WPP-Scangroup posts US$15.5m loss as it clears former executives

KENYA – Marketing and communication company WPP-Scagroup, a subsidiary of WPP, has released its financial results for the financial year ended 31st December 2020 after delaying the publication for the third consecutive time due to ongoing investigations against its former Chief Executive Officer, Mr. Bharat Thakrar and the former Chief Finance Officer, Mr. Satyabrata Das.

These results were due on 3Oth April 2021.

The results show that group revenue for the year 2020 from continuing operations declined by 22% to Kshs 2.239 billion (US$20.37 million) from Kshs 2.872 billion (US$26.1 million) reported in the same period in 2019.

The Nairobi Securities Exchange-listed firm said that it made a net gain of Kshs 2.242 billion (US$20.4 million) from the sale of its interest in Millward Brown East Africa Ltd, Millward Brown Nigeria Ltd, Millward Brown West Africa Ltd and Research & Marketing Group Investment in June 2020.

“These companies represented a significant part of the Group and this disposal therefore materially affects the results of the Group.” the company said in a statement after markets closed on 31st August 2021.

Total billings for the full year 2020 declined to Kshs 6.34 billion (US$57.68 million) from Kshs 9.28 billion (US$84.4 million) reported in 2019 while operating and administrative expenses increased by Kshs 720 million (US$6.55 million0 (26%) to Kshs 3.46 billion (US$31.5 million).

Its total loss for the year came in at Kshs 1.732 billion (US$15.5 million) compared to a profit of Kshs 158.792 million (US$1.44 million) reported in the same period in 2019.

Investigations against its former executives

In February 2021 February 2021, Scangroup board suspended CEO Bharat Thakrar and the Chief Finance Officer, Satyabrata Das, after allegations of gross misconduct in their capacity as senior executives.

However, the company did not release a full report of its investigation on the alleged misconduct of its founder CEO Mr. Bharat Thakrar and the former Chief Finance Officer, Mr. Satyabrata Das.

WPP Scan Group considered the largest marketing and communication group in Sub-Saharan Africa, said that the “investigation did not identify items of a material nature that required adjustment to the results of the Company or the Group for the year ended 31 December 2020 or to the balance sheets at that date.”

The board said that interrogations had taken longer than expected as a result of the extended scope of the audit by external auditors. 

“During the course of the investigation into the allegations, Mr. Thakrar and Mr. Das tendered their resignations as Directors and as senior executives of the Company. Following the completion of this investigation, the auditors of the Company extended the scope of their audit work. This extended audit process led to the delay in the Company being able to publish its 2020 results. Both shareholders and the Capital Markets Authority (CMA) have been kept informed regarding the delays and the expected date of publication of the results.” Read the statement from the company.

Deloitte’s qualified opinion

Deloitte & Touché expressed a qualified audit opinion on the company’s audited consolidated financial statements in their report dated 31 August 2021 which reflects the independent auditor’s inability to give a clean report.

The basis for our qualified audit opinion was that The Group has five foreign investments; Ocean Ogilvy Gabon, Ocean Central Africa, Ocean Burkina Faso, Ocean Afrique Occidentale and Ocean Conseil and has disclosed these as equity investments. The company has not accounted for these associates using the equity method which is in non-compliance with IFRS.” Deloitte noted in the audited financial report through the engagement partner CPA David Waweru who was responsible for the audit.

“The company considers them as immaterial as disclosed in the consolidated financial statements of WPP Scangroup Plc. We were not provided with sufficient and appropriate audit evidence to determine the appropriateness of the accounting treatment adopted and could therefore not determine if there were any adjustments required to the consolidated financial statements.” continued the statement.

 

 

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