I am pleased to present to you the annual report and financial statements for the year ended 30th June 2016. This period saw Longhorn Publishers Limited continue transition to a fully-fledged, pan-African provider of innovative learning solutions. This has seen the business expand its operations, either through agency or distributor agreements, to the Democratic Republic of Congo, Ethiopia and Senegal. This makes your company uniquely placed to balance challenging market conditions in one region, with improvements in another.
Our expansion has been made possible by the successful Rights Issue, which was completed in April 2016. It saw Centum Investment Company take a majority stake in the business. Centum now owns 60.2 per cent of the business.
The Kenyan publishing industry continues to experience some challenges, primarily because of piracy and taxation. Kenya remains one of the few countries in the world that levie value added tax on books. This is putting a tax on education, which severely hampers the country’s efforts of boosting the skills and education levels of its citizens. We, along with the Kenya Publishers Association, continue to lobby the government to reverse this decision.
Moreover, intellectual property theft continues to be a crime where the punishment does not fit the gravity of the offence. Regardless of the amount of work stolen, a pirate is only liable for a fine not exceeding Kshs 800,000. This is not a deterrent since a criminal must only have enough for the maximum fine and legal fees and they can continue their illicit activity without worry. More must be done to ensure piracy is treated with the seriousness it deserves.
The industry must also contend with future issues, such as the changes to the national curriculum, amendments to the purchase and distribution of books and other government policies.
Despite these challenges, group sales have increased to more than Kshs 1.5 billion, an increase of 77 per cent compared to the 2014- 2015 financial year. Pre-tax profit has also increased by 43 per cent to Kshs 139 million. This performance is attributed to growing export sales, improved local performance and uptake of school reference materials.
Subject to your approval, the Board of Directors is happy to recommend a dividend of Kshs 0.35 per share, totalling Kshs 95,354,000
As we expand, we will continue serving the Kenyan market. This has been characterised by the unveiling of our digital products. This is a long-term strategic investment to safeguard our leadership position in the wider publishing industry. While the local digital market is still in its infancy, it continues to grow and we are working to be a significant part of that growth. The company also continues to make strategic investments with like-minded businesses that increase our profitability.
This year, we are planning to acquire a majority stake in LawAfrica Publishing Limited, the leading in legal publisher in the region. This will give us a stronger tertiary offering and dominant position in a growing market. In conclusion, I would like to thank the Board of Directors, management and staff for continuing to work hard to grow Longhorn Publishers Limited and expand our reach. We are moving into this new financial year with optimism and vigour. We thank you all.