National Storage Mechanism | Additional information

23 June 2021

The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area, Canada, Australia, Japan or the Republic of South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.

LITERACY CAPITAL PLC

Intention to float

Literacy Capital plc (the "Company") today announces its intention to seek admission of its ordinary shares of £0.001 ("Ordinary Shares") to trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange ("Admission").

The Company's objectives are to achieve long term capital growth through making investments in accordance with the Investment Policy; and to provide a consistent donation to registered charities selected by the Investment Manager with the approval of the Board.

The Company's investment policy is to invest in a diversified portfolio consisting primarily of equity and equity-related securities issued by unquoted companies. The full terms of the investment policy are set out under the heading "Investment Policy" in the Prospectus.

Literacy Capital Asset Management LLP (the "Investment Manager") is the Company's investment manager. The Investment Manager, which is sector agnostic in its approach, looks to identify compelling opportunities for investment in under-served parts of the market. It has a core focus on companies which generate EBITDA between £1 million and £5 million, and will typically invest in family-owned and founder-led businesses.

Highlights:

· The Company was created in September 2017 as a permanent capital vehicle to allow longer term decision making and with the intention to generate substantial investment returns;

· As at the end of 2018, the Company had raised approximately £54 million in capital. As at 31 March 2021, the Company's unaudited Net Asset Value is approximately £96.4 million;

· The Directors and the Investment Manager believe that the Company offers Shareholders a differentiated investment proposition from other private equity and microcap investment opportunities;

· The Investment Manager's team and the Directors have significant 'skin-in-the-game' by virtue of their shareholdings in the Company. In aggregate, 55.2 per cent of the Ordinary Shares are owned by them and their connected parties. Further, no performance fee is payable by the Company to the Investment Manager and the members of the Investment Manager's team are incentivised by warrant arrangements, further aligning them with the performance of the Company;

· The Investment Manager seeks fair and aligned outcomes for management teams and shareholders of its investee companies and works with management of investee companies to build great businesses with larger, long-term ambitions; and

· The Company makes and will continue to make an annual donation equating to 0.9 per cent of the Company's Net Asset Value (at the relevant time) to charities, thereby providing consistent, long-term charitable donations. The Company has donated or reserved for donation more than £1.9 million as at the end of 2020.

Paul Pindar, Chairman, said:

"Literacy Capital is delighted to bring this compelling opportunity to market, providing investors access to a differentiated investment approach to private equity. We believe we have a unique offering, an alternative way of working with founders and owners of small businesses that offers strong, long-term investment support with a social purpose at its centre."

Richard Pindar, CEO, said:

We invest in founder-led and owned businesses that we can work closely with as engaged and active shareholders to offer guidance and encourage innovation in this under-served part of the market. We can help to attract high calibre individuals to create complete teams, which can assist these companies thrive long term."

Singer Capital Markets Securities Limited (trading as N+1 Singer), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("N+1 Singer"), is acting exclusively as financial adviser and sole bookrunner for the Company.

The Company expects to publish a prospectus (the "Prospectus") later today (23 June 2021) and Admission is expected to occur on 25 June 2021. N+1 Singer is conducting a limited placing on behalf of a small number shareholders who will sell some or all of their shares conditional upon Admission. The sale and purchase price per Ordinary Share is 160 pence, excluding commission.

Expected timetable

Publication of the Prospectus	23 June 2021
Admission and dealings in Ordinary Shares commence	25 June 2021

Ordinary Share identifiers

Following Admission, the Ordinary Shares will trade on the Specialist Fund Segment under the mnemonic (or TIDM) "BOOK". The ISIN of the Ordinary Shares is GB00BMF1L080, and the SEDOL is BMF1L08.

COMPANY'S OBJECTIVE AND OVERVIEW

The Company's objectives are:

a) to achieve long term capital growth through making investments in accordance with the Investment Policy; and

b) to provide a consistent donation to registered charities selected by the Investment Manager with the approval of the Board.

INVESTMENT HIGHLIGHTS

The Directors and the Investment Manager believe that the Company offers Shareholders a differentiated investment proposition from other private equity and microcap investment opportunities, with a number of particular strengths.

Supporting UK private businesses

The Company is invested in a number of UK-based businesses, holding both minority and majority positions in portfolio companies, many of which were family-owned and founder-led.

Robust performance to date

The Company was created as a permanent capital vehicle to allow longer term decision making and with the intention to generate substantial investment returns.

This has been borne out. As at the end of 2018, the Company had raised approximately £54 million in capital. As at 31 March 2021 (being the date of the last published Net Asset Value - which has not been audited - as at the latest practicable date prior to the publication of this Prospectus), the Company's Net Asset Value is approximately £96.4 million (which equates to a Net Asset Value per Ordinary Share of 178.5p or 160p following conversion of the A Growth Shares which will occur immediately prior to Admission), which, inter alia, excludes certain deferred tax liabilities that are not expected to become payable should the Company qualify for investment trust status with effect from the financial year commencing 1 January 2022.

The Company's portfolio has shown robust performance during 2020, despite COVID-19, with NAV up 29 per cent in 2020. The performance in 2020 was due to both a maturing of the portfolio and the businesses in it, along with reduced cash drag, as the Company became more fully invested.

Alignment of management team to Shareholders

The Investment Manager's team and the Directors have significant 'skin-in-the-game' by virtue of their shareholdings in the Company. In aggregate, 55.2 per cent of the Ordinary Shares are owned by them and their connected parties. Further, no performance fee is payable by the Company to the Investment Manager and the members of the Investment Manager's team are incentivised by the warrant arrangements described below, further aligning them with the performance of the Company.

Differentiated approach to private equity investors

The Investment Manager operates an investment strategy that is different from typical private equity strategies. Specifically, the Company:

· seeks fair and aligned outcomes for management teams and shareholders of its investee companies;

· works with management of investee companies to build great businesses with larger, long-term ambitions;

· has a high degree of alignment with the Company's shareholders and management of portfolio companies to maximise value in a responsible way;

· employs conservative capital structures with modest bank debt (1x-1.5x EBITDA on average);

· assists in the provision of active engagement from experienced entrepreneurs with a focus on backing and building complete management teams;

· may in the right circumstances introduce new hires into portfolio companies with track record of running larger businesses to help them scale; and

· plans to grow the Company through organic growth rather than by raising new capital.

Unique charitable mission

The UK now has the lowest rates of literacy of any developed nation, which results in adverse, long term consequences for the child and society. The Company aims to assist in the education of children in the UK, in particular by promoting and supporting the development of literacy.

Teenagers without basic literacy skills are significantly more likely to be excluded from school, commit crime and spend time in prison. Approximately 50 per cent of the UK prison population have literacy skills no higher than those expected from an 11 year old. Annually, it costs £40,000 to keep one individual in prison, while teaching a child to read can be done relatively inexpensively and is one of the most cost-effective ways to reduce crime.

One charity that benefits from the Company's support is Bookmark Reading. Bookmark Reading has developed a scalable technology solution to match schools with much needed reading helpers who will support children struggling with literacy. The charity provides a support network for volunteers who want to foster a love of reading and really make a difference in their local communities.

The Company makes and will continue to make an annual donation equating to 0.9 per cent of the Company's Net Asset Value (at the relevant time) to charities, thereby providing consistent, long-term charitable donations. The Company has donated or reserved for donation more than £1.9 million as at the end of 2020.

The Directors believe the commercial knowledge and experience the Investment Manager has in backing small companies and supporting their growth, enables the Company and the charities it supports to make a significant social impact in an efficient and cost-effective way.

DIVIDEND POLICY

The Directors intend to manage the Company's affairs to achieve Shareholder returns through capital growth rather than income. Therefore, it should not be expected that the Company will pay dividends to Shareholders in the ordinary course, although the Company retains the right to pay dividends at the discretion of Directors.

INVESTMENT TEAM

Biographies of the key personnel of the Investment Manager involved in the provision of services to the Company are as follows:

Paul Pindar, Chairman

Formerly CEO of Capita, which he co-founded in 1987 and grew from 33 people to 62,000 by his retirement in February 2014. Then, it had an enterprise value of £8.5 billion and was the 52nd most valuable listed UK company. A founder investor and non-executive Chairman of Purplebricks, the UK's largest online estate agency. Within three years, the business started trading, expanded internationally and completed an IPO on AIM. Chairman of four other VC and PE-backed businesses in the past five years.

Richard Pindar, Chief Executive Officer

Richard is ACA qualified with the ICAEW and has a background in investing, private equity and acting as a consultant to private equity owned businesses. He previously worked at Lonsdale Capital Partners, a lower mid-market private equity firm, and started his career in Transaction Services and M&A Corporate Finance at KPMG.

Miral Patel, Investment Director

Miral is ACA qualified with the ICAEW and spent six years at KPMG (across two spells) in M&A Corporate Finance advising clients in the mid-market on buy and sell-side transactions. She has also worked in the M&A Execution team within Investment Banking at HSBC on larger public and private deals.

Jesse Portner, Investment Manager

Jesse is ACA qualified with the ICAEW and spent three years in Transaction Services at KPMG, providing financial due diligence on private equity transactions, followed by six months on secondment to the Managing Partner's Office. He previously worked in a Business Development role at LaundryRepublic, a start-up based in London.

Olly Cox, Associate

Olly has a background in corporate finance at Numis Securities, spending six years providing M&A, fundraising and corporate broking advice to a broad range of clients in both the public and private markets. He started his career as a Business Development Analyst at TotallyMoney, a private equity owned Fintech business.

Tom Vernon, Head of Finance

Tom is ACCA qualified and spent over six years with Octopus Investments and Octopus Healthcare, working for different funds investing across a range of asset classes. He started his career at Sainsbury's Supermarket in the Finance Operations team.

BOARD OF DIRECTORS

Paul Pindar (Chairperson)

Biography provided above.

Richard Pindar (non-independent)

Biography provided above.

Simon Downing (independent)

Founder and Executive Chairman of Civica, which he created in 2000 with backing from Alchemy Partners. Since then, the business has grown to over 5,000 employees and operates in ten countries. It is one of the largest specialist software companies in Europe and is valued at more than £1 billion following its most recent private equity transaction led by Partners Group. He has been Chairman of four other private IT services businesses in the past six years, is current Chairman of Audiotonix Limited and Senior Non-Executive Director at Purplebricks Group plc, and was previously a Senior Adviser to OMERS Private Equity, which has more than $12 billion of private equity assets under management.

Kevin Dady (independent)

Formerly CEO and currently Executive Chairman of IRIS, a large software business majority owned by HgCapital, since December 2015. IRIS has grown significantly during his tenure and he recently took it through a £1.3 billion private equity buyout. Formerly Managing Director of the Professional Services division of Capita where, in nine years, he grew EBITDA from £50 million to £150 million.

Christopher Sellers (independent)

Chris is currently Group CEO of RCI Health Group and Chairman of Grayce which are both portfolio companies. He formerly spent 12 years at Capita plc before leaving in January 2018. This included being a member of the Group Board as Head of Business Development and six years as Executive Sales Director. Prior to joining Capita he spent 14 years as a consultant, Business Development Director and Managing Director, having originally trained as an engineer with Shell.

Rachel Murphy (independent)

Rachel is the founding Director of RJM Consulting, which works with public and private companies, providing consultancy services, corporate finance advice and coaching to board level executives. Previously, she was a member of the investment team at the private equity firm Alchemy Partners for six years. She has also been a non-executive of several private equity owned businesses and held finance roles at Diageo and Shell.

AIFM

The Company operates as an externally managed non-EEA domiciled AIF. The AIFM, Literacy Capital Asset Management LLP, is authorised to act as a UK full scope alternative investment fund manager under the UK AIFMD and is a non-EEA domiciled alternative investment fund manager for the purposes of the EU AIFMD.

WARRANTS

The Company has agreed to issue Warrants to members and employees of the Investment Manager both prior to Admission and at intervals thereafter upon request of the Investment Manager. The Warrants issue is designed to provide long-term incentivisation for members of the management team.

The maximum number of Warrants to be issued will be equal to 5 per cent of the total issued share capital at the time of Admission. The Warrants will not be admitted to trading and will be transferrable only in limited circumstances.

The terms of the Warrants state that they can be exercised into Ordinary Shares in a time period between the third and tenth anniversaries of their respective issue date. The longstop date for exercising all Warrants in issue is the fifteenth anniversary of Admission.

The Warrants do not entitle holders to any voting rights in the Company. Warrant holders benefit from certain standard protections ensuring that the rights of the Warrants cannot be changed without the consent of Warrant holders.

The exercise price of each Warrant shall be the higher of: (i) the average of the mid-market values of an Ordinary Share trading on the Specialist Fund Segment of the Main Market of the London Stock Exchange for the five business days prior to the date that the relevant Warrants are allotted and issued; and (ii) the prevailing Net Asset Value per Ordinary Share calculated in accordance with the Company's published valuation policy on the date that the relevant Warrants are allotted and issued with such adjustments as may be agreed by the Company and the Investment Manager to reflect material portfolio events following the publication of the prevailing Net Asset Value per Ordinary Share (including, without limitation, any changes that would result to the Net Asset Value as a result of a "Triggering Event" (as defined in the Company's valuation policy)), provided that Warrants allotted and issued on the date of Admission shall have a subscription price of 160 pence per Ordinary Share. As such, Warrants issued at different times will have different exercise prices.

Where a holder of Warrants ceases to be a member of the Investment Manager (other than for certain standard "good leaver" circumstances such as retirement), any Warrants held by that person will automatically lapse and become incapable of exercise.

Warrants will not be issued to Paul Pindar or Richard Pindar.

-ENDS-

For further information, please contact:

Literacy Capital Asset Management LLP - Investment Manager to the Company:

Richard Pindar, Tom Vernon

+44 (0) 20 3960 0280

N+1 Singer - Financial Adviser and Sole Bookrunner:

Robert Peel, Amanda Gray (Investment Banking)

Sam Greatrex, Alan Geeves, James Waterlow, Paul Glover (Sales)

+44 (0) 20 7496 3000

Quill PR - Public relations adviser to the Company:

Sarah Gibbons-Cook

+44 (0)20 7466 5060

LEI: 2549006P3DFN5HLFGR54

IMPORTANT INFORMATION

This announcement which has been prepared by, and is the sole responsibility of, the Directors of the Company, has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 ("FSMA") by the Investment Manager, which is authorised and regulated by the Financial Conduct Authority ("FCA").

This announcement is an advertisement and does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for, any shares in Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor. Approval of the Prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors should read the Prospectus and in particular the risk factors set out therein before making an investment decision in order to fully understand the potential risks and reqards associated with the decision to invest in the Company's securities. Copies of the Prospectus, subject to certain access restrictions, will be available shortly for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website (www.literacycapital.com). 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.

This announcement may not be published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and will not be offered, sold, exercised, resold, transferred or delivered, directly or indirectly, in or into the United States or to, or for the account or benefit of, any US person (as defined under Regulation S under the US Securities Act). The Company has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended.

Neither this announcement nor any copy of it may be: (i) taken or transmitted into or distributed in any member state of the European Economic Area, Canada, Australia, Japan or the Republic of South Africa or to any resident thereof, or (ii) taken or transmitted into or distributed in Japan or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

N+1 Singer, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of N+1 Singer or advice to any other person in relation to the matters contained herein. Neither N+1 Singer nor any of its directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for this announcement, its contents or otherwise in connection with it or any other information relating to the Company, whether written, oral or in a visual or electronic format.

This announcement may include "forward-looking statements". All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's products and services) are forward-looking statements. Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the formal Prospectus. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules or Prospectus Regulation Rules made under Part VI of the Financial Services and Markets Act 2000 of the Financial Conduct Authority or other applicable laws, regulations or rules.The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by FSMA, the Listing Rules, the Prospectus Regulation Rules made under Part VI of the FSMA or the Financial Conduct Authority or other applicable laws, regulations or rules.

UK PRIIPs Regulation

In accordance with the UK version of Regulation (EU) No. 1286/2014 on key information documents for packaged retail and insurance-based investment products, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (the "UK PRIIPs Regulation"), a key information document (the "KID") in respect of an investment in the Shares has been prepared by the Company and is available to investors at www.literacycapital.com.

If you are distributing Ordinary Shares, it is your responsibility to ensure that the KID is provided to any clients that are "retail clients".

The Company is the only manufacturer of the Ordinary Shares for the purposes of the UK PRIIPs Regulation and neither N+1 Singer nor the Investment Manager are manufacturers for these purposes. Neither N+1 Singer nor the Investment Manager makes any representations, express or implied, or accepts any responsibility whatsoever for the contents of the KID prepared by the Company nor accepts any responsibility to update the contents of the KID in accordance with the UK PRIIPs Regulation, to undertake any review processes in relation thereto or to provide the KID to future distributors of Ordinary Shares. Each of N+1 Singer, the Investment Manager and their respective affiliates accordingly disclaim all and any liability whether arising in tort or contract or otherwise which it or they might have in respect of the key information documents prepared by the Company. Investors should note that the procedure for calculating the risks, costs and potential returns in the KID are prescribed by laws. The figures in the KID may not reflect actual returns for the Company and anticipated performance returns cannot be guaranteed.