Longhorn to cross-list after subsidiaries make profit

he cross-listing of Longhorn Publishers in neighbouring stock exchanges will take place once its subsidiaries in those countries become profitable.

This is expected to take place within one and a half years, the company’s management said Thursday.

The listed publisher plans to cross-list on the Dar es Salaam Stock Exchange (DSE), the Uganda Securities Exchange (USE) and the Rwanda Stock Exchange (RSE).

Longhorn chief executive Musyoki Muli said the profitability of its subsidiaries in Uganda, Tanzania and Rwanda would make the company a better sell to investors in those stock markets. “We want to grow them to a level where they are independent.

Focus in the next two years will be on strengthening these subsidiaries and we will then go to the Capital Markets Authority (CMA) and present a proposal to cross-list,” said Mr Muli at a briefing on the firm’s cross-listing and rebranding.

Longhorn Kenya was rebranded to Longhorn Publishers with an eye on the regional market.

Longhorn has set aside Sh120 million for the Tanzanian subsidiary and Sh80 million for the Ugandan one.

Expansion will also be through acquisition in some markets. For Zambia and Malawi, two other markets where the firm has expanded, penetration will be through an agency model.

Mr Muli added that the company had bid for government tenders in Zambia and the results would be coming out soon. Analysts said that targeting governments has worked well for the publisher in the past.

“The company has won various government tenders to supply school books in Malawi, Rwanda, Tanzania and Uganda which was done through more effective distribution channels such as school-to-school, revamped advertisements which led to increased parental uptake (of books) while ensuring they offer quality products,” said a note by Genghis Capital on Longhorn’s half-year results.

Half-year sales for the period ending December 31, 2014, stood at Sh531 million, a five-per cent drop from Sh558 million posted in a corresponding period in 2013. Net profits were however up to Sh39.8 million from Sh30.15 million, a 32 per cent increase.

To further support operations, the publisher has bought property to set up offices in Uganda and Rwanda.

Longhorn has also begun looking for a new chief executive to replace Mr Muli who is set to retire on June 10 after 21 years of service.

“The board of directors has commenced the process of identifying a suitably qualified successor to the managing director,” said the company in a statement.