WPP Scangroup clears former executives as it books Ksh.1.7B full year loss

Marketing magnet WPP Scangroup has cleared its former executives including former Chief Executive Officer Bharat Thakrar and Chief Finance Officer Satyabrata Das.

In a delayed trading update for the year ended December 31, 2020 and which was published on Tuesday night, the company says investigations did not uncover any issues material to the company’s performance at the end of the period.

“The investigation did not identify items of a material nature that required adjustment to the results of the company or Group or to the balance sheets at that date,” the company noted.

Investigations into alleged gross misconduct by the two suspended executives saw the company delay the publication of its full year financials by more than four months.

The pair was suspended on February 18 before their subsequent resignation as directors and senior executives at the company on March 23 and May 11.

The investigation into alleged gross misconduct was carried out by an internal team supported by external investigators.

Further from the investigations however, an audit on the company’s books by Deloitte & Touche found non-compliance to International Financial Reporting Standards (IFRS).

This is as the company failed to account for its associates represented by five foreign investments including Ocean Ogilvy Gabon, Ocean Central Africa, Ocean Burkinafaso, Ocean Afrique Occidentale and Ocean Conseil, all disclosed as equity investments.

“The company has not accounted for these associates using the equity method which is in non-compliance to IFRS. The company consider 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 consolidate financial statements,” read part of the auditors report summary.

On its part, WPP Scangroup says it has been unable to obtain financial information relating to the entities for some time including dividend returns but has previously made full provisions for the investments.

WPP Scangroup has meanwhile posted a Ksh.1.7 billion loss for the year to December 31 on higher operating and administrative expenses and greater impairments in the period.

The company’s operating and administrative expenses touched a high Ksh.3.5 billion from Ksh.2.7 billion while the Group made impairments of Ksh.158.8 million and Ksh.315.7 million in its investments in associates and goodwill.

The higher impairments on associates relate to a deteriorated economic outlook while the goodwill impairment relates to the consideration paid in excess of the net assets of subsidiaries acquired.

WPP Scangroup’s earnings from billings eased to Ksh.6.3 billion from Ksh.9.3 billion while revenues are down at Ksh.2.2 billion from a higher Ksh.2.9 billion in 2019.

The company’s board of directors have not recommended the payment of a final dividend following the profit wipe out as the firms earnings per share turn negative at sub Ksh.3.89.