Advice to Kantala Limited:

Under IFRS 13 (Fair Value Measurement), the fair value of the land should be determined as follows:

1. Current Use as Agricultural Land:
   • Until planning permission for residential use is granted, the land’s fair value must be based on its existing use as agricultural land, as this reflects the current condition and legal constraints of the land.
2. Consideration of Market Participant Assumptions:
   • The preliminary indication that planning permission may be granted and the Ogun State Government’s intention to reallocate agricultural land for residential purposes may influence market participants’ assumptions. These factors could result in a higher fair value if potential buyers are willing to pay a premium in anticipation of future residential use.
3. Observable Market Data:
   • Kantala Limited should use observable market data, such as the prices of similar agricultural land in the region, to determine fair value. Any speculative increases related to potential residential use must be supported by market evidence and not based solely on internal expectations.
4. Fair Value Hierarchy:
   • The valuation should prioritize Level 2 inputs (e.g., comparable market prices) or Level 3 inputs (e.g., internally developed models) if no active market exists.

In summary, the fair value of the land should reflect its current use as agricultural land, incorporating any market participant expectations that planning permission for residential use might increase its value. However, speculative assumptions without sufficient market evidence should not be included in the valuation.