Marketing services firm WPP Scangroup’s net profit for the year to December dipped by nearly a quarter on lower revenues and a higher tax rate.
The firm, which is listed on the Nairobi bourse, Wedenesday reported an after-tax profit of Sh478.7 million, a 23.4 per cent drop from the previous year’s Sh625.5 million.
The profitability dip resulted from a two per cent decline in revenues to Sh5.02 billion compared to the Sh5.12 billion the firm posted in the financial year to December 2014.
The firm paid a higher corporate tax of Sh396.6 million as its effective rate increased from 31 per cent to 45 per cent due to deferred tax adjustments, further eating into its profitability.
“The group faced rough trading environment during 2015 in Kenya, its largest market,” WPP Scangroup said in a financial declaration sent to the Nairobi Securities Exchange (NSE).
“As a consequence, the group’s revenue declined by two per cent. Kenya now accounts for 66 per cent of its revenue and we anticipate it to reduce further to below 60 per cent in 2016.”
The firm’s earnings were boosted by interest income from financial investments which grew by Sh187.8 million to Sh436.1 million, representing a 76 per cent jump.
WPP Scangroup reported that its operating and administrative expenses last year increased 4.3 per cent to Sh4.7 billion, pulling down earnings.
The company announced that its operations in markets outside Kenya such as Ghana, Nigeria, South Africa and Uganda were “particularly pleasing” and that they would therefore continue to strengthen them.
WPP Scangroup said its biggest growth came from Public Relations and its digital business.