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RNS Number : 5471F
UIL Limited
21 February 2018
Date: 21 February 2018
Contact: Charles Jillings
ICM Investment Management Limited
01372 271 486
UIL LIMITED
UNAUDITED STATEMENT OF RESULTS
FOR THE SIX MONTHS TO 31 DECEMBER 2017
FINANCIAL HIGHLIGHTS
-- Revenue return per ordinary share 3.22p (2.76p)
-- Capital return per ordinary share 13.76p (20.69p)
-- Total return per ordinary share 16.98p (23.45p)
-- Dividends per ordinary share 3.75p (3.75p)
Figures in brackets are 31 December 2016
UNAUDITED GROUP PERFORMANCE SUMMARY
Half-year Half-year Annual % change
31 Dec 31 Dec 30 Jun Jun-Dec
2017 2016 2017 2017
--------------------------------------------------- --------------- --------------- ------------- ----------------
NAV total return(1) (%) 6.7 9.7 7.7 n/a
Annual compound NAV total return
(since inception)(2) (%) 12.0 12.6 11.9 n/a
--------------------------------------------------- --------------- --------------- ------------- ----------------
NAV per ordinary share (pence) 266.08 261.14 252.86 5.2
Ordinary share price (pence) 163.50 143.50 164.00 (0.3)
Discount (%) 38.6 45.0 35.1 n/a
FTSE All-Share Total Return Index 7,266 6,424 6,777 7.2
Zero dividend preference ("ZDP") shares(3)
(pence)
2018 ZDP shares
Capital entitlement per ZDP share 151.44 141.18 146.19 3.6
ZDP share price 157.38 154.38 154.75 1.7
2020 ZDP shares
Capital entitlement per ZDP share 127.04 118.43 122.64 3.6
ZDP share price 143.75 133.50 140.38 2.4
2022 ZDP shares
Capital entitlement per ZDP share 109.67 103.20 106.37 3.1
ZDP share price 124.50 109.75 119.50 4.2
2024 ZDP shares
Capital entitlement per ZDP share 100.75 n/a n/a n/a
ZDP share price 105.25 n/a n/a n/a
--------------------------------------------------- --------------- --------------- ------------- ----------------
Equity holders' funds (GBPm)
Gross assets(4) 459.7 471.6 449.7 2.2
Bank loans 37.1 75.0 47.8 (22.4)
ZDP shares 182.6 160.8 173.8 5.1
Equity holders' funds 240.0 235.8 228.1 5.2
Revenue account (GBPm)
Income 5.2 4.8 10.7 8.3(5)
Costs (management and other expenses) 1.4 1.5 2.9 (6.7)(5)
Finance costs 0.8 0.7 1.8 14.3 5)
--------------------------------------------------- --------------- --------------- ------------- ----------------
Financial ratios of the Group (%)
Revenue yield on average gross assets 2.3(6) 2.2(6) 2.4 n/a
Ongoing charges figure excluding performance
fees(7) 2.1(6) 2.0(6) 2.1 n/a
Ongoing charges figure including performance
fees(7) 2.5(6) 2.8(6) 2.6 n/a
Bank loans, net bank overdraft and
ZDP shares gearing on net assets 92.1 103.5 97.2 n/a
--------------------------------------------------- --------------- --------------- ------------- ----------------
Returns and dividends (pence)
Revenue return per ordinary share 3.22 2.76 6.38 16.7 (5)
Capital return per ordinary share 13.76 20.69 12.46 (33.5) (5)
Total return per ordinary share 16.98 23.45 18.84 (27.6) (5)
Dividends per ordinary share 3.75 3.75 7.50 0.0 (5)
--------------------------------------------------- --------------- --------------- ------------- --------------
(1) Total return is calculated as change in NAV per ordinary
share, plus dividends reinvested
(2) Since inception includes data relating to Utilico Investment
Trust plc, UIL's predecessor, which started trading in August
2003
(3) Issued by UIL Finance Limited, a wholly owned subsidiary of
UIL
(4) Gross assets less current liabilities excluding loans and
ZDP shares
(5) Percentage change based on comparative six month period to
31 December 2016
(6) For comparative purposes the figures have been
annualised
(7) Expressed as a percentage of average net assets. Ongoing
charges comprise all operational, recurring costs that are payable
by the Group or
incurred within underlying investee funds, in the absence of any
purchases or sales of investments
CHAIRMAN'S STATEMENT
UIL achieved a positive NAV total return of 6.7% in the six
months to 31 December 2017 while the share price fell by 0.3%. The
FTSE All Share Total Return Index was also positive at 7.2%. Since
inception UIL has delivered a 411.4% NAV growth versus the FTSE's
237.6%, resulting in a compound annual growth rate for UIL of
12.0%. Arising from this strong NAV performance, a performance fee
payable by UIL of GBP0.8m (2016: nil) has been accrued.
The share price total return for the six months was 2.0%.
Despite the good NAV gains, the reduction in absolute debt and
gearing, and attractive dividend payments, the ordinary share
discount has widened to 38.6% as at 31 December 2017 from 35.1% as
at 30 June 2017.
During the six months to 31 December 2017 UIL did not buy back
any shares. However, since the period end and up to 20 February
2018, UIL bought back 0.7m shares, 0.8% of the issued shares, at an
average price of 172.67p, a discount to the NAV as at 31 December
2017 of 35.1%.
In my statement for the year to 30 June 2017, I noted that the
world's gross domestic product ("GDP") looked to be in a positive
synchronised growth across most global markets, inflation remains
weak and as such, we are experiencing a "Goldilocks" type
environment for investors. This continued in the second half of
2017 with GDP rising and the Goldilocks environment remaining
intact. Nearly all asset classes strengthened and performance even
accelerated over the six months to 31 December 2017, and this has
continued with a strong start to 2018.
Against this rising strength in GDP and low interest rates,
volatility has reduced and is currently at decade lows. Populism
and regional tensions remain elevated and are expected to continue
over the coming year. Whether they will disrupt the synchronised
GDP expectations remains a concern. The challenge posed by the
emergence of disruptive technology businesses, which increasingly
dominate local and global markets, has continued. Much of the asset
class growth has been driven by higher earnings and valuations, but
also higher debt levels across the world's economies.
This remains a difficult environment for long term strategic
investors. UIL's portfolio has benefitted from its technology
investments and in particular, Afterpay Touch Group Limited
("Afterpay"), an Australian fintech business.
Over the six months to 31 December 2017 Sterling has recovered
some of the ground it lost over the six months to 30 June 2017.
Sterling rose against the New Zealand Dollar by 7.2%, by 4.1%
against the US Dollar and 2.1% against the Australian Dollar, while
falling 1.1% against the Euro. Oil continued its strong recovery
rising by 39.5% ending the year at USD 66.87 per barrel. Gold rose
by 5.0% over the six months to 31 December 2017 ending the year at
USD 1,303/oz.
UIL has delivered strong gains over the period with gains on
investments on the capital return of GBP14.3m, as Afterpay
increased its value by GBP31.3m. UIL's NAV rose by 13.22p to
266.08p over the six months to 31 December 2017.
In October 2017 UIL successfully rolled 17.1m of its existing
2018 ZDP shares into a new issue of 2024 ZDP shares and placed 3.3m
of the new 2024 ZDP shares for cash. The 2024 ZDP shares have a
lower compounding rate of 4.75% and will reduce UIL's funding costs
going forward. It is pleasing to note the new 2024 ZDP shares
trading at a premium to the issue price.
The Board is considering proposals to extend its ZDP maturity
profile through the issue of a new class of 2026 ZDP shares and a
corresponding reduction in the Company's bank facility. Further
details will be announced in due course.
UIL has placed 3.3m new 2024 ZDP shares for cash, realised
investments, received back investee loans and seen its currency
hedges rolled over, all generating cash in the six month period
enabling UIL to reduce its bank loans from GBP47.8m to
GBP37.1m.
The combination of the above has seen UIL's gearing reduce to
92.1% from 97.2% as at 30 June 2017 and its average funding costs
as at 31 December 2017 reduce to 3.4%.
The profit on the revenue account in the half year was up by
16.4% at GBP2.9m (31 December 2016: GBP2.5m). The Board has
maintained the quarterly dividends of 1.875p per ordinary share,
with the second quarterly dividend to be paid on 23 March 2018 to
shareholders on the register as at 9 March 2018.
MiFID II came into effect in January 2018 and UIL was required
to publish a Key Information Document ("KID"). UIL has fully
complied with the new KID requirements for its ordinary shares and
each of its ZDP shares at a financial cost to the shareholders. The
Board would suggest some caution to shareholders using the KID. In
particular, while the performance scenarios have been calculated
using the methodology prescribed by EU rules, these should not be
taken as a guide to the future and actual performance which may
turn out to be materially different.
In response to the new MiFID II environment, ICM and ICM
Investment Management have agreed to absorb the research cost and
not recharge them to UIL.
OUTLOOK
Markets remain outside the normal historic parameters. From a
monetary policy perspective, unconventional tools are continuing to
be deployed, such as negative interest rates and Quantitative
Easing ("QE") still being implemented in Europe and Japan. However,
the US economy has strengthened to the point where Quantitative
Tightening ("QT") is now in place and inflation look set to rise,
including wage inflation. This in turn has seen increased market
expectations that interest rates will need to rise faster.
The rising dislocation between QE and QT is likely to result in
increased volatility and in the last month volatility has been seen
to spike and markets correct. Corporates remain in a goldilocks
scenario (global growth, low interest rates and low inflation)
which should be beneficial when reflected in rising revenues,
increasing margins and consequently good earnings growth. This
should have positive implications for UIL's portfolio.
A caution should be made about geopolitical events and populism.
There continues to be a strong populist influence and this could
lead to changing outcomes which may not always be foreseen. Further
increased geopolitical tensions, especially in the Middle East
could also have implications for the markets.
While macro, political and geopolitical events will influence
markets, UIL's investment approach and performance will continue to
be driven by individual stock selection.
Peter Burrows
Chairman
21 February 2018
INVESTMENT MANAGERS' REPORT
UIL's NAV total return was 6.7% in the six months to 31 December
2017 and builds again on the significant gains made by UIL in
recent years. Since inception UIL's NAV total return has been
411.4% and the share price total return was 318.9%.
As noted in the Chairman's statement, the six months to 31
December 2017 has seen a further acceleration in global GDP and a
continuation of the goldilocks scenario, growth in GDP with low
inflation and low interest rates. Equity markets led by the USA
S&P have moved higher in rising earnings and valuations.
Commodity prices have been much stronger, led by oil which, as at
31 December 2017 was 39.5% higher at USD 66.87 per barrel, and gold
which was up by 5.0% at USD 1,303/oz.
We remain optimistic about short-term markets but are concerned
about elevated political and geographical tensions which could
derail global GDP growth. We remain concerned about the rising
level of global debt and liabilities.
Over the six months, Sterling has reversed some of the losses it
made in recent years. Sterling was up against the NZD by 7.2%; USD
by 4.1% and AUD by 2.1%. The Euro gained 1.1% versus Sterling.
For UIL, the net effect of all of the above has been further
asset gains. UIL's foreign exchange positions have released cash on
maturity as Sterling has firmed. UIL has taken the opportunity to
reduce bank debt by placing 3.3m new 2024 ZDP shares for cash and
realising investments.
PORTFOLIO
The technology investments in UIL have been strong with Afterpay
rising 122.8%. Offsetting this, Zeta Resources Limited ("Zeta") and
Resolute Mining Limited ("Resolute") have both been relatively weak
and disappointingly, so too has the unlisted company Vix Technology
Limited ("Vix Technology"). These are all reviewed below.
Overall, the investment portfolio gained GBP14.3m and the gains
on derivatives and foreign exchange amounted to GBP5.0m.
MAJOR PLATFORM INVESTMENTS
Somers Limited ("Somers") is a financial services sector
investment holding company listed on the Bermuda Stock Exchange.
Somers' share price was USD 14.25 as at 31 December 2017, up from
USD 13.00 as at 30 June 2017.
During the period PCF Group plc, Somers' majority owned bank,
received a UK deposit banking licence and commenced taking retail
deposits, while Homeloans Limited ("Homeloans") became Somers'
largest investment following the growth in its reported Assets
under Management to AUD 10.2bn. Somers' shareholders' equity
increased significantly to USD 361.2m (June 2017: USD 268.6m)
mainly as a result of the conversion of the loan notes issued as
part of Somers' acquisition of the majority stake in Homeloans in
September 2016. Somers' other two significant investments are
Bermuda Commercial Bank Limited (one of Bermuda's four licensed
banks), which is a wholly owned investment and a 62.5% interest in
Waverton Investment Management Limited ("Waverton"), a UK private
wealth manager with GBP5.5bn of assets under management.
For the year ended 30 September 2017 Somers reported a net
profit of USD 19.4m on total equity of USD 361.2m. Somers' diluted
NAV per share was USD 18.55 as at 30 September 2017 (September
2016: USD 18.66). The profit was driven principally by valuation
increases at Homeloans and Waverton due to strong financial
performances at both companies. Despite the annual profit, NAV per
share remained at similar levels to last year mainly due to the
issue of shares from the pro rata bonus warrant issue to all
shareholders at a discount to net asset value. Following the
exercise of convertible loan notes by other shareholders during the
period, UIL's holding in Somers reduced to 44.2% as at 31 December
2017. Somers is now UIL's largest investment accounting for 19.6%
of the total portfolio.
Utilico Emerging Markets Limited ("UEM") invests predominantly
in infrastructure and utility assets in emerging markets and is
listed in the UK and traded on the London Stock Exchange. During
the period, emerging markets have generally been strong, with the
MSCI Emerging Markets Total Return Index (GBP adjusted) up by
11.3%. This reflects robust underlying economies, with all regions
across the world showing positive synchronised growth while
inflation in most countries remains subdued.
After enduring its longest recession in history in 2015-16,
Brazil's economy finally returned to growth in early 2017 and
sustained this through the year. This helped deliver strong market
performance, with a 21.5% rise in the Bovespa index over the six
months to 31 December 2017. Meanwhile China continued to deliver
surprisingly resilient growth, with GDP up 6.9% in 2017, beating
the official target. While the Chinese A-share market posted modest
growth, up by 3.6% over the six months, the Hong Kong Hang Seng was
also particularly strong, up by 16.1%. It is notable that in
Argentina President Macri continues to effect major market-friendly
reforms, which was reflected in the Merval index appreciating by
37.2% during the period. However, stubbornly high inflation partly
eroded returns here, with the Argentinian Peso depreciating against
Sterling by 13.9%.
In the six months to 31 December 2017, UEM's NAV increased by
7.2% on a total return basis, reflecting a solid underlying
performance from the portfolio constituents, partly offset by
currency headwinds due to strengthening of Sterling. During the
period UEM's share price total return increased by 4.1%, reflecting
the increase in dividends to 3.40p per share. UIL sold 0.75m shares
in UEM over the period, reducing its holding by 2.3% and realising
GBP1.7m.
Zeta is a resource-focused investment company which is listed on
the Australian Stock Exchange. Over the six months to 31 December
2017, Zeta's net assets increased by a pleasing 33.0%, while its
share price declined by 12.2% to AUD 0.33, representing a discount
to net tangible assets of 29.5%.
During the six month period, commodity prices were up overall.
Oil prices rose, with the Brent crude oil price up by 39.5% to USD
66.87 per barrel. The gold price was up by 5.0% to USD 1,303/oz,
while the nickel price was up by 30.2% to USD 5.48/lb. In line with
the rise in commodity prices, the net assets of Zeta rose by 33.0%
from USD 68.7m to USD 91.4m. However, the net assets per share rose
by 24.9% due to dilution from the exercise of options by UIL during
the period. In the six months to 31 December 2017, New Zealand Oil
& Gas ("NZOG") was subject to a partial takeover bid by OG Oil
& Gas, benefiting Zeta's investment in NZOG.
The loan balance as at 31 December 2017 is AUD 24.5m, UIL loaned
Zeta an additional AUD 12.7m and Zeta repaid to UIL AUD 18.4m.
Infratil Limited ("Infratil") is a New Zealand listed company
managed by H.R.L. Morrison & Co, with its main business lines
focused in the renewable energy, airport and public transportations
sectors. Infratil's share price increased by 11.8% in the six
months to 31 December 2017 reflecting solid financial performance
in its investments, which has led to an upgrade in its EBITDAF
guidance for its financial year to 31 March 2018.
In its interim report to 30 September 2017, Infratil's six-month
continuing EBITDAF was up by 18.4%, with a strong performance at
Trustpower more than offsetting a weaker financial contribution
from NZ Bus and Tilt Renewables. Trustpower has benefitted from a
combination of strong hydrology and firm electricity prices in New
Zealand, with total generation up by 20.4% and EBITDAF growth of
33.8%. However, wind resources have been comparatively weak, with
Tilt Renewables output falling by 16.0% and EBITDAF declining
19.9%. NZ Bus passenger figures fell by 8.6% due to the loss of its
South Auckland services, with resulting EBITDAF declining 28.4%.
Wellington Airport provided steady growth, reporting passenger
numbers up by 3.1% and EBITDAF up 8.2%, whilst Perth Energy losses
narrowed. Overall, Infratil's net parent surplus increased 15.6%
year-on-year.
In the six months to 31 December 2017 Infratil increased its
dividends per share by 4.3%. There was no change to UIL's
shareholding in Infratil during the period.
Bermuda First Investment Company Limited ("BFIC") is an
investment company focused on Bermuda. Its largest investments are
Ascendant Group Limited ("Ascendant") (valued at BMD 25.9m as at 31
December 2017) and One Communications Limited ("One") (valued at
BMD 24.1m as at 31 December 2017). BFIC's policy is to build
strategic investments in local Bermudan companies whilst working
closely, where appropriate, with the board and senior management of
those companies to increase the long-term value of the investments
and to encourage the introduction of shareholder friendly
initiatives. Both companies are benefiting from an improvement in
the Bermuda economy and a strong 2017 where Bermuda had a positive
uplift from hosting the America's Cup. Both Ascendant and One are
making significant investments to maintain and improve their
respective networks in order to drive future growth.
MAJOR DIRECT HOLDINGS
Gold production by Resolute in the six months to 31 December
2017 was 142,749 ounces, down 16.3% on the same period in the prior
year. This was due to lower head grades, planned production
shutdowns for maintenance at Syama and the wind-down of reserves
from underground mining at Ravenswood before transitioning to
large-scale open pit operations. Production cash costs during the
period averaged AUD 1,231 per ounce. For the year to June 2018
Resolute has forecast production of 300,000 ounces at an all-in
sustaining cost of AUD 1,280 per ounce. The Syama underground mine
is currently under development and is due to commence full
underground mining in December 2018.
In the six months to 31 December 2017, Resolute sold 121,480
ounces of gold at an average price of AUD 1,687 per ounce,
generating gross operating cash flow of AUD 86.8m. Cash and bullion
on hand and liquid investments were AUD 196.4m as at 31 December
2017 (2016: AUD 282.5m); total borrowings were AUD 35.0m (2016: AUD
22.0m). During the period Resolute paid a dividend of 2.0c per
share.
The share price of Resolute during the six months to 31 December
2017 was down by 4.2% from AUD 1.19 as at 30 June 2017 to AUD 1.14
as at the end of December 2017. There was no change in UIL's
shareholding during the six months under review.
Afterpay had a rewarding six months following the merger between
Afterpay Holdings Limited and Touchcorp Limited on 30 June
2017.
The company's "Afterpay" branded payment service, which allows
consumers in Australia and New Zealand to pay for goods in
instalments with no interest charges funded by supplier discounts,
continued to grow extremely strongly, in terms of total transaction
values, customer numbers and merchant outlets. AUD 918.0m of sales
were processed through the platform in the six months to 31
December 2017, more than six times the AUD 145.0m of sales
processed for the same period in 2016.
Afterpay now has over 11,500 merchants offering its payment
option and 1.5m consumers have now used the service. Whilst over
90% of processed payments are made online, the service is
increasingly being used instore, with Afterpay available as a
payment method in over 5,000 branches of multiple retailers. During
the period, Afterpay has partnered with Qantas' low cost airline,
Jetstar, to offer Afterpay as a payment option for domestic
flights.
Since the period end, Afterpay has announced that it is
evaluating an entry into the US market and to support this, the
company has entered into a strategic relationship with a US based
venture capital firm, Matrix Partners.
Afterpay's share price more than doubled over the six month
period, advancing 122.8%. UIL sold 3.0m shares (16.8% of UIL's
shareholding) realising GBP8.2m over the six months to 31 December
2017.
Optal Limited ("Optal") is a developer of global payment
solutions, with its key application providing payment services to
eNett, a virtual payment card solution for the travel industry.
eNett is majority owned by NASDAQ listed Travelport Worldwide
Limited, with Optal owning a 23.5% stake.
eNett's revenues continue to grow strongly, albeit at a lower
rate than in prior years. For the three months to 30 September
2017, eNett's revenues increased by 30.0% to USD 54.0m when
compared to the same period in 2016. Optal is an unlisted company
and its revenues for the period have not been publicly disclosed.
However, revenues generated from its relationship with eNett grow
at a rate broadly proportional to eNett's volumes. Optal is
profitable and cash generative.
Vix Technology is an unlisted company in which UIL has a 39.8%
holding. It is a global leader in smart booking, ticketing,
payments, real-time information and data management solutions for
large-scale transport networks, working with over 200 customers
worldwide. Vix Technology leverages more than 25 years of industry
experience designing, operating and maintaining proven
next-generation ticketing, payment and loyalty platforms to help
governments and businesses manage more than five billion
transactions a year and create new ways to connect with their
customers.
2017 marked the formal launch of a new strategy for Vix
Technology, promoting greater integration, the outsourcing of
non-core functions and a commitment to the common technology
platform, "Pulse". The move to a universal platform is expected to
improve scalability, reduce business risk and promote sustainable
growth. However, deferred project revenues and material fixed costs
have impacted performance in the short term. 2017 EBITDA was
disappointing and with a commitment to deliver a core Pulse product
for selected geographies, 2018-2020 will continue to reflect a
relatively high cost base. Nevertheless, the transition from a
project-focused to a product-focused business model will leave the
company better placed to compete effectively in a rapidly changing
global marketplace.
In the six months to 31 December 2017, UIL wrote down its equity
holding in Vix Technology by GBP6.5m to reflect the headwinds being
experienced by the business.
Vix Verify Global Ltd ("VVG") is an unlisted global technology
business based in Australia. The company provides identity
verification services to customers such as banks,
telecommunications providers, online gaming companies and
government agencies. Vix Verify's systems are used to check
identities and verify the validity of identification documents for
various purposes including fraud reduction, the prevention of money
laundering and terrorism financing and checking immigration
statuses.
VVG's Australian operations exceeded budget while VVG continues
to invest in its operations internationally.
UIL holds its 39.8% interest in VVG through a CFD, which confers
the same benefit as if the shares had been held directly by
UIL.
PORTFOLIO ACTIVITY
During the six months to 31 December 2017, UIL invested
GBP19.3m, including GBP3.4m lent to Vix Technology and GBP8.3m to
Zeta, and realised GBP21.2m, including GBP10.7m from the repayment
of Zeta loans, GBP8.2m from the sale of shares in Afterpay and
GBP1.7m in UEM.
The geographical split, on a look-through basis, had Australia
increasing to 30.9% of total investments (30 June 2017: 27.3%) and
Bermuda decreasing from 16.1% as at 30 June 2017 to 12.6% as at the
end of December 2017. In the sector split, technology rose to 26.5%
(30 June 2017: 22.3%) and oil and gas reduced from 9.1% as at 30
June 2017 to 6.0% as at 31 December 2017.
LEVEL 3 INVESTMENTS
UIL's investments in level 3 companies decreased by GBP1.5m.
Platform loans remained relatively flat at GBP21.8m, a decrease of
2.2%.
GEARING
It is pleasing to note UIL's initial goal set four years ago of
reducing gearing to 100.0% or below has been delivered.
Gearing (including the ZDP shares) has steadily reduced from
160.4% as at 30 June 2013, 124.1%, two years ago, 103.5% a year ago
and 97.2% as at 30 June 2017 to 92.1% as at 31 December 2017.
ZDP SHARES
During the six months to 31 December 2017, UIL Finance issued
GBP50.0m of new 2024 ZDP shares of which GBP20.0m were issued to
UIL and are held by UIL on its balance sheet. The 2024 ZDP shares
held by UIL are eliminated on consolidation of UIL Finance. Of the
GBP30.0m issued to the market, GBP26.7m was issued to existing 2018
ZDP shareholders under the rollover offer and GBP3.3m was placed in
the market for cash.
The 2018 ZDP shares which are due for redemption on 31 October
2018 this year were reduced by the rollover to stand at GBP49.5m as
at 31 December 2017. These are expected to be redeemed for cash and
on time in full.
Funding is expected to come from the undrawn Scotia facility and
from further realisations and distributions from investee
companies.
DEBT
Bank loans decreased from GBP47.8m as at 30 June 2017 to
GBP37.1m as at 31 December 2017 funded by investee loan repayments,
portfolio realisations, cash being released from UIL's FX positions
as Sterling has strengthened and the placing of 3.3m new 2024 ZDP
shares for cash.
The GBP50.0m loan facility with Scotiabank is due for repayment
on 22 March 2018. UIL has agreed indicative terms for a new two
year GBP50.0m secured multicurrency revolving bank facility with
Scotiabank on similar terms and covenants, which is expected to be
entered into, prior to 22 March 2018.
DERIVATIVES
During the six months to 31 December 2017 there continued to be
significant currency hedges. As at 31 December 2017 these were AUD
140.9m, USD 74.8m, NZD 14.4m and EUR 6.0m. These generated a gain
on the capital account of GBP4.1m (31 December 2016: loss of
GBP9.0m).
REVENUE RETURN
Revenue total income rose by 9.9% from GBP4.8m to GBP5.3m.
Management and administration fees and other expenses decreased by
5.7% to GBP1.4m (31 December 2016: GBP1.5m). Finance costs
increased by 26.5% to GBP0.8m (31 December 2016: GBP0.7m).
As a result of the above, revenue profit increased by 16.4% from
GBP2.5m to GBP2.9m and earnings per ordinary share ("EPS") rose by
16.7% to 3.22p from 2.76p as at 31 December 2016.
CAPITAL RETURN
Capital total income was GBP19.3m (31 December 2016: GBP25.2m).
This represented gains on investments and also gains on foreign
exchange positions.
Management fees of GBP0.8m represent accrued performance fees
due to ICM Limited and ICM Investment Management Limited under the
management agreements.
Finance costs were 7.0% lower at GBP6.0m (31 December 2016:
GBP6.5m) reflecting lower costs associated with the ZDP shares in
issue.
The resultant profit for the six months to 31 December 2017 on
the capital return was GBP12.4m (31 December 2016: GBP18.7m) and
the EPS was 13.76p (31 December 2016: 20.69p).
EXPENSE RATIO
The ongoing charges figure, excluding performance fees,
increased from 2.0% as at 31 December 2016 to 2.1% as at 31
December 2017. Including performance fees (accrued by UIL and
underlying investee funds) the ongoing charges figure decreased
from 2.8% to 2.5%.
ICM Investment Management Limited and ICM Limited
21 February 2018
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 Business Review section of the Annual Report and
Accounts for the year ended 30 June 2017 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, the adverse impact gearing
could have, the sudden withdrawal of its bank facility, loss of key
management and losses due to inadequate controls of third party
service providers.
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 2017 are set out in note 12 to the Half-Yearly Report and
details of the fees paid to the Investment Managers are set out in
note 2 to the Half-Yearly Report.
Directors' fees were increased by approximately 2.3% with effect
from 1 July 2017 to:
Chairman GBP44,000 per annum
Chairman of the Audit Committee GBP42,000 per annum
Directors GBP32,500 per annum
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 2017 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
21 February 2018
UNAUDITED CONDENSED GROUP INCOME STATEMENT
for the six months to 31 December 2017 2016
Revenue Capital Total Revenue Capital Total
return return return return return return
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------------------------- --------- --------- --------- --------- --------- ---------
Gains on investments - 14,250 14,250 - 35,006 35,006
Gains/(losses) on derivative financial instruments - 4,102 4,102 - (8,999) (8,999)
Foreign exchange (losses)/gains (20) 908 888 (66) (789) (855)
Investment and other income 5,257 - 5,257 4,830 - 4,830
Total income 5,237 19,260 24,497 4,764 25,218 29,982
Management and administration fees (740) (804) (1,544) (852) - (852)
Other expenses (644) - (644) (616) (2) (618)
---------------------------------------------------- --------- --------- --------- --------- --------- ---------
Profit before finance costs and taxation 3,853 18,456 22,309 3,296 25,216 28,512
Finance costs (846) (6,049) (6,895) (669) (6,507) (7,176)
Profit before taxation 3,007 12,407 15,414 2,627 18,709 21,336
Taxation (100) - (100) (129) - (129)
---------------------------------------------------- --------- --------- --------- --------- --------- ---------
Profit for the period 2,907 12,407 15,314 2,498 18,709 21,207
---------------------------------------------------- --------- --------- --------- --------- --------- ---------
Earnings per ordinary share - pence 3.22 13.76 16.98 2.76 20.69 23.45
---------------------------------------------------- --------- --------- --------- --------- --------- ---------
The Group does not have any income or expense that is not
included in the profit for the period, and therefore the profit for
the period is also the total comprehensive income 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.
UNAUDITED CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
for the six months to 31 December 2017
Ordinary Share Non-
share premium Special distributable Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- --------- --------- --------- -------------- --------- --------- ---------
Balance at 30 June 2017 9,020 19,313 233,866 32,069 (75,667) 9,468 228,069
Profit for the period - - - - 12,407 2,907 15,314
Ordinary dividends paid - - - - - (3,382) (3,382)
Balance at 31 December 2017 9,020 19,313 233,866 32,069 (63,260) 8,993 240,001
----------------------------- --------- --------- --------- -------------- --------- --------- ---------
for the six months to 31 December 2016
Ordinary Share Non-
share premium Special distributable Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- --------- --------- --------- -------------- --------- --------- ---------
Balance at 30 June 2016 9,065 20,031 233,866 32,069 (86,928) 10,482 218,585
Profit for the period - - - - 18,709 2,498 21,207
Ordinary dividends paid - - - - - (3,388) (3,388)
Shares purchased by the
Company (35) (563) - - - - (598)
Balance at 31 December 2016 9,030 19,468 233,866 32,069 (68,219) 9,592 235,806
----------------------------- --------- --------- --------- -------------- --------- --------- ---------
for the year to 30 June 2017
Ordinary Share Non-
share premium Special distributable Capital Revenue
capital account reserve reserve reserves reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------- --------- --------- --------- -------------- --------- --------- ---------
Balance at 30 June 2016 9,065 20,031 233,866 32,069 (86,928) 10,482 218,585
Profit for the year - - - - 11,261 5,760 17,021
Ordinary dividends paid - - - - - (6,774) (6,774)
Shares purchased by the
Company (45) (718) - - - - (763)
Balance at 30 June 2017 9,020 19,313 233,866 32,069 (75,667) 9,468 228,069
-------------------------- --------- --------- --------- -------------- --------- --------- ---------
UNAUDITED CONDENSED GROUP BALANCE SHEET
31 Dec 2017 31 Dec 2016 30 Jun 2017
GBP'000s GBP'000s GBP'000s
--------------------------------------- --------------- --------------- ---------------
Non-current assets
Investments 461,451 473,943 449,116
Current assets
Other receivables 1,273 646 25,190
Derivative financial instruments 1,287 6,094 818
Cash and cash equivalents 620 253 3,573
--------------------------------------- --------------- --------------- ---------------
3,180 6,993 29,581
--------------------------------------- --------------- --------------- ---------------
Current liabilities
Loans (37,128) (25,000) (47,846)
Other payables (3,022) (9,247) (26,472)
Derivative financial instruments (1,911) (56) (2,532)
Zero dividend preference shares (49,482) - -
(91,543) (34,303) (76,850)
--------------------------------------- --------------- --------------- ---------------
Net current liabilities (88,363) (27,310) (47,269)
--------------------------------------- --------------- --------------- ---------------
Total assets less current liabilities 373,088 446,633 401,847
--------------------------------------- --------------- --------------- ---------------
Non-current liabilities
Loans - (50,000) -
Zero dividend preference shares (133,087) (160,827) (173,778)
--------------------------------------- --------------- --------------- ---------------
Net assets 240,001 235,806 228,069
--------------------------------------- --------------- --------------- ---------------
Equity attributable to equity holders
Ordinary share capital 9,020 9,030 9,020
Share premium account 19,313 19,468 19,313
Special reserve 233,866 233,866 233,866
Non-distributable reserve 32,069 32,069 32,069
Capital reserves (63,260) (68,219) (75,667)
Revenue reserve 8,993 9,592 9,468
--------------------------------------- --------------- --------------- ---------------
Total attributable to equity holders 240,001 235,806 228,069
Net asset value per ordinary share
Basic - pence 266.08 261.14 252.86
--------------------------------------- --------------- --------------- ---------------
UNAUDITED CONDENSED GROUP STATEMENT OF CASH FLOWS
Six months to Six months to Year to
31 Dec 2017 31 Dec 2016 30 Jun 2017
GBP'000s GBP'000s GBP'000s
------------------------------------------------------ ------------------- ------------------- --------------
Cash flows from operating activities 580 1,933 1,314
------------------------------------------------------ ------------------- ------------------- --------------
Investing activities:
Purchases of investments (18,452) (43,874) (67,267)
Sales of investments 21,193 60,490 109,560
Purchases of derivatives - (28,607) (23,202)
Sales of derivatives 3,012 - -
Cash flows from investing activities 5,753 (11,991) 19,091
------------------------------------------------------ ------------------- ------------------- --------------
Cash flows before financing activities 6,333 (10,058) 20,405
------------------------------------------------------ ------------------- ------------------- --------------
Financing activities:
Equity dividends paid (3,382) (3,388) (6,774)
Movement on loans (9,595) 46,800 25,148
Cash flows from issue of ZDP shares 2,840 19,538 27,258
Cash flows from redemption of ZDP shares - (62,741) (62,741)
Cost of shares purchased for cancellation (164) (598) (599)
Cash flows from financing activities (10,301) (389) (17,708)
------------------------------------------------------ ------------------- ------------------- --------------
Net (decrease)/increase in cash and cash equivalents (3,968) (10,447) 2,697
Cash and cash equivalents at the beginning
of the period 3,573 (114) (114)
Effect of movement in foreign exchange (237) 2,646 990
------------------------------------------------------ ------------------- ------------------- --------------
Cash and cash equivalents at the end of the period (632) (7,915) 3,573
------------------------------------------------------ ------------------- ------------------- --------------
Comprised of:
Cash 620 253 3,573
Bank overdraft (1,252) (8,168) -
Total (632) (7,915) 3,573
------------------------------------------------------ ------------------- ------------------- --------------
NOTES
The Directors have declared a second quarterly dividend in
respect of the year ending 30 June 2018 of 1.875p per ordinary
share payable on 23 March 2018 to shareholders on the register at
close of business on 9 March 2018. The total cost of this dividend,
which has not been accrued in the results for the six months to 31
December 2017, is GBP1,678,000 based on 89,493,389 ordinary shares
in issue at the date of this report.
The half-yearly report is available on the website
www.uil.limited and will be posted to shareholders at the beginning
of March 2018. Copies may be obtained during normal business hours
from Exchange House, Primrose Street, London, EC2A 2NY.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMGZZZMRGRZM
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