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UNIVERSAL PARTNERS LIMITED - Summarised audited financial statements for the year ended 30 June 2020

Release Date: 09/09/2020 12:00
Code(s): UPL     PDF:  
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Summarised audited financial statements for the year ended 30 June 2020

UNIVERSAL PARTNERS LIMITED
(Incorporated in the Republic of Mauritius)
(Registration number: 138035 C1/GBL)
SEM share code: UPL.N0000
JSE share code: UPL
ISIN: MU0526N00007
("Universal Partners" or "the Company")


SUMMARISED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020

                                                                   Year ended               Year ended
                                                                 30 June 2020             30 June 2019
Net asset value per share ("NAV")        GBP                            1.095                    1.143
(Loss)/profit for the year               GBP                       (3 478 437)               8 034 051
(Loss)/earnings per share                pence                          (4.81)                   11.10
Headline (loss)/earnings per share       pence                          (4.81)                   11.10

Universal Partners has a primary listing on the Official Market of the Stock Exchange of Mauritius Ltd
("SEM") and a secondary listing on the Alternative Exchange of the JSE Limited ("JSE").

The principal activity of the Company is to hold investments in high quality, growth businesses across
Europe, with a particular focus on the United Kingdom ("UK"). The Company’s investment mandate
also allows up to 20% of total funds at the time an investment is made to be invested outside of the
UK and Europe.

The Company's primary objective is to achieve strong capital appreciation in Pounds Sterling
("GBP") over the medium to long-term by investing in businesses that meet the investment criteria
set out in the Company’s investment policy.

The Company has now completed six investments since its listing up to the reporting date and
continues to build a pipeline of new investments.

In December 2019, the Company concluded agreements with RMB International (Mauritius)
("RMB") for a term loan facility. The total amount of the facility is GBP 16.5 million, which is available
for making new investments, follow-ons in existing investments, and covering working capital
requirements. The Company drew down GBP 7.8 million of the facility in January 2020 when it
completed its most recent investment, Techstream Group.

The Covid-19 pandemic continues to have a global impact on economies, companies, their staff
and their customers. Many countries imposed lockdowns during the period from March to June
2020, with some allowing increased activity near the end of this period. Globally, most businesses
were adversely impacted by these lockdowns and have struggled to return to pre-Covid trading
levels once these restrictions were lessened. The Company's investments were not immune to the
effects of the lockdown restrictions and all companies experienced a reduction in revenue to some
degree. In all cases management were quick to take action, firstly to protect staff and customers,
and secondly to mitigate the adverse impact of lockdown restrictions on the business. Wherever
possible, staff moved from working onsite to working remotely, costs were cut and measures to
conserve cash, whilst still allowing efficient and effective operations, were initiated. Post the easing
of lockdown restrictions, all businesses have seen a rebound in financial results and in some cases
revenues are approaching 100% of pre-Covid-19 levels. The Argo team remained in close contact
with portfolio company management and boards throughout the pandemic, providing support
and insight to the management teams, and information on current trading and contingency plans
to the Company's Investment Committee and Board.

The Company, with assistance from Argo, performed detailed valuations of its investments at 30
June 2020 using the most current information available and the businesses’ actual trading
performance to the middle of August 2020. The impact of Covid-19 has resulted in fair value
impairment provisions against the valuations of Dentex and Techstream as at 30 June 2020;
however, the Company is confident that these businesses are capable of restoring performance
over a 12 to 24-month timeframe.

Despite a dip in performance during March and April 2020 due to the UK national lockdown, the
Company's investment in JSA Services Limited ("JSA") has performed well since the Company's
acquisition in May 2018. Due to a combination of acquisitive and organic growth, JSA’s normalised
EBITDA has almost doubled since the investment was made and the Company has accordingly
increased the valuation of this investment from its original cost to its current fair value.

The Company has carefully considered the fair value of its investments in YASA Limited and SC Lowy
Partners and has concluded that no adjustment to the current carrying values is necessary.

Financial review
For the year under review, interest income included interest earned from providing short-term
bridging loans to investee companies as well as interest earned from investing excess cash in interest
bearing fixed deposits for periods of up to six months. Interest earned for the year amounted to GBP
111,217, which included interest of GBP 27,585 earned from cash balances and GBP 83,632 earned
from providing short-term bridging loans. There were no loans outstanding at the end of the year.

Dividends received comprise an accrual raised on the preferred shares subscribed for by the
Company in Techstream and amounted to GBP 248,430 for the year.

The Company participated in two capital raises by Dentex during the year for which it earned raising
fees of GBP 128,000. These raising fees are included in other income.

As mentioned above, the valuations of the Company’s investments have been assessed in detail
at 30 June 2020 and the Company has recorded a net impairment charge of GBP 2,848,986 for the
year under review. The investments in Dentex and Techstream were adversely affected by the
Covid-19 pandemic, which resulted in their valuations being impaired by GBP 8,262,836 and GBP
957,518 respectively. The investment in JSA has seen remarkable growth in normalised EBITDA in the
two years since the Company made this investment. Accordingly, Universal Partners has increased
the fair value of this investment from its original cost to a current value of GBP 15,838,338 at 30 June
2020, equating to a fair value gain of GBP 6,371,368.

The Company's investment in SC Lowy is reflected at its original cost and is denominated in US
Dollars ("USD"). During the year, the translation effect of exchange rate movements between the
USD and the GBP resulted in a foreign exchange gain of GBP 364,406.

Management fees paid during the year amounted to GBP 1,571,149, incurred in terms of the
investment management agreement between the Company and Argo. Transaction costs of GBP
9,968, relating to the additional investment in YASA, were incurred during the year. General and
administrative expenses amounting to GBP 447,639 were incurred. The accrual for performance
fees is calculated on the revaluation of the Company’s investments. These fees, which are
recalculated quarterly, only become payable to Argo if the Company realises the expected profit
on disposal of the investments. No performance fees are payable to Argo until a successful exit of
an investment has been achieved. The net decrease in the valuations of the Company’s
investments during the year resulted in a reduction of the accrual required. This had a positive
impact on the income statement of GBP 731,723.

The Company paid interest of GBP 128,476 during the year on the RMB term loan facility.
Short-form announcement

This short-form announcement is the responsibility of the directors and is only a summary of the
information in the full announcement and accordingly does not contain full or complete details.
The full announcement was published on SENS on 9 September 2020, and can be found on the
Company’s website www.universalpartners.mu and can be accessed using the following JSE link
https://senspdf.jse.co.za/documents/2020/jse/isse/UPLE/FY2020res.pdf.

Any investment decisions by shareholders and/or investors should be based on the full
announcement released on SENS and published on the Company's website.

Copies of this report are available to the public, free of charge, at the registered office of the
Company, c/o Intercontinental Trust Limited, Level 3 Alexander House, 35 Cybercity, Ebene 72201,
Mauritius.

Copies of the statement of direct or indirect interest of the Senior Officers of the Company pursuant
to rule 8(2)(m) of the Securities (Disclosure of Obligations of Reporting Issuers) Rules 2007 are
available to the public upon request to the Company Secretary at the Registered Office of the
Company at c/o Intercontinental Trust Limited, Level 3 Alexander House, 35 Cybercity, Ebene 72201,
Mauritius. The Board of Universal Partners accepts full responsibility for the accuracy of the
information in this communique.

No dividends were declared in the current or prior interim period. This is in line with the Company's
investment strategy to achieve long-term growth in NAV.

The Board of Universal Partners accepts full responsibility for the accuracy of the information
contained in this announcement.

By order of the Board
Mauritius – 8 September 2020

Company Secretary
Intercontinental Trust Limited


For further information please contact:

                                        SEM authorised representative
          JSE sponsor                            and sponsor                     Company Secretary
         Java Capital                          Perigeum Capital              Intercontinental Trust Ltd
     Tel: +27 11 722 3050                     Tel: +230 402 0890                 Tel: +230 403 0800

Date: 09-09-2020 12:00:00
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