Scangroup’s share price gained 28.6 percent in three days after the company published its delayed 2020 results which showed that it did not suffer internal fraud as earlier feared.
The stock closed Friday at Sh4.63, rising from Sh3.6 recorded on Tuesday.
The rally started on Wednesday when Scangroup published its financial statements for the year ended December. This has seen the company’s market value rise by Sh445 million to Sh2 billion.
The Nairobi Securities Exchange-listed firm suspended its former CEO Bharat Thakrar and chief financial officer Satyabrata Das on February 19 over unspecified allegations.
It later said the external auditor Deloitte & Touche LLP needed more to time to determine whether investigation of the two –who subsequently resigned— would have a material impact on the financial statements.
In the commentary accompanying the results, the company said nothing material was unearthed in the investigation.
The disclosure allayed fears of significant fraud which had seen some investors sell their shares in panic, sending the stock down to record lows of Sh3.5.
The new share price rally is a signal that investors now have clarity on the firm’s true financial position and are confident about its future prospects.
Scangroup reported a net profit of Sh469.2 million in the year ended December 2020, an 8.6 percent rise from Sh431.9 million the year before.
The performance was largely derived from a Sh2.2 billion net gain from the disposal of the subsidiary Kantar Africa.
Excluding that transaction, Scangroup would have reported negative earnings as indicated by a Sh1.7 billion loss from continuing operations. The company did not declare a dividend.It had made a record payout of Sh8 per share in the form of a special interim dividend based on the windfall from the Kantar deal.Despite posting losses from continuing operations, Scangroup revealed that it is holding cash and bank deposits of Sh3.8 billion which dwarfs its market capitalisation of Sh2 billion.The company noted that it has won new business and reduced its cost base, setting it up for improved earnings in the coming years.