Investors of the Safaricom Investment Co-operative (SIC) will not get dividends for their investments this year, after the company employed the use of a new accounting standard, the IFRS 15.
Reports indicate that revenues slumped by 89.3 percent as of December 2019, after the standard was effected.
The board now proposes rebates to its 4,538 members instead of dividends, a development last seen in the institution in 2012.
In 2018, the Co-operative paid its members Ksh375 million in terms of dividends.
Their revenues went down by Ksh55.9 million in 2019 compared to Ksh525 million a year earlier. Business Daily reports that the accounting standard resulted in deferment of Ksh217 million worth of income that will now be booked in the current fiscal year.
“Our financial report is prepared in full compliance with International Financial Reporting Standards, including IFRS 15. This means that a substantial percentage of our income has been deferred to 2020,” SIC said in the report.
Under the new accounting system, revenues are only recognised after the land has been sold and transferred to the customer as opposed to the previous practice of booking sales after clients pay a deposit.
As a result, income from land sales dropped by 97.6 percent to Ksh9.78 million. Total income from projects –mainly sale of land and housing- dropped by the same margin to Ksh12.7 million.
The co-operative posted a Ksh88.5 million drop from previous year’s surplus of Ksh6.9 million.
“Having fully complied with IFRS 15, we expect to turn back to profitability effective this (2020 financial year),” said Chief executive Humphrey Njeru.