• Wednesday, February 21, 2024
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BusinessDay

Learn Africa succumbs to cost pressure

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 percent 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 N3.24 billion shareholders’ fund as of June 2014.

Financial performance for half year 2014

For the first six months through June 2014, the company posted a loss of N185.30 million from the same negative figures of N198.58 million the same period of the corresponding year (HY 2013).

Based on BusinessDay analysis, the decline in profits was as a result of pressures from operating expense margin that was as high as 96 percent, while operating expenses increased by 6 percent to N431.07 million. However, inputs costs were reduced to the barest minimum.

The surge in operating expenses stemmed 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.

Additionally, to increase its sales coverage and expand its market share, the company expanded its sales team from 61 to 137 sales persons, which may have contributed to swelling distribution and marketing expenses.

However, the company was able to trim cost of production despite the challenging operating environment as cost-of-sales margin dipped to 38.20 percent in HY 2014, from 53.81 percent as of HY 2013, while cost of sales fell by 10.47 percent to N171.25 million. Direct costs attributable to projects were managed effectively as gross profit increased by 64.78 percent to N276.22 million in the review period as against N167.62 million in the preceding year.

Gross profit margins spiked to 61.91 percent in HY 2014, compared with 46.70 as of HY 2013, validating the company’s ability to manage cost of inventories and also pass along any price increase through sales to clients.

Top-line level performance were impressive given the rise in sales by 24.68 percent to N447.78 million from N358.27 million as of HY 2013.

The company’s share price closed at N1.60 on the floor of the Nigerian Stock Exchange, while market capitalisation was N1.23 billion on the same day.

BALA AUGIE