Learn Africa plc is an education solutions business with a history spanning over 50 years. The company was established in 1961 as Longman Nigeria – a book publishing firm wholly owned by Longman Group UK Limited, now Pearson Education.
On July 23, 1996, the shares of Longman Nigeria were listed on the Nigerian Stock Exchange. In 2008, the company became a subsidiary of Pearson plc following the Longman’s increase in its shareholding from 29 to 51 percent.
In 2011, however, Pearson and Longman Nigeria mutually agreed to become separate corporate entities in Nigeria. Today, Learn Africa is Nigeria’s largest educational publisher with the widest range of books/educational resources and a very expansive distribution network.
The company has 771.45 million shares outstanding with N3.51 billion shareholders’ fund as of March 2014.
The widening of its coverage area with a view to consolidating market share through the expansion of sales team from 61 before Pearson’s divestment to 137 sales people within one year is yielding positive results, as Learn Africa posted double digit growth in the first three months of the year.
For the first three months of the year, Lean Africa’s revenue surged by 85.41 percent year-on-year (yoy) to N277.84 million from N149.85 million in same period in the prior year (Q1 2013).
The company was unable to translate the strong performance in the top-line level to bottom-line growth as it posted a loss before tax of N10.28 million.
Based on BusinessDay analysis, the decline in profits was as a result of pressures from operating expenses, however, inputs costs were reduced to the barest minimum.
The efficient management of prime costs by the company helped reduced cost of sales margin to 34.45 percent in 2014, from 58.49 percent in 2013, thus gross profit margin spiked to 65.54 percent in 2014 as against 41.50 percent in 2013.
The gross margin performance validates the company’s ability to manage cost of inventories and also pass along any price increase through sales to clients.
Despite 36.60 percent increase in distribution and administrative expenses to N205.45 million in the review period, the company spent less naira on expenses in generating sales as operating margin reduced to 74.1 percent in Q1 2014, as against 100.36 percent as of Q1 2014.
The surge in operating expenses stem from the cost incurred on the restructuring of the entire sales and marketing department for optimum utilisation to enable it meet the current challenges of contemporary book business.
Total assets were down slightly by 5.50 percent in the review period to N4.21 billion compared with N4.46 billion as of Q1 2013.
Trade and other receivables were up 21.17 percent to N1.84 billion in Q1 2014, from N1.51 billion as of Q1 2013. The company should intensify collection of debt from customers as a means of bolstering liquidity and profitability.
In addition, to improved collection of debt and improve cash flows, the company should give discount to customers to enable them pay quickly. Inventories in the review period increased by 16.26 percent to N1.85 billion compared with N1.51 billion as of Q1 2013.
To reduce the inventory level, Learn Africa should engage in sales promotion in order to ensure that the warehouse is empty.
The company’s share price closed at N1.75 on the floor of the Nigerian Stock Exchange on May 29, 2014, while market capitalisation was N1.35 billion on the same day.
BALA AUGIE
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