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Scangroup finds foreign investment assets worthless in investigation

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Scangroup finds foreign investment assets worthless in investigation

Wednesday, May 11, 2022

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Scangroup CEO Patricia Ithau. PHOTO PHOTO | NMG

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By CONSTANT MUNDA
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Summary

  • The marketing service company WPP Scangroup has completed the investigation of its foreign investments and states that the assets are worthless.
  • It launched a study on foreign investment last year, after its founder and former CEO Bharat Thakrar left the company in an apparent power struggle.
  • The company had previously fully covered the costs of foreign investments due to lack of information and dividend yields.

The marketing service company WPP Scangroup #ticker: SCAN has closed the study of its foreign investments and states that the assets are worthless.

The company had been going for years without receiving reports of its minority stakes in companies spread across five countries.

It launched a study on foreign investment last year, after its founder and former CEO Bharat Thakrar left the company in an apparent power struggle.

Nairobi Securities Exchange #ticker: NSE-listed companies each own 25 percent of the shares in Ocean Ogilvy Gabon, Ocean Central Africa, Ocean Burkina Faso, Ocean Afrique Occidentale (Senegal) and Ocean Conseil (Ivory Coast).

“The company was able to establish that only the Ocean Council in Côte d’Ivoire continues to trade. The result of this company is considered insignificant and is therefore not recorded according to the equity method,” Scangroup said in its latest annual report.

The company had previously fully covered the costs of foreign investments due to lack of information and dividend yields. It did not state how much it had spent on minority interests. The majority shareholders in the foreign companies were also not disclosed.

The case prompted Scangroup’s external auditor Deloitte & Touche LLP to issue a qualified opinion on the company’s 2020 financial statements, citing the information gap.

“We were not able to obtain sufficient appropriate audit evidence to determine whether the investments exist or not, nor the adequacy of the carrying amounts of those investments,” the audit firm said in the 2020 report.

Scangroup had a net loss of Sh37.9 million last year, reversing a net profit of Sh382.8 million in 2020.

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