Annual Financial Report

RNS Number : 6800M

UIL Limited

22 September 2021

 

Date:    22 September 2021

Contact:   Charles Jillings

    ICM Investment Management Limited

    01372 271 486

UIL LIMITED

ANNUAL FINANCIAL REPORT

for the year to 30 June 2021

UIL Limited ("UIL" or the "Company") today announced its audited financial results for the year to 30 June 2021.

FINANCIAL HIGHLIGHTS

· Net asset value ("NAV") total return per ordinary share* of 50.9% (2020: -18.7%)

· Share price total return per ordinary share* of 57.0% (2020: -7.1%)

· NAV discount as at 30 June 2021* of 37.9% (2020: 39.4%)

· Dividend yield* of 3.0% (2020: 4.4%)

· Revenue earnings per ordinary share of 9.98p (2020: 9.77p)

· Dividend per ordinary share of 8.00p up 1.6% (2020: 7.875p)

*See Alternate Performance Measures on pages 110 and 111 of the Report and Accounts

GROUP PERFORMANCE SUMMARY

	30 June 2021	30 June 2020	% change 2021/20
NAV total return per ordinary share (1)  (for the year) (%)	50.9	(18.7)	n/a
Share price total return per ordinary share (1)  (for the year) (%)	57.0	(7.1)	n/a
Annual compound NAV total return (1)  (since inception (2) ) (%)	13.1	11.2	n/a
NAV per ordinary share (1)  (pence)	431.51	292.79	47.4
Ordinary share price (pence)	268.00	177.50	51.0
Discount (1)  (%)	37.9	39.4	n/a
Returns and dividends (pence)
Revenue return per ordinary share	9.98	9.77	2.1
Capital return per ordinary share	133.81	(81.30)	264.6
Total return per ordinary share	143.79	(71.53)	301.0
Dividends per ordinary share	8.00 (3)	7.875	1.6
FTSE All-Share total return Index	7,852	6,465	21.5
Equity holders' funds (£m)
Gross assets (4)	544.4	483.3	12.6
Bank and other loans	48.5	51.2	(5.2)
ZDP shares	132.1	180.5	(26.8)
Equity holders' funds	363.8	251.6	44.6
Revenue account (£m)
Income	11.6	12.7	(8.7)
Costs (management and other expenses)	2.1	2.6	(19.2)
Finance costs	1.0	1.6	(37.5)
Net income	8.5	8.5	0.0
Financial ratios of the Group (%)
Ongoing charges figure excluding performance fees (1)	2.3	2.1	n/a
Ongoing charges figure including performance fees (1)	4.6 (5)	2.1	n/a
Gearing (1)	48.8	93.4	n/a

(1) See Alternate Performance Measures on pages 110 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

(5) Performance fees for year ended 30 June 2021 are only suffered within underlying funds

CHAIRMAN'S STATEMENT

It is pleasing to report a strong year of NAV performance to 30 June 2021 with UIL's NAV total return of 50.9%, significantly outperforming the FTSE All-Share total return Index which was up by 21.5% over the same period. UIL's NAV of 431.51p as at 30 June 2021 is an all-time high. This lifted the annual compound NAV total return since inception in 2003 to 13.1%. As an absolute return fund with a bottom-up selection to investments these results are very pleasing, especially as total debt was reduced in the year as well.

Since inception in August 2003, UIL has distributed £81.2m in dividends, invested £35.6m in ordinary share buybacks and made net gains of some £376.1m for a total return of 804.0% (adjusted for the exercise of warrants and convertibles). This is significantly higher than the FTSE All-Share average annual compound total return for the same period of 7.5%. Shareholders should note that the Board and the Investment Managers do not focus on short term movements in the market indices, but they are included as shareholders may be interested to see the comparators.

UIL has emerged in a much stronger position following a seminal shift in the twelve months to 30 June 2021. Its asset values recovered sharply with shareholders' funds up £112.2m, an increase of 44.6% to £363.8m. Within the portfolio three significant corporate sale transactions were completed and one renegotiated, facilitating UIL's funding of the full £60.4m 2020 ZDP redemption payment in October 2020. Subsequently, in March 2021 UIL offered 2022 ZDP shareholders the option to roll over into a new class of 2028 ZDP shares. Of the 25.0m 2028 ZDP shares offered, some 19.8m shares were issued to 2022 ZDP shareholders electing to roll over, 4.6m were subscribed by institutional and other investors and 0.6m were acquired by UIL and held as an investment. Together, these all helped to deliver a step change in reducing UIL's gearing, leading to a sharp improvement over the year, almost halving from 93.4% as at 30 June 2020 to 48.8% as at 30 June 2021. Total debt including bank loans and ZDP shares reduced from £231.7m to £180.6m, a reduction of £51.1m in absolute terms.

It is worth drawing shareholders' attention to the fact that in June 2021 UIL moved to valuing Somers Limited ("Somers") at its daily NAV. Prior to this, Somers was valued at a discount of 15% to NAV. This uplift together with a stellar performance by Somers added £102.4m to UIL's reported NAV over the year to 30 June 2021. Utilico Emerging Markets Trust plc ("UEM") and Zeta Resources Limited ("Zeta") continue to be valued based on their market bid prices. As at 30 June 2021, discounts to published NAVs amounted to 10.8% for UEM (some £9.8m) and 26.7% for Zeta (some £25.3m). Together these discounts amount to some £35.1m attributable to UIL. Adding these discounts back would see UIL's adjusted NAV per share increase by 9.6% to 473.14p and UIL's implied discount widen to 43.4%.

It is good to see a number of the portfolio investments performing well at an operating level and being rewarded by strong market gains. In particular Resimac Group Limited ("Resimac") and Copper Mountain Mining Corporation ("Copper Mountain") which are indirectly held, being the largest investments in Somers' and Zeta's portfolios respectively, delivered very strong share price increases over the year.

Resimac, a non-bank Australian financial institution which is listed on the Australian Securities Exchange ("ASX"), is Somers' largest investment and is capitalised at AUD 1.0bn. Resimac has increased its mortgage book, expanded its net interest margin and doubled its profitability. Resimac was awarded the Non-Bank of the Year at the 2020 Australian Mortgage Awards. The market has rightly rewarded Resimac and its share price has risen 143.6% in the year to 30 June 2021.

Copper Mountain's Q2 results to 30 June 2021 reported strong year-on-year gains, with copper production up 41.0%, revenue up 29.4% and cashflow from operations up over 500% at CAD 94.6m. Copper Mountain is listed on both the Toronto Stock Exchange and the ASX and its share price rose from CAD 0.63 to CAD 3.64 in the year to 30 June 2021, a gain of 477.8%.

As you would expect, all of the above has seen the shape of UIL's asset and liability profile shift significantly. Shareholders should note that Somers now accounts for 42.7% of the total portfolio. Resimac, Somers' largest investment accounted for 25.3% of UIL's look-through portfolio as at 30 June 2021. The Board of UIL appreciates the support from ordinary and ZDP shareholders in April 2021 in approving amendments to UIL's investment policy so that any platform investment may represent up to 50.0% of the portfolio, provided that no single investment held by such platform exceeds 30.0% on a look-through basis.

A point to emphasise for shareholders is the shift in UIL's portfolio focus. Over the past three years UIL has increasingly invested in disruptive technology companies. This has increased UIL's exposure to high growth, deep value investments. Such companies include Starpharma Holdings Limited ("Starpharma") and its nanotechnology solution for the global pharmaceutical companies, through to Littlepay (one of ICM Mobility Group's ("ICM Mobility") core investments) with its best-in-class ticketless transit systems which already underpin a number of UK bus companies. 

The Board remains disappointed to see the ordinary shares trade at a discount of 37.9% as at 30 June 2021. In part this reflects a widening in discount in the second half of June 2021 following the step up in NAV on the elimination of the Somers discount. Following the strong NAV gains, reduction in absolute debt, significantly lower gearing, and attractive dividend payments, the discount is frustrating to see. 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 and this was firmly communicated to the market with the Company continuing to buy back ordinary shares at these low levels. It was understandable that discounts were high through much of last year's uncertainties but given UIL's significantly improved profile and performance as noted above, the hope is that the discount will again narrow. As at 31 August 2021 it was good to see the discount at 33.1%.

During the year to 30 June 2021 the Company bought back 1.6m ordinary shares (1.9% of opening shares in issue) at an average price of 221.29p, which represented a discount of 48.7% to the closing NAV.

The 2022, 2024 and 2026 ZDP shares are trading at much tighter gross redemption yields compared to those as at 30 June 2020. As a result of UIL's investment performance and the redemption in 2020, the cover for the ZDP shares has again improved considerably over the year and, as at 30 June 2021, the cover for the 2028 ZDP shares was 2.5 times, the highest cover ever of UIL's longest dated issues. Furthermore, the Company's average blended rate of funding costs, including bank debt, as at 30 June 2021 reduced further to 4.5%.

Total revenue income for the year to 30 June 2021 was £11.6m, a decrease of 8.9% from the prior year's £12.7m. This reflects in part the loss of earnings from Ascendant Group Limited ("Ascendant"), One Communications Limited ("One Communications") and Optal Limited ("Optal"). The costs were lower and the group revenue return earnings per share ("EPS") of 9.98p represents an increase of 2.1% over the prior year of 9.77p.

The Board declared an unchanged fourth quarter dividend of 2.00p per ordinary share in August 2021 which brings the total for the year to June 2021 to 8.00p, representing an uplift of 1.6% over the prior year and a yield on the closing share price of 3.0%. The dividend was covered 1.2 times by earnings in the year and undistributed revenue reserves carried forward increased from £10.9m to £12.5m equal to 14.88p per share.

The capital gain for the year ended 30 June 2021 was £122.7m, reflecting strong portfolio performance.

Given the economic turmoil and fundamental uncertainties faced over the year with Covid-19, US elections, Brexit and US/China trade frictions, the above is a pleasing and commendable performance. The Board wishes to thank the Investment Managers for delivering a result well above expectations and in these challenging conditions.

GLOBAL EVENTS

Covid-19 continues to be the dominant consideration for all aspects of life. From government policy through to business practices and economic activity. It has impacted every continent and every community and this cannot be over emphasised. It has exposed the stresses and weaknesses in our economies, politics and social fabric; from disrupted health services, education, business and social activities. Governments continue to struggle to keep up with a rapidly changing situation and deciding on the optimal medical, economic and social solutions to tackle the pandemic. The vulnerable have borne and continue to bear the greatest burden directly and indirectly from Covid-19.

However, it does feel as though we are approaching a possible escape in Western Europe and North America where the health services seem to be coping with the current pressures arising from the Delta variant infections. We expect that the current pause in economic activity globally in response to the rising Delta variant will give way to rising gross domestic product ("GDP") again. Markets remain vulnerable to future waves of infection and their impact on employment and economic activity.

While the West is successfully vaccinating its way out of Covid lockdowns it remains a fact that newer variants are proving more difficult to contain as they emerge. With the majority of the world's population unvaccinated it is almost certain that further new variants will continue to appear. Hopefully, all new variants are contained by the current vaccine array. We are of the view that vaccinations reduce the impact of the virus, but not the transmission. So, we expect that everybody will contract Covid at some point. The unvaccinated and vulnerable will continue to see the worst outcomes.

The pandemic has seen both an immediate demand and supply shock which has impacted most stakeholders in all economies. As we move through the policy responses, we are seeing ongoing "aftershocks", especially in supply chains. We expect this to continue. Economic and stock market volatility is expected to remain high.

The policy response has been to seek to break community transmission of Covid-19, ranging from lockdowns, to testing, through to vaccination programmes. Economically there have been two parts to the Covid-19 response: central banks have dramatically increased the supply of capital while reducing the cost of capital; and governments have introduced significant support schemes for businesses especially around continued employment and social welfare support. These are truly unprecedented steps which have come at a very high economic cost.

At the same time there is also an accelerating expectation that businesses address questions around their approach to Environmental, Social and Governance ("ESG") outcomes. The concept of responsible investing has always been a core component to UIL's investment process. UIL's Investment Managers have a good record on governance, given their active approach to investee companies and they have taken steps to continue to strengthen their ESG approach to investing. ICM has recently become a signatory to the United Nations supported Principles for Responsible Investment ("PRI"), a code of best practice for incorporating ESG issues. UIL is therefore able to meet the expectations and requirements of that framework. ESG continues to be a focus for UIL, and we believe this offers significant opportunities for the Company over the long-term.

Today the world is largely over leveraged, under employed and certain sectors remain significantly underutilised, transport and leisure especially so. The next significant policy steps we expect are under the broad policy banners of "build your way out of the pandemic" and the "green agenda". These will add to demand and, we believe, will see strong inflationary pressures continue to rise, especially where supply is disrupted. While the policy initiatives may well reduce unemployment, they will add significantly to the already unprecedented debt levels. Over the year, the individual markets have seen strong divergences in market indices and currencies as country-by-country responses have varied, and the impact of Covid-19 has differed in its timing and its severity. But a common theme within markets has been the acceleration of disruptive or enabling digital businesses, which have thrived with the shift to working from home. We expect this trend to continue and even accelerate further. There are significant technology disruption opportunities from finance to health and from businesses through to government.

The ongoing risk from cyber-attacks on businesses and governments is a deep concern to all. While we can be prepared, we can't avoid the targeted impacts of such cyber actions. We remain vigilant. As is the rising instability in the Middle East and the aftershocks we can expect from the re-emergence of the Taliban in Afghanistan. We now have a number of failed states from Venezuela in Latin America to Libya in Africa, to Yemen in the Middle East and now Afghanistan in Asia. These unstable nations are a deep concern as they add to poverty and result in economic immigration and export instability to their immediate neighbours and regions.

It is also worth noting that as economies reopen, demand for goods and services is likely to accelerate above normal trend lines as supply chains and inventory are rebuilt. Coupled with the cost savings implemented by many businesses in the face of huge economic uncertainties from the pandemic fallout, reported margins by many corporates are actually widening. We expect this to continue for much of this year.

OUTLOOK

The outlook for global economies is inextricably linked to Covid-19 and the central banks' quantitative easing monetary policies in response to the global economic damage caused by the pandemic. At the time of writing, the world is starting to reverse the recent surge in infections driven in large part by virus mutations. The vaccination program is gaining ground numerically on cases too, while our understanding and treatment of Covid-19 is becoming increasingly effective. The challenge now is to navigate the aftershocks and further waves of infection. There remains a high risk of setbacks. To counter this, we anticipate that government and central bank policies will remain supportive. We expect inflation to be benign for much of 2021, assets valuations to increase, technology to continue to gain market share and commodities to rise in value. Above all, we expect volatility to remain high as differentiated recoveries become clearer. Most of our portfolio companies are doing very well in this environment and we expect this to continue.

Peter Burrows AO
Chairman
22 September 2021

INVESTMENT MANAGERS' REPORT

The year to 30 June 2021 delivered a strong and broad economic recovery from the lows in March 2020. Pleasingly, a number of UIL's investments thrived and delivered outstanding returns, contributing to UIL's NAV total return for the year of 50.9%.

As noted in the Chairman's Statement, UEM and Zeta, two of UIL's platform investments, trade at NAV discounts. If UEM and Zeta were valued at their NAV, then UIL's NAV as at 30 June 2021 would increase by 9.6% to 473.14p and many of UIL's metrics would improve further as a result.

GLOBAL OUTLOOK

The Covid-19 pandemic has impacted everyone and continues to dominate every aspect of life. There are few places, if any, that are unaffected by restrictions dictated by Covid-19. We now know how to address surges and new variants and we know the pharmaceutical companies can produce extremely effective vaccines. However, significant challenges remain. If this pandemic is left unhindered it will escalate quickly and mutations are a major concern. India, Latin America and Africa remain mostly unvaccinated and serve as a petri dish from which variants can emerge. Significant concerns remain around a new variant being outside the vaccine capability.

Covid-19 has caused unprecedented challenges for investors. Add this pandemic to a growing list of significant and current concerns, which include central bank intervention, extreme debt levels, historic low and even negative interest rates, populism, US/China frictions, Brexit, Black Lives Matter, climate change and it is obvious that investors have been besieged by a dynamic and challenging environment. Furthermore, with the unstable rogue states across the regions from Venezuela to Yemen, we can now add in Afghanistan. On top of this, we have seen political instability in West Africa with repeated coups in Mali and the challenges for all are therefore likely to rise.

When the world's largest corporates struggle to project their next quarter's revenues, it is difficult to be confident about the direction and resilience of the global economy. ICM has continued to be focused on the economic value of its preferred investments and the delivery of its long-term financial performance. It has made sure that these investments have the right approach to risk, while still seeking opportunities that will thrive in this current and then post Covid-19 environment.

ICM is strongly of the view that due to Covid-19, the shift to working from home and e-commerce has accelerated the digitalisation of governments, businesses and individuals. This shift ranges from doctors' surgeries going online, restaurants setting up internet delivery options and farmers offering produce direct to consumers online. This dramatic shift will offer new investment opportunities. Businesses without internet reach or capability will face a challenging outlook. Many businesses have been agile and shifted to e-commerce, which has created opportunities and generated a positive outlook for investors. We emphasise to our investee companies that disruption is coming to everybody and they need to be taking advantage of it by adapting their business models and embracing these challenges.

There are two strong trends worth emphasising. First, as individual markets recover, pent-up demands have driven above trend activity in the last two quarters. Second, most investee companies responded to the pandemic by holding or reducing costs. As recovery has commenced, this cautious approach has seen margins expand, delivering some impressive results.

We have remained confident in the portfolio's ability to deliver growth and earnings. Today, our view is that the portfolio remains compelling value.

We have also sought out scalable businesses with good assets and strong management teams who can unlock value. This is particularly the case in Allectus Capital Limited ("Allectus"). We have also sought to capture the digital opportunity in all investments, including digital infrastructure in emerging markets through UEM.

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 is a 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 go on that journey. UIL are seeking investments that are capital light, have high barriers to entry and business models that are scalable.

PORTFOLIO

The recovery in UIL's portfolio was broad based with most of the top ten holdings values moving higher. Notably, Somers was up 109.2%, Zeta's share price was up 117.6%, UEM's share price was up 26.4%, Starpharma up 32.6%, and Sindoh Co Limited ("Sindoh") up 40.9%. These reflect strong operating performances combined with rising valuations. The breadth of the rise is pleasing to see and overall, the portfolio gained some £112.5m.

At the same time, UIL sold Ascendant, One Communications and Optal in the year to 30 June 2021 and reduced its shareholding in Afterpay Limited ("Afterpay"). Post year-end Somers completed the sale of Bermuda Commercial Bank Limited ("BCB") following regulatory approval in Bermuda in July 2021. As a result of the sales of Ascendant, One Communications and BCB, UIL has seen its country exposure to Bermuda reduce by some two thirds from 16.4% as at 30 June 2020 to 5.1% as at 30 June 2021, and to 1.4% of the total portfolio as at 31 July 2021.

We are excited about a number of new investments and expect them to offer a mix of deep value operational performance opportunities, which combined with improving valuations to deliver long term value to UIL shareholders.

Somers' valuation increase of 109.2% in the year to 30 June 2021 was largely driven by the very strong performance of Resimac. Resimac's business has accelerated over the past twelve months. The market has rewarded Resimac with a stronger share price, which was up 143.6% over the year. The strength of the Australian Dollar has also contributed to this performance. Looking forward the tailwinds driving much of Resimac's performance remain in place and we are optimistic that Resimac's share valuation can continue to re-rate as the business model delivers strong growth.

Zeta's share price rise of 117.6% during the period reflected the strength in the wider resources sector. As economies in Asia have returned to near normal, their economic growth has accelerated and in turn driven prices for commodities higher. In particular, copper has risen 58.3% during the year to 30 June 2021. Copper Mountain, Zeta's largest investment, has seen its share price accelerate as it benefits from the price increase and improves its operating output. Its share price was up 477.8% during the year to 30 June 2021. Again, we are optimistic that Copper Mountain will deliver improving results and a rising share price.

Allectus' value, adjusting for Littlepay which was transferred to ICM Mobility, was down 6.2% in the year to 30 June 2021 and largely continues to comprise a collection of compelling early-stage technology investments. It is worth noting that Allectus has made a number of investments over the year as it rebuilds its investment portfolio.

The perennial under performer has been Resolute Mining Limited ("Resolute"). Over the years, Resolute has failed to deliver shareholder value and frustratingly in the year to 30 June 2021 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 better focus on its mining operations. We are clear that we expect to see improving metrics, stronger cash flows and reduced debt. It has not helped that Mali, where its Syama mine is based, witnessed a further military coup and Covid-19 has hampered operations. Resolute's share price fell by 55.1% during the year to 30 June 2021, reflecting these events.

UIL successfully exited Optal in December 2020, although this was at around one-third of the price that had been previously agreed with WEX Inc and around half of UIL's carrying valuation as at 30 June 2020, when there was a strong chance that the original contract would be binding. Following legal proceedings, WEX Inc renegotiated the transaction, citing material changes to the travel industry due to Covid-19, and paid USD 577.5m cash for Optal and its associated company eNett (34.0% of the value of their original cash and shares offer of USD 1.7bn made in January 2020). UIL received £12.8m from the sale of its Optal shares compared to the carrying valuation as at 30 June 2020 of £24.4m.

UIL's investments as at 30 June 2021 are all reviewed in the ten largest holdings section starting on page 24 of the Report and Accounts.

It should be noted that Sterling was generally stronger over the year and therefore held back valuation gains on translation.

PORTFOLIO ACTIVITY

During the year to 30 June 2021, UIL invested £144.8m, including exercising options in Zeta amounting to £23.6m. UIL realised £206.2m, including loans repaid by Zeta of £48.3m, sales of £25.5m from Ascendant, £18.4m from One Communications and £12.8m from Optal.

UIL supported and participated in the formation of a new investment vehicle, ICM Mobility, into which Littlepay and Snapper (both held by Allectus) and Vix Tech Pte Limited ("VixTech") and Kuba Pte Limited ("Kuba") (both partially held by UIL) were transferred. This has resulted in UIL's interests in transport ticketing system companies now being held in one operating vehicle which provides scale, enhanced focus on the opportunities in the global transport sector and an independent chairman.

PLATFORM INVESTMENTS

UIL currently has four platform investments, Somers, Zeta, UEM and Allectus in its top ten holdings. These investments account for 78.7% of the total portfolio as at 30 June 2021 (30 June 2020: 77.4%). During the year to 30 June 2021, net withdrawals from these platforms amounted to £16.8m (30 June 2020: net investments of £28.8m). Each platform is reviewed under the ten largest holdings section starting on page 24 of the Report and Accounts.

DIRECT INVESTMENTS

UIL has six direct investments in its top ten holdings, ICM Mobility, Resolute, Orbital Corporation Limited ("Orbital"), Starpharma, AssetCo plc ("AssetCo") and Sindoh. Starpharma, AssetCo and Sindoh are new to the top ten holdings replacing Ascendant and Optal, both sold, and VixTech which was transferred into ICM Mobility. All are reviewed in the ten largest holdings section starting on page 24 of the Report and Accounts.

GEOGRAPHIC REVIEW

The geographical split of the portfolio, on a look-through basis, shows Australia and New Zealand increasing to 37.6% of UIL's total investments (30 June 2020: 25.6%); Bermuda reduced by 11.3% from 16.4% as at 30 June 2020 to 5.1% as at 30 June 2021; Europe reduced by 5.3% from 8.1% to 2.8% of the total portfolio. The UK and North America nearly doubled to 18.6% and 9.8% as at 30 June 2021 from 10.4% and 4.0% respectively.

The increase in Australia reflects the rise in value of Resimac held through Somers. Exposure to Bermuda reduced following the sale of Ascendant and One Communications. Europe halved following the sale of Optal, while North America reflected the impressive share price increase from the Canadian copper investment, Copper Mountain.

SECTOR REVIEWS

Financial Services - 42.7% (30 June 2020: 26.9%)

Somers is UIL's largest investment and accounted for 42.7% of UIL's total investments as at 30 June 2021 (30 June 2020: 26.8%). As already noted, the increase in Resimac's valuation has driven Somers' NAV gains.

Technology - 17.0% (30 June 2020: 18.0%)

UIL holds a number of early-stage investments in the technology and pharmaceutical sector, both directly and through Allectus (its sixth largest investment), ICM Mobility (fourth largest holding) and Starpharma (UIL's eighth largest investment). However, UIL's technology exposure reduced in absolute amount during the year following the sale of Optal and continued sales in Afterpay.

Resources (excl. gold mining) - 15.3% (30 June 2020: 11.9%)

UIL's largest investment in resources is Zeta, which accounted for 17.1% of the total portfolio as at 30 June 2021 (30 June 2020: 14.5%). Zeta has seen a strong run in its copper investment, Copper Mountain, which is benefiting from both improved operating performance, rising copper prices and therefore operational gearing.

Infrastructure Investments - 12.7% (30 June 2020: 23.0%)

UIL has amalgamated the infrastructure and utility sectors into one and this now consists of Telecommunications, Infrastructure, Electricity, Ports, Road & Rail, Oil & Gas, Renewables, Water & Waste and Airports. This sector reduced as a result of selling Ascendant and One Communications. Today UIL's infrastructure exposure is largely through UEM.

Gold Mining - 6.5% (30 June 2020: 15.3%)

UIL's largest investment in gold mining is in Resolute, which is held both directly by UIL (4.8% of the total portfolio) and indirectly through Zeta. In addition, Zeta holds 69.5% of Horizon Gold Limited, an Australian gold mining exploration company.

LEVEL 3 INVESTMENTS

UIL's investments in level 3 companies nearly doubled in the year to 30 June 2021 from 36.3% as at 30 June 2020 to 59.8%, mainly as a result of Somers being reclassified as level 3. While Somers remains listed on the Bermuda Stock Exchange ("BSX"), in view of the low level of transactional volume in Somers shares, UIL moved this asset from level 2 to level 3. See notes 9 and 29 to the accounts for further information.

COVID-19

The Board has suspended all travel and physical meetings and moved to holding Board and Committee meetings by video conference; this looks likely to continue into 2022.

Currently, the Investment Managers have a work from home policy in place across its offices and a "ban" on corporate travel. While it is hoped this will change in the future, ICM is prepared for ongoing restrictions as required. ICM offices are therefore largely closed. ICM has benefited from having offices in the key time zones of Asia, Europe and the Americas, and from its existing cloud-based infrastructure platform. ICM has developed a process and approach to ensure information is gathered and acted upon in an efficient and timely manner.

GEARING

As a result of the strong portfolio performance and the redemption of the 2020 ZDP shares, gearing nearly halved to 48.8% as at 30 June 2021 from 93.4% as at 30 June 2020. This is well inside UIL's target gearing of under 100.0%. At an absolute level UIL's debt reduced to £180.6m from £231.7m as at 30 June 2020, a reduction of £51.1m.

The continuing reduction of financing costs, with the blended interest rate of debt reducing from 6.3% in June 2013 to 4.5% as at 30 June 2021, is pleasing. In the year to 30 June 2021 the finance costs were £9.6m, down 19.5% on the prior year's £11.9m. This should continue next year owing to lower average interest costs and lower debt levels.

ZDP SHARES

On a consolidated basis the ZDP shares decreased from £180.5m to £132.1m, mainly as a result of the £60.4m redemption of the 2020 ZDP shares in October 2020. This is a significant step for UIL as it reduced the absolute level of debt, resulting in lower gearing and helping to reduce the blended cost of funding to 4.5% per annum.

UIL extended its ZDP maturity by establishing a new class of 25.0m 2028 ZDP shares. The 2022 ZDP shareholders were offered the opportunity to roll over into the 2028 ZDP shares and the balance was offered to external investors. The 2022 ZDP shareholders elected to roll into 19.8m 2028 ZDP shares, 4.6m was placed with institutional and other investors and 0.6m was subscribed for by UIL. With four issues, UIL has successfully spread the redemptions over seven years and reduced the 2022 ZDP redemption to £52.3m.

UIL held 2.4m 2026 ZDP shares at market value as at 30 June 2020 and this increased to 3.1m shares held as at 30 June 2021.

DEBT

Bank debt of £51.2m as at 30 June 2020 reduced to £48.5m as at 30 June 2021. This was drawn in Australian Dollars, Euros and US Dollars. Scotiabank's £50.0m committed senior secured multi-currency revolving matures on 30 September 2022.

REVENUE RETURNS

Group revenue income reduced to £11.6m from £12.7m, a reduction of 8.9%. This largely reflects the sale of Ascendant, One Communications and Optal in the year.

Management and administration fees and other expenses were down by 21.4% at £2.1m (30 June 2020: £2.6m). Finance costs reduced significantly by 38.0% to £1.0m (30 June 2021: £1.6m) reflecting lower average borrowing costs.

Revenue profit was unchanged at £8.5m (30 June 2020: £8.5m) while EPS increased 2.1% to 9.98p (30 June 2020: 9.77p) driven mainly by a lower average weighted number of ordinary shares following share buybacks.

CAPITAL RETURNS

Capital total income was positive at £122.7m (30 June 2020: loss of £60.2m).

There was no performance fee accrued in the year to 30 June 2021.

Finance costs reduced by 16.6% to £8.6m (30 June 2021: £10.3m) reflecting the lower number of ZDP shares in issue and lower average borrowing costs.

The resultant gain for the year to 30 June 2021 on the capital return was £114.1m (30 June 2020: loss of £70.5m) and EPS gain was 133.81p (30 June 2020: loss of 81.30p).

EXPENSE RATIO

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

All expenses are borne by the ordinary shareholders.

Charles Jillings
ICM Investment Management Limited
and ICM Limited

22 September 2021

PRINCIPAL RISKS AND RISK MITIGATION

During the year ended 30 June 2021, 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.

The Board considers carefully the Company's principal and emerging risks and uncertainties. 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. Emerging risks are considered at each Audit & Risk Committee meeting. 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. The Covid-19 pandemic, which emerged towards the end of the Company's previous financial year, gave rise to significant challenges for businesses worldwide and the Board took these into account as part of its 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 sound balance sheets, good cash flows, the ability to pay and sustain dividends, good asset bases and market conditions. In addition, ESG factors are 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 109 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 with title documents for a small number of investments also being held securely by Waverton Investment Management Limited ("Waverton"). 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 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 2021, gearing on net assets, including bank loans, any overdrafts and ZDP shares, was 48.8% (30 June 2020: 93.4%). 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 Report and Accounts

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 International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) 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 IFRSs as adopted by the EU; 

· 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.

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 2021 and signed on its behalf by:

Peter Burrows

Chairman

GROUP INCOME STATEMENT

for the year to 30 June			2021				2020
	Revenue	Capital	Total	Revenue	Capital		Total
	return	return	return	return	return		return
	£'000s	£'000s	£'000s	£'000s	£'000s		£'000s
Gains/(losses) on investments	-	112,465	112,465	-	(60,006)		(60,006)
Gains on derivative financial instruments	-	6,319	6,319	-	3,286		3,286
Foreign exchange gains/(losses)	-	3,904	3,904	-	(3,469)		(3,469)
Investment and other income	11,555	-	11,555	12,684	-		12,684
Total income/(loss)	11,555	122,688	134,243	12,684	(60,189)		(47,505)
Management and administration fees	(982)	-	(982)	(1,426)	-		(1,426)
Other expenses	(1,069)	(5)	(1,074)	(1,184)	(10)		(1,194)
Profit/(loss) before finance costs and taxation	9,504	122,683	132,187	10,074	(60,199)		(50,125)
Finance costs	(994)	(8,601)	(9,595)	(1,602)	(10,312)		(11,914)
Profit/(loss) before taxation	8,510	114,082	122,592	8,472	(70,511)		(62,039)
Taxation	-	-	-	(1)	-		(1)
Profit/(loss) for the year	8,510	114,082	122,592	8,471	(70,511)		(62,040)
Earnings per ordinary share - pence	9.98	133.81	143.79	9.77	(81.30)		(71.53)

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

for the year to 30 June			2021			2020
	Revenue	Capital	Total	Revenue	Capital	Total
	return	return	return	return	return	return
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains/(losses) on investments	-	112,986	112,986	-	(60,078)	(60,078)
Gains on derivative financial instruments	-	6,319	6,319	-	3,286	3,286
Foreign exchange gains/(losses)	-	3,904	3,904	-	(3,469)	(3,469)
Investment and other income	11,555	-	11,555	12,684	-	12,684
Total income/(loss)	11,555	123,209	134,764	12,684	(60,261)	(47,577)
Management and administration fees	(982)	-	(982)	(1,426)	-	(1,426)
Other expenses	(1,069)	(5)	(1,074)	(1,184)	(10)	(1,194)
Profit/(loss) before finance costs and taxation	9,504	123,204	132,708	10,074	(60,271)	(50,197)
Finance costs	(994)	(8,762)	(9,756)	(1,602)	(10,643)	(12,245)
Profit/(loss) before taxation	8,510	114,442	122,952	8,472	(70,914)	(62,442)
Taxation	-	-	-	(1)	-	(1)
Profit/(loss) for the year	8,510	114,442	122,952	8,471	(70,914)	(62,443)
Earnings per ordinary share - pence	9.98	134.24	144.22	9.77	(81.76)	(71.99)

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

for the year to 30 June 2021
	Ordinary	Share		Non-
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance as at 30 June 2020	8,594	10,445	233,866	32,069	(44,199)	10,850	251,625
Profit for the year	-	-	-	-	114,082	8,510	122,592
Ordinary dividends paid	-	-	-	-	-	(6,813)	(6,813)
Shares purchased by the Company	(164)	(3,459)	-	-	-	-	(3,623)
Balance as at 30 June 2021	8,430	6,986	233,866	32,069	69,883	12,547	363,781

for the year to 30 June 2020
	Ordinary	Share		Non-
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance as at 30 June 2019	8,828	16,103	233,866	32,069	26,312	9,090	326,268
(Loss)/profit for the year	-	-	-	-	(70,511)	8,471	(62,040)
Ordinary dividends paid	-	-	-	-	-	(6,711)	(6,711)
Shares purchased by the Company	(234)	(5,658)	-	-	-	-	(5,892)
Balance as at 30 June 2020	8,594	10,445	233,866	32,069	(44,199)	10,850	251,625

COMPANY STATEMENT OF CHANGES IN EQUITY

for the year to 30 June 2021
	Ordinary	Share		Non-
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance as at 30 June 2020	8,594	10,445	233,866	32,069	(44,589)	10,850	251,235
Profit for the year	-	-	-	-	114,442	8,510	122,952
Ordinary dividends paid	-	-	-	-	-	(6,813)	(6,813)
Shares purchased by the Company	(164)	(3,459)	-	-	-	-	(3,623)
Balance as at 30 June 2021	8,430	6,986	233,866	32,069	69,853	12,547	363,751

for the year to 30 June 2020
	Ordinary	Share		Non-
	share	premium	Special	distributable	Capital	Revenue
	capital	account	reserve	reserve	reserves	reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance as at 30 June 2019	8,828	16,103	233,866	32,069	26,325	9,090	326,281
(Loss)/profit for the year	-	-	-	-	(70,914)	8,471	(62,443)
Ordinary dividends paid	-	-	-	-	-	(6,711)	(6,711)
Shares purchased by the Company	(234)	(5,658)	-	-	-	-	(5,892)
Balance as at 30 June 2020	8,594	10,445	233,866	32,069	(44,589)	10,850	251,235

STATEMENTS OF FINANCIAL POSITION

			Group			Company
as at 30 June	2021	2020		2021	2020
	£'000s	£'000s		£'000s	£'000s
Non-current assets
Investments	540,074	488,997		544,228	491,280
Current assets
Other receivables	1,411	3,579		1,411	3,579
Derivative financial instruments	1,047	111		1,047	111
Cash and cash equivalents	3,324	258		3,324	258
	5,782	3,948		5,782	3,948
Current liabilities
Loans	(48,548)	(51,146)		(48,548)	(51,146)
Other payables	(827)	(4,248)		(827)	(63,335)
Derivative financial instruments	(627)	(5,391)		(627)	(5,391)
Zero dividend preference shares	-	(59,087)		-	-
	(50,002)	(119,872)		(50,002)	(119,872)
Net current liabilities	(44,220)	(115,924)		(44,220)	(115,924)
Total assets less current liabilities	495,854	373,073		500,008	375,356
Non-current liabilities
Other payables	-	-		(136,257)	(124,121)
Zero dividend preference shares	(132,073)	(121,448)		-	-
Net assets	363,781	251,625		363,751	251,235
Equity attributable to equity holders
Ordinary share capital	8,430	8,594		8,430	8,594
Share premium account	6,986	10,445		6,986	10,445
Special reserve	233,866	233,866		233,866	233,866
Non-distributable reserve	32,069	32,069		32,069	32,069
Capital reserves	69,883	(44,199)		69,853	(44,589)
Revenue reserve	12,547	10,850		12,547	10,850
Total attributable to equity holders	363,781	251,625		363,751	251,235
Net asset value per ordinary share - pence	431.51	292.79		431.48	292.34

STATEMENTS OF CASH FLOWS

		Group		Company
for the year to 30 June	2021	2020	2021	2020
	£'000s	£'000s	£'000s	£'000s
Profit/(loss) before taxation	122,592	(62,039)	122,952	(62,442)
Adjust for non-cash flow items:
(Gains)/losses on investments	(112,465)	60,006	(112,986)	60,078
Gains on derivative financial instruments	(6,319)	(3,286)	(6,319)	(3,286)
Foreign exchange (gains)/losses	(3,904)	3,469	(3,904)	3,469
Non-cash flows on income	(8,167)	(6,323)	(8,167)	(6,323)
Decrease/(increase) in accrued income	526	(709)	526	(709)
Decrease/(increase) in other debtors	2,134	(2,122)	2,134	(2,122)
Decrease in creditors	(177)	(8,757)	(177)	(8,757)
ZDP shares finance costs	8,601	10,312	-	-
Intra-group loan account finance costs	-	-	8,762	10,643
Tax on overseas income	-	(1)	-	(1)
Cash flows from operating activities	2,821	(9,450)	2,821	(9,450)
Investing activities:
Purchases of investments	(52,154)	(81,698)	(52,920)	(81,698)
Sales of investments	121,274	82,812	121,274	93,093
Sales of derivatives	619	7,519	619	7,519
Cash flows from investing activities	69,739	8,633	68,973	18,914
Cash flows before financing activities	72,560	(817)	71,794	9,464
Financing activities:
Equity dividends paid	(6,813)	(6,711)	(6,813)	(6,711)
Movements on loans	(606)	(2,137)	(606)	(2,137)
Cash flows from issue of ZDP shares	4,114	10,281	4,114	-
Cash flows from redemption of ZDP shares	(61,177)	-	(60,411)	-
Cash paid for ordinary shares purchased for cancellation	(3,623)	(5,892)	(3,623)	(5,892)
Cash flows from financing activities	(68,105)	(4,459)	(67,339)	(14,740)
Net increase/(decrease) in cash and cash equivalents	4,455	(5,276)	4,455	(5,276)
Cash and cash equivalents at the beginning of the year	(3,256)	3,177	(3,256)	3,177
Effect of movement in foreign exchange	1,912	(1,157)	1,912	(1,157)
Cash and cash equivalents at the end of the year	3,111	(3,256)	3,111	(3,256)

Comprised of:
Cash	3,324	258	3,324	258
Bank overdraft	(213)	(3,514)	(213)	(3,514)
Total	3,111	(3,256)	3,111	(3,256)

NOTES

1. DIVIDENDS

The Directors declared a fourth quarterly dividend in respect of the year ended 30 June 2021 of 2.00p per share payable on 30 September 2021 to all ordinary shareholders on the register at close of business on 3 September 2021. The total cost of the dividend, which has not been accrued in the results for the year to 30 June 2021, is £1,680,000 based on 84,014,018 ordinary shares in issue.

2. RELATED PARTY TRANSACTIONS

The following are considered related parties of UIL:

Ultimate parent undertaking:

As at 30 June 2021, UIL's majority shareholder General Provincial Life Pension Fund Limited ("GPLPF") held 65.1% of UIL's shares. Union Mutual Pension Fund Limited ("UMPF") held 8.9% of UIL's shares and General Provincial Company Limited ("GPC") held nil UIL shares, having sold its 3.7% shareholding in UIL to UMPF during December 2020. The ultimate parent undertaking of GPLPF, UMPF and GPC is Somers Isles Private Trust Company Limited ("SIPTCL") as trustee of various trusts of which Mr Duncan Saville is a beneficiary.

Subsidiaries of UIL:

Allectus Capital Limited ("Allectus"), Bermuda First Investment Company Limited, Coldharbour Technology Limited ("Coldharbour"), Elevate Platform Limited ("Elevate"), Energy Holdings Ltd, ICM Mobility International Ltd, Newtel Holdings Limited ("Newtel"), UIL Holdings Pte Ltd and Zeta Resources Limited ("Zeta"). On consolidation, transactions between the Company and UIL Finance Limited have been eliminated.

Associated undertakings:

DTI Group Ltd ("DTI"), ICM Mobility Group Ltd, ICM Mobility Ltd, Littlepay Mobility Ltd, Orbital Corporation Limited ("Orbital"), Serkel Solutions Pty Ltd ("Serkel"), Smilestyler Solutions Pty Ltd ("Smilestyler") and Somers Limited ("Somers"). 3DMeditech Pty Ltd's shareholding was diluted in the year and is no longer an associated holding. VixTech Pte. Ltd's ("VixTech") shareholding was transferred to ICM Mobility Group Limited in the year.

Subsidiaries of the above subsidiaries and associated undertakings:

Allectus : Global Equity Risk Protection Limited ("GERP") and Own Solutions AC Ltd. CHIPS AG, Metricus Pty Ltd, Trustlink (Pty) Ltd, Unity Holdings Ltd and Responsible Gaming Monitoring Company Pty Ltd are all subsidiaries of GERP. VixNet Africa (Pty) Ltd was sold by Allectus during the year ended 30 June 2021.

ICM Mobility Group Limited: ICM Mobility Ltd, Kuba Group Ltd, Kuba Pte. Ltd, Littlepay Mobility Ltd, Littlepay Pte Ltd (Australia), Vix AFC Ltd, Vix Holdings Ltd, VixTech and Vix Technology Limited.

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

Somers: Bermuda Commercial Bank Ltd ("BCB"), PCF Group plc, Resimac Group Limited ("Resimac"), Waverton Investment Management Limited ("Waverton") and West Hamilton Holdings Limited.

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 2021 between the Company and its related parties above:

UIL Finance

Loans from UIL Finance to UIL of £183.2m as at 30 June 2020 decreased by £46.9m, to £136.3m as at 30 June 2021. The loans are repayable on any ZDP share repayment date.

Subsidiaries of UIL

Allectus: Allectus paid capital dividend distributions of USD 12.9m to UIL. Pursuant to a loan agreement dated 1 September 2016 under which UIL agreed to loan monies to Allectus, UIL advanced to Allectus loans of USD 7.6m and Allectus repaid USD 1.0m. The remaining loan balance of USD 6.6m was converted to equity on 30 June 2021. The loan was interest free and is converted into equity on an annual basis at 30 June each year.

BFIC: BFIC paid a capital dividend of USD 3.1m to UIL (UIL received in specie 647,970 One Communications shares at USD 4.75 per share in settlement of the dividend). Pursuant to a loan agreement dated 3 July 2017 under which UIL agreed to loan monies to BFIC, UIL advanced to BFIC USD 0.1m and the following share purchases and share sales occurred via the loan account: BFIC sold 10,900 One Communications shares to UIL at USD 4.75 per share; BFIC bought 924,424 Ascendant shares from UIL at USD 36.00 per share; BFIC bought 1,001,519 One Communications shares from UIL at USD 4.75 per share. BFIC repaid USD 39.0m and capitalised loan interest of USD 65k. As at 30 June 2021, the balance of the loan was USD nil. The annual interest rate of the loan was 6.0%.

Coldharbour: Pursuant to a loan agreement dated 19 August 2020 under which UIL agreed to loan monies to Coldharbour, UIL advanced to Coldharbour a loan of GBP 1.1m. As at 30 June 2021, the balance of the loan was GBP 1.1m. The loan bears interest at 10% per annum and matures on 31 December 2021.

Elevate: Due to a restructure, Elevate purchased all of its ordinary shares and issued UIL with 42,700,769 preference shares. As at 30 June 2021 UIL held 44,348,478 preference shares (2020: 1,647,709). Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to Elevate. UIL advanced to Elevate GBP 0.5m. As at 30 June 2021, the balance of the loan and interest outstanding was GBP 2.0m. 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.

ICM Mobility International Ltd: On 11 May 2021 UIL received 1,700 ICM Mobility International Ltd shares on the formation of the company at nominal value of 1p per share. On 29 June 2021, UIL received 1.7m shares in ICM Mobility International Ltd at a value of £1.6m, being the settlement of a capital distribution from Allectus. UIL advanced loans of USD 1.0m in May 2021. In June 2021, the USD 1.0m loan was converted to GBP 0.7m. A further loan of GBP 0.1m was advanced in June 2021. On 29 June 2021 UIL received 1,700 shares on capitalisation of the £0.8m loan.

Newtel: UIL advanced GBP 0.1m to Newtel as part of its working capital loan to Newtel. As at 30 June 2021 the loan balance was GBP 5.3m and is repayable on demand.

UIL Holdings Pte Ltd: There were no transactions during the year.

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 22.9m and CAD 2.0m and received from Zeta repayments of AUD 27.8m and CAD 16.5m, and capitalised interest of AUD 5.4m and CAD 2.2m. UIL exercised 172.3m Zeta options at AUD 0.25 per share which resulted in a loan settlement of AUD 43.1m. As at 30 June 2021, the balance of the loans and interest outstanding was AUD 22.2m and CAD 18.2m. 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:

DTI: There were no transactions during the year.

ICM Mobility Group Limited: On 6 December 2020 UIL received 3,981 ICM Mobility Group Limited shares on the formation of the company at nominal value of 1p per share. On 30 April 2021 as part of a group restructure the equity holdings in VixTech and Kuba Pte Ltd were transferred at a value of GBP 16.5m to ICM Mobility Group Limited and in exchange UIL received 82.7m ordinary shares in ICM Mobility Group Limited. Due to the group restructure, the loan to Vix Technology Limited of USD 4.2m was also transferred to ICM Mobility Group Limited. Further loans of USD 2.3m were advanced in May 2021. The USD 6.5m loan was converted into GBP 4.7m in June 2021. Further loans of GBP 0.4m were advanced in June 2021. The GBP 5.1m loan was capitalised into equity on 29 June 2021, UIL receiving 3,981 shares. As part of a further group restructure, on 11 June 2021 UIL exchanged 3.3m shares in ICM Mobility Ltd for the same number of shares in ICM Mobility Group Limited at a value of £1.8m. On 29 June 2021, UIL received 3.3m shares in ICM Mobility Group Limited at a value of £3.2m being settlement of a capital distribution from Allectus.

Littlepay Mobility Ltd: On 1 March 2021 UIL received 1.4m shares at a value of £0.9m in Littlepay being part settlement of the capital distribution from Allectus.

ICM Mobility Ltd: In the year ICM Mobility Ltd was also held as an associate undertaking. On 1 March 2021, UIL received 3.3m shares in ICM Mobility Limited being part settlement of the capital distribution from Allectus. As part of a group restructure, on 11 June 2021 UIL exchanged the 3.3m shares in ICM Mobility Ltd for the same number of shares in ICM Mobility Group Limited at a value of £1.8m. Orbital: 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 5.2m to UIL and UIL received 338,928 ordinary shares as part of a dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD loan), 22 June 2018 (GBP loan), 5 September 2019 (AUD loan) and 4 December 2019 (CAD loan), under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of USD 8.8m, GBP 0.2m and AUD 0.5m, Somers repaid loans of USD 4.1m, GBP 6.4m, AUD 4.8m and CAD 2.3m. UIL received interest of USD 235k, GBP 280k, AUD 261k and CAD 50k. As at 30 June 2021, the balance of the loans and interest outstanding was USD 9.0m, GBP 2.2m, AUD 3.2m and CAD nil. With the exception of the CAD loan, which had an annual interest rate of 10.0%, the loans bear interest at an annual rate of 6.0% and are repayable on not less than 12 months' notice.

VixTech: As part of a restructure the equity holdings in VixTech were transferred to ICM Mobility Group Limited and in exchange UIL received ordinary shares in ICM Mobility Group Limited.

Subsidiaries of the above subsidiaries and associated undertakings:

Littlepay Mobility Ltd: See above under associated undertakings.

Littlepay Pte Ltd: UIL advanced loans of AUD 1.2m in March 2021 and Littlepay Pte Ltd thereafter repaid AUD 0.3m. As at 30 June 2021 the loan balance was AUD 0.9m. The loan is interest free

Vix Technology Limited: Pursuant to a loan agreement dated 1 December 2016 under which UIL has agreed to loan monies to Vix Technology Limited, UIL advanced to Vix Technology Limited USD 4.2m. On 30 April 2021 the loan was transferred to ICM Mobility Group Limited. The loan was interest free.

Except for the above there were no transactions during the year to 30 June 2021 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 and secretarial costs as set out in note 3 in the Report and Accounts, and reimbursed expenses of £8,000, there were no other transactions with ICM or ICMIM or ICM Corporate Services (Pty) Ltd. At the year-end £149,000 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, Mitre Investments Limited, Somers and West Hamilton Holdings Limited. Mr Jillings is a director of Allectus, GERP, ICM Mobility Group Limited, Somers and Waverton. Mr Jillings received dividends from UIL of £28,000. Mr Saville is a director of Allectus, BFIC, GPLPF, GERP, ICM Mobility Group Limited, Newtel, 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

The fees paid to Directors remained at: Chairman £46,000 per annum; Chairman of Audit & Risk Committee £44,000 per annum and Directors £34,000 per annum. The Board received aggregate remuneration of £192,000 for services as Directors. As at 30 June 2021, £nil remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £108,865 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 £468,363 from UIL, GPC received dividends of £126,000 from UIL and Mitre Investments Limited received dividends of £215,287 from UIL. There were no other transactions between companies controlled by key management and UIL during the year to 30 June 2021.

3. RESULTS

This statement was approved by the Board on 22 September 2021. The financial information set out above does not constitute the Group's or Company's statutory accounts for the years ended 30 June 2021 or 2020 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.

The Report & Accounts for the year ended 30 June 2021 will be posted to shareholders in early October 2021. A copy will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism   and on the Company's website www.uil. limited

Annual General Meeting Arrangements

The Annual General Meeting ("AGM") of the Company will be held its registered office, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda on Wednesday, 10 November 2021 at 5.00pm (local time) and notice is set out at the end of the Report & Accounts.

Legal Entity Identifier: 213800CTZ7TEIE7YM468

 

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