KENYA – Coffee and tea grower Sasini is set to sell its restaurant chain, Sasini Coffee House, for Sh70 million. The sale marks the latest divestiture by the Nairobi Securities Exchange-listed firm.
Sasini says it will sell its entire 60 per cent stake in the company that runs four restaurants on Nairobi’s Loita Street, Ralph Bunche Road, Muthangari Road and Mombasa Road.
“The group entered into a contract with Sheb Investments Limited to sell off its entire shareholding in Sasini Coffee House for a consideration of Sh70 million,” Sasini said in its latest annual report.
The transaction is subject to shareholders’ approval and is expected to be completed in the current financial year in which it could boost earnings from normal operations.
Sasini did not explain why it was exiting the restaurant business it started in September 2007 with a Sh20.9 million investment.
The subsidiary had net assets of Sh36.9 million in the year ended September when it recorded a net loss of Sh7.4 million, reversing a profit of Sh958,051 the year before.
Its sales declined 14 per cent to Sh105.6 million in the review period.
Sasini Coffee House offers a diverse menu including tea, coffee, snacks, desserts, lamb chops and burgers.
Besides diversification, the subsidiary was also set up to boost local consumption of Sasini’s tea and coffee brands.
More such lifestyle coffee lounges have been started in Nairobi besides the expansion of established shops such as Java House targeting demand from the middle class.
Disposal of Sasini Coffee House marks the latest divestiture by the firm whose principal activities are growing and processing of tea and coffee.
Sasini in 2015 sold its building on Nairobi’s Loita Street, Sasini House, for more than Sh600 million. It recently raised Sh1 billion from sale of its land in agricultural operations it says are unprofitable, recording large capital gains from the properties it bought decades ago.
These include land in its two coffee estates in Nyeri — Mweiga and Wahenya — that it said had been running losses for six consecutive years.
The agricultural firm recorded a 30.8 per cent net profit drop in the year ended September on a larger tax charge and relatively lower gains from asset sales than the year before.
The company’s net profit dropped from Sh1.1 billion to Sh761.8 million in the review period. Sasini incurred a tax charge of Sh258.9 million compared to a tax credit of Sh61.9 million a year earlier, eroding its bottom-line.
Gains from assets disposal stood at 422.7 million compared to the Sh830.7 million which boosted the earnings in the prior year.
The firm’s revenues and earnings from normal operations grew significantly on the back of increased output and higher prices of tea and coffee.
Sales jumped 28.1 per cent to Sh3.5 billion, raising the gross profit to Sh974 million from Sh733 million.
Sasini produced 11,108 tonnes of tea in the review period compared to 8,578 tonnes the year before, with the commodity’s price per kilogramme rising marginally to an average of Sh196.4 from Sh194.3.