Sasini’s land value up by Sh700 million

Agricultural firm Sasini saw its land value rise by Sh700 million in the year ended September 2019, potentially boosting its balance sheet or earnings if a part of the land were to be sold.

The Nairobi Securities Exchange-listed company, however, did not book the gain in its financial statements.

Sasini periodically carries out revaluation of its land holdings which it has historically carried at cost.

In the review period, the company’s leasehold land was revalued by Knight Frank Valuers Limited to reflect its prevailing market value.

“The fair value of the land is estimated at Sh4.2 billion (2018 –Sh3.5 billion). The revaluation has not been adopted in the financial statements,” Sasini says in its latest annual report.

“The group engages independent valuers to determine fair values of property, plant and equipment. The valuation is based on the prevailing market prices which are sensitive to economic conditions.”

Revaluation increases arising from asset revaluations are usually recognised in income statement as “other comprehensive income” and accumulated in the revaluation reserve in equity statement.

Booking such revaluations as other income has an impact of increasing the reported profits.

Sasini had an option of passing this gain in its financials like other firms have done before. This would have had the potential of lifting it out of the Sh337.7 million net loss it reported in the review period.

Sasini in 2014 disclosed that valuations of its freehold land rose by Sh4.3 billion, which subsequently pushed up its total assets.

It then sold 513.7 acres of land in Nyeri in 2015, booking a gain of Sh1 billion which boosted its earnings despite weaker performance in agricultural operations. The company is among a group of agricultural firms that have benefited from the appreciation of land values over the decades.