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

Literacy CapitalAnnouncement

27/04/2023 07:00

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RNS Number : 6106X  Literacy Capital PLC  27 April 2023

The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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 April 2023

 

Literacy Capital plc

 

Quarterly trading update and NAV announcement for Q1 2023

 

"Further growth across portfolio companies drives Q1 NAV return of +11.1%

and twelve month return of +46.1%"

 

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 and
NAV update for the three months ending 31 March 2023.

 

Q1 Highlights:

 

 ●    Net asset value ("NAV") per share of 467.3p (Q4'22: 420.6 pence) and NAV of
      £280.4m (Q4'22: £252.4m)
 ●    Total NAV return (after all fees and charitable donation provisions) of +11.1%
      in the last three months, a net uplift of £28.0m (46.7p per share)
 ●    Portfolio companies continue to trade well with RCI (+£18.6m) again the most
      significant contributor in the quarter, driven by strong organic growth.
      Kernel Global (+£8.4m) also performed strongly as it was marked up in line
      with the transaction that completed in March
 ●    Literacy Capital received £21.1m of cash in Q1, the largest inflow for BOOK
      in any quarter. The sale of Kernel at a 48.9% premium to its previous carrying
      value generated £19.0m, with a dividend from Grayce also contributing
 ●    The discount to NAV that the shares trade on is reducing and is something
      which The Board of the Company continues to monitor closely

 

Commenting on the Q1 performance, CEO of BOOK's investment manager, Richard
Pindar, said:

 

"Literacy Capital entered 2023 with the portfolio in excellent condition. We
are optimistic that this will continue as the year progresses.

 

"RCI was again the outstanding performer. It contributed an uplift of £18.6m
in Q1, following strong growth in the previous quarter too (+£17.8m in Q4
2022). The sale of Kernel was also pleasing, particularly given the
challenging market conditions. This exit generated substantial cash for BOOK
(thereby allowing debt to be repaid), released capital for new investments and
provided evidence of prudence in BOOK's valuations.

 

"We have a strong pipeline of opportunities to invest in both new businesses
and our existing portfolio. We anticipate that future cash inflows will be
healthy as the portfolio matures.

 

"Share price performance in 2023 has been encouraging thus far and we are
pleased that the discount which appeared in H2 2022 is now reducing. We will
continue to monitor this on behalf of shareholders."

 

Net Asset Value

 

The Company announces that as at 31 March 2023, the NAV per ordinary share was
467.3 pence. This represents an 11.1%, or 46.7p per share, uplift since 31
December 2022 when NAV per ordinary share was 420.6p.

 

                         At 31 Mar 23  At 31 Dec 22  At 31 Mar 22
 Net asset value         £280.4m       £252.4m       £192.0m
 NAV per ordinary share  467.3p        420.6p        320.0p

 

 

The above NAV calculation is based on the Company's issued ordinary share
capital as at 31 March 2023 of 60,000,000 ordinary shares of £0.001 each.
This NAV calculation includes the cost to ordinary shareholders of the 550,000
warrants in issue. This cost has been accrued on a straight-line basis over
the vesting period of the warrants.

 

Portfolio company performance

 

Despite continued macro uncertainty during the quarter, the financial
performance and KPIs reported by our portfolio remained consistent and strong
in Q1. The majority of the top ten investments contributed positively to our
NAV uplift.

 

Sales momentum across some portfolio companies was more subdued than expected
at the start of the year but this improved later in the quarter. Growth in Q2
looks encouraging, which would have a direct and positive impact on NAV growth
in the next quarterly report. RCI was the strongest performer in Q1 and now
comprises 30.6% of net assets. We have very regular contact (often daily) with
the management team and we are confident that this momentum will continue.

 

We are now also receiving increasingly frequent inbound interest in BOOK's
portfolio companies from credible acquirors, as many of them have increased in
scale, are well-led and continue to grow strongly. This was the case with
Kernel Global, which moves from our fourth largest asset to eighth, following
the receipt of £19.0m after BOOK sold most of its stake to a €1bn private
equity fund.

 

Transactions and investments

 

No new investments were completed in the quarter but a further £4.3m was
invested into the portfolio during Q1.

 

Follow-on funding was provided to Oxygen again to help it refurbish and
acquire more sites. Smaller amounts of capital were invested into several
other existing portfolio companies. No capital calls from PE funds were funded
by BOOK in Q1.

 

Cash & liquidity

 

£21.1m of cash was received in Q1, the largest inflow for BOOK in any
quarter. The sale of Kernel generated £19.0m, with a dividend from Grayce
also contributing. Distributions from third party funds amounted to £0.2m in
Q1.

Balances drawn under the RCF were repaid in Q1, resulting in £2.9m being
drawn on 31 March 2023 (vs. £15.9m on 31 December 2022).

 

Post-balance sheet events

 

No events occurred between the end of Q1 and the publication of this factsheet
requiring reported NAV to be revised.

 

Factsheet

 

The Company's factsheet for the three months to 31 March 2023 is now available
on the Company's website: www.literacycapital.com/investors
(http://www.literacycapital.com/investors)

 

 

-ENDS-

 

 

For further information, please contact:

 

Literacy Capital plc / Literacy Capital Asset Management LLP

Tom Vernon / Richard Pindar

+44 (0) 20 3960 0280

 

MHP Group

Reg Hoare / Ollie Hoare / Matthew Taylor

book@mhpgroup.com

+44 (0) 20 3128 8404

 

Singer Capital Markets Securities Limited

Robert Peel

+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. Almost £6.5 million
has been donated or reserved for donation to charities since the trust's
creation in 2017, meaning 12% of the capital originally raised from investors
has been given away. 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://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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