,319 Foreign exchange (losses)/gains – (5,264) (5,264) – 3,904 3,904 2 Investment and other income 9,879 – 9,879 11,555 – 11,555 Total income/(loss) 9,879 (136,320) (126,441) 11,555 122,688 134,243 3 Management and administration fees (852) – (852) (982) – (982) 4 Other expenses (819) (3) (822) (1,069) (5) (1,074) Profit/(loss) before finance costs and taxation 8,208 (136,323) (128,115) 9,504 122,683 132,187 5 Finance costs (1,132) (7,790) (8,922) (994) (8,601) (9,595) Profit/(loss) before taxation 7,076 (144,113) (137,037) 8,510 114,082 122,592 6 Taxation (63) – (63) – – – Profit/(loss) for the year 7,013 (144,113) (137,100) 8,510 114,082 122,592 7 Earnings per ordinary share – pence 8.35 (171.68) (163.33) 9.98 133.81 143.79 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. The notes on pages 77 to 103 form part of these financial statements. Report and Accounts for the year to 30 June 2022 71 ## COMPANY INCOME STATEMENT for the year to 30 June 2022 2021 Notes | | Revenue | | Capital | Total | Revenue | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | return | return | return | return | | | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | | 9 (Losses)/gains on investments – (120,529) (120,529) – 112,986 112,986 | | | | | | | | | 12 (Losses)/gains on derivative financial | | | | | | | | instruments – (10,532) (10,532) – 6,319 6,319 Foreign exchange (losses)/gains – (5,264) (5,264) – 3,904 3,904 2 Investment and other income 9,879 – 9,879 11,555 – 11,555 Total income/(loss) 9,879 (136,325) (126,446) 11,555 123,209 134,764 3 Management and administration fees (852) – (852) (982) – (982) 4 Other expenses (819) (3) (822) (1,069) (5) (1,074) Profit/(loss) before finance costs and taxation 8,208 (136,328) (128,120) 9,504 123,204 132,708 5 Finance costs (1,132) (7,988) (9,120) (994) (8,762) (9,756) Profit/(loss) before taxation 7,076 (144,316) (137,240) 8,510 114,442 122,952 6 Taxation (63) – (63) – – – Profit/(loss) for the year 7,013 (144,316) (137,303) 8,510 114,442 122,952 7 Earnings per ordinary share – pence 8.35 (171.92) (163.57) 9.98 134.24 144.22 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. The notes on pages 77 to 103 form part of these financial statements. 72 73 UIL Limited Report and Accounts for the year to 30 June 2022 ## GROUP STATEMENT OF CHANGES IN EQUITY for the year to 30 June 2022 | Notes | 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 20 Transfer of reserves – 32,069 – (32,069) – – – (Loss)/profit for the year – – – – (144,113) 7,013 (137,100) 8 Ordinary dividends paid – – – – – (6,714) (6,714) 17 Shares purchased by the Company (46) (1,181) – – – – (1,227) Balance at 30 June 2022 8,384 37,874 233,866 – (74,230) 12,846 218,740 for the year to 30 June 2021 | Notes | 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 2020 8,594 10,445 233,866 32,069 (44,199) 10,850 251,625 Profit for the year – – – – 114,082 8,510 122,592 8 Ordinary dividends paid – – – – – (6,813) (6,813) 17 Shares purchased by the Company (164) (3,459) – – – – (3,623) Balance at 30 June 2021 8,430 6,986 233,866 32,069 69,883 12,547 363,781 The notes on pages 77 to 103 form part of these financial statements. 72 73 UIL Limited Report and Accounts for the year to 30 June 2022 ## COMPANY STATEMENT OF CHANGES IN EQUITY for the year to 30 June 2022 | Notes | 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 20 Transfer of reserves – 32,069 – (32,069) – – – (Loss)/profit for the year – – – – (144,316) 7,013 (137,303) 8 Ordinary dividends paid – – – – – (6,714) (6,714) 17 Shares purchased by the Company (46) (1,181) – – – – (1,227) Balance at 30 June 2022 8,384 37,874 233,866 – (74,463) 12,846 218,507 for the year to 30 June 2021 | Notes | 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 2020 8,594 10,445 233,866 32,069 (44,589) 10,850 251,235 Profit for the year – – – – 114,442 8,510 122,952 8 Ordinary dividends paid – – – – – (6,813) (6,813) 17 Shares purchased by the Company (164) (3,459) – – – – (3,623) Balance at 30 June 2021 8,430 6,986 233,866 32,069 69,853 12,547 363,751 The notes on pages 77 to 103 form part of these financial statements. 74 75 UIL Limited Report and Accounts for the year to 30 June 2022 ## STATEMENTS OF FINANCIAL POSITION Group Company Notes as at 30 June 2022 2021 2022 2021 £’000s £’000s £’000s £’000s Non-current assets 9 Investments 416,516 540,074 419,715 544,228 Current assets 11 Other receivables 444 1,411 444 1,411 12 Derivative financial instruments 620 1,047 620 1,047 Cash and cash equivalents 8 3,324 8 3,324 1,072 5,782 1,072 5,782 Current liabilities | 13 | Loans (51,080) (48,548) (51,080) (48,548) | | --- | --- | | 14 | Other payables (4,393) (827) (55,559) (827) | | 12 | Derivative financial instruments (2,562) (627) (2,562) (627) | | 15 | Zero dividend preference shares (51,166) – – – | (109,201) (50,002) (109,201) (50,002) Net current liabilities (108,129) (44,220) (108,129) (44,220) Total assets less current liabilities 308,387 495,854 311,586 500,008 Non-current liabilities 16 Other payables – – (93,079) (136,257) 15 Zero dividend preference shares (89,647) (132,073) – – Net assets 218,740 363,781 218,507 363,751 Equity attributable to equity holders | 17 | Ordinary share capital 8,384 8,430 8,384 8,430 | | --- | --- | | 18 | Share premium account 37,874 6,986 37,874 6,986 | | 19 | Special reserve 233,866 233,866 233,866 233,866 | | 20 | Non-distributable reserve – 32,069 – 32,069 | | 21 | Capital reserves (74,230) 69,883 (74,463) 69,853 | | 22 | Revenue reserve 12,846 12,547 12,846 12,547 | Total attributable to equity holders 218,740 363,781 218,507 363,751 23 Net asset value per ordinary share – pence 260.89 431.51 260.61 431.48 The notes on pages 77 to 103 form part of these financial statements. Approved by the Board on 21 September 2022 and signed on its behalf by Peter Burrows Chairman 74 75 UIL Limited Report and Accounts for the year to 30 June 2022 ## STATEMENTS OF CASH FLOWS | | Group | | Company | | | --- | --- | --- | --- | --- | | for the year to 30 June | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | (Loss)/profit before taxation | (137,037) | 122,592 | (137,240) | 122,952 | | Deduct investment income - dividends* | (7,539) | - | (7,539) | - | | Deduct investment income - interest* | (2,338) | - | (2,338) | - | | Deduct bank interest | (2) | - | (2) | - | | Add back bank interest charged | 1,132 | - | 1,132 | - | | Add back losses/(gains) on investments | 120,524 | (112,465) | 120,529 | (112,986) | | Add back losses/(gains) on derivative financial instruments | 10,532 | (6,319) | 10,532 | (6,319) | | Add back foreign exchange losses/(gains) | 5,264 | (3,904) | 5,264 | (3,904) | | Deduct non-cash flows on income | - | (8,167) | - | (8,167) | | Decrease in accrued income | - | 526 | - | 526 | | (Increase)/decrease in other debtors | (4) | 2,134 | (4) | 2,134 | | Increase/(decrease) in creditors | 10 | (177) | 10 | (177) | | Deduct ZDP shares finance costs | 7,790 | 8,601 | - | - | | Deduct intra-group loan account finance costs | - | - | 7,988 | 8,762 | | **Net cash outflow from operating activities before dividends and interest** | **(1,668)** | **2,821** | **(1,668)** | **2,821** | | Dividends received* | 3,039 | - | 3,039 | - | | Investment income - interest received* | 369 | - | 369 | - | | Bank interest received | 2 | - | 2 | - | | Interest paid | (1,141) | - | (1,141) | - | | Taxation paid | (63) | - | (63) | - | | **Cash flows from operating activities** | **538** | **2,821** | **538** | **2,821** | | Investing activities: | | | | | | Purchases of investments | (40,733) | (52,154) | (40,733) | (52,920) | | Sales of investments | 51,150 | 121,274 | 52,100 | 121,274 | | Net settlement of derivatives | (8,170) | 619 | (8,170) | 619 | | **Cash flows from investing activities** | **2,247** | **69,739** | **3,197** | **68,973** | | Financing activities: | | | | | | Equity dividends paid | (6,714) | (6,813) | (6,714) | (6,813) | | Drawdowns of bank loans | 1,894 | - | 1,894 | - | | Repayment of bank loans | (3,147) | (606)** | (3,147) | (606)** | | Cash flows from issue of ZDP shares | 950 | 4,114 | - | 4,114 | | Cash flows from redemption of ZDP shares | - | (61,177) | - | (60,411) | | Cash paid for ordinary shares purchased for cancellation | (1,227) | (3,623) | (1,227) | (3,623) | | **Cash flows from financing activities** | **(8,244)** | **(68,105)** | **(9,194)** | **(67,339)** | | Net (decrease)/increase in cash and cash equivalents | (5,459) | 4,455 | (5,459) | 4,455 | | Cash and cash equivalents at the beginning of the year | 3,111 | (3,256) | 3,111 | (3,256) | | Effect of movement in foreign exchange | (1,479) | 1,912 | (1,479) | 1,912 | | **Cash and cash equivalents at the end of the year** | **(3,827)** | **3,111** | **(3,827)** | **3,111** | | **Comprised of:** | | | | | | Cash | 8 | 3,324 | 8 | 3,324 | | Bank overdraft | (3,835) | (213) | (3,835) | (213) | | **Total** | **(3,827)** | **3,111** | **(3,827)** | **3,111** | * Disclosed under "Non-cash flows on income" in 2021 ** Disclosed as "Movement on loans" in 2021 The notes on pages 77 to 103 form part of these financial statements. 76 UL Limited ## NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES Dividends on ordinary shares may be paid out of the special reserve, revenue reserve and the capital reserves. The Company, UIL Limited, is an investment company incorporated in Bermuda and traded on the Specialist Fund A number of new standards and amendments to standards Segment of the Main Market of the London Stock Exchange. and interpretations, which have not been applied in The Company commenced trading on 20 June 2007. preparing these accounts, were in issue but not effective. None of these are expected to have a material effect on the The Group Accounts comprise the results of the Company accounts of the Group. and UIL Finance Limited (“UIL Finance”). The key assumptions concerning the future and other key The Group is engaged in a single segment of business, sources of estimation uncertainty that have a significant risk focusing on maximising shareholder returns by identifying of causing a material adjustment to the carrying amounts of and investing in investments where the underlying value is assets and liabilities within the next financial year relate to not reflected in the market price. the valuation of unlisted investments, details of which are set (a) Basis of accounting out in accounting policy 1(d). The Accounts have been prepared on a going concern basis (b) Basis of consolidation (see note 28) in accordance with UK adopted international The consolidated Accounts include the Accounts of the accounting standards (2021: EU adopted international Company and its operating subsidiary, UIL Finance. All intra accounting standards), which comprise standards and group transactions, balances, income and expenses are interpretations approved by the IASB, and International eliminated on consolidation. Other subsidiaries and associate Accounting Standards and Standing Interpretations undertakings held as part of the investment portfolio (see Committee interpretations approved by the IASC that remain note 1(d) below) are not accounted for in the Group Accounts, in effect. but are carried at fair value through profit or loss. There have been no significant changes to the accounting policies during the year to 30 June 2022. (c) Financial instruments The Board has determined by having regard to the currency Financial instruments include non-current assets, derivative of the Company’s share capital, the predominant currency assets and liabilities and long-term debt instruments. For in which its shareholders operate and the currency in which those financial instruments carried at fair value, accounting dividends are paid by the Company, that Sterling is the standards recognise a hierarchy of fair value measurements functional and reporting currency. for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical Where presentational recommendations set out in the assets or liabilities (Level 1) and the lowest priority revised Statement of Recommended Practice “Financial to unobservable inputs (Level 3). The classification of Statements of Investment Trust Companies and Venture instruments depends on the lowest significant applicable Capital Trusts” (“SORP”), issued in the UK by the Association input, as follows: of Investment Companies (“AIC”) in April 2021, do not conflict with the requirements of IFRS, the Directors have Level 1 – Unadjusted, fully accessible and current quoted prepared the Accounts on a basis consistent with the prices in active markets for identical assets or liabilities. recommendations of the SORP, in the belief that this will aid Included within this category are investments listed on any comparison with similar investment companies incorporated recognised stock exchange or quoted on any secondary and listed in the United Kingdom. market. In accordance with the SORP, the Income Statement has been Level 2 – Quoted prices for similar assets or liabilities, or analysed between a revenue return (dealing with items of a other directly or indirectly observable inputs which exist for revenue nature) and a capital return (relating to items of a the duration of the period of investment. Examples of such capital nature). Revenue returns include, but are not limited instruments would be convertible loans in listed investee to, dividend income, operating expenses, finance costs companies, securities for which the quoted price has been and taxation (insofar as they are not allocated to capital, as recently suspended, securities for which an offer price has described in notes 1(j) and 1(k)). Net revenue returns are been announced in the market, forward exchange contracts allocated via the revenue return to the revenue reserve. and certain other derivative instruments. Capital returns include, but are not limited to, profits and Level 3 – External inputs are unobservable. Value is the losses on the disposal and the valuation of non-current Directors’ best estimate of fair value, based on advice from investments, derivative instruments and on cash and relevant knowledgeable experts, use of recognised valuation borrowings. Net capital returns are allocated via the capital techniques and on assumptions as to what inputs other return to capital reserves. market participants would apply in pricing the same or similar 76 77 UIL Limited Report and Accounts for the year to 30 June 2022 ## NOTES TO THE ACCOUNTS ## (continued) instruments. Included in level 3 are investments in private finance costs between revenue and capital return within the companies or securities, whether invested in directly, via Income Statement. loans or through pooled private equity vehicles. (g) ZDP shares (d) Valuation of investments and derivative financial The ZDP shares, due to be redeemed on 31 October 2022, instruments held at fair value through profit or loss 2024, 2026 and 2028 at a redemption value, including accrued Investment purchases and sales are accounted for on the capitalised returns (see note 15) of 146.99 pence per share, trade date, inclusive of transaction costs. Investments, 138.35 pence per share, 151.50 pence per share and 152.29 including both equity and loans, used for efficient portfolio pence per share respectively, have been classified as liabilities, management are classified as being at fair value through as they represent an obligation on behalf of the Group to profit or loss. As the Company’s business is investing in deliver to their holders a fixed and determinable amount at financial assets with a view to profiting from their total the redemption date. They are accordingly accounted for at return in the form of dividends, interest or increases in fair amortised cost, using the effective interest method as per IFRS value, its investments (including those ordinarily classified 9 “Financial Instruments”. ZDP shares held by the Company as subsidiaries under IFRS 10 but exempted by that financial are deemed cancelled for Group purposes. The Company reporting standard from the requirement to be consolidated) has undertaken (i) to repay any interest free loan, and (ii) are designated as being at fair value through profit or loss to reimburse UIL Finance (by way of payment in advance, if on initial recognition. Derivatives including forward foreign required) any and all costs, expenses, fees or interest UIL exchange contracts and options are accounted for as a Finance incurs or is otherwise liable to pay to the holder of the financial asset/liability at fair value through profit or loss. ZDP Shares so as to enable UIL Finance to pay the final capital The Company manages and evaluates the performance of entitlement of each class of ZDP Share on their respective these investments and derivatives on a fair value basis in redemption date. The intra group loans are accordingly accordance with its investment strategy and information accounted for at amortised cost, using the effective interest about the Company is provided internally on this basis to the method. Company’s Directors and key management personnel. Gains (h) Foreign currency and losses on investments and on derivatives are analysed within the Income Statement as capital returns. Quoted Foreign currency assets and liabilities are expressed in investments are shown at fair value using market bid prices. Sterling at rates of exchange ruling at the statement of The fair value of unquoted investments is determined by the financial position date. Foreign currency transactions are Board in accordance with the International Private Equity translated at the rates of exchange ruling at the dates of and Venture Capital Valuation guidelines. In exercising its those transactions. Exchange profits and losses on currency judgement over the value of these investments, the Board balances are credited or charged to the Income Statement uses valuation techniques which take into account, where and analysed as capital or revenue as appropriate. Forward appropriate, latest dealing prices, valuations from reliable foreign exchange contracts are valued in accordance with sources, net asset values, earnings multiples, recent orderly quoted market rates. transactions in similar securities, time to expected repayment (i) Investment and other income and other relevant factors (see key valuations techniques on pages 101 to 103). Dividends receivable are brought into the Income Statement and analysed as revenue return (except where, in the opinion (e) Cash and cash equivalents of the Directors, their nature indicates they should be Cash and cash equivalents comprise cash balances. Bank recognised as capital) on the ex-dividend date or, where no overdrafts are included as a component of cash and cash ex-dividend date is quoted, when the Group’s right to receive equivalents for the purpose of the cash flow statement only. payment is established. Where the Group or the Company has elected to receive its dividends in the form of additional (f) Bank borrowings shares rather than in cash, the amount of the cash dividend Interest-bearing bank loans and overdrafts are initially foregone is recognised as revenue return. Any excess in the measured at fair value and subsequently measured at value of the shares received over the amount of the cash amortised cost using the effective interest method. No dividend foregone is recognised as capital return. Interest on debt instruments held during the year required hierarchical debt securities is accrued on a time basis using the effective classification. Finance charges, including interest, are accrued interest method. Bank and short-term deposit interest is using the effective interest method and are added to the recognised on an accruals basis. These are brought into the carrying amount of the instrument to the extent that they are Income Statement and analysed as revenue returns. not settled in the year. See note 1(k) below for allocation of 78 79 UIL Limited Report and Accounts for the year to 30 June 2022 #### (j) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the Income Statement and analysed under revenue return except for those expenses incidental to the acquisition or disposal of investments and performance related fees (calculated under the terms of the management agreement), which are analysed under the capital return, as the Directors believe such fees arise from capital performance. #### (k) Finance costs Finance costs are accounted for using the effective interest method, recognised through the Income Statement and analysed under the revenue return except those finance costs of the ZDP shares and intra group loans which are analysed under the capital return. #### (l) Dividends payable Dividends paid by the Company are accounted for in the year in which the Company is liable to pay them and are reflected in the Statement of Changes in Equity. Under Bermuda law, the Company is unable to pay a dividend unless, after payment, the realisable value of its assets will not be less than the aggregate of its liabilities and it is able to pay its liabilities as they fall due. #### (m) Capital reserves The following items are accounted for through the Income Statement as capital returns and transferred to capital reserves: ##### Capital reserve – arising on investments sold - gains and losses on the disposal of investments and derivative instruments - expenses allocated in accordance with notes 1(j) and 1(k) ##### Capital reserve – arising on investments held - increases and decreases in the valuation of investments and derivative instruments held at the year end. #### (n) Use of estimates and judgements The presentation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of plausible future events and other factors. Actual results may differ from these estimates. The areas requiring the most significant judgement and estimation in the preparation of the financial statements are: accounting for the value of unquoted investments; and the classification of the subsidiaries as investment entities. The policy for valuation of unquoted securities is set out in note 1(d) and further information on Board procedures is contained in the Audit & Risk Committee Report and note 29(d). The fair value of unquoted (level 3) investments, as disclosed in note 9, represented 57.4% of total investments as at 30 June 2022 (2021: 59.8%). Details of the subsidiaries are set out in note 10. The Board has reviewed the classification and characteristics of the subsidiaries and except for UIL Finance determined that where the subsidiaries carry on business as investment companies they do not fall under s32 of IFRS 10 as providing services that relate to UIL's investment activities. UIL has therefore not consolidated these subsidiaries and measures them at fair value through profit and loss in accordance with IFRS 9.1. ## 2. INVESTMENT AND OTHER INCOME | Group and Company | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | **Investment income:** | | | | | | | | Dividends* | 7,539 | - | 7,539 | 6,781 | - | 6,781 | | Interest* | 2,338 | - | 2,338 | 4,774 | - | 4,774 | | | **9,877** | **-** | **9,877** | **11,555** | **-** | **11,555** | | **Other income:** | | | | | | | | Interest on cash and short-term deposits | 2 | - | 2 | - | - | - | | Total income | **9,879** | **-** | **9,879** | **11,555** | **-** | **11,555** | * Includes scrip income (dividends and capitalised interest) of £6,822,000 (2021: £8,025,000) Report and Accounts for the year to 30 June 2022 79 ## NOTES TO THE ACCOUNTS ### 3. MANAGEMENT AND ADMINISTRATION FEES | Group and Company | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Payable to: | | | | | | | | ICM/ICMIM – management fee and secretarial fees | 576 | – | 576 | 726 | – | 726 | | Administration fees | 276 | – | 276 | 256 | – | 256 | | | **852** | **–** | **852** | **982** | **–** | **982** | 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 receive 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 year to 30 June 2022, UIL's NAV return is below the required hurdle calculated at 8.5% return to entitle the Investment Managers to a performance fee and therefore no performance fee has been accrued. 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 ("Waverton") 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. 80 UIL Limited #### 4. OTHER EXPENSES | Group and Company | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Auditor's remuneration (see note 4A) | 155 | – | 155 | 180 | – | 180 | | Broker and consultancy fees | 42 | – | 42 | 40 | – | 40 | | Custody fees | 24 | – | 24 | 45 | – | 45 | | Directors' fees for services to the Company (see Directors' Remuneration Report on pages 57 to 59) | 199 | – | 199 | 192 | – | 192 | | Travel expenses | 43 | – | 43 | 2 | – | 2 | | Professional and legal fees | 71 | – | 71 | 330 | – | 330 | | Sundry expenses | 285 | 3 | 288 | 280 | 5 | 285 | | | **819** | **3** | **822** | **1,069** | **5** | **1,074** | #### 4A. AUDITOR'S REMUNERATION Fees paid to the Group's auditor are summarised below: | Group Auditor – KPMG LLP Group and Company Annual Audit Fees | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | Audit of the Group and Company's annual financial statements | 123 | 110 | | Additional audit costs for the prior year | 20 | 60 | | Other non-audit services – agreed procedures on interim financial statements | 12 | 10 | | Total auditor's remuneration for the year | **155** | **180** | #### 5. FINANCE COSTS | Group | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Loans and bank overdrafts | (1,132) | – | (1,132) | 994 | – | 994 | | ZDP shares | – | (7,790) | (7,790) | – | 8,601 | 8,601 | | | **(1,132)** | **(7,790)** | **(8,922)** | **994** | **8,601** | **9,595** | | Company | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Loans and bank overdrafts | (1,132) | – | (1,132) | 994 | – | 994 | | Intra-group loan account | – | (7,988) | (7,988) | – | 8,762 | 8,762 | | | **(1,132)** | **(7,988)** | **(9,120)** | **994** | **8,762** | **9,756** | Report and Accounts for the year to 30 June 2022 81 ## NOTES TO THE ACCOUNTS ### 6. TAXATION | Group and Company | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Overseas taxation | (63) | – | (63) | – | – | – | Except as stated above, profits of the Company and subsidiaries for the year are not subject to any taxation within their countries of residence (2021: same). ### 7. EARNINGS PER ORDINARY SHARE The calculation of earnings per ordinary share from continuing operations is based on the following data: | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | Revenue | 7,013 | 8,510 | 7,013 | 8,510 | | Capital | (144,113) | 114,082 | (144,316) | 114,442 | | Total | (137,100) | 122,592 | (137,303) | 122,952 | | | Number | Number | Number | Number | | Weighted average number of shares in issue during the year for earnings per share calculations | 83,942,540 | 85,255,099 | 83,942,540 | 85,255,099 | ### 8. DIVIDENDS | Group and Company | Record date | Payment date | 2022 £'000s | 2021 £'000s | | --- | --- | --- | --- | --- | | 2019 Fourth quarterly of 1.875p | 04-Sep-20 | 25-Sep-20 | – | 1,719 | | 2020 First quarterly of 1.875p | 04-Dec-20 | 21-Dec-20 | – | 1,719 | | 2020 Second quarterly of 2.000p | 05-Mar-21 | 31-Mar-21 | – | 1,689 | | 2020 Third quarterly of 2.000p | 04-Jun-21 | 28-Jun-21 | – | 1,686 | | 2020 Fourth quarterly of 2.000p | 03-Sep-21 | 30-Sep-21 | 1,680 | – | | 2021 First quarterly of 2.000p | 03-Dec-21 | 23-Dec-21 | 1,680 | – | | 2021 Second quarterly of 2.000p | 04-Mar-22 | 31-Mar-22 | 1,677 | – | | 2021 Third quarterly of 2.000p | 06-Jun-22 | 30-Jun-22 | 1,677 | – | | | | | 6,714 | 6,813 | The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2022 of 2.00p per share payable on 30 September 2022 to all ordinary shareholders on the register at close of business on 2 September 2022. The total cost of the dividend, which has not been accrued in the results for the year to 30 June 2022, is £1,677,000 based on 83,842,918 ordinary shares in issue. 82 UAL Limited ## 9. INVESTMENTS | Group | 2022 | | | | 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Level 1 £'000s | Level 2 £'000s | Level 3 £'000s | Total £'000s | Level 1 £'000s | Level 2 £'000s | Level 3 £'000s | Total £'000s | | Investments brought forward | | | | | | | | | | Cost | 205,741 | - | 219,605 | 425,346 | 127,930 | 156,666 | 216,524 | 501,120 | | Gains/(losses) | 11,469 | - | 103,259 | 114,728 | 23,475 | 3,269 | (38,867) | (12,123) | | Valuation | 217,210 | - | 322,864 | 540,074 | 151,405 | 159,935 | 177,657 | 488,997 | | Movements in the year: | | | | | | | | | | Transfer between levels* | (11,723) | 11,723 | - | - | 19,719 | (134,348) | 114,629 | - | | Purchases at cost | 35,319 | 1,082 | 53,378 | 89,779 | 36,883 | - | 107,934 | 144,817 | | Sales | | | | | | | | | | proceeds | (21,364) | - | (71,449) | (92,813) | (16,607) | (25,521) | (164,077) | (206,205) | | (losses)/gains on investments | (46,236) | (8,416) | (65,872) | (120,524) | 25,810 | (66) | 86,721 | 112,465 | | Valuation at 30 June | 173,206 | 4,389 | 238,921 | 416,516 | 217,210 | - | 322,864 | 540,074 | | Analysed at 30 June | | | | | | | | | | Cost | 207,332 | 11,365 | 199,073 | 417,770 | 205,741 | - | 219,605 | 425,346 | | (Losses)/gains | (34,126) | (6,976) | 39,848 | (1,254) | 11,469 | - | 103,259 | 114,728 | | Valuation | 173,206 | 4,389 | 238,921 | 416,516 | 217,210 | - | 322,864 | 540,074 | *Transfers due to the changes in liquidity (2021: transfers due to the changes in liquidity, availability of observable market data and delisting of investee companies; Transfers in level 1 includes a £1.1m transfer to level 3). The book cost and fair value were transferred using the 30 June 2021 balances (2021: 30 June 2020 balances) The Group received £92,813,000 (2021: £206,205,000) from investments sold in the year. The book cost of these investments when they were purchased was £97,355,000 (2021: £220,591,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Disposals in level 3 investments includes £58.7m related to repayment of capital and £2.4m of capital distribution (2021: £100.1m related to repayment of capital and £11.7m of capital distribution) Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded Level 3 includes investments in private companies and other unquoted securities Report and Accounts for the year to 30 June 2022 83 ## NOTES TO THE ACCOUNTS | Company | 2022 | | | | 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Level 1 £'000s | Level 2 £'000s | Level 3 £'000s | Total £'000s | Level 1 £'000s | Level 2 £'000s | Level 3 £'000s | Total £'000s | | Investments brought forward | | | | | | | | | | Cost | 206,325 | 3,169 | 219,605 | 429,099 | 127,930 | 159,069 | 216,524 | 503,523 | | Gains/(losses) | 11,463 | 407 | 103,259 | 115,129 | 23,475 | 3,149 | (38,867) | (12,243) | | | 217,788 | 3,576 | 322,864 | 544,228 | 151,405 | 162,218 | 177,657 | 491,280 | | Movements in the year: | | | | | | | | | | Transfer between levels* | (8,725) | 8,725 | - | - | 19,719 | (134,348) | 114,629 | - | | Purchases at cost | 35,319 | 1,082 | 53,378 | 89,779 | 37,467 | 766 | 107,934 | 146,167 | | Sales | | | | | | | | | | proceeds | (22,314) | - | (71,449) | (93,763) | (16,607) | (25,521) | (164,077) | (206,205) | | (losses)/gains on investments | (46,229) | (8,428) | (65,872) | (120,529) | 25,804 | 461 | 86,721 | 112,986 | | Valuation at 30 June | 175,839 | 4,955 | 238,921 | 419,715 | 217,788 | 3,576 | 322,864 | 544,228 | | Analysed at 30 June | | | | | | | | | | Cost | 209,685 | 11,949 | 199,073 | 420,707 | 206,325 | 3,169 | 219,605 | 429,099 | | (Losses)/gains | (33,846) | (6,994) | 39,848 | (992) | 11,463 | 407 | 103,259 | 115,129 | | Valuation | 175,839 | 4,955 | 238,921 | 419,715 | 217,788 | 3,576 | 322,864 | 544,228 | \* Transfers due to the changes to liquidity (2021: transfers due to the changes to liquidity, availability of observable market data and delisting of investee companies. Transfers in level 1 includes a £1.1m transfer to level 3). The book cost and fair value were transferred using the 30 June 2021 balances (2021: 30 June 2020 balances) The Company received £93,763,000 (2021: £206,205,000) from investments sold in the year. The book cost of these investments when they were purchased was £98,171,000 (2021: £220,591,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments Disposals in level 3 investments includes £58.7m related to repayment of capital and £2.4m of capital distribution (2021: £100.1m related to repayment of capital and £11.7m of capital distribution) Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market Level 2 includes holdings linked directly to companies whose prices are quoted and quoted investments that are thinly traded Level 3 includes investments in private companies and other unquoted securities | (Losses)/gains on investments held at fair value | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | Losses on investments sold | (4,542) | (14,386) | (4,408) | (14,386) | | (Losses)/gains on investments held | (115,982) | 126,851 | (116,121) | 127,372 | | Total (losses)/gains on investments | (120,524) | 112,465 | (120,529) | 112,986 | ### Group and Company In the year the following material level 3 holdings were sold: | | Proceeds £'000s | Cost £'000s | Carrying value at the end of the previous accounting period £'000s | | --- | --- | --- | --- | | Nautilus Data Technologies Inc Convertible Bond | 8,124 | 7,239 | n/a* | | Novareum Blockchain Asset Fund Limited ('Novareum') | 2,770 | 1,967 | n/a* | \*Purchased in the year 84 UL Limited Associated undertakings Under IFRS10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following associate undertakings are held as part of the investment portfolio and consequently are accounted for as investments at fair value through profit and loss: | | | | | | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Country of | | Number of | | | | | | | registration and | | | ordinary shares | | | % of ordinary | | % of ordinary | | | | incorporation | | | | held | shares held | | shares held | | Carebook Technologies Inc (“Carebook”) Canada 36,046,167 46.5 – DTI Group Ltd (“DTI”) Australia 103,193,989 23.0 30.9 ICM Mobility Group Limited (“ICM Mobility”) United Kingdom 93,166,922 39.8 39.8 Littlepay Mobility Ltd (“Littlepay”) United Kingdom 4,257,079 * 49.2 49.3 Orbital Corporation Limited (“Orbital”) Australia 27,565,888 30.3 30.4 Resimac Group Limited (“Resimac”) Australia 123,342,981 ** 29.6 26.6 Serkel Solutions Pty Ltd (“Serkel”) Australia 10,510 33.3 33.3 SmileStyler Solutions Pty Ltd (“SmileStyler”) Australia 1,151,434 24.0 24.0 Somers Limited (“Somers”) Bermuda 10,168,462 44.7 44.5 SportEngaged Ltd UK 25 20.0 20.0 * Shares held directly 1,445,000 and indirectly through ICM Mobility 2,812,079. ** Shares held directly 17,127,747 and indirectly through Somers 106,215,234. Transactions in the year to 30 June 2022 with associated undertakings Transactions with associated undertakings Carebook Pursuant to a loan agreement dated 22 December 2021 under which UIL has agreed to loan monies to Carebook, UIL advanced to Carebook a loan of CAD 0.5m. As at 30 June 2022, the balance of the loan and interest outstanding was CAD 0.5m. The loan bears interest at an annual rate of the Canadian variable bank rate + 10% and is repayable on 21 December 2026. On 3 August 2021, UIL participated in a private placement to buy 11m Carebook shares for a total consideration of CAD 11.0m. UIL also received 5.5m Warrants (exercisable at CAD 1.47 until 5 August 2023) on a free of charge basis. In May 2022, UIL underwrote a Carebook rights issue at CAD 0.15 per share. UIL exercised its allocated 8,933,716 shares under the offer and additionally purchased the shortfall of 12,892,251 shares for a total CAD 3.3m. UIL also received 193,383 Warrants (exercisable at CAD 0.16 until 17 May 2024) on a free of charge basis. 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 £2.2m and ICM Mobility repaid £34k. On 23 December 2021, agreement was made to increase the loan by £0.3m and in exchange UIL reduced its investment in Littlepay's equity by £0.3m. On 28 April 2022 the loan was increased by £0.4m and UIL's equity in ICM Mobility was decreased by £0.4m. UIL capitalised £1.6m of the loan on 31 December 2021 and a further £1.3m of the loan on the 24 June 2022. As at 30 June 2022, the loan balance was nil. The loan is interest free and is converted into equity on a bi-annual basis. Littlepay Distributed to UIL AUD 0.4m in the year. On 23 December 2021 the equity in Littlepay was reduced by AUD 0.3m (see ICM Mobility above). Orbital In October 2021, Orbital undertook a pro-rata renounceable rights issue at AUD 0.50 per share on the basis on one new share for every six existing shares. UIL took up its allocated 3,937,984 rights under the offer at cost of AUD 2.0m. Resimac There were no transactions during the year. Serkel There were no transactions during the year. 84 85 UIL Limited Report and Accounts for the year to 30 June 2022 ## NOTES TO THE ACCOUNTS ## (continued) SmileStyler There were no transactions during the year. Somers Somers paid dividends of USD 8.5m to UIL and UIL received 477,882 ordinary shares as part of a dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD loan), 22 June 2018 (£ loan) and 5 September 2019 (AUD loan), under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of USD 1.5m and AUD 5.8m, Somers repaid USD 10.5m (part paid via the transfer of 208,190 AssetCo shares for fair value of £2.7m to UIL), £2.2m and AUD 9.0m and UIL received interest of USD 357k, £55k and AUD 83k. As at 30 June 2022, the balance of the loans and interest outstanding was USD nil, £ nil and AUD nil. The loans bear interest at an annual rate of 6.0% and are repayable on not less than 12 months’ notice. Also see Zeta Resources Limited (“Zeta”) disclosures on page 87. SportEngaged Ltd There were no transactions during the year. Significant interests In addition to the above, the Group and Company have a holding of 3% or more of any class of share capital of the following investments, which are material in the context of the Accounts: | | | | | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | % of class of | | % of class of | | | | Country of registration | | | Class of | instrument | | instrument | | | Undertaking | | and incorporation | instrument held | | | held | | held | Resolute Mining Limited Australia Ordinary Shares 6.8 8.5 Starpharma Holdings Limited Australia Ordinary Shares 3.0 3.0 Utilico Emerging Markets Trust plc United Kingdom Ordinary Shares 14.4 16.3 10. SUBSIDIARY UNDERTAKINGS The following was a subsidiary undertaking of the Company at 30 June 2022 and 30 June 2021. Country of operation, Holding and registration and voting incorporation Number and class of shares held rights % UIL Finance Limited Bermuda 10 ordinary shares of 10p nil paid share 100 The subsidiary was incorporated, and commenced trading, on 17 January 2007 to carry on business as an investment company. Under IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, the following are subsidiaries of the Company, held as part of the investment portfolio, and are accounted for as investments at fair value through profit and loss. 86 87 UIL Limited Report and Accounts for the year to 30 June 2022 2022 2021 Country of registration Number of Holding and Number of Holding and and ordinary voting rights ordinary voting rights incorporation shares held % shares held % Allectus Capital Limited (“Allectus Capital”) Bermuda 100 50.0 100 50.0 Allectus Quantum Holdings Limited (“Allectus Quantum”) UK 501 50.0 – – Bermuda First Investment Company Limited (“BFIC”) Bermuda – – 1,891,195 94.2 Coldharbour Technology Limited (“Coldharbour”) United Kingdom 29,660,694 96.5 29,660,694 96.5 Elevate Platform Limited (“Elevate”) United Kingdom 44,348,478 * 51.0 44,348,478 * 51.0 Energy Holdings Ltd Bermuda 100 100.0 100 100.0 Newtel Holdings Limited (“Newtel”) Jersey 115,920 100.0 115,920 100.0 Novareum Cayman Islands 28,361 57.5 – – Snapper Services (UK) Limited United Kingdom 5,014,238 ** 50.0 5,014,238 ** 50.0 UIL Holdings Pte Ltd Singapore – – 100 100.0 Zeta Bermuda 344,573,832 61.0 344,573,832 60.9 * Preference shares ** Shares held directly 1,703,400 and indirectly through ICM Mobility 3,310,838. Transactions in the year to 30 June 2022 with subsidiaries held as investments Allectus Capital Pursuant to a loan agreement dated 1 September 2016 under which UIL has agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital USD 7.0m and Allectus Capital repaid USD 6.7m. As part of a share purchase agreement (“SPA”), UIL transferred to Allectus Capital, Nautilus Data Tech Inc convertible notes for USD 10.7m and in exchange received listed holdings with fair values of £2.9m and the loan was increased by USD 7.1m. UIL also received a bond in Invigor Group for fair value of AUD 1.2m and in exchange reduced the loan by USD 0.8m. On 30 June 2022, the balance of the loan was USD 6.6m. The loan is interest free and is converted into equity on an annual basis. Allectus Quantum UIL paid £0.2m for the 50% equity holding of 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 £2.3m. The loan is interest free and is converted into equity on an annual basis. On 28 June 2022 the full loan of £2.3m was capitalised. BFIC BFIC was dissolved on 7 December 2021. There were no transactions during the period. Coldharbour Coldharbour appointed liquidators in January 2022. To effect a solvent liquidation process, UIL signed a deed of release which forgave the loan in its entirety (GBP 1.1m) with zero value from principal or interest recovered. Elevate Pursuant to a loan agreement dated 1 January 2019 under which UIL has agreed to loan monies to Elevate, UIL advanced to Elevate £0.4m. As at 30 June 2022, the balance of the loan and interest outstanding was £1.6m. The loan bears interest at an annual rate of 6.0% and is repayable on 31 December 2023. Energy Holdings Ltd There were no transactions during the year. Newtel UIL advanced £0.2m to Newtel as part of its working capital loan to Newtel. As at 30 June 2022 the loan balance was £5.5m and is repayable on demand. Novareum UIL invested USD5.0m and redeemed USD2.9m in the year. Snapper Services (UK) Snapper Services (UK) Limited changed its name from ICM Mobility International Ltd in the year. Limited There were no transactions during the year. 86 87 UIL Limited Report and Accounts for the year to 30 June 2022 ## NOTES TO THE ACCOUNTS ## (continued) UIL Holdings Pte Ltd UIL Holdings Pte Ltd was dissolved on 8 November 2021. There were no transactions during the period. Zeta Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan), under which UIL has agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 7.2m and CAD 0.4m and received from Zeta repayments of AUD 32.0m (AUD 16.0m being settled via the transfer of Panoramic Resources shares to UIL, AUD 2.2m being settled by the transfer of Resimac shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of AUD 13.8m being settled via cash) and CAD 19.9m (CAD 17.1m being settled by the transfer of Resimac shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of CAD 2.8m being settled via cash) and capitalisation of interest of AUD 1.1m and CAD 0.9m. As at 30 June 2022, 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. 11. OTHER RECEIVABLES – CURRENT ASSETS 2022 2021 Group and Company £’000s £’000s Securities sold for future settlement 419 492 Accrued income 9 907 Prepayments and other debtors 16 12 444 1,411 12. DERIVATIVE FINANCIAL INSTRUMENTS 2022 2021 | | | | Net current | | | | Net current | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Current | Current | | assets/ | Current | Current | | assets/ | | | assets | liabilities | (liabilities) | | assets | liabilities | (liabilities) | | | Group and Company | £’000s | £’000s | | £’000s | £’000s | £’000s | | £’000s | Forward foreign exchange contracts 620 (2,562) (1,942) 1,047 (627) 420 The above derivatives are classified as level 2 as defined in note 1(c). Changes in derivatives Changes in total net current derivative financial instruments are as follows: 2022 2021 Group and Company £’000s £’000s Valuation brought forward 420 (5,280) Net settlements 8,170 (619) (Losses)/gains (10,532) 6,319 Valuation carried forward (1,942) 420 88 89 UIL Limited Report and Accounts for the year to 30 June 2022 ### 13. LOANS – CURRENT LIABILITY | Group and Company | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | Bank Loans | | | | AUD 12.5m rolled over July 2021 | – | 6,793 | | AUD 12.9m rolled over July 2021 | – | 7,000 | | AUD 9.0m rolled over August 2021 | – | 4,891 | | EUR 5.0m rolled over July 2021 | – | 4,292 | | EUR 5.6m rolled over September 2021 | – | 4,786 | | USD 21.8m rolled over July 2021 | – | 15,744 | | USD 7.0m rolled over September 2021 | – | 5,042 | | AUD 12.5m rolled to September 2022 | 7,078 | – | | AUD 12.3m rolled to September 2022 | 6,961 | – | | AUD 8.7m rolled to September 2022 | 4,954 | – | | EUR 5.0m rolled to September 2022 | 4,304 | – | | EUR 5.4m rolled to September 2022 | 4,690 | – | | USD 20.9m rolled over July 2022 to September 2022 | 17,235 | – | | USD 7.1m rolled to September 2022 | 5,858 | – | | | **51,080** | **48,548** | The Company has a committed loan facility of £50,000,000 from Scotiabank Europe PLC ("Scotiabank") and was fully drawn as at 30 June 2022. The facility was extended in September 2022 to 19 September 2023 and novated to the Bank of Nova Scotia, London Branch, reducing to £37.5m on 30 March 2023. 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. Bank of Nova Scotia, London Branch has a floating charge over the assets of the Company in respect of amounts owing under the loan facility. ### 14. OTHER PAYABLES | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | Securities purchased for future settlement | – | 57 | – | 57 | | Bank overdraft | 3,835 | 213 | 3,835 | 213 | | Intra-group loans | – | – | 51,166 | – | | Accrued finance costs | 111 | 120 | 111 | 120 | | Accrued expenses | 447 | 437 | 447 | 437 | | | **4,393** | **827** | **55,559** | **827** | The Directors consider that the carrying values of other payables are equivalent to their fair value. Report and Accounts for the year to 30 June 2022 89 ## NOTES TO THE ACCOUNTS ## (continued) 15. ZDP SHARES Group 2022 2021 ZDP shares – current liabilities £’000s £’000s 2022 ZDP shares 51,166 – ZDP Shares – non-current liabilities 2022 ZDP shares – 48,052 2024 ZDP shares 36,833 34,996 2026 ZDP shares 27,589 25,299 2028 ZDP shares 25,225 23,726 89,647 132,073 Total ZDP shares liabilities 140,813 132,073 Authorised ZDP shares at 30 June 2022 and 30 June 2021 are as follows: Number £’000s 2022 ZDP shares 63,686,754 3,387 2024 ZDP shares 76,717,291 2,917 2026 ZDP shares 25,000,000 2,500 2028 ZDP shares 44,842,717 1,734 2022 2024 2026 2028 Total 2022 Number £’000s Number £’000s Number £’000s Number £’000s £’000s Balance at 30 June 2021 35,569,069 48,052 30,000,000 34,996 21,890,380 25,299 24,416,265 23,726 132,073 Issue of ZDP shares – – – – 800,000 950 * – – 950 Finance costs (see note 5) – 3,114 – 1,837 – 1,340 – 1,499 7,790 Balance at 30 June 2022 35,569,069 51,166 30,000,000 36,833 22,690,380 27,589 24,416,265 25,225 140,813 | * Sold by the Company in the market, an issue of ZDP shares for Group accounting | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 2020 | 2022 | 2024 | 2026 | 2028 | Total | | 2021 Number | £’000s Number | £’000s Number | £’000s Number | £’000s Number | £’000s | £’000s | Balance as at 30 June 2020 39,000,000 59,087 50,000,000 63,407 30,000,000 33,250 22,596,706 24,791 – – 180,535 Issue of ZDP shares – – – – – – – – 24,416,265 24,417 24,417 Issue costs of ZDP shares – – – – – – – – – (964) (964) Redemption of ZDP shares (39,000,000) (60,411) (14,430,931) (19,338) – – – – – – (79,749) ZDP shares purchased by the Company – – – – – – (706,326) (767) – – (767) Finance costs (see note 5) – 1,324 – 3,983 – 1,746 – 1,275 – 273 8,601 Balance as at 30 June 2021 – – 35,569,069 48,052 30,000,000 34,996 21,890,380 25,299 24,416,265 23,726 132,073 90 91 UIL Limited Report and Accounts for the year to 30 June 2022 The Company held 3,109,620 2026 ZDP shares as at 30 June 2021. In the year, the Company sold 800,000 2026 ZDP shares in the open market, receiving £0.95m. The Company held 2,309,620 2026 ZDP shares as at 30 June 2022. The Company held 583,735 2028 ZDP shares as at 30 June 2021 and 30 June 2022. #### 2022 ZDP shares Based on the initial entitlement of a 2022 ZDP share of 100p on 23 June 2016, a 2022 ZDP share will have a final capital entitlement at the end of its life on 31 October 2022 of 146.99p equating to a 6.25% per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2022 ZDP share as at 30 June 2022 was 143.98p (2021: 135.56p). #### 2024 ZDP shares Based on the initial entitlement of a 2024 ZDP share of 100p on 2 November 2018, a 2024 ZDP share will have a final capital entitlement at the end of its life on 31 October 2024 of 138.35p equating to a 4.75% per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2024 ZDP share as at 30 June 2022 was 124.14p (2021: 118.51p). #### 2026 ZDP shares Based on the initial entitlement of a 2026 ZDP share of 100p on 26 April 2018, a 2026 ZDP share will have a final capital entitlement at the end of its life on 31 October 2026 of 151.50p equating to a 5.00% per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2026 ZDP share as at 30 June 2022 was 122.62p (2021: 116.78p). #### 2028 ZDP shares Based on the initial entitlement of a 2028 ZDP share of 100p on 23 April 2021, a 2028 ZDP share will have a final capital entitlement at the end of its life on 31 October 2028 of 152.29p equating to a 5.75% per annum gross redemption yield. The capital entitlement (excluding issue costs) per 2028 ZDP share as at 30 June 2022 was 106.87p (2021: 101.06p). The ZDP shares are traded on the London Stock Exchange and are stated at amortised cost using the effective interest method. The ZDP shares carry no entitlement to income however they have a pre-determined final capital entitlement which ranks behind all other liabilities and creditors of UIL Finance and UIL but in priority to the ordinary shares of the Company save in respect of certain winding up revenue profits. The growth of each ZDP accrues daily and is reflected in the capital return and NAV per ZDP share on an effective interest rate basis. The ZDP shares do not carry any voting rights at general meetings of the Company. However the Company will not be able to carry out certain corporate actions unless it obtains at separate meeting's approval of each class of ZDP shareholders. Separate approval of each class of ZDP shareholders must be obtained in respect of any proposals which would affect their respective rights, including any resolution to wind up the Company. In addition the approval of ZDP shareholders by the passing of a special resolution at separate class meetings of the ZDP shareholders is required in relation to any proposal to modify, alter or abrogate the rights attaching to any class of the ZDP shares and in relation to any proposal by the Company or its parent company which would reduce the Group's cover of the existing ZDP shares below 1.35 times. On a liquidation of UIL and/or UIL Finance, to the extent that the relevant classes of ZDP shares have not already been redeemed, the shares shall rank in the following order of priority in relation to the repayment of their accrued capital entitlement as at the date of liquidation: i. the 2022 ZDP shares shall rank in priority to the 2024 ZDP shares, the 2026 ZDP shares and the 2028 ZDP shares; ii. the 2024 ZDP shares shall rank in priority to the 2026 ZDP shares and the 2028 ZDP shares; and iii. the 2026 ZDP shares shall rank in priority to the 2028 ZDP shares. The entitlement of ZDP shareholders of a particular class shall be determined in proportion to their holdings of ZDP shares of that class. #### 16. OTHER PAYABLES - NON-CURRENT LIABILITY | Company | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | Intra-group loans | 93,079 | 136,257 | In consideration for UIL Finance agreeing to transfer to the Company certain assets, the Company has undertaken (i) to repay any interest free loan, and (ii) to reimburse UIL Finance (by way of payment in advance, if required) any and all costs, expenses, fees or interest UIL Finance incurs or is otherwise liable to pay to the holder of the ZDP shares so as to enable UIL Finance to pay the final capital entitlement of each class of ZDP share on their respective redemption date. The amount owed in the accounts as at 30 June 2022 is a current liability of £51,166,000 and a non-current liability of £93,079,000 (2021: non-current liability of £136,257,000) based on the entitlements of the ZDP shareholders at the relevant date. The loan is repayable on the date when the underlying ZDP shares are redeemed. Report and Accounts for the year to 30 June 2022 91 ## NOTES TO THE ACCOUNTS ## (continued) 17. ORDINARY SHARE CAPITAL Number £’000s Equity share capital: Ordinary shares of 10p each with voting rights Authorised 250,000,000 25,000 | | Total shares | | Total shares | | | --- | --- | --- | --- | --- | | | | in issue | | in issue | | 2022 | | Number | | £’000s | Balance at 30 June 2021 84,303,283 8,430 Purchased for cancellation (460,365) (46) Balance at 30 June 2022 83,842,918 8,384 | | Total shares | | Total shares | | | --- | --- | --- | --- | --- | | | | in issue | | in issue | | 2021 | | Number | | £’000s | Balance at 30 June 2020 85,939,314 8,594 Purchased for cancellation (1,636,031) (164) Balance at 30 June 2021 84,303,283 8,430 During the year the Company bought back for cancellation 460,365 (2021: 1,636,031) ordinary shares at a total cost of £1,227,000 (2021: £3,623,000). No further ordinary shares have been purchased for cancellation since the year end. In addition to receiving the income distributed by way of dividend, the ordinary shareholders will be entitled to any balances on the revenue reserve at the winding up date, together with the assets of the Company remaining after payment of the ZDP shareholders’ entitlement. The ordinary shareholders participate in all general meetings of the Company on the basis of one vote for each share held. 18. SHARE PREMIUM ACCOUNT 2022 2021 Group and Company £’000s £’000s Balance brought forward 6,986 10,445 Purchase of ordinary shares (1,181) (3,459) Transfer from Non-distributable Reserve (see note 20) 32,069 – Balance carried forward 37,874 6,986 19. SPECIAL RESERVE 2022 2021 Group and Company £’000s £’000s Balance brought forward and carried forward 233,866 233,866 The reserve will not constitute winding up revenue profits in the event of the Company’s liquidation. 92 93 UIL Limited Report and Accounts for the year to 30 June 2022 ## 20. NON-DISTRIBUTABLE RESERVE | Group and Company | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | Balance brought forward | 32,069 | 32,069 | | Transfer to Share Premium Account | (32,069) | - | | Balance carried forward | - | 32,069 | The Non-distributable Reserve was created when the warrants issued in 2007 were exercised, following the recommendation by the SORP in issue at that time. The current SORP no longer requires this accounting treatment and the reserve has therefore been transferred back to the Share Premium Account. There is no impact to distributable reserves under Bermuda Law as a result of this transfer. ## 21. CAPITAL RESERVES | Capital reserves comprise: | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | Arising on investments sold | (72,976) | (44,845) | (73,471) | (45,276) | | Arising on revaluation of investments held | (1,254) | 114,728 | (992) | 115,129 | | Balance as at 30 June | (74,230) | 69,883 | (74,463) | 69,853 | Included within the Capital Reserve movement for the year is £2,444,000 (2021: £11,735,000) of capital distributions, £3,000 (2021: £20,000) of transaction costs on purchases of investments and £27,000 (2021: £16,000) of transaction costs on sales of investments. ## 22. REVENUE RESERVE | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000s | 2021 £'000s | 2022 £'000s | 2021 £'000s | | Balance brought forward | 12,547 | 10,850 | 12,547 | 10,850 | | Amount transferred to revenue reserve | 7,013 | 8,510 | 7,013 | 8,510 | | Dividends paid in the year | (6,714) | (6,813) | (6,714) | (6,813) | | Balance as at 30 June | 12,846 | 12,547 | 12,846 | 12,547 | Under Bermuda Law, a company cannot declare or pay a dividend, or make a distribution out of contributed surplus, unless there are reasonable grounds for believing that the company is and will after the payment be able to meet its liabilities as they become due, and the realisable value of the company's assets will not thereby be less than the aggregate of its liabilities. The net assets of the Company as at 30 June 2022 was £218.7m (2021: £363.8m). ## 23. NET ASSET VALUE PER ORDINARY SHARE NAV per ordinary share is based on net assets at the year end of £218,740,000 for the Group and £218,507,000 for the Company (2021: £363,781,000 for the Group and £363,751,000 for the Company) and on 83,842,918 ordinary shares in issue at the year end (2021: 84,303,283). Report and Accounts for the year to 30 June 2022 93 ## NOTES TO THE ACCOUNTS ## (continued) 24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES Non-cash flow Group changes Balance at Foreign Balance Transactions 30June Cash exchange Finance at 30 June in the year 2021 flows movement costs 2022 2022 £’000s £’000s £’000s £’000s £’000s £’000s Bank loans 48,548 – (1,253) 3,785 – 51,080 ZDP shares 132,073 – 950 – 7,790 140,813 Dividends paid – 6,714 (6,714) – – – Repurchase of shares for cancellation – 1,227 (1,227) – – – 180,621 7,941 (8,244) 3,785 7,790 191,893 Non-cash flow changes Balance Foreign Balance Transactions at 30June Cash exchange Finance at 30 June in the year 2020 flows movement costs 2021 2021 £’000s £’000s £’000s £’000s £’000s £’000s Bank loans 50,646 – (106) (1,992) – 48,548 Coldharbour loan 500 – (500) – – – ZDP shares 180,535 – (57,063) – 8,601 132,073 Dividends paid – 6,813 (6,813) – – – Repurchase of shares for cancellation – 3,623 (3,623) – – – 231,681 10,436 (68,105) (1,992) 8,601 180,621 Non-cash flow Company changes Balance Foreign Balance Transactions at 30June Cash exchange Finance at 30 June in the year 2021 flows movement costs 2022 2022 £’000s £’000s £’000s £’000s £’000s £’000s Bank loans 48,548 – (1,253) 3,785 – 51,080 Intra-group loans 136,257 – – – 7,988 144,245 Dividends paid – 6,714 (6,714) – – – Repurchase of shares for cancellation – 1,227 (1,227) – – – 184,805 7,941 (9,194) 3,785 7,988 195,325 Non-cash flow changes | | | Balance | | | | | | Foreign | | | | | | Balance | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | at 30 June | | | Transactions | | Cash | exchange | | Finance | | Issue of ZDP | | at 30 June | | | | | | | 2020 | in the year | | flows | movement | | | costs | | shares | | | 2021 | | 2021 | | £’000s | | | £’000s | £’000s | | £’000s | £’000s | | | £’000s | | £’000s | | Bank loans 50,646 – (106) (1,992) – 48,548 Coldharbour loan 500 – (500) – – – Intra-group loans 183,208 – (56,297) – 8,762 584 136,257 Dividends paid – 6,813 (6,813) – – – – Repurchase of shares for cancellation – 3,623 (3,623) – – – – 234,354 10,436 (67,339) (1,992) 8,762 584 184,805 94 95 UIL Limited Report and Accounts for the year to 30 June 2022 ## 25. ULTIMATE PARENT UNDERTAKING In the opinion of the Directors, the Group's ultimate parent undertaking is Somers Isles Private Trust Company Limited ("SIPTCL"), a company incorporated in Bermuda and owned by Mr Duncan Saville. ## 26. 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 9.1% of UIL's shares. The ultimate parent undertaking of GPLPF and UMPF is SIPTCL as referred to in note 25. #### Subsidiaries of UIL: Allectus Capital, Allectus Quantum, BFIC, Coldharbour, Elevate, Energy Holdings Ltd, Newtel, Novareum, Snapper Services (UK) Limited, UIL Holdings Pte Ltd and Zeta. On consolidation, transactions between the Company and UIL Finance have been eliminated. BFIC and UIL Holdings Pte Ltd were dissolved and struck off during the year. #### Associated undertakings: Carebook, DTI, ICM Mobility, Littlepay, Orbital, Resimac, Serkel, Smlestyler, Somers and SportEngaged Ltd. #### Subsidiaries of the above subsidiaries and associated undertakings: **Allectus Capital:** Own Solutions AC Limited, Own Solutions Financial Services Limited, Aplauz CH GmbH, Aplauz NL B.V., Stichting Aplauz Foundation. Global Equity Risk Protection Limited ("GERP-ACL") was sold by Allectus Capital during the year ended 30 June 2022. **Allectus Quantum:** Allectus Quantum Ltd and Diraq Pty Ltd. **ICM Mobility:** Kuba Group Limited, Vix AFC Limited, Vix Holdings Ltd, Vix Tech Pte Ltd and Vix Technology Limited. **Littlepay:** Littlepay Limited, Littlepay Pty Ltd, Littlepay Inc. **Resimac:** Access Home Loans Pty Ltd, 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. **Snapper Services (UK) Limited:** Snapper App Co 1 Limited, Snapper App Co 2 Limited, Snapper Platform Co Limited and Snapper Services Ltd. **Somers:** AssetCo plc, PCF Group plc, Somers Pte Ltd, Somers Treasury Pty Ltd, Somers UK (Holdings) Limited, Waverton and West Hamilton Holdings 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. #### The following transactions were carried out during the year to 30 June 2022 between the Company and its related parties above: ##### UIL Finance Loans from UIL Finance to UIL of £136.3m as at 30 June 2021 increased by £7.9m, to £144.2m as at 30 June 2022. The loans are repayable on any ZDP share repayment date. ##### Subsidiaries of UIL Transactions are disclosed in note 10. #### Associated undertakings: Transactions are disclosed in note 9. #### Subsidiaries of the above subsidiaries and associated undertakings: There were no transactions during the year to 30 June 2022 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 £1,000, there were no other transactions with ICM or ICMIM or ICM Corporate Services (Pty) Ltd. At the period-end £192,000 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 BCB, BFIC, GERP, PIL, PML, Somers and West Hamilton Holdings Limited. Mr Jillings is a director of Allectus Capital, GERP, PIL, PML, Somers and Waverton. Mr Jillings received dividends from UIL of £28,000. Mr Saville is a director of Allectus Capital, BFIC, GPLPF, GERP, Newtel, PIL, PML, Resimac, VixTech, West Hamilton Holdings Limited and Zeta Energy Pte Ltd. There were no other transactions in Report and Accounts for the year to 30 June 2022 95 ## NOTES TO THE ACCOUNTS the year with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL. ### The Board: Fees paid to Directors were: Chairman £47,600 per annum; Chairman of Audit & Risk Committee £45,500 per annum and Directors £35,200 per annum. The Board received aggregate remuneration of £198,700 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 £119,543 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 £4,388,123 from UIL, UMPF received dividends of £602,999 from UIL and Mitre Investments Limited received dividends of £216,607 from UIL. There were no other transactions between companies controlled by key management and UIL during the year to 30 June 2022. ### 27. OPERATING SEGMENTS The Directors are of the opinion that the Company's activities comprise a single operating segment, which is investing in equity, debt and derivative securities to maximise shareholder returns. ### 28. GOING CONCERN Notwithstanding that the Group has reported net current liabilities of £108,129,000 as at 30 June 2022 (2021: £44,220,000), 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 focussed on the forecast liquidity of the Group for 12 months from the date of approval of the financial statements. This analysis assumes that the Company will meet some of its short term obligations through the sale of level 1 securities, which represented 41.6% of the Company's total portfolio as at 30 June 2022. 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 and an assessment of the Company's ability to meet its liabilities as they fall due (including the loan liabilities in note 13 and the 2022 ZDP shares liabilities in note 15), 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 £51,080,000 and the repayment to the 2022 ZDP share holders of £52,283,000. 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. As at the year end, the Company had a £50m multicurrency loan facility with Scotiabank expiring on 30 September 2022. Drawdowns under the facility are detailed in note 13. Subsequent to the year end, UIL entered into an amendment agreement, novated from Scotiabank to the Bank of Nova Scotia, London Branch, inter alia, extending the expiry date to 19 September 2023, with the facility reducing to £37.5m on 30 March 2023. Post 19 September 2023, the Company will either extend or replace the facility or repay the outstanding debt when due from portfolio realisations. Consequently, the Directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Accordingly, the Board considers it appropriate to continue to adopt the going concern basis in preparing the accounts. ### 29. FINANCIAL RISK MANAGEMENT The Group's investment objective is to maximise shareholder returns by identifying and investing in compelling long-term investments worldwide, where the underlying value is not reflected in the market share price. The Group seeks to meet its investment objective by investing principally in a direct and indirect diversified portfolio of both listed and unlisted companies. Derivative instruments may be used for purposes of hedging the underlying portfolio of investments. The Group has the power to take out both short and long term borrowings. In pursuing the objective, the Group is exposed to financial risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit and counterparty risk. The Board of Directors, together with the Investment Managers, is responsible for the Group's risk management. The Directors' policies and processes for managing the financial risks are set out in (a), (b) and (c) below. The Company's risks include the risks within UIL Finance and therefore only the Group risks are analysed below as the differences are not considered to be significant. The accounting policies which govern the reported Statement of Financial Position carrying values of the underlying financial assets and liabilities, as well as the related income and expenditure, are set out in note 1. The policies are in compliance with IFRS and best practice, and include the valuation of financial assets and 96 UIL Limited liabilities at fair value except as noted in (d) below and in note 15 in respect of ZDP shares. The Group does not make use of hedge accounting rules. # **(a) Market risks** The fair value of equity and other financial securities held in the Group's portfolio and derivative financial instruments fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the market perception of future risks. The Board sets policies for managing these risks within the Group's objective and meets regularly to review full, timely and relevant information on investment performance and financial results. The Investment Managers assess exposure to market risks when making each investment decision and monitor on-going market risk within the portfolio. The Group's other assets and liabilities may be denominated in currencies other than Sterling and may also be exposed to interest rate risks. The Investment Managers and the Board regularly monitor these risks. The Group does not normally hold significant cash balances. Borrowings are limited to amounts and currencies commensurate with the portfolio's exposure to those currencies, thereby limiting the Group's exposure to future changes in exchange rates. Gearing may be short- or long-term, in Sterling and foreign currencies, and enables the Group to take a long-term view of the countries and markets in which it is invested without having to be concerned about short-term volatility. Income earned in foreign currencies is converted to Sterling on receipt. The Board regularly monitors the effects on net revenue of interest earned on deposits and paid on gearing. # **Currency exposure** The principal currencies to which the Group was exposed were the Australian Dollar, Canadian Dollar, Euro and US Dollar (2021: Australian Dollar, Euro and US Dollar). The Group's assets and liabilities as at 30 June (shown at fair value, except derivatives at gross exposure value), by currency excluding Sterling based on the country of primary exposure, are shown below: | 2022 | AUD £'000s | CAD £'000s | EUR £'000s | USD £'000s | Other £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | --- | | Other receivables | 8 | - | - | - | - | 8 | | Derivative financial instruments – assets | 16,969 | 2,553 | - | 7,199 | - | 26,721 | | Cash and cash equivalents | - | 8 | - | - | - | 8 | | Derivative financial instruments – liabilities | (38,777) | (30,805) | (7,749) | (43,728) | - | (121,059) | | Short-term borrowings | (18,993) | - | (8,994) | (23,093) | - | (51,080) | | Net monetary liabilities | (40,793) | (28,244) | (16,743) | (59,622) | - | (145,402) | | Investments | 146,224 | 22,068 | 32,982 | 21,087 | 136,909 | 359,270 | | Net financial assets | 105,431 | (6,176) | 16,239 | (38,535) | 136,909 | 213,868 | | 2021 | AUD £'000s | EUR £'000s | USD £'000s | Other £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | | Other receivables | 695 | 311 | - | 393 | 1,399 | | Derivative financial instruments – assets | 24,843 | - | - | 7,732 | 32,575 | | Cash and cash equivalents | 1,291 | - | 2,004 | 28 | 3,323 | | Derivative financial instruments – liabilities | (64,799) | - | (27,141) | (17,697) | (109,637) | | Short-term borrowings | (18,684) | (9,078) | (20,786) | - | (48,548) | | Net monetary liabilities | (56,654) | (8,767) | (45,923) | (9,544) | (120,888) | | Investments | 114,995 | - | 250,970 | 19,505 | 385,470 | | Net financial assets | 58,341 | (8,767) | 205,047 | 9,961 | 264,582 | Report and Accounts for the year to 30 June 2022 97 ## NOTES TO THE ACCOUNTS ## (continued) Based on the financial assets and liabilities held, and exchange rates applying, as at the Statement of Financial Position date, a weakening or strengthening of Sterling against each of these currencies by 10% would have had the following approximate effect on annualised income after tax and on NAV per share: 2022 2021 AUD CAD EUR USD AUD EUR USD Weakening of Sterling £’000s £’000s £’000s £’000s £’000s £’000s £’000s Income Statement Revenue profit for the year 81 2 – 61 127 – – Capital profit/(loss) for the year 11,715 (686) 1,804 (1,614) 6,405 (974) 22,783 Total profit/(loss) for the year 11,796 (684) 1,804 (1,553) 6,532 (974) 22,783 2022 2021 AUD CAD EUR USD AUD EUR USD Strengthening of Sterling £’000s £’000s £’000s £’000s £’000s £’000s £’000s Income Statement Revenue loss for the year (81) (2) – (61) (127) – – Capital (loss)/profit for the year (11,715) 686 (1,804) 1,614 (6,405) 974 (22,783) Total (loss)/profit for the year (11,796) 684 (1,804) 1,553 (6,532) 974 (22,783) These analyses are broadly representative of the Group’s activities during the current year as a whole, although the level of the Group’s exposure to currencies fluctuates in accordance with the investment and risk management processes. Interest rate exposure The exposure of the financial assets and liabilities to interest rate risks as at 30 June is shown below: 2022 2021 | | Within | More than | | | | Within | More than | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Total | one year | one year | | Total | one year | | one year | | | £’000s | £’000s | | £’000s | £’000s | | £’000s | | £’000s | Exposure to floating rates Cash and margin account 8 8 – 3,324 3,324 – Bank overdraft (3,835) (3,835) – (213) (213) – Borrowings (51,080) (51,080) – (48,548) (48,548) – (54,907) (54,907) – (45,437) (45,437) – Exposure to fixed rates ZDP shares (140,813) (51,166) (89,647) (132,073) – (132,073) Net exposures At year end (195,720) (106,073) (89,647) (177,510) (45,437) (132,073) Maximum in year (199,716) (112,232) (87,484) (238,270) (115,657) (122,613) Minimum in year (177,510) (45,437) (132,073) (166,819) (42,048) (124,771) | | Exposure to | | | Exposure | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | floating | | to fixed | | | Exposure to | | Exposure to | | | | | interest | | interest | | | | floating | fixed interest | | | Total | | | rates | | rates | Total | interest rates | | | rates | | £’000s | | | £’000s | | £’000s | £’000s | | £’000s | | £’000s | Maximum in year (199,716) (61,715) (138,001) (238,270) (55,928) (182,342) Minimum in year (177,510) (45,437) (132,073) (166,819) (42,048) (124,771) 98 99 UIL Limited Report and Accounts for the year to 30 June 2022 Exposures vary throughout the year as a consequence of changes in the make-up of the net assets of the Group arising out of the investment and risk management processes. Interest received on cash balances or paid on overdrafts is at ruling market rates. Finance costs on the ZDP shares are fixed (see note 15). Interest paid on borrowings is at ruling market rates (2021: same). The Group’s total returns and net assets are sensitive to changes in interest rates on cash and borrowings. Based on the financial assets and liabilities held, and the interest rates pertaining, at each Statement of Financial Position date, a decrease or increase in interest rates by 2% would have had the following approximate effects on the Group Income Statement revenue and capital returns after tax and on the NAV per share. 2022 2021 | Increase | | Decrease | | Increase | Decrease | | | --- | --- | --- | --- | --- | --- | --- | | | in rate | | in rate | in rate | | in rate | | | £’000s | | £’000s | £’000s | | £’000s | Revenue profit for the year (1,098) 1,098 (909) 909 Capital profit for the year – – – – Total profit for the year (1,098) 1,098 (909) 909 Other market risk exposures The portfolio of investments, valued at £416,516,000 as at 30 June 2022 (2021: £540,074,000) is exposed to market price changes. The Group enters into currency and index options in managing its exposure to other market risks. The Investment Managers assess these exposures at the time of making each investment decision. The Board reviews overall exposures at each meeting against indices and other relevant information. An analysis of the portfolio by country and major industrial sector are set out on pages 21 and 12 respectively. The Investment Managers operate a strategic market position via the purchase and sale of equity index put and call options, principally on the S&P500 Index. The level of the position is kept under constant review, and will depend upon several factors including the relative performance of markets, the price of options as compared to the market, and the Investment Managers’ view of likely future volatility and market movements. During the year to 30 June 2022, the Group did not purchase or sell any S&P options. Based on the portfolio of investments at the Statement of Financial Position date, and assuming other factors, including derivative financial instrument exposure, remain constant, a decrease or increase in the fair values of the portfolio by 20% would have had the following approximate effects on the Income Statement Capital Return after tax and on the NAV per share: 2022 2021 Increase Decrease Increase Decrease in value in value in value in value Income Statement capital profit for the year (£’000s) 83,303 (83,303) 108,846 (108,846) (b) Liquidity risk exposure The Group and the Company are required to raise funds to meet commitments associated with financial instruments including ZDP shares. These funds may be raised either through the realisation of assets or through increased borrowing. The risk of the Group or the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given: the number of quoted investments held in the Group’s portfolio, 19 as at 30 June 2022 (18 as at 30 June 2021); the liquid nature of the portfolio of investments; the geographical and sector diversity of the portfolio (see pages 21 and 12 respectively); and the existence of an on-going loan facility agreement. Cash balances are held with reputable banks with high quality external credit ratings. 98 99 UIL Limited Report and Accounts for the year to 30 June 2022 ## NOTES TO THE ACCOUNTS ## (continued) The Investment Managers review liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each meeting. The Group has bank loan facilities of £50.0m as set out in note 13 and ZDP share liabilities of £140.8m as set out in note 15. The contractual maturities of the financial liabilities, based on the earliest date on which payment can be required, were as follows: 2022 2021 | | | | | More than | | | | | | | More than | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Three | | three months | | | | | | Three | three months | | | | | | | | months | | but less than | | | More than | | | months | but less than | | | More than | | | | | or less | | | one year | | one year | | Total | or less | | one year | | oneyear | | Total | | | £’000s | | | | £’000s | | £’000s | £’000s | £’000s | | | £’000s | | £’000s | £’000s | | Securities | | – – – – 57 – – 57 | | | | | | | | | | | | | | purchased for future settlement Bank overdraft 3,835 – – 3,835 213 – – 213 Other creditors 447 – – 447 437 – – 437 Derivative financial 99,750 40,497 – 140,247 139,451 – – 139,451 instruments Loans 51,564 – – 51,564 37,172 11,714 – 48,886 ZDP shares – 52,283 113,064 165,347 – – 132,073 132,073 155,596 92,780 113,064 361,440 177,330 11,714 132,073 321,117 (c) Credit risk and counterparty exposure The Group is exposed to potential failure by counterparties to deliver securities for which the Group has paid, or to pay for securities which the Group has delivered. The Board approves all counterparties used in such transactions, which must be settled on a basis of delivery against payment (except where local market conditions do not permit). A list of pre-approved counterparties is maintained and regularly reviewed by Waverton and the Board. Broker counterparties are selected based on a combination of criteria, including credit rating, statement of financial position strength and membership of a relevant regulatory body. Cash and deposits are held with reputable banks. The Group has an on-going contract with its custodians for the provision of custody services. The contracts are reviewed regularly. Details of securities held in custody on behalf of the Group are received and reconciled monthly. Prior to making investments in debt instruments, the Investment Managers have in place a process of review that includes an evaluation of a potential investee company’s ability to service and repay its debt. The Investment Managers review the financial position of investee companies on a regular basis. To the extent that the Investment Managers carry out duties (or cause similar duties to be carried out by third parties) on the Group’s behalf, the Group is exposed to counterparty risk. The Board assesses this risk continuously through regular meetings with management. In summary, compared to the amounts included in the Statement of Financial Position, the maximum exposure to credit risk was as follows: 2022 2021 | | | Maximum | | | Maximum | | | --- | --- | --- | --- | --- | --- | --- | | | | exposure | | | exposure | | | | 30 June | in the year | | 30 June | in the year | | | Current assets | £’000s | | £’000s | £’000s | | £’000s | Cash at bank 8 4,496 3,324 55,841 Margin account – – – 2,104 Financial assets through profit and loss Investments in debt instruments 8,672 39,138 36,089 79,499 Derivatives (forward foreign exchange contracts) 138,305 168,050 139,871 198,145 None of the Group’s financial assets are past due or impaired. The Group’s principal custodian is JPMorgan Chase Bank N.A.– Jersey Branch. 100 101 UIL Limited Report and Accounts for the year to 30 June 2022 # (d) Fair values of financial assets and liabilities The assets and liabilities of the Group are, in the opinion of the Directors, reflected in the Statement of Financial Position at fair value except for ZDP shares which are carried at amortised cost using effective interest rate basis (see note 15). Borrowings under loan facilities do not have a value materially different from their capital repayment amount. Borrowings in foreign currencies are converted into Sterling at exchanges rates ruling at each valuation date. The fair values of ZDP shares derived from their quoted market price as at 30 June, were: | | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | 2022 ZDP shares | 51,219 | 49,619 | | 2024 ZDP shares | 36,750 | 36,150 | | 2026 ZDP shares | 26,207 | 25,393 | | 2028 ZDP shares | 24,172 | 24,416 | Unquoted investments are valued based on professional assumptions and advice that is not wholly supported by prices from current market transactions or by observable market data. The Directors make use of recognised valuation techniques and may take account of recent arms' length transactions in the same or similar investments. The Directors regularly review the principles applied by the Investment Managers to those valuations to ensure they comply with the Group's accounting policies and with fair value principles. # 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. Some or all of the significant inputs into these models may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for the selection of the appropriate valuation model to be used, determination of expected future cash flows of the financial instrument being valued, determination of the probability of counterparty default and prepayments, peer group multiple and selection of appropriate discount rates. Fair value estimates obtained from such models are adjusted for any other factors, such as controlling interest, historical and projected financial data, entity specific strengths and weaknesses, or model uncertainties, to the extent that the Company believes that a third party market participant would take them into account in pricing a transaction. The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuations. 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. U/L currently has investments in a number of level 3 closed-end investment companies including Alectus Capital, ICM Mobility and Somers. These closed-end fund interests 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 30 June 2022 managers' NAVs and these NAVs have been reviewed to ensure that the economic impact of the rising interest rate environment, inflation, the Ukraine war, and Covid-19 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. The following section details the sensitivity of valuations to variations in key inputs. The level of change selected is considered to be reasonable, based on observation of market conditions and historic trends. In assessing the level of reasonably possible outcomes consideration was also given to the impact on valuations of the increased level of volatility in equity markets during the first half of 2022, principally reflecting concerns about Report and Accounts for the year to 30 June 2022 101 ## NOTES TO THE ACCOUNTS (continued) increasing rates of inflation, tightening energy supplies, rising interest rates and the Ukraine war. The valuations of fund interests are based on the managers' NAVs and these 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. For each unlisted holding valued over £5.0m, the significant valuation inputs have been sensitised by a percentage deemed to reflect the relative degree of estimation uncertainty. **Allectus Capital** Bermuda incorporated Valuation inputs: Market value for portfolio of investments. Valuation methodology: UIL has used the portfolio's NAV and carried its investment at £22.9m (2021: £21.4m) and loans at £5.5m (2021: £nil). The cost of these investments was £23.9m (2021: £18.5m). The financial results of Allectus Capital are not publicly available. Allectus Capital's portfolio is concentrated in the technology sector and its NAV was valued using valuation techniques consistent with IFRS and was subject to audit. The Directors considered together both the increased volatility in technology equity markets and the increased level of unlisted investments within Allectus Capital's portfolio and assessed that the valuation uncertainty had increased over the year. Accordingly, Allectus Capital's fair value has been given a sensitivity of 20% (2021: 10%) to reflect a higher level of uncertainty over the managers' valuations of Allectus Capital's portfolio. Sensitivities: Should the value of holdings in Allectus Capital move by 20% the gain or loss would be £5.7m. **ICM Mobility** (including direct holdings in Littlepay and Snapper Services (UK) Limited) UK incorporated Valuation inputs: Market value for portfolio of investments. Valuation methodology: UIL has used ICM Mobility's and Snapper Services (UK) Limited portfolio NAVs and its direct investment in Littlepay has been valued using earnings and revenue peer multiples. UIL values the investments at £51.0m (2021: £41.9m). The cost of these investments was £32.4m (£30.5m). For the year to 30 June 2022, ICM Mobility's turnover was £12.6m and pre-tax profits were £12.4m and as at 30 June 2022 the net assets were £110.2m. For the year to 30 June 2021, the latest publicly available information, Littlepay's turnover was £nil and pre-tax loss was £59k, and as at 30 June 2021 the net assets were £5.9m. ICM Mobility's portfolio is focused in the transit payments sector and its NAV was valued using valuation techniques consistent with IFRS and was subject to audit. The Directors considered ICM Mobility's sector and current market turbulence, in ICM Mobility's portfolio valuations and assessed that the valuation uncertainty was at a medium level. As at 30 June 2022 ICM Mobility's investment portfolio was heavily concentrated, and all its holdings were valued using valuation techniques. The valuation methodologies employed by ICM Mobility consisted predominantly of peer group earnings and revenue multiples with most of the entity's investments valued using these methodologies. Earnings and revenue were considered over historic, current and forecast periods. Its portfolio holdings were also heavily weighted towards the growth stage of their business life cycles resulting in a higher degree of management judgement and estimation in the determination of their fair value. ICM Mobility's fair value has been given a sensitivity of 20% (2021: 20%) to reflect a higher level of uncertainty over the managers' valuations of ICM Mobility's portfolio. Sensitivities: Should the value of ICM Mobility move by 20% the gain or loss would be £10.2m. **Somers** Bermuda incorporated Somers is UIL's largest investment with a value of £148.8m as at 30 June 2022 (2021: £220.1m) and accounts for 35.7% (2021: 42.7%) of UIL's total portfolio. The cost of this investment was £89.4m (£84.9m). Valuation inputs: Market value for portfolio of investments. Valuation methodology: UIL values its holding of Somers shares based on estimated NAV per share. The Directors believe this is the most appropriate basis for valuing the investment in Somers. Somers shares are listed on the BSX. As at 30 June 2022, the Somers shares were deemed not to trade in an active market and as at the 30 June 2022 measurement date, the Directors consider that the listed share price did not represent fair value. In making their assessment the Directors considered the very low level of trading in Somers shares, the large disconnect between the listed share price and Somers' NAV, and the absence of movement in Somers' listed share price in response to changing financial performance and other developments at Somers. Somers is a financial services investment holding company, listed on the BSX. It is classified as an investment company under IFRS 10 and, accordingly, values its underlying investments at fair value. Somers applies valuation techniques consistent with IFRS and is subject to annual audit. As an investment company, Somers' value is based primarily on the performance and valuation of its portfolio of investments which are concentrated in the banking, wealth management and asset financing sectors. For its year ended 30 September 2021, Somers recorded total income of USD 218.0m, net income before tax of USD 197.8m and net assets of USD 617.8m. As at 30 June 2022, Somers' three largest investments, which make up 78.4% of its portfolio, were a 58.4% holding in Resimac, a non-bank Australian financial institution, a 61.8% holding in Waverton, a UK wealth 102 UIL Limited manager, and a 48.4% holding in Thorn Group, an Australian diversified financial services organisation. As at 30 June 2022 28% of Somers' investment portfolio was valued using valuation techniques and these investments have been given a sensitivity of 10% (2021: 5%) to reflect a degree of uncertainty over the managers' valuations. The remaining 72% of Somers' portfolio was valued using their listed share price. Sensitivities: Should the value of Somers move by 10% the gain or loss would be USD 18.1m (£14.9m). #### **Arria NLG Limited ("Arria")** New Zealand incorporated UIL hold 6.6m ordinary shares in Arria which it valued at £1.2m as at 30 June 2022. The cost of this investment was £0.7m. In arriving at its valuation, UIL applied a peer revenue multiple to estimated recurring revenue. According to its most recent published accounts, Arria was materially loss making, cash flow negative, and they may have insufficient cash reserves if their expected capital raise activities do not proceed as planned. Against this, their revenues have recently gained traction and appear to be growing very strongly. Arria has also had historic success in raising funds. In arriving at their valuation, the Directors considered Arria's historic financial track record, their recent uplift in revenues and Arria's reliance on successful future capital raising. The Directors assessed that while the valuation uncertainty over Arria was high, should Arria's recent growth trajectory continue and should they have success in raising capital this would be expected to contribute to a valuation uplift. Accordingly, Arria's fair value has been given a sensitivity of 400% to reflect the high level of uncertainty over the future position of Arria. Sensitivities: Should the value of UIL's holding in Arria increase by 400% the gain or loss would be £4.6m. #### **Other unlisted companies** Valuation methodology: UIL has a further 19 (2021: 13) unlisted holdings valued below £2.5m (2021: £2.5m) each. These holdings were valued using a variety of methods, including, listed peer comparison or peer group multiple, discounted cash flow, net assets, dividend yields, and cost of recent investments adjusted for events subsequent to acquisition that impact fair value. The total value of these 19 holdings was £9.6m as at 30 June 2022 (2021: £6.0m). Sensitivities: If the value of all these lower valued investments moved by 10.0%, this would have an impact on the investment portfolio value of £1.0m or 0.2%. A 20.0% change would have an impact on the investment portfolio value of £1.9m or 0.5%. #### **(e) Capital risk management** The objective of the Group is stated as being to maximise shareholder returns by identifying and investing in investments where the underlying value is not reflected in the market price. In pursuing this long term objective, the Board has a responsibility for ensuring the Group's ability to continue as a going concern. It must therefore maintain its capital structure through varying market conditions. This involves the ability to: issue and buy back share capital within limits set by the shareholders in general meeting; borrow monies in the short and long term; and pay dividends to shareholders out of current year earnings as well as out of brought forward reserves. Changes to ordinary share capital are set out in note 17. Dividends are set out in note 8. Bank loans are set out in note 13. ZDP shares are set out in note 15. #### **30. CONTINGENT LIABILITIES** UIL has given a guarantee to Bank of Nova Scotia to settle derivative transactions traded by Somers. Somers has not and is not expected to use this facility. It is not expected that UIL will incur any liability. #### **31. COMMITMENTS** UIL has made a £1m convertible loan note facility available to Coda Cloud Limited. This facility has not been drawn nor is it expected to be drawn for the next six months. Report and Accounts for the year to 30 June 2022 103 ## OTHER FINANCIAL INFORMATION (UNAUDITED) ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (“AIMFD”) In accordance with the AIFMD, information in relation to the Group’s leverage and the remuneration of the Company’s AIFM, ICMIM, is required to be made available to investors. Detailed regulatory disclosures including those on the AIFM’s remuneration policy are available on the Company’s website or from ICMIM on request. The Group’s maximum and actual leverage as at 30 June are shown below: | | | | | | 2022 | | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Gross | Commitment | | | Gross | Commitment | | | | Leverage exposure | method | | | method | | method | | method | | Maximum permitted limit 425% 425% 425% 425% Actual 236% 236% 251% 251% The leverage limits are set by the AIFM and approved by the Board. The AIFM is also required to comply with the gearing parameters set by the Board in relation to borrowings. 104 105 UIL Limited Report and Accounts for the year to 30 June 2022 # NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of UIL Limited will be held at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on Thursday, 10 November 2022 at 5.00pm (local time) for the purpose of considering and, if thought fit, passing the following resolutions (which will be proposed in the case of resolutions 1 to 11, as ordinary resolutions and, in the case of resolution 12, as a special resolution). # ORDINARY BUSINESS 1. To receive and adopt the report of the Directors of the Company and the financial statements for the year ended 30 June 2022, together with the report of the auditor thereon. 2. To approve the Directors' Remuneration Report for the year ended 30 June 2022. 3. To approve the Company's dividend policy to pay four interim dividends per year. 4. To re-elect Mr P Burrows as a Director. 5. To re-elect Mr S Bridges as a Director. 6. To re-elect Ms A Hill as a Director. 7. To re-elect Mr C Samuel as a Director. 8. To re-elect Mr D Shillson as a Director. 9. To re-appoint KPMG LLP as auditor of the Company to hold office until the conclusion of the next Annual General Meeting of the Company. 10. To authorise the Directors to determine the auditor's remuneration. # SPECIAL BUSINESS # Ordinary resolution 11. That, in substitution for the Company's existing authority to make market purchases of ordinary shares of 10p in the Company ("Ordinary Shares"), the Company be and it is generally and unconditionally authorised to make market purchases of Ordinary Shares, provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased is 12,560,000 (being the equivalent of approximately 14.99% of the issued Ordinary Shares as at the date of this notice); (b) the minimum price which may be paid for an Ordinary Share shall be 10p; (c) the maximum price (exclusive of expenses payable by the Company) which may be paid for an Ordinary Share shall be the higher of: (i) 105% of the average of the middle market quotations of the Ordinary Shares for the five business days prior to the date on which such shares are contracted to be purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out; (d) such purchases shall be made in accordance with the Companies Act 1981 of Bermuda; and (e) unless renewed, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting to be held in 2023 save that the Company may, prior to such expiry, enter into a contract to purchase Ordinary Shares which will or may be completed or executed wholly or partly after the expiration of such authority. # Special resolution 12. That, for the purpose of Bye-law 4A of the Company's Bye-laws, the Company may issue Relevant Securities (as defined in the Bye-laws) representing up to 4,192,000 Ordinary Shares, equivalent to approximately 5% of the total number of Ordinary Shares in issue as at the date of this notice otherwise than on a pre-emptive basis, provided that such disapplication shall expire (unless and to the extent previously revoked, varied or renewed by the Company in general meeting by Special Resolution (as defined in the Bye-laws)) at the earlier of the conclusion of the Annual General Meeting to be held in 2023 or 18 months from the date of this resolution but so that this power shall enable the Company to make such offers or agreements before such expiry which would or might otherwise require Relevant Securities to be issued after such expiry and the Directors may issue Relevant Securities in pursuance of such offer or agreement as if such expiry had not occurred. By order of the Board ICM Limited, Secretary 21 September 2022 Report and Accounts for the year to 30 June 2022 105 NOTICE OF ANNUAL GENERAL MEETING (continued) # NOTES 1. Only the holders of ordinary shares registered on the register of members of the Company at close of business on 8 November 2022 shall be entitled to attend and vote or to be represented at the meeting in respect of the ordinary shares registered in their name at that time. Changes to entries on the register after close of business on 8 November 2022 shall be disregarded in determining the rights of any person to attend and vote at the meeting. 2. A member entitled to attend and vote at the meeting may appoint one or more proxies to attend and vote instead of him/her. A proxy need not be a member of the Company. 3. If the Chairman, as a result of any proxy appointments, is given discretion as to how the votes are cast and the voting rights in respect of those discretionary proxies, when added to the interests in the Company's securities already held by the Chairman, result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure Guidance and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial Conduct Authority. As a result, any person holding 5% or more of the voting rights in the Company who grants the Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a notification obligation under the Disclosure Guidance and Transparency Rules need not make a separate notification to the Company and the Financial Conduct Authority. 4. Any such person holding 5% or more of the voting rights in the Company who appoints a person other than the Chairman as his proxy will need to ensure that both he and such person complies with their respective disclosure obligations under the Disclosure Guidance and Transparency Rules. 5. A form of proxy is provided with this notice of meeting. The return of a form of proxy will not preclude a member from attending the meeting and voting in person if he/she wishes to do so. To be valid, a form of proxy for use at the meeting and the power of attorney or other authority (if any) under which it is signed, or a notarially certified or office copy of such power or authority, must be deposited with the Company's registrars, Computershare Investor Services (Bermuda) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 62Y not later than 5:00 pm (GMT) on 8 November 2022. Alternatively, shareholders can vote or appoint a proxy electronically by visiting www.proxyappointment.com/login. You will be asked to enter the Control Number, the Shareholder Reference Number and PIN which are printed on the form of proxy. The latest time for the submission of proxy votes electronically is 5:00 pm (GMT) on 8 November 2022. To appoint more than one proxy, an additional proxy form(s) may be obtained by contacting the Registrar's helpline on 0370 707 1196 or you may photocopy the form of proxy. Please indicate in the box next to the proxy holder's name the number of shares in relation to which they are authorised to act as your proxy. Please also indicate by marking the box provided if the proxy instruction is one of multiple instructions being given. All forms of proxy must be signed and should be returned together in the same envelope. 6. Investors holding ordinary shares in the Company through depository interests should ensure that Forms of Instruction are returned to The Depositary, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 62Y not later than 5:00 pm (GMT) on 7 November 2022 or give an instruction via the CREST system as detailed under note 7. Please note only depository interest holders registered on the depositary interest register at close of business on 7 November 2022 shall be entitled to attend and vote or to be represented at the meeting. Changes to entries on the depositary interest register after close of business on 7 November 2022 shall be disregarded in determining the rights of any person to attend and vote at the meeting. 7. Depositary interest holders who are CREST members and who wish to issue an instruction through the CREST electronic voting appointment service may do so by using the procedures described in the CREST manual (available from www.euroclear.com). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting services provider(s), who will be able to take the appropriate action on their behalf. In order for instructions made using the CREST service to be valid, the appropriate CREST message (a "CREST Voting Instruction") must be properly authenticated in accordance with the specifications of Euroclear UK & International Limited ("EU") and must contain the information required for such instructions, as described in the CREST Manual (available from www.euroclear.com). The message, regardless of whether it relates to the voting instruction or to an amendment to the instruction given to the Depositary must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID 3RA50) no later than 5:00 pm, (GMT) on 7 November 2022. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the CREST Voting Instruction by the CREST applications host) from which the issuer's agent is able to retrieve the CREST Voting Instruction by enquiry to CREST in the manner prescribed by CREST. CREST members and, where applicable, their CREST sponsors or voting service providers should note that EU does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the transmission of CREST Voting Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that the CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a CREST Voting Instruction is transmitted by means of the CREST service by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 8. The register of Directors' holdings is available for inspection at the registered office of the Company during normal business hours on any weekday and will be available at the place of the meeting from 15 minutes prior to the commencement of the meeting until the conclusion thereof. 9. No service contracts exist between the Company and any of the Directors, who hold office in accordance with letters of appointment and the Company's Bye laws. The letters of appointment are available for inspection on request at the Company's registered office and at the Annual General Meeting. 10. As at the date of publication of this Notice of Annual General Meeting, the Company's issued share capital consisted of 83,842,918 ordinary shares of 10p each. Each ordinary share carries the right to one vote and therefore the total voting rights in the Company as at the date of this report are 83,842,918. 106 UK Limited ## COMPANY INFORMATION DIRECTORS LEGAL ADVISOR TO THE COMPANY (as to English law) Peter Burrows, AO (Chairman) | Stuart Bridges | Norton Rose Fulbright LLP | | --- | --- | | Alison Hill | 3 More London Riverside, London SE1 2AQ | | Christopher Samuel | United Kingdom | David Shillson LEGAL ADVISOR TO THE COMPANY REGISTERED OFFICE (as to Bermuda law) Clarendon House, 2 Church Street, Hamilton HM 11, Conyers Dill & Pearman Limited Bermuda Clarendon House, 2 Church Street, Hamilton HM 11, Company Registration Number: 39480 Bermuda LEI: 213800CTZ7TEIE7YM468 AUDITOR AIFM AND JOINT PORTFOLIO MANAGER KPMG LLP ICM Investment Management Limited 15 Canada Square, London E14 5GL, United Kingdom Ridge Court, The Ridge, Epsom, Surrey, KT18 7EP Member of the Institute of Chartered Accountants in England and United Kingdom Wales Telephone number 01372 271486 Authorised and regulated in the UK by the Financial Conduct Authority DEPOSITARY SERVICES PROVIDER J.P. Morgan Europe Limited JOINT PORTFOLIO MANAGER AND SECRETARY 25 Bank Street, Canary Wharf, London E14 5JP ICM Limited United Kingdom 34 Bermudiana Road, Hamilton HM 11, Bermuda Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority ASSISTANT SECRETARY | Conyers Corporate Services (Bermuda) Limited | CUSTODIAN | | --- | --- | | Clarendon House, 2 Church Street, Hamilton HM 11, | JPMorgan Chase Bank N.A. | | Bermuda | JPMorgan House, Grenville Street, St Helier | Jersey JE4 8QH ADMINISTRATOR | JP Morgan Chase Bank N.A. – London Branch | REGISTRAR | | --- | --- | | 25 Bank Street, Canary Wharf, London E14 5JP | Computershare Investor Services (Bermuda) Limited | | United Kingdom | 5 Reid Street, Hamilton HM 11, Bermuda | | Authorised by the Prudential Regulation Authority and regulated by the | Telephone number 0370 707 1196 | Financial Conduct Authority and the Prudential Regulation Authority REGISTRAR TO THE DEPOSITARY INTERESTS BROKER AND CREST AGENT Shore Capital and Corporate Limited Computershare Investor Services PLC Cassini House, 57 St James’s Street, London The Pavilions, Bridgwater Road, Bristol BS99 6ZY SW1A 1LD United Kingdom United Kingdom Authorised and regulated in the UK by the Financial Conduct Authority COMPANY BANKER The Bank of Nova Scotia, London Branch 201 Bishopsgate, 6th Floor, London EC2M 3NS United Kingdom 106 107 UIL Limited Report and Accounts for the year to 30 June 2022 Report and Accounts for the year to 30 June 2022 107 ## ALTERNATIVE PERFORMANCE MEASURES The European Securities and Markets Authority defines an Alternative Performance Measure ("APM") as being a financial measure of historical or future financial performance, financial position or cash flow, other than a financial measure defined or specified in the applicable accounting framework. The Group uses the following APMs: **Discount/Premium** – if the share price is lower than the NAV per ordinary share, the shares are trading at a discount. Shares trading at a price above NAV per ordinary share are said to be at a premium. As at 30 June 2022 the ordinary share price was 187.50p (2021: 268.00p) and the NAV per ordinary share was 260.89p (2021: 431.51p), the discount was therefore 28.1% (2021: 37.9%). **Gearing** – represents the ratio of the borrowings less cash and cash equivalents of the Company to its net assets. | | page | 2022 £'000s | 2021 £'000s | | --- | --- | --- | --- | | Bank overdraft | 89 | 3,835 | 213 | | Cash and cash equivalents | 75 | (8) | (3,324) | | Bank loans | 75 | 51,080 | 48,548 | | ZDP shares | 90 | 140,813 | 132,073 | | Total debt | | 195,720 | 177,510 | | Net assets attributable to equity holders | 75 | 218,740 | 363,781 | | Gearing | 4 | 89.5% | 48.8% | **NAV per ordinary share** – the value of the Group's net assets divided by the number of ordinary shares in issue (see note 23 to the accounts). **NAV/share price total return** – the return to shareholders calculated on a per ordinary share basis by adding dividends paid in the period to the increase or decrease in the NAV or share price in the period. The dividends are assumed to have been re-invested in the form of net assets or shares, respectively, on the date on which the dividends were paid. | Year to 30 June 2022 | Dividend rate (pence) | NAV (pence) | Share price (pence) | | --- | --- | --- | --- | | 30-Jun-21 | n/a | 431.51 | 268.00 | | 30-Sep-21 | 2.000 | 387.13 | 267.00 | | 23-Dec-21 | 2.000 | 372.95 | 245.00 | | 31-Mar-22 | 2.000 | 370.02 | 240.00 | | 30-Jun-22 | 2.000 | 260.69 | 187.50 | | 30-Jun-22 | n/a | 260.69 | 187.50 | | Total return | | (38.1%) | (27.6%) | | Year to 30 June 2021 | Dividend rate (pence) | NAV (pence) | Share price (pence) | | --- | --- | --- | --- | | 30-Jun-20 | n/a | 292.79 | 177.50 | | 25-Sep-20 | 2.000 | 295.59 | 160.00 | | 21-Dec-20 | 2.000 | 325.51 | 191.50 | | 31-Mar-21 | 2.000 | 331.07 | 228.00 | | 28-Jun-21 | 2.000 | 395.11 | 257.00 | | 30-Jun-21 | n/a | 431.51 | 268.00 | | Total return | | 50.9% | 57.0% | **NAV/share price total return since inception** – the return to shareholders calculated on a per ordinary share basis by adding dividends paid in the period and adjusting for the exercise of warrants and Convertible Unsecured Loan Stock ("CULS") in the period to the increase or decrease in the NAV/share price in the period. The dividends are assumed to have been reinvested in the form of net assets or shares on the date on which the dividends were paid. The adjustment for the exercise of warrants and CULS is made on the date the warrants and CULS were exercised. | Total return | NAV (pence) | 2022 Share price (pence) | NAV (pence) | 2021 Share price (pence) | | --- | --- | --- | --- | --- | | NAV 14 August 2003 (pence) | 99.47 | 85.67 | 99.47 | 85.67 | | Total dividend, warrants and CULS adjustment factor | 2.1336 | 2.6203 | 2.0840 | 2.5314 | | NAV/Share price at year end (pence) | 260.69 | 187.5 | 431.51 | 268.00 | | Adjusted NAV/Share price at 30 June (pence) | 556.63 | 491.30 | 899.25 | 678.42 | | Total return since inception | 459.6% | 473.5% | 804.0% | 691.9% | 108 UIL Limited Annual compound NAV/share price total return Revenue yield – represents the ratio of total income in since inception – the annual return to shareholders the year over average gross assets in the year. using the same basis as NAV/share price total return 2022 2021 since inception. | | | | page | £’000s | £’000s | | --- | --- | --- | --- | --- | --- | | 2022 | 2021 | Income 71 9,879 11,555 | | | | | Share | Share | | | | | Average Gross assets 491,667 499,467 NAV price NAV price Revenue yield 2.0% 2.3% Annual compound NAV total return since inception 9.5% 9.7% 13.1% 12.3% Dividend yield – represents the ratio of dividends per ordinary share over closing ordinary share price. Ongoing charges – all operating costs expected to 2022 2021 be regularly incurred and that are payable by the page pence pence Group or suffered within underlying investee funds, Dividends per ordinary expressed as a proportion of the average weekly NAV shares 4 8.00 8.00 of the Group (valued in accordance with accounting Ordinary share price 4 187.50 268.00 policies) over the reporting year. The costs of buying Dividend yield 4.3% 3.0% and selling investments and derivatives are excluded, as are interest costs, taxation, non-recurring costs and Revenue reserves per ordinary share carried the costs of buying back or issuing ordinary shares. forward – the value of the Group’s revenue reserves Ongoing charges calculation 2022 2021 divided by the number of ordinary shares in issue. (excluding performance fees) page £’000s £’000s page 2022 2021 Management and administration fees 71 852 982 Revenue reserves (£'000s) 75 12,846 12,547 Other expenses 71 819 830 Number of ordinary shares in issue at 30 June 92 83,842,918 84,303,283 Expenses suffered within underlying funds 5,221 4,784 Revenue reserves per ordinary share carried Total expenses for ongoing forward (pence) 15.32 14.88 charges calculation 6,892 6,596 Average weekly NAV of the Group 306,929 282,613 Ongoing Charges 4 2.2% 2.3% Ongoing charges calculation 2022 2021 (including performance fees) page £’000s £’000s Management and administration fees 71 852 982 Other expenses 71 819 830 Expenses suffered within underlying funds 5,221 11,184 Total expenses for ongoing charges calculation 6,892 12,996 Average weekly NAV of the Group 306,929 282,613 Ongoing Charges 4 2.2% 4.6% 108 109 UIL Limited Report and Accounts for the year to 30 June 2022 ## HISTORICAL PERFORMANCE | at 30 June | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013^{(1)} | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | NAV per ordinary share (pence) | **260.89** | 431.51 | 292.79 | 369.57 | 291.79 | 252.86 | 241.12 | 169.00 | 165.84 | 148.33 | | Ordinary share price (pence) | **187.50** | 268.00 | 177.50 | 199.00 | 174.50 | 164.00 | 130.75 | 117.00 | 128.00 | 130.00 | | Discount (%) | **28.1** | 37.9 | 39.4 | 46.2 | 40.2 | 35.1 | 45.8 | 30.8 | 22.8 | 12.4 | | **Returns and dividends (pence)** | | | | | | | | | | | | Revenue return per ordinary share | **8.35** | 9.98 | 9.77 | 7.63 | 6.67 | 6.38 | 6.23 | 7.84 | 7.03 | 12.06 | | Capital return per ordinary share | **(171.68)** | 133.81 | (81.30) | 75.34 | 38.96 | 12.46 | 68.45 | 2.47 | 19.85 | (63.65) | | Total return per ordinary share | **(163.33)** | 143.79 | (71.53) | 82.97 | 45.63 | 18.84 | 74.68 | 10.31 | 26.88 | (51.59) | | Dividend per ordinary share | **8.000^{(2)}** | 8.000 | 7.875 | 7.500 | 7.500 | 7.500 | 7.500 | 7.500 | 7.500 | 10.000^{(3)} | | FTSE All-Share total return index | **7.981** | 7.852 | 6.465 | 7.431 | 7.389 | 6.777 | 5.737 | 5.614 | 5.471 | 4.837 | | **ZDP shares^{(4)} (pence)** | | | | | | | | | | | | **2022 ZDP shares** | | | | | | | | | | | | Capital entitlement^{(5)} per ZDP share | **143.98** | 135.56 | 127.59 | 120.03 | 113.01 | 106.37 | 100.12 | n/a | n/a | n/a | | ZDP share price | **144.00** | 139.50 | 126.50 | 132.00 | 124.50 | 119.50 | 104.50 | n/a | n/a | n/a | | **2024 ZDP shares** | | | | | | | | | | | | Capital entitlement^{(5)} per ZDP share | **124.14** | 118.51 | 113.13 | 107.97 | 103.10 | n/a | n/a | n/a | n/a | n/a | | ZDP share price | **122.50** | 120.50 | 105.50 | 114.00 | 107.50 | n/a | n/a | n/a | n/a | n/a | | **2026 ZDP shares** | | | | | | | | | | | | Capital entitlement^{(5)} per ZDP share | **122.62** | 116.78 | 111.21 | 105.89 | 100.87 | n/a | n/a | n/a | n/a | n/a | | ZDP share price | **115.50** | 116.00 | 92.25 | 107.50 | 102.25 | n/a | n/a | n/a | n/a | n/a | | **2028 ZDP shares** | | | | | | | | | | | | Capital entitlement^{(5)} per ZDP share | **106.87** | 101.60 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | ZDP share price | **99.00** | 100.00 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | **Equity holders' funds (£m)** | | | | | | | | | | | | Gross assets^{(6)} | **410.6** | 544.4 | 483.3 | 537.2 | 488.3 | 449.7 | 440.7 | 373.4 | 399.1 | 383.0 | | Bank debt | **51.1** | 48.5 | 50.6 | 51.0 | 27.8 | 47.8 | 24.7 | 34.4 | 22.2 | 42.5 | | ZDP shares | **140.8** | 132.1 | 180.5 | 159.9 | 199.4 | 173.8 | 197.4 | 172.4 | 212.5 | 193.4 | | Other debt | - | - | 0.5 | - | - | - | - | - | - | - | | Equity holders' funds | **218.7** | 363.8 | 251.6 | 326.3 | 261.1 | 228.1 | 218.6 | 166.6 | 164.4 | 147.1 | | **Revenue account (£m)** | | | | | | | | | | | | Income | **9.9** | 11.6 | 12.7 | 11.2 | 10.6 | 10.7 | 10.5 | 11.2 | 10.4 | 16.2 | | Costs (management and other expenses) | **1.7** | 2.1 | 2.6 | 2.8 | 2.8 | 2.9 | 1.9 | 1.8 | 2.1 | 3.2 | | Finance costs | **1.1** | 1.0 | 1.6 | 1.6 | 1.6 | 1.8 | 1.7 | 1.1 | 0.9 | 0.8 | | **Financial ratios of the Group (%)** | | | | | | | | | | | | Ongoing charges figure^{(7)} (excluding performance fee) | **2.2** | 2.3 | 2.1 | 2.1 | 2.2 | 2.1 | 3.3 | 2.0 | 2.2 | 1.8 | | Gearing^{(8)} | **89.5** | 48.8 | 93.4 | 63.7 | 87.3 | 97.2 | 101.6 | 124.1 | 144.4 | 160.4 | $^{(1)}$ Restated on adoption of IFRS10 Consolidated Financial Statements $^{(2)}$ The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts $^{(3)}$ Includes the special dividend of 2.50p per share $^{(4)}$ Issued by UIL Finance, a wholly owned subsidiary of UIL $^{(5)}$ See pages 55 and 56 $^{(6)}$ Gross assets less current liabilities excluding loans $^{(7)}$ See Alternative Performance Measures on pages 108 and 109 110 UIL Limited ### A DIVERSE PORTFOLIO BY GEOGRAPHY AND SECTOR | UK CONTACT | REGISTERED OFFICE | | --- | --- | | PO Box 208 | Clarendon House | | Epsom Surrey | 2 Church Street | | KT18 7YF | Hamilton HM 11 | Bermuda Telephone: +44 (0)1372 271486 www.uil.limited