Date:                      18 February 2022

Contact:                 Charles Jillings                                                                 

                                ICM Investment Management Limited                        

                                01372 271 486                                                               

UIL LIMITED

UNAUDITED HALF-YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 31 DECEMBER 2021

UIL Limited ("UIL" or the "Company") today announced its unaudited financial results for the six months to 31 December 2021.

FINANCIAL HIGHLIGHTS

·    Revenue return per ordinary share 3.40p (4.63p)

·    Dividends per ordinary share 4.00p (4.00p)

·    Net asset value ("NAV") total return per ordinary share* of -9.9% (+22.0%)

·    Share price total return per ordinary share* of -5.3% (+10.4%)

·    Gearing* 60.7% (55.5%)

Figures in brackets are 31 December 2020

* See Alternate Performance Measures in the Half-yearly financial report for 31 December 2021       

The half-yearly report for the six months to 31 December 2021 will be posted to shareholders in early March 2022. A copy will shortly be available to view and download from the Company's website at www.uil.limited and the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Please click on the following link to view the document: http://www.rns-pdf.londonstockexchange.com/rns/1494C_1-2022-2-18.pdf

UNAUDITED GROUP PERFORMANCE SUMMARY 

(1)  See Alternative Performance Measures in the Half-yearly financial report for 31 December 2021

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

(3)  Percentage change based on comparative six month period to 31 December 2020

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

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

(6)  For comparative purposes the figures have been annualised

(7)  Performance fees for the periods are only suffered within underlying funds

CHAIRMAN'S STATEMENT

The half-year to 31 December 2021 was challenging for investors. UIL's performance was impacted over the half-year as some of the portfolio gave back part of the strong gains made in the previous financial year. UIL's NAV total return was negative 9.9%. The FTSE All-Share total return Index ("FTSE") was up by 6.5% over the same period. While weaker than the overall market, the UIL result should be viewed against a very strong out-performance in the year to 30 June 2021, where UIL's NAV total return was up 50.9% versus the FTSE which was up 21.5%. UIL's annual compound NAV total return since inception in 2003 was 12.1%, whilst the FTSE was 7.7%.

Since inception in August 2003, UIL has distributed £84.6m in dividends, invested £36.6m in ordinary share buybacks and made net gains of some £339.5m for a total return of 714.2% (adjusted for the exercise of warrants and convertibles). Shareholders should note that the Board and the Investment Managers focus on longer term movements in market indices, whilst including short term comparisons for reference.

As shareholders are aware, UIL moved to valuing Somers Limited ("Somers") based on its daily NAV from 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 31 December 2021, discounts to published NAVs widened to 12.7% for UEM (some £11.0m) and narrowed marginally to 24.0% for Zeta (some £25.2m). Together these discounts amount to £36.2m attributable to UIL. Adding these back would see UIL's adjusted NAV per share increase by 11.2% to 427.67p (30 June 2021: 473.14p) and UIL's implied discount widen to 41.5%.

A number of investments have pulled back on weaker market sentiment, driven by concerns over sustained inflation and the need for central banks to raise interest rates. We have seen this impact with Resimac Group Limited ("Resimac") (Somers' largest holding), whose share price fell 23.2% during the half-year. Given Resimac is 49.4% of Somers' portfolio and Somers is 39.2% of UIL's portfolio, Resimac's weakness has in turn accounted for 8.2% of UIL's 9.9% negative total return over the half-year. We would note that Resimac delivered excellent results in the year to 30 June 2021. As at 31 December 2021, Resimac shares traded at a historic price earnings ratio of some 7.4x and a dividend yield of 3.4%. It was pleasing to see Resimac buying back its own shares on the market.

Many other investments had a good half-year. The share price of Panoramic Resources Limited ("Panoramic"), Zeta's second largest investment, rose some 89.3% on the back of a strengthening outlook for nickel. Panoramic accounted for most of Zeta's 16.2% share price increase during the half-year.

Resolute Mining Limited ("Resolute") has been a perennial underperformer. Resolute's share price was down 23.8% on the back of lacklustre operational performance and continued concerns over the political outlook in the region.

A point to emphasise for shareholders is the continued 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, significant value upside investments. Such companies include Starpharma Holdings Limited ("Starpharma") and Littlepay Pty Limited ("Littlepay") (one of ICM Mobility Group Limited's ("ICM Mobility") core investments); both of which are highlighted in the annual report. In the half-year we have invested in Nautilus Data Technologies, Inc ("Nautilus") and Novareum Blockchain Asset Fund Limited ("Novareum"). Both are now in UIL's top ten holdings and offer exciting opportunities.

The Board remains disappointed to see the ordinary shares trade at a discount of 35.0% as at 31 December 2021. Given recent NAV gains, reduction in absolute debt, significantly lower gearing and attractive dividend payments, the discount is frustrating. In 2019, the Board determined, in agreement with the Investment Managers and the major shareholder, to target a lower discount level of 20.0% in the medium term. This was firmly communicated to the market with UIL continuing to buy back ordinary shares at high discount 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.

During the half-year to 31 December 2021 the Company bought back 0.3m ordinary shares (0.4% of opening shares in issue) at an average price of 274.00p, which represented a discount of 28.8% to the closing NAV.

As with the wider debt markets, UIL's longer dated 2024, 2026 and 2028 ZDP shares are trading at higher gross redemption yields compared to those as at 30 June 2021, being 4.4%, 5.5% and 6.6% respectively, as the markets price in interest rate rises by most central banks and inflation increases sharply. UIL's 2022 ZDP shares, being short dated, have seen their gross redemption yield narrow over the half-year to 3.8%. As at 31 December 2021, UIL's average blended rate of funding costs, including bank debt, remained at 4.5%.

Total revenue income for the half-year to 31 December 2021 was £4.3m, a decrease of 24.6% from £5.7m in the prior half-year. This reflects in part the loss of earnings from the Zeta and Somers loans which were significantly reduced in the half-year, resulting in interest income reducing from £2.7m over the prior half-year to £1.2m. The revenue return earnings per share ("EPS") of 3.40p represents a decrease of 26.6% over the prior half-year of 4.63p.

The Board has declared an unchanged second quarter dividend of 2.00p per ordinary share which maintains the total for the half-year to 4.00p, and a yield on the closing share price of 3.2%. The dividend was covered 0.9x by earnings in the half-year and undistributed revenue reserves carried forward decreased from £12.5m to £12.0m, equal to 14.34p per share. In the absence of unforeseen circumstances, the Board intends to pay a further 4.00p in dividends for the second half-year and the Investment Managers expect UIL's earnings to rise in the second half-year, resulting in EPS covering intended dividends for the full year of 8.00p.

Following the capital gains of £114.1m last year, there was a capital loss for the half-year ended 31 December 2021 of £39.4m.

UIL has a stronger financing structure with four ZDP issues totalling £136.9m and bank and other debt of £60.2m. It is pleasing to see UIL's debt significantly below the 100% gearing target level set some years ago, at 60.7% as at 31 December 2021. The 2022 ZDP shares amounting to £49.6m as at 31 December 2021, are redeemable in October this year. As such they are moved to current liabilities and the Investment Managers have started to take steps to fund the redemption payment.

GLOBAL EVENTS

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

On Covid-19 it is very pleasing to see the virus follow an expected evolution, with each new variant of Covid-19 being weaker but more virulent. Omicron certainly meets that profile. Just as pleasing to see is that the array of vaccines available in the West has reduced the impact on individuals. The net outcome of a weaker virus and high vaccination is fewer people are ending up in hospital and fewer still are dying from Covid-19. Nearly all countries are moving towards "living with Covid" and a number are starting to remove Covid restrictions. While this may still take time for all countries to catch up, the direction of travel is positive. The concerning outlier in this approach is China, which continues to pursue a zero-tolerance approach. One that may well give rise to more challenges for them in the future.

The heightened geopolitical events are concerning on two fronts. They can, if unresolved, lead to war and have a devastating impact on global recovery. Clearly Russia's aggressive positioning towards Ukraine is testing the resolve of Europe and NATO. We hope that a diplomatic resolution can be found and Russia can step back. Although we note that the differences of the long term vision between Russia and the West is such that any resolution may well not stand the test of time.

Furthermore, the ongoing friction between China and the USA is again a clash of ideologies and will likely lead to ongoing resistance between the two nations and their allies.

As economies have reopened there has been a very strong demand for goods led by the consumer. Goods supply chains have been disrupted by Covid-19. The result has been rising inflation as demand for goods has outstripped supply. Faced with concerns around inflationary pressures, most central banks have begun to move towards raising interest rates and a number have started the process.

In the next two years we expect inflationary pressures to reduce as supply chains normalise and the demand for goods falls back to trend lines. The one unknown in our view is the response of the labour force. To date the number of economically active people is well below pre-pandemic levels. If this continues then the shortage of the work force will drive up wages and in turn feed inflation.

OUTLOOK

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

Peter Burrows AO

Chairman

18 February 2022

INVESTMENT MANAGERS' REPORT

The half-year to 31 December 2021 was a challenging period and, as anticipated, volatility was elevated.

UIL's portfolio reduced by £35.0m mainly as a result of the decrease in value of Somers and its underlying holding in Resimac, and the poor performance of Resolute. While disappointing, the results for the six months followed a 50.9% increase in UIL's NAV total return for the year ended 30 June 2021.

PORTFOLIO

The performance of UIL's portfolio was volatile over the half-year. Within the top ten, three increased in value, five decreased in value and two new investments were made. Overall, the decreases outweighed the increases, which led to an overall reduction in the portfolio of £35.0m. As noted in the Chairman's Statement, UEM and Zeta's share price discounts to NAVs represent £36.2m to UIL.

Somers' valuation reduced 13.9% giving back some of the 109.2% gains in the year to 30 June 2021. This was largely driven by Resimac's share price declining by 23.2%, compared to its 143.6% gain in the year to 30 June 2021. Resimac continues to deliver strong operational performance and while some of the valuation tailwinds have reduced over recent months, such as interest rate expectations, we believe that their valuation is relatively modest at a historic price earnings ratio of 7.4x.

Zeta's share price gained 16.2% in the half-year to 31 December 2021, adding to the rise of 117.6% during the year to 30 June 2021. This reflected the continuing strengthening of the wider resources sector. The combination of supply constraints as commodity production fell, with stronger demand as economies recovered, created a surge in demand. In particular, copper firmed 3.9% in the half-year, adding to the 58.3% rise in copper during the year to 30 June 2021. We see copper prices continuing to strengthen in the face of rising demand and falling production, as the recent under investment in mining leads to constrained supplies. Copper Mountain Mining Corporation ("Copper Mountain"), Zeta's largest investment, has seen its share price weaken, down 6.1% in the six months to 31 December 2021, but it has largely held onto the gains of 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. Nickel was up 14.7% in the half-year and Panoramic saw its share price rise by 89.3% during the period as it resumes operations.

The perennial under performer has been 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 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 23.8% in the half-year, in addition to the 55.1% loss during the year to 30 June 2021.

The ten largest holdings section starting on page 18 provides more information on UIL's key investments, including new additions to the portfolio. We are excited about our new investments and expect them to provide a mix of deep value operational performance opportunities which, combined with improving valuations, should deliver long term value to UIL shareholders.

FOREIGN EXCHANGE & COMMODITIES

As a global investor, UIL faces both exposure and opportunities from foreign exchange ("FX") movements. To mitigate this risk UIL hedges its ZDP repayment liability to Sterling. As can be seen, the impact on UIL from FX in the half-year was a modest loss of £0.2m (30 June 2021: gain of £3.9m). This reflects in part a stronger Canadian Dollar and a weaker Australian Dollar.

Commodities remained volatile. During the half-year, oil was initially up 15.0% and then down 10.0%, ending the period 3.5% up. Copper was less volatile, with a high/low spread of 15.0%, ending the half-year up 3.9%. Nickel was the standout performer, up 14.7% during the period.

PORTFOLIO ACTIVITY

During the half-year to 31 December 2021, UIL invested £36.0m and realised £22.7m, including loans repaid by Somers and Zeta. Purchases included investments in Nautilus of £7.2m and Novareum of £3.6m; both of these are in UIL's top ten investments as at 31 December 2021.

PLATFORM INVESTMENTS

UIL currently has four platform investments, Somers, Zeta, UEM and Allectus Capital Limited ("Allectus") in its top ten holdings. These investments account for 77.4% of the total portfolio as at 31 December 2021 (30 June 2021: 78.7%). During the half-year to 31 December 2021, net withdrawals from these platforms amounted to £8.3m (30 June 2021: £16.8m).

DIRECT INVESTMENTS

UIL has six direct investments in its top ten holdings, ICM Mobility, Resolute, Starpharma, Nautilus, Sindoh Co Limited ("Sindoh") and Novareum. The two new investments to the top ten holdings, Nautilus and Novareum, replace AssetCo plc ("AssetCo") and Orbital Corporation Limited, both of which remain UIL investments.

GEOGRAPHIC REVIEW

The geographical split of the portfolio, on a look-through basis, shows Australia and New Zealand decreasing to 35.3% of UIL's total investments (30 June 2021: 37.6%); North America nearly doubled again to 18.3% (30 June 2021: 9.8%).

The decrease in Australia reflects the decrease in value of Resimac held through Somers.

SECTOR REVIEW

Financial Services - 39.2% (30 June 2021: 42.7%)

Somers is UIL's largest investment and accounted for 39.2% of UIL's total investments as at 31 December 2021 (30 June 2021: 42.7%). As already noted, the decrease in Resimac's valuation has driven Somers' NAV weakness.

Technology - 18.2% (30 June 2021: 17.0%)

UIL holds a number of early-stage investments in the technology and pharmaceutical sector, both directly and through ICM Mobility (UIL's fourth largest investment), Allectus (UIL's fifth largest investment), and Starpharma (UIL's seventh largest investment). During the half-year we have added Nautilus (UIL's eighth largest investment) and Novareum (UIL's tenth largest investment).

Resources (excl. gold mining) - 17.3% (30 June 2021: 15.3%)

UIL's largest investment in resources is Zeta, which accounted for 19.2% of the total portfolio as at 31 December 2021 (30 June 2021: 17.1%). Zeta has continued its strong run on the back of improving commodity prices and operating performance by its investees.

Infrastructure Investments - 12.0% (30 June 2021: 12.7%)

UIL amalgamated the infrastructure and utility sectors into one and this consists of Telecommunications, Infrastructure, Electricity, Ports, Road & Rail, Oil & Gas, Renewables, Water & Waste and Airports. UIL's infrastructure exposure is largely through UEM.

Gold Mining - 5.4% (30 June 2021: 6.5%)

UIL's largest investment in gold mining is Resolute, which is held both directly by UIL (3.6% of the total portfolio) and indirectly through Zeta. In addition, Zeta holds 69.9% of Horizon Gold Limited ("Horizon"), an Australian gold mining exploration company. Resolute's share price weakness has been partly offset by Horizon's share price gains.

LEVEL 3 INVESTMENTS

UIL's investment in level 3 companies was unchanged at 60.1% (30 June 2021: 59.8%).

COVID-19

The Board continues to suspend all travel and physical meetings, and currently all Board and Committee meetings are held by video conference. The Board is hopeful that in mid-2022 the Board can once again meet up in person.

GEARING

As a result of the pull back in portfolio performance, the half-year saw gearing increase to 60.7% (30 June 2021: 48.8%), although this remains well inside UIL's target gearing of under 100.0%. At an absolute level UIL's debt increased over the half-year from £180.6m to £197.1m as at 31 December 2021.

It is pleasing to see 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 31 December 2021. In the half-year to 31 December 2021 the finance costs were £4.4m, down 18.5% on the prior half-year's £5.4m.

ZDP SHARES

On a consolidated basis the ZDP shares increased from £132.1m to £136.9m, up 3.6% mainly as a result of the capitalised interest return in the half-year. 0.8m 2026 ZDP shares were placed out in the half-year, leaving UIL holding 2.3m 2026 ZDP shares and 0.6m 2028 ZDP shares as at 31 December 2021. The blended cost of funding was flat at 4.5% per annum. With four ZDP issues, UIL has spread the redemptions from any one issue.

UIL is taking steps to ensure the 2022 ZDP shares are redeemed later in the year in full and on time.

DEBT

Bank debt increased to £49.6m as at 31 December 2021 (30 June 2021: £48.5m). This was drawn in Australian Dollars, Euros and US Dollars. Scotiabank's £50.0m committed senior secured multi-currency revolving facility matures on 30 September 2022.

REVENUE RETURNS

Revenue income for the half-year reduced to £4.3m from £5.7m in the six months to 31 December 2020, a reduction of 24.6%. This largely reflects the decrease in loans to Somers and Zeta as these were partly repaid and Zeta loans were largely converted into equity in June 2021, which in turn contributed to the reduction of interest income from £2.7m to £1.2m.

Management and administration fees and other expenses were down by 33.3% at £0.8m (31 December 2020: £1.2m). Finance costs were up at £0.6m as at 31 December 2021 from £0.5m as at 31 December 2020.

Revenue profit decreased by 27.5% to £2.9m (31 December 2020: £4.0m) and EPS decreased by 26.6% to 3.40p (31 December 2020: 4.63p) driven mainly by the lower revenue income but improved by a lower average weighted number of ordinary shares in issue following share buybacks.

CAPITAL RETURNS

Capital total income was at a loss of £35.6m (31 December 2020: gain of £55.3m).

Finance costs reduced by 20.4% to £3.9m (31 December 2020: £4.9m) largely reflecting the lower number of ZDP shares in issue following the 2020 ZDP redemption in October 2020.

The resultant loss for the half-year to 31 December 2021 on the capital return was £39.4m (31 December 2020: gain of £50.4m) and EPS loss was 46.95p (31 December 2020: gain of 58.69p).

EXPENSE RATIO

The ongoing charges figure, excluding performance fees, was 2.0% as at 31 December 2021 (30 June 2021: 2.3%) and the ongoing charges figure, including performance fees paid in UIL's platform companies, was 4.2% (30 June 2021: 4.6%). No performance fee was earned at UIL level.

All expenses are borne by the ordinary shareholders.

INVESTMENT APPROACH

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

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

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

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

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

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

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

DISRUPTION

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

Charles Jillings
ICM Investment Management Limited and ICM Limited
18 February 2022

HALF-YEARLY FINANCIAL REPORT AND RESPONSIBILITY STATEMENT

The Chairman's Statement and the Investment Managers' Report give details of the important events which have occurred during the period and their impact on the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES

Most of UIL's principal risks and uncertainties are market related and are similar to those of other investment companies investing mainly in listed equities in developed countries.

The principal risks and uncertainties were described in more detail under the heading "Principal Risks and Risk Mitigation" within the Strategic Report section of the annual report and accounts for the year ended 30 June 2021 and have not changed materially since the date of that report.

The principal risks faced by UIL include not achieving long-term total returns for its shareholders, adverse market conditions leading to a fall in NAV, loss of key management, its shares trading at a discount to NAV, losses due to inadequate controls of third-party service providers, gearing risk and regulatory risk. In addition, the emergence and spread of Covid-19 continues to be an ongoing risk facing UIL and its portfolio.

The annual report and accounts is available on the Company's website, www.uil.limited

RELATED PARTY TRANSACTIONS

Details of related party transactions in the six months to 31 December 2021 are set out in note 13 to the accounts.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with Chapter 4 of the Disclosure Guidance and Transparency Rules, the Directors confirm that to the best of their knowledge:

• The condensed set of financial statements contained within the report for the six months to 31 December 2021 has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and gives a true and fair view of the assets, liabilities, financial position and return of the Group;

• The half-yearly financial report, together with the Chairman's Statement and Investment Managers' Report, includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements as required by DTR 4.2.7R;

• The Directors' statement of principal risks and uncertainties above is a fair review of the principal risks and uncertainties for the remainder of the year as required by DTR 4.2.7R; and

• The half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year as required by DTR 4.2.8R.

On behalf of the Board

Peter Burrows

Chairman

18 February 2022

CONDENSED GROUP INCOME STATEMENT (UNAUDITED)

The Group does not have any income or expense that is not included in the profit/(loss) for the period, and therefore the profit/(loss) for the period is also the total comprehensive income/(loss) for the period, 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.

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

CONDENSED GROUP STATEMENT OF FINANCIAL POSITION (UNAUDITED)

CONDENSED GROUP STATEMENT OF CASH FLOWS (UNAUDITED)

NOTES TO THE ACCOUNTS (UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

The Company is an investment company incorporated in Bermuda, traded on the Specialist Fund Segment of the London Stock Exchange Main Market and listed on the Bermuda Stock Exchange.

The Group accounts comprise the results of the Company and UIL Finance Limited.

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK.

The annual financial statements of the Group for the year ended 30 June 2022 will be prepared in accordance with UK-adopted international accounting standards.  As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 30 June 2021 which were prepared in accordance with IFRSs as adopted by the EU.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by the Directors in applying the Group's accounting policies and key sources of uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June 2021.

The unaudited condensed Group accounts do not include all of the information required for full annual accounts and should be read in conjunction with the consolidated accounts of the Group for the year ended 30 June 2021, which were prepared under full IFRS requirements.

2. MANAGEMENT AND ADMINISTRATION FEES

The Company has appointed ICM Investment Management Limited ("ICMIM") as its Alternative Investment Fund Manager and joint portfolio manager with ICM Limited ("ICM"), for which they are entitled to a management fee and a performance fee. The aggregate fees payable by the Company are apportioned between the joint portfolio managers as agreed by them.

The relationship between ICMIM and ICM is compliant with the requirements of the UK version of the EU Alternative Investment Fund Managers Directive as it forms part of UK domestic law by virtue of the European Union (withdrawal) Act 2018, as amended and also such other requirements applicable to ICMIM by virtue of its regulation by the Financial Conduct Authority.

The annual management fee is 0.5% per annum based on total assets less current liabilities (excluding borrowings and excluding the value of all holdings in companies managed or advised by the Investment Managers or any of their subsidiaries from which they receives a management fee), calculated and payable quarterly in arrears. The agreement with ICM and ICMIM may be terminated upon one year's notice given by the Company or by ICM and ICMIM, acting together.

In addition, the Investment Managers are entitled to a capped performance fee payable in respect of each financial period, equal to 15% of the amount by which the Company's NAV attributable to holders of ordinary shares outperforms the higher of (i) 5.0%, and (ii) the post-tax yield on the FTSE Actuaries Government Securities UK Gilts 5 to 10 years' index, plus inflation (on the RPIX basis) (the "Reference Rate"). The opening equity funds for calculation of the performance fee are the higher of (i) the equity funds on the last day of a calculation period in respect of which a performance fee was last paid, adjusted for capital events and dividends paid since that date (the "high watermark"); and (ii) the equity funds on the last day of the previous calculation period increased by the Reference Rate during the calculation period and adjusted for capital events and dividends paid since the previous calculation date. In a period where the Investment Managers or any of their associates receive a performance fee from any ICM managed investment in which UIL is an investor, the performance fee payable by UIL will be reduced by a proportion corresponding to UIL's percentage holding in that investment applied to the underlying investment performance fee, subject to the provision that the UIL performance fee cannot be a negative figure. In calculating any performance fee payable, a cap of 2.5% of closing NAV (adjusted for capital events and dividends paid) will be applied following any of the above adjustments and any excess over this cap shall be written off. A performance fee was last paid in respect of the year to 30 June 2019. As at that date the equity shareholders' funds were £326.3m. As at 30 June 2021, the attributable shareholders' funds were above the high watermark. However, after adjusting for the allocated share of performance fees (paid and accrued) from ICM managed investments in which UIL is an investor, no performance fee was accrued.

In the period to 31 December 2021, UIL's NAV return is below the required 5% return to entitle the Investment Managers to a performance fee and therefore no performance fee has been accrued. The final amount payable is dependent upon the performance of the Company, adjusted for the allocated share of any performance fees from ICM managed investments in which UIL is an investor,  in the year to 30 June 2022.

ICM also provides company secretarial services to the Company, with the Company paying 45% of the incurred costs associated with this post.

JP Morgan Chase Bank N.A. - London Branch has been appointed Administrator and ICMIM has appointed Waverton Investment Management Limited to provide certain support services (including middle office, market dealing and information technology support services). The Company or the Administrator may terminate the agreement with the Administrator upon six months' notice in writing.

3. TAXATION

The revenue taxation charge of £66,000 (31 December 2020: £1,000 and 30 June 2021: £nil) relates to overseas taxation suffered on interest income. Except as stated above, profits of the Company and subsidiaries for the period are not subject to any taxation within their countries of residence.

4. EARNINGS PER ORDINARY SHARE

The calculation of earnings per ordinary share from continuing operations is based on the following data:

5. DIVIDENDS

The Directors have declared a second quarterly dividend in respect of the year ending 30 June 2022 of 2.00p per ordinary share payable on 31 March 2022 to shareholders on the register at close of business on 4 March 2022. The total cost of this dividend, which has not been accrued in the results for the six months to 31 December 2021, is £1,677,000 based on 83,866,218 ordinary shares in issue at the date of this half-yearly report.

6. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

The tables below set out the fair value measurements hierarchy at the relevant period end.

These fair value measurements are categorised into a hierarchy consisting of the following three levels:

Level 1 - valued using unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2 - valued by reference to valuation techniques using other observable inputs not included within Level 1.

Level 3 - valued by reference to valuation techniques using unobservable inputs.

During the period, holdings of value £78,050,000 were transferred from level 1 to level 2 due to the investee company shares having irregular trading in the period. The book cost and fair values were transferred using the 30 June 2021 balances.

During the period, a holding of value £1,101,000 was transferred from level 1 to level 3 due to the investee company delisting, a holding of value £1,265,00 was transferred from level 1 to level 2 due to investee company shares having irregular trading in the period and a holding of value £113,527,665 was transferred from level 2 to level 3 due to the share price being static and shares untraded in the period. The book cost and fair values were transferred using the 30 June 2020 balances.

In the year to 30 June 2021, holdings with value of £20,820,000 were transferred from level 2 to level 1, holdings with value of £113,528,000 were transferred from level 2 to level 3 and a holding with value of £1,101,000 was transferred from level 1 to level 3 . Transfers were due to the changes in liquidity, availability of observable market data and delisting of investee companies. The book cost and fair value were transferred using the 30 June 2020 balances.

A reconciliation of fair value measurements in level 3 is set out in the following table:

UIL has lent to Zeta, a subsidiary of UIL, shares in Resolute Mining Limited with a value of £8.3m as at 31 December 2021. These shares are security for loans taken out by Zeta.

7. BANK LOANS

The Company has a committed loan facility of £50,000,000 from Scotiabank expiring on 30 September 2022. Commissions are charged on any undrawn amounts at commercial rates. The terms of the loan facility, including those related to accelerated repayment and costs of repayment and the loan covenants, are typical of those normally found in facilities of this nature. Scotiabank has a floating charge over the assets of the Company in respect of amounts owing under the loan facility. As at 31 December 2021 £49,623,000 (31 December 2020: £43,817,000 and 30 June 2021: £48,548,000) was drawn down.

8. ORDINARY SHARE CAPITAL

Since the end of the period under review, 96,500 ordinary shares have been purchased for cancellation at a cost of £237,000.

9. SHARE PREMIUM ACCOUNT

10. NON-DISTRIBUTABLE RESERVE

The Non-distributable Reserve was created when the warrants issued in 2007 were exercised, following the recommendation by the SORP in issue at that time. The current SORP no longer requires this accounting treatment and the reserve has therefore been transferred back to the Share Premium Account. There is no impact to distributable reserves under Bermuda Law as a result of this transfer.

11. NET ASSET VALUE PER SHARE

Net asset value per ordinary share is based on net assets at the period end of £322,896,000. (31 December 2020: £302,158,000 and 30 June 2021: £363,781,000) and on 83,962,718 ordinary shares in issue at the period end (31 December 2020: 85,706,314 and 30 June 2021: 84,303,283).

12. OPERATING SEGMENTS

The Directors are of the opinion that the Group's activities comprise a single operating segment, namely that of investing in equity, debt and derivative securities to maximise shareholder returns.

13. RELATED PARTY TRANSACTIONS

The following transactions were carried out during the half-year to 31 December 2021 between the Company and its related parties above:

Subsidiaries of UIL
UIL Finance Limited
Loans from UIL Finance Limited to UIL of £136.3m as at 30 June 2021 increased by £3.9m to £140.2m as at 31 December 2021. The loans are repayable on any ZDP share repayment date.

Allectus Capital Limited ("Allectus") - Pursuant to a loan agreement dated 1 September 2016 under which UIL agreed to loan monies to Allectus, UIL advanced to Allectus a loan of USD 5.8m and Allectus repaid USD 3.3m. The loan is interest free and is converted into equity on an annual basis at 30 June each year.

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

Elevate Platform Limited ("Elevate") - Pursuant to a loan agreement dated 1 January 2019 under which UIL agreed to loan monies to Elevate, UIL advanced to Elevate GBP 0.3m and GBP 0.9m of the loan was capitalised. As at 31 December 2021, the balance of the loan was GBP 1.4m. The loan does not bear interest and is repayable on 31 December 2023.

Newtel Holdings Limited ("Newtel") - UIL advanced GBP 0.1m to Newtel as part of its working capital loan to Newtel. As at 31 December 2021 the loan balance was GBP 5.4m and is repayable on demand.

Novareum Blockchain Asset Fund Ltd ("Novareum") - During the period UIL purchased 50,000 units for a total cost of GBP 3.6m. As at 31 December 2021, UIL holding represented 50.63% of Novareum's units in issue and had a fair value of GBP 6.1m.

Zeta Resources Limited ("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 2.3m and CAD 2.8m and received from Zeta repayments of AUD 7.1m and CAD nil, and capitalised interest of AUD 1.7m and CAD 0.7m. As at 31 December 2021, the balance of the loans and interest outstanding was AUD 19.0m and CAD 16.5m. The AUD loan bears interest at an annual rate of 7.5% and the CAD loan bears interest at an annual rate of 7.25%. The loans are repayable on not less than 12 months' notice.

Associated undertakings:

Carebook Technologies Inc ("Carebook") -Pursuant to a loan agreement dated 21 December 2021, under which UIL has agreed to loan monies to Carebook, UIL advanced to Carebook a loan of CAD 0.5m. UIL received interest of CAD nil. As at 31 December 2021, the balance of the loan and interest outstanding was CAD 0.5m. The loan bears interest at an annual rate of 10.0% and is repayable by 21 December 2026.

ICM Mobility Group Limited ("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 a loan of GBP 1.3m. In November 2021, UIL assigned a loan amount of GBP 254k (AUD 472k) due by Littlepay Pty Limited ("Littlepay") to ICM Mobility. As at 31 December 2021, the balance of the loan outstanding was GBP 1.6m. The loan does not bear interest and any outstanding loan is settled in full by way of capitalisation every six months on or before 31 December and 30 June each year.

Littlepay - UIL received loan repayments from Littlepay of AUD 100k per month for four months (July to October) and in November 2021, the loan balance of AUD 472k was assigned to ICM Mobility. The loan was interest free.

Somers Limited ("Somers") - Somers paid dividends of USD 4.7m to UIL and UIL received 267,767 ordinary shares as part of a dividend reinvestment program. Pursuant to loan agreements dated 1 September 2016 (USD loan), 22 June 2018 (GBP loan) and 5 September 2019 (AUD loan), under which UIL has agreed to loan monies to Somers, UIL advanced to Somers loans of USD 1.5m, GBP nil and AUD 5.7m and Somers repaid loans of USD 4.5m, GBP 2.2m and AUD 8.9m. UIL received interest of USD 255k, GBP 55k and AUD 83k. As at 31 December 2021, the balance of the loans and interest outstanding was USD 5.9m, GBP nil and AUD nil. The loans bear interest at an annual rate of 6.0% and are repayable on not less than 12 months' notice.

There were no other transactions during the six months with any of UIL's subsidiaries and associated undertakings.

Key management entities and persons: ICM and ICMIM are joint portfolio managers of UIL. Other than investment management fees and company secretarial costs as set out in note 2, and reimbursed expenses of £1,000, there were no other transactions with ICM or ICMIM or ICM Corporate Services (Pty) Ltd. As at 31 December 2021, £143,000 remained outstanding to ICM and ICMIM in respect of management and company secretarial fees and £nil in respect of performance fees.

Mr Jillings received dividends from UIL of £14,000. There were no other transactions during the six months with Alasdair Younie, Charles Jillings, Duncan Saville and Sandra Pope and UIL.

The Board

The fees paid to Directors for the six months to 31 December 2021: Chairman £23,800; Chairman of Audit & Risk Committee £22,750; Directors £17,600. The Board received aggregate remuneration of £99,350 for services as Directors. As at 31 December 2021, £nil remained outstanding to the Directors. In addition to their fees, the Directors received dividends totalling £59,247. There were no other transactions during the six months with the Board and UIL.

Companies controlled by key management persons: General Provincial Life Pension Fund Limited received dividends of £2,194,000 from UIL, Union Mutual Pension Fund Limited received dividends of £300,000 from UIL and Mitre Investments Limited received dividends of £108,000 from UIL. There were no other transactions between companies controlled by key management and UIL during the six months to 31 December 2021.

14. FINANCIAL RISK MANAGEMENT - LEVEL 3 FINANCIAL INSTRUMENTS

Valuation methodology

The objective of using valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The Company uses proprietary valuation models, which are compliant with IPEV guidelines and IFRS 13 and which are usually developed from recognised valuation techniques.

The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied, and the valuations. The methodologies used to determine fair value are described in the 2021 annual report. The level 3 assets comprise of a number of unlisted investments at various stages of development and each has been assessed based on its industry, location and business cycle. The valuation methodologies include net assets, discounted cash flows, cost of recent investment or last funding round, listed peer comparison or peer group multiple or dividend yield, as appropriate. Where applicable, the Directors have considered observable data and events to underpin the valuations. A discount has been applied, where appropriate, to reflect both the unlisted nature of the investments and business risks.

UIL currently has investments in four close-ended investment companies, Allectus, ICM Mobility, Novareum and Somers, that are valued using valuation techniques. These close ended fund interests are valued on a net assets basis, estimated based on the managers' NAVs. Managers' NAVs use recognised valuation techniques consistent with IFRS and are normally subject to audit. The fund valuations included in these financial statements were based principally on the 31 December 2021 managers' NAVs and these NAVs have been reviewed to ensure that the economic impact of Covid-19 has been considered.

Sensitivity of level 3 financial investments measured at fair value to changes in key assumptions.

Level 3 inputs are sensitive to assumptions made when ascertaining fair value. While the Directors believe that the estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. The sensitivities shown in the table below give an indication of the effect of applying reasonable and possible alternative assumptions.

In assessing the level of reasonably possible outcomes consideration was also given to the impact of Covid-19 on the valuations. Covid-19 created a higher level of uncertainty over the valuation of unlisted investments and the valuation methodologies were enhanced in 2020 to address this issue. Since then, the impact of Covid-19 on the businesses within UIL's investment portfolio has become considerably clearer and better understood, and the Company has been able to revert to a more standard valuation approach in 2021.

The following table shows the sensitivity of the fair value of level 3 financial investments to changes in key assumptions.

12. GOING CONCERN

Notwithstanding that the Group has reported net current liabilities of £108,146,000 as at 31 December 2021 (30 June 2021: £44,220,000), the financial statements have been prepared on a going concern basis which the Directors consider to be appropriate for the following reasons.

The Board's going concern assessment has focused on the forecast liquidity of the Group for 12 months from the date of approval of the financial statements. This analysis assumes that the Company will meet some of its short term obligations through the sale of level 1 securities, which represented 23.2% of the Company's total portfolio as at 31 December 2021. As part of this assessment the Board has considered a severe but plausible downside that reflects the impact of Covid-19 and an assessment of the Company's ability to meet its liabilities as they fall due (including the loan liabilities), assuming a significant reduction in asset values and accompanying currency volatility.

The severe but plausible downside assumes a breach of bank loan covenants leading to the repayment of bank loan liabilities and a significant reduction in asset values in line with that experienced during the emergence of the Covid-19 pandemic in the first quarter of 2020. The Board also considered reverse stress testing to identify the reduction in the valuation of liquid investments that would cause the Group to be unable to meet its net current liabilities, being primarily the bank loan of £49,623,000 and the 2022 ZDP shares of £49,609,000. The Board is confident that the reduction in asset values implied by the reverse stress test is not plausible even in the current volatile environment.

Consequently, the Directors are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements. Accordingly, the Board considers it appropriate to continue to adopt the going concern basis in preparing the accounts.

13. RESULTS

The condensed set of financial statements, forming the half-year accounts, has been neither audited nor reviewed by the Company's auditors. The latest published accounts are for the year ended 30 June 2021; the report of the auditors thereon was unqualified. The condensed financial statements shown above for the year ended 30 June 2021 are an extract from those accounts.

Legal Entity Identifier: 213800CTZ7TEIE7YM468