REG - Literacy Capital PLC - Quarterly trading update and NAV announcement

Literacy CapitalAnnouncement

27/10/2022 07:00

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RNS Number : 2422E  Literacy Capital PLC  27 October 2022

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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

 

This announcement contains inside information.

 

27 October 2022

 

Literacy Capital plc

 

Quarterly trading update and NAV announcement for Q3 2022

 

"Strong growth of portfolio companies drives Q3 NAV return of +11.3%

and twelve month return of +56.9%"

 

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 quarterly trading update for
the three months ending 30 September 2022.

 

Q3 Highlights:

 

 •    Net Asset Value ("NAV") per share of 384.9 pence and NAV of £231.0m
 •    Total NAV return (after all fees and charitable donation provisions) of +11.3%
      in the last three months and +56.9% in the last twelve months
 •    Portfolio companies continue to trade strongly with more recent investments
      contributing substantial NAV uplifts and the portfolio heavily weighted
      towards strongly performing businesses with low leverage
 •    Total charitable donations since the inception of Literacy exceed £5 million,
      with a charitable donation provision of £639k in the three months to 30
      September 2022
 •    Following this announcement, the shares are trading at a premium of
      approximately 1.0% to NAV, the smallest premium since BOOK listed

 

Commenting on the Q3 performance, CEO of BOOK's investment manager, Richard
Pindar, said:

 

"The portfolio performed very well in Q3. The companies within the buyout
segment, which represents the vast majority of the portfolio, continued to
grow strongly and these types of investments remain our core focus, given
their strong returns profile. The early signs in Q4, regarding the strength of
demand and trading across the portfolio, is very encouraging."

 

Net Asset Value

 

The Company announces that as at 30 September 2022 the unaudited NAV per
ordinary share was 384.9 pence (383.9 pence per ordinary share on a fully
diluted basis, taking account of warrants to subscribe for ordinary shares
currently in issue).

 

This represents an 11.3%, or 39.2 pence per share, uplift since 30 June 2022
when NAV per ordinary share was 345.7 pence.

The above NAV calculation is based on the Company's issued ordinary share
capital as at 30 September 2022 of 60,000,000 ordinary shares of £0.001 each.

 

Portfolio company performance

 

In a more uncertain macroeconomic environment and higher inflation, BOOK's
portfolio companies continue to trade strongly. A significant amount of the
investment manager's time and focus is given to ensuring that the teams
running and guiding these businesses are as strong and well-resourced as
possible, enabling the businesses and their employees to thrive regardless of
the circumstances they face. To-date, BOOK's portfolio companies have
effectively navigated the impact of rising energy prices and other
inflationary pressures, as well as supply chain challenges.

 

The companies within the buyout segment of the portfolio (now over 87% of
gross assets) continued to grow strongly, adding a net 15.8% to NAV in Q3,
excluding the impact of investing additional capital. These buyouts have been
our core focus due to their returns profile. Their share of the total
portfolio continues to increase. The value of growth capital investments fell
by 13.2% to £18.3m (less than 7.5% of gross assets) at the end of Q3, as the
environment for these earlier stage businesses became more difficult.

 

Organic revenue growth for the last twelve months (on a weighted average
basis) for the buyout investments in the top ten assets amounted to 63%, in
line with the figure achieved three months earlier. Including the impact of
acquisitions, sales grew 70% in the twelve months to 30 September 2022.

 

The use of leverage within the portfolio remains conservative, with net debt
(on a weighted average basis) reduced further in the quarter, from 1.2x to
1.0x EBITDA, reflecting the positive EBITDA growth and cash generation.

 

Transactions and investments

 

During Q3, BOOK made one new investment, in Ashleigh & Burwood, a
family-owned, leading independent home fragrance business. The business
designs and manufactures both branded and white-label fragrance products
including candles, room sprays, and reed diffusers, predominantly for the
home. BOOK's investment will help the business build on the impressive growth
to-date, and continue to enhance its presence in Europe, the U.S., and Japan.

 

In addition, further capital was invested to increase BOOK's stake in
Techpoint and to support growth in Oxygen Freejumping, as well as to fund one
private equity drawdown. In aggregate, £8.5m was invested in the quarter.

 

Cash & liquidity

 

BOOK received £0.2m of cash in Q3, comprising two distributions from private
equity funds.

 

The debt facilities available to Literacy were increased in the quarter, from
£15m to £25m, to provide BOOK additional flexibility and funding for new or
follow-on investments. The total amount drawn on 30 September 2022 was £13.5m
(up from £3.5m on 30 June 2022).

Post-balance sheet events

 

No events occurred between the end of Q3 and the publication of this factsheet
requiring reported NAV to be revised.

 

Factsheet

 

The Company's factsheet for the three months to 30 September 2022 is now
available on the Company's website: www.literacycapital.com/investors
(https://literacycapital.sharepoint.com/Shared%20Documents/LCP%20reporting/PLC%20reporting/2022/Q3/www.literacycapital.com/investors)
.

 

Notice of results

 

The Company expects to report its unaudited interim results for the six months
to 30 September 2022 on 16 November 2022 and release its Q4 factsheet on 26
January 2023.

 

-ENDS-

 

 

For further information, please contact:

 

Literacy Capital plc / Literacy Capital Asset Management LLP

Tom Vernon

+44 (0) 20 3960 0280

 

MHP Communications

Reg Hoare / Ollie Hoare / Matthew Taylor

+44 (0) 20 3128 8404

 

Singer Capital Markets Securities Limited

Robert Peel / Amanda Gray

+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 0.9% of annual NAV to
charities focused on improving UK literacy in children. More than £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) .

 

A copy of this announcement will be available on the Company's website at
www.literacycapital.com
(https://literacycapital.sharepoint.com/Shared%20Documents/LCP%20reporting/PLC%20reporting/2022/Q3/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. 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

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