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

Literacy CapitalAnnouncement

28/10/2024 07:00

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RNS Number : 7266J  Literacy Capital PLC  28 October 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The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any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.

 

This announcement contains inside information.

 

28 October 2024

Literacy Capital plc

 

Quarterly trading update and NAV announcement for Q3 2024

 

BOOK continues to recycle capital and focus on investments with strong growth
potential

 

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 and NAV
update for the three months ending 30 September 2024.

 

Q3 Highlights:

 

 ●    Total return in the quarter of -3.4%, a fall of £9.9m (17.9p per share),
      resulting in net asset value ("NAV") per share of 504.7p (Q2'24: 522.6p), and
      NAV of £303.7m (Q2'24: £313.6m).

 ●    The majority of BOOK's largest holdings continue to perform in line or ahead
      of plan despite UK business confidence and growth remaining subdued.

 ●    £14.2m was invested in the quarter, which included one new investment. This
      involved BOOK taking a minority stake in Campfire, an influencer marketing
      agency.

 ●    Literacy announced the extension and refinancing of its Revolving Credit
      Facility ("RCF") with a new lender on improved terms. This will provide
      additional support and flexibility to BOOK's activities until September 2027.

 ●    A focus on actively managing and recycling capital from the portfolio remains,
      as demonstrated by a successful sale of a fund interest at a premium, with an
      expectation of strong cash receipts by BOOK in the next six months.

 

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

 

"Whilst, the modest decline in NAV in Q3 was disappointing, it is worth noting
that this is the first adverse movement in any quarter since Q1 2020, which
was heavily impacted by Covid-19.

 

The majority of BOOK's largest holdings continue to perform in line or ahead
of plan, despite business confidence and macroeconomic growth across many
sectors in the UK remaining noticeably subdued.

 

The NAV decline was primarily due to a reduction in the carrying value of two
assets, which were relatively large holdings at the end of the previous
quarter (21.1% of NAV on 30 June). Both remain highly profitable investments,
which have traded very strongly historically and retain significant potential.
 

 

Prior to the UK general election in July, many expected that sentiment and
confidence amongst businesses would improve. Despite the hope for greater
certainty, many corporates have evidently chosen to defer decision making or
spending until they digest the Budget statement on 30 October."

 

Net Asset Value

 

The Company announces that, as at 30 September 2024, the NAV per ordinary
share was 504.7 pence. This represents a 3.4%, or 17.9p per share, reduction
since 30 June 2024, when NAV per ordinary share was 522.6p.

 

                                 At 30 Sep 24  At 30 Jun 24  At 30 Sep 23
 Net asset value (£m)            303.7         313.6         295.7
 NAV per ordinary share (pence)  504.7         522.6         492.8

 

The above NAV calculation is based on the Company's issued ordinary share
capital as at 30 September 2024 of 60,175,000 ordinary shares of £0.001 each.
This NAV calculation includes the cost to ordinary shareholders of the 450,000
warrants in issue. This cost is accrued on a straight-line basis over the
vesting period of the warrants.

 

Portfolio company performance

 

Double digit revenue and earnings growth across BOOK's top ten holdings was
achieved in the quarter, remaining consistent with three months earlier. Most
of BOOK's largest holdings traded in line or ahead of budget. The two
businesses that saw their valuations decline in Q3 were relatively large
holdings (21.1% of NAV on 30 June 2024), which resulted in the overall decline
in NAV. Otherwise, the performance of BOOK's largest portfolio companies
remained on track.

 

Velociti and Cubo Work were the two strongest contributors in Q3 and were
marked up as a result of positive trading. Both continue to demonstrate
progress and have strong prospects for Q4 and 2025.

 

BOOK's modest exposure to private equity fund interests continue to mature and
reduce as a proportion of NAV, as the funds sell their underlying portfolio
companies and return cash to their investors. During the quarter, BOOK agreed
to sell one of its remaining fund interests for an 8.2% premium to its Q2 2024
carrying value. This sale generated £2.8m and the cash proceeds were received
in full in early October. This demonstrates BOOK's ability to realise
favourable exit prices and rebalance the portfolio into newer, direct
investments that are expected to deliver greater upside.

 

Transactions and investments

 

£14.2m was invested by BOOK in aggregate during Q3. One new platform
investment was completed in the quarter, with Literacy taking a minority stake
in Campfire, a tech-enabled influencer marketing agency. The rest of the
capital was injected into the existing portfolio. The largest recipients of
additional capital were Techpoint, Cubo Work and Oxygen; three of BOOK's top
five investments with respect to carrying value.

 

Cash & liquidity

 

Cash inflows amounted to £2.1m in Q3. These receipts related to a
distribution (£1.5m) from an existing portfolio company, with the balance
(£0.6m) received courtesy of distributions from third-party fund investments.

 

Literacy's RCF was £19.9m drawn as at 30 September 2024 (£6.4m drawn on 30
June 2024). During the quarter, the fund refinanced its facility with OakNorth
Bank plc, on a new three-year term.

 

The combination of good growth rates and low leverage at a portfolio company
level mean that several assets are likely to be refinanced or sold in the next
six months, which would generate healthy cash inflows for BOOK.

 

Post-balance sheet events

 

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

 

Factsheet

 

The Company's factsheet for the three months to 30 September 2024 is now
available on the Company's website: www.literacycapital.com/investors
(http://www.literacycapital.com/investors) .

 

BOOK's FY24 year-end and Q4 reporting date are 31 December 2024. As a result,
the next factsheet is expected to be published slightly later, with an
expectation that this would occur before the end of February 2025.

 

 

-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 0.9% of annual NAV to
charities focused on improving UK literacy in children. £10.6 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 (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. 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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