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contained in this announcement is restricted and is not for
publication, release or distribution in the United States of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.
29 January 2024
Literacy Capital plc
Quarterly trading update and NAV
announcement for Q4 2023
NAV return of +1.6% in Q4 and an uplift
of +19.0% during 2023
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 31 December 2023.
Q4
Highlights:
●
|
Total return in the quarter of +1.6%, an uplift
of £4.6m (7.7p per share), taking net asset value ("NAV") per share
to 500.4p (Q3'23: 492.8p), or NAV of £300.3m (Q3'23:
£295.7m).
|
●
|
BOOK and the majority of its portfolio
companies continue to perform well, despite more challenging UK
macroeconomic conditions in H2 2023. Our focus remains on long-term
value creation, rather than short-term targets.
|
●
|
Cash inflows in Q4 (£22.2m) were the highest of
any quarter in Literacy's history. Most of this related to BOOK's
sale of its stake in Butternut Box. Material sums of cash are
expected to be received in 2024 as Literacy's assets
mature.
|
●
|
Total charitable donations since the inception
of Literacy Capital now amount to £8.5m, including a charitable
donation provision of £732k in the quarter.
|
Commenting on
the Q4 performance, CEO of BOOK's investment manager, Richard
Pindar, said:
"BOOK continued to
make good progress in the quarter, with NAV passing through £300m
in Q4. We are pleased that eight of BOOK's ten largest portfolio
companies contributed positively to NAV growth in Q4. However, it
is clear that macro conditions in H2 2023 were more challenging,
which has affected customer demand and short-term profit growth for
some businesses. Regardless of this, we are confident that they are
well-positioned for the opportunities that 2024 will
bring."
Net
Asset Value
The Company announces that as at 31 December
2023 the NAV per ordinary share was 500.4 pence. This represents a
1.6%, or 7.7p per share, uplift since 30 September 2023 when NAV
per ordinary share was 492.8p.
|
At 31 Dec 23
|
At 30 Sep 23
|
At 31 Dec 22
|
Net asset value
|
£300.3m
|
£295.7m
|
£252.4m
|
NAV per ordinary share
|
500.4p
|
492.8p
|
420.6p
|
The above NAV calculation is based on the
Company's issued ordinary share capital as at 31 December 2023 of
60,000,000 ordinary shares of £0.001 each. This NAV calculation
includes the cost to ordinary shareholders of the 600,000 warrants
in issue. This cost is accrued on a straight-line basis over the
vesting period of the warrants.
Portfolio company
performance
Growth across portfolio companies generally remains
encouraging. However, as stated in our Q3 2023 trading update,
market conditions have become less favourable for certain portfolio
companies.
This has impacted the performance of two of BOOK's
largest assets by value, Grayce and Techpoint. Accordingly, their
valuations have been reduced to reflect the current environment and
their performance in Q4 has diluted the rate of growth across the
overall portfolio, due to their high weightings achieved from prior
outperformance.
Techpoint had benefitted from inflated demand in 2022,
because of supply chain constraints post-Covid. This excess demand
unwound in 2023 and trading is now normalising.
Both management teams have been strengthened in the
last quarter and we expect these actions to return the businesses
to stronger growth in 2024.
Despite challenging market conditions, the progress
made by the portfolio is positive and the companies will benefit
when these conditions improve. We are confident that overall
portfolio company earnings will grow in 2024.
Following the disposal of Butternut Box and receipt of
cash in Q4, almost 100% of the portfolio is now weighted towards
the buyout of profitable businesses and fund interests, in line
with BOOK's investment strategy.
Transactions and
investments
Whilst no new platform investments were made in
the quarter, two of BOOK's existing portfolio companies made
bolt-on acquisitions; Tyrefix and Halsbury Travel each made an
acquisition to give them more scale in the markets that they
operate.
In Q4, £9.0m was invested, with a proportion
financing the acquisitions by Tyrefix and Halsbury Travel. Whilst
funding was also provided to several other portfolio companies to
support their growth, as well as to acquire additional equity in
certain portfolio companies.
BOOK and its portfolio companies continue to
assess several new acquisition opportunities.
Cash
& liquidity
Cash inflows in Q4 amounted to £22.2m, the
highest in any three-month period for Literacy. The largest
component of this was £21.8m from the sale of BOOK's investment in
Butternut Box, with the remaining amount being distributions from
third party fund investments.
In November 2023, Literacy's credit facility
limit was extended by £5m to £30m. It was £9.4m drawn at 31
December 2023 (£22.75m at 30 September 2023).
Post-balance sheet
events
No events occurred between the end of Q4 and the
publication of the factsheet requiring reported NAV to be
revised.
Factsheet
The Company's factsheet for the three months to
31 December 2023 is now available on the Company's website:
www.literacycapital.com/investors
-ENDS-
For further
information, please contact:
Literacy
Capital plc / Book 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 8100
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. £8.5 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.
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