Six minority shareholders who hold 58.7 million ordinary shares have requested for a Special General Meeting (SGM) to effect board changes amid mounting losses /HANDOUTAlleged worsening losses at WPP Scangroup Plc have sparked a push by minority shareholders for an overhaul of the company’s board of directors to restore investor confidence and reposition the firm for financial recovery.
In a formal requisition to the board dated May 8, six minority shareholders who hold 58.7 million ordinary shares – approximately 13.59 per cent of the company’s issued share capital – have requested for a Special General Meeting (SGM) to effect the board changes.
At the centre of their concerns is what they describe as continued deterioration of the company's financial, commercial and strategic position since February, 2021.
The team, led by former founder and CEO Bharat Thakrar and the former executive creative director Andrew White, say the company’s share price stood at Sh5.94 as at February 18, 2021 but by June 30, 2024, it had fallen to Sh2.30 — a decline of about 61 per cent in market capitalisation.
"Over the period 2021 to 2025, the company has incurred aggregate trading losses of approximately Sh3.1 billion and cash balance down by Sh1.9 billion."
The shareholder claimed that no dividends have been declared since 2021 compared to cumulative dividends of approximately Sh 6.9 billion distirbuted between 2006 and 2020.
They said the company has issued four consecutive profit warnings, eroding shareholder value and leading to the loss of several major clients, including KCB, Equity Bank, NCBA and Airtel.
"The loss of Airtel may materially impair the company's performance in the financial year 2026 and beyond," the shareholders said, citing Airtel's reported contribution of approximately 24 per cent of company's total revenues.
According to the shareholders, the company's audited financial statements for the year ended December 31, 2025, paint a more serious financial problem.
Revenue declined by approximately 16.3 per cent to Sh2.04 billion from Sh2.44 billion in 2024, while net losses widened by 41 per cent to Sh713.7 million, up from Sh 506.7 million in the previous year.
They claimed gross profit declined by Sh539 million (approximately 27 per cent) to Sh1.47 billion, loss before tax of Sh639 million and loss per share widened to Sh1.61 compared to Sh1.17 in 2024.
Cash and cash equivalents fell to Sh864 million as at December 31, 2025, from Sh2.14 billion a year earlier while net cash used in operations was Sh678 million.
The shareholders also raised concern over WPP Plc's strategic, financial and operational commitment to the long-term sustainability relating to recoverability of long-term loan extended to its subsidiaries.
They said WPP Group Services (SNC), a wholly owned subsidiary of WPP plc, was awarded $9.2 million (approximatelySh1.2 billion) loan at an annual interest rate of 5 per cent, a rate shareholders consider low relative to the prevailing risk profile and market conditions.
Ogilvy South Africa, another WPP Plc subsidiary, was given a $600,000 loan (approximately Sh78million) in the absence of what the shareholders claim was inadequate disclosure regarding security, repayment arrangements, treasury policy and recoverability.
"Any impairment or non-recovery of these balances would further erode shareholder value and expose the company to avoidable financial and legal risk," they said.
"It is therefore our considered view that the matters set out above raise serious questions as to WPP Plc's continuing strategic, financial and operational commitment to the long-term sustainability of WPP Scangroup PLC, and that the interests of minority shareholders, as well as confidence in the Kenyan capital market, require urgent action by shareholders," the shareholders told the board.
The shareholders also expressed concern over the company's shrinking regional footprint with the divestiture of its South African PR business and the closure of operations in Nigeria and Tanzania.
They said the entities have historically constituted one of WPP Scangroup Plc's core strategic strengths, and with the exit of Airtel, the developments indicate a severe erosion of business value, client base, regional presence.
They said the requisition is issued under sections 277 and 278 of the Companies Act, 2015 and Article 44.4 of the Company's Articles of Association, which states that general meetings shall also be convened by the board on the requisition in writing by members who hold at least 10 per cent of the paid up capital of the company and are entitled to vote.
The company's article of association further states that a request for the directors to convene a General Meeting is only effective if it states the general nature of the business to be dealt with at the meeting.
"Accordingly, we hereby formally requisition that the Board convene a General Meeting of the members of the company, preferably as a hybrid meeting with a physical venue in Nairobi and simultaneous electronic participation and poll voting facilities, for the purpose of considering and, if thought fit, passing the ordinary resolutions set out in Schedule 1 to this requisition," the shareholders said.
The shareholders asked the company to send a copy of the requisition and the proposed removal resolutions to each director, accompanied with all procedural requirements, including the directors' rights to be heard at the meeting.
Under the Companies Act, 2015, the Board is required to convene the SGM within 28 days of receiving the requisition notice.
Should it fail to do so within the prescribed timeline, the shareholders have indicated they will exercise their statutory right to convene the meeting independently at the company's expense.
"The intended resolutions are intended to restore effective oversight, rebuild the business and protect shareholder value," the shareholders said.
