Learn Africa plans to combine organic and inorganic growth strategies to drive and sustain its growth.
The board of Learn Africa yesterday indicated that the educational publishing company plans to raise new equity capital as well as undertake a merger and acquisition deal to leverage its growth.
Directors of the company are scheduled to meet early next month to consider and approve two major resolutions on new capital raising and merger and acquisitions, after which the decisions will be extended to shareholders of the company.
According to a regulatory disclosure submitted by the company, Learn Africa plans to raise new equity funds from its shareholders through a rights issue.
The company is also considering a business combination option to bolster its performance, after suffering setbacks in recent years.
Formerly known as Longman Nigeria, Learn Africa was incorporated in August 1961. Its shares were listed on the Nigerian Exchange in July 1996.
Learn Africa’s principal activity is publishing and distribution of educational materials for all levels of learning including nursery, primary, secondary and tertiary education.
Audited report and accounts of Learn Africa for the year ended March 31, 2020 showed double-digit decline in sales and profitability. Underlying profitability ratios illustrated a slowdown, with returns dropping to lower levels. The company had cut dividend payout by two-thirds while shareholders’ net realisable earnings also dropped marginally. It must be noted that the comparable period of 2019 was a 15-month period as against 12-month period for 2020.
Notwithstanding, weakening ratios still coloured the overall performance negative.
Learn Africa recorded decline in actual profit and loss figures and underlying profit-making ratios. With its single business line of sale of titles to customers, total sales dropped by 17.5 per cent to N2.87 billion in 2020 as against N3.48 billion in 2019. Top-line decline was largely due to drop in office-based corporate sales as well as sales in the northern zone.
Significant decline in the two previous segments was moderated by considerable improvement in sales from the southern zone. Cost of sales dropped by 37 per cent from N2.21 billion to N1.39 billion. This supported 16 per cent growth in gross profit, from N1.27 billion to N1.48 billion. Total operating expenses rose by 13.5 per cent from N1.22 billion to N1.39 billion. Non-core business income dropped by 51.4 per cent from N350 million to N170 million. Interest expenses however jumped by 77 per cent from N21 million to N37 million. Profit before tax thus dropped by 41 per cent from N380 million to N224 million. After taxes, net profit dropped by 50.6 per cent to N80 million in 2020 as against N162 million in 2019.
Basic earnings per share halved from 21 kobo to 10 kobo. The company distributed total dividend of N39 million or a dividend per share of 5.0 kobo for the 2020 business year, 66.7 per cent below N116 million or 15 kobo paid for the 2019 business year. Net assets per share also slipped from N4.07 in 2019 to N4.03 in 2020. Dividend cover rode on the back of the cut in payout to 2.00 times in 2020 as against 1.40 times in 2019.
Underlying profitability ratios were mostly negative. Gross profit margin expectedly improved from 36.6 per cent to 51.6 per cent. Pre-tax profit margin however dropped from 11 per cent in 2019 to 8.0 per cent in 2020. Return on total assets declined from 6.8 per cent to 4.5 per cent while return on equity halved from 5.2 per cent to 2.6 per cent.