Date:                      21 September 2022

Contact:                 Charles Jillings

                                ICM Investment Management Limited

                                01372 271 486

UIL LIMITED

ANNUAL FINANCIAL REPORT

for the year to 30 June 2022

UIL Limited ("UIL" or the "Company") today announced its audited financial results for the year to 30 June 2022.

FINANCIAL HIGHLIGHTS

·    Revenue earnings per ordinary share of 8.35p (2021: 9.98p)

·    Dividends per ordinary share of 8.00p (2021: 8.00p)

·    Net asset value ("NAV") total return per ordinary share* of -38.1% (2021: 50.9%)

·    Share price total return per ordinary share* of -27.6% (2021: 57.0%)

·    NAV discount as at 30 June 2022* of 28.1% (2021: 37.9%)

·    Gearing* 89.5% (2021: 48.8%)

*See Alternate Performance Measures on pages 108 and 109 of the Report and Accounts

The Report & Accounts for the year ended 30 June 2022 will be posted to shareholders in early October 2022. A copy will shortly be available to view and download from the Company's website at www.uil.limited and the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Please click on the following link to view the document: http://www.rns-pdf.londonstockexchange.com/rns/2219A_1-2022-9-21.pdf

GROUP PERFORMANCE SUMMARY

(1) See Alternate Performance Measures on pages 108 and 109 of the Report and Accounts

(2) All performance data relating to periods prior to 20 June 2007 are in respect of Utilico Investment Trust plc, UIL's predecessor.

(3) The fourth quarterly dividend of 2.00p has not been included as a liability in the accounts

(4) Gross assets less current liabilities excluding loans and ZDP shares

(5) Performance fees suffered within underlying funds

CHAIRMAN'S STATEMENT

The year to 30 June 2022 was very challenging for investors. UIL gave up all the gains of the prior year, ending the year with NAV per share of 260.89p, a decline of 39.5%. UIL's NAV total return was negative 38.1%. This has dragged UIL's annual compound NAV total return since inception in 2003 down to 9.5%.

Much of this reflects a strong reset by the markets in the face of rising inflation (especially energy and food prices), increasing interest rates by central banks, rising climate change concerns and all exacerbated by the Ukraine war and China's zero Covid policy. UIL's gross assets declined by 24.6% and UIL's gearing has magnified the impact on shareholders.

Since inception in August 2003, UIL has distributed £87.9m in dividends, invested £36.9m in ordinary share buybacks and made net gains of some £239.0m for a total return of 459.6% (adjusted for the exercise of warrants and convertibles). Shareholders should note that the Board and the Investment Managers focus on longer term market indices, whilst including short term comparisons for reference.

As shareholders are aware, UIL values Utilico Emerging Markets Trust plc ("UEM") and Zeta Resources Limited ("Zeta") based on their market bid prices. As at 30 June 2022, discounts to published NAVs widened to 13.9% for UEM (some £10.1m) and narrowed marginally to 15.4% for Zeta (some £11.7m). Together these discounts amount to £21.8m attributable to UIL. Adding these back would see UIL's adjusted NAV per share increase by 10.0% to 286.89p (30 June 2021: 473.14p) and UIL's implied discount widen to 34.6%.

Most investments have been marked down in the year to 30 June 2022 in the face of significant market weakness. Eight of the top ten holdings by UIL had some significant declines in value. Resimac Group Limited's ("Resimac") share price fell 53.3% during the year. Given Resimac is now held directly by UIL and is 39.9% of Somers Limited's ("Somers") portfolio and Somers is 35.7% of UIL's portfolio, Resimac's weakness has in turn accounted for 56.8% of UIL's portfolio losses of £120.5m over the year. As at 30 June 2022, Resimac shares traded at an annualised historic price earnings ratio of 4.6x and a dividend yield of 7.0%. It is pleasing to see Resimac continuing to buy back its own shares on the market, while operating results have been good.

Resolute Mining Limited ("Resolute") has been a perennial underperformer. Resolute's share price was down 55.4% on the back of lacklustre operational performance and continued concerns over the political outlook in Mali. The Resolute board rightly appointed a new CEO in May 2022. Early signs are that under new leadership Resolute is making good progress.

The Board is pleased to see the ordinary shares discount narrow to under 30.0%, standing at 28.1% as at 30 June 2022. In 2019, the Board determined, in agreement with the Investment Managers and the major shareholder, to target a lower discount level of 20.0% in the medium term. This was communicated to the market with UIL continuing to buy back ordinary shares at high discount levels.

During the year to 30 June 2022, the Company bought back 0.5m ordinary shares (0.5% of opening shares in issue) at an average price of 266.30p.

Consistent with the wider debt markets, UIL's longer dated 2024, 2026 and 2028 ZDP shares are trading at higher gross redemption yields compared to those as at 30 June 2021, being 5.3%, 6.5% and 7.0% respectively. The market prices of the ZDP shares were impacted by interest rate rises by most central banks as inflation increased sharply. UIL's 2022 ZDP shares will be redeemed on 31 October 2022. As at 30 June 2022, UIL's average blended rate of funding costs, including bank debt, increased slightly from 4.5% to 4.7%.

Total revenue income for the year to 30 June 2022 was £9.9m, a decrease of 14.7% from £11.6m in the prior year. This reflects in part the loss of earnings from the Zeta and Somers loans which were significantly reduced in the year, resulting in interest income reducing from £4.8m over the prior year to £2.3m. The revenue return earnings per share ("EPS") of 8.35p represents a decrease of 16.3% over the prior year of 9.98p.

The Board has declared an unchanged fourth quarter dividend of 2.00p per ordinary share which maintains the total for the year at 8.00p, and a yield on the closing share price of 4.3%. The dividend was covered by earnings in the year and undistributed revenue reserves carried forward increased from £12.5m to £12.8m, equal to 15.32p per share. In the absence of unforeseen circumstances, the Board intends to pay further quarterly dividends of 2.00p per ordinary share.

Following the capital return profit of £114.1m last year, there was a capital return loss for the year ended 30 June 2022 of £144.1m. The majority of this was due to unrealised losses on investments and foreign exchange of £136.3m (prior year: gains of £122.7m).

The capital losses has resulted in UIL's gearing rising to 89.5%. This is a disappointing outcome but remains within the 100% gearing target level set some years ago. The 2022 ZDP shares amounting to £51.2m as at 30 June 2022, are redeemable in October this year. As such they are moved to current liabilities and the Investment Managers have taken steps to fund the redemption payment.

GLOBAL EVENTS

Three themes continue to dominate global events: Covid-19, heightened geopolitical tensions and the outlook for inflation and interest rates.

While Covid-19 continues to disrupt, the impact on most economies is very reduced. We now expect it to recede and not be an issue going forward. But the exception is China. As we noted before, their zero policy to Covid-19 sets them apart from every other significant economy, and nearly every country in the world. The economic damage being inflicted on the Chinese economy as a result of this approach is very significant and sad to see. The Chinese consumer confidence has deteriorated to the point where housing is facing very severe challenges. Given that China is the world's second biggest economy, and that housing is some 35% of economic activity this is a significant headwind and of deep concern. It is hard to judge when this dogmatic policy changes. 

In the half-yearly report, we referred to heightened geopolitical events and risk of war with devastating consequences for its global economy. Clearly Russia going to war reflects the worst outcome and the question now is what is next. Our view is that it will take time for both sides to exhaust their ambitions, but once they reach a neutral position a negotiated outcome would be expected. Russia's maximum leverage is likely to be early next year, at which point Europe will be facing the worst of the energy crisis they now certainly face.

We also noted at the interim stage the ongoing friction between China and the USA is again a clash of ideologies and will likely lead to ongoing resistance between the two nations and their allies. The tensions over Taiwan are symptomatic of two ideologies facing each other across the economic, political and social divide. This is concerning over the longer term.

Inflation moved markedly higher follow the Russian invasion of the Ukraine. Coupled with surprising low unemployment globally this has driven inflation markedly higher. Central Banks have had to respond much more firmly in combating the very high inflation expectations. This in turn is slowing economic growth. We see this headwind continuing for the rest of the year. However, once the Russian/Ukraine conflict is resolved we expect inflation to subside.

The one unknown in our view is the response of the labour force. The labour market remains tight and the number of unemployed are at record lows in many economies. If this continues, then the shortage of the work force will drive up wages and in turn feed inflation.

OUTLOOK

The outlook for global economies is inextricably linked to Covid-19 in China, to resolving geopolitical differences and to central banks navigating inflation and interest rate responses. We remain optimistic that solutions can be found and that policy makers can navigate through the challenges. We expect inflation to be elevated for much of 2022, assets valuations to increase, technology to continue to gain market share and commodities to rise in value. Most of our portfolio companies are doing very well in this challenging environment and we expect this to continue.

Peter Burrows AO
Chairman
21 September 2022

INVESTMENT MANAGERS' REPORT

The year to 30 June 2022 was a very difficult period and unprecedented for investors, and, as anticipated, volatility remained elevated.

UIL reversed the gains of the prior year, ending the year to 30 June 2022 with NAV per share of 260.89p, a decline of 39.5%. This has dragged UIL's annual compound NAV total return since inception in 2003 down to 9.5%.

The added headwind of the Ukraine war exacerbated the already challenging environment of rising inflation, increasing interest rates, Covid relapses (in particular China's zero Covid policy), climate change and escalating China versus US tensions. Equity markets understandably retreated faced with the deluge of material uncertainties.

PORTFOLIO

There was significant volatility over the year, and within the top ten holdings, two holdings increased in value, six declined and two new investments were made. Overall, the decreases significantly outweighed the increases, which led to an overall reduction in the portfolio of £120.5m.

As noted in the Chairman's Statement, UEM and Zeta's share price discounts to NAVs represent a £21.8m reduction to UIL's valuation.

Somers' valuation reduced 43.4% in the year to 30 June 2022, giving back most of its 109.2% gain in the year to 30 June 2021. This was largely driven by Resimac's share price declining by 53.3%, compared to its 143.6% gain in the year to 30 June 2021. Resimac continues to deliver strong operational performance and while some of the valuation tailwinds have reversed over recent months, such as interest rate expectations, we believe the market is undervaluing Resimac's long-term opportunity. Resimac published its annual results for the year to 30 June 2022 and its valuation is modest at a historic price earnings ratio of 4.6x and a dividend yield of 7.0%. It is very pleasing to see Resimac continuing to buy back shares at these current levels.

During the year UIL bought a number of listed investments from Somers at fair value which increased UIL's listed portfolio and thereby improved UIL's bank covenant ratios. We are pleased to be a direct shareholder in Resimac with its strong market outlook over the medium term.

After the year-end, UIL together with its associates bought out the minority shares in Somers at USD 21.00 per share. Following this transaction, Somers distributed a number of investments to the new shareholders. UIL received further shares in Resimac and a holding in The Market Herald, an ASX listed financial news service.

Zeta's share price weakened by 10.8% in the year to 30 June 2022, returning part of the share price increase of 117.6% during the year to 30 June 2021. In the main, this reflected a weakening of the wider resources sector in the face of lower demand from China and a slowing of global GDP feeding through to softer commodity prices. We continue to expect copper prices to remain elevated over the medium to longer term in the face of accelerated demand from the green energy transition by global economies and falling production, as the recent underinvestment in mining leads to supply constraints. Copper Mountain Mining Corporation ("Copper Mountain") is Zeta's largest investment, which has seen its share price reduce by 53.7% in the year to 30 June 2022, but it must be put in context of the gains of 477.8% during the year to 30 June 2021. Copper Mountain reported weaker than expected results in its two most recent quarters due to a confluence of factors, including damage to its secondary crusher in December 2021 (repaired in April 2022), the mining of a lower grade section of the pit, and lower copper prices.

UIL bought Panoramic Resources Limited ("Panoramic") shares from Zeta at market price and Zeta used the proceeds to reduce its loan with UIL. The Nickel price was up 24.3% in the year and Panoramic benefitted with a share price rise of 30.0% during the period as it resumed operations. It has been pleasing to see the growing confidence in the management team at Panoramic as it ramps up operations and delivers on its exploration endeavours.

Over the years, Resolute has failed to deliver shareholder value and frustratingly in the year to 30 June 2022 delivered further disappointment given our positive outlook on gold. The board of Resolute took decisive action during the year, making management changes with a view to ensuring better focus on its mining operations. We are starting to see improved performance under the new management team and expect to see improving metrics, stronger cash flows and reduced debt. It has not helped that Mali, where its Syama mine is based, witnessed another military coup during the year and Covid-19 has hampered operations. Resolute's share price fell by 55.4% in the year, in addition to the 55.1% loss during the year to 30 June 2021.

UEM has been a relative standout performer over the year to 30 June 2022 with a total NAV return of negative 1.6% compared to the MSCI emerging markets total return Index (GBP adjusted) ("MSCI") loss of 15.3% over the same period. UEM continues to see strong reporting results from its investee companies with most growing revenues and expanding margins. This is a credit to the investee management teams who continue to deliver in volatile times. UEM is ahead of the MSCI since inception. As with most emerging market funds, UEM's discount has widened to 13.9% as at 30 June 2022. This remains a frustration, but UIL has taken the opportunity of this share price outperformance to reduce its holding and realise some £12.0m during the year.

The ten largest holdings section starting on page 22 provides more information on UIL's key investments, including new additions to the portfolio. We are excited about our new investments and expect them to deliver strong operational outperformance which, combined with improving valuations, should deliver long term value to UIL's shareholders.

FOREIGN EXCHANGE & COMMODITIES

As a global investor, UIL faces both exposure and opportunities from foreign exchange ("FX") movements. To mitigate this risk UIL hedges its ZDP repayment liability to Sterling. As can be seen, the impact on UIL from FX in the year was a significant loss of £10.5m (30 June 2021: gain of £6.3m). This reflects a general weakness in Sterling and we were taken by surprise at the speed and weakness of the currency. We would note that in the face of continued global headwinds we have reduced the FX positions markedly, from a net of £102.0m as at 30 June 2022 to £55.0m as at 31 July 2022. However, the FX losses are more than offset by gains in the portfolio.

Commodities were volatile during the year. Oil reached a year high of up 70.3% and a year low of down 13.2%, ending the year up 52.8%. Copper's volatility increased, with a high/low spread of 28.3%, ending the year at its low point down 13.5%. Nickel was extremely volatile, at one point seeing an outsized options mismatch by one large trader, driving the price up by 164.7%. Nickel ended the year up by 24.3%.

PORTFOLIO ACTIVITY

During the year to 30 June 2022, UIL invested £89.8m and realised £92.8m, including loans repaid by Somers and Zeta. Purchases included investments in Resimac and Panoramic. UIL bought Resimac and Panoramic from Somers and Zeta respectively, to increase the listed holdings of UIL and as a result improve UIL's covenant cover on its bank facility. Somers and Zeta used the proceeds to reduce their debt with UIL.

PLATFORM INVESTMENTS

UIL currently has four platform investments, Somers, Zeta, UEM and Allectus Capital Limited ("Allectus") in its top ten holdings. These investments account for 73.0% of the total portfolio as at 30 June 2022 (30 June 2021: 78.7%). During the year to 30 June 2022, net withdrawals from these platforms amounted to £37.4m (30 June 2021: £16.8m).

DIRECT INVESTMENTS

UIL has six direct investments in its top ten holdings, ICM Mobility Group Limited ("ICM Mobility"), Resimac (which replaced Orbital Corporation Limited ("Orbital")), Resolute, Panoramic (which replaced Sindoh), Starpharma Holdings Limited ("Starpharma"), and AssetCo plc ("AssetCo"). Orbital's share price fell by 72.9% resulting in it falling outside the top ten. UIL exited Sindoh for a gain on investment of 8.9%.

GEOGRAPHIC REVIEW

The geographical split of the portfolio, on a look through basis, shows Australia and New Zealand remaining as UIL's largest exposure, decreasing slightly by 0.4% to 37.2% of UIL's total investments (30 June 2021: 37.6%); UK remained second at 13.8%, down 4.8% and Asia remained almost unchanged at 10.5%, up 0.1%. Europe increased by 5.1% to 7.9% of the total portfolio.

SECTOR REVIEWS

Financial Services - 38.5% (30 June 2021: 42.7%)

Somers is UIL's largest investment and accounted for 35.7% of UIL's total investments as at 30 June 2022 (30 June 2021: 42.7%). As already noted, the decrease in Resimac's share price has driven Somers' NAV weakness.

Technology - 25.8% (30 June 2021: 17.0%)

UIL holds a number of early-stage investments in the technology and the pharmaceutical sector, both directly and through ICM Mobility (UIL's fourth largest investment), Allectus (UIL's fifth largest investment), and Starpharma (UIL's ninth largest investment).

Resources (excl. gold mining) - 15.4% (30 June 2021: 15.3%)

UIL's largest investment in resources is Zeta, and UIL now holds Panoramic directly after buying its shares from Zeta.

Infrastructure Investments - 12.7% (30 June 2021: 12.7%)

This consists of Telecommunications, Infrastructure, Electricity, Ports, Road & Rail, Oil & Gas, Renewables, Water & Waste and Airports. UIL's infrastructure exposure is largely through UEM.

Gold Mining - 4.0% (30 June 2021: 6.5%)

UIL's largest investment in gold mining is Resolute, which is held both directly by UIL (3.6% of the total portfolio) and indirectly through Zeta. In addition, Zeta holds 72.0% of Horizon Gold Limited ("Horizon"), an Australian gold mining exploration company. Resolute's share price weakness has been partly offset by Horizon's share price gains.

LEVEL 3 INVESTMENTS

UIL's investment in level 3 companies was 57.4% (30 June 2021: 59.8%) of the total portfolio. There was a reduction from £322.9m as at 30 June 2021 to £238.9m as at 30 June 2022, mainly as a result of a decrease in Somers valuation. The level 3 investments which are unlisted are formally revalued twice a year.  It is worth noting that where there is a material event that impacts an unlisted investment, it is revalued at the time, thus keeping the unlisted valuations current.

COVID-19

In June 2022, the Board met in person for the first time in over two years. The Board meets formally three times a year and these Board meetings are interspersed with regular investment updates by Teams to brief the Board on portfolio developments.

GEARING

As a result of the significant pull back in portfolio valuations during the year, gearing increased to 89.5% (30 June 2021: 48.8%), although this remains well inside UIL's target gearing of under 100.0%. At an absolute level UIL's debt increased over the year from £180.8m to £195.7m as at 30 June 2022.

Borrowing costs rose marginally to 4.7% from 4.5%. 

Following the redemption of the 2022 ZDP shares on 31 October 2022 and based on June valuations, gearing would fall back to 65.6% and the cost of borrowings would fall to 4.2%.

ZDP SHARES

On a consolidated basis the ZDP shares increased from £132.1m to £140.8m, up 6.6% mainly as a result of the capitalised interest return in the year. 0.8m 2026 ZDP shares were placed out in the year, leaving UIL holding 2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at 30 June 2022. With four ZDP issues, UIL has spread the redemptions liability over six years.

The 2022 ZDP shares will be redeemed on 31 October 2022.

bank DEBT

Bank debt increased to £51.1m as at 30 June 2022 (30 June 2021: £48.5m). This was drawn in Australian Dollars, Euros and US Dollars. Scotiabank Europe PLC's ("Scotiabank") £50.0m committed senior secured multi-currency revolving facility has been extended to 19 September 2023 and novated to the Bank of Nova Scotia, London Branch. The extension requires a reduction in the facility of £12.5m by 30 March 2023.

REVENUE RETURNS

Revenue income for the year to 30 June 2022 reduced to £9.9m from £11.6m, a reduction of 14.7%. This largely reflects the decrease in loans to Somers and Zeta as these were repaid or converted into equity, which in turn contributed to the reduction of interest income from £4.8m to £2.3m.

Management and administration fees and other expenses were down by 19.0% at £1.7m (30 June 2021: £2.1m). Finance costs were up at £1.1m as at 30 June 2022 from £1.0m as at 30 June 2021.

Revenue profit decreased by 17.6% to £7.0m (30 June 2021: £8.5m) and EPS decreased by 16.3% to 8.35p (30 June 2021: 9.98p) driven mainly by the lower revenue income.

CAPITAL RETURNS

Capital total income was at a loss of £136.3m (30 June 2021: gain of £122.7m).

Finance costs reduced by 9.4% to £7.8m (30 June 2021: £8.6m) largely reflecting the lower number of ZDP shares in issue following the 2020 ZDP redemption in October 2020.

The resultant loss for the year to 30 June 2022 on the capital return was £144.1m (30 June 2021: gain of £114.1m) and EPS loss was 171.68p per ordinary share (30 June 2022: gain of 133.81p).

EXPENSE RATIO

The ongoing charges figure, excluding performance fees, was 2.2% as at 30 June 2022 (30 June 2021: 2.3%) and the ongoing charges figure, including performance fees paid in UIL's platform companies, was 2.2% (30 June 2021: 4.6%). No performance fee was earned at the UIL level.

All expenses are borne by the ordinary shareholders.

INVESTMENT APPROACH

UIL continues to develop its core platform investments, which offer the following benefits:

Focused strategy. Each platform has a dedicated mandate and as such is driven by the objective of finding and making attractive investments within its mandate.

Dedicated research analysts. The research analysts for each platform are focused on both understanding the existing portfolio businesses and identifying compelling new investments.

Financial support. Ability to draw on UIL's analytical support and financial backing.

Deep knowledge. Utilising the Investment Managers' knowledge across many jurisdictions to optimise investment opportunities and undertake corporate finance led transactions.

A key driver in shaping the current portfolio is the Investment Managers' three medium-term core views. First, that the world's financial markets are over indebted; second, that technological change offers strong investment upside; and third, that emerging markets offer better GDP growth opportunities than developed markets.

UIL's Investment Managers' emphasis is on individual stock selection, remaining fully invested and focusing on identifying investments whose valuations do not reflect their true long-term value, while at the same time being a supportive shareholder of investee companies. The Investment Managers are relentless bottom-up investors, drawing on in-depth knowledge and capability.

DISRUPTION

There continues to be significant disruption to business models from blockchain to artificial intelligence through to nanotechnology and financial technology. These disruptions are shortening the product life cycle and enabling rapid change to products and processes. ICM is encouraging its investee companies to embrace their opportunities and the consequent journey. UIL is seeking investments that are capital light, have high barriers to entry and business models that are scalable.

Charles Jillings
ICM Investment Management Limited
and ICM Limited

21 September 2022

PRINCIPAL RISKS AND RISK MITIGATION

During the year ended 30 June 2022, ICMIM was the Company's AIFM and had sole responsibility for risk management subject to the overall policies, supervision, review and control of the Board.

As required by the Association of Investment Companies ("AIC") Code of Corporate Governance, the Board has undertaken a robust assessment of the principal risks facing the Company. It seeks to mitigate these risks through regular review by the Audit & Risk Committee of the Company's risk register which identifies the risks facing the Company and the likelihood and potential impact of each risk, together with the controls established for mitigation.

During the year the Audit & Risk Committee also discussed and monitored a number of emerging risks that could potentially impact the Company, the principal ones being geopolitical risk and climate change risk. The Audit & Risk Committee has determined that they are not currently sufficiently material to be categorised as separate key risks and are considered within investment risk and market risk below. The Covid-19 pandemic, which emerged in 2020, gave rise to significant challenges for businesses worldwide and this was also taken into account as part of the assessment of risks to the Company.

The principal risks and uncertainties currently faced by the Company and the controls and actions to mitigate those risks, are described below. There have been no significant changes to the principal risks during the year.

INVESTMENT RISK: The risk that the investment strategy does not achieve long-term positive total returns for the Company's shareholders.

The Board monitors the performance of the Company and has established guidelines to ensure that the approved investment policy is pursued by the Investment Managers. The Board regularly reviews strategy in relation to a range of issues including the balance between quoted and unquoted stocks, the allocation of assets between geographic regions and sectors and gearing.

The investment process employed by the Investment Managers combines assessment of economic and market conditions in the relevant countries with stock selection. Fundamental analysis forms the basis of the Company's stock selection process, with an emphasis on most investments having sound balance sheets, good cash flows, the ability to pay and sustain dividends, good asset bases as well as market conditions. In addition, ESG factors are also considered when selecting and retaining investments and political risks associated with investing in specific countries are also assessed. Overall, the investment process aims to achieve absolute returns through an active fund management approach and the Board monitors the implementation and results of the investment process with the Investment Managers.

MARKET RISK: Adverse market movements in the prices of equity and fixed interest securities, interest rates and foreign currency exchange rates and adverse liquidity could lead to a fall in NAV.

The Company's portfolio is exposed to equity market risk, interest rate risk, foreign currency risk and liquidity risk. Adverse market conditions may result from factors such as economic conditions, political change, climate change, natural disasters and health epidemics. At each Board meeting the Board reviews the composition of the portfolio, asset allocation, stock selection, unquoted investments and levels of gearing and has set investment restrictions and guidelines which are monitored and reported on by the Investment Managers.

The Company's results are reported in Sterling, although the majority of its assets are priced in foreign currencies and therefore any rise or fall in Sterling will lead, respectively, to a fall or rise in the Company's reported NAV. Such factors are out of the control of the Board and the Investment Managers and may give rise to distortions in the reported returns to shareholders. It can be difficult and expensive to hedge some currencies.

KEY STAFF RISK: Loss by the Investment Managers of key staff could affect investment returns.

The quality of the investment management team is a crucial factor in delivering good performance. There are training and development programs in place for employees and the remuneration packages have been developed in order to retain key staff. Any material changes to the management team are considered by the Board at its next meeting; the Board discusses succession planning with the Investment Managers at regular intervals.

DISCOUNT RISK: The Company's shares may trade at a discount to their NAV and a widening discount may undermine investor confidence in the Company.

The Board monitors the price of the Company's shares in relation to their NAV and is focussed on reducing the discount at which they trade. The Board may agree to buy back shares if there is a significant overhang of stock in the market; it targets a discount to NAV of approximately 20% over the medium term.

OPERATIONAL RISK: Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its investment policy.

The Company's main service providers are listed on page 107 of the Report and Accounts. The Audit & Risk Committee monitors the performance and controls (including business continuity procedures) of the service providers at regular intervals.

Most of UIL's investments are held in custody for the Company by JPMorgan Chase Bank N.A., Jersey, the Company's depositary services provider, also monitors the movement of cash and assets across the Company's accounts.

The Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are reported on by Independent Service Auditors, in relation to its administration, custodial and information technology services.

The Board reviews the overall performance of the Investment Managers and all the other service providers on a regular basis. The risk of cybercrime is high, as it is with most organisations, but the Board regularly seeks assurances from the Investment Managers and other service providers on the preventative steps that they are taking to reduce this risk.

GEARING RISK: Whilst the use of borrowings should enhance total return where the return on the Company's underlying securities is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling.

The ordinary shares rank behind bank debt and ZDP shares, making them a geared instrument.

The gearing level is high due to the capital structure of the balance sheet. As at 30 June 2022, gearing on net assets, including bank loans, any overdrafts and ZDP shares, was 89.5% (30 June 2021: 48.8%). The Board reviews the level of gearing at each Board meeting.

ICMIM monitors compliance with the banking covenants when each drawdown is made and at the end of each month. The Board reviews compliance with the banking covenants at each Board meeting.

REGULATORY RISK: Failure to comply with applicable legal and regulatory requirements could lead to suspension of the Company's Stock Exchange listings, financial penalties, a qualified audit report or the Company being subject to tax on capital gains.

The Investment Managers and the Company's professional advisers monitor developments in relevant laws and regulations and provide regular reports to the Board in respect of the Company's compliance.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and the Group and parent Company Accounts in accordance with applicable law and regulations.

The Directors are required to prepare Group and parent Company financial statements for each financial year. They have elected to prepare the Group financial statements in accordance with UK adopted International Accounting Standards and applicable law and have elected to prepare the parent Company financial statements on the same basis.

The Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable, relevant and reliable; 

·      state whether they have been prepared in accordance with UK adopted International Accounting Standards; 

·      assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

·      use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 1981 of Bermuda. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors have decided to prepare voluntarily a Directors' Remuneration Report in accordance with Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 made under the UK Companies Act 2006, as if those requirements applied to the Company. The Directors have also decided to prepare voluntarily a Corporate Governance Statement under the UK Corporate Governance Code as if the Company were required to comply with the Listing Rules of the Financial Conduct Authority applicable to UK premium listed companies.

In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial statements will form part of the annual financial report prepared using the single electronic reporting format under the TD ESEF Regulation. The auditor's report on these financial statements provides no assurance over the ESEF format.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK and Bermuda governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL REPORT 

We confirm that to the best of our knowledge: 

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·      the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Approved by the Board on 21 September 2022 and signed on its behalf by:

Peter Burrows

Chairman

GROUP INCOME STATEMENT

The Group does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is also the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised).

All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of the Company. There are no minority interests.

COMPANY INCOME STATEMENT

The Company does not have any income or expense that is not included in the profit/(loss) for the year and therefore the profit/(loss) for the year is also the total comprehensive income for the year, as defined in International Accounting Standard 1 (revised).

All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of the Company.

GROUP STATEMENT OF CHANGES IN EQUITY

COMPANY STATEMENT OF CHANGES IN EQUITY

STATEMENTS OF FINANCIAL POSITION

STATEMENTS OF CASH FLOWS

* Disclosed under "Non-cash flows on income" in 2021

** Disclosed as "Movement on loans" in 2021

NOTES

1. DIVIDENDS

The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2022 of 2.00p per share payable on 30 September 2022 to all ordinary shareholders on the register at close of business on 2 September 2022. The total cost of the dividend, which has not been accrued in the results for the year to 30 June 2022, is £1,677,000 based on 83,842,918 ordinary shares in issue.

2. RELATED PARTY TRANSACTIONS

The following are considered related parties of UIL:

Ultimate parent undertaking:

UIL's majority shareholder General Provincial Life Pension Fund Limited ("GPLPF") holds 65.4% of UIL's shares. Union Mutual Pension Fund Limited ("UMPF") holds 9.1% of UIL's shares. The ultimate parent undertaking of GPLPF and UMPF is Somers Isles Private Trust Company Limited as referred to in note 25 in the Report and Accounts.

Subsidiaries of UIL:

Allectus Capital Limited ("Allectus Capital"), Allectus Quantum Holdings Limited ("Allectus Quantum"), Bermuda First Investment Company Limited ("BFIC"), Coldharbour Technology Limited ("Coldharbour"), Elevate Platform Limited ("Elevate"), Energy Holdings Ltd, Newtel Holdings Limited ("Newtel"), Novareum Blockchain Asset Fund Limited ("Novareum"), Snapper Services (UK) Limited, UIL Holdings Pte Ltd and Zeta Resources Limited ("Zeta"). On consolidation, transactions between the Company and UIL Finance have been eliminated. BFIC and UIL Holdings Pte Ltd were dissolved and struck off during the year.

Associated undertakings:

Carebook Technologies Inc ("Carebook"), DTI Group Ltd ("DTI"), ICM Mobility Group Limited ("ICM Mobility"), Littlepay Mobility Ltd ("Littlepay"), Orbital Corporation Limited ("Orbital"), Resimac Group Limited ("Resimac"), Serkel Solutions Pty Ltd ("Serkel"), Smilestyler Solutions Pty Ltd ("Smilestyler"), Somers Limited ("Somers") and SportEngaged Ltd.

Subsidiaries of the above subsidiaries and associated undertakings:

Allectus Capital: Own Solutions AC Limited, Own Solutions Financial Services Limited, Aplauz CH GmbH, Aplauz NL B.V., Stiching Aplauz Foundation. Global Equity Risk Protection Limited ("GERP-ACL") was sold by Allectus Capital during the year ended 30 June 2022.

Allectus Quantum: Allectus Quantum Ltd and Diraq Pty Ltd.

ICM Mobility: Kuba Group Limited, Vix AFC Limited, Vix Holdings Ltd, Vix Tech Pte Ltd and Vix Technology Limited.

Littlepay: Littlepay Limited, Littlepay Pty Ltd, Littlepay Inc.

Resimac: Access Home Loans Pty Ltd, Access Network Management Pty Ltd, Auspak Financial Services Pty Ltd, FAI First Mortgage Pty Ltd, Independent Mortgage Corporation Pty Ltd, Resimac Est Pty Ltd and Resimac Limited.

Snapper Services (UK) Limited: Snapper App Co 1 Limited, Snapper App Co 2 Limited, Snapper Platform Co Limited and Snapper Services Ltd.

Somers: AssetCo plc, PCF Group plc, Somers Pte Ltd, Somers Treasury Pty Ltd, Somers UK (Holdings) Limited, Waverton and West Hamilton Holdings Limited.

Zeta: Horizon Gold Limited, Kumarina Resources Pty Ltd, Zeta Energy Pte Ltd, Zeta Investments Limited and Zeta Minerals Ltd.

Key management entities and persons:

ICM and ICMIM and the board of directors of ICM, Alasdair Younie, Charles Jillings, Duncan Saville and of ICMIM, Charles Jillings and Sandra Pope. ICM Corporate Services (Pty) Ltd is a wholly owned subsidiary of ICM.

Persons exercising control of UIL:

The Board of UIL.

Company controlled by key management persons:

Mitre Investments Limited.

The following transactions were carried out during the year to 30 June 2022 between the Company and its related parties above:

UIL Finance

Loans from UIL Finance to UIL of £136.3m as at 30 June 2021 increased by £7.9m, to £144.2m as at 30 June 2022. The loans are repayable on any ZDP share repayment date.

Subsidiaries of UIL:

Allectus Capital: Pursuant to a loan agreement dated 1 September 2016 under which UIL has agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital USD 7.0m and Allectus Capital repaid USD 6.7m. As part of a share purchase agreement ("SPA"), UIL transferred to Allectus Capital, Nautilus Data Tech Inc convertible notes for USD 10.7m and in exchange received listed holdings with fair values of £2.9m and the loan was increased by USD 7.1m. UIL also received a bond in Invigor Group for fair value of AUD 1.2m and in exchange reduced the loan by USD 0.8m. On 30 June 2022, the balance of the loan was USD 6.6m. The loan is interest free and is converted into equity on an annual basis.

Allectus Quantum: UIL paid £0.2m for the 50% equity holding of Allectus Quantum. Pursuant to a loan agreement dated 20 April 2022 under which UIL has agreed to loan monies to Allectus Quantum, UIL advanced to Allectus Quantum a loan of £2.3m. The loan is interest free and is converted into equity on an annual basis. On 28 June 2022 the full loan of £2.3m was capitalised.

BFIC: BFIC was dissolved on 7 December 2021. There were no transactions during the period.

Coldharbour: Coldharbour appointed liquidators in January 2022. To effect a solvent liquidation process, UIL signed a deed of release which forgave the loan in its entirety (GBP 1.1m) with zero value from principal or interest recovered.

Elevate Pursuant to a loan agreement dated 1 January 2019 under which UIL has agreed to loan monies to Elevate, UIL advanced to Elevate £0.4m. As at 30 June 2022, the balance of the loan and interest outstanding was £1.6m. The loan bears interest at an annual rate of 6.0% and is repayable on 31 December 2023.

Energy Holdings Ltd: There were no transactions during the year.

Newtel: UIL advanced £0.2m to Newtel as part of its working capital loan to Newtel. As at 30 June 2022 the loan balance was £5.5m and is repayable on demand.

Novareum: UIL invested USD5.0m and redeemed USD2.9m in the year.

Snapper Services (UK) Limited: Snapper Services (UK) Limited changed its name from ICM Mobility International Ltd in the year. There were no transactions during the year.

UIL Holdings Pte Ltd: UIL Holdings Pte Ltd was dissolved on 8 November 2021. There were no transactions during the period

Zeta: Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan), under which UIL has agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 7.2m and CAD 0.4m and received from Zeta repayments of AUD 32.0m (AUD 16.0m being settled via the transfer of Panoramic Resources shares to UIL, AUD 2.2m being settled by the transfer of Resimac shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of AUD 13.8m being settled via cash) and CAD 19.9m (CAD 17.1m being settled by the transfer of Resimac shares to UIL from Somers as part of a SPA between UIL and Somers, and the balance of CAD 2.8m being settled via cash) and capitalisation of interest of AUD 1.1m and CAD 0.9m. As at 30 June 2022, the balance of the loans and interest outstanding was AUD nil and CAD nil. The AUD loan bears interest at an annual rate of 7.5% and the CAD loan bears interest at an annual rate of 7.25%. The loans are repayable on not less than 12 months' notice.

Associated undertakings:

Carebook: Pursuant to a loan agreement dated 22 December 2021 under which UIL has agreed to loan monies to Carebook, UIL advanced to Carebook a loan of CAD 0.5m. As at 30 June 2022, the balance of the loan and interest outstanding was CAD 0.5m. The loan bears interest at an annual rate of the Canadian variable bank rate + 10% and is repayable on 21 December 2026.

On 3 August 2021, UIL participated in a private placement to buy 11.0m Carebook shares for a total consideration of CAD 11m. UIL also received 5.5m Warrants (exercisable at CAD 1.47 until 5 August 2023) on a free of charge basis.

In May 2022, UIL underwrote a Carebook rights issue at CAD 0.15 per share. UIL exercised its allocated 8,933,716 shares under the offer and additionally purchased the shortfall of 12,892,251 shares for a total CAD 3.3m. UIL also received 193,383 Warrants (exercisable at CA$ 0.16 until 17 May 2024) on a free of charge basis.

DTI: There were no transactions during the year

ICM Mobility: Pursuant to a loan agreement dated 1 June 2021 under which UIL has agreed to loan monies to ICM Mobility, UIL advanced to ICM Mobility £2.2m and ICM Mobility repaid £34k. On 23 December 2021, agreement was made to increase the loan by £0.3m and in exchange UIL reduced its investment in Littlepay's equity by £0.3m. On 28 April 2022 the loan was increased by £0.4m and UIL's equity in ICM Mobility was decreased by £0.4m. UIL capitalised £1.6m of the loan on 31 December 2021 and a further £1.3m of the loan on the 24 June 2022. As at 30 June 2022, the loan balance was nil. The loan is interest free and is converted into equity on a bi-annual basis.

Littlepay: Distributed to UIL AUD 0.4m in the year. On 23 December 2021 the equity in Littlepay was reduced by AUD 0.3m (see ICM Mobility above).

Orbital: In October 2021, Orbital undertook a pro-rata renounceable rights issue at AUD 0.50 per share on the basis on one new share for every six existing shares. UIL took up its allocated 3,937,984 rights under the offer at cost of AUD 2.0m.

Resimac: There were no transactions during the year.

Serkel: There were no transactions during the year.

SmileStyler: There were no transactions during the year.

Somers: Somers paid dividends of USD 8.5m to UIL and UIL received 477,882 ordinary shares as part of a dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD loan), 22 June 2018 (£ loan) and 5 September 2019 (AUD loan), under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of USD 1.5m and AUD 5.8m, Somers repaid USD 10.5m (part paid via the transfer of 208,190 AssetCo shares for fair value of £2.7m to UIL), £2.2m and AUD 9.0m and UIL received interest of USD 357k, £55k and AUD 83k. As at 30 June 2022, the balance of the loans and interest outstanding was USD nil, £ nil and AUD nil. The loans bear interest at an annual rate of 6.0% and are repayable on not less than 12 months' notice. Also see Zeta disclosures above.

SportEngaged Ltd: There were no transactions during the year.

Subsidiaries of the above subsidiaries and associated undertakings:

There were no transactions during the year to 30 June 2022 with any of the subsidiaries of the above subsidiaries and associated undertakings.

Key management entities and persons:

ICM and ICMIM are joint portfolio managers of UIL. Other than investment management fees, secretarial costs and performance fees as set out in note 3, and reimbursed expenses of £1,000, there were no other transactions with ICM or ICMIM or ICM Corporate Services (Pty) Ltd. At the period-end £192,000 remained outstanding to ICM and ICMIM in respect of management and company secretarial fees and £ nil in respect of performance fees.

Mr Younie is a director of BCB, BFIC, GERP, PIL, PML, Somers and West Hamilton Holdings Limited. Mr Jillings is a director of Allectus Capital, GERP, PIL, PML, Somers and Waverton. Mr Jillings received dividends from UIL of £28,000. Mr Saville is a director of Allectus Capital, BFIC, GPLPF, GERP, Newtel, PIL, PML, Resimac, VixTech, West Hamilton Holdings Limited and Zeta Energy Pte Ltd. There were no other transactions in the year with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL.

The Board:

Fees paid to Directors were: Chairman £47,600 per annum; Chairman of Audit & Risk Committee £45,500 per annum and Directors £35,200 per annum. The Board received aggregate remuneration of £198,700 for services as Directors. As at 30 June 2022, £nil remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £119,543 during the year. There were no other transactions in the year with the Board and UIL.

Companies controlled by key management persons:

GPLPF received dividends of £4,388,123 from UIL, UMPF received dividends of £602,999 from UIL and Mitre Investments Limited received dividends of £216,607 from UIL. There were no other transactions between companies controlled by key management and UIL during the year to 30 June 2022

3. RESULTS

This statement was approved by the Board on 21 September 2022. The financial information set out above does not constitute the Group's or Company's statutory accounts for the years ended 30 June 2022 or 2021 but is derived from those accounts. The auditor has reported on those accounts; their reports were (i) unqualified and (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report.

Annual General Meeting Arrangements

The Annual General Meeting ("AGM") of the Company will be held at its registered office, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on Thursday, 10 November 2022 at 5.00pm (local time) and notice is set out at the end of the Report & Accounts.

Legal Entity Identifier: 213800CTZ7TEIE7YM468