Companies

Scangroup finds foreign investment assets worthless in probe

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Scangroup CEO Patricia Ithau. FILE PHOTO | NMG

Marketing services firm WPP Scangroup #ticker:SCAN has closed the investigation of its foreign investments, establishing that the assets are worthless.

The company had gone for years without receiving reports on its minority stakes in companies spread across five countries.

It launched an investigation into the foreign investments last year after its founder and former chief executive Bharat Thakrar left the company in an apparent power struggle.

The Nairobi Securities Exchange #ticker:NSE -listed firm has a 25 percent stake each in Ocean Ogilvy Gabon, Ocean Central Africa, Ocean Burkina Faso, Ocean Afrique Occidentale (Senegal), and Ocean Conseil (Ivory Coast).

“The company was able to ascertain that only Ocean Conseil in Cote d’Ivoire continues to trade. The results of this company are considered immaterial and therefore not accounted for equity method,” Scangroup says in its latest annual report.

The company had fully provided for the cost of the foreign investments in the past due to the lack of information and dividend returns. It did not say how much it had spent on the minority stakes. The majority shareholders of the foreign companies were also not disclosed.

The matter saw Scangroup’s external auditor Deloitte & Touche LLP issue a qualified opinion on the company’s 2020 accounts, citing the information gap.

“We were unable to obtain sufficient appropriate audit evidence to determine if the investments exist or not, nor the appropriateness of the carrying amounts of these investments,” the audit firm said in the 2020 report.

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

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