'Successful' year for Cengage Learning EMEA, turnover up 11%

Cengage Learning EMEA Ltd has reported a "successful" fiscal year 2017, according to a report newly filed with Companies House, citing growth in turnover of 11.1% to £54.5m ​for the year ended March 2017. However, profit dipped from £3.8m to £2.8m.

The £54.5m turnover figure is up from £49m the previous year, when turnover only grew 1.7%.

A key reason for the increase in turnover, according to Cengage, is the depreciation of the pound, which over the last year has made products "more competitively priced" for overseas customers and distributors in the UK looking to export.

The proportion of digital sales (e-book sales and online content) for the period was roughly flat, accounting for 39% of sales (40.4% the year before). Cengage said digital "remains an area in transition, for the company and the industry, with new competitors and expectations".

Profitability "continues at acceptable levels", it said. Earnings before interest, tax, depreciation and amortization (EBITDA) less capital expenditure grew 35% (versus a decrease in 2016 of 24.8%). Gross margin fell from 41.9% the year before to 36.3% for the year ended March 2017, with net profit before tax falling by 26% (2016: a decrease of 14.8%); Cengage explained this was due to impairments of intangible assets. 

Cengage’s overall adjusted revenues for the fiscal year 2017, revealed last May, fell 10% to $1.5bn. Adjusted EBITDA for the year stood at $353m, a decline of 20% from the prior year. C.e.o. Michael Hansen said last year that there had been “significant volatility” in the Higher Education industry, hit by both a fall in enrolments, temporary impacts from channel ordering trends, and changes in faculty adoption and student purchasing behaviour affecting the demand for learning materials​.

For the first six months of fiscal year 2018 (to end September 2017), Cengage's overall revenue stood at $818.4m, down from $849.9m in the comparable period for the previous year, with operating income at $108.3m, down from $120.8m in the previous year.