Literacy Capital PLC Quarterly trading update and NAV announcement (2422E)

TIDMBOOK

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The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area, Canada, Australia, Japan or the Republic of South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 GBP231.0m 
 --   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 GBP5 million, with a charitable 
       donation provision of GBP639k 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 GBP0.001 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 GBP18.3m (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, GBP8.5m was invested in the quarter.

Cash & liquidity

BOOK received GBP0.2m of cash in Q3, comprising two distributions from private equity funds.

The debt facilities available to Literacy were increased in the quarter, from GBP15m to GBP25m, to provide BOOK additional flexibility and funding for new or follow-on investments. The total amount drawn on 30 September 2022 was GBP13.5m (up from GBP3.5m 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.

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

[phone]

MHP Communications

Reg Hoare / Ollie Hoare / Matthew Taylor

[phone]

Singer Capital Markets Securities Limited

Robert Peel / Amanda Gray

[phone]

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 GBP54m 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 GBP5 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.

A copy of this announcement will be available on the Company's website at 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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October 27, 2022 02:00 ET (06:00 GMT)