Learn Africa Plc (NSE Ticker: LEARNAFRCA) on Friday 28 August, 2020 released its audited financial statements and other national disclosures for the year ended 31 March 2020.
Following a 50% decrease in profit after tax, the board of directors has recommended a dividend of 5kobo per ordinary share. This will undoubtedly be a disappointment for shareholders and investors, given that the publisher has always paid double digit dividends in the past (except for 2016 when there was no dividend).
In 2017 the company paid a dividend of 10kobo, then followed it up with 14kobo in 2018 and did 1kobo better in the subsequent year by paying 15kobo in 2019.
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The financial statements were released in after trading hours, the market response will undoubtedly be known in Monday’s trading session.
Analysis of the report: Income Statement
Revenue declined by 17.53% in the year in review, to N2.869 billion down from the N3.479 billion reported in the preceding year.
It is worth noting that the 2019 financial year ran for 15 months, as the company moved its end of the financial year from December to March.
LEARNAFRCA managed to reduce its cost of sales from N2.205 billion to N1.390 billion, a 36.97% decrease. With a gross profit margin of 51.54% (2019: 36.60%), it reported a gross profit of N1.478 billion, 16.13% higher than the N1.273 billion reported in 2019.
The combined effect of the drop in other operating income, and an increase in the administrative expenses, eroded the gains made by a reduction in the cost of sales. While other operating income decreased from N338.587 million in 2019 to N159.599 million in 2020, the administrative expenses increased by 19.58% from N880.335 million to N1.052 billion.
Thus, it resulted in a 35.69% decrease in the operating profit; N250.264 million against the N389.128 million reported in the preceding year.
Finance cost also increased by 77.50%, and the company ended the year with a profit after tax of N79.992 million, approximately half of the N161.960 million reported in 2019.
The reported profit represent a 2.79% net profit margin (2019: 4.65%), and an earning per share of 10kobo (2019: 21kobo)
Analysis of the report: Statement of Financial Position
As at 31 March, 2020 LEARNAFRCA had a total asset of N5.013 billion, 9.63% smaller than its total asset of N5.547 billion held as at 31 March, 2020. A reduction in the inventories held was the major reason for this decrease.
The company has no Long term liability, its current liabilities were made up of Trade and other payables, income tax payable, provisions, and interest bearing loans and borrowings. It recorded a 20.72% reduction in liabilities, mostly due to a reduction in the trade and other payables.
An analysis of the company’s balance sheet shows that 61.96% of its total asset (2016: 56.64%) were funded by the shareholders’ equity, and 38.04% (2019: 43.36%) funded by liabilities.
Analysis of the report: Statement of Cash Flows
The cash flow statement shows that the company was running a negative cash flow from its operating activities. The cash used in the various business activities are as following;
- Net cash flows used in operating activities was N56.316 million, as against N304.014 generated from operating activities in 2019.
- Net cash used in investing activities was N236.758 million, up from N63.035 million used in 2019.
- Net cash used in financing activities was N138.932 million, up from the N114.336 million used in 2019.
As at 31 March, 2020, the cash and cash equivalent the company had was N177.806 million, a significant reduction from the N609.812 million cash held as at 31 March, 2019.
Table 1: Financial highlights
About the Company
Learn Africa Plc is a leading learning resource business in Nigeria, 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 Plc were listed on the Nigerian Stock Exchange. In 2008, the company became a subsidiary of Pearson Plc following the latter’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. The main business of Learn Africa Plc is the publication and marketing of textbooks for the entire gamut of the educational system – nursery, primary, secondary and tertiary.
The registered office is located at 52, Oba Akran Avenue, Ikeja, Lagos in Nigeria.
LEARNAFRCA has 771,450,000 outstanding shares, and a market capitalization of N825.451 million.
The shares of LEARNAFRCA closed at N1.07 in the last trading session on Friday, 5.31% lower than its opening price this year. Over the last five years, the stock is gaining 17.58%, and gaining 38.96% over the past three years.
In the course of past one year, the stock has lost 23.02% of its value. The 52 weeks high and low prices of the stock are N1.39 and N0.90 respectively.
We will be taking a position on the stock in our weekly stock pick.