Literacy Capital's H1 2025 Results: NAV Approaches Record High with Strategic Portfolio Focus

• Trinitatum (March 2025) – a majority stake in a provider of test automation software and services for energy and financial trading markets.
• Langford’s (April 2025) – a significant minority stake in the premium meat producer, as the first acquisition of the newly formed Red Sky Food Group, which is considering further M&A.

Management notes both teams have been strengthened and are showing encouraging momentum since Literacy’s investment.

Strategy pivot: recycle capital, build cash, aim to narrow the discount

Literacy is rebalancing away from adding lots of new holdings and towards maximising value from existing assets, including assessing exits for relatively mature positions. The goal is to generate stronger cash inflows, support targeted reinvestment, and – crucially for shareholders – underpin capital returns.

The company “recently announced its intention to make a first return of capital to shareholders before the end of 2025”. The mechanism, size and timing are not disclosed. If executed well, this could help close the share price discount to NAV – the gap between the market price and the underlying asset value – especially when combined with better M&A conditions.

Management also plans to step up marketing and investor communications to build broader awareness of the strategy and track record.

Share price vs NAV: why the gap persists

NAV per share is just 0.6% shy of its all-time high, yet the share price fell 4.0% in H1. Meanwhile, the FTSE Investment Company Index rose 4.6% and the FTSE All-Share gained 9.1%. That underperformance points to a wider discount than management would like.

The team highlights potential catalysts: continued NAV progress, successful exits, and an uptick in M&A activity and buyer confidence (both were “in short supply” in H1 2025). The Velociti outcome shows the portfolio can realise value at strong premia to carrying values when deals get done.

Long-term performance and charitable impact

It’s not just a one-half story. On a total return basis to 30 June 2025, NAV per share is +50.3% over three years, +223.4% since admission, and +419.5% since inception. The share price, while more volatile, is up +172.5% since admission.

Literacy retains a distinctive social purpose: donating 0.5% of annual NAV to UK literacy charities. £790k was provided for in H1 2025, taking total donations since inception to £12.0 million.

The balanced view: what looks good, and what doesn’t

Positives

• NAV per share up 5.4% in H1 2025 to 519.5p – within touching distance of the record 522.6p.
• Velociti transaction at a 52% premium to carrying value, delivering 14.8x MoM and 70% IRR – strong validation of the value-add model.
• Two portfolio refinancings completed, supporting platform investments without heavy new equity issuance.
• Selective new deals in profitable UK businesses (Trinitatum and Langford’s/Red Sky Food Group), with strengthened management benches.
• First return of capital planned before end-2025 – a potential catalyst to reduce the discount.
• Compelling long-term outperformance versus UK indices since admission.

Watch-outs

• Share price fell 4.0% in H1 while broader indices rose – the discount to NAV remains a live issue.
• Cash realised (£5.8m) was lower than H1 2024 (£25.0m), reflecting a quieter exit market.
• Management’s exit plans are partly contingent on a pick-up in M&A activity and confidence.
• Details of the capital return (size, method, timing) are not disclosed.
• NAV is still 0.6% below its all-time high – good, but not yet a new peak.

What to watch in H2 2025

• Capital return specifics – mechanism (buyback, tender, special dividend) and scale are not disclosed.
• Further exits or refinancings from “relatively mature” holdings, and the pricing achieved versus carrying values.
• Operational updates from Trinitatum and Red Sky Food Group, plus any follow-on M&A.
• Movement in the share price discount to NAV if dealflow and communications improve.
• Any subsequent portfolio valuation uplifts following the July Velociti transaction.

Performance snapshot

• NAV per share total return to 30 June 2025: +5.4% (6 months), (0.6)% (1 year), +50.3% (3 years), +223.4% (since admission), +419.5% (since inception).
• Share price total return: (4.0)% (6 months), (17.3)% (1 year), +9.0% (3 years), +172.5% (since admission).
• FTSE Investment Company Index: +4.6% (6 months), +7.5% (1 year), +22.8% (3 years), +5.3% (since admission), +56.0% (since inception).
• FTSE All-Share Index: +9.1% (6 months), +11.2% (1 year), +35.5% (3 years), +35.9% (since admission), +50.2% (since inception).

Sources and notes

All figures are from Literacy Capital’s unaudited interim results for the six months ended 30 June 2025. The NAV figures include the impact of warrants in issue. You can read the company’s materials here:

• Reports and results
• Company website

Reminder: NAV (net asset value) is the per-share value of the trust’s underlying portfolio. Closed-ended funds like Literacy can trade at a discount or premium to NAV depending on sentiment and liquidity.