UNIVERSAL PARTNERS LIMITED — Annual Report 2021

Nov 3, 2021

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INTEGRATED ANNUAL REPORT 2021

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Value comes from delivering on successful partnerships

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Contents

5 Our business at a glance

• 6 About us

• 8 Our structure

• 10 Share analysis 12 Our investment strategy 14 Our executive team 17 Our board and investment committee

• 23 Leadership review

• 24 Message from the chairman 28 Chief executive officer’s report 34 Our investments

• 50 Corporate governance

• 50 How we are governed 54 Governance structure 56 Structure of the board and its committees 58 Board committees

• 63 Directors appointment procedure 64 Director duties, remuneration and performance 66 Risk governance and internal control 68 Reporting with integrity 69 Audit

• 70 Relations with shareholders and other key shareholders

• 73 Annual financial statements

• 74 Commentary of the directors 75 Statement of compliance 76 Certificate from the secretary 77 Independent auditor’s report 80 Statement of financial position

81 Statement of profit or loss and other comprehensive income 82 Statement of changes in equity 83 Statement of cash flows 84 Notes to the financial statements

105 Shareholder information

106 Corporate diary 107 Corporate information

ABOUT THIS REPORT

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

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About this report

This is the fifth integrated annual report of Universal Partners Limited (“Universal Partners” or “the Company”). It provides investors with an overview of our investment strategy, performance over the reporting period and our governance framework. This report seeks to demonstrate that Universal Partners has the capacity to deliver on its investment strategy and in doing so, create and deliver value over the medium- and long-term for our shareholders.

FRAMEWORK AND ASSURANCE

The company has a primary listing on the Stock Exchange of Mauritius (SEM) and a secondary listing on the alternative board of the Johannesburg Stock Exchange (JSE AltX). The information included in this integrated report has been provided in accordance with International Financial Reporting Standards (IFRS), the Mauritian Companies Act, 2001, the Mauritian Securities Act, 2005, SEM Listing Rules, JSE Listings Requirements, Integrated Reporting Framework and the Code of Corporate Governance for Mauritius.

FORWARD-LOOKING STATEMENTS

This integrated report contains certain forwardlooking statements with respect to Universal Partners’ financial performance and position. These statements and forecasts involve risk and uncertainty as they relate to events and circumstances that occur in the future. There could be various factors, including but not limited to, global and local economic conditions, industry as well as regulatory factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Universal Partners is not under any obligation to

update or alter its forward-looking statements, whether as a result of new information, future information or otherwise. This forward-looking information has not been reviewed or reported on by the external auditors.

APPROVAL OF THE INTEGRATED REPORT

The board of directors of Universal Partners acknowledges its responsibility for ensuring the integrity of this integrated report. The board believes that this report presents a balanced and fair account of Universal Partners’ performance for the year ending 30 June 2021. On the recommendation of the Audit and Risk committee, the board approved the 2021 integrated report for publication on 7 October 2021.

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Larry Nestadt Pierre Joubert Chairman CEO

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4 OUR BUSINESS AT A GLANCE
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UNIVERSAL PARTNERS 5
INTEGRATED ANNUAL
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• Our business at a glance 6 About us 8 Our structure 10 Share analysis 12 Our investment strategy 14 Our executive team 17 Our board and investment committee

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OUR BUSINESS AT A GLANCE

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About us

Universal Partners Limited is a permanent capital investment holding company.

We seek investments in high-potential, growth businesses, with a focus on the United Kingdom and Europe. Twenty per cent of the company’s funds may be allocated to other regions. Our experienced leadership team is recognised for its strong track record of managing and growing successful businesses. We provide growth capital to high quality businesses that meet our investment criteria. We add value by drawing on our extensive experience to offer strategic direction to the companies we partner with.

We are patient investors with a permanent capital structure and are committed to achieving the best long-term outcomes for both the businesses we invest in and for our investors.

OUR PURPOSE

Our purpose is to partner with, and add value to, high potential businesses to achieve strong capital appreciation over the mediumto long-term.

OUR VISION

Our vision is to create and manage a portfolio of investments that deliver value for our shareholders.

THE VALUES WE LIVE BY:

Trust

We don’t simply invest in businesses, we partner with people. Every investment we make is based on the quality of the relationships we build and the trust that underpins them.

Integrity

We know that success doesn’t happen overnight. What sets us apart is the integrity of our people and the reputations they have developed through years of building sustainable businesses.

Honesty

We will only partner where we see value and where we believe we can offer insight. For us, honesty is what underpins every good investment decision.

Excellence

We seek excellence in the businesses we invest in, and we offer excellence in return.

OUR BUSINESS AT A GLANCE

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Our structure

Universal Partners was established in Mauritius on 25 April 2016 as a public company limited by shares, holding a Category 1 global business license issued by the Mauritian Financial Services Commission.

Universal Partners is listed on the Stock Exchange of Mauritius (SEM) with a secondary listing on the Johannesburg Stock Exchange Limited’s Alternative Exchange (JSE AltX). Universal Partners raised over £72 million for investment in its initial public offering in August 2016.

Universal Partners appointed Argo Investment Managers (Argo) under the leadership of executive directors Pierre Joubert, David Vinokur and Andrew Birrell, as its investment manager. Argo is responsible for sourcing the investment opportunities, executing the transactions, and managing the investments until such time as they are realised. Argo earns an annual management fee for its services, in addition to a carry fee payable only once an investment is realised profitably. A portion of this carry fee is payable in Universal Partners equity, and a portion in cash. The equity portion has a three-year lock in period.

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OUR BUSINESS AT A GLANCE

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Share analysis

Our shareholder base is maturing and consolidating, with 99% of shares being held by shareholders who hold more than 100 000 shares each. The directors and their associates directly and indirectly own 20.9% of the total issued share capital of the company as at 30 June 2021.

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93% 7% 75% 25% 86% 14%
149 72 350 131 72 350 131
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SHAREHOLDER SPREAD

RANGE 1 – 999 1 000 – 9 999 10 000 – 99 999 100 000 – more Total	NUMBER OF SHAREHOLDERS 64 24 22 39 149	% OF HOLDERS 42.9% 16,1% 14,8% 26,2% 100,0%	NUMBER OF SHARES 7 733 95 095 790 644 71 456 659 72 350 131	% OF SHARES
				0,0%
				0,1%
				1,1%
				98,8%
				100,0%

UPL SHARE PRICE VS GBP/ZAR EXCHANGE RATE

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24 1,15
1,10
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1,05
20 1,00
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16 0,85
0,80
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12 0,70
Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21
UPL (JSE) GBP/ZAR UPL (SEM)
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Our investment

strategy

Our investment strategy is to invest in high-potential, growth businesses in our primary markets, the United Kingdom and Europe. We also assess opportunities outside of the United Kingdom and Europe. The investment mandate allows the Company to invest up to twenty per cent of its funds (at the time of making the investment) in other regions.

We are focussed on acquiring and building We seek to invest in companies that successful businesses across a broad range demonstrate the following important of sectors where we are able to add value. attributes: The types of businesses we seek are typically − those that demonstrate an advantage over A robust, easily understood competitors, such as an enhanced customer business model − experience, a proven consolidation platform, Clear competitive advantages − a structurally lower cost base and technological A clear path to strong and sustainable and innovation leadership (demonstrated profitability, combined with a high by registered and protected IP). cash conversion ratio

• A clear path to strong and sustainable profitability, combined with a high cash conversion ratio

• Experienced management, who demonstrate a strong cultural fit with Universal Partners and our investment manager

We seek to partner with owner managed or founder led businesses by taking an active shareholding in the businesses we invest in, in order to enable meaningful participation in the formulation and monitoring of the business strategy. We offer permanent capital and target investments where we are able to take minority stakes up to 49 per cent, with at least one board seat. We will also invest where we are part of a consortium on the condition that we have adequate minority protections and have a board seat. As a broad guideline, we look for investments that require an initial equity contribution of between £8 million and £20 million.

• Long-term growth potential

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Our executive team

PIERRE JOUBERT (56) CHIEF EXECUTIVE OFFICER

We are seasoned investment specialists, with a track record of successfully growing businesses and delivering shareholder value. As entrepreneurs, senior executives and business owners, we are adept at helping the businesses we partner with deliver sustainable growth. Our strong global investor network enables us to successfully invest in high-growth businesses, and our ethos means that we only seek to partner with organisations where we believe we can add strategic value.

Expertise: Corporate finance and investment specialist Nationality: South African (permanently resides in Mauritius)

Pierre is the CEO of Universal Partners. Prior to joining Universal Partners, he was the chief investment officer of the Richmark Group of companies, which he joined in November 2015. Previously he spent 13 years at Rand Merchant Bank (RMB) fulfilling various roles including senior transactor in the Corporate Finance division, head of the Equities and co-head of the Global Markets divisions. Pierre is a member of the RMB investment committee, a position he has held for 19 years.

He is also a member of the Ashburton Private Equity Fund 1 investment committee and a nonexecutive director of Homechoice International PLC and Brait PLC. Previously, Pierre held various executive positions at Connection Group Holdings Ltd including that of CEO of Connection Group for four years, leading the successful turnaround of the business that culminated in the group being bought by JD Group Ltd. In his early career, Pierre worked for various companies in the Reunert Ltd group after completing his articles with Deloitte.

Pierre holds a Bachelor of Commerce degree from the University of Cape Town, and is a Chartered Accountant (South Africa).

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DAVID VINOKUR (42) CHIEF FINANCIAL OFFICER

ANDREW BIRRELL (52) EXECUTIVE DIRECTOR

Expertise: Investments, M&A, private equity and financial services Nationality: British/South African

Expertise: Private equity, corporate finance and investments Nationality: South African

David is the CFO of Universal Partners Limited. He is also the CEO of the Global Capital Group. David has more than 17 years of private equity experience. During his career, he has been instrumental in originating, structuring, concluding and exiting private equity transactions in a variety of industries and countries. He represents Universal Partners and Global Capital on the boards of the underlying companies both locally and offshore and assists with the strategic management of the investments.

Andrew has over 30 years’ experience in various executive and non-executive roles, across the life insurance, general insurance, health insurance, stock broking, asset management, and retail online banking industries, in South Africa, the UK, Scandinavia, Canada, Ireland and Australia. Previous executive roles were as CFO of Guardian Financial Services; Group Chief Actuary and Group CRO of Old Mutual plc; CRO of Old Mutual South Africa Ltd; COO and CFO of Investec Securities Ltd; and CFO of Capital Alliance Holdings Ltd and Capital Alliance Life Ltd. Andrew serves as an independent non-executive director on the boards of Sanlam Group, Sanlam Life and Sanlam Developing Markets in South Africa, and esure insurance Group and Sun Life Financial of Canada in the United Kingdom. He represents Universal Partners on the boards of JSA Services Limited and SC Lowy Limited and was on the board of YASA Limited up until its disposal. Andrew is a Fellow of the Institute and Faculty of Actuaries, United Kingdom and the Actuarial Society of South Africa. He is also a Chartered Enterprise Risk Actuary (CERA) and a member of the Institute of Directors in the United Kingdom.

After completing his articles at PricewaterhouseCoopers, David was certified as a chartered accountant and became a member of South African Institute of Chartered Accountants. Following this David joined Global Capital in February 2004; his portfolio consists of a diverse range of private companies in a variety of industries.

David holds a Bachelor of Commerce degree and Bachelor of Accounting degree from the University of the Witwatersrand (South Africa), and is a Chartered Accountant (South Africa).

Andrew holds a Bachelor of Business Science (Hons)(Actuarial) from the University of Cape Town, South Africa.

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JUSTIN RODRIGUES (34) PRINCIPAL

DORON FALK (39) GROUP FINANCIAL MANAGER

Expertise: Private Equity, investment banking, leveraged finance Nationality: British/South African

Expertise: Private equity, corporate finance and investments Nationality: South African

Doron is the financial manager of Universal Partners and has been with the company since its inception in 2016. He is also the financial manager of Global Capital, a private equity investment company, where he oversees the finance function for various portfolio companies.

Justin joined Universal Partners in 2016 following a 7 year career at Investec Bank. During his time at Investec, he worked in the Johannesburg, London and Cape Town offices specialising in private equity and leveraged finance transactions.

Since joining Universal Partners in London, Justin has been actively involved in the origination, execution and management of investments. He sits on the Board of Directors of Dentex and TechStream and takes an active role in the capital raising activities and the strategic direction of Universal Partners’ investments.

Doron completed his articles at PKF (South Africa) and, prior to joining Universal Partners, worked for eight years in the finance teams of both listed and private companies in the telecommunications and finance industries.

Doron is a Chartered Accountant. He holds a Bachelor of Accounting from the University of the Witwatersrand, South Africa.

Justin holds a Bachelor of Commerce degree from Rhodes University (South Africa), and is a Chartered Accountant (South Africa).

Our board and investment committee

Our board of directors is responsible for ensuring that Universal Partners adheres to sound corporate governance principles and determines our strategic positioning. The members of the board and investment committee offer a wide range of experience, competencies and perspectives.

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LARRY NESTADT (71) NON-EXECUTIVE DIRECTOR AND CHAIRMAN OF THE BOARD

Member of the investment committee Nationality: South African

Larry Nestadt has a long and successful global corporate career. He is a co-founder and former executive director of Investec Bank Ltd. Larry has been instrumental in the creation and strategic development of a number of listed companies including Capital Alliance Holdings Ltd (Capital Alliance Life – acquired by Liberty Life; Capital Alliance Bank – now Brait), Super Group Ltd, HCI Ltd, SIB Holdings Ltd, CorpGro Ltd and Global Capital Ltd. He has also served as past chairman on the boards of these companies. Previously, Larry sat on the boards of Softline Ltd, JCI Ltd and Abacus Technologies Holdings Ltd.

Further he has been a former chairman on various non-listed company boards both in South Africa and abroad, including Stenham Ltd (UK) and Prefsure Life Ltd (Australia). Larry is the current executive chairman of Global Capital (Pty) Ltd and non-executive chairman of Blue Label Telecoms Ltd, Dis-Chem Pharmacies Ltd, National Airways Corporation (Pty) Ltd, Morecorp Group (Pty) Ltd, Melrose Motor Investments (Pty) Ltd and SellDirect Marketing (Pty) Ltd. He also serves as deputy chairman of Cell C Ltd.

Larry is a life member of the Young Presidents Organisation, Lloyds of London (since 1983) and is an Honorary Colonel in the South African Air Force.

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MARC OOMS (70) INDEPENDENT NON-EXECUTIVE DIRECTOR

NEIL PAGE (66) INDEPENDENT NON-EXECUTIVE DIRECTOR

Chairman of the investment committee Nationality: Belgian

Member of the investment committee Nationality: South African

Marc Ooms was general partner of the Petercam Group, a Benelux investment bank. He was also the managing director of Petercam Belgium N.V. and chairman of Petercam Bank Nederland. He retired from Petercam in 2011. Today, Marc is a private equity investor and independent board member. He is also involved in real estate mainly in Germany and Poland. He serves, inter alia, as a board member of the following companies: Sea-Invest Corporation, Luxemburg (the largest European stevedoring group in bulk and fruit which is also active in Africa); BMT NV (gears, transmissions, aeronautics, moulds for the glass industry); Greenyard NV (world leader in distribution of fresh, frozen and canned food, listed on Euronext); Baltisse and Straco, two important Belgian family offices.

Neil started his career with Ford Motor Company prior to entering the banking industry in 1978. He has extensive commercial banking experience including retail, corporate and international banking. He specialised in private equity in 1985, when he joined the MBO division of Barclays Merchant Bank (which subsequently became Firstcorp Capital, the forerunner of Ethos Private Equity (Pty) Ltd). In 1989 Neil co-founded what is today RMB Corvest, a leading private equity investor in South Africa. Neil was the managing director until his retirement in 2018 and sat on the boards of various RMB Corvest investee companies, and the boards of the subsidiary companies making up the RMB Corvest Group of companies. Neil remains on the board of RMB Corvest as a non-executive director. Neil was a member of the RMB investment committee for a number of years up until his retirement from RMB Corvest.

Marc is a graduate of the VLEKHO Business School, Brussels and lives in Belgium.

Neil holds a Bachelor of Commerce and CAIB (SA), Dip SAIM from Port Elizabeth Technikon, South Africa.

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ANDREW DUNN (50) NON-EXECUTIVE DIRECTOR

Member of the investment committee Nationality: South African

Andrew has over 25 years’ experience in all areas of business development and Private Equity, from establishing and scaling companies to structuring and managing business investments. Andrew’s career has featured highlights such as founding Miltrans, a Logistics and Supply Chain business which was later sold to Super Group, the successful MBO of Premier Foods which was sold to Brait, the Manline Group which was merged into Barloworld Logistics and several other Private Equity interests spanning Property, Aviation (National Airways Corporation), Motor dealerships (Melrose Motor Investments) and Security (SSG Holdings), and was the CEO of the Richmark Group from 2012-2018. Andrew co-founded DNI in 2006 where he currently serves as the CEO.

Andrew holds a Bachelor of Commerce degree from the University of Cape Town, South Africa.

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GARY SPELLINS (63) INDEPENDENT NON-EXECUTIVE DIRECTOR

Member of the investment committee Nationality: British

Gary was Chair at Inflexion LLP backed Reed & Mackay, a global corporate travel management and solutions company servicing the financial and professional services market until November 2020. He is also a board advisor to FINE+RARE, one of Europe’s largest fine wine brokers.

During his 18 years leading Private Equity backed businesses he has been Chair at Inflexion LLP backed Scott Dunn, an international luxury tour operator specialising in premium tailor-made holidays. Gary was also Chair at The Parts Alliance, an Hg Capital investment in the automotive sector, which was successfully sold in 2017.

Previously, between 2002 and 2014, he was Chief Executive, then Chair at Independent Clinical Services, which is Europe’s leading healthcare staffing and professional services company. Gary led the business through five phases of Private Equity ownership.

In his early career Gary was Group Managing Director at RAC PLC serving on the PLC board and European Marketing Director at G E Capital. Gary began his commercial career at American Express.

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DANIEL RUBENSTEIN (39) NON-EXECUTIVE DIRECTOR

Member of the investment committee Nationality: South African

Daniel is an entrepreneur and property investor and is a founder and shareholder in many businesses and property companies. After qualifying as a CA(SA), Daniel worked for Brait Ltd, a private equity fund listed on the Johannesburg Stock Exchange (“JSE”), where he was responsible for sourcing deals. Daniel was a founder and Executive Director of Annuity Properties, which listed on the JSE in 2012. The company was subsequently sold to a larger, listed REIT (Redefine Properties) in 2014.

Daniel is currently the CEO of Glen Anil Development Corporation, a property and private equity investment vehicle, with interests in South Africa, the United Kingdom and Europe.

Daniel holds a Bachelor of Accounting degree from the University of the Witwatersrand (South Africa), and is a Chartered Accountant (South Africa).

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FRANÇOISE CHAN (53) NON-EXECUTIVE DIRECTOR

Nationality: Mauritian

Françoise is an executive director of Intercontinental Trust Ltd.

With many years of practical experience, Francoise is a seasoned professional and has a deep understanding of the intricacies of the Global Business industry. She has assisted a number of multinationals, fund managers and high net worth individuals in the structuring and the implementation of their affairs in Mauritius.

Françoise previously held senior positions at the representative of Arthur Andersen in Mauritius as well as in the International Banking Division of Barclays Bank Plc. Françoise is a member of both the International Fiscal Association (IFA) and the Society of Trust and Estate Practitioners (STEP) and serves as a director on the board of several Global Business companies including listed companies.

Françoise holds a DEA in banking and finance and she holds a Master’s Degree in Econometrics from the University of Paris 1 Sorbonne, France. She also holds a Magistere d’Economie from the University of Paris 1 Sorbonne in conjunction with ULM et L’Ecole des Hautes Etudes en Sciences Sociales of Paris, France.

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KESAVEN MOOTHOOSAMY (38) NON-EXECUTIVE DIRECTOR

Nationality: Mauritian

Kesaven is an executive director of Perigeum Capital. He was, until June 2016, a senior manager in the Capital Market Advisory team of a leading management company in Mauritius. For the past 16 years, in the Mauritius financial services industry, he has acquired experience ranging from fund formation and administration, Mauritius regulatory matters, investment evaluation and structuring, complex transaction advisory to business valuation, debt & equity capital raising and listing on securities exchanges. He has been involved on various initiatives to enhance the attractiveness of the SEM. He is also a board member of SEM listed companies as well as director in a number of investment holding companies established in Mauritius. He graduated from the University of Mauritius with a B.Sc. (Hons) in Accounting with Information Systems and holds an MBA in Leadership and Innovation. He is also a fellow member of the Association of Chartered Certified Accountants UK (FCCA), a member of the Mauritius Institute of Professional Accountants (MIPA) and Member of the Mauritius Institute of Directors (MiOD).

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22 ABOUT THIS REPORT
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UNIVERSAL PARTNERS 23
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Leadership
review
24 Message from the chairman
28 Chief executive officer’s report
34 Our investments
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LEADERSHIP REVIEW

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MESSAGE FROM THE CHAIRMAN

Powering ahead

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“ON 03 AUGUST 2021, WE CONCLUDED THE FIRST EXIT OF AN INVESTMENT SINCE LISTING IN AUGUST 2016, SELLING OUR 21.95% SHARE IN WORLD-LEADING ELECTRIC MOTOR MANUFACTURER, YASA, FOR £42.8 MILLION.”

Dear stakeholders,

Following a difficult 2020, in which the Covid-19 pandemic had a marked impact on economies across the globe because of nationwide shutdowns, 2021 has proven to be far more positive.

To date, Universal Partners Limited, “UPL” or the “Company”, has made investments in six businesses, and all have shown resilience during this challenging time, with most of our investments exceeding performance expectations for the year ended 30 June 2021.

We are very pleased with this, given the extent to which our primary market, the UK, was hit by the Covid-19 pandemic, and resultant lockdown extensions. However, the UK economy has seen positive signs of recovery with many of the lockdown restrictions now lifted thanks to a successful vaccine rollout. The economy, which shrank by more than 9.9% in 2020, is expected to grow by more than 7% in 2021 (IMF, July 2021).

OUR FIRST SUCCESSFUL EXIT

Although concluded after the reporting date, UPL has passed a significant milestone in its journey to delivering shareholder value. On 03 August 2021, we concluded the first exit of an investment since listing in August 2016, selling our 21.95% share in world-leading electric motor manufacturer, YASA, for £42.8 million. In doing so, we achieved a 3 times money multiple on the funds invested in YASA and delivered an IRR of 27,6%, after allowing for the anticipated timing of all cash flows, fees and carried interest payable. This is substantially higher than our minimum targeted return on investments.

When we listed the business in August 2016, our pre-listing statement outlined that we are a listed private equity business seeking patient investors who

are looking for medium to long-term growth in NAV per share in GB Pounds sterling.

YASA is the first concrete delivery on this investment thesis. Furthermore, we believe that there is solid potential in our remaining portfolio and investors that have a long-term approach will see the rewards in terms of the Company exceeding its targeted returns.

OUR PERFORMANCE

During the first part of the financial year, our efforts were focused on getting our investee companies, all of which were affected to some degree by the Covid-19 pandemic, back on track. During the second half of the year, we saw activity return, for the most part, to pre-pandemic levels, with some of our businesses even exceeding the targets outlined in their business plans. We made no new investments during the year.

OUR INVESTMENTS

Dentex, the UK’s second largest private dental practice group, has performed exceptionally well, and has achieved strong growth in the number of dental practices in the group (95 practices (at 06 September), up from 73 last year) and in terms of its earnings. The business recovered rapidly from the ten-week Covid lockdown in 2020 and was trading at pre-Covid levels within 2 months of re-opening in June 2020. Dentex raised £20 million of additional equity in November 2020 from current and new shareholders to help fund new acquisitions, in line with its business plan. UPL invested a further £2.5million in this round. The business is now well capitalised, demonstrating strong profitability and has successfully agreed additional debt facilities with its lenders, who remain very supportive of the company.

JSA, a leading UK provider of personal service companies (PSC) and umbrella payroll services, had a successful year. HMRC legislative changes around who

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"IT IS NOT POSSIBLE TO PREDICT THE LONGER-TERM IMPACT OF THE COVID-19 PANDEMIC ON THE GLOBAL ECONOMY, BUT WE ARE PLEASED THAT OUR PRIMARY MARKET, THE UK, IS SHOWING SIGNS OF RECOVERY."

can be categorised as a flexible worker (“IR35”) came into effect in April 2021, after having been delayed for a year due to the Covid-19 pandemic. The benefits to JSA, as anticipated, were significant with the company seeing a 50% increase in the number of new umbrella payroll workers that it provides services to. This is due to employers and employment agencies shifting to larger, accredited payroll service providers, such as JSA. During the year, JSA acquired the Workr Group, enhancing its position as one of the largest players in this industry in the UK.

SC Lowy Partners, a leading market maker in distressed and high yield debt, had an excellent year as it continues to thrive in volatile markets. The company delivered a strong performance across all divisions for its financial year to December 2020. It is pleasing to report that this strong growth in profitability has continued, with profits for the first 6 months of its new financial year exceeding those for the whole of the prior year.

Prospects for the remainder of the year to December 2021 are positive, as there is likely to be substantial corporate balance sheet restructuring ahead as government support programmes ease and lenders are required to actively manage distressed positions.

TechStream Group (TSG) recruits permanent and contract staff for high technology niches. It was formed following the merger of three specialist technology talent solution companies. TSG experienced operational and financial challenges during the period. The integration process proved to be challenging due to the Covid-19 pandemic; however, a new CEO and CFO were appointed, and several operational improvements are having a positive impact. The results for the first seven months of the new financial year that began in

January are positive, with the company marginally ahead of its budget for the period. We continue to believe that this is fundamentally a good business with solid growth prospects.

Propelair manufactures hygiene enhancing water efficient toilets. Despite a compelling product, the company continues to experience a longer than expected sales cycle, as a result of customers assessing the product at a test site prior to committing to large-scale installations. The company was unable to achieve its sales target for the period. Propelair completed a funding round in 2020, however UPL elected not to participate in the round. We remain supportive of management but have elected to maintain the value of this investment at a nominal £1 for now.

DIRECTOR AND SHAREHOLDER CHANGES

Peter Gain, an independent non-executive director, stepped down from the Board to focus on other commitments. We thank him for sharing his expertise and experience with the UPL board during his tenure.

Gary Spellins was appointed as an independent non-executive director on 10 November 2020, replacing Peter Gain on the Board; he was also appointed as chairman of the Audit and Risk committee. Based in the United Kingdom, Gary has deep private equity experience having been both an executive in companies that had a private equity investor, as well as being an advisor to Inflexion LLP, a leading private equity manager with £5.4 billion assets under management. Gary’s appointment to the Board reinforces our UK focus; he is well known and has an excellent network in the UK. We believe Gary will add a tremendous amount of value to the Board.

Daniel Rubenstein was appointed to the Board as a non-executive director on 11 May 2021. Based in South Africa, Daniel represents a consortium of new shareholders that purchased c.15.6% of UPL’s shares at the end of March 2021.

LOOKING AHEAD

It is not possible to predict the longer-term impact of the Covid-19 pandemic on the global economy, but we are pleased that our primary market, the UK, is showing signs of recovery.

In the short term, our focus is on ensuring that our existing businesses realise their business plans. In the medium term, we expect that good investment opportunities will arise in our target markets, which we will assess in line with our investment strategy. While we have assessed various opportunities in our deal pipeline during the year under review, we did not conclude any new deals. We have started seeing interesting opportunities and we expect to conclude deals in the new financial year as Covid-19 travel restrictions begin to ease.

We have fully deployed the £72 million that we raised in our initial public offering on the Stock Exchange of Mauritius (SEM) and the Alternative Exchange of the Johannesburg Stock Exchange (AltX) in August 2016. In 2019, to invest in TSG and to consider other opportunities, we secured a £16.5 million debt facility from RMB (Mauritius) Limited. Further amounts were drawn down from the facility during the year for purposes of an additional investment in Dentex and advancing a shareholder loan to TSG.

As at the date of this report, the Company has received £35.4m of proceeds from the sale of its investment in YASA. An amount of £14.7m was used to settle the RMB loan in full. The Board has decided to declare a dividend of £15m in order to reward shareholders for the excellent return made on the investment in YASA. After payment of the dividend, the Company has adequate funds from a combination of cash and debt facilities to continue executing its investment mandate.

CONCLUSION

As the world continues to be buffered by the Covid-19 pandemic, it is apparent that strong leadership is required to weather the storm. I would like to extend my appreciation to our executive team, Board and investment committee for helping us to navigate through what continues to be a challenging macro environment.

I remain confident in our portfolio of investments, the majority of which are on track to realise strong capital appreciation for our stakeholders over the medium to long-term.

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Larry Nestadt Chairman 8 September 2020

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CHIEF EXECUTIVE OFFICER’S REPORT

Wind in our sails

"OUR BELIEF THAT GOOD BUSINESSES WILL SUCCEED EVEN IN TOUGH TIMES HAS HELD TRUE."

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As an executive team, our focus during the year-ended June 2021 was on ensuring that our investment businesses were able to continue delivering on their main strategic objectives. Covid-19 and the resultant economic fallout impacted all of these companies to some extent, but I am pleased to report that they have navigated through this turbulent time.

Our belief that good businesses will succeed even in tough times has held true. All our businesses, which are characterised by excellent management teams, good cash conversion and a clear competitive advantage, have come through this period in a stronger position than they were a year ago. This demonstrates that the value creation process is intact, despite choppy waters.

OUR INVESTMENT THESIS IN ACTION

We are delighted to report that we have completed our first successful exit, selling our stake in YASA to Daimler UK, a subsidiary of Mercedes-Benz AG. This was concluded in August 2021, which is outside of the reporting period, however the exit was negotiated during the year under review. The YASA investment has provided excellent returns for UPL’s shareholders (3 times money multiple on the funds invested in YASA and an IRR of 27,6%).

Through this exit we demonstrate our investment thesis in action. That is, to partner with high-potential businesses and management teams, provide strategic input and capital to help grow and add value to these businesses and to achieve strong capital appreciation over the medium-to long-term, delivering value to our shareholders and our investment businesses.

OUR INVESTMENTS

Other than further investments in both Dentex and Techstream detailed below, we made no new acquisitions. We remained firmly focused that our existing investments overcame shortterm setbacks and focussed on achieving their medium- to long-term goals.

Dentex

Dentex, the UK’s second largest private dental practice group, continued to perform exceptionally well. After three months of lockdown dental practices were allowed to open up again from June 2020 and by September were trading at pre-Covid levels. This was due to significant pent-up demand for dental services and the bottleneck caused by the National Health Services (NHS) practices operating at reduced capacity. The NHS bottleneck has resulted in a two to three year backlog of patients that are going to have to use the private offering unless they are prepared to wait. The practices remain subject to enhanced infection prevention protocols but the Dentex team has developed robust operating procedures that have allowed the practices to trade at normal capacity, with minimal impact on profit margins. The management team also used the lockdown period to conduct online training to up skill dentists on more advanced procedures, which enabled more dentists to extend their service offering and, as a result, increase their revenue.

Dentex concluded a strategic GBP 20 million equity raise in November 2020 in order to take advantage of prevailing market conditions and acquire high quality practices on favourable terms. UPL invested a total of GBP 2.5 million in the capital raise and obtained commitments of GBP 10 million from co-investors whom they represent.

Dentex’s current strong financial position has enabled it to engage with its lenders to implement a new debt funding solution to support Dentex’s buy and build growth strategy. Under the terms of the agreement the lenders provided access to the committed acquisition facility in March 2021 to partly fund the acquisition of further dental practices. An additional £30 million was raised through that facility, which will be fully deployed by November 2021. A further £40 million facility

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"ALL OUR BUSINESSES, WHICH ARE CHARACTERISED BY EXCELLENT MANAGEMENT TEAMS, GOOD CASH CONVERSION AND A CLEAR COMPETITIVE ADVANTAGE, HAVE COME THROUGH THIS PERIOD IN A STRONGER POSITION THAN THEY WERE A YEAR AGO."

is in the process of being secured. Both the current lenders as well as a large UK debt fund have expressed appetite to finance further acquisitions thereafter..

The acquisition strategy has exceeded expectations, with new acquisitions ahead of the business plan that was developed pre-Covid. During the period, Dentex acquired 15 practices on favourable terms, and has completed the acquisition of a further 10 practices since our financial year end. Dentex now has a total of 96 practices, and a further 18 practices in due diligence which it expects to close within the next 6 months. Dentex is now showing organic growth in the existing practices and economies of scale from the platform as new practices are integrated.

JSA

JSA, a provider of personal service companies (PSC) and umbrella payroll services to contractors and temporary workers in the UK, saw a solid recovery in revenue and profitability in 2021. The umbrella payroll side of the business, which was hard hit by the lockdown in 2020, benefited from a gradual normalising of market conditions in the contract labour market, even though lockdown conditions resumed in the UK during January 2021.

As expected, the IR35 employment legislation dealing with the employment of contract workers in the private sector in the UK became effective on 6 April 2021. This was supposed to have been implemented in April 2020 but was delayed for a year due to Covid-19. This legislation increases the compliance burden on employers and employment agencies, encouraging them to use larger, accredited payroll service providers such as JSA. As anticipated, the implementation of IR35 has resulted in JSA experiencing a 50% increase in the number of new umbrella payroll workers that it administers. This substantial increase in its umbrella customer base means that

JSA is working with a much broader group of employment agencies and the potential to get further business from this broader, more sophisticated customer base is significant. On the flip side, the legislation resulted in a structural change in the market in terms of who is considered a flexible worker, leading to a reduction in the number of PSC clients. JSA was successful in switching 75% of its PSC clients who were affected to their umbrella solution.

In line with its strategy of consolidating smaller, complementary businesses in the sector, JSA resumed its buy-and-build strategy in the second half of the period. At the end of April 2021, JSA completed the acquisition of Workr Group. This transaction adds around 1 700 umbrella workers and 1 600 contract workers to JSA’s substantial client base. Workr introduces a small international element to the business that represents the first step of a measured expansion outside the UK.

YASA

YASA manufactures lightweight, highperformance axial flux electric motors for the automotive industry; it is the e-motor solution of choice in the hybrid supercar segment and is used in vehicles offered by Mercedes AMG, Mercedes Benz, Ferrari and Koenigsegg.

In August 2021 we disposed of our shares in this company, selling our stake to Daimler UK. Prior to completion of the transaction, YASA sold its Aerospace business to a consortium that wishes to facilitate the commercialisation of the axial flux motor technology in the aerospace sector. The sale of YASA delivered excellent returns for our shareholders (a net Internal Rate of Return (IRR), after allowing for transaction fees and carried interest charges, of 27.6%).

The technology originated from research undertaken at Oxford University in the early 2000’s, where after Oxford University commercialised the research by establishing

YASA. During our four years of investment in YASA we supported the company to raise capital and facilitated the introduction of new shareholders including Oxford Sciences Innovation (OSI). Along the way, we also assisted YASA to weather the COVID-19 lockdowns and the impact of Brexit on its operations.

Going forward, YASA will operate as a wholly owned subsidiary of Mercedes-Benz AG, developing ultra-high-performance e-motors while retaining its own brand, team and facilities. YASA will also continue to supply e-motors to its other automotive supercar customers. We are confident that MBAG will build on the success achieved by YASA and will take YASA’s impressive technology to even greater heights.

SC Lowy

SC Lowy is a pre-eminent high yield, distressed debt and private credit asset manager with a market leading position in Asia Pacific and EMEA. It has operations in Hong Kong, Sydney, Seoul, Singapore, Mumbai, Milan, London and New York. In addition to its credit activities, SC Lowy owns Cheoun Savings Bank in Seoul, South Korea and Solution Bank in Bologna, Italy.

SC Lowy delivered excellent results in 2020 and continues to deliver a solid performance in 2021. The company thrives in volatile markets, which was evident in increased trading volumes, and the widening of spreads in the high yield credit market during the period.

SC Lowy’s Primary Investment fund continued to show strong relative and absolute returns, achieving a return of 6.5% net of fees from 1 July to 31 December 2020 and 12.5% net of fees from 1 January to 30 June 2021, comfortably outperforming benchmark returns over the period and resulting in substantial performance fees. In addition, the Strategic Investment I Fund achieved exits well in excess of the target 15% IRR and a new Strategic Investment fund,

focusing on Asian opportunities attracted greater than expected funds at the first close in April 2021. As a result, Assets Under Management in the investment activities exceeded $1.5bn by 30 June 2021. SC Lowy’s Primary Investment fund was featured as having one of the Most Consistent Top performing Event Driven Strategies Hedge Funds over five years from January 2016 to December 2020. Since inception in 2011, the Primary Investments fund has returned 165% with a Sharpe Ratio of 2.73, marking it out as a top performer in its sector.

Trading income from all trading activities performed well. Solution Bank in Italy delivered a strong operating profit, continuing the unbroken quarterly growth trend post completion of the turnaround in 2018, resulting in a larger than expected maiden profit in December 2020. Choeun Savings Bank in Korea continued to deliver double digit Return on Equity on an annualised basis and paid a maiden dividend in March 2021.

Although many of SC Lowy’s locations were impacted by Covid-19 related restrictions, the company’ staff were able to work remotely, ensuring business continuity whilst seamlessly delivering a high level of service to clients. Trading volumes were at record levels during the period due to the economic impact of the pandemic in the markets that SC Lowy services. The company’s leadership is confident that they offer market-leading trading and asset management services to their clients and that they are well positioned to take advantage of the expected credit restructuring that will commence as credit markets begin to normalise.

TechStream Group

UPL acquired a significant minority stake in TechStream Group (TSG) alongside existing shareholders and management in January 2020. Our investment, together with a financing

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package from Investec Bank, was used to fund the merger of three businesses under the TSG brand.

TSG focuses on recruiting permanent and contract staff for high technology niches. Global demand for these skills continues to significantly exceed supply. The complexity of the roles and projects requires specialist recruiters who are the intermediary between the client and the potential recruit. This is a high margin segment of the recruitment market.

TSG experienced a challenging 2020 as the integration process of the three businesses had just started when the Covid-19 pandemic hit, disrupting employment markets around the world. This proved to be a difficult time for the business as it was trying to integrate three subsidiaries, across multiple jurisdictions, and with employees now working from home and unable to travel.

At an operating level, demand for talent was initially impacted due to the uncertainty caused by Covid-19; however this proved to be a temporary glitch and demand for niche IT talent resumed.

The integration process highlighted some management challenges that have since been addressed. We appointed a new CEO from within the Group and a highly experienced CFO, with solid industry knowledge, was hired. The management structure was also slimmed down. The new management team has acted swiftly to make several operational improvements across the business. Besides growing net fee income, management continue to focus on improving the management of working capital, contract margins and expenses. The positive impact of these changes is evident in improved financial results; after a difficult year to December 2020, TSG is trading ahead of budget for the period to July 2021.

In January 2021, we provided a shareholder loan of £1.5 million to TSG, to be used for working capital purposes. Certain management of TSG provided an additional £100k, increasing the total loan to £1.6 million. The introduction of the

shareholder loan facilitated the renegotiation of the company’s debt covenants with its lenders, who remain fully supportive of the business.

Demand for the scarce skills and services that TSG provides to its customers remains robust and the business is well placed to capitalise on these opportunities. We are confident that the new management structure and focus of the executive will deliver a positive outcome for investors.

Propelair

The Propelair positive pressure-flushing toilet offers multiple benefits to property owners, occupiers and end-users. It has a proven ability to reduce the aerosols produced by conventional flushing toilets; these aerosols spread bacteria and viruses. In addition, the Propelair technology enhances hygiene and uses a fraction of the water used in conventional units, which is becoming a key consideration given expected water scarcity in many global regions. Despite these two compelling features, the company continues to experience a longer than expected sales cycle for its product.

Propelair’s clients have proven reluctant to commit to large-scale installations initially; instead test sites are set up where the product is installed and water savings and reliability are measured, before a commitment is made to a larger installation. Currently there are several test sites in the UK, South Africa and the Middle East.

Propelair management continued to build their network of installation partners in the UK and South Africa and have used the period under review to appoint new sales partners in the Gulf region. Fulfilment of the pipeline has been adversely impacted by Covid-19 restrictions in the UK and South Africa, resulting in reduced footfall in retail and commercial properties in these regions. Accordingly, landlords have been reluctant to invest in upgrading facilities given the uncertain outlook and impact on rental income. The company was unable to achieve its sales target as a result.

Propelair completed a funding round in December 2020, which introduced some new shareholders. It also undertook a crowdfunding raise, which closed in August 2020. UPL elected to not participate in the fundraise as the company has consistently struggled to achieve its approved business plans. We remain supportive of management, but would prefer to see clear evidence of a turnaround in the company’s fortunes before committing any further capital to this investment.

FINANCIAL PERFORMANCE

For the year under review, interest income of GBP 109,753 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.

Dividends received comprise an accrual raised on the preferred shares subscribed for by the Company in Techstream and amounted to GBP 574,540 for the year. These dividends are provided for immediately as the Board is of the opinion that the valuation of Techstream should remain unchanged compared to that previously reported.

Included in other income is a raising fee of GBP 30,000 earned by the Company in relation to providing a short-term bridging loan to Techstream.

Detailed valuations of the Company’s investments are performed every six months. At 30 June 2021, the valuations performed for Dentex and JSA indicated an increase in the fair values of these investments based on improved and sustainable performance during the period. The Company therefore increased the valuations of these two investments by GBP 8,934,478 and GBP 4,162,233 respectively. In addition to this, the Company completed the sale of YASA to Mercedes Benz AG, subsequent to the year end. The valuation of YASA was accordingly increased to reflect the total expected proceeds receivable. The total fair value gain on remeasurement of financial assets at fair value through profit or loss, taking into account all

of the above, was GBP 33,953,487 for the year. The valuation of the investments in Techstream and Propelair remain unchanged from the prior year.

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 loss of GBP 1,341,471.

Management fees paid during the year amounted to GBP 1,770,416, incurred in terms of the investment management agreement between the Company and Argo. General and administrative expenses amounting to GBP 337,137 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 and proceeds have been received. The increase in the valuations of the Company’s investments during the year resulted in an additional accrual of GBP 4,240,144.

The Company incurred interest of GBP 390,773 during the year on the RMB term loan facility. This facility was repaid in full, in accordance with the facility agreements, post completion of the YASA disposal.

WITH THANKS TO ALL OUR STAKEHOLDERS

I would like to thank our board and investment committee, as well as the Argo team, for their ongoing commitment and support. It is exciting to see our strategy play out and to continue to deliver value to our shareholders.

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Pierre Joubert

Chief executive officer 13 September 2021

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Our investments

Universal Partners has concluded

six investments to date.

Dentex: April 2017 Propelair: July 2017 YASA Limited: August 2017

SC Lowy: December 2017 JSA Services: May 2018 TechStream Group: January 2020

The company’s mandate states that each investment should be less than 20% of the total assets at the time of making the investment. However, due to different growth rates in assets held over time, it is quite possible that any one investment can account for more than 20% of the asset base thereafter. The case studies that follow provide insight into how Universal Partners is delivering on its investment strategy through these investments.

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Dentex Healthcare Group Limited Fair value per accounts: £42.2 million

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YASA

Fair value per accounts: £42.8 million

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JSA Services Limited

Fair value per accounts: £20.0 million

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Propelair Fair value per accounts: £1

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SC Lowy Partners Fair value per accounts: £10.8 million

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TechStream Group Fair value per accounts: £7.1 million

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OUR INVESTMENTS DENTEX HEALTHCARE GROUP LIMITED

Strong Covid lockdown recovery

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Universal Partners made an initial investment of £15 million in Dentex Healthcare Group Limited in April 2017 having recognised the sector’s strong growth potential and defensive characteristics over the economic cycle.

Company name: Dentex Healthcare Group Limited

Business description: UK dental partnership

Sector: Healthcare services

Healthcare services W ith growing demand for higher quality treatment and more Investment partners: aesthetic dental interventions, the Universal Partners, Dentex private dental industry in the UK management, other investors continues to grow. While there are now a number of dental corporates Cost of Investment: in the United Kingdom, they this still £32.3 million only account for about 12% of the total dental market. Dentex sets itself apart Fair Value per accounts: in this market through a partnership £42.2 million model that sees clinicians becoming equity partners in the Dentex Group Date of investment: in part payment for their practices. 28 April 2017 Practices are allowed to retain their identity and clinicians are given clinical Shareholding: freedom in their surgeries, within 39% agreed best practice parameters. Dentex facilitates continuing professional development and provides clinicians with assistance to build their business and enhance their wealth alongside Dentex.

in the sector in a manner that allows them to deliver excellent clinical outcomes to patients whilst increasing the value of their investment. Competitor models tend to operate on the basis that corporates acquire 100 per cent of the underlying practices for cash and the dentists become salaried employees who are required to work within tight corporate practice guidelines.

Dentex had 3 practices when the initial investment was made and has since grown to 96 practices (at 18 September 2021) across the UK. This is in line with its long-term business plan of acquiring practices at favourable prices and integrating them seamlessly into the business to create economies of scale.

After Covid-19 disrupted this acquisition strategy, Dentex moved to quickly to resume its business plan, which began in earnest again in November 2020 to take advantage of

The Dentex model is an attractive proposition for entrepreneurial clinicians who wish to remain invested

the opportunity to acquire high quality practices at attractive valuations. A total of 15 new practices were acquired during the period, 10 completed post year end and a further 18 practices in the pipeline.

UPL chose to invest in Dentex in part because the dental sector tends to remain robust regardless of whether the economy is strong or weak. This is because non-discretionary dental work is generally unaffected by the state of the economy. Covid has proven this thesis, with Dentex’s private practices showing a return to 80% – 90% of preCovid income by the end of July 2020, less than two months after practices reopened on 8 June following a 2.5 month-long shutdown and at 100% of pre-Covid levels by September. Part of the reason for this strong recovery is that, as consultants, the dentists earn a percentage of their billings, rather than being salaried employees and are extremely motivated to recover the cash flow during the this period.

• In August 2020, the Dentex board resolved to raise additional equity of £20 million to strategically position the business for continued growth and put the business on the front foot to renegotiate the terms of the existing acquisition debt facility. UPL played a leading role in this capital raise, contributing £2.5 million and introducing new shareholders who provided a further £10 million of fresh equity. A significant existing shareholder provided the remaining £7.5 million of capital raised. Following the capital raise, Dentex was able to negotiate with its two lenders to provide access to the committed acquisition facility from March 2021 to partly fund the acquisition of further dental practices. An additional £30 million of debt funding was raised through that facility, which will be fully deployed by November 2021.

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An additional £40 million facility is in the process of being secured. The current lenders and a large debt fund have indicated appetite for the additional £40m and a complete refinance through a larger facility on more favorable terms, respectively.

dental practices, the positive referrals by existing dentists in the group provide a great starting point for each discussion.

The growth opportunity for Dentex is significant, with thousands of practices that fit the Dentex acquisition profile, giving the group runway to continue to realise the benefits of building economies of scale. Dentex’s platform is now mature and is achieving organic growth of existing practices and economies of scale as new practices are integrated. Dentex is the second largest private dental group in the UK, second only to Portman Dental Care. In 2018 Core Equity Holdings, a European Private Equity Firm, acquired a controlling stake in Portman. The transaction valued Portman at around £300m on an estimated multiple of 18 times forward EBITDA. It is worth noting that Dentex is now a larger group than Portman was when they sold.

Covid-19, which in the short-term was a major challenge for Dentex, also presented the company with opportunities. Dentists and their support staff (who are employees of Dentex) have been effusive in their praise for the substantial support that they received during the lockdown and after the re-opening of their practices; significant goodwill has been created as a result. Dentex supported the dental practices during this time by assisting them with furloughing staff, procuring vital PPE and hosting informative webinars on a wide variety of topics including infection control protocols. These interventions have created positive energy and generated significant interest in the Dentex model. As Dentex resumed acquiring further

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OUR INVESTMENTS YASA LIMITED

A podium finish for an excellent investment

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UPL sold its 22% interest in the UK-based electric motor manufacturer YASA to Daimler UK in a £42.8m transaction in August 2021. Daimler UK, a 100% held subsidiary of Mercedes-Benz AG (“MBAG”), will assume 100% ownership of YASA. YASA will operate as a subsidiary of MBAG, developing ultra-highperformance e-motors, while retaining its own brand, team, facilities and continuing to supply existing automotive customers with e-motors.

Company name: YASA

Business description:

Manufacturer of electrical motors, generators and controllers

Sector:

Automotive manufacturing (motors), aviation, trains and other industrial applications

A fter acquiring an initial stake in YASA in August 2017, UPL went on to invest a total of £14.3m in YASA, which manufactures the highest power density (kW/kg) axial flux electric motors, with outstanding efficiency, for the automotive and aerospace industries. YASA supplies performance, luxury and premier brands such as Mercedes AMG, Mercedes-Benz, Ferrari and Koenigsegg.

European automakers are working hard to bring about the transformation of the automotive sector in Europe, as mandated by the European Commission’s ban on sales of new motor vehicles with internal combustion engines (“ICE’s”) by 2035. Over the next decade all manufacturers have to transition their offerings for European markets from ICE powered vehicles to battery electric vehicles. Certain markets (e.g. the UK and Germany) have indicated that the ban on new ICE powered vehicles will commence by 2030. Other regions will follow Europe’s lead, and electric vehicles (“EV’s”) are expected to account for 11% of vehicles sold globally within six years, with EV’s projected to surpass sales of ICE cars by 2040.

Investment partners:

Universal Partners, Parkwalk Advisers, Oxford University Innovation Fund, Oxford Sciences Innovation

Cost of Investment: £14.3m

Fair value per accounts: £42.8m

Date of investment: 18 August 2017

Founded in 2009, YASA’s proprietary axial-flux electric motor is a stepchange from the legacy radial electric motor technology, incorporating over 120 patents it has developed in order to offer the most efficient, highest power Axial Flux motors in a low weight, high power, versatile package.

Shareholding: 22% (fully diluted)

In the Mercedes-Benz Market Strategy Update of 22 July 2021, the CEO stated his ambition to go all electric by the end of the decade, where market conditions allow. Mercedes-Benz will shift from “electric-first” to “electriconly” as part of this process. By 2022, Mercedes-Benz will have battery electric vehicles (“BEV”) in all market segments, and from 2025 onwards, all newly launched vehicle architectures will be electric only. Customers will be able to choose an all-electric alternative for every model the company makes.

YASA’s motor and inverter technology will play a key role in this transition, and be used in the AMG.EA BEV range for its first application, whilst acting as an innovation partner pioneering adoption of e-drive into a broader set of Mercedes-Benz applications, with cutting edge, class leading electric drive technology.

Mercedes-Benz first started working with YASA in 2019 in order to explore how YASA’s technology could assist them in fast tracking their ambitions to introduce high quality electric drive in an efficient, high-power application. As a result of this engagement, YASA was able to demonstrate the leadership of its Axial Flux technology. MBAG decided that acquiring YASA would assist them to create a vertically integrated e-drive technology capability better able to deliver leading BEV solutions and entered into negotiations to acquire YASA.

UPL’s team worked closely with the YASA Board and Management through these negotiations and the UPL Board believes that the final outcome achieved was excellent for all parties.

Following the acquisition, YASA and its 250 employees will continue to operate from its headquarters and production facility in Oxford, UK. This acquisition gives YASA technology the global scale and reach of Mercedes-Benz and the

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of Return (IRR), after allowing for transaction fees and carried interest charges, of 27.6%.

intention is to make YASA the premier mark of excellence in electric motor technology, accelerating the adoption of electric vehicles and resetting the bar for electric driving experiences. YASA’s expertise and resources will be focused on delivering world-beating electric drive technologies for AMG-Mercedes’ electric-only platform.

Since its initial investment in YASA, UPL has assisted the company to grow its business value substantially, ultimately paving the way for MBAG’s acquisition of YASA to become its sole owner. The transaction demonstrates UPL’s ability to be a value adding, reliable partner that helps businesses to grow exponentially while delivering healthy returns for all its shareholders.

In addition to programmes being undertaken in the automotive sector, YASA has been engaged in several other advanced engineering projects in the aerospace sector. In a separate transaction which completed prior to the sale of the automotive business to MBAG, YASA disposed of its aerospace business to a consortium of investors who will further invest to develop and commercialise the YASA e-drive technology for the aerospace sector.

In line with its investment philosophy of being an active shareholder in its investee companies, UPL was represented on the YASA board by executive director Andrew Birrell. During UPL’s investment in YASA, it supported the company to raise capital and facilitated the introduction of new shareholders like Oxford Sciences Innovation (OSI). Along the way, UPL also assisted YASA to weather the COVID-19 lockdowns and the impact of Brexit on its operations.

The aggregate value of both disposals amounted to c. £195 million. UPL’s disposal of its 22% share in YASA will realise total proceeds of £42.8 million . The transaction results in gross proceeds of 3 times the amount invested and a net Internal Rate

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OUR INVESTMENTS

SC LOWY PARTNERS

Excellent returns with a positive outlook

SC Lowy Partners, a specialist fixed income and banking group, recognised as a leader in the distressed and high yield debt markets in Asia Pacific and the Middle East, thrives in volatile markets. A leading market maker, SC Lowy delivered excellent results across all its divisions in the period and the outlook is positive.

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Company name: SC Lowy Partners

Business description: Financial services

• Two commercial banking platforms, which provide a balance sheet of more than US$1 billion for focused opportunities in:

Business focus:

Business focus: High-yield bond and S C Lowy provides a one-stop investment banking offering, with distressed debt specialist unparalleled expertise in the distressed and high yield markets. SC Lowy’s Investment partners: business comprises three pillars, which Universal Partners, Investec provide the company with a strong Bank, a consortium of local presence and the infrastructure to investors and the founders access the most attractive debt markets globally. These pillars include:

• Italy and Europe; via Solution Bank, a regional bank based in Emilia-Romagna, one of the premier industrial and commercial regions of Italy, which is licensed to raise deposits and hold assets across the Eurozone

Cost of Investment:

£11.3 million (US$ 15 million)

• An asset manager with over US$1 billion in AUM focusing on high yield,

• Date of initial investment: on high yield, 22 December 2017 − distressed, special situations and private financing opportunities;

• Fair value per accounts: − A broker dealer which matches £10.8 million over 500 sellers of distressed debt and high

• South Korea; via Choeun Savings Bank, a savings bank headquartered in Seoul with operations across South Korea

SC Lowy is headquartered in Hong

Kong and has investment professionals and client-facing staff in Hong Kong, London, Milan, Bologna, Seoul and New York. Its in-house team of analysts cover the energy, infrastructure,

• Shareholding: yield positions with SC Lowy’s client 5% base of over 500 investors in this form of debt, leading to trading flows in excess of US$20 billion per annum; and

“THE COMPANY’S LEADERSHIP IS CONFIDENT THAT THE BUSINESS IS WELL POSITIONED TO TAKE ADVANTAGE OF THE EXPECTED CREDIT RESTRUCTURING EXPECTED TO COMMENCE ONCE THE COVID-19 PANDEMIC ABATES.“

manufacturing, telecommunications, media, metals, mining, financials, shipping and real estate sectors for issuers based in Australia, Asia, the Middle East and Europe.

SC Lowy was founded by Michel Löwy and Soo Cheon Lee in 2009 during the global financial crisis. They proved that they could bring their experience of distressed debt and high yield markets to benefit their customers in one of the most severe periods of stress ever seen in credit markets.

SC Lowy has enhanced and diversified its operations over the last 10 years, and is well placed for the transition expected over the short to medium term from a benign credit market to a stressed credit market, in line with the normal cycle of credit markets.

Although SC Lowy has demonstrated strong growth in AUM, broker dealer trade volumes and banking profitability during the benign stage of credit markets since 2010, we believe that the platform built up over the last 10 years will bring competitive advantage as the credit market cycle turns from excess to distress.

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for the twelve-month period which comfortably outperformed benchmark returns, and resulted in substantial performance fees. The Strategic Investments I Fund achieved attractive exits on a number of its positions, with a realised IRR on deals comfortably in excess of the target return of 15% net of fees. Solution Bank ended the year with a larger than expected maiden profit. Choeun Savings Bank delivered double digit RoE in excess of 10% on an annualised basis, and paid a maiden dividend in March 2021.

In December 2017, SC Lowy acquired full control of Choeun Savings Bank in South Korea, opening up access to the Asia Pacific region. It also acquired Credito Di Romagna (now rebranded as Solution Bank) in 2018, providing it with access to the European market. By owning these banks, SC Lowy is able to deepen its reach in the market for traded high-yield and distressed bonds and loans.

SC Lowy completed a scheduled equity raise of US$25m in March 2020, introducing a new strategic shareholder that took up US$17m of the round alongside management and a number of existing investors. The additional equity was raised at the same price per share that Universal Partners paid when it made its investment. Universal Partners elected not to participate in this equity raise and accordingly its interest in SC Lowy reduced from 5.1% to 4.7% at the time.

During April 2021 the company had the first close of its new Special Investments II Fund, focused on Asian opportunities, where subscriptions were substantially higher than anticipated. As a result of this new fund, along with strong performance in the Primary Investments Fund, AUM grew to over US$1.4bn by 30 June 2021.

The company’s leadership is confident that the business is well positioned to take advantage of the expected credit restructuring expected to commence once the Covid-19 pandemic abates and banks have to restore discipline to their balance sheets, disposing of non-performing positions to specialists such as SC Lowy.

SC Lowy delivered impressive results across all its divisions in the period under review. The Primary Investment fund showed strong relative and absolute returns, achieving a return of 6.5% net of fees for the period 1 July to 31 December 2020, and 12.5% net of fees for the period 1 January to 30 June 2021, a blended return of 19.82%

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OUR INVESTMENTS

JSA SERVICES LIMITED

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The proportion of flexible and self-employed workers continues to rise in the UK and globally, and has been further accelerated by the Covid-19 pandemic. With this trend comes the need for professional employment organisations (PEOs), which provide limited company, umbrella and payroll services to contractors and temporary workers. However, this sector is ripe for consolidation because of increasingly onerous compliance requirements related to onerous labour and tax legislation.

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Company name: JSA Services Limited

Business description: Professional employment organisation

Sector:

Employment services

Investment partners: Universal Partners, JSA Services management

Cost of investment: £9.4 million

Fair value per accounts: J SA is a leading provider of professional advisory and £20.0 million outsourcing services to the UK’s growing flexible workforce. Date of investment: JSA provides accounting services 9 May 2018 to around 25,000 customers, split roughly equally between PSC clients Shareholding: and umbrella workers, making 43% it a significant player in the UK employment services sector.

for both accountancy and umbrella employment services. Accreditation requires the company to pass a rigorous annual independent audit process.

JSA’s regulatory and tax compliant, technology-led platform and experienced management team have delivered strong growth and taken advantage of the opportunities afforded by the continued expansion, consolidation and regulation of the sector. HMRC legislative changes around who can be categorised as a

JSA is a longstanding member of the Freelance Contractors Services Association (“FCSA”) accredited

Delivering on expectations

flexible worker (“IR35”), which came into effect in April 2021, mean that it is important for both services to be offered seamlessly, which JSA does. The introduction of IR35 meant that many flexible working contractors who operated via a PSC were compelled to move to an umbrella solution. JSA successfully retained around 75% of its PSC customers who fell into this category.

as a result of the Covid-19 pandemic “JSA HAS but resumed in April 2021 with the BENEFITED FROM acquisition of the Workr group. This A GRADUAL buy-and-build approach sees JSA NORMALISING adding the customers acquired to its OF MARKET platform while eliminating many of the CONDITIONS IN costs of the underlying businesses, THE CONTRACT creating economies of scale and thus LABOUR MARKET, creating shareholder value. RESULTING IN A STRONG These acquisitions have been funded by REBOUND IN internally generated cash and through REVENUE AND £15 million of borrowings from a debt PROFITABILITY provider that was introduced by UPL. DURING THE PERIOD.“

In order to assist clients and potential clients to establish whether their current status was compliant under the new legislation, JSA developed an online compliance assessment tool, which was widely recognised and used, and has proven to be a very effective marketing asset.

Covid-19 had a significant impact on the umbrella payroll side of the business during the lockdown periods, given the dramatic drop off in demand for temporary workers at these times. However, JSA has benefited from a gradual normalising of market conditions in the contract labour market, resulting in a strong rebound in revenue and profitability during the period.

Notably, the legislation increases the compliance burden on end hirers and employment agencies, encouraging them to use larger, accredited payroll service providers such as JSA. JSA experienced a 50% increase in the number of new umbrella payroll customers as a result.

Since UPL invested in JSA, the company has demonstrated its ability to conclude attractive acquisitions and to integrate them successfully into the core business. With the impact of Covid 19 and IR35 largely behind it, JSA is set to continue its successful acquisition strategy while also organically growing its substantial customer base.

JSA has grown organically and via acquisitions, and since 2013 it has completed and integrated 14 acquisitions, with seven of these concluded since UPL invested in the business. Acquisitions were put on hold

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INTEGRATED ANNUAL REPORT 2021

OUR INVESTMENTS

TECHSTREAM GROUP

New management set TSG on path for growth

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Digital transformation is now pervasive and as IT projects become more complex and prolific, there is increasing demand for technology specialists with niche skills. Successfully placing candidates on complex projects requires a deep understanding of tech solutions and industry requirements.

Company name: TechStream Group

Business description: Human capital business

Sector: T echStream focuses on recruiting permanent and contract Specialised IT staff for high technology niches. employment services Globally, demand for these skills significantly exceeds supply and Investment partners: securing specialised staff requires Universal Partners, specialist recruiters with deep industry TechStream Group knowledge and solid networks. This management and existing is a high margin segment within the shareholders broader recruitment market.

220 internal employees across its offices in London, New York, Munich, Hamburg, Munich, Singapore, Malaga and Cape Town. The Group is headquartered in London.

TechStream’s revenue is split between fees earned from permanent placements and net fee income from providing niche IT contractors to clients. This income split brings a good measure of stability to the business. The Group’s speciality lies in sourcing talent who have expertise in areas such as cloud transformation, digital transformation, cyber security, data analytics, automation, Internet of Things, robotic process automation, embedded tech and clean technologies.

Cost of investment: TSG was formed in January 2020 £7.8 million following the successful merger of three leading specialist technology talent Fair value per accounts: solution companies, which resulted in £7.1 million a global business with revenue of £100 million, which now all operate under Date of investment: the TechStream Group brand. TSG has 17 January 2020 over 600 technology, engineering, and digital consultants placed with a variety Shareholding: of clients across geographies. It has

2020 proved to be challenging for TSG as the integration process of the three businesses had just commenced when the Covid-19 pandemic hit and disrupted employment markets around the world. This proved to be a difficult time for the business as it was trying to integrate three subsidiaries, across multiple jurisdictions and time zones, and with employees now working from home and unable to travel.

At an operating environment level, demand for talent was initially impacted due to the uncertainty caused by Covid-19 and the various lockdowns in the UK and other countries in which the group operates. However, this proved to be a temporary glitch and demand for niche talent resumed.

The integration process also highlighted some management issues, which have since been addressed –a new CEO was appointed from within the Group and a highly experienced CFO, with good industry knowledge, was hired. The management structure was also slimmed down.

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The new management team has acted “AS THE TREND swiftly to make several operational OF DIGITAL improvements across the business. TRANSFORMATION The operating model has been refined AND AUTOMATION and group vision, mission and values STRENGTHENS, statements have been refreshed. DEMAND FOR THE The positive impact of these changes NICHE SKILLS THAT is evident in the improved financial TSG IS ABLE TO results. SOURCE AND PLACE IS EXPECTED TO After a difficult year to December 2020, SHOW CONTINUED TSG has started its new financial year GROWTH.” on a positive note. The financial results for the first half ended June were ahead of budget, with net fee income in both the permanent placement and contractor divisions ahead of plan. From a geographic perspective, sales in the UK, Singapore, USA and Spain have been strong, while Germany and South Africa were below expectations. Plans are in place to address areas of weakness and to improve the level of cross selling of services across TSG’s substantial client base.

As the trend of digital transformation and automation strengthens, demand for the niche skills that TSG is able to source and place is expected to show continued growth, and the business is well placed to capture the significant opportunities that the sector presents.

46%

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OUR INVESTMENTS

PROPELAIR LIMITED

A good product with a long sales cycle

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Company name : Propelair

Business description:

A high-performance, positive pressure-flushing toilet

Business focus: Sanitation and sustainability

Investment partners:

Universal Partners, Investec Bank, Sustainable Technology Investors Limited

Cost of Investment: £1.4 million

Date of initial investment: 13 July 2017

Fair value per accounts: £1.00

The Covid-19 pandemic has raised the spotlight on bathroom hygiene as the virus is known to be airborne and can be transmitted through human waste. One way to reduce the risk of transmission in a public bathroom setting is to ensure that the toilet lid is closed when flushing. Given its design, the Propelair toilet provides substantial protection against this, since the lid is always closed, apart from when it is in use.

water savings and reliability before committing to installing the toilets. Currently there are several test sites in the UK, South Africa and the Middle East.

T he Propelair toilet uses air pressure to expel waste, making it compatible with normal drain systems. As well as affording water savings, it reduces the energy used in processing the wastewater due to a substantial saving in water usage. Its powerful flush also reduces blockages, resulting in lower maintenance costs, making it well suited to high traffic locations such as commuter stations and office blocks.

Propelair management believe that the Covid-19 pandemic reinforces the need for enhanced washroom hygiene, and given their product’s proven reduction in pathogen distribution, they believe that potential customers have additional reasons to install their system. However, the sales pipeline has been adversely impacted by Covid-19 restrictions in the UK and South Africa because of reduced footfall in retail and commercial properties, landlords have been reluctant to invest in upgrading

While Propelair offers a number of advantages, the business sales cycle is longer than expected, as prior to committing to a significant installation, customers generally require a test site installation to assess the product. The test site allows the customer to assess

“PROPELAIR MANAGEMENT BELIEVE THAT THE COVID-19 PANDEMIC REINFORCES THE NEED FOR ENHANCED WASHROOM HYGIENE, AND GIVEN THEIR PRODUCT’S PROVEN REDUCTION IN PATHOGEN DISTRIBUTION, THEY BELIEVE THAT POTENTIAL CUSTOMERS HAVE ADDITIONAL REASONS TO INSTALL THEIR SYSTEM.”

facilities given the uncertain outlook and impact on rental income. This negatively impacted Propelair’s ability to achieve its sales target as a result.

Management continued to build their network of installation partners in the UK and South Africa in the period and furthered their negotiations with potential sales partners in the Gulf region; they expect that this will result in increased sales over time.

In December 2020, Propelair completed a further funding round, which introduced new shareholders. It also undertook a crowd-funding raise on

the SEEDRS platform, which closed in August 2020, and resulted in their third most successful B2B raise on that platform to date. UPL elected to not participate in the fundraise as the company has consistently underperformed the business case that was the premise for making this investment. We remain supportive of management, but await evidence that the company’s sales conversion rate has improved.

UPL remains cautious regarding the future performance of Propelair and has maintained the valuation at a nominal £1.00.

48 CORPORATE GOVERNANCE

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UNIVERSAL PARTNERS 49
INTEGRATED ANNUAL
REPORT 2021
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Corporate governance

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• 50 How we are governed 54 Governance structure

• 56 Structure of the board and its committees 58 Board committees

• 63 Directors appointment procedure

• 64 Director duties, remuneration and performance 66 Risk governance and internal control 68 Reporting with integrity 69 Audit

• 70 Relations with shareholders and other key shareholders

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How we are governed

Corporate governance is a system of structuring, operating and controlling a company and involves a set of relationships between all of the company’s stakeholders. Sound principles of corporate governance are essential to ensure fairness, integrity, transparency and to achieve a high level of stakeholders’ trust and confidence in the organisation.

Universal Partners Limited, the “Company”, “Universal Partners” or “UPL” the “Company” was incorporated in Mauritius on 25 April 2016 and holds a Global Business Licence issued by the Financial Services Commission (the “FSC”). The Company is listed on the Stock Exchange of Mauritius with a secondary listing on the Johannesburg Stock Exchange Limited’s Alternative Exchange.

ORGANISATIONAL CHART

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SHAREHOLDERS

Holding structure

The Board of Directors, the “Board”, of the Company recognises that The National Code of Corporate Governance for Mauritius (2016) (the “Code”) is regarded as best practice and therefore uses its best endeavours to ensure that the principles of good corporate governance, as applicable in Mauritius, are fully adhered to and form an integral part of the way in which the Company’s business is conducted. The Company also endeavours to apply the recommendations of the Code.

The holding structure of the Company is as follows:

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INVESTORS
UNIVERSAL PARTNERS LIMITED (GBC)
Listed on the JSE & SEM
UNIVERSAL PARTNERS INVESTMENTS
(Converted to GBC on 30 June 2021)
UNIVERSAL PARTNERS INVESTMENTS BIDCO
(Converted to GBC on 30 June 2021)
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DESCRIPTION OF SUBSIDIARIES’ ACTIVITIES

NAME OF SUBSIDIARY	ACTIVITY
Universal Partners Investments Universal Partners Investments Bidco	Investment holding
	Investment holding

COMMON DIRECTORS

Mr Pierre George Joubert is a common director in the above entities.

SUBSTANTIAL SHAREHOLDERS

The following shareholders held more than 5% of the stated capital of the Company as at 30 June 2021:

NAME OF SHAREHOLDER Glenrock Lux No1 S.C.SP. Blackstone Swiss Independent Trustees SA as trustee of Cassycode Trust Swiss Independent Trustees SA as trustee of Jay Trust PSL Client Safe Custody Asset	NUMBER OF ORDINARY SHARES 11,306,729 10,000,000 7,940,730 5,940,730 5,747,998	% HOLDING
		15.63%
		13.82%
		10.98%
		8.21%
		7.94%

SHAREHOLDERS’ AGREEMENT AFFECTING GOVERNANCE OF THE COMPANY BY THE BOARD

There was no such agreement in place during the year under review.

COMPANY’S CONSTITUTION

There are no clauses of the Constitution deemed material enough for separate disclosure.

DIVIDEND POLICY

As the objective of the Company is to provide shareholders with attractive medium to longterm capital growth, the Board does not intend to declare regular dividends.

Notwithstanding the above, and subject to the

SEM Rules and the JSE Listings Requirements, the Company in a general meeting may declare dividends but may not declare a larger dividend than that declared by the directors.

No dividend shall be declared and paid except out of retained earnings and unless the directors determine that immediately after the payment of the dividend:

• (i) The Company will be able to satisfy the solvency test in accordance with Section 6 of the Mauritius Companies Act 2001; and

• (ii) The realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of accounts, and its stated capital.

No dividends have been declared for the year under review.

No shares of the Company are currently in issue with a fixed date on which entitlement to

dividends arises and there are no arrangements in force whereby future dividends are waived or agreed to be waived.

APPLICATION OF THE CODE OF CORPORATE GOVERNANCE

The Board assessed its corporate governance in terms of the eight corporate governance principles:

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PRINCIPLE 1:

Governance structure

The Board is ultimately accountable and responsible for the performance and affairs of the Company, whilst meeting the appropriate interests of its shareholders and stakeholders. To achieve this, the Board is responsible for establishing the objectives of the Company and setting a philosophy for investments, performance and ethical standards. In addition, the Board ensures that the Company complies with the relevant rules and regulations. Quarterly board meetings are held every year.

The Board acknowledges that it should lead and control the organisation and be collectively responsible for its long-term success, reputation and governance. In so doing, the Board assumes responsibility for meeting all regulatory and legal requirements.

The Board is responsible and accountable for all decisions of the Company where the duties of the directors are carried out in line with the Mauritius Companies Act 2001. The Company has delegated the day-to-day administration functions to its Management Company and Company Secretary.

The Board collectively considers and implements the measures in respect of the Code and this is further strengthened by the presence of independent intermediaries like auditors, who act as additional safeguards in meeting this principle. The main objects and functions of the Board are inter alia to:

The Company’s organisational chart is commensurate with the sophistication and scale of the organisation. The Company has eleven directors in appointment.

The Board is satisfied that it has suitably discharged its responsibilities for the year under review in respect of corporate governance.

• determine, agree and develop the Company’s general policy on corporate governance in accordance with the Code;

• − prepare the Corporate Governance Report; and

• − review the terms and conditions of all service agreements between the Company and its service providers.

− prepare the Corporate Governance The Company is committed to providing Report; and shareholders and its stakeholders with timely − review the terms and conditions of all service and relevant information. The Company has agreements between the Company and its designed a website which can be accessed at service providers. www.universalpartners.mu. The website provides access to information about the Company as well The Company has in place a Constitution which as investor relation information. sets out the rules and regulations which it needs to abide along with other local laws and regulations.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The roles of the Chairman and Chief Executive Officer are separate and each of them has clearly defined responsibilities. These ensure a proper balance of power, increased accountability and greater capacity of the Board for independent decision-making.

In his role as Chairman of the Company, Mr Larry Nestadt is responsible for leading the Board and ascertaining its effectiveness. He ensures that the corporate strategy and the related execution are aligned with operational efficiencies. He is also responsible for ensuring that the directors receive accurate, timely and clear information and he encourages the active participation of all Board members in discussions and decisions. With his experience and strong knowledge of the Company, the Chairman is in an excellent position to oversee the affairs of the Company while ensuring that value is being created for all stakeholders.

On the other hand, Mr Pierre Joubert in his capacity as Chief Executive Officer of the Company is responsible for the executive management of the Company’s operations and for developing the long-term strategy and vision of the Company. Mr Joubert also ensures effective communication with the stakeholders.

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PRINCIPLE 2:

Structure of the board

and its committees

BOARD COMPOSITION

from Mauritius and a female director on the Board. Board appointments are made upon recommendation of the Corporate Governance committee, which is responsible for the nominations and appointments. Board appointments are done through a transparent selection process, which ensures the right balance of skills, experience and competencies in order to achieve the objectives of the Company. There are no fixed term contracts for executive directors and the notice period for termination or resignation is one calendar month.

The Board has a unitary structure and comprises of three executive directors, five non-independent non-executive directors and three independent non-executive directors. The independence of the non-executive members are determined as per the Code of Corporate Governance. The roles of the Chairman and the CEO are separate to ensure balance of power and authority. The number of Board members is proportionate with the size of the Company. There are currently three resident directors

BOARD STRUCTURE

The Board and committees are as follows:

BOARD Laurence (Larry) Nestadt Non-executive director & chairman of Board Pierre Joubert Chief executive offcer David Vinokur Chief fnancial offcer Andrew Birrell Executive director Andrew Dunn Non-executive director & chairman of Corporate Governance Committee Marc Ooms Independent non-executive director & chairman of Investment Committee Neil Page Independent non-executive director Mr Gary Spellins Independent non-executive director & chairman of Audit and Risk Committee Mr Daniel Rubenstein Non-executive director Françoise Chan Non-executive director Kesaven Moothoosamy Non-executive director	SUB-COMMITTEE MEMBER APPOINTED
	AUDIT & RISK COMMITTEE INVESTMENT COMMITTEE CORPORATE GOVERNANCE COMMITTEE
	• •
	• • •
	• • •
	• •
	• • •
	•
	• •

DIRECTORS’ PROFILES

The directors’ names, profiles, their categorisation as well as their directorship details in listed companies can be found on page 14 to 21 of this report.

BOARD MEETINGS

The Board meetings are held once each quarter and at any additional times as the Company requires. Decisions taken between meetings are confirmed by way of resolutions in writing, agreed and signed by all directors then entitled to receive notice.

The Board meetings are conducted in accordance with the Company’s Constitution and the Mauritius Companies Act 2001 and are convened by giving appropriate notice to the directors. Detailed agenda, as determined by the Chairman, together with other supporting documents are circularised in advance to the directors to enable them to participate meaningfully in the decision-making process and make informed deliberations at Board meetings. In order to address specific urgent business needs, meetings are at times called at shorter notice. Furthermore, the directors have the right to request independent professional advice at the Company’s expense.

A quorum of three (3) directors is currently required for a Board Meeting of the Company and in case of equality of votes, the Chairman does not have a casting vote.

A director of the Company who has declared his/her interest shall not vote on any matter relating to a transaction or proposed transaction in which he/she is interested and shall not be counted in the quorum present for the purpose of that decision.

A list of directors’ interests is maintained by the Company Secretary and is available to shareholders upon request to the Company Secretary. The directors confirm that the list is correct at each quarterly Board meeting.

During the year under review, the Board met six (6) times. Decisions were also taken by way of resolutions in writing, agreed and signed by all directors then entitled to receive notice of the meeting.

The minutes of the proceedings of each Board meeting are recorded by the Company Secretary, Intercontinental Trust Limited, and are entered in the Minutes Book of the Company. The minutes of each Board meeting are submitted for confirmation at the next meeting and these are then signed by the Chairman.

• Member

• • Chairman

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Board committees

The audit and risk committee, investment committee and corporate governance committee have been set up to assist the Board in the effective performance of its duties. All the committees are governed by their charters which have been approved by the Board. As the focal point, the Board is ultimately responsible and accountable for the performance and affairs of the Company. Committees are a mechanism for assisting the Board and its directors in discharging their duties through a more comprehensive evaluation of specific issues. Delegating authority to Board committees or management does not in any way absolve the Board of its duties and responsibilities.

INVESTMENT COMMITTEE

The investment committee of the Board is mandated to take all decisions of the Company regarding acquisitions and disposals in accordance with the investment strategy. The role of the committee entails the following:

• Understanding the Company’s investment goals and how the objectives support the Company’s mission;

• Adopting, periodically reviewing, and revising the investment policy;

• Monitoring the performance of invested funds and ensuring that investments are made in accordance with the investment policy;

• Provide buy sell valuation recommendations; and

• Engage with external advisors and reviewing reports prepared by them to formulate recommendations to the Board.

AUDIT AND RISK COMMITTEE

• The committee meets on a quarterly basis.

• The committee’s objective comprises mainly of the evaluation of the systems of internal, financial and operational controls and accounting policies, reviewing the publication of financial information, recommending the appointment, terms of engagement and remuneration of the external auditors, and ensuring the independence of the external auditors.

− The committee’s responsibility also includes the review of the Company’s critical business, operational, financial and compliance exposures and sustainability issues. The committee’s role in risk management is to set the process for the identification and management of risk, report any significant risks to the Board, review corporate governance guidelines and their implementation and review and approve group insurance policies.

• The committee reports annually at the annual general meeting (AGM) on how it has discharged its duties during the financial year reported on.

CORPORATE GOVERNANCE COMMITTEE

The corporate governance committee has been set up to ensure that reporting requirements with regard to corporate governance, whether in the annual report or on an on-going basis, are in accordance with the principles of the applicable Code of Corporate Governance.

The corporate governance committee also carries out the functions of a nomination committee and a remuneration committee, until the Board determines that a separate committee will be required.

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BOARD ATTENDANCE AT MEETINGS

The Board meets as and when required to discuss routine and other significant matters so as to ensure that the directors maintain overall control and supervision of the Company’s affairs.

The following table gives the record of attendance at Board meetings and Committee meetings of the Company for the year under review:

DIRECTORS’ INTEREST IN THE SHARE CAPITAL OF THE COMPANY AS AT 30 JUNE 2021

Dealing in the Company’s securities by directors is regulated and monitored as required by the SEM listing rules.

The directors follow the principles of the model code on securities transactions by directors as detailed in Appendix 6 of the SEM Listing Rules.

The directors’ interests in the shares of the Company as at 30 June 2021 are as follows:

Mr Pierre Joubert Mr David Vinokur Mr Andrew Birrell Mr Larry Nestadt Mr Marc Ooms Mr Neil Page Mr Peter Gain Mr Gary Spellins Mr Andrew Dunn Mr Daniel Rubenstein** Mr Kesaven Moothoosamy Ms Françoise Chan	BOARD MEETING	INVESTMENT COMMITTEE	AUDIT AND RISK COMMITTEE	CORPORATE GOVERNANCE COMMITTEE
	6/6 6/6 6/6 6/6 6/6 6/6 2/2 3/3 5/6 1/1 6/6 4/6****	N/A N/A N/A 6/6 6/6 6/6 3/3 3/3 6/6 1/1 N/A N/A	N/A N/A N/A N/A 4/4 4/4 1/1 2/2 N/A N/A 4/4 N/A	N/A
				N/A
				N/A
				4/4
				N/A
				N/A
				N/A
				N/A
				4/4
				N/A
				4/4
				N/A

DIRECTOR Mr Andrew Birrell Mr Pierre Joubert Mr David Vinokur Mr Andrew Dunn Mr Neil Page Mr Larry Nestadt Mr Marc Ooms Mr Daniel Rubenstein	DIRECT HOLDING	INDIRECT HOLDING	TOTAL SHARES HELD	PERCENTAGE OF ISSUED SHARES
	– 1,433,455 – – – – – –	3,080,000 1,076,668 621,054 2,927,236 1,011,878 3,442,854 422,620 1,125,020	3,080,000 2,510,123 621,054 2,927,236 1,011,878 3,442,854 422,620 1,125,020	4.26%
				3.47%
				0.86%
				4.05%
				1.40%
				4.76%
				0.58%
				1.56%

Mr Gary Spellins, Mrs Françoise Chan and Mr Kesaven Moothoosamy do not have any interests in the shares of the Company. None of the directors and officers had any material interest in the equity of the Company’s subsidiaries.

• Mr Peter Gain resigned as director on 10 November 2020.

• ** Mr Gary Spellins was appointed as director and chairman of the audit & risk committee on 10 November 2020.

• *** Mr Daniel Rubenstein was appointed as director to the board on 11 May 2021.

• **** Mrs Toorisha Nakey-Kurnauth alternated for Mrs. Françoise Chan for the board meetings held on 18 September 2021 and 10 November 2020.

CONTRACTS OF SIGNIFICANCE

During the year under review, there was no contract of significance to which the Company was a party and in which a director of the Company was materially interested either directly or indirectly, except as disclosed otherwise.

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PRINCIPLE 3:

Director appointment procedure

DIRECTOR APPOINTMENT BOARD ORIENTATION PROCEDURES AND INDUCTION

COMPANY SECRETARY

Intercontinental Trust Limited (ITL) is a suitably qualified, experienced and competent Company Secretary that is appropriately empowered to fulfil duties and provide assistance to the Board.

The Company Secretary is responsible to the Board for ensuring that procedures and regulations are complied with and that directors are conversant with their duties and responsibilities. The Company Secretary provides the Board as a whole and directors individually with detailed guidance on the discharging of their responsibilities in the best interest of the Company.

The Board has considered the competence, qualifications and experience of the Company Secretary, and deemed it fit to continue in the role as Company Secretary for the Company.

The Board, through the Corporate Governance Committee, follows a rigorous, formal and transparent procedure to select and appoint new directors. The Corporate Governance Committee leads the process according to the Company’s Constitution and makes recommendations to the Board.

The directors stand for re-election at the Annual Meeting of the Company every year.

SUCCESSION PLANNING

The directors do not have a formal succession plan that ensures progressive refreshing of the Board. The Board is of the view that given the nature of the business, it is able to find suitably qualified and skilled directors to fill any vacancies that may arise within a reasonable timeframe.

The Company has put in place procedures to ensure that newly appointed directors receive an induction upon joining the Board to familiarise them with the Company’s operations, senior management and its business environment and to induct them in their fiduciary duties and responsibilities. The Company’s relevant governing documents are also provided to them. Directors will receive further briefings from time to time on relevant new laws and regulations as well as on changing economic risks.

PROFESSIONAL DEVELOPMENT AND TRAINING

Directors are encouraged to keep themselves up to date with the latest workplace trends and professional development. The Board conducts annual reviews to identify areas where the Board members require further training or education.

The Company Secretary also acts as Secretary to the different Board committees.

The Company Secretary is subject to annual evaluation by the Board.

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PRINCIPLE 4:

Director duties, remuneration and performance

The directors of the Company are aware of their duties under the Mauritius Companies Act 2001 and the Constitution of the Company and exercise sufficient care, diligence and skills for the good conduct of the business. The Board meets regularly (frequency depending on nature of business and operations) to discuss and approve the Company’s operational, regulatory and compliance matters. The directors are provided appropriate notice and materials to help them in their decision-making.

DIRECTORS’ INTERESTS

Directors inform the Company as soon as they become aware that they have an interest in a transaction. The Company Secretary keeps a register of directors’ interests and ensures that the register is updated regularly. The interest register is available to the shareholders of the Company upon request to the Company Secretary.

DIRECTORS’ REMUNERATION

The remuneration and benefits payable to the directors of Universal Partners Limited in their capacity as directors (or in any other capacity) for the financial year ended 30 June 2021 are as set out below:

DIRECTOR Mr Pierre Joubert Mr David Vinokur Mr Andrew Birrell Mr Larry Nestadt Mr Marc Ooms Mr Neil Page Mr Peter Gain Mr Andrew Dunn Mr Gary Spellins Intercontinental Trust Limited**	DIRECTOR FEES GBP
	–
	–
	–
	40,000
	18,000
	18,000
	4,500
	18,000
	12,500
	14,000
TOTAL	125,000

• Mr Peter Gain resigned as director on 10 November 2020

** Mr Gary Spellins was appointed as director on 10 November 2020.

*** Mrs Francoise and Mr Kesaven remuneration is incorporated into the fees paid by the Company to Intercontinental Trust Limited, the Company Secretary.

Non-executive directors have not received any remuneration in the form of share options or bonuses associated with organisational performance.

REMUNERATION PHILOSOPHY

The Board has delegated to the Corporate Governance Committee the responsibility of determining the adequate remuneration to be paid to the Non-Executive Chairman of the Board, the Independent Non-Executive Directors and the Non-Executive Directors.

The Company’s underlying philosophy is to set remuneration at an appropriate level to retain, motivate and attract high calibre personnel and directors, and to reward them in accordance with their individual as well as collective contribution towards the achievement of the Company’s objectives and performance, whilst taking into account current market conditions and/or other factors which may be determined from time to time.

EMPLOYEE SHARE OPTION PLAN

The Company does not have an employee share option scheme.

RELATED PARTY TRANSACTIONS

For details on Related Party Transactions, please refer to Note 17 of the audited financial statements.

BOARD EVALUATION AND DEVELOPMENT

During the year under review, the Corporate Governance Committee conducted an evaluation of the Board, the individual directors and the Audit Committee. The directors forming part of the Board of the Company, especially those who are members of Board Committees, have been appointed in the light of their wide range of skills and competence acquired through several years of working experience and professional background.

DIRECTORS’ ETHICS AND CODE OF CONDUCT

The Board of Directors is mindful of the interest of other stakeholders such as suppliers, clients and the public at large when running its operations and is committed to high standards of integrity and ethical conduct in dealing with them.

Furthermore, the Company and its employees, direct and indirect, must, at all times, comply with all applicable laws and regulations. The Company will not condone the activities of employees who achieve results through violation

of the law or unethical business dealings. This includes any payments for illegal acts, indirect contributions, rebates, and bribery. The Company does not permit any activity that fails to stand the closest possible public scrutiny.

All business conduct should be above the minimum standards required by law. Accordingly, employees must ensure that their actions cannot be interpreted as being, in any way, in contravention of the laws and regulations governing the Company’s operations. Employees uncertain about the application or interpretation of any legal requirements should refer the matter to their superior, who, if necessary, should seek the advice of someone at the highest level of the Company’s hierarchy.

The Company is committed to the highest standards of integrity and ethical conduct when dealing with all its stakeholders. This commitment, which is actively endorsed by the Board, is based on a fundamental belief that business should be conducted honestly, fairly and legally. Given the size and activity of the Company, it does not have a significant footprint with regards to environmental, health and safety and social issues. No reporting is therefore required.

INFORMATION POLICY

The Company Secretary has effective IT policies and strategies in place. The Company Secretary ensures that the correct information flows within the Board and provides accurate, timely and clear information to the Board as and when required. The directors ensure strict confidentiality with respect to information obtained while exercising their duties. The Company Secretary keeps all records of the Company and has proper information technology policies in place. Accordingly, the Company places reliance on the controls implemented by the Company Secretary and deems that it is not necessary for the Company to have its own frameworks.

The directors ensure strict confidentiality with respect to information obtained and shared while exercising their duties.

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PRINCIPLE 5:

Risk governance and internal control

Risk management is the discipline by which risks are identified, assessed and prioritised. It is essential to understand the multiple dimensions of risks in order to manage them effectively, with the aim of increasing shareholders’ value.

The directors are responsible for maintaining an effective system of internal control and risk management. The Board confirms that there is an ongoing process for identifying, evaluating and managing the various risks faced by the Company.

Day-to-day activities are undertaken by the Company Secretary, ITL, which needs to ensure that the necessary structures, processes and methods for identifying and monitoring any risks are in place. Hence, the Company relies on the internal controls of ITL which is subject to an internal control review and reporting by external auditors. On a yearly basis, an ISAE 3402 Type II Audit is conducted and the latest report was issued on 03 November 2020.

The Company has also contracted an insurance cover with SICOM General Insurance for its directors and officers which is renewable every year. The current insurance policy is valid up to 05 June 2022.

There are no risks that threaten the solvency and liquidity of the Company. The directors make an assessment of the Company’s ability to continue as a going concern and same is disclosed in the financial statements every year.

• the identification of potential opportunities which would result in increasing firm value; and

− the installation of a culture of risk management throughout the Company.

INTERNAL AUDIT

The Company does not have a formalised internal audit function, but the board has implemented strong internal controls and it ensures that these function properly and adjusts them as and when necessary.

INTERNAL CONTROL AND RISK MANAGEMENT

The Company recognises that proper risk management and internal control help organisations understand the risks they are exposed to, put controls in place to counter threats, and effectively pursue their objectives. They are therefore an important aspect of an organisation’s governance, management and operations.

The Board has delegated to the Audit and Risk Committee (AC) its overall responsibility to translate its vision on risks management. The AC reviews the risks philosophy, strategy and policies recommended by management. Compliance with policies and procedures is constantly monitored.

Financial risk

Strategic risk

Strategic risk is the risk associated with the way the Company is managed. Strategic risk management focuses on broad corporate issues such as reputation, competitor strategy and new product development. This is the risk to earnings or capital arising from adverse business decisions or improper implementation of business decisions. It also includes market risk which is the risk of not meeting the strategic objectives of the organisation arising from the Company’s inability to adapt to external factors. These external factors include general economic conditions, availability and cost of debt and equity capital and competition.

Integrity risk

Integrity risk is the risk associated with the authorization, completeness and accuracy of transactions as they are entered into, processed by, summarized by and reported by the various application systems deployed by the Company.

Operational risk

Operational risk is the risk associated with the Company’s ability to control and deliver its core processes in a timely and predictable manner. It includes inaccurate or incomplete processing of authorised transactions, duplicate processing of authorised transactions, calculation errors or processing unauthorised transactions.

Human capital risk

Human capital risk is the risk that personnel will not be sufficient to attain the Company’s objectives. Specific risk elements would include quality and quantity of personnel, key person risk, succession planning and/or turnover rates.

Environment risk (Legal and Regulatory)

Environmental risk is the risk of legal liabilities arising from failing to comply with laws and regulatory requirements and the resultant government investigation, prosecution, fines, sanctions or shutdowns.

In addition to the above, the Company relies on the Investment Committee which reviews all investments and acts as an additional layer in the investment decision process. The Board believes that this mitigates the risk associated with the business activity of the Company.

The Board has established and maintains an effective compliance monitoring plan, policies, procedures and controls, as may be appropriate and effective to review its obligations under the laws, the rules and regulations, having full regard to the risk complexity and diversity of its clients and services. The Board has effective responsibility for compliance with the rules, the laws and any other rules made under the Law.

The Company Secretary conducts regular file reviews on the Company.

Information system and information security risk

Risk management is an integral part of the Company’s strategic management and is the mechanism through which risks associated with the Company’s activities are addressed. The key objectives of the risk management system include:

• the identification, assessment and mitigation of risks on a timely basis;

• the provision of timely information on risk situations and appropriate risk responses;

Financial risk is the risk that cash flows and financial risks are not managed cost-effectively to:

• (a) maximize cash availability,

• (b) reduce uncertainty of currency, interest rate, credit and other financial risks, or

• (c) move cash funds quickly and without loss of value to wherever they are needed most.

Information system and information security risk is the risk that data is not genuine, complete or accurate, recorded and accumulated correctly or readily accessible and the risk that unauthorised persons access proprietary or confidential data or knowledge.

The Board ensures that there are effective and appropriate policies, procedures and controls in place which allow the Board to meet its obligations, with particular regard to the nature, size and complexity of the business and includes a requirement for sample testing of the policies and procedures to ensure that they are robust. When a review of compliance is discussed by the Board, at appropriate intervals, the necessary action is taken to remedy any identified deficiencies and to provide adequate resources to ensure that these are subject to regular monitoring and testing, as required.

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PRINCIPLE 6:

Reporting with integrity

The directors are responsible for preparing the audited financial statements of the Company that fairly present the state of affairs and financial position of the Company on a yearly basis in accordance with applicable laws and regulations.

The Company recognises the importance of being a responsible corporate citizen and operating in a socially responsible manner. In so doing, the Company takes into consideration the economic, environmental, ethical, social, and health factors affecting the communities in which it operates. The Company has taken all measures to reduce any negative social and environmental impact of its operations. Further, the Board is committed to ethical behaviour in all of its transactions.

The Company is committed to the general rules and regulations governing the health, safety and environmental issue. The Company is committed to minimising any adverse effect of its operations on the environment and on the health and safety of its employees and the community in which it operates.

Given the nature of its activities the Company has no environmental or social impact and these are therefore not assessed in the financial statements.

The financial statements are prepared under IFRS, which is a generally accepted accounting standards by the FSC. A corporate governance report is included in the audited financial statements.

The financial statements of the Company for the year ended 30 June 2021 will be filed with the FSC within the statutory deadline, after the Board’s approval.

The quarterly unaudited financial statements for the period ended 30 September 2020, 31 December 2020 and 31 March 2021 were filed with the FSC and released on the SEM website and the Stock Exchange News Service of the JSE within 45 days from the closing date of each quarter.

The Company made no charitable or political donations during the year under review.

There are no clauses of the Company’s Constitution deemed material enough for separate disclosure.

The Company has signed a Management Agreement with Argo Investment Managers (“the Manager”) in the financial year 2017 and same is still in place. An addendum to the Management Agreement was signed in the financial year under review. The Manager is responsible for sourcing investment opportunities, executing transactions and managing investments. The Manager earns a management fee for its services as well as a carry fee once investments are realised. A portion of this carry fee is payable in the Company’s shares and a portion in cash.

PRINCIPLE 7:

Audit

Grant Thornton have been appointed as the external auditors for the Company for the past five years since the incorporation of the Company in April 2016. The Audit Committee has satisfied itself that the external auditors are independent, experienced in the audit of companies in the same line of business and have the necessary resources to undertake audits of such companies.

A key factor that may impair auditors’ independence is a lack of control over non-audit services provided by the external auditors.

In essence, the external auditors’ independence is deemed to be impaired if the auditors provide a service which:

• results in auditing of own work by the auditors;

• − results in the auditors acting as a manager or employee of the Company;

• puts the auditors in the role of advocate for the Company; or

• creates a mutuality of interest between the auditors and the Company.

The Company addresses this issue through three primary measures, namely:

• disclosure of the extent and nature of nonaudit services;

• − the prohibition of selected services; and

• prior approval by the audit committee of non-audit services.

• Other safeguards encapsulated in the policy include: − the external auditors are required to assess periodically, in their professional judgement, whether they are independent of the Company;

• the audit committee has primary responsibility for making recommendations to the Board on the appointment, reappointment and removal of the external auditors.

The audit committee approved the external auditors’ terms of engagement, scope of work, the annual audit and the applicable levels of materiality. Based on written reports submitted, the committee reviewed, with the external auditors, the findings of their work and confirmed that all significant matters had been satisfactorily resolved.

The audit committee has satisfied itself as to the suitability of the external auditors for reappointment for the ensuing year.

Given the size, complexity and nature of the business, the Board is of the view that the Company does not need an internal audit function and hence no internal audit committee has been set up. The Board relies on the system of internal controls developed jointly by the Company Secretary and its advisors as well as the external audit that is conducted annually.

AUDITORS’ REMUNERATION

The fees payable (exclusive of VAT) to the auditors of the Company for audit and other services are as follows:

DIRECTOR Audit fees Tax fees	2021 GBP 2020 GBP
	11,300 11,500
	1,500 990
AT 30 JUNE	12,800 12,490

• the audit committee ensures that the scope of the auditors’ work is sufficient and that the auditors are fairly remunerated; and

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PRINCIPLE 8:

Relations with shareholders and other key shareholders

The Board of Directors places great importance on clear disclosure, open and transparent channel of communication with all its shareholders. It endeavours to keep them regularly informed on matters pertaining to and affecting the Company.

The Company also makes regular filings with the Registrar of Companies and Financial Services Commission in Mauritius to ensure that the Company is up to date with its filings.

TIME TABLE OF IMPORTANT EVENTS

Through the Company’s website namely Month Events www.universalpartners.mu, information is provided to all stakeholders on the activities September 2021 Publication of abridged of the Company. audited financial statements for the year ended Shareholders are strongly encouraged to 30 June 2021 attend the Company’s Annual Meeting, which provides an opportunity for the latters to raise November 2021 Annual General Meeting and discuss matters with the Board relating to the Company’s performance and also to keep June 2022 Financial year end abreast of the overall strategy and goals.

The Chairman, Chief Executive Officer and other Board members assist the Annual Meeting and invite Shareholders to put questions on different aspects of the Company’s activities and directions the business will take in the future.

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Mr Andrew Dunn

Chairman of the Corporate Governance Committee

The Annual Report, including the Notice of the Annual Meeting of shareholders, is sent to each shareholder of the Company and the Notice of the Annual meeting is published in two daily newspapers at least 21 days before the meeting.

72 ANNUAL FINANCIAL STATEMENTS

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Annual financial statements

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UNIVERSAL PARTNERS 73
INTEGRATED ANNUAL
REPORT 2021
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• 74 Commentary of the directors

• 75 Statement of compliance 76 Certificate from the secretary 77 Independent auditors’ report 80 Statement of financial position 81 Statement of profit or loss and other comprehensive income

• 82 Statement of changes in equity 83 Statement of cash flows

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• 84 Notes to the financial statements

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Commentary of the directors

DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The directors are pleased to present their report together with the audited financial statements of Universal Partners Limited, the “Company”, or “Universal Partners”, or “UPL”, for the year ended 30 June 2021.

Company law requires the directors to prepare financial statements for each financial year which present fairly the financial position, financial performance, changes in equity and cash flows of the Company. In preparing those financial statements, the directors are required to:

The Company was incorporated under the name of Universal Partners and it changed its name to Universal Partners Limited on 06 May 2016.

INCORPORATION AND LISTINGS

• select suitable accounting policies and then apply them consistently;

The Company was incorporated in the Republic of Mauritius on 25 April 2016 as a public company with the liability limited by shares. The Company is listed on the Stock Exchange of Mauritius (“SEM”) since 08 August 2016 and on the Alternative Exchange (“AltX”) of Johannesburg Stock Exchange (“JSE”) since 11 August 2016.

• make judgements and estimates that are reasonable and prudent;

− state whether International Financial Reporting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

PRINCIPAL ACTIVITY

The directors confirm that they have complied with the above requirements in preparing the financial statements.

The principal activity of the Company is to hold investments through its investees in high quality, growth businesses, with a particular focus on the United Kingdom.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Mauritius Companies Act 2001, International Financial Reporting Standards and the Financial Reporting Act 2004. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

RESULTS AND DIVIDENDS

The results for the year are shown in the statement of profit or loss and other comprehensive income.

The directors did not recommend any dividend for the year under review (2020: Nil).

Statement of compliance

(Section 75 (3) of the Financial Reporting Act)

Name of Company: Universal Partners Limited

Reporting Period: Financial year ended 30 June 2021

We, the undersigned being the directors of Universal Partners Limited, the “Company”, confirm that, to the best of our knowledge, the Company has partially complied with the Code. Due to the size, structure and nature of the business of the Company, many of the criteria stipulated in the Code are not deemed to be relevant to the Company and the reasons have been provided below:

Principle 1 Principle 3	AREAS OF NON-APPLICATION OF THE CODE Adoption of Code of Ethics. Adoption of Board Charter. Suitable plans must be in place to maintain an appropriate balance of knowledge, skills and experience so as to ensure progressive refreshing of the Board.	EXPLANATION FOR NON-APPLICATION
		The Company has no specifc Code of Ethics in place but the Board is committed to high integrity and ethical conduct in dealing with all its stakeholders.
		The Board is of the view that the current legislation, rules, guidelines and Code already defne the responsibilities of the directors and there is no need to adopt a separate Board Charter currently as the Board is governed and guided by the legislation, rules, guidelines and Code.
		The Board is of the view that given the nature of the business, it is able to fnd suitably qualifed and skilled directors to fll any vacancies that may arise within a reasonable timeframe.

DIRECTORS

The present membership of the Board is set out on page 17.

EXTERNAL AUDITORS

The external auditors, Grant Thornton, have indicated their willingness to continue in office and a resolution concerning their re-appointment will be proposed at the next Annual Meeting.

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L M Nestadt Chairman & Director

Date: 13 September 2021

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P G Joubert Chief Executive Officer & Director

Date: 13 September 2021

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77

Certificate from the Secretary under Section 166 (d) of the Mauritius Companies Act 2001

We certify, to the best of our knowledge and belief, that we have filed with the Registrar of Companies all such returns as are required of Universal Partners Limited under the Mauritius Companies Act 2001 during the financial year ended 30 June 2021.

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for Intercontinental Trust Limited

Secretary

Registered office:

Level 3, Alexander House 35 Cybercity Ebene 72201 Republic of Mauritius

Date: 13 September 2021

Independent auditors’ report To the members of Universal Partners Limited

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the year ended 30 June 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Opinion

We have audited the financial statements of Universal Partners Limited, the “Company”, which comprise the statement of financial position as at 30 June 2021, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

The key audit matter identified in relation to the audit of the financial statements is as described below.

Risk description

In our opinion, the accompanying financial statements on pages 80 to 83 give a true and fair view of the financial position of the Company as at 30 June 2021, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Mauritius Companies Act 2001 and the Financial Reporting Act 2004.

Valuation of the Unquoted Investments

We focused on this area due to the size of the balance on the statement of financial position and the significant judgement and assumptions involved when estimating the fair values of unquoted investments.

Basis for opinion

As at 30 June 2021, the Company’s unquoted investments amounted to GBP 122,918,027 and are classified on the Level 3 fair value hierarchy.

We conducted our audit in accordance with International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

How audit responded

• We have assessed the design and operating effectiveness of the Company’s internal controls with regard to the identification, recognition and measurement of its unquoted investments.

• Where investments are stated at cost, we have reviewed the impairment assessment made by the Investment Committee in accordance with relevant IFRS.

• Where investments are stated at fair values, we have ensured that the valuation team involved in the valuation process are competent and we have assessed the appropriatenesss of the valuation model and the reasonablesness of the inputs used in determining those fair values.

• We have checked whether the estimated fair values have been subject to review at the relevant authority level.

Key observation

We consider the valuation method adopted to be appropriate.

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Independent auditors’ report to the members of Universal Partners Limited (continued)

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT THEREON (“OTHER INFORMATION”)

Management is responsible for the Other Information. The Other Information comprises mainly of information included under the Corporate Data, the Commentary of the Directors, the Chairman’s Report and the Corporate Governance Report sections, but does not include the financial statements and our auditors’ report thereon.

Our opinion on the financial statements does not cover the Other Information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this regard.

Corporate Governance Report

Our responsibility under the Financial Reporting Act 2004 is to report on the compliance with the Code of Corporate Governance (“the Code”) disclosed in the Corporate Governance Report and assess the explanations given for non-compliance with any requirement of the Code. From our assessment of the disclosures made on corporate governance in the Corporate Governance Report, the Company has, pursuant to Section 75 of the Financial Reporting Act 2004, complied with the requirements of the Code.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of the financial statements in accordance with International Financial Reporting Standards and the requirements of the Mauritius Companies Act 2001 and the Financial Reporting Act 2004, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with International Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Mauritius Companies Act 2001

In accordance with the requirements of Mauritius Companies

Act 2001, we report as follows:

• we have no relationship with, or any interests in, the Company other than in our capacity as auditors;

• we have obtained all the information and explanations we have required; and

• in our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

OTHER MATTER

Our report is made solely to the members of the Company as a body in accordance with Section 205 of the Mauritius Companies Act 2001. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinion we have formed.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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Grant Thornton Chartered Accountants

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Y NUBEE, FCCA Licensed by FRC

Date: 13 September 2021

Ebene 72201, Republic of Mauritius

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81

Statement of financial position as at 30 June

Statement of profit or loss and other comprehensive income for the year ended 30 June

		2021	2020
	Notes	GBP	GBP
Assets
Non-current
Investments at fair value throughproft or loss	7	80,111,899	87,806,011
Non-current assets		80,111,899	87,806,011
Current
Investments at fair value through proft or loss	7	42,806,128	–
Receivables and prepayments	8	1,739,825	96,146
Cash and cash equivalents	9	1,315,339	582,560
Current assets		45,861,292	678,706
Total assets		125,973,191	88,484,717
Equity
Stated capital	10	71,847,164	71,847,164
Retained earnings		33,244,889	7,347,022
Total equity		105,092,053	79,194,186
Liabilities
Non-current
Borrowings	11	–	7,631,250
Non-current liabilities		–	7,631,250
Current
Borrowings	11	14,530,235	–
Payables	12	6,350,903	1,659,281
Current liabilities		20,881,138	1,659,281
Total liabilities		20,881,138	9,290,531
Total equity and liabilities		125,973,191	88,484,717

Approved by the Board on 13 September 2021 and signed on its behalf by:

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		2021	2020
	Notes	GBP	GBP
Income
Interest income		109,753	111,217
Dividend income		574,540	248,430
Other income		30,000	128,000
Total income		714,293	487,647
Expenditure
Directors fees (Non-executive)		127,630	124,642
Transaction costs	3.9	2,932	9,968
Legal and professional fees		45,551	79,378
Management fees	13.1	1,770,416	1,571,149
Performance fees (accrued but not paid)	13.2	4,240,144	(731,723)
Other expenses	14	117,105	188,682
Amortisation of structuring fee		112,500	56,250
Interest on borrowings	11	390,773	128,476
Commitment fees		46,851	54,937
Total expenditure		6,853,902	1,481,759
Operating loss		(6,139,609)	(994,112)
Fair value gain/(loss) on remeasurement of investments at fair value through proft or	7	33,953,487	(2,848,986)
loss
Impairment loss	7	(574,540)	–
Net foreign exchange(loss)/gains	7	(1,341,471)	364,661
Proft/(loss) before tax		25,897,867	(3,478,437)
Tax expense	15	–	–
Proft/(loss) for theyear		25,897,867	(3,478,437)
Other comprehensive income:
Items that will not be reclassifed subsequently to proft or loss		–	–
Items that will be reclassifed subsequentlytoproft or loss		–	–
Other comprehensive income for theyear, net of tax		–	–
Total comprehensive income for theyear		25,897,867	(3,478,437)
Earnings/(loss) per share(Pence)	16	35.80	(4.81)

Larry Nestadt Pierre Joubert Chairman CEO

The accompanying notes on pages 84 to 103 form an integral part of these financial statements.

The accompanying notes on pages 84 to 103 form an integral part of these financial statements.

82 ANNUAL FINANCIAL STATEMENTS

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83

for the for the year ended 30 June

Statement of changes in equity for the year ended 30 June

	Stated	Retained
	capital	earnings	Total
	GBP	GBP	GBP
At 01 July 2020	71,847,164	7,347,022	79,194,186
Proft for the year	–	25,897,867	25,897,867
Other comprehensive income	–	–	–
Total comprehensive income for theyear	–	25,897,867	25,897,867
At 30 June 2021	71,847,164	33,244,889	105,092,053
At 01 July2019	71,847,164	10,825,459	82,672,623
Loss for the year	–	(3,478,437)	(3,478,437)
Other comprehensive income	–	–	–
Total comprehensive income for theyear	–	(3,478,437)	(3,478,437)
At 30 June 2020	71,847,164	7,347,022	79,194,186

Statement of cash flows

2021	2020
GBP	GBP
Operating activities Proft/(loss) before tax 25,897,867	(3,478,437)
Adjustments for: Impairment loss 574,540	–
Net foreign exchange gains/(loss) 1,341,471	(364,661)
Interest income accrued (109,753)	(111,217)
Dividend income accrued (574,540)	(248,430)
Fair value (gain)/loss on remeasurement of investments at fair value through proft or loss (33,953,487)	2,848,986
Raising fees (Shares issued in lieu of) –	(75,001)
Raising fees (Capitalised to loan) (30,000)	–
Amortisation of structuring fee 112,500	56,250
Commitment fee payable 46,851	–
Interest on borrowings accrued 390,773	128,476
Net changes in working capital: Change in receivables and prepayments (4,309)	(224)
Change inpayables 4,691,622	(713,033)
Net cash fow used in operating activities (1,616,465) Investment activities Acquisition of investments (2,500,000)	(1,957,291) (11,882,981)
Loans advanced to subsidiaries (1,500,000)	(247,680)
Loans repaid by subsidiaries –	691,582
Interest received 383	111,217
Net cash fows used in investing activities (3,999,617) Financing activities Interest paid (151,139)	(11,327,862) (128,476)
Loan received 6,500,000	–
Payment of structuringfee –	(225,000)
Net cash fows from/(used in) fnancing activities 6,348,861 Net change in cash and cash equivalents 732,779*	(353,476) (13,638,629)
Cash and cash equivalents at beginning of year 582,560	14,220,935
Effects of exchange rate changes on cash and cash equivalents –	254
Cash and cash equivalents at end ofyear 1,315,339	582,560
Cash and cash equivalents made up of: Cash at bank(Note 9) 1,315,339	582,560
Non-cash transactions: Acquisition of investments –	(7,800,000)
Borrowings –	7,800,000
Raising fee –	75,001
Capitalisation of fees –	(75,001)

* For reconciliation of liabilities arising from financing activities, refer to Note 18.

The accompanying notes on pages 84 to 103 form an integral part of these financial statements.

The accompanying notes on pages 84 to 103 form an integral part of these financial statements.

84 ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS 85 INTEGRATED ANNUAL REPORT 2021

Notes to the financial statements For the year ended 30 June 2021

1. General information and statement of compliance with International Financial Reporting Standards

Universal Partners Limited, the “Company”, was incorporated in the Republic of Mauritius on 25 April 2016 as a public company with liability limited by shares. Pursuant to a Certificate of Incorporation on Change of Name issued by Registrar of Companies on 06 May 2016, the Company changed its name from Universal Partners to Universal Partners Limited.

The Company holds a Global Business Licence (formerly Category 1 Global Business Licence) issued by the Financial Services Commission. The Company has its registered office at Level 3, Alexander House, 35 Cybercity, Ebene 72201, Republic of Mauritius. The Company has been listed on the Stock Exchange of Mauritius (“SEM”) on 08 August 2016 and on the Alternative Exchange (“AltX”) of Johannesburg Stock Exchange (“JSE”) on 11 August 2016.

The principal activity of the Company is to hold investments through its investees in high quality, growth businesses across Europe, with a particular focus on the United Kingdom.

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

2. Application of new and revised IFRS

2.1 New and revised standards that are effective for the period beginning on 01 July 2020

In the current year, the following revised standards issued by the IASB became mandatory for the first time for the financial year beginning on 01 June 2020:

IFRS 3, Definition of a Business

(Amendments to IFRS 3)

The amended definition of a business requires an acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs. The definition of the term ‘outputs’ is amended to focus on goods and services provided to customers, generating investment income and other income, and it excludes returns in the form of lower costs and other economic benefits.

IAS 1 and IAS 8, Definition of Material (Amendments to IAS 1 and IAS 8)

The changes in ‘Definition of Material’ (Amendments to IAS 1 and IAS 8) relate to a revised definition of ‘material’ which states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

IFRS 9, IAS 39 and IFRS 7, Interest Rate Benchmark Reform (IBOR))

The IASB has issued amendments to IFRS 9, IAS 39 and IFRS 7 that provide certain reliefs in connection with interest rate benchmark reform. The reliefs relate to hedge accounting and have the effect that IBOR reform should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the pervasive nature of hedges involving IBOR-based contracts, the reliefs will affect companies in all industries.

IFRS 16, COVID-19-Related Rent Concessions (Amendment to IFRS 16)

The pronouncement amended IFRS 16 Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. On issuance, the practical expedient was limited to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021.

2.2 Standards and amendments to existing standards that are not yet effective and have not been adopted early by the Company

At the date of authorisation of these financial statements, certain new standards and amendments to existing standards have been published but are not yet effective and have not been adopted early by the Company.

Management anticipates that all of the relevant pronouncements, as relevant to Company’s activities, will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncements. Information on the new standards and amendments to existing standards is provided below.

Various, Interest Rate Benchmark Reform Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

These amendments address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. The changes relate to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting.

IFRS 3, References to the Conceptual Framework (Amendments to IFRS 3)

The changes update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework; add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

IAS 16, Proceeds before Intended Use (Amendments to IAS 16)

Amendments were made to the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

IAS 37, Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments were brought to clarify that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.

IFRS 1, IFRS 9, IFRS 16 and IAS 41,

Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments to IFRS 1, IFRS 9, IFRS 16, IAS 41)

The objective of the annual improvements is to enhance the quality of standards, by amending existing IFRSs to clarify guidance and wording, or to correct for relatively minor unintended consequences, conflicts or oversights. Amendments are made through the annual improvements process when the amendment is considered non-urgent but necessary. The IASB issued Annual Improvements to IFRS Standards 2018–2020 containing the following amendments to IFRSs:

• IFRS 1, First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter. The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.

IFRS 9, Financial Instruments – The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.

86 ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS 87 INTEGRATED ANNUAL REPORT 2021

Notes to the financial statements For the year ended 30 June 2021

• FRS 16, Leases – Lease incentives.

• The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.

• IAS 41, Agriculture – Taxation in fair value measurements. The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13.

IFRS 17, Insurance Contracts

IFRS 17 requires insurance liabilities to be measured at a current fulfilment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4, Insurance Contracts as of 01 January 2021.

IFRS 4, Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

The amendments change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9, Financial Instruments, so that entities will be required to apply IFRS 9 for annual periods beginning on or after 01 January 2023 (instead of 01 January 2021).

IAS 1, Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The amendments in classification as liabilities as current or non-current affect only the presentation of liabilities in the statement of financial position – not the amount or timing of recognition of any asset, liability, income or expense, or the information that entities disclose about those items. They:

• clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the

reporting period and align the wording in all affected paragraphs to refer to the “right” to defer settlement by at least twelve months and make explicit that only rights in place “at the end of the reporting period” should affect the classification of a liability;

• clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and

• make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

• Management has yet to assess the impact of the above standards and amendments to existing standards on the Company’s financial statements.

3. Summary of accounting policies

3.1 Overall considerations

The financial statements have been prepared using the significant accounting policies and measurement bases summarised below.

3.2 Investment in subsidiary

A subsidiary is an entity over which the Company has control. The Company controls a subsidiary if it is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

The Company has accounted for its investment in a subsidiary at fair value through profit or loss as management has determined that the Company falls within the definition of an investment entity as described in IFRS 10, Consolidated Financial Statements . An investment entity is defined as an entity that:

• (i) obtains funds from one or more investors for the purpose of providing those investors with investment management services;

• (ii) commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

• (iii) measures and evaluates the performance of substantially all of its investments on a fair value basis.

A parent company also needs to consider a set of typical characteristics which combined with the above definition, are intended to allow for an appropriate balance between creating a clear scope and allowing judgement in assessing whether a company is an investment entity. The characteristics are as follows:

• (i) it has more than one investment; (ii) it has more than one investor;

• (iii) it has investors that are not related parties of the entity; and

• (iv) it has ownership interests in the form of equity or similar interests.

3.3 Financial instruments

Recognition, initial measurement, and derecognition

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, where appropriate. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled, or expires.

Classification and subsequent measurement of financial assets

Except for those receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs, where appropriate.

Financial assets are classified into the following categories:

• amortised cost;

• fair value through profit or loss (“FVTPL”); and

• fair value through other comprehensive income (“FVOCI”).

In the current year, the Company does not have any financial assets categorised as FVOCI.

The classification is determined by both:

• the Company’s business model for managing the financial asset; and

• the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of receivables which is presented within other expenses.

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Company’s receivables and cash and cash equivalents fall into this category of financial instruments.

Financial assets at fair value through profit or loss

Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

The Company accounts for its equity investments at FVTPL and did not make the irrevocable election to account for the investments at FVOCI.

ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS 89 INTEGRATED ANNUAL REPORT 2021

88

Notes to the financial statements For the year ended 30 June 2021

Principles of valuation of investment

Unlisted investments are stated at amounts considered by the directors to be a reasonable assessment of their fair value, where fair value is the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

Retained earnings consists of the current and prior year results as disclosed in the statement of profit or loss and other comprehensive income.

Dividend distributions payable to the equity shareholders are included in current liabilities when the dividends have been approved by the Board prior to the reporting date.

3.8 Revenue recognition

Interest income is recognised on an accrual basis using the effective interest method.

Dividend income will be recognised when the right to receive payment is established.

3.9 Expense recognition

The Company values its unlisted investment according to one of the following bases, depending upon the category in which the investment falls:

• Cost (less any provision required)

• Discounted cash flow (“DCF”)

• Price of recent transaction (“PRT”)

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Classification and measurement of financial liabilities

3.6 Foreign currency

Functional and presentation currency

The financial statements are presented in currency British Pound (“GBP”), which is also the functional currency of the Company.

Operating expenses are recognised in profit or loss upon utilisation of the services or as incurred.

Transaction costs are costs incurred to acquire financial assets at fair value through profit or loss and are expensed.

• Earnings multiple

• Net assets value

• Sale price

• Enterprise value

• Equity value

Impairment of financial assets

IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (“ECL”) model’. Instruments within the scope of these requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

Recognition of credit losses is no longer dependent on the Company first identifying a credit loss event. Instead the Company considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’); and

• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

The Company’s financial liabilities include payables and borrowings.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Company designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method.

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

3.4 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank. Cash and cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value.

3.5 Equity

Stated capital is determined using the value of shares that have been issued, net of transaction costs associated with the issue of shares.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the Company, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in the statement of comprehensive income.

Non-monetary items are not retranslated at yearend and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

The closing exchange rate for the year for GBP/ USD was 0.72197 (2020: 0.8114).

3.7 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. At time of effective payment, the provision is deducted from the corresponding expenses. All known risks at the reporting date are reviewed in detail and provision is made where necessary.

3.10 Related party transactions

A related party is a person or company where that person or company has control or joint control of the reporting company; has significant influence over the reporting company; or is a member of the key management personnel of the reporting company or of a parent of the reporting company.

3.11 Income tax

Tax expense recognised in the statement of profit or loss and other comprehensive income comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting years, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting date.

ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

90

91

Notes to the financial statements For the year ended 30 June 2021

Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax liabilities are always provided for in full.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss or equity.

3.12 Impairment of assets

At each reporting year, the Company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered any impairment loss. When an indication of impairment loss exists, the carrying amount of the asset is assessed and written down to its recoverable amount.

3.13 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are expensed.

3.14 Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

3.15 Significant management judgements in applying accounting policies and estimation uncertainty

When preparing the financial statements, management undertakes a number of judgements, estimates, and assumptions about the recognition and measurement of assets, liabilities, income, and expenses.

Significant management judgment

Significant management judgement in applying the accounting policies of the Company that has the most significant effect on the financial statements is set below.

Determination of functional currency

The determination of the functional currency of the Company is critical since recording of transactions and exchange differences arising therefrom are dependent on the functional currency selected. The directors have considered

those factors and have determined that the functional currency of the Company is the GBP.

Investment entity

Using the guidance as per IFRS 10, “Consolidated Financial Statements”, and management has determined that the Company meets the definition of an investment entity. This has required management to make significant judgements as to whether the Company has met such definition and the typical characteristics to be considered to qualify as an investment entity as per IFRS 10.

Impact of COVID-19

In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets.

The directors have considered the potential adverse impact of COVID-19 on the Company’s business activities and have exercised significant judgement in assessing that the preparation of these financial statements on a going concern basis is appropriate. In making this assessment, the directors have considered the Company’s future business projects, future cash flows and profitability and the global economic conditions.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Fair value of financial instruments

Management applies valuation techniques to determine the fair value of investment where active market quote is not available. This requires the development of estimates and assumptions based on market inputs, using observable data that market participants would use in pricing the investment. Where such data is not observable, management uses the best estimate available. Estimated fair value of investment may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

4. Financial instrument ris k

Risk management objectives and policies

The Company is not exposed to various risks in relation to financial instruments. The main types of risks are market risk, credit risk and liquidity risk.

The Company’s financial assets and liabilities by category are summarised below:

	The Company’s fnancial assets and liabilities by category are summarised below:
		2021	2020
		GBP	GBP
	Financial assets
	Non-current
	Financial assets at fair value through proft or loss:
	Investment in unquoted companies	80,111,899	87,806,011
	Current
	Financial assets at fair value through proft or loss:
	Investment in unquoted companies	42,806,128	–
	Amortised cost
	Loans and other receivables*	1,729,370	90,000
	Cash and cash equivalents	1,315,339	582,560
	Current assets	45,850,837	672,560
	Total fnancial assets	125,962,736	88,478,571
	Financial liabilities
	Financial liabilities measured at amortised cost:
	Non-current
	Borrowings	–	7,631,250
	Current
	Borrowings	14,530,235	–
	Provisions	5,830,757	1,590,613
	Payables	520,146	68,668
	Total fnancial liabilities	20,881,138	9,290,531

* Loans and other receivables classified as financial assets exclude prepaid expenses.

The Company’s risk management is carried out under policies approved by the Board of Directors and focuses on actively securing the Company’s short to medium term cash flows by minimising the exposure to financial risks.

The Board has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate measures and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the Company’s activities. The Company does not actively engage in the trading of financial assets and derivatives for speculative purposes nor does it write options.

ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS 93 INTEGRATED ANNUAL REPORT 2021

92

Notes to the financial statements For the year ended 30 June 2021

The most significant financial risks to which the Company is exposed are described below.

4.1 Market risk analysis

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Foreign currency sensitivity

The Company’s transactions are mainly carried out in the British Pound (“GBP”) and United States Dollar (“USD”). The Company is therefore exposed to foreign currency risk on the financial assets and liabilities denominated in USD. The Company does not use any financial instruments to hedge its foreign exchange risk.

The currency profile of the Company’s financial assets and liabilities is summarised as follows:

	Financial	Financial	Financial	Financial
	assets	liabilities	assets	liabilities
	2021	2021	2020	2020
	GBP	GBP	GBP	GBP
United States Dollar (USD)	10,829,724	–	12,171,196	–
British Pound(GBP)	115,133,012	20,881,138	76,307,375	9,290,531
	125,962,736	20,881,138	88,478,571	9,290,531

The following table illustrates the sensitivity of profit/loss and equity in regards to the Company’s financial assets and financial liabilities and the GBP/USD exchange rate “all other things being equal”. It assumes, for the year ended 30 June 2021, a 3% change of the GBP/USD exchange (2020: 3%).

This percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Company’s foreign currency financial instruments held at each reporting date.

If the GBP had weakened against the USD by 3% (2020: 3%), then this would have the following impact:

At 30 June 2021 Loss for the year GBP Equity GBP USD 324,892 324,892 Total 324,892 324,892	At 30 June 2020 Profit for the year GBP Equity GBP
	USD 365,136 365,136
	Total 365,136 365,136

If the GBP had strengthened against the USD by 3% (2020: 3%), then this would have the following impact:

At 30 June 2021 Loss for the year GBP Equity GBP USD (324,892) (324,892) Total (324,892) (324,892)	At 30 June 2020 Profit for the year GBP Equity GBP
	USD (365,136) (365,136)
	Total (365,136) (365,136)

At 30 June 2021, the bank balance stood at GBP 1,315,339 (2020: GBP 582,560) and interest income earned during the year was insignificant. With regards to the interest on the borrowings, if interest rate on the financial instrument had been 25 basis points higher/lower, the effect would be marginal on the operating cash flows and equity. If interest rate on the financial liabilities had been 25 basis points higher/lower, the effect on profit/loss for the year would have been GBP 35,328 (2020: GBP 19,500) lower/higher.

Price risk sensitivity

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising on interest rate risk or foreign exchange risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company holds shares in unquoted companies, which are classified as fair value through profit or loss.

The table below summarises the impact of increase/decrease in the fair value of the Company’s investments and profit for the year assuming a +/- 5% change in the price.

			Fair value
			as at
Name of investee companies	Country of incorporation	Valuation technique used	30 June 2021 GBP	% change	Increase GBP	Decrease GBP
Dentex Healthcare	United Kingdom	Fair value	42,190,690	5%	2,109,535	(2,109,535)
Group Limited
YASA Limited	United Kingdom	Fair value	42,806,128	5%	2,140,306	(2,140,306)
SC Lowy Partners	Cayman Islands	Cost	10,829,724	5%	541,486	(541,486)
(Cayman) Limited
JSA Newco Limited	United Kingdom	Fair value	20,000,571	5%	1,000,029	(1,000,029)
Propelair Limited	United Kingdom	Fair value	1	5%	–	–
TechStream Group	United Kingdom	Fair value	7,090,913	5%	354,546	(354,546)
Total			122,918,027	5%	6,145,902	(6,145,902)
			Fair value
			as at
Name of investee companies	Country of incorporation	Valuation technique used	30 June 2020 GBP	% change	Increase GBP	Decrease GBP
Dentex Healthcare	United Kingdom	Fair value	30,756,211	5%	1,537,811	(1,537,811)
Group Limited
YASA Limited	United Kingdom	Fair value	21,949,352	5%	1,097,468	(1.097,468)
SC Lowy Partners	Cayman Islands	Cost	12,171,196	5%	608,560	(608,560)
(Cayman) Limited
JSA Newco Limited	United Kingdom	Fair value	15,838,338	5%	791,917	(791,917)
Propelair Limited	United Kingdom	Fair value	1	5%	–	–
TechStreamGroup	United Kingdom	Fair value	7,090,913	5%	354,546	(354,546)
Total			87,806,011	5%	4,390,301	(4,390,301)

Interest rate sensitivity

The Company’s exposure to interest rate risk is limited to its bank balance, loans receivable and borrowings and the interest thereon is based on market rates.

94 ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS 95 INTEGRATED ANNUAL REPORT 2021

Notes to the financial statements For the year ended 30 June 2021

4.2 Credit risk analysis

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:

below:
	2021	2020
	GBP	GBP
Financial assets
Non-current
Financial assets at fair value through proft or loss:
Investment in unquoted companies	80,111,899	87,806,011
Current
Financial assets at fair value through proft or loss:
Investment in unquoted companies	42,806,128	–
Amortised cost
Loans and other receivables*	1,729,370	90,000
Cash and cash equivalents	1,315,339	582,560
Current assets	45,850,837	672,560
Total fnancial assets	125,962,736	88,478,571

4.4 Concentration risk

The Company has invested in unlisted companies whose securities are considered to be illiquid. Such illiquidity may adversely affect the ability of the Company to acquire or dispose of such investments. The investments may be difficult to value and to sell or otherwise liquidate and the risk of investing in such companies is much greater than the risk of investing in publicly traded securities. On account of the inherent uncertainty of valuation, the estimated values may differ significantly from the values that would be used had a ready market for the investments existed. However, the Board of directors considers these investments to be strategic and the concentration risk is manageable.

Furthermore, given the different growth profiles of the investments that the Company has made, it is inevitable that certain investments will constitute a high proportion of the Company’s net asset value at certain times. The Board accepts that as a result of this the portfolio of investments will in all likelihood not be balanced.

5. Fair value measurement

5.1 Fair value measurement of financial instruments

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

• Level 3: unobservable inputs for the asset or liability.

The Company’s financial assets at fair value through profit and loss are classified under Level 3.

* Loans and other receivables classified as financial assets exclude prepaid expenses.

The hierarchy of the fair value measurement of the Company’s financial assets and financial liabilities are as follows:

The investments in the unquoted companies are stated at GBP 122,918,027 which represents the maximum exposure to credit risk. During the year, the underlying investments were fair valued, resulting in a net fair value gain of GBP 33,953,487.

The credit risk on the bank balance and fixed deposits is considered negligible, since the Company transacts with a reputable financial institution.

The directors believe that no credit risk is associated with the loans and receivables.

None of the above financial assets are secured by collateral or other credit enhancements.

4.3 Liquidity risk analysis

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as and when they fall due. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Ultimate responsibility for liquidity risk management rests with the Board of directors who also monitor the Company’s short, medium, and long-term funding and liquidity management requirements. As of 30 June 2021, its liabilities were for accrued expenses, payables and borrowings.

	Level 1	Level 2	Level 3	Total
2021	GBP	GBP	GBP	GBP
Assets
Financial assets and fair value through proft or loss:
Investments in unquoted companies	–	–	122,918,027	122,918,027
	Level 1	Level 2	Level 3	Total
2020	GBP	GBP	GBP	GBP
Assets
Financial assets and fair value through proft or loss:
Investments in unquoted companies	–	–	87,806,011	87,806,011

There has been no transfer among Levels at the reporting date.

Measurement of fair value

The policy of the Company is to evaluate its investments (direct or indirect) twice a year for financial reporting purposes. However, the estimated fair values of the investments are reviewed by the Investment Committee and Board quarterly and are adjusted if a significant event takes place. The investments are valued in accordance with generally accepted valuation models. It is the policy to state the Company’s investments at fair value or at cost where the fair values cannot be reliably estimated. However, all investments stated at cost are assessed for indicators of impairment.

ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

96

97

Notes to the financial statements For the year ended 30 June 2021

TechStream Group

The investment in TechStream Group has been maintained at the value reported at 30 June 2020. Management is of view that this value represents the fair value of the investment at the reporting date.

Dentex

Dentex Healthcare Group Limited (“Dentex”) raised GBP 20 million equity in November 2020 from current and new shareholders to help fund new acquisitions in line with its business plan. The Company invested GBP 2.5 million in this round. The equity was raised at a valuation of £1.34 per share. In March 2021, the Dentex Board approved the fair value of £1.70 per share to be used to issue new shares to dentists, as part payment for new acquisitions, from 1 April 2021. The valuation of the shares held in Dentex at the reporting date has, accordingly, been based on this increased valuation of £1.70 per share. This has resulted in a fair value gain of GBP 8,934,478 of the investment in Dentex.

SC Lowy

SC Lowy Partners (Cayman) Limited (“SC Lowy”) has been maintained at its historical USD cost, after adjusting for the effects of foreign exchange.

JSA

The investment in JSA Services has been fair valued at the reporting date based on a discounted cash flow method that has been approved by the Investment Committee. A fair value gain of GBP 4,162,233 has been recognised in respect of this investment.

YASA

On 03 August 2021, the Company disposed of its shares in YASA to Mercedes-Benz AG for a total consideration to the Company of GBP 42.8 million. GBP 35.4 million of the proceeds were received upfront and the remainder will be received over a period of 72 months Accordingly, the fair value of YASA at the reporting date has been revalued to this amount and a fair value gain of GBP 20,856,776 has been recognised. The sale of YASA, which is the Company’s first exit

of an investment since listing, resulted in gross proceeds of 3 times the amount invested and a net Internal Rate of Return, after allowing for transaction fees and carried interest charges, of 27.6%.

Propelair

The Company considers that the investment in Propelair Limited remains impaired at year end and the value of the investment has been maintained at a nominal amount of GBP 1.

• 5.2 Fair value measurement of financial instruments not carried at fair value

The Company’s other financial assets and financial liabilities are measured at fair carrying amounts which approximate their fair values.

• 5.3 Fair value measurement of non-financial instruments

The Company’s non-financial assets consist of prepayments for which fair value measurement is not applicable since these are not measured at fair value on a recurring or non-recurring basis in the statement of financial position.

At the reporting date, the Company did not have any non-financial liabilities.

6. Capital risk management policies and procedures

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns to its shareholders and other stakeholders.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid, buy back shares, or issue new shares.

The Company monitors capital on the basis of the gearing ratio. This ratio is determined as the proportion of net debt to total capital. The Company obtained a facility of GBP 16.5 million from RMB of which GBP 14.3 million has been drawn down at 30 June 2021 (2020: GBP 7.8 million).

	2021	2020
	GBP	GBP
Total Borrowings	14,530,235	7,631,250
Less: cash and cash equivalents	(1,315,339)	(582,560)
Net debt	13,214,896	7,048,690
Total equity	105,092,053	79,194,186
Total capital	118,306,949	86,242,876
Gearingratio	11.17%	8.17%

Debt is defined as long-term borrowings which comprise of the loan facility as detailed in Note 11.

7. Investments at fair value through profit or loss

(i) Unquoted and at fair value:

2021	2020
GBP	GBP
At start of the year 87,806,011	70,284,178
Additions during the year 2,500,000	19,757,983
Dividends accrued and capitalised 574,540	248,430
Fair value gain/(loss) on remeasurement 33,953,487	(2,848,986)
Impairment loss (574,540)	–
Effect of foreign exchange (1,341,471)	364,406
At 30 June 122,918,027	87,806,011

(ii) Details of the investments are as follows:

				Cost	Fair value	Cost	Fair value
Name of investee company	Country of incorporation	Type of investment	% holding	2021 GBP	2021 GBP	2020 GBP	2020 GBP
Universal Partners
Investments (Dentex,
Yasa, Propelair, SC
Lowy Partners, JSA
and Techstream)
(Note (iii) below)	Republic of	Ordinary	100	76,530,741	122,918,027	74,030,741	87,806,011
	Mauritius	shares
Total				76,530,741	122,918,027	74,030,741	87,806,011

• (iii) During the year under review, the Company made additional investments totalling GBP 2,500,000 in Dentex Healthcare Group Limited

ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

98

99

Notes to the financial statements For the year ended 30 June 2021

(iv) Details of the Company’s indirect investments held through its wholly-owned subsidiary is as follows:

				Cost	Fair value	Cost	Fair value
Name of investee company	Country of incorporation	Type of investment	% holding	2021 GBP	2021 GBP	2020 GBP	2020 GBP
Dentex Healthcare	United	Class E1	39.76%	32,308,080	42,190,690	29,808,080	30,756,211
Group Limited	Kingdom	ordinary shares
Propelair	United	Preference	10.38%	1,404,984	1	1,404,984	1
Limited	Kingdom	shares
YASA Limited	United	Ordinary	21.95%	14,285,881	42,806,128	14,285,881	21,949,352
	Kingdom	shares
SC Lowy Partners	Cayman	Class B	4.73%	11,264,825	10,829,724	11,264,825	12,171,196
(Cayman) Limited	Islands	Ordinary
		shares
JSA Newco	United	Class A	43.18%	9,466,970	20,000,571	9,466,970	15,838,338
Limited	Kingdom	Ordinary
		shares
TechStream	United	Class A	46.41%	7,800,001	7,090,913	7,800,001	7,090,913
	Kingdom	Ordinary
		shares,
		Class A
		Preference
		Shares,
		Preferred
		Ordinary
		Shares,
		Class B
		Preference
		Shares
				**76,530,741 **	122,918,027	74,030,741	87,806,011

8. Receivables and prepayments

Receivables and prepayments
	2021	2020
	GBP	GBP
Due from wholly owned subsidiaries	90,000	90,000
Due from Techstream Group	1,639,370	–
Prepayments	10,455	6,146
Total	1,739,825	96,146

• (i) The amounts due from wholly owned subsidiaries are unsecured, interest-free and receivable on demand. These relate to minimum cash deposits, for the bank accounts of the two wholly owned subsidiaries, in order to minimise bank charges.

• (ii) Universal Partners Investments (“UPI”) has subcribed to 1,530,000 loan notes of GBP 1 each issued by Techstream Group on 13 January 2021. This has been funded by the Company. Hence, the principal amoumt of GBP 1,500,000, raising fee of GBP 30,000 and interest income of GBP 109,370 is payable by UPI. The loan note accrues interest at 15% per annum and if not settled after 9 months will be increased to 20% per annum restropspectively from the date issued.

• (iii) The directors consider that no expected credit loss will be recognised for amounts due from the related parties as these parties are not experiencing any financial difficulties and no default is anticipated.

9. Cash and cash equivalents

	Cash and cash equivalents
		2021	2020
		GBP	GBP
	Cash at bank in: – British Pound(“GBP”)	1,315,339	582,560
	Total cash at bank	1,315,339	582,560
	Total cash and cash equivalents	1,315,339	582,560
	Stated capital
		2021	2020
		GBP	GBP
	72,350,131 ordinary shares of no par value:
	Proceeds from issue	72,350,131	72,350,131
	Issuance costs	(502,967)	(502,967)
	At 30 June	71,847,164	71,847,164

10. Stated capital

11. Borrowings

Borrowings
	2021	2020
	GBP	GBP
At start of the year	7,631,250	7,800,000
Structuring fee	–	(225,000)
Amortisation of structuring fee	112,500	56,250
Additional borrowings	6,500,000	–
Interest accrued during the year	390,773	–
Commitment fee payable	46,851	–
Interestpayment	(151,139)	–
At end of theyear	14,530,235	7,631,250

Universal Partners Limited, through its wholly-owned subsidiary Universal Partners Investments (“UPI” or “the Borrower”), obtained GBP 16,500,000, a two year liquidity facility from RMB International (Mauritius) Limited (the “Lender” or “RMB”). Universal Partners Limited and Universal Partners Investments Bidco (the “Guarantors”) signed cross guarantees in relation to this facility. The Borrower has pledged, inter alia, its interest in all of its shares legally and beneficially owned in Universal Partners Investments Bidco in favour of First Rand Bank Limited (“Security Agent”) in accordance with the “Code de Commerce” of Mauritius. Further, bank accounts of the Universal Partners Investments Bidco and the Borrower are also pledged in favour of this facility.This facility is required to be settled from the proceeds of a sale of an investment if it is sold within the 2 year term.

The Company drew down GBP 6,500,000 from the facility through UPI during the year.

Interest on the facility is charged at LIBOR plus a margin of

• 3% to 31 December 2020;

• 3.4% from 31 December 2020 to 30 June 2021; and

• 3.75% from 30 June 2021 to final repayment date

The interest is payable quarterly for the first 12 months and thereafter will be capitalised until due for repayment at the end of the loan term. Interest expense amounted to GBP 390,773 for the year under review.

There is also a commitment fee of 1% which is payable on the facility that is not utilised. This fee is payable quarterly for the first 12 months and thereafter will be capitalised until repayment at the end of the loan term.

The facility was settled in full on 13 August 2021, in terms of the liquidity loan facility agreement, using part of the proceeds received from the sale of YASA.

100 ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

101

Notes to the financial statements For the year ended 30 June 2021

12. Payables

Payables
	2021	2020
	GBP	GBP
Accruals	50,210	43,000
Payables	469,936	25,668
Provision forperformance fees(See note below)	5,830,757	1,590,613
Total	6,350,903	1,659,281

This relates to a provision made under the Management Agreement with Argo Investment Managers and is payable upon terms and conditions disclosed in Note 13.2 below.

15. Taxation

15.1 Income tax expense

The Company, under the current laws and regulations, is liable to pay income tax on its net income at a rate of 15%. The Company is, however, entitled to a tax credit equivalent to the higher of actual foreign tax suffered or 80% of the Mauritian tax payable in respect of its foreign source income, thus reducing its maximum effective rate to 3%. The Company has received a tax residence certificate (TRC) from the Mauritius Revenue Authority (MRA) which is renewable annually.

No Mauritian capital gains tax is payable on profits arising from any sale of securities, and any dividends and redemption proceeds paid by the Company to its shareholders will be exempt in the Republic of Mauritius from any withholding tax.

13. Management and performance fees

13.1 Management fees

Pursuant to a Management Agreement (the “Agreement”), Argo Investment Managers (the “Manager”), a related entity registered in the Republic of Mauritius, has been appointed to provide investment management services to the Company, for a fee of 0.90% of the amount of funds held by the Company and which are not long term investments (being investments which will be held for less than 6 months) and a fee of 2% of the fair value of long term investments held by the Company as reflected in the statement of financial position. The management fees are payable quarterly in arrears.

Management fees for the year amounted to GBP 1,770,416 (2020: GBP 1,571,149).

13.2 Performance fees

As per the above Agreement, the Company is required to pay a performance fee to the Manager in an amount equal to 20% of the amount by which the net proceeds of realisation exceed the initial cost of investment plus management fees paid less any distribution/repayment received, all adjusted by an annual rate of return of 8%. The performance fee will only become payable on realisation of the underlying investments. 80% of the performance fee is payable in cash and 20% in shares in Universal Partners Limited issued at the net asset value at the date of issue. These shares can only be sold after a period of three years.

Accrued unrealised performance fees for the year amounted to GBP 5,830,757 (2020: GBP 1,590,613).

As at 30 June 2021, the Company had no income tax liability due to accumulated tax losses of GBP 8,205,390 (2020: GBP 2,188,478) carried forward.

15.2 Income tax reconciliation

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the Company as follows:

rate of the Company as follows:
	2021	2020
	GBP	GBP
Proft/(loss)before tax	25,897,867	(3,478,437)
Tax at effective rate of 3%	776,936	(104,353)
Non-allowable items	61,173	88,916
Exempt income	(1,018,616)	(14,476)
Deferred tax asset not recognised	180,507	29,913
Tax expense	–	–

15.3 Deferred taxation

No deferred tax asset has been recognised in respect of the tax losses carried forward as no taxable income is probable in the foreseeable future.

14. Other expenses

Other expenses
	2021	2020
	GBP	GBP
Advertising and promotion	4,078	4,648
Annual report cost	7,828	7,293
Audit fees	15,299	15,902
Bank charges	1,685	2,018
Consulting fees	38,250	39,206
General expenses	318	–
Insurance	7,096	6,481
Listing fees – JSE	16,835	16,035
Listing fees – SEM	24,025	26,105
Subscriptions	1,604	–
Travel expenses	87	70,994
Total	117,105	188,682

16. Earnings/(loss) per share

The earnings/(loss) per share is calculated by:

The earnings/(loss) per share is calculated by:
	2021	2020
	GBP	GBP
Proft/(loss)for theyear(GBP)	25,897,867	(3,478,437)
Number of shares in issue	72,350,131	72,350,131
Earnings/(loss) per share(pence)	35.80	(4.81)

102 ANNUAL FINANCIAL STATEMENTS

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

103

Notes to the financial statements For the year ended 30 June 2021

17. Related party transactions

During the year ended 30 June 2021, the Company had transactions with its related parties. The nature, volume of transactions and balances with the related parties are as follows:

			Debit/(credit)	Debit/(credit)	Debit/(credit)
		Volume of	balances at		balances at
		transactions	30 June 2021		30 June 2020
Nature of relationship	Nature of transactions	GBP	GBP		GBP
Key management personnel	Directors fees (Non-executives)	117,447	(34,250)		(28,000)
Investee	Loan (Note 8)	1,639,370	1,639,370		–
Subsidiary	Loan (Note 8)	–	45,000		45,000
Subsidiary	Loan (Note 8)	–	45,000		45,000
Common directorship	Management fees (Notes 12 and 13)	1,770,416	(451,479)		–
Common directorship	Performance fees accrued (Notes 12 and 13)	4,240,144	(5,830,757)		(1,590,613)
Administrator and secretary	Professional fees	35,270	(1,204)		(3,085)

The Company bears all of the operating expenses for its wholly-owned subsidiaries, on a free of charge basis and which amounted in aggregate to GBP 13,678 (2020: GBP 11,574). The wholly-owned subsidiaries exist solely to hold the underlying investments.

18. Reconciliation of liabilities arising from financing activities

19. Events after the reporting date

COVID-19 outbreak was declared a pandemic by the World Health Organization in January 2020 with financial and non-financial effects still being felt as at the date of this report. The situation is dynamic with various cities and countries around the world responding in different ways to address the outbreak. There are meaningful direct and indirect effects developing with companies across multiple industries and the world.

The directors have made an assessment of the Company’s ability to continue as a going concern taking into account all available information about the future including the analysis of the possible impacts in relation to COVID-19, which is at least, but is not limited to, twelve months from the date of approval of these financial statements and at 30 June 2021 no events or conditions have been identified that may cast significant doubt on the Company’s ability to continue as a going concern. The prolonged effects of the outbreak as well as the resultant lockdown will have an impact on business activities and cash flows.

On 03 August 2021, the Company disposed of its shares in YASA to Mercedes-Benz AG for a total consideration to the Company of GBP 42.8 million. GBP 35.4 million of the proceeds were received upfront and the remainder will be received over a period of 72 months. The sale of YASA, which is the Company’s first exit of an investment since listing, resulted in gross proceeds of 3 times the amount invested and a net Internal Rate of Return, after allowing for transaction fees and carried interest charges, of 27.6%.

The facility from RMB was settled in full on 13 August 2021, in terms of the term loan facility agreement, using part of the proceeds received from the sale of YASA.

Except for the above, there have been no material events since the end of the reporting period which would require disclosure or adjustment to the financial statements for the year ended 30 June 2021.

Reconciliation of liabilities arising from fnancing activities
	2021	2020
	GBP	GBP
Opening balance	7,631,250	–
Cash fows:
Cash changes
Structuring fee	–	(225,000)
Interest paid	(151,139)	(128,476)
Non-cash changes
Borrowings	6,500,000	7,800,000
Accrual for interest	390,773	128,476
Commitment fee payable	46,851	–
Amortisation of structuringfee	112,500	56,250
At 30 June	14,530,235	7,631,250

104 SHAREHOLDER INFORMATION

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UNIVERSAL PARTNERS 97
INTEGRATED ANNUAL
REPORT 2021
Shareholder
information
106 Corporate diary
107 Corporate information
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SHAREHOLDER INFORMATION

UNIVERSAL PARTNERS INTEGRATED ANNUAL REPORT 2021

106

107

Corporate diary

KEY EVENTS	DATE
Financial year end	30 June 2021
Publication of audited fnancial results on the JSE and SEM	14 September 2021
Annual General Meeting	10 November 2021
Announcement of FY2022 30 September 2021 frst quarter results (tentative date)	11 November 2021
Announcement of FY2022 31 December 2021 interim results (tentative date)	9 February 2022
Announcement of FY2022 31 March 2022 third quarter results (tentative date)	11 May 2022
Announcement of FY2022 30 June 2022 annual results (tentative date)	15 September 2022

Corporate information

Directors	Laurence Nestadt (Chairman) Andrew Birrell Françoise Chan Andrew Dunn Pierre Joubert Kesaven Moothoosamy Marc Ooms Neil Page David Vinokur Peter Gain Gary Spellins Daniel Rubenstein 25 April 2016 25 April 2016 25 April 2016 25 April 2016 25 April 2016 25 April 2016 25 April 2016 25 April 2016 25 April 2016 13 July 2016 (resigned 10 November 2020) 10 November 2020 11 May 2021 DATE APPOINTED
Administrator and secretary	Intercontinental Trust Limited Level 3, Alexander House 35 Cybercity Ebene, 72201 Republic of Mauritius
Registered offce	Alexander House Level 3, Alexander House 35 Cybercity Ebene 72201 Republic of Mauritius
Auditors	Grant Thornton Ebene Tower 52 Cybercity Ebene 72201 Republic of Mauritius
Banker	Investec Bank (Mauritius) Limited 6th Floor, Dias Pier Building Le Caudan Waterfront Caudan, Port Louis Republic of Mauritius
Registered transfer agents	Computershare Investor Services Proprietary Limited Central Depository & Settlement Co. Ltd Rosebank Towers 15 Biermann Ave, Rosebank, 2196 Johannesburg South Africa 4th Floor, One Cathedral Square Building 16, Jules Koenig Street Port Louis Republic of Mauritius
Investment advisory manager	ARGO Investment Managers Level 3, Alexander House 35 Cybercity Ebene 72201 Republic of Mauritius
Sponsor (in South Africa)	Java Capital Trustees and Sponsors (Proprietary) Limited 6th Floor, 1 Park Lane, Wierda Valley Sandton Johannesburg South Africa
Sponsor (in Mauritius)	Perigeum Capital Ltd Level 4, Alexander House 35 Cybercity Ebene 72201 Mauritius

www.universalpartners.mu