## 2023 ## REPORT AND ACCOUNTS ## TRENDS DRIVING UIL’S INVESTMENT OPPORTUNITIES ### Changes in Technology Infrastructure and Disruptive ### markets and changes impacting utilities megatrends technologies and ### regulation opening commodity in global emerging business models ### up business demands markets ### opportunities ## UIL's objective is to maximise shareholder returns ## by identifying and investing in compelling long- ## term investments worldwide, where the underlying ## value is not fully recognised. IN THE YEAR TO 30 JUNE 2023 REVENUE EARNINGS DIVIDENDS PER NET ASSET VALUE SHARE PRICE PER ORDINARY SHARE ORDINARY SHARE TOTAL RETURN PER TOTAL RETURN PER ORDINARY SHARE * ORDINARY SHARE * | 6.68p | 8.00p | -20.6% | -18.5% | | --- | --- | --- | --- | | (2022: 8.35p) | (2022: 8.00p) | (2022: -38.1%) | (2022: -27.6%) | | * See Alternative Performance Measures on pages 109 to 111 | | | | ## WHY UIL LIMITED? ## Stock selection remains our focus and ICM’s proven ## bottom-up long-term approach aims to 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 | (14 August 2003) and prides itself in | • Diversified mix of investments identifying compelling investment opportunities and • Opportunity to currently buy UIL shares on the working pro-actively with investee companies to market at a significant discount to NAV improve the economic value for shareholders • Attractive quarterly dividends • Aligned interest with over 75.0% of UIL held by investors associated with ICM UIL OFFERS ZDP SHAREHOLDERS: • ICM offers significant sector expertise • Attractive capital growth • Appealing asset, sector and geographical cover PORTFOLIO STRENGTHS • Financial Services • Structured as three ZDP classes – mitigating redemption risk • Utilities and Infrastructure • Technology • Resources Report and Accounts for the year to 30 June 2023 1 ## CONTENTS The business of UIL Limited (“UIL” or the Company”) consists of investing PERFORMANCE the pooled funds of its shareholders in accordance with its investment 3 Current Year Performance objective and policy, generating 4 Group Performance Summary a return for shareholders and spreading the investment risk. UIL 5 Chairman’s Statement has borrowings and gearing is also 8 Performance Since Inception (14 August 2003) provided by zero dividend preference (“ZDP”) shares, issued by its wholly STRATEGIC REPORT AND INVESTMENTS owned subsidiary UIL Finance Limited 10 Investment Managers’ Report (“UIL Finance”). The joint portfolio managers of UIL are ICM Investment 15 Top Ten Companies as at 30 June 2023 Management Limited (“ICMIM”) and 16 Macro Trends Affecting Our Portfolio ICM Limited (“ICM”), together referred to as the “Investment Managers”. 18 Our Investment Approach 20 ESG Spotlight 21 Geographical Investment Exposure 22 Ten Largest Holdings 28 Capital Structure 30 ZDP Shares 32 Strategic Report 42 Investment Managers and Team GOVERNANCE 45 Directors 46 Directors’ Report 52 Corporate Governance Statement 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 9 November 2023 64 Independent Auditor’s Report Half Year 31 December FINANCIAL STATEMENTS 70 Accounts Dividends Payable September, December, March 76 Notes to the Accounts and June ADDITIONAL INFORMATION 106 Notice of Annual General Meeting 108 Company Information 109 Alternative Performance Measures 112 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 2023 | * | | | | | | SHARE | * | | | | | | -20.6% | | -18.5% | | 27.5% | | 83.5% | | | (2022: -38.1%) | | (2022: -27.6%) | | (2022: 28.1%) | | (2022: 89.5%) | | | REVENUE EARNINGS | DIVIDENDS PER | REVENUE YIELD | * | DIVIDEND YIELD | * | | --- | --- | --- | --- | --- | --- | | PER ORDINARY SHARE | ORDINARY SHARE | | | | | | 6.68p | 8.00p | 2.9% | | 5.5% | | | (2022: 8.35p) | (2022: 8.00p) | (2022: 2.0%) | | (2022: 4.3%) | | ONGOING CHARGES including and excluding performance fees* ## 2.8% (2022: 2.2%) * See Alternative Performance Measures on pages 109 to 111 TOTAL RETURN COMPARATIVE PERFORMANCE † (pence) from 30 June 2022 to 30 June 2023 115 110 105 100 95 90 85 80 75 70 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 Jan 23 Feb 23 Mar 23 Apr 23 May 23 Jun 23 | | 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 2022 | | | | | Source: ICM and Bloomberg Report and Accounts for the year to 30 June 2023 3 ## GROUP PERFORMANCE SUMMARY 30 June 30 June % change 2023 2022 2023/22 1 NAV total return per ordinary share (for the year) (%) (20.6) (38.1) n/a 1 | Share price total return per ordinary share | | (for the year) (%) (18.5) (27.6) n/a | | | --- | --- | --- | --- | | | 1 | | 2 | | Annual compound NAV total return | (since inception | | ) (%) 7.8 9.5 n/a | 1 NAV per ordinary share (pence) 199.87 260.89 (23.4) Ordinary share price (pence) 145.00 187.50 (22.7) 1 Discount (%) 27.5 28.1 n/a Returns and dividends (pence) Revenue return per ordinary share 6.68 8.35 (20.0) Capital return per ordinary share (59.70) (171.68) (65.2) Total return per ordinary share (53.02) (163.33) (67.5) 3 Dividends per ordinary share 8.00 8.00 0.0 FTSE All-Share total return Index 8,611 7,981 7.9 Equity holders' funds (£m) 4 Gross assets 304.9 410.6 (25.7) Loans 42.7 51.1 (16.4) ZDP shares 94.6 140.8 (32.8) Equity holders' funds 167.6 218.7 (23.4) Revenue account (£m) Income 10.2 9.9 3.0 Costs (management and other expenses) 1.7 1.7 0.0 Finance costs 2.9 1.1 163.6 Net income 5.6 7.0 (20.0) Financial ratios of the Group (%) 1 Ongoing charges figure excluding performance fees 2.8 2.2 n/a 1 Ongoing charges figure including performance fees 2.8 2.2 n/a 1 Gearing 83.5 89.5 n/a (1) See Alternative Performance Measures on pages 109 to 111 (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 4 UIL Limited ## CHAIRMAN’S STATEMENT The year to 30 June 2023 Since inception in August 2003, UIL has distributed has been challenging on the £94.6m in dividends, invested £36.9m in ordinary economic and geopolitical share buybacks and made net gains of £209.0m for front. At UIL this has been a total return of 344.2% (adjusted for the exercise of compounded given the need warrants and convertibles). Shareholders should note that the Board and the Investment Managers focus on to reduce UIL’s bank debt longer term market indices, whilst including short term significantly at this time. UIL’s comparisons for reference. investment performance has | | been disappointing with its | There have been a number of changes in the portfolio | | --- | --- | --- | | PETER BURROWS | NAV total return down by | during the year to 30 June 2023. UIL sold its largest | | Chairman | 20.6% for the year and which, | | unlisted company, ICM Mobility Group Limited ("ICM in light of UIL’s ZDP shares and Mobility"), to Somers Limited (“Somers”) and bought a bank debt, is estimated to comprise approximately number of listed holdings as UIL sought to reduce its -12.0% from the investment portfolio and the balance unlisted investments and increase its listed positions. primarily due to the effects of gearing. This has Furthermore, as a result of share price weakness, pulled UIL’s annual compound NAV total return since a number of positions fell out of the top ten. This is inception in 2003 down to 7.8%. covered in more detail in the Investment Managers’ report. Market volatility has been driven by significant The Board is pleased to see the ordinary shares uncertainties in the face of rising inflation (especially discount to NAV end the year under 30.0%, standing at energy and food prices), increasing interest rates by 27.5% as at 30 June 2023 (30 June 2022: 28.1%). Given central banks, rising climate change concerns and the focus of applying cash resources to the redemption all exacerbated by the war in Ukraine and China’s of the 2022 ZDP shares and the reduction in the bank transition to no Covid restrictions earlier this year. facility, no buybacks were undertaken in the year There also continues to be a wider reset of economic ended 30 June 2023. and political relationships between the West and the East. Consistent with the wider debt markets, UIL’s longer dated 2024, 2026 and 2028 ZDP shares are trading at A small positive is that the reduction in UIL’s net debt significantly higher gross redemption yields compared to £139.9m from £195.7m as at 30 June 2022, has seen to those as at 30 June 2022, being 8.9%, 8.8% and 8.9% UIL’s gearing decline. As at 30 June 2023 UIL’s gearing respectively. The market prices of the ZDP shares were stood at 83.5% (30 June 2022: 89.5%). impacted by interest rate rises by most central banks COMMODITIES MOVEMENTS from 30 June 2022 to 30 June 2023 140 130 120 110 100 90 80 70 60 | Jun 22 | Aug 22 | Oct 22 | Dec 22 | Feb 23 | Apr 23 | | Jun 23 | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Nickel GoldCopperOil | | Aluminium | | | | Rebased to 100 as at 30 June 2022 | | | | | | Source: Bloomberg | | Report and Accounts for the year to 30 June 2023 5 ## CHAIRMAN'S STATEMENT (continued) ### CURRENCY MOVEMENTS vs STERLING from 30 June 2022 to 30 June 2023 ![img-0.jpeg](img-0.jpeg) Rebased to 100 as at 30 June 2022 Source: Bloomberg as inflation increased sharply. As at 30 June 2023, UIL's average blended rate of funding costs, including bank debt, increased from 4.7% to 5.7%, mainly as a result of higher bank borrowing costs. Total revenue income for the year to 30 June 2023 was £10.2m, an increase of 3.0% from £9.9m in the prior year, a good outcome given the reduced level of investments. However, the finance costs increased significantly for the year to 30 June 2023 to £2.9m, up 163.6% from the prior year at £1.1m. This resulted in the revenue return earnings per share ("EPS") of 6.68p, representing a decrease of 20.0% from 30 June 2022 of 8.35p. The Board declared an unchanged fourth quarterly dividend of 2.00p per ordinary share which maintains the total for the year at 8.00p, and a yield on the closing share price of 5.5%. Although the dividend is not fully covered by earnings in the year, given the significant revenue reserves brought forward of 15.32p per share, the Board is comfortable with maintaining the payout at 8.00p. The revenue reserves carried forward reduced to £11.7m as at 30 June 2023 from £12.8m as at 30 June 2022. The capital return loss for the year ended 30 June 2023 of £50.0m is disappointing to report to shareholders. ### BANK FACILITY UIL has agreed with the Bank of Nova Scotia, London Branch ("Bank of Nova Scotia") to extend its committed senior secured multi-currency facility to 19 March 2024. The facility has been reduced from £37.5m to £25.0m and will step down in stages over the next six months prior to a final repayment by 19 March 2024. ### GLOBAL EVENTS Several themes continue to dominate global events: heightened geopolitical tensions, the outlook for inflation and interest rates, climate change, technology and Artificial Intelligence ("AI"). As anticipated at the time of announcing UIL's half-year report, Covid-19 has receded and we do not expect it to be an issue going forward. China's reversal of its zero tolerance policy earlier this year was a positive. However, weak Chinese consumer confidence is a headwind to a full recovery by China. The war in Ukraine has gone on longer than expected and today there continues to be no clear way forward. Both sides have been drawn in further, but once they reach a neutral position, a negotiated outcome would be expected. The ongoing friction between the USA and China continues to deepen and it is now difficult to see how this reverses direction. Given the USA and China are the two largest economies globally this must pose significant risks at some point in the future, especially for technology businesses on each side of the Pacific Ocean. Inflation moved markedly for most economies over the year. Nearly all central banks responded with significantly higher interest rates. We now see major 6 UIL Limited differences between three key regions: the Western OUTLOOK economies where we expect inflation to reduce The outlook for worldwide economies increasingly gradually; Asia, where we see China heading for rests with global leadership, both political and central deflation; and Latin America (“LatAm”), where inflation bankers. The central banks perhaps have the easier has already halved. Against this backdrop we expect task as inflation looks to be receding in most major Western economies to hold interest rates higher for markets. We assume interest rates will stay higher than longer, China to reduce rates further while LatAm is expected and we expect this will be a headwind to expected to reduce interest rates sharply lower. economies and commodities are likely to remain soft. The same cannot be said of geopolitical leadership The one unknown in our view continues to be the which remains challenging. The rising pressure to response of the labour force especially in the West. meet social expectations and the impact of climate Labour markets remain tight and the number of change, natural disasters and conflict will be difficult unemployed are at record lows in many economies. If to navigate. We remain focused on reducing risk and this continues, then the shortage of the work force will helping investee companies navigate through these drive up wages and in turn feed inflation. challenges and emerge stronger. An ever increasing factor for investors is climate change. It has clearly had devastating impacts on a number of communities from wildfires in Hawaii to Peter Burrows AO floods in Germany. We are seeing whole ecosystems Chairman being impacted from prolonged droughts to record 22 September 2023 temperatures. As investors we need to prepare for these outcomes to continue across our portfolios. There is a very perceptible shift to embrace AI by most businesses and as with most technological developments, those without legacy businesses benefit the most, but eventually all businesses will need to adapt or risk failure. This has been our experience in the Fintech sector. UIL has a number of investments with significant exposure to AI, Blockchain and Quantum Computing. INDICES MOVEMENTS from 30 June 2022 to 30 June 2023 120 110 100 90 80 70 | Jun 22 | | | | Apr 23Feb 23Dec 22Oct 22Aug 22 | | | Jun 23 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | FTSE All-Share | Australian Securities Exchange ("ASX") | S&P 500 | MSCI All Countries World Index | Report and Accounts for the year to 30 June 2023 | | | 7 | | Rebased to 100 as at 30 June 2022 | | | | | | 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 | * | | 7.8% | | 344.2% | | 8.1% | | 367.5% | | | REVENUE EARNINGS | DIVIDENDS PER | | DIVIDENDS PAID | REVENUE RESERVES | | | --- | --- | --- | --- | --- | --- | | PER ORDINARY SHARE | ORDINARY SHARE | | OUT | PER ORDINARY SHARE | | | | | | | CARRIED FORWARD | * | | 131.14p | 106.83p | | £94.6m | 14.00p | | | * See Alternative Performance Measures on pages 109 to 111 | | | | | | | ORDINARY SHARES | VALUE OF ORDINARY | | ZDP SHARES | ZDP SHARES | | | BOUGHT BACK | SHARES BOUGHT BACK | | ISSUED | REDEEMED | | | 29.6m | £36.9m | | £379.5m | £466.4m | | | HISTORIC TOTAL RETURN PERFORMANCE | | † (pence) | | | | since inception to 30 June 2023 950 850 750 650 550 450 350 250 150 50 | | | | 201020092008200620052004 20072003 201820172016201420132012 20152011 20232019 2020 | | | | 2021 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 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 and Bloomberg | | | 8 UIL Limited DIVIDENDS PER ORDINARY SHARE (pence) ALLOCATION OF GROSS ASSETS (£m) from 30 June 2004 to 30 June 2023 from 14 August 2003 to 30 June 2023 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 | 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | Aug 03 | Jun 05 | Jun 07 | Jun 09 | Jun 11 | Jun 13 | Jun 15 | Jun 17 | Jun 19 | Jun 21 | Jun 23 | 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 2023 (Rebased to 100 as at 14 August 2003 * ) 800 NAV total return of 344.2% 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 | Jun | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | | | 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 and Bloomberg Report and Accounts for the year to 30 June 2023 9 INVESTMENT MANAGERS' REPORT ![img-1.jpeg](img-1.jpeg) Investment Manager The year to 30 June 2023 has been difficult to navigate for investors and especially for UIL as it needed to redeem the 2022 ZDP shares as well as reduce its bank debt by £12.5m. This created pressure on the portfolio given the need for substantial realisations in difficult markets. UIL's loss for the year to 30 June 2023 was £44.5m resulting in NAV per share of 199.87p, a decline of 23.4%. This has dragged UIL's annual compound NAV total return since inception in 2003 down to 7.8%. However, positively, total net debt reduced by £55.8m. #### PORTFOLIO There was significant volatility over the year and within the top ten holdings. Three holdings increased in value, three holdings were sold, five reduced in value and two new investments were made. Overall, the decreases significantly outweighed the increases, which led to an overall reduction in the portfolio of £108.2m. It should also be noted that UEM and Zeta's share price discounts to NAV represent a £22.2m reduction to the underlying valuations. Somers' valuation reduced by 24.2% in the year to 30 June 2023. This was largely driven by Somers' dividend distribution and Resimac's share price declining by 23.5%. Resimac continues to deliver good operational performance in the face of material economic and competitive headwinds. In August 2023, Resimac published its annual results for the year to 30 June 2023 and its valuation is modest at a historic price earnings ratio of 4.8x and a dividend yield of 8.7%. It is good to see Resimac continuing to buy back shares at these current levels. It should be noted that UIL also holds a direct investment in Resimac, which is UIL's fifth largest investment. As noted last year, UIL bought a number of listed investments from Somers at fair value and sold ICM Mobility to Somers at fair value. Taken together, this increased UIL's listed portfolio and reduced its unlisted portfolio and thereby improved UIL's bank covenant ratios. We are pleased to be direct shareholders in West Hamilton Holdings Limited ("West Hamilton") and The Market Herald Limited ("TMH"), both acquired shortly after UIL's 2022 year end. Waverton, Somers' largest position at 38.7% of its gross assets, continues to build on its positive momentum. In its year to 31 December 2022 Waverton saw AUM increase by 5.8% to £9.1bn, revenues increase by 9.1% to £54.9m and profits before tax remained unchanged at £12.0m. Waverton has an enviable investment performance record, is driven in adding clients and has recently successfully outsourced its back office to SEI, a platform which can be leveraged to everybody's benefit. This success has carried over into the current year to December 2023. Zeta's NAV per share increased by 1.0% over the year, a good outcome given Zeta's exposure to aluminium and nickel which were both down significantly over the year to 30 June 2023. Aluminium was down 12.8% and nickel was down by 10.0%. Zeta's share price declined by 7.6% and as a result the discount widened to 22.0%. Zeta's largest investment at the start of the year, Copper Mountain Mining Corporation ("Copper Mountain"), was successfully acquired by Hudbay Minerals Inc ("Hudbay") in an all-paper offer. Zeta has reduced its holding in Hudbay as the share price has firmed. In market capitalisation terms, Hudbay is approximately four times the size of Copper Mountain and the investment is more liquid as a result. The proceeds of UIL's sale of ICM Mobility to Somers and Panoramic Resources Limited ("Panoramic") back to Zeta at market price was used to repay the 2022 ZDP shares. UIL will capture much of the movement in valuation of these holdings through its shareholding in Somers and Zeta of 41.7% and 61.2% respectively. UEM has again been a relative standout performer over the year to 30 June 2023 with a NAV total return of 12.1% compared to the MSCI emerging markets total return Index (SIBP adjusted) ("MSCI") loss of 2.6% over the same period. UEM continues to see strong results reported by its investee companies with most growing revenues. While margins are under pressure their EBITDA have mostly expanded too. This is a credit to the investee management teams who continue to deliver excellent operational performance in volatile times. UEM is ahead of the MSCI since inception. As with most emerging market funds, UEM's discount has widened to 14.0% as at 30 June 2023. This remains a frustration, but UIL has taken the opportunity of this. 18 UIL Limited share price outperformance to reduce its holding and realize £25.5m during the year. Allectus Capital Limited ("Allectus Capital") successfully sold its stake in Cohort Go, one of its largest investments. The sale to Rywire culminated after a significant period of ownership as the largest shareholder and delivered excellent financial results. The decrease in Allectus Capital's overall valuation was in part due to this sale, as well as broader technology market challenges, with software multiples significantly decreasing across the market. During the year Allectus Capital has remained highly selective on its mandate and will continue to capitalise on high conviction sectors like AI or distressed sectors like fintech. West Hamilton, a listed Bermuda property developer, has sold its major asset in Bermuda and is in the process of completing this transaction. West Hamilton expects to return over 90.0% of its value to shareholders shortly. UIL exited Resolute Mining Limited ("Resolute") in March 2023. This was a long-standing investment but, for the most part, has been a significant challenge for UIL and has failed to deliver long term returns. Given poor operational performance and the added rising risks in Mali, UIL took the painful decision to exit and realised its investment over the year. Allectus Quantum Holdings Limited's ("Allectus Quantum") valuation has increased over the year following both additional investments by UIL and an increase in the fair value of Diraq Pty Ltd ("Diraq"), a next generation quantum computing company. Diraq is Allectus Quantum's sole investment and its outlook remains positive. Littlepay Mobility Limited ("Littlepay") has performed ahead of expectations, but values have decreased in line with markets resulting in the carrying value reducing by 14.1%. Starpharma Holdings Limited ("Starpharma") and AssetCo plc remain investments, but the poor execution of both their strategies has seen their valuations decline, resulting in both investments falling out of UIL's top ten holdings. In line with many AI related investments Arria NLG Limited ("Arria") has risen in value. Whilst this has been positive for Arria, we are cautious on its outlook. #### FOREIGN EXCHANGE As at 30 June 2023 UIL held no forward FX derivative positions. As noted in the half year report to 31 December 2022 UIL took the decision to close out its positions in full, in light of sheer volatility in the FX markets. In the year ended 30 June 2023, forward contract FX and currency losses amounted to £3.6m. UIL is less vulnerable to the volatility in the FX markets for the coming year. #### COMMODITIES Commodities were volatile during the year to 30 June 2023 with oil down 34.8%. Copper was less volatile up 0.7%. Nickel was extremely volatile, at one point seeing a high of 38.1% and a low of 14.7%, ending the year down by 10.0%. #### PORTFOLIO ACTIVITY During the year to 30 June 2023, UIL invested £120.6m and realised £188.4m, including loans repaid by Somers and Zeta. Purchases included investments in Resimac, West Hamilton and TMH. UIL bought these holdings from Somers to increase the listed holdings of UIL and as a result improve UIL's covenant cover on its bank facility. #### PLATFORM INVESTMENTS UIL currently has four platform investments, Somers, Zeta, UEM and Allectus Capital in its top ten holdings. These investments account for 71.8% of the total portfolio as at 30 June 2023 (30 June 2022: 73.0%). During the year to 30 June 2023, net withdrawals from these platforms amounted to £61.5m (30 June 2022: £37.4m). #### DIRECT INVESTMENTS UIL has six direct investments in its top ten holdings, Resimac, West Hamilton (which replaced ICM Mobility), Allectus Quantum (which replaced Resolute), TMH (which replaced Panoramic), Arria (which replaced Starpharma) and Littlepay (which replaced AssetCo plc). #### GEOGRAPHIC REVIEW The geographical split of the portfolio, on a look through basis, shows Australia and New Zealand remaining as UIL's largest exposure, increasing by 2.9% to 40.1% of UIL's total investments (30 June 2022: 37.2%), UK remained second at 19.2%, up 5.4% and Bermuda Report and Accounts for the year to 30 June 2023 11 ## INVESTMENT MANAGERS’ REPORT (continued) IN THE YEAR TO 30 JUNE 2023 AUSTRALIA & NEW ZEALAND UK REMAINS UIL’S SECOND BERMUDA IS NOW UIL’S THIRD REMAINS UIL’S LARGEST LARGEST COUNTRY EXPOSURE AT LARGEST COUNTRY EXPOSURE AT EXPOSURE AT | 40.1% | 19.2% | 9.5% | | --- | --- | --- | | (2022: 37.2%) | (2022: 13.8%) | (2022: 4.8%) | | AFRICA IS UIL’S FOURTH | ASIA IS UIL’S FIFTH | CANADA REMAINS UIL’S SIXTH | | LARGEST EXPOSURE AT | LARGEST EXPOSURE AT | LARGEST COUNTRY | EXPOSURE AT ## 6.9% 6.0% 5.7% (2022: 7.2%) (2022: 10.5%) (2022: 5.3%) See page 21 for the full geographic exposure SECTOR SPLIT OF INVESTMENTS Financial Services Technology Resources ## 40.6% 23.6% 14.4% (2022: 38.5%) (2022: 25.8%) (2022: 15.4%) Infrastructure Gold Mining Other Investments ## 11.6% 3.4% 6.4% (2022: 12.7%) (2022: 4.0%) (2022: 3.6%) IN THE YEAR TO 30 JUNE 2023 | | INVESTED | * | | REALISED | * | | TOTAL REVENUE INCOME | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | £120.6m | | | £188.4m | | | £10.2m | | | | (2022: £89.8m) | | | (2022: £92.8m) | | | (2022: £9.9m) | | | | LEVEL 1 & 2 | | | LEVEL 3 | | | LEVEL 3 | | | | INVESTMENTS | | * | INVESTMENTS | | * | % OF TOTAL PORTFOLIO | | | | £135.7m | | | £172.7m | | | 56.0% | | | | (2022: £177.6m) | | | (2022: £238.9m) | | | (2022: 57.4%) | | | | * See note 9 to the accounts | | | | | | | Source: ICM | | 12 | UIL Limited | | | | | | | | moved up by 4.7% at 9.5% of UIL's total investments. Asia decreased by 4.5% to 6.0% of the total portfolio. #### SECTOR REVIEWS **Financial Services** – 40.6% (30 June 2022: 38.5%) Somers is UIL's largest investment and accounts for 34.9% of UIL's total investments as at 30 June 2023 (30 June 2022: 35.7%). **Technology** – 23.6% (30 June 2022: 25.8%) UIL holds a number of early-stage investments in the technology sector, both directly and through Allectus Capital (UIL's fourth largest investment) and Littlepay (UIL's tenth largest investment). **Resources (excl. gold mining)** – 14.4% (30 June 2022: 15.4%) UIL's largest investment in resources is Zeta which represents 17.9% of UIL's total portfolio. **Infrastructure Investments** – 11.6% (30 June 2022: 12.7%) This consists of Airports, Electricity, Infrastructure, Oil & Gas, Ports, Renewables, Road & Rail, Telecommunications and Water & Waste. UIL's infrastructure exposure is largely through UEM which is UIL's third largest investment. **Gold Mining** – 3.4% (30 June 2022: 4.0%) UIL's largest investment in gold mining is indirectly through Zeta, Horizon Gold Limited ("Horizon"), an Australian gold mining exploration company. UIL exited Resolute reducing its exposure to the sector. #### LEVEL 3 INVESTMENTS UIL's investment in level 3 companies was 56.0% (30 June 2022: 57.4%) of the total portfolio. The total value reduced from £238.9m as at 30 June 2022 to £172.7m as at 30 June 2023, mainly as a result of a decrease in Somers' valuation. The level 3 investments which are unlisted are formally revalued twice a year. It is worth highlighting that where there is a material event that impacts an unlisted investment, it is revalued at the time, thereby keeping the unlisted valuations current. Shareholders should be aware that within the portfolio in Somers is an investment in AK Jensen Group ("AK") which comprises a platform for both traditional hedge funds and hedge funds trading digital assets. In addition, AK has issued AK tokens, a crypto currency which have been sold to investors and hedge fund managers in the AK. Crypto platform. Valuing the token is difficult as few metrics allow comparability, and the industry has not settled on a methodology we can readily adopt. Somers' view on valuation is EUR 0.088 to EUR 0.185 per token, driven by an analysis of milestones met and yet to be achieved as well as wider market considerations. While hedge fund managers are buying AK tokens at some EUR 0.37 the volume held by Somers would likely see a discount driven by lower liquidity opportunities and reduced fee discount benefits held by these hedge fund managers. Somers holds 75.0m AK tokens and carries them at EUR 0.10. Each EUR 0.05 represents £3.2m swing in valuation for Somers and £1.4m for UIL. Further details on AK can be found on their website and note 29 to the accounts. #### GEARING Notwithstanding the significant pull back in portfolio valuations during the year, this was more than offset by the reduction in the ZDP shares and bank debt. As a result, gearing decreased to 83.5% as at 30 June 2023 from 89.5% as at 30 June 2022 and this remains well inside UIL's target gearing of under 100.0%. At an absolute level UIL's net debt decreased over the year from £195.7m to £139.9m as at 30 June 2023. The blended costs of borrowing rose from 4.7% to 5.7% as a result of rising finance costs on UIL's bank facilities. #### ZDP SHARES On a consolidated basis the ZDP shares decreased significantly from £140.8m to £94.6m, down 32.8% mainly as a result of the repayment of the 2022 ZDP shares which were redeemed in October 2022. UIL continues to hold 2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at 30 June 2023. With three ZDP issues, UIL has spread the redemption liability over five years. #### BANK AND OTHER DEBT Bank and other loans decreased to £42.7m as at 30 June 2023 (30 June 2022: £51.1m). Scotiabank Europe plc's £50.0m committed senior secured multi-currency revolving facility was extended in September 2022 to 19 September 2023 and novated to the Bank of Nova Scotia, London Branch. The extension provided a reduction in the facility of £12.5m on 30 March 2023, and consequently the outstanding amount as at 30 June Report and Accounts for the year to 30 June 2023 13 ## INVESTMENT MANAGERS' REPORT (continued) 2023 under this facility was £375m. In September 2023, the facility was extended to 19 March 2024, reducing to £25.0m and it will step down in stages over the following six months prior to a final repayment by 19 March 2024. On 29 June 2023, Union Mutual Pension Fund Limited loaned USD 6.6m to UIL. This loan is repayable on 30 September 2023. ### REVENUE RETURNS Revenue income for the year to 30 June 2023 increased to £10.2m from £9.9m, an increase of 3.0%. Management and administration fees and other expenses were largely flat at £1.7m (30 June 2022: £1.7m). Finance costs were significantly higher at £2.9m for the year to 30 June 2023 from £1.1m in the prior year, mainly as a result of higher finance costs feeding through into the cost of funding. Revenue profit decreased by 20.0% to £5.6m (30 June 2022: £7.0m) and EPS decreased by 20.0% to 6.68p (30 June 2022: 8.35p) driven mainly by higher financing costs. ### CAPITAL RETURNS Capital total income reported a loss of £44.0m (30 June 2022: loss of £136.3m) which was driven mainly by the £40.3m loss on investments. Finance costs reduced by 21.8% to £6.1m (30 June 2022: £7.8m) largely reflecting the lower number of ZDP shares in issue following the redemption of the 2022 ZDP shares in October 2022. The resultant capital return loss for the year to 30 June 2023 was £50.0m (30 June 2022: loss of £144.1m) and EPS loss was 59.70p per ordinary share (30 June 2022: loss of 171.68p). ### EXPENSE RATIO The ongoing charges figure, including and excluding performance fees, was 2.8% for the year ended 30 June 2023 (30 June 2022: 2.2%). No performance fee was earned at the UIL level or the platform companies. All expenses are borne by the ordinary shareholders. ### DISRUPTION There continues to be significant disruption to business models from blockchain to AI through to nanotechnology and financial technology. These disruptions are shortening the product life cycle and enabling rapid change to products and processes. ICM is encouraging its investee companies to embrace these opportunities and the consequent journey. UIL is seeking investments that are capital light, have high barriers to entry and business models that are scalable. **ICM Investment Management Limited and ICM Limited** 22 September 2023 14 ULL Limited ## TOP TEN COMPANIES AS AT 30 JUNE 2023 ### 1 2 3 4 5 | | 34.9% | | 17.9% | | 13.2% | | 5.8% | | 5.4%* | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Somers Limited | | Zeta Resources | | Utilico Emerging | | Allectus Capital | | Resimac Group | | | | | | Limited | Markets Trust plc | | | Limited | | Limited | | Financial Services | | | Resources | Investment Fund | | | Technology | Financial Services | | | A financial services | | A resources-focused | | A UK closed-end | | An investment | | | A lender for | | investment platform, | | investment platform, | | investment trust | | platform with a | | residential mortgages | | | | which primarily | which invests in a | | | dedicated to | | growth-stage | and asset finance in | | | | invests in the | range of resource | | | investments in | | portfolio of | Australia and New | | | banking, wealth | | entities and base | | infrastructure, utility | | | technology | | Zealand. | | management, fintech | | metals exploration | | and related sectors | | | companies. | | | | and asset financing | | | and production | including technology | | | | | | | | sectors. | | companies. | infrastructure in the | | | | | | emerging markets. ## 107,687 55,025 40,641 17,821 16,657 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s ### 6 7 8 9 10 | | 4.9% | | 4.8% | | 3.7% | | 2.1% | | 1.5% | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | West Hamilton | | Allectus Quantum | | The Market Herald | | Arria NLG Limited | | Littlepay Mobility | | | Holdings Limited | | Holdings Limited | | | Limited | | | | Limited | | Investment Fund | | | Technology | Financial Services | | | Technology | | Technology | | | A Bermuda | | An investment | A multi-platform | | | An AI natural | A global provider | | | property holding | | holding company | | and financial news | | language software | | | of payment | | and management | | for Australia based | | business operating in | | | company. | | infrastructure | | | company. | quantum computing | | Australia, Canada and | | | | for transport and | | | | | | startup Diraq. | Germany, and the | | | | | mobility. | owner of a number of classified online listing businesses. ## 15,087 14,666 11,480 6,602 4,701 Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Fair value £’000s Note: % relates to % of total investments *15.4% on a look-through basis Report and Accounts for the year to 30 June 2023 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, in particular, between the US and China. • 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 are expected to increase long term demand for several commodities, including nickel, copper, lithium and graphite. • Unprecedented increase in global government debt under the previous policy of negative interest rates has led to significant inflation, driving gold investment as a protection from fiat money debasement. • Underinvestment in new oil and gas fields combined with sanctions on Russian energy exports is leading to supply constraints and significant energy price inflation. • Heightened risk to the 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 consumers driven by enhanced applications in sectors including e-commerce, e-government, online education, telemedicine, communications and media. • Innovative solutions in fintech, which are disintermediating traditional financial sector business models, 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 AND ARTIFICIAL INTELLIGENCE • 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 AI, e.g. the 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 factors is necessary. • Reputational risk is 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. • The sophistication and frequency of cyber-attacks are in the spotlight, with an increase in enforcement of material financial and civil penalties related to cyber-crime and inadequate protection of consumer data. • There are also 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, railways, 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. Report and Accounts for the year to 30 June 2023 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 1.8bn of assets directly industries. New investments usually offer an attractive under management and is responsible indirectly for a valuation with strong risk/return expectations at the time further USD 22.9bn 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 16.5m to not-for-profit and community organisations. Report and Accounts for the year to 30 June 2023 19 ## ESG SPOTLIGHT The Board believes that it is in the shareholders’ interests to consider ESG factors when selecting and retaining investments, and has therefore 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 or where an individual risk has been identified, 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 40. Set out below are examples of the approach taken with two of UIL’s investments. ### USA ### 2.5% (5.1%) ### A financial services investment A closed-end investment trust ### platform, which primarily primarily investing in under- ### invests in the banking, wealth developed and developing ### management, fintech and asset markets, within the energy, ### financing sectors. utilities and telecom sectors. ESG ANALYSIS: ESG ANALYSIS: Somers’ investment objective is to provide long-term UEM has a sound investment approach which total return to its shareholders. To date Somers has considers ESG factors when selecting and retaining invested in banking, wealth management, fintech and investments. UEM looks to understand the relevant asset financing, and is focused on developed markets. ESG issues in conjunction with the financial, macro Somers generally aims to achieve a controlling position and political drivers as part of its investment process, in companies. By achieving this position, Somers has populating a bespoke ESG framework. Where investees a greater understanding of the investees and how are assessed as having a low ESG score, UEM’s they conduct business. All investees are situated in approach is to engage with the companies directly with developed, well-regulated financial markets, meaning the objective of seeing improvements over time. the risk of sudden political or economic stability is significantly reduced. ICM ESG CONCLUSION: UEM has embedded ESG into its investment process, ICM ESG CONCLUSION: which gives visibility over the non-financial factors that Somers has a robust investment process that could affect the value of an investment. This not only incorporates ESG analysis. In February 2023 the helps identify risks but also opportunities. Somers' board approved a comprehensive Responsible Investment Policy formalising the management of ESG risks. 20 UIL Limited ## GEOGRAPHICAL INVESTMENT EXPOSURE (% of total investments on a look-through basis) | | UK & | | Europe | | --- | --- | --- | --- | | Channel Islands | | (excluding UK) | | | | 19.2% | | 5.4% | ### Canada (13.8%) (7.9%) ### 5.7% (5.3%) ### Asia ### Bermuda ### 6.0% ### 9.5% ### USA (10.5%) (4.8%) ### 2.5% (5.1%) ### Africa ### 6.9% ### Latin (7. 2%) ### America ### 4.7% (4.2%) ### Australia & ### New Zealand ### 40.1% (37.2%) Gold Mining 0.0% (2022: 4.0%) Figures in brackets as at 30 June 2022 Source: ICM Report and Accounts for the year to 30 June 2023 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% | 0.5% | 29 | | --- | --- | --- | | (2022: 94.2%) OF THE | (2022: 2.1%) OF THE GROUP’S | (2022: 33) | | GROUP’S TOTAL INVESTMENTS | PORTFOLIO | | 22 UIL Limited ## 1 SOMERS LIMITED ### VALUATION ↓ 24.2% | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 107,687 | | % of total investments | 34.9% | **Somers is a financial services investment holding company, whose shares are listed on the Mezzanine Market of the Bermuda Stock Exchange ("BSX"). Somers is managed by ICM.** As at 31 March 2023, Somers' three largest investments, which make up 86.1% of its portfolio, were a 54.4% holding in Resimac, a leading non-bank Australian financial institution, with AUD 14.5bn assets under management ("AUM"), a 61.8% holding in Waverton Investment Management Limited (a UK wealth manager with over £13.3bn funds under management and administration), and a 39.8% holding in ICM Mobility, a UK holding company focused on the mobility sector for private and public transport. Resimac reported normalised profit after tax of AUD 73.7m for the year ended 30 June 2023. Somers shareholders' equity was £281.7m as at 31 March 2023 (30 September 2022: £303.2m) and Somers' NAV per share of £11.54 was down 7.1% since 30 September 2022. Somers' gearing ratio was 30.5% up from 24.1% as at 30 September 2022. As at 30 June 2023, Somers' fair value had fallen further to £258.2m. The NAV decrease resulted principally from currency losses and a decrease in the value of Somers' largest investment, Resimac, whose share price decreased 9.2% during Somers' first half despite continuing to report solid underlying performance. Somers is classified as an investment company under IFRS 10 and, accordingly, values its underlying investments at fair value. ## 2 ZETA RESOURCES ### SHARE PRICE ↓ 7.6% | Sector | Resources | | --- | --- | | Fair Value £'000s | 55,025 | | % of total investments | 17.9% | **Zeta is a resource-focused investment company, which is listed on the ASX. Zeta is managed by ICM.** In the year ended 30 June 2023, Zeta's NAV per share grew by 1.0%, Zeta's share price closed at a discount of 22.0% (30 June 2022: 18.1%) to NAV per share. On 21 June 2023, Canadian listed Copper Mountain Mining Corporation, Zeta's second largest investment, was acquired by Canadian listed Hudbay Minerals Inc creating the third largest copper producer in Canada. Each Copper Mountain share was exchanged for 0.381 Hudbay shares and remained Zeta's second largest investment. In the year to 30 June 2023, gold and copper were up 6.2% and 0.7% respectively, whilst nickel, aluminium and oil were down 10.0%, 12.8%, and 34.8% respectively. Zeta's copper and gold focused investments were its strongest performers during the period under review, with Hudbay Minerals up 43.8% (accounting for the acquisition), and Horizon Gold up 38.5% on the year. 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 relatively concentrated portfolio, having built up cornerstone shareholdings in bauxite, nickel, gold and copper companies. Report and Accounts for the year to 30 June 2023 23 TEN LARGEST HOLDINGS (continued) # 3 **UTILICO** Emerging Markets Trust, plc # SHARE PRICE ↑ 7.7% Sector Investment Fund Fair Value £'000s 40,641 % of total investments 13.2% 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. UEM is managed by ICMIM and ICM. UEM invests predominantly in emerging markets with a focus on infrastructure and utility megatrends. In the twelve months to 30 June 2023, UEM's NAV total return was up by 12.1% and again outperformed the MSCI Emerging Markets total return Index (GBP adjusted) which declined by 2.6% during the same period. There were robust share price performances at many of UEM's investee companies within the utilities, infrastructure and telecommunication sectors, most notably in its Brazilian assets which benefited from an improving economic outlook and the impending turn in the interest rate cycle. Pleasingly, UEM's investee companies have continued to deliver resilient cash flows supporting increased dividend payments. In the year to 30 June 2023, UEM's share price increased by 7.7%, though disappointingly the discount to NAV remained stubbornly wide at 14.0% from 13.9% as at 30 June 2022. Dividends per share increased to 8.45p from 8.00p. UIL's shareholding in UEM decreased by 39.6% during the year under review. # 4 **ALLECTUSCAPITAL** # VALUATION ↓ 26.0% Sector Technology Fair Value £'000s 17,821 % of total investments 5.8% Allectus Capital is an unlisted investment company with a focused portfolio of technology businesses and is managed by ICM. Allectus Capital invests in early and growth-stage companies developing potentially disruptive technologies. Its key verticals comprise of fintech, AI, digital health and deep tech. Allectus Capital 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 Capital made several new investments during the year to 30 June 2023, which included MasterRemit (Australian company enabling the secure cross border transfer of money), Q-CTRL (Australian quantum control and sensing software platform) and YouPay (Australian gifting payments provider). In July 2022, CohortGo, an Australian education payments platform was sold to Flywire for cash consideration, in what represented an excellent outcome for all shareholders and the business. Allectus Capital also exited its investment in Limepay in July 2022 via redemption of a convertible note. Nautilus, being Allectus Capital's largest investment was significantly impacted by negative sentiment in global capital markets and rising interest rates due to its capital-intensive model and has been written down by approximately 50%. Allectus Capital continues to expand its deep tech and fintech mandates; sectors which have currently depressed valuations but overall strong future potential. Throughout 2023, Allectus Capital saw a significant slowdown on financing rounds and downward pressure on pricing, hence management focuses on identifying companies with product-market fit and strong unit economics which can be sourced at value. 24 VAL LARGEST ## 5 resimac ### SHARE PRICE ↓23.5% | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 16,657 | | % of total investments | 5.4% | **Resimac is an ASX listed residential mortgage lender and multichannel distribution business specialising in prime and specialist mortgage lending.** Resimac's share price decreased 23.5% in the twelve months to 30 June 2023 despite continuing to report strong underlying operational performance. Resimac's share price reduction was consistent with the share price decreases seen across the wider listed non-banking sector in Australia as the market factored in the impact of higher interest rates and mortgage interest margin pressure from the larger banks. Resimac is considered one of Australia's and New Zealand's premier non-bank lenders. 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. As at 30 June 2023, Resimac reported a total home loan AUM of AUD 13.1bn, a decrease year on year of 14.0%. Resimac generated a normalised net profit after tax for the year ended 30 June 2023 of AUD 73.7m. Net interest income for the year was AUD 222.5m, a 7.0% decrease from 2022. Total loan settlements during the year was AUD 4.2bn of which the asset finance division reported settlements of AUD 482.0m and provisioning loan impairment expense decreased to AUD 2.2m. During the year, Resimac issued AUD 2.4bn of Australian and New Zealand Prime and Specialist RMBS. ## 6 WEST HAMILTON ### NEW ENTRY | Sector | Investment Fund | | --- | --- | | Fair Value £'000s | 15,087 | | % of total investments | 4.9% | **West Hamilton is a BSX listed investment and management company with property assets in Bermuda.** West Hamilton's properties consist of the Belvedere Residences, a 308-space car park facility and the Belvedere Building. The Belvedere Residences, a mixed-use building is fully occupied with all commercial space let, seven apartments let on leases and two apartments sold. The car park facility is 100% occupied with a significant waiting list. The Belvedere Building is approximately 80% occupied which in the post Covid-19 commercial property environment with a great proportion of employees working from home is positive. In March 2023, West Hamilton announced that it had entered into an agreement which resulted in the sale of approximately 86% its property assets. Completion of the transaction is subject to several conditions including Governmental approvals. For the year ended 30 September 2022, West Hamilton reported solid results with revenue of USD 3.1m (2021: USD 3.1m) and net income for the year of USD 1.1m (2021: USD 2.0m). Total assets at 30 September 2022 were USD 42.3m (2021: USD 50.4m). Report and Accounts for the year to 30 June 2023 25 TEN LARGEST HOLDINGS (continued) ## 7 **Allectus** Quantum Holdings Ltd ### VALUATION ↑ 533.6% | Sector | Technology | | --- | --- | | Fair Value £'000s | 14,666 | | % of total investments | 4.8% | ### **Allectus Quantum is an unlisted investment holding company with an investment in Sydney-based quantum computing startup Diraq.** Diraq is building a quantum computing platform that leverages the advanced manufacturing capabilities of the semiconductor industry. Diraq was spun out of the University of New South Wales in May 2022 and is led by Professor Andrew Dzurak who has over two decades of experience in the quantum computing field, having invented Diraq's approach to quantum computing in 2004. Diraq has established foundational IP in quantum computing hardware and is now focused on producing the technology at scale as it works toward the long-term goal of providing commercial applications of quantum computing. For the year to 30 June 2023, Diraq has seen technical progress including publishing a new method to control qubits published in the prestigious Nature Nanotechnology journal and has won grants worth over AUD 10.0m. Diraq has increased its patents and patent applications from 28 to 59 patents across key jurisdictions. In the coming year, Diraq will continue to work towards its technical milestones as it aims to prove out its technology at scale. The valuation of Allectus Quantum has increased due to a rise in the fair value of Diraq and additional investment by UIL. ## 8 **The 2Harter Herald** ### NEW ENTRY | Sector | Financial Services | | --- | --- | | Fair Value £'000s | 11,480 | | % of total investments | 3.7% | ### **TMH is a classified advertising and financial media company, operating online listing marketplaces, financial news publishing and strategic consultancy.** The most significant event for TMH during the year was the acquisition of Adevinta's Australian classifieds business, comprising Gumtree, Carsguide, and Autotrader (collectively "GCA") in October 2022 for AUD 87.0m. These classified advertising businesses have significant potential to monetise their customer base. In addition, TMH plans to introduce point-of-sale financing options from select broker and lender partners. Consideration for the deal was funded by two shareholder rights issues and a vendor loan note, subsequently refinanced with Commonwealth Bank of Australia. TMH recently released its full year to 30 June 2023 financial results, with revenue AUD 81.6m and EBITDA AUD 12.0m, compared to AUD 25.8m and AUD -1.9m, respectively, in 2022. Profits were negatively impacted by one-off expenses associated with the acquisition of GCA, appeal to the Takeover Panel, and restructuring of the financial news division. The latter is expected to generate recurring cost-savings, equating to annualised EBITDA AUD 1.4m in the year to 30 June 2024. 26 VILL LARGEST ## 9 **ARRIA** VALUATION ↑506.5% | Sector | Technology | | --- | --- | | Fair Value £'000s | 6,602 | | % of total investments | 2.1% | Arria is a Generative AI software provider, operating a mature technology stack in the AI space for over a decade. Arria brings language to data analytics, helping to improve understanding and accelerate the ability to action data insights, in real-time, at scale. Arria was originally a spin out from the University of Aberdeen, Scotland in 2012. Now USA-centric in terms of teams and customers it is a provider of AI technology for the quick-service restaurant food sector and financial services sector. The software converts data such as financial spreadsheets into text, the primary use being automated financial and management reporting. Following the acquisition of PING, Arria provides call answering software that is both voice and text based for Dominos restaurants across the USA. Arria reported revenues of USD 17.8m in its full year to 30 September 2022, and is forecasting revenues of USD 30.2m for the full year to 30 September 2023. Arria is loss making and anticipates a negative EBITDA in the USD 15-20m range for FY 2023. The current valuation of Arria is derived on a last transaction basis of USD 1.25 per share and Arria recently confirmed a bond issue, partially taken up, that held that valuation per share as a minimum value. The AI software sector remains highly volatile and the pricing of non-listed assets like Arria remains a challenge and may be subject to change. ## 10 **littlepay** VALUATION ↓14.1% | Sector | Technology | | --- | --- | | Fair Value £'000s | 4,701 | | % of total investments | 1.5% | Littlepay provides payment services to the public transit sector through its proprietary API-based modular payments platform. The platform connects with various Europay, Mastercard and Visa readers, fare systems and financial institutions, allowing transit operators, authorities and agencies to implement a seamless multimodal contactless payment system across a transport network, making fare payments simpler and boarding faster for public transport users. Littlepay offers a range of fare management and data analytics products as add-on solutions on its platform. Littlepay is working with over 250 transit providers globally and has implemented contactless ticketing systems from small, regional operators up to multi-modal, city-wide networks and national rollouts. In FY23, Littlepay has increased payment transactions processed by over 40.0% to more than 200m transactions. This has resulted in revenue increasing by over 20%, although average transaction value has reduced due to UK fare-capping policies. Littlepay has a strong pipeline of projects going live in FY24 which is expected to drive Littlepay's top-line growth including Transport for NSW, Tuscany, Bordeaux and Lima adding to its existing base in the UK, Sweden, Finland and California. Littlepay is investing significantly in expanding its team to build for scalability and robustness in its operations as processing volumes continue to grow rapidly, distinguishing itself from any emerging competitors. Report and Accounts for the year to 30 June 2023 27 CAPITAL STRUCTURE ## UIL has a geared 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 2023 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. ### 2024 ZDP SHARES 30,000,000 2024 ZDP shares were in issue as at 30 June 2023. 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 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 2023, 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 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 2023, 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 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 AND OTHER LOANS As at 30 June 2023, UIL had a £37.5m multi-currency loan facility provided by the Bank of Nova Scotia, secured against the Company's assets by way of a debenture, which was fully drawn. UIL has agreed with the Bank of Nova Scotia to extend its committed senior secured multi-currency facility to 19 March 2024. The facility has been reduced from £37.5m to £25.0m and will step down in stages over the next six months prior to a final repayment by 19 March 2024. On 29 June 2023, Union Mutual Pension Fund Limited loaned USD 6.6m to UIL. This loan is repayable on 30 September 2023. ### 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 and other loans such that they represent a geared instrument. For every £100 of gross assets of the Company as at 30 June 2023, the ordinary shares could be said to be interested in £54.97 of those assets after deducting the prior claims as above. This makes the ordinary shares more sensitive to movements in gross assets. Based on these amounts, a 1.0% 28 UIL Limited movement in gross assets would change the NAV Based on their final entitlement of 151.50p per share, attributable to ordinary shares by 1.8%. the final entitlement of the 2026 ZDP shares was covered 2.49 times by gross assets as at 30 June The interest cost of UIL’s bank and other loans, 2023. Should the gross assets fall by 59.8% over the combined with the annual accruals in respect of ZDP remaining life of the 2026 ZDP shares, then the 2026 shares, represents a blended rate of 5.7% as at 30 June ZDP shares would not receive their final entitlement in 2023. full. Should gross assets fall by 72.0%, equivalent to an Based on their final entitlement of 138.35p per share, annual fall of 31.7%, the 2026 ZDP shares would receive the final entitlement of the 2024 ZDP shares was no payment at the end of their life. covered 3.57 times by gross assets as at 30 June Based on their final entitlement of 152.29p per share, 2023. Should the gross assets fall by 72.0% over the the final entitlement of the 2028 ZDP shares was remaining life of the 2024 ZDP shares, then the 2024 covered 1.90 times by gross assets as at 30 June ZDP shares would not receive their final entitlement 2023. Should the gross assets fall by 47.5% over the in full. Should gross assets fall by 85.4%, equivalent remaining life of the 2028 ZDP shares, then the 2028 to an annual fall of 76.2%, the 2024 ZDP shares would ZDP shares would not receive their final entitlement receive no payment at the end of their life. in full. Should gross assets fall by 59.8%, equivalent to an annual fall of 15.7%, the 2028 ZDP shares would receive no payment at the end of their life. SPLIT OF GROSS ASSETS CONSOLIDATED FUNDING COST STRUCTURE as at 30 June 2023 as at 30 June 2023 6.84% by value by percentage 5.75% 5.65% 5.00% £167.6m Ordinary shares 54.97% 4.75% | £26.8m | 2028 ZDP shares | 8.79% | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Bank and | 2024 | 2026 | 2028 | Blended | | | | | other | ZDP | ZDP | ZDP | cost of | | £29.0m | 2026 ZDP shares | 9.51% | | | | | | | | | | loans | shares | shares | shares | prior | charges to £38.8m 2024 ZDP shares 12.73% ordinary shares £42.7m Bank and other loans 14.00% 28 29 UIL Limited Report and Accounts for the year to 30 June 2023 ## ZDP SHARES 1 | ZDP SHARES | (pence) | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 30 June | | 30 June | | % change | | | | | 2023 | | 2022 | 2023/22 | 2022 ZDP shares 2 Capital entitlement per ZDP share n/a 143.98 n/a ZDP share price n/a 144.00 n/a 2024 ZDP shares 2 Capital entitlement per ZDP share 130.04 124.14 4.8 ZDP share price 123.50 122.50 0.8 2026 ZDP shares 2 Capital entitlement per ZDP share 128.75 122.62 5.0 ZDP share price 114.50 115.50 (0.9) 2028 ZDP shares 2 Capital entitlement per ZDP share 113.02 106.87 5.8 ZDP share price 96.50 99.00 (2.5) (1) Issued by UIL Finance, a wholly owned subsidiary of UIL (2) See pages 28 and 29 GEARING/NAV TOTAL RETURN from 30 June 2016 to 30 June 2023 120 1,000 900 100 800 700 80 600 (pence) (%) 60 500 400 40 300 200 20 100 0 0 Jun 23Jun 22Jun 21Jun 20Jun 19Jun 18Jun 17Jun 16 NAV total return (pence)*Gearing (%) *Rebased to 100 as at 14 August 2003 Source: ICM TOTAL ZDP SHARES TOTAL ZDP SHARES ISSUED SINCE INCEPTION REDEEMED SINCE INCEPTION ## £379.5m £466.4m 30 31 30 UIL Limited Report and Accounts for the year to 30 June 2023 UIL Limited TOTAL BORROWINGS Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 £’000s £’000s £’000s £’000s £’000s £’000s £’000s £’000s 2014 ZDP 2016 ZDP 61,327 2018 ZDP 67,548 72,622 50,858 2020 ZDP 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 38,765 2026 ZDP 11,275 13,474 24,791 25,299 27,589 29,005 2028 ZDP 23,726 25,225 26,819 Total 197,361 173,778 199,354 159,942 180,535 132,073 140,813 94,589 Bank and other debt* 24,813 47,846 28,495 50,971 54,402 45,437 54,907 45,329 Total debt 222,174 221,624 227,849 210,913 234,937 177,510 195,720 139,918 Blended interest rate % 6.5 6.2 6.1 5.5 5.2 4.5 4.7 5.7 *includes net bank overdrafts Source: ICM ZDP SHARES – TIMES COVERED BY UIL’S GROSS ASSETS * Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 2014 ZDP 2016 ZDP 5.13 2018 ZDP 2.68 3.51 6.50 2020 ZDP 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 3.57 2026 ZDP 1.63 2.08 1.81 3.03 2.23 2.49 2028 ZDP 2.50 1.85 1.90 * 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, BANK AND | GEARING AS AT | TOTAL NET DEBT | AVERAGE COST OF | | --- | --- | --- | --- | | OTHER DEBT AS AT | 30 JUNE 2023 | DECREASE DURING THE | DEBT FUNDING | | 30 JUNE 2023 | | YEAR | | ## + ## £139.9m 83.5% £55.8m 5.7% + See Alternative Performance Measures on pages 109 to 111 30 31 UIL Limited Report and Accounts for the year to 30 June 2023 ## STRATEGIC REPORT PRINCIPAL ACTIVITY arise from factors such as technological change, market motivation, prospective financial engineering UIL carries on business as an investment company and opportunities, competition, underperforming its principal activity is portfolio investment. management or shareholder apathy. INVESTMENT OBJECTIVE UIL aims to maximise value for shareholders through UIL’s investment objective is to maximise shareholder a relatively concentrated portfolio of investments returns by identifying and investing in investments including separate closed-end investment companies worldwide where the underlying value is not fully (“Platforms”) which have been or will be established to recognised. focus on investments in dedicated market sectors. UIL has the flexibility to invest in shares, bonds, STRATEGY AND BUSINESS MODEL convertibles, and other types of securities, including UIL invests in accordance with the objective set non-investment grade bonds and to invest in unlisted out above. The Board is collectively responsible to securities. UIL may also invest in other investment shareholders for the long-term success of the Company. companies or vehicles, including any managed by the Since the Company has no employees, it outsources Investment Managers, where such investment would be its activities to third party service providers, including complementary to UIL’s investment objective and policy. the appointment of external investment managers to deliver investment performance. The Board oversees UIL may also use derivative instruments such as and monitors the activities of the service providers with American Depositary Receipts, promissory notes, the Board setting investment policy and risk guidelines, foreign currency hedges, interest rate hedges, contracts together with investment limits. for difference, financial futures, call and put options and warrants and similar instruments for investment ICMIM, an English incorporated company authorised purposes and efficient portfolio management, including and regulated by the Financial Conduct Authority (“FCA”) protecting UIL’s portfolio and balance sheet from major as an alternative investment fund manager (“AIFM”) corrections and reducing, transferring, or eliminating pursuant to the AIFM Regulations, is the Company’s investment risks in its investments. These investments AIFM and joint portfolio manager alongside ICM. The will be long term in nature. investment team responsible for the management of the portfolio is headed by Duncan Saville and Charles UIL has the flexibility to invest in markets worldwide 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 Regulations and Computershare Investor shareholder approach through encouraging a review Services which acts as registrar. ICM has also been of the capital structure and business efficiencies. The appointed 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 and UIL may take legal or management control of a fully recognised. This perceived undervaluation may company from time to time. 32 33 32 UIL Limited Report and Accounts for the year to 30 June 2023 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 As at 30 June 2023 the Company’s £37.5m senior investment unless otherwise stated. secured multicurrency revolving facility with the Bank of There are no fixed limits on the allocation of investments Nova Scotia was fully drawn. Further details are included between sectors and markets, however the following in note 13 to the accounts. UIL has agreed with the Bank investment limits apply: of Nova Scotia to extend its committed senior secured multi-currency facility to 19 March 2024. The facility • investments in unlisted companies will, in has been reduced from £37.5m to £25.0m and will step aggregate, not exceed 25% of gross assets at the down in stages over the next six months prior to a final time that any new unlisted investment is made. This repayment by 19 March 2024. restriction does not apply to loans to Platforms; • no single investment will exceed 30% of gross DIVIDEND POLICY assets at the time such investment is made, save The Board’s objective is to maintain or increase the that this limit shall not prevent the exercise of total annual dividend. Dividends are expected to be warrants, options or similar convertible instruments paid quarterly each year in December, March, June and acquired prior to the relevant investment reaching September. In determining dividend payments, the Board the 30% limit. This restriction does not apply to will take account of factors such as income forecasts, investments in any Platform; and retained revenue reserves, the Company’s dividend payment record and Bermuda law. The Board also has • no single investment in a Platform will exceed 50% the flexibility to pay dividends from capital reserves. of gross assets at the time such investment is made, save that this limit shall not prevent the exercise of RESULTS AND DIVIDENDS warrants, options or similar convertible instruments Details of the Company’s performance are set out in the acquired prior to the relevant investment Investment Managers’ Report. The results for the year reaching the 50% limit and provided that no single ended 30 June 2023 are set out in the attached accounts. investment held by such Platform will exceed 30%. The dividends in respect of the year, which total 8.00p, of the gross assets at the time such investment is have been declared by way of four interim dividends. made on a look-through basis. None of the above restrictions will require the realisation KEY PERFORMANCE INDICATORS of any of UIL’s assets where any restriction is breached Delivery of shareholder value is achieved through the as a result of an event outside of the control of the increase in capital value of the Company’s shares and by Investment Managers which occurs after the investment its income return. The Board reviews performance by is made, but no further relevant assets may be acquired, reference to a number of Key Performance Indicators or loans made by UIL until the relevant restriction can (“KPIs”) that include the following: again be complied with. • NAV total return relative to the FTSE All-Share Index BORROWING LIMITS • Share price Under UIL’s Bye-laws, the Group is permitted to borrow • Share price discount to NAV (excluding the gearing provided through the Group’s capital structure) an aggregate amount equal to 100% of • Revenue earnings its gross assets. Borrowings may be drawn down in any • Ongoing charges figure currency appropriate for the portfolio. 32 33 UIL Limited Report and Accounts for the year to 30 June 2023 ## 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 109 to 111. | 30 June | 2023 | 2022 | | --- | --- | --- | | NAV total return (%) | (20.6) | (38.1) | | FTSE All-Share total return Index (%) | 7.9 | 1.6 | | Share price (pence) | 145.00 | 187.50 | | Discount to NAV (%) | 27.5 | 28.1 | | Percentage of issued shares bought back during the year (based on opening share capital) (%) | 0.0 | 0.5 | | Revenue EPS (pence) | 6.68 | 8.35 | | Ongoing charges figure – excluding performance fees (%) | 2.8 | 2.2 | 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 112 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 25.1% to 41.4% 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, although no ordinary shares were bought back during the year ended 30 June 2023. **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 2023. The fourth quarterly dividend will be paid on 13 October 2023 to shareholders on the register as at 29 September 2023. The total dividend for the year was 8.00p per share (2022: 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 2023, 56.0% 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. ### 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. 34 UIL Limited 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 2022). Maximum use is made of market-based information and the valuation methodologies used are those generally used by market participants. Valuations are compliant with IFRS fair value guidelines and guidelines issued by the IPEV valuation board, which set out recommended practice for fair valuing of unlisted investments within the IFRS framework. The valuation of unlisted Earnings Multiples investments requires the exercise of judgment, and every effort is made to ensure that this judgment is This valuation methodology is used where the applied objectively and is not used to overstate or investment is profitable and where a set of comparable understate the valuation result. listed companies with similar characteristics to its holding can be determined. As several investments are The Board reviews the unlisted valuations at each not traded on an active market, the valuations are then meeting and in conjunction with UIL’s external financial adjusted by a liquidity discount with the discount varying reporting process. The Board receives a detailed depending on the nature of the underlying investment report from the Investment Managers’ valuation entity and its sector and whether restrictions exist team recommending a proposed valuation for each on UIL’s ability to sell the asset in an orderly fashion. of UIL’s investments. The report includes details of In certain instances, UIL may use a revenue multiple all material valuations, explanations for movements approach if this is deemed more appropriate. and confirmation of the valuation process adopted. Representatives of the Investment Managers are in It is UIL’s policy to use reported earnings adjusted for attendance at these meetings to answer any questions non-recurring items, which are typically sourced from the Board may have on the valuation process and the the investee companies’ management accounts or choice of valuation techniques and inputs. The Board audited financial reports. In certain cases, current or reviews and challenges the assumptions behind the projected maintainable earnings provide a more reliable unlisted asset valuations. indicator of the company’s performance and in these instances an estimate of maintainable earnings is used VALUATION METHODOLOGIES in the valuation calculation. The valuation of unlisted investments is normally Multiples are derived from comparable listed companies determined by using one of the following valuation in the same business sector. Adjustments are made for methodologies and, depending on the investment and relative performance versus the comparables and other relevance of the approach, any or all of these valuation company specific factors including size, product offering methods could be used. and growth rates. 34 35 UIL Limited Report and Accounts for the year to 30 June 2023 ## STRATEGIC REPORT (continued) Discounted Cash Flow transaction has been substantially agreed, a discount to the expected realisation proceeds or flotation value This methodology may be used for valuing investments valuation technique is used. Judgement is applied as with long term stable cash flows and uses maintainable to the likely eventual exit proceeds and certainty of earnings discounted at appropriate rates to reflect the completion. This technique is only utilised where a sale value of the business. Generally, the latest historical or flotation process is materially complete, and the accounts are used unless reliable forecast results for the remaining risks are estimated to be small. current year are available. Earnings are adjusted where appropriate for exceptional or non-recurring items. Note 29 to the accounts sets out more details on UIL’s unlisted investments and the valuation methodologies Net Assets adopted. This valuation technique derives the value of an investment by reference to the value of its net assets. PRINCIPAL RISKS AND RISK MITIGATION This is used for investments whose value derives mainly During the year ended 30 June 2023, ICMIM was the from the underlying fair value of their assets rather Company’s AIFM and had sole responsibility for risk than their earnings, such as unlisted fund investments, management subject to the overall policies, supervision, property holding companies and other investment review and control of the Board. 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 For unlisted investment companies and limited of the Company’s risk register which identifies the partnerships, the fair value estimate is based on a risks facing the Company and the likelihood and summation of the estimated fair value of the underlying potential impact of each risk, together with the controls investments attributable to the investor. This fund NAV established for mitigation. 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 Recent Investments Audit & Risk Committee has determined that they are 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 investment is imminent and the pricing of the relevant 36 37 UIL Limited Report and Accounts for the year to 30 June 2023 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, geo-political confrontations, climate and fixed interest change, natural disasters and health epidemics. At each Board meeting the Board securities, interest reviews the composition of the portfolio, asset allocation, stock selection, unquoted rates and foreign investments and levels of gearing and has set investment restrictions and currency exchange guidelines which are monitored 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 focused 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. 36 37 UIL Limited Report and Accounts for the year to 30 June 2023 ## STRATEGIC REPORT (continued) OPERATIONAL Failure by any service The Company’s main service providers are listed on page 108. The Audit & Risk RISK: provider to carry Committee monitors the performance and controls (including business continuity out its obligations procedures) of the key service providers at regular intervals. to the Company in Most of UIL’s investments are held in custody for the Company by JPMorgan accordance with Chase Bank N.A., Jersey. JPMEL, the Company’s depositary services provider, also the terms of its monitors the movement of cash and assets across the Company’s accounts. The appointment could Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are reported have a materially on by Independent Service Auditors, in relation to its administration, custodial and detrimental impact 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 key service providers on the preventative steps the Company to that 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 2023, gearing on net assets, including bank loans, any overdrafts and ZDP on the Company’s shares, was 83.5% (30 June 2022: 89.5%). 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 over a period of five years is appropriate given the nature of the Company and its investment objective The Board makes an assessment of the longer-term and appropriately reflects the long-term strategy of the prospects of the Company beyond the timeframe Company. envisaged under the going concern basis of accounting, having regard to the Company’s current position and In its assessment of the viability of the Company, the the principal risks it faces. The Company is a long-term Board has considered the Company's prospects and investment vehicle and the Board believes that it is outlook, each of the Company’s principal risks and appropriate to assess the Company’s viability over a uncertainties detailed above, as well as the impact of long-term horizon. For the purposes of assessing the a significant fall in world equity and foreign exchange Company’s prospects in accordance with provision markets on the value of the Company’s investment 31 of the UK Corporate Governance Code, the Board portfolio and the Company’s ability to repay the considers that assessing the Company’s prospects 38 39 UIL Limited Report and Accounts for the year to 30 June 2023 £122.1m ultimate liability in respect of the 2024 and regard (amongst other matters) to fostering relationships 2026 ZDP shares and its bank and other debt. The with the Company’s stakeholders and maintaining a Investment Managers remain focused on reducing risk reputation for high standards of business conduct. and helping investee companies navigate through the As an externally managed investment company, UIL current challenging environment and emerge stronger. has no employees, customers, operations or premises. The Board is also satisfied that it operates an effective Therefore, the Company’s key stakeholders (other than its risk management process and has concluded a robust shareholders) are considered to be its service providers, assessment of the principal risks facing the Company. The including lenders. The need to promote business Board has also considered the Company’s income and relationships with the service providers and maintain expenditure projections and the fact that the Company’s a reputation for high standards of business conduct is operating expenses comprise a very small percentage of central to the Directors’ decision making. The Directors net assets while a significant proportion of the Company’s believe that fostering constructive and collaborative investments comprise listed securities which could likely relationships with the Company’s service providers will be sold to meet funding requirements, if necessary. The assist in their promotion of the success of the Company Board continues to consider the key risks set out in this for the benefit of all shareholders and their performance Strategic Report, the controls and actions to mitigate is monitored by the Board and its committees. The these risks and the prospects for the Company’s portfolio principal service provider is the Investment Managers, holdings and has concluded that they are unlikely to affect who are responsible for managing the Company’s assets the going concern status or viability of the Company. in order to achieve its stated investment objective, and As part of this assessment the Board considered a the Board maintains a good working relationship with number of stress tests, including short term reverse them. Whilst strong long term investment performance stress testing, and scenarios which considered the is essential, the Board recognises that to provide an impact of severe stock market and currency volatility on investment vehicle that is sustainable over the long term, shareholders’ funds over a five-year period. Initially, the both it and the Investment Managers must have regard Company’s projections were adjusted to reflect a material to ethical and environmental issues that impact society. reduction in the value of its investments in line with Accordingly, ESG considerations are an important part that experienced during the emergence of the Covid-19 of the Investment Managers’ investment process as pandemic in the first quarter of 2020. The first stress test explained more fully below. considered a fall in the market of 40% in the first year The Board seeks to engage with the Investment Managers with recovery of 10% per annum thereafter. A second and its other service providers in a collaborative and test considered a fall in the markets of 20% and adverse collegiate manner, whilst also ensuring that appropriate sterling movement, the Company’s reporting currency, and regular challenge is brought, and evaluation of 10% in the first year with a further fall in markets of conducted. The aim of this approach is to enhance 20% in the second year and no movement thereafter. service levels and strengthen relationships with a view The results demonstrated the impact on the Company’s to ensuring the interests of the Company’s shareholders NAV, its expenses, and its ability to meet its liabilities over are best served by keeping cost levels proportionate and that period. As a result of this analysis, the Board has competitive, and by maintaining the highest standards of concluded that there is a reasonable expectation that the business conduct. Company will be able to continue in operation and meet its liabilities as they fall due over the next five years. The Directors aim to act fairly as between the Company’s shareholders and the approach to shareholder relations PROMOTING THE SUCCESS OF THE COMPANY is summarised in the Corporate Governance Statement Although the Company is domiciled in Bermuda, the on pages 52 to 56. The Chairman is available to meet Board has considered the guidance set out in the AIC with shareholders as appropriate and the Investment Code of Corporate Governance in relation to Section 172 Managers meet regularly with shareholders and their of the UK Companies Act 2006. This requires the Directors respective representatives, reporting back on views to to have a duty to promote the success of the Company for the Board. Shareholders may also communicate with the benefit of its members as a whole and includes having the Company at any time by writing to the Board at the 38 39 UIL Limited Report and Accounts for the year to 30 June 2023 Report and Accounts for the year to 30 June 2023 39 ## STRATEGIC REPORT (continued) Company’s registered office or contacting the Company’s within a company ensures that minority shareholder broker. These communication opportunities help inform interests are aligned with other shareholders, the Board when considering how best to promote the management and stakeholders. The Investment success of the Company for the benefit of all shareholders Managers’ “G” assessment therefore includes questions over the long term. covering shareholders’ rights, transparency and related parties, as well as audit and accounting, board In addition to ensuring that the Company’s stated composition and effectiveness, executive oversight and investment objective was being pursued, the Directors compensation. Each area is assessed and weighted, and confirm that they have considered promoting the success the Investment Managers then apply an aggregated of the Company when making decisions, including in weighting towards “G” in line with the strong empirical relation to: evidence linking robust corporate governance and • the extension of the Company’s senior secured performance. The questions and expectations that multicurrency revolving facility with Bank of Nova the Investment Managers have of companies stays Scotia, London Branch in September 2022 for 12 consistent. This is regardless of the size of company, months; sector or geographical location. • the realisation of investments in advance of the The “E” and “S” are also focal points for the Investment redemption of the 2022 ZDP shares on 31 October Managers, as assessing key environmental and social risks 2022; are essential to a long-term sustainable business model. The Investment Managers identify the most material “E” • the recommendation that shareholders vote in and “S” risks that are believed to affect each sector. Once favour of the Company’s dividend policy at the identified, many investees are then assessed against each forthcoming AGM; and risk. The results from this analysis feed into an “E” and • the recommendation that shareholders vote in “S” score for each company reflecting, for each material favour of the renewal of the buyback and allotment risk, whether suitable/sustainable strategies are in authorities as set out in the notice of AGM. place. Where this is data is not disclosed, the Investment Managers will engage with the investee to ensure that the RESPONSIBLE INVESTMENT POLICY correct data is captured. To manage individual ESG risks The Board believes that it is in the shareholders’ interests the Investment Managers will capture or ask the investee to consider ESG factors when selecting and retaining if not disclosed, how the company is managing the risk. investments, and has asked the Investment Managers to Where a portfolio company is assessed as having a take these into account when investing. The concept of relatively low “E”, “S” and/or “G” score, ICM’s approach is responsible investing has always been a core component to engage with the company to seek improvements over of the investment process and the Investment Managers time. ESG considerations provide a way to identify and employ a disciplined investment process that seeks to review the long-term drivers of an investment that are both uncover opportunities and evaluate potential risks, not found within the financial accounts, thereby enabling while striving for the best possible return outcomes. the Investment Managers to fully question a company’s When reviewing any investment opportunity, the investment potential from a few perspectives. Examples Investment Managers look to understand the relevant of ESG progress on two portfolio companies are set out ESG issues in conjunction with the financial, macro and on page 20. political drivers as part of their investment process, populating an internally built ESG framework due to Where possible, the Investment Managers aim to visit lack of appropriate coverage from external providers. companies to access an in-person opportunity to ask Relevant and material ESG opportunities and risks management teams what they perceive to be the key can meaningfully affect investment performance, operational, social, and environmental issues, as well therefore the consideration of ESG issues forms part of as a chance to see assets operating first-hand. ESG the integrated research analysis, decision-making and disclosures are not always easy to understand given they ongoing monitoring. may not be openly reported or consistently disclosed. The Investment Managers believe that engaging with The Investment Managers believe that “G” is the core companies directly is the best first step. Where necessary, foundation on which all else is built, as strong governance 40 41 UIL Limited Report and Accounts for the year to 30 June 2023 the Investment Managers will question and challenge an Company considers itself to be a low energy user under investee company’s management team directly to ensure the SECR regulations and therefore is not required to a full understanding of any challenges and opportunities. disclose energy and carbon information. Given the Investment Managers are long term investors, BRIBERY ACT engagement with management teams is and will remain The Company has a zero tolerance policy towards bribery paramount to the investment approach. On behalf of UIL and is committed to carrying out business fairly, honestly as shareholder, the Investment Managers work actively and openly. The Investment Managers also adopt a zero with investee companies to incorporate stronger ESG tolerance approach and have policies and procedures in principles and vote in a considered manner (including place to prevent bribery. against resolutions) to drive positive change. Voting proposals are reviewed carefully with final execution CRIMINAL FINANCE ACT taking into consideration the analysis and engagement The Company has a commitment to zero tolerance completed. As referred to previously, the Investment towards the criminal facilitation of tax evasion. Managers believe that governance factors are fundamental to an investment. SOCIAL, HUMAN RIGHTS AND COMMUNITY MATTERS ICM is a signatory to the United Nations-supported As an externally-managed investment company, the Principles of Responsible Investment, which is an Company does not have any employees or maintain any international network of investors working together to premises. It therefore has no material, direct impact on implement its six aspirational principles. The Investment the environment or any particular community and the Managers believe that good stewardship is essential and Company itself has no environmental, human rights, these principles align with their philosophy to protect and social or community policies. The Board notes the increase the value of UIL's investments. Investment Managers’ policy statement in respect of Environmental, Social and Governance issues, as outlined MODERN SLAVERY ACT on page 40. 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 no Company’s objective of delivering a long-term total return turnover. The Company is therefore not required to make and the future of the Company is dependent upon the a slavery and human trafficking statement. In any event, success of its investment strategy. The outlook for the the Board considers the Company’s supply chains, dealing Company is discussed in the Chairman’s Statement predominantly with professional advisers and service and the main trends and factors likely to affect the providers in the financial services industry, to be low risk future development, performance and position of the in relation to this matter. Company’s business can be found in the Investment Managers’ Report. GENDER DIVERSITY This Strategic Report was approved by the Board of The Board consists of three male directors and one Directors on 22 September 2023. female director. The Company has no employees and therefore there is nothing further to report in respect of gender representation within the Company. The By order of the Board Company’s policy on diversity is detailed in the Corporate ICM Limited Governance Statement on page 55. Company Secretary GREENHOUSE GAS EMISSIONS AND STREAMLINED 22 September 2023 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 40 41 UIL Limited Report and Accounts for the year to 30 June 2023 ## 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 2023 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 ## £1.8bn IN FUNDS DIRECTLY AND IS RESPONSIBLE INDIRECTLY FOR A FURTHER USD 22.9BN 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 and H.R.L Morrison & Co 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. 42 43 UIL Limited Report and Accounts for the year to 30 June 2023 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-five 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. 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. ICM MOBILITY Dugald Morrison is responsible for Australasia and leads the team responsible for the ICM Mobility Group. 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. RESOURCES Tristan Kingcott is responsible for ICM Canada, based in Vancouver. He is the fund manager for Zeta Resources Limited and is focused on the resources sector worldwide and on the technology and financial services sectors in North America. He has over twelve years’ experience in financial and commercial analysis. Mr Kingcott is currently a non-executive director of Terra Firma Capital Corp, and several unlisted companies. Mr Kingcott is a CFA Charterholder and a Member of the CFA Society in Vancouver. 42 43 UIL Limited Report and Accounts for the year to 30 June 2023 ## INVESTMENT MANAGERS AND TEAM (continued) TECHNOLOGY Jason Cheong leads the investment team at Allectus Capital Limited and holds various technology portfolio directorships. He has thirteen years’ experience in private markets investing across venture capital and private equity in Australia and the United Kingdom. Prior to joining ICM, he was a private equity investor at Brookfield Asset Management and a mergers and acquisitions lawyer at Baker & McKenzie, LLP. Mr Cheong is a qualified solicitor, admitted to practice in Australia. Matthew Gould is responsible for ICM's quantum endeavour. He has experience across a range of emerging technologies including Artificial Intelligence, Virtual Reality, and Fintech. Prior to joining ICM, he was CEO of Arria NLG Limited, an AI software company. Mr Gould was with Hewlett Packard ("HP") where he led the Emerging Technologies practice, before transferring as the Chief Strategy Officer for HP’s Professional Services division. He is a registered financial advisor and member of the Institute of Directors, New Zealand. 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 significant 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. 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. 44 45 UIL Limited Report and Accounts for the year to 30 June 2023 ## 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. 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. 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 44 45 UIL Limited Report and Accounts for the year to 30 June 2023 Report and Accounts for the year to 30 June 2023 45 ## DIRECTORS’ REPORT The Directors present the Annual Report and Accounts FUND MANAGEMENT ARRANGEMENTS of the Company for the year ended 30 June 2023. 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. 46 47 46 UIL Limited Report and Accounts for the year to 30 June 2023 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 2023, 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 22 December 2022, 31 March 2023 and 26 June 2023. A dividend of 2.00p per share was declared on 19 September 2023 for payment on 13 October 2023 to shareholders on the register as at 29 September 2023. 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-2.jpeg](img-2.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. 20.5% of the total portfolio as at 30 June 2023 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 four non-executive Directors who oversee and monitor the activities of the Investment Report and Accounts for the year to 30 June 2023 47 ## DIRECTORS’ REPORT (continued) Managers and other service providers and ensure that DIRECTORS’ INTERESTS the Company’s investment policy is adhered to. The The Directors’ interests in the ordinary share capital Board is supported by an Audit & Risk Committee and of the Company are disclosed in the Directors’ a Management Engagement Committee, which deal Remuneration Report. with specific aspects of the Company’s affairs. The No Director was a party to, or had any interests in, Corporate Governance Statement, which is set out on any contract or arrangement with the Company at any pages 52 to 56, forms part of this Directors’ Report. time during the year or at the year end. There are no The Directors have a range of business, financial and agreements between the Company and its Directors asset management skills as well as experience relevant concerning compensation for loss of office. to the direction and control of the Company. Brief A Director must avoid a situation where he/she has, biographical details of the members of the Board are or can have, a direct or indirect interest that conflicts, shown on page 45. All the Directors are independent or possibly may conflict, with the Company’s interests. other than Mr Shillson, who is a partner of Dentons The Directors have declared any potential conflicts of Kensington Swan, a New Zealand law firm which has interest to the Company which are reviewed regularly acted for members of the UIL and ICM groups. by the Board. The Directors have undertaken to advise UIL’s Bye-laws require that a Director shall retire the Company Secretary and/or Chairman as soon and be subject to re-election at the first AGM after as they become aware of any potential conflicts of appointment and at least every three years thereafter. interest. However, in accordance with the AIC Code of Corporate Governance, all the directors are subject to annual SHARE CAPITAL re-election. As at 30 June 2023 the issued ordinary share capital The nature of an investment company and the of the Company and the total voting rights were relationship between the Board and the Investment 83,842,918 ordinary shares. As at the date of this Managers are such that it is considered unnecessary report the issued share capital and total voting to identify a senior independent director. Any of the rights were 83,842,918 ordinary shares. There are Directors is available to shareholders if they have no restrictions on the transfer of securities in the concerns which have not been resolved through the Company and there are no special rights attached to normal channels of contact with the Chairman or the any of the shares. Investment Managers, or for which such channels are SHARE ISSUES AND REPURCHASES inappropriate. UIL has the authority to purchase shares in the The duty to Promote the Success of the Company market and to issue new shares for cash. During the section on pages 39 and 40 forms part of this year ended 30 June 2023 no ordinary shares were Directors' Report. purchased by the Company. The current authority to repurchase shares was granted to Directors on DIRECTORS’ INDEMNITY AND INSURANCE 10 November 2022 and expires at the conclusion of As permitted by the Company’s Bye-laws, the Directors the next AGM. The Directors are proposing that their have the benefit of an indemnity under which the authority to buy back up to 14.99% of the Company’s Company has agreed to indemnify each Director, to the shares and to issue new shares up to 10% of the extent permitted by law, in respect of certain liabilities Company’s issued ordinary share capital be renewed incurred as a result of carrying out his/her role as a at the forthcoming AGM. Director of the Company. The indemnity was in place during the year and as at the date of this report. SUBSTANTIAL SHARE INTERESTS UIL also maintains Directors’ and Officers’ liability As at the date of this report, the Company had insurance which provides appropriate cover for any received notification from Mr Duncan Saville that he legal action brought against the Directors. had an interest in 63,179,727 ordinary shares (75.4% of UIL’s issued share capital) which included the 48 49 UIL Limited Report and Accounts for the year to 30 June 2023 holding of General Provincial Life Pension Fund Limited ANNUAL GENERAL MEETING (54,851,533 ordinary shares (65.4%)). The following information to be discussed at the forthcoming AGM is important and requires your THE COMMON REPORTING STANDARD immediate attention. If you are in any doubt about the Tax legislation under The OECD (Organisation for action you should take, you should seek advice from Economic Co-operation and Development) Common your stockbroker, bank manager, solicitor, accountant Reporting Standard for Automatic Exchange of or other financial adviser authorised under the Financial Account Information (the “Common Reporting Financial Services and Markets Act 2000 (as amended). Standard”) was introduced on 1 January 2016. The If you have sold or transferred all of your shares in the legislation requires UIL, as an investment company, Company, you should pass this document, together to provide personal information on shareholders to with any other accompanying documents including the the Company’s local tax authority in Bermuda. The form of proxy, at once to the purchaser or transferee, Bermuda tax authority may in turn exchange the or to the stockbroker, bank or other agent through information with the tax authorities of another country whom the sale or transfer was effected, for onward or countries in which the shareholder may be tax transmission to the purchaser or transferee. 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 All new shareholders, excluding those whose shares Statements are held as depositary interests, who are entered on This resolution seeks shareholder approval to receive the share register will be sent a certification form for the Directors’ Report, the Independent Auditor’s the purposes of collecting this information. Report and the Financial Statements for the year ended 30 June 2023. AUDIT INFORMATION AND AUDITOR The Directors who held office at the date of approval Ordinary Resolution 2 – Approval of the Directors’ of this Directors’ Report confirm that, so far as they are Remuneration Policy aware, there is no relevant audit information of which This resolution is to approve the Directors’ the Company’s auditor is unaware; and each Director Remuneration Policy which, if passed, will be effective has taken all the steps that they ought to have taken as with immediate effect and will apply until it is next a Director to make themselves aware of any relevant put to shareholders for approval, which must be at audit information and to establish that the Company’s intervals of not more than three years. auditor is aware of that information. Ordinary Resolution 3 – Approval of the Directors’ LISTING RULE 9.8.4R Remuneration Report The ordinary shares of UIL are admitted to the This resolution is an advisory vote on the Directors’ Specialist Fund Segment and therefore the Listing Remuneration Report. Rules do not technically apply to it. However it has agreed to comply voluntarily with certain key Ordinary Resolution 4 – Approval of the Company’s provisions of the Listing Rules, including Listing dividend policy Rule 9.8, and confirms that there are no instances This resolution seeks shareholder approval of the where the Company is required to make disclosures Company’s dividend policy to pay four interim in respect of Listing Rule 9.8.4R (information to be dividends per year. Under the Company’s Bye-laws, the included in annual report and accounts). Board is authorised to approve the payment of interim dividends without the need for the prior approval of the Company’s shareholders. 48 49 UIL Limited Report and Accounts for the year to 30 June 2023 ## DIRECTORS’ REPORT (continued) Having regard to corporate governance best practice Ordinary Resolutions 9 and 10 – Appointment of the relating to the payment of interim dividends without external Auditor and the Auditor’s Remuneration the approval of a final dividend by a company’s These resolutions relate to the appointment and shareholders, the Board has decided to seek express remuneration of the Company’s auditor. The Company, approval from shareholders of its dividend policy to through its Audit & Risk Committee, has considered pay four interim dividends per year. If this resolution the independence and objectivity of the external is not passed, it is the intention of the Board to auditor and is satisfied that the proposed Auditor is refrain from authorising any further interim dividends independent. Further information in relation to the until such time as the Company’s dividend policy is assessment of the existing Auditor’s independence can approved by its shareholders. be found in the report of the Audit & Risk Committee. Resolutions relating to the following items of special Ordinary Resolutions 5 to 8 (inclusive) – Re-election of Directors business will be proposed at the forthcoming AGM: The biographies of the Directors are set out on page Ordinary Resolution 11 – Authority to buy back 45 and are incorporated into this report by reference. shares Resolution 5 relates to the re-election of Mr Peter This resolution seeks to renew the authority granted Burrows who was appointed Chairman on 16 to Directors enabling the Company to purchase its November 2015, having joined the Board on 16 own shares. The Directors will consider repurchasing September 2011. Mr Burrows’ leadership of the Board shares in the market if they believe it to be in as Chairman draws on his long and varied experience shareholders’ interests and as a means of correcting on the boards of many listed and unlisted companies. any imbalance between supply and demand for the His focus is on long-term strategic issues, which are Company’s shares. Any shares purchased pursuant to key topics of Board discussion. this resolution shall be cancelled immediately upon completion of the purchase or held, sold, transferred Resolution 6 relates to the re-election of Mr Stuart or otherwise dealt with as treasury shares. Bridges who was appointed on 2 October 2019. Mr Bridges is a chartered accountant with many years of The Directors are seeking authority to purchase in the experience both as a chief financial officer and as chair market up to 12,560,000 ordinary shares (representing of audit and risk committees in the financial services approximately 14.99% of the issued ordinary shares as sector. He therefore brings this strong background at the date of the Notice of AGM). This authority, unless and skills to his role as the Company’s Audit & Risk renewed at an earlier general meeting, will expire at Committee Chairman. the conclusion of the next AGM of the Company to be held in 2024. Resolution 7 relates to the re-election of Ms Alison Hill who was appointed on 16 November 2015. Ms Special Resolution 12 – Authority to disapply pre- Hill is based in Bermuda and is an executive director emption rights and chief executive officer of the financial services The Company’s Bye-laws provide that, unless company, The Argus Group. She therefore brings otherwise determined by a special resolution, the extensive financial services experience and knowledge Company is not able to allot ordinary shares for cash of Bermuda to her role on the Board. without offering them to existing shareholders first in Resolution 8 relates to the re-election of Mr David proportion to their shareholdings. This resolution will Shillson who was appointed on 16 November 2015. Mr grant the Company authority to dis-apply these pre- Shillson brings significant legal experience to his role emption rights in respect of up to 8,384,000 ordinary on the Board which draws on a track record of advising shares (representing approximately 10% of the issued on acquisitions and investment structuring in many of ordinary shares as at the date of the Notice of AGM). the sectors in which the Company invests. 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 50 51 UIL Limited Report and Accounts for the year to 30 June 2023 Company to be held in 2024 unless renewed prior to that date at an earlier general meeting. 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 22 September 2023 50 51 UIL Limited Report and Accounts for the year to 30 June 2023 ## 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 Four 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. 52 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 be held in countries where the Company holds investments and COMPLIANCE WITH THE AIC CODE the Board will meet with investee companies and local During the year ended 30 June 2023, the Company 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 2023 53 ## 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 2/2 2/2 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. chaired by Mr Bridges, comprises all the independent It reviews financial reports and performance against Directors of the Company and meets at least once a relevant stock market criteria and the Company’s peer 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 2023, with ad hoc market/ 54 UIL Limited occurred during the year ended 30 June 2023 or Number of senior | subsequently up to the date of this report. | | Number | Percentage | | | positions on | | --- | --- | --- | --- | --- | --- | --- | | | | of Board | | of the | the Board (CEO, | | | | 30 June 2023 | members | | Board | CFO, SID, Chair) | | BOARD DIVERSITY, APPOINTMENT, RE-ELECTION AND TENURE Men 3 75% The Board as a whole undertakes the responsibilities Women 1 25% which would otherwise be assumed by a nomination Not applicable* committee since the Board is composed solely of non- Other – – executive Directors. It considers the size and structure Not specified/ of the Board, including the balance of expertise and prefer not to say – – skills brought by individual Directors. It supports the principles of boardroom diversity, including gender Number of senior | and ethnicity, progressive refreshing and succession | | Number | Percentage | | | positions on | | --- | --- | --- | --- | --- | --- | --- | | planning and such matters are discussed by the Board | | of Board | | of the | the Board (CEO, | | | | 30 June 2023 | members | | Board | CFO, SID, Chair) | | as a whole at least annually. The Company’s policy is that the Board should be comprised of directors with White British or other White a diverse range of skills, knowledge and experience (including and that any new appointments should be made on minority-white the basis of merit, against objective criteria including groups) 4 100% diversity. Listing Rule 9.8.6, against which the Company Mixed/Multiple has agreed to comply voluntarily, requires companies Ethnic Groups – – to report against the following three diversity targets: Asian/Asian British – – Not applicable* (i) At least 40% of individuals on the board are Black/African/ women; Caribbean/Black (ii) At least one of the senior board positions (defined British – – in the Listing Rules as the chair, CEO, SID and CFO) Other ethnic is held by a woman; and group, including Arab – – (iii) At least one individual on the board is from a Not specified/ minority ethnic background. prefer not to say – – As at 30 June 2023, UIL’s Board consists of three * This column is inapplicable as the company is externally managed and does not have executive management functions, specifically it men and one woman and UIL does not comply with does not have a CEO , CFO. targets (i) and (iii). As provided for in the Listing Rules, investment companies do not need to report against Whilst the current composition of the Board does not target (ii) if it is inapplicable. The Board believes satisfy targets (i) and (iii), the Board will continue to that, since UIL is an externally managed investment have regard to boardroom diversity, including gender company which does not have executive management and ethnicity, during its consideration of succession functions, including the roles of CEO or CFO, this target planning and future Board appointments. is not applicable. The Board is of the view that length of service does The Board has chosen to align its diversity reporting not necessarily compromise the independence or reference date with the Company’s financial year end. contribution of directors of an investment company, As required by the Listing Rules, further details in where continuity and experience can add significantly relation to the three diversity targets are set out in to the strength of the Board. This is supported by the the tables below. The information was obtained by views on independence expressed in the AIC Code. asking each of the Directors how they wished to be No limit on the overall length of service of any of the categorised for the purposes of these disclosures: Company’s Directors, including the Chairman, has Report and Accounts for the year to 30 June 2023 55 ## CORPORATE GOVERNANCE STATEMENT (continued) been imposed. All Directors are subject to annual re- the Chairman with the other Directors, taking into election. account the views of the Investment Managers. The relevant points arising from these meetings are then The Board reviews succession planning at least reported to, and discussed by, the Board as a whole. annually. Appointments of new Directors will be made This process has been carried out in respect of the on a formalised basis with the Chairman agreeing, in year under review and will be conducted on an annual conjunction with his colleagues, a job specification basis. The result of this year’s performance evaluation and other relevant selection criteria and the methods process was that the Board, the Committees of the of recruitment (where appropriate using an external Board and the Directors individually were all assessed recruitment agency), selection and appointment. The to have performed satisfactorily. No follow-up actions potential Director would meet with Board members were required. prior to formal appointment. An induction process will be undertaken, with new appointees to the It is not felt appropriate currently to employ the Board being given a full briefing on the workings and services of, or to incur the additional expense of, an processes of the Company and the management of the external third party to conduct the evaluation process Company by the Chairman, the Investment Managers, as an appropriate process is in place; this will, however, the Company Secretary and other appropriate be kept under review. persons. All appointments are subject to subsequent confirmation by shareholders in general meeting. RELATIONS WITH SHAREHOLDERS UIL welcomes the views of shareholders and BOARD, COMMITTEE AND DIRECTORS’ places great importance on communication with PERFORMANCE APPRAISAL shareholders. The Directors recognise the importance of the AIC The prime medium by which the Company Code’s recommendations in respect of evaluating communicates with shareholders is through the the performance of the Board, the Committees half-yearly and annual financial reports, which aim to and individual Directors. This encompasses both provide shareholders with a full understanding of the quantitative and qualitative measures of performance Company’s activities and its results. This information including: is supplemented by the calculation and publication, • attendance at meetings; via a Regulatory Information Service, of the NAV of the Company’s shares and by monthly fact sheets produced • the independence of individual Directors; by the Investment Managers. Shareholders can visit • the ability of Directors to make an effective the Company’s website: www.uil.limited in order to contribution to the Board and Committees access copies of half-yearly and annual financial reports, through the range and diversity of skills and factsheets and regulatory announcements. experience each Director brings to their role; and The Investment Managers hold meetings with the • the Board’s ability to challenge the Investment Company’s largest shareholders and report back Managers’ recommendations, suggest areas to the Board on these meetings. The Chairman and of debate and set the future strategy of the other Directors are available to discuss any concerns Company. with shareholders, if required and shareholders may communicate with the Company at any time by writing The Board opted to conduct performance evaluation to the Board at the Company’s registered office or through questionnaires and discussion between contacting the Company’s broker. the Directors, the Chairman and the chairmen of the Committees. This process is conducted by the Chairman reviewing individually with each of By order of the Board the Directors their performance, contribution and ICM Limited commitment to the Company and the possible further Company Secretary development of skills. In addition, the Chair of the Audit & Risk Committee reviews the performance of 22 September 2023 56 UIL Limited # DIRECTORS' REMUNERATION REPORT The Board presents the report on Directors' remuneration for the year ended 30 June 2023. The report comprises a remuneration policy, which is subject to a triennial binding shareholder vote, or sooner if an alteration to the policy is proposed, and a report on remuneration, which is subject to an annual advisory vote. An ordinary resolution for the approval of this report will be put to shareholders at the Company's forthcoming AGM. Where certain parts of the disclosures provided have been audited, they are indicated as such. The auditor's opinion is included in their report starting on page 64. The Board's policy on remuneration is set out below. A key element is that fees payable to Directors should reflect the time spent by them on the Company's affairs and should be sufficient to attract and retain individuals with suitable knowledge and experience to promote the long term success of the Company whilst also reflecting the time commitment and responsibilities of the role. There were no changes to the policy during the year. The Board is composed solely of non-executive Directors, none of whom has a service contract with the Company and therefore no remuneration committee has been appointed. The Board as a whole undertakes the responsibilities which would otherwise be assumed by a remuneration committee. ## DIRECTORS' REMUNERATION POLICY The Board considers the level of the Directors fees at least annually. The Board determines the level of Directors' fees within the limit currently set by the Company's Bye-laws, which limit the aggregate fees payable to the Directors to a total of £250,000 per annum. The Board's policy is to set Directors' remuneration at a level commensurate with the skills and experience necessary for the effective stewardship of the Company and the expected contribution of the Board as a whole in continuing to achieve the investment 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. The fees are fixed and are payable in cash, quarterly in arrears. Directors are entitled to be reimbursed for any reasonable expenses properly incurred by them in connection with the performance of their duties and attendance at Board and general meetings and Committee meetings. Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits. Directors are provided with a letter of appointment when they join the Board. There is no provision for compensation upon early termination of appointment. The letters of appointment are available on request at the Company's registered office during business hours. ## DIRECTORS' REMUNERATION The Board reviews the fees payable to the Chairman and Directors annually. The review in respect of the year ending 30 June 2024 has resulted in the increases being applied to the annual fees as detailed in the table below. | Year ending 30 June | 2024 £'000s | 2023* £'000s | | --- | --- | --- | | Chairman | 52.5 | 50.0 | | Directors | 38.9 | 37.0 | | Chairman of Audit & Risk Committee | 50.2 | 47.8 | * Annual ## VOTING AT ANNUAL GENERAL MEETING A resolution to approve the Remuneration Report was put to shareholders at the AGM of the Company held on 10 November 2022. Of the votes cast, 99.96% were in favour and 0.04% were against; this resolution will be put to shareholders again this year. The Company seeks shareholder approval for its remuneration policy on a triennial basis and a binding resolution was last put to shareholders at the AGM held on 8 December 2020. Of the votes cast, 99.98% were in favour and 0.02% were against. A resolution to approve the remuneration policy will be put to shareholders at the forthcoming AGM. Report and Accounts for the year to 30 June 2023 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 2023. 2023 and the prior year. Although this disclosure is a statutory requirement, the Directors consider that Year ended 2023 2022 30 June £ £ comparison of Directors’ remuneration with annual dividends and share buybacks does not provide a Peter Burrows 50,000 47,600 meaningful measure relative to the Company’s overall Stuart Bridges 47,750 45,500 performance as an investment company with an Alison Hill 37,000 35,200 objective of providing shareholders with long-term 1 Christopher Samuel 33,917 35,200 total return. David Shillson 37,000 35,200 Year ended 2023 2022 CHANGE Total 205,667 198,700 30 June £’000s £’000s £’000s (1) Mr Samuel retired from the Board on 31 May 2023 Aggregate Directors’ emoluments 206 199 7 ANNUAL PERCENTAGE CHANGE IN DIRECTORS’ Aggregate dividends 6,708 6,714 (6) REMUNERATION Aggregate share buybacks – 1,227 (1,227) The following table sets out the annual percentage change in Directors’ remuneration compared to the DIRECTORS’ BENEFICIAL SHARE INTERESTS previous year. (AUDITED) | Year ended | | 2023 | | 2022 | | 2021 | | 2020 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 June | | | % | | % | | % | | % | The Directors’ (and any connected persons) holdings of | | | 1 | | | | | | | | | ordinary shares are detailed below: | | Peter Burrows | | | 5.0 3.5 100.0 (48.9) | | | | | | | | Stuart Bridges 4.9 3.4 0.0 n/a As at 30 June 2023 2022 Alison Hill 5.1 3.5 0.0 2.3 Peter Burrows 909,617 909,617 Christopher Samuel 5.1 3.5 0.0 2.3 2 Stuart Bridges 182,007 159,736 David Shillson 5.1 3.5 0.0 2.3 2 | | Alison Hill | 116,511 99,254 | | | | --- | --- | --- | --- | --- | | (1) Mr Burrows waived 50% of his fee entitlement during the year ended | | | 1 | | | | Christopher Samuel 228,419 | | | 219,998 | 30 June 2020. David Shillson 159,069 141,812 (1) As at 31 May 2023, the date Mr Samuel retired from the Board (2) Since the year end, Mr Bridges and Ms Hill have each acquired, respectively, a further 8,025 and 6,218 ordinary shares 58 59 UIL Limited Report and Accounts for the year to 30 June 2023 ## COMPANY PERFORMANCE The graph below compares, for the ten years ended 30 June 2023, the ordinary share price total return (see page 109) 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 2013 to 30 June 2023 (rebased to 100 as at 30 June 2013) ![img-3.jpeg](img-3.jpeg) Source: ICM On behalf of the Board **Peter Burrows** Chairman 22 September 2023 Report and Accounts for the year to 30 June 2023 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 2023. • 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 • management of the relationship with the external STUART BRIDGES duties include considering auditor, including its appointment and the Chairman of the Audit & Risk Committee and recommending to the evaluation of scope, execution, cost effectiveness, Board for approval the independence and objectivity; contents of the half yearly and annual financial • reviewing and approving the external auditor’s statements and providing an opinion as to whether plan for the financial year, with a focus on the annual report and accounts, taken as a whole, the identification of areas of audit risk, and are fair, balanced and understandable and provide consideration of the appropriateness of the level the information necessary for shareholders to assess of audit materiality adopted; the Company’s performance, business model and strategy. The Committee also reviews the external • reviewing and recommending to the Board for auditor’s report on the annual financial statements and approval the audit and non-audit fees payable is responsible for reviewing and forming an opinion to the external auditor and the terms of its on the effectiveness of the external audit process engagement; and audit quality. Other duties include reviewing the • evaluation of reports received from the external appropriateness of the Company’s accounting policies auditor with respect to the annual financial and ensuring the adequacy of the internal control statements and its review of the half-yearly report; systems and standards. • reviewing the efficacy of the external audit process The Audit & Risk Committee meets at least three times and making a recommendation to the Board with a year. Two of the planned meetings are held prior respect to the reappointment of the external to the Board meetings to review the half yearly and auditor; annual results. Representatives of the Investment Managers attend all meetings. • evaluation of the effectiveness of the internal control and risk management systems including COMPOSITION reports received on the operational controls of the Company’s service providers and reports from the During the year ended 30 June 2023, the Audit & Risk Company’s depositary; Committee consisted of all the independent Directors of the Company. It is considered that there is a range of • reviewing the appropriateness of the Company’s recent and relevant financial experience amongst the accounting policies; and members of the Audit & Risk Committee together with • monitoring developments in accounting and experience of the investment trust sector. In light of reporting requirements that impact on the the Chairman of the Board’s relevant financial services Company’s compliance with relevant statutory and experience, his continued independence and his listing requirements. valued contributions in Committee meetings, the Audit & Risk Committee considers it appropriate that he is a AUDITOR AND AUDIT TENURE member. KPMG LLP (“KPMG”) has been the auditor of the Company since 2012, following a competitive tender process. The Audit & Risk Committee decides when it 60 61 UIL Limited Report and Accounts for the year to 30 June 2023 is appropriate to put the role of auditor out to tender. appropriate safeguards exist there is no impact to The audit partner has rotated regularly. Mr John auditor independence. Waterson was appointed the lead audit partner in The partner and manager of the audit team at 2020. The Audit & Risk Committee has considered the KPMG presented their audit plan to the Audit & Risk independence of the auditor and the objectivity of the Committee in advance of the financial year end. Items audit process and is satisfied that KPMG has fulfilled its of audit focus were discussed, agreed and given obligations to shareholders as independent auditor to particular attention during the audit process. KPMG the Company. reported to the Audit & Risk Committee on these It is the Company’s policy not to seek substantial non- items, their independence and other matters. This audit services from its auditor unless they relate to a report was considered by the Audit & Risk Committee review of the half yearly report as the Board considers and discussed with KPMG and the Investment the auditor is best placed to provide this work. If the Managers prior to approval of the annual financial provision of significant non-audit services were to report. be considered, the Committee would procure such Members of the Audit & Risk Committee meet in services from an accountancy firm other than the camera with the external auditor at least annually. auditor. Non-audit fees paid to KPMG by the Company amounted to £12,000 for the year ended 30 June 2023 ACCOUNTING MATTERS AND SIGNIFICANT AREAS (2022: £12,000) and related to the agreed procedures For the year ended 30 June 2023 the accounting on the half yearly accounts. The Committee has matters that were subject to specific consideration considered the threats to independence from the by the Audit & Risk Committee and consultation with provision of this service and concluded that since KPMG where necessary were as follows: 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 2023 is independence, and objectivity. fair, balanced, and understandable and provides the 60 61 UIL Limited Report and Accounts for the year to 30 June 2023 ## AUDIT & RISK COMMITTEE REPORT (continued) As part of the review of the effectiveness of the audit tool to highlight and monitor the principal risks, details process, a formal evaluation process incorporating of which are provided in the Strategic Report. It also views from the members of the Audit & Risk received and considered, together with representatives Committee and relevant personnel at the Investment of the Investment Managers, reports in relation to Managers is followed and feedback is provided to the operational controls of the Investment Managers, KPMG. Areas covered by this review include: Administrator and Custodian. These reviews identified no issues of significance. • the calibre of the audit firm, including reputation and industry presence; WHISTLEBLOWING POLICY • the extent of quality controls including review The Committee has also reviewed and accepted the processes, second director oversight and annual ‘whistleblowing’ policy that has been put in place by reports from its regulator; the Investment Managers under which their staff, in confidence, can raise concerns about possible • the performance of the audit team, including improprieties in matters of financial reporting or other skills of individuals, specialist knowledge, partner matters, in so far as they affect the Company. involvement, team member continuity and quality and timeliness of audit planning and execution; INTERNAL AUDIT • audit communication including planning, relevant Due to the nature of the Company, being an externally accounting and regulatory developments, managed investment company with no executive approach to significant accounting risks, employees, the Company does not have its own communication of audit results and internal audit function. The Committee and the Board recommendations on corporate reporting; have concluded that there is no current need for such • ethical standards including independence and a function, based on the satisfactory operation of integrity of the audit team, lines of communication controls within the Company’s service providers. to the Audit & Risk Committee and partner rotation; and • reasonableness of the audit fees. Stuart Bridges For the year ended 30 June 2023, the Audit & Risk Chairman of the Audit & Risk Committee Committee is satisfied that the audit process was effective. 22 September 2023 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 management, which continue to serve as an effective 62 63 UIL Limited Report and Accounts for the year to 30 June 2023 ## STATEMENT OF DIRECTORS’ RESPONSIBILITIES ## in respect of the Annual Report and Financial Statements The Directors are responsible for preparing the Annual The Directors have decided to prepare voluntarily a Directors’ Report and the Group and parent Company Accounts in Remuneration Report in accordance with Schedule 8 to accordance with applicable law and regulations. The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the The Directors are required to prepare Group and parent UK Companies Act 2006, as if those requirements applied Company financial statements for each financial year. They to the Company. The Directors have also decided to prepare have elected to prepare the Group financial statements voluntarily a Corporate Governance Statement under the UK in accordance with UK adopted International Accounting Corporate Governance Code as if the Company were required Standards and applicable law and have elected to prepare the to comply with the Listing Rules of the Financial Conduct parent Company financial statements on the same basis. Authority applicable to UK premium listed companies. The Directors must not approve the financial statements In accordance with Disclosure Guidance and Transparency unless they are satisfied that they give a true and fair view of Rule 4.1.14R, the financial statements will form part of the the state of affairs of the Group and parent Company and annual financial report prepared using the single electronic of their profit or loss for that period. In preparing each of reporting format under the TD ESEF Regulation. The auditor’s the Group and parent Company financial statements, the report on these financial statements provides no assurance Directors are required to: over the ESEF format. • select suitable accounting policies and then apply them The Directors are responsible for the maintenance and consistently; integrity of the corporate and financial information included on the Company’s website. Legislation in the UK and Bermuda • make judgements and estimates that are reasonable, governing the preparation and dissemination of financial relevant and reliable; statements may differ from legislation in other jurisdictions. • 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, • the financial statements, prepared in accordance with matters related to going concern; and the applicable set of accounting standards, give a true • use the going concern basis of accounting unless they and fair view of the assets, liabilities, financial position either intend to liquidate the Group or the parent and profit or loss of the Company and the undertakings Company or to cease operations or have no realistic included in the 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 the whole, together with a description of the principal risks parent Company and enable them to ensure that its financial and uncertainties that they face. statements comply with the Companies Act 1981 of Bermuda. We consider the annual report and accounts, taken as a They are responsible for such internal controls as they whole, is fair, balanced, and understandable and provides the determine is necessary to enable the preparation of financial information necessary for shareholders to assess the Group’s statements that are free from material misstatement, position and performance, business model and strategy. whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to Approved by the Board and signed on its behalf by: safeguard the assets of the Group and to prevent and detect Peter Burrows fraud and other irregularities. Chairman 22 September 2023 62 63 UIL Limited Report and Accounts for the year to 30 June 2023 Report and Accounts for the year to 30 June 2023 63 ## Independent ## auditor’s report ## to the members of UIL Limited 1. Our opinion is unmodified Overview We have audited the financial statements of UIL Limited Materiality: £3.1m (2022:£4.1m) (“the Company”) for the year ended 30 June 2023 which group financial comprise the Group and Company Income Statements, 1% (2022: 1%) of group total statements as a whole Group and Company Statements of Changes in Equity, assets Group and Company Statements of Financial Position, Group and Company Statements of Cash Flows, and the Coverage 100% (2022:100%) of group total related notes, including the accounting policies in note assets 1. In our opinion the financial statements: Key audit matter vs 2022 — give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 June 2023 and of the Group’s and Parent Company’s Recurring risk Valuation of certain level ◄► losses for the year then ended; and 3 investments — 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. We have fulfilled our ethical responsibilities under, and we are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. 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 (unchanged from 2022), in arriving at our audit opinion above. This matter was addressed, in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, 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 Group’s controls, because the Certain of the unlisted investments within key audit matter nature of the balance is such that we would expect the total unlisted investments balance of to obtain audit evidence primarily through the | (Certain specific investments within | £172.6 million are subject to significant | | | | --- | --- | --- | --- | | | | detailed procedures described below: | . | | the total of level 3 investments of | inherent estimation uncertainty in | | | | £172.6m; 2022: £238.9m) | determining their valuation. | Our procedures included: | | | | Unlisted investments are measured at fair | Methodology choice: In the context of observed | | | Refer to page 61 (Audit & Risk | value, which is determined by reference to | industry best practice and the provisions of the | | | Committee Report), page 77 | the International Private Equity and Venture | International Private Equity and Venture Capital | | | (accounting policy) and pages 82,83 & | Capital Valuation Guidelines by using | Valuation Guidelines, we challenged the | | | 101 - 104 (financial disclosures). | measurements of value such as prices of | appropriateness of the valuation basis selected; | | recent orderly transactions, milestone Our valuation experience: We challenged the analysis, revenue multiples and valuing investment manager on key judgements affecting interest by reference to their reported Net investee company valuations, such as discount rate Asset Value. and the choice of benchmark for earnings multiples. The factors considered in assessing which We compared key underlying financial data inputs unlisted investments were subject to to external sources, investee company audited significant risk included the quantum of the accounts and management information as individual investment, performance of the applicable. We challenged the assumptions investment, nature of the asset held as well pertaining to the external valuation report and as the estimation uncertainty of the assessed the competence of the surveyor. We methodology and inputs used. challenged the assumptions around sustainability of earnings based on the plans of the investee We assessed that there is a significant risk companies and whether these are achievable and associated with this matter due to the we obtained an understanding of existing and quantum of the balance, and the level of prospective investee company cashflows to judgement associated with certain understand whether borrowings can be serviced or unobservable inputs. Therefore this is one whether refinancing may be required. Our work of the key areas that our audit has focused included consideration of events which occur on. subsequent to the year end until the date of this The financial statements note 29 discloses report; the range/sensitivity estimated by the Historical comparisons: We assessed investment Group for all level 3 investments held. valuations, comparing current period valuations and movement to prior period valuations in the absence of any sales or listings, to understand the reasons for significant variances and determine whether they are indicative of bias or error in the Company’s approach to valuations. A retrospective review of prior period audited accounts, in comparison to prior period management accounts, is also undertaken to assess the accuracy of management information provided. 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; Our corporate finance expertise: We utilised the expertise of KPMG Corporate Finance specialists to assist the audit team in assessing specific areas, such as evaluating the appropriateness of comparable companies for a selection of unlisted investments and the appropriateness of valuation methodology; and 65 2. Key audit matters: our assessment of risks of material misstatement (cont.) The risk Our response 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. # 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 £3.1m (2022: £4.1m), determined with reference to a benchmark of total assets of which it represents 1% (2022: 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% (2022: 65%) of materiality for the financial statements as a whole, which equates to £2.0m (2022 : £2.6m). 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 £0.28m (2022: £0.35 million) and performance materiality of £0.18m (2022: £0.26m) 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 £3.0m (2022: £4.0m). 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 (2022: 0.95%). Performance materiality was set at 65% (2022 : 65%) of materiality for the financial statements as a whole, which equates to £1.9m (2022 : £2.6m) 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 £0.16m (2022: £0.21m) for the Group, £0.15m (2022: £0.20 million) for the Company, or £0.01m in relation to Investment and other income (2022: £0.02m), in addition to other identified misstatements that warranted reporting on qualitative grounds. The Group team determined the remaining component materiality as £0.98m (2022: £1.4m) having regard to the mix of size and risk profile of UIL Finance Limited. Of the group's 2 (2022: 2) reporting components, we subjected 2 (2022: 2) to full scope audits for group purposes. 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 £m 313.8 (2022: £417.5m) Group materiality £3.1m (2022: £4.1m) ![img-4.jpeg](img-4.jpeg) £3.1m Whole financial statements materiality (2022: £4.1m) £2.0 million Whole financial statements performance materiality (2022: £2.66m) £0.28million Investment and other income materiality (2022: £0.35m) £0.16m Misstatements reported to the Audit & Risk Committee (2022: £0.21million) 66 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 to going concern basis as they do not intend to liquidate the Group fraud or the Company or to cease their operations, and as they have To identify risks of material misstatement due to fraud (“fraud risks”) concluded that the Group and the Company’s financial position we assessed events or conditions that could indicate an incentive or means that this is realistic. They have also concluded that there pressure to commit fraud or provide an opportunity to commit fraud. are no material uncertainties that could have cast significant Our risk assessment procedures included: doubt over their ability to continue as a going concern for at least — Enquiring of Directors and inspection of policy documentation as to a year from the date of approval of the financial statements (“the the Group’s and Company’s high-level policies and procedures to going concern period”). prevent and detect fraud, as 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 Directors, inherent risks to its business model and analysed how those risks the Administrator and the Group and Company’s Investment might affect the Group’s and Company’s financial resources or Manager; ability to continue operations over the going concern period. The — Reading Board and Audit and Risk Committee minutes; and risks that we considered most likely to adversely affect the — Using analytical procedures to identify any unusual or unexpected Group’s and Company’s available financial resources and its relationships. ability to operate over this period were; — The impact of a significant reduction in the valuation of We communicated identified fraud risks throughout the audit team and investments and the implications for the Group and remained alert to any indications of fraud throughout the audit. Company’s debt covenants; As required by auditing standards, we perform procedures to address — The liquidity of the investment portfolio and its ability to the risk of management override of controls, in particular to the risk meet the liabilities of the Group and Company as and when that management may be in a position to make inappropriate they fall due; and accounting entries and the risk of bias in accounting estimates and — The operational resilience of key service organisations. judgements such as the valuation of level 3 investments. On this audit we do not believe there is a fraud risk related to revenue recognition We considered whether these risks could plausibly affect the because the revenue is non judgemental and straightforward, with liquidity or covenants compliance in the going concern period by limited opportunity for manipulation. assessing the degree of downside assumption that, individually and collectively, could result in a liquidity issue, taking into We performed procedures including: account the Group and Company’s liquid investment position (and the results of their reverse stress testing). • Evaluating the design and implementation of the controls over journal entries and other adjustments; We considered whether the going concern disclosure in notes 1 and 28 to the financial statements give a full and accurate • Enquiring of the Administrator about inappropriate or unusual description of the Directors’ assessment of going concern, activity relating to the processing of journal entries and other including the identified risks and related sensitivities. adjustments; and Our conclusions based on this work: — we consider that the Directors’ use of the going concern basis • Identifying and testing all material post closing journal entries by of accounting in the preparation of the financial statements is comparing the selected entries to supporting documentation. appropriate; Identifying and responding to risks of material misstatement related to — we have not identified, and concur with the directors’ compliance with laws and regulations assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may We identified areas of laws and regulations that could reasonably be cast significant doubt on the Group’s or Company's ability to expected to have a material effect on the financial statements from our continue as a going concern for the going concern period; and general commercial and sector experience, and through discussion with — we have nothing material to add or draw attention to in the Directors, the Investment Manager and the Administrator (as relation to the Directors’ statement in notes 1 and 28 to the required by auditing standards), and discussed with the directors the financial statements on the use of the going concern basis of policies and procedures regarding compliance with laws and accounting with no material uncertainties that may cast regulations. As the Company is regulated, our assessment of risks significant doubt over the Group and Company’s use of that involved gaining an understanding of the control environment including basis for the going concern period, and we found the going the entity’s procedures for complying with regulatory requirements. concern disclosure in notes 1 and 28 to be acceptable. We communicated identified laws and regulations throughout our However, as we cannot predict all future events or conditions team and remained alert to any indications of non-compliance and as subsequent events may result in outcomes that are throughout the audit. inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation. The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation) and financial reporting aspects of the relevant 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. 67 5. Fraud and breaches of laws and regulations – ability to detect Disclosures of emerging and principal risks and longer-term (continued) viability Secondly, the Group is subject to many other laws and regulations We are required to perform procedures to identify whether where the consequences of non-compliance could have a material there is a material inconsistency between the directors’ effect on amounts or disclosures in the financial statements, for disclosures in respect of emerging and principal risks and the instance through the imposition of fines or litigation. We identified viability statement, and the financial statements and our audit the following areas as those most likely to have such an effect: knowledge. money laundering, data protection, bribery and corruption Based on those procedures, we have nothing material to add or legislation, and certain aspects of company legislation recognising draw attention to in relation to: the financial and regulated nature of the Group’s activities and its legal form. — the Directors’ confirmation within the Principal Risks and Risk Mitigation on pages 36 to 38 that they have carried out a Auditing standards limit the required audit procedures to identify robust assessment of the emerging and principal risks facing non-compliance with these laws and regulations to enquiry of the the Group, including those that would threaten its business Directors and the Administrator and inspection of regulatory and model, future performance, solvency and liquidity; legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant — the Principal Risks and Risk Mitigation disclosures describing correspondence, an audit will not detect that breach. these risks and how emerging risks are identified, and explaining how they are being managed and mitigated; and Context of the ability of the audit to detect fraud or breaches of law or regulation — the Directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what Owing to the inherent limitations of an audit, there is an unavoidable period they have done so and why they considered that risk that we may not have detected some material misstatements in period to be appropriate, and their statement as to whether the financial statements, even though we have properly planned and they have a reasonable expectation that the Group will be performed our audit in accordance with auditing standards. For able to continue in operation and meet its liabilities as they example, the further removed non-compliance with laws and fall due over the period of their assessment, including any regulations is from the events and transactions reflected in the related disclosures drawing attention to any necessary financial statements, the less likely the inherently limited procedures qualifications or assumptions. required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non- Our work is limited to assessing these matters in the context of detection of fraud, as these may involve collusion, forgery, only the knowledge acquired during our financial statements intentional omissions, misrepresentations, or the override of internal audit. As we cannot predict all future events or conditions and as controls. Our audit procedures are designed to detect material subsequent events may result in outcomes that are inconsistent misstatement. We are not responsible for preventing non- with judgements that were reasonable at the time they were compliance or fraud and cannot be expected to detect non- made, the absence of anything to report on these statements is compliance with all laws and regulations. not a guarantee as to the Group’s and Company’s longer-term viability. 6. We have nothing to report on the other information in the Annual Corporate governance disclosures Report We are required to perform procedures to identify whether The directors are responsible for the other information presented in there is a material inconsistency between the directors’ the Annual Report together with the financial statements. Our corporate governance disclosures and the financial statements opinion on the financial statements does not cover the other and our audit knowledge. information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion Based on those procedures, we have concluded that each of the thereon. following is materially consistent with the financial statements and our audit knowledge: Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the — the Directors’ statement that they consider that the annual information therein is materially misstated or inconsistent with the report and financial statements taken as a whole is fair, financial statements or our audit knowledge. Based solely on that balanced and understandable and provides the information work we have not identified material misstatements in the other necessary for shareholders to assess the Group’s position and information. performance, business model and strategy; Directors’ remuneration report — the section of the annual report describing the work of the Audit Committee does not appropriately address matters In addition to our audit of the financial statements, the directors communicated by us to the Audit Committee, and how these have engaged us to audit the information in the Directors’ issues were addressed; and Remuneration Report that is described as having been audited, which — the section of the annual report that describes the review of the directors have decided to prepare as if the Company were the effectiveness of the Group’s risk management and required to comply with the requirements of Schedule 8 to The Large internal control systems. and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008 No. 410) made under the UK Companies In addition to our audit of the financial statements, the Directors Act 2006. have engaged us to review their Corporate Governance Statement as if the Company were required to comply with the In our opinion the part of the Directors’ Remuneration Report to be Listing Rules and the Disclosure Guidance and Transparency audited has been properly prepared in accordance with the Rules of the Financial Conduct Authority in relation to those Companies Act 2006, as if those requirements applied to the matters. Under the terms of our engagement we are required to Company. review the part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. We have nothing to report in this respect. 68 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 22 September 2023 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 . The Group will be including these financial statements in an annual financial report prepared using the single electronic reporting format specified in the TD ESEF Regulation. This auditor’s report provides no assurance over whether the annual financial report has been prepared in accordance with that format. 69 ## GROUP INCOME STATEMENT for the year to 30 June 2023 2022 Notes | | Revenue | | Capital | Total | Revenue | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | return | return | return | return | | | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | | 9 Losses on investments – (40,342) (40,342) – (120,524) (120,524) | | | | | | | | | 12 Losses on derivative financial instruments – (2,038) (2,038) – (10,532) (10,532) | | | | | | | | Foreign exchange losses – (1,604) (1,604) – (5,264) (5,264) 2 Investment and other income 10,229 – 10,229 9,879 – 9,879 Total income/(loss) 10,229 (43,984) (33,755) 9,879 (136,320) (126,441) 3 Management and administration fees (758) – (758) (852) – (852) 4 Other expenses (977) (5) (982) (819) (3) (822) Profit/(loss) before finance costs and taxation 8,494 (43,989) (35,495) 8,208 (136,323) (128,115) 5 Finance costs (2,897) (6,059) (8,956) (1,132) (7,790) (8,922) Profit/(loss) before taxation 5,597 (50,048) (44,451) 7,076 (144,113) (137,037) 6 Taxation – – – (63) – (63) Profit/(loss) for the year 5,597 (50,048) (44,451) 7,013 (144,113) (137,100) 7 Earnings per ordinary share – pence 6.68 (59.70) (53.02) 8.35 (171.68) (163.33) The Group does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is also the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised). All items in the above statement derive from continuing operations. All income is attributable to the equity holders of the Company. There are no minority interests. The notes on pages 76 to 104 form part of these financial statements. 70 71 UIL Limited Report and Accounts for the year to 30 June 2023 ## COMPANY INCOME STATEMENT for the year to 30 June 2023 2022 Notes | | Revenue | | Capital | Total | Revenue | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | return | return | return | return | | | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | | 9 Losses on investments – (40,411) (40,411) – (120,529) (120,529) | | | | | | | | | 12 Losses on derivative financial instruments – (2,038) (2,038) – (10,532) (10,532) | | | | | | | | Foreign exchange losses – (1,604) (1,604) – (5,264) (5,264) 2 Investment and other income 10,229 – 10,229 9,879 – 9,879 Total income/(loss) 10,229 (44,053) (33,824) 9,879 (136,325) (126,446) 3 Management and administration fees (758) – (758) (852) – (852) 4 Other expenses (977) (5) (982) (819) (3) (822) Profit/(loss) before finance costs and taxation 8,494 (44,058) (35,564) 8,208 (136,328) (128,120) 5 Finance costs (2,897) (6,260) (9,157) (1,132) (7,988) (9,120) Profit/(loss) before taxation 5,597 (50,318) (44,721) 7,076 (144,316) (137,240) 6 Taxation – – – (63) – (63) Profit/(loss) for the year 5,597 (50,318) (44,721) 7,013 (144,316) (137,303) 7 Earnings per ordinary share – pence 6.68 (60.02) (53.34) 8.35 (171.92) (163.57) The Company does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is also the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised). All items in the above statement derive from continuing operations. All income is attributable to the equity holders of the Company. The notes on pages 76 to 104 form part of these financial statements. 70 71 UIL Limited Report and Accounts for the year to 30 June 2023 ## GROUP STATEMENT OF CHANGES IN EQUITY for the year to 30 June 2023 | Notes | Ordinary | | | Share | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | premium | | Special | Capital | Revenue | | | | | | capital | account | | reserve | reserves | reserve | | Total | | | | £’000s | | £’000s | £’000s | £’000s | | £’000s | £’000s | Balance as at 30 June 2022 8,384 37,874 233,866 (74,230) 12,846 218,740 (Loss)/profit for the year – – – (50,048) 5,597 (44,451) 8 Ordinary dividends paid – – – – (6,708) (6,708) Balance as at 30 June 2023 8,384 37,874 233,866 (124,278) 11,735 167,581 for the year to 30 June 2022 | 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 as at 30 June 2022 8,384 37,874 233,866 – (74,230) 12,846 218,740 The notes on pages 76 to 104 form part of these financial statements. 72 73 UIL Limited Report and Accounts for the year to 30 June 2023 ## COMPANY STATEMENT OF CHANGES IN EQUITY for the year to 30 June 2023 | Notes | Ordinary | | | Share | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | premium | | Special | Capital | Revenue | | | | | | capital | account | | reserve | reserves | reserve | | Total | | | | £’000s | | £’000s | £’000s | £’000s | | £’000s | £’000s | Balance as at 30 June 2022 8,384 37,874 233,866 (74,463) 12,846 218,507 (Loss)/profit for the year – – – (50,318) 5,597 (44,721) 8 Ordinary dividends paid – – – – (6,708) (6,708) Balance as at 30 June 2023 8,384 37,874 233,866 (124,781) 11,735 167,078 for the year to 30 June 2022 | 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 as at 30 June 2022 8,384 37,874 233,866 – (74,463) 12,846 218,507 The notes on pages 76 to 104 form part of these financial statements. 72 73 UIL Limited Report and Accounts for the year to 30 June 2023 ## STATEMENTS OF FINANCIAL POSITION Group Company Notes as at 30 June 2023 2022 2023 2022 £’000s £’000s £’000s £’000s Non-current assets 9 Investments 308,347 416,516 311,477 419,715 Current assets 11 Other receivables 62 444 62 444 12 Derivative financial instruments 110 620 110 620 Cash and cash equivalents 5,234 8 5,234 8 5,406 1,072 5,406 1,072 Current liabilities | 13 Loans (42,691) (51,080) (42,691) (51,080) | | --- | | 14 Other payables (8,892) (4,393) (8,892) (55,559) | | 12 Derivative financial instruments – (2,562) – (2,562) | | 15 Zero dividend preference shares – (51,166) – – | (51,583) (109,201) (51,583) (109,201) Net current liabilities (46,177) (108,129) (46,177) (108,129) Total assets less current liabilities 262,170 308,387 265,300 311,586 Non-current liabilities 16 Other payables – – (98,222) (93,079) 15 Zero dividend preference shares (94,589) (89,647) – – Net assets 167,581 218,740 167,078 218,507 Equity attributable to equity holders | 17 Ordinary share capital 8,384 8,384 8,384 8,384 | | --- | | 18 Share premium account 37,874 37,874 37,874 37,874 | | 19 Special reserve 233,866 233,866 233,866 233,866 | | 21 Capital reserves (124,278) (74,230) (124,781) (74,463) | | 22 Revenue reserve 11,735 12,846 11,735 12,846 | Total attributable to equity holders 167,581 218,740 167,078 218,507 23 Net asset value per ordinary share – pence 199.87 260.89 199.27 260.61 The notes on pages 76 to 104 form part of these financial statements. Approved by the Board on 22 September 2023 and signed on its behalf by Peter Burrows Chairman UIL Limited Registered in Bermuda, No 39480 74 75 UIL Limited Report and Accounts for the year to 30 June 2023 ## STATEMENTS OF CASH FLOWS | | Group | | Company | | | --- | --- | --- | --- | --- | | for the year to 30 June | 2023 £'000s | 2022 £'000s | 2023 £'000s | 2022 £'000s | | Loss before taxation | (44,451) | (137,037) | (44,721) | (137,240) | | Deduct investment income - dividends | (9,904) | (7,539) | (9,904) | (7,539) | | Deduct investment income - interest | (320) | (2,338) | (320) | (2,338) | | Deduct bank interest | (5) | (2) | (5) | (2) | | Add back bank interest charged | 2,897 | 1,132 | 2,897 | 1,132 | | Add back losses on investments | 40,342 | 120,524 | 40,411 | 120,529 | | Add back losses on derivative financial instruments | 2,038 | 10,532 | 2,038 | 10,532 | | Add back foreign exchange losses | 1,604 | 5,264 | 1,604 | 5,264 | | Increase in other debtors | (10) | (4) | (10) | (4) | | (Decrease)/increase in creditors | (60) | 10 | (60) | 10 | | Add back ZDP shares finance costs | 6,059 | 7,790 | - | - | | Add back intra-group loan account finance costs | - | - | 6,260 | 7,988 | | **Net cash outflow from operating activities before dividends and interest** | **(1,810)** | **(1,668)** | **(1,810)** | **(1,668)** | | Dividends received | 3,580 | 3,039 | 3,580 | 3,039 | | Investment income - interest received | 166 | 369 | 166 | 369 | | Bank interest received | 5 | 2 | 5 | 2 | | Interest paid | (2,375) | (1,141) | (2,375) | (1,141) | | Taxation paid | - | (63) | - | (63) | | **Cash flows from operating activities** | **(434)** | **538** | **(434)** | **538** | | Investing activities: | | | | | | Purchases of investments | (17,588) | (40,733) | (17,588) | (40,733) | | Sales of investments | 92,285 | 51,150 | 92,285 | 52,100 | | Net settlement of derivatives | (4,090) | (8,170) | (4,090) | (8,170) | | **Cash flows from investing activities** | **70,607** | **2,247** | **70,607** | **3,197** | | Financing activities: | | | | | | Equity dividends paid | (6,708) | (6,714) | (6,708) | (6,714) | | Drawdowns of bank loans | 55,231 | 1,894 | 55,231 | 1,894 | | Repayment of bank loans | (66,070) | (3,147) | (66,070) | (3,147) | | Cash flows from issue of ZDP shares | - | 950 | - | - | | Cash flows from redemption of ZDP shares | (52,283) | - | - | - | | Cash flows from repayment of intra-group loan account | - | - | (52,283) | - | | Cash paid for ordinary shares purchased for cancellation | - | (1,227) | - | (1,227) | | **Cash flows from financing activities** | **(69,830)** | **(8,244)** | **(69,830)** | **(9,194)** | | Net increase/(decrease) in cash and cash equivalents | 343 | (5,459) | 343 | (5,459) | | Cash and cash equivalents at the beginning of the year | (3,827) | 3,111 | (3,827) | 3,111 | | Effect of movement in foreign exchange | 846 | (1,479) | 846 | (1,479) | | **Cash and cash equivalents at the end of the year** | **(2,638)** | **(3,827)** | **(2,638)** | **(3,827)** | | **Comprised of:** | | | | | | Cash | 5,234 | 8 | 5,234 | 8 | | Bank overdraft | (7,872) | (3,835) | (7,872) | (3,835) | | **Total** | **(2,638)** | **(3,827)** | **(2,638)** | **(3,827)** | The notes on pages 76 to 104 form part of these financial statements Report and Accounts for the year to 30 June 2023 75 ## NOTES TO THE ACCOUNTS 76 77 76 77 UIL Limited Report and Accounts for the year to 30 June 2023 UIL Limited Report and Accounts for the year to 30 June 2023 1. ACCOUNTING POLICIES The Company, UIL Limited, is an investment company incorporated in Bermuda, with its ordinary shares traded on the Specialist Fund Segment of the Main Market of the London Stock Exchange and listed on the Bermuda Stock Exchange. The Company commenced trading on 20 June 2007. The Group Accounts comprise the results of the Company and UIL Finance Limited (“UIL Finance”). The Group is engaged in a single segment of business, focusing on maximising shareholder returns by identifying and investing in investments where the underlying value is not reflected in the market price. (a) Basis of accounting The Accounts have been prepared on a going concern basis (see note 28) in accordance with UK adopted international accounting standards, which comprise standards and interpretations approved by the IASB, and International Accounting Standards and Standing Interpretations Committee interpretations approved by the IASC that remain in effect. There have been no significant changes to the accounting policies during the year to 30 June 2023. The Board has determined by having regard to the currency of the Company’s share capital, the predominant currency in which its shareholders operate and the currency in which dividends are paid by the Company, that Sterling is the functional and reporting currency. Where presentational recommendations set out in the revised Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”), issued in the UK by the Association of Investment Companies (“AIC”) in July 2022, do not conflict with the requirements of IFRS, the Directors have prepared the Accounts on a basis consistent with the recommendations of the SORP, in the belief that this will aid comparison with similar investment companies incorporated and listed in the United Kingdom. In accordance with the SORP, the Income Statement has been analysed between a revenue return (dealing with items of a revenue nature) and a capital return (relating to items of a capital nature). Revenue returns include, but are not limited to, dividend income, operating expenses, finance costs and taxation (insofar as they are not allocated to capital, as described in notes 1(j) and 1(k)). Net revenue returns are allocated via the revenue return to the revenue reserve. Capital returns include, but are not limited to, profits and losses on the disposal and the valuation of non-current investments, derivative instruments and on cash and borrowings. Net capital returns are allocated via the capital return to capital reserves. Dividends on ordinary shares may be paid out of the special reserve, revenue reserve and the capital reserves. A number of new standards and amendments to standards and interpretations, which have not been applied in preparing these accounts, were in issue but not effective. None of these are expected to have a material effect on the accounts of the Group. The key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to the valuation of unlisted investments, details of which are set out in accounting policy 1(d). (b) Basis of consolidation The consolidated Accounts include the Accounts of the Company and its operating subsidiary, UIL Finance. All intra group transactions, balances, income and expenses are eliminated on consolidation. Other subsidiaries, joint ventures and associate undertakings held as part of the investment portfolio (see note 1(d) below) are not accounted for in the Group Accounts, but are carried at fair value through profit or loss. (c) Financial instruments Financial instruments include non-current assets, derivative assets and liabilities and long-term debt instruments. For those financial instruments carried at fair value, accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of instruments depends on the lowest significant applicable input, as follows: Level 1 – Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities. Included within this category are investments listed on any recognised stock exchange. Level 2 – Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration of the period of investment. Examples of such instruments would be convertible loans in listed investee companies, securities 76 77 76 77 UIL Limited Report and Accounts for the year to 30 June 2023 UIL Limited Report and Accounts for the year to 30 June 2023 for which the quoted price has been recently suspended, securities for which an offer price has been announced in the market, forward exchange contracts and certain other derivative instruments. Level 3 – External inputs are unobservable. Value is the Directors’ best estimate of fair value, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instruments. Included in level 3 are investments in private companies or securities, whether invested in directly, via loans or through pooled private equity vehicles. (d) Valuation of investments and derivative financial instruments held at fair value through profit or loss Investment purchases and sales are accounted for on the trade date, inclusive of transaction costs. Investments, including both equity and loans, used for efficient portfolio management are classified as being at fair value through profit or loss. As the Company’s business is investing in financial assets with a view to profiting from their total return in the form of dividends, interest or increases in fair value, its investments (including those ordinarily classified as subsidiaries under IFRS 10 but exempted by that financial reporting standard from the requirement to be consolidated) are designated as being at fair value through profit or loss on initial recognition. Derivatives including forward foreign exchange contracts and options are accounted for as a financial asset/liability at fair value through profit or loss. The Company manages and evaluates the performance of these investments and derivatives on a fair value basis in accordance with its investment strategy and information about the Company is provided internally on this basis to the Company’s Directors and key management personnel. Gains and losses on investments and on derivatives are analysed within the Income Statement as capital returns. Quoted investments are shown at fair value using market bid prices. The fair value of unquoted investments is determined by the Board in accordance with the International Private Equity and Venture Capital Valuation guidelines. In exercising its judgement over the value of these investments, the Board uses valuation techniques which take into account, where appropriate, latest dealing prices, valuations from reliable sources, net asset values, earnings multiples, recent orderly transactions in similar securities, time to expected repayment and other relevant factors (see key valuations techniques on pages 101 to 104). (e) Cash and cash equivalents Cash and cash equivalents comprise cash balances. Bank overdrafts are included as a component of cash and cash equivalents for the purpose of the cash flow statement only. (f) Bank borrowings Interest-bearing bank loans and overdrafts are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. No debt instruments held during the year required hierarchical classification. Finance charges, including interest, are accrued using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the year. See note 1(k) below for allocation of finance costs between revenue and capital return within the Income Statement. (g) ZDP shares The ZDP shares, due to be redeemed on 31 October 2024, 2026 and 2028 at a redemption value, including accrued capitalised returns (see note 15) of 138.35 pence per share, 151.50 pence per share and 152.29 pence per share respectively, have been classified as liabilities, as they represent an obligation on behalf of the Group to deliver to their holders a fixed and determinable amount at the redemption date. They are accordingly accounted for at amortised cost, using the effective interest method as per IFRS 9 “Financial Instruments”. ZDP shares held by the Company are eliminated on consolidation for Group purposes. 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 intra group loans are accordingly accounted for at amortised cost, using the effective interest method. (h) Foreign currency Foreign currency assets and liabilities are expressed in Sterling at rates of exchange ruling at the statement of financial position date. Foreign currency transactions are translated at the rates of exchange ruling at the dates of those transactions. Exchange profits and losses on currency balances are credited or charged to the Income Statement and analysed as capital or revenue as appropriate. Forward foreign exchange contracts are valued in accordance with quoted market rates. ## NOTES TO THE ACCOUNTS ## (continued) 78 79 UIL Limited Report and Accounts for the year to 30 June 2023 (i) Investment and other income Dividends receivable are brought into the Income Statement and analysed as revenue return (except where, in the opinion of the Directors, their nature indicates they should be recognised as capital under gains and losses on investments) on the ex- dividend date or, where no ex-dividend date is quoted, when the Group’s right to receive payment is established. Where the Group or the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised as revenue return. Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised as capital return. Interest on debt securities is accrued on a time basis using the effective interest method. Bank and short-term deposit interest is recognised on an accruals basis. These are brought into the Income Statement and analysed as revenue returns. (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 • exchange differences of a capital nature • 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 56.0% of total investments as at 30 June 2023 (2022: 57.4%). ## 2. INVESTMENT AND OTHER INCOME | Group and Company | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | **Investment income:** | | | | | | | | Dividends* | 9,904 | – | 9,904 | 7,539 | – | 7,539 | | Interest* | 320 | – | 320 | 2,338 | – | 2,338 | | | **10,224** | – | **10,224** | 9,877 | – | 9,877 | | **Other income:** | | | | | | | | Interest on cash and short-term deposits | 5 | – | 5 | 2 | – | 2 | | **Total income** | **10,229** | – | **10,229** | 9,879 | – | 9,879 | *Includes scrip income (dividends and capitalised interest) of £6,401,224 (2022: £6,822,000) ## 3. MANAGEMENT AND ADMINISTRATION FEES | Group and Company | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | **Payable to:** | | | | | | | | ICM/ICMM – management fee and secretarial fees | 557 | – | 557 | 576 | – | 576 | | Administration fees | 201 | – | 201 | 276 | – | 276 | | | **758** | – | **758** | 852 | – | 852 | The Company has appointed ICM Investment Management Limited ("ICMM") 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 ICMM 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 ICMM 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 ICMM may be terminated upon one year's notice given by the Company or by ICM and ICMM, 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 UIs is an investor, the performance fee payable by UIs will be reduced by a proportion corresponding to UIs's percentage holding in that investment applied to the underlying investment performance fee, subject to the provision that the UIs 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 UIs is an investor, no performance fee was accrued. Report and Accounts for the year to 30 June 2023 79 ## NOTES TO THE ACCOUNTS In the year to 30 June 2023, UIC's NAV return is below the required hurdle calculated at 14.8% 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 ICMM 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. ### 4. OTHER EXPENSES | Group and Company | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Auditor's remuneration (see note 4A) | 182 | – | 182 | 155 | – | 155 | | Broker and consultancy fees | 41 | – | 41 | 42 | – | 42 | | Custody fees | 15 | – | 15 | 24 | – | 24 | | Directors' fees for services to the Company (see Directors' Remuneration Report on pages 57 to 59) | 206 | – | 206 | 199 | – | 199 | | Travel expenses | 74 | – | 74 | 43 | – | 43 | | Professional and legal fees | 194 | – | 194 | 71 | – | 71 | | Sundry expenses | 265 | 5 | 270 | 285 | 3 | 288 | | | 977 | 5 | 982 | 819 | 3 | 822 | ### 4A. AUDITOR'S REMUNERATION Fees paid to the Group's auditor are summarised below: | Group Auditor – KPMG LLP Group and Company Annual Audit Fees | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Audit of the Group and Company's annual financial statements | 150 | 123 | | Additional audit costs for the prior year | 20 | 20 | | Other non-audit services – agreed procedures on interim financial statements | 12 | 12 | | Total auditor's remuneration for the year | 182 | 155 | 80 UIC LIMITED ## 5. FINANCE COSTS | Group | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Loans and bank overdrafts | 2,897 | – | 2,897 | 1,132 | – | 1,132 | | ZDP shares | – | 6,059 | 6,059 | – | 7,790 | 7,790 | | | 2,897 | 6,059 | 8,956 | 1,132 | 7,790 | 8,922 | | Company | 2023 | | | 2022 | | | | | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | | Loans and bank overdrafts | 2,897 | – | 2,897 | 1,132 | – | 1,132 | | Intra-group loan account | – | 6,260 | 6,260 | – | 7,988 | 7,988 | | | 2,897 | 6,260 | 9,157 | 1,132 | 7,988 | 9,120 | ## 6. TAXATION | Group and Company | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | 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 UIL Finance for the year are not subject to any taxation within their countries of residence (2022: same). ## 7. EARNINGS PER ORDINARY SHARE The calculation of earnings per ordinary share from continuing operations is based on the following data: | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2023 £'000s | 2022 £'000s | 2023 £'000s | 2022 £'000s | | Revenue | 5,597 | 7,013 | 5,597 | 7,013 | | Capital | (50,048) | (144,113) | (50,318) | (144,316) | | Total | (44,451) | (137,106) | (44,721) | (137,303) | | | Number | Number | Number | Number | | Weighted average number of shares in issue during the year for earnings per share calculations | 83,842,918 | 83,942,540 | 83,842,918 | 83,942,540 | Report and Accounts for the year to 30 June 2023 81 ## NOTES TO THE ACCOUNTS ### 8. DIVIDENDS | Group and Company | Record date | Payment date | 2023 £'000s | 2022 £'000s | | --- | --- | --- | --- | --- | | 2021 Fourth quarterly of 2.000p | 03-Sep-21 | 30-Sep-21 | - | 1,680 | | 2022 First quarterly of 2.000p | 03-Dec-21 | 23-Dec-21 | - | 1,680 | | 2022 Second quarterly of 2.000p | 04-Mar-22 | 31-Mar-22 | - | 1,677 | | 2022 Third quarterly of 2.000p | 06-Jun-22 | 30-Jun-22 | - | 1,677 | | 2022 Fourth quarterly of 2.000p | 02-Sep-22 | 30-Sep-22 | 1,677 | - | | 2023 First quarterly of 2.000p | 02-Dec-22 | 22-Dec-22 | 1,677 | - | | 2023 Second quarterly of 2.000p | 03-Mar-23 | 31-Mar-23 | 1,677 | - | | 2023 Third quarterly of 2.000p | 02-Jun-23 | 26-Jun-23 | 1,677 | - | | | | | 6,708 | 6,714 | The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2023 of 2.00p per share payable on 13 October 2023 to all ordinary shareholders on the register at close of business on 29 September 2023. The total cost of the dividend, which has not been accrued in the results for the year to 30 June 2023, is £1,677,000 based on 83,842,918 ordinary shares in issue. ### 9. INVESTMENTS | Group | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 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 | 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 | | Movements in the year: | | | | | | | | | | Transfer between levels* | (66,496) | 66,496 | - | - | (11,723) | 11,723 | - | - | | Purchases at cost | 33,098 | 19,796 | 67,701 | 120,595 | 35,319 | 1,082 | 53,378 | 89,779 | | Sale proceeds | (63,074) | (41) | (125,307) | (188,422) | (21,364) | - | (71,449) | (92,813) | | Losses on investments | (13,619) | (18,060) | (8,663) | (40,342) | (46,236) | (8,416) | (65,872) | (120,524) | | Valuation at 30 June | 63,115 | 72,580 | 172,652 | 308,347 | 173,206 | 4,389 | 238,921 | 416,516 | | Analysed at 30 June | | | | | | | | | | Cost | 76,016 | 110,503 | 168,186 | 354,705 | 207,332 | 11,365 | 199,073 | 417,770 | | (Losses)/gains | (12,901) | (37,923) | 4,466 | (46,358) | (34,126) | (6,976) | 39,848 | (1,254) | | Valuation | 63,115 | 72,580 | 172,652 | 308,347 | 173,206 | 4,389 | 238,921 | 416,516 | * During the year three holdings with a value of £70.0m were transferred from level 1 to level 2 due to the investor companies shareholding irregularly in the year and one stock with a value of £3.5m was transferred from level 2 to level 1 due to the investor company shares resuming regular trading (2022 transfers of £1.7m were due to the changes in liquidity). The book cost and fair value were transferred using the 30 June 2022 balances (2022: 30 June 2021 balances). The Group received £188,422,000 (2022: £92,815,000) from investments sold in the year. The book cost of these investments when they were purchased was £183,660,000 (2022: £97,355,000). These investments have been revalued over time and until they were sold any unrevalued gains/losses were included in the fair value of the investments. Either purchases and sales non cash settlements amounted to £100.0m and £36.0m respectively (2022: £49.1m and £41.7m respectively). Disposals in level 3 investments includes £47.3m related to repayment of capital and £32.0m of capital distribution (2022: £58.7m related to repayment of capital and £2.4m of capital distribution). Level 1 includes investments listed on any recognised stock exchange or quoted on any secondary market. Level 2 includes holdings listed 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. 82 VIL LIMITED | Company | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 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 | 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 | | | 175,839 | 4,955 | 238,921 | 419,715 | 217,788 | 3,576 | 322,864 | 544,228 | | Movements in the year: | | | | | | | | | | Transfer between levels* | (69,129) | 69,129 | - | - | (8,725) | 8,725 | - | - | | Purchases at cost | 33,098 | 19,796 | 67,701 | 120,595 | 35,319 | 1,082 | 53,378 | 89,779 | | Sale proceeds | (63,074) | (41) | (125,307) | (188,422) | (22,314) | - | (71,449) | (93,763) | | Losses on investments | (13,619) | (18,129) | (8,663) | (40,411) | (46,229) | (8,428) | (65,872) | (120,529) | | Valuation at 30 June | 63,115 | 75,710 | 172,652 | 311,477 | 175,839 | 4,955 | 238,921 | 419,715 | | Analysed at 30 June | | | | | | | | | | Cost | 76,016 | 113,440 | 168,186 | 357,642 | 209,685 | 11,949 | 199,073 | 420,707 | | (Losses)/gains | (12,901) | (37,730) | 4,466 | (46,165) | (33,846) | (6,994) | 39,848 | (992) | | Valuation | 63,115 | 75,710 | 172,652 | 311,477 | 175,839 | 4,955 | 238,921 | 419,715 | * During the year four holdings with a value of £72.0m were transferred from level 1 to level 2 due to the investee companies shares trading irregularly in the year and one stock with a value of £3.5m was transferred from level 2 to level 1 due to the investee company shares resuming regular trading (2022 transfers of £8.7m were due to the changes in liquidity). The book cost and fair value were transferred using the 30 June 2022 balances (2022: 30 June 2021 balances). The Company received £188,422,000 (2022: £93,763,000) from investments sold in the year. The book cost of these investments when they were purchased was £183,660,000 (2022: £98,171,000). 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. Within purchases and sales non cash settlements amounted to £103.0m and £96.6m respectively (2022: £49.1m and £41.7m respectively). Disposals in level 3 investments includes £47.3m related to repayment of capital and £32.0m of capital distribution (2022: £58.7m related to repayment of capital and £2.4m of capital distribution). Level 1 includes investments listed on any recognized 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 thirty-traded. Level 3 includes investments in private companies and other unquoted securities. | (Losses)/gains on investments held at fair value | Group | | Company | | | --- | --- | --- | --- | --- | | | 2023 £'000s | 2022 £'000s | 2023 £'000s | 2022 £'000s | | Gains/(losses) on investments sold | 4,762 | (4,542) | 4,762 | (4,408) | | Losses on investments held | (45,104) | (115,982) | (45,173) | (116,121) | | Total losses on investments | (40,342) | (120,524) | (40,411) | (120,529) | Report and Accounts for the year to 30 June 2023 83 ## NOTES TO THE ACCOUNTS ### 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 | | --- | --- | --- | --- | | 2023 | | | | | ICM Mobility Group Limited ('ICM Mobility') | 43,572 | 29,108 | 43,879 | | Snapper Services (UK) Limited | 1,542 | 2,393 | 1,656 | | | Proceeds £'000s | Cost £'000s | Carrying value at the end of the previous accounting period £'000s | | --- | --- | --- | --- | | 2022 | | | | | 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 ### Joint Ventures Under IFRS 9 Financial Instruments and IAS 28 Investments in Associates and Joint Ventures, the following joint ventures are held as part of the investment portfolio and consequently are accounted for as investments at fair value through profit and loss: | | Country of registration and incorporation | Number of ordinary shares held | 2023 Holding and voting rights % | Number of ordinary shares held | 2022 Holding and voting rights % | | --- | --- | --- | --- | --- | --- | | Allectus Capital Limited ('Allectus Capital') | Bermuda | 100 | 50.0 | 100 | 50.0* | | Allectus Quantum Holdings Limited ('Allectus Quantum') | United Kingdom | 503 | 50.0 | 501 | 50.0* | *In the prior year classified as a subsidiary ### Transactions in the year to 30 June 2023 with joint ventures held as investments: | **Allectus Capital** | Pursuant to a loan agreement dated 1 September 2016 under which UIL agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital a loan of USD 1.7m, transferred a loan of USD 0.7m from the facility given on 28 April 2023 (see below) and Allectus Capital repaid USD 6.9m. The balance of the loan as at 30 June 2023 was USD 2.1m (30 June 2022: USD 6.6m). The loan is interest free and is converted to equity on an annual basis. Pursuant to a loan agreement dated 28 April 2023 under which UIL agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital a loan of USD 0.7m. On 27 June 2023, this loan was transferred to the original loan facility. | | --- | --- | | **Allectus Quantum** | Pursuant to a loan agreement dated 20 April 2022 under which UIL has agreed to loan monies to Allectus Quantum, UIL advanced to Allectus Quantum a loan of £3.7m. The loan is interest free and is converted into equity on a semi-annual basis. The loan of £3.7m was converted to equity in the year, increasing the number of ordinary shares held by 2. As at 30 June 2023 the loan balance was nil. | 84 UIL 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: | | Country of registration and incorporation | Number of ordinary shares held | 2023 % of ordinary shares held | 2022 % of ordinary shares held | | --- | --- | --- | --- | --- | | DTI Group Ltd ("DTI") | Australia | 103,193,989 | 23.0 | 23.0 | | ICM Mobility | United Kingdom | - | - | 39.8 | | Littlepay Mobility Ltd ("Littlepay") | United Kingdom | 2,616,083^{1} | 30.2 | 49.2 | | Novareum Blockchain Asset Fund Ltd ("Novareum") | Cayman Islands | 28,361 | 33.4 | 57.5^{1} | | Orbital Corporation Limited ("Orbital") | Australia | 35,056,348 | 29.9 | 30.3 | | Resimac Group Limited ("Resimac")^{2} | Australia | 127,157,477^{3} | 31.6 | 29.6 | | 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 | 10,168,931 | 41.7 | 44.7 | | SportEngaged Ltd | United Kingdom | 25 | 20.0 | 20.0 | | The Market Herald Limited ("TMH") | Australia | 75,605,734 | 23.6 | n/a | (1) Shares held directly 1,445,000 (2022: 1,445,000) and indirectly through Somers 1,171,083 (2022: 2,812,079) (2) Subsidiary in 2022 (3) Shares held directly 36,152,616 (2022: 17,127,747) and indirectly through Somers 91,004,861 (2022: 106,215,234) # Transactions in the year to 30 June 2023 with associated undertakings: | DTI | There were no transactions during the year. | | --- | --- | | ICM Mobility | Pursuant to a loan agreement dated 1 June 2021, under which UIL has agreed to loan monies to ICM Mobility, UIL advanced to ICM Mobility loans of £0.6m and received from ICM Mobility £0.1m. In October 2022, UIL sold its loan to ICM Mobility (£0.5m) to Somers as part of the transaction where UIL sold its stake in ICM Mobility to Somers. | | Littlepay | There were no transactions during the year. | | Novareum | There were no transactions during the year. | | Orbital | In November 2022, UIL took part in Orbital's AUD 5m share placement at AUD 0.20 per share, agreeing to subscribe for 38% of the shares offered. UIL received 7,490,460 shares (cost AUD 1.5m) and 3,745,230 options on a free of charge basis. The options are exercisable at AUD 0.35 until February 2026. | | Resimac | See transaction details of Somers below. UIL received dividends of £1.7m from Resimac. | | Serkel | There were no transactions during the year. | | SmileStyler | There were no transactions during the year. | Report and Accounts for the year to 30 June 2023 85 ## NOTES TO THE ACCOUNTS ## (continued) 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: | | | | | | | 2023 | | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Country of | | | % of class of | | % of class of | | | | | registration | | Class of | instrument | | instrument | | | Undertaking | and incorporation | | instrument held | | | held | | held | Utilico Emerging Markets Trust plc United Kingdom Ordinary Shares 9.1 14.4 86 87 UIL Limited Report and Accounts for the year to 30 June 2023 Somers On 12 July 2022 UIL sold to Somers, at fair values, 2,953,446 Resimac shares for AUD 3.5m and received in exchange 134,153 Assetco plc shares for £1.0m and 2,691,811 MJ Hudson Group plc shares for GBP 1.0m. On 5 August 2022 Somers paid a distribution of USD 4.55 per share. In settlement, UIL received at fair values 38,451,000 Resimac Group Limited shares for AUD 50.4m and 42,183,103 TMH shares for AUD 16.0m. The distribution has been recognised as a return of capital of USD 38.7m and a revenue dividend of USD 7.6m. At the same time, Somers issued 5,412,314 warrants pro-rata to all of its shareholders on a one for four basis (the “Warrants”). The exercise price of the Warrants is USD 18.92 per share and can be converted at any time until maturity on 30 September 2023. These were issued for no consideration and UIL received and continues to hold as at 30 June 2023 2,542,233 warrants. On 8 August 2022, as part of a group restructure, UIL sold to Somers at fair value, 16,472,685 Resimac shares for AUD 21.6m and in exchange UIL advanced loans to Zeta for AUD 2.2m and CAD 17.5m. On 11 October 2022, Somers acquired UIL’s holding in ICM Mobility and Snapper for £45.6m. In exchange Somers sold to UIL its holding in West Hamilton Holdings Limited ("West Hamilton") for USD 19.7m, WT Financial Group Limited for AUD 5.7m and BNK Banking Corp Ltd for AUD 3.9m. Somers funded the balance of the transaction (£22.3m) via the loan account. Pursuant to a loan agreement dated 22 June 2018 under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of £23.2m (including the £22.3m from the 11 October 2022 transaction above) and Somers repaid loans of £23.2m. UIL received interest of £39k. As at 30 June 2023, the balance of the loans and interest outstanding was £nil. The loan bears interest at an annual rate of 6.0% and is repayable on not less than 12 months’ notice. SportEngaged Ltd There were no transactions during the year. TMH See transaction details of Somers above. On 30 August 2022, UIL received 16,873,241 rights through a 2 for 5 rights issue at AUD 0.34. UIL sold 1,150,000 rights in the market and oversubscribing, received a further 5,000,000 rights. On 15 September 2022 UIL exercised the rights, receiving 20,723,241 shares at a cost of AUD 7.0m. On 27 January 2023, UIL received 10,484,390 rights through a 1 for 6 rights issue at AUD 0.34. On 13 February UIL exercised these rights, receiving 10,484,390 shares at a cost of AUD 3.6m. On 6 February 2023, UIL purchased 2,215,000 ordinary shares in the market. ## 10. SUBSIDIARY UNDERTAKINGS The following was a subsidiary undertaking of the Company at 30 June 2023 and 30 June 2022. | | Country of operation, registration and incorporation | Number and class of shares held | Holding and voting 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. | | Country of registration and incorporation | 2023 | | 2022 | | | --- | --- | --- | --- | --- | --- | | | | Number of ordinary shares held | Holding and voting rights % | Number of ordinary shares held | Holding and voting rights % | | Carebook Technologies Inc ('Carebook') | Canada | 48,546,167 | 53.8 | 36,046,167 | 46.5 | | Coldharbour Technology Limited ('Coldharbour') | United Kingdom | 29,660,694 | 96.5 | 29,660,694 | 96.5 | | Energy Holdings Ltd | Bermuda | 100 | 100.0 | 100 | 100.0 | | Newtel Holdings Limited ('Newtel') | Jersey | 7,453,957 | 100.0 | 115,920 | 100.0 | | Northbrook Resources Ltd (formerly Devate Platform Limited) | United Kingdom | 44,348,478 | 51.0 | 44,348,478^{1} | 51.0 | | Snapper Services (UK) Limited ('Snapper') | United Kingdom | - | - | 2,088,851^{1} | 50.0 | | West Hamilton | Bermuda | 1,659,390 | 57.0 | - | - | | Zeta | Bermuda | 344,573,832 | 61.2 | 344,573,832 | 61.0 | (1) Associate undertaking in 2022 (2) Preference shares (3) Shares held directly 1,759,400 and indirectly through ICM Mobility 3,310,838. Transactions in the year to 30 June 2023 with subsidiaries held as investments | **Carebook** | Pursuant to a convertible loan agreement dated 21 December 2021, amended and restated on 28 September 2022, UIL advanced to Carebook an additional loan tranche of CAD 500k. As at 30 June 2023, the balance of the loan and interest outstanding was CAD 1.03m (2022: CAD 0.5m). UIL received interest of CAD 84k. The loan bears an interest rate of the Canadian Variable Rate plus 10.0% and is repayable by 21 December 2026. Pursuant to a convertible loan agreement dated 15 December 2022, UIL advanced to Carebook a loan of CAD 1.25m. As at 30 June 2023, the balance of the loan and interest outstanding was CAD 1.31m (2022: n/a). The loan bears an interest rate of the Canadian Variable Rate plus 10.0% and is repayable by 22 December 2026. On 8 March 2023, UIL purchased 12,500,000 restricted ordinary shares at CAD 0.10 per share. The shares became unrestricted in July 2023. On 8 March 2023, UIL received 187,500 warrants for no cost, exercisable on any date until 8 March 2025. Each warrant can be exercised for one share at CAD 0.15 per warrant. | | --- | --- | | **Coldharbour** | There were no transactions during the year. | | **Energy Holdings Ltd** | There were no transactions during the year. | | **Newtel** | In October 2022, the £5.5m loan balance brought forward as at 30 June 2022 was converted into equity. UIL received 7,338,037 Newtel ordinary shares. | | **Northbrook Resources Ltd** | Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to Northbrook Resources Limited, no further funds were advanced to Northbrook Resources Ltd during the year. As at 30 June 2023, the balance of the loan was £1.6m. The loan bears interest at 6% per annum and is repayable on 31 December 2023. As at 30 June 2023 the fair value of the loan was £111 (2022: £111). | Report and Accounts for the year to 30 June 2023 87 ## NOTES TO THE ACCOUNTS | **Snapper** | On 11 October 2022, Somers acquired UIL's holding in Snapper; see transactions details of Somers on page 86. | | --- | --- | | **West Hamilton** | See transaction details of Somers on page 86. | | **Zeta** | Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan), under which UIL agreed to loan monies to Zeta. UIL advanced to Zeta loans of AUD 0.3m and CAD nil and capitalised interest of AUD nil and CAD 0.2m. UIL advanced loans of AUD 2.2m and CAD 17.5m as per the details included in transactions with Somers. UIL received from Zeta repayments of AUD 2.5m and CAD 17.7m. As at 30 June 2023, the balance of the loans and interest outstanding was AUD nil and CAD nil. The AUD loan bears interest at an annual rate of 7.5% and the CAD loan bears interest at an annual rate of 7.25%. The loans are repayable on not less than 12 months' notice. | ### 11. OTHER RECEIVABLES – CURRENT ASSETS | Group and Company | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Securities sold for future settlement | – | 419 | | Accrued income | 36 | 9 | | Prepayments and other debtors | 26 | 16 | | | **62** | **444** | ### 12. DERIVATIVE FINANCIAL INSTRUMENTS | Group and Company | 2023 | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | | | Current assets £'000s | Current liabilities £'000s | Net current assets/ (liabilities) £'000s | Current assets £'000s | Current liabilities £'000s | Net current assets/ (liabilities) £'000s | | Forward foreign exchange contracts | – | – | – | 620 | (2,562) | (1,942) | | Option contracts | 110 | – | 110 | – | – | – | | | **110** | **–** | **110** | **620** | **(2,562)** | **(1,942)** | 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: | Group and Company | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Valuation brought forward | (1,942) | 420 | | Net settlements | 4,090 | 8,170 | | Losses | (2,038) | (10,532) | | Valuation carried forward | **110** | **(1,942)** | 88 ULL Limited ### 13. LOANS - CURRENT LIABILITY | Group and Company | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | **Bank Loans** | | | | AUD 12.5m repaid October 2022 | - | 7,078 | | AUD 12.3m repaid October 2022 | - | 6,961 | | AUD 8.7m repaid August 2022 | - | 4,954 | | EUR 5.0m repaid October 2022 | - | 4,304 | | EUR 5.4m repaid October 2022 | - | 4,698 | | USD 20.9m repaid October 2022 | - | 17,235 | | USD 7.1m repaid September 2022 | - | 5,858 | | GBP 37.5m rolled to September 2023 | 37,500 | - | | **Union Mutual Pension Fund Limited** | - | - | | USD 6.6m drawn to September 2023 | 5,191 | - | | | **42,691** | **51,080** | The Company has a committed loan facility of £37,500,000 (2022: £50,000,000) from Bank of Nova Scotia, London Branch ("Bank of Nova Scotia") and was fully drawn as at 30 June 2023. The £50,000,000 facility with Scotiabank Europe PLC 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 has a floating charge over the assets of the Company in respect of amounts owing under the loan facility. Subsequent to the year end the loan facility was extended to 19 March 2024 (see note 28). Union Mutual Pension Fund Limited has loaned USD6,600,000 (2022: nil) to U.K. This loan is repayable on 30 September 2023 and bears interest at 8% per annum. ### 14. OTHER PAYABLES | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2023 £'000s | 2022 £'000s | 2023 £'000s | 2022 £'000s | | Bank overdraft | 7,872 | 3,835 | 7,872 | 3,835 | | Intra-group loans | - | - | - | 51,166 | | Accrued finance costs | 633 | 111 | 633 | 111 | | Accrued expenses | 387 | 447 | 387 | 447 | | | **8,892** | **4,393** | **8,892** | **55,559** | 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 2023 89 ## NOTES TO THE ACCOUNTS (continued) ### 15. ZDP SHARES | | Group | | | --- | --- | --- | | | 2023 £'000s | 2022 £'000s | | **ZDP shares – current liabilities** | | | | 2022 ZDP shares | - | 51,166 | | **ZDP Shares – non-current liabilities** | | | | 2024 ZDP shares | 38,765 | 36,833 | | 2026 ZDP shares | 29,005 | 27,589 | | 2028 ZDP shares | 26,819 | 25,225 | | | 94,589 | 89,647 | | **Total ZDP shares liabilities** | **94,589** | **140,813** | | Authorised ZDP shares at 30 June 2023 and 30 June 2022 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 | | 2023 | Number | 2022 £'000s | Number | 2024 £'000s | Number | 2026 £'000s | Number | 2028 £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Balance as 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 | | Redemption of ZDP shares | (35,569,069) | (52,283) | - | - | - | - | - | - | (52,283) | | Finance costs (see note 5) | - | 1,117 | - | 1,932 | - | 1,416 | - | 1,594 | 6,059 | | **Balance as at 30 June 2023** | **-** | **-** | **30,000,000** | **38,765** | **22,690,380** | **29,005** | **24,416,265** | **26,819** | **94,589** | | 2022 | Number | 2022 £'000s | Number | 2024 £'000s | Number | 2026 £'000s | Number | 2028 £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 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 | | Issue of ZDP shares | - | - | - | - | 800,000 | 950* | - | - | 950 | | Finance costs (see note 5) | - | 3,114 | - | 1,837 | - | 1,340 | - | 1,499 | 7,790 | | **Balance as 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 On 31 October 2022 the 35,569,069 2022 ZDP shares that were in issue were redeemed at 146.99p per 2022 ZDP share. The Company held 2,309,620 2026 ZDP shares as at 30 June 2022 and 30 June 2023. The Company held 583,735 2028 ZDP shares as at 30 June 2022 and 30 June 2023. #### 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 2023 was 130.04p (2022: 124.14p). #### 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 2023 was 128.75p (2022: 122.62p). 90 VILLAGE ## 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 2023 was 113.02p (2022: 106.87p). 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 meetings 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 UIL or UIL Finance 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 2024 ZDP shares shall rank in priority to the 2026 ZDP shares and the 2028 ZDP shares; and 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 | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Intra-group loans | 98,222 | 93,079 | 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 2023 is a non-current liability of £98,222,000 (2022: current liability of £51,166,000 and a non-current liability of £93,079,000) 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. ## 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 in issue Number | Total shares in issue £'000s | | 2023 | | | | Balance at 30 June 2022 and 30 June 2023 | 83,842,918 | 8,384 | Report and Accounts for the year to 30 June 2023 91 ## NOTES TO THE ACCOUNTS ## (continued) | | 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 During the year the Company did not buy back any ordinary shares for cancellation (2022: 460,365 ordinary shares at a total cost of £1,227,000). No 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. 92 93 UIL Limited Report and Accounts for the year to 30 June 2023 18. SHARE PREMIUM ACCOUNT Group and Company 2023 £’000s 2022 £’000s Balance brought forward 37,874 6,986 Purchase of ordinary shares – (1,181) Transfer from Non-distributable Reserve (see note 20) – 32,069 Balance carried forward 37,874 37,874 19. SPECIAL RESERVE Group and Company 2023 £’000s 2022 £’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. 20. NON-DISTRIBUTABLE RESERVE Group and Company 2023 £’000s 2022 £’000s Balance brought forward – 32,069 Transfer to Share Premium Account – (32,069) Balance carried forward – – 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 was therefore 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 | | --- | --- | --- | --- | --- | | | 2023 £'000s | 2022 £'000s | 2023 £'000s | 2022 £'000s | | Arising on investments sold | (77,920) | (72,976) | (78,616) | (73,471) | | Arising on revaluation of investments held | (46,358) | (1,254) | (46,165) | (992) | | Balance as at 30 June | (124,278) | (74,230) | (124,781) | (74,463) | Included within the capital reserve movement for the year is £32,043,000 (2022: £2,444,000) of capital distributions, £5,000 (2022: £3,000) of transaction costs on purchases of investments and £21,000 (2022 £27,000) of transaction costs on sales of investments. ## 22. REVENUE RESERVE | Group and Company | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | Balance brought forward | 12,846 | 12,547 | | Amount transferred to revenue reserve | 5,597 | 7,013 | | Dividends paid in the year | (6,708) | (6,714) | | Balance as at 30 June | 11,735 | 12,846 | 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 2023 was £167.1m (2022: £218.5m). ## 23. NET ASSET VALUE PER ORDINARY SHARE NAV per ordinary share is based on net assets at the year end of £167,581,000 for the Group and £167,078,000 for the Company (2022: £218,740,000 for the Group and £218,507,000 for the Company) and on 83,842,918 ordinary shares in issue at the year end (2022: 83,842,918). ## 24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES | Group | Balance at 30 June 2022 £'000s | Transactions in the year £'000s | Receipts £'000s | Payments £'000s | Non-cash flow changes | | Balance at 30 June 2023 £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Foreign exchange movement £'000s | Finance costs £'000s | | | 2023 | | | | | | | | | Loans | 51,080 | - | 55,231 | (66,070) | 2,450 | - | 42,691 | | ZOP shares | 140,813 | - | - | (52,283) | - | 6,059 | 94,589 | | Dividends paid | - | 6,708 | - | (6,708) | - | - | - | | | 191,893 | 6,708 | 55,231 | (125,061) | 2,450 | 6,059 | 137,280 | Report and Accounts for the year to 30 June 2023 93 ## NOTES TO THE ACCOUNTS (continued) | 2022 | Balance at 30 June 2021 £'000s | Transactions in the year £'000s | Receipts £'000s | Payments £'000s | Non-cash flow changes | | Balance at 30 June 2022 £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Foreign exchange movement £'000s | Finance costs £'000s | | | Bank loans | 48,548 | - | 1,894 | (3,147) | 3,785 | - | 51,080 | | ZDF 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 | 2,844 | (11,088) | 3,785 | 7,790 | 191,893 | | Company | Balance at 30 June 2022 £'000s | Transactions in the year £'000s | Receipts £'000s | Payments £'000s | Non-cash flow changes | | Balance at 30 June 2023 £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Foreign exchange movement £'000s | Finance costs £'000s | | | Loans | 51,080 | - | 55,231 | (66,070) | 2,450 | - | 42,691 | | Intra-group loans | 144,245 | - | - | (52,283) | - | 6,260 | 98,222 | | Dividends paid | - | 6,708 | - | (6,708) | - | - | - | | | 195,325 | 6,708 | 55,231 | (125,061) | 2,450 | 6,260 | 140,913 | | 2022 | Balance at 30 June 2021 £'000s | Transactions in the year £'000s | Receipts £'000s | Payments £'000s | Non-cash flow changes | | Balance at 30 June 2022 £'000s | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Foreign exchange movement £'000s | Finance costs £'000s | | | Bank loans | 48,548 | - | 1,894 | (3,147) | 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 | 1,894 | (11,088) | 3,785 | 7,988 | 195,325 | ### 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 9.7% of UIL's shares. The ultimate parent undertaking of GPLPF and UMPF is SIPTCL as referred to in note 25. 94 UIL Limited 94 95 UIL Limited Report and Accounts for the year to 30 June 2023 Subsidiaries of UIL: Carebook, Coldharbour, Energy Holdings Ltd, Newtel, Northbrook Resources Limited, West Hamilton and Zeta. On consolidation, transactions between the Company and UIL Finance have been eliminated. Snapper, a subsidiary at 30 June 2022 was sold in the year. Joint ventures of UIL Allectus Capital and Allectus Quantum. Associated undertakings: DTI, Littlepay, Novareum, Orbital, Resimac, Serkel, Smilestyler, Somers, SportEngaged Ltd and TMH. Subsidiaries of the above subsidiaries, joint ventures and associated undertakings: Allectus Capital: Own Solutions AC Limited. Allectus Quantum: Allectus Quantum Ltd and Diraq Pty Ltd. Littlepay: Littlepay Limited, Littlepay Pty Ltd, Littlepay Inc. Newtel: Newtel Limited. Resimac: Access Network Management Pty Ltd, Auspak Financial Services Pty Ltd, FAI First Mortgage Pty Ltd, Independent Mortgage Corporation Pty Ltd, Resimac Est Pty Ltd and Resimac Limited. Somers: Dfinitive Capital Limited, PCF Group plc, Snapper, Somers Pte Ltd, Somers Treasury Pty Ltd, Somers UK (Holdings) Limited and Waverton. 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. Companies controlled by key management persons: Mitre Investments Limited and Permanent Mutual Limited. The following transactions were carried out during the year to 30 June 2023 between the Company and its related parties above: UIL Finance Loans from UIL Finance to UIL of £144.2m as at 30 June 2022 decreased by £46.0m, to £98.2m as at 30 June 2023. The loans are repayable on any ZDP share repayment date. Subsidiaries of UIL Transactions are disclosed in note 10. Joint ventures of UIL Transactions are disclosed in note 9. 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 2023 with any of the subsidiaries of the above subsidiaries and associated undertakings. Key management entities and persons ICM and ICMIM are joint portfolio managers of UIL. Other than investment management fees, secretarial costs and performance fees as set out in note 3, and reimbursed expenses of £12,000, there were no other transactions with ICM or ICMIM or ICM ## NOTES TO THE ACCOUNTS Corporate Services (Pty) Ltd. At the period-end £108,000 remained outstanding to ICM and ICMM in respect of management and company secretarial fees and £nH in respect of performance fees. Mr Younie is a director of PIL, PML, Somers and West Hamilton. Mr Jillings is a director of Allectus Capital, PIL, PML, Somers and Waverton. Mr Jillings received dividends from UIL of £35,000. Mr Saville is a director of Allectus Capital, GPLPF, Newtel, PIL, PML, Resimac, QICM Technology Investments Ltd (formerly Vix Technology Limited), West Hamilton and Zeta Energy Pte Ltd. There were no other transactions in the year with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL. ### The Board Fees paid to Directors were: Chairman £50,000 per annum; Chairman of Audit & Risk Committee £47,750 per annum and Directors £37,000 per annum. The Board received aggregate remuneration of £206,000 for services as Directors. As at 30 June 2022, £nH remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £120,000 during the year. There were no other transactions in the year with the Board and UIL. ### Companies controlled by key management persons GPLPF received dividends of £5,292,000 from UIL. UMPF received dividends of £620,000 from UIL. Mitre Investments Limited received dividends of £206,000 from UIL and Permanent Mutual Limited received dividends of £2,000 from UIL. UMPF provided a USD 6.6m loan facility to UIL, see note 13 for details. There were no other transactions between companies controlled by key management and UIL during the year to 30 June 2023. ### 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 £46,177,000 as at 30 June 2023 (2022: £198,129,000), the financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the following reasons. The Board's going concern assessment has focused on the forecast liquidity of the Group for at least 12 months from the date of approval of the financial statements. This analysis assumes that the Company will meet some of its short term obligations through the sale of level 1 securities, which represented 20.5% of the Company's total portfolio as at 30 June 2023. As part of this assessment the Board has considered a severe but plausible downside that reflects the impact of the key risks set out in the Strategic Report and an assessment of the Company's ability to meet its liabilities as they fall due (including the loan liabilities in note 13), 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 £37,500,000, net bank overdraft of £2.6m and loan from Union Mutual Pension Fund Limited of £5.2m (repaid since the year end). 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 £37.5m multicurrency loan facility with Bank of Nova Scotia expiring on 19 September 2023. Subsequent to the year end, the Company has extended the facility until 19 March 2024, the facility reducing to £25m on 19 September 2023, £20m by 31 October 2023, £15m by 31 December 2023, £10m by 19 February 2024 and fully repaid by 19 March 2024. The outstanding debt will be repaid when due from portfolio realisations. Drawdowns under the facility are detailed in note 13. The 2024 ZDP shares final liability of £41.5m is repayable on 31 October 2024, UIL will manage this debt 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 the purposes of hedging the underlying portfolio of investments. The Group 96 ULL Limited 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 U.S. 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 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, Bermuda Dollar, Canadian Dollar and US Dollar (2022, Australian Dollar, Canadian 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: | 2023 | AUD £'000s | BMD £'000s | CAD £'000s | USD £'000s | Other £'000s | Total £'000s | | --- | --- | --- | --- | --- | --- | --- | | Other receivables | 1 | - | 36 | - | 2 | 39 | | Derivative financial instruments – assets | - | - | - | 110 | - | 110 | | Cash and cash equivalents | (1) | - | 15 | 5,191 | - | 5,205 | | Short-term borrowings | - | - | - | (5,191) | - | (5,191) | | Net monetary liabilities | - | - | 51 | 110 | 2 | 163 | | Investments | 119,932 | 29,428 | 17,550 | 7,617 | 74,414 | 248,941 | | Net financial assets | 119,932 | 29,428 | 17,601 | 7,727 | 74,416 | 249,104 | | 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 | Report and Accounts for the year to 30 June 2023 97 ## NOTES TO THE ACCOUNTS 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: | Weakening of Sterling | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | AUD £'000s | BMD £'000s | CAD £'000s | USD £'000s | AUD £'000s | CAD £'000s | EUR £'000s | USD £'000s | | **Income Statement** | | | | | | | | | | Revenue profit for the year | 201 | 710 | 11 | - | 81 | 2 | - | 61 | | Capital profit/(loss) for the year | 13,326 | 3,270 | 1,950 | 846 | 11,715 | (686) | 1,804 | (1,614) | | Total profit/(loss) for the year | 13,527 | 3,980 | 1,961 | 846 | 11,796 | (684) | 1,804 | (1,553) | | Strengthening of Sterling | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | AUD £'000s | CAD £'000s | EUR £'000s | USD £'000s | AUD £'000s | CAD £'000s | EUR £'000s | USD £'000s | | **Income Statement** | | | | | | | | | | Revenue loss for the year | (201) | (710) | (11) | - | (81) | (2) | - | (61) | | Capital loss/(profit) for the year | (13,326) | (3,270) | (1,950) | (846) | (11,715) | 686 | (1,804) | 1,614 | | Total (loss)/(profit) for the year | (13,527) | (3,980) | (1,961) | (846) | (11,796) | 684 | (1,804) | 1,553 | 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. | | 2023 | | | | 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Total £'000s | Within one year £'000s | More than one year £'000s | Total £'000s | Within one year £'000s | More than one year £'000s | | | **Exposure to floating rates** | | | | | | | | | Cash and margin account | 5,234 | 5,234 | - | 8 | 8 | - | - | | Bank overdraft | (7,872) | (7,872) | - | (3,835) | (3,835) | - | - | | Borrowings | (37,500) | (37,500) | - | (51,080) | (51,080) | - | - | | | (40,138) | (40,138) | - | (54,907) | (54,907) | - | - | | **Exposure to fixed rates** | | | | | | | | | Borrowings | (5,191) | (5,191) | - | - | - | - | - | | ZDP shares | (94,589) | - | (94,589) | (140,813) | (51,166) | (89,647) | - | | | (99,780) | (5,191) | (94,589) | (140,813) | (51,166) | (89,647) | - | | **Net exposures** | | | | | | | | | At year end | (139,918) | (45,329) | (94,589) | (195,720) | (106,073) | (89,647) | - | | Maximum in year | (195,720) | (106,073) | (89,647) | (199,716) | (112,232) | (87,484) | - | | Minimum in year | (139,918) | (45,329) | (94,589) | (177,510) | (45,437) | (132,073) | - | | | Total £'000s | Exposure to floating interest rates £'000s | Fixed interest rates £'000s | Total £'000s | Exposure to floating interest rates £'000s | Fixed interest rates £'000s | | --- | --- | --- | --- | --- | --- | --- | | Maximum in year | (195,720) | (54,907) | (140,813) | (199,716) | (61,715) | (138,001) | | Minimum in year | (139,918) | (40,138) | (99,780) | (177,510) | (45,437) | (132,073) | 98 VILLAGE 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 bank borrowings is at ruling market rates and on other loans is fixed (see note 13). 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. | | 2023 | | 2022 | | | --- | --- | --- | --- | --- | | | Increase in rate £'000s | Decrease in rate £'000s | Increase in rate £'000s | Decrease in rate £'000s | | Revenue profit for the year | (907) | 907 | (1,098) | 1,098 | | Capital profit for the year | - | - | - | - | | Total profit for the year | (907) | 907 | (1,098) | 1,098 | ### Other market risk exposures The portfolio of investments, valued at £308,347,000 as at 30 June 2023 (2022: £416,516,000) is exposed to market price changes. The Group enters into 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 2023, the Group's exposure to S&P options was negligible (2022: the Group did not purchase or sell S&P options). Based on the portfolio of investments at the Statement of Financial Position date, and assuming other factors 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: | | 2023 | | 2022 | | | --- | --- | --- | --- | --- | | | Increase in value | Decrease in value | Increase in value | Decrease in value | | Income Statement capital profit for the year (£'000s) | 61,689 | (61,689) | 83,303 | (83,303) | ### (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, 16 as at 30 June 2023 (19 as at 30 June 2022); the liquid nature of the portfolio of investments, and the geographical and sector diversity of the portfolio (see pages 21 and 12 respectively). Cash balances are held with reputable banks with high quality external credit ratings. 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 £37.5m and a further loan of £5.2m as set out in note 13 and ZDP share liabilities of £94.6m 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: Report and Accounts for the year to 30 June 2023 99 ## NOTES TO THE ACCOUNTS ## (continued) (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: 2023 2022 | | | Maximum | | | Maximum | | | --- | --- | --- | --- | --- | --- | --- | | | | exposure | | | exposure | | | | 30 June | in the year | | 30 June | in the year | | | Current assets | £’000s | | £’000s | £’000s | | £’000s | Cash at bank 5,234 5,234 8 4,496 Financial assets through profit and loss Investments in debt instruments 2,952 18,095 8,672 39,138 Derivatives (forward foreign exchange contracts) – 138,305 138,305 168,050 Derivatives (option contracts) 110 110 – – None of the Group’s financial assets are past due or impaired. The expected credit loss on the cash at bank is not considered material at 30 June 2023 (2022: not material). 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 2023 2023 2022 Three months or less £’000s More than three months but less than one year £’000s More than one year £’000s Total £’000s Three months or less £’000s More than three months but less than one year £’000s More than one year £’000s Total £’000s Bank overdraft 7,872 – – 7,872 3,835 – – 3,835 Other creditors 387 – – 387 447 – – 447 Derivative financial instruments – – – – 99,750 40,497 – 140,247 Loans 44,612 – – 44,612 51,564 – – 51,564 ZDP shares – – 113,064 113,064 – 52,283 113,064 165,347 52,871 – 113,064 165,935 155,596 92,780 113,064 361,440 (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: | | 2023 £'000s | 2022 £'000s | | --- | --- | --- | | 2022 ZDP shares | - | 51,219 | | 2024 ZDP shares | 37,050 | 36,750 | | 2026 ZDP shares | 25,980 | 26,207 | | 2028 ZDP shares | 23,562 | 24,172 | 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 these 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. UIs currently has investments in a number of level 3 closed-end investment companies including Alectus Capital, Alectus Quantum 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 2023 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 elevated level of volatility in equity markets during the year, principally reflecting concerns about high rates of inflation, tightening energy supplies, higher interest rates and the Ukraine 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. Report and Accounts for the year to 30 June 2023 101 ## NOTES TO THE ACCOUNTS ### **Alectus Capital Bermuda incorporated** UIL holds 50% of the ordinary shares in a joint venture and carried its investment at £16.2m (2022: £22.9m) and loans at £1.6m (2022: £5.5m). The cost of these investments was £20.1m (2022: £23.9m). The financial results of Alectus Capital are not publicly available. Valuation inputs: Market value for portfolio of investments. Valuation methodology: UIL has used the portfolio's NAV. Alectus 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 both the high level of unlisted investments within Alectus Capital's portfolio and the continued high level of volatility in technology equity markets and assessed that the valuation uncertainty remained at an elevated level. Accordingly, Alectus Capital's fair value has been given a sensitivity of 20% (2022: 20%) reflecting the higher level of uncertainty over the manager's valuations of Alectus Capital's portfolio. Sensitivities: Should the value of holdings in Alectus Capital move by 20% the gain or loss would be £3.6m (2022: £5.7m). ### **Alectus Quantum UK incorporated** UIL holds 50% of the ordinary shares in a joint venture and carried its investment at £14.7m. The cost of this investment was £6.4m (2022: £2.5m). The financial results of Alectus Quantum are not publicly available. Valuation inputs: Market value for portfolio of investments. Valuation methodology: UIL has used the portfolio's NAV. Alectus Quantum is an investment holding company for quantum technology investments and its NAV was valued using valuation techniques consistent with IFRS. The portfolio, consisting principally of the unlisted investment Diraq Pty Ltd, was valued at the recent funding round. The Directors considered the portfolio and assessed the valuation uncertainty at a higher level. Accordingly, Alectus Quantum's fair value has been given a sensitivity of 20% reflecting the higher level of uncertainty over the manager's valuations of Alectus Quantum's holdings. Sensitivities: Should the value of holdings in Alectus Quantum move by 20% the gain or loss would be £2.9m (2022: n/a). ### **Arria NLG Limited ("Arria") New Zealand incorporated** UIL holds 6.6m ordinary shares in Arria and, as at 30 June 2023, carried this investment at £6.6m (2022: £1.2m). The cost of this investment was £0.7m (2022: £0.7m). The financial results of Arria are not publicly available. UIL did not receive any income in the year from Arria. Valuation inputs: Recent and current fundraise price of USD 1.25 per ordinary share. Valuation Methodology: Arria has been valued based on recent and current equity fundraising events. Arria operates in the AI field known as natural language generation. It owns, develops, and licenses its core, patented natural language generation technologies. Arria's revenues have gained traction over the last two years and appear to be growing strongly, however against this, it is materially loss making and cash flow negative. Arria's recent success in raising capital has removed much of the uncertainty over its valuation and accordingly, it has been given a lower sensitivity of 20% (2022: 400%). Sensitivities: Should the value of Arria move by 20% the gain or loss would be £1.3m (2022: a move by 400% the gain or loss would be £4.6m). ### **Somers Bermuda incorporated** Somers is UIL's largest investment with a value of £107.7m as at 30 June 2023 (2022: £148.8m) and accounts for 34.9% (2022: 35.7%) of UIL's total portfolio. The cost of this investment was £70.1m (2022: £89.4m). 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 Mezzanine Market of the Bermuda Stock Exchange. As at 30 June 2023, the Somers shares were deemed not to trade in an active market and as at the 30 June 2023 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. 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 102 UIL Limited 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 2022, Somers recorded total income of USD 204.5m (2022: USD 218.0m), net loss before tax of USD 210.1m (2022: net income before tax of USD 197.8m) and net assets of USD 337.4m (2022: USD 617.8m). As at 31 March 2023, Somers reported the three largest investments, which make up 86.1% of its portfolio, were a 61.8% holding in Waverton, a UK wealth manager, a 54.4% holding in Resimac, a non-bank Australian financial institution, and a 39.8% holding in ICM Mobility, a UK holding company focused on the mobility sector for private and public transport. Somers values Waverton based on comparable quoted companies and in particular a multiple of assets under management. Resimac is valued using its quoted share price and ICM Mobility's portfolio investments are predominantly valued using earnings and revenue peer multiples. Somers also holds 75m AKJ token securities issued by AKJT Holdings Limited and as at 31 March 2023, carried this investment at EUR 7.5m or EUR 0.10 per token. Somers values these tokens with reference to the funds invested in the token to date by Somers and other investors and note that a substantial majority of the investment in the token to date occurred at a price approximating EUR 0.10 per token. Somers note that a smaller number of more recent trades occurred at values above this level. This, along with the elevated volatility in crypto markets, has increased the sensitivity of these securities to significant valuation changes. As at 30 June 2023 62% of Somers' investment portfolio was valued using valuation techniques and these investments have been given a sensitivity of 20% (2022: 10%) to reflect the higher percentage of unlisted investments within Somers' portfolio, the high subjectivity around the AKJ token valuation and a degree of uncertainty over the managers valuations. The remaining 38% of Somers' portfolio was valued using their listed share price. Sensitivities: Should the value of Somers move by 20% the gain or loss would be £21.5m (2022: by 10% the gain or loss would be £14.9m). #### **West Hamilton Bermuda incorporated** UK holds a 57.0% equity interest in West Hamilton and, as at 30 June 2023, carried this investment at £15.1m (2022: n/a). The cost of this investment was £17.8m (2022: n/a). Key valuation inputs: Fair value of West Hamilton's identifiable assets and liabilities. Investment yield is 6.25% and rent renewal rates are assumed to be at the same level as is currently achieved from existing tenants. Valuation Methodology: Fair value of West Hamilton's properties held in Hamilton, Bermuda. West Hamilton's properties at 69 and 71 Pitts Bay Road, representing approximately 86% of their property assets by land area, are currently subject to a sales process. West Hamilton intend to distribute the net proceeds from this sale to shareholders. For these properties, UK utilised the expected sales proceeds for valuing them. In adopting this approach the Directors considered the credibility of the buyer, the stage of the sales process and the certainty of completion. The Directors also considered the fair value of the properties should the sale not complete. For the remaining property held outside of the scope of this sales process, consisting of a mixed-use building located at 714 Pitts Bay Road housing nine executive condominiums, a penthouse office suit and a gymnasium, West Hamilton appointed an independent professional valuer to perform a property valuation and to provide his opinion as to the fair value of this property. This valuation was based on an income approach whereby net rental income for the property is capitalised using an investment yield. Comparable property values and the demand for comparable rental units were also considered in support of income approach value. The Directors consider Bermuda property values have not moved significantly since the independent valuation was performed and have utilised the valuation for the purpose of valuing the holding, with adjustments for known movements to 30 June 2023. West Hamilton's fair value has been given a sensitivity of 10% to reflect a degree of uncertainty over the property portfolio valuations. For its year ended 30 September 2022, West Hamilton recorded total income of USD 3.1m, net loss before tax of USD 5.1m and net assets of USD 32.4m. Sensitivities: Should the value of West Hamilton move by 10% the gain or loss would be £1.5m (2022: n/a). #### **Other unlisted companies** Valuation methodology: UK has a further 16 (2022: 19) unlisted holdings valued below £5.0m 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 16 holdings was £10.6m as at 30 June 2023 (2022: £9.6m), consisting £9.5m of equities and £1.3m of loans. If the value of all these lower valued equity investments moved by 20.0%, this would have an impact on the investment portfolio value of £1.9m or 0.6%. If the value of all these lower valued loans moved by 10.0%, this would have an impact on the investment portfolio value of £0.1m (2022: a 20% change, £1.9m). Report and Accounts for the year to 30 June 2023 103 ## NOTES TO THE ACCOUNTS The following table shows the sensitivity of the fair value of level 3 financial investments to changes in key assumptions as at 30 June 2023. | Investment | Investment type | Valuation methodology | Risk weighting | Sensitivity +/- | Carrying amount £'000s | Sensitivity £'000s | | --- | --- | --- | --- | --- | --- | --- | | Somers | Equity | NAV | Low | 20% | 107,688 | 21,538 | | Alectus Capital | Equity | NAV | Medium | 20% | 17,821 | 3,564 | | Alectus Quantum | Equity | NAV | Medium | 20% | 14,666 | 2,933 | | West Hamilton | Equity | Fair value of assets | Low | 10% | 15,087 | 1,509 | | Arna | Equity | Last fund raising | Medium | 20% | 6,602 | 1,320 | | Other investments | Equity | Various | Medium | 20% | 9,451 | 1,890 | | Other investments | Loans | Various | Low | 10% | 1,337 | 134 | | Total | | | | | 172,652 | 32,888 | ### (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. 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. As at 30 June 2023 this facility had not been drawn, since the year end £500,000 has been drawn by Coda Cloud Limited. ### 32. POST BALANCE SHEET EVENT On 28 July 2023, Zeta Energy Ltd, a related party, provided an AUD 11.0m (£5.2m) loan facility to UIL. On 1 August 2023, the AUD 11m was drawn by UIL. In September 2023, AUD 2.0m (£0.9m) was repaid by UIL. The loan is repayable on 30 September 2023 and bears interests at 8.3% per annum. 104 UIL Limited ## 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: | | | | | 2023 | | | | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Gross | Commitment | | | Gross | Commitment | | | | Leverage exposure | method | | method | | method | | method | | Maximum permitted limit 425% 425% 425% 425% Actual 188% 188% 236% 236% 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 2023 # NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of UAL Limited will be held at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on Thursday, 9 November 2023 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 2023, together with the report of the auditor thereon. 2. To approve the Directors' Remuneration Policy. 3. To approve the Directors' Remuneration Report for the year ended 30 June 2023. 4. To approve the Company's dividend policy to pay four interim dividends per year. 5. To re-elect Mr P Burrows as a Director. 6. To re-elect Mr S Bridges as a Director. 7. To re-elect Ms A Hill as a Director. 8. To re-elect Mr O 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 2024 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 8,384,000 Ordinary Shares, equivalent to approximately 10% 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 2024 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** 22 September 2023 106 UAL Limited ## NOTES 1. Only the holders of ordinary shares registered on the register of members of the Company at close of business on 7 November 2023 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 this time. Changes to entries on the register after close of business on 7 November 2023 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 of 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 6ZY not later than 5:00 pm (GMT) on 7 November 2023. Alternatively, shareholders can vote or appoint a proxy electronically by visiting www.investocentre.co.uk/eproxy. You will be asked to enter the Control Number, the Shareholder Reference Number and PR/schefs are printed on the form of proxy. The latest time for the submission of proxy votes also normally is 5:00 pm (GMT) on 7 November 2023. To appoint more than one proxy, an additional proxy for me/any 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 Depository, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY not later than 5:00 pm (GMT) on 8 November 2023 or give an instruction via the CREST system as detailed under note 7. Please note only depository interest holders registered on the depository interest register at close of business on 6 November 2023 shall be entitled to attend and vote or to be represented at the meeting. Changes to entries on the depository interest register after close of business on 6 November 2023 shall be disregarded in determining the rights of any person to attend and vote at the meeting. 7. Depository 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 Depository must, in order to be valid, be transmitted to as to be received by the issuer's agent (ID 3R4500 no later than 5:00 pm, (GMT) on 6 November 2023. 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 (Eye 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 Notice are 83,842,918. Report and Accounts for the year to 30 June 2023 107 ## COMPANY INFORMATION DIRECTORS LEGAL ADVISOR TO THE COMPANY Peter Burrows, AO (Chairman) (as to English law) Stuart Bridges Norton Rose Fulbright LLP Alison Hill 3 More London Riverside, London SE1 2AQ David Shillson United Kingdom REGISTERED OFFICE LEGAL ADVISOR TO THE COMPANY Clarendon House, 2 Church Street, Hamilton HM 11, (as to Bermuda law) Bermuda Conyers Dill & Pearman Limited Company Registration Number: 39480 Clarendon House, 2 Church Street, Hamilton HM 11, LEI: 213800CTZ7TEIE7YM468 Bermuda AIFM AND JOINT PORTFOLIO MANAGER AUDITOR ICM Investment Management Limited KPMG LLP Ridge Court, The Ridge, Epsom, Surrey, KT18 7EP 15 Canada Square, London E14 5GL, United Kingdom United Kingdom Member of the Institute of Chartered Accountants in England and Telephone number 01372 271486 Wales Authorised and regulated in the UK by the Financial Conduct Authority DEPOSITARY SERVICES PROVIDER JOINT PORTFOLIO MANAGER AND SECRETARY J.P. Morgan Europe Limited ICM Limited 25 Bank Street, Canary Wharf, London E14 5JP 34 Bermudiana Road, Hamilton HM 11, Bermuda United Kingdom Authorised in the UK by the Prudential Regulation Authority and ASSISTANT SECRETARY regulated by the Financial Conduct Authority and the Prudential Regulation Authority Conyers Corporate Services (Bermuda) Limited Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda CUSTODIAN JPMorgan Chase Bank N.A. – Jersey Branch | ADMINISTRATOR | JPMorgan House, Grenville Street, St Helier | | --- | --- | | JP Morgan Chase Bank N.A. – London Branch | Jersey JE4 8QH | | 25 Bank Street, Canary Wharf, London E14 5JP | Regulated by the Jersey Financial Services Commission | United Kingdom Authorised in the UK by the Prudential Regulation Authority and REGISTRAR regulated by the Financial Conduct Authority and the Prudential Computershare Investor Services (Bermuda) Limited Regulation Authority 5 Reid Street, Hamilton HM 11, Bermuda Telephone number 0370 707 1196 BROKER Shore Capital and Corporate Limited REGISTRAR TO THE DEPOSITARY INTERESTS Cassini House, 57 St James’s Street, London AND CREST AGENT SW1A 1LD United Kingdom Computershare Investor Services PLC Authorised and regulated in the UK by the Financial Conduct Authority The Pavilions, Bridgwater Road, Bristol BS99 6ZY United Kingdom COMPANY BANKER The Bank of Nova Scotia, London Branch 201 Bishopsgate, 6th Floor, London EC2M 3NS United Kingdom 108 UIL Limited ## 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 2023 the ordinary share price was 145.00p (2022: 187.50p) and the NAV per ordinary share was 199.87p (2022: 260.89p), the discount was therefore 27.5% (2022: 28.1%). **Gearing** – represents the ratio of the borrowings less cash and cash equivalents of the Company to its net assets. | | page | 2023 £'000s | 2022 £'000s | | --- | --- | --- | --- | | Bank overdraft | 89 | 7,872 | 3,835 | | Cash and cash equivalents | 74 | (5,234) | (8) | | Loans | 74 | 42,691 | 51,080 | | ZDP shares | 90 | 94,589 | 140,813 | | Total debt | | 139,918 | 195,720 | | Net assets attributable to equity holders | 74 | 167,581 | 218,740 | | Gearing | | 83.5% | 89.5% | **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 2023 | Dividend rate (pence) | NAV (pence) | Share price (pence) | | --- | --- | --- | --- | | 30-Jun-22 | n/a | 260.69 | 187.50 | | 30-Sep-22 | 2.00 | 258.73 | 188.50 | | 23-Dec-22 | 2.00 | 233.15 | 155.00 | | 31-Mar-23 | 2.00 | 214.13 | 128.50 | | 26-Jun-23 | 2.00 | 201.89 | 143.50 | | 30-Jun-23 | n/a | 199.87 | 145.00 | | Total return | | (20.6%) | (18.5%) | | 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 | 2.00 | 387.13 | 267.00 | | 23-Dec-21 | 2.00 | 372.95 | 245.00 | | 31-Mar-22 | 2.00 | 370.02 | 240.00 | | 30-Jun-22 | 2.00 | 260.69 | 187.50 | | 30-Jun-22 | n/a | 260.69 | 187.50 | | Total return | | (38.1%) | (27.6%) | Report and Accounts for the year to 30 June 2023 109 ## ALTERNATIVE PERFORMANCE MEASURES (continued) 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. | | | | 2023 | | 2022 | | --- | --- | --- | --- | --- | --- | | | Share price | | | Share price | | | Total return NAV (pence) | | (pence) NAV (pence) | | | (pence) | NAV 14 August 2003 (pence) 99.47 85.67 99.47 85.67 Total dividend, warrants and CULS adjustment factor 2.2105 2.7620 2.1336 2.6203 NAV/Share price at year end (pence) 199.87 145.00 260.69 187.50 Adjusted NAV/Share price at 30 June (pence) 441.81 400.49 556.63 491.30 Total return since inception 344.2% 367.5% 459.6% 473.5% Annual compound NAV/share price total return since inception – the annual return to shareholders using the same basis as NAV/share price total return since inception. 2023 2022 NAV Share price NAV Share price Annual compound NAV total return since inception 7.8% 8.1% 9.5% 9.7% Ongoing charges – all operating costs expected to be regularly incurred and that are payable by the Group or suffered within underlying investee funds, expressed as a proportion of the average weekly NAV of the Group (valued in accordance with accounting policies) over the reporting year. The costs of buying and selling investments and derivatives are excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing ordinary shares. Ongoing charges calculation (including and excluding 2023 2022 performance fees) page £’000s £’000s Management and administration fees 70 758 852 Other expenses 70 977 819 Expenses suffered within underlying funds 3,935 5,221 Total expenses for ongoing charges calculation 5,670 6,892 Average weekly NAV of the Group 200,431 306,929 Ongoing Charges 2.8% 2.2% Revenue yield – represents the ratio of total income in the year over average gross assets in the year. 2023 2022 page £’000s £’000s Income 70 10,229 9,879 Average Gross assets 357,505 491,667 Revenue yield 2.9% 2.0% 110 111 UIL Limited Report and Accounts for the year to 30 June 2023 **Dividend yield** – represents the ratio of dividends per ordinary share over closing ordinary share price. | | page | 2023 pence | 2022 pence | | --- | --- | --- | --- | | Dividends per ordinary shares | 4 | 8.000 | 8.000 | | Ordinary share price | 4 | 145.00 | 187.50 | | Dividend yield | | 5.5% | 4.3% | **Revenue reserves per ordinary share carried forward** – the value of the Group's revenue reserves divided by the number of ordinary shares in issue. | | page | 2023 | 2022 | | --- | --- | --- | --- | | Revenue reserves (£'000s) | 74 | 11,735 | 12,846 | | Number of ordinary shares in issue at 30 June | 91 | 83,842,918 | 83,842,918 | | Revenue reserves per ordinary share carried forward (pence) | | 14.00 | 15.32 | Report and Accounts for the year to 30 June 2023 **111** ## HISTORICAL PERFORMANCE | at 30 June | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | NAV per ordinary share (pence) | 199.87 | 260.89 | 431.51 | 292.79 | 369.57 | 291.79 | 252.86 | 241.12 | 169.00 | 165.84 | | Ordinary share price (pence) | 145.00 | 187.50 | 268.00 | 177.50 | 199.00 | 174.50 | 164.00 | 130.75 | 117.00 | 128.00 | | Discount (%) | 27.5 | 28.1 | 37.9 | 39.4 | 46.2 | 40.2 | 35.1 | 45.8 | 30.8 | 22.8 | | **Returns and dividends (pence)** | | | | | | | | | | | | Revenue return per ordinary share | 6.68 | 8.35 | 9.98 | 9.77 | 7.63 | 6.67 | 6.38 | 6.23 | 7.84 | 7.03 | | Capital return per ordinary share | (59.70) | (171.68) | 133.81 | (81.30) | 75.34 | 38.96 | 12.46 | 68.45 | 2.47 | 19.85 | | Total return per ordinary share | (53.02) | (163.33) | 143.79 | (71.53) | 82.97 | 45.63 | 18.84 | 74.68 | 10.31 | 26.88 | | Dividends per ordinary share | 8.000^{1} | 8.000 | 8.000 | 7.875 | 7.500 | 7.500 | 7.500 | 7.500 | 7.500 | 7.500 | | FTSE All-Share Index total return | 8.611 | 7.981 | 7.852 | 6.465 | 7.431 | 7.389 | 6.777 | 5.737 | 5.614 | 5.471 | | **ZDP shares^{2} (pence)** | | | | | | | | | | | | **2022 ZDP shares** | | | | | | | | | | | | Capital entitlement^{3} per ZDP share | n/a | 143.98 | 135.56 | 127.59 | 120.03 | 113.01 | 106.37 | 100.12 | n/a | n/a | | ZDP share price | n/a | 144.00 | 139.50 | 126.50 | 132.00 | 124.50 | 119.50 | 104.50 | n/a | n/a | | **2024 ZDP shares** | | | | | | | | | | | | Capital entitlement^{3} per ZDP share | 130.04 | 124.14 | 118.51 | 113.13 | 107.97 | 103.10 | n/a | n/a | n/a | n/a | | ZDP share price | 123.50 | 122.50 | 120.50 | 105.50 | 114.00 | 107.50 | n/a | n/a | n/a | n/a | | **2026 ZDP shares** | | | | | | | | | | | | Capital entitlement^{3} per ZDP share | 128.75 | 122.62 | 116.78 | 111.21 | 105.89 | 100.87 | n/a | n/a | n/a | n/a | | ZDP share price | 114.50 | 115.50 | 116.00 | 92.25 | 107.50 | 102.25 | n/a | n/a | n/a | n/a | | **2028 ZDP shares** | | | | | | | | | | | | Capital entitlement^{3} per ZDP share | 113.02 | 106.87 | 101.60 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | ZDP share price | 96.50 | 99.00 | 100.00 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | **Equity holders' funds (£m)** | | | | | | | | | | | | Gross assets^{4} | 304.9 | 410.6 | 544.4 | 483.3 | 537.2 | 488.3 | 449.7 | 440.7 | 373.4 | 399.1 | | Loans | 42.7 | 51.1 | 48.5 | 51.1 | 51.0 | 27.8 | 47.8 | 24.7 | 34.4 | 22.2 | | ZDP shares | 94.6 | 140.8 | 132.1 | 180.5 | 159.9 | 199.4 | 173.8 | 197.4 | 172.4 | 212.5 | | Equity holders' funds | 167.6 | 218.7 | 363.8 | 251.6 | 326.3 | 261.1 | 228.1 | 218.6 | 166.6 | 164.4 | | **Revenue account (£m)** | | | | | | | | | | | | Income | 10.2 | 9.9 | 11.6 | 12.7 | 11.2 | 10.6 | 10.7 | 10.5 | 11.2 | 10.4 | | Costs (management and other expenses) | 1.7 | 1.7 | 2.1 | 2.6 | 2.8 | 2.8 | 2.9 | 1.9 | 1.8 | 2.1 | | Finance costs | 2.9 | 1.1 | 1.0 | 1.6 | 1.6 | 1.6 | 1.8 | 1.7 | 1.1 | 0.9 | | **Financial ratios of the Group (%)** | | | | | | | | | | | | Ongoing charges figure^{5} (excluding performance fee) | 2.8 | 2.2 | 2.3 | 2.1 | 2.1 | 2.2 | 2.1 | 3.3 | 2.0 | 2.2 | | Gearing^{6} | 83.5 | 89.5 | 48.8 | 93.4 | 63.7 | 87.3 | 97.2 | 101.6 | 124.1 | 144.4 | (1) The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts. (2) Issued by UK Finance, a wholly owned subsidiary of UK. (3) See pages 28 and 29. (4) Gross assets less current liabilities excluding loans. (5) See Alternative Performance Measures on pages 109 to 111. 112 UK 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 UIL News