HOW KENYA'S WPP SCANGROUP SCANNED WELL IN 2018

WPP ScanGroup in Kenya just released brief on its 2018 annual report and deductions from it were clear: Revenue did not grow at fantastic rate within the year but there is no cause for complain. The year ended fairly well.

Reason? Well, says the company, acquisition and activities of its research arm, TNS Kartar Research and digital technology opened new windows in Nigeria and indeed, West Africa that countered the challenge back home in Kenya.

Added to these was good control over operating and administration costs which limited its growth to just 4.13% to Ksh 3863.9m while generating core revenue growth of 9.27% to Ksh4504.9m.

The net result was that operating profit grew by 55% to Ksh 641m compared to Ksh 412.3m in 2017.

Hence that the company's profit before tax rose by 37.8% to Ksh 959.9m from Ksh 696.4m was because this core business was solid enough to take in its stride impairment provisions totalling Ksh 23.76m not made in 2017.

Of course, this base was also boosted by 49.8% rise in other income to Ksh 31.6m; net share of profit from associates of Ksh 25.1m compared to zero in 2017 and very marginal 0.24% growth in net interest income to Ksh 291.1m

It was also helpful too that loss from foreign exchange dropped by 81.2% to Ksh 5.16m from Ksh 27.4m in 2017.

In the end, WPP made profit of Ksh 19.8 on every Ksh 100 income it earned as against Ksh 15.7 the previous year.

Beyond this, though, there are some warning signals WPP Scan Group could do well to scan better in 2019. The major one was that despite its better 2018, its liquidity position ended worse than it started it.

Its working capital surplus came to Ksh 4852.7m compared to Ksh 6136.1m in 2017 perhaps because of its acquisition moves within the year.

Then there was the dive in impact of exchange rate difference as it resulted in loss of Ksh 97.1m in 2018 compared to Ksh34.1m gain in 2017. Here though, the company could be almost entirely at the mercy of exchange rate normally outside its control.

WPP SCANGROUP. Kshm Full year
                              2018.          2017
Total income.   4852.7.        4787.9
Core revenue.   4504.9.        4122.9
Total cost          3863.9.        3710.6
Net interest inc.  291.1.          290.4
Associates profit  25.1.             -
Impairment.           23.76.           -
Other income.       31.6.             21.1
Forex income.     (5.16).          (27.4)
Profit before tax 959.9.           696.4
Profit margin %      19.8.            15.7
Working capital 5810.3.        6136.1

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