REG - Literacy Capital PLC - Final results for the year to 31 December 2024

Literacy CapitalAnnouncement

21/03/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250321:nRSU5636Ba&default-theme=true

RNS Number : 5636B  Literacy Capital PLC  21 March 2025

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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 2025

Literacy Capital plc

 

Final results and audited financial statements for the year to 31 December
2024

 

Helping to build great businesses to generate superior returns

 

Literacy Capital plc ("Literacy", "BOOK" or the "Company"), a listed
investment trust primarily focused on investing directly into private
businesses based in the UK, today announces its final results for the year to
31 December 2024.

 

A PDF copy of the results can be viewed at:
www.literacycapital.com/investors/reports-and-results
(https://protect.checkpoint.com/v2/r06/___http:/www.literacycapital.com/nsAjxytwxdwjutwyx-fsi-wjxzqyx___.ZXV3MjpuZXh0MTU6YzpvOmMzNDQ0N2ZiOGFiMjhmODA5ZDI3MThkNmFiNjIxMTBmOjc6YTE2NDpkMDE4ZjY4ZDZmNjQ0YjhlYjBlNTk0MjZjYWM4NTU5YmEwZjQwMDdhMmU2ZGJmZWU2NTRjNzIyMDEyM2Q0ODYxOnA6RjpU)

 

An online presentation for retail investors will be held via the Investor Meet
Company platform on 29 April 2025 and a Capital Markets Event will be held in
London for institutional investors and research analysts on 13 May 2025.
Details for both events will be announced in due course.

 

Performance Highlights:

 

·    NAV per ordinary share of 492.8p, with net assets of £296.6m

o  NAV, adjusted for the post-period end event (Halsbury Travel's bolt-on
acquisition), of 499.2p per ordinary share, with adjusted net assets of
£300.4m

o  The reported NAV per share as at 31 December 2024 declined 1.5% after the
impact of all costs (including charitable donations and the impact of the
warrant instruments) in the twelve months to 31 December 2024

o  BOOK's share price decreased 5.4% over the same period

 

·    Attractive opportunities to deploy capital into new investments, as
well as building a pipeline of new opportunities

o Three new platform investments completed in 2024, with a strong pipeline of
new opportunities

o  £41.1m cash invested in aggregate in 2024, an increase of 22.3% compared
to calendar year 2023, to support growth in existing portfolio companies, as
well as capital for new investments

 

·    M&A activity and cash distributions received in 2024 were more
muted than the previous year

o  £30.1m cash received by BOOK in 2024. Whilst lower than 2023 (cash
received in 2023 was mostly due to the sale of two maturing assets at
significant premiums), this was more than 2022

o The majority of this cash was from refinancing two existing portfolio
companies; further refinancings underway in early 2025 to fund new investment
activity and pay down RCF debt

o  Literacy also completed the sale of a private equity fund interest for an
8.2% premium to its prior carrying value, reducing BOOK's exposure to private
equity fund interests

 

·    A slight decline in overall carrying multiples, compared to the end
of 2023, to reflect caution given the UK macroeconomic outlook; however,
Literacy's investee companies remain modestly leveraged

o On 31 December 2024, the weighted average EV / EBITDA multiple for
Literacy's ten largest investments (comprising 87.7% of NAV) was 8.8x,
compared to 9.4x on 31 December 2023

o  The average net debt / EBITDA was 2.3x (calculated on the same basis as
above), an increase on twelve months ago (1.6x at 31 December 2023) following
the refinancing activity

 

·    Consistent charitable donations and a continued focus on helping
children in the UK's most disadvantaged communities

o  Total donations now amount to £11.2m since inception of Literacy Capital

 

 

Performance to 31 December 2024

 

 % total return                                    3 months  1 year  3 years  Since Inception(1)
 BOOK NAV per share                                (2.3)%    (1.5)%  +77.8%   +392.8%
 BOOK Share Price                                  (9.2)%    (5.4)%  +53.9%   n/a(2)
 FTSE All-Share Closed End Investment Trust Index  +2.2%     +8.7%   (4.8)%   +49.1%
 FTSE All-Share Index                              (0.4)%    +9.5%   +18.5%   +37.7%

 

(1) Inception date is April 2018

(2)BOOK's shares were admitted for trading on the London Stock Exchange in
June 2021. Share price data therefore starts at this point.

 

 

Comparison to prior periods

 

                         At 31 December 2024  At 31 December 2023
 Net asset value         £296.6m              £300.3m
 NAV per ordinary share  492.8p               500.4p

 

                                12 months to 31 December 2024  12 months to 31 December 2023
 Capital invested               £41.1m                         £33.6m
 Cash realised                  £30.1m                         £46.3m
 Charitable donation provision  £2.7m                          £2.8m

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

"The performance of the fund in 2024, in terms of the NAV return delivered
during the period, was below our original expectations and the high standards
we have set in previous years. That said, it is important to note that a
single twelve-month period is not sufficient to judge the track record of
BOOK, or indeed any private equity fund. Over a longer, more appropriate
timeframe, BOOK's performance compared to other listed investment companies
remains extremely strong and we believe that its strategy will generate
compelling absolute and relative performance in future periods.

 

The primary impediment to a better NAV return in 2024 was the performance of
two portfolio companies. These two holdings were amongst the three largest at
the start of the year and between them equated to nearly 25% of the fund's NAV
at the start of 2024. In aggregate, they contributed to a £33.6m decline in
NAV. Clearly, whilst disappointing, it is not realistic to expect the
performance of each company to be linear or positive at all times.

 

As shareholders will be aware, we take a proactive approach to managing our
investments and are able to make changes to management teams when necessary.
These businesses both now have new leadership, their weighting has reduced to
16% of NAV, and both are showing more positive trends in 2025 than the last 18
months. We are confident that their performance will be more encouraging, and
they will not be a drag on the fund's NAV return in 2025.

 

It is important to reemphasise all of the benefits of BOOK's strategy and
approach. Literacy's focus is on smaller, private businesses; there are
relatively few buyers for these types of businesses, due to their size, whilst
they are characterised by often incomplete or underdeveloped management teams
and immature succession planning. As a result, there is frequently limited
competition for many businesses that Literacy looks at and we focus on
allocating our capital in a disciplined way to deliver sustainable long-term
growth.

 

Ensuring we don't overpay is also crucial to protecting and growing
shareholder capital. Our value-add is not solely in 'stock picking' but also
ensuring our companies have appropriate leadership and complementary
management teams to maximise their potential, which takes effort and patience.

 

Another key difference is the timespan over which we are prepared to invest.
Allowing gains to compound over time results in better returns for
shareholders, which is facilitated by the unusually strong financial alignment
between the investment manager and fund's shareholders. The management fee for
a fund making direct private equity investments remains below market, despite
the uplift from 0.9% to 1.5% effective from 1 January 2025, and no performance
fees are paid by BOOK to its Manager, which is virtually unheard of within
private equity, and removes the incentive to prematurely sell assets."

 

 

-ENDS-

 

 

For further information, please contact:

 

Literacy Capital plc / Book Asset Management LLP

Richard Pindar / Aasha Tailor

+44 (0) 20 3960 0280

 

MHP Group

Reg Hoare / Ollie Hoare / Matthew Taylor

book@mhpgroup.com

+44 (0) 7817 458 804 / + 44 (0) 7827 662 831

 

Singer Capital Markets Securities Limited

Alaina Wong

+44 (0) 20 7496 3000

 

About Literacy Capital plc

 

Literacy Capital (BOOK.L) is a closed-end investment company that was
co-founded by Paul Pindar and Richard Pindar in 2017 with £54m of capital.
Literacy listed on the London Stock Exchange's Main Market in June 2021,
before gaining Investment Trust status on 1 April 2022. 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 with its support.

 

It also has a unique charitable objective, to donate 0.5% of annual NAV to
charities focused on improving UK literacy in children. £11.2 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
(https://protect.checkpoint.com/v2/___http:/www.literacycapital.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzphNjUwYWQxZDUwODhlOWQ3MmI2NDdhYTkzOTJmNjA0Mzo2OmViNjk6ZTY1ZGRjZjU4MjE2YTJmMjU5YmYzMWZjOTYwMDBjMTI4MzY0YTIxYzQ1YzZkODczYzMwNzQ1YzM1YzI0NTg5YTpwOlQ6Tg)
.

 

A copy of this announcement will be available on the Company's website at
www.literacycapital.com
(https://protect.checkpoint.com/v2/___http:/www.literacycapital.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzphNjUwYWQxZDUwODhlOWQ3MmI2NDdhYTkzOTJmNjA0Mzo2OmViNjk6ZTY1ZGRjZjU4MjE2YTJmMjU5YmYzMWZjOTYwMDBjMTI4MzY0YTIxYzQ1YzZkODczYzMwNzQ1YzM1YzI0NTg5YTpwOlQ6Tg)
.

 

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. The information contained
herein is unaudited.

 

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.

 

LEI: 2549006P3DFN5HLFGR54

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACSBRGDXBBDDGUG