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Newly listed Scangroup posts Kshs278.68M profit. - Tuesday, March 27, 2007

Scangroup Limited, East Africa’s leading marketing services company, has announced its financial results for 2006.
The company has posted a Kshs.278.68M pre – tax profit for the year ending December 31, 2006. This is a 39% increase from Kshs.200.99M recorded in 2005. Billings were up by 29% to stand at Kshs3.01B compared to Kshs2.34B in the previous year.

During an investor briefing, Scangroup chief executive Mr. Bharat Thakrar said, “I am proud to announce that our company’s profit after tax went up by 32% from Kshs148.19M in 2005 to Kshs195.53M in 2006. Profits available for distribution to shareholders after minority interests are Ksh186.40M up from Ksh143.51M in 2005 which represents a 30% increase.”

More info here -
Scangroup CEO's Statement - Results 2006
Scangroup Investor Briefing - Results 2006
Scangroup Limited Audit - Results 31st Dec 2006

Mr. Thakrar said, “Our business depends on the general economic trends in the region. There has been positive growth in the advertising industry generally as a result of the economic upturn recorded in the region. The Advertising Exposure as measured by The Steadman Group (Adex), in East Africa grew by 37%. In Kenya, the market grew by 50%, whilst Uganda and Tanzania recorded growth of 23% and 10% respectively. Kenya still leads the market with 66% of the exposure, whilst Uganda accounted for 23% and Tanzania 11%.”

“Even though advertising and media was 88% of our business, with revenues growing by 28% over 2005 and contributing to 84% of our bottom line, specialty communications, which is the Activation and Experiential Marketing side of our business, which contributed to 7% of our revenue, gave us the highest growth of over 483% over 2005 and contributed to 10% of our bottom line. Public Relations was 5% of our net revenue contributing to 6% of our bottom line with growth of 212% over 2005. Our focus in 2006 and in the coming year will to grow this line of business to offer fully integrated communications solutions to our clients”, Mr. Thakrar added.

Scangroup is the holding company for media buying companies, Media Initiative East Africa and Universal McCann, advertising companies; Lowe Scanad (Kenya Uganda and Tanzania), Thompson Kenya, McCann Kenya, Grey East Africa and Redsky, public relations company Scanad Public Relations and activations and experiential marketing company, Roundtrip.

He said, “We delivered on our business growth strategy to attain a significant presence in the Telecommunications sector, especially in the cellular market in Kenya and Tanzania. In 2006 we acquired a majority shareholding in FCB Tanzania, the agency that handles advertising for Vodacom Tanzania, the largest advertiser in Tanzania. In January 2007 we acquired a 50% shareholding in Red Sky Kenya Limited, the agency that handles advertising for Safaricom.
Uganda is the second biggest market after Kenya and whilst we are still the market leader, we don’t have any cellular client which is the fastest growing sector. Our key priority for 2007 will be to maintain our leadership by pitching for a cellular client.”

In an attempt to meet demands from clients for Pan African communications solutions, Scangroup is in the process of expanding its regional reach outside East Africa. Mr. Thakrar announced that Scangroup will be considering expansion into West Africa through the establishment of an agency presence in Nigeria.
He said, “A lot of the multinational companies operating in Africa are centralising communication for the continent in key regional locations based in South, East, West and North Africa. Our model will be to develop creative work in any of these centres and run it across markets via our centralised media planning and buying companies. For example, we believe Nigeria will be the next biggest Advertising market outside South & East Africa and we need to be in place to take advantage of this opportunity.”

On human resource management, the CEO said that the Golden Handcuffs programme initiated during the IPO had proved successful in retaining key staff within the agency and added that the board had approved a plan to underpin the scheme through an Employee Share Ownership Plan (ESOP), subject to shareholder and regulatory approval.

“As we expand into other markets we will need to train locally and offer attractive career opportunities to local talent across the continent. Going forward we need to offer excellent compensation and career growth opportunities to attract young and talented people, as you know, our staff are our most valuable asset”, Mr. Thakrar said.
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