REG - Literacy Capital PLC - Final results for the year to 31 December 2023

Literacy CapitalAnnouncement

21/03/2024 07:00

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RNS Number : 6908H  Literacy Capital PLC  21 March 2024

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any
member state of the European Economic Area, Canada, Australia, Japan or the
Republic of South Africa.

 

 

21 March 2024

 

Literacy Capital plc ("Literacy Capital", "BOOK" or the "Fund")

 

Final results and audited financial statements for the year to 31 December
2023

 

Helping to build great businesses to generate superior returns

 

Literacy Capital, the listed investment trust, is pleased to release its final
results for the year to 31 December 2023.

 

A PDF copy of the results can be viewed at:
www.literacycapital.com/investors/reports-and-results
(http://www.literacycapital.com/investors/reports-and-results)

 

Performance highlights

 

·    NAV per ordinary share of 500.4p

o  Net assets of £300.3m, an increase of 19.0% after all costs and expenses
(including charitable donations), in the twelve months to 31 December 2023

o  Book's share price increased 30.4% over the same period

 

·    Significant step up in cash realised in 2023, driven by a maturing
portfolio and interest in Literacy's assets from acquirors

o  £46.3m cash received in the twelve month period to 31 December 2023
(£13.1m in 2022)

o  The majority of this cash (£40.8m) was generated from the transactions
involving Kernel Global and Butternut Box. These transactions both completed
at significant premiums to Literacy's carrying value of the assets (49% and
54% premiums respectively)

 

·  Continued focus on deploying capital into new investments and existing
portfolio companies, as well as building a pipeline of new opportunities

o  Two new platform investments completed in 2023, with follow-on capital
provided to several portfolio companies to support and accelerate their growth

o  £33.6m cash invested in aggregate in 2023, an increase of 25.4% compared
to calendar year 2022, providing potential for uplifts in future periods

 

·   The Fund and its portfolio is favourably positioned at the end of 2023.
This is despite more challenging UK macroeconomic conditions (particularly in
H2 2023), with Literacy Capital's companies modestly leveraged

o  Following the sale of BOOK's stake in Butternut Box, almost 100% of NAV is
now weighted towards the buyouts of profitable businesses, rather than earlier
stage, more risky investments

o  On 31 December 2023, the average EV / EBITDA multiple was 9.4x and net
senior debt / EBITDA was 1.6x (both calculated on a weighted average basis for
Literacy's ten largest investments, which comprise 86.5%(3) of NAV)

 

·    Increasing charitable donations, helping disadvantaged children
across the UK get a fair chance

o  A further £2.8m of charitable donations provided for in 2023 (£2.3m in
2022), a year-on-year increase in line with NAV growth

o  Total donations now exceed £8.5m since inception of Literacy Capital

 

 

Performance to 31 December 2023

 

 % total return                 3 months  1 year  3 years  Since Inception
 BOOK Net asset value           +1.6%     +19.0%  +250.5%  +456.0%
 BOOK Share Price               (5.4)%    +30.4%  n/a      n/a
 FTSE Investment Company Index  +8.3%     +4.9%   (1.2)%   +37.2%
 FTSE All-Share Index           +3.2%     +7.9%   +28.1%   +25.8%

 

Inception: 30 April 2018

 

 

Comparison to prior periods

 

                         At 31 December 2023  At 31 December 2022
 Net asset value         £300.3m              £252.4m
 NAV per ordinary share  500.4p               420.6p

 

                                12 months to 31 December 2023  12 months to 31 December 2022
 Capital invested               £33.6m                         £26.8m
 Cash realised                  £46.3m                         £13.1m
 Charitable donation provision  £2.8m                          £2.3m

 

 

 

Richard Pindar, CEO of the Investment Manager and Director of Literacy Capital
plc, commented:

"Overall, we are pleased with the performance of BOOK's portfolio during this
financial year. Following extremely strong performance years in 2021 and 2022
(NAV growth of +94.1% and +51.7% respectively), it has been challenging to
repeat this level of performance in 2023 (+19.0%), as weaker UK macroeconomic
conditions have impacted the growth of certain portfolio companies.

 

2023 marked the first occasion where we were able to complete a significant
sale of an earlier Literacy Capital investment, which we were able to achieve
twice. In both cases, Literacy enjoyed approximately a 10x return on its
investment and a premium at exit of 50% to carrying value.

 

We continue to explore several new investment opportunities and we strive to
retain the same discipline when appraising these. As Literacy's unique
approach and alternative structure compared to traditional private equity is
better understood by company founders, we expect to continue to see a good
volume of opportunities. This allows us to remain highly selective about the
businesses and people we choose to work with.

 

Finally, it is worth highlighting again the strong financial alignment between
the Fund's shareholders and investment manager. The management fee is low and
no performance fees are paid by the Fund to its Manager, with the focus
remaining on generating the best net returns possible for shareholders."

 

 

Enquiries

For further information, please contact:

 

 Literacy Capital plc / Book Asset Management LLP:

 Richard Pindar / Tom Vernon                        +44 (0) 20 3960 0280

 MHP Group:

 Reg Hoare / Ollie Hoare / Matthew Taylor           +44 (0) 20 3128 8100

 Singer Capital Markets Securities Limited:

 Robert Peel                                        +44 (0) 20 7496 3000

 

 

About Literacy Capital:

 

Literacy Capital (BOOK.L) is an investment trust that was launched in 2017 by
Paul and Richard Pindar, before it listed on the London Stock Exchange's main
market in June 2021. The Company focuses on opportunities to invest for the
long-term in growing private businesses where a clear route to creating
additional value can be seen. It also has a unique charitable objective to
donate 0.9% of annual NAV to charities focused on improving literacy in UK
children. £8.5 million has been donated or reserved for donation to charities
since the trust's creation in 2017. For more information, please visit our
website: www.literacycapital.com (http://www.literacycapital.com) .

 

 

 

Website:

www.literacycapital.com

 

LEI: 2549006P3DFN5HLFGR54

 

A copy of this announcement will be available on the Company's website at
www.literacycapital.com (http://www.literacycapital.com) .

 

 

 

 

The information contained in this announcement regarding the Company's
investments has been provided by the relevant underlying portfolio company and
has not been independently verified by the Company.

 

This announcement is for information purposes only and is not an offer to
invest. All investments are subject to risk. Past performance is no guarantee
of future returns. Prospective investors are advised to seek expert legal,
financial, tax and other professional advice before making any investment
decision. The value of investments may fluctuate. Results achieved in the past
are no guarantee of future results. Neither the content of the Company's
website, nor the content on any website accessible from hyperlinks on its
website for any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a recognised
information service, should any such content be relied upon in reaching a
decision as to whether or not to acquire, continue to hold, or dispose of,
securities in the Company.

 

This announcement may include "forward-looking statements". All statements
other than statements of historical facts included in this announcement,
including, without limitation, those regarding the Company's financial
position, business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to the
Company's products and services) are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and
accordingly the Company's actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements. These factors include but are not limited
to those described in the formal Prospectus. These forward-looking statements
speak only as at the date of this announcement. The Company expressly
disclaims any obligation or undertaking to update or revise any
forward-looking statements contained herein to reflect actual results or any
change in the assumptions, conditions or circumstances on which any such
statements are based unless required to do so by the Financial Services and
Markets Act 2000, the Listing Rules or Prospectus Regulation Rules made under
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