Date:                      22 September 2023

Contact:                 Charles Jillings

                                ICM Investment Management Limited

                                01372 271 486

UIL LIMITED

ANNUAL FINANCIAL REPORT

for the year to 30 June 2023

UIL Limited ("UIL" or the "Company") today announced its audited financial results for the year to 30 June 2023.

FINANCIAL HIGHLIGHTS

·    Revenue earnings per ordinary share of 6.68p (2022: 8.35p)

·    Dividends per ordinary share of 8.00p (2022: 8.00p)

·    Net asset value ("NAV") total return per ordinary share* of -20.6% (2022: -38.1%)

·    Share price total return per ordinary share* of -18.5% (2022: -27.6%)

·    NAV discount as at 30 June 2023* of 27.5% (2022: 28.1%)

·    Gearing* 83.5% (2022: 89.5%)

*See Alternate Performance Measures on pages 109 and 111 of the Report and Accounts

The Report & Accounts for the year ended 30 June 2023 will be posted to shareholders in early October 2023. A copy will shortly be available to view and download from the Company's website at www.uil.limited 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/4324N_1-2023-9-22.pdf

GROUP PERFORMANCE SUMMARY

(1) See Alternate Performance Measures on pages 109 and 111 of the Report and Accounts

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

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

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

CHAIRMAN'S STATEMENT

The year to 30 June 2023 has been challenging on the economic and geopolitical front. At UIL this has been compounded given the need to reduce UIL's bank debt significantly at this time. UIL's investment performance has been disappointing with its NAV total return down by 20.6% for the year and which, in light of UIL's ZDP shares and bank debt, is estimated to comprise approximately -12.0% from the investment portfolio and the balance primarily due to the effects of gearing. This has pulled UIL's annual compound NAV total return since inception in 2003 down to 7.8%.

Market volatility has been driven by significant uncertainties in the face of rising inflation (especially energy and food prices), increasing interest rates by central banks, rising climate change concerns and all exacerbated by the war in Ukraine and China's transition to no Covid restrictions earlier this year. There also continues to be a wider reset of economic and political relationships between the West and the East.

A small positive is that the reduction in UIL's net debt to £139.9m from £195.7m as at 30 June 2022, has seen UIL's gearing decline. As at 30 June 2023 UIL's gearing stood at 83.5% (30 June 2022: 89.5%).

Since inception in August 2003, UIL has distributed £94.6m in dividends, invested £36.9m in ordinary share buybacks and made net gains of £209.0m for a total return of 344.2% (adjusted for the exercise of warrants and convertibles). Shareholders should note that the Board and the Investment Managers focus on longer term market indices, whilst including short term comparisons for reference.

There have been a number of changes in the portfolio during the year to 30 June 2023. UIL sold its largest unlisted company, ICM Mobility Group Limited ("ICM Mobility"), to Somers Limited ("Somers") and bought a number of listed holdings as UIL sought to reduce its unlisted investments and increase its listed positions. Furthermore, as a result of share price weakness, a number of positions fell out of the top ten. This is covered in more detail in the Investment Managers' report.

The Board is pleased to see the ordinary shares discount to NAV end the year under 30.0%, standing at 27.5% as at 30 June 2023 (30 June 2022: 28.1%). Given the focus of applying cash resources to the redemption of the 2022 ZDP shares and the reduction in the bank facility, no buybacks were undertaken in the year ended 30 June 2023. 

Consistent with the wider debt markets, UIL's longer dated 2024, 2026 and 2028 ZDP shares are trading at significantly higher gross redemption yields compared to those as at 30 June 2022, being 8.9%, 8.8% and 8.9% respectively. The market prices of the ZDP shares were impacted by interest rate rises by most central banks as inflation increased sharply. As at 30 June 2023, UIL's average blended rate of funding costs, including bank debt, increased from 4.7% to 5.7%, mainly as a result of higher bank borrowing costs.

Total revenue income for the year to 30 June 2023 was £10.2m, an increase of 3.0% from £9.9m in the prior year, a good outcome given the reduced level of investments. However, the finance costs increased significantly for the year to 30 June 2023 to £2.9m, up 163.6% from the prior year at £1.1m. This resulted in the revenue return earnings per share ("EPS") of 6.68p, representing a decrease of 20.0% from 30 June 2022 of 8.35p.

The Board declared an unchanged fourth quarterly dividend of 2.00p per ordinary share which maintains the total for the year at 8.00p, and a yield on the closing share price of 5.5%. Although the dividend is not fully covered by earnings in the year, given the significant revenue reserves brought forward of 15.32p per share, the Board is comfortable with maintaining the payout at 8.00p. The revenue reserves carried forward reduced to £11.7m as at 30 June 2023 from £12.8m as at 30 June 2022.

The capital return loss for the year ended 30 June 2023 of £50.0m is disappointing to report to shareholders.

BANK facility

UIL has agreed with the Bank of Nova Scotia, London Branch ("Bank of Nova Scotia") to extend its committed senior secured multi-currency facility to 19 March 2024. The facility has been reduced from £37.5m to £25.0m and will step down in stages over the next six months prior to a final repayment by 19 March 2024.

GLOBAL EVENTS

Several themes continue to dominate global events: heightened geopolitical tensions, the outlook for inflation and interest rates, climate change, technology and Artificial Intelligence ("AI").

As anticipated at the time of announcing UIL's half-year report, Covid-19 has receded and we do not expect it to be an issue going forward. China's reversal of its zero tolerance policy earlier this year was a positive. However, weak Chinese consumer confidence is a headwind to a full recovery by China.

The war in Ukraine has gone on longer than expected and today there continues to be no clear way forward. Both sides have been drawn in further, but once they reach a neutral position, a negotiated outcome would be expected.

The ongoing friction between the USA and China continues to deepen and it is now difficult to see how this reverses direction.  Given the USA and China are the two largest economies globally this must pose significant risks at some point in the future, especially for technology businesses on each side of the Pacific Ocean.

Inflation moved markedly for most economies over the year. Nearly all central banks responded with significantly higher interest rates. We now see major differences between three key regions: the Western economies where we expect inflation to reduce gradually; Asia, where we see China heading for deflation; and Latin America ("LatAm"), where inflation has already halved. Against this backdrop we expect Western economies to hold interest rates higher for longer, China to reduce rates further while LatAm is expected to reduce interest rates sharply lower.

The one unknown in our view continues to be the response of the labour force especially in the West. Labour markets remain tight and the number of unemployed are at record lows in many economies. If this continues, then the shortage of the work force will drive up wages and in turn feed inflation.

An ever increasing factor for investors is climate change. It has clearly had devastating impacts on a number of communities from wildfires in Hawaii to floods in Germany. We are seeing whole ecosystems being impacted from prolonged droughts to record temperatures. As investors we need to prepare for these outcomes to continue across our portfolios.

There is a very perceptible shift to embrace AI by most businesses and as with most technological developments, those without legacy businesses benefit the most, but eventually all businesses will need to adapt or risk failure. This has been our experience in the Fintech sector. UIL has a number of investments with significant exposure to AI, Blockchain and Quantum Computing.

OUTLOOK

The outlook for worldwide economies increasingly rests with global leadership, both political and central bankers. The central banks perhaps have the easier task as inflation looks to be receding in most major markets. We assume interest rates will stay higher than expected and we expect this will be a headwind to economies and commodities are likely to remain soft.  The same cannot be said of geopolitical leadership which remains challenging. The rising pressure to meet social expectations and the impact of climate change, natural disasters and conflict will be difficult to navigate. We remain focused on reducing risk and helping investee companies navigate through these challenges and emerge stronger.

Peter Burrows AO
Chairman
22 September 2023

INVESTMENT MANAGERS' REPORT

The year to 30 June 2023 has been difficult to navigate for investors and especially for UIL as it needed to redeem the 2022 ZDP shares as well as reduce its bank debt by £12.5m. This created pressure on the portfolio given the need for substantial realisations in difficult markets.

UIL's loss for the year to 30 June 2023 was £44.5m resulting in NAV per share of 199.87p, a decline of 23.4%. This has dragged UIL's annual compound NAV total return since inception in 2003 down to 7.8%. However, positively, total net debt reduced by £55.8m.

PORTFOLIO

There was significant volatility over the year and within the top ten holdings. Three holdings increased in value, three holdings were sold, five reduced in value and two new investments were made. Overall, the decreases significantly outweighed the increases, which led to an overall reduction in the portfolio of £108.2m.

It should also be noted that UEM and Zeta's share price discounts to NAV represent a £22.2m reduction to the underlying valuations.

Somers' valuation reduced by 24.2% in the year to 30 June 2023. This was largely driven by Somers' dividend distribution and Resimac's share price declining by 23.5%. Resimac continues to deliver good operational performance in the face of material economic and competitive headwinds. In August 2023, Resimac published its annual results for the year to 30 June 2023 and its valuation is modest at a historic price earnings ratio of 4.8x and a dividend yield of 8.7%. It is good to see Resimac continuing to buy back shares at these current levels. It should be noted that UIL also holds a direct investment in Resimac, which is UIL's fifth largest investment.

As noted last year, UIL bought a number of listed investments from Somers at fair value and sold ICM Mobility to Somers at fair value. Taken together, this increased UIL's listed portfolio and reduced its unlisted portfolio and thereby improved UIL's bank covenant ratios. We are pleased to be direct shareholders in West Hamilton Holdings Limited ("West Hamilton") and The Market Herald Limited ("TMH"), both acquired shortly after UIL's 2022 year end.

Waverton, Somers' largest position at 38.7% of its gross assets, continues to build on its positive momentum. In its year to 31 December 2022 Waverton saw AUM increase by 5.8% to £9.1bn, revenues increase by 9.1% to £54.9m and profits before tax remained unchanged at £12.0m. Waverton has an enviable investment performance record, is driven in adding clients and has recently successfully outsourced its back office to SEI, a platform which can be leveraged to everybody's benefit. This success has carried over into the current year to December 2023.

Zeta's NAV per share increased by 1.0% over the year, a good outcome given Zeta's exposure to aluminium and nickel which were both down significantly over the year to 30 June 2023. Aluminium was down 12.8% and nickel was down by 10.0%. Zeta's share price declined by 7.6% and as a result the discount widened to 22.0%.

Zeta's largest investment at the start of the year, Copper Mountain Mining Corporation ("Copper Mountain"), was successfully acquired by Hudbay Minerals Inc ("Hudbay") in an all-paper offer. Zeta has reduced its holding in Hudbay as the share price has firmed. In market capitalisation terms, Hudbay is approximately four times the size of Copper Mountain and the investment is more liquid as a result.

The proceeds of UIL's sale of ICM Mobility to Somers and Panoramic Resources Limited ("Panoramic") back to Zeta at market price was used to repay the 2022 ZDP shares. UIL will capture much of the movement in valuation of these holdings through its shareholding in Somers and Zeta of 41.7% and 61.2% respectively.

UEM has again been a relative standout performer over the year to 30 June 2023 with a NAV total return of 12.1% compared to the MSCI emerging markets total return Index (GBP adjusted) ("MSCI") loss of 2.6% over the same period. UEM continues to see strong results reported by its investee companies with most growing revenues. While margins are under pressure their EBITDAs have mostly expanded too. This is a credit to the investee management teams who continue to deliver excellent operational performance in volatile times. UEM is ahead of the MSCI since inception. As with most emerging market funds, UEM's discount has widened to 14.0% as at 30 June 2023. This remains a frustration, but UIL has taken the opportunity of this share price outperformance to reduce its holding and realise £25.5m during the year.

Allectus Capital Limited ("Allectus Capital") successfully sold its stake in Cohort Go, one of its largest investments. The sale to Flywire culminated after a significant period of ownership as the largest shareholder and delivered excellent financial results. The decrease in Allectus Capital's overall valuation was in part due to this sale, as well as broader technology market challenges, with software multiples significantly decreasing across the market. During the year Allectus Capital has remained highly selective on its mandate and will continue to capitalise on high conviction sectors like AI or distressed sectors like fintech.

West Hamilton, a listed Bermuda property developer, has sold its major asset in Bermuda and is in the process of completing this transaction. West Hamilton expects to return over 90.0% of its value to shareholders shortly.

UIL exited Resolute Mining Limited ("Resolute") in March 2023. This was a long-standing investment but, for the most part, has been a significant challenge for UIL and has failed to deliver long term returns. Given poor operational performance and the added rising risks in Mali, UIL took the painful decision to exit and realised its investment over the year.

Allectus Quantum Holdings Limited's ("Allectus Quantum") valuation has increased over the year following both additional investments by UIL and an increase in the fair value of Diraq Pty Ltd ("Diraq"), a next generation quantum computing company. Diraq is Allectus Quantum's sole investment and its outlook remains positive.

Littlepay Mobility Limited ("Littlepay") has performed ahead of expectations, but values have decreased in line with markets resulting in the carrying value reducing by 14.1%. Starpharma Holdings Limited ("Starpharma") and AssetCo plc remain investments, but the poor execution of both their strategies has seen their valuations decline, resulting in both investments falling out of UIL's top ten holdings.

In line with many AI related investments Arria NLG Limited ("Arria") has risen in value. Whilst this has been positive for Arria, we are cautious on its outlook.

FOREIGN EXCHANGE

As at 30 June 2023 UIL held no forward FX derivative positions. As noted in the half year report to 31 December 2022 UIL took the decision to close out its positions in full, in light of sheer volatility in the FX markets. In the year ended 30 June 2023, forward contract FX and currency losses amounted to £3.6m. UIL is less vulnerable to the volatility in the FX markets for the coming year.

COMMODITIES

Commodities were volatile during the year to 30 June 2023 with oil down 34.8%. Copper was less volatile up 0.7%. Nickel was extremely volatile, at one point seeing a high of 38.1% and a low of 14.7%, ending the year down by 10.0%.

PORTFOLIO ACTIVITY

During the year to 30 June 2023, UIL invested £120.6m and realised £188.4m, including loans repaid by Somers and Zeta. Purchases included investments in Resimac, West Hamilton and TMH. UIL bought these holdings from Somers to increase the listed holdings of UIL and as a result improve UIL's covenant cover on its bank facility.

PLATFORM INVESTMENTS

UIL currently has four platform investments, Somers, Zeta, UEM and Allectus Capital in its top ten holdings. These investments account for 71.8% of the total portfolio as at 30 June 2023 (30 June 2022: 73.0%). During the year to 30 June 2023, net withdrawals from these platforms amounted to £61.5m (30 June 2022: £37.4m).

DIRECT INVESTMENTS

UIL has six direct investments in its top ten holdings, Resimac, West Hamilton (which replaced ICM Mobility), Allectus Quantum (which replaced Resolute), TMH (which replaced Panoramic), Arria (which replaced Starpharma) and Littlepay (which replaced AssetCo plc).

GEOGRAPHIC REVIEW

The geographical split of the portfolio, on a look through basis, shows Australia and New Zealand remaining as UIL's largest exposure, increasing by 2.9% to 40.1% of UIL's total investments (30 June 2022: 37.2%); UK remained second at 19.2%, up 5.4% and Bermuda moved up by 4.7% at 9.5% of UIL's total investments. Asia decreased by 4.5% to 6.0% of the total portfolio.

SECTOR REVIEWS

Financial Services - 40.6% (30 June 2022: 38.5%)

Somers is UIL's largest investment and accounts for 34.9% of UIL's total investments as at 30 June 2023
(30 June 2022: 35.7%).

Technology - 23.6% (30 June 2022: 25.8%)

UIL holds a number of early-stage investments in the technology sector, both directly and through Allectus Capital (UIL's fourth largest investment) and Littlepay (UIL's tenth largest investment).

Resources (excl. gold mining) - 14.4% (30 June 2022: 15.4%)

UIL's largest investment in resources is Zeta which represents 17.9% of UIL's total portfolio.

Infrastructure Investments - 11.6% (30 June 2022: 12.7%)

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

Gold Mining - 3.4% (30 June 2022: 4.0%)

UIL's largest investment in gold mining is indirectly through Zeta, Horizon Gold Limited ("Horizon"), an Australian gold mining exploration company. UIL exited Resolute reducing its exposure to the sector.

LEVEL 3 INVESTMENTS

UIL's investment in level 3 companies was 56.0% (30 June 2022: 57.4%) of the total portfolio. The total value reduced from £238.9m as at 30 June 2022 to £172.7m as at 30 June 2023, mainly as a result of a decrease in Somers' valuation. The level 3 investments which are unlisted are formally revalued twice a year. It is worth highlighting that where there is a material event that impacts an unlisted investment, it is revalued at the time, thereby keeping the unlisted valuations current.

Shareholders should be aware that within the portfolio in Somers is an investment in AK Jensen Group ("AKJ") which comprises a platform for both traditional hedge funds and hedge funds trading digital assets. In addition, AKJ has issued AKJ tokens, a crypto currency which have been sold to investors and hedge fund managers in the AKJ Crypto platform. Valuing the token is difficult as few metrics allow comparability, and the industry has not settled on a methodology we can readily adopt. Somers' view on valuation is EUR 0.088 to EUR 0.185 per token, driven by an analysis of milestones met and yet to be achieved as well as wider market considerations. While hedge fund managers are buying AKJ tokens at some EUR 0.37 the volume held by Somers would likely see a discount driven by lower liquidity opportunities and reduced fee discount benefits held by these hedge fund managers. Somers holds 75.0m AKJ tokens and carries them at EUR 0.10. Each EUR 0.05 represents £3.2m swing in valuation for Somers and £1.4m for UIL. Further details on AKJ can be found on their website and note 29 to the accounts.

GEARING

Notwithstanding the significant pull back in portfolio valuations during the year, this was more than offset by the reduction in the ZDP shares and bank debt. As a result, gearing decreased to 83.5% as at 30 June 2023 from 89.5% as at 30 June 2022 and this remains well inside UIL's target gearing of under 100.0%. At an absolute level UIL's net debt decreased over the year from £195.7m to £139.9m as at 30 June 2023.

The blended costs of borrowing rose from 4.7% to 5.7% as a result of rising finance costs on UIL's bank facilities.

ZDP SHARES

On a consolidated basis the ZDP shares decreased significantly from £140.8m to £94.6m, down 32.8% mainly as a result of the repayment of the 2022 ZDP shares which were redeemed in October 2022. UIL continues to hold 2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at 30 June 2023. With three ZDP issues, UIL has spread the redemption liability over five years.

BANK and other DEBT

Bank and other loans decreased to £42.7m as at 30 June 2023 (30 June 2022: £51.1m). Scotiabank Europe plc's £50.0m committed senior secured multi-currency revolving facility was extended in September 2022 to 19 September 2023 and novated to the Bank of Nova Scotia, London Branch. The extension provided a reduction in the facility of £12.5m on 30 March 2023, and consequently the outstanding amount as at 30 June 2023 under this facility was £37.5m. In September 2023, the facility was extended to 19 March 2024, reducing to £25.0m and it will step down in stages over the following six months prior to a final repayment by 19 March 2024.

On 29 June 2023, Union Mutual Pension Fund Limited loaned USD 6.6m to UIL. This loan is repayable on 30 September 2023.

REVENUE RETURNS

Revenue income for the year to 30 June 2023 increased to £10.2m from £9.9m, an increase of 3.0%.

Management and administration fees and other expenses were largely flat at £1.7m (30 June 2022: £1.7m). Finance costs were significantly higher at £2.9m for the year to 30 June 2023 from £1.1m in the prior year, mainly as a result of higher finance costs feeding through into the cost of funding.

Revenue profit decreased by 20.0% to £5.6m (30 June 2022: £7.0m) and EPS decreased by 20.0% to 6.68p (30 June 2022: 8.35p) driven mainly by higher financing costs.

CAPITAL RETURNS

Capital total income reported a loss of £44.0m (30 June 2022: loss of £136.3m) which was driven mainly by the £40.3m loss on investments.

Finance costs reduced by 21.8% to £6.1m (30 June 2022: £7.8m) largely reflecting the lower number of ZDP shares in issue following the redemption of the 2022 ZDP shares in October 2022.

The resultant capital return loss for the year to 30 June 2023 was £50.0m (30 June 2022: loss of £144.1m) and EPS loss was 59.70p per ordinary share (30 June 2022: loss of 171.68p).

EXPENSE RATIO

The ongoing charges figure, including and excluding performance fees, was 2.8% for the year ended 30 June 2023 (30 June 2022: 2.2%). No performance fee was earned at the UIL level or the platform companies.

All expenses are borne by the ordinary shareholders.

DISRUPTION

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

Charles Jillings
ICM Investment Management Limited
and ICM Limited

22 September 2023

PRINCIPAL RISKS AND RISK MITIGATION

During the year ended 30 June 2023, ICMIM was the Company's AIFM and had sole responsibility for risk management subject to the overall policies, supervision, review and control of the Board.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company's main service providers are listed on page 108 of the Report and Accounts. The Audit & Risk Committee monitors the performance and controls (including business continuity procedures) of the service providers at regular intervals.

Most of UIL's investments are held in custody for the Company by JPMorgan Chase Bank N.A., Jersey. JPMEL, the Company's depositary services provider, also monitors the movement of cash and assets across the Company's accounts. The Audit & Risk Committee reviews the JP Morgan SOC1 reports, which are reported on by Independent Service Auditors, in relation to its administration, custodial and information technology services.

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

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

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

The gearing level is high due to the capital structure of the balance sheet. As at 30 June 2023, gearing on net assets, including bank loans, any overdrafts and ZDP shares, was 83.5% (30 June 2022: 89.5%). The Board reviews the level of gearing at each Board meeting.

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

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

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

STATEMENT OF DIRECTORS' RESPONSIBILITIES

in respect of the Annual Report and Financial Statements

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

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

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

·      select suitable accounting policies and then apply them consistently;

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

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

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

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

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

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

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

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

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

We confirm that to the best of our knowledge: 

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

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

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

Approved by the Board on 22 September 2023 and signed on its behalf by:

Peter Burrows

Chairman

GROUP INCOME STATEMENT

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

NOTES

1. DIVIDENDS

The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2023 of 2.00p per share payable on 13 October 2023 to all ordinary shareholders on the register at close of business on 29 September 2023. The total cost of the dividend, which has not been accrued in the results for the year to 30 June 2023, is £1,677,000 based on 83,842,918 ordinary shares in issue.

2. RELATED PARTY TRANSACTIONS

The following are considered related parties of UIL:

Ultimate parent undertaking:

UIL's majority shareholder General Provincial Life Pension Fund Limited ("GPLPF") holds 65.4% of UIL's shares. Union Mutual Pension Fund Limited ("UMPF") holds 9.7% of UIL's shares. The ultimate parent undertaking of GPLPF and UMPF is Somers Isles Private Trust Company Limited as referred to in note 25 in the Report and Accounts.

Subsidiaries of UIL:

Carebook Technologies Inc ("Carebook"), Coldharbour Technology Limited ("Coldharbour"), Energy Holdings Ltd, Newtel Holdings Limited ("Newtel"), Northbrook Resources Limited (formerly Elevate Platform Limited), West Hamilton and Zeta. On consolidation, transactions between the Company and UIL Finance have been eliminated. Snapper Services (UK) Limited ("Snapper"), a subsidiary at 30 June 2022 was sold in the year.

Joint ventures of UIL

Allectus Capital Limited ("Allectus Capital") and Allectus Quantum Holdings Limited ("Allectus Quantum").

Associated undertakings:

DTI Group Ltd ("DTI"), Littlepay Mobility Ltd ("Littlepay"), Novareum Blockchain Asset Fund Ltd ("Novareum"), Orbital Corporation Limited ("Orbital"), Resimac Group Limited ("Resimac"), Serkel Solutions Pty Ltd ("Serkel"), Smilestyler Solutions Pty Ltd ("Smilestyler"), Somers Limited ("Somers"), SportEngaged Ltd and The Market Herald Limited ("TMH").

Subsidiaries of the above subsidiaries and associated undertakings:

Allectus Capital: Own Solutions AC Limited.

Allectus Quantum: Allectus Quantum Ltd and Diraq Pty Ltd.

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

Newtel: Newtel Limited.

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

Somers: Dfinitive Capital Limited, PCF Group plc, Snapper, Somers Pte Ltd, Somers Treasury Pty Ltd, Somers UK (Holdings) Limited and Waverton Investment Management Limited.

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

Key management entities and persons:

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

Persons exercising control of UIL:

The Board of UIL.

Company controlled by key management persons:

Mitre Investments Limited and Permanent Mutual Limited.

The following transactions were carried out during the year to 30 June 2023 between the Company and its related parties above:

UIL Finance

Loans from UIL Finance to UIL of £144.2m as at 30 June 2022 decreased by £46.0m, to £98.2m as at 30 June 2023. The loans are

repayable on any ZDP share repayment date.

Subsidiaries of UIL

Carebook: Pursuant to a convertible loan agreement dated 21 December 2021, amended and restated on 28 September 2022, UIL advanced to Carebook an additional loan tranche of CAD 500k. As at 30 June 2023, the balance of the loan and interest outstanding was CAD 1.03m (2022: CAD 0.5m). UIL received interest of CAD 84k. The loan bears an interest rate of the Canadian Variable Rate plus 10.0% and is repayable by 21 December 2026.

Pursuant to a convertible loan agreement dated 15 December 2022, UIL advanced to Carebook a loan of CAD 1.25m. As at 30 June 2023, the balance of the loan and interest outstanding was CAD 1.31m (2022: n/a). The loan bears an interest rate of the Canadian Variable Rate plus 10.0% and is repayable by 22 December 2026.

On 8 March 2023, UIL purchased 12,500,000 restricted ordinary shares at CAD 0.10 per share. The shares became unrestricted in July 2023. On 8 March 2023, UIL received 187,500 warrants for no cost, exercisable on any date until 8 March 2025. Each warrant can be exercised for one share at CAD 0.15 per warrant.

Coldharbour: There were no transactions during the year.

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

Newtel: In October 2022, the £5.5m loan balance brought forward as at 30 June 2022 was converted into equity, UIL received 7,338,037 Newtel ordinary shares.

Northbrook Resources Ltd: Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to Northbrook Resources Limited, no further funds were advanced to Northbrook Resources Ltd during the year. As at 30 June 2023, the balance of the loan was £1.6m. The loan bears interest at 6% per annum and is repayable on 31 December 2023. As at 30 June 2023 the fair value of the loan was £nil (2022: £nil).

Snapper: On 11 October 2022, Somers acquired UIL's holding in Snapper, see transactions of Somers below.

West Hamilton: See transaction details of Somers below.

Zeta: Pursuant to loan agreements dated 1 September 2016 (AUD loan) and 1 May 2018 (CAD loan), under which UIL agreed to loan monies to Zeta, UIL advanced to Zeta loans of AUD 0.3m and CAD nil and capitalised interest of AUD nil and CAD 0.2m. UIL advanced loans of AUD 2.2m and CAD 17.5m as per the details included in transactions with Somers. UIL received from Zeta repayments of AUD 2.5m and CAD 17.7m. As at 30 June 2023, the balance of the loans and interest outstanding was AUD nil and CAD nil. The AUD loan bears interest at an annual rate of 7.5% and the CAD loan bears interest at an annual rate of 7.25%. The loans are repayable on not less than 12 months' notice.

Joint Ventures of UIL

Allectus Capital: Pursuant to a loan agreement dated 1 September 2016 under which UIL agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital a loan of USD 1.7m, transferred a loan of USD 0.7m from the facility given on 28 April 2023 (see below) and Allectus Capital repaid USD 6.9m. The balance of the loan as at 30 June 2023 was USD 2.1m (30 June 2022: USD 6.6m). The loan is interest free and is converted to equity on an annual basis. Pursuant to a loan agreement dated 28 April 2023 under which UIL agreed to loan monies to Allectus Capital, UIL advanced to Allectus Capital a loan of USD 0.7m. On 27 June 2023, this loan was transferred to the original loan facility.

Allectus Quantum: Pursuant to a loan agreement dated 20 April 2022 under which UIL has agreed to loan monies to Allectus Quantum, UIL advanced to Allectus Quantum a loan of £3.7m. The loan is interest free and is converted into equity on a semi-annual basis. The loan of £3.7m was converted to equity in the year, increasing the number of ordinary shares held by 2. As at 30 June 2023 the loan balance was nil.

Associated undertakings

DTI: There were no transactions during the year

ICM Mobility: Pursuant to a loan agreement dated 1 June 2021, under which UIL has agreed to loan monies to ICM Mobility, UIL advanced to ICM Mobility loans of £0.6m and received from ICM Mobility £0.1m. In October 2022, UIL sold its loan to ICM Mobility (£0.5m) to Somers as part of the transaction where UIL sold its stake in ICM Mobility to Somers.

Littlepay: There were no transactions during the year.

Novareum: There were no transactions during the year.

Orbital: In November 2022, UIL took part in Orbital's AUD 5m share placement at AUD 0.20 per share, agreeing to subscribe for 30% of the shares offered. UIL received 7,490,460 shares (cost AUD 1.5m) and 3,745,230 options on a free of charge basis. The options are exercisable at AUD 0.35 until February 2026.

Resimac: See transaction details of Somers below. UIL received dividends of £1.7m from Resimac.

Serkel: There were no transactions during the year.

SmileStyler: There were no transactions during the year.

Somers: On 12 July 2022 UIL sold to Somers, at fair values, 2,953,446 Resimac shares for AUD 3.5m and received in exchange 134,153 Assetco plc shares for £1.0m and 2,691,811 MJ Hudson Group plc shares for GBP 1.0m.

On 5 August 2022 Somers paid a distribution of USD 4.55 per share. In settlement, UIL received at fair values 38,451,000 Resimac Group Limited shares for AUD 50.4m and 42,183,103 TMH shares for AUD 16.0m. The distribution has been recognised as a return of capital of USD 38.7m and a revenue dividend of USD 7.6m. At the same time, Somers issued 5,412,314 warrants pro-rata to all of its shareholders on a one for four basis (the "Warrants"). The exercise price of the Warrants is USD 18.92 per share and can be converted at any time until maturity on 30 September 2023. These were issued for no consideration and UIL received and continues to hold as at 30 June 2023 2,542,233 warrants.

On 8 August 2022, as part of a group restructure, UIL sold to Somers at fair value, 16,472,685 Resimac shares for AUD 21.6m and in exchange UIL advanced loans to Zeta for AUD 2.2m and CAD 17.5m.

On 11 October 2022, Somers acquired UIL's holding in ICM Mobility and Snapper for £45.6m. In exchange Somers sold to UIL its holding in West Hamilton Holdings Limited ("West Hamilton") for USD 19.7m, WT Financial Group Limited for AUD 5.7m and BNK Banking Corp Ltd for AUD 3.9m. Somers funded the balance of the transaction (£22.3m) via the loan account.

Pursuant to a loan agreement dated 22 June 2018 under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of £23.2m (including the £22.3m from the 11 October 2022 transaction above) and Somers repaid loans of £23.2m. UIL received interest of £39k. As at 30 June 2023, the balance of the loans and interest outstanding was £nil. The loan bears interest at an annual rate of 6.0% and is repayable on not less than 12 months' notice.

SportEngaged Ltd: There were no transactions during the year.

TMH: See transaction details of Somers above.

On 30 August 2022, UIL received 16,873,241 rights through a 2 for 5 rights issue at AUD 0.34. UIL sold 1,150,000 rights in the market and oversubscribing, received a further 5,000,000 rights. On 15 September 2022 UIL exercised the rights, receiving 20,723,241 shares at a cost of AUD 7.0m. On 27 January 2023, UIL received 10,484,390 rights through a 1 for 6 rights issue at AUD 0.34. On 13 February UIL exercised these rights, receiving 10,484,390 shares at a cost of AUD 3.6m. On 6 February 2023, UIL purchased 2,215,000 ordinary shares in the market.

Subsidiaries of the above subsidiaries and associated undertakings

There were no transactions during the year to 30 June 2023 with any of the subsidiaries of the above subsidiaries and associated undertakings.

Key management entities and persons

ICM and ICMIM are joint portfolio managers of UIL. Other than investment management fees, secretarial costs and performance fees as set out in note 3, and reimbursed expenses of £12,000, there were no other transactions with ICM or ICMIM or ICM Corporate Services (Pty) Ltd. At the period-end £108,000 remained outstanding to ICM and ICMIM in respect of management and company secretarial fees and £nil in respect of performance fees.

Mr Younie is a director of PIL, PML, Somers and West Hamilton. Mr Jillings is a director of Allectus Capital, PIL, PML, Somers and

Waverton.

Mr Jillings received dividends from UIL of £35,000. Mr Saville is a director of Allectus Capital, GPLPF, Newtel, PIL, PML, Resimac, QICM Technology Investments Ltd (formerly  Vix Technology Limited), West Hamilton and Zeta Energy Pte Ltd. There were no other transactions in the year with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL

The Board

Fees paid to Directors were: Chairman £50,000 per annum; Chairman of Audit & Risk Committee £47,750 per annum and Directors £37,000 per annum. The Board received aggregate remuneration of £206,000 for services as Directors. As at 30 June 2022, £nil remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £120,000 during the year. There were no other transactions in the year with the Board and UIL.

Companies controlled by key management persons

GPLPF received dividends of £5,292,000 from UIL, UMPF received dividends of £620,000 from UIL, Mitre Investments Limited

received dividends of £206,000 from UIL and Permanent Mutual Limited received dividends of £2,000 from UIL. UMPF provided a USD 6.6m loan facility to UIL, see note 13 for details. There were no

other transactions between companies controlled by key management and UIL during the year to 30 June 2023.

3. RESULTS

This statement was approved by the Board on 22 September 2023. The financial information set out above does not constitute the Group's or Company's statutory accounts for the years ended 30 June 2023 or 2022 but is derived from those accounts. The auditor has reported on those accounts; their reports were (i) unqualified and (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report.

Annual General Meeting Arrangements

The Annual General Meeting ("AGM") of the Company will be held at its registered office, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on Thursday, 9 November 2023 at 5.00pm (local time) and notice is set out at the end of the Report & Accounts.

Legal Entity Identifier: 213800CTZ7TEIE7YM468