Longhorn publisher’s profit fall 16% on new government policy
NAIROBI, KENYA, FEB 26 — Kenyan book publisher Longhorn’s first-half profit for the period ended December 31, dropped 16.3 per cent, as the new government centralized textbooks procurement policy comes to haunt publishers.
The Nairobi Securities Exchange publisher has reported a Ksh36.5 million profit after tax for the period ended December 31, 2017, down from Ksh43.6 million recorded a year earlier.
The firm’s turnover drops by 24.9 per cent to Ksh513.46 million, compared to Ksh684.05 million recorded in the same period in 2016.
“This is attributed to the new government textbook procurement framework which resulted in a shift in the buying pattern from quarter two to quarter three of our financial year,” the company reported in its unaudited financial statements on Monday.
During the period, the firm reduced its total operating expenses by 11.8 per cent to total Ksh280.3 million, down from Ksh306.5 million a year earlier.
Cash used in operating activities went down to Ksh66.4 million compared to Ksh79.2 million in 2016, while investing activities consumed Ksh27.3 million, a reduction by almost half of the Ksh53.1 million spent in the same period the previous year.
In the statement by Chairman Francis Nyammo and group managing director Simon Ngigi, on behalf of the board of directors, the firm said it managed to remain profitable as a result of improvement in operational efficiency and focus on high margin products.
Fraud
Last year, the government announced it will start distributing text books directly to public schools.
The move is aimed at among others, locking out cartels and middlemen who collude with school heads to pocket billions of government allocations.
An audit report by the Kenya Publishers Association (KPA), submitted to the Education Ministry in April last year, revealed that the government could be losing up to Sh13 billion annually to books frauds.
The report said the government allocates up to Sh18.5 billion every year but only Sh5 billion is used in the actual purchase of books.
The then Education CS, currently the Interior CS Fred Matiang’i, accused middlemen of driving up textbook prices by more than 25 per cent.
Future prospects
Longhorn has however said it expects a positive performance in the second half mainly due to the government orders to supply books for class seven and eight.
“We are pleased to be one of publishers that will be supplying the government of Kenya with textbooks in the new procurement framework,” the firm said adding “We also expect to deliver on Rwanda government and UNICEF South Sudan contracts.”
The publisher enjoys a wide market in East Africa with continued expansion into other countries in the continent.
It has activities in Kenya, Uganda, Tanzania, Rwanda, South Sudan, Malawi, Zambia and Senegal.
The firm said it remains on track in the implementation of its strategic objectives.
“The board is encouraged by our geographical diversification strategy which has now yielded success in our newest market, Senegal, where we expect to supply books later this year,” it said in the financial statements approved by the board of directors on February 23, 2018.
